FIFTH AMENDMENT TO CREDIT AGREEMENT
This Fifth Amendment to Credit Agreement (this "Amendment Agreement") is
dated as of August 27, 2007 by and among Lower Lakes Towing Ltd. ("Lower
Lakes"), Lower Lakes Transportation Company, Grand River Navigation Company,
Inc., the other Credit Parties signatory hereto, General Electric Capital
Corporation, as a US Lender and as Agent, and GE Canada Finance Holding Company,
as a Cdn. Lender.
W I T N E S S E T H :
WHEREAS, the Credit Parties, the lenders party thereto, and the Agent
entered into that certain Credit Agreement dated as of March 3, 2006 and amended
as of August 1, 2006, February 28, 2007, March 23, 2007 and June 26, 2007 (the
"Credit Agreement");
WHEREAS, pursuant to that certain Memorandum of Agreement between Voyageur
Marine Transport Ltd. ("Voyageur") and Lower Lakes dated as of August 27, 2007,
Lower Lakes has agreed to purchase the vessels Voyageur Independent (the
"Independent") and Voyageur Pioneer (the "Pioneer") for an aggregate of
Cdn.$25,000,000 (the "Purchase Agreement"), and pursuant to that certain Option
Agreement dated as of August 27, 2007 between Lower Lakes and Voyageur, Voyageur
has granted Lower Lakes an option to buy the vessel Maritime Trader;
WHEREAS, in order to finance the acquisition of the Independent and the
Pioneer, Lower Lakes has requested the Cdn. Term Lender to make an additional
Cdn. Term Loan of Cdn.$18,000,000; and
WHEREAS, the Cdn. Term Lender has agreed to provide such additional
financing, and the Lenders and the Agent have agreed to further amend the Credit
Agreement to effect certain changes thereto requested by the Credit Parties as
set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Defined Terms. Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to such terms in the Credit Agreement,
as amended hereby.
2. Amendments to Credit Agreement. The Credit Agreement is hereby amended
as follows:
2.1. Section 1.1(b) of the Credit Agreement is hereby amended by (a)
deleting the reference therein to "Cdn.$21,200,000" and replacing it with a
reference to "Cdn.$36,868,000" and (b) replacing the table set forth in Section
1.1(b)(ii) with the following:
---------------------------------------------------------------
Period Quarterly Installment Amounts
---------------------------------------------------------------
September 2007 - March 2008 Cdn.$636,000
June 2008 - December 2008 Cdn.$1,176,000
March 2009 - December 2009 Cdn.$1,176,000
---------------------------------------------------------------
Period Quarterly Installment Amounts
---------------------------------------------------------------
March 2010 - December 2010 Cdn.$1,176,000
March 2011 - December 2011 Cdn.$1,176,000
---------------------------------------------------------------
2.2. Section 1.1(d) of the Credit Agreement is hereby amended by replacing
the table set forth in Section 1.1(d)(ii) with the following:
---------------------------------------------------------------
Period Quarterly Installment Amounts
---------------------------------------------------------------
September 2007 - December 2007 US $186,000
March 2008 - December 2008 US $186,000
March 2009 - December 2009 US $186,000
March 2010 - December 2010 US $186,000
March 2011 - December 2011 US $186,000
---------------------------------------------------------------
2.3. Annex A to the Credit Agreement is hereby amended by (a) adding the
following definition in alphabetical order:
"Independent" means the Independent, a self-propelled steel cargo
vessel bearing Canadian Certificate of Registry Official Number 827118.
"Independent Mortgage" means the statutory ship mortgage of the
Independent made by Lower Lakes in favor of the Agent, such mortgage to be
in a form satisfactory to the Lenders and Lenders' Counsel and suitable
for registration.
"Pioneer" means the Pioneer, a self-propelled steel cargo vessel
bearing Canadian Certificate of Registry Official Number 395510.
"Pioneer Mortgage" means the statutory ship mortgage of the Pioneer
made by Lower Lakes in favor of the Agent, such mortgage to be in a form
satisfactory to the Lenders and Lenders' Counsel and suitable for
registration.
