PROMISSORY NOTE
 

$1,500,000.00
   
New York, New York
February 11, 2011

 
FOR VALUE RECEIVED, Black Creek Shipping Holding Company, Inc. (the “Payor”),
promises to pay to the order of Reserve Holdings, LLC (“Reserve”) and Buckeye
Holdings, LLC (“Buckeye” and, together with Reserve, the “Payee”), at their
office at 501 4th Avenue, Menominee, MI  49858, or at such other place as may be
designated in writing by the holder of this Promissory Note (including all
modifications, substitutions, renewals or extensions hereof, this "Note"), the
principal sum of One Million Five Hundred Thousand ($1,500,000.00) Dollars,
together with interest on the unpaid principal balance at the rate and on the
terms to be computed as determined below, on December 15, 2011 (the "Maturity
Date").
 
1.
Interest Rate: Interest shall accrue on the unpaid principal balance of this
Note at the rate of six percent (6%) per annum (the “Interest Rate”) from the
date hereof until the Note is paid in full.  Interest shall be paid for the
actual number of days elapsed based on a 360-day year and shall be payable in
arrears.

 
2.
Payment.  The outstanding principal under this Note plus all interest thereon
shall be due and payable on the Maturity Date.

 
3.
Pre-Payment. This Note may be prepaid in whole or in part at any time during the
term of this Note, without premium or penalty.  Prepayments shall be applied
first to accrued interest under, and then the principal amount of, this Note.

 
4.
Off-Set:  Amount payable under this Note are subject to the right of Payor to
off-set therefrom amounts owed by "Sellers" on account of any "Purchaser Party
Loss" (as each such term is defined in that certain Asset Purchase Agreement,
dated the date hereof, among Black Creek Shipping Company, Inc. (“Black Creek”),
Payor, Reserve and Buckeye.)

 
5.
Subordination:  Payor, for itself and its successors, covenants and agrees, and
each holder of the Subordinated Indebtedness (as hereinafter defined), by such
holder's acceptance thereof, likewise covenants and agrees, that the payment of
the Subordinated Indebtedness is hereby expressly subordinated, to the extent
and in the manner immediately hereinafter set forth, in right of payment to the
prior payment in full in cash of all Senior Indebtedness (as hereinafter
defined).  For all purposes hereof, a payment or distribution on account of the
Subordinated Indebtedness may consist of cash, property or securities, by
set-off or otherwise, and a payment or distribution on account of the
Subordinated Indebtedness shall include, without limitation, any redemption,
purchase or other acquisition of the Subordinated Indebtedness.  The
subordination provisions herein set forth are made for the benefit of the
holders of the Senior Indebtedness (the “Senior Creditors”), and such holders
may proceed to enforce such provisions.

 
 
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"Subordinated Indebtedness" means all indebtedness, obligations and liabilities
under this Note.
 
"Senior Indebtedness" shall mean (i) all indebtedness, obligations and
liabilities of any and every kind and nature now existing or hereafter arising,
contingent or otherwise, of the Payor or its subsidiaries under, in connection
with, or evidenced by, that certain Credit Agreement, dated as of the date
hereof, between Black Creek, Payor and General Electric Capital Corporation, as
lender and agent (the "Agent") (as from time to time amended, modified,
restated, refunded or replaced, the "Credit Agreement"), including, without
limitation, all guaranteed principal, premium (if any), interest (including
Post-Petition Interest, as hereafter defined), fees, costs, expenses and
liabilities provided for therein and any renewals, extensions, modifications and
refundings of such indebtedness and (ii) any indebtedness, obligations and
liabilities of any and every kind and nature hereafter arising, contingent or
otherwise, incurred by Black Creek or Payor in replacement of, or in connection
with a refinancing of, the indebtedness, obligations and liabilities under the
Credit Agreement, whether or not held by the holders of the Credit Agreement in
whole or in part; provided, however, that, the total principal amount of Senior
Indebtedness to which the Subordinated Indebtedness shall be subordinated in
accordance with this Section 5 shall not exceed $35,000,000.  "Post-Petition
Interest" shall mean interest accruing in respect of Senior Indebtedness after
the commencement of any bankruptcy, insolvency, receivership or similar
proceedings by or against Black Creek or the Payor, at the rate applicable to
such Senior Indebtedness pursuant to the Credit Agreement or other document
governing the Senior Indebtedness, whether or not such interest is allowed as a
claim enforceable against Black Creek or the Payor in a bankruptcy case under
Title 11 of the United States Code, and any other interest that would have
accrued but for the commencement of such proceedings.
 
