Document:

EXHIBIT
10.3

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into on October
2, 2006 by and between Stellent, Inc., a Minnesota corporation (the “Company”),
and Frank A. Radichel, a resident of the state of Minnesota (“Employee”).

RECITALS

A.          Employee is a key
member of the management of the Company and it is desirable and in the best
interests of the Company and its shareholders to continue to obtain the
benefits of Employee’s services and attention to the affairs of the Company.

B.           It is desirable and
in the best interests of the Company and its shareholders to provide inducement
for Employee (A) to remain in the service of the Company in the event of any
proposed or anticipated change in control of the Company and (B) to remain in
the service of the Company in order to facilitate an orderly transition in the
event of a change in control of the Company, without regard to the effect such
change in control may have on Employee’s employment with the Company.

C.           It is desirable and
in the best interests of the Company and its shareholders that Employee be in a
position to make judgments and advise the Company with respect to proposed
changes in control of the Company.

D.   The Company and Employee are parties to an
Amended and Restated Employment Agreement between them dated as of April 1,
2003 (the “Prior Agreement”).

E.           In October 2004, the American Jobs
Creation Act of 2004 (the “Act”) was enacted, Section 885 of which Act added
new provisions to the Internal Revenue Code pertaining to deferred
compensation.

F.           The Treasury Department has issued
transition guidance, revised transition guidance and proposed regulations
regarding the deferred compensation provisions of the Act, which permit service
providers and service recipients a transition period to modify existing
deferred compensation arrangements to bring them in compliance with the Act.

G.           The parties agree that it is in their
mutual best interests to modify and clarify the terms and conditions of the
Prior Agreement, as set forth in this Agreement, with the full intention of
complying with the Act so as to avoid the excise taxes and penalties imposed
under the Act.

H.          The Company and Employee wish to
continue the employment relationship and to provide for certain additional benefits
for Employee, subject to the terms and conditions set forth in this Agreement.

 

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements of the Company and Employee set forth below, the Company
and Employee, intending to be legally bound, agree as follows:

1.             Employment.  Subject to all terms and conditions hereof,
the Company shall employ Employee, and Employee shall serve the Company and
perform services for the Company, until such time as Employee’s employment is
terminated in accordance with Section 12 hereof.

2.             Position
and Duties.

(a)             Position
with the Company.  During the term of
Employee’s employment with the Company, Employee shall perform such duties and
responsibilities as the Company shall assign to him from time to time.

(b)             Performance
of Duties and Responsibilities. 
Employee shall serve the Company faithfully and to the best of his
ability and shall devote his full time, attention and efforts to the business
of the Company during his employment. 
Employee shall report to the President and Chief Executive Officer, or
to such other party that may be designated by the President and Chief Executive
Officer.  During his employment
hereunder, Employee shall not accept other employment or engage in other
material business activity, except as approved in writing by the Board of
Directors of the Company (the “Board”). 
Employee hereby represents and confirms that he is under no contractual
or legal commitments that would prevent him from fulfilling his duties and
responsibilities as set forth in this Agreement.

3.             Compensation
and Benefits.

(a)             Base
Salary.  While Employee is employed
by the Company hereunder, the Company shall pay to Employee an annual base
salary at a rate determined by the Company, less deductions and withholdings,
which base salary shall be paid in accordance with the Company’s normal payroll
policies and procedures.  During each
year after the first year of Employee’s employment hereunder, the Company shall review and may adjust Employee’s base salary in its
sole discretion.

(b)           Bonus/Commissions.  From time to time during Employee’s
employment with the Company, Employee may be eligible for bonuses and/or
commissions in accordance with the terms and conditions of a bonus and/or
commission plan established by the Company. 
The Company shall review and may revise any bonus and/or commission
program in its sole discretion.

(c)           Equity
Awards.  From time to time the
Compensation Committee, in its sole discretion, may grant Employee options or
other equity awards, in accordance with the

 

terms and conditions of the Company’s stock option or other equity
plans as may be in effect from time to time.

(d)           Employee
Benefits.  While Employee is employed
by the Company hereunder, Employee shall be entitled to participate in all
employee benefit plans and programs of the Company to the extent that Employee
meets the eligibility requirements for each individual plan or program.  The Company provides no assurance as to the
adoption or continuance of any particular employee benefit plan or program, and
Employee’s participation in any such plan or program shall be subject to the
provisions, rules and regulations applicable thereto.

(e)           Expenses.  While Employee is employed by the Company
hereunder, the Company shall reimburse Employee for all reasonable and
necessary out-of-pocket business, travel and entertainment expenses incurred by
Employee in the performance of the duties and responsibilities hereunder,
subject to the Company’s normal policies and procedures for expense
verification and documentation.

(f)            Vacation.  While Employee is employed by the Company
hereunder, Employee shall be entitled to paid vacation consistent with the
Company’s vacation policy, which may be amended from time to time in the Company’s
discretion.  Vacation days shall be taken
at such times so as not to disrupt the operations of the Company.

4.             Affiliated
Entities.  As used in this Agreement,
“Affiliates” shall include the Company and each corporation, partnership, or
other entity, which controls the Company, is controlled by the Company, or is
under common control with the Company (in each case “control” meaning the
direct or indirect ownership of 50% or more of all outstanding equity
interests).

5.             Confidential
Information.  Except as permitted by
the Board, Employee shall not at any time divulge, furnish or make accessible
to anyone or use in any way other than in the ordinary course of the business
of the Company or its Affiliates, any confidential, proprietary or secret knowledge
or information of the Company or its Affiliates that Employee has acquired or
shall acquire about the Company or its Affiliates, whether developed by himself
or by others, concerning (i) any trade secrets, (ii) any confidential,
proprietary or secret designs, programs, processes, formulae, plans, devices or
material (whether or not patented or patentable) directly or indirectly useful
in any aspect of the business of the Company or of its Affiliates, (iii) any
customer or supplier lists, (iv) any confidential, proprietary or secret
development or research work, (v) any strategic or other business, marketing or
sales plans, (vi) any financial or personnel data or plans, or (viii) any other
confidential or proprietary information or secret aspects of the business of
the Company or of its Affiliates. 
Employee acknowledges that the above-described knowledge and information
constitutes a unique and valuable asset of the Company and represents a
substantial investment of time and expense by the Company, and that any
disclosure or other use of such knowledge or information other than for the
sole benefit of the Company or its Affiliates would be wrongful and would cause
irreparable harm to the Company. 
Employee shall refrain from intentionally committing any acts that would
materially reduce the value of such knowledge or information to the Company or
its Affiliates.  The

 

foregoing obligations of confidentiality shall not apply to any
knowledge or information that (i) is now or subsequently becomes generally publicly
known, other than as a direct or indirect result of the breach of this
Agreement, (ii) is independently made available to Employee in good faith by a
third party who has not violated a confidential relationship with the Company
or its Affiliates, or (iii) is required to be disclosed by law or legal
process.  Employee understands and agrees
that his obligations under this Agreement to maintain the confidentiality of
the Company’s confidential information are in addition to any obligations of
Employee under applicable statutory or common law.

6.             Ventures.  If, during Employee’s employment with the
Company, Employee is engaged in or provides input into the planning or
implementing of any project, program or venture involving the Company, all
rights in such project, program or venture shall belong to the Company.  Except as approved in writing by the Board of
Directors of the Company, Employee shall not be entitled to any interest in any
such project, program or venture or to any commission, finder’s fee or other
compensation in connection therewith. 
Employee shall have no interest, direct or indirect, in any customer or
supplier that conducts business with the Company.

7.             Conflicts
of Interest.  During Employee’s
employment with the Company hereunder, Employee shall not, directly or
indirectly, transact business with the Company personally, or as agent, owner,
partner, or shareholder of any other entity unless any such transaction has
been knowingly approved by all disinterested members of the Company’s Board of
Directors.

8.             Noncompetition
and Nonsolicitation Covenants.

(a)           Agreement
Not to Compete.  During Employee’s
employment with the Company or any Affiliates and for a period of twelve (12)
consecutive months from and after the termination of Employee’s employment,
whether such termination is with or without cause, or whether such termination
is at the instance of Employee or the Company, Employee shall not, directly or
indirectly (including without limitation as a proprietor, principal, agent,
partner, officer, director, stockholder, employee, member of any association,
consultant or otherwise), engage in any business, in the United States or in
any other location in which the Company is then doing business or actively
planning to do business:

(i)            that designs, develops, markets, distributes, or sells
web content management services or products, or

(ii)           that designs, develops, markets, distributes, or sells
services or products similar to any service or product then being developed,
marketed, or distributed by the Company.

Ownership by Employee, as a passive investment, of less than 3% of the
outstanding shares of capital stock of any corporation listed on a national
securities exchange or publicly traded in the over-the-counter market shall not
constitute a breach of this Section 8(a).

 

(b)           Agreement
Not to Hire.  During Employee’s
employment with the Company or any Affiliates and for a period of twelve (12)
consecutive months from and after the termination of Employee’s employment,
whether such termination is with or without cause, or whether such termination
is at the instance of Employee or the Company, Employee shall not, directly or
indirectly (including without limitation as a proprietor, principal, agent,
partner, officer, director, stockholder, employee, member of any association,
consultant or otherwise), hire, engage or solicit any person who is then an
employee or contractor of the Company or who was an employee of the Company at
any time during the six (6) month period
immediately preceding Employee’s termination of employment, in any manner or
capacity.

(c)           Agreement
Not to Solicit.  During Employee’s
employment with the Company or any Affiliates and for a period of twelve (12)
consecutive months from and after the termination of executive’s employment,
whether such termination is with or without cause, or whether such termination
is at the instance of Employee or the Company, Employee shall not, directly or
indirectly (including without limitation as a proprietor, principal, agent,
partner, officer, director, stockholder, employee, member of any association,
consultant or otherwise), (i) market, solicit or sell, or attempt to
market, solicit or sell, to any current or potential customer of the Company
for which Employee had direct or indirect responsibility or about which
Employee had access to confidential information, in each case at any time
during the 24 months immediately preceding the last day of Employee’s
employment with the Company, for the purpose of selling any product or service
that is competitive with, similar to or performs similar functions as any
product or service of the Company, or (ii) solicit, request, advise or induce
any current or potential customer, supplier or other business contact of the
Company to cancel, curtail or otherwise adversely change its relationship with
the Company.

(d)           Acknowledgment.  Employee hereby acknowledges that the
provisions of this Section 8 are reasonable and necessary to protect the
legitimate interests of the Company and that any violation of this Section 8
by Employee shall cause substantial and irreparable harm to the Company to such
an extent that monetary damages alone would be an inadequate remedy therefor.

(e)           Blue
Pencil Doctrine.  If the duration of,
the scope of or any business activity covered by any provision of this Section
8 is in excess of what is determined to be valid and enforceable under
applicable law, such provision shall be construed to cover only that duration,
scope or activity that is determined to be valid and enforceable.  Employee hereby acknowledges that this Section
8 shall be given the construction which renders its provisions valid and
enforceable to the maximum extent, not exceeding its express terms, possible
under applicable law.

9.             Patents, Copyrights and Related Matters.

(a)           Disclosure and Assignment.  Employee shall immediately disclose to the
Company any and all improvements and inventions that Employee may conceive
and/or reduce to practice individually or jointly or commonly with others while
he is employed with the Company or any of its Affiliates with respect to (i)
any methods, processes or apparatus concerned with the development, use or
production of any type of products, goods or services

 

sold or used by the Company
or its Affiliates, and (ii) any type of products, goods or services sold or
used by the Company or its Affiliates. 
Any such improvements and inventions shall be the sole and exclusive
property of the Company and Employee shall immediately assign, transfer and set
over to the Company his entire right, title and interest in and to any and all
of such improvement and inventions as are specified in this Section 9(a),
and in and to any and all applications for letters patent that may be filed on
such inventions, and in and to any and all letters patent that may issue, or be
issued, upon such applications.  In
connection therewith and for no additional compensation therefor, but at no
expense to Employee, Employee shall sign any and all instruments deemed necessary
by the Company for:

(i)            the filing and prosecution of any applications for
letters patent of the United States or of any foreign country that the Company
may desire to file upon such inventions as are specified in this Section
9(a);

(ii)           the filing and prosecution of any divisional, continuation,
continuation-in-part or reissue applications that the Company may desire to
file upon such applications for letters patent; and

(iii)          the reviving, re-examining or renewing of any of such
applications for letters patent.

This
Section 9(a) shall not apply to any invention for which no
equipment, supplies, facilities, confidential, proprietary or secret knowledge
or information, or other trade secret information of the Company was used and
that was developed entirely on Employee’s own time, and (i) that does not
relate (A) directly to the business of the Company, or (B) to the
Company’s actual or demonstrably anticipated research or development, or
(ii) that does not result from any work performed by Employee for the
Company.

(b)           Copyrightable
Material.  All right, title and
interest in all copyrightable material that Employee shall conceive or
originate individually or jointly or commonly with others, and that arise in
connection with Employee’s services hereunder or knowledge of confidential and
proprietary information of the Company, shall be the property of the Company
and are hereby assigned by Employee to the Company or its Affiliates, along
with ownership of any and all copyrights in the copyrightable material. Where
applicable, works of authorship created by Employee relating to the Company or
its Affiliates and arising out of Employee’s knowledge of confidential and
proprietary information of the Company shall be considered “works made for
hire,” as defined in the U.S. Copyright Act, as amended.

10.           Return
of Records and Property.  Upon
termination of Employee’s employment or at any time upon the Company’s request,
Employee shall promptly deliver to the Company any and all Company and
Affiliate records and any and all Company and Affiliate property in his
possession or under his control, including without limitation manuals, books,
blank forms, documents, letters, memoranda, notes, notebooks, reports,
printouts, computer disks, computer tapes, source codes, data, tables or
calculations and all copies thereof, documents that in whole or in part contain
any trade secrets or confidential, proprietary or other

 

secret information of the Company or its Affiliates and all copies
thereof, and keys, access cards, access codes, passwords, credit cards, personal
computers, telephones and other electronic equipment belonging to the Company
or its Affiliates.

11.           Remedies.  Employee acknowledges that it would be
difficult to fully compensate the Company for monetary damages resulting from
any breach by him of the provisions hereof. 
Accordingly, in the event of any actual or threatened breach of any such
provisions, the Company shall, in addition to any other remedies it may have,
be entitled to injunctive and other equitable relief to enforce such
provisions, and such relief may be granted without the necessity of proving
actual monetary damages.

12.           Termination of Employment.

(a)           The Employee’s employment with the Company shall terminate
immediately upon:

(i)            Employee’s receipt of written notice from the Company of
the termination of his employment;

(ii)           The Company’s receipt of Employee’s
written resignation from the Company;

(iii)          Employee’s Disability (as defined below); or

(iv)          Employee’s death.

(b)           The
date upon which Employee’s termination of employment with the Company occurs
shall be the “Termination Date.”

13.           Payments
upon Termination of Employment.

(a)           If
Employee’s employment with the Company (x) is terminated by the Company
for any reason other than for Cause (as defined below), or (y)  terminates
due to death or Disability, then, subject to Section 13(g), Section
13(h), Section 13(i), and Section 13(j):

(i)            the Company shall pay to Employee in a lump sum an amount
equal to six (6) months base salary, at the rate of Employee’s base salary in
effect as of the Termination Date, less applicable withholdings; and

(ii)           if Employee elects to continue his group medical or dental
insurance coverage with the Company following the termination of his employment
with the Company, the Company shall reimburse him for the portion of the
premiums that the Company would have paid had Employee remained employed with
the Company, at the same level of coverage that was in effect as of the
Termination

 

Date, for a period of six
(6) consecutive months after the Termination Date.

(b)           If
within twelve (12) months following a Change in Control (as defined in the
Stellent, Inc. 2005 Equity Incentive Plan, as may be amended from time
to time) Employee’s employment
with the Company (x) is terminated by the Company for any reason other
than for Cause (as defined below), (y) is terminated by Employee for Good
Reason (as defined below), or
(z) terminates due to death or Disability, then in lieu of any
benefits under Section 13(a) above, and subject to Section 13(g), Section 13(h), Section 13(i),
and Section 13(j):

(i)            Employee
shall receive severance benefits on the same terms as set forth in Section
13(a) above, and

(ii)           any outstanding and unvested stock
options held by Employee as of the Termination Date shall vest on the first
business day following expiration of any rescission periods applicable to the
release of claims required pursuant to Section 13(h), provided that
Employee has not rescinded the release of claims.

(c)           If
Employee’s employment with the Company is terminated by reason of:

(i)            Employee’s abandonment of his employment or Employee’s
resignation for any reason (other than resignation for Good Reason within
twelve (12) months following a Change in Control); or

(ii)           termination of Employee’s employment by the Company for
Cause (as defined below),

the Company shall pay to Employee or his beneficiary or his estate, as
the case may be, his base salary through the Termination Date.

(d)           “Cause” hereunder shall mean:

(i)            an act or acts of dishonesty
undertaken by Employee and intended to result in personal gain or enrichment of
Employee or others at the expense of the Company;

(ii)           unlawful conduct or gross misconduct that is willful and
deliberate on Employee’s part and that, in either event, is injurious to the
Company;

(iii)          the conviction of Employee of a felony;

 

(iv)          failure of Employee to perform his
duties and responsibilities hereunder or to satisfy his obligations as an
officer or employee of the Company; or

(v)           breach of any terms and conditions of this Agreement by Employee.

(e)           Termination
by Employee for “Good Reason” hereunder shall mean termination by Employee of
his employment with the Company because one or more of the following shall have
occurred upon or after a Change in Control (as defined in the Stellent, Inc.
2005 Equity Incentive Plan, as may be amended from time to time) without
Employee’s written consent:

(i)            the relocation of Employee’s principal place of work more
than 30 miles from Employee’s then-current principal place of work;

(ii)           a material reduction in Employee’s duties or
responsibilities; or

(iii)          a material reduction of Employee’s base salary, other than
pursuant to a general reduction in the base salaries of all executives of the
Company.

(f)            “Disability”
hereunder shall mean the inability of Employee to perform on a full-time basis
the duties and responsibilities of his employment with the Company by reason of
his illness or other physical or mental impairment or condition, if such
inability continues for an uninterrupted period of 120 days or more during any
360-day period.  A period of inability
shall be “uninterrupted” unless and until Employee returns to full-time work
for a continuous period of at least 30 days.

(g)           Any amount payable
to Employee as reimbursement for the cost of the continuation of his group
health or dental insurance coverage under Section 13(a) shall be subject
to deductions and withholdings and shall be paid to Employee by the Company in
approximately equal monthly installments commencing on the first normal payroll
date of the Company following the expiration of all applicable rescission
periods provided by law and continuing monthly thereafter.  The Company shall be entitled to cease making
reimbursement payments to Employee for the cost of the continuation of his
group medical or dental insurance coverage with the Company after the
Termination Date if Employee becomes eligible for comparable group medical or
dental insurance coverage from any other employer.  For purposes of mitigation and reduction of
the Company’s financial obligations to Employee under Section 13(a),
Employee shall promptly and fully disclose to the Company in writing the fact
that he has become eligible for comparable group medical or dental insurance
coverage from any other employer. 
Employee shall be liable to repay any amounts to the Company that should
have been so mitigated or reduced but for Employee’s failure or unwillingness
to make such disclosures.

 

(h)           Notwithstanding
the foregoing provisions of this Section 13, the Company shall not be obligated
to make any payments to Employee under Sections 13(a) hereof unless
Employee (or Employee’s guardian or estate, as applicable) shall have signed a
release of claims in favor of the Company and its Affiliates in a form to be
prescribed by the Company, all applicable consideration and rescission periods
provided by law shall have expired, and Employee is in strict compliance with
the terms of this Agreement as of the dates of such payments.

(i)            Notwithstanding any
provision to the contrary contained in this Agreement, if the cash payments due
and the other benefits to which Employee shall become entitled under this Section
13, either alone or together with other payments in the nature of
compensation to Employee that are contingent on a change in the ownership or
effective control of the Company or in the ownership of a substantial portion
of the assets of the Company or otherwise, would constitute a “parachute
payment” as defined in Section 280G of the Internal Revenue Code (the “Code”)
or any successor provision thereto, such lump sum payment and/or such other
benefits and payments shall be reduced (but not below zero) to the largest
aggregate amount as will result in no portion thereof being subject to the
excise tax imposed under Section 4999 of the Code (or any successor provision
thereto) or being non-deductible to the Company for federal income tax purposes
pursuant to Section 280G of the Code (or any successor provision thereto).  The outside accountants of the Company shall
determine the amount of any reduction to be made pursuant to this Section 13
and shall select from among the foregoing benefits and payments those that
shall be reduced.

