EXHIBIT 10.38
FORM OF GUARANTEE
TO: ▇▇▇▇▇▇ STEEL TUBE CO. LTD. (THE "CREDITOR")
WHEREAS the Creditor, BST Acquisition, Ltd. (the "DEBTOR"), Tarpon
Industries, Inc. (the "GUARANTOR") and others are party to an asset purchase
agreement dated [o] 2004 (the "ASSET PURCHASE AGREEMENT");
AND WHEREAS pursuant to the Asset Purchase Agreement the Debtor has
executed and delivered to the Creditor a promissory note dated the date hereof
in the principal amount of Cdn $1,200,000 (the "NOTE");
AND WHEREAS it is a condition of the closing of the transactions
contemplated by the Asset Purchase Agreement that the Guarantor execute and
deliver this Guarantee.
NOW THEREFORE THIS GUARANTEE WITNESSES that for good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
the undersigned) the undersigned makes the agreements and acknowledgments
hereinafter set forth:
SECTION I
GUARANTEE
1.1 UNCONDITIONAL GUARANTEE
The Guarantor hereby irrevocably, absolutely and unconditionally
guarantees to the Creditor:
(a) the payment by the Debtor to the Creditor of all present and future
debts, liabilities and obligations (direct or indirect, absolute or
contingent, matured or otherwise, alone or jointly with others, and
as principal or surety) now or at any time and from time to time due
or owing by the Debtor to the Creditor pursuant to the Note,
pursuant to the obligation of the Debtor to pay for inventories
pursuant to Section 1.8(d) of the Asset Purchase Agreement and
pursuant to any security agreement or instrument related thereto to
which the Debtor and the Creditor are parties (collectively, the
"AGREEMENTS"); and
(b) any and all out of pocket costs and expenses (including reasonable
legal costs) incurred by or on behalf of the Creditor in order to
enforce its rights hereunder or under any of the Agreements;
(the obligations and other matters referred to in clauses (a) and (b) above
being hereinafter called the "OBLIGATIONS"). Without prejudice to anything
herein contained, the Guarantor is bound for
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the due, prompt and complete performance of the Obligations as principal obligor
and not merely as surety.
1.2 CONTINUING GUARANTEE
This Guarantee shall be a continuing guarantee and without
limitation shall continue in full force irrespective of the legality, validity
or enforceability of any provision of the Agreements until this Guarantee shall
be terminated as hereinafter provided. Notwithstanding anything herein
contained, this Guarantee shall be in addition to, and not in substitution for
or in derogation of, any other security or guarantee held by the Creditor from
the Guarantor or others in respect of the obligations of the Debtor to the
Creditor or in respect of any other matter whatsoever.
1.3 INDEMNITY
Without limiting anything herein contained, the Guarantor shall
indemnify and save harmless the Creditor from and against:
(a) the failure of the Debtor to pay, perform and comply with the
Obligations; and
(b) all claims, actions, causes of action, damages, losses, liabilities,
demands, costs and expenses (including legal expenses on a
solicitor-client basis) in respect of the foregoing.
1.4 CONCLUSIVE STATEMENT
Any indebtedness of the Debtor to the Creditor regarding the
Obligations which is acknowledged by the Debtor, or agreed or settled by the
Creditor and the Debtor as being outstanding shall be binding and conclusive
upon the Guarantor and, absent manifest mathematical error, any such
indebtedness which is stated to be outstanding in a certificate of an officer of
the Creditor shall be prima facie evidence thereof.
SECTION II
OBLIGATIONS OF GUARANTOR UNAFFECTED
2.1 NO EXTENSION OF REMEDIES
(a) The Creditor shall not be bound or obliged to take any action or
legal proceeding against or demand payment from or otherwise exhaust
any recourse against the Debtor or any of the security granted to or
held by the Creditor to secure payment of or performance of the
Obligations or to take any action or to do any other matter or thing
or to pursue any other remedy available to the Creditor before being
entitled to require the Guarantor to fulfill the Guarantor's
obligations hereunder.
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(b) The liability of the Guarantor hereunder is independent of the
obligations of the Debtor under the Agreements. A separate action or
actions may be brought against the Guarantor whether or not any
other party is joined therein and whether or not a separate action
or actions in respect of any of the Obligations is brought against
any other party.
