Document:

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MEMORANDUM OF AGREEMENT       blerivesina Sbipteaken'
                              Assoeissioaos Memorandum el
                              Agreement For sale and
                              purchase of
                              Aaspr1 by The Bakie end
                              1nsenesosiel /arid= ComWI
                              (BRAM im 1936.
                              Cede-harm SALEFORM 1993
                              Revised 1966. 1993..d
                              191161117.
                              ---------------------------

Dated: August 27, 2007

Voyageur Marine Transport Limited, 171 Metler Rd. RR1, Ridgeville, Ontario,
Canada, L0S 1M0 and Voyageur Pioneer Marine Inc., 171 Metler Rd. RR1,
Ridgeville, Ontario, Canada, L0S 1M0

hereinafter called the Sellers, have agreed to sell, and

Lower Lakes Towing Ltd, P.O Box 1149, 517 Main Street, Port Dover, Ontario,
Canada, N0A 1N0

hereinafter called the Buyers, have agreed to buy the ships described in
Schedule 1.

each of them referred to as a "Vessel" or and collectively as "Vessels", on the
following terms and conditions:

Definitions

"Banking days" are days on which banks are open both in the country of the
currency stipulated for the Purchase Price In Clause 1 and in the place of
closing stipulated in Clause 8.

"In writing' or "written" means a letter handed over from the Sellers to the
Buyers or vice versa, a registered letter, telex, telefax or other modern form
of written communication.

"Classification Society" or "Class" means the Society referred to in Schedule 1.

1.    Purchase Price : Canadian Twenty-Five Million Dollars (C$25,000.000.00)
      allocated between the ships described in Schedule 1 as per said schedule.

<PAGE>

2.    Payment

The said Purchase Price less the sum of C$70,543.00 to be used for the
adjustment referred to in Rider Clause 17 shall be paid in full free of bank
charges to Sellers at closing as per Sellers' Fund Directions.

3.    Inspections

a)    The Buyers have inspected and accepted the Vessels classification records.
      The Buyers have also Inspected the Vessels in Duluth Mn.. on July 18, 2007
      in the case of the Voyageur Pioneer and in Milwaukee, Ws., on July 21,
      2007 in the case of the Voyageur Independent and have accepted the Vessels
      following this inspection and the sale is outright and definite, subject
      only to the terms and conditions of this Agreement.

4.    Notices, time and place of delivery

a)    The Vessels shall be delivered and taken over safely afloat at closing
      subject to Rider Clause 17. Closing is to take place on the date hereof.

<PAGE>

5.    Spares/bunkers, etc.

The Sellers shall deliver each of the Vessels to the Buyers with everything
belonging to her on board and on shore. All spare parts and spare equipment
including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s),
if any, belonging to the Vessels at the time of inspection used or unused,
whether on board or not shall become the Buyers' property, but spares on order
are to be excluded. Forwarding charges, if any, shall be for the Buyers'
account. The Sellers are not required to replace spare parts including spare
tall-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out
of spare and used as replacement prior to delivery, but the replaced items shall
be the Property of the Buyers. The radio installation and navigational equipment
shall be included in the sale without extra payment if they are the property of
the Sellers. Unused stores and provisions shall be included in the sale and be
taken over by the Buyers without extra payment.

The Sellers have the right to take ashore crockery, plates, cutlery, linen and
other articles bearing the Sellers' flag or name, provided they replace same
with similar unmarked items. Library, forms, etc., exclusively for use in the
Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers'
and Crew's personal belongings including the slop chest are to be excluded from
the sale, as well as the following additional items (including items on hire):

The Buyers shall take over the remaining bunkers and unused lubricating oils in
storage tanks and sealed drums the quantity of which is to be ascertained after
each of the Vessels has completed the voyage she was undergoing at the time of
closing. Said bunkers and unused lubricating oils shall be assessed at the
current net market price (excluding barging expenses) at the port and date of
completion of the said voyage. Payment under this Clause, net of any amount due
by Sellers pursuant to Rider Clause 17, shall be made within one (1) days of the
completion of the said voyage.