(j)            This Agreement is
intended to satisfy the requirements of Section 409A(a)(2), (3) and (4) of the
Internal Revenue Code of 1986, as amended (“Code”), including current and
future guidance and regulations interpreting such provisions.  To the extent that any provision of this
Agreement fails to satisfy those requirements, the provision shall
automatically be modified in a manner that, in the good-faith opinion of the
Company, brings the provisions into compliance with those requirements while
preserving as closely as possible the original intent of the provision and this
Agreement.  In particular, and without limiting
the preceding sentence, if Employee is a “specified employee” under Section
409A(a)(2)(B)(i) of the Code, then any payment under this Agreement that is
treated as deferred compensation under Section 409A of the Code shall be
delayed until the date that is which is six months after the date of separation
from service (without interest or earnings).

(k)           In
the event of termination of Employee’s employment, the sole obligation of the
Company hereunder shall be its obligation to make the payments called for by Sections
13(a), 13(b), or 13(c) hereof, as the case may be, and the
Company shall have no other obligation to Employee or to his beneficiary or his
estate, except as otherwise provided by law, under the terms of any other
applicable agreement between Employee and the Company, or under the terms of
any employee benefit plans or programs then maintained by the Company in which
Employee participates.

14.           Miscellaneous.

 

(a)           Governing
Law.  All matters relating to the
interpretation, construction, application, validity and enforcement of this
Agreement shall be governed by the laws of the State of Minnesota without
giving effect to any choice or conflict of law provision or rule, whether of
the State of Minnesota or any other jurisdiction, that would cause the
application of laws of any jurisdiction other than the State of Minnesota.

(b)           Jurisdiction
and Venue.  Employee and the Company
consent to jurisdiction of the courts of the State of Minnesota and/or the
federal district courts, District of Minnesota, for the purpose of resolving
all issues of law, equity, or fact arising out of or in connection with this
Agreement.  Any action involving claims
of a breach of this Agreement or for enforcement of this Agreement shall be
brought exclusively in such Minnesota courts. 
Each party consents to personal jurisdiction over such party in the
state and/or federal courts of Minnesota and hereby waives any defense of lack
of personal jurisdiction or inconvenient forum. 
Venue, for the purpose of all such suits, shall be in Hennepin County,
State of Minnesota.

(c)           Entire
Agreement.  This Agreement and any
stock option or equity award agreements entered into by the Company and
Employee contain the entire agreement of the parties relating to Employee’s
employment with the Company and supersedes all prior agreements and
understandings with respect to such subject matter, and the parties hereto have
made no agreements, representations or warranties relating to the subject
matter of this Agreement that are not set forth herein.

(d)           No
Violation of Other Agreements. 
Employee hereby represents and agrees that neither (i) Employee’s
entering into this Agreement nor (ii) Employee’s carrying out the provisions of
this Agreement, will violate any other agreement (oral, written or other) to
which Employee is a party or by which Employee is bound.

(e)           Amendments.  No amendment or modification of this
Agreement shall be deemed effective unless made in writing and signed by the
parties hereto.

(f)            No
Waiver.  No term or condition of this
Agreement shall be deemed to have been waived, except by a statement in writing
signed by the party against whom enforcement of the waiver is sought.  Any written waiver shall not be deemed a
continuing waiver unless specifically stated, shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such
term or condition for the future or as to any act other than that specifically
waived.

(g)             Assignment.  This Agreement shall not be assignable, in
whole or in part, by either party without the prior written consent of the
other party, except that the Company may, without the consent of Employee,
assign its rights and obligations under this Agreement (1) to an Affiliate or
(2) to any corporation or other person or business entity to which the Company
may sell or transfer all or a portion of its assets.  After any such assignment by the Company, the
Company shall be discharged from all further liability hereunder and such
assignee shall thereafter be deemed to be “the Company” for purposes of all
terms and conditions of this Agreement, including this Section 14.

 

(h)             Counterparts.  This Agreement may be executed in any number
of counterparts, and such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument.

(i)            Severability.  Subject to Section 8(e) hereof, to the
extent that any portion of any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted herefrom and the remainder of
such provision and of this Agreement shall be unaffected and shall continue in
full force and effect.

(j)            Captions
and Headings.  The captions and
paragraph headings used in this Agreement are for convenience of reference only
and shall not affect the construction or interpretation of this Agreement or
any of the provisions hereof.

IN WITNESS WHEREOF, Employee and the Company have
executed this Agreement as of the date set forth in the first paragraph.

	
  

  	
  Stellent, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F. Olson

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Frank A. Radichel

  
	
   

  	
  Frank A. RadichelExhibit
10.1

INTERNATIONAL
LETTER OF CREDIT AGREEMENT

Dated as of September 29,
2006

among

GREAT LAKES DREDGE & DOCK CORPORATION,

GREAT LAKES DREDGE &
DOCK COMPANY, LLC,

and

WELLS FARGO HSBC TRADE
BANK, N.A.

 

TABLE
OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
   

  	
  CERTAIN DEFINITIONS AND OTHER
  INTERPRETIVE PROVISIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
   

  
	
  1.2

  	
   

  	
  Other
  Interpretive Provisions

  	
   

  	
   

  
	
  1.3

  	
   

  	
  Accounting Terms

  	
   

  	
   

  
	
  1.4

  	
   

  	
  Times
  of Day

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  II.

  	
   

  	
  LETTERS OF CREDIT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Commitment

  	
   

  	
   

  
	
  2.2

  	
   

  	
  International
  Borrowing Base

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Letters of Credit

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Letter of Credit
  Requests

  	
   

  	
   

  
	
  2.5

  	
   

  	
  Agreement
  to Repay Letter of Credit Drawings

  	
   

  	
   

  
	
  2.6

  	
   

  	
  Conflict
  Between Applications and Agreement

  	
   

  	
   

  
	
  2.7

  	
   

  	
  Increased
  Costs; Increased Capital

  	
   

  	
   

  
	
  2.8

  	
   

  	
  Default
  Rate

  	
   

  	
   

  
	
  2.9

  	
   

  	
  Facility
  Subject to Ex-Im Bank Rules

  	
   

  	
   

  
	
  2.10

  	
   

  	
  Currency Equivalents

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  III.

  	
   

  	
  CASH COLLATERAL, PREPAYMENTS AND
  OTHER PAYMENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Deposit of
  Cash Collateral and Required Prepayments

  	
   

  	
   

  
	
  3.2

  	
   

  	
  [RESERVED]

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Place of
  Payment or Prepayment

  	
   

  	
   

  
	
  3.4

  	
   

  	
  Prepayment
  Premium or Penalty

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Taxes

  	
   

  	
   

  
	
  3.6

  	
   

  	
  Reduction
  or Termination of the Commitment

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IV.

  	
   

  	
  FEES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Facility
  Fee

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Letter of Credit Fees

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Fees Not
  Interest; Nonpayment

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  V.

  	
   

  	
  PERMITTED PURPOSES OF LETTERS OF
  CREDIT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VI.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Organization
  and Qualification

  	
   

  	
   

  

 

 i
 

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Financial
  Statements; Positive Tangible Net Worth

  	
   

  	
   

  
	
  6.3

  	
   

  	
  Litigation;
  Contingent Liabilities

  	
   

  	
   

  
	
  6.4

  	
   

  	
  Default

  	
   

  	
   

  
	
  6.5

  	
   

  	
  Title to Assets;
  Ownership

  	
   

  	
   

  
	
  6.6

  	
   

  	
  Authorization,
  Validity, Etc.

  	
   

  	
   

  
	
  6.7

  	
   

  	
  Intentionally
  Omitted

  	
   

  	
   

  
	
  6.8

  	
   

  	
  Taxes

  	
   

  	
   

  
	
  6.9

  	
   

  	
  Conflicting
  or Adverse Agreements or Restrictions

  	
   

  	
   

  
	
  6.10

  	
   

  	
  Information

  	
   

  	
   

  
	
  6.11

  	
   

  	
  No
  Consent

  	
   

  	
   

  
	
  6.12

  	
   

  	
  Environmental
  Matters

  	
   

  	
   

  
	
  6.13

  	
   

  	
  Debt

  	
   

  	
   

  
	
  6.14

  	
   

  	
  Compliance with Laws

  	
   

  	
   

  
	
  6.15

  	
   

  	
  Suspension and
  Debarment, Etc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VII.

  	
   

  	
  CONDITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Representations
  True and No Defaults

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Terms
  of Sale

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Governmental
  Approvals

  	
   

  	
   

  
	
  7.4

  	
   

  	
  Letter of Credit
  Documents

  	
   

  	
   

  
	
  7.5

  	
   

  	
  Required
  Initial Documents and Certificates

  	
   

  	
   

  
	
  7.6

  	
   

  	
  Ex-Im Bank
  Acknowledgment, Etc.

  	
   

  	
   

  
	
  7.7

  	
   

  	
  Post-Closing Lien
  Search

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII.

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Financial
  Statements and Information

  	
   

  	
   

  
	
  8.2

  	
   

  	
  Books and Records

  	
   

  	
   

  
	
  8.3

  	
   

  	
  Insurance

  	
   

  	
   

  
	
  8.4

  	
   

  	
  Inspection
  of Property and Records; Audits of Collateral; Etc.

  	
   

  	
   

  
	
  8.5

  	
   

  	
  Notice of Certain
  Matters

  	
   

  	
   

  
	
  8.6

  	
   

  	
  Security and
  Further Assurances

  	
   

  	
   

  
	
  8.7

  	
   

  	
  Establishment
  of Cash Collateral Account

  	
   

  	
   

  
	
  8.8

  	
   

  	
  Maintenance of
  Property

  	
   

  	
   

  
	
  8.9

  	
   

  	
  Corporate
  Existence; Payment of Taxes and Claims; Compliance With Laws

  	
   

  	
   

  
	
  8.10

  	
   

  	
  Assignment
  of International Letter of Credit Proceeds

  	
   

  	
   

  
	
  8.11

  	
   

  	
  Environmental
  Matters

  	
   

  	
   

  
	
  8.12

  	
   

  	
  Controlling
  Affiliates

  	
   

  	
   

  
	
  8.13

  	
   

  	
  Assembly of
  Export Order Summaries

  	
   

  	
   

  
	
  8.14

  	
   

  	
  Delivery of
  Domestic Loan Documents

  	
   

  	
   

  

 

 ii
 

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.15

  	
   

  	
  Reaffirmation of
  Borrower

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IX.

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Liens

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Merger,
  Consolidation, Acquisitions, Sales of Assets, Etc.

  	
   

  	
   

  
	
  9.3

  	
   

  	
  Conduct of Business

  	
   

  	
   

  
	
  9.4

  	
   

  	
  Investments

  	
   

  	
   

  
	
  9.5

  	
   

  	
  Financial Covenants

  	
   

  	
   

  
	
  9.6

  	
   

  	
  Debt

  	
   

  	
   

  
	
  9.7

  	
   

  	
  Affiliate
  Transactions

  	
   

  	
   

  
	
  9.8

  	
   

  	
  Restricted Payments

  	
   

  	
   

  
	
  9.9

  	
   

  	
  Suspension and
  Debarment, Etc.

  	
   

  	
   

  
	
  9.10

  	
   

  	
  Debt of
  Eligible Joint Ventures

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  X.

  	
   

  	
  EVENTS OF DEFAULT; REMEDIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Events of Default

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Other
  Remedies

  	
   

  	
   

  
	
  10.3

  	
   

  	
  Collateral Account

  	
   

  	
   

  
	
  10.4

  	
   

  	
  Exit Date Event
  of Default

  	
   

  	
   

  
	
  10.5

  	
   

  	
  Remedies Cumulative

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XI.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Waivers, Amendments

  	
   

  	
   

  
	
  11.2

  	
   

  	
  Reimbursement of
  Expenses

  	
   

  	
   

  
	
  11.3

  	
   

  	
  Notices

  	
   

  	
   

  
	
  11.4

  	
   

  	
  Governing
  Law

  	
   

  	
   

  
	
  11.5

  	
   

  	
  Survival of
  Representations, Warranties and Covenants

  	
   

  	
   

  
	
  11.6

  	
   

  	
  Counterparts

  	
   

  	
   

  
	
  11.7

  	
   

  	
  Separability

  	
   

  	
   

  
	
  11.8

  	
   

  	
  Limitation of
  Liability

  	
   

  	
   

  
	
  11.9

  	
   

  	
  Set-off

  	
   

  	
   

  
	
  11.10

  	
   

  	
  Sale or Assignment

  	
   

  	
   

  
	
  11.11

  	
   

  	
  Interest

  	
   

  	
   

  
	
  11.12

  	
   

  	
  Indemnification

  	
   

  	
   

  
	
  11.13

  	
   

  	
  Payments Set Aside

  	
   

  	
   

  
	
  11.14

  	
   

  	
  Credit
  Agreement Controls

  	
   

  	
   

  
	
  11.15

  	
   

  	
  Amendment
  of Financial Covenants

  	
   

  	
   

  
	
  11.16

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
   

  
	
  11.17

  	
   

  	
  USA Patriot Act
  Notice

  	
   

  	
   

  

 

 iii
 

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.18

  	
   

  	
  Time of the Essence

  	
   

  	
   

  
	
  11.19

  	
   

  	
  Final Agreement

  	
   

  	
   

  
	
  11.20

  	
   

  	
  Release of
  Collateral and Guarantors

  	
   

  	
   

  
	
  11.21

  	
   

  	
  Additional
  Guarantors

  	
   

  	
   

  

 

	
  Exhibit A

  	
   

  	
  -

  	
   

  	
  Definitions

  
	
  Exhibit B

  	
   

  	
  -

  	
   

  	
  Form of Note

  
	
  Exhibit C

  	
   

  	
  -

  	
   

  	
  Form of Weekly International Borrowing Base
  Certificate, together with Annexes I and II

  
	
  Exhibit D

  	
   

  	
  -

  	
   

  	
  Form of Compliance Certificate

  
	
  Exhibit E

  	
   

  	
  -

  	
   

  	
  Form of Letter of Credit Request

  
	
  Exhibit F

  	
   

  	
  -

  	
   

  	
  Form of Guaranty

  
	
  Exhibit G

  	
   

  	
  -

  	
   

  	
  Form of Joinder to Guaranty

  
	
  Exhibit H

  	
   

  	
  -

  	
   

  	
  Form of Standby Letter of Credit Agreement

  
	
  Exhibit I

  	
   

  	
  -

  	
   

  	
  Form of Reaffirmation, Ratification and Assumption Agreement

  
	
  Exhibit J

  	
   

  	
  -

  	
   

  	
  Form of Deposit Account Control Agreement

  
	
  Schedule 1.1

  	
   

  	
  -

  	
   

  	
  Existing Letters of Credit

  
	
  Schedule 6.1

  	
   

  	
  -

  	
   

  	
  Subsidiaries

  
	
  Schedule 6.3

  	
   

  	
  -

  	
   

  	
  Litigation

  
	
  Schedule 6.5

  	
   

  	
  -

  	
   

  	
  Capital Stock of Borrower; Control Affiliates

  
	
  Schedule 8.3

  	
   

  	
  -

  	
   

  	
  Insurance

  
	
  Schedule 8.7

  	
   

  	
  -

  	
   

  	
  Export Orders Excluded from the Cash Collateral
  Account

  

 

 iv

 

INTERNATIONAL LETTER OF CREDIT AGREEMENT

This International Letter of Credit Agreement is
entered into as of September 29, 2006 among GREAT LAKES DREDGE &
DOCK CORPORATION, a Delaware corporation, the Guarantors from time to time
party hereto and WELLS FARGO HSBC TRADE BANK, N.A. (together with its
successors and assigns, the “Bank”).

The Borrower has requested that the Bank provide an
international letter of credit facility, and the Bank is willing to do so on
and subject to the terms and conditions set forth herein.

In consideration of the mutual covenants herein
contained, the parties hereto covenant and agree as follows:

ARTICLE I.

CERTAIN DEFINITIONS AND OTHER INTERPRETIVE PROVISIONS.

1.1                                 Definitions.  Capitalized terms used in this Agreement and
not otherwise defined herein shall have the
meanings given to them in Exhibit A to this Agreement.

1.2                                 Other
Interpretive Provisions.  With
reference to this Agreement and each other International Loan Document, unless otherwise
specified herein or in such other International Loan Document:

(a)                                  The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  The word “will”
shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any restrictions on
such amendments, restatements, supplements or modifications set forth herein or
in any other International Loan Document), (ii) any reference herein to
any Person shall be construed to include such Person’s successors and assigns,
(iii) the words “herein,” “hereof” and “hereunder”
and words of similar import when used in any International Loan Document, shall
be construed to refer to such International Loan Document in its entirety and
not to any particular provision thereof, (iv) all references in an
International Loan Document to Articles, Sections, Exhibits and Schedules shall
be construed to refer to Articles and Sections of, and Exhibits and Schedules
to, the International Loan Document in which such references appear,
(v) any reference to any law shall include all statutory and regulatory
provisions consolidating, amending, replacing or interpreting such law and any
reference to any law or regulation shall, unless otherwise specified, refer to
such law or regulation as amended, modified or supplemented from time to time,
and (vi) the words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

 

(b)                                 In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including;” the words “to”
and “until” each mean “to but excluding;” and the word “through”
means “to and including.”

(c)                                  Section
headings herein and in the other International Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other International Loan Document.

1.3                                 Accounting
Terms.

(a)                                  All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.  The Borrower shall
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
1.3(b)), and each of the financial statements described below shall be
prepared from such system and records.

(b)                                 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 8.1 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 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 9.5 or in the related
definitions of terms used therein, the parties hereto agree, subject to Section
11.15, 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, subject to Section
11.15, 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
Bank, so as to reflect such change in accounting principles.

1.4                                 Times
of Day.  Unless otherwise specified,
all references herein to times of day shall be references to Central time
(daylight or standard, as applicable).

ARTICLE II.

LETTERS OF CREDIT.

2.1                                 Commitment.

(a)                                  Upon
the terms and conditions and relying upon the representations and warranties
herein set forth, the Bank agrees to issue standby Letters of Credit for the
account of the Borrower up to an aggregate face amount not exceeding at any one
time outstanding the lesser of (i) $20,000,000.00 (such amount, as it may
be reduced from time to time pursuant to Section 3.6, being the Bank’s “Commitment”)
or (ii) the International Borrowing Base.

 2
 

 

(b)                                 The
Borrower shall execute and deliver to the Bank, to evidence its reimbursement
obligations in respect of Letters of Credit, a Note which shall be
(i) dated of even date herewith; (ii) in the principal amount of the
Commitment; and (iii) in substantially the form attached hereto as Exhibit B,
with the blanks appropriately completed.

2.2                                 International
Borrowing Base.

(a)                                  As
soon as available, and in any event by 11 a.m. (Central time) each Wednesday
(or, if Wednesday is not a Business Day, then on the following Business Day),
the Borrower shall furnish the Bank an international borrowing base detailed
scheduled report in the form of Exhibit C, which is dated as of the last
Business Day of the previous calendar week (the “Weekly International
Borrowing Base Certificate”); provided, however, in order to
receive Credit Accommodations hereunder, the Borrower shall have delivered a
Weekly International Borrowing Base Certificate at least within the past seven
(7) calendar days.  The Bank may, on
demand, inspect the documentation supporting any Weekly International Borrowing
Base Certificate.  With respect to the
Weekly International Borrowing Base Certificate delivered for the fourth week
of every calendar month, such Weekly International Borrowing Base Certificate
shall include (i) a list of the Eligible Export-Related Accounts
Receivable and (ii) a list of Export Orders that are included in the
International Borrowing Base, as at the end of the preceding month, such list
to be in such form and containing such information and detail as the Bank may
reasonably request, and as is satisfactory to the Bank, to comply with the
requirements of the Ex-Im Bank Guaranty, including, without limiting the
generality of the foregoing, as to Eligible Export-Related Accounts Receivable,
aging thereof in the customary manner. 
The inclusion of any receivable in the Weekly International Borrowing
Base Certificate shall constitute a representation and warranty by the Borrower
that such receivable is an Eligible Export-Related Accounts Receivable.

