Exhibit 10.6

 

EXECUTIVE VERSION

 

 

THIRD AMENDED AND RESTATED

 

UNDERWRITING AND CONTINUING

 

INDEMNITY AGREEMENT

 

dated

 

December 22, 2003

 

among

 

GREAT LAKES DREDGE & DOCK CORPORATION,

 

CERTAIN OF ITS SUBSIDIARIES,

 

TRAVELERS CASUALTY AND SURETY COMPANY

 

and

 

TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

ARTICLE I

DEFINITIONS

 

 

 

 

SECTION 1.1

DEFINED TERMS

 

SECTION 1.2

USE OF DEFINED TERMS

 

SECTION 1.3

ACCOUNTING PRINCIPLES

 

 

 

 

ARTICLE II

BOND FACILITY

 

 

 

 

SECTION 2.1

BONDS

 

SECTION 2.2

PREMIUM PAYMENT

 

 

 

 

ARTICLE III

INDEMNIFICATION

 

 

 

 

SECTION 3.1

INDEMNITY

 

SECTION 3.2

EXONERATION

 

SECTION 3.3

CASH COLLATERAL

 

SECTION 3.4

WAIVER OF CLAIMS AND HOLD HARMLESS

 

SECTION 3.5

WITHDRAWAL FROM AND TERMINATION OF AGREEMENT

 

SECTION 3.6

INDEMNITORS AGREE TO BECOME PARTY DEFENDANTS

 

SECTION 3.7

INDEMNITORS’ WAIVER OF NOTICE

 

SECTION 3.8

INDEMNITORS’ KNOWING CONSENT TO AGREEMENT

 

SECTION 3.9

INDEMNITORS’ DUTY TO REMAIN INFORMED OF PRINCIPAL’S BUSINESS

 

SECTION 3.10

ENFORCEABILITY OF RIGHTS DIRECTLY AGAINST INDEMNITORS

 

 

 

 

ARTICLE IV

CONDITIONS PRECEDENT

 

 

 

 

SECTION 4.1

CONDITION PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT

 

SECTION 4.2

CONDITIONS PRECEDENT TO ALL BONDS

 

 

 

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

 

 

 

SECTION 5.1

INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION

 

SECTION 5.2

CORPORATE POWER AND AUTHORITY

 

SECTION 5.3

LEGALLY ENFORCEABLE AGREEMENT

 

SECTION 5.4

APPROVALS

 

SECTION 5.5

OWNERSHIP AND LIENS

 

SECTION 5.6

TAXES

 

SECTION 5.7

INSURANCE

 

SECTION 5.8

COMPLIANCE

 

SECTION 5.9

LITIGATION

 

SECTION 5.10

SUBSIDIARIES

 

SECTION 5.11

REAL PROPERTY

 

SECTION 5.12

EQUIPMENT

 

SECTION 5.13

VESSELS

 

 

i

--------------------------------------------------------------------------------

 

ARTICLE VI

COVENANTS

 

 

 

 

SECTION 6.1

CORPORATE EXISTENCE

 

SECTION 6.2

MAINTENANCE OF RECORDS

 

SECTION 6.3

MAINTENANCE OF PROPERTIES

 

SECTION 6.4

MAINTENANCE OF INSURANCE

 

SECTION 6.5

COMPLIANCE WITH LAWS

 

SECTION 6.6

TAXES

 

SECTION 6.7

BOOKS AND RECORDS

 

SECTION 6.8

FINANCIAL RECORDS AND REPORTS

 

SECTION 6.9

PRINCIPALS’ REPRESENTATION

 

SECTION 6.10

NOTICE OF LITIGATION

 

SECTION 6.11

LIENS

 

SECTION 6.12

DEBT AND CONTINGENT LIABILITIES

 

SECTION 6.13

DISPOSITION OF ASSETS; ISSUANCE OF EQUITY.

 

SECTION 6.14

MERGERS

 

SECTION 6.15

INVESTMENTS

 

SECTION 6.16

DIVIDEND RESTRICTIONS

 

SECTION 6.17

RESTRICTIONS UPON CONTRACTS WITH AFFILIATES

 

SECTION 6.18

NATURE OF BUSINESS

 

SECTION 6.19

NET WORTH

 

SECTION 6.20

NET CURRENT ASSETS

 

SECTION 6.21

SUBORDINATED DEBT AND PAYMENT BLOCKAGE NOTICE.

 

 

 

 

ARTICLE VII

RIGHTS OF TRAVELERS

 

 

 

 

SECTION 7.1

FURTHER ASSURANCES/TRAVELERS AS ATTORNEY-IN-FACT

 

SECTION 7.2

CONTRACT FUNDS HELD IN TRUST

 

SECTION 7.3

RIGHT OF TRAVELERS TO SETTLE CLAIMS

 

SECTION 7.4

AUTHORITY OF TRAVELERS TO MAKE LOANS TO PRINCIPAL

 

SECTION 7.5

AUTHORITY OF TRAVELERS TO AMEND BOND

 

SECTION 7.6

RIGHTS OF TRAVELERS TO TAKE POSSESSION OF THE WORK

 

SECTION 7.7

DEPOSITORY TRUST ACCOUNTS

 

SECTION 7.8

PRESERVATION OF TRAVELERS’S RIGHTS

 

SECTION 7.9

AUTHORITY OF TRAVELERS TO ELECT REMEDIES

 

 

 

 

ARTICLE VIII

MISCELLANEOUS

 

 

 

 

SECTION 8.1

BENEFICIAL PARTIES

 

SECTION 8.2

JOINT AND SEVERAL

 

SECTION 8.3

ATTORNEYS FEES

 

SECTION 8.4

APPLICABLE LAW

 

SECTION 8.5

JURISDICTION FOR SUITS UNDER THIS AGREEMENT

 

SECTION 8.6

INDEMNITORS WAIVE DEFENSE OF SUBSEQUENT EXECUTION

 

SECTION 8.7

VALIDITY OF AGREEMENT

 

 

ii

--------------------------------------------------------------------------------

 

SECTION 8.8

ORAL MODIFICATIONS INEFFECTIVE

 

SECTION 8.9

NOTICES

 

SECTION 8.10

REAFFIRMATION AND RESTATEMENT

 

SECTION 8.11

CONFIDENTIALITY

 

SECTION 8.12

RELEASE OF LIENS

 

SECTION 8.13

SUCCESSORS AND ASSIGNS

 

 

EXHIBIT A

-

Form of Supplemental Signature Page

EXHIBIT B

-

Form of Pledge Agreement

EXHIBIT C

-

Form of Security Agreement (A/R)

EXHIBIT D

-

Form of Security Agreement (Equipment)

EXHIBIT E

-

Form of Vessel Mortgage (First)

EXHIBIT F

-

Form of Vessel Mortgage (Second)

 

 

 

SCHEDULE 1.1

-

Permitted Liens

SCHEDULE 5.7

-

Insurance

SCHEDULE 5.9

-

Litigation

SCHEDULE 5.10

-

Subsidiaries

SCHEDULE 5.11

-

Real Property

SCHEDULE 5.12

-

Equipment

SCHEDULE 5.13

-

Vessels

SCHEDULE 6.4

-

Insurers

SCHEDULE 6.12

-

Existing Debt and Contingent Liabilities

SCHEDULE 6.15

-

Investments

SCHEDULE 6.17

-

Affiliate Transactions

 

iii

--------------------------------------------------------------------------------

 

THIRD AMENDED AND RESTATED

UNDERWRITING AND CONTINUING

INDEMNITY AGREEMENT

 

THIS THIRD AMENDED AND RESTATED UNDERWRITING AND CONTINUING INDEMNITY AGREEMENT
(the “Agreement”), made and entered into this 22nd day of December, 2003, is
among (i) GREAT LAKES DREDGE & DOCK CORPORATION, a Delaware corporation
(“HOLDINGS”), and the SUBSIDIARIES of HOLDINGS from time to time signatories
hereto (collectively with HOLDINGS, the “INDEMNITORS”), and (ii) TRAVELERS
CASUALTY AND SURETY COMPANY, a Connecticut corporation (as assignee of Reliance
Insurance Company, a Pennsylvania corporation, United Pacific Insurance Company,
a Pennsylvania corporation, Reliance National Insurance Company, a Delaware
corporation, and Reliance Surety Company, a Delaware corporation) (“TCASC”), and
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, a Connecticut corporation
(“TRAVELERS AMERICA” and together with TCASC, “TRAVELERS”).

 

R E C I T A L S

 

WHEREAS, the PRINCIPALS are engaged in the business, among other things, of
dredging, dredging reclamation, aggregate mining and supply, and marine
construction in the United States and in other countries, and any PRINCIPAL,
individually, jointly with others or on behalf of any of its SUBSIDIARIES,
AFFILIATES or divisions or their SUBSIDIARIES, AFFILIATES or divisions now in
existence or hereafter formed or acquired, or on behalf of third-party Persons,
may desire or be required from time to time in connection with these businesses
to deliver certain BOND(s) to OBLIGEES; and

 

WHEREAS, certain of the INDEMNITORS, the PRINCIPALS and TRAVELERS are parties to
that certain Second Amended and Restated Underwriting and Continuing Indemnity
Agreement (the “SECOND AMENDMENT AND RESTATEMENT”) dated as of August 19, 1998,
which amended and restated that certain First Amended and Restated Underwriting
and Continuing Indemnity Agreement dated as of September 24, 1997 (“FIRST
AMENDMENT AND RESTATEMENT”), which amended and restated that certain Amended
Agreement dated as of October 15, 1991, among certain of the PRINCIPALS, certain
AFFILIATES of the PRINCIPALS and TRAVELERS (as amended and restated by the FIRST
AMENDMENT AND RESTATEMENT and the SECOND AMENDMENT AND RESTATEMENT, and as
otherwise amended or modified, the “EXISTING AGREEMENT”); and

 

WHEREAS, in accordance with the terms of the EXISTING AGREEMENT, TRAVELERS has
heretofore executed or procured and, upon the express condition that this
Agreement and the other UNDERWRITING DOCUMENTS be executed, TRAVELERS may
continue to execute or procure the execution of BOND(s), and TRAVELERS may
continue previously executed BOND(s) and may forbear cancellation of such
BOND(s); and

 

WHEREAS, each of the INDEMNITORS recognizes that BONDS are a necessary and
desirable adjunct to the businesses done and to be done by the PRINCIPALS and
desires to accommodate the financial, security, indemnity, exoneration and other
requirements of TRAVELERS as an inducement to TRAVELERS to become surety upon
obligations of the

 

--------------------------------------------------------------------------------

 

PRINCIPALS and has therefore agreed to be bound by this Agreement and the other
UNDERWRITING DOCUMENTS to which it is a party and has agreed to exercise its
best efforts to permit and require the PRINCIPALS to honor and perform all of
the terms of this Agreement; and

 

WHEREAS, TRAVELERS has agreed to act as surety or procure surety BONDS for the
PRINCIPALS, subject to the understanding of the parties that TRAVELERS is under
no obligation to act as surety for every bond of the PRINCIPALS, that TRAVELERS
shall have the right to refuse to execute BONDS for any reason, including,
without limitation, with respect to CONTRACTS which in TRAVELERS’ sole judgment
present risks not contemplated by this Agreement and that the PRINCIPALS are
under no obligation to obtain BONDS from TRAVELERS; and

 

WHEREAS, the INDEMNITORS and the PRINCIPALS now desire to amend and restate the
EXISTING AGREEMENT on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the
execution or procurement of any BOND(s) by TRAVELERS or the forbearance or
cancellation of any existing BOND(s) by TRAVELERS and as an inducement to such
execution, procurement or forbearance, we, the undersigned PRINCIPALS and
INDEMNITORS, agree and bind ourselves, our successors and assigns, jointly and
severally, as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION 1.1   DEFINED TERMS.  FOR THE PURPOSES OF THIS AGREEMENT, THE FOLLOWING
TERMS SHALL HAVE THE MEANINGS LISTED BELOW:

 

“AFFILIATE” means, with respect to any PERSON, any other PERSON or group acting
in concert with such PERSON that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under the common control
with such PERSON.  For purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any PERSON or group of PERSONS, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of such PERSON, whether through the
ownership of voting securities or by contract or otherwise.

 

“AUTHORIZED OFFICER” means, with respect to any PERSON, the chief executive
officer, president, chief financial officer, treasurer, assistant treasurer,
controller or any vice president of such PERSON.

 

“BANK LOAN FACILITY” means that certain Credit Agreement dated as of
December 22, 2003, by and among GLDD Acquisitions Corp., HOLDINGS, certain
corporate affiliates thereof, the financial institutions from time to time
parties thereto and Bank of America, N.A., as administrative agent to such
financial institutions, and the documents, instruments and agreements executed
and delivered in connection therewith, as all of the same may be amended,
restated, supplemented or otherwise modified from time to time, and any credit
agreement or

 

2

--------------------------------------------------------------------------------

 

other agreement or agreements relating to any refinancing, extension, renewal or
replacement, in whole or in part, thereof.

 

“BOND(s)” means any surety agreements, undertakings, or instruments of guarantee
signed by TRAVELERS on behalf of any PRINCIPAL, whether executed before or after
the execution of this Agreement.

 

“CONTINGENT LIABILITY” means any agreement, undertaking or arrangement by which
any Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by agreement, contingent, or otherwise, to provide funds for payment, to
supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a
creditor against loss) the indebtedness, obligation or any other liability of
any other Person (other than by endorsements of instruments in the course of
collection), or guarantees the payment of dividends or other distributions upon
the shares of any other PERSON.

 

“CONTRACT(s)” means any contract referred to or described in any BOND(s) issued
on behalf of any PRINCIPAL.

 

“DEBT” means and includes, with respect to any PERSON, (i) indebtedness for
borrowed money, (ii) obligations evidenced by bonds (including, without
limitation, license, bid, performance, lien or payment bonds), debentures, notes
or other similar instruments, (iii) obligations which have been incurred in
connection with the acquisition of property or services (including, without
limitation, obligations to pay the deferred purchase price of property or
services), excluding trade payables and accrued expenses incurred in the
ordinary course of business, (iv) obligations secured by any LIEN or other
charge upon property or assets owned by such PERSON, even though such PERSON has
not assumed or become liable for the payment of such obligations, (v)
obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such PERSON,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of property, (vi) the principal amount of any capital lease and (vii)
reimbursement obligations with respect to letters of credit.

 

“DEBT INDENTURE” means that certain Indenture dated as of December 22, 2003, by
and among HOLDINGS, certain of the SUBSIDIARIES of HOLDINGS, and The Bank of New
York, as Trustee, governing the issuance by HOLDINGS of $175,000,000 in original
principal amount of its 7 3/4% Senior Subordinated Notes due 2013, as amended,
restated, supplemented, modified, refunded, refinanced or replaced, in whole or
in part, from time to time in accordance with Section 6.21.

 

“ENVIRONMENTAL LAWS” means all international, foreign, federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative or judicial orders, licenses, authorizations
and permits of, and agreements with, any governmental authorities, in each case
relating to environmental, health, safety and land use and natural resource
matters now or hereafter in effect; including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid
Waste Disposal Act, as amended, the Resource Conservation and Recovery Act, the
Toxic Substance Control Act, and

 

3

--------------------------------------------------------------------------------

 

the Emergency Planning and Community Right-to-Know Act, and the Occupational
Safety and Health Act, and any analogous state or local laws.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations and published interpretations thereof.

 

“EVENT OF DEFAULT” means any one or more of the following:

 

(A)                                  FAILURE BY THE INDEMNITORS, OR ANY OF THEM,
TO PAY ON THE DATE WHEN DUE (AND AFTER GIVING EFFECT TO ANY APPLICABLE PAYMENT
PERIOD) ANY OBLIGATION OWING TO TRAVELERS HEREUNDER; PROVIDED, HOWEVER, THAT ANY
BOND PREMIUM MAY BE DISPUTED BY ANY PRINCIPAL IN GOOD FAITH IN THE ORDINARY
COURSE OF BUSINESS WITHOUT CAUSING AN EVENT OF DEFAULT UNDER THIS CLAUSE (A);
PROVIDED FURTHER, THAT THE FOREGOING SHALL NOT PREVENT TRAVELERS FROM FILING
SUIT TO RECOVER ANY SUCH DISPUTED PREMIUM;

or

(B)                                 FAILURE BY THE INDEMNITORS, OR ANY OF THEM,
TO COMPLY WITH OR TO PERFORM THEIR RESPECTIVE OBLIGATIONS UNDER SECTIONS 3.3,
6.7, 6.14, 6.16, 6.19, 6.20 OR 6.21 OF THIS AGREEMENT, AND, IN THE CASE OF
SECTION 6.16, SUCH FAILURE SHALL CONTINUE FOR TEN (10) DAYS;

or

(C)                                  FAILURE BY THE INDEMNITORS, OR ANY OF THEM,
TO COMPLY WITH OR PERFORM THEIR RESPECTIVE OBLIGATIONS UNDER ANY PROVISION OF
THIS AGREEMENT (AND NOT CONSTITUTING AN EVENT OF DEFAULT UNDER ANY OF THE OTHER
CLAUSES OF THIS DEFINITION) AND (1) CONTINUANCE OF SUCH FAILURE FOR THIRTY (30)
DAYS AFTER NOTICE THEREOF TO THE INDEMNITOR BY TRAVELERS SPECIFYING SUCH FAILURE
IF SUCH FAILURE CAN BE CURED WITH DILIGENCE WITHIN SUCH THIRTY-DAY PERIOD BY THE
INDEMNITORS, OR CAN BE CURED BY THE PAYMENT OF MONEY, OR (2) CONTINUANCE OF SUCH
FAILURE FOR SIXTY (60) DAYS BY TRAVELERS SPECIFYING SUCH FAILURE IF SUCH FAILURE
CANNOT WITH DILIGENCE BE CURED WITHIN SUCH THIRTY-DAY PERIOD AND CANNOT BE CURED
BY THE PAYMENT OF MONEY;

or

(D)                                 ANY REPRESENTATION OR WARRANTY MADE OR
DEEMED MADE BY ANY INDEMNITOR IN THIS AGREEMENT OR ANY OTHER UNDERWRITING
DOCUMENT, SHALL PROVE TO HAVE BEEN INCORRECT IN ANY MATERIAL RESPECT ON OR AS OF
THE DATE MADE OR DEEMED MADE;

or

(e)                                  an OBLIGEE has declared by delivery of
written notice to any PRINCIPAL that such PRINCIPAL is in default of any
provision under the respective CONTRACT(s) between such PRINCIPAL and such
OBLIGEE and such PRINCIPAL has failed to cure such default within that period of
time provided to cure said default within such CONTRACT(s) in which such
PRINCIPAL is alleged to be in default and such default results in any OBLIGEE
making demand for payment or performance under any BOND provided in connection
with such CONTRACT; provided, that TRAVELERS shall, upon investigation,
reasonably determine in good faith that PRINCIPAL is in default under the
CONTRACT(s) or such PRINCIPAL has acknowledged its default under the
CONTRACT(s),

 

