Document:

Exhibit 10.1

 

EXECUTION VERSION

 

 

$120,300,000

CREDIT AGREEMENT

 

 

dated as of December 22, 2003

 

 

among

 

 

GLDD ACQUISITIONS CORP.,

as Holdings,

 

 

GREAT LAKES DREDGE & DOCK CORPORATION,

as the Borrower,

 

 

THE OTHER LOAN PARTIES HERETO,

as Loan Parties,

 

 

THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTY HERETO,

as the Lenders,

 

 

LEHMAN BROTHERS INC.

and

 

CREDIT SUISSE FIRST BOSTON,

ACTING THROUGH ITS CAYMAN ISLANDS BRANCH,

as Joint Advisors, Joint Lead Arrangers

and Joint Book Runners

 

and

 

BANK OF AMERICA, N.A.,

as an Issuing Lender and the Administrative Agent

 

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (including all Schedules and Exhibits hereto,
this “Agreement”) dated as of December 22, 2003, among GLDD
ACQUISITIONS CORP., a Delaware corporation (“Holdings”), GREAT LAKES
DREDGE & DOCK CORPORATION, a Delaware corporation (the “Borrower”),
the OTHER LOAN PARTIES FROM TIME TO TIME PARTY HERETO (collectively, together
with the Borrower and Holdings, the “Loan Parties”), the FINANCIAL
INSTITUTIONS FROM TIME TO  TIME PARTY HERETO (the “Lenders”),
LEHMAN BROTHERS INC. (“Lehman Brothers”) and CREDIT SUISSE FIRST BOSTON,
ACTING THROUGH ITS CAYMAN ISLANDS BRANCH (“CSFB”), as Joint Advisors,
Joint Lead Arrangers and Joint Book Runners (Lehman Brothers and CSFB together
in such capacities, the “Arrangers”), and BANK OF AMERICA, N.A. (“Bank
of America”), as an issuer of the Letters of Credit (in such capacity an “Issuing
Lender”), and as representative for the Lenders (in such representative
capacity, together with any successor representative appointed pursuant to Section
8.9, the “Administrative Agent”).

 

 

WHEREAS, the Borrower, the other Loan Parties (other than Holdings),
Bank of America and certain of the Lenders and other financial institutions
(collectively, the “Existing Lenders”) are currently parties to that
certain Credit Agreement dated as of August 19, 1998 (as the same may have been
heretofore amended or amended and restated, the “Existing Credit Agreement”);

 

WHEREAS, Holdings, formed by affiliates of Madison Dearborn Partners
IV, L.P. (“MDP”) and certain co-investors including certain members of
the management of the Borrower, plans to acquire (the “Acquisition”) by
means of a merger, all of the issued and outstanding common stock of the
Borrower;

 

WHEREAS, to finance the Acquisition, in part, to facilitate the
repayment of certain outstanding debt of the Borrower and its Subsidiaries and
the payment of fees and expenses in connection with the Acquisition and related
refinancing, and for general corporate purposes, the Borrower has requested
that the Lenders make available (i) a $60,000,000 revolving credit and letter
of credit facility and (ii) a $60,300,000 Tranche B Term Loan Facility;

 

WHEREAS, the Borrower has requested that the Lenders and the Issuing
Lenders make available, for the purposes specified in this agreement, such
revolving credit and letter of credit facility and Tranche B Term Loan
Facility, all on the terms and conditions set forth herein; 

 

WHEREAS, the Lenders and the Issuing Lenders are willing to make
available to the Borrower such credit facilities, upon the terms and subject to
the conditions set forth herein; 

 

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NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:

 

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ARTICLE I.

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1.                                       Defined
Terms.  Capitalized terms (whether
or not underscored) used in this Agreement, including its preamble, shall
(unless a clear contrary intention explicitly appears) have the respective
meanings assigned thereto in Schedule I.

 

SECTION 1.2.                                       Use
of Defined Terms.  Unless otherwise
defined or the context otherwise explicitly requires, terms for which meanings
are provided in this Agreement shall have such meanings when used in the
Schedules and each Notice of Borrowing, Continuation/Conversion Notice,
Compliance Certificate, Assignment and Acceptance, notice and other communication
delivered from time to time in connection with this Agreement or any other Loan
Document.

 

SECTION 1.3.                                       Interpretation.  In this Agreement and each other Loan
Document, unless a clear contrary intention explicitly appears:

 

(a)                                  the
singular number includes the plural number and vice  versa;

 

(b)                                 reference
to any Person includes such Person’s successors and assigns but, if applicable,
only if such successors and assigns are permitted by this Agreement, and
reference to a Person in a particular capacity excludes such Person in any
other capacity or individually;

 

(c)                                  reference
to any gender includes each other gender;

 

(d)                                 unless
explicitly provided otherwise herein, reference to any agreement (including
this Agreement and the Schedules and Exhibits hereto), document or instrument
means such agreement, document or instrument as amended, restated, supplemented
or modified and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms hereof and reference to any promissory note
includes any promissory note which is an extension or renewal thereof or a
substitute or replacement therefor;

 

(e)                                  reference
to any Applicable Law means such Applicable Law as amended, modified, codified
or reenacted, in whole or in part, and in effect from time to time, including
rules and regulations promulgated thereunder;

 

(f)                                    unless
the context explicitly indicates otherwise, reference to the preamble or any
Article, Section, Schedule or Exhibit means the preamble hereto or such
Article, or Section hereof or Schedule or Exhibit hereto;

 

(g)                                 “hereunder,”
“hereof,” “hereto” and words of similar import shall be deemed references to
this Agreement as a whole and not to any particular Article, Section or other
provision hereof;

 

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(h)                                 “including”
(and with correlative meaning “include”) means including without limiting the
generality of any description preceding such term; and

 

(i)                                     relative
to the determination of any period of time, “from” means “from and including,”
“to” means “to but excluding,” and “through” means “to and including.”

 

SECTION 1.4.                                       Accounting
Terms.  All accounting terms not
specifically defined herein shall be construed in accordance with GAAP.  Except as otherwise provided herein, if any
changes in accounting principles from those used in the preparation of the most
recent financial statements referred to in Section 5.1(f) are hereafter
required or permitted by the rules, regulations, pronouncements and opinions of
the Financial Accounting Standards Board of the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions)
and are adopted by Holdings or the Borrower with the agreement of its
independent certified public accountants and such changes result in a change in
the method of calculation of any of the financial covenants, standards or terms
found in Section 6.3 or in the related definitions of terms used
therein, the parties hereto agree to enter into negotiations in order to amend such
provisions so as to reflect equitably such changes with the desired result that
the criteria for evaluating the Borrower’s financial condition shall be the
same after such changes as if such changes had not been made, provided
that no change in GAAP that would affect the method of calculation of any of
the financial covenants, standards or terms shall be given effect in such
calculations until such provisions are amended, in a manner satisfactory to the
Majority Lenders, so as to reflect such change in accounting principles.

 

ARTICLE II.

AMOUNT AND TERM OF COMMITMENTS

 

SECTION 2.1.                                       Commitments.  The Lenders shall make Loans to or for the
benefit of the Borrower in accordance with their respective Commitments as
provided below in this Section 2.1.

 

SECTION 2.1.1.                             Revolving
Commitment.  On the terms and
subject to the conditions of this Agreement (including Article IV), each
Lender severally and for itself alone agrees to make Revolving Loans to, and to
issue or participate in the issuance of Letters of Credit for the account of,
the Borrower pursuant to its Revolving Commitment, as described in this Article
II and in Article III, respectively.  From time to time on any Business Day occurring prior to the
Revolving Commitment Termination Date, each Lender, severally and for itself
alone, agrees to make revolving loans in Dollars (relative to such Lender, its
“Revolving Loans”) to the Borrower equal to such Lender’s Revolving
Credit Percentage of the aggregate amount of the applicable Borrowing requested
by the Borrower to be made on such day pursuant to this Section 2.1.1.  The commitment of each Lender described in
this Section 2.1.1 is herein referred to as its “Revolving Commitment”
and shall be in the amount set forth on Schedule 1 to the Lender Addendum of
such Lender as such Lender’s “Revolving Commitment”; provided, however
that (a) the aggregate principal amount of all Revolving Loans which

 

5

 

any Lender shall be committed to have outstanding
hereunder shall not at any time exceed the product of (i) such Lender’s
Revolving Credit Percentage multiplied by (ii) the Availability and (b)
the aggregate principal amount of all Revolving Loans which the Lenders shall
be committed to have outstanding hereunder shall not at any time exceed the
Availability.  On the terms and subject
to the conditions hereof, the Borrower may from time to time borrow, prepay and
reborrow Revolving Loans.

 

SECTION 2.1.2.                              Tranche
B Term Commitment.  On the terms and
subject to the conditions of this Agreement (including Article IV), each
Lender severally and for itself alone agrees to make a single term loan
(relative to such Lender, its “Tranche B Term Loan”) on the Closing Date
to the Borrower pursuant to, and in an aggregate principal amount equal to, its
Tranche B Term Commitment.  The
commitment of each Lender described in this Section 2.1.2 is herein
referred to as its “Tranche B Term Commitment” and shall be in the
amount set forth on Schedule 1 to the Lender Addendum of such Lender as such
Lender’s “Tranche B Term Commitment.”

 

SECTION 2.2.                                       Reduction
of Revolving Commitment Amount.  The
Borrower shall have the right, upon not less than two Business Days’ notice to
the Administrative Agent, to terminate the Revolving Commitments or, from time
to time, to reduce the aggregate amount of the Revolving Commitments; provided
that no such termination or reduction of Revolving Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Loans made on the effective date thereof, the total Revolving
Extensions of Credit would exceed the Revolving Commitments.  Any such reduction shall be in an amount
equal to $1,000,000, or a multiple of $500,000 in excess thereof, and shall
reduce permanently the Revolving Commitments then in effect.

 

SECTION 2.3.                                       Various
Types of Loans.  Each Loan shall be
either a Base Rate Loan or a Eurodollar Rate Loan (each a “type” of
Loan), as the Borrower shall specify in the related Notice of Borrowing or
Continuation/Conversion Notice pursuant to Section 2.4 or 2.6; provided,
however, that the Borrower may not request or have outstanding
Eurodollar Rate Loans having more than ten (10) different Interest Periods.

 

SECTION 2.4.                                       Borrowing
Procedures.  (a) The Borrower shall
give notice to the Administrative Agent of each proposed Borrowing not later
than (i) in the case of a Borrowing of Base Rate Loans, 11:00 A.M.  (Chicago time) on the proposed date of such
Borrowing and (ii) in the case of a Borrowing of Eurodollar Rate Loans, 11:00
A.M.  (Chicago time) at least two (2)
Business Days prior to the proposed date of such Borrowing.  Each such notice (a “Notice of Borrowing”)
shall be requested by telephone with same day written confirmation by facsimile
transmission, substantially in the form of Exhibit B hereto, specifying
therein the date, the amount and type of such Borrowing and, in the case of a
Borrowing of Eurodollar Rate Loans, the initial Interest Period therefor.  Each Borrowing shall be in Dollars.  All Loans requested on the Closing Date
shall be Base Rate Loans.  Promptly
following receipt of any such notice, the Administrative Agent shall advise
each Lender thereof.

 

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(b)                                 Each
Lender receiving such notice in a prompt manner (as described in the last
sentence of clause (a) above) shall, before 2:00 P.M. (Chicago time) on the
date of each proposed Borrowing, make available for the account of its
Applicable Lending Office at the principal office of the Administrative Agent
in same day funds such Lender’s Revolving Credit Percentage of such
Borrowing.  Subject to Section 2.4(f),
after the Administrative Agent’s receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article IV, the Administrative
Agent will make such funds available to the Borrower to such account as the
Borrower shall designate from time to time.

 

(c)                                  Any
Lender which does not make funds available at the applicable time specified
under this Section 2.4 (any such Lender a “Defaulting Lender”)
shall pay to the Administrative Agent on demand interest thereon at the Federal
Funds Rate for the number of days from the date of the applicable Borrowing to
the date on which such amount becomes immediately available to the
Administrative Agent, together with such other compensatory amounts as may be
required to be paid by such Lender to the Administrative Agent pursuant to the
Rules for Interbank Compensation of the Council on International Banking or the
Clearinghouse Compensation Committee, as the case may be, as in effect from
time to time.  A statement of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this Section 2.4 shall be conclusive in the absence of manifest
error.  If such amount is not in fact
made available to the Administrative Agent by such Lender on the same Business
Day as the date of such Borrowing, the Administrative Agent shall be entitled
to recover such amount from the Borrower (net of any amount received from the
Defaulting Lender pursuant to the provisions of the first sentence of this
Section), with interest thereon at the rate then applicable to the Loans
comprising such Borrowing, on demand, provided that such payment by the
Borrower shall in no way limit or restrict its ability to hold such Lender
liable for its failure to so fund.

 

(d)                                 Each
Borrowing consisting of Eurodollar Rate Loans or Base Rate Loan, shall be in an
aggregate amount not less than $1,000,000, or an integral multiple of $500,000
in excess thereof.

 

(e)                                  Each
Notice of Borrowing (whether in writing or by telephone) shall be irrevocable
and binding on the Borrower.  The
Borrower shall provide the Administrative Agent with documents reasonably
satisfactory to the Administrative Agent indicating the names of those
employees of the Borrower authorized by the Borrower to make telephonic
requests for Loans and continuations and conversions thereof, and the
Administrative Agent shall be entitled to rely upon such documentation until
notified in writing by the Borrower of any change(s) in the names of the
employees so authorized.  The
Administrative Agent shall be entitled, in the absence of willful misconduct,
bad faith or gross negligence, to act on the instructions of anyone identifying
himself as one of the persons authorized to request Loans and continuations and
conversions thereof by telephone and the Borrower shall be bound thereby in the
same manner as if the Person were actually so authorized.  The Borrower agrees to indemnify and hold
the Administrative Agent and each Lender harmless from any and all claims,
damages, liabilities, losses, and reasonable out-of-pocket costs and expenses
(including

 

7

 

Attorney Costs and excluding loss of anticipated
profits) which may arise or be created by the acceptance of instructions for
making, continuing or converting any Loans by telephone, in the absence of
willful misconduct, bad faith or gross negligence.  In the case of any request for a Borrowing of Eurodollar Rate
Loans, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure (i) to fulfill on or
before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article IV  or (ii) to otherwise make
the Borrowing in accordance with such Notice of Borrowing, including any loss
(excluding loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Loan to be made by such Lender as part of such Borrowing
when such Loan, as a result of such failure, is not made on such date.

 

(f)                                    Unless
the Administrative Agent shall have received notice from a Lender prior to the
date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s Revolving Credit Percentage of such
Borrowing, the Administrative Agent may assume that such Lender has made such
Revolving Credit Percentage available to the Administrative Agent on the date
of such Borrowing in accordance with Section 2.4(b) and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount.  If and to the extent that such Lender shall not have made such
Percentage available to the Administrative Agent, such Lender and the Borrower
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon (net of any amounts
received from such Defaulting Lender in respect of such Defaulting Lender’s
Percentage of such Borrowing), for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to Loans comprising such Borrowing and (ii) in the case
of such Lender, the Federal Funds Rate. 
If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount so repaid shall constitute such Lender’s
Loans as part of such Borrowing for purposes of this Agreement.

 

(g)                                 The
failure of any Lender to make the Loans to be made by it as part of any
Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the Loan to be made
by such other Lender on the date of any Borrowing.

 

SECTION 2.5.                                       Evidence
of Loans.  The Loans made by each
Lender shall, if requested by such Lender, be evidenced by the Notes payable to
such Lender.  All Loans and payments
hereunder shall be recorded on the books of the Lender making such Loan or
receiving such payment, which shall be rebuttable presumptive evidence of the
amount of such Loans outstanding at any time hereunder.  Notwithstanding any term or condition of
this Agreement to the contrary, however, the failure of any Lender to record the
date and amount of any Loan made by such Lender hereunder or error in so
recording shall not limit or otherwise affect the obligations of the Borrower
to repay any such Loan and interest thereon; provided that if there is
an error in so recording there

 

8

 

shall be a rebuttable presumption that the records of
the Administrative Agent are true and correct as to the amount of the Loan.

 

SECTION 2.6.                                       Continuation/Conversion
Procedures.  Subject to Sections
2.3 and 2.4, the Borrower may convert any outstanding Loans of one
type into Loans of another type or continue any outstanding Eurodollar Rate
Loan as a Eurodollar Rate Loan, in each case by giving notice thereof to the
Administrative Agent not later than 11:00 A.M. 
(Chicago time), (a) in the case of a conversion of a Eurodollar Rate
Loan into a Base Rate Loan, on or before the proposed date of such conversion
and (b) in the case of a continuation of a Eurodollar Rate Loan as, or a
conversion of a Base Rate Loan into, a Eurodollar Rate Loan, at least two (2)
Business Days prior to the proposed date of such continuation or conversion; provided,
that Eurodollar Rate Loans may be continued or converted only as of the
last day of the Interest Period applicable thereto (unless all payments which
are due, if any, under Section 2.11 are made in connection with such
continuation or conversion).  Each such
notice (a “Continuation/Conversion Notice”) shall be by telephone with
same day written confirmation by facsimile transmission substantially in the
form of Exhibit C, specifying therein the date and amount of such
continuation or conversion, the type of the Loan to be so converted or
continued, and, in the case of a continuation of or conversion into a
Eurodollar Rate Loan, the new Interest Period therefor.  Promptly upon receipt of such notice (which
shall be effective upon receipt by the Administrative Agent), the
Administrative Agent shall advise each Lender thereof.  Subject to Sections 2.18 and 2.19,
such Loan shall be so converted or continued on the requested date of
conversion or continuation; provided that each conversion or
continuation shall be on a Business Day and, after giving effect to any such
conversion or continuation, the aggregate principal amount of each outstanding
Eurodollar Rate Loan shall be at least $1,000,000 and an integral multiple of
$500,000.  Each Eurodollar Rate Loan
shall automatically convert to a Base Rate Loan at the end of the Interest
Period applicable thereto, unless (i) in the case of an expiring Eurodollar
Rate Loan, the Borrower shall have delivered to the Administrative Agent a
Continuation/Conversion Notice not less than two (2) nor more than ten (10)
Business Days prior to the last day of the Interest Period applicable thereto,
and (ii) all of the other conditions contained in this Section 2.6 are
satisfied.

 

SECTION 2.7.                                       Pro
Rata Treatment.  All Borrowings,
continuations, conversions, prepayments, repayments and mandatory and voluntary
Revolving Commitment Amount reductions shall be effected so that after giving
effect thereto each Lender will have a ratable share (according to its
Percentage) of all Loans and Letters of Credit and of the Revolving Commitment
Amount.

 

SECTION 2.8.                                       Principal
Payments.  Repayments and
prepayments of principal of the Loans shall be made in accordance with this Section
2.8.

 

SECTION 2.8.1.                               Repayments
and Prepayments.  

 

The Borrower will make payment in full in Dollars of all unpaid
principal of all Revolving Loans and all other principal Obligations which are
then outstanding (other than the outstanding principal balance of the Tranche B
Term Loans and the

 

9

 

accrued
interest thereon) on the Revolving Commitment Termination Date.  The Borrower will make payment in full in
Dollars of all unpaid principal amounts of all Tranche B Term Loans on the
Tranche B Term Loan Maturity Date. 
Without limiting the foregoing, and in addition thereto, the Borrower:

 

(a)                                  may,
from time to time on any Business Day, make a voluntary prepayment, in whole or
in part, of the outstanding principal amount of any Loans; provided
that:

 

(i)                                     any
such prepayment of a Eurodollar Rate Loan prior to the last day of the Interest
Period for such Loan shall be subject to Section 2.11,

 

(ii)                                  no
such prepayment of a Eurodollar Rate Loan may be made which, after giving
effect thereto, would result in the aggregate outstanding principal amount of
any remaining Eurodollar Rate Loans to be equal to an amount other than
$1,000,000 or an integral multiple of $500,000 in excess thereof,

 

(iii)                               each such voluntary
prepayment shall require written notice by 11:00 A.M.  (Chicago time) on such Business Day but no more than five (5)
Business Days prior to such prepayment, and

 

(iv)                              each
such voluntary prepayment shall be in a minimum amount of $1,000,000 and an
integral multiple of $500,000 in excess thereof (or, if less, the aggregate
principal amount of all Loans outstanding);

 

(b)                                 shall,
on each date when the Administrative Agent receives proceeds of Collateral from
the Lender First Proceeds Account, or otherwise pursuant to Section 3.3(a) of
the Intercreditor Agreement, be deemed to have made, and the Borrower shall
cause to be made, a mandatory prepayment of the Loans in an amount equal to
such proceeds;

 

(c)                                  shall,
unless the Required Prepayment Lenders and the Borrower shall otherwise agree,
and subject to the Intercreditor Agreement, upon the consummation of any
Disposition of any property of the Borrower or any of its Subsidiaries
(excluding (i) Dispositions permitted under Section 6.2(g) and (ii)
Permitted Dispositions, but including Permitted Dispositions to the extent a
prepayment is required pursuant to the clause (c)(iii)(B) of the
definition of such term) or Recovery Event, unless a Reinvestment Notice shall
be delivered in respect thereof, make a mandatory prepayment of the Loans in an
amount equal to the Net Cash Proceeds with respect to such transaction within
three (3) Business Days of the receipt by the Borrower or any of its
Subsidiaries of the Net Cash Proceeds (provided that the Borrower shall
promptly provide notice to the Administrative Agent of the receipt of such Net
Cash Proceeds) of such Disposition or Recovery Event; provided, however,
that, notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of any
Recovery Events that may be excluded from the foregoing application requirement
pursuant to a Reinvestment Notice shall not exceed $10,000,000 in any fiscal
year of the Borrower (provided that the

 

10

 

foregoing limitation on reinvesting Net Cash Proceeds
of any Recovery Event in excess of $10,000,000 in any Fiscal Year shall in no
event limit or restrict the ability of the Borrower to reinvest Net Cash
Proceeds, through the delivery of a Reinvestment Notice, of any Recovery Event
relating to a vessel that does not constitute an actual or constructive total
loss of such vessel) and (ii) on each Reinvestment Prepayment Date the Tranche
B Term Loans or Revolving Loans, as applicable, shall be prepaid by an amount equal
to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment
Event, as set forth above.  The
provisions of this Section do not constitute a consent to the consummation of
any transaction not permitted by this Agreement;

 

(d)                                 shall,
unless the Required Prepayment Lenders and the Borrower shall otherwise agree,
upon the consummation of any issuance, incurrence or sale of any Debt by the
Borrower or any of its Subsidiaries (other than Debt of the type described in Section
6.2(i)), make a mandatory prepayment of the Loans in an amount equal to the
Net Cash Proceeds with respect to such transaction within three (3) Business
Days of the receipt by the Borrower or any of its Subsidiaries of the Net Cash
Proceeds (provided that the Borrower shall promptly provide notice to
the Administrative Agent of the receipt of such Net Cash Proceeds) of such
issuance, incurrence or sale of Debt;

 

(e)                                  shall,
unless the Required Prepayment Lenders and the Borrower shall otherwise agree,
upon the consummation of any issuance or sale of any Capital Stock of Holdings
or any of its Subsidiaries by Holdings or any of its Subsidiaries (other than a
Permitted Capital Stock Issuance), make a mandatory prepayment of the Loans in
an amount equal to the Net Cash Proceeds with respect to such transaction
within three (3) Business Days of the receipt by the Borrower or any of its
Subsidiaries of the Net Cash Proceeds (provided that the Borrower shall
promptly provide notice to the Administrative Agent of the receipt of such Net
Cash Proceeds) of such issuance or sale of Capital Stock;

 

(f)                                    shall,
unless the Required Prepayment Lenders and the Borrower shall otherwise agree,
upon the consummation of the refinancing of the Debt of Amboy Aggregates
guarantied by the Borrower, make a mandatory prepayment of the Loans in an
amount equal to the amount by which the maximum amount of the guaranty of the
refinanced Debt by the Borrower exceeds $3,000,000 within thirty (30) days of
the consummation of such refinancing (provided that the Borrower shall
promptly provide notice to the Administrative Agent of the consummation of such
refinancing);

 

(g)                                 shall,
from time to time, make mandatory prepayments of the Revolving Loans in such
amounts and at such times as may be necessary to (i) prevent the aggregate
outstanding principal amount of all Revolving Loans from exceeding Availability
and (ii) to the extent achievable through the prepayment of Revolving Loans,
prevent the aggregate outstanding Letter of Credit Obligations from exceeding
the Letter of Credit Availability;

 

(h)                                 shall,
immediately upon any acceleration of the maturity of any Loans pursuant to Section
7.2, repay all Loans; and

 

11

 

(i)                                     each
repayment and prepayment of any Loans made pursuant to this Section 2.8.1
shall be without premium or penalty, except as may be required by Section
2.11, and shall be applied in accordance with Section 2.8.2.  No mandatory or voluntary prepayment of
principal of the Loans shall cause a permanent reduction in the Revolving
Commitment Amount, except as provided in Sections 2.2 and 7.2.  

 

SECTION 2.8.2.                                      Application
.  

 

(a)                                  Amounts
to be applied in connection with the voluntary and mandatory prepayments paid
pursuant to the provisions of clauses (a) through (f) of Section
2.8.1 shall be applied, first, to the prepayment of the Tranche B
Term Loans and second, to the repayment of any outstanding Revolving
Loans (without any permanent reduction to the Revolving Commitments).

 

(b)                                 Notwithstanding
anything to the contrary in Section 2.8.1 or 2.8.2(a), each Tranche B
Term Loan Lender may, at its option, decline up to 100% of the portion of any
mandatory payment applicable to the Tranche B Term Loans of such Lender;
accordingly, with respect to the amount of any mandatory prepayment described
in Section 2.8.1 that is allocated to the Tranche B Term Loans (such amounts,
the “Mandatory Prepayment Amount”), on the date specified in Section
2.8.1 for such prepayment (or if no date is specified, the date on which
such mandatory prepayment is to occur), the Borrower will (A) give the
Administrative Agent telephonic notice (promptly confirmed in writing)
requesting that the Administrative Agent prepare and provide to each Tranche B
Term Loan Lender a notice (each a “Prepayment Option Notice”) as
described below and (B) deposit with the Administrative Agent the Mandatory
Prepayment Amount.

 

(c)                                  As
promptly as practicable after receiving such notice from the Borrower, the
Administrative Agent will send to each Tranche B Term Loan Lender a Prepayment
Option Notice, which shall be substantially in the form of Exhibit H,
and shall include an offer by the Borrower to prepay on the Prepayment Date the
Tranche B Term Loans of such Lender by an amount equal to the portion of the
Mandatory Prepayment Amount indicated in such Lender’s Prepayment Option Notice
as being applicable to such Lender’s Tranche B Term Loans. The “Prepayment
Date” in respect of any Prepayment Option Notice shall be the date which is
the date which is five Business Days after the date of such Prepayment Option
Notice.  

 

(d)                                 On
the Prepayment Date, the Administrative Agent shall (A) apply the
Mandatory Prepayment Amount toward prepayment of the outstanding Tranche B Term
Loans in respect of which Lenders have accepted mandatory prepayment as
described above and (B) return the remaining portion of the Mandatory
Prepayment Amount not accepted by the Tranche B Term Loan Lenders to the
Borrower; provided, that in the case of Net Cash Proceeds arising from the
sale of Collateral returned to the Borrower pursuant to clause (B) above,
either (x) the Borrower shall then apply such Net Cash Proceeds as a voluntary
prepayment of the Tranche B Term Loan pursuant to Section 2.8.1(a) or
(y) the Revolving Credit Commitments shall be permanently reduced by the amount
of such Net Cash Proceeds.

 

12

 

SECTION 2.9.                                       Interest
Payments.  Interest on all Loans
shall accrue and be payable in accordance with this Section 2.9.

 

SECTION 2.9.1.                             Rates.  From the date any Loan is made to the date
the principal amount of such Loan is repaid in full, interest shall accrue on
the outstanding principal amount of such Loan at a rate per  annum:

 

(a)                                  on
that portion of the outstanding principal amount thereof maintained from time
to time as a Base Rate Loan, equal to the Base Rate from time to time in
effect, plus, in the case of any Revolving Loan, the then Applicable
Base Rate Margin, and, in the case of any Tranche B Term Loan, 2.00%; and

 

(b)                                 on
that portion of the outstanding principal amount thereof maintained from time
to time as a Eurodollar Rate Loan, during each Interest Period applicable
thereto, equal to the sum of the Eurodollar Rate (Adjusted) for such Interest
Period, plus, in the case of any Revolving Loan, the then Applicable
Eurodollar Rate Margin, and, in the case of any Tranche B Term Loan, 3.00%.

 

SECTION 2.9.2.                                      Default
Rate.  If all or a portion of the
principal amount of any Loan or Reimbursement Obligation shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), all
outstanding Loans and Reimbursement Obligations (whether or not overdue) (to
the extent legally permitted) shall bear interest at a rate per annum that is
equal to (x) in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section plus 2%
or (y) in the case of Reimbursement Obligations, the rate applicable to Base
Rate Loans under the Revolving Credit Facility plus 2% (the “Default Rate”).  If all or a portion of any interest payable
on any Loan or Reimbursement Obligation or any commitment fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise), such overdue amount shall bear interest at a
rate per annum equal to the Default Rate.

 

SECTION 2.9.3.                                      Payment
Dates.  Interest accrued on each
Loan shall be payable, without duplication:

 

(a)                                  with
respect to any Revolving Loans, on the Revolving Commitment Termination Date;

 

(b)                                 with
respect to any Tranche B Term Loan, on the date specified in Section 2.8.1;

 

(c)                                  in
the case of any Loan:

 

(i)                                     on
that portion of the outstanding principal amount thereof maintained as a Base
Rate Loan, on the last day of each Fiscal Quarter, commencing with the first
such day following the Closing Date;

 

(ii)                                  on
that portion of the outstanding principal amount thereof maintained as a
Eurodollar Rate Loan, on the last day of each applicable Interest

 

13

 

Period and, if such Interest Period shall exceed three
months, on each day that occurs during such Interest Period every three months
from the first day of such Interest Period (or, if there is no numerically
corresponding day in such subsequent month or if such numerically corresponding
day is not a Business Day, on the next preceding Business Day); and

 

(d)                                 on
that portion of any Loans the maturity of which is accelerated pursuant to Section
7.2, immediately upon such acceleration.

 

Interest
accrued on the principal amount of each Loan or other monetary Obligation
arising under this Agreement or any other Loan Document after the date such
amount is due and payable (whether on the Revolving Commitment Termination
Date, upon acceleration or otherwise) shall be payable upon demand.

 

SECTION 2.9.4.                                      Rate
Determinations.

 

(a)                                  All
determinations by the Administrative Agent of any rate of interest applicable
to any Loan or other monetary Obligation shall be presumptive evidence of such rate.

 

(b)                                 If
the Administrative Agent shall have determined that for any reason adequate and
reasonable means do not exist for ascertaining the IBO Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan or that the IBO
Rate applicable pursuant to Section 2.9.1 for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan does not adequately and
fairly reflect the cost to the Lenders of funding such Loan, the Administrative
Agent will immediately give notice of such determination to the Borrower and
each Lender.  Thereafter, the obligation
of the Lenders to make or continue Eurodollar Rate Loans hereunder, or permit
the conversion of Base Rate Loans into Eurodollar Rate Loans, shall be
suspended until the Administrative Agent revokes such notice in writing
promptly after determining that the circumstances relating to its determination
that adequate and reasonable means do not exist for ascertaining the IBO rate
no longer exist and no new such circumstances have come into being.  Upon receipt of such notice, the Borrower
may revoke any Notice of Borrowing or Continuation/Conversion Notice then
submitted by it; provided, however, that such revocation shall
not cause the Borrower to be obligated to reimburse the Lenders for costs under
Section 2.11 in connection with such revocation.  If the Borrower does not revoke such notice,
the Lenders shall make, convert or continue the Loans, as originally proposed
by the Borrower, in the amount specified in the applicable notice submitted by
the Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans.

 

(c)                                  On
the date on which the aggregate unpaid principal amount of Loans shall be
reduced, by payment or prepayment or otherwise, to less than $1,000,000, such
Loans shall, if they are Eurodollar Rate Loans, automatically convert into Base
Rate Loans, and on and after such date the right of the Borrower to convert
Base Rate Loans into Eurodollar Rate Loans shall terminate.  The Borrower shall be obligated to reimburse

 

14

 

the Lenders for costs incurred in connection with such
automatic conversion in accordance with Section 2.11.

 

SECTION 2.10.                                 Increased
Costs and Reduction of Returns.

 

(a)                                  If
any Issuing Lender or any Lender shall determine that, due to either (i) the
introduction of or any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the IBO Rate)
in or in the interpretation of any law or regulation occurring after the
Closing Date (other than a change in tax law) or (ii) the compliance with any
guideline or request (other than a guideline or request relating to taxes)
issued after the Closing Date from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to (including a reduction in the sum receivable by) such Issuing
Lender or such Lender of agreeing to make or making, funding, continuing or
maintaining any of its Loans as, or converting (or its obligation to convert)
any portion of the principal amount of any of its Loans into, Eurodollar Rate
Loans, or issuing, maintaining or participating in any Letter of Credit, then
the Borrower shall be liable for, and shall from time to time, within fifteen
(15) days after written demand therefor by the Administrative Agent on behalf
of such Issuing Lender or such Lender in the form of a certificate as to such
amounts, showing a calculation of such amounts in reasonable detail, submitted
to the Borrower and the Administrative Agent by such Issuing Lender or such
Lender which certificate shall be presumptive evidence of such amounts (which
demand the Administrative Agent hereby agrees to deliver), immediately pay to
the Administrative Agent for the account of such Issuing Lender or such Lender,
from time to time as specified by such Issuing Lender or such Lender,
additional amounts as are sufficient to compensate such Issuing Lender or such
Lender for such increased cost (including such reduced amount).

 

(b)                                 If
any Issuing Lender or any Lender shall have determined that (i) the
introduction after the Closing Date of any Capital Adequacy Regulation, (ii)
any change after the Closing Date in any Capital Adequacy Regulation, (iii) any
change after the Closing Date in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance
by such Issuing Lender or such Lender (or its Applicable Lending Office) or any
corporation controlling such Issuing Lender or such Lender, with any Capital
Adequacy Regulation issued after the Closing Date, in any such case affects or
would affect the amount of capital required or expected to be maintained by
such Issuing Lender or such Lender or any corporation controlling such Issuing
Lender or such Lender and (taking into consideration such Issuing Lender’s or
such Lender’s or such corporation’s policies with respect to capital adequacy
and such Issuing Lender’s or such Lender’s desired return on capital)
determines that the amount of such capital is increased as a consequence of its
commitment to issue, its issuance of or participation in any Letter of Credit
or its Commitments, Loans, credits or obligations under this Agreement, then,
within fifteen (15) days after written demand therefor by the Administrative
Agent on behalf of such Issuing Lender or such Lender in the form of a
certificate as to such amounts, showing a calculation of such amounts in
reasonable detail, submitted to the Borrower and the

 

15

 

Administrative Agent by such Issuing Lender or such
Lender which certificate shall be presumptive evidence of such amounts (which
demand the Administrative Agent hereby agrees to deliver), the Borrower shall
pay to the Administrative Agent for the account of such Issuing Lender or such
Lender, from time to time as specified by such Issuing Lender or such Lender,
additional amounts as are sufficient to compensate such Issuing Lender or such
Lender or such corporation for such increase.

 

(c)                                  Without
limiting the generality of clauses (a) and (b) of this Section
2.10, in the event that any Issuing Lender, in compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) or any Capital Adequacy Regulation
issued after the Closing Date, or as a result of any change after the Closing
Date in the interpretation or administration of any such guideline or Capital
Adequacy Regulation by any central bank or Governmental Authority charged with
the interpretation or administration thereof, determines that a Performance
Letter of Credit should have been characterized at the time of issuance thereof
or should be recharacterized as a Financial Letter of Credit, then the Borrower
shall be liable for, and shall from time to time, upon demand therefor by such
Issuing Lender in the form of a certificate as to such amounts, showing a
calculation of such amounts in reasonable detail, submitted to the Borrower and
the Administrative Agent by such Issuing Lender, which certificate shall be
presumptive evidence of such amounts (with a copy to the Administrative Agent),
within fifteen (15) days after written demand therefor by the Administrative
Agent on behalf of such Issuing Lender (which demand the Administrative Agent
hereby agrees to deliver), pay to the Administrative Agent, for the account of
such Issuing Lender, from time to time as specified by such Issuing Lender,
such additional amounts as are sufficient to cause such Issuing Lender to
receive Letter of Credit Fees under Section 3.3(a) from the date of
issuance or recharacterization, as the case may be.

 

(d)                                 Each
Issuing Lender and each Lender agree to notify the Borrower and the
Administrative Agent in writing promptly of any circumstances that would cause
the Borrower to pay additional amounts pursuant to this Section 2.10, provided
that the failure to give such notice shall not affect the Borrower’s obligation
to pay such additional amounts hereunder. 
Notwithstanding anything to the contrary in this Section 2.10,
the Borrower shall have no obligation to pay any additional amounts under clause
(a), (b) or (c) of this Section 2.10 unless the
claiming Issuing Lender or Lender shall have made demand upon the Borrower for
such additional amounts within six (6) months after the claiming Issuing Lender
or Lender obtained knowledge of the circumstances that would cause the Borrower
to pay such additional amounts; provided, however, that the
foregoing limitation shall not apply to any such additional amounts arising out
of the retroactive application of any law, regulation, rule guideline or
directive within such six (6) month period. 
A Lender or Issuing Lender shall be deemed to have obtained knowledge of
any circumstances that would cause the Borrower to pay such additional amounts
if any rules with respect to such increase have been published in the Federal
Register and such knowledge shall be deemed to have been obtained on the later
of the date when such new rule (i) is published in the Federal Register and
(ii) becomes effective.  Without
prejudice to the survival of any other agreement of the Borrower

 

16

 

hereunder, the agreements and obligations of the
Borrower in this Section 2.10 shall survive the payment of all other
Obligations.

 

(e)                                  If
the Borrower is required to pay additional amounts to any Lender or the Administrative
Agent pursuant to Section 2.10, then such Lender shall use its
reasonable best efforts (consistent with legal and regulatory restrictions) to
take such actions (including, if applicable, to change the jurisdiction of its
Applicable Lending Office) so as to minimize any such additional payment by the
Borrower which may thereafter accrue if such change in the judgment of such
Lender is not otherwise disadvantageous to such Lender.

 

SECTION 2.11.                                 Funding
Losses.  In the event any Lender
shall incur any loss or expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to make, continue or maintain any portion of the principal
amount of any Loan as, or to convert any portion of the principal amount of any
Loan into, a Eurodollar Rate Loan) as a result of:

 

(a)                                  repayment
or prepayment of the principal amount of any Eurodollar Rate Loans on a date
other than the last day of the Interest Period applicable thereto, whether
pursuant to Section 2.8 or otherwise, or the compulsory assignment of a
Eurodollar Rate Loan of a Non-Consenting Lender pursuant to Section 9.1;

 

(b)                                 any
conversion of all or any portion of the outstanding principal amount of any
Eurodollar Rate Loans to Base Rate Loans prior to the expiration of the
Interest Period then applicable thereto;

 

(c)                                  any
Loans not being made as Eurodollar Rate Loans in accordance with the Notice of
Borrowing therefor (except in the event of a revocation of a Notice of Borrowing
pursuant to Section 2.9.4 (b)); or

 

(d)                                 any
Loans not being continued as, or converted into, Eurodollar Rate Loans in
accordance with the Continuation/Conversion Notice given therefor, then, upon
the request by the Administrative Agent on behalf of such Lender in the form of
a certificate as to such amounts, showing a calculation of such amounts in
reasonable detail, submitted to the Borrower and the Administrative Agent by
such Lender, which shall be presumptive evidence of such amounts (which request
the Administrative Agent hereby agrees to deliver), the Borrower shall pay to
the Administrative Agent for the account of such Lender such amount as will (in
the reasonable determination of such Lender) reimburse such Lender for such
loss or expense.  Solely for purposes of
calculating amounts payable by the Borrower to such Lenders under this Section
2.11, each Eurodollar Rate Loan made by a Lender (and each related reserve,
special deposit or similar requirement) shall be conclusively deemed to have
been funded at the rate used in determining the IBO Rate for such Eurodollar
Rate Loan by a matching deposit or other borrowing in the interbank eurodollar
market for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan is in fact so funded. 
Any claim by a Lender for reimbursement under this Section  2.11
shall be set forth in a certificate delivered by such Lender to the Borrower
and the Administrative Agent

 

17

 

showing in reasonable detail the basis for such
calculation and shall be presumptive evidence of such amounts.  The agreements and obligations of the
Borrower in this Section 2.11 shall survive the payment of all other
Obligations.

 

(e)                                  If
the Borrower is required to pay additional amounts to any Lender or the
Administrative Agent pursuant to Section 2.11, then such Lender shall
use its reasonable best efforts (consistent with legal and regulatory
restrictions) to take such actions (including, if applicable, to change the
jurisdiction of its Applicable Lending Office) so as to minimize any such
additional payment by the Borrower which may thereafter accrue if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.

 

SECTION 2.12.                                 Illegality.

 

(a)                                  If
any Lender shall determine that the introduction of any Applicable Law, or any
change in any Applicable Law or in the interpretation or administration
thereof, has made it unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for any Lender or its Applicable
Lending Office to make Eurodollar Rate Loans, then, on notice thereof by such
Lender to the Borrower through the Administrative Agent, the obligation of that
Lender to make, convert into or continue Eurodollar Rate Loans, shall be
suspended until such Lender shall have notified the Administrative Agent and
the Borrower that the circumstances giving rise to such determination no longer
exist.

 

(b)                                 If
a Lender shall determine that it is unlawful to maintain any Eurodollar Rate
Loan, the Borrower shall prepay in full all Eurodollar Rate Loans of that
Lender then outstanding, together with interest accrued thereon, or convert
such Eurodollar Rate Loans into Base Rate Loans, either on the last day of the
Interest Period thereof if such Lender may lawfully continue to maintain such
Eurodollar Rate Loans to such day, or immediately, upon request therefor if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans
until the last day of the Interest Period, together with any amounts required
to be paid in connection therewith pursuant to Section 2.11.

 

(c)                                  If
the Borrower is required to prepay any Eurodollar Rate Loan immediately as
provided in Section 2.12(b), then concurrently with such prepayment, the
Borrower shall borrow from the affected Lender, in the amount of such
repayment, a Base Rate Loan.

 

(d)                                 If
the obligation of any Lender to make or maintain Eurodollar Rate Loans has been
terminated, the Borrower may elect, by giving notice to such Lender through the
Administrative Agent that all Loans which would otherwise be made by such
Lender as Eurodollar Rate Loans shall instead be Base Rate Loans.

 

(e)                                  Before
giving any notice to the Administrative Agent pursuant to this Section 2.12,
the affected Lender shall designate a different Eurodollar Office with respect
to its Eurodollar Rate Loans if such designation will avoid the need for giving

 

18

 

such notice or making such demand and will not, in the
judgment of such Lender, be illegal or otherwise disadvantageous to such
Lender.

 

(f)                                    If
the Borrower is required to pay additional amounts to any Lender or the
Administrative Agent pursuant to Section 2.12, then such Lender shall
use its reasonable best efforts (consistent with legal and regulatory
restrictions) to take such actions (including, if applicable, to change the
jurisdiction of its Applicable Lending Office) so as to minimize any such
additional payment by the Borrower which may thereafter accrue if such change
in the judgment of such Lender is not otherwise disadvantageous to such
Lender.  

 

SECTION 2.13.                                 Right
of the Lenders to Fund through Other Offices.  Each Lender may, if it so elects, fulfill its commitment as to
any Eurodollar Rate Loan by causing a foreign branch or affiliate of such
Lender to make such Loan; provided that in such event for the purposes
of this Agreement such Loan shall be deemed to have been made by such Lender
and the obligation of the Borrower to repay such Loan shall nevertheless be to
such Lender and shall be deemed held by it, to the extent of such Loan, for the
account of such branch or affiliate.

 

SECTION 2.14.                                 Commitment
Fee and Fee Obligations Generally.

 

(a)                                  Commitment
Fee.  The Borrower agrees to pay to
the Administrative Agent, for the account of each Lender, a commitment fee (the
“Commitment Fee”) in an amount equal to the product of (i) the
Applicable Commitment Fee Percentage multiplied by (ii) the daily average
amount by which the Revolving Commitment Amount exceeds the sum of the
outstanding principal balance of the Revolving Loans plus the then
Letter of Credit Obligations, for the period from the Closing Date until the
Revolving Commitment Termination Date. 
The Commitment Fee shall be payable quarterly in arrears on the last day
of each Fiscal Quarter for the Fiscal Quarter then ended and on the Revolving
Commitment Termination Date.  Solely for
purposes of calculating the Commitment Fee under this Section 2.14(a),
the equivalent in Dollars of the undrawn face amount of each Letter of Credit
made in an Alternative Currency shall be determined on the date of issuance of
such Letter of Credit and shall be redetermined as of the last Business Day of
each calendar month thereafter during which such Letter of Credit remains
outstanding, with no interim adjustments with respect to any fluctuations in
the value of such Alternative Currency.

 

(b)                                 Other
Fees.  The Borrower agrees to pay to
the Administrative Agent the fees in the amounts and on the dates from time to
time agreed to in writing by the Borrower and the Administrative Agent.

 

(c)                                  Fee
Obligations.  The obligation of the
Borrower to pay the fees described in this Section 2.14, and the Letter
of Credit Fees described in Section 3.3, shall be in addition to, and
not in lieu of, the obligation of the Borrower to pay interest and expenses and
other amounts otherwise described in this Agreement.  The fees described in this Section 2.14 shall be fully
earned on the earlier of the date paid or

 

19

 

accrued and shall be non-refundable.  The Letter of Credit Fees and the fees
described in this Section 2.14 shall bear interest, if not paid when
due, at the Default Rate.

 

SECTION 2.15.                                 Payments
and Computations.

 

(a)                                  Allocation.  All payments by the Borrower pursuant to
this Agreement or any other Loan Document, whether in respect of principal of
or interest on Loans or other Obligations, shall be made by the Borrower in
Dollars no later than 1:00 P.M.  (Chicago
time) on the day when due to the Administrative Agent in same day funds.  All payments in respect of principal of or
interest on Loans or Letter of Credit Obligations shall (unless otherwise
specified herein) be made by the Borrower to the Administrative Agent for the
account of the Lenders pro  rata according to the respective
unpaid principal amounts of the Loans made by them or to their respective
participation or other interests in such Letter of Credit Obligations, as the
case may be.  The payment of all fees
referred to in Section 2.14 and Section 3.3 shall (unless
otherwise specified therein) be made by the Borrower to the Administrative
Agent for the account of the Lenders entitled thereto.  All other amounts payable to the
Administrative Agent or any Lender under this Agreement or any other Loan
Document shall be paid to the Administrative Agent for the account of the
Person entitled thereto.  Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 9.7(d), from and
after the effective date specified in such Assignment and Acceptance, the
Administrative Agent shall make all payments hereunder in respect of the
interest assigned thereby to the Lender assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between
themselves.  The Administrative Agent
shall promptly remit to each Lender in immediately available funds and in
Dollars such Lender’s share of all such payments received by the Administrative
Agent for the account of such Lender.

 

(b)                                 All
computations of interest or fees hereunder or under any other Loan Document
shall be made by the Administrative Agent on the basis of a year of 360 days,
except that, with respect to Base Rate Loans (other than Base Rate Loans with
respect to which the rate of interest is calculated on the basis of the Federal
Funds Rate), the interest thereon shall be calculated on the basis of a year of
365 or 366 days, as the case may be, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest or fees are payable. 
Each determination by the Administrative Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.

 

(c)                                  Whenever
any payment hereunder shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest or fees, as the case may be; provided if such extension
would cause payment of interest on or principal of Eurodollar Rate Loans to be
made in the next following calendar month, such payment shall be made on the
next preceding Business Day.

 

20

 

(d)                                 Unless
the Administrative Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Lenders hereunder that the Borrower
will not make such payment in full, the Administrative Agent may assume that
the Borrower has made such payment in full to the Administrative Agent on such
date and the Administrative Agent may, in reliance upon such assumption, cause
to be distributed to each Lender on such due date an amount equal to the amount
then due such Lender.  If and to the
extent that the Borrower shall not have so made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.

 

(e)                                  All
payments of principal, interest, fees and all expenses and other amounts due
hereunder or under any other Loan Document payable to the Lenders shall be made
without condition and in same day funds and delivered to the Administrative
Agent on the date thereof not later than the applicable cut-off time described
in Section 2.15(a), and funds received by the Administrative Agent after
that time shall be deemed to have been paid on the next succeeding Business
Day.

 

(f)                                    Subject
to the provisions of Section 2.8.2, each payment of principal shall be
applied to such Loans as the Borrower shall direct by notice received by the
Administrative Agent on or before the date of such payment or, in the absence
of such notice, first, to the unpaid principal amount of any outstanding Base
Rate Loans, second, to the unpaid principal amount of any outstanding
Eurodollar Rate Loans with those Eurodollar Rate Loans which have earlier expiring
Interest Periods being repaid prior to those which have later expiring Interest
Periods, and then as the Administrative Agent shall determine in its
discretion.  Concurrently with each
remittance to any Lender of its share of any such payment, the Administrative
Agent shall advise such Lender as to the application of such payment.

 

SECTION 2.16.                                 Taxes.

 

(a)                                  Subject
to Section 2.16(d), any and all payments by the Borrower to each Lender
or the Administrative Agent under this Agreement shall be made free and clear
of, and without, unless required by Applicable Law (in which case Section
2.16(d) shall apply), deduction or withholding for, any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Administrative Agent, such taxes (including income taxes or franchise taxes) as
are imposed on or measured by each Person’s net income (including branch
profits taxes), and franchise taxes are imposed on it by the jurisdiction under
the laws of which such Lender or the Administrative Agent, as the case may be,
is organized or maintains any Applicable Lending Office or any political
subdivision of the foregoing (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as “Taxes”).

 

21

 

(b)                                 In
addition, the Borrower shall pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents other than amounts as are being contested in good faith (hereinafter
referred to as “Other Taxes”).

 

(c)                                  Subject
to Section 2.16(g), the Borrower shall indemnify and hold harmless each
Lender and the Administrative Agent for the full amount of Taxes or Other Taxes
paid by Lender or the Administrative Agent as a result of its Commitment, any
Loans made by it hereunder, or otherwise in connection with its participation
in this Agreement and any liability (including penalties, interest, additions
to tax and expenses) arising therefrom or with respect thereto (other than
liability resulting from the gross negligence, bad faith or willful misconduct
of such Lender or the Administrative Agent), whether or not such Taxes or Other
Taxes were correctly or legally asserted. 
Payment under this indemnification shall be made within thirty (30) days
from the date Lender or the Administrative Agent makes written demand therefor
in the form of a certificate as to such amounts, showing a calculation of such
amounts in reasonable detail, submitted to the Borrower and the Administrative
Agent by such Lender, which shall be presumptive evidence of such amounts,
which written demand shall be made no sooner than thirty (30) days prior to the
date Lender intends to pay such Taxes or Other Taxes and no later than ninety
(90) days after such payment.