6.    Documentation

The place of closing: Offices of Ogilvy Renault, Bureau 3800, Royal Bank Plaza,
South Tower, 200 Bay Street, Toronto, Ontario.

In exchange for payment of the Purchase Price the Sellers shall furnish the
Buyers with delivery documents, namely:

<PAGE>

a)    Legal Bill of Sale in a form recordable in Canada (the country in which
      the Buyers are to register the Vessels), warranting that each of the
      Vessels is free from all encumbrances, mortgages and maritime liens or any
      other debts or claims whatsoever, duly notarially attested and legalized
      by the consul of such country or other competent authority.

b)    Current Certificate of Ownership issued by the competent authorities of
      the flag state of the Vessels.

c)    Confirmation of Class issued within 72 hours prior to closing in the case
      of the Voyageur Pioneer.

d)    Current Certificate issued by the competent authorities stating that each
      of the Vessels is free from registered encumbrances.

e)    Any such additional documents as may reasonably be required by the
      competent authorities for the purpose of registering the Vessel, provided
      the Buyers notify the Sellers of any such documents as soon as possible
      after the date of this Agreement.

At the time of delivery the Buyers and Sellers shall sign and deliver to each
other a Protocol of Delivery and Acceptance confirming the date and time of
delivery of the Vessels from the Sellers to the Buyers.

At the time of delivery the Sellers shall hand to the Buyers the classification
certificate(s) as well as all plans etc., which are on board the Vessels. Other
certificates which are on board the Vessels shall also be handed over to the
Buyers unless the Sellers are required to retain same, in which case the Buyers
to have the right to take copies. Other technical documentation which may be in
the Sellers' possession shall be promptly forwarded to the Buyers at their
expense, if they so request. The Sellers may keep the Vessels' log books but the
Buyers to have the right to take copies of same.

7.    Encumbrances

The Sellers warrant that each of the Vessels, at the time of closing, is free
from all charters, encumbrances, mortgages and maritime liens or any other debts
whatsoever. The Sellers hereby undertake to indemnify the Buyers against all
consequences of claims made against the Vessel which have been incurred prior to
the time of delivery.

8.    Taxes, etc.

Any taxes, fees and expenses in connection with the purchase and registration
under the Buyers' flag, shall be for the Buyers' account, whereas similar
charges in connection with the closing of the Sellers' register shall be for the
Sellers' account.

<PAGE>

9.    Condition on delivery

Each of the Vessels with everything belonging to her shall be at the Sellers'
risk and expense until she is delivered to the Buyers, but subject to the terms
and conditions of this Agreement she shall be delivered and taken over as she
was at the time of inspection, fair wear and tear excepted. However, the Vessels
shall be delivered with her class maintained without condition/recommendationo,
free of average damage affecting the Vessel's class, and with her classification
certificates and national certificates, as well as all other certificates the
Vessel had at the time of inspection, valid and unextended without
condition/recommendation* by Class or the relevant authorities at the time of
delivery. "inspection" in this Clause 11, shall mean the Buyers' inspection
according to Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior
to the signing of this Agreement. If the Vessel is taken over without
inspection, the date of this Agreement shall be the relevant date.
*     Notes, if any, In the surveyors report which are accepted by the
      Classification Society without condition/recommendation are not to be
      taken into account.

10.   Arbitration

a)    This Agreement shall be governed by and construed in accordance with
      Canadian Maritime law and any dispute arising out of this Agreement shall
      be referred to arbitration in Toronto in accordance with the AMAC Rules
      one arbitrator being appointed by each party. On the receipt by one party
      of the nomination in writing of the other party's arbitrator, that party
      shall appoint their arbitrator within fourteen days, failing which the
      decision of the single arbitrator appointed shall apply. If two
      arbitrators properly appointed shall not agree they shall appoint an
      umpire whose decision shall be final.

Sellers                                      Buyers
Voyageur Marine Transport Limited            Lower Lakes Towing Ltd.