4

--------------------------------------------------------------------------------

 

irrespective of whether or not such PRINCIPAL is actually in default of the
CONTRACT(s) (such a determination by TRAVELERS shall not be binding upon such
PRINCIPAL in any dispute such PRINCIPAL may have with such OBLIGEE or a claimant
under the related BOND(s); except as provided above, it shall be no defense to
the enforcement of this Agreement by TRAVELERS, and co-sureties, if any, that
PRINCIPAL asserts that it is not in default under the CONTRACT(s));

or

(f)                                    TRAVELERS has received notice or
knowledge of facts giving rise to a reasonable good faith belief that it has
incurred or may incur a LOSS and a PRINCIPAL has failed to cure such LOSS or to
take reasonable steps to avoid the incurrence by TRAVELERS of such LOSS within
thirty (30) days after receipt of written notice sent by TRAVELERS to such
PRINCIPAL; provided, that no EVENT OF DEFAULT under this clause (f) shall occur
if prior to the expiration of such thirty-day period such PRINCIPAL causes (1) a
letter of credit with a face amount equal to such LOSS and otherwise in form and
substance reasonably acceptable to TRAVELERS to be issued and delivered to
TRAVELERS or (2) cash collateral in an amount equal to such LOSS to be pledged
to TRAVELERS pursuant to documentation reasonably acceptable to TRAVELERS;
provided further, that the providing of such letter of credit or cash collateral
shall not obligate TRAVELERS to deny any claim related to such LOSS unless
TRAVELERS has determined that a meritorious defense exists to such claim;

or

(g)                                 Any PRINCIPAL within fifteen (15) days after
receipt of notice sent by TRAVELERS to such PRINCIPAL has failed, refused or
delayed to pay or is unable to pay any claims, bills or other indebtedness
incurred in, or in connection with, the performance of the CONTRACT(s) which
claims, bills or other indebtedness TRAVELERS, upon investigation, shall have
reasonably determined in good faith to be valid;

or

(H)                                 ANY INDEMNITOR SHALL (I) FAIL TO PAY ANY
DEBT OR CONTINGENT OBLIGATION OF SUCH INDEMNITOR IN AN AGGREGATE PRINCIPAL
AMOUNT IN EXCESS OF $5,000,000, OR ANY INTEREST OR PREMIUM THEREON, WHEN DUE
WHETHER BY SCHEDULED MATURITY, REQUIRED PREPAYMENT, ACCELERATION, DEMAND, OR
OTHERWISE (SUBJECT TO ANY APPLICABLE GRACE PERIODS), OR (II) FAIL TO PERFORM OR
OBSERVE ANY TERM, COVENANT, OR CONDITION ON ITS PART TO BE PERFORMED OR OBSERVED
UNDER ANY AGREEMENT OR INSTRUMENT RELATING TO ANY DEBT OR CONTINGENT OBLIGATION
OF SUCH INDEMNITOR IN AN AGGREGATE PRINCIPAL AMOUNT IN EXCESS OF $5,000,000
(SUBJECT TO ANY APPLICABLE GRACE PERIODS), IF THE RESULT OF SUCH FAILURE TO
PERFORM OR OBSERVE IS (A) IN THE CASE OF THE BANK LOAN FACILITY, EITHER TO
ACCELERATE THE MATURITY OF SUCH DEBT OR TO CAUSE A PAYMENT BLOCKAGE NOTICE TO BE
DELIVERED TO THE TRUSTEE UNDER THE DEBT INDENTURE, (B) IN THE CASE OF THE DEBT
INDENTURE, TO ACCELERATE OR PERMIT THE ACCELERATION OF THE MATURITY OF SUCH DEBT
OR (C) IN THE CASE OF ANY OTHER DEBT OR CONTINGENT OBLIGATION, TO ACCELERATE THE
MATURITY OF SUCH DEBT OR CONTINGENT OBLIGATION;

 

5

--------------------------------------------------------------------------------

 

or

(I)                                     ANY INDEMNITOR BECOMES INSOLVENT OR
GENERALLY FAILS TO PAY, OR ADMITS IN WRITING ITS INABILITY TO PAY, DEBTS AS THEY
BECOME DUE; OR ANY INDEMNITOR APPLIES FOR, CONSENTS TO, OR ACQUIESCES IN THE
APPOINTMENT OF, A TRUSTEE, RECEIVER OR OTHER CUSTODIAN FOR SUCH INDEMNITOR OR
FOR A SUBSTANTIAL PORTION OF ITS PROPERTY, OR MAKES A GENERAL ASSIGNMENT FOR THE
BENEFIT OF CREDITORS; OR, IN THE ABSENCE OF SUCH APPLICATION, CONSENT OR
ACQUIESCENCE, A TRUSTEE, RECEIVER OR OTHER CUSTODIAN IS APPOINTED FOR ANY
INDEMNITOR OR FOR A SUBSTANTIAL PART OF THE PROPERTY OF ANY THEREOF AND IS NOT
DISMISSED OR DISCHARGED WITHIN SIXTY (60) DAYS; OR ANY BANKRUPTCY,
REORGANIZATION, DEBT ARRANGEMENT, OR OTHER CASE OR PROCEEDING UNDER ANY
BANKRUPTCY OR INSOLVENCY LAW, OR ANY DISSOLUTION OR LIQUIDATION PROCEEDING, IS
COMMENCED IN RESPECT OF ANY INDEMNITOR AND IF SUCH CASE OR PROCEEDING IS NOT
COMMENCED BY SUCH INDEMNITOR, IT IS CONSENTED TO OR ACQUIESCED IN BY SUCH
INDEMNITOR OR IS NOT RELEASED, DISMISSED, VACATED OR FULLY BONDED WITHIN SIXTY
(60) DAYS UNDISMISSED; OR ANY INDEMNITOR TAKES ANY CORPORATE ACTION TO
AUTHORIZE, OR IN FURTHERANCE OF, ANY OF THE FOREGOING;

or

(J)                                     A FINAL JUDGMENT OR JUDGMENTS (AFTER THE
EXPIRATION OF ALL TIMES TO APPEAL THEREFROM) FOR THE PAYMENT OF MONEY IN EXCESS
OF $5,000,000 IN THE AGGREGATE SHALL BE RENDERED AGAINST ANY INDEMNITOR AND THE
SAME SHALL NOT BE (I) FULLY COVERED BY INSURANCE OR (II) VACATED, STAYED,
BONDED, PAID OR DISCHARGED FOR A PERIOD OF THIRTY (30) DAYS.

 

“EXISTING AGREEMENT” has the meaning set forth in the recitals to this
Agreement.

 

“FINANCIAL STATEMENTS” means all those balance sheets, income statements and
other financial statements of any INDEMNITOR or any AFFILIATE thereof which have
been furnished to TRAVELERS for the purpose of or in connection with this
Agreement and the transactions contemplated hereby.

 

“GAAP” is defined as generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board.

 

“GLDDC” means Great Lakes Dredge & Dock Company, a New Jersey corporation.

 

“HOLDINGS” has the meaning set forth in the recitals to this Agreement.

 

“INDEMNITOR” means any of HOLDINGS or any SUBSIDIARY of HOLDINGS which is a
party to this Agreement as of the date hereof or which becomes a party to this
Agreement after the date hereof by hereafter executing and delivering to
TRAVELERS a SUPPLEMENTAL SIGNATURE PAGE and INDEMNITORS means, collectively, all
of HOLDINGS and all such SUBSIDIARIES of HOLDINGS.

 

“INTERCREDITOR AGREEMENT” means that certain Intercreditor Agreement dated as of
December 22, 2003, by and among GLDD Acquisitions Corp., HOLDINGS, certain

 

6

--------------------------------------------------------------------------------

 

SUBSIDIARIES of HOLDINGS, Bank of America, N.A., as administrative agent, and
TRAVELERS, and the documents, instruments and agreements executed and delivered
pursuant thereto, as all of the same may be amended, restated, supplemented or
otherwise modified from time to time, and any other intercreditor agreement in
replacement thereof which is in form and substance acceptable to TRAVELERS.

 

“LIEN” means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement to assure payment of DEBT,
encumbrance, lien (statutory or other), charge, or encumbrance of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing).

 

“LIMITED SUBSIDIARY” means (a) any SUBSIDIARY which is not an INDEMNITOR and (b)
any INDEMNITOR which is not a wholly-owned SUBSIDIARY of HOLDINGS; provided,
that North American Site Developers, Inc. shall not be deemed to be a LIMITED
SUBSIDIARY for purposes of this Agreement.

 

“LOSS” means:

 

(A)                                  ALL DAMAGES, COSTS, EXPENSES (INCLUDING ALL
REASONABLE ATTORNEY FEES, EXPERT FEES AND CONSULTING FEES AND OTHER LIABILITIES)
WHICH TRAVELERS, OR ANY OF THEM, MAY SUSTAIN OR INCUR BY REASON OF EXECUTING OR
PROCURING THE EXECUTION OF THE BOND(S), OR ANY OTHER BOND(S) WHICH MAY BE
ALREADY OR HEREAFTER EXECUTED ON BEHALF OF ANY PRINCIPAL, OR ANY RENEWAL OR
CONTINUATION THEREOF; OR WHICH MAY BE SUSTAINED OR INCURRED BY REASON OF MAKING
ANY INVESTIGATION ON ACCOUNT THEREOF, PROSECUTING OR DEFENDING ANY ACTION IN
CONNECTION THEREWITH, OBTAINING A RELEASE, RECOVERING OR ATTEMPTING TO RECOVER
ANY SALVAGE IN CONNECTION THEREWITH OR ENFORCING BY LITIGATION OR OTHERWISE ANY
OF THE PROVISIONS OF THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO:

 

(1)                                  MONEY JUDGMENTS, AMOUNTS PAID IN SETTLEMENT
OR COMPROMISE, THE FULL AMOUNT OF REASONABLE ATTORNEY AND OTHER PROFESSIONAL
FEES INCURRED OR PAID BY TRAVELERS, OR ANY OF THEM, COURT COSTS AND FEES, AND
INTEREST AT THE PRIME RATE OR REFERENCE RATE ANNOUNCED FROM TIME TO TIME BY BANK
OF AMERICA, N.A. ON ALL SUMS DUE IT FROM THE FIFTEENTH DAY FOLLOWING
TRAVELERS’S, OR ANY OF THEIR, DEMAND FOR SAID SUMS, WHETHER OR NOT INTEREST HAS
BEEN AWARDED BY A COURT, PROVIDED, THAT SUCH LOSS IS NOT DUE TO THE GROSS
NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF TRAVELERS, OR ANY OF THEM; AND

 

(2)                                  ANY LOSS WHICH TRAVELERS, OR ANY OF THEM,
MAY SUSTAIN OR INCUR IN CONNECTION WITH THE CONTRACT(S) OR BOND(S), WHETHER THAT
LOSS RESULTS FROM THE ACTIVITY OF ANY PRINCIPAL INDIVIDUALLY OR AS PART OF A
JOINT VENTURE, PARTNERSHIP OR OTHER ENTITY WHICH HAS BEEN OR MAY BE FORMED IN
CONNECTION WITH THE PERFORMANCE OF THE CONTRACT(S) AND IN WHICH ANY PRINCIPAL
HAS AN OWNERSHIP INTEREST, PROVIDED, THAT SUCH LOSS IS

 

7

--------------------------------------------------------------------------------

 

NOT DUE TO THE GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF TRAVELERS,
OR ANY OF THEM; AND

 

(3)                                  ANY LOSS WHICH TRAVELERS, OR ANY OF THEM,
MAY SUSTAIN OR INCUR AS A RESULT OF ANY ACTIONS TAKEN BY TRAVELERS, OR ANY OF
THEM, UPON INFORMATION PROVIDED BY ANY INDEMNITOR, PROVIDED THAT SUCH LOSS IS
NOT DUE TO THE GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF TRAVELERS,
OR ANY OF THEM;

 

(B)                                 ALL REASONABLE LEGAL AND CONSULTING FEES AND
RELATED EXPENSES INCURRED IN CONNECTION WITH ANY APPLICATION OR SUBMISSION BY
ANY PRINCIPAL FOR A PROPOSAL, BID OR OTHER BOND, WHETHER OR NOT TRAVELERS, OR
ANY OF THEM, DECIDES TO ISSUE SAID BOND; AND

 

(C)                                  ALL PREMIUMS, FEES, INTEREST AND OTHER
CHARGES DUE TRAVELERS, OR ANY OF THEM, IN CONNECTION WITH THIS AGREEMENT OR THE
BOND(S).

 

“LYDON” means Lydon Dredging & Construction Company, Ltd., a Canadian
corporation.

 

“MATERIAL ADVERSE CHANGE” means a material adverse change in the condition
(financial or otherwise), business, operations or prospects of HOLDINGS and its
SUBSIDIARIES, taken as a whole.

 

“MERGER AGREEMENT” means that certain Amended and Restated Agreement and Plan of
Merger, dated as of December 22, 2003, among GLDD Acquisitions Corp., a Delaware
corporation (“Parent “), GLDD Merger Sub, Inc., a Delaware corporation and a
direct wholly-owned subsidiary of Parent, HOLDINGS and, solely in its capacity
as Stockholder Representative thereunder and for purposes of Sections 2.8, 2.9,
Article VIII and Article IX thereof, Vectura Holding Company LLC.

 

“NET INCOME” means, for any period, the aggregate of all amounts (exclusive of
all amounts in respect of any extraordinary or non-recurring gain or loss
(including, without limitation, any write-off of the Chicago Flood litigation
insurance receivable)) which, in accordance with GAAP, would be included as net
income on a consolidated statement of income of HOLDINGS and its SUBSIDIARIES
for such period.

 

“OBLIGEE” means any named party or parties appearing on the BOND(s) in whose
favor the BOND(s) are issued.

 

“PAYMENT BLOCKAGE NOTICE” has the meaning assigned thereto in the DEBT
INDENTURE.

 

“PERMITTED LIENS” means:

 

(A)                                  ANY LIEN IN FAVOR OF TRAVELERS;

 

8

--------------------------------------------------------------------------------

 

(B)                                 LIENS SECURING THE BANK LOAN FACILITY AND
THE OBLIGATIONS ARISING THEREUNDER (PROVIDED, THAT SUCH LIENS ARE GRANTED IN
COMPLIANCE WITH AND REMAIN SUBJECT TO THE INTERCREDITOR AGREEMENT);

 

(C)                                  LIENS FOR TAXES, ASSESSMENTS OR OTHER
GOVERNMENTAL CHARGES OR LEVIES THAT ARE EITHER NOT YET PAST DUE OR THAT ARE
BEING CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS AND FOR WHICH ADEQUATE
RESERVES HAVE BEEN ESTABLISHED IN ACCORDANCE WITH GAAP;

 

(D)                                 CARRIERS’, WAREHOUSEMEN’S, LANDLORD’S,
MECHANICS’, WORKMEN’S AND REPAIRMEN’S LIENS OR OTHER LIKE LIENS ARISING BY
OPERATION OF LAW (INCLUDING MARITIME LAW) IN THE ORDINARY COURSE OF BUSINESS AND
SECURING SUMS WHICH ARE NOT PAST DUE, OR THAT ARE BEING CONTESTED IN GOOD FAITH
BY APPROPRIATE PROCEEDINGS AND FOR WHICH ADEQUATE RESERVES HAVE BEEN ESTABLISHED
IN ACCORDANCE WITH GAAP;

 

(E)                                  ANY LIEN ON ASSETS EXISTING ON THE
EFFECTIVE DATE OF THIS AGREEMENT AND LISTED ON SCHEDULE 1.1 TO THIS AGREEMENT
AND THE CONTINUATION OF ANY SUCH LIEN UPON A REFINANCING, RENEWAL OR EXTENSION
OF THE DEBT SECURED BY SUCH EXISTING LIEN (PROVIDED, THAT THE PROPERTY SUBJECT
TO SUCH LIEN IS LIMITED TO THE PROPERTY TO WHICH SUCH LIEN IS ATTACHED PRIOR TO
THE EFFECTIVE DATE OF THIS AGREEMENT AND THE PRINCIPAL AMOUNT OF SUCH DEBT AS OF
THE EFFECTIVE DATE OF THIS AGREEMENT IS NOT INCREASED);

 

(F)                                    ANY LIEN ON CAPITAL EQUIPMENT GRANTED TO
SECURE THE PURCHASE PRICE THEREOF;

 

(G)                                 ANY LIEN ON CAPITAL EQUIPMENT GRANTED IN
CONNECTION WITH CAPITALIZED LEASES OF SUCH EQUIPMENT IN THE ORDINARY COURSE OF
BUSINESS;

 

(H)                                 LIENS (OTHER THAN ANY LIEN IMPOSED BY ERISA
OR ENVIRONMENTAL LAWS) INCURRED OR DEPOSITS (INCLUDING, WITHOUT LIMITATION,
SECURITY DEPOSITS) MADE IN THE ORDINARY COURSE OF HOLDINGS’ BUSINESS OR ANY OF
ITS SUBSIDIARIES’ BUSINESSES (INCLUDING, WITHOUT LIMITATION, SURETY BONDS AND
APPEAL BONDS) IN CONNECTION WITH WORKERS’ COMPENSATION, UNEMPLOYMENT INSURANCE
AND OTHER TYPES OF SOCIAL SECURITY BENEFITS OR TO SECURE THE PERFORMANCE OF
TENDERS, BIDS, CONTRACTS (OTHER THAN FOR THE REPAYMENT OF BORROWED MONEY OR TO
STAY A JUDGMENT PENDING AN APPEAL THEREOF), STATUTORY OBLIGATIONS AND OTHER
SIMILAR OBLIGATIONS OR ARISING AS A RESULT OF PROGRESS PAYMENTS UNDER GOVERNMENT
CONTRACTS, BUT ONLY TO THE EXTENT THAT THE AMOUNTS SECURED OR TO BE SECURED BY
SUCH LIENS ARE EITHER NOT DELINQUENT OR ARE BEING CONTESTED IN GOOD FAITH AND
WITH RESPECT TO WHICH ADEQUATE RESERVES OR OTHER APPROPRIATE PROVISIONS ARE
BEING MAINTAINED IN ACCORDANCE WITH GAAP;

 

(I)                                     SURVEY EXCEPTIONS, ENCUMBRANCES,
EASEMENTS OR RESERVATIONS OF, OR RIGHTS OF OTHERS FOR, RIGHTS-OF-WAY, SEWERS,
ELECTRIC LINES, TELEGRAPH OR TELEPHONE LINES AND OTHER SIMILAR PURPOSES, OR
ZONING OR OTHER RESTRICTIONS AS TO THE USE OF REAL PROPERTY OR LIENS INCIDENTAL
TO THE CONDUCT OF SUCH PRINCIPAL OR TO THE OWNERSHIP OF ITS PROPERTIES;

 

9

--------------------------------------------------------------------------------

 

(J)                                     JUDGMENT LIENS NOT GIVING RISE TO AN
EVENT OF DEFAULT SO LONG AS SUCH LIEN IS ADEQUATELY BONDED WITHIN 15 DAYS AFTER
THE ENTRY OF SUCH JUDGMENT;

 

(K)                                  LIENS ARISING FROM FILING UCC FINANCING
STATEMENTS FOR PRECAUTIONARY PURPOSES IN CONNECTION WITH TRUE LEASES OF PERSONAL
PROPERTY UNDER WHICH HOLDINGS OR ANY SUBSIDIARY IS LESSEE;

 

(L)                                     ANY LIENS ON ANY PROPERTY OR ASSETS
ACQUIRED BY HOLDINGS OR ANY OF ITS SUBSIDIARIES WHICH LIEN EXISTED PRIOR TO THE
ACQUISITION THEREOF AND WAS NOT CREATED IN CONTEMPLATION OF SUCH ACQUISITION,
PROVIDED, THAT SUCH LIENS ATTACH ONLY TO THE PROPERTY OR ASSETS SO ACQUIRED;

 

(M)                               LIENS SECURING REIMBURSEMENT OBLIGATIONS IN
RESPECT OF COMMERCIAL LETTERS OF CREDIT AND COVERING THE GOODS (OR THE DOCUMENTS
OF TITLE IN RESPECT OF SUCH GOODS) FINANCED BY SUCH LETTERS OF CREDIT, WHICH
HAVE BEEN ISSUED IN THE ORDINARY COURSE OF BUSINESS;

 

(N)                                 ANY LIEN ON ANY ASSET OF ANY PERSON EXISTING
AT THE TIME SUCH PERSON IS MERGED OR CONSOLIDATED WITH OR INTO HOLDINGS OR ANY
SUBSIDIARY OF HOLDINGS (TO THE EXTENT SUCH MERGER OR CONSOLIDATION IS PERMITTED
HEREUNDER) AND WHICH LIEN WAS NOT CREATED IN CONTEMPLATION OF SUCH EVENT,
PROVIDED, THAT SUCH LIEN ATTACHES ONLY TO THE ASSETS ACQUIRED PURSUANT TO SUCH
MERGER OR CONSOLIDATION;

 

(O)                                 LIENS SECURING ANY INTEREST RATE, SWAP,
HEDGING, CURRENCY, COMMODITY, FOREIGN COUNTRY RISK OR OTHER SIMILAR AGREEMENT;

 

(P)                                 LEASES OR SUBLEASES (INCLUDING BAREBOAT
CHARTERS) GRANTED AND ENTERED INTO WITH OTHERS NOT INTERFERING IN ANY MATERIAL
RESPECT WITH THE BUSINESSES OF HOLDINGS AND ITS SUBSIDIARIES;

 

(Q)                                 LIENS SECURING PAYMENT OF DEBT PERMITTED AND
DESCRIBED IN CLAUSE (M) OF SECTION 6.12, AND LIENS SECURING PAYMENT OF DEBT
PERMITTED AND DESCRIBED IN CLAUSE (D) OF SECTION 6.12 TO THE EXTENT LIMITED TO
THE ACCOUNTS RECEIVABLE FINANCED WITH SUCH DEBT;

 

(R)                                    LIENS ON THE VESSEL FINANCING COLLATERAL
GRANTED TO SECURE THE VESSEL FINANCING AGREEMENT;

 

(S)                                  RENEWALS OR REPLACEMENTS OF ANY OF THE
FOREGOING, PROVIDED THAT SUCH RENEWED OR REPLACED LIEN DOES NOT EXTEND TO
PROPERTY OTHER THAN THAT WHICH WAS ENCUMBERED BY THE ORIGINALLY PERMITTED LIEN
HEREUNDER;

 

(T)                                    LIENS ARISING BY OPERATION OF LAW OR BY
CONTRACT ENCUMBERING INSURANCE POLICIES AND PROCEEDS THEREOF TO SECURE THE
FINANCING OF PREMIUMS PAYABLE UNDER SUCH POLICIES;

 

10

--------------------------------------------------------------------------------

 

(U)                                 CUSTOMARY RIGHTS OF SET-OFF, REVOCATION,
REFUND, OR CHARGE BACK UNDER DEPOSIT AGREEMENTS OR UNDER THE UNIFORM COMMERCIAL
CODE OF BANKS OR OTHER FINANCIAL INSTITUTIONS (BUT NOT IN RESPECT OF DEBT
GENERALLY);

 

(V)                                 LIENS PURSUANT TO A PURCHASE AGREEMENT OR
SALE AGREEMENT SECURING THE OBLIGATIONS UNDER SUCH PURCHASE AGREEMENT OR SALE
AGREEMENT AND ENCUMBERING SOLELY THE ASSETS THAT ARE TO BE SOLD IN ANY ASSET
DISPOSITION PERMITTED BY THIS AGREEMENT; AND

 

(W)                               OTHER LIENS SECURING OBLIGATIONS THAT DO NOT
EXCEED AN AGGREGATE AMOUNT OF $5,000,000 AT ANY TIME OUTSTANDING.