"Special Letter of Credit" means the Letter of Credit issued August
27, 2007 for the benefit of GE Canada Finance Holding Company, as agent,
which supports the guarantee by Lower Lakes of the loan facility extended
to Voyageur Maritime Trading Inc.
and (b) deleting the definitions of "Capital Expenditures", "Cdn. Borrowing
Base", "Cdn. Vessels", "Commitment Termination Date" and "Mortgages" in their
entirety and replacing them with the following:
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of
Indebtedness) by such Person during any measuring period for any fixed
assets or improvements or for replacements, substitutions or additions
thereto, that have a useful life of more than one year and that are
required to be capitalized under GAAP, including all such expenditures
paid pursuant to the WMS Charter; provided, that for the fourth quarter of
Fiscal Year 2007, there shall be excluded therefrom expenditures of
C$9,552,738 by the Credit Parties, to the extent that such expenditures
were made exclusively from the proceeds of a capital contribution made to
one or more of the Credit Parties by Rand Logistics, Inc.; provided,
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further, that for the purposes of paragraphs (a) and (d) of Annex G, up to
US $6,140,000 in proceeds of the warrant exercise program of Rand
Logistics, Inc. which ended on July 13, 2007 which were contributed to
LLTC and applied thereby to reduce the outstanding balance of the US
Revolving Credit Facility on May 10, 2007 shall be deducted from Capital
Expenditures in Fiscal Year 2008.
"Cdn. Borrowing Base" means, in respect of Lower Lakes, as of any
date of determination thereof by the Agent from time to time, an amount
equal to (a) eighty five percent (85%) of the amount of Eligible Cdn.
Accounts, less (b) any Reserves established in accordance with Section
1.6, plus (c) the amount available to be drawn under the Special Letter of
Credit, in each case as at the date of determination.
"Cdn. Vessels" means, collectively, the Cuyahoga, the Saginaw, the
Mississagi, the Michipicoten, the Independent and the Pioneer.
"Commitment Termination Date" means the earliest of (a) ▇▇▇▇▇ ▇,
▇▇▇▇, (▇) the date of termination of Lenders' obligations to make Advances
or permit existing Loans to remain outstanding pursuant to Section 8.2(b),
and (c) the date of indefeasible prepayment in full by Borrowers of the
Loans and the cancellation and return of all Letters of Credit or the cash
collateralization of all Letter of Credit Obligations pursuant to Annex B,
and the permanent reduction of the Commitments to zero dollars
(Cdn.$0/US$0).
"Mortgages" means, collectively, the Cuyahoga Mortgage, the Saginaw
Mortgage, the Mississagi Mortgage, the Manistee Mortgage, the Independent
Mortgage and the Pioneer Mortgage.
2.4. Annex B to the Credit Agreement is hereby amended by deleting the
reference to Cdn.$1,250,000 in paragraph (a) thereof and replacing it with a
reference to Cdn.$1,325,000.
2.5. Annex G to the Credit Agreement is hereby amended by deleting Annex G
in its entirety and replacing it with the Annex G attached hereto.
2.6. Annex I to the Credit Agreement is hereby amended by deleting Annex I
in its entirety and replacing it with the Annex I attached hereto.
3. Conditions to Effectiveness. The effectiveness of this Amendment
Agreement is expressly conditioned upon the execution of this Agreement by the
Credit Parties, the Agent and each Lender and the satisfaction of the following
conditions:
(a) Cdn. Term Note. Lower Lakes shall provide a duly executed
original of a replacement Cdn. Term Note dated the date hereof, reflecting
the terms set forth in Section 2 hereof.
(b) Reaffirmation. Each Credit Party shall have executed and
delivered the Reaffirmation of Guaranty in the form of Exhibit A attached
hereto.
(c) Mortgages. Each of the Independent Mortgage and the Pioneer
Mortgage shall have been executed by Lower Lakes in favor of Agent.
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(d) Insurance. Agent shall have received satisfactory evidence that
the insurance policies required by Section 5.4 with respect to each of the
Independent and the Pioneer are in full force and effect, together with
appropriate evidence showing loss payable and additional insured clauses
or endorsements, as reasonably requested by Agent, in favor of Secured
Parties.
(e) Appraisals. Agent shall have received an appraisal of each of
the Independent and the Pioneer by an appraiser selected by the Agent,
which appraisals (including the asset values reflected therein) shall be
in form and substance reasonably satisfactory to Agent.
(f) Lien Searches and Termination Statements. Agent shall have
received copies of transcripts of registry from Transport Canada with
respect to each of the Independent and the Pioneer listing all effective
notice of lien filings regarding the Independent or the Pioneer that name
Voyageur or any Credit Party as debtor, none of which shall cover either
the Independent or the Pioneer, and such termination statements, releases
or other documents as may be reasonably necessary to confirm that neither
the Independent nor the Pioneer are subject to any other Liens in favor of
any Persons.
(g) Approvals. Agent shall have received satisfactory evidence that
the Credit Parties have obtained all required consents and approvals of
all Persons, including all requisite Governmental Authorities and all
collateral assignments with respect to any customer contracts, to the
execution, delivery and performance of the Purchase Agreement, this
Amendment Agreement and the other Loan Documents.
(h) Purchase Documents. Executed copies of the Purchase Agreement
and all documents and instruments delivered in connection therewith shall
have been delivered to the Agent.
(i) Due Diligence. Agent shall have completed its legal and business
due diligence, with results reasonably satisfactory to Agent.
(j) Opinion. Duly executed originals of an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP, counsel for the Credit Parties, together with any local counsel
opinions reasonably requested by Agent, each in form and substance
reasonably satisfactory to Agent and its counsel, dated the date hereof.
(k) Fees. Borrower shall have paid all fees, costs and expenses due
and payable on the date hereof, including the reasonable fees and out of
pocket expenses of counsel for the Agent with respect to this Amendment
Agreement.
(l) Secretary's Certificate. Agent shall have received from each
Credit Party, (i) such Person's charter (or similar formation document),
certified by the appropriate governmental authority, (ii) good standing
certificates in its state or province of incorporation (or formation) and
in each other state or province requested by Agent, (iii) such Person's
bylaws (or similar governing document), (iv) resolutions of its board of
directors (or similar governing body) approving and authorizing such
Person's execution, delivery and performance of this Amendment Agreement
and the transactions contemplated thereby, and (v) signature and
4
incumbency certificates of its officers executing this Amendment Agreement
and the documents contemplated hereby, all certified by its secretary or
an assistant secretary (or similar officer) as being in full force and
effect without modification.
(m) Other Documents. The Borrowers shall provide such other
documents, instruments and agreements as the Agent may reasonably request.
4. Consent. Notwithstanding (a) the prohibition against Acquisitions set
forth in Section 6.24 of the Credit Agreement, each Lender hereby consents to
the acquisition of the Independent and the Pioneer pursuant to the terms of the
Purchase Agreement, and (b) any provision of the Credit Agreement to the
contrary, each Lender hereby consents to the guarantee by Lower Lakes of the
loan facility extended by GE Canada Finance Holding Company ("GE Canada") to
Voyageur Maritime Trading Inc. pursuant to that certain Guarantee dated as of
the date hereof between Lower Lakes and GE Canada, as agent, and the other
transactions contemplated thereby.
5. Representations and Warranties of the Credit Parties.
5.1. Each of the Credit Parties represents and warrants that the
execution, delivery and performance by each of the Credit Parties of this
Amendment Agreement and the documents and instruments delivered in connection
therewith have been duly authorized by all necessary corporate action and that
this Amendment Agreement is a legal, valid and binding obligation of such Credit
Party, enforceable against such Credit Party in accordance with its terms,
except as the enforcement thereof may be subject to (a) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally and (b) general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law).
5.2. Each of the Credit Parties hereby certifies that each of the
representations and warranties contained in the Credit Agreement and the other
Loan Documents (as amended through the date hereof) is true and correct in all
material respects on and as of the date hereof as if made on the date hereof,
except to the extent that any such representation or warranty is stated to
relate solely to an earlier date, in which case such representation or warranty
shall be true and correct on and as of such earlier date.
6. Reference to and Effect on the Credit Agreement.
6.1. Upon the effectiveness of this Amendment Agreement, each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import and each reference to the Credit Agreement in each Loan
Document shall mean and be a reference to the Credit Agreement as amended
hereby.
6.2. Except as specifically amended above, all of the terms, conditions
and covenants of the Credit Agreement and the other Loan Documents shall remain
unaltered and in full force and effect and shall be binding upon the Credit
Parties in all respects and are hereby ratified and confirmed.
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6.3. The execution, delivery and effectiveness of this Amendment Agreement
shall not operate as a waiver of (a) any right, power or remedy of any Lender or
the Agent under the Credit Agreement or any of the other Loan Documents, or (b)
any Event of Default or Default under the Credit Agreement.
7. CHOICE OF LAW. THIS AMENDMENT AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
NEW YORK.
8. Execution in Counterparts. This Amendment Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
9. Headings. Section headings in this Amendment Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Amendment Agreement for any other purposes.
[signature page follows]
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IN WITNESS WHEREOF, the Credit Parties, the Agent and the Lenders have
executed this Amendment Agreement as of the date first above written.