(a)           Distribution on Dissolution, Liquidation and Reorganization.  Upon
any distribution of assets of the Payor, upon any foreclosure, dissolution,
winding up or liquidation of the Payor, whether voluntary or involuntary, or
upon any reorganization, readjustment, arrangement or similar proceeding
relating to the Payor, or any of its property, and whether in bankruptcy,
insolvency or receivership proceedings or otherwise, or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Payor or otherwise or upon any exercise by the Senior Creditors of any of
their rights and remedies under any document evidencing Senior Indebtedness,
 
(i)           the holders of all Senior Indebtedness shall be entitled to
receive payment in full in cash of the Senior Indebtedness before the holder or
holders of the Subordinated Indebtedness are entitled to receive any payment
with respect to the Subordinated Indebtedness; and
 
 
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(ii)           any payment or distribution of assets of the Payor of any kind or
character, whether in cash, property or securities or by set-off or otherwise,
to which the holder or holders of the Subordinated Indebtedness would be
entitled except for the provisions hereof (except for any distribution of
securities which are subordinated ("Exchange Securities"), to at least the same
extent as the Subordinated Indebtedness, to the payment of all Senior
Indebtedness or securities issued in exchange for Senior Indebtedness then
outstanding) shall be paid by the liquidating trustee or agent or other person
making such payment or distribution, whether a trustee in bankruptcy, a receiver
or liquidating trustee or otherwise, directly to the Agent to the extent
necessary to make payment in full in cash of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness, and, if any holder of Subordinated
Indebtedness does not file a proper claim or proof of debt therefor prior to
thirty (30) days before the expiration of the time to file such claim, then the
Senior Creditors are hereby authorized and empowered to demand, sue for, collect
and receive every such payment or distribution described herein.
 
(b)           Default Under Senior Indebtedness.  Unless the foregoing paragraph
(a) shall be applicable, upon the occurrence and continuance of a Triggering
Event (as hereafter defined), then (i) no payment or distribution of any assets
of the Payor of any kind or character, whether in cash, property or securities
or by set-off or otherwise, shall be made by or on behalf of the Payor on
account of the Subordinated Indebtedness and (ii) no holder of Subordinated
Indebtedness will take action to accelerate the Subordinated Indebtedness or
commence, cause the commencement of, participate in or support any action or
proceeding (whether at law or in equity) against the Payor or any subsidiary to
recover all or any part of the Subordinated Indebtedness or any action to
commence or prosecute any bankruptcy or similar proceedings in respect of the
Payor or any subsidiary (unless the Agent shall have agreed in writing in
advance to, and shall have joined in, such proceeding), until the date such
Triggering Event shall have been cured or waived in writing or shall have ceased
to exist and any acceleration of such Senior Indebtedness shall have been
rescinded or annulled or such Senior Indebtedness shall have been paid in full
in cash, after which (subject to the other provisions of this paragraph (b)) the
Payor shall resume making any and all required payments in respect of the
Subordinated Indebtedness, including all accrued and unpaid payments.
 
A “Triggering Event” means an event of default with respect to the Senior
Indebtedness resulting from or arising out of (i) failure of the obligor
thereunder to pay any principal, interest or other amounts when due and payable
thereunder, (ii) the breach of any financial covenant applicable to the Senior
Indebtedness or (iii) the commencement, whether voluntarily or involuntarily, of
any bankruptcy proceeding with respect to the Payor or any of its subsidiaries,
or of any event which constitutes, or after notice or lapse of time or both
would constitute such an event of default, or if the making of any payment on
account of the Subordinated Indebtedness would create such an event of default.
 