(b)                                 Two
Business Days after the receipt of any such Weekly International Borrowing Base
Certificate (unless the Bank prior to such date has notified the Borrower in
writing of its determination of a different International Borrowing Base) the
International Borrowing Base amount stated in any such Weekly International
Borrowing Base Certificate shall automatically be deemed the International
Borrowing Base amount until the earlier of (i) the date of the next
determination or (ii) the date the Bank notifies the Borrower in writing
of its determination of a different International Borrowing Base and the basis
for such determination.  The date of any
such notification (if any) by the Bank is herein called a “Determination
Date” and any increase or reduction in the International Borrowing Base by
the Bank shall be effective as of such date. 
Each determination of the International Borrowing Base shall be made by
the Bank in its reasonable business judgment, based on the most recent Weekly
International Borrowing Base Certificate furnished by the Borrower and other
information available to the Bank.

 3
 

 

2.3                                 Letters
of Credit.

(a)                                  Subject
to and upon the terms and conditions herein set forth, including, without
limitation, the applicable terms and conditions set forth in Article VII
hereof, the Bank agrees that it will, following its receipt of a Letter of
Credit Request, issue or cause to be issued for the account of the Borrower one
or more irrevocable standby letters of credit which can be drawn down by a Buyer only if the Borrower, any
Guarantor or an Eligible Joint Venture fails to perform any of its obligations
under an Export Order (each a “Letter
of Credit” and collectively, the “Letters of Credit”); provided that
the Bank shall be under no obligation to issue or cause to be issued any Letter
of Credit if at the time of such issuance:

(i)                                     any
order, judgment or decree of any Governmental Authority or arbitrator shall
purport by its terms to enjoin or restrain the Bank or Wells Fargo from issuing
such Letter of Credit or any requirement of law applicable to the Bank or Wells
Fargo or any request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over the Bank or Wells Fargo shall
prohibit, or request that the Bank or Wells Fargo refrain from, the issuance of
letters of credit generally; or

(ii)                                  subject
to any Cover requirements set forth in Section 10.3 of this Agreement,
(x) 25% of the Stated Amount of such Letter of Credit plus (y) 25% of the
aggregate Stated Amount of all outstanding Letters of Credit plus (z) 100% of
the aggregate Unpaid Drawings then outstanding (after giving effect to all
Unpaid Drawings reimbursed prior to or concurrently with the issuance of such
Letter of Credit) exceeds the International Borrowing Base then in effect; or

(iii)                               if
the Stated Amount of such Letter of Credit plus all Letter of Credit
Outstandings (after giving effect to all Unpaid Drawings reimbursed prior to or
concurrently with the issuance of such Letter of Credit) exceeds the
Commitment; or

(iv)                              unless
the Bank and Ex-Im Bank shall give their prior written consent in their sole
discretion, the expiry date of such Letter of Credit is later than 12 months
from the date of issuance of such Letter of Credit; provided  however,
the Bank may issue or cause to be issued the Diyaar Project Letter of Credit so
long as the Diyaar Project Letter of Credit shall have an expiry date of not
later than the lesser of (a) 27 months from the date of issuance of such Diyaar
Project Letter of Credit and (b) the number of months from Closing Date to the
Final Disbursement Date.

(b)                                 Notwithstanding
the foregoing, (i) the Bank may not issue or cause to be issued during the
final sixty (60) days of the term of this Agreement any Letters of Credit which
expire after the Maturity Date unless the Bank either has decided to renew this
Agreement or has obtained the prior written approval of Ex-Im Bank and
(ii) any Letter of Credit that shall have an expiration date after the
Maturity Date shall be subject to Cover, such Cover to be delivered to the Bank
thirty (30) days prior to the Maturity Date.

 4
 

 

(c)                                  The
Borrower acknowledges that the Bank will be liable to Wells Fargo for
reimbursement of any and all draws under Letters of Credit issued by Wells
Fargo and for all other amounts required to be paid under the applicable
Application and the Standby Letter of Credit Agreement.  Accordingly, the Borrower agrees to pay to
the Bank any and all amounts required to be paid under the applicable
Application and the Standby Letter of Credit Agreement, when and as required to
be paid thereby.

(d)                                 From
and after the Initial Date, all Existing Letters of Credit shall be deemed to
have been issued pursuant hereto, and shall be subject to and governed by the
terms and conditions hereof.

2.4                                 Letter
of Credit Requests.

(a)                                  Whenever
the Borrower desires that a Letter of Credit be issued for its account or that
an existing expiry date shall be extended, the Borrower shall deliver to the
Bank its prior written request therefore not later than 12:00 noon
(Central time) on at least the second Business Day prior to the requested
issuance or extension date, as the case may be. 
Each such request shall be in the form of Exhibit E attached
hereto executed by the Borrower or such other form (including electronic
requests) satisfactory to the Bank and Wells Fargo in their sole discretion
(together with the Application, a “Letter of Credit Request”) and, in
the case of the issuance of any Letter of Credit, shall be accompanied by an
Application therefor, completed to the satisfaction of the Bank and Wells
Fargo, and such other certificates, documents and other papers and information
as the Bank and Wells Fargo may reasonably request.  Each Letter of Credit shall be denominated in
Dollars or in an Approved Currency, shall expire no later than the date
specified in Section 2.3, shall not be in an amount greater than is
permitted under Section 2.3(a) and shall be in such form as may be
approved from time to time by the Bank, Wells Fargo and the Borrower.

(b)                                 The
making of each Letter of Credit Request shall be deemed to be a representation
and warranty by the Borrower that such Letter of Credit may be issued in
accordance with, and will not violate the requirements of Section 2.3(a)
and Article VII of this Agreement. 
Upon its issuance of any Letter of Credit or the extension of the
existing expiry date of any Letter of Credit, as the case may be, the Bank
shall promptly notify the Borrower of such issuance or extension, which notice
shall be accompanied by a copy of the Letter of Credit actually issued or a
copy of any amendment extending the existing expiry date of any Letter of
Credit, as the case may be.

2.5                                 Agreement
to Repay Letter of Credit Drawings.

(a)                                  Upon
the receipt by the Bank of notice of any Drawing from a beneficiary under a
Letter of Credit, the Bank promptly will provide the Borrower with telecopy
notice thereof.  The Borrower hereby
agrees to reimburse the Bank by making payment to the Bank in immediately
available funds at the Payment Office, for any payment made by the Bank under
any Letter of Credit issued by it or Wells Fargo (each such amount so paid
until reimbursed, an “Unpaid Drawing”) on the date of such payment, provided
that if the Borrower shall have received notice of any Drawing later than 11:00
a.m. (Central

 5
 

 

time) on any Business Day, then the Borrower
shall make such payment not later than 11:00 a.m. (Central time) on the
immediately following Business Day, together with interest on the amount so
paid by the Bank at the rate specified herein, to the extent not reimbursed
prior to 2:00 p.m. (Central time) on the date of such payment, from and
including the date paid but excluding the date reimbursement is made as
provided above, such interest to be payable ON DEMAND.

(b)                                 The
Borrower’s obligations under this Section 2.5 to reimburse the Bank
with respect to Unpaid Drawings (including, in each case, interest thereon)
shall be absolute and unconditional under any and all circumstances (except as
provided below with respect to the gross negligence, bad faith or willful
misconduct of the Bank or Wells Fargo) and irrespective of any setoff,
counterclaim or defense to payment which the Borrower may have or have had
against the Bank or Wells Fargo, including any defense based upon the failure
of any drawing under a Letter of Credit (each a “Drawing”) to conform to
the terms of the Letter of Credit (other than a defense based upon the gross
negligence, bad faith or willful misconduct of the Bank or Wells Fargo in
determining whether such Drawing conforms to the terms of the Letter of Credit)
or any non-application or misapplication by the beneficiary of the proceeds of
such Drawing, including any of the following circumstances:

(i)                                     any
lack of validity or enforceability of this Agreement or any of the other
International Loan Documents;

(ii)                                  the
existence of any claim, setoff, defense or other right which the Borrower may
have at any time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any such transferee may
be acting), the Bank, Wells Fargo, or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transaction between the
Borrower or any other Person and the beneficiary named in any such Letter of
Credit);

(iii)                               any
draft, certificate or any other document presented under the Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;

(iv)                              the
surrender or impairment of any security for the performance or observance of
any of the terms of any of the International Loan Documents;

(v)                                 the
occurrence of any Default or Event of Default; or

(vi)                              any
other circumstance which might otherwise constitute a defense available to, or
a discharge of, the Borrower;

provided that none
of the foregoing is attributable to the gross negligence, bad faith or willful
misconduct of the Bank or Wells Fargo.

 6
 

 

(c)                                  The
Borrower also agrees with the Bank that, in the absence of gross negligence,
bad faith or willful misconduct of the Bank or Wells Fargo, the Bank shall not
be responsible for, and the Borrower’s reimbursement obligations under Section 2.5(a)
shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute between the
Borrower or any other Person and the beneficiary of any Letter of Credit or any
other party to which such Letter of Credit may be transferred, or any claims
whatsoever of the Borrower or any other Person against any beneficiary of such
Letter of Credit or any such transferee.

(d)                                 Neither
the Bank nor Wells Fargo shall be liable for any error, omission, interruption
or delay in transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with any Letter of Credit, except for errors
or omissions caused by the Bank’s or Wells Fargo’s gross negligence, bad faith
or willful misconduct.  The Borrower
agrees that any action taken or omitted by the Bank or Wells Fargo under or in
connection with any Letter of Credit or the related drafts or documents, if
done in the absence of gross negligence, bad faith or willful misconduct and in
accordance with the standards of care specified in the Uniform Customs and
Practice for Documentary Credits (1994 Revision), International Chamber of
Commerce, Publication No. 500 (and any subsequent revisions thereof
approved by a Congress of the International Chamber of Commerce and adhered to
by the Bank) and, to the extent not inconsistent therewith, the Uniform
Commercial Code of the State of New York, shall not result in any liability of
the Bank or Wells Fargo to the Borrower or any other Person.  IT IS THE INTENT OF THE PARTIES HERETO THAT
NEITHER THE BANK NOR WELLS FARGO SHALL HAVE ANY LIABILITY UNDER THIS SECTION
2.5 FOR THE ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE OF THE BANK OR WELLS
FARGO.

2.6                                 Conflict
Between Applications and Agreement. 
To the extent that any provision of any Application related to any Letter of Credit or
any provision of the Standby Letter of Credit Agreement is inconsistent with the provisions of
this Agreement, the provisions of this Agreement shall control.

2.7                                 Increased
Costs; Increased Capital.

(a)                                  If
the Bank determines that compliance with any law or regulation or any guideline
or request from any central bank or other Governmental Authority (whether or not
having the force of law) issued after the Closing Date affects or would affect
the amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and that the amount of such capital is
increased by or based upon the existence of the Bank’s Commitment hereunder and
other commitments of this type, then, within fifteen (15) Business Days after
written demand by the Bank, the Borrower shall pay to the Bank, from time to
time as specified by the Bank, additional amounts sufficient to compensate the
Bank or such corporation for such increase. 
A certificate as to such amounts, showing a calculation of such amounts
in reasonable detail, submitted to the Borrower by the Bank shall be
presumptive evidence of such amounts.

 7
 

 

(b)                                 Anything
in this Section notwithstanding: 
(i) the Borrower shall not be required to pay to the Bank
reimbursement or indemnification with regard to any costs or expenses described
in this Section, unless the Bank notifies the Borrower in writing of such costs
or expenses within ninety (90) days after the date the Bank obtained knowledge
of the circumstances that would cause the Borrower to pay such additional
amounts; and (ii) the Bank shall not be permitted to pass through to the
Borrower charges and costs under this Section on a discriminatory basis (i.e.,
which are not also passed through by the Bank to other customers of the Bank
similarly situated where such customer is subject to documents providing for
such pass through).

2.8                                 Default
Rate.  Notwithstanding anything set
forth herein to the contrary if any Unpaid Drawing is not paid when due, all outstanding Obligations shall
bear interest at a fluctuating rate per annum equal to the Default Rate, which
interest shall be due and payable ON DEMAND.

2.9                                 Facility
Subject to Ex-Im Bank Rules.  The
Borrower acknowledges that the Bank is willing to make its Commitment available to
the Borrower because Ex-Im Bank is willing to guaranty payment of a significant
portion of the Obligations pursuant to the Ex-Im Bank Guaranty.  Accordingly, in the event of any
inconsistency among the International Loan Documents and the Ex-Im Bank
Guaranty, the Borrower Agreement, the Fast Track Agreement, the Fast Track
Borrower Supplement and the rules and regulations of Ex-Im Bank governing the
Working Capital Guaranty Program, the provision that is the more stringent on
the Borrower shall control and compliance with any such applicable rule or
regulation shall constitute an additional covenant of the Borrower incorporated
herein by reference; provided, however, that the following
provisions shall be deemed to be waived by the terms of this Agreement: (1)
Fast Track Lender Agreement Section 2(e)(ii)(a) with respect to the requirement
that the Borrower provide the Bank with a Lien on the domestic revolving loan
collateral under the Domestic Credit Agreement; (2) Section 1.01 of the
Borrower Agreement and the Ex-Im Bank Guaranty with respect to the definition
of Eligible Export-Related Accounts Receivable regarding (i) Accounts
Receivable owned by the Eligible Joint Ventures being included in the
definition of Eligible Export-Related Accounts Receivable and (ii) affiliate
receivables being included in the definition of Eligible Export-Related
Accounts Receivable; (3) Section 4.12(b) of the Ex-Im Bank Guaranty with
respect to the length of the term of certain letters of credit longer than 12
months; (4) Section 4.02 of the Ex-Im Bank Guaranty, as amended by the Fast
Track Lender Agreement, with respect to the requirement that the Bank perfect
its security interest in Export-Related Inventory; (5) Section 4.02(a) of the
Ex-Im Bank Guaranty, as amended by the Fast Track Lender Agreement, with
respect to the collateral securing the Domestic Credit Agreement that will not
secure the Obligations; (6) Section 7 of the Fast Track Agreement, Section
2.07(c) of the Borrower Agreement, as amended by the Fast Track Borrower
Supplement and Section 2.08(a) of the Borrower Agreement, as amended by the
Fast Track Borrower Supplement with respect to the payment of all funds
received in payment of the Excluded Export-Related Accounts Receivable into a
lockbox and/or the Cash Collateral Account; (7) Section 2.19 of the Borrower
Agreement with respect to naming the Bank as loss payee or mortgagee on its
property insurance; and (8) Section 2.22 of the Borrower Agreement with respect
to the consummation of the Aldabra Transactions.  The Borrower and the Bank hereby acknowledge
that Holdings and the Persons that own 20% or more of the ownership of Holdings
are controlled by venture capital

 8
 

 

firms, private
equity firms or other investment groups and are therefore not required to
guaranty this Agreement.

2.10                           Currency
Equivalents.  For all purposes of
this Agreement, (i) the equivalent in Dollars of any Approved Currency shall be determined by
using the quoted spot rate at which Wells Fargo offers to exchange Dollars for
such Approved Currency two Business Days prior to the date on which such
equivalent is to be determined and (ii) the equivalent in any Approved Currency
of Dollars shall be determined by using the quoted spot rate at which Wells
Fargo offers to exchange such Approved Currency for Dollars two Business Days
prior to the date on which such equivalent is to be determined.  The equivalent in Dollars of each Letter of
Credit made in an Approved Currency shall be recalculated hereunder on each
date that it shall be necessary or desirable by any party to determine the
amount of the Commitment, the Unpaid Drawings, the Letter of Credit
Obligations, the Letter of Credit Outstandings, the Obligations or the face
amount of any Letter of Credit on such date.

ARTICLE III.

CASH COLLATERAL, PREPAYMENTS AND OTHER PAYMENTS.

3.1                                 Deposit
of Cash Collateral and Required Prepayments.

(a)                                  The
Borrower agrees that if at any time the Borrower or the Bank determines that
(x) 25% of the aggregate Stated Amount of all outstanding Letters of Credit
plus (z) 100% of the aggregate Unpaid Drawings then outstanding exceeds the
International Borrowing Base, the Borrower will, within five Business Days after request from the Bank or actual
knowledge thereof, (i) deliver to the Bank cash collateral in an amount equal
to such excess, which shall be held by the Bank to the extent and until such
excess is eliminated or (ii) furnish additional security to the Bank, in form
and amount satisfactory to the Bank and Ex-Im Bank.

(b)                                 The
Borrower agrees that if at any time the aggregate principal amount of the
Letter of Credit Outstandings exceeds the amount of the Commitment, the
Borrower shall immediately deliver to the Bank cash collateral in an amount
equal to such excess, which, subject to Section 3.1(c) below, shall be
held by the Bank to the extent and until such excess is eliminated.

(c)                                  Cash
collateral provided to the Bank pursuant to Section 3.1(a) and (b)
above shall be first applied by the Bank to the Unpaid Drawings, if any, and
the remainder to be held by the Bank in a collateral account.

3.2                                 [RESERVED].

3.3                                 Place
of Payment or Prepayment.  All
payments and prepayments of the Obligations made in accordance with the provisions of this
Agreement or of the Note, including, without limitation, fees, reimbursements
or interest, shall, subject to Section 2.5(a), be made to the Bank at
the Payment Office no later than 2:00 p.m. (Central time) on the date when
due, in immediately available funds.

 9
 

 

3.4                                 Prepayment
Premium or Penalty.  Each prepayment
pursuant to Section 3.1 shall be without premium or penalty.

3.5                                 Taxes.  Unless required by law, all payments (whether
of principal, interest, reimbursements or otherwise)
under this Agreement or on the Note shall be made by the Borrower without
set-off or counterclaim and shall be made free and clear of and without
deduction for any present or future tax, levy, impost or any other charge, if
any, of any nature whatsoever now or hereafter imposed by any taxing authority,
but excluding taxes imposed on or measured by the Bank’s net income (including
branch profits taxes) and franchise taxes imposed on the Bank (each
non-excluded tax, levy, impost or charge, a “Tax”).  If the making of such payments is prohibited
by law unless such Tax is deducted or withheld therefrom, the Borrower shall
pay to the Bank, on the date of each such payment, such additional amounts as
may be necessary in order that the net amounts received by the Bank after such
deduction or withholding shall equal the amounts which would have been received
if such deduction or withholding were not required, provided that the
Borrower shall be required to pay such additional amounts only if (A) such
withholding Tax is imposed as a result of a change in law after the Closing
Date (or, in the case of a transferee of the Bank, if such withholding Tax is
imposed as a result of a change in law after the date the transferee became a
party hereto) and (B) such withholding Tax is not imposed as a result of the
failure of the Bank (or any transferee of the Bank) to provide such properly
completed and duly executed documentation prescribed by applicable law as will
permit such payments to be made without withholding or at a reduced rate of
withholding, but only to the extent the Bank (or such transferee) is legally
permitted to provide such documentation.

3.6                                 Reduction
or Termination of the Commitment. 
The Borrower may at any time or from time to time reduce or terminate the
Commitment by giving written notice thereof no later than 2:00 p.m.
(Central time) not less than two (2) Business Days’ prior to such reduction or
termination.  Any reduction in the
Commitment shall be effective on the date specified in the Borrower’s notice
with respect to such reduction.  The
Commitment shall automatically terminate on the earlier of (i) the Maturity
Date or (ii) in the event of acceleration of the Maturity Date of the Note.  Each reduction of the Commitment hereunder
shall be irrevocable.

ARTICLE IV.

FEES.

4.1                                 Facility
Fee.  The Borrower shall pay to the
Bank on the Closing Date, and on each Loan Facility Anniversary Date, a non-refundable facility
fee in an amount equal to the product of (x) the Commitment and (y) the
Annual Facility Fee Percentage; provided that on the second Loan
Facility Anniversary Date, the facility fee shall be pro rated for a period of
time equal to the greater of (i) the remaining term of the Agreement and (ii)
six months.  The facility fee payable on
the Closing Date shall be in the amount of $200,000.

4.2                                 Letter
of Credit Fees.  The Borrower agrees
to pay the Bank a fee in respect of each Letter of Credit issued for the account of the Borrower (the “Letter
of Credit Fee”), in an amount equal to the greater of (i) $750 or
(ii) an amount computed at the applicable rate for standby letters of
credit in the Domestic Credit Agreement set forth in Section 3.3(a)
thereof minus 0.25%.  Letter of
Credit Fees shall be due and payable quarterly in arrears on or before the
fifth (5th) Business Day following the end of each Fiscal Quarter.  Fees due under this

 10
 

 

Section 4.2
shall be computed on the basis of a year of 360 days.  In addition, the Borrower shall pay to the
Bank or Wells Fargo, as applicable, solely for its own account as issuer of
Letters of Credit, any applicable amendment, transfer, negotiation and other
fees as determined in accordance with the Bank’s or Wells Fargo’s then current
fee policy.