(c) The Creditor's rights or remedies hereunder shall not be exhausted
by exercise of any of such rights or remedies or by any action or by
any number of successive actions against the Guarantor in respect of
the Guarantor's obligations hereunder unless this Guarantee shall
have been terminated as hereinafter provided.
2.2 NO RELEASE
The liability of the Guarantor hereunder, shall not be
released, discharged, limited or otherwise affected by anything done, omitted,
suffered or permitted by the Creditor in connection with (i) the Debtor, (ii)
any other guarantor, (iii) the Obligations or the obligations of the Guarantor
hereunder, or (iv) any security held by or granted to the Creditor to secure
payment or performance of any of the Obligations or the obligations of the
Guarantor hereunder. The Guarantor's liability hereunder shall remain in full
force and effect until this Guarantee shall have been terminated as hereinafter
provided. Without limiting the generality of the foregoing, the liability of the
Guarantor hereunder shall not be released, discharged, limited or otherwise
affected by:
(a) any amendment or modification of, or revision to, or action taken
under the Agreements or security therefor;
(b) any cessation or termination from any cause whatsoever, whether
consensual or by virtue of the statute of limitations or otherwise,
of the liability or indebtedness of the Debtor under all or any part
of the Agreements;
(c) the amalgamation, consolidation or other reorganization of the
Debtor or of its business or affairs or a winding-up, dissolution or
liquidation of the business or affairs of the Debtor or any change
in the status, articles of incorporation, bylaws, membership,
constating documents, control or ownership of the Debtor, whether
voluntary or otherwise;
(d) any transfer, sale, conveyance, lease, mortgage, charge, pledge,
encumbrance of or other dealing with the assets of the Debtor;
(e) any voluntary or involuntary participation by the Debtor in any
settlement or composition for the benefit of the Debtor's creditors
either through liquidation, receivership, bankruptcy or otherwise;
(f) the Debtor becoming insolvent or bankrupt or subject to the
provisions of the Bankruptcy and Insolvency Act (Canada), the United
States Bankruptcy Code (USA) or any successor legislation or any
failure of the
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Creditor to file or enforce a claim in respect of such insolvency or
bankruptcy;
(g) the Creditor failing to take, perfect or maintain any security for
the Obligations or the obligations of the Guarantor hereunder;
(h) any extension, renewal or other modification of the time for payment
or performance of any of the Obligations or any of the obligations
of the Guarantor hereunder or any other indulgences, releases,
discharges, compromises, arrangements or forebearances granted or
accepted in respect thereof or in respect of any other guarantor or
other person, or any delay by the Creditor in enforcing the terms
of, or any waiver by the Creditor of any default under, the
Agreements or any security instrument or other document;
(i) the actions or omissions of the Creditor regarding the realization
or enforcement of any security held by or granted to the Creditor to
secure payment or performance of any of the obligations of the
Guarantor hereunder or any of the Obligations or regarding any other
act or thing in respect of any such security, regardless of whether
such security or any rights or defences which the Guarantor or any
other person might have, by subrogation, reimbursement,
indemnification or otherwise, against the Creditor or others may be
diminished, destroyed or otherwise adversely affected by such action
or omission and regardless of whether recourse may or may not
thereafter be had against the Debtor or any other person for any
deficiency;
(j) the loss, releasing, discharging or modification of or any security
held by or granted to the Creditor to secure payment or performance
of the Obligations or the obligations of the Guarantor hereunder;
(k) the manner in which the Creditor applies moneys received from the
Debtor or others or received from the enforcement of any security
agreement, guarantee or other instrument;
(l) the Creditor failing to pursue any recourse which might otherwise be
available, whether by way of deficiency judgment or otherwise and
the Guarantor hereby renounces all benefits of discussion and
division; or
(m) any law, act, omission, thing or circumstance which would or might,
but for this provision, constitute a legal or equitable discharge or
defence of a surety, guarantor or person giving a guarantee in the
form of this Guarantee, it being acknowledged and agreed by the
Guarantor that the Creditor may at any time deal with the Debtor,
any other guarantor and others, and with securities, as the Creditor
may in the Creditor's sole discretion see fit (regardless of whether
such dealing increases the
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Guarantor's risk hereunder) and that such dealing shall not affect
the Guarantor's obligations hereunder in any manner whatsoever.
2.3 NO SET-OFF
The liability of the Guarantor hereunder shall not be released,
discharged, reduced, limited or otherwise affected by any right or alleged right
of set-off, counterclaim, appropriation or application of any claim or demand
that the Debtor may have or may allege to have against the Creditor or any other
person.