(c)           Payment Remittance.  In the event that, notwithstanding the
foregoing, any payment or distribution of assets of the Payor, or any payment by
or on behalf of the Payor, of any kind or character, whether in cash, property
or securities or by set-off or otherwise, prohibited by any of the foregoing
paragraphs (a) or (b) shall be paid to or received by any holder of Subordinated
Indebtedness, then and in such event such payment or distribution shall be held
in trust for the benefit of the Senior Creditors and paid over and delivered
forthwith to the Agent, for application to the payment of all Senior
Indebtedness remaining unpaid until all such Senior Indebtedness shall have been
paid in full in cash.
 
 
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(d)           Subrogation.  If any amount payable in respect of the Subordinated
Indebtedness is paid over to the Senior Creditors, then subject to the payment
in full in cash of all Senior Indebtedness, the holder or holders of the
Subordinated Indebtedness shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of cash, property or
securities of the Payor applicable to Senior Indebtedness until the principal of
and interest on the Subordinated Indebtedness shall be paid in full and, for the
purposes of such subrogation, no such payments or distributions to the Senior
Creditors of cash, property or securities otherwise distributable to the holder
or holders of the Subordinated Indebtedness shall, as between the Payor, its
creditors other than the holders of Senior Indebtedness, and the holder or
holders of the Subordinated Indebtedness, be deemed to be a payment by the Payor
to or on account of Senior Indebtedness.
 
(e)           Delivery of Instruments; Notice from the Payor.  If any holder of
Subordinated Indebtedness does not file a proper claim or proof of debt in the
form required in any proceeding referred to above prior to thirty (30) days
before the expiration of the time to file such claim in such proceeding, then
the holder of any such Senior Indebtedness shall be hereby irrevocably appointed
the agent and attorney-in-fact (in its own name or in the name of any holder of
any Subordinated Indebtedness or otherwise), but shall have no obligation, to
execute, verify, deliver and file any such proofs of claim, consents,
assignments or other instruments for or on behalf of such holder.
 
Each holder of the Subordinated Indebtedness agrees that, while it shall retain
the right to vote its claim and otherwise act in any bankruptcy, insolvency or
similar proceedings related to the Payor (including, without limitation, the
right to vote to accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension), such holder will not
take any acts or vote in any way so as to contest the enforceability of the
subordination provisions set forth herein.
 
(f)           Notice of Certain Events.  The Payor shall give prompt written
notice to the holders of the Subordinated Indebtedness and the Senior Creditors
of any dissolution, winding up, liquidation, reorganization, readjustment,
arrangement or similar proceeding, assignment for the benefit of creditors, or
any marshalling of assets and liabilities, in respect of the Payor, and shall
also give prompt written notice to each such person of any event or condition
which, pursuant to the subordination provisions set forth herein, prevents
payment by the Payor on account of the Subordinated Indebtedness.
 
(g)           Reliance re Identification of Persons.  Upon any distribution of
assets of the Payor or payments by or on behalf of the Payor referred to herein,
the holders of the Subordinated Indebtedness shall be entitled to rely upon any
order or decree of a court of competent jurisdiction in which any proceedings of
the nature referred to in paragraph (a) hereof are pending and upon a
certificate of the debtor in possession, bankruptcy trustee, liquidating trustee
or agent or other Person making any distribution to the holders of the
Subordinated Indebtedness for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Payor, the amount thereof or payable thereon, and all
other facts pertinent thereto.
 
 
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(h)           Reliance on Subordination.  Each holder of the Subordinated
Indebtedness by its acceptance hereof acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each Senior Creditor to acquire and continue to hold the Senior
Indebtedness and such holder of the Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold such Senior Indebtedness and shall be deemed a third party
beneficiary of such provisions.
 