 

(d)                                 If
the Borrower shall be required by law to deduct or withhold any Taxes or Other
Taxes from or in respect of any sum payable hereunder to any Lender or the
Administrative Agent, then, subject to Section 2.16(g):

 

(i)                                     the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.16) such Lender or the Administrative Agent, as the case
may be, receives an amount equal to the sum it would have received had no such
deductions been made;

 

(ii)                                  the
Borrower shall make such deductions; and

 

(iii)                               the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.

 

(e)                                  Within
thirty (30) days after the date of any payment by the Borrower of Taxes or
Other Taxes, the Borrower shall furnish to the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof, or other evidence
of payment reasonably satisfactory to the Administrative Agent.

 

(f)                                    Each
Lender other than a Lender which is (1) a U.S. person (within the meaning of
IRC Section 7701(a)(30)) and (2) treated as a corporation for U.S. federal
income tax purposes agrees that:

 

(i)                                     it
shall, no later than the Closing Date (or, in the case of a Lender which
becomes a party hereto pursuant to Section 9.7 after the Closing

 

22

 

Date, the date upon which Lender becomes a party
hereto) deliver to the Borrower through the Administrative Agent two accurate
and complete signed originals of IRS Form W-9, Form W-8BEN or W-8 ECI or any
successor thereto, in each case (“Withholding Forms”) indicating that
the Lender is on the date of delivery thereof exempt from United States
withholding tax and entitled to receive payments under this Agreement free from
withholding of United States Federal income tax;

 

(ii)                                  if
at any time the Lender makes any changes necessitating a new Withholding Form,
it shall with reasonable promptness deliver to the Borrower through the
Administrative Agent in replacement for, or in addition to, the forms
previously delivered by it hereunder, two accurate and complete signed
originals of Withholding Forms indicating that the Lender is on the date of
delivery thereof exempt from United States withholding tax and entitled to
receive all payments under this Agreement free from withholding of United
States Federal income tax;

 

(iii)                               it shall, before or
promptly after the occurrence of any event (including the passing of time but
excluding any event mentioned in clause (ii) above) requiring a change
in or renewal of the most recent Withholding Forms previously delivered by such
Lender, deliver to the Borrower through the Administrative Agent two accurate
and complete original signed copies of Withholding Forms in replacement for the
forms previously delivered by the Lender; and

 

(iv)                              it
shall, promptly upon the Borrower’s or the Administrative Agent’s reasonable
request to that effect, deliver to the Borrower or the Administrative Agent (as
the case may be) such other forms or similar documentation as may be required
from time to time by any applicable law, treaty, rule or regulation in order to
establish such Lender’s tax status for withholding purposes.

 

(g)                                 The
Borrower will not be required to pay any amounts in respect of United States
Federal income tax pursuant to Section 2.16(c) or Section 2.16(d)
to any Lender for the account of any Applicable Lending Office of such Lender:

 

(i)                                     if
the obligation to pay such additional amounts would not have arisen but for a
failure by such Lender to comply with its obligations under Section 2.16(f)
in respect of such Applicable Lending Office;

 

(ii)                                  if
such Lender shall have delivered to the Borrower a Withholding Form in respect
of such Applicable Lending Office pursuant to Section 2.16(f), and such
Lender shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by the
Borrower hereunder for the account of such Applicable Lending Office for any
reason other than a change in United States law or regulations or in the
official interpretation of such law or regulations by any governmental

 

23

 

authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the date
of delivery of such Withholding Form; or

 

(iii)                               if the Lender shall have
delivered to the Borrower a Withholding Form in respect of such Applicable
Lending Office pursuant to Section 2.16(f), and such Lender shall not at
any time be entitled to exemption from deduction or withholding of United
States Federal income tax in respect of payments by the Borrower hereunder for
the account of such Applicable Lending Office for any reason other than a
change in United States law or regulations or any applicable tax treaty or
regulations or in the official interpretation of any such law, treaty or
regulations by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the date
of delivery of such Withholding Form.

 

(h)                                 If
the Borrower is required to pay additional amounts to any Lender or the
Administrative Agent pursuant to Section 2.16(d), then such Lender shall
use its reasonable best efforts (consistent with legal and regulatory
restrictions) (including changing the jurisdiction of its Applicable Lending
Office) so as to eliminate any such additional payment by the Borrower which
may thereafter accrue if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender.

 

(i)                                     If
the Administrative Agent or any Lender determines that it has received a refund
or direct credit in respect of and specifically associated with any Taxes or
Other Taxes as to which it has been indemnified by the Borrower, or with
respect to which the Borrower has paid additional amounts, it shall promptly
notify the Borrower of such refund or direct credit and shall within 30 days
from the date of receipt of such refund or benefit of such direct credit
(including any interest paid or credited by the relevant Governmental Authority
attributable to such refund or direct credit) to the Borrower but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
with respect to the Taxes or Other Taxes giving rise to such refund or direct
credit net of all out-of-pocket expenses of such Person.  

 

(j)                                     Without
prejudice to the survival of any other agreement of the Borrower, the Lenders
and the Administrative Agent hereunder, the agreements and obligations of the
Borrower, the Lenders and the Administrative Agent contained in this Section
2.16 shall survive the payment of all other Obligations.

 

SECTION 2.17.                                 Sharing
of Payments, Etc.  If any Lender
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise, but not including any payment made from
an assigning Lender to an assignee Lender or a Lender to a Participant on
account of an assignment of Loans or Participation) on account of the Loans or
the Letters of Credit (other than pursuant to Section 2.10, 2.11,
2.12(b), 2.16 or 3.3(b)) in excess of its ratable share of
payments on account of such Loans and/or the Letters of Credit obtained by all
the Lenders entitled thereto, such Lender shall forthwith purchase from the
other Lenders notified of such payment such participations in such Loans and/or
Letters of Credit made by them as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with

 

24

 

each of them; provided that if all or any
portion of such excess payment is thereafter recovered from the purchasing
Lender, such purchase from each such Lender shall be rescinded and each such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender’s ratable share
(according to the proportion of (a) the amount of such Lender’s required
repayment to (b) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. 
The Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 2.17 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
setoff) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.

 

SECTION 2.18.                                 Warranty.  Each Notice of Borrowing pursuant to Section
2.4 and the delivery of each Letter of Credit Request pursuant to Section
3.2, shall automatically constitute a warranty by the Borrower to the
Administrative Agent and each Lender to the effect that on the date of such
requested Borrowing or the issuance of the requested Letter of Credit, as the
case may be, (a) the warranties contained in the Loan Documents (except to the
extent changes in facts or conditions are expressly permitted or required
hereunder or thereunder) shall be true and correct in all material respects as
of such requested date as though made on the date thereof unless an earlier
date is so specified in such representation and warranty and (b) no Event of
Default or Default shall have then occurred and be continuing or will result
therefrom.

 

SECTION 2.19.                                 Conditions.  Notwithstanding any other provision of this
Agreement (other than as set forth in Section 3.4), (a) no Lender shall
be obligated to make any Loan, (b) no Lender shall be obligated to convert into
or permit the continuation at the end of the applicable Interest Period of any
Eurodollar Rate Loan, and (c) no Issuing Lender shall be obligated to issue any
Letter of Credit if, in any such case, an Event of Default or Default exists or
would result therefrom.

 

SECTION 2.20.                                 All
Obligations Secured.  The Loans, the
Reimbursement Obligations, and all other Obligations of the Borrower and each
other Person to the Administrative Agent, any Issuing Lender, any Lender or any
other Secured Party, shall be secured by the Administrative Agent’s Lien, for
the benefit of the Secured Parties, on all of the Collateral and by all other
Liens heretofore, now, or at any time or times hereafter granted by the
Borrower or any other Person to the Administrative Agent, any Issuing Lender,
any Lender or any other Secured Party to secure any Obligations.  The Borrower agrees that all of the rights
of the Secured Parties set forth in this Agreement shall apply to any
modification, amendment or restatement of, or supplement to, this Agreement,
any supplements or exhibits hereto, and the other Loan Documents, unless otherwise
agreed in writing. 

 

SECTION 2.21.                                 Use
of Proceeds.  The Borrower shall
apply the proceeds of the Revolving Loans and the Tranche B Term Loans to
(a) to the general corporate purposes of the Borrower and its
Subsidiaries, (b) the financing of the Acquisition, (c) the

 

25

 

payment of fees and expenses related to the
Acquisition and (d) the refinancing of the Debt in respect of the NASDI
Acquisition Note and the Existing Credit Agreement.

 

SECTION 2.22.                                 Assignment
of Commitments Under Certain Circumstances.  In the event that the Administrative Agent shall have delivered a
notice or certificate on behalf of any Lender pursuant to Section 2.10, 2.12
or 2.16, the Loan Parties shall be required to make additional payments
to any Lender under Section 2.16, or any Lender shall become a
Defaulting Lender, the Borrower shall have the right, at its own expense, upon
notice to such Lender and Administrative Agent, not later than sixty (60) days
following such Lender’s delivery of such notice or certificate, to require such
Lender or Defaulting Lender to transfer and assign, without recourse or
discount, in accordance with and subject to the restrictions contained in Section
9.7, all of its interests, rights and obligations under this Agreement
(including, without limitation, its Commitments and its Percentage of the
Obligations) to one or more financial institutions chosen by the Borrower (and
approved by the Administrative Agent and the Issuing Bank, which approval shall
not be unreasonably withheld) which have agreed to so acquire and assume such
interests, rights and obligations.  A
Lender shall not be required to make any such transfer and assignment unless
all Obligations owing to such Lender, including, without limitation, those
arising under Sections 2.10, 2.12 and 2.16, have been paid
in full and such Lender shall have no further obligations with respect to its
Commitments, and no Lender shall be required to make any such transfer and
assignment if prior thereto the circumstances entitling the Borrower to require
such a transfer and assignment cease to apply as a result of such Lender’s
withdrawing its notice or certificate pursuant to Section 2.10, 2.12
or 2.16, as applicable.

 

ARTICLE III.

LETTERS OF CREDIT

 

SECTION 3.1.                                       Commitment
for Letters of Credit.  Prior to the
Closing Date, Bank of America, as “Issuing Lender” under the Existing Credit
Agreement has issued the Existing L/Cs, which from and after the Closing Date,
shall constitute Letters of Credit hereunder. 
Subject to the terms and conditions hereof, each Issuing Lender
hereunder, in reliance on the agreements of the other Revolving Lenders, set
forth in Section  3.4,  agrees
to issue letters of credit (the letters of credit issued on and after the Closing
Date pursuant to this Section 3 together with the Existing L/Cs, the “Letters
of Credit”) in Dollars or in Alternative Currencies for the account of the
Borrower, and each Lender severally agrees to participate in the Letters of
Credit (including Existing L/Cs) issued by each Issuing Lender hereunder, in a
Dollar equivalent amount equal to such Lender’s Revolving Credit Percentage,
from time to time, on any Business Day during the period commencing on the date
hereof, and continuing until the Revolving Commitment Termination Date in such
form as may be approved from time to time by the applicable Issuing Lender; provided,
that no Issuing Lender shall have any obligation to issue any Letter of Credit
if, after giving effect to such issuance, (i) the Letter of Credit Obligations
would exceed the Letter of Credit Availability or (ii) the aggregate amount of
Available Revolving Commitments would be less than zero.  Each Letter of Credit shall expire no later
than the earlier of (x) the fourth anniversary of its date of issuance and (y)
the date which is prior to the Revolving Commitment Termination Date as in
effect at the

 

26

 

time of the issuance of the Letter of Credit; provided
that any Letter of Credit with a one-year term may provide for renewal thereof
for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above).

 

SECTION 3.2.                                       Issuance
of Letters of Credit.

 

(a)                                  The
Borrower shall give the applicable Issuing Lender prior written notice (a “Letter
of Credit Request”) not later than 11:00 A.M. (Chicago time) on the
Business Day immediately preceding the date on which the issuance or amendment
of a Letter of Credit is requested or,
in the case of a requested Letter of Credit to be denominated in an Alternative
Currency, on the Business Day immediately preceding the date on which the
issuance or amendment of such a Letter of Credit requested (or, in either case,
such shorter time if consented to by the Administrative Agent and such
Issuing Lender), specifying:

 

(i)                                     the
requested date for issuance or amendment of such Letter of Credit, which shall
be a Business Day;

 

(ii)                                  the
expiry date of such Letter of Credit, which shall be a Business Day;

 

(iii)                               the beneficiary of such
Letter of Credit;

 

(iv)                              the
aggregate face amount of such Letter of Credit and the requested currency in
which such Letter of Credit is to be denominated;

 

(v)                                 whether
the Letter of Credit to be issued is a Financial Letter of Credit or a Performance
Letter of Credit; and

 

(vi)                              the
conditions for drawing to be included in such Letter of Credit.

 

Each such
Letter of Credit Request shall be by telecopier, telex or cable, confirmed
immediately in writing by mail, in substantially the form of Exhibit D
and executed by an authorized officer of the Borrower.

 

(b)                                 Upon
receipt of a Letter of Credit Request, the applicable Issuing Lender shall
promptly send a copy thereof to the Administrative Agent who shall then notify
each Lender of the contents thereof. 
Upon satisfaction of the conditions precedent specified in Article IV
hereof, and subject to the provisions of Section 3.2(c), such Issuing
Lender shall issue the Letter of Credit requested to be issued by it or amend
the Letter of Credit requested to be amended, as the case may be, on the date
specified in the Letter of Credit Request; provided that no Issuing
Lender shall issue or maintain a Letter of Credit having an expiry date later
than the date specified in Section 3.1. 
Promptly after the issuance by an Issuing Lender of a Letter of Credit,
such Issuing Lender shall furnish a copy of such Letter of Credit to the
Administrative Agent and the Borrower.

 

27

 

(c)                                  In
the case of a requested Letter of Credit to be denominated in an Alternative
Currency, the obligation of the applicable Issuing Lender to issue such Letter
of Credit is subject to the confirmation by such Issuing Lender to the
Administrative Agent on the Business Day of the requested date of such issuance
that such Issuing Lender agrees to issue such Letter of Credit in the requested
Alternative Currency, which confirmation shall be promptly forwarded by the
Administrative Agent to the Borrower.  If
such Issuing Lender shall not have so provided to the Administrative Agent such
confirmation, the Administrative Agent shall promptly notify the Borrower that
such Issuing Lender has not provided such confirmation, and the Borrower’s
request for such Letter of Credit in such Alternative Currency shall be deemed
to have been thereupon withdrawn by the Borrower.

 

SECTION 3.3.                                       Letter
of Credit Fee.  The Borrower agrees
to pay to the Administrative Agent (a) ratably for the account of each Lender,
a letter of credit fee for the term of such Letter of Credit at the rate equal
to the aggregate face amount outstanding of such Letter of Credit multiplied by
(i) in the case of Performance Letters of Credit, subject to Section 2.10(c),
the then Applicable Performance Letter of Credit Fee Percentage and (ii) in the
case of Financial Letters of Credit, the then Applicable Financial Letter of
Credit Fee Percentage, and (b) for the applicable Issuing Lender’s own account
(in addition to its Percentage of the fee payable to it as a Lender, in
accordance with clause (a) above), a letter of credit fee for the term of such
Letter of Credit .125 of 1% per annum (or such lower amount if agreed to by the
applicable Issuing Lender) based upon the aggregate face amount outstanding of
each such Letter of Credit and the applicable Issuing Lender’s customary
processing fees for the issuance, amendment or renewal of the Letter of
Credit.  The fee for any Letter of
Credit issued by any Issuing Lender hereunder, as determined in accordance with
clauses (a) and (b) above (the “Letter of Credit Fee”), shall be payable
quarterly in arrears on the last day of each Fiscal Quarter, on the Revolving
Commitment Termination Date and on the earliest of the cancellation, expiration
or return of such Letter of Credit to the applicable Issuing Lender; provided
that if any Letter of Credit is canceled and/or returned to the applicable
Issuing Lender prior to the expiration thereof, the Borrower shall from time to
time, upon demand by such Issuing Lender and/or any Lender therefor,
immediately pay to such Issuing Lender and/or such Lender additional amounts
sufficient to compensate it for its expenses not covered by a previously
received Letter of Credit Fee.  A
certificate as to the amount of such expenses submitted to the Borrower and the
Administrative Agent by such Issuing Lender and/or such Lender, showing in
reasonable detail the calculation thereof, shall be presumptive evidence of
such amount.

 

SECTION 3.4.                                       Obligations
of the Lenders to an Issuing Lender under a Letter of Credit.  Each Issuing Lender will notify the
Administrative Agent, and the Administrative Agent will thereupon notify each
other Lender, promptly upon presentation to it of a draft for payment drawn
under, or purporting to be drawn under, a Letter of Credit issued by it; provided
that the Administrative Agent and each Lender shall have received notice by
2:00 P.M. (Chicago time) on the Business Day on which such Issuing Lender
intends to make payment of each such draft, to the extent that the Borrower
fails to provide funds therefor, each other Lender shall make payment to the
applicable Issuing Lender in immediately available funds and in Dollars at the
applicable

 

28

 

Issuing Lender’s Domestic Lending Office of an amount
equal to the Dollar equivalent amount of such Issuing Lender’s payment
multiplied by such other Lender’s Revolving Credit Percentage.  The obligation of each Lender to make
payments to each Issuing Lender under this Section 3.4 shall be
unconditional, continuing, irrevocable and absolute regardless of whether or
not any of the conditions set forth in Article IV are then
satisfied.  In the event that any Lender
fails to make payment to any Issuing Lender of any amount due under this Section
3.4, such Issuing Lender shall be entitled to receive the principal and
interest otherwise payable to such Lender hereunder with respect to such amount
until such Issuing Lender receives such payment from such Lender; provided
that nothing contained in this sentence shall relieve such Lender of its
obligation to make payment to any Issuing Lender for such amounts in accordance
with this Section 3.4.

 

SECTION 3.5.                                       Reimbursement
Obligation.  The Borrower agrees
unconditionally and irrevocably to pay to the Administrative Agent in Dollars
and in immediately available funds for the account of the applicable Issuing
Lender (and, to the extent such payments were made by the Lenders pursuant to Section
3.4, for the account of such Lenders), upon demand therefor by the
Administrative Agent (which demand the Administrative Agent hereby agrees to
deliver), the Dollar equivalent amount of each payment which is drawn under a
Letter of Credit, or which purports to be so drawn (such obligation of the
Borrower being referred to herein as a “Reimbursement Obligation” with
respect to such Letter of Credit).  If
at any time the Borrower fails immediately to repay a Reimbursement Obligation
pursuant to this Section 3.5, the Borrower shall be deemed to have
requested a Revolving Loan which is a Base Rate Loan, as of the date of the
payment giving rise to the Reimbursement Obligation, from each Lender, equal in
amount to such Lender’s Revolving Credit Percentage multiplied by the Dollar
equivalent amount of the unpaid Reimbursement Obligation, the proceeds of which
shall be used to repay such Reimbursement Obligation.  If, as a result of a Default or an Event of Default, a Revolving
Loan may not be made on a date on which such Loan would be deemed to have been requested
pursuant to the preceding sentence, the unpaid Dollar equivalent amount of the
Reimbursement Obligation shall bear interest at the Default Rate and shall be
payable on demand.  Regardless of the
expiration date of any Letter of Credit, the Borrower shall remain liable with
respect to each Letter of Credit and all letter of credit fees shall continue
to accrue, until the applicable Issuing Lender is released from liability by
every Person which is entitled to draw or demand payment under such Letter of
Credit.

 

SECTION 3.6.                                       Representatives
of Beneficiaries.  Each Issuing
Lender may receive, accept or pay as complying with the terms of such Letter of
Credit, any drafts or other documents, otherwise in order, which may be signed
by, or issued to, the administrator or executor of, or the trustee in
bankruptcy of, or the receiver for any of the property of, the party in whose
name such Letter of Credit provides that any drafts or other document should be
drawn or issued.

 

SECTION 3.7.                                       Responsibility
of the Administrative Agent, the Issuing Lenders and the Lenders.  None of the Administrative Agent, any
Issuing Lender or any Lender shall be liable or responsible for:

 

29

 

(a)                                  the
use which may be made of the Letters of Credit or for any acts or omissions of
the beneficiary(ies) in connection therewith;

 

(b)                                 the
validity, sufficiency or genuineness of documents, or of any endorsement(s)
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged;

 

(c)                                  failure
of any draft to bear any reference or adequate reference to a Letter of Credit,
or failure of documents to accompany any draft at negotiation, or failure of
any Person to surrender or to take up a Letter of Credit or to send forward
documents, apart from drafts required by the terms of the relevant Letter of
Credit, each of which provisions, if contained in such Letter of Credit itself,
it is agreed may be waived by the applicable Issuing Lender;

 

(d)                                 errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, wireless, or otherwise, whether or not they may be
in cipher; or

 

(e)                                  any
other circumstances whatsoever in making or failing to make payment under a
Letter of Credit;

 

except only
that the Borrower shall have a claim against an Issuing Lender, and such
Issuing Lender shall be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered by the
Borrower which are determined to be caused by (i) such Issuing Lender’s willful
misconduct, bad faith or gross negligence or (ii) such Issuing Lender’s willful
or grossly negligent failure to pay under the relevant Letter of Credit after
the presentation to such Issuing Lender by the relevant beneficiary of such
Letter of Credit of a sight draft and certificate strictly complying with the
terms and conditions of such Letter of Credit.

 

The happening of any one or more of the contingencies referred to in subparagraphs
(a), (b), (c), (d) or (e) above shall not
affect, impair or prevent the vesting of any of the rights or powers of the
Issuing Lenders, the Lenders or the Administrative Agent hereunder.  In furtherance and extension and not in
limitation of the specific provisions hereinbefore set forth, it is hereby
further agreed that any action, inaction or omission taken or suffered by the
Administrative Agent, any Issuing Lender or any Lender, under or in connection
with a Letter of Credit or the relative drafts, documents or assets, if in
conformity with such foreign or domestic laws, customs or regulations as are
applicable thereto and without willful misconduct, bad faith or gross
negligence, shall be binding upon the Borrower and shall not place the
Administrative Agent, any Issuing Lender or any Lender under any resulting
liability to the Borrower.  The word
“assets” as used in this Section 3.7 includes goods and merchandise, as
well as any and all documents relative thereto, securities, funds, choses in
action, and any and all other forms of property, whether real, personal or
mixed and any right or interest of the Borrower therein or thereto.

 

30

 

SECTION 3.8.                                       Modifications
to Letters of Credit.  In the event
of any change or modification with respect to (a) the amount or duration of any
Letter of Credit, (b) the drawing, negotiation, presentation, acceptance, or
maturity of any drafts, acceptances or other documents, or (c) any of the other
terms or provisions of any Letter of Credit, such being done at the request of
the Borrower, this Agreement shall be binding upon the Borrower in all respects
with regard to the Letter of Credit so changed or modified, inclusive of any
action taken by the applicable Issuing Lender or any Lender with respect to
such Letter of Credit.

 

SECTION 3.9.                                       Uniform
Customs and Practice for Documentary Credits.  Except as otherwise expressly provided in this Agreement or as
the Borrower and the Lenders may otherwise expressly agree with regard to, and prior
to the issuance of, a Letter of Credit, the “Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No.  500,” as hereafter
amended, revised, supplemented, or replaced by other publication of similar
effect, shall in all respects be deemed a part hereof as fully as if
incorporated herein and shall apply to such Letter of Credit.

 

SECTION 3.10.                                 Indemnification.  The Borrower hereby agrees to indemnify and
hold harmless the Administrative Agent, each Issuing Lender and each Lender
from and against any and all claims, damages, losses, liabilities, and
reasonable out-of-pocket costs or expenses whatsoever (in each case, excluding
loss of anticipated profits) which the Administrative Agent, an Issuing Lender
or a Lender may incur (or which may be claimed against the Administrative
Agent, an Issuing Lender or a Lender by any Person) by reason of or in
connection with the execution and delivery or transfer of, or payment or
failure to pay under, any Letter of Credit; provided that the Borrower
shall not be required to indemnify any Issuing Lender for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by the willful misconduct, bad faith or gross negligence of such Issuing
Lender, the Administrative Agent or any Lender.  Nothing in this Section 3.10 is intended to limit the
reimbursement obligation of the Borrower contained in Section 3.5
hereof.

 

SECTION 3.11.                                 Transitional
Provisions.  The Borrower, Bank of
America, as “Administrative Agent,” and the Existing Lenders are currently
parties to the Existing Credit Agreement pursuant to which, among other things,
Bank of America, as “Issuing Lender” thereunder issued certain “Letters of
Credit” (as defined therein) for the account of the Borrower (to the extent
outstanding on the Closing Date and set forth on Schedule II, the “Existing
L/C’s”).  Each of the Existing L/C’s
shall remain outstanding and constitute Letters of Credit issued by an Issuing
Lender for the account of the Borrower pursuant to this Agreement on the
Closing Date for all purposes under this Agreement and any other Loan Document,
including, for the purpose of the accrual and payment of Letter of Credit Fees
payable pursuant to Section 3.3 for the remaining term of such Existing
L/C’s (other than for customary processing fees for the issuance, amendment or
renewal of such Existing L/C’s occurring prior to the Closing Date or relating
to the deemed issuance thereof occurring on the Closing Date).  All “Reimbursement Obligations” and other
“Letter of Credit Obligations” (as respectively defined in the Existing Credit
Agreement) which remain outstanding on the Closing Date

 

31

 

with respect to the Existing L/C’s shall constitute
Reimbursement Obligations and Letter of Credit Obligations of the Borrower
under this Agreement and shall be included in the calculations of Availability
and Letter of Credit Availability.  Schedule
II sets forth, as of the date hereof, the aggregate outstanding face
amount, identifying number, expiry date and name of the beneficiary, with
respect to each Existing L/C’s.

 

SECTION 3.12.                                 Currency
Equivalents.  For all purposes of
this Agreement, (i) the equivalent in Dollars of any Alternative Currency shall
be determined by using the quoted spot rate at which the applicable Issuing
Lender (or its Affiliate) offers to exchange Dollars for such Alternative
Currency two Business Days prior to the date on which such equivalent is to be
determined and (ii) the equivalent in any Alternative Currency of Dollars shall
be determined by using the quoted spot rate at which the applicable Issuing
Lender (or its Affiliate) offers to exchange such Alternative Currency for
Dollars two Business Days prior to the date on which such equivalent is to be
determined.  Except as specified in Section
2.14(a), the equivalent in Dollars of each Letter of Credit made in an
Alternative Currency shall be recalculated hereunder on each date that it shall
be necessary or desirable by any party to determine the amount of the
Availability, the Letter of Credit Availability, the Letter of Credit
Obligations, the Reimbursement Obligations, the Obligations or the face amount
of any Letter of Credit on such date. 
Upon the request by any party hereto, the applicable Issuing Lender
shall promptly make such determination and notify such requesting party of such
determination.

 

ARTICLE IV.

CONDITIONS OF LENDING

 

SECTION 4.1.                                       Conditions
Precedent to Initial Borrowing and Initial Issuance of Letters of Credit.  The obligation of each Lender on the Closing
Date to make the Loans requested to be made by it and the agreement of the
Issuing Lenders to issue the initial Letters of Credit to be issued or deemed
issued on the Closing Date shall be subject to the satisfaction of each of the
following conditions precedent set forth in this Section 4.1:

 

(a)                                  Delivery
of Documents.  The Administrative
Agent shall have received counterparts of this Agreement and all other agreements,
documents and instruments described in the List of Closing Documents attached
hereto as Schedule IV (including legal opinions from counsel to the Loan
Parties substantially in the forms attached hereto as Exhibits F-1 and F-2,
and the Loan Parties hereby direct their counsel to prepare and deliver the
same to the Secured Parties), each duly executed, completed and acknowledged
where appropriate and in form and substance reasonably satisfactory to the
Lenders and in sufficient copies for each of the Lenders.

 

(b)                                 Financial
Statements; Business Plan.  The
Administrative Agent shall have received (i) the financial statements described
in Section 5.1(f) and (ii) a satisfactory business plan for Fiscal Years
2003-2008.  It is understood that (i)
any projections, budget or business plan furnished to the Administrative Agent
or any Lender are subject to significant uncertainties and contingencies, which
are beyond the control of

 

32

 

Holdings and its Subsidiaries, (ii) no assurance is
given by Holdings and its Subsidiaries that such projections, budget or
business plans will be realized, and (iii) the actual results may differ from
such projections and such differences may be material.  Such financial statements shall show
Adjusted Consolidated EBITDA of the Borrower and its Subsidiaries for the
twelve-month period ended September 30, 2003 of not less than $59,000,000.

 

(c)                                  Lender
Tax Forms.  The Administrative Agent
shall have received from each Lender required under Section 2.16 to deliver any
Withholding Form, two executed copies of the appropriate Withholding Forms or
such other forms or documents (or successor forms or documents) appropriately
completed, as may be applicable to establish the extent, if any, to which
payments to such Lender pursuant to this Agreement are exempt from withholding
or deduction of Taxes imposed by the United States government.

 

(d)                                 Certification
of Debt to Adjusted Consolidated EBITDA. 
The Lenders shall have received a certificate of the chief financial
officer of the Borrower certifying on behalf of the Borrower that the ratio of
Debt of the Borrower and its Subsidiaries as of the Closing Date to Adjusted
Consolidated EBITDA of the Borrower and its Subsidiaries for the twelve month period
ended September 30, 2003 does not exceed 4.25 to 1.0, after giving effect to
the Transactions and the other transactions contemplated hereby.

 

(e)                                  Solvency
Certificate.  The Administrative
Agent shall have received a solvency certificate from the chief financial
officer of the Borrower certifying on behalf of the Borrower that the Borrower
and its Subsidiaries on a consolidated basis, after giving effect to the
Transactions and the other transactions contemplated hereby, are Solvent.

 

(f)                                    Other
Documents.  The Administrative Agent
shall have received such other approvals, opinions or documents as the
Administrative Agent or any Lender may reasonably request.

 

(g)                                 Satisfactory
Legal Form.  All documents executed
or submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries or any other Loan Party shall be in form and substance reasonably
satisfactory to the Administrative Agent and its counsel; the Administrative
Agent and its counsel shall have received all information, approvals, opinions,
documents or instruments as the Administrative Agent or its counsel may
reasonably request.

 

(h)                                 Evidence
and Perfection of Liens; Allocation of Collateral.  The Administrative Agent shall have received
(i) such documents, filings, recordings, or searches as the Administrative
Agent may reasonably request to evidence and perfect all Liens granted by the
Collateral Documents and (ii) such other evidence that all other actions,
including, but not limited to, the payment of all filing and recording fees and
taxes, necessary or, in the opinion of the Administrative Agent, desirable to
perfect and protect the priority of the security interests and liens created by
the Collateral Documents,

 

33

 

and to enhance the Administrative Agent’s ability to
preserve and protect its interests in and access to the Collateral, have been
taken or arrangements satisfactory to the Administrative Agent are in place
therefor.  The Lenders shall have
received, prior to the date hereof, an appraisal valuation by Merrill Marine of
the assets described in clauses (i) and (ii) of Section 2.20 and such
additional assets as may be agreed upon by the parties, and the equipment to be
allocated to the collateral described in such clauses shall have been so
allocated in a manner reasonably agreed by the Administrative Agent and the
Arrangers.

 

(i)                                     Termination
of Existing Credit Facilities; Payment of Existing Notes and NASDI Acquisition
Note.  The Administrative Agent
shall have received evidence satisfactory to the Administrative Agent that (i)
all Debt and all other obligations of the Loan Parties under the Existing
Credit Agreement (other than contingent indemnification and expense
reimbursement obligations and obligations with respect to Existing L/Cs) shall
be repaid from the proceeds of the initial Loans hereunder, and all agreements
and instruments evidencing and securing such Debt shall be terminated, (ii) the
Existing Notes that have been tendered prior to the Closing Date shall have
been retired or repurchased in full in accordance with the Trust Indenture Act
and the terms of the Existing Notes Indenture, and the Administrative Agent and
the Arrangers shall have received evidence reasonably satisfactory to them
either that (x) an amount sufficient to redeem the remaining Existing Notes not
so retired or repurchased prior to the Closing Date has been irrevocably
deposited with The Bank of New York, as trustee under the Existing Notes
Indenture, in accordance with the terms of the Existing Note Indenture for the
purpose of redeeming the remaining Existing Notes or (y) the remaining Existing
Notes have been otherwise irrevocably called for redemption, repurchase or
retirement and the amounts required for such redemption, repurchase or
retirement irrevocably committed, set aside and/or defeased, as may be agreed
upon among the Administrative Agent, the Arrangers and the Borrower, for the
purpose of effecting such redemption, repurchase or retirement, and (iii) the
NASDI Acquisition Note shall have been repaid in full and any commitments in
respect thereof have been terminated. 
In each case, the Administrative Agent shall have received evidence
satisfactory to it that, if applicable, arrangements satisfactory to the
Administrative Agent have been made for the termination of Liens and security
interests granted in connection with the Debt described in clauses (i), (ii)
and (iii) above.

 

(j)                                     Acquisition,
etc.  The Administrative Agent shall
have received evidence reasonably satisfactory to it that (i) each of the
representations and warranties set forth in Section 5.1(v) are true and
accurate, (ii) that copies of a file-stamped certificate of merger with respect
to the Acquisition or other evidence reasonably satisfactory to the Administrative
Agent that such certificate of merger have been filed and all waiting periods
with respect to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, (and all other applicable laws and regulations) if applicable, have
expired or been waived with respect to the Acquisition and related
transactions, (iii) Holdings has received gross cash proceeds of at least
$96,700,000 from the Initial Capital Contribution and that all of such proceeds
have been contributed by Holdings to the equity capital of the Borrower, (iv)
that the Borrower has received gross cash proceeds of at least $175,000,000
from the Note Issuance (less fees and expenses incurred by the

 

34

 

Borrower in connection therewith, as contemplated by
the Note Indenture) and that such net proceeds shall have been released to the
Borrower from escrow, (v) that the Acquisition has been, or concurrently is
being, consummated in accordance with all applicable law for a purchase price
satisfactory to the Arrangers, (vi) that the fees and expenses to be incurred
in connection with the Acquisition and the financing thereof shall not exceed
$17,000,000 and (vii) that copies of all executed Related Documents (including
all schedules and exhibits thereto), each in form and substance reasonably
satisfactory to the Arrangers and the Administrative Agent, have been delivered
to the Administrative Agent.

 

(k)                                  Bonding
and Intercreditor Agreements.  The
Administrative Agent shall have received a fully executed Intercreditor
Agreement which shall be in form and substance reasonably satisfactory to the
Administrative Agent and the Lenders, and a certified copy of the Bonding
Agreement in existence on the Closing Date, which shall be in form and
substance reasonably satisfactory to the Administrative Agent.

 

(l)                                     Closing
Fees, Expenses, etc.  The
Administrative Agent shall have received for its own account, or for the
account of each Lender, as the case may be, all fees then earned and due and
payable pursuant to Section 2.14 and all costs and expenses which have
been invoiced and are payable pursuant to Section 9.4.

 

(m)                               Ownership
Structure, etc.  Each of the Lenders
shall be reasonably satisfied with the ownership structure and the shareholder
arrangements of the Borrower and each of the Guarantors, including, without
limitation, the charter and bylaws (or equivalent documents) of each Loan
Party.

 

(n)                                 Equipment
Financing.  Each Lender shall be
reasonably satisfied that the material terms of the Borrower’s Equipment
Financing Debt are substantially similar to those material terms disclosed to
the Arrangers prior to November 7, 2003.

 

(o)                                 Insurance.  The Lenders shall be satisfied that the
amount, types and terms and conditions of all insurance maintained by Holdings,
the Borrower and each of the Borrower’s Subsidiaries shall be substantially
similar to each such Person’s existing insurance and that such insurance
reasonably satisfies the requirements of Section 6.1.  The Lenders shall have received endorsements
naming the Administrative Agent, on behalf of the Lenders, as additional
insured or loss payee, as the case may be, under all insurance policies to be
maintained with respect to the properties of Holdings the Borrower and the
Borrower’s Subsidiaries forming part of the Collateral and all liability
policies required by the Loan Documents.

 

(p)                                 Anti-Terrorism
Regulation.  To the extent
requested, the Arrangers and Lenders shall have received all documentation and
other information required by bank regulatory authorities under applicable
“Know Your Customer” and anti-money laundering rules and regulations, including
without limitation, the USA Patriot Act.

 

(q)                                 Other
Conditions.  The conditions
precedent to each Borrowing as provided in Section 4.2 shall be satisfied
on the Closing Date.

 

35

 

SECTION 4.2.                                       Conditions
Precedent to Each Borrowing and Each Issuance of a Letter of Credit.  The obligation (a) of each Lender to make
its initial Loans and each subsequent Loan and (b) of each Issuing Lenders to
issue its initial and each subsequent Letter of Credit (other than the Existing
L/C’s) and the Lenders’ obligations to participate in such Letters of Credit
shall be subject to each of the following conditions precedent that on the date
of each such Borrowing or the issuance of such Letter of Credit:

 

(a)                                  the
following statements shall be true and correct (and each of the giving of an
applicable Notice of Borrowing, or a Letter of Credit Request, and the
acceptance by the Borrower of the proceeds of such Loan, or the issuance of
such Letter of Credit, shall constitute a representation and warranty by the
Borrower that on the date of such Loan, or the issuance of such Letter of
Credit, such statements set forth in clauses (i) through (iii)
are true):

 

(i)                                     The
representations and warranties contained in Section 5.1 and in the other
Loan Documents are true and correct in all material respects on and as of the
date of such Loan or the issuance of such Letter of Credit, as the case may be,
both before and after giving effect to such Loan or the issuance of such Letter
of Credit, and, in the case of any such Loan, to the application of the
proceeds therefrom, as though made on and as of such date except for any
representation or warranty which is specified as being made as of an earlier
date, in which case such representation or warranty shall only speak as to such
earlier date;

 

(ii)                                  No
event has occurred and is continuing, or would result from such Loan or the
issuance of such Letter of Credit, as the case may be, or, in the case of any
such Loan, from the application of the proceeds therefrom, which constitutes a
Default or an Event of Default; and

 

(iii)                               (A) Revolving Loans
outstanding plus the Letters of Credit Obligations shall not exceed the
Revolving Commitment Amount, both before and after giving effect to such Loan
and/or such Letter of Credit and (B) in the case of the issuance of a Letter of
Credit, the Letter of Credit Obligations shall not exceed the Letter of Credit
Availability, both before and after giving effect to such Letter of Credit.

 

(b)                                 no
law or regulation shall prohibit, and no order, judgment or decree of any
Governmental Authority shall enjoin, prohibit or restrain, such Lender from
making the requested Loan, or issuing or participating in the requested Letter
of Credit, as the case may be.

 

SECTION 4.3.                                       No
Waiver.  In no event shall any
Lender’s making of any Loan or issuance of or participation in a Letter of
Credit hereunder at a time when any condition precedent to any Loan or Letter
of Credit, as specified in this Article IV, was not satisfied (a)
constitute a waiver of such condition by such Lender with respect to
subsequently requested Loans or Letters of Credit, or (b) to the extent such
unsatisfied

 

36

 

condition constituted a Default or Event of Default,
constitute a waiver by any Lender of such Default or Event of Default.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

 

SECTION 5.1.                                       Representations
and Warranties of the Loan Parties. 
In order to induce the Lenders and the Issuing Lenders to enter into
this Agreement, and to make the Loans and issue, maintain and/or participate in
the Letters of Credit, each Loan Party which is a party hereto represents and
warrants to each Lender and each Issuing Lender as of the Closing Date, and
(unless specified to speak only as of a specified date) on and as of the date
of any Loan or the issuance, amendment or extension of any Letter of Credit
that:

 

(a)                                  Organization;
Corporate Powers.  Each Loan Party
(i) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization (except to the extent
that such Loan Party’s failure to be in good standing under such laws could not
reasonably be expected to have a Material Adverse Effect and except as
otherwise as a result of a transaction permitted under Section 6.2(a)(i)),
(ii) is duly qualified to do business as a foreign corporation and in good
standing under the laws of each jurisdiction in which such qualification and
good standing are necessary in order for it to conduct its business and own its
property as heretofore conducted and owned (except such jurisdictions where
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect), and (iii) has all requisite corporate power to conduct its
business, to own and operate its property and to execute, deliver and perform
all of its obligations under the Loan Documents and other Transaction Documents
to which it is a party.

 

(b)                                 Authorizations;
Enforceability.  Each Loan Party has
the requisite corporate authority to execute, deliver and perform each of the
Loan Documents and other Transaction Documents executed by it.  Each of the Loan Documents and other
Transaction Documents to which any Loan Party is party has been duly executed
and delivered by such Loan Party and constitutes the legal, valid and binding
obligation of such Loan Party, enforceable against such Loan Party in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and to
general principles of equity, regardless of whether enforcement is sought in a
proceeding at law or in equity.

 

(c)                                  No
Conflict.  The execution, delivery
and/or performance by each Loan Party of each Loan Document and other
Transaction Document to which it is a party do not and will not, by the lapse
of time, the giving of notice or otherwise, (i) constitute a violation of any
Applicable Law or a breach of any provision contained in such party’s charter
or by-laws or contained in any material agreement, instrument or document to
which Holdings, the Borrower or any of the Borrower’s Subsidiaries is a party
or by which it is bound or (ii) result in or require the creation or imposition
of any Lien whatsoever upon any of the properties or assets of Holdings or any
of its Subsidiaries (other than Liens granted pursuant to the Collateral
Documents).

 

37

 

(d)                                 Approvals.  No approval, consent or authorization of, or
notice to or filing with, any Governmental Authority or any securities exchange
is required in connection with the execution, delivery or performance by any
Loan Party of any of the Loan Documents or other Transaction Documents, or the
granting of a Lien on any of the Collateral in the manner and for the purpose
contemplated by the Collateral Documents, except (i) filings and recording to
perfect such Liens, (ii) those obtained on or prior to the Closing Date and
(iii) those which, if not obtained, could not reasonably be expected to have a
Material Adverse Effect.

 

(e)                                  Licenses
and Permits.  Each of Holdings, the
Borrower and each of the Borrower’s Subsidiaries owns or possesses or is
licensed or otherwise has the right to use all Permits and other governmental
approvals and authorizations, franchises, authorizations and other rights that
are reasonably necessary for the operations of its business as currently
conducted, without, to the knowledge of Holdings or any of its Subsidiaries,
conflict with the rights of any other Person with respect thereto, except where
the failure to be so licensed or to have such Permits would not have a Material
Adverse Effect.

 

(f)                                    Financial
Reports.  

 

(i)                                     The
unaudited pro  forma consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at September 30, 2003 (the “Pro Forma
Balance Sheet”), copies of which have heretofore been furnished to each
Lender, has been prepared giving effect (as if such events had occurred on such
date) to (i) the consummation of the Acquisition and other Transactions, (ii)
the Loans to be made and the Note Issuance and the use of proceeds thereof and
(iii) the payment of fees and expenses in connection with the foregoing.  The Pro Forma Balance Sheet has been
prepared based on the best information available to the Borrower as of the date
of delivery thereof, and presents fairly in all material respects on a pro
forma basis the estimated financial position of Borrower and its
consolidated Subsidiaries as at September 30, 2003, assuming that the events
specified in the preceding sentence had actually occurred at such date.

 

(ii)                                  The
consolidated balance sheet of the Borrower and its Subsidiaries as at December
31, 2001 and December 31, 2002 and as at September 30, 2003, and the related
consolidated statements of earnings and cash flows of the Borrower and its
Subsidiaries for the Fiscal Year-ended December 31, 2001 and December 31, 2002
and for the period from January 1, 2003 through September 30, 2003, copies of
each of which have been furnished to each Lender, fairly present in all
material respects the consolidated financial condition of the Borrower and its
Subsidiaries as at such respective dates and the consolidated results of the
operations of the Borrower and its Subsidiaries for such respective periods
ended on such dates, all in accordance with GAAP, consistently applied; provided
that such financial statements delivered for any period other than a Fiscal
Year may lack certain footnote disclosures which would otherwise be required by
GAAP and may be subject to normal year-end adjustments.  Since December 31, 2002, there has been no
change in any circumstances, facts or

 

38

 

conditions nor shall an event have taken place which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

(g)                                 Title
to Property; Liens.

 

(i)                                     Each
of Holdings, the Borrower and each of the Borrower’s Subsidiaries has good and
marketable title to, or a valid leasehold interest in, all of its properties
and assets, real and personal, of any nature whatsoever, free and clear of all
Liens, except for Liens permitted by Section 6.2(h).  The assets and properties owned by and leased
to Holdings, the Borrower or any of the Borrower’s Subsidiaries which are
necessary in the conduct of their respective businesses are in adequate
operating condition and repair, ordinary wear and tear and damage due to
casualty excepted, are free and clear of any known defects except such defects
as do not substantially interfere with the continued use thereof in the conduct
of normal operations, and are able to serve the function for which they are
intended in the conduct of such Person’s business.

 

(ii)                                  As
of the Closing Date and as of the date of each annual delivery of the list of
Designated Vessels pursuant to Section 6.4(g), except to the extent set
forth on Schedule 5.1(g), the Borrower and the Subsidiary Guarantors are
the sole and lawful owners of each Designated Vessel and hold valid legal title
to the whole of such Designated Vessels. 
The Borrower and the Subsidiary Guarantors lawfully own and are lawfully
possessed of each Designated Vessel free from any Lien, charge or encumbrance
whatsoever, except as permitted pursuant to Section 6.2(h), and will
warrant and defend the title and possession thereto and to every part thereof
for the benefit of the Lenders against the material claims and demands of any
Person whomsoever.

 

(h)                                 No
Default.  None of Holdings, the
Borrower or any of the Borrower’s Subsidiaries is in violation of any
Applicable Law, or in default under any agreement or instrument to which any of
such Persons is a party or by which any of their respective properties or
assets is bound or affected, which violation or default could reasonably be
expected to have a Material Adverse Effect. 
No Event of Default or Default has occurred and is continuing.

 

(i)                                     Litigation;
Contingent Liabilities; Labor Matters.

 

(i)                                     Except
as set forth in Schedule 5.1(i) or in the financial statements described
in Section 5.1(f), no claims, litigation, arbitration proceedings or
governmental proceedings are pending or, to the knowledge of the Loan Parties,
overtly threatened against or, to the knowledge of the Loan Parties, are
affecting Holdings, the Borrower, or any of the Borrower’s Subsidiaries, or any
of their respective properties, assets or revenues, the results of which could
reasonably be expected to have a Material Adverse Effect.

 

(ii)                                  Other
than any liability incident to the claims, litigation or proceedings disclosed
in Schedule 5.1(i), or provided for or disclosed in the

 

39

 

financial statements referred to in Section 5.1(f),
as of the Closing Date, none of Holdings, the Borrower or any of the Borrower’s
Subsidiaries has any contingent liabilities which could reasonably be expected
to have a Material Adverse Effect.

 

(j)                                     Patents,
Trademarks and Licenses.  Holdings,
the Borrower and each of the Borrower’s Subsidiaries owns or possesses all the
licenses, patents, copyrights, trademarks, service marks, trade names, and
other similar property rights which are reasonably necessary for the present
conduct of its business, without, to the knowledge of Holdings or any of its
Subsidiaries, conflict with the rights of any other Person with respect
thereto, except where the failure to own or possess such property, or the
existence of any such conflict, could not reasonably be expected to have a
Material Adverse Effect.

 

(k)                                  ERISA.  As to each Plan which is not a Multiemployer
Plan and which is intended to be qualified under Section 401(a) of the IRC as
currently in effect, either (i) such Plan has been determined by the IRS to be
so qualified, and each trust related to such Plan has been determined to be
exempt from federal income taxation under Section 501(a) of the IRC as
currently in effect, (ii) an application for a determination for such Plan has
been filed and is now pending with the IRS, or (iii) the failure of such Plan
to be so qualified or determined to be exempt could not reasonably be expected
to have a Material Adverse Effect.  As
of the Closing Date, except as disclosed on Schedule 5.1(k), none of
Holdings, the Borrower or any of the Borrower’s Subsidiaries maintains or
contributes to any employee welfare benefit plan within the meaning of Section
3(1) of ERISA which provides benefits to employees after termination of
employment other than as required by Section 601 of ERISA.  None of Holdings, the Borrower, or any of
the Borrower’s Subsidiaries or any ERISA Affiliate has failed to comply with
any of the responsibilities, obligations or duties imposed on it by ERISA or regulations
promulgated thereunder with respect to any Plan which failure could reasonably
be expected to have a Material Adverse Effect. 
No Plan has incurred any accumulated funding deficiency (as defined in
Sections 302(a)(2) of ERISA and 412(a) of the IRC) whether or not waived.  Except as disclosed on Schedule 5.1(k),
none of Holdings, the Borrower, or any of their respective Subsidiaries or any
ERISA Affiliate nor to the knowledge of the Loan Parties any fiduciary of any
Plan which is not a Multiemployer Plan (i) has engaged in a nonexempt prohibited
transaction described in Section 406 of ERISA or Section 4975 of the IRC which
could reasonably be expected to have a Material Adverse Effect or (ii) has
taken or failed to take with respect to any Plan any action which would
constitute or result in a Termination Event. 
None of Holdings, the Borrower, or any of the Borrower’s Subsidiaries or
any ERISA Affiliate has incurred any potential liability under Section 4063,
4064, 4069, 4204 or 4212(c) of ERISA. 
None of Holdings, the Borrower, or any of the Borrower’s Subsidiaries or
any ERISA Affiliate has incurred any liability to the PBGC which remains
outstanding other than the payment of premiums, and there are no premium
payments which have become due which are unpaid.  Except as disclosed on Schedule 5.1(k), none of Holdings
or any of the Borrower’s Subsidiaries or any ERISA Affiliate has (i) failed to
make a required contribution or payment to a Multiemployer Plan or (ii) made a
complete or partial withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan.  None of Holdings or
any of its Subsidiaries or any ERISA Affiliate has failed to make a required

 

40

 

installment or any other required payment under
Section 412 of the IRC on or before the due date for such installment or other
payment.  None of Holdings, the Borrower
or any of the Borrower’s Subsidiaries or any ERISA Affiliate is required to
provide security to a Plan under Section 401(a)(29) of the IRC due to a Plan
amendment that results in an increase in current liability for the plan year.

 

(l)                                     Environmental
Matters.