 

“PERSON” means any entity, whether an individual, trustee, corporation,
partnership, joint stock company, limited liability company, unincorporated
organization, business association or firm, joint venture, a government or any
agent or instrumentality or political subdivision thereof.

 

“PLAN” means any employee benefit plan (as defined in Section 3(3) of ERISA)
established, maintained or to which contributions have been made by any
PRINCIPAL.

 

“PLEDGE AGREEMENT” means a Note Pledge Agreement substantially in the form of
Exhibit B hereto, executed by certain of the INDEMNITORS in favor of TRAVELERS,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.

 

“PRINCIPAL” means any of HOLDINGS, GLDDC, LYDON, and any other INDEMNITOR for
whom TRAVELERS has executed a BOND; and PRINCIPALS means collectively all of the
foregoing PERSONS.

 

“TRAVELERS” has the meaning set forth in the recitals to this Agreement.

 

“RESTRICTED AMOUNTS” means, as of any date, each of the following: (a) all DEBT
and CONTINGENT LIABILITIES of the type described in clause (j) of Section 6.12
outstanding on such date, (b) the fair market value of all assets sold from the
date hereof through such date pursuant to the terms of clause (a)(iv)(B) of
Section 6.13, and (c) investments of the type described in clause (e) of
Section 6.15 outstanding on such date.

 

“SECURITY AGREEMENTS” means, collectively, the SECURITY AGREEMENT (A/R) and each
SECURITY AGREEMENT (EQUIPMENT).

 

“SECURITY AGREEMENT (A/R) “ means a Security Agreement (A/R) substantially in
the form of Exhibit C hereto, executed by the PRINCIPALS (other than LYDON) in
favor of TRAVELERS, as the same may be amended, restated, supplemented or
otherwise modified from time to time.

 

“SECURITY AGREEMENT (EQUIPMENT)” means each of the Security Agreement
(Equipment) substantially in the form of Exhibit D hereto, executed and
delivered by each of GLDDC and HOLDINGS (or any other INDEMNITOR which executes
a VESSEL

 

11

--------------------------------------------------------------------------------

 

MORTGAGE after the date hereof) in favor of TRAVELERS, as the same may be
amended, restated, supplemented or otherwise modified from time to time.

 

“SUBORDINATED DEBT” means all DEBT of HOLDINGS issued pursuant to the DEBT
INDENTURE.

 

“SUBSIDIARY” of a PERSON means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than 50% of the voting stock or other equity interests, is owned or controlled
directly or indirectly by such PERSON, or one or more of the SUBSIDIARIES of
such PERSON, or a combination thereof.  Unless the context otherwise clearly
requires, references herein to a “SUBSIDIARY” refer to a SUBSIDIARY of HOLDINGS.

 

“SUPPLEMENTAL SIGNATURE PAGE” means a supplemental signature page to this
Agreement in the form of Exhibit A hereto.

 

“UNDERWRITING DOCUMENTS” means this Agreement, each of the SECURITY AGREEMENTS,
the PLEDGE AGREEMENT, the VESSEL MORTGAGES, each BOND and any other instrument,
document or agreement delivered by any INDEMNITOR in connection herewith.

 

“VESSEL FINANCING AGREEMENT” means that certain Credit Agreement, dated as of
December 17, 2003, by and between GLDDC and General Electric Capital
Corporation, and the documents, instruments and agreements executed and
delivered pursuant thereto, as all of the same may be amended, restated,
supplemented or otherwise modified from time to time, and any credit agreement
or other agreement or agreements relating to any refinancing, extension, renewal
or replacement, in whole or in part, from time to time thereof.

 

“VESSEL FINANCING COLLATERAL” means, collectively, (i) the Vessels Florida
(Official No. 506446), Key West (Official No. 684596) and GL 184 (Official No.
652202), (ii) all insurance and requisition compensation relating to such
vessels and any proceeds thereof, and (iii) all charters (other than charters
entered into in connection with work being performed on a bonded project)
entered into with respect to such vessels having a duration of nine months or
more, and the right to receive payments of all sums thereunder.

 

“VESSEL MORTGAGES” means, collectively, (i) the First Preferred Fleet Mortgage
substantially in the form of Exhibit E hereto, executed by GLDDC in favor of
TRAVELERS, (ii) the Second Preferred Fleet Mortgage substantially in the form of
Exhibit F hereto, executed by GLDDC in favor of TRAVELERS, (iii) the First
Preferred Fleet Mortgage substantially in the form of Exhibit E hereto, executed
by HOLDINGS in favor of TRAVELERS, (iv) the Second Preferred Fleet Mortgage
substantially in the form of Exhibit F hereto, executed by HOLDINGS in favor of
TRAVELERS, and (v) any other fleet mortgages or vessel mortgages at any time
hereafter executed and delivered by any INDEMNITOR in connection with this
Agreement and the other UNDERWRITING DOCUMENTS; in each case as any of the
foregoing documents may be amended, restated, supplemented or otherwise modified
from time to time.

 

SECTION 1.2   USE OF DEFINED TERMS.  ANY COLLECTIVE DEFINED TERM AND ANY DEFINED
TERM USED IN THE PLURAL SHALL BE TAKEN TO ENCOMPASS ALL MEMBERS OF THE RELEVANT
CLASS. 

 

12

--------------------------------------------------------------------------------

 

Any defined term used in the singular preceded by “any” shall be taken to
indicate any number of the members of the relevant class.  A reference to any
PERSON shall include all predecessors in interest of such PERSON and any
successors or assigns of such PERSON, including successors by way of merger,
acquisition or similar event.  Any defined term used in the singular and
preceded by the word “each” shall indicate all members of the relevant class,
individually.  A Section or an Exhibit or a Schedule is, unless otherwise
stated, a reference to a section hereof or an exhibit or a schedule hereto, as
the case may be.  The words “hereof,” “herein,” “hereto” and “hereunder” and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.

 

SECTION 1.3   ACCOUNTING PRINCIPLES.  UNLESS THE CONTEXT OTHERWISE CLEARLY
REQUIRES, ALL ACCOUNTING TERMS NOT EXPRESSLY DEFINED HEREIN SHALL BE CONSTRUED,
AND ALL FINANCIAL COMPUTATIONS REQUIRED UNDER THIS AGREEMENT SHALL BE MADE, IN
ACCORDANCE WITH GAAP, CONSISTENTLY APPLIED.

 

ARTICLE II

BOND FACILITY

 

SECTION 2.1   BONDS.  SUBJECT TO THE TERMS OF THIS AGREEMENT, TRAVELERS AGREES
TO PROVIDE OR PROCURE SURETY BONDS FOR OR ON BEHALF OF THE PRINCIPALS; PROVIDED,
THAT TRAVELERS RESERVES THE RIGHT TO DECLINE TO EXECUTE ANY BOND(S) AND IF
TRAVELERS EXECUTES ANY PROPOSAL OR BID BOND AND IF ANY PRINCIPAL IS AWARDED THE
CONTRACT(S), TRAVELERS SHALL NOT BE OBLIGATED TO EXECUTE ANY BOND(S) REQUIRED TO
PERFORM THE AWARDED CONTRACT.  NO CLAIM SHALL BE MADE, NOR ANY CAUSE OF ACTION
ASSERTED AGAINST TRAVELERS AS A CONSEQUENCE OF ITS FAILURE TO EXECUTE ANY
BOND(S).

 

SECTION 2.2   PREMIUM PAYMENT.  EACH PRINCIPAL AGREES TO PAY ALL PREMIUMS ON THE
BOND(S) ISSUED FOR SUCH PRINCIPAL, COMPUTED IN ACCORDANCE WITH THE REGULAR
MANUAL OF RATES IN EFFECT ON THE DATE SUCH BOND(S) ARE EXECUTED; SUCH PAYMENTS
TO BE MADE WITHIN 45 DAYS OF RECEIPT BY INDEMNITORS OF A STATEMENT THEREFOR FROM
TRAVELERS PURSUANT TO THE PAYMENT DIRECTIONS STATED THEREIN OR AS OTHERWISE
AGREED TO BETWEEN INDEMNITORS AND TRAVELERS.  THE FAILURE OF ANY PRINCIPAL TO
PAY THE BOND PREMIUMS OR THE FAILURE OF TRAVELERS TO RECEIVE PREMIUMS SHALL NOT
PROVIDE INDEMNITORS WITH ANY DEFENSE TO AN ACTION UNDER THIS AGREEMENT.

 

ARTICLE III

INDEMNIFICATION

 

SECTION 3.1   INDEMNITY.  INDEMNITORS AGREE TO INDEMNIFY, AND KEEP INDEMNIFIED,
AND HOLD AND SAVE HARMLESS TRAVELERS AGAINST ALL LOSS; PROVIDED, THAT IN NO
EVENT SHALL ANY INDEMNITOR INDEMNIFY OR HOLD HARMLESS TRAVELERS AGAINST ANY LOSS
ARISING OUT OF THE GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF
TRAVELERS.  THE DUTY OF INDEMNITORS TO INDEMNIFY TRAVELERS IS A CONTINUING DUTY,
SEPARATE FROM THE DUTY TO EXONERATE, AND SURVIVES ANY PAYMENTS MADE IN
EXONERATION OF TRAVELERS.  AMOUNTS DUE TRAVELERS PURSUANT TO THIS SECTION SHALL
BE PAYABLE WITHIN FIFTEEN (15) DAYS OF RECEIPT BY

 

13

--------------------------------------------------------------------------------

 

INDEMNITORS of written demand therefor.  Notwithstanding anything to the
contrary herein, any INDEMNITOR which is not a wholly-owned SUBSIDIARY of
HOLDINGS (other than North American Site Developers, Inc.) shall indemnify and
hold and save TRAVELERS harmless only as to any LOSS incurred by or on behalf of
such INDEMNITOR.

 

SECTION 3.2   EXONERATION.  INDEMNITORS RECOGNIZE AND ACKNOWLEDGE THE COMMON LAW
RIGHT OF TRAVELERS TO BE EXONERATED BY PRINCIPAL FOR ANY LOSS ARISING OUT OF ANY
SURETY OBLIGATION UNDERTAKEN BY TRAVELERS IN CONNECTION WITH ANY BOND, PROVIDED,
THAT IN NO EVENT SHALL ANY INDEMNITOR EXONERATE TRAVELERS FOR ANY LOSS ARISING
OUT OF THE GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF TRAVELERS.  IN
THE EVENT ANY PRINCIPAL FAILS OR REFUSES TO EXONERATE TRAVELERS FOR ANY LOSS
UPON WRITTEN DEMAND THEREFOR, ALL INDEMNITORS OTHER THAN SUCH PRINCIPAL AGREE,
UPON SUCH DEMAND BY TRAVELERS, TO EXONERATE TRAVELERS FROM LOSS TO THE SAME
EXTENT SUCH INDEMNITORS AGREE TO INDEMNIFY TRAVELERS AS PROVIDED IN SECTION 3.1,
BY SATISFYING SUCH PRINCIPAL’S OBLIGATIONS UNDER THE CONTRACT(S) AND OBTAINING
EITHER A WITHDRAWAL OF ALL CLAIMS AGAINST TRAVELERS UNDER THE BOND(S) OR A
GENERAL RELEASE.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, ANY
INDEMNITOR WHICH IS NOT A WHOLLY-OWNED SUBSIDIARY OF HOLDINGS (OTHER THAN NORTH
AMERICAN SITE DEVELOPERS, INC.) SHALL EXONERATE TRAVELERS ONLY AS TO BONDS
ISSUED FOR OR ON BEHALF OF SUCH INDEMNITOR.

 

SECTION 3.3   CASH COLLATERAL.  UPON REFUSAL OR FAILURE OF ANY PRINCIPAL TO
EXONERATE TRAVELERS IN ACCORDANCE WITH THE TERMS HEREOF, INDEMNITORS AGREE
WITHIN TEN (10) DAYS OF DEMAND THEREFOR TO DEPOSIT WITH TRAVELERS AN AMOUNT OF
MONEY OR OTHER COLLATERAL OF VALUE ADEQUATE IN THE REASONABLE JUDGMENT OF
TRAVELERS TO EXONERATE TRAVELERS, SUCH FUNDS TO BE HELD BY TRAVELERS AS
COLLATERAL PURSUANT TO DOCUMENTATION REASONABLY ACCEPTABLE TO TRAVELERS, WITH
THE RIGHT TO USE SUCH FUNDS OR ANY PART THEREOF AT ANY TIME IN PAYMENT OR
COMPROMISE OF SUCH LOSS, AND IN WHICH FUNDS INDEMNITORS DO HEREBY GRANT TO
TRAVELERS A SECURITY INTEREST TO SECURE SUCH LOSS.  UNEXPENDED FUNDS BY
TRAVELERS PURSUANT TO A REQUEST FOR EXONERATION HEREUNDER SHALL BE REPAID TO
HOLDINGS AND ITS SUBSIDIARIES WHEN THE LIABILITY OF TRAVELERS ARISING OUT OF THE
EVENT FOR WHICH EXONERATION WAS REQUESTED HAS BEEN RESOLVED TO THE REASONABLE
SATISFACTION OF TRAVELERS AND TRAVELERS SHALL HAVE BEEN FURNISHED WITH FULL
RELEASES OF ALL LIABILITY UNDER A SURETY OBLIGATION AND HAVE BEEN REIMBURSED IN
FULL FOR ALL LOSS.  INTEREST EARNED (IF ANY) UPON FUNDS HELD BY TRAVELERS
PURSUANT TO A REQUEST FOR EXONERATION UNDER THIS SECTION WHICH IS NOT OTHERWISE
EXPENDED IN ACCORDANCE WITH THIS SECTION SHALL BE PAID TO HOLDINGS AND ITS
SUBSIDIARIES.

 

SECTION 3.4   WAIVER OF CLAIMS AND HOLD HARMLESS.  EACH INDEMNITOR SPECIFICALLY
AGREES TO PROTECT, INDEMNIFY AND HOLD HARMLESS TRAVELERS, EACH OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS AND ITS ATTORNEYS-IN-FACT AGAINST ANY AND ALL LOSS
THAT MAY IN ANY WAY ARISE IN CONNECTION WITH THIS AGREEMENT AND THE OTHER
UNDERWRITING DOCUMENTS AND THE POWERS HEREIN GRANTED, SPECIFICALLY WAIVING ANY
CLAIM WHICH ANY INDEMNITOR HAS OR MIGHT HEREAFTER HAVE AGAINST TRAVELERS OR ITS
ATTORNEYS-IN-FACT ON ACCOUNT OF ANYTHING DONE IN ENFORCING THE TERMS OF THIS
AGREEMENT, THE BOND(S) OR ANY OTHER UNDERWRITING DOCUMENT EXCEPT FOR ANY LOSS
DUE TO THE GROSS NEGLIGENCE, BAD FAITH, OR WILLFUL MISCONDUCT OF TRAVELERS. 
UNTIL ALL OBLIGATIONS OWING TO TRAVELERS HEREUNDER HAVE BEEN PAID IN FULL, EACH
INDEMNITOR HEREBY WAIVES AND RELINQUISHES IN FAVOR OF

 

14

--------------------------------------------------------------------------------

 

TRAVELERS any claim or right to payment that such INDEMNITOR may have or
hereafter have or acquire against any PRINCIPAL or other INDEMNITOR by
subrogation, indemnification, contribution or otherwise.

 

SECTION 3.5   WITHDRAWAL FROM AND TERMINATION OF AGREEMENT.  (A)EACH INDEMNITOR
EXPRESSLY RECOGNIZES AND COVENANTS THIS AGREEMENT AS ITS CONTINUING OBLIGATION
TO PROTECT TRAVELERS FROM ALL LOSS.  ANY INDEMNITOR MAY NOTIFY TRAVELERS IN
WRITING OF SUCH INDEMNITOR’S WITHDRAWAL FROM THIS AGREEMENT; AND SUCH NOTICE
SHALL STATE WHEN, NOT LESS THAN FIFTEEN (15) DAYS AFTER RECEIPT OF SUCH NOTICE
BY TRAVELERS, SUCH WITHDRAWAL SHALL BE EFFECTIVE.  SUCH INDEMNITOR WILL NOT BE
LIABLE UNDER THIS AGREEMENT AS TO ANY BOND(S) EXECUTED BY TRAVELERS AFTER THE
EFFECTIVE DATE OF SUCH NOTICE; PROVIDED, THAT AS TO ANY AND ALL SUCH BOND(S)
EXECUTED OR AUTHORIZED BY TRAVELERS PRIOR TO THE EFFECTIVE DATE OF SUCH NOTICE
AND AS TO ANY AND ALL RENEWALS, CONTINUATIONS, EXTENSIONS, OR SUBSTITUTIONS
(AND, IF A PROPOSAL OR BID BOND HAS BEEN EXECUTED OR AUTHORIZED PRIOR TO SUCH
EFFECTIVE DATE, AS TO ANY CONTRACT BOND EXECUTED PURSUANT THERETO) REGARDLESS OF
WHEN THE SAME ARE EXECUTED, SUCH INDEMNITOR SHALL BE AND REMAIN FULLY LIABLE
HEREUNDER, AS IF NOTICE HAD NOT BEEN SERVED.  WITHDRAWAL BY ANY INDEMNITOR SHALL
IN NO WAY AFFECT THE OBLIGATION OF ANY OTHER INDEMNITOR WHO HAS GIVEN NO NOTICE
OF TERMINATION TO TRAVELERS.

 

(B)                                 HOLDINGS MAY NOTIFY TRAVELERS OF THE
TERMINATION OF THIS AGREEMENT BY DELIVERING WRITTEN NOTICE OF SUCH TERMINATION
TO TRAVELERS, SUCH TERMINATION TO BE EFFECTIVE ON A DATE SPECIFIED IN SUCH
NOTICE WHICH DATE SHALL NOT BE LESS THAN FIFTEEN (15) DAYS FROM RECEIPT OF SUCH
NOTICE; PROVIDED, THAT NO SUCH TERMINATION SHALL BE EFFECTIVE AT ANY TIME WHEN
ANY BONDS SHALL REMAIN OUTSTANDING OR ANY OBLIGATIONS UNDER THIS AGREEMENT SHALL
REMAIN UNPAID.

 

SECTION 3.6   INDEMNITORS AGREE TO BECOME PARTY DEFENDANTS.  IN THE EVENT OF
LEGAL PROCEEDINGS AGAINST TRAVELERS ARISING OUT OF THIS AGREEMENT OR THE BONDS,
TRAVELERS MAY APPLY FOR A COURT ORDER MAKING ANY OR ALL OF THE INDEMNITORS PARTY
DEFENDANTS, AND EACH INDEMNITOR CONSENTS TO THE GRANTING OF SUCH APPLICATION,
INCLUDING CONSENT TO THE JURISDICTION OF THE COURT IN WHICH THE APPLICATION IS
MADE, AND AGREES TO BECOME SUCH A PARTY DEFENDANT OR THIRD-PARTY DEFENDANT AND
TO ALLOW JUDGMENT, IN THE EVENT OF JUDGMENT AGAINST TRAVELERS, TO BE RENDERED
ALSO AGAINST EACH INDEMNITOR, JOINTLY AND SEVERALLY, IN LIKE AMOUNT AND IN FAVOR
OF TRAVELERS UNLESS SUCH JUDGMENT IS DUE TO THE GROSS NEGLIGENCE, BAD FAITH OR
WILLFUL MISCONDUCT OF TRAVELERS.