2.4 No LIMITATION
All monies in fact borrowed or obtained from the Creditor by or on
behalf of the Debtor or owing by the Debtor to the Creditor shall be deemed to
form part of the Obligations guaranteed by the Guarantor hereunder, and the
Obligations shall otherwise be guaranteed under this Agreement, notwithstanding:
(a) loss of capacity of the Debtor;
(b) any lack or limitation of status or power, incapacity or disability
of the Debtor or of the directors, agents or others appearing to act
for the Debtor;
(c) that the Debtor may not be a legal or suable entity; or
(d) any irregularity, defect or informality in the Agreements, any
security therefor or otherwise;
whether known to the Creditor or not. Without limiting anything herein
contained, any sum which may not be recoverable from the Debtor under the
Agreements shall be recoverable from the Guarantor as sole and principal debtor
in respect of such sums and shall be paid to the Creditor on demand with
interest as provided in this Guarantee.
The validity and enforceability of this Guarantee shall not be
impaired or affected by any act or omission by Creditor (whether occurring
before or after receipt by Creditor of notice of termination of this Guarantee)
with respect to all or part of the indebtedness or any agreement relating to it,
or with respect to any present or future guarantee or other security for all or
part of the indebtedness, including, but not limited to:
(a) any extension, modification, renewal, indulgence or substitution;
(b) any failure or omission to enforce any right, power or remedy;
(c) any waiver of any right, power or remedy of any default;
(d) any release, surrender, compromise, settlement, subordination or
modification, with or without consideration;
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(e) any failure by Creditor to perfect or secure any priority of its
rights with respect to any security; or
(f) any consent by Creditor to any sale or transfer of any security; all
whether or not the undersigned shall have had notice or knowledge of
any act, omission or circumstance referred to in this paragraph.
The validity and enforceability of this Guarantee also shall not be impaired or
affected by the unenforceability or invalidity of the Note or of any present or
future guarantee or other security for all or part of the Note indebtedness.
2.5 WAIVER
The Guarantor hereby waives:
(a) all requirements, if any, of demand, presentment, diligence,
protest, notice of dishonour and notice of acceptance and all other
notices of every kind or nature including, without limiting the
generality of the foregoing, notice of the existence, creation or
incurring of any new or additional indebtedness or obligation under
the Agreement or of any action or inaction on the part of the
Debtor, the Creditor, Guarantor or any of the obligations or any
other person whatsoever; and
(b) any duty on the part of the Creditor to disclose to the Guarantor
any fact which the Creditor may now or hereafter know and which the
Creditor has reason to believe is known by any officer or director
of the Debtor, regardless of whether the Creditor has reason to
believe any such fact materially increases the risk beyond that
which the Guarantor intends to assume or whether the Creditor has
reason to believe that any such fact is unknown to the Guarantor or
whether the Creditor has a reasonable opportunity to communicate any
such fact to the Guarantor, it being understood and agreed that the
Guarantor is fully responsible for being and keeping fully informed;
and
(c) any and all defences, claims, and discharges of Debtor or any other
obligor with respect to the Note indebtedness except the defence of
discharge by payment. Without limiting the generality of the
foregoing, guarantor will not assert, plea or enforce against
creditor or any defence of waiver, release, discharge in bankruptcy,
statute of limitations, res judicata, statute of frauds,
anti-deficiency statute, fraud, incapacity, minority, usury, ultra
▇▇▇▇▇, lack of authorization, illegality or unenforceability that
may be available to Debtor or any other person, corporation, or
entity liable with respect to any indebtedness, or any set-off
available against Creditor to Debtor or any such other person,
whether or not on account of a related transaction. Guarantor shall
be liable for any deficiency remaining after foreclosure of or
realization upon any security for all or part of the Note
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indebtedness, whether or not the liability of Debtor or any other
obligor for the deficiency is discharged pursuant to statute or
judicial decision.
2.6 SUBROGATION
The Guarantor shall not be entitled to be subrogated to the position
of the Creditor, the Guarantor shall not be entitled to the benefit of any
security held by the Creditor, nor shall the Guarantor claim or prove in the
bankruptcy or insolvency of, or take security from, the Debtor or a co-guarantor
in competition with the Creditor, until such time as the Obligations and the
obligations of the Guarantor hereunder, are paid and performed in full.