 

(i)                                     Except
as specifically disclosed in Schedule 5.1(l), the ongoing operations of
Holdings, the Borrower and each of the Borrower’s Subsidiaries have complied
and currently comply in all respects with all Environmental Laws, except to the
extent that such noncompliance could not reasonably be expected to have a
Material Adverse Effect.

 

(ii)                                  Except
as specifically disclosed in Schedule 5.1(1), each of Holdings, the
Borrower and each of the Borrower’s Subsidiaries has obtained all Permits
required under any Environmental Law (“Environmental Permits”) and
necessary for its ordinary course operations, all such Environmental Permits
have been and are currently in good standing in all respects, and each of
Holdings, the Borrower and each of the Borrower’s Subsidiaries is and has been
in compliance with all terms and conditions of each such Environmental Permit,
except in each case, where the failure to obtain, remain in good standing, or
otherwise be in compliance with, such Environmental Permit could not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.

 

(iii)                               Except as specifically
disclosed in Schedule 5.1(l), none of Holdings, the Borrower or any of
the Borrower’s Subsidiaries or any of their respective present or to the Loan
Parties’ knowledge, former Property or operations is subject to any outstanding
written order from or agreement with any Governmental Authority nor subject to
any pending or, to any Loan Party’s knowledge threatened, claim or proceeding
under Environmental Laws, nor has been notified that it is a potentially
responsible party, respecting any Environmental Law, Environmental Claim or
Hazardous Material which, in any such case, could reasonably be expected to
have a Material Adverse Effect.

 

(iv)                              Except
as specifically disclosed in Schedule 5.1(l), there are no Hazardous
Materials or other conditions or circumstances existing with respect to any
current or, to the knowledge of any Loan Party, former Property, or arising
from operations prior to the Closing Date, of Holdings, the Borrower or any of
the Borrower’s Subsidiaries that could reasonably be expected to give rise to
Environmental Claims which would have a Material Adverse Effect.  To the best knowledge of the Loan Parties,
as of the Closing Date, none of Holdings, the Borrower, or any of the
Borrower’s Subsidiaries has any underground storage tanks (x) that are not properly
registered or permitted under applicable Environmental Laws, (y) that are not
in compliance with any Environmental Permits or Environmental Laws, or (z) with
respect to which a Release has occurred, on or off-site.  Each of Holdings, the Borrower and each of
the

 

41

 

Borrower’s Subsidiaries has notified all of its
employees of the existence, if any, of any health hazard arising from the
conditions of their employment of which the Loan Parties have knowledge in a
manner consistent with all applicable laws and have met all notification
requirements under Title III of CERCLA and all other Environmental Laws except
where a failure to so notify such employees could not reasonably be expected to
have a Material Adverse Effect.

 

(v)                                 To
the best knowledge of the Loan Parties, except as specifically disclosed in Schedule
5.1(l), as of the Closing Date, none of the Properties has at any time been
operated as a treatment, storage or disposal facility.

 

(vi)                              To
the best knowledge of the Loan Parties, except as set forth in Schedule
5.1(l), none of Holdings, the Borrower or any of the Borrower’s
Subsidiaries has any contingent liability in connection with (1) any actual,
threatened, or potential Release into the environment of, or otherwise with
respect to, any Hazardous Material or other hazardous, toxic or dangerous
waste, substance or constituent, or other substance, whether on any premises
now or previously owned or occupied by Holdings, the Borrower or any of the
Borrower’s Subsidiaries or on any other premises or from any vessel or vehicle
owned, operated or leased by Holdings or any of Borrower’s Subsidiaries that
could reasonably be expected to have a Material Adverse Effect or (2) any other
unsafe or unhealthful condition that could reasonably be expected to have a
Material Adverse Effect.

 

(m)                               Payment
of Taxes.  Holdings, the Borrower
and each of the Borrower’s Subsidiaries have filed all federal income and other
federal, state and local tax returns and other reports as required by law, and
have paid all taxes and other similar charges (including employment taxes) that
are due and payable, after giving effect to any extensions therefor, except (i)
such taxes, if any, that are being contested in good faith by appropriate
proceedings and have been adequately reserved against in accordance with GAAP
or (ii) any such returns, taxes, or charges the nonfiling or nonpayment of
which could not be reasonably expected to have a Material Adverse Effect.  None of the Loan Parties has any knowledge
of any proposed tax assessment against any of them or against any Subsidiaries
of the Borrower not constituting Loan Parties for which adequate provision has
not been made on its accounts.  The
provisions for taxes on the books of Holdings, the Borrower and each of the Borrower’s
Subsidiaries are adequate for all open years, and for its current fiscal
period.

 

(n)                                 Fiscal
Year.  Each of Holdings, the
Borrower and each of the Borrower’s Subsidiaries has established a Fiscal Year
ending on December 31 each year.

 

(o)                                 Governmental
Regulation.  None of the Loan
Parties is subject to regulation under the Interstate Commerce Act, the
Investment Company Act of 1940, the Public Utility Holding Company Act of 1935, the
Federal Power Act or any other Applicable Law that restricts such Loan Party’s
ability to incur debt, guaranty obligations

 

42

 

or to grant Liens, except to the extent that such
regulation could not reasonably be expected to have a Material Adverse Effect.

 

(p)                                 Margin
Regulations.  None of Holdings, the
Borrower or any of the Borrower’s Subsidiaries is engaged, principally or as
one of its important activities, in the business of extending credit for the
purpose of “purchasing” or “carrying” any “margin stock” (as each of the quoted
terms is defined or used in Regulation T, U or X of the Board of Governors of
the Federal Reserve System as in effect from time to time).  No part of the proceeds of any of the Loans
and no Letter of Credit has been used for so purchasing or carrying margin
stock or for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation T, U or X.

 

(q)                                 Other
Loan Documents.  The representations
and warranties made by each Loan Party contained in each Loan Document are true
and correct in all material respects.

 

(r)                                    Corporate
Structure; Capitalization.  As of
the Closing Date, a complete and correct disclosure of each Subsidiary of
Holdings in existence as of the Closing Date is set forth in Schedule
5.1(r)(i), together with the names, jurisdictions of organization, the
percentage of shares of such Persons owned by Holdings, the Borrower and each
Subsidiary of the Borrower as of the Closing Date.  As of the Closing Date, the names and ownership percentages
(stated both on an outstanding and fully-diluted basis) of each legal, record
owner of each class of the issued and outstanding shares of Capital Stock of
Holdings and the Borrower, and each Subsidiary of the Borrower, and of all
issued and outstanding warrants, options, stock appreciation rights and other
convertible interests with respect to Holdings, the Borrower’s, or such
Subsidiary’s Capital Stock, are completely and accurately set forth in Schedule
5.1(r)(ii).  As of the Closing Date,
the issued and outstanding shares of Capital Stock of Holdings, the Borrower
and each Subsidiary of the Borrower have been validly issued, are fully paid
and nonassessable and are owned directly or indirectly by Holdings, the
Borrower or the other applicable Persons as described in Schedule 5.1(r)(i),
free and clear of all Liens (other than Liens permitted hereunder).  No shares of Capital Stock of such
Subsidiary are held as or otherwise constitute treasury stock.  No authorized but unissued shares of Capital
Stock of Holdings, the Borrower or any such Subsidiary are subject to any
option, warrant, right to call, preemptive right or other commitment of any
kind whatsoever.

 

(s)                                  Debt;
Contingent Obligations; Solvency. 
As of the Closing Date, the financial statements referred to in Section
5.1(f) contain a complete and accurate disclosure in all material respects
of (i) all Debt of Holdings and its Subsidiaries outstanding as of the
respective dates of such financial statements and (ii) all material loss
contingencies and other material contingent obligations of Holdings and its
Subsidiaries as of such dates, except for Guaranties disclosed on Schedule
6.2(f).  As of the Closing Date,
none of Holdings, the Borrower or any of the Borrower’s Subsidiaries has
incurred any other Debt or Guaranties since the respective dates of such
financial statements, except as would have been permitted under Sections
6.2(f) and 6.2(i) of this Agreement had this Agreement been in
effect at the time of the incurrence of any such additional Debt or
Guaranties.  As of the Closing Date,
none of Holdings, the Borrower

 

43

 

or any of its Subsidiaries has incurred any loss
contingencies or other contingent obligations since the respective dates of
such financial statements which could reasonably be expected to have a Material
Adverse Effect.  Holdings and the other
Loan Parties, on a consolidated basis, are Solvent prior to, and on the date of
each Borrowing or Issuance of a Letter of Credit, after giving effect to the consummation
of the Transactions, including the Loans made, or to be made, and Letters of
Credit to be issued, or to be issued, to the Borrower on the Closing Date.

 

(t)                                    Insurance.  As of the Closing Date, Schedule 5.1(t)
sets forth a complete and accurate list in all material respects of insurance
policies and programs in effect with respect to the properties and businesses
of Holdings, the Borrower and each of the Borrower’s Subsidiaries, specifying
for each such policy and program, (i) the amount thereof, (ii) the risks
insured against thereby, (iii) the name of the insurer and each insured party
thereunder and (iv) the policy or other identification number thereof.  Such insurance policies and programs are in
such forms and amounts, and provide coverage against such risks as are required
by Section 6.1(c) and are customary for corporations of established
reputation engaged in the same or a similar business and owning and operating
similar properties.

 

(u)                                 Collateral
Documents.  The provisions of the
Collateral Documents executed by any Loan Party in favor of the Administrative
Agent evidence legal, valid, enforceable and continuing Liens, in favor of the
Administrative Agent for the benefit of the Secured Parties, in all right,
title and interest of such Loan Party in any and all of the Collateral
described therein, securing the Obligations from time to time outstanding, and
upon all proper filings and recordings being duly made in the locations
referred to in the applicable Collateral Documents or the taking of possession
of the Collateral by the Administrative Agent in accordance with the provisions
of such Collateral Documents, each of such Collateral Documents constitutes a
fully perfected first or second priority Lien in all right, title and interest
of such Loan Party in such Collateral superior in right to any Liens (other
than the Liens of Travelers), existing or future, which such Loan Party or any
creditors thereof or purchasers therefrom, or any other Person, may have
against such Collateral or interests therein, except for Liens permitted by Section
6.2(h).

 

(v)                                 The
Transactions.  (i) (A) All
conditions precedent to, and all material consents necessary to permit, the
Acquisition pursuant to the Acquisition Agreement, the Note Issuance pursuant
to the Note Indenture, the Initial Capital Contribution, and the effectiveness
of the Travelers Agreement pursuant to its terms, have been satisfied or
delivered, or waived with the prior written consent of the Majority Lenders,
(B) no material breach of any term or provision of the Acquisition Agreement,
the Note Indenture, the Travelers Agreement or documents relating to the
Initial Capital Contribution has occurred, (C) the Acquisition, the Note
Issuance and the Initial Capital Contribution each have been consummated (or
are being consummated simultaneously with the making of the initial Loans
hereunder), in accordance with all Applicable Laws, (D) all governmental and
material third party approvals necessary in connection with the Transactions
shall have been obtained and are in full force and effect, and all applicable
waiting periods shall have expired without any action being taken or threatened
by any

 

44

 

Governmental Authority which would restrain, prevent
or otherwise impose materially adverse conditions on any of the Transactions
and (E) no actions, suits or proceedings are pending or threatened with respect
to any of the Transactions or any Loan Document or Related Document which the
Administrative Agent or the Majority Lenders shall reasonably determine could
reasonably be expected to have a Material Adverse Effect.

 

(ii)                                  Each
of the Related Documents filed with the Securities and Exchange Commission or
other securities authorities, including, without limitation, the offering
memorandum with respect to the Note Issuance, complied (when filed) in all
material respects with all applicable provisions of the 1933 Act, 1934 Act, all
other federal securities laws, state securities or “Blue Sky” laws, foreign securities
laws, general corporation law and all rules and regulations thereunder.

 

(iii)                               The Borrower has
delivered to the Administrative Agent true, correct and complete, executed
copies of each of the Related Documents, including, without limitation, all amendments,
schedules and exhibits thereto, and all other material agreements, documents,
and certificates which have been executed and delivered in connection with the
Transactions.

 

(w)                               Accuracy
of Information.  The schedules,
certificates and other written statements and information furnished to the
Administrative Agent, the Issuing Lenders and the Lenders by or on behalf of
any Loan Party in connection with the negotiation of this Agreement and the
other Loan Documents do not contain any material misstatement of material fact
or omit to state a material fact or any fact necessary to make the material
statements contained therein not misleading in any material respect in light of
the circumstances under which such information was provided as of the time when
delivered.  As of the Closing Date,
there is no fact currently known to any Loan Party which now or in the future
could reasonably be expected to have a Material Adverse Effect and which has
not been set forth or referred to in this Agreement, the other Loan Documents,
or such schedules, certificates, statements or information heretofore furnished
to the Administrative Agent.

 

(x)                                   Obligations
and Guaranties “Senior Debt” under Note Indenture.  The Obligations and the Guaranties
constitute “Senior Debt” as defined in the Note Indenture.

 

ARTICLE VI.

COVENANTS

 

SECTION 6.1.                                       Affirmative
Covenants.  Each Loan Party which is
a party hereto covenants and agrees that so long as any of the Lenders shall
have any Commitment hereunder, there shall exist any outstanding Loans, any
Letter of Credit shall remain outstanding, or any other Obligations (other than
contingent obligations hereunder for which no claim has been, or is reasonably
expected to be, made) shall remain outstanding:

 

45

 

(a)                                  Corporate
Existence.  Holdings, the Borrower
and each of the Borrower’s Subsidiaries shall maintain its corporate existence,
qualification and good standing in all jurisdictions in which such
qualification and good standing are necessary in order for each such Person to
conduct its business and own its property as presently conducted and owned in
such jurisdictions (except in such jurisdictions where the failure to remain so
qualified and in good standing could not reasonably be expected to have a
Material Adverse Effect) and Holdings, the Borrower and each of the Borrower’s
Subsidiaries shall maintain all rights, privileges, licenses, patents, patent
rights, copyrights, trademarks, trade names, trade styles, franchises and other
authority for the conduct of its respective business in the ordinary course as
conducted from time to time, except to the extent that the failure to maintain
such rights, privileges, licenses, patents, patent rights, copyrights,
trademarks, trade names, trade styles, franchises and other authority would not
be reasonably expected to have a Material Adverse Effect.

 

(b)                                 Compliance
with Laws.  Holdings, the Borrower
and each of the Borrower’s Subsidiaries shall (i) comply with all Applicable
Laws applicable to such Person (except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect) and (ii) obtain as
needed, and maintain in good standing, all Permits and other governmental
approvals and authorizations necessary for its operations (except where the
failure to obtain or maintain such Permits and approvals could not reasonably
be expected to have a Material Adverse Effect).

 

(c)                                  Maintenance
of Properties; Insurance.

 

(i)                                     Holdings,
the Borrower and each of the Borrower’s Subsidiaries shall (A) obtain the
consent or approval of any Person whose consent or approval is required in
order for Holdings, the Borrower or such Subsidiary to grant or keep effective
Liens to or for the benefit of the Administrative Agent in any property of
Holdings, the Borrower or such Subsidiary intended to secure the Obligations;
and (B) maintain in good repair, working order and condition, excepting
ordinary wear and tear and damage due to casualty, all of its material
properties which are used in the conduct of its business (whether owned or
leased by such party) and make or cause to be made all appropriate repairs,
renewals and replacements thereof, in each case consistent with sound business
practices; provided that such obligation shall not apply to property
that Holdings, the Borrower or such Subsidiary reasonably determines in good
faith that maintenance thereof is no longer economically desirable.

 

(ii)                                  Holdings,
the Borrower and each of the Borrower’s Subsidiaries shall maintain the
following insurance policies and programs:

 

(A)                              physical
damage insurance on all material real and personal property (including
inventory) covering (1) for all open and operating facilities, repair and
replacement cost of all such property and (2) for all closed, inactive vacant
facilities, the actual cash value of such facilities;

 

46

 

(B)                                general
liability insurance (including products and completed operations liability
coverage) in an aggregate amount of not less than $65,000,000;

 

(C)                                Longshoremen
and Harbor Workers insurance per statutory limits;

 

(D)                               hull
and machinery insurance in an aggregate amount of not less than $200,000,000;

 

(E)                                 protection
and indemnity, including Masters and Members of Crew insurance in an aggregate
amount of not less than $75,000,000;

 

(F)                                 Workers
compensation insurance per statutory limits;

 

(G)                                Wrongful
draw insurance with respect to each Letter of Credit having an aggregate Dollar
equivalent face amount in excess of $10,000,000 and supporting contracts to be
performed in a country other than the United States or for a beneficiary in a
country other than the United States in an amount equal to such excess, unless
(1) the Borrower shall have notified the Administrative Agent that it has
determined, in good faith, that such insurance with respect to such Letter of
Credit is not available at a reasonable economic cost or not available from a
reputable insurer and (2) the Administrative Agent shall have concurred with
such conclusion in writing (which concurrence shall not be unreasonably
withheld or delayed);

 

(H)                               insurance
to protect against asset seizure with respect to each contract to be performed
by the Borrower or its Subsidiaries in a country outside of the United States,
in an amount equal to the aggregate fair market value of the assets used by the
Borrower and its Subsidiaries in fulfilling their respective obligations under
such contract unless (1) the Borrower shall have notified the Administrative
Agent that it has determined, in good faith, that such insurance with respect
to such contract is not available at a reasonable economic cost or not
available from a reputable insurer, or the property to be used in connection
with such contract is not subject to a material risk of asset seizure in such
country and (2) the Administrative Agent shall have concurred with such
conclusion in writing (which concurrence shall not be unreasonably withheld or
delayed);

 

(I)                                    contractors
pollution liability coverage of not less than $5,000,000; and

 

(J)                                   such
other additional insurance coverage and with respect to such risks as is
customary for businesses similar to that of Holdings and its Subsidiaries.

 

47

 

All such insurance shall be provided by (x) the insurers listed on Schedule
5.1(t), (y) insurers that have an A.M. Best policy-holders rating of not
less than A, or if no such rating is applicable, having a quality comparable to
those rated A or better, or (z) such other insurers as the Administrative Agent
may approve reasonably in writing, and shall contain endorsements, in form and
substance reasonably satisfactory to the Administrative Agent, naming the
Administrative Agent as loss payee with respect to each casualty insurance
policy which insures any Collateral and as an additional insured with respect
to each liability insurance policy.

 

(iii)                               The Borrower shall
deliver or cause to be delivered to the Administrative Agent, on or before the
Closing Date, copies of certificates of insurance with respect to each of the
Borrower’s and its Subsidiaries’ policies of insurance described in Section
6.1(c), as in effect on the Closing Date. 
In addition, the Borrower shall deliver to the Administrative Agent
prompt written notice of any cancellation or reduction in the amount or
coverage of any of the insurance policies required by this Section 6.1(c)
and, in the event any new or substitute policies shall be issued, the Borrower
shall promptly request its insurers (or their agents) to deliver certificates
evidencing such new or substitute insurance to the Administrative Agent.

 

(d)                                 Notice
of Litigation.  The Borrower shall
deliver or cause to be delivered to the Administrative Agent, promptly
following the occurrence and the Borrower acquiring knowledge thereof, notice
of any of the following events:  (i) the
institution of, or threat in writing of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting Holdings, the
Borrower or any of the Borrower’s Subsidiaries, which (A) could reasonably be
expected to have a Material Adverse Effect or (B) relates to any Loan Document,
(ii) any development in any action, suit, proceeding, governmental
investigation or arbitration already disclosed which could reasonably be
expected to have a Material Adverse Effect and (iii) any judgment (or
judgments) or money judgment (or judgments), writ or warrant of attachment, or
similar process involving in excess of $15,000,000 (or $6,000,000 in the
aggregate to the extent not covered by insurance which is confirmed in writing
by the insurers or agents of Holdings, the Borrower or any of the Borrower’s
Subsidiaries as covering such judgment or process) in the aggregate being
entered or filed against any of the Loan Parties or any of their respective
assets.

 

(e)                                  Taxes;
Claims.  Holdings, the Borrower and
each of the Borrower’s Subsidiaries shall (i) promptly file all material
federal, state and local tax returns and other reports which such Person is
required by law to file, (ii) maintain adequate reserves for the payment of all
material taxes, assessments, governmental charges, and other similar charges,
and pay promptly, when due, all such taxes, assessments, and other charges
(including employment taxes) in such manner as will not give rise to any Lien
other than Customary Permitted Liens, (iii) promptly pay all other Claims
(including claims for labor, services, materials and supplies) that have become
due and payable and that by law have or may give rise to a Lien on such
Person’s property or assets, prior to the time when any penalty or fine may be
incurred with

 

48

 

respect thereto and otherwise in such manner as will
not give rise to any Lien other than Customary Permitted Liens, and (iv) pay all
trade accounts payable in accordance with customary business terms; provided
that none of Holdings, the Borrower or any of the Borrower’s Subsidiaries shall
be required to pay any such tax, assessment, charge, claim or account which (x)
(1) is being contested in good faith by appropriate proceedings which will
prevent the forfeiture or sale of any Property or any material interference
with the use thereof by such Person, and (2) has been adequately reserved
against in accordance with GAAP or (y) if not so paid, could not reasonably be
expected to have a Material Adverse Effect.

 

(f)                                    ERISA
Notices.  The Borrower shall deliver
or cause to be delivered to the Administrative Agent, at the Borrower’s
expense, the following information and notices:

 

(i)                                     within
ten (10) Business Days after any of Holdings, the Borrower, any of the
Borrower’s Subsidiaries or any ERISA Affiliate knows that a Termination Event
has occurred, a written statement of the chief financial officer of the
Borrower describing such Termination Event and the action, if any, which
Holdings, the Borrower or any of their respective Subsidiaries or ERISA
Affiliate has taken, is taking or proposes to take with respect thereto, and
when known, any action taken or threatened by the IRS, DOL or PBGC with respect
thereto;

 

(ii)                                  within
ten (10) Business Days after any of Holdings, the Borrower, any of the
Borrower’s Subsidiaries or any ERISA Affiliate knows that a prohibited
transaction (defined in Sections 406 of ERISA and 4975 of the IRC) has occurred
which could reasonably be expected to result in liabilities to Holdings, the
Borrower or any of the Borrower’s Subsidiaries in excess of $2,000,000, a
statement of the chief financial officer of the Borrower describing such
transaction and the action which Holdings, Borrower and their respective
Subsidiaries or ERISA Affiliate has taken, is taking or proposes to take with
respect thereto;

 

(iii)                               within ten (10) Business
Days after the filing thereof with the IRS, a copy of each funding waiver
request filed with respect to any Plan and all communications received by
Holdings, the Borrower or any of the Borrower’s Subsidiaries or any ERISA
Affiliate with respect to such request;

 

(iv)                              within
ten (10) Business Days after receipt by Holdings, the Borrower or any of the
Borrower’s Subsidiaries or any ERISA Affiliate of the PBGC’s intention to
terminate a Plan or to have a trustee appointed to administer a Plan in either
case in a distress termination under Section 4041(c) of ERISA, copies of each
such notice;

 

(v)                                 within
ten (10) Business Days after receipt by Holdings or any of the Borrower’s
Subsidiaries or any ERISA Affiliate of any unfavorable determination letter
from the IRS regarding the qualification of a Plan under

 

49

 

Section 401(a) of the IRC which could reasonably be
expected to result in liabilities to Holdings, the Borrower or any of the
Borrower’s Subsidiaries in excess of $2,000,000, copies of each such letter;

 

(vi)                              within
ten (10) Business Days after the receipt by Holdings, the Borrower or any of
the Borrower’s Subsidiaries or any ERISA Affiliate of a notice from a
Multiemployer Plan regarding the imposition of withdrawal liability which could
reasonably be expected to result in liabilities to Holdings, the Borrower or
any of their respective Subsidiaries in excess of $2,000,000, copies of each
such notice;

 

(vii)                           within ten (10) Business
Days after Holdings, or any of its Subsidiaries or any ERISA Affiliate fails to
make a required installment or any other required payment under Section 412 of
the IRC on or before the due date for such installment or payment which could
reasonably be expected to result in the imposition of a Lien under Section
412(n) of the IRC, a notification of such failure; and

 

(viii)                        within ten (10) Business Days
after Holdings, the Borrower, or any of their respective Subsidiaries or any
ERISA Affiliate knows (A) a Multiemployer Plan has been terminated, (B) the
administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan, or (C) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan
which, in any such case, could reasonably be expected to result in liabilities
to the Borrower and its Subsidiaries in excess of $2,000,000, a notification of
such event or fact.

 

For purposes
of this Section 6.1(f), any Loan Party and any ERISA Affiliate shall be
deemed to know all facts known by the administrator of any Plan of which such
Loan Party or such ERISA Affiliate is the plan sponsor.

 

(g)                                 ERISA
Compliance.  Holdings and the
Borrower shall, and shall cause each of the Borrower’s Subsidiaries and each
other ERISA Affiliate to, establish, maintain and operate all Plans to comply
in all respects with the provisions of ERISA, IRC, and all other applicable
laws, and the regulations and interpretations thereunder except to the extent
such noncompliance could not reasonably be expected to have a Material Adverse
Effect.

 

(h)                                 Patents,
Trademarks and Licenses.  Holdings
and the Borrower shall, and shall cause each of the Borrower’s Subsidiaries to,
obtain and maintain adequate licenses, patents, copyrights, trademarks, service
marks, trade names, and other similar property rights to conduct its business
as currently conducted, except where the failure to obtain or maintain such
property rights could not reasonably be expected to have a Material Adverse
Effect.

 

(i)                                     Notice
of Labor Disputes.  The Borrower
shall notify the Administrative Agent as soon as possible and in any event
within three (3) days,

 

50

 

following (A) the Borrower’s learning of any labor
dispute to which Holdings, the Borrower or any of the Borrower’s Subsidiaries
is likely to become a party, any strikes or walkouts, or threatened strikes or
walkouts, relating to any of its plants or other facilities, and (B) the
expiration or termination of any labor contract to which Holdings, the Borrower
or any of the Borrower’s Subsidiaries is a party or by which Holdings, the
Borrower or any of the Borrower’s Subsidiaries is bound (other than an
expiration or termination of a labor contract which has been replaced by a new
labor contract or an extension of an existing labor contract), which, in any
case under clause (A) or (B) hereof, could reasonably be expected
to have a Material Adverse Effect.

 

(j)                                     Notice
of Default.  The Borrower shall
promptly notify the Administrative Agent, (i) of any condition or event that
constitutes a Default or an Event of Default and (ii) of any other default
under any contractual obligation to which Holdings, the Borrower or any of the
Borrower’s Subsidiaries is a party or by which any of them or their respective
properties may be bound (which default could reasonably be expected to have a
Material Adverse Effect), such notice to specify the nature and period of
existence of any such condition, event, or default and what action Holdings,
the Borrower or such Subsidiary, as applicable, has taken, is taking or
proposes to take with respect thereto.

 

(k)                                  Environmental
Notices.  The Borrower shall notify
the Administrative Agent in writing no later than ten (10) Business Days after
becoming aware of any of the following which could reasonably be expected to
result in liabilities or expenses of Holdings, the Borrower or any of the
Borrower’s Subsidiaries in excess of $3,000,000:  (i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened against
Holdings or any of its Subsidiaries or any of their respective current or
former Properties pursuant to any applicable Environmental Laws; (ii) all other
Environmental Claims; (iii) any environmental or similar condition on any real
property adjoining or in the vicinity of the Property of Holdings, the Borrower
or any of the Borrower’s Subsidiaries that could reasonably be expected to
cause such Property or any part thereof to be subject to any restrictions on
the ownership, occupancy, transferability or use of such property under any
Environmental Laws; (iv) new and material changes to any existing Environmental
Law; and (v) any filing or report made by the Borrower or any of its
Subsidiaries with any Governmental Authority with respect to (A) the violation
of any Environmental Law, (B) any unpermitted Release or threatened Release of
a Contaminant that is reportable under 40 C.F.R.  302 or (C) any unsafe or unhealthful condition at any Property of
the Borrower or any of its Subsidiaries.

 

(l)                                     Environmental
Laws.

 

(i)                                     Holdings
and the Borrower shall, and shall cause each of the Borrower’s Subsidiaries to,
conduct its operations and keep and maintain its Property in compliance with
all Environmental Laws, and will obtain, maintain in good order, and comply in
all material respects with, all Environmental Permits and registrations, except
to the extent any such noncompliance, or failure to

 

51

 

obtain, or maintain such Environmental Permits or
registrations, could not reasonably be expected to have a Material Adverse
Effect.

 

(ii)                                  Upon
the written request of the Administrative Agent, the Loan Parties shall submit
to the Administrative Agent with sufficient copies for each Lender, at the Loan
Parties’ sole cost and expense, at reasonable intervals, a report providing an
update of the status of any environmental, health or safety compliance, hazard
or liability issue identified in any notice or report required pursuant to Section
6.1(k), that could, individually or in the aggregate, result in liability
in excess of $3,000,000.

 

(m)                               Books,
Records and Inspections.  Holdings,
the Borrower and each of the Borrower’s Subsidiaries shall keep books of record
and account (including records relating to the Collateral) which accurately
reflect all of its business affairs and transactions in relation to its
business and activities in all material respects.  Holdings, the Borrower and each of the Borrower’s Subsidiaries
shall permit officers and designated representatives of the Administrative
Agent and, if accompanied by the Administrative Agent, each Lender, to visit
and inspect any of the properties and operations of Holdings, the Borrower and
each of the Borrower’s Subsidiaries, and to examine the books of account and
other documents of the Borrower and each of the Borrower’s Subsidiaries and (at
the expense of the Loan Parties) make copies thereof and discuss the affairs,
finances and accounts of Holdings, the Borrower and the Borrower’s Subsidiaries
with, and be advised as to the same by, its and their officers and to interview
any of the employees, representatives or agents of Holdings, the Borrower and
the Borrower’s Subsidiaries regarding environmental compliance, hazard or
liability, and its independent auditors, and each Loan Party hereby authorizes
its independent auditors to discuss such financial matters with the
Administrative Agent or any representative thereof, in each such case, at such
reasonable times and intervals, so long as no Event of Default is continuing
upon reasonable prior written notice, during regular business hours, and to
such reasonable extent as the Administrative Agent may desire (but, so long as
no Event of Default is continuing, with the Borrower in attendance for such
discussions); provided, however, that, following the occurrence
and during the continuation of an Event of Default, the rights of the
Administrative Agent and the Lenders may be exercised at any time, with any
frequency upon reasonable notice.  The
Loan Parties agree to pay the reasonable fees of the Administrative Agent’s
auditors incurred in connection with any reasonable exercise of the rights of
the Administrative Agent pursuant to this section.  Unless an Event of Default shall have occurred and be continuing,
the Loan Parties shall only be obligated to pay the fees and expenses of the
Administrative Agent and its auditors in respect of one visit and inspection in
any calendar year.

 

(n)                                 Bonding
Agreement; Employment Agreements. 
Holdings and the Borrower will take all action necessary to maintain the
Bonding Agreement in full force and effect and will promptly notify the
Administrative Agent of any supplement, replacement or amendment thereof.  The Borrower will promptly notify the
Administrative Agent of any extension, termination or non-renewal of any of the
Employment Agreements or of any amendment to any of the material terms thereof.

 

52

 

(o)                                 Foreign
Exchange Hedging.  Prior to
Holdings, the Borrower or any of the Borrower’s Subsidiaries entering into any
contract or series of contracts under which the amounts payable to it are
payable in whole or in part in the currency of any country other than the
United States (a “Foreign Currency Contract”) and the amount payable
thereunder, when aggregated with the amounts payable under all other Foreign
Currency Contracts for such country, exceeds $20,000,000 (on a Dollar
equivalent basis), net of the amounts thereafter payable by the Borrower and
its Subsidiaries in the currency of such country (on a Dollar equivalent basis)
for related services or products, whether under subcontracts or otherwise, as
estimated by the Borrower in good faith and with notice to the Administrative
Agent prior to Holdings, the Borrower or such Subsidiary of the Borrower
entering into such Foreign Currency Contract, and if foreign exchange hedging
arrangements are available from a reputable financial institution or through a
contract traded on a reputable exchange at a reasonable economic cost, the
Borrower or such Subsidiary shall obtain foreign currency hedging arrangements
satisfactory in form and substance to the Administrative Agent with respect to
the amounts payable under all such Foreign Currency Contracts involving such
country.  For purposes of this Section
6.1(o), a foreign exchange hedging arrangement with respect to any currency
shall be presumed to be available from a reputable financial institution or
through a contract traded on a reputable exchange at a reasonable economic
cost, unless (A) the Borrower shall notify the Administrative Agent that it has
determined, in good faith, that such a foreign exchange hedging arrangement
with respect to such currency is not so available and (B) the Administrative
Agent shall have concurred with such conclusion in writing (which concurrence
shall not be unreasonably withheld or delayed).

 

(p)                                 Liens
on Collateral.  The Liens granted to
the Administrative Agent securing the Obligations for the benefit of the
Secured Parties shall, as set forth in the Guaranties and Collateral Documents
(subject to changes in the Collateral resulting from Dispositions and
substitutions of Collateral permitted hereunder pursuant to clause (c) of the
definition of Permitted Dispositions and the effect of Recovery Events) for the
term of this Agreement be comprised of (i) a first priority lien on equipment
of the Borrower and the Guarantors that as of the Closing Date, according to
the appraisal performed by Merrill Marine in connection with to the Closing
Date, was determined to have an orderly liquidation value (“OLV”) of at
least $70,000,000, (ii) a perfected second priority lien on other equipment of
the Borrower and the Guarantors that as of the Closing Date, according to the
appraisal performed by Merrill Marine immediately prior to the Closing Date was
determined to have an OLV of at least $80,000,000 (subject only to Liens
permitted by this Agreement and the Liens of Travelers pursuant to the Bonding
Agreement) based, in the case of each of clauses (i) and (ii), upon the
valuations of Merrill Marine conducted in connection with the Closing Date;
(iii) a perfected Lien on all intercompany receivables of the Borrower and the
Subsidiary Guarantors having an equal priority to the Liens of the Bonding
Company, and having a senior priority to all other Liens; and (iv) by a
perfected second priority lien on accounts receivables of the Borrower and the
Subsidiary Guarantors arising from projects that are bonded pursuant to the
Bonding Agreement (subject only to Liens permitted by this Agreement and the
Liens of Travelers pursuant to the Bonding Agreement).  In the event that at any time an Event of
Default in respect of the financial covenant set forth in Section 6.3(b)
shall have occurred and be continuing, within 60 days of the date that the
Borrower is required to

 

53

 

deliver a Compliance Certificate pursuant to Section
6.4(d) for the Fiscal Quarter end for which such the financial covenant set
forth in Section 6.3(b) has not been satisfied, the Borrower shall, or shall
cause its Subsidiaries to, grant to the Administrative Agent for the benefit of
the Secured Parties as security for the Obligations first priority perfected
Liens on additional equipment or other assets selected by the Borrower having
an OLV as of the date of such grant (based upon a valuation conducted at such
time, as provided below) of at least $10,000,000 (subject, but senior to, the
second Liens of Travelers on such additional collateral to the extent required
by the Intercreditor Agreement), and the Person granting such additional
collateral, to effect the grant (and perfection of) such Liens, shall execute
Collateral Documents in substantially the same form as the other Collateral
Documents then in existence and otherwise in form and substance reasonably
satisfactory to the Administrative Agent together with opinions, certificates
and other documentation reasonably requested by the Administrative Agent as
provided in the Collateral Documents. 
For the purposes of the immediately preceding sentence, OLV shall be
determined by a valuation completed by Merrill Marine, or such other appraiser
reasonably satisfactory to the Administrative Agent.

 

(q)                                 Future
Subsidiaries.  Upon any Person
becoming, after the Closing Date, a Subsidiary of the Borrower, or upon
Holdings, the Borrower or any Subsidiary of the Borrower acquiring additional
Capital Stock of any existing Subsidiary, the Borrower shall notify the
Administrative Agent of such event, and, unless such Subsidiary is organized in
a jurisdiction outside the United States of America or otherwise agreed to
between the Borrower and the Administrative Agent, (i) such Person shall
execute a Loan Party Guaranty and other Collateral Documents in substantially
the same forms as the other Loan Party Guaranties and Collateral Documents then
in existence and otherwise in form and substance reasonably satisfactory to the
Administrative Agent together with opinions, certificates and other
documentation reasonably requested by the Administrative Agent in connection with
the Collateral Documents (but only to the extent not conflicting with the terms
of the Intercreditor Agreement) and (ii) to the extent such Person executes a
Loan Party Guaranty, such Person shall become a party to the Contribution
Agreement in a manner satisfactory to the Administrative Agent, together, in
each case, with such opinions of legal counsel, in form and substance
reasonably satisfactory to the Administrative Agent, as the Administrative
Agent may reasonably require relating to such Loan Party Guaranty and the
Contribution Agreement.

 

(r)                                    Further
Assurances.  Each Loan Party agrees
that, until all Obligations (other than contingent obligations for which no
claim has been, or is reasonably expected to be, made) have been indefeasibly
paid and fully satisfied and the Commitments have been terminated, the
Administrative Agent’s security interests in and Liens on and against the
Collateral, and all proceeds thereof, shall, subject to Section 8.10,
continue in full force and effect.  Each
Loan Party shall perform, from time to time, any and all steps reasonably
requested by the Administrative Agent to perfect, maintain and protect the
Administrative Agent’s security interests in and Liens on and against the
Collateral granted or purported to be granted by the Collateral Documents, as
well as the priority of such security interests and Liens, or to enable the
Administrative Agent to exercise its rights and remedies hereunder with respect
to any Collateral, including (i) executing and filing ship mortgages, financing
or continuation statements, or

 

54

 

amendments thereof, and terminations of ship
mortgages, financing statements and other releases, in form and substance
reasonably satisfactory to the Administrative Agent, (ii) delivering to the
Administrative Agent all instruments representing or evidencing the Collateral
duly endorsed and accompanied by duly executed instruments of transfer or
assignment, including note powers or allonges, all in form and substance
reasonably satisfactory to the Administrative Agent, and (iii) executing and
delivering all further instruments and documents, and taking all further
action, as the Administrative Agent may reasonably request.

 

SECTION 6.2.                                       Negative
Covenants.  Each Loan Party which is
a party hereto covenants and agrees that so long as any of the Lenders shall
have any Commitment hereunder, there shall exist any outstanding Loans, any
Letter of Credit shall remain outstanding, or any other Obligations (other than
contingent obligations hereunder for which no claim has been, or is reasonably
expected to be, made) shall remain outstanding:

 

(a)                                  Consolidation,
Mergers and Acquisitions.  Neither
Holdings nor the Borrower shall, nor shall they permit any of the Borrower’s
Subsidiaries to, liquidate or dissolve, consolidate with, or merge into or
with, any other corporation or Person, or purchase or otherwise acquire all or
substantially all of the assets of any Person (or of any division thereof)
except:

 

(i)                                     any
Subsidiary of the Borrower may liquidate or dissolve voluntarily into, and may
merge with and into, the Borrower or any Subsidiary Guarantor, and the assets
or stock of the Borrower or any of the Borrower’s Subsidiaries may be purchased
or otherwise acquired by the Borrower or any Subsidiary Guarantor, as the case
may be and any Subsidiary that is not a Subsidiary Guarantor may liquidate or
dissolve voluntarily into, or merge with and into any other Subsidiary of the
Borrower that is not a Subsidiary Guarantor; 

 

(ii)                                  Permitted
Business Acquisitions, if permitted (without duplication) by Section
6.2(b)(v) to be made as an Investment; 

 

(iii)                               Purchases of equipment
and related property permitted as Capital Expenditures pursuant to Section
6.3(a); and

 

(iv)                              the
Acquisition.

 

(b)                                 Investments.  Neither Holdings nor the Borrower shall, nor
shall they permit any of the Borrower’s Subsidiaries to, make any Investments,
except:

 

(i)                                     Investments
existing on the Closing Date, as set forth on Schedule 6.2(b)(i);

 

(ii)                                  Investments
that, when made, constituted Customary Permitted Investments;

 

55

 

(iii)                               without duplication,
Investments permitted as Debt pursuant to Section 6.2(i) and Investments
permitted as Guaranties under Section 6.2(f);

 

(iv)                              without
duplication, Investments permitted as Capital Expenditures pursuant to Section
6.3(a);

 

(v)                                 without
duplication, Permitted Business Acquisitions to the extent that the aggregate
consideration paid (including any assumption of Debt and the fair market value
of any non-cash consideration) to make each such acquisition together with the
aggregate consideration paid (including any assumptions of Debt and the fair
market value of any non-cash consideration) for all other Permitted Business
Acquisitions consummated after the Closing Date does not exceed $20,000,000; provided,
that any such Permitted Business Acquisition only shall be permitted if after
giving effect to such Permitted Business Acquisition (x) the Borrower and its
Subsidiaries will be in compliance with each financial covenant ratio set forth
in Sections 6.3(b) and (c) as of the most recently ended Fiscal Quarter for
which financial statements (and the related compliance certificate) have been
delivered pursuant to Section 6.4 after adjusting each such ratio (solely for
purposes of this Section 6.2(b)(v)) to make each such ratio .25 to 1.00 more
restrictive on the Borrower as of the end of such Fiscal Quarter, and (y) the
amount of the aggregate Available Revolving Commitments is not less than
$15,000,000;

 

(vi)                              (A)
loans and advances to employees of the Borrower and its Subsidiaries not to
exceed $1,000,000 at any time outstanding to any one employee and not to exceed
$2,500,000 in the aggregate at any time outstanding, and (B) advances of
payroll payments and expenses to employees in the ordinary course of business; provided,
however, that, once made, loans and advances made pursuant to this clause
(vi) shall be deemed to remain outstanding except to the extent such loans
or advances are repaid in cash without discount;

 

(vii)                           accounts receivable arising,
and trade credit granted, in the ordinary course of business and any securities
received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss, which securities shall not be greater than $4,000,000 in the
aggregate;

 

(viii)                        (A) Investments by the Borrower
in Subsidiary Guarantors and Investments by any Subsidiary of the Borrower in
the Borrower or any Subsidiary Guarantor, and (B) Investments (other than in
the form of transfers of Collateral) by the Borrower in Subsidiaries of the
Borrower which are not Subsidiary Guarantors, and Investments (other than in
the form of transfers of Collateral) by any Subsidiary of the Borrower in
Subsidiaries of the Borrower which are not Subsidiary Guarantors, provided
that, in the case of this clause (B), the aggregate amount of such
Investments made on and after the date hereof shall not exceed $15,000,000;

 

56

 

(ix)                                Investments
made in connection with the receipt by the Borrower or any of its Subsidiaries
of consideration other than cash for the sale by the Borrower or such
Subsidiary of any assets permitted to be sold under clause (a) or (c)
of the definition of Permitted Disposition;

 

(x)                                   Investments
in joint ventures or partnerships organized and maintained for specific single
projects, provided that the amount of such Investments made and maintained does
not at any time exceed $20,000,000;

 

(xi)                                other
Investments in an aggregate amount at any one time not to exceed $10,000,000; provided,
however, that, once made, Investments made pursuant to this clause
(xi) shall be deemed to remain outstanding except to the extent such
Investment is repaid or otherwise returned in cash or in kind (in reasonably
equivalent value), without discount;

 

(xii)                             Investments in interest
rate, foreign exchange and commodity hedges that are entered into in the ordinary
course of business and not for any speculative purpose;

 

(xiii)                          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;

 

(xiv)                         Investments constituting
deposits made in the ordinary course consistent with past practice to secure
the performance of leases; 

 

(xv)                            Investments
constituting loans to employees of the Borrower and its Subsidiaries to
purchase Capital Stock of Holdings not exceeding in the aggregate $5,000,000;
and

 

(xvi)                         Investments constituting (A)
accounts receivable arising, (B) trade debt granted, or (C) deposits made in
connection with the purchase price of goods or services, in each case in the
ordinary course of business on customary terms.

 

(c)                                  Restricted
Payments.  Neither Holdings nor the
Borrower shall, nor shall they permit any of the Borrower’s Subsidiaries to,
declare, pay or make, or offer to pay or make any Restricted Payment (directly
or indirectly through any Affiliate) except that so long as no Event of Default
exists immediately prior to any Restricted Payment otherwise permitted below or
would result therefrom (other than with respect of clauses (ii), (iv), (v) and
(vi) below):  (i) the Borrower may
repurchase, redeem or otherwise acquire shares of, or options to purchase,
Capital Stock of Holdings or the Borrower or stock appreciation rights from
directors, officers and employees (or their legal representatives or heirs, as
the case may be) of the Borrower or any Subsidiary of the Borrower whose
employment has terminated or who has died or retired or become disabled, or who
has suffered some other hardship and with respect to whom the Board of
Directors of the Borrower has otherwise determined to make such a repurchase,
redemption or other acquisition in light of such hardship (provided that
in the case of

 

57

 

such other payments (other than payments made to
former employees, officers or directors of Holdings or its Subsidiaries in
connection with the repurchase of Capital Stock of Holdings paid by the
issuance of a note by the Borrower to such former employee, officer or
director, which issuances shall not exceed in outstanding principal amount
$5,000,000 in the aggregate) subject to such determination, the aggregate
amount of Restricted Payments does not exceed $1,000,000 in any Fiscal Year,
and provided further that the aggregate amount of all such repurchases,
redemptions and other acquisitions shall not exceed $7,000,000 in the aggregate
after the date hereof), or upon the vesting of stock appreciation rights; (ii)
any Subsidiary of the Borrower may make Restricted Payments ratably among all
of its equity holders; (iii) management fees payable pursuant to a Management
Agreement not to exceed $1,000,000 in any Fiscal Year ; (iv) and reimbursement
to the Principals of reasonable out-of-pocket expenses relating to Principals’
management services provided to the Borrower; (v) cash distributions on the
Capital Stock of the Borrower to Holdings to pay (A) reasonable and customary
board of directors fees and legal, accounting and other administrative expenses
(other than management fees) incurred in the ordinary course of business, and (B)
taxes owing by Holdings in respect of the Borrower and its Subsidiaries; (vi)
payments not exceeding in the aggregate $4,500,000 in the aggregate made
pursuant to the put right set forth section 5 of the Shareholders Agreement
dated as of April 24, 2001 among the Borrower, Christopher A. Beradi, Joseph A.
Beradi and Great Lakes North American Site Developers, Inc., in the form
provided to the Arrangers prior to the Closing Date; and (vii) Holdings and the
Borrower may make Restricted Payments constituting dividends or distributions
on their Capital Stock not to exceed in aggregate for all such dividends or
distributions made after the Closing Date the lesser of (A) 75% of the
cumulative Net Income attributed to the period beginning on the Closing Date and
ending on the last day of the last Fiscal Quarter for which a compliance
certificate has been delivered pursuant to Section 6.4(c) and (B) $50,000,000
so long as, after giving effect to each such Restricted Payment (x) the Senior
Leverage Ratio of the Borrower and its Subsidiaries does not exceed 1.00 to
1.00, (y) the Total Leverage Ratio of the Borrower and its Subsidiaries does
not exceed 3.00 to 1.00 and (z) the amount of the aggregate Available Revolving
Commitments is not less than $15,000,000.

 

(d)                                 Transactions
with Affiliates.  Neither Holdings
nor the Borrower shall, nor shall they permit any of the Borrower’s
Subsidiaries to, enter into, or cause, suffer or permit to exist any
arrangement or contract with any of its other Affiliates unless such arrangement
or contract is fair and equitable to Borrower or such Subsidiary and is an
arrangement or contract of the kind which would be entered into by a prudent
Person in the position of Borrower or such Subsidiary with a Person that is not
one of its Affiliates; provided, however, that nothing in this Section
6.2(d) shall prohibit (i) any transactions otherwise permitted hereby
pursuant to any Management Agreement or any Tax Sharing Agreement, (ii) any
transaction among the Borrower and any Subsidiary Guarantor or (iii) the
transaction described on Schedule 6.2(d).

 

(e)                                  Negative
Pledges, etc.  Neither Holdings nor
the Borrower shall, nor shall they permit any of the Borrower’s Subsidiaries
to, enter into (or suffer to exist) any agreement prohibiting (i) the creation
or assumption of any Lien upon Holdings, the Borrower or such Subsidiary’s
properties, revenues or assets, whether now owned or

 

58

 

hereafter acquired; (ii) the ability of the Borrower
or any such Subsidiary to amend or otherwise modify this Agreement or any other
Loan Document; or (iii) the ability of any of the Borrower’s Subsidiaries to
make any payments, directly or indirectly, to the Borrower by way of dividends,
advances, repayments of loans or advances, reimbursements of management and
other intercompany charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which restricts the ability
of any such Subsidiary to make any payment, directly or indirectly, to the
Borrower other than (A) this Agreement and each Loan Document; (B) agreements
existing as of the Closing Date and identified in Schedule 6.2(e); (C)
agreements governing Debt permitted by clause (ii) of Section 6.2(i)
as in effect on the Closing Date, which agreements shall be in form and
substance reasonably acceptable to the Administrative Agent; (D) agreements
governing Debt permitted by clause (v) of Section 6.2(i), with
any such restrictions being applicable solely to the assets financed with the
proceeds of such Debt; (E) the Bonding Agreement, the Intercreditor Agreement,
the agreements relating to the Equipment Financing Debt and the Note Indenture;
(F) such restrictions or circumstances existing under or by reason of
Applicable Laws; and (G) such restrictions or encumbrances existing under or by
reason of customary non-assignment provisions in operating leases and licenses
of real or personal property (including intellectual property) entered into by
any Loan Party or Lessee or Licensee in the ordinary course of business (provided
that such restrictions and encumbrances pertain only to the property that is
the subject matter of the applicable lease or leases).

 

(f)                                    Guaranties.  Neither Holdings nor the Borrower shall, nor
shall they permit any of the Borrower’s Subsidiaries to, create or become or be
liable, whether directly or indirectly, with respect to any Guaranty, except
that the Borrower or any such Subsidiary may incur (i) Guaranties for the
benefit of the Borrower or any such Subsidiary if the primary obligation is
permitted by this Agreement, (ii) an unsecured Guaranty by the Borrower of Debt
owing by Amboy Aggregates to Fleet Bank, N.A., and each replacement,
refinancing and renewal of such Guaranty or guaranteed Debt, in each case so
long as the maximum amount of such Guaranty does not exceed $5,000,000 at any
time, (iii) Guaranties existing on the Closing Date and described in Schedule
6.2(f) hereto, and the replacement, refinancing and renewal of each such
Guaranty which does not increase the amount guaranteed thereunder, (iv)
Guaranties of Debt arising under the Bonding Agreement, (v) Guaranties of the
Note Indenture Obligations by Subsidiary Guarantors and (vi) a Guaranty by the
Borrower of the Debt evidenced by the agreements relating to the Equipment
Financing Debt, and (vii) unsecured Guaranties of Debt which, when combined
(without duplication) with all unsecured Debt incurred and permitted under clause
(xiii) of Section 6.2(i), do not exceed $10,000,000 at any time
outstanding.  Notwithstanding the
foregoing, no such Guaranty shall be permitted unless after the incurrence of
any such Guaranty, there would exist no Default or Event of Default.