/s/ Fred Huneault                            /s/ Scott Bravener
------------------------------------         -----------------------------------
By: Fred Huneault, President                 By: Scott Bravener, President

<PAGE>

Sellers (Cont'd)

Voyageur  Pioneer  Marine Inc.,  as
registered  owner  of the  Voyageur
Pioneer

/s/ Fred Huneault
------------------------------------
By: Fred Huneault, President

<PAGE>

                      RIDER TO THE MEMORANDUM OF AGREEMENT
                              DATED AUGUST 27, 2007
         BETWEEN VOYAGEUR MARINE TRADING LTD AND LOWER LAKES TOWING LTD.

11.   Adjustment

Should the Vessel be engaged in a voyage at the time of closing, the parties
agree to the following:

a)    The Vessel shall be allowed to continue her voyage and discharge her cargo
      at destination.
b)    All costs to complete the voyage, including but not restricting to,
      stevedoring, port charges, pilotage fees and seaway tolls, if any, that
      shall be paid by the Buyers as owners are to be assumed by the Sellers.
c)    Wages of crew and cost of victualling the ship until discharge of the
      cargo, and other like expenses, are to be assumed by the Sellers as well.
d)    All such costs and expenses shall be deducted from the balance of the
      Purchase Price and any amount left shall be remitted to the Sellers, once
      the said adjustment has been completed.
e)    Any cargo claim arising from the said voyage shall be handled and
      ultimately settled by the Sellers at no cost to the Buyers. Should the
      Sellers fail to handle such a claim or fail to settle same, the Buyers
      shall have the right, but not be obliged, to handle, defend, compromise or
      settle the claim, in which case, the Sellers shall be responsible to
      reimburse the Buyers for the expenses incurred in so doing, including, all
      reasonable legal fees.

12.   Assignment

      Buyers may assign this Memorandum of Agreement, or any rights hereunder,to
its lenders, in its sole discretion at any time, without the consent of
Voyageur.

<PAGE>

                    SCHEDULE 1 TO THE MEMORANDUM OF AGREEMENT
                              DATED AUGUST 27, 2007
         BETWEEN VOYAGEUR MARINE TRADING LTD AND LOWER LAKES TOWING LTD.

<TABLE>
<CAPTION>
SHIP #1
<S>                            <C>              <C>

Name:                          Voyageur Independent
Classification Society/Class:  N/A              /
Built:                         1952             By: Defoe Shipbuilding Co., Bay City, MI. USA
Flag:                          Canadian         Place of Registration:  Hamilton
Call Sign:                                      Grt/Nrt:  12,296.00 t / 5,581.00 t
Register Number:               827118
Allocated value:               11,500,000.00

SHIP #2

Name:                          Voyageur Pioneer
Classification Society/Class:  Lloyd's/100A1 Bulk Carrier
Built:                         1983             By:  Govan Shipbuilders Ltd, Glasgow, Scotland
Flag:                          Canadian         Place of Registration:  Hamilton
Call Sign:                                      Grt/Nrt:  22,388.00 t / 11,648.00 t
Register Number:               395510
Allocated value:               13,500,000.00
</TABLE>GUARANTEE

                  THIS GUARANTEE is made as of August 27, 2007.

      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., an Ontario corporation (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 "Lenders"
and, together with Agent, 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");

      AND WHEREAS in this Guarantee, capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Credit
Agreement;

      AND WHEREAS the Borrower, Voyageur Marine Transport Limited, an Ontario
corporation ("Transport"), and Lower Lakes Towing Ltd., a Canada corporation
(hereinafter referred to as the "Guarantor"), are entering into a contract of
affreightment (the "COA") dated as of August 27, 2007 with respect to the
"Maritime Trader", a self-propelled steel cargo vessel of 10,901 gross tones
built in Collingwood, Ontario in 1967 by Canadian Shipbuilding & Engineering
Ltd. and bearing Canadian Certificate of Registry Official Number 325744 (the
"Financed Vessel");

      AND WHEREAS the Borrower and the Guarantor are entering into an option
agreement (the "Option Agreement") dated as of August 27, 2007 with respect to
the Financed Vessel;

      AND WHEREAS in consideration of the benefit to be realized by the
Guarantor through its time charter of the Financed Vessel pursuant to the COA
and its option to purchase the Financed Vessel pursuant to the Option Agreement,
the Guarantor has agreed to provide certain security for up to $1,250,000 of the
present and future indebtedness, liabilities and obligations of the Borrower in
favour of the Secured Parties under the Credit Agreement and the other Loan
Documents (collectively, the "Guaranteed Obligations");