4.3                                 Fees
Not Interest; Nonpayment.  The fees
described in this Agreement represent compensation for services rendered and to be rendered
separate and apart from the lending of money or the provision of credit and do
not constitute compensation for the use, detention or forbearance of money, and
the obligation of the Borrower to pay each fee described herein shall be in
addition to, and not in lieu of, the obligation of the Borrower to pay
interest, other fees described in this Agreement, and expenses otherwise
described in this Agreement.  Fees shall
be payable when due in Dollars and in immediately available funds.  All fees shall be non-refundable, and shall,
to the fullest extent permitted by law, bear interest, if not paid within five
(5) Business Days of when due, at a rate per annum equal to the Default Rate.

ARTICLE V.

PERMITTED PURPOSES OF LETTERS OF CREDIT

The Borrower agrees that the Letters of Credit shall
be issued solely to support one or more of the Borrower’s, any Guarantor’s or
any Eligible Joint Venture’s obligations under an Export Order.  No Letter of Credit may be a Warranty Letter
of Credit; provided, however, a performance Letter of Credit that
converts to a Warranty Letter of Credit at the end of the performance period
may be issued so long as the Bank’s liability thereunder and therefor is
eliminated (in a manner satisfactory to the Bank in its sole discretion) not
later than the date when the warranty period commences.

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES.

The Borrower and, as applicable, each Guarantor each
represents and warrants that:

6.1                                 Organization
and Qualification.  It and each of
its Subsidiaries (a) is duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its organization (except to the extent that such
failure to be in good standing under such laws could not reasonably be expected
to have a Material Adverse Effect); (b) has the power to own its
Properties and to carry on its business as now conducted; and (c) is duly
qualified to do business and is in good standing in all jurisdictions in which
the failure to so qualify or be in good standing could reasonably be expected
to have a Material Adverse Effect.  As of
the Closing Date, the Borrower has no Subsidiaries other than those listed on Schedule 6.1.

6.2                                 Financial
Statements; Positive Tangible Net Worth. 
The Borrower has furnished the Bank with the following financial
statements:  (a) its year-end Annual
Audited Financial Statements for the fiscal year ended December 31, 2005; and
(b) its unaudited consolidated balance sheet, statement of earnings and
statement of cash flow as at and for the three month period ended June 30,
2006.  These statements have been
prepared in conformity with GAAP, except, in the case of unaudited financial
statements, for the absence of footnote disclosure and for year-end audit
adjustments.  Such statements fairly
present, in all material respects, the

 11
 

 

consolidated
financial condition of the Borrower and its Subsidiaries and the consolidated
results of its operations as at the dates and for the periods indicated.  Since December 31, 2005, there has been no
change in any circumstances, facts or conditions nor shall an event have taken
place which, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.  During the
period from June 30, 2006 to the
Closing Date, the Borrower has had a positive tangible net worth, as determined
in accordance with GAAP.  For the purpose
of this determination, net worth (as determined in accordance with GAAP) must
be (i) increased by any Debt of the Borrower and its Subsidiaries
subordinated to the indebtedness evidenced by this Agreement and
(ii) decreased by all intangible assets (including, without limitation,
all patents, licenses, goodwill, subscription lists, capitalized software,
organization expenses, covenants not to compete, and investments in and monies
due from Affiliates, officers and directors of the Borrower and its
Subsidiaries).

6.3                                 Litigation;
Contingent Liabilities.  Other than
as set forth on Schedule 6.3, there is no material action or proceeding pending or, to
the knowledge of the Loan Parties, overtly threatened against or involving the
Borrower or any Subsidiary before any court, administrative agency or
arbitrator the results of which could reasonably be expected to have a Material
Adverse Effect.  Other than any liability
incident to the actions or proceedings disclosed on Schedule 6.3, or
provided for or disclosed in the financial statements referred to in Section
6.2, as of the Closing Date, none of the Borrower or any of the Borrower’s
Subsidiaries has any contingent liabilities which could reasonably be expected
to have a Material Adverse Effect.

6.4                                 Default.  Neither the Borrower nor any Subsidiary is
(i) 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 default could reasonably be
expected to have a Material Adverse Effect, (ii) in default under or in
violation of the provisions of any Governmental Requirement (except where
such default or violation could not reasonably be expected to have a Material
Adverse Effect) or (iii) in default in any material respect with any
material provisions of any Export Order (which is included in the International
Borrowing Base), which has not been waived by the applicable party
thereto.  No Event of Default or Default
has occurred and is continuing.

6.5                                 Title
to Assets; Ownership.

(a)                                  The
Borrower and each Subsidiary has good and marketable title to, or a valid
leasehold interest in, its material Properties, subject to no Liens except as
permitted by Section 9.1 hereof.

(b)                                 As
of the Closing Date, except as permitted in Section 9.1 hereof, the
Persons identified on Schedule 6.5 directly own, free and clear of all
Liens or restrictions on transferability or voting, one hundred percent (100%)
of the outstanding shares of Capital Stock of the Borrower and all such shares
are validly issued, fully paid and non assessable.  As of the Closing Date, there are no outstanding
warrants, options, contracts or commitments of any kind entitling any Person to
purchase or otherwise acquire (i) any shares of the Capital Stock of the
Borrower or (ii) any securities convertible into or exchangeable for any
shares of such Capital Stock.  As of the
Closing Date, no securities are outstanding which are convertible into or
exchangeable for any shares of Capital

 12
 

 

Stock of the Borrower.  As of the Closing Date, the Persons
identified on Schedule 6.5 as Controlling Affiliates are the only
Controlling Affiliates of the Borrower (other than Controlling Affiliates that
are not required to execute a Guaranty pursuant to Section 6(c) of the
Fast Track Lender Agreement).

6.6                                 Authorization,
Validity, Etc.  It has the power and
authority to make, execute, deliver and carry out the International Loan Documents to
which it is a party and the transactions contemplated therein and to perform
its obligations thereunder and all such action has been duly authorized by all
necessary proceedings on its part.  The
International Loan Documents to which any Loan Party is a party have been duly
and validly executed and delivered by such Loan Party and constitute valid and
legally binding obligations of such Loan Party enforceable against such Loan
Party in accordance with their respective terms, except as limited by Debtor
Laws.  The Liens created by the
International Security Documents will constitute valid and perfected Liens on
the Collateral described therein superior in right to all other Liens, except
for Permitted Liens.

6.7                                 Intentionally
Omitted.

6.8                                 Taxes.  The Borrower and each Subsidiary has timely filed, or has caused to be timely
filed, all tax returns and reports required by
applicable law, has timely paid, or has caused to be timely paid, all applicable
taxes, assessments, deposits and contributions owing by Borrower and each such
Subsidiary and will timely pay, or cause to be timely paid, all such items in
the future as they became due and payable. 
The Borrower or any Subsidiary may, however, defer payment of any
contested taxes; provided, that Borrower or such Subsidiary (a) in
good faith contests Borrower’s obligation to pay such taxes by appropriate
proceedings promptly and diligently instituted and conducted; (b) notifies
the Bank in writing of the commencement of, and any material development in,
the proceedings; (c) posts bonds or takes any other steps required to keep
the contested taxes from becoming a Lien upon any of the Collateral; and
(d) maintains adequate reserves therefore in conformity with GAAP.  The Borrower is not aware of any proposed tax
assessment by any taxing authority or of any claims by any Governmental
Authority for any unpaid taxes which could reasonably expected to have a
Material Adverse Effect, in each case except liabilities contested in good
faith or for which adequate reserves have been provided.

6.9                                 Conflicting
or Adverse Agreements or Restrictions. 
Neither the execution, delivery and performance by each Loan Party of the
International Loan Documents to which it is a party, any Export Order
to which it is a party and which is included in the International Borrowing
Base, nor the consummation of the transactions contemplated thereby nor
fulfillment of and compliance with the respective terms, conditions and
provisions thereof, will conflict with or result in a breach of any of the
terms, conditions or provisions of, or constitute a default under, or result in
any violation of, or result in the creation or imposition of any Lien on any of
the Property of the Borrower or any Subsidiary (other than Liens created under
the International Loan Documents and, in connection with the execution,
delivery and performance of any Export Order, Permitted Liens) pursuant to,
(a) the Organization Documents of such Person; (b) any Governmental
Requirement; or (c) the terms, conditions or provisions of any material
contract to which such Person is a party or by which it is bound or to which it
is subject.

6.10                           Information.  Neither this Agreement nor any other
document, certificate or written statement furnished to the Bank by or on behalf of the Borrower or
any Subsidiary in

 13
 

 

connection
with this Agreement (including, without limitation, any Export Order included
in the International Borrowing Base or any Weekly International Borrowing Base
Certificate) contains any statement of material fact which is untrue or
incorrect in any material respect or omits to state a material fact necessary
in order to make the statements contained herein and 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 International Loan Documents, or such documents,
certificates or statements heretofore furnished to the Bank.

6.11                           No
Consent.  Except to the extent
obtained, no authorization or approval or other action by, and no notice to or filing with, any Person or any
Governmental Authority is required for the due execution, delivery, and
performance (a) by any Loan Party of any International Loan Document to
which it is a party or the borrowings hereunder, in each case as contemplated
herein, or the effectuation of the transactions contemplated under any
International Loan Document to which it is a party, except (i) filings and
recordings to perfect the Liens created under the International Loan Documents
and (ii) those which, if not obtained, could not reasonably be expected to have
a Material Adverse Effect, or (b) of any Export Order by the parties
thereto or the effectuation of the transactions contemplated thereunder, except
those which, if not obtained, could not reasonably be expected to have a
Material Adverse Effect.

6.12                           Environmental
Matters.  The Borrower and each
Subsidiary (a) owns, possesses or otherwise holds, and is in compliance with the terms and
conditions of, all Governmental Approvals under Environmental Laws necessary
for the ownership or lease and operation of its Property and the carrying on of
its business as now conducted or proposed to be conducted, except where the
failure could not reasonably be expected to have a Material Adverse Effect, and
(b) is in compliance with all Governmental Requirements relating to the
environment except where the failure could not reasonably be expected to have a
Material Adverse Effect.  There are no
civil, criminal or administrative actions, investigations or proceedings or
claims pending or, to the best knowledge of the Borrower, threatened against
the Borrower or any Subsidiary, for noncompliance with Environmental Laws or
arising out of the presence or release of hazardous materials at, on or under
any Property now owned, leased or operated by the Borrower or any Subsidiary
which could reasonably be expected to have a Material Adverse Effect.

6.13                           Debt.  As of the Closing Date, the financial
statements referred to in Section 6.2 contain a complete and accurate disclosure in all material respects of
all Debt of the Borrower and its Subsidiaries outstanding as of the respective
dates of such financial statements, except for Guaranties permitted by Section
6.2(f) (or any comparable section) of the Domestic Credit Agreement.  As of the Closing Date, none of the Borrower
or any of its Subsidiaries has incurred any other Debt since the respective
dates of such financial statements, except as would have been permitted under Section
9.6 of this Agreement had this Agreement been in effect at the time of the
incurrence of any such additional Debt.

6.14                           Compliance
with Laws.  The Borrower and each
Subsidiary has complied in all material respects with all provisions of all applicable laws and
regulations, including those relating to Borrower’s ownership of real or
personal property, the conduct and licensing of

 14
 

 

Borrower’s
business, the payment and withholding of taxes, ERISA and other employee
matters, safety and environmental matters.

6.15                           Suspension
and Debarment, Etc.  Neither the
Borrower nor any of its Principals (as defined below) are (A) debarred, suspended,
proposed for debarment with a final determination still pending, declared
ineligible or voluntarily excluded (as such terms are defined under any of the
Debarment Regulations referred to below) from participating in procurement or
nonprocurement transactions with any U.S. federal government department or
agency pursuant to any of the Debarment Regulations (as defined below) or (B) indicted,
convicted or had a civil judgment rendered against the Borrower or any of its
Principals for any of the offenses listed in any of the Debarment
Regulations.  For the purposes hereof,
(1) ”Principals” shall mean any officer, director, owner, partner,
key employee, or other person with primary management or supervisory
responsibilities with respect to the Borrower; or any other Person (whether or
not an employee) who has critical influence on or substantive control over the
transaction covered by this Agreement and (2) the “Debarment
Regulations” shall mean (x) the Government wide Debarment and
Suspension (Nonprocurement) regulations (Common Rule), 53 Fed.
Reg. 19204 (May 26, 1988), (y) Subpart 9.4 (Debarment,
Suspension and Ineligibility) of the Federal Acquisition Regulations,
48 C.F.R. 9.400-9.409 and (z) the revised Government wide
Debarment and Suspension (Nonprocurement) regulations (Common Rule),
60 Fed. Reg. 33037 (June 26, 1995).

ARTICLE VII.

CONDITIONS.

The obligation of the
Bank to issue each Letter of Credit is subject to the following conditions:

7.1                                 Representations
True and No Defaults.

(a)                                  The
representations and warranties of the Borrower and the Guarantors contained in
the International Loan Documents shall be true and correct in all material
respects on and as of the date of
the issuance of any Letter of Credit, 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; and

(b)                                 no
Event of Default or Default shall have occurred and be continuing.

7.2                                 Terms
of Sale.  Letters of Credit shall be
issued only against Export Orders, copies of which have been delivered to the Bank, if the Bank or Ex-Im
Bank requires, and which are maintained on file with the Borrower.  Each Letter of Credit hereunder is subject to
the condition precedent that the Bank shall have reviewed and approved in its
sole discretion the terms and conditions, including without limitation that
there exists satisfactory evidence that the Items will in fact be exported, of
the applicable Export Order.

7.3                                 Governmental
Approvals.  The Borrower and each
Guarantor and the Bank shall have obtained all Governmental Approvals required
for the making and carrying out of this Agreement, the issuance of Letters of
Credit pursuant hereto and the issuance of the Note and the

 15
 

 

execution,
delivery and performance of the applicable Export Order that is included in the
International Borrowing Base.  Without
limitation of the foregoing, no Letter of Credit shall be issued hereunder
(a) in violation of the Ex-Im Bank Guaranty or contrary to the
instructions of Ex-Im Bank or (b) following the occurrence of an Event of
Default that is continuing or of any event which but for the giving of notice
or the lapse of time or both would constitute an Event of Default pursuant to Section 4.10
of the Ex-Im Bank Guaranty.

7.4                                 Letter
of Credit Documents.  On the date of
the issuance of any Letter of Credit, the Bank shall have received from the Borrower a
Letter of Credit Request in respect of Letters of Credit to be issued on such
issuance date together with such other documents and certificates relating to
the transactions herein contemplated as the Bank may reasonably request.

7.5                                 Required
Initial Documents and Certificates. 
On or before the issuance of the first Letter of Credit hereunder (the “Initial
Date”), the Bank shall have received from the Borrower or, as applicable,
each Guarantor the following, in each case in form, scope and substance
satisfactory to the Bank:

(i)                                     the
SBA/Ex-Im Bank Joint Application, duly executed by the parties thereto,
together with the $100 application fee related thereto;

(ii)                                  the
Borrower Agreement duly executed by the parties thereto;

(iii)                               the
Fast Track Borrower Supplement duly executed by the parties thereto;

(iv)                              this
Agreement duly executed by the parties hereto, together with all schedules and
exhibits thereto;

(v)                                 the
Note duly executed by the Borrower;

(vi)                              the
International Security Agreement duly executed by the parties thereto;

(vii)                           the
International Pledge Agreement duly executed by the parties thereto;

(viii)                        the
Standby Letter of Credit Agreement duly executed by the parties thereto;

(ix)                                an
officer’s certificate of the Borrower signed in the name of the Borrower by its
President, Chief Financial Officer, Vice President or Secretary, and dated as
of the Closing Date to which are attached true and correct copies of the
Organization Documents of the Borrower and corporate resolutions duly adopted
by the Board of Directors of the Borrower authorizing the transactions
contemplated by the International Loan Documents;

 16

 

(x)                                   such
certificates as may be appropriate to demonstrate the continued existence and
good standing of the Borrower in its jurisdiction of organization;

(xi)                                an
officer’s certificate of each Guarantor signed in the name of such Guarantor by
its President, Chief Financial Officer, Vice President or Secretary, and dated
as of the Closing Date to which are attached true and correct copies of the
Organization Documents of such Guarantor and resolutions duly adopted by the
Board of Directors or Managers of such Guarantor authorizing the transactions
contemplated by the International Loan Documents;

(xii)                             such
certificates as may be appropriate to demonstrate the continued existence and
good standing of each Guarantor in its jurisdiction of organization;

(xiii)                          a Weekly
International Borrowing Base Certificate dated within five (5) calendar days
preceding the Initial Date;

(xiv)                         copies of
UCC Financing Statements and all other requisite filing documents necessary to
perfect the Liens granted pursuant to the International Security Documents and,
if applicable, duly executed releases or assignments of Liens and UCC-3
financing statements in recordable form, each in form and substance
satisfactory to the Bank, and filed with the appropriate filing offices,
covering all of the Collateral subject thereto, as may be necessary to reflect
that the Liens granted to the Bank are of the priority required by Section 9.1
hereof;

(xv)                            the
facility fee required under Section 4.1;

(xvi)                         the
Borrower’s monthly Export-Related Accounts Receivable aging schedule showing
all of the Borrower’s Export-Related Accounts Receivable as of the last day of
the calendar month immediately preceding the Closing Date;

(xvii)                      the Borrower’s
financial statements described in Section 6.2;

(xviii)                   an Exceptions
Approval Letter properly signed by Ex-Im Bank;

(xix)                           the
Guaranty, duly executed and delivered by each Guarantor;

(xx)                              a
control agreement in the form of Exhibit J hereto for the Cash
Collateral Account at Wells Fargo, duly executed by Bank, Wells Fargo and the
Borrower;

(xxi)                           a copy
of the Standing Instruction Agreement executed by Ahli United Bank;

 17
 

 

(xxii)                        a
customary opinion dated as of the Closing Date of legal counsel to the Borrower
and Guarantor as to such matters as the Bank may reasonably request;

(xxiii)                     any
amendments and/or consents required to the Domestic Loan Documents and the
Travelers Agreement (as defined in the Domestic Credit Agreement) to allow the
Liens granted pursuant to the International Security Documents;

(xxiv)                    a confirmation
of the pledge of each Guarantor’s equity interests in the Durrat Joint Venture,
executed by each other member of the Durrat Joint Venture; and

(xxv)                       any further
documentation or evidence that the Bank or Ex-Im Bank may require.

In addition, as of the Initial Date, all legal matters
incident to the transactions herein contemplated shall be reasonably
satisfactory to the Bank.

7.6                                 Ex-Im
Bank Acknowledgment, Etc.  On or
before the Initial Date, Ex-Im Bank shall have received from the Bank copies of all documents
required pursuant to the Ex-Im Bank Guaranty and the Fast Track Agreement.  The Bank shall have received from Ex-Im Bank
a Loan Authorization Agreement executed by Ex-Im Bank, together with all other
items referred to in Paragraph 3 of the Fast Track Agreement.

7.7                                 Post-Closing
Lien Search.  After the Closing Date,
the Bank shall have received the results of all post-closing lien searches confirming
that the Bank has obtained a perfected security interest in the Collateral of
the priority required by Section 9.1.

ARTICLE
VIII.

AFFIRMATIVE COVENANTS.

The Borrower covenants and agrees that, so long as the
Borrower requests issuance of Letters of Credit hereunder and until payment in
full of all Obligations, the expiry of all Letters of Credit and the termination
of this Agreement, the Borrower shall, and shall (except in the case of the
covenants set forth in Sections 8.1 and 8.5) cause each
Subsidiary to:

8.1                                 Financial
Statements and Information.  Deliver
to the Bank:

(a)                                  within
90 days after the end of each Fiscal Year of the Borrower, the Annual Audited
Financial Statements of the Borrower and its Subsidiaries for such Fiscal Year;

(b)                                 within
75 days after the first calendar day of each Fiscal Year, a budget for such
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 Fiscal Year.  It is understood that

 18
 

 

(i) any
projections or budget furnished to the Bank 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;

(c)                                  within
45 days after the first three Fiscal Quarters of each Fiscal Year, the
Quarterly Unaudited Financial Statements of the Borrower and its Subsidiaries;

(d)                                 a
Weekly International Borrowing Base Certificate as required by Section
2.2(a);

(e)                                  the
notices and information required to be delivered by Section 6.1(f) (or any comparable
section) of the Domestic Credit Agreement;

(f)                                    with
reasonable promptness after the sending or filing thereof, copies of all
reports and registrations statements which the Borrower or any Subsidiary files
with the Securities and Exchange Commission or any national securities
exchange;

(g)                                 in
connection with the Durrat Project and the Diyaar Project, within 45 days after
the end of each calendar month, (i) copies of all standing instructions
delivered to Ahli United Bank (to the extent not previously delivered), (ii)
monthly statements of the Ahli United Bank Deposit Account, and (iii) copies of
any and all invoices issued by (x) the Durrat Joint Venture to Durrat, (y) the
Diyaar Joint Venture to Diyaar and (z) Great Lakes LLC to (I) the Durrat Joint Venture
and (II) the Diyaar Joint Venture; and

(h)                                 such
additional financial or other information as the Bank may reasonably request.