SECTION III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES
The Guarantor hereby makes the following representations and
warranties which shall survive the execution and delivery of this Guarantee:
(a) this Guarantee and each of the Agreements have been duly authorized,
executed and delivered by the Guarantor and the Debtor, as the case
may be, and constitute a legal, valid and binding obligation of the
Guarantor and the Debtor , as the case may be, enforceable in
accordance with their respective terms;
(b) neither the execution and delivery of this Guarantee by the
Guarantor, nor consummation by the Guarantor of the transactions
herein contemplated, nor compliance by the Guarantor with the terms,
conditions and provisions hereof will conflict with or result in a
breach of any of the terms, conditions or provisions of:
(i) the articles of incorporation, bylaws or other formation
documents of the Guarantor;
(ii) any agreement, instrument or arrangement to which the
Guarantor is now a party or by which the Guarantor is, or may
be bound, or constitute a default thereunder, or result
thereunder in the creation or imposition of any security
interest, mortgage, lien, charge or encumbrance of any nature
whatsoever upon the assets of the Debtor or the assets which
are the subject of the Agreements; or
(iii) any judgment or order, writ, injunction or decree of any court
in each case, relating to the Guarantor;
(c) the Guarantor is the registered and beneficial owner of all of the
issued and outstanding shares of the Debtor; and
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(d) the Guarantor is a corporation duly incorporated and organized and
validly existing under the laws of the State of Michigan and has
adequate and sufficient corporate power and authority to enter into
this Guarantee.
SECTION IV
DEMAND AND TERMINATION
4.1 DEMAND
The Guarantor shall pay or perform such of the Obligations
guaranteed hereunder forthwith upon the written demand or demands therefor made
by the Creditor from time to time.
4.2 TERMINATION
This Guarantee may be terminated by mutual agreement in writing
between the Creditor and the Guarantor and shall automatically terminate upon
the performance and payment in full of the Obligations.
4.3 INTEREST
All amounts payable by the Guarantor to the Creditor hereunder shall
bear interest commencing on the date of receipt of the demand referred to herein
at the rate of interest specified in the Note until payment thereof to the
Creditor. Interest shall be payable before and after judgment at such rate.
Notwithstanding the foregoing, in no event shall the undersigned be required to
make any payment hereunder that would violate any applicable law regulating or
limiting the rate of interest that the holder of the Note may lawfully collect.
SECTION V
MISCELLANEOUS
5.1 INVESTIGATIONS
The Guarantor acknowledges and confirms that the Guarantor is
relying solely on the Guarantor's own knowledge and is making the Guarantor's
own investigation in connection with the making of this Guarantee.
5.2 GOVERNING LAW
This Guarantee and the rights and obligations and relations of the
Creditor and the Guarantor shall be governed by and construed in accordance with
the laws of the Province of Ontario and the federal laws of Canada applicable
therein (but without giving effect to any conflict of laws rules). The Guarantor
agrees that the Courts of Ontario shall have jurisdiction to entertain any
action or other legal proceedings based on any provisions of this Guarantee. The
Guarantor does hereby attorn to the jurisdiction of the Courts of the Province
of Ontario. Guarantor irrevocably agrees and consents that any action against
Guarantor for collection or
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enforcement of this Guarantee may be brought in the courts of the Province of
Ontario, Canada, and any such court shall have personal jurisdiction over
Guarantor for purposes of that action.
5.3 ASSIGNMENT AND ENUREMENT
This Guarantee may not be assigned by the Guarantor without the
Creditor's prior written consent. The benefits of this Guarantee may not be
assigned by the Creditor without the Guarantor's prior written consent. Subject
to the foregoing sentence, this Guarantee shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, personal legal representations, successors and assigns.
5.4 TIME OF THE ESSENCE
Time shall be of the essence of this Guarantee and of every part
hereof and no extension or variation of this Guarantee shall operate as a waiver
of this provision.
5.5 PAYMENTS AND COMMUNICATIONS
All payments and communications which may be or are required to be
given by any party to the other herein, shall (in the absence of any specific
provision to the contrary) be in writing and delivered or sent by prepaid
registered mail or telecopier to the parties at their following respective
addresses:
(a) If to the Guarantor or the Creditor at:
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
BST Acquisition, Ltd.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Stikeman Elliott
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(b) If to the Debtor at:
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Steel Tube Co. Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
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with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
WeirFoulds LLP
The Exchange Tower, Suite 1600
P.O. Box 480,130 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
and any such payment or communication shall be deemed to have been duly given
when mailed. A communication given by any other means shall be deemed duly given
when actually received by the addressee. Either party may from time to time
change its address hereinbefore set forth by notice to the other of them in
accordance with this Section.