      NOW THEREFORE THIS GUARANTEE WITNESSES that in consideration of the
premises and the covenants and agreements herein contained, the sum of $1.00 now
paid by each of the Secured Parties to the Guarantor and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the Guarantor covenants with each of the Secured Parties as follows:

                              ARTICLE 1 - GUARANTEE

1.01  Guarantee

      The Guarantor hereby unconditionally and irrevocably guarantees payment of
the Guaranteed Obligations; provided that the recourse of the Secured Parties

<PAGE>

under and in connection with this Guarantee will be limited solely to the amount
of $1,250,000, plus any amounts owing pursuant to Section 5.13 hereof. At the
sole discretion of the Secured Parties but subject to Section 3.01 hereof,
payment of such amount may be made by making a draw under that certain
irrevocable standby letter of credit dated the date hereof (as amended,
supplemented, replaced or modified, the "Letter of Credit") in the amount of
$1,250,000 provided by Wachovia Bank N.A. on the application of Guarantor for
the benefit of the Agent.

1.02  Obligations Absolute

      The liability of the Guarantor hereunder will be absolute and
unconditional and will not be affected by:

      (a)   any lack of validity or enforceability of any agreement between the
            Borrower and the Secured Parties;

      (b)   any impossibility, impracticability, frustration of purpose,
            illegality, force majeure or act of government;

      (c)   the bankruptcy, winding-up, liquidation, dissolution or insolvency
            of the Borrower or any other person or the amalgamation, a merger of
            or any other change in the status, function, control or ownership of
            the Borrower, the Guarantor, the Secured Parties or any other
            person;

      (d)   any lack or limitation of power, incapacity or disability on the
            part of the Borrower or of the directors, partners or agents thereof
            or any other irregularity, defect or informality on the part of the
            Borrower in its obligations to the Secured Parties; or

      (e)   any other law, regulation or other circumstance that might otherwise
            constitute a defence available to, or a discharge of, the Borrower
            in respect of any or all of the Obligations.

                  ARTICLE 2 - DEALINGS WITH BORROWER AND OTHERS

2.01  No Release

      The liability of the Guarantor hereunder will not be released, discharged,
limited or in any way affected by anything done, suffered or permitted by the
Secured Parties in connection with any duties or liabilities of the Borrower to
the Secured Parties or any security therefor including any loss of or in respect
of any security received by the Secured Parties from the Borrower or others.
Without limiting the generality of the foregoing and without releasing,
discharging, limiting or otherwise affecting in whole or in part the Guarantor's
liability hereunder, without obtaining the consent of or giving notice to the
Guarantor, the Secured Parties may:

      (a)   discontinue, reduce, increase or otherwise vary the credit of the
            Borrower in any manner whatsoever; provided, that the principal

<PAGE>

            amount of the credit facilities extended by the Lenders to the
            Borrower shall not be increased by more than $500,000 absent
            Guarantor's prior written consent;

      (b)   make any change in the time, manner or place of payment under, or in
            any other term of, any agreement between the Borrower and the
            Secured Parties or the failure on the part of the Borrower to carry
            out any of its obligations under any such agreement;

      (c)   grant time, renewals, extensions, indulgences, releases and
            discharges to the Borrower;

      (d)   take or abstain from taking or enforcing securities or collateral
            from the Borrower or from perfecting securities or collateral of the
            Borrower;

      (e)   accept compromises from the Borrower;

      (f)   apply all money at any time received from the Borrower or from
            securities upon such part of the Obligations as the Secured Parties
            may see fit or change any such application in whole or in part from
            time to time as the Secured Parties may see fit; or

      (g)   otherwise deal with the Borrower and all other persons and
            securities as the Secured Parties may see fit.

2.02  No Exhaustion of Remedies

      The Secured Parties will not be bound or obligated to exhaust their
recourse against the Borrower or other persons or any securities or collateral
any may hold or take any other action before being entitled to demand payment
from the Guarantor hereunder.