 

(g)                                 Sales
of Assets.  Neither Holdings nor the
Borrower shall, nor shall they permit any of the Borrower’s Subsidiaries to,
Dispose of any properties or assets (including accounts receivable and Capital
Stock or other equity of Subsidiaries), whether now owned or hereafter
acquired, or any income or profits therefrom, or enter into any agreement or
grant any right or option to do so, in one transaction or a series of
transactions, unless such transaction or arrangement (i) constitutes a
Permitted

 

59

 

Disposition, (ii) consists of a transfer of property
among the Borrower and its Subsidiaries permitted under Section 6.2(a)
or transfers of property permitted as Investments under Section 6.2(b),
(iii) consists of the lease of equipment (including vessels) by the Borrower or
any Subsidiary to Persons which are not Affiliates (other than the Borrower or
any Subsidiaries of the Borrower) in the ordinary course of business for a term
not exceeding twelve (12) months, or (iv) constitutes a Disposition of accounts
receivables arising from projects performed outside of the United States of
America or Canada.

 

(h)                                 Liens,
etc.  Neither Holdings nor the
Borrower shall, nor shall they permit any of the Borrower’s Subsidiaries to,
create, incur, assume or permit to exist, whether directly or indirectly, any
Lien on or with respect to Holdings’, the Borrower’s or such Subsidiary’s
properties and assets, whether now or hereafter acquired or upon any income or
profits therefrom, except:

 

(i)                                     Liens
granted pursuant to the Loan Documents;

 

(ii)                                  Customary
Permitted Liens;

 

(iii)                               Liens existing on the
Closing Date and disclosed on Schedule 5.1(g);

 

(iv)                              Liens
securing payment of Debt permitted and described in clause (viii) of Section
6.2(i);

 

(v)                                 Liens
securing payment of Debt permitted and described in clause (v) of Section
6.2(i) and covering only those assets acquired, constructed or improved in
whole or in part with the proceeds of such Debt;

 

(vi)                              Existing
Liens on property (other than Collateral) pledged as collateral for liabilities
assumed by the Borrower or any Subsidiary of the Borrower in connection with
any merger or acquisition permitted by Section 6.2(a) (provided
that such liabilities were not incurred in anticipation of, or to finance, any
such merger or acquisition);

 

(vii)                           Liens granted to sureties
under the Bonding Agreement, to the extent permitted by the Intercreditor
Agreement;

 

(viii)                        Liens on any property or assets
used by the Borrower or any Subsidiary in the ordinary course of business and
not constituting Collateral, provided that such Liens existed prior to the
acquisition thereof by the Borrower or such Subsidiary and were not created in
contemplation of such acquisition;

 

(ix)                                Liens
securing Obligations under any Rate Protection Agreement, provided that such
Lien is granted in favor of a Secured Party or an Affiliate thereof,

 

60

 

(x)                                   Leases
or subleases (including bareboat charters) of Property other than Collateral by
the Borrower or any of its Subsidiaries as lessor or sublessor, provided that
such leases and subleases do not interfere in any material respect with the
businesses of the Borrower and its Subsidiaries, and are not otherwise
prohibited under the other terms of this Agreement, and leases or subleases
(including bareboat charters) of Property constituting Collateral, provided
that such leases and subleases do not interfere in any material respect with
the businesses of the Borrower and its Subsidiaries, are not otherwise
prohibited under the other terms of this Agreement, are made in the ordinary
course of business and for a term not exceeding nine (9) months, and are
expressly subordinated to the Liens contemplated hereby in favor of the
Administrative Agent, for the benefit of the Secured Parties; 

 

(xi)                                Liens
securing the Equipment Financing Debt encumbering only the equipment financed
(including insurance, requisition, compensation and charters relating thereto
and proceeds thereof) with the proceeds of the Equipment Financing Debt; 

 

(xii)                             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;

 

(xiii)                          Liens arising from
precautionary UCC financing statements filed under any lease permitted by this
Agreement but only to the extent such Liens pertain to the property that is the
subject of such leases;

 

(xiv)                         Liens arising by operation of
law or by contract in each case encumbering insurance policies and proceeds
thereof to secure the financing of premiums payable under such policies;

 

(xv)                            customary
rights of set-off, revocation, revocation, refund, or charge back under deposit
agreements or under the UCC of banks or other financial institutions in respect
of charges relating to deposit accounts and returned items (but not in respect
of Debt generally);

 

(xvi)                         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;

 

(xvii)                      Liens on accounts receivables for
which attempts at collection have been undertaken by a third party (provided
that the face amount of such accounts receivables subject to such Lien shall not
exceed $2,500,000 in the aggregate at any time); and

 

(xviii)                   such other Liens with respect to
which neither the Debt secured by such Lien nor the fair market value of the
property subject to such Liens exceed in the aggregate for all such Liens
$3,000,000.

 

61

 

provided,
however, that notwithstanding the foregoing, in no event shall any
contractual Liens be permitted to exist on any common stock of or other equity
interests in the Borrower or any of the Borrower’s Subsidiaries which is
wholly-owned by Holdings or any of its Subsidiaries.

 

(i)                                     Debt.  Neither Holdings nor the Borrower shall, nor
shall they permit any of the Borrower’s Subsidiaries to, create, incur, assume
or otherwise become or remain liable with respect to any Debt, other than,
without duplication, the following:

 

(i)                                     Debt
in respect of the Loans and other Obligations;

 

(ii)                                  Debt,
including Debt in respect of Guaranties, existing on the Closing Date, as set
forth on Schedule 6.2(i), and (except as may otherwise be restricted by Sections
6.2(c) or 6.2(o)) any renewal, extension, refinancing or replacement
thereof so long as (A) the terms of any such renewal, extension, refinancing or
replacement are not materially less favorable to such Loan Party than the
original Debt, (B) the then aggregate outstanding amount of such Debt at the
time of such renewal, extension, refinancing or replacement, as the case may
be, is not increased, and (C) the average life to maturity of such Debt at the
time of such renewal, extension, refinancing or replacement, as the case may
be, is not decreased thereby;

 

(iii)                               unsecured Debt incurred
in the ordinary course of business of the Borrower and its Subsidiaries in the
nature of open accounts (extended by suppliers on normal trade terms in
connection with purchases of goods and 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 or result
in any Liens prohibited by Section 6.2(h);

 

(iv)                              unsecured
Debt of the Borrower or any of its Subsidiaries owing to one another, provided
that all such Debt owing to the Borrower or to any Subsidiary Guarantor shall
be evidenced by one or more promissory notes, in form and substance reasonably
acceptable to the Administrative Agent, which promissory notes shall be pledged
to the Administrative Agent pursuant to the Note Pledge Agreement;

 

(v)                                 Capitalized
Rentals (to the extent permitted by Section 6.3(a)) or purchase money
Debt incurred by the Borrower or any of its Subsidiaries to any Person to
finance the acquisition, construction, repair or improvement of assets
permitted to be acquired, constructed, repaired or improved pursuant to Section
6.3(a), including any such Debt incurred after the acquisition,
construction, repair or improvement of such assets, so long as, in each case,
the amount of such Debt does not exceed 100% and is not less than 50% of the
purchase price, construction cost, repair cost or improvement cost of the
assets acquired, constructed, repaired or improved with the proceeds thereof
and, in the case of Debt incurred after the acquisition, construction, repair
or improvement of

 

62

 

the assets to be financed, such Debt is incurred no
later than twelve calendar months after such assets are acquired, constructed,
repaired or improved;

 

(vi)                              Debt
incurred in connection with any Rate Protection Agreement;

 

(vii)                           Debt of Subsidiaries of the
Borrower which represents the assumption by such Subsidiaries of Debt of
another Subsidiary of the Borrower in connection with the merger of such other
Subsidiary with and into the assuming Subsidiary or the purchase of all or
substantially all the assets of such other Subsidiary;

 

(viii)                        Debt (contingent or otherwise)
for the reimbursement of the surety or sureties which issue (A) license, bid,
performance and lien, and payment bonds under the Bonding Agreement for amounts
expended by them in the performance of such bonds, and (B) bonds issued
pursuant to the Bonding Agreement with respect to projects in a country other
than the United States which are used to obtain letters of credit, financial
guaranties or other bonds under which Holdings or a Subsidiary of Holdings is
the primary obligor provided  that, the aggregate amount of the
Debt permitted by this subclause (B) shall not exceed $25,000,000 at any time
outstanding; 

 

(ix)                                Guaranties
permitted under Section 6.2(f);

 

(x)                                   Debt
constituting Note Indenture Obligations pursuant to the terms of the Note
Indenture, in an aggregate principal amount not to exceed $175,000,000;

 

(xi)                                Debt
in respect of taxes, assessments, governmental charges and claims for labor,
materials or supplies, to the extent that payment thereof is not required
pursuant to Section 6.1(e);

 

(xii)                             all premiums (if any),
interest (including post-petition interest), fees, expenses, indemnities,
charges and additional or contingent interest on obligations described in clauses
(i) through (xv) of this Section 6.2(i);

 

(xiii)                          other unsecured Debt of the
Borrower and its Subsidiaries which when combined (without duplication) with
all unsecured Guaranties incurred and permitted under clause (vii) of Section
6.2(f), does not exceed $10,000,000 at any time outstanding;

 

(xiv)                         Equipment Financing Debt not
exceeding $23,400,000 in aggregate principal amount at any time outstanding;
and

 

(xv)                            unsecured
Debt used to repurchase Capital Stock of Holdings from former employees not to
exceed in the aggregate $5,000,000.

 

63

 

Any Person
which becomes a Subsidiary after the Closing Date shall for all purposes of
this Section 6.2(i) be deemed to have created, assumed or incurred, at
the time it becomes a Subsidiary, all Debt of such Person existing immediately
after it becomes a Subsidiary.

 

(j)                                     ERISA.  Neither Holdings nor the Borrower shall, nor
shall they permit any of the Borrower’s Subsidiaries to (i) engage, nor shall
the Borrower or any of its Subsidiaries permit any ERISA Affiliate to engage,
in any prohibited transaction described in Section 406 of ERISA or Section 4975
of the IRC for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the DOL; (ii) permit to
exist any accumulated funding deficiency (as defined in Section 302 of ERISA
and Section 412 of the IRC), whether or not waived; (iii) fail, or permit any
ERISA Affiliate to fail, to pay timely required contributions or annual
installments due with respect to any waived funding deficiency to any Plan;
(iv) terminate, or permit any ERISA Affiliate to terminate, any Plan which
would result in any liability of the Borrower or any ERISA Affiliate, or the
imposition of any Lien on their respective property, under Title IV of ERISA;
(v) fail to make any contribution or payment to any Multiemployer Plan which
the Borrower or any ERISA Affiliate is required to make under any agreement
relating to such Multiemployer Plan, or any law pertaining thereto; (vi) fail,
or permit any ERISA Affiliate to fail, to pay any required installment or any
other payment required under Section 412 of the IRC on or before the due date
for such installment or other payment; or (vii) amend, or permit any ERISA
Affiliate to amend, a Plan resulting in an increase in current liability for
the plan year such that the Borrower or any ERISA Affiliate is required to
provide security to such Plan under Section 401 (a)(29) of the IRC; provided,
however, that no act, omission or event specified in clause (i)
through (vii) shall be considered a violation of this Section 6.2(j)
unless such act, omission or event could reasonably be expected to have a
Material Adverse Effect.

 

(k)                                  Conduct
of Business; Holdings a Passive Holding Company.  (i) The Borrower shall not, and shall not permit any of its
Subsidiaries to, engage in any business or activity other than (A) the
businesses of dredging, aggregate mining and supply, towing services, marine
construction, dredging reclamation activities and demolitions; and (B) any
businesses or activities reasonably related, complimentary or incidental
thereto, or the commercial and industrial demolition business.

 

(ii) Notwithstanding anything to the contrary in this Agreement or any
other Loan Document, Holdings shall not (A) conduct, transact or otherwise
engage in, or commit to conduct, transact or otherwise engage in, any business
or operations other than those incidental to its ownership of the Capital Stock
of the Borrower, (B) incur, create, assume or suffer to exist any Debt, except
(1) nonconsensual obligations imposed by operation of law, (2) pursuant to the
Loan Documents to which it is a party and (3) obligations with respect to its
Capital Stock, or (C) own, lease, manage or otherwise operate any properties or
assets (including cash (other than cash received in connection with dividends
made by the Borrower in accordance with Section 6.2(c) pending
application in the manner contemplated by said Section) and cash equivalents)
other than the ownership of shares of Capital Stock of the Borrower.

 

64

 

(l)                                     Sales
and Leasebacks.  Except for
transactions described in clause  (b) of the definition of
Permitted Disposition or permitted pursuant to Section 6.2(i)(v), neither
Holdings nor the Borrower shall, nor shall they permit any of the Borrower’s
Subsidiaries to, become liable, directly or by way of any Guaranties, with
respect to any lease of any property (whether real or personal or mixed)
whether now owned or hereafter acquired, (i) which any Loan Party has sold or
transferred or is to sell or transfer to any other Person, or (ii) which any
Loan Party intends to use for substantially the same purposes as any other
property which has been or is to be sold or transferred by that entity to any
other Person in connection with such lease.

 

(m)                               Margin
Regulation.  Neither Holdings nor
the Borrower shall, nor shall they permit any other Person to, use any portion
of the proceeds of any credit extended under this Agreement in any manner which
might cause the extension of credit or the application of such proceeds to
violate the 1933 Act or the 1934 Act (each as amended to the Closing Date and
from time to time thereafter, and any successor statute) or to violate Regulation
U, or Regulation X, or any other regulation of the Federal Reserve Board, in
each case as in effect on the date or dates of such extension of credit and
such use of proceeds.

 

(n)                                 Lease
Obligations.  Neither Holdings nor
the Borrower shall, nor shall they permit any of the Borrower’s Subsidiaries
to, enter into any operating lease (which is not a Capitalized Lease) with
respect to any real or personal property (or any interest therein), except (i)
operating leases which, together with all other such arrangements (excluding
those described in clauses (ii) and (iii) below) which shall then
be in effect, will not require the payment of an aggregate amount of rentals by
the Borrower and its Subsidiaries (determined on a consolidated basis) in
excess of $20,000,000 for any Fiscal Year, (ii) operating leases for not more
than one year and (iii) operating leases in connection with the performance of
specific projects for the period of such projects; provided, however,
that any calculation made for purposes of this section shall exclude any
amounts required to be expended for maintenance, repairs, insurance, taxes,
assessments, and other similar charges.

 

(o)                                 Modification
of Material Agreements and Documents. 
Neither Holdings nor the Borrower shall, nor shall they permit any of
the Borrower’s Subsidiaries to, consent to any amendment, supplement or other
modification of any terms or provisions contained in, or applicable to (i) the
Bonding Agreement or any agreement relating thereto that is either material or related
to the creation, attachment or perfection of a security interest in any
collateral securing the obligations under the Bonding Agreement or the
Equipment Financing Debt, in each case in any manner materially adverse to the
Borrower or the rights or interests of the Secured Parties under the Loan
Documents, (ii) its certificate or articles of incorporation, by-laws or other
organizational documents in any manner materially adverse to the rights or
interests of the Secured Parties under the Loan Documents, or (iii) the
Acquisition Agreement in any manner materially adverse to the rights or
interests of the Secured Parties under the Loan Documents or the Note Indenture
(other than modifications of the Note Indenture pursuant to the terms of
Section 9.01 thereof).

 

65

 

(p)                                 Change
of Location or Name.  None of the
Loan Parties shall change (i) the location of its principal place of business,
chief executive office, major executive office, jurisdiction or organization,
chief place of business or its records concerning its business and financial
affairs; or (ii) its name or the name under or by which it conducts its
business, in each case without giving the Administrative Agent written notice
thereof promptly upon the effectiveness of such name change (and in any event
no later than 30 days after the effectiveness of such name change) and taking
any and all actions which may be reasonably necessary or desirable, or which
the Administrative Agent may reasonably request, to maintain and preserve all
Liens in favor of the Administrative Agent granted pursuant to the Collateral
Documents; provided that notwithstanding the foregoing, none of the Loan
Parties shall change the location of its principal place of business, chief
executive office, chief place of business or its records concerning its
business and financial affairs from the contiguous continental United States of
America to any place outside the contiguous continental United States of
America.

 

(q)                                 Take
or Pay Contracts.  Neither Holdings
nor the Borrower shall, nor shall they permit any of the Borrower’s
Subsidiaries to, enter into or be a party to any arrangement for the purchase
of materials, supplies, other property or services if such arrangement by its express
terms requires that payment be made by Holdings, the Borrower or such
Subsidiary regardless of whether such materials, supplies, other property or
services are delivered or furnished to it; provided, however,
Holdings and the Borrower may, and may permit their respective Subsidiaries to,
enter into such arrangements which are incidental to its business and not
entered into for speculation.

 

(r)                                    Use
of Proceeds.  Neither Holdings nor
the Borrower shall, nor shall they permit any of the Borrower’s Subsidiaries
to, directly or indirectly use or apply any of the proceeds of any Loans in a
manner inconsistent with the provisions of Section 2.21.

 

(s)                                  Certain
Collateral Matters.  Notwithstanding
anything set forth in this Section 6.2, no Loan Party shall Dispose of
any Collateral (other than in a Permitted Disposition described in clause (c)
of the Definition of Permitted Disposition) or shall consummate any transaction
otherwise not prohibited by this Section 6.2, if such Disposition or
transaction would result in any modification of the existence, perfection or
priority of any Lien on Collateral in favor of the Administrative Agent, for
the benefit of the Secured Parties (as set forth in Section 6.1(p)), in
any manner adverse to the interests of the Secured Parties.  Any transaction that would be otherwise be
permitted under this Section 6.2 but for the immediately preceding
sentence, shall be permitted so long as, prior to the consummation of such
Disposition or transaction, the Loan Parties (and any other Person receiving
such Collateral) perform any and all steps reasonably requested by the
Administrative Agent to perfect, maintain and protect the Administrative
Agent’s security interests in and Liens on and against the Collateral granted
or purported to be granted by the Collateral Documents, as well as the priority
of such security interests and Liens, or to enable the Administrative Agent to
exercise its rights and remedies hereunder with respect to any Collateral.

 

66

 

SECTION 6.3.                                       Financial
Covenants.  The Borrower covenants
and agrees that so long as the Lenders shall have any Commitment hereunder, any
Letter of Credit shall remain outstanding, or any other Obligation (other than
contingent obligations hereunder for which no claim has been, or is reasonably
expected to be, made) shall remain outstanding:

 

(a)                                  Capital
Expenditures.  The Borrower and its
consolidated Subsidiaries shall not make or permit Capital Expenditures in an
aggregate amount in excess of $22,000,000 during any Fiscal Year commencing
with Fiscal Year 2004 (with respect to any such Fiscal Year, the “Base
Capital Expenditure Amount”); provided, however, that the
Base Capital Expenditure Amount for any Fiscal Year after Fiscal Year 2004 may
be increased by (A) an amount equal to the excess, if any, of (i) the Base
Capital Expenditure Amount for the immediately preceding Fiscal Year, over (ii)
the actual amount of Capital Expenditures made by the Borrower and its
Subsidiaries during such immediately preceding Fiscal Year; plus (B) the amount
of Capital Expenditures permitted in the immediately succeeding Fiscal Year (provided
that the Base Capital Expenditure Amount for such succeeding Fiscal Year shall
be reduced by the amount of any increase pursuant to this Clause (B); and provided,
further, that in no event shall the amount of Capital Expenditures made
by the Borrower and its consolidated Subsidiaries in any Fiscal Year exceed
$26,000,000).

 

(b)                                 Maximum
Total Leverage.  The Borrower and its
consolidated Subsidiaries shall not permit the ratio (the “Total Leverage
Ratio”) of (i) the aggregate unpaid principal amount of Total Funded Debt
as of the last day of any Fiscal Quarter ending during the periods described
below to (ii) Adjusted Consolidated EBITDA for the four (4) consecutive Fiscal
Quarter period ending as of such date, to exceed the corresponding ratio set
forth below opposite such period:

 

	
  Period

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31,
  2003 through and

  including December 31, 2004

  	
   

  	
  5.75 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2005 through and

  including December 31, 2005

  	
   

  	
  5.50 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2006 through and

  including
  December 31, 2006

  	
   

  	
  5.00 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2007 through and

  including December 31, 2007

  	
   

  	
  4.75 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2008 through and

  including December 31, 2008

  	
   

  	
  4.50 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2009 through and

  including December 31, 2009

  	
   

  	
  4.00 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2010 and thereafter

  	
   

  	
  3.50 to 1.00

  	
   

  

 

67

 

(c)                                  Maximum
Senior Leverage.  The Borrower and
its consolidated Subsidiaries shall not permit the ratio (the “Senior
Leverage Ratio”) of (i) the aggregate unpaid principal amount of Senior
Debt as of last day of any Fiscal Quarter ending during the periods described
below to (ii) Adjusted Consolidated EBITDA for the four (4) consecutive Fiscal
Quarter period ending as of such date, to exceed the corresponding ratio set
forth below opposite such period: 

 

	
  Period

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31,
  2003 through and

  including December 31, 2004

  	
   

  	
  2.50 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2005 through and

  including December 31, 2005

  	
   

  	
  2.25 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2006 through and

  including December 31, 2006

  	
   

  	
  2.00 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2007 through and

  including December 31, 2007

  	
   

  	
  1.75 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2008 through and

  including December 31, 2008

  	
   

  	
  1.50 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2009 and thereafter

  	
   

  	
  1.25 to 1.00

  	
   

  

 

 

(d)                                 Interest
Coverage Ratio.  The Borrower and
its consolidated Subsidiaries shall not permit the ratio of (i) Adjusted Consolidated
EBITDA for any four (4) consecutive Fiscal Quarter period ending as of the last
day of any Fiscal Quarter ending during the period described below to (ii)
Interest Expense, in each case for the four (4) consecutive Fiscal Quarter
period ending as of such date, to be less than the corresponding ratio set
forth below opposite such period: 

 

	
  Period

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2003 through and

  including December 31, 2004

  	
   

  	
  1.75 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1, 2005 through and

  including December 31, 2005

  	
   

  	
  2.00 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1, 2006 through and

  including December 31, 2006

  	
   

  	
  2.00 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1, 2007 through and

  including December 31, 2008

  	
   

  	
  2.25 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1, 2009 through and thereafter

  	
   

  	
  2.50 to 1.00

  	
   

  

 

68

 

SECTION 6.4.                                       Financial
Reporting.  The Borrower covenants
and agrees that so long as any of the Lenders shall have any Commitment
hereunder, there shall exist any outstanding principal under any Loans, any
Letter of Credit shall remain outstanding, or any other Obligation (other than
contingent obligations hereunder for which no claim has been, or is reasonably
expected to be, made) shall remain outstanding:

 

(a)                                  System
of Accounting.  Holdings and the
Borrower shall maintain the percentage-of-completion accounting policies
relative to change orders and work-in-progress as in effect on the Closing Date
and shall in any event maintain a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in conformity with GAAP (except as may be otherwise
required pursuant to Section 1.4), and each of the financial statements
described below shall be prepared from such system and records.

 

(b)                                 Quarterly
Reports.  The Borrower shall provide
the Administrative Agent within 45 days after the end of each of the first
three Fiscal Quarters of each Fiscal Year, unaudited consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as of the end
of such Fiscal Quarter and unaudited consolidated and consolidating statements
of earnings and consolidated statements of cash flow of the Borrower and its
Subsidiaries for such Fiscal Quarter and for the period commencing at the end
of such Fiscal Quarter, certified on behalf of the Borrower by an Authorized
Officer of the Borrower.

 

(c)                                  Annual
Reports.  The Borrower shall provide
to the Administrative Agent, within 90 days after the end of each Fiscal Year,
a copy of the annual audit report for such Fiscal Year for the Borrower and its
Subsidiaries, including therein consolidated (and unaudited consolidating)
balance sheets of the Borrower and its Subsidiaries as of the end of such
Fiscal Year and consolidated (and unaudited consolidating) statements of earnings
and cash flow of the Borrower and its Subsidiaries for such Fiscal Year by
Deloitte & Touche or other independent public accountants reasonably
acceptable to the Administrative Agent, together with such accountants’
opinion, which shall not be subject to any Impermissible Qualification, and a
certificate from such accountants containing a computation of, and showing
compliance with, each of the financial ratios and restrictions contained in Section
6.3 and to the effect that, in making the examination necessary for the
signing of such annual report by such accountants, they have not become aware
of any Default or Event of Default in respect of the financial covenants set

 

69

forth in Section
6.3 that has occurred and is continuing, or, if they have become aware of
such Default or Event of Default in respect of the financial covenants set
forth in Section 6.3, describing such Default or Event of Default.

 

(d)                                 Compliance
Certificate. The Borrower shall provide to the Administrative Agent, within
45 days after the end of each of the first three Fiscal Quarters of each Fiscal
Year and within 90 days after the end of the last Fiscal Quarter of each Fiscal
Year, (i) a certificate substantially in the form of Exhibit G (the “Compliance
Certificate”), executed on behalf of the Borrower by the Authorized Officer
who is the chief financial officer, treasurer, assistant treasurer or
controller of the Borrower, showing (in reasonable detail and appropriate
calculations and computations in form reasonably satisfactory to the
Administrative Agent) compliance with the financial covenants set forth in Section
6.3, (ii) a backlog schedule and a schedule of all work-in-progress,
identified by contract or project, of the Borrower and its Subsidiaries for the
performance of dredging, construction or other services, prepared in a manner
consistent with past practice, (iii) notice of the occurrence of any Permitted
Disposition or any Permitted Business Acquisition, describing, in detail
reasonably satisfactory to the Administrative Agent, the assets sold or
disposed of or the assets acquired and the purchase price or sale price
thereof, as the case may be, during the preceding Fiscal Quarter, (iv) notice
of the receipt of any sales proceeds, insurance or requisition proceeds or
condemnation awards received in connection with the sale, damage, destruction,
requisition or condemnation of any Collateral during the preceding Fiscal
Quarter, including a statement with regard to whether the Borrower or such
Subsidiary intends to apply such sales proceeds, insurance or requisition
proceeds or awards, as the case may be, to replace, within one year of receipt
thereof, such sold, damaged, destroyed, requisitioned or condemned assets or
property Collateral used for substantially the same purpose as those sold,
damaged, destroyed, requisitioned or condemned and (v) notice of any (A)
voluntary liquidation or dissolution by any Subsidiary of the Borrower into the
Borrower or another Subsidiary of the Borrower, (B) merger by any such
Subsidiary with and into the Borrower or another Subsidiary of the Borrower or
(C) the purchase by the Borrower or any of its Subsidiaries of any Capital
Stock of any other Subsidiary of the Borrower during the preceding Fiscal
Quarter.

 

(e)                                  Budget.
The Borrower shall deliver to the Administrative Agent, within 75 days after
the end of each Fiscal Year, a budget for the next succeeding Fiscal Year,
which budget shall be prepared on a Fiscal Quarter basis and shall contain a projected,
consolidated balance sheet, consolidated statement of earnings (broken out in
reasonable detail by business segment) and a consolidated statement of cash
flow of the Borrower and its Subsidiaries for such succeeding Fiscal Year.  It is understood that (i) any projections or
budget furnished to the Administrative Agent or any Lender are subject to
significant uncertainties and contingencies, which are beyond the control of
the Borrower and its Subsidiaries, (ii) no assurance is given by the Borrower
and its Subsidiaries that such projections will be realized, and (iii) the
actual results may differ from such projections and such differences may be
material.

 

(f)                                    Securities
Reports.  With reasonable promptness
after the sending or filing thereof, the Borrower shall deliver to the
Administrative Agent copies of all

 

70

 

reports and registration statements which the Borrower
or any of its Subsidiaries files with the Securities and Exchange Commission or
any national securities exchange.

 

(g)                                 Vessels.  The Borrower shall deliver to the
Administrative Agent, within ninety (90) days after the end of each Fiscal
Year, a certificate of an Authorized Officer of the Borrower listing all
Designated Vessels.

 

(h)                                 Other
Information.  With reasonable
promptness, Holdings and the Borrower shall deliver such other data and
information (including, without limitation, intercompany loan and advance
balances among the Borrower and each of its Subsidiaries) as the Administrative
Agent or a Lender through the Administrative Agent shall reasonably request.

 

(i)                                     Delivery
of Financial Information to the Lenders. 
The Administrative Agent shall promptly deliver to each Lender a copy of
the financial information delivered to the Administrative Agent by the Borrower
pursuant to Section  6.4.

 

(j)                                     New
Subsidiaries.  As soon as
practicable after the end of the Fiscal Quarter ending on or about December 31,
2003 and each Fiscal Quarter thereafter, the Borrower shall provide the Administrative
Agent with an updated Schedule 5.1(r) containing all of the information
which would be required to be included in such schedule pursuant to Section
5.1 if such schedule were to be made true and complete as of the last day
of such Fiscal Quarter (including, without limitation, information with respect
to any newly acquired or created Subsidiaries); provided, however,
that, no such updated schedule need be delivered to the Administrative Agent if
the schedule which has been then most recently delivered to the Administrative
Agent pursuant to this section (or attached to this Agreement as Schedule
5.1(r)) remains true and complete in all material respects as of the last
day of such Fiscal Quarter.

 

ARTICLE VII.

EVENTS OF DEFAULT; REMEDIES

 

SECTION 7.1.                                       Events
of Default.  Each of the following
occurrences shall constitute an Event of Default under this Agreement:

 

(a)                                  Failure
to Make Payments When Due.  Any Loan
Party shall fail to pay on the date when due (i) any principal of any Loan or
Reimbursement Obligation or (ii) any interest or fees under the Loan Documents
or any other Obligations and such failure shall continue for five (5) Business
Days.

 

(b)                                 Breach
of Covenants.

 

(i)                                     Any
Loan Party shall fail duly and punctually to perform or observe any covenant or
agreement binding on such Loan Party under Section 6.l(a), (f) or
(m), Section 6.2 or Section 6.3 of this Agreement.

 

71

 

(ii)                                  Any
Loan Party shall fail duly and punctually to perform or observe any covenant or
agreement binding on such Loan Party under Section 6.1(c)(ii), (d),
(i), (j), or Section 6.4 of this Agreement, and such
failure shall continue unremedied for ten (10) Business Days (or in the case of
Section 6.1(j), three (3) Business Days) after an officer of such Loan
Party first has knowledge of such failure or such Loan Party receives written
notice thereof from the Administrative Agent, whichever is earlier.

 

(iii)                               Any Loan Party shall
fail duly and punctually to perform or observe any covenant or agreement
binding on such Loan Party under this Agreement (other than as provided in subsection
(a) above or in clause (i) or (ii) of this subsection (b))
or under any of the other Loan Documents, and such failure shall continue
unremedied for thirty (30) days after an Authorized Officer first has knowledge
of such failure or such Loan Party receives written notice thereof from the
Administrative Agent, whichever is earlier.

 

(c)                                  Incorrect
Representation or Warranty.  Any
representation or warranty made by any Loan Party or any officer of any Loan
Party under this Agreement, any other Loan Document or any amendment, waiver or
modification of any of the terms thereof shall prove to have been incorrect or
misleading when made in any material respect.

 

(d)                                 Default
as to Other Debt.  Default in the
payment when due subject to any applicable grace period (whether by scheduled
maturity, required prepayment, required redemption, acceleration, demand or
otherwise) on any Debt (other than the Obligations), individually or in the
aggregate, having an outstanding principal amount in excess of $5,000,000, of
or guaranteed by, any Loan Party or Subsidiary of Holdings; or any breach,
default or event of default shall occur, or any other event shall occur or condition
shall exist, under any instrument, agreement or indenture pertaining thereto,
if the effect thereof, after giving effect to any applicable grace or cure
period, is to accelerate, or permit the holder(s) of such Debt to accelerate
the maturity of such Debt, or require a mandatory redemption or repurchase of
such Debt prior to its scheduled redemption or repurchase; or any such Debt
shall be declared due and payable or required to be prepaid (other than by a
regularly scheduled required prepayment), repurchased or redeemed prior to the
originally stated maturity thereof; or the holder of any Lien related to a Debt
in excess of $5,000,000 shall commence foreclosure of such Lien; or an “Event
of Default” shall have occurred under and as defined in the Travelers Agreement
after giving effect to any applicable cure periods and any waivers thereof; or
an “Event of Default” shall have occurred under and as defined in Section 6.01
of the Note Indenture.

 

(e)                                  Bankruptcy.

 

(i)                                     Any
Loan Party or Subsidiary of the Borrower shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or

 

72

 

(ii)                                  any
proceeding shall be instituted by or against any Loan Party or Subsidiary of
the Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation (other than in a transaction permitted under Section 6.2(a)(i)),
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed, undischarged, unvacated, unbonded or
unstayed for a period of sixty (60) days, or any of the actions sought in such
proceeding (including the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it
or any substantial part of its property) shall occur; or 

 

(iii)                               any Loan Party or
Subsidiary of the Borrower shall take any corporate action pursuant to a
resolution or consent of its board of directors or shareholders to authorize
any of the actions set forth in this Section 7.1(e).

 

(f)                                    Judgments
and Attachments.  Any final judgment
(or judgments) or money judgment (or judgments), writ or warrant of attachment,
or similar process involving in excess of $5,000,000 (to the extent not covered
by insurance which is confirmed in writing by the insurers or agents of
Holdings, the Borrower or any of their respective Subsidiaries as covering such
judgment or process) in the aggregate shall be entered or filed against any
Loan Party or Subsidiary of the Borrower or any of their respective assets and
either (1) shall remain undischarged, unpaid, unvacated, unbonded or unstayed
for a period of thirty (30) days from the date of its entry, or (2) there shall
be any period of thirty (30) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect.

 

(g)                                 ERISA
Termination Event.  Any Termination
Event occurs which the Majority Lenders reasonably believe could have a
Material Adverse Effect.

 

(h)                                 ERISA
Waiver.  If the plan administrator
of any Plan applies under Section 412(d) of the IRC for a waiver of the minimum
funding standards of Section 412(a) of the IRC and the Majority Lenders
reasonably believe that the business hardship upon which the application for such
waiver is based could have a Material Adverse Effect.

 

(i)                                     Termination
of Documents; Failure of Security. 
Any of the Loan Documents shall cease for any reason (other than by
reason of any action or inaction by the Administrative Agent or any Lender) to
be in full force and effect against any Loan Party (other than in accordance
with the terms hereof or thereof), or any Loan Party shall disavow its
obligations under, or shall contest the validity or enforceability of, any of
the Loan Documents or the Obligations, or any material Lien intended to be
created thereby ceases to be or is not valid and perfected in any material
respect; or any such Lien shall

 

73

 

be subordinated or shall not have the priority contemplated
by this Agreement, any of the other Loan Documents, for any reason, or any Loan
Party or Affiliate thereof shall institute any action seeking a determination
of any of the foregoing, or the subordination provisions of the Note Indenture
shall fail to be in full force and effect.

 

(j)                                     Change
in Control.  Any of the following
events occur:

 

(i)                                     (A)
prior to an initial public offering of the Voting Stock of the Borrower or any
Person which directly or indirectly owns all of outstanding Voting Stock of the
Borrower or at any other time when such Voting Stock is not traded on a
national securities exchange, the failure of one or more Principals (1) to own,
directly or indirectly, at least 51% of the Voting Stock of the Borrower,
determined on a fully diluted basis and (2) to have the power to direct or
cause the direction of the management or policies of Borrower or (B) following
such initial public offering and at any time the Voting Stock of the Borrower
or any Person which directly or indirectly owns all of outstanding Voting Stock
of the Borrower is traded on a national securities exchange, the failure of the
Principals or any direct or indirect wholly-owned Subsidiary of the Principals
(individually or in the aggregate) to own, directly or indirectly, less than
40% of the Voting Stock of the Borrower, determined on a fully-diluted basis,
and a Person (other than a Principal) owns a greater percentage of such Voting
Stock, determined on a fully-diluted basis; or

 

(ii)                                  the
failure of the Borrower (A) to own (directly or indirectly), free and clear of
all Liens or other encumbrances (other than any Lien or encumbrance created by
the Loan Documents), 100% of the outstanding shares of each class of Capital
Stock of any Subsidiary Guarantor on a fully diluted basis, or, in the case of
NASDI, at least 75% of the outstanding equity capital, or 100% of the
outstanding Voting Stock, of NASDI, or (B) to have the power (directly or
indirectly) to direct or cause the direction of the management or policies of
any such Subsidiary Guarantor; or

 

(iii)                               a majority of the Board
of Directors of the Borrower are not Continuing Directors; or

 

(iv)                              any
“Change of Control” (as defined in the Note Indenture) occurs.

 

(k)                                  Bonding
Agreement.

 

(i)                                     Any
Person executing bonds, undertakings or instruments of guaranty as surety for
Holdings, the Borrower or any of their respective Subsidiaries with respect to
any marine construction or dredging contracts to be entered into by the
Borrower or any such Subsidiary for any reason ceases to issue such bonds,
undertakings or instruments of guaranty and such denial, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect; or

 

74

 

(ii)                                  Travelers
provides notice to the Administrative Agent (pursuant to Section 4.4 of the
Intercreditor Agreement) of any breach or default under any bonded contract or
under the Travelers Agreement and, as a result thereof, Travelers has taken
action pursuant to Section 4.1(a) of the Intercreditor Agreement; or

 

(iii)                               The Borrower or any of
its Subsidiaries defaults in the payment when due of any amount due under the
Bonding Agreement or breaches or default with respect to any other term of the
Bonding Agreement, if the effect of such failure to pay, default or breach is
to cause any Person executing bonds, undertakings or instruments of guaranty as
surety for the Borrower or any of its Subsidiaries to take possession of the
work under any of the bonded contracts of the Borrower or any of its
Subsidiaries and such possession could reasonably be expected to result in a
Material Adverse Effect; or

 

(iv)                              Any
Loan Party breaches or defaults with respect to any term under any of the
bonded contracts of such Loan Party, if the effect of such default or breach is
to cause any Person executing bonds, undertakings or instruments of guaranty as
surety for such Loan Party to take possession of the work under such bonded
contract and such possession could reasonably be expected to result in a
Material Adverse Effect.

 

SECTION 7.2.                                       Acceleration.  Upon the occurrence of any Event of Default
described in clause (ii) or (iii) of Section 7.1(e), the
Commitments shall each automatically and immediately terminate and all unpaid
Obligations shall automatically become immediately due and payable, without
presentment, demand, or protest or other requirements of any kind (including
valuation and appraisement diligence, presentment, notice of intent to demand
or accelerate and of acceleration), all of which are hereby expressly waived by
the Borrower, and the obligation of each Lender to make any Loan and of the
Issuing Lenders to issue and of the Lenders to participate in any Letter of
Credit hereunder shall thereupon terminate; and upon the occurrence and during
the continuance of any other Event of Default, the Administrative Agent may,
and at the direction of the Majority Lenders, shall, by written notice to the
Borrower, immediately terminate the Commitments and/or declare all of the
Obligations of the Borrower to be, and the same shall forthwith become,
immediately due and payable together with accrued interest thereon, and the
obligation of each Lender to make any Loan and of the Issuing Lenders to issue
and of the Lenders to participate in any Letter of Credit hereunder shall
thereupon terminate.  In addition to and
not in limitation of any other right available to the Lenders under any of the
Loan Documents or otherwise at law or equity, upon the giving of such notice by
the Administrative Agent, the Borrower shall be required to deposit immediately
with the Administrative Agent for the benefit of the Lenders, in immediately
available funds, an amount equal to the Letter of Credit Obligations (the “Deposit”).  The Borrower’s obligation to pay the Deposit
shall be absolute and unconditional, and the Deposit shall be deposited in a
special collateral account with the Administrative Agent to ensure
reimbursement of any drawings under such Letters of Credit and payment of all
other amounts due and payable under any of the Loan Documents regarding the
Letters of Credit.

 

75

 

SECTION 7.3.                                       Injunctive
Relief.  Each of Holdings and the
Borrower recognizes that in the event the Borrower fails to perform, observe or
discharge any of its Obligations, any remedy of law may prove to be inadequate
relief to the Administrative Agent or any Lender, therefore each of Holdings
and the Borrower agrees that the Administrative Agent and each Lender, if the
Administrative Agent or such Lender so requests, shall be entitled to temporary
and permanent injunctive relief during the continuation of an Event of Default
in any such case without the necessity of proving actual damages or inadequacy
of damages as an available remedy therefor.

 

SECTION 7.4.                                       Allocation
Among Secured Parties.  Following
the occurrence of an Event of Default, and notwithstanding anything in this
Agreement to the contrary, all payments, and collections with respect to
proceeds of Collateral and all other payments and other applications otherwise
on account of any of the Obligations, shall be applied to the Obligations which
are then due and payable and if such payments and proceeds are insufficient to
satisfy all such Obligations which are due and payable, such payments and
proceeds shall be applied in the following order in each case ratably among
such Obligations: (i) to the payment of all amounts then due with respect to
reasonable out-of-pocket fees (including Attorney Costs), charges, expenses and
indemnity claims due the Administrative Agent, (ii) to the payment of all other
amounts then due with respect to reasonable out-of-pocket fees (including
Attorney Costs), charges, expenses and indemnity claims due the other Secured
Parties, (iii) to the payment of amounts then due with respect to interest on
the Loans, (iv) to the payment of amounts then due with respect to principal of
the Loans and Reimbursement Obligations (and to the extent Letter of Credit
Obligations are contingent, cash collateral with respect thereto), and amounts
then due the Secured Parties with respect to Rate Protection Agreements and (v)
to the payment of all other Obligations.

 

ARTICLE VIII.

THE ADMINISTRATIVE AGENT

 

SECTION 8.1.                                       Appointment
and Authorization.  Each Lender
hereby irrevocably appoints, designates and authorizes the Administrative Agent
to take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto,
including, without limitation, acting as the representative of each Secured
Party for the perfection of the Liens granted pursuant to the Collateral
Documents.  Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Administrative Agent.  Notwithstanding the use of the term
“Administrative Agent”, the Administrative Agent’s legal relationship with the
Lenders shall not be one of agency, it being understood and agreed to by the
Lenders that the Administrative Agent is an independent contractor for the
Lenders.

 

76

 

SECTION 8.2.                                       Delegation
of Duties.  The Administrative Agent
may execute any of its duties under this Agreement or any other Loan Document
by or through its agents, employees or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.

 

SECTION 8.3.                                       Liability
of Administrative Agent.  None of
the Administrative Agent-Related Persons shall (i) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document (except for its own gross negligence, bad
faith or willful misconduct), or (ii) be responsible in any manner to any of
the Lenders for any recital, statement, representation or warranty made by the
Borrower or any Subsidiary or Affiliate of the Borrower, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or for the value of any Collateral or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder.  No Administrative
Agent-Related Person shall be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions, of this Agreement or any other Loan Document, or
to inspect the properties, books or records of the Borrower or any of its
Subsidiaries or Affiliates.

 

SECTION 8.4.                                       Reliance
by Administrative Agent.

 

(a)                                  The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Loan Parties),
independent accountants and other experts selected by the Administrative
Agent.  Except for its express
obligations set forth in Article II hereof, the Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Majority Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.  The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Majority Lenders and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.

 

(b)                                 For
purposes of determining compliance with the conditions specified in Sections
4.1 and 4.2, each Lender that has executed this Agreement, or an

 

77

 

Assignment and Acceptance, shall be deemed to have
consented to, approved or accepted or to be satisfied with each document or
other matter either sent by the Administrative Agent to such Lender for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to such Lender,
unless an officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
prior to the initial Borrowing specifying its objection thereto and either such
objection shall not have been withdrawn by notice to the Administrative Agent
to that effect or
such Lender shall not have made available to the Administrative Agent such
Lender’s ratable portion of such Borrowing.

 

SECTION 8.5.                                       Notice
of Default.  The Administrative
Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent
for the account of the Lenders, unless the Administrative Agent shall have
received written notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a “notice of default.” In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to the Lenders.  The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be requested by the Majority Lenders in accordance
with Article VII; provided that unless and until the
Administrative Agent shall have received any such request, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable or in the best interest of the Lenders.

 

SECTION 8.6.                                       Credit
Decision.  Each Lender expressly
acknowledges that none of the Administrative Agent-Related Persons has made any
representation or warranty to it and that no act by the Administrative Agent
hereinafter taken, including any review of the affairs of the Loan Parties
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. 
Each Lender represents to the Administrative Agent that it has, independently
and without reliance upon the Administrative Agent and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties, and all applicable
bank regulatory laws relating to the transactions contemplated thereby, and
made its own decision to enter into this Agreement and extend credit to the
Borrower hereunder.  Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower.  Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Administrative Agent, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects,

 

78

 

operations, property, financial and other condition or
creditworthiness of the Borrower which may come into the possession of any of
the Administrative Agent-Related Persons.

 

SECTION 8.7.                                       Indemnification.  Whether or not the transactions contemplated
hereby shall be consummated, the Lenders shall indemnify upon demand the
Administrative Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Borrower and without limiting the obligation of the Borrower to
do so), ratably according to such Lender’s Percentage from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind whatsoever which may at
any time (including at any time following the repayment of the Loans and the
termination or resignation of the related Administrative Agent) be imposed on,
incurred by or asserted against any such Person and which are in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by any such Person under or in
connection with any of the foregoing; provided that no Lender shall be
liable for the payment to the Administrative Agent-Related Persons of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from such
Person’s gross negligence, bad faith or willful misconduct.  Without limitation of the foregoing, each
Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any
other Loan Document, or any document contemplated by or referred to herein to
the extent that the Administrative Agent is not reimbursed for such expenses by
or on behalf of the Borrower.  Without
limiting the generality of the foregoing, if the IRS or any other Governmental
Authority of the United States or other jurisdiction asserts a claim that the
Administrative Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not delivered, was
not properly executed, or because such Lender failed to notify the
Administrative Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify the Administrative Agent fully for all amounts paid,
directly or indirectly, by the Administrative Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Administrative Agent under this
Section, together with all costs and expenses (including Attorney Costs).  The obligation of the Lenders in this
Section shall survive the payment of all Obligations hereunder.

 

SECTION 8.8.                                       Administrative
Agent in Individual Capacity.  Bank
of America and its Affiliates may make loans to, issue letters of credit for
the account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory or other business with
the Loan Parties and their Affiliates as though Bank of America were not the
Administrative Agent hereunder and without notice to or consent of the
Lenders.  With respect to its Loans and
interests in Letters of Credit issued hereunder, Bank of America shall have the
same rights and

 

79

 

powers under this Agreement as any other Lender and
may exercise the same as though it were not the Administrative Agent, and the
terms “Lender” and the “Lenders” shall include Bank of America in its
individual capacity.

 

SECTION 8.9.                                       Successor
Administrative Agent.  The
Administrative Agent may, and at the request of the Majority Lenders shall,
resign as Administrative Agent upon thirty (30) days’ notice to the Lenders and
the Borrower.  If the Administrative
Agent shall resign as Administrative Agent under this Agreement, the Majority
Lenders shall appoint from among the Lenders a successor representative for the
Lenders.  If no successor representative
is appointed prior to the effective date of the resignation of the
Administrative Agent, the Administrative Agent may appoint, after consulting
with the Lenders and the Borrower, a successor representative from among the
Lenders.  Upon the acceptance of its
appointment as successor representative hereunder, such successor
representative shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term “Administrative Agent” shall mean
such successor representative and the retiring Administrative Agent’s
appointment, powers and duties as Administrative Agent shall be
terminated.  After any retiring
Administrative Agent’s resignation hereunder as Administrative Agent, the
provisions of this Article VIII and Sections 9.4 and 9.10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement.  If no successor
representative has accepted appointment as Administrative Agent by the date
which is thirty (30) days following a retiring Administrative Agent’s notice of
resignation, the retiring Administrative Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Majority
Lenders appoint a successor representative as provided for above.  Upon resignation, the Administrative Agent
shall execute and deliver such assignments and take such other actions as the Lenders
shall reasonably request in order to transfer and assign its rights and
interests under the Collateral Documents to the Lenders or any successor
representative appointed by the Lenders; provided that any costs and
expenses incurred by the Administrative Agent in taking such actions shall be
reimbursed in accordance with Section 9.4(a).

 

SECTION 8.10.                                 Collateral
Matters; Release of Collateral.

 

(a)                                  The
Administrative Agent is authorized on behalf of all the Lenders, without the
necessity of any notice to or further consent from the Lenders, from time to
time to take any action with respect to any Collateral or the Collateral
Documents which may be necessary to perfect and maintain perfected the security
interest in and Liens upon the Collateral granted pursuant to the Collateral
Documents.

 

(b)                                 The
Lenders irrevocably authorize the Administrative Agent, and the Administrative
Agent hereby agrees upon the request of the Borrower, to release any Lien
granted to or held by the Administrative Agent upon any Collateral (i) upon
termination of the Commitments and payment in full of all Loans and all other
Obligations (or cash collateralization of any outstanding Letters of Credit in
a manner acceptable to the applicable Issuing Lender) payable under this
Agreement and under any other Loan Document (other than contingent obligations
for which no claim has been, or

 

80

 

is reasonably expected to be, made); (ii) constituting
property sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which none of
the Loan Parties owned any interest at the time the Lien was granted or at any
time thereafter; (iv) constituting property leased to any Loan Party under a
lease which has expired or been terminated in a transaction permitted under
this Agreement or is about to expire and which has not been, and is not
intended by such Loan Party to be, renewed or extended; (v) consisting of an
instrument evidencing Debt or other debt instrument, if the Debt evidenced
thereby has been paid in full; (vi) if required by the Intercreditor Agreement;
(vii) with respect to which (A) the Borrower shall have requested in writing
that the Administrative Agent release its Lien thereon, (B) the Borrower shall have
provided, or caused one or more of its Subsidiaries to provide, substitute
Collateral of reasonably equivalent or greater value to that of such Collateral
subject to such requested Lien release, (C) the Administrative Agent shall have
reasonably determined that such substitute Collateral is otherwise acceptable,
(D) such substitute Collateral (and the Administrative Agent’s substitute Lien
thereon) shall be subject to documentation reasonably satisfactory to the
Administrative Agent and (E) such release and substitution is otherwise made in
compliance with Section 3.1 of the Intercreditor Agreement; or (viii) if
approved, authorized or ratified in writing by the Majority Lenders.  Upon request by the Administrative Agent at
any time, the Lenders will confirm in writing the Administrative Agent’s
authority to release particular types or items of Collateral pursuant to this Section
8.10(b).  The Administrative Agent
hereby agrees to execute and deliver to the Borrower such instruments and
documents as are requested by the Borrower (and prepared and filed at
Borrower’s sole cost and expense) to effect each release permitted hereunder.