 

SECTION 3.7   INDEMNITORS’ WAIVER OF NOTICE.  INDEMNITORS WAIVE NOTICE OF THE
EXECUTION, CONTINUATION, MODIFICATION, RENEWAL, ENLARGEMENT OR AMENDMENT OF ANY
BOND AND OF ANY FACT, ACT OR INFORMATION CONCERNING OR AFFECTING THE RIGHTS OR
LIABILITIES OF TRAVELERS OR INDEMNITORS INCLUDING, BUT NOT LIMITED TO, ANY ACTS
GIVING RISE TO ANY LOSS UNDER THE BOND(S).

 

SECTION 3.8   INDEMNITORS’ KNOWING CONSENT TO AGREEMENT.  EACH INDEMNITOR
WARRANTS THAT IT IS SPECIFICALLY AND BENEFICIALLY INTERESTED IN OBTAINING THE
BOND(S) OR THE FORBEARANCE OF CANCELLATION OF ANY EXISTING BOND(S).  INDEMNITORS
ACKNOWLEDGE THAT THE EXECUTION OF THIS AGREEMENT AND THE UNDERTAKING OF
INDEMNITY WAS NOT MADE IN RELIANCE UPON ANY REPRESENTATION CONCERNING THE
RESPONSIBILITY OF ANY INDEMNITOR OR CONCERNING THE COMPETENCE OF PRINCIPAL TO
PERFORM.  INDEMNITORS AGREE TO MAKE NO

 

15

--------------------------------------------------------------------------------

 

claim against TRAVELERS for any oral representations, promises or statements
made to any of them by TRAVELERS or any of its agents or brokers, or for the
failure of TRAVELERS to disclose facts or information to INDEMNITORS.

 

SECTION 3.9   INDEMNITORS’ DUTY TO REMAIN INFORMED OF PRINCIPAL’S BUSINESS. 
INDEMNITORS POSSESS THE DUTY TO REMAIN INFORMED OF ALL ASPECTS OF EACH
PRINCIPAL’S BUSINESS AND THE BUSINESS ACTIVITIES AND FINANCIAL AFFAIRS OF EACH
PRINCIPAL.  INDEMNITORS ACKNOWLEDGE THAT THEY ARE PRESENTLY INFORMED OF THE
STATE OF BUSINESS ACTIVITIES AND FINANCIAL AFFAIRS OF EACH PRINCIPAL AND ALL
INDEMNITORS.  TRAVELERS POSSESSES NO OBLIGATION TO INFORM ANY INDEMNITOR OF ANY
ASPECT OF ANY PRINCIPAL’S BUSINESS OR THE BUSINESS ACTIVITIES AND FINANCIAL
AFFAIRS OF THE INDEMNITORS OR OF THE REQUEST FOR, OR ISSUANCE OF, ANY BOND(S).

 

SECTION 3.10   ENFORCEABILITY OF RIGHTS DIRECTLY AGAINST INDEMNITORS.  TRAVELERS
SHALL BE ENTITLED TO ENFORCE THE OBLIGATIONS OF THIS AGREEMENT DIRECTLY AGAINST
ANY INDEMNITOR WITHOUT THE NECESSITY OF FIRST PROCEEDING AGAINST THE PRINCIPAL. 
THE FAILURE OF ANY INDEMNITOR TO PERFORM ANY OF THE TERMS OF THIS AGREEMENT OR
THE RELEASE OF ANY INDEMNITOR BY TRAVELERS SHALL NOT EXCUSE OR RELEASE THE
REMAINING INDEMNITORS FROM THEIR OBLIGATIONS UNDER THIS AGREEMENT.

 

SECTION 3.11   ADDITIONAL INDEMNITORS.  INDEMNITORS ACKNOWLEDGE THAT THIS
AGREEMENT CAN BE AMENDED BY THE EXECUTION AND DELIVERY OF A SUPPLEMENTAL
SIGNATURE PAGE TO ADD ANOTHER PERSON AS AN INDEMNITOR TO THIS AGREEMENT AND
INDEMNITORS WAIVE ANY AND ALL NOTICE IN CONNECTION WITH THE ADDITION OF
ADDITIONAL INDEMNITORS, AND FURTHER ACKNOWLEDGE THE RIGHTS AND OBLIGATIONS
PROVIDED HEREIN SHALL APPLY TO ALL INDEMNITORS WHENEVER MADE A PARTY TO THIS
AGREEMENT.

 

ARTICLE IV

CONDITIONS PRECEDENT

 

SECTION 4.1   CONDITION PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT.  THE
EFFECTIVENESS OF THIS AGREEMENT IS SUBJECT TO THE CONDITION PRECEDENT THAT
TRAVELERS SHALL HAVE RECEIVED ON OR BEFORE THE DAY HEREOF EACH OF THE FOLLOWING,
IN FORM AND SUBSTANCE SATISFACTORY TO TRAVELERS AND ITS COUNSEL:

 

(A)                                  A SECURITY AGREEMENT (A/R) DULY EXECUTED BY
EACH PRINCIPAL (OTHER THAN LYDON) AND, UNLESS ALREADY FILED, EXECUTED FINANCING
STATEMENTS (UCC-1) TO BE FILED IN ALL JURISDICTIONS IN THE OPINION OF TRAVELERS
DESIRABLE TO PERFECT THE SECURITY INTEREST CREATED BY SUCH SECURITY AGREEMENT
(A/R);

 

(B)                                 THE VESSEL MORTGAGES DULY EXECUTED BY THE
MORTGAGEE PARTY THERETO, TOGETHER WITH (I) ANY SUPPLEMENTS THERETO AS
APPLICABLE, AND (II) PROPER DOCUMENTATION RELEASING ALL OTHER LIENS, IF ANY, ON
THE RELATED VESSELS;

 

(C)                                  A SECURITY AGREEMENT (EQUIPMENT) DULY
EXECUTED BY EACH INDEMNITOR PARTY TO A VESSEL MORTGAGE AND, UNLESS ALREADY
FILED, EXECUTED FINANCING STATEMENTS (UCC-1) TO BE FILED IN ALL JURISDICTIONS IN
THE

 

16

--------------------------------------------------------------------------------

 

opinion of TRAVELERS desirable to perfect the security interest created by such
SECURITY AGREEMENT (EQUIPMENT);

 

(D)                                 THE PLEDGE AGREEMENT DULY EXECUTED BY THE
INDEMNITORS REFERENCED ON THE SIGNATURE PAGES THERETO TOGETHER WITH A PHOTOCOPY
OF THE MASTER INTERCOMPANY DEMAND NOTE, EVIDENCE THAT BANK OF AMERICA, N.A., AS
ADMINISTRATIVE AGENT UNDER THE BANK LOAN FACILITY IS IN RECEIPT OF THE ORIGINAL
OF SUCH NOTE AND EXECUTED FINANCING STATEMENTS (UCC-1) TO BE FILED IN ALL
JURISDICTIONS IN THE OPINION OF TRAVELERS DESIRABLE TO PERFECT THE SECURITY
INTEREST CREATED BY SUCH PLEDGE AGREEMENT;

 

(E)                                  THE INTERCREDITOR AGREEMENT AND THE
PROCEEDS AGENT AGREEMENT CONTEMPLATED THEREBY, DULY EXECUTED BY THE PRINCIPALS,
TRAVELERS AND THE OTHER PARTIES THERETO;

 

(F)                                    A FAVORABLE OPINION OF WINSTON & STRAWN
LLP, COUNSEL TO THE PRINCIPALS AND INDEMNLTORS, ADDRESSING SUCH LEGAL MATTERS AS
TRAVELERS MAY REQUIRE;

 

(G)                                 AN OFFICER’S CERTIFICATE OF HOLDINGS
CERTIFYING THAT THE BANK LOAN FACILITY, THE MERGER AGREEMENT AND THE DEBT
INDENTURE ARE IN FULL FORCE AND EFFECT, AND ATTACHING TRUE AND CORRECT COPIES OF
THE PRINCIPAL DOCUMENTS THEREOF;

 

(H)                                 A SECRETARY’S CERTIFICATE OF EACH INDEMNITOR
CERTIFYING COPIES OF SUCH PARTY’S ORGANIZATIONAL DOCUMENTS, APPROPRIATE
RESOLUTIONS AUTHORIZING THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT AND THE OTHER UNDERWRITING DOCUMENTS TO WHICH SUCH PARTY IS A PARTY
AND CERTIFYING INCUMBENCIES AND TRUE SIGNATURES OF ITS OFFICERS SO AUTHORIZED;

 

(I)                                     EVIDENCE OF THE GOOD STANDING OF EACH
INDEMNITOR IN THE JURISDICTION IN WHICH SUCH PARTY IS ORGANIZED;

 

(J)                                     EVIDENCE OF THE EXISTENCE OF INSURANCE
ON THE PROPERTY OF EACH PRINCIPAL, TOGETHER WITH EVIDENCE ESTABLISHING TRAVELERS
AS A LOSS PAYEE AND/OR ADDITIONAL INSURED ON ALL INSURANCE POLICIES RELATING TO
ANY TANGIBLE PROPERTY ON WHICH TRAVELERS HAS A FIRST LIEN UNDER THE VESSEL
MORTGAGES AND EACH SECURITY AGREEMENT (EQUIPMENT);

 

(K)                                  SUCH OTHER INFORMATION AND DOCUMENTS AS MAY
REASONABLY BE REQUIRED BY TRAVELERS.

 

SECTION 4.2   CONDITIONS PRECEDENT TO ALL BONDS.  THE OBLIGATION OF TRAVELERS TO
ISSUE ANY BOND SHALL BE SUBJECT TO THE FURTHER CONDITIONS PRECEDENT THAT ON THE
DATE OF SUCH ISSUANCE:

 

(A)                                  THE FOLLOWING STATEMENTS SHALL BE TRUE AND,
BY ITS REQUEST FOR THE ISSUANCE OF SUCH BOND, THE APPLICABLE PRINCIPAL SHALL BE
DEEMED TO HAVE CERTIFIED TO TRAVELERS THAT AS OF THE DATE OF SUCH ISSUANCE:

 

17

--------------------------------------------------------------------------------

 

(I)                                     THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN ARTICLE V OF THIS AGREEMENT, IN SECTION 4 OF THE SECURITY AGREEMENT
(A/R), IN SECTION 4 OF EACH SECURITY AGREEMENT (EQUIPMENT), IN SECTION 4 OF THE
PLEDGE AGREEMENT AND IN ARTICLE I OF EACH OF THE VESSEL MORTGAGES ARE CORRECT IN
ALL MATERIAL RESPECTS ON AND AS OF THE DATE OF SUCH ISSUANCE AS THOUGH MADE ON
AND AS OF SUCH DATE EXCEPT TO THE EXTENT STATED TO RELATE TO AN EARLIER DATE, IN
WHICH CASE SUCH REPRESENTATION AND WARRANTY SHALL BE CORRECT AS OF SUCH EARLIER
DATE;

 

(II)                                  NO AUTHORIZATIONS, APPROVALS OR CONSENTS
OF, AND NO FILINGS OR REGISTRATIONS WITH (OTHER THAN THOSE PREVIOUSLY MADE OR
OBTAINED) ANY GOVERNMENTAL OR REGULATORY AUTHORITY OR AGENCY ARE NECESSARY FOR
THE CONTINUED PERFORMANCE BY EACH PRINCIPAL AND EACH INDEMNITOR OF THE
UNDERWRITING DOCUMENTS TO WHICH EACH IS A PARTY, OR FOR THE CONTINUED VALIDITY
AND ENFORCEABILITY THEREOF WITH RESPECT TO EACH PRINCIPAL AND EACH INDEMNITOR
WHICH IS A PARTY THERETO; AND

 

(III)                               NO EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING, OR WOULD RESULT FROM THE ISSUANCE OF SUCH BOND;

 

(B)                                 TRAVELERS SHALL HAVE RECEIVED EACH OF THE
FOLLOWING:

 

(I)                                     A SECURITY AGREEMENT (A/R) DULY EXECUTED
BY THE PRINCIPAL (OTHER THAN LYDON) FOR WHOM SUCH BOND IS ISSUED UNLESS SUCH
PRINCIPAL PREVIOUSLY DELIVERED A SECURITY AGREEMENT (A/R) PURSUANT TO
SECTION 4.1(A), TOGETHER WITH ACKNOWLEDGMENT COPIES OF THE FINANCING STATEMENTS
(UCC-1) REQUIRED TO BE FILED PURSUANT TO SECTION 4.1(A); AND

 

(II)                                  SUCH OTHER APPROVALS AND DOCUMENTS AS
TRAVELERS MAY REASONABLY REQUEST.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

The PRINCIPALS represent and warrant to TRAVELERS that

 

SECTION 5.1   INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION.  HOLDINGS AND
EACH SUBSIDIARY:  (A) IS A CORPORATION OR OTHER LEGAL ENTITY DULY ORGANIZED,
VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS
ORGANIZATION; (B) HAS THE ORGANIZATIONAL POWER AND AUTHORITY, AND HAS ALL
MATERIAL GOVERNMENTAL LICENSES, AUTHORIZATIONS, CONSENTS AND APPROVALS,
NECESSARY TO OWN ITS ASSETS AND TO TRANSACT THE BUSINESS IN WHICH IT IS NOW
ENGAGED OR PROPOSED TO BE ENGAGED, EXCEPT TO THE EXTENT THE FAILURE THEREOF
COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE CHANGE; AND (C) IS
DULY QUALIFIED AS A FOREIGN ORGANIZATION AND IN GOOD STANDING UNDER THE LAWS OF
EACH OTHER JURISDICTION IN WHICH SUCH QUALIFICATION IS REQUIRED EXCEPT TO THE
EXTENT THE

 

18

--------------------------------------------------------------------------------

 

failure to so qualify could not reasonably be expected to name a MATERIAL
ADVERSE CHANGE.

 

SECTION 5.2   CORPORATE POWER AND AUTHORITY.  THE EXECUTION, DELIVERY, AND
PERFORMANCE BY EACH PRINCIPAL AND EACH INDEMNITOR OF THE UNDERWRITING DOCUMENTS
TO WHICH EACH IS A PARTY HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY
ORGANIZATIONAL AND STOCKHOLDER ACTION AND DO NOT AND WILL NOT (A) CONTRAVENE
SUCH PARTY’S ORGANIZATIONAL DOCUMENTS; (B) VIOLATE ANY PROVISION OF ANY MATERIAL
LAW, RULE, REGULATION, ORDER, WRIT, JUDGMENT, INJUNCTION, DECREE, DETERMINATION,
OR AWARD PRESENTLY IN EFFECT HAVING APPLICABILITY TO SUCH PARTY; (C) RESULT IN A
BREACH OF OR CONSTITUTE A DEFAULT UNDER ANY MATERIAL INDENTURE OR LOAN OR CREDIT
AGREEMENT OR ANY OTHER MATERIAL AGREEMENT, LEASE, OR INSTRUMENT TO WHICH SUCH
PARTY IS A PARTY OR BY WHICH IT OR ITS PROPERTIES MAY BE BOUND OR AFFECTED
(EXCEPT WHERE THE APPROPRIATE CONSENTS HAVE BEEN OBTAINED); (D) RESULT IN, OR
REQUIRE, THE CREATION OR IMPOSITION OF ANY LIEN (EXCEPT LIENS IN FAVOR OF
TRAVELERS AND LIENS ARISING UNDER THE BANK CREDIT FACILITY), UPON OR WITH
RESPECT TO ANY OF THE PROPERTIES NOW OWNED OR HEREAFTER ACQUIRED BY SUCH PARTY;
OR (E) CAUSE SUCH PARTY TO BE IN DEFAULT UNDER ANY SUCH LAW, RULE, REGULATION,
ORDER, WRIT, JUDGMENT, INJUNCTION, DECREE, DETERMINATION, OR AWARD OR ANY SUCH
INDENTURE, AGREEMENT, LEASE, OR INSTRUMENT (EXCEPT WHERE THE APPROPRIATE
CONSENTS HAVE BEEN OBTAINED).

 

SECTION 5.3   LEGALLY ENFORCEABLE AGREEMENT.  THIS AGREEMENT IS, AND EACH OF THE
OTHER UNDERWRITING DOCUMENTS WHEN DELIVERED UNDER THIS AGREEMENT WILL BE, LEGAL,
VALID, AND BINDING OBLIGATIONS OF EACH PRINCIPAL AND EACH INDEMNITOR PARTY
THERETO, ENFORCEABLE AGAINST SUCH PRINCIPAL OR INDEMNITOR, AS THE CASE MAY BE,
IN ACCORDANCE WITH THEIR RESPECTIVE TERMS, EXCEPT TO THE EXTENT THAT SUCH
ENFORCEMENT MAY BE LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION,
MORATORIUM AND OTHER SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS GENERALLY AND BY
EQUITABLE PRINCIPLES (REGARDLESS OF WHETHER ENFORCEMENT IS SOUGHT AT LAW OR IN
EQUITY).

 

SECTION 5.4   APPROVALS.  EXCEPT FOR FILINGS AND RECORDINGS OF LIENS CREATED
PURSUANT TO THE SECURITY AGREEMENTS AND THE VESSEL MORTGAGES, AS OF THE DATE OF
THIS AGREEMENT, NO AUTHORIZATIONS, APPROVALS OR CONSENTS OF, AND NO FILINGS OR
REGISTRATIONS WITH, ANY GOVERNMENTAL OR REGULATORY AUTHORITY OR AGENCY ARE
NECESSARY FOR THE EXECUTION, DELIVERY OR PERFORMANCE BY EACH PRINCIPAL AND EACH
INDEMNITOR OF THE UNDERWRITING DOCUMENTS TO WHICH EACH IS A PARTY OR FOR THE
VALIDITY OR ENFORCEABILITY THEREOF, OTHER THAN THOSE WHICH HAVE BEEN HERETOFORE
MADE OR OBTAINED.

 

SECTION 5.5   OWNERSHIP AND LIENS.  EACH OF HOLDINGS AND EACH SUBSIDIARY HAS
TITLE TO, OR VALID LEASEHOLD INTERESTS IN, ALL OF ITS PROPERTIES AND ASSETS,
REAL AND PERSONAL, THAT ARE NECESSARY FOR CONDUCT OF SUCH PERSON’S BUSINESS AND
NONE OF THE MATERIAL PROPERTIES AND ASSETS OWNED BY HOLDINGS OR ANY SUBSIDIARY
AND NONE OF THEIR RESPECTIVE MATERIAL LEASEHOLD INTERESTS IS SUBJECT TO ANY
LIEN, EXCEPT SUCH AS MAY BE PERMITTED PURSUANT TO SECTION 6.11 OF THIS
AGREEMENT.

 

SECTION 5.6   TAXES.  EACH OF HOLDINGS AND EACH SUBSIDIARY HAS FILED ALL
MATERIAL TAX RETURNS (FEDERAL, STATE, AND LOCAL) REQUIRED TO BE FILED AND HAS
PAID ALL TAXES, ASSESSMENTS, AND GOVERNMENTAL CHARGES AND LEVIES THEREON TO BE
DUE, INCLUDING INTEREST AND

 

19

--------------------------------------------------------------------------------

 

penalties, except to the extent the validity thereof is being contested in good
faith by appropriate proceedings and for which adequate reserves have been set
aside on its books in accordance with GAAP.

 

SECTION 5.7   INSURANCE.  AS OF THE DATE OF THIS AGREEMENT, EACH PRINCIPAL HAS
INSURANCE IN FORCE AS DISCLOSED IN SCHEDULE 5.7 ATTACHED HERETO AND MADE A PART
HEREOF.

 

SECTION 5.8   COMPLIANCE.  EACH OF HOLDINGS AND EACH SUBSIDIARY IS IN MATERIAL
COMPLIANCE WITH ALL STATUTES AND GOVERNMENTAL RULES AND REGULATIONS APPLICABLE
TO IT, INCLUDING WITHOUT LIMITATION, ERISA INSOFAR AS ERISA APPLIES TO IT,
EXCEPT TO THE EXTENT THE FAILURE TO BE IN COMPLIANCE THEREWITH COULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE CHANGE.  NO CONDITION EXISTS
OR EVENT OR TRANSACTION HAS OCCURRED IN CONNECTION WITH ANY PLAN WHICH COULD
RESULT IN ANY LIABILITY, FINE OR PENALTY BEING ASSERTED AGAINST HOLDINGS OR ANY
SUBSIDIARY, IN AN AGGREGATE AMOUNT IN EXCESS OF $5,000,000.