(i)           Waiver and Consent.  Each holder of the Subordinated Indebtedness
waives any and all notice of the acceptance of these provisions or of the
creation, renewal, refinancing, replacement, extension or accrual, now or at any
time in the future, of any Senior Indebtedness or of the reliance of the holders
of the Senior Indebtedness on these provisions.  Each holder of the Subordinated
Indebtedness acknowledges and agrees that (i) the subordination provisions set
forth herein shall be specifically enforceable against such Persons by the
holders of the Senior Indebtedness, and (ii) without notice to or further assent
by it, the Senior Indebtedness may from time to time, in whole or in part, be
renewed, replaced, refinanced, extended, increased, refunded or released by the
holders thereof, as they may deem advisable, that the loan agreements and any
other instruments or documents executed and delivered in connection therewith
may be amended, modified, supplemented, replaced or terminated, that any
collateral security for any such Senior Indebtedness may from time to time, in
whole or in part, be exchanged, sold, or surrendered by the holders thereof, as
they may deem advisable, and that such holders may take any other action they
may deem necessary or appropriate in connection with the Senior Indebtedness,
all without in any manner or to any extent impairing or affecting the
obligations of the Payor to the holders of the Subordinated Indebtedness.
 
(j)           Subordination Unaffected by Certain Events.  The rights set forth
herein of the holders of the Senior Indebtedness as against each holder of the
Subordinated Indebtedness shall remain in full force and effect without regard
to, and shall not be impaired or affected by:
 
(i)           any act or failure to act on the part of the Payor; or
 
(ii)           any extension or indulgence in respect of any payment or
prepayment of the Senior Indebtedness or any part thereof or in respect of any
other amount payable to any holder of the Senior Indebtedness; or
 
(iii)           any amendment, modification, replacement, refinancing or waiver
of, or addition or supplement to, or deletion for, or compromise, release,
consent or other action in respect of, any of the terms of any Senior
Indebtedness or any other agreement which may be made relating to any Senior
Indebtedness; or
 
 
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(iv)           any exercise or nonexercise by any holder of Senior Indebtedness
of any right, power, privilege or remedy under or in respect of such Senior
Indebtedness or the Subordinated Indebtedness or any waiver of any such right,
power, privilege or remedy or any default in respect of such Senior Indebtedness
or the Subordinated Indebtedness, or any receipt by any holder of Senior
Indebtedness of any security, or any failure by such holder to perfect a
security interest in, or any release by such holder of, any security for the
payment of such Senior Indebtedness; or
 
(v)           any merger or consolidation of the Payor or any of its
subsidiaries into or with any of its subsidiaries or into or with any other
Person, or any sale, lease or transfer of any or all of the assets of the Payor
or any of its subsidiaries to any other Person; or
 
(vi)           the absence of any notice to, or knowledge by, any holder of the
Subordinated Indebtedness of the existence or occurrence of any of the matters
or events set forth in the foregoing clauses (i) through (v).
 
(k)           Reinstatement of Subordination.  The obligations of each holder of
the Subordinated Indebtedness under the subordination provisions set forth
herein shall continue to be effective, or be reinstated, as the case may be, as
to any payment in respect of any Senior Indebtedness that is rescinded or must
otherwise be returned by the holder of such Senior Indebtedness upon the
occurrence or as a result of any proceeding, all as though such payment had not
been made.
 
(L)           No Impairment.  It is understood that the provisions set forth
herein are and are intended solely for the purpose of defining the relative
rights of the holder or holders of the Subordinated Indebtedness, on the one
hand, and the holders of Senior Indebtedness, on the other hand.  Nothing
contained herein is intended to or shall impair, as between the Payor, its
creditors other than the holders of Senior Indebtedness, and the holder or
holders of the Subordinated Indebtedness, the obligation of the Payor, which is
unconditional and absolute, to pay to the holder or holders of the Subordinated
Indebtedness the principal of and interest on the Subordinated Indebtedness as
and when the same shall become due and payable in accordance with its terms, or
to affect the relative rights of the holder or holders of the Subordinated
Indebtedness and creditors of the Payor other than the holders of Senior
Indebtedness.
 