LOWER LAKES TOWING LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Title: President
-----------------------------------
LOWER LAKES TRANSPORTATION COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Title: President
-----------------------------------
GRAND RIVER NAVIGATION COMPANY, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
--------------------------------------
Title: President
-----------------------------------
RAND LL HOLDINGS CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: President
-----------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION, as a
US Lender and as Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Title: Duly Authorized Signatory
-----------------------------------
GE CANADA FINANCE HOLDING COMPANY, as a
Cdn. Lender
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: Duly Authorized Signatory
GE CANADA FINANCE HOLDING COMPANY, as L/C
Guarantor
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: Duly Authorized Signatory
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
The Borrowers shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:
(a) Minimum Fixed Charge Coverage Ratio. Parent shall have on a
consolidated basis, at the end of each Fiscal Quarter set forth below, a Fixed
Charge Coverage Ratio for the 12-month period then ended of not less than the
following:
Period Ratio
------ -----
September 30, 2007 through March 31, 2008 1.0:1.0
June 30, 2008 1.1:1.0
Thereafter 1.2:1.0
(b) Minimum EBITDA. Parent shall have on a consolidated basis, at the end
of each Fiscal Quarter set forth below, EBITDA for the 12-month period then
ended of not less than the following:
Period EBITDA
------ ------
September 30, 2007 through December 31, 2007 Cdn.$8,500,000
March 31, 2008 Cdn.$9,000,000
June 30, 2008 Cdn.$11,000,000
September 30, 2008 Cdn.$13,500,000
December 31, 2008 through March 31, 2009 Cdn.$14,000,000
Thereafter Cdn.$15,000,000
(c) Maximum Senior Funded Debt to EBITDA Ratio. Parent shall have on a
consolidated basis, at the end of each Fiscal Quarter set forth below, a Senior
Funded Debt to EBITDA Ratio as of the last day of such Fiscal Quarter and for
the 12-month period then ended of less than the following:
Fiscal Quarters Ratio
--------------- -----
September 30, 2007 4.90:1.0
December 31, 2007 4.65:1.0
March 31, 2008 4.30:1.00
June 30, 2008 4.00:1.00
September 30, 2008 3.25:1.00
December 31, 2008 3.00:1.00
March 31, 2009 2.75:1.00
Thereafter 2.50:1.00
(d) Maximum Capital Expenditures. Parent and its Subsidiaries on a
consolidated basis shall not make Capital Expenditures during the following
periods that exceed in the aggregate the amounts set forth opposite each of such
periods:
Period Maximum Capital
------ Expenditures per Period
-----------------------
Fiscal Year 2007 Cdn.$4,500,000
Each Fiscal Year Thereafter Cdn.$6,000,000
Notwithstanding the foregoing, Capital Expenditures shall not include any
expenditures paid by either of the US Borrowers in connection with its purchase
of the Manistee or by the Canadian Borrower in connection with its purchase of
the Independent and the Pioneer.
(e) Minimum Appraised Value to Term Loan Outstandings. Parent shall have
on a consolidated basis, at the end of each Fiscal Year, a ratio of (i) the
aggregate appraised orderly liquidation value of the Vessels as of such date to
(ii) the aggregate principal amount outstanding of the Term Loans as of such
date of not less then 1.35:1.00.
Unless otherwise specifically provided herein, any accounting term used in
the Agreement shall have the meaning customarily given such term in accordance
with GAAP, and all financial computations hereunder shall be computed in
accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then the Borrowers, Agent and Lenders agree to enter into negotiations
in order to amend such provisions of the Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for evaluating
Borrowers and their Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board (or successor thereto or any comparable body or
agency with similar functions), (ii) changes in accounting principles concurred
in by Borrowers' independent chartered accountants; and (iii) the reversal of
any reserves established as a result of purchase accounting adjustments. All
such adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrowers and Requisite Lenders agree upon the required amendments (and all
other Credit Parties shall be deemed to agree to such amendments so agreed to by
Borrowers), then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Agent, Borrowers and Requisite Lenders cannot agree upon the required amendments
within thirty (30) days following the date of implementation of any Accounting
Change, then all Financial Statements delivered and all calculations of
financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change. For purposes of Section 8.1,
a breach of a Financial Covenant contained in this Annex G shall be deemed to
have occurred as of any date of determination by Agent or as of the last day of
any specified measurement period, regardless of when the Financial Statements
reflecting such breach are delivered to Agent.
For the purposes of calculating the Financial Covenants, conversions from
US Dollars to Canadian Dollars or from Canadian Dollars to US Dollars, as
applicable, shall be done using the overnight spot rate; provided that with
respect to Interest Expense, EBITDA, Capital Expenditures, preferred dividend
payments, principal amortization and average revolver balance, such conversions
shall be determined using the trailing twelve month average exchange rates.
ANNEX I (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
Lender(s):
US Term Loan Commitment: US$6,200,000
General Electric Capital Corporation US$6,200,000
Cdn. Term Loan Commitment: Cdn$36,868,000
GE Canada Finance Holding Company Cdn$36,868,000
US Revolving Loan Commitment: US$6,500,000
General Electric Capital Corporation US$6,500,000
Cdn. Revolving Loan Commitment: Cdn$3,000,000
GE Canada Finance Holding Company Cdn$3,000,000