 

SECTION 8.11.                                 Intercreditor
Agreement and other Loan Documents. 
Except to the extent provided in Section 9.1, each Lender from
time to time party hereto authorizes and consents, by its execution hereof or
by the Assignment and Acceptance by which it became a Lender, to the
Administrative Agent’s entering into the Intercreditor Agreement and each of
the other Loan Documents on such Lender’s behalf and taking all actions taken,
required or permitted to be taken by the Administrative Agent thereunder.

 

ARTICLE IX.

MISCELLANEOUS

 

SECTION 9.1.                                       Amendments,
Etc.  No amendment or waiver of any
provision of this Agreement or any other Loan Document, nor consent to any
departure by Holdings or the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Majority
Lenders and the Borrower and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided
that no amendment, waiver or consent shall, unless in writing and signed by all
of the affected Lenders and the Borrower do any of the following: (a) reduce
the rate of interest on any Loan or obligation or reduce any fee payable to the
Lenders, (b) reduce or forgive the principal of, or interest on, the Loans or
any fees or other amounts payable hereunder, (c) postpone any date fixed for
any payment of principal of, or interest on, the Loans or any fees or other
amounts payable hereunder (it being understood that, with the consent of the
Required Prepayment

 

81

 

Lenders, changes to any mandatory prepayments set
forth in clauses (b) through (f) of Section 2.8.1,
including the application thereof, may be made), (d) reduce the percentage
specified in the definition of Majority Facility Lenders (with respect to any
Facility all Lenders under such Facility shall be deemed to be directly
affected by such a reduction), (e) extend the expiration of or change the
percentage of any of the Commitments or increase the number of the Lenders
which shall be required for the Lenders or any of them to take any action
hereunder, (f) require additional consents, to be obtained with respect to
the sale or any assignment or participation of any Lenders hereunder, (g)
release all or substantially all of the Guarantees or the Liens of the
Administrative Agent and the Lenders on all or substantially all of the
Collateral (other than to the extent permitted by Section 8.10), or (h)
amend this Section 9.1 or otherwise modify the voting provisions of this
Agreement or amend the definition of Majority Lenders or Required Prepayment
Lenders; provided, further, that no amendment, waiver or consent
shall (i) be effective without the consent of the Majority Revolving Credit
Facility Lenders, if the same shall amend, modify or waive any condition
precedent to any extension of credit under the Revolving Credit Facility set
forth in Section 4.2 (including, without limitation, the waiver of an
existing Default or Event of Default required to be waived in order for such
extension of credit to be made), (ii) unless in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Administrative Agent under this
Agreement, or (iii) effect an increase in any of the Commitments of any Lender
without such Lender’s express written approval.

 

If, in connection with
any proposed amendment, modification, waiver or termination (a “Proposed
Change”) requiring the consent of all affected Lenders, the consent of
Majority Lenders is obtained but the consent of other Lenders whose consent is
required is not obtained (any such Lender whose consent is not obtained as
described in this Section 9.1 being referred to as a “Non-Consenting
Lender”), then, so long as the Lender acting as the Administrative Agent is
not a Non-Consenting Lender, at the Borrower’s request, an assignee acceptable
to the Administrative Agent shall have the right with the Administrative
Agent’s consent and in the Administrative Agent’s sole discretion (but shall
have no obligation) to purchase from such Non-Consenting Lender, and such Non-Consenting
Lender agrees that it shall, upon the Administrative Agent’s request, sell and
assign to the Lender acting as the Administrative Agent or such Assignee, all
of the interests, rights and obligations under this Agreement (including,
without limitation, the Commitments and the Percentage of the Obligations) of
such Non-Consenting Lender for an amount equal to the principal balance of all
Loans held by the Non-Consenting Lender and all accrued interest and fees with
respect thereto through the date of sale; provided, however, that
such purchase and sale shall not be effective until the Administrative Agent
shall have received from such assignee an agreement in form and substance
satisfactory to the Administrative Agent and the Borrower whereby such assignee
shall agree to be bound by the terms hereof. 
Each Lender agrees that, if it becomes a Non-Consenting Lender, it shall
execute and deliver to the Administrative Agent an Assignment and Acceptance to
evidence such sale and purchase and shall deliver to the Administrative Agent
any Note (if the assigning Lender’s Loans are evidenced by Notes) subject to
such Assignment and Acceptance; provided, however,

 

82

 

that the failure of any
Non-Consenting Lender to execute an Assignment and Acceptance shall not render
such sale and purchase (and the corresponding assignment) invalid.

 

SECTION 9.2.                                       Notices,
Etc.  Unless otherwise specifically
permitted herein, all notices and other communications provided for hereunder
shall be in writing (including telecopier, telegraphic, telex or cable
communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, and addressed as follows:

 

(a)                                  if
to the Borrower or any other Loan Party:

 

Great Lakes Dredge & Dock Corporation

c/o Madison Dearborn Partners IV, L.P.

Three First National Plaza

Suite 3800

Chicago, Illinois 60602

Attention:  Sam M. Mencoff and Thomas S.
Souleles

Telecopier:  (312) 895-1056

 

and 

 

Great Lakes Dredge & Dock Corporation

2212 York Road

Oak Brook, IL 60523

Attention:  Chief Financial Officer

Telecopier:  (630) 574-3007

 

with a copy to:

 

Kirkland & Ellis LLP

Aon Center

200 East Randolph Drive

Chicago, Illinois 60601-6636

Attention:  Francesco Penati; Richard
Campbell

Telecopier:  (312) 861-2200

 

(b)                                 if
to any Lender, an original party hereto, at its Domestic Lending Office
specified on Schedule 1 to the Lender Addendum of such Lender; if to any other
Lender, at its Domestic Lending Office specified in the Assignment and
Acceptance pursuant to which it became a Lender; and

 

(c)                                  if
to Bank of America as an Issuing Lender or the Administrative Agent: 

 

Bank of America, N.A. 

231 South LaSalle Street

Chicago, Illinois 60697

Attention:  David Johanson and Jeffery
T. White

Telecopier:  (877) 206-8410 and (877)
207-0485

 

83

 

with a copy to:

 

Bank of America, N.A.

231 South LaSalle Street

Chicago, Illinois 60697

Attention:  Jennifer Gerdes

Telecopier:  (312) 974-0791

 

with a copy to:

 

Sidley Austin Brown & Wood LLP

Bank One Plaza

10 South Dearborn Street

Chicago, Illinois 60603

Attention:  Michael Gold, Esq.

Telecopier: (312) 853-7036

 

or, as to
Holdings, the Borrower or the Administrative Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to Holdings, the Borrower and the Administrative
Agent.  All such telecopier,
telegraphic, telex or cable notices and communications shall, when telecopied,
telegraphed, telexed or cabled, be effective when telecopied delivered to the
telegraph company, confirmed by telex answerback or delivered to the cable
company, respectively, and all such mail notices and communications shall be
effective five (5)  days after deposit in the mails; except that notices and
communications by any of the above means to the Administrative Agent pursuant
to Articles II, III or VIII shall not be effective until
received by the Administrative Agent.

 

SECTION 9.3.                                       No
Waiver; Remedies.  No failure on the
part of any Lender or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

 

SECTION 9.4.                                       Costs
and Expenses; Indemnification. The Borrower agrees (a) to pay or reimburse
the Administrative Agent and the Arrangers for all their reasonable
out-of-pocket costs and expenses incurred in connection with the syndication of
the Facilities (other than fees payable to syndicate members) and the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without
limitation, the reasonable fees and disbursements and other charges of counsel
to the Administrative Agent and the Arrangers and the charges of Intralinks,
(b) to pay or reimburse each Lender and the Administrative Agent for all their
costs and expenses incurred in

 

84

 

connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any other documents
prepared in connection herewith or therewith, including, without limitation,
the fees and disbursements of counsel and charges of Intralinks to each Lender
and of counsel to the Administrative Agent, (c) to pay, indemnify, or reimburse
each Lender and the Administrative Agent for, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay, in
paying, stamp, excise and other taxes, if any, which may be payable in
connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify or reimburse each Lender, the Administrative Agent, the
Arrangers, their respective affiliates, and their respective officers,
directors, trustees, employees, advisors, agents and controlling persons (each,
an “Indemnitee”) for, and hold each Indemnitee harmless from and against
any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including, without limitation, any of the foregoing
relating to the use of proceeds of the Loans or the violation of, noncompliance
with or liability under, any Environmental Law applicable to the operations of
Holdings, the Borrower any of its Subsidiaries or any of the Properties and the
fees and disbursements and other charges of legal counsel in connection with
claims, actions or proceedings by any Indemnitee against the Borrower hereunder
(all the foregoing in this clause (d), collectively, the “Indemnified
Liabilities”), provided, that the Borrower shall have no obligation hereunder
to any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence, bad
faith or willful misconduct of such Indemnitee.  No Indemnitee shall be liable for (i) consequential damages as a
result of any failure to fund any of the Facilities or (ii) any damages arising
from the use by unauthorized persons of Information or other materials sent through
electronic, telecommunications or other information transmission systems that
are intercepted by such persons or for any special, indirect, consequential or
punitive damages in connection with the Facilities (unless such damages
resulted directly from the gross negligence, bad faith or willful misconduct of
the Person claiming the protections of clause (ii)).  Without limiting the foregoing, and to the extent permitted by
applicable law, the Borrower agrees not to assert and to cause its Subsidiaries
not to assert, and hereby waives and agrees to cause its Subsidiaries so to
waive, all rights for contribution or any other rights of recovery with respect
to all claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature, under or related to
Environmental Laws, that any of them might have by statute or otherwise against
any Indemnitee; provided, however, that the Borrower shall retain
all such rights of recovery with respect to any liabilities arising under
Environmental Laws resulting from the gross negligence, bad faith or willful
misconduct of such Indemnitee.  All
amounts due under this Section shall be payable not later than 30 days after
written demand therefor.  Statements
payable by the Borrower

 

85

 

pursuant to this Section shall be submitted to Deborah
A. Wensel (Telephone No. (630) 574-3007) (Fax No. (630) 574-2981), at the
address of the Borrower set forth in Section 9.2, or to such other Person or
address as may be hereafter designated by the Borrower in a notice to the
Administrative Agent.  The agreements in
this Section shall survive repayment of the Loans and all other amounts payable
hereunder.

 

SECTION 9.5.                                       Setoff.  In addition to and not in limitation of any
rights of any Lender under Applicable Law, each Lender shall, upon the
occurrence and during the continuance of any Event of Default described in Section
7.1(a) or Section 7.1(e), have the right to appropriate and apply to
the payment of the Obligations then due and unpaid, and, as security for such
Obligations, each of the Loan Parties hereby grants to each Lender a continuing
security interest in, any and all deposits or accounts of the Borrower then or
thereafter maintained with such Lender or participant; provided that any
such appropriation and application shall be subject to the provisions of Section
2.17.  Each Lender agrees promptly
to notify the Borrower and the Administrative Agent after any such setoff and
application made by such Lender; provided that the failure to give such
notice shall not affect the validity of such setoff and application.  The rights of each Lender under this Section
9.5 are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.

 

SECTION 9.6.                                       Effectiveness.  This Agreement shall become effective when
it shall have been executed by the Borrower and the Administrative Agent and
when the Administrative Agent shall have been notified by each Lender that such
Lender has executed it.

 

SECTION 9.7.                                       Successors
and Assigns; Participations and Assignments.  (a) This Agreement shall be binding upon and inure to the benefit
of Holdings, the Borrower, the Lenders, the Administrative Agent, all future
holders of the Loans and their respective successors and assigns, except that
neither Holdings nor the Borrower may assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent and each Lender.

 

(b)                                 Any
Lender may, without the consent of the Borrower, in accordance with applicable
law, at any time sell to one or more banks, financial institutions or other
entities (each, a “Participant”) participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents.  In the event of any such sale by a Lender of
a participating interest to a Participant, such Lender’s obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Loan Documents, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement and the other Loan
Documents.  In no event shall any
Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to
any departure by any Loan Party therefrom, except to the extent that such
amendment, waiver or consent would require the

 

86

 

consent of the Lender from which such participation
was purchased pursuant to Section 9.1. 
The Borrower agrees that if amounts outstanding under this Agreement and
the Loans are due or unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall, to the maximum extent permitted by applicable law, be deemed to have the
right of setoff in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement, provided
that, in purchasing such participating interest, such Participant shall be
deemed to have agreed to share with the Lenders the proceeds thereof as
provided in Section 9.7(a) as fully as if such Participant were a Lender
hereunder.  The Borrower also agrees
that each Participant shall be entitled to the benefits of Sections 2.10,
2.11, 2.12 and 2.16 with respect to its participation in the
Commitments and the Loans outstanding from time to time as if such Participant
were a Lender; provided that, in the case of Sections  2.12
and 2.16, such Participant shall have complied with the requirements of
said Section, and provided, further, that no Participant shall be
entitled to receive any greater amount pursuant to any such Section than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.

 

(c)                                  Any
Lender (an “Assignor”) may, in accordance with applicable law and upon
written notice to the Administrative Agent, at any time and from time to time
assign to any Lender or any Affiliate, Related Fund or Control Investment
Affiliate thereof or, with the written consent of the Borrower and the
Administrative Agent and, in the case of any assignment of Revolving
Commitments, the written consent of the Issuing Lenders (which, in each case,
shall not be unreasonably withheld or delayed) (provided (y) that no
such consent need be obtained by either of the Arrangers or any of their
respective Affiliates with respect to any assignment by either of them and (z)
that the consent of the Borrower need not be obtained with respect to any
assignment of Tranche B Term Loans), to an additional bank, financial
institution or other entity (an “Assignee”) all or any part of its
rights and obligations under this Agreement pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit A, executed by such Assignee and
such Assignor (and, where the consent of the Borrower, the Administrative Agent
or the Issuing Lenders is required pursuant to the foregoing provisions, by the
Borrower and such other Persons) and delivered to the Administrative Agent for
its acceptance and recording in the Register; provided that no such
assignment to an Assignee (other than any Lender or any Affiliate or Related
Fund), in the case of an assignment of Revolving Commitments and/or Revolving
Loans, shall be in an aggregate principal amount of less than $5,000,000 or, in
the case of Tranche B Term Loan, shall be in an aggregate principal amount of
less than $1,000,000 (in each case, other than in the case of an assignment of
all of a Lender’s interests under this Agreement), and after giving effect
thereto, the Assignor, in the case of an assignment of Revolving Commitments
and/or Revolving Loans, shall have Revolving Commitments and/or Revolving Loans
aggregating at least $5,000,000 and, in the case of an assignment of Tranche B
Term Loans, shall have Tranche B Term Loans aggregating at least $1,000,000, in
each case unless otherwise agreed by the Borrower and the Administrative Agent.  Any such assignment need not be ratable as
among the Facilities.  Upon such
execution, delivery, acceptance and recording, from and after the effective
date

 

87

 

determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with Commitments and/or Loans as set forth therein, (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor’s rights and obligations
under this Agreement, such Assignor shall cease to be a party hereto, except as
to Section 2.10, 2.11, 2.12 and 9.4 in respect of
the period prior to such effective date), and (z) the assignee shall comply
with Section 2.16 (f). 
Notwithstanding any provision of this Section, the consent of the
Borrower shall not be required for any assignment that occurs at any time when
any Event of Default shall have occurred and be continuing.  For purposes of the minimum assignment
amounts set forth in this paragraph, multiple assignments by two or more
Related Funds shall be aggregated.

 

(d)                                 The
Administrative Agent shall, on behalf of the Borrower, maintain at its address
referred to in Section 9.2 a copy of each Assignment and Acceptance
delivered to it and a register (the “Register”) for the recordation of
the names and addresses of the Lenders and the Commitment of, and principal
amount of the Loans owing to, each Lender from time to time.  The entries in the Register shall be
presumptive evidence of the amounts so entered, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of the Loans and any Notes evidencing
such Loans recorded therein for all purposes of this Agreement.  Any assignment of any Loan, whether or not
evidenced by a Note, shall be effective only upon appropriate entries with
respect thereto being made in the Register (and each Note shall expressly so
provide).  Any assignment or transfer of
all or part of a Loan evidenced by a Note shall be registered on the Register
only upon surrender for registration of assignment or transfer of the Note
evidencing such Loan, accompanied by a duly executed Assignment and Acceptance;
thereupon one or more new Notes in the same aggregate principal amount shall be
issued to the designated Assignee, and the old Notes shall be returned by the
Administrative Agent to the Borrower marked “canceled”.  The Register shall be available for
inspection by the Borrower or any Lender (with respect to any entry relating to
such Lender’s Loans) at any reasonable time and from time to time upon
reasonable prior notice.

 

(e)                                  Upon
its receipt of an Assignment and Acceptance executed by an Assignor and an
Assignee (and, in any case where the consent of any other Person is required by
Section 9.7(c), by each such other Person) together with payment to the
Administrative Agent of a registration and processing fee of $3,500 (except
that no such registration and processing fee shall be payable in the case of an
Assignee which is already a Lender or is an Affiliate or Related Fund of a
Lender or a Person under common management with a Lender), the Administrative
Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Borrower.  On or prior to such
effective date, the Borrower, at its own expense, upon request, shall execute
and deliver to the Administrative Agent (in exchange for the applicable Notes
of the assigning Lender) a new Notes to the order of such Assignee in an amount
equal to the Revolving

 

88

 

Commitment and/or applicable Tranche B Term Loans, as
the case may be, assumed or acquired by it pursuant to such Assignment and
Acceptance and, if the Assignor has retained a Revolving Commitment and/or
Tranche B Term Loans, as the case may be, upon request, a new Note and/or
Notes, as the case may be, to the order of the Assignor in an amount equal to
the Revolving Commitment and/or applicable Tranche B Term Loans, as the case
may be, retained by it hereunder.  Such
new Note or Notes shall be dated the Closing Date and shall otherwise be in the
form of the Note or Notes replaced thereby.

 

(f)                                    For
avoidance of doubt, the parties to this Agreement acknowledge that the
provisions of this Section 9.7 concerning assignments of Loans and Notes relate
only to absolute assignments and that such provisions do not prohibit
assignments creating security interests in Loans and Notes, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law. 

 

(g)                                 Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting Lender”)
may grant to a special purpose funding vehicle (an “SPC”), identified as
such in writing from time to time by the Granting Lender to the Administrative
Agent and the Borrower, the option to provide to the Borrower all or any part
of any Loan that such Granting Lender would otherwise be obligated to make to
the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof.  The
making of a Loan by an SPC hereunder shall utilize the Commitment of the
Granting Lender to the same extent, and as if, such Loan were made by such
Granting Lender.  Each party hereto
hereby agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender).  In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other Debt
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or
any state thereof.  In addition,
notwithstanding anything to the contrary in this Section 9.7(g), any SPC
may (A) with notice to, but without the prior written consent of, the Borrower
and the Administrative Agent and without paying any processing fee therefor,
assign all or a portion of its interests in any Loans to the Granting Lender,
or with the prior written consent of the Borrower and the Administrative Agent
(which consent shall not be unreasonably withheld) to any financial
institutions providing liquidity and/or credit support to or for the account of
such SPC to support the funding or maintenance of Loans, and (B) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC; provided that non-public
information with respect to the Borrower may be disclosed only with the
Borrower’s consent which will not be

 

89

 

unreasonably withheld.  This Section 9.7(g) may not be amended without the written
consent of any SPC with Loans outstanding at the time of such proposed
amendment.

 

SECTION 9.8.                                       Survival
of Warranties and Agreements.  All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the other Loan Documents and the
making and repayment of the Obligations hereunder.

 

SECTION 9.9.                                       Marshalling;
Recourse to Security; Payments Set Aside. 
Neither any Lender nor the Administrative Agent shall be under any
obligation to marshall any assets in favor of the Borrower or any other Loan
Party or against or in payment of any or all of the Obligations.  Recourse to security shall not be required at
anytime.  To the extent that any Loan Party
makes a payment or payments to the Administrative Agent or the Lenders, or the
Administrative Agent or the Lenders enforce their security interests or
exercise their rights of set-off, and such payment or payments or the proceeds
of such enforcement or set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such recovery, the obligation or part thereof originally intended
to be satisfied, and all Liens, rights and remedies therefor, shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or set-off had not occurred.

 

SECTION 9.10.                                 Submission
To Jurisdiction; Waivers.

 

(a)                                  All
judicial proceedings brought against any party to this Agreement with respect
to this Agreement or any other Loan Document may be brought in any state or
federal court of competent jurisdiction in the State of New York, and by
execution and delivery of this Agreement, each party accepts, for itself and in
connection with its properties, generally and unconditionally, the nonexclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any
final judgment rendered thereby in connection with this Agreement or any of the
other Loan Documents from which no appeal has been taken or is available.  Each party irrevocably consents to the service
of process of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to its notice address specified on the signature pages hereof, such
service to become effective ten (10) days after such mailing.  EACH LOAN PARTY, EACH ISSUING LENDER, THE
ADMINISTRATIVE AGENT, AND EACH LENDER IRREVOCABLY WAIVES (A) TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, AND (B) ANY OBJECTION (INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE.  Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the

 

90

 

right of the Administrative Agent or any Lender or any
Loan Party to bring proceedings against any Loan Party in the courts of any
other jurisdiction.

 

SECTION 9.11.                                 Performance
of Obligations.  Each Loan Party
agrees that the Administrative Agent, the Issuing Lenders and the Lenders, or
any one or more of them, may, but shall have no obligation to, make any payment
or perform any act required of such Loan Party under any Loan Document or take
any other action which such party in its discretion deems necessary or
desirable to protect or preserve the Collateral, including any action to pay or
discharge taxes, liens, security interests or other encumbrances levied or
placed on or threatened against any Collateral.

 

SECTION 9.12.                                 Construction.  The parties acknowledge that each party and
its counsel have reviewed and revised this Agreement and the other Loan
Documents and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Loan Documents or any amendments or exhibits
thereto.

 

SECTION 9.13.                                 GOVERNING
LAW.  THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS (UNLESS ANY SUCH LOAN DOCUMENT EXPRESSLY PROVIDES OTHERWISE), AND THE
LETTERS OF CREDIT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES
(OTHER THAN THE PROVISIONS OF 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).

 

SECTION 9.14.                                 Execution
in Counterparts.  This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.

 

SECTION 9.15.                                 Entire
Agreement.  This Agreement, together
with the other Loan Documents, embodies the entire agreement and understanding
among the Loan Parties, the Lenders, the Issuing Lenders and the Administrative
Agent, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof, except for the fee letter dated as of December 3,
2003 among MDP, LCPI, Lehman Brothers, CSFB and the Administrative Agent, and
any prior arrangements made with respect to the payment by the Borrower of (or
any indemnification for) any fees, costs or expenses payable to or incurred (or
to be incurred) by or on behalf of the Administrative Agent or the Lenders

 

SECTION 9.16.                                 Delivery
of Lender Addenda.  Each initial
Lender shall become a party to this Agreement by delivering to the
Administrative Agent a Lender Addendum duly executed by such Lender, the
Borrower and the Administrative Agent.

 

SECTION 9.17.                                 Non-Confidentiality
of Tax Structure.  Notwithstanding
anything herein to the contrary, each party hereto (and each affiliate and
person acting on behalf of any such party) agrees that each party (and each
employee, representative, and

 

91

 

other agent of such party) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the transaction contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to such party or
such person relating to such tax treatment and tax structure, except to the
extent necessary to comply with any applicable federal or state securities
laws.  This authorization is not
intended to permit disclosure of any other information including (without limitation)
(i) any portion of any materials to the extent not related to the tax treatment
or tax structure of the transaction, (ii) the identities of participants or
potential participants in the transaction, (iii) the existence or status of any
negotiations, (iv) any pricing or financial information (except to the extent
such pricing or financial information is related to the tax treatment or tax
structure of the transaction), or (v) any other term or detail not relevant to
the tax treatment or the tax structure of the transaction. 

 

*  *  *  *  *

 

92

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the Closing Date.

 

	
   

  	
  GLDD ACQUISITIONS CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
  Name: Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
  Title: Senior Vice President, Chief

  	
   

  
	
   

  	
   

  	
           
  Financial Officer and Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  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

  	
   

  

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

 

	
   

  	
  FIFTY-THREE DREDGING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
  Name: Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
  Title: Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NORTH AMERICAN SITE DEVELOPERS,

  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
  Name: Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,

      as Administrative Agent, an Issuing Lender and a
  Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Helen Zitzman

  	
   

  
	
   

  	
   

  	
  Name: Helen Zitzman

  	
   

  
	
   

  	
   

  	
  Title:   Senior Vice
  President

  	
   

  

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

 

SCHEDULE I

 

DEFINITIONS

 

“1933 Act” means the Securities Act of 1933, as amended from
time to time.

 

“1934 Act” means the Securities Exchange Act of 1934, as amended
from time to time.

 

“Acquisition” has the meaning specified in the recitals.

 

“Acquisition Agreement” means the Merger Agreement dated
November 12, 2003 between GLDD Acquisitions Corp., Merger Sub and Great Lakes
Dredge & Dock Corporation.

 

“Adjusted Consolidated EBITDA” means EBITDA plus adjustments,
without duplication (i) required or permitted by Regulation S-X of the 1933
Act, and (ii) for the four Fiscal Quarters ending September 30, 2003, December
31, 2003, March 31, 2004, June 30, 2004, and September 30, 2004 consisting of
up to $3,200,000 of adjustments with respect to the pro  forma
savings resulting from the equipment financing transactions, subject to
confirmation by the Arrangers that the Borrower’s calculation of such savings
is reasonable.

 

“Administrative Agent” has the meaning specified in the preamble.

 

“Administrative Agent-Related Persons” means Bank of America and
any successor Administrative Agent arising under Section 8.9, together
with their respective Affiliates, and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

 

“Affiliate” means, with respect to any Person, any other Person:

 

(i)                     which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such Person (excluding any
trustee under, or any committee with responsibility for administering any
Plan);

 

(ii)                  which
beneficially owns or holds ten percent (10%) or more of any class of the Voting
Stock of such Person (or, in the case of a Person which is not a corporation,
ten percent (10%) or more of the equity interests); or

 

(iii)               ten percent (10%)
or more of the Voting Stock (or, in the case of a Person which is not a
corporation, ten percent (10%) or more of the equity interests) of which, is
beneficially owned or held, directly or indirectly, by such Person.

 

 

The term “control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or otherwise.

 

“Agreement” has the meaning specified in the preamble.

 

“Alternative Currency” means Euros, British Pound Sterling,
Canadian Dollars, German Deutschmarks, and any other lawful currency other than
Dollars which is freely transferable and convertible into Dollars as agreed to
from time to time by an Issuing Lender and the Administrative Agent (in their
respective sole and absolute discretion).

 

“Applicable Base Rate Margin,” “Applicable Commitment Fee
Percentage,” “Applicable Eurodollar Rate Margin,” “Applicable
Financial Letter of Credit Fee Percentage,” and “Applicable Performance
Letter of Credit Fee Percentage” respectively mean, during any Pricing
Period, the amount set forth below for such Applicable Base Rate Margin,
Applicable Commitment Fee Percentage, Applicable Eurodollar Rate Margin,
Applicable Financial Letter of Credit Fee Percentage or Applicable Performance
Letter of Credit Fee Percentage, as the case may be, depending upon the Total
Leverage Ratio as of the last day of the Fiscal Quarter most recently ended
prior to the first day of such Pricing Period:

 

	
  Total

  Leverage

  Ratio

  	
   

  	
  Applicable

  Base Rate

  Margin

  	
   

  	
  Applicable

  Commitment

  Fee Percentage

  	
   

  	
  Applicable

  Eurodollar Rate

  Margin

  	
   

  	
  Applicable

  Financial

  Letter of Credit

  Fee Percentage

  	
   

  	
  Applicable

  Performance

  Letter of Credit

  Fee Percentage

  	
   

  
	
  Less than 3.00x

  	
   

  	
  1.25

  	
   

  	
  .50

  	
   

  	
  2.25

  	
   

  	
  2.25

  	
   

  	
  1.18

  	
   

  
	
  Greater than or equal to
  3.00x but less 3.75x

  	
   

  	
  1.50

  	
   

  	
  .50

  	
   

  	
  2.50

  	
   

  	
  2.50

  	
   

  	
  1.25

  	
   

  
	
  Greater than or equal to
  3.75x but less 4.75x

  	
   

  	
  1.75

  	
   

  	
  .50

  	
   

  	
  2.75

  	
   

  	
  2.75

  	
   

  	
  1.38

  	
   

  
	
  Greater than or equal to
  4.75x

  	
   

  	
  2.00

  	
   

  	
  .50

  	
   

  	
  3.00

  	
   

  	
  3.00

  	
   

  	
  1.50

  	
   

  

 

provided, however, that (i) if and for
so long as the Borrower shall have failed to timely deliver a Compliance
Certificate under Section 6.4(b) or Section 6.4(c) with respect
to such Fiscal Quarter most recently ended, the Applicable Base Rate Margin,
Applicable Commitment Fee Percentage, Applicable Eurodollar Rate Margin,
Applicable Financial Letter of Credit Fee Percentage, and Applicable
Performance Letter of Credit Fee Percentage for such Pricing Period shall be
determined as if the Total Leverage Ratio is greater than or equal to 4.75 to
1.00, (ii) notwithstanding the foregoing, (a) for the period beginning on the
Closing Date and ending on December 31, 2003, the Applicable Base Rate Margin,
Applicable Commitment Fee Percentage, Applicable Eurodollar Rate Margin,
Applicable Financial Letter of Credit Fee Percentage, and Applicable
Performance Letter of Credit Fee Percentage for such Pricing Periods shall be
determined

 

2

 

as if the
Total Leverage Ratio is greater than or equal to 3.75 to 1.00 but less than
4.75 to 1.00, and (iii) notwithstanding the foregoing, the Applicable
Performance Letter of Credit Fee Percentage shall be subject to change in
accordance with Section 2.10(c). 

 

“Applicable Law” means, with respect to any Person or matter,
any law, rule, regulation, order, decree or other requirement having the force
of law relating to such Person or matter and, where applicable, any
interpretation thereof by any Person having jurisdiction with respect thereto
or charged with the administration or interpretation thereof.

 

“Applicable Lending Office” means, with respect to each Lender,
such Lender’s Domestic Lending Office in the case of a Base Rate Loan and such
Lender’s Eurodollar Office in the case of a Eurodollar Rate Loan.

 

“Arrangers” has the meaning specified in the preamble.

 

“Assignee” has the meaning specified in Section 9.7.

 

“Assignment and Acceptance” means an assignment and acceptance
entered into by a Lender and an Assignee, and accepted by the Administrative
Agent, in substantially the form of Exhibit A.

 

“Assignor”  has the
meaning specified in Section 9.7.

 

“Attorney Costs” means and includes all reasonable out-of-pocket
fees and disbursements of any law firm or other external counsel.

 

“Authorized Officer” means, relative to any Loan Party, the
officers of such Loan Party whose signatures and incumbency shall have been
certified to the Administrative Agent pursuant to Section 4.1.

 

“Availability” means, at any time, an amount (determined on a
Dollar equivalent basis) equal to the Revolving Commitment Amount then in
effect minus the then outstanding Letter of Credit Obligations.

 

“Available Revolving Commitments” means with respect to any
Revolving Lender at any time, an amount equal to the excess, if any, of (a)
such Lender’s Revolving Commitment then in effect over (b) such Lender’s
Revolving Extensions of Credit then outstanding.

 

“Bank of America” has the meaning specified in the preamble.

 

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C.  § 101, et seq.).

 

“Base Capital Expenditure Amount” has the meaning specified in
Section 6.3(a).

 

3

 

“Base Rate” means the higher of:

 

(i)                     the rate of
interest publicly announced from time to time by Bank of America (or its
successor) in Charlotte, North Carolina as its “reference rate.”  It is a rate that is set by Bank of
America’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate.  Any change in the reference rate announced by Bank of America
shall take effect at the opening of business on the day specified in the public
announcement of such change; and

 

(ii)                  0.50% per annum
above the latest Federal Funds Rate.

 

 “Base Rate Loan” means a
Loan which bears interest at or determined by reference to the Base Rate.

 

“Bonding Agreement” means, collectively, the Travelers Agreement
and any supplement thereto or replacement thereof, and any similar contractual
arrangement with providers of bid, performance or payment bonds, each of which
supplement, replacement or similar arrangement being subject to the
Intercreditor Agreement.

 

“Borrower” has the meaning specified in the preamble.

 

“Borrowing” means a borrowing of Loans made by all of the
Lenders in accordance with their respective applicable Percentages, on the same
Business Day, in accordance with Section 2.4.

 

“Business Day” means a day of the year on which banks are not
required or authorized to close in any of New York City or Chicago and, if the
applicable Business Day relates to any Eurodollar Rate Loan, a day of the year
on which dealings are carried on in the interbank Eurodollar market.

 

“Capital Adequacy Regulation” means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.

 

“Capital Expenditures” means, for any period, the aggregate
amount of all expenditures of the Borrower and its Subsidiaries for fixed or capital
assets made or incurred during such period (whether or not paid in cash and
including that portion of Capitalized Leases which is capitalized on the
consolidated balance sheet of the Borrower and its Subsidiaries) which, in
accordance with GAAP, would be classified as capital expenditures; provided,
however, that, for any such period, such aggregate amount shall be
reduced by the sum of (in each case to the extent the following would otherwise
be required to be capitalized on the Consolidated balance sheet of the Borrower
and its Subsidiaries) (a) proceeds received from the sale of fixed or capital
assets which have been applied, within one year of receipt thereof, to the
purchase or cost of design, installation, construction, repair or improvement of
fixed or capital assets used or useful

 

4

 

in the
business of the Borrower and its Subsidiaries; (b) insurance or requisition
proceeds or condemnation awards received in connection with the damage, destruction,
requisition or condemnation of fixed or capital assets which have been applied,
within one year of receipt thereof, to the purchase or cost of design,
installation, construction, repair or improvement of fixed or capital assets
used or useful in the business of the Borrower and its Subsidiaries; (c)
proceeds of indemnity claims made by Holdings or the Borrower pursuant to the
Acquisition Agreement to the extent used in connection with the purchase or
cost of design, installation, construction, repair or improvement of fixed or
capital assets used or useful in the business of the Borrower and its
Subsidiaries in connection with such indemnity claim; (d) with regard to
equipment purchased simultaneously with the trade-in of existing equipment of
the Borrower or its Subsidiaries, the amount of the credit extended for such
trade-in; and (e) expenditures for vessels identified to be sold by the
Borrower or any of its Subsidiaries and then leased-back (on an operating lease
basis) by the Borrower or any of its Subsidiaries to the extent that such sale
occurs within 180 days of the completion of such vessel and the Borrower has
notified the Lenders in writing in reasonable detail of the timing, facts and
circumstances of such sale and lease-back to the extent that the aggregate
amount of such expenditures does not exceed $15,000,000 at any time (provided
that if any vessel so identified is not sold, the amount of the expenditures
made that relate to such vessel shall be added back to the amount of Capital
Expenditures for the Fiscal Quarter in which such expenditure was made), and
(f) the repurchase of the vessels set forth on Schedule 6.3(a) for the
amounts set forth on Schedule 6.3(a). 
Anything herein to the contrary notwithstanding, Capital Expenditures
shall not include expenditures made as consideration or purchase price for
Permitted Business Acquisitions.

 

“Capital Stock” means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) including, without limitation, membership interests and
partnership interests or units, and any and all warrants, rights or options to
purchase any of the foregoing.

 

“Capitalized Lease” means, with respect to any Person, any lease
of any property by that Person as lessee, the obligation for Rentals with
respect to which is required to be accounted for as a capital lease on the
balance sheet of such person in accordance with GAAP.

 

“Capitalized Rentals” means, as of the date of any
determination, the amount at which the aggregate Rentals due and to become due
under all Capitalized Leases under which the Borrower or any of its
Subsidiaries is a lessee would be reflected as a liability on a consolidated
balance sheet of the Borrower and its Subsidiaries.

 

“CERCLA” has the meaning specified in the definition of “Environmental
Laws.”

 

“Claims” means any claim or demand, by any Person, of whatsoever
kind or nature for any alleged Liabilities and Costs, whether based in
contract, tort, implied or

 

5

 

express
warranty, strict liability, criminal or civil statute, Permit, ordinance or
regulation, common law or otherwise.

 

“Closing Date” means the date on which all of the conditions
precedent set forth in Section 4.1 are satisfied or waived by all of the
Lenders.

 

“Code” means the Uniform Commercial Code of the State of New
York.

 

“Collateral” means all Property and interests in Property now
owned or hereafter acquired by Holdings or any of its Subsidiaries in or upon
which a Lien is granted under the Collateral Documents.

 

“Collateral Documents” means the First Preferred Fleet Mortgage,
the Second Preferred Fleet Mortgage, the Note Pledge Agreement, the Equipment
Security Agreements, the Receivables Security Agreements, the Proceeds Agent
Agreement, financing statements and all other similar agreements, assignments,
instruments and documents delivered to the Administrative Agent from time to
time to create, evidence or perfect Liens securing the Obligations, and all
amendments, supplements, modifications, renewals, replacements, restatements,
consolidations, substitutions, and extensions of any of the foregoing.

 

“Commitment” shall mean collectively, the Revolving Commitments
and the Tranche B Term Commitments, or with respect to any Lender, such
Lender’s Revolving Commitment and Tranche B Term Commitment.

 

“Commitment Fee” shall have the meaning specified in Section
2.14(a).

 

“Compliance Certificate” shall have the meaning specified in Section
6.4(d).

 

“Contaminant” means any waste, pollutant, hazardous substance,
radioactive substance or material, toxic substance, hazardous waste,
radioactive waste, special waste, petroleum or petroleum-derived substance or
waste, asbestos in any form or condition, polychlorinated biphenyls (“PCBs”),
or any hazardous or toxic constituent thereof and includes, but is not limited
to, these terms as defined in any Environmental Law.

 

“Continuation/Conversion Notice” shall have the meaning
specified in Section 2.6.

 

“Continuing Directors” means, as of any date of determination,
any member of the Board of Directors of the Borrower who (i) was a member of
such Board of Directors as of the Closing Date, (ii) was nominated for election
or elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election, or (iii) receives the vote of the Principals in
his or her election by the shareholders of the Borrower.

 

6

 

“Contribution Agreement” means the Contribution and
Indemnification Agreement executed and delivered pursuant to Section 4.1
among each of the Guarantors.

 

“Control Investment Affiliate” means, as to any Person, any
other Person that (a) directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person and (b) is organized by such
Person primarily for the purpose of making equity or debt investments in one or
more companies.  For purposes of this
definition, “control” of a Person means the power, directly or indirectly, to
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise.

 

“CSFB” has the meaning specified in the preamble.

 

“Customary Permitted Investment” means, at any time, Investments
of the Borrower or any of its Subsidiaries in (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 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 (other than an Affiliate of any Loan Party) 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 by Moody’s Investors
Service, Inc., or (ii) any Lender (or its holding company); (d) any certificate
of deposit, time or demand deposit (including Eurodollar time deposits) 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, or (iii) any branch of any Lender 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)
participation in loans made to a borrower (other than an Affiliate of any Loan
Party) 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, however,
that such loans must mature within six months from the date such participation
is purchased; (g) short-term asset management accounts offered by any Lender
for the purpose of investing in notes issued by a corporation (other than an
Affiliate of any Loan Party) 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 (h) bonds issued by a municipality or governmental agency and
rated not lower than BBB by Standard & Poor’s Rating Group,

 

7

 

a division of
McGraw Hill, Inc. or Baa2 by Moody’s Investors Service, Inc. and purchased by
the Borrower or any of its Subsidiaries in the ordinary course of its business
in connection with retainage under contracts with its customers; or (i) United
States Dollars or money in other currencies received in the ordinary course of
business; or (j) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (a) through (e),
(i) and (j) of this definition; or (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 the
Borrower that is not a domiciled in the United States, investments comparable
to the foregoing that have been approved by the Administrative Agent.

 

“Customary Permitted Liens” means:

 

(a)                                  Liens (other than
those arising with respect to any noncompliance with ERISA or Environmental
Laws) for taxes, assessments or governmental charges, but only to the extent
that such taxes, assessments or charges are either not delinquent or are being
contested in good faith by appropriate proceedings, and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP;

 

(b)                                 statutory Liens of
landlords and Liens of carriers, warehousemen, mechanics, materialmen,
suppliers and other Liens imposed by law (including maritime law) created in
the ordinary course of business of the Borrower and its Subsidiaries, but only
to the extent that the amounts secured or to be secured by such Liens are
either not overdue 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;

 

(c)                                  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 the
Borrower’s 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;

 

(d)                                 survey exceptions or
encumbrances, easements or reservations, or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or

 

8

 

other restrictions as to the use of real property, which do not
materially interfere with the ordinary conduct of the business of the Borrower
and its Subsidiaries; and

 

(e)                                  Liens of or resulting
from any judgment or award, other than any judgment or award that gives rise to
an Event of Default, the time for appeal or petition for rehearing of which
shall not have expired, or in respect of which the Borrower or any of its
Subsidiaries shall at any time in good faith be prosecuting an appeal or
proceeding for a review and in respect of which a stay of execution pending
such appeal or proceeding for review shall have been secured.

 

“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 Capitalized
Rentals under any Capitalized Lease, (vii) reimbursement obligations with
respect to letters of credit, and (viii) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(i) through (vii) above.  For
the avoidance of doubt, notwithstanding FAS 150, the Capital Stock of Holdings
issued in connection with the Initial Capital Contribution, and all other
Capital Stock issued by Holdings thereafter having substantially the same
terms, shall not constitute Debt (including for the purpose of calculation the
covenants in Section 6.3) so long as such Capital Stock does not require
any cash payments or dividends thereon or require any mandatory redemption or
repurchase prior to the date one year after the maturity of the
Obligations.  “Debt” shall not include
obligations under the Existing Notes to the extent that the Existing Notes that
have been tendered prior to the Closing Date have been retired or repurchased
in full in accordance with the Trust Indenture Act and the terms of the
Existing Notes Indenture, and the Administrative Agent and the Arrangers in
satisfaction of the conditions precedent of this Agreement have received
evidence reasonably satisfactory to them either that (x) an amount sufficient
to redeem the remaining Existing Notes not so retired or repurchased prior to
the Closing Date has been irrevocably deposited with The Bank of New York, as
trustee under the Existing Notes Indenture, in accordance with the terms of the
Existing Note Indenture for the purpose of redeeming the remaining Existing
Notes or (y) the remaining Existing Notes have been otherwise irrevocably
called for redemption, repurchase or retirement and the amounts required for
such redemption, repurchase or retirement irrevocably committed, set aside
and/or defeased, as may be agreed upon 

 

9

 

among the
Administrative Agent, the Arrangers and the Borrower, for the purpose of
effecting such redemption, repurchase or retirement.

 

“Default” means an event which, with the lapse of time or the
giving of notice, or both, would be an Event of Default.

 

“Defaulting Lender” has the meaning specified in Section
2.4(c).

 

“Default Rate” has the meaning specified in Section 2.9.2.

 

“Deposit” has the meaning specified in Section 7.2.

 

“Designated Vessel” means (i) all vessels owned by the Borrower
or any of its Subsidiaries and documented under the federal laws of the United
States of America, (ii) any vessels, whether or not documented in compliance
with clause (i), with a book value of at least $750,000 owned as of the
Closing Date or thereafter acquired by the Borrower or any of its Subsidiaries,
and (iii) any vessels constituting Collateral.

 

“Disposition” means with respect to any Property, any sale,
lease, sale and leaseback, assignment, conveyance, transfer or other
disposition thereof; and the terms “Dispose” and “Disposed of”
shall have correlative meanings.

 

“DOL” means the United States Department of Labor.

 

“Dollars” and the sign “$” each means lawful money of the
United States of America.

 

“Domestic Lending Office” means, with respect to any Lender, the
office of such Lender specified as its “Domestic Lending Office” on Schedule 1
to the Lender Addendum of such Lender or in the Assignment and Acceptance
pursuant to which it became a Lender, or such other office of such Lender as
such Lender may from time to time specify to the Borrower and the
Administrative Agent.

 

“EBITDA” means, with respect to any period, as determined in
accordance with GAAP, the sum of the amounts for such period of Net Income, (a)
plus, without duplication and to the extent reflected as a charge in the
consolidated statement of such Net Income for such period: (i) depreciation,
depletion and amortization expense, (ii) federal, state, local and foreign
income taxes, (iii) Interest Expense, (iv) transaction fees and expenses
incurred in connection with the Transactions to the extent not exceeding in the
aggregate $17,000,000, (v) non-cash charges and losses, (vi) any amounts
included in the calculation of Net Income for amortization or non-cash charges
for the write-off or impairment of goodwill, intangibles or other purchase
accounting adjustments related to the accounting for the Transactions or other
acquisitions under GAAP (including Financial Accounting Standards No. 141 and
142), (vii) fees and expenses incurred in connection with the Bonding Agreement
and the Equipment Financing Debt, (viii) management fees paid pursuant to any
Management Agreement to the extent permitted to be paid hereunder, and (ix) Net
Income attributable to the minority equity interest in NASDI that is not owned
by the Borrower to the extent the Net

 

10

 

Income in
respect of such minority equity interest is received by the Borrower, and (b) minus,
without duplication, (i) non-cash gains. 
“EBITDA” for the Borrower and its Subsidiaries for the fiscal quarters
ended December 31, 2002, March 31, 2003, June 30, 2003 and September 30, 2003
shall be deemed to be $15,369,000, $15,164,000, $13,147,000 and $15,403,000,
respectively.

 

“Employment Agreements” means those certain employment
agreements now existing between the Borrower and each of Douglas B.  Mackie and Richard Lowry, respectively, as
the same may be amended, supplemented or otherwise modified from time to time.

 

“Environmental Claim” means all claims, however asserted, by any
Governmental Authority or other Person alleging potential or actual liability
under Environmental Laws or responsibility for violation of any Environmental
Law or for release or injury to the environment or threat to public health,
personal injury (including sickness, disease or death), property damage, natural
resources damage, or otherwise alleging liability or responsibility for damages
(punitive or otherwise), cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or other type of
relief, resulting from or based upon (a) the presence, placement, or Release
(including intentional and unintentional, negligent and non-negligent, sudden
or non-sudden, accidental or non-accidental or Releases) of any Hazardous
Material at, in, or from Property, whether or not owned by the Borrower, or (b)
any other circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.

 

“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 (“CERCLA”), 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 Substances Control Act, and
the Emergency Planning and Community Right-to-Know Act, and the Occupational
Safety and Health Act, and any analogous state or local laws.

 

“Equipment Financing Debt”  means Debt incurred pursuant to the Credit
Agreement dated December 17, 2003 between General Electric Capital Corporation
and Great Lakes to finance certain equipment of the Borrower and the Subsidiary
Guarantors existing on the Closing Date as refinanced or replaced in whole or
in part, from time to time, as permitted hereunder.

 

“Equipment Security Agreements” means the “Lender Equipment
Security Agreements” referred to and as defined in the Intercreditor Agreement.

 

“ERISA” means the Employee Retirement Income Security Act of
1974, as amended.

 

11

 

“ERISA Affiliate” means any (a) corporation which is a member of
the same controlled group of corporations (within the meaning of Section 414(b)
of the IRC) as the Borrower, (b) partnership or other trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the IRC) with the Borrower, and (c) member of the same
affiliated service group (within the meaning of Section 414(m) of the IRC) as
the Borrower, any corporation described in clause (a) above or any
partnership or trade or business described in clause (b) above.

 

“Eurodollar Office” means, with respect to any Lender, the
office of such Lender specified as its “Eurodollar Office” on Schedule 1 to the
Lender Addendum of such Lender or in the Assignment and Acceptance pursuant to
which it became a Lender (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.

 

“Eurodollar Rate (Adjusted)” means, relative to any portion of a
Loan to be made, continued, or maintained as, or converted into, a Eurodollar
Rate Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined pursuant to the following
formula:

 

	
  Eurodollar Rate

  	
  =

  	
  IBO Rate

  
	
  (Adjusted)

  	
   

  	
  1 - the Eurodollar Reserve Percentage.

  

 

“Eurodollar Rate Loan” means a Loan bearing interest, at all
times during the Interest Period applicable to such Loan, at a rate of interest
determined by reference to the Eurodollar Rate (Adjusted).

 

“Eurodollar Reserve Percentage” means, relative to each Interest
Period, a percentage (expressed as a decimal) equal to the daily average during
such Interest Period of the percentages in effect on each day of such Interest
Period, as prescribed by the Federal Reserve Board, for determining the maximum
reserve requirements applicable to “Eurocurrency liabilities” pursuant to
Regulation D or any other applicable regulation of the Federal Reserve Board which prescribes reserve requirements
applicable to “Eurocurrency liabilities” as currently defined in Regulation D.

 

“Events of Default” has the meaning specified in Section 7.1.

 

“Existing Credit Agreement” has the meaning specified in the recitals.

 

“Existing L/C’s” has the meaning specified in Section 3.11.

 

“Existing Lenders” has the meaning specified in the recitals.

 

“Existing Note Indenture” means that certain Indenture dated as
of August 19, 1998 between The Bank of New York, as trustee, and the Borrower
and certain Subsidiaries of the Borrower.

 

12

 

“Existing Notes” means the Borrower’s 11.25% Senior Subordinated
Notes due 2008.

 

“Facility” means each of (a) the Tranche B Term Commitments and
the Term Loans made thereunder (the “Tranche B Term Loan Facility”) and
(b) the Revolving Commitments and the extensions of credit made thereunder (the
“Revolving Credit Facility”).

 

“Federal Funds Rate” means, for any period, the rate set forth
in the weekly statistical release designated as H.l5(519), or any successor publication, published by the Federal
Reserve Board (including any such successor, “H.15(519)”) for such day opposite
the caption “Federal Funds (Effective).” If on any relevant day such rate is
not yet published in H.15(519),
the rate for such day will be the rate set forth in the daily statistical
release designated as the Composite 3:30 p.m. 
Quotations for U.S.  Government
Securities, or any successor publication, published by the Federal Reserve Bank
of New York (including any such successor, the “Composite 3:30 p.m.  Quotation”) for such day under the caption
“Federal Funds Effective Rate.” If on any relevant day the appropriate rate for
such previous day is not yet published in either H.15(5l9) or the Composite
3:30 p.m.  Quotation, the rate for such
day will be the arithmetic mean of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. 
(New York time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Administrative Agent.

 

“Federal Reserve Board” means the Board of Governors of the Federal
Reserve System, or any successor thereto.

 

“Financial Letter of Credit” means any standby letter of credit
issued pursuant to this Agreement, other than a Performance Letter of Credit.

 

“First Preferred Fleet Mortgages” means the “Lender First Ship Mortgage”
referred to and as defined in the Intercreditor Agreement.

 

“Fiscal Quarter” means any quarter of any Fiscal Year.