 

SECTION 5.9   LITIGATION.  THERE IS NO ACTION, SUIT OR PROCEEDING PENDING
AGAINST, OR TO THE KNOWLEDGE OF HOLDINGS THREATENED AGAINST OR AFFECTING,
HOLDINGS OR ANY SUBSIDIARY BEFORE ANY COURT OR ARBITRATOR OR ANY GOVERNMENT
BODY, AGENCY OR OFFICIAL IN WHICH THERE IS A REASONABLE LIKELIHOOD OF AN ADVERSE
DECISION WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE CHANGE OR
WHICH IN ANY MANNER DRAWS INTO QUESTION THE VALIDITY OF THIS AGREEMENT EXCEPT
THOSE REFERRED TO IN SCHEDULE 5.9 ATTACHED HERETO AND MADE A PART HEREOF.

 

SECTION 5.10   SUBSIDIARIES.  SCHEDULE 5.10 ATTACHED HERETO AND MADE A PART
HEREOF SETS FORTH A COMPLETE AND ACCURATE LIST, AS OF THE DATE OF THIS
AGREEMENT, OF EACH SUBSIDIARY OF HOLDINGS AND EACH SUBSIDIARY SET FORTH ON
SCHEDULE 5.10 AND DESIGNATED WITH AN ASTERISK (“*”) IS A WHOLLY-OWNED SUBSIDIARY
OF HOLDINGS.

 

SECTION 5.11   REAL PROPERTY.  SCHEDULE 5.11 CONTAINS A COMPLETE AND ACCURATE
LIST, AS OF THE DATE OF THIS AGREEMENT, OF THE ADDRESS OF ANY REAL PROPERTY
OWNED OR LEASED BY EACH PRINCIPAL WITH A NET BOOK VALUE IN EXCESS OF $750,000.

 

SECTION 5.12   EQUIPMENT.  SCHEDULE 5.12 ATTACHED HERETO AND MADE A PART HEREOF
SETS FORTH A COMPLETE AND ACCURATE LIST, AS OF THE DATE OF THIS AGREEMENT, OF
EACH ITEM OF EQUIPMENT WITH A NET BOOK VALUE IN EXCESS OF $750,000 OWNED OR
LEASED BY EACH PRINCIPAL.

 

SECTION 5.13   VESSELS.  SCHEDULE 5.13 ATTACHED HERETO AND MADE A PART HEREOF
SETS FORTH A COMPLETE AND ACCURATE LIST, AS OF THE DATE OF THIS AGREEMENT, OF
ALL VESSELS OWNED OF RECORD BY ANY PRINCIPAL WITH A NET BOOK VALUE IN EXCESS OF
$750,000 AND, EXCEPT AS SET FORTH ON SCHEDULE 5.13, EACH SUCH VESSEL HAS ALL
CERTIFICATES REQUIRED UNDER APPLICABLE LAW (EXCEPT WHERE THE FAILURE COULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE CHANGE), INCLUDING, WITHOUT
LIMITATION, CERTIFICATES OF DOCUMENTATION, AND, EXCEPT AS SET FORTH ON
SCHEDULE 5.13, EACH SUCH VESSEL HAS BEEN CERTIFIED BY THE U.S. COAST GUARD. 
EACH SUCH CERTIFICATE IS IN FULL FORCE AND EFFECT AND EACH SUCH VESSEL IS IN
SEAWORTHY AND OPERATIONAL CONDITION.  TRAVELERS HAS (OR WILL HAVE UPON PROPER
FILING OF THE VESSEL MORTGAGES WITH THE U.S. COAST GUARD) A PERFECTED SECURITY
INTEREST, ARISING PURSUANT TO THE VESSEL MORTGAGES, IN EACH VESSEL SET FORTH ON
SCHEDULE 5.13 AND DESIGNATED WITH AN ASTERISK (“*”).

 

20

--------------------------------------------------------------------------------

 

ARTICLE VI

COVENANTS

 

So long as any BONDS shall remain outstanding, HOLDINGS hereby covenants and
agrees with TRAVELERS as follows:

 

SECTION 6.1   CORPORATE EXISTENCE.  HOLDINGS WILL, AND WILL CAUSE EACH
SUBSIDIARY TO, MAINTAIN ITS LEGAL EXISTENCE (IN GOOD STANDING WHERE APPROPRIATE
UNDER LOCAL LAW) AND REMAIN OR BECOME DULY QUALIFIED OR LICENSED (AND IN GOOD
STANDING WHERE APPROPRIATE UNDER LOCAL LAW) AS A FOREIGN ORGANIZATION IN EACH
JURISDICTION IN WHICH THE CONDUCT OF ITS BUSINESSES OR LOCATION OF ITS ASSETS
REQUIRES SUCH QUALIFICATION OR LICENSE, EXCEPT WHERE THE FAILURE TO TAKE ANY
SUCH ACTION COULD NOT IN THE AGGREGATE REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE CHANGE.

 

SECTION 6.2   MAINTENANCE OF RECORDS.  HOLDINGS WILL, AND WILL CAUSE EACH
SUBSIDIARY TO, KEEP ADEQUATE RECORDS AND BOOKS OF ACCOUNT, IN WHICH COMPLETE
ENTRIES WILL BE MADE IN ACCORDANCE WITH GAAP CONSISTENTLY APPLIED.

 

SECTION 6.3   MAINTENANCE OF PROPERTIES.  HOLDINGS WILL, AND WILL CAUSE EACH
SUBSIDIARY TO, MAINTAIN, KEEP AND PRESERVE ALL OF ITS PROPERTIES (TANGIBLE AND
INTANGIBLE) NECESSARY OR USEFUL IN ITS BUSINESS IN GOOD WORKING ORDER AND
CONDITION, ORDINARY WEAR AND TEAR AND DAMAGE CAUSED BY CASUALTY EXCEPTED.

 

SECTION 6.4   MAINTENANCE OF INSURANCE.  HOLDINGS WILL, AND WILL CAUSE EACH
SUBSIDIARY TO, MAINTAIN INSURANCE WITH FINANCIALLY SOUND AND REPUTABLE INSURANCE
COMPANIES OR ASSOCIATIONS (I) LISTED ON SCHEDULE 6.4, (II) THAT HAVE AN A.M.
BEST POLICY-HOLDERS RATING OF NOT LESS THAN A, OR IF NO SUCH RATING IS
APPLICABLE, THAT HAVE A QUALITY COMPARABLE TO THOSE RATED A OR BETTER, OR (III)
AS TRAVELERS MAY REASONABLY APPROVE, IN SUCH AMOUNTS AND COVERING SUCH RISKS AS
ARE USUALLY CARRIED BY COMPANIES ENGAGED IN THE SAME OR A SIMILAR BUSINESS AND
SIMILARLY SITUATED, WHICH INSURANCE MAY PROVIDE FOR REASONABLE DEDUCTIBILITY
FROM COVERAGE THEREOF.  HOLDINGS FURTHER AGREES TO FURNISH TRAVELERS UPON
WRITTEN REQUEST WITH AN ANNUAL REPORT ON THE INSURANCE IN FORCE AND WITH COPIES
OF THE POLICIES OF SAID INSURANCE EVIDENCING THE EXISTENCE OF THE COVERAGE
CALLED FOR BY THIS AGREEMENT.

 

SECTION 6.5   COMPLIANCE WITH LAWS.  HOLDINGS WILL, AND WILL CAUSE EACH
SUBSIDIARY TO, COMPLY IN ALL RESPECTS WITH ALL APPLICABLE LAWS, RULES,
REGULATIONS, AND ORDERS THE FAILURE TO COMPLY WITH WHICH COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE CHANGE, SUCH COMPLIANCE TO INCLUDE, WITHOUT
LIMITATION, PAYING BEFORE THE SAME BECOME DELINQUENT ALL MATERIAL TAXES,
ASSESSMENTS, AND GOVERNMENTAL CHARGES IMPOSED UPON IT OR UPON ITS PROPERTY,
EXCEPT TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES BEING CONTESTED IN GOOD FAITH
BY APPROPRIATE PROCEEDINGS AND FOR WHICH ADEQUATE RESERVES HAVE BEEN SET ASIDE
ON ITS BOOKS IN ACCORDANCE WITH GAAP.

 

SECTION 6.6   TAXES.  HOLDINGS WILL, AND WILL CAUSE EACH SUBSIDIARY TO, PROMPTLY
PAY ALL OF ITS MATERIAL TAXES, ASSESSMENTS AND OTHER GOVERNMENTAL CHARGES PRIOR
TO THE DATE ON WHICH ALL PENALTIES ARE ATTACHED THERETO; PROVIDED, THAT NOTHING
HEREIN CONTAINED SHALL BE

 

21

--------------------------------------------------------------------------------

 

interpreted to require the payment of any tax, assessment or charge so long as
its validity is being contested in good faith by appropriate proceedings and for
which adequate reserves have been set aside on its books in accordance with
GAAP.

 

SECTION 6.7   BOOKS AND RECORDS.  UNTIL TRAVELERS SHALL HAVE BEEN FURNISHED WITH
EVIDENCE SATISFACTORY TO IT THAT IT HAS BEEN DISCHARGED FROM ITS OBLIGATIONS
UNDER ALL BONDS WITHOUT LOSS, UPON REASONABLE PRIOR NOTICE TRAVELERS SHALL HAVE
THE RIGHT AT REASONABLE TIMES DURING NORMAL BUSINESS HOURS TO FREE ACCESS TO THE
BOOKS AND RECORDS OF EACH OF HOLDINGS AND ITS SUBSIDIARIES, INCLUDING, WITHOUT
LIMITATION, ITS BOOKS, RECORDS, ACCOUNTS, COMPUTER SOFTWARE AND OTHER
COMPUTER-STORED INFORMATION, FOR THE PURPOSE OF EXAMINING, COPYING, OR
REPRODUCING THE SAME.  FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN
EVENT OF DEFAULT, EACH PRINCIPAL AUTHORIZES AND REQUESTS ANY AND ALL
DEPOSITORIES IN WHICH FUNDS OF SUCH PRINCIPAL MAY BE DEPOSITED TO FURNISH TO
TRAVELERS UPON TRAVELERS’S WRITTEN REQUEST STATEMENTS OF ITS ACCOUNT AND ANY
OTHER DOCUMENTS REFLECTING ITS RECEIPTS AND DISBURSEMENTS, AND ANY PERSON DOING
BUSINESS WITH SUCH PRINCIPAL IS AUTHORIZED TO FURNISH ANY INFORMATION REQUESTED
BY TRAVELERS CONCERNING ANY TRANSACTION.  SUBJECT TO SECTION 8.11, TRAVELERS MAY
FURNISH COPIES OF ANY AND ALL STATEMENTS, AGREEMENTS AND FINANCIAL STATEMENTS
AND ANY INFORMATION WHICH IT NOW HAS OR MAY OBTAIN CONCERNING EACH OF HOLDINGS
AND ITS SUBSIDIARIES TO OTHER PERSONS FOR THE PURPOSE OF PROCURING CO-SURETYSHIP
OR REINSURANCE.

 

SECTION 6.8   FINANCIAL RECORDS AND REPORTS.  HOLDINGS WILL PROVIDE TRAVELERS
WITH COPIES OF YEARLY AUDITED FINANCIAL STATEMENTS OF HOLDINGS AND ITS
SUBSIDIARIES ON A CONSOLIDATED BASIS AS SOON AS POSSIBLE UPON COMPLETION AND IN
NO EVENT LATER THAN NINETY (90) DAYS AFTER THE END OF THE PERIOD UNDER AUDIT. 
IN ADDITION, HOLDINGS WILL FURNISH TRAVELERS WITH TRUE COPIES OF QUARTERLY
UNAUDITED FINANCIAL STATEMENTS OF HOLDINGS AND ITS SUBSIDIARIES ON A
CONSOLIDATED BASIS, AND SUCH OTHER FINANCIAL INFORMATION IN A FORM AS TRAVELERS
MAY REASONABLY REQUEST, UPON COMPLETION AND IN NO EVENT LATER THAN FORTY-FIVE
(45) DAYS AFTER THE END OF EACH OF THE FIRST THREE FISCAL QUARTERS OF EACH
FISCAL YEAR.  THE FINANCIAL STATEMENTS TO BE PROVIDED BY HOLDINGS WILL BE
PREPARED IN CONFORMITY WITH GAAP (EXCEPT, WITH RESPECT TO UNAUDITED FINANCIAL
STATEMENTS, FOR THE ABSENCE OF FOOTNOTES AND SUBJECT TO YEAR-END AUDIT
ADJUSTMENTS) APPLIED ON A BASIS CONSISTENT WITH THAT OF THE PRECEDING FISCAL
YEAR AND IN EACH INSTANCE WILL PRESENT FAIRLY AND ACCURATELY THE FINANCIAL
CONDITION OF HOLDINGS AND ITS SUBSIDIARIES ON A CONSOLIDATED BASIS AS AT THE
DATES OF THE STATEMENTS AND THE RESULTS OF THEIR OPERATIONS FOR THE PERIODS THEN
ENDED.  HOLDINGS AGREES TO PROMPTLY NOTIFY TRAVELERS OF THE OCCURRENCE OF ANY
MATERIAL ADVERSE CHANGE.

 

SECTION 6.9   PRINCIPALS’ REPRESENTATION.  HOLDINGS WILL PROVIDE TRAVELERS ON A
QUARTERLY BASIS WITH A LETTER IN WHICH AN AUTHORIZED OFFICER OF HOLDINGS
REPRESENTS THAT TO HIS OR HER KNOWLEDGE, AS OF THE DATE OF SUCH QUARTER END, NO
CONDITION, EVENT OR ACT EXISTS WHICH CONSTITUTES, OR WHICH WITH NOTICE OR THE
LAPSE OF TIME, OR BOTH, WOULD CONSTITUTE AN EVENT OF DEFAULT.  THIS LETTER SHALL
ACCOMPANY EACH DELIVERY OF FINANCIAL STATEMENTS REQUIRED BY SECTION 6.8 HEREOF.

 

SECTION 6.10   NOTICE OF LITIGATION.  HOLDINGS SHALL PROMPTLY GIVE NOTICE IN
WRITING TO TRAVELERS OF (A) ANY LITIGATION FILED OR THREATENED AGAINST HOLDINGS
OR ANY OF

 

22

--------------------------------------------------------------------------------

 

its SUBSIDIARIES involving an amount in excess of $6,000,000 which claim is not
covered by insurance and (b) all litigation filed against any INDEMNITOR
associated with any CONTRACT with respect to which five or more separate
litigation matters are then pending.

 

SECTION 6.11   LIENS.  HOLDINGS WILL NOT, AND WILL NOT PERMIT ANY SUBSIDIARY TO
CREATE, INCUR, ASSUME, OR SUFFER TO EXIST ANY LIEN UPON ANY OF ITS PROPERTIES OR
ASSETS NOW OWNED OR HEREAFTER ACQUIRED, EXCEPT FOR PERMITTED LIENS.

 

SECTION 6.12   DEBT AND CONTINGENT LIABILITIES.  HOLDINGS WILL NOT, AND WILL NOT
PERMIT ANY SUBSIDIARY TO, INCUR, ASSUME, OR SUFFER TO EXIST ANY DEBT OR
CONTINGENT LIABILITY, EXCEPT FOR:

 

(A)                                  DEBT AND CONTINGENT LIABILITY EXISTING AT
THE EFFECTIVE DATE OF THIS AGREEMENT AND DISCLOSED ON SCHEDULE 6.12 ATTACHED
HERETO AND ANY RENEWALS, EXTENSIONS, REFINANCINGS OR REPLACEMENTS THEREOF,
PROVIDED, THAT THE TERMS THEREOF ARE NOT MATERIALLY MORE BURDENSOME ON THE
INDEMNITORS THAN THE EXISTING TERMS;

 

(B)                                 ENDORSEMENT OF INSTRUMENTS FOR DEPOSIT OR
COLLECTION IN THE ORDINARY COURSE OF BUSINESS;

 

(C)                                  CONTINGENT LIABILITIES IN CONNECTION WITH
THIRD-PARTY LEASES, REPURCHASE AGREEMENTS OR SALES IN THE ORDINARY COURSE OF
BUSINESS;

 

(D)                                 DEBT AND CONTINGENT LIABILITIES IN RESPECT
OF FACTORING OR FINANCING OF ACCOUNTS RECEIVABLE WITH RESPECT TO ANY CONTRACT OR
SERIES OF CONTRACTS UNDER WHICH THE AMOUNTS PAYABLE TO HOLDINGS OR ANY
SUBSIDIARY ARE PAYABLE IN WHOLE OR IN PART IN THE CURRENCY OF ANY COUNTRY OTHER
THAN THE UNITED STATES OF AMERICA, SOLD OR PLEDGED ON A NON-RECOURSE BASIS IN AN
AGGREGATE AMOUNT NOT TO EXCEED $10,000,000;

 

(E)                                  DEBT OF THE PRINCIPALS AND INDEMNITORS
ARISING UNDER THIS AGREEMENT AND UNDER THE OTHER UNDERWRITING DOCUMENTS;

 

(F)                                    DEBT AND CONTINGENT LIABILITIES ARISING
UNDER (I) THE BANK LOAN FACILITY; PROVIDED, THAT THE AGGREGATE PRINCIPAL AMOUNT
OF ALL LOANS PLUS THE UNDRAWN FACE AMOUNT OF ALL LETTERS OF CREDIT OUTSTANDING
UNDER THE BANK LOAN FACILITY SHALL AT NO TIME EXCEED $130,000,000; (II) THE DEBT
INDENTURE; PROVIDED, THAT THE AGGREGATE PRINCIPAL AMOUNT OUTSTANDING UNDER THE
DEBT INDENTURE SHALL AT NO TIME EXCEED $175,000,000; AND (III) THE 1998 DEBT
INDENTURE (AS DEFINED IN THE EXISTING AGREEMENT) IN THE AGGREGATE PRINCIPAL
AMOUNT OUTSTANDING OF APPROXIMATELY $26,940,000; PROVIDED, THAT HOLDINGS WILL
REDEEM SUCH DEBT PROMPTLY FOLLOWING THE DATE HEREOF AND IN ANY EVENT BY
FEBRUARY 15, 2004, AND THAT THE AMOUNT NECESSARY TO REDEEM SUCH DEBT SHALL HAVE
BEEN IRREVOCABLY COMMITTED OR SET ASIDE IN A MANNER REASONABLY ACCEPTABLE TO
TRAVELERS UNTIL APPLICATION THEREOF TO REDEEM SUCH DEBT;

 

(G)                                 DEBT AND CONTINGENT LIABILITIES UNDER OR IN
RESPECT OF CAPITAL LEASES;

 

23

--------------------------------------------------------------------------------

 

(H)                                 DEBT OF HOLDINGS TO ANY SUBSIDIARY AND DEBT
OF ANY SUBSIDIARY TO HOLDINGS OR ANY OTHER SUBSIDIARY TO THE EXTENT PERMITTED BY
SECTION 6.15;

 

(I)                                     DEBT CONSISTING OF DEFERRED PAYMENT
OBLIGATIONS OF A PRINCIPAL FOR INSURANCE PREMIUMS OR OF FUNDS BORROWED FOR THE
PAYMENT OF SUCH PREMIUMS;

 

(J)                                     CONTINGENT LIABILITIES CONSISTING OF
GUARANTIES BY HOLDINGS OR ANY SUBSIDIARY OF OBLIGATIONS OF HOLDINGS OR ANY
SUBSIDIARY, AS THE CASE MAY BE, UNDER ANY DEBT OTHERWISE PERMITTED HEREUNDER OR
UNDER ANY LEASE OR OTHER AGREEMENT (NOT REPRESENTING DEBT) ENTERED INTO IN THE
ORDINARY COURSE OF BUSINESS; PROVIDED, THAT THE AGGREGATE AMOUNT OF SUCH
CONTINGENT LIABILITIES OF INDEMNITORS RELATING TO DEBT OF LIMITED SUBSIDIARIES,
WHEN ADDED TO THE OTHER RESTRICTED AMOUNTS THEN OUTSTANDING, SHALL NOT EXCEED AT
ANY TIME $30,000,000;

 

(K)                                  DEBT INCURRED IN THE ORDINARY COURSE OF
BUSINESS IN THE NATURE OF OPEN ACCOUNTS (EXTENDED BY SUPPLIERS ON NORMAL TRADE
TERMS IN CONNECTION WITH PURCHASERS OF GOODS OR SERVICES) ACCRUED LIABILITIES
AND DEFERRED INCOME, TAXES AND JUDGMENTS OR ORDERS FOR THE PAYMENT OF MONEY TO
THE EXTENT SUCH JUDGMENTS OR ORDERS DO NOT RESULT IN ANY EVENT OF DEFAULT;

