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LETTER OF CREDIT AGREEMENT
B E T W E E N:
LOWER LAKES TOWING LTD.
(as "Lower Lakes")
- and -
HEDDLE MARINE SERVICE INC.
(as "Heddle")
A. WHEREAS pursuant to a credit agreement (as amended,
supplemented, restated
or replaced from time to time, the "Credit Agreement") made as
of August
27, 2007 among Voyageur Maritime Trading Inc. (the "Borrower"),
the
Persons named therein as Credit Parties, GE Canada Finance
Holding
Company, as agent (in such capacity, the "Agent"), for itself,
as Lender,
and the other Lenders signatory thereto from time to time (the
Agent and
Lenders, collectively, the "Secured Parties"), the Lenders have
agreed to
make a term loan to the Borrower in the principal amount of
$5,000,000
(the "Term Loan");
B. AND WHEREAS as a condition precedent to providing the Term
Loan, the
Secured Parties have requested Lower Lakes to (i) guarantee
certain
obligations of Voyageur under the Credit Agreement pursuant to a
guarantee
dated as of August 27, 2007 (the "Guarantee"); and (ii) secure
the
Guarantee with a letter of credit in the amount of Cdn.
$1,250,000 (the
"Lower Lakes L/C");
C. AND WHEREAS it is in the best interest of Heddle that
Voyageur enter into
the Credit Agreement and Lower Lakes provide the Guarantee;
D. AND WHEREAS as a condition precedent to providing such credit
support,
Lower Lakes has required that Heddle provide a letter of credit
or cash
escrow in the amount of $625,000 to support Lower Lakes'
obligations under
the Guarantee;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
the premises and
the covenants and agreements herein contained, the sum of $1.00
now paid by
Lower Lakes to Heddle and other good and valuable consideration
(the receipt and
sufficiency of which is hereby acknowledged), the parties agree
as follows:
1. Lower Lakes and Heddle acknowledge that at the date hereof,
Heddle has
deposited Cdn. $625,000 (the "Escrow Funds") in an escrow
account (the
"Escrow Account") with Ogilvy Renault LLP pursuant to an escrow
agreement
dated as of the date hereof (the "Escrow Agreement").
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2. At the option of Heddle, it may deliver to Lower Lakes an
irrevocable
standby letter of credit (the "Heddle L/C") in the amount of
$625,000 and
otherwise in form and substance satisfactory to Lower Lakes,
acting
reasonably. Upon receipt of the Heddle L/C, Lower Lakes will
instruct
Ogilvy Renault LLP to release the Escrow Funds to Heddle and the
Escrow
Agreement shall automatically terminate upon such release.
3. If Lower Lakes receives a Trigger Notice under the Guarantee,
then Lower
Lakes shall be entitled to draw against the Heddle L/C or
withdraw from
the Escrow Account, as applicable, on such date as payment by
Lower Lakes
is required under the Guarantee, an amount equal to fifty (50%)
percent of
the amount required to be paid under the Guarantee by Lower
Lakes. Lower
Lakes shall promptly provide Heddle with a copy of any Trigger
Notice
received by Lower Lakes.
4. If Lower Lakes determines to exercise its right under Section
3.02(a) of
the Guarantee and completes the purchase of the Financed Vessels
(as
defined therein) in accordance with the requirements of the
Guarantee, it
shall, within 5 Business Days of the closing of that
transaction, return
the Heddle L/C for cancellation or instruct the Escrow Agent to
release
the Escrow Funds to Heddle, as applicable.
5. If Lower Lakes determines to exercise its rights pursuant to
Section
3.02(b) of the Guarantee to lend money on a second subordinated
basis to
Voyageur (the "Voyageur Subordinated Loan"), it shall notify
Heddle within
5 Business Days of making such determination. In such notice
(the "Loan
Notice"), Lower Lakes shall, to the extent known, describe the
terms of
the Voyageur Subordinated Loan, including the amount proposed to
be loaned
by Lower Lakes and the proposed closing date. Heddle shall
ha
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