Together with each delivery of the Annual Audited
Financial Statements and the Quarterly Unaudited Financial Statements, the
Borrower will deliver to the Bank a Compliance Certificate substantially in the
form of Exhibit D hereto, showing (in reasonable detail and
appropriate calculations and computations in form reasonably satisfactory to
the Bank) compliance with the financial covenants set forth in Section 9.5,
stating that there exists no Event of Default or Default, or, if any such Event
of Default or Default exists, stating the nature thereof, the period of
existence thereof and what action the Borrower has taken or proposes to take
with respect thereto.  The Bank is
authorized to deliver a copy of any information and financial statement
delivered to it pursuant to this Agreement to Ex-Im Bank and any
Governmental Authority having jurisdiction over the Bank.

8.2                                 Books
and Records.  Maintain, and cause its
Subsidiaries to maintain, proper books of record and account in accordance with GAAP (including
records relating to Collateral) which accurately reflect all of its business
affairs and transactions in relation to its business and activities in all
material respects.

8.3                                 Insurance.  Maintain, and cause its Subsidiaries to
maintain, insurance with financially sound, responsible and reputable companies in such types
(including, without limitation, fire and casualty) and amounts and against such
casualties, risks and contingencies as

 19
 

 

is customarily carried by owners of similar businesses and Properties,
and furnish to the Bank, together with each delivery of Annual Audited
Financial Statements under Section 8.1(a), certificates of
insurance evidencing the insurance carried. 
Without limiting the generality of the foregoing, the Borrower will
comply with the insurance requirements set forth in each International Security
Document to which the Borrower is a party. 
For purposes hereof, the Borrower’s types and amounts of insurance set
forth in Schedule 8.3 shall be acceptable to the Bank.

8.4                                 Inspection
of Property and Records; Audits of Collateral; Etc.

(a)                                  Permit,
and cause its Subsidiaries to permit, any Person designated by the Bank in
writing to visit and inspect any of the Properties, books and financial records
of the Borrower and its Subsidiaries and discuss its affairs and finances with
its officers, all at such times during normal business hours as the Bank may
reasonably request at a mutually agreeable time, and cause its officers and
employees to give full cooperation and assistance in connection therewith.  Without limiting the generality of the
foregoing, the Borrower will permit, and cause its Subsidiaries to permit, any
officer or employee of, or agent designated by, the Bank to have access to,
examine and inspect the Collateral and to audit and make copies from the
Borrower’s and any Subsidiaries’ records, files and books of account in order
to verify such Collateral.

(b)                                 The
Borrower will, from time to time, on a quarterly basis (other than the fourth
Fiscal Quarter), permit the Bank, an independent certified public accountant or
another appropriate entity acceptable to the Bank to audit the Borrower’s
books, records and procedures with respect to Inventory, Accounts Receivable
and other Collateral.  This inspection
shall include a physical inspection of the Collateral in accordance with normal
commercial lending practices, except that a book audit shall be made of the
Borrower’ Accounts Receivable and any intangible Collateral.  Promptly after the conclusion of each such
audit, the Borrower shall pay to the Bank its reasonable and customary
out-of-pocket expenses associated with such audit.

8.5                                 Notice
of Certain Matters.  Promptly, but in
any event within five (5) Business Days, notify the Bank in writing of the occurrence of any
of the following:

(a)                                  the
Borrower or any Guarantor (i) applies for, consents to or suffers the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of
its property or calls a meeting of its creditors, (ii) admits in writing its
inability, or is generally unable, to pay its debts as they become due or
ceases operations of its present business, (iii) makes a general assignment for
the benefit of creditors, (iv) commences a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect), (v) is adjudicated as
bankrupt or insolvent, (vi) files a petition seeking to take advantage of any
other law providing for the relief of debtors, (vii) acquiesces to, or fails to
have dismissed within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) takes any action for the
purpose of effecting any of the foregoing;

 20
 

 

(b)                                 any
Lien in any of the Collateral, granted or intended by the International Loan
Documents to be granted to Bank, ceases to be a valid, enforceable, perfected,
first priority Lien (or a lesser priority if expressly permitted pursuant to
Section 6 of the Loan Authorization Agreement) subject only to Permitted Liens;

(c)                                  the
issuance of any levy, assessment, attachment, seizure or Lien, other than a
Permitted Lien, against any of the Collateral which is not stayed or lifted
within thirty (30) calendar days;

(d)                                 any
proceeding is commenced by or against the Borrower or any Guarantor for the
liquidation of its assets or dissolution;

(e)                                  any
litigation is filed against the Borrower or any Guarantor which has had or
could reasonably be expected to have an Ex-Im Material Adverse Effect and such
litigation is not withdrawn or dismissed within thirty (30) calendar days of
the filing thereof;

(f)                                    any
Default or Event of Default under the International Loan Documents;

(g)                                 any
failure to comply with any terms of the Loan Authorization Agreement;

(h)                                 any
material provision of this Agreement or any other International Loan Document
for any reason ceases to be valid, binding and enforceable in accordance with
its terms;

(i)                                     any
event which has had or could reasonably be expected to have an Ex-Im
Material Adverse Effect;

(j)                                     the
aggregate outstanding amount of Disbursements exceeds the applicable
Export-Related Borrowing Base;

(k)                                  the
existence of any condition requiring a mandatory prepayment or deposit of cash
collateral pursuant to Section 3.1 hereof;

(l)                                     any
failure to pay when due any amount payable to the Bank by the Borrower or any
Subsidiary under any non-Ex-Im Bank guaranteed loan(s) extended by the Bank to
the Borrower or any Subsidiary;

(m)                               any
actual breach, or threatened breach made in writing, in any material respect of
any material provision of any Export Order included in the International
Borrowing Base, by any party to any such contract; or

(n)                                 the
Borrower has included in the International Borrowing Base any Accounts
Receivable that no longer qualifies as Eligible Export-Related Accounts
Receivable.

 21
 

 

8.6                                 Security
and Further Assurances.  Each Loan
Party shall, from time to time as the Bank may reasonably request, at the Borrower’s
own expense, promptly execute and deliver all such further instruments
(including, without limiting the generality of the foregoing, additional
security agreements, and financing statements) and do such other acts as the
Bank may reasonably request for the purpose of protecting or perfecting any
Lien created or granted or intended to be created or granted in the
International Security Documents or in order to ensure that any such Lien is of
the priority purported to be granted thereby and as required by Section 9.1
hereof, or in order to police or protect any Collateral or otherwise to carry
out more effectually the purposes and intent of the International Loan
Documents.

8.7                                 Establishment
of Cash Collateral Account. 
Establish and maintain a deposit account with Wells Fargo, in which payments related to
Export-Related Accounts Receivable will be deposited directly by wire transfer
(the “Cash Collateral Account”); provided, however, that
payments from Durrat and Diyaar will be deposited in an account at Ahli United
Bank (the “Ahli United Bank Deposit Account”) with the portion of such
payments belonging to the Borrower or Guarantor to be deposited in the Cash
Collateral Account reasonably promptly, and in any event within two (2) Business Days (as defined in the
Standing Instruction Agreement), from the date of the deposit in the Ahli
United Bank Deposit Account and, provided, further that (i)
payments related to the Export Orders identified on Schedule 8.7 and
(ii) payments related to Export Orders that have a contractual value of less
than $1,000,000 and which are not included in the International Borrowing Base
(collectively, the “Excluded Export-Related Accounts Receivable”) shall
not be required to be deposited into the Cash Collateral Account.  The Cash Collateral Account, including the
withdrawal and release of funds therefrom, shall be governed by the control
agreement in the form of Exhibit J hereto.  So long as no Event of Default has occurred
and is continuing, the Bank will deliver orders to Wells Fargo providing for a
daily transfer of all funds from the Cash Collateral Account to the Borrower’s
operating account at Bank of America, N.A. or such other account as the
Borrower may direct in writing from time to time.

8.8                                 Maintenance
of Property.  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 the Borrower or such Subsidiary reasonably
determines in good faith that maintenance thereof is no longer economically
desirable.

8.9                                 Corporate
Existence; Payment of Taxes and Claims; Compliance With Laws.

(a)                                  Except
as otherwise permitted by the Domestic Credit Agreement, maintain, and cause
each Subsidiary to maintain, its existence;

(b)                                 pay,
and cause to be paid, all taxes, assessments, governmental charges, claims for
labor, and other obligations that have become due and payable and that by law
have or may give rise to a Lien on such Person’s Property other than Liens
permitted by Section 9.1, provided that none of the Borrower or
any Subsidiary shall be required to pay such tax, assessment, governmental
charge, claim for labor or other obligations

 22
 

 

which (i) 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 has been adequately reserved against in accordance
with GAAP, and (ii) if not so paid, could not reasonably be expected to have a
Material Adverse Effect; and

(c)                                  comply,
and cause each Subsidiary to comply, with all Governmental Requirements except
where failure to so comply could not reasonably be expected to have a Material
Adverse Effect.

8.10                           Assignment
of International Letter of Credit Proceeds. 
Each letter of credit or bank guaranty issued in favor of the Borrower with
respect to the sale of Items related to Export Orders to be financed under this
Agreement and included in the International Borrowing Base, if any,
(a) shall be in form and substance reasonably satisfactory to the Bank,
and (b) shall be issued in the manner required by the Bank by financial
institutions reasonably acceptable to the Bank. 
If required by the Bank, any such letter of credit or bank guaranty
shall provide for an assignment of proceeds thereof, in form and substance
reasonably satisfactory to the Bank.

8.11                           Environmental
Matters.  At all times:

(a)                                  comply,
and cause each Subsidiary to comply, with all applicable Governmental
Requirements and Governmental Approvals under Environmental Laws except where
failure to so comply could not reasonably be expected to have a Material
Adverse Effect; and

(b)                                 promptly
notify the Bank after becoming aware of any enforcement, cleanup, removal or
other governmental or regulatory actions instituted or threatened in writing
against Borrower or any Subsidiary pursuant to any applicable Environmental
Laws which could reasonably be expected to result in liabilities of Borrower or
its Subsidiaries in excess of $3,000,000 (to the extent not covered by
insurance or third party indemnification).

8.12                           Controlling
Affiliates.  If any Person shall
become a Controlling Affiliate after the Closing Date, then the Borrower (a) will cause such
Controlling Affiliate if required under Section 6(c) of the Fast Track
Lender Agreement, to execute and deliver to the Bank the Guaranty within thirty
(30) days of becoming a Controlling Affiliate and (ii) to execute and deliver
to the Bank the Security Agreement within thirty (30) days of becoming a
Controlling Affiliate, if such Controlling Affiliate’s assets will be included
in the International Borrowing Base.

8.13                           Assembly
of Export Order Summaries.  In the
event the Borrower has furnished summaries of Export Orders to the Bank pursuant
to Section 2.2(a), at least once each calendar quarter, make
available to the Bank a sampling of such Export Orders selected by the Bank
representing at least 10% of the aggregate U.S. dollar volume of all Export
Orders and 10% of the number of Export Orders supporting Letters of Credit
issued during the preceding calendar quarter available for the Bank’s review
and inspection.

 23
 

 

8.14                           Delivery
of Domestic Loan Documents.  Deliver
or cause to be delivered to the Bank promptly after the effectiveness thereof, any
amendments, modifications, renewals and extensions of the Domestic Credit
Agreement.

8.15                           Reaffirmation
of Borrower.  Contemporaneously with
the consummation of the Aldabra Transactions, the Successor Borrower shall execute
and deliver to the Bank a Reaffirmation, Ratification and Assumption Agreement,
substantially in the form attached hereto as Exhibit I and such other
documents as may be reasonably requested by the Bank or Ex-Im Bank to assure
themselves of the continuing effectiveness of the International Loan Documents
being reaffirmed, ratified and assumed by the Successor Borrower.

ARTICLE
IX.

NEGATIVE COVENANTS.

So long as the Borrower may request issuance of
Letters of Credit hereunder and until payment in full of all Obligations and
termination of this Agreement, unless the Bank shall otherwise give its prior
written consent in its sole and absolute discretion:

9.1                                 Liens.  The Borrower will not, and will not permit
any Subsidiary to create, incur, assume or permit to exist any Lien upon any of its Properties, or the
proceeds thereof, whether now owned or hereafter acquired, except (a)  Liens permitted pursuant to Section 6.2(h)
(or such comparable section) of the Domestic Credit Agreement, provided
that no such Liens (other than Permitted Liens) shall encumber the Collateral
subject to the International Security Documents, and (b) Liens in favor of the
Bank created under the International Loan Documents.

9.2                                 Merger,
Consolidation, Acquisitions, Sales of Assets, Etc.  Without the prior written consent of the Bank
and Ex-Im Bank, the
Borrower will not: (a) merge, consolidate or otherwise combine with any other
Person, (b) acquire all or substantially all of the assets or capital stock of
another Person; (c) sell, lease, transfer, assign or otherwise dispose of any
of its assets, except for the sale of Inventory in the ordinary course of
business and the disposition of obsolete equipment in the ordinary course of
business; (d) make any material change in its organizational structure or
identity, or (e) enter into any agreement to do any of the foregoing; except
that the Borrower may consummate the Aldabra Transactions.

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

9.4                                 Investments.  The Borrower will not, and will not permit
any Subsidiary to make any Investments, except as
permitted by Section 6.2(b) (or any comparable section) of the
Domestic Credit Agreement or otherwise consented to by the Domestic Lenders
under the Domestic Credit Agreement but not otherwise prohibited by Section
9.2.  This Section 9.4
shall not be construed to prohibit advances made to employees, officers and
directors in the usual, customary and ordinary course of business.

 24
 

 

9.5                                 Financial
Covenants.

(a)                                  Capital
Expenditures.

(i)                                     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 (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 2006 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.

(i)                                     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

  	
   

  
	
  Closing Date
  through and including September 30, 2006

  	
   

  	
  5.60 to 1.00

  	
   

  
	
  October 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

  	
   

  

 

(c)                                  Maximum
Senior Leverage.

(i)                                     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

  	
   

  
	
  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

  	
   

  

 

 25
 

 

 

	
  January 1, 2008
  through and including December 31, 2008

  	
   

  	
  1.50 to 1.00

  	
   

  
	
  January 1, 2009 through
  and thereafter

  	
   

  	
  1.25 to 1.00

  	
   

  

 

(d)                                 Interest
Coverage Ratio.

(i)                                     The
Borrower and its consolidated Subsidiaries shall not permit the ratio (the “Interest
Coverage 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 periods described below to (ii) Interest Expense
for such period ending as of such date, to be less than the corresponding ratio
set forth below opposite such period:

	
  Period

  	
   

  	
  Ratio

  	
   

  
	
  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

  	
   

  

 

9.6                                 Debt.  The Borrower will not, and will not permit
any Subsidiary to create, incur, assume or otherwise become
or remain liable with respect to any Debt, other than, without duplication, the
following:

(a)                                  Debt
to the Bank; and

(b)                                 Debt
permitted by Section 6.2(i) (or any comparable section) of the Domestic
Credit Agreement.

9.7                                 Affiliate
Transactions.  The Borrower shall
not, nor shall it permit any Subsidiary to, enter into, or cause, suffer or permit to exist any
arrangement or contract with any of its other Affiliates (as defined in the
Domestic Credit Agreement) 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 (as
defined in the Domestic Credit Agreement); provided, however,
that nothing in this Section 9.7 shall prohibit (i) any transactions
otherwise permitted hereby pursuant to any Management Agreement (as defined in
the Domestic Credit Agreement) or any Tax Sharing Agreement (as defined in the
Domestic Credit Agreement), (ii) any transaction among the Borrower and any
Subsidiary Guarantor (as defined in the Domestic Credit Agreement) or (iii) the
NASDI Restructuring (as defined in the Domestic Credit Agreement).

9.8                                 Restricted
Payments.  The Borrower will not
declare, pay or make, or offer to pay or make any Restricted Payment (directly or indirectly
through an Affiliate (as defined in the Domestic Credit Agreement)), except as
permitted under Section 6.2(c) (or any comparable section) of the Domestic
Credit Agreement.

9.9                                 Suspension
and Debarment, Etc.  Unless
authorized by Ex-Im Bank, the Borrower will not knowingly enter into any transactions in
connection with the Items with any Person who

 26
 

 

is debarred, suspended, declared ineligible or voluntarily excluded
from participation in procurement or nonprocurement transactions with any U.S.
federal government department or agency pursuant to any of the Debarment
Regulations.  The Borrower will provide
immediate written notice to the Bank if at any time it learns that the
certification set forth in Section 6.15 was erroneous when made or
has become erroneous by reason of changed circumstances.

9.10                           Debt
of Eligible Joint Ventures.   The
Borrower shall not, nor shall it permit any Subsidiary, to consent to the incurrence of Debt by
any Eligible Joint Venture.

ARTICLE
X.

EVENTS OF DEFAULT; REMEDIES.

10.1                           Events
of Default.  If any of the following
events shall occur, then the Bank may (a) by written notice to the Borrower, declare the Commitment of the
Bank and the obligation of the Bank to issue or cause to be issued Letters of
Credit to be terminated, whereupon the same shall forthwith terminate, and
(b) by written notice to the Borrower declare all outstanding Obligations, to be forthwith due and payable,
whereupon all outstanding
Obligations shall become and be forthwith due and payable without presentment,
demand, protest, or further notice of any kind (including, without limitation,
notice of default, notice of intent to accelerate and notice of acceleration),
all of which are hereby expressly waived by the Borrower; provided, however,
that with respect to any Event of Default described in Sections 10.1(d),
(e) and (f) hereof, the Commitment of the Bank and the
obligation of the Bank to issue or cause to be issued Letters of Credit
hereunder shall automatically be terminated and all outstanding Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest, or any notice of any kind (including, without limitation,
notice of default, notice of intent to accelerate and notice of acceleration),
all of which are hereby expressly waived by the Borrower:

(a)                                  Failure
to Make Payments When Due.  The
Borrower does not pay, repay or prepay on the date when due (i) any Unpaid
Drawings or (ii) any other Obligations and such failure shall continue
unremedied for five (5) Business Days; or

(b)                                 Misrepresentation
or Breach of Warranty.  Any
representation or warranty made by any Loan Party herein, in any other
International Loan Document, or in any amendment, waiver or modification
thereof shall be incorrect, false or misleading in any material respect when
made; or

(c)                                  Violation
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 8.4, 8.5
(other than 8.5(k)), 8.9(a), 8.12, 8.15 or Article
IX of this Agreement; or

(ii)                                  Any
Loan Party shall fail duly and punctually to perform or observe any covenant or
agreement binding on such Loan Party under Section 8.1, 8.2 and 8.5(k)
of this Agreement, and such failure shall continue unremedied for ten (10)
Business Days after an Authorized Officer of such Loan Party first has
knowledge of such failure or such Loan Party receives written notice thereof
from the Bank, whichever is earlier; or

 27
 

 

(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
(c)) or under any of the other International Loan Documents (other than the
Guaranty), 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 Bank, whichever is earlier; or

(d)                                 Bankruptcy
and Other Matters.  Any Loan Party
(A) applies for, consents to or suffers the appointment of, or the taking of
possession by, a receiver, a custodian, trustee, liquidator or similar
fiduciary of itself or of all or a substantial part of its property or calls a
meeting of its creditors, (B) admits in writing its ability, or is generally
unable, to pay its debts as they become due or ceases operations of its present
business, (C) makes a general assignment for the benefit of creditors, (D)
commences a voluntary case under any state or federal bankruptcy laws (as now
or hereafter in effect), (E) is adjudicated as bankrupt or insolvent, (F) files
a petition seeking to take advantage of any other law providing for the relief
of debtors, (G) acquiesces to, or fails to have dismissed within thirty (30)
days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (H) takes any action for the purpose of effecting any of
the foregoing; or

(e)                                  Bankruptcy
of Subsidiary.