 

(L)                                     DEBT AND CONTINGENT LIABILITIES INCURRED
TO FINANCE THE ACQUISITION, CONSTRUCTION, REPAIR OR IMPROVEMENT OF ASSETS IN THE
ORDINARY COURSE OF BUSINESS SO LONG AS THE AMOUNT OF SUCH DEBT DOES NOT EXCEED
THE PURCHASE PRICE, CONSTRUCTION COST, REPAIR COST OR IMPROVEMENT COST OF THE
ASSETS ACQUIRED, CONSTRUCTED, REPAIRED OR IMPROVED WITH THE PROCEEDS THEREOF;

 

(M)                               DEBT ARISING FROM THE ISSUANCE OF LICENSE,
BID, PERFORMANCE AND LIEN BONDS, AND OTHER UNDERTAKINGS OR INSTRUMENTS OF
GUARANTY, WHETHER ISSUED BY TRAVELERS OR ANY OTHER SURETY FOR THE BENEFIT OF
HOLDINGS OR ANY SUBSIDIARY;

 

(N)                                 DEBT INCURRED IN CONNECTION WITH ANY
INTEREST RATE HEDGING TRANSACTION, FOREIGN CURRENCY OR COMMODITY HEDGING
TRANSACTIONS, FOREIGN EXCHANGE CONTRACT OR OTHER SIMILAR ARRANGEMENT ENTERED
INTO BY HOLDINGS OR ANY SUBSIDIARY;

 

(O)                                 CONTINGENT LIABILITIES CONSISTING OF
GUARANTIES BY HOLDINGS OR ANY SUBSIDIARY OF OBLIGATIONS OF AMBOY AGGREGATES, A
NEW JERSEY JOINT VENTURE, AND ITS SUBSIDIARIES; PROVIDED, THAT THE AGGREGATE
AMOUNT OF SUCH CONTINGENT LIABILITIES OF INDEMNITORS, SHALL NOT EXCEED AT ANY
TIME $17,000,000;

 

(P)                                 DEBT OF SUBSIDIARIES WHICH REPRESENTS THE
ASSUMPTION BY SUCH SUBSIDIARIES OF DEBT OF ANOTHER SUBSIDIARY IN CONNECTION WITH
THE MERGER OF SUCH OTHER SUBSIDIARY WITH AND INTO THE ASSUMING SUBSIDIARY OR THE
PURCHASE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF SUCH OTHER SUBSIDIARY;

 

(Q)                                 ALL PREMIUMS, INTEREST, FEES, EXPENSES,
INDEMNITIES, CHARGES AND ADDITIONAL OR CONTINGENT INTEREST ON OBLIGATIONS
DESCRIBED IN THIS SECTION 6.12;

 

24

--------------------------------------------------------------------------------

 

(R)                                    DEBT AND CONTINGENT LIABILITIES IN
RESPECT OF TAXES, ASSESSMENTS, GOVERNMENTAL CHARGES, TO THE EXTENT THAT PAYMENT
THEREOF IS NOT REQUIRED PURSUANT TO SECTION 6.6;

 

(S)                                  DEBT AND CONTINGENT LIABILITIES ARISING
UNDER THE VESSEL FINANCING AGREEMENT, PROVIDED THAT THE AGGREGATE PRINCIPAL
AMOUNT THEREUNDER DOES NOT EXCEED $23,400,000 AT ANY TIME OUTSTANDING;

 

(T)                                    UNSECURED DEBT USED TO REPURCHASE CAPITAL
STOCK OF GLDD ACQUISITIONS CORP. FROM FORMER EMPLOYEES, AT ANY TIME OUTSTANDING
NOT TO EXCEED IN THE AGGREGATE $5,000,000;

 

(U)                                 CONTINGENT LIABILITIES OTHERWISE PERMITTED
BY THIS AGREEMENT; AND

 

(V)                                 OTHER DEBT OF HOLDINGS AND ITS SUBSIDIARIES
IN AN AGGREGATE AMOUNT, DETERMINED ON A CONSOLIDATED BASIS WITH RESPECT TO
HOLDINGS AND ITS SUBSIDIARIES, AT ANY TIME OUTSTANDING NOT TO EXCEED
$10,000,000.

 

SECTION 6.13   DISPOSITION OF ASSETS; ISSUANCE OF EQUITY.

 

(A)                                  EXCEPT FOR PERMITTED LIENS, HOLDINGS WILL
NOT, AND WILL NOT PERMIT ITS SUBSIDIARIES TO, SELL, LEASE, TRANSFER, OR
OTHERWISE DISPOSE OF ITS ASSETS WHETHER NOW OWNED OR HEREAFTER ACQUIRED EXCEPT
FOR

 

(I)                                     SALES OF INVENTORY IN THE ORDINARY
COURSE OF BUSINESS,

 

(II)                                  THE SALE OR OTHER DISPOSITION OF ANY
INVESTMENT OF THE TYPE DESCRIBED IN CLAUSES (A) THROUGH (E), (H) AND (J) OF
SECTION 6.15,

 

(III)                               A DISPOSITION MADE IN CONNECTION WITH A SALE
AND LEASEBACK TRANSACTION INVOLVING THE SALE OR DISPOSITION OF CAPITAL ASSETS,
PROVIDED (A) SUCH SALE OR DISPOSITION IS FOR AN AMOUNT NOT LESS THAN THE FAIR
MARKET VALUE THEREOF AND (B) ANY DEBT ARISING IN CONNECTION THEREWITH IS
PERMITTED BY SECTION 6.12,

 

(IV)                              A SALE, LEASE OR OTHER DISPOSITION THAT EITHER
(A) IS MADE IN THE ORDINARY COURSE OF BUSINESS FOR FAIR MARKET VALUE, (B) IS A
SALE, LEASE OR TRANSFER FROM HOLDINGS TO ANY SUBSIDIARY OR FROM A SUBSIDIARY TO
HOLDINGS OR ANY OTHER SUBSIDIARY; PROVIDED, THAT, IN THE CASE OF A SALE, LEASE
OR OTHER DISPOSITION BY HOLDINGS OR ANY SUBSIDIARY WHICH IS NOT A LIMITED
SUBSIDIARY TO A LIMITED SUBSIDIARY, THE FAIR MARKET VALUE OF SUCH ASSETS, WHEN
ADDED TO THE OTHER RESTRICTED AMOUNTS THEN OUTSTANDING, SHALL NOT EXCEED AT ANY
TIME $30,000,000 OR (C) IS A LEASE (ON A SHORT-TERM OR LONG-TERM BASIS) TO
ANOTHER PERSON OF ASSETS NO LONGER USEFUL OR NECESSARY IN THE OPERATIONS OF
BUSINESSES OF HOLDINGS AND ITS SUBSIDIARIES,

 

(V)                                 A SALE OR OTHER DISPOSITION OF ASSETS NO
LONGER USEFUL OR NECESSARY IN THE OPERATIONS OR BUSINESSES OF HOLDINGS AND ITS
SUBSIDIARIES AND THE PURCHASE PRICE IS NOT LESS THAN THE FAIR MARKET VALUE OF
THE ASSET SOLD OR DISPOSED OF,

 

25

--------------------------------------------------------------------------------

 

(VI)                              A SALE OR OTHER DISPOSITION OF ACCOUNTS
RECEIVABLE ARISING IN THE ORDINARY COURSE OF BUSINESS WHICH ARE OVERDUE AND
WHICH HOLDINGS OR ANY SUBSIDIARY HAVE DETERMINED ARE NOT ECONOMICAL TO COLLECT,
AND

 

(VII)                           OTHER DISPOSITIONS, PROVIDED, THAT SUCH
DISPOSITIONS DO NOT EXCEED IN THE AGGREGATE IN ANY FISCAL YEAR TEN PERCENT (10%)
OF THE BOOK VALUE OF ALL ASSETS.

 

(B)                                 HOLDINGS FURTHER AGREES THAT IT SHALL NOT
PERMIT ITS SUBSIDIARIES TO AUTHORIZE OR ISSUE ADDITIONAL SHARES OF THEIR CAPITAL
STOCK OR SIMILAR EQUITY INTEREST EXCEPT (I) SHARES OR SIMILAR EQUITY INTERESTS
ISSUED TO HOLDINGS OR A WHOLLY-OWNED SUBSIDIARY OF HOLDINGS, (II) SHARES OF
CAPITAL STOCK OR EQUITY INTERESTS ISSUED BY (1) ANY NON-WHOLLY OWNED SUBSIDIARY
TO ITS HOLDERS OF CAPITAL STOCK OR EQUITY INTERESTS ON A PROPORTIONATE BASIS AND
(2) A NEWLY CREATED SUBSIDIARY TO ANOTHER PERSON IN CONNECTION WITH ANY JOINT
VENTURE, PROVIDED THAT SUCH NEWLY CREATED SUBSIDIARY’S BUSINESS AND ACTIVITIES
SHALL BE LIMITED TO THE CONDUCT OF SUCH JOINT VENTURE, (III) FOR DIRECTORS’
QUALIFYING SHARES AND SIMILAR ISSUANCES PURSUANT TO LOCAL LAW REQUIREMENTS, AND
(IV) SHARES OF CAPITAL STOCK OR EQUITY INTERESTS ISSUED BY NORTH AMERICAN SITE
DEVELOPERS, INC. TO PERSONS OTHER THAN HOLDINGS OR A WHOLLY-OWNED SUBSIDIARY OF
HOLDINGS, PROVIDED, THAT THE AGGREGATE AMOUNT OF SUCH SHARES OF CAPITAL STOCK OR
EQUITY INTERESTS ISSUED TO SUCH PERSONS SHALL NOT EXCEED TWENTY-FIVE PERCENT
(25%) OF THE AGGREGATE NUMBER OF SHARES OF CAPITAL STOCK OR EQUITY INTERESTS
ISSUED BY NORTH AMERICAN SITE DEVELOPERS, INC.

 

SECTION 6.14   MERGERS.  HOLDINGS WILL NOT, AND WILL NOT PERMIT ITS SUBSIDIARIES
TO, MERGE OR CONSOLIDATE WITH OR INTO OR PURCHASE OR OTHERWISE ACQUIRE ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF, OR STOCK OR OTHER EQUITY INTEREST IN, ANY
PERSON UNLESS (A) AFTER GIVING EFFECT TO SUCH TRANSACTION HOLDINGS SHALL BE IN
COMPLIANCE WITH THE PROVISIONS OF SECTION 6.19, AND 6.20 AND (B) IF SUCH
TRANSACTION INVOLVES AN INDEMNITOR, THE SURVIVING ENTITY SHALL HAVE EXECUTED AND
DELIVERED TO TRAVELERS A SUPPLEMENTAL SIGNATURE PAGE; PROVIDED, THAT (X) ANY
WHOLLY-OWNED SUBSIDIARY WHICH IS AN INDEMNITOR MAY MERGE OR CONSOLIDATE INTO
HOLDINGS OR INTO OR WITH ANY OTHER WHOLLY-OWNED SUBSIDIARY WHICH IS AN
INDEMNITOR, (Y) ANY WHOLLY-OWNED SUBSIDIARY WHICH IS NOT AN INDEMNITOR MAY MERGE
OR CONSOLIDATE INTO HOLDINGS OR INTO OR WITH ANY OTHER WHOLLY-OWNED SUBSIDIARY,
PROVIDED, THAT IN THE EVENT AN INDEMNITOR IS A PARTY TO SUCH MERGER OR
CONSOLIDATION, AN INDEMNITOR MUST SURVIVE THE TRANSACTION AND (Z) ANY
WHOLLY-OWNED SUBSIDIARY MAY SELL, TRANSFER, CONVEY, LEASE OR ASSIGN ITS ASSETS
OR A SUBSTANTIAL PART THEREOF TO HOLDINGS OR ANY OTHER WHOLLY-OWNED SUBSIDIARY,
PROVIDED, THAT IN THE CASE OF A SALE, TRANSFER, CONVEYANCE, LEASE OR ASSIGNMENT
BY SUCH A SUBSIDIARY WHICH IS AN INDEMNITOR, THE OTHER PARTY TO SUCH TRANSACTION
MUST ALSO BE AN INDEMNITOR.  NOTWITHSTANDING THE FOREGOING, HOLDINGS AND ITS
SUBSIDIARIES MAY CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT.

 

SECTION 6.15   INVESTMENTS.  HOLDINGS WILL NOT, AND WILL NOT PERMIT ITS
SUBSIDIARIES TO, MAKE OR SUFFER TO EXIST ANY INVESTMENT IN ANY PERSON WHETHER IN
THE FORM OF EQUITY, DEBT OR CONTINGENT LIABILITY, EXCEPT:

 

(A)                                  CASH EQUIVALENT INVESTMENTS;

 

26

--------------------------------------------------------------------------------

 

(B)                                 INVESTMENTS PERMITTED AS DEBT OR CONTINGENT
LIABILITIES UNDER SECTION 6.12 AND INVESTMENTS PERMITTED UNDER SECTION 6.14;

 

(C)                                  INVESTMENTS EXISTING ON THE EFFECTIVE DATE
OF THIS AGREEMENT AND DISCLOSED IN SCHEDULE 6.15;

 

(D)                                 ACCOUNTS RECEIVABLE ARISING FROM, AND CREDIT
EXTENDED IN CONNECTION WITH, THE SALE OF GOODS OR RENDERING OF SERVICES IN THE
ORDINARY COURSE OF BUSINESS AND PROMISSORY NOTES OR OTHER INSTRUMENTS EVIDENCING
SUCH CREDIT OR PARTIAL SATISFACTION THEREOF;

 

(E)                                  INVESTMENTS, DEBT AND CONTINGENT
LIABILITIES IN HOLDINGS OR ITS SUBSIDIARIES; PROVIDED, THAT THE AGGREGATE AMOUNT
OF INVESTMENTS IN LIMITED SUBSIDIARIES, WHEN ADDED TO THE OTHER RESTRICTED
AMOUNTS THEN OUTSTANDING, SHALL NOT EXCEED AT ANY TIME $30,000,000;

 

(F)                                    LOANS OR ADVANCES TO EMPLOYEES OF
HOLDINGS AND ITS SUBSIDIARIES MADE IN THE ORDINARY COURSE OF BUSINESS CONSISTENT
WITH PAST BUSINESS PRACTICES;

 

(G)                                 INVESTMENTS MADE IN THE ORDINARY COURSE OF
BUSINESS IN CONNECTION WITH ITS CAPACITY AS A CO-JOINT VENTURER IN A JOINT
VENTURE, CORPORATION OR SIMILAR POOLING OF EFFORTS IN RESPECT OF A SPECIFIC
PROJECT OR SERIES OF PROJECTS FOR A LIMITED OR FIXED DURATION TO CONDUCT A
BUSINESS OF A TYPE IN WHICH A PRINCIPAL IS PRESENTLY ENGAGED CONSISTENT WITH
PAST PRACTICES;

 

(H)                                 INVESTMENTS IN AMBOY AGGREGATES, A NEW
JERSEY JOINT VENTURE, EXISTING ON THE DATE HEREOF AND DISCLOSED ON SCHEDULE 6.15
AND ADDITIONAL INVESTMENTS THEREIN MADE AFTER THE DATE HEREOF; PROVIDED, THAT
THE AMOUNT OF SUCH ADDITIONAL INVESTMENTS (EXCLUDING INCREASES SOLELY AS A
RESULT OF INCREASES IN THE RETAINED EARNINGS OF AMBOY AGGREGATES) SHALL NOT
EXCEED AT ANY TIME $10,000,000;

 

(I)                                     INVESTMENTS MADE IN CONNECTION WITH THE
RECEIPT BY HOLDINGS OR ANY OF ITS SUBSIDIARIES OF CONSIDERATION OTHER THAN CASH
FOR THE SALE BY HOLDINGS OR SUCH SUBSIDIARY OF ANY ASSETS PERMITTED TO BE SOLD
UNDER SECTION 6.13;

 

(J)                                     INVESTMENTS RECEIVED IN CONNECTION WITH
THE BANKRUPTCY OR REORGANIZATION OF, OR SETTLEMENT OF DELINQUENT ACCOUNTS AND
DISPUTES WITH CUSTOMERS AND SUPPLIERS, IN EACH CASE IN THE ORDINARY COURSE OF
BUSINESS;

 

(K)                                  INVESTMENTS CONSTITUTING LOANS TO EMPLOYEES
OF HOLDINGS AND ITS SUBSIDIARIES TO PURCHASE CAPITAL STOCK OF HOLDINGS; AND

 

(L)                                     OTHER INVESTMENTS IN AN AGGREGATE AMOUNT
AT ANY ONE TIME NOT TO EXCEED $15,000,000.

 

For purposes of this Section 6.15, “Cash Equivalent Investments” means, at any
item:

 

27

--------------------------------------------------------------------------------

 

(A)                                  ANY OBLIGATION, MATURING NOT MORE THAN ONE
YEAR AFTER SUCH TIME, ISSUED OR GUARANTEED BY THE UNITED STATES GOVERNMENT OR
ISSUED BY AN AGENCY THEREOF AND BACKED BY THE FULL FAITH AND CREDIT OF THE
UNITED STATES OF AMERICA;

 

(B)                                 MARKETABLE GENERAL OBLIGATIONS, MATURING NOT
MORE THAN SIX MONTHS AFTER SUCH TIME, ISSUED BY ANY STATE OF THE UNITED STATES
OF AMERICA OR ANY POLITICAL SUBDIVISION OF ANY SUCH STATE OR ANY PUBLIC
INSTRUMENTALITY THEREOF AND RATED A-2 OR HIGHER BY STANDARD & POOR’S RATING
GROUP, A DIVISION OF MCGRAW HILL, INC., OR P-2 OR HIGHER BY MOODY’S INVESTORS
SERVICE, INC.;

 

(C)                                  COMMERCIAL PAPER, MATURING NOT MORE THAN
NINE MONTHS FROM THE DATE OF ISSUE, WHICH IS ISSUED BY (I) A CORPORATION
ORGANIZED UNDER THE LAWS OF ANY STATE OF THE UNITED STATES OR OF THE DISTRICT OF
COLUMBIA AND RATED A-2 OR HIGHER BY STANDARD & POOR’S RATING GROUP, A DIVISION
OF MCGRAW HILL, INC., OR P-2 OR HIGHER BY MOODY’S INVESTORS SERVICE, INC., OR
(II) ANY LENDER UNDER THE BANK LOAN FACILITY (OR ITS HOLDING COMPANY);

 

(D)                                 ANY CERTIFICATE OF DEPOSIT, TIME (INCLUDING
EURODOLLAR TIME DEPOSITS) OR DEMAND DEPOSIT OR BANKERS ACCEPTANCE, MATURING NOT
MORE THAN ONE YEAR AFTER SUCH TIME, WHICH IS ISSUED BY EITHER (I) A COMMERCIAL
BANKING INSTITUTION ORGANIZED UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR
ANY STATE THEREOF OR THE DISTRICT OF COLUMBIA THAT HAS A COMBINED CAPITAL,
SURPLUS AND UNDIVIDED PROFITS OF NOT LESS THAN $500,000,000, (II) ANY LENDER
UNDER THE BANK LOAN FACILITY, OR (III) ANY BRANCH OF ANY LENDER UNDER THE BANK
LOAN FACILITY OR ANY COMMERCIAL BANKING INSTITUTION ORGANIZED UNDER THE LAWS OF
THE UNITED KINGDOM, CANADA OR JAPAN HAVING COMBINED CAPITAL, SURPLUS AND
UNDIVIDED PROFITS OF NOT LESS THAN $500,000,000;

 

(E)                                  FULLY COLLATERALIZED REPURCHASE AGREEMENTS
WITH A TERM OF NOT MORE THAN 30 DAYS FOR UNDERLYING SECURITIES OF THE TYPE
DESCRIBED IN CLAUSES (A) AND (B) ABOVE, ENTERED INTO WITH ANY INSTITUTION
MEETING THE QUALIFICATIONS SPECIFIED IN CLAUSE (D) ABOVE;

 

(F)                                    PARTICIPATIONS IN LOANS MADE TO A
BORROWER WITH A DEBT RATING OF A-2 OR HIGHER FROM STANDARD & POOR’S RATING
GROUP, A DIVISION OF MCGRAW HILL, INC., OR P-2 OR HIGHER FROM MOODY’S INVESTOR
SERVICE, INC.; PROVIDED, THAT SUCH LOANS MUST MATURE WITHIN SIX MONTHS FROM THE
DATE SUCH PARTICIPATION IS PURCHASED;

 

(G)                                 SHORT-TERM ASSET MANAGEMENT ACCOUNTS FOR THE
PURPOSE OF INVESTING IN NOTES ISSUED BY A CORPORATION ORGANIZED UNDER THE LAWS
OF ANY STATE OF THE UNITED STATES OR OF THE DISTRICT OF COLUMBIA AND RATED A-2
OR HIGHER BY STANDARD & POOR’S RATING GROUP, A DIVISION OF MCGRAW HILL, INC., OR
P-2 OR HIGHER BY MOODY’S INVESTORS SERVICE, INC.;

 

(H)                                 BONDS ISSUED BY A MUNICIPALITY OR
GOVERNMENTAL AGENCY AND RATED NOT LOWER THAN BBB BY STANDARD & POOR’S RATING
GROUP, A DIVISION OF MCGRAW HILL, INC., OR BAA2 BY MOODY’S INVESTORS SERVICE,
INC. AND PURCHASED BY HOLDINGS OR ANY OF

 

28

--------------------------------------------------------------------------------

 

ITS SUBSIDIARIES IN THE ORDINARY COURSE OF ITS BUSINESS IN CONNECTION WITH
RETAINAGE UNDER CONTRACTS WITH ITS CUSTOMERS;

 

(I)                                     UNITED STATES DOLLARS OR MONEY IN OTHER
CURRENCIES RECEIVED IN THE ORDINARY COURSE OF BUSINESS;

 

(J)                                     MONEY MARKET FUNDS AT LEAST 95% OF THE
ASSETS OF WHICH CONSTITUTE CASH EQUIVALENT INVESTMENTS OF THE KINDS DESCRIBED IN
CLAUSES (A) THROUGH (E), (I) AND (J) OF THIS DEFINITION;

 

(K)                                  SECURITIES WITH MATURITIES OF ONE YEAR OR
LESS FROM THE DATE OF ACQUISITION ISSUED OR FULLY AND UNCONDITIONALLY GUARANTEED
BY ANY STATE, COMMONWEALTH OR TERRITORY OF THE UNITED STATES OF AMERICA OR THE
FEDERAL GOVERNMENT OF CANADA, OR BY ANY POLITICAL SUBDIVISION OR TAXING
AUTHORITY THEREOF, AND HAVING ONE OF THE TWO HIGHEST RATINGS OBTAINABLE FROM
STANDARD & POOR’S RATING GROUP, A DIVISION OF MCGRAW HILL, INC., OR MOODY’S
INVESTORS SERVICE, INC.; OR

 

(L)                                     IN THE CASE OF ANY SUBSIDIARY OF
HOLDINGS THAT IS NOT DOMICILED IN THE UNITED STATES, INVESTMENTS COMPARABLE TO
THE FOREGOING THAT HAVE BEEN APPROVED BY THE ADMINISTRATIVE AGENT UNDER THE BANK
LOAN FACILITY.