2.03  No Set-Off

      In any claim by the Secured Parties against the Guarantor, the Guarantor
may not assert any set-off or counterclaim that either the Guarantor or the
Borrower may have against the Secured Parties.

                               ARTICLE 3 - DEMAND

3.01  Demand

      Upon the occurrence of any Triggering Event (as hereafter defined), the
Agent will be entitled to make demand upon the Guarantor for the payment of any
or all of the Guaranteed Obligations as set forth under Section 3.02 below. For
the purposes of this Agreement, the occurrence of any of the following events
shall constitute a "Triggering Event":

      (a)   the Debt Service Coverage Ratio of Voyageur Maritime Holdings Inc.
            ("Holdings") and its Subsidiaries shall on a consolidated basis be
            less than 1.10:1.00 on any date on which it is tested under the
            Credit Agreement except that, for the Fiscal Quarter ending April

<PAGE>

            30, 2008, a Triggering Event shall instead occur if the Debt Service
            Coverage Ratio of Holdings and its Subsidiaries shall on a
            consolidated basis be less than 0.8:1.0 in respect of the period
            commencing on the Closing Date and ending on April 30, 2008;

      (b)   the amount outstanding under the Term Loan shall exceed the sum of
            (i) 100% of the orderly liquidation value of the Financed Vessel
            less (ii) the amount secured by Liens attaching to the Financed
            Vessel that have or may have priority to the Agent's Lien over the
            Financed Vessel;

      (c)   the Borrower and Transport shall have (i) failed to make the
            Financed Vessel available to the Guarantor for loaded voyages at any
            time during the Navigation Season (as defined in the COA) for any
            reason (including force majeure) or (ii) otherwise have breached,
            defaulted under, or failed to perform under, the COA (any
            non-declaration or waiver of breach, default or non-performance by
            the Guarantor under the COA being ineffective for purposes of this
            Section 3.01(c)); or

      (d)   an Event of Default shall occur under Section 8.1(a), (h) or (i) of
            the Credit Agreement.

3.02  Procedure for Exercise of Draw

      If the Agent wishes to demand payment under the Guarantee, whether
pursuant to a draw on the Letter of Credit or otherwise, the Agent shall give
notice in writing of its intention to demand payment to the Guarantor at the
address shown in Section 5.06 (the "Trigger Notice"). The Trigger Notice shall
contain a description of the Triggering Event in respect of which the Trigger
Notice is delivered. Except in respect of a Triggering Event arising from an
Event of Default under Section 8.1(h) or (i) of the Credit Agreement (upon which
payment shall be due immediately and a draw may immediately be made under the
Letter of Credit at the Agent's sole discretion), payment under the Guarantee
shall be due on the 60th day (the "Draw Date") after the Guarantor's receipt of
such Trigger Notice (upon which date a draw may be made under the Letter of
Credit at the Agent's sole discretion) unless, prior to the Draw Date:

      (a)   the Guarantor has completed its purchase of the Financed Vessel in
            accordance with the Option Agreement; or

      (b)   the Guarantor (either alone or together with Heddle Marine Service
            Inc.) has made a subordinated secured loan (the "Subordinated
            Secured Loan") to the Borrower in an amount at least equal to the
            amount of the Guaranteed Obligations and otherwise on terms and
            conditions reasonably satisfactory to the Agent, and all or a
            portion of the proceeds of such loan in an amount at least equal to
            the amount of the Guaranteed Obligations has been paid over by the
            Guarantor to the Agent at the direction of the Borrower; or

      (c)   all Trigger Events have been cured or waived by the Agent.

<PAGE>

3.03  Buy-Out Option

      Within fifteen (15) days following the receipt by the Guarantor of any
notice from the Agent of an Event of Default arising under Section 8.1(h) or (i)
of the Credit Agreement (which notice has not been withdrawn in writing by the
Agent prior to the delivery of a Committed Buy-Out Notice (as hereinafter
defined)), (i) the Guarantor shall have the right (the "Purchase Option"), by
giving a written notice (a "Committed Buy-Out Notice") to the Agent to acquire
on the date that is five (5) Business Days after the date of the Agent's receipt
of such Committed Buy-Out Notice, from the Secured Parties all (but not less
than all) of the right, title, and interest of the Secured Parties in and to the
Obligations and the Loan Documents, and (ii) upon the receipt by the Agent of
the Committed Buy-Out Notice, Guarantor irrevocably shall be committed to
acquire, within five (5) Business Days following such receipt, from the Secured
Parties all (but not less than all) of the right, title, and interest of the
Secured Parties in and to the Obligations and the Loan Documents, by paying to
the Agent in cash a purchase price (the "Purchase Price") equal to the sum of:

      (a)   100% of the outstanding balance with respect to the Term Loan owing
            to the Lenders, including, without limitation, principal, interest
            accrued and unpaid thereon, and any unpaid fees, to the extent
            earned or due and payable in accordance with the Loan Documents, and

      (b)   100% of the expenses to the extent earned or due and payable to the
            Secured Parties in accordance with the Loan Documents (including the
            reimbursement of extraordinary expenses, attorneys fees, financial
            examination expenses and appraisal fees);

whereupon the Secured Parties shall assign to Guarantor, without any
representation, recourse, or warranty whatsoever (except that each applicable
Secured Party shall warrant to Guarantor that (1) the amount quoted in writing
by such Secured Party as its portion of the Purchase Price represents the amount
shown as due with respect to the claims transferred as reflected on its books
and records, (2) it owns, or has the right to transfer to Guarantor, the rights
being transferred, and (3) the assets being transferred will be free and clear
of Liens and adverse claims), their right, title, and interest with respect to
the Obligations and the Loan Documents.

      The assignment by the Secured Parties of their right, title, and interest
with respect to the Obligations and the Loan Documents shall be at no expense
(other than the payment of the applicable Purchase Price) to Guarantor other
than the reimbursement by Guarantor of the reasonable out-of-pocket expenses of
the Secured Parties (including their attorneys fees) in connection with
documenting and effecting such assignment and the related delivery to Guarantor
of the original Loan Documents in the possession of such Secured Parties. In
connection with such assignment, the Secured Parties shall deliver to Guarantor
any original Loan Documents and any Collateral in their possession and shall
execute such other documents, instruments, and agreements reasonably necessary
to effect such assignment, whereupon such Secured Parties shall be relieved from
any further duties, obligations, or liabilities to Guarantor pursuant to this
Agreement.

<PAGE>

      For greater certainty, no Secured Party shall be under any obligation
pursuant to this Agreement to approve any new credit facility or amend the terms
of any existing credit facility for the account of the Guarantor or Heddle
Marine Service Inc. for the purpose of assisting either of them to fund the
Purchase Price.

3.04  Letter of Credit

      All payments made by a draw under the Letter of Credit shall reduce any
amount due hereunder on a dollar for dollar basis.

                             ARTICLE 4 - SUBROGATION

4.01  Subrogation

      The Guarantor will not be entitled to subrogation until (i) the Guarantor
performs or makes payment to the Secured Parties of all amounts owing by the
Guarantor to the Secured Parties under this Guarantee and (ii) the Obligations
are performed and paid in full in cash. Thereafter, the Secured Parties will, at
the Guarantor's request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation and warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Obligations and any security held therefor resulting from such
performance or payment by the Guarantor.

                               ARTICLE 5 - GENERAL

5.01  Representation and Warranty of the Guarantor

      The Guarantor represents and warrants that that it has not had commenced
and served or threatened against it by Canada Steamship Lines Inc. ("CSL") or
the Seafarers' International Union of Canada ("SIU") any litigation, labor
action, or other claim in connection with its charter of the Financed Vessel,
the operation of the Financed Vessel on the Great Lakes or St. Lawrence Seaway,
or the potential acquisition of the Financed Vessel by the Guarantor.

5.02  Binding Effect of the Guarantee

      This Guarantee will be binding upon the successors of the Guarantor and
will enure to the benefit of the Secured Parties and their respective successors
and permitted assigns.