(i)                                     Any
Subsidiary of the Borrower (other than a Loan Party) 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

(ii)                                  any
proceeding shall be instituted by or against any Subsidiary of the Borrower
(other than a Loan Party) seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation (other than in a transaction permitted under Section
6.2(a)(i) or any comparable section of the Domestic Credit Agreement),
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
Subsidiary of the Borrower (other than a Loan Party) 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
10.1(e).

 28
 

 

(f)                                    Dissolution.  Any proceeding is commenced by or against any
Loan Party for the liquidation of its assets or dissolution; or

(g)                                 Collateral
and Liens.

(i)                                     Any
Lien in any of the Collateral, granted or intended by the International Loan
Documents to be granted to the Bank, ceases to be a valid, enforceable,
perfected, first priority Lien (or lesser priority if expressly permitted
pursuant to Section 6 of the Loan Authorization Agreement) subject only to
Permitted Liens; or

(ii)                                  any
levy, assessment, attachment, seizure or Lien, other than a Permitted Lien, is
made against any of the Collateral which is not stayed or lifted within thirty
(30) calendar days; or

(h)                                 Cross-default
to Export Orders.  The Borrower is in
breach in any material respect of any material provision of any Export Order
included in the International Borrowing Base, which has not been waived by the
applicable party thereto; or

(i)                                     Cross-default
to Domestic Loan Documents.

(i)                                     After
giving effect to any applicable grace or cure period, an “Event of Default”
under and as defined in the Domestic Credit Agreement shall have occurred,
unless the same shall have been waived by the Domestic Lenders in accordance
with the terms of the Domestic Credit Agreement; or

(ii)                                  or,
unless waived in writing by Ex-Im Bank, the Domestic Credit Agreement has been
terminated or ceases to be in full force and effect for any reason; or

(j)                                     Cross-default
to Non-Ex-Im Bank Debt.  The Borrower
or any Guarantor fails to pay within thirty (30) calendar days of the date when
due any amount payable to the Bank under any loan or other extension of credit
from the Bank to the Borrower or such Guarantor which is not guaranteed by
Ex-Im Bank, unless the same shall have been waived by the Bank in accordance
with the terms thereof; or

(k)                                  Cross-acceleration
to Other Debt.

(i)                                     The
Borrower or any Guarantor shall fail to pay any Debt in an aggregate principal
amount in excess of $5,000,000 at its final scheduled maturity date; or

(ii)                                  any
breach 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

 29
 

 

prepayment), repurchased or redeemed prior to the originally stated
maturity thereof; or

(l)                                     Undischarged
Judgment.  Final judgment shall be
rendered against any Loan Party or Subsidiary of the Borrower in an amount in
excess of $5,000,000 (to the extent not covered by insurance) and the same
shall remain undischarged for a period of 30 days during which execution shall
not be effectively stayed, released, bonded or vacated; or

(m)                               Cross-default
to Borrower Agreement, Loan Authorization Agreement and Fast Track Borrower
Supplement.  The Borrower fails to
comply with any provision contained in the Borrower Agreement, the Loan Authorization
Agreement or the Fast Track Borrower Supplement and such failure is not cured
within thirty (30) calendar days after the occurrence of such failure; or

(n)                                 Change
of Control.  A Change of Control (as
defined in the Domestic Credit Agreement) shall occur; or

(o)                                 Impairment
of Ex-Im Bank Guaranty.  The Ex-Im
Bank Guaranty shall cease to be in full force and effect or shall be declared
null and void or the validity or enforceability thereof shall be contested,
challenged or denied by Ex-Im Bank, the Borrower, any Governmental Authority,
any Affiliate of the Borrower or any Subsidiary or any Guarantor; or

(p)                                 Impairment
of International Loan Documents, Export Orders.  Any material provision of this Agreement, the
Note, any Export Order included in the International Borrowing Base, or any
other International Loan Document shall cease for any reason (other than by
reason of any action or inaction by the Bank) to be in full force and effect
against any Loan Party (other than in accordance with its terms) or shall be
declared null and void or the validity or enforceability hereof or thereof
shall be contested, challenged or denied by the Borrower, any Governmental
Authority, any Affiliate of the Borrower or any Subsidiary of such Borrower or
any Guarantor; or

(q)                                 Distributions
in Violation of the Ex-Im Bank Guaranty. 
The Borrower shall have in good faith requested and the Bank shall have
made a Disbursement that unintentionally turns out to be in violation of the
Ex-Im Bank Guaranty, and the Borrower shall not have repaid such Disbursement
promptly upon learning of such violation;

(r)                                    Material
Litigation.  Any litigation is filed
against the Borrower or any Guarantor which has had or could reasonably be
expected to have an Ex-Im Material Adverse Effect and such litigation is not
withdrawn or dismissed within thirty (30) calendar days of the filing thereof;
or

(s)                                  Guaranty.  Any breach or default occurs under the
Guaranty, or the Guaranty is terminated or any obligation to perform thereunder
is terminated, or any Guarantor attempts to revoke the Guaranty.

 30

 

10.2                           Other
Remedies.  In addition to and
cumulative of any rights or remedies expressly provided for in this  Article X, if any one or more
Events of Default shall have occurred (other than an Exit Date Event of
Default), the Bank may proceed to protect and enforce its rights hereunder by
any appropriate proceedings and the Liens evidenced by the International
Security Documents shall be subject to foreclosure in any manner provided for
therein or provided for by law as the Bank may elect.  The Bank may also proceed either by the
specific performance of any covenant or agreement contained in this Agreement
or the other International Loan Documents or by enforcing the payment of the
Obligations provided under this Agreement or the other International Loan Documents
or otherwise existing under any law.  The
Bank shall not, however, be under any obligation to marshal any assets in favor
of the Borrower or against or in payment of any or all obligations under any
International Loan Document.  Upon the
occurrence of an Event of Default (other than an Exit Date Event of Default),
it is hereby acknowledged and agreed Ex-Im Bank shall have the right to
(a) direct the Bank to make demand hereunder and under the other
International Loan Documents and (b) request that the Bank declare all
outstanding Obligations, to be forthwith due and payable, and the Bank shall
have no liability to the Borrower for complying with such directions or
requirements.

10.3                           Collateral
Account.  The Borrower hereby agrees
that in the event of (a) the occurrence of the Maturity Date, (b) the termination of the
Commitment or (c) upon the occurrence and during the continuance of an
Event of Default (other than an Exit Date Event of Default), it shall, if
requested by the Bank in writing, provide to the Bank Cover equal to 100% of
the then aggregate amount of Letter of Credit Outstandings, which Cover shall
be held by the Bank in a collateral account to be maintained by the Bank.  The Borrower hereby agrees to execute and
deliver to the Bank such security agreements, pledges or other documents as the
Bank may, from time to time, require to perfect the pledge, lien and security
interest in and to any such funds provided for in this Section 10.3.  Upon the payment or expiry of all Letter of
Credit Outstandings, all such Collateral shall be promptly released to the
Borrower in due course at Borrower’s cost.

10.4                           Exit
Date Event of Default.  On the date
that is thirty (30) days after the date that Wells Fargo notifies the Borrower that it is assigning
its interests in the Domestic Credit Agreement to a Person other than Wells
Fargo, an Affiliate of Wells Fargo or an Affiliate of the Bank and an Exit Date
has occurred during such thirty day period, then an Exit Date Event of Default
shall be deemed to have occurred and the Commitment of the Bank and the
obligation of the Bank to issue or cause to be issued Letters of Credit
hereunder shall (unless Ex-Im Bank shall have consented to the issuance of
additional Letters of Credit) automatically be terminated, whereupon the same
shall forthwith terminate and no additional Letters of Credit shall be issued
without Ex-Im Bank’s written consent. 
Notwithstanding anything to the contrary, if the only Event of Default
that has occurred and is continuing is an Exit Date Event of Default, then the
Bank and the Secured Party (as defined in the International Security Agreement)
shall not have the right to exercise any right or remedy (other than those
rights and remedies set forth in this Section 10.4) that may only be
exercised upon the occurrence and during the continuance of an Event of
Default.

10.5                           Remedies
Cumulative.  No remedy, right or
power conferred upon the Bank is intended to be exclusive of any other remedy, right or power
given hereunder or now or hereafter

 31
 

 

existing at
law, in equity, or otherwise, and all such remedies, rights and powers shall be
cumulative.

ARTICLE XI.

MISCELLANEOUS.

11.1                           Waivers,
Amendments.  No failure or delay on
the part of the Bank in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  No course of dealing
between the Borrower or any Subsidiary of such Borrower, any Guarantor and the
Bank shall operate as a waiver of any right of the Bank or Ex-Im Bank.  No amendment, modification or waiver of any
provision of this Agreement, the Note or any other International Loan Document
nor consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be (i) approved by Ex-Im Bank and (ii) in
writing signed by all the parties thereto, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.  Except as otherwise provided by
any International Loan Document or applicable law, no notice to or demand on
the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.

11.2                           Reimbursement
of Expenses.  WHETHER OR NOT THE
TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT SHALL BE CONSUMMATED, THE BORROWER AGREES TO REIMBURSE THE BANK
FOR ITS REASONABLE OUT-OF-POCKET EXPENSES, INCLUDING THE REASONABLE FEES AND
EXPENSES OF OUTSIDE COUNSEL TO THE BANK, IN CONNECTION WITH SUCH TRANSACTIONS,
OR ANY OF THEM, OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
INTERNATIONAL LOAN DOCUMENT, INCLUDING (A) THE NEGOTIATION, PREPARATION,
EXECUTION, ADMINISTRATION, MODIFICATION AND ENFORCEMENT OF THIS AGREEMENT OR
ANY OTHER INTERNATIONAL LOAN DOCUMENT, AND (B) REASONABLE OUT-OF-POCKET
COSTS AND EXPENSES OF THE BANK IN CONNECTION WITH DUE DILIGENCE, TRANSPORTATION
AND DUPLICATION.  THE BORROWER AGREES TO
PAY ANY AND ALL STAMP, DOCUMENTARY AND OTHER SIMILAR TAXES WHICH MAY BE PAYABLE
OR DETERMINED TO BE PAYABLE IN CONNECTION WITH THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE NOTE OR ANY OTHER INTERNATIONAL LOAN DOCUMENT, AND TO SAVE
THE BANK HARMLESS FROM ANY AND ALL LIABILITIES WITH RESPECT TO OR RESULTING
FROM ANY DELAY OR OMISSION TO PAY ANY SUCH TAXES.  THE OBLIGATIONS OF THE BORROWER UNDER THIS SECTION
11.2 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND/OR THE PAYMENT OF
THE OBLIGATIONS.

11.3                           Notices.  All notices and other communications provided
for herein shall be in writing (including facsimile
or cable communication) and shall be mailed, telecopied, cabled or delivered,
addressed as follows:

(a)                                  If
to the Borrower or any Guarantor:

 32
 

 

Great Lakes Dredge
& Dock Corporation

2122 York Road

Oak Brook, Illinois  60523

Attention:  Ms. Deborah A. Wensel

Telephone No.:  630-574-2948

Telefax No.:  630-574-3007

(b)                                 If
to the Bank:

Wells Fargo HSBC
Trade Bank, N.A.

1000 Louisiana Street, Fourth Floor

Houston, Texas 77002

Attention:  Mr. Scott Gildea

Telephone No.:  (713) 319-1374

Telefax No.:  (713) 739-1087

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, telecopied, transmitted, cabled, or sent by reputable overnight
courier become effective (i) five (5) days after deposited in the mail, (ii)
when transmitted to the telecopier, or delivered to the cable company, or (iii)
on the following Business Day after deposit with the overnight courier, except
that notices and communications to the Bank shall not be effective until
actually received by the Bank.

11.4                           Governing
Law.  THIS AGREEMENT, THE OTHER
INTERNATIONAL LOAN DOCUMENTS (UNLESS ANY
SUCH INTERNATIONAL 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).

11.5                           Survival
of Representations, Warranties and Covenants.  All representations, warranties and covenants contained herein or made
in writing by the Borrower and the Guarantors in connection herewith shall
survive the execution and delivery of this Agreement and the Note, and will
bind and inure to the benefit of the respective successors and assigns of the
parties hereto, whether so expressed or not.  No investigation at any time made by or on
behalf of the Bank shall diminish the Bank’s right to rely thereon.

11.6                           Counterparts.  This Agreement may be executed in several
counterparts, and by the parties hereto on
separate counterparts, and each counterpart, when so executed and delivered,
shall constitute an original instrument, and all such separate counterparts
shall constitute but one and the same instrument.

11.7                           Separability.  Should any clause, sentence, paragraph or
Section of this Agreement be judicially declared to be invalid, unenforceable or void, such
decision shall not have the effect of invalidating or voiding the remainder of
this Agreement, and the parties hereto agree that the part or parts of this
Agreement so held to be invalid, unenforceable or void will be

 33
 

 

deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.

11.8                           Limitation
of Liability.  No claim may be made
by the Borrower or the Affiliates, directors, officers, employees, attorneys, or agents
of the Borrower against the Bank or the Affiliates, directors, officers,
employees, attorneys, or agents of the Bank for any special, indirect,
consequential or punitive damages in respect of any claim for breach of
contract arising out of or related to the transactions contemplated by this
Agreement, or any act, omission, or event occurring in connection herewith; and
the Borrower hereby waives, releases, and agrees not to sue upon any claim for
any such damages, whether or not accrued and whether or not known or suspected
to exist in its favor.

11.9                           Set-off.  If an Event of Default has occurred and is
continuing, the Borrower hereby gives and confirms to the Bank a right of set-off of all moneys,
securities and other property of the Borrower (whether special, general or
limited) and the proceeds thereof, now or hereafter delivered to remain with or
in transit in any manner to the Bank, its correspondents or its agents from or
for the Borrower, whether for safekeeping, custody, pledge, transmission,
collection or otherwise or coming into possession of the Bank in any way, and
also, any balance of any deposit accounts and credits of the Borrower with, and
any and all claims of security for the payment of the Obligations, and the
Borrower hereby authorize the Bank at any time or times, without prior notice,
to apply such money, securities, other property, proceeds, balances, credits of
claims, or any part of the foregoing, to such Obligations in such amounts as it
may select, whether such liabilities be contingent, unmatured or otherwise, and
whether any collateral security therefor is deemed adequate or not.  The rights described herein shall be in
addition to any collateral security described in any separate agreement
executed by the Borrower.

11.10                     Sale or
Assignment.  The Bank may assign its
rights hereunder and under each other International Loan Document and the Liens granted
pursuant to the International Security Documents only to Ex-Im Bank in
accordance with the terms and conditions of the Ex-Im Bank Guaranty.  Notwithstanding the foregoing, the Bank may
assign, transfer, negotiate, sell or participate all or part of its interests
and rights in the Letters of Credit to an Affiliate or Subsidiary of the Bank,
provided that the Bank retains all obligations under the Ex-Im Bank Guaranty
with respect to Ex-Im Bank and the International Loan Documents.

11.11                     Interest.  All agreements between the Borrower, any
Guarantor and the Bank, whether now existing or
hereafter arising and whether written or oral, are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of demand being
made on the Note or otherwise, shall the amount paid, or agreed to be paid, to
the Bank for the use, forbearance, or detention of the money to be loaned under
this Agreement or otherwise or for the payment or performance of any covenant
or obligation contained herein or in any other International Loan Document
exceed the Highest Lawful Rate.  If, as a
result of any circumstances whatsoever, fulfillment of any provision hereof or
of any of such documents, at the time performance of such provision shall be
due, shall involve transcending the limit of validity prescribed by applicable
usury law, then, ipso facto, the obligation to be fulfilled shall be reduced to
the limit of such validity, and if, from any such circumstance, the Bank shall
ever receive interest or anything which might be deemed interest under
applicable law which would exceed the Highest Lawful Rate, such amount which
would be excessive interest shall be applied

 34
 

 

to the
reduction of the principal amount owing on account of the Obligations or the
amounts owing on other obligations of the Borrower or any Guarantor to the Bank
under any International Loan Document and not to the payment of interest, or if
such excessive interest exceeds the unpaid principal balance of the Obligations
and the amounts owing on other obligations of the Borrower and any Guarantor to
the Bank under any International Loan Document, as the case may be, such excess
shall be refunded to the Borrower or such Guarantor, as applicable.  All sums paid or agreed to be paid to the
Bank for the use, forbearance, or detention of the indebtedness of the Borrower
and the Guarantors to the Bank shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full term of
such indebtedness until payment in full of the principal thereof (including the
period of any renewal or extension thereof) so that the interest on account of
such indebtedness shall not exceed the Highest Lawful Rate.  Notwithstanding anything to the contrary
contained in this Agreement or the Note, it is understood and agreed that if at
any time the rate of interest which accrues on the outstanding Obligations
shall exceed the Highest Lawful Rate, the rate of interest which accrues on the
outstanding Obligations shall be limited to the Highest Lawful Rate, but any
subsequent reductions in the rate of interest which accrues on the outstanding
Obligations shall not reduce the rate of interest which accrues on the
outstanding Obligations below the Highest Lawful Rate until the total amount of
interest accrued on the outstanding Obligations equals the amount of interest
which would have accrued if such interest rate had at all times been in
effect.  The terms and provisions of this
Section 11.11 shall control and supersede every other provision of
all agreements between the Borrower, the Guarantors and the Bank.

11.12                     Indemnification.  EACH OF THE LOAN PARTIES AGREES TO INDEMNIFY,
DEFEND, AND SAVE HARMLESS THE BANK
AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ATTORNEYS, AND EACH OF THEM
(THE “INDEMNIFIED PARTIES”), FROM AND AGAINST ALL CLAIMS, ACTIONS, SUITS, AND
OTHER LEGAL PROCEEDINGS, DAMAGES, COSTS, INTEREST, CHARGES, REASONABLE COUNSEL
FEES, AND OTHER EXPENSES AND PENALTIES WHICH ANY OF THE INDEMNIFIED PARTIES MAY
SUSTAIN OR INCUR BY REASON OF OR ARISING OUT OF (I) THE ISSUANCE OF ANY
LETTER OF CREDIT HEREUNDER, THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
NOTE AND THE OTHER INTERNATIONAL
LOAN DOCUMENTS AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY
AND THE EXERCISE AND ENFORCEMENT OF ANY OF THE BANK’S RIGHTS UNDER THIS
AGREEMENT, THE NOTE AND THE OTHER INTERNATIONAL LOAN DOCUMENTS OR OTHERWISE,
INCLUDING, WITHOUT LIMITATION, DAMAGES, COSTS, AND EXPENSES INCURRED BY ANY OF
THE INDEMNIFIED PARTIES IN INVESTIGATING, PREPARING FOR, DEFENDING AGAINST, OR
PROVIDING EVIDENCE, PRODUCING DOCUMENTS, OR TAKING ANY OTHER ACTION IN RESPECT
OF ANY COMMENCED OR THREATENED LITIGATION UNDER ANY FEDERAL SECURITIES LAW OR
ANY SIMILAR LAW OF ANY JURISDICTION OR AT COMMON LAW OR (II) ANY
VIOLATIONS OF ANY LAW OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN WHICH COULD
RESULT IN A VIOLATION OF ANY ENVIRONMENTAL LAW, OR IMPOSE ANY LIABILITY ON THE
INDEMNIFIED PARTIES FOR DAMAGE TO HEALTH OR THE ENVIRONMENT;  PROVIDED  HOWEVER THAT NO
INDEMNIFIED PARTY SHALL BE ENTITLED TO THE BENEFITS OF THIS SECTION 11.12
TO THE EXTENT OF ANY BAD FAITH, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT BY AN

 35
 

 

INDEMNIFIED
PARTY.  THIS AGREEMENT IS INTENDED TO
PROTECT AND INDEMNIFY THE INDEMNIFIED PARTIES AGAINST ALL RISKS HEREBY ASSUMED
BY THE LOAN PARTIES.  THE OBLIGATIONS OF
THE LOAN PARTIES UNDER THIS SECTION 11.12 SHALL SURVIVE ANY EXERCISE OF
THE POWER OF SALE GRANTED IN ANY INTERNATIONAL SECURITY DOCUMENT TO WHICH ANY
OF THE LOAN PARTIES ARE A PARTY, ANY FORECLOSURE OF THE LIENS CREATED BY ANY
INTERNATIONAL SECURITY DOCUMENT TO WHICH ANY OF THE LOAN PARTIES ARE A PARTY,
OR CONVEYANCE IN LIEU OF FORECLOSURE, THE REPAYMENT OF THE OBLIGATIONS, THE
DISCHARGE AND RELEASE OF ANY PERSON UNDER ANY INTERNATIONAL LOAN DOCUMENT AND
ANY TERMINATION OF THIS AGREEMENT.