 

“Fiscal Year” means the Fiscal Year of the Loan Parties
consisting of a period of twelve consecutive months ending on December 31.

 

“Foreign Currency Contract” has the meaning specified in Section
6.1(o).

 

“GAAP” means generally accepted accounting principles set forth
in the rules, regulations, statements, opinions and pronouncements of the
American Institute of Certified Public Accountants and of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the accounting profession), except as provided in
the definitions of “Debt” and “Interest Expense” in respect of the treatment of
Capital Stock of Holdings pursuant to Statement of Financial Accounting
Standards No. 150 (“FAS 150”), which, subject to Section 1.4, are
applicable to the circumstances as of the date of determination.

 

13

 

“Governmental Authority” means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

 

“Granting Lender” has the meaning specified in Section 9.7.

 

“Great Lakes” means Great Lakes Dredge & Dock Company, a New
Jersey corporation and a wholly-owned Subsidiary of the Borrower.

 

“Guaranties” by any Person shall mean all obligations (other
than endorsements in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Debt, dividend or other obligation, of any other Person (the “Primary
Obligor”) in any manner, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person:  (i) to purchase such Debt or obligation or
any property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such Debt or obligation or (y)
to maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Debt or
obligation, or (iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the owner of such
Debt or obligation of the ability of the Primary Obligor to make payment of the
Debt or obligation, or (iv) otherwise to assure the owner of the Debt or obligation
of the Primary Obligor against loss in respect thereof.  For the purposes of all computations made
under this Agreement, a Guaranty in respect of any Debt for borrowed money
shall be deemed to be Debt equal to the principal amount of such Debt for borrowed
money which has been guaranteed (or the aggregate amount of such Debt which is
guaranteed under such Guaranty, whichever is less), and a Guaranty in respect
of any other obligation or liability or any dividend shall be deemed to be Debt
equal to the maximum aggregate amount of such obligation, liability or dividend
so guaranteed.  Guaranties shall not
include reimbursement obligations with respect to letters of credit but shall
include guaranties of reimbursement obligations with respect to such letters of
credit.

 

“Guarantors” means the collective reference to Holdings and the
Subsidiary Guarantors.

 

“Hazardous Materials” means all those substances, materials or
wastes, which are regulated by, or which may form the basis of liability under,
any Environmental Law, including all substances, materials or wastes identified
under any Environmental Law as a hazardous waste, hazardous constituent,
special waste, hazardous substance, hazardous material, or toxic substance,
pollutant, contaminant or words of similar meaning, asbestos, or petroleum,
including crude oil or any fraction thereof, and all substances identified
under CERCLA as hazardous.

 

“Holdings” has the meaning specified in the preamble.

 

“IBO Rate” means, relative to the Interest Period for each
Eurodollar Rate Loan comprising all or any part of the same Borrowing, the rate
of interest determined by

 

14

 

the
Administrative Agent to be (rounded upwards, if necessary, to the nearest 1/100
of 1%) the rate per  annum at which deposits in Dollars in
immediately available funds are offered to the Administrative Agent’s
Eurodollar Office in the interbank Eurodollar market as at or about 11:00 a.m.,
Chicago time, two (2) Business Days prior to the beginning of such Interest
Period, for delivery on the first day of such Interest Period, in an amount
approximately equal or comparable to the amount of Bank of America’s Eurodollar
Rate Loan comprising part of such Borrowing and for a period equal to such
Interest Period.

 

“Impermissible Qualification” means, relative to the opinion or
certification of any independent public accountant as to any financial
statements of the Borrower and its Subsidiaries, any qualification or exception
to such opinion or certification:  (a)
which is of a “going concern” or similar nature, (b) which relates to the
limited scope of examination of matters relevant to such financial statement,
or (c) which relates to the treatment or classification of any item in such
financial statements and which, as a condition to its removal, would require an
adjustment to such item the effect of which would be to cause any violation of Section
6.3.

 

“Indemnified Liabilities” has the meaning specified in Section
9.4.

 

“Indemnitee” has the meaning specified in Section 9.4.

 

“Initial Capital Contribution” means cash equity capital
contributions by shareholders of Holdings in an aggregate amount of not less
than $96,700,000, which amount shall subsequently be contributed by Holdings to
the capital of the Borrower.

 

“Intercreditor Agreement” means the Intercreditor Agreement of
even date herewith by and among the Administrative Agent, the Borrower, Great
Lakes, Dawson Marine Services Company, Fifty-Three Dredging Corporation, NASDI,
Travelers, the other “Sureties” and “Great Lakes Entities” party thereto and
referred to and defined therein, as amended, restated, supplemented or
otherwise modified from time to time.

 

“Interest Expense” means, for any Fiscal Quarter, the aggregate
consolidated interest expense (net of interest income) of the Borrower and its
consolidated Subsidiaries for such Fiscal Quarter, as determined in accordance
with GAAP, including (i) Commitment Fees paid or payable during such Fiscal
Quarter, (ii) all other fees paid or payable with respect to the issuance or
maintenance of any Guaranty or contingent Debt (including Letters of Credit but
excluding fees paid under the Bonding Agreement), which, in accordance with
GAAP, would be included as interest expense, (iii) net costs or benefits under
any Rate Protection Agreement (excluding the costs of any commodity hedging
transaction or foreign currency hedging transaction other than a foreign
currency hedging transaction on account of Section 6.1(o)) and (iv) the
portion of any payments made in respect of Capitalized Rentals of the Borrower
and its consolidated Subsidiaries allocable to interest expense, but excluding
any amortization of costs and expenses incurred in connection with, and
relating to, this Agreement or other financings permitted by this
Agreement.  For the avoidance of doubt,
“Interest Expense” shall not include any non-cash dividends or other non-cash
payments in respect of any

 

15

 

Capital Stock
of Holdings that is not included in the definition of “Debt” pursuant to the
last sentence of such definition.

 

“Interest Period” means, relative to any Eurodollar Rate Loan,
the period from the date on which such Eurodollar Rate Loan is made or
continued as, or converted into, a Eurodollar Rate Loan pursuant to Section
2.4 or 2.6 as the case may be, and, unless the maturity of such
Eurodollar Rate Loan is accelerated, the day which numerically corresponds to
such date one, two, three, six or (if available to all applicable Lenders) nine
or twelve months thereafter, as the Borrower may select in its relevant notice
pursuant to Section 2.4 or 2.6, as the case may be; provided
that:

 

(a)                                  the Borrower shall
not be permitted to select Interest Periods to be in effect at any one time
which have expiration dates occurring on more than ten different dates;

 

(b)                                 if there exists no
numerically corresponding day in such month, such Interest Period shall end on
the last Business Day of such month;

 

(c)                                  if such Interest
Period would otherwise end on a day which is not a Business Day, such Interest
Period shall end on the next following Business Day (unless such next following
Business Day is a Business Day falling in a new calendar month, in which case
such Interest Period shall end on the Business Day next preceding such
numerically corresponding day); and

 

(d)                                 the Borrower shall not
be permitted to select, and there shall not be applicable, any Interest Period
that would end later than the Revolving Commitment Termination Date.

 

“Investment” means, as applied to any Person, any purchase or
other acquisition by that Person of Securities or Debt, or of a beneficial
interest in Securities or Debt, of any other Person, any loan, advance (other
than deposits with financial institutions available for withdrawal on demand,
prepaid expenses, advances to employees, officers and directors and similar
items made or incurred in the ordinary course of business), capital
contribution by that Person to any other Person, and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.  The amount of any Investment
shall be determined in conformity with GAAP. 
The amount of any Investment shall be the original principal or capital
amount thereof less all returns of principal or equity thereon.

 

“IRC” means the Internal Revenue Code of 1986, as amended.

 

“IRS” means the Internal Revenue Service.

 

“Issuing Lender” means any Lender designated by the Borrower and
consenting to such Designation as an Issuing Lender, including, as of the
Closing Date, Bank of America, as specified in the preamble.

 

“LCPI” means Lehman Commercial Paper Inc.

 

16

 

“Lehman Brothers” has the meaning specified in the preamble.

 

“Lender Addendum” means, with respect to any initial Lender, a
Lender Addendum, substantially in the form of Exhibit J, to be executed
and delivered by such Lender on the Closing Date as provided in Section 9.17.

 

“Lender First Proceeds Account” has the meaning specified in the
Intercreditor Agreement.

 

“Lenders” means the institutions listed on the signature pages
hereof and each institution that shall become a party hereto pursuant to Section
9.7.

 

“Letters of Credit” has the meaning specified in Section 3.1

 

“Letter of Credit Availability” means, at any time of
determination, an amount (determined on a Dollar equivalent basis) equal to the
lesser of (a) the Revolving Commitment Amount then in effect minus the
then outstanding principal balance of the Loans and (b) $30,000,000.

 

“Letter of Credit Fee” has the meaning specified in Section
3.3.

 

“Letter of Credit Obligations” means at any time, but without
duplication, an amount (determined on a Dollar equivalent basis) equal to the
sum of (a) the aggregate amount available to be drawn under outstanding Letters
of Credit, plus (b) all amounts drawn, but not yet reimbursed, under
Letters of Credit.

 

“Letter of Credit Request” has the meaning specified in Section
3.2.

 

“Liabilities and Costs” means all liabilities, obligations,
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, reasonable out-of-pocket costs  and expenses (including,
without limitation, Attorney Costs, expert and consulting fees and costs of
investigation and feasibility studies), fines, penalties and monetary
sanctions, interest, direct or indirect, known or unknown, absolute or
contingent, past, present or future.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance for the payment
of money, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention agreement,
the interest of a lessor under a capital lease, any financial lease having
substantially the same economic effect as any of the foregoing and the filing
of any financing statement (other than a financing statement filed by a “true”
lessor pursuant to Section 9-408 of the Code or other comparable law of any
jurisdiction) naming the owner of the asset to which such Lien relates as
debtor under the Code or other comparable law of any jurisdiction but excluding
unauthorized financing statements filed under the UCC (or any similar law) with
respect to which no security interest exists in the assets described in such
financing statements.

 

17

 

“Loans” means, collectively, Revolving Loans and Tranche B Term Loans.

 

“Loan Documents” means this Agreement, the Notes, the Letters of
Credit, the Loan Party Guaranties, the Contribution Agreement, the
Intercreditor Agreement, the Collateral Documents, all material agreements,
instruments and documents which creates or perfects any of the Liens securing
the Obligations or create any obligation between any Loan Party and the
Administrative Agent or any Lender, each Notice of Borrowing, Notice of
Conversion/Continuation, Letter of Credit Request, Closing Certificate, Compliance
Certificate, and all documents and instruments that are agreed by the Borrower
and the Administrative Agent to constitute a “Loan Document” hereunder
heretofore, now or hereafter executed by or on behalf of any Loan Party and
delivered to or for the benefit of the Administrative Agent or any Lender in
connection with this Agreement, and all amendments, supplements, modifications,
renewals, replacements, restatements, consolidations, substitutions, and
extensions of any of the foregoing.

 

“Loan Party” means the Borrower, each Guarantor and each other
Affiliate of the Borrower executing a Loan Document.

 

“Loan Party Guaranties” means the Guaranties of even date
herewith executed and delivered pursuant to Section 4.1, pursuant to
which Holdings and the respective Subsidiary Guarantors fully, unconditionally
and irrevocably guaranty the prompt and complete payment and performance of the
Obligations of the Borrower, as amended, restated, supplemented or otherwise
modified from time to time.

 

“Majority Facility Lenders” means, with respect to any Facility,
the holders of more than 50% of the aggregate unpaid principal amount of
Tranche B Term Loans or the Total Revolving Extensions of Credit, as the case
may be outstanding under such Facility (or, in the case of the Revolving Credit
Facility, prior to any termination of the Revolving Commitment, the holders of
more than 50% of the aggregate amount of the Revolving Commitment).

 

“Majority Lenders” means, at any time, the Lenders having, in
the aggregate, a Percentage of more than 50% of the total Percentages of all of
the Lenders at such time.

 

“Majority Revolving Credit Facility Lenders” means the Majority
Facility Lenders in respect of the Revolving Credit Facility.

 

“Management Agreement” means any management agreement between
the Principals and the Loan Parties entered into after the Closing Date and
reasonably approved by the Administrative Agent and the Arrangers.

 

“Mandatory Prepayment Amount” has the meaning set forth in
Section 2.8.2(b).

 

18

 

“Material Adverse Effect” means (a) a material adverse effect
upon (i) the Acquisition, (ii) the condition (financial or otherwise),
operating results, assets, liabilities, business or operations of Holdings, the
Borrower and its Subsidiaries, taken as a whole, or (iii) the validity or
enforceability of any of the Loan Documents, the Liens granted to the
Administrative Agent and the Secured Parties, or the rights and remedies of the
Administrative Agent and the Lenders thereunder.

 

“MDP” has the meaning specified in the recitals.

 

“Merger Sub” means GLDD Merger Sub, Inc., a Delaware
corporation.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by the Borrower or any ERISA Affiliate.

 

“NASDI” means North American Site Developers, Inc., a
Massachusetts corporation.

 

“NASDI Acquisition Note” means, collectively, those certain
Junior Subordinated Promissory Notes dated as of April 24, 2001 in an aggregate
initial principal amount of $3,000,000 executed and delivered by NASDI Newco
(and assumed by NASDI by operation of the NASDI Merger) and made payable to
certain of the former non-management stockholders of NASDI.

 

“Net Cash Proceeds” means the gross cash proceeds received by
the Borrower and its Subsidiaries in connection with the consummation of any of
the transactions of the type resulting in a mandatory prepayment under clauses
(c), (d) or (e) of Section 2.8.1, in any such case, net of all fees,
expenses, charges, taxes, commissions and costs incurred by the Borrower or any
of its Subsidiaries in connection with the consummation of such transactions.

 

“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) which, in accordance with GAAP, would be included as net income on a
consolidated statement of income of the Borrower and its Subsidiaries for such
period.

 

“Non-Consenting Lender” has the meaning specified in Section
9.1.

 

“Note Indenture” means that certain Indenture dated as of
December22, 2003 between The Bank of New York, as trustee, and the Borrower and
the Subsidiary Guarantors, pursuant to which the Borrower has consummated the
Note Issuance.

 

“Note Indenture Obligations” means all of (a) (i) the Borrower’s
obligations under and with respect to the Note Indenture and the Note Issuance,
including, without limitation, all obligations to pay principal, interest,
premium, fees, charges, expenses and indemnities with respect thereto, and to
effect redemptions, repurchases and prepayments with respect thereto, in any
case, whether fixed, contingent, matured or unmatured and (ii) the Borrower’s
Subsidiaries’ guaranty obligations with

 

19

 

respect to the
obligations of the Borrower described in clause (a)(i), or (b) the
Borrower’s obligations under and with respect to such other note indenture and
note issuance, the proceeds of which are used to refinance the Note Issuance,
(i) pursuant to a note indenture containing covenants, events of default and
other terms less restrictive as to the Borrower and its Subsidiaries than those
set forth in this Agreement, not including any maintenance covenants, and which
is otherwise customary, including, without limitation, the subordination
provisions which shall be satisfactory to the Administrative Agent at the
Arrangers thereof, for senior subordinated notes issued at such time under
comparable circumstances by issuers of similar credit quality, (ii) the initial
scheduled principal repayment date of such note issuance shall be at least one
year and one day beyond the Term Loan B Maturity Date, (iii) the interest rate
applicable to such note issuance shall be a rate that is lower than the senior
subordinated notes issued by the Borrower pursuant to the Note Issuance, (iv)
such note issuance shall not require the consent of any holder thereof with
respect to any amendment or other modification of any Loan Document, (v) the
note indenture with respect to such note issuance shall otherwise contain terms
and conditions reasonably satisfactory to the Majority Lenders.

 

“Note Issuance” means the issuance on December 22, 2003 by the
Borrower of $175,000,000 in original aggregate principal amount of its 7 3/4%
Senior Subordinated Notes due December 15, 2013 pursuant to the Note Indenture.

 

“Note Pledge Agreement” means the “Lender Pledge Agreement”
referred to and as defined in the Intercreditor Agreement.

 

“Notes” means the promissory notes made by the Borrower and
delivered to each Lender evidencing such Lender’s Loans and participations in
Letters of Credit.

 

“Notice of Borrowing” has the meaning specified in Section
2.4.

 

“Obligations” means all loans, advances, debts, liabilities,
obligations, covenants and duties of any kind or nature, present or future,
owing by any Loan Party to any Lender, the Administrative Agent, or any
Affiliate of any Lender or the Administrative Agent, or Person entitled to
indemnification pursuant to this Agreement, whether evidenced by any note,
guaranty or other instrument, arising under this Agreement or under any other
Loan Document or any Rate Protection Agreement between any Loan Party and a
Lender or any Person that was an Affiliate of a Lender at the time of the entry
into of such Rate Protection Agreement, whether or not for the payment of
money, whether arising by reason of an extension of credit, loan, guaranty,
indemnification, interest rate hedging transaction, commodity hedging
transaction, foreign currency hedging transaction or in any other manner,
whether direct or indirect (including those acquired by assignment), absolute
or contingent, due or to become due, now existing or hereafter arising and
however acquired.  The term includes,
without limitation, all interest (including, without limitation, interest
accruing after the maturity of the Loans and Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), charges, expenses, fees, Attorney Costs

 

20

 

and any other
sum chargeable to any Loan Party under this Agreement or any other Loan
Document.  Unless otherwise specified in
this Agreement, any determination of the amount of outstanding Obligations
shall be made on a Dollar equivalent basis.

 

“OLV” has the meaning specified in Section 6.1(p).

 

“Other Taxes” has the meaning specified in Section 2.16(b).

 

“Participant” has the meaning specified in Section 9.7.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Percentage” means, relative to any Lender, its percentage of
the Commitments as set forth on Schedule 1 to the Lender Addendum of such
Lender, or if such Lender has entered into an Assignment and Acceptance, the
percentage set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 9.7(d).

 

“Performance Letter of Credit” means any standby letter of
credit issued pursuant to this Agreement to assure completion of performance of
a nonfinancial or commercial obligation of Borrower or any of its Subsidiaries,
until such time, if any, as such letter of credit is recharacterized as
relating to a financial obligation of the Borrower or such Subsidiaries.

 

“Permit” means any permit, approval, authorization, license,
variance, or permission required from any Governmental Authority under any
Applicable Law.

 

“Permitted Business Acquisition” means any acquisition by the
Borrower or any of its Subsidiaries of all or any part of the assets, shares or
other equity interests in a corporation or other Person engaged in the same
business or a business reasonably related, complimentary or incidental to the
business of the Borrower or any of its Subsidiaries but only if no Default or
Event of Default shall have occurred or be continuing immediately prior to such
acquisition or after giving effect thereto.

 

“Permitted Capital Stock Issuance” means (i) sales and issuances
of the Capital Stock of Holdings to officers, directors and employees of the
Borrower and its Subsidiaries not exceeding in the aggregate for all such
issuances $5,000,000, (ii) sales and issuances of the Capital Stock of Holdings
to the Principals, and (iii) sales and issuances of the Capital Stock of
Holdings to the seller in any Permitted Business Acquisition not exceeding in
the aggregate for all such issuances $1,000,000.

 

“Permitted Disposition” means any Disposition of any assets of
the Borrower or any of its Subsidiaries, whether in a single transaction or a
series of related transactions, to any Person, but only if

 

(a)                                  such Disposition of
property which is not Collateral and which is (i) made in the ordinary course
of business of the Borrower or such Subsidiary, (ii) is a Disposition from (A)
the Borrower to any of its Subsidiary Guarantors or

 

21

 

from a Subsidiary Guarantor to the Borrower or to another Subsidiary
Guarantor, or (B) (x) the Borrower or any Subsidiary Guarantor to a Subsidiary
of the Borrower which is not a Subsidiary Guarantor, or (y) from a Subsidiary
of the Borrower which is not a Subsidiary Guarantor to any other such
Subsidiary, provided that, in the case of clause (B)(x), the aggregate amount
of all such Permitted Dispositions (other than renewals and extensions of the
leases and subleases set forth on Schedule V) made after the Closing Date does
not exceed $15,000,000 (net of the fair market value of any property received
in exchange for such Dispositions), (iii) is a sale, lease or transfer to
another Person of assets determined by the Borrower or such Subsidiary, in its
reasonable judgment, to be no longer useful or necessary in the operations or
businesses of the Borrower or such Subsidiaries (it being understood that
committing a vessel and related equipment of the Borrower or any of its Subsidiaries
to the performance of a contract to which it is a party shall not constitute a
lease of such vessel and related equipment), or (iv) is a Disposition of any
property or assets that secure any Indebtedness permitted by Section 6.2(i),
including any Recovery Event with respect to such property or assets;

 

(b)                                 such Disposition is
made in connection with a sale and leaseback transaction involving the
Disposition of capital assets (other than Collateral, unless the disposition of
such Collateral also complies with clause (iii) of subparagraph (c)
of this definition) of the Borrower or any of its Subsidiaries to a Person
other than the Borrower or any of its Subsidiaries and (i) such Disposition of
such capital assets is for an amount not less than the fair market value
thereof (as determined by the Borrower or such Subsidiary in its reasonable
judgment), (ii) no Default or Event of Default shall have occurred or be
continuing either immediately prior to such disposition or after giving effect
thereto, (iii) the rental payments of the lease relative to such transaction
shall not be greater than the fair market rental value (as determined by the
Borrower or such Subsidiary in its reasonable judgment) for the assets subject
to such lease, and (iv) 100% of the consideration for such Disposition shall be
cash; and

 

(c)                                  such Disposition is
made in connection with the Disposition of any assets of the Borrower or its
Subsidiaries other than those of the type described in clauses (a) and (b)
above and (i) such sale or disposition of such assets is for an amount not less
than the fair market value thereof; as determined by the Borrower or such
Subsidiary in its reasonable judgment, (ii) no Event of Default shall have
occurred and be continuing either immediately prior to such disposition or
after giving effect thereto and (iii) (A) prior to or simultaneously with such
disposition, the Borrower shall have provided, or caused one or more of its
Subsidiaries to provide, Collateral (or substitute Collateral) of reasonably equal
or greater (but if such vessel is greater, then such excess shall carry-over to
any future substitution and be credited against such future substitution) value
to that of the property subject to such disposition, such Collateral (or
substitute Collateral) is otherwise reasonably acceptable to the Administrative
Agent, and such Collateral (or substitute Collateral) and the Administrative
Agent’s substitute Lien thereon are subject to documentation reasonably
satisfactory to the Administrative Agent

 

22

 

(provided that such documentation shall be satisfactory if
substantially similar to the applicable Collateral Documents executed on the
Closing Date), including, without limitation, any consents required under the
Bonding Agreement or Intercreditor Agreement, or (B) at least seventy-five
percent (75%) of the consideration therefor shall be in cash and the Net Cash
Proceeds therefrom shall be payable to the Borrower or its Subsidiaries at the
time of the consummation of such Disposition, the Borrower shall have
concurrently with the consummation of such Disposition prepaid the Tranche B
Term Loans (or permanently reduced the Revolving Credit Commitments) in an
amount equal to such cash (except that the Borrower shall not be required to
make any such prepayment to the extent that such Net Cash Proceeds do not
exceed $100,000 in any Fiscal Year), and the aggregate of all non-cash proceeds
received by the Borrower and its Subsidiaries after the Closing Date in consideration
for all dispositions pursuant to this clause (c) does not exceed
$7,500,000 plus the amount of cash subsequently received in respect of
such non-cash proceeds that are applied to the Tranche B Term Loans as a
prepayment (or permanently reduce the Revolving Credit Commitments).

 

“Person” means and includes any person, employee, individual,
sole proprietorship, partnership, joint venture, trust, unincorporated
organization, association, limited liability company, corporation, institution,
entity, party, Governmental Authority or a government or any political
subdivision or agency thereof.

 

“Plan” means (i) an employee benefit plan defined in Section
3(3) of ERISA in respect of which the Borrower is, or within the immediately
preceding six (6) years was, an “employer” as defined in Section 3(5) of ERISA
or (ii) a defined benefit plan as defined in Section 3(35) of ERISA (other than
a Multiemployer Plan) in respect of which the Borrower or any ERISA Affiliate
is, or within the immediately preceding six (6) years was, an “employer” as
defined in Section 3(5) of ERISA.

 

“Prepayment Option Notice” has the meaning specified in Section
2.8.2(b).

 

“Pricing Period” means the period commencing on the forty-fifth
(45th) day after the end of a Fiscal Quarter (or in the case of the last Fiscal
Quarter of the Fiscal Year, commencing on the ninetieth (90th) day after the
end of such Fiscal Quarter) and ending on the forty-fourth (44th) day after the
end of the succeeding Fiscal Quarter (unless such succeeding Fiscal Quarter is
the last Fiscal Quarter of the Fiscal Year, in which case such period shall end
on the eighty-ninth (89th) date after the end of such Fiscal Quarter).

 

“Primary Obligor” has the meaning specified in the definition of
“Guaranties.”

 

“Principals” means the collective reference to MDP, Affiliates
of MDP that are stockholders of Holdings as of the Closing Date, and MDP and
their respective Control Investment Affiliates.

 

23

 

“Proceeds Agent” has the meaning specified in the Intercreditor
Agreement.

 

“Proceeds Agent Agreement” has the meaning specified in the
Intercreditor Agreement.

 

“Property” means any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed, plant, building, facility,
structure, vessel, underground storage tank, equipment or unit, whether
tangible or intangible, or other asset owned, leased or operated by the
Borrower or any of its Subsidiaries.

 

“Proposed Change” has the meaning specified in Section 9.1.

 

“Rate Protection Agreement” means any interest rate hedging
transaction, commodity hedging transaction, foreign currency hedging
transaction or similar arrangement entered into pursuant to an agreement in
form and substance (including amounts subject to such agreement) reasonably
satisfactory to the Administrative Agent.

 

“Receivables Security Agreements” means the “Lender Receivables
Security Agreement” referred to in and as defined in the Intercreditor
Agreement.

 

“Recovery Event” means any settlement of or payment in respect
of any property or casualty insurance claim, any condemnation proceeding or
requisition of assets relating to any asset of Holdings, the Borrower or any of
its Subsidiaries, but excluding any settlement of payment in respect of any
property or casualty insurance claim, any condemnation proceeding or
requisition of assets relating to any property that is the subject of Liens
permitted under Section 6.2(h) (other than the Liens securing the Obligations
and the Liens of the Bonding Company securing the obligations under the Bonding
Agreement) securing Indebtedness permitted under Section 6.2(i).

 

“Refinancing” means the repayment in full of the Borrower’s
obligations under and with respect to the Existing Credit Agreement, Existing
Notes and the NASDI Note, and the termination of all credit facilities or
commitments, if any, with respect thereto and, if applicable, related liens and
other security granted in connection therewith (except for the continuation of
UCC financing statements for the benefit of the Administrative Agent and the
Lenders and except as otherwise provided in Section 3.11).

 

“Register” has the meaning specified in Section 9.7.

 

“Reimbursement Obligation” has the meaning specified in Section
3.5.

 

“Reinvestment Deferred Amount” means, with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received by Holdings, the
Borrower or any of its Subsidiaries in connection therewith that are not
applied to prepay the Tranche B Term Loans or reduce the Revolving Commitments
pursuant to Section 2.8.1(c) as a result of the delivery of a Reinvestment
Notice.

 

24

 

“Reinvestment Event” means any Disposition or Recovery Event in
respect of which the Borrower has delivered a Reinvestment Notice.

 

“Reinvestment Notice” means, a written notice executed by the
chief financial officer or treasurer of the Borrower stating that no Default or
Event of Default has occurred and is continuing and that the Borrower (directly
or indirectly through a Subsidiary) intends and expects to use all or a
specified portion of the Net Cash Proceeds of a Disposition or Recovery Event
to acquire, improve, construct, repair assets used or useful in the business of
the Borrower and its Subsidiaries.

 

“Reinvestment Prepayment Amount” means, with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto less
any amount expended prior to the relevant Reinvestment Prepayment Date to
acquire assets used or useful in the business of the Borrower or any of its
Subsidiaries.

 

“Reinvestment Prepayment Date” means, with respect to any
Reinvestment Event, the earlier of (a) the date occurring 270 days after such
Reinvestment Event and (b) the date on which the Borrower shall have determined
not to, or shall have otherwise ceased to, acquire assets useful in the
Borrower’s business with all or any portion of the relevant Reinvestment
Deferred Amount.

 

“Related Documents” means the Note Indenture, the Acquisition
Agreement and the Bonding Agreement and the lease agreement in respect of the
Equipment Financing Debt.

 

“Related Fund” means, with respect to any Lender, any fund that
(x) invests in commercial loans and (y) is managed or advised by the same
investment advisor as such Lender, by such Lender or an Affiliate of such
Lender.

 

“Release” means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment.

 

“Rentals” means and includes as of the date of any determination
thereof all fixed rents (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property and including all payments on Capital Leases) payable by the Borrower
or a Subsidiary, as lessee or sublessee under a lease of real or personal
property, but shall be exclusive of any amounts required to be paid by the
Borrower or a Subsidiary (whether designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes and similar charges.  Fixed rents under any so-called “percentage
leases” shall be computed not only on the basis of the minimum rents, if any,
required to be paid by the lessee but also on the basis of any additional rents
whether based on sales volume or gross revenues or otherwise.  With respect to leases providing for period
of free rent or discounted rent, Rentals means the amount of the actual cash
payments required under the lease, even though accounting convention may
require that the rents be accrued on an amortized basis over the term of the
lease.

 

25

 

“Reportable Event” means any of the events described in Section
4043 of ERISA other than an event with respect to which the notice requirements
have been waived by regulation.

 

“Required Prepayment Lenders” means the Majority Facility
Lenders in respect of each Facility. 

 

“Restricted Payments” means (i) any dividend or other
distribution on account of any shares of any class of Capital Stock of Holdings
or the Borrower or any Subsidiary of the Borrower that is not a wholly-owned
Subsidiary of the Borrower (including, without limitation, any class of
preferred stock) now or hereafter outstanding (except a dividend payable solely
in shares or any warrants, options or other rights with respect thereto or
rights to acquire shares, of common stock of Holdings or the Borrower or any
Subsidiary of the Borrower), including, without limitation, all payments which
are from time to time due and owing by Holdings or the Borrower pursuant to or
with respect to the Acquisition Agreement (other than for indemnification or
expense reimbursement pursuant to the terms thereof), (ii) any redemption,
retirement, repurchase, sinking fund or similar payment, purchase or other
acquisition for value of any shares of any class of Capital Stock of Holdings
or the Borrower now or hereafter outstanding or any warrants, options or other
rights with respect thereto, (iii) any voluntary or mandatory redemption,
repurchase, retirement, sinking fund payment or other payment of principal with
respect to the Note Indenture Obligations, or any voluntary payment or other
prepayment of interest with respect to the Note Indenture Obligations, (iv) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of any outstanding warrants, options or other rights to acquire
shares of any class of Capital Stock of Holdings or the Borrower or any of
their respective Subsidiaries, (v) any voluntary prepayment, redemption, or
repurchase or other voluntary payment of principal with respect to the Bonding
Agreement, or any voluntary payment or other prepayment of interest with
respect thereto, or (vi) the setting aside of funds for any of the foregoing.

 

“Revolving Commitment” has the meaning specified in Section
2.1.1.

 

“Revolving Commitment Amount” means $60,000,000, as the same may
be reduced after the Closing Date pursuant to Section 2.2.

 

“Revolving Commitment Termination Date” means the fifth anniversary
of the Closing Date or the earlier date of termination in whole of all of the
Revolving Commitments pursuant to Section 2.2 or 7.2.

 

“Revolving Credit Facility” has the meaning specified in the
definition of “Facility”.

 

“Revolving Credit Percentage” means, relative to any Revolving
Lender, its percentage of the Revolving Commitment Amount as set forth on
Schedule 1 to the Lender Addendum of such Lender, or if such Revolving Lender
has entered into an Assignment and Acceptance, the percentage set forth for
such Revolving Lender in the Register maintained pursuant to Section 9.7(d)
(or, at any time after the Revolving

 

26

 

Commitments
shall have expired or terminated, the percentage which the aggregate amount of
such Lender’s Revolving Extensions of Credit then outstanding constitutes the
amount of the Total Revolving Extensions of Credit then outstanding).

 

“Revolving Extensions of Credit” means, with respect to any
Revolving  Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Revolving Loans
made by such Lender then outstanding, and (b) such Lender’s Revolving Credit
Percentage of the Letter of Credit Obligations then outstanding.

 

“Revolving Lender” means each Lender that has a Revolving
Commitment or is the holder of Revolving Loans.

 

“Revolving Loan” has the meaning specified in Section 2.1.1.

 

“Second Preferred Fleet Mortgages” means the “Lender Second Ship
Mortgage” referred to and as defined in the Intercreditor Agreement.

 

“Secured Parties” means, collectively, the Administrative Agent,
the Issuing Lenders, the Lenders and each other Person to whom any Obligations
are owing, including, without limitation, each Person entitled to
indemnification pursuant to Section 9.10.

 

“Security” has the meaning specified in Section 2(1) of the 1933
Act.

 

“Senior Debt” means Total Funded Debt consisting of (i) the
outstanding principal balance of the Obligations (other than the aggregate
undrawn face amount of Letters of Credit), (ii) Capitalized Rentals and (iii)
and all other Total Funded Debt owing by the Borrower or any of its
Subsidiaries which is secured in whole or in part by a Lien on any property of
the Borrower or any of its Subsidiaries. 
“Senior Debt” shall be calculated net of cash and Cash Equivalents held
by the Borrower and its Subsidiaries in the United States, other than cash and
Cash Equivalents held for the purpose of the redemption, repurchase or
retirement of the Existing Notes (to the extent such Existing Notes are not
included in the definition of “Debt”).

 

“Senior Leverage Ratio” has the meaning specified in Section
6.3(c)

 

“Solvent” means when used with respect to any Person that (a)
the fair value of all its assets is in excess of the total amount of its debts
(including contingent liabilities) determined on a going concern basis; (b) it
is able to pay its matured debts and its other debts as they mature in the
ordinary course of business; (c) it does not have unreasonably small capital
for the business in which it is engaged or for any business or transaction in
which it is about to engage; and (d) it is not “insolvent” as such term is
defined in Section 101(32) of the Bankruptcy Code.

 

“SPC” has the meaning specified in Section 9.7.

 

“Subsidiary” of any Person means any corporation, partnership,
limited liability company or other association or entity of which more than
fifty percent (50%) of

 

27

 

the Voting
Stock of such entity is at any time, directly or indirectly, owned by such
Person.

 

“Subsidiary Guarantors” means each domestic Subsidiary of the
Borrower and each other domestic Subsidiary of Holdings which executes and
delivers a Loan Party Guaranty in connection with this Agreement.

 

“Tax Sharing Agreement” means any tax sharing agreement entered
into by the Loan Parties after the Closing Date and reasonably approved by the
Administrative Agent and the Arrangers.

 

“Taxes” has the meaning specified in Section 2.16(a).

 

“Termination Event” means (i) a Reportable Event with respect to
any  Plan; (ii) the withdrawal of the
Borrower or any ERISA Affiliate from a Plan during a plan year in which the
Borrower or such ERISA Affiliate was a “substantial employer” as defined in
Section 400l(a)(2) of ERISA; (iii) the imposition of an obligation on the
Borrower or any ERISA Affiliate under Section 4041 of ERISA to provide affected
parties written notice of intent to terminate a Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Plan; (v) any event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; or (vi) the partial or
complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan.

 

“Total Funded Debt” of any Person means as of any date of
determination, all Debt of the Borrower and its consolidated Subsidiaries
which, in accordance with GAAP, should be included as liabilities in the
consolidated balance sheet of the Borrower and its Subsidiaries at such time
(excluding, however, the undrawn face amount of all Letter of Credit and all
Capitalized Rentals due within one year from the date of determination hereunder).  “Total Funded Debt,” when used with respect
to the Borrower, shall mean the aggregate amount of all such Total Funded Debt
of the Borrower and its Subsidiaries determined on a consolidated basis in
accordance with GAAP (eliminating intercompany items).  “Total Funded Debt” shall be calculated net
of cash and Cash Equivalents held by the Borrower and its Subsidiaries in the
United States, other than cash and Cash Equivalents held for the purpose of the
redemption, repurchase or retirement of the Existing Notes (to the extent such
Existing Notes are not included in the definition of “Debt”).

 

“Total Leverage Ratio” has the meaning specified in Section
6.3(b).  

 

“Total Revolving Extensions of Credit” means at any time the
aggregate amount of Revolving Extensions of Credit of the Revolving Lenders at
such time.

 

“Tranche B Term Commitment” has the meaning specified in Section
2.1.2.

 

28

 

“Tranche B Term Loan Facility” has the meaning specified in the
definition of “Facility.”

 

“Tranche B Term Loan Maturity Date” means the seventh
anniversary of the Closing Date.

 

“Tranche B Term Loans” has the meaning specified in Section
2.1.2.

 

“Tranche B Term Loan Lenders” means each Lender that has a
Tranche B Term Commitment or is the holder of a Tranche B Term Loan.

 

“Transaction Documents” means the Loan Documents and all
material agreements, instruments and documents executed and delivered by the
Borrower which govern or effect the consummation of the Acquisition, the
Initial Capital Contribution, the Notes Issuance and related transactions
contemplated therein, including, without limitation, the Acquisition Agreement
and the Note Indenture.

 

“Transactions” means, collectively, the Acquisition, the Notes
Issuance, the Initial Capital Contribution, the Refinancing, the execution and
delivery of the Loan Documents, the making of the initial Loans, the issuance
of the initial Letters of Credit if any on the Closing Date, the granting of
Liens to the Administrative Agent pursuant to the terms of the Loan Documents,
and the application of all proceeds of any of the foregoing.

 

“Travelers” means, collectively, Travelers Casualty and Surety
Company and Travelers Casualty and Surety Company of America, together with
their successors and assigns.

 

“Travelers Agreement” means, collectively, the “Bonding
Agreement” and “Underwriting Documents” referred to and as respectively defined
in the Intercreditor Agreement.

 

“type” has the meaning specified in Section 2.3.

 

“Voting Stock” means Securities or other equity interests of any
class or classes of a corporation, partnership, limited liability company or
other association or entity the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the board of directors,
managers, general partners, managing members or Persons performing similar
functions.

 

“Withholding Forms” has the meaning specified in Section 2.16.

 

* * * * *

 

29

 

SCHEDULE II

 

EXISTING LETTERS OF CREDIT

 

 

	
  L/C #

  	
   

  	
  Issuer

  	
   

  	
  Date

  	
   

  	
  Expiry

  Amount

  	
   

  	
  Face

  Beneficiary

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE III

 

LIST OF CLOSING DOCUMENTS

 

[TO COME]

 

 

TABLE OF CONTENTS

 

	
  ARTICLE
  I.

  	
  DEFINITIONS
  AND INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 1.1.

  	
  Defined Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 1.2.

  	
  Use of Defined Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 1.3.

  	
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 1.4.

  	
  Accounting Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  II.

  	
  AMOUNT
  AND TERM OF COMMITMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.1.

  	
  Commitments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SECTION 2.1.1.

  	
  Revolving Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SECTION 2.1.2.

  	
  Tranche B Term Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION
  2.2.

  	
  Reduction
  of Revolving Commitment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.3.

  	
  Various Types of Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.4.

  	
  Borrowing Procedures

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.5.

  	
  Evidence of Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION
  2.6.

  	
  Continuation/Conversion
  Procedures

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.7.

  	
  Pro Rata Treatment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.8.

  	
  Principal Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SECTION 2.8.1.

  	
  Repayments and Prepayments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SECTION 2.8.2.

  	
  Application

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.9.

  	
  Interest Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SECTION 2.9.1.

  	
  Rates

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SECTION 2.9.2.

  	
  Default Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SECTION 2.9.3.

  	
  Payment Dates

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SECTION 2.9.4.

  	
  Rate Determinations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.10.

  	
  Increased Costs and Reduction of Returns

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.11.

  	
  Funding Losses

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.12.

  	
  Illegality

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.13.

  	
  Right of the Lenders to Fund through
  Other Offices

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.14.

  	
  Commitment Fee and Fee Obligations
  Generally

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.15.

  	
  Payments and Computations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.16.

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.17.

  	
  Sharing of Payments, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.18.

  	
  Warranty

  	
   

  
								

 

i

 

	
   

  	
  SECTION 2.19.

  	
  Conditions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.20.

  	
  All Obligations Secured

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.21.

  	
  Use of Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.22.

  	
  Assignment of Commitments Under Certain
  Circumstances

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  LETTERS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.1.

  	
  Commitment for Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.2.

  	
  Issuance of Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.4.

  	
  Obligations of the Lenders to an Issuing
  Lender under a Letter of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.5.

  	
  Reimbursement Obligation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.6.

  	
  Representatives of Beneficiaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.7.

  	
  Responsibility of the Administrative Agent,
  the Issuing Lenders and the Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.8.

  	
  Modifications to Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.9.

  	
  Uniform Customs and Practice for
  Documentary Credits

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.10.

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.11.

  	
  Transitional Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.12.

  	
  Currency Equivalents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IV.

  	
  CONDITIONS
  OF LENDING

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.1.

  	
  Conditions Precedent to Initial Borrowing
  and Initial Issuance of Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.2.

  	
  Conditions Precedent to Each Borrowing and
  Each Issuance of a Letter of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.3.

  	
  No Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  V.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 5.1.

  	
  Representations and Warranties of the Loan
  Parties

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 6.1.

  	
  Affirmative Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 6.2.

  	
  Negative Covenants

  	
   

  

 

ii

 

	
   

  	
  SECTION 6.3.

  	
  Financial Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 6.4.

  	
  Financial Reporting

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  EVENTS OF DEFAULT; REMEDIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.1.

  	
  Events of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.2.

  	
  Acceleration

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.3.

  	
  Injunctive Relief

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.4.

  	
  Allocation Among Secured Parties

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  THE ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.1.

  	
  Appointment and Authorization

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.2.

  	
  Delegation of Duties

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.3.

  	
  Liability of Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.4.

  	
  Reliance by Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.5.

  	
  Notice of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.6.

  	
  Credit Decision

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.7.

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.8.

  	
  Administrative Agent in Individual Capacity

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.9.

  	
  Successor Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.10.

  	
  Collateral Matters; Release of Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.11.

  	
  Intercreditor Agreement and other Loan
  Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IX.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.1.

  	
  Amendments, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.2.

  	
  Notices, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.3.

  	
  No Waiver; Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.4.

  	
  Costs and Expenses; Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.5.

  	
  Setoff

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.6.

  	
  Effectiveness

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.7.

  	
  Successors and Assigns; Participations and
  Assignments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.8.

  	
  Survival of Warranties and Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.9.

  	
  Marshalling; Recourse to Security; Payments
  Set Aside

  	
   

  

 

iii

 

	
   

  	
  SECTION 9.10.

  	
  Submission To Jurisdiction; Waivers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.11.

  	
  Performance of Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.12.

  	
  Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.13.

  	
  GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.14.

  	
  Execution in Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.15.

  	
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.16.

  	
  Delivery of Lender Addenda

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.17.

  	
  Non-Confidentiality of Tax Structure

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedules to
  Credit Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  I

  	
  -

  	
  Definitions

  	
   

  
	
  Schedule
  II

  	
  -

  	
  Existing
  Letters of Credit

  	
   

  
	
  Schedule
  III

  	
  -

  	
  Closing
  Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  5.1(g)

  	
   

  	
  -

  	
  Existing Liens

  	
   

  
	
  Schedule
  5.1(i)

  	
   

  	
  -

  	
  Litigation

  	
   

  
	
  Schedule 5.1(k)

  	
   

  	
  -

  	
  ERISA Plans

  	
   

  
	
  Schedule 5.1(1)

  	
   

  	
  -

  	
  Environmental Matters

  	
   

  
	
  Schedule
  5.1(r)(i)

  	
   

  	
  -

  	
  Subsidiaries

  	
   

  
	
  Schedule
  5.1(r)(ii)

  	
   

  	
  -

  	
  Ownership of Borrower’s Equity

  	
   

  
	
  Schedule
  5.1(t)

  	
   

  	
  -

  	
  Insurance Policies

  	
   

  
	
  Schedule
  6.2(b)(i)

  	
   

  	
  -

  	
  Existing Investments

  	
   

  
	
  Schedule
  6.2(d)

  	
   

  	
  -

  	
  Transactions with Affiliates

  	
   

  
	
  Schedule
  6.2(e)

  	
   

  	
  -

  	
  Existing Restrictive Agreements

  	
   

  
	
  Schedule
  6.2(f)

  	
   

  	
  -

  	
  Existing Guaranties

  	
   

  
	
  Schedule
  6.2(i)

  	
   

  	
  -

  	
  Existing Debt

  	
   

  
	
  Schedule
  6.3(a)

  	
   

  	
  -

  	
  Certain Vessels

  	
   

  

 

iv

 

	
  Exhibits to
  Credit Agreement

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of
  Assignment and Acceptance

  	
   

  
	
  Exhibit B

  	
  -

  	
  Form of
  Notice of Borrowing

  	
   

  
	
  Exhibit C

  	
  -

  	
  Form of
  Notice of Conversion/Continuation

  	
   

  
	
  Exhibit D

  	
  -

  	
  Form of
  Letter of Credit Request

  	
   

  
	
  Exhibit E

  	
  -

  	
  Form of
  Closing Certificate

  	
   

  
	
  Exhibit F-1

  	
  -

  	
  Form of
  Opinion of Kirkland & Ellis LLP

  	
   

  
	
  Exhibit F-2

  	
  -

  	
  Form of
  Opinion of General Counsel to the Borrower

  	
   

  
	
  Exhibit G

  	
  -

  	
  Form of
  Compliance Certificate

  	
   

  
	
  Exhibit H

  	
  -

  	
  Form of
  Prepayment Option Notice

  	
   

  
	
  Exhibit I

  	
  -

  	
  Form of
  Lender Addendum

  	
   

  
	
  Exhibit J

  	
  -

  	
  Form of
  Intercreditor Agreement

  	
   

  
					

 

vExhibit 10.2

 

CREDIT AGREEMENT

 

 

Dated as of December 17, 2003

 

 

Between

 

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

 

And

 

 

GREAT LAKES DREDGE & DOCK COMPANY

 

 

TABLE OF CONTENTS

 

	
  ARTICLE
  1       DEFINITIONS AND ACCOUNTING TERMS

  	
   

  
	
  Section 1.1.

  	
  Certain Defined Terms.

  	
   

  
	
  Section 1.2.

  	
  Computation of Time Periods.

  	
   

  
	
  Section 1.3.

  	
  Accounting Terms.

  	
   

  
	
  ARTICLE
  2       CREDIT FACILITIES; DRAWDOWN
  PROCEDURES AND REPAYMENT PROVISIONS

  	
   

  
	
  Section 2.1.

  	
  The Loan.

  	
   

  
	
  Section 2.2.

  	
  General Provisions.

  	
   

  
	
  Section 2.3.

  	
  Changes in Law, Funding Losses, etc.

  	
   

  
	
  Section 2.4.

  	
  Payments and Computations.

  	
   

  
	
  Section 2.5.

  	
  Setoff.

  	
   

  
	
  ARTICLE
  3       SECURITY

  	
   

  
	
  Section 3.1.

  	
  Security Documents.

  	
   

  
	
  Section 3.2.

  	
  Release of Security.

  	
   

  
	
  Section 3.3.

  	
  Exercise of Powers of Attorney.

  	
   

  
	
  ARTICLE
  4       CONDITIONS TO FUNDING

  	
   

  
	
  Section 4.1.

  	
  Conditions Precedent to Initial Funding.

  	
   

  
	
  ARTICLE
  5       REPRESENTATIONS, WARRANTIES AND
  COVENANTS

  	
   

  
	
  Section 5.1.

  	
  Representations and Warranties.

  	
   

  
	
  Section 5.2.

  	
  Affirmative Covenants.

  	
   

  
	
  Section 5.3.

  	
  Negative Covenants.

  	
   

  
	
  ARTICLE
  6       EVENTS OF DEFAULT; REMEDIES

  	
   

  
	
  Section 6.1.

  	
  Events of Default, Acceleration.

  	
   

  
	
  Section 6.2.

  	
  Additional Rights.

  	
   

  
	
  ARTICLE
  7       MISCELLANEOUS

  	
   

  
	
  Section 7.1.

  	
  Amendments, etc.

  	
   

  
	
  Section 7.2.

  	
  Notices, etc.

  	
   

  
	
  Section 7.3.

  	
  Governing Law.

  	
   

  
	
  Section 7.4.

  	
  Service of Process and Consent to
  Jurisdiction; Waiver of Venue.

  	
   

  
	
  Section 7.5.

  	
  No Remedy Exclusive.

  	
   

  

 

i

 

	
  Section 7.6.

  	
  Payment of Costs.

  	
   

  
	
  Section 7.7.

  	
  Further Assurances.

  	
   

  
	
  Section 7.8.

  	
  Counterparts.

  	
   

  
	
  Section 7.9.

  	
  Headings.

  	
   

  
	
  Section 7.10.

  	
  Severability.

  	
   

  
	
  Section 7.11.

  	
  Survival.

  	
   

  
	
  Section 7.12.

  	
  WAIVER OF TRIAL BY JURY.

  	
   

  
	
  Section 7.13.

  	
  Assignment by The Lender.

  	
   

  
	
  Section 7.14.

  	
  Confidentiality.

  	
   

  

 

 

	
  EXHIBIT A

  	
  –

  	
  Description
  of Vessels

  
	
  EXHIBIT B

  	
  –

  	
  Form of Secured Promissory Note

  
	
  EXHIBIT C

  	
  –

  	
  Form of First Preferred Fleet Mortgage

  
	
  EXHIBIT D

  	
  –

  	
  Form of Assignment of Earnings and Charterparties

  
	
  EXHIBIT E

  	
  –

  	
  Form of Assignment of Insurances

  
	
   

  	
   

  	
   

  
	
  Schedule 5.2(l)

  	
  –

  	
  Insurance

  
	
   

  	
   

  	
   

  
	
  APPENDIX A

  	
  –

  	
  Form of Notice of Drawing

  

 

ii

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”),
dated as of December 17, 2003, is made by and between GENERAL ELECTRIC
CAPITAL CORPORATION, a corporation duly organized and validly existing under
the laws of the State of Delaware, and GREAT LAKES DREDGE & DOCK COMPANY, a
corporation duly organized and validly existing under the laws of the State of
New Jersey.