 

SECTION 6.16   DIVIDEND RESTRICTIONS.  HOLDINGS WILL NOT PAY ANY DIVIDEND OR
MAKE ANY OTHER DISTRIBUTION TO ANY PERSON, EXCEPT:

 

(A)                                  DIVIDENDS OR DISTRIBUTIONS PAYABLE IN
COMMON STOCK OR WARRANTS TO PURCHASE COMMON STOCK OR SPLITUPS OR
RECLASSIFICATION OF ITS STOCK INTO ADDITIONAL OR OTHER SHARES OF ITS COMMON
STOCK; AND

 

(B)                                 CASH DIVIDENDS OR OTHER DISTRIBUTIONS
PAYABLE BY HOLDINGS NOT TO EXCEED IN AGGREGATE DURING THE TERM OF THIS AGREEMENT
THE SUM OF (I) $5,000,000 PLUS (II) FIFTY PERCENT (50%) OF THE SUM OF THE
POSITIVE NET INCOME (IF ANY) FOR THE FISCAL QUARTER OF HOLDINGS ENDING ON OR
ABOUT DECEMBER 31, 1998 PLUS (III) FIFTY PERCENT (50%) OF THE SUM OF POSITIVE
NET INCOME (IF ANY) FOR EACH FISCAL YEAR OF HOLDINGS ENDING ON OR AFTER
DECEMBER 31, 1999; PROVIDED, THAT BOTH BEFORE AND AFTER GIVING EFFECT TO SUCH
DIVIDENDS OR DISTRIBUTIONS HOLDINGS SHALL BE IN COMPLIANCE WITH THE PROVISIONS
OF SECTION 6.19 AND 6.20.

 

Notwithstanding the foregoing, HOLDINGS may consummate the transactions
contemplated by the MERGER AGREEMENT.

 

SECTION 6.17   RESTRICTIONS UPON CONTRACTS WITH AFFILIATES.  OTHER THAN AMONGST
THEMSELVES, HOLDINGS AND ITS SUBSIDIARIES WILL NOT WITHOUT THE PRIOR WRITTEN
CONSENT OF TRAVELERS ENTER INTO CONTRACTS, EQUIPMENT LEASES OR OTHER AGREEMENTS
WITH ANY AFFILIATE EXCEPT ON AN ARMS’ LENGTH BASIS OR EXCEPT (A) PURSUANT TO
WRITTEN AGREEMENTS WITH THIRD-PARTY PERSONS FROM WHICH HOLDINGS AND ITS
SUBSIDIARIES HAVE BEEN OR ARE BEING BENEFITED, INCLUDING BUT NOT LIMITED TO
PENSION PLANS AND OTHER JOINT EMPLOYEE BENEFIT PROGRAMS, INSURANCE PROGRAMS AND
OTHER SIMILAR JOINT PROGRAMS OR SERVICES, (B) THE PAYMENT BY HOLDINGS AND ITS
SUBSIDIARIES TO MADISON DEARBORN PARTNERS IV, L.P., OR ANY OF ITS AFFILIATES OF

 

29

--------------------------------------------------------------------------------

 

out of pocket costs and expenses owed to PERSONS who are not AFFILIATES, (c)
transactions contemplated by the MERGER AGREEMENT, (d) any tax sharing agreement
entered into by HOLDINGS or any of its SUBSIDIARIES from time to time, (e) any
customary management agreement entered into by HOLDINGS or its SUBSIDIARIES with
Madison Dearborn Partners IV, L.P. or any of its AFFILIATES from time to time
and (f) the transactions described on Schedule 6.17.

 

SECTION 6.18   NATURE OF BUSINESS.  HOLDINGS AND ITS SUBSIDIARIES SHALL NOT
ENGAGE IN ANY BUSINESS ACTIVITIES OR OPERATIONS SUBSTANTIALLY DIFFERENT FROM OR
UNRELATED TO ITS PRESENT BUSINESS ACTIVITIES AND OPERATIONS; PROVIDED, THAT
HOLDINGS AND ITS SUBSIDIARIES MAY ENGAGE IN ACTIVITIES THAT ARE REASONABLY
RELATED, COMPLIMENTARY OR ANCILLARY TO ITS BUSINESS ACTIVITIES OR OPERATIONS,
INCLUDING, WITHOUT LIMITATION, THE PROVISION OF COMMERCIAL AND INDUSTRIAL
DEMOLITION SERVICES.

 

SECTION 6.19   NET WORTH.  HOLDINGS AND ITS CONSOLIDATED SUBSIDIARIES SHALL NOT
PERMIT NET WORTH AS OF THE LAST DAY OF ANY FISCAL QUARTER OF HOLDINGS ENDING
AFTER THE DATE HEREOF, TO BE LESS THAN THE SUM OF (I) $90,000,000 PLUS (II)
FIFTY PERCENT (50%) OF THE SUM OF THE POSITIVE NET INCOME (IF ANY) FOR THE
FISCAL QUARTER OF HOLDINGS ENDING ON OR ABOUT DECEMBER 31, 2003, PLUS (III)
FIFTY PERCENT (50%) OF THE SUM OF THE POSITIVE NET INCOME (IF ANY) FOR EACH
FISCAL YEAR OF HOLDINGS ENDING ON OR AFTER DECEMBER 31, 2004 AND PRIOR TO THE
DATE OF DETERMINATION HEREUNDER.

 

SECTION 6.20   NET CURRENT ASSETS.  HOLDINGS WILL NOT PERMIT THE RATIO OF ITS
CONSOLIDATED CURRENT ASSETS TO ITS CONSOLIDATED CURRENT LIABILITIES AS OF THE
LAST DAY OF EACH FISCAL QUARTER OF HOLDINGS TO BE LESS THAN 1.2 TO 1 AND WILL
NOT PERMIT ITS NET CURRENT ASSETS AS OF THE LAST DAY OF EACH FISCAL QUARTER OF
HOLDINGS TO BE LESS THAN $17,000,000; PROVIDED, THAT IN THE EVENT HOLDINGS FAILS
TO MAINTAIN EITHER OF THESE LEVELS IT SHALL IMMEDIATELY NOTIFY TRAVELERS AND
SHALL HAVE THIRTY (30) DAYS IN WHICH TO RESTORE ITS POSITION.  IN THE
DETERMINATION OF CURRENT ASSETS, PIPE INVENTORY SHALL BE CLASSIFIED AS A CURRENT
ASSET; AND PROVIDED FURTHER, THAT FOR PURPOSES OF CALCULATING CONSOLIDATED
CURRENT LIABILITIES, CURRENT MATURITIES OF DEBT WILL BE EXCLUDED FROM THE
CALCULATION THEREOF TO THE EXTENT HOLDINGS OR ANY OF ITS SUBSIDIARIES IS ABLE TO
REPAY SUCH CURRENT MATURITIES THROUGH THE INCURRENCE OF OTHER NON-CURRENT DEBT
(INCLUDING, WITHOUT LIMITATION, THROUGH BORROWINGS UNDER THE BANK LOAN
FACILITY).

 

SECTION 6.21   SUBORDINATED DEBT AND PAYMENT BLOCKAGE NOTICE.

 

(A)                                  HOLDINGS SHALL NOT, AND SHALL NOT SUFFER OR
PERMIT ANY OF ITS SUBSIDIARIES TO, (I) MAKE ANY PAYMENT (OTHER THAN ANY PAYMENT
UTILIZING PROCEEDS FROM THE ISSUANCE OF ANY EQUITY SECURITIES BY HOLDINGS OR ANY
PARENT ENTITY) OF INTEREST ON ANY SUBORDINATED DEBT ON ANY DAY OTHER THAN THE
STATED, SCHEDULED DATE (SUBJECT TO ANY APPLICABLE GRACE PERIOD) FOR SUCH PAYMENT
SET FORTH IN THE DOCUMENT OR AGREEMENT EVIDENCING OR GOVERNING SUCH SUBORDINATED
DEBT, (II) MAKE ANY VOLUNTARY OR MANDATORY PREPAYMENT (OTHER THAN ANY PAYMENT
UTILIZING PROCEEDS FROM THE ISSUANCE OF ANY EQUITY SECURITIES BY HOLDINGS OR ANY
PARENT ENTITY) OF PRINCIPAL OF, OR REDEEM, PURCHASE OR DEFEASE, ANY SUBORDINATED
DEBT, OR (III) CONSENT TO ANY AMENDMENT, SUPPLEMENT OR OTHER MODIFICATION OF ANY
OF THE TERMS OR PROVISIONS CONTAINED IN, OR APPLICABLE TO, ANY DOCUMENT OR
AGREEMENT EVIDENCING OR GOVERNING

 

30

--------------------------------------------------------------------------------

 

SUBORDINATED DEBT, except to the extent that such amendment, supplement or other
modification would extend the date or reduce the amount of any required
repayment or redemption or would amend, supplement or modify any term or
provision in a manner not adverse to the rights or interests of TRAVELERS. 
Notwithstanding the foregoing, (i) TRAVELERS hereby consents to HOLDINGS making
a voluntary prepayment of, redeeming or repurchasing all of the principal and
accrued and unpaid interest, together with any premium and fees in connection
with such prepayment, redemption or repurchase, on the senior subordinated notes
issued pursuant to the 1998 DEBT INDENTURE (as defined in the EXISTING
AGREEMENT) and (ii) HOLDINGS and its SUBSIDIARIES shall be permitted to
refinance the SUBORDINATED DEBT from time to time pursuant to a note indenture
or other agreement containing covenants, events of default and other terms not
materially more restrictive than those set forth in the DEBT INDENTURE.

 

(B)                                 HOLDINGS SHALL PROMPTLY GIVE NOTICE IN
WRITING TO TRAVELERS OF THE RECEIPT BY THE TRUSTEE UNDER THE DEBT INDENTURE OF
ANY PAYMENT BLOCKAGE NOTICE.

 

SECTION 6.22   CHANGE OF LOCATION OR NAME.  NONE OF THE INDEMNITORS SHALL CHANGE
(I) THE LOCATION OF ITS PRINCIPAL PLACE OF BUSINESS OR CHIEF EXECUTIVE OFFICE,
OR (II) ITS NAME OR THE NAME UNDER WHICH IT CONDUCTS BUSINESS OR ITS
JURISDICTION OF ORGANIZATION, IN EACH CASE WITHOUT GIVING TRAVELERS WRITTEN
NOTICE THEREOF PROMPTLY UPON THE EFFECTIVENESS OF SUCH CHANGE (AND IN ANY EVENT
NO LATER THAN 30 DAYS AFTER THE EFFECTIVENESS OF SUCH CHANGE) AND TAKING ALL
ACTIONS REASONABLY REQUESTED BY TRAVELERS TO MAINTAIN AND PRESERVE ALL LIENS IN
FAVOR OF TRAVELERS GRANTED PURSUANT TO THE UNDERWRITING DOCUMENTS.

 

ARTICLE VII

RIGHTS OF TRAVELERS

 

SECTION 7.1   FURTHER ASSURANCES/TRAVELERS AS ATTORNEY-IN-FACT.  PRINCIPALS
AGREE TO SIGN, EXECUTE, FILE AND/OR DELIVER TO TRAVELERS ALL DOCUMENTS, REPORTS,
PAPERS, PLEADINGS AND/OR INSTRUMENTS REASONABLY REQUESTED BY TRAVELERS TO
OBTAIN, AND/OR PERFECT ANY OF TRAVELERS’S RIGHTS UNDER THIS AGREEMENT.  THE
INDEMNITORS IRREVOCABLY NOMINATE AND APPOINT TRAVELERS OR ANY OTHER PERSON(S)
DESIGNATED BY TRAVELERS, EFFECTIVE UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, TRUE AND LAWFUL ATTORNEY-IN-FACT OF THE
INDEMNITORS, WITH FULL RIGHT AND AUTHORITY, UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT TO EXECUTE ON BEHALF OF, AND SIGN THE NAMES
OF EACH INDEMNITOR TO ANY VOUCHER, RELEASE, SATISFACTION, CHECK, APPLICATION FOR
PAYMENT, BILL OF SALE OF ANY OR ALL PROPERTY ASSIGNED BY THIS AGREEMENT OR ANY
OTHER UNDERWRITING DOCUMENT TO TRAVELERS OR ANY OTHER PAPER OR CONTRACT
NECESSARY OR DESIRED TO CARRY INTO EFFECT THE PURPOSES OF THIS AGREEMENT OR ANY
OTHER UNDERWRITING DOCUMENT, WITH FULL RIGHT AND AUTHORITY, TO SATISFY THE
PERFORMANCE OF THE CONTRACT(S); AND EACH INDEMNITOR RATIFIES AND CONFIRMS ALL
THAT SUCH ATTORNEY-IN-FACT OR TRAVELERS MAY LAWFULLY DO IN THE PREMISES AND
FURTHER AUTHORIZES AND EMPOWERS TRAVELERS AND SUCH ATTORNEY-IN-FACT AND EACH OF
THEM TO ENTER UPON AND TAKE POSSESSION OF THE TOOLS, PLANT, EQUIPMENT, MATERIALS
AND SUBCONTRACTS AND ALL OTHER COLLATERAL SECURITY MENTIONED IN THIS AGREEMENT
AND ENFORCE, USE, EMPLOY AND DISPOSE THEREOF FOR THE PURPOSES SET FORTH IN THIS

 

31

--------------------------------------------------------------------------------

 

Agreement, INDEMNITORS recognize that the appointment of such attorney-in-fact
constitutes a power coupled with an interest.

 

SECTION 7.2   CONTRACT FUNDS HELD IN TRUST.  INDEMNITORS AND PRINCIPALS AGREE
AND EXPRESSLY DECLARE THAT UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN
EVENT OF DEFAULT ALL FUNDS DUE OR TO BECOME DUE UNDER THE CONTRACT(S) WILL
IMMEDIATELY BECOME TRUST FUNDS, WHETHER IN POSSESSION OF INDEMNITORS, PRINCIPALS
OR ANOTHER, FOR THE BENEFIT AND THE PAYMENT OF ALL PERSONS TO WHOM A PRINCIPAL
INCURS OBLIGATIONS IN THE PERFORMANCE OF THE CONTRACT(S), FOR WHICH TRAVELERS
WOULD BE LIABLE UNDER THE BOND(S).  IF TRAVELERS DISCHARGES ANY SUCH
OBLIGATIONS, WITH OR WITHOUT A CLAIM ASSERTED AGAINST TRAVELERS UNDER THE
BOND(S), IT SHALL BE ENTITLED TO ASSERT THE RIGHT OF SUCH PERSON TO THE TRUST
FUND.

 

SECTION 7.3   RIGHT OF TRAVELERS TO SETTLE CLAIMS.  TRAVELERS SHALL HAVE THE
EXCLUSIVE RIGHT FOR ITSELF AND FOR INDEMNITORS AND PRINCIPALS TO DECIDE AND
DETERMINE WHETHER ANY CLAIM, DEMAND, SUIT OR JUDGMENT ON THE BOND(S) SHALL BE
PAID, SETTLED, DEFENDED OR APPEALED.  ANY PAYMENT OR DETERMINATION MADE BY
TRAVELERS UNDER A GOOD FAITH BELIEF THAT EITHER TRAVELERS WAS OR MIGHT BE LIABLE
THEREFOR OR SUCH PAYMENTS WERE NECESSARY OR ADVISABLE TO PROTECT ANY OF
TRAVELERS’S RIGHTS OR TO AVOID OR LESSEN TRAVELERS’S LIABILITY OR ALLEGED
LIABILITY, SHALL BE FINAL, CONCLUSIVE AND BINDING UPON INDEMNITORS AND THE
PRINCIPALS; AND ANY LOSS WHICH MAY BE SUSTAINED OR INCURRED SHALL BE PAID BY THE
RESPECTIVE PRINCIPAL OR BY INDEMNITORS WITHIN FIFTEEN (15) DAYS OF RECEIPT OF
WRITTEN DEMAND BY TRAVELERS.  IN THE EVENT OF ANY PAYMENT, SETTLEMENT,
COMPROMISE, OR INVESTIGATION, AN ITEMIZED STATEMENT OF LOSS SWORN TO BY AN
OFFICER OR AUTHORIZED REPRESENTATIVE OF TRAVELERS OR VOUCHER(S) OR OTHER
EVIDENCE OF SUCH LOSS SHALL BE PRIMA FACIE EVIDENCE OF THE FACT AND EXTENT OF
THE LIABILITY OF INDEMNITORS AND THE PRINCIPALS TO TRAVELERS IN ANY CLAIM OR
SUIT AND IN ANY AND ALL MATTERS ARISING BETWEEN INDEMNITORS, THE PRINCIPALS AND
TRAVELERS.

 

SECTION 7.4   AUTHORITY OF TRAVELERS TO MAKE LOANS TO PRINCIPAL.  IN ADDITION TO
THE OTHER REMEDIES PROVIDED HEREIN, TRAVELERS IS AUTHORIZED AND EMPOWERED, BUT
IS NOT OBLIGATED, TO ADVANCE OR LOAN MONEY OR GUARANTEE LOANS TO ANY PRINCIPAL
AS TRAVELERS MAY SEE FIT FOR THE PURPOSE OF ANY OF THE CONTRACT(S), OR FOR THE
PURPOSE OF MEETING OPERATIONAL EXPENSES OR PAYING OTHER OBLIGATIONS, BONDED OR
UNBONDED.  SUCH FUNDS MAY BE ADVANCED OR GUARANTEED AT ANYTIME, WHETHER BEFORE
OR AFTER DEFAULT OF SUCH PRINCIPAL UNDER THE CONTRACT(S).  UPON DEMAND BY
TRAVELERS, EACH INDEMNITOR SHALL BE RESPONSIBLE TO REIMBURSE TRAVELERS FOR ALL
FUNDS SO LOANED, ADVANCED, OR GUARANTEED AND ALL LOSS INCURRED BY TRAVELERS IN
RELATION THERETO, NOTWITHSTANDING THE FAILURE OF ANY PRINCIPAL TO SO USE THOSE
FUNDS.  INDEMNITORS WAIVE ALL NOTICE OF SUCH ADVANCE, LOAN, OR GUARANTEE.