11.13                     Payments
Set Aside.  To the extent that the
Borrower makes a payment or payments to the Bank or the Bank enforces any security interest
or exercises its right of setoff, and such payment or payments or the proceeds
of such enforcement or setoff 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 Person under any Debtor Law or
equitable cause, then, to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all rights and remedies
therefor, shall be revived and shall continue in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred.

11.14                     Credit
Agreement Controls.  If there are any
conflicts or inconsistencies between this Agreement and any of the other International Loan Documents, the
provisions of this Agreement shall prevail and control.

11.15                     Amendment
of Financial Covenants. 
Notwithstanding anything herein to the contrary, the parties hereto agree that any amendment
to or waiver to the financial covenants set forth in Section 6.3 (or any
comparable section) of the Domestic Credit Agreement or any related term or
definition used therein shall, subject to the prior written approval of Ex-Im
Bank and Bank, automatically amend or waive the corresponding financial
covenants set forth in Section 9.5 of this Agreement and any related
term or definition used therein in the same manner.  Subject to the prior written approval of
Ex-Im Bank, the Bank agrees to execute an amendment or waiver to this Agreement
to document such automatic amendment or waiver of the financial covenants and
related terms and conditions.

11.16                     Waiver of
Jury Trial.  TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAWS, THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR
INTERNATIONAL LOAN DOCUMENTS, OR ARISING FROM ANY FINANCING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY INTERNATIONAL LOAN DOCUMENT
AND AGREE THAT ANY ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.

11.17                     USA
Patriot Act Notice.  The Bank hereby
notifies Borrower that, pursuant to the requirements of the USA Patriot Act, and the Bank’s
policies and practices, the Bank is required to obtain, verify and record
certain information and documentation that identifies Borrower,

 36
 

 

which
information includes the name and address of Borrower and such other information
that will allow the Bank to identify Borrower in accordance with the USA
Patriot Act.  In addition, Borrower shall
(i) ensure that no Person who owns a controlling interest in or otherwise
controls Borrower or any Subsidiary of Borrower is or shall be listed on the
Specially Designated Nationals and Blocked Person List or other similar lists
maintained by the Office of Foreign Assets Control (“OFAC”), the
Department of the Treasury or included in any Executive Orders, (ii) not
use or permit the use of the proceeds of the Loan to violate any of the foreign
asset control regulations of OFAC or any enabling statute or Executive Order
relating thereto, and (iii) comply, and cause its Subsidiaries to comply,
with all applicable laws.

11.18                     Time of
the Essence.  Time is of the essence
of the International Loan Documents.

11.19                     Final
Agreement.  THIS WRITTEN AGREEMENT
AND THE INTERNATIONAL LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

11.20                     Release of
Collateral and Guarantors.  Subject
to the prior written approval of Ex-Im Bank, the Bank hereby agrees to release,
or cause to be released, the Liens held by it under the International Loan
Documents and the Guaranty upon payment in full in cash of all the Obligations
(other than unasserted contingent and indemnification obligations), termination
of the Commitment and reduction of the Letter of Credit Outstandings to zero
(or the making of other arrangements satisfactory to the Bank).

11.21                     Additional
Guarantors.  Each Person that becomes
a Guarantor after the Closing Date shall execute and deliver a Joinder to Guaranty in
substantially the form attached hereto as Exhibit G and shall thereafter
be a party to this Agreement as a Guarantor.

[The Balance of This Page
is Left Blank Intentionally]

 37
 

 

IN WITNESS WHEREOF, the parties hereto, by their respective officers
thereunto duly authorized, have executed this Agreement effective as of the
date first written above.

	
  

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GREAT LAKES DREDGE &

  
	
   

  	
   

  	
  DOCK CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
  Deborah A.
  Wensel

  
	
   

  	
   

  	
  Senior Vice
  President, Chief Financial Officer

  
	
   

  	
   

  	
  and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GUARANTOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GREAT LAKES DREDGE &

  
	
   

  	
   

  	
  DOCK COMPANY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
  Deborah A.
  Wensel

  
	
   

  	
   

  	
  Senior Vice
  President, Chief Financial Officer

  
	
   

  	
   

  	
  and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO HSBC TRADE BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott Gildea

  	
   

  
	
   

  	
   

  	
  Scott Gildea

  
	
   

  	
   

  	
  Vice President

  
					

 

 38

 

EXHIBIT
“A”

CERTAIN DEFINITIONS

As used in the Agreement, the following words and
terms shall have the respective meanings indicated opposite each of them:

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

“Accounts Receivable” shall mean all of the
Loan Parties’ now owned or hereafter acquired (a) “accounts” (as such term is
defined in the UCC), other receivables, book debts and other forms of
obligations, whether arising out of goods sold or services rendered or from any
other transaction; (b) rights in, to and under all purchase orders or receipts
for goods or services; (c) rights to any goods represented or purported to be
represented by any of the foregoing (including unpaid sellers’ rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods); (d) moneys due or to become due to
such Borrower under all purchase orders and contracts (which includes Export
Orders) for the sale of goods or the performance of services or both by
Borrower (whether or not yet earned by performance on the part of Borrower),
including the proceeds of the foregoing; (e) any notes, drafts, letters of
credit, insurance proceeds or other instruments, documents and writings
evidencing or supporting the foregoing; and (f) all collateral security and
guarantees of any kind given by any other Person with respect to any of the
foregoing.

“Adjusted Consolidated EBITDA” means EBITDA
plus adjustments, without duplication, required or permitted by Regulation S-X
of the 1933 Act.

“Affiliate” shall mean (i) all persons,
companies or other entities owning or otherwise controlling twenty percent
(20%) or more of the voting share capital (or equivalent right of ownership) of
the Borrower, or having the power to direct the Borrower’s policies or
management whether by contract or otherwise (each such person, company or other
entity, a “Controlling Affiliate”), (ii) all companies or other entities in
which a Controlling Affiliate owns or otherwise controls twenty percent (20%)
or more of the voting share capital (or equivalent right of ownership) or has
the power to direct the policies or management of, whether by contract or
otherwise and (iii) all companies or other entities in which the Borrower owns
or otherwise controls twenty percent (20%) or more of the voting share capital
(or equivalent right of ownership) of or has the power to direct the policies
or management of, whether by contract or otherwise.

“Agreement” shall mean this International
Letter of Credit Agreement, as the same may be amended, restated, modified,
supplemented or otherwise changed from time to time.

“Ahli United Bank Deposit Account” shall have
the meaning set forth in Section 8.7.

“Aldabra Transactions” means the mergers and
other transactions contemplated by the Aldabra Transaction Documents.

 A-1
 

 

“Aldabra Transaction Documents” means that
certain Agreement and Plan of Merger dated as of June 20, 2006 (the “Merger
Agreement”) by and among GLDD Acquisitions Corp., a Delaware corporation,
Aldabra Acquisition Corporation, a Delaware corporation, Aldabra Merger Sub,
L.L.C., a Delaware limited liability company, Madison Dearborn Capital Partners
IV, L.P., a Delaware limited partnership, solely in its capacity as Company
Representative, and Terrapin Partners LLC, solely in its capacity as Buyer
Representative, and such other documents, instruments and agreements executed
and/or delivered pursuant to the Merger Agreement, all as the same may be
amended, restated, supplemented or otherwise modified from time to time.

“Annual Audited Financial Statements” shall
mean, as to any Person, the year-end consolidated financial statements of such
Person (consolidated balance sheet, consolidated statement of earnings, and
consolidated cash flow statements), all prepared in conformity with GAAP and
audited by Deloitte & Touche LLP or other independent certified public
accountants reasonably satisfactory to the Bank and Ex-Im Bank.  Annual Financial Statements shall also include
unaudited consolidating financial statements certified on behalf of such Person
by an Authorized Officer of such Person who is the chief financial officer,
treasurer, assistant treasurer or controller of the Borrower, as fairly
presenting in all material respects the consolidating financial condition of
such Person and its Subsidiaries.

“Annual Facility Fee Percentage” shall mean
1.00%.

“Application” shall mean an application, in
such form as the Bank or Wells Fargo may specify from time to time, requesting
the Bank cause a Letter of Credit to be issued.

“Approved Currency” means (a) Bahrain Dinars,
(b) so long as the Borrower enters into Rate Protection Agreements if required
by Ex-Im Bank and satisfactory Ex-Im Bank and Bank, (i) Qatari Riyals, (ii)
Kuwati Dinars, (iii) UAE Dirhams, (iv) Euros, (v) British Pound Sterling, and
(vi) Canadian Dollars and (c) subject to the prior written approval of the Bank
and Ex-Im Bank, any other lawful currency other than Dollars which is freely
transferable and convertible into Dollars.

“Authorized Officer” means, with respect to any
Loan Party, the President, Chief Executive Officer, Chief Financial Officer,
Treasurer, any Vice President or Secretary of such Loan Party whose signatures
and incumbency shall have been certified to the Bank pursuant to Section 7.5.

“Bahrain Dinar” means mean the lawful currency
of the Kingdom of Bahrain.

“Base Capital Expenditure Amount” have the
meaning specified in Section 9.5(a)(ii).

“Borrower” shall mean the Original Borrower and
from and after the consummation of the Aldabra Transactions, the Successor
Borrower, and any successors and assigns.

“Borrower Agreement” shall mean the Borrower
Agreement dated as of the Closing Date executed by the Borrower and the Bank,
as amended, restated, supplemented or otherwise modified from time to time.

 A-2
 

 

“Business Day” means a day of the year on which
banks are not required or authorized to close in any of the Kingdom of Bahrain,
New York City, San Francisco or Chicago.

“Buyer” shall mean an entity which has entered
into one or more Export Orders with any Loan Party or an Eligible Joint Venture
or who is an obligor on Export-Related Accounts Receivable.

“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 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 (as defined in the Domestic Credit 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; (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 Domestic 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) to the Domestic
Credit Agreement for the amounts set forth on Schedule 6.3(a) to the
Domestic Credit Agreement.  Anything
herein to the contrary notwithstanding, Capital Expenditures shall not include
expenditures made as consideration or purchase price for Permitted Business
Acquisitions (as defined in the Domestic Credit Agreement).

“Capital Good” shall mean a capital good (e.g.,
manufacturing equipment, licensing agreements) that will establish or expand
foreign production capacity of an exportable good.

 A-3
 

 

“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.

“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.

“Cash Collateral Account” shall have the
meaning set forth in Section 8.7.

“Closing Date” shall mean September 29,
2006.

“Code” shall mean the Internal Revenue Code of
1986, as amended, as now or hereafter in effect, together with all regulations,
rulings and interpretations thereof or thereunder issued by the Internal
Revenue Service.

“Collateral” shall mean all Collateral as
defined in the International Security Agreement and the International Pledge
Agreement.

“Commitment” shall have the meaning set forth
in Section 2.1(a).

“Compliance Certificate” shall mean a
certificate executed by an Authorized Officer of the Borrower who is the chief
financial officer, treasurer, assistant treasurer or controller of the
Borrower, substantially in the form of Exhibit D, with such changes as
acceptable to the Bank.

“Controlling Affiliate” shall have the meaning
set forth in the definition of “Affiliate”.

“Country Limitation Schedule” shall have the
meaning set forth in the Borrower Agreement.

“Cover” means (a) a letter of credit with
terms and from a bank acceptable to the Bank in its sole discretion or
(b) immediately available funds to be held by the Bank in a collateral
account maintained by the Bank at its principal office and collaterally
assigned to the Bank as security for the Obligations using documentation
reasonably satisfactory to Bank in the amount required by any applicable
provision hereof.  Such letter of credit
or amount of immediately available funds shall be retained by Bank (and with
respect to the amount of immediately available funds, in such collateral
account) until such time as the applicable Letter of Credits shall have expired
and reimbursement obligations, if any, with respect thereto shall have been
fully satisfied; provided, however, that at such time if a
Default or Event of Default has occurred and is continuing, Bank shall not be
required to release such letter of credit or amount in any Cover until such
Default or Event of Default shall have been cured or waived.

 A-4
 

 

“Credit Accommodation” shall mean,
collectively, Disbursements and issuances of Letter of Credit.

“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 (as defined in the
Domestic Credit Agreement), 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 9.5)
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 (as defined in the Domestic Credit
Agreement).

“Debtor Laws” shall mean all applicable
liquidation, conservatorship, bankruptcy, moratorium, arrangement,
receivership, insolvency, reorganization or other similar laws affecting
creditors’ rights generally, or general equitable principles, regardless of
whether enforcement is sought in a proceeding at law or in equity.

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

“Default Rate” shall mean the lower of (a) the
Highest Lawful Rate, or (b) a rate per annum equal to the Prime Rate plus two
percent (2%).

“Determination Date” shall have the meaning set
forth in Section 2.2(b).

“Disbursement” shall mean an advance to fund a
Drawing under a Letter of Credit issued or caused to be issued by the Bank for
the account of Borrower.

“Diyaar” shall mean Diyaar Al Muharraq Company W.L.L.

“Diyaar Joint Venture” means a joint venture to
created between Great Lakes LLC and  Nass
Contracting Company WLL for the purpose of carrying out the Diyaar Project.

 A-5
 

 

“Diyaar Project” shall mean the performance of
dredging, reclamation and shore protection works off the coast of Al Muharraq
in the Kingdom of Bahrain.

“Diyaar Project Letter of Credit” shall mean a
Letter of Credit that (i) is issued in connection with the Diyaar Project and
(ii) shall have a face amount of approximately $15 million.

“Dollars” and “$” shall mean lawful
currency of the United States of America.

“Domestic Credit Agreement” shall mean the
Credit Agreement dated as of December 22, 2003, among Holdings, the
Borrower, the other Loan Parties from time to time party thereto, the financial
institutions from time to time party thereto and Bank of America, N.A., as
Administrative Agent and an Issuing Lender, as the same may be amended,
restated, supplemented, modified, refunded, refinanced or replaced, in whole or
in part, from time to time.

“Domestic Lenders” shall mean Bank of America,
N.A., as administrative agent, and other agents, arrangers and lenders now or
hereafter party to the Domestic Credit Agreement.

“Domestic Loan Documents” shall mean the
Domestic Credit Agreement and the other “Loan Documents” as defined in the
Domestic Credit Agreement, and all amendments, restatements, supplements,
modifications, renewals, extensions, increases and rearrangements of, and
substitutions for, any of the foregoing.

“Drawings” shall have the meaning set forth in Section 2.5(b).

“Durrat” shall mean Durrat Khaleej Al Bahrain Company.

“Durrat Joint Venture” means the Great Lakes
Nass Joint Venture created pursuant to the Joint Venture Agreement dated
December 19, 2004 between Great Lakes LLC (as successor to Great Lakes Dredge
& Dock Company) and Nass Contracting Company WLL.

“Durrat Project” shall mean the performance of
reclamation and dredging and shore protection works at Durrat Al Bahrain.

“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 (as defined in the Domestic Credit
Agreement) 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 (as defined in the Domestic Credit Agreement) and the Equipment
Financing Debt (as defined in the Domestic Credit Agreement),
(viii) management fees paid pursuant to any Management Agreement (as
defined in the Domestic Credit Agreement) to the extent permitted to be paid

 A-6
 

 

under the Domestic Credit
Agreement, and (ix) Net Income attributable to the minority equity
interest in NASDI (as defined in the Domestic Credit Agreement) that is not
owned by the Borrower to the extent the Net Income in respect of such minority
equity interest is received by the Borrower, (b) minus, without
duplication, (i) non-cash gains and (ii) Net Income attributable to
the minority equity interest in NASDI that is not owned, directly or
indirectly, by the Borrower to the extent the Net Income in respect of such
minority equity interest is distributed to the holder or holders of such
minority equity interest, and (c) plus, without duplication, cash
dividends received by the Borrower or any Subsidiary from Amboy Aggregates, a
New Jersey joint venture, and any other equity joint ventures.

“Eligible Export-Related Accounts Receivable”
shall mean Export-Related Accounts Receivable of the Loan Parties meeting all
of the following criteria as of the date of any determination of Eligible
Export-Related Accounts Receivable:

(a)                                  the
account debtor’s obligation to pay the account receivable is not conditional
upon such account debtor’s approval or the account receivable is not subject to
any repurchase obligation or return right, other than warranty obligations in
the ordinary course of business;

(b)                                 the
account receivable shall arise from the performance by one or more of the
Borrower or any Subsidiary of services which have been fully and satisfactorily
performed, or from the absolute sale by one or more of the Borrower or any
Subsidiary of goods (i) in which one or more of the Borrower or any of its
Subsidiaries had sole and complete ownership and (ii) which have been shipped
and delivered to the account debtor, which shall evidence which such obligee
has possession of shipping and delivery receipts;

(c)                                  the
account receivable shall arise in the ordinary course of business, and no
notice of bankruptcy or insolvency of the account debtor (unless such account
debtor’s obligations are secured by a letter of credit or bond), nor any notice
of such account debtor’s inability to pay its debts generally as they become
due, has been received by the Borrower; and

(d)                                 for
which the account debtor is contractually obligated to pay.

In addition, pursuant to the requirements of Ex-Im
Bank, in no event shall Eligible Export-Related Accounts Receivable include any
Export-Related Accounts Receivable:

(i)                                     that
does not arise from the sale of Items in the ordinary course of the Borrower’s
business;

(ii)                                  that
is not subject to a valid, perfected first priority Lien in favor of the Bank;

(iii)                               as
to which any covenant, representation or warranty contained in the
International Loan Documents with respect to such Account Receivable has been
breached;

 A-7
 

 

(iv)                              that
is not owned by a Loan Party or is subject to any right, claim or interest of
another Person other than the Lien in favor of the Bank;

(v)                                 with
respect to which an invoice has not been sent;

(vi)                              that
arises from the sale of defense articles or defense services;

(vii)                           that
is due and payable from an account debtor located in a Prohibited Country;

(viii)                        that
does not comply with the requirements of the Country Limitation Schedule;

(ix)                                that
is due and payable more than 90 days from the earlier of the shipment date
or the date of the invoice;

(x)                                   that
is not paid within 60 calendar days from its original due date, unless it is
insured through Ex-Im Bank export credit insurance for comprehensive commercial
and political risk, or through Ex-Im Bank approved private insurers for
comparable coverage, in which case it is not paid within 90 calendar days from
its due date;

(xi)                                
of an account debtor for whom twenty-five percent (25%) or more of the Accounts
Receivable of such account debtor do not satisfy the requirements of subclauses
(ix) and (x) above;

(xii)                             except
with respect to Eligible Joint Ventures, that arises from a sale of goods to or
performance of services for any employee of Borrower, stockholders of Borrower,
Subsidiaries of Borrower, a Person with a controlling interest in Borrower or a
Person which shares common controlling ownership with Borrower;

(xiii)                          that
is backed by a letter of credit unless the Items covered by the subject letter
of credit have been shipped or the covered services provided;

(xiv)                         that
Bank or Ex-Im Bank, in the exercise of reasonable judgment, deems uncollectible
for any reason;

(xv)                            that
is due and payable in a currency other than U.S. dollars or an Approved
Currency, except as may be approved in writing by Bank and Ex-Im Bank;

(xvi)                         that
is due and payable from a military account debtor, except as may be approved in
writing by Ex-Im Bank;

(xvii)                      that
does not comply with the terms of sale set forth in Section 7 of
the Loan Authorization Agreement;

 A-8
 

 

(xviii)                   that
is due and payable from an account debtor who (a) applies for, suffers, or
consents to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property or calls a meeting of its creditors, (b) admits in writing
its inability, or is generally unable, to pay its debts as they become due or
ceases operations of its present business, (c) makes a general assignment
for the benefit of creditors, (d) commences a voluntary case under any
state or federal bankruptcy laws (as now or hereafter in effect), (e) is
adjudicated as bankrupt or insolvent, (f) files a petition seeking to take
advantage of any other law providing for the relief of debtors,
(g) acquiesces to, or fails to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or
(h) takes any action for the purpose of effecting any of the foregoing;

(xix)                           that
arises from a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced
by chattel paper;

(xx)                              for
which the Items giving rise to such Account Receivable have not been shipped to
the account debtor or when the Items are services, such services have not been
performed or when the Export Order specifies a timing for invoicing the Items
other than shipment or performance and the Items have not been invoiced in
accordance with such terms of the Export Order, or the Accounts Receivable
otherwise do not represent a final sale;

(xxi)                           that
is subject to any offset, deduction, defense, dispute, or counterclaim or the
account debtor is also a creditor or supplier of the Borrower or the Account
Receivable is contingent in any respect or for any reason;

(xxii)                        for
which the Borrower has made any agreement with the account debtor for any
deduction therefrom, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each respective invoice
related thereto;

(xxiii)                     for
which any of the Items giving rise to such Account Receivable have been
returned, rejected or repossessed;

(xxiv)                    that
is included as an eligible receivable under any other credit facility to which
Borrower is a party;

(xxv)                       any
of the Items giving rise to such Accounts Receivable are Capital Goods, unless
the transaction is in accordance with Section 2.14 of the Borrower
Agreement;

(xxvi)                    that
is due and payable from an account debtor that is, or is located in, the United
States; provided, however, that this subsection (xxvi) shall not preclude an
Export-Related Accounts Receivable arising from the sale of Items to foreign
contractors or subcontractors providing services to a United States

 A-9
 

 

Embassy or the
United States Military located overseas from being deemed an Eligible
Export-Related Accounts Receivable;

(xxvii)                 that
arise from the sale of Items that do not meet the U.S. Content requirements in
accordance with Section 2.01(b)(ii) of the Borrower Agreement;

(xxviii)              that
arise from the sale of any Items to be used in the construction, alteration,
operation or maintenance of nuclear power, enrichment, reprocessing, research
or heavy water production facilities;

(xxix)                      that,
acting reasonably and in good faith and after consultation with the Borrower,
the Bank has deemed such Accounts Receivable ineligible because of uncertainty
about the creditworthiness of the account debtor or because the Bank otherwise
reasonably considers the collateral value thereof to be impaired or its ability
to realize such value to be insecure. 
Amounts payable to any account debtor shall be netted out of Eligible
Export-Related Accounts Receivable owing by such account debtor.  In the event of any dispute under the
foregoing criteria, about whether an Account Receivable is or has ceased to be
an Eligible Export-Related Account Receivable, the reasonable decision of the
Bank, made in good faith, shall be conclusive and binding, absent manifest
error; or

(xxx)                         that
are Excluded Export-Related Accounts Receivable.