 

RECITALS

 

WHEREAS, the Borrower has requested that the
Lender make available to the Borrower a term loan in the principal amount of
$23,400,000, the proceeds of which will be used by the Borrower to finance
and/or refinance a portion of its cost to acquire the Vessels from BCC
Equipment Leasing Corporation, a Delaware corporation (“Seller”), to pay
certain costs incident hereto and thereto and to provide additional working capital;
and

 

WHEREAS, as security for the Loan, the
Borrower has offered to grant the Lender, among other things, a first preferred
fleet mortgage over the Vessels, and collaterally assign to the Lender (i) all
insurances and requisition compensation of the Vessels and (ii) all charters
(other than charters entered into in connection with work being performed on a
bonded project) entered into with respect to the Vessels having a duration of
nine months or more and the right to receive payments of all sums from time to
time payable thereunder; and

 

WHEREAS, the Lender is willing to make the
Loan to the Borrower, subject to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the
premises and mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the parties do hereby agree as
follows:

 

ARTICLE 1

 

DEFINITIONS
AND ACCOUNTING TERMS

 

Section 1.1.      Certain Defined Terms. As used in
this Agreement, unless the context requires otherwise, the following terms
shall have the following meanings (such to be equally applicable to the
singular and plural forms of the terms defined):

 

“Acquisition
Agreement” means the Merger Agreement dated November 12, 2003 between GLDD
Acquisition Corp., GLDD Merger Sub, Inc., and Great Lakes Dredge & Dock
Corporation.

 

“Adjusted
Consolidated EBITDA” means EBITDA plus adjustments, without duplication (i)
required or permitted by Regulation S-X of the 1933 Act, and (ii) for the four
Fiscal Quarters ending September 30, 2003, December 31, 2003, March 31, 2004,
June 30, 2004, and September 30, 2004 consisting of up to $3,200,000 of
adjustments with respect to the pro  forma savings 

 

 

resulting from the equipment financing transactions, subject to
confirmation by the Lender that the Guarantor’s calculation of such savings is
reasonable.

 

 

“Affiliate”
means, as to any Person, any other Person that, directly or indirectly,
controls, is controlled by or is under common control with such Person
(excluding any trustee under, or any committee with responsibility for
administering any Plan).  For purposes
of this definition, the term “control” (including the terms “controlling,”
“controlled by” and “under common control with”) of a Person means the
possession, direct or indirect, of the power to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
Person or to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.

 

“Agreement” has the meaning set forth
in the Preamble.

 

“Applicable Percentage” means for the
FLORIDA 72.29%; for the KEY WEST 23.53%; and for the GL 184 4.18%.

 

“Assignment of Earnings” means the
Assignment of Earnings and Charterparties, substantially in the form attached
hereto as Exhibit D, as the same may be amended, restated, supplemented
or otherwise modified from time to time.

 

“Assignment of Insurances” means the
Assignment of Insurances, substantially in the form attached hereto as Exhibit E
as the same may be amended, restated, supplemented or otherwise modified from
time to time.

 

“Bonding Agreement” means the Second
Amended and Restated Underwriting and Continuing Indemnity Agreement dated as
of August 19, 1998 by and among the Guarantor, certain of its Subsidiaries and
Travelers Casualty and Surety Company and Travelers Casualty and Surety Company
of America, including any related notes, guaranties, collateral documents,
instruments and agreements executed in connection therewith, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.

 

“Borrower” means Great Lakes Dredge
& Dock Company, a New Jersey corporation, and its successors and permitted
assigns.

 

“Breakage Fees” has the meaning set
forth in Section 2.3(c).

 

“Business Day” means (i) for all
purposes other than as covered by clause (ii) below, any day of the year
excluding Saturday, Sunday and any day which shall be in the cities of New
York, New York and Chicago, Illinois a legal holiday or a day on which banking
institutions are authorized or required by law or other government actions to
close, and (ii) with respect to all notices and determinations in connection
with any payments of principal, interest and any other amounts due hereunder or
under the other Loan Documents, any day which is a Business Day described in
clause (i) and which is also a day on which dealings in Dollars are carried out
in the London interbank Eurodollar market.

 

2

 

“Capital Expenditures” means, for any
period, the aggregate amount of all expenditures of the Guarantor and its
Subsidiaries for fixed or capital assets made or incurred during such period
(whether or not paid in cash and including that portion of Capital Leases which
is capitalized on the consolidated balance sheet of the Guarantor and its
Subsidiaries) which, in accordance with GAAP, would be classified as capital
expenditures; provided, however, that, for any such period, such
aggregate amount shall be reduced by the sum of (in each case to the extent the
following would otherwise be required to be capitalized on the consolidated balance
sheet of the Guarantor and its subsidiaries) (a) proceeds received from the
sale of fixed or capital assets which have been applied, within one year of
receipt thereof, to the purchase or cost of design, installation, construction,
repair or improvement of fixed or capital assets used or useful in the business
of the Guarantor and its Subsidiaries; (b) insurance or requisition proceeds or
condemnation awards received in connection with the damage, destruction,
requisition or condemnation of fixed or capital assets which have been applied,
within one year of receipt thereof, to the purchase or cost of design,
installation, construction, repair or improvement of fixed or capital assets
used or useful in the business of the Guarantor and its Subsidiaries; (c)
proceeds of indemnity claims made by the Guarantor (or the parent corporation
that owns the Guarantor) pursuant to the Acquisition Agreement to the extent
used in connection with the purchase or cost of design, installation,
construction, repair or improvement of fixed or capital assets used or useful
in the business of the Guarantor and its Subsidiaries in connection with such
indemnity claim; (d) with regard to equipment purchased simultaneously with the
trade-in of existing equipment of the Guarantor or its Subsidiaries, the amount
of the credit extended for such trade-in; (e) expenditures for vessels
identified to be sold by the Guarantor or any of its Subsidiaries and then
leased-back (on an operating lease basis) by the Guarantor or any of its Subsidiaries
to the extent that such sale occurs within 180 days of the completion of the
construction of such vessel and the Borrower has notified the Lender in writing
in reasonable detail of the timing, facts and circumstances of such sale and
lease-back to the extent that the aggregate amount of such expenditures does
not exceed $15,000,000 at any time (provided that if any vessel so identified
is not sold, the amount of the expenditures made that relate to such vessel
shall be added back to the amount of Capital Expenditures for the Fiscal Year
in which such expenditure was made); and (f) the repurchase of any Designated
Vessels that are utilized by the Guarantor or any Subsidiary under an operating
lease.

 

“Capital Lease” means, with respect to
any Person, any lease of any property by that Person as lessee, the obligation
for Rentals with respect to which is required to be accounted for as a capital
lease on the balance sheet of such Person in accordance with GAAP.

 

“Capitalized Rentals” means, as of the
date of any determination, the amount at which the aggregate Rentals due and to
become due under all Capital Leases under which the Guarantor or any of its
Subsidiaries is a lessee would be reflected as a liability on a consolidated
balance sheet of the Guarantor and its Subsidiaries.

 

“Capital Stock” means any and all
shares, interests, participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent ownership interests in a
Person (other than a corporation) and any and all warrants, rights or options
to purchase any of the foregoing.

 

“CERCLA” has the meaning specified in
the definition of “Environmental Laws”.

 

3

 

“Change of Control” means
(i) the failure of one or more Principals to have or to exercise
the power to elect at least a majority of the Board of Directors of the
Guarantor, or (ii) the failure
of the Guarantor to own (directly or indirectly) 100% of the then outstanding
shares of Capital Stock of the Borrower, or to have the power (directly or
indirectly) to direct or cause the direction of the management or policies of
the Borrower.

 

“Charter” means any time charter,
space charter, voyage charter or contract of affreightment entered into by the
Borrower, as owner, with any third party charterer, for any Vessel.

 

“Closing Date” means December 17,
2003.

 

“Code” means the Internal Revenue Code
of 1986, as amended.

 

“Collateral” means collectively the
Vessels and all other collateral now or hereafter serving as security for any
or all of the Obligations pursuant to the Loan Documents.

 

“Collection Account” has the meaning
set forth in Section 5.2(h).

 

“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
Capitalized Rentals under any Capitalized Lease, (vii) all obligations of such
Person to redeem, repurchase, exchange, defease in cash or otherwise make
payments in cash in respect of its capital stock prior to December 17, 2013,
(viii) reimbursement obligations with respect to letters of credit, and (ix)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (i) through (viii)
above.  For avoidance of doubt,
notwithstanding FAS 150, the Capital Stock of the Guarantor or any direct
parent of the Guarantor shall not constitute Debt so long as such Capital Stock
does not require any cash payments or dividends thereon or require any
mandatory redemption or repurchase prior to the date one year after the
maturity of the Obligations.

 

“Default” means any Event of Default
or any event which with the giving of notice or lapse of time, or both, would
constitute an Event of Default.

 

“Default Rate” has the meaning set
forth in Section 2.2(b).

 

4

 

“Designated Vessels” means the dredge
“New York,” the dredge “Victoria Island,” the “BTS-401 and BTS-402 Scows,” the
Bottom-Dump Barges G.L.61, G.L. 62 and G.L. 65,” the dredge “Texas” and the
dredge “Pontchartrain” and ancillary equipment related thereto.

 

“Dollars” and “$” means the
lawful money of the United States of America.

 

“EBITDA” means, with respect to any
period, as determined in accordance with GAAP, the sum of the amounts for such
period of (a) Net Income, plus, without duplication and to the extent
reflected as a charge in the consolidated statement of such Net Income for such
period: (i) depreciation, depletion and amortization expense, (ii) federal,
state, local and foreign income taxes, (iii) Interest Expense, (iv) transaction
fees and expenses incurred in connection with the Transactions to the extent
not exceeding in the aggregate $17,000,000, (v) non-cash charges and losses,
(vi) any amounts included in the calculation of the Net Income for amortization
or non-cash charges for the write-off or impairment of goodwill, intangibles or
other purchase accounting adjustments related to the accounting for this
transaction, the transactions contemplated by the Senior Credit Facility or
other acquisitions under GAAP (including Financial Accounting Standards No. 141
and 142), (vii) fees and expenses incurred in connection with the Bonding
Agreement and this Agreement and any future amendments thereto, (viii)
management fees paid pursuant to any management agreement to the extent
permitted to be paid under the Senior Credit Facility, and (ix) Net Income
attributable to the minority equity interests in North American Site
Developers, Inc. to the extent the Net Income in respect of such minority
equity interest is received by the Guarantor, and (b) minus, without
duplication, (i) non-cash gains. 
“EBITDA” for the Guarantor and its Subsidiaries for the fiscal quarters
ended December 31, 2002 through and including December 31, 2003 will be
calculated on a pro-forma basis, adding to EBITDA, all scheduled basic hire
payments previously paid by the Borrower to BCC Equipment Leasing Corporation
for the Vessels and the vessel named Carolina during the twelve-month period
prior to the date of calculation.

 

“Environmental Law” 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 (“CERCLA”),
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 Substances Control Act, and 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.

 

“ERISA Affiliate” means any (i)
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as the Borrower, (ii)
partnership or other trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Code) with the
Borrower, and (iii) member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as the Borrower, any corporation
described in clause (i) above or any partnership or trade or business

 

5

 

described in clause (ii) above.

 

“Eurocurrency Liabilities” has the
meaning specified in Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

 

“Eurodollar Rate Reserve Percentage”
means, for any Interest Period, the reserve percentage (expressed as a decimal
and rounded upwards, if necessary, to the next higher 1/100th of 1%)
applicable two (2) Business Days before the first day of such Interest Period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or
other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
the Loan is determined) having a term equal to such Interest Period.

 

“Event of Default” means any one of
the events listed in Section 6.1.

 

“Excluded Taxes” has the meaning set
forth in Section 2.4(d).

 

“Fiscal Quarter” means any quarter of
any Fiscal Year.

 

“Fiscal Year” means the fiscal year of
the Guarantor consisting of a period of twelve consecutive months ending
December 31.

 

“Fleet Mortgage” means the First
Preferred Fleet Mortgage, substantially in the form attached hereto as Exhibit C,
executed by the Borrower in favor of the Lender, as amended, restated,
supplemented or otherwise modified from time to time.

 

“GAAP” means generally accepted
accounting principles set forth in the rules, regulations, statements, opinions
and pronouncements of the American Institute of Certified Public Accountants
and of the Financial Accounting Standards Board (or agencies with similar
functions of comparable stature and authority within the accounting profession)
as in effect from time to time, except as provided in the definitions of “Debt”
and “Interest Expense” in respect of the treatment of Capital Stock of the
Guarantor (or any direct parent of the Guarantor) pursuant to Statement of
Financial Accounting Standards No. 150 (“FAS 150”).

 

“GE Charters” has the meaning set
forth in Section 5.2(q).

 

“Governmental Authority” means any
nation or government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

 

“Guarantor” means Great Lakes Dredge
& Dock Corporation, a Delaware corporation, and its successors and
permitted assigns.

 

6

 

“Guaranty” means the Guaranty
Agreement dated as of the date hereof, executed by the Guarantor in favor of
the Lender, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

 

“Hazardous Materials” means all those
substances, materials or wastes, which are regulated by, or which may form the
basis of liability under, any Environmental Law, including all substances,
materials or wastes identified under any Environmental Law as a hazardous
waste, hazardous constituent, special waste, hazardous substance, hazardous
material, or toxic substance, pollutant, contaminant or words of similar
meaning, asbestos, or petroleum, including crude oil or any fraction thereof,
and all substances identified under CERCLA and/or OPA  as hazardous.

 

“Indenture” means that certain
Indenture dated as of August 19, 1998 between The Bank of New York, as trustee,
the Guarantor and certain subsidiaries of the Guarantor, pursuant to which the
Guarantor has consummated the issuance of its 11.25% Senior Subordinated Notes
due 2008, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

 

“Initial Appraisal Report” means that
certain Appraisal Report dated July 7, 2003 issued by Merrill Marine Services,
Inc., covering the Vessels.

 

“Interest Expense” means, for any
Fiscal Quarter, the aggregate consolidated interest expense (net of interest
income) of the Guarantor and its consolidated Subsidiaries for such Fiscal
Quarter, as determined in accordance with GAAP, including (i) commitment fees
paid or payable during such Fiscal Quarter, (ii) all other fees paid or payable
with respect to the issuance or maintenance of any guaranty or contingent Debt
(including letters of credit but excluding fees paid under the Bonding
Agreement), which, in accordance with GAAP, would be included as interest
expense, (iii) net costs or benefits under any interest rate hedging
transaction and (iv) the portion of any payments made in respect of Capitalized
Rentals of the Guarantor and its consolidated Subsidiaries allocable to
interest expense, but excluding any amortization of costs and expenses incurred
in connection with, and relating to, this Agreement or other financings
permitted by this Agreement.  For the
avoidance of doubt, Interest Expense shall not include any non-cash dividends
or other non-cash payments in respect of any Capital Stock of the Guarantor or
any direct parent of the Guarantor.

 

“Interest Period” means the period
commencing either on the (i) Closing Date, or (ii) expiration of the
immediately preceding period relating thereto, and ending three (3) months
thereafter.

 

“Lender” means General Electric
Capital Corporation, a corporation organized and existing under the laws of the
State of Delaware (and includes its successors and assigns).

 

“LIBOR Rate” means, for any Interest
Period for any LIBOR Rate Loan, the rate of interest equal to (i) the rate
determined by the Lender at which Dollar deposits for such Interest Period are
offered based on information presented on Page 3750 of the Dow Jones Market
Service (formerly known as the Telerate Service) as of 11:00 a.m. London time
on the second Business Day prior to the first day of such Interest Period,
divided by (ii) a number equal to 1.00 

 

7

 

minus the Eurodollar Rate Reserve Percentage
for such Interest Period.  If the rate
described above does not appear on the Dow Jones Market Service on any
applicable interest determination date, the LIBOR Rate shall be the rate
(rounded upwards, if necessary, to the next higher 1/100th of 1%)
appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period and having a
maturity equal to such Interest Period, as adjusted for reserves, and if that
rate does not appear on Reuters Screen FRBD on any applicable interest
determination date, the LIBOR Rate shall be the rate (rounded upwards, if
necessary, to the next higher 1/100th of 1%), determined on the
basis of the offered rates for deposits in U.S. Dollars for a period of time
comparable to such LIBOR Rate Loan which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. London time, on the second
Business Day prior to the first day of such Interest Period as selected by the
Lender.  The principal London office of
each of the four major London banks will be requested to provide a quotation of
its U.S. Dollar deposit offered rate. 
If at least two such quotations are provided, the rate for that date
will be the arithmetic mean of quotations. 
If fewer than two quotations are provided as requested, the rate for
that date will be determined on the basis of the rates quoted for loans in U.S.
Dollars to leading European banks for a period of time comparable to such
Interest Period offered by major banks in New York City at approximately 11:00
a.m. (New York time), on the second Business Day prior to the first day of such
Interest Period.  In the event that the
Lender is unable to obtain any such quotation as provided above, it will be
considered that LIBOR Rate cannot be determined.

 

“LIBOR Rate Loan” means the Loan while
bearing interest at the LIBOR Rate.

 

“Lien” means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset.  For
the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.

 

“Loan” has the meaning set forth in Section
2.1(a).

 

“Loan Documents” mean this Agreement,
the Note, the Fleet Mortgage, the Assignment of Insurances, the Assignment of
Earnings, the Guaranty, and any other agreements, documents and instruments
executed and/or delivered pursuant to this Agreement or otherwise evidencing,
securing and/or guaranteeing the Loan or other Obligations.

 

“Material Adverse Effect” means (a) a
material adverse effect upon (i)  the
financial condition, operating results, assets, liabilities, business or
operations of the Guarantor and the Borrower taken as a whole, or (ii) the
ability of the Borrower to perform in any material respect the Loan Documents,
or (b) the occurrence of an event which could reasonably be expected to have a
material adverse effect on the legality, validity or enforceability against the
Borrower of this Agreement or any other Loan Document or any of its Obligations
hereunder or thereunder.

 

“Maturity Date” has the meaning set
forth in Section 2.1(b).

 

“Multiemployer Plan” means a Plan
which is defined in § 4001(a)(3) of ERISA.

 

8

 

“Net Proceeds” means the cash proceeds
received by the Borrower in connection with the consummation of any transaction
or event of the type resulting in a mandatory prepayment under Section
2.1(e), net of all fees, expenses, charges, taxes, commissions and costs
incurred by the Borrower in connection with the consummation of such
transaction or the prosecution or settlement of such event.

 

“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) which, in accordance with GAAP,
would be included as net income on a consolidated statement of income of the
Guarantor and its Subsidiaries for such period.

 

“Note” means the secured promissory
note of even date herewith, substantially in the form attached hereto as Exhibit
B, in the original principal amount of $23,400,000, executed by the
Borrower and payable to the order of the Lender to evidence the Loan, as the
same may be amended, restated, supplemented, or otherwise modified from time to
time.

 

“Notice of Drawing” has the meaning
set forth in Section 2.1(a).

 

“Obligations” means any obligations of
the Borrower to the Lender of any kind, including, without limitation, any
obligation to make any payment for any reason, whether or not such obligation
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether or
not such obligation is discharged, stayed or otherwise affected by any proceeding
referred to in Section 6.1(g) or 6.1(h), in each case
arising under this Agreement or under any other Loan Document.  For the purposes hereof, the Borrower’s
Obligations under the Loan Documents include, without limitation, the timely
payment of (i) all principal, interest, prepayment premiums, late charges, fees
and expenses (including reasonable attorney’s fees and expenses),
disbursements, indemnities and any other amounts payable by the Borrower under
or pursuant to the Note or any of the other Loan Documents, and (ii) any amount
which the Lender, in its sole discretion, may elect to pay or advance on the
Borrower’s behalf pursuant to and in accordance with the terms of the Loan
Documents.

 

“OPA” means the Oil Pollution Act of
1990, as amended, together with all rules and regulations promulgated pursuant
thereto.

 

“Permitted Business Acquisition” means
any acquisition by the Guarantor or any of its Subsidiaries of all or any part
of the assets, shares or other equity interests in a corporation or other
Person engaged in the same business or activities reasonably related,
complementary or incidental to the business of the Guarantor or any of its
Subsidiaries but only if no Default or Event of Default shall have occurred and
be continuing immediately prior to such acquisition or after giving effect
thereto.

 

“Permitted Liens” means, in the case
of the Vessels:

 

(i)          charters and subcharters (excluding
bareboat charters) of the Vessels, provided that such charters and subcharters
do not interfere in any material respects with the business of the Guarantor
and its Subsidiaries;

 

9

 

(ii)         Liens arising by operation of law or by
contract on insurance policies and proceeds thereto to secure the financing of
premiums payable under such policies;

 

(iii)        Liens (other than those arising with
respect to any non-compliance with ERISA or Environmental Laws) for taxes,
assessments or governmental charges, but only to the extent that such taxes,
assessments or charges are either not delinquent or are being contested in good
faith by appropriate proceedings, and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with GAAP;

 

(iv)       Liens of carriers, warehousemen, mechanics,
materialmen, suppliers and other Liens imposed by law (including maritime law)
created in the ordinary course of business of the Guarantor and its
Subsidiaries, but only to the extent that the amounts secured or to be secured
by such Liens are either not overdue or are being contested in good faith and
adequate reserves or other appropriate provisions for the payment thereof are
being maintained in accordance with GAAP, and failure to satisfy the same will
not result in loss, sale or forfeiture of any of the Vessels;

 

(v)        Liens (other than any Lien imposed by
ERISA or Environmental Laws) incurred in the ordinary course of the Guarantor’s
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 adequate reserves or other appropriate provisions
are being maintained in accordance with GAAP, and failure to satisfy the same
will not result in loss, sale or forfeiture of any of the Vessels; and

 

(vi)       Liens of or resulting from any judgment
or award, other than any judgment or award that gives rise to an Event of
Default, the time for appeal or petition for rehearing of which shall not have
expired, or in respect of which the Guarantor or any of its Subsidiaries shall
at any time in good faith be prosecuting an appeal or proceeding for a review
and in respect of which a stay of execution pending such appeal or proceeding
for review shall have been secured.

 

“Person” means a natural person,
partnership, corporation (including a business trust), limited liability
company, joint stock company, partnership (whether general or limited), trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof, or any other entity, whether acting
in an individual, fiduciary or other capacity.

 

“Plan” means an employee benefit plan
defined in Section 3(3) of ERISA in respect of which the Borrower or any ERISA
Affiliate is, or within the immediately preceding six (6) years was, an
“employer” as defined in Section 3(5) of ERISA.

 

“Prepayment Premium” means an amount
equal to (i) 3% of any principal amount prepaid on or before December 17, 2004,
(ii) 2% of any principal amount prepaid after 

 

10

 

December 17, 2004 and prior to December 17, 2005, (iii) 1% of any
principal amount prepaid after December 17, 2005 and prior to December 17,
2008, and (iv) 0% thereafter.

 

“Prime-Based Rate” means a floating
and fluctuating per annum rate of interest at all times equal to the prime rate
of interest published from time to time in the “Money Rates” Section of The
Wall Street Journal.

 

“Principals” means the collective
reference to the Persons that are stockholders of the Guarantor as of the
Closing Date; provided, however, that upon consummation of the
Sale in accordance with the terms and conditions set forth in Section 5.3(g),
the term “Principals” shall thereafter mean the collective reference to the
Persons that are stockholders of the newly created entity that owns (directly
or indirectly) 100% of the outstanding shares of Capital Stock of the Guarantor
as of the closing date of the Sale.

 

“Rentals” means, with respect to any
Person, as of the date of any determination thereof all fixed rents (including
as such all payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property and including all
payments on Capital Leases) payable by such Person, as lessee or sublessee
under a lease of real or personal property, but shall be exclusive of any
amounts required to be paid by such Person (whether designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges.

 

“Sale” has the meaning set forth in Section
5.3(g).

 

“Seller” has the meaning set forth in
the Recitals to this Agreement.

 

“Senior Credit Facility” means the
Credit Agreement, dated as of August 19, 1998, among the Guarantor, certain
subsidiaries of the Guarantor (including, without limitation, the Borrower),
the financial institutions from time to time party thereto, and Bank of
America, N.A., as administrative agent, as 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.

 

“Senior Debt” means Total Funded Debt
consisting of (i) the aggregate principal amount of all Debt of such Person as
shown on such Person’s balance sheet, other than Subordinated Debt, and (ii)
Capitalized Rentals, all determined on a consolidated basis in accordance with
GAAP.  “Senior Debt” shall be calculated
net of cash and cash equivalents held by the Guarantor and its Subsidiaries in
the United States.

 

“Senior Lenders” means the lenders
from time to time under the Senior Credit Facility.

 

“Subordinated Debt” means any Debt of
the Guarantor, the Borrower or any Subsidiary subordinated in right and time of
payment to the Obligations on terms and pursuant to documentation reasonably
satisfactory to the Lender in all respects. 
The subordination provisions set forth in the Indenture are acknowledged
by the Lender to be satisfactory to the Lender.

 

11

 

“Subsidiary” of any Person means any
corporation of which more than 50% of the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of Directors of
such corporation (irrespective of whether at the time capital stock of any
other class or classes of such corporation shall or might have voting power
upon the occurrence of any contingency) is at the time directly or indirectly
owned or controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person’s other Subsidiaries.

 

“Total Funded Debt” of any Person
means, as of any date of determination, all Debt of the Guarantor and its
consolidated Subsidiaries which, in accordance with GAAP, should be included as
liabilities in the consolidated balance sheet of the Guarantor and its
Subsidiaries at such time (excluding, however, the undrawn face amount of all
letters of credit and all Capitalized Rentals due within one year from the date
of determination hereunder).  “Total
Funded Debt,” when used with respect to the Guarantor, shall mean the aggregate
amount of all such Total Funded Debt of the Guarantor and its Subsidiaries
determined on a consolidated basis in accordance with GAAP (eliminating
intercompany items).  “Total Funded
Debt” shall be calculated net of cash and cash equivalents held by the
Guarantor and its Subsidiaries in the United States.

 

“Total Loss” has the meaning set forth
in Section 5.2(l).

 

“Transactions” means, collectively,
the merger and the other transactions contemplated by the Acquisition
Agreement.

 

“UCC” means the Uniform Commercial
Code as in effect from time to time in the State of New York.

 

“U.S. Person” has the meaning
specified in Code Section 7701(a)(30).

 

“Vessels” means collectively the
Vessels identified on Exhibit A attached hereto; and “Vessel”
means each such Vessel individually; provided, however, that
any Vessel released from the security interest created under this Agreement or
the other Loan Documents pursuant to the terms hereof or thereof shall, from
and after such release, no longer constitute a “Vessel”.

 

Section 1.2.            Computation of Time Periods.  For the purposes of this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including” and each of the words “to” and
“until” means “to but excluding”.

 

Section 1.3.            Accounting Terms.  All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.  Except as otherwise provided herein, if any
changes in accounting principles from those used in the preparation of the most
recent financial statements referred to in Section 5.2(a) are hereafter
required or permitted by the rules, regulations, pronouncements and opinions of
the Financial Accounting Standards Board of the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions)
and are adopted by the Guarantor or the Borrower with the agreement of its
independent certified public accountants and such changes result in a change in
the method of calculation of any of the financial covenants, standards or terms
found in Section 5.2(r)  or
in the related definitions of terms used therein, the parties hereto agree to
enter into negotiations in 

 

12

 

order to amend such provisions so as to
reflect equitably such changes with the desired result that the criteria for
evaluating the Borrower’s or the Guarantor’s financial condition shall be the
same after such changes as if such changes had not been made, provided  that
no change in GAAP that would affect the method of calculation of any of the
financial covenants, standards or terms shall be given effect in such
calculations until such provisions are amended, in a manner reasonably
satisfactory to the Lender, so as to reflect such change in accounting
principles.  Notwithstanding anything to
the contrary herein, the application of GAAP shall not include FAS 150.

 

 

ARTICLE 2

 

CREDIT FACILITIES;

DRAWDOWN PROCEDURES AND REPAYMENT PROVISIONS

 

Section 2.1.            The
Loan.

 

(a)           Advance of Loan.  Subject to the terms and conditions of this
Agreement, and in reliance upon the representations and warranties set forth
herein, the Lender agrees to lend to the Borrower Twenty-Three Million Four
Hundred Thousand United States Dollars ($23,400,000) (the “Loan”).  The proceeds of the Loan shall be used by
the Borrower solely to finance and/or refinance a portion of its costs to
acquire the Vessels, to fund certain costs and expenses associated with the
Loan and the purchase of the Vessels and to provide additional working
capital.  The Borrower may request the
Lender to advance the proceeds of the Loan by delivering to the Lender a duly
completed Notice of Drawing substantially in the form annexed hereto as Appendix
A, which notice shall be irrevocable and be received by the L ender not
later than 11:00 a.m. E.S.T. one (1) Business Day prior to the Closing Date (“Notice
of Drawing”).  The Lender’s
obligation to make the Loan available hereunder shall expire on December 31,
2003, provided, however, that such obligation shall terminate
automatically upon the occurrence of a Default or an Event of Default.  The Borrower unconditionally and irrevocably
authorizes the Lender to make the payments specified in the Notice of Drawing.

 

(b)           Principal Payment
of the Loan.  The Borrower shall
repay the principal amount of the Loan over a period of ten (10) years in forty
(40) consecutive quarterly installments, commencing on March 17, 2004 and
continuing thereafter on the same day of each third month thereafter until paid
in full.  The first thirty-nine (39)
such principal installments shall be in the amount of $487,500 each, and the
final principal installment, due on December 17, 2013, shall be in an amount
equal to the then unpaid principal balance of the Loan.  Unless sooner paid, all sums due under the
Loan shall be due and payable in full on December 17, 2013 (the “Maturity
Date”).

 

(c)           Interest.  Except for any period during which an Event
of Default under Section 6.1(a) has occurred and is continuing
hereunder (and irrespective of whether or not the maturity of the Loan has been
accelerated pursuant hereto), the Borrower shall pay interest on the unpaid
principal balance of the Loan from the date the Loan is made until the date the
Loan has been indefeasibly repaid in full, calculated with respect to each
Interest Period at a rate per annum equal to the LIBOR Rate applicable to such
Interest Period plus 440 basis points. 
Interest 

 

13

 

accrued on the
Loan shall be paid by the Borrower to the Lender on a quarterly basis
commencing on March 17, 2004, and continuing on the same day of each third
month thereafter until maturity of the Loan (whether by acceleration, extension
or otherwise) at which time the Borrower shall pay to the Lender all accrued
but unpaid interest on the Loan.

 

(d)           Optional
Prepayments of the Loan.  The
Borrower shall have the right to prepay the Loan in whole at any time or in
part from time to time; provided  that (i) each partial prepayment
shall be in an amount not less than $1,000,000 or any integral multiple
thereof, (ii) the Borrower shall give the Lender not less than five (5)
Business Days advance written notice of any such prepayment, and (iii)
irrespective of whether any such prepayment is voluntary or by reason of an
Event of Default hereunder, acceleration of maturity of the Loan or for any
other reason whatsoever, the Borrower shall pay to the Lender simultaneously
with each such prepayment (x) accrued and unpaid interest on the amount prepaid
to (but not including) the date of such prepayment, (y) Breakage Fees, if
applicable, and (z) the Prepayment Premium, if any.  Each such prepayment shall be applied first to accrued but
unpaid interest and Breakage Fees and Prepayment Premiums, if applicable, on
the portion of the Loan being repaid and then to the remaining principal
installments on a pro-rata basis.

 

(e)           Mandatory
Prepayments of the Loan.  If at any
time prior to repayment in full of the Loan,

 

(i)            one of the Vessels is sold or
otherwise disposed of, the Borrower shall pay to the Lender, upon its receipt
of the Net Proceeds from such sale or other disposition of said Vessel, an
amount equal to the greater of (x) the Net Proceeds of sale or disposition, up
to but not to exceed the amount then outstanding under the Loan, or (y) an
amount determined by multiplying the remaining unpaid principal balance of the
Loan by the Applicable Percentage for the subject Vessel, plus, in each
case, all applicable Prepayment Premiums or Breakage Fees, if any.  So long as no Event of Default shall have
occurred and be continuing, all such prepayments shall be applied first to
Breakage Fees and Prepayment Premiums, if any, and then to the remaining
principal installments on a pro-rata basis; and

 

(ii)           one of the Vessels sustains a Total
Loss, the Borrower shall pay to the Lender, within ninety (90) days of the date
of such Total Loss, an amount (which after taking into account any insurance
proceeds previously received by the Lender as a result of such Total Loss) is
equal to the greater of (x) the Net Proceeds received by the Borrower as a
result of such Total Loss up to but not to exceed the amount then outstanding
under the Loan, or (y)  an amount
determined by multiplying the remaining unpaid principal balance of the Loan by
the Applicable Percentage for the subject Vessel, plus, in each case,
any applicable Breakage Fees, if any. 
So long as no Event of Default shall have occurred and be continuing,
all such prepayments shall be applied first to Breakage Fees, if any, and then
to the remaining principal installments on a pro-rata basis.

 

(f)            The Note.  The Borrower’s obligation to repay the Loan,
with interest, shall be evidenced by the Note.

 

14

 

Section 2.2.            General
Provisions.

 

(a)           Payments.  Whenever any payment to be made by the
Borrower under the provisions of this Agreement or the Note is due on a day which
is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, in the case of any payment which bears interest,
such extension of time shall be included in computing interest on such payment.  All payments of principal, interest, fees or
other amounts to be made by the Borrower under the provisions of this Agreement
or the Note shall be paid without set-off or counterclaim to the Lender at the
Lender’s office specified in Section 7.2 hereof in lawful money of
the United States of America in immediately available funds.

 

(b)           Default Rate.  Upon the occurrence and during the
continuance of an Event of Default under Section 6.1(a), the unpaid
principal balance of the Loan shall bear interest at a rate per annum equal to
two percent (2%) in excess of the rate otherwise applicable hereunder (the “Default
Rate”).

 

Section 2.3.            Changes
in Law, Funding Losses, etc.

 

(a)           Basis for Determining LIBOR Rate
Inadequate or Unfair.  If with
respect to any Interest Period:

 

(i)            deposits in Dollars (in the
applicable amounts) are not being offered to the Lender in the relevant market
for such Interest Period, or the Lender otherwise reasonably determines (which
determination shall be binding and conclusive on the Borrower) that by reason
of circumstances affecting the London interbank Eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable LIBOR Rate; or

 

(ii)           the Lender reasonably determines that
the LIBOR Rate will not adequately and fairly reflect the cost to the Lender of
making or maintaining the Loan for such Interest Period;

 

then the Lender shall promptly notify the Borrower in writing thereof
and the Lender and the Borrower shall attempt to agree upon an alternative rate
that would otherwise compensate the Lender for the cost of making or
maintaining the Loan.  In the event the
parties cannot agree on an alternative rate, then, within sixty (60) days
thereafter, the Borrower shall either: 
(a) prepay the Loan, together with all accrued interest thereon,
Breakage Fees and Prepayment Premiums, if any, and all other sums due
hereunder; or (b) request the Lender to convert the interest rate applicable to
the Loan from a rate based on the LIBOR Rate to the Prime-Based Rate (plus 340
basis points instead of 440 basis points) effective on the last day of the
current Interest Period.  The Lender
shall agree to modify the terms of the Note reflecting the change in the
applicable interest rate so long as no Default or Event of Default has then
occurred.

 

(b)           Changes in Law
Rendering Maintenance of the Loan Unlawful, etc.  In the event that any change after the Closing Date in (including
the adoption of any new) applicable laws or regulations, or any change after
the Closing Date in the interpretation of applicable laws or regulations by any
governmental authority, central bank or comparable agency charged with the
administration thereof, should make it unlawful for the Lender to make or
maintain the Loan 

 

15

 

as a LIBOR
Rate Loan, then the Lender shall promptly notify the Borrower of such change
and the Borrower shall either: 
(a) prepay the Loan, together with all accrued interest thereon,
Breakage Fees and Prepayment Premiums, if any, and all other sums due
hereunder; or (b) request the Lender to convert the interest rate applicable to
the Loan from a rate based on the LIBOR Rate to the Prime-Based Rate (plus 340
basis points instead of 440 basis points) effective on the last day of the
current Interest Period.  The Lender
shall agree to modify the terms of the Note reflecting the change in the
applicable interest rate so long as no Default or Event of Default has then
occurred.

 

(c)           Funding Losses.  The Borrower hereby agrees that upon demand
by the Lender (which demand shall be accompanied by a statement setting forth
in reasonable detail the basis for the calculations of the amount claimed) the
Borrower will indemnify the Lender against any actual net loss or out-of-pocket
expense (collectively, the “Breakage Fees”) which the Lender may sustain
or incur (including, without limitation, any net loss or expense incurred by
reason of the liquidation or re-employment of deposits or other funds acquired
by the Lender to fund or maintain the Loan), as reasonably determined by the
Lender, as a result of any prepayment of any amounts due under the Note other
than at the end of an Interest Period.

 

(d)           Discretion of the
Lender as to Manner of Funding. 
Notwithstanding any provision of this Agreement to the contrary, the
Lender shall be entitled to fund and maintain its funding of all or any part of
the Loan in any manner it sees fit.

 

(e)           Conclusiveness of
Statements; Survival of Provisions. 
Determinations and statements issued by the Lender pursuant to the
provisions hereof shall be conclusive absent manifest error.  The Lender may use reasonable averaging and
attribution methods in determining compensation under this Section 2.3,
and the provisions of such Section shall survive repayment of the Loan,
cancellation of the Note and any termination of this Agreement.

 

Section 2.4.            Payments
and Computations.

 

(a)           Making of
Payments.  The Borrower shall make
all payments of principal of, Prepayment Premiums, if any, and interest on, the
Note to the Lender in Dollars, in immediately available funds, not later than
11:00 A.M. E.S.T. on the day when due, to be applied by the Lender in
accordance with the terms of this Agreement and the Note.  Funds received after 11:00 A.M. E.S.T. shall
be deemed to have been received by the Lender on the next following Business
Day.

 

(b)           Application of
Certain Payments.  Each payment of
principal shall be applied in the manner provided in the Note or in the absence
of such direction, as the Lender shall determine in its sole discretion; provided,
however, that optional prepayments shall be applied as set forth in Section 2.1(d)
and mandatory prepayments shall be applied as set forth in Section 2.1(e)
or Section 5.3(h) (as applicable).

 

(c)           Computations.  All computations of interest shall be made
by the Lender on the basis of a 360-day year, for the actual number of days
(including the first day but excluding the last day) occurring in the Interest
Period; provided, however, that computations of interest based
upon the Prime-Based Rate shall be made on the basis of a 366/365-day year and 

 

16

 

actual days
elapsed.  Each determination by the
Lender of an interest rate hereunder shall be conclusive and binding for all
purposes, absent demonstrable error.

 

(d)           Payment Net of
Taxes.  All payments made by the
Borrower to the Lender under this Agreement and the Note shall be made without
any setoff or counterclaim, and free and clear of and without withholding or
deduction for or on account of any taxes (except to the extent that such
withholding or deduction is compelled by law), excluding any taxes assessed on
or measured by the net income of the Lender imposed by any jurisdiction (any
such excluded taxes, the “Excluded Taxes”).  If the Borrower is compelled by law to make any such deduction or
withholding, it will:

 

(i)            pay to the relevant authorities the
full amount required to be withheld or deducted;

 

(ii)           except
with respect to Excluded Taxes, pay such additional amounts to the Lender as
may be required for the Lender to receive, after such deduction or withholding
(including any required deduction or withholding on such additional amounts),
the amount it would have received had no such deduction or withholding been
made; and

 

(iii)          promptly forward to the Lender an
official receipt or other documentation satisfactory to the Lender evidencing
such payment to such authorities.

 

If any taxes (other than Excluded Taxes) are
directly assessed against the Lender, the Lender shall promptly notify the
Borrower of such assessment.  Unless the
Borrower promptly provides evidence satisfactory to the Lender that such taxes
have been paid, the Lender may pay such taxes. 
Thereafter, the Borrower shall pay such additional amount (including,
without limitation, any penalties, interest or expenses, but excluding any such
items resulting from (A) the failure of the Lender promptly to notify the
Borrower of the assessment of such taxes against the Lender or (B) the gross
negligence, bad faith or willful misconduct of the Lender) as may be necessary
for the Lender to receive, after the payment of such taxes (including any taxes
on such additional amount), the amount the Lender would have received had no
such taxes been assessed.  The
Borrower’s obligations arising from this Section 2.4(d) shall
survive repayment of the Loan, cancellation of the Note and the termination of
this Agreement.

 

Notwithstanding any provision contained in
this Agreement to the contrary, in the event that the Lender should assign all
or any portion of the Loan or of its rights under this Agreement to another
Person, the Borrower’s obligations under this Section 2.4 shall not
be greater than what its obligations would have been if the Lender had retained
a 100% interest in the Loan and in this Agreement.

 

If the Lender determines that it has received
a refund or direct credit with any taxes as to which the Borrower has made
additional payments, it shall promptly notify Borrower of such refund or direct
credit and shall within thirty (30) days of its receipt of the amount of such
refund or direct credit pay such amount to the Borrower (plus any interest paid
or credited by the relevant taxing authority with respect to such amount).   The Lender shall cooperate with the
Borrower to obtain any refunds or direct credits that would give rise to
payments hereunder 

 

17

 

provided (i) the Borrower pays all reasonable out of pocket expenses
incurred by the Lender to obtain such refunds or direct credits and (ii) the
Lender determines, in its reasonable discretion, that it would not be
materially disadvantaged (other than costs and expenses that the Borrower has
agreed to pay) in obtaining the refund or direct credit.  To the extent a refund or direct credit is
required to be repaid with respect to which the payments have been made under
this provision, the Borrower shall indemnify and promptly reimburse the Lender
for the amounts repaid.

 

Section 2.5.            Setoff.  In addition to and not in limitation of any
rights of the Lender under applicable law, the Lender shall, upon the
occurrence and during the continuance of an Event of Default under Section
6.1(a), have the right to appropriate and apply to the payment of the
Obligations then due and unpaid, any and all monies, securities, deposits and
other property of the Borrower, now or hereafter held or received by, or in
transit to, the Lender.  The Lender
agrees promptly to notify the Borrower after any such setoff and application made
by the Lender; provided  that the failure to give such notice
shall not affect the validity of such setoff and application.  The rights of the Lender under this Section
2.5 are in addition to other interests, rights and remedies (including
other rights of setoff) which the Lender may have.

 

 

ARTICLE 3

 

SECURITY

 

Section 3.1.            Security Documents.  In order to secure the prompt payment and
performance of its Obligations in connection with the Loan, the Borrower shall
execute and deliver to the Lender the following:

 

(i)            the Fleet Mortgage;

 

(ii)           the Assignment of Earnings; and

 

(iii)          the Assignment of Insurances.

 

In addition to the foregoing, the Borrower
shall promptly deliver or cause to be delivered to the Lender the following
documents and instruments:  (i) a copy
of the Certificate of Documentation for each Vessel; (ii) the Letter to the
Master and form of Notice of Mortgage and the Borrower’s certification that
such Notice of Mortgage is posted on each Vessel; (iii) certificates of
insurance issued by the Borrower’s insurance broker evidencing the insurances
covering the Vessels; and (iv) an appropriate Uniform Commercial Code financing
statement with respect to the security interests created pursuant to the Loan
Documents.

 

Section 3.2.            Release of Security.  Upon the sale or other disposition of any
Vessel and the payment by the Borrower to the Lender of all sums payable
pursuant to Section 2.1(e), the Lender, at the Borrower’s sole cost
and expense, shall release and discharge such Vessel (and any other Collateral
used on or forming part of said Vessel) from the security interest created
under this Agreement or any other Loan Document.  Upon payment in full of all sums due hereunder and under the Note
and performance of all of the Borrower’s Obligations with respect thereto, the
Lender, at the Borrower’s sole cost and expense, shall release and discharge
any and all 

 

18

 

security delivered pursuant to this Agreement
or any of the other Loan Documents.  The
Lender agrees to execute and deliver to the Borrower any instrument, agreement
or release document necessary to effect such release of Liens, and to take such
other actions as shall be reasonably necessary to release the Liens required to
be released under this Section 3.2 promptly upon the reasonable
request of the Borrower and payment by the Borrower of all reasonable out of
pocket costs related thereto.

 

Section 3.3.            Exercise of Powers of Attorney.  The Lender shall not exercise any rights or
powers pursuant to any power of attorney granted to the Lender pursuant to the
Fleet Mortgage or the other Loan Documents except upon the occurrence and
during the continuance of an Event of Default.

 

ARTICLE 4

 

CONDITIONS TO
FUNDING

 

Section 4.1.            Conditions Precedent to Initial
Funding.  The Lender’s agreement to
enter into this Agreement and to make the Loan available to the Borrower is
subject to the condition precedent that the Lender shall have received on or
before the date hereof the following, each in form and substance reasonably
satisfactory to the Lender:

 

(a)           certified copies of
the organizational documents of the Borrower and the Guarantor, the resolutions
of the Board of Directors of the Borrower and of the Guarantor approving the
execution, delivery and performance of each of the Loan Documents to which each
is a party, a certificate of incumbency for each person signing any of the Loan
Documents on behalf of the Borrower and the Guarantor and evidence of the due
incorporation and good standing of the Borrower and the Guarantor;

 

(b)           this Agreement;

 

(c)           the Note;

 

(d)           the Fleet Mortgage;

 

(e)           the Assignment of
Earnings;

 

(f)            the Assignment of
Insurances;

 

(g)           the Guaranty;

 

(h)           the favorable
opinions of counsel for the Borrower and the Guarantor;

 

(i)            a copy of the
Certificate of Documentation for each Vessel; and

 

(j)                                     an
appropriate UCC-1 financing statement with respect to the security interest
created pursuant to the Loan Documents.

 

The Lender shall also have received:

 

19

 

(i)            evidence reasonably satisfactory to
the Lender and its counsel that the Vessels are duly registered in the name of
the Borrower under the laws of the United States of America, free of all liens
and encumbrances of record, other than (a) the Fleet Mortgage in favor of the
Lender and (b) Permitted Liens;

 

(ii)           evidence reasonably satisfactory to
the Lender and its counsel that all filings and recordings to the extent
permitted or required by applicable law shall have been duly made by the
Borrower and all other action shall have been taken as may be required by the
Lender to perfect the security interests granted by the Borrower under any of
the Loan Documents, all proceedings taken in connection with the Loan and the
execution of the Loan Documents shall be reasonably satisfactory to the Lender,
and the Lender shall have received copies of such documents as the Lender
reasonably may request in connection therewith all in form and substance
reasonably satisfactory to the Lender;

 

(iii)          certificates of insurance naming the
Lender as loss payee as required by the terms hereof and, to the extent
practicable but without subjecting the Lender to any liability for premiums or
calls, as an additional insured, with such responsible and reputable insurance
companies or associations, and in such amounts and covering such risks, as is
required pursuant to this Agreement and the Fleet Mortgage;

 

(iv)          payment of the remainder of the
Lender’s loan fee which originally amounted to $234,000; and

 

(v)           payment to the Lender and its counsel
of all fees and expenses due pursuant to Section 7.6 hereof.

 

ARTICLE 5

 

REPRESENTATIONS,
WARRANTIES AND COVENANTS

 

Section 5.1.            Representations and Warranties.  The Borrower hereby represents and warrants
as follows:

 

(a)           Organization and
Powers.  It is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey, with organizational identification number 4224001000, and is duly
qualified and authorized to transact business as a foreign corporation and in
good standing under the laws of each jurisdiction in which qualification and
good standing are necessary in order to carry on its present business and
operations (except such jurisdictions where failure to so qualify would not
reasonably be expected to have a Material Adverse Effect).  It has all requisite corporate power and
authority to enter into and to perform its obligations under this Agreement and
the other Loan Documents to which it is a party and to own, operate, and
mortgage the Vessels, except as would not reasonably be expected to have a
Material Adverse Effect.

 

(b)           Authorization.  It has duly authorized by all requisite
corporate action the execution, delivery and performance of each of the Loan
Documents to which it is a party, and the execution, delivery and performance
by it of such Loan Documents will not violate any provision of law, any order
of any court or other agency of government, its articles of 

 

20

 

incorporation
or bylaws, or any material indenture, agreement or other instrument to which it
is a party, or by which it or any of its property or assets is bound, or be in
conflict with, result in a breach of, or constitute (with due notice or lapse
of time, or both) a default under any such material indenture, agreement or
other instrument, or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of its property or assets
except as otherwise permitted, required or contemplated by the Loan Documents.  The Loan Documents constitute the legal,
valid and binding obligations of the Borrower, enforceable against it, in
accordance with the terms thereof, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally and to general principles of equity, regardless of whether
enforcement is sought in a proceeding at law or in equity.

 

(c)           Litigation.  As of the Closing Date, there are no
actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting it or its property at law, in equity or in
admiralty, or before or by any governmental authority, department, commission,
bureau, board, agency or instrumentality, domestic or foreign, (i) which could
reasonably be expected to have a Material Adverse Effect or (ii) which purports
to affect the legality, validity or enforceability of any Loan Document.  As of the Closing Date, it is not in default
under or violation of with respect to any order, writ, injunction, decree or
demand of any court or governmental authority, department, commission, board,
bureau, agency or instrumentality, domestic or foreign where such default or
violation could reasonably be expected to have a Material Adverse Effect.

 

(d)           Financial
Condition, etc.  As of the Closing Date, there has
been (i) since the last audited financial statements of the Guarantor, no
material adverse change, individually or in the aggregate, in the business,
financial or other condition of the Borrower and the Guarantor taken as a
whole, the industry in which Borrower operates, or the collateral which will be
subject to the security interest granted to the Lender or in the prospects or
projections of Borrower and the Guarantor taken as a whole,
(ii) no litigation commenced which, if successful, would have a material
adverse impact on Borrower and the Guarantor taken as a whole, its or
their business, or its or their ability to repay the Loan, or which would
challenge the transactions under consideration, and (iii) since the last
audited financial statements of the Guarantor, no material increase in the
liabilities, liquidated or contingent, of the Borrower and
Guarantor, taken as a whole, or a material decrease in the assets of the
Borrower
and the Guarantor taken as a whole.

 

(e)           Tax Returns.  It has filed or has caused to have been
filed all material tax returns which, to its knowledge, are required by law to
be filed, and has paid or caused to have been paid all material taxes as shown
on such returns or on any assessment received by it, to the extent that such
taxes have become due and payable as of the Closing Date, after giving effect
to any extensions therefor, unless (i) such taxes, assessments and governmental
charges, if any, are currently contested in good faith and by appropriate
proceedings and adequate reserves therefor have been established as required
under GAAP and (ii) such taxes, assessments or governmental charges the
nonfiling or nonpayment of which could not be reasonably expected to have a Material
Adverse Effect.

 

(f)            Compliance with
Law; Licenses and Permits.  To the
best of its knowledge after due inquiry, it is not in violation of any law,
ordinance, governmental rule or regulation to which it is subject, except where
the failure to be in compliance could not 

 

21

 

reasonably be
expected to have a Material Adverse Effect, and it has obtained all licenses,
permits, franchises or other governmental authorizations necessary for the
ownership of its properties and the conduct of its business, except where the
failure to obtain such license, permit, franchise or governmental authorization
could not reasonably be expected to have a Material Adverse Effect.