5.6 PARTIAL INVALIDITY
If any provision of this Guarantee or the application thereof to any
person or circumstance shall, to any extent, be invalid or unenforceable, the
remainder of this Guarantee, or the application of such provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each provision of this Guarantee shall be
valid and enforced to the fullest extent permitted by law and be independent of
every other provision of this Guarantee.
5.7 CONSTRUCTION CLAUSE
This Guarantee has been negotiated and approved by counsel on behalf
of all parties hereto and, notwithstanding any rule or maxim of construction to
the contrary, any ambiguity or uncertainty will not be construed against any
party hereto by reason of the authorship of any of the provisions hereof.
5.8 HEADINGS
The headings of this Guarantee are solely for convenience of
reference and do not affect the interpretation thereof or define, limit or
construe the contents of any provision of this Guarantee.
5.9 ENTIRE AGREEMENT
With respect to the subject matter of this Guarantee, this Guarantee
(a) sets forth the entire agreement between the Creditor and the Guarantor and
any persons who have in the past or who are now representing either of them, (b)
supersedes all prior understandings and communications between the Creditor and
the Guarantor or any of them, oral or written, and (c) constitutes the entire
agreement between the Creditor and the Guarantor. The Guarantor acknowledges and
represents that this Guarantee is entered into after full investigation and that
the Guarantor is not relying upon any statement or representation made by the
Creditor which is not embodied in this Guarantee. The Guarantor acknowledges
that the Guarantor shall have no right to rely upon any amendment, promise,
modification, statement or representation made or occurring subsequent to the
execution of this Guarantee unless the same is in writing and executed by the
Creditor and the Guarantor.
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5.10 NON-PERFORMANCE
The failure of the Creditor to enforce at any time any of the
provisions of this Guarantee or any of its rights in respect thereto or to
insist upon strict adherence to any term of this Guarantee will not be
considered to be a waiver of such provision, right or term or in any way to
affect the validity of this Guarantee or deprive the Creditor of the right
thereafter to insist upon strict adherence to that term or any other term of
this Guarantee. The exercise by the Creditor of any of its rights provided by
this Guarantee will not preclude or prejudice the Creditor from exercising any
other right the Creditor may have by reason of this Guarantee or otherwise,
irrespective of any previous action or proceeding taken by the Creditor
hereunder. Any waiver by of the performance of any of the provisions of this
Guarantee will be effective only if in writing and signed by a duly authorized
representative of the Creditor.
5.11 REMEDIES CUMULATIVE
No remedy herein conferred upon or reserved in favour of the
Creditor shall exclude any other remedy herein or existing at law or in equity
or by statute, but each shall be cumulative and in addition to every other
remedy given hereunder or now or hereafter existing.
5.12 FURTHER ASSURANCES
The Guarantor hereto agrees from time to time, subsequent to the
date hereof, to execute and deliver or cause to be executed and delivered to the
Creditor such instruments or further assurances as may, in the reasonable
opinion of the Creditor, be necessary or desirable to give effect to the
provisions of this Guarantee.
EACH OF CREDITOR AND GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVE ITS RIGHT
TO A TRIAL BY JURY IN ANY ACTION, INCLUDING ANY CLAIM, COUNTER-CLAIM,
CROSS-CLAIM OR THIRD PARTY CLAIM ("CLAIM") THAT IS BASED UPON, ARISES OUT OF, OR
RELATES TO THIS GUARANTEE, OR THE INDEBTEDNESS, INCLUDING, WITHOUT LIMITATION,
ANY CLAIM BASED UPON OR RISING OUT OF OR RELATING TO ANY ACTION, OR INACTION OF
CREDITOR IN CONNECTION WITH ANY ACCELERATION OF THE INDEBTEDNESS OR ANY
ENFORCEMENT OR COLLECTION OF THIS GUARANTEE.
IN WITNESS WHEREOF the Guarantor has executed these presents under
seal as of the date first above written.
TARPON INDUSTRIES, INC.
By:_________________________c/s
Name:
Title:
