-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FiA295LnS/0S7B4o5aC+md2wmX/KH6Ybg+bvPRaNYR+lKtaZmr//1W/oB/KOMlzO 94iuC+of0Zdp3Q2pT7iSPw== 0001036050-98-001653.txt : 19981001 0001036050-98-001653.hdr.sgml : 19981001 ACCESSION NUMBER: 0001036050-98-001653 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19980929 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT LAKES DREDGE & DOCK CORP CENTRAL INDEX KEY: 0000885538 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 133634726 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-64687 FILM NUMBER: 98717836 BUSINESS ADDRESS: STREET 1: 2122 YORK ROAD CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 6305743000 MAIL ADDRESS: STREET 1: 2122 YORK RD CITY: OAK BROOK STATE: IL ZIP: 60521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT LAKES DREDGE & DOCK CO CENTRAL INDEX KEY: 0000043365 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 361163930 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-64687-01 FILM NUMBER: 98717837 BUSINESS ADDRESS: STREET 1: GREAT LAKES DREDGE & DOCK CORP STREET 2: 2122 YORK RD CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 6305743000 MAIL ADDRESS: STREET 1: GREAT LAKES DREDGE & DOCK CORP STREET 2: 2122 YORK RD CITY: OAK BROOK STATE: IL ZIP: 60521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT LAKES INTERNATIONAL INC CENTRAL INDEX KEY: 0000310987 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 363015839 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-64687-02 FILM NUMBER: 98717838 BUSINESS ADDRESS: STREET 1: 2122 YORK RD STREET 2: C/O GREAT LAKES DREDGE & DOCK CORP CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 6305743000 MAIL ADDRESS: STREET 1: C/O GREAT LAKES DREDGE & DOCK CORP STREET 2: 2122 YORK RD CITY: OAK BROOK STATE: IL ZIP: 60521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAWSON DREDGING CO CENTRAL INDEX KEY: 0001070597 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 363503893 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-64687-03 FILM NUMBER: 98717839 BUSINESS ADDRESS: STREET 1: 2122 YORK RD STREET 2: C/O GREAT LAKES DREDGE & DOCK CORP CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 6305743000 MAIL ADDRESS: STREET 1: C/O GREAT LAKES DREDGE & DOCK CORP STREET 2: 2122 YORK RD CITY: OAK BROOK STATE: IL ZIP: 60521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GATES CONSTRUCTION CORP CENTRAL INDEX KEY: 0001070598 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 221539854 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-64687-04 FILM NUMBER: 98717840 BUSINESS ADDRESS: STREET 1: 2122 YORK RD STREET 2: C/O GREAT LAKES DREDGE & DOCK CORP CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 6305743000 MAIL ADDRESS: STREET 1: C/O GREAT LAKES DREDGE & DOCK CORP STREET 2: 2122 YORK RD CITY: OAK BROOK STATE: IL ZIP: 60521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIFTY THREE DREDGING CORP CENTRAL INDEX KEY: 0001070599 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 363177787 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-64687-05 FILM NUMBER: 98717841 BUSINESS ADDRESS: STREET 1: 2122 YORK RD STREET 2: C/O GREAT LAKES DREDGE & DOCK CORP CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 6305743000 MAIL ADDRESS: STREET 1: C/O GREAT LAKES DREDGE & DOCK CORP STREET 2: 2122 YORK RD CITY: OAK BROOK STATE: IL ZIP: 60521 S-4 1 FORM S-4 REGISTRATION STATEMENT AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1998 REGISTRATION NO. 333- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- GREAT LAKES DREDGE & DOCK CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1600 13-3634726 (STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.) (OF INCORPORATION OR ORGANIZATION) --------------- SEE TABLE OF ADDITIONAL REGISTRANTS BELOW --------------- 2122 YORK ROAD OAK BROOK, ILLINOIS 60521 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES) MR. DOUGLAS B. MACKIE PRESIDENT & CHIEF EXECUTIVE OFFICER GREAT LAKES DREDGE & DOCK CORPORATION 2122 YORK ROAD OAK BROOK, ILLINOIS 60521 (630) 574-3000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT OR SERVICE) --------------- WITH COPIES TO: G. DANIEL O'DONNELL, ESQ. DECHERT PRICE & RHOADS 4000 BELL ATLANTIC TOWER 1717 ARCH STREET PHILADELPHIA, PENNSYLVANIA 19103 (215) 994-4000 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] --------------- CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
PROPOSED PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE - -------------------------------------------------------------------------------- Series B 11 1/4% Senior Subordinated Notes due 2008................... $115,000,000 100% $115,000,000 $33,925 - -------------------------------------------------------------------------------- Guarantee of Series B 11 1/4% Senior Subordinated Notes due 2008 by each of the Registrants other than Great Lakes Dredge & Dock Corporation (see table below)........... $115,000,000 -- -- None(2)
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (1) Estimated pursuant to Rule 457(f) solely for purposes of calculating the registration fee. (2) Pursuant to Rule 457(n), no separate fee is payable for the guarantees. --------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF ADDITIONAL REGISTRANTS
STATE OR OTHER PRIMARY STANDARD EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER; JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER ADDRESS, INCLUDING ZIP CODE; AND TELEPHONE NUMBER, INCORPORATION CLASSIFICATION IDENTIFICATION INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES OR ORGANIZATION CODE NUMBER NUMBER - ----------------------------------------------------- --------------- ---------------- --------------- Great Lakes Dredge & Dock Company New Jersey 1600 36-1163930 2122 York Road Oak Brook, IL 60521 (630) 574-3000 Great Lakes International, Inc. Delaware 1600 36-3015839 2122 York Road Oak Brook, IL 60521 (630) 574-3000 Dawson Dredging Company Delaware 1600 36-3503893 2122 York Road Oak Brook, IL 60521 (630) 574-3000 Gates Construction Corp. New Jersey 1600 22-1539854 2122 York Road Oak Brook, IL 60521 (630) 574-3000 Fifty-Three Dredging Corporation New Jersey 1600 36-3177787 2122 York Road Oak Brook, IL 60521 (630) 574-3000
AVAILABLE INFORMATION The Company has filed with the Commission a Registration Statement on Form S-4 (the "Registration Statement," which term shall encompass all amendments, exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the rules and regulations promulgated thereunder, covering the Exchange Notes being offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement. For further information with respect to the Company and the Exchange Offer, reference is made to the Registration Statement. Statements made in this Prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete. With respect to each such contract, agreement or other document filed as an exhibit to the Registration Statement, reference is made to the exhibit for a more complete description of the document or matter involved, and each such statement shall be deemed qualified in its entirety by such reference. Upon the effectiveness of the Registration Statement of which this Prospectus is a part, the Company will be subject to the informational reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith will file periodic reports and other information with the Commission. Such periodic reports and other information filed with the Commission, including the Registration Statement, may be inspected without charge at the Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and will also be available for inspection and copying at the regional offices of the Commission located at Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any portion of such material may be obtained from the Public Reference Section of the Commission upon payment of certain prescribed fees. In addition, the Commission maintains a website that contains periodic reports and other information filed by registrants such as the Company. This address of the website is http://www.sec.gov. Copies of such material can also be obtained from the Company upon request. While any Exchange Notes remain outstanding, the Company will make available, on request, to any holder and any prospective purchaser of Exchange Notes the information required pursuant to Rule 144A(d)(4) under the Securities Act during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act. FORWARD-LOOKING STATEMENTS This Prospectus, including the "Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" sections, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of forward-looking terminology, such as "may," "intend," "will," "expect," "anticipate," "plan," "the Company believes," "estimate," "continue," or "position" or the negative thereof or other variations thereon or comparable terminology. In particular, any statements, express or implied, concerning future operating results or the ability to generate revenues, income or cash flow to service the Exchange Notes are forward-looking statements. Investors in the Exchange Notes offered hereby are cautioned that reliance on any forward-looking statements involves risks and uncertainties and that, although the Company believes that the assumptions on which the forward-looking statements contained herein are based are reasonable, any of those assumptions could be incorrect, and actual results may differ materially from any results indicated or suggested thereby. The uncertainties in this regard include, but are not limited to, those identified herein under "Risk Factors." In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company's plans and objectives will be achieved. All forward-looking statements are expressly qualified by such cautionary statements, and the Company expressly disclaims any duty to update such forward-looking statements. i OFFER TO EXCHANGE SERIES B 11 1/4% SENIOR SUBORDINATED NOTES DUE 2008 FOR ALL OUTSTANDING SERIES A 11 1/4% SENIOR SUBORDINATED NOTES DUE 2008 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON , 1998, UNLESS EXTENDED Great Lakes Dredge & Dock Corporation, a Delaware corporation ("Great Lakes" or the "Company"), hereby offers to exchange an aggregate principal amount of up to $115,000,000 of its Series B 11 1/4% Senior Subordinated Notes due 2008 (the "Exchange Notes") for a like principal amount of its Series A 11 1/4% Senior Subordinated Notes due 2008 (the "Existing Notes") outstanding on the date hereof (the "Exchange Offer"), upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying letter of transmittal (the "Letter of Transmittal"). The Exchange Notes and the Existing Notes are hereinafter collectively referred to as the "Notes." The terms of the Exchange Notes are identical in all material respects to those of the Existing Notes, except that (i) interest on the Exchange Notes shall accrue from the most recent date to which interest has been paid on the Existing Notes surrendered in exchange therefor or, if no interest has been paid on the Existing Notes, from August 19, 1998 and (ii) the Exchange Notes are being registered under the Securities Act of 1933, as amended (the "Securities Act"), and will not bear any legends restricting their transfer. The Exchange Notes will evidence the same debt as the Existing Notes and will be issued pursuant to, and entitled to the benefits of, the indenture governing the Existing Notes. The Exchange Offer is being made in order to satisfy certain contractual obligations of the Company. Interest on the Exchange Notes will be payable semi-annually on February 15 and August 15 of each year, commencing February 15, 1999 at a rate of 11 1/4% per annum. The Exchange Notes will mature on August 15, 2008. The Exchange Notes will be redeemable at the option of the Company, in whole or in part, on or after August 15, 2003, at the redemption prices set forth herein, plus accrued and unpaid interest, if any, to the date of redemption. At any time or from time to time prior to August 15, 2003, the Company may redeem up to 35% of the aggregate principal amount of the Notes originally issued at the redemption price of 111.25% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, with the net cash proceeds of one or more Public Equity Offerings (as defined); provided, that at least 65% of the aggregate principal amount of Notes originally issued remain outstanding immediately thereafter. See "Description of Notes--Optional Redemption." Upon a Change of Control (as defined), each holder of Exchange Notes will have the right to require the Company to repurchase all of such holder's Exchange Notes at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. See "Description of Notes-- Repurchase at the Option of Holders--Change of Control." Holders whose Existing Notes are accepted for exchange will be deemed to have waived the right to receive any interest or dividends accrued on the Existing Notes. (continued on next page) SEE "RISK FACTORS" COMMENCING ON PAGE 10 FOR A DISCUSSION OF CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is , 1998 The Exchange Notes will be general unsecured obligations of the Company, will rank subordinate in right of payment to all Senior Debt (as defined) and will be senior or pari passu in right of payment to any future subordinated indebtedness of the Company. The Company's obligations under the Exchange Notes will be jointly and severally guaranteed (the "Subsidiary Guarantees") by each of the Company's wholly owned domestic subsidiaries (the "Subsidiary Guarantors"). The Subsidiary Guarantees will rank subordinate in right of payment to all Senior Debt of each Subsidiary Guarantor, including each Subsidiary Guarantor's guarantee of indebtedness under the New Credit Facility (as defined). The Exchange Notes and the Subsidiary Guarantees will be effectively subordinated to all liabilities, including trade payables, of the Company's subsidiaries that are not Subsidiary Guarantors. As of June 30, 1998, on a pro forma basis after giving effect to the Transaction (as defined), the Exchange Notes would have been subordinated to $62.7 million of Senior Debt, excluding contingent obligations, and effectively subordinated to $37.2 million of liabilities of the Company's subsidiaries that are not Subsidiary Guarantors. The Company is offering the Exchange Notes in reliance on certain interpretive letters issued by the staff of the Securities and Exchange Commission (the "Commission") to third parties in unrelated transactions. Based on such interpretive letters, the Company is of the view that holders of Existing Notes (other than any holder who is an "affiliate" of the Company or any Guarantor (as defined) within the meaning of Rule 405 under the Securities Act) who exchange their Existing Notes for Exchange Notes pursuant to the Exchange Offer generally may offer such Exchange Notes for resale, resell such Exchange Notes and otherwise transfer such Exchange Notes without compliance with the registration and prospectus delivery provisions of the Securities Act, provided such Exchange Notes are acquired in the ordinary course of the holders' business and such holders have no arrangement with any person to participate in a distribution of such Exchange Notes. Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Letter of Transmittal states that by so acknowledging and by delivery of a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This prospectus, at it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Existing Notes where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date (as defined), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." Prior to the Exchange Offer there has been no public market for the Existing Notes. If a market for the Exchange Notes should develop, such Exchange Notes could trade at a discount from their principal amount. The Company currently does not intend to list the Exchange Notes on any securities exchange or to seek approval for quotation through any automated quotation system, and no active public market for the Exchange Notes is currently anticipated. There can be no assurance that an active public market for the Exchange Notes will develop. The Exchange Offer is not conditioned upon any minimum principal amount of Existing Notes being tendered for exchange pursuant to the Exchange Offer. The Company will pay all the expenses incident to the Exchange Offer. THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF EXISTING SECURITIES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and consolidated financial statements of the Company, including the notes thereto (the "Financial Statements"), included elsewhere in this Prospectus. Unless otherwise noted, the term "AcquisitionCo" means Great Lakes Dredge & Dock Acquisition, Inc. and the "Company" or "Great Lakes" refers to Great Lakes Dredge & Dock Corporation and its subsidiaries. As used herein (i)"Recapitalization" refers to the recapitalization of the Company pursuant to the terms of the Merger Agreement (as defined) by and among AcquisitionCo, the Company, the stockholders of the Company and Vectura Holding Company LLC ("Vectura") and (ii) "Transaction" refers to the Recapitalization, the financing of the Recapitalization and the application of the proceeds of such financing. See "The Transaction." References herein to "bid market share" mean the percentage represented by the value of contracts bid upon and won by the Company divided by the value of all contracts upon which the Company bid, including those the Company did not win (valued at the price at which the contracts were awarded). As such, bid market share data does not reflect market share data for all dredging activities. THE COMPANY Great Lakes is the largest provider of dredging services in the United States. Dredging generally involves the enhancement or preservation of navigability of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock. The U.S. dredging market consists of three primary types of work: Capital, Maintenance (including controlled disposal dredging) and Beach Nourishment, in which activities the Company achieved a combined bid market share in the U.S. of 54% in 1997. In addition, the Company is the only U.S. dredging contractor with significant international operations, which represented approximately 22% of its contract revenues in 1997. The Company's fleet of 25 dredges, 29 material transportation barges, two drillboats, and 128 other specialized support vessels is the largest and most diverse fleet in the U.S. The Company believes its fleet would cost in excess of $600 million to build. For the twelve months ended June 30, 1998, the Company's contract revenues and Adjusted EBITDA (as defined), were $276.9 million and $38.4 million, respectively. In addition, as of June 30, 1998, the Company's contract backlog totaled approximately $178 million. Over its 108-year life, the Company has grown to be the leader in each of its business activities in the U.S. The Company's three principal business activities are: . CAPITAL (approximately 43% of 1997 contract revenues). Capital dredging projects are primarily port expansion projects, which involve the deepening of channels to allow larger, deeper draft ships and providing land fill for building additional port facilities, thereby enhancing port profitability and competitiveness. Approximately 31% of the Company's Capital project contract revenues in 1997 derive from port projects sponsored by the U.S. Government ("Deep Port" projects). The Company's cumulative bid market share of Deep Port projects was 76% from 1991 to 1997. Capital projects also include land reclamations, trench digging, and other construction-related dredging. The Company's bid market share of total U.S. Capital projects (including Deep Port projects) was 67% in 1997. Approximately 22% of the Company's contract revenues were attributable to non-U.S. Capital projects. . MAINTENANCE (approximately 29% of 1997 contract revenues). Maintenance dredging consists of the redredging of waterways and harbors to remove silt, sand and other accumulated sediments. Due to natural sedimentation, active channels generally require Maintenance dredging every one to three years, thus creating a continuous source of dredging work that is typically non-deferrable if optimal navigability is to be maintained. The Company's bid market share of U.S. Maintenance projects was 28% in 1997. 1 . BEACH NOURISHMENT (approximately 23% of 1997 contract revenues). Beach Nourishment dredging projects generally involve moving sand from the ocean floor to shoreline locations when erosion has progressed to a stage that threatens substantial shoreline assets. The Company's bid market share of U.S. Beach Nourishment projects was 86% in 1997. The Company believes that it benefits from a number of favorable trends in the U.S. dredging market. The average controlling depth of the top ten largest U.S. ports, as measured by annual container volume, is 40.4 feet compared to 52.7 feet for the top ten non-U.S. ports worldwide. Without significant deepening efforts, most major U.S. ports risk being unable to accommodate larger cargo vessels, which renders them less competitive with deeper ports. The Army Corps of Engineers (the "Corps"), which has the primary responsibility for maintaining and improving the nation's waterways, ports and shorelines, has recently announced 18 new Deep Port projects to be completed over the next seven years, which the Corps estimates will have an aggregate dollar value in excess of $2.2 billion. Funding for announced projects has also increased significantly during the past 12 months due to increased federal funding and increased cost sharing of Capital projects by local governments. In addition, the Corps, which historically has performed a significant amount of domestic Maintenance dredging projects, has substantially reduced its fleet from its height of 42 dredges in 1976 to 12 dredges in 1998, and has recently idled the largest of its four remaining hopper dredges, which are the only Corps dredges that compete with the Company. COMPETITIVE STRENGTHS The Company possesses a number of competitive strengths that have allowed it to develop and maintain its leading position within the dredging industry, including the following: FLEXIBLE PORTFOLIO OF ASSETS. The Company operates the largest and most diverse dredging fleet in the U.S., which the Company believes would cost in excess of $600 million to build. Great Lakes owns over 180 vessels including approximately 40% of the vessels certified by the U.S. Coast Guard and American Bureau of Shipping to perform offshore dredging operations, 47% of available hopper dredge capacity, 33% of large capacity clamshell dredges operating in the U.S., 100% of the drill boats in the U.S. and certain specialized equipment, such as the only two large electric dredges in the U.S. The size and breadth of the fleet improves the Company's competitiveness as it generally permits the Company to select the most efficient equipment for a particular job. To maintain the value and effectiveness of its fleet, the Company emphasizes proactive maintenance that results in lower downtime, increased profitability, enhanced vessel life and relatively low capital expenditure requirements. To this end, the Company incurred $17.3 million of maintenance expense in 1997 in addition to capital expenditures of $11.5 million. FAVORABLE COMPETITIVE DYNAMIC. Great Lakes is the largest U.S. provider of dredging services and has consistently maintained a cumulative bid market share of 38% since 1991, which is substantially greater than its nearest competitor's share for those projects. In addition to operating and owning the industry's largest and most diverse fleet, the Company believes that it benefits from a number of significant advantages relative to both existing and potential competitors, including: (i) the requirements of the Dredging Act of 1906 and the Jones Act of 1920, which effectively prohibit foreign dredges and foreign- owned dredging companies from competing in the U.S.; (ii) its being one of three competitors that it believes are independently able to obtain performance bonds in an amount greater than $50 million; (iii) the relatively high capital costs associated with the construction of a new dredge, which the Company estimates at between $10 to $50 million; and (iv) the Company's reputation for quality and customer service built up over its 108 year operating history, during which time it has never failed to complete a project. In addition, the Company's long history as a leader in the industry has enabled it to develop a proprietary database that contains detailed bidding and technical information on most domestic dredging projects since 1970, which management believes allows the Company, among other things, to be more accurate than its competitors in predicting contract costs prior to bidding. 2 SPECIALIZED CAPABILITY IN CAPITAL PROJECTS. Great Lakes believes it is the leader in Capital dredging projects which generally require specialized engineering expertise, specific combinations of equipment and experience in performing complex projects. From 1991 to 1997, Great Lakes achieved a 38% U.S. bid market share of the Capital projects. The Corps has recently announced 18 new Deep Port projects to be completed through 2005. The Corps has estimated the aggregate dollar value of these projects to exceed $2.2 billion (of which bidding for approximately $1.0 billion of such projects is scheduled to commence in 1998) compared to $849 million of projects bid between 1986 and 1997. The Company's cumulative bid market share of Deep Port projects was 76% from 1991 to 1997. The Company believes its extensive experience on complex projects significantly enhances its ability to profitably bid and complete these contracts. PROVEN, EXPERIENCED MANAGEMENT TEAM. The Company's senior managers include: Douglas B. Mackie, President and Chief Executive Officer; Richard M. Lowry, Executive Vice President and Chief Operating Officer; and Bruce J. Biemeck, Senior Vice President and Chief Financial Officer, who have an average of 17 years of experience in the dredging industry. The Company believes that its experienced management team provides it with a significant advantage over its competitors, many of whom are family owned and managed. As a result of the Transaction, the management of the Company owns approximately 16% of the issued and outstanding common stock of Great Lakes. BUSINESS STRATEGY The Company's strategy is to continue to grow contract revenues and cash flow and strengthen its competitive position worldwide. The principal elements of this strategy include: CONTINUE TO GROW IN DOMESTIC MARKETS. The Company expects to strengthen its domestic leadership position by leveraging (i) the size and breadth of its fleet, (ii) its industry-leading operating experience, (iii) its engineering expertise, and (iv) its efficient project management practices. For example, the Company has contracted to build a new backhoe at a cost of approximately $18 million, which will enhance its ability to compete for and execute new Deep Port projects. To further enhance the Company's operating capabilities, on July 27, 1998, the Company entered into an agreement with T.L. James & Company, Inc., a significant competitor, to acquire, at a cost of approximately $14.5 million, a large hydraulic dredge and midsize hydraulic dredge together with support equipment, inventory and spare parts. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." GROW ESTABLISHED FOREIGN MARKET BASE. Since the early 1990s, a consolidation among certain foreign competitors, together with an increase in foreign governments' port infrastructure investments, have resulted in new overseas dredging opportunities for Great Lakes. In 1997, the Company recorded approximately $55.9 million in revenue from non-U.S. dredging projects. The Company intends to continue to selectively pursue international opportunities that offer it the potential to increase the utilization of its asset base, to leverage its project management capabilities and to expand its non-U.S. dredging market share. EXPLOIT GROWTH IN CONTROLLED DISPOSAL DREDGING. In recent years, in response to more stringent regulations governing the disposal of dredged materials, certain of the Company's projects have required dredged materials to be disposed of in a more controlled manner. The Company believes it is well positioned to exploit this trend due to its equipment mix, its operating expertise and its joint venture with the owner and operator of two fully permitted upland disposal sites in New Jersey, which represent a substantial percentage of the upland disposal capacity in the greater New York City area. During 1997, Great Lakes completed $12.0 million of controlled disposal dredging projects. The Company has estimated that over $100 million of dredging revenue related to projects requiring upland disposal is expected to be completed through 2005 in New York and New Jersey. 3 THE TRANSACTION On July 20, 1998, AcquisitionCo, the Company, the stockholders of the Company, Vectura and certain other entities entered into the Merger Agreement providing for the recapitalization of the Company. Pursuant to the Merger Agreement, AcquisitionCo, a wholly owned subsidiary of Vectura, merged with and into the Company with the Company as the surviving corporation. As a result of the Recapitalization, Vectura and certain others own in the aggregate approximately 84% of outstanding common stock of the Company and certain members of the management of the Company (the "Management Investors") own in the aggregate approximately 16% of outstanding common stock of the Company. See "The Transaction." The principal executive offices of the Company are located at 2122 York Road, Oak Brook, Illinois 60521 and the telephone number is (630) 574-3000. THE EXCHANGE OFFER SECURITIES OFFERED.......... Up to $115,000,000 aggregate principal amount of Series B 11 1/4% Senior Subordinated Notes Due 2008. The terms of the Exchange Notes and Existing Notes are identical in all material respects, except for certain transfer restrictions and registration rights relating to the Existing Notes. THE EXCHANGE OFFER.......... The Exchange Notes are being offered in exchange for a like principal amount of Existing Notes. Existing Notes may be exchanged only in integral multiples of $1,000. The issuance of the Exchange Notes is intended to satisfy obligations of the Company contained in the Registration Rights Agreement (as defined). EXPIRATION DATE; WITHDRAWAL OF TENDER................ The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1998, or such later date and time to which it may be extended by the Company. The tender of Existing Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. Any Existing Notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. CERTAIN CONDITIONS TO THE EXCHANGE OFFER....... The Company's obligation to accept for exchange, or to issue Exchange Notes in exchange for, any Existing Notes is subject to certain customary conditions relating to compliance with any applicable law or any applicable interpretation by the staff of the Commission, the receipt of any applicable governmental approvals and the absence of any actions or proceedings of any governmental agency or court which could materially impair the Company's ability to consummate the Exchange Offer. The Company currently expects that each of the conditions will be satisfied and that no waivers will be necessary. See "The Exchange Offer--Certain Conditions to the Exchange Offer." 4 PROCEDURES FOR TENDERING EXISTING NOTES........... Each holder of Existing Notes wishing to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with such Existing Notes and any other required documentation, to the Exchange Agent (as defined) at the address set forth herein. See "The Exchange Offer--Procedures for Tendering Existing Notes." USE OF PROCEEDS............. The Company will not receive any proceeds from the Exchange Offer. EXCHANGE AGENT.............. The Bank of New York (the "Exchange Agent") is serving as the Exchange Agent in connection with the Exchange Offer. FEDERAL INCOME TAX CONSEQUENCES............. The exchange of Notes pursuant to the Exchange Offer should not be a taxable event for federal income tax purposes. See "Certain Federal Income Tax Considerations." CONSEQUENCES OF EXCHANGING EXISTING NOTES PURSUANT TO THE EXCHANGE OFFER Based on certain interpretive letters issued by the staff of the Commission to third parties in unrelated transactions, the Company is of the view that holders of Existing Notes (other than any holder who is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) who exchange their Existing Notes for Exchange Notes pursuant to the Exchange Offer generally may offer such Exchange Notes for resale, resell such Exchange Notes and otherwise transfer such Exchange Notes without compliance with the registration and prospectus delivery provisions of the Securities Act, provided such Exchange Notes are acquired in the ordinary course of the holders' business and such holders have no arrangement or understanding with any person to participate in a distribution of such Exchange Notes. If any holder of Existing Notes is an affiliate of the Company, is engaged in or intends to engage in or has any arrangement or understanding with any person to participate in the distribution of the Exchange Notes to be acquired in the Exchange Offer, such holder (i) could not relay on the applicable interpretations of the Commission and (ii) must comply with the registration requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives Exchange Notes for its own account in exchange for Existing Notes must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." In addition, to comply with the securities laws of certain jurisdictions, if applicable, the Exchange Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdictions or in compliance with an available exemption from registration or qualification. The Company has agreed, pursuant to the Registration Rights Agreement and subject to certain specified limitations therein, or register to qualify the Exchange Notes for offer or sale under the securities or blue sky laws of such jurisdictions as any holder of the Notes reasonably requests in writing. If a holder of Existing Notes does not exchange such Existing Notes for Exchange Notes pursuant to the Exchange Offer, such Existing Notes will continue to be subject to the restrictions on transfer contained in the legend thereon. In general, the Existing Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Holders of Existing Notes do not have any appraisal or dissenters' rights under the Delaware General Corporation Law in connection with the Exchange Offer. See "The Exchange Offer--Consequences of Failure to Exchange; Resales of Exchange Notes." The Existing Notes are currently eligible for trading in the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") market. Following commencement of the Exchange Offer but prior to its consummation, the Existing Notes may continue to be traded in the PORTAL market. Following consummation of the Exchange Offer, the Exchange Notes will not be eligible for PORTAL trading. 5 THE EXCHANGE NOTES SECURITIES OFFERED.......... $115 million in aggregate principal amount of Series B 11 1/4% Senior Subordinated Notes due 2008. MATURITY DATE............... August 15, 2008. INTEREST RATE .............. The Exchange Notes will bear interest at the rate of 11 1/4% per annum, payable semi-annually on February 15 and August 15 of each year, commencing February 15, 1999. SUBSIDIARY GUARANTEES....... The Exchange Notes will be jointly and severally guaranteed on a senior subordinated basis by all of the existing wholly owned domestic subsidiaries of the Company. SUBORDINATION............... The Exchange Notes will be general unsecured obligations of the Company, will rank subordinate in right of payment to all Senior Debt and will rank senior or pari passu in right of payment to any future subordinated indebtedness of the Company. The Subsidiary Guarantees will rank subordinate in right of payment to all Senior Debt of each Subsidiary Guarantor, including each Subsidiary Guarantor's guarantee of indebtedness under the New Credit Facility. The Exchange Notes and the Subsidiary Guarantees will be effectively subordinated to all liabilities, including trade payables, of the Company's subsidiaries that are not Subsidiary Guarantors. As of June 30, 1998, on a pro forma basis after giving effect to the Transaction, the Exchange Notes would have been subordinated to $62.7 million of Senior Debt, exclusive of contingent obligations, and effectively subordinated to $37.2 million of liabilities of the Company's subsidiaries that are not Subsidiary Guarantors. See "Risk Factors--Subordination." OPTIONAL REDEMPTION......... The Exchange Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after August 15, 2003 in cash at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of redemption. In addition, at any time prior to August 15, 2001, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes originally issued at a redemption price equal to 111.25% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net cash proceeds of one or more Public Equity Offerings; provided that at least 65% of the aggregate principal amount of Notes originally issued remain outstanding immediately after the occurrence of such redemption. See "Description of Notes--Optional Redemption." CHANGE OF CONTROL........... Upon the occurrence of a Change of Control, each holder of Exchange Notes will have the right to require the Company to repurchase all or any part of such holder's Exchange Notes at an offer price in cash equal to 101% of the aggregate principal amount 6 thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase. See "Description of Notes-- Repurchase at the Option of Holders--Change of Control." There can be no assurance that, in the event of a Change of Control, the Company would have sufficient funds to purchase all Exchange Notes tendered. See "Risk Factors--Potential Inability to Fund a Change of Control Offer." CERTAIN COVENANTS........... The Indenture contains certain covenants that limit, among other things, the ability of the Company to: (i) pay dividends, redeem capital stock or make certain other restricted payments or investments, (ii) incur additional indebtedness or issue certain preferred equity interests, (iii) merge, consolidate or sell all or substantially all of its assets, (iv) create certain liens on assets and (v) enter into certain transactions with affiliates or related persons. See "Description of Notes--Certain Covenants." REGISTRATION RIGHTS AGREEMENT................... The Existing Notes were sold by the Company on August 19, 1998 in a private placement. In connection with the sale, the Company and the Subsidiary Guarantors entered into a Registration Rights Agreement (the "Registration Rights Agreement") providing for, among other things, the Exchange Offer. See "The Exchange Offer-- Purpose and Effect of the Exchange Offer." RISK FACTORS FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE EXCHANGE NOTES, SEE "RISK FACTORS." 7 SUMMARY CONDENSED FINANCIAL AND OTHER DATA The following table sets forth summary condensed financial and other data of the Company. The historical financial data (except for EBITDA and Adjusted EBITDA) for each of the three years ended December 31, 1997, have been derived from, and should be read in conjunction with, the audited consolidated financial statements of the Company and the related notes thereto included elsewhere in this Prospectus. The historical financial data (except for EBITDA and Adjusted EBITDA) for each of the two years ended December 31, 1994, have been derived from the audited financial statements of the Company which are not contained herein. The historical financial data (except for EBITDA and Adjusted EBITDA) for the six-month periods ended June 30, 1997 and 1998, have been derived from, and should be read in conjunction with, the unaudited consolidated financial statements of the Company and the notes related thereto included elsewhere herein. The historical financial data for the twelve months ended June 30, 1998, have been derived from unaudited consolidated financial statements prepared by the Company which are not contained herein. In the opinion of management, interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the information presented for such periods. Results of operations for the six-month period ended June 30, 1998, are not necessarily indicative of results of operations for a full year or for future periods. The pro forma financial data have been derived from the Unaudited Pro Forma Condensed Consolidated Financial Statements and notes thereto included elsewhere herein. The pro forma statement of income data for the periods presented were prepared to give effect to the Transaction as if it occurred on January 1, 1997, and the pro forma balance sheet data was prepared to give effect to the Transaction as if it had occurred on June 30, 1998, and do not purport to represent what the Company's operating results or financial position would have been or to project its operating results or financial position for any future date. See "Unaudited Pro Forma Condensed Consolidated Financial Statements," "Selected Financial and Other Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical financial statements and the related notes thereto (the "Historical Financial Statements") included elsewhere in this Prospectus.
SIX MONTHS TWELVE ENDED MONTHS YEAR ENDED DECEMBER 31, JUNE 30, ENDED -------------------------------------- -------------- JUNE 30, 1993 1994 1995 1996 1997 1997 1998 1998 (DOLLARS IN MILLIONS) STATEMENT OF INCOME DATA: Contract revenues...... $251.3 $269.6 $226.9 $235.9 $258.3 $108.4 $127.0 $276.9 Gross profit........... 36.8 37.0 9.8 27.2 29.9 9.9 21.1 41.1 Operating income (loss)................ 16.1 17.1 (6.1) 10.8 11.0 0.8 11.2 21.4 Interest expense, net.. (6.3) (7.3) (7.9) (6.0) (6.0) (2.8) (2.1) (5.3) Net income (loss)...... 6.5 4.7 (10.0) 2.0 3.8 (1.7) 4.7 10.2 OTHER DATA: Adjusted EBITDA(1)..... $ 31.0 $ 35.0 $ 16.0 $ 26.2 $ 28.8 $ 10.1 $ 19.7 $ 38.4 Depreciation and amortization.......... 13.4 14.1 14.7 13.9 13.6 6.9 7.3 14.0 Maintenance expense(2). 12.3 11.1 15.4 14.7 17.3 8.1 8.7 17.9 Capital expenditures... 12.8 7.4 11.5 5.4 11.5 3.5 5.9 13.9 PRO FORMA DATA: Cash interest expense(3)................................................ $ 18.0 Ratio of Adjusted EBITDA to cash interest expense....................... 2.1x Ratio of total debt to Adjusted EBITDA(4)............................... 4.6x
8
AS OF JUNE 30, 1998 ------------------ ACTUAL AS ADJUSTED BALANCE SHEET DATA: Cash and cash equivalents. $ 0.6 $ 0.6 Working capital........... 39.2 31.7 Total assets.............. 234.9 234.0 Total debt(5)............. 50.6 177.7 Total stockholders' equity (deficit)................ 82.9 (47.0)
- -------- (1) "EBITDA," as provided for herein, represents earnings from continuing operations before interest expense, net, income taxes and depreciation and amortization expense and excludes equity in earnings of joint ventures and minority interests. EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles. The Company's EBITDA is included in the Prospectus as it is a basis upon which the Company assesses its financial performance, and certain covenants in the Company's borrowing arrangements will be tied to similar measures. "Adjusted EBITDA" excludes the effects of certain items on the Company's historical EBITDA that are not expected to recur in the ongoing activities of the Company. Adjusted EBITDA is presented to provide additional information with respect to the ability of the Company to meet future debt service, capital expenditures and working capital requirements, but is not necessarily a measure of the Company's ability to fund its cash needs. EBITDA and Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows from continuing operations, or other consolidated income or cash flow data prepared in accordance with generally accepted accounting principals as measures of the Company's profitability or liquidity. EBITDA and Adjusted EBITDA as defined in this Prospectus may differ from similarly titled measures presented by other companies. The components of EBITDA and Adjusted EBITDA are set forth below for the periods indicated:
SIX MONTHS TWELVE ENDED MONTHS YEAR ENDED DECEMBER 31, JUNE 30, ENDED ------------------------------- ----------- JUNE 30, 1993 1994 1995 1996 1997 1997 1998 1998 (DOLLARS IN MILLIONS) Operating income (loss). $16.1 $17.1 $(6.1) $10.8 $11.0 $ 0.8 $11.2 $21.4 Depreciation and amortization........... 13.4 14.1 14.7 13.9 13.6 6.9 7.3 14.0 ----- ----- ----- ----- ----- ----- ----- ----- EBITDA.................. 29.5 31.2 8.6 24.7 24.6 7.7 18.5 35.4 Management fees paid to former stockholder..... 0.5 0.5 0.5 0.5 0.3 0.3 0.5 Legal and other expenses related to the Chicago Flood Litigation....... 0.8 1.1 1.4 0.6 1.8 1.0 0.8 Letter of credit fees associated with the Chicago Flood Litigation............. 0.2 0.6 0.2 Disposed operations..... 0.3 0.2 1.5 1.9 1.1 0.9 1.7 Settlement and other costs related to subcontract dispute.... 5.6 Other corporate charges. 1.3 (1.1) ----- ----- ----- ----- ----- ----- ----- ----- Adjusted EBITDA......... $31.0 $35.0 $16.0 $26.2 $28.8 $10.1 $19.7 $38.4 ===== ===== ===== ===== ===== ===== ===== =====
For descriptions of each of the above components of Adjusted EBITDA, see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Certain Items Affecting Results of Operations." (2) Represents amount expended for maintenance included in costs of contract revenues. (3) Pro forma cash interest is defined as interest expense exclusive of amortization of deferred financing fees. (4) The ratio of total debt to Adjusted EBITDA was calculated based on pro forma total debt as of June 30, 1998, of $177.7 million. See "Capitalization." Pro forma total debt does not include approximately $14.5 million of debt anticipated to be incurred in respect of the planned acquisition of certain assets of a competitor. See "Management's Discussions and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." (5) Total debt includes long-term debt and the current maturities of long-term debt and excludes contingent obligations. 9 RISK FACTORS This Prospectus includes "forward looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Although the Company believes that its plans, intentions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such plans, intentions or expectations will be achieved. Important factors that could cause actual results to differ materially from the Company's forward looking statements are set forth below and elsewhere in this Prospectus. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statement set forth below. SUBSTANTIAL LEVERAGE The Company is, and will continue after the Exchange Offer to be, highly leveraged. On June 30, 1998, after giving pro forma effect to the Transaction, the Company would have had total indebtedness of approximately $177.7 million (excluding letters of credit, outstanding guarantees and bond obligations), outstanding letters of credit with a face amount of approximately $10.0 million and a stockholders' deficit of approximately $47.0 million. The Company has guaranteed up to $8.5 million of the outstanding indebtedness of Amboy Aggregates Joint Venture ("Amboy"). The Company and its subsidiaries will be permitted to incur additional indebtedness in the future. See "Capitalization" and "Description of Notes--Certain Covenants." The Company's ability to make scheduled payments of principal of, or to pay the interest or Liquidated Damages, if any, on, or to refinance, its indebtedness (including the Notes), or to fund planned capital expenditures will depend on its future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. Based upon the current level of operations, management believes that cash flow from operations, together with available borrowings under the New Credit Facility, will be adequate to meet the Company's future liquidity needs for at least the next several years. The Company may, however, need to refinance all or a portion of the principal of the Notes on or prior to maturity. There can be no assurance that the Company's business will generate sufficient cash flow from operations, or that future borrowings will be available under the New Credit Facility in an amount sufficient to enable the Company to service its indebtedness, including the Notes, or to fund its other liquidity needs. In addition, there can be no assurance that the Company will be able to effect any such refinancing on commercially reasonable terms or at all. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." The degree to which the Company will be leveraged following the Offering could have important consequences to holders of the Notes, including, but not limited to: (i) making it more difficult for the Company to satisfy its obligations with respect to the Notes, (ii) increasing the Company's vulnerability to general adverse economic and industry conditions, (iii) limiting the Company's ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements, (iv) requiring the dedication of a substantial portion of the Company's cash flow from operations to the payment of principal of, and interest on, its indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures or other general corporate purposes, (v) limiting the Company's flexibility in planning for, or reacting to, changes in its business and the industry, and (vi) placing the Company at a competitive disadvantage vis-a-vis less leveraged competitors. In addition, the Indenture, the New Credit Facility and the New Bonding Agreement will contain financial and other restrictive covenants that will limit the ability of the Company to, among other things, borrow additional funds. Failure by the Company to comply with such covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on the Company. In addition, the degree to which the Company is leveraged could prevent it from repurchasing all of the Notes tendered to it upon the occurrence of a Change of Control. See "Description of Notes--Repurchase at the Option of Holders--Change of Control" and "Description of the New Credit Facility." In the ordinary course of its business the Company is often required to obtain bid, payment and performance bonds (in the United States) and bank guarantees (outside the United States) in order to qualify for, and be 10 awarded projects. In the event the Company were to default on a contract, the bonding company would be required either to complete the contract or to reimburse the project sponsor for the cost of completion. In such event, the Company will be obligated to reimburse the bonding company for the amount it expended plus, in the event the bonding company completed the project itself, a reasonable profit thereon. Pursuant to the bonding agreement to be entered into by the Company and the Subsidiary Guarantors upon consummation of the Transaction, the Company's and the Subsidiary Guarantors' obligations are secured by a security interest in certain of the Company's fixed assets. In the event the Company or any of the Subsidiary Guarantors fails or is unable to complete the work under a bonded contract or breaches the New Bonding Agreement, the bonding company may proceed against their collateral, cause the performance of such bonded contract by subletting it in the name of the Company or its wholly owned subsidiary and seek reimbursement from the Company and its wholly owned subsidiary for costs incurred on the subletting or performance of such bonded contract. The total amount of bonds outstanding varies with the dollar value of contracts in process; however, the face amount of outstanding bonds typically overstates the associated contingent liability to the extent of the portion of the related projects which have been completed by the Company. The Company estimates that as of June 30, 1998, approximately $450.0 million of bonds were outstanding. See "Description of New Bonding Agreement." SUBORDINATION The Notes are subordinated in right of payment of all current and future Senior Debt of the Company and the Subsidiary Guarantors. Upon any distribution to creditors of the Company or any Subsidiary Guarantor in a liquidation or dissolution of the Company or any Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or any Subsidiary Guarantor or their respective properties, an assignment for the benefit of creditors or any marshalling of the Company's or any Subsidiary Guarantor's assets and liabilities, the holders of Senior Debt will be entitled to be paid in full before any payment may be made with respect to the Notes. In addition, the subordination provisions of the Indenture provide that payments with respect to the Notes will be blocked in the event of a payment default on Senior Debt and may be blocked for up to 179 days each year in the event of certain non-payment defaults on Senior Debt. In the event of a bankruptcy, liquidation or reorganization of the Company or any Subsidiary Guarantor, holders of the Notes will participate ratably with all holders of subordinated indebtedness of the Company or any such Subsidiary Guarantor that is deemed to be of the same class as the Notes, and potentially with all other general creditors of the Company or any such Subsidiary Guarantor, based upon the respective amounts owed to each holder or creditor, in the remaining assets of the Company or any such Subsidiary Guarantor. In any of the foregoing events, there can be no assurance that there would be sufficient assets to pay amounts due on the Notes. As a result, holders of Notes may receive less, ratably, than the holders of Senior Debt. As of June 30, 1998, on a pro forma basis after giving effect to the Transaction, the aggregate amount of Senior Debt of the Company and its Restricted Subsidiaries (including borrowings under the New Credit Facility but excluding letters of credit, guarantees and outstanding bond obligations) would have been approximately $62.7 million, and approximately $37.9 million would have been available for additional borrowing under the New Credit Facility. Senior Debt will also include the Company's letters of credit, guarantees and bonding obligations in effect from time to time. The Indenture permits the incurrence of substantial additional indebtedness, including Senior Debt, by the Company and its Restricted Subsidiaries in the future. See "Description of the New Credit Facility." While the Company's obligations under the Notes are guaranteed by all of the Company's wholly-owned domestic Restricted Subsidiaries, non-wholly owned and foreign subsidiaries, representing 22.9% of the Company's total assets as of June 30, 1998, and 20.7% of the Company's 1997 contract revenues, do not provide guarantees of the Notes or the New Credit Facility. Consequently, the Company's obligations under the Notes are effectively subordinated to the indebtedness and other liabilities of such Subsidiaries. Any right of the Company to receive assets of any of such Subsidiaries upon the latter's liquidation or reorganization (and the consequent right of the Holders of the Notes to participate in those assets) will be effectively subordinated to the claims of that Subsidiary's creditors, except to the extent that the Company is itself recognized as a creditor of 11 such Subsidiary, in which case the claims of the Company would still be subordinate to any security in the assets of such Subsidiary and any indebtedness of such Subsidiary senior to that held by the Company. As of June 30, 1998, such Subsidiaries would have had approximately $37.2 million of liabilities (including trade payables) and other liabilities outstanding. In addition, after payment to creditors the Company's rights against non- Guarantor Subsidiaries will effectively rank pari passu with minority interests in the Company's subsidiaries which are not Subsidiary Guarantors. As a general partner of Amboy, the Company is liable for the liabilities of Amboy (other than non-recourse liabilities), which aggregated approximately $13.9 million as of December 31, 1997. BACKLOG; RISKS ASSOCIATED WITH FIXED PRICE CONTRACTS The Company's contracts backlog represents management's estimate of the revenues which will be realized under the Company's contracts remaining to be performed based upon estimates relating to, among other things, the time required to mobilize the necessary assets at the project site, the amount of material necessary to be dredged and the time necessary to demobilize the project assets. However, such estimates are necessarily subject to fluctuations based upon the amount of material which actually must be dredged, as well as factors affecting the time required to complete the job. Consequently, backlog is not necessarily indicative of future sales. In addition, because all of the Company's backlog relates to government contracts, the Company's order backlog can be canceled at any time without penalty, except, in some cases, the recovery of the Company's actual committed costs and profit on work performed up to the date of cancellation. See "-- Dependence on Government Contracts and Funding." Further, the estimated size of a contract is not necessarily indicative of the profitability of that contract. Substantially all of the Company's contracts with its customers are fixed-price contracts. Under a fixed-price contract, the customer agrees to pay a specified price for the Company's performance of the entire contract. Fixed-price contracts carry inherent risks, including risks of losses from underestimating costs, operational difficulties and other changes that may occur over the contract period. One of the most significant factors which can affect the profitability of a project is the weather at the project site. Inclement or hazardous weather conditions can result in substantial delays in dredging and contract losses. For example, in 1995, the east coast of the United States was struck by the most severe hurricane and tropical storms experienced in over 60 years. These storms caused certain of the Company's 1995 Beach Nourishment projects to be delayed until 1996, which significantly affected the Company's Beach Nourishment contract revenues and profits in 1995. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." There can be no assurance that the Company will be able to perform its obligations under such fixed-price contracts without incurring such losses. If the Company were to significantly underestimate the cost of one or more significant contracts, the resulting losses could have a material adverse effect on the Company. DEPENDENCE ON GOVERNMENT CONTRACTS AND FUNDING Substantially all of the Company's revenues have been, and are expected to continue to be, attributable to contracts with federal, state and other government agencies or with companies operating under contracts with such government agencies. Government contracts are typically subject to termination at any time, on relatively short notice, at the election of the applicable government agency involved even if the Company is performing its obligation thereunder. Cancellation of significant contracts or the failure of the Company to win significant contracts could have a material adverse effect on the Company. In addition, the Company's operations depend on project funding by various government agencies and may be adversely affected by the level and timing of such funding. Lack of funding has, in the past, substantially delayed scheduled projects, including projects that have been put up for bid. Many of the projects authorized by WORDA (as defined) in 1986 were substantially delayed due to lack of funding. Recently the Corps has scheduled in excess of $2.2 billion of projects to be bid on and completed by 2005. There can be no assurance that these projects will be bid or executed on the published schedules or at all. Substantially all of the Company's contracts are, and will continue to be, awarded based on competitive bidding. In the United States, such contracts are awarded to the lowest adequately bonded bidder, regardless of a 12 bidder's relationship with the project sponsor, work on past projects, reputation or similar factors. There can be no assurance that the Company's competitors will not bid more aggressively than the Company for contracts or that the Company will continue to achieve bid market shares at the levels that it has achieved historically. Some dredging government contracts are awarded through a negotiated procurement process in which the contractor submits a proposal and cost and pricing data to the government, and the contractor and the government negotiate the contract price. Under such contracts, the government has the right, after award and/or completion of the contract, to audit the contractor's books and records, including the proposal and data available to the contractor during negotiations to ensure compliance with the contract and applicable federal legislation, rules and regulations. The government may seek a price adjustment based on the results of such audit. DEPENDENCE ON BONDING The Company, like all dredging service providers, generally is required to post bonds in connection with its dredging contracts to insure job completion if the Company should fail to finish a project. Upon consummation of the transaction, the Company entered into the New Bonding Agreement with Reliance Insurance Company, United Pacific Insurance Company, Reliance Insurance Company of New York and United Pacific Insurance Company of New York (collectively, the "Sureties") pursuant to which the Sureties act as surety, issue bid bonds, performance bonds and payment bonds and obligate themselves upon other contracts of guaranty required by the Company in the day-to-day operations of its dredging and marine construction business. However, the Sureties are not obligated under the New Bonding Agreement to issue bonds on behalf of the Company. No bond issued on behalf of the Company has ever been drawn upon in the Company's 108-year history. However, the Company's business would be materially and adversely affected if the Company were unable to obtain bonding for future projects. The New Bonding Agreement contains financial and operating covenants that limit the ability of the Company to incur indebtedness, create liens, pay dividends and to take certain other corporate actions. A default by the Company under the New Bonding Agreement permits the Sureties to proceed against collateral that includes most of the Company's operating equipment. See "Business--Bidding and Foreign Projects Guarantees" and "Description of New Bonding Agreement." OPERATING RISKS The business of dredging is generally subject to a number of risks and hazards, including environmental hazards, industrial accidents, labor disputes, encountering unusual or unexpected geological formations, cave-ins of below water tunnels, collisions with fixed objects, disruption of transportation services and flooding. The foregoing risks could result in damage to or destruction of dredges and transportation vessels as well as personal injury, environmental damage, delays in dredging, monetary losses and possible legal liability. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." For example, in 1992, an underwater utility tunnel located beneath the Chicago Loop failed adjacent to a construction tunnel and building basements serviced by the tunnel. Numerous suits were filed against the Company for claims of flood damage and losses due to business interruption (the "Chicago Flood Litigation"). See "Business-- Legal and Environmental Matters." Although all remaining claims relating to the Chicago Flood Litigation were settled in 1997, there can be no assurance that the Company's operations will not be adversely affected in the future by similar or other conditions attributable to the foregoing risks. Although the Company maintains insurance within ranges of coverage consistent with industry practice, no assurance can be given that such insurance will be available at economically feasible premiums. POTENTIAL LIABILITY AND INSURANCE COVERAGE The Company insures the Company's risks up to certain policy limits and subject to certain deductibles. Management makes estimates and assumptions that affect the reported amount of liability and the disclosure of contingent liabilities. As claims develop, it is possible that the ultimate results of these claims may differ from 13 management's estimates. There can be no assurance that the dollar amount of the Company's liabilities will not materially exceed the insurance policy limits. In addition, premiums and deductibles for liability insurance could increase to the point that such insurance becomes prohibitively expensive, or unavailable. The failure to obtain adequate insurance could effect the Company's ability to bid on, or execute, significant projects, or obtain adequate bonding or financing. RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS A significant portion of the Company's current operations are conducted abroad. International operations are subject to numerous additional risks, including the impact of foreign government regulations, currency fluctuations, political uncertainties and differences in business practices. There can be no assurance that foreign governments will not adopt regulations or take other actions that would have a direct or indirect adverse impact on the business or market opportunities of the Company within such governments' countries. Furthermore, there can be no assurance that the political, cultural and economic climate outside the United States will be favorable to the Company's operations and growth strategy. In addition, the Company has benefited in recent years from the substantial investment in foreign port infrastructure, particularly in the Pacific Rim. Because many international dredging contractors have concentrated significant assets in the Pacific Rim projects, the Company has enjoyed less competition in areas such as the Middle East, Africa and South America. However, if the recent economic recession in South East Asia were to adversely affect the investment in South East Asian port facilities, the Company could be faced with substantial increased competition in the foreign markets that it has competed in, which could have a material adverse effect on the Company. FLUCTUATIONS IN OPERATIONS A substantial portion of the Company's revenues and earnings are attributable to a limited number of significant multiyear contracts. Quarterly results can fluctuate significantly based upon the number and size of contracts undertaken and the timing of the initiation of projects under such contracts. Revenues and earnings can vary from year to year based on the number and size of such contracts and the timing of project performance. As a result of the foregoing, results of operations may fluctuate from year to year. The Company typically realizes lower revenues and earnings in the first and fourth calendar quarters of each year. During any quarter, projects can be delayed and revenues and earnings may be adversely affected by severe weather conditions at job sites. As a result of the foregoing, results of operations for any one quarter may not be indicative of results for any other quarters or for the year. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." Substantial fluctuations in the Company's results in operations may adversely affect the Company's ability to service its debt or satisfy its other liquidity needs in a particular period, which could have a material adverse effect on the Company. GOVERNMENT REGULATION The Company is subject to government regulation pursuant to the dredging statute (46 U.S.C. Section 292) which protects the United States dredging industry from competition from foreign-built dredges. The law prohibits foreign-built vessels (absent special legislative action) from competing in the United States dredging market. Dredges operating in the navigable waters of the United States must also meet the coastwise trade requirements of the Jones Act (Section 27 of the Merchant Marine Act, 1920) and Section 2 of the Shipping Act, 1916, as amended, and must have a coastwise endorsement pursuant to the Vessel Documentation Act (46 U.S.C. Section 12101 et seq.). These acts prohibit vessels owned or controlled by entities which are less than 75% owned and controlled by United States citizens from transporting dredged material between points in the United States. 14 In addition, in 1995, a government agency commenced an investigation into purported bid-rigging in the U.S. dredging industry. To date, the Company is not aware of any action against any participant in the U.S dredging industry related to such investigation. The Company does not engage in collusive bidding practices, and knows of no such practices in the U.S. dredging industry. However, there can be no assurance that additional investigations into purported bid-rigging will not occur or that the Company will not be a subject of such investigations. See "Business--Legal and Environmental Matters." ENVIRONMENTAL MATTERS The Company's operations and facilities are subject to a variety of federal and state environmental statutes and regulations, including those regulating dredging operations, the disposal of dredged material, wetlands, storm and waste water discharges, air emissions and the handling of certain substances. The scope of such statutes and regulations and parties liable thereunder have been afforded broad interpretations by state and federal regulators and courts. In addition, the Company is required to comply with federal and state statutes designed to protect certain species and habitats. Such compliance can delay the authorization of, appropriation with respect to, and performance of, particular projects and increase expenses in connection therewith. The Company cannot predict what environmental laws will be enacted in the future, how existing or future environmental laws will be administered or interpreted or what environmental conditions may be found to exist on its properties. Compliance with more stringent environmental laws, as well as more vigorous enforcement policies of the regulatory agencies or stricter interpretation of those laws, and discovery of new conditions may require additional expenditure by the Company. There can be no assurance that one or more of the foregoing will not have a material adverse effect on the Company. See "Business--Legal and Environmental Matters." ATTRACTION AND RETENTION OF QUALIFIED PROFESSIONALS; UNIONIZED LABOR FORCE The Company's ability to retain and expand its staff of qualified professionals is an important factor in determining the Company's future success. The market for qualified professionals is competitive and there can be no assurances that the Company will continue to be successful in its efforts to attract and retain such professionals. In addition, the Company relies heavily upon the experience and ability of its senior executive staff and the loss of any or a significant portion of such individuals could have a material adverse effect on the Company. A significant portion of the Company's hourly work force is represented by various unions. The Company has experienced strikes from time to time by certain of those unions. See "Business--Employees." There can be no assurance that future strikes, employee slowdowns or similar actions by one or more unions will not have a material adverse effect on the Company. CONTROL OF THE COMPANY As a result of the Recapitalization, Vectura owns approximately 49.9% of the outstanding voting capital stock and all of the non-voting capital stock of the Company. Pursuant to the Stockholders Agreement among Vectura, the Company, Management Investors and certain other stockholders of the Company, Vectura will have the right to appoint up to two of the five directors of the Company. As a result of the Recapitalization, Vectura and the Company's directors, the Management Investors and their affiliates control all of the voting power represented by the Company's outstanding shares of capital stock. Accordingly, those stockholders have the ability, if acting in concert, to control the outcome of elections of matters presented for approval by the stockholders of the Company. Such concentration of ownership may have the effect of preventing a change in control of the Company. There can be no assurance that the interests of Vectura and its affiliates will not conflict with the interests of the holders of the Notes. See "Management;" "Ownership of Capital Stock" and "Description of Capital Stock." 15 RESTRICTIVE DEBT COVENANTS The New Credit Facility, the New Bonding Agreement and the Indenture contain numerous restrictive financial and operating covenants that limit the discretion of the Company's management with respect to certain business matters. These covenants place significant restrictions on, among other things, the ability of the Company and its subsidiaries to dispose of assets, incur additional indebtedness, incur guarantee obligations, repay other indebtedness or amend other debt instruments (including the Indenture), pay dividends, create liens on assets, enter into sale and leaseback transactions, make investments, loans or advances, make acquisitions, engage in mergers or consolidations, make capital expenditures, or engage in certain transactions with affiliates and otherwise restrict corporate activities. In addition, under the New Credit Facility and the New Bonding Agreement, the Company is required to comply with specified financial ratios and tests, including minimum interest coverage ratios, maximum leverage ratios, annual capital expenditure limitations and net worth tests, which, if not met, may trigger an event of default under the New Credit Facility or the New Bonding Agreement, which have a material adverse effect on the Company. See "Description of the New Credit Facility;" "Description of New Bonding Agreement" and "Description of Notes." POTENTIAL INABILITY TO FUND A CHANGE OF CONTROL OFFER Upon a Change of Control, the Company will be required to offer to repurchase all outstanding Notes at 101% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages, if any, to the date of repurchase. Prior to commencing such an offer to purchase, the Company may be required to (i) repay in full all indebtedness of the Company that would prohibit the repurchase of the Notes, including the New Credit Facility or (ii) obtain any consent required to make the repurchase. If the Company is unable to repay all of such indebtedness or is unable to obtain the necessary consents, the Company will be unable to offer to purchase the Notes and that failure will constitute an Event of Default under the Indenture. In addition, there can be no assurance that sufficient funds will be available at the time of any Change of Control to make any required repurchases of Notes tendered or that restrictions in the New Credit Facility will allow the Company to make such required repurchases. Notwithstanding these provisions, the Company could enter into certain transactions, including certain recapitalizations, that would not constitute a Change of Control but would increase the amount of debt outstanding at such time. See "Description of Notes--Repurchase at the Option of Holders--Change of Control." FRAUDULENT CONVEYANCE STATUTES Under applicable provisions of federal bankruptcy law or comparable provisions of state fraudulent transfer law, if, among other things, the Company or any Subsidiary Guarantor, at the time it incurred the indebtedness evidences by the Notes or its Subsidiary Guarantee, (i) (a) was or is insolvent or rendered insolvent by reason of such occurrence or (b) was or is engaged in a business or transaction for which the assets remaining with the Company or such Subsidiary Guarantor constituted unreasonably small capital or (c) intended or intends to incur, or believed or believes that it would incur, debts beyond its ability to pay such debts as they mature, and (ii) the Company or such Subsidiary Guarantor received or receives less than reasonably equivalent value or fair consideration for the incurrence of such indebtedness, then the Notes and the Subsidiary Guarantees, and any pledge or other security interest securing such indebtedness, could be avoided, or claims in respect of the Notes or the Subsidiary Guarantees could be subordinated to all other debts of the Company or such Subsidiary Guarantor, as the case may be. In addition, the payment of interest and principal by the Company pursuant to the Notes or the payment of amounts by a Subsidiary Guarantor pursuant to a Subsidiary Guarantee could be avoided and required to be returned to the person making such payment, or to a fund for the benefit of the creditors of the Company or such Subsidiary Guarantor, as the case may be. The measures of insolvency for purposes of the foregoing considerations will vary depending upon the law applied in any proceeding with respect to the foregoing. Generally, however, the Company or a Subsidiary Guarantor would be considered insolvent if (i) the sum of its debts, including contingent liabilities, were greater than the saleable value of all of its assets at fair valuation or if the present fair saleable value of its assets were 16 less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature or (ii) it could not pay its debts as they become due. On the basis of historical financial information, recent operating history and other factors, the Company believes that, after giving effect to the indebtedness incurred in connection with the Transaction, neither it nor the Subsidiary Guarantors were insolvent, had unreasonably small capital for the business in which it is engaged or incurred debts beyond its ability to pay such debts as they mature. There can be no assurance, however, as to what standard a court would apply in making such determinations or that a court would agree with the Company's conclusions in this regard. YEAR 2000 ISSUE Historically, many computer programs have been written using two digits rather than four to define the applicable year, which could result in the program failing to recognize a year that begins with "20" instead of "19". This, in turn, could result in major system failures or miscalculations, and is generally referred to as the "Year 2000 issue". In June 1996, the Company's MIS Department developed a plan to identify and address issues related to Year 2000 compliance. The Company's internal systems were the primary focus of the plan. At that time, the Company compiled an inventory of its internally developed and third party software. The Company also evaluated various solutions and techniques for making its internally developed databases and programs Year 2000 ready. The Company prioritized the tasks taking into account the likelihood of Year 2000 failure, the impact of Year 2000 failure on its business, and the effort required to complete the task. In March 1997, senior management of the Company reviewed the tasks and approved the plan. The Company's Year 2000 Plan contemplated four phases--assessment, implementation, testing and release/installation--which overlap to a degree. The Company has completed all phases for its most critical systems. The Company is currently in the implementation, testing and installation phase for its less critical systems and anticipates completing the final installation phase during the fourth quarter of 1998. Some non-critical systems will be addressed during calendar year 1999 and the Company believes such systems are not material to its operations. The Company has received information concerning the Year 2000 status of certain critical suppliers, and anticipates initiating more extensive inquiries with significant suppliers during the fourth quarter of 1998 to determine the extent to which the Company is vulnerable to those third parties' failure to remediate their own Year 2000 issues. The Company currently estimates that the total cost of implementing its Year 2000 Plan, consisting primarily of increased staffing requirements and outside consulting services, will not be material. This estimate is based on presently available information and will be updated as the Company continues its assessment and proceeds with implementation. If the Company's computer systems fail with respect to the Year 2000 Issue, or if any applications or embedded chips critical to the Company's reporting process are overlooked there could be a material adverse effect on the business, results of operations or financial condition of the Company. Additionally, there can be no assurance that the systems of other companies on which the Company's systems rely will be timely converted, or that a failure to convert by another company would not have material adverse effect on the business, results of operations or financial condition of the Company. The Company has not yet established a contingency plan in this regard, but intends to formulate one to address unavoided or unavoidable risks and expects to have the contingency plan formulated by July 1999. 17 ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER The Existing Notes are eligible for trading in PORTAL. The Exchange Notes are new securities for which there is no established market. There can be no assurance as to the existence of any market for the Exchange Note, the liquidity of any markets that may develop for the Notes, the ability of holders of the Notes to sell their Notes, or the prices at which holders would be able to sell their Notes. Future trading prices of the Notes will depend on many factors, including, among other things, prevailing interest rates, the Company's operating results and the market for similar securities. The Initial Purchaser has advised the Company that it currently intends to make a market in the Notes. However, it is not obligated to do so and any market making may be discontinued at any time without notice. The Company does not intend to apply for listing of the Notes on any securities exchange. THE TRANSACTION Pursuant to the Agreement and Plan of Merger dated July 20, 1998 (as thereafter amended, the "Merger Agreement") among Vectura, AcquisitionCo, GLI Acquisition, Inc., the Company, Great Lakes International, Inc., Blackstone Dredging Partners L.P. ("Blackstone L.P.) and Blackstone Family Investment Partnership I L.P. (collectively with Blackstone L.P., "Sellers"), the following transactions occurred prior to, or concurrent with, the issuance of the Existing Notes: (i) immediately prior to consummation of the Recapitalization, certain members of the management of the Company who held vested non-qualified stock options ("Options") representing approximately 7% of the capital stock of the Company on a fully diluted basis exercised the Options, and (ii) at the closing of the Recapitalization, AcquisitionCo and the Company merged (the "Merger"), with the Company being the surviving corporation. Upon the effectiveness of the Merger, the capital stock of the Company was converted into consideration of $221.0 million, less outstanding indebtedness of the Company for borrowed money at the closing, less any obligation of the Company to pay bonuses to employees of the Company as a result of consummation of the Recapitalization (the "Transaction Bonuses"), less Sellers' expenses in connection with the Merger, plus cash paid or indebtedness incurred in connection with the acquisition of certain assets from a competitor of the Company, plus the right to receive a cash amount equal to the amount expended by the Company prior to the closing in connection with the construction of a backhoe dredge, which the Company estimates was approximately $4.0 million at closing, plus the aggregate exercise price of the Options. Upon consummation of the Merger, the Company immediately issued the Existing Notes and borrowed the necessary proceeds under the New Credit Facility to fund the Recapitalization. Additionally, the Management Investors received common stock and preferred stock of the Company in the Merger. Pursuant to the Merger Agreement, the Company has also agreed to pay to Sellers, upon receipt, the amount due the Company as reimbursement from certain insurance companies for amounts advanced by the Company in settlement of liability claims in connection with the Chicago Flood Litigation, which amounts equaled approximately $11.0 million. Following consummation of the Recapitalization, Vectura, whose membership interests are owned by 399 Venture Partners, Inc., an affiliate of Citicorp Venture Capital Ltd., and certain others own approximately 84% of the outstanding common stock of the Company and the Management Investors own in the aggregate approximately 16% of outstanding common stock of the Company. * * * * * The Company's principal executive offices are located at 2122 York Road, Oak Brook, Illinois 60521. The telephone number of the Company's executive office is (630) 574-3000. USE OF PROCEEDS The Company will not receive any proceeds from the Exchange Offer. The gross proceeds of $115.0 million received by the Company from the sale of the Existing Notes, together with borrowings totaling $62.1 million under the New Credit Facility, and proceeds of $50.0 million from the Equity Contribution, were used by the Company: (i) to fund the cash purchase price payable in connection with the Recapitalization and (ii) to pay fees and expenses in connection with the Transaction. 18 CAPITALIZATION The following table sets forth as of June 30, 1998, (i) the actual cash and capitalization of the Company and (ii) the unaudited pro forma cash and capitalization of the Company, as adjusted to give effect to the Transaction. The following table should be read in conjunction with the "Unaudited Pro Forma Condensed Consolidated Financial Statements" and the notes thereto and the Historical Financial Statements included elsewhere in this Prospectus.
AS OF JUNE 30, 1998 --------------- AS ACTUAL ADJUSTED (DOLLARS IN MILLIONS) Cash and cash equivalents....................................... $ 0.6 $ 0.6 ====== ====== Total debt: Existing Credit Facility........................................ $ 50.0 $ -- New Credit Facility(1): Revolving Credit Facility(2)(3)................................ -- 7.1 Term Loan...................................................... -- 55.0 11 1/4% Senior Subordinated Notes due 2008...................... -- 115.0 Other........................................................... 0.6 0.6 ------ ------ Total debt(4)................................................. 50.6 177.7 Stockholders' equity (deficit).................................. 82.9 (47.0) ------ ------ Total capitalization.......................................... $133.5 $130.7 ====== ======
- -------- (1) See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources" and "Description of the New Credit Facility." (2) Approximately $10.0 million face amount of letters of credit were issued and outstanding upon consummation of the Transaction under the $55.0 million Revolving Credit Facility and approximately $37.9 million of borrowings were available to the Company upon consummation of the Transaction under the Revolving Credit Facility for working capital and general corporate purposes. (3) In July 1998, the Company entered into an agreement to acquire two hydraulic dredges, certain support vessels and operating inventory from a competitor for approximately $14.5 million. The Company expects to initially finance the purchase price for such assets with borrowings under the Revolving Credit Facility. The Company expects to refinance approximately $10.0 million of such borrowings after the consummation of the Transaction with an operating lease. The Company anticipates the acquisition will close by the end of August 1998. (4) Total debt includes long-term debt and the current maturities of long-term debt and excludes contingent obligations. 19 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following Unaudited Pro Forma Condensed Consolidated Financial Statements of the Company consist of an Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1998, and Unaudited Pro Forma Condensed Consolidated Statements of Income for the six months ended June 30, 1997 and 1998, and for the year ended December 31, 1997, and for the twelve months ended June 30, 1998, and were derived from the Company's historical consolidated financial statements included elsewhere herein, as adjusted to illustrate the effects of the Transaction. The unaudited pro forma adjustments were applied to the respective historical consolidated financial statements to reflect and account for the Transaction as a recapitalization. Accordingly, the historical basis of the Company's assets and liabilities has not been impacted by the Transaction. The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the Transaction as if it had occurred on June 30, 1998. The Unaudited Pro Forma Condensed Consolidated Statements of Income give effect to the Transaction as if it had occurred on January 1, 1997. The unaudited pro forma adjustments are based upon currently available information and upon certain assumptions that the Company's management believes are reasonable under the circumstances. The Unaudited Pro Forma Condensed Consolidated Financial Statements do not purport to represent what the Company's actual results of operations, net income or actual financial position would have been if the Transaction had in fact occurred on such dates or to project the Company's results of operations or financial position for any future period or date. The Unaudited Pro Forma Condensed Consolidated Financial Statements do not give effect to any transactions other than the Recapitalization and related transactions (the "Transaction" defined elsewhere herein) and those discussed in the notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements set forth below. The Unaudited Pro Forma Condensed Consolidated Financial Statements and accompanying notes should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," the historical consolidated financial statements of the Company, including the notes thereto, and other financial information included elsewhere in this Prospectus. 20 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1998 (DOLLARS IN MILLIONS)
HISTORICAL ADJUSTMENTS AS ADJUSTED ASSETS Cash and equivalents....................... $ 0.6 $ -- (a) $ 0.6 Accounts receivable, net................... 43.5 -- 43.5 Contract revenues in excess of billings.... 6.7 -- 6.7 Inventories................................ 9.6 -- 9.6 Other current assets....................... 19.9 (11.0)(b) 5.4 (c) 14.3 ------ ------ ------ Total current assets..................... 80.3 (5.6) 74.7 Property and equipment, net................ 137.3 -- 137.3 Inventories................................ 6.7 -- 6.7 Investments in joint ventures.............. 9.0 -- 9.0 Other assets............................... 1.6 6.3 (d) (1.6)(e) 6.3 ------ ------ ------ Total assets............................. $234.9 $ (0.9) $234.0 ====== ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable........................... $ 22.6 $ -- $ 22.6 Accrued expenses and other................. 18.3 (3.6)(c) 2.5 (f) 3.0 (g) 20.2 Current maturities of long-term debt....... 0.2 -- 0.2 ------ ------ ------ Total current liabilities................ 41.1 1.9 43.0 Long term debt............................. 50.4 (50.0)(a) 55.0 (a) 115.0 (a) 7.1 (a) 177.5 Deferred income taxes...................... 47.2 -- 47.2 Other...................................... 10.2 -- 10.2 ------ ------ ------ Total liabilities........................ 148.9 129.0 277.9 Minority interests......................... 3.1 -- 3.1 Stockholders' equity (deficit)............. 82.9 (129.9)(h) (47.0) ------ ------ ------ Total liabilities and stockholders' equity (deficit)........................ $234.9 $ (0.9) $234.0 ====== ====== ======
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet 21 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (DOLLARS IN MILLIONS) (a) The estimated sources and uses of cash of the Transaction are as follows: SOURCES OF FUNDS: Borrowings under Revolving Credit Facility......................... $ 7.1 Proceeds from Term Loan............................................ 55.0 Existing Notes..................................................... 115.0 Equity Contribution................................................ 50.0 ------ $227.1 ====== USES OF FUNDS: Recapitalization of the Company: Redemption of common stock....................................... $164.0 Deferred redemption payment...................................... (2.5) Transaction-related bonuses paid................................. 5.6 Repayment of debt................................................ 50.0 Estimated transaction fees and expenses............................ 10.0 ------ $227.1 ======
The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the Transaction as if it had occurred on June 30, 1998. The repayment of debt, the deferred redemption payment, and the Redemption of common stock reflected herein are based on amounts reflected in the Company's historical consolidated financial statements as of June 30, 1998. Any changes in those amounts between June 30, 1998, and the Closing date may impact the resulting stockholders' equity (deficit). Approximately $10.0 million of letters of credit were issued and outstanding at closing under the $55.0 million Revolving Credit Facility and therefore approximately $37.9 million of borrowings were available to the Company at closing under the Revolving Credit Facility for working capital and general corporate purposes. (b) To reflect the Seller's retention, pursuant to the Merger Agreement, of the amount due the Company as reimbursement from certain insurance companies for amounts advanced by the Company in settlement of liability claims in connection with the Chicago Flood Litigation. (c) To record the estimated income tax effects as a result of the following: approximately $3.1 benefit related to compensation expense as a result of management's exercise of the Options; approximately $3.6 benefit related to compensation expense associated with Transaction-related bonuses; approximately $1.6 benefit related to the transaction fees and expenses incurred in connection with the Recapitalization; and approximately $0.7 benefit related to the write-off of deferred financing costs associated with the debt being repaid. (d) To record the estimated transaction fees and expenses attributable to the Financings which will be amortized over the term of the related debt. Certain fees and expenses incurred in connection with the Recapitalization of approximately $3.7 ($2.1 net of tax) were expensed. (e) To record the write-off of deferred financing costs of $1.6 ($0.9 net of tax) associated with the debt repaid at the closing of the Transaction. (f) To record the estimated deferred redemption payment related to amounts expended by the Company in connection with the construction of a backhoe dredge. Amounts expended by the Company prior to the closing of the Recapitalization were approximately $4.0. The $2.5 represents expenditures through June 30, 1998 and the difference between this amount and the actual amount at closing was reflected as an increase in current liabilities of the Company. 22 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (DOLLARS IN MILLIONS) (g) To record the estimated additional Transaction-related bonuses to be paid to Management Investors. (h) To record the impact on stockholders' equity (deficit) as a result of the Transaction: Redemption of common stock....................................... $(164.0) Equity Contribution.............................................. 50.0 Seller's retention of insurance receivable (see pro forma adjustment(b)).................................................. (11.0) Transaction related and additional bonuses (see pro forma adjustment(g)).................................................. (8.6) Transaction fees and expenses (see pro forma adjustments(a) and (d))............................................................ (3.7) Write-off of deferred financing costs (see pro forma adjustment(e)).................................................. (1.6) Tax effect (see pro forma adjustment(c))......................... 9.0 ------- $(129.9) =======
23 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997 (DOLLARS IN MILLIONS)
HISTORICAL ADJUSTMENTS(F) AS ADJUSTED(F) Contract revenues..................... $258.3 -- $258.3 Costs of contract revenues............ 228.4 -- 228.4 ------ ----- ------ Gross profit........................ 29.9 -- 29.9 General and administrative expenses... 18.9 (0.5)(a) 18.4 ------ ----- ------ Operating income.................... 11.0 0.5 11.5 Interest expense, net................. (6.0) (12.7)(b) (18.7) Equity in earnings of joint ventures.. 3.1 -- 3.1 ------ ----- ------ Income (loss) before income taxes and minority interests............. 8.1 (12.2) (4.1) Income taxes.......................... (2.6) 5.1 (c) 2.5 Minority interests.................... (1.7) -- (1.7) ------ ----- ------ Net income (loss)................... $ 3.8 $(7.1) $ (3.3) ====== ===== Accrued dividends on Preferred Stock(d)............................. (5.4) ------ Net income available to Common Stock.............................. $ (8.7) ====== Ratio of earnings to fixed charges(e). 1.7x -- UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED JUNE 30, 1998 (DOLLARS IN MILLIONS) HISTORICAL ADJUSTMENTS(F) AS ADJUSTED(F) Contract revenues..................... $276.9 -- $276.9 Costs of contract revenues............ 235.8 -- 235.8 ------ ----- ------ Gross profit........................ 41.1 -- 41.1 General and administrative expenses... 19.7 (0.5)(a) 19.2 ------ ----- ------ Operating income.................... 21.4 0.5 21.9 Interest expense, net................. (5.3) (13.4)(b) (18.7) Equity in earnings of joint ventures.. 2.9 -- 2.9 ------ ----- ------ Income before income taxes and minority interests................. 19.0 (12.9) 6.1 Income taxes.......................... (7.0) 5.4 (c) (1.6) Minority interests.................... (1.8) -- (1.8) ------ ----- ------ Net income.......................... $ 10.2 $(7.5) $ 2.7 ====== ===== Accrued dividends on Preferred Stock(d)............................. (5.4) ------ Net income available to Common Stock.............................. $ (2.7) ====== Ratio of earnings to fixed charges(e). 3.7x 1.1x
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income 24 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998 (DOLLARS IN MILLIONS)
HISTORICAL ADJUSTMENTS(F) AS ADJUSTED(F) Contract revenues..................... $127.0 -- $127.0 Costs of contract revenues............ 105.9 -- 105.9 ------ ----- ------ Gross profit........................ 21.1 -- 21.1 General and administrative expenses... 9.9 (0.3)(a) 9.6 ------ ----- ------ Operating income.................... 11.2 0.3 11.5 Interest expense, net................. (2.1) (7.3)(b) (9.4) Equity in earnings of joint ventures.. 0.4 -- 0.4 ------ ----- ------ Income before income taxes and minority interests................. 9.5 (7.0) 2.5 Income taxes.......................... (3.5) 2.9 (c) (0.6) Minority interests.................... (1.3) -- (1.3) ------ ----- ------ Net income.......................... $ 4.7 $(4.1) $ 0.6 ====== ===== Accrued dividends on Preferred Stock(d)............................. (2.7) ------ Net income available to Common Stock.............................. $ (2.1) ====== Ratio of earnings to fixed charges(e). 4.5x 1.1x
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1997 (DOLLARS IN MILLIONS)
HISTORICAL ADJUSTMENTS(F) AS ADJUSTED(F) Contract revenues..................... $108.4 -- $108.4 Costs of contract revenues............ 98.5 -- 98.5 ------ ----- ------ Gross profit........................ 9.9 -- 9.9 General and administrative expenses... 9.1 (0.3)(a) 8.8 ------ ----- ------ Operating income.................... 0.8 0.3 1.1 Interest expense, net................. (2.8) (6.6)(b) (9.4) Equity in earnings of joint ventures.. 0.6 0.6 ------ ----- ------ Income (loss) before income taxes and minority interests............. (1.4) (6.3) (7.7) Income taxes.......................... 0.9 2.6 (c) 3.5 Minority interests.................... (1.2) -- (1.2) ------ ----- ------ Net income (loss)................... $ (1.7) $(3.7) $ (5.4) ====== ===== Accrued dividends on Preferred Stock(d)............................. (2.7) ------ Net income available to Common Stock.............................. $ (8.1) ====== Ratio of earnings to fixed charges(e). -- --
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income 25 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (DOLLARS IN MILLIONS) (a) To eliminate the management fee charged by the Seller as subsequent to the Transaction, such fee will no longer be incurred. (b) The unaudited pro forma adjustments to interest expense reflect the following:
SIX MONTHS TWELVE ENDED MONTHS YEAR ENDED JUNE 30, ENDED DECEMBER 31, ------------ JUNE 30, 1997 1997 1998 1998 Interest expense on debt repaid(1)...... $(5.8) $(2.8) $(2.1) $(5.1) Interest expense on Term Loan (7.65% per annum)(2).............................. 4.2 2.1 2.1 4.2 Interest expense on Revolving Credit Facility (7.65% per annum)(2).......... 0.5 0.3 0.3 0.5 Interest expense on Notes (11.25% per annum)................................. 12.9 6.5 6.5 12.9 Amortization of deferred financing costs.................................. 0.6 0.3 0.3 0.6 Other borrowing costs................... 0.3 0.2 0.2 0.3 ----- ----- ----- ----- Net adjustments....................... $12.7 $ 6.6 $ 7.3 $13.4 ===== ===== ===== =====
-------- (1) Interest expense includes amortization of deferred financing costs, agents' fees, and unused facility fees. (2) Interest rates with respect to borrowings under the Term Loan and Revolving Credit Facility are variable. An increase of 0.125% in interest rates on borrowings under the Term Loan and Revolving Credit Facility would increase pro forma interest by $0.1 annually. (c) To reflect the estimated tax effects of the unaudited pro forma adjustments. (d) Represents dividends on the Company's issuance of Preferred Stock as part of the Recapitalization. The Preferred Stock will accrue dividends at a rate of 12%, compounded annually. See "Description of Capital Stock." (e) Earnings used in computing the ratio of earnings to fixed charges consists of earnings before provision for income taxes plus distributed income of joint ventures and fixed charges. Fixed charges are defined as interest expense including the amortization of deferred financing costs. For the year ended December 31, 1997, pro forma earnings were insufficient to cover fixed charges by $8.0 million. For the six months ended June 30, 1997, pro forma earnings were insufficient to cover fixed charges by $9.4 million. For the six months ended June 30, 1997, earnings were insufficient to cover fixed charges by $3.2 million. (f) The unaudited pro forma adjustments and the Unaudited Pro Forma Condensed Consolidated Statements of Income do not reflect an estimated $19.0 ($11.0 net of tax) of nonrecurring costs expected to be incurred in connection with the Transaction. This amount relates to: approximately $8.6 ($5.0 net of tax) of estimated compensation expense as a result of Transaction-related bonuses; approximately $3.7 ($2.1 net of tax) of estimated transaction fees and expenses incurred in connection with the Recapitalization; approximately $1.6 ($0.9 net of tax) related to the write-off of deferred financing costs associated with the debt being repaid; and approximately $5.1 ($3.0 net of tax) of estimated compensation expense related to the cash settlement of a portion of management's Options exercised. 26 SELECTED FINANCIAL AND OTHER DATA The following table presents selected historical financial and other data of the Company for the periods indicated. The historical financial data (except for EBITDA and Adjusted EBITDA) for each of the three years ended December 31, 1997, have been derived from, and should be read in conjunction with, the audited consolidated financial statements of the Company and the related notes thereto included elsewhere in this Prospectus. The historical financial data (except for EBITDA and Adjusted EBITDA) for the two years ended December 31, 1994, have been derived from the audited consolidated financial statements of the Company which are not contained herein. The historical financial data (except for EBITDA and Adjusted EBITDA) for each of the two six month periods ended June 30, 1997 and 1998, have been derived from, and should be read in conjunction with, the unaudited consolidated financial statements of the Company and the notes related thereto included elsewhere herein. In the opinion of management, information for interim periods includes all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company for such periods. Results for interim periods are not indicative of results for a full year or indicative of future periods. The selected historical consolidated financial data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements included elsewhere in this Prospectus.
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, -------------------------------------- -------------- 1993 1994 1995 1996 1997 1997 1998 (DOLLARS IN MILLIONS) STATEMENT OF INCOME DATA: Contract revenues....... $251.3 $269.6 $226.9 $235.9 $258.3 $108.4 $127.0 Costs of contract revenues(1)............ (214.5) (232.6) (217.1) (208.7) (228.4) (98.5) (105.9) ------ ------ ------ ------ ------ ------ ------ Gross profit........... 36.8 37.0 9.8 27.2 29.9 9.9 21.1 General and administrative expenses............... (20.7) (19.9) (15.9) (16.4) (18.9) (9.1) (9.9) ------ ------ ------ ------ ------ ------ ------ Operating income (loss)................ 16.1 17.1 (6.1) 10.8 11.0 0.8 11.2 Interest expenses, net.. (6.3) (7.3) (7.9) (6.0) (6.0) (2.8) (2.1) Equity in earnings of joint ventures......... 2.4 2.1 1.3 1.1 3.1 0.6 0.4 Other non-operating expenses............... (0.4) -- -- -- -- -- -- ------ ------ ------ ------ ------ ------ ------ Income (loss) before income taxes, minority interests and discontinued operations............ 11.8 11.9 (12.7) 5.9 8.1 (1.4) 9.5 Income tax (expense) benefit................ (4.8) (4.6) 4.2 (2.4) (2.6) 0.9 (3.5) Minority interests...... (0.7) (1.0) (1.2) (0.4) (1.7) (1.2) (1.3) ------ ------ ------ ------ ------ ------ ------ Income (loss) from continuing operations. 6.3 6.3 (9.7) 3.1 3.8 (1.7) 4.7 Extraordinary item net of tax effect.......... (1.9) Discontinued operations. 0.2 0.3 (0.3) (1.1) -- -- -- ------ ------ ------ ------ ------ ------ ------ Net income (loss)...... $ 6.5 $ 4.7 $(10.0) $ 2.0 $ 3.8 $ (1.7) $ 4.7 ====== ====== ====== ====== ====== ====== ====== Ratio of earnings to fixed charges(2)....... 2.6 2.6 -- 1.8 1.7 -- 4.5 OTHER DATA: Adjusted EBITDA(3)...... $ 31.0 $ 35.0 $ 16.0 $ 26.2 $ 28.8 $ 10.1 $ 19.7 Net cash flows from operating activities... 19.3 13.4 (3.7) 24.7 13.6 (3.3) 11.4 Depreciation and amortization........... 13.4 14.1 14.7 13.9 13.6 6.9 7.3 Maintenance expenses(4). 12.3 11.1 15.4 14.7 17.3 8.1 8.7 Capital expenditures.... 12.8 7.4 11.5 5.4 11.5 3.5 5.9 BALANCE SHEET DATA: Cash and cash equivalents............ $ 1.9 $ 3.5 $ 2.3 $ 1.9 $ 1.7 $ 2.6 $ 0.6 Working capital......... 12.5 20.6 26.9 22.0 41.6 23.2 39.2 Total assets............ 263.7 278.0 266.0 222.1 245.6 240.8 234.9 Total debt(5)........... 75.5 70.3 76.8 52.4 57.6 64.1 50.6 Total stockholders' equity ................ 77.6 82.3 72.3 74.4 78.2 72.7 82.9
27 - -------- (1) During interim periods the Company prepays or accrues fixed equipment costs and amortizes the expenses in proportion to revenues recognized over the year to better match revenues and expenses. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." (2) Earnings used in computing the ratio of earnings to fixed charges consists of earnings before provision for income taxes plus distributed income of joint ventures and fixed charges. Fixed charges are defined as interest expense including the amortization of deferred financing costs. For the year ended December 31, 1995, and the six months ended June 30, 1997, earnings were insufficient to cover fixed charges by $9.6 million and $3.2 million, respectively. (3) "EBITDA," as provided herein, represents earnings from continuing operations before interest expense, net, income taxes and depreciation and amortization expense and excludes equity earnings of joint ventures and minority interests. EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles. The Company's EBITDA is included in the Prospectus as it is a basis upon which the Company assesses its financial performance, and certain covenants in the Company's borrowing arrangements will be tied to similar measures. "Adjusted EBITDA" excludes the effects of certain items on the Company's historical EBITDA that are not expected to recur in the ongoing activities of the Company. Adjusted EBITDA is presented to provide additional information with respect to the ability of the Company to meet future debt service, capital expenditures and working capital requirements, but is not necessarily a measure of the Company's ability to fund its cash needs. EBITDA and Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows from continuing operations, or other consolidated income or cash flow data prepared in accordance with generally accepted accounting principles as measures of the Company's profitability or liquidity. EBITDA and Adjusted EBITDA as defined in this Prospectus may differ from similarly titled measures presented by other companies. The components of EBITDA and Adjusted EBITDA are set forth below for the periods indicated:
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------- ----------- 1993 1994 1995 1996 1997 1997 1998 (DOLLARS IN MILLIONS) Operating income (loss)... $16.1 $17.1 $(6.1) $10.8 $11.0 $ 0.8 $11.2 Depreciation and amortization............. 13.4 14.1 14.7 13.9 13.6 6.9 7.3 ----- ----- ----- ----- ----- ----- ----- EBITDA.................... 29.5 31.2 8.6 24.7 24.6 7.7 18.5 Management fees paid to former stockholder....... 0.5 0.5 0.5 0.5 0.3 0.3 Legal and other expenses related to the Chicago Flood Litigation......... 0.8 1.1 1.4 0.6 1.8 1.0 Letter of credit fees associated with the Chicago Flood Litigation. 0.2 0.6 0.2 Disposed operations....... 0.3 0.2 1.5 1.9 1.1 0.9 Settlement and other costs related to subcontract dispute.................. 5.6 Other corporate charges... 1.3 (1.1) ----- ----- ----- ----- ----- ----- ----- Adjusted EBITDA........... $31.0 $35.0 $16.0 $26.2 $28.8 $10.1 $19.7 ===== ===== ===== ===== ===== ===== =====
For descriptions of each of the above components of Adjusted EBITDA, see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Certain Items Affecting Results of Operations." (4) Represents amount expended for maintenance included in costs of contract revenues. (5) Total debt includes long-term debt and the current maturities of long-term debt and excludes contingent obligations. 28 MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with, and is qualified in its entirety by, "Selected Financial and Other Data" and the Financial Statements included elsewhere herein. GENERAL Great Lakes is the largest provider of dredging services in the United States. Dredging generally involves the enhancement or preservation of navigability of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock. The U.S. dredging market consists of three primary types of work: Capital, Maintenance (including controlled disposal dredging) and Beach Nourishment, in which areas the Company has experienced a combined bid market share in the U.S. of 54% in 1997. In addition, the Company has grown its role as the only U.S. dredging contractor with significant international operations, which represented approximately 22% of its contract revenues in 1997. The Company's fleet of 25 dredges, 29 material transportation barges, two drillboats, and 128 other specialized support vessels is the largest and most diverse fleet in the U.S., which the Company believes would cost in excess of $600 million to build. Most dredging contracts are obtained through competitive bidding on terms specified by the party inviting the bid. The nature of the specified services dictates the types of equipment, material and labor involved, all of which affect the cost of performing the contract and the price that dredging contractors will bid. For contracts under its jurisdiction, the Corps typically prepares a cost estimate based on its understanding of the availability of contractors and their equipment. To be successful, a bidder must be determined by the Corps to be a responsible bidder (i.e., a bidder that generally has the necessary equipment and experience to successfully complete the project) and submit the lowest responsive bid that does not exceed 125.0% of an estimate determined by the Corps to be fair and reasonable. With respect to projects that are not administered by the Corps, contracts are generally awarded to the low qualified bidder, provided such bid is no greater than the amount of funds that are available for such project. Substantially all of the Company's contracts are competitively bid. However, some government contracts are awarded by a sole source procurement process through negotiation between the contractor and the government. Prior to negotiations, the contractor submits a proposal and cost and pricing data to the government. Under such contracts, the government has the right, after award and/or completion of the contract, to audit the contractor's books and records, including the proposal and data available to the contractor during negotiations, to ensure compliance with the contract and applicable federal legislation, rules and regulations. The government may seek a price adjustment based on the results of such audit. The Company recognizes contract revenues under the percentage-of-completion method, based on the Company's engineering estimates of the physical percentage completed of each project. Billings on contracts are generally submitted after verification with the customers of physical quantities completed. Costs of contract revenues are adjusted to reflect the gross profit percentage expected to be achieved upon ultimate completion of each project. Significant expenditures incurred incidental to major contracts are deferred and recognized as costs of contracts based on contract performance over the duration of the related project. These expenditures are reported as prepaid expenses. Provisions for estimated losses on contracts in progress are made in the period in which such losses are determined. Claims for additional compensation due the Company are not recognized in contract revenues until such claims are settled. The components of costs of contract revenues are labor, equipment, subcontracts, rentals, lease expense, other assets employed (including depreciation, insurance, fuel, maintenance and supplies) and project overhead. The hourly labor generally is hired on a project basis and laid-off upon the completion of the project. Costs of contract revenues vary significantly depending on the type and location of work performed and assets utilized. 29 Generally, Capital projects have the lowest costs of contract revenues as a percent of contract revenues and Beach Nourishment projects have the highest. The Company's cost structure includes significant fixed costs, averaging approximately 18.0% of total costs of contracts. The Company can have significant fluctuations in equipment utilization throughout the year. Accordingly, for interim reporting, the Company prepays or accrues fixed equipment costs and amortizes the expenses in proportion to revenues recognized over the year to better match revenues and expenses. Costs of contract revenues also includes the net gain or loss on dispositions of property and equipment. The Company recorded net gains on dispositions of property and equipment of $1.5 million, $0.5 million, $3.3 million and $0.4 million in 1995, 1996, 1997 and the first six months of 1998, respectively. The Company's equity in earnings of joint ventures relates to the Company's 50% ownership interest in Amboy and the Company's 14% interest in Riovia S.A. ("Riovia"), the Company's Argentine Joint Venture. The Company's investment in Riovia was made in 1996. The Company accounts for its investments in each of Amboy and Riovia under the equity method. The Company conducts certain hopper dredging activities, primarily Maintenance and Beach Nourishment projects through the operation of NATCO Limited Partnership ("NATCO") and North American Trailing Company ("North American"). Minority interests reflects Ballast Nedam Group N.V.'s respective 25% and 20% interest in NATCO and North American. See "Business--Joint Ventures." CERTAIN ITEMS AFFECTING RESULTS OF OPERATIONS The Company believes that its historical results of operations were impacted by a number of items that are not expected to recur in the ongoing activities of the Company. The following table sets forth the Company's historical EBITDA, the impact of these items and Adjusted EBITDA to eliminate the impact of these items.
SIX MONTHS TWELVE ENDED MONTHS YEAR ENDED DECEMBER 31, JUNE 30, ENDED ------------------------------- ----------- JUNE 30, 1993 1994 1995 1996 1997 1997 1998 1998 (DOLLARS IN MILLIONS) Operating income (loss).. $16.1 $17.1 $(6.1) $10.8 $11.0 $0.8 $11.2 $21.4 Depreciation and amortization............ 13.4 14.1 14.7 13.9 13.6 6.9 7.3 14.0 ----- ----- ------ ----- ----- ----- ----- ----- EBITDA................... 29.5 31.2 8.6 24.7 24.6 7.7 18.5 35.4 Management fees paid to former stockholder...... 0.5 0.5 0.5 0.5 0.3 0.3 0.5 Legal and other expenses related to the Chicago Flood Litigation........ 0.8 1.1 1.4 0.6 1.8 1.0 0.8 Letter of credit fees associated with the Chicago Flood Litigation.............. 0.2 0.6 0.2 Disposed operations...... 0.3 0.2 1.5 1.9 1.1 0.9 1.7 Settlement and other costs related to subcontract dispute .... 5.6 Other corporate charges.. 1.3 (1.1) ----- ----- ------ ----- ----- ----- ----- ----- Adjusted EBITDA.......... $31.0 $35.0 $ 16.0 $26.2 $28.8 $10.1 $19.7 $38.4 ===== ===== ====== ===== ===== ===== ===== =====
Management Fees Paid to Former Stockholder. During the periods presented, the Company paid a management fee to a former stockholder. The Company does not intend to pay such a fee subsequent to the Recapitalization. Legal and Other Expenses Related to the Chicago Flood Litigation. In 1992, an underwater utility tunnel located beneath the Chicago Loop failed adjacent to a construction site completed by the Company in the fall of 1991. The failure resulted in a flooding of the tunnel, and building basements served by the tunnel. Numerous 30 suits were filed against the Company for claims of flood damage and losses due to business interruption. The Company incurred substantial legal expenses along with other expenses as a result of the Chicago Flood Litigation. During 1997, all remaining claims were settled relating to the Chicago Flood Litigation. Letter of Credit Fees Associated With The Chicago Flood Litigation. In connection with the Chicago Flood Litigation, the Company incurred additional expenses related to certain letters of credit as the Company was not able to obtain such letters of credit under its existing credit facilities. Instead, the Company obtained such letters of credit from third parties that charged a higher fee than the Company would have paid for such letters of credit under its credit facilities. Disposed Operations. During the periods presented, the Company operated a marine construction business that was sold in 1996. The adjustments reflect the elimination of the historical negative EBITDA attributable to this business. Settlement and Other Costs related to Subcontract Dispute. The Company subcontracted a portion of a marine construction project in New Orleans to a subcontractor. The subcontractor failed to complete its portion of the project and the Company incurred additional costs to complete the project. The Company and the subcontractor were subsequently parties to legal proceedings, of which the settlement in 1995 resulted in $5.6 million of expense recorded by the Company. Other Corporate Charges. In 1994, the Company undertook a corporate reorganization, in which it closed certain of its regional U.S. offices and incurred a charge of $1.3 million in connection therewith. In 1996, the Company offered a voluntary early retirement program and incurred a charge of $0.6 million relating thereto. In 1996, the Company also terminated its defined benefit pension plan and recognized a net gain of $1.7 million. "EBITDA," as provided for herein, represents earnings from continuing operations before interest expense, net, income taxes and depreciation and amortization expense and excludes equity in earnings of joint ventures and minority interests. EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles. The Company's EBITDA is included in the Prospectus as it is a basis upon which the Company assesses its financial performance, and certain covenants in the Company's borrowing arrangements will be tied to similar measures. "Adjusted EBITDA" excludes the effects of certain items on the Company's historical EBITDA that are not expected to recur in the ongoing activities of the Company. Adjusted EBITDA is presented to provide additional information with respect to the ability of the Company to meet future debt service, capital expenditures and working capital requirements, but is not necessarily a measure of the Company's ability to fund its cash needs. EBITDA and Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows from continuing operations, or other consolidated income or cash flow data prepared in accordance with generally accepted accounting principals as measures of the Company's profitability or liquidity. EBITDA and Adjusted EBITDA as defined in this Prospectus may differ from similarly titled measures presented by other companies. COMPONENTS OF CONTRACT REVENUES The following table sets forth the Company's contract revenues by type of work performed for the periods indicated:
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED DECEMBER 31, JUNE 30, 1998 ----------------------- ------------------------- 1995 1996 1997 1997 1998 (IN THOUSANDS) Capital............. $58,663 $34,422 $55,563 $ 15,364 $ 29,399 Maintenance......... 55,347 47,014 74,379 42,706 33,883 Beach............... 29,520 65,838 59,036 25,330 28,248 Foreign............. 53,910 58,166 55,919 17,239 34,152 Other(1)............ 29,425 30,431 13,399 7,733 1,335 ------- ------- ------- ------------ ------------
31
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED DECEMBER 31, JUNE 30, 1998 -------------------------- ------------------------- 1995 1996 1997 1997 1998 (IN THOUSANDS) Total.......... $226,865 $235,871 $258,296 $ 108,372 $ 127,017 ======== ======== ======== ============ ============
- -------- (1) Consists of contract revenues primarily attributable to a marine construction business that was sold in 1996. RESULTS OF OPERATIONS The following table sets forth the components of net income and EBITDA as a percentage of contract revenues for the periods indicated:
FOR THE SIX FOR THE YEAR ENDED MONTHS ENDED DECEMBER 31, JUNE 30, ---------------------- -------------- 1995 1996 1997 1997 1998 Contract revenues...................... 100.0% 100.0% 100.0% 100.0% 100.0% Costs of contract revenues............. (95.7) (88.5) (88.4) (90.9) (83.4) ------ ------ ------ ------ ------ Gross profit......................... 4.3 11.5 11.6 9.1 16.6 General and administrative expenses.... (7.0) (6.9) (7.3) (8.3) (7.8) ------ ------ ------ ------ ------ Operating income (loss).............. (2.7) 4.6 4.3 0.8 8.8 Interest expense, net.................. (3.5) (2.6) (2.3) (2.6) (1.7) Equity in earnings of joint ventures... 0.6 0.5 1.2 0.5 0.3 ------ ------ ------ ------ ------ Income (loss) before income taxes, minority interests and discontinued operations.......................... (5.6) 2.5 3.2 (1.3) 7.4 Income tax (expense) benefit........... 1.8 (1.0) (1.0) 0.8 (2.7) Minority interests..................... (0.5) (0.2) (0.7) (1.1) (1.0) ------ ------ ------ ------ ------ Income (loss) from continuing operations.......................... (4.3) 1.3 1.5 (1.6) 3.7 Discontinued operations................ (0.1) (0.5) 0.0 0.0 0.0 ------ ------ ------ ------ ------ Net income (loss).................... (4.4)% 0.8% 1.5% (1.6)% 3.7% ====== ====== ====== ====== ====== EBITDA................................. 3.8% 10.5% 9.5% 7.1% 14.6% ====== ====== ====== ====== ======
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997 Contract Revenues. Contract revenues increased $18.6 million or 17.2%, from $108.4 million for the first six months of 1997 to $127.0 million for the first six months of 1998. The increase was due primarily to a large new Capital project in Los Angeles that began in the fourth quarter of 1997. Additionally, foreign project contract revenues increased $16.9 million between the periods due to projects awarded in the last quarter of 1997 in the Middle East and Mexico. Maintenance work declined by $8.8 million between the periods due to normal fluctuations in the number and size of projects awarded from year to year. Beach Nourishment contract revenues remained consistent with the prior period. Costs of Contract Revenues. Costs of contract revenues increased $7.4 million or 7.6%, from $98.5 million for the first six months of 1997 to $105.9 million for the first six months of 1998. The increase was primarily attributable to increased utilization of assets. As a percentage of contract revenues, costs of contract revenues was 83.4% in the first six months of 1998 compared to 90.9% in the 1997 period. The improvement in 1998 was attributable to historically higher margins on two large new Capital projects on the West Coast of the United States, several Beach Nourishment projects and one foreign Capital project. 32 Gross Profit. Gross profit increased $11.2 million or 112.8%, from $9.9 million for the first six months of 1997 to $21.1 million for the first six months of 1998. The increase was primarily attributable to the increased contract revenues as well as the improved margins experienced in 1998. General and Administrative Expenses. General and administrative expenses increased $0.8 million or 9.3%, from $9.1 million for the first six months of 1997 to $9.9 million for the first six months of 1998. The increase was primarily due to increased headcount associated with increased contract revenues and higher incentive accruals connected with increased earnings levels. Operating Income. Operating income increased $10.4 million from $0.8 million for the six months of 1997 to $11.2 million for the first six months of 1998. The increase was primarily attributable to the increased contract revenues as well as the improved margins experienced in the first six months of 1998. EBITDA. EBITDA increased $10.8 million or 138.9%, from $7.7 million for the first six months of 1997 to $18.5 million for the first six months of 1998. The increase was primarily due to the impact of increased earnings and improved margins. Interest Expense, Net. Interest expense, net declined $0.7 million or 24.5%, from $2.8 million for the first six months of 1997 to $2.1 million for the first six months of 1998. The increase was primarily attributable to lower debt levels during the 1998 period. Equity in Earnings of Joint Ventures. Equity in earnings of joint ventures declined $0.2 million or 29.6%, from $0.6 million for the first six months of 1997 to $0.4 million for the first six months of 1998. The decrease was primarily attributable to a temporary reduction in demand for Amboy's products during the period. Income Tax Expense (Benefit). Income taxes increased $4.4 million from $(0.9) million for the first six months of 1997 to $3.5 million for the first six months of 1998. The increase was primarily due to the impact of increased earnings. Minority Interests. Minority interests increased $0.1 million or 12.3%, from $1.2 million for the first six months of 1997 to $1.3 million for the first six months of 1998. Net Income. Net income increased $6.4 million from a loss of $1.7 million for the first six months of 1997 to net income of $4.7 million for the first six months of 1998. The increase primarily resulted from the increased contract revenues and improved profitability levels in certain Capital and Beach Nourishment projects. YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996 Contract Revenues. Contract revenues increased $22.4 million or 9.5%, from $235.9 million in 1996 to $258.3 million in 1997. The increase was primarily due to contract revenues from a number of large Capital projects and additional hopper Maintenance work arising from severe flooding in the Mississippi river basin, partially offset by a decrease in Beach Nourishment contract revenues. A $92.0 million Capital project in Los Angeles was awarded to the Company in the second quarter of 1997, which contributed $13.0 million to contract revenues in 1997. Additionally, a new Capital project in Newark Bay contributed $15.9 million to contract revenues in 1997. The decrease in Beach Nourishment contract revenues was due to normal fluctuations in the number and size of projects awarded from year to year. Costs of Contract Revenues. Costs of contract revenues increased $19.7 million or 9.4%, from $208.7 million in 1996 to $228.4 million in 1997. The increase was primarily due to the increased utilization of fixed assets. The percent of costs of contract revenues compared to contract revenues remained constant between 1997 and 1996 at approximately 88.4%. Gross Profit. Gross profit increased $2.7 million or 10.2%, from $27.2 million in 1996 to $29.9 million in 1997. The increase was due to increased contract revenues earned in 1997. 33 General and Administrative Expenses. General and administrative expenses increased $2.5 million or 15.4%, from $16.4 million in 1996 to $18.9 million in 1997. The increase was primarily due to additional legal and bonus costs in 1997 related to the Chicago Flood Litigation and the favorable impact from the termination in 1996 of the Company's defined benefit plan for salaried employees, which was not repeated in 1997. Operating Income. Operating income of $10.8 million in 1996 and $11.0 million in 1997 remained essentially unchanged from 1996 to 1997. EBITDA. EBITDA of $24.7 million in 1996 and $24.6 million in 1997 remained essentially unchanged from 1996 to 1997. Interest Expense, Net. Interest expense, net remained level from 1996 to 1997, representing $6.0 million in each of 1996 and 1997. Equity in Earnings of Joint Ventures. Equity in earnings of joint ventures increased $2.0 million or 175.0%, from $1.1 million in 1996 to $3.1 million in 1997. The increase was primarily due to sales growth at Amboy and the addition of earnings from the Company's investment in Riovia in 1997. Income Tax Expense. Income tax expense increased $0.2 million or 14.8%, from $2.4 million in 1996 to $2.6 million in 1997. The increase was primarily due to increased earnings but offset partially by lower state tax rates in certain project locations in 1997. The overall effective tax rates were 39.7% and 32.8% for the 1996 and 1997 period, respectively. The decline in tax rate was caused principally by variations in taxable earnings allocated to minority interests. Minority Interests. Minority interests increased $1.3 million or 297.9%, from $0.4 million in 1996 to $1.7 million in 1997. The increase was primarily attributable to the increased hopper maintenance dredging by vessels operated by NATCO in 1997. Discontinued Operations. The loss from discontinued operations of $1.1 million related to the sale of a non-core aggregate towing business in 1996. Net Income. Net income increased $1.8 million or 89.5%, from $2.0 million in 1996 to $3.8 million in 1997. The increase was primarily attributable to revenue growth, improved results in joint venture equity earnings, a reduction in losses from discontinued operations and favorable state income tax variances in certain domestic project locations. YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995 Contract Revenues. Contract revenues increased $9.0 million or 4.0%, from $226.9 million in 1995 to $235.9 million in 1996. The increase was primarily due to an increase in Beach Nourishment contract revenues in 1996, partially offset by reductions in Capital and Maintenance contract revenues. Beach Nourishment contract revenues increased $36.3 million in 1996 over 1995 due to increased demand and funding for Beach Nourishment projects. During 1995, the East Coast of the United States was struck by the most severe hurricane and tropical storms experienced in over 60 years, which caused certain 1995 Beach Nourishment projects to be delayed until 1996 and severely eroded numerous beaches along the East Coast resulting in more Beach Nourishment projects performed in 1996. The reductions in Capital contract revenues were due primarily to increased competition from a competitor, which has since ceased competing with the Company in the Capital dredging business. The reductions in Maintenance contract revenues were due to normal fluctuations in the number and size of projects awarded from year to year. Costs of Contract Revenues. Costs of contract revenues declined $8.4 million or 3.9%, from $217.1 million in 1995 to $208.7 million in 1996. The percent of costs of contract revenues compared to contract revenues was 88.5% in 1996 and 95.7% in 1995. The improvement in 1996 over 1995 was primarily due to the losses incurred in 1995 on certain Beach Nourishment contracts adversely affected by severe weather conditions. 34 Gross Profit. Gross profit increased $17.4 million or 177.4%, from $9.8 million in 1995 to $27.2 million in 1996. The increase was primarily attributable to the increased contract revenues in 1996 and the reduction in costs associated with Beach Nourishment projects in 1996 as weather conditions normalized. General and Administrative Expenses. General and administrative expenses increased $0.5 million or 3.3%, from $15.9 million in 1995 to $16.4 million in 1996. The increase was primarily due to higher incentive expense connected with increased earnings levels, partially offset by the favorable impact from the termination of the Company's defined benefit plan for salaried employees in 1996. Operating Income. Operating income increased $16.9 million from a loss of $6.1 million in 1995 to $10.8 million in 1996. The increase was primarily attributable to the increased contract revenues in 1996 and the reduction in costs associated with Beach Nourishment projects in 1996 as weather conditions normalized. EBITDA. EBITDA increased $16.1 million or 186.0%, from $8.6 million in 1995 to $24.7 million in 1996. The increase was primarily due to the impact of increased earnings and improved margins. Interest Expense, Net. Interest expense, net declined $1.9 million or 23.1%, from $7.9 million in 1995 to $6.0 million in 1996. The decrease was primarily due to lower borrowing levels in 1996. Equity in Earnings of Joint Ventures. Equity in earnings of joint ventures of $1.3 million in 1995 and $1.1 million in 1996 remained essentially unchanged from 1995 to 1996. Income Tax Expense (Benefit). Income taxes increased $6.6 million from a benefit of $4.2 million in 1995 to an expense of $2.4 million in 1996. The increase was primarily due to increased earnings. The overall effective tax rates were 33.0% and 39.7% for the 1995 and 1996 period, respectively. The increase in tax rate was caused principally by variations in state income taxes. Minority Interests. Minority interests decreased $0.8 million or 65.2%, from $1.2 million in 1995 to $0.4 million in 1996. The decrease was primarily attributable to lower levels of hopper Maintenance work in 1996 as compared to 1995 due to normal fluctuations in the number and size of projects awarded from year to year. Discontinued Operations. The loss from discontinued operations increased $0.8 million or 237.1%, from $0.3 million in 1995 to $1.1 million in 1996. Discontinued operations related to the non-core aggregate towing business that was sold in 1996. Net Income. Net income increased $12.0 million from a loss of $10.0 million in 1995 to a profit of $2.0 million in 1996. The increase was primarily due to improved operating results in Beach Nourishment and hopper Maintenance projects. BACKLOG The Company's contracts backlog represents management's estimate of the revenues which will be realized under the portion of contracts remaining to be performed based upon estimates relating to, among other things, the time required to mobilize the necessary assets at the project site, the amount of material necessary to be dredged and the time necessary to demobilize the project assets. However, such estimates are necessarily subject to fluctuations based upon the amount of material which actually must be dredged, as well as factors affecting the time required to complete the job. Consequently, backlog is not necessarily indicative of future sales. In addition, because substantially all of the Company's backlog relates to government contracts, the Company's order backlog can be canceled at any time without penalty, except, in some cases, the recovery of the Company's actual committed costs and profit on work performed up to the date of cancellation. The Company's backlog does not include contract revenues with respect to project bids that have been awarded to the Company but for which the Company's customer has not provided an executed contract. As of June 30, 1998, there were $5.4 35 million of contracts on which the Company was the low bidder, but which had not yet been awarded to the Company. As of December 31, 1997, the Company had a backlog of contract revenues of $155.3 million, which represents an increase of $47.4 million, or 43.9%, over December 31, 1996 backlog of $107.9 million. The Company had backlog of $178.3 million at June 30, 1998, $115.7 million of which the Company expects to complete in 1998, although there can be no assurance that all such backlog will be completed within that period. The largest component of backlog at December 31, 1997 was $79.8 million attributable to a large Capital project in Los Angeles. As of June 30, 1998, $62.6 million relating to this project remained in backlog which included $2.3 million of additional work awarded in the first six months of 1998. Additionally, backlog at June 30, 1998 includes $34.3 million attributable to the Boston Harbor Deep Port project that the Company won in the second quarter of 1998. SEASONALITY The Company has historically realized lower contract revenues and earnings in the first and fourth quarters of each year. This trend is due to a number of factors including variation in weather conditions and government funding cycles, which affect the timing and execution of projects. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operations and borrowings under the New Credit Facility are anticipated to be the Company's primary sources of short-term liquidity. At the closing of the Transaction, the Company expects to have approximately $37.9 million of borrowing capacity available under the New Credit Facility. The Company's net cash flows from operating activities for the six months ended June 30, 1998 and 1997, were $11.4 million and $(3.3) million, respectively. The increase in net cash flows from operating activities in 1998 compared to 1997 was due to the increase in earnings in the first six months of 1998 over the first six months of 1997. The Company's net cash flows from operating activities for the years ended December 31, 1997, 1996 and 1995, were $13.6 million, $24.7 million and $(3.7) million, respectively. The decrease in net cash flow from operating activities in 1997 compared to 1996 was a result of an increase in working capital in the fourth quarter of 1997 due to high revenue levels in the fourth quarter of 1997. Net cash flows increased in 1996 compared to 1995 due to earnings levels in 1996 compared to operating losses in 1995. The Company's net cash flows from investing activities for the six months ended June 30, 1998 and 1997, were $(5.6) million and $3.4 million, respectively. The decrease in net cash flows from investing activities in 1998 compared to 1997 was a result of increased capital expenditures and a decrease in proceeds from dispositions of property and equipment in the first six months of 1998 as compared to the first six months of 1997. The Company's net cash flows from investing activities for the years ended December 31, 1997, 1996 and 1995, were $(6.2) million, $(0.8) million and $(3.9) million, respectively. The decrease in net cash flows from investing activities in 1997 from 1996 was a result of increased capital expenditures in 1997 over 1996. The increase in net cash flows from investing activities in 1996 from 1995 was a result of decreased capital expenditures in 1996 from 1995. The Company's net cash flows from financing activities for the six months ended June 30, 1998 and 1997, were $(7.0) million and $0.7 million, respectively. The decrease in net cash flows from financing activities in the first six months of 1998 compared to the first six months of 1997 was a result of increased repayments of debt with the additional cash generated from increased earnings in the first six months of 1998. The Company's net cash flows from financing activities for the years ended December 31, 1997, 1996 and 1995 were $(7.6) million, $(24.3) million and $6.5 million, respectively. The increase in net cash flows from financing activities in 1997 compared to 1996 was primarily a result of funding additional capital expenditures and the increase in working capital requirements. The decrease in net cash flows from financing activities in 1996 compared to 1995 was a result of the increased repayments of debt with additional cash generated from increased earnings in 1996. 36 Distributions from both Amboy and Riovia are subject to the unanimous consent of each partner in such joint venture. The Company received distributions from joint ventures of $5.5 million, $0.8 million, $1.0 million and $0.0 million in 1995, 1996, 1997 and the first six months of 1998, respectively, and recorded earnings from such joint ventures of $1.3 million, $1.1 million, $3.1 million, and $0.4 million, respectively, for the same periods. The Company paid dividends of $0.6 million, $0.7 million, $3.0 million and $0.0 million in respect of minority interests in 1995, 1996, 1997 and the first six months of 1998, respectively, and the Company recorded minority interest expense of $1.2 million, $0.4 million, $1.7 million and $1.3 million, respectively, for the same periods. The Company has entered into operating lease agreements for certain dredging assets and office space, which require annual lease payments totaling approximately $6.0 million annually through 2006. Additionally the Company expects to incur annual maintenance expense of between $15 and $18 million annually. Amounts expended for operating leases and maintenance expense are charged to operations on an annual basis. Planned capital expenditures, which primarily include support equipment and equipment upgrades, are expected to require annual spending of between $8 million and $11 million annually for the foreseeable future. The Company's capital expenditures for 1998 are expected to be $11.0 million for improvements to its current fleet. In July 1998, the Company entered into an agreement to acquire two hydraulic dredges, certain support vessels and operating inventory from a competitor for approximately $14.5 million, for which the Company expects to finance approximately $10.0 million after the consummation of the Transaction with an operating lease increasing annual operating lease expense by approximately $1.1 million. The Company expects initially to finance the purchase price for such assets with borrowings under the Revolving Credit Facility. In addition, the Company has contracted to build a new backhoe dredge, costing approximately $18.0 million, for delivery in early to mid 1999, which is expected to be financed through an operating lease increasing annual operating lease expense by approximately $2.0 million. In connection with the Recapitalization, the Company entered into the New Credit Facility. The New Credit Facility is secured by first liens on approximately $55.0 million in market value of dredging equipment and second liens on approximately an additional $40.0 million in market value of dredging equipment. Such lien positions restrict the Company's ability to incur additional indebtedness as a significant portion of its assets are subject to liens. Additionally, the New Credit Facility restricts the total amount of indebtedness the Company can incur. The Term Loan under the New Credit Facility will require quarterly principal payments aggregating $0.0 million, $2.5 million, $6.5 million, $9.0 million and $11.0 million in 1998, 1999, 2000, 2001 and 2002, respectively. See "Description of the New Credit Facility." In connection with the Recapitalization, the Company entered into the New Bonding Agreement, which provides surety bonds required for bidding and performing projects. The bonding company's obligation to issue bonds is discretionary. The Company's obligations under the New Bonding Agreement are secured by approximately $160 million of vessel and equipment collateral which the bonding company has either a first lien position or a second lien position (behind the first liens securing the Company's obligations under the New Credit Facility). Additionally, the New Bonding Agreement contains restrictive covenants which, among other things, limit the Company's ability to incur indebtedness and place liens on its assets. See "Description of New Bonding Agreement." In connection with the Recapitalization, the Company sold the Existing Notes, with an aggregate principal amount of $115.0 million, to the initial purchaser. The Notes are general unsecured obligations of the Company subordinated in right of payment to all existing and future senior debt. The Indenture contains certain covenants that limit, among other things, the ability of the Company to (i) pay dividends, redeem capital stock or make certain other restricted payments or investments, (ii) incur additional indebtedness or issue certain preferred equity interests, (iii) sell all or substantially all of its assets and (iv) create certain liens on assets. The Notes bear interest at the rate of 11 1/4% per annum, payable semi-annually on February 15 and August 15, commencing February 15 1999. The Notes mature on August 15, 2008. See "Description of Notes." 37 Management believes cash flow from operations and available credit will be sufficient to finance operations, planned capital expenditures and debt service requirements for the foreseeable future. The Company's ability to make scheduled payments of principal of, or to pay the interest or Liquidated Damages (as defined hereinafter), if any, on, or to refinance, its indebtedness (including the Notes), or to fund planned capital expenditures will depend on its future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. The Company may, however, need to refinance all or a portion of the principal of the Notes on or prior to maturity. There can be no assurance that the Company's business will generate sufficient cash flow from operations or that future borrowings will be available under the New Credit Facility in an amount sufficient to enable the Company to service its indebtedness, including the Notes, or to fund its other liquidity needs. In addition, there can be no assurance that the Company will be able to effect any such refinancing on commercially reasonable terms or at all. YEAR 2000 ISSUE Historically, many computer programs have been written using two digits rather than four to define the applicable year, which could result in the program failing to recognize a year that begins with "20" instead of "19". This, in turn, could result in major system failures or miscalculations, and is generally referred to as the "Year 2000 issue". In June 1996, the Company's MIS Department developed a plan to identify and address issues related to Year 2000 compliance. The Company's internal systems were the primary focus of the plan. At that time, the Company compiled an inventory of its internally developed and third party software. The Company also evaluated various solutions and techniques for making its internally developed databases and programs Year 2000 ready. The Company prioritized the tasks taking into account the likelihood of Year 2000 failure, the impact of Year 2000 failure on its business, and the effort required to complete the task. In March 1997, senior management of the Company reviewed the tasks and approved the plan. The Company's Year 2000 Plan contemplated four phases--assessment, implementation, testing and release/installation--which overlap to a degree. The Company has completed all phases for its most critical systems. The Company is currently in the implementation, testing and installation phase for its less critical systems and anticipates completing the final installation phase during the fourth quarter of 1998. Some non-critical systems will be addressed during calendar year 1999 and the Company believes such systems are not material to its operations. The Company has received information concerning the Year 2000 status of certain critical suppliers, and anticipates initiating more extensive inquiries with significant suppliers during the fourth quarter of 1998 to determine the extent to which the Company is vulnerable to those third parties' failure to remediate their own Year 2000 issues. The Company currently estimates that the total cost of implementing its Year 2000 Plan, consisting primarily of increased staffing requirements and outside consulting services, will not be material. This estimate is based on presently available information and will be updated as the Company continues its assessment and proceeds with implementation. If the Company's computer systems fail with respect to the Year 2000 Issue, or if any applications or embedded chips critical to the Company's reporting process are overlooked there could be a material adverse effect on the business, results of operations or financial condition of the Company. Additionally, there can be no assurance that the systems of other companies on which the Company's systems rely will be timely converted, or that a failure to convert by another company would not have material adverse effect on the business, results of operations or financial condition of the Company. The Company has not yet established a contingency plan in this regard, but intends to formulate one to address unavoided or unavoidable risks and expects to have the contingency plan formulated by July 1999. 38 EFFECTS OF RECENTLY ISSUED ACCOUNTING STANDARDS In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income" ("SFAS 130"), and Statement of Financial Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131"), which could require the Company to make additional disclosures in its financial statements no later than for the year ending December 31, 1998. SFAS 130 defines comprehensive income, which includes items in addition to those reported in the statement of operations, and requires disclosures about its components. Management is presently evaluating the effect on the Company's financial reporting from the adoption of this statement and does not expect it to have any material effect. SFAS 131 requires disclosures for each segment of a business and the determination of segments based on the Company's internal management structure. Management is in the process of evaluating the impact on the Company's financial reporting from the adoption of this statement. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), which is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999. SFAS 133 requires that all derivatives be recognized as either assets or liabilities in the statement of financial position and be measured at fair value. Management is in the process of evaluating the impact on the Company's financial position from adoption of SFAS 133. INFLATION The Company does not believe that inflation has had a material impact on the Company's operations. 39 THE EXCHANGE OFFER PURPOSE AND EFFECT OF THE EXCHANGE OFFER The Existing Notes were sold by the Company to the Initial Purchaser on August 19, 1998 (the "Issue Date"). The Initial Purchaser subsequently sold the Existing Notes to qualified institutional buyers in reliance on Rule 144A under the Securities Act and to a limited number of institutional "accredited investors" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. Because the Existing Notes are subject to certain transfer restrictions, as an inducement to the Initial Purchaser the Company, the Subsidiary Guarantors and the Initial Purchaser entered into the Registration Rights Agreement, pursuant to which the Company agreed (i) to prepare and file with the Commission the Registration Statement of which this Prospectus is a part not later than October 18, 1998 and (ii) to cause the Registration Statement to become effective under the Securities Act not later than February 15, 1999. The Registration Statement is intended to satisfy in part the Company's obligations with respect to the Existing Notes under the Registration Rights Agreement. Based on certain interpretive letters issued by the staff of the Commission to third parties in unrelated transactions, management believes that the Exchange Notes will be freely transferable by holders other than affiliates of the Company after the Exchange Offer without further registration under the Securities Act if the holder of the Exchange Notes represents that it is acquiring the Exchange Notes in the ordinary course of its business, that it has no arrangement or understanding with any person to participate in the distribution of the Exchange Notes and that it is not an affiliate of the Company, as such terms are interpreted by the Commission; provided, however, that broker-dealers ("Participating Broker-Dealers") receiving Exchange Notes in the Exchange Offer will have a prospectus delivery requirement with respect to resales of such Exchange Notes. In interpretive letters issued to third parties in unrelated transactions, the Commission has taken the position that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to exchange notes (other than a resale of an unsold allotment from the original sale of existing notes) with the prospectus contained in the registration statement pursuant to which such exchange notes were registered. Based on those interpretive letters, the Company is of the view that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to the Exchange Notes with this Prospectus, although the Commission has expressed no opinion in this regard. Under the Registration Rights Agreement, the Company is required to allow Participating Broker- Dealers and other persons, if any, with similar prospectus-delivery requirements to use this Prospectus in connection with the resale of such Exchange Notes. Each broker-dealer that receives Exchange Notes for its own account in exchange for Existing Notes, where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a Prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING EXISTING NOTES Upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal (which together constitute the Exchange Offer), the Company will accept for exchange Existing Notes which are properly tendered on or prior to the Expiration Date and not withdrawn as permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New York City time, on , 1998; provided, however, that if the Company has extended the period of time for which the Exchange Offer is open, the term "Expiration Date" means the latest time and date to which the Exchange Offer is extended. As of the date of this Prospectus, $115.0 million aggregate principal amount of the Existing Notes are outstanding. This Prospectus, together with the Letter of Transmittal, is first being sent on or about , 1998 to all holders of Existing Notes known to the Company. The Company's obligation to accept Existing Notes for exchange pursuant to the Exchange Offer is subject to certain conditions as set forth under "--Certain Conditions to the Exchange Offer" below. The Company expressly reserves the right, at any time or from time to time, to extend the period of time during which the Exchange Offer is open, and thereby delay acceptance for any exchange of any Existing Notes, 40 by giving notice of such extension to the holders thereof. During any such extension, all Existing Notes previously tendered will remain subject to the Exchange Offer and may be accepted for exchange by the Company. Any Existing Notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. The Company expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Existing Notes not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified below under "--Certain Conditions to the Exchange Offer." The Company will give notice of any extension, amendment, non- acceptance or termination to the holders of the Existing Notes as promptly as practicable, such notice in the case of any extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Holders of Existing Notes do not have any appraisal or dissenters' rights under the Delaware General Corporation Law in connection with the Exchange Offer. PROCEDURES FOR TENDERING EXISTING NOTES The tender to the Company of Existing Notes by a holder thereof as set forth below and the acceptance thereof by the Company will constitute a binding agreement between the tendering holder and the Company upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal. Except as set forth below, a holder who wishes to tender Existing Notes for exchange pursuant to the Exchange Offer must transmit a properly completed and duly executed Letter of Transmittal, including all other documents required by such Letter of Transmittal, to The Bank of New York at one of the addresses set forth below under "Exchange Agent" on or prior to the Expiration Date. In addition, either (i) certificates for such Existing Notes must be received by the Exchange Agent along with the Letter of Transmittal, or (ii) a timely confirmation of a book- entry transfer (a "Book-Entry Confirmation") of such Existing Notes, if such procedure is available, into the Exchange Agent's account at The Depository Trust Company (the "Book-Entry Transfer Facility" or the "Depositary") pursuant to the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the Expiration Date, or the holder must comply with the guaranteed delivery procedure described below. THE METHOD OF DELIVERY OF EXISTING NOTES, LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR EXISTING NOTES SHOULD BE SENT TO THE COMPANY. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the Existing Notes surrendered for exchange pursuant thereto are tendered (i) by a registered holder of the Existing Notes who has not completed the box entitled "Special Issuance Instruction" or "Special Delivery Instruction" on the Letter of Transmittal or (ii) for the account of an Eligible Institution (as defined below). In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case maybe, are required to be guaranteed, such guarantees must be by a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or by a commercial bank or trust Company having an office or correspondent in the United States (collectively, "Eligible Institutions"). If Existing Notes are registered in the name of a person other than a signer of the Letter of Transmittal, the Existing Notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by the Company in its sole discretion, duly executed by, the registered holder with the signature thereon guaranteed by an Eligible Institution. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of Existing Notes tendered for exchange will be determined by the Company in its sole discretion, which determination shall be 41 final and binding. The Company reserves the absolute right to reject any and all tenders of any particular Existing Notes not properly tendered or to not accept any particular Existing Notes which acceptance might, in the judgment of the Company or its counsel, be unlawful. The Company also reserves the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to any particular Existing Notes either before or after the Expiration Date(including the right to waive the ineligibility of any holder who seeks to tender Existing Notes in the Exchange Offer). The interpretation of the terms and conditions of the Exchange Offer as to any particular Existing Notes either before or after the Expiration Date (including the Letter of Transmittal and the instructions thereto) by the Company shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Existing Notes for exchange must be cured within such reasonable period of time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Existing Notes for exchange, nor shall any of them incur any liability for failure to give such notification. If the Letter of Transmittal or any Existing Notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. By tendering, each holder of Existing Notes will represent to the Company in writing that, among other things, the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the holder and any beneficial holder, that neither the holder nor any such beneficial holder has an arrangement or understanding with any person to participate in the distribution of such Exchange Notes and that neither the holder nor any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company. If the holder is not a broker-dealer, the holder must represent that it is not engaged in nor does it intend to engage in a distribution of the Exchange Notes. If the holder is a broker- dealer, the holder must represent that it will receive Exchange Notes for its own account in exchange for Existing Notes that were acquired as a result of market-making activities or other trading activities. Each broker-dealer that receives Exchange Notes for its own account in exchange for Existing Notes, where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities (an "Exchanging Dealer"), must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES For each Existing Note accepted for exchange, the holder of such Existing Note will receive an Exchange Note having a principal amount equal to that of the surrendered Existing Note. For purposes of the Exchange Offer, the Company shall be deemed to have accepted properly tendered Existing Notes for exchange when, as and if the Company has given oral and written notice thereof to the Exchange Agent. In all cases, issuance of Exchange Notes for Existing Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of certificates for such Existing Notes or a timely Book-Entry Confirmation of such Existing Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal and all other required documents. If any tendered Existing Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offer or if Existing Notes are submitted for a greater principal amount than the holder desires to exchange, such unaccepted or non-exchanged Existing Notes will be returned without expense to the tendering holder thereof(or, in the case of Existing Notes tendered by book- entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described below, such non-exchanged Existing Notes will be credited to an account maintained with such Book-Entry Transfer Facility) as promptly as practicable after the expiration of the Exchange Offer. 42 BOOK-ENTRY TRANSFER Any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of Existing Notes by causing the Book-Entry Transfer Facility to transfer such Existing Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Existing Notes may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof with any required signature guarantees and any other required documents must, in any case, be transmitted to and received by the Exchange Agent at one of the addresses set forth below under "Exchange Agent" on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. The Company understands that the Exchange Agent has confirmed with the Book- Entry Transfer Facility that any financial institution that is a participant in the Book-Entry Transfer Facility's system may utilize the Book-Entry Transfer Facility's Automated Tender Offer Program ("ATOP") to tender Existing Notes. The Company further understands that the Exchange Agent will request, within two business days after the date the Exchange Offer commences, that the Book-Entry Transfer Facility establish an account with respect to the Existing Notes for the purpose of facilitating the Exchange Offer, and any participant may make book-entry delivery of Existing Notes by causing the Book-Entry Transfer Facility to transfer such Existing Notes into the Exchange Agent's account in accordance with the Book-Entry Transfer Facility's ATOP procedures for transfer. However, the exchange of the Existing Notes so tendered will only be made after timely confirmation (a "Book-Entry Confirmation") of such book-entry transfer and timely receipt by the Exchange Agent of an Agent's Message (as defined in the next sentence), an appropriate Letter of Transmittal with any required signature guarantee, and any other documents required. The term "Agent's Message" means a message, transmitted by the Book- Entry Transfer Facility and received by the Exchange Agent and forming part of Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from a participant tendering Existing Notes which are the subject of such Book-Entry Confirmation and that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Company may enforce such agreement against such participant. GUARANTEED DELIVERY PROCEDURES If a registered holder of the Existing Notes desires to tender such Existing Notes and the Existing Notes are not immediately available, or time will not permit such holder's Existing Notes or other required documents to reach the Exchange Agent before the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if (i) the tender is made through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form provided by the Company (by telegram, telex, facsimile transmission, mail or hand delivery), setting forth the name and address of the holder of Existing Notes and the amount of Existing Notes tendered, stating that the tender is being made thereby and guaranteeing that within five New York Stock Exchange ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Existing Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent and (iii) the certificates for all physically tendered Existing Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and all other documents required by the Letter of Transmittal are received by the Exchange Agent within five NYSE trading days after the date of execution of the Notice of Guaranteed Delivery. WITHDRAWAL RIGHTS Tenders of Existing Notes may be withdrawn at any time prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent at one of the addresses set forth below under "Exchange Agent." Any such notice of withdrawal must specify the name of the person 43 having tendered the Existing Notes to be withdrawn, identify the Existing Notes to be withdrawn (including the principal amount of such Existing Notes), and (where certificates for Existing Notes have been transmitted) specify the name in which such Existing Notes are registered, if different from that of the withdrawing holder. If certificates for Existing Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such holder is an Eligible Institution. If Existing Notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the Book- Entry Transfer Facility to be credited with the withdrawn Existing Notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Existing Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Existing Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or in the case of Existing Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described above, such Existing Notes will be credited to an account maintained with such Book-Entry Transfer Facility for the Existing Notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Existing Notes may be retendered by following one of the procedures described under "--Procedures for Tendering Existing Notes" above at any time on or prior to the Expiration Date. CERTAIN CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision of the Exchange Offer, the Company shall not be required to accept for exchange, or to issue Exchange Notes in exchange for, any Existing Notes and may terminate or amend the Exchange Offer if at any time before the acceptance of such Existing Notes for exchange or the exchange of Exchange Notes for such Existing Notes, the Company determines that (i) the Exchange Offer does not comply with any applicable law or any applicable interpretation of the staff of the Commission, (ii) the Company has not received all applicable governmental approvals or (iii) any actions or proceedings of any governmental agency or court exist which could materially impair the Company's ability to consummate the Exchange Offer. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its reasonable discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, the Company will not accept for exchange any Existing Notes tendered, and no Exchange Notes will be issued in exchange for any such Existing Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). In any such event the Company is required to use every reasonable effort to obtain the withdrawal of any stop order at the earliest possible time. 44 EXCHANGE AGENT The Bank of New York has been appointed as the Exchange Agent for the Exchange Offer. All executed Letters of Transmittal should be directed to the Exchange Agent at one of the addresses set forth below. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows: By Hand Or Overnight Facsimile Transmissions: By Registered Or Certified Delivery: Mail: (Eligible Institutions Only) The Bank of New York (212) 571-3080 The Bank of New York 101 Barclay Street 101 Barclay Street, 7E Corporate Trust Services To Confirm by Telephone New York, New York 10286 Window or for Information Call: Attention: Reorganization Ground Level Section, Attention: Reorganization (212) 815-6333 Section, Delivery to an address other than as set forth above or transmission via facsimile to a number other than as set forth above does not constitute a valid delivery. FEES AND EXPENSES The Company will not make any payments to brokers, dealers or others soliciting acceptances of the Exchange Offer. The principal solicitation is being made by mail; however, additional solicitations may be made in person or by telephone by officers and employees of the Company. The expenses to be incurred in connection with the Exchange Offer will be paid by the Company. Such expenses include fees and expenses of the Exchange Agent and Trustee, accounting and legal fees and printing costs, among others. ACCOUNTING TREATMENT The Exchange Notes will be recorded at the same carrying amount as the Existing Notes, which is the principal amount as reflected in the Company's accounting records on the date of the exchange and, accordingly, no gain or loss will be recognized. The debt issuance costs will be capitalized and amortized to interest expense over the term of the Exchange Notes. TRANSFER TAXES Holders who tender their Existing Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that holders who instruct the Company to register Exchange Notes in the name of, or request that Existing Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer tax thereon. CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF EXCHANGE NOTES Holders of Existing Notes who do not exchange their Existing Notes for Exchange Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Existing Notes as set forth in the legend thereon as a consequence of the issuance of the Existing Notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of, the Securities Act and applicable state securities laws. Existing Notes not exchanged pursuant to the Exchange Offer will continue to accrue interest at 11 1/4% per annum and will otherwise remain outstanding in accordance with their terms. Holders of Existing Notes do not have any appraisal or dissenters' rights under the Delaware General Corporation Law in connection with the Exchange Offer. In general, the Existing Notes may not be offered or sold unless registered under the Securities 45 Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register the Existing Notes under the Securities Act. However, (i) if the Initial Purchaser so requests with respect to Existing Notes not eligible to be exchanged for Exchange Notes in the Exchange Offer and held by it following consummation of the Exchange Offer or (ii) if any holder of Existing Notes(other than an Exchanging Dealer) is not eligible to participate in the Exchange Offer or, in the case of any holder of Existing Notes (other than an Exchanging Dealer) that participates in the Exchange Offer, does not receive Exchange Notes in exchange for Existing Notes that may be sold without restriction under state and federal securities laws (other than due solely to the status of such holder as an affiliate of the Company within the meaning of the Securities Act), the Company is obligated to file a shelf registration statement on the appropriate form under the Securities Act relating to the Existing Notes held by such persons. Based on certain interpretive letters issued by the staff of the Commission to third parties in unrelated transactions, the Company is of the view that Exchange Notes issued pursuant to the Exchange Offer may be offered for resale, resold or otherwise transferred by holders thereof (other than (i) any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act or (ii) any broker-dealer that purchases Notes from the Company to resell pursuant to Rule 144A or any other available exemption) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement or understanding with any person to participate in the distribution of such Exchange Notes. If any holder has any arrangement or understanding with respect to the distribution of the Exchange Notes to be acquired pursuant to the Exchange Offer, such holder (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. A broker-dealer who holds Existing Notes that were acquired for its own account as a result of market-making or other trading activities may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Exchange Notes. Each such broker-dealer that receives Exchange Notes for its own account in exchange for Existing Notes, where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge in the Letter of Transmittal that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." The Company has not requested the staff of the Commission to consider the Exchange Offer in the context of a no-action letter, and there can be no assurance that the staff would take positions similar to those taken in the interpretive letters referred to above if the Company were to make such a no-action request. In addition, to comply with the securities laws of certain jurisdictions, if applicable, the Exchange Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdictions or an exemption from registration or qualification is available and is complied with. The Company has agreed, pursuant to the Registration Rights Agreement and subject to certain specified limitations therein, to register or qualify the Exchange Notes for offer or sale under the securities or blue sky laws of such jurisdictions in the United States as any selling holder of the Notes reasonably requests in writing. 46 BUSINESS Great Lakes is the largest provider of dredging services in the United States. Dredging generally involves the enhancement or preservation of navigability of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock. The U.S. dredging market consists of three primary types of work: Capital, Maintenance (including controlled disposal dredging) and Beach Nourishment, in which activities the Company achieved a combined bid market share in the U.S. of 54% in 1997. In addition, the Company is the only U.S. dredging contractor with significant international operations, which represented approximately 22% of its contract revenues in 1997. The Company's fleet of 25 dredges, 29 material transportation barges, two drillboats, and 128 other specialized support vessels is the largest and most diverse fleet in the U.S. The Company believes its fleet would cost in excess of $600 million to build. For the twelve months ended June 30, 1998, the Company's contract revenues and Adjusted EBITDA, were $276.9 million and $38.4 million, respectively. In addition, as of June 30, 1998, the Company's contract backlog totaled approximately $178 million. Over its 108-year life, the Company has grown to be the leader in each of its business activities in the U.S. The Company's three principal business activities are: . CAPITAL (approximately 43% of 1997 contract revenues). Capital dredging projects are primarily port expansion projects, which involve the deepening of channels to allow larger, deeper draft ships and providing land fill for building additional port facilities, thereby enhancing port profitability and competitiveness. Approximately 31% of the Company's Capital project revenues in 1997 derive from Deep Port projects. The Company's cumulative bid market share of Deep Port projects was 76% from 1991 to 1997. Capital projects also include land reclamations, trench digging, and other construction-related dredging. The Company's bid market share of total U.S. Capital projects (including Deep Port projects) was 67% in 1997. Approximately 22% of the Company's contract revenues were attributable to non-U.S. Capital projects. . MAINTENANCE (approximately 29% of 1997 contract revenues). Maintenance dredging consists of the redredging of waterways and harbors to remove silt, sand and other accumulated sediments. Due to natural sedimentation, active channels generally require Maintenance dredging every one to three years, thus creating a continuous source of dredging work that is typically non-deferable if optimal navigability is to be maintained. The Company's bid market share of U.S. Maintenance projects was 28% in 1997. . BEACH NOURISHMENT (approximately 23% of 1997 contract revenues). Beach Nourishment dredging projects generally involve moving sand from the ocean floor to shoreline locations when erosion has progressed to a stage that threatens substantial shoreline assets. The Company's bid market share of U.S. Beach Nourishment projects was 86% in 1997. The Company believes that it benefits from a number of favorable trends in the U.S. dredging market. The average controlling depth of the top ten largest U.S. ports, as measured by annual container volume, is 40.4 feet compared to 52.7 feet for the top ten non-U.S. ports worldwide. Without significant deepening efforts, most major U.S. ports risk being unable to accommodate larger cargo vessels, which renders them less competitive with deeper ports. The Corps, which has the primary responsibility for maintaining and improving the nation's waterways, ports and shorelines, has recently announced 18 new Deep Port projects to be completed over the next seven years, which the Corps estimates will have an aggregate value in excess of $2.2 billion. Funding for announced projects has also increased significantly during the past 12 months due to increased federal funding and increased cost sharing of Capital projects by local governments. In addition, the Corps, which historically has performed a significant amount of domestic Maintenance dredging projects, has substantially reduced its fleet from its height of 42 dredges in 1976 to 12 dredges in 1998, and has recently idled the largest of its four remaining hopper dredges, which are the only Corps dredges that compete with the Company. 47 COMPETITIVE STRENGTHS The Company possesses a number of competitive strengths that have allowed it to develop and maintain its leading position within the dredging industry, including the following: FLEXIBLE PORTFOLIO OF ASSETS. The Company operates the largest and most diverse dredging fleet in the U.S., which the Company believes would cost in excess of $600 million to build. Great Lakes owns over 180 vessels including approximately 40% of the vessels certified by the U.S. Coast Guard and American Bureau of Shipping to perform offshore dredging operations, 47% of available hopper dredge capacity, 33% of large capacity clamshell dredges operating in the U.S., 100% of the drill boats in the U.S. and certain specialized equipment, such as the only two large electric dredges in the U.S. The size and breadth of the fleet improves the Company's competitiveness as it generally permits the Company to select the most efficient equipment for a particular job. To maintain the value and effectiveness of its fleet, the Company emphasizes proactive maintenance that results in lower downtime, increased profitability, enhanced vessel life and relatively low capital expenditure requirements. To this end, the Company incurred $17.3 million of maintenance expense in 1997 in addition to capital expenditures of $11.5 million. FAVORABLE COMPETITIVE DYNAMIC. Great Lakes is the largest U.S. provider of dredging services and has consistently maintained a cumulative bid market share of 38% since 1991, which is substantially greater than its nearest competitor's share for those projects. In addition to operating and owning the industry's largest and most diverse fleet, the Company believes that it benefits from a number of significant advantages relative to both existing and potential competitors, including: (i) the requirements of the Dredging Act of 1906 and the Jones Act of 1920, which effectively prohibit foreign dredges and foreign-owned dredging companies from competing in the U.S.; (ii) its being one of three competitors that it believes are independently able to obtain performance bonds in an amount greater than $50 million; (iii) the relatively high capital costs associated with the construction of a new dredge, which the Company estimates at between $10 to $50 million; and (iv) the Company's reputation for quality and customer service built up over its 108 year operating history, during which time it has never failed to complete a project. In addition, the Company's long history as a leader in the industry has enabled it to develop a proprietary database that contains detailed bidding and technical information on most domestic dredging projects since 1970, which management believes allows the Company, among other things, to be more accurate than its competitors in predicting contract costs prior to bidding. SPECIALIZED CAPABILITY IN CAPITAL PROJECTS. Great Lakes believes it is the leader in Capital dredging projects which generally require specialized engineering expertise, specific combinations of equipment and experience in performing complex projects. From 1991 to 1997, Great Lakes achieved a 38% U.S. bid market share of the Capital projects. The Corps has recently announced 18 new Deep Port projects to be completed through 2005. The Corps has estimated the aggregate dollar value of these projects to exceed $2.2 billion (of which bidding for approximately $1 billion of such projects is scheduled to commence in 1998) compared to $887 million of projects bid between 1986 and 1997. The Company's cumulative bid market share of Deep Port projects was 76% from 1991 to 1997. The Company believes its extensive experience on complex projects significantly enhances its ability to profitably bid and complete these contracts. PROVEN, EXPERIENCED MANAGEMENT TEAM. The Company's senior managers include: Douglas B. Mackie, President and Chief Executive Officer; Richard M. Lowry, Executive Vice President and Chief Operating Officer; and Bruce J. Biemeck, Senior Vice President and Chief Financial Officer, who have an average of 17 years of experience in the dredging industry. The Company believes that its experienced management team provides it with a significant advantage over its competitors, many of whom are family owned and managed. As a result of the Transaction, the management of the Company owns approximately 16% of the issued and outstanding common stock of Great Lakes. BUSINESS STRATEGY The Company's strategy is to continue to grow contract revenues and cash flow and strengthen its competitive position worldwide. The principal elements of this strategy include: 48 CONTINUE TO GROW IN DOMESTIC MARKETS. The Company expects to strengthen its domestic leadership position by leveraging (i) the size and breadth of its fleet, (ii) its industry-leading operating experience, (iii) its engineering expertise, and (iv) its efficient project management practices. For example, the Company has contracted to build a new backhoe at a cost of approximately $18 million, which will enhance its ability to compete for and execute new Deep Port projects. To further enhance the Company's operating capabilities, on July 27, 1998, the Company entered into an agreement with T.L. James & Company, Inc., a significant competitor, to acquire, at a cost of approximately $14.5 million, a large hydraulic dredge and midsize hydraulic dredge together with support equipment, inventory and spare parts. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." GROW ESTABLISHED FOREIGN MARKET BASE. Since the early 1990s, a consolidation among certain foreign competitors, together with an increase in foreign governments' port infrastructure investments, have resulted in new overseas dredging opportunities for Great Lakes. In 1997, the Company recorded approximately $55.9 million in revenue from non-U.S. dredging projects. The Company intends to continue to selectively pursue international opportunities that offer it the potential to increase the utilization of its asset base, to leverage its project management capabilities and to expand its non-U.S. dredging market share. EXPLOIT GROWTH IN CONTROLLED DISPOSAL DREDGING. In recent years, in response to more stringent regulations governing the disposal of dredged materials, certain of the Company's projects have required dredged materials to be disposed of in a more controlled manner. The Company believes it is well positioned to exploit this trend due to its equipment mix, its operating expertise and its joint venture with the owner and operator of two fully permitted upland disposal sites in New Jersey, which represent a substantial percentage of the upland disposal capacity in the greater New York City area. During 1997, Great Lakes completed $12.0 million of controlled disposal dredging projects. The Company has estimated that over $100 million of dredging revenue related to projects requiring upland disposal is expected to be completed through 2005 in New York and New Jersey. OPERATIONS U.S. Capital Dredging. Capital dredging projects are primarily from expansion projects, which involve the deepening of channels to allow larger, deeper draft ships and providing land fill for building additional port facilities, thereby enhancing port profitability and competitiveness. The Company's cumulative bid market share of Deep Port projects was 76% from 1991 to 1997. Capital projects also include other land reclamations, trench digging, and other construction-related dredging. 49 U.S. Capital includes Deep Port projects authorized under the 1986 Water Resource Development Act, as amended and supplemented ("WORDA"). In 1986, WORDA authorized the deepening of 39 ports and subsequently authorized additional port deepening projects and modifications to previously authorized projects. As of the date of this Offering Memorandum, port deepening projects have commenced or been completed in Norfolk, VA, Baltimore, MD, Mobile, AL, New York, NY, Miami, FL, Oakland, CA, Los Angeles, CA and Long Beach, CA. The budgeted cost of all federally authorized Deep Port projects is expected to be in excess of approximately $3.0 billion. Great Lakes has had a bid market share of 65.4% on the $887.0 of Deep Port projects awarded since WORDA was enacted in 1986. Increasing competition among ports has resulted in added pressure on the Corps and Congress to schedule projects previously approved but not yet put out for bid. Additionally, funding for announced projects has also increased significantly during the past 12 months due to (i) increased federal funding, and (ii) increased cost sharing of Capital projects by local governments. As a result, the Corps has announced over $2.2 billion of Capital projects to be let for bid and executed over the next seven years, of which the bidding for approximately $1.0 billion of such projects is scheduled to commence in 1998. The table below lists the Deep Port projects, estimated size and expected time frame for construction identified by the Corps for bid through 2005. See "Risk Factors--Dependence on Government Contracts and Funding." DEEP PORT PROJECTS PLANNED THROUGH 2005
ESTIMATED SIZE EXPECTED TIME FRAME (MILLIONS) FOR CONSTRUCTION Arthur Kill/Kill Van Kull, NY.................... $ 750 1999-2005 Houston Ship Channel, TX......................... 250 1998-2004 Cape Fear River, NC.............................. 248 2000-2003 Delaware River, PA............................... 236 2000-2003 Oakland, CA...................................... 124 2001-2004 Charleston Harbor, SC............................ 117 1999-2002 Columbia River, OR............................... 100 2002-2003 San Diego Harbor, CA............................. 87 2001-2003 Baltimore Harbor, MD............................. 63 2002-2004 Savannah, GA..................................... 60 2000-2001 San Juan Harbor, Puerto Rico..................... 50 1998-2000 Los Angeles/Long Beach, CA....................... 45 1998-1999 Brunswick, GA.................................... 40 1999-2001 Jacksonville Harbor, FL.......................... 40 2000-2002 Humbolt Harbor, CA............................... 15 1998-1999 ------ Total........................................ $2,255 ======
Capital dredging involves a higher level of complexity and the use of specialized equipment. These requirements limit the number of competitors qualified to perform this type of work. The Company's experience, expertise and extensive and diverse equipment fleet make Great Lakes the leading provider of dredging services with a significant cumulative bid market share of all Capital projects, approximately 38% over the last seven years. Maintenance. Maintenance dredging consists of the redredging of waterways and harbors to remove silt, sand, and other accumulated sediments. Channels are typically redredged to depths established prior to recent sedimentation. Due to natural sedimentation, active channels generally require Maintenance dredging every one to three years, thus creating a continuous source of dredging work that is typically non-deferrable if optimal navigability is to be maintained. The frequency of Maintenance dredging requirements is often accelerated by snowfall or heavy rainfall in the midwest which causes additional siltation in the Mississippi River and its tributaries. 50 The majority of Maintenance dredging work is contracted by the Corps. Other entities which contract Maintenance dredging include state and local governments, port authorities, private enterprises, and foreign entities. Equipment utilized in Maintenance work varies with the specifications of the project. The Corps' Maintenance dredging program has grown since 1990 due to both additional ongoing dredging required in channels deepened under the WORDA legislation and the execution by the private sector of work previously done by the Corps. In 1994, the Corps reduced the level of utilization of its hopper dredging fleet by 20.0% and awarded this additional work to the private sector. In addition, pursuant to federal legislation enacted in late 1997, the Corps idled the largest of its four hopper dredges, which are the only Corps dredges that compete with the Company. The legislation provides that if the private sector's performance is satisfactory, the idled Corps dredge will be permanently idled, which will provide the private sector with additional business opportunities. The Company believes that the maintenance market will be favorably impacted by a number of factors, including but not limited to: (i) increasing demands by the shipping industry to maintain ports more frequently to ensure proper depths for increasingly larger deeper draft ships, and (ii) additional maintenance required upon the completion of Capital-related projects, as deeper channels tend to accumulate sediment more rapidly. In recent years, in response to more stringent regulations governing the disposal of dredged materials, certain of the Company's projects have required dredged materials to be disposed of in a more controlled manner. The Company believes it is well positioned to exploit this trend due to its equipment mix, its operating expertise and its joint venture with the owner and operator of two fully permitted upland disposal sites in New Jersey, which represent a substantial percentage of the upland disposal capacity in the greater New York City area. During 1997, Great Lakes completed $12.0 million of controlled disposal dredging projects. The Corps has estimated that over $100.0 million of dredging revenue related to projects requiring upland disposal is expected to be completed through 2005 in New York and New Jersey. Beach Nourishment. Beach Nourishment dredging projects generally involve moving sand from the ocean floor to shoreline locations and typically arise when beach erosion has progressed to a stage that threatens substantial shoreline assets. Beach Nourishment achieves a more esthetic result than trapping sand through the use of sea walls and jetties, and a more economic response to relocating buildings and other assets from the shoreline. Primary customers for Beach Nourishment jobs are federal, state and local agencies and municipalities. Beach Nourishment projects have become in recent years a more important component of the dredging industry. The increased commercial development of U.S. shorelines, combined with their continual erosion, has created potential replenishment opportunities on hundreds of miles of coastline, particularly on the East Coast. The offshore areas from which replacement sand is dredged, known as borrow areas, are increasingly located further from the beach, which (i) requires in certain cases the use of ocean-certified dredges, of which the Company has the largest U.S. fleet, and (ii) limits the ability to directly pump the sand. This benefits the Company because it has the largest fleet of ocean-certified vessels which are capable of performing this activity. During the period from 1960 through 1985, a substantial amount of beach rebuilding was performed. However, there was an inadequate amount of follow-up maintenance performed subsequent to 1985. Since 1996, the Beach Nourishment market has improved due to (i) an increased amount of follow-up work and (ii) the recent increase in the severity of the storm and hurricane activity along the eastern seaboard. Foreign Dredging Operations. Since 1993, the Company has established itself as a capable and competitive provider of international dredging services for Capital projects. Great Lakes has built strong relationships with certain foreign customers due to its willingness to redesign projects, its ethical business practices and the desire of certain foreign governments to conduct business with U.S. firms. Great Lakes is now routinely invited to bid on projects in certain foreign markets and as a result has been successful in increasing its foreign business. Since 1993, the Company has worked in Europe, the Middle East, Africa, Mexico and South America. In 1997, 22% of the Company's contract revenues were derived from international dredging projects. 51 JOINT VENTURES Amboy. The Company and a New Jersey aggregates company each own 50% of Amboy. Amboy was formed in December 1984 to mine sand from the entrance channel to the New York harbor and to process, transport, and market fine aggregate, which is used principally as an ingredient in ready-mix concrete and asphalt. Great Lakes' dredging expertise and its partner's knowledge of the aggregate market formed the basis for the joint venture. Amboy is accounted for by the Company under the equity method. See "Management's Discussion and Analysis of Financial Conditions and Results of Operations." Amboy is the only East coast aggregate producer to mine sand from the ocean floor. In 1988 Amboy built a specially designed dredge at a cost of $9.0 million for sand mining, de-watering and dry delivery. No other vessel of this type operates in the U.S. Amboy's ocean-based supply of sand provides a long- term competitive advantage in the Northeast as land-based sand deposits are depleted or rendered less cost competitive by escalating land values. Mining operations are performed pursuant to permits granted to Amboy by the federal government and the states of New York and New Jersey. Amboy is in the process of obtaining permits to mine sand in new borrow areas which contain aggregate more closely meeting the specifications for concrete sand. These new sources will require less blending of material with the dredged aggregate, reducing the cost of the final product and improving margins. The Company believes that these permits are likely to be obtained in the next 18 months. However, there can be no assurance that such permits will be obtained. Argentine Joint Venture. In 1996, Great Lakes acquired a 14% interest in Riovia, a joint venture with four leading European dredging firms and two Argentine dredging firms to dredge the long neglected Rio Via channel linking Buenos Aires, Argentina and Montevideo, Uruguay which is important for shipping to Argentina and Uruguay. This venture has afforded Great Lakes the opportunity to work with other international dredging companies to design, manage and execute this project. CUSTOMERS More than 400 ports and 25,000 miles of navigation channels are dredged throughout the U.S. in order to keep ship traffic operating efficiently. The dredging industry's customers include federal, state, and local governments, foreign governments, and both domestic and foreign private concerns such as utilities and oil companies. Most dredging projects are competitively bid, with the award going to the lowest bonded bidder. There are generally few economic substitutes that customers can use for dredging services. Foreign governments are the primary dredging customers in international markets, generally for capital projects relating to infrastructure development. See "Risk Factors--Dependence on Government Contracts and Funding." The Corps is the largest dredging customer in the U.S. and has responsibility for federally funded projects related to navigation and flood control. In addition, the United States Coast Guard and the United States Navy are responsible for awarding federal contracts with respect to their own facilities. Until the early 1970's, the Corps used its own fleet to execute nearly all of its authorized maintenance dredging. In 1973, Congress imposed a moratorium on upgrading the Corps' dredging fleet in response to industry pressure which challenged the efficiency of the Corps' operation. Legislation was ultimately passed by Congress in 1978 limiting the Corps' fleet of dredges to a size and configuration considered necessary only for emergencies and national defense. As a result, its fleet was reduced from 42 dredges in 1976 to 12 dredges in 1998. Currently, only the Corps' four hopper dredges compete directly with the Company. Furthermore, the Corps recently idled the largest of its four remaining hopper dredges for a two-year test program. The Corps is currently conducting a study on alternatives to operating its remaining fleet, but the Corps is prohibited from selling any of its fleet for use in the U.S. BIDDING PROCESS Most dredging contracts are obtained through competitive bidding on terms specified by the party inviting the bid. The nature of the specified services dictates the types of equipment, material and labor involved, all of which affect the cost of performing the contract and the price that dredging contractors will bid. 52 For contracts under its jurisdiction, the Corps typically prepares a cost estimate based on its understanding of the availability of contractors and their equipment. To be successful, a bidder must be determined by the Corps to be a responsible bidder (i.e., a bidder that generally has the necessary equipment and experience to successfully complete the project) and submit the lowest responsive bid that does not exceed 125% of an estimate determined by the Corps to be fair and reasonable. With respect to projects that are not administered by the Corps, contracts are generally awarded to the lowest qualified bidder, provided such bid is no greater than the amount of funds that are available for such project. Substantially all of the Company's contracts are competitively bid. However, some government contracts are awarded by a sole source procurement process through negotiation between the contractor and the government. Prior to negotiations, the contractor submits a proposal and cost and pricing data to the government. Under such contracts, the government has the right, after award and/or completion of the contract, to audit the contractor's books and records, including the proposal and data available to the contractor during negotiations, to ensure compliance with the contract and applicable federal legislation, rules and regulations. The government may seek a price adjustment based on the results of such audit. Great Lakes has operated for over 100 years and maintains an extensive historical database of dredging production records from its own and its competitors' activities and past bidding results. Prior production records help the Company predict sediment composition and optimum equipment requirements. Management believes that its extensive database and its accumulated estimating and bidding expertise allow the Company to be more accurate than its competitors in predicting dredging cost, prior to bidding for contracts. BONDING AND FOREIGN PROJECTS GUARANTEES For most domestic projects and some foreign projects, dredging service providers are required to obtain three types of bonds, which are typically provided by large insurance companies. A bid bond is required to serve as a guarantee that if a service provider's bid is chosen, the service provider will sign the contract. The amount of the bond is typically 20% of the service provider's bid, up to a maximum bond of $3.0 million. After a contract is signed, the bid bond is replaced by a performance bond, the purpose of which is to guarantee that the job will be completed. A performance bond typically covers 100% of the contract value with no maximum bond amounts. If the service provider fails to complete a job, the bonding company assumes such obligation and pays to complete the job, generally by using the equipment of the defaulting company. A company's ability to obtain performance bonds with respect to a particular contract depends upon the size of the contract, as well as the size of the service provider and its financial position. A payment bond is also required to protect the service provider's suppliers and subcontractors in the event that the service provider cannot make timely payments. Payment bonds are generally written in amounts ranging from 40% to 50% of the contract value, up to a maximum of $2.5 million. Great Lakes has never failed to complete a project during its 108 year history, and therefore a performance bond has never been called. This reflects (i) the fact that the range of work performed by Great Lakes is limited and often repetitive; (ii) the relatively short duration of most projects and (iii) Great Lakes' broad experience in most U.S. harbors. The Company's projects have been bonded by Reliance Surety Company ("Reliance") since 1985, with whom it believes it has a good relationship. The Company has not experienced difficulty in obtaining bonding from Reliance for any of its projects. If the Company were to fail to complete a project, the bond provider would be required to either (i) permit the customer to complete the job and reimburse the customer for the cost of completion or (ii) complete the defaulted contract utilizing the Company's equipment and labor force or a third party service provider. In the event the bonding company were to complete the defaulted contract, it would be entitled to be paid the contract price directly by the customer. However, the bonding company would be entitled to be paid by the Company an amount equal to the difference, if any, between the contract price and the cost of completing the project plus a profit margin thereon. For most foreign projects, letters of credit or bank guarantees issued by foreign banks, which are secured by letter of credit issued under the Credit Agreement, are required as security for the bid, performance and, if 53 applicable, advance payments. Foreign bid guarantees are usually 2% to 5% of the service provider's bid. Foreign performance and advance payment guarantees are each typically 5% to 10% of the contract value. COMPETITIVE ENVIRONMENT The U.S. dredging industry is highly fragmented but has experienced significant consolidation in recent years. Approximately 180 entities in the U.S. presently operate more than 600 dredges, most of which are smaller, serve the inland, as opposed to coastal, waterways and therefore do not compete with Great Lakes. Competition in the Company's markets is based mainly on the basis of price, and competition is often limited by the size of the job, equipment requirements, bonding requirements, certification requirements, or government regulations. Currently, Great Lakes and two competitors are the only dredging companies which independently bid on jobs with values in excess of $50.0 million. Most dredging competitors concentrate their efforts in certain regions and operate only one type of dredge. The Company believes the concentration is usually the result of (i) a limited capital base from which to expand operations, (ii) familiarity with the local markets and (iii) expertise with a particular type of equipment. Regional concentrations do not allow these competitors to respond to opportunities in other regions or to diversify their risks in the event of a temporary decline in the market in their area. A company with a variety of equipment, such as Great Lakes, is better able to respond to changes in demand for certain types of dredges and can select the most suitable equipment for any particular project, minimizing its project completion cost. Additionally, Great Lakes, with its extensive fleet and engineering expertise, can readily meet applicable certification, government and bonding requirements. EQUIPMENT OVERVIEW Great Lakes' dredging fleet is the largest in the western hemisphere and one of the largest fleets in the world. The fleet consists of over 180 pieces of equipment, including the largest hopper, and most of the large hydraulic dredges in the U.S. The following table provides a listing of the Company's fleet of equipment. FLEET OF EQUIPMENT (1)
TYPE OF EQUIPMENT QUANTITY Hydraulic Dredges...................................................... 10 Hopper Dredges......................................................... 8 Clamshell Dredges...................................................... 7 Unloaders.............................................................. 2 Drill Boats............................................................ 2 Dump Barges............................................................ 20 Hopper Barges.......................................................... 9 Deck Barges............................................................ 32 Other Barges........................................................... 23 Booster Pumps.......................................................... 6 Tugs................................................................... 10 Launches............................................................... 19 Derricks............................................................... 6 Cranes................................................................. 7 Loaders/Dozers......................................................... 10 Survey Boats........................................................... 13 --- Total................................................................ 184 ===
- -------- (1) In addition, the Company has entered into an agreement to purchase two hydraulic dredges and support vessels and is building a backhoe dredge. 54 Along with being among the largest and most versatile in the U.S., five of Great Lakes' hoppers are split-hulled (to facilitate dumping) and self propelled. In addition, the Company operates the only two large electric dredges in the U.S., which makes Great Lakes particularly competitive in markets with stringent emissions standards (such as southern California). The Company also has the largest fleet of material transportation barges in the industry which provide cost advantages when dredged material is required to be disposed of far offshore or when transporting material requiring controlled disposal. The Company is committed to preventive maintenance, which it believes is reflected in the long life of most of its equipment and its low level downtime on jobs. The Company spent $17.3 million on maintenance in 1997, in addition to approximately $11.5 million on capital expenditures. Great Lakes' domestic fleet is typically positioned on the East and West coast with a smaller number of vessels on the Gulf of Mexico and on the inland rivers. The mobility of the Company's fleet enables Great Lakes to move equipment in response to changes in demand. The Company believes that on average, its dredge equipment capacity utilization based on actual operating time is among the highest in the industry. Great Lakes' international fleet is currently positioned in the Middle East, Europe, Africa, Puerto Rico and Central and South America. There are three primary types of dredging equipment: hopper dredges, hydraulic dredges and mechanical dredges. Hopper Dredges. Hopper dredges are self-propelled with molded hulls and have the general appearance of an ocean-going vessel. The dredge has hollow hulls into which material is suctioned hydraulically through dragarms and deposited. Once the hollow hulls or "hoppers" are filled, the dredge will sail to the designated disposal site and either (i) bottom dump the material or (ii) pump the material from the hoppers through a pipeline to the designated site. Hopper dredges can operate in rough waters, are less likely to interfere with ship traffic and can move quickly from one project to another. Hydraulic Dredges. Hydraulic dredges remove material using a revolving cutterhead which cuts and churns the sediment on the ocean floor and hydraulically pumps the material by pipe to the disposal location. These dredges are very powerful and can dredge some types of rock. Certain dredged materials can be directly pumped as far as seven miles with the aid of a booster pump. Hydraulic dredges work with an assortment of support equipment which help with the positioning and movement of the dredge, handling of the pipelines, and the placement of the dredged material. Mechanical Dredges. There are two basic types of mechanical dredges: clamshell and backhoe. In all cases the dredge uses a bucket which excavates the material from the ocean floor. The dredged material is placed by the bucket into material barges or "scows" for transport to the designated disposal area. The scows are emptied by bottom-dumping, direct-pump out or removal by a crane with a bucket. Mechanical dredges are capable of removing hardpacked sediments and debris and can work in tight areas such as along docks or terminals. Clamshell dredges with specialized buckets are ideally suited to handle material requiring controlled disposal. Future Equipment Needs. The current Great Lakes fleet is sufficient to meet the demand associated with the anticipated future Maintenance dredging and Beach work. A significant portion of the upcoming Capital projects will require the use of a special type of backhoe dredge. Great Lakes has contracted to build a backhoe dredge for delivery in early 1999 to meet the anticipated timing for these projects. Great Lakes believes that this new dredge will significantly enhance its ability to efficiently bid and execute a substantial portion of the upcoming Capital projects. To further enhance the Company's operating capabilities, on July 27, 1998 the Company entered into an agreement with T.L. James & Company, Inc., a significant competitor, to acquire a large hydraulic dredge and midsize hydraulic dredge together with support equipment, inventory and spare parts. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." 55 EQUIPMENT CERTIFICATION Certification of equipment by the U.S. Coast Guard and the establishment of the permissible loading capacity by the American Bureau of Shipping ("A.B.S.") are important factors in Great Lakes business. Many projects, such as Beach Nourishment projects with offshore sand, dredging projects in exposed entrance channels, and dredging projects with offshore disposal areas, are restricted by federal regulations to be performed only by dredges or scows that have U.S. Coast Guard certification and a load line established by the A.B.S. The certifications indicate that the dredge is structurally capable of operating in open waters. GOVERNMENT REGULATIONS The Company is subject to government regulation pursuant to the dredging statute (46 U.S.C. Section 292) which protects the United States dredging industry from competition from foreign-built dredges. The law prohibits foreign-built vessels (absent special legislative action) from competing in the United States dredging market. Dredges operating in the navigable waters of the United States must also meet the coastwise trade requirements of the Jones Act (Section 27 of the Merchant Marine Act, 1920) and Section 2 of the Shipping Act, 1916, as amended, and must have a coastwise endorsement pursuant to the Vessel Documentation Act (46 U.S.C. Section 12101 et seq.). These acts prohibit vessels owned or controlled by entities which are less than 75% owned and controlled by United States citizens from transporting dredged material between points in the United States. The Company's operations and facilities are subject to a variety of federal and state environmental statutes and regulations. In addition, the Company is required to comply with federal and state statues designed to protect certain species and habitats. EMPLOYEES Currently, the Company employs approximately 220 full-time salaried personnel, with additional hourly personnel hired on a project-by-project basis. During 1997, the Company employed an average of approximately 500 hourly personnel, most of whom are unionized, on a project-by-project basis. Crews are generally available for hire on relatively short notice. The Company is a party to more than twenty-five collective bargaining agreements that govern its relationship with its hourly personnel. Six primary agreements apply to more than ninety percent of such employees, which are listed below with the corresponding expiration dates of the agreements. (1) Northern Labor Agreement--Local 25, Marine Division, International Union of Operating Engineers, AFL-CIO, expires October 1, 1999 (2) Southern Labor Agreement--Local 25, Marine Division, International Union of Operating Engineers, AFL-CIO, expires February 1, 2000 (3) Seafarers International Union of America--Licensed Agreement, expires March 1, 2000 (4) Seafarers International Union of America--Unlicensed Agreement, expires March 1, 2000 (5) Northern California Agreement--Local 3, International Union of Operating Engineers, expires March 1, 2000 (6) Southern California Master Labor Agreement--Local 12, International Union of Operating Engineers ("Local 12"), expired August 1, 1998, which agreement was extended until August 1, 2001 pursuant to an agreement in principle. During the past five years the only collective labor disruption experienced by the Company was a strike by Local 12, in August 1995 at the Company's Los Angeles, California project site. There can be no assurance that the Company will not experience labor strikes or disturbances in the future. 56 LEGAL AND ENVIRONMENTAL MATTERS In the ordinary course of business, Great Lakes is engaged in various litigation. However, management does not believe any current litigation is material to the Company's operation or financial position. In 1992, an underwater utility tunnel located beneath the Chicago Loop failed adjacent to a construction site completed by Great Lakes during the fall of 1991. The failure resulted in a flooding of the tunnel and building basements serviced by the tunnel. Numerous suits were filed against the Company for claims of flood damage and losses due to business interruption. During 1997 all remaining claims were settled relating to the Chicago Flood Litigation. In 1988 Great Lakes and a subsidiary entered into a plea agreement with the United States of America wherein Great Lakes and the subsidiary agreed to plead guilty to five violations of the Sherman Antitrust Act for conspiring to rig bids on projects between 1981 and 1985. The employment of all former officers of the Company who were involved in the alleged improper bidding activities was terminated in 1986. Great Lakes and the subsidiary were never debarred from bidding by any State or Federal Agency as a result of the improper bidding activities. Great Lakes is not currently involved in any material environmental or related claims or legal matters. The Company's operations and facilities are subject to a variety of federal and state environmental statutes and regulations, including those regulating dredging operations, the disposal of dredged material, wetlands, storm and waste water discharges, air emissions and the handling of certain substances. The scope of such statutes and regulations and parties liable thereunder have been afforded broad interpretations by state and federal regulators and courts. In addition, the Company is required to comply with federal and state statutes designed to protect certain species and habitats. Such compliance can delay the authorization of, appropriation with respect to, and performance of, particular projects and increase expenses in connection therewith. The Company cannot predict what environmental laws will be enacted in the future, how existing or future environmental laws will be administered or interpreted or what environmental conditions may be found to exist on its properties. Compliance with more stringent environmental laws, as well as more vigorous enforcement policies of the regulatory agencies or stricter interpretation of those laws, and discovery of new conditions may require additional expenditure by the Company. There can be no assurance that one or more of the foregoing will not have a material adverse effect on the Company. BACKLOG The Company's contracts backlog represents management's estimate of the revenues which will be realized under the Company's contracts remaining to be performed based upon estimates relating to, among other things, the time required to mobilize the necessary assets at the project site, the amount of material necessary to be dredged and the time necessary to demobilize the project assets. However, such estimates are necessarily subject to fluctuations based upon the amount of material which actually must be dredged, as well as factors affecting the time required to complete the job. Consequently, backlog is not necessarily indicative of future sales. In addition, because all of the Company's backlog relates to government contracts, the Company's order backlog can be canceled at any time without penalty, except, in some cases, the recovery of the Company's actual committed costs and profit on work performed up to the date of cancellation. The Company's backlog does not include contract revenues with respect to project bids that have been awarded to the Company but for which the Company's customer has not provided an executed contract, which, as of June 30, 1998, includes $5.4 million of contracts on which the Company was the low bidder, but which had not yet been awarded to the Company. As of December 31, 1997, the Company had a backlog of contract revenues of $155.3 million, which represents an increase of $47.4 million, or 43.9%, over December 31, 1996 backlog of $107.9 million. The 57 Company had backlog of $178.3 million at June 30, 1998, $115.7 of which the Company expects to complete in 1998, although there can be no assurance that all such backlog will be completed within that period. The largest component of backlog at December 31, 1997, was $79.8 million attributable to a large Capital project in Los Angeles. As of June 30, 1998, $62.6 million relating to this project remained in backlog which included $2.3 million of additional work awarded in the first six months of 1998. Additionally, backlog at June 30, 1998 includes $34.3 million attributable to the Boston Harbor Deep Port project won in the second quarter of 1998. 58 MANAGEMENT DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES Set forth below are the names, ages and positions with the Company of the persons who serve as the directors, executive officers and key employees of the Company.
NAME AGE POSITION - ---- --- -------- Douglas B. Mackie................ 46 President, Chief Executive Officer and Director Richard M. Lowry................. 43 Executive Vice President and Chief Operating Officer Bruce J. Biemeck................. 49 Sr. Vice President, Chief Financial Officer and Treasurer William F. Pagendarm............. 49 Vice President--Division Manager Steven F. O'Hara................. 43 Vice President--Division Manager Bradley T.J. Hansen.............. 45 Vice President--Division Manager Daniel L. Hussin................. 49 Vice President--Manager of U.S. Business Development Michael A. Delaney............... 44 Director David Wagstaff III............... 60 Director
Douglas B. Mackie--Mr. Mackie has been President, Chief Executive Officer and Director of the Company since 1995. Mr. Mackie joined the Company in 1978 as Corporate Counsel. In 1987 he was named Senior Vice President. Richard M. Lowry--Mr. Lowry has been the Executive Vice President and Chief Operating Officer of the Company since 1995. Mr. Lowry joined the Company in 1978 as a Project Engineer and has since held positions of increasing responsibility in the engineering and operating areas of the Company. In 1990 he was named Senior Vice President and Chief Engineer. Bruce J. Biemeck--Mr. Biemeck has been the Senior Vice President, Chief Financial Officer and Treasurer of the Company since 1994. Mr. Biemeck joined the Company as Controller in 1987. He was named Vice President, Chief Financial Officer and Treasurer in 1989. William F. Pagendarm--Mr. Pagendarm has been the Vice President and Division Manager of the Company since 1985. He joined the Company in 1979 as Project Superintendent. Steven F. O'Hara--Mr. O'Hara has been the Vice President and Division Manager of the Company since 1988. He joined the Company in 1978 as Cost Accountant. Bradley T.J. Hansen--Mr. Hansen has been the Vice President and Division Manager of the Company since 1994, and Vice President & General Superintendent of the Company from 1991 to 1994. He joined the Company in 1977 as Area Engineer. Daniel L. Hussin--Mr. Hussin has been Vice President--Manager of U.S. Business Development since 1995, and Vice President and Division Manager of the Company from 1973 to 1995. He joined the Company in 1972 as an Estimator. Michael A. Delaney--Mr. Delaney became a director of the Company upon consummation of the Transaction. Mr. Delaney has been a Managing Director of 399 Venture Partners Inc. and its affiliate Citicorp Venture Capital Ltd. since 1989. From 1986 through 1989, he was Vice President of Citicorp Mergers and Acquisitions. Mr. Delaney is also a director of GVC Holdings, JAC Holdings, CORT Business Services, Inc., Palomar Technologies, Inc., SC Processing, Inc., Triumph Group, Inc., CLARK Material Handling Inc., MSX International, Delco Remy International Inc., International Knife and Saw Inc., Fabri-Steel Products, Inc., Aetna Inc. AmeriSource Health Corporation and Allied Digital Technologies Inc. David Wagstaff III--Mr. Wagstaff became a director of the Company upon consummation of the Transaction. Mr. Wagstaff has served as President and Chief Executive Officer of Vectura Group, Inc. since 59 1993. He was previously the Principal in a private consulting business and has worked in various executive capacities at the Equitable Life Assurance Company and Citicorp. SUMMARY COMPENSATION TABLE The following table sets forth all cash compensation paid during 1997 to Great Lakes' Chief Executive Officer and the next four highest paid executive officers of the Company (collectively, together with the Chief Executive Officer, the "Named Executive Officers"): SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ------------------ ALL OTHER NAME AND PRINCIPAL POSITION SALARY BONUS (1) COMPENSATION (2) - --------------------------- -------- --------- ---------------- Douglas B. Mackie, President and CEO....... $286,700 $236,814 $ 134,140(3) Richard M. Lowry, Executive Vice President and Chief Operating Officer............... 248,000 204,848 113,586(4) Bruce J. Biemeck, Senior Vice President, Chief Financial Officer and Treasurer..... 176,400 114,484 72,891(5) William F. Pagendarm, Vice President, Division Manager.......................... 136,000 35,000 22,188(6) Bradley T.J. Hansen, Vice President, Division Manager.......................... 108,000 40,000 19,058(7)
- -------- (1) Attributable to 1997, but paid in 1998. (2) Includes employer matching contributions under Great Lakes 401(k) plan, profit sharing contribution under 401(k) plan and lost 401(k) benefit bonus due to IRS limitations. (3) Includes employer matching contributions under Great Lakes' 401(k) plan of $9,500, profit sharing contribution of $11,000 and payment of lost 401(k) benefit due to IRS limitations of $113,640. (4) Includes employer matching contributions under Great Lakes' 401(k) plan of $9,500, profit sharing contribution of $11,000 and payment of lost 401(k) benefit due to IRS limitations of $93,086. (5) Includes employer matching contributions under Great Lakes' 401(k) plan of $9,500, profit sharing contribution of $11,000 and payment of lost 401(k) benefit due to IRS limitation of $52,391. (6) Includes employer matching contributions under Great Lakes' 401(k) plan of $9,500, profit sharing contribution of $11,000 and payment of lost 401(k) benefit due to IRS limitation of $1,688. (7) Includes employer matching contributions under Great Lakes' 401(k) plan of $9,500 and profit sharing contribution of $9,558. EXECUTIVE EMPLOYMENT ARRANGEMENTS The Company has entered into an Employment Agreement, dated as of January 1, 1992, with Douglas B. Mackie. The employment agreement provides for an initial term of three years with automatic renewal for successive one year terms, unless sooner terminated by either party giving 90 days written notice prior to the end of the then current term. In addition, either party may terminate the employment agreement at any time, with or without cause, by giving the other party 30 days prior written notice. Mr. Mackie's current annual base salary under his employment agreement is $300,000, which is subject to annual increase as determined by the compensation committee of the Board of Directors, and benefits as provided from time to time by the Company to its senior executives. In the event Mr. Mackie resigns for good reason (defined to include, among other things, a material breach of the employment agreement by the Company) or the employment agreement is otherwise terminated by the Company for any reason other than cause, death or permanent disability, Mr. Mackie will be entitled to receive severance compensation in the amount equal to the sum of (a) Mr. Mackie's current annual current base salary and (b) a bonus calculated by multiplying current base salary by the average percentage of Mr. Mackie's base salary represented by the bonuses Mr. Mackie received during the term of the employment agreement. 60 During the term of the employment agreement and for one year thereafter, Mr. Mackie is prohibited from directly or indirectly carrying on, engaging or having a financial interest in any business which is in material competition with the business of the Company. The Company has also entered into employment agreements with Richard M. Lowry and Bruce J. Biemeck, which agreements contain terms substantially similar to Mr. Mackie's employment agreement, other than the amount of base salary and the office held. Mr. Lowry's and Mr. Biemeck's current annual base salaries under their respective employment agreements are $260,000 and $195,000, respectively. 61 OWNERSHIP OF CAPITAL STOCK The following table sets forth certain information with respect to the beneficial ownership of the preferred stock and common stock of the Company immediately following the Transaction.
NUMBER AND PERCENT OF SHARES ------------------------------------------------ PREFERRED STOCK CLASS A STOCK CLASS B STOCK -------------- --------------- ----------------- NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT ------------------------ ------ ------- ------- ------- --------- ------- Vectura Holding Company LLC... 41,818 92.9% 818,000 49.9% 3,363,900 100% c/o Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 Douglas B. Mackie............. 930 2.1% 208,000 12.7% -- -- c/o Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 Richard M. Lowry.............. 930 2.1% 208,000 12.7% -- -- c/o Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 Bruce J. Biemeck.............. 700 1.6% 149,800 9.2% -- -- c/o Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 William F. Pagendarm.......... 130 0.3% 33,000 2.0% -- -- Bradley T. J. Hansen.......... 130 0.3% 33,000 2.0% -- -- All directors and executive officers as a group.......... 3,080 6.8% 697,800 42.7% -- --
DESCRIPTION OF CAPITAL STOCK PREFERRED STOCK The Company's Certificate of Incorporation provides that the Company may issue 250,000 shares of preferred stock, all of which is designated as 12% Series A Cumulative Compounding Preferred Stock (the "Preferred Stock"). The Preferred Stock has a stated value of $1,000 per share and is entitled to annual dividends when, as and if declared, which dividends are cumulative, whether or not earned or declared, and accrue at a rate of 12%, compounding annually. The vote of a majority of the outstanding shares of the Preferred Stock, voting as a separate class, is required to (i) create, authorize or issue any other class or series of stock entitled to a preference prior to the Preferred Stock upon any dividend or distribution or any liquidation, distribution of assets, dissolution or winding up of the Company, or increase the authorized amount of any such other class or series, or (ii) amend the Company's Certificate of Incorporation if such amendment would adversely affect the relative rights and preferences of the holders of the Preferred Stock. Except as described in the immediately preceding sentence or as otherwise required by law, the Preferred Stock is not entitled to vote. The Company may not pay any dividend upon (except for a dividend payable in Junior Stock, as defined below), or redeem or otherwise acquire shares of, capital stock junior to the Preferred Stock (including the Common Stock) ("Junior Stock") unless all cumulative dividends on the Preferred Stock have been paid in full. Upon liquidation, dissolution or winding up of the Company, holders of Preferred Stock will be entitled to receive out of the legally available assets of the Company, before any amount shall be paid to holders of Junior Stock, an amount equal to $1,000 per share of Preferred Stock, plus all accrued and unpaid dividends to the date of final 62 distribution. If such available assets are insufficient to pay the holders of the outstanding shares of Preferred Stock in full, such assets, or the proceeds thereof, will be distributed ratably among such holders. The Preferred Stock will not be mandatorily redeemable prior to the maturity of the Notes. The Company may optionally redeem, in whole or in part, the Preferred Stock at any time at a price per share of $1,000, plus accrued and unpaid dividends to the date of redemption. At the option of the Company, the Preferred Stock may be exchanged for junior subordinated debentures of the Company, subject to the Company's compliance with the requirements of the New Credit Facility, the New Bonding Agreement and the Notes. The Company currently anticipates that the dividends on the Preferred Stock will be declared and accrued but not paid. The ability of the Company to pay cash dividends, and to redeem the Preferred Stock, is subject to restrictions contained in the New Credit Facility, the New Bonding Agreement and the Notes. COMMON STOCK The Certificate of Incorporation of the Company provides that the Company may issue 50 million shares of Common Stock, divided into two classes consisting of 25 million shares of Class A Stock and 25 million shares of Class B Stock. The holders of Class A Stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. Except as required by law, the holders of Class B Stock have no voting rights. Under the Company's Certificate of Incorporation, a holder of either class of Common Stock may convert any or all of his shares into an equal number of shares of the other class of Common Stock; provided that in the case of a conversion from Class B Stock, which is nonvoting, into Class A Stock, which is voting, the holders of shares to be converted would be permitted under applicable law to hold the total number of shares of Class A Stock which would be held after giving effect to the conversion. STOCKHOLDERS' AGREEMENT In connection with the Transaction, the stockholders of the Company entered into a Securities Purchase and Holders Agreement (the "Stockholders' Agreement") containing certain agreements among such stockholders with respect to the capital stock and corporate governance of the Company. The following is a summary description of the principal terms of the Stockholders' Agreement. Pursuant to the Stockholders' Agreement, the Board of Directors of the Company is composed of up to five directors, which include: Mr. Mackie (so long as he continues to be President of the Company and own shares of Common Stock or Preferred Stock); the President of the Company if Mr. Mackie is no longer serving on the Board of Directors; up to two individuals designated by Vectura; and the remaining directors shall be such independent directors as shall be designated by Vectura (to the extent permitted by applicable law as determined by Vectura in its sole discretion), provided that in the event that Vectura concludes that it is unable to designate, or elects not to designate for any reason, one or more of such independent directors or the election of any such independent director is not approved by the holders of a majority of the outstanding shares of Class A Stock, such directorship(s) shall not be filed by the remaining members of the Board of Directors but shall remain vacant until the election of a director designated by Vectura to fill such vacancy in accordance with the Stockholders' Agreement. The Stockholders' Agreement contains certain provisions which, with certain exceptions, restrict the ability of the stockholders to transfer any Common Stock or Preferred Stock except pursuant to the terms of the Stockholders' Agreement. If holders of more than 50% of the Common Stock approve the sale of the Company (an "Approved Sale"), each stockholder has agreed to consent to such sale and, if such sale includes the sale of stock, each stockholder has agreed to sell all of such stockholder's Common Stock and Preferred Stock on the terms and conditions approved by holders of a majority of the Common Stock then outstanding. In the event the Company proposes to issue and sell (other than in a public offering pursuant to a registration statement) any shares of Common Stock or any securities containing options or rights to acquire any shares of Common Stock or any securities convertible into Common Stock to Vectura or any of its respective affiliates, the Company must first offer to each of the other shareholders a pro rata portion of such shares. Such preemptive rights will not be applicable to the issuance of shares of Common Stock upon conversion of shares of one class of Common Stock 63 into shares of the other class. Subject to certain limitations neither Vectura, nor any of its respective affiliates, may sell any of their shares of Preferred Stock or Common Stock without offering the other stockholders a pro rata opportunity to participate in such sale. The Stockholders' Agreement also provides for certain additional restrictions on transfer of shares by Management Investors, including the right of the Company to repurchase certain shares upon termination of such stockholder's employment prior to 2003, at a formula price, and the grant of a right of first refusal in favor of the Company in the event a Management Investor elects to transfer shares of Common Stock. STOCKHOLDERS' REGISTRATION RIGHTS AGREEMENT In connection with their entry into the Stockholders' Agreement, the Company, Vectura, the Management Investors and certain other stockholders of the Company entered into the Stockholders' Registration Rights Agreement. Pursuant to the Stockholders' Registration Rights Agreement, upon the written request of Vectura, the Company will prepare and file a registration statement with the Securities and Exchange Commission concerning the distribution of all or part of the shares held by Vectura and use its best efforts to cause such registration statement to become effective. If at any time the Company files a registration statement for the Common Stock pursuant to a request by Vectura or otherwise (other than a registration statement of Form S-8, Form S-4 or any similar form, a registration statement filed in connection with a share exchange or an offering solely to the Company's employees or existing stockholders, or a registration statement registering a unit offering (as defined)) (a "Qualifying Offering"), the Company will use its best efforts to allow the other parties to the Stockholders' Registration Rights Agreement to have their shares of Common Stock (or a portion of their shares under certain circumstances) included in such offering of Common Stock. Registration expenses of the selling stockholders (other than underwriting fees, brokerage fees and transfer taxes applicable to the shares sold by such stockholders or in certain cases the fees and expenses of any accountants or other representatives retained by a selling stockholder) will be paid by Company. 64 DESCRIPTION OF THE NEW CREDIT FACILITY As part of the Transaction, the Company entered into a New Credit Facility with a group of financial institutions (the "Lenders"), arranged by Bank of America National Trust and Savings Association ("B of A"), with Bank of Montreal, Chicago Branch, as the documentation agent and B of A acting as the administrative agent for the Lenders ("Agent"). The New Credit Facility provides for (i) the Revolving Credit Facility in the maximum amount of $55.0 million and (ii) a term loan facility (the "Term Loan Facility") in the amount of $55.0 million. At Closing, the Company borrowed approximately $55.0 million under the Term Loan Facility and approximately $7.1 million under the Revolving Credit Facility. In addition, approximately $10.0 million of face amount of letters of credit was outstanding under the Revolving Credit Facility at closing. The Revolving Credit Facility enables the Company to obtain revolving credit loans and standby letters of credit for the account to the Company from time to time for working capital, acquisitions and general corporate purposes. The New Credit Facility will expire on the six and one- half year anniversary of the closing date. The loans under the Revolving Credit Facility will bear interest, generally at the Company's option, at a Base Rate plus a Base Rate Margin or at an adjusted Eurodollar Rate plus Eurodollar Rate Margin. The "Base Rate" will equal the higher of (A) the rate of interest publicly announced from time to time by B of A, and (B) 0.5% per annum above the latest Federal Funds Rate. The "Base Rate Margin" will range from 0.0% to 1.0% depending on the Company's ratio of consolidated total debt to cashflow. The "Eurodollar Rate" will equal the rate of interest determined by the Agent to be the rate per annum at which deposits in Dollars in immediately available funds are offered to the Agent in the interbank Eurodollar market two business days prior to the beginning of the applicable interest period. The Eurodollar Rate Margin will range from 1.25% to 2.75% depending on the Company's ratio of consolidated total debt to cashflow. The New Credit Facility contains various covenants that restrict the Company from various actions and that require the Company to achieve and maintain certain financial covenants. The New Credit Facility includes financial covenants consisting of a total debt to cashflow ratio, a senior debt to cashflow ratio, a cashflow to interest expense ratio and a minimum net worth test, and limitations on, among other things, indebtedness, liens, capital expenditures, dividends, business activities, investments and guarantees, sale of assets, consolidations and mergers, and amendments or modifications to the New Bonding Agreement or its certificate of incorporation, bylaws, shareholder agreements, voting trusts or other similar arrangements. The New Credit Facility includes events of default consisting of, among other things: (i) any failure to pay principal or failure in the payment of any reimbursement obligation under any letter of credit, or to pay interest or fees within three business days after the date due or any other obligations within five business days after the date due; (ii) any failure to pay certain other indebtedness or contingent obligations, or defaults that result in or permit the acceleration of such indebtedness or contingent obligations; (iii) the breach by the Company or certain of its subsidiaries of covenants, representations or warranties contained in the New Credit Facility; (iv) certain events of bankruptcy, insolvency or dissolution of the Company or its subsidiaries; (v) the incurrence of certain pension-related liabilities, including liabilities with respect to failures to make certain required contributions when due and termination of, or withdrawal from, certain pension plans which result in liabilities in excess of specified amounts; (vi) the invalidity of or any challenge to the validity of the guarantees of the indebtedness under the New Credit Facility or of the security interests granted to the Lenders; (vii) default by the Company or any of its subsidiaries in the payment when due of any amount due under the New Bonding Agreement or a breach or default with respect to any other term of the New Bonding Agreement or bonded contracts that are the subject of such New Bonding Agreement, or the failure of any surety in connection with the New Bonding Agreement to issue bonds thereunder, the effect of which is materially adverse to the Company; and (viii) certain change in control of the Company or its subsidiaries. All obligations under the New Credit Facility are guaranteed by each of the Subsidiary Guarantors. The loans under the New Credit Facility are secured by: (i) a perfected first priority lien and security interest (exclusive of all liens and security interests other than those in favor of the bonding company) in vessels and 65 equipment approved by the Agent and having appraised orderly liquidation value of at least $65.0 million; (ii) a perfected second priority lien and security interest in all vessels and equipment (with the exception of those vessels and equipment operated by NATCO) securing the bonding company; (iii) a perfected second priority lien in certain assets; and (iv) a security interest in all of the accounts receivable of the Company and its subsidiaries. In connection with the execution of the New Credit Facility and the New Bonding Agreement, the Agent and the sureties under the New Bonding Agreement (the "Sureties") entered into an intercreditor agreement which addresses, among other things, the lien priorities of shared collateral, the substitution of vessels under ship mortgages, the exercise of rights under ship mortgages and other shared collateral agreements, the application of proceeds of various classes of shared collateral as well as certain collateral benefitting only the Sureties, the exercise of remedies under the New Credit Facility and the New Bonding Agreement, the release of certain liens, the taking of additional collateral and other relevant intercreditor provisions. In addition, the intercreditor agreement provides that the Sureties will have the right to use all encumbered vessels and other equipment to perform any outstanding bonded contracts. 66 DESCRIPTION OF NEW BONDING AGREEMENT As part of the Transaction, the Company and certain of its subsidiaries entered into an Amended and Restated Underwriting and Continuing Indemnity Agreement (the "New Bonding Agreement") with the Sureties, pursuant to which the Sureties will act as surety, issue bid bonds, performance bonds and payment bonds and obligate themselves upon other contracts of guaranty required by the Company and its subsidiaries in the day-to-day operations of its dredging business. The Sureties obligations under the New Bonding Agreement are discretionary. As such, the Sureties are not obligated under the New Bonding Agreement to issue bonds on behalf of the Company or any of its subsidiaries. The New Bonding Agreement contains various covenants that restrict the Company from various actions and that require the Company to achieve and maintain certain financial covenants. The New Bonding Agreement includes a current ratio and a minimum net worth test, and limitations on, among other things, indebtedness and contingent obligations, cash dividends, liens, business combinations, investments, business activities, sale of assets, issuances of equity and affiliate transactions. The New Bonding Agreement includes events of default with respect to the Company and certain of its subsidiaries, consisting of, among other things: (i) the failure to pay any obligation owing to the Sureties; (ii) the breach of covenants, representations or warranties contained in the New Bonding Agreement; (iii) certain events of bankruptcy or insolvency; (iv) the default of any provision under a bonded contract; (v) the failure to pay certain other indebtedness, or defaults that result or permit the acceleration of such indebtedness or contingent obligation; and (vi) certain judgments that are not fully covered by insurance or bonded or discharged. The obligations of the Company and its wholly owned subsidiaries under the New Bonding Agreement are secured by a security interest in the Company's fixed assets. In the event the Company or any of its subsidiaries fails or is unable to complete the work under a bonded contract or breaches the New Bonding Agreement, the Sureties may proceed against their collateral, cause the performance of such bonded contract by subletting it in the name of the Company or its wholly-owned subsidiary and seek reimbursement from the Company and its wholly owned subsidiary for costs incurred in the subletting or performance of such bonded contract. In connection with the execution of the New Credit Facility and the New Bonding Agreement, the Agent and the Sureties entered into an intercreditor agreement which addresses, among other things, the lien priorities of shared collateral, the substitution of vessels under ship mortgages, the exercise of rights under ship mortgages and other shared collateral agreements, the application of proceeds of various classes of shared collateral as well as certain collateral benefitting only the Sureties, the exercise of remedies under the New Credit Facility and the New Bonding Agreement, the release of certain liens, the taking of additional collateral and other relevant intercreditor provisions. In addition, the intercreditor agreement provides that the Sureties will have the right to use all encumbered vessels and other equipment to perform any outstanding bonded contracts. 67 DESCRIPTION OF NOTES GENERAL The Existing Notes were issued pursuant to an Indenture (the "Indenture") among the Company, the Subsidiary Guarantors and The Bank of New York, as trustee (the "Trustee"), in a private transaction that was not subject to the registration requirements of the Securities Act. The terms of the Indenture apply to the Existing Notes and to the Exchange Notes to be issued in exchange therefor pursuant to the Exchange Offer (all such Notes being referred to herein collectively as the "Notes"). The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. The Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the Trust Indenture Act for a statement thereof. The following summary of the material provisions of the Indenture does not purport to be complete and is qualified in its entirety by reference to the Indenture, including the definitions therein of certain terms used below. Copies of the Indenture, the form of Notes and the Registration Rights Agreement are available as set forth below under "--Additional Information." The definitions of certain terms used in the following summary are set forth below under "--Certain Definitions." For purposes of this summary, the term "Company" refers only to Great Lakes Dredge & Dock Corporation and not to any of its Subsidiaries. The Notes are general unsecured obligations of the Company, subordinated in right of payment to all existing and future Senior Debt, including Indebtedness pursuant to the New Credit Facility. The Company's obligations under the Notes are guaranteed (the "Subsidiary Guarantees") on a senior subordinated basis by the Subsidiary Guarantors. See "--Subsidiary Guarantees." As of June 30, 1998, on a pro forma basis after giving effect to the Transaction, the Notes would have been subordinated to $62.7 million of Senior Debt, excluding contingent obligations, of the Company and the Subsidiary Guarantors and effectively subordinated to $37.2 million of liabilities of the Company's subsidiaries that are not Subsidiary Guarantors. Upon closing of the Transaction, approximately $37.9 million was available for additional borrowing under the New Credit Facility. The Indenture permits the incurrence of additional Senior Debt in the future. See "Risk Factors-- Subordination." The operations of the Company are conducted through its Subsidiaries and, therefore, the Company is dependent upon the cash flow of such Subsidiaries to meet their obligations, including their obligations under the Notes. All of the existing domestic Wholly Owned Restricted Subsidiaries of the Company are, and all future domestic Restricted Subsidiaries are expected to be, Subsidiary Guarantors. As of the date of this Prospectus, all of the Company's Subsidiaries are Restricted Subsidiaries. However, under certain circumstances, the Company will be able to designate current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the restrictive covenants set forth in the Indenture. In addition, the Notes are effectively subordinated to all indebtedness and other liabilities and commitments (including trade payables and capital lease obligations) of the Company's foreign Subsidiaries and the Company's Subsidiaries that are not Wholly Owned Restricted Subsidiaries. Any right of the Company to receive assets of any of its foreign Subsidiaries or its Subsidiaries that are not Wholly Owned Restricted Subsidiaries upon such Subsidiary's liquidation or reorganization (and the consequent right of the Holders of the Notes to participate in those assets) will be effectively subordinated to the claims of that Subsidiary's creditors. As of June 30, 1998, on a pro forma basis after giving effect to the Transaction, the aggregate amount of liabilities (including trade payable) of the Company's foreign Subsidiaries and the Company's Subsidiaries that are not Wholly Owned Restricted Subsidiaries was $37.2 million. PRINCIPAL, MATURITY AND INTEREST The Notes are limited in aggregate principal amount to $165.0 million, of which $115.0 million were issued as the Existing Notes on August 19, 1998, and will mature on August 15, 2008. Interest on the Notes will accrue at the rate of 11 1/4% per annum and will be payable semi-annually in arrears on February 15 and August 15 of each year, commencing February 15, 1999, to Holders of record on the immediately preceding February 1 and August 1. Additional Notes may be issued from time to time, subject to the provisions of the Indenture described below under the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of Disqualified 68 Stock." The Existing Notes, the Exchange Notes and any additional Notes subsequently issued would be treated as a single class for all purposes under the Indenture, including without limitations, waivers, amendments, redemptions and offers to purchase. Interest on the Exchange Notes will accrue from the most recent date to which interest has been paid on the Existing Notes or, if no such interest has been paid, from the date of original issuance of the Existing Notes. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal, premium and Liquidated Damages, if any, and interest on the Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of principal, premium, interest and Liquidated Damages, if any, may be made by check mailed to the Holders of the Notes at their respective addresses set forth in the register of Holders of Notes; provided that all payments of principal, premium, interest and Liquidated Damages, if any, with respect to Notes the Holders of which have given wire transfer instructions to the Company will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. Notes are issued in denominations of $1,000 and integral multiples thereof. SUBORDINATION The payment of principal of, premium, if any, and interest on the Notes is subordinated in right of payment, as set forth in the Indenture, to the prior payment in full of all Senior Debt, whether outstanding on the date of the Indenture or thereafter incurred. The Notes rank pari passu in right of payment with all other senior subordinated Indebtedness of the Company and senior in right of payment to all subordinated Indebtedness. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, the holders of Senior Debt will be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt whether or not allowed in such proceeding) before the Holders of Notes will be entitled to receive any payment with respect to the Notes, and until all Obligations with respect to such Senior Debt are paid in full in cash, any distribution to which the Holders of Notes would be entitled shall be made to the holders of Senior Debt (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from the trust described under "--Legal Defeasance and Covenant Defeasance"). The Company also may not make any payment upon or in respect of the Notes (except in Permitted Junior Securities or from the trust described under "-- Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of the principal of, premium, if any, or interest on Designated Senior Debt occurs and is continuing beyond any applicable period of grace or (ii) any other default occurs and is continuing with respect to Designated Senior Debt that permits holders of the Designated Senior Debt as to which such default relates to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the Company or the representatives of the holders of any Designated Senior Debt. Payments on the Notes may and shall be resumed (a) in the case of a payment default, upon the date on which such default is cured or waived in writing and (b) in case of a nonpayment default, the earlier of the date on which such nonpayment default is cured or waived in writing or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Debt has been accelerated. No new period of payment blockage may be commenced unless and until (i) 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (ii) all scheduled payments of principal, premium, if any, and interest on the Notes that have come due during such payment blockage period have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been waived for a period of not less than 90 days. The Indenture further requires that the Company promptly notify holders of Senior Debt if payment of the Notes is accelerated because of an Event of Default. 69 As a result of the subordination provisions described above, in the event of a liquidation or insolvency, Holders of Notes may recover less ratably than creditors of the Company who are holders of Senior Debt. On a pro forma basis, after giving effect to the Acquisition, the principal amount of Senior Debt outstanding at June 30, 1998 would have been approximately $62.7 million. The Indenture limits, subject to certain financial tests, the amount of additional Indebtedness, including Senior Debt, that the Company and its subsidiaries can incur. See "--Certain Covenants--Incurrence of Indebtedness and Issuance of Disqualified Stock" and "Risk Factors--Subordination." SUBSIDIARY GUARANTEES The Company's payment obligations under the Notes are fully and unconditionally guaranteed on a joint and several basis (the "Subsidiary Guarantees") by the Subsidiary Guarantors. The Subsidiary Guarantee of each Subsidiary Guarantor is subordinated to the prior payment in full of all Senior Debt of such Guarantor. As of June 30, 1998, on a pro forma basis giving effect to the Transaction, the Subsidiary Guarantors would have had an aggregate of approximately $62.7 million of Senior Debt outstanding. The Indenture permits the Subsidiary Guarantors to incur additional Senior Debt, subject to certain limitations. The obligations of each Subsidiary Guarantor under its Subsidiary Guarantee will be limited so as not to constitute a fraudulent conveyance under applicable law. See, however, "Risk Factors-- Fraudulent Conveyance Statutes." The Indenture provides that no Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person), another Person whether or not affiliated with such Subsidiary Guarantor unless (i) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) assumes, by operation of law or otherwise, all the obligations of such Subsidiary Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Subsidiary Guarantees, the Indenture, and the Registration Rights Agreement; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists, provided that nothing in the foregoing provisions shall prohibit the merger or consolidation of a Subsidiary Guarantor with and into the Company or another Wholly Owned Subsidiary Guarantor where the Company or such other Wholly Owned Subsidiary Guarantor is the surviving Person. The Indenture provides that in the event of a sale or other disposition of all or substantially all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Subsidiary Guarantor) or the corporation or other entity acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor) will be released and relieved of any and all obligations under its Subsidiary Guarantee (and, in the event of a disposition of assets, any Liens in favor of the Holders will be released); provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture. See "--Repurchase at Option of Holders", "--Asset Sales." In addition, the Indenture provides that, in the event the Company designates a Restricted Subsidiary to become an Unrestricted Subsidiary in accordance with the Indenture, then such Restricted Subsidiary shall, in accordance with the Indenture, be released from its obligations under its Subsidiary Guarantee upon the effectiveness of such designation. 70 OPTIONAL REDEMPTION The Notes are redeemable at any time at the option of the Company, in whole or in part upon not less than 30 nor more than 60 days' notice, in cash at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below:
YEAR PERCENTAGE 2003............................................................ 105.625% 2004............................................................ 103.750% 2005............................................................ 101.875% 2006 and thereafter............................................. 100.000%
Notwithstanding the foregoing, at any time prior to August 15, 2001, the Company may (but will not have the obligation to) on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes originally issued at a redemption price equal to 111.250% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net cash proceeds of one or more Public Equity Offerings; provided that at least 65% of the aggregate principal amount of Notes originally issued remain outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 180 days of the date of the closing of such Public Equity Offering. SELECTION AND NOTICE If less than all of the Notes are to be redeemed or repurchased at any time, selection of Notes for redemption or repurchase will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. Notices of redemption or repurchase may not be conditional. If any Note is to be redeemed or repurchased in part only, the notice of redemption or repurchase that relates to such Note shall state the portion of the principal amount thereof to be redeemed or repurchased. A new Note in principal amount equal to the unredeemed or unrepurchased portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption or repurchase become due on the date fixed for redemption or repurchase. On and after the redemption or repurchase date, interest and Liquidated Damages ceases to accrue on Notes or portions of them called for redemption or repurchase. MANDATORY REDEMPTION Except as set forth below under "--Repurchase at the Option of Holders," the Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. REPURCHASE AT THE OPTION OF HOLDERS Change of Control Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be 71 no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations directly conflict with the provisions of the Indenture relating to such Change of Control Offer, the Company will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in the Indenture by virtue thereof. On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent (as defined in the Indenture) an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Indenture provides that, prior to complying with the provisions of this covenant, but in any event within 90 days following a Change of Control, the Company will either repay all outstanding Senior Debt or obtain the requisite consents, if any, under the agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this covenant. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above will be applicable whether or not any other provisions of the Indenture are applicable (and will not affect the subordination provisions). Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction. The New Credit Facility currently prohibits the Company from repurchasing any Notes and also provides that certain change of control events with respect to the Company would constitute a default thereunder. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company's failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the New Credit Facility. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes. In addition, the exercise by Holders of the Notes of their right to require the Company to repurchase the Notes could cause a default under such Senior Debt, even if the Change of Control itself does not, due to the financial effect of such repurchases on the Company. Finally, the Company's ability to pay cash to the Holders of Notes upon a repurchase may be limited by the Company's then existing financial resources. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries (determined on a consolidated basis), in each case, to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than the 72 Company or a Wholly Owned Restricted Subsidiary or any Principal or a Related Party of a Principal (as defined below), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company (other than in a transaction which complies with the provisions described under "--Merger, Consolidation or Sale of Assets"), (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than one or more Principals or their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of shares) and the Principals do not beneficially own as much or more of the Voting Stock of the Company (measured by voting power rather than by number of shares) than such person or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. The definition of Change of Control includes a phrase relating to the sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the assets of the Company and its Subsidiaries (determined on a consolidated basis). Although there is a developing body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Notes to require the Company to repurchase such Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of the Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election or was designated by a Principal or a Related Party of a Principal. "Principals" means (i) CVC and the Management Investors and (ii) any Related Party of a Person referred to in clause (i). "Related Party" means (a) with respect to CVC (i) Citicorp, any direct or indirect wholly owned subsidiary of Citicorp, and any officer, director or employee of CVC, Citicorp or any wholly owned subsidiary of Citicorp, (ii) any spouse or lineal descendant (including by adoption and stepchildren) of the officers, directors and employees referred to in clause (a) (i) above, (iii) any trust, corporation or partnership 100%-in-interest of the beneficiaries, stockholders or partners of which consists of one or more of the persons described in clause (a) (i) or (ii) above or (iv) Vectura, so long as CVC or any of its Related Parties described in (i), (ii) or (iii) above holds at least 50% of the Great Lakes membership interests in Vectura; and (b) with respect to any officer or employee of the Company or a Subsidiary of the Company (i) any spouse or lineal descendant (including by adoption and stepchildren) of such officer or employee and (ii) any trust, corporation or partnership 100%-in-interest of the beneficiaries, stockholders or partners of which consists of such officer or employee, any of the persons described in clause (b) (i) above or any combination thereof. ASSET SALES The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of Qualified Proceeds; provided that the aggregate fair market value of Qualified Proceeds (other than cash or Cash Equivalents), which may be received in consideration for asset sales pursuant to this clause (ii) shall not exceed $5.0 million since the date of the 73 Indenture; provided further that the amount of (x) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability and (y) any securities, Notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) within 90 days following the closing of such Asset Sale, shall be deemed to be cash for purposes of this provision, provided further that the 75% limitation referred to above shall not apply to any Asset Sale in which the cash and Cash Equivalents portion of the consideration received therefor, determined in accordance with the foregoing proviso, is equal to or greater than what the net after-tax proceeds would have been had such Asset Sale complied with the aforementioned 75% limitation. Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company or any Restricted Subsidiary may apply such Net Proceeds, at its option, (a) to repay Senior Debt, (b) to the acquisition of a majority of the assets of, or a majority of the Voting Stock of, another Permitted Business, the making of a capital expenditure or the acquisition or commitment to acquire (provided that such commitment or a reasonable replacement thereof is consummated substantially in accordance with the terms thereof) of other assets that are used or useful in a Permitted Business or (c) for a combination of uses described in clauses (a) and (b). Pending the final application of any such Net Proceeds, the Company and its Restricted Subsidiaries may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will be required to make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of repurchase, in accordance with the procedures set forth in the Indenture. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any general corporate purpose. If the aggregate principal amount of Notes tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. CERTAIN COVENANTS Restricted Payments The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than, in each case, dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or dividends or distributions payable to the Company or a Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company (other than Equity Interests owned by the Company or any Restricted Subsidiary of the Company) or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes (other than any subordinated indebtedness held by the Company or any Subsidiary Guarantor), except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless: 74 (a) at the time of and after giving effect to such Restricted Payment, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption "--Incurrence of Indebtedness and Issuance of Disqualified Stock;" and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of the Indenture (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (viii), (ix) and (xi) of the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the Indenture to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate fair market value of Qualified Proceeds received by the Company since the date of the Indenture as a contribution to its equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company), plus (iii) to the extent that any Restricted Investment that was made after the date of the Indenture is sold for cash or otherwise liquidated or repaid for Qualified Proceeds, the lesser of (A) the fair market of the Qualified Proceeds received with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment, plus (iv) 50% of any dividends received by the Company or a Wholly Owned Restricted Subsidiary after the date of the Indenture from an Unrestricted Subsidiary of the Company, to the extent that such dividends were not otherwise included in Consolidated Net Income of the Company for such period, plus (v) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of the Indenture, the lesser of (A) the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation or (B) such fair market value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary. The foregoing provisions do not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company or any Subsidiary Guarantor, in each case, in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock) or the net cash proceeds of a common equity capital contribution to the Company; provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c) (ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any dividend or making of any distribution by a Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis; (v) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Subsidiary of the Company held by any former member of the Company's (or any of their Subsidiaries') Board of Directors or any former officer, employee or director of the Company or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stockholder agreement, stock option agreement, employment agreement or other similar agreements or employee benefit plan; provided that (A) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed (1) $2.0 million in any calendar year (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to clause (2)) of $5.0 million, plus (2) in the case of a repurchase, redemption or other acquisition or retirement of Equity Interests of the 75 Company, the aggregate cash proceeds received by the Company during such calendar year from any reissuance of Equity Interests by or the Company to employees, officers and directors of the Company and its Restricted Subsidiaries plus the cash proceeds of any "key man" life insurance policy received by the Company with respect to the owner of, and any cash proceeds paid to the Company in connection with the issuance or exercise of, any management or employee Equity Interests so acquired plus (3) in the case of a repurchase, redemption or other acquisition or retirement of Equity Interests of a Subsidiary Guarantor, the aggregate cash proceeds received by such Subsidiary Guarantor during such calendar year from any reissuance of Equity Interests of such Subsidiary Guarantor to employees, officers, and directors of such Subsidiary Guarantor plus the cash proceeds of any "key man" life insurance policy received by such Subsidiary Guarantor with respect to the owner of any cash proceeds paid to such Subsidiary Guarantor in connection with the issuance or exercise of, any management or employee Equity Interests so acquired, and (B) no Default or Event of Default shall have occurred and be continuing immediately after such transaction; provided, further that the aggregate cash proceeds referred to in (2) above shall be excluded from clause (c)(ii) of the preceding paragraph; (vi) any Investment to the extent that the consideration therefor consists of the net cash proceeds of the substantially concurrent issue and sale (other than to a Restricted Subsidiary) of Equity Interests of the Company (other than any Disqualified Stock); (vii) so long as no Default or Event of Default has occurred and is continuing and the Company can incur at least $1.00 of additional indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under caption "--Incurrence of Indebtedness and Issuance of Disqualified Stock," the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company, or any Subsidiary Guarantor issued after the date of the Indenture in accordance with the covenant described below under the caption "Incurrence of Indebtedness and Issuance of Disqualified Stock;" (viii) repurchase of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; (ix) loans to employees of the Company or any Subsidiary Guarantor not to exceed $2.0 million at any one time outstanding; (x) Restricted Payments not to exceed $5.0 million since the date of the Indenture and (xi) payments made pursuant to the Merger Agreement and tax "gross up" payments made pursuant to the Stockholders Agreement in connection with the Recapitalization, in each case, as in effect on the date of the Indenture, as the same may be amended, modified or replaced from time to time so long as such amendment, modification or replacement does not increase the amount of any such payments from the amount of such payments provided for in the Merger Agreement or Stockholders Agreement, as the case may be, as in effect on the date of the Indenture. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. For purposes of determining compliance with this covenant, in the event that a Restricted Payment meets the criteria of more than one of the exceptions described in (i) through (x) above or is entitled to be made pursuant to the first paragraph of this covenant, the Company shall, in its sole discretion, classify such Restricted Payment in any manner that complies with the covenant. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment or return of capital on any Restricted Subsidiary shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $7.5 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the 76 calculations required by the covenant "Restricted Payments" were computed, together with a copy of any fairness opinion or appraisal required by the Indenture. Incurrence of Indebtedness and Issuance of Disqualified Stock The Indenture provides that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and the Company's Subsidiaries may incur Indebtedness or issue preferred equity if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. The provisions of the first paragraph of this covenant will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company and the Subsidiary Guarantors of term Indebtedness under the New Credit Facility (including any guarantee thereof by any Subsidiary Guarantor); provided that the aggregate principal amount of all term Indebtedness outstanding under the New Credit Facility after giving effect to such incurrence does not exceed an amount equal to $55.0 million plus (in the case of any refinancing thereof) the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing less the aggregate amount of all scheduled or mandatory repayments of the principal of any term Indebtedness under the New Credit Facility (other than repayments that are immediately reborrowed) that have been made since the date of the Indenture; (ii) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness and reimbursement obligations in respect of letters of credit under Credit Facilities (including any guarantee thereof by any Subsidiary Guarantor); provided that the aggregate principal amount of all revolving credit or other Indebtedness (other than term Indebtedness permitted under clause (i) above) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder) outstanding under all Credit Facilities after giving effect to such incurrence does not exceed an amount equal to $55.0 million; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company of Indebtedness represented by the Notes sold in the Offering and the incurrence by the Subsidiary Guarantors of Indebtedness represented by the Subsidiary Guarantees of such Notes; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage or construction financings or purchase money obligations or similar financings, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount not to exceed $20.0 million at any time outstanding; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph hereof or clauses (iii), (iv), (v), (vi) or (ix) of this paragraph; (vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes and (ii)(A) any subsequent issuance or 77 transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vii); (viii) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging (i) interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding, (ii) the value of foreign currencies purchased or received by the Company or any Restricted Subsidiary in the ordinary course of business as conducted by the Company or (iii) commodity risk relating to commodity agreements to the extent entered into in the ordinary course of business solely to protect the Company and its Restricted Subsidiaries from fluctuations in the prices of raw materials used in its business; (ix) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (in addition to Indebtedness permitted by other clauses of this paragraph) in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (ix), not to exceed $25.0 million; (x) the incurrence by the Company's Unrestricted Subsidiaries of Non- Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (x); (xi) the Guarantee by the Company or any of the Subsidiary Guarantors of Indebtedness of the Company or a Subsidiary Guarantor, which Indebtedness was permitted to be incurred by another provision of this covenant; (xii) Indebtedness of the Company or a Restricted Subsidiary owed to (including obligations in respect of letters of credit for the benefit of) any Person in connection with worker's compensation, health, disability or other employee benefits or property, casualty or liability insurance provided by such Person to the Company or such Restricted Subsidiary, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business and consistent with past practices; (xiii) the incurrence of Permitted Bonding Obligations; (xiv) the issuance of preferred stock (other than Disqualified Stock) by any Subsidiary Guarantor to members of management of such Subsidiary Guarantor, provided that such preferred stock does not require the Company or any Restricted Subsidiary to pay dividends thereon other than in shares of additional preferred stock (other than Disqualified Stock); and (xv) the incurrence of Indebtedness arising from agreements of the Company or any Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or Capital Stock of a Restricted Subsidiary; provided that the maximum aggregate liability of such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with any such disposition. For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xv) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this covenant. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an 78 issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. No Senior Subordinated Debt The Indenture provides that (i) the Company will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Indebtedness and senior in any respect in right of payment to the Notes, and (ii) no Subsidiary Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Indebtedness of such Subsidiary Guarantor and senior in any respect in right of payment to the Subsidiary Guarantee of such Subsidiary Guarantor; provided that no Indebtedness will be deemed subordinate or junior in right of payment to any other Indebtedness solely by reason of the fact that such Indebtedness is unsecured. Liens The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien securing Indebtedness or trade payables on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom, except (i) Permitted Liens, and (ii) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes, the Notes are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens (with the same relative priority as such subordinate or junior Indebtedness shall have with respect to the Notes and the Subsidiary Guarantees) and (y) in all other cases, the Notes are secured by such Lien on an equal and ratable basis. Dividend and Other Payment Restrictions Affecting Subsidiaries The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of the Indenture, (b) the New Credit Facility and Permitted Bonding Obligations as in effect as of the date of the Indenture, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the New Credit Facility or in agreements with respect to Permitted Bonding Obligations, as applicable, as in effect on the date of the Indenture, (c) the Indenture, the Notes and the Subsidiary Guarantees, (d) applicable law, (e) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred, (f) customary non-assignment provisions in leases or other similar agreements entered into in the ordinary course of business and consistent with past practices, (g) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (h) any agreement for the sale of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale, (i) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such 79 Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced, (j) secured Indebtedness otherwise permitted to be incurred pursuant to the provisions of the covenant described above under the caption "--Liens" that limits the right of the debtor to dispose of the assets securing such Indebtedness, (k) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business, (l) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, (m) mortgage or construction financing that imposes restrictions on the transfer of the property acquired or improved, (n) encumbrances or restrictions imposed by amendments to the contracts, agreements or obligations referred to in the foregoing clauses (a), (c), (e), (f), (g), (h), (j), (k) and (n), provided that such amendments are not materially more restrictive than the agreement so amended; and (o) protective liens filed in connection with sale-leaseback transactions permitted under the caption "--Sale and Leaseback Transactions." Merger, Consolidation, or Sale of Assets The Indenture provides that the Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation or other entity organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the then existing obligations of the Company under the Registration Rights Agreement, the Notes and the Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Subsidiary of the Company, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Disqualified Stock." The Indenture will provide that the Company will not, directly or indirectly, lease all or substantially all of its properties or assets to any Person. Transactions with Affiliates The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $2.0 million, a resolution of the Board of Directors of the Company set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Company and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $7.5 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate 80 Transactions: (i) any employment agreement, compensation, employee benefit arrangements and incentive arrangements or indemnification agreement or arrangement with any officer, director, member or employee entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business of the Company or such Restricted Subsidiary, (ii) transactions between or among the Company and/or its Restricted Subsidiaries, (iii) payment of reasonable directors fees, (iv) Restricted Payments (other than Restricted Investments) that are permitted by the provisions of the Indenture described above under the caption "--Restricted Payments," (v) loans and advances to officers, directors and employees of the Company or any Restricted Subsidiary for travel, entertainment, moving and other relocation expenses, in each case made in the ordinary course of business; (vi) transactions pursuant to the Stockholders' Agreement and the Merger Agreement, in each case, as in effect on the date of the Indenture as the same may be amended, modified or replaced from time to time so long as such amendment, modification or replacement is no less favorable to the Company and its Restricted Subsidiaries, taken as a whole, than the Stockholders' Agreement or the Merger Agreement, as the case may be, as in effect on the date of the Indenture. Sale and Leaseback Transactions The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that the Company or any of its Restricted Subsidiaries may enter into a sale and leaseback transaction if (i) the Company or such Restricted Subsidiary could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to the covenant described above under the caption "--Incurrence of Additional Indebtedness and Issuance of Disqualified Stock" and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption "--Liens," (ii) the gross cash proceeds of such sale and leaseback transaction are at least equal to the fair market value (as determined in good faith by the Board of Directors of the Company and set forth in an Officers' Certificate delivered to the Trustee) of the property that is the subject of such sale and leaseback transaction and (iii) the transfer of assets in such sale and leaseback transaction is permitted by, and if applicable, the Company applies the proceeds of such transaction in compliance with, the covenant described above under the caption "--Asset Sales." Notwithstanding the foregoing, this covenant shall not apply to the sale and leaseback of (i) the backhoe dredge "New York" under construction on the date of the Indenture or (ii) the dredging assets acquired from T.L. James & Company, Inc. pursuant to the acquisition agreement in effect on the date of the Indenture, as such agreement is in effect on such date, in the case of clauses (i) and (ii), within 120 days of the date of completion of such construction or acquisition of such assets, as applicable. Business Activities The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. Payments for Consent The Indenture provides that neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Additional Subsidiary Guarantees The Indenture provides that if the Company or any of its Restricted Subsidiaries shall acquire or create another domestic Subsidiary after the date of the Indenture, then, unless such Subsidiary is properly designated as an Unrestricted Subsidiary, such newly acquired or created Subsidiary shall become a Subsidiary Guarantor 81 and execute a Supplemental Indenture and deliver an opinion of counsel, in accordance with the terms of the Indenture. Limitations on Issuances of Guarantees of Indebtedness The Indenture provides that the Company will not permit any Restricted Subsidiary, directly or indirectly, to Guarantee any other Indebtedness of the Company or a Subsidiary Guarantor unless, if such Restricted Subsidiary is not a Guarantor, such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the Indenture providing for the Guarantee of the payment of the Notes by such Restricted Subsidiary, which Guarantee shall be senior to or pari passu with such Subsidiary's Guarantee of such other Indebtedness unless such other Indebtedness is Senior Debt, in which case the Guarantee of the Notes may be subordinated to the Guarantee of such Senior Debt to the same extent as the Notes are subordinated to such Senior Debt. Notwithstanding the foregoing, any such Subsidiary Guarantee shall provide by its terms that it shall be automatically and unconditionally released and discharged upon any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all of the Company's stock in, or all or substantially all the assets of, such Restricted Subsidiary, which sale, exchange or transfer is made in compliance with the applicable provisions of the Indenture. The form of such Subsidiary Guarantee attached as an exhibit to the Indenture. REPORTS The Indenture provides that, whether or not required by the rules and regulations of the Securities and Exchange Commission (the "Commission"), so long as any Notes are outstanding, the Company will furnish to the Holders of Notes (i) all quarterly financial information beginning with the quarter ended September 30, 1998 and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company was required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the Commission's rules and regulations. In addition, following the consummation of the exchange offer contemplated by the Registration Rights Agreement, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, (i) at all times the Commission does not accept the filings provided for in the preceding sentence or (ii) such filings provided for in the preceding sentence do not contain the information required to be delivered upon request pursuant to Rule 144A(d)(4) under the Securities Act, then, in each case, the Company has agreed that, for so long as any Notes remain outstanding, it will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. EVENTS OF DEFAULT AND REMEDIES The Indenture provides that each of the following constitutes an Event of Default: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes (whether or not permitted by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Notes (whether or not permitted by the subordination provisions of the Indenture); (iii) failure by the Company or any of its Restricted Subsidiaries to comply with the provisions described under the caption "--Change of Control;" (iv) failure by the Company or any of its Restricted Subsidiaries for 60 days 82 after notice by the Trustee or by the Holders of at least 25% in principal amount of Notes then outstanding to comply with any of its other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its stated maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated (after giving effect to any applicable grace period), aggregates $10.0 million or more; (vi) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $10.0 million (net of any amount with respect to which a reputable insurance company with assets over $100.0 million has acknowledged liability in writing), which judgments are not paid, discharged or stayed for a period of 60 days after their entry; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Subsidiaries and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes, the Indenture or the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have all of its obligations and the obligations of the Subsidiary Guarantors discharged with respect to the outstanding Notes ("Legal Defeasance") except for (i) 83 the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium and Liquidated Damages, if any, and interest on such Notes when such payments are due from the trust referred to below, (ii) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default & Remedies" will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest and Liquidated Damages on the outstanding Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, subject to customary assumptions and exceptions, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exceptions, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company must have delivered to the Trustee an opinion of counsel to the effect that, subject to customary assumptions and exceptions, after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (vii) the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (viii) the Company must deliver to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. TRANSFER AND EXCHANGE A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the 84 Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. The registered Holder of a Note will be treated as the owner of it for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the Indenture, the Subsidiary Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing default or compliance with any provision of the Indenture, the Notes or the Subsidiary Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (i) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than provisions relating to the covenants described above under the caption "--Repurchase at the Option of Holders"), (iii) reduce the rate of or change the time for payment of interest on any Note, (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration), (v) make any Note payable in money other than that stated in the Notes, (vi) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes, (vii) waive a redemption payment with respect to any Note (other than a payment required by one of the covenants described above under the caption "--Repurchase at the Option of Holders"), (viii) release any Subsidiary Guarantor from any of its obligations under its Subsidiary Guarantee or the Indenture, except in accordance with the terms of the Indenture, or (ix) make any change in the foregoing amendment and waiver provisions. In addition, any amendment to the provisions of Article 10 and Section 11.02 of the Indenture (which relate to subordination) will require the consent of the Holders of at least 75% in aggregate principal amount of the Notes then outstanding if such amendment would adversely affect the rights of Holders of the Notes. Notwithstanding the foregoing, without the consent of any Holder of Notes, the Subsidiary Guarantors, the Company and the Trustee may amend or supplement the Indenture, the Subsidiary Guarantees or the Notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's or a Subsidiary Guarantor's obligations to Holders of Notes in the case of a merger or consolidation or sale of all or substantially all of the Company's assets, to provide for the issuance of Additional Notes in accordance with the provisions set forth in the Indenture on the date of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to allow any Subsidiary Guarantor to guarantee the Notes. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. 85 The Holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. BOOK-ENTRY, DELIVERY AND FORM The Exchange Notes will be in the form of a global note without interest coupons (the "Global Note"). Upon issuance, the Global Note will be deposited with the Trustee, as custodian for DTC, in New York, New York, and registered in the name of DTC or its nominee, in each case for credit to the accounts of DTC's Direct and Indirect Participants (as defined below). The Global Note may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee in certain limited circumstances. Beneficial interests in the Global Note may be exchanged for Notes in certificated form in certain limited circumstances. See "--Transfer of Interests in Global Note for Certificated Notes." Initially, the Trustee will act as Paying Agent and Registrar. The Notes may be presented for registration of transfer and exchange at the offices of the Registrar. DEPOSITARY PROCEDURES DTC has advised the Company that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Direct Participants") and to facilitate the clearance and settlement of transactions in those securities between Direct Participants through electronic book-entry changes in accounts of Participants. The Direct Participants include securities brokers and dealers (including the Initial Purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities that clear through or maintain a direct or indirect, custodial relationship with a Direct Participant (collectively, the "Indirect Participants"). DTC may hold securities beneficially owned by other persons only through the Direct Participants or Indirect Participants and such other persons' ownership interest and transfer of ownership interest will be recorded only on the records of the Direct Participant and/or Indirect Participant, and not on the records maintained by DTC. DTC has also advised the Company that, pursuant to DTC's procedures, (i) upon deposit of the Global Note, DTC will credit the accounts of the Direct Participants designated by the Initial Purchasers with portions of the principal amount of the Global Notes allocated by the Initial Purchasers to such Direct Participants, and (ii) DTC will maintain records of the ownership interests of such Direct Participants in the Global Notes and the transfer of ownership interests by and between Direct Participants. DTC will not maintain records of the ownership interests of, or the transfer of ownership interests by and between, Indirect Participants or other owners of beneficial interests in the Global Notes. Direct Participants and Indirect Participants must maintain their own records of the ownership interests of, and the transfer of ownership interests by and between, Indirect Participants and other owners of beneficial interests in the Global Notes. Investors in the Global Note may hold their interests therein directly through DTC if they are Direct Participants in DTC or indirectly through organizations that are Direct Participants in DTC. The laws of some states require that certain persons take physical delivery in definitive, certificated form of securities that they own. This may limit or curtail the ability to transfer beneficial interests in a Global Note to such persons. Because DTC can act only on behalf of Direct Participants, which in turn act on behalf of Indirect Participants and others, the ability of a person having a beneficial interest in a Global Note to pledge such interest 86 to persons or entities that are not Direct Participants in DTC, or to otherwise take actions in respect of such interests, may be affected by the lack of physical certificates evidencing such interests. For certain other restrictions on the transferability of the Notes see "--Transfers of Interests in Global Notes for Certificated Notes." Except as described in "Transfers of Interests in Global Notes for Certificated Notes," owners of beneficial interests in the Global Notes will not have Notes registered in their names, will not receive physical delivery of Notes in certificated form and will not be considered the registered owners or holders thereof under the Indenture for any purpose. Under the terms of the Indenture, the Company, the Subsidiary Guarantors and the Trustee will treat the persons in whose names the Notes are registered (including Notes represented by the Global Note) as the owners thereof for the purpose of receiving payments and for any and all other purposes whatsoever. Payments in respect of the principal, premium, Liquidated Damages, if any, and interest on the Global Note registered in the name of DTC or its nominee will be payable by the Trustee to DTC or its nominee as the registered holder under the Indenture. Consequently, neither the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for (i) any aspect of DTC's records or any Direct Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any of DTC's records or any Direct Participant's or Indirect Participant's records relating to the beneficial ownership interests in any Global Note or (ii) any other matter relating to the actions and practices of DTC or any of its Direct Participants or Indirect Participants. DTC has advised the Company that its current payment practice (for payments of principal, interest and the like) with respect to securities such as the Notes is to credit the accounts of the relevant Direct Participants with such payment on the payment date in amounts proportionate to such Direct Participant's respective ownership interests in the Global Notes as shown on DTC's records. Payments by Direct Participants and Indirect Participants to the beneficial owners of the Notes will be governed by standing instructions and customary practices between them and will not be the responsibility of DTC, the Trustee, the Company or the Subsidiary Guarantors. Neither the Company, the Subsidiary Guarantors nor the Trustee will be liable for any delay by DTC or its Direct Participants or Indirect Participants in identifying the beneficial owners of the Notes, and the Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee as the registered owner of the Notes for all purposes. Interests in the Global Note are expected to be eligible to trade in DTC's Same-Day Funds Settlement System and, therefore, transfers between Direct Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in immediately available funds. Transfers between Indirect Participants who hold an interest through a Direct Participant will be effected in accordance with the procedures of such Direct Participant but generally will settle in immediately available funds. DTC has advised the Company that it will take any action permitted to be taken by a holder of Notes only at the direction of one or more Direct Participants to whose account interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of the Notes as to which such Direct Participant or Direct Participants has or have given direction. However, if there is an Event of Default under the Notes, DTC reserves the right to exchange Global Notes (without the direction of one or more of its Direct Participants) for legended Notes in certificated form, and to distribute such certificated forms of Notes to its Direct Participants. See "--Transfers of Interests in Global Notes for Certificated Notes." TRANSFERS OF INTERESTS IN THE GLOBAL NOTE FOR CERTIFICATED NOTES The entire Global Note may be exchanged for definitive Notes in registered, certificated form without interest coupons ("Certificated Notes") if (i) DTC (x) notifies the Company that it is unwilling or unable to continue as depositary for the Global Note and the Company thereupon fails to appoint a successor depositary within 90 days or (y) has ceased to be a clearing agency registered under the Exchange Act, (ii) the Company, at 87 its option, notifies the Trustee in writing that it elects to cause the issuance of Certificated Notes or (iii) there shall have occurred and be continuing a Default or an Event of Default with respect to the Notes. In any such case, the Company will notify the Trustee in writing that, upon surrender by the Direct and Indirect Participants of their interest in the Global Note, Certificated Notes will be issued to each person that such Direct and Indirect Participants and DTC identify as being the beneficial owner of the related Notes. Beneficial interests in the Global Note held by any Direct or Indirect Participant may be exchanged for Certificated Notes upon request to DTC, by such Direct Participant (for itself or on behalf of an Indirect Participant), but only upon at least 20 days' prior written notice given to the Trustee by or on behalf of DTC in accordance with customary DTC procedures. Certificated Notes delivered in exchange for any beneficial interest in the Global Note will be registered in the names, and issued in any approved denominations, requested by DTC on behalf of such Direct or Indirect Participants (in accordance with DTC's customary procedures). Neither the Company, the Subsidiary Guarantors nor the Trustee will be liable for any delay by the holder of the Global Note or the DTC in identifying the beneficial owners of Notes, and the Company and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the holder of the Global Note or the DTC for all purposes. SAME DAY SETTLEMENT AND PAYMENT The Indenture will require that payments in respect of the Notes represented by the Global Note (including principal, premium, if any, interest and Liquidated Damages, if any) be made by wire transfer of immediately available funds to the accounts specified by the holder of such Global Note. With respect to Certificated Notes, the Company will make all payments of principal, premium, if any, interest and Liquidated Damages, if any, by wire transfer of immediately available funds to the accounts specified by the holders thereof or, if no such account is specified, by mailing a check to each such holder's registered address. The Company expects that secondary trading in the Certificated Notes will also be settled in immediately available funds. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices (provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, will be governed by the provisions of the Indenture described above under the caption "--Change of Control" and/or the provisions 88 described above under the caption "Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the issue or sale by any Restricted Subsidiary of Equity Interests of any of the Company's Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $2.0 million or (b) for net proceeds in excess of $2.0 million. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, (iii) a Restricted Payment that is permitted by the covenant described above under the caption "--Restricted Payments," (iv) the sale and leaseback of any assets within 120 days of the date of acquisition or completion of construction of such assets, (v) the sale at fair market value of property or equipment that has become worn out, obsolete or damaged or otherwise unsuitable for use in connection with the business of the Company or any Restricted Subsidiary, as the case may be, in the ordinary course of business and (vi) bare-boat charters entered into in the ordinary course of business for a term not to exceed 12 months. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one-year and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500 million, (iv) repurchase obligations with a term of not more than thirty days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) obligations issued or fully guaranteed by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Corporation or Moody's Investors Service, Inc., (vi) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within one year after the date of acquisition, (vii) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) through (vii) of this definition and (viii) short-term asset management accounts offered by any lender under Credit Facilities for the purpose of investing in notes issued by a corporation (other than the Company or any Affiliate of the Company) organized under the laws of any state of the United States or of the District of Columbia and rated A-2 or higher by Standard & Poor's Rating Group, a division of McGraw Hill, Inc. or P-2 or higher by Moody's Investors Service, Inc. "Citicorp" means Citicorp, a Delaware corporation, or any successor thereto by merger or consolidation. 89 "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) an amount equal to any extraordinary or nonrecurring loss plus any net loss realized in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income, plus (ii) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income, plus (iii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iv) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income, plus, without duplication, (v) any interest expense on Indebtedness of another person that is guaranteed by such person or a Subsidiary of such person or secured by a Lien on the assets of such person or one of its Subsidiaries (to the extent that such interest expense was deducted in computing Consolidated Net Income in such period), plus (vi) expenses and charges of the Company related to the Transaction incurred or for which the Company became obligated on or prior to or within 30 days after the date of the Indenture plus (vii) incremental expenses incurred associated with the Chicago Flood Litigation not exceeding $800,000, minus (viii) non-cash items increasing such Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded and (v) the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Subsidiaries. "Credit Facilities" means, with respect to the Company or its Restricted Subsidiaries, one or more debt facilities (including, without limitation, the New Credit Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as increased as permitted by the terms of the Indenture, and amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "CVC" means Citicorp Venture Capital, Ltd., a New York corporation, or any successor thereto by merger or consolidation. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. 90 "Designated Senior Debt" means (i) any Obligations outstanding under the New Credit Facility (including letters of credit), (ii) any Permitted Bonding Obligation and (iii) any other Senior Debt permitted under the Indenture the principal amount of which is $50.0 million or more and that has been designated by the Company as "Designated Senior Debt." Notwithstanding the foregoing, Indebtedness under the New Credit Facility shall be deemed outstanding for purposes of this definition at all times when the lenders thereunder have an effective commitment to extend credit thereunder, regardless of whether any such Indebtedness is actually outstanding at such time. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "--Certain Covenants--Restricted Payments." "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Existing Indebtedness" means Indebtedness (including Guarantees) of the Company and its Subsidiaries (other than Indebtedness under the New Credit Facility) in existence on the date of the Indenture, until such amounts are permanently repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to interest Hedging Obligations; provided, however, that in no event shall any amortization of deferred financing costs incurred in connection with the Transaction be included in Fixed Charges) and (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all cash dividend payments and non-cash dividend payments, on any series of preferred stock and any series of Disqualified Stock, in each case, of such Person or any of its Restricted Subsidiaries, other than dividend payments (x) on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or (y) to the Company or a Subsidiary Guarantor, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the referent Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays or redeems any Indebtedness (other than repayment of revolving credit borrowings that are not accompanied by a permanent reduction in the commitment amount) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, 91 assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers (including the Merger) or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of the Indenture. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate or currency swap agreements, interest rate cap agreements and interest rate collar agreements, (ii) other agreements or arrangements solely designed to protect such Person against fluctuations in interest or currency exchange rates and (iii) commodities purchase and sale agreements and other similar agreements designed to protect such Person against fluctuations in the price of raw materials used by the Company and its Restricted Subsidiaries in the ordinary course of business. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing (other than letters of credit, Hedging Obligations and Attributable Debt) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. The amount of any Indebtedness (other than Hedging Obligations, guarantees and Attributable Debt) outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that an acquisition of Equity Interests or other securities by 92 the Company or any of its Restricted Subsidiaries for consideration consisting solely of Equity Interests (other than Disqualified Stock) of the Company shall not be deemed to be an Investment. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption "--Restricted Payments." "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Net Income" means, with respect to any Person for any period, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of dividends on preferred interests, (i) excluding, however, (a) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (1) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (2) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (b) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss) and (ii) less the aggregate amount of all Restricted Payments made by such Person or any of its Restricted Subsidiaries for such period pursuant to clause (vii) of the covenant described under the caption "--Certain Covenants--Restricted Payments" to the extent not otherwise deducted in computing such Net Income. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, any taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New Bonding Agreement" means that certain Second Amended and Restated Underwriting and Continuing Indemnity Agreement, dated as of the date of the Indenture, by and among the Company, certain of its Subsidiaries and the Sureties, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as amended, restated, modified, renewed, refunded, replaced or refinanced from time to time. "New Credit Facility" means that certain Credit Agreement, dated as of the date of the Indenture, by and among the Company, Bank of America National Trust and Savings Association, as agent, and certain other lenders party thereto, initially providing for up to $55.0 million of revolving credit borrowings and $55.0 million of term borrowings, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as increased as permitted by the terms of the Indenture, and amended, modified, renewed, restated, refunded, replaced or refinanced from time to time. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor or otherwise), or (c) constitutes the lender; and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) 93 any holder of any other Indebtedness (other than the Notes being offered hereby) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Obligations" means any principal, interest, penalties, fees, indemnifications, costs, expenses, reimbursement obligations, damages and other liabilities and obligations which may arise under or in connection with the New Credit Facility or the New Bonding Agreement or under or in connection with the documentation governing any Indebtedness, and in all cases whether direct or indirect, absolute or contingent, now outstanding or hereafter created, assumed or incurred and including, without limitation, interest accruing subsequent to the filing of a petition in bankruptcy or the commencement of any insolvency, reorganization or similar proceedings at the rate provided in the relevant document, whether or not an allowed claim, and any obligation to redeem or defease any of the foregoing. "Permitted Bonding Obligations" means (i) obligations incurred by the Company or any of its Subsidiaries (including Guarantees) with respect to bid, performance, surety, appeal or similar bonds and completion guarantees in the ordinary course of business and consistent with past practices and (ii) obligations incurred by the Company or any of its Subsidiaries (including Guarantees) under the New Bonding Agreement. "Permitted Business" means any of the businesses engaged in by the Company and its Restricted Subsidiaries on the date of the Indenture and any other business reasonably related, complementary or ancillary thereto. "Permitted Investments" means (a) any Investment in the Company or in a Restricted Subsidiary of the Company that is a Subsidiary Guarantor and is engaged in a Permitted Business; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary of the Company and a Subsidiary Guarantor and is engaged in a Permitted Business or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company that is a Subsidiary Guarantor and that is engaged in Permitted Business; (d) any Investment made as a result of the receipt of assets not constituting Cash Equivalents from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption "--Repurchase at the Option of Holders--Asset Sales;" (e) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (f) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (f) that are at the time outstanding, not to exceed $10.0 million; (g) Investments in securities of customers received in settlement of obligations or pursuant to a plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (h) Investments existing on the date of the Indenture; (i) loans and advances to officers, directors, members and employees for business-related travel expenses, moving expenses and other similar expenses, in each case, incurred in the ordinary course of business and consistent with past practices not to exceed $1.0 million in the aggregate at any time; (j) any Hedging Obligation; (k) Investments consisting of intercompany loans from the Company and its Restricted Subsidiaries to Restricted Subsidiaries, including Restricted Subsidiaries that are not Subsidiary Guarantors; (l) Investments consisting of capital contributions from the Company or any Restricted Subsidiaries to Restricted Subsidiaries that are not Subsidiary Guarantors in an aggregate amount at any one time outstanding not to exceed $10.0 million; and (m) Investments in joint ventures formed in the ordinary course of business for the purpose of bidding and completing specific projects within a Permitted Business in an aggregate amount at any one time outstanding not to exceed $5.0 million. "Permitted Junior Securities" means Equity Interests in the Company or any Subsidiary Guarantor or debt securities that are subordinated to all Senior Debt (and any debt securities issued in exchange for Senior Debt) to substantially the same extent as, or to a greater extent than, the Notes are subordinated to Senior Debt pursuant 94 to the Indenture; provided that no such Equity Interests or debt securities may be issued if the rights of the holders of the Senior Debt are impaired by any such issuance in connection with a reorganization, including, without limitation, by reason of such rights being impaired within the meaning of Section 1124 of Title 11 of the United States Code. "Permitted Liens" means (i) Liens on assets of the Company securing Senior Debt of the Company and Liens on assets of Subsidiary Guarantors securing Senior Debt, provided, in each case, that such Indebtedness was permitted by the terms of the Indenture to be incurred; (ii) Liens in favor of the Company or a Subsidiary Guarantor; (iii) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, bid bonds, payment bonds, performance and lien bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (v) or (ix) of the second paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock" covering, in the case of such clause (v), only the assets acquired with such Indebtedness; (vii) Liens existing on the date of the Indenture; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (ix) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries; (x) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $7.5 million at any one time outstanding and that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary; (xi) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens (including statutory maritime Liens) imposed by law incurred in the ordinary course of business; (xii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security or similar obligations, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (xiii) judgment or attachment Liens not giving rise to an Event of Default; (xiv) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary course of the business of the Company or any of its Restricted Subsidiaries; (xv) any interest or title of a lessor under any lease, whether or not characterized as capital or operating; provided that such Liens do not extend to any property or assets which is not leased property subject to such lease; (xvi) Liens securing Hedging Obligations which Hedging Obligations relate to Indebtedness that is otherwise permitted under the Indenture; (xvii) Liens securing reimbursement obligations with respect to letters of credit and products and proceeds thereof; (xviii) Liens securing Permitted Refinancing Indebtedness which is incurred to refinance any Indebtedness which has been secured by a Lien permitted under the Indenture and which has been incurred in accordance with the provisions of the Indenture; (xix) Liens in favor of the Company or any of its Restricted Subsidiaries securing Indebtedness of any Restricted Subsidiary that is not a Subsidiary Guarantor; (xx) Liens with respect to current wages of the master and crew and for wages of a stevedore when employed directly by the Company or any Subsidiary of the Company, or by the charterer, operator, master or agent of any of the vessels owned or operated by the Company or any Subsidiary of the Company; and (xxi) Liens for salvage (including contract salvage). "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, to extend, refinance, renew, replace, defease or refund other Indebtedness of 95 the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses, premiums, penalties, fees and interest incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Public Equity Offering" means a public offering pursuant to an effective registration statement under the Securities Act of Equity Interests (other than Disqualified Stock) of the Company. "Qualified Proceeds" means any of the following or any combination of the following: (i) cash, (ii) Cash Equivalents, (iii) assets that are used or useful in a Permitted Business and (iv) the Capital Stock of any Person engaged in a Permitted Business if, in connection with the receipt by the Company or any Restricted Subsidiary of the Company of such Capital Stock, (a) such Person becomes a Restricted Subsidiary of the Company or any Restricted Subsidiary of the Company or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or any Restricted Subsidiary of the Company. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Senior Debt" means (i) all Obligations of the Company or a Subsidiary Guarantor outstanding under the New Credit Facility, including any Guarantee thereof and all Hedging Obligations with respect thereto and all interest and fees accrued with respect thereto following the commencement of a proceeding under bankruptcy law, whether or not considered an allowed claim in such proceeding, (ii) all Permitted Bonding Obligations from time to time outstanding, (iii) any other Indebtedness of the Company or a Subsidiary Guarantor permitted to be incurred under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes and (iv) all Obligations with respect to the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Debt will not include (v) any liability for federal, state, local or other taxes owed or owing, (w) any Indebtedness of the Company or any Subsidiary Guarantor to any Subsidiary of the Company or any other Affiliates of the Company, (x) any trade payables, (y) any Indebtedness which is expressly subordinated to any other Indebtedness of the Company or any of its Subsidiaries, or (z) any Indebtedness that is incurred in violation of the Indenture. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date hereof. "Stated Maturity" means, with respect to any installment of interest or principal (including any sinking fund payment) on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any 96 contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Stockholders' Agreement" means the Securities Purchase and Holders Agreement among the stockholders of the Company, as in effect on the date of the Indenture. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "Subsidiary Guarantors" means each of (i) the wholly owned domestic Restricted Subsidiaries of the Company on the date of the Indenture and (ii) any other subsidiary that executes a Subsidiary Guarantee in accordance with the provisions of the Indenture, and their respective successors and assigns. "Sureties" means Reliance Insurance Company, United Pacific Insurance Company, Reliance National Insurance Company and Reliance Surety Company, together with any of their respective affiliates. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company or any successor to any of them) that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a board resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non- Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has at least one director on its board of directors that is not a director or executive officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Company or any of its Restricted Subsidiaries. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by the covenant described above under the caption "Certain Covenants--Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "Certain Covenants-- Incurrence of Indebtedness and Issuance of Disqualified Stock," the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under the covenant described under the caption "Certain Covenants--Incurrence of Indebtedness and Issuance of Disqualified Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. 97 "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. 98 CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following discussion summarizes the material United States federal income tax consequences of the Exchange Offer to a holder of Existing Notes who is an individual citizen or resident of the United States or a United States corporation that purchased the Existing Notes pursuant to their original issue (a "U.S. Holder"). It is based on the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), existing and proposed Treasury regulations, and judicial and administrative determinations, all of which are subject to change at any time, possibly on a retroactive basis. The following relates only to the Existing Notes, and the Exchange Notes received therefor, that are held as "capital assets" within the meaning of Section 1221 of the Code by U.S. Holders. It does not discuss state, local, or foreign tax consequences, nor does it discuss tax consequences to subsequent purchasers (persons who did not purchase the Existing Notes pursuant to their original issue), or to categories of holders that are subject to special rules, such as foreign persons, tax-exempt organizations, insurance companies, banks and dealers in stocks and securities. Tax consequences may vary depending on the particular status of an investor. No rulings will be sought from the Internal Revenue Service with respect to the federal income tax consequences of the Exchange Offer. THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO EXCHANGE EXISTING NOTES FOR EXCHANGE NOTES. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR CONCERNING THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO ITS PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE EXISTING NOTES FOR EXCHANGE NOTES. THE EXCHANGE OFFER The exchange of Existing Notes pursuant to the Exchange Offer should be treated as a continuation of the corresponding Existing Notes, because the terms of the Exchange Notes are not materially different from the terms of the Existing Notes. Accordingly, such exchange should not constitute a taxable event to U.S. Holders and, therefore, (i) no gain or loss should be realized by U.S. Holders upon receipt of an Exchange Note, (ii) the holding period of an Exchange Note should include the holding period of the Existing Note exchanged therefor and (iii) the adjusted tax basis of an Exchange Note should be the same as the adjusted tax basis of the Existing Note exchanged therefor immediately before the exchange. STATED INTEREST Stated interest on a Note will be taxable to a U.S. Holder as ordinary interest income at the time that such interest accrues or is received, in accordance with the U.S. Holder's regular method of accounting for federal income tax purposes. The Notes are not considered to have been issued with original issue discount for federal income tax purposes. SALE, EXCHANGE OR RETIREMENT OF THE NOTES A U.S. Holder's tax basis in a Note generally will be its cost. A U.S. Holder generally will recognize gain or loss on the sale, exchange or retirement of a Note in an amount equal to the difference between the amount realized on the sale, exchange or retirement and the tax basis of the Note. Gain or loss recognized on the sale, exchange or retirement of a Note (excluding amounts received in respect of accrued interest, which will be taxable as ordinary interest income) generally will be capital gain or loss and will be long-term capital gain or loss, if the Note was held for more than one year. Under recently enacted legislation, net long-term capital gain recognized by non-corporate taxpayers is generally subject to a 20% maximum rate of tax. 99 BACKUP WITHHOLDING Under certain circumstances, a U.S. Holder of a Note may be subject to "backup withholding" at a 31% rate with respect to payments of interest thereon or the gross proceeds from the disposition thereof. This withholding generally applies if the U.S. Holder fails to furnish his or her social security number or other taxpayer identification number in the specified manner and in certain circumstances or fails to properly certify that he or she is not subject to backup withholding in general. Any amount withheld from a payment to a U.S. Holder under the backup withholding rules is allowable as a credit against such U.S. Holder's federal income tax liability. Corporations and certain other entities described in the Code and Treasury regulations are exempt from backup withholding if their exempt status is properly established. PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Existing Notes where such Existing Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until 90 days after the date of this Prospectus, all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. 100 LEGAL MATTERS Certain legal matters with respect to the Exchange Notes offered hereby will be passed upon for the Company by Dechert Price & Rhoads, Philadelphia, Pennsylvania. EXPERTS The consolidated financial statements of the Company as of December 31, 1996 and 1997 and for each of the three years in the period ended December 31, 1997 included in this Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The financial statements of Amboy as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997 included in this Prospectus have been audited by J.H. Cohn LLP, independent public accountants, as stated in their report included herein. 101 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES Page Condensed Consolidated Balance Sheet of Great Lakes Dredge & Dock Corporation and Subsidiaries as of June 30, 1998--unaudited............. F-2 Condensed Consolidated Statements of Income for Great Lakes Dredge & Dock Corporation and Subsidiaries for the six months ended June 30, 1998 and 1997--unaudited......................................................... F-3 Condensed Consolidated Statements of Cash Flows for Great Lakes Dredge & Dock Corporation and Subsidiaries for the six months ended June 30, 1998 and 1997--unaudited..................................................... F-4 Notes to Condensed Consolidated Financial Statements of Great Lakes Dredge & Dock Corporation and Subsidiaries as of June 30, 1998-- unaudited............................................................... F-5 Independent Auditors' Report............................................. F-13 Consolidated Balance Sheets of Great Lakes Dredge & Dock Corporation and Subsidiaries as of December 31, 1997 and 1996........................... F-14 Consolidated Statements of Income and Retained Earnings of Great Lakes Dredge & Dock Corporation and Subsidiaries for the years ended December 31, 1997, 1996 and 1995................................................. F-15 Consolidated Statements of Cash Flows of Great Lakes Dredge & Dock Corporation and Subsidiaries for the years ended December 31, 1997, 1996 and 1995................................................................ F-16 Notes to Consolidated Financial Statements of Great Lakes Dredge & Dock Corporation and Subsidiaries for the years ended December 31, 1997, 1996 and 1995................................................................ F-17 AMBOY AGGREGATES JOINT VENTURE Report of Independent Public Accountants................................. F-34 Balance Sheets of Amboy Aggregates (A Joint Venture) as of December 31, 1997 and 1996........................................................... F-35 Statements of Income and Partners' Capital of Amboy Aggregates (A Joint Venture) for the years ended December 31, 1997, 1996 and 1995........... F-36 Statements of Cash Flows for Amboy Aggregates (A Joint Venture) for the years ended December 31, 1997, 1996 and 1995............................ F-37 Notes to Financial Statement for Amboy Aggregates (A Joint Venture)...... F-38
F-1 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 1998 (UNAUDITED) (IN THOUSANDS)
JUNE 30, 1998 -------- ASSETS Current assets: Cash and equivalents.................................................. $ 550 Accounts receivable, net.............................................. 43,517 Contract revenues in excess of billings............................... 6,728 Inventories........................................................... 9,626 Settlement advance.................................................... 11,000 Prepaid expenses and other current assets............................. 8,898 -------- Total current assets................................................ 80,319 Property and equipment, net........................................... 137,308 Inventories........................................................... 6,632 Investments in joint ventures......................................... 9,011 Other assets.......................................................... 1,637 -------- Total assets........................................................ $234,907 ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable...................................................... $ 22,612 Accrued expenses and other............................................ 18,322 Current maturities of long-term debt.................................. 200 -------- Total current liabilities........................................... 41,134 Long-term debt........................................................ 50,400 Deferred tax liability................................................ 47,204 Other................................................................. 10,174 -------- Total liabilities................................................... 148,912 Minority interests.................................................... 3,128 Commitments and contingencies (Note 7)................................ Stockholders' equity: Preferred stock--$.01 par value; authorized: 100; none issued........ -- Common stock--no par value; authorized: 200; issued and outstanding: 100................................................................. 60,000 Retained earnings.................................................... 22,867 -------- Total liabilities and stockholders' equity.......................... $234,907 ========
See notes to unaudited condensed consolidated financial statements. F-2 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) (IN THOUSANDS)
FOR THE SIX MONTHS ENDED JUNE 30, ------------------ 1998 1997 -------- -------- Contract revenues........................................... $127,017 $108,372 Costs of contract revenues.................................. (105,933) (98,462) -------- -------- Gross profit.............................................. 21,084 9,910 General and administrative expenses......................... (9,920) (9,075) -------- -------- Operating income.......................................... 11,164 835 Interest expense, net....................................... (2,123) (2,812) Equity in earnings of joint ventures........................ 414 588 -------- -------- Income (loss) before income taxes and minority interests.... 9,455 (1,389) Income tax (expense) benefit................................ (3,411) 915 Minority interests.......................................... (1,334) (1,188) -------- -------- Net income (loss)......................................... $ 4,710 $ (1,662) ======== ========
See notes to unaudited condensed consolidated financial statements. F-3 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) (IN THOUSANDS)
FOR THE SIX MONTHS ENDED JUNE 30, ------------------ 1998 1997 -------- -------- OPERATING ACTIVITIES Net income (loss)......................................... $ 4,710 $ (1,662) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation............................................ 7,327 6,907 Earnings of joint ventures.............................. (414) (588) Minority interests...................................... 1,334 1,188 Deferred income taxes................................... (352) (1,326) Gain on dispositions of property and equipment.......... (366) (3,208) Other, net.............................................. (990) (1,113) Changes in assets and liabilities: Accounts receivable................................... (3,218) (11,996) Contract revenues in excess of billings............... 8,780 (2,767) Inventories........................................... (737) 422 Prepaid expenses and other current assets............. 3,773 (557) Accounts payable, accrued expenses and other.......... (8,460) 11,372 -------- -------- Net cash flows from operating activities................ 11,387 (3,328) INVESTING ACTIVITIES Purchases of property and equipment....................... (5,920) (3,536) Proceeds from dispositions of property and equipment...... 366 5,147 Distribution to minority interest......................... -- (700) Deposit................................................... -- 2,500 -------- -------- Net cash flows from investing activities................ (5,554) 3,411 FINANCING ACTIVITIES Proceeds from long-term debt.............................. 36,500 29,000 Repayments of long-term debt.............................. (43,500) (17,326) Settlement advance........................................ -- (11,000) -------- -------- Net cash flows from financing activities................ (7,000) 674 Net increase (decrease) in cash and equivalents........... (1,167) 757 Cash and equivalents at beginning of period............... 1,717 1,887 -------- -------- Cash and equivalents at end of period..................... $ 550 $ 2,644 ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest.................................... $ 2,113 $ 1,646 ======== ======== Cash paid for taxes....................................... $ 3,135 $ 338 ======== ========
See notes to unaudited condensed consolidated financial statements. F-4 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1998 (UNAUDITED) (IN THOUSANDS) 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these financial statements do not include all the information in the notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations. The unaudited condensed consolidated financial statements and notes herein should be read in conjunction with the audited consolidated financial statements of the Company and the notes thereto. 2. ALLOCATION OF EQUIPMENT COST The Company can have significant fluctuations in equipment utilization throughout the year. Accordingly, for interim reporting the Company prepays or accrues fixed equipment costs and amortizes the expenses in proportion to revenues recognized over the year to better match revenues and expenses. 3. ACCOUNTS RECEIVABLE Accounts receivable at June 30, 1998 are as follows: Completed contracts............................................. $33,680 Contracts in progress........................................... 6,720 Retainage....................................................... 3,599 ------- 43,999 Allowance for doubtful accounts................................. (482) ------- $43,517 =======
4. CONTRACTS IN PROGRESS The components of contracts in progress at June 30, 1998 are as follows: Cost and earnings in excess of billings: Accumulated costs and earnings for contracts in progress....... $ 43,705 Amounts billed................................................. (42,415) -------- Cost and earnings in excess of billings for contracts in progress........................................................ 1,290 Cost and earnings in excess of billings for completed contracts.. 5,438 -------- $ 6,728 ======== Billings in excess of costs and earnings (included in accrued expenses and other): Amounts billed................................................. $(57,354) Accumulated costs and earnings for contracts in progress....... 54,708 -------- $ (2,646) ========
F-5 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED) 5. INVESTMENTS IN JOINT VENTURES The Company has a 50% ownership interest in Amboy Aggregates Joint Venture, whose primary business is the dredge mining and sale of fine aggregate, and a 14% ownership interest in a venture whose sole business is the performance of a dredging contract in Argentina and Uruguay (Riovia S.A. Venture). Summarized financial information of the joint ventures as of and for the five months ended May 31, 1998 and 1997 is as follows:
AMBOY RIOVIA AGGREGATES VENTURE ---------- -------- AS OF MAY 31, 1998 Current assets......................................... $ 8,374 $ 23,829 Non-current assets..................................... 15,908 1,900 -------- -------- Total assets......................................... 24,282 25,729 Current liabilities.................................... (2,536) (8,585) Non-current liabilities................................ (11,272) (9,490) -------- -------- Stockholders' equity................................. $ 10,474 $ 7,654 ======== ======== FIVE MONTHS ENDED MAY 31, 1998 Contract revenues...................................... $ 5,973 $ 14,598 Costs and expenses..................................... (6,467) (15,187) -------- -------- Net income........................................... $ (494) $ (589) ======== ======== FIVE MONTHS ENDED MAY 31, 1997 Contract revenues...................................... $ 7,713 Costs and expenses..................................... (7,121) -------- Net income........................................... $ 592 ========
6. LONG-TERM DEBT Long-term debt is as follows: Bank debt: Revolving loan................................................ $50,000 Other secured debt............................................ 600 ------- 50,600 Current maturities of long-term debt............................ (200) ------- $50,400 =======
At June 30, 1998, the Company's average borrowing rate was 7.8%, including amortization of financing fees. Letters of credit reducing the availability under the revolving loan commitment were $10,200 as of June 30, 1998. 7. COMMITMENTS AND CONTINGENCIES At June 30, 1998, the Company is contingently liable, in the normal course of business, for $1,237 in additional letters of credit related to contract performance guarantees. In July 1998, the Company entered into an agreement to acquire two hydraulic dredges, certain support vessels and operating inventory from a competitor for approximately $14.5 million. The Company has contracted to build a backhoe dredge for approximately $18.0 million for delivery in early 1999. F-6 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED) In 1992, an underwater utility tunnel failed adjacent to a construction site completed by Great Lakes Dredge & Dock Company, a wholly owned subsidiary of Great Lakes Dredge & Dock Corporation. The failure resulted in a flooding of the tunnel and building basements serviced by the tunnel. Numerous suits were filed against Great Lakes Dredge & Dock Company for claims of flood damage to building basements and losses due to business interruption. During 1997, all outstanding claims related to the flood litigation were settled. Settlement payments totaling $11,000 were advanced by the Company. Management believes all such advances will be fully recovered through insurance proceeds in 1998. 8. SUBSEQUENT EVENTS On July 20, 1998, the Company, the stockholders of the Company and Vectura Holdings, LLC entered into an Agreement and Plan of Merger providing for the recapitalization of the Company. In order to fund and consummate the recapitalization, it is anticipated that the Company will incur $115 million in a senior subordinated notes offering, enter into a new bank credit facility providing $110 million of capacity, and issue $50 million of capital stock to Vectura Holdings, LLC and certain members of Company management. Following consummation of the recapitalization, the Company will be the surviving corporation with certain members of management holding approximately 16% in aggregate of the outstanding common stock of the Company, as a result of exercising stock options and the issuance of common stock. 9. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION The payment obligations of the Company under the proposed senior subordinated note offering are to be guaranteed by certain of the Company's wholly owned domestic subsidiaries ("Subsidiary Guarantors"). Such guarantees are full, unconditional and joint and several. Separate financial statements of the Subsidiary Guarantors are not presented because the Company's management has determined that they would not be material to investors. The following supplemental financial information sets forth, on a combined basis, the balance sheet, statements of income and statements of cash flows for the Subsidiary Guarantors, the Company's non-guarantor subsidiaries and for the Company (GLD Corporation). F-7 GREAT LAKES DREDGE AND DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET AT JUNE 30, 1998
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ ASSETS Current assets: Cash and equivalents.. $ 458 $ 92 $ -- $ -- $ 550 Accounts receivable, net.................. 39,150 4,367 -- -- 43,517 Receivables from affiliates........... 21,068 12,455 -- (33,523) -- Current portion of net investment in direct financing leases..... 3,080 4,432 -- (7,512) -- Contract revenues in excess of billings... 6,728 -- -- -- 6,728 Inventories........... 6,704 2,922 -- -- 9,626 Settlement advance.... 11,000 -- -- -- 11,000 Prepaid expenses and other current assets. 8,898 -- -- -- 8,898 -------- ------- ------- --------- -------- Total current assets............. 97,086 24,268 -- (41,035) 80,319 Property and equipment, net.................... 120,679 16,629 -- -- 137,308 Net investment in direct financing leases....... 7,418 11,300 -- (18,718) -- Investments in subsidiaries........... 164,976 -- 82,866 (247,842) -- Notes receivable from affiliates............. 36,415 1,549 -- (37,964) -- Inventories............. 6,632 -- -- -- 6,632 Investments in joint ventures............... 9,011 -- -- -- 9,011 Other................... 1,637 -- -- -- 1,637 -------- ------- ------- --------- -------- $443,854 $53,746 $82,866 $(345,559) $234,907 ======== ======= ======= ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable...... $ 20,316 $ 2,286 $ -- $ 10 $ 22,612 Payable to affiliates. 31,127 2,396 -- (33,523) -- Accrued expenses and other................ 15,119 3,203 -- -- 18,322 Current portion of obligations under capital leases....... -- 7,512 -- (7,512) -- Current maturities of long-term debt....... 200 -- -- -- 200 -------- ------- ------- --------- -------- Total current liabilities........ 66,762 15,397 -- (41,025) 41,134 Long-term debt.......... 50,400 -- -- -- 50,400 Obligations under capital leases......... -- 18,718 -- (18,718) -- Note payable to affiliate.............. 37,964 -- -- (37,964) -- Deferred income taxes... 44,181 3,023 -- -- 47,204 Other................... 10,103 71 -- -- 10,174 -------- ------- ------- --------- -------- Total liabilities... 209,410 37,209 -- (97,707) 148,912 Minority interests...... 3,266 -- -- (138) 3,128 Stockholders' equity.... 231,178 16,537 82,866 (247,714) 82,867 -------- ------- ------- --------- -------- $443,854 $53,746 $82,866 $(345,559) $234,907 ======== ======= ======= ========= ========
F-8 GREAT LAKES DREDGE AND DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ Contract revenues....... $104,930 $22,471 $ -- $ (384) $ 127,017 Costs of contract revenues............... (91,776) (14,541) -- (384) (105,933) -------- ------- ------ ------- --------- Gross profit.......... 13,154 7,930 -- -- 21,084 General and administrative expenses............... (7,752) (2,168) -- -- (9,920) -------- ------- ------ ------- --------- Operating income...... 5,402 5,762 -- -- 11,164 Interest expense, net... (2,022) (101) -- -- (2,123) Equity in earnings of subsidiaries........... -- -- 4,710 (4,710) -- Equity in earnings of joint ventures......... 414 -- -- -- 414 -------- ------- ------ ------- --------- Income before income taxes and minority interests............ 3,794 5,661 4,710 (4,710) 9,455 Income tax expense...... (2,946) (465) -- -- (3,411) Minority interests...... (1,334) -- -- -- (1,334) -------- ------- ------ ------- --------- Net income (loss)... $ (486) $ 5,196 $4,710 $(4,710) $ 4,710 ======== ======= ====== ======= =========
F-9 GREAT LAKES DREDGE AND DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1998
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ OPERATING ACTIVITIES Net income (loss)....... $ (486) $ 5,196 $4,710 $(4,710) $ 4,710 Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation........... 5,313 2,014 -- -- 7,327 Earnings of subsidiaries and joint ventures.............. (414) -- (4,710) 4,710 (414) Minority interests..... 1,334 -- -- -- 1,334 Deferred income taxes.. (352) -- -- -- (352) Gain on dispositions of property and equipment............. (366) -- -- -- (366) Other, net............. (1,488) 498 -- -- (990) Changes in assets and liabilities: Accounts receivable... 2,680 (5,898) -- -- (3,218) Contract revenues in excess of billings... 8,079 701 -- -- 8,780 Inventories........... (737) -- -- -- (737) Prepaid expenses and other current assets. 3,773 -- -- -- 3,773 Accounts payable and accrued expenses..... (6,849) (1,611) -- -- (8,460) -------- ------- ------ ------- -------- Net cash flows from operating activities.. 10,487 900 -- -- 11,387 INVESTING ACTIVITIES Purchases of property and equipment.......... (5,769) (151) -- -- (5,920) Proceeds from dispositions of property and equipment. 366 -- -- -- 366 Principal payments received on direct financing leases....... (1,986) 1,986 -- -- -- Payments received on notes receivable from affiliates............. (345) 345 -- -- -- -------- ------- ------ ------- -------- Net cash flows from investing activities.. (7,734) 2,180 -- -- (5,554) FINANCING ACTIVITIES Proceeds from long-term debt................... 36,500 -- -- -- 36,500 Repayments of long-term debt................... (43,500) -- -- -- (43,500) Principal payments on capital leases......... 3,420 (3,420) -- -- -- -------- ------- ------ ------- -------- Net cash flows from financing activities.. (3,580) (3,420) -- -- (7,000) -------- ------- ------ ------- -------- Net decrease in cash and equivalents............ (827) (340) -- -- (1,167) Cash and equivalents at beginning of period.... 1,285 432 -- -- 1,717 -------- ------- ------ ------- -------- Cash and equivalents at end of period.......... $ 458 $ 92 $ -- $ -- $ 550 ======== ======= ====== ======= ========
F-10 GREAT LAKES DREDGE AND DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1997
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ Contract revenues....... $75,842 $34,361 $ $(1,831) $108,372 Costs of contract revenues............... (73,881) (26,412) -- (1,831) (98,462) ------- ------- ------- ------- -------- Gross profit.......... 1,961 7,949 -- -- 9,910 General and administrative expenses............... (6,729) (2,346) -- -- (9,075) ------- ------- ------- ------- -------- Operating income (loss)............... (4,768) 5,603 -- -- 835 Interest expense, net... (2,866) 54 -- -- (2,812) Equity in earnings of subsidiaries........... -- -- (1,662) 1,662 -- Equity in earnings of joint venture.......... 588 -- -- -- 588 ------- ------- ------- ------- -------- Income (loss) before income taxes, minority interests... (7,046) 5,657 (1,662) 1,662 (1,389) Income tax benefit (expense).............. 1,391 (476) -- -- 915 Minority interests...... (1,188) -- -- -- (1,188) ------- ------- ------- ------- -------- Net income (loss)... $(6,843) $ 5,181 $(1,662) $ 1,662 $ (1,662) ======= ======= ======= ======= ========
F-11 GREAT LAKES DREDGE AND DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1997
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ OPERATING ACTIVITIES Net income (loss)....... $(6,843) $ 5,181 $(1,662) $1,662 $ (1,662) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation........... 5,044 1,863 -- -- 6,907 Earnings of subsidiaries and joint ventures.............. (588) -- 1,662 (1,662) (588) Minority interests..... 1,188 -- -- -- 1,188 Deferred income taxes.. (1,326) -- -- -- (1,326) Gain on dispositions of property and equipment............. (3,208) -- -- -- (3,208) Other, net............. (4,024) 2,911 -- -- (1,113) Changes in assets and liabilities: Accounts receivable... 160 (12,156) -- -- (11,996) Contract revenues in excess of billings... (4,746) 1,979 -- -- (2,767) Inventories........... 422 -- -- -- 422 Prepaid expenses and other current assets. (557) -- -- -- (557) Accounts payable and accrued expenses..... 6,658 4,714 -- -- 11,372 ------- -------- ------- ------ -------- Net cash flows from operating activities.. (7,820) 4,492 -- -- (3,328) INVESTING ACTIVITIES Purchases of property and equipment.......... (3,028) (508) -- -- (3,536) Proceeds from dispositions of property and equipment. 5,147 -- -- -- 5,147 Distribution to minority interest............... -- (700) -- -- (700) Principal payments received on direct financing leases....... (1,722) 1,722 -- -- -- Payments received on notes receivable from affiliate.............. (686) 686 -- -- -- Deposit................. 2,500 -- -- -- 2,500 ------- -------- ------- ------ -------- Net cash flows from investing activities.. 2,211 1,200 -- -- 3,411 FINANCING ACTIVITIES Proceeds from long-term debt................... 29,000 -- -- -- 29,000 Repayments of long-term debt................... (17,326) -- -- -- (17,326) Principal payments on capital leases......... 3,027 (3,027) -- -- -- Settlement advance...... (11,000) -- -- -- (11,000) ------- -------- ------- ------ -------- Net cash flows from financing activities.. 3,701 (3,027) -- -- 674 ------- -------- ------- ------ -------- Net increase (decrease) in cash and equivalents............ (1,908) 2,665 -- -- 757 Cash and equivalents at beginning of period.... 570 1,317 -- -- 1,887 ------- -------- ------- ------ -------- Cash and equivalents at end of period.......... $(1,338) $ 3,982 -- -- $ 2,644 ======= ======== ======= ====== ========
F-12 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Great Lakes Dredge & Dock Corporation: We have audited the accompanying consolidated balance sheets of Great Lakes Dredge & Dock Corporation and subsidiaries (the Company) as of December 31, 1997 and 1996, and the related consolidated statements of income and retained earnings, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Great Lakes Dredge & Dock Corporation and subsidiaries at December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Chicago, Illinois January 30, 1998 F-13 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1997 AND 1996 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1997 1996 -------- -------- ASSETS Current assets: Cash and equivalents....................................... $ 1,717 $ 1,887 Accounts receivable, net................................... 40,299 28,057 Contract revenues in excess of billings.................... 15,508 11,252 Inventories................................................ 9,195 9,910 Settlement advance......................................... 11,000 -- Prepaid expenses........................................... 5,118 2,875 Deposit.................................................... -- 2,500 Net assets of discontinued operations...................... -- 1,929 Other current assets....................................... 8,319 8,383 -------- -------- Total current assets..................................... 91,156 66,793 Property and equipment, net.................................. 138,716 142,966 Inventories.................................................. 6,326 6,875 Investments in joint ventures................................ 7,569 4,807 Other assets................................................. 1,788 617 -------- -------- $245,555 $222,058 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable........................................... $ 31,001 $ 20,104 Accrued expenses........................................... 15,419 11,001 Billings in excess of contract revenues.................... 2,974 326 Current maturities of long-term debt....................... 200 13,322 -------- -------- Total current liabilities................................ 49,594 44,753 Long-term debt............................................... 57,400 39,114 Deferred income taxes........................................ 48,322 52,061 Foreign income taxes......................................... 5,078 2,382 Other........................................................ 5,149 6,180 -------- -------- Total liabilities........................................ 165,543 144,490 Minority interests........................................... 1,856 3,214 Commitments and contingencies (Notes 10 and 15) Stockholders' equity: Preferred stock--$.01 par value; authorized: 100; none issued.................................................... -- -- Common stock--no par value; authorized: 200; issued and outstanding: 100.......................................... 60,000 60,000 Retained earnings.......................................... 18,156 14,354 -------- -------- Total stockholders' equity............................... 78,156 74,354 -------- -------- $245,555 $222,058 ======== ========
See notes to consolidated financial statements. F-14 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (IN THOUSANDS)
1997 1996 1995 -------- -------- -------- Contract revenues................................ $258,296 $235,871 $226,865 Costs of contract revenues....................... (228,383) (208,717) (217,077) -------- -------- -------- Gross profit................................... 29,913 27,154 9,788 General and administrative expenses.............. (18,922) (16,391) (15,870) -------- -------- -------- Operating income (loss)........................ 10,991 10,763 (6,082) Other income (expense): Interest income................................ 316 138 380 Interest expense............................... (6,303) (6,182) (8,242) Equity in earnings of joint ventures........... 3,132 1,139 1,333 -------- -------- -------- Income (loss) before income taxes, minority interests and discontinued operations....... 8,136 5,858 (12,611) Income tax (expense) benefit..................... (2,667) (2,324) 4,160 Minority interests............................... (1,667) (419) (1,204) -------- -------- -------- Income (loss) from continuing operations....... 3,802 3,115 (9,655) Discontinued operations Loss from operations, net of tax benefit: 1997- $0; 1996-$695; and 1995-$163 ................. -- (1,044) (329) Loss on disposal, net of tax benefit of $44 in 1996.......................................... -- (65) -- -------- -------- -------- Net income (loss)............................ 3,802 2,006 (9,984) Retained earnings at beginning of year........... 14,354 12,348 22,332 -------- -------- -------- Retained earnings at end of year................. $ 18,156 $ 14,354 $ 12,348 ======== ======== ========
See notes to consolidated financial statements. F-15 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (IN THOUSANDS)
1997 1996 1995 -------- -------- -------- OPERATING ACTIVITIES Net income (loss)............................... $ 3,802 $ 2,006 $ (9,984) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation.................................. 13,615 13,881 14,700 Earnings of joint ventures.................... (3,132) (1,139) (1,333) Minority interests............................ 1,667 419 1,204 Deferred income taxes......................... (3,963) (3,796) (1,352) Gain on dispositions of property and equipment.................................... (3,308) (467) (1,496) Foreign income taxes.......................... 2,696 2,382 -- Pension curtailment and settlement............ -- (1,688) -- Other, net.................................... (238) 217 6 Changes in assets and liabilities: Accounts receivable......................... (12,242) 20,945 5,043 Contract revenues in excess of billings..... (4,256) 3,094 3,472 Inventories................................. 1,264 3,915 (3,714) Prepaid expenses and other current assets... (250) (402) 2,110 Income taxes receivable..................... -- 3,509 (3,509) Accounts payable and accrued expenses....... 15,315 (15,881) (8,500) Billings in excess of contract revenues..... 2,648 (2,321) (396) -------- -------- -------- Net cash flows from operating activities...... 13,618 24,674 (3,749) INVESTING ACTIVITIES Purchases of property and equipment............. (11,494) (5,411) (11,473) Dispositions of property and equipment.......... 5,437 7,820 2,664 Distributions from joint venture................ 1,000 750 5,500 Investments in joint venture.................... (630) (755) -- Distribution to minority interests.............. (3,025) (700) (640) Deposit......................................... 2,500 (2,500) -- -------- -------- -------- Net cash flows from investing activities...... (6,212) (796) (3,949) FINANCING ACTIVITIES Proceeds from long-term debt.................... 102,500 27,051 52,700 Repayments of long-term debt.................... (97,336) (51,368) (46,220) Financing fees.................................. (1,740) -- -- Settlement advance.............................. (11,000) -- -- -------- -------- -------- Net cash flows from financing activities...... (7,576) (24,317) 6,480 -------- -------- -------- Net decrease in cash and equivalents............ (170) (439) (1,218) Cash and equivalents at beginning of year....... 1,887 2,326 3,544 -------- -------- -------- Cash and equivalents at end of year............. $ 1,717 $ 1,887 $ 2,326 ======== ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest.......................... $ 5,407 $ 6,131 $ 7,100 ======== ======== ======== Cash paid for taxes............................. $ 4,588 $ 1,492 $ 5,047 ======== ======== ========
See notes to consolidated financial statements. F-16 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Great Lakes Dredge & Dock Corporation ("GLD Corporation") is wholly owned by Blackstone Limited Partnerships. GLD Corporation and its subsidiaries (the Company) are in the business of marine construction, primarily dredging. The Company's primary customers are domestic and foreign government agencies. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The consolidated financial statements include the accounts of GLD Corporation and its subsidiaries. All significant intercompany accounts and transactions are eliminated. The Company is a joint venture partner in Amboy Aggregates Joint Venture and Riovia S.A. which are accounted for under the equity method. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. REVENUE AND COST RECOGNITION ON CONTRACTS Contract revenues are recognized under the percentage-of-completion method, based on the Company's engineering estimates of the physical percentage completed of each project. Billings on contracts are generally submitted after verification with the customers of physical quantities completed. Costs of contract revenues are adjusted to reflect the gross profit percentage expected to be achieved upon ultimate completion of each project. Significant expenditures incurred incidental to major contracts are deferred and recognized as contract costs based on contract performance over the duration of the related project. These expenditures are reported as prepaid expenses. Provisions for estimated losses on contracts in progress are made in the period in which such losses are determined. Claims for additional compensation due the Company are not recognized in contract revenues until such claims are settled. CLASSIFICATION OF CURRENT ASSETS AND LIABILITIES The Company includes in current assets and liabilities amounts realizable and payable in the normal course of contract completion unless completion of such contracts extends significantly beyond one year. CASH EQUIVALENTS The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. INVENTORIES Inventories are recorded at the lower of first-in, first-out cost or market. Inventories consist mainly of pipe, purchased spare parts and supplies. DEPRECIATION Depreciation is calculated over the estimated useful lives of property and equipment using the straight-line method. The estimated useful lives by class of assets are 5 to 10 years for furniture and fixtures and 3 to 25 years for operating equipment. F-17 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of financial instruments included in current assets and liabilities approximates fair values due to the short-term maturities of these instruments. The carrying value of long-term debt is a reasonable estimate of its fair value as interest rates are variable, based on the prevailing market rates. The contract amount of letters of credit and guarantees is a reasonable estimate of their fair value as the value for each is fixed over the life of the commitment. LONG-LIVED ASSETS Long lived assets are reviewed for possible impairment whenever events indicate that the carrying amount of such assets may not be recoverable. If such a review indicates an impairment, the carrying amount would be reduced to estimated recoverable value. CAPITAL STOCK In 1996, the Company authorized an additional 100 shares of common stock and effected a 5 for 1 stock split of the common shares outstanding. The authorized capital stock of the Company includes 100 shares of preferred stock, which the Board of Directors is authorized to issue and to establish the dividend, redemption, voting and other rights, preferences, privileges and restrictions of such issues. No shares of preferred stock are outstanding as of December 31, 1997. RECLASSIFICATIONS Certain amounts in the 1996 and 1995 consolidated financial statements have been reclassified to conform to the 1997 presentation. EFFECTS OF RECENTLY ISSUED ACCOUNTING STANDARDS In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"), and Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131"), which could require the Company to make additional disclosures in its financial statements no later than for the year ending December 31, 1998. SFAS 130 defines comprehensive income, which includes items in addition to those reported in the statement of operations, and requires disclosures about its components. Management is presently evaluating the effect on the Company's financial reporting from the adoption of this statement and does not expect it to have any material effect. SFAS 131 requires disclosures for each segment of a business and the determination of segments based on the Company's internal management structure. Management is in the process of evaluating the impact on the Company's financial reporting from the adoption of this statement. 2. ACCOUNTS RECEIVABLE Accounts receivable are as follows:
1997 1996 ------- ------- Completed contracts...................................... $13,797 $14,151 Contracts in progress.................................... 22,831 7,497 Retainage................................................ 4,121 6,713 ------- ------- 40,749 28,361 Allowance for doubtful accounts.......................... (450) (304) ------- ------- $40,299 $28,057 ======= =======
F-18 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 3. CONTRACTS IN PROGRESS The components of contracts in progress are as follows:
1997 1996 -------- --------- Cost and earnings in excess of billings: Costs and earnings for contracts in progress....... $ 56,981 $ 138,578 Prepaid contract costs............................. (1,053) (1,786) Amounts billed..................................... (45,575) (129,162) -------- --------- Cost and earnings in excess of billings for contracts in progress......................................... 10,353 7,630 Cost and earnings in excess of billings for completed contracts........................................... 5,155 3,622 -------- --------- $ 15,508 $ 11,252 ======== ========= Billings in excess of costs and earnings: Amounts billed..................................... $(44,870) $ (9,723) Costs and earnings for contracts in progress....... 41,896 9,397 -------- --------- $ (2,974) $ (326) ======== =========
4. PROPERTY AND EQUIPMENT Property and equipment are as follows:
1997 1996 -------- -------- Land................................................... $ 2,604 $ 2,604 Furniture and fixtures................................. 5,652 5,509 Operating equipment.................................... 203,784 196,010 -------- -------- 212,040 204,123 Accumulated depreciation............................... (73,324) (61,157) -------- -------- $138,716 $142,966 ======== ========
Performance bonds are customarily required for dredging and marine construction projects. The Company obtains its performance bonds through a bonding agreement with a group of insurance companies that have been granted a security interest in a substantial portion of the Company's operating equipment with a net book value of approximately $62,558 at December 31, 1997. The bonding agreement contains financial and operating covenants that limit the ability of the Company to incur indebtedness, create liens, pay dividends and take certain other actions. In 1996, the Company paid $2,500 for an option to purchase a used hopper dredge. The option price was recorded as a current asset deposit. In 1997, the Company recovered this amount through a lease transaction. F-19 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 5. INVESTMENTS IN JOINT VENTURES The Company has a 50% ownership interest in a venture whose primary business is the dredge mining and sale of fine aggregate (Aggregate Venture), and a 14% ownership interest in a venture whose sole business is the performance of a dredging contract in Argentina and Uruguay. Summarized financial information of the combined joint ventures for 1997 and 1996 and of the Aggregate Venture for 1995 is as follows:
DECEMBER 31, DECEMBER 31, 1997 1996 ------------ ------------ Current assets................................... $ 35,793 $ 12,160 Non-current assets............................... 19,627 23,227 -------- -------- Total assets..................................... 55,420 35,387 Current liabilities.............................. (16,735) (10,780) Non-current liabilities.......................... (10,737) (12,215) -------- -------- Equity......................................... $ 27,948 $ 12,392 ======== ========
FOR THE YEARS ENDED DECEMBER 31, ---------------------------------- 1997 1996 1995 ---------- ---------- ---------- Revenues............................... $ 67,498 $ 24,777 $ 15,825 Costs and expenses..................... (54,364) (23,437) (13,160) ---------- ---------- ---------- Net income........................... $ 13,134 $ 1,340 $ 2,665 ========== ========== ==========
The Aggregate Venture has a mortgage loan with a bank, which contains certain restrictive covenants, including limitations on the amount of distributions to its joint venture partners. The Company has guaranteed 50% of the outstanding mortgage principal and accrued interest which totaled $5,850 at December 31, 1997. In 1997, the Company paid royalties of $1,549 to the Aggregate Venture for the right to mine sand related to performance of a contract of the Company. In 1996 and 1995, the Company provided dredging and towing services to the Aggregate Venture and recorded revenue of $735 and $1,408, respectively, for these services. As of December 31, 1996, $545 of the amount earned in 1996 was included in accounts receivable. 6. ACCRUED EXPENSES Accrued expenses are as follows:
1997 1996 ------- ------- Insurance................................................. $ 5,501 $ 4,128 Income and other taxes.................................... 5,138 467 Payroll and employee benefits............................. 2,835 2,493 Rentals................................................... -- 2,279 Other..................................................... 1,945 1,634 ------- ------- $15,419 $11,001 ======= =======
F-20 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 7. LONG-TERM DEBT Long-term debt is as follows:
1997 1996 ------- -------- Bank debt: New credit facility revolving loan.................... $57,000 $ -- Revolving loan........................................ -- 31,000 Term loan............................................. -- 20,084 Other secured debt...................................... 600 1,352 ------- -------- 57,600 52,436 Current maturities of long-term debt.................... (200) (13,322) ------- -------- $57,400 $ 39,114 ======= ========
In September 1997, the Company entered into a new revolving credit agreement. The new credit agreement (Credit Agreement), expiring in 2002, is a $100,000 aggregate revolving loan commitment of which $50,000 may be used for letters of credit. At December 31, 1997, availability under the aggregate commitment for both borrowings and letters of credit was $26,994. The terms of the Credit Agreement provide for interest rate spreads based on the Company's debt level compared to earnings, as defined, and allow for various interest rate options for loan amounts and periods that are selected at the discretion of the Company. At December 31, 1997 and 1996, the Company's average borrowing rate was 8.0% and 8.7%, respectively, including amortization of financing fees. The Company also pays an annual commitment fee of up to 0.5% on the average daily unused capacity available under the credit commitment. The Credit Agreement contains provisions that require the Company to maintain a minimum net worth and certain other financial ratios, limit payment of dividends and restrict certain other transactions. Borrowings under the Credit Agreement are secured by first lien mortgages on certain operating equipment of the Company with a net book value of approximately $34,968 at December 31, 1997 and are guaranteed by certain subsidiaries of the Company. No principal payments are required; however, the total commitment is reduced by $5,333 semi-annually beginning March 24, 2001. The Company may voluntarily reduce the amount of the commitment at any time. 8. INCOME TAXES The provision for income taxes is as follows:
1997 1996 1995 ------- ------- ------- Federal: Current U.S. ................................ $ 2,372 $ 3,070 $(3,337) Current foreign.............................. 3,112 2,268 384 Deferred..................................... (3,386) (3,396) (1,559) State: Current...................................... 1,146 782 145 Deferred..................................... (577) (400) 207 ------- ------- ------- Income tax expense (benefit)................... $ 2,667 $ 2,324 $(4,160) ======= ======= =======
F-21 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The deferred income tax benefit is as follows:
1997 1996 1995 ------- ------- ------- Depreciation.................................... $(3,940) $(5,153) $ (860) Insurance....................................... (237) 251 (641) Pension termination............................. -- 848 -- Accrued claims.................................. -- 540 (412) Royalties....................................... -- -- 308 Other........................................... 214 (282) 253 ------- ------- ------- $(3,963) $(3,796) $(1,352) ======= ======= =======
The Company's effective tax rate and the statutory U.S. federal income tax rate are reconciled as follows:
1997 1996 1995 ---- ---- ---- Statutory U.S. federal income tax rate................... 35.0% 35.0% 35.0% State income tax, net of federal income tax benefit...... 4.6 4.3 1.8 Partnership gain allocated to minority interest.......... (6.0) (.6) (2.3) Other.................................................... (0.8) 1.0 (1.5) ---- ---- ---- Effective tax rate..................................... 32.8% 39.7% 33.0% ==== ==== ====
The deferred tax liabilities (assets) are as follows:
1997 1996 ------- ------- Gross deferred tax liabilities: Depreciation.......................................... $47,435 $51,405 Other................................................. 2,509 2,610 ------- ------- 49,944 54,015 Gross deferred tax assets: Accrued liabilities................................... (3,919) (4,027) ------- ------- 46,025 49,988 Net current deferred tax assets (included in other current assets)........................................ 2,297 2,073 ------- ------- Net non-current deferred tax liabilities................ $48,322 $52,061 ======= =======
9. DISCONTINUED OPERATIONS In April 1997, the Company completed the sale of its non-core aggregate towing business segment. The segment was reported as discontinued operations for 1996 and 1995. Revenues from the discontinued segment were $1,575 and $6,927 for 1996 and 1995, respectively. In 1996 net assets of the discontinued operation consisted primarily of property, plant and equipment. F-22 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 10. LEASE COMMITMENTS The Company leases certain operating equipment and office facilities under long-term operating leases expiring at various dates through 2009. The leases contain renewal or purchase options which specify prices at the then fair market value upon the expiration of the equipment leases. Future minimum lease payments for the years ending December 31 are as follows: 1998............................................................ $ 6,115 1999............................................................ 5,967 2000............................................................ 5,931 2001............................................................ 5,882 2002............................................................ 5,819 Thereafter...................................................... 26,605 ------- Total minimum lease payments.................................. $56,319 =======
Total rent expense for the years ended December 31, 1997, 1996, and 1995 was $16,457, $19,926 and $12,979, respectively. 11. RETIREMENT PLANS The Company sponsors a 401(k) savings plan (Plan) covering substantially all non-union employees. Under the Plan, individual employees may contribute a percentage of compensation and the Company will match a portion of the employees' contributions. Effective October 1, 1996, the Company amended the Plan to add a profit-sharing component, permitting the Company to make discretionary employer contributions to all eligible employees of the Plan. The Company's expense for matching and discretionary contributions was $1,732, $716, and $562 for 1997, 1996 and 1995, respectively. The Company sponsored a non-contributory defined pension plan (Pension Plan) covering substantially all non-union employees. The Pension Plan provided pension benefits upon retirement, based on compensation and years of service as defined in the plan. The Company's policy was to fund the Pension Plan as required by ERISA. During 1996, the Company terminated the Pension Plan. The Pension Plan's liabilities were settled in December 1996 through a combination of lump sum payouts and rollovers, and a group annuity contract. The Company recognized a $2,440 curtailment gain and a $752 settlement loss on the termination of the Pension Plan. The components of net pension expense for the years ended December 31, 1996 and 1995 were as follows:
1996 1995 ------- ------- Service cost............................................. $ 488 $ 516 Interest on projected benefit obligation................. 541 541 Actual return on plan assets............................. (654) (1,142) Net deferral and amortization............................ 57 600 Curtailment gain net of settlement loss.................. (1,688) -- ------- ------- $(1,256) $ 515 ======= =======
F-23 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Actuarial assumptions used in accounting for the pension plan for 1996 and 1995 were as follows: Discount rate...................................................... 7.00% Long term rate of return on assets................................. 9.50 Rate of increase in compensation levels............................ 6.20
The Company also contributes to various multi-employer pension plans pursuant to collective bargaining agreements. In the event of a plan's termination or Company withdrawal from a plan, the Company may be liable for a portion of the plan's unfunded vested benefits. As of December 31, 1997, unfunded amounts, if any, are not significant. Contributions to multi-employer pension plans for the years ended December 31, 1997, 1996 and 1995 were $2,173, $2,593 and $2,252, respectively. 12. STOCK PLANS The Equity Incentive Plan of Great Lakes Dredge & Dock Corporation (the Plan) provides for the grant of options and other stock-based awards to management personnel designated by the Compensation Committee. Awards up to an aggregate of 5.0% of authorized shares of common stock may be granted under the Plan. On January 1, 1992, options were granted on 3.7% of authorized shares of common stock at an exercise price of $600,000 per share representing the estimated fair market value of the shares on the grant date (as defined in the Agreement). Options become exercisable for 20% of the granted option shares on each of the first five anniversaries of the grant date and remain exercisable until the tenth anniversary. New options were granted during 1996 equal in number to those options forfeited in 1996 and with vesting provisions as if such options had been granted on January 1, 1992. All options granted are fully vested and outstanding as of December 31, 1997. The Company uses Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," in accounting for its employee stock options. Statement of Financial Accounting Standards No. 123, "Accounting for Stock- Based Compensation" (SFAS No. 123) requires disclosures of the effect to net income as if SFAS No. 123 had been adopted. The effects of applying SFAS No. 123 are not material to the Company's financial statements. The Great Lakes Dredge & Dock Corporation Employee Stock Purchase Plan (the Stock Plan) provides eligible employees with an option to purchase shares of common stock at a discount to market price. The Stock Plan is considered non- compensatory and is intended to qualify under Section 423 of the Internal Revenue Code. An aggregate of 0.4% of authorized shares of common stock may be granted pursuant to the Stock Plan. The Compensation Committee may grant options at such times as it, in its discretion, determines but must grant them to all eligible employees. As of December 31, 1997, no options have been granted. 13. MAJOR CUSTOMERS In 1997, 1996 and 1995, contract revenues earned from contracts with federal government agencies were 47.4%, 35.8% and 30.2%, respectively. In 1997, 1996 and 1995, contract revenues earned from a contract with a state port authority were 10.1%, 11.8% and 13.6%, respectively. An additional 9.5%, 10.9% and 15%, were earned from contracts with a foreign government in 1997, 1996 and 1995, respectively. 14. FOREIGN OPERATIONS The Company derived revenues and gross profit from foreign project operations, for the years ended December 31, as follows:
1997 1996 1995 -------- -------- -------- Contract revenues............................ $ 55,919 $ 58,166 $ 53,910 Costs of contract revenues................... (48,695) (49,324) (48,866) -------- -------- -------- Gross profit................................. $ 7,224 $ 8,842 $ 5,044 ======== ======== ========
F-24 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 15. COMMITMENTS AND CONTINGENCIES At December 31, 1997 and 1996, the Company was contingently liable, in the normal course of business, for $1,237 and $1,500, respectively, in letters of credit related to contract performance guarantees. In 1992, an underwater utility tunnel failed adjacent to a construction site completed by Great Lakes Dredge & Dock Company (GLDD), a wholly owned subsidiary of GLD Corporation. The failure resulted in a flooding of the tunnel and building basements serviced by the tunnel. Numerous suits were filed against GLDD for claims of flood damage to building basements and losses due to business interruption. During 1997, all outstanding claims were settled related to the flood litigation. Settlement payments totaling $11,000 were advanced by the Company. Management believes all such advances will be fully recovered through insurance proceeds in 1998. In the normal course of business, the Company is a defendant in various other legal proceedings. Resolution of these claims is not expected to have a material impact on the financial position or operations of the Company. As is customary with negotiated contracts with the federal government, the government has the right to audit the books and records of the Company to ensure compliance with such contracts and applicable federal laws. The government has the ability to seek a price adjustment based on the results of such audit. Any such audits are not expected to have a material impact on the financial position or operations of the Company. 16. SUBSEQUENT EVENTS--UNAUDITED On July 20, 1998, the Company, the stockholders of the Company and Vectura Holdings, LLC entered into an Agreement and Plan of Merger providing for the recapitalization of the Company. In order to fund and consummate the recapitalization, it is anticipated that the Company will incur $115 million in a senior subordinated notes offering, enter into a new bank credit facility providing $110 million of capacity, and issue $50 million of capital stock to Vectura Holdings, LLC and certain members of Company management. Following consummation of the recapitalization, the Company will be the surviving corporation with certain members of management holding approximately 16% in aggregate of the outstanding common stock of the Company, as a result of exercising stock options and the issuance of common stock. 17. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION The payment obligations of the Company under the proposed senior subordinated note offering described above are to be guaranteed by the Company's wholly-owned domestic subsidiaries ("Subsidiary Guarantors"). Such guarantees are full, unconditional and joint and several. Separate financial statements of the Subsidiary Guarantors are not presented because the Company's management has determined that they would not be material to investors. The following supplemental financial information sets forth, on a combined basis, balance sheets, statements of income and statements of cash flows for the Subsidiary Guarantors, the Company's non-guarantor subsidiaries and for the Company. F-25 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING BALANCE SHEET AT DECEMBER 31, 1997
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ ASSETS Current assets: Cash and equivalents... $ 1,285 $ 432 $ -- $ -- $ 1,717 Accounts receivable.... 37,167 3,132 -- -- 40,299 Receivables from affiliates............ 18,716 9,713 -- (28,429) -- Current portion of net investment in direct financing leases...... 2,938 4,121 -- (7,059) -- Contract revenues in excess of billings.... 14,623 885 -- -- 15,508 Inventories............ 7,016 2,179 -- -- 9,195 Settlement advance..... 11,000 -- -- -- 11,000 Prepaid expenses and other current assets.. 13,259 178 -- -- 13,437 -------- ------- ------- --------- -------- Total current assets... 106,004 20,640 -- (35,488) 91,156 Property and equipment, net.................... 122,142 16,574 -- -- 138,716 Net investment in direct financing leases....... 8,994 13,596 -- (22,590) -- Investments in subsidiaries........... 155,015 -- 78,156 (233,171) -- Notes receivable from affiliates............. 26,717 1,893 -- (28,610) -- Inventories............. 6,326 -- -- -- 6,326 Investments in joint ventures............... 7,569 -- -- -- 7,569 Other................... 1,788 -- -- -- 1,788 -------- ------- ------- --------- -------- $434,555 $52,703 $78,156 $(319,859) $245,555 ======== ======= ======= ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable....... $ 26,852 $ 4,106 $ -- $ 43 $ 31,001 Payables to affiliates. 26,058 2,371 -- (28,429) -- Accrued expenses and other................. 16,249 2,144 -- -- 18,393 Current portion of obligations under capital leases........ -- 7,059 -- (7,059) -- Current maturities of long-term debt........ 200 -- -- -- 200 -------- ------- ------- --------- -------- Total current liabilities........... 69,359 15,680 -- (35,445) 49,594 Long-term debt.......... 57,400 -- -- -- 57,400 Obligations under capital leases......... -- 22,590 -- (22,590) -- Note payable to affiliates............. 28,610 -- -- (28,610) -- Deferred income taxes... 45,299 3,023 -- -- 48,322 Other................... 10,159 68 -- -- 10,227 -------- ------- ------- --------- -------- Total liabilities...... 210,827 41,361 -- (86,645) 165,543 Minority interests...... 2,024 -- -- (168) 1,856 Stockholders' equity.... 221,704 11,342 78,156 (233,046) 78,156 -------- ------- ------- --------- -------- $434,555 $52,703 $78,156 $(319,859) $245,555 ======== ======= ======= ========= ========
F-26 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING BALANCE SHEET AT DECEMBER 31, 1996
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ASSETS ------------ ------------ ----------- ------------ ------------ Current Assets: Cash and equivalents... $ 570 $ 1,317 $ -- $ -- $ 1,887 Accounts receivable.... 25,720 2,337 -- -- 28,057 Receivables from affiliates............ 19,308 12,659 -- (31,967) -- Current portion of net investment in direct financing leases...... 2,673 3,570 -- (6,243) -- Contract revenues in excess of billings.... 8,894 2,358 -- -- 11,252 Inventories............ 8,307 1,603 -- -- 9,910 Prepaid expenses....... 2,875 -- -- -- 2,875 Deposit................ 2,500 -- -- -- 2,500 Net assets of discontinued operations............ 1,929 -- -- -- 1,929 Other current assets... 8,111 272 -- -- 8,383 -------- ------- ------- --------- -------- Total current assets... 80,887 24,116 -- (38,210) 66,793 Property and equipment, net.................... 126,467 16,499 -- -- 142,966 Net investment in direct financing leases....... 11,932 17,717 -- (29,649) -- Investment in subsidiaries........... 160,420 -- 74,354 (234,774) -- Notes receivable from affiliates............. 41,792 2,582 -- (44,374) -- Inventories............. 6,875 -- -- -- 6,875 Investments in joint ventures............... 4,807 -- -- -- 4,807 Other................... 617 -- -- -- 617 -------- ------- ------- --------- -------- $433,797 $60,914 $74,354 $(347,007) $222,058 ======== ======= ======= ========= ======== LIABILITIES AND STOCK- HOLDERS' EQUITY Current liabilities: Accounts payable....... $16,741 $ 3,384 $ -- $ (21) $ 20,104 Payables to affiliates. 28,805 2,462 -- (31,267) Accrued expenses....... 9,456 1,545 -- -- 11,001 Billings in excess of contract revenues..... 326 -- -- -- 326 Current portion of obligations under capital leases........ -- 6,243 -- (6,243) -- Current maturities of long-term debt........ 13,322 -- -- -- 13,322 -------- ------- ------- --------- -------- Total current liabilities........... 68,650 13,634 -- (37,531) 44,753 Long-term debt.......... 39,114 -- -- -- 39,114 Obligations under capital leases......... 41,792 29,649 -- (71,441) -- Note payable to affiliate.............. 2,582 (2,582) Deferred income taxes... 48,682 3,379 -- -- 52,061 Other................... 8,505 57 -- -- 8,562 -------- ------- ------- --------- -------- Total liabilities...... 209,325 46,719 -- (111,554) 144,490 Minority interests...... 3,321 -- -- (107) 3,214 Stockholders' equity Total stockholders' equity................ 221,151 14,195 74,354 (235,346) 74,354 -------- ------- ------- --------- -------- $433,797 $60,914 $74,354 $(347,007) $222,058 ======== ======= ======= ========= ========
F-27 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ Contract revenues....... $ 216,388 $ 53,504 $ -- $(11,596) $ 258,296 Costs of contract revenues............... (198,428) (41,551) -- (11,596) (228,383) --------- -------- ------ -------- --------- Gross profit.......... 17,960 11,953 -- -- 29,913 General and administrative expenses............... (15,059) (3,863) -- -- (18,922) --------- -------- ------ -------- --------- Operating income...... 2,901 8,090 -- -- 10,991 Interest, net........... (6,135) 148 -- -- (5,987) Equity in earnings of subsidiaries........... 3,802 (3,802) Equity in earnings of joint ventures......... 3,132 -- -- -- 3,132 --------- -------- ------ -------- --------- Income (loss) before income taxes, minority interests and discontinued operations........... (102) 8,238 3,802 (3,802) 8,136 Income tax expense...... (1,577) (1,090) -- -- (2,667) Minority interests...... (1,667) -- -- (1,667) --------- -------- ------ -------- --------- Net income (loss)... $ (3,346) $ 7,148 $3,802 $ (3,802) $ 3,802 ========= ======== ====== ======== =========
F-28 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1996
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ Contract revenues....... $202,864 $44,720 $ -- $(11,713) $235,871 Costs of contract revenues............... (182,625) (37,805) -- (11,713) (208,717) -------- ------- ------ -------- -------- Gross profit.......... 20,239 6,915 -- -- 27,154 General and administrative expenses............... (13,093) (3,298) -- -- (16,391) -------- ------- ------ -------- -------- Operating income...... 7,146 3,617 -- -- 10,763 Interest, net........... (5,773) (271) -- -- (6,044) Equity in earnings of subsidiaries........... 2,006 (2,006) Equity in earnings of joint ventures......... 1,139 -- -- -- 1,139 -------- ------- ------ -------- -------- Income before income taxes, minority interests and discontinued operations......... 2,512 3,346 2,006 (2,006) 5,858 Income tax expense...... (1,213) (1,111) -- -- (2,324) Minority interests...... (419) -- -- (419) -------- ------- ------ -------- -------- Income from continuing operations......... 880 2,235 2,006 (2,006) 3,115 Discontinued operations Loss from operations, net of tax benefit of $695................. (1,044) -- -- -- (1,044) Loss on disposal, net of tax benefit of $44.................. (65) -- -- -- (65) -------- ------- ------ -------- -------- Net income (loss)... $ (229) $ 2,235 $2,006 $ (2,006) $ 2,006 ======== ======= ====== ======== ========
F-29 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTAL ------------ ------------ ----------- ------------ ------------ Contract revenues....... $ 197,467 $ 38,193 $ -- $(8,795) $ 226,865 Costs of contract revenues............... (196,994) (28,878) -- (8,795) (217,077) --------- -------- ------- ------- --------- Gross profit.......... 473 9,315 -- -- 9,788 General & administrative expenses............... (13,100) (2,770) -- -- (15,870) --------- -------- ------- ------- --------- Operating income (loss)............... (12,627) 6,545 -- -- (6,082) Other income (expense): Interest, net......... (7,447) (415) -- -- (7,862) Equity in earnings of subsidiaries......... (9,984) 9,984 Equity in earnings of joint ventures....... 1,333 -- -- -- 1,333 --------- -------- ------- ------- --------- Income (loss) before income taxes, minority interests and discontinued operations......... (18,741) 6,130 (9,984) 9,984 (12,611) Income tax benefit (expense).............. 5,235 (1,075) -- -- 4,160 Minority interests...... (1,204) -- -- (1,204) --------- -------- ------- ------- --------- Income (loss) from continuing operations......... (14,710) 5,055 (9,984) 9,984 (9,655) Discontinued operations: Loss from operations, net of tax benefit of $163................. (329) -- -- -- (329) --------- -------- ------- ------- --------- Net income (loss)... $ (15,039) $ 5,055 $(9,984) $ 9,984 $ (9,984) ========= ======== ======= ======= =========
F-30 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1997
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ OPERATING ACTIVITIES Net income (loss)....... $ (3,345) $ 7,147 $3,802 $(3,802) $ 3,802 Adjustments to reconcile net income to net cash flows from operation activities: Depreciation........... 9,899 3,716 -- -- 13,615 Earnings of subsidiaries and joint ventures.............. (3,132) -- (3,802) 3,802 (3,132) Minority interests..... 6,317 (4,650) -- -- 1,667 Deferred income taxes.. (3,608) (355) -- -- (3,963) Gain on dispositions of property and equipment............. (3,308) -- -- -- (3,308) Foreign income taxes... 2,696 -- -- -- 2,696 Other, net............. (238) -- -- -- (238) Changes in net assets and liabilities: Accounts receivable... (13,711) 1,469 -- -- (12,242) Contract revenues in excess of billings... (5,729) 1,473 -- -- (4,256) Inventories........... 1,264 -- -- -- 1,264 Prepaid expenses and other current assets............... 232 (482) -- -- (250) Accounts payable and accrued expenses..... 13,251 2,064 -- -- 15,315 Billings in excess of contract revenues.... 2,772 (124) 2,648 -------- ------- ------ ------- -------- Net cash flows from op- erating activities.... 3,360 10,258 -- -- 13,618 INVESTING ACTIVITIES Purchases of property and equipment.......... (7,703) (3,791) -- -- (11,494) Proceeds from dispositions of property and equipment. 5,437 -- -- -- 5,437 Distributions from joint venture................ 1,000 -- -- -- 1,000 Investments in joint venture................ (630) -- -- -- (630) Distributions to minority interests..... -- (3,025) -- -- (3,025) Deposit................. 2,500 -- -- -- 2,500 Principal payments received on direct financing leases....... (3,570) 3,570 -- -- -- Payments received on notes receivable from affiliate.............. (1,371) 1,371 -- -- -- -------- ------- ------ ------- -------- Net cash flows from investing activities.. (4,337) (1,875) -- -- (6,212) FINANCING ACTIVITIES Proceeds from long-term debt................... 102,500 -- -- -- 102,500 Repayments of long-term debt................... (97,336) -- -- -- (97,336) Principal payments on capital leases......... 6,243 (6,243) -- -- -- Financing fees.......... (1,740) -- -- -- (1,740) Settlement advance...... (11,000) -- -- -- (11,000) -------- ------- ------ ------- -------- Net cash flows from financing activities.. (1,333) (6,243) -- -- (7,576) -------- ------- ------ ------- -------- Net increase (decrease) in cash and equivalents............ (2,310) 2,140 (170) Cash and equivalents at beginning of period.... 570 1,317 -- -- 1,887 -------- ------- ------ ------- -------- Cash and equivalents at end of period.......... $ (1,740) $ 3,457 $ -- $ -- $ 1,717 ======== ======= ====== ======= ========
F-31 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1996
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ OPERATING ACTIVITIES Net income (loss)....... $ (229) $2,235 $ 2,006 $(2,006) $ 2,006 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation........... 10,191 3,690 -- -- 13,881 Earnings of subsidiaries and joint ventures.............. (1,139) -- (2,006) 2,006 (1,139) Minority interests..... 3,219 (2,800) -- -- 419 Deferred income taxes.. (3,461) (335) -- -- (3,796) Gain on dispositions of property and equipment............. (467) -- -- -- (467) Foreign income taxes... 2,382 -- -- -- 2,382 Pension curtailment and settlement............ (1,688) -- -- -- (1,688) Other, net............. 217 -- -- -- 217 Changes in assets and liabilities: Accounts receivable... 20,956 (11) -- -- 20,945 Contract revenues in excess of billings... 3,033 61 -- -- 3,094 Inventories........... 3,915 -- -- -- 3,915 Prepaid expenses and other current assets. (281) (121) -- -- (402) Income tax receivable. 3,509 -- -- -- 3,509 Accounts payable and accrued expenses..... (17,074) 1,193 -- -- (15,881) Billings in excess of contract revenues.... (2,445) 124 -- -- (2,321) ------- ------ ------- ------- ------- Net cash flows from operating activities.. 20,638 4,036 -- -- 24,674 INVESTING ACTIVITIES Purchases of property and equipment.......... (4,023) (1,388) -- -- (5,411) Dispositions of property and equipment.......... 7,820 -- -- -- 7,820 Distributions from joint venture................ 750 -- -- -- 750 Investments in joint venture................ (755) -- -- -- (755) Distribution to minority interests.............. -- (700) -- -- (700) Deposit................. (2,500) -- -- -- (2,500) Principal payments received on direct financing leases....... (3,100) 3,100 -- -- -- Payments received on notes receivable from affiliate.............. (1,371) 1,371 -- -- -- ------- ------ ------- ------- ------- Net cash flows from investing activities.. (3,179) 2,383 -- -- (796) FINANCING ACTIVITIES Proceeds from long-term debt................... 27,051 -- -- -- 27,051 Repayments of long-term debt................... (51,368) -- -- -- (51,368) Principal payments on capital leases......... 5,533 (5,533) -- -- -- ------- ------ ------- ------- ------- Net cash flows from financing activities.. (18,784) (5,533) -- -- (24,317) ------- ------ ------- ------- ------- Net increase (decrease) in cash and equivalents............ (1,325) 886 -- -- (439) Cash and equivalents at beginning of period.... 1,895 431 -- -- 2,326 ------- ------ ------- ------- ------- Cash and equivalents at end of period.......... $ 570 $1,317 $(2,006) $2,006 $ 1,887 ======= ====== ======= ======= =======
F-32 GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1995
GUARANTOR OTHER GLD CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ELIMINATIONS TOTALS ------------ ------------ ----------- ------------ ------------ OPERATING ACTIVITIES Net income (loss)....... $(15,039) $ 5,055 $(9,984) $ 9,984 $ (9,984) Adjustments to reconcile net income to net cash flows from operating activities: Depreciation........... 11,195 3,505 -- -- 14,700 Earnings of subsidiaries and joint ventures.............. (1,333) -- 9,984 (9,984) (1,333) Minority interests..... 1,204 -- -- 1,204 Deferred income taxes.. (1,757) 405 -- -- (1,352) Gain on dispositions of property and equipment............. (1,496) -- -- -- (1,496) Other, net............. 6 -- -- -- 6 Changes in assets and liabilities: -- -- -- Accounts receivable... 10,508 (5,465) -- -- 5,043 Contract revenues in excess of billings... 4,585 (1,113) -- -- 3,472 Inventories........... (3,714) -- -- -- (3,714) Prepaid expenses and other current assets. 1,357 753 -- -- 2,110 Income tax receivable. (3,509) -- -- -- (3,509) Accounts payable and accrued expenses..... (8,757) 257 -- -- (8,500) Billings in excess of contract revenues.... (320) (76) -- (396) -------- -------- ------- ------- -------- Net cash flows from operating activities.. (7,070) 3,321 (3,749) INVESTING ACTIVITIES Purchases of property and equipment......... (10,283) (1,190) -- -- (11,473) Dispositions of property and equipment............. 2,664 -- -- -- 2,664 Distributions from joint venture......... 5,500 -- -- -- 5,500 Distribution to minority interests.... -- (640) -- -- (640) Principal payments received on direct financing leases...... (2,740) 2,740 -- -- -- Payments received on notes receivable from affiliate............. (1,371) 1,371 -- -- -- -------- -------- ------- ------- -------- Net cash flows from investing activities.. (6,230) 2,281 -- -- (3,949) FINANCING ACTIVITIES Proceeds from long-term debt.................. 52,700 -- -- -- 52,700 Repayments of long-term debt.................. (46,220) -- -- -- (46,220) Principal payments on capital leases........ 4,953 (4,953) -- -- -- Dividends paid......... 3,440 (3,440) -- -- -- -------- -------- ------- ------- -------- Net cash flows from financing activities.. 14,873 (8,393) -- -- 6,480 -------- -------- ------- ------- -------- Net increase (decrease) in cash and equivalents............ 1,573 (2,791) -- -- (1,218) Cash and equivalents at beginning of period.... 322 3,222 -- -- 3,544 -------- -------- ------- ------- -------- Cash and equivalents at end of period.......... $ 1,895 $ 431 $ 9,984 $(9,984) $ 2,326 ======== ======== ======= ======= ========
F-33 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Partners Amboy Aggregates We have audited the accompanying balance sheets of AMBOY AGGREGATES (A JOINT VENTURE) as of December 31, 1997 and 1996, and the related statements of income and partners' capital and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Amboy Aggregates (A Joint Venture) as of December 31, 1997 and 1996, and its results of operations and cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. J.H. COHN LLP Roseland, New Jersey January 23, 1998 F-34 AMBOY AGGREGATES (A JOINT VENTURE) BALANCE SHEETS DECEMBER 31, 1997 AND 1996
1997 1996 ----------- ----------- ASSETS Current assets: Cash and cash equivalents............................ $ 1,830,997 $ 914,810 Accounts receivable, net of allowance for doubtful accounts of $100,147 and $192,401................... 6,319,106 3,749,758 Inventory............................................ 1,142,696 1,633,236 Prepaid expenses and other current assets............ 167,108 273,164 Due from general partners............................ 136,969 ----------- ----------- Total current assets............................... 9,596,876 6,570,968 Property, plant and equipment, net of accumulated depreciation........................................ 13,756,075 15,454,986 Deferred charges..................................... 59,995 70,280 Permits.............................................. 1,408,653 1,388,031 ----------- ----------- Totals............................................. $24,821,599 $23,484,265 =========== =========== LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Current portion of long-term debt.................... $ 1,714,113 $ 1,635,024 Accounts payable..................................... 849,877 665,985 Accrued expenses and other current liabilities....... 552,943 319,451 Due general partners................................. 545,469 ----------- ----------- Total current liabilities.......................... 3,116,933 3,165,929 Long-term debt, noncurrent portion..................... 9,985,353 11,666,812 Deferred compensation.................................. 751,431 548,138 ----------- ----------- Total liabilities.................................. 13,853,717 15,380,879 Commitments and contingency Partners' capital...................................... 10,967,882 8,103,386 ----------- ----------- Totals............................................. $24,821,599 $23,484,265 =========== ===========
See Notes to Financial Statements. F-35 AMBOY AGGREGATES (A JOINT VENTURE) STATEMENTS OF INCOME AND PARTNERS' CAPITAL YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995 ----------- ----------- ------------ INCOME Revenue: Net sales............................. $21,418,691 $17,507,797 $ 15,707,172 Royalties............................. 799,356 67,702 Interest.............................. 46,879 26,144 50,417 ----------- ----------- ------------ Totals.............................. 22,264,926 17,533,941 15,825,291 ----------- ----------- ------------ Costs and expenses: Cost of sales......................... 14,442,219 12,457,297 10,891,600 Selling............................... 231,474 329,290 307,957 General and administrative............ 1,746,253 1,363,867 1,298,124 Interest.............................. 980,484 1,105,298 662,244 ----------- ----------- ------------ Totals.............................. 17,400,430 15,255,752 13,159,925 ----------- ----------- ------------ Net income.............................. 4,864,496 2,278,189 2,665,366 PARTNERS' CAPITAL Balance, beginning of year.............. 8,103,386 7,325,197 15,659,831 Distributions........................... (2,000,000) (1,500,000) (11,000,000) ----------- ----------- ------------ Balance, end of year.................... $10,967,882 $ 8,103,386 $ 7,325,197 =========== =========== ============
See Notes to Financial Statements. F-36 AMBOY AGGREGATES (A JOINT VENTURE) STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995 ----------- ----------- ------------ OPERATING ACTIVITIES: Net income............................ $ 4,864,496 $ 2,278,189 $ 2,665,366 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization....... 2,265,295 2,119,526 2,105,152 Provision for doubtful accounts..... 120,000 120,000 60,000 Changes in operating assets and liabilities: Accounts receivable............... (2,689,348) (1,600,753) 698,451 Inventory......................... 490,540 (356,058) (533,780) Prepaid expenses and other current assets........................... 106,056 130,079 (89,042) Accounts payable.................. 183,892 342,685 (427,156) Accrued expenses and other liabilities...................... 436,785 (6,328) (926,809) Due general partners.............. (682,438) 545,469 ----------- ----------- ------------ Net cash provided by operating activities......................... 5,095,278 3,572,809 3,552,182 ----------- ----------- ------------ INVESTING ACTIVITIES: Capital expenditures.................. (556,099) (480,915) (1,568,823) Increase in other assets.............. (20,622) (66,097) (99,757) ----------- ----------- ------------ Net cash used in investing activities......................... (576,721) (547,012) (1,668,580) ----------- ----------- ------------ FINANCING ACTIVITIES: Deferred charges...................... (19,721) Proceeds of long-term debt............ 9,628,944 Payments of long-term debt............ (1,602,370) (1,500,818) (1,496,335) Distributions......................... (2,000,000) (1,500,000) (12,800,000) ----------- ----------- ------------ Net cash used in financing activi- ties............................... (3,602,370) (3,000,818) (4,687,112) ----------- ----------- ------------ Net increase (decrease) in cash and cash equivalents..................... 916,187 24,979 (2,803,510) Cash and cash equivalents, beginning of year.............................. 914,810 889,831 3,693,341 ----------- ----------- ------------ Cash and cash equivalents, end of year................................. $ 1,830,997 $ 914,810 $ 889,831 =========== =========== ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: Interest paid......................... $ 980,484 $ 1,105,298 $ 662,244 =========== =========== ============
See Notes to Financial Statements. F-37 AMBOY AGGREGATES (A JOINT VENTURE) NOTES TO FINANCIAL STATEMENTS NOTE 1--ORGANIZATION AND BUSINESS: Amboy Aggregates (the "Partnership") was established on January 1, 1989 as an equal joint venture between Great Lakes Dredge and Dock Company and Ralph Clayton and Sons Materials, L.P. The Partnership's principal business activity is to dredge, process, transport and sell fine aggregate in the New York Metropolitan area. NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. CASH EQUIVALENTS: The Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. CONCENTRATIONS OF CREDIT RISK: Financial instruments which potentially subject the Partnership to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Partnership places its cash and cash equivalents with high credit quality financial institutions. At times, such amounts exceed Federally insured limits. The Partnership generally extends credit to its customers, a significant portion of which are in the construction industry. During 1997, 1996 and 1995, approximately 50%, 47% and 64%, respectively, of the Partnership's net sales were derived from major customers who accounted for approximately $4,441,000 and $1,762,000 of the accounts receivable balance at December 31, 1997 and 1996, respectively. However, the Partnership closely monitors the extension of credit to its customers while maintaining allowances for potential credit losses. Management does not believe that significant credit risk exists at December 31, 1997. The Partnership is currently negotiating a joint venture agreement with a certain customer in which both parties will own a 50% interest in a newly- formed limited liability company. It is currently anticipated that the Company will contribute approximately $1,500,000 of its accounts receivable from this customer to the newly-formed entity as a capital contribution, and the customer will contribute equipment and other assets of approximate equal value. INVENTORY: Inventory is stated at the lower of cost, determined using the first-in, first-out (FIFO) method, or market. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. F-38 AMBOY AGGREGATES (A JOINT VENTURE) NOTES TO FINANCIAL STATEMENTS--(CONTINUED) DEFERRED CHARGES: Costs incurred in connection with obtaining financing are amortized and charged to interest expense over the term of the related loan using the straight-line method which approximates the interest method. OTHER ASSETS: Costs incurred in connection with obtaining permits to dredge the Partnership's products are amortized on the straight-line basis over the term of the related permits. ADVERTISING: The Company expenses the cost of advertising and promotion as incurred. Advertising costs charged to operations were not material during 1997, 1996 and 1995. INCOME TAXES: Income or loss of the Partnership is includible in the income tax returns of the partners in proportion to their respective interests. Accordingly, there is no provision for income taxes in the accompanying financial statements. RECENT ACCOUNTING PRONOUNCEMENTS: In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"), and Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131"), which could require the Company to make additional disclosures in its financial statements no later than for the year ending December 31, 1998. SFAS 130 defines comprehensive income, which includes items in addition to those reported in the statement of operations, and requires disclosures about its components. Management believes that the adoption of SFAS 130 will not require the Company to make any additional disclosures. SFAS 131 requires disclosures for each segment of a business and the determination of segments based on its internal management structure. Management is in the process of evaluating whether SFAS 131 will require the Company to make any additional disclosures. NOTE 3--INVENTORY: Inventory consists of the following:
1997 1996 ---------- ---------- Raw materials........................................ $ 654,845 $ 775,292 Finished goods....................................... 442,024 810,958 Supplies............................................. 45,827 46,986 ---------- ---------- Totals............................................. $1,142,696 $1,633,236 ========== ==========
F-39 AMBOY AGGREGATES (A JOINT VENTURE) NOTES TO FINANCIAL STATEMENTS--(CONTINUED) NOTE 4--PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment consists of the following:
RANGE OF ESTIMATED USEFUL LIVES (YEARS) 1997 1996 ------------ ----------- ----------- Land................................. $ 677,408 $ 677,408 Plant and equipment.................. 3 to 15 6,616,018 6,245,360 Delivery equipment (Scows)........... 10 to 20 7,781,647 7,697,412 Dredging system...................... 15 to 20 13,828,348 13,796,684 Office equipment and trailers........ 10 222,170 214,294 Automobiles and trucks............... 3 to 5 141,098 113,755 ----------- ----------- 29,266,689 28,744,913 Less accumulated depreciation........ 15,510,614 13,289,927 ----------- ----------- Totals............................. $13,756,075 $15,454,986 =========== ===========
Depreciation expense for the years ended December 31, 1997, 1996 and 1995 was $2,255,010, $2,109,241 and $1,961,074, respectively. NOTE 5--ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES: Accrued expenses and other current liabilities consist of the following:
1997 1996 -------- -------- Compensation............................................. $510,339 $165,452 Union health and welfare................................. 41,808 38,987 Insurance................................................ 71,903 Sundry................................................... 796 43,109 -------- -------- Totals................................................. $552,943 $319,451 ======== ========
NOTE 6--LONG-TERM DEBT: At December 31, 1997 and 1996, long-term debt consists of borrowings under a $15,000,000 variable rate term loan agreement which is payable in monthly installments through October 2003 with interest at the lower of either the bank's base rate minus 1/2% or the 30/90 day LIBOR rate plus 180 basis points. The loan, which is secured by all of the Partnership's machinery and equipment with a net book value of approximately $13,100,000 at December 31, 1997, also includes a negative pledge of the Partnership's real estate prohibiting its use as collateral for any other debt. In addition, the loan is guaranteed by the individual shareholders and/or partners of the general partners of the Partnership. The loan agreement also contains various covenants, including requirements for maintaining certain financial ratios and places restrictions on capital expenditures and the amount of partners' distributions. Principal payment requirements in each of the five years subsequent to December 31, 1997 are as follows:
YEAR ENDING DECEMBER 31, AMOUNT ------------ ---------- 1998........................................................... $1,714,113 1999........................................................... 1,850,974 2000........................................................... 1,998,762 2001........................................................... 2,158,350 2002........................................................... 2,330,681
F-40 AMBOY AGGREGATES (A JOINT VENTURE) NOTES TO FINANCIAL STATEMENTS--(CONTINUED) The Partnership also has available a $2,000,000 revolving credit facility, borrowings under which are secured by the Partnership's accounts receivable and inventory and bear interest at either the bank's base rate on the 60/90 day LIBOR rate plus 140 basis points. There is a stand-by fee of 1/2% per year on the unused portion of the revolving credit facility. The Partnership had no amounts outstanding under the revolving credit facility at December 31, 1997 and 1996. NOTE 7--RETIREMENT PLANS: PENSION PLAN: Employees covered by a union agreement are included in a multi-employer pension plan to which the Partnership makes contributions in accordance with the contractual union agreement. The Partnership made contributions of $223,792, $191,170 and $183,767 during the years ended December 31, 1997, 1996 and 1995, respectively. Plan benefit and net asset data for the multi-employer pension plan for union employees are not available. 401(K) PLAN: The Partnership maintains a retirement plan qualifying under Section 401(k) of the Internal Revenue Code which allows eligible employees to defer a portion of their income through contributions to the plan. Under the provisions of the plan, the Partnership makes contributions for the benefit of the employees, subject to certain limitations. The Partnership's contributions for the years ended December 31, 1997, 1996 and 1995 were $44,361, $20,015 and $18,015, respectively. NOTE 8--COMMITMENTS AND CONTINGENCY: LICENSE AGREEMENT: The Partnership has a license agreement with the State of New Jersey which enables the Partnership to dredge in the Ambrose Channel for commercial fill. Under this agreement, the State of New Jersey receives a royalty fee based on the amount of material dredged of $.35 ($.40 beginning August 1, 1997) per cubic yard. Royalties charged to operations during the years ended December 31, 1997, 1996 and 1995 amounted to $799,697, $667,780 and $695,233, respectively. LITIGATION: In the ordinary course of business, the Partnership is a defendant in various legal proceedings. In the opinion of management, resolution of these claims is not expected to have a material adverse impact on the financial position or results of operations of the Partnership. NOTE 9--RELATED PARTY TRANSACTIONS: During 1997, one of the general partners dredged fill material from the Ambrose Channel under the Partnership's license agreement with the State of New Jersey. As a result, the general partner reimbursed the Partnership for the royalty fee of $774,326 which was paid to the State of New Jersey and, in addition, paid the Partnership a royalty fee of $774,326. The Partnership had a towage agreement, which expired in 1996, with a general partner whereby the Partnership was required to pay the general partner $2.35 in 1996 and $2.20 in 1995 per delivered cubic yard for towing service. During 1996 and 1995, the Partnership incurred towage expenses of approximately $190,000 and $1,248,000, respectively. F-41 AMBOY AGGREGATES (A JOINT VENTURE) NOTES TO FINANCIAL STATEMENTS--(CONTINUED) In addition, during 1996 and 1995, Partnership purchased approximately $545,000 and $160,000, respectively, of dredging services from a general partner. The amounts due from/to general partners at December 31, 1997 and 1996 arose from the aforementioned transactions. NOTE 10--FAIR VALUE OF FINANCIAL INSTRUMENTS: The Company's material financial instruments at December 31, 1997 and 1996 for which disclosure of estimated fair value is required by certain accounting standards consisted of cash and cash equivalents, accounts receivable, accounts payable and long-term debt. In the opinion of management, (i) cash and cash equivalents, accounts receivable and accounts payable were carried at values that approximated their fair values because of their liquidity and/or their short-term maturities and (ii) long-term debt was carried at values that approximated its face value because it bears interest at rates equivalent to those currently prevailing for financial instruments with similar characteristics. * * * F-42 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR- MATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS OFFER- ING MEMORANDUM, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUER OR THE INITIAL PUR- CHASER. THIS OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR A SO- LICITATION OF AN OFFER TO BUY THE NOTES BY ANYONE IN ANY JURISDICTION IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS OFFERING MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE IS- SUER SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. TABLE OF CONTENTS
PAGE Available Information..................................................... i Summary................................................................... 1 Risk Factors.............................................................. 10 The Transaction........................................................... 18 Use of Proceeds........................................................... 18 Capitalization............................................................ 19 Unaudited Pro Forma Condensed Consolidated Financial Statements........... 20 Selected Financial and Other Data......................................... 27 Management's Discussion and Analysis of Financial Condition and Results of Operations .............................................................. 29 The Exchange Offer........................................................ 39 Business.................................................................. 46 Management................................................................ 58 Ownership of Capital Stock................................................ 61 Description of Capital Stock.............................................. 61 Description of the New Credit Facility.................................... 64 Description of New Bonding Agreement...................................... 66 Description of Notes...................................................... 67 Certain Federal Income Tax Consequences................................... 98 Plan of Distribution...................................................... 99 Legal Matters............................................................. 100 Experts................................................................... 100 Index to Consolidated Financial Statements................................ F-1
Until , 1999 (90 days after the date of this Prospectus), all dealers effecting transactions in the Notes, whether or not participating in this distribution, may be required to deliver a Prospectus. This is in addition to the obligation of dealers to deliver a Prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- $115,000,000 LOGO [GREAT LAKES DREDGE AND DOCK CORPORATION] GREAT LAKES DREDGE & DOCK CORPORATION SERIES B 11 1/4% SENIOR SUBORDINATED NOTES DUE 2008 --------------------------------- PROSPECTUS --------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. As permitted by the Delaware General Corporation Law ("DGCL"), the Company's Restated Certificate of Incorporation provides that directors of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, relating to prohibited dividends or distributions or the repurchase or redemption of stock, or (iv) for any transaction from which the director derives an improper personal benefit. In addition, the Company's Bylaws provide for indemnification of the Company's officers and directors to the fullest extent permitted under Delaware law. Section 145 of the DGCL provides that a corporation may indemnify any persons, including officers and directors, who were or are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as an officer, director, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, for criminal proceedings, had no reasonable cause to believe that his conduct was unlawful. A Delaware corporation may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses that such officer or director actually and reasonably incurred. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. The directors and officers of the Company are insured against certain liabilities under the registrant's directors' and officers' liability insurance. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits The following exhibits are filed herewith unless otherwise indicated:
EXHIBIT NUMBER DESCRIPTION ------- ----------- 2.01 Plan and Agreement of Merger dated as of August 19, 1998 between the Company and Great Lakes Dredge & Dock Acquisition, Inc. 3.01 Restated Certificate of Incorporation of the Company. 3.02 Bylaws of the Company. 4.01 Indenture dated as of August 19, 1998 among the Company, the Subsidiary Guarantors and The Bank of New York, as Trustee. 4.02 Registration Rights Agreement dated as of August 19, 1998 among the Company, the Subsidiary Guarantors and the Initial Purchaser. Form of 11% Senior Subordinated Note due 2008 (included in Exhibit 4.03 4.01). 5.01* Opinion of Dechert Price & Rhoads.
II-1
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.01 Credit Agreement dated as of August 19, 1998 among the Company and the other loan parties thereto, as Borrowers, the financial institutions from time to time party thereto, as Lenders, Bank of Montreal, Chicago Branch, as Documentation Agent, Bank of America National Trust and Savings Association, as Issuing Lender and Administrative Agent and BancAmerica Robertson Stephens, as Lead Arranger. 10.02 Second Amended and Restated Underwriting and Continuing Indemnity Agreement dated August 19, 1998 among the Company, certain of its Subsidiaries, Reliance Insurance Company, United Pacific Insurance Company, Reliance National Insurance Company and Reliance Surety Company. 10.03 Contract relating to Boston Harbor Navigation Improvement and Berth Dredging Project between Great Lakes Dredge & Dock Company and United States Army Corps of Engineers, awarded May 18, 1998. 10.04 Contract Relating to Stage 2, Port of Los Angeles, Pier 400 Deep Draft, Navigation Improvements, Los Angeles and Long Beach Harbors, San Pedro Bay, Los Angeles County, California, between Pier 400 Constructors and United States Army Corps of Engineers, awarded May 12, 1997. 10.05 Employment Agreement between the Company and Douglas B. Mackie. 10.06* Great Lakes Dredge & Dock 401(k) Plan 21.01 Subsidiaries of the Registrant. 23.01 Consent of Deloitte & Touche LLP (included on Page II-10). 23.02 Consent of J.H. Cohn LLP (included on Page II-11). 23.03* Consent of Dechert Price & Rhoads (included in Exhibit 5.01). 24.01 Powers of Attorney (included on Signature Pages). Statement of Eligibility and Qualification of The Bank of New York on 25.01 Form T-1. 27.01 Financial Data Schedule for the Company. 99.01* Form of Letter of Transmittal. 99.02* Form of Notice of Guaranteed Delivery.
- -------- * To be filed by amendment. (b) Financial Statement Schedules: Schedules not listed above are omitted because of the absence of the conditions under which they are required or because the information required by such omitted schedules is set forth in the financial statements or the notes thereto. ITEM 22. UNDERTAKINGS. (a) The undersigned registrants hereby undertake: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; II-2 (2) that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) The undersigned registrants hereby undertake to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (d) The undersigned registrants hereby undertake to supply by means of a post- effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oak Brook and State of Illinois on September 29, 1998. GREAT LAKES DREDGE & DOCK CORPORATION /s/ Douglas B. Mackie By: ______________________________________ Douglas B. Mackie President & Chief Executive Officer POWER OF ATTORNEY KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Douglas B. Mackie and Bruce J. Biemeck, each and individually, his or her attorneys-in-fact, with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any or all amendments or post-effective amendments to this Registration Statement or any Registration Statement for the same offering that is effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each such attorney-in-fact, or his agent or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE /s/ Douglas B. Mackie President, Chief September 29, 1998 - ------------------------------------- Executive Officer Douglas B. Mackie and Director (principal executive officer) /s/ Bruce J. Biemeck Senior Vice September 29, 1998 - ------------------------------------- President, Chief Bruce J. Biemeck Financial Officer and Treasurer (principal financial officer and principal accounting officer) /s/ Michael A. Delaney Director September 29, 1998 - ------------------------------------- Michael A. Delaney /s/ David Wagstaff III Director September 29, 1998 - ------------------------------------- David Wagstaff III II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oak Brook and State of Illinois on September 29, 1998. GREAT LAKES DREDGE & DOCK COMPANY /s/ Douglas B. Mackie By:__________________________________ Douglas B. Mackie President & Chief Executive Officer POWER OF ATTORNEY KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Douglas B. Mackie and Bruce J. Biemeck, each and individually, his or her attorneys-in-fact, with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any or all amendments or post-effective amendments to this Registration Statement or any Registration Statement for the same offering that is effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each such attorney-in-fact, or his agent or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE /s/ Douglas B. Mackie President, Chief September 29, 1998 - ------------------------------------- Executive Officer Douglas B. Mackie and Director (principal executive officer) /s/ Bruce J. Biemeck Senior Vice September 29, 1998 - ------------------------------------- President, Chief Bruce J. Biemeck Financial Officer and Treasurer (principal financial officer and principal accounting officer) and Director /s/ Mark Thomas Director September 29, 1998 - ------------------------------------- Mark Thomas II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oak Brook and State of Illinois on September 29, 1998. GREAT LAKES INTERNATIONAL, INC. /s/ Douglas B. Mackie By: _________________________________ Douglas B. Mackie President & Chief Executive Officer POWER OF ATTORNEY KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Douglas B. Mackie and Bruce J. Biemeck, each and individually, his or her attorneys-in-fact, with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any or all amendments or post-effective amendments to this Registration Statement or any Registration Statement for the same offering that is effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each such attorney-in-fact, or his agent or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE /s/ Douglas B. Mackie President, Chief September 29, 1998 - ------------------------------------- Executive Officer Douglas B. Mackie and Director (principal executive officer) /s/ Bruce J. Biemeck Senior Vice September 29, 1998 - ------------------------------------- President, Chief Bruce J. Biemeck Financial Officer and Treasurer (principal financial officer and principal accounting officer) and Director /s/ Mark Thomas Director September 29, 1998 - ------------------------------------- Mark Thomas II-6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oak Brook and State of Illinois on September 29, 1998. DAWSON DREDGING COMPANY /s/ Douglas B. Mackie By: _________________________________ Douglas B. Mackie President & Chief Executive Officer POWER OF ATTORNEY KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Douglas B. Mackie and Bruce J. Biemeck, each and individually, his or her attorneys-in-fact, with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any or all amendments or post-effective amendments to this Registration Statement or any Registration Statement for the same offering that is effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each such attorney-in-fact, or his agent or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE /s/ Douglas B. Mackie President, Chief September 29, 1998 - ------------------------------------- Executive Officer Douglas B. Mackie and Director (principal executive officer) /s/ Bruce J. Biemeck Senior Vice September 29, 1998 - ------------------------------------- President, Chief Bruce J. Biemeck Financial Officer and Treasurer (principal financial officer and principal accounting officer) and Director /s/ Mark Thomas Director September 29, 1998 - ------------------------------------- Mark Thomas II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oak Brook and State of Illinois on September 29, 1998. GATES CONSTRUCTION CORP. /s/ Douglas B. Mackie By: __________________________________ Douglas B. Mackie President & Chief Executive Officer POWER OF ATTORNEY KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Douglas B. Mackie and Bruce J. Biemeck, each and individually, his or her attorneys-in-fact, with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any or all amendments or post-effective amendments to this Registration Statement or any Registration Statement for the same offering that is effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each such attorney-in- fact, or his agent or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE /s/ Douglas B. Mackie President, Chief September 29, 1998 - ------------------------------------ Executive Officer Douglas B. Mackie and Director (principal executive officer) /s/ Bruce J. Biemeck Senior Vice September 29, 1998 - ------------------------------------ President, Chief Bruce J. Biemeck Financial Officer and Treasurer (principal financial officer and principal accounting officer) and Director /s/ Richard M. Lowry Director September 29, 1998 - ------------------------------------ Richard M. Lowry II-8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oak Brook and State of Illinois on September 29, 1998. FIFTY-THREE DREDGING CORPORATION /s/ Douglas Mackie By: _________________________________ Douglas B. Mackie President & Chief Executive Officer POWER OF ATTORNEY KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Douglas B. Mackie and Bruce J. Biemeck, each and individually, his or her attorneys-in-fact, with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any or all amendments or post-effective amendments to this Registration Statement or any Registration Statement for the same offering that is effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each such attorney-in-fact, or his agent or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. NAME TITLE DATE /s/ Douglas B. Mackie President, Chief September 29, 1998 - ------------------------------------- Executive Officer Douglas B. Mackie and Director (principal executive officer) /s/ Bruce J. Biemeck Senior Vice September 29, 1998 - --------------------------------- President, Chief Bruce J. Biemeck Financial Officer and Treasurer (principal financial officer and principal accounting officer) /s/ Mark Thomas Director September 29, 1998 - ------------------------------------- Mark Thomas II-9 INDEPENDENT AUDITORS' CONSENT We consent to the use in this Registration Statement of Great Lakes Dredge & Dock Corporation on Form S-4 of our report dated January 30, 1998, appearing in the Prospectus, which is part of this Registration Statement. We also consent to the reference to us under the heading "Experts" in such Prospectus. DELOITTE & TOUCHE LLP Chicago, Illinois September 29, 1998 II-10 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT We consent to the inclusion in this Registration Statement on Form S-4 being filed by Great Lakes Dredge & Dock Corporation of our report, dated January 23, 1998, on the financial statements of Amboy Aggregates (A Joint Venture) as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997. We also consent to the reference to our firm under the caption "Experts" in the Prospectus of the Registration Statement. J. H. Cohn LLP Roseland, New Jersey September 28, 1998 II-11 EX-2.01 2 PLAN AND AGREEMENT OF MERGER EXHIBIT 2.01 ------------ PLAN AND AGREEMENT OF MERGER THIS IS A PLAN AND AGREEMENT OF MERGER DATED AS OF AUGUST 19, 1998 (THE "AGREEMENT") BETWEEN GREAT LAKES DREDGE & DOCK CORPORATION, A DELAWARE CORPORATION (THE "COMPANY") AND GREAT LAKES DREDGE & DOCK ACQUISITION, INC., A DELAWARE CORPORATION ("MERGER SUB"). THE COMPANY AND MERGER SUB ARE SOMETIMES HEREINAFTER COLLECTIVELY REFERRED TO AS THE "CONSTITUENT CORPORATIONS." BACKGROUND ---------- The Boards of Directors of the Company and Merger Sub, deeming it to be advantageous to their respective corporations and their stockholders, have duly approved this Agreement and its execution. Accordingly, the parties hereto agree as follows: TERMS ----- ARTICLE I 1.1. Merger. Subject to the terms and conditions hereof, at the ------ Effective Time (as defined in Section 1.5) Merger Sub shall be merged with and into the Company (the "Merger") pursuant to provisions of the Delaware General Corporation Law, the separate existence of Merger Sub shall cease, and the Company shall be the surviving corporation (the "Surviving Corporation") and continue its existence under Delaware law under the name "Great Lakes Dredge & Dock Corporation." 1.2. Effect of Merger. At the Effective Time of the Merger, all the ---------------- rights, property, real, personal and mixed, and franchises of each of the Constituent Corporations, and all debts due on whatever account to either of them, including subscriptions to shares and other things in action or belonging to either of them, shall be taken and deemed to be transferred to and vested in the Surviving Corporation, without further act or deed, and the Surviving Corporation shall thenceforth be responsible for all the liabilities and obligations of each of the Constituent Corporations. 1.3. Stockholder Approval. Subsequent to the execution of this -------------------- Agreement, each of the Company and Merger Sub shall submit this Agreement to its stockholders for their approval pursuant to the applicable provisions of the Delaware General Corporation Law. 1.4. Filing of the Agreement. Following the approval of this ----------------------- Agreement by the stockholders of the Company and Merger Sub, and provided that this Agreement has not been terminated pursuant to section 4.1 hereof, the parties hereto will cause the Merger to be consummated by filing with the Secretary of State of Delaware this Agreement or the appropriate Certificate of Merger (the "Certificate of Merger") duly executed by the Company and Merger Sub in accordance with the requirements of the Delaware General Corporation Law. 1.5. Effective Time. The Merger shall become effective at such time -------------- as this Agreement shall be filed with the Secretary of State of the State of Delaware (such time of effectiveness being herein sometimes referred to as the "Effective Time"). ARTICLE II 2.1. Certificate of Incorporation. Immediately prior to the ---------------------------- Effective Time and until thereafter amended or supplemented in accordance with their respective terms and Delaware General Corporation Law, the Certificate of Incorporation of the Company shall be as set forth in Exhibit A attached hereto --------- and hereby made a part hereof. The Certificate of Incorporation attached hereto as Exhibit A shall be the Certificate of Incorporation of the Surviving --------- Corporation until thereafter amended as provided therein and by law. 2.2. Bylaws. The Bylaws of Merger Sub as in effect immediately prior ------ to the Effective Time shall be the Bylaws of the Surviving Corporation until thereafter amended as provided therein and by law. 2.3. Directors. The directors of Merger Sub immediately prior to the --------- Effective Time shall continue as the directors of the Surviving Corporation after the Effective Time, to hold office until the expiration of their current terms, or their prior resignation, removal or death. 2.4. Company Officers. The officers of the Company immediately prior ---------------- to the Effective Time shall continue as the officers of the Surviving Corporation after the Effective Time, to hold office until the expiration of their current terms, or their prior resignation, removal or death. ARTICLE III 3.1. Conversion of Stock. At the Effective Time by virtue of the ------------------- Merger and without any action on the part of the holder of any of the capital stock of the Company or Merger Sub: (a) Definitions. For purposes of this agreement the following ----------- definitions shall apply: (i) "Effective Time Merger Consideration" means $155,995,675. (ii) "Per Share Effective Time Merger Consideration" means the quotient obtained by dividing (i) the Effective Time Merger Consideration by (ii) the total number of shares of the Company's Common Stock, no par value per share ("Company Common Stock"), outstanding at the Effective Time ("Total Shares of Company Common Stock"). (b) Company Common Stock. -------------------- (i) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than any Retained Shares (as hereinafter defined), Vectura Shares (as hereinafter defined), and Dissenting Shares (as hereinafter defined)) shall be canceled and extinguished and converted into the right to receive, without interest, the Per Share Effective Time Merger Consideration. (ii) Retained Shares. All shares of Company Common Stock held --------------- by members of the Company management listed on Exhibit B attached hereto (such --------- shares being the "Retained Shares"), shall be canceled and extinguished and converted into the number of validly issued, fully paid and non-assessable shares of Class A Common Stock, par value $.01 per share, of the Surviving Corporation ("Surviving Corp. Class A Common"), and the number of validly issued, fully paid and non-assessable shares of 12% Series A Cumulative Compounding Preferred Stock, par value $.01 per share, of the Surviving Corporation ("Surviving Corp. Series A Preferred") as set forth opposite each shareholder's name on Exhibit B. --------- (iii) Vectura Shares. All shares of Company Common Stock held -------------- by Vectura Holding Company LLC (such shares being the "Vectura Shares"), shall be canceled and extinguished and converted into 749,753 validly issued, fully paid and non-assessable shares of Surviving Corp. Class A Common and 7,500 validly issued, fully paid and non-assessable shares of Surviving Corp. Series A Preferred. (iv) Dissenting Shares. Notwithstanding anything herein to the ----------------- contrary, any shares of Company Common Stock issued and outstanding prior to the Effective Time and held by a holder (if any) who has exercised the right to demand payment for fair value of such shares in accordance with Article 262 of the General Corporation Law of Delaware or similar provisions (the "Dissenting Shares"), shall not be converted into a right to receive the consideration referred to in the foregoing paragraphs (i) through (iii) (the "Merger Consideration") unless such holder fails to perfect or otherwise loses such holder's right to such payment or appraisal, if any. If, after the Effective Time, such holder fails to perfect or loses any such right to appraisal, then as of the later of the Effective Time or the occurrence of such event, such holders' shares of Company Common Stock shall automatically be converted into and represent only the right to receive the Per Share Effective Time Merger Consideration, without interest, as provided in this Article 3.1(b) upon surrender of the certificate or certificates representing any shares of Company Common Stock. The Company shall give prompt notice to Merger Sub of any demands received by the Company for payment or appraisal of shares of Company Common Stock, and Merger Sub shall have the right to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the mutual written approval of Merger Sub, settle or offer to settle any such demands. (c) Merger Sub Common and Preferred Stock ------------------------------------- (i) Each share of Class A Common Stock, par value $.01 per share, of Merger Sub ("Merger Sub Class A Common") issued and outstanding immediately prior to the Effective Time shall be canceled and extinguished and converted into one validly issued, fully paid and non-assessable share of Surviving Corp. Class A Common; the shares of Merger Sub Class A Common so converted shall cease to exist as such, and shall exist only as shares of Surviving Corp. Class A Common; and shares of Merger Sub Class A Common held in Merger Sub's treasury shall be canceled and retired. (ii) Each share of Class B Common Stock, par value $.01 per share, of Merger Sub ("Merger Sub Class B Common") issued and outstanding immediately prior to the Effective Time shall be canceled and extinguished and converted into one validly issued, fully paid and non-assessable share of Class B Common Stock, par value $.01 per share, of the Surviving Corporation ("Surviving Corp. Class B Common"); the shares of Merger Sub Class B Common so converted shall cease to exist as such, and shall exist only as shares of Surviving Corp. Class B Common; and shares of Merger Sub Class B Common held in Merger Sub's treasury shall be canceled and retired. (iii) Each share of 12% Series A Cumulative Compounding Preferred Stock, par value $.01 per share, of Merger Sub ("Merger Sub Series A Preferred") issued and outstanding immediately prior to the Effective Time shall be canceled and extinguished and converted into one validly issued, fully paid and non-assessable share of Surviving Corp. Series A Preferred; the shares of Merger Sub Series A Preferred so converted shall cease to exist as such, and shall exist only as shares of Surviving Corp. Series A Preferred; and shares of Merger Sub Series A Preferred held in the Merger Sub's treasury shall be canceled and retired. 3.2. Fractional Shares; Adjustments. No fractional shares of the ------------------------------ Surviving Corporation shall be issued as a result of the conversion provided for in Section 3.1(a). In lieu of any such fractional shares, the holder of a fractional interest in shares of common or preferred stock in the Surviving Corporation shall be entitled to receive a cash payment therefor in an amount equal to the value of one dollar ($1) per share of Surviving Corp. Class A Common and one thousand dollars ($1,000) per share of Surviving Corp. Series A Preferred. 3.3. Shareholders Agreements; Option Plans. At the Effective Time, ------------------------------------- all shareholders agreements by and among the Company and the shareholders and all option plans of the Company shall be terminated and have no further force and effect; provided, that this provision shall in no event affect any -------- shareholder agreement in respect of the Surviving Corp. Class A Common, Surviving Corp. Class B Common or Surviving Corp. Series A Preferred dated as of, on or after the date of the Effective Time. ARTICLE IV 4.1. Termination. This Plan and Agreement of Merger may be ----------- terminated and the Merger abandoned by action of the board of directors of either the Company or Merger Sub at any time before the Effective Time, notwithstanding the approval in the manner set forth in Section 1.3. 4.2. Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of Delaware. 4.3. Headings. The section headings herein are for convenience of -------- reference only and shall not affect the construction or interpretation of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. GREAT LAKES DREDGE & DOCK ACQUISITION, INC. Attest: /s/ Paul D. Delva By: /s/ Michael A. Delaney ----------------------------- ------------------------------ Name: Name: Michael A. Delaney Title: Title: Vice President GREAT LAKES DREDGE & DOCK CORPORATION Attest: /s/ Mark R. Thomas By: /s/ Douglas B. Mackie ----------------------------- ------------------------------ Name: Name: Title: Title: Exhibit A -- Restated Certificate of Incorporation of Great Lakes Dredge & Dock Corporation. Exhibit B -- Schedule of Retained Shares. EX-3.01 3 RESTATED CERTIFICATE OF INCORPORATION EXHIBIT 3.01 ------------ RESTATED CERTIFICATE OF INCORPORATION OF GREAT LAKES DREDGE & DOCK CORPORATION 1. Name. The name of the Corporation is Great Lakes Dredge & Dock ---- Corporation. 2. Registered Office and Agent. The address of the Corporation's --------------------------- registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle, DE 19801. The name of the Corporation's registered agent at such address is The Corporation Trust Company. 3. Purpose. The purposes for which the Corporation is formed are to ------- engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware and to possess and exercise all of the powers and privileges granted by such law and any other law of Delaware. 4. Authorized Capital. The aggregate number of shares of stock which ------------------ the Corporation shall have authority to issue is 50,250,000 shares, divided into three (3) classes consisting of 250,000 shares of Preferred Stock, par value $.01 per share ("Preferred Stock"); 25,000,000 shares of Class A Common Stock, par value $.01 per share ("Class A Common Stock"); and 25,000,000 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock"). Class A Common Stock and Class B Common Stock are hereinafter sometimes collectively referred to as "Common Stock." The following is a statement of the designations, preferences, qualifications, limitations, restrictions and the special or relative rights granted to or imposed upon the shares of each such class and upon the shares of the first series of Preferred Stock. A. PREFERRED STOCK --------------- 1. Issue in Series. Preferred Stock may be issued from time to --------------- time in one or more series, each such series to have the terms stated herein and in the resolution of the Board of Directors of the Corporation providing for its issue. All shares of any one series of Preferred Stock will be identical, but shares of different series of Preferred Stock need not be identical or rank equally except insofar as provided by law or herein. 2. Creation of Series. In addition to the 12% Series A Cumulative ------------------ Compounding Preferred Stock ("Series A Preferred Stock") provided for herein, the Board of Directors will have the authority to adopt amendments to these Articles to cause to be created one or more series of Preferred Stock, and to determine and fix with respect to each series prior to the issuance of the series to which such resolution relates : a. The distinctive designation of the series and the number of shares which will constitute the series, which number may be increased or decreased (but not below the number of shares then outstanding) from time to time by action of the Board of Directors; b. The dividend rate and the times of payment of dividends on the shares of the series, whether dividends will be cumulative, and if so, from what date or dates; c. The price or prices at which, and the terms and conditions on which, the shares of the series may be redeemed at the option of the Corporation; d. Whether or not the shares of the series will be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof; e. Whether or not the shares of the series will be convertible into, or exchangeable for, any other shares of stock of the Corporation or other securities, and if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange; f. The rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation; g. Whether or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other series or class in any respect or will be entitled to the benefit of limitations restricting the issuance of shares of any other series or class having priority over or being on a parity with the shares of such series in any respect, or restricting the payment of dividends on or the making of other distributions in respect of shares of any other series or class ranking junior to the shares of the series as to dividends or assets, or restricting the purchase or redemption of the shares of any such junior series or class, and the terms of any such restriction; h. Whether the series will have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights; and 2 i. Any other preferences, qualifications, privileges, options and other relative or special rights and limitations of that series. 3. Dividends. Holders of Preferred Stock shall be entitled to receive, --------- when and as declared by the Board of Directors, out of funds legally available for the payment thereof, dividends at the rates fixed by the Board of Directors for the respective series, and no more, before any dividends shall be declared and paid, or set apart for payment, on Common Stock with respect to the same dividend period. 4. Preference on Liquidation. In the event of the voluntary or ------------------------- involuntary liquidation, dissolution or winding up of the Corporation, holders of each series of Preferred Stock will be entitled to receive the amount fixed for such series plus, in the case of any series on which dividends will have been determined by the Board of Directors to be cumulative, an amount equal to all dividends accumulated and unpaid thereon to the date of final distribution whether or not earned or declared before any distribution shall be paid, or set aside for payment, to holders of Common Stock. If the assets of the Corporation are not sufficient to pay such amounts in full, holders of all shares of Preferred Stock will participate in the distribution of assets ratably in proportion to the full amounts to which they are entitled or in such order or priority, if any, as will have been fixed in the resolution or resolutions providing for the issue of the series of Preferred Stock. Neither the merger nor consolidation of the Corporation into or with any other corporation, nor a sale, transfer or lease of all or part of its assets, will be deemed a liquidation, dissolution or winding up of the corporation within the meaning of this paragraph except to the extent specifically provided for herein. 5. Redemption. The Corporation, at the option of the Board of Directors, ---------- may redeem all or part of the shares of any series of Preferred Stock on the terms and conditions fixed for such series. 6. Voting Rights. Except as otherwise required by law, as otherwise ------------- provided herein or as otherwise determined by the Board of Directors as to the shares of any series of Preferred Stock prior to the issuance of any such shares, the holders of Preferred Stock shall have no voting rights and shall not be entitled to any notice of meeting of stockholders. B. 12% SERIES A CUMULATIVE COMPOUNDING PREFERRED STOCK --------------------------------------------------- 1. Designation; Number of Shares. The first series of Preferred Shares ----------------------------- shall be designated as 12% Series A Cumulative Compounding Preferred Stock ("Series A Preferred Stock"), and the number of shares which shall constitute such series shall be 250,000. The par value of the Series A Preferred Stock shall be $.01 per share. 3 2. Accrual and Payment of Dividends. -------------------------------- a. The holders of Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds of the Corporation legally available therefor, cumulative cash dividends at the rate of $120 per share per annum. Dividends on the Series A Preferred Stock shall be payable in annual installments in arrears commencing September 30, 1999 and thereafter on the thirtieth day of September (unless such day is not a business day in which event on the last preceding business day) in each such year (hereinafter referred to as a "Dividend Accrual Date"), except that the dividend payment payable on September 30, 1999 shall be calculated from the date of original issuance through September 30, 1999. Each such dividend on Series A Preferred Stock when paid shall be payable to holders of record as they appear on the stock books of the Corporation on the date established by the Board of Directors of the Corporation as the record date for the payment of such dividend (which record date shall not precede the date upon which the resolution fixing such record date is adopted and which record date shall be not more than sixty days prior to such action). If no record date is fixed, the record date for determining holders for such purpose shall be at the close of business on the date on which the Board of Directors adopts the resolution relating to such dividend payment. Dividends with respect to any shares of Series A Preferred Stock shall accrue (whether or not earned or declared) from the date of issuance of such shares. b. Dividends on the Series A Preferred Stock shall be cumulative, whether or not earned or declared, so that if at any time full cumulative dividends at the rate aforesaid on all Series A Preferred Stock then outstanding to the end of the annual dividend period next preceding such time shall not have been paid, the amount of the deficiency shall be paid before any sum shall be set aside for or applied by the Corporation to the purchase, redemption or other acquisition for value of any Junior Shares (as such term is defined in Section 4.B(9)) (either pursuant to any applicable sinking fund requirement or otherwise) or any dividend or other distribution shall be paid or declared and set apart for payment on any Junior Shares (other than a dividend payable in Junior Shares); provided, -------- however, that the foregoing shall not prohibit the Corporation from ------- repurchasing Junior Shares from a former employee of the Corporation (or a subsidiary of the Corporation) where such repurchase arises from the Corporation's option to repurchase such shares upon the termination of such employee's employment with the Corporation (or a subsidiary) pursuant to a written agreement between the Corporation and such employee. Accrued dividends on the Series A Preferred Stock if not paid on the first or any subsequent Dividend Accrual Date following accrual 4 shall thereafter accrue additional dividends in respect thereof (the "Additional Dividends"), compounded annually, at the rate of 12% per annum. c. When dividends are not paid in full upon the Series A Preferred Stock and any other stock ranking on a parity as to dividends with the Series A Preferred Stock, all dividends paid upon Series A Preferred Stock and any other Shares ranking on a parity as to dividends with the Series A Preferred Stock shall be paid pro rata so that in all cases the amount of dividends paid per share of Series A Preferred Stock and such other Shares shall bear the same ratio that accrued dividends per share on the Series A Preferred Stock and such other shares bear to each other. Except as provided in the preceding sentence, unless full cumulative dividends on the Series A Preferred Stock have been paid, no dividends shall be declared or paid or set aside for payment upon any other shares of the Corporation ranking on a parity with the Series A Preferred Stock as to dividends. d. An annual dividend period shall commence on the day following a Dividend Accrual Date and shall end on the next succeeding Dividend Accrual Date. 3. Preference on Liquidation. ------------------------- a. In the event that the Corporation shall be liquidated, dissolved or wound up, whether voluntarily or involuntarily, after all creditors of the Corporation shall have been paid in full, the holders of the Series A Preferred Stock shall be entitled to receive, out of the assets of the Corporation legally available for distribution to its shareholders, whether from capital, surplus or earnings, before any amount shall be paid to the holders of any Junior Shares, an amount equal to $1000 in cash per share plus an amount equal to full cumulative dividends (whether or not earned or declared) accrued and unpaid thereon (including Additional Dividends) to the date of final distribution, and no more. If upon any liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation shall be insufficient to pay the holders of all outstanding Series A Preferred Stock and of any shares ranking on a parity with the Series A Preferred Stock the full amounts to which they respectively shall be entitled, such assets, or the proceeds thereof, shall be distributed ratably among the holders of the Series A Preferred Stock and of any shares of stock ranking on a parity with the Series A Preferred Stock. Holders of Series A Preferred Stock shall not be entitled, upon the liquidation, dissolution or winding up of the Corporation, to receive any amounts with respect to such shares other than the amounts referred to in this Section 4.B(3)(a). 5 b. Neither the purchase nor redemption by the Corporation of any shares of any class in any manner permitted by these Articles or any amendment hereof, nor the merger or consolidation of the Corporation with or into any other corporation or corporations, nor a sale, transfer or lease of all or substantially all of the Corporation's assets shall be deemed to be a liquidation, dissolution or winding up of the Corporation for the purposes of this Section 4.B(3); provided, however, that any consolidation or merger of the -------- ------- Corporation in which the Corporation is not the surviving entity shall be deemed to be a liquidation, dissolution or winding up of the affairs of the Corporation within the meaning of this Section 4.B(3) if, (A) in connection therewith, the holders of Common Shares of the Corporation receive as consideration, whether in whole or in part, for such Common Shares (1) cash, (2) notes, debentures or other evidences of indebtedness or obligations to pay cash or (3) preferred stock of the surviving entity (whether or not the surviving entity is the Corporation) which ranks on a parity with or senior to the preferred shares received by holders of the Series A Preferred Stock with respect to liquidation or dividends or (B) the holders of the Series A Preferred Stock do not receive preferred shares of the surviving entity with rights, powers and preferences equal to (or more favorable to the holders than) the rights, powers and preferences of the Series A Preferred Stock. 4. Redemption. ---------- a. All outstanding shares of Series A Preferred Stock shall be redeemed from funds legally available therefor on September 30, 2018 (the "Mandatory Redemption Date"), at a price per share equal to $1000 plus an amount per share equal to full cumulative dividends (whether or not earned or declared) accrued and unpaid thereon (including Additional Dividends) to the Mandatory Redemption Date. b. The Series A Preferred Stock may be redeemed from funds legally available therefor, in whole or in part, at the election of the Corporation, expressed by resolution of the Board of Directors, at any time and from time to time at a price per share equal to $1000 plus an amount per share equal to full cumulative dividends (whether or not earned or declared) accrued and unpaid thereon (including Additional Dividends) to the date of redemption. c. The aggregate amount of the redemption price pursuant to Section 4.B(4)(a) or (b) is hereinafter referred to as the "Series A Redemption Price" with respect to such redemption. The Mandatory Redemption Date and the date of any redemption pursuant to Section 4.B(4)(b) are each hereinafter referred to individually as a "Redemption Date." 6 5. Redemption Procedure. -------------------- a. A redemption pursuant to Section 4.B(4) shall be accomplished in the manner and with the effect as set forth in this Section 4.B(5). b. Notice of the redemption of Series A Preferred Stock pursuant to Section 4.B(4) shall be given by mail not less than ten (10) days prior to the Redemption Date. If less than all the outstanding Series A Preferred Stock is to be redeemed, the selection of shares for redemption shall be made pro rata and the notice of redemption to a holder shall state the number of Series A Preferred Stock of such holder to be redeemed. The amount of the Series A Redemption Price shall be deposited on or before the Redemption Date in trust for the account of the holders of Series A Preferred Stock entitled thereto with a bank or trust company in good standing doing business in the State of New York and having capital and surplus of at least $100,000,000 (the date of such deposit being hereinafter in this Section 4.B(5) referred to as the "date of deposit"). c. Notice of the date on which, and the name and address of the bank or trust company with which, the deposit has been or will be made shall be included in the notice of redemption. On and after the Redemption Date (unless default shall be made by the Corporation in providing money for the payment of the Series A Redemption Price pursuant to the notice of redemption), or if the Corporation shall make such deposit on or before the date specified therefor in the notice of redemption, then on and after the date of deposit (provided notice of redemption has been duly given), all dividends on the Series A Preferred Stock so called for redemption shall cease to accrue and, notwithstanding that any certificate for Series A Preferred Stock is not surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding and all rights of the holders thereof as shareholders of the Corporation with respect to such shares shall cease and terminate, except the right to receive the Series A Redemption Price as hereinafter provided. d. At any time on or after the Redemption Date, or if the Corporation shall deposit the money for such redemption prior to the Redemption Date, then at any time on or after the date of deposit, which time shall be specified by the Corporation in the notice of redemption and which shall not be later than the Redemption Date, the holders of record of the Series A Preferred Stock to be redeemed shall be entitled to receive the Series A Redemption Price upon actual delivery to the bank or trust company with which such deposit shall be made of certificates for the shares to be redeemed, such certificates, if required, to be duly endorsed in blank or accompanied by proper instruments of assignment and transfer duly endorsed in blank. The making of such deposit with any such bank or 7 trust company shall not relieve the Corporation of liability for payment of the Series A Redemption Price. e. Any money so deposited which shall remain unclaimed by the holders of such Series A Preferred Stock at the end of two (2) years after the Redemption Date shall be paid by such bank or trust company to the Corporation, which shall thereafter, to the extent of the money so repaid, be liable for the payment of the Series A Redemption Price. Any interest accrued on money so deposited shall be paid to the Corporation from time to time. 6. Optional Exchange. The Series A Preferred Stock may be exchanged, at ----------------- the Corporation's option at any time and from time to time, in whole or in part, for junior subordinated debentures to be issued by the Corporation in substantially the form attached as Annex A hereto ("Exchange Debentures") at the rate of $1000 per share plus an amount per share equal to full cumulative dividends (whether or not earned or declared) accrued and unpaid thereon (including all dividends which have accrued since the most recent Dividend Accrual Date) to the date established by the Board of Directors for such exchange (the Exchange Date") (the aggregate of such amounts is hereinafter referred to as the "Exchange Amount"). The Exchange Debentures shall bear interest at a rate equal to the lesser of 12% and the maximum interest rate permitted to be deducted as accrued under the relevant provisions of the Internal Revenue Code of 1986 and the rules and regulations promulgated thereunder in effect on the Exchange Date. If less than all the shares of Series A Preferred Stock is to be exchanged, the selection of shares to be exchanged shall be pro rata. The election of the Corporation to exchange the shares of Series A Preferred Stock for Exchange Debentures pursuant to this Section 4.B(6) must be made by the affirmative vote of at least eighty percent (80%) of all the directors of the Corporation then in office. 7. Exchange Procedure ------------------ a. Any exchange pursuant to Section 4.B(6) shall be accomplished in the manner and with the effect as set forth in this Section 4.B(7). b. Notice of the exchange of Series A Preferred Stock pursuant to Section 4.B(6) shall be given by first class mail to each holder of record on the record date for such exchange at such holder's address as the same appears on the stock register of the Corporation not less than ten (10) days and not more than sixty (60) days prior to the Exchange Date. Each such notice shall state: (A) the Exchange Date, (B) the place or places where certificates for such shares of Series A Preferred Stock are to be surrendered for exchange into the Exchange Debentures, (C) that dividends on the Series A Preferred Stock to be exchanged will cease to 8 accrue on such Exchange Date and (D) if less than all the shares of Series A Preferred Stock is to be exchanged the number of shares of the holder to be exchanged. The form of the Exchange Debentures may not be amended or supplemented before the Exchange Date without the affirmative vote or consent of the holders of a majority of the outstanding shares of Series A Preferred Stock, except for those changes which would not adversely affect the legal rights of the holders. c. On and after the Exchange Date, all dividends on the Series A Preferred Stock so called for exchange shall cease to accrue and, notwithstanding that any certificate for shares of Series A Preferred Stock is not surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding and all rights of the holders thereof as stockholders of the Corporation shall cease and terminate, except the right to receive the Exchange Debentures as herein provided. d. At any time on or after the Exchange Date, the holders of record of the Series A Preferred Stock to be exchanged shall be entitled to receive the amount of Exchange Debentures set forth herein upon actual delivery to the Corporation of certificates for the shares to be exchanged, such certificates, if required, to be duly endorsed in blank or accompanied by proper instruments of assignment and transfer duly endorsed in blank. The person or persons entitled to receive the Exchange Debentures issuable upon exchange shall be treated for all purposes as the registered holder or holders of such Exchange Debentures. e. The Corporation shall not be required to honor any request to register a transfer or exchange of the Series A Preferred Stock for the fifteen (15) days prior to the Exchange Date. The Corporation will cause the Exchange Debentures to be authenticated on the Exchange Date. 8. Voting. Except as required by law and except for any voting by the ------ holders of the Series A Preferred Stock as part of a separate class or series pursuant to Section 4.B(7) hereunder or any other provision of these Articles, no holder of Series A Preferred Stock, as such holder, shall be entitled to vote on any matter submitted to a vote of shareholders. On any matters on which the holders of the Series A Preferred Stock shall be entitled to vote, they shall be entitled to one vote for each share held. Except as otherwise required by law or as otherwise provided herein, the holders of Series A Preferred Stock shall not be entitled to notice of any meeting of shareholders. 9. Other Rights. Without the written consent of the holders of a majority ------------ of the outstanding shares of Series A Preferred Stock or the vote of the holders of a majority of the outstanding shares of Series A Preferred Stock at a meeting of the holders of Series A Preferred Stock called for such purpose, the Corporation shall not (i) exchange the shares of Series A Preferred Stock for 9 Exchange Debentures pursuant to Section 4.B(6), (ii) create, authorize or issue any other class or series of stock entitled to a preference prior to Series A Preferred Stock upon any dividend or distribution or any liquidation, distribution of assets, dissolution or winding up of the Corporation, or increase the authorized amount of any such other class or series, or (iii) amend, alter or repeal any provision of the Corporation's Certificate of Incorporation so as to adversely affect the relative rights and preferences of the Series A Preferred Stock; provided however, that any such amendment that -------- ------- changes the dividend payable on the Series A Preferred Stock shall require the affirmative vote of the holder of each shares of Series A Preferred Stock at a meeting of such holders called for such purpose or the written consent of the holder of each such share of Series A Preferred Stock. 10. Acknowledgment. Each holder of Series A Preferred Stock, by acceptance -------------- thereof, acknowledges and agrees that payments of dividends, interest, premium and principal on, and redemption and repurchase of, such securities by the Corporation are subject to restrictions contained in certain credit and financing agreements of the Corporation. 11. Definitions. The following terms, when used in this Section 4.B, shall ----------- have the meanings set forth below: a. As used herein, the amount of dividends "accrued" on any share of Series A Preferred Stock as at any date shall be calculated as the amount of any unpaid dividends accumulated thereon to and including the last preceding Dividend Accrual Date with respect to which dividends have not been paid, whether or not earned or declared (including the amount of any dividends accumulated on any share of Series A Preferred Stock from the preceding Dividend Accrual Date in the event of an optional redemption pursuant to Section 4.B(5)(b) or in the event of an exchange pursuant to Section 4.B(6)). b. "corporation" shall mean a corporation, partnership, business trust, unincorporated organization, association, limited liability company or joint stock company. c. "Junior Shares" shall mean any series or class of the capital stock of the Corporation now or hereafter authorized or issued by the Corporation, including any series or class of preferred shares, ranking junior to the Series A Preferred Stock with respect to dividends or distributions or upon the liquidation, distribution of assets, dissolution or winding-up of the Corporation, including without limitation the Common Shares. d. "person" shall mean an individual, a corporation, partnership, trust, organization, association, government or any department or agency thereof, or any other individual or entity. 10 C. CLASS A AND CLASS B COMMON STOCK -------------------------------- Except as otherwise provided herein, all shares of Class A Common Stock and Class B Common Stock will be identical and will entitle the holders thereof to the same rights and privileges. 1. Dividends. Holders of Common Stock will be entitled to receive such --------- dividends as may be declared by the Board of Directors, provided that if -------- dividends are declared which are payable in shares of Class A Common Stock or Class B Common Stock, dividends will be declared which are payable at the same rate on each class of Common Stock and the dividends payable in shares of Class A Common Stock will be payable to holders of Class A Common Stock and the dividends payable in shares of Class B Common Stock will be payable to holders of Class B Common Stock. 2. Conversion. Each record holder of Class A Common Stock will be ---------- entitled to convert any or all of such holder's Class A Common Stock into the same number of shares of Class B Common Stock and each record holder of Class B Common Stock will be entitled to convert any or all of the shares of such holder's Class B Common Stock into the same number of shares of Class A Common Stock; provided, however, that at the time of conversion of -------- ------- shares of Class B Common Stock into shares of Class A Common Stock such holder would be permitted, pursuant to applicable law, to hold the total number of shares of Class A Common Stock which such holder would hold after giving effect to such conversion; and provided, further, that the -------- ------- determination of a holder of Class B Common Stock that such holder is permitted pursuant to applicable law to convert Class B Common Stock into Class A Common Stock pursuant to this Section 2 shall be final and binding upon the Company. Each conversion of shares of one class of Common Stock into shares of another class of Common Stock will be effected by the surrender of the certificate or certificates representing the shares to be converted at the principal office of the Corporation at any time during normal business hours, together with a written notice by the holder of such shares stating the number of shares that any such holder desires to convert into the other class of Common Stock. Such conversion will be deemed to have been effected as of the close of business on the date on which such certificate or certificates have been surrendered and such notice has been received by the Corporation, and at such time the rights of any such holder with respect to the converted class of Common Stock will cease and the person or persons in whose name or names the certificate or certificates for shares of the other class of Common Stock are to be issued upon such conversion will be deemed to have become the holder or holders of record of the shares of such other class of Common Stock represented thereby. Promptly after such surrender and the receipt by the Corporation of the written notice from the holder hereinbefore referred to, the Corporation will 11 issue and deliver in accordance with the surrendering holder's instructions the certificate or certificates for the other class of Common Stock issuable upon such conversion and a certificate representing any shares of Common Stock which were represented by the certificate or certificates delivered to the Corporation in connection with such conversion but which were not converted. The issuance of certificates for the other class of Common Stock upon conversion will be made without charge to the holder or holders of such shares for any issuance tax (except stock transfer taxes) in respect thereof or other cost incurred by the Corporation in connection with such conversion. 3. Transfers. The Corporation will not close its books against the --------- transfer of any share of Common Stock, or of any share of Common Stock issued or issuable upon conversion of shares of the other class of Common Stock, in any manner that would interfere with the timely conversion of such shares of Common Stock. 4. Subdivision and Combinations of Shares. If the Corporation in any -------------------------------------- manner subdivides or combines the outstanding shares of any class of Common Stock, the outstanding shares of the other class of Common Stock will be proportionately subdivided or combined. 5. Reservation of Shares for Conversion. So long as any shares of any ------------------------------------ class of Common Stock are outstanding, the Corporation will at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock and Class B Common Stock (or any shares of Class A Common Stock or Class B Common Stock which are held as treasury shares), the number of shares sufficient for issuance upon conversion. 6. Distribution of Assets. In the event of the voluntary or ---------------------- involuntary liquidation, dissolution or winding up of the Corporation, holders of Common Stock will be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders after all amounts to which the holders of Preferred Stock are entitled have been paid or set aside in cash for payment. 7. Voting Rights. The holders of Class A Common Stock shall have the ------------- general right to vote for all purposes as provided by law. Each holder of Class A Common Stock shall be entitled at all elections of directors to as many votes as shall equal the number of votes which such holder would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected, and such holder may cast all of such votes for a single director or may distribute them among the number to be voted for, or for any two or more of them as he may see fit, and to one vote for each share upon all other matters. Except as otherwise required by law, the holders of Class B Common Stock shall have no voting rights. 12 8. Merger, etc. In connection with any merger, consolidation, or ----------- recapitalization in which holders of Class A Common Stock generally receive, or are given the opportunity to receive, consideration for their shares (a) all holders of Class B Common Stock shall be given the opportunity to receive the same form of consideration for their shares as is received by holders of Class A Common Stock and (b) holders of Class B Common Stock shall be entitled to receive the same amount of consideration per share as received by holders of Class A Common Stock. 5. Bylaws. The board of directors of the Corporation is authorized to ------ adopt, amend or repeal the bylaws of the Corporation, except as otherwise specifically provided therein. 6. Elections of Directors. Elections of directors need not be by written ---------------------- ballot unless the bylaws of the Corporation shall so provide. 7. Right to Amend. The Corporation reserves the right to amend any -------------- provision contained in this Certificate as the same may from time to time be in effect in the manner now or hereafter prescribed by law, and all rights conferred on stockholders or others hereunder are subject to such reservation. 8. Limitation on Liability. The directors of the Corporation shall be ----------------------- entitled to the benefits of all limitations on the liability of directors generally that are now or hereafter become available under the General Corporation Law of Delaware. Without limiting the generality of the foregoing, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this Section 8 shall be prospective only, and shall not affect, to the detriment of any director, any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. ANNEX A IS ATTACHED HERETO. 13 ANNEX A ------- THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE TERMS AND CONDITIONS OF A SECURITIES PURCHASE AND HOLDERS AGREEMENT BY AND AMONG THE COMPANY AND THE HOLDERS SPECIFIED THEREIN, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT AND THE SECURITIES ARE TRANSFERABLE ONLY UPON PROOF OF COMPLIANCE THEREWITH. No. ____ PAYMENTS UNDER THIS NOTE ARE SUBJECT TO THE SUBORDINATION PROVISIONS OF SECTION 7 HEREOF GREAT LAKES DREDGE & DOCK CORPORATION ------------------------------------- _____% JUNIOR SUBORDINATED DEBENTURES DUE SEPTEMBER 30, 2009 GREAT LAKES DREDGE & DOCK CORPORATION, a Delaware corporation (the "Corporation", which term includes any successor corporation), for value received, hereby promises to pay to _______________, a _______________, or its successors or permitted assigns ("Holder"), the principal sum of _______________ on September 30, 2009, and to pay interest on the unpaid balance of the principal amount of this Note at the rate of _____% per annum. This Note will accrue interest annually for the periods ending September 30 of each calendar year commencing ________, ______ (each date of payment being an "Interest Payment Date"). Interest on this Note will accrue from the most recent date to which interest has been paid or accrued as provided in the preceding sentence or, if no interest has been paid, from the issuance date hereof. Interest will be computed on the basis of a 365-day year for the actual days elapsed. This Note may be prepaid at any time in whole or in part without premium, penalty or discount. All permitted prepayments in respect of this Note shall be applied first to accrued interest on the principal amount prepaid which interest has not been added to the principal amount, and then to principal outstanding hereunder. This Note shall be binding upon the successors and assigns of the Corporation and shall inure to the benefit of the successors and permitted assigns of the Holder. The Holder may assign, transfer or dispose of its rights with respect to this Note only upon registration of this Note under the Securities Act, and any applicable state securities laws, or pursuant to an exemption from such registration. 1. Method of Payment ----------------- The Holder shall note any payment of principal on the Note, but the obligation of the Corporation shall be reduced by such payment notwithstanding any failure by Holder to note such payment. The Corporation will pay principal and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts (payment may be made by check payable in such money). All interest due on any Interest Payment Date prior to the Maturity Date shall be deemed to be paid by such amount being added to the outstanding principal amount on the Interest Payment Date therefor and shall accrue interest as a portion of the principal amount of this Note from such Interest Payment Date to the maximum extent permitted by law. 2. Maturity Date ------------- This Note shall be repaid in full on September 30, 2009 (the "Maturity Date")/1/. 3. Defined Terms ------------- (a) "Acceleration Notice" shall have the meaning set forth in Section 8(b). (b) "Agent" shall have the meaning set forth in Section 7(a). (c) "Bank Debt" shall have the meaning set forth in Section 7(a). (d) "Bankruptcy Law" shall mean Title 11, U.S. Code or any similar federal or state law for the relief of debtors. (e) "Bonding Agreement" shall mean the Amended and Restated Underwriting and Continuing Indemnity Agreement among the sureties party thereto, the Corporation and certain of the Corporation's Subsidiaries, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as amended, restated, modified, renewed, refunded, replaced or refinanced from time to time. - -------------------------- /1/ The Board of Directors in its discretion shall have the power to set the Maturity Date on or after September 30, 2009, but in no event later than September 30, 2018. -2- (f) "Capital Stock" shall mean (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. (g) "Change in Control" shall have the meaning set forth in Section 4(b). (h) "Citicorp" shall mean Citicorp, a Delaware corporation, or any successor thereto by merger or consolidation. (i) "Continuing Director" shall have the meaning set forth in Section 4(b). (j) "Corporation" shall have the meaning set forth in the first paragraph of this Note. (k) "Credit Agreement" shall have the meaning set forth in Section 7(b). (l) "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law or in connection with any insolvency proceeding. (m) "CVC" means Citicorp Venture Capital Ltd., a New York corporation, or any successor thereto by merger or consolidation. (n) "Equity Swap" shall have the meaning set forth in Section 5(g). (o) "Event of Default" shall have the meaning set forth in Section 8(a). (p) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (q) "GLI" shall mean Great Lakes International, Inc., a Delaware corporation and wholly-owned subsidiary of the Corporation. (r) "Great Lakes" shall mean Great Lakes Dredge & Dock Company, a New Jersey corporation and wholly-owned subsidiary of GLI. (s) "Holder" shall have the meaning set forth in the first paragraph of this Note and, for purposes of Section 7, as set forth in Section 7. (t) "Indebtedness" shall have the meaning set forth in Section 7(a). -3- (u) "Indenture" shall have the meaning set forth in Section 7(a). (v) "Insolvency Proceeding" shall have the meaning set forth in Section 7(j). (w) "Interest Payment Date" shall have the meaning set forth in the first paragraph of this Note. (x) "Junior Indebtedness" shall have the meaning set forth in Section 5(g)(iv). (y) "Lenders" shall have the meaning set forth in Section 7(a). (z) "Loan Parties" shall have the meaning set forth in Section 7(a). (aa) "Majority Holders" shall have the meaning set forth in Section 8(b). (bb) "Maturity Date" shall have the meaning set forth in Section 2. (cc) "Non-payment Default" shall have the meaning set forth in Section 7(a). (dd) "Payment Blockage Period" shall have the meaning set forth in Section 7(c)(iii). (ee) "Payment Default" shall have the meaning set forth in Section 7(a). (ff) "Person" shall mean any individual, partnership, corporation, trust or unincorporated organization or a government or agency or political subdivision thereof. (gg) "Post-Petition Interest" shall have the meaning set forth in Section 5(a). (hh) "Principal" shall have the meaning set forth in Section 4(b). (ii) "Principal Securities" shall have the meaning set forth in Section 4(d). (jj) "QIB" shall have the meaning set forth in Section 4(c). (kk) "Redemption Price" shall have the meaning set forth in Section 4(a). (ll) "Related Party" shall have the meaning set forth in Section 4(b). -4- (mm) "Representative" shall mean (i) the Agent for so long as the Bank Debt is outstanding, (ii) at such time as the Bank Debt is no longer outstanding, the sureties under the Bonding Agreement, for so long as obligations of the Corporation are outstanding under such agreement, (iii) at such time as obligations under the Bonding Agreement are no longer outstanding, the Trustee, for so long as the Senior Subordinated Notes are outstanding, and (iv) at such time as the Bank Debt, obligations under the Bonding Agreement and the Senior Subordinated Notes are no longer outstanding, the representative selected by holders of 50% or more of the Senior Debt of the applicable Senior Creditor. (nn) "Sale" shall have the meaning set forth in Section 4(d). (oo) "SEC" shall mean the Securities and Exchange Commission. (pp) "Securities Act" shall mean the Securities Act of 1933, as amended. (qq) "Senior Creditors" shall have the meaning set forth in Section 7(a). (rr) "Senior Debt" shall have the meaning set forth in Section 7(a). (ss) "Senior Default" shall have the meaning set forth in Section 7(a). (tt) "Senior Loan Documents" shall have the meaning set forth in Section 7(a). (uu) "Senior Subordinated Notes" shall have the meaning set forth in Section 7(a). (vv) "Series A Preferred" shall mean the Corporation's 12% Series A Cumulative Compounding Preferred Stock. (ww) "Significant Subsidiary" shall have the meaning set forth in Section 7(a). (xx) "Stockholders Agreement" shall mean the Securities Purchase and Holders Agreement dated as of August __, 1998, by and among the Corporation, Vectura, and Management Investors. (yy) "Subordinated Debt" shall have the meaning set forth in Section 7(a). (zz) "Subsidiary" shall have the meaning set forth in Section 7(a). (aaa) "Subsidiary Guarantor" shall have the meaning given such term in the Indenture. -5- (bbb) "Transfer" shall have the meaning set forth in Section 10. (ccc) "Trustee" shall have the meaning set forth in Section 7(a). (ddd) "Vectura" shall mean Vectura Holdings, LLC, a Delaware limited liability company. (eee) "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. (fff) "Wholly Owned Restricted Subsidiary" shall have the meaning defined in the Indenture. (ggg) "399" shall mean 399 Venture Partners Inc. or its successors and assigns. 4. Redemption ---------- (a) Optional Redemption. The Corporation may, at any time and from ------------------- time to time, redeem this Note, in whole or in part, at a redemption price equal to the principal amount being redeemed plus accrued and unpaid interest, if any, to the date of redemption (the "Redemption Price"). (b) Change in Control. Upon the occurrence of a Change in Control, ----------------- the Corporation shall, upon the expiration of any offer to purchase or repayment or redemption of any Senior Debt required as a result of such Change in Control, redeem this Note in full at the Redemption Price. For purposes of this Section 4, the term "Change in Control" shall mean the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Corporation and its Subsidiaries (determined on a consolidated basis), in each case, to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than the Corporation or a Wholly Owned Restricted Subsidiary or any Principal or a Related Party of a Principal, (ii) the adoption of a plan relating to the liquidation or dissolution of the Corporation (other than a merger, consolidation or sale of assets), (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than one or more Principals or their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of more than 50% of the Voting Stock of the Corporation (measured by voting power rather than number of shares) and the Principals do not beneficially own as much or more of the Voting Stock of the Corporation (measured by voting power rather than by number of shares) than such person or (iv) the first day on which a majority of the members of the Board of Directors of the Corporation are -6- not Continuing Directors. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Corporation who (i) was a member of such Board of Directors on the date of the Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election or was designated by a Principal or a Related Party of a Principal. "Principals" means (i) CVC and the Management Investors and (ii) any Related Party of a Person referred to in clause (i). "Related Party" means (a) with respect to CVC (i) Citicorp, any direct or indirect wholly owned subsidiary of Citicorp, and any officer, director or employee of CVC, Citicorp or any wholly owned subsidiary of Citicorp, (ii) any spouse or lineal descendant (including by adoption and stepchildren) of the officers, directors and employees referred to in clause (a) (i) above, (iii) any trust, corporation or partnership 100%-in-interest of the beneficiaries, stockholders or partners of which consists of one or more of the persons described in clause (a) (i) or (ii) above or (iv) Vectura, so long as CVC or any of its Related Parties described in (i), (ii) or (iii) above holds at least 50% of the Great Lakes membership interests in Vectura; and (b) with respect to any officer or employee of the Corporation or a Subsidiary of the Corporation (i) any spouse or lineal descendant (including by adoption and stepchildren) of such officer or employee and (ii) any trust, corporation or partnership 100%-in- interest of the beneficiaries, stockholders or partners of which consists of such officer or employee, any of the persons described in clause (b) (i) above or any combination thereof. (c) Restricted Payments. The Corporation shall redeem this Note in ------------------- full to the extent then outstanding immediately upon any violation of Section 5(g). (d) Limitations on Redemption Obligations. Anything in this ------------------------------------- Section 4 to the contrary notwithstanding, the Corporation shall not be obligated to redeem all or any portion of the Note to the extent the Corporation is prohibited from doing so by the terms of any Senior Debt outstanding at the time of the occurrence of the event giving rise to such requirement to redeem. (e) Interest on Securities Called for Redemption. On and after the -------------------------------------------- redemption date, interest will cease to accrue on the Note or portion thereof called for redemption. 5. Covenants; Representations -------------------------- (a) Payment of Note. The Corporation shall pay the principal of and --------------- interest on this Note on the dates and in the manner provided in this Note. The Corporation shall pay interest (including post-petition interest ("Post Petition Interest") in any proceeding under any Bankruptcy Law at the relevant contractual rate, whether or not such interest is an allowed claim enforceable against the debtor in a bankruptcy case under Title 11 of the U.S. Code) on overdue installments of principal and interest on this Note at the applicable rate set forth above plus 2%. (b) SEC Reports. The Corporation shall deliver to the Holder ----------- promptly (and in any event within 5 days after it files them with the SEC), copies of the annual reports, quarterly reports -7- and other periodic reports which the Corporation may be required to file with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act. To the extent that the Corporation is required to prepare and deliver any periodic reports to the holders of Senior Debt or to 399 or Vectura, the Corporation shall deliver copies of such reports to the Holder, at the same time the Corporation is required to deliver such reports to the holders of the Senior Debt or to 399 or Vectura, as applicable. The Corporation shall, upon reasonable notice, provide officers, employees and representatives of Holder and the proposed transferees with reasonable access to the Corporation's premises, properties, books, records and personnel as may reasonably be requested in connection with a potential transfer of the Note or any portion thereof. (c) Preservation of Corporate Existence; etc. Subject to Section ---------------------------------------- 10, the Corporation will do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence and the material rights (charter and statutory) and franchises of the Corporation and of GLI and Great Lakes; provided, however, that the Corporation shall not be required to preserve or cause to be preserved any such material right or franchise if the board of directors of the Corporation shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Corporation and that the loss thereof is not, and will not be, adverse in any material respect to the Holder. (d) Payment of Taxes, Assessment, Charges and Claims. The ------------------------------------------------ Corporation will and will cause the Subsidiaries to duly pay or discharge or cause to be paid or discharged the following before they shall become delinquent: (i) all material taxes, assessments and governmental charges levied or imposed upon the Corporation or any of the Subsidiaries or upon the income, profit or property of the Corporation or any of the Subsidiaries, and (ii) all material lawful claims for labor, materials and supplies which, if unpaid, might by law become a material lien upon the property of the Corporation or any of the Subsidiaries; provided, however, that the Corporation or any of the Subsidiaries -------- ------- shall not be required to pay or discharge or cause to be paid or discharged (but shall make adequate provision for) any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which adequate provision has been made. (e) Waiver of Stay, Extension or Usury Laws. The Corporation --------------------------------------- covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, or plead, or in any manner whatsoever claim, and shall resist any and all efforts to be compelled to take the benefit or advantage of, any stay or extension law or any usury law or other law which would prohibit or forgive the Corporation from paying all or any portion of the principal of and/or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note; and (to the extent that it may lawfully do so) the Corporation hereby expressly waives all benefit or advantage of any such law and covenants that it -8- shall not hinder, delay or impede the execution of any power herein granted to the Holder but shall suffer and permit the execution of every such power as though no such law had been enacted. (f) Compliance with Laws. The Corporation will, and will cause -------------------- the Subsidiaries to, comply in all material respects with all applicable statutes, regulations, orders and restrictions of the United States, any state, municipality or other governmental division thereof, and agencies and instrumentalities of the foregoing, in respect of the conduct of its and their businesses and the ownership of its and their properties (including, without limitation, applicable statutes, regulations, orders and restrictions relating to equal employment opportunities and environmental standards and controls), except such as are being contested in good faith. (g) Limitation on Restricted Payments. --------------------------------- (i) The Corporation (A) shall not effect the declaration, payment or setting apart for payment of any dividend on any part of the Corporation's capital stock or any cash interest payment on any Junior Indebtedness or effect or make any payment on account of or set apart for payment money for a sinking or other similar fund for, the purchase, prepayment, redemption or other retirement of, any of the Corporation's capital stock (or any rights, warrants or options to purchase or acquire any such capital stock) or Junior Indebtedness, or make any distribution of any nature whatsoever in respect of any thereof, either directly or indirectly, and whether in cash, or other obligations of the Corporation or other property (except dividends or distributions payable solely in shares, rights, warrants or options of capital stock and except dividends or distributions payable solely to the Corporation or its wholly-owned Subsidiaries), (B) shall not make any payment of cash interest on Indebtedness that is pari passu with this Note at any time when the payment ---- ----- of cash interest on this Note is prohibited by the terms of any Senior Debt, (C) shall not voluntarily prepay any Indebtedness that is pari passu with this Note, ---- ----- (D) shall not permit a Subsidiary or any other corporation or other entity directly or indirectly controlled by the Corporation to purchase, redeem or otherwise acquire any of the Corporation's capital stock or Junior Indebtedness or any Indebtedness that is pari passu with this Note and (E) shall not permit any Subsidiary that is not a wholly-owned Subsidiary to make any payment or distribution in respect of the capital stock of such Subsidiary that the Corporation would be prohibited from making in respect of the capital stock of the Corporation. The provisions of this Section 5(g) shall not prohibit (x) the repurchase of securities of the Corporation from employees, former employees, directors or former directors of the Corporation or any Subsidiary (or permitted transferees of such individuals) pursuant to the terms of Article VII of the Stockholders Agreement; provided, further, however, that the aggregate amount of such repurchases shall not exceed the sum of (1) $10 million and (2) the aggregate amount of cash received by the Corporation after the date hereof from the sale of such securities to, or the exercise of options to purchase such securities by, employees or directors of the Corporation or any Subsidiary, (y) the exchange of the Series A Preferred for Junior Indebtedness pursuant to the terms thereof, or (z) the retirement, redemption or exchange of Junior Indebtedness or Series A Preferred with or for shares of capital stock of the Corporation (an "Equity Swap"). -9- (ii) The Corporation will not permit any Subsidiary to effect the declaration, payment or setting apart for payment of any dividend on any part of such Subsidiary's capital stock (other than dividends or distributions in such Subsidiary's capital stock) except for payments of any dividend to the Corporation or a wholly-owned Subsidiary. (iii) None of the Corporation's Junior Indebtedness shall provide for the mandatory payment of principal by way of redemption, sinking fund or otherwise (including, without limitation, at the option of the holder thereof) and the Corporation will make no optional payment with respect thereto, prior to the payment of all principal of and interest on this Note (including accrued but unpaid interest), except that nothing herein shall prohibit any Equity Swap. (iv) "Junior Indebtedness" means any Indebtedness of the Corporation whether outstanding on the date hereof or incurred thereafter, that is subordinated in right of payment to this Note either by its terms or by operation of law. (h) Limitation on Payment Restrictions. ---------------------------------- Except as set forth herein, the Corporation will not, and will not permit any of the Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction (other than this Note) on the ability of any Subsidiary to (i) pay dividends or make any other distribution on its capital stock or any other interests or participation in, or measured by, its profits, owned by the Corporation or any Subsidiary of the Corporation, or pay any Indebtedness owed to, the Corporation or a Subsidiary of the Corporation, (ii) make loans or advances to the Corporation or (iii) transfer any of its properties or assets to the Corporation, except for such encumbrances or restrictions existing under or by reason of (A) applicable law, (B) Senior Debt or (C) Indebtedness existing on the date hereof. 6. Due Authorization, etc. ---------------------- The Corporation hereby represents to the Holder that (i) the Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, (ii) the Corporation has all requisite corporate power and corporate authority to execute and deliver this Note and to carry out the terms hereof, (iii) the Corporation has duly authorized the execution, delivery and performance of this Note and (iv) the execution, delivery and performance of this Note do not (a) violate any provision of the certificate of incorporation or by-laws of the Corporation, or (b) violate any statute, rule or regulation of any governmental authority to which the Corporation is subject. This Note represents the valid and binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms. 7. Subordination ------------- -10- (a) Definitions. The following terms have the following meanings: ----------- "Agent" means Bank of America National Trust and Savings ----- Association, as administrative agent for the Lenders party to the Credit Agreement, any successor agent and any agent for the Lenders with respect to any amendment, extension, supplement, increase, renewal, refunding, replacement, refinancing (including successive refinancings) or other modification of the Bank Debt. If no such agent exists, "Agent" shall mean the holders of a majority of the outstanding Bank Debt. "Bank Debt" means all obligations of the Corporation (and the --------- Subsidiary Guarantors thereunder) now or hereafter existing (a) under the Credit Agreement as it may hereafter be amended, extended, supplemented, increased, renewed, refunded, replaced, refinanced (including successive refinancings) or otherwise modified from time to time, whether for principal, interest, premium, reimbursement of amounts drawn under letters of credit issued pursuant to the Credit Agreement, fees, expenses, indemnities or otherwise and (b) under any of the Senior Loan Documents, as they may hereafter be amended, extended, supplemented, increased, renewed, refunded, replaced, refinanced (including successive refinancings) or otherwise modified from time to time. "Credit Agreement" means the Credit Agreement dated as of ---------------- August __, 1998 among the Corporation, as borrower, other loan parties thereto, the banks party thereto, the Agent and BancAmerica Robertson Stephens, as lead arranger, as such Agreement may hereafter be amended, extended, supplemented, increased, renewed, refunded, replaced, refinanced (including successive refinancings) or otherwise modified. "Holder" as used in this Section 7 means a holder or owner of ------ this Note and any other holder or owner of Subordinated Debt. "Indebtedness" means, without duplication, with respect to any ------------ person, (a) the principal of and premium (if any) in respect of all indebtedness of such person for borrowed money, (b) the principal of and premium (if any) in respect of all obligations of such person evidenced by notes, bonds, debentures or other similar instruments, (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (d) all obligations of such person as lessee under leases that have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, (e) all obligations, contingent or otherwise, of such person under acceptance, letter of credit or similar facilities, (f) all indebtedness of the type referred to in clauses (a) through (e) above guaranteed directly or indirectly in any manner by such person, or in effect guaranteed directly or indirectly by such person through an agreement (1) to pay or purchase such indebtedness or to advance or supply funds for the payment or purchase of such indebtedness, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the -11- debtor to make payment of such indebtedness or to assure the holder of such indebtedness against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss, and (i) all indebtedness of the type referred to in clauses (a) through (e) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien on property (including, without limitation, accounts and contract rights) owned by such person, even though such person has not assumed or become liable for the payment of such indebtedness, but excluding trade and other accounts payable in the ordinary course of business in accordance with customary trade terms and which are not overdue for more than 90 days, or as to which a dispute exists and adequate reserves in conformity with generally accepted accounting principles have been established on the books of such person. "Indenture" means the Indenture dated August__, 1998 between --------- the Corporation and The Bank of New York, as trustee, with respect to the Corporation's ___% Senior Subordinated Notes due 2008. "Lenders" means the Lenders as defined in the Credit Agreement. ------- "Loan Parties" shall mean the Corporation and any Subsidiary ------------ which is an obligor under the Credit Agreement or the Senior Subordinated Notes. "Non-payment Default" means any default or event of default ------------------- (other than a Payment Default) under any agreement or instrument relating to Senior Debt. For purposes of the immediately preceding sentence, an "event of default" shall exist when as a result thereof the holders of the pertinent Senior Debt are then permitted (whether or not with the requirement that notice be given) to cause such Senior Debt to become due prior to its scheduled maturity. "Payment Default" means any default in the payment of principal --------------- of, premium, if any, interest on, or other amounts payable on, or in connection with, Senior Debt, irrespective of whether such default in payment results from a failure to pay any amount when originally scheduled to be paid or upon acceleration or otherwise. "Senior Creditors" means (i) the Lenders and the Agent under ---------------- the Senior Loan Documents until the Bank Debt (including all refinancings and successive refinancings thereof) has been finally and indefeasibly paid in full, (ii) thereafter, the sureties under the Bonding Agreement until obligations under such agreement are no longer outstanding, (iii) thereafter, the holders of the Senior Subordinated Notes until they have been finally and indefeasibly paid in full and (iv) thereafter, the holders of other Senior Debt on a pro rata basis. "Senior Debt" means (a) all Indebtedness of the Corporation and ----------- the Subsidiaries, including principal, premium, if any, and interest on such Indebtedness, whether -12- outstanding on the date hereof or thereafter created, incurred or assumed, except for Indebtedness which is expressly by its terms or the terms of the instrument creating or evidencing such Indebtedness made equal in right of payment with this Note or subordinate in right of payment to this Note, (b) all other amounts due on or in connection with such Indebtedness, including all charges, fees, indemnities, and expenses (including reasonable fees and expenses of counsel), (c) all Post Petition Interest with respect to such Indebtedness, (d) all amendments, extensions, supplements, increases, renewals, refundings, replacements, refinancings, modifications and deferrals of the Indebtedness referred to in clauses (a), (b) and (c) above, and shall include without limiting the foregoing the Bank Debt, obligations under the Bonding Agreement, the Senior Subordinated Notes and all guaranties thereof by the Corporation. Notwithstanding the foregoing, Senior Debt shall not include (i) any Indebtedness of the Corporation to any Subsidiary of the Corporation, (ii) any Indebtedness of the Corporation which, by its terms or the terms of any instrument creating or evidencing it (including the terms of any instrument amending, extending, supplementing, renewing, increasing, refunding, replacing, refinancing, modifying or deferring the same) is expressly made pari passu with ---- ----- expressly subordinate in right of payment to this Note, (iii) Indebtedness to any employee of the Corporation; (iv) any liability for taxes; (v) amounts payable to trade creditors for goods and services provided in the ordinary course of business; (vi) that portion of any Indebtedness which at the time of incurrence, creation or assumption is incurred, created or assumed in violation of the Indenture (as in effect on the date of issuance of the Senior Subordinated Notes and irrespective of whether any Indebtedness is then outstanding thereunder); or (vii) Indebtedness under the Senior Subordinated Notes (or the terms of any instrument amending, extending, supplementing, renewing, increasing, refunding, replacing, refinancing, modifying or deferring the same) in excess of the principal amount outstanding on the date of original issuance of the Senior Subordinated Notes plus any interest thereon or other Indebtedness in respect thereof. "Senior Default" means a Payment Default or a Non-payment -------------- Default. "Senior Loan Documents" means all Loan Documents (as defined in --------------------- the Credit Agreement). "Senior Subordinated Notes" means all obligations of the ------------------------- Corporation and the Subsidiary Guarantors, now or hereafter existing under the Indenture as it may hereafter be amended, extended, supplemented, increased, renewed, refunded, replaced, refinanced or otherwise modified from time to time, whether for principal, interest, premium, fees, expenses, indemnities or otherwise. "Significant Subsidiary" means any Subsidiary of the ---------------------- Corporation that would be a "significant subsidiary" as defined in Rule 1.02(v) of Regulation S-X promulgated pursuant to the Securities Act. "Subordinated Debt" means (a) all obligations of the ----------------- Corporation now or hereafter existing under or with respect to this Note (whether created directly or acquired by -13- assignment or otherwise), as it may hereafter be amended, extended, supplemented or otherwise modified from time to time, whether for principal, interest (including, without limitation, Post Petition Interest), fees, expenses, indemnities, reimbursements, damages, liabilities or otherwise, (b) all obligations of any of the Loan Parties in respect of (i) any Indebtedness (but in no event constituting Bank Debt) incurred by any of the Loan Parties to amend, extend, supplement, increase, renew, refund, replace, refinance or otherwise modify, in whole or in part, the Subordinated Debt, including interest and premium on any such Indebtedness, (ii) any loan or credit agreement entered into by any of the Loan Parties in connection with any such Indebtedness, as such agreement may be amended, extended, supplemented or otherwise modified from time to time, and (iii) all other amounts payable in respect of any such Indebtedness or agreement, including, without limitation, amounts payable (A) in respect of any indemnity and (B) in respect of any breach of a representation or a warranty. "Subsidiary" means any corporation more than 50% of the outstanding ---------- voting power of the voting stock of which is owned or controlled, directly or indirectly, by the Corporation. "Trustee" means The Bank of New York, as trustee under the Indenture, ------- or any successor thereto (b) Subordinated Debt Subordinated to Senior Debt. The Corporation, for --------------------------------------------- itself and its successors, and each Holder, by its acceptance thereof, agrees that the Subordinated Debt is and shall be subordinated in right of payment, to the extent and in the manner provided in this Section 7, to the prior payment in full of all Senior Debt. For the purposes of this Note, Senior Debt shall be deemed not to have been paid in full until the holders or owners of the Senior Debt shall have received payment of all Senior Debt in cash and as long as any lender shall have any obligation under the Senior Loan Documents, the Indenture or other agreement or instrument evidencing any obligations under any Senior Debt. This Section 7 shall constitute a continuing offer to all persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Debt, and such provisions are made for the benefit of the holders of Senior Debt, and such holders are made obligees hereunder and any one or more of them may enforce such provisions. (c) No Payment on Subordinated Debt in Certain Circumstances. -------------------------------------------------------- (i) Upon the maturity of all or any part of any Senior Debt by lapse of time, acceleration (unless waived in writing) or otherwise, all Senior Debt then due shall first be paid in full, or such payment duly provided for, in cash or cash equivalents in a manner satisfactory to the holders of such Senior Debt, before any payment is made on account of the Subordinated Debt, and until the Senior Debt is paid in full, any distribution to which the Holder would be entitled but for this Section 7 shall be made to holders of Senior Debt as their interests may appear. (ii) In the event that any Payment Default shall have occurred and be continuing, unless and until such default shall have been cured or waived in writing, then no payment -14- (including any payment which may be payable by reason of the payment of any other indebtedness of the Corporation being subordinated to payment of the Subordinated Debt) shall be made by or on behalf of the Corporation for or on account of any Subordinated Debt, and the Holder shall not take or receive from the Corporation or any Subsidiary, directly or indirectly, in cash or other property, or by set-off or in any other manner, including, without limitation, from or by way of collateral, payment of all or any of the Subordinated Debt. The Holder shall immediately deliver to the Representative any monies, securities or other property paid in violation of the preceding sentence and received by the Holder or its equivalent in cash, with proper endorsement or assignment if necessary, and prior to such delivery shall hold in trust, such monies, securities or other properties solely as trustee for and for the benefit of the Senior Creditors as set forth in this sentence. (iii) Upon written notice from the Representative to the Corporation (which shall give prompt notice to the Holder) of a Non-payment Default and if such Non-payment Default shall not have been cured or waived in writing, no payment (including any payment which may be payable by reason of the payment of any other Indebtedness of the Corporation being subordinated to payment of the Subordinated Debt) shall be made by or on behalf of the Corporation for or on account of any Subordinated Debt, and the Holder shall not take or receive from the Corporation, directly or indirectly, in cash or other property or by set-off or in any other manner, including, without limitation, from or by way of collateral, payment of all or any of the Subordinated Debt, during the period (the "Payment Blockage Period") commencing on the date of receipt by the Corporation of such notice and ending (unless earlier terminated by notice from the Representative to the Corporation (which shall give prompt notice to the Holder), on the earlier of (A) the date when all Non-payment Defaults shall have been cured or waived in writing, (B) the date an Event of Default occurs under Section 8(a)(ii) (other than Section 8(a)(ii)(E)) or 8(a)(iii), and (C) the date on which the Bank Debt or Senior Subordinated Notes are accelerated and declared immediately due and payable. (iv) Nothing contained in this Section 7 will limit the right of the Holder to take any action to accelerate the maturity of the securities pursuant to Section 8 or to pursue, subject to Section 8, any rights or remedies hereunder; provided that so long as any Senior Debt remains outstanding the -------- Holder shall take no such action during the period (the "Remedies Blockage Period") commencing upon any Event of Default hereunder until the earlier of (A) the date when all Events of Default hereunder shall have been cured or waived in writing, (B) the date an Event of Default occurs under Section 8(a)(ii) or 8(a)(iii), and (C) the date on which the Bank Debt, obligations under the Bonding Agreement or Senior Subordinated Notes are accelerated and declared immediately due and payable; provided, further, that in the event that any -------- ------- Subordinated Debt is declared due and payable before its stated maturity, the holders of all Senior Debt shall be entitled to receive final and indefeasible payment in full of all amounts due or to become due (whether or not accelerated) on or in respect of all Senior Debt before the Holder is entitled to receive any payment (including any payment which may be payable by reason of the payment of any other indebtedness of the Corporation being subordinated to the payment of the Subordinated Debt) by the Corporation on account of the Subordinated Debt. The Holder shall immediately deliver to the Representative any monies, securities or other property -15- received by the Holder or its equivalent in cash, with proper endorsement or assignment if necessary, and prior to such delivery shall hold in trust, such monies, securities or other properties solely as trustee for and for the benefit of the Senior Creditors as set forth in this sentence. (v) Nothing contained in this Section 7 shall prevent interest from accruing to this Note as provided above until this Note is paid in full. (d) Subordinated Debt Subordinated to Prior Payment of All Senior Debt ------------------------------------------------------------------ on Dissolution. Upon any payment or distribution of all or any of the assets or - -------------- securities of the Corporation of any kind or character upon any dissolution, winding up, liquidation, reorganization, arrangement, adjustment, protection, relief or other similar case or proceeding under any federal or state bankruptcy or similar law (whether voluntary or involuntary, in bankruptcy, insolvency, receivership, arrangement, reorganization or relief proceedings or upon any assignment for the benefit of creditors or any marshalling of the assets and liabilities of the Corporation or otherwise): (i) all Senior Debt shall first be entitled to be paid in full before the Holder is entitled to receive any payment on account of the Subordinated Debt; and (ii) any payment or distribution in respect of the Subordinated Debt to which the Holder would be entitled except for the provisions of this Section 7 (including any payment that may be payable by reason of any other Indebtedness of the Corporation being subordinated to the payment of the Subordinated Debt), shall be paid by the Corporation, the liquidating trustee or agent or other person making such payment or distribution directly to the Agent (in the case of the Bank Debt) or to the holders of the other Senior Debt or their Representative or to the trustee under any indenture or other agreement (if any) pursuant to which Senior Debt may have been issued, as the case may be, for application to (in the case of cash), or as collateral (in the case of non-cash property or securities) for, the payment or prepayment in full of all Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution (in the case of cash) to the holders of such Senior Debt. (e) Holder to be Subrogated to Rights of Holders of Senior Debt. Upon ----------------------------------------------------------- final and indefeasible payment in full of all Senior Debt, the Holder shall be subrogated to the rights of the holders of Senior Debt to receive payments or distributions of assets of the Corporation applicable to the Senior Debt until all Subordinated Debt shall be paid in full, and for the purpose of such subrogation no such payments or distributions to the holders of Senior Debt by or on behalf of the Corporation or by or on behalf of the Holder by virtue of this Section 7 which otherwise would have been made to the Holder shall, as among the Corporation, its creditors other than the holders of Senior Debt and the Holder, be deemed to be payment by the Corporation to or on account of the Senior Debt, it being understood that the provisions of this Section 7(e) are and are intended solely for the purpose of defining the relative rights of the Holder, on the one hand, and the holders of Senior Debt, on the other hand. -16- If any payment or distribution to which the Holder would otherwise have been entitled but for the provisions of this Section 7 shall have been applied, pursuant to the provisions of this Section 7, to the payment of all amounts payable under the Senior Debt, then and in such case, the Holder shall be entitled to receive from the holders of such Senior Debt at the time outstanding any payments or distributions received by such holders of Senior Debt in excess of the amount sufficient to pay holders of Senior Debt all amounts payable under or in respect of the Senior Debt in full unless the holders of Senior Debt are otherwise directed by a court of competent jurisdiction. (f) Subordination Rights Not Impaired by Acts or Omissions of the ------------------------------------------------------------- Corporation or Holders of Senior Debt. The Corporation agrees that it will not - ------------------------------------- make any payment of any Subordinated Debt, or take any other action, in contravention of the provisions of this Section 7, and no right of any present or future holders of any Senior Debt to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Corporation or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Corporation with the terms of this Note, regardless of any knowledge thereof which any such holder may have or with which any such holder may be otherwise charged. The holders of Senior Debt may amend, extend, supplement, increase, renew, refund, replace, refinance, restructure or otherwise modify the terms of the Senior Debt or any instrument or agreement evidencing or governing the same or any security therefor and release, sell or exchange any security therefor and otherwise deal freely with any Loan Party, all without affecting the liabilities and obligations of the Corporation and the Holder hereunder. (g) In Furtherance of Subordination. ------------------------------- (i) All payments or distributions upon or with respect to the Subordinated Debt which are received by the Holder contrary to the provisions of this Section 7 shall be received and held by such Holder, in trust for the benefit of, shall be segregated from other funds and property held by such Holder for and shall be paid immediately over and delivered to the Representative of Senior Creditors in the same form as so received (with any necessary endorsement), for application (in the case of cash) to, or as collateral (in the case of non-cash property or securities) for, the payment or prepayment in full of all Senior Debt of the Senior Creditors remaining unpaid, after giving effect to any concurrent payment or distribution (in the case of cash) to the holders of Senior Debt and shall be applied (A) first to the final and indefeasible payment in full of all Bank Debt, (B) next to the final and indefeasible payment in full of the Senior Subordinated Notes and (C) finally to the payment of any other Senior Debt on a pro rata basis. (ii) The Corporation shall give prompt written notice to the Holder of any Senior Default under any Senior Debt or under any agreement pursuant to which Senior Debt may have been issued or of any dissolution, winding up, liquidation, reorganization or other event described in Section 7(d) relating to the Corporation; provided that, except as set forth in Section 7(i), -------- -17- the failure to give any such notice shall in no way affect the obligations of the Holder under, or the terms of subordination set forth in, this Section 7. (iii) The Agent or the holders of Senior Debt (including the Trustee), as the case may be, are hereby authorized to demand specific performance of the provisions of this Section 7, whether or not the Corporation shall have complied with any of the provisions hereof applicable to it, at any time when the Corporation or the Holder, as the case may be, shall have failed to comply with any of the provisions of this Section 7 applicable to it. The Holder hereby irrevocably waives any defense based on the adequacy of a remedy at law that might be asserted as a bar to such remedy of specific performance. The Holder hereby acknowledges that the provisions of this Section 7 are intended to be enforceable at all times, whether before or after the commencement of a proceeding referred to in Section 7(d). (h) Obligations of Corporation Unconditional. Nothing contained in this ---------------------------------------- Section 7 is intended to or shall impair, as between the Corporation and the Holder, the obligations of the Corporation, which are absolute and unconditional, to pay to the Holder the principal of, premium, if any, on and interest on this Note as and when the same shall become due and payable in accordance with its terms or is intended to or shall affect the relative rights of the Holder and creditors of the Corporation other than the holders of the Senior Debt, and, except as otherwise expressly provided herein, nothing contained herein shall prevent the Holder from exercising all remedies otherwise permitted by applicable law upon Default, subject to the rights, if any, under this Section 7 of the holders of such Senior Debt in respect of cash, property, security or securities of the Corporation received upon the exercise of any such remedy. Nothing contained in this Section 7 or in this Note shall, except during the pendency of any dissolution, winding-up, liquidation, reorganization, recapitalization or readjustment of the Corporation, affect the obligation of the Corporation to make, or prevent the Corporation from making, at any time (except under the circumstances described in Section 7(c)) payment of principal of or interest on this Note. The failure to make a payment on account of principal of, premium, if any, on or interest on this Note by reason of any provision of this Section 7 shall not be construed as preventing the occurrence of an Event of Default under Section 8. Upon any payment or distribution of assets of the Corporation referred to in this Section 7, the Holder shall be entitled to rely upon any unstayed, final, nonappealable order or decree made by any court of competent jurisdiction or upon any certificate of any agent or other person for the purpose of ascertaining the persons entitled to participate in any distribution, the holders of the Senior Debt and other Indebtedness of the Corporation, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 7. (i) Holder Entitled to Assume Payments Not Prohibited in Absence of --------------------------------------------------------------- Notice. The Holder shall not at any time be charged with the knowledge of the - ------ existence of any facts which -18- would prohibit the making of any payment to such Holder, unless and until the Holder shall have received written notice thereof from the Corporation or one or more holders of Senior Debt or from the Agent or Representative therefor; and, prior to the receipt of any such written notice (and absent actual notice to the contrary on the part of the Holder), the Holder shall be entitled to assume conclusively that no such facts exist. Nothing contained in this Section 7 shall limit the right of the holders of Senior Debt to recover payments as contemplated elsewhere in this Section 7. The Holder shall be entitled to rely on the delivery to it of, and upon such delivery will be charged with knowledge of the existence of, a written notice by a person representing himself or itself to be a holder of such Senior Debt (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Senior Debt or a trustee on behalf of any such holder. (j) Rights in Insolvency Proceedings. The Holder irrevocably -------------------------------- authorizes and empowers the Representative of the Senior Creditors in any proceeding defined in Section 8(a) (ii) or (iii) (an "Insolvency Proceeding") involving or relating to the Subordinated Debt to file a proof of claim on behalf of the Holder with respect to the Subordinated Debt if the Holder fails to file proof of its claims prior to 30 days before the expiration of the time period during which such claims must be submitted to accept and receive any payment or distribution which may be payable or deliverable at any time upon or in respect of the Subordinated Debt in an amount not in excess of the Agent's portion of the Senior Debt then outstanding and to take such other action as may be reasonably necessary to effectuate the foregoing. The Holder shall provide to the Agent all information and documents reasonably necessary to present claims or seek enforcement as aforesaid. The Holder agrees that even though it shall retain the right to vote its claims and otherwise act in any such Insolvency Proceedings relative to the Corporation (including, without limitation, the right to vote to accept or reject any plan of partial or complete liquidation, reorganization, arrangement, composition or extension), the Holder shall not take any action or vote in any way so as to contest (i) the validity or the enforceability of the Credit Agreement, the Senior Loan Documents or the liens and security interests to the extent granted to the Agent by the Corporation with respect to the Bank Debt, (ii) the validity or enforceability of the Indenture, (iii) the rights of the Lenders established in the Credit Agreement, the Senior Loan Documents or any security documents with respect to such liens and security interests, or (iv) the validity or enforceability of terms of subordination set forth herein or any agreement or instrument to the extent evidencing or relating to the Senior Debt. The holders of Senior Debt agree that as a condition to Holder's obligations in this paragraph, while they shall retain the right to vote the Senior Debt and otherwise act in any such reorganization proceeding relative to the Corporation (including, without limitation, the right to vote or accept or reject any plan of partial or complete liquidation, reorganization, arrangement, composition or extension), they shall not take any action or vote in any way so as to contest the enforceability of this Note or any other agreement or instrument to the extent evidencing or relating to the Subordinated Debt. (k) Waiver of Consolidation. Each holder of this Note agrees that it ----------------------- will not at any time insist upon, plead, or in any manner whatsoever, seek the entry of any order or judgment, or take the benefit or advantage of, any substantive consolidation, piercing of the corporate veil or any other -19- order or judgment that causes an effective combination of the assets and liabilities of the Corporation and any other individual, corporation, partnership or joint venture in any Insolvency Proceeding. (l) Miscellaneous. ------------- (i) The Holder and the Corporation each will, at the Corporation's expense and at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all further action that may be reasonably necessary or desirable, or that the Agent or any Representative of the Senior Creditors may reasonably request, in order to protect any right or interest granted or purported to be granted by the provisions of this Section 7 or to enable the Agent to exercise and enforce its rights and remedies hereunder. (ii) All rights and interests under this Section 7 of the holders of the Bank Debt, the Agent or the holders of the Senior Subordinated Notes and any other holder of Senior Debt, and all agreements and obligations of the Holder and the Corporation under this Section 7, shall remain in full force and effect irrespective of: (a) any lack of validity or enforceability of any Senior Loan Document or any other agreement or instrument relating thereto or to any Senior Debt; (b) any amendment, extension, renewal, increase, supplement, refunding, replacement, refinancing or other modification in the time, manner or place of payment of, or in any other term of, all or any of the Bank Debt, the Senior Subordinated Notes or any other Senior Debt, or any other amendment, extension, renewal or waiver of or any consent to any departure from any Senior Loan Document or any other agreement or instrument relating thereto or to any other Senior Debt, including, without limitation, any increase in obligations resulting from the extension of additional credit to any Loan Party or any of its subsidiaries or otherwise (provided that nothing in this paragraph shall operate to make any Indebtedness that would not otherwise qualify as Senior Debt so qualify). (c) any taking, exchange, release or non-perfection of any other collateral, or any taking, release or amendment or waiver of or consent to departure from any guaranty, for all or any of the Bank Debt, the Senior Subordinated Notes or any other Senior Debt; (d) any manner of application of collateral, or proceeds thereof, to all or any of the Bank Debt or any other Senior Debt, or any manner of sale or other disposition of any collateral for all or any of the Bank Debt or any other Senior Debt, or any other assets of any Loan Party or any of its subsidiaries; (e) any change, restructuring or termination of the corporate structure or existence of any Loan Party or any of its subsidiaries; or -20- (f) any other circumstance which might otherwise constitute a defense available to, or a discharge of, any Loan Party or a subordinated creditor. (iii) The provisions of this Section 7 shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Senior Debt is rescinded or must otherwise be returned by the Agent, any holder of Bank Debt, any holder of the Senior Subordinated Notes or any other holder of Senior Debt upon the insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as though such payment had not been made. (iv) The Holder and the Corporation each hereby waives (to the extent each may lawfully do so) promptness, diligence, notice of acceptance and any other notice with respect to any of the Senior Debt and this Section 7 and any requirement that the Agent, any holder of Bank Debt or any other holder of Senior Debt protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against the Corporation or any other person or entity or any collateral. (v) No failure on the part of the Agent, any holder of Bank Debt, any holder of the Senior Subordinated Notes or any other holder of Senior Debt to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies hereunder provided are cumulative and not exclusive of any remedies provided by law. (vi) The provisions of this Section 7 constitute a continuing agreement and shall (A) remain in full force and effect until all Senior Debt shall have been finally and indefeasibly paid in full, (B) be binding upon the Holder and the Corporation and their successors and assigns, and (C) inure to the benefit of and be enforceable by any holders of Bank Debt, the Agent, the Trustee, any holder of the Senior Subordinated Notes, any other holder of Senior Debt and their successors, transferees and assigns. 8. Events of Default ----------------- (a) An "Event of Default" occurs if: (i) the Corporation defaults in the payment of the principal or interest of this Note when the same becomes due and payable at maturity, upon acceleration, or otherwise, whether or not such payment shall be prohibited by the provisions of Section 7; (ii) the Corporation or any Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law: -21- (A) commences a voluntary case or proceeding, (B) consents to the entry of an order for relief against it in an involuntary case or proceeding, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; (iii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Corporation or any Significant Subsidiary in an involuntary case or proceeding, (B) appoints a Custodian of the Corporation or any Significant Subsidiary or for all or substantially all of its property, or (C) orders the liquidation of the Corporation or any Significant Subsidiary; and in the case of (A) above the order or decree remains unstayed and in effect for 60 days; (iv) the Corporation fails to observe or perform any material covenant, condition or agreement required on its part to be observed or performed pursuant to Section 5, such failure continues for a period of thirty days after notice from Holder and notice of such failure shall have been given to the Representative (which notice may be given by the Corporation or the Holder); or (v) the Corporation fails to pay any Indebtedness of the Corporation within any applicable grace period after final maturity or any such Indebtedness is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $10 million and such failure continues for 10 days after notice. (b) Acceleration. Subject to the provisions of Section 7, if an ------------ Event of Default (other than an Event of Default with respect to the Corporation specified in clause (a)(ii) or (iii) of Section 8) occurs and is continuing, the Holders of 25% or more of the outstanding amount of the Corporation's _____% Junior Subordinated Debentures due 2009, by written notice to the Corporation (an "Acceleration Notice"), may declare the unpaid principal of and accrued interest on this Note to be -22- immediately due and payable. Upon such declaration, if there is at such time any Senior Debt outstanding, the principal, premium, if any, and interest shall be due and payable upon the first to occur of an acceleration under the Senior Loan Documents or the Indenture or thirty days after receipt by the Agent (or any Representative of which the holder of this Note has received notice if the Bank Debt is not then outstanding) of such Acceleration Notice given hereunder and there has been no cure by such 30th day. If an Event of Default specified in clause (a)(ii) or (iii) of Section 8 occurs with respect to the Corporation, all principal of and interest on this Note outstanding shall ipso facto become and ---- ----- be immediately due and payable without any declaration or other act on the part of the Holder. The Holders of 50% or more of the outstanding amount of the Corporation's ____% Junior Subordinated Debentures due 2009 (the "Majority Holders") by written notice to the Corporation may rescind an acceleration and its consequences if (i) all existing Events of Default, other than the nonpayment of principal of or interest on this Note which has become due solely because of the acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. Any amounts received by Holder in connection with any action taken pursuant to this Section 8(b) shall be subject to the provisions of Section 7. (c) Other Remedies. Subject to the provisions of Section 7, if an -------------- Event of Default occurs and is continuing, the Majority Holders may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or interest on this Note or to enforce the performance of any provision of this Note. A delay or omission by the Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All remedies are cumulative to the extent permitted by law. (d) Waiver of Past Defaults. Subject to Section 8(b), the Majority ----------------------- Holders may waive an existing Default or Event of Default and its consequences. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Note; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. 9. Amendment and Waiver -------------------- (a) Consent Required. Any term, covenant, agreement or condition of ---------------- this Note may, with the consent of the Corporation, be amended or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), if the Corporation shall have obtained the consent in writing of the Majority Holders; provided that without the written consent of the holders of all of the Notes then outstanding, no such waiver, modification, alteration or amendment shall be effective (i) which will change the time of payment of the principal of or the interest on any Note or reduce the principal amount thereof, or (ii) which will change the percentage of -23- holders of the Notes required to consent to any such amendment, alteration or modification, or (iii) which will change any of the provisions of Section 8(b), Section 8(c), Section 8(d) or this Section 9. This Note may not be amended without the consent in writing of the Agent and the Trustee. For the purpose of determining whether holders of the requisite principal amount of Notes have made or concurred in any waiver, consent, approval, notice or other communication under this Note, Notes held in the name of, or owned beneficially by, the Corporation or any Subsidiary shall not be deemed outstanding. (b) Effect of Amendment or Waiver. Any amendment or waiver shall ----------------------------- apply equally to all of the holders of the Notes and shall be binding upon them, upon each future holder of any Note and upon the Corporation, whether or not such Note shall have been marked to indicate such amendment or waiver. No such amendment or waiver shall extend to or affect any obligation not expressly amended or waived or impair any right consequent thereon. 10. No Setoff. The rights of the Holder to receive payment hereunder --------- shall be absolute and not subject to any setoff or similar right. 11. When Corporation May Merge, etc. ------------------------------- (a) The Corporation shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transaction, all or substantially all its assets to, any Person, unless: (i) the resulting, surviving or transferee Person (the "Successor Company") shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Corporation) shall expressly assume, all the obligations of the Corporation hereunder; (ii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary as a result of such transaction as having been incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (iii) such transaction shall be permitted by the Indenture if any Indebtedness under the Indenture is then outstanding; (iv) the Corporation shall have delivered to the Holder an officers' certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Note. -24- The Successor Company shall be the successor to the Corporation and shall succeed to, and be substituted for, and may exercise every right and power of, the Corporation under this Note, but the predecessor Corporation in the case of a conveyance, transfer or lease shall not be released from the obligation to pay the principal of and interest on this Note. (b) The Corporation shall not permit any Significant Subsidiary to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or series of transaction, all or substantially all of its assets to any Person unless: (i) the resulting, surviving or transferee Person (if not such Significant Subsidiary) shall be a Person organized and existing under the laws of the jurisdiction under which such Significant Subsidiary was organized or under the laws of the United States of America, or any State thereof or the District of Columbia; (ii) immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at the time of such transaction), no Default shall have occurred and be continuing; and (iii) the Corporation delivers to the Holder an officers' certificate and an opinion of counsel, each stating that such consolidation, merger or transfer complies with this Note. The provisions of clauses (i) and (ii) above shall not apply to any one or more transactions which constitute an Asset Disposition as defined in the Indenture if the Corporation has complied with the applicable provisions of Section [___] of the Indenture. 12. Denominations; Transfer and Exchange ------------------------------------ When this Note is presented to the Corporation with a request to register the transfer, the Corporation shall register a transfer as requested, if the requirements for such transfer are met; provided, however, that if this -------- ------- Note is presented or surrendered for registration of transfer or exchange it shall be duly endorsed or be accompanied by a written instrument of transfer in form satisfactory to the Corporation duly executed by the Holder or his attorney duly authorized in writing. The Corporation may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. 13. Replacement Note ---------------- If a mutilated Note is surrendered to the Corporation or if the Holder of this Note presents evidence to the reasonable satisfaction of the Corporation that this Note has been lost, destroyed or wrongfully taken, the Corporation shall issue a replacement Note of like tenor if the requirements of the Corporation for such transactions are met. An indemnity bond may be required that is sufficient in the reasonable judgment of the Corporation to protect the Corporation from any loss which it may suffer. The Corporation may charge for its expenses in replacing this Note. 14. No Recourse Against Others -------------------------- -25- No director, officer, employee or stockholder, as such, of the Corporation shall have any liability for any obligations of the Corporation under this Note or for any claim based on, in respect or by reason of, such obligations or their creation. The Holder by accepting this Note waives and releases all such liability. This waiver and release are part of the consideration for the issue of this Note. 15. Notice ------ All notices, requests, consents and demands shall be made in writing and shall be given by registered or certified mail postage prepaid to the following addresses: if to the Corporation, to it at Great Lakes Dredge & Dock Corporation, 2122 York Road, Oak Brook, Illinois 60521, Attention: Bruce J. Biemeck, Chief Financial Officer, with required copies to: 399 Venture Partners Inc., 399 Park Avenue, Fourteenth Floor, New York, New York 10043, Attention: Michael A. Delaney and Paul C. Schorr IV, Telecopy: (212) 888-2940, to Dechert Price & Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, Pennsylvania 19103, Attention: G. Daniel O'Donnell, Telecopy: (215) 994-2222 or to such other address as may be furnished in writing to the Holder; and if to the Holder, to it at its address listed on the transfer books of the Corporation. Unless otherwise indicated herein, notices hereunder shall be effective when delivered, if delivered personally, or, if sent by mail, when sent. Any notices given by the Representative to Holder hereunder may be made by Representative by delivery as set forth above to the address for Holder set forth above or such other address of which Holder shall give notice to Representative. Any notices given by the Corporation or Holder to Representative hereunder may be made by delivery as set forth above to the following address or such other address of which Representative shall give notice to the party delivering such notice: . _____________________________________________ 16. Governing Law ------------- This Note shall be deemed a contract under, and shall be governed and construed in accordance with, the laws of the State of New York without giving effect to principles of conflicts of laws. 17. Successors, etc.; Entire Agreement ---------------------------------- This Note shall be binding upon and shall inure to the benefit of and be enforceable by the respective successors and assigns of the Corporation and the registered Holder thereof. -26- 18. Headings -------- The section headings of this Note are for convenience only and shall not affect the meaning or interpretation of this Note or any provision hereof. IN WITNESS WHEREOF, the Corporation has caused this Note to be executed by its duly authorized officer. Dated: , ______________ ____ GREAT LAKES DREDGE & DOCK CORPORATION By: ____________________________ President -27- EX-3.02 4 BYLAWS EXHIBIT 3.02 ------------ BYLAWS OF GREAT LAKES DREDGE & DOCK CORPORATION ARTICLE I STOCKHOLDERS ------------ 1.1 Meetings. -------- 1.1.1 Place. Meetings of the stockholders shall be held at such place as ----- may be designated by the board of directors. 1.1.2 Annual Meeting. An annual meeting of the stockholders for the -------------- election of directors and for other business shall be held on such date and at such time as may be fixed by the board of directors. 1.1.3 Special Meetings. Special meetings of the stockholders may be ---------------- called at any time by the president, or the board of directors, or the holders of a majority of the outstanding shares of stock of the Company entitled to vote at the meeting. 1.1.4 Quorum. The presence, in person or by proxy, of the holders of a ------ majority of the outstanding shares of stock of the Company entitled to vote on a particular matter shall constitute a quorum for the purpose of considering such matter. 1.1.5 Voting Rights. Except as otherwise provided herein, in the ------------- certificate of incorporation or by law, every stockholder shall have the right at every meeting of stockholders to one vote for every share standing in the name of such stockholder on the books of the Company which is entitled to vote at such meeting. Every stockholder may vote either in person or by proxy. ARTICLE II DIRECTORS --------- 2.1 Number and Term. The board of directors shall have authority to (i) --------------- determine the number of directors to constitute the board and (ii) fix the terms of office of the directors. 2.2 Meetings. -------- 2.2.1 Place. Meetings of the board of directors shall be held at such ----- place as may be designated by the board or in the notice of the meeting. 2.2.2 Regular Meetings. Regular meetings of the board of directors shall ---------------- be held at such times as the board may designate. Notice of regular meetings need not be given. 2.2.3 Special Meetings. Special meetings of the board may be called by ---------------- direction of the president or any two members of the board on three days' notice to each director, either personally or by mail, telegram or facsimile transmission. 2.2.4 Quorum. A majority of all the directors in office shall constitute ------ a quorum for the transaction of business at any meeting. 2.2.5 Voting. Except as otherwise provided herein, in the certificate of ------ incorporation or by law, the vote of a majority of the directors present at any meeting at which a quorum is present shall constitute the act of the board of directors. 2.2.6 Committees. The board of directors may, by resolution adopted by a ---------- majority of the whole board, designate one or more committees, each committee to consist of one or more directors and such alternate members (also directors) as may be designated by the board. Unless otherwise provided herein, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another director to act at the meeting in the place of any such absent or disqualified member. Except as otherwise provided herein, in the certificate of incorporation or by law, any such committee shall have and may exercise the powers of the full board of directors to the extent provided in the resolution of the board directing the committee. ARTICLE III OFFICERS -------- 3.1 Election. At its first meeting after each annual meeting of the -------- stockholders, the board of directors shall elect a president, treasurer, secretary and such other officers as it deems advisable. 3.2 Authority, Duties and Compensation. The officers shall have such ---------------------------------- authority, perform such duties and serve for such compensation as may be determined by resolution of the board of directors. Except as otherwise provided by board resolution, (i) the president shall be the chief executive officer of the Company, shall have general supervision over the business and operations of the Company, may perform any act and execute any instrument for the conduct of such business and operations and shall preside at all meetings of the board and stockholders, (ii) the other officers shall have the duties customarily related to their respective offices, and (iii) any vice president, or vice presidents in the order determined by the board, shall in the absence of the president have the authority and perform the duties of the president. -2- ARTICLE IV INDEMNIFICATION --------------- 4.1 Right to Indemnification. The Company shall indemnify any person who was ------------------------ or is party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding"), by reason of the fact that such person is or was a director or officer of the Company or a constituent corporation absorbed in a consolidation or merger, or is or was serving at the request of the Company or a constituent corporation absorbed in a consolidation or merger, as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or is or was a director or officer of the Company serving at its request as an administrator, trustee or other fiduciary of one or more of the employee benefit plans of the Company or other enterprise, against expenses (including attorneys' fees), liability and loss actually and reasonably incurred or suffered by such person in connection with such proceeding, whether or not the indemnified liability arises or arose from any threatened, pending or completed proceeding by or in the right of the Company, except to the extent that such indemnification is prohibited by applicable law. 4.2 Advance of Expenses. Expenses incurred by a director or officer of the ------------------- Company in defending a proceeding shall be paid by the Company in advance of the final disposition of such proceeding subject to the provisions of any applicable statute. 4.3 Procedure for Determining Permissibility. To determine whether any ---------------------------------------- indemnification or advance of expenses under this Article IV is permissible, the board of directors by a majority vote of a quorum consisting of directors not parties to such proceeding may, and on request of any person seeking indemnification or advance of expenses shall be required to, determine in each case whether the applicable standards in any applicable statute have been met, or such determination shall be made by independent legal counsel if such quorum is not obtainable, or, even if obtainable, a majority vote of a quorum of disinterested directors so directs, provided that, if there has been a change in control of the Company between the time of the action or failure to act giving rise to the claim for indemnification or advance of expenses and the time such claim is made, at the option of the person seeking indemnification or advance of expenses, the permissibility of indemnification or advance of expenses shall be determined by independent legal counsel. The reasonable expenses of any director or officer in prosecuting a successful claim for indemnification, and the fees and expenses of any special legal counsel engaged to determine permissibility of indemnification or advance of expenses, shall be borne by the Company. 4.4 Contractual Obligation. The obligations of the Company to indemnify a ---------------------- director or officer under this Article IV, including the duty to advance expenses, shall be considered a contract between the Company and such director or officer, and no modification or repeal of any provision of this Article IV shall affect, to the detriment of the director or officer, such obligations of the Company in connection with a claim based on any act or failure to act occurring before such modification or repeal. -3- 4.5 Indemnification Not Exclusive; Inuring of Benefit. The indemnification and ------------------------------------------------- advance of expenses provided by this Article IV shall not be deemed exclusive of any other right to which one indemnified may be entitled under any statute, provision of the Certificate of Incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall inure to the benefit of the heirs, executors and administrators of any such person. 4.6 Insurance and Other Indemnification. The board of directors shall have the ----------------------------------- power to (i) authorize the Company to purchase and maintain, at the Company's expense, insurance on behalf of the Company and on behalf of others to the extent that power to do so has not been prohibited by statute, (ii) create any fund of any nature, whether or not under the control of a trustee, or otherwise secure any of its indemnification obligations, and (iii) give other indemnification to the extent permitted by statute. ARTICLE V TRANSFER OF SHARE CERTIFICATES ------------------------------ Transfers of share certificates and the shares represented thereby shall be made on the books of the Company only by the registered holder or by duly authorized attorney. Transfers shall be made only on surrender of the share certificate or certificates. ARTICLE VI AMENDMENTS ---------- These bylaws may be amended or repealed at any regular or special meeting of the board of directors by vote of a majority of all directors in office or at any annual or special meeting of stockholders by vote of holders of a majority of the outstanding stock entitled to vote. Notice of any such annual or special meeting of stockholders shall set forth the proposed change or a summary thereof. -4- EX-4.01 5 INDENTURE EXHIBIT 4.01 GREAT LAKES DREDGE & DOCK CORPORATION SERIES A AND B 11 1/4% SENIOR SUBORDINATED NOTES DUE 2008 INDENTURE Dated as of August 19, 1998 THE BANK OF NEW YORK Trustee CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section 310(a)(1)................................................ 7.10 (a)(2)................................................ 7.10 (a)(3)................................................ N.A. (a)(4)................................................ N.A. (a)(5)................................................ 7.10 (b)................................................... 7.10 (c)................................................... N.A. 311(a)................................................... 7.11 (b)................................................... 7.11 (c)................................................... N.A. 312(a)................................................... 2.05 (b)................................................... 12.03 (c)................................................... 12.03 313(a)................................................... 7.06 (b)(2)................................................ 7.07 (c)................................................... 7.06;12.02 (d)................................................... 7.06 314(a)................................................... 4.03;12.02 (c)(1)................................................ 12.04 (c)(2)................................................ 12.04 (c)(3)................................................ N.A. (e)................................................... 12.05 (f)................................................... N.A. 315(a)................................................... 7.01 (b)................................................... 7.05,12.02 (c)................................................... 7.01 (d)................................................... 7.01 (e)................................................... 6.11 316(a) (last sentence)................................... 2.09 (a)(1)(A)............................................. 6.05 (a)(1)(B)............................................. 6.04 (a)(2)................................................ N.A. (b)................................................... 6.07 (c)................................................... 2.12 317(a)(1)................................................ 6.08 (a)(2)................................................ 6.09 (b)................................................... 2.04 318(a)................................................... 12.01 (b)................................................... N.A.
(c)................................................... 12.01
N.A. means not applicable. TABLE OF CONTENTS
Page ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions................................................. 1 Section 1.02. Other Definitions........................................... 19 Section 1.03. Incorporation by Reference of Trust Indenture Act........... 19 Section 1.04. Rules of Construction....................................... 20 ARTICLE 2 THE NOTES Section 2.01. Form and Dating............................................. 20 Section 2.02. Execution and Authentication................................ 22 Section 2.03. Registrar and Paying Agent.................................. 22 Section 2.04. Paying Agent to Hold Money in Trust......................... 23 Section 2.05. Holder Lists................................................ 23 Section 2.06. Transfer and Exchange....................................... 23 Section 2.07. Replacement Notes........................................... 35 Section 2.08. Outstanding Notes........................................... 36 Section 2.09. Treasury Notes.............................................. 36 Section 2.10. Temporary Notes............................................. 36 Section 2.11. Cancellation................................................ 36 Section 2.12. Defaulted Interest.......................................... 37 ARTICLE 3 REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee.......................................... 37 Section 3.02. Selection of Notes to Be Redeemed........................... 37 Section 3.03. Notice of Redemption........................................ 38 Section 3.04. Effect of Notice of Redemption.............................. 39 Section 3.05. Deposit of Redemption Price................................. 39 Section 3.06. Notes Redeemed in Part...................................... 39 Section 3.07. Optional Redemption......................................... 39 Section 3.08. Mandatory Redemption........................................ 40 Section 3.09. Offer to Purchase by Application of Excess Proceeds......... 40 ARTICLE 4 COVENANTS Section 4.01. Payment of Notes............................................ 42 Section 4.02. Maintenance of Office or Agency............................. 42 Section 4.03. Reports..................................................... 43 Section 4.04. Compliance Certificate...................................... 43 Section 4.05. Taxes....................................................... 44 Section 4.06. Stay, Extension and Usury Laws.............................. 44 Section 4.07. Restricted Payments......................................... 44
i Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.......... 47 Section 4.09. Incurrence of Indebtedness and Issuance of Disqualified Stock........... 48 Section 4.10. Asset Sales............................................................. 51 Section 4.11. Transactions with Affiliates............................................ 52 Section 4.12. Liens................................................................... 53 Section 4.13. Business Activities..................................................... 53 Section 4.14. Corporate Existence..................................................... 53 Section 4.15. Offer to Repurchase Upon Change of Control.............................. 54 Section 4.16. No Senior Subordinated Debt............................................. 55 Section 4.17. Limitation on Sale and Leaseback Transactions........................... 55 Section 4.18. Limitation on Issuances of Guarantees of Indebtedness................... 55 Section 4.19. Payments for Consent.................................................... 56 Section 4.20. Additional Subsidiary Guarantees........................................ 56 ARTICLE 5 SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets................................ 56 Section 5.02. Successor Corporation Substituted....................................... 57 ARTICLE 6 DEFAULTS AND REMEDIES Section 6.01. Events of Default....................................................... 57 Section 6.02. Acceleration............................................................ 59 Section 6.03. Other Remedies.......................................................... 59 Section 6.04. Waiver of Past Defaults................................................. 59 Section 6.05. Control by Majority..................................................... 60 Section 6.06. Limitation on Suits..................................................... 60 Section 6.07. Rights of Holders of Notes to Receive Payment........................... 60 Section 6.08. Collection Suit by Trustee.............................................. 61 Section 6.09. Trustee May File Proofs of Claim........................................ 61 Section 6.10. Priorities.............................................................. 61 Section 6.11. Undertaking for Costs................................................... 62 ARTICLE 7 TRUSTEE Section 7.01. Duties of Trustee....................................................... 62 Section 7.02. Rights of Trustee....................................................... 63 Section 7.03. Individual Rights of Trustee............................................ 64 Section 7.04. Trustee's Disclaimer.................................................... 64 Section 7.05. Notice of Defaults...................................................... 65 Section 7.06. Reports by Trustee to Holders of the Notes.............................. 65 Section 7.07. Compensation and Indemnity.............................................. 65 Section 7.08. Replacement of Trustee.................................................. 66 Section 7.09. Successor Trustee by Merger, etc........................................ 67 Section 7.10. Eligibility; Disqualification........................................... 67 Section 7.11. Preferential Collection of Claims Against Company....................... 67
ii ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance........ 67 Section 8.02. Legal Defeasance and Discharge.................................. 68 Section 8.03. Covenant Defeasance............................................. 68 Section 8.04. Conditions to Legal or Covenant Defeasance...................... 69 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions................. 70 Section 8.06. Repayment to Company............................................ 70 Section 8.07. Reinstatement................................................... 71 ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Notes............................. 71 Section 9.02. With Consent of Holders of Notes................................ 72 Section 9.03. Compliance with Trust Indenture Act............................. 73 Section 9.04. Revocation and Effect of Consents............................... 74 Section 9.05. Notation on or Exchange of Notes................................ 74 Section 9.06. Trustee to Sign Amendments, etc................................. 74 ARTICLE 10 SUBORDINATION Section 10.01. Agreement to Subordinate....................................... 75 Section 10.02. Liquidation; Dissolution; Bankruptcy........................... 75 Section 10.03. Default on Designated Senior Debt.............................. 75 Section 10.04. Acceleration of Securities..................................... 76 Section 10.05. When Distribution Must Be Paid Over............................ 76 Section 10.06. Notice by Company.............................................. 77 Section 10.07. Subrogation.................................................... 77 Section 10.08. Relative Rights................................................ 77 Section 10.09. Subordination May Not Be Impaired by Company................... 77 Section 10.10. Distribution or Notice to Representative....................... 77 Section 10.11. Rights of Trustee and Paying Agent............................. 78 Section 10.12. Authorization to Effect Subordination.......................... 78 Section 10.13. Amendments..................................................... 78 Section 10.14. Trustee Not Fiduciary for Holders of Senior Debt............... 78 ARTICLE 11 SUBSIDIARY GUARANTEES Section 11.01. Guarantee...................................................... 79 Section 11.02. Subordination of Subsidiary Guarantee.......................... 80 Section 11.03. Limitation on Guarantor Liability.............................. 80 Section 11.04. Execution and Delivery of Subsidiary Guarantee................. 80 Section 11.05. Subsidiary Guarantors May Consolidate, etc., on Certain Terms.. 81 Section 11.06. Releases Following Sale of Assets.............................. 82
iii ARTICLE 12 MISCELLANEOUS Section 12.01. Trust Indenture Act Controls..................................................... 82 Section 12.02. Notices.......................................................................... 82 Section 12.03. Communication by Holders of Notes with Other Holders of Notes.................... 84 Section 12.04. Certificate and Opinion as to Conditions Precedent............................... 84 Section 12.05. Statements Required in Certificate or Opinion.................................... 84 Section 12.06. Rules by Trustee and Agents...................................................... 84 Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders......... 85 Section 12.08. Governing Law.................................................................... 85 Section 12.09. No Adverse Interpretation of Other Agreements.................................... 85 Section 12.10. Successors....................................................................... 85 Section 12.11. Severability..................................................................... 85 Section 12.12. Counterpart Originals............................................................ 85 Section 12.13. Table of Contents, Headings, etc................................................. 85
EXHIBITS Exhibit A1 FORM OF NOTE Exhibit A2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE Exhibit B FORM OF CERTIFICATE OF TRANSFER Exhibit C FORM OF CERTIFICATE OF EXCHANGE Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Exhibit E FORM OF SUBSIDIARY GUARANTEE Exhibit F FORM OF SUPPLEMENTAL INDENTURE iv INDENTURE dated as of August 19, 1998 among Great Lakes Dredge & Dock Corporation, a Delaware corporation (the "Company"), the Subsidiary Guarantors set forth on Schedule I hereto and The Bank of New York, as trustee (the "Trustee"). The Company, the Subsidiary Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 11 1/4% Series A Senior Subordinated Notes due 2008 (the "Series A Notes") and the 11 1/4% Series B Senior Subordinated Notes due 2008 (the "Series B Notes" and, together with the Series A Notes, the "Notes"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions. "144A Global Note" means a global note substantially in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "AcquisitionCo" means Great Lakes Dredge & Dock Acquisition, Inc., a Delaware corporation. "Additional Notes" means up to $40.0 million aggregate principal amount of Notes (other than the Initial Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the Initial Notes. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-registrar. 1 "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices (provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, will be governed by the provisions of Section 4.15 and/or Section 5.01 hereof and not by the provisions of Section 4.10 hereof), and (ii) the issue or sale by any Restricted Subsidiary of Equity Interests of any of the Company's Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $2.0 million or (b) for net proceeds in excess of $2.0 million. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, (iii) a Restricted Payment that is permitted by Section 4.07 hereof, (iv) the sale and leaseback of any assets within 120 days of the date of acquisition or completion of construction of such assets, (v) the sale at fair market value of property or equipment that has become worn out, obsolete or damaged or otherwise unsuitable for use in connection with the business of the Company or any Restricted Subsidiary, as the case may be, in the ordinary course of business and (vi) bare-boat charters entered into in the ordinary course of business for a term not to exceed 12 months. "Attributable Debt" means in respect of a sale and leaseback transaction, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "Broker-Dealer" has the meaning set forth in the Registration Rights Agreement. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. 2 "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one-year and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500 million, (iv) repurchase obligations with a term of not more than thirty days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) obligations issued or fully guaranteed by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Corporation or Moody's Investors Service, Inc., (vi) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within one year after the date of acquisition, (vii) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) through (vii) of this definition and (viii) short-term asset management accounts offered by any lender under Credit Facilities for the purpose of investing in notes issued by a corporation (other than the Company or any Affiliate of the Company) organized under the laws of any state of the United States or of the District of Columbia and rated A-2 or higher by Standard & Poor's Rating Group, a division of McGraw Hill, Inc. or P- 2 or higher by Moody's Investors Service, Inc. "Cedel" means Cedel Bank, SA. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries (determined on a consolidated basis), in each case, to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than the Company or a Wholly Owned Restricted Subsidiary or any Principal or a Related Party of a Principal, (ii) the adoption of a plan relating to the liquidation or dissolution of the Company (other than in a transaction which complies with the provisions of Section 5.01 hereof), (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than one or more Principals or their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of 3 shares) and the Principals do not beneficially own as much or more of the Voting Stock of the Company (measured by voting power rather than by number of shares) than such person or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. "Citicorp" means Citicorp, a Delaware corporation, or any successor thereto by merger or consolidation. "Company" means Great Lakes Dredge & Dock Corporation, a Delaware corporation and successor by merger to AcquisitionCo, and any and all successors thereto. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) an amount equal to any extraordinary or nonrecurring loss plus any net loss realized in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income, plus (ii) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income, plus (iii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iv) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income, plus, without duplication, plus (v) any interest expense on Indebtedness of another person that is guaranteed by such person or a Subsidiary of such person or secured by a Lien on the assets of such person or one of its Subsidiaries (to the extent that such interest expense was deducted in computing Consolidated Net Income in such period), plus (vi) expenses and charges of the Company related to the Transaction incurred or for which the Company became obligated on or prior to or within 30 days after the date of this Indenture plus (vii) incremental expenses incurred associated with the Chicago Flood Litigation not exceeding $800,000, minus (viii) non-cash items increasing such Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that 4 Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded and (v) the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Subsidiaries. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of this Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election or was designated by a Principal or a Related Party of a Principal. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Company. "Credit Facilities" means, with respect to the Company or its Restricted Subsidiaries, one or more debt facilities (including, without limitation, the New Credit Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as increased as permitted by the terms hereof, and amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "CVC" means Citicorp Venture Capital, Ltd., a New York corporation, or any successor thereto by merger or consolidation. "Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A1 hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. 5 "Designated Senior Debt" means (i) any Obligations outstanding under the New Credit Facility (including letters of credit), (ii) any Permitted Bonding Obligation and (iii) any other Senior Debt permitted hereunder the principal amount of which is $50.0 million or more and that has been designated by the Company as "Designated Senior Debt." Notwithstanding the foregoing, Indebtedness under the New Credit Facility shall be deemed outstanding for purposes of this definition at all times when the lenders thereunder have an effective commitment to extend credit thereunder, regardless of whether any such Indebtedness is actually outstanding at such time. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof in whole or in part, on or prior to November 14, 2008; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 hereof. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means the Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Existing Indebtedness" means Indebtedness (including Guarantees) of the Company and its Subsidiaries (other than Indebtedness under the New Credit Facility) in existence on the date of this Indenture, until such amounts are permanently repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed 6 interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to interest Hedging Obligations; provided, however, that in no event shall any amortization of deferred financing costs incurred in connection with the Transaction be included in Fixed Charges) and (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all cash dividend payments and non-cash dividend payments, on any series of preferred stock and any series of Disqualified Stock, in each case, of such Person or any of its Restricted Subsidiaries, other than dividend payments (x) on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or (y) to the Company or a Subsidiary Guarantor, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the referent Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays or redeems any Indebtedness (other than repayment of revolving credit borrowings that are not accompanied by a permanent reduction in the commitment amount) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers (including the Merger) or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of this Indenture. 7 "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof. "Global Note Legend" means the legend set forth in Section 2.06(g)(ii), which is required to be placed on all Global Notes issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate or currency swap agreements, interest rate cap agreements and interest rate collar agreements, (ii) other agreements or arrangements solely designed to protect such Person against fluctuations in interest or currency exchange rates and (iii) commodities purchase and sale agreements and other similar agreements designed to protect such Person against fluctuations in the price of raw materials used by the Company and its Restricted Subsidiaries in the ordinary course of business. "Holder" means a Person in whose name a Note is registered. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing (other than letters of credit, Hedging Obligations and Attributable Debt) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. The amount of any Indebtedness (other than Hedging Obligations, guarantees and Attributable Debt) outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. 8 "Initial Notes" means the first $115,000,000 aggregate principal amount of Notes issued under this Indenture on the date hereof. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that an acquisition of Equity Interests or other securities by the Company or any of its Restricted Subsidiaries for consideration consisting solely of Equity Interests (other than Disqualified Stock) of the Company shall not be deemed to be an Investment. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 4.07 hereof. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Liquidated Damages" means all liquidated damages then owing pursuant to Section 5 of the Registration Rights Agreement. "Management Investors" means certain members of management of the Company that own capital stock of the Company. 9 "Merger" means, in connection with the Recapitalization and pursuant to the Merger Agreement, the merger of AcquisitionCo with and into the Company, with the Company as the surviving entity. "Merger Agreement" means the Agreement and Plan of Merger, dated July 20, 1998, among Vectura, AcquisitionCo, GLI Acquisition, Inc., the Company, Great Lakes International, Inc., Blackstone Dredging Partners, L.P. and Blackstone Family Investment Partnership L.P, as amended and restated on August 19, 1998. "Net Income" means, with respect to any Person for any period, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of dividends on preferred interests, (i) excluding, however, (a) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (1) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (2) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (b) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss) and (ii) less the aggregate amount of all Restricted Payments made by such Person or any of its Restricted Subsidiaries for such period pursuant to clause (vii) of Section 4.07 hereof to the extent not otherwise deducted in computing such Net Income. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, any taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New Bonding Agreement" means that certain second Amended and Restated Underwriting and Continuing Indemnity Agreement, dated as of the date of this Indenture, by and among the Company, certain of its Subsidiaries and the Sureties, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as amended, restated, modified, renewed, refunded, replaced or refinanced from time to time. "New Credit Facility" means that certain Credit Agreement, dated as of the date of this Indenture, by and among the Company, Bank of America National Trust and Savings Association, as agent, and certain other lenders party thereto, initially providing for up to $55.0 million of revolving credit borrowings and $55.0 million of term borrowings, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as increased as permitted by the terms hereof, and amended, modified, renewed, restated, refunded, replaced or refinanced from time to time. 10 "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor or otherwise), or (c) constitutes the lender; and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than the Notes being offered hereby) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Non-U.S. Person" means a Person who is not a U.S. Person. "Notes" has the meaning assigned to it in the preamble to this Indenture. The Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture. "Obligations" means any principal, interest, penalties, fees, indemnifications, costs, expenses, reimbursement obligations, damages and other liabilities and obligations which may arise under or in connection with the New Credit Facility or the New Bonding Agreement or under or in connection with the documentation governing any Indebtedness, and in all cases whether direct or indirect, absolute or contingent, now outstanding or hereafter created, assumed or incurred and including, without limitation, interest accruing subsequent to the filing of a petition in bankruptcy or the commencement of any insolvency, reorganization or similar proceedings at the rate provided in the relevant document, whether or not an allowed claim, and any obligation to redeem or defease any of the foregoing. "Offering" means the offering of the Notes by the Company. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 12.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee. "Participant" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to DTC, shall include Euroclear and Cedel). 11 "Permitted Bonding Obligations" means (i) obligations incurred by the Company or any of its Subsidiaries (including Guarantees) with respect to bid, performance, surety, appeal or similar bonds and completion guarantees in the ordinary course of business and consistent with past practices and (ii) obligations incurred by the Company or any of its Subsidiaries (including Guarantees) under the New Bonding Agreement. "Permitted Business" means any of the businesses engaged in by the Company and its Restricted Subsidiaries on the date of this Indenture and any other business reasonably related, complementary or ancillary thereto. "Permitted Investments" means (a) any Investment in the Company or in a Restricted Subsidiary of the Company that is a Subsidiary Guarantor and is engaged in a Permitted Business; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary of the Company and a Subsidiary Guarantor and is engaged in a Permitted Business or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company that is a Subsidiary Guarantor and that is engaged in Permitted Business; (d) any Investment made as a result of the receipt of assets not constituting Cash Equivalents from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof; (e) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (f) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (f) that are at the time outstanding, not to exceed $10.0 million; (g) Investments in securities of customers received in settlement of obligations or pursuant to a plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (h) Investments existing on the date of this Indenture; (i) loans and advances to officers, directors, members and employees for business-related travel expenses, moving expenses and other similar expenses, in each case, incurred in the ordinary course of business and consistent with past practices not to exceed $1.0 million in the aggregate at any time; (j) any Hedging Obligation; (k) Investments consisting of intercompany loans from the Company and its Restricted Subsidiaries to Restricted Subsidiaries, including Restricted Subsidiaries that are not Subsidiary Guarantors; (l) Investments consisting of capital contributions from the Company or any Restricted Subsidiaries to Restricted Subsidiaries that are not Subsidiary Guarantors in an aggregate amount at any one time outstanding not to exceed $10.0 million; and (m) Investments in joint ventures formed in the ordinary course of business for the purpose of bidding and completing specific projects within a Permitted Business in an aggregate amount at any one time outstanding not to exceed $5.0 million. "Permitted Junior Securities" means Equity Interests in the Company or any Subsidiary Guarantor or debt securities that are subordinated to all Senior Debt (and any debt securities issued in exchange for Senior Debt) to substantially the same extent as, or to a greater extent than, the Notes are subordinated to Senior Debt pursuant to this Indenture; provided that no such Equity Interests or debt securities may be issued if the rights of the holders of the Senior Debt are impaired by any such issuance in connection with a reorganization, including, without limitation, by reason of such rights being impaired within the meaning of Section 1124 of Title 11 of the United States Code. 12 "Permitted Liens" means (i) Liens on assets of the Company securing Senior Debt of the Company and Liens on assets of Subsidiary Guarantors securing Senior Debt, provided, in each case, that such Indebtedness was permitted by the terms of this Indenture to be incurred; (ii) Liens in favor of the Company or a Subsidiary Guarantor; (iii) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, bid bonds, payment bonds, performance and lien bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (v) or (ix) of the second paragraph of Section 4.09 hereof covering, in the case of such clause (v), only the assets acquired with such Indebtedness; (vii) Liens existing on the date of this Indenture; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (ix) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries; (x) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $7.5 million at any one time outstanding and that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary; (xi) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens (including statutory maritime Liens) imposed by law incurred in the ordinary course of business; (xii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security or similar obligations, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (xiii) judgment or attachment Liens not giving rise to an Event of Default; (xiv) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary course of the business of the Company or any of its Restricted Subsidiaries; (xv) any interest or title of a lessor under any lease, whether or not characterized as capital or operating; provided that such Liens do not extend to any property or assets which is not leased property subject to such lease; (xvi) Liens securing Hedging Obligations which Hedging Obligations relate to Indebtedness that is otherwise permitted under this Indenture; (xvii) Liens securing reimbursement obligations with respect to letters of credit and products and proceeds thereof; (xviii) Liens securing Permitted Refinancing Indebtedness which is incurred to refinance any Indebtedness which has been secured by a Lien permitted under this Indenture and which has been incurred in accordance with the provisions hereof; (xix) Liens in favor of the Company or any of its Restricted Subsidiaries securing Indebtedness of any Restricted Subsidiary that is not a Subsidiary Guarantor; (xx) Liens with respect to current wages of the master and crew and for wages of a stevedore when employed directly by the Company or any Subsidiary of the Company, or by the charterer, operator, master or agent of any of the vessels owned or 13 operated by the Company or any Subsidiary of the Company; and (xxi) Liens for salvage (including contract salvage). "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses, premiums, penalties, fees and interest incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof. "Principals" means (i) CVC and the Management Investors and (ii) any Related Party of a Person referred to in clause (i). "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "Public Equity Offering" means a public offering pursuant to an effective registration statement under the Securities Act of Equity Interests (other than Disqualified Stock) of the Company. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Qualified Proceeds" means any of the following or any combination of the following: (i) cash, (ii) Cash Equivalents, (iii) assets that are used or useful in a Permitted Business and (iv) the Capital Stock of any Person engaged in a Permitted Business if, in connection with the receipt by the Company or any Restricted Subsidiary of the Company of such Capital Stock, (a) such Person becomes a Restricted Subsidiary of the Company or any Restricted Subsidiary of the Company or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or any Restricted Subsidiary of the Company. 14 "Recapitalization" means the recapitalization of the Company pursuant to the Merger Agreement. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of August 19, 1998, by and among the Company and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time, and, with respect to any Additional Notes, one or more registration rights agreements between the Company and the other parties thereto, as such agreement(s) may be amended, modified or supplemented from time to time, relating to rights given by the Company to the purchasers of Additional Notes to register such Additional Notes under the Securities Act. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate. "Regulation S Permanent Global Note" means a permanent global Note in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period. "Regulation S Temporary Global Note" means a temporary global Note in the form of Exhibit A2 hereto bearing the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S. "Related Party" means (a) with respect to CVC (i) Citicorp, any direct or indirect wholly owned subsidiary of Citicorp, and any officer, director or employee of CVC, Citicorp or any wholly owned subsidiary of Citicorp, (ii) any spouse or lineal descendant (including by adoption and stepchildren) of the officers, directors and employees referred to in clause (a) (i) above, (iii) any trust, corporation or partnership 100%-in-interest of the beneficiaries, stockholders or partners of which consists of one or more of the persons described in clause (a) (i) or (ii) above or (iv) Vectura, so long as CVC or any of its Related Parties described in (i), (ii) or (iii) above holds at least 50% of the Great Lakes membership interests in Vectura; and (b) with respect to any officer or employee of the Company or a Subsidiary of the Company (i) any spouse or lineal descendant (including by adoption and stepchildren) of such officer or employee and (ii) any trust, corporation or partnership 100%-in-interest of the beneficiaries, stockholders or partners of which consists of such officer or employee, any of the persons described in clause (b) (i) above or any combination thereof. "Representative" means the indenture trustee or other trustee, agent or representative for any Senior Debt. "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other 15 officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Note" means a Global Note bearing the Private Placement Legend. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Period" means the 40-day restricted period as defined in Regulation S. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated the Securities Act. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Debt" means (i) all Obligations of the Company or a Subsidiary Guarantor outstanding under the New Credit Facility, including any Guarantee thereof and all Hedging Obligations with respect thereto and all interest and fees accrued with respect thereto following the commencement of a proceeding under bankruptcy law, whether or not considered an allowed claim in such proceeding, (ii) all Permitted Bonding Obligations from time to time outstanding, (iii) any other Indebtedness of the Company or a Subsidiary Guarantor permitted to be incurred under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes and (iv) all Obligations with respect to the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not include (v) any liability for federal, state, local or other taxes owed or owing, (w) any Indebtedness of the Company or any Subsidiary Guarantor to any Subsidiary of the Company or any other Affiliates of the Company, (x) any trade payables, (y) any Indebtedness which is expressly subordinated to any other Indebtedness of the Company or any of its Subsidiaries, or (z) any Indebtedness that is incurred in violation of this Indenture. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. 16 "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date hereof. "Stated Maturity" means, with respect to any installment of interest or principal (including any sinking fund payment) on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Stockholders' Agreement" means the Securities Purchase and Holders Agreement among the stockholders of the Company, as in effect on the date of this Indenture. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "Subsidiary Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Subsidiary Guarantors" means each of (i) the wholly owned domestic Restricted Subsidiaries of the Company on the date of this Indenture and (ii) any other subsidiary that executes a Subsidiary Guarantee in accordance with the provisions hereof, and their respective successors and assigns. "Sureties" means Reliance Insurance Company, United Pacific Insurance Company, Reliance National Insurance Company and Reliance Surety Company, together with any of their respective Affiliates. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa- 77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Transaction" means the Recapitalization and the funding thereof pursuant to the issuance of capital stock by the Company to Vectura and the Management Investors, borrowings by the Company under the New Credit Facility and consummation of the Offering. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. 17 "Unrestricted Global Note" means a permanent global Note substantially in the form of Exhibit A1 attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Notes that do not bear the Private Placement Legend. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company (or any successor to any of them) that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a board resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non- Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has at least one director on its board of directors that is not a director or executive officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Company or any of its Restricted Subsidiaries. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act. "Vectura" means Vectura Holdings, LLC, a Delaware limited liability company, or any successor thereto by merger or consolidation. 18 "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. Section 1.02. Other Definitions. Defined in Term Section ----- ------- "Affiliate Transaction"........................................ 4.11 "Asset Sale Offer"............................................. 3.09 "Authentication Order"......................................... 2.02 "Change of Control Offer"...................................... 4.15 "Change of Control Payment".................................... 4.15 "Change of Control Payment Date"............................... 4.15 "Covenant Defeasance".......................................... 8.03 "DTC"........................................................... 2.03 "Event of Default".............................................. 6.01 "Excess Proceeds"............................................... 4.10 "incur"......................................................... 4.09 "Legal Defeasance".............................................. 8.02 "Offer Amount".................................................. 3.09 "Offer Period".................................................. 3.09 "Paying Agent".................................................. 2.03 "Payment Blockage Notice"....................................... 10.03 "Payment Default"............................................... 6.01 "Permitted Debt"................................................ 4.09 "Purchase Date"................................................. 3.09 "Registrar"..................................................... 2.03 "Restricted Payments".......................................... 4.07 Section 1.03. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. 19 The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes and the Subsidiary Guarantees means the Company and the Subsidiary Guarantors, respectively, and any successor obligor upon the Notes and the Subsidiary Guarantees, respectively. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04. Rules of Construction. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (c) "or" is not exclusive; (d) words in the singular include the plural, and in the plural include the singular; (e) provisions apply to successive events and transactions; (f) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time; and (g) the word "including" means "including without limitation." ARTICLE 2 THE NOTES Section 2.01. Form and Dating. (a) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by 20 law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company, the Subsidiary Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Notes. Notes issued in global form shall be substantially in the form of Exhibits A1 or A2 attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A1 attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. (c) Temporary Global Notes. Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel Bank certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note bearing a Private Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Company. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in Regulation S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. 21 (d) Euroclear and Cedel Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes that are held by Participants through Euroclear or Cedel Bank. Section 2.02. Execution and Authentication. One Officer shall sign the Notes for the Company by manual or facsimile signature. If the Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by one Officer (an "Authentication Order"), authenticate Notes for original issue up to the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. Section 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Restricted Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes. 22 Section 2.04. Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Restricted Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. Section 2.05. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA (S) 312(a). Section 2.06. Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial 23 interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Temporary Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, 24 the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof. (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in the Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in 25 the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. (i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; 26 (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; 27 (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests in Global Notes. (i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes 28 delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, and in the case of clause (C) above, the Regulation S Global Note. (ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: 29 (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global 30 Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). (i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or 31 (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not broker- dealers, (y) they are not participating in a distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. (g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. 32 (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR REGULATION S THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE." (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form: 33 "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." (iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note shall bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof). 34 (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. Section 2.07. Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. An indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. 35 Section 2.08. Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 2.09. Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded. Section 2.10. Temporary Notes. Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. Section 2.11. Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of 36 transfer, exchange, payment, replacement or cancellation. Certification of the cancellation of all canceled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. Section 2.12. Defaulted Interest. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE 3 REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. Section 3.02. Selection of Notes to Be Redeemed. If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by 37 such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. Section 3.03. Notice of Redemption. Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. The notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Holder receives such Notice. In any case, failure to give such notice by mail or any defects in the notice to any Holder shall not affect the validity of the proceeding for the redemption of the Notes of any other Holder. 38 Section 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. Section 3.05. Deposit of Redemption Price. One Business Day prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. Section 3.06. Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. Section 3.07. Optional Redemption. (a) Except as set forth in clause (b) of this Section 3.07, the Company shall not have the option to redeem the Notes pursuant to this Section 3.07 prior to August 15, 2003. Thereafter, the Company shall have the option to redeem the Notes, in whole or in part, in cash at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below: Year Percentage - ---- ---------- 2003........................................ 105.625% 2004........................................ 103.750% 2005........................................ 101.875% 2006 and thereafter......................... 100.000% 39 (b) Notwithstanding the provisions of clause (a) of this Section 3.07, at any time prior to August 15, 2001, the Company may (but will not have the obligation to) on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes originally issued at a redemption price equal to 111.250% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net cash proceeds of one or more Public Equity Offerings; provided that at least 65% of the aggregate principal amount of Notes originally issued remain outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 180 days of the date of the closing of such Public Equity Offering. (c) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. Section 3.08. Mandatory Redemption. The Company shall not be required to make mandatory redemption payments with respect to the Notes. Section 3.09. Offer to Purchase by Application of Excess Proceeds. In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount of Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; 40 (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrete or accrue interest; (d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or accrue interest after the Purchase Date; (e) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in integral multiples of $1,000 only; (f) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date or as soon as practicable thereafter. 41 Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. ARTICLE 4 COVENANTS Section 4.01. Payment of Notes. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Paying Agent shall return to the Company no later than five days following the date of payment, any money that exceeds the amount of principal, premium, if any, and interest payable on the Notes. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace period) at the same rate to the extent lawful. Section 4.02. Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03. 42 Section 4.03. Reports. (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Holders of Notes (i) all quarterly financial information beginning with the quarter ended September 30, 1998 and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company was required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the Commission's rules and regulations. In addition, following the consummation of the exchange offer contemplated by the Registration Rights Agreement, whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. (b) For so long as any Notes remain outstanding, (i) at all times the SEC does not accept the filings provided for in Section 4.03(a) hereof or (ii) such filings provided for in Section 4.03(a) hereof do not contain the information required to be delivered upon request pursuant to Rule 144A(d)(4) under the Securities Act, then, in each case, the Company shall agree to furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Section 4.04. Compliance Certificate. (a) The Company and each Subsidiary Guarantor (to the extent that such Subsidiary Guarantor is so required under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture or the Pledge Agreement (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such 43 event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the Company shall use its best efforts to obtain a written statement to accompany the year-end financial statements delivered pursuant to Section 4.03(a) of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. Section 4.05. Taxes. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. Section 4.06. Stay, Extension and Usury Laws. The Company and each of the Subsidiary Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Subsidiary Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. Section 4.07. Restricted Payments. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than, in each case, dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or dividends or distributions payable to 44 the Company or a Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company (other than Equity Interests owned by the Company or any Restricted Subsidiary of the Company) or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes (other than any subordinated indebtedness held by the Company or any Subsidiary Guarantor), except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless: (a) at the time of and after giving effect to such Restricted Payment, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (viii), (ix) and (xi) of the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this Indenture to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate fair market value of Qualified Proceeds received by the Company since the date of this Indenture as a contribution to its equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company), plus (iii) to the extent that any Restricted Investment that was made after the date of this Indenture is sold for cash or otherwise liquidated or repaid for Qualified Proceeds, the lesser of (A) the fair market of the Qualified Proceeds received with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment, plus (iv) 50% of any dividends received by the Company or a Wholly Owned Restricted Subsidiary after the date of this Indenture from an Unrestricted Subsidiary of the Company, to the extent that such dividends were not otherwise included in Consolidated Net Income of the Company for such period, plus (v) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of this Indenture, the lesser of (A) the fair market value of the Company's Investment in such Subsidiary as of the date of such redesignation or (B) such fair market value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary. 45 The foregoing provisions shall not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions hereof; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company or any Subsidiary Guarantor, in each case, in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock) or the net cash proceeds of a common equity capital contribution to the Company; provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any dividend or making of any distribution by a Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis; (v) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Subsidiary of the Company held by any former member of the Company's (or any of their Subsidiaries') Board of Directors or any former officer, employee or director of the Company or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stockholder agreement, stock option agreement, employment agreement or other similar agreements or employee benefit plan; provided that (A) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed (1) $2.0 million in any calendar year (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to clause (2)) of $5.0 million, plus (2) in the case of a repurchase, redemption or other acquisition or retirement of Equity Interests of the Company, the aggregate cash proceeds received by the Company during such calendar year from any reissuance of Equity Interests by or the Company to employees, officers and directors of the Company and its Restricted Subsidiaries plus the cash proceeds of any "key man" life insurance policy received by the Company with respect to the owner of, and any cash proceeds paid to the Company in connection with the issuance or exercise of, any management or employee Equity Interests so acquired plus (3) in the case of a repurchase, redemption or other acquisition or retirement of Equity Interests of a Subsidiary Guarantor, the aggregate cash proceeds received by such Subsidiary Guarantor during such calendar year from any reissuance of Equity Interests of such Subsidiary Guarantor to employees, officers, and directors of such Subsidiary Guarantor plus the cash proceeds of any "key man" life insurance policy received by such Subsidiary Guarantor with respect to the owner of any cash proceeds paid to such Subsidiary Guarantor in connection with the issuance or exercise of, any management or employee Equity Interests so acquired, and (B) no Default or Event of Default shall have occurred and be continuing immediately after such transaction; provided, further that the aggregate cash proceeds referred to in (2) above shall be excluded from clause (c)(ii) of the preceding paragraph; (vi) any Investment to the extent that the consideration therefor consists of the net cash proceeds of the substantially concurrent issue and sale (other than to a Restricted Subsidiary) of Equity Interests of the Company (other than any Disqualified Stock); (vii) so long as no Default or Event of Default has occurred and is continuing and the Company can incur at least $1.00 of additional indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof, the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company, or any Subsidiary Guarantor issued after the date of this Indenture in accordance with Section 4.09 hereof; (viii) repurchase of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; (ix) loans to employees of the 46 Company or any Subsidiary Guarantor not to exceed $2.0 million at any one time outstanding; (x) Restricted Payments not to exceed $5.0 million since the date of this Indenture and (xi) payments made pursuant to the Merger Agreement and tax "gross up" payments made pursuant to the Stockholders Agreement in connection with the Recapitalization, in each case, as in effect on the date of this Indenture, as the same may be amended, modified or replaced from time to time so long as such amendment, modification or replacement does not increase the amount of any such payments from the amount of such payments provided for in the Merger Agreement or Stockholders Agreement, as the case may be, as in effect on the date of this Indenture. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this Section 4.07. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. For purposes of determining compliance with this Section 4.07, in the event that a Restricted Payment meets the criteria of more than one of the exceptions described in (i) through (xi) above or is entitled to be made pursuant to the first paragraph of this Section 4.07, the Company shall, in its sole discretion, classify such Restricted Payment in any manner that complies with this Section 4.07. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $7.5 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed, together with a copy of any fairness opinion or appraisal required by this Indenture. Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of this Indenture, (b) the New 47 Credit Facility and Permitted Bonding Obligations as in effect as of the date of this Indenture, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the New Credit Facility or in agreements with respect to Permitted Bonding Obligations, as applicable, as in effect on the date of this Indenture, (c) this Indenture, the Notes and the Subsidiary Guarantees, (d) applicable law, (e) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms hereof to be incurred, (f) customary non-assignment provisions in leases or other similar agreements entered into in the ordinary course of business and consistent with past practices, (g) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (h) any agreement for the sale of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale, (i) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced, (j) secured Indebtedness otherwise permitted to be incurred pursuant to the provisions of Section 4.12 hereof that limits the right of the debtor to dispose of the assets securing such Indebtedness, (k) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business, (l) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, (m) mortgage or construction financing that imposes restrictions on the transfer of the property acquired or improved, (n) encumbrances or restrictions imposed by amendments to the contracts, agreements or obligations referred to in the foregoing clauses (a), (c), (e), (f), (g), (h), (j), (k) and (n), provided that such amendments are not materially more restrictive than the agreement so amended; and (o) protective liens filed in connection with sale-leaseback transactions permitted under Section 4.17 hereof. Section 4.09. Incurrence of Indebtedness and Issuance of Disqualified Stock. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and the Company's Subsidiaries may incur Indebtedness or issue preferred equity if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of 48 the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. The provisions of the first paragraph of this Section 4.09 shall not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company and the Subsidiary Guarantors of term Indebtedness under the New Credit Facility (including any guarantee thereof by any Subsidiary Guarantor); provided that the aggregate principal amount of all term Indebtedness outstanding under the New Credit Facility after giving effect to such incurrence does not exceed an amount equal to $55.0 million plus (in the case of any refinancing thereof) the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing less the aggregate amount of all scheduled or mandatory repayments of the principal of any term Indebtedness under the New Credit Facility (other than repayments that are immediately reborrowed) that have been made since the date hereof; (ii) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness and reimbursement obligations in respect of letters of credit under Credit Facilities (including any guarantee thereof by any Subsidiary Guarantor); provided that the aggregate principal amount of all revolving credit or other Indebtedness (other than term Indebtedness permitted under clause (i) above) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder) outstanding under all Credit Facilities after giving effect to such incurrence does not exceed an amount equal to $55.0 million; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company of Indebtedness represented by the Notes sold in the Offering and the incurrence by the Subsidiary Guarantors of Indebtedness represented by the Subsidiary Guarantees of such Notes; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage or construction financings or purchase money obligations or similar financings, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount not to exceed $20.0 million at any time outstanding; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this Section 4.09 or clauses (iii), (iv), (v), (vi) or (ix) of this Section 4.09; 49 (vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vii); (viii) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging (i) interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding, (ii) the value of foreign currencies purchased or received by the Company or any Restricted Subsidiary in the ordinary course of business as conducted by the Company or (iii) commodity risk relating to commodity agreements to the extent entered into in the ordinary course of business solely to protect the Company and its Restricted Subsidiaries from fluctuations in the prices of raw materials used in its business; (ix) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (in addition to Indebtedness permitted by other clauses of this Section 4.09) in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (ix), not to exceed $25.0 million; (x) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (x); (xi) the Guarantee by the Company or any of the Subsidiary Guarantors of Indebtedness of the Company or a Subsidiary Guarantor, which Indebtedness was permitted to be incurred by another provision of this Section 4.09; (xii) Indebtedness of the Company or a Restricted Subsidiary owed to (including obligations in respect of letters of credit for the benefit of) any Person in connection with worker's compensation, health, disability or other employee benefits or property, casualty or liability insurance provided by such Person to the Company or such Restricted Subsidiary, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business and consistent with past practices; (xiii) the incurrence of Permitted Bonding Obligations; 50 (xiv) the issuance of preferred stock (other than Disqualified Stock) by any Subsidiary Guarantor to members of management of such Subsidiary Guarantor, provided that such preferred stock does not require the Company or any Restricted Subsidiary to pay dividends thereon other than in shares of additional preferred stock (other than Disqualified Stock); and (xv) the incurrence of Indebtedness arising from agreements of the Company or any Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or Capital Stock of a Restricted Subsidiary; provided that the maximum aggregate liability of such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with any such disposition. For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xv) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this Section 4.09. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. Section 4.10. Asset Sales. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of Qualified Proceeds; provided that the aggregate fair market value of Qualified Proceeds (other than cash or Cash Equivalents), which may be received in consideration for asset sales pursuant to this clause (ii) shall not exceed $5.0 million since the date of this Indenture; provided further that the amount of (x) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability and (y) any securities, Notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) within 90 days following the closing of such Asset Sale, shall be deemed to be cash for purposes of this provision, provided further that the 75% limitation referred to above shall not apply to any Asset Sale in which the cash and Cash Equivalents portion of the consideration received therefor, determined in accordance with the foregoing 51 proviso, is equal to or greater than what the net after-tax proceeds would have been had such Asset Sale complied with the aforementioned 75% limitation. Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company or any Restricted Subsidiary may apply such Net Proceeds, at its option, (a) to repay Senior Debt, (b) to the acquisition of a majority of the assets of, or a majority of the Voting Stock of, another Permitted Business, the making of a capital expenditure or the acquisition or commitment to acquire (provided that such commitment or a reasonable replacement thereof is consummated substantially in accordance with the terms thereof) of other assets that are used or useful in a Permitted Business or (c) for a combination of uses described in clauses (a) and (b). Pending the final application of any such Net Proceeds, the Company and its Restricted Subsidiaries may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this Section 4.10 shall be deemed to constitute "Excess Proceeds." Within five days of each date on which the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall make an Asset Sale Offer to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of repurchase, in accordance with the procedures set forth in Section 3.09 hereof. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any general corporate purpose. If the aggregate principal amount of Notes tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero. Section 4.11. Transactions with Affiliates. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $2.0 million, a resolution of the Board of Directors of the Company set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Company and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $7.5 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (i) any employment agreement, compensation, employee benefit arrangements and incentive arrangements or indemnification agreement or arrangement with any officer, director, member 52 or employee entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business of the Company or such Restricted Subsidiary, (ii) transactions between or among the Company and/or its Restricted Subsidiaries, (iii) payment of reasonable directors fees, (iv) Restricted Payments (other than Restricted Investments) that are permitted by the provisions of Section 4.07 hereof, (v) loans and advances to officers, directors and employees of the Company or any Restricted Subsidiary for travel, entertainment, moving and other relocation expenses, in each case made in the ordinary course of business; and (vi) transactions pursuant to the Stockholders' Agreement and the Merger Agreement, in each case, as in effect on the date of this Indenture as the same may be amended, modified or replaced from time to time so long as such amendment, modification or replacement is no less favorable to the Company and its Restricted Subsidiaries, taken as a whole, than the Stockholders' Agreement or the Merger Agreement, as the case may be, as in effect on the date of this Indenture. Section 4.12. Liens. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien securing Indebtedness or trade payables on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom, except (i) Permitted Liens, and (ii) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes, the Notes are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens (with the same relative priority as such subordinate or junior Indebtedness shall have with respect to the Notes and the Subsidiary Guarantees) and (y) in all other cases, the Notes are secured by such Lien on an equal and ratable basis. Section 4.13. Business Activities. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. Section 4.14. Corporate Existence. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Restricted Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Company and its Restricted Subsidiaries taken as a whole. 53 Section 4.15. Offer to Repurchase Upon Change of Control. (a) Upon the occurrence of a Change of Control, the Company shall make an offer (a "Change of Control Offer") to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company shall mail a notice to each Holder stating: (1) that the Change of Control Offer is being made pursuant to this Section 4.15 and that all Notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes in connection with a Change of Control. To the extent that the provisions of any securities laws or regulations directly conflict with the provisions hereof, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described herein by virtue thereof. (b) On the Change of Control Payment Date, the Company shall, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. 54 (c) Notwithstanding anything to the contrary in this Section 4.15, the Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.15 and Section 3.09 hereof made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. (d) Prior to complying with the provisions of this Section 4.15, but in any event within 90 days following a Change of Control, the Company shall either repay all outstanding Senior Debt or obtain the requisite consents, if any, under the agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this Section 4.15. Section 4.16. No Senior Subordinated Debt. The Company shall not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Indebtedness and senior in any respect in right of payment to the Notes, and no Subsidiary Guarantor shall incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Indebtedness of such Subsidiary Guarantor and senior in any respect in right of payment to the Subsidiary Guarantee of such Subsidiary Guarantor; provided that no Indebtedness shall be deemed subordinate or junior in right of payment to any other Indebtedness solely by reason of the fact that such Indebtedness is unsecured. Section 4.17. Limitation on Sale and Leaseback Transactions. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that the Company or any of its Restricted Subsidiaries may enter into a sale and leaseback transaction if (i) the Company or such Restricted Subsidiary could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to Section 4.09 hereof and (b) incurred a Lien to secure such Indebtedness pursuant to Section 4.12 hereof, (ii) the gross cash proceeds of such sale and leaseback transaction are at least equal to the fair market value (as determined in good faith by the Board of Directors of the Company and set forth in an Officers' Certificate delivered to the Trustee) of the property that is the subject of such sale and leaseback transaction and (iii) the transfer of assets in such sale and leaseback transaction is permitted by, and if applicable, the Company applies the proceeds of such transaction in compliance with Section 4.10 hereof. Notwithstanding the foregoing, this covenant shall not apply to the sale and leaseback of (i) the backhoe dredge "New York" under construction on the date of the Indenture or (ii) the dredging assets acquired from T.L. James & Company, Inc. pursuant to the acquisition agreement in effect on the date of the Indenture, as such agreement is in effect on such date, in the case of clauses (i) and (ii), within 120 days of the date of completion of such construction or acquisition of such assets, as applicable. Section 4.18. Limitation on Issuances of Guarantees of Indebtedness. The Company shall not permit any Restricted Subsidiary, directly or indirectly, to Guarantee any other Indebtedness of the Company or a Subsidiary Guarantor unless, if such Restricted Subsidiary is 55 not a Guarantor, such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for the Guarantee of the payment of the Notes by such Restricted Subsidiary, which Guarantee shall be senior to or pari passu with such Subsidiary's Guarantee of such other Indebtedness unless such other Indebtedness is Senior Debt, in which case the Guarantee of the Notes may be subordinated to the Guarantee of such Senior Debt to the same extent as the Notes are subordinated to such Senior Debt. Notwithstanding the foregoing, any such Subsidiary Guarantee shall provide by its terms that it shall be automatically and unconditionally released and discharged upon any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all of the Company's stock in, or all or substantially all the assets of, such Restricted Subsidiary, which sale, exchange or transfer is made in compliance with the applicable provisions hereof. The form of such Subsidiary Guarantee is attached as Exhibit E hereto. Section 4.19. Payments for Consent. Neither the Company nor any of its Restricted Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Section 4.20. Additional Subsidiary Guarantees. If the Company or any of its Restricted Subsidiaries shall acquire or create another domestic Subsidiary after the date of this Indenture, then, unless such Subsidiary is properly designated as an Unrestricted Subsidiary, such newly acquired or created Subsidiary shall become a Subsidiary Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel, in accordance with the terms of this Indenture. The form of such Subsidiary Guarantee is attached as Exhibit E hereto. ARTICLE 5 SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets. The Company shall not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation or other entity organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the then existing obligations of the Company under the Registration Rights Agreement, the 56 Notes and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Subsidiary of the Company, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof. The Company shall not, directly or indirectly, lease all or substantially all of its properties or assets to any Person. Section 5.02. Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. ARTICLE 6 DEFAULTS AND REMEDIES Section 6.01. Events of Default. An "Event of Default" occurs if: (a) the Company defaults in the payment when due of interest on, or Liquidated Damages with respect to, the Notes (whether or not permitted by Article 10 hereof) and such default continues for a period of 30 days; (b) the Company defaults in the payment when due of principal of or premium, if any, on the Notes (whether or not permitted by the provisions of Article 10 hereof) when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (c) the Company or any of its Restricted Subsidiaries fails to comply with any of the provisions of 4.15 hereof; (d) the Company or any of its Restricted Subsidiaries fails to observe or perform any other covenant, representation, warranty or other agreement in this Indenture or the Notes for 60 days after 57 notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes (including Additional Notes, if any) then outstanding voting as a single class; (e) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date hereof, which default (i) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (ii) results in the acceleration of such Indebtedness prior to its stated maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated (after giving effect to any applicable grace period), aggregates $10.0 million or more; (f) the Company or any of its Restricted Subsidiaries fails to pay final judgments aggregating in excess of $10.0 million (net of any amount with respect to which a reputable insurance company with assets over $100.0 million has acknowledged liability in writing), which judgments are not paid, discharged or stayed for a period of 60 days after their entry; (g) the Company or any of its Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; or (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (ii) appoints a custodian of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or 58 (iii) orders the liquidation of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; or (i) except as permitted by this Indenture, any Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under such Subsidiary Guarantor's Subsidiary Guarantee. Section 6.02. Acceleration. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Company, any Significant Subsidiary or any group of Significant Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company, any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all outstanding Notes shall be due and payable immediately without further action or notice. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived. Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 6.04. Waiver of Past Defaults. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in 59 aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 6.05. Control by Majority. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. Section 6.06. Limitation on Suits. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. Section 6.07. Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and Liquidated Damages, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. 60 Section 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium and Liquidated Damages, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.09. Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10. Priorities. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and Liquidated Damages, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and Liquidated Damages, if any and interest, respectively; and 61 Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7 TRUSTEE Section 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01; 62 (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. Rights of Trustee. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture; provided, that the Trustee's conduct does not constitute willful misconduct or negligence. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. 63 (g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its reasonable discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall reasonably determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company during normal business hours and upon reasonable notice, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation; (h) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any willful misconduct or gross negligence on the part of any agent or attorney appointed with due care by it hereunder; (i) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture; and (j) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 7.04. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. 64 Section 7.05. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is actually known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. Section 7.06. Reports by Trustee to Holders of the Notes. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA (S) 313(a) (but if no event described in TIA (S) 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA (S) 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA (S) 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA (S) 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange and any delisting thereof. Section 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder as the Company and the Trustee shall from time to time agree in writing. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. 65 The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the extent applicable. Section 7.08. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. 66 If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. Section 7.09. Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. Section 7.10. Eligibility; Disqualification. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA (S) 310(b). Section 7.11. Preferential Collection of Claims Against Company. The Trustee is subject to TIA (S) 311(a), excluding any creditor relationship listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be subject to TIA (S) 311(a) to the extent indicated therein. ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article Eight. 67 Section 8.02. Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium and Liquidated Damages, if any, and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) the Legal Defeasance provisions of this Article Eight. Subject to compliance with this Article Eight, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. Section 8.03. Covenant Defeasance. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19 and 4.20 hereof and clause (iv) of Section 5.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default. 68 Section 8.04. Conditions to Legal or Covenant Defeasance. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium and Liquidated Damages, if any, and interest on the outstanding Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, subject to customary assumptions and exceptions, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exceptions, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article Eight concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a material breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that, subject to customary assumptions and exceptions, after the 91st day following the deposit, the trust funds 69 will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and (h) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. The Trustee shall promptly pay to the Company, after written request therefor, any money held at such time in excess of the amounts required to pay any of the Company's Obligations then owing with respect to the Notes. Section 8.06. Repayment to Company. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining 70 unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 8.07. Reinstatement. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Notes. Notwithstanding Section 9.02 of this Indenture, the Company, the Subsidiary Guarantors and the Trustee may amend or supplement this Indenture, the Subsidiary Guarantees or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) to provide for the assumption of the Company's or a Subsidiary's Guarantor's obligations to the Holders of the Notes by a successor to the Company pursuant to Article 5 or Article 10 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note; 71 (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; (f) to provide for the issuance of Additional Notes in accordance with the limitations set forth in this Indenture as of the date hereof; or (g) to allow any Subsidiary Guarantor to execute a supplemental indenture and/or a Subsidiary Guarantee with respect to the Notes. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company and the Subsidiary Guarantors in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise. Section 9.02. With Consent of Holders of Notes. Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and 4.15 hereof), the Subsidiary Guarantees or the Notes with the consent of the Holders of at least a majority in principal amount of the Notes (including Additional Notes) then outstanding voting as a single class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, Liquidated Damages, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Notes or the Subsidiary Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes). Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. 72 After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes (including Additional Notes, if any) then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non- consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes (except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof); (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including Additional Notes, if any) and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or interest on the Notes; (g) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions; or (h) release any Subsidiary Guarantor from any of its obligations under its Subsidiary Guarantee or this Indenture, except in accordance with the terms of this Indenture. In addition, any amendment of the provisions of Article 10 herein will require the consent of the Holders of at least 75% in aggregate principal amount of the Notes then outstanding if such amendment would adversely affect the rights of Holders of the Notes. Section 9.03. Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. 73 Section 9.04. Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent to any amendment, supplement or waiver or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent to such amendment, supplement or waiver or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. Section 9.05. Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. Section 9.06. Trustee to Sign Amendments, etc. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officers' Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. 74 ARTICLE 10 SUBORDINATION Section 10.01. Agreement to Subordinate. The Company agrees, and each Holder by accepting a Note agrees, that the Indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment in full of all Senior Debt (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. Section 10.02. Liquidation; Dissolution; Bankruptcy. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshaling of the Company's assets and liabilities: (i) holders of Senior Debt shall be entitled to receive payment in full of all Obligations due in respect of such Senior Debt (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt) before Holders of the Notes shall be entitled to receive any payment with respect to the Notes (except that Holders may receive (A) Permitted Junior Securities and (B) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof); and (ii) until all Obligations with respect to Senior Debt (as provided in clause (i) above) are paid in full, any distribution to which Holders would be entitled but for this Article 10 shall be made to holders of Senior Debt (except that Holders of Notes may receive (A) Permitted Junior Securities and (B) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof), as their interests may appear. Section 10.03. Default on Designated Senior Debt. (a) The Company may not make any payment or distribution to the Trustee or any Holder in respect of Obligations with respect to the Notes and may not acquire from the Trustee or any Holder any Notes for cash or property (other than (A) Permitted Junior Securities and (B) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof) until all principal and other Obligations with respect to the Senior Debt have been paid in full if: (i) a default in the payment of any principal or other Obligations with respect to Designated Senior Debt occurs and is continuing beyond any applicable grace period in the agreement, indenture or other document governing such Designated Senior Debt; or (ii) a default, other than a payment default, on Designated Senior Debt occurs and is continuing that then permits holders of the Designated Senior Debt to accelerate its maturity and the Trustee receives a notice of the default (a "Payment Blockage Notice") from a Person who may 75 give it pursuant to Section 10.11 hereof. If the Trustee receives any such Payment Blockage Notice, no subsequent Payment Blockage Notice shall be effective for purposes of this Section unless and until (A) at least 360 days shall have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (B) all scheduled payments of principal, premium, if any, and interest on the Securities that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice. (b) The Company may and shall resume payments on and distributions in respect of the Notes and may acquire them upon the earlier of: (i) the date upon which the default is cured or waived, or (ii) in the case of a default referred to in clause (ii) of Section 10.03(a) hereof, 179 days pass after notice is received if the maturity of such Designated Senior Debt has not been accelerated, if this Article 10 otherwise permits the payment, distribution or acquisition at the time of such payment or acquisition. Section 10.04. Acceleration of Securities. If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Debt of the acceleration. Section 10.05. When Distribution Must Be Paid Over. In the event that the Trustee or any Holder receives any payment of any Obligations with respect to the Notes at a time when the Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by Section 10.03 hereof, such payment shall be held by the Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Debt as their interests may appear or their Representative under the indenture or other agreement (if any) pursuant to which Senior Debt may have been issued, as their respective interests may appear, for application to the payment of all Obligations with respect to Senior Debt remaining unpaid to the extent necessary to pay such Obligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt. With respect to the holders of Senior Debt, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Debt shall be entitled by virtue of this Article 10, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. 76 Section 10.06. Notice by Company. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Notes to violate this Article 10, but failure to give such notice shall not affect the subordination of the Notes to the Senior Debt as provided in this Article 10. Section 10.07. Subrogation. After all Senior Debt is paid in full and until the Notes are paid in full, Holders of Notes shall be subrogated (equally and ratably with all other Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to the Holders of Notes have been applied to the payment of Senior Debt. A distribution made under this Article 10 to holders of Senior Debt that otherwise would have been made to Holders of Notes is not, as between the Company and Holders, a payment by the Company on the Notes. Section 10.08. Relative Rights. This Article 10 defines the relative rights of Holders of Notes and holders of Senior Debt. Nothing in this Indenture shall: (i) impair, as between the Company and Holders of Notes, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Notes in accordance with their terms; (ii) affect the relative rights of Holders of Notes and creditors of the Company other than their rights in relation to holders of Senior Debt; or (iii) prevent the Trustee or any Holder of Notes from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Debt to receive distributions and payments otherwise payable to Holders of Notes. If the Company fails because of this Article 10 to pay principal of or interest on a Note on the due date, the failure is still a Default or Event of Default. Section 10.09. Subordination May Not Be Impaired by Company. No right of any holder of Senior Debt to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Indenture. Section 10.10. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative. 77 Upon any payment or distribution of assets of the Company referred to in this Article 10, the Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. Section 10.11. Rights of Trustee and Paying Agent. Notwithstanding the provisions of this Article 10 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least five Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Notes to violate this Article 10. Only the Company or a Representative may give the notice. Nothing in this Article 10 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. The Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. Section 10.12. Authorization to Effect Subordination. Each Holder of Notes, by the Holder's acceptance thereof, authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the Representatives are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. Section 10.13. Amendments. The provisions of this Article 10 and Section 11.02 shall not be amended or modified without the written consent of the holders of all Senior Debt. Section 10.14. Trustee Not Fiduciary for Holders of Senior Debt. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if the Trustee shall in good faith mistakenly pay over or distribute to Holders of Notes or to the Company or to any other person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article 10 or otherwise. With respect to the holders of Senior Debt, the Trustee undertakes to perform or to observe only such of its covenants or 78 obligations as are specifically set forth in this Article 10 and no implied covenants or obligations with respect to holders of Senior Debt shall be read into this Indenture against the Trustee. ARTICLE 11 SUBSIDIARY GUARANTEES Section 11.01. Guarantee. Subject to this Article 11, each of the Subsidiary Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and severally obligated to pay the same immediately. Each Subsidiary Guarantor agrees that this is a guarantee of payment and not a guarantee of collection. The Subsidiary Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors, any amount paid by either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Subsidiary Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the Subsidiary 79 Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantors for the purpose of this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. Section 11.02. Subordination of Subsidiary Guarantee. The Obligations of each Subsidiary Guarantor under its Subsidiary Guarantee pursuant to this Article 11 shall be junior and subordinated to the Senior Debt of such Subsidiary Guarantor on the same basis as the Notes are junior and subordinated to Senior Debt of the Company. For the purposes of the foregoing sentence, the Trustee and the Holders shall have the right to receive and/or retain payments by any of the Subsidiary Guarantors only at such times as they may receive and/or retain payments in respect of the Notes pursuant to this Indenture, including Article 10 hereof. Section 11.03. Limitation on Guarantor Liability. Each Subsidiary Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors hereby irrevocably agree that the obligations of such Subsidiary Guarantor will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Subsidiary Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under this Article 11, result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent transfer or conveyance. Section 11.04. Execution and Delivery of Subsidiary Guarantee. To evidence its Subsidiary Guarantee set forth in Section 11.01, each Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee substantially in the form included in Exhibit E shall be endorsed by an Officer of such Subsidiary Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Subsidiary Guarantor by its President or one of its Vice Presidents. Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee set forth in Section 11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. 80 If an Officer whose signature is on this Indenture or on the Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantors. In the event that the Company creates or acquires any new Subsidiaries subsequent to the date of this Indenture, if required by Section 4.20 hereof, the Company shall cause such Subsidiaries to execute supplemental indentures to this Indenture and Subsidiary Guarantees in accordance with Section 4.20 hereof and this Article 11, to the extent applicable. Section 11.05. Subsidiary Guarantors May Consolidate, etc., on Certain Terms. Except as otherwise provided in Section 11.06, no Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person) another Person whether or not affiliated with such Subsidiary Guarantor unless: (a) subject to Section 11.06 hereof, the Person formed by or surviving any such consolidation or merger (if other than a Subsidiary Guarantor or the Company) unconditionally assumes all the obligations of such Subsidiary Guarantor, pursuant to operation of law or a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, this Indenture and the Subsidiary Guarantee on the terms set forth herein or therein; and (b) immediately after giving effect to such transaction, no Default or Event of Default exists. In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by operation of law or supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Subsidiary Guarantor, such successor Person shall succeed to and be substituted for the Subsidiary Guarantor with the same effect as if it had been named herein as a Subsidiary Guarantor. Such successor Person shall, as soon as reasonably practicable upon such consolidation, merger, sale or conveyance, execute and deliver to the Trustee a supplemental indenture satisfactory in form to the Trustee. Such successor Person thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof. Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses (a) and (b) above, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor, or shall prevent any 81 sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Subsidiary Guarantor. Section 11.06. Releases Following Sale of Assets. In the event of a sale or other disposition of all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all to the capital stock of any Subsidiary Guarantor, in each case to a Person that is not (either before or after giving effect to such transactions) a Restricted Subsidiary of the Company, then such Subsidiary Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Subsidiary Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor) will be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of this Indenture, including without limitation Section 4.10 hereof, the Trustee shall execute any documents reasonably required in order to evidence the release of any Subsidiary Guarantor from its obligations under its Subsidiary Guarantee. In the event the Company designates a Restricted Subsidiary to become an Unrestricted Subsidiary in accordance with this Indenture, then such Restricted Subsidiary shall, in accordance with this Indenture, be released from its obligations under its Subsidiary Guarantee upon the effectiveness of such designation. Any Subsidiary Guarantor not released from its obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 11. ARTICLE 12 MISCELLANEOUS Section 12.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA (S)318(c), the imposed duties shall control. Section 12.02. Notices. Any notice or communication by the Company, any Subsidiary Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the others' address: 82 If to the Company and/or any Subsidiary Guarantor: Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 Telecopier No.: (630) 574-3007 Attention: President With a copy to: Dechert Price & Rhoads 4000 Bell Atlantic Tower 1717 Arch Street Philadelphia, Pennsylvania 19103 Telecopier No.: (215) 994-2222 Attention: G. Daniel O'Donnell, Esq. If to the Trustee: The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Telecopier No.: (212) 815-5915 Attention: Corporate Trust Trustee Administration The Company, any Subsidiary Guarantor or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA (S) 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. 83 If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. Section 12.03. Communication by Holders of Notes with Other Holders of Notes. Holders may communicate pursuant to TIA (S) 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA (S) 312(c). Section 12.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. Section 12.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S) 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. Section 12.06. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. 84 Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator or stockholder of the Company or any Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or such Subsidiary Guarantor under the Notes, the Subsidiary Guarantees, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Section 12.08. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Section 12.09. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 12.10. Successors. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Subsidiary Guarantor in this Indenture shall bind its successors, except as otherwise provided in Section 11.06. Section 12.11. Severability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 12.12. Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 12.13. Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. 85 [Signatures on following page] 86 SIGNATURES Dated as of August 19, 1998 GREAT LAKES DREDGE & DOCK CORPORATION By: /s/ Douglas B. Mackie --------------------- Name: Douglas B. Mackie Title: President and C.E.O. GREAT LAKES INTERNATIONAL, INC. By: /s/ Douglas B. Mackie --------------------- Name: Douglas B. Mackie Title: President and C.E.O. GREAT LAKES DREDGE & DOCK COMPANY By: /s/ Douglas B. Mackie --------------------- Name: Douglas B. Mackie Title: President and C.E.O. DAWSON DREDGING By: /s/ Douglas B. Mackie --------------------- Name: Douglas B. Mackie Title: President and C.E.O. FIFTY-THREE DREDGING CORPORATION By: /s/ Douglas B. Mackie --------------------- Name: Douglas B. Mackie Title: President and C.E.O. GATES CONSTRUCTION CORP. By: /s/ Douglas B. Mackie --------------------- Name: Douglas B. Mackie Title: President and C.E.O. THE BANK OF NEW YORK, AS TRUSTEE By: /s/ Iliana Acevedo ------------------ Name: Iliana Acevedo Title: Assistant Treasurer EXHIBIT A1 [Face of Note] - -------------------------------------------------------------------------------- CUSIP/CINS 390606AA9 11 1/4% [Series A] [Series B] Senior Subordinated Notes due 2008 No. ___ $115,000,000 GREAT LAKES DREDGE & DOCK CORPORATION promises to pay to Cede & Co., or registered assigns, the principal sum of One Hundred Fifteen Million Dollars on August 19, 2008. Interest Payment Dates: February 15 and August 15 Record Dates: February 1 and August 1 Dated: August 19, 1998 GREAT LAKES DREDGE & DOCK CORPORATION By:____________________________________ Name: Title: This is one of the Notes referred to in the within-mentioned Indenture: THE BANK OF NEW YORK, as Trustee By:________________________________ Name: Title: - -------------------------------------------------------------------------------- A1-1 [Back of Note] 11 1/4% [Series A] [Series B] Senior Subordinated Notes due 2008 THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR REGULATION S THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY A1-2 PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. Interest. Great Lakes Dredge & Dock Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at 11 1/4% per annum from August 19, 1998 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually in arrears on February 15 and August 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be February 15, 1999. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on the February 1 or August 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, The Bank of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. A1-3 4. Indenture. The Company issued the Notes under an Indenture dated as of August 19, 1998 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are obligations of the Company limited to $115.0 million in aggregate principal amount. 5. Optional Redemption. (a) Except as set forth in clause (b) of this Paragraph 5, the Company shall not have the option to redeem the Notes pursuant to this Paragraph 5 prior to August 15, 2003. Thereafter, the Company shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, in cash at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below: Year Percentage ---- ---------- 2003.............................................. 105.625% 2004.............................................. 103.750% 2005.............................................. 101.875% 2006 and thereafter............................... 100.000% (b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior to August 15, 2001, the Company may (but will not have the obligation to) on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes originally issued at a redemption price equal to 111.250% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net cash proceeds of one or more Public Equity Offerings; provided that at least 65% of the aggregate principal amount of Notes originally issued remain outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 180 days of the date of the closing of such Public Equity Offering. 6. Mandatory Redemption. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 7. Repurchase At Option Of Holder. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) A1-4 of each Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or a Subsidiary consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes (including any Additional Notes) that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes (including any Additional Notes) tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. 8. Notice Of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 11. Amendment, Supplement And Waiver. Subject to certain exceptions, the Indenture , the Subsidiary Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes and Additional Notes, if any, voting A1-5 as a single class, and any existing default or compliance with any provision of the Indenture, the Subsidiary Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes and Additional Notes, if any, voting as a single class. Without the consent of any Holder of a Note, the Indenture , the Subsidiary Guarantees or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's [or Guarantor's] obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, to provide for the Issuance of Additional Notes in accordance with the limitations set forth in the Indenture, or to allow any Subsidiary Guarantor to execute a supplemental indenture to the Indenture and/or a Subsidiary Guarantee with respect to the Notes. 12. Defalts And Remedies. Events of Default include: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes (whether or not permitted by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Notes (whether or not permitted by the subordination provisions of the Indenture); (iii) failure by the Company or any of its Restricted Subsidiaries to comply with Section 4.15 of the Indenture; (iv) failure by the Company or any of its Restricted Subsidiaries for 60 days after notice by the Trustee or by the Holders of at least 25% in principal amount of Notes then outstanding to comply with any of its other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its stated maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated (after giving effect to any applicable grace period), aggregates $10.0 million or more; (vi) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $10.0 million (net of any amount with respect to which a reputable insurance company with assets over $100.0 million has acknowledged liability in writing), which judgments are not paid, discharged or stayed for a period of 60 days after their entry; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Subsidiaries and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided A1-6 in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. Trustee Dealings With Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. No Recourse Against Others. A director, officer, employee, incorporator or stockholder, of the Company or any of the Subsidiary Guarantors, as such, shall not have any liability for any obligations of the Company or such Subsidiary Guarantor under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. Additional Rights Of Holders Of Restricted Global Notes And Restricted Definitive Notes. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of August 19, 1998, among the Company and the parties named on the signature pages thereof or, in the case of Additional Notes, Holders of Restricted Global Notes and Restricted Definitive Notes shall have the rights set forth in one or more registration rights agreements, if any, between the Company and the other parties thereto, relating to rights given by the Company to the purchasers of any Additional Notes (collectively, the "Registration Rights Agreement"). 18. Cusip Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as A1-7 contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 Attention: President A1-8 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:___________________________________ (Insert assignee's legal name) ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint_________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date:_______________ Your Signature:_____________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*:_____________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A1-9 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: [_] Section 4.10 [_] Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $_______________________ Date:______________ Your Signature:_______________________________ (Sign exactly as your name appears on the face of this Note) Tax Identification No.:________________________ Signature Guarantee*:__________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A1-10 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE* The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount Signature of Amount of decrease Amount of increase of this Global Note authorized officer in in following such of Principal Amount Principal Amount decrease Trustee or Note Date of Exchange of this Global Note of this Global Note (or increase) Custodian - ------------------- -------------------- ---------------------- ------------------- ------------------
* This schedule should be included only if the Note is issued in global form. A1-11 [Face of Regulation S Temporary Global Note] - -------------------------------------------------------------------------------- CUSIP/CINS __________ 11 1/4% [Series A] [Series B] Senior Subordinated Notes due 2008 No. ___ $__________ GREAT LAKES DREDGE & DOCK CORPORATION promises to pay to______________________________________________________________ or registered assigns, the principal sum oF____________________________________________________________ Dollars on August 19, 2008. Interest Payment Dates: February 15, and August 15 Record Dates: February 1, and August 1 Dated: August ___, 1998 Great Lakes Dredge & Dock Corporation By: ____________________________________ Name: Title: This is one of the Notes referred to in the within-mentioned Indenture: THE BANK OF NEW YORK, as Trustee By: __________________________________ Authorized Signatory - -------------------------------------------------------------------------------- A2-1 [Back of Regulation S Temporary Global Note] 11 1/4% [Series A] [Series B] Senior Subordinated Notes due 2008 THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR REGULATION S THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH A2-2 TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. Interest. Great Lakes Dredge & Dock Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at 11 1/4% per annum from August 19, 1998 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually on February 15 and August 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be February 15, 1999. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Until this Regulation S Temporary Global Note is exchanged for one or more Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to receive payments of interest hereon; until so exchanged in full, this Regulation S Temporary Global Note shall in all other respects be entitled to the same benefits as other Senior Subordinated Notes under the Indenture. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on the August 1 or February 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to A2-3 principal, premium, interest and Liquidated Damages at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of [immediately available/next day] funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, The Bank of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. Indenture. The Company issued the Notes under an Indenture dated as of August 19, 1998 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are obligations of the Company limited to $115.0 million in aggregate principal amount. 5. Optional Redemption. (a) Except as set forth in clause (b) of this Paragraph 5, the Company shall not have the option to redeem the Notes pursuant to this Paragraph 5 prior to August 15, 2003. Thereafter, the Company shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, in cash at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below:
Year Percentage - ---- ---------- 2003........................................................................... 105.625% 2004........................................................................... 103.750% 2005........................................................................... 101.875% 2006 and thereafter............................................................ 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior to August 15, 2001, the Company may (but will not have the obligation to) on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes originally issued at a redemption price equal to 111.250% of the principal amount thereof, plus accrued and unpaid interest and Liquidated A2-4 Damages, if any, thereon to the redemption date, with the net cash proceeds of one or more Public Equity Offerings; provided that at least 65% of the aggregate principal amount of Notes originally issued remain outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 180 days of the date of the closing of such Public Equity Offering. 6. Mandatory Redemption. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 7. Repurchase at Option of Holder. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or a Subsidiary consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. 8. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and A2-5 the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Global Notes only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Note for one or more Global Notes, the Trustee shall cancel this Regulation S Temporary Global Note. 10. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 11. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes and Additional Notes, if any, and any existing default or compliance with any provision of the Indenture, the Subsidiary Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act to provide for the Issuance of Additional Notes in accordance with the limitations set forth in the Indenture, or to allow any Subsidiary Guarantor to execute a supplemental indenture to the Indenture and/or a Subsidiary Guarantee with respect to the Notes. 12. Defaults and Remedies. Events of Default include: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes (whether or not permitted by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Notes (whether or not permitted by the subordination provisions of the Indenture); (iii) failure by the Company or any of its Restricted Subsidiaries to comply with Section 4.15 of the Indenture; (iv) failure by the Company or any of its Restricted Subsidiaries for 60 days after notice by the Trustee or by the Holders of at least 25% in principal amount of Notes then outstanding to comply with any of its other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on A2-6 such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its stated maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated (after giving effect to any applicable grace period), aggregates $10.0 million or more; (vi) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $10.0 million (net of any amount with respect to which a reputable insurance company with assets over $100.0 million has acknowledged liability in writing), which judgments are not paid, discharged or stayed for a period of 60 days after their entry; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Subsidiaries and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. No Recourse Against Others. A director, officer, employee, incorporator or stockholder, of the Company or any of the Subsidiary Guarantors, as such, shall not have any liability for any obligations of the Company or such Subsidiary Guarantor under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. A2-7 16. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of August 19, 1998, among the Company and the parties named on the signature pages thereof or, in the case of Additional Notes, Holders of Restricted Global Notes and Restricted Definitive Notes shall have the rights set forth in one or more registration rights agreements, if any, between the Company and the other parties thereto, relating to rights given by the Company to the purchasers of any Additional Notes (collectively, the "Registration Rights Agreement"). 18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 Attention: President A2-8 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:___________________________________ (Insert assignee's legal name) ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint_________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date:_______________ Your Signature:___________________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*:_____________________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A2-9 Option of Holder to Elect Purchase If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: [_] Section 4.10 [_] Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $______________________ Date:____________________ Your Signature:______________________________ (Sign exactly as your name appears on the face of this Note) Tax Identification No.:______________________ Signature Guarantee*:______________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A2-10 SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Global Note, or of other Restricted Global Notes for an interest in this Regulation S Temporary Global Note, have been made:
Principal Amount Signature of Amount of decrease in Amount of increase in of this Global Note authorized officer of Principal Amount of Principal Amount following such decrease Trustee or Note Date of Exchange this Global Note of this Global Note (or increase) Custodian - ---------------- --------------------- -------------------- ---------------------- -------------------
A2-11 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Re: 11 1/4% Senior Subordinated Notes due 2008 ------------------------------------------ Reference is hereby made to the Indenture, dated as of August 19, 1998 (the "Indenture"), between Great Lakes Dredge & Dock Corporation, as issuer (the "Company"), and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ___________________, (the "Transferor") owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the "Transfer"), to ___________________________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN ------------------------------------------------------------------ THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer - --------------------------------------------------------------- is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN ------------------------------------------------------------------ THE TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A - ------------------------------------------------------------------------- DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected - ---------------------------------------- pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction B-1 was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act [and/,] (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note , the Temporary Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL ------------------------------------------------------------------- INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION - ------------------------------------------------------------------------------ OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is - ---------------------------------------------------------- being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [_] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) [_] such Transfer is being effected to the Company or a subsidiary thereof; or (c) [_] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or (d) [_] such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject B-2 to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Definitive Notes and in the Indenture and the Securities Act. 4. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN ------------------------------------------------------------------ AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE. - ----------------------------------------------------------------- (a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. _____________________________________________ [Insert Name of Transferor] By:__________________________________________ Name: B-3 Title: Dated:_________________ B-4 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [_] a beneficial interest in the: (i) [_] 144A Global Note (CUSIP ___________), or (ii) [_] Regulation S Global Note (CUSIP ________), or (iii) [_] IAI Global Note (CUSIP __________); or (b) [_] a Restricted Definitive Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [_] a beneficial interest in the: (i) [_] 144A Global Note (CUSIP __________), or (ii) [_] Regulation S Global Note (CUSIP ________), or (iii) [_] IAI Global Note (CUSIP ____________); or (iv) [_] Unrestricted Global Note (CUSIP ); or (b) [_] a Restricted Definitive Note; or (c) [_] an Unrestricted Definitive Note, in accordance with the terms of the Indenture. B-5 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Re: 11 1/4% Senior Subordinated Notes due 2008 ------------------------------------------ (CUSIP ____________) Reference is hereby made to the Indenture, dated as of August 19, 1998 (the "Indenture"), between Great Lakes Dredge & Dock Corporation, as issuer (the "Company"), and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. __________________________, (the "Owner") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $____________ in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A -------------------------------------------------------------------- RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS - -------------------------------------------------------------------------------- IN AN UNRESTRICTED GLOBAL NOTE - ------------------------------ (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the C-1 Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN ------------------------------------------------------------------ RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS - ------------------------------------------------------------------------------- IN RESTRICTED GLOBAL NOTES - -------------------------- (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (b) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [_] 144A Global Note, [_] Regulation S Global Note, [_] IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer C-2 enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. C-3 EXHIBIT C This certificate and the statements contained herein are made for your benefit and the benefit of the Company. _____________________________________________ [Insert Name of Transferor] By:__________________________________________ Name: Title: Dated:____________________ C-4 EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Re: 11 1/4% Senior Subordinated Notes due 2008 ------------------------------------------ Reference is hereby made to the Indenture, dated as of August 19, 1998 (the "Indenture"), between Great Lakes Dredge & Dock Corporation, as issuer (the "Company"), and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of $____________ aggregate principal amount of: (a) [_] a beneficial interest in a Global Note, or (b) [_] a Definitive Note, we confirm that: 1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of D-1 EXHIBIT D Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. ________________________________________ [Insert Name of Accredited Investor] By:_____________________________________ Name: Title: Dated:____________________ D-2 EXHIBIT E [FORM OF NOTATION OF GUARANTEE] For value received, each Subsidiary Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture dated as of August 19, 1998 (the "Indenture") among Great Lakes Dredge & Dock Corporation, the Subsidiary Guarantors listed on Schedule I thereto and The Bank of New York, as trustee (the "Trustee"), (a) the due and punctual payment of the principal of, premium, if any, and interest on the Notes (as defined in the Indenture), whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal and premium, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Subsidiary Guarantors to the Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly set forth in Article 11 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Subsidiary Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Subsidiary Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Note in accordance with the provisions of the Indenture. [Name of Subsidiary Guarantor(s)] By:____________________________________________ Name: Title: E-1 EXHIBIT F [FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS] SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of ________________, among __________________ (the "Guaranteeing Subsidiary"), a subsidiary of Great Lakes Dredge & Dock Corporation (or its permitted successor), a Delaware corporation (the "Company"), the Company, the other Subsidiary Guarantors (as defined in the Indenture referred to herein) and The Bank of New York, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of August 19, 1998 providing for the issuance of an aggregate principal amount of up to $165,000,000 of 11 1/4% Senior Subordinated Notes due 2008 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Subsidiary Guarantee"); and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as follows: (a) Along with all Subsidiary Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, the Notes or the obligations of the Company hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in F-1 accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever. (d) This Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture, and the Guaranteeing Subsidiary accepts all obligations of a Subsidiary Guarantor under the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors, or any Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors, any amount paid by either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantors for the purpose of this Subsidiary Guarantee. (h) The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 11.02 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable F-2 Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under Article 11 of the Indenture, this new Subsidiary Guarantee shall be limited to the maximum amount permissible such that the obligations of such Subsidiary Guarantor under this Subsidiary Guarantee will not constitute a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the Subsidiary Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. 4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. (a) The Guaranteeing Subsidiary may not consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person) another corporation, Person or entity whether or not affiliated with such Subsidiary Guarantor unless: (i) subject to Sections 11.05 and 11.06 of the Indenture, the Person formed by or surviving any such consolidation or merger (if other than a Subsidiary Guarantor or the Company) unconditionally assumes all the obligations of such Subsidiary Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Subsidiary Guarantee on the terms set forth herein or therein; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Subsidiary Guarantor, such successor corporation shall succeed to and be substituted for the Subsidiary Guarantor with the same effect as if it had been named herein as a Subsidiary Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 and Section 11.05 of Article 11 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor, or shall prevent any sale or conveyance of the property of a Subsidiary Guarantor as an entirety or substantially as an entirety to the Company or another Subsidiary Guarantor. F-3 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all to the capital stock of any Subsidiary Guarantor, in each case to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, then such Subsidiary Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Subsidiary Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor) will be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Indenture, including without limitation Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any Subsidiary Guarantor from its obligations under its Subsidiary Guarantee. (b) Any Subsidiary Guarantor not released from its obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Subsidiary Guarantor under the Indenture as provided in Article 11 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. F-4 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. F-5 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: _______________, ____ [GUARANTEEING SUBSIDIARY] By: _______________________________ Name: Title: GREAT LAKES DREDGE & DOCK CORPORATION By: _______________________________ Name: Title: [EXISTING SUBSIDIARY GUARANTORS] By: _______________________________ Name: Title: THE BANK OF NEW YORK, as Trustee By: _______________________________ Name: Title: F-6 SCHEDULE I SCHEDULE OF SUBSIDIARY GUARANTORS The following schedule lists each Subsidiary Guarantor under the Indenture as of the date of the Indenture: Great Lakes International, Inc. Great Lakes Dredge & Dock Company Dawson Dredging Company Gates Construction Corp. Fifty-Three Dredging Corporation EX-4.02 6 REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.02 ================================================================================ REGISTRATION RIGHTS AGREEMENT DATED AS OF AUGUST 19, 1998 BY AND AMONG GREAT LAKES DREDGE & DOCK CORPORATION THE SUBSIDIARY GUARANTORS SET FORTH HEREIN AND DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION ================================================================================ This Registration Rights Agreement (this "AGREEMENT") is made and entered --------- into as of August 19, 1998, by and among Great Lakes Dredge and Dock Corporation, a Delaware corporation (the "COMPANY"), the Subsidiary Guarantors ------- set forth on the signature pages hereto (each, a "SUBSIDIARY GUARANTOR" and, -------------------- collectively, the "SUBSIDIARY GUARANTORS"), and Donaldson, Lufkin & Jenrette --------------------- Securities Corporation (the "INITIAL PURCHASER"), who has agreed to purchase the ----------------- Company's 11 1/4% Senior Subordinated Notes due 2008 (the "SENIOR SUBORDINATED ------------------- NOTES") pursuant to the Purchase Agreement (as defined below). - ----- This Agreement is made pursuant to the Purchase Agreement, dated August 14, 1998, (the "PURCHASE AGREEMENT"), by and among the Company, the Subsidiary ------------------ Guarantors and the Initial Purchaser. In order to induce the Initial Purchaser to purchase the Senior Subordinated Notes, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchaser set forth in Section 2 of the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Indenture, dated August 19, 1998, among the Company, the Subsidiary Guarantors and The Bank of New York, as Trustee, relating to the Senior Subordinated Notes and the New Senior Subordinated Notes (the "INDENTURE"). --------- The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: ACT: The Securities Act of 1933, as amended. --- AFFILIATE: As defined in Rule 144 of the Act. --------- BROKER-DEALER: Any broker or dealer registered under the Exchange Act. ------------- CERTIFICATED SECURITIES: Definitive Notes, as defined in the Indenture. ----------------------- CLOSING DATE: The date hereof. ------------ COMMISSION: The Securities and Exchange Commission. ---------- CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes of ---------- this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the New Senior Subordinated Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Company to the Registrar under the Indenture of New Senior Subordinated Notes in the same aggregate principal amount as the aggregate principal amount of Senior Subordinated Notes tendered by Holders thereof pursuant to the Exchange Offer. CONSUMMATION DEADLINE: As defined in Section 3(b) hereof. --------------------- EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof. ---------------------- EXCHANGE ACT: The Securities Exchange Act of 1934, as amended. ------------ EXCHANGE OFFER: The exchange and issuance by the Company of a principal -------------- amount of New Senior Subordinated Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Senior Subordinated Notes that are tendered by such Holders in connection with such exchange and issuance. EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating ------------------------------------- to the Exchange Offer, including the related Prospectus. EXEMPT RESALES: The transactions in which the Initial Purchaser proposes to -------------- sell the Senior Subordinated Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act and pursuant to Regulation S under the Act. FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof. --------------- HOLDERS: As defined in Section 2 hereof. ------- NEW SENIOR SUBORDINATED NOTES: The Company's 11 1/4% Senior Subordinated ----------------------------- Notes due 2008 to be issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof. PROSPECTUS: The prospectus included in a Registration Statement at the time ---------- such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post- effective amendments, and all material incorporated by reference into such Prospectus. RECOMMENCEMENT DATE: As defined in Section 6(d) hereof. ------------------- REGISTRATION DEFAULT: As defined in Section 5 hereof. -------------------- REGISTRATION STATEMENT: Any registration statement of the Company and the ---------------------- Subsidiary Guarantors relating to (a) an offering of New Senior Subordinated Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. 2 REGULATION S: Regulation S promulgated under the Act. ------------ RULE 144: Rule 144 promulgated under the Act. -------- SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof. ---------------------------- SUSPENSION NOTICE: As defined in Section 6(d) hereof. ----------------- TIA: The Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as --- in effect on the date of the Indenture. TRANSFER RESTRICTED SECURITIES: Each (A) Senior Subordinated Note, until ------------------------------ the earliest to occur of (i) the date on which such Senior Subordinated Note is exchanged in the Exchange Offer for a New Senior Subordinated Note which is entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (ii) the date on which such Senior Subordinated Note has been disposed of in accordance with a Shelf Registration Statement (and the purchasers thereof have been issued New Senior Subordinated Notes), or (iii) the date on which such Senior Subordinated Note is distributed to the public pursuant to Rule 144 under the Act and each (B) New Senior Subordinated Note held by a Broker Dealer until the date on which such New Senior Subordinated Note is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including the delivery of the Prospectus contained therein). SECTION 2. HOLDERS A Person is deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such Person owns Transfer Restricted Securities. ------ SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a)(i) below have been complied with), the Company and the Subsidiary Guarantors shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 60 days after the Closing Date (such 60th day being the "FILING DEADLINE"), (ii) use its best --------------- efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 180 days after the Closing Date (such 180th day being the "EFFECTIVENESS DEADLINE"), (iii) in ---------------------- connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the New Senior Subordinated Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, 3 commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the New Senior Subordinated Notes to be offered in exchange for the Senior Subordinated Notes that are Transfer Restricted Securities and (ii) resales of New Senior Subordinated Notes by Broker-Dealers that tendered into the Exchange Offer Senior Subordinated Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Senior Subordinated Notes acquired directly from the Company or any of its Affiliates) as contemplated by Section 3(c) below. (b) The Company and the Subsidiary Guarantors shall use their respective best efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Company and the Subsidiary Guarantors shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the New Senior Subordinated Notes shall be included in the Exchange Offer Registration Statement. The Company and the Subsidiary Guarantors shall use their respective best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 business days thereafter (such 30/th/ day being the "CONSUMMATION DEADLINE"). --------------------- (c) The Company shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Senior Subordinated Notes acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of any New Senior Subordinated Notes received by such Broker-Dealer in the Exchange Offer, the Company and the Subsidiary Guarantors shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the prospectus contained in the Exchange Offer Registration Statement is available for sales of New Senior Subordinated Notes by Broker-Dealers, the Company and the Subsidiary Guarantors agree to use their respective reasonable best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 6(a) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, 4 rules and regulations of the Commission as announced from time to time, for a period of 180 days from the Consummation Deadline or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Company and the Subsidiary Guarantors shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than two business days after such request, at any time during such period. SECTION 4. SHELF REGISTRATION (a) Shelf Registration. If (i) the Exchange Offer is not permitted by ------------------ applicable law (after the Company and the Subsidiary Guarantors have complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities shall notify the Company within 20 Business Days following the Consummation Deadline that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the New Senior Subordinated Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) such Holder is a Broker-Dealer and holds Senior Subordinated Notes acquired directly from the Company or any of its Affiliates, then the Company and the Subsidiary Guarantors shall: (x) cause to be filed, on or prior to 60 days after the earlier of (i) the date on which the Company determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Company receives the notice specified in clause (a)(ii) above (such earlier date, the "FILING DEADLINE"), a shelf registration statement pursuant to --------------- Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement) (in either case, the "SHELF REGISTRATION STATEMENT"), ---------------------------- relating to all Transfer Restricted Securities, and (y) use their respective best efforts to cause such Shelf Registration Statement to become effective on or prior to 180 days after the Filing Deadline for the Shelf Registration Statement (such 180th day the "EFFECTIVENESS ------------- DEADLINE"). - -------- If, after the Company has filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Company is required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e., clause (a)(i) above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (x) above; provided that, in such event, the Company shall remain obligated to meet the Effectiveness Deadline set forth in clause (y). To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the other securities required to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and the Subsidiary Guarantors shall use their respective best efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, 5 amended and current as required by and subject to the provisions of Sections 6(b) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years (as extended pursuant to Section 6(c)(i)) following the Closing Date, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto. Notwithstanding the foregoing, following the date on which such Shelf Registration Statement first becomes effective under the Act, the Company may suspend the effectiveness of the Shelf Registration Statement by prior written notice to the Holders for a period not to exceed 30 days in any twelve month period if (i) an event occurs and is continuing as a result of which the Shelf Registration Statement would, in the reasonable good faith judgment of the Company's Board of Directors, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading and (ii)(A) the Company's Board of Directors reasonably determines in good faith that the disclosure of such event at such time would have a material adverse effect on the business, operations or prospects of the Company and its subsidiaries, taken as a whole, or (B) the disclosure otherwise relates to a previously undisclosed pending material business transaction, the disclosure of which would, in the reasonable good faith judgment of the Company's Board of Directors, impede the Company's ability to consummate such transaction. (b) Provision by Holders of Certain Information in Connection with the Shelf ------------------------------------------------------------------------ Registration Statement. No Holder of Transfer Restricted Securities may include - ---------------------- any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 15 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such information. Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. SECTION 5. LIQUIDATED DAMAGES If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (ii) any such Registration Statement has not been declared effective by the Commission on or prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not been Consummated on or prior to the Consummation Deadline or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within 5 days by a post-effective amendment to such Registration Statement that cures such failure and that is itself declared effective within 5 days of filing such post-effective amendment to such Registration Statement (each such event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the Company and the Subsidiary -------------------- Guarantors hereby jointly and severally agree to 6 pay to each Holder of Transfer Restricted Securities affected thereby liquidated damages in an amount equal to $.05 per week per $1,000 in principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.50 per week per $1,000 in principal amount of Transfer Restricted Securities; provided that the Company and the Subsidiary Guarantors shall in no event be required to pay liquidated damages for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. All accrued liquidated damages shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Indenture, on each Interest Payment Date, as more fully set forth in the Indenture and the Notes. Notwithstanding the fact that any securities for which liquidated damages are due cease to be Transfer Restricted Securities, all obligations of the Company and the Subsidiary Guarantors to pay liquidated damages with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. SECTION 6. REGISTRATION PROCEDURES (a) Exchange Offer Registration Statement. In connection with the Exchange ------------------------------------- Offer, the Company and the Subsidiary Guarantors shall (x) comply with all applicable provisions of Section 6(c) below, (y) use their respective best efforts to effect such exchange and to permit the resale of New Senior Subordinated Notes by Broker-Dealers that tendered in the Exchange Offer Senior Subordinated Notes that such Broker-Dealer acquired for its own account as a result of its market making activities or other trading activities (other than Senior Subordinated Notes acquired directly from the Company or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof, and (z) comply with all of the following provisions: (i) If, following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Company and the Subsidiary 7 Guarantors hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Company and the Subsidiary Guarantors to Consummate an Exchange Offer for such Transfer Restricted Securities. The Company and the Subsidiary Guarantors hereby agree to pursue the issuance of such a decision to the Commission staff level, but shall not be required to take commercially unreasonable actions to effect a change in Commission policy. In connection with the foregoing, the Company and the Subsidiary Guarantors hereby agree to take all such other reasonable actions as may be requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff. (ii) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company and the Subsidiary Guarantors (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the New Senior Subordinated Notes to be issued in the Exchange Offer and (C) it is acquiring the New Senior Subordinated Notes in its ordinary course of business. As a condition to its participation in the Exchange Offer each Holder using the Exchange Offer to participate in a distribution of the New Senior Subordinated Notes shall acknowledge and agree that, if the resales are of New Senior Subordinated Notes obtained by such Holder in exchange for Senior Subordinated Notes acquired directly from the Company or an Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. ---------------------------- (available June 5, 1991) and Exxon Capital Holdings Corporation (available ---------------------------------- May 13, 1988), as interpreted in the Commission's letter to Shearman & ---------- Sterling dated July 2, 1993, and similar no-action letters (including, if -------- applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company and the Subsidiary Guarantors shall provide a supplemental letter to the Commission (A) stating that the Company and the Subsidiary Guarantors are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation ---------------------------------- (available May 13, 1988), Morgan Stanley and Co., Inc. (available ---------------------------- 8 June 5, 1991) as interpreted in the Commission's letter to Shearman & ---------- Sterling dated July 2, 1993, and, if applicable, any no-action letter -------- obtained pursuant to clause (i) above, (B) including a representation that neither the Company nor any Subsidiary Guarantor has entered into any arrangement or understanding with any Person to distribute the New Senior Subordinated Notes to be received in the Exchange Offer and that, to the best of the Company's and each Subsidiary Guarantor's information and belief, each Holder participating in the Exchange Offer is acquiring the New Senior Subordinated Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the New Senior Subordinated Notes received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above, if applicable. (b) Shelf Registration Statement. In connection with the Shelf ---------------------------- Registration Statement, the Company and the Subsidiary Guarantors shall (i) comply with all the provisions of Section 6(c) below and use their respective best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company and the Subsidiary Guarantors will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof, and (ii) issue, upon the request of any Holder or purchaser of Senior Subordinated Notes covered by any Shelf Registration Statement contemplated by this Agreement, New Senior Subordinated Notes having an aggregate principal amount equal to the aggregate principal amount of Senior Subordinated Notes sold pursuant to the Shelf Registration Statement and surrendered to the Company for cancellation; the Company shall register New Senior Subordinated Notes on the Shelf Registration Statement for this purpose and issue the New Senior Subordinated Notes to the purchaser(s) of securities subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate. (c) General Provisions. In connection with any Registration Statement and ------------------ any related Prospectus required by this Agreement, the Company and the Subsidiary Guarantors shall: (i) use their respective best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to 9 make the statements therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company and the Subsidiary Guarantors shall file promptly an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use their respective best efforts to cause such amendment to be declared effective as soon as practicable. (ii) prepare and file with the Commission such amendments and post- effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise each Holder promptly and, if requested by such Holder, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company and the Subsidiary Guarantors shall use their respective best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; 10 (iv) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (v) furnish to each selling Holder in connection with such sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders in connection with such sale, if any, for a period of at least five business days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which such selling Holders shall reasonably object within five business days after the receipt thereof. A selling Holder shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; (vi) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to each selling Holder in connection with such sale, if any, make the Company's and the Subsidiary Guarantors' representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders may reasonably request; (vii) make available, at reasonable times, for inspection by each Holder and any attorney or accountant retained by such Holders, all financial and other records, pertinent corporate documents of the Company and the Subsidiary Guarantors and cause the Company's and the Subsidiary Guarantors' officers, directors and employees to supply all information reasonably requested by any such Holder, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (viii) if requested by any Holders in connection with such exchange or sale, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such Holders may reasonably 11 request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (ix) furnish to each Holder in connection with such exchange or sale, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each Holder without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company and the Subsidiary Guarantors hereby consent to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (xi) upon the request of any Holder, enter into such agreements (including underwriting agreements) and make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder in connection with any sale or resale pursuant to any applicable Registration Statement. In such connection, the Company and the Subsidiary Guarantors shall: (A) upon request of any Holder, furnish (or in the case of paragraphs (2) and (3), use its best efforts to cause to be furnished) to each Holder, upon Consummation of the Exchange Offer or upon the effectiveness of the Shelf Registration Statement, as the case may be: (1) a certificate, dated such date, signed on behalf of the Company and each Subsidiary Guarantor by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Company and such Subsidiary Guarantor, confirming, as of the date thereof, the matters set forth in Sections 6(y), 9(a) and 9(b) of the Purchase Agreement and such other similar matters as such Holders may reasonably request; (2) opinions, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Company and the Subsidiary Guarantors covering matters similar to those set forth in paragraphs (e) and (f) of Section 9 of the Purchase Agreement and such other matter as such Holder may reasonably 12 request, and in any event including a statement (which may be provided in a letter separate from the opinion) to the effect that such counsel has participated in conferences with officers and other representatives of the Company and the Subsidiary Guarantors, representatives of the independent public accountants for the Company and the Subsidiary Guarantors and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to the extent such counsel deems appropriate upon the statements of officers and other representatives of the Company and the Subsidiary Guarantors) and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation of the Exchange Offer, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated the date of Consummation of the Exchange Offer, or as of the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 9(h) of the Purchase Agreement; and (B) deliver such other documents and certificates as may be reasonably requested by the selling Holders to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in the any agreement entered into by the Company and the Subsidiary Guarantors pursuant to this clause (xi); 13 (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that neither the Company nor any Subsidiary Guarantor shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two business days prior to such sale of Transfer Restricted Securities; (xiv) use their respective best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xv) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; (xvi) otherwise use their respective best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (xvii) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents 14 required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; and (xviii) provide promptly to each Holder, upon request, each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act. (d) Restrictions on Holders. Each Holder agrees by acquisition of a ----------------------- Transfer Restricted Security that, upon receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a "SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of ----------------- Transfer Restricted Securities pursuant to the applicable Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT -------------- DATE"). Each Holder receiving a Suspension Notice hereby agrees that it will - ---- either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession which have been replaced by the Company with more recently dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Recommencement Date. SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Company's and the Subsidiary Guarantors' performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the New Senior Subordinated Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company, the Subsidiary Guarantors and, subject to Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the New Senior Subordinated Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Company and the Subsidiary Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance). 15 The Company will, in any event, bear its and the Subsidiary Guarantors' internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or the Subsidiary Guarantors. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company and the Subsidiary Guarantors will reimburse the Initial Purchaser and the Holders of Transfer Restricted Securities who are tendering Senior Subordinated Notes into in the Exchange Offer and/or selling or reselling Senior Subordinated Notes or New Senior Subordinated Notes pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Latham & Watkins, unless another firm shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. SECTION 8. INDEMNIFICATION (a) The Company and the Subsidiary Guarantors agree, jointly and severally, to indemnify and hold harmless each Holder, its directors, officers and each Person, if any, who controls such Holder (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from and against any and all losses, claims, damages, liabilities, judgments, (including without limitation, any reasonable legal or other reasonable expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto) provided by the Company to any Holder or any prospective purchaser of New Senior Subordinated Notes or registered Senior Subordinated Notes, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by an untrue statement or omission or alleged untrue statement or omission that is based upon information relating to any of the Holders furnished in writing to the Company by any of the Holders; provided, however, that the foregoing indemnity agreement with respect to any Registration Statement, preliminary prospectus or Prospectus shall not inure to the benefit of any Holder who failed to deliver a final Prospectus (as then amended or supplemented, provided by the Company to the several Holders in the requisite quantity and on a timely basis to permit proper delivery on or prior to written confirmation of such sale) to the person asserting any losses, claims, damages and liabilities and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such material misstatement or omission or alleged material misstatement or omission was cured in the final 16 Prospectus and it shall have been determined that such person would not have incurred such losses, claims, damages and liabilities and judgments had the final Prospectus been delivered. (b) Each Holder of Transfer Restricted agrees, severally and not jointly, to indemnify and hold harmless the Company and the Subsidiary Guarantors, and their respective directors and officers, and each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company, or the Subsidiary Guarantors to the same extent as the foregoing indemnity from the Company and the Subsidiary Guarantors set forth in section (a) above, but only with reference to information relating to such Holder furnished in writing to the Company by such Holder expressly for use in any Registration Statement. In no event shall any Holder, its directors, officers or any Person who controls such Holder be liable or responsible for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the "INDEMNIFIED ----------- PARTY"), the indemnified party shall promptly notify the person against whom - ----- such indemnity may be sought (the "INDEMNIFYING PERSON") in writing and the ------------------- indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required to assume the defense of such action pursuant to this Section 8(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Holder). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a 17 majority of the Holders, in the case of the parties indemnified pursuant to Section 8(a), and by the Company and Subsidiary Guarantors, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its prior written consent or (ii) effected without its prior written consent if the settlement is entered into more than thirty business days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request for the fees and expenses of counsel (unless the reasonableness of such fees and expenses of counsel is being contested in good faith). No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (d) To the extent that the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Subsidiary Guarantors, on the one hand, and the Holders, on the other hand, from their sale of Transfer Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Company and the Subsidiary Guarantors, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Company and the Subsidiary Guarantors, on the one hand, and of the Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or such Subsidiary Guarantor, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Subsidiary Guarantors and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result 18 of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter, including any action that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 8, no Holder, its directors, its officers or any Person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 8(c) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint. SECTION 9. RULE 144A AND RULE 144 The Company and each Subsidiary Guarantor agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company or such Subsidiary Guarantor (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. SECTION 10. MISCELLANEOUS (a) Remedies. The Company and the Subsidiary Guarantors acknowledge and -------- agree that any failure by the Company and/or the Subsidiary Guarantors to comply with their respective obligations under Sections 3 and 4 hereof may result in material irreparable injury to the Initial Purchaser or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchaser or any Holder may obtain such relief as may be required to specifically enforce the Company's and the Subsidiary Guarantors' obligations under Sections 3 and 4 hereof. The Company and the Subsidiary Guarantors further agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. Neither the Company nor any Subsidiary -------------------------- Guarantor will, on or after the date of this Agreement, enter into any agreement with respect to its securities 19 that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as disclosed in the Offering Memorandum of the Company dated August 14, 1998 with respect to the Senior Subordinated Notes, neither the Company nor any Subsidiary Guarantor has previously entered into any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's and the Subsidiary Guarantors' securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not be ---------------------- amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 10(c)(i), the Company has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (d) Third Party Beneficiary. The Holders shall be third party beneficiaries ----------------------- to the agreements made hereunder between the Company and the Subsidiary Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. (e) Notices. All notices and other communications provided for or permitted ------- hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (ii) if to the Company or the Subsidiary Guarantors: Great Lakes Dredge & Dock Company 2122 York Road Oak Brook, Illinois 60532 Telecopier No.: (708) 574-2981 Attention: Chief Financial Officer 20 With a copy to: Dechert Price & Rhoades 4000 Bell Atlantic Tower 171 Arch Street Philadelphia, Pennsylvania 19103-2793 Telecopier No.: (215) 994-2222 Attention: G. Daniel O'Donnell, Esq. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of ---------------------- and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor acquired Transfer Restricted Securities directly from such Holder, and that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. (g) Counterparts. This Agreement may be executed in any number of ------------ counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of -------- reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ------------- ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. 21 (j) Severability. In the event that any one or more of the provisions ------------ contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement is intended by the parties as a ---------------- final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 22 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. GREAT LAKES DREDGE & DOCK CORPORATION By: /s/ Douglas B. Mackie --------------------- Name: Title: GREAT LAKES INTERNATIONAL, INC. By: /s/ Douglas B. Mackie --------------------- Name: Title: GREAT LAKES DREDGE & DOCK COMPANY By: /s/ Douglas B. Mackie --------------------- Name: Title: DAWSON DREDGING COMPANY By: /s/ Douglas B. Mackie --------------------- Name: Title: FIFTY-THREE DREDGING CORPORATION By: /s/ Douglas B. Mackie --------------------- Name: Title: GATES CONSTRUCTION CORP. By: /s/ Douglas B. Mackie --------------------- Name: Title: DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By:/s/ William J.R. Wilson ----------------------- Name: William J.R. Wilson Title: Vice President EX-10.01 7 CREDIT AGREEMENT EXHIBIT 10.01 ================================================================================ ================================================================================ CREDIT AGREEMENT dated as of August 19, 1998 among GREAT LAKES DREDGE & DOCK CORPORATION as the Borrower, --------------- THE OTHER LOAN PARTIES HERETO, as Loan Parties, --------------- THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO, as the Lenders, -------------- BANK OF MONTREAL, CHICAGO BRANCH as the Documentation Agent, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as the Issuing Lender and the Administrative Agent -------------------------------------------------- BANCAMERICA ROBERTSON STEPHENS, as Lead Arranger ---------------- ================================================================================ ================================================================================ Exhibits -------- Exhibit A - Form of Assignment and Acceptance Exhibit B - Form of Notice of Borrowing Exhibit C - Form of Continuation/Conversion Notice Exhibit D - Form of Letter of Credit Request Exhibit E - Opinions of Counsel for the Borrower Exhibit F - Form of Compliance Certificate Schedules --------- Schedule I - Definitions Schedule II - List of Percentages and Applicable Lending Offices Schedule III - Existing L/C's Schedule IV - List of Closing Documents Schedule 5.1(g) - Existing Liens Schedule 5.1(i) - Litigation Schedule 5.1(k) - ERISA Plans Schedule 5.1(l) - Environmental Matters Schedule 5.1(r)(i) - Subsidiaries Schedule5.1(r)(ii) - Ownership of Borrower's Equity Schedule 5.1(t) - Insurance Policies Schedule 6.2(b)(i) - Existing Investments Schedule 6.2(b)(ii) - Certain Venturers or Partners Schedule 6.2(e) - Existing Restrictive Agreements Schedule 6.2(f) - Existing Guaranties Schedule 6.2(i) - Existing Debt CREDIT AGREEMENT ---------------- THIS CREDIT AGREEMENT (including all Schedules and Exhibits hereto, --------- -------- this "Agreement") dated as of August19, 1998, among GREAT LAKES DREDGE & DOCK --------- CORPORATION, a Delaware corporation (the "Borrower"), the OTHER LOAN PARTIES -------- FROM TIME TO TIME PARTY HERETO, the FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO (the "Lenders"), BANK OF MONTREAL, CHICAGO BRANCH, as the ------- Documentation Agent, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("Bank of America"), as the issuer of Letters of Credit (in such capacity, the --------------- "Issuing Lender") and as representative for the Lenders (in such representative - --------------- capacity, together with any successor representative appointed pursuant to Section 8.9, the "Administrative Agent"). - ----------- -------------------- ARTICLE I DEFINITIONS AND INTERPRETATION ------------------------------ SECTION 1.1. Defined Terms. Capitalized terms (whether or not ------------- underscored) used in this Agreement, including its preamble, shall (unless a clear contrary intention appears) have the respective meanings assigned thereto in Schedule I. ---------- SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the -------------------- context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in the Schedules and each Notice of Borrowing, Continuation/Conversion Notice, Compliance Certificate, Assignment and Acceptance, notice and other communication delivered from time to time in connection with this Agreement or any other Loan Document. SECTION 1.3. Interpretation. In this Agreement and each other Loan -------------- Document, unless a clear contrary intention appears: (a) the singular number includes the plural number and vice versa; ---- ----- (b) reference to any Person includes such Person's successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually; (c) reference to any gender includes each other gender; (d) reference to any agreement (including this Agreement and the Schedules and Exhibits hereto), document or instrument means such --------- -------- agreement, document or instrument as amended, restated, supplemented or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof and reference to any promissory note includes any promissory note which is an extension or renewal thereof or a substitute or replacement therefor; (e) reference to any Applicable Law means such Applicable Law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder; (f) unless the context indicates otherwise, reference to the preamble or any Article, Section, Schedule or Exhibit means the preamble -------- ------- ------- -------- ------- -------- hereto or such Article or Section hereof or Schedule or Exhibit hereto; ------- ------- -------- ------- (g) "hereunder," "hereof," "hereto" and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Article, Section or other provision hereof; ------- ------- (h) "including" (and with correlative meaning "include") means including without limiting the generality of any description preceding such term; and (i) relative to the determination of any period of time, "from" means "from and including", "to" means "to but excluding", and "through" means "to and including." SECTION 1.4. Accounting Terms. All accounting terms not specifically ---------------- defined herein shall be construed in accordance with GAAP. Except as otherwise provided herein, if any changes in accounting principles from those used in the preparation of the most recent financial statements referred to in Section ------- 5.1(f) are hereafter required or permitted by the rules, regulations, - ------ pronouncements and opinions of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) and are adopted by the Borrower with the agreement of its independent certified public accountants and such changes result in a change in the method of calculation of any of the financial covenants, standards or terms found in Section 6.3 or in the related definitions ----------- of terms used therein, the parties hereto agree to enter into negotiations in order to amend such provisions so as to reflect equitably such changes with the desired result that the criteria for evaluating the Borrower's financial condition shall be the same after such changes as if such changes had not been made, provided that no change in GAAP that would affect the method of -------- calculation of any of the financial covenants, standards or terms shall be given effect in such calculations until such provisions are amended, in a manner satisfactory to the Majority Lenders, so as to reflect such change in accounting principles. ARTICLE II AMOUNT AND TERM OF COMMITMENTS ------------------------------ SECTION 2.1. Commitments. The Lenders shall make Loans to or for ----------- the benefit of the Borrowers in accordance with their respective Commitments as provided below in this Section 2.1. ----------- SECTION 2.1.1. Revolving Commitment. On the terms and subject to the -------------------- conditions of this Agreement (including Article IV), each Lender severally and ---------- for itself alone -2- agrees to make Revolving Loans to, and to issue or participate in the issuance of Letters of Credit for the account of, the Borrower pursuant to its Revolving Commitment, as described in this Article II and in Article III, respectively. ---------- ----------- From time to time on any Business Day occurring prior to the Revolving Commitment Termination Date, each Lender, severally and for itself alone, agrees to make revolving loans in Dollars (relative to such Lender, its "Revolving --------- Loans") to the Borrower equal to such Lender's Percentage of the aggregate - ----- amount of the applicable Borrowing requested by the Borrower to be made on such day pursuant to this section. The commitment of each Lender described in this Section 2.1.1 is herein referred to as its "Revolving Commitment" and shall be - ------------- -------------------- in the amount set forth below such Lender's name in Schedule II hereof as such ----------- Lender's "Revolving Commitment"; provided that (a) the aggregate principal -------- amount of all Revolving Loans which any Lender shall be committed to have outstanding hereunder shall not at any time exceed the product of (i) such Lender's Percentage multiplied by (ii) the Availability and (b) the aggregate principal amount of all Revolving Loans which the Lenders shall be committed to have outstanding hereunder shall not at any time exceed the Availability. On the terms and subject to the conditions hereof, the Borrower may from time to time borrow, prepay and reborrow Revolving Loans. SECTION 2.1.2. Term Commitment. On the terms and subject to the --------------- conditions of this Agreement (including Article IV), each Lender severally and ---------- for itself alone agrees to make a single Term Loan on the Closing Date to the Borrower pursuant to, and in an aggregate principal amount equal to, its Term Commitment. The commitment of each Lender described in this Section 2.1.2 is ------------- herein referred to as its "Term Commitment" and shall be in the amount set forth --------------- below such Lender's name in Schedule II hereof as such Lender's "Term ----------- Commitment." SECTION 2.2. Reduction of Revolving Commitment Amount. The Revolving ---------------------------------------- Commitment Amount is subject to reduction from time to time pursuant to this Section 2.2. - ----------- SECTION 2.2.1. Optional. The Borrower may, from time to time on any -------- Business Day, voluntarily reduce the amount of the Revolving Commitment Amount by paying to the Administrative Agent for the account of the Lenders such amount as may be necessary, if any, to reduce the outstanding principal balance of the Revolving Loans plus the then Letter of Credit Obligations to such reduced ---- Revolving Commitment Amount; provided that all such reductions shall require at -------- least two (2) Business Day's prior written notice to the Administrative Agent and be permanent and that any partial reduction of the Revolving Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral multiple of $500,000 in excess thereof. SECTION 2.2.2. Mandatory. As of the date any prepayment is made --------- pursuant to Sections 2.8.1(c) or 2.8.1(d) and to the extent, if any, applied to ----------------- -------- the repayment of outstanding Revolving Loans (or cash collateralization of Letter of Credit Obligations) pursuant to Section 2.8.2, the Revolving ------------- Commitment Amount shall be automatically and temporarily reduced by an amount equal to the portion, if any, of prepayment so applied, and, thereafter, shall be automatically and permanently increased by the amount of such temporary reduction if and when, within twelve (12) months following such temporary reduction, the Borrower provides, or -3- causes one or more of its Subsidiaries to provide, Collateral (or substitute Collateral) of equal or greater value to that of the property subject to the disposition or casualty giving rise to such temporary reduction, such Collateral (or substitute Collateral) is otherwise reasonably acceptable to the Administrative Agent and subject to documentation reasonably satisfactory to the Administrative Agent (provided that such documentation shall be satisfactory if substantially similar to the applicable Collateral Documents executed and delivered on the Closing Date) and, at the time such Collateral (or substitute Collateral) is provided, no Event of Default has occurred and is continuing. If the Borrower fails to provide or cause its Subsidiaries to provide such Collateral (or substitute Collateral) and documentation within such twelve (12) month period or if, upon this expiration of such period, an Event of Default has occurred and is continuing, such temporary reduction to the Commitment Amount shall thereupon become a permanent reduction. SECTION 2.3. Various Types of Loans. Each Loan shall be either a ---------------------- Base Rate Loan or a Eurodollar Rate Loan (each a "type" of Loan), as the ---- Borrower shall specify in the related notice of Borrowing or Continuation/Conversion Notice pursuant to Section 2.4 or 2.6; provided, ----------- --- -------- however, that the Borrower may not request or have outstanding Eurodollar Rate - ------- Loans having more than ten (10) different Interest Periods. SECTION 2.4. Borrowing Procedures. (a) The Borrower shall give -------------------- notice to the Administrative Agent of each proposed Borrowing not later than (i) in the case of a Borrowing of Base Rate Loans, 11:00 A.M. (Chicago time) on the proposed date of such Borrowing and (ii) in the case of a Borrowing of Eurodollar Rate Loans, 11:00 A.M. (Chicago time) at least two (2) Business Days prior to the proposed date of such Borrowing. Each such notice (a "Notice of --------- Borrowing") shall be requested by telephone with same day written confirmation - --------- by facsimile transmission, substantially in the form of Exhibit B hereto, --------- specifying therein the date, the amount and type of such Borrowing and, in the case of a Borrowing of Eurodollar Rate Loans and the initial Interest Period therefor. Each Borrowing shall be in Dollars. All Loans requested on the Closing Date shall be Base Rate Loans. Promptly following receipt of any such notice, the Administrative Agent shall advise each Lender thereof. (b) Each Lender shall, before 2:00 P.M. (Chicago time) on the date of each proposed Borrowing, make available for the account of its Applicable Lending Office at the principal office of the Administrative Agent in same day funds such Lender's Percentage of such Borrowing. Subject to Section 2.4(f), after the Administrative Agent's receipt of such funds -------------- and upon fulfillment of the applicable conditions set forth in Article IV, ---------- the Administrative Agent will make such funds available to the Borrower to such account as the Borrower shall designate from time to time. (c) Any Lender which does not make funds available at the applicable time specified under this Section 2.4 shall pay to the ----------- Administrative Agent on demand interest thereon at the Federal Funds Rate for the number of days from the date of the applicable Borrowing to the date on which such amount becomes immediately available to the Administrative Agent, together with such other compensatory amounts as may be required to be paid by such Lender to the Administrative Agent pursuant to the Rules for Interbank Compensation of the Council on International Banking or the Clearinghouse -4- Compensation Committee, as the case may be, as in effect from time to time. A statement of the Administrative Agent submitted to any Lender with respect to any amounts owing under this Section 2.4 shall be conclusive in ----------- the absence of manifest error. If such amount is not in fact made available to the Administrative Agent by such Lender on the same Business Day as the date of such Borrowing, the Administrative Agent shall be entitled to recover such amount from the Borrower, with interest thereon at the rate then applicable to the Loans comprising such Borrowing, on demand, provided that such payment by the Borrower shall in no way limit or restrict its ability to hold such Lender liable for its failure to so fund. (d) Each Borrowing consisting of Eurodollar Rate Loans or Base Rate Loan, shall be in an aggregate amount not less than $1,000,000, or an integral multiple of $500,000 in excess thereof. (e) Each Notice of Borrowing (whether in writing or by telephone) shall be irrevocable and binding on the Borrower. The Borrower shall provide the Administrative Agent with documents reasonably satisfactory to the Administrative Agent indicating the names of those employees of the Borrower authorized by the Borrower to make telephonic requests for Loans and continuations and conversions thereof, and the Administrative Agent shall be entitled to rely upon such documentation until notified in writing by the Borrower of any change(s) in the names of the employees so authorized. The Administrative Agent shall be entitled to act on the instructions of anyone identifying himself as one of the persons authorized to request Loans and continuations and conversions thereof by telephone and the Borrower shall be bound thereby in the same manner as if the Person were actually so authorized. The Borrower agrees to indemnify and hold the Administrative Agent and each Lender harmless from any and all claims, damages, liabilities, losses, costs and expenses (including Attorney Costs) which may arise or be created by the acceptance of instructions for making, continuing or converting any Loans by telephone. In the case of any request for a Borrowing of Eurodollar Rate Loans, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure (i) to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article IV or (ii) to otherwise make the Borrowing ---------- in accordance with such Notice of Borrowing, including any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Loan to be made by such Lender as part of such Borrowing when such Loan, as a result of such failure, is not made on such date. (f) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's Percentage of such Borrowing, the Administrative Agent may assume that such Lender has made such Percentage available to the Administrative Agent on the date of such Borrowing in accordance with Section 2.4(b) and the Administrative Agent -------------- may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender -5- shall not have made such Percentage available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender's Loans as part of such Borrowing for purposes of this Agreement. (g) The failure of any Lender to make the Loans to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing. SECTION 2.5. Evidence of Loans. The Loans made by each Lender ------------------ shall be evidenced by the Notes payable to such Lender. All Loans and payments hereunder shall be recorded on the books of the Lender making such Loan or receiving such payment, which shall be rebuttably presumptive evidence of the amount of such Loans outstanding at any time hereunder. Notwithstanding any term or condition of this Agreement to the contrary, however, the failure of any Lender to record the date and amount of any Loan made by such Lender hereunder or error in so recording shall not limit or otherwise affect the obligations of the Borrower to repay any such Loan and interest thereon; provided that if there -------- is an error in so recording there shall be a rebuttable presumption that the records of the Administrative Agent are true and correct as to the amount of the Loan. SECTION 2.6. Continuation/Conversion Procedures. Subject to ---------------------------------- Sections 2.3 and 2.4, the Borrower may convert any outstanding Loans of one type - ------------ --- into Loans of another type or continue any outstanding Eurodollar Rate Loan as a Eurodollar Rate Loan, in each case by giving notice thereof to the Administrative Agent not later than 11:00 A.M. (Chicago time), (a) in the case of a conversion of a Eurodollar Rate Loan into a Base Rate Loan, on or before the proposed date of such conversion and (b) in the case of a continuation of a Eurodollar Rate Loan as, or a conversion of a Base Rate Loan into, a Eurodollar Rate Loan, at least two (2) Business Days prior to the proposed date of such continuation or conversion; provided, that Eurodollar Rate Loans may be -------- ---- continued or converted only as of the last day of the Interest Period applicable thereto (unless all payments which are due, if any, under Section 2.11 are made ------------ in connection with such continuation or conversion). Each such notice (a "Continuation/Conversion Notice") shall be by telephone with same day written ------------------------------ confirmation by facsimile transmission substantially in the form of Exhibit C, --------- specifying therein the date and amount of such continuation or conversion, the type of the Loan to be so converted or continued, and, in the case of a continuation of or conversion into a Eurodollar Rate Loan, the new Interest Period therefor. Promptly upon receipt of such notice (which shall be effective upon receipt by the Administrative Agent), the Administrative Agent shall advise each Lender thereof. Subject to Sections 2.18 and 2.19, such Loan shall be so ------------- ---- converted or continued on the requested date of conversion or continuation; -6- provided that each conversion or continuation shall be on a Business Day and, - -------- after giving effect to any such conversion or continuation, the aggregate principal amount of each outstanding Eurodollar Rate Loan shall be at least $1,000,000 and an integral multiple of $500,000. Each Eurodollar Rate Loan shall automatically convert to a Base Rate Loan at the end of the Interest Period applicable thereto, unless (i) in the case of an expiring Eurodollar Rate Loan, the Borrower shall have delivered to the Administrative Agent a Continuation/Conversion Notice not less than two (2) nor more than ten (10) Business Days prior to the last day of the Interest Period applicable thereto and (ii) all of the other conditions contained in this Section 2.6 are ----------- satisfied. SECTION 2.7. Pro Rata Treatment. All Borrowings, continuations, ------------------ conversions, prepayments, repayments and mandatory and voluntary Revolving Commitment Amount reductions shall be effected so that after giving effect thereto each Lender will have a ratable share (according to its Percentage) of all Loans and Letters of Credit and of the Revolving Commitment Amount. SECTION 2.8. Principal Payments. Repayments and prepayments of ------------------ principal of the Loans shall be made in accordance with this Section 2.8. ----------- SECTION 2.8.1. Repayments and Prepayments. The Borrower will make -------------------------- payment in full in Dollars of all unpaid principal of all Revolving Loans and all other principal Obligations which are then outstanding (other than the outstanding principal balance of the Term Loans) on the Revolving Commitment Termination Date. The Borrower will repay, in Dollars, the aggregate outstanding principal balance of the Term Loans in twenty-two (22) consecutive quarterly installments on each September 30, December 31, March 31 and June 30, commencing on September 30, 1999 and continuing through and including December 31, 2004, in the amounts set forth below: Installment Date Installment Amount ---------------- ------------------ Each of September 30, 1999 December 31, 1999, March 31, 2000 and June 30, 2000 $1,250,000 Each of September 30, 2000 December 31, 2000, March 31, 2001 and June 30, 2001 $2,000,000 Each of September 30, 2001 December 31, 2001, March 31, 2002 and June 30, 2002 $2,500,000 Each of September 30, 2002 December 31, 2002, March 31, 2003 and June 30, 2003 $3,000,000 -7- Each of September 30, 2003 December 31, 2003, March 31, 2004 and June 30, 2004 $3,000,000 Each of September 30, 2004 December 31, 2004 $4,000,000. Without limiting the foregoing, and in addition thereto, the Borrower: (a) may, from time to time on any Business Day, make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any Loans; provided that: -------- (i) any such prepayment of a Eurodollar Rate Loan prior to the last day of the Interest Period for such Loan shall be subject to Section 2.11, ------------ (ii) no such prepayment of a Eurodollar Rate Loan may be made which, after giving effect thereto, would result in the aggregate outstanding principal amount of any remaining Eurodollar Loans to be equal to an amount other than $1,000,000 or an integral multiple of $500,000 in excess thereof, (iii) each such voluntary prepayment shall require written notice by 11:00 A.M. (Chicago time) on such Business Day but no more than five (5) Business Days prior to such prepayment, and (iv) each such voluntary prepayment shall be in a minimum amount of $1,000,000 and an integral multiple of $500,000 in excess thereof (or, if less, the aggregate principal amount of all Loans outstanding); (b) shall, on or before the ninetieth (90th) day following the end of each Fiscal Year, commencing with the Fiscal Year ending December 31, 1999, with respect to which the Total Leverage Ratio for the four Fiscal Quarter period ending as of the last day of such Fiscal Year equals or exceeds 3.00 to 1.00, make a mandatory prepayment of the Loans in an amount equal to fifty percent (50%) of Excess Cash Flow with respect to such Fiscal Year; (c) shall, on each date when the Administrative Agent receives proceeds of Collateral from the Lender First Proceeds Account, or otherwise pursuant to Section 3.3(a) of the Intercreditor Agreement, be deemed to have made, and the Borrower shall cause to be made, a mandatory prepayment of the Loans in an amount equal to such proceeds; (d) shall, upon the consummation of any sale, transfer, lease, contribution, conveyance or other disposition of any property of the Borrower or any of its Subsidiaries -8- (excluding (i) sales, transfers, leases, contributions, conveyances and other distributions permitted under Section 6.2(g) and (ii) Permitted -------------- Dispositions, but including Permitted Dispositions to the extent a prepayment is required pursuant to the clause (c)(iv)(B) of the definition ----------------- of such term), make a mandatory prepayment of the Loans in an amount equal to the Net Cash Proceeds with respect to such transaction; (e) shall, upon the consummation of any issuance, incurrence or sale of any Debt by the Borrower or any of its Subsidiaries (other than Debt of the type described in Section 6.2(i)), make a mandatory prepayment -------------- of the Loans in an amount equal to the Net Cash Proceeds with respect to such transaction; (f) shall, upon the consummation of any issuance or sale of any capital stock, warrants, options, stock appreciation rights, partnership interests, limited liability company units or other similar equity interests by the Borrower, or any of its Subsidiaries, or any Person which owns, directly or indirectly, all of the outstanding Voting Stock of the Borrower (other than sales and issuances to officers and directors of the Borrower), make a mandatory prepayment of the Loans in an amount equal to fifty percent (50%) of the Net Cash Proceeds with respect to such transaction (except to the extent such Net Cash Proceeds are applied to the repayment of Note Indenture Obligations in accordance with clause (iii) of ------------ Section 6.2(c)); -------------- (g) shall, from time to time, make mandatory prepayments of the Revolving Loans in such amounts and at such times as may be necessary to (i) prevent the aggregate outstanding principal amount of all Revolving Loans from exceeding Availability and (ii) to the extent achievable through the prepayment of Revolving Loans, prevent the aggregate outstanding Letter of Credit Obligations from exceeding the Letter of Credit Availability; and (h) shall, immediately upon any acceleration of the maturity of any Loans pursuant to Section 7.2, repay all Loans. ----------- Each repayment and prepayment of any Loans made pursuant to this Section 2.8.1 ------------- shall be without premium or penalty, except as may be required by Section 2.11, ------------ and shall be applied in accordance with Section 2.8.2. No mandatory or ------------- voluntary prepayment of principal of the Loans shall cause a reduction in the Revolving Commitment Amount, except as provided in Section 2.2. ----------- SECTION 2.8.2. Application. In the case of all voluntary and ----------- mandatory prepayments paid pursuant to the provisions of clauses (a) through (f) ----------- --- of Section 2.8.1 (except voluntary repayments of Revolving Loans made other than ------------- in conjunction with a mandatory reduction to the Revolving Commitment pursuant to Section 2.2.2), (a) fifty percent (50%) of the amount of each such prepayment ------------- shall be applied first to then remaining unpaid Term Loan principal installments next scheduled to become due and payable in accordance with Section 2.8.1 and, ------------- then, after the Term Loans have been paid in full, to the outstanding principal balance of the Revolving Loans (and if no Revolving Loans are then outstanding, to the cash collateralization of Letter of Credit Obligations pursuant to a cash collateral security agreement in form and -9- substance reasonably acceptable to the Administrative Agent) and (b) the remaining fifty percent (50%) of the amount of each such prepayment shall be applied first to the outstanding principal balance of the Term Loans ratably among the then remaining unpaid scheduled installments thereof described in Section 2.8.1 and, then, after the Term Loans have been paid in full, to the - ------------- outstanding principal balance of the Revolving Loans (and if no Revolving Loans are then outstanding, to the cash collateralization of Letter of Credit Obligations pursuant to a cash collateral security agreement in form and substance reasonably acceptable to the Administrative Agent). SECTION 2.9. Interest Payments. Interest on all Loans shall accrue ----------------- and be payable in accordance with this Section 2.9. ----------- SECTION 2.9.1. Rates. From the date any Loan is made to the date the ----- principal amount of such Loan is repaid in full, interest shall accrue on the outstanding principal amount of such Loan at a rate per annum: --- ----- (a) on that portion of the outstanding principal amount thereof maintained from time to time as a Base Rate Loan, equal to the Base Rate from time to time in effect, plus the then Applicable Base Rate Margin; and ---- (b) on that portion of the outstanding principal amount thereof maintained from time to time as a Eurodollar Rate Loan, during each Interest Period applicable thereto, equal to the sum of the Eurodollar Rate (Adjusted) for such Interest Period, plus the then Applicable Eurodollar ---- Rate Margin. SECTION 2.9.2. Default Rate. Notwithstanding the provisions of ------------ Section 2.9.1, after the occurrence of any Default or Event of Default, at the - ------------- election of the Majority Lenders, until the time when such Event of Default shall have been cured or waived or the principal of and interest on all Loans and all other monetary Obligations arising under this Agreement or any other Loan Document shall have been paid in full, the Borrower shall pay interest (after as well as before judgment) on the principal amount of all Loans and, to the fullest extent permitted by applicable law, on such other Obligations, respectively, at a rate per annum (the "Default Rate") equal to the sum of the --- ----- ------------ Base Rate from time to time in effect, plus the then Applicable Base Rate ---- Margin, plus 2.0%. ---- SECTION 2.9.3. Payment Dates. Interest accrued on each Loan shall be ------------- payable, without duplication: (a) with respect to any Revolving Loans, on the Revolving Commitment Termination Date; (b) with respect to any portion of any Loan prepaid pursuant to Section 2.8.1, (i) in the case of Base Rate Loans, on the last day of the ------------- next Fiscal Quarter ending after such prepayment, but only with respect to interest accrued on such Loan through the date -10- of prepayment, and (ii) in the case of Eurodollar Rate Loans, on the date of such prepayment; (c) in the case of any Loan: (i) on that portion of the outstanding principal amount thereof maintained as a Base Rate Loan, on the last day of each Fiscal Quarter, commencing with the first such day following the Closing Date; (ii) on that portion of the outstanding principal amount thereof maintained as a Eurodollar Rate Loan, on the last day of each applicable Interest Period and, if such Interest Period shall exceed three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period (or, if there is no numerically corresponding day in such subsequent month or if such numerically corresponding day is not a Business Day, on the next preceding Business Day); and (d) on that portion of any Loans the maturity of which is accelerated pursuant to Section 7.2, immediately upon such acceleration. ----------- Interest accrued on the principal amount of each Loan or other monetary Obligation arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Revolving Commitment Termination Date, upon acceleration or otherwise) shall be payable upon demand. SECTION 2.9.4. Rate Determinations. ------------------- (a) All determinations by the Administrative Agent of any rate of interest applicable to any Loan or other monetary Obligation shall be conclusive in the absence of manifest error. (b) If the Administrative Agent shall have determined that for any reason adequate and reasonable means do not exist for ascertaining the IBO Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan or that the IBO Rate applicable pursuant to Section ------- 2.9.1 for any requested Interest Period with respect to a proposed ----- Eurodollar Rate Loan does not adequately and fairly reflect the cost to the Lenders of funding such Loan, the Administrative Agent will forthwith give notice of such determination to the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or continue Eurodollar Rate Loans hereunder, or permit the conversion of Base Rate Loans into Eurodollar Rate Loans, shall be suspended until the Administrative Agent revokes such notice in writing. Upon receipt of such notice, the Borrower may revoke any Notice of Borrowing or Continuation/Conversion Notice then submitted by it. If the Borrower does not revoke such notice, the Lenders shall make, convert or continue the Loans, as originally proposed by the Borrower, in the amount -11- specified in the applicable notice submitted by the Borrower, but such Loans shall be made, converted or continued as Base Rate Loans. (c) On the date on which the aggregate unpaid principal amount of Loans shall be reduced, by payment or prepayment or otherwise, to less than $1,000,000, such Loans shall, if they are Eurodollar Rate Loans, automatically convert into Base Rate Loans, and on and after such date the right of the Borrower to convert Base Rate Loans into Eurodollar Rate Loans shall terminate. The Borrower shall be obligated to reimburse the Lenders for costs incurred in connection with such automatic conversion in accordance with Section 2.11. ------------ SECTION 2.10. Increased Costs and Reduction of Returns. ---------------------------------------- (a) If the Issuing Lender or any Lender shall determine that, due to either (i) the introduction of or any change (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the IBO Rate) in or in the interpretation of any law or regulation occurring after the Closing Date or (ii) the compliance with any guideline or request issued after the Closing Date from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to (including a reduction in the sum receivable by) the Issuing Lender or such Lender of agreeing to make or making, funding, continuing or maintaining any of its Loans as, or converting (or its obligation to convert) any portion of the principal amount of any of its Loans into, Eurodollar Rate Loans, or issuing, maintaining or participating in any Letter of Credit, then the Borrower shall be liable for, and shall from time to time, within fifteen (15) days after written demand therefor by the Administrative Agent on behalf of such Issuing Lender or such Lender (which demand the Administrative Agent hereby agrees to deliver), immediately pay to the Administrative Agent for the account of the Issuing Lender or such Lender, from time to time as specified by the Issuing Lender or such Lender, additional amounts as are sufficient to compensate the Issuing Lender or such Lender for such increased cost (including such reduced amount). A certificate as to such amounts, showing a calculation of such amounts in reasonable detail, submitted to the Borrower and the Administrative Agent by the Issuing Lender or such Lender, shall be conclusive and binding for all purposes, absent manifest error. (b) If the Issuing Lender or any Lender shall have determined that (i) the introduction after the Closing Date of any Capital Adequacy Regulation, (ii) any change after the Closing Date in any Capital Adequacy Regulation, (iii) any change after the Closing Date in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by the Issuing Lender or such Lender (or its Applicable Lending Office) or any corporation controlling the Issuing Lender or such Lender, with any Capital Adequacy Regulation issued after the Closing Date, in any such case affects or would affect the amount of capital required or expected to be maintained by the Issuing Lender or -12- such Lender or any corporation controlling the Issuing Lender or such Lender and (taking into consideration the Issuing Lender's or such Lender's or such corporation's policies with respect to capital adequacy and the Issuing Lender's or such Lender's desired return on capital) determines that the amount of such capital is increased as a consequence of its commitment to issue, its issuance of or participation in any Letter of Credit or its Commitments, Loans, credits or obligations under this Agreement, then, within fifteen (15) days after written demand therefor by the Administrative Agent on behalf of the Issuing Lender or such Lender (which demand the Administrative Agent hereby agrees to deliver), the Borrower shall pay to the Administrative Agent for the account of the Issuing Lender or such Lender, from time to time as specified by the Issuing Lender or such Lender, additional amounts as are sufficient to compensate the Issuing Lender or such Lender 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 and the Administrative Agent by the Issuing Lender or such Lender shall be conclusive and binding for all purposes, absent manifest error. (c) Without limiting the generality of clauses (a) and (b) of this ------- --- --- Section 2.10, in the event that the Issuing Lender, in compliance with any ------------ guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) or any Capital Adequacy Regulation issued after the Closing Date, or as a result of any change after the Closing Date in the interpretation or administration of any such guideline or Capital Adequacy Regulation by any central bank or Governmental Authority charged with the interpretation or administration thereof, determines that a Performance Letter of Credit should have been characterized at the time of issuance thereof or should be recharacterized as a Financial Letter of Credit, then the Borrower shall be liable for, and shall from time to time, upon demand therefor by the Issuing Lender (with a copy to the Administrative Agent), within fifteen (15) days after written demand therefor by the Administrative Agent on behalf of the Issuing Banks (which demand the Administrative Agent hereby agrees to deliver), pay to the Administrative Agent, for the account of the Issuing Lender, from time to time as specified by the Issuing Lender, such additional amounts as are sufficient to cause the Issuing Lender to receive Letter of Credit Fees under Section 3.3(a) with respect to such Letter of Credit Fee Percentage -------------- from the date of issuance or recharacterization, as the case may be. A certificate as to such amounts, showing a calculation of such amounts in reasonable detail, submitted to the Borrower and the Administrative Agent by the Issuing Lender, shall be conclusive and binding for all purposes, absent manifest error. (d) The Issuing Lender and each Lender agree to notify the Borrower and the Administrative Agent in writing promptly of any circumstances that would cause the Borrower to pay additional amounts pursuant to this Section ------- 2.10, provided that the failure to give such notice shall not affect the ---- -------- Borrower's obligation to pay such additional amounts hereunder. Notwithstanding anything to the contrary in this Section 2.10, the Borrower ------------ shall have no obligation to pay any additional amounts under clause (a), ---------- (b) or (c) of this Section 2.10 unless the claiming Issuing Lender or --- --- ------------ Lender shall have made demand upon the Borrower for such additional amounts within six (6) months after the claiming Issuing Lender or Lender obtained knowledge of the circumstances that would -13- cause the Borrower to pay such additional amounts; provided, however, that -------- ------- the foregoing limitation shall not apply to any such additional amounts arising out of the retroactive application of any law, regulation, rule guideline or directive within such six (6) month period. A Lender or Issuing Lender shall be deemed to have obtained knowledge of any circumstances that would cause the Borrower to pay such additional amounts if any rules with respect to such increase have been published in the Federal Register and such knowledge shall be deemed to have been obtained on the later of the date when such new rule (i) is published in the Federal Register and (ii) becomes effective. Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower in this Section 2.10 shall survive the payment ------------ of all other Obligations. SECTION 2.11. Funding Losses. In the event any Lender shall incur -------------- any loss or expense (including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as, or to convert any portion of the principal amount of any Loan into, a Eurodollar Rate Loan) as a result of: (a) repayment or prepayment of the principal amount of any Eurodollar Rate Loans on a date other than the last day of the Interest Period applicable thereto, whether pursuant to Section 2.8 or otherwise; ----------- (b) any conversion of all or any portion of the outstanding principal amount of any Eurodollar Rate Loans to Base Rate Loans prior to the expiration of the Interest Period then applicable thereto; (c) any Loans not being made as Eurodollar Rate Loans in accordance with the Notice of Borrowing therefor; or (d) any Loans not being continued as, or converted into, Eurodollar Rate Loans in accordance with the Continuation/Conversion Notice given therefor, then, upon the request by the Administrative Agent on behalf of such Lender (which request the Administrative Agent hereby agrees to deliver), the Borrower shall pay to the Administrative Agent for the account of such Lender such amount as will (in the reasonable determination of such Lender) reimburse such Lender for such loss or expense. Solely for purposes of calculating amounts payable by the Borrower to such Lenders under this Section 2.11, each Eurodollar Rate Loan ------------ made by a Lender (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the rate used in determining the IBO Rate for such Eurodollar Rate Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan is in fact so funded. Any claim by a Lender for reimbursement under this Section 2.11 shall ------------ be set forth in a certificate delivered by such Lender to the Borrower and the Administrative Agent showing in reasonable detail the basis for such calculation and shall be conclusive and binding absent manifest error. The agreements and obligations of the Borrower in this Section ------- -14- 2.11 shall survive the payment of all other Obligations. - ---- SECTION 2.12. Illegality. ---------- (a) If any Lender shall determine that the introduction of any Applicable Law, or any change in any Applicable Law or in the interpretation or administration thereof, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Lender or its Applicable Lending Office to make Eurodollar Rate Loans, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, the obligation of that Lender to make, convert into or continue Eurodollar Rate Loans, shall be suspended until such Lender shall have notified the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. (b) If a Lender shall determine that it is unlawful to maintain any Eurodollar Rate Loan, the Borrower shall prepay in full all Eurodollar Rate Loans of that Lender then outstanding, together with interest accrued thereon, or convert such Eurodollar Rate Loans into Base Rate Loans, either on the last day of the Interest Period thereof if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, upon request therefor if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans until the last day of the Interest Period, together with any amounts required to be paid in connection therewith pursuant to Section 2.11. ------------ (c) If the Borrower is required to prepay any Eurodollar Rate Loan immediately as provided in Section 2.12(b), then concurrently with such --------------- prepayment, the Borrower shall borrow from the affected Lender, in the amount of such repayment, a Base Rate Loan. (d) If the obligation of any Lender to make or maintain Eurodollar Rate Loans has been terminated, the Borrower may elect, by giving notice to such Lender through the Administrative Agent that all Loans which would otherwise be made by such Lender as Eurodollar Rate Loans shall instead be Base Rate Loans. (e) Before giving any notice to the Administrative Agent pursuant to this Section 2.12, the affected Lender shall designate a different ------------ Eurodollar Office with respect to its Eurodollar Rate Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of such Lender, be illegal or otherwise disadvantageous to such Lender. SECTION 2.13. Right of the Lenders to Fund through Other Offices. -------------------------------------------------- Each Lender may, if it so elects, fulfill its commitment as to any Eurodollar Rate Loan by causing a foreign branch or affiliate of such Lender to make such Loan; provided that in such event for the purposes of this Agreement such Loan -------- shall be deemed to have been made by such Lender and the obligation of the Borrower to repay such Loan shall nevertheless be to such Lender and shall be deemed held by it, to the extent of such Loan, for the account of such branch or affiliate. -15- SECTION 2.14. Commitment Fee and Fee Obligations Generally. -------------------------------------------- (a) Commitment Fee. The Borrower agrees to pay to the Administrative -------------- Agent, for the account of each Lender, a commitment fee (the "Commitment ---------- Fee") in an amount equal to the product of (i) the Applicable Commitment --- Fee Percentage multiplied by (ii) the daily average amount by which the Revolving Commitment Amount exceeds the sum of the outstanding principal balance of the Revolving Loans plus the then Letter of Credit Obligations, ---- for the period from the Closing Date until the Revolving Commitment Termination Date. The Commitment Fee shall be payable quarterly in arrears on the last day of each Fiscal Quarter for the Fiscal Quarter then ended and on the Revolving Commitment Termination Date. Solely for purposes of calculating the Commitment Fee under this Section 2.14(a), the equivalent --------------- in Dollars of the undrawn face amount of each Letter of Credit made in an Alternative Currency shall be determined on the date of issuance of such Letter of Credit and shall be redetermined as of the last Business Day of each calendar month thereafter during which such Letter of Credit remains outstanding, with no interim adjustments with respect to any fluctuations in the value of such Alternative Currency. (b) Certain Fees. The Borrower agrees to respectively pay to the Lead ------------ Arranger, the Issuing Bank, and the Administrative Agent, for their respective own accounts, the fees in amounts and at the times set forth in that certain letter agreement dated as of July 29, 1998 among CVC, the Lead Arranger and the Issuing Bank and the Administrative Agent of even date herewith (the "Fee Letter"). ---------- (c) Fee Obligations. The obligation of the Borrower to pay the fees --------------- described in this Section 2.14, and the Letter of Credit Fees described in ------------ Section 3.3, shall be in addition to, and not in lieu of, the obligation of ----------- the Borrower to pay interest and expenses and other amounts otherwise described in this Agreement. The fees described in this Section 2.14 shall ------------ be fully earned on the earlier of the date paid or accrued and shall be non-refundable. The Letter of Credit Fees and the fees described in this Section 2.14 shall bear interest, if not paid when due, at the Default ------------ Rate. SECTION 2.15. Payments and Computations. ------------------------- (a) Allocation. All payments by the Borrower pursuant to this ---------- Agreement or any other Loan Document, whether in respect of principal of or interest on Loans or other Obligations, shall be made by the Borrower in Dollars no later than 1:00 P.M. (Chicago time) on the day when due to the Administrative Agent in same day funds. All payments in respect of principal of or interest on Loans or Letter of Credit Obligations shall (unless otherwise specified herein) be made by the Borrower to the Administrative Agent for the account of the Lenders pro rata according to --- ---- the respective unpaid principal amounts of the Loans made by them or to their respective participation or other interests in such Letter of Credit Obligations, as the case may be. The payment of all fees referred to in Section 2.14 and Section 3.3 shall (unless otherwise specified therein) be ------------ ----------- made by the Borrower to the Administrative Agent for the account of the Lenders entitled thereto. All -16- other amounts payable to the Administrative Agent or any Lender under this Agreement or any other Loan Document shall be paid to the Administrative Agent for the account of the Person entitled thereto. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.7(d), from and after the -------------- effective date specified in such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. The Administrative Agent shall promptly remit to each Lender in immediately available funds and in Dollars such Lender's share of all such payments received by the Administrative Agent for the account of such Lender. (b) All computations of interest or fees hereunder or under any other Loan Document shall be made by the Administrative Agent on the basis of a year of 360 days, except that, with respect to Base Rate Loans (other than Base Rate Loans with respect to which the rate of interest is calculated on the basis of the Federal Funds Rate), the interest thereon shall be calculated on the basis of a year of 365 or 366 days, as the case may be, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (c) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case may be; provided if such extension would cause payment of interest on or -------- principal of Eurodollar Rate Loans to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate. (e) All payments of principal, interest, fees and all expenses and other amounts due hereunder or under any other Loan Document payable to the Lenders shall be made without condition and in same day funds and delivered to the Administrative Agent on the date thereof not later than the applicable cut-off time described in Section 2.15(a), and --------------- -17- funds received by the Administrative Agent after that time shall be deemed to have been paid on the next succeeding Business Day. (f) Subject to the provisions of Section 2.8.2, each payment of ------------- principal shall be applied to such Loans as the Borrower shall direct by notice received by the Administrative Agent on or before the date of such payment or, in the absence of such notice, first, to the unpaid principal amount of any outstanding Base Rate Loans, second, to the unpaid principal amount of any outstanding Eurodollar Rate Loans with those Eurodollar Rate Loans which have earlier expiring Interest Periods being repaid prior to those which have later expiring Interest Periods, and then as the Administrative Agent shall determine in its discretion. Concurrently with each remittance to any Lender of its share of any such payment, the Administrative Agent shall advise such Lender as to the application of such payment. SECTION 2.16. Taxes. ----- (a) Subject to Section 2.16(d), any and all payments by the Borrower --------------- to each Lender or the Administrative Agent under this Agreement shall be made free and clear of, and without, unless required by Applicable Law (in which case Section 2.16(d) shall apply), deduction or withholding for, any --------------- and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Administrative Agent, such taxes (including income taxes or franchise taxes) as are imposed on or measured by each Lender's net income by the jurisdiction under the laws of which such Lender or the Administrative Agent, as the case may be, is organized or maintains any Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). ----- (b) In addition, the Borrower shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Documents (hereinafter referred to as "Other ----- Taxes"). ----- (c) Subject to Section 2.16(g), the Borrower shall indemnify and hold --------------- harmless each Lender and the Administrative Agent for the full amount of Taxes or Other Taxes paid by Lender or the Administrative Agent and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnification shall be made within thirty (30) days from the date Lender or the Administrative Agent makes written demand therefor, which written demand shall be made no sooner than thirty (30) days prior to the date Lender intends to pay such Taxes or Other Taxes and no later than ninety (90) days after such payment. -18- (d) If the Borrower shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Lender or the Administrative Agent, then, subject to Section 2.16(g): --------------- (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.16) such Lender or the ------------ Administrative Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made; (ii) the Borrower shall make such deductions; and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (e) Within thirty (30) days after the date of any payment by the Borrower of Taxes or Other Taxes, the Borrower shall furnish to the Administrative Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Administrative Agent. (f) Each Lender which is a foreign person (i.e., a person other than ---- a United States person for United States Federal income tax purposes) agrees that: (i) it shall, no later than the Closing Date (or, in the case of a Lender which becomes a party hereto pursuant to Section 9.7 after ----------- the Closing Date, the date upon which Lender becomes a party hereto) deliver to the Borrower through the Administrative Agent two accurate and complete signed originals of IRS Form 4224 or any successor thereto ("Form 4224"), or two accurate and complete signed originals --------- of IRS Form 1001 or any successor thereto ("Form 1001"), as --------- appropriate, in each case indicating that the Lender is on the date of delivery thereof entitled to receive payments of principal, interest and fees under this Agreement free from withholding of United States Federal income tax; (ii) if at any time the Lender makes any changes necessitating a new Form 4224 or Form 1001, it shall with reasonable promptness deliver to the Borrower through the Administrative Agent in replacement for, or in addition to, the forms previously delivered by it hereunder, two accurate and complete signed originals of Form 4224; or two accurate and complete signed originals of Form 1001, as appropriate, in each case indicating that the Lender is on the date of delivery thereof entitled to receive payments of principal, interest and fees under this Agreement free from withholding of United States Federal income tax; (iii) it shall, before or promptly after the occurrence of any event (including the passing of time but excluding any event mentioned in clause(ii) above) requiring a change in or renewal of the most ---------- recent Form -19- 4224 or Form 1001 previously delivered by such Lender, deliver to the Borrower through the Administrative Agent two accurate and complete original signed copies of Form 4224 or Form 1001 in replacement for the forms previously delivered by the Lender; and (iv) it shall, promptly upon the Borrower's or the Administrative Agent's reasonable request to that effect, deliver to the Borrower or the Administrative Agent (as the case may be) such other forms or similar documentation as may be required from time to time by any applicable law, treaty, rule or regulation in order to establish such Lender's tax status for withholding purposes. (g) The Borrower will not be required to pay any additional amounts in respect of United States Federal income tax pursuant to Section 2.16(d) --------------- to any Lender for the account of any Applicable Lending Office of such Lender: (i) if the obligation to pay such additional amounts would not have arisen but for a failure by such Lender to comply with its obligations under Section 2.16(f) in respect of such Applicable --------------- Lending Office; (ii) if such Lender shall have delivered to the Borrower a Form 4224 in respect of such Applicable Lending Office pursuant to Section 2.16(f), and such Lender shall not at any time be entitled to --------------- exemption from deduction or withholding of United States Federal income tax in respect of payments by the Borrower hereunder for the account of such Applicable Lending Office for any reason other than a change in United States law or regulations or in the official interpretation of such law or regulations by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) after the date of delivery of such Form 4224; or (iii) if the Lender shall have delivered to the Borrower a Form 1001 in respect of such Applicable Lending Office pursuant to Section ------- 2.16(f), and such Lender shall not at any time be entitled to ------- exemption from deduction or withholding of United States Federal income tax in respect of payments by the Borrower hereunder for the account of such Applicable Lending Office for any reason other than a change in United States law or regulations or any applicable tax treaty or regulations or in the official interpretation of any such law, treaty or regulations by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) after the date of delivery of such Form 1001. (h) If the Borrower is required to pay additional amounts to any Lender or the Administrative Agent pursuant to Section 2.16(d), then such --------------- Lender shall use its reasonable best efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office so as to eliminate any such additional payment -20- by the Borrower which may thereafter accrue if such change in the judgment of such Lender is not otherwise disadvantageous to such Lender. (i) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 2.16 shall survive the payment of all other ------------ Obligations. SECTION 2.17. Sharing of Payments, Etc. If any Lender shall obtain ------------------------ any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Loans or the Letters of Credit (other than pursuant to Section 2.10, 2.11, 2.12(b), 2.16 or 3.3(b)) in excess ------------ ---- ------- ---- ------ of its ratable share of payments on account of such Loans and/or the Letters of Credit obtained by all the Lenders entitled thereto, such Lender shall forthwith purchase from the other Lenders such participations in such Loans and/or Letters of Credit made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided that if all or any -------- portion of such excess payment is thereafter recovered from the purchasing Lender, such purchase from each such Lender shall be rescinded and each such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (a) the amount of such Lender's required repayment to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.17 ------------ may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. SECTION 2.18. Warranty. Each Notice of Borrowing pursuant to -------- Section 2.4 and the delivery of each Letter of Credit Request pursuant to - ----------- Section 3.2, shall automatically constitute a warranty by the Borrower to the - ----------- Administrative Agent and each Lender to the effect that on the date of such requested Borrowing or the issuance of the requested Letter of Credit, as the case may be, (a) the warranties contained in the Loan Documents (except to the extent changes in facts or conditions are expressly permitted or required hereunder or thereunder) shall be true and correct in all material respects as of such requested date as though made on the date thereof unless an earlier date is so specified in such representation and warranty and (b) no Event of Default or Default shall have then occurred and be continuing or will result therefrom. SECTION 2.19. Conditions. Notwithstanding any other provision of ---------- this Agreement (other than as set forth in Section 3.4), (a) no Lender shall be ----------- obligated to make any Loan, (b) no Lender shall be obligated to convert into or permit the continuation at the end of the applicable Interest Period of any Eurodollar Rate Loan and (c) the Issuing Lender shall not be obligated to issue any Letter of Credit if, in any such case, an Event of Default or Default exists or would result therefrom. SECTION 2.20. All Obligations Secured. The Loans, the Reimbursement ----------------------- Obligations, and all other Obligations of the Borrower and each other Person to the -21- Administrative Agent, the Issuing Lender, any Lender or any other Secured Party, shall be secured by the Administrative Agent's Lien, for the benefit of the Secured Parties, on all of the Collateral and by all other Liens heretofore, now, or at any time or times hereafter granted by the Borrower or any other Person to the Administrative Agent, the Issuing Lender, any Lender or any other Secured Party to secure any Obligations. The Borrower agrees that all of the rights of the Secured Parties set forth in this Agreement shall apply to any modification, amendment or restatement of, or supplement to, this Agreement, any supplements or exhibits hereto, and the other Loan Documents, unless otherwise agreed in writing. SECTION 2.21. Use of Proceeds. The Borrower shall apply the --------------- proceeds of the initial Borrowing (a) to the payment of the "Merger Consideration" under and as defined in the Merger Agreement, (b) as a contribution to GLI's equity capital and, to the extent so applied, cause GLI to repay in full all "Obligations" under (and as defined in) the Existing Agreement (other than contingent indemnification and expense reimbursement obligations), (c) to pay fees and expenses incurred in connection with this Agreement, the Merger Agreement, the Reliance Agreement, the other Restructuring Transactions and the transactions contemplated hereby and thereby and/or (d) for the purposes set forth in the immediately following sentence. The Borrower shall apply the proceeds of each other Borrowing, and shall utilize each Letter of Credit, for its and its Subsidiaries ongoing working capital needs and/or general corporate purposes not inconsistent with the provisions of the Loan Documents (including, without limitation, all payments due and owing by the Borrower after the Closing Date pursuant to the terms of the Merger Agreement and not prohibited by the terms of this Agreement). SECTION 2.22. Assignment of Commitments Under Certain --------------------------------------- Circumstances. In the event that the Administrative Agent shall have delivered a - ------------- notice or certificate on behalf of any Lender pursuant to Section 2.10 or 2.12, ------------ ---- or the Loan Parties shall be required to make additional payments to any Lender under Section 2.16, the Borrower shall have the right, at its own expense, upon ------------ notice to such Lender and Administrative Agent, not later than sixty (60) days following such Lender's delivery of such notice or certificate, to require such Lender to transfer and assign, without recourse or discount, in accordance with and subject to the restrictions contained in Section 9.7, all of its interests, ----------- rights and obligations under this Agreement (including, without limitation, its Commitments and its Percentage of the Obligations) to one or more financial institutions chosen by the Borrower (and approved by the Administrative Agent and the Issuing Bank, which approval shall not be unreasonably withheld) which have agreed to so acquire and assume such interests, rights and obligations. A Lender shall not be required to make any such transfer and assignment unless all Obligations owing to such Lender, including, without limitation, those arising under Sections 2.10, 2.12 and 2.16, have been paid in full and such Lender shall ------------- ---- ---- have no further obligations with respect to its Commitments, and no Lender shall be required to make any such transfer and assignment if prior thereto the circumstances entitling the Borrower to require such a transfer and assignment cease to apply as a result of such Lender's withdrawing its notice or certificate pursuant to Section 2.10 or 2.12, as applicable. ------------ ---- -22- ARTICLE III LETTERS OF CREDIT ----------------- SECTION 3.1. Commitment for Letters of Credit. The Issuing Lender -------------------------------- agrees, on the terms and conditions contained herein, to issue Letters of Credit in Dollars or in Alternative Currencies for the account of the Borrower, and each Lender severally agrees to participate in all Letters of Credit (including Existing L/C's) issued by the Issuing Lender hereunder, in a Dollar equivalent amount equal to its respective Percentage, from time to time during the period commencing on the date hereof, and continuing until the Revolving Commitment Termination Date; provided that (a)the Letter of Credit Obligations shall not at -------- any time exceed the Letter of Credit Availability; and (b)all such Letters of Credit shall be in form and substance acceptable to the Issuing Lender and the Administrative Agent. SECTION 3.2. Issuance of Letters of Credit. ----------------------------- (a) The Borrower shall give the Issuing Lender prior written notice (a "Letter of Credit Request") not later than 11:00 A.M. (Chicago time) on ------------------------ the Business Day immediately preceding the date on which the issuance or amendment of a Letter of Credit is requested or, in the case of a requested Letter of Credit to be denominated in an Alternative Currency, on the Business Day immediately preceding the date on which the issuance or amendment of such a Letter of Credit requested (or, in either case, such shorter time if consented to by the Administrative Agent and the Issuing Lender), specifying: (i) the requested date for issuance or amendment of such Letter of Credit, which shall be a Business Day; (ii) the expiry date of such Letter of Credit, which shall be a Business Day and on or prior to the earlier of (A) the Revolving Commitment Termination Date and (B) the four (4) year anniversary of the date of issuance thereof; (iii) the beneficiary of such Letter of Credit; (iv) the aggregate face amount of such Letter of Credit and the requested currency in which such Letter of Credit is to be denominated; (v) whether the Letter of Credit to be issued is a Financial Letter of Credit or a Performance Letter of Credit; and (vi) the conditions for drawing to be included in such Letter of Credit. Each such Letter of Credit Request shall be by telecopier, telex or cable, confirmed immediately in writing by mail, in substantially the form of Exhibit D --------- and executed by an authorized officer of the Borrower. -23- (b) Upon receipt of a Letter of Credit Request, the Issuing Lender shall promptly send a copy thereof to the Administrative Agent who shall then notify each Lender of the contents thereof. Upon satisfaction of the conditions precedent specified in Article IV hereof, and subject to the ---------- provisions of Section 3.2(c), the Issuing Lender shall issue the Letter of -------------- Credit requested to be issued by it or amend the Letter of Credit requested to be amended, as the case may be, on the date specified in the Letter of Credit Request; provided that the Issuing Lender shall not issue or -------- maintain a Letter of Credit having an expiry date later than the earlier of (i) the Revolving Commitment Termination Date and (ii) the four (4) year anniversary of the date of issuance thereof. (c) In the case of a requested Letter of Credit to be denominated in an Alternative Currency, the obligation of the Issuing Lender to issue such Letter of Credit is subject to the confirmation by the Issuing Lender to the Administrative Agent on the Business Day of the requested date of such issuance that the Issuing Lender agrees to issue such Letter of Credit in the requested Alternative Currency, which confirmation shall be promptly forwarded by the Administrative Agent to the Borrower. If the Issuing Lender shall not have so provided to the Administrative Agent such confirmation, the Administrative Agent shall promptly notify the Borrower that the Issuing Lender has not provided such confirmation, and the Borrower's request for such Letter of Credit in such Alternative Currency shall be deemed to have been thereupon withdrawn by the Borrower. SECTION 3.3. Letter of Credit Fee. The Borrower agrees to pay to -------------------- the Administrative Agent (a) ratably for the account of each Lender, a letter of credit fee for the term of such Letter of Credit at the rate equal to the aggregate face amount outstanding of such Letter of Credit multiplied by (i) in ------------- the case of Performance Letters of Credit, subject to Section 2.10(c), the then --------------- Applicable Performance Letter of Credit Fee Percentage and (ii) in the case of Financial Letters of Credit, the then Applicable Financial Letter of Credit Fee Percentage, and (b) for the Issuing Lender's own account (in addition to its Percentage of the fee payable to it as a Lender, in accordance with clause (a) ---------- above), a letter of credit fee for the term of such Letter of Credit at the rate set forth in the Fee Letter based upon the aggregate face amount outstanding of each such Letter of Credit and the Issuing Lender's customary processing fees for the issuance, amendment or renewal of the Letter of Credit. The fee for any Letter of Credit issued by the Issuing Lender hereunder, as determined in accordance with clauses (a) and (b) above (the "Letter of Credit Fee"), shall be ----------- --- -------------------- payable quarterly in arrears on the last day of each Fiscal Quarter, on the Revolving Commitment Termination Date and on the earliest of the cancellation, expiration or return of such Letter of Credit to the Issuing Lender; provided -------- that if any Letter of Credit is canceled and/or returned to the Issuing Lender prior to the expiration thereof, the Borrower shall from time to time, upon demand by the Issuing Lender and/or any Lender therefor, immediately pay to the Issuing Lender and/or such Lender additional amounts sufficient to compensate it for its expenses not covered by a previously received Letter of Credit Fee. A certificate as to the amount of such expenses submitted to the Borrower and the Administrative Agent by the Issuing Lender and/or such Lender, showing in reasonable detail the calculation thereof, shall be conclusive and binding for all purposes, absent manifest error. -24- SECTION 3.4. Obligations of the Lenders to Issuing Lender under a ---------------------------------------------------- Letter of Credit. The Issuing Lender will notify the Administrative Agent, and - ---------------- the Administrative Agent will thereupon notify each other Lender, promptly upon presentation to it of a draft for payment drawn under, or purporting to be drawn under, a Letter of Credit issued by it; provided that the Administrative Agent -------- and each Lender shall have received notice by 2:00 P.M. (Chicago time) on the Business Day on which the Issuing Lender intends to make payment of each such draft, to the extent that the Borrower fails to provide funds therefor, each other Lender shall make payment to the Issuing Lender in immediately available funds and in Dollars at the Issuing Lender's Domestic Lending Office of an amount equal to the Dollar equivalent amount of the Issuing Lender's payment multiplied by such other Lender's Percentage. The obligation of each Lender to make payments to the Issuing Lender under this Section 3.4 shall be ----------- unconditional, continuing, irrevocable and absolute regardless of whether or not any of the conditions set forth in Article IV are then satisfied. In the event ---------- that any Lender fails to make payment to the Issuing Lender of any amount due under this Section 3.4, the Issuing Lender shall be entitled to receive the ----------- principal and interest otherwise payable to such Lender hereunder with respect to such amount until the Issuing Lender receives such payment from such Lender; provided that nothing contained in this sentence shall relieve such Lender of - -------- its obligation to make payment to the Issuing Lender for such amounts in accordance with this Section 3.4. ----------- SECTION 3.5. Reimbursement Obligation. The Borrower agrees ------------------------ unconditionally and irrevocably to pay to the Administrative Agent in Dollars and in immediately available funds for the account of the Issuing Lender (and, to the extent such payments were made by the Lenders pursuant to Section 3.4, ----------- for the account of such Lenders), upon demand therefor by the Administrative Agent (which demand the Administrative Agent hereby agrees to deliver), the Dollar equivalent amount of each payment which is drawn under a Letter of Credit, or which purports to be so drawn (such obligation of the Borrower being referred to herein as a "Reimbursement Obligation" with respect to such Letter ------------------------ of Credit). If at any time the Borrower fails immediately to repay a Reimbursement Obligation pursuant to this Section 3.5, the Borrower shall be ----------- deemed to have requested a Revolving Loan which is a Base Rate Loan, as of the date of the payment giving rise to the Reimbursement Obligation, from each Lender, equal in amount to such Lender's Percentage multiplied by the Dollar equivalent amount of the unpaid Reimbursement Obligation, the proceeds of which shall be used to repay such Reimbursement Obligation. If, as a result of a Default or an Event of Default, a Revolving Loan may not be made on a date on which such Loan would be deemed to have been requested pursuant to the preceding sentence, the unpaid Dollar equivalent amount of the Reimbursement Obligation shall bear interest at the Default Rate and shall be payable on demand. Regardless of the expiration date of any Letter of Credit, the Borrower shall remain liable with respect to each Letter of Credit and all letter of credit fees shall continue to accrue, until the Issuing Lender is released from liability by every Person which is entitled to draw or demand payment under such Letter of Credit. SECTION 3.6. Representatives of Beneficiaries. The Issuing Lender -------------------------------- may receive, accept or pay as complying with the terms of such Letter of Credit, any drafts or other documents, otherwise in order, which may be signed by, or issued to, the administrator or executor of, or the trustee in bankruptcy of, or the receiver for any of the property of, the party in -25- whose name such Letter of Credit provides that any drafts or other document should be drawn or issued. SECTION 3.7. Responsibility of the Administrative Agent, the ----------------------------------------------- Issuing Lender and the Lenders. Neither the Administrative Agent, the Issuing - ------------------------------ Lender nor any Lender shall be liable or responsible for: (a) the use which may be made of the Letters of Credit or for any acts or omissions of the beneficiary(ies) in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement(s) thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) failure of any draft to bear any reference or adequate reference to a Letter of Credit, or failure of documents to accompany any draft at negotiation, or failure of any Person to surrender or to take up a Letter of Credit or to send forward documents, apart from drafts required by the terms of the relevant Letter of Credit, each of which provisions, if contained in such Letter of Credit itself, it is agreed may be waived by the Issuing Lender; (d) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, wireless, or otherwise, whether or not they may be in cipher; or (e) any other circumstances whatsoever in making or failing to make payment under a Letter of Credit; except only that the Borrower shall have a claim against the Issuing Lender, and the Issuing Lender shall be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential, damages suffered by the Borrower which are determined to be caused by (i) the Issuing Lender's willful misconduct, bad faith or gross negligence or (ii) the Issuing Lender's willful or grossly negligent failure to pay under the relevant Letter of Credit after the presentation to the Issuing Lender by the relevant beneficiary of such Letter of Credit of a sight draft and certificate strictly complying with the terms and conditions of such Letter of Credit. The happening of any one or more of the contingencies referred to in subparagraphs (a), (b), (c), (d) or (e) above shall not affect, impair or - ------------- --- --- --- --- --- prevent the vesting of any of the rights or powers of the Issuing Lender, the Lenders or the Administrative Agent hereunder. In furtherance and extension and not in limitation of the specific provisions hereinbefore set forth, it is hereby further agreed that any action, inaction or omission taken or suffered by the Administrative Agent, the Issuing Lender or any Lender, under or in connection with a Letter of Credit or the relative drafts, documents or assets, if in conformity with such foreign or domestic laws, customs or regulations as are applicable thereto and without willful misconduct, bad faith or gross negligence, shall be binding upon the Borrower and shall not place the Administrative -26- Agent, the Issuing Lender or any Lender under any resulting liability to the Borrower. The word "assets" as used in this Section 3.7 includes goods and ----------- merchandise, as well as any and all documents relative thereto, securities, funds, choses in action, and any and all other forms of property, whether real, personal or mixed and any right or interest of the Borrower therein or thereto. SECTION 3.8. Modifications to Letters of Credit. In the event of ---------------------------------- any change or modification with respect to (a) the amount or duration of any Letter of Credit, (b) the drawing, negotiation, presentation, acceptance, or maturity of any drafts, acceptances or other documents, or (c) any of the other terms or provisions of any Letter of Credit, such being done at the request of the Borrower, this Agreement shall be binding upon the Borrower in all respects with regard to the Letter of Credit so changed or modified, inclusive of any action taken by the Issuing Lender or any Lender with respect to such Letter of Credit. SECTION 3.9. Uniform Customs and Practice for Documentary Credits. ---------------------------------------------------- Except as otherwise expressly provided in this Agreement or as the Borrower and the Lenders may otherwise expressly agree with regard to, and prior to the issuance of, a Letter of Credit, the "Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500," as hereafter amended, revised, supplemented, or replaced by other publication of similar effect, shall in all respects be deemed a part hereof as fully as if incorporated herein and shall apply to such Letter of Credit. SECTION 3.10. Indemnification. The Borrower hereby agrees to --------------- indemnify and hold harmless the Administrative Agent, the Issuing Lender and each Lender from and against any and all claims, damages, losses, liabilities, costs or expenses whatsoever which the Administrative Agent, the Issuing Lender or a Lender may incur (or which may be claimed against the Administrative Agent, the Issuing Lender or a Lender by any Person) by reason of or in connection with the execution and delivery or transfer of, or payment or failure to pay under, any Letter of Credit; provided that the Borrower shall not be required to -------- indemnify the Issuing Lender for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the willful misconduct, bad faith or gross negligence of the Issuing Lender, the Administrative Agent or any Lender. Nothing in this Section 3.10 is intended to ------------ limit the reimbursement obligation of the Borrower contained in Section 3.5 ----------- hereof. SECTION 3.11. Transitional Provisions. GLI, the Administrative ----------------------- Agent and certain of the Lenders and other financial institutions (collectively, the Existing Lenders") are currently parties to that certain Credit Agreement ---------------- dated as of September 24, 1997 (as may have been heretofore amended, the "Existing Agreement") pursuant to which, among other things, Bank of America, as ------------------ "Issuing Lender" thereunder issued certain "Letters of Credit" (as defined therein) for the account of GLI (to the extent outstanding on the Closing Date and set forth on Schedule III, the "Existing L/C's"). As of the Closing Date, ------------ -------------- the Borrower hereby assumes all of GLI's reimbursement and other obligations with respect to each Existing L/C, and each of the Existing L/C's shall remain outstanding and constitute Letters of Credit issued by the Issuing Lender for the account of the Borrower pursuant to this Agreement on the Closing Date for all purposes under this Agreement and any other Loan Document, including, for the purpose of the -27- accrual and payment of Letter of Credit Fees payable pursuant to Section 3.3 for ----------- the remaining term of such Existing L/C's (other than for customary processing fees for the issuance, amendment or renewal of such Existing L/C's occurring prior to the Closing Date or relating to the deemed issuance thereof occurring on the Closing Date). All "Reimbursement Obligations" and other "Letter of Credit Obligations" (as respectively defined in the Existing Agreement) which remain outstanding on the Closing Date with respect to the Existing L/C's shall constitute Reimbursement Obligations and Letter of Credit Obligations of the Borrower under this Agreement and shall be included in the calculations of Availability and Letter of Credit Availability. Schedule III sets forth, as of ------------ the date hereof, the aggregate outstanding face amount, identifying number, expiry date and name of the beneficiary, with respect to each Existing L/C's. SECTION 3.12. Currency Equivalents. For all purposes of this -------------------- Agreement, (i) the equivalent in Dollars of any Alternative Currency shall be determined by using the quoted spot rate at which the Issuing Lender (or its Affiliate) offers to exchange Dollars for such Alternative Currency two Business Days prior to the date on which such equivalent is to be determined and (ii) the equivalent in any Alternative Currency of Dollars shall be determined by using the quoted spot rate at which the Issuing Lender (or its Affiliate) offers to exchange such Alternative Currency for Dollars two Business Days prior to the date on which such equivalent is to be determined. Except as specified in Section 2.14(a), the equivalent in Dollars of each Letter of Credit made in an - --------------- Alternative Currency shall be recalculated hereunder on each date that it shall be necessary or desirable by any party to determine the amount of the Availability, the Letter of Credit Availability, the Letter of Credit Obligations, the Reimbursement Obligations, the Obligations or the face amount of any Letter of Credit on such date. Upon the request by any party hereto, the Issuing Lender shall promptly make such determination and notify such requesting party of such determination. ARTICLE IV CONDITIONS OF LENDING --------------------- SECTION 4.1. Conditions Precedent to Initial Borrowing and Initial ----------------------------------------------------- Issuance of Letters of Credit. The obligation of each Lender on the Closing Date - ----------------------------- to make its Loans requested to be made by it and the agreement of the Issuing Lender to issue the initial Letters of Credit to be issued or deemed issued on the Closing Date shall be subject to the satisfaction of each of the following conditions precedent set forth in this Section 4.1: ----------- (a) Delivery of Documents. The Administrative Agent shall have --------------------- received counterparts of this Agreement and all other agreements, documents and instruments described in the List of Closing Documents attached hereto as Schedule IV (including legal opinions from counsel to the Loan Parties ----------- substantially in the forms attached hereto as Exhibit E, and the Loan --------- Parties hereby direct their counsel to prepare and deliver the same to the Secured Parties), each duly executed, completed and acknowledged where appropriate and in form and substance reasonably satisfactory to the Lenders and in sufficient copies for each of the Lenders. -28- (b) Financial Statements. The Administrative Agent shall have -------------------- received the financial statements described in Section 5.1(f) -------------- (c) Lender Tax Forms. The Administrative Agent and the Borrower shall ---------------- have received from each Lender organized under the laws of a jurisdiction other than the United States, two executed copies of United States Internal Revenue Service Form 4224 or Form 1001 or such other forms or documents (or successor forms or documents) appropriately completed, as may be applicable to establish the extent, if any, to which payments to such Lender pursuant to this Agreement are exempt from withholding or deduction of Taxes imposed by the United States government. (d) Other Documents. The Administrative Agent shall have received --------------- such other approvals, opinions or documents as the Administrative Agent or any Lender may reasonably request. (e) Satisfactory Legal Form. All documents executed or submitted ----------------------- pursuant hereto by or on behalf of the Borrower or any of its Subsidiaries or any other Loan Party shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel; the Administrative Agent and its counsel shall have received all information, approvals, opinions, documents or instruments as the Administrative Agent or its counsel may reasonably request. (f) Evidence and Perfection of Liens. The Administrative Agent shall -------------------------------- have received (i) such documents as the Administrative Agent may reasonably request to evidence and perfect all Liens granted by the Collateral Documents and (ii) such other evidence that all other actions necessary or, in the opinion of the Administrative Agent, desirable to perfect and protect the priority of the security interests and liens created by the Collateral Documents, and to enhance the Administrative Agent's ability to preserve and protect its interests in and access to the Collateral, have been taken or arrangements satisfactory to the Administrative Agent are in place therefor. (g) Termination of Existing Agreement. All Debt and all other --------------------------------- obligations of the Loan Parties under the Existing Agreement (other than contingent indemnification and expense reimbursement obligations) shall be repaid from the proceeds of the initial Loans hereunder, and all agreements and instruments evidencing and securing such Debt shall be terminated, and the Administrative Agent shall have received a payoff letter, releases and termination statements related thereto reasonably acceptable to the Administrative Agent or assurances reasonably satisfactory to the Administrative Agent that such releases and termination statements will be delivered promptly after the Closing Date. (h) Restructuring Transactions. The Administrative Agent shall have -------------------------- received evidence reasonably satisfactory to it that each of the representations and warranties set forth in Section 5.1(v) are true and -------------- accurate, including, without limitation, (i) copies of a file-stamped certificate of merger with respect to the Merger or other evidence reasonably satisfactory to the Administrative Agent that such certificate of merger has been filed and -29- all waiting periods with respect to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, have expired or been waived with respect to the Merger and related transactions, (ii) evidence that the Borrower has received gross cash proceeds of at least $37,700,000 from the Initial Capital Contribution and that all of such proceeds have been contributed by the Borrower's shareholders to the equity capital of the Borrower, (iii) evidence that the Borrower has received gross cash proceeds of at least $115,000,000 from the Note Issuance (less fees and expenses incurred by the Borrower in connection therewith, as contemplated by the Note Indenture) and that such net proceeds shall have been applied to the payment of the consideration payable to the Borrower's shareholders pursuant to the terms of the Merger Agreement, (iv) agreements and other assurances from the Existing Lenders that, upon application of the proceeds of the initial Loans to be made hereunder, the Refinancing will have been consummated and shall be effective and the Liens securing the obligations under the Existing Agreement will be released and (v) copies of all executed and delivered Restructuring Documents. (i) Bonding and Intercreditor Agreements. The Administrative Agent ------------------------------------ shall have received a fully executed Intercreditor Agreement which shall be in form and substance reasonably satisfactory to the Administrative Agent and the Lenders, and a certified copy of the Bonding Agreement in existence on the Closing Date, which shall be in form and substance satisfactory to the Administrative Agent. (j) Closing Fees, Expenses, etc. The Administrative Agent shall --------------------------- have received for its own account, or for the account of each Lender, as the case may be, all fees then due and payable pursuant to Section 2.14 and ------------ all costs and expenses which have been invoiced and are payable pursuant to Section 9.4. ----------- (k) Other Conditions. The conditions precedent to each Borrowing as ---------------- provided in Section 4.2 shall be satisfied on the Closing Date. ----------- SECTION 4.2. Conditions Precedent to Each Borrowing and Each ----------------------------------------------- Issuance of a Letter of Credit. The obligation (a) of each Lender to make its - ------------------------------ initial Loans and each subsequent Loan and (b) of the Issuing Lender to issue its initial and each subsequent Letter of Credit (other than the Existing L/C's) and the Lenders' obligations to participate in such Letters of Credit shall be subject to the further conditions precedent that on the date of each such Borrowing or the issuance of such Letter of Credit: (a) the following statements shall be true (and each of the giving of an applicable Notice of Borrowing, or a Letter of Credit Request, and the acceptance by the Borrower of the proceeds of such Loan, or the issuance of such Letter of Credit, shall constitute a representation and warranty by the Borrower that on the date of such Loan, or the issuance of such Letter of Credit, such statements set forth in clauses (i) through (iii) are ----------- ----- true): (i) The representations and warranties contained in Section 5.1 ----------- and in the other Loan Documents are correct in all material respects on and as of the date -30- of such Loan or the issuance of such Letter of Credit, as the case may be, both before and after giving effect to such Loan or the issuance of such Letter of Credit, and, in the case of any such Loan, to the application of the proceeds therefrom, as though made on and as of such date except for any representation or warranty which is specified as being made as of an earlier date, in which case such representation or warranty shall only speak as to such earlier date; (ii) No event has occurred and is continuing, or would result from such Loan or the issuance of such Letter of Credit, as the case may be, or, in the case of any such Loan, from the application of the proceeds therefrom, which constitutes a Default or an Event of Default; and (iii) (A) Revolving Loans outstanding plus the Letters of Credit ---- Obligations shall not exceed the Revolving Commitment Amount, both before and after giving effect to such Loan and/or such Letter of Credit and (B) in the case of the issuance of a Letter of Credit, the Letter of Credit Obligations shall not exceed the Letter of Credit Availability, both before and after giving effect to such Letter of Credit. (b) no law or regulation shall prohibit, and no order, judgment or decree of any Governmental Authority shall enjoin, prohibit or restrain, such Lender from making the requested Loan, or issuing or participating in the requested Letter of Credit, as the case may be. SECTION 4.3. No Waiver. In no event shall any Lender's making of any --------- Loan or issuance of or participation in a Letter of Credit hereunder at a time when any condition precedent to any Loan or Letter of Credit, as specified in this Article IV, was not satisfied (a) constitute a waiver of such condition by ---------- such Lender with respect to subsequently requested Loans or Letters of Credit, or (b) to the extent such unsatisfied condition constituted a Default or Event of Default, constitute a waiver by any Lender of such Default or Event of Default. ARTICLE V REPRESENTATIONS AND WARRANTIES ------------------------------ SECTION 5.1. Representations and Warranties of the Loan Parties. In -------------------------------------------------- order to induce the Lenders and the Issuing Lender to enter into this Agreement, and to make the Loans and issue, maintain and/or participate in the Letters of Credit, each Loan Party which is a party hereto represents and warrants to each Lender and the Issuing Lender as of the Closing Date, and (unless specified to speak only as of a specified date) on and as of the date of any Loan or the issuance, amendment or extension of any Letter of Credit that: (a) Organization; Corporate Powers. Each Loan Party (i) is a ------------------------------ corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization (except to the extent that such Loan Party's failure to be in good standing -31- under such laws could not reasonably be expected to have a Material Adverse Effect and except as otherwise as a result of a transaction permitted under Section 6.2(a)(i)), (ii) is duly qualified to do business as a foreign ----------------- corporation and in good standing under the laws of each jurisdiction in which such qualification and good standing are necessary in order for it to conduct its business and own its property as heretofore conducted and owned (except such jurisdictions where failure to so qualify could not reasonably be expected to have a Material Adverse Effect), and (iii) has all requisite corporate power to conduct its business, to own and operate its property and to execute, deliver and perform all of its obligations under the Loan Documents and other Restructuring Documents to which it is a party. (b) Authorizations; Enforceability. Each Loan Party has the ------------------------------ requisite corporate authority to execute, deliver and perform each of the Loan Documents and other Restructuring Documents executed by it. Each of the Loan Documents and other Restructuring Documents to which any Loan Party is party has been duly executed and delivered by such Loan Party and constitutes the legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and to general principles of equity, regardless of whether enforcement is sought in a proceeding at law or in equity. (c) No Conflict. The execution, delivery and/or performance by each ----------- Loan Party of each Loan Document and other Restructuring Document to which it is a party do not and will not, by the lapse of time, the giving of notice or otherwise, (i) constitute a violation of any Applicable Law or a breach of any provision contained in such party's charter or by-laws or contained in any material agreement, instrument or document to which the Borrower or any of its Subsidiaries is a party or by which it is bound or (ii) result in or require the creation or imposition of any Lien whatsoever upon any of the properties or assets of the Parent or any of its Subsidiaries (other than Liens granted pursuant to the Collateral Documents). (d) Approvals. No approval, consent or authorization of, or notice --------- to or filing with, any Governmental Authority or any securities exchange is required in connection with the execution, delivery or performance by any Loan Party of any of the Loan Documents or other Restructuring Documents, or the granting of a Lien on any of the Collateral in the manner and for the purpose contemplated by the Collateral Documents, except (i) filings and recording to perfect such Liens, (ii) those obtained on or prior to the Closing Date and (iii) those which, if not obtained, could not reasonably be expected to have a Material Adverse Effect. (e) Licenses and Permits. Each of the Borrower and its Subsidiaries -------------------- owns or possesses or is licensed or otherwise has the right to use all Permits and other governmental approvals and authorizations, franchises, authorizations and other rights that are reasonably necessary for the operations of its business, without conflict with the rights -32- of any other Person with respect thereto, except where the failure to be so licensed or to have such Permits would not have a Material Adverse Effect. (f) Financial Reports. The consolidated balance sheet of the ----------------- Borrower and its Subsidiaries as at December 31, 1997 and as at June 30, 1998, and the related consolidated statements of earnings and cash flows of the Borrower and its Subsidiaries for the Fiscal Year ended December 31, 1997 and for the period from January 1, 1998 through June 30, 1998, copies of each of which have been furnished to each Lender, fairly present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as at such respective dates and the consolidated results of the operations of the Borrower and its Subsidiaries for such respective periods ended on such dates, all in accordance with GAAP, consistently applied, provided that such financial statements delivered for any period other than a Fiscal Year may lack certain footnote disclosures which would otherwise be required by GAAP and may be subject to normal year-end adjustments. Since December 31, 1997, 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. (g) Title to Property; Liens. ------------------------ (i) Each of the Borrower and its Subsidiaries has good and marketable title to, or a valid leasehold interest in, all of its properties and assets, real and personal, of any nature whatsoever, free and clear of all Liens, except for Liens permitted by Section ------- 6.2(h). The assets and properties owned by and leased to the Borrower ------ or any of its Subsidiaries which are necessary in the conduct of their respective businesses are in adequate operating condition and repair, ordinary wear and tear and damage due to casualty excepted, are free and clear of any known defects except such defects as do not substantially interfere with the continued use thereof in the conduct of normal operations, and are able to serve the function for which they are intended in the conduct of such Person's business. (ii) Except to the extent set forth on Schedule 5.1(g), the --------------- Borrower and its Designated Subsidiaries are the sole and lawful owners of each Designated Vessel and hold valid legal title to the whole of such Designated Vessels. The Borrower and its Designated Subsidiaries lawfully own and are lawfully possessed of each Designated Vessel free from any Lien, charge or encumbrance whatsoever, except as permitted pursuant to Section 6.2(h), and will -------------- warrant and defend the title and possession thereto and to every part thereof for the benefit of the Lenders against the claims and demands of any Person whomsoever. (h) No Default. None of the Borrower or any of its Subsidiaries is ---------- in violation of any Applicable Law, or in default under any agreement or instrument to which any of such Persons is a party or by which any of their respective properties or assets is bound or affected, which violation or default could have a Material Adverse Effect. No Event of Default or Default has occurred and is continuing. -33- (i) Litigation; Contingent Liabilities; Labor Matters. ------------------------------------------------- (i) Except as set forth in Schedule 5.1(i) or in the financial --------------- statements described in Section 5.1(f), no claims, litigation, -------------- arbitration proceedings or governmental proceedings are pending or, to the knowledge of the Loan Parties, overtly threatened against or are affecting the Borrower or any of its Subsidiaries, or any of their respective properties, assets or revenues, the results of which could reasonably be expected to have a Material Adverse Effect. (ii) Other than any liability incident to the claims, litigation or proceedings disclosed in Schedule 5.1(i), or provided --------------- for or disclosed in the financial statements referred to in Section ------- 5.1(f), as of the Closing Date, neither the Borrower nor any of its ------ Subsidiaries has any contingent liabilities which are material to the Borrower, any of its Subsidiaries or the Borrower and its Subsidiaries taken as a whole. (j) Patents, Trademarks and Licenses. The Borrower and each of its -------------------------------- Subsidiaries owns or possesses all the licenses, patents, copyrights, trademarks, service marks, trade names, and other similar property rights which are reasonably necessary for the present and planned future conduct of its business, without conflict with the rights of any other Person with respect thereto, except where the failure to own or possess such property, or the existence of any such conflict, could not reasonably be expected to have a Material Adverse Effect. (k) ERISA. As to each Plan which is not a Multiemployer Plan and ----- which is intended to be qualified under Section 401(a) of the IRC as currently in effect, either (i) such Plan has been determined by the IRS to be so qualified, and each trust related to such Plan has been determined to be exempt from federal income taxation under Section 501(a) of the IRC as currently in effect, (ii) an application for a determination for such Plan has been filed and is now pending with the IRS, or (iii) the failure of such Plan to be so qualified or determined to be exempt could not reasonably be expected to name a Material Adverse Effect. As of the Closing Date, except as disclosed on Schedule 5.1(k), none of the Borrower --------------- or any of its Subsidiaries maintains or contributes to any employee welfare benefit plan within the meaning of Section 3(l) of ERISA which provides benefits to employees after termination of employment other than as required by Section 601 of ERISA. None of the Borrower or any of its Subsidiaries or any ERISA Affiliate has failed to comply with any of the responsibilities, obligations or duties imposed on it by ERISA or regulations promulgated thereunder with respect to any Plan which failure could reasonably be expected to have a Material Adverse Effect. No Benefit Plan has incurred any accumulated funding deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the IRC) whether or not waived. Except as disclosed on Schedule 5.1(k), none of the Borrower or any of its --------------- Subsidiaries or any ERISA Affiliate nor any fiduciary of any Benefit Plan which is not a Multiemployer Plan (i) has engaged in a nonexempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the IRC which could reasonably be expected to have a Material Adverse Effect or (ii) has taken or failed to take -34- with respect to any Benefit Plan any action which would constitute or result in a Termination Event. None of the Borrower or any of its Subsidiaries or any ERISA Affiliate has incurred any potential liability under Section 4063, 4064, 4069, 4204 or 4212(c) of ERISA. None of the Borrower or any of its Subsidiaries or any ERISA Affiliate has incurred any liability to the PBGC which remains outstanding other than the payment of premiums, and there are no premium payments which have become due which are unpaid. Schedule B to the most recent annual report filed with the IRS with respect to each Benefit Plan and furnished to Administrative Agent is complete and accurate in all material respects. Since the date of each such Schedule B, there has been no adverse change in the funding status or financial condition of the Benefit Plan relating to such Schedule B which could reasonably be expected to have a Material Adverse Effect. Except as disclosed on Schedule 5.1(k), none of the Borrower or any of its --------------- Subsidiaries or any ERISA Affiliate has (i) failed to make a required contribution or payment to a Multiemployer Plan or (ii) made a complete or partial withdrawal under Sections 4203 or 4205 of ERISA from a Multiemployer Plan. None of the Borrower or any of its Subsidiaries or any ERISA Affiliate has failed to make a required installment or any other required payment under Section 412 of the IRC on or before the due date for such installment or other payment. None of the Borrower or any of its Subsidiaries or any ERISA Affiliate is required to provide security to a Benefit Plan under Section 401(a)(29) of the IRC due to a Plan amendment that results in an increase in current liability for the plan year. (l) Environmental Matters. --------------------- (i) Except as specifically disclosed in Schedule 5.1(l), the --------------- ongoing operations of the Borrower and each of its Subsidiaries comply in all respects with all Environmental Laws, except to the extent that such noncompliance could not reasonably be expected to have a Material Adverse Effect. (ii) Except as specifically disclosed in Schedule 5.1(l), the --------------- Borrower and each of its Subsidiaries has obtained all licenses, permits, authorizations and registrations required under any Environmental Law ("Environmental Permits") and necessary for its --------------------- ordinary course operations, all such Environmental Permits are in good standing in all respects, and the Borrower and each of its Subsidiaries is in compliance with all terms and conditions of each such Environmental Permit, except in each case, where the failure to obtain, remain in good standing, or otherwise be in compliance with, such Environmental Permit could not reasonably be expected to have a Material Adverse Effect. (iii) Except as specifically disclosed in Schedule 5.1(l), none --------------- of the Borrower or any of its Subsidiaries or any of their respective present Property or operations is subject to any outstanding written order from or agreement with any Governmental Authority nor subject to any judicial or docketed administrative proceeding, nor has been notified that it is a potentially responsible party, respecting any Environmental Law, Environmental Claim or Hazardous Material -35- which, in any such case, could reasonably be expected to have a Material Adverse Effect. (iv) Except as specifically disclosed in Schedule 5.1(l), there --------------- are no Hazardous Materials or other conditions or circumstances existing with respect to any Property, or arising from operations prior to the Closing Date, of the Borrower or any of its Subsidiaries that could reasonably be expected to give rise to Environmental Claims which would have a Material Adverse Effect. To the best knowledge of the Loan Parties, as of the Closing Date, none of the Borrower or any of its Subsidiaries has any underground storage tanks (x) that are not properly registered or permitted under applicable Environmental Laws, (y) that are not in compliance with any Environmental Permits or Environmental Laws, or (z) with respect to which a Release has occurred, on or off-site. Each of the Borrower and its Subsidiaries has notified all of its employees of the existence, if any, of any health hazard arising from the conditions of their employment of which the Loan Parties have knowledge in a manner consistent with all applicable laws and have met all notification requirements under Title III of CERCLA and all other Environmental Laws except where a failure to so notify such employees could not reasonably be expected to have a Material Adverse Effect. (v) To the best knowledge of the Loan Parties, except as specifically disclosed in Schedule 5.1(1),as of the Closing Date, none --------------- of the Properties have at any time been operated as a treatment, storage or disposal facility. (vi) To the best knowledge of the Loan Parties, except as set forth in Schedule 5.1(l), none of the Borrower or any of its --------------- Subsidiaries has any contingent liability in connection with (1)any actual, threatened, or potential spillage, disposal or release into the environment of, or otherwise with respect to, any Hazardous Material or other hazardous, toxic or dangerous waste, substance or constituent, or other substance, whether on any premises now or previously owned or occupied by the Parent or any of its Subsidiaries or on any other premises that could reasonably be expected to have a Material Adverse Effect or (2)any other unsafe or unhealthful condition that could reasonably be expected to have a Material Adverse Effect. (m) Payment of Taxes. The Borrower and its Subsidiaries have filed ---------------- all federal income and other federal, state and local tax returns and other reports as required by law, and have paid all taxes and other similar charges that are due and payable, after giving effect to any extensions therefor, except (i) such taxes, if any, that are being contested in good faith by appropriate proceedings and have been adequately reserved against in accordance with GAAP and (ii) any such returns, taxes, or charges the nonfiling or nonpayment of which could not be reasonably expected to have a Material Adverse Effect. None of the Loan Parties has any knowledge of any proposed tax assessment against any of them or against any Subsidiaries of Borrower not constituting Loan Parties for which adequate provision has not been made on its accounts. The provisions for taxes on the -36- books of the Borrower and each Subsidiary are adequate for all open years, and for its current fiscal period. (n) Fiscal Year. The Borrower and each Subsidiary has established a ----------- Fiscal Year ending on December 31 each year. (o) Governmental Regulation. None of the Loan Parties is subject to ----------------------- regulation under the Interstate Commerce Act, the Investment Company Act of 1940, the Public Utility Holding Company Act of 1935, the Federal Power Act or any other Applicable Law that restricts such Loan Party's ability to incur debt, guaranty obligations or to grant Liens, except to the extent that such regulation could not reasonably be expected to have a Material Adverse Effect. (p) Margin Regulations. None of the Borrower or any of its ------------------ Subsidiaries is engaged, principally or as one of its important activities, in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each of the quoted terms is defined or used in Regulation T, U or X of the Board of Governors of the Federal Reserve System as in effect from time to time). No part of the proceeds of any of the Loans and no Letter of Credit has been used for so purchasing or carrying margin stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U or X. (q) Other Loan Documents. The representations and warranties made by -------------------- each Loan Party contained in each Loan Document are true and correct in all material respects. (r) Corporate Structure; Capitalization. As of the Closing Date, a ----------------------------------- complete and correct disclosure of each Subsidiary of the Borrower in existence as of the Closing Date is set forth in Schedule 5.1(r)(i), ------------------ together with the names, jurisdictions of organization, the percentage of shares of such Persons owned by Borrower and each other Subsidiary of the Borrower as of the Closing Date. As of the Closing Date, the names and ownership percentages (stated both on an outstanding and fully-diluted basis) of each legal, record owner of each class of the issued and outstanding shares of capital stock of the Borrower, and of all issued and outstanding warrants, options, stock appreciation rights and other convertible interests with respect to the Borrower's capital stock, are completely and accurately set forth in Schedule5.1(r)(ii). All of the ------------------ issued and outstanding shares of capital stock of each Subsidiary of the Borrower have been validly issued, are fully paid and nonassessable and are owned directly or indirectly by the Borrower or the other applicable Persons as described in Schedule5.1(r)(i), free and clear of all Liens ----------------- (other than Liens permitted hereunder). No shares of capital stock of such Subsidiary are held as or otherwise constitute treasury stock. No authorized but unissued shares of capital stock of the Borrower or any such Subsidiary are subject to any option, warrant, right to call, preemption right or other commitment of any kind whatsoever. (s) Debt; Contingent Obligations; Solvency. As of the Closing Date, -------------------------------------- the financial statements referred to in Section 5.1(f) contain a complete -------------- and accurate -37- disclosure of (i) all Debt of the Borrower and its Subsidiaries outstanding as of the respective dates of such financial statements and (ii) all material loss contingencies and other material contingent obligations of the Borrower and its Subsidiaries as of such dates, except for Guaranties disclosed on Schedule 6.2(f). As of the Closing Date, none of the Borrower --------------- or any of its Subsidiaries has incurred any other Debt or Guaranties since the respective dates of such financial statements, except as would have been permitted under Sections 6.2(f) and 6.2(i) of this Agreement had this --------------- ------ Agreement been in effect at the time of the incurrence of any such additional Debt or Guaranties. As of the Closing Date, none of the Borrower or any of its Subsidiaries has incurred any loss contingencies or other contingent obligations since the respective dates of such financial statements which could reasonably be expected to have a Material Adverse Effect. The Borrower and the other Loan Parties, each individually and on a consolidated basis, are Solvent prior to and at all times after giving effect to the consummation of the Restructuring Transactions. (t) Insurance. As of the Closing Date, Schedule 5.1(t) sets forth a --------- --------------- complete and accurate list of insurance policies and programs in effect with respect to the properties and businesses of the Borrower and its Subsidiaries, specifying for each such policy and program, (i) the amount thereof, (ii) the risks insured against thereby, (iii) the name of the insurer and each insured party thereunder and (iv) the policy or other identification number thereof. Such insurance policies and programs are in such forms and amounts, and provide coverage against such risks as are required by Section 6.1(c) and are customary for corporations of -------------- established reputation engaged in the same or a similar business and owning and operating similar properties. (u) Collateral Documents. The provisions of the Collateral Documents -------------------- executed by any Loan Party in favor of the Administrative Agent evidence legal, valid, enforceable and continuing Liens, in favor of the Administrative Agent for the benefit of the Secured Parties, in all right, title and interest of such Loan Party in any and all of the Collateral described therein, securing the Obligations from time to time outstanding, and upon all proper filings and recordings being duly made in the locations referred to in the applicable Collateral Documents or the taking of possession of the Collateral by the Administrative Agent in accordance with the provisions of such Collateral Documents, each of such Collateral Documents constitutes a fully perfected first priority Lien in all right, title and interest of such Loan Party in such Collateral superior in right to any Liens, existing or future, which such Loan Party or any creditors thereof or purchasers therefrom, or any other Person, may have against such Collateral or interests therein, except for Liens permitted by Section ------- 6.2(h). ------ (v) The Restructuring Transactions. (i) (A) All conditions precedent ------------------------------ to, and all consents necessary to permit, the Merger pursuant to the Merger Agreement, the Note Issuance pursuant to the Note Indenture, the Initial Capital Contribution pursuant to the Capitalization Documents, and the restatement and amendment of the Reliance Agreement pursuant to its terms, have been satisfied or delivered, or waived with the prior written consent of the Majority Lenders, (B) no material breach of any term or provision of the Merger Agreement, the Note Indenture, the Reliance Agreement or the Capitalization -38- Documents has occurred, (C) the Merger, the Note Issuance and the Initial Capital Contribution each have been consummated (or are being consummated simultaneously with the making the initial Loans hereunder), in accordance with all Applicable Laws, (D) all governmental and material third party approvals necessary in connection with the Restructuring Transactions shall have been obtained and are in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any Governmental Authority which would restrain, prevent or otherwise impose materially adverse conditions on any of the Restructuring Transactions and (E) no actions, suits or proceedings are pending or threatened with respect to any of the Restructuring Transactions or any Restructuring Document which the Administrative Agent or the Majority Lenders shall reasonably determine could reasonably be expected to have a Material Adverse Effect. (ii) Each of the Restructuring Documents filed with the Securities and Exchange Commission or other securities authorities, including, without limitation, the offering memorandum with respect to the Note Issuance, complied (when filed) in all material respects with all applicable provisions of the 1933 Act, 1934 Act, all other federal securities laws, state securities or "Blue Sky" laws, foreign securities laws, general corporation law and all rules and regulations thereunder. (iii) The Borrower has delivered to the Administrative Agent correct and complete, executed copies of each of the Restructuring Documents, including, without limitation, all amendments, schedules and exhibits thereto, and all other material agreements, documents, and certificates which have been executed and delivered in connection with the Restructuring Transactions. (w) Year 2000 Compliance. The Borrower has reviewed and assessed all -------------------- computer applications which are material to the Borrower's and its Subsidiaries' businesses with respect to the ability of such applications to correctly recognize references to, and abbreviations of, the year 2000 (including, without limitation, references to "00" as the year 2000 and not the year 1900), and has inquired of each of its material suppliers, vendors and customers as to whether such Persons have so reviewed and assessed all computer applications, if any, relating to those aspects of such Persons' business which may materially affect the Borrower's and its Subsidiaries businesses. The Borrower reasonably believes, as a result of such reviews, assessments and inquiries, that to the extent one or more of such computer applications of the Borrower or its Subsidiaries, or their respective material suppliers vendors or customers, is unable to correctly recognize such references to, or abbreviations of, the year 2000, that such deficiencies could not reasonably be expected to have a Material Adverse Effect. (x) Accuracy of Information. The schedules, certificates and other ----------------------- written statements and information furnished to the Administrative Agent, the Issuing Lender and the Lenders by or on behalf of any Loan Party in connection with the negotiation of this Agreement and the other Loan Documents do not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained -39- therein not misleading. As of the Closing Date, there is no fact currently known to any Loan Party which now or in the future could reasonably be expected to have a Material Adverse Effect and which has not been set forth or referred to in this Agreement, the other Loan Documents, or such schedules, certificates, statements or information heretofore furnished to the Administrative Agent. ARTICLE VI COVENANTS --------- SECTION 6.1. Affirmative Covenants. Each Loan Party which is a party --------------------- hereto covenants and agrees that so long as any of the Lenders shall have any Commitment hereunder, there shall exist any outstanding Loans, any Letter of Credit shall remain outstanding, or any other Obligations shall remain outstanding, unless the Majority Lenders shall otherwise give their prior written consent: (a) Corporate Existence. The Borrower and each of its Subsidiaries ------------------- shall maintain its corporate existence, qualification and good standing in all jurisdictions in which such qualification and good standing are necessary in order for each such Person to conduct its business and own its property as presently conducted and owned in such jurisdictions (except in such jurisdictions where the failure to remain so qualified and in good standing could not reasonably be expected to have a Material Adverse Effect); and the Borrower and each Subsidiary shall maintain all rights, privileges, licenses, patents, patent rights, copyrights, trademarks, trade names, trade styles, franchises and other authority for the conduct of its respective business in the ordinary course as conducted from time to time, except to the extent that the failure to maintain such rights, privileges, licenses, patents, patent rights, copyrights, trademarks, trade names, trade styles, franchises and other authority would not be reasonably expected to have a Material Adverse Effect. (b) Compliance with Laws. The Borrower and each of its Subsidiaries -------------------- shall (i) comply with all Applicable Laws applicable to such Person (except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect) and (ii) obtain as needed, and maintain in good standing, all Permits and other governmental approvals and authorizations necessary for its operations (except where the failure to obtain or maintain such Permits and approvals could not reasonably be expected to have a Material Adverse Effect). (c) Maintenance of Properties; Insurance. ------------------------------------ (i) The Borrower and each of its Subsidiaries shall (A) obtain the consent or approval of any Person whose consent or approval is required in order for the Borrower or such Subsidiary to grant or keep effective Liens to or for the benefit of the Administrative Agent in any property of the Borrower or such Subsidiary intended to secure the Obligations; and (B) maintain in good repair, -40- 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 determines in good faith that maintenance thereof is no longer economically desirable. (ii) The Borrower and its Subsidiaries shall maintain the following insurance policies and programs: (A) physical damage insurance on all material real and personal property (including inventory) covering (1) for all open and operating facilities, repair and replacement cost of all such property and (2) for all closed, inactive vacant facilities, the actual cash value of such facilities; (B) general liability insurance (including products and completed operations liability coverage) in an aggregate amount of not less than $65,000,000; (C) Longshoremen and Harbor Workers insurance per statutory limits; (D) hull and machinery insurance in an aggregate amount of not less than $200,000,000; (E) protection and indemnity, including Masters and Members of Crew insurance in an aggregate amount of not less than $75,000,000; (F) Workers compensation insurance per statutory limits; (G) Wrongful draw insurance with respect to each Letter of Credit having an aggregate Dollar equivalent face amount in excess of $10,000,000 and supporting contracts to be performed in a country other than the United States or for a beneficiary in a country other than the United States in an amount equal to such excess, unless (1) the Borrower shall have notified the Administrative Agent that it has determined, in good faith, that such insurance with respect to such Letter of Credit is not available at a reasonable economic cost or not available from a reputable insurer and (2) the Administrative Agent shall have concurred with such conclusion in writing (which concurrence shall not be unreasonably withheld or delayed); (H) insurance to protect against asset seizure with respect to each contract to be performed by the Borrower or its Subsidiaries in a country outside of the United States, in an amount equal to the aggregate -41- fair market value of the assets used by the Borrower and its Subsidiaries in fulfilling their respective obligations under such contract unless (1) the Borrower shall have notified the Administrative Agent that it has determined, in good faith, that such insurance with respect to such contract is not available at a reasonable economic cost or not available from a reputable insurer, or the property to be used in connection with such contract is not subject to a material risk of asset seizure in such country and (2) the Administrative Agent shall have concurred with such conclusion in writing (which concurrence shall not be unreasonably withheld or delayed); and (I) such other additional insurance coverage and with respect to such risks as is customary for businesses similar to that of the Parent and its Subsidiaries. All such insurance shall be provided by (x) the insurers listed on Schedule -------- 5.1(t), (y) insurers that have an A.M. Best policy-holders rating of not ------ less than A, or if no such rating is applicable, having a quality comparable to those rated A or better or (z) such other insurers as the Administrative Agent may approve in writing, and shall contain endorsements, in form and substance reasonably satisfactory to the Administrative Agent, naming the Administrative Agent as loss payee with respect to each casualty insurance policy which insures any Collateral and as an additional insured with respect to each liability insurance policy. (iii) The Borrower shall deliver or cause to be delivered to the Administrative Agent, on or before the Closing Date, copies of certificates of insurance with respect to each of the Borrower's and its Subsidiaries' policies of insurance described in Section 6.1(c), -------------- as in effect on the Closing Date. In addition, the Borrower shall deliver to the Administrative Agent prompt written notice of any cancellation or reduction in the amount or coverage of any of the insurance policies required by this Section 6.1(c) and, in the event -------------- any new or substitute policies shall be issued, the Borrower shall promptly request its insurers (or their agents) to deliver certificates evidencing such new or substitute insurance to the Administrative Agent. (d) Notice of Litigation. The Borrower shall deliver or cause to be -------------------- delivered to the Administrative Agent, promptly following the occurrence thereof, notice of any of the following events: (i) the institution of, or threat in writing of, any action, suit, proceeding, governmental investigation or arbitration against or affecting the Borrower or any Subsidiary, which (A) could reasonably be expected to have a Material Adverse Effect or (B) relates to any Loan Document, (ii) any development in any action, suit, proceeding, governmental investigation or arbitration already disclosed which could reasonably be expected to have a Material Adverse Effect and (iii) any judgment (or judgments) or money judgment (or judgments), writ or warrant of attachment, or similar process involving in excess of $5,000,000 (or $2,000,000 in the aggregate to the extent not -42- covered by insurance which is confirmed in writing by the insurers or agents of the Borrower or Subsidiaries as covering such judgment or process) in the aggregate being entered or filed against any or the Loan Parties or any of their respective assets. (e) Taxes; Claims. The Borrower and each of its Subsidiaries shall ------------- (i) promptly file all federal, state and local tax returns and other reports which such Person is required by law to file, (ii) maintain adequate reserves for the payment of all taxes, assessments, governmental charges, and other similar charges, and pay promptly, when due, all such taxes, assessments, and other charges in such manner as will not give rise to any Lien other than Customary Permitted Liens, (iii) promptly pay all other Claims (including claims for labor, services, materials and supplies) that have become due and payable and that by law have or may give rise to a Lien on such Person's property or assets, prior to the time when any penalty or fine may be incurred with respect thereto and otherwise in such manner as will not give rise to any Lien other than Customary Permitted Liens, and (iv) pay all trade accounts payable in accordance with usual and customary business terms; provided that neither the Borrower nor any of its -------- Subsidiaries shall be required to pay any such tax, assessment, charge, claim or account which (x) (1) is being contested in good faith by appropriate proceedings which will prevent the forfeiture or sale of any Property or any material interference with the use thereof by such Person, and (2) has been adequately reserved against in accordance with GAAP or (y) if not so paid, could not reasonably be expected to have a Material Adverse Effect. (f) ERISA Notices. The Borrower shall deliver or cause to be ------------- delivered to the Administrative Agent, at the Borrower's expense, the following information and notices as soon as possible, and in any event: (i) within ten (10) Business Days after any Loan Party or any ERISA Affiliate knows that a Termination Event has occurred, a written statement of the chief financial officer of the Borrower describing such Termination Event and the action, if any, which the Borrower or any of its Subsidiaries or ERISA Affiliate has taken, is taking or proposes to take with respect thereto, and when known, any action taken or threatened by the IRS, DOL or PBGC with respect thereto; (ii) within ten (10) Business Days after any Loan Party or any ERISA Affiliate knows that a prohibited transaction (defined in Sections 406 of ERISA and 4975 of the IRC) has occurred which could reasonably be expected to result in liabilities to the Borrower and its Subsidiaries in excess of $2,000,000, a statement of the chief financial officer of the Borrower describing such transaction and the action which the Borrower and its Subsidiaries or ERISA Affiliate has taken, is taking or proposes to take with respect thereto; (iii) within ten (10) Business Days after the filing thereof with the IRS, a copy of each funding waiver request filed with respect to any Benefit Plan and all communications received by the Borrower or any of its Subsidiaries or any ERISA Affiliate with respect to such request; -43- (iv) within ten (10) Business Days after receipt by the Borrower or any of its Subsidiaries or any ERISA Affiliate of the PBGC's intention to terminate a Benefit Plan or to have a trustee appointed to administer a Benefit Plan in either case in a distress termination under Section 4041(c) of ERISA, copies of each such notice; (v) within ten (10) Business Days after receipt by the Parent or any of its Subsidiaries or any ERISA Affiliate of any unfavorable determination letter from the IRS regarding the qualification of a Plan under Section 401(a) of the IRC which could reasonably be expected to result in liabilities to the Borrower and its Subsidiaries in excess of $2,000,000, copies of each such letter; (vi) within ten (10) Business Days after the receipt by the Borrower or any of its Subsidiaries or any ERISA Affiliate of a notice from a Multiemployer Plan regarding the imposition of withdrawal liability which could reasonably be expected to result in liabilities to the Borrower and its Subsidiaries in excess of $2,000,000, copies of each such notice; (vii) within ten (10) Business Days after the Parent or any of its Subsidiaries or any ERISA Affiliate fails to make a required installment or any other required payment under Section 412 of the IRC on or before the due date for such installment or payment which could reasonably be expected to result in the imposition of a Lien under Section 412(n) of the IRC, a notification of such failure; and (viii) within ten (10) Business Days after the Borrower or any of its Subsidiaries or any ERISA Affiliate knows (A) a Multiemployer Plan has been terminated, (B) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (C) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan which, in any such case, could reasonably be expected to result in liabilities to the Borrower and its Subsidiaries in excess of $2,000,000, a notification of such event or fact. For purposes of this Section 6.1(f), any Loan Party and any ERISA Affiliate -------------- shall be deemed to know all facts known by the administrator of any Plan of which such Loan Party or such ERISA Affiliate is the plan sponsor. (g) ERISA Compliance. The Borrower and each of its Subsidiaries ---------------- shall, and shall cause each ERISA Affiliate to, establish, maintain and operate all Plans to comply in all respects with the provisions of ERISA, IRC, and all other applicable laws, and the regulations and interpretations thereunder except to the extent such noncompliance could not reasonably be expected to have a Material Adverse Effect. -44- (h) Patents, Trademarks and Licenses. The Borrower and each of its -------------------------------- Subsidiaries shall obtain and maintain adequate licenses, patents, copyrights, trademarks, service marks, trade names, and other similar property rights to conduct its business as currently conducted, except where the failure to obtain or maintain such property rights could not reasonably be expected to have a Material Adverse Effect. (i) Notice of Labor Disputes. The Borrower shall notify the ------------------------ Administrative Agent as soon as possible and in any event within three (3) days, following (A) the Borrower's learning of any labor dispute to which the Borrower or any of its Subsidiaries is likely to become a party, any strikes or walkouts, or threatened strikes or walkouts, relating to any of its plants or other facilities, and (B) the expiration or termination of any labor contract to which the Borrower or any of its Subsidiaries is a party or by which the Borrower or any of its Subsidiaries is bound (other than an expiration or termination of a labor contract which has been replaced by a new labor contract or an extension of an existing labor contract), which, in any case under clause (A) or (B) hereof, could ---------- --- reasonably be expected to have a Material Adverse Effect. (j) Notice of Default. The Borrower shall promptly notify the ----------------- Administrative Agent, (i) of any condition or event that constitutes a Default or an Event of Default and (ii) of any other default under any contractual obligation to which the Borrower or any of its Subsidiaries is a party or by which any of them or their respective properties may be bound (which default could reasonably be expected to have a Material Adverse Effect), such notice to specify the nature and period of existence of any such condition, event, or default and what action the Borrower or such Subsidiary, as applicable, has taken, is taking or proposes to take with respect thereto. (k) Environmental Notices. The Borrower shall notify the --------------------- Administrative Agent in writing, promptly upon, but in no event later than ten (10) days after, becoming aware of any of the following which could reasonably be expected to result in liabilities or expenses of the Borrower and the Subsidiaries in excess of $3,000,000: (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Parent or any of its Subsidiaries or any of their respective Properties pursuant to any applicable Environmental Laws; (ii) all other Environmental Claims; (iii) any environmental or similar condition on any real property adjoining or in the vicinity of the Property of the Borrower or any of its Subsidiaries that could reasonably be anticipated to cause such Property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of such property under any Environmental Laws; (iv) new and material changes to any existing Environmental Law; and (v) any filing or report made by the Borrower or any of its Subsidiaries with any Governmental Authority with respect to (A) the violation of any Environmental Law, (B) any unpermitted Release or threatened Release of a Contaminant that is reportable under 40 C.F.R. 302 or (C) any unsafe or unhealthful condition at any Property of the Borrower or any of its Subsidiaries. -45- (l) Environmental Laws. ------------------ (i) The Borrower and each of its Subsidiaries shall conduct its operations and keep and maintain its Property in compliance with all Environmental Laws, and will obtain, maintain in good order, and comply in all material respects with, all Environmental Permits and registrations, except to the extent any such noncompliance, or failure to obtain, or maintain such Environmental Permits or registrations, could not reasonably be expected to have a Material Adverse Effect. (ii) Upon the written request of the Administrative Agent, the Loan Parties shall submit to the Administrative Agent with sufficient copies for each Lender, at the Loan Parties' sole cost and expense, at reasonable intervals, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice or report required pursuant to Section 6.1(k), that could, individually or in the aggregate, -------------- result in liability in excess of $3,000,000. (m) Books, Records and Inspections. The Parent and each of its ------------------------------ Subsidiaries shall keep proper books of record and account (including records relating to the Collateral) which accurately reflect all of its business affairs and transactions in relation to its business and activities. The Borrower and each of its Subsidiaries shall permit officers and designated representatives of the Administrative Agent and, if accompanied by the Administrative Agent, each Lender, to visit and inspect any of the properties and operations of the Borrower and its Subsidiaries, and to examine the books of account and other documents of the Borrower and its Subsidiaries and (at the expense of the Loan Parties) make copies thereof and discuss the affairs, finances and accounts of the Parent and its Subsidiaries with, and be advised as to the same by, its and their officers and to interview any of the employees, representatives or agents of the Borrower and its Subsidiaries regarding environmental compliance, hazard or liability, and its independent auditors, and each Loan Party hereby authorizes its independent auditors to discuss such financial matters with the Administrative Agent or any representative thereof, in each such case, at such reasonable times and intervals, upon reasonable notice and to such reasonable extent as the Administrative Agent may desire; provided, however, that, following the occurrence and during the -------- ------- continuation of an Event of Default, the rights of the Administrative Agent and the Lenders may be exercised at any time, with any frequency upon reasonable notice. The Loan Parties agree to pay the reasonable fees of the Administrative Agent's auditors incurred in connection with any reasonable exercise of the rights of the Administrative Agent pursuant to this section. (n) Bonding Agreement; Employment Agreements. The Borrower will take ---------------------------------------- all action necessary to maintain the Bonding Agreement in full force and effect and will promptly notify the Administrative Agent of any supplement, replacement or amendment thereof. The Borrower will promptly notify the Administrative Agent of any extension, -46- termination or non-renewal of any of the Employment Agreements or of any amendment to any of the material terms thereof. (o) Foreign Exchange Hedging. Prior to the Borrower or any of its ------------------------ Subsidiaries entering into any contract or series of contacts under which the amounts payable to it are payable in whole or in part in the currency of any country other than the United States (a "Foreign Currency Contract") ------------------------- and the amount payable thereunder, when aggregated with the amounts payable under all other Foreign Currency Contracts for such country, exceeds $20,000,000 (on a Dollar equivalent basis), net of the amounts thereafter payable by the Borrower and its Subsidiaries in the currency of such country (on a Dollar equivalent basis) for related services or products, whether under subcontracts or otherwise, as estimated by the Borrower in good faith and with notice to the Administrative Agent prior to the Borrower's or such Subsidiary's entering into such Foreign Currency Contract, and if foreign exchange hedging arrangements are available from a reputable financial institution or through a contract traded on a reputable exchange at a reasonable economic cost, the Borrower or such Subsidiary shall obtain foreign currency hedging arrangements satisfactory in form and substance to the Administrative Agent with respect to the amounts payable under all such Foreign Currency Contracts involving such country. For purposes of this Section 6.1(o), a foreign exchange hedging arrangement -------------- with respect to any currency shall be presumed to be available from a reputable financial institution or through a contract traded on a reputable exchange at a reasonable economic cost, unless (A) the Borrower shall notify the Administrative Agent that it has determined, in good faith, that such a foreign exchange hedging arrangement with respect to such currency is not so available and (B) the Administrative Agent shall have concurred with such conclusion in writing (which concurrence shall not be unreasonably withheld or delayed). (p) Future Subsidiaries. Upon any Person becoming, after the Closing ------------------- Date, a Subsidiary of the Borrower, or upon the Borrower or any Subsidiary of the Borrower acquiring additional capital stock of, or partnership, ownership or similar equity interest in, any existing Subsidiary (other than Subsidiaries of NATCO or North American Trailing Company), the Borrower shall notify the Administrative Agent of such event, and, unless such Subsidiary is organized in a jurisdiction outside the United States of America or otherwise agreed to between the Borrower and the Administrative Agent, (i) such Person shall execute a Subsidiary Guaranty in substantially the form of the other Subsidiary Guaranties then in existence and otherwise in form and substance reasonably satisfactory to the Administrative Agent (but only to the extent not prohibited by the Bonding Agreement or the Intercreditor Agreement, each as in effect on the Closing Date); and (ii) to the extent such Person executes a Subsidiary Guaranty, such Person shall become a party to the Contribution Agreement in a manner satisfactory to the Administrative Agent, together, in each case, with such opinions of legal counsel, in form and substance reasonably satisfactory to the Administrative Agent, as the Administrative Agent may reasonably require relating to such Subsidiary Guaranty and the Contribution Agreement. -47- (q) Further Assurances. Each Loan Party agrees that, until all ------------------ Obligations have been indefeasibly paid and fully satisfied and the Commitments have been terminated, the Administrative Agent's security interests in and Liens on and against the Collateral, and all proceeds thereof, shall, subject to Section 8.10, continue in full force and effect. ------------ Each Loan Party shall perform, from time to time, any and all steps reasonably requested by the Administrative Agent to perfect, maintain and protect the Administrative Agent's security interests in and Liens on and against the Collateral granted or purported to be granted by the Collateral Documents, as well as the priority of such security interests and Liens, or to enable the Administrative Agent to exercise its rights and remedies hereunder with respect to any Collateral, including (i) executing and filing ship mortgages, financing or continuation statements, or amendments thereof, and terminations of ship mortgages, financing statements and other releases, in form and substance reasonably satisfactory to the Administrative Agent, (ii) delivering to the Administrative Agent all certificates representing or evidencing the Collateral duly endorsed and accompanied by duly executed instruments of transfer or assignment, including stock powers, all in form and substance reasonably satisfactory to the Administrative Agent, and (iii) executing and delivering all further instruments and documents, and taking all further action, as the Administrative Agent may reasonably request. SECTION 6.2. Negative Covenants. Each Loan Party which is a party ------------------ hereto covenants and agrees that so long as any of the Lenders shall have any Commitment hereunder, there shall exist any outstanding Loans, any Letter of Credit shall remain outstanding, or any other Obligations shall remain outstanding, unless the Majority Lenders shall otherwise give their prior written consent: (a) Consolidation, Mergers and Acquisitions. None of the Borrower or --------------------------------------- any of its Subsidiaries shall liquidate or dissolve, consolidate with, or merge into or with, any other corporation or Person, or purchase or otherwise acquire all or substantially all of the assets of any Person (or of any division thereof) except: (i) any Subsidiary of the Borrower may liquidate or dissolve voluntarily into, and may merge with and into, the Borrower or any Designated Subsidiary, and the assets or stock of the Borrower or any of the Borrower's Subsidiaries may be purchased or otherwise acquired by the Borrower or any Designated Subsidiary, as the case may be; and (ii) Permitted Business Acquisitions, if permitted (without duplication) by Section 6.3(a) to be made as a Capital Expenditure. -------------- (b) Investments. None of the Borrower or any of its Subsidiaries ----------- shall make any Investments, except: (i) Investments existing on the Closing Date, as set forth on Schedule 6.2(b)(i); ------------------ -48- (ii) Investments that, when made constituted Customary Permitted Investments; (iii) without duplication, Investments permitted as Debt pursuant to Section 6.2(i) and Investments permitted as Guaranties -------------- under Section 6.2(f); -------------- (iv) without duplication, Investments permitted as Capital Expenditures pursuant to Section 6.3(a); -------------- (v) without duplication, Permitted Business Acquisitions permitted as Capital Expenditures pursuant to Section 6.2(a); -------------- (vi) (A) loans and advances to employees of the Borrower and its Subsidiaries not to exceed $1,000,000 at any time outstanding to any one employee and not to exceed $2,500,000 in the aggregate at any time outstanding, (B) advances of payroll payments and expenses to employees in the ordinary course of business and (C) loans by the Borrower to certain of its officers pursuant to Section 2.1 of the Merger Agreement which are repaid in full in cash (or by setoff) as of the Closing Date; provided, however, that, once made, loans and -------- ------- advances made pursuant to this clause (vi) shall be deemed to remain ----------- outstanding except to the extent such loans or advances are repaid in cash without discount; (vii) accounts receivable arising and trade credit granted in the ordinary course of business and any securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss, which securities shall not be greater than $2,500,000 in the aggregate; (viii) (A) Investments by the Borrower in Designated Subsidiaries and Investments by any Subsidiary of the Borrower in the Borrower or any Designated Subsidiary, and (B) Investments (other than in the form of transfers of Collateral) by the Borrower in NATCO, North American Trailing Company or other Subsidiaries of the Borrower which are not Designated Subsidiaries, and Investments (other than in the form of transfers of Collateral) by any Subsidiary of the Borrower in NATCO, North American Trailing Company or other Subsidiaries of the Borrower which are not Designated Subsidiaries, provided that, in the case of this clause (B), the aggregate amount of such Investments made on and ---------- after the date hereof shall not exceed $15,000,000; (ix) Investments made in connection with the receipt by the Borrower or any of its Subsidiaries of consideration other than cash for the sale by the Borrower or such Subsidiary of any assets permitted to be sold under clause (a) or (c) of the definition of ---------- --- Permitted Disposition; -49- (x) Investments in joint ventures or partnerships organized and maintained for specific single projects, provided that the amount of such Investments made and maintained does not at any time exceed $20,000,000; (xi) [Intentionally Omitted]; and (xii) other Investments in an aggregate amount at any one time not to exceed $10,000,000; provided, however, that, once made, -------- ------- Investments made pursuant to this clause (xii) shall be deemed to ------------ remain outstanding except to the extent such Investment is repaid or otherwise returned in cash or in kind (in reasonably equivalent value), without discount. For purposes of this Section 6.2(b), at the time when a Person becomes a -------------- Subsidiary, all Investments of such Person shall be deemed to have been made by such Person at such time. (c) Restricted Payments. The Borrower shall not, and shall not permit ------------------- any of its Subsidiaries to, declare, pay or make, or offer to pay or make any Restricted Payment (directly or indirectly through any Affiliate) except that (i) the Borrower may repurchase, redeem or otherwise acquire shares of, or options to purchase, capital stock of the Borrower or stock appreciation rights from directors, officers and employees (or their legal representatives or heirs, as the case may be) of the Borrower or any Subsidiary of the Borrower whose employment has terminated or who has died or retired or become disabled, or who has suffered some other hardship and with respect to whom the Board of Directors of the Borrower has otherwise determined to make such a repurchase, redemption or other acquisition in light of such hardship (provided that in the case of such other payments subject to such determination, the aggregate amount of Restricted Payments does not exceed $250,000 in any Fiscal Year, and provided further that the aggregate amount of all such repurchases, redemptions and other acquisitions shall not exceed $5,000,000 in the aggregate after the date hereof), or upon the vesting of stock appreciation rights; (ii) payments required to be made pursuant to the terms of the Merger Agreement or pursuant to the Shareholders Agreement; (iii) redemption payments, and related payments of accrued interest and "Liquidated Damages" (as defined in the Note Indenture) made in accordance with Section 3.07(b) of the Note Indenture and not exceeding fifty percent (50%) of the Net Cash Proceeds with respect to the "Public Equity Offering" (as defined therein) giving rise to such payments; and (iv) any Subsidiary of the Borrower may make Restricted Payments to its equity holders; provided that no Default or -------- Event of Default exists immediately prior to any Restricted Payment otherwise permitted by this Section 6.2(c) or would result therefrom. -------------- (d) Transactions with Affiliates. None of the Borrower or any of its ---------------------------- Subsidiaries shall enter into, or cause, suffer or permit to exist any arrangement or contract with any of its other Affiliates unless such arrangement or contract is fair and equitable to Borrower or such Subsidiary and is an arrangement or contract of the kind which would be entered into by a prudent Person in the position of Borrower or such Subsidiary with a Person which is not one of its Affiliates; provided, however, that nothing -50- in this Section 6.2(d) shall prohibit any transactions permitted hereby -------------- among any of the Borrower, NATCO, North American Trailing Company and any of the Designated Subsidiaries. (e) Negative Pledges, etc. None of the Borrower or any of it --------------------- Subsidiaries shall enter into any agreement prohibiting (i) the creation or assumption of any Lien upon its properties, revenues or assets, whether now owned or hereafter acquired; (ii) the ability of the Borrower or any such Subsidiary to amend or otherwise modify this Agreement or any other Loan Document; or (iii) the ability of any of the Borrower's Subsidiaries to make any payments, directly or indirectly, to the Borrower by way of dividends, advances, repayments of loans or advances, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments, or any other agreement or arrangement which restricts the ability of any such Subsidiary to make any payment, directly or indirectly, to the Borrower other than (A) this Agreement and each Loan Document; (B) agreements existing as of the Closing Date and identified in Schedule 6.2(e); (C) agreements governing Debt permitted by clause (ii) of --------------- ----------- Section 6.2(i) as in effect on the Closing Date, which agreements shall be -------------- in form and substance reasonably acceptable to the Administrative Agent; (D) agreements governing Debt permitted by clause (v) of Section 6.2(i), ---------- -------------- with any such restrictions being applicable solely to the assets financed with the proceeds of such Debt; and (E) the Bonding Agreement, the Intercreditor Agreement and the Note Indenture. (f) Guaranties. None of the Borrower or any of its Subsidiaries shall ---------- create or become or be liable, whether directly or indirectly, with respect to any Guaranty, except that the Borrower or any such Subsidiary may incur (i) Guaranties for the benefit of the Borrower or any such Subsidiary if the primary obligation is permitted by this Agreement, (ii) an unsecured Guaranty by GLI of Debt not exceeding $10,000,000 in aggregate outstanding principal amount owing by Amboy Aggregates to Summit Bank, and each replacement, refinancing and renewal of such Guaranty or guaranteed Debt which does not increase such Debt or the amount guaranteed thereunder, (iii) Guaranties existing on the Closing Date and described in Schedule 6.2(f) hereto, and the replacement, refinancing and renewal of --------------- each such Guaranty which does not increase the amount guaranteed thereunder, (iv) Guaranties of Debt arising under the Bonding Agreement, (v) Guaranties of the Note Indenture Obligations by Subsidiary Guarantors and (vi) unsecured Guaranties of Debt which, when combined (without duplication) with all unsecured Debt incurred and permitted under clause ------ (xiv) of Section 6.2(i), do not exceed $5,000,000 at any time outstanding. ----- -------------- Notwithstanding the foregoing, no such Guaranty shall be permitted unless after the incurrence of any such Guaranty, there would exist no Default or Event of Default. (g) Sales of Assets. None of the Borrower or any of its Subsidiaries --------------- shall sell, assign, transfer, lease, convey or otherwise dispose of any properties or assets (including accounts receivable and capital stock or other equity of Subsidiaries), whether now owned or hereafter acquired, or any income or profits therefrom, or enter into any agreement or grant any right or option to do so, in one transaction or a series of transactions, unless -51- such transaction or arrangement (i) constitutes a Permitted Disposition, (ii) consists of a transfer of property among the Borrower and its Subsidiaries permitted under Section 6.2(a) or transfers of property -------------- permitted as Investments under Section 6.2(b), (iii) [intentionally -------------- omitted], or (iv) consists of the lease of equipment (including vessels) by the Borrower or any Subsidiary to Persons which are not Affiliates (other than the Borrower or any Subsidiaries of the Borrower) in the ordinary course of business for a term not exceeding nine (9) months. (h) Liens, etc. None of the Parent or any of its Subsidiaries shall ---------- create, incur, assume or permit to exist, whether directly or indirectly, any Lien on or with respect to the Borrower's or such Subsidiary's properties and assets, whether now or hereafter acquired or upon any income or profits therefrom, except: (i) Liens granted pursuant to the Loan Documents; (ii) Customary Permitted Liens; (iii) Liens existing on the Closing Date and disclosed on Schedule 5.1(g); --------------- (iv) Liens securing payment of Debt permitted and described in clause (viii) of Section 6.2(i); ------------- -------------- (v) Liens securing payment of Debt permitted and described in clause (v) of Section 6.2(i) and covering only those assets acquired, ---------- -------------- constructed or improved in whole or in part with the proceeds of such Debt; (vi) existing Liens on property (other than Collateral) pledged as collateral for liabilities assumed by the Borrower or any Subsidiary of the Borrower in connection with any merger or acquisition permitted by Section 6.2(a) (provided that such -------------- -------- liabilities were not incurred in anticipation of, or to finance, any such merger or acquisition); (vii) Liens granted to sureties under the Bonding Agreement, to the extent permitted by the Intercreditor Agreement; (viii) Liens on any property or assets used by the Borrower or any Subsidiary in the ordinary course of business and not constituting Collateral, provided that such Liens existed prior to the acquisition thereof by the Borrower or such Subsidiary and were not created in contemplation of such acquisition; (ix) Liens securing Obligations under any Rate Protection Agreement, provided that such Lien is granted in favor of a Secured Party; (x) leases or subleases (including bareboat charters) of Property other than Collateral by the Borrower or any of its Subsidiaries as lessor or sublessor, -52- provided that such leases and subleases do not interfere in any material respect with the businesses of the Borrower and its Subsidiaries, and are not otherwise prohibited under the other terms of this Agreement, and leases or subleases (including bareboat charters) of Property constituting Collateral, provided that such leases and subleases do not interfere in any material respect with the businesses of the Borrower and its Subsidiaries, are not otherwise prohibited under the other terms of this Agreement, are made in the ordinary course of business and for a term not exceeding nine (9) months, and are expressly subordinated to the Liens contemplated hereby in favor of the Administrative Agent, for the benefit of the Secured Parties; and (xi) renewals or replacements of any of the foregoing, provided that such renewed or replaced Lien does not extend to property other than that which was encumbered by the originally permitted Lien hereunder; provided, however, that notwithstanding the foregoing, in no event shall any - -------- ------- contractual Liens be permitted to exist on any common stock of or other equity interests in any of the Borrower's Subsidiaries which is owned by the Borrower or any of its Subsidiaries. (i) Debt. None of the Borrower or any of its Subsidiaries shall ---- create, incur, assume or otherwise become or remain liable with respect to any Debt, other than, without duplication, the following: (i) Debt in respect of the Loans and other Obligations; (ii) Debt, including Debt in respect of Guaranties, existing on the Closing Date, as set forth on Schedule 6.2(i), and (except as may --------------- otherwise be restricted by Sections 6.2(c) or 6.2(o)) any renewal, --------------- ------- extension, refinancing or replacement thereof so long as (A) the terms of any such renewal, extension, refinancing or replacement are not materially less favorable to such Loan Party than the original Debt, (B) the then aggregate outstanding amount of such Debt at the time of such renewal, extension, refinancing or replacement, as the case may be, is not increased and (C) the average life to maturity of such Debt at the time of such renewal, extension, refinancing or replacement, as the case may be, is not decreased thereby; (iii) unsecured Debt incurred in the ordinary course of business of the Borrower and its Subsidiaries in the nature of open accounts (extended by suppliers on normal trade terms in connection with purchases of goods and services), accrued liabilities and deferred income, taxes and judgments or orders for the payment of money to the extent such judgments or orders do not result in any Event of Default or result in any Liens prohibited by Section 6.2(h); -------------- (iv) unsecured Debt of the Borrower or any of its Subsidiaries owing to one another, provided that all such Debt owing to the Borrower or to any -53- Subsidiary Guarantor shall be subordinated to the Obligations in a manner reasonably satisfactory to the Administrative Agent and evidenced by one or more promissory notes, in form and substance reasonably acceptable to the Administrative Agent, which promissory notes shall be pledged to the Administrative Agent pursuant to the Note Pledge Agreement; (v) Capitalized Rentals (to the extent permitted by Sections -------- 6.2(n) and 6.3(b)) or purchase money Debt incurred by the Borrower or ------ ------ any of its Subsidiaries to any Person to finance the acquisition, construction or improvement of assets permitted to be acquired, constructed or improved pursuant to Section 6.3(a), including any such -------------- Debt incurred after the acquisition, construction or improvement of such assets, so long as, in each case, the amount of such Debt does not exceed 100% and is not less than 50% of the purchase price, construction cost or improvement cost of the assets acquired, constructed or improved with the proceeds thereof and, in the case of Debt incurred after the acquisition, construction or improvement of the assets to be financed, such Debt is incurred no later than twelve calendar months after such assets are acquired, constructed or improved; (vi) Debt incurred in connection with any Rate Protection Agreement; (vii) Debt of Subsidiaries of the Borrower which represents the assumption by such Subsidiaries of Debt of another Subsidiary of the Borrower in connection with the merger of such other Subsidiary with and into the assuming Subsidiary or the purchase of all or substantially all the assets of such other Subsidiary; (viii) Debt (contingent or otherwise) for the reimbursement of the surety or sureties which issue (A) license, bid, performance and lien, and payment bonds under the Bonding Agreement for amounts expended by them in the performance of such bonds, and (B) bonds issued pursuant to the Bonding Agreement with respect to projects in a country other than the United States which are used to obtain letters of credit, financial guaranties or other bonds under which the Parent or a Subsidiary of the Parent is the primary obligor provided that, -------- ---- the aggregate amount of the Debt permitted by this subclause (B) shall not exceed $25,000,000 at any time outstanding; (ix) Guaranties permitted under Section 6.2(f); -------------- (x) [Intentionally Omitted]; (xi) Debt constituting Note Indenture Obligations pursuant to the terms of the Note Indenture, in an aggregate principal amount not to exceed $115,000,000; -54- (xii) Indebtedness in respect of taxes, assessments, governmental charges and claims for labor, materials or supplies, to the extent that payment thereof is not required pursuant to Section ------- 6.1(e); ------ (xiii) all premiums (if any), interest (including post-petition interest), fees, expenses, indemnities, charges and additional or contingent interest on obligations described in clauses (i) through ----------- (xiv) of this Section 6.2(i); and ----- -------------- (xiv) other unsecured Debt of the Borrower and its Subsidiaries which when combined (without duplication) with all unsecured Guaranties incurred and permitted under clause (vi) of Section 6.2(f), ----------- -------------- does not exceed $5,000,000 at any time outstanding. Any Person which becomes a Subsidiary after the Closing Date shall for all purposes of this Section 6.2(i) be deemed to have created, assumed or incurred, -------------- at the time it becomes a Subsidiary, all Debt of such Person existing immediately after it becomes a Subsidiary. (j) ERISA. None of the Borrower or any of its Subsidiaries shall: (i) ----- engage, nor shall the Borrower or any of its Subsidiaries permit any ERISA Affiliate to engage, in any prohibited transaction described in Section 406 of ERISA or Section 4975 of the IRC for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the DOL; (ii) permit to exist any accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the IRC), whether or not waived; (iii) fail, or permit any ERISA Affiliate to fail, to pay timely required contributions or annual installments due with respect to any waived funding deficiency to any Benefit Plan; (iv) terminate, or permit any ERISA Affiliate to terminate, any Benefit Plan which would result in any liability of the Borrower or any ERISA Affiliate, or the imposition of any Lien on their respective property, under Title IV of ERISA; (v) fail to make any contribution or payment to any Multiemployer Plan which the Borrower or any ERISA Affiliate is required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto; (vi) fail, or permit any ERISA Affiliate to fail, to pay any required installment or any other payment required under Section 412 of the IRC on or before the due date for such installment or other payment; or (vii) amend, or permit any ERISA Affiliate to amend, a Plan resulting in an increase in current liability for the plan year such that the Borrower or any ERISA Affiliate is required to provide security to such Plan under Section 401(a)(29) of the IRC; provided, however, that no act, omission or -------- ------- event specified in clause (i) through (vii) shall be considered a violation ---------- ----- of this Section 6.2(j) unless such act, omission or event could reasonably -------------- be expected to have a Material Adverse Effect. (k) Conduct of Business. The Borrower shall not, and shall not permit ------------------- any of its Subsidiaries to, engage in any business other than (i) the businesses of dredging, aggregate mining and supply, towing services, marine construction and dredging reclamation activities and (ii) any businesses or activities substantially related or incidental thereto. -55- (l) Sales and Leasebacks. Except for transactions described in clause -------------------- ------ (b) of the definition of Permitted Disposition, none of the Parent or any of its - --- Subsidiaries shall become liable, directly or by way of any Guaranties, with respect to any lease of any property (whether real or personal or mixed) whether now owned or hereafter acquired, (i) which any Loan Party has sold or transferred or is to sell or transfer to any other Person, or (ii) which any Loan Party intends to use for substantially the same purposes as any other property which has been or is to be sold or transferred by that entity to any other Person in connection with such lease. (m) Margin Regulation. The Borrower shall not use or permit any other ----------------- Person to use any portion of the proceeds of any credit extended under this Agreement in any manner which might cause the extension of credit or the application of such proceeds to violate the 1933 Act or the 1934 Act (each as amended to the Closing Date and from time to time thereafter, and any successor statute) or to violate Regulation U, or Regulation X, or any other regulation of the Federal Reserve Board, in each case as in effect on the date or dates of such extension of credit and such use of proceeds. (n) Lease Obligations. None of the Borrower or any of its ----------------- Subsidiaries shall enter into any operating lease (which is not a Capitalized Lease) with respect to any real or personal property (or any interest therein), except (i) operating leases which, together with all other such arrangements (excluding those described in clauses (ii) and ------------ (iii) below) which shall then be in effect, will not require the payment of ----- an aggregate amount of rentals by the Borrower and its Subsidiaries (determined on a consolidated basis) in excess of $13,500,000 for any Fiscal Year through December 31, 2000, $15,000,000 for the Fiscal Year ending December 31, 2001, and $18,000,000 for any Fiscal Year thereafter, (ii) operating leases for not more than one year and (iii) operating leases in connection with the performance of specific projects for the period of such projects; provided, however, that any calculation made for purposes of -------- ------- this section shall exclude any amounts required to be expended for maintenance, repairs, insurance, taxes, assessments, and other similar charges. (o) Modification of Material Agreements and Documents. None of the ------------------------------------------------- Borrower or any of its Subsidiaries shall consent to any amendment, supplement or other modification of any terms or provisions contained in, or applicable to (a) the Bonding Agreement or its Certificate of Incorporation, By-Laws or other organizational documents in any manner materially adverse to the rights or interests of the Secured Parties under the Loan Documents, or (b) the Merger Agreement, the Shareholders Agreement or the Note Indenture in any respect (other than a modification of the Note Indenture pursuant to the terms of Section 9.01 thereof). (p) Change of Location or Name. None of the Loan Parties shall change -------------------------- (i) the location of its principal place of business, chief executive office, major executive office, chief place of business or its records concerning its business and financial affairs; or (ii) its name or the name under or by which it conducts its business, in each case without first giving the Administrative Agent thirty (30) days' prior written notice thereof and taking any and all actions which may be necessary or desirable, or which the -56- Administrative Agent may reasonably request, to maintain and preserve all Liens in favor of the Administrative Agent granted pursuant to the Collateral Documents; provided that notwithstanding the foregoing, none of -------- the Loan Parties shall change the location of its principal place of business, chief executive office, chief place of business or its records concerning its business and financial affairs from the contiguous continental United States of America to any place outside the contiguous continental United States of America. (q) Take or Pay Contracts. None of the Borrower or any of its --------------------- Subsidiaries shall enter into or be a party to any arrangement for the purchase of materials, supplies, other property or services if such arrangement by its express terms requires that payment be made by the Borrower or such Subsidiary regardless of whether such materials, supplies, other property or services are delivered or furnished to it; provided, -------- however, the Borrower and its Subsidiaries may enter into such arrangements ------- which are incidental to its business and not entered into for speculation. (r) Use of Proceeds. None of the Borrower or any of its Subsidiaries --------------- shall directly or indirectly use or apply any of the proceeds of any Loans in a manner inconsistent with the provisions of Section 2.21. ------------ SECTION 6.3. Financial Covenants. The Borrower covenants and agrees ------------------- that so long as the Lenders shall have any Commitment hereunder, any Letter of Credit shall remain outstanding, or any other Obligation shall remain outstanding, unless the Majority Lenders shall otherwise give their prior written consent: (a) Capital Expenditures and Permitted Business Acquisitions. The -------------------------------------------------------- Borrower and its consolidated Subsidiaries shall not make or permit Capital Expenditures and Permitted Business Acquisitions in an aggregate amount in excess of $12,000,000 during any Fiscal Year commencing with Fiscal Year 1998 (with respect to any such Fiscal Year, the "Base Capital Expenditure ------------------------ Amount"); provided, however, that the Base Capital Expenditure Amount for ------ -------- ------- Fiscal Year 1998 shall be $12,500,000, and the Base Capital Expenditure Amount for any Fiscal Year after Fiscal Year 1998 may be increased by an amount equal to the lesser of (i) $6,000,000 and (ii) the excess, if any, of (A) the Base Capital Expenditure Amount for the immediately preceding Fiscal Year, over (B) the actual amount of Capital Expenditures and Permitted Business Acquisitions made by the Borrower and its Subsidiaries during such immediately preceding Fiscal Year; provided further, however, ---------------- ------- that Capital Expenditures for the backhoe dredge New York and up to $10,000,000 of Capital Expenditures made to consummate the acquisition of certain assets by Great Lakes from T.L. James & Company, Inc. ("TL James") pursuant to that certain Asset Purchase Agreement dated as of July 24, 1998, as amended, between Great Lakes and TL James, shall be excluded in determining the Borrower's compliance with this Section 6.3(a). -------------- (b) Maximum Total Leverage. The Borrower and its consolidated ---------------------- Subsidiaries shall not permit the ratio (the "Total Leverage Ratio") of (i) -------------------- the aggregate unpaid principal amount of Total Funded Debt as of the last day of any Fiscal Quarter ending during the -57- periods described below (each, a "Total Leverage Ratio Test Date") to (ii) ------------------------------ EBITDA for the four (4) consecutive Fiscal Quarter period ending as of such Total Leverage Ratio Test Date, to exceed the corresponding ratio set forth below opposite such period: Period Ratio ------ ----- Closing Date through and including December 31, 1999 6.25 to 1.00 January 1, 2000 through and including December 31, 2000 5.75 to 1.00 January 1, 2001 through and including December 31, 2001 5.25 to 1.00 January 1, 2002 and 4.75 to 1.00; thereafter (c) Maximum Senior Leverage. The Borrower and its consolidated ----------------------- Subsidiaries shall not permit the 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) 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 December 31, 1999 3.50 to 1.00 January 1, 2000 through and including December 31, 2000 3.00 to 1.00 January 1, 2001 through and including December 31, 2001 2.50 to 1.00 January 1, 2002 and 2.00 to 1.00. thereafter (d) Interest Coverage Ratio. The Borrower and its consolidated ----------------------- Subsidiaries shall not permit the ratio of (i) EBITDA for any four (4) consecutive Fiscal Quarter period ending as of the last day of any Fiscal Quarter ending during the period described below to (ii) Interest Expense for the four (4) consecutive Fiscal Quarter period ending as of such date, to be less than the corresponding ratio set forth below opposite such period: -58- Period Ratio ------ ----- December 31, 1998 through and 1.75 to 1.00 including December 31, 2000 January 1, 2001 and thereafter 2.00 to 1.00 Notwithstanding the foregoing, (x) Interest Expense for the period ending December 31, 1998 shall equal Interest Expense for the Fiscal Quarter ended such date, multiplied by 4, (y) Interest Expense for the period ending on or about March 31, 1999 shall equal Interest Expense for the two consecutive Fiscal Quarters ended such date, multiplied by 2, and (z) Interest Expense for the period ending on or about June 30, 1999 shall equal Interest Expense for the three consecutive Fiscal Quarters ended such date, multiplied by four-thirds (4/3). (e) Net Worth. The Borrower and its consolidated Subsidiaries shall --------- not permit Net Worth, as of the last day of any Fiscal Quarter ending after the Closing Date, to be less than the sum of (i) -$56,100,000, plus (ii) ---- fifty percent (50%) of the sum of the positive Net Income (if any) for the Fiscal Quarter ending on or about December 31, 1998, plus fifty percent ---- (50%) of the sum of the positive Net Income (if any) for each Fiscal Year ending on or after December 31, 1999 and prior to the date of determination hereunder. SECTION 6.4. Financial Reporting. The Borrower covenants and agrees ------------------- that so long as any of the Lenders shall have any Commitment hereunder, there shall exist any outstanding principal under any Loans, any Letter of Credit shall remain outstanding, or any other Obligation shall remain outstanding, unless the Majority Lenders shall otherwise give their prior written consent: (a) System of Accounting. The Borrower shall maintain the percentage- -------------------- of-completion accounting policies relative to change orders and work-in- progress as in effect on the Closing Date and shall in any event maintain a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP (except as may be otherwise required pursuant to Section 1.4), and each of the financial statements described below shall be ----------- prepared from such system and records. (b) Quarterly Reports. The Borrower shall provide the Administrative ----------------- Agent within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, unaudited consolidated and consolidating balance sheets of the Borrower and its Subsidiaries as of the end of such Fiscal Quarter and unaudited consolidated and consolidating statements of earnings and consolidated statements of cash flow of the Borrower and its Subsidiaries for such Fiscal Quarter and for the period commencing at the end of such Fiscal Quarter, certified by an Authorized Officer of the Borrower. -59- (c) Annual Reports. The Borrower shall provide to the Administrative -------------- Agent, within 90 days after the end of each Fiscal Year, a copy of the annual audit report for such Fiscal Year for the Borrower and its Subsidiaries, including therein consolidated (and unaudited consolidating) balance sheets of the Borrower and its Subsidiaries as of the end of such Fiscal Year and consolidated (and unaudited consolidating) statements of earnings and cash flow of the Borrower and its Subsidiaries for such Fiscal Year by Deloitte & Touche or other independent public accountants reasonably acceptable to the Administrative Agent, together with such accountants' opinion, which shall not be subject to any Impermissible Qualification, and a certificate from such accountants containing a computation of, and showing compliance with, each of the financial ratios and restrictions contained in Section 6.3 and to the effect that, in making ----------- the examination necessary for the signing of such annual report by such accountants, they have not become aware of any Default or Event of Default that has occurred and is continuing, or, if they have become aware of such Default or Event of Default, describing such Default or Event of Default. (d) Compliance Certificate. The Borrower shall provide to the ---------------------- Administrative Agent, within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year and within 90 days after the end of the last Fiscal Quarter of each Fiscal Year, (i) a certificate substantially in the form of Exhibit F (the "Compliance Certificate"), --------- ---------------------- executed by the Authorized Officer who is the chief financial officer, treasurer, assistant treasurer or controller of the Borrower, showing (in reasonable detail and appropriate calculations and computations in all respects reasonably satisfactory to the Administrative Agent) compliance with the financial covenants set forth in Section 6.3, (ii) a backlog ----------- schedule and a schedule of all work-in-progress, identified by contract or project, of the Borrower and its Subsidiaries for the performance of dredging, construction or other services, prepared in a manner consistent with past practice, (iii) notice of the occurrence of any Permitted Disposition or any Permitted Business Acquisition, describing, in detail reasonably satisfactory to the Administrative Agent, the assets sold or disposed of or the assets acquired and the purchase price or sale price thereof, as the case may be, during the preceding Fiscal Quarter, (iv) notice of the receipt of any sales proceeds, insurance or requisition proceeds or condemnation awards received in connection with the sale, damage, destruction, requisition or condemnation of any Collateral during the preceding Fiscal Quarter, including a statement with regard to whether the Borrower or such Subsidiary intends to apply such sales proceeds, insurance or requisition proceeds or awards, as the case may be, to replace, within one year of receipt thereof, such sold, damaged, destroyed, requisitioned or condemned assets or property Collateral used for substantially the same purpose as those sold, damaged, destroyed, requisitioned or condemned and (v) notice of any (A) voluntary liquidation or dissolution by any Subsidiary of the Borrower into the Borrower or another Subsidiary of the Borrower, (B) merger by any such Subsidiary with and into the Borrower or another Subsidiary of the Borrower or (C) the purchase by the Borrower or any of its Subsidiaries of any capital stock of any other Subsidiary of the Borrower during the preceding Fiscal Quarter. (e) Budget. The Borrower shall deliver to the Administrative Agent, ------ within 75 days after the end of each Fiscal Year, a budget for the next succeeding Fiscal Year, which -60- budget shall be prepared on a Fiscal Quarter basis and shall contain a projected, consolidated balance sheet, consolidated statement of earnings (broken out in reasonable detail by business segment) and a consolidated statement of cash flow of the Borrower and its Subsidiaries for such succeeding Fiscal Year. (f) Securities Reports. With reasonable promptness after the ------------------ sending or filing thereof, the Borrower shall deliver to the Administrative Agent copies of all reports and registration statements which the Borrower or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange. (g) Vessels. The Borrower shall deliver to the Administrative ------- Agent, within ninety (90) days after the end of each Fiscal Year, a certificate of an Authorized Officer of the Borrower listing all Designated Vessels. (h) Other Information. With reasonable promptness, the Borrower ----------------- shall deliver such other data and information (including, without limitation, intercompany loan and advance balances among the Borrower and each of its Subsidiaries) as the Administrative Agent or a Lender through the Administrative Agent shall reasonably request. (i) Delivery of Financial Information to the Lenders. The ------------------------------------------------ Administrative Agent shall promptly deliver to each Lender a copy of the financial information delivered to the Administrative Agent by the Borrower pursuant to Section 6.4. ----------- (j) New Subsidiaries. As soon as practicable after the end of the ---------------- Fiscal Quarter ending on or about September 30, 1998 and each Fiscal Quarter thereafter, the Borrower shall provide the Administrative Agent with an updated Schedule 5.1(r) containing all of the information which --------------- would be required to be included in such schedule pursuant to Section 5.1 ----------- if such schedule were to be made true and complete as of the last day of such Fiscal Quarter (including, without limitation, information with respect to any newly acquired or created Subsidiaries); provided, however, -------- ------- that, no such updated schedule need be delivered to the Administrative Agent if the schedule which has been then most recently delivered to the Administrative Agent pursuant to this section (or attached to this Agreement as Schedule 5.1(r)) remains true and complete in all material --------------- respects as of the last day of such Fiscal Quarter. ARTICLE VII EVENTS OF DEFAULT; REMEDIES --------------------------- SECTION 7.1. Events of Default. Each of the following occurrences ----------------- shall constitute an Event of Default under this Agreement: (a) Failure to Make Payments When Due. Any Loan Party shall fail --------------------------------- to pay on the date when due (i) any principal of any Loan or Reimbursement Obligation, (ii) any -61- interest or fees under the Loan Documents and such failure shall continue for three (3) Business Days, or (iii) any other Obligations and such failure shall continue for five (5) Business Days. (b) Breach of Covenants. ------------------- (i) Any Loan Party shall fail duly and punctually to perform or observe any covenant or agreement binding on such Loan Party under Section 6.1(a), (f) or (m), Section 6.2 (other than Section 6.2(b), -------------- --- --- ----------- -------------- (c) and (d)) or Section 6.3 of this Agreement. --- --- ----------- (ii) Any Loan Party shall fail duly and punctually to perform or observe any covenant or agreement binding on such Loan Party under Section 6.1(c)(ii), (d), (i), (j), (k) or Section 6.2(b), (c) or (d), ------------------ --- --- --- --- -------------- --- --- or Section 6.4 of this Agreement, and such failure shall continue ----------- unremedied for ten (10) Business Days (or in the case of Section ------- 6.1(j), three (3) Business Days) after an officer of such Loan Party ------ first has knowledge of such failure or such Loan Party receives written notice thereof from the Administrative Agent, whichever is earlier. (iii) Any Loan Party shall fail duly and punctually to perform or observe any covenant or agreement binding on such Loan Party under this Agreement (other than as provided in subsection(a) above or in ------------- clause(i) or (ii) of this subsection(b)) or under any of the other --------- ---- ------------- Loan Documents, and such failure shall continue unremedied for thirty (30) days after an Authorized Officer first has knowledge of such failure or such Loan Party receives written notice thereof from the Administrative Agent, whichever is earlier. (c) Incorrect Representation or Warranty. Any representation or ------------------------------------ warranty made by any Loan Party or any officer of any Loan Party under or in connection with this Agreement, any other Loan Document or any amendment, waiver or modification of any of the terms thereof shall prove to have been incorrect or misleading when made in any material respect. (d) Default as to Other Debt. Default in the payment when due ------------------------ subject to any applicable grace period (whether by scheduled maturity, required prepayment, required redemption, acceleration, demand or otherwise) on any Debt (other than the Obligations), individually or in the aggregate, having an outstanding principal amount in excess of $4,000,000, of or guaranteed by, any Loan Party or Subsidiary of the Parent; or any breach, default or event of default shall occur, or any other event shall occur or condition shall exist, under any instrument, agreement or indenture pertaining thereto, if the effect thereof, after giving effect to any applicable grace or cure period, is to accelerate, or permit the holder(s) of such Debt to accelerate the maturity of such Debt, or require a mandatory redemption or repurchase of such Debt prior to its scheduled redemption or repurchase; or any such Debt shall be declared due and payable or required to be prepaid (other than by a regularly scheduled required prepayment), repurchased or redeemed prior -62- to the originally stated maturity thereof; or the holder of any Lien related to a Debt in excess of $4,000,000 shall commence foreclosure of such Lien; or an "Event of Default" shall have occurred under and as defined in the Reliance Agreement after giving effect to any applicable cure periods and any waivers thereof; or an "Event of Default" shall have occurred under and as defined in Section 6.01 of the Note Indenture. (e) Bankruptcy. ---------- (i) Any Loan Party or Subsidiary of the Borrower shall become insolvent, or 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 Loan Party or Subsidiary of the Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation (other than in a transaction permitted under Section 6.2(a)(i)), winding up, ----------------- reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed, undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or (iii) any Loan Party or Subsidiary of the Borrower shall take any corporate action to authorize any of the actions set forth in this Section 7.1(e). -------------- (f) Judgments and Attachments. Any final judgment (or judgments) ------------------------- or money judgment (or judgments), writ or warrant of attachment, or similar process involving in excess of $4,000,000 (to the extent not covered by insurance which is confirmed in writing by the insurers or agents of the Borrower or Subsidiaries as covering such judgment or process) in the aggregate shall be entered or filed against any Loan Party or Subsidiary of the Borrower or any of their respective assets and either (1) shall remain undischarged, unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days from the date of its entry, or (2)there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. (g) ERISA Termination Event. Any Termination Event occurs which ----------------------- the Majority Lenders believe could have a Material Adverse Effect. -63- (h) ERISA Waiver. If the plan administrator of any Plan applies ------------ under Section 412(d) of the IRC for a waiver of the minimum funding standards of Section 412(a) of the IRC and the Majority Lenders believe that the business hardship upon which the application for such waiver is based could have a Material Adverse Effect. (i) Termination of Documents; Failure of Security. Any of the Loan --------------------------------------------- Documents shall cease for any reason (other than by reason of any action or inaction by the Administrative Agent or any Lender) to be in full force and effect against any Loan Party (other than in accordance with the terms hereof or thereof), or any Loan Party shall disavow its obligations under, or shall contest the validity or enforceability of, any of the Loan Documents or the Obligations, or any material Lien intended to be created thereby ceases to be or is not valid and perfected in any material respect; or any such Lien shall be subordinated or shall not have the priority contemplated by this Agreement, any of the other Loan Documents, for any reason, or any Loan Party or Affiliate thereof shall institute any action seeking a determination of any of the foregoing. (j) Change in Control. Any of the following events occur: ----------------- (i) (A) prior to an initial public offering of the Voting Stock of the Borrower or any Person which directly or indirectly owns all of outstanding Voting Stock of the Borrower or at any other time when such Voting Stock is not traded on a national securities exchange, the failure of one or more Principals (1) to own, directly or indirectly, at least 51% of the Voting Stock of the Borrower, determined on a fully diluted basis and (2) to have the power to direct or cause the direction of the management or policies of Borrower or (B) following such initial public offering and at any time the Voting Stock of the Borrower or any Person which directly or indirectly owns all of outstanding Voting Stock of the Borrower is traded on a national securities exchange, CVC, Citicorp and any direct or indirect wholly-owned Subsidiary of Citicorp (individually or in the aggregate) own, directly or indirectly, less than 40% of the Voting Stock of the Borrower, determined on a fully-diluted basis, and a Person (other than a Principal) owns a greater percentage of such Voting Stock, determined on a fully-diluted basis; or (ii) the failure of the Borrower (i) to own (directly or indirectly), free and clear of all Liens or other encumbrances (other than any Lien or encumbrance created by the Loan Documents), 100% of the outstanding shares of each class of capital stock of any Subsidiary Guarantor in existence on the Closing Date on a fully diluted basis and (ii) to have the power (directly or indirectly) to direct or cause the direction of the management or policies of any such Subsidiary Guarantor; or (iii) a majority of the Board of Directors of the Borrower are not Continuing Directors; or (iv) any "Change of Control" (as defined in the Note Indenture) occurs. -64- (k) Bonding Agreement. ----------------- (i) Any Person executing bonds, undertakings or instruments of guaranty as surety for the Borrower or any of its Subsidiaries with respect to any marine construction or dredging contracts to be entered into by the Borrower or any such Subsidiary for any reason ceases to issue such bonds, undertakings or instruments of guaranty and such denial, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; or (ii) Reliance provides notice to the Administrative Agent (pursuant to Section 4.4 of the Intercreditor Agreement) of any breach or default under any bonded contract or under the Reliance Agreement and, as a result thereof, Reliance has taken action pursuant to Section 4.1(a) of the Intercreditor Agreement; or (iii) The Borrower or any of its Subsidiaries defaults in the payment when due of any amount due under the Bonding Agreement or breaches or default with respect to any other term of the Bonding Agreement, if the effect of such failure to pay, default or breach is to cause any Person executing bonds, undertakings or instruments of guaranty as surety for the Borrower or any of its Subsidiaries to take possession of the work under any of the bonded contracts of the Borrower or any of its Subsidiaries and such possession could reasonably be expected to result in a Material Adverse Effect; or (iv) Any Loan Party breaches or defaults with respect to any term under any of the bonded contracts of such Loan Party, if the effect of such default or breach is to cause any Person executing bonds, undertakings or instruments of guaranty as surety for such Loan Party to take possession of the work under such bonded contract and such possession could reasonably be expected to result in a Material Adverse Effect. SECTION 7.2. Acceleration. Upon the occurrence of any Event of ------------ ------------ Default described in clause (ii) or (iii) of Section 7.1(e), the Commitments ----------- ----- -------------- shall each automatically and immediately terminate and all unpaid Obligations shall automatically become immediately due and payable, without presentment, demand, or protest or other requirements of any kind (including valuation and appraisement diligence, presentment, notice of intent to demand or accelerate and of acceleration), all of which are hereby expressly waived by the Borrower, and the obligation of each Lender to make any Loan and of the Issuing Lender to issue and of the Lenders to participate in any Letter of Credit hereunder shall thereupon terminate; and upon the occurrence and during the continuance of any other Event of Default, the Administrative Agent may, and at the direction of the Majority Lenders, shall, by written notice to the Borrower, immediately terminate the Commitments and/or declare all of the Obligations of the Borrower to be, and the same shall forthwith become, immediately due and payable together with accrued interest thereon, and the obligation of each Lender to make any Loan and of the Issuing Lender to issue and of the Lenders to participate in any Letter of Credit hereunder shall thereupon terminate. In addition to and not in limitation of any other right available to the Lenders under any of the Loan Documents -65- or otherwise at law or equity, upon the giving of such notice by the Administrative Agent, the Borrower shall be required to deposit immediately with the Administrative Agent for the benefit of the Lenders, in immediately available funds, an amount equal to the Letter of Credit Obligations (the "Deposit"). The Borrower's obligation to pay the Deposit shall be absolute and - -------- unconditional, and the Deposit shall be deposited in a special collateral account with the Administrative Agent to ensure reimbursement of any drawings under such Letters of Credit and payment of all other amounts due and payable under any of the Loan Documents regarding the Letters of Credit. SECTION 7.3. Injunctive Relief. The Borrower recognizes that in the ----------------- event the Borrower fails to perform, observe or discharge any of its Obligations, any remedy of law may prove to be inadequate relief to the Administrative Agent or any Lender; therefore, the Borrower agrees that the Administrative Agent and each Lender, if the Administrative Agent or such Lender so requests, shall be entitled to temporary and permanent injunctive relief during the continuation of an Event of Default in any such case without the necessity of proving actual damages or inadequacy of damages as an available remedy therefor. SECTION 7.4. Allocation Among Secured Parties. Following the -------------------------------- occurrence of an Event of Default, and notwithstanding anything in this Agreement to the contrary, all payments, and collections with respect to proceeds of Collateral, shall be applied to the Obligations which are then due and payable and if such payments and proceeds are insufficient to satisfy all such Obligations which are due and payable, such payments and proceeds shall be applied in the following order: (i) to the payment of all amounts then due with respect to fees (including Attorney Costs), charges, expenses and indemnity claims due the Administrative Agent, (ii) to the payment of all other amounts then due with respect to fees (including Attorney Costs), charges, expenses and indemnity claims due the other Secured Parties, (iii) to the payment of amounts then due with respect to interest on the Loans, (iv) to the payment of amounts then due with respect to principal of the Loans and Reimbursement Obligations (and to the extent Letter of Credit Obligations are contingent, cash collateral with respect thereto), and amounts then due the Secured Parties with respect to Rate Protection Agreements and (v) to the payment of all other Obligations. ARTICLE VIII THE ADMINISTRATIVE AGENT ------------------------ SECTION 8.1. Appointment and Authorization. Each Lender hereby ----------------------------- irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto, including, without limitation, acting as the representative of each Secured Party for the perfection of the Liens granted pursuant to the Collateral Documents. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set -66- forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. Notwithstanding the use of the term "Administrative Agent", the Administrative Agent's legal relationship with the Lenders shall not be one of agency, it being understood and agreed to by the Lenders that the Administrative Agent is an independent contractor for the Lenders. SECTION 8.2. Delegation of Duties. The Administrative Agent may -------------------- execute any of its duties under this Agreement or any other Loan Document by or through its agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. SECTION 8.3. Liability of Administrative Agent. None of the --------------------------------- Administrative Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document (except for its own gross negligence, or willful misconduct), or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by the Borrower or any Subsidiary or Affiliate of the Borrower, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or for the value of any Collateral or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of the Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Administrative Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Borrower or any of its Subsidiaries or Affiliates. SECTION 8.4. Reliance by Administrative Agent. -------------------------------- (a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Loan Parties), independent accountants and other experts selected by the Administrative Agent. Except for its express obligations set forth in Article II hereof, the Administrative Agent shall ---------- be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Majority Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to -67- take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Majority Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. (b) For purposes of determining compliance with the conditions specified in Sections 4.1 and 4.2, each Lender that has executed this ------------ --- Agreement, or an Assignment and Acceptance, shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter either sent by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender, unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender prior to the initial Borrowing specifying its objection thereto and either such objection shall not have been withdrawn by notice to the Administrative Agent to that effect or such Lender shall not have made available to the Administrative Agent such Lender's ratable portion of such Borrowing. SECTION 8.5. Notice of Default. The Administrative Agent shall not ----------------- be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default." In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be requested by the Majority Lenders in accordance with Article VII; provided that unless and until the Administrative ----------- -------- Agent shall have received any such request, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders. SECTION 8.6. Credit Decision. Each Lender expressly acknowledges --------------- that none of the Administrative Agent-Related Persons has made any representation or warranty to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Loan Parties shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties, and all applicable bank regulatory laws relating to the transactions contemplated thereby, and made its own decision to enter into this Agreement and extend credit to the Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan -68- Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Administrative Agent, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Borrower which may come into the possession of any of the Administrative Agent-Related Persons. SECTION 8.7. Indemnification. Whether or not the transactions --------------- contemplated hereby shall be consummated, the Lenders shall indemnify upon demand the Administrative Agent-Related Persons (to the extent not reimbursed by or on behalf of the Borrower and without limiting the obligation of the Borrower to do so), ratably according to such Lender's Percentage from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind whatsoever which may at any time (including at any time following the repayment of the Loans and the termination or resignation of the related Administrative Agent) be imposed on, incurred by or asserted against any such Person and which are in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any such Person under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment to -------- the Administrative Agent-Related Persons of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower. Without limiting the generality of the foregoing, if the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Lenders in this Section shall survive the payment of all Obligations hereunder. -69- SECTION 8.8. Administrative Agent in Individual Capacity. Bank of ------------------------------------------- America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory or other business with the Loan Parties and their Affiliates as though Bank of America were not the Administrative Agent hereunder and without notice to or consent of the Lenders. With respect to its Loans and interests in Letters of Credit issued hereunder, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and the "Lenders" shall include Bank of America in its individual capacity. SECTION 8.9. Successor Administrative Agent. The Administrative ------------------------------ Agent may, and at the request of the Majority Lenders shall, resign as Administrative Agent upon thirty (30) days' notice to the Lenders. If the Administrative Agent shall resign as Administrative Agent under this Agreement, the Majority Lenders shall appoint from among the Lenders a successor representative for the Lenders. If no successor representative is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor representative from among the Lenders. Upon the acceptance of its appointment as successor representative hereunder, such successor representative shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term "Administrative Agent" shall mean such successor representative and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article VIII and Sections 9.4 and ------------ ------------ 9.10 shall inure to its benefit as to any actions taken or omitted to be taken - ---- by it while it was Administrative Agent under this Agreement. If no successor representative has accepted appointment as Administrative Agent by the date which is thirty (30) days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Majority Lenders appoint a successor representative as provided for above. Upon resignation, the Administrative Agent shall execute and deliver such assignments and take such other actions as the Lenders shall reasonably request in order to transfer and assign its rights and interests under the Collateral Documents to the Lenders or any successor representative appointed by the Lenders; provided -------- that any costs and expenses incurred by the Administrative Agent in taking such actions shall be reimbursed in accordance with Section 9.4(a). -------------- SECTION 8.10. Collateral Matters; Release of Collateral. ----------------------------------------- (a) The Administrative Agent is authorized on behalf of all the Lenders, without the necessity of any notice to or further consent from the Lenders, from time to time to take any action with respect to any Collateral or the Collateral Documents which may be necessary to perfect and maintain perfected the security interest in and Liens upon the Collateral granted pursuant to the Collateral Documents. -70- (b) The Lenders irrevocably authorize the Administrative Agent, and the Administrative Agent hereby agrees upon the request of the Borrower, to release any Lien granted to or held by the Administrative Agent upon any Collateral (i) upon termination of the Commitments and payment in full of all Loans and all other Obligations payable under this Agreement and under any other Loan Document; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder; (iii) constituting property in which none of the Loan Parties owned any interest at the time the Lien was granted or at any time thereafter; (iv) constituting property leased to any Loan Party under a lease which has expired or been terminated in a transaction permitted under this Agreement or is about to expire and which has not been, and is not intended by such Loan Party to be, renewed or extended; (v) consisting of an instrument evidencing Debt or other debt instrument, if the indebtedness evidenced thereby has been paid in full; (vi) if required by the Intercreditor Agreement; (vii) with respect to which (A) the Borrower shall have requested in writing that the Administrative Agent release its Lien thereon, (B) the Borrower shall have provided, or caused one or more of its Subsidiaries to provide, substitute Collateral of equal or greater value to that of such Collateral subject to such requested Lien release, (C) the Administrative Agent shall have reasonably determined that such substitute Collateral is otherwise acceptable, (D) such substitute Collateral (and the Administrative Agent's substitute Lien thereon) shall be subject to documentation reasonably satisfactory to the Administrative Agent and (E) such release and substitution is otherwise made in compliance with Section ------- 3.1 of the Intercreditor Agreement; or (viii) if approved, authorized or --- ratified in writing by the Majority Lenders. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent's authority to release particular types or items of Collateral pursuant to this Section 8.10(b). The Administrative Agent --------------- hereby agrees to execute and deliver to the Borrower such instruments and documents as are requested by the Borrower (and prepared and filed at Borrower's sole cost and expense) to effect each release permitted hereunder. SECTION 8.11. Intercreditor Agreement and other Loan Documents. ------------------------------------------------ Except to the extent provided in Section 9.1, each Lender from time to time ----------- party hereto authorizes and consents, by its execution hereof or by the Assignment and Acceptance by which it became a Lender, to the Administrative Agent's entering into the Intercreditor Agreement and each of the other Loan Documents on such Lender's behalf and taking all actions taken, required or permitted to be taken by the Administrative Agent thereunder. ARTICLE IX MISCELLANEOUS ------------- SECTION 9.1. Amendments, etc. No amendment or waiver of any --------------- provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no amendment, waiver or consent shall, unless in writing -------- and signed by -71- all the Lenders, do any of the following: (a) increase any of the Commitments of the Lenders, (b) reduce the principal of, or interest on, the Loans or any fees or other amounts payable hereunder, (c) postpone any date fixed for any payment of principal of, or interest on, the Loans or any fees or other amounts payable hereunder (it being understood that, with the consent of the Majority Lenders, changes to any mandatory prepayments set forth in clauses (b) through (f) of ----------- --- Section 2.8.1, including the application thereof, may be made), (d) change the - ------------- percentage of any of the Commitments or of the aggregate unpaid principal amount of the Loans, or the number of the Lenders, which shall be required for the Lenders or any of them to take any action hereunder, or (e) release all or substantially all of the Collateral (other than to the extent permitted by Section 8.10), (f) amend this Section 9.1; and provided, further, that no - ------------ ----------- -------- ------- amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement. SECTION 9.2. Notices, etc. Unless otherwise specifically permitted ------------ herein, all notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) and mailed, telecopied, telegraphed, telexed, cabled or delivered, and addressed as follows: (a) if to the Borrower or any other Loan Party: Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, Illinois 60521 Attention: Bruce J. Biemeck Telecopier: (630) 574-2981 with a copy to: Winston & Strawn 35 West Wacker Drive Chicago, Illinois 60601 Attention: Brian S. Hart Telecopier: (312) 558-5700 (b) if to any Lender, an original party hereto, at its Domestic Lending Office specified opposite its name on Schedule II hereto; if to any ----------- other Lender, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and -72- (c) if to Bank of America as the Issuing Lender or the Administrative Agent: Bank of America National Trust and Savings Association 231 South LaSalle Street Chicago, Illinois 60697 Attention: Jay McKeown, Assistant Vice President Telecopier: (312) 974-9102 with a copy to: Bank of America National Trust and Savings Association 231 South LaSalle Street Chicago, Illinois 60697 Attention: Paul R. Frey, Senior Vice President Telecopier: (312) 765-2193 and a copy to: Sidley & Austin One First National Plaza Chicago, Illinois 60603 Attention: Michael L. Gold Telecopier: (312) 853-7036 or, as to the Borrower or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Administrative Agent. All such telecopier, telegraphic, telex or cable notices and communications shall, when telecopied, telegraphed, telexed or cabled, be effective when telecopied delivered to the telegraph company, confirmed by telex answerback or delivered to the cable company, respectively, and all such mail notices and communications shall be effective five (5) days after deposit in the mails; except that notices and communications by any of the above means to the Administrative Agent pursuant to Articles II, III or VIII shall not be effective until received by ----------- --- ---- the Administrative Agent. SECTION 9.3. No Waiver; Remedies. No failure on the part of any ------------------- Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9.4. Costs and Expenses. The Borrower shall, whether or not ------------------ the transactions contemplated hereby shall be consummated: -73- (a) pay or reimburse Bank of America (including in its capacity as Administrative Agent) and the Lead Arranger promptly after demand for all reasonable out-of-pocket costs and expenses incurred by Bank of America (including in its capacity as Administrative Agent) in connection with the development, preparation, delivery, syndication, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any Loan Document and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including the Attorney Costs incurred by Bank of America (including in its capacity as Administrative Agent) with respect thereto; provided that Bank -------- of America (including in its capacity as Administrative Agent) and the Lead Arranger shall not be entitled to reimbursement for costs and expenses associated with assignments and participations by any Lender after the Closing Date with the exception of assignments or participations arranged at the request of the Borrower including assignments pursuant to Section ------- 2.22; ---- (b) pay or reimburse each Lender, the Issuing Lender and the Administrative Agent within five (5) Business Days after demand for all costs and expenses incurred by them in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies (including in connection with any "workout" or restructuring regarding the Loans and other Obligations, and including in any Insolvency Proceeding or appellate proceeding) under this Agreement, any other Loan Document, and any such other documents, including Attorney Costs incurred by the Administrative Agent, the Issuing Lender and any Lender; and (c) pay or reimburse Bank of America (including in its capacity as Administrative Agent) within five (5) Business Days after demand for all reasonable appraisal (including the reasonable allocated cost of internal appraisal services), audit, environmental inspection and review (including the allocated cost of such internal services), search and filing costs, fees and expenses which are reasonably incurred or sustained by Bank of America (including in its capacity as Administrative Agent) in connection with the matters referred to under subsections (a) and (b) of this Section. --------------- --- SECTION 9.5. Setoff. In addition to and not in limitation of any ------ rights of any Lender under Applicable Law, each Lender shall, upon the occurrence and during the continuance of any Event of Default described in Section 7.1(a) or Section 7.1(e), have the right to appropriate and apply to the - -------------- -------------- payment of the Obligations then due and unpaid, and, as security for such Obligations, the Borrower hereby grants to each Lender a continuing security interest in, any and all deposits or accounts of the Borrower then or thereafter maintained with such Lender or participant; provided that any such appropriation -------- and application shall be subject to the provisions of Section 2.17. Each Lender ------------ agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided that the failure to -------- give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section 9.5 are in addition to other rights ----------- and remedies (including other rights of setoff) which such Lender may have. -74- SECTION 9.6. Binding Effect. This Agreement shall become effective -------------- when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Lender that such Lender has executed it, and thereafter shall be binding upon and inure to the benefit of each of the Borrower, the Administrative Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders. SECTION 9.7. Assignments, Participations, etc. -------------------------------- (a) Any Lender may at any time, with the written consent of the Borrower and the Administrative Agent, which consents shall not be unreasonably withheld, assign and delegate to one or more Eligible Assignees (provided that no written consent of the Borrower or the -------- Administrative Agent shall be required at any time when an Event of Default exists, or in connection with any assignment and delegation by a Lender to a Lender Affiliate of such Lender) (each an "Assignee") all, or any ratable -------- part of all, of the Loans, interests in Letters of Credit, the Commitment and the other rights and obligations of such Lender hereunder, in a minimum amount of $5,000,000 and integral multiples of $500,000 in excess of such amount or, if less, all of such Loans, interests in Letters of Credit, the Commitment and the other rights and obligations of such Lender hereunder; provided that (i) the Borrower, the Administrative Agent and the Issuing -------- Lender may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (A) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Borrower and the Administrative Agent by such Lender and the Assignee; (B) such Lender and its Assignee shall have delivered to the Borrower and the Administrative Agent an Assignment and Acceptance; and (C) the assignor Lender or Assignee has paid to the Administrative Agent a processing fee in the amount of $3,500 and (ii) the First Preferred Fleet Mortgages and the Second Preferred Fleet Mortgages shall be amended of record to the extent deemed necessary by the Administrative Agent and its counsel to reflect the deletion and/or addition of Lenders' names in such instruments. (b) From and after the date that the Administrative Agent notifies the assignor Lender that it has received an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents. (c) Immediately upon each Assignee's making its processing fee payment under the Assignment and Acceptance, this Agreement shall be deemed to be amended to -75- the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitment arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitment of the assigning Lender pro tanto. --- ----- (d) The Administrative Agent shall maintain at its address referred to in Section 9.2 a copy of each Assignment and Acceptance delivered to and ----------- accepted by it and a register for the recordation of the names and addresses of the Lenders, the Commitments, the principal amount of Loans owing to, and the face amount of the Letters of Credit issued by the Issuing Lender from time to time (the "Register"). The entries in the -------- Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent, the Issuing Lender and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Any Lender may at any time sell to one or more commercial banks or other Persons not Affiliates of the Borrower (a "Participant") ----------- participating interests in any Loans and Letters of Credit, the Commitment of that Lender and the other interests of that Lender (the "originating ----------- Lender") hereunder and under the other Loan Documents; provided that (i) ------ -------- the originating Lender's obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations, (iii) the Borrower, the Administrative Agent and the Issuing Lender shall continue to deal solely and directly with the originating Lender in connection with the originating Lender's rights and obligations under this Agreement and the other Loan Documents, and (iv) no Lender shall transfer or grant any participating interest under which the Participant shall have rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment, consent or waiver would extend the maturity or reduce the principal amount of, the rate of interest on or any fee payable with respect to the Loans or other obligations in which such Participant shall have purchased a Participation. In the case of any such Participation, the Participant shall not have any rights under this Agreement, or any of the other Loan Documents, and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation; except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. (f) Each Lender agrees to use its reasonable best efforts, including to take normal and reasonable precautions and exercise due care, to maintain the confidentiality of all information identified as "confidential" by the Borrower and provided to it by the Borrower or any subsidiary of the Borrower, or by the Administrative Agent on the Borrower's or Subsidiary's behalf, in connection with this Agreement or any other Loan -76- Document (and, regardless of whether it is identified as "confidential", all financial statements, budgets and projections received by the Lenders pursuant to Section 6.4(g)), and neither it nor any of its Affiliates shall -------------- use any such information for any purpose or in any manner other than pursuant to the terms contemplated by this Agreement; except to the extent such information (i) was or becomes generally available to the public other than as a result of a disclosure by the Lender, or (ii) was or becomes available on a non-confidential basis from a source other than the Borrower; provided that such source is not bound by a confidentiality -------- agreement with the Borrower known to the Lender; provided that any Lender -------- may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which such Lender is subject or in connection with an examination of such Lender by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; and (D) to such Lender's independent auditors and other professional advisors. Notwithstanding the foregoing, the Borrower authorizes each Lender to disclose to any Participant or Assignee (each, a "Transferee") and to any ---------- prospective Transferee, such financial and other information in such Lender's possession concerning the Borrower or its Subsidiaries which has been delivered to Administrative Agent or the Lenders pursuant to this Agreement or which has been delivered to the Administrative Agent or Lender by the Borrower in connection with such Lender's credit evaluation of the Borrower prior to entering into this Agreement; provided that, unless -------- otherwise agreed by the Borrower, such Transferee executes and delivers to the Borrower a confidentiality agreement under the terms of which such Transferee shall agree to keep such information confidential to the same extent required of the Lenders hereunder. (g) Notwithstanding any other provision contained in this Agreement or any other Loan Document to the contrary, any Lender may assign all or any portion of the Loans held by it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank; provided that any payment in respect -------- of such assigned Loans made by the Borrower to or for the account of the assigning or pledging Lender in accordance with the terms of this Agreement shall satisfy the Borrower's obligations hereunder in respect to such assigned Loans to the extent of such payment. No such assignment shall release the assigning Lender from its obligations hereunder. SECTION 9.8. Survival of Warranties and Agreements. All agreements, ------------------------------------- representations and warranties made herein shall survive the execution and delivery of this Agreement and the other Loan Documents and the making and repayment of the Obligations hereunder. SECTION 9.9. Marshalling; Recourse to Security; Payments Set Aside. ----------------------------------------------------- Neither any Lender nor the Administrative Agent shall be under any obligation to marshall any assets in favor of the Borrower or any other Loan Party or against or in payment of any or all of the Obligations. Recourse to security shall not be required at any time. To the extent that any -77- Loan Party makes a payment or payments to the Administrative Agent or the Lenders, or the Administrative Agent or the Lenders enforce their security interests or exercise their rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred. SECTION 9.10. Indemnification. Whether or not the transactions --------------- contemplated hereby shall be consummated: (a) General Indemnity. The Borrower shall pay, indemnify, and hold ----------------- each Lender, the Issuing Lender, the Administrative Agent, the Lead Arranger and its successors and assigns, and each of their respective officers, directors, employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and against any and all ------------------ liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including Attorney Costs) of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement and any other Loan Documents, or the transactions contemplated hereby and thereby, and with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to this Agreement, the Loans, the Letters of Credit or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided that the ----------------------- -------- Borrower shall have no obligation hereunder to an Indemnified Person with respect to Indemnified Liabilities arising from the gross negligence, bad faith or willful misconduct of such Indemnified Person. (b) Environmental Indemnity. ----------------------- (i) The Borrower hereby agrees to indemnify, defend and hold harmless each Indemnified Person from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including Attorney Costs and the allocated cost of internal environmental audit or review services), which may be incurred by or asserted against such Indemnified Person in connection with or arising out of any pending or threatened investigation, litigation or proceeding, or any action taken by any Person, with respect to any Environmental Claim arising out of or related to any Property subject to a Lien in favor of the Administrative Agent or any Lender. (ii) In no event shall any site visit, observation, or testing by the Administrative Agent or any Lender be deemed a representation or warranty that Hazardous Materials are or are not present in, on, or under the site, or that there has been or shall be compliance with any Environmental Law. Neither the -78- Borrower nor any other Person is entitled to rely on any site visit, observation, or testing by the Administrative Agent or any Lender. Neither the Administrative Agent nor any Lender owes any duty of care to protect the Borrower or any other Person against, or to inform the Borrower or any other party of, any Hazardous Materials or any other adverse condition affecting any site or Property. Neither the Administrative Agent nor any Lender shall be obligated to disclose to the Borrower or any other Person any report or findings made as a result of, or in connection with, any site visit, observation, or testing by the Administrative Agent or any Lender. (c) Survival; Defense. The obligations in this Section 9.10 shall ----------------- ------------ survive payment of all other Obligations. At the election of any Indemnified Person, the Borrower shall defend such Indemnified Person using legal counsel satisfactory to such Indemnified Person in such Person's sole discretion, at the sole cost and expense of the Borrower. All amounts owing under this Section 9.10 shall be paid within thirty (30) days after ------------ demand. SECTION 9.11. Consent to Jurisdiction and Service of Process; Waiver ------------------------------------------------------ of Jury Trial. All judicial proceedings brought against any party to this - ------------- Agreement with respect to this Agreement or any other Loan Document may be brought in any state or federal court of competent jurisdiction in the State of Illinois, and by execution and delivery of this Agreement, each party accepts, for itself and in connection with its properties, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any final judgment rendered thereby in connection with this Agreement or any of the other Loan Documents from which no appeal has been taken or is available. Each party irrevocably consents to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to its notice address specified on the signature pages hereof, such service to become effective ten (10) days after such mailing. EACH LOAN PARTY, THE ISSUING LENDER, THE ADMINISTRATIVE AGENT, AND EACH LENDER IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (B) ANY OBJECTION (INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of the Administrative Agent or any Lender or any Loan Party to bring proceedings against any Loan Party in the courts of any other jurisdiction. SECTION 9.12. Performance of Obligations. Each Loan Party agrees -------------------------- that the Administrative Agent, the Issuing Lender and the Lenders, or any one or more of them, may, but shall have no obligation to, make any payment or perform any act required of such Loan Party under any Loan Document or take any other action which such party in its discretion deems necessary or desirable to protect or preserve the Collateral, including any action to pay or -79- discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against any Collateral. SECTION 9.13. Construction. The parties acknowledge that each party ------------ and its counsel have reviewed and revised this Agreement and the other Loan Documents and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Loan Documents or any amendments or exhibits thereto. SECTION 9.14. GOVERNING LAW. THIS AGREEMENT, THE OTHER LOAN ------------- DOCUMENTS, AND THE LETTERS OF CREDIT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES. SECTION 9.15. Execution in Counterparts. This Agreement may be ------------------------- executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 9.16. Entire Agreement. This Agreement, together with the ---------------- other Loan Documents, embodies the entire agreement and understanding among the Loan Parties, the Lenders, the Issuing Lender and the Administrative Agent, and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof, except for the Fee Letter, and any prior arrangements made with respect to the payment by the Borrower of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of the Administrative Agent or the Lenders. * * * * * -80- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the Closing Date. GREAT LAKES DREDGE & DOCK CORPORATION By: --------------------------- Name: ---------------------- Title: --------------------- BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as the Administrative Agent By: --------------------------- Name: ---------------------- Title: --------------------- BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as the Issuing Lender and a Lender By: --------------------------- Name: ---------------------- Title: --------------------- BANK OF MONTREAL, CHICAGO BRANCH, as the Documentation Agent and as a Lender By: --------------------------- Name: ---------------------- Title: --------------------- S- --- COMERICA BANK, as a Lender By: --------------------------- Name: ---------------------- Title: --------------------- S- --- FLEET BANK, N.A., as a Lender By: --------------------------- Name: ---------------------- Title: --------------------- S- --- LASALLE NATIONAL BANK, as a Lender By: --------------------------- Name: ---------------------- Title: --------------------- THE NORTHERN TRUST COMPANY, as a Lender By: --------------------------- Name: ---------------------- Title: --------------------- S- --- SUMMIT BANK, as a Lender By: --------------------------- Name: ---------------------- Title: --------------------- S- --- The following Persons are signatories to this Agreement in their capacities as Loan Parties and not as Borrower. GREAT LAKES INTERNATIONAL, INC. By: --------------------------- Name: ---------------------- Title: --------------------- GREAT LAKES DREDGE & DOCK COMPANY By: --------------------------- Name: ---------------------- Title: --------------------- DAWSON DREDGING COMPANY By: --------------------------- Name: ---------------------- Title: --------------------- FIFTY-THREE DREDGING CORPORATION By: --------------------------- Name: ---------------------- Title: --------------------- GATES CONSTRUCTION CORP. By: --------------------------- Name: ---------------------- Title: --------------------- S- --- EXHIBIT A* --------- FORM OF ASSIGNMENT AND ACCEPTANCE Dated ____________ ___, ____ Reference is hereby made to the Credit Agreement dated as of August 19, 1998[, heretofore amended] (the "Credit Agreement") among Great Lakes Dredge ---------------- & Dock Corporation, a Delaware corporation (the "Borrower"), the other Loan -------- Parties (as defined in the Credit Agreement), the Lenders (as defined in the Credit Agreement), and Bank of America National Trust and Savings Association, as the Administrative Agent for the Lenders (the "Administrative Agent"), and as -------------------- the Issuing Lender. Terms defined in the Credit Agreement are used herein as therein defined. _____________ (the "Assignor") and ____________ (the "Assignee") agree as follows: 1. As of the Effective Date (as defined below), the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that certain interest of the Assignor in and to: __% of the Loans owing to the Assignor; __% of the Assignor's Commitment; __% of the interests in outstanding Letters of Credit in which the Assignor is a participant pursuant to the terms of the Credit Agreement ("Letter of Credit ---------------- Participation"); ------------- and all of the other rights and obligations of the Assignor under the Credit Agreement and not explicitly mentioned above. After giving effect to such sale and assignment, (i) the Assignee's Commitment, the amount of Loans owing to the Assignee and the amount of Letter of Credit Participations held by the Assignee will be as set forth in Section 1 of Schedule 1, and (ii) the Assignee's ---------- Percentage will be as set forth in Section 2 of Schedule 1. The assignment set ---------- forth in this paragraph shall be without recourse to, or representation or warranty (except as expressly provided in this Assignment and Acceptance) by, the Assignor. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of - -------------------- *Please note requirement of Section 9.7(a) of the Credit Agreement that the ship mortgages may need to reflect the addition or deletion of the names of the Lenders party to the assignment. the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or its Affiliates or the performance or observance by the Borrower or its Affiliates of any of their respective obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of all financial information and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Administrative Agent to take such action as its representative and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; [and] (vi) specifies as its Domestic Lending Office (and address for notices) and Eurodollar Office the offices set forth beneath its name on the signature pages hereof [and (vii) assumes no duties or obligations held by the Assignor in its capacity as Administrative Agent under the Credit Agreement]** [and (viii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty]***. 4. Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Administrative Agent for acceptance and recording by the Administrative Agent. The effective date of this Assignment and Acceptance shall be the date of acceptance thereof by the Administrative Agent, unless otherwise specified on Schedule 1 hereto (the ---------- "Effective Date"); provided that all of the requirements for an assignment set -------------- -------- forth in Section 9.7 of the Credit Agreement shall have been satisfied as of such date. 5. Upon such acceptance and recording by the Administrative Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder, and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. - ----------------------------- ** If the Assgnor is the Administrative Agent. *** If the Assignee is organized under the laws of a jurisdiction outside the United States. 6. Upon such acceptance and recording by the Administrative Agent, from and after the Effective Date, the Administrative Agent shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including all payments of principal, interest and fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of Illinois. * * * * IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized, as of the date first above written, such execution being made on Schedule 1 hereto. - ---------- [NAME OF ASSIGNOR] By: ___________________________ Title: [NAME OF ASSIGNEE] By: ___________________________ Title: GREAT LAKES DREDGE & DOCK CORPORATION By: ___________________________ Title: Accepted this ___ day of ______________, ____ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent By: _________________________ Title: Schedule 1 to Assignment and Acceptance Dated _______________ __, ____ Section 1. - --------- Assignee's Commitment: $__________ Aggregate Outstanding Principal Amount of Revolving Loans owing to the Assignee: $__________ Aggregate Outstanding Principal Amount of Term Loans owing to the Assignee: $__________ Aggregate Outstanding Amount of Letter of Credit Participations held by the Assignee: $__________ Section 2. - --------- Assignee's Percentage*: __________% Section 3. - --------- Effective Date**: ___________ __, _____ - -------------------------- * A fraction equal to Assignee's Commitment divided by the Commitments of all of the Lenders, rounded upwards to the nearest whole multiple of 1/10,000. ** This date should be no earlier than the date of acceptance by the Administrative Agent. EXHIBIT B --------- FORM OF NOTICE OF BORROWING Bank of America National Trust and Savings Association, as Administrative Agent for the Lenders parties to the Credit Agreement referred to below 231 South LaSalle Street Chicago, Illinois 60697 Attention: ________________ [Date] Ladies and Gentlemen: The undersigned, GREAT LAKES DREDGE & DOCK CORPORATION, refers to the Credit Agreement, dated as of August 19, 1998[, as heretofore amended] (the "Credit Agreement," the terms defined therein being used herein as therein - ----------------- defined), among the undersigned, the other Loan Parties, the Lenders parties thereto, and Bank of America National Trust and Savings Association, as Administrative Agent for the Lenders, and as the Issuing Lender, and hereby gives you notice, irrevocably, pursuant to Section 2.4 of the Credit Agreement ----------- that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the "Proposed Borrowing") as required by Section 2.4 of the Credit Agreement: ------------------ ----------- [Revolving][Term] Loans to be made on ________________, ____: (1) Base Rate Loans $______________ (2) Eurodollar Rate Loans $______________ Total $______________ ----- The Interest Period for the Eurodollar Rate Loans described above in clause (2) shall be ____ months. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing: (a) the representations and warranties contained in Loan Documents are correct in all material respects, both before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of each such date (other than those which are specified as being made only as of a stated earlier date); (b) no event has occurred and is continuing, or would result from the Proposed Borrowing or from the application of the proceeds therefrom, which constitutes a Default or an Event of Default; and (c) the aggregate principal amount of Revolving Loans outstanding plus the Letter of Credit Obligations will not exceed the Revolving ---- Commitment Amount, both before and after giving effect to the Proposed Borrowing. Very truly yours, GREAT LAKES DREDGE & DOCK CORPORATION By:__________________________ Title: -S- - --- EXHIBIT C --------- FORM OF CONTINUATION/CONVERSION NOTICE Bank of America National Trust and Savings Association, as Administrative Agent for the Lenders parties to the Credit Agreement referred to below 231 South LaSalle Street Chicago, Illinois 60697 Attention: ______________ [Date] Ladies and Gentlemen: The undersigned, GREAT LAKES DREDGE & DOCK CORPORATION, refers to the Credit Agreement, dated as of August19, 1998[, as heretofore amended] (the "Credit Agreement"; the terms defined therein being used herein as therein - ----------------- defined), among the undersigned, the other Loan Parties, the Lenders parties thereto, and Bank of America National Trust and Savings Association, as Administrative Agent for the Lenders, and as the Issuing Lender, and hereby gives you notice, irrevocably, pursuant to Section 2.6 of the Credit Agreement ----------- that the undersigned hereby requests that on _____________, ____: (1) $______________________ of the presently outstanding amount of [Base Rate Loans] [Eurodollar Rate Loans having an Interest Period expiring on _____________, ____] consisting of [Revolving][Term] Loans: (2) be [converted into] [continued as], [ ] Base Rate Loans in the aggregate principal amount of $____________ and [ ] Eurodollar Rate Loans in the aggregate principal amount of $___________________ having an Interest Period of ________ months. The undersigned hereby certifies that both immediately before and immediately after giving effect to the conversion or continuation of the Loans as requested herein, and the application of the proceeds therefrom, no Default or Event of Default shall exist or be continuing. GREAT LAKES DREDGE & DOCK CORPORATION By: ____________________________ Title: _______________________ EXHIBIT D --------- FORM OF LETTER OF CREDIT REQUEST Bank of America National Trust and Savings Association, as Issuing Lender under the Credit Agreement referred to below 231 South LaSalle Street Chicago, Illinois 60697 Attention: _______________ [Date] Ladies and Gentlemen: The undersigned, Great Lakes Dredge & Dock Corporation, refers to the Credit Agreement, dated as of August 19, 1998 [, as heretofore amended] (the "Credit Agreement"; the terms defined therein being used herein as therein - ----------------- defined), among the undersigned, the other Loan Parties, the Lenders parties thereto, and Bank of America National Trust and Savings Association, as Administrative Agent for the Lenders, and as the Issuing Lender, and hereby gives you notice, irrevocably, pursuant to Section 3.2 of the Credit Agreement ----------- that the undersigned hereby requests the issuance of a Letter of Credit under the Credit Agreement (the "Requested Letter of Credit"), and in that connection -------------------------- sets forth below the information relating to the Requested Letter of Credit as required by Section 3.2(a) of the Credit Agreement: -------------- (i) the Business Day of the issuance of the Requested Letter of Credit is ____________ ___, ____; (ii) the expiry date of the Requested Letter of Credit is _____________ __, ____, which is on or prior to the Revolving Commitment Termination Date; (iii) the beneficiary of the Requested Letter of Credit is ________________; (iv) the aggregate face amount of the Requested Letter of Credit is _______________ (specify Dollars or the Alternative Currency in which the Requested Letter of Credit is to be denominated); (v) the Requested Letter of Credit is a [Financial] [Performance] Letter of Credit; and (vi) the conditions for drawing to be included in the Requested Letter of Credit are as follows: The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the issuance of the Requested Letter of Credit: (i) the representations and warranties contained in the Loan Documents are correct in all material respects, both before and after giving effect to the issuance of the Requested Letter of Credit, as though made on and as of each such date (other than those which are specified as being made only as of a stated earlier date); (ii) no event has occurred and is continuing, or would result from the issuance of such Letter of Credit, which constitutes a Default or an Event of Default; and (iii) the Letter of Credit Obligations will not exceed the Letter of Credit Availability, both before and after giving effect to the issuance of the Requested Letter of Credit. Very truly yours, GREAT LAKES DREDGE & DOCK CORPORATION By: ___________________________ Title: ______________________ -S- - --- EXHIBIT E --------- FORM OF OPINION OF THE BORROWER'S COUNSEL Attached. EXHIBIT F --------- FORM OF COMPLIANCE CERTIFICATE I, ________________________, hereby do certify on behalf of Great Lakes Dredge & Dock Corporation., a Delaware corporation ( the "Borrower"), in -------- my capacity solely as an officer of the Borrower and not in my individual capacity, pursuant to the Credit Agreement dated as of August 19, 1998 [, as heretofore amended] (the "Credit Agreement"), by and among the Borrower, the ---------------- other Loan Parties (as defined in the Credit Agreement), the financial institutions party to the Credit Agreement (the "Lenders"), and Bank of America ------- National Trust and Savings Association, in its capacity as the Issuing Lender and in its capacity as the Administrative Agent for the Lenders, as follows: 1. I am the duly elected, qualified and acting _______________ of the Borrower. 2. No Default or Event of Default has occurred and is continuing under the Credit Agreement on the date hereof. 3. This certificate is the "Compliance Certificate" required to be delivered pursuant to Section 6.4(d) of the Credit Agreement [for the Fiscal -------------- Quarter ending _________, ____] [for the Fiscal Year ending _________, ____]. For the fiscal period covered by this certificate, the Borrower and its consolidated Subsidiaries have complied with each of the covenants contained in Section 6.3 of the Credit Agreement. - ----------- 4. Set forth on Schedules A through E hereto are the calculations which provide the basis for the certification in paragraph 3 above. Terms which are capitalized but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the ____ day of _________, ____. GREAT LAKES DREDGE & DOCK CORPORATION By: _____________________ Title: _____________ Schedule A ---------- Capital Expenditures -------------------- Schedule B ---------- Total Leverage -------------- Schedule C ---------- Senior Leverage --------------- Schedule D ---------- Interest Coverage Ratio ----------------------- Schedule E ---------- Certain Existing Leases and Subleases ------------------------------------- SCHEDULE I ---------- DEFINITIONS ----------- "1933 Act" means the Securities Act of 1933, as amended from time to -------- time. "1934 Act" means the Securities Exchange Act of 1934, as amended from -------- time to time. "Administrative Agent" has the meaning specified in the preamble. -------------------- -------- "Administrative Agent-Related Persons" means Bank of America and any ------------------------------------ successor Administrative Agent arising under Section 8.9, together with their ----------- respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Affiliate" means, with respect to any Person, any other Person: --------- (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such Person (excluding any trustee under, or any committee with responsibility for administering any Plan); (ii) which beneficially owns or holds ten percent (10%) or more of any class of the Voting Stock of such Person (or, in the case of a Person which is not a corporation, ten percent (10%) or more of the equity interests); or (iii) ten percent (10%) or more of the Voting Stock (or, in the case of a Person which is not a corporation, ten percent (10%) or more of the equity interests) of which, is beneficially owned or held, directly or indirectly, by such Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Stock, by contract or otherwise. "Agreement" has the meaning specified in the preamble. --------- -------- "Alternative Currency" means British Pound Sterling, Canadian Dollars, -------------------- German Deutschmarks, and any other lawful currency other than Dollars which is freely transferable and convertible into Dollars as agreed to from time to time by the Issuing Lender and the Administrative Agent (in their respective sole and absolute discretion). "Applicable Base Rate Margin," "Applicable Commitment Fee Percentage," --------------------------- ------------------------------------ "Applicable Eurodollar Rate Margin," "Applicable Financial Letter of Credit Fee --------------------------------- ----------------------------------------- Percentage," and "Applicable Performance Letter of Credit Fee Percentage" - ---------- ------------------------------------------------------ respectively mean, during any Pricing Period, the amount set forth below for such Applicable Base Rate Margin, Applicable Commitment Fee Percentage, Applicable Eurodollar Rate Margin, Applicable Financial Letter of Credit Fee Percentage or Applicable Performance Letter of Credit Fee Percentage, as the case may be, depending upon the Total Leverage Ratio as of the last day of the Fiscal Quarter most recently ended prior to the first day of such Pricing Period:
=========================================================================================================== Applicable Applicable Total Applicable Applicable Applicable Financial Performance Leverage Base Rate Commitment Eurodollar Rate Letter of Credit Letter of Credit Ratio Margin Fee Percentage Margin Fee Percentage Fee Percentage =========================================================================================================== Less than 2.75x 0.00% 0.30% 1.25% 1.25% 0.625% - ----------------------------------------------------------------------------------------------------------- Greater than or 0.0% 0.375% 1.50% 1.50% 0.75% equal to 2.75x but less than 3.50x - ----------------------------------------------------------------------------------------------------------- Greater than or 0.0% 0.375% 1.75% 1.75% 0.875% equal to 3.50x but less than 4.25x - ----------------------------------------------------------------------------------------------------------- Greater than or 0.25% 0.50% 2.00% 2.00% 1.00% equal to 4.25x but less than 5.00x - ----------------------------------------------------------------------------------------------------------- Greater than or 0.50% 0.50% 2.25% 2.25% 1.125% equal to 5.00x but less than 5.75x - ----------------------------------------------------------------------------------------------------------- Greater than or 0.75% 0.50% 2.50% 2.50% 1.125% equal to 5.75x - -----------------------------------------------------------------------------------------------------------
provided, however, that (i) if and for so long as the Borrower shall have failed - -------- ------- to timely deliver a Compliance Certificate under Section 6.4(b) or Section -------------- ------- 6.4(c) with respect to such Fiscal Quarter most recently ended, the Applicable - ------ Base Rate Margin, Applicable Commitment Fee Percentage, Applicable Eurodollar Rate Margin, Applicable Financial Letter of Credit Fee Percentage, and Applicable Performance Letter of Credit Fee Percentage for such Pricing Period shall be determined as if the Total Leverage Ratio is greater than or equal to 5.75 to 1.00, (ii) notwithstanding the foregoing, for the period beginning on the Closing Date and ending on the first day of the first Pricing Period commencing after the Closing Date, the Applicable Base Rate Margin, Applicable Commitment Fee Percentage, Applicable Eurodollar Rate Margin, Applicable Financial Letter of Credit Fee Percentage, and Applicable Performance Letter of Credit Fee Percentage for such Pricing Period shall be determined as if the Total Leverage Ratio is greater than or equal to 4.25 to 1.00 but less than 5.00 to 1.00 and (iii) notwithstanding the foregoing, the Applicable Performance Letter of Credit Fee Percentage shall be subject to change in accordance with Section 2.10(c). - --------------- -S- - --- "Applicable Law" means, with respect to any Person or matter, any law, -------------- rule, regulation, order, decree or other requirement having the force of law relating to such Person or matter and, where applicable, any interpretation thereof by any Person having jurisdiction with respect thereto or charged with the administration or interpretation thereof. "Applicable Lending Office" means, with respect to each Lender, such ------------------------- Lender's Domestic Lending Office in the case of a Base Rate Loan and such Lender's Eurodollar Office in the case of a Eurodollar Rate Loan. "Assignee" has the meaning specified in Section 9.7. -------- ----------- "Assignment and Acceptance" means an assignment and acceptance entered ------------------------- into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of Exhibit A. --------- "Attorney Costs" means and includes all reasonable fees and -------------- disbursements of any law firm or other external counsel, the reasonable allocated cost of internal legal services which are performed (but without duplication of the services performed by any external counsel) specifically with respect to this Agreement, any other Loan Document or otherwise related to the relationship of the Lenders and the Borrower and, without duplication, all reasonable disbursements of internal counsel. "Authorized Officer" means, relative to any Loan Party, the officers ------------------ of such Loan Party whose signatures and incumbency shall have been certified to the Administrative Agent pursuant to Section 4.1. ----------- "Availability" means, at any time, an amount (determined on a Dollar ------------ equivalent basis) equal to the Revolving Commitment Amount then in effect minus ----- the then outstanding Letter of Credit Obligations. "Bank of America" has the meaning specified in the preamble. --------------- -------- "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 --------------- U.S.C. (S) 101, et seq.). ------- "Base Capital Expenditure Amount" has the meaning specified in Section ------------------------------- ------- 6.3(a). - ------ "Base Rate" means the higher of: --------- (i) the rate of interest publicly announced from time to time by Bank of America (or its successor) in San Francisco, California as its "reference rate." It is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in the reference rate announced by Bank of America shall take effect at -S- - --- the opening of business on the day specified in the public announcement of such change; and (ii) 0.50% per annum above the latest Federal Funds Rate. "Base Rate Loan" means a Loan which bears interest at or determined by -------------- reference to the Base Rate. "Benefit Plan" means a defined benefit plan as defined in Section ------------ 3(35) of ERISA (other than a Multiemployer Plan) in respect of which the Borrower or any ERISA Affiliate is, or within the immediately preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA. "Bonding Agreement" means, collectively, the Reliance Agreement and ----------------- any supplement thereto or replacement thereof, and any similar contractual arrangement with providers of bid, performance or payment bonds, each of which supplement, replacement or similar arrangement being subject to the Intercreditor Agreement. "Borrower" has the meaning specified in the preamble. -------- -------- "Borrowing" means a borrowing of Loans made by all of the Lenders in --------- accordance with their respective applicable Percentages, on the same Business Day, in accordance with Section 2.4. ----------- "Business Day" means a day of the year on which banks are not required ------------ or authorized to close in any of New York City or Chicago and, if the applicable Business Day relates to any Eurodollar Rate Loan, a day of the year on which dealings are carried on in the interbank Eurodollar market. "Capital Adequacy Regulation" means any guideline, request or --------------------------- directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. "Capitalization Documents" means the Merger Agreement, the ------------------------ Shareholders Agreement and the Registration Rights Agreement. "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 (x) proceeds received from the sale of fixed or capital assets which have been applied, within one year of receipt thereof, to the purchase of replacement fixed or capital assets used for substantially the same purpose as the assets sold; and (y) insurance or requisition proceeds or condemnation -S- - --- 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 of replacement fixed or capital assets used for substantially the same purpose as the assets or properties damaged, destroyed, requisitioned or condemned. "Capitalized Lease" means, with respect to any Person, any lease of ----------------- any property by that Person as lessee, the obligation for Rentals with respect to which is required to be accounted for as a capital lease on the balance sheet of such person in accordance with GAAP. "Capitalized Rentals" means, as of the date of any determination, the ------------------- amount at which the aggregate Rentals due and to become due under all Capitalized Leases under which the Borrower or any of its Subsidiaries is a lessee would be reflected as a liability on a consolidated balance sheet of the Borrower and its Subsidiaries. "CERCLA" has the meaning specified in the definition of "Environmental ------ ------------- Laws." - ---- "Claims" means any claim or demand, by any Person, of whatsoever kind ------ or nature for any alleged Liabilities and Costs, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, Permit, ordinance or regulation, common law or otherwise. "Closing Date" means the date on which all of the conditions precedent ------------ set forth in Section 4.1 are satisfied or waived by all of the Lenders. ----------- "Code" means the Uniform Commercial Code of the State of Illinois. ---- "Collateral" means all Property and interests in Property now owned or ---------- hereafter acquired by the Parent or any of its Subsidiaries in or upon which a Lien is granted under the Collateral Documents. "Collateral Documents" means the First Preferred Fleet Mortgages, the -------------------- Second Preferred Fleet Mortgages, the Note Pledge Agreement, the Equipment Security Agreements, the Receivables Security Agreements, the Proceeds Agent Agreement, financing statements and all other similar agreements, assignments, instruments and documents delivered to the Administrative Agent from time to time to create, evidence or perfect Liens securing the Obligations, and all amendments, supplements, modifications, renewals, replacements, restatements, consolidations, substitutions, and extensions of any of the foregoing. "Commitment" shall mean collectively, the Revolving Commitments and ---------- the Term Commitments, or with respect to any Lender, such Lender's Revolving Commitment and Term Commitment. "Commitment Fee" shall have the meaning specified in Section 2.14(a). -------------- --------------- "Compliance Certificate" shall have the meaning specified in Section ---------------------- ------- 6.4(d). - ------ -S- - --- "Contaminant" means any waste, pollutant, hazardous substance, ----------- radioactive substance or material, toxic substance, hazardous waste, radioactive waste, special waste, petroleum or petroleum-derived substance or waste, asbestos in any form or condition, polychlorinated biphenyls ("PCBs"), or any hazardous or toxic constituent thereof and includes, but is not limited to, these terms as defined in any Environmental Law. "Continuation/Conversion Notice" shall have the meaning specified in ------------------------------ Section 2.6. - ----------- "Continuing Directors" means, as of any date of determination, any -------------------- member of the Board of Directors of the Borrower who (i) was a member of such Board of Directors as of the Closing Date or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election. "Contribution Agreement" means the Contribution and Indemnification ---------------------- Agreement executed and delivered pursuant to Section 4.1 among each of the ----------- Subsidiary Guarantors. "Customary Permitted Investment" means, at any time, Investments of ------------------------------ the Borrower or any of its Subsidiaries in (a) any obligation, maturing not more than one year after such time, issued or guaranteed by the United States Government or issued by an agency thereof and backed by the full faith and credit of the United States of America; (b) marketable general obligations, maturing not more than six months after such time, issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof and rated A-2 by Standard & Poor's Rating Group, a division of McGraw Hill Inc. or P-2 or higher by Moody's Investors Service, Inc.; (c) commercial paper, maturing not more than nine months from the date of issue, which is issued by (i) a corporation (other than an Affiliate of any Loan Party) organized under the laws of any state of the United States or of the District of Columbia and rated A-2 or higher by Standard & Poor's Rating Group, a division of McGraw Hill Inc. or P-2 by Moody's Investors Service, Inc., or (ii) any Lender (or its holding company); (d) any certificate of deposit, time or demand deposit or bankers acceptance, maturing not more than one year after such time, which is issued by either (i) a commercial banking institution organized under the laws of the United States of America or any State thereof or the District of Columbia that has a combined capital, surplus and undivided profits of not less than $500,000,000, (ii) any Lender, or (iii) any branch of any Lender or any commercial banking institution organized under the laws of the United Kingdom, Canada or Japan having combined capital, surplus and undivided profits of not less than $500,000,000; (e) fully collateralized repurchase agreements with a term of not more than 30 days for underlying securities of the type described in clauses (a) and (b) above, entered into with any institution ----------- --- meeting the qualifications specified in clause (d) above; (f) participation in ---------- loans made to a borrower (other than an Affiliate of any Loan Party) with a debt rating of A-2 or higher from Standard & Poor's Rating Group, a division of McGraw Hill Inc. or P-2 or higher from Moody's Investor Service, Inc.; provided, -------- however, that such loans must mature within six months from the date such - ------- participation is purchased; (g) short-term asset management accounts offered by any Lender for the purpose of investing in notes issued by a corporation (other than an Affiliate of any Loan Party) organized under the laws of any state of the United States or of the District of Columbia and rated A-2 or higher by Standard & Poor's -S- - --- Rating Group, a division of McGraw Hill, Inc. or P-2 or higher by Moody's Investors Service, Inc.; or (h) bonds issued by a municipality or governmental agency and rated not lower than BBB by Standard & Poor's Rating Group, a division of McGraw Hill, Inc. or Baa2 by Moody's Investors Service, Inc. and purchased by the Borrower or any of its Subsidiaries in the ordinary course of its business in connection with retainage under contracts with its customers. "Customary Permitted Liens" means: ------------------------- (a) Liens (other than those arising with respect to any noncompliance with ERISA or Environmental Laws) for taxes, assessments or governmental charges, but only to the extent that such taxes, assessments or charges are either not delinquent or are being contested in good faith by appropriate proceedings, and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen, suppliers and other Liens imposed by law created in the ordinary course of business of the Borrower and its Subsidiaries, but only to the extent that the amounts secured or to be secured by such Liens are either not overdue or are being contested in good faith and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (c) Liens (other than any Lien imposed by ERISA or Environmental Laws) incurred or deposits (including, without limitation, security deposits) made in the ordinary course of the Borrower's business or any of its Subsidiaries' businesses (including, without limitation, surety bonds and appeal bonds) in connection with workers' compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, contracts (other than for the repayment of borrowed money or to stay a judgment pending an appeal thereof), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts, but only to the extent that the amounts secured or to be secured by such Liens are either not delinquent or are being contested in good faith and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (d) survey exceptions or encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real property, which do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries; and (e) Liens of or resulting from any judgment or award, other than any judgment or award that gives rise to an Event of Default, the time for appeal or petition for rehearing of which shall not have expired, or in respect of which the Borrower or any of its Subsidiaries shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured. -S- - --- "CVC" means Citicorp Venture Capital, Ltd., a New York corporation, or --- any successor thereto by merger or consolidation. "Dawson" means Dawson Dredging Company, a Delaware corporation and ------ wholly-owned Subsidiary of the Borrower. "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. "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" has the meaning specified in Section 2.9.2. ------------ ------------- "Deposit" has the meaning specified in Section 7.2. ------- ----------- "Designated Subsidiary" means (i) a wholly-owned Subsidiary of the --------------------- Borrower which is also a Loan Party, and (ii) any "Wholly Owned Restricted Subsidiary", as defined in the Note Indenture as in effect on the date hereof. "Designated Vessel" means (i) all vessels owned by the Borrower or any ----------------- of its Subsidiaries and documented under the federal laws of the United States of America and (ii) any vessels, whether or not documented in compliance with clause (i), with a book value of at least $500,000 owned as of the Closing Date - ---------- or thereafter acquired by the Borrower or any of its Subsidiaries. "DOL" means the United States Department of Labor. --- "Dollars" and the sign "$" each means lawful money of the United ------- - States of America. -S- - --- "Domestic Lending Office" means, with respect to any Lender, the ----------------------- office of such Lender specified as its "Domestic Lending Office" opposite its name on Schedule II or in the Assignment and Acceptance pursuant to which it ----------- became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "EBITDA" means, with respect to any period, as determined in ------ accordance with GAAP, the sum of the amounts for such period of (i) Net Income, plus, without duplication and to the extent reflected as a charge in the - ---- consolidated statement of such Net Income for such period: (ii) depreciation, depletion and amortization expense, (iii) federal, state, local and foreign income taxes, (iv) Interest Expense, and (v) non-recurring charges arising during the Fiscal Year ending December 31, 1998 in connection with the Restructuring Transactions. "Eligible Assignee" means any bank, trust company, savings bank, ----------------- savings and loan association, investment bank, insurance company, credit company, finance company or pension fund, unaffiliated with the Borrower or any Lender Affiliate. "Employment Agreements" means those certain employment agreements now --------------------- existing between the Borrower and each of Douglas B. Mackie, Bruce J. Biemeck and Richard Lowry, respectively, as the same may be amended, supplemented or otherwise modified from time to time. "Environmental Claim" means all claims, however asserted, by any ------------------- Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon (a) the presence, placement, or Release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental or Releases) of any Hazardous Material at, in, or from Property, whether or not owned by the Borrower, or (b) any other circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. "Environmental Laws" means all 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 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. -S- - --- "Equipment Security Agreements" means the "Lender Equipment Security ----------------------------- Agreement" referred to and as defined in the Intercreditor Agreement. "ERISA" means the Employee Retirement Income Security Act of 1974. ----- "ERISA Affiliate" means any (a) corporation which is a member of the --------------- same controlled group of corporations (within the meaning of Section 414(b) of the IRC) as the Borrower, (b) partnership or other trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the IRC) with the Borrower, and (c) member of the same affiliated service group (within the meaning of Section 414(m) of the IRC) as the Borrower, any corporation described in clause (a) above or any partnership or trade or ---------- business described in clause (b) above. ---------- "Eurodollar Office" means, with respect to any Lender, the office of ----------------- such Lender specified as its "Eurodollar Office" opposite its name on Schedule -------- II hereto or in the Assignment and Acceptance pursuant to which it became a - -- Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "Eurodollar Rate (Adjusted)" means, relative to any portion of a Loan -------------------------- to be made, continued, or maintained as, or converted into, a Eurodollar Rate Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Eurodollar Rate = IBO Rate -------------------- (Adjusted) 1 - the Eurodollar Reserve Percentage. "Eurodollar Rate Loan" means a Loan bearing interest, at all times -------------------- during the Interest Period applicable to such Loan, at a rate of interest determined by reference to the Eurodollar Rate (Adjusted). "Eurodollar Reserve Percentage" means, relative to each Interest ----------------------------- Period, a percentage (expressed as a decimal) equal to the daily average during such Interest Period of the percentages in effect on each day of such Interest Period, as prescribed by the Federal Reserve Board, for determining the maximum reserve requirements applicable to "Eurocurrency liabilities" pursuant to Regulation D or any other applicable regulation of the Federal Reserve Board which prescribes reserve requirements applicable to "Eurocurrency liabilities" as currently defined in Regulation D. "Events of Default" has the meaning specified in Section 7.1. ----------------- ----------- "Excess Cash Flow" means, with respect to any Fiscal Year for the ---------------- Borrower and its consolidated Subsidiaries, as determined in accordance with GAAP, an amount equal to: (a) the sum for such period of (i) EBITDA, plus (ii) extraordinary ---- and non- -S- - --- recurring cash gains, plus (iii) all non-cash losses deducted in ---- determining Net Income for such Fiscal Year, plus (iv) cash dividends from ---- and cash payments on account of, principal and interest received from Amboy Aggregates and other equity joint ventures; minus ----- (b) the sum for such period of (i) Capital Expenditures made during such period to the extent permitted under Section 6.3(a), plus (ii) all -------------- ---- regularly scheduled installments of principal with respect to Debt, all voluntary prepayments of the Term Loans and all mandatory prepayments with respect to the outstanding principal balance of the Obligations (other than pursuant to Section 2.2.1 and, in any event, excluding all voluntary ------------- prepayments of Revolving Loans, and excluding all mandatory prepayments of Revolving Loans to the extent not concurrently resulting in a permanent reduction in the Revolving Commitment Amount), in each case, which were actually paid by the Borrower and its consolidated Subsidiaries during such Fiscal Year, plus (iii) all federal, state, local and foreign income taxes ---- paid or payable in cash during such Fiscal Year by the Borrower and its consolidated Subsidiaries, plus (iv) Interest Expense paid or payable in ---- cash during such Fiscal Year, plus (v) the amount of the net increase (if ---- any, but not less than zero) in the consolidated net current assets (consolidated current assets minus consolidated current liabilities) of the Borrower and its consolidated Subsidiaries since the end of the preceding Fiscal Year, plus (vi) extraordinary and non-recurring cash losses, plus ---- ---- (vii) all non-cash gains or benefits included in determining Net Income for such Fiscal Year, plus (viii) all amounts paid in cash to minority ---- stockholders in Subsidiaries during such period, to the extent such payments are not prohibited by any terms of this Agreement, plus (ix) all ---- losses attributable to minority interests in Subsidiaries of the Borrower added in determining Net Income for such Fiscal Year, and plus (x) all ---- income attributable to Amboy Aggregates and other equity joint ventures, to the extent included in determining Net Income. "Existing Agreement" has the meaning specified in Section 3.11. ------------------ ------------ "Existing L/C's" has the meaning specified in Section 3.11. -------------- ------------ "Existing Lenders" has the meaning specified in Section 3.11. ---------------- ------------ "Federal Funds Rate" means, for any period, the rate set forth in the ------------------ weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such day opposite the caption "Federal Funds (Effective)." If on any relevant day such rate is not yet published in H.15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m. Quotation") for such day under the caption "Federal Funds Effective Rate." If on any relevant day the appropriate rate for such previous day is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotation, the rate for such day will be the -S- - --- arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrative Agent. "Federal Reserve Board" means the Board of Governors of the Federal --------------------- Reserve System, or any successor thereto. "Fee Letter" has the meaning specified in Section 2.14(b). ---------- ------- "Financial Letter of Credit means any standby letter of credit issued -------------------------- pursuant to this Agreement, other than a Performance Letter of Credit. ---------- "First Preferred Fleet Mortgages" means the "Lender First Ship ------------------------------- Mortgage" referred to and as defined in the Intercreditor Agreement. "Fiscal Quarter" means any quarter of any Fiscal Year. -------------- "Fiscal Year" means the Fiscal Year of the Loan Parties consisting of ----------- a period of twelve consecutive months ending on December 31. "Foreign Currency Contract" has the meaning specified in Section ------------------------- ------- 6.1(o). - ------ "Form 1001" has the meaning specified in Section 2.16(f)(i). --------- ------------------ "Form 4224" has the meaning specified in Section 2.16(f)(i). --------- ------------------ "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), which, subject to Section 1.4, are ----------- applicable to the circumstances as of the date of determination. "GLI" means Great Lakes International, Inc., a Delaware corporation. --- "Governmental Authority" means any nation or government, any state or ---------------------- other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Great Lakes" means Great Lakes Dredge & Dock Company, a New Jersey ----------- corporation and wholly-owned Subsidiary of the Borrower. "Guaranties" by any Person shall mean all obligations (other than ---------- endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Debt, dividend or other obligation, of any other Person (the "Primary Obligor") --------------- in any manner, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (i) to purchase such Debt or obligation or any property or assets constituting security therefor, (ii) to advance or supply funds -S- - --- (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. "Hazardous Materials" means all those substances which are regulated ------------------- by, or which may form the basis of liability under, any Environmental Law, including all substances identified under any Environmental Law as a hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or toxic substance, friable asbestos, or petroleum, including crude oil or any fraction thereof, and all substances identified under CERCLA as a pollutant or a contaminant. "IBO Rate" means, relative to the Interest Period for each Eurodollar -------- Rate Loan comprising all or any part of the same Borrowing, the rate of interest determined by the Administrative Agent to be (rounded upwards, if necessary, to the nearest 1/100 of 1%) the rate per annum at which deposits in Dollars in immediately available funds are offered to the Administrative Agent's Eurodollar Office in the interbank Eurodollar market as at or about 11:00 a.m., Chicago time, two (2) Business Days prior to the beginning of such Interest Period, for delivery on the first day of such Interest Period, in an amount approximately equal or comparable to the amount of Bank of America's Eurodollar Rate Loan comprising part of such Borrowing and for a period equal to such Interest Period. "Impermissible Qualification" means, relative to the opinion or --------------------------- certification of any independent public accountant as to any financial statements of the Borrower and its Subsidiaries, any qualification or exception to such opinion or certification: (a) which is of a "going concern" or similar nature, (b) which relates to the limited scope of examination of matters relevant to such financial statement, or (c) which relates to the treatment or classification of any item in such financial statements and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause any violation of Section 6.3. ----------- "Indemnified Liabilities" has the meaning specified in ----------------------- Section 9.10(a). - --------------- "Indemnified Person" has the meaning specified in Section 9.10(a). ------------------ --------------- -S- - --- "Initial Capital Contribution" means cash equity capital contributions ---------------------------- by shareholders of Borrower in an aggregate amount of not less than $37,700,000 pursuant to the terms and conditions of the Capitalization Documents. "Insolvency Proceeding" means (a) any case, action or proceeding --------------------- before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; in each case, undertaken under United States Federal, state or foreign law, including the Bankruptcy Code. "Intercreditor Agreement" means the Intercreditor Agreement of even ----------------------- date herewith by and among Reliance, the Administrative Agent, the Borrower, GLI, Great Lakes and the other "Sureties" and "Great Lakes Entities" party thereto and referred to and defined therein, as amended, restated, supplemented or otherwise modified from time to time. "Interest Expense" means, for any Fiscal Quarter, the aggregate ---------------- consolidated interest expense (net of interest income) of the Borrower and its consolidated Subsidiaries for such Fiscal Quarter, as determined in accordance with GAAP, including (i) Commitment Fees paid or payable during such Fiscal Quarter, (ii) all other fees paid or payable with respect to the issuance or maintenance of any Guaranty or contingent Debt (including Letters of Credit but excluding fees paid under the Bonding Agreement), which, in accordance with GAAP, would be included as interest expense, (iii) net costs or benefits under any Rate Protection Agreement (excluding the costs of any commodity hedging transaction or foreign currency hedging transaction other than a foreign currency hedging transaction on account of Section 6.1(o)) and (iv) the portion -------------- of any payments made in respect of Capitalized Rentals of the Borrower and its consolidated Subsidiaries allocable to interest expense, but excluding any amortization of costs and expenses incurred in connection with, and relating to, this Agreement or other financings permitted by this Agreement. "Interest Period" means, relative to any Eurodollar Rate Loan, the --------------- period from the date on which such Eurodollar Rate Loan is made or continued as, or converted into, a Eurodollar Rate Loan pursuant to Section 2.4 or 2.6 as the ----------- --- case may be, and, unless the maturity of such Eurodollar Rate Loan is accelerated, the day which numerically corresponds to such date one, two, three, six or (if available) nine or twelve months thereafter, as the Borrower may select in its relevant notice pursuant to Section 2.4 or 2.6, as the case may ----------- --- be; provided that: -------- (a) the Borrower shall not be permitted to select Interest Periods to be in effect at any one time which have expiration dates occurring on more than ten different dates; (b) if there exists no numerically corresponding day in such month, such Interest Period shall end on the last Business Day of such month; (c) if such Interest Period would otherwise end on a day which is not a Business -S-___- Day, such Interest Period shall end on the next following Business Day (unless such next following Business Day is a Business Day falling in a new calendar month, in which case such Interest Period shall end on the Business Day next preceding such numerically corresponding day); and (d) the Borrower shall not be permitted to select, and there shall not be applicable, any Interest Period that would end later than the Revolving Commitment Termination Date. "Investment" means, as applied to any Person, any purchase or other ---------- acquisition by that Person of Securities or Debt, or of a beneficial interest in Securities or Debt, of any other Person, any loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, advances to employees, officers and directors and similar items made or incurred in the ordinary course of business), capital contribution by that Person to any other Person, and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. The amount of any Investment shall be determined in conformity with GAAP. The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon "IRC" means the Internal Revenue Code of 1986. --- "IRS" means the Internal Revenue Service. --- "Issuing Lender" has the meaning specified in the preamble. -------------- -------- "Issuing-Lender Related Person" means the Issuing Lender, together ----------------------------- with their respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Issuing Banks and Affiliates. "Lead Arranger" means BankAmerica Robertson Stephens. ------------- "Lender Affiliate" means a Person engaged primarily in the business of ---------------- commercial banking and that is a Subsidiary of a Lender or of a Person of which a Lender is a Subsidiary. "Lender First Proceeds Account" has the meaning specified in the ----------------------------- Intercreditor Agreement. "Lenders" means the institutions listed on the signature pages hereof ------- and each institution that shall become a party hereto pursuant to Section 9.7. ----------- "Letter of Credit" means (i) any Financial Letter of Credit or ---------------- Performance Letter of Credit issued hereunder and (ii) any Existing L/C. Unless otherwise specified in this Agreement, any determination of the face amount or undrawn face amount of any Letter of Credit shall be made on a Dollar equivalent basis. -S-___- "Letter of Credit Availability" means, at any time of determination, ----------------------------- an amount (determined on a Dollar equivalent basis) equal to the lesser of (a) the Revolving Commitment Amount then in effect minus the then outstanding ----- principal balance of the Loans and (b) $55,000,000. "Letter of Credit Fee" has the meaning specified in Section 3.3. -------------------- ----------- "Letter of Credit Obligations" means at any time, but without ---------------------------- duplication, an amount (determined on a Dollar equivalent basis) equal to the sum of (a) the aggregate amount available to be drawn under outstanding Letters of Credit, plus (b) all amounts drawn, but not yet reimbursed, under Letters of ---- Credit. "Letter of Credit Request" has the meaning specified in Section 3.2. ------------------------ ----------- "Liabilities and Costs" means all liabilities, obligations, --------------------- responsibilities, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including, without limitation, Attorney Costs, expert and consulting fees and costs of investigation and feasibility studies), fines, penalties and monetary sanctions, interest, direct or indirect, known or unknown, absolute or contingent, past, present or future. "Lien" means any mortgage, deed of trust, pledge, hypothecation, ---- assignment, deposit arrangement, security interest, encumbrance for the payment of money, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financial lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement (other than a financing statement filed by a "true" lessor pursuant to Section 9-408 of the Code or other comparable law of any jurisdiction) naming the owner of the asset to which such Lien relates as debtor under the Code or other comparable law of any jurisdiction. "Loans" means, collectively, Revolving Loans and Term Loans. ----- "Loan Documents" means this Agreement, the Notes, the Letters of -------------- Credit, the Fee Letter, the Subsidiary Guaranties, the Contribution Agreement, the Intercreditor Agreement, the Collateral Documents and all other agreements, instruments and documents heretofore, now or hereafter executed by or on behalf of any Loan Party and delivered to or for the benefit of the Administrative Agent or any Lender in connection with this Agreement, and all amendments, supplements, modifications, renewals, replacements, restatements, consolidations, substitutions, and extensions of any of the foregoing. "Loan Party" means the Borrower, each Subsidiary Guarantor and each ---------- other Affiliate of the Borrower executing a Loan Document other than the Administrative Agent, the Issuing Lender, the Lenders and Affiliates thereof. "Majority Lenders" means, at any time, the Lenders having, in the ---------------- aggregate, a Percentage of more than 50% of the total Percentages of all of the Lenders at such time. -S-___- "Material Adverse Effect" means (a) a material adverse effect upon (i) ----------------------- the Administrative Agent's Lien on or rights with respect to any material portion of the Collateral (whether as to type, or as to amount or value in relation to the total amount of Collateral of such type), (ii) the business, financial condition, operations, properties or prospects of the Borrower and its Subsidiaries, taken as a whole, or (iii) the ability of any Loan Party to perform in any material respect the Loan Documents, the Reliance Agreement, the Merger Agreement or the Note Indenture to which it is a party or (b) the occurrence of an event which the Administrative Agent or the Majority Lenders determine could reasonably be expected to have a material adverse affect on the legality, validity or enforceability against the Loan Parties of this Agreement, any other Loan Document, the Reliance Agreement, the Merger Agreement or the Note Indenture or provided, however, if it shall be determined by any party -------- ------- hereto that any event or occurrence shall reasonably be expected to have a Material Adverse Effect solely with respect to clause (i) of this definition, ---------- then, notwithstanding such determination, such event or occurrence shall not reasonably be expected to have such a Material Adverse Effect if, within sixty (60) days of such determination, the Borrower shall have provided, or caused to be provided, to the Administrative Agent substitute Collateral with respect to the affected Collateral and related documentation pursuant to the terms and conditions of Section 8.10(b) (and, in any event, such event or occurrence shall --------------- not reasonably be expected to have such a Material Adverse Effect until the expiration of such sixty (60) day period). "Merger Agreement" means that Amended and Restated Agreement and Plan ---------------- of Merger, dated as of August 19, 1998, among Vectura Holding Company LLC, Great Lakes Dredge & Dock Acquisition, Inc., a Delaware corporation formerly known as GLDBD Acquisition, Inc., the Borrower, GLI, Blackstone Dredging Partners L.P. and Blackstone Family Investment Partnership L.P. "Merger" means the merger of Great Lakes Dredge & Dock Acquisition, ------ Inc., a Delaware corporation formerly known as GLDBD Acquisition, Inc., with and into the Borrower, effected pursuant to the terms and conditions of the Merger Agreement. "Multiemployer Plan" means a "multiemployer plan" as defined in ------------------ Section 4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years was, contributed to by the Borrower or any ERISA Affiliate. "NATCO" means NATCO Dredging Limited Partnership, a Delaware limited ----- partnership with respect to which Great Lakes owns a 75% interest as of the Closing Date. "Net Cash Proceeds" means the gross cash proceeds received by the ----------------- Borrower and its Subsidiaries in connection with the consummation of any of the transactions of the type resulting in a mandatory prepayment under clauses (d), ----------- (e) or (f) of Section 2.8.1, in any such case, net of all fees, expenses, - --- --- ------------- charges, taxes, commissions and costs incurred by the Borrower or any of its Subsidiaries in connection with the consummation of such transactions. "Net Income" means, for any period, the aggregate of all amounts ---------- (exclusive of all amounts in respect of any extraordinary or non-recurring gain or loss (including, without -S-___- limitation, any write-off of the Chicago flood litigation insurance receivable)) which, in accordance with GAAP, would be included as net income on a consolidated statement of income of the Borrower and its Subsidiaries for such period. "Net Worth" means, at any time, the sum of all amounts which, in --------- accordance with GAAP, should be included under shareholders' equity on the consolidated balance sheet of the Borrower and its Subsidiaries at such time. "Note Indenture" means that certain Indenture dated as of August 19, -------------- 1998 between The Bank of New York, as trustee, and the Borrower and the Designated Subsidiaries, pursuant to which the Borrower has consummated the Note Issuance. "Note Indenture Obligations" means all of (a) the Borrower's -------------------------- obligations under and with respect to the Note Indenture and Note Issuance, including, without limitation, all obligations to pay principal, interest, premium, fees, charges, expenses and indemnities with respect thereto, and to effect redemptions, repurchases and prepayments with respect thereto, in any case, whether fixed, contingent, matured or unmatured and (b) the Borrower's Subsidiaries' guaranty obligations with respect to the obligations of the Borrower described in clause (a). ---------- "Note Issuance" means the issuance by the Borrower of $115,000,000 in ------------- original aggregate principal amount of its 11.25% Senior Subordinated Notes due 2008 pursuant to the Note Indenture. "Note Pledge Agreement" means the "Lender Pledge Agreement" referred --------------------- to and as defined in the Intercreditor Agreement. "Notes" means the promissory notes made by the Borrower and delivered ----- to each Lender evidencing such Lender's Loans and participations in Letters of Credit. "Notice of Borrowing" has the meaning specified in Section 2.4. ------------------- ----------- "Obligations" means all loans, advances, debts, liabilities, ----------- obligations, covenants and duties of any kind or nature, present or future, owing by any Loan Party to any Lender, the Administrative Agent, or any Affiliate of any Lender or the Administrative Agent, or Person entitled to indemnification pursuant to this Agreement, whether or not evidenced by any note, guaranty or other instrument, arising under this Agreement or under any other Loan Document or any Rate Protection Agreement between any Loan Party and a Lender or Affiliate of a Lender (but only for so long as such Lender is a party to this Agreement), whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, indemnification, foreign exchange or interest rate swap transactions or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. The term includes, without limitation, all interest, charges, expenses, fees, Attorney Costs and any other sum chargeable to any Loan Party under this Agreement or any other Loan Document. Unless otherwise specified in this Agreement, any determination of the amount of outstanding Obligations shall be made on a Dollar equivalent basis. -S-___- "originating Lender" has the meaning specified in Section 9.7(e). ------------------ -------------- "Other Taxes" has the meaning specified in Section 2.16(b). ----------- --------------- "Participant" has the meaning specified in Section 9.7(d). ----------- -------------- "PBGC" means the Pension Benefit Guaranty Corporation. ---- "Percentage" means, relative to any Lender, its percentage of the ---------- Commitments as set forth opposite such Lender's name on Schedule II, or if such ----------- Lender has entered into an Assignment and Acceptance, the percentage set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.7(d). -------------- "Performance Letter of Credit" means any standby letter of credit ---------------------------- issued pursuant to this Agreement to assure completion of performance of a nonfinancial or commercial obligation of Borrower or any of its Subsidiaries, until such time, if any, as such letter of credit is recharacterized as relating to a financial obligation of the Borrower or such Subsidiaries. "Permit" means any permit, approval, authorization, license, variance, ------ or permission required from any Governmental Authority under any Applicable Law. "Permitted Business Acquisition" means any acquisition by the Borrower ------------------------------ or any of its Subsidiaries of all or any part of the assets, shares or other equity interests in a corporation or other Person engaged in the same business or substantially related business as the Borrower or any of its Subsidiaries but only if (i) no Default or Event of Default shall have occurred or be continuing immediately prior to such acquisition or after giving effect thereto and (ii) the aggregate consideration paid (including any assumptions of Debt and the fair market value of any non-cash consideration) to make each such acquisition is included as a Capital Expenditure in the Fiscal Year in which such acquisition is consummated for purposes of computing the limits prescribed by Section ------- 6.3(a). - ------ "Permitted Disposition" means any sale, transfer, lease, contribution, --------------------- conveyance or other disposition of any assets of the Borrower or any of its Subsidiaries, whether in a single transaction or a series of related transactions, to any Person, but only if (a) such sale, lease or transfer consists of property which is not Collateral and which is either (i) made in the ordinary course of business of the Borrower or such Subsidiary, (ii) is a sale, lease or transfer from (A) the Borrower to any of its Designated Subsidiaries or from a Designated Subsidiary to the Borrower or to another Designated Subsidiary, or (B) the Borrower or any Designated Subsidiary to a Subsidiary of the Borrower which is not a Designated Subsidiary, or from a Subsidiary of the Borrower which is not a Designated Subsidiary to any other such Subsidiary, provided that, in the case of this clause (B), the aggregate amount of all such Permitted Dispositions (other than renewals and extensions of the leases and subleases set forth on Schedule V) made after the Closing Date does not exceed $15,000,000, or (iii) is a sale, lease or transfer to another Person of assets determined by the Board of Directors of the Borrower or such -S-___- Subsidiary, in its reasonable judgment, to be no longer useful or necessary in the operations or businesses of the Borrower or such Subsidiaries, provided that the aggregate consideration for all such assets sold, leased -------- or transferred after the Closing Date under clause (iii) of this ------------ subparagraph (a) does not exceed $15,000,000 (it being understood that ---------------- committing a vessel and related equipment of the Borrower or any of its Subsidiaries to the performance of a contract to which it is a party shall not constitute a lease of such vessel and related equipment); (b) such disposition is made in connection with a sale and leaseback transaction involving the sale or disposition of capital assets (other than Collateral, unless the disposition of such Collateral also complies with clause (iv) of subparagraph (c) of this definition) of the Borrower or any ----------- ---------------- of its Subsidiaries to a Person other than the Borrower or any of its Subsidiaries and (i) such sale or disposition of such capital assets is for an amount not less than the fair market value thereof (as determined by the Board of Directors of the Borrower or such Subsidiary in its reasonable judgment), (ii) no Default or Event of Default shall have occurred or be continuing either immediately prior to such disposition or after giving effect thereto, (iii) the rental payments of the lease relative to such transaction shall not be greater than the fair market rental value (as determined by the Board of Directors of the Borrower or such Subsidiary in its reasonable judgment) for the assets subject to such lease, and (iv) 100% of the consideration for such sale or disposition shall be cash; and (c) such disposition is made in connection with the sale of any assets of the Borrower or its Subsidiaries other than those of the type described in clauses (a) and (b) above and (i) such sale or disposition of ----------- --- such assets is for an amount not less than the fair market value thereof, as determined by the Board of Directors of the Borrower or such Subsidiary in its reasonable judgment, (ii) such sale or disposition and its terms have been approved by the Board of Directors of the Borrower or such Subsidiary, (iii) no Event of Default shall have occurred and be continuing either immediately prior to such disposition or after giving effect thereto and (iv) (A) prior to or simultaneously with such disposition, the Borrower shall have provided, or caused one or more of its Subsidiaries to provide, Collateral (or substitute Collateral) of equal or greater value to that of the property subject to such disposition, such Collateral (or substitute Collateral) is otherwise reasonably acceptable to the Administrative Agent, and such Collateral (or substitute Collateral) and the Administrative Agent's substitute Lien thereon are subject to documentation reasonably satisfactory to the Administrative Agent (provided that such documentation shall be satisfactory if substantially similar to the applicable Collateral Documents executed on the Closing Date), including, without limitation, any consents required under the Bonding Agreement or Intercreditor Agreement, or (B) at least seventy-five percent (75%) of the consideration therefor shall be in cash and the Net Cash Proceeds therefrom shall be payable to the Borrower or its Subsidiaries at the time of the consummation of such disposition, the Borrower shall have concurrently with the consummation of such disposition prepaid the Loans in an amount equal to such cash (except that the Borrower shall not be required to make any such prepayment to the extent that such Net Cash Proceeds do not exceed $100,000 in any Fiscal Year), and the aggregate of all non-cash -S-___- proceeds received by the Borrower and its Subsidiaries after the Closing Date in consideration for all dispositions pursuant to this clause (c) does ---------- not exceed $5,000,000. "Person" means and includes any person, employee, individual, sole ------ proprietorship, partnership, joint venture, trust, unincorporated organization, association, limited liability company, corporation, institution, entity, party, Governmental Authority or a government or any political subdivision or agency thereof. "Plan" means an employee benefit plan defined in Section 3(3) of ERISA ---- in respect of which the Borrower or any ERISA Affiliate is, or within the immediately preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA. "Pricing Period" means the period commencing on the forty-fifth (45th) -------------- day after the end of a Fiscal Quarter (or in the case of the last Fiscal Quarter of the Fiscal Year, commencing on the ninetieth (90th) day after the end of such Fiscal Quarter) and ending on the forty-fourth (44th) day after the end of the succeeding Fiscal Quarter (unless such succeeding Fiscal Quarter is the last Fiscal Quarter of the Fiscal Year, in which case such period shall end on the eighty-ninth (89th) date after the end of such Fiscal Quarter). "Primary Obligor" has the meaning specified in the definition of --------------- "Guaranties." - ----------- "Principals" has the meaning ascribed thereto in the Indenture, as in ---------- effect on the date hereof. "Proceeds Agent" has the meaning specified in the Intercreditor -------------- Agreement. "Proceeds Agent Agreement" has the meaning specified in the ------------------------ Intercreditor Agreement. "Property" means any real or personal property, plant, building, -------- facility, structure, vessel, underground storage tank, equipment or unit, or other asset owned, leased or operated by the Borrower or any of its Subsidiaries. "Rate Protection Agreement" means any interest rate hedging ------------------------- transaction, commodity hedging transaction, foreign currency hedging transaction or similar arrangement entered into pursuant to an agreement in form and substance (including amounts subject to such agreement) reasonably satisfactory to the Administrative Agent. "Receivables Security Agreements" means the "Lender Receivables ------------------------------- Security Agreement" referred to and as defined in the Intercreditor Agreement. "Refinancing" means the repayment in full of the Borrower's ----------- obligations under and with respect to the Existing Agreement, and the termination of all credit facilities with respect thereto and related liens and other security granted in connection therewith (except for the continuation of UCC financing statements for the benefit of the Administrative Agent and the Lenders and except as otherwise provided in Section 3.11). ------------ -S-___- "Register" has the meaning specified in Section 9.7(d). -------- -------------- "Registration Rights Agreement" means that certain Registration Rights ----------------------------- Agreement dated as of August 19, 1998 among the Borrower, certain of its Subsidiaries parties thereto, and Donaldson, Lufkin & Jenrette Securities Corporation. "Reimbursement Obligation" has the meaning specified in Section 3.5. ------------------------ ----------- "Release" means any release, spill, emission, leaking, pumping, ------- injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment. "Reliance" means Reliance Insurance Company, a Pennsylvania -------- corporation. "Reliance Agreement" means, collectively, the "Bonding Agreement" and ------------------ "Underwriting Documents" referred to and as respectively defined in the Intercreditor Agreement. "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 or not 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. "Reportable Event" means any of the events described in Section 4043 ---------------- of ERISA other than an event with respect to which the notice requirements have been waived by regulation. "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 Merger 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, or any voluntary payment or other prepayment of interest with respect to the Note Indenture Obligations, (iv) any payment made to redeem, -S-___- 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 or any of its Subsidiaries, or (v) the setting aside of funds for any of the foregoing. "Restructuring Documents" means the Loan Documents and all agreements, ----------------------- instruments and documents executed and delivered by the Borrower which govern or effect the consummation of the Merger, the Note Issuance, the Initial Capital Contribution, the restatement and amendment of the Reliance Agreement as of the date hereof and related security documentation, or the Refinancing and related transactions contemplated therein, including, without limitation, the Merger Agreement, the Note Indenture, the Capitalization Documents and the Reliance Agreement. "Restructuring Transactions" means, collectively, the Merger, the Note -------------------------- Issuance, the Initial Capital Contribution, the Refinancing, the restatement and amendment of the Reliance Agreement as of the date hereof and related security documentation, the execution and delivery of the Loan Documents, the making of the initial Loans, the issuance of the initial Letters of Credit if any on the Closing Date, the granting of Liens to the Agent pursuant to the terms of the Loan Documents, and the application of all proceeds of any of the foregoing. "Revolving Commitment" has the meaning specified in Section 2.1.1. -------------------- ------------- "Revolving Commitment Amount" means $55,000,000, as the same may be --------------------------- reduced after the Closing Date pursuant to Section 2.2. ----------- "Revolving Commitment Termination Date" means February 18, 2005 or the ------------------------------------- earlier date of termination in whole of all of the Revolving Commitments pursuant to Section 2.2 or 7.2. ----------- --- "Revolving Loan" has the meaning specified in Section 2.1.1. -------------- ------------- "Second Preferred Fleet Mortgages" means the "Lender Second Ship -------------------------------- Mortgage" referred to and as defined in the Intercreditor Agreement. "Secured Parties" means, collectively, the Administrative Agent, the --------------- Issuing Lender, the Lenders and each other Person to whom any Obligations are owing, including, without limitation, each Person entitled to indemnification pursuant to Section 9.10. ------------ "Security" has the meaning specified in Section 2(1) of the 1933 Act. -------- "Senior Debt" means Total Funded Debt consisting of (i) the ----------- outstanding principal balance of the Obligations (other than the aggregate undrawn face amount of Letters of Credit), (ii) Capitalized Rentals and (iii) and all other Total Funded Debt owing by the Borrower or any of its Subsidiaries which is secured in whole or in part by a Lien on any property of the Borrower or any of its Subsidiaries. -S-___- "Shareholders Agreement" means that certain Securities Purchase and ---------------------- Holders Agreement dated as of August 19, 1998 among the Borrower, Vectura Holding Company LLC, certain purchasing management investors and continuing management investors signatory thereto, and certain individuals who may execute such agreement from time to time. "Solvent" means when used with respect to any Person that (a) the fair ------- value of all its assets is in excess of the total amount of its debts (including contingent liabilities); (b) it is able to pay its debts as they mature; (c)it does not have unreasonably small capital for the business in which it is engaged or for any business or transaction in which it is about to engage; and (d)it is not "insolvent" as such term is defined in Section 101(32) of the Bankruptcy Code. "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. "Subsidiary Guaranties" means the Guaranties of even date herewith --------------------- executed and delivered pursuant to Section 4.1, pursuant to which the respective ----------- Subsidiary Guarantors fully, unconditionally and irrevocably guaranty the prompt and complete payment and performance of the Obligations of the Borrower, as amended, restated, supplemented or otherwise modified from time to time. "Subsidiary Guarantors" means each domestic Subsidiary of the Borrower --------------------- (other than North American Trailing Company and NATCO) and each other Subsidiary of the Parent which executes and delivers a Subsidiary Guaranty in connection with this Agreement. "Taxes" has the meaning specified in Section 2.16(a). ----- --------------- "Term Commitment" has the meaning specified in Section 2.1.2. --------------- ------------- "Term Loans" has the meaning specified in Section 2.1.2. ---------- ------------- "Termination Event" means (i) a Reportable Event with respect to any ----------------- Benefit Plan; (ii) the withdrawal of the Borrower or any ERISA Affiliate from a Benefit Plan during a plan year in which the Borrower or such ERISA Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii) the imposition of an obligation on the Borrower or any ERISA Affiliate under Section 4041 of ERISA to provide affected parties written notice of intent to terminate a Benefit Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Benefit Plan; (v) any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Benefit Plan; or (vi) the partial or complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan. "Total Funded Debt" of any Person means as of any date of ----------------- determination, all Debt of the Borrower and its consolidated Subsidiaries which, in accordance with GAAP, should be included as liabilities in the consolidated balance sheet of the Borrower and its Subsidiaries at such time (excluding, however, the undrawn face amount of all Letter of Credit and all -S-___- Capitalized Rentals due within one year from the date of determination hereunder). "Total Funded Debt," when used with respect to the Borrower, shall mean the aggregate amount of all such Total Funded Debt of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP (eliminating intercompany items). "Total Leverage Ratio" has the meaning specified in Section 6.3(b). -------------------- -------------- "Total Leverage Ratio Test Date" has the meaning specified in Section ------------------------------ ------- 6.3(b). - ------ "Transferee" has the meaning specified in Section 9.7(d). ---------- -------------- "type" has the meaning specified in Section 2.3. ---- ----------- "Voting Stock" means Securities or other equity interests of any class ------------ or classes of a corporation, partnership, limited liability company or other association or entity the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the board of directors, managers, general partners, managing members or Persons performing similar functions. * * * * * -S-___- SCHEDULE II ----------- LIST OF PERCENTAGES AND APPLICABLE LENDING OFFICES --------------------------------------------------
Name of Bank Domestic Lending Office Eurodollar Office - ------------ ----------------------- ----------------- Bank of America National Trust and Savings Association 231 South LaSalle Street 231 South LaSalle Street Chicago, Illinois 60697 Chicago, Illinois 60697 Attn: Paul Frey Attn: Paul Frey Revolving Commitment: $ 17,000,000 Term Commitment: $ 17,000,000 Total Commitment: $ 34,000,000 Percentage: 30.90909091% Bank of Montreal, 115 South LaSalle Street 115 South LaSalle Street Chicago Branch Chicago, Illinois 60603 Chicago, Illinois 60603 Attn: Angelo Barone Attn: Angelo Barone Revolving Commitment: $ 10,000,000 Term Commitment: $ 10,000,000 Total Commitment: $ 20,000,000 Percentage: 18.18181818% Summit Bank 301 Carnegie Center 301 Carnegie Center Princeton, New Jersey 08543 Princeton, New Jersey 08543 Attn: Bonnie Gershon Attn: Bonnie Gershon Revolving Commitment: $ 9,250,000 Term Commitment: $ 9,250,000 Total Commitment: $ 18,500,000 Percentage: 16.81818182% The Northern Trust 50 South LaSalle Street 50 South LaSalle Street Company Chicago, Illinois 60675 Chicago, Illinois 60675 Attn: Ronald Mallicoat Attn: Ronald Mallicoat Revolving Commitment: $ 5,000,000 Term Commitment: $ 5,000,000 Total Commitment: $ 10,000,000 Percentage: 9.09090909%
Fleet Bank, N.A. 1185 Avenue of the Americas 1185 Avenue of the Americas New York, New York 10036 New York, New York 10036 Attn: Robert A. Isaksen Attn: Robert A. Isaksen Revolving Commitment $ 7,500,000 Term Commitment $ 7,500,000 Total Commitment $ 15,000,000 Percentage: 13.63636364% LaSalle National Bank 135 South LaSalle Street 135 South LaSalle Street Chicago, Illinois 60603 Chicago, Illinois 60603 Attn: James Turner Attn: James Turner Revolving Commitment: $ 6,250,000 Term Commitment: $ 6,250,000 Total Commitment: $ 12,500,000 Percentage: 11.36363636% Total Commitments: $ 55,000,000 Total Term Commitment: $ 55,000,000 ============ Total Aggregate Commitment: $110,000,000
SCHEDULE III ------------ EXISTING LETTERS OF CREDIT -------------------------- Expiry Face L/C# Issuer Date Amount Beneficiary - ----------- ---- ------ ----------- SCHEDULE IV ----------- LIST OF CLOSING DOCUMENTS ------------------------- Attached. TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS AND INTERPRETATION......................................1 SECTION 1.1. Defined Terms...............................................1 SECTION 1.2. Use of Defined Terms........................................1 SECTION 1.3. Interpretation..............................................1 SECTION 1.4. Accounting Terms............................................2 ARTICLE II AMOUNT AND TERM OF COMMITMENTS.....................................2 SECTION 2.1. Commitments.................................................2 SECTION 2.1.1. Revolving Commitment.................................2 SECTION 2.1.2. Term Commitment......................................3 SECTION 2.2. Reduction of Revolving Commitment Amount....................3 SECTION 2.2.1. Optional.............................................3 SECTION 2.2.2. Mandatory............................................3 SECTION 2.3. Various Types of Loans......................................4 SECTION 2.4. Borrowing Procedures........................................4 SECTION 2.5. Evidence of Loans...........................................6 SECTION 2.6. Continuation/Conversion Procedures..........................6 SECTION 2.7. Pro Rata Treatment..........................................7 SECTION 2.8. Principal Payments..........................................7 SECTION 2.8.1. Repayments and Prepayments...........................7 SECTION 2.8.2. Application..........................................9 SECTION 2.9. Interest Payments..........................................10 SECTION 2.9.1. Rates...............................................10 SECTION 2.9.2. Default Rate........................................10 SECTION 2.9.3. Payment Dates.......................................10 SECTION 2.9.4. Rate Determinations.................................11 SECTION 2.10. Increased Costs and Reduction of Returns..................12 SECTION 2.11. Funding Losses............................................14 SECTION 2.12. Illegality................................................15 SECTION 2.13. Right of the Lenders to Fund through Other Offices........15 SECTION 2.14. Commitment Fee and Fee Obligations Generally..............16 (a) Commitment Fee.................................................16 (b) Certain Fees...................................................16 (c) Fee Obligations................................................16 SECTION 2.15. Payments and Computations.................................16 (a) Allocation.....................................................16 SECTION 2.16. Taxes.....................................................18 SECTION 2.17. Sharing of Payments, Etc..................................21 SECTION 2.18. Warranty..................................................21 SECTION 2.19. Conditions................................................21 SECTION 2.20. All Obligations Secured...................................21 SECTION 2.21. Use of Proceeds...........................................22 SECTION 2.22. Assignment of Commitments Under Certain Circumstances.....22 -i- ARTICLE III LETTERS OF CREDIT................................................23 SECTION 3.1. Commitment for Letters of Credit...........................23 SECTION 3.2. Issuance of Letters of Credit..............................23 SECTION 3.3. Letter of Credit Fee.......................................24 SECTION 3.4. Obligations of the Lenders to Issuing Lender under a Letter of Credit..................................................25 SECTION 3.5. Reimbursement Obligation...................................25 SECTION 3.6. Representatives of Beneficiaries...........................25 SECTION 3.7. Responsibility of the Administrative Agent, the Issuing Lender and the Lenders.....................................26 SECTION 3.8. Modifications to Letters of Credit.........................27 SECTION 3.9. Uniform Customs and Practice for Documentary Credits.......27 SECTION 3.10. Indemnification...........................................27 SECTION 3.11. Transitional Provisions...................................27 SECTION 3.12. Currency Equivalents......................................28 ARTICLE IV CONDITIONS OF LENDING.............................................28 SECTION 4.1. Conditions Precedent to Initial Borrowing and Initial Issuance of Letters of Credit..............................28 (a) Delivery of Documents.........................................28 (b) Financial Statements...........................................29 (c) Lender Tax Forms...............................................29 (d) Other Documents................................................29 (e) Satisfactory Legal Form........................................29 (f) Evidence and Perfection of Liens...............................29 (g) Termination of Existing Agreement..............................29 (h) Restructuring Transactions.....................................29 (i) Bonding and Intercreditor Agreements...........................30 (j) Closing Fees, Expenses, etc....................................30 (k) Other Conditions...............................................30 SECTION 4.2. Conditions Precedent to Each Borrowing and Each Issuance of a Letter of Credit......................................30 SECTION 4.3. No Waiver..................................................31 ARTICLE V REPRESENTATIONS AND WARRANTIES.....................................31 SECTION 5.1. Representations and Warranties of the Loan Parties.........31 (a) Organization; Corporate Powers.................................31 (b) Authorizations; Enforceability.................................32 (c) No Conflict....................................................32 (d) Approvals......................................................32 (e) Licenses and Permits...........................................32 (f) Financial Reports..............................................33 (g) Title to Property; Liens.......................................33 (h) No Default.....................................................33 (i) Litigation; Contingent Liabilities; Labor Matters..............34 (j) Patents, Trademarks and Licenses...............................34 (k) ERISA..........................................................34 (l) Environmental Matters..........................................35 (m) Payment of Taxes...............................................36 (n) Fiscal Year....................................................37 (o) Governmental Regulation........................................37 -ii- (p) Margin Regulations.............................................37 (q) Other Loan Documents...........................................37 (r) Corporate Structure; Capitalization............................37 (s) Debt; Contingent Obligations; Solvency.........................37 (t) Insurance......................................................38 (u) Collateral Documents...........................................38 (v) The Restructuring Transactions.................................38 (w) Year 2000 Compliance...........................................39 (x) Accuracy of Information........................................39 ARTICLE VI COVENANTS.........................................................40 SECTION 6.1. Affirmative Covenants......................................40 (a) Corporate Existence............................................40 (b) Compliance with Laws...........................................40 (c) Maintenance of Properties; Insurance...........................40 (d) Notice of Litigation...........................................42 (e) Taxes; Claims..................................................43 (f) ERISA Notices..................................................43 (g) ERISA Compliance...............................................44 (h) Patents, Trademarks and Licenses...............................45 (i) Notice of Labor Disputes.......................................45 (j) Notice of Default..............................................45 (k) Environmental Notices..........................................45 (l) Environmental Laws.............................................46 (m) Books, Records and Inspections.................................46 (n) Bonding Agreement; Employment Agreements.......................46 (o) Foreign Exchange Hedging.......................................47 (p) Future Subsidiaries............................................47 (q) Further Assurances.............................................48 SECTION 6.2. Negative Covenants.........................................48 (a) Consolidation, Mergers and Acquisitions........................48 (b) Investments....................................................48 (c) Restricted Payments............................................50 (d) Transactions with Affiliates...................................50 (e) Negative Pledges, etc..........................................51 (f) Guaranties.....................................................51 (g) Sales of Assets................................................51 (h) Liens, etc.....................................................52 (i) Debt...........................................................53 (j) ERISA..........................................................55 (k) Conduct of Business............................................55 (l) Sales and Leasebacks...........................................56 (m) Margin Regulation..............................................56 (n) Lease Obligations..............................................56 (o) Modification of Material Agreements and Documents..............56 (p) Change of Location or Name.....................................56 (q) Take or Pay Contracts..........................................57 -iii- SECTION 6.3. Financial Covenants........................................57 (a) Capital Expenditures and Permitted Business Acquisitions.......57 (b) Maximum Total Leverage.........................................57 (c) Maximum Senior Leverage........................................58 (d) Interest Coverage Ratio........................................58 (e) Net Worth......................................................59 SECTION 6.4. Financial Reporting........................................59 (a) System of Accounting...........................................59 (b) Quarterly Reports..............................................59 (c) Annual Reports.................................................60 (d) Compliance Certificate.........................................60 (e) Budget.........................................................60 (f) Securities Reports.............................................61 (g) Vessels........................................................61 (h) Other Information..............................................61 (i) Delivery of Financial Information to the Lenders...............61 (j) New Subsidiaries...............................................61 ARTICLE VII EVENTS OF DEFAULT; REMEDIES......................................61 SECTION 7.1. Events of Default..........................................61 (a) Failure to Make Payments When Due..............................61 (b) Breach of Covenants............................................62 (c) Incorrect Representation or Warranty...........................62 (d) Default as to Other Debt.......................................62 (e) Bankruptcy.....................................................63 (f) Judgments and Attachments......................................63 (g) ERISA Termination Event........................................63 (h) ERISA Waiver...................................................64 (i) Termination of Documents; Failure of Security..................64 (j) Change in Control..............................................64 (k) Bonding Agreement..............................................65 SECTION 7.2. Acceleration...............................................65 SECTION 7.3. Injunctive Relief..........................................66 SECTION 7.4. Allocation Among Secured Parties...........................66 ARTICLE VIII THE ADMINISTRATIVE AGENT........................................66 SECTION 8.1. Appointment and Authorization..............................66 SECTION 8.2. Delegation of Duties.......................................67 SECTION 8.3. Liability of Administrative Agent..........................67 SECTION 8.4. Reliance by Administrative Agent...........................67 SECTION 8.5. Notice of Default..........................................68 SECTION 8.6. Credit Decision............................................68 SECTION 8.7. Indemnification............................................69 SECTION 8.8. Administrative Agent in Individual Capacity................70 SECTION 8.9. Successor Administrative Agent.............................70 SECTION 8.10. Collateral Matters; Release of Collateral.................70 SECTION 8.11. Intercreditor Agreement and other Loan Documents..........71 -iv- ARTICLE IX MISCELLANEOUS.....................................................71 SECTION 9.1. Amendments, etc............................................71 SECTION 9.2. Notices, etc...............................................72 SECTION 9.3. No Waiver; Remedies........................................73 SECTION 9.4. Costs and Expenses.........................................73 SECTION 9.5. Setoff.....................................................74 SECTION 9.6. Binding Effect.............................................75 SECTION 9.7. Assignments, Participations, etc...........................75 SECTION 9.8. Survival of Warranties and Agreements......................77 SECTION 9.9. Marshalling; Recourse to Security; Payments Set Aside......77 SECTION 9.10. Indemnification...........................................78 (a) General Indemnity..............................................78 (b) Environmental Indemnity........................................78 (c) Survival; Defense..............................................79 SECTION 9.11. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial................................................79 SECTION 9.12. Performance of Obligations................................79 SECTION 9.13. Construction..............................................80 SECTION 9.14. GOVERNING LAW.............................................80 SECTION 9.15. Execution in Counterparts.................................80 SECTION 9.16. Entire Agreement..........................................80 -v- EX-10.02 8 UNDERWRITING AND CONTINUING INDEMNITY AGREEMENT EXHIBIT 10.02 ------------- SECOND AMENDED AND RESTATED UNDERWRITING AND CONTINUING INDEMNITY AGREEMENT dated August 19, 1998 among GREAT LAKES DREDGE & DOCK CORPORATION, CERTAIN OF ITS SUBSIDIARIES and RELIANCE INSURANCE COMPANY, UNITED PACIFIC INSURANCE COMPANY, RELIANCE NATIONAL INSURANCE COMPANY, and RELIANCE SURETY COMPANY TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS.................................................... 2 1.1 DEFINED TERMS.................................................... 2 1.2 USE OF DEFINED TERMS............................................. 12 1.3 ACCOUNTING PRINCIPLES............................................ 13 ARTICLE II BOND FACILITY.................................................. 13 2.1 BONDS............................................................ 13 2.2 PREMIUM PAYMENT.................................................. 13 ARTICLE III INDEMNIFICATION................................................ 13 3.1 INDEMNITY........................................................ 13 3.2 EXONERATION...................................................... 14 3.3 CASH COLLATERAL.................................................. 14 3.4 WAIVER OF CLAIMS AND HOLD HARMLESS............................... 14 3.5 WITHDRAWAL FROM AND TERMINATION OF AGREEMENT..................... 15 3.6 INDEMNITORS AGREE TO BECOME PARTY DEFENDANTS..................... 15 3.7 INDEMNITORS' WAIVER OF NOTICE.................................... 15 3.8 INDEMNITORS' KNOWING CONSENT TO AGREEMENT........................ 15 3.9 INDEMNITORS' DUTY TO REMAIN INFORMED OF PRINCIPAL'S BUSINESS..... 16 3.10 ENFORCEABILITY OF RIGHTS DIRECTLY AGAINST INDEMNITORS............ 16 ARTICLE IV CONDITIONS PRECEDENT........................................... 16 4.1 CONDITION PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT........... 16 4.2 CONDITIONS PRECEDENT TO ALL BONDS................................ 17 ARTICLE V REPRESENTATIONS AND WARRANTIES................................. 18 5.1 INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION.............. 18 5.2 CORPORATE POWER AND AUTHORITY.................................... 19 5.3 LEGALLY ENFORCEABLE AGREEMENT.................................... 19 5.4 APPROVALS........................................................ 19 5.5 OWNERSHIP AND LIENS.............................................. 19 5.6 TAXES............................................................ 19 5.7 INSURANCE........................................................ 20 5.8 COMPLIANCE....................................................... 20 5.9 LITIGATION....................................................... 20 5.10 SUBSIDIARIES..................................................... 20 5.11 REAL PROPERTY.................................................... 20 5.12 EQUIPMENT........................................................ 20 5.13 VESSELS.......................................................... 20 -i- ARTICLE VI COVENANTS...................................................... 21 6.1 CORPORATE EXISTENCE.............................................. 21 6.2 MAINTENANCE OF RECORDS........................................... 21 6.3 MAINTENANCE OF PROPERTIES........................................ 21 6.4 MAINTENANCE OF INSURANCE......................................... 21 6.5 COMPLIANCE WITH LAWS............................................. 21 6.6 TAXES............................................................ 22 6.7 BOOKS AND RECORDS................................................ 22 6.8 FINANCIAL RECORDS AND REPORTS.................................... 22 6.9 PRINCIPALS' REPRESENTATION....................................... 22 6.10 NOTICE OF LITIGATION............................................. 23 6.11 LIENS............................................................ 23 6.12 DEBT AND CONTINGENT LIABILITIES.................................. 23 6.13 DISPOSITION OF ASSETS; ISSUANCE OF EQUITY........................ 25 6.14 MERGERS.......................................................... 26 6.15 INVESTMENTS...................................................... 26 6.16 DIVIDEND RESTRICTIONS............................................ 28 6.17 RESTRICTIONS UPON CONTRACTS WITH AFFILIATES...................... 29 6.18 NATURE OF BUSINESS............................................... 29 6.19 NET WORTH........................................................ 29 6.20 NET CURRENT ASSETS............................................... 30 6.21 SUBORDINATED DEBT AND PAYMENT BLOCKAGE NOTICE.................... 30 ARTICLE VII RIGHTS OF RELIANCE............................................. 31 7.1 FURTHER ASSURANCES/RELIANCE AS ATTORNEY-IN-FACT.................. 31 7.2 CONTRACT FUNDS HELD IN TRUST..................................... 31 7.3 RIGHT OF RELIANCE TO SETTLE CLAIMS............................... 31 7.4 AUTHORITY OF RELIANCE TO MAKE LOANS TO PRINCIPAL................. 32 7.5 AUTHORITY OF RELIANCE TO AMEND BOND.............................. 32 7.6 RIGHTS OF RELIANCE TO TAKE POSSESSION OF THE WORK................ 32 7.7 DEPOSITORY TRUST ACCOUNTS........................................ 32 7.8 PRESERVATION OF RELIANCE'S RIGHTS................................ 33 7.9 AUTHORITY OF RELIANCE TO ELECT REMEDIES.......................... 33 ARTICLE VIII MISCELLANEOUS.................................................. 33 8.1 BENEFICIAL PARTIES............................................... 33 8.2 JOINT AND SEVERAL................................................ 33 8.3 ATTORNEYS FEES................................................... 33 8.4 APPLICABLE LAW................................................... 33 8.5 JURISDICTION FOR SUITS UNDER THIS AGREEMENT...................... 34 8.6 INDEMNITORS WAIVE DEFENSE OF SUBSEQUENT EXECUTION................ 34 8.7 VALIDITY OF AGREEMENT............................................ 34 8.8 ORAL MODIFICATIONS INEFFECTIVE................................... 34 8.9 NOTICES.......................................................... 34 -ii- 8.10 REAFFIRMATION AND RESTATEMENT.................................... 35 8.11 CONFIDENTIALITY.................................................. 35 8.12 RELEASE OF LIENS................................................. 35 -iii- EXHIBIT A - Form of Supplemental Signature Page EXHIBIT B - Form of Pledge Agreement EXHIBIT C - Form of Security Agreement (Accounts Receivable) EXHIBIT D - Form of Security Agreement (Equipment) EXHIBIT E - Form of Vessel Mortgage (First) EXHIBIT F - Form of Vessel Mortgage (Second) SCHEDULE 1.1 - Permitted Liens SCHEDULE 5.7 - Insurance SCHEDULE 5.9 - Litigation SCHEDULE 5.10 - Subsidiaries SCHEDULE 5.11 - Real Property SCHEDULE 5.12 - Equipment SCHEDULE 5.13 - Vessels SCHEDULE 6.12 - Existing Debt and Contingent Liabilities SCHEDULE 6.15 - Investments -iv- SECOND AMENDED AND RESTATED --------------------------- UNDERWRITING AND CONTINUING --------------------------- INDEMNITY AGREEMENT ------------------- THIS SECOND AMENDED AND RESTATED UNDERWRITING AND CONTINUING INDEMNITY AGREEMENT (the "Agreement"), made and entered into this 19 day of August, 1998, --------- is among (i) GREAT LAKES DREDGE & DOCK CORPORATION, a Delaware corporation ("HOLDINGS"), and the SUBSIDIARIES of HOLDINGS from time to time signatories - ---------- hereto (collectively with HOLDINGS, the "INDEMNITORS"), and (ii) RELIANCE ----------- INSURANCE COMPANY, a Pennsylvania corporation, UNITED PACIFIC INSURANCE COMPANY, a Pennsylvania corporation, RELIANCE NATIONAL INSURANCE COMPANY, a Delaware corporation, and RELIANCE SURETY COMPANY, a Delaware corporation (collectively, the foregoing parties are referred to herein as "RELIANCE"). -------- R E C I T A L S WHEREAS, the PRINCIPALS are engaged in the business, among other things, of dredging, dredging reclamation, aggregate mining and supply, and marine construction in the United States and in other countries, and any PRINCIPAL, individually, jointly with others or on behalf of any of its SUBSIDIARIES, AFFILIATES, or divisions or their SUBSIDIARIES, AFFILIATES or divisions now in existence or hereafter formed or acquired, or on behalf of third-party Persons, may desire or be required from time to time in connection with these businesses to deliver certain BOND(s) to OBLIGEES; and WHEREAS, certain of the INDEMNITORS, the PRINCIPALS and RELIANCE are parties to that certain Amended and Restated Underwriting and Continuing Indemnity Agreement (the "FIRST AMENDMENT AND RESTATEMENT") dated as of ------------------------------- September 24, 1997, which amended and restated that certain Amended Agreement dated as of October 15, 1991, among certain of the PRINCIPALS, certain AFFILIATES of the PRINCIPALS and RELIANCE (as amended and restated by the FIRST AMENDMENT AND RESTATEMENT, and as otherwise amended or modified, the "ORIGINAL -------- AGREEMENT"); and - --------- WHEREAS, in accordance with the terms of the ORIGINAL AGREEMENT, RELIANCE has heretofore executed or procured and, upon the express condition that this Agreement and the other UNDERWRITING DOCUMENTS be executed, RELIANCE may continue to execute or procure the execution of BOND(s), and RELIANCE may continue previously executed BOND(s) and may forbear cancellation of such BOND(s); and WHEREAS, each of the INDEMNITORS recognizes that BONDS are a necessary and desirable adjunct to the businesses done and to be done by the PRINCIPALS and desires to accommodate the financial, security, indemnity, exoneration and other requirements of RELIANCE as an inducement to RELIANCE to become surety upon obligations of the PRINCIPALS and has therefore agreed to be bound by this Agreement and the other UNDERWRITING DOCUMENTS to which it is a party and has agreed to exercise its best efforts to permit and require the PRINCIPALS to honor and perform all of the terms of this Agreement; and WHEREAS, RELIANCE has agreed to act as surety or procure surety BONDS for the PRINCIPALS, subject to the understanding of the parties that RELIANCE is under no obligation to act as surety for every bond of the PRINCIPALS, that RELIANCE shall have the right to refuse to execute BONDS upon CONTRACTS which in its sole judgment present risks not contemplated by this Agreement and that the PRINCIPALS are under no obligation to obtain BONDS from RELIANCE; and WHEREAS, the INDEMNITORS and the PRINCIPALS now desire to amend and restate the ORIGINAL AGREEMENT on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the execution or procurement of any BOND(s) by RELIANCE or the forbearance or cancellation of any existing BOND(s) by RELIANCE and as an inducement to such execution, procurement or forbearance, we, the undersigned PRINCIPALS and INDEMNITORS, agree and bind ourselves, our successors and assigns, jointly and severally, as follows: ARTICLE I DEFINITIONS SECTION 1.1 DEFINED TERMS. For the purposes of this Agreement, the ------------- following terms shall have the meanings listed below: "AFFILIATE" means, with respect to any PERSON, any other PERSON or group acting in concert with such PERSON that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under the common control with such PERSON. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any PERSON or group of PERSONS, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such PERSON, whether through the ownership of voting securities or by contract or otherwise. "AUTHORIZED OFFICER" means, with respect to any PERSON, the chief executive officer, president, chief financial officer, treasurer, assistant treasurer, controller or any vice president of such PERSON. "BANK LOAN FACILITY" means that certain Credit Agreement dated as of even date herewith, by and among HOLDINGS, certain corporate affiliates thereof, the financial institutions from time to time parties thereto, and Bank of America National Trust and Savings Association, as administrative agent to such financial institutions, and the documents, -2- instruments and agreements executed and delivered in connection therewith, as all of the same may be amended, restated, supplemented or otherwise modified from time to time and any credit agreement or other agreement or agreements relating to any refinancing, extension, renewal or replacement, in whole or in part, thereof. "BOND(s)" means any surety agreements, undertakings, or instruments of guarantee signed by RELIANCE on behalf of any PRINCIPAL, whether executed before or after the execution of this Agreement. "CONTINGENT LIABILITY" means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by agreement, contingent, or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, obligation or any other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. "CONTRACT(s)" means any contract referred to or described in any BOND(s) issued on behalf of any PRINCIPAL. "DEBT" means and includes, with respect to any PERSON, (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds (including, without limitation, license, bid, performance, lien or payment bonds), debentures, notes or other similar instruments, (iii) obligations which have been incurred in connection with the acquisition of property or services (including, without limitation, obligations to pay the deferred purchase price of property or services), excluding trade payables and accrued expenses incurred in the ordinary course of business, (iv) obligations secured by any LIEN or other charge upon property or assets owned by such PERSON, even though such PERSON has not assumed or become liable for the payment of such obligations, (v) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such PERSON, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of property, (vi) the principal amount of any capital lease and (vii) reimbursement obligations with respect to letters of credit. "EQUITY DOCUMENTS" means (i) that certain Securities Purchase and Holders Agreement dated as of the date hereof among HOLDINGS, Vectura Holding, LLC, certain purchasing management investors and continuing management investors signatory thereto, and certain individuals who may execute such agreement from time to time, (ii) that certain Registration Rights Agreement dated as of the date hereof among HOLDINGS, certain SUBSIDIARIES signatory thereto and Donaldson, Lufkin & Jenrette Securities Corporation and (iii) each of the documents, instruments and agreements executed pursuant to or in connection with any of the foregoing. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations and published interpretations thereof. -3- "EVENT OF DEFAULT" means any one or more of the following: (a) Failure by the INDEMNITORS, or any of them, to pay on the date when due (and after giving effect to any applicable payment period) any obligation owing to RELIANCE hereunder; provided, however, that any -------- ------- BOND premium may be disputed by any PRINCIPAL in good faith in the ordinary course of business without causing an EVENT OF DEFAULT under this clause (a); or (b) Failure by the INDEMNITORS, or any of them, to comply with or to perform their respective obligations under Sections 6.7, 6.14, 6.16, ------------ ---- ---- 6.19, 6.20 or 6.21 of this Agreement, and, in the case of Section 6.16, ---- ---- ---- ------------ such failure shall continue for ten (10) days; or (c) Failure by the INDEMNITORS, or any of them, to comply with or perform their respective obligations under any provision of this Agreement (and not constituting an Event of Default under any of the other clauses of this definition) and (1) continuance of such failure for thirty (30) days after notice thereof to the INDEMNITOR by RELIANCE specifying such failure if such failure can be cured with diligence within such thirty- day period by the INDEMNITORS, or can be cured by the payment of money, or (2) continuance of such failure for sixty (60) days by RELIANCE specifying such failure if such failure cannot with diligence be cured within such thirty-day period and cannot be cured by the payment of money; or (d) Any representation or warranty made or deemed made by any INDEMNITOR in this Agreement or any other UNDERWRITING DOCUMENT, shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (e) an OBLIGEE has declared by delivery of written notice to any PRINCIPAL that such PRINCIPAL is in default of any provision under the respective CONTRACT(s) between such PRINCIPAL and such OBLIGEE and such PRINCIPAL has failed to cure such default within that period of time provided to cure said default within such CONTRACT(s) in which such PRINCIPAL is alleged to be in default -4- and such default results in the termination of such CONTRACT; provided, -------- that RELIANCE shall, upon investigation, reasonably determine in good faith that PRINCIPAL is in default under the CONTRACT(s) or such PRINCIPAL has acknowledged its default under the CONTRACT(s), irrespective of whether or not such PRINCIPAL is actually in default of the CONTRACT(s) (such a determination by RELIANCE shall not be binding upon such PRINCIPAL in any dispute such PRINCIPAL may have with such OBLIGEE or a claimant under the related BOND(s); except as provided above, it shall be no defense to the enforcement of this Agreement by RELIANCE, and co-sureties, if any, that PRINCIPAL asserts that it is not in default under the CONTRACT(s)); or (f) RELIANCE has received notice or knowledge of facts giving rise to a reasonable good faith belief that it has incurred or may incur a LOSS and a PRINCIPAL has failed to cure such LOSS or to take reasonable steps to avoid the incurrence by RELIANCE of such LOSS within thirty (30) days after receipt of written notice sent by RELIANCE to such PRINCIPAL; provided, that no EVENT OF DEFAULT under this clause (f) -------- ---------- shall occur if prior to the expiration of such thirty-day period such PRINCIPAL causes (1) a letter of credit with a face amount equal to such LOSS and otherwise in form and substance reasonably acceptable to RELIANCE to be issued and delivered to RELIANCE or (2) cash collateral in an amount equal to such LOSS to be pledge to RELIANCE pursuant to documentation reasonably acceptable to RELIANCE; or (g) Any PRINCIPAL within fifteen (15) days after receipt of notice sent by RELIANCE to such PRINCIPAL has failed, refused or delayed to pay or is unable to pay any claims, bills or other indebtedness incurred in, or in connection with, the performance of the CONTRACT(s) which claims, bills or other indebtedness RELIANCE, upon investigation, shall have reasonably determined in good faith to be valid; or (h) Any INDEMNITOR shall (i) fail to pay any DEBT or CONTINGENT OBLIGATION of such INDEMNITOR in an aggregate principal amount in excess of $5,000,000, or any interest or premium thereon, when due whether by scheduled maturity, required -5- prepayment, acceleration, demand, or otherwise (subject to any applicable grace periods), or (ii) fail to perform or observe any term, covenant, or condition on its part to be performed or observed under any agreement or instrument relating to any DEBT or CONTINGENT OBLIGATION of such INDEMNITOR in an aggregate principal amount in excess of $5,000,000 (subject to any applicable grace periods), if the result of such failure to perform or observe is (A) in the case of the BANK LOAN FACILITY, either to accelerate the maturity of such DEBT or to cause a PAYMENT BLOCKAGE NOTICE to be delivered to the Trustee under the 1998 DEBT INDENTURE, (B) in the case of the 1998 DEBT INDENTURE, to accelerate or permit the acceleration of the maturity of such DEBT and (C) in the case of any other DEBT or CONTINGENT OBLIGATION, to accelerate the maturity of such DEBT or CONTINGENT OBLIGATION; or (i) Any INDEMNITOR becomes insolvent or generally fails to pay, or admits in writing its inability to pay, debts as they become due; or any INDEMNITOR applies for, consents to, or acquiesces in the appointment of, a trustee, receiver or other custodian for such INDEMNITOR or for a substantial portion of its property, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for any INDEMNITOR or for a substantial part of the property of any thereof and is not dismissed or discharged within thirty (30) days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is commenced in respect of any INDEMNITOR and if such case or proceeding is not commenced by such INDEMNITOR, it is consented to or acquiesced in by such INDEMNITOR or is not released, dismissed, vacated or fully bonded within thirty (30) days undismissed; or any INDEMNITOR takes any corporate action to authorize, or in furtherance of, any of the foregoing; or (j) A final judgment or judgments (after the expiration of all times to appeal therefrom) for the payment of money in excess of $5,000,000 in the aggregate shall be rendered against any INDEMNITOR and the same shall not be (i) fully covered by insurance or (ii) vacated, stayed, bonded, paid or discharged for a period of thirty (30) days. -6- "FINANCIAL STATEMENTS" means all those balance sheets, income statements and other financial statements of any INDEMNITOR or any AFFILIATE thereof which have been furnished to RELIANCE for the purpose of or in connection with this Agreement and the transactions contemplated hereby. "GAAP" is defined as generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board. "GLDDC" means Great Lakes Dredge & Dock Company, a New Jersey corporation. "GLI" means Great Lakes International, Inc., a Delaware corporation. "HOLDINGS" has the meaning set forth in the recitals to this Agreement. "INDEMNITOR" means any of HOLDINGS or any SUBSIDIARY of HOLDINGS which is a party to this Agreement as of the date hereof or which becomes a party to this Agreement after the date hereof by hereafter executing and delivering to RELIANCE a SUPPLEMENTAL SIGNATURE PAGE and INDEMNITORS means, collectively, all of HOLDINGS and all such SUBSIDIARIES of HOLDINGS. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement dated as of even date herewith by and among HOLDINGS, Bank of America National Trust and Savings Association, as Agent, and RELIANCE, and the documents, instruments and agreements executed and delivered in connection therewith, as all of the same may be amended, restated, supplemented or otherwise modified from time to time and any other intercreditor agreement in replacement thereof which is in form and substance acceptable to RELIANCE. "LIEN" means any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement to assure payment of DEBT, encumbrance, lien (statutory or other), charge, or encumbrance of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing). "LIMITED SUBSIDIARY" means (a) any SUBSIDIARY which is not an INDEMNITOR and (b) any INDEMNITOR which is not a wholly-owned SUBSIDIARY of HOLDINGS; provided, that neither NATCO Limited Partnership nor North American Trailing - -------- Company shall be deemed to be a LIMITED SUBSIDIARY for purposes of this Agreement. "LOSS" means: (a) All damages, costs, expenses (including all reasonable attorney fees and liabilities) which RELIANCE may sustain or incur by reason of executing or procuring the execution of the BOND(s), or any other -7- BOND(s) which may be already or hereafter executed on behalf of any PRINCIPAL, or any renewal or continuation thereof; or which may be sustained or incurred by reason of making any investigation on account thereof, prosecuting or defending any action in connection therewith, obtaining a release, recovering or attempting to recover any salvage in connection therewith or enforcing by litigation or otherwise any of the provisions of this Agreement, including, but not limited to: (1) money judgments, amounts paid in settlement or compromise, the full amount of reasonable attorney and other professional fees incurred or paid by RELIANCE, court costs and fees, and interest at the prime rate or reference rate announced from time to time by Bank of America National Trust and Savings Association on all sums due it from the fifteenth day following RELIANCE's demand for said sums, whether or not interest has been awarded by a court, provided, that -------- such LOSS is not due to the gross negligence, bad faith or willful misconduct of RELIANCE; and (2) any LOSS which RELIANCE may sustain or incur in connection with the CONTRACT(s) or BOND(s), whether that LOSS results from the activity of any PRINCIPAL individually or as part of a joint venture, partnership or other entity which has been or may be formed in connection with the performance of the CONTRACT(s) and in which any PRINCIPAL has an ownership interest, provided, that such LOSS is -------- not due to the gross negligence, bad faith or willful misconduct of RELIANCE; and (3) any LOSS which RELIANCE may sustain or incur as a result of any actions taken by RELIANCE upon information provided by any INDEMNITOR, provided, that such LOSS is not due to the gross -------- negligence, bad faith or willful misconduct of RELIANCE; (b) All reasonable legal and consulting fees and related expenses incurred in connection with any application or submission by any PRINCIPAL for a proposal, bid or other BOND, whether or not RELIANCE decides to issue said BOND; and (c) All premiums, fees, interest and other charges due RELIANCE in connection with this Agreement or the BOND(S). "LYDON" means Lydon Dredging & Construction Company, Ltd., a Canadian corporation. -8- "MATERIAL ADVERSE CHANGE" means a material adverse change in the condition (financial or otherwise), business, operations or prospects of HOLDINGS and its SUBSIDIARIES, taken as a whole. "MERGER AGREEMENT" means that certain Amended and Restated Agreement and Plan of Merger dated as of August 19, 1998, among Vectura Holding Company LLC, Great Lakes Dredge & Dock Acquisition, Inc., GLI Acquisition, Inc., HOLDINGS, Great Lakes International, Inc., Blackstone Dredging Partners L.P. and Blackstone Family Investment Partnership L.P. "NATCO" means NATCO Dredging Limited Partnership, a Delaware limited partnership. "NET INCOME" means, for any period, the aggregate of all amounts (exclusive of all amounts in respect of any extraordinary or non-recurring gain or loss (including, without limitation, any write-off of the Chicago Flood litigation insurance receivable)) which, in accordance with GAAP, would be included as net income on a consolidated statement of income of HOLDINGS and its SUBSIDIARIES for such period. "1998 DEBT INDENTURE" means that certain Indenture, dated as of August 19, 1998, between HOLDINGS, certain of the SUBSIDIARIES of HOLDINGS, and The Bank of New York, as Trustee, governing the issuance by HOLDINGS of $115,000,000 in original principal amount of its 11.25% Senior Subordinated Notes due 2008, as amended, restated, supplemented or otherwise modified from time to time in accordance with Section 6.21. ------------ "NORTH AMERICAN" means North American Trailing Company, a Delaware corporation. "OBLIGEE" means any named party or parties appearing on the BOND(s) in whose favor the BOND(s) are issued. "ORIGINAL AGREEMENT" has the meaning set forth in the recitals to this Agreement. "PAYMENT BLOCKAGE NOTICE" has the meaning assigned thereto in the 1998 DEBT INDENTURE. "PERMITTED LIENS" means: -8- (a) any LIEN in favor of RELIANCE; (b) LIENS securing the BANK LOAN FACILITY and the obligations arising thereunder (provided, that such LIENS are granted in compliance with -------- and remain subject to the INTERCREDITOR AGREEMENT); (c) LIENS for taxes, assessments or other governmental charges or levies that are either not yet past due or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (d) Carriers', warehousemen's, landlord's, mechanics', workmen's and repairmen's LIENS or other like LIENS arising by operation of law in the ordinary course of business and securing sums which are not past due, or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (e) any LIEN on assets existing on the effective date of this Agreement and listed on Schedule 1.1 to this Agreement and the continuation of any ------------ such LIEN upon a refinancing, renewal or extension of the DEBT secured by such existing LIEN (provided, that the property subject to such LIEN -------- is limited to the property to which such LIEN is attached prior to the effective date of this Agreement and the principal amount of such DEBT as of the effective date of this Agreement is not increased); (f) any LIEN on capital equipment granted to secure the purchase price thereof; (g) any LIEN on capital equipment granted in connection with capitalized leases of such equipment in the ordinary course of business; (h) LIENS arising under workmen's compensation laws, unemployment insurance laws or other forms of governmental insurance or benefit, or to secure performance of bids, tenders, contracts (other than for borrowed money) or leases, or deposits to secure public or statutory obligations, or deposits of cash or United States Government bonds to secure surety or appeal bonds, or deposits as security for contested taxes or for the payment of rent or otherwise in the ordinary course of business; (i) survey exceptions, encumbrances, easements or reservations of, or rights of others for, rights-of-way, sewers, electric lines, telegraph or -9- telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or liens incidental to the conduct of such PRINCIPAL or to the ownership of its properties. (j) judgment LIENS not giving rise to an Event of Default so long as such LIEN is adequately bonded within 15 days after the entry of such judgment. (k) LIENS arising from filing UCC financing statements for precautionary purposes in connection with true leases of personal property under which HOLDINGS or any SUBSIDIARY is lessee; (l) any LIENS on any property or assets acquired by HOLDINGS or any of its SUBSIDIARIES which LIEN existed prior to the acquisition thereof and was not created in contemplation of such acquisition, provided, that -------- such LIENS attach only to the property or assets so acquired; (m) LIENS securing reimbursement obligations in respect of commercial letters of credit and covering the goods (or the documents of title in respect of such goods) financed by such letters of credit, which have been issued in the ordinary course of business; (n) any LIEN on any asset of any PERSON existing at the time such PERSON is merged or consolidated with or into HOLDINGS or any SUBSIDIARY of HOLDINGS (to the extent such merger or consolidation is permitted hereunder) and which LIEN was not created in contemplation of such event, provided, that such LIEN attaches only to the assets acquired -------- pursuant to such merger or consolidation; (o) LIENS securing any interest rate, swap, hedging, currency, commodity, foreign country risk or other similar agreement; (p) leases or subleases (including bareboat charters) granted and entered into with others not interfering in any material respect with the businesses of HOLDINGS and its SUBSIDIARIES; (q) LIENS securing payment of DEBT permitted and described in clause (m) of Section 6.12, and LIENS securing payment of DEBT permitted and ------------ described in clause (d) of Section 6.12 to the extent limited to the ------------ accounts receivable financed with such DEBT; (r) renewals or replacements of any of the foregoing, provided that such renewed or replaced LIEN does not extend to property other than that -10- which was encumbered by the originally permitted LIEN hereunder; and (s) other LIENS securing obligations that do not exceed an aggregate amount of $5,000,000 at any time outstanding. "PERSON" means any entity, whether an individual, trustee, corporation, partnership, joint stock company, limited liability company, unincorporated organization, business association or firm, joint venture, a government or any agent or instrumentality or political subdivision thereof. "PLAN" means any employee benefit plan (as defined in Section 3(3) of ERISA) established, maintained or to which contributions have been made by any PRINCIPAL. "PLEDGE AGREEMENT" means a Note Pledge Agreement substantially in the form of Exhibit B hereto, executed by certain of the INDEMNITORS in favor of --------- RELIANCE, as the same may be amended, restated, supplemented or otherwise modified from time to time. "PRINCIPAL" means any of HOLDINGS, GLI, GLDDC, NATCO, LYDON, Gates Construction Corp., a New Jersey corporation, and any other INDEMNITOR for whom RELIANCE has executed a BOND; and PRINCIPALS means collectively all of the foregoing PERSONS. "RELIANCE" has meaning set forth with recitals to this Agreement. "RESTRICTED AMOUNTS" means, as of any date, each of the following (a) all DEBT and CONTINGENT LIABILITIES of the type described in clause (j) of Section ---------- ------- 6.12 outstanding on such date, (b) the fair market value of all assets sold from - ---- the date hereof through such date pursuant to the terms of clause (a)(iv)(B) of ----------------- Section 6.13, and (c) investments of the type described in clause (e) of Section - ------------ ---------- ------- 6.15 outstanding on such date. - ---- "SECURITY AGREEMENTS" means, collectively, the SECURITY AGREEMENT (A/R) and the SECURITY AGREEMENT (EQUIPMENT). "SECURITY AGREEMENT (A/R)" means Security Agreement (Accounts Receivable) substantially in the form of Exhibit C hereto, executed by a PRINCIPAL (other --------- than LYDON) in favor of RELIANCE, as the same may be amended, restated, supplemented or otherwise modified from time to time. "SECURITY AGREEMENT (EQUIPMENT)" means Security Agreement (Equipment) substantially in the form of Exhibit D hereto, executed and delivered by GLDDC --------- (or any other INDEMNITOR which executes a VESSEL MORTGAGE after the date hereof) in favor of RELIANCE, as the same may be amended, restated, supplemented or otherwise modified from time to time. -11- "SUBORDINATED DEBT" means all DEBT of HOLDINGS issued pursuant to the 1998 DEBT INDENTURE. "SUBSIDIARY" of a PERSON means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than 50% of the voting stock or other equity interests, is owned or controlled directly or indirectly by such PERSON, or one or more of the SUBSIDIARIES of such PERSON, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "SUBSIDIARY" refer to a SUBSIDIARY of HOLDINGS. "SUPPLEMENTAL SIGNATURE PAGE" means a supplemental signature page to this Agreement in the form of Exhibit A hereto. --------- "UNDERWRITING DOCUMENTS" means this Agreement, each of the SECURITY AGREEMENTS, the PLEDGE AGREEMENT, the VESSEL MORTGAGES, each BOND and any other instrument, document or agreement delivered by any INDEMNITOR in connection herewith. "VESSEL MORTGAGES" means, collectively, (i) the Amended and Restated First Preferred Fleet Mortgage substantially in the form of Exhibit E hereto, executed --------- by GLDDC in favor of RELIANCE, (ii) the Second Preferred Fleet Mortgage substantially in the form of Exhibit F hereto, executed by GLDDC in favor of --------- RELIANCE, (iii) the First Preferred Fleet Mortgage dated March 7, 1990, by North American Trailing Company to Reliance Insurance Company and certain of its AFFILIATES, as amended by those certain Supplements to First Preferred Fleet Mortgage dated as of October 15, 1991, September 24, 1997 and as of even date herewith, (iv) the Second Preferred Fleet Mortgage dated July 10, 1990, by GLDDC (as successor by merger to Tidewater Dredging Corporation) to Reliance Insurance Company and certain of its AFFILIATES, as amended by those certain Supplements to Second Preferred Fleet Mortgage dated as of October 15, 1991, September 24, 1997 and as of even date herewith, (v) the Second Preferred Fleet Mortgage dated July 10, 1990, by GLDDC (as successor by merger to Tidewater Dredging Corporation) to Reliance Insurance Company and certain of its AFFILIATES, as amended by those certain Supplements to Second Preferred Fleet Mortgage dated as of October 15, 1991, September 24, 1997 and as of even date herewith; and (vi) any other fleet mortgages or vessel mortgages at any time hereafter executed and delivered by any INDEMNITOR in connection with this Agreement and the other UNDERWRITING DOCUMENTS; in each case as any of the foregoing documents may be amended, restated, supplemented or otherwise modified from time to time. SECTION 1.2 USE OF DEFINED TERMS. Any collective defined term and any ------------ -------------------- defined term used in the plural shall be taken to encompass all members of the relevant class. Any defined term used in the singular preceded by "any" shall be taken to indicate any number of the members of the relevant class. Any defined term used in the singular and preceded by the word "each" shall indicate all members of the relevant class, individually. A Section or an Exhibit or a Schedule is, unless otherwise stated, a reference to a section hereof or an exhibit or a -12- schedule hereto, as the case may be. The words "hereof," "herein," "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. SECTION 1.3 ACCOUNTING PRINCIPLES. Unless the context otherwise clearly --------------------- requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. ARTICLE II BOND FACILITY SECTION 2.1 BONDS. Subject to the terms of this Agreement, RELIANCE ----- agrees to provide or procure surety bonds for or on behalf of the PRINCIPALS; provided, that RELIANCE reserves the right to decline to execute any BOND(s) and - -------- if RELIANCE executes any proposal or bid bond and if any PRINCIPAL is awarded the CONTRACT(s), RELIANCE shall not be obligated to execute any BOND(s) required to perform the awarded contract. No claim shall be made, nor any cause of action asserted against RELIANCE as a consequence of its failure to execute any BOND(s). SECTION 2.2 PREMIUM PAYMENT. Each PRINCIPAL agrees to pay all premiums --------------- on the BOND(s) issued for such PRINCIPAL, computed in accordance with the regular manual of rates in effect on the date such BOND(s) are executed; such payments to be made within 45 days of receipt by INDEMNITORS of a statement therefor from RELIANCE pursuant to the payment directions stated therein or as otherwise agreed to between INDEMNITORS and RELIANCE. The failure of any PRINCIPAL to pay the bond premiums or the failure of RELIANCE to receive premiums shall not provide INDEMNITORS with any defense to an action under this Agreement. ARTICLE III INDEMNIFICATION SECTION 3.1 INDEMNITY. INDEMNITORS agree to indemnify, and keep --------- indemnified, and hold and save harmless RELIANCE against all LOSS; provided, -------- that in no event shall any INDEMNITOR indemnify or hold harmless RELIANCE against any LOSS arising out of the gross negligence, bad faith or willful misconduct of RELIANCE. The duty of INDEMNITORS to indemnify RELIANCE is a continuing duty, separate from the duty to exonerate, and survives any payments made in exoneration of RELIANCE. Amounts due RELIANCE pursuant to this Section shall be payable within fifteen (15) days of receipt by INDEMNITORS of written demand therefor. Notwithstanding anything to the contrary herein, any INDEMNITOR which is not a wholly-owned SUBSIDIARY of HOLDINGS shall indemnify and hold and save RELIANCE harmless only as to any LOSS incurred by or on behalf of such INDEMNITOR; provided, that (a) NORTH AMERICAN shall indemnify and hold -------- and -13- save RELIANCE harmless as to any LOSS incurred by or on behalf of NATCO and (b) NATCO shall indemnify and hold and save RELIANCE harmless as to any LOSS incurred by or on behalf of NORTH AMERICAN. SECTION 3.2 EXONERATION. INDEMNITORS recognize and acknowledge the ----------- common law right of RELIANCE to be exonerated by PRINCIPAL for any LOSS arising out of any surety obligation undertaken by RELIANCE in connection with any BOND, provided, that in no event shall any INDEMNITOR exonerate RELIANCE for any LOSS - -------- arising out of the gross negligence, bad faith or willful misconduct of RELIANCE. In the event any PRINCIPAL fails or refuses to exonerate RELIANCE for any LOSS upon written demand therefor, all INDEMNITORS other than such PRINCIPAL agree, upon such demand by RELIANCE, to exonerate RELIANCE from LOSS to the same extent such INDEMNITORS agree to indemnify RELIANCE as provided in Sections 3.1, ------------ by satisfying such PRINCIPAL's obligations under the CONTRACT(s) and obtaining either a withdrawal of all claims against RELIANCE under the BOND(s) or a general release. Notwithstanding anything to the contrary contained herein, any INDEMNITOR which is not a wholly-owned SUBSIDIARY of HOLDINGS shall exonerate RELIANCE only as to BONDS issued for or on behalf of such INDEMNITOR; provided, -------- that (a) NORTH AMERICAN shall exonerate RELIANCE as to BONDS issued for or on behalf of NATCO and (b) NATCO shall exonerate RELIANCE as to BONDS issued for or on behalf of NORTH AMERICAN. SECTION 3.3 CASH COLLATERAL. Upon refusal or failure of any PRINCIPAL --------------- to exonerate RELIANCE in accordance with the terms hereof, INDEMNITORS agree upon demand to deposit with RELIANCE an amount of money or other collateral of value adequate in the reasonable judgment of RELIANCE to exonerate RELIANCE, such funds to be held by RELIANCE as collateral pursuant to documentation reasonably acceptable to RELIANCE, with the right to use such funds or any part thereof at any time in payment or compromise of such LOSS, and in which funds INDEMNITORS do hereby grant to RELIANCE a security interest to secure such LOSS. Unexpended funds by RELIANCE pursuant to a request for exoneration hereunder shall be repaid to HOLDINGS and its SUBSIDIARIES when the liability of RELIANCE arising out of the event for which exoneration was requested has been resolved to the reasonable satisfaction of RELIANCE and RELIANCE shall have been furnished with full releases of all liability under a surety obligation and have been reimbursed in full for all LOSS. Interest earned (if any) upon funds held by RELIANCE pursuant to a request for exoneration under this Section which is not otherwise expended in accordance with this Section shall be paid to HOLDINGS and its SUBSIDIARIES. SECTION 3.4 WAIVER OF CLAIMS AND HOLD HARMLESS. Each INDEMNITOR ---------------------------------- specifically agrees to protect, indemnify and hold harmless RELIANCE, each of its officers, directors, employees, agents and its attorneys-in-fact against any and all LOSS that may in any way arise in connection with this Agreement and the other UNDERWRITING DOCUMENTS and the powers herein granted, specifically waiving any claim which any INDEMNITOR has or might hereafter have against RELIANCE or its attorneys-in-fact on account of anything done in enforcing the terms of this Agreement, the BOND(s) or any other -14- UNDERWRITING DOCUMENT except for any LOSS due to the gross negligence, bad faith, or willful misconduct of RELIANCE. SECTION 3.5 WITHDRAWAL FROM AND TERMINATION OF AGREEMENT. Each -------------------------------------------- INDEMNITOR expressly recognizes and covenants this Agreement as its continuing obligation to protect RELIANCE from all LOSS. Any INDEMNITOR may notify RELIANCE in writing, of such INDEMNITOR's withdrawal from this Agreement; and such notice shall state when, not less than fifteen (15) days after receipt of such notice by RELIANCE, such withdrawal shall be effective. Such INDEMNITOR will not be liable under this Agreement as to any BOND(s) executed by RELIANCE after the effective date of such notice; provided, that as to any and all such BOND(s) -------- executed or authorized by RELIANCE prior to the effective date of such notice and as to any and all renewals, continuations, extensions, or substitutions (and, if a proposal or bid bond has been executed or authorized prior to such effective date, as to any contract bond executed pursuant thereto) regardless of when the same are executed, such INDEMNITOR shall be and remain fully liable hereunder, as if notice had not been served. Withdrawal by any INDEMNITOR shall in no way affect the obligation of any other INDEMNITOR who has given no notice of termination to RELIANCE. (b) HOLDINGS may notify RELIANCE of the termination of this Agreement by delivering written notice of such termination to RELIANCE, such termination to be effective on a date specified in such notice which date shall not be less than fifteen (15) days from receipt of such notice; provided, that no such -------- termination shall be effective at any time when any BONDS shall remain outstanding or any obligations under this Agreement shall remain unpaid. SECTION 3.6 INDEMNITORS AGREE TO BECOME PARTY DEFENDANTS. In the event -------------------------------------------- of legal proceedings against RELIANCE arising out of this Agreement or the BONDS, RELIANCE may apply for a court order making any or all of the INDEMNITORS party defendants, and each INDEMNITOR consents to the granting of such application, including consent to the jurisdiction of the court in which the application is made, and agrees to become such a party defendant or third-party defendant and to allow judgment, in the event of judgment against RELIANCE, to be rendered also against each INDEMNITOR, jointly and severally, in like amount and in favor of RELIANCE unless such judgment is due to the gross negligence, bad faith or willful misconduct of RELIANCE. SECTION 3.7 INDEMNITORS' WAIVER OF NOTICE. INDEMNITORS waive notice of ----------------------------- the execution, continuation, modification, renewal, enlargement or amendment of any BOND and of any fact, act or information concerning or affecting the rights or liabilities of RELIANCE or INDEMNITORS including, but not limited to, any acts giving rise to any LOSS under the BOND(s). SECTION 3.8 INDEMNITORS' KNOWING CONSENT TO AGREEMENT. Each INDEMNITOR ----------------------------------------- warrants that it is specifically and beneficially interested in obtaining the BOND(s) or the forbearance of cancellation of any existing BOND(s). INDEMNITORS -15- acknowledge that the execution of this Agreement and the undertaking of indemnity was not made in reliance upon any representation concerning the responsibility of any INDEMNITOR or concerning the competence of PRINCIPAL to perform. INDEMNITORS agree to make no claim against RELIANCE for any oral representations, promises or statements made to any of them by RELIANCE or any of its agents or brokers, or for the failure of RELIANCE to disclose facts or information to INDEMNITORS. SECTION 3.9 INDEMNITORS' DUTY TO REMAIN INFORMED OF PRINCIPAL'S --------------------------------------------------- BUSINESS. INDEMNITORS possess the duty to remain informed of all aspects of each PRINCIPAL's business and the business activities and financial affairs of each PRINCIPAL. INDEMNITORS acknowledge that they are presently informed of the state of business activities and financial affairs of each PRINCIPAL and all INDEMNITORS. RELIANCE possesses no obligation to inform any INDEMNITOR of any aspect of any PRINCIPAL's business or the business activities and financial affairs of the INDEMNITORS or of the request for, or issuance of, any BOND(s). SECTION 3.10 ENFORCEABILITY OF RIGHTS DIRECTLY AGAINST INDEMNITORS. ----------------------------------------------------- RELIANCE shall be entitled to enforce the obligations of this AGREEMENT directly against any INDEMNITOR without the necessity of first proceeding against the PRINCIPAL. The failure of any INDEMNITOR to perform any of the terms of this Agreement or the release of any INDEMNITOR by RELIANCE shall not excuse or release the remaining INDEMNITORS from their obligations under this Agreement. ARTICLE IV CONDITIONS PRECEDENT SECTION 4.1 CONDITION PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT. The ------------------------------------------------------ effectiveness of this Agreement is subject to the condition precedent that RELIANCE shall have received on or before the day hereof each of the following, in form and substance satisfactory to RELIANCE and its counsel: (a) a SECURITY AGREEMENT (A/R) duly executed by each PRINCIPAL (other than LYDON) and, unless already filed, executed Financing Statements (UCC-1) to be filed in all jurisdictions in the opinion of RELIANCE desirable to perfect the security interest created by such SECURITY AGREEMENT (A/R); (b) The VESSEL MORTGAGES duly executed by the mortgagee party thereto, together with (i) any supplements thereto as applicable, and (ii) proper documentation releasing all other LIENS, if any, on the related vessels; (c) a SECURITY AGREEMENT (EQUIPMENT) duly executed by each INDEMNITOR party to a VESSEL MORTGAGE and, unless already filed, executed Financing Statements (UCC-1) to be filed in all jurisdictions in the opinion of -16- RELIANCE desirable to perfect the security interest created by such SECURITY AGREEMENT (EQUIPMENT); (d) The PLEDGE AGREEMENT duly executed by the INDEMNITORS referenced on the signature pages thereto together with a photocopy of the Master Intercompany Demand Note, evidence that Bank of America National Trust and Savings Association, as administrative agent under the BANK LOAN FACILITY is in receipt of the original of such Note and executed Financing Statements (UCC-1) to be filed in all jurisdictions in the opinion of RELIANCE desirable to perfect the security interest created by such PLEDGE AGREEMENT; (e) The INTERCREDITOR AGREEMENT and the Proceeds Agent Agreement contemplated thereby, duly executed by the PRINCIPALS, RELIANCE and the other parties thereto; (f) A favorable opinion of Winston & Strawn, counsel to the PRINCIPALS and INDEMNITORS, addressing such legal matters as RELIANCE may require; (g) A secretary's certificate of HOLDINGS certifying that the BANK LOAN FACILITY and the 1998 DEBT INDENTURE are in full force and effect and attaching copies of all documentation related thereto; (h) An officer's certificate of each INDEMNITOR certifying copies of such party's organizational documents, appropriate resolutions authorizing the execution, delivery and performance of this Agreement and the other UNDERWRITING DOCUMENTS to which such party is a party and certifying incumbencies and true signatures of its officers so authorized; (i) Evidence of the good standing of each INDEMNITOR in the jurisdiction in which such party is organized; (j) Evidence of the existence of insurance on the property of each PRINCIPAL, together with evidence establishing RELIANCE as a loss payee and/or additional insured on all insurance policies relating to any tangible property on which RELIANCE has a first LIEN under the VESSEL MORTGAGES and the SECURITY AGREEMENT (EQUIPMENT); (k) Such other information and documents as may reasonably be required by RELIANCE. SECTION 4.2 CONDITIONS PRECEDENT TO ALL BONDS. The obligation of --------------------------------- RELIANCE to issue any BOND shall be subject to the further conditions precedent that on the date of such issuance: -17- (a) The following statements shall be true and, by its request for the issuance of such BOND, the applicable PRINCIPAL shall be deemed to have certified to RELIANCE that as of the date of such issuance: (i) The representations and warranties contained in Article V of this Agreement, in Section 4 of each SECURITY AGREEMENT --------- --------- (A/R), in Section 4 of each SECURITY AGREEMENT (EQUIPMENT), in Section 4 --------- --------- of the PLEDGE AGREEMENT and in Article I of each of the VESSEL MORTGAGES --------- are correct in all material respects on and as of the date of such issuance as though made on and as of such date except to the extent stated to relate to an earlier date, in which case such representation and warranty shall be correct as of such earlier date; and (ii) No EVENT OF DEFAULT has occurred and is continuing, or would result from the issuance of such BOND; (b) RELIANCE shall have received each of the following: (i) a SECURITY AGREEMENT (A/R) duly executed by the PRINCIPAL (other than LYDON) for whom such BOND is issued unless such PRINCIPAL previously delivered a SECURITY AGREEMENT (A/R) pursuant to SECTION 4.1(a), together with acknowledgment copies of the Financing Statements (UCC-1) required to be filed pursuant to SECTION 4.1(a); and -------------- (ii) such other approvals and documents as RELIANCE may reasonably request. ARTICLE V REPRESENTATIONS AND WARRANTIES The PRINCIPALS represent and warrant to RELIANCE that SECTION 5.1 INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION. --------------------------------------------------- HOLDINGS and each SUBSIDIARY: (a) is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (b) has the organizational power and authority, and has all material governmental licenses, authorizations, consents and approvals, necessary to own its assets and to transact the business in which it is now engaged or proposed to be engaged, except to the extent the failure thereof could not reasonably be expected to have a MATERIAL ADVERSE CHANGE; and (c) is duly qualified as a foreign organization and in good standing under the laws of each other jurisdiction in which such qualification is required except to the extent the failure to so qualify could not reasonably be expected to name a MATERIAL ADVERSE CHANGE. -18- SECTION 5.2 CORPORATE POWER AND AUTHORITY. The execution, delivery, and ----------------------------- performance by each PRINCIPAL and each INDEMNITOR of the UNDERWRITING DOCUMENTS to which each is a party have been duly authorized by all necessary organizational and stockholder action and do not and will not (a) contravene such party's organizational documents; (b) violate any provision of any material law, rule, regulation, order, writ, judgment, injunction, decree, determination, or award presently in effect having applicability to such party; (c) result in a breach of or constitute a default under any material indenture or loan or credit agreement or any other material agreement, lease, or instrument to which such party is a party or by which it or its properties may be bound or affected (except where the appropriate consents have been obtained); (d) result in, or require, the creation or imposition of any Lien (except LIENS in favor of RELIANCE and LIENS arising under the BANK CREDIT FACILITY), upon or with respect to any of the properties now owned or hereafter acquired by such party; or (e) cause such party to be in default under any such law, rule regulation, order, writ, judgment, injunction, decree, determination, or award or any such indenture, agreement, lease, or instrument (except where the appropriate consents have been obtained). SECTION 5.3 LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each ----------------------------- of the other UNDERWRITING DOCUMENTS when delivered under this Agreement will be, legal, valid, and binding obligations of each PRINCIPAL and each INDEMNITOR party thereto, enforceable against such PRINCIPAL or INDEMNITOR, as the case may be, in accordance with their respective terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and by equitable principles (regardless of whether enforcement is sought at law or in equity). SECTION 5.4 APPROVALS. Except for filings and recordings of Liens --------- created pursuant to the SECURITY AGREEMENTS and the VESSEL MORTGAGES, as of the date of this Agreement, no authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency are necessary for the execution, delivery or performance by each PRINCIPAL and each INDEMNITOR of the UNDERWRITING DOCUMENTS to which each is a party or for the validity or enforceability thereof, other than those which have been heretofore made or obtained. SECTION 5.5 OWNERSHIP AND LIENS. Each of HOLDINGS and each SUBSIDIARY ------------------- has title to, or valid leasehold interests in, all of its properties and assets, real and personal, that are necessary for conduct of such Person's business and none of the material properties and assets owned by HOLDINGS or any SUBSIDIARY and none of their respective material leasehold interests is subject to any LIEN, except such as may be permitted pursuant to Section 6.11 of this ------------ Agreement. SECTION 5.6 TAXES. Each of HOLDINGS and each SUBSIDIARY has filed all ----- material tax returns (federal, state, and local) required to be filed and has paid all taxes, assessments, and governmental charges and levies thereon to be due, including interest and -19- penalties, except to the extent the validity thereof is being contested in good faith by appropriate proceedings and for which adequate reserves have been set aside on its books in accordance with GAAP. SECTION 5.7 INSURANCE. As of the date of this Agreement, each PRINCIPAL --------- has insurance in force as disclosed in Schedule 5.7 attached hereto and made a ------------ part hereof. SECTION 5.8 COMPLIANCE. Each of HOLDINGS and each SUBSIDIARY is in ---------- material compliance with all statutes and governmental rules and regulations applicable to it, including without limitation, ERISA insofar as ERISA applies to it, except to the extent the failure to be in compliance therewith could not reasonably be expected to have a MATERIAL ADVERSE CHANGE. No condition exists or event or transaction has occurred in connection with any PLAN which could result in any liability, fine or penalty being asserted against HOLDINGS or any SUBSIDIARY, in an aggregate amount in excess of $5,000,000. SECTION 5.9 LITIGATION. There is no action, suit or proceeding pending ---------- against, or to the knowledge of HOLDINGS threatened against or affecting, HOLDINGS or any SUBSIDIARY before any court or arbitrator or any government body, agency or official in which there is a reasonable likelihood of an adverse decision which could reasonably be expected to have a MATERIAL ADVERSE CHANGE or which in any manner draws into question the validity of this Agreement except those referred to in Schedule 5.9 attached hereto and made a part hereof. ------------ SECTION 5.10 SUBSIDIARIES. Schedule 5.10 attached hereto and made a part ------------ ------------- hereof sets forth a complete and accurate list, as of the date of this Agreement, of each SUBSIDIARY of HOLDINGS and each SUBSIDIARY set forth on Schedule 5.10 and designated with an asterisk ("*") is a wholly-owned SUBSIDIARY - ------------- of HOLDINGS. SECTION 5.11 REAL PROPERTY. Schedule 5.11 contains a complete and ------------- ------------- accurate list, as of the date of this Agreement, of the address of any real property owned or leased by each PRINCIPAL with a net book value in excess of $500,000. SECTION 5.12 EQUIPMENT. Schedule 5.12 attached hereto and made a part --------- ------------- hereof sets forth a complete and accurate list, as of the date of this Agreement, of each item of equipment with a net book value in excess of $500,000 owned or leased by each PRINCIPAL. SECTION 5.13 VESSELS. Schedule 5.13 attached hereto and made a part ------- ------------- hereof sets forth a complete and accurate list, as of the date of this Agreement, of all vessels owned of record by any PRINCIPAL with a net book value in excess of $500,000 and, except as set forth on Schedule 5.13, each such ------------- vessel has all certificates required under applicable law (except where the failure could not reasonably be expected to have a MATERIAL ADVERSE CHANGE), including, without limitation, certificates of documentation, and, except as set forth on Schedule 5.13, each such vessel has been certified by the U.S. Coast ------------- Guard. Each such certificate is in full force and effect and each such vessel is in seaworthy and operational condition. Reliance Insurance Company, as Agent, has (or will have upon proper filing of the -20- VESSEL MORTGAGES with the U.S. Coast Guard) a perfected security interest, arising pursuant to the VESSEL MORTGAGES, in each vessel set forth on Schedule 5.13 and designed with an asterisk. - ------------- ARTICLE VI COVENANTS So long as any BONDS shall remain outstanding, HOLDINGS hereby covenants and agrees with RELIANCE as follows: SECTION 6.1 CORPORATE EXISTENCE. HOLDINGS will, and will cause each ------------------- SUBSIDIARY to, maintain its legal existence (in good standing where appropriate under local law) and remain or become duly qualified or licensed (and in good standing where appropriate under local law) as a foreign organization in each jurisdiction in which the conduct of its businesses or location of its assets requires such qualification or license, except where the failure to take any such action could not in the aggregate reasonably be expected to have a MATERIAL ADVERSE CHANGE. SECTION 6.2 MAINTENANCE OF RECORDS. HOLDINGS will, and will cause each ---------------------- SUBSIDIARY to, keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied. SECTION 6.3 MAINTENANCE OF PROPERTIES. HOLDINGS will, and will cause ------------------------- each SUBSIDIARY to, maintain, keep and preserve all of its properties (tangible and intangible) necessary or useful in its business in good working order and condition, ordinary wear and tear and damage caused by casualty excepted. SECTION 6.4 MAINTENANCE OF INSURANCE. HOLDINGS will, and will cause ------------------------ each SUBSIDIARY to, maintain insurance with financially sound and reputable insurance companies or associations in such amounts and covering such risks as are usually carried by companies engaged in the same or a similar business and similarly situated, which insurance may provide for reasonable deductibility from coverage thereof. HOLDINGS further agrees to furnish RELIANCE upon written request with an annual report on the insurance in force and with copies of the policies of said insurance evidencing the existence of the coverage called for by this Agreement. SECTION 6.5 COMPLIANCE WITH LAWS. HOLDINGS will, and will cause each -------------------- SUBSIDIARY to, comply in all respects with all applicable laws, rules, regulations, and orders the failure to comply with which could reasonably be expected to have a MATERIAL ADVERSE CHANGE, such compliance to include, without limitation, paying before the same become delinquent all material taxes, assessments, and governmental charges imposed upon it or upon its property, except taxes, assessments and governmental charges being contested in good faith by appropriate proceedings and for which adequate reserves have been set aside on its books in accordance with GAAP. -21- SECTION 6.6 TAXES. HOLDINGS will, and will cause each SUBSIDIARY to, ----- promptly pay all of its material taxes, assessments and other governmental charges prior to the date on which all penalties are attached thereto; provided, -------- that nothing herein contained shall be interpreted to require the payment of any tax, assessment or charge so long as its validity is being contested in good faith by appropriate proceedings and for which adequate reserves have been set aside on its books in accordance with GAAP. SECTION 6.7 BOOKS AND RECORDS. Until RELIANCE shall have been furnished ----------------- with evidence satisfactory to it that it has been discharged from its obligations under all BONDS without LOSS, upon reasonable prior notice RELIANCE shall have the right at reasonable times during normal business hours to free access to the books and records of each of HOLDINGS and its SUBSIDIARIES, including, without limitation, its books, records, accounts, computer software and other computer-stored information, for the purpose of examining, copying, or reproducing the same. Following the occurrence and during the continuance of an EVENT OF DEFAULT, each PRINCIPAL authorizes and requests any and all depositories in which funds of such PRINCIPAL may be deposited to furnish to RELIANCE upon RELIANCE's written request statements of its account and any other documents reflecting its receipts and disbursements, and any PERSON doing business with such PRINCIPAL is authorized to furnish any information requested by RELIANCE concerning any transaction. Subject to Section 8.11, RELIANCE may ------------ furnish copies of any and all statements, agreements and FINANCIAL STATEMENTS and any information which it now has or may obtain concerning each of HOLDINGS and its SUBSIDIARIES to other PERSONS for the purpose of procuring co-suretyship or reinsurance. SECTION 6.8 FINANCIAL RECORDS AND REPORTS. HOLDINGS will provide ----------------------------- RELIANCE with copies of yearly audited FINANCIAL STATEMENTS of HOLDINGS and its SUBSIDIARIES on a consolidated basis as soon as possible upon completion and in no event later than ninety (90) days after the end of the period under audit. In addition, HOLDINGS will furnish RELIANCE with true copies of quarterly unaudited FINANCIAL STATEMENTS of HOLDINGS and its SUBSIDIARIES on a consolidated basis, and such other financial information in a form as RELIANCE may reasonably request, upon completion and in no event later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year. The FINANCIAL STATEMENTS to be provided by HOLDINGS will be prepared in conformity with GAAP (except, with respect to unaudited FINANCIAL STATEMENTS, for the absence of footnotes and subject to year-end audit adjustments) applied on a basis consistent with that of the preceding fiscal year and in each instance will present fairly and accurately the financial condition of HOLDINGS and its SUBSIDIARIES on a consolidated basis as at the dates of the statements and the results of their operations for the periods then ended. HOLDINGS agrees to promptly notify RELIANCE of the occurrence of any MATERIAL ADVERSE CHANGE. SECTION 6.9 PRINCIPALS' REPRESENTATION. HOLDINGS will provide RELIANCE -------------------------- on a quarterly basis with a letter in which an AUTHORIZED OFFICER of HOLDINGS represents that to his or her knowledge, as of the date of such quarter end, no -22- condition, event or act exists which constitutes, or which with notice or the lapse of time, or both, would constitute an EVENT OF DEFAULT. This letter shall accompany each delivery of FINANCIAL STATEMENTS required by Section 6.8 hereof. ----------- SECTION 6.10 NOTICE OF LITIGATION. HOLDINGS shall promptly give notice -------------------- in writing to RELIANCE of (a) any litigation filed or threatened against HOLDINGS or any of its SUBSIDIARIES involving an amount in excess of $5,000,000 which claim is not covered by insurance and (b) all litigation filed against any INDEMNITOR associated with any CONTRACT with respect to which five or more separate litigation matters are then pending. SECTION 6.11 LIENS. HOLDINGS will not, and will not permit any ----- SUBSIDIARY to create, incur, assume, or suffer to exist any LIEN upon any of its properties or assets now owned or hereafter acquired, except for PERMITTED LIENS. SECTION 6.12 DEBT AND CONTINGENT LIABILITIES. HOLDINGS will not, and ------------------------------- will not permit any SUBSIDIARY to, incur, assume, or suffer to exist any DEBT or CONTINGENT LIABILITY, except for: (a) DEBT and CONTINGENT LIABILITY existing at the effective date of this Agreement and disclosed on Schedule 6.12 attached hereto and any renewals, ------------- extensions, refinancings or replacements thereof, provided, that the terms -------- thereof are not materially more burdensome on the INDEMNITORS than the existing terms ; (b) endorsement of instruments for deposit or collection in the ordinary course of business; (c) CONTINGENT LIABILITIES in connection with third party leases, repurchase agreements or sales in the ordinary course of business; (d) DEBT and CONTINGENT LIABILITIES in respect of factoring or financing of accounts receivable with respect to any contract or series of contracts under which the amounts payable to HOLDINGS or any SUBSIDIARY are payable in whole or in part in the currency of any country other than the United States of America, sold or pledged on a non-recourse basis in an aggregate amount not to exceed $10,000,000; (e) DEBT of the PRINCIPALS and INDEMNITORS arising under this Agreement and under the other UNDERWRITING DOCUMENTS; (f) DEBT and CONTINGENT LIABILITIES arising under (i) the BANK LOAN FACILITY; provided, that the aggregate principal amount of all loans plus the -------- undrawn face amount of all letters of credit outstanding under the BANK LOAN FACILITY shall at no time exceed $130,000,000; and (ii) the 1998 DEBT INDENTURE; provided, that the aggregate principal amount outstanding under the 1998 DEBT - -------- INDENTURE shall at no time exceed $115,000,000; -23- (g) DEBT and CONTINGENT LIABILITIES under or in respect of capital leases; (h) DEBT of HOLDINGS to any SUBSIDIARY and DEBT of any SUBSIDIARY to HOLDINGS or any other SUBSIDIARY to the extent permitted by Section 6.15; ------------ (i) DEBT consisting of deferred payment obligations of a PRINCIPAL for insurance premiums or of funds borrowed for the payment of such premiums; (j) CONTINGENT LIABILITIES consisting of guaranties by HOLDINGS or any SUBSIDIARY of obligations of HOLDINGS or any SUBSIDIARY, as the case may be, under any DEBT otherwise permitted hereunder or under any lease or other agreement (not representing DEBT) entered into in the ordinary course of business; provided, that the aggregate amount of such CONTINGENT LIABILITIES of -------- INDEMNITORS relating to DEBT of LIMITED SUBSIDIARIES, when added to the other RESTRICTED AMOUNTS then outstanding, shall not exceed at any time $30,000,000; (k) DEBT incurred in the ordinary course of business in the nature of open accounts (extended by suppliers on normal trade terms in connection with purchasers of goods or services) accrued liabilities and deferred income, taxes and judgements or orders for the payment of money to the extent such judgments or orders do not result in any EVENT OF DEFAULT; (l) DEBT and CONTINGENT LIABILITIES incurred to finance the acquisition of assets in the ordinary course of business so long as the amount of such DEBT does not exceed the purchase price of the assets acquired with the proceeds thereof; (m) DEBT arising from the issuance of license, bid, performance and lien bonds, and other undertakings or instruments of guaranty, whether issued by RELIANCE or any other surety for the benefit of HOLDINGS or any SUBSIDIARY; (n) DEBT incurred in connection with any interest rate hedging transaction, foreign currency or commodity hedging transactions, foreign exchange contract or other similar arrangement entered into by HOLDINGS or any SUBSIDIARY; (o) CONTINGENT LIABILITIES consisting of guaranties by HOLDINGS or any SUBSIDIARY of obligations of Amboy Aggregates, a New Jersey joint venture, and its SUBSIDIARIES; provided, that the aggregate amount of such CONTINGENT -------- LIABILITIES of INDEMNITORS, shall not exceed at any time $17,000,000; (p) DEBT OF SUBSIDIARIES which represents the assumption by such SUBSIDIARIES of DEBT of another SUBSIDIARY in connection with the merger of -24- such other SUBSIDIARY with and into the assuming SUBSIDIARY or the purchase of all or substantially all of the assets of such other SUBSIDIARY; (q) all premiums, interest, fees, expenses, indemnities, charges and additional or contingent interest on obligations described in this Section 6.12; ------------ (r) [Reserved] (s) other DEBT of HOLDINGS and its SUBSIDIARIES in an aggregate amount, determined on a consolidated basis with respect to HOLDINGS and its SUBSIDIARIES, at any time outstanding not to exceed $5,000,000. SECTION 6.13 DISPOSITION OF ASSETS; ISSUANCE OF EQUITY. ----------------------------------------- (a) Except for PERMITTED LIENS, HOLDINGS will not, and will not permit its SUBSIDIARIES to, sell, lease, transfer, or otherwise dispose of its assets whether now owned or hereafter acquired except for (i) sales of inventory in the ordinary course of business, (ii) the sale or other disposition of any investment of the type described in clauses (a) through (e), (h) and (j) of Section 6.15, ------------ (iii) a disposition made in connection with a sale and leaseback transaction involving the sale or disposition of capital assets, provided (A) such sale or disposition is for an amount not less than the fair market value thereof and (B) any DEBT arising in connection therewith is permitted by Section 6.12, ------------ (iv) a sale, lease or other disposition that either (A) is made in the ordinary course of business for fair market value, (B) is a sale, lease or transfer from HOLDINGS to any SUBSIDIARY or from a SUBSIDIARY to HOLDINGS or any other SUBSIDIARY; provided, that, in the case -------- of a sale, lease or other disposition by HOLDINGS or any SUBSIDIARY which is not a LIMITED SUBSIDIARY to a LIMITED SUBSIDIARY, the fair market value of such assets, when added to the other RESTRICTED AMOUNTS then outstanding, shall not exceed at any time $30,000,000 or (C) is a lease (on a short-term or long-term basis) to another Person of assets no longer useful or necessary in the operations of businesses of HOLDINGS and its SUBSIDIARIES, (v) a sale or other disposition of assets no longer useful or necessary in the operations or businesses of HOLDINGS and its SUBSIDIARIES and the purchase price is not less than the fair market value of the asset sold or disposed of, -25- (vi) a sale or other disposition of accounts receivable arising in the ordinary course of business which are overdue and which HOLDINGS or any SUBSIDIARY have determined are not economical to collect, and (vii) other dispositions, provided, that such dispositions do -------- not exceed in the aggregate in any fiscal year ten percent (10%) of the book value of all assets. (b) HOLDINGS further agrees that it shall not permit its SUBSIDIARIES to authorize or issue additional shares of their capital stock or similar equity interest except (i) shares or similar equity interests issued to HOLDINGS or a wholly-owned SUBSIDIARY of HOLDINGS, (ii) shares of capital stock or equity interests issued by (1) any non-wholly owned SUBSIDIARY to its holders of capital stock or equity interests on a proportionate basis and (2) a newly created SUBSIDIARY to another PERSON in connection with any joint venture, provided that such newly created SUBSIDIARY's business and activities shall be - -------- limited to the conduct of such joint venture, and (iii) for directors' qualifying shares and similar issuances pursuant to local law requirements. SECTION 6.14 MERGERS. HOLDINGS will not, and will not permit its ------- SUBSIDIARIES to, merge or consolidate with or into or purchase or otherwise acquire all or substantially all of the assets of, or stock or other equity interest in, any PERSON unless (a) after giving effect to such transaction HOLDINGS shall be in compliance with the provisions of Section 6.19 and 6.20 and ------------ ---- (b) if such transaction involves an INDEMNITOR, the surviving entity shall have executed and delivered to RELIANCE a SUPPLEMENTAL SIGNATURE PAGE; provided, that -------- (x) any wholly-owned SUBSIDIARY which is an INDEMNITOR may merge or consolidate into HOLDINGS or into or with any other wholly-owned SUBSIDIARY which is an INDEMNITOR, (y) any wholly-owned SUBSIDIARY which is not an INDEMNITOR may merge or consolidate into HOLDINGS or into or with any other wholly-owned SUBSIDIARY, provided, that in the event an INDEMNITOR is a party to such merger or - -------- consolidation, an INDEMNITOR must survive the transaction and (z) any wholly- owned SUBSIDIARY may sell, transfer, convey, lease or assign its assets or a substantial part thereof to HOLDINGS or any other wholly-owned SUBSIDIARY, provided, that in the case of a sale, transfer, conveyance, lease or assignment - -------- by such a SUBSIDIARY which is an INDEMNITOR, the other party to such transaction must also be an INDEMNITOR. Notwithstanding the foregoing, HOLDINGS and its SUBSIDIARIES may consummate the transactions contemplated by the MERGER AGREEMENT. SECTION 6.15 INVESTMENTS. HOLDINGS will not, and will not permit its ----------- SUBSIDIARIES to, make or suffer to exist any investment in any PERSON whether in the form of equity, DEBT or CONTINGENT LIABILITY, except: (a) Cash Equivalent Investments; -26- (b) investments permitted as DEBT or CONTINGENT LIABILITIES under Section 6.12 and investments permitted under Section 6.14; - ------------ ------------ (c) investments existing on the effective date of this Agreement and disclosed in Schedule 6.15; ------------- (d) accounts receivable arising from, and credit extended in connection with, the sale of goods or rendering of services in the ordinary course of business and promissory notes or other instruments evidencing such credit or partial satisfaction thereof; (e) investments, DEBT and CONTINGENT LIABILITIES in HOLDINGS or its SUBSIDIARIES; provided, that the aggregate amount of investments in LIMITED -------- SUBSIDIARIES, when added to the other RESTRICTED AMOUNTS then outstanding, shall not exceed at any time $30,000,000; (f) loans or advances to employees of HOLDINGS and its SUBSIDIARIES made in the ordinary course of business consistent with past business practices; (g) investments made in the ordinary course of business in connection with its capacity as a co-joint venturer in a joint venture, corporation or similar pooling of efforts in respect of a specific project or series of projects for a limited or fixed duration to conduct a business of a type in which a PRINCIPAL is presently engaged consistent with past practices; (h) investments in Amboy Aggregates, a New Jersey joint venture, existing on the date hereof and disclosed on Schedule 6.15 and additional ------------- investments therein made after the date hereof; provided, that the amount of -------- such additional investments (excluding increases solely as a result of increases in the retained earnings of Amboy Aggregates) shall not exceed at any time $10,000,000. (i) other investments in an aggregate amount at any one time not to exceed $15,000,000; For purposes of this Section 6.15, "Cash Equivalent Investments" means, at ------------ --------------------------- any item: (a) any obligation, maturing not more than one year after such time, issued or guaranteed by the United States Government or issued by an agency thereof and backed by the full faith and credit of the United States of America; (b) marketable general obligations, maturing not more than six months after such time, issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof and rated A-2 or higher by Standard & Poor's -27- Rating Group, a division of McGraw Hill Inc. or P-2 or higher by Moody's Investors Service, Inc.; (c) commercial paper, maturing not more than nine months from the date of issue, which is issued by a corporation organized under the laws of any state of the United States or of the District of Columbia and rated A-2 or higher by Standard & Poor's Rating Group, a division of McGraw Hill Inc. or P-2 or higher by Moody's Investors Service, Inc.; (d) any certificate of deposit, time or demand deposit or bankers acceptance, maturing not more than one year after such time, which is issued by a commercial banking institution organized under the laws of the United States of America or any State thereof or the District of Columbia that has a combined capital, surplus and undivided profits of not less than $100,000,000, or any Lender or commercial banking institution organized under the laws of the United Kingdom, Canada or Japan having combined capital, surplus and undivided profits of not less than $100,000,000; (e) fully collateralized repurchase agreements with a term of not more than 30 days for underlying securities of the type described in clauses (a) and (b) above, entered into with any institution meeting ----------- --- the qualifications specified in clause (d) above; ---------- (f) participations in loans made to a borrower with a debt rating of A-2 or higher form Standard & Poor's Rating Group, a division of McGraw Hill Inc. or P-2 or higher from Moody's Investor Service, Inc.; provided, that such loans must mature within six months form the -------- date such participation is purchased; (g) short-term asset management accounts for the purpose of investing in notes issued by a corporation organized under the laws of any state of the United States or of the District of Columbia and rated A-2 or higher by Standard & Poor's Rating Group, a division of McGraw Hill Inc. or P-2 or higher by Moody's Investors Service, Inc.; or (h) bonds issued by a municipality or governmental agency and rate not lower than (i) BBB by Standard & Poor's Corporation or (ii) Baa2 by Moody's Investors Service, Inc. and purchased by HOLDINGS or any of its SUBSIDIARIES in the ordinary course of its business in connection with retainage under contracts with its customers. SECTION 6.16 DIVIDEND RESTRICTIONS. HOLDINGS will not pay any dividend --------------------- or make any other distribution to any PERSON, except: -28- (a) dividends or distributions payable in common stock or warrants to purchase common stock or splitups or reclassification of its stock into additional or other shares of its common stock; (b) cash dividends or other distributions payable by HOLDINGS not to exceed in aggregate during the term of this Agreement the sum of (i) $5,000,000 plus (ii) fifty percent (50%) of the sum of the positive NET INCOME (if any) for - ---- the fiscal quarter of HOLDINGS ending on or about December 31, 1998 plus (iii) ---- fifty percent (50%) of the sum of positive NET INCOME (if any) for each fiscal year of HOLDINGS ending on or after December 31, 1999; provided, that both -------- before and after giving effect to such dividends or distributions HOLDINGS shall be in compliance with the provisions of Section 6.19 and 6.20; and ------------ ---- (c) cash dividends or distributions made pursuant to (i) the MERGER AGREEMENT (including, without limitations, dividends or distributions made after the date of this Agreement pursuant to Sections 2.6 and 2.11 of the MERGER ------------ ---- AGREEMENT) and (ii) the separate agreement entered into by HOLDINGS and certain members of senior management of HOLDINGS with respect to the reimbursement of taxes payable by such senior management in connection with the consummation of the transactions contemplated by the MERGER AGREEMENT, provided, that in the -------- case of the foregoing clause (ii), such dividends and/or distributions shall not exceed in aggregate $4,000,000. SECTION 6.17 RESTRICTIONS UPON CONTRACTS WITH AFFILIATES. Other than ------------------------------------------- amongst themselves, HOLDINGS and its SUBSIDIARIES will not without the prior written consent of RELIANCE enter into contracts, equipment leases or other agreements with any AFFILIATE except on an arms' length basis or except (a) pursuant to written agreements with third party PERSONS from which HOLDINGS and its SUBSIDIARIES have been or are being benefitted, including but not limited to pension plans and other joint employee benefit programs, insurance programs and other similar joint programs or services, (b) the payment by HOLDINGS and its SUBSIDIARIES to Vectura Holding Company LLC, or any of its AFFILIATES of out of pocket costs and expenses owed to PERSONS who are not AFFILIATES and (c) transactions contemplated by the MERGER AGREEMENT and the EQUITY DOCUMENTS. SECTION 6.18 NATURE OF BUSINESS. HOLDINGS and its SUBSIDIARIES shall not ------------------ engage in any business activities or operations substantially different from or unrelated to its present business activities and operations; provided, that -------- HOLDINGS and its SUBSIDIARIES may engage in activities that are reasonably related or ancillary to its business activities or operations. SECTION 6.19 NET WORTH. HOLDINGS and its consolidated SUBSIDIARIES shall --------- not permit NET WORTH as of the last day of any fiscal quarter of HOLDINGS ending after the date hereof, to be less than the sum of (i) -56,100,000 plus (ii) fifty percent (50%) of the -29- sum of the positive NET INCOME (if any) for the fiscal quarter of HOLDINGS ending on or about December 31, 1998, plus (iii) fifty percent (50%) of the sum ---- of the positive NET INCOME (if any) for each fiscal year of HOLDINGS ending on or after December 31, 1999 and prior to the date of determination hereunder. SECTION 6.20 NET CURRENT ASSETS. HOLDINGS will not permit the ratio ------------------ of its consolidated current assets to its consolidated current liabilities as of the last day of each fiscal quarter of HOLDINGS to be less than 1.4 to 1 and will not permit its net current assets as of the last day of each fiscal quarter of HOLDINGS to be less than $17,000,000; provided, that in the event HOLDINGS -------- fails to maintain either of these levels it shall immediately notify RELIANCE and shall have thirty (30) days in which to restore its position. In the determination of current assets, pipe inventory shall be classified as a current asset; and provided further, that for purposes of calculating consolidated -------- ------- current liabilities, current maturities of DEBT will be excluded from the calculation thereof to the extent HOLDINGS or any of its SUBSIDIARIES is able to repay such current maturities through the incurrence of other non-current DEBT (including, without limitation, through borrowings under the BANK LOAN FACILITY). SECTION 6.21 SUBORDINATED DEBT AND PAYMENT BLOCKAGE NOTICE. -------------------------- (a) HOLDINGS shall not, and shall not suffer or permit any of its SUBSIDIARIES to, (i) make any payment (other than any payment utilizing proceeds from the issuance of any equity securities by HOLDINGS or any parent entity) of interest on any SUBORDINATED DEBT on any day other than the stated, scheduled date (subject to any applicable grace period) for such payment set forth in the document or agreement evidencing or governing such SUBORDINATED DEBT, (ii) make any voluntary or mandatory prepayment (other than any payment utilizing proceeds from the issuance of any equity securities by HOLDINGS or any parent entity) of principal of, or redeem, purchase or defease, any SUBORDINATED DEBT, or (iii) consent to any amendment, supplement or other modification of any of the terms or provisions contained in, or applicable to, any document or agreement evidencing or governing SUBORDINATED DEBT, except to the extent that such amendment, supplement or other modification would extend the date or reduce the amount of any required repayment or redemption or would amend, supplement or modify any term or provision in a manner not adverse to the rights or interests of RELIANCE. (b) HOLDINGS shall promptly give notice in writing to RELIANCE of the receipt by the Trustee under the 1998 DEBT INDENTURE of any PAYMENT BLOCKAGE NOTICE. -30- ARTICLE VII RIGHTS OF RELIANCE SECTION 7.1 FURTHER ASSURANCES/RELIANCE AS ATTORNEY-IN-FACT. ----------------------------------------------- PRINCIPALS agree to sign, execute, file and/or deliver to RELIANCE all documents, reports, papers, pleadings and/or instruments reasonably requested by RELIANCE to obtain, and/or perfect any of RELIANCE's rights under this Agreement. The INDEMNITORS irrevocably nominate and appoint RELIANCE or any other PERSON(s) designated by RELIANCE, effective upon the occurrence and during the continuance of an EVENT OF DEFAULT, true and lawful attorney-in-fact of the INDEMNITORS, with full right and authority, upon the occurrence and during the continuance of an EVENT OF DEFAULT to execute on behalf of, and sign the names of each INDEMNITOR to any voucher, release, satisfaction, check, application for payment, bill of sale of any or all property assigned by this Agreement or any other UNDERWRITING DOCUMENT to RELIANCE or any other paper or contract necessary or desired to carry into effect the purposes of this Agreement or any other UNDERWRITING DOCUMENT, with full right and authority, to satisfy the performance of the CONTRACT(s); and each INDEMNITOR ratifies and confirms all that such attorney-in-fact or RELIANCE may lawfully do in the premises and further authorizes and empowers RELIANCE and such attorney-in-fact and each of them to enter upon and take possession of the tools, plant, equipment, materials and subcontracts and all other collateral security mentioned in this Agreement and enforce, use, employ and dispose thereof for the purposes set forth in this Agreement, INDEMNITORS recognize that the appointment of such attorney-in-fact constitutes a power coupled with an interest. SECTION 7.2 CONTRACT FUNDS HELD IN TRUST. INDEMNITORS and PRINCIPALS ---------------------------- agree and expressly declare that upon the occurrence and during the continuance of an EVENT OF DEFAULT all funds due or to become due under the CONTRACT(s) will immediately become trust funds, whether in possession of INDEMNITORS, PRINCIPALS or another, for the benefit and the payment of all PERSONS to whom a PRINCIPAL incurs obligations in the performance of the CONTRACT(s), for which RELIANCE would be liable under the BOND(s). If RELIANCE discharges any such obligations, with or without a claim asserted against RELIANCE under the BOND(s), it shall be entitled to assert the right of such PERSON to the trust fund. SECTION 7.3 RIGHT OF RELIANCE TO SETTLE CLAIMS. RELIANCE shall have ---------------------------------- the exclusive right for itself and for INDEMNITORS and PRINCIPALS to decide and determine whether any claim, demand, suit or judgment on the BOND(s) shall be paid, settled, defended or appealed. Any payment or determination made by RELIANCE under a good faith belief that either RELIANCE was or might be liable therefor or such payments were necessary or advisable to protect any of RELIANCE's rights or to avoid or lessen RELIANCE's liability or alleged liability, shall be final, conclusive and binding upon INDEMNITORS and the PRINCIPALS; and any LOSS which may be sustained or incurred shall be paid by the respective PRINCIPAL or by INDEMNITORS within fifteen (15) days of receipt of written demand by RELIANCE. In the event of any payment, settlement, compromise, or investigation, an itemized -31- statement of LOSS sworn to by an officer or authorized representative of RELIANCE or voucher(s) or other evidence of such LOSS shall be prima facie evidence of the fact and extent of the liability of INDEMNITORS and the PRINCIPALS to RELIANCE in any claim or suit and in any and all matters arising between INDEMNITORS, the PRINCIPALS and RELIANCE. SECTION 7.4 AUTHORITY OF RELIANCE TO MAKE LOANS TO PRINCIPAL. In ------------------------------------------------ addition to the other remedies provided herein, RELIANCE is authorized and empowered, but is not obligated, to advance or loan money or guarantee loans to any PRINCIPAL as RELIANCE may see fit for the purpose of any of the CONTRACT(s), or for the purpose of meeting operational expenses or paying other obligations, bonded or unbonded. Such funds may be advanced or guaranteed at anytime, whether before or after default of such PRINCIPAL under the CONTRACT(s). Upon demand by RELIANCE, each INDEMNITOR shall be responsible to reimburse RELIANCE for all funds so loaned, advanced, or guaranteed and all LOSS incurred by RELIANCE in relation thereto, notwithstanding the failure of any PRINCIPAL to so use those funds. INDEMNITORS waive all notice of such advance, loan, or guarantee. SECTION 7.5 AUTHORITY OF RELIANCE TO AMEND BOND. RELIANCE shall have ----------------------------------- the right, and is hereby authorized and empowered, but not required: (a) upon the request of any INDEMNITOR to increase or decrease the penalty or penalties of any BOND(s), to change the OBLIGEE(s) therein, to execute any continuation, enlargements, modifications and renewals thereof or substitute therefor with the same or different conditions, provisions or OBLIGEE(s), and with the same, larger or smaller penalties, it being agreed that this instrument shall apply to and cover such new or changed BOND(s) or renewals even though the consent of RELIANCE may or does substantially increase the liability of the INDEMNITORS and the PRINCIPALS; or (b) to take such steps as it may deem necessary or proper to obtain release from liability under the BOND(s); or (c) to assent to any changes in any CONTRACT, including but not limited to, any change in the time for completion of any CONTRACT and to payments or advances thereunder. SECTION 7.6 RIGHTS OF RELIANCE TO TAKE POSSESSION OF THE WORK. Upon ------------------------------------------------- the occurrence and during the continuance of an EVENT OF DEFAULT (for the avoidance of doubt, after giving effect to all applicable grace periods contained in the definition of EVENT OF DEFAULT), in addition to other remedies provided herein, RELIANCE is authorized and empowered, but is not obligated, to take possession of the work under any CONTRACT(s) and at the expense of the respective PRINCIPAL and of INDEMNITORS to complete or to contract for the completion of the same, or to consent to the reletting of the completion thereof by OBLIGEE, or to take such other steps as in the discretion of RELIANCE may be advisable or necessary to obtain its release or to avoid LOSS. SECTION 7.7 DEPOSITORY TRUST ACCOUNTS. Upon the occurrence and during ------------------------- the continuance of an EVENT OF DEFAULT (for the avoidance of doubt, after giving effect to all applicable grace periods contained in the definition of EVENT OF DEFAULT), PRINCIPALS shall, upon demand of RELIANCE, open an account(s) with a bank or similar depository designated by PRINCIPALS and approved by RELIANCE, which account(s) shall be -32- designated as trust account(s) for the deposit of such trust funds, and shall deposit therein all monies paid or to be paid under the CONTRACT(s). Withdrawals from such account(s) shall be by check or similar instruments signed by a representative of RELIANCE and, at RELIANCE's option, countersign by an PRINCIPAL. Said trust(s) shall terminate on the payment by INDEMNITORS and PRINCIPALS of all the contractual obligations for the payment of which the trust(s) are created or upon the expiration of seven (7) years from the date thereof, whichever shall first occur. SECTION 7.8 PRESERVATION OF RELIANCE'S RIGHTS. RELIANCE shall have --------------------------------- every right and remedy which a personal surety without compensation would have, including the right to secure its discharge from the suretyship, and nothing in this Agreement shall waive, abridge or diminish any right which RELIANCE might have if this Agreement were not executed. SECTION 7.9 AUTHORITY OF RELIANCE TO ELECT REMEDIES. Each right, --------------------------------------- remedy and power of RELIANCE provided in this Agreement or by law, equity, or statute shall be cumulative, and the exercise by RELIANCE of any right, remedy or power shall not preclude RELIANCE's simultaneous or subsequent exercise of any or all other rights, powers or remedies. The failure or delay by RELIANCE to exercise any right, power or remedy shall not waive any right, power or remedy. No notice or demand upon RELIANCE by any INDEMNITOR or any PRINCIPAL shall limit or impair RELIANCE's right to take any action under this Agreement or to exercise any right, power or remedy, subject to the provisions of Section 3.5 ----------- herein. ARTICLE VIII MISCELLANEOUS SECTION 8.1 BENEFICIAL PARTIES. This Agreement shall, in all its terms ------------------ and agreements, be for the benefit of and protect any PERSON joining with RELIANCE in executing any BOND or BONDS or executing at the request of RELIANCE said BOND or BONDS as well as any PERSON assuming co-suretyship or reinsurance thereupon. SECTION 8.2 JOINT AND SEVERAL. The agreements and covenants herein ----------------- contained shall be binding upon the undersigned, both jointly and severely, upon their successors and assigns jointly and severely, provided, that the PRINCIPALS -------- and the INDEMNITORS may not assign their rights hereunder without the prior written consent of RELIANCE. SECTION 8.3 ATTORNEYS FEES. The INDEMNITORS agree hereby to pay the -------------- reasonable attorneys fees and expenses incurred by RELIANCE in the preparation and enforcement of this Agreement and the other UNDERWRITING DOCUMENTS. SECTION 8.4 APPLICABLE LAW. The terms and conditions of this Agreement -------------- shall be construed under the laws of Pennsylvania. -33- SECTION 8.5 JURISDICTION FOR SUITS UNDER THIS AGREEMENT. Separate ------------------------------------------- suits may be brought hereunder as causes of action may accrue, and the pendency or termination of any such suit shall not bar any action, whether previously or subsequently arising. PRINCIPALS and INDEMNITORS consent to the jurisdiction of the state and federal court located in Philadelphia, PA to bring any action against them under this Agreement or the BOND(s). Each PRINCIPAL and each INDEMNITOR are the agents for all PRINCIPALS and all INDEMNITORS for the purpose of accepting service of process. SECTION 8.6 INDEMNITORS WAIVE DEFENSE OF SUBSEQUENT EXECUTION. ------------------------------------------------- INDEMNITORS waive any defense that this Agreement was executed subsequent to any BOND, admitting that such BOND was executed pursuant to each INDEMNITOR'S request and in reliance upon INDEMNITORS' promise to execute this Agreement. SECTION 8.7 VALIDITY OF AGREEMENT. Failure to execute, or defective --------------------- execution, by any party shall not affect the validity of this Agreement as to any other party executing the same and each other party shall remain fully bound and liable hereunder. Invalidity of any portion or provision of this Agreement by reason of the laws of any state or for any other reason shall not render the other provisions or portions invalid. Executions of any application or submission for any BOND by any PRINCIPAL, or of any other indemnity agreement by any INDEMNITOR for the PRINCIPALS shall not abrogate, waive or diminish any rights of RELIANCE under this Agreement. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. SECTION 8.8 ORAL MODIFICATIONS INEFFECTIVE. This Agreement may not be ------------------------------ changed or modified orally. No change or modification to this Agreement shall be effective unless specifically agreed to in writing and executed by RELIANCE and HOLDINGS. SECTION 8.9 NOTICES. It is mutually agreed that any and all notices or ------- demands herein provided for must be given in writing and shall be deemed given if and when delivered in person or duly deposited in the United States mails, postage prepaid for regular or certified mail, properly addressed to the party to whom given at the address of such party shown in this Agreement; provided, -------- that any party may specify any other post office address in the United States by giving at least ten (10) days written notice thereof to the other party. Notice to RELIANCE shall be sent to: Reliance Insurance Company Three Parkway Philadelphia, PA 19102-1376 Attention: Surety Department -34- Notice to any PRINCIPAL or to any INDEMNITOR shall be sent to: Great Lakes Dredge & Dock Corporation 2122 York Road Oak Brook, IL 60523 Attention: Bruce J. Biemeck Chief Financial Officer With a copy to: Winston & Strawn 35 W. Wacker Drive Chicago, Illinois 60601 Attention: Brian S. Hart, Esq. SECTION 8.10 REAFFIRMATION AND RESTATEMENT. and restatement of the ----------------------------- ORIGINAL AGREEMENT and the DEBT evidenced by the ORIGINAL AGREEMENT is continuing DEBT. Nothing herein shall be deemed to constitute a payment, settlement or novation of the DEBT evidenced by the ORIGINAL AGREEMENT, or to release or otherwise adversely affect any LIEN securing such DEBT or any rights RELIANCE has against any guarantor, surety or other party primarily or secondarily liable for such DEBT. SECTION 8.11 CONFIDENTIALITY. RELIANCE agrees that they will maintain --------------- the confidentiality of any written or oral information provided to RELIANCE by or on behalf of HOLDINGS or any of its SUBSIDIARIES (hereinafter collectively called "Confidential Information"), subject to RELIANCE'S (a) obligation to ------------------------ disclose any such Confidential Information pursuant to a request or order under applicable laws and regulations or pursuant to a subpoena or other legal process, (b) right to disclose any such Confidential Information to its examiners, auditors, counsel and other professional advisors, (c) right to disclose any such Confidential Information in connection with any litigation or dispute involving RELIANCE and HOLDINGS or any of its SUBSIDIARIES (d) right to provide such information to other Persons for the purpose of procuring co- suretyship or reinsurance if such Person agrees in writing to maintain the confidentiality of such information on terms substantially similar to those of this Section as if it were a party hereto. Notwithstanding the foregoing, any such information supplied to RELIANCE or another Person under this Agreement shall cease to be Confidential Information if it is or becomes known to such Person by other than unauthorized disclosure, or if it becomes a matter of public knowledge. SECTION 8.12 RELEASE OF LIENS. RELIANCE agrees to release the LIENS ---------------- under the SECURITY AGREEMENTS, the VESSEL MORTGAGES, and any other UNDERWRITING DOCUMENTS, and to execute and deliver such documents and instruments requested by any PRINCIPAL to effect such release; -35- (a) on any property or assets in which the agent under the BANK LOAN FACILITY has a first priority LIEN and if such first priority LIEN is released by the agent under the BANK LOAN FACILITY; (b) on any property or assets for which substitute collateral is provided with an appraisal value at least equal to the value of the property or assets released; (c) on all collateral upon termination of this Agreement and payment in full of all obligations under this Agreement; and (d) on any property or assets upon the sale, transfer or other disposition of such property or assets which is otherwise permitted under this Agreement, up to an aggregate fair market value, as determined in good faith by the applicable PRINCIPAL selling such property or assets, not to exceed $5,000,000 during the term of this Agreement; provided, that RELIANCE is given prior written notice of -------- the fair market value of such transaction. IN WITNESS WHEREOF, this Agreement is executed by the parties on the day and date first set forth above. GREAT LAKES DREDGE & DOCK CORPORATION BY: -------------------------------- Its ----------------------------- GREAT LAKES INTERNATIONAL, INC. BY: -------------------------------- Its ----------------------------- GREAT LAKES DREDGE & DOCK COMPANY BY: -------------------------------- Its ----------------------------- LYDON DREDGING & CONSTRUCTION COMPANY, LTD. BY: -------------------------------- Its ----------------------------- -36- GATES CONSTRUCTION CORPORATION BY: -------------------------------- Its ----------------------------- NATCO DREDGING LIMITED PARTNERSHIP BY: -------------------------------- Its ----------------------------- NORTH AMERICAN TRAILING COMPANY BY: -------------------------------- Its ----------------------------- FIFTY-THREE DREDGING COMPANY BY: -------------------------------- Its ----------------------------- DAWSON DREDGING COMPANY BY: -------------------------------- Its ----------------------------- -37- RELIANCE INSURANCE COMPANY UNITED PACIFIC INSURANCE COMPANY RELIANCE NATIONAL INSURANCE COMPANY RELIANCE SURETY COMPANY BY: -------------------------------- -------------------------------- Its ----------------------------- -38- EX-10.03 9 CONTRACT EXHIBIT 10.03 [LOGO] [LETTERHEAD OF DEPARTMENT OF THE ARMY APPEARS HERE] REPLY TO ATTENTION OF May 18, 1998 Contracts Branch Great Lakes Dredge & Dock Company 2122 York Road Oak Brook, Illinois 60523 Gentlemen: You are hereby notified of the acceptance of your offer dated May 5, 1998, in the amount of $31,927,300.00, for the Base Bid and All Additive Bid Items, submitted in response to Solicitation No. DACW33-98-B-0004, for Boston Harbor Navigation Improvement and Berth Dredging Project. A fully-executed copy of Contract No. DACW33-98-C-0008 is enclosed for your retention. In accordance with Contract Clause No. 65.1, CONTINUING CONTRACTS, funds in the amount of $12,000,000.00 have been reserved for this contract and are available for payments this fiscal year. Also enclosed, in duplicate, are Performance and Payment Bond forms. In accordance with the Special Clause 1.8 of the Contract, properly executed bonds must be returned to this office within ten (10) calendar days after receipt of same. Upon receipt of these properly executed forms, together with acceptable certificates of insurance as indicated in Special Clause 1.6 of the Contract, a Notice to Proceed will be issued. Building materials and supplies used in this contract are exempt from the Massachusetts Sale and Use Tax. Certificate of Exemption No. E 999-089-600 shall be cited by you in your Contractor's Exempt Purchase Certificate, Form ST-5C. Please sign the acknowledgement on the enclosed Designation of Authority and Notice of Appointment and return one copy to each of this office. Enclosed for your information is a Notice regarding subcontracting assistance. Sincerely, /s/ Charles W. Coe Charles W. Coe Chief, Contracting Division Contracting Officer Enclosures
==================================================================================================================================== 1. SOLICITATION NO. 2. TYPE OF SOLICITATION 3. DATE ISSUED PAGE OF PAGES SOLICITATION, OFFER, DACW33-98-B-0004 03/09/98 I 8 AND AWARD [X] SEALED BID (IFB) Construction, Alteration, or Repair) [_] NEGOTIATED (RFP) - ------------------------------------------------------------------------------------------------------------------------------------ IMPORTANT - The "offer" section on the reverse must be fully completed by offeror. - ------------------------------------------------------------------------------------------------------------------------------------ 4. CONTRACT NO. 5. REQUISITION/PURCHASE REQUEST NO. 6. PROJECT NO. DACW33-98-C-0008 961316-8005-8002 DACW33-98-B-0004 - ------------------------------------------------------------------------------------------------------------------------------------ 7. ISSUED BY CODE 961316 8. ADDRESS OFFER TO BIDS DEPT OF THE ARMY USA ENGR DISTRICT, NEW ENGLAND NE DISTRICT, CORPS OF ENGINEERS ATTN: BIDS REC'G DESK, CONTRACTING DIV 696 VIRGINIA ROAD 696 VIRGINIA ROAD CONCORD MA 01742-2751 CONCORD MA 01742-2751 - ------------------------------------------------------------------------------------------------------------------------------------ 9. FOR INFORMATION A. NAME B. TELEPHONE NO. (Include area code) (NO COLLECT CALLS) CALL See Solicitation - SECTION 00100 - ------------------------------------------------------------------------------------------------------------------------------------ SOLICITATION - ------------------------------------------------------------------------------------------------------------------------------------ NOTE: In sealed bid solicitations "offer" and "offeror" mean "bid" and "bidder". - ------------------------------------------------------------------------------------------------------------------------------------ 10. THE GOVERNMENT REQUIRES PERFORMANCE OF THE WORK DESCRIBED IN THESE DOCUMENTS (Title, identifying no., date): SPECIFICATIONS titled "BOSTON HARBOR NAVIGATION AND BERTH DREDGING PROJECT", dated MARCH 1998. DRAWINGS as listed in paragraph titled "CONTRACT DRAWINGS, MAPS AND SPECIFICATIONS" of the SPECIAL CONTRACT REQUIREMENTS. CONTRACT CLAUSES, SECTION 00700 and 00800. - ------------------------------------------------------------------------------------------------------------------------------------ 11. The Contractor shall begin performance within * ___________ calender days and complete it within * _________ calender ------- ----- days after receiving [_] award, [X] notice to proceed. This performance period is [X] mandatory, [_] negotiable. *(See SECTION 00800 - Par. 1) ---------------------- - ------------------------------------------------------------------------------------------------------------------------------------ 12A. THE CONTRACTOR MUST FURNISH ANY REQUIRED PERFORMANCE AND PAYMENT BONDS? 12B. CALENDAR DAYS (If "YES, Indicate within how many calendar days after award in Item 12B.) [X] YES [_] NO 010 - ------------------------------------------------------------------------------------------------------------------------------------ 13. ADDITIONAL SOLICITATION REQUIREMENTS: A. Sealed offers in original and 2 copies to perform the work required are due at the place specified in Item 8 by 1400 (hour) - ---- local time 5/5/98 (date). If this is a sealed bid solicitation, offers must be publicly opened at that time. Sealed envelopes containing offers shall be marked to show the offeror's name and address, the solicitation number, and the date and time offers are due. B. An offer guarantee [X] is, [_] is not required. C. All offers are subject to the (1) work requirements, and (2) other provisions and clauses incorporated in the solicitation in full text or by reference. Offers providing less than 60 calender days for Government acceptance after the date offers are due will not be --------- considered and will be rejected. ====================================================================================================================================
00010-1
==================================================================================================================================== - ------------------------------------------------------------------------------------------------------------------------------------ 14. NAME AND ADDRESS OF OFFEROR (Include Zip Code) 15. TELEPHONE NO. (Include area code) 630/574-3000 ----------------------------------------------------------------------- Great Lakes Dredge & Dock Company 16. REMITTANCE ADDRESS (Include only if different than item 14) 2122 York Road Oak Brook, Illinois 60523 DUNS: 00-693-0358 CAGE: 26052 - ------------------------------------------------------------- CODE OCULI FACILITY CODE - ------------------------------------------------------------------------------------------------------------------------------------ 17. The offeror agrees to perform the work required at the prices specified below in strict accordance with the terms of this solicitation, if this offer is accepted by the Government in writing within _____ calendar days after the date offers are due. (Insert any number equal to or greater than the minimum requirement stated in Item 13D. Failure to Insert any number means the offeror accepts the minimum in item 13D.) AMOUNTS> See Page 3 - BIDDING SCHEDULE - ------------------------------------------------------------------------------------------------------------------------------------ 18. THE OFFEROR AGREES TO FURNISH ANY REQUIRED PERFORMANCE AND PAYMENT BONDS. - ------------------------------------------------------------------------------------------------------------------------------------ 19. ACKNOWLEDGMENT OF AMENDMENTS (The offeror acknowledges receipt of amendments to the solicitation - give number and date of each) - ------------------------------------------------------------------------------------------------------------------------------------ AMENDMENT NO. 0001 0002 0003 0004 - ------------------------------------------------------------------------------------------------------------------------------------ DATE 3/11/98 4/7/98 4/10/98 4/21/98 - ------------------------------------------------------------------------------------------------------------------------------------ 20. NAME AND TITLE OF PERSON AUTHORIZED TO SIGN OFFER 20B. SIGNATURE 20.C OFFER DATE (Type or Print) Steven F. O'Hara Vice President /s/ Steven F. O'Hara 5/5/98 - ------------------------------------------------------------------------------------------------------------------------------------ AWARD (TO BE COMPLETED BY GOVERNMENT) DACW33-98-C-0008 - ------------------------------------------------------------------------------------------------------------------------------------ 21. ITEMS ACCEPTED: ITEM NOS. 0001 through 0020B as set forth on Pages Nos. 3 through 8, BIDDING SCHEDULE. - ------------------------------------------------------------------------------------------------------------------------------------ 22. AMOUNT 23. ACCOUNTING AND APPROPRIATION DATA $31,927,300.00 ESTIMATED SEE BIDDING SCHEDULE - ------------------------------------------------------------------------------------------------------------------------------------ 24. SUBMIT INVOICES TO ADDRESS SHOWN IN ITEM 25. OTHER THAN FULL OPEN COMPETITION PURSUANT TO (4 COPIES UNLESS OTHERWISE SPECIFIED) > SC-1.4 [_] 10. U.S.C. 2304(c)( ) [_] 41 U.S.C. 253(c)( ) - ------------------------------------------------------------------------------------------------------------------------------------ 26. ADMINISTERED BY CODE 27. PAYMENT WILL BE MADE BY ----------------------- DEPARTMENT OF THE ARMY FINANCE & ACCOUNTING OFFICER NEW ENGLAND DISTRICT, CORPS OF ENGINEERS U.S. ARMY ENGINEER DISTRICT, NEW ENGLAND Concord Park 696 Virginia Road 696 Virginia Road Concord, MA 01742-2751 Concord, MA 01742-2751 - ------------------------------------------------------------------------------------------------------------------------------------ CONTRACTING OFFICER WILL COMPLETE ITEM 28 OR 29 AS APPLICABLE - ------------------------------------------------------------------------------------------------------------------------------------ [_] 28. NEGOTIATED AGREEMENT (Contractor is required to sign [X] 29. AWARD (Contractor is not required to sign this this document and return________ copies to issuing office.) document.) Your offer on this solicitation, is hereby accepted as Contractor agrees to furnish and deliver all items or perform to the items listed. This award consummates the contract, which all work, requisitions Identified on this form and any consists of (a) the Government solicitation and your offer, and continuation sheets for the consideration stated in this (b) this contract award. No further contractual document is contract. The rights and obligations of the parties to this necessary. contract shall be governed by (a) this contract ward, (b) the solicitation, and (c) the clauses, representations, certifications, and specifications incorporated by reference in or attached to this contract. - ------------------------------------------------------------------------------------------------------------------------------------ 30A. NAME AND TITLE OF CONTRACTOR OR PERSON AUTHORIZED 31A. NAME OF CONTRACTING OFFICER (Type or print) TO SIGN (Type or Print) CHARLES W. COE Chief, Contracting Division - ------------------------------------------------------------------------------------------------------------------------------------ 30B. SIGNATURE 30C. DATE 31B. UNITED STATES OF AMERICA 31C. AWARD DATE BY /s/ Charles W. Coe 5/18/98 ====================================================================================================================================
STANDARDS FORM 1442 BACK (REV. 4-85) 00010-2 SECTION 00010 BIDDING SCHEDULE
ITEM DESCRIPTION QUANTITY U/I UNIT PRICE AMOUNT - ----- ------------------------------------------------------- -------- --- ------------- ------------ 0001 MOBILIZATION AND DEMOBILIZATION FOR 1.00 JB 0.00000 0.00 DREDGING OPERATIONS Accounting: N/A 0001A MOBILIZATION AND DEMOBILIZATION FOR 1.00 JB 651519.000000 615,519.00 DREDGING OPERATION - (O&M FEDERAL) Accounting: 96X3123 08-2418 001960 96190 3200 001TKQ 0001B MOBILIZATION AND DEMOBILIZATION FOR 1.00 JB 996595.000000 996,595.00 DREDGING OPERATIONS - (FEDERAL) Accounting: 96X3122 08-2418 039025 96190 3200 001TKD 0001C MOBILIZATION AND DEMOBILIZATION FOR 1.00 JB 332198.000000 332,198.00 DREDGING OPERATIONS - (NON-FEDERAL) Accounting: 96X8862 08-2418 039025 96190 3200 001TKB 0001D MOBILIZATION AND DEMOBILIZATION FOR 1.00 JB 294688.000000 294,688.00 DREDGING OPERATIONS - (BERTHS) Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0002 MOBILIZATION AND DEMOBILIZATION FOR 1.00 JB 0.000000 0.00 DREDGING OPERATIONS Accounting: N/A 0002A MOBILIZATION AND DEMOBILIZATION FOR 1.00 JB 168750.000000 168,750.00 BLASTING OPERATIONS - (FEDERAL) Accounting: 96X3123 08-2418 039025 96190 3200 001TKD 0002B MOBILIZATION AND DEMOBILIZATION FOR 1.00 JB 56250.000000 56,250.00 BLASTING OPERATIONS - (NON-FEDERAL) Accounting: 96x8862 08-2418 039025 96190 3200 001TKB 0003 MAINTENANCE DREDGING AND DISPOSAL 612,000.00 CY * 23.000000 14,076,000.00 (O&M FEDERAL) Accounting: 96X3123 08-2418 001960 3200 001TKQ
00010-3
ITEM DESCRIPTION QUANTITY U/I UNIT PRICE AMOUNT - ------ --------------------------------- --------------------- ------- --------------------- -------------------- 0004 IMPROVEMENT DREDGING AND DISPOSAL 1,230,000.00 CY ** 0.000000 0.00 Accounting: N/A 0004A IMPROVEMENT DREDGING AND DISPOSAL - 922,500.00 CY ** 7.000000 6,457,500.00 (FEDERAL) Accounting: 96X3122 08-2418 039025 96190 3200 001TKD 0004B IMPROVEMENT DREDGING AND DISPOSAL - 307,500.00 CY ** 7.000000 2,152,500.00 (NON-FEDERAL) Accounting: 96X8862 08-2418 039025 96190 3200 001TKB 0005 ROCK EXCAVATION FROM FEDERAL CHANNEL 16,900.00 CY *** 0.000000 0.00 Accounting: N/A 0005A ROCK EXCAVATION FROM FEDERAL CHANNEL - 12,675.00 CY *** 55.000000 697,125.00 (FEDERAL) Accounting: 96X3122 08-2418 039025 96190 3200 001TKD 0005B ROCK EXCAVATION FROM FEDERAL CHANNEL - 4,225.00 CY *** 55.000000 232,375.00 (NON-FEDERAL) Accounting: 96X8862 08-2418 039025 96190 3200 001TKB 0006 DEBRIS REMOVAL - (O&M FEDERAL) 100.00 TN 150.000000 15,000.00 Accounting: 96X3123 08-2418 001960 96190 3200 001TKQ 0007 REMOVAL AND DISPOSAL OF OBSTRUCTION 1.00 JB 25000.000000 25,000.00 (O&M FEDERAL) Accounting: 96X3123 08-2418 001960 96190 3200 001TKQ 0008 WATER QUALITY MONITORING - (O&M FEDERAL) 1.00 JB 250000.000000 250,000.00 Accounting: 96X3123 08-2418 039025 96190 3200 001TKQ 0009 REMOVAL OF ABANDONED WATER TUNNEL 1.00 JB 350000.000000 350,000.00
00010-4
ITEM DESCRIPTION QUANTITY U/I UNIT PRICE AMOUNT - ------ --------------------------------- --------------------- ------- --------------------- -------------------- (NON-FEDERAL) Accounting: 96X8862 08-2418 039025 96190 3200 001TKB 0010 BOND COSTS 1.00 JB 0.000000 0.00 Accounting: N/A 0010A BOND COST - (O&M FEDERAL) 1.00 JB 42900.000000 42,900.00 Accounting: 96X3123 08-2418 001960 96190 3200 001TKQ 0010B BOND COST - (FEDERAL) 1.00 JB 67700.000000 67,700.00 Accounting: 96X3122 08-2418 039025 96190 3200 001TKD 0010C BOND COST - (NON-FEDERAL) 1.00 JB 39400.000000 39,400.00 Accounting: 96X8862 08-2418 039025 96190 3200 001TXB 0011 DREDGING OF DISTRIGAS BERTH AREA 1.00 JB 0.000000 0.00 Accounting: N/A 0011A MAINTENANCE DREDGING AND DISPOSAL 6,900.00 CY 21.000000 144,900.00 Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0011B IMPROVEMENT DREDGING AND DISPOSAL 16,100.00 CY 7.000000 112,700.00 (INCLUDES 6,100 CY OF OVERDEPTH) Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0012 DREDGING OF PROLERIZED BERTH AREA 1.00 JB 0.000000 0.00 Accounting: N/A 0012A MAINTENANCE DREDGING AND DISPOSAL 5,400.00 CY 21.000000 113,400.00 Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0012B IMPROVEMENT DREDGING AND DISPOSAL 13,400.00 CY 7.000000 93,800.00 (INCLUDES 5,900 CY OF OVERDEPTH)
00010-5
ITEM DESCRIPTION QUANTITY U/I UNIT PRICE AMOUNT - ----- ----------- -------- --- ---------- ------ Accounting: 96X8862 08-2418 039025 96190 3200 001 TKC 0013 DREDGING OF MORAN BERTH AREA 1.00 JB 0.000000 0.00 Accounting: N/A 0013A MAINTENANCE DREDGING AND 2,400.00 CY 21.000000 50,400.00 DISPOSAL Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0013B IMPROVEMENT DREDGING AND 5,500.00 CY 7.000000 38,500.00 DISPOSAL (INCLUDING 4,600 CY OF OVERDEPTH) Accounting 96X8862 08-2418 039025 96190 3200 001TKC 0014 DREDGING OF MEDFORD STREET 1.00 JB 0.000000 0.00 TERMINAL BERTH AREA Accounting: N/A 0014A MAINTENANCE DREDGING AND 14,600.00 CY 21.000000 306,600.00 DISPOSAL Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0014B IMPROVEMENT DREDGING AND 23,000.00 CY 7.000000 161,000.00 DISPOSAL (INCLUDES 9100 CY OF OVERDEPTH) Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0015 DREDGING OR ARMY BASE 4-10 1.00 JB 0.000000 0.00 BERTH AREAS Accounting N/A 0015A MAINTENANCE DREDGING AND 26,400.00 CY 26.000000 686,400.00 DISPOSAL (INCLUDES 9800 CY OF OVERDEPTH) Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0015B IMPROVEMENT DREDGING AND 5,700.00 CY 10.000000 57,000.00 DISPOSAL (INCLUDES 5700 CY OF OVERDEPTH) Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0016 DREDGING OF NORTH JETTY 1.00 JB 0.000000 0.00 BERTH AREAS
00010-6
ITEM DESCRIPTION QUANTITY U/I UNIT PRICE AMOUNT - ---- ------------------------------------------------------- ----------- ----- ---------- ----------- Accounting: N/A 0016A MAINTENANCE DREDGING AND DISPOSAL 13,30.00 CY 26.000000 345,800.00 (INCLUDES 6,600 CY OF OVERDEPTH) Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0017 DREDGING OF CONLEY TERMINAL BERTH AREAS 1.00 JB 0.000000 0.00 14, 15, 16, AND 17 Accounting: N/A 0017A MAINTENANCE DREDGING AND DISPOSAL 21,400.00 CY 26.000000 556,400.00 (INCLUDES 2300 CY OF OVERDEPTH) Accounting: 96x8862 08-2418 039025 96190 3200 001TKC 0017B IMPROVEMENT DREDGING AND DISPOSAL 17,100.00 CY 10.000000 171,000.00 (INCLUDES 9800 CY OF OVERDEPTH) Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0018 DREDGING OF MYSTIC PIERS 1 AND 2 BERTH 1.00 JB 0.000000 0.00 AREAS Accounting: N/A 0018A MAINTENANCE DREDGING AND DISPOSAL 20,600.00 CY 21.000000 432,600.00 (INCLUDES 6600 CY OF OVERDEPTH) Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0018B IMPROVEMENT DREDGING AND DISPOSAL 6,300.00 CY 7.000000 44,100.00 (INCLUDES 6300 CY OF OVERDRAFT) Accounting: 96X8862 08-2418 039025 96190 3200 001TKC 0019 DREDGING OF ARMY BASE 1-3 BERTH AREAS 1.00 JB 0.000000 0.00 Accounting: N/A 0019A MAINTENANCE DREDGING AND DISPOSAL 31,100.00 CY 26.000000 808,600.00
00010-7
ITEM DESCRIPTION QUANTITY U/I UNIT PRICE AMOUNT - ---- ------------------------------------------ ----------- --- --------------------- ------------------ (INCLUDES 8,600 C.Y. OF OVERDEPTH) Accounting: 96x8862 08-2418 039025 96190 3200 001TKC 0019B IMPROVEMENT DREDGING AND DISPOSAL 4,600.00 CY 10.000000 46,000.00 (INCLUDES 4600 CY OF OVERDEPTH) Accounting: 96x8862 08-2418 039025 96190 3200 001TKC 0020 DREDGING OF MYSTIC PIERS 49 AND 50 BERTH 1.00 JB 0.000000 0.00 AREAS Accounting: N/A 0020A MAINTENANCE DREDGING AND DISPOSAL 39,500.00 CY 21.000000 829,500.00 (INCLUDES 2700 CY OF OVERDEPTH) Accounting: 96x8862 08-2418 039025 96190 3200 001TKC 0020B IMPROVEMENT DREDGING AND DISPOSAL 3,300.00 CY 7.000000 23,100.00 (INCLUDES 3300 CY OF OVERDEPTH) Accounting: 96x8862 08-2418 039025 96190 3200 001TKC
* Includes 101,100 cubic yards of allowable overdepth. ** Includes 627,600 cubic yards of allowable overdepth. *** Includes 5,100 cubic yards of required overdepth and 5,100 cubic yards of allowable overdepth. 00010-8 ________________________________________________________________________________ [LOGO OF US ARMY CORPS OF ENGINEERS NEW ENGLAND DISTRICT DACW33-98-B-0004 APPEARS HERE] ________________________________________________________________________________ BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT BOSTON, MASSACHUSETTS CONSTRUCTION SOLICITATION AND SPECIFICATIONS MARCH 1998 ________________________________________________________________________________ ============================================================================================================================ 1. SOLICITATION NO. 2. TYPE OF SOLICIATION 3. DATE ISSUED PAGE OF PAGES SOLICITATION, OFFER, DACW33-98-B-0004 AND AWARD [X] SEALED BID (IFB) 03/09/98 1 8 (Construction, Alteration, or Repair) [_] NEGOTIATED (RFP) - ---------------------------------------------------------------------------------------------------------------------------- IMPORTANT - The "offer" section on the reverse must be fully completed by offeror. - ---------------------------------------------------------------------------------------------------------------------------- 4. CONTRACT NO. 5. REQUISITION/PURCHASE REQUEST NO. 6. PROJECT NO. 961316-8005-8002 DACW33-98-B-0004 - ---------------------------------------------------------------------------------------------------------------------------- 7. ISSUED BY CODE 961316 8. ADDRESS OFFER TO ---------------------------- BIDS DEPT OF THE ARMY USA ENGR DISTRICT, NEW ENGLAND NE DISTRICT, CORPS OF ENGINEERS ATTN: BIDS REC'G DESK, CONTRACTING DIV 696 VIRGINIA ROAD 696 VIRGINIA ROAD CONCORD MA 01742-2751 CONCARD MA 01742-2751 - ---------------------------------------------------------------------------------------------------------------------------- 9. FOR INFORMATION A. NAME B. TELEPHONE NO. (Include area code) (NO COLLECT CALLS) CALL: See Solicitation - SECTION 00100 - ---------------------------------------------------------------------------------------------------------------------------- SOLICITATION - ---------------------------------------------------------------------------------------------------------------------------- NOTE: In sealed bid solicitations "offer" and "offeror" means "bid" and "bidder". - ---------------------------------------------------------------------------------------------------------------------------- 10. THE GOVERNMENT REQUIRES PERFORMANCE OF THE WORK DESCRIBED IN THESE DOCUMENTS (Title, identifying no., date): SPECIFICATIONS titled "BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT", dated MARCH 1998. DRAWINGS as listed in paragraph titled "CONTRACT DRAWINGS, MAPS AND SPECIFICATIONS" of the SPECIAL CONTRACT REQUIREMENTS. CONTRACT CLAUSES, SECTION 00700 and 00800. - ---------------------------------------------------------------------------------------------------------------------------- * * 11. The Contractor shall begin performance within -------- ------ calendar days and complete it within ------- ------- calendar days after receiving [_] award, [x] notice to proceed. This performance period is [x] mandatory, [_] negotiable. *(See SECTION 00800 - Par. 1) ---------------------- - ---------------------------------------------------------------------------------------------------------------------------- 12A. THE CONTRACTOR MUST FURNISH ANY REQUIRED PERFORMANCE AND PAYMENT BONDS? 12B. CALENDAR DAYS (If "YES," indicate within how many calendar days after award in item 12B.) [x] YES [_] NO 010 - ---------------------------------------------------------------------------------------------------------------------------- 13. ADDITIONAL SOLICITATION REQUIREMENTS:
A. Sealed offers in original and 2 copies to perform the work required are due at the place specified in Item 8 by 1400 (hour) local time 04/20/98 (date). If this is a sealed bid solicitation, offers must be publicly opened at that time. Sealed envelopes containing offers shall be marked to show the offeror's name and address, the solicitation number, and the date and time offers are due. B. An offer guarantee [X] is, [_] is not required. C. All offers are subject to the (1) work requirements, and (2) other provisions and clauses incorporated in the solicitation in full text or by reference. D. Offers providing less than 60 calendar days for Government acceptance after the date offers are due will not be considered and will be rejected. ================================================================================ 00010-1 ================================================================================================================================== - ---------------------------------------------------------------------------------------------------------------------------------- 14. NAME AND ADDRESS OF OFFEROR(Include ZIP Code) 15. TELEPHONE NO. (Include area code) ------------------------------------------------------------------- 16. REMITTANCE ADDRESS (Include only if different than item 14) DUNS: CAGE: - -------------------------------------------------------- CODE FACILTY CODE - -------------------------------------------------------- 17. THE OFFEROR AGREES TO PERFORM THE WORK REQUIRED AT THE PRICES SPECIFIED BELOW IN STRICT ACCORDANCE WITHT HE TERMS OF THIS SOLICITAION,. IF THIS OFFER IS ACCEPTED BY THE GOVERNMENT IN WRITING WITHIN ---CALENDAR DAYS AFTER THE DATE OFFERS ARE DUE. (INSERT ANY NUMBER EQUAL TO OR GREATER THAN THE MINIMUM REQUIREMENT STATED IN ITEM 13D. FAILURED TO INSERT ANY NUMBER MEANS THE OFFEROR ACCEPTS THE MINIMUM IN ITEM 13D.) AMOUNTS SEE PAGE 3 - BIDDING SECHEDULE - ----------------------------------------------------------------------------------------------------------------------------------- 18. THE OFFEROR AGGREES TO FURNISH ANY REQUIRED PERFORMANCE AND PAYMENT BONDS. - ----------------------------------------------------------------------------------------------------------------------------------- 19. ACKNOWLEDGEMENT OF AMENDMENTS (The offeror acknowledges receipt of amendments to the solicitation - give number and date of each) - ----------------------------------------------------------------------------------------------------------------------------------- AMENDMENT NO. - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- 20.A NAME LAND TITLE OF PERSON AUTHORIZED TO SIGN OFFER 20.B. SIGNATURE 20.C OFFER DATE (Type or print) - ----------------------------------------------------------------------------------------------------------------------------------- AWARD (TO BE COMPLETED BY GOVERNMENT) - ----------------------------------------------------------------------------------------------------------------------------------- 21. ITEMS ACCEPTED: - ----------------------------------------------------------------------------------------------------------------------------------- 22. AMOUNT 23. ACCOUNTING AND APPROPRIATION DATA - ----------------------------------------------------------------------------------------------------------------------------------- 24. SUBMIT INVOICES TO ADDRESS SHOWN IN ITEM 25. OTEHR THAN FULL AND OPEN COMPETITION PURSUANT TO (4 COPIES UNLESS OTHERWISE SPECIFIED) [_] 10 U.S.C 2304 (c) ( ) [_] 41 U.S.C.253(c) ( ) - ----------------------------------------------------------------------------------------------------------------------------------- 26. ADMINISTERED BY CODE __________________________ 27. PAYMENT WILL BE MADE BY - ---------------------------------------------------------------------------------------------------------------------------------- CONTRACTING OFFICER WILL COMPLETE ITEM 28 OR 29 AS APPLICABLE - ---------------------------------------------------------------------------------------------------------------------------------- [_] 28. NEGOTIATED AGREEMNET [CONRACTOR IS REQUIRED TO SIGN THIS DOCUMENT AND RETURN_________COPIES TO ISSUING OFFICE.) CONTRACTOR AGREES TO FURNISH AND DELIVER ALL ITEMS OR PERFORM ALL WORK, REQUISITIONS INDENTIFIED ON THIS FORM AND ANY CONTIMATIONS SHEETS FOR THE CONSIDERATION STATED IN THIS CONTRACT. THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO THIS CONTRACT SHALL BE GOVERNED BY (A) THIS CONTRACT AWARD,(B) THE SOLICITATION, AND (C) THE CLAUSES, REPRESENTATIONS, CERTIFICATIONS, AND SPECIFICATIONS INCORPORATED BY REFERENCES IN OR ATTACHED TO THIS CONTRACT. [29] 29. AWARD (CONTRACTOR IS NOT REQUIRED TO SIGN THIS DOCUMENT). YOUR OFFER ON THIS SOLICITATION, IS HEREBY ACCEPTED AS TO THE ITEMS LISTED. THIS AWARD CONSUMMATES THE CONTRACT, WHICH CONSISTS OF (A) THE GOVERNMENT SOLICITATION AND YOUR OFFER, AND (B) THIS CONTRACT AWARD. NO FURTHER CONTRACTUAL DOCUMENT IS NECESSARY. - ------------------------------------------------------------------------------------------------------------------------------------ 30A. NAME AND TITLE OF CONTRACTOR OR PERSON AUTHORIZED 31A. NAME OF CONTRACTING OFFICER (type or print) TO SIGN (Type or print) - ------------------------------------------------------------------------------------------------------------------------------------ 30B. SIGNATURE 30C. DATE 31B. UNITED STATES OF AMERICA 31C. AWARD DATE BY =================================================================================================================================== STANDARD FORM 1442 BACK (REV. 4-85)
00010-2 Solicitation No. DACW33-98-B-0004 BIDDING SCHEDULE ---------------- Refer to Section 01025 - MEASUREMENT AND PAYMENT BASE BID ITEMS -------------- DREDGING BOSTON HARBOR CHANNELS -------------------------------
Item Estimated Unit Estimated No. Description Quantity Unit Price Amount - ------------------------------------------------------------------------------------------------------------ 0001 Mobilization and Demobilization for Dredging Operations 1 Job L.S. $________ 0002 Mobilization and Demobilization for Blasting Operations 1 Job L.S. $________ 0003 Maintenance Dredging and Disposal 612,000* C.Y. $________ $________ 0004 Improvement Dredging and Disposal 1,230,000** C.Y. $________ $________ 0005 Rock Excavation from Federal Channel 16,900*** C.Y. $________ $________ 0006 Debris Removal 100 Ton $________ $________ 0007 Removal and Disposal of Obstruction 1 Job L.S. $________ 0008 Water Quality Monitoring 1 Job L.S. $________ 0009 Removal of Abandoned Water Tunnel 1 Job L.S. $________ 0010 Bond Costs (Bond Costs shall include the cost of Bid, Performance, and Payment Bonds) (See Section 00700, Contract Clauses, clause entitled "Notice of Evaluation Preference for Small Disadvantaged Business Concerns -- Construction Acquisitions -- Test Program (Apr 1996)") 1 Job L.S. $________ TOTAL ESTIMATED BASE BID $========
* Includes 101,000 cubic yards of allowable overdepth. ** Includes 627,600 cubic yards of allowable overdepth. *** Includes 5,100 cubic yards of required overdepth and 5,100 cubic yards of allowable overdepth. 00010-3 ADDITIVE BID ITEMS ------------------ DREDGING AT BERTH AREAS -----------------------
Item Estimated Unit Estimated No. Description Quantity Unit Price Amount - ---------------------------------------------------------------------------------------------- 0011 Dredging of Distrigas Berth Area 0011A Maintenance Dredging and Disposal 6,900 C.Y. $___________ $_____________ 0011B Improvement Dredging and Disposal (Includes 6,100 C.Y. of overdepth) 16,100 C.Y. $___________ $_____________ ESTIMATED TOTAL FOR ADDITIVE BID ITEM NO. 0011 $ ============= 0012 Dredging of Prolerized Berth Area 0012A Maintenance Dredging and Disposal 5,400 C.Y. $___________ $_____________ 0012B Improvement Dredging and Disposal (Includes 5,900 C.Y. of overdepth) 13,400 C.Y. $___________ $_____________ ESTIMATED TOTAL FOR ADDITIVE BID ITEM NO. 0012 $ ============= 0013 Dredging of Moran Berth Area 0013A Maintenance Dredging and Disposal 2,400 C.Y. $___________ $_____________ 0013B Improvement Dredging and Disposal (Includes 4,600 C.Y. of overdepth) 5,500 C.Y. $___________ $_____________ ESTIMATED TOTAL FOR ADDITIVE BID ITEM NO. 0013 $ ============= 0014 Dredging of Medford Street Terminal Berth Area 0014A Maintenance Dredging and Disposal 14,600 C.Y. $___________ $_____________ 0014B Improvement Dredging and Disposal (Includes 9,100 C.Y. of overdepth) 23,000 C.Y. $___________ $_____________ ESTIMATED TOTAL FOR ADDITIVE BID ITEM NO. 0014 $ =============
00010-4 Item Estimated Unit Estimated No. Description Quantity Unit Price Amount - -------------------------------------------------------------------------------- 0015 Dredging of Army Base 4-10 Berth Areas 0015A Maintenance Dredging and Disposal (Includes 9,800 C.Y. of overdepth) 26,400 C.Y. $____ $____ 0015B Improvement Dredging and Disposal (Includes 5,700 C.Y. of overdepth) 5,700 C.Y. $____ $____ ESTIMATED TOTAL FOR ADDITIVE BID ITEM NO. 0015 $==== 0016 Dredging of North Jetty Berth Area 0016A Maintenance Dredging and Disposal (includes 6,600 C.Y. of overdepth) 13,300 C.Y. $____ $____ ESTIMATED TOTAL FOR ADDITIVE BID ITEM NO. 0016 $==== 0017 Dredging of Conley Terminal Berth Areas 14, 15, 16, and 17 0017A Maintenance Dredging and Disposal (Includes 2,300 C.Y. of overdepth) 21,400 C.Y. $____ $____ 0017B Improvement Dredging and Disposal (Includes 9,800 C.Y. of overdepth) 17,100 C.Y. $____ $____ ESTIMATED TOTAL FOR ADDITIVE BID ITEM NO. 0017 $==== 0018 Dredging of Mystic Piers 1 and 2 Berth Areas 0018A Maintenance Dredging and Disposal (Includes 6,600 C.Y. of overdepth) 20,600 C.Y. $____ $____ 0018B Improvement Dredging and Disposal (Includes 6,300 C.Y. of overdepth) 6,300 C.Y. $____ $____ ESTIMATED TOTAL FOR ADDITIVE BID ITEM NO. 0018 $==== 00010-5
Item Estimated Unit Estimated No. Description Quantity Unit Price Amount - ---------------------------------------------------------------------------------------------- 0019 Dredging of Army Base 1-3 Berth Areas 0019A Maintenance Dredging and Disposal (Includes 8,600 C.Y. of overdepth) 31,100 C.Y. $_____________ $_____________ 0019B Improvement Dredging and Disposal (Includes 4,600 C.Y. of overdepth) 4,600 C.Y. $_____________ $_____________ ESTIMATED TOTAL FOR ADDITIVE BID ITEM NO. 0019 $ ============= 0020 Dredging of Mystic Piers 49 and 50 Berth Areas 0020A Maintenance Dredging and Disposal (Includes 2,700 C.Y. of overdepth) 39,500 C.Y. $_____________ $_____________ 0020B Improvement Dredging and Disposal (Includes 3,300 C.Y. of overdepth) 3,300 C.Y. $_____________ $_____________ ESTIMATED TOTAL FOR ADDITIVE BID ITEM NO. 0020 $ =============
NOTE 1: EVALUATION OF BIDS - ADDITIVE ITEMS 252.236-7007 (DEC 1991): ------------------------------------------------------------- (a) The low offeror and the items to be awarded shall be determined as follows-- (1) Prior to the opening of bids, the Government will determine the amount of funds available for the project. (2) The low offeror shall be the Offeror that-- (i) Is otherwise eligible for award; and (ii) Offers the lowest aggregate amount for the TOTAL ESTIMATED BASE BID, plus (in the order stated in the list of priorities in the bid schedule) those additive or deductive items that provide the most features within the funds determined available. (3) The Contracting Officer shall evaluate all bids on the basis of the same additive or deductive items. (i) If adding another item from the bid schedule list of priorities would make the award exceed the available funds for all offerors, the Contracting Officer will skip that item and go to the next item from the bid schedule of priorities; and (ii) Add that next item if an award may be made that includes that item and is within the available funds. (b) The Contracting Officer will use the list of priorities in the bid schedule only to determine the low offeror. After determining the low offeror, an award may be made on any combination of items if-- (1) It is in the best interest of the Government; (2) Funds are available at the time of award; and (3) The low offeror's price for the combination to be awarded is less than the price offered by any other responsive, responsible offeror. (c) Example: The amount available is $100,000. Offeror A's base bid and four additives (in the order stated in the list of priorities in the bid Schedule) 00010-6 are $85,000, $10,000, $8,000, $6,000, and $4,000. Offeror B's base bid and four additives are $80,000, $16,000, $9,000, $7,000, and $4,000. Offeror A is the low offeror. The aggregate amount of offeror A's bid for purposes of award would be $99,000, which includes a base bid plus the first and fourth additives. The second and third additives were skipped because each of them would cause the aggregate bid to exceed $100.000. (End of provision) NOTE 2: CONTRACT AWARD: The work will be awarded to one bidder. Bidders shall -------------- bid all items set forth on the Bidding Schedule. NOTE 3: FUNDING LIMITATIONS - UNBALANCED BIDS: Due to funding limitations, it ------------------------------------- is mandatory that bids not be unbalanced. If, in the opinion of the Government, the low bidder has unbalanced his bid, the Government will require the bidder to furnish a breakdown of his bid in such detail as will enable the Government to take appropriate action. NOTE 4: SCOPE OF CONTRACT: The work represented by the base bid will be the ----------------- minimum amount of work awarded within the funds available. 00010-7 PLANT AND EQUIPMENT SCHEDULE/SURVEY ----------------------------------- Available Plant to be Used -------------------------- (To Be Attached to Bid Form) The bidder must complete the PLANT AND EQUIPMENT SCHEDULE listing the plant available to the Bidder and proposed to be used on the work. Prior to commencement of work at the site, the Contractor will be required to submit for review copies of all applicable current inspections and certificates for all floating plant. See Section 01600 - Plant and Equipment. BUCKET DREDGE (Clamshell/Dipper/Excavator/Dragline) (Check Type of Plant) - ------------------------------------------------------------------------- =============================================================================== Capacity of Swings Type of Age & Size of Plant (*) Per Hp of Number/Name Manfactr Condition Bucket (Cu. Yds/Mo) Hour Engine - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (*) When working materials similar to those anticipated to be encountered in the performance of work. BOATS AND BARGES/SCOWS - ---------------------- ================================================================================ Age & No. & Size Number/Name Manfactr Conditions of Drills - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ATTENDANT PLANT (Give columnar information pertinent to items listed, if to - ---------------------------------------------------------------------------- be used) - -------- ============================================================================== No. to HP of Length Draft Capacity Name Be Used Engine & Beam Light Loaded (Cu. Yds) - ------------------------------------------------------------------------------ Tug - ------------------------------------------------------------------------------ Tug - ------------------------------------------------------------------------------ Launch - ------------------------------------------------------------------------------ Scow - ------------------------------------------------------------------------------ Scow - ------------------------------------------------------------------------------ Pipeline - ------------------------------------------------------------------------------ Shore - ------------------------------------------------------------------------------ Pontoon - ------------------------------------------------------------------------------ -- End of Section -- 00010-8 DOCUMENT TABLE OF CONTENTS DIVISION 00 - DOCUMENTS SPECIAL CONTRACT REQUIREMENTS 1.1 COMMENCEMENT, PROSECUTION AND COMPLETION OF WORK (APR 1984) FAR 52.211-10 1.2 LIQUIDATED DAMAGES - CONSTRUCTION (APR 1984) FAR 52.211-12 1.3 CONTRACT DRAWINGS, MAPS AND SPECIFICATIONS (DEC 1991) DFARS 252.236-7001 1.4 DESIGNATED BILLING OFFICE (NEDCD) 1.5 BID GUARANTEE (SEP 1996) FAR 52.228-1 1.6 INSURANCE REQUIRED 1.7 PERFORMANCE OF WORK BY THE CONTRACTOR (APR 1984) FAR 52.236-1 1.8 PERFORMANCE AND PAYMENT BONDS (APR 1984) FAR 28.102. 1.9 OBSTRUCTION OF NAVIGABLE WATERWAYS (DEC 1991) 1.10 PAYMENT FOR MOBILIZATION AND DEMOBILIZATION (DEC 1991) DFARS 252.236-7004. 1.11 QUANTITY SURVEYS 1.12 LAYOUT OF WORK (APR 1984) 52.236-17 - -- End of Document Table Of Contents -- DOCUMENT TABLE OF CONTENTS 00800 PAGE 1 SPECIAL CONTRACT REQUIREMENTS 1.1 COMMENCEMENT, PROSECUTION AND COMPLETION OF WORK (APR 1984) FAR 52.211-10 a. The Contractor shall be required to-- (1) commence work under this contract within 15 calendar days after the date the Contractor receives the notice to proceed, (2) prosecute the work diligently, and (3) complete the entire work ready for use not later than 540 calendar days after the date the Contractor receives notice to proceed. The time stated