 

SECTION 7.5   AUTHORITY OF TRAVELERS TO AMEND BOND.  TRAVELERS SHALL HAVE THE
RIGHT, AND IS HEREBY AUTHORIZED AND EMPOWERED, BUT NOT REQUIRED: (A) UPON THE
REQUEST OF ANY INDEMNITOR TO INCREASE OR DECREASE THE PENALTY OR PENALTIES OF
ANY BOND(S), TO CHANGE THE OBLIGEE(S) THEREIN, TO EXECUTE ANY CONTINUATION,
ENLARGEMENTS, MODIFICATIONS AND RENEWALS THEREOF OR SUBSTITUTE THEREFOR WITH THE
SAME OR DIFFERENT CONDITIONS, PROVISIONS OR OBLIGEE(S), AND WITH THE SAME,
LARGER OR SMALLER PENALTIES, IT BEING AGREED THAT THIS INSTRUMENT SHALL APPLY TO
AND COVER SUCH NEW OR CHANGED BOND(S) OR RENEWALS EVEN THOUGH THE CONSENT OF

 

32

--------------------------------------------------------------------------------

 

TRAVELERS may or does substantially increase the liability of the INDEMNITORS
and the PRINCIPALS; or (b) to take such steps as it may deem necessary or proper
to obtain release from liability under the BOND(s); or (c) to assent to any
changes in any CONTRACT, including but not limited to, any change in the time
for completion of any CONTRACT and to payments or advances thereunder.

 

SECTION 7.6   RIGHTS OF TRAVELERS TO TAKE POSSESSION OF THE WORK.  UPON THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT (FOR THE AVOIDANCE
OF DOUBT, AFTER GIVING EFFECT TO ALL APPLICABLE GRACE PERIODS CONTAINED IN THE
DEFINITION OF EVENT OF DEFAULT), IN ADDITION TO OTHER REMEDIES PROVIDED HEREIN,
TRAVELERS IS AUTHORIZED AND EMPOWERED, BUT IS NOT OBLIGATED, TO TAKE POSSESSION
OF THE WORK UNDER ANY CONTRACT(S) AND AT THE EXPENSE OF THE RESPECTIVE PRINCIPAL
AND OF INDEMNITORS TO COMPLETE OR TO CONTRACT FOR THE COMPLETION OF THE SAME, OR
TO CONSENT TO THE RELETTING OF THE COMPLETION THEREOF BY OBLIGEE, OR TO TAKE
SUCH OTHER STEPS AS IN THE DISCRETION OF TRAVELERS MAY BE ADVISABLE OR NECESSARY
TO OBTAIN ITS RELEASE OR TO AVOID LOSS.

 

SECTION 7.7   DEPOSITORY TRUST ACCOUNTS.  UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT (FOR THE AVOIDANCE OF DOUBT, AFTER GIVING
EFFECT TO ALL APPLICABLE GRACE PERIODS CONTAINED IN THE DEFINITION OF EVENT OF
DEFAULT), PRINCIPALS SHALL, UPON DEMAND OF TRAVELERS, OPEN AN ACCOUNT(S) WITH A
BANK OR SIMILAR DEPOSITORY DESIGNATED BY PRINCIPALS AND APPROVED BY TRAVELERS,
WHICH ACCOUNT(S) SHALL BE DESIGNATED AS TRUST ACCOUNT(S) FOR THE DEPOSIT OF SUCH
TRUST FUNDS, AND SHALL DEPOSIT THEREIN ALL MONIES PAID OR TO BE PAID UNDER THE
CONTRACT(S).  WITHDRAWALS FROM SUCH ACCOUNT(S) SHALL BE BY CHECK OR SIMILAR
INSTRUMENTS SIGNED BY A REPRESENTATIVE OF TRAVELERS AND, AT TRAVELERS’S OPTION,
COUNTERSIGNED BY A PRINCIPAL.  SAID TRUST(S) SHALL TERMINATE ON THE PAYMENT BY
INDEMNITORS AND PRINCIPALS OF ALL THE CONTRACTUAL OBLIGATIONS FOR THE PAYMENT OF
WHICH THE TRUST(S) ARE CREATED OR UPON THE EXPIRATION OF SEVEN (7) YEARS FROM
THE DATE THEREOF, WHICHEVER SHALL FIRST OCCUR.

 

SECTION 7.8   PRESERVATION OF TRAVELERS’S RIGHTS.  TRAVELERS SHALL HAVE EVERY
RIGHT AND REMEDY WHICH A PERSONAL SURETY WITHOUT COMPENSATION WOULD HAVE,
INCLUDING THE RIGHT TO SECURE ITS DISCHARGE FROM THE SURETYSHIP, AND NOTHING IN
THIS AGREEMENT SHALL WAIVE, ABRIDGE OR DIMINISH ANY RIGHT WHICH TRAVELERS MIGHT
HAVE IF THIS AGREEMENT WERE NOT EXECUTED.

 

SECTION 7.9   AUTHORITY OF TRAVELERS TO ELECT REMEDIES.  EACH RIGHT, REMEDY AND
POWER OF TRAVELERS PROVIDED IN THIS AGREEMENT OR BY LAW, EQUITY, OR STATUTE
SHALL BE CUMULATIVE, AND THE EXERCISE BY TRAVELERS OF ANY RIGHT, REMEDY OR POWER
SHALL NOT PRECLUDE TRAVELERS’S SIMULTANEOUS OR SUBSEQUENT EXERCISE OF ANY OR ALL
OTHER RIGHTS, POWERS OR REMEDIES.  THE FAILURE OR DELAY BY TRAVELERS TO EXERCISE
ANY RIGHT, POWER OR REMEDY SHALL NOT WAIVE ANY RIGHT, POWER OR REMEDY.  NO
NOTICE OR DEMAND UPON TRAVELERS BY ANY INDEMNITOR OR ANY PRINCIPAL SHALL LIMIT
OR IMPAIR TRAVELERS’S RIGHT TO TAKE ANY ACTION UNDER THIS AGREEMENT OR TO
EXERCISE ANY RIGHT, POWER OR REMEDY, SUBJECT TO THE PROVISIONS OF SECTION 3.5
HEREIN.

 

33

--------------------------------------------------------------------------------

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.1   BENEFICIAL PARTIES.  THIS AGREEMENT SHALL, IN ALL ITS TERMS AND
AGREEMENTS, BE FOR THE BENEFIT OF AND PROTECT ANY PERSON JOINING WITH TRAVELERS
IN EXECUTING ANY BOND OR BONDS OR EXECUTING AT THE REQUEST OF TRAVELERS SAID
BOND OR BONDS AS WELL AS ANY PERSON ASSUMING CO-SURETYSHIP OR REINSURANCE
THEREUPON.

 

SECTION 8.2   JOINT AND SEVERAL.  THE AGREEMENTS AND COVENANTS HEREIN CONTAINED
SHALL BE BINDING UPON THE UNDERSIGNED, BOTH JOINTLY AND SEVERALLY, UPON THEIR
SUCCESSORS AND ASSIGNS JOINTLY AND SEVERALLY, PROVIDED, THAT THE PRINCIPALS AND
THE INDEMNITORS MAY NOT ASSIGN THEIR RIGHTS HEREUNDER WITHOUT THE PRIOR WRITTEN
CONSENT OF TRAVELERS.

 

SECTION 8.3   ATTORNEYS FEES.  THE INDEMNITORS AGREE HEREBY TO PAY THE
REASONABLE ATTORNEYS FEES AND EXPENSES INCURRED BY TRAVELERS IN THE PREPARATION
AND ENFORCEMENT OF THIS AGREEMENT AND THE OTHER UNDERWRITING DOCUMENTS.

 

SECTION 8.4   APPLICABLE LAW.  THE TERMS AND CONDITIONS OF THIS AGREEMENT SHALL
BE CONSTRUED UNDER THE LAWS OF NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAWS
PRINCIPLES (OTHER THAN THE PROVISIONS OF 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).

 

SECTION 8.5   JURISDICTION FOR SUITS UNDER THIS AGREEMENT.  SEPARATE SUITS MAY
BE BROUGHT HEREUNDER AS CAUSES OF ACTION MAY ACCRUE, AND THE PENDENCY OR
TERMINATION OF ANY SUCH SUIT SHALL NOT BAR ANY ACTION, WHETHER PREVIOUSLY OR
SUBSEQUENTLY ARISING.  PRINCIPALS AND INDEMNITORS CONSENT TO THE JURISDICTION OF
THE STATE AND FEDERAL COURT LOCATED IN HARTFORD, CT TO BRING ANY ACTION AGAINST
THEM UNDER THIS AGREEMENT OR THE BOND(S).  EACH PRINCIPAL AND EACH INDEMNITOR
ARE THE AGENTS FOR ALL PRINCIPALS AND ALL INDEMNITORS FOR THE PURPOSE OF
ACCEPTING SERVICE OF PROCESS.

 

SECTION 8.6   INDEMNITORS WAIVE DEFENSE OF SUBSEQUENT EXECUTION.  INDEMNITORS
WAIVE ANY DEFENSE THAT THIS AGREEMENT WAS EXECUTED SUBSEQUENT TO ANY BOND,
ADMITTING THAT SUCH BOND WAS EXECUTED PURSUANT TO EACH INDEMNITOR’S REQUEST AND
IN RELIANCE UPON INDEMNITORS’ PROMISE TO EXECUTE THIS AGREEMENT.

 

SECTION 8.7   VALIDITY OF AGREEMENT.  FAILURE TO EXECUTE, OR DEFECTIVE
EXECUTION, BY ANY PARTY SHALL NOT AFFECT THE VALIDITY OF THIS AGREEMENT AS TO
ANY OTHER PARTY EXECUTING THE SAME, AND EACH OTHER PARTY SHALL REMAIN FULLY
BOUND AND LIABLE HEREUNDER.  INVALIDITY OF ANY PORTION OR PROVISION OF THIS
AGREEMENT BY REASON OF THE LAWS OF ANY STATE OR FOR ANY OTHER REASON SHALL NOT
RENDER THE OTHER PROVISIONS OR PORTIONS INVALID.  EXECUTIONS OF ANY APPLICATION
OR SUBMISSION FOR ANY BOND BY ANY PRINCIPAL, OR OF ANY OTHER INDEMNITY AGREEMENT
BY ANY INDEMNITOR FOR THE PRINCIPALS SHALL NOT ABROGATE, WAIVE OR DIMINISH ANY
RIGHTS OF TRAVELERS UNDER THIS AGREEMENT.  THIS AGREEMENT MAY BE EXECUTED
SIMULTANEOUSLY IN ONE OR MORE COUNTERPARTS, EACH OF WHICH SHALL BE AN ORIGINAL,
BUT ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

34

--------------------------------------------------------------------------------

 

SECTION 8.8   ORAL MODIFICATIONS INEFFECTIVE.  THIS AGREEMENT MAY NOT BE CHANGED
OR MODIFIED ORALLY.  NO CHANGE OR MODIFICATION TO THIS AGREEMENT SHALL BE
EFFECTIVE UNLESS SPECIFICALLY AGREED TO IN WRITING AND EXECUTED BY TRAVELERS AND
HOLDINGS.

 

SECTION 8.9   NOTICES.  IT IS MUTUALLY AGREED THAT ANY AND ALL NOTICES OR
DEMANDS HEREIN PROVIDED FOR MUST BE GIVEN IN WRITING AND SHALL BE DEEMED GIVEN
IF AND WHEN DELIVERED IN PERSON OR DULY DEPOSITED IN THE UNITED STATES MAILS,
POSTAGE PREPAID FOR REGULAR OR CERTIFIED MAIL, PROPERLY ADDRESSED TO THE PARTY
TO WHOM GIVEN AT THE ADDRESS OF SUCH PARTY SHOWN IN THIS AGREEMENT; PROVIDED,
THAT ANY PARTY MAY SPECIFY ANY OTHER POST OFFICE ADDRESS IN THE UNITED STATES BY
GIVING AT LEAST TEN (10) DAYS WRITTEN NOTICE THEREOF TO THE OTHER PARTY.

 

Notice to TRAVELERS shall be sent to:

 

Travelers Casualty and Insurance Company of America

One Tower Square, 5PB

Hartford, CT  06183

 

Attention:  Chief Underwriting Officer - National Account Unit

 

with a copy to:

 

Travelers Casualty and Surety Company
215 Shuman Boulevard
Naperville, IL 60563-8458

 

Attention: Construction Services - Bond

 

Notice to any PRINCIPAL or to any INDEMNITOR shall be sent to:

 

Great Lakes Dredge & Dock Corporation
2122 York Road
Oak Brook, IL 60523

 

Attention:                                         Deborah A. Wensel

Chief Financial Officer

 

With a copy to:

 

Winston & Strawn LLP
35 W. Wacker Drive
Chicago, Illinois 60601

 

 

Attention: Brian S. Hart, Esq.

 

SECTION 8.10   REAFFIRMATION AND RESTATEMENT.  THIS AGREEMENT CONSTITUTES AN
AMENDMENT AND RESTATEMENT OF THE EXISTING AGREEMENT AND THE DEBT EVIDENCED BY
THE EXISTING AGREEMENT IS CONTINUING DEBT.  NOTHING HEREIN SHALL BE

 

35

--------------------------------------------------------------------------------

 

deemed to constitute a payment, settlement or novation of the DEBT evidenced by
the EXISTING AGREEMENT, or to release or otherwise adversely affect any LIEN
securing such DEBT or any rights TRAVELERS has against any guarantor, surety or
other party primarily or secondarily liable for such DEBT.

 

SECTION 8.11   CONFIDENTIALITY.  TRAVELERS AGREES THAT THEY WILL MAINTAIN THE
CONFIDENTIALITY OF ANY WRITTEN OR ORAL INFORMATION PROVIDED TO TRAVELERS BY OR
ON BEHALF OF HOLDINGS OR ANY OF ITS SUBSIDIARIES (HEREINAFTER COLLECTIVELY
CALLED “CONFIDENTIAL INFORMATION”), SUBJECT TO TRAVELERS’S (A) OBLIGATION TO
DISCLOSE ANY SUCH CONFIDENTIAL INFORMATION PURSUANT TO A REQUEST OR ORDER UNDER
APPLICABLE LAWS AND REGULATIONS OR PURSUANT TO A SUBPOENA OR OTHER LEGAL
PROCESS, (B) RIGHT TO DISCLOSE ANY SUCH CONFIDENTIAL INFORMATION TO ITS
EXAMINERS, AUDITORS, COUNSEL AND OTHER PROFESSIONAL ADVISORS, (C) RIGHT TO
DISCLOSE ANY SUCH CONFIDENTIAL INFORMATION IN CONNECTION WITH ANY LITIGATION OR
DISPUTE INVOLVING TRAVELERS AND HOLDINGS OR ANY OF ITS SUBSIDIARIES, (D) RIGHT
TO PROVIDE SUCH INFORMATION TO OTHER PERSONS FOR THE PURPOSE OF PROCURING
CO-SURETYSHIP OR REINSURANCE IF SUCH PERSON AGREES IN WRITING TO MAINTAIN THE
CONFIDENTIALITY OF SUCH INFORMATION ON TERMS SUBSTANTIALLY SIMILAR TO THOSE OF
THIS SECTION AS IF IT WERE A PARTY HERETO.  NOTWITHSTANDING THE FOREGOING, ANY
SUCH INFORMATION SUPPLIED TO TRAVELERS OR ANOTHER PERSON UNDER THIS AGREEMENT
SHALL CEASE TO BE CONFIDENTIAL INFORMATION IF IT IS OR BECOMES KNOWN TO SUCH
PERSON BY OTHER THAN UNAUTHORIZED DISCLOSURE, OR IF IT BECOMES A MATTER OF
PUBLIC KNOWLEDGE.

 

SECTION 8.12   RELEASE OF LIENS.  TRAVELERS AGREES TO RELEASE THE LIENS UNDER
THE SECURITY AGREEMENTS, THE VESSEL MORTGAGES, AND ANY OTHER UNDERWRITING
DOCUMENTS, AND TO EXECUTE AND DELIVER SUCH DOCUMENTS AND INSTRUMENTS REQUESTED
BY ANY PRINCIPAL TO EFFECT SUCH RELEASE;

 

(A)                                  ON ANY PROPERTY OR ASSETS IN WHICH THE
AGENT UNDER THE BANK LOAN FACILITY HAS A FIRST PRIORITY LIEN AND IF SUCH FIRST
PRIORITY LIEN IS RELEASED BY THE AGENT UNDER THE BANK LOAN FACILITY;

 

(B)                                 ON ANY PROPERTY OR ASSETS FOR WHICH
SUBSTITUTE COLLATERAL IS PROVIDED WITH AN APPRAISAL VALUE AT LEAST EQUAL TO THE
VALUE OF THE PROPERTY OR ASSETS RELEASED;

 

(C)                                  ON ALL COLLATERAL UPON TERMINATION OF THIS
AGREEMENT AND PAYMENT IN FULL OF ALL OBLIGATIONS UNDER THIS AGREEMENT; AND

 

(D)                                 ON ANY PROPERTY OR ASSETS UPON THE SALE,
TRANSFER OR OTHER DISPOSITION OF SUCH PROPERTY OR ASSETS WHICH IS OTHERWISE
PERMITTED UNDER THIS AGREEMENT, UP TO AN AGGREGATE FAIR MARKET VALUE, AS
DETERMINED IN GOOD FAITH BY THE APPLICABLE PRINCIPAL SELLING SUCH PROPERTY OR
ASSETS, NOT TO EXCEED $5,000,000 DURING THE TERM OF THIS AGREEMENT; PROVIDED,
THAT TRAVELERS IS GIVEN PRIOR WRITTEN NOTICE OF THE FAIR MARKET VALUE OF SUCH
TRANSACTION.

 

SECTION 8.13   SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF THE INDEMNITORS AND TRAVELERS AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS (INCLUDING SUCCESSORS BY WAY OF MERGER, ACQUISITION OR
SIMILAR EVENT).

 

36

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, this Agreement is executed by the parties on the day and
date first set forth above.

 

 

GREAT LAKES DREDGE & DOCK
CORPORATION

 

 

 

 

By:

  /s/ Deborah A. Wensel/

 

 

 

Name:

Deborah A. Wensel

 

 

Title:

Senior Vice President, Chief Financial

 

 

 

Officer and Treasurer

 

 

 

 

 

 

 

 

 

GREAT LAKES DREDGE & DOCK COMPANY

 

 

 

 

By:

 /s/ Deborah A. Wensel/

 

 

 

Name:

Deborah A. Wensel

 

 

Title:

Senior Vice President, Chief Financial

 

 

 

Officer and Treasurer

 

 

 

 

 

 

 

 

 

LYDON DREDGING & CONSTRUCTION
COMPANY, LTD.

 

 

 

 

By:

 /s/ Deborah A. Wensel/

 

 

 

Name:

Deborah A. Wensel

 

 

Title:

Vice President

 

 

 

 

 

 

 

 

 

FIFTY-THREE DREDGING CORPORATION

 

 

 

 

By:

 /s/ Deborah A. Wensel/

 

 

 

Name:

Deborah A. Wensel

 

 

Title:

Vice President

 

 

 

 

 

 

 

 

 

DAWSON MARINE SERVICES COMPANY

 

 

 

 

By:

 /s/ Deborah A. Wensel/

 

 

 

Name:

Deborah A. Wensel

 

 

Title:

Senior Vice President, Chief Financial

 

 

 

Officer and Treasurer

 

--------------------------------------------------------------------------------

 

 

GREAT LAKES CARIBBEAN DREDGING, INC.

 

 

 

 

By:

 /s/ Deborah A. Wensel/

 

 

 

Name:

Deborah A. Wensel

 

 

Title:

Senior Vice President, Chief Financial

 

 

 

Officer and Treasurer

 

 

 

 

 

 

 

 

 

NORTH AMERICAN SITE DEVELOPERS, INC.

 

 

 

 

By:

 /s/ Deborah A. Wensel/

 

 

 

Name:

Deborah A. Wensel

 

 

Title:

Vice President and Treasurer

 

--------------------------------------------------------------------------------

 

 

TRAVELERS CASUALTY AND SURETY
COMPANY

 

 

 

 

By:

 /s/ Michael Damewood

 

 

 

Name:

 Michael Damewood

 

 

 

Title:

Attorney-in-Fact

 

 

 

 

 

 

 

 

 

 

TRAVELERS CASUALTY AND SURETY
COMPANY

 

 

 

 

By:

 /s/ Michael Damewood

 

 

 

Name:

 Michael Damewood

 

 

 

Title:

Attorney-in-Fact

 

 

--------------------------------------------------------------------------------