 

(g)           Government
Consents.  Neither the execution and
delivery by it of this Agreement, the Note and any of the other Loan Documents,
nor the consummation by it of any of the transactions contemplated hereby or
thereby, requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
governmental authority or agency, domestic or foreign, other than (i) the
filing and recording of the Fleet Mortgage with the United States Coast Guard,
National Vessel Documentation Center and the UCC-1 financing statement with the
Secretary of the State of New Jersey, and (ii) those obtained or made on or
prior to the Closing Date.

 

(h)           Ownership of
Vessels.  As of the Closing Date,
the Borrower has good and marketable title to the Vessels, free and clear of
all Liens except for Liens in favor of the Lender and Permitted Liens, and upon
execution, filing and recording of the Fleet Mortgage, the Lender will hold a
duly recorded first preferred mortgage lien over the whole of the Vessels.

 

(i)            Principal Place
of Business.  The address stated in Section 7.2
hereof is the principal place of business and chief executive office of the
Borrower.

 

(j)            Margin
Regulations.  Neither the Guarantor
nor the Borrower is engaged, principally or as one of its important activities,
in the business of extending credit for the purpose of “purchasing” or
“carrying” any “margin stock” (as each of the quoted terms is defined or used
in Regulation T, U or X of the Board of Governors of the Federal Reserve
System).  No part of the proceeds of the
Loan has been used for so purchasing or carrying margin stock or for any
purpose which violates, or which would be inconsistent with, the provisions of
Regulation T, U or X.

 

(k)           ERISA.  With respect to any Plan which is a “pension
plan” as defined in § 3(2) of ERISA (other than a Multiemployer Plan) which is
now or within the immediately preceding six years has been maintained or
contributed to by the Borrower and/or by ERISA Affiliate: (i) no “accumulated
funding deficiency” as defined in Code § 412 or ERISA § 302 has occurred,
whether or not that accumulated funding deficiency has been waived; (ii) no
“reportable event” as defined in ERISA § 4043, other than an event with respect
to which the notice requirements have been waived by regulation, has occurred;
and (iii) no distress termination described in § 404(c) of ERISA of any such
Plan which is subject to Title IV of ERISA has occurred and the Pension Benefit
Guaranty Corporation has not instituted proceedings to terminate any such Plan,
and no event or condition which constitute grounds under ERISA § 4041 for the
termination of, or the appointment of a trustee to administer, any such
Plan.  With respect to any Plan which is
a Multiemployer Plan and which is now, or previously has been, contributed to
by the Borrower and/or by ERISA Affiliate: (i) neither the Borrower nor any
ERISA Affiliate has incurred a “complete withdrawal” within the meaning of
ERISA § 4203; and (ii) neither the Borrower nor any ERISA Affiliate has
incurred a “partial withdrawal” within the meaning of ERISA § 4205.

 

22

 

(l)            Charters.  The Vessels are not currently subject to any
Charters.

 

(m)          Citizenship.  Each of the Borrower and the Guarantor is a
citizen of the United States within the meaning of Section 2 of the Shipping
Act of 1916, as amended (46 U.S.C. § 802), qualified to engage in the coastwise
trade of the United States of America.

 

(n)           Matters Related
to Subordinated Debt.  As of the
Closing Date, the Borrower has delivered to Lender a complete and correct copy
of the Indenture (including all schedules, exhibits, amendments, supplements
and modifications thereto).  The
Obligations constitute “Senior Debt” as defined in the Indenture.  The execution, delivery and/or performance
by the Borrower and the Guarantor of each of the Loan Documents to which it is
a party do not and will not, by the lapse of time, the giving of notice or
otherwise, (i) constitute a violation of the Indenture or (ii) result in or
require the creation or imposition of any Lien whatsoever upon any of the
properties or assets of the Borrower or the Guarantor (other than Liens granted
pursuant to the Loan Documents).  The
Borrower acknowledges that the Lender is entering into this Agreement in
reliance upon the subordination provisions of the Indenture and the related
documents and this Section 5.1(n).

 

(o)           Patriot Act, etc.  The Borrower is and will remain in full
compliance in all material respects with all laws and regulations applicable to
it including, without limitation, (i) ensuring that no person who owns a
controlling interest in or otherwise controls the Borrower is or shall be (A)
listed on the Specially Designated Nationals and Blocked Person List maintained
by the Office of Foreign Assets Control (“OFAC”), Department of the Treasury,
and/or any other similar lists maintained by OFAC pursuant to any authorizing
statute, Executive Order or regulation, or (B) a person designated under
Sections 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001),
any related enabling legislation or any other similar Executive Orders, and
(ii) compliance with all applicable Bank Secrecy Act (“BSA”) laws, regulations
and government guidance on BSA compliance and on the prevention and detection
of money laundering violations.

 

Section 5.2.            Affirmative
Covenants.  The Borrower covenants
and agrees that so long as any of the Obligations (other than contingent
obligations hereunder for which no claim has been or is reasonably expected to
be made) remain outstanding, the Borrower hereby agrees that:

 

(a)           Financial
Statements.  The Borrower shall
furnish to the Lender (i) within three (3) days after the Guarantor is required
to file annual financial statements with the SEC, or, if the Guarantor is no
longer required to file with the SEC, then within one hundred twenty (120) days
after the close of its fiscal year, copies of the audited consolidated
financial statements of the Guarantor and its consolidated Subsidiaries
certified as of the end of such period, including a balance sheet and related
statements of earnings and cash flow; (ii) for the first three fiscal quarters
of the Guarantor within three (3) days after the Guarantor is required to file
quarterly financial statements with the SEC, or, if the Guarantor is no longer
required to file with the SEC, then within sixty (60) days after the close of
each of the first three fiscal quarters, copies of its internally prepared
quarterly condensed consolidated financial statements for the Guarantor and its
consolidated Subsidiaries, certified by the Guarantor’s chief financial
officer; (iii) concurrently with the delivery of the financial statements
described in (i) and (ii) above, a compliance certificate signed by the chief
financial officer of the Guarantor, confirming (A) that 

 

23

 

neither the
Borrower nor the Guarantor is in default of any of its obligations under the
Loan Documents, and (B) that there exists no event of default under the
Borrower’s Senior Credit Facility, or, if any such event of default exists,
what action, if any, the Senior Lenders have taken with respect thereto, and
what action, if any, the Borrower is taking to cure such event of default; and
(iv) such other financial or other information as the Lender may from time to
time reasonably request.  Such financial
statements shall be prepared in accordance with GAAP.

 

(b)           Corporate
Existence.  The Borrower shall
continue to maintain its corporate existence, good standing and qualifications
to do business in all jurisdictions in which such qualification and good
standing are necessary in order for it to conduct its business and own its
property as presently conducted and owned in such jurisdictions (except in such
jurisdictions where the failure to remain so qualified and in good standing
could not reasonably be expected to have a Material Adverse Effect).

 

(c)           Notice of Default.  The Borrower shall notify the Lender
promptly in writing of the occurrence of an event described in Article VI
hereof which with notice or lapse of time, or both, would constitute an Event
of Default described in Article VI hereof and the action which the
Borrower is taking or proposes to take with respect thereto.

 

(d)           Notice of
Mortgage.  The Borrower shall cause
a certified copy of the Fleet Mortgage, together with notice thereof, to be
placed on board each of the Vessels and, reasonably promptly following the date
hereof (and in any event within thirty (30) days of the date hereof), shall
furnish the Lender with copies of the Masters’ signed receipts therefor, in
form and substance reasonably satisfactory to the Lender.

 

(e)           Use of Proceeds.  The Borrower shall use the proceeds of the
Loan solely for the purposes specified in the Recitals to this Agreement and
for no other purposes.

 

(f)            Payment of Taxes.  The Borrower shall pay and discharge or
cause to be paid and discharged all material taxes, assessments and
governmental charges or levies imposed on it or on its income or profits or on
any of its material property prior to the date on which penalties attach
thereto, except that it will not be required to pay any such tax, assessment,
charge or levy, the payment of which is being contested in good faith and by
appropriate proceedings, so long as none of the Vessels have been attached or
arrested, or, if attached or arrested, 
such attachment or arrest has been fully bonded and fully lifted, provided
that the Borrower shall not be required to pay any such tax, assessment,
charge, claim or account which (i)(1) is being contested in good faith by
appropriate proceedings which will prevent the forfeiture or sale of any
property or any material interference with the use thereof by such Person, and
(2) has been adequately reserved against in accordance with GAAP or (ii) if not
so paid, could not reasonably be expected to have a Material Adverse Effect.

 

(g)           Compliance with
Rules and Regulations.  The Borrower
shall comply in all material respects with the requirements of all applicable
laws, rules, regulations and orders of any court, governmental body or
regulatory agency having jurisdiction over it or its property, except where (i)
the failure to so comply could not reasonably be expected to have a Material
Adverse Effect and (ii) such laws, rules, regulations or orders are being
contested in good faith 

 

24

 

and by
appropriate proceedings and its failure to comply with the same will not result
in loss, sale or forfeiture of any of the Vessels.

 

(h)           Collection
Account.  Upon the occurrence and
during the continuation of an Event of Default, the Borrower shall, at the
written request of the Lender, either (i) direct all earnings or other payments
under the Assignment of Earnings or the Assignment of Insurances to be made
directly to the Lender, or (ii) maintain with a depository selected by the
Lender a separate account (the “Collection Account”) into which the
Borrower shall deposit, or cause to be deposited, as provided therein all such
earnings and payments.  Such account
shall be assigned to the Lender pursuant to documentation reasonably
satisfactory to the Lender.

 

(i)            Vessels.  The Borrower will at all times and without
cost or expense to the Lender maintain and preserve, or cause to be maintained
and preserved, the Vessels in good running order and repair (ordinary wear and
tear alone excepted), so that the Vessels shall be, in so far as due dili­gence
can make them so, tight, staunch, strong and well and sufficiently tackled,
apparelled, furnished, equipped and in all material respects seaworthy; and if
classed, will keep the Vessels or cause them to be kept, in such condition as
will entitle them to the applicable classification as determined by the
Borrower in its good faith judgment in American Bureau of Shipping or other
classification society of like standing, and, if any vessel is classed,
annually will furnish to the Lender a certificate by such classi­fi­cation
society or societies that such classification is maintained.  The Vessels shall, and the Borrower covenants
that it will, at all times comply in all material respects with all applicable
laws, treaties and conventions of the country of each Vessel’s registry and
rules and regulations issued thereunder, and shall have on board as and when
required thereby valid certificates showing compliance therewith.  The Borrower will cause the Vessels to be
drydocked in accordance with any applicable class requirements.  The Borrower shall endeavor to give the
Lender five (5) Business Days’ prior telefax notice of drydocking of any of the
Vessels so as to afford the Lender the opportunity to be present.  The Borrower shall not make, or permit to be
made, any substantial change in the structure, type and speed of any of the Vessels
or change in any of their rigs, which might result in a decrease or reduction
in the value or utility of the Vessels (a “Vessel Change”) without first
receiving the written approval thereof by the Lender.  The Borrower shall notify the Lender of any such Vessel Change to
be made in the structure, type and speed of the Vessels or in any of their
rigs.

 

(j)            Inspections;
Logs and Records.  At all reasonable
times, the Borrower shall afford the Lender and its authorized representatives
reasonable access to the Vessels for the purpose of inspecting the same and
their papers and, at the reasonable request of the Lender, the Borrower will
deliver for inspection copies of any and all material documents relating to the
Vessels, whether on board or not subject to the Lender’s agreement to the
Confidentiality provisions set forth herein; provided, however,
that prior to an Event of Default, the Lender shall conduct an inspection not
more than twice annually at the expense of the Lender, during normal business
hours with minimal disruption of the Borrower’s business and after giving
reasonable prior written notice.  If
upon such inspection the Lender shall discover that any of the Vessels is in a
condition that violates in any respect the requirements of Section 5.2(i)
above, the Lender shall have the right to call for the drydocking and repair
thereof within ninety (90) days after the completion of the current project for
which such Vessel is employed and at the sole cost and expense of the
Borrower.  The Borrower shall also
permit the Lender and its representatives from 

 

25

 

time to time,
to visit and inspect its properties; inspect, audit and make extracts from its
books, records and files, including, but not limited to, management letters
prepared by its auditors; and discuss with its principal officers, and its
independent accountants, its business, assets, liabilities, financial condition
and results of operations; provided, however, that prior to an
Event of Default, the Lender shall conduct an inspection or audit, visit or
inspection not more than twice annually at the expense of the Lender, during
normal business hours with minimal disruption of the Borrower’s business and
after giving reasonable prior written notice. 
Notwithstanding the foregoing, upon the occurrence and during the
continuance of an event of default under the Senior Credit Facility, whether or
not an Event of Default shall then be continuing hereunder, the Lender shall
have the additional right to inspect the Vessels at any time and from time to
time during normal business hours with minimal disruption of the Borrower’s
business and after giving reasonable prior written notice, which inspection
rights shall not count against the twice annual inspection rights described
above.

 

(k)           Litigation.  The Borrower shall promptly inform the
Lender of any pending, or threat in writing of, litigation involving it, where
the amount claimed, together with all other claims then pending or threatened,
exceeds $10,000,000, and of any other event, condition or occurrence which, to
the best of its knowledge and belief, could reasonably be expected to have a
Material Adverse Effect.

 

(l)            Insurance.  At all times during the term hereof, the
Borrower shall obtain and keep each Vessel insured against the risks indicated
below:

 

(i)            marine hull
insurance on full conditions as per Institute Time Clauses Hull (1/10/83) or
American Institute Hull Clauses (June 2, 1977) or other conditions approved by
the Lender,  insuring each of the
Vessels against the usual risks, and for all Vessels taken together for an
agreed aggregate value of not less than 110% of the outstanding principal
balance of the Loan and in all events not less, for each Vessel, than the fair
market value of such Vessel as shown in the Initial Appraisal Report;

 

(ii)           full protection and
indemnity cover on terms and conditions as per the rules of a protection and
indemnity club that is a member of the International Group of Protection and
Indemnity Associations, or equivalent cover acceptable to the Lender, providing
for liability cover in an amount at least equal to $50,000,000 for any one
accident or occurrence;

 

(iii)          to the extent not
already included above, insurance against liability for pollution, spillage or
leakage emanating from the Vessels in an amount at least equal to $50,000,000
for any one accident or occurrence or such other amount as the Lender may
agree;

 

(iv)          when located in
areas normally considered by insurance brokers and underwriters to involve
war-like or hostile areas, war risk insurance, which shall be maintained in the
broadest forms generally available in the United States, London, European or
Japanese markets, and shall include coverage for war risk hull and machinery,
war risk protection and indemnity, confiscation, expropriation, and
piracy.  Such insurance shall be in a
total amount for the aggregate of the Vessels of not less than 

 

26

 

110% of the outstanding principal balance of
the Loan and in all events not less than, for each Vessel, the fair market
value of such Vessel as shown in the Initial Appraisal Report; and

 

(v)           to the extent not
already included above, mortgagee’s interest insurance, with a single limit at
all times of not less than the outstanding principal balance of the Loan plus
accrued but unpaid interest due thereon.

 

All such insurance shall be provided by (i) the insurers listed on Schedule
5.2(l), (ii) insurers that have an A.M. Best policy-holders rating of not
less than A, or if no such rating is applicable, having a quality comparable to
those rated A or better, or (iii) such other insurers as the Lender may
reasonably approve, and shall contain endorsements, in form and substance
reasonably satisfactory to the Lender, naming the Lender as loss payee with
respect to the casualty insurance which insures the Vessels and as an
additional insured but without any liability for premiums, calls or other
assessments with respect to each liability insurance policy.  Notwithstanding the foregoing, unless
otherwise required by the Lender by written notice to the underwriters (which
notice may only be given while an Event of Default is in existence), (i) any
loss under any insurance on the Vessels with respect to protection and
indemnity risks shall be paid directly to the Borrower to reimburse it for any
loss, damage or expense previously paid by it and covered by such insurance or
to the Person to whom any liability covered by such insurance has been
incurred, and (ii) in the case of any loss (other than a Total Loss) under any
insurance with respect to the Vessels involving any loss or damage to the
Vessels, the underwriters may, so long as they have not been notified that an
Event of Default has occurred and is continuing, pay directly for the repair,
replacement, salvage or other charges involved or, if the Borrower shall have
first repaired the damage or paid salvage or other charges, may pay the
Borrower as reimbursement therefor; provided, however, that if
such damage involves a loss in excess of 10% of the value of the affected
Vessel as of the Closing Date as established by the Initial Appraisal Report,
the underwriters shall make such payment directly to the Lender, which amount
shall be distributed by the Lender to the Borrower for application to repair or
replace the Vessel, upon the Lender’s receipt of evidence reasonably
satisfactory to it of the completion of such repairs or replacement.  The Borrower shall furnish to the Lender
annually certificates of insurance evidencing the insurance maintained in respect
of the Vessels.  Each insurer shall
agree, by endorsement upon the policy or policies issued by it, or by
independent instrument furnished to the Lender, that (i) it will give the
Lender thirty (30) days’ prior written notice of the effective date of any
material alteration, cancellation or non-renewal of such policy or policies;
and (ii) the insurance as to the interest of any named loss payee other
than the Borrower shall not be invalidated by any actions, inactions, breach of
warranty or condition or neg­ligence of the Borrower with respect to such
policy or policies.

 

Upon the occurrence of:  (i) the actual or constructive total loss or
compromised, agreed or arranged total loss of any of the Vessels; or (ii) the
loss, theft or destruction of any of the Vessels or damage thereto to such
extent as shall make repair thereof uneconomical or shall render any of the
Vessels permanently unfit for normal use for any reason whatsoever; or (iii)
the requisition of title to or other compulsory acquisition of any of the
Vessels (otherwise than by requisition for hire); or (iv) the capture, seizure,
arrest or detention of any of the Vessels by any government or by persons
acting or purporting to act on behalf of any government (as established to the
reasonable satisfaction of the Lender); unless the Vessel(s) shall be released 

 

27

 

from such capture, seizure, arrest or detention within sixty (60) days
after such occurrence but in all events prior to the maturity of the Loan (any
such occurrence being herein referred to as a “Total Loss”) of any of
the Vessels; or (ii) upon the occurrence and during the continuance of an Event
of Default, the Lender may, by delivery of written notice to the Borrower,
elect to apply all insurance proceeds received by it toward prepayment of the
Loan in accordance with Section 2.1(e).

 

The Borrower shall be responsible for
pursuing all claims under the insurances indicated above, and take such actions
as may be reasonably necessary to satisfy all insurers’ inquiries.  The Borrower agrees that the Vessels shall
be operated within the confines of the cover provided by all insurances.  The Borrower further agrees that it will not
make, do, consent or agree to any act or omission which would or could render
any insurance covering the Vessels invalid, void, voidable, or unenforceable or
render any sum payable thereunder repayable in whole or part.  The Borrower further covenants to make no
changes regarding the management of the Vessels which could invalidate or cause
to be terminated any of the insurance coverages required by the provisions of Section
5.02(l) of this Agreement, in each case without either (i) the prior
written consent of the Lender or (ii) the delivery to the Lender prior to such
change of management an endorsement or endorsements to such policy or policies
confirming that such insurances will be unaffected by such change in
management.

 

(m)          Financial
Responsibility.  The Borrower shall
comply with and satisfy all of the provisions of any applicable law,
regulation, proclamation or order concerning financial responsi­bil­ity for
liabilities imposed on the Borrower or the Vessels with respect to pollution
including, without limitation, the International Convention of Maritime Pollution
of 1973, the International Convention for the Safety of Life at Sea of 1974,
the U.S. Water Pollution Act, as amended by the Water Pollution Control Act
Amendment of 1972, the U.S. Oil Pollution Act of 1990, as the same may be
amended from time to time, and will maintain all certificates or other evidence
of financial responsibility as may be required by any such law, regulation,
proclamation or order with respect to the trade which the Vessels from time to
time engage in and the cargoes carried by them, except in each case where the
failure to so comply and satisfy or maintain could not reasonably be expected
to have a Material Adverse Effect.

 

(n)           Insolvency.  The Borrower shall provide the Lender with
written notice of the commencement of proceedings by or against it, under the
applicable bankruptcy laws or other insolvency laws (as now or hereafter in
effect), involving the Borrower, as a debtor.

 

(o)           Bonding and
Compliance with ERISA.  The Borrower
shall maintain at all times such bonding as is required by § 412 of ERISA.  As soon as practicable and in any event
within thirty (30) days after the Borrower knows or has reason to know that,
with respect to any Plan described in the first sentence of Section 5.1(k),
a “reportable event”, other than an event with respect to which the notice
requirements have been waived by regulation, has occurred, the Borrower shall
deliver to the Lender a certificate signed by its chief financial officer
setting forth the details of such “reportable event.”  With respect to any Plan described in the first sentence of Section
5.1(k) which is maintained by the Borrower or to which the Borrower and/or
any ERISA Affiliate contributes, either now or in the future, neither the
Borrower nor any ERISA Affiliate shall: 
(i) engage in or permit any “prohibited transaction” (as defined in
ERISA § 406 or Code § 4975) to occur; (ii) cause any “accumulated funding
deficiency” as defined in ERISA § 302 

 

28

 

and/or Code §
412; or (iii) terminate any such Plan in a manner that could result in the
imposition of a lien on the property of the Borrower pursuant to ERISA § 4068;
provided, however, the existence of any such prohibited transaction shall not
be an Event of Default if it does not have a Material Adverse Effect.  With respect to any Plan described in the
second sentence of Section 5.1(k) which is maintained by the Borrower or
to which the Borrower and/or any ERISA Affiliate contributes, either now or in
the future, (i) neither the Borrower nor any ERISA Affiliate shall (1) fail to
pay any required payment to any such Plan or (2) incur a complete or partial
withdrawal with respect to any such Plan within the meaning of ERISA § 4203 and
4205, if failure to act or acts could reasonably be expect to have a Material
Adverse Effect; and (ii) within fifteen (15) days after notice is received by
the Borrower or any ERISA Affiliate that any such Plan has been or shall be
placed in “reorganization” within the meaning of ERISA § 4241, which could reasonably
be expected to result in liability to the Borrower in excess of $10,000,000,
the Borrower shall notify the Lender to that effect.  Upon the Lender’s request, the Borrower shall deliver, or cause
to be delivered, to the Lender a copy of the most recent actuarial report,
financial statements and annual report completed with respect to any Plan which
is a “defined benefit plan,” as defined in ERISA § 3(35), to which the Borrower
contributes, other than a Multiemployer Plan.

 

(p)           Environmental.  The Borrower shall advise the Lender in
writing, promptly upon becoming aware of any of the following which could
reasonably be expected to result in liabilities or expenses of the Guarantor or
the Borrower in excess of $10,000,000 in the aggregate:  (i) any and all enforcement, cleanup,
remedial, removal or other governmental or regulatory actions instituted,
completed or threatened pursuant to any applicable federal, state or local
laws, ordinances or regulations relating to any Hazardous Materials affecting the
Borrower’s business operations; (ii) all claims made or threatened by any
third party against the Borrower relating to damages, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous Materials;
and (iii) any remedial action taken by the Borrower with respect to the
Borrower’s business operations.

 

(q)           Assignment of
Charters.  Within ten (10) Business
Days of the date on which the Borrower enters into any charter for the use,
operation or employment of any Vessel (including renewals and extensions
thereof) having a duration of nine (9) months or more (other than charters
entered into in connection with work being performed on bonded projects) (the “GE
Charters”), the Borrower shall provide the Lender with a copy of such charter,
including all amendments and additions thereto, which shall set out, inter
alia, the name and address of the charterer.  In addition, if requested by the Lender, the Borrower shall use
commercially reasonable efforts to cause the charterer to execute and deliver
to the Lender a consent, acknowledging its consent to the prior assignment and
agreeing upon receipt of written notice from the Lender that an Event of
Default has occurred and is continuing, to make all payments of charter hire
and other amounts directly to the Lender.

 

(r)            Financial
Covenants.  The Borrower covenants
and agrees that so long as any of the Obligations (other than contingent
obligations hereunder for which no claim has been or is reasonably expected to
be made) remain outstanding:

 

(i)            Capital Expenditures.  The Guarantor and its consolidated
Subsidiaries shall not make or permit Capital Expenditures (other than
Permitted Business 

 

29

 

Acquisitions)
in an aggregate amount in excess of $22,000,000 during any Fiscal Year
commencing with Fiscal Year 2004 (with respect to any such Fiscal Year, the “Base
Capital Expenditure Amount”); provided, however, that the
Base Capital Expenditure Amount for any Fiscal Year after Fiscal Year 2004 may
be increased by (A) an amount equal to the excess, if any, of (i) the Base
Capital Expenditure Amount for the immediately preceding Fiscal Year, over (ii)
the actual amount of Capital Expenditures made by the Guarantor and its
Subsidiaries during such immediately preceding Fiscal Year; plus (B) the amount
of Capital Expenditures permitted in the immediately succeeding Fiscal Year (provided
that the Base Capital Expenditure Amount for such succeeding Fiscal Year shall
be reduced by the amount of any increase pursuant to this Clause (B); and provided,
further, that in no event shall the amount of Capital Expenditures made
by the Borrower and its consolidated Subsidiaries in any Fiscal Year exceed
$26,000,000).  The Guarantor and its
consolidated Subsidiaries shall not make Permitted Business Acquisitions except
to the extent that the aggregate consideration paid (including the assumption
of Debt and the fair market value of any non-cash consideration) to make all
Permitted Business Acquisitions consummated after the Closing Date does not
exceed $20,000,000.

 

(ii)           Maximum Total Leverage.  The Guarantor and its consolidated
Subsidiaries shall not permit the ratio (the “Total Leverage Ratio”) of
(i) the aggregate unpaid principal amount of Total Funded Debt as of the last
day of any Fiscal Quarter ending during the periods described below to (ii)
Adjusted Consolidated EBITDA for the four (4) consecutive Fiscal Quarter period
ending as of such date, to exceed the corresponding ratio set forth below
opposite such period:

 

	
  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  January 1,
  2004 through and including December 31, 2004

  	
   

  	
  5.75 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2005 through and including December 31, 2005

  	
   

  	
  5.50 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2006 through and including December 31, 2006

  	
   

  	
  5.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2007 through and including December 31, 2007

  	
   

  	
  4.75 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2008 through and including December 31, 2008

  	
   

  	
  4.50 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2009 through and including December 31, 2009

  	
   

  	
  4.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2010 and thereafter

  	
   

  	
  3.50 to 1.00

  

 

(iii)          Maximum Senior Leverage.  The Guarantor and its consolidated
Subsidiaries shall not permit the ratio (the “Senior Leverage Ratio”) of
(i) the aggregate unpaid 

 

30

 

principal
amount of Senior Debt as of the last day of any Fiscal Quarter ending during
the periods described below to (ii) Adjusted Consolidated EBITDA for the four
(4) consecutive Fiscal Quarter period ending as of such date, to exceed the
corresponding ratio set forth below opposite such period:

 

	
  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  January 1,
  2004 through and including December 31, 2004

  	
   

  	
  2.50 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2005 through and including December 31, 2005

  	
   

  	
  2.25 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2006 through and including December 31, 2006

  	
   

  	
  2.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2007 through and including December 31, 2007

  	
   

  	
  1.75 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2008 through and including December 31, 2008

  	
   

  	
  1.50 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2009 and thereafter

  	
   

  	
  1.25 to 1.00

  

 

(iv)          Interest Coverage Ratio.  The Guarantor and its consolidated
Subsidiaries shall not permit the ratio of (i) Adjusted Consolidated EBITDA for
any four (4) consecutive Fiscal Quarter period ending as of the last day of any
Fiscal Quarter ending during the period described below to (ii) Interest
Expense, in each case for the four (4) consecutive Fiscal Quarter period ending
as of such date, to be less than the corresponding ratio set forth below
opposite such period:

 

	
  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  January 1,
  2004 through and including December 31, 2004

  	
   

  	
  1.75 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2005 through and including December 31, 2005

  	
   

  	
  2.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2006 through and including December 31, 2006

  	
   

  	
  2.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2007 through and including December 31, 2008

  	
   

  	
  2.25 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2009 and thereafter

  	
   

  	
  2.50 to 1.00

  

 

31

 

Section 5.3.            Negative
Covenants.

 

The Borrower
covenants and agrees that so long as any of the Obligations (other than
contingent obligations hereunder for which no claim has been or is reasonably
expected to be made) remain outstanding, the Borrower shall not:

 

(a)           Liens.  Create, incur, assume or suffer to exist any
Lien upon the Collateral except Liens in favor of the Lender and Permitted
Liens.

 

(b)           Jurisdiction of
Incorporation; Place of Business. 
Change its jurisdiction of incorporation or the location of its
principal place of business from that set forth in Section 7.2
without giving the Lender at least fifteen (15) Business Days prior written
notice of such change and setting forth in detail the new jurisdiction of
incorporation and/or complete address of such new place of business, and in
furtherance thereof, the Lender is authorized to authenticate and file Uniform
Commercial Code financing statements, amendments or continuation statements in
such jurisdiction or jurisdictions as the Lender shall deem reasonably
necessary or appropriate.

 

(c)           Assignments.  Assign to any Person other than the Lender
any of GE Charters or any of the insurances (other than liability and protection
and indemnity insurance) in respect of the Vessels.

 

(d)           Sale of Capital
Stock or Assets of the Borrower; Merge. 
Sell all or substantially all of the capital stock or assets of the
Borrower or merge into or consolidate with any other Person, except the
following shall be permitted:

 

(1)           any Subsidiary of the Borrower may
liquidate or dissolve voluntarily into, and may merge with and into, the
Borrower, and the assets or stock of any of the Borrower’s Subsidiaries may be
purchased or otherwise acquired by the Borrower, as the case may be; or

 

(2)           Permitted Business Acquisitions.

 

(e)           Flag.  Change the flag of any Vessel.

 

(f)            Conduct of
Business.  Engage in any business
other than (i) the businesses of dredging, aggregate mining and supply, towing
services, marine construction, dredging reclamation activities and demolitions,
and commercial and industrial demolition and (ii) any businesses reasonably
related, complimentary or incidental thereto.

 

(g)           Change of Control.  Allow to occur any Change of Control, except
that the proposed sale or merger (the “Sale”) of the Guarantor, which is
expected to occur prior to March 15, 2004, shall be permitted, provided  that
the following conditions are met (immediately after giving effect to the Sale,
and treating such Sale as having occurred on the last day of the immediately
preceding fiscal quarter of the Borrower):

 

(i)            the
Guarantor and the Borrower and their consolidated Subsidiaries shall have a
ratio of Total Funded Debt to EBITDA (calculated on a rolling 12 month basis
through the end of the then most recent fiscal quarter of the Borrower and the
Guarantor) of less than or equal to 4.25 to 1.0;

 

(ii)           the
Guarantor and the Borrower and their consolidated Subsidiaries 

 

32

 

shall have no Senior Debt, other than (a) the
Senior Credit Facility, (b) the Loan, and (c) not more than $10,000,000 of
other Senior Debt; and

 

(iii)            the Guarantor and the Borrower and their
consolidated Subsidiaries shall have a ratio of Senior Debt to EBITDA (calculated
on a rolling 12 month basis through the end of the then most recent fiscal
quarter of the Borrower and the Guarantor) less than or equal to 1.8 to 1.0.

 

(h)           Operation of Vessels Outside U.S. Territorial Waters.
The Borrower shall not operate any of the Vessels outside the territorial waters of the United States,
without the Lender’s prior written consent; provided, however, that if the Borrower requests such consent and the Lender
does not so consent, so long as no Event of Default has occurred and is
continuing, the Borrower shall have the right to have the Lender’s Lien on the
subject Vessel released by making a voluntary prepayment on
the Loan in an amount determined by multiplying the remaining unpaid principal
balance of the Loan by the Applicable Percentage for the subject Vessel.  Provided no Event
of Default shall have occurred and be continuing, upon the Lender’s receipt of
such prepayment, together with any applicable Prepayment Premium, Breakage
Fees, if any, and all other sums due in connection therewith, the Lender shall
release such Vessel from the Lien of its Fleet Mortgage and all other Loan
Documents.  The
Lender agrees to execute and deliver to the Borrower any instrument, agreement
or release document necessary to effect such release of Liens, and to take such
other actions as shall be reasonably necessary to release the Liens required to
be released under this Section 5.3(h) promptly upon the reasonable
request and at the sole cost and expense of the Borrower.

 

ARTICLE 6

 

EVENTS OF
DEFAULT; REMEDIES

 

Section 6.1.            Events of Default, Acceleration.  If any of the following events (each an “Event
of Default” and collectively “Events of Default”) shall occur and be
continuing:

 

(a)           the Borrower shall
fail to pay on the date when due (i) any installment of principal due on the
Loan or (ii) any interest due on the Loan or any other amount payable pursuant
to Section 2.3, 2.4(d) or 7.6(a) and such failure
shall continue for three (3) Business Days; or

 

(b)           the Borrower defaults
in the due and punctual performance and observance of any provision of Section 5.2(b),
(e), (f), (h), (l), (n)  (o) and (r)
and Section 5.3; or

 

(c)           the Borrower or the
Guarantor fails to perform or observe, or cause to be performed or observed,
any term, covenant or agreement contained in the Loan Documents or any
certificate delivered pursuant thereto which is not specifically referenced in
this Section 6.1 and such failure shall continue for a period of
thirty (30) days after the giving of written notice thereof by the Lender to
the Borrower; or

 

(d)           any representation
or warranty made by the Borrower or the Guarantor hereunder or by the Borrower
in any of the other Loan Documents shall prove to have been incorrect or
misleading in any material respect on the date when made; or

 

33

 

(e)           (i)            the Borrower or the Guarantor shall
fail to pay any Debt in an aggregate principal amount in excess of $1,000,000
at its final scheduled maturity date; or

 

(ii)           any
breach, default or event of default shall occur under any instrument, agreement
or indenture pertaining to any Debt referred to in clause (i) above, if the
effect thereof, after giving effect to any applicable grace or cure period, is
to accelerate the maturity of such Debt or cause such Debt to be declared due
and payable or required to be prepaid (other than by a regularly scheduled
required prepayment), repurchased or redeemed prior to the originally stated
maturity thereof; or

 

(f)            one or more final judgments for the
payment of money in the aggregate in excess of $10,000,000 (to the extent not
covered by insurance) entered by a court of competent jurisdiction against the
Borrower or the Guarantor shall remain undischarged, unpaid, unvacated,
unbonded or unstayed for a period of thirty (30) days from the date of its
entry, or there shall be any period of thirty (30) consecutive days during
which a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, shall not be in effect; or

 

(g)           the Borrower or the Guarantor shall
(i) apply for or consent to the appointment of or the taking possession by a
receiver, trustee, liquidator, assignee, custodian, sequestrator or the like of
itself or substantially all of its property, (ii) admit in writing its
inability to pay its debts generally, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case under the bankruptcy laws
of any jurisdiction, (v) file a petition or answer seeking reorganization or an
arrangement with creditors or to take advantage of any insolvency law or an
answer admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or (vi) take corporate
action or other action for the purpose of effecting any of the foregoing; or

 

(h)           an order, judgment, or decree shall
be entered in any involuntary case with or without the application, approval or
consent of the Borrower or the Guarantor, by a court or governmental agency of
competent jurisdiction, granting relief under or approving a petition seeking
reorganization, or appointing a receiver, trustee, liquidator assignee,
custodian, sequestrator or the like of the Borrower or the Guarantor, or of its
property and such order, judgment or decree shall continue unstayed and in
effect for a period of sixty (60) consecutive days; or

 

(i)            for any reason, the Lender fails to
hold a perfected first preferred mortgage on the Vessels (other than in
accordance with the terms hereof or thereof); or

 

(j)            an event of default shall occur and
be continuing under any of the other Loan Documents and all grace or cure
periods, if any, with respect thereto shall have expired; or

 

(k)                                  the Borrower ceases
operations or is dissolved;

 

(l)            any
notice shall have been issued by the United States Coast Guard to the effect
that any Vessel subject to the Fleet Mortgage is subject to deletion from
registry or the 

 

34

 

Certificate of Documentation
for any such Vessel or the endorsement noted thereon is subject to revocation
or cancellation, for any reason whatsoever and such notice is not appealed or
challenged by appropriate legal action within thirty (30) days of the
Borrower’s receipt thereof or such other period of times as may be permitted by
law, or any Vessel subject to the Fleet Mortgage is deleted from registry or
the Certificate of Documentation for any such Vessel or the endorsement noted
thereon is revoked or cancelled;

 

then, and in any such event (A) the Lender may declare the Loan to be
in Default, (B) upon written notice to the Borrower, the Lender may declare all
of the Borrower’s Obligations to the Lender hereunder, together with accrued
interest to the date of payment to be, and the same shall forthwith become,
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which the Borrower hereby waives, and (C) the
Lender may exercise all other remedies available to it under any Loan Document
or any applicable law; provided, however, if a default occurs
under subparts (g) and (h) of this Section 6.1, no such declaration
or notice shall be necessary and subpart (A), (B), and (C) hereof shall operate
as if such declaration and notice had been made.

 

The rights and remedies of the Lender
hereunder and under any documents or instruments executed pursuant hereto are
cumulative, and recourse to one or more rights or remedies shall not constitute
a waiver of the others or an election of remedies.  It is mutually agreed that commercial reasonableness and good
faith require the giving of no more than ten (10) Business Days’ prior written
notice of the time and place of any public sale of any Collateral or of the
time after which any private sale or any other intended disposition thereof is
to be made, and at any such public or private sale, subject to limitations of
law, the Lender, its agents and/or nominees, may purchase the Collateral.  If the net proceeds of any disposition of
Collateral exceed the amount then due and owing, whether by acceleration, at
maturity or otherwise, or on demand, such excess will be remitted to Borrower
or whomsoever shall be legally entitled thereto.  The Borrower shall remain liable for any deficiency remaining
after disposition of Collateral.

 

If the Borrower fails to perform or comply
with any of its obligations contained herein, the Lender shall have the right,
but shall not be obligated, to effect such performance or compliance and the
Borrower, within ten (10) Business Days from the date of demand, shall
reimburse the Lender immediately for such sums so expended, together with
interest thereon at the Default Rate for the actual number of days elapsed from
date of payment by the Lender to the date on which the Lender receives payment
thereof from the Borrower.  Failure of
the Borrower to pay and promptly discharge the aforesaid debts and obligations
shall constitute an Event of Default under this Agreement, but the payment of
the same by the Lender shall not cure or constitute a waiver of such Event of
Default.  Upon the occurrence and during
the continuance of an Event of Default, all payments received by the Lender
from or on behalf of the Borrower shall be applied by the Lender to any
installment(s) due and payable under the Note as the Lender, in its sole
discretion, may determine, without notice to or consent of Borrower, the
Borrower hereby expressly waives (to the extent permitted by law) all rights to
make or manifest any binding instruction upon the Lender as to application of
such pay­ments other than as provided herein. 
Acceptance by the Lender of partial payment(s) or performance by the
Borrower or by any other third party shall not be construed as a waiver of any
Event of Default, nor shall the same affect or in any way impair the rights and
remedies of the Lender hereunder.

 

35

 

Section 6.2.            Additional Rights.  The Borrower hereby irrevocably appoints the
Lender as its attorney-in-fact (which power shall be deemed coupled with an
interest) to, following the occurrence and during the continuance of an Event
of Default execute, endorse and deliver any deed, conveyance, assignment or
other instrument in writing as may be required to vest in the Lender any right,
title or power which by the terms hereof are expressed to be conveyed to or
conferred upon the Lender, including any documents and checks or drafts
relating to or received in payment for any loss or damage under the policies of
insurance required by the provisions of Section 5.2(l) hereof, but
only to the extent that the same relates to the Collateral.

 

 

ARTICLE 7

 

MISCELLANEOUS

 

Section 7.1.            Amendments, etc.  No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Borrower therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Lender and the Borrower and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

 

Section 7.2.            Notices, etc.  All notices and other communications
provided for hereunder shall be in writing and mailed, facsimile transmitted or
delivered as follows:

 

	
  To the Borrower:

  	
   

  	
  Great Lakes Dredge & Dock Company

  
	
   

  	
   

  	
  2122 York Road

  
	
   

  	
   

  	
  Oak Brook, Illinois 60521

  
	
   

  	
   

  	
  Attn:

  	
  Deborah A. Wensel

  
	
   

  	
   

  	
   

  	
  Senior Vice President,

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer and Treasurer

  
	
   

  	
   

  	
  Fax: (630) 574-2981

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  with a copy
  to:

  	
   

  	
  Brian S.
  Hart

  
	
   

  	
   

  	
  Winston
  & Strawn LLP

  
	
   

  	
   

  	
  35 W. Wacker
  Drive

  
	
   

  	
   

  	
  Chicago,
  Illinois 60601

  
	
   

  	
   

  	
  Fax:  (312) 558-5700

  

 

36

 

 

	
  To the Lender:

  	
   

  	
  General Electric Capital Corporation

  
	
   

  	
   

  	
  500 West Monroe Street

  
	
   

  	
   

  	
  Suite 2900

  
	
   

  	
   

  	
  Chicago, Illinois  60661

  
	
   

  	
   

  	
  Attn: Walter R. Schoultz

  
	
   

  	
   

  	
  Facsimile: (312) 441-7395

  
	
   

  	
   

  	
   

  
	
  with a copy
  to:

  	
   

  	
  Patrick K. Cameron, Esq.

  
	
   

  	
   

  	
  Ober, Kaler, Grimes & Shriver

  
	
   

  	
   

  	
  120 E. Baltimore Street, 9th Floor

  
	
   

  	
   

  	
  Baltimore, Maryland 21202

  
	
   

  	
   

  	
  Fax:  (410) 547-0699

  

 

or to such other address as shall be designated by such party in a
written notice to the other party.  All
such notices and communica­tions shall, when mailed be sent by first class
registered mail postage prepaid and be effective three (3) calendar days after
being deposited in the U.S. mails addressed as aforesaid.  All notices sent by facsimile transmission
shall be effective when sent.  All other
forms of written notice or other communication shall be effective upon receipt.

 

Section 7.3.            Governing Law.  THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF SAID STATE,
INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW
BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAWS.

 

Section 7.4.            Service of Process and Consent to
Jurisdiction; Waiver of Venue.  Each
party hereto hereby irrevocably submits to the non-exclusive jurisdiction of
the Federal and State courts located in the State of New York, in any action
brought under this Agreement, the Note, or any other Loan Document and agrees
that a summons and complaint commencing any action or proceeding in such court
shall be properly served if delivered personally or by registered mail to such
party at its address set forth in Section 7.2 above, or otherwise
served under the laws of the State of New York, and each party hereto hereby
waives any objection to venue and jurisdiction which the Borrower may now or
hereafter have.  Each party shall
promptly notify the other party of any change in such address.  Nothing herein shall affect the right of the
Lender to serve process in any other matter prescribed by law or the right of
the Lender to bring legal proceedings in any other competent jurisdiction.

 

Section 7.5.            No Remedy Exclusive.  Each and every right, power and remedy given
to the Lender in this Agreement, the Note, and the other Loan Documents shall
be cumulative and shall be in addition to every other right, power and remedy
herein or therein given now or hereafter existing at law, in equity, in
admiralty, by statute or otherwise. 
Each and every right, power and remedy whether given therein or
otherwise existing may be exercised from time to time as often and in such
order as may be determined by the Lender, and neither the failure or delay in
exer­cising any power or right nor the exercise or partial exercise of any
right, power or remedy shall be construed to be a waiver of or acquiescence in
any default therein; nor shall the acceptance of any security or of any payment
of or on account of the Loan, obligations, 

 

37

 

expenses, interest or fees maturing after a
default or of any payment on account of any past default be construed to be a
waiver of any right to take advantage of any future default or of any past
default not completely cured thereby.

 

Section 7.6.            Payment of Costs.  Whether or not the transactions contemplated
herein shall be consummated, the Borrower hereby agrees to pay (a) all
reasonable out-of-pocket costs and expenses (evidenced by invoices in
reasonable detail) incurred by the Lender (including the reasonable fees and
expenses of its counsel) in connection with the preparation, execution and
delivery of this Agreement and any Loan Document or any amendment to any Loan
Document, and (b) all losses, costs and expenses (including, but not limited
to, reasonable attorneys’ fees and expenses) in connection with (i) the
preservation of any rights of the Lender under, or legal advice in respect of,
the rights or responsibilities of the Lender under this Agreement and the Loan
Documents or (ii) the enforcement of any Loan Document.  The Borrower agrees to indemnify and hold
the Lender harmless from and against any documentary taxes, assessments or
charges made by any governmental authority by reason of the execution, delivery,
filing or recordation of this Agreement or any Loan Document.

 

Section 7.7.            Further Assurances.  The Borrower further agrees to execute such
other and further assurances and documents as reasonably requested by the
Lender to more effectively to carry out the terms of this Agreement or of any
other Loan Document.

 

Section 7.8.            Counterparts.  This Agreement may be executed in
counterparts, each of which when so executed shall be deemed an original but
all such counterparts shall together constitute but one and the same
instrument.

 

Section 7.9.            Headings.  The titles of the Articles and the Section
headings of this Agreement are for convenience only and shall not affect the
construction of this Agreement.

 

Section 7.10.          Severability.  If any term or provision of this Agreement
or any other Loan Document shall be determined to be invalid or unenforceable
for any reason, such determination shall not adversely affect any other term or
provision of this Agreement or such other Loan Document which shall remain in
full force and effect and the effect of such determination shall be limited to
the territory or the jurisdiction in which made.

 

Section 7.11.          Survival.  The Borrower’s agreements, representations,
warranties and conditions contained in this Agreement and made pursuant to the
provisions hereof shall survive the execution and delivery of this Agreement
until the Loan and all interest thereon shall have been repaid in full in
accordance with the terms of this Agreement, and any and all other moneys, payments,
obligations and liabilities which the Borrower shall have made, incurred or
become liable for pursuant to the terms of this Agreement or any other Loan
Document shall have been paid in full.

 

Section 7.12.          WAIVER OF TRIAL BY JURY.  THE PARTIES HERETO HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO WHICH THEY MAY BE PARTIES, ARISING OUT OF
OR IN ANY WAY PERTAINING TO (A) THIS AGREEMENT OR (B) THE OTHER LOAN
DOCUMENTS.  IT IS AGREED AND UNDERSTOOD
THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY

 

38

 

OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH
ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO
THIS AGREEMENT.  THIS WAIVER IS
KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY EACH OF THE PARTIES HERETO, AND
THE PARTIES HEREBY REPRE­SENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE
BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY
WAY MODIFY OR NULLIFY ITS EFFECT.  THE
PARTIES FURTHER REPRESENT THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF THEIR OWN FREE WILL, AND THEY HAVE HAD THE OPPORTUNITY TO DISCUSS
THIS WAIVER WITH COUNSEL.

 

Section 7.13.          Assignment by The Lender.  The Lender may assign its rights and
obligations under this Agreement or any of the other Loan Documents and may
sell to any other Person participations in the Loan.  If the Lender shall assign or participate its interest in the
Loan to any Person that is a U.S. Person and is not taxed as a corporation for
federal income tax purposes, such Person shall deliver to Borrower a completed
IRS Form W-9 certifying that such Person is exempt from backup withholding on
all payments under this Agreement.  If
the Lender shall assign or participate its interest in the Loan to any Person
that is not a U.S. Person, such Person shall deliver to the Borrower a
completed IRS Form W-8BEN or IRS Form W-8ECI certifying that such Person is
exempt from withholding on all payments under this Agreement.  Such Person’s shall update such forms as
necessary to reflect a change in circumstances or the passage of time.  If an assignee or participant does not
deliver the forms required under this Section 7.13 certifying that such
Person is exempt from withholding, the Borrower shall not be required (i) to
increase any payments as required under Section 2.4(d) with respect to
withholding taxes imposed on payments with respect to such Person’s interest in
the Loan or (ii) indemnify any Person for any taxes under Section 2.4(d)
imposed on any payments with respect to such Person’s interest in the Loan.

 

Section 7.14.          Confidentiality.  The Lender hereby agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be informed
of the confidential nature of such Information and instructed to keep such
Information confidential); (b) to the extent requested by any regulatory
authority; (c) to the extent 
required by applicable laws or regulations or by any subpoena or similar
legal process; (d) to any other party to this Agreement; (e) in connection with
the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder; (f) subject
to an agreement containing provisions substantially the same as those of this Section
7.14, to (i) any assignee of or participant in, or any prospective assignee
of or participant in, any of its rights or obligations under this Agreement or
(ii) any direct or indirect contractual counterparty or prospective
counterparty (or such contractual counterparty’s or prospective counterparty’s
professional advisor) to any credit derivative transaction relating to
obligations of the Borrower; (g) with the consent of the Borrower; (h) to
the extent such Information (1) becomes publicly available other than as a
result of a breach of this Section 7.14 or (2) becomes available to
the Lender on a nonconfidential basis from a source other than the Borrower  (unless such information became
available from such source in violation of a 

 

39

 

confidentiality
obligation of such source with respect to such Information, of which obligation
the Lender was aware); or (i) to any nationally
recognized rating agency that requires access to information about the Lender’s
or its Affiliates’ investment portfolio in connection with ratings issued with
respect to such Lender or its Affiliates. 
For the purposes of this Section 7.14, “Information” means
all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the Lender on a
nonconfidential basis prior to disclosure by the Borrower.  Any Person required to maintain the
confidentiality of Information as provided in this Section 7.14 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential
information.  Notwithstanding anything
herein to the contrary, Information shall not include, and the Borrower and the
Lender (and each employee, representative or other agent of the Borrower and
the Lender) may disclose to any and all persons without limitation of any kind,
any information with respect to the U.S. federal income tax treatment and U.S.
federal income tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Borrower or the Lender relating to such tax treatment and tax
structure.

 

 

[SIGNATURES BEGIN ON NEXT PAGE]

 

40

 

IN WITNESS WHEREOF, the parties hereto have
caused this Credit Agreement to be duly executed as of the day and year first
above written.

 

	
   

  	
  GREAT LAKES DREDGE & DOCK COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
  Name: Deborah A. Wensel

  
	
   

  	
   

  	
  Title: Senior Vice President, Chief Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Walter R. Schoultz

  	
   

  
	
   

  	
   

  	
  Name: Walter R. Schoultz

  
	
   

  	
   

  	
  Title: Vice President

  
					

 

 

 

Schedule 5.2(l)

 

Insurance Providers

 

 

1.                                       The
West of England Ship Owners Mutual Insurance Association

 

2.                                       Lloyds
of London and London Insurance Companies

 

 

Exhibit A

 

Vessels

 

 

	
  Vessel Name

  	
   

  	
  Official
  Number

  
	
   

  	
   

  	
   

  
	
  FLORIDA

  	
   

  	
  506446

  
	
  KEY WEST

  	
   

  	
  684596

  
	
  G.L. 184

  	
   

  	
  652202

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