In addition, “Eligible Export-Related Accounts
Receivable” shall also mean any account receivable of the Loan Parties that is
approved in writing by the Bank and Ex-Im Bank. 
The Bank and Ex-Im Bank have specifically approved as Eligible
Export-Related Accounts Receivable those receivables due from the Eligible
Joint Ventures arising from billings to Durrat and Diyaar, provided that
payments by Durrat and Diyaar to the Eligible Joint Ventures are remitted to
the Cash Collateral Account in accordance with the requirements of Section
8.7.  As used in this definition, “Letter
of Credit” shall mean an irrevocable letter of credit subject to the UCP
500, payable in the United States or at the issuing bank and issued for the
benefit of the Borrower on behalf of a Buyer in connection with the purchase of
Items.  The value of each Eligible
Export-Related Accounts Receivable shall be, at the date of determination
thereof, the aggregate face amount of such Eligible Export-Related Accounts
Receivable less taxes, discounts, credits, allowances and Retainages, except to
the extent otherwise permitted by the Bank in writing.

“Eligible Joint Venture” means, collectively,
(i) the Durrat Joint Venture, (ii) the Diyaar Joint Venture, provided the
Borrower delivers standing instructions to Ahli United Bank with respect to
payments made to the Diyaar Joint Venture and a consent to the pledge of Great
Lakes equity interests in the Diyaar Joint Venture, each in form and substance
satisfactory to the Bank and (iii) any other joint venture which is approved in
writing from time to time by the Ex-Im Bank and the Bank; provided, however,
with respect to each joint venture set forth in clause (i), (ii) and (iii)
above, the equity interests of such joint venture owned by a Borrower, a
Guarantor or a Subsidiary of the Borrower or a Guarantor shall be pledged to
the Bank as security for the obligations pursuant to an International Pledge
Agreement.

 A-10

 

“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.

“ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as amended from time to time, and all rules,
regulations, rulings and interpretations adopted by the Internal Revenue
Service or the U.S. Department of Labor thereunder.

“Event of Default” shall mean any of the events
specified in Section 10.1, provided that there has been satisfied
any requirement in connection with such event for the giving of notice, or the
lapse of time, or the happening of any further condition, event or act.

“Exceptions Approval Letter” means a letter
from Ex-Im Bank approving any and all applicable exceptions from the rules and
regulations of Ex-Im Bank governing its Working Capital Guaranty Program.

“Excluded Export-Related Accounts Receivable”
shall have the meaning set forth in Section 8.7.

“Ex-Im Bank” shall mean the Export-Import Bank
of the United States.

“Ex-Im Bank Guaranty” shall mean that certain
Master Guaranty Agreement No. MN-MGA-05-001 dated as of November 1, 2005,
between Ex-Im Bank and the Bank, as the same may be amended, modified or
supplemented from time to time.

“Ex-Im Material Adverse Effect” shall mean a
material adverse effect on (a) the business, assets, operations, prospects or
financial or other condition of Borrower or any Guarantor, (b) the Borrower’s
ability to pay or perform the Obligations in accordance with the terms thereof,
(c) the Collateral or Bank’s Liens on the Collateral or the priority of such
Lien, or (d) the Bank’s rights and remedies under the International Loan
Documents.

“Existing Letters of Credit” shall mean the
letters of credit issued under the Domestic Credit Agreement and listed on Schedule
1.1.

“Exit Date” shall mean the date that none of
Wells Fargo nor Bank nor an Affiliate thereof are participants in the Domestic
Credit Agreement (i.e., no longer Domestic Lenders) unless prior to such date
Ex-Im Bank has waived in writing the requirement that (i) the Borrower
maintain a domestic revolving credit facility with a revolving commitment in an
aggregate amount of at least $5,000,000 and which facility is not guaranteed by
Ex-Im Bank or any other governmental program or (ii) Wells Fargo, Bank, or an
Affiliate thereof are participants in the Domestic Credit Agreement.

 A-11
 

 

“Exit Date Event of Default” shall mean the
occurrence of the event specified in Section 10.4, provided that
there has been satisfied any requirement in connection with such event for the
giving of notice, or the lapse of time, or the happening of any further
condition, event or act.

“Export Order” shall mean a documented purchase
order or contract evidencing a Buyer’s agreement to purchase the Items from a
Loan Party for export from the United States, which documentation shall include
written information that is necessary to confirm such purchase order or
contract, including identification of the Items, the name of the Buyer, the
country of destination, contact information for the Buyer and the total amount
of the purchase order or contract.

“Export-Related Accounts Receivable” shall mean
those Accounts Receivable arising from the sale of Items which are due and
payable to the Borrower or a Guarantor in the United States, except for
Excluded Export-Related Accounts Receivable which shall not be required to be
due and payable in the United States and as otherwise approved of by Ex-Im Bank
and Bank.

“Fast Track Agreement” shall mean the Fast
Track Lender Agreement, Number MN-FTLA-05-001 dated as of December
27, 2005, between Ex-Im Bank and the Bank, as the same may be amended,
restated, modified or supplemented from time to time.

“Fast Track Borrower Supplement” shall mean the
Fast Track Borrower Agreement Supplement executed by the Borrower as of September 29,
2006, as the same may be amended, restated, modified or supplemented from time
to time.

“Final Disbursement Date” shall mean the date
set forth in paragraph 10 of the Loan Authorization Agreement.

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

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

“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 1.3,
are applicable to the circumstances as of the date of determination.

“Governmental Approval” means any
authorization, consent, approval, license or exemption of, registration or
filing with, or report or notice to, any Governmental Authority.

“Governmental Authority” shall mean any foreign
governmental authority, the United States of America, any State of the United
States of America and any political subdivision of any of the foregoing, and
any agency, department, commission, board, bureau, court or other tribunal

 A-12
 

 

having jurisdiction over
the Bank, any Guarantor or the Borrower, or any of their respective assets or
Property.

“Governmental Requirement” means any law,
statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, writ, edict, franchise, permit, certificate, license, award,
authorization or other direction, guideline, or requirement of any Governmental
Authority.

“Great Lakes LLC” means Great Lakes Dredge
& Dock Company, LLC, a Delaware limited liability company, and any
successors and assigns.

“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.

“Guaranty” shall mean each Guaranty executed by
the Guarantors, substantially in the form of Exhibit F.

“Guarantors” means Great Lakes LLC, and each
Subsidiary of the Borrower which executes and delivers a Guaranty and an
International Security Agreement.

“Highest Lawful Rate” shall mean, with respect
to the Bank, the maximum nonusurious interest rate that at any time or from
time to time may be contracted for, taken, reserved, charged, or received with
respect to the Obligations or on other amounts due to the Bank pursuant to this
Agreement or any other International Loan Document, under laws applicable to
the Bank which are presently in effect, or, to the extent allowed by law, under
such applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.

 A-13
 

 

“Holdings” means GLDD Acquisitions Corp., a
Delaware corporation, and any successors and assigns.

“Indemnified Parties” shall have the meaning
set forth in Section 11.12.

“Initial Date” shall have the meaning set forth
in Section 7.5.

“Interest Coverage Ratio” have the meaning
specified in Section 9.5(d).

“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 (as
defined in the Domestic Credit Agreement) 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
(as defined in the Domestic Credit Agreement) but excluding fees paid under the
Bonding Agreement (as defined in the Domestic Credit Agreement)), which, in
accordance with GAAP, would be included as interest expense, (iii) net
costs or benefits under any Rate Protection Agreement (excluding (A) any
gain or loss recognized under GAAP resulting from the mark to market valuation
of any Rate Protection Agreement and (B) the costs of any commodity
hedging transaction or foreign currency hedging transaction) 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 Capital Stock of Holdings that is not included in the definition
of “Debt” pursuant to the last sentence of such definition.

“International Borrowing Base” shall mean an
amount equal to 90% of the Eligible Export-Related Accounts Receivable of the
Loan Parties which is supported by a firm Export Order to which no party is in
breach in any material respect of any material provision thereof.

“International Loan Documents” shall mean this
Agreement, the Note, the Guaranty, the Standby Letter of Credit Agreement, all
International Security Documents, and all instruments, certificates and
agreements now or hereafter executed or delivered to the Bank pursuant to any of
the foregoing and the transactions connected therewith, and all amendments,
restatements, supplements, modifications, renewals, extensions, increases and
rearrangements of, and substitutions for, any of the foregoing; provided that “International
Loan Documents” shall not include the Domestic Loan Documents, the Ex-Im Bank
Guaranty, the Fast Track Agreement, the Fast Track Borrower Agreement
Supplement, the Loan Authorization Agreement and the Borrower Agreement.

“International Security Agreements” shall mean
the International Security Agreements at any time executed and delivered by the
Borrower and any Guarantor for the benefit of the Bank, and any and all
amendments, modifications, renewals and extensions thereof.

“International Security Documents” shall mean
this Agreement, the International Security Agreements, the International Pledge
Agreements and any guaranties, as each may be amended or modified from time to
time.

 A-14
 

 

“International Pledge Agreements” shall mean
the International Pledge Agreements at any time executed and delivered by the
Borrower and any Guarantor for the benefit of the Bank, and any and all
amendments, modifications, renewals and extensions thereof.

“Inventory” shall have the meaning set forth in
the Borrower Agreement.

“Investments” 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.

“Items” shall have the meaning set forth in the
Borrower Agreement.

“Letter of Credit” and “Letters of Credit”
shall have the meanings provided in Section 2.3(a).

“Letter of Credit Fee” shall have the meaning
specified in Section 4.2.

“Letter of Credit Obligations” shall mean all
undrawn amounts of outstanding obligations incurred by the Bank, whether direct
or indirect, contingent or otherwise, due or not due, in connection with the
issuance or guarantee by the Bank of Letters of Credit.

“Letter of Credit Outstandings” shall mean, at
any time, the sum of, without duplication, (a) the aggregate Stated Amount
of all outstanding Letters of Credit and (b) the amount of all Unpaid
Drawings in respect of all Letters of Credit.

“Letter of Credit Request” shall have the
meaning specified in Section 2.4(a).

“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.

“Loan Authorization Agreement” shall mean the
duly-executed Fast Track Loan Authorization Agreement, setting forth certain
terms and conditions of the credit facility, a copy of which is attached as
Annex A to the Borrower Agreement.

 A-15
 

 

“Loan Facility Anniversary Date” shall mean
each one (1) year anniversary of September 29, 2006.

“Loan Party” means the Borrower and each
Guarantor.

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

“Maturity Date” shall
mean December 31, 2008.

“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.

“Note” shall mean the International Revolving
Note executed by the Borrower, as of September 29, 2006, and payable to
the Bank, in the original principal amount of Twenty Million and No/100 Dollars
($20,000,000.00) and each renewal, increase, extension, amendment, replacement,
modification or other re-arrangement thereof.

“Obligations” shall mean all advances to, and
debts, liabilities, obligations, covenants and duties of, any, some or all of
the Loan Parties arising under this Agreement, the Note and the other
International Loan Documents whether now or hereafter arising, of any nature or
amount whatsoever, and including any and all interest and fees that accrue
after the commencement of proceedings under Debtor Laws, regardless of whether
the same are allowed claims in such proceeding.

“OFAC” has the meaning specified in Section 11.17.

“Organization Document” means, (a) with
respect to any corporation, the certificate or articles of incorporation and
the bylaws (or equivalent or comparable constitutive documents with respect to
any non-U.S. jurisdiction); (b) with respect to any limited liability
company, the certificate or articles of formation or organization and operating
agreement; and (c) with respect to any partnership, joint venture, trust
or other form of business entity, the partnership, joint venture or other
applicable agreement of formation or organization and any agreement,
instrument, filing or notice with respect thereto filed in connection with its
formation or organization with the applicable Governmental Authority in the
jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.

“Original Borrower” shall mean Great Lakes
Dredge & Dock Corporation, a Delaware corporation.

 A-16
 

 

“Payment Office” means 1000 Louisiana, 4th
Floor, Houston, Texas 77002, Attention: Scott Gildea, or such other office or
offices as the Bank may from time to time notify the Borrower.

“Permitted Liens” shall mean (a) Liens for
taxes, assessments or other governmental charges or levies not delinquent, or,
being contested in good faith and by appropriate proceedings and with respect
to which proper reserves have been taken by the Borrower; provided, that,
the Lien shall have no effect on the priority of the Liens in favor of the Bank
or the value of the assets in which the Bank has such a Lien and a stay of
enforcement of any such Lien shall be in effect; (b) deposits or pledges
securing obligations under worker’s compensation, unemployment insurance,
social security or public liability laws or similar legislation; (c) deposits
or pledges securing bids, tenders, contracts (other than contracts for the
payment of money), leases, statutory obligations, surety and appeal bonds and
other obligations of like nature arising in the ordinary course of the Borrower’s
business; (d) judgment Liens that have been stayed or bonded; (e) mechanics’,
workers’, materialmen’s or other like Liens arising in the ordinary course of
the Borrower’s business with respect to obligations which are not due; (f)
Liens placed upon fixed assets hereafter acquired to secure a portion of the
purchase price thereof, provided, that, any such Lien shall not
encumber any other property of Borrower; (g) security interests being
terminated concurrently with the execution of the International Loan Documents;
and (h) Liens disclosed in Section 6.D. of the Loan Authorization Agreement, provided
that, except as otherwise permitted by Ex-Im Bank in writing, such Liens
in Section 6.D. shall be subordinate to the Liens in favor of the Bank on the
Collateral.

“Person” shall mean an individual, partnership,
joint venture, corporation, joint stock company, bank, trust, unincorporated
organization and/or a government or any department or agency thereof.

“Plan” shall mean any plan subject to Title IV
of ERISA or Section 412 of the Code and maintained at any time since
January 1, 1986 for employees of the Borrower or any Subsidiary of the
Borrower thereof or of any member of a “controlled group of corporations” or “trade
or business,” as such terms are defined in Section 414(b) or (c) of
the Code, of which the Borrower or any Subsidiary of the Borrower thereof is a
member, or any plan subject to Title IV of ERISA or Section 412 of the
Code to which the Borrower or any Subsidiary of the Borrower thereof is
required to contribute, or has been required to contribute at any time since
January 1, 1986, on behalf of its employees.

“Prime Rate” means the rate of interest from
time to time announced publicly by Wells Fargo, in San Francisco, California,
as its prime rate.  Such rate is set by
Wells Fargo as a general reference rate of interest, taking into account such
factors as Wells Fargo may deem appropriate, it being understood that many of Wells
Fargo’s commercial or other loans are priced in relation to such rate, that it
is not necessarily the lowest or best rate actually charged to any customer and
that Wells Fargo may make various commercial or other loans at rates of
interest having no relationship to such rate. 
In addition, such rate is evidenced by the recording thereof after its
announcement in such internal publication or publications as Wells Fargo may
designate, and each change in the Prime Rate will be effective on the day the
change is announced within Wells Fargo; provided, however, such
rate shall be a rate of interest generally applied by Wells

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Fargo to other loan
transactions to the extent such transactions include rates based in whole or in
part on the Prime Rate.

“Prohibited Country” shall mean any country in
which Ex-Im Bank coverage is not available for commercial reasons or in which
Ex-Im Bank is legally prohibited from doing business, as designated in the
Country Limitation Schedule.

“Property” or “Properties” means any
interest in any kind of property or assets, whether real, personal or mixed,
and whether tangible or intangible.

“Quarterly Unaudited Financial Statements”
shall mean the unaudited quarterly consolidated financial statements of a
Person, which statements shall include a consolidated and consolidating balance
sheet as of the end of such Fiscal Quarter and a consolidated and consolidating
statement of earnings and consolidated statement of cash flows for such Fiscal
Quarter, and for the Fiscal Year to date, subject to normal year-end
adjustments, and certified on behalf of such Person by an Authorized Officer of
such Person who is the chief financial officer, treasurer, assistant treasurer
or controller of the Borrower

“Rate Protection Agreement” means any interest
rate hedging transaction, commodity hedging transaction, foreign currency
hedging transaction or similar arrangement.

“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.

“Restricted Payments” means (i) any dividend or
other distribution on account of any shares of any class of Capital Stock 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 the Borrower), including, without limitation, all
payments which are from time to time due and owing by the Borrower pursuant to
or with respect to the Acquisition Agreement (as defined in the Domestic Credit
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 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 (as

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defined in the Domestic
Credit Agreement), 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 the Borrower, (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.

“Retainage” shall mean that portion of the
purchase price of an Export Order that a Buyer is not obligated to pay until
the end of a specified period of time following the satisfactory performance
under such Export Order.

“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 (as defined in the
Domestic Credit Agreement) (other than the aggregate undrawn face amount of
Letters of Credit (as defined in the Domestic Credit Agreement)), (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 (as defined in the Domestic Credit Agreement) held by the
Borrower and its Subsidiaries in the United States.

“Senior Leverage Ratio” have the meaning
specified in Section 9.5(c).

“Standby Letter of Credit Agreement” shall mean
the Standby Letter of Credit Agreement, executed by the Borrower substantially
in the form of Exhibit G.

“Stated Amount” shall mean, as to each Letter
of Credit, at any time, the maximum amount then available to be drawn
thereunder (without regard to whether any conditions to drawing could then be
met).

“Subsidiary” of any Person means any
corporation, partnership, limited liability company or other association or
entity of which more than fifty percent (50%) of the Voting Stock of such
entity is at any time, directly or indirectly, owned by such Person.  Unless the context is to the contrary, any
reference to a Subsidiary herein shall mean a Subsidiary of the Borrower.

“Successor Borrower” shall mean Great Lakes
Dredge & Dock Corporation (formerly named Great Lakes Dredge & Dock
Holdings Corp.), a Delaware corporation and successor by merger to the Original
Borrower.

“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 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 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

 A-19
 

 

(eliminating intercompany
items).  “Total Funded Debt” shall be
calculated net of cash and Cash Equivalents (as defined in the Domestic Credit
Agreement) held by the Borrower and its Subsidiaries in the United States.

“Total Leverage Ratio” have the meaning
specified in Section 9.5(b).

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

“Unpaid Drawing” shall have the meaning
specified in Section 2.5(a).

“USA Patriot Act” means the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56, signed into law
October 26, 2001).

“U.S. Content” shall have the meaning set forth
in the Borrower Agreement.  The parties
hereto hereby agree that in the event any dispute arises as to the U.S. Content
of any good or service, the decision of Ex-Im Bank shall be final and
conclusive.

“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.

“Warranty Letter of Credit” shall have the
meaning set forth in the Borrower Agreement.

“Weekly International Borrowing Base Certificate”
shall have the meaning set forth in Section 2.2(a).

“Wells Fargo” shall mean Wells Fargo Bank, N.A.

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