6.
Unless waived by the Payee, the occurrence of one or more of the following
events shall constitute an “Event of Default”:

 
 
a)
If the Payor shall fail to make any payment hereunder when due and payable; or

 
 
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b)
If the Payor shall (i) admit in writing its inability to pay its debts generally
as they become due, (ii) file a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state thereof, or any other
jurisdiction, (iii) make an assignment or other arrangement for the benefit of
its creditors generally, (iv) consent to the appointment of a receiver for
itself or for the whole or any substantial part of its property, or (v) have an
order for relief in bankruptcy entered against it or with respect to it, or be
adjudged bankrupt, provided such order shall not be vacated, set aside or stayed
within thirty (30) days after the date of entry thereof.

 
When any Event of Default described in clause (a), above, shall have occurred,
at the option of the Payee upon notice thereof to the Payor, the outstanding
principal balance of this Note shall immediately become due and payable in
full.  If an Event of Default described in clause (b), above, shall have
occurred, the outstanding principal balance of this Note shall immediately
become due and payable in full without notice to the Payor.  Upon an Event of
Default, the interest rate hereunder shall increase to twelve percent (12%).
 
7.
Severability.  It is the desire and intent of the parties that the provisions of
this Note be enforced to the full extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is
sought.  Accordingly, if any provision of this Note would be held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, such provision,
as to such jurisdiction, shall be ineffective, without invalidating the
remaining provisions of this Note or affecting the validity or enforceability of
such provision in any other jurisdiction.  Notwithstanding the foregoing, if
such provision could be more narrowly drawn so as not to be invalid, prohibited
or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Note or
affecting the validity or enforceability of such provision in any other
jurisdiction.

 
8.
Amendment. This Note cannot be modified, discharged or terminated except in
writing signed by the Payor and the Payee.

 
9.
Governing Law.   This Note shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts made and to be
performed in such State, without giving effect to the conflicts of laws
principles thereof.

 
10.
Jurisdiction; Waiver of Jury Trial.  ALL ACTIONS AND PROCEEDINGS ARISING OUT OF
OR IN CONNECTION WITH THIS NOTE SHALL BE LITIGATED IN THE FEDERAL OR STATE
COURTS LOCATED IN THE BOROUGH OF MANHATTAN, NEW YORK, AND EACH PARTY HERETO
HEREBY SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS.  PAYOR AND PAYEE
EACH IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTER CLAIM (WHETHER BASED ON CONTRACT TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT.

 
11.
Counterparts.  This Note may be executed in any number of counterparts and any
party hereto may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument.

 
 
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12.
Attorneys Fees.  The Payor agrees to pay to the Payee all reasonable
out-of-pocket costs and expenses incurred by the Payee in collection or
enforcement of this Note, including reasonable attorney’s fees for services
rendered in connection therewith.

 
13.
Waiver.  No delay or omission on the part of the Payee in exercising any right
or option herein given to such holder shall impair such right or option or be
considered as a waiver thereof or as a waiver or acquiescence in any default
hereunder.

 
14.
Guaranty.  This Note is secured by the Guaranty of Rand Logistics, Inc.

 
IN WITNESS WHEREOF, the parties hereto have duly executed this Note on the date
first written above.
 
 
BLACK CREEK SHIPPING HOLDING COMPANY, INC.
     
By: 
/s/ Joseph W. McHugh, Jr.    
Name: Joseph W. McHugh, Jr.
Title: Vice President
       

 
RESERVE HOLDINGS, LLC
     
By: 
KK INTEGRATED SHIPPING, LLC, its sole member
     
By: 
/s/ Thomas J. Kuber    
Name: Thomas J. Kuber
Title: Manager
       

 
BUCKEYE HOLDINGS, LLC
     
By: 
KK INTEGRATED SHIPPING, LLC, its sole member
     
By: 
/s/ Thomas J. Kuber    
Name: Thomas J. Kuber
Title: Manager
       

 
 
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