5.03  Entire Agreement

      This Guarantee constitutes the entire agreement between the Guarantor and
the Secured Parties with respect to the subject matter hereof and cancels and
supersedes any prior understandings and agreements between such parties with
respect thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the parties except as expressly set forth herein. The Secured Parties will not
be bound by any representations or promises made by the Borrower to the
Guarantor, and possession of this Guarantee by the Secured Parties will be
conclusive evidence against the Guarantor that the Guarantee was not delivered
in escrow or pursuant to any agreement that it should not be effective until any

<PAGE>

condition precedent or subsequent has been complied with and this Guarantee will
be operative and binding notwithstanding the non-execution thereof by any
proposed signatory.

5.04  Amendments and Waivers

      No amendment to this Guarantee will be valid or binding unless set forth
in writing and duly executed by the Guarantor and the Agent. No waiver of any
breach of any provision of this Guarantee will be effective or binding unless
made in writing and signed by the party purporting to give the same and, unless
otherwise provided in the written waiver, will be limited to the specific breach
waived.

5.05  Severability

      If any provision of this Guarantee is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability will
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof will continue in full force and
effect.

5.06  Notices

      All notices and other communications provided for herein shall be in
writing and shall be delivered as follows:

            (i)   if to be sent to the Guarantor, at:

                  Lower Lakes Towing Ltd.,
                  P.O Box 1149, 517 Main Street, Port Dover,
                  Ontario, Canada  N0A 1N0
                  Attention: Scott Bravener, President
                  or Fax: (519) 583-0982
                  sbravener@lowerlakes.com

            (ii)  if to be sent to the Agent, at:

                  GE Canada Finance Holding Company
                  123 Front Street West
                  Suite 1400, P.O. Box 14
                  Toronto, ON
                  M5J 2M2

                  Attention: Voyageur Account Manager

                  Telecopier No.:       (416) 202-6226
                  Telephone No.:        (416) 202-6200

<PAGE>

                  With copies to:

                  McCarthy Tetrault LLP
                  Suite 4700
                  Toronto Dominion Bank Tower
                  Toronto-Dominion Centre
                  Toronto, Ontario
                  M5K 1E6

                  Attention:    Joel Scoler / Kevin Wright

                  Telecopier No.:       (416) 868-0673
                  Telephone No.:        (416) 362-1812

                  and:

                  General Electric Capital Corporation
                  401 Merritt 7
                  Norwalk, CT
                  06851
                  U.S.A.

                  Attention:    Voyageur Account Manager

                  Telecopier No.:       (203) 956-4001
                  Telephone No.:        (203) 229-1800

5.07  Discharge

      The Guarantor will not be discharged from any of its obligations hereunder
except by a release or discharge signed in writing by the Agent.

5.08  Governing Law

      This Guarantee will be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.

5.09  Headings

      The division of this Guarantee into Articles and Sections and the
insertion of headings are for convenience of reference only and will not affect
the construction or interpretation of this Guarantee. The terms "hereof",
"hereunder" and similar expressions refer to this Guarantee and not to any
particular Article, Section or other portion hereof and include any agreement
supplemental hereto. Unless something in the subject matter or context is
inconsistent therewith, references herein to Articles and Sections are to
Articles and Sections of this Guarantee.

<PAGE>

5.10  Extended Meanings

      In this Guarantee words importing the singular number only include the
plural and vice versa, words importing any gender include all genders and words
importing persons include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations.

5.11  Currency

      All amounts in this Guarantee are stated and are to be calculated in
Canadian currency.

5.12  Executed Copy

      The Guarantor acknowledges receipt of a fully executed copy of this
Guarantee.

5.13  Costs and Expenses

      The Guarantor shall pay on demand by Agent any and all reasonable costs,
fees and expenses (including, without limitation, reasonable legal fees and
expenses) incurred by Agent in enforcing any of its rights under this Guarantee.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

<PAGE>

                                     LOWER LAKES TOWING LTD.

                                     By:    /s/ Scott Bravener
                                            ------------------------------------
                                     Name:  Scott Bravener
                                            ------------------------------------
                                     Title: President
                                            ------------------------------------

                                     GE CANADA FINANCE HOLDING COMPANY, as Agent

                                     By:    /s/ Colin Woodyard
                                            ------------------------------------
                                     Name:  Colin Woodyard
                                            ------------------------------------
                                     Title: Vice President
                                            ------------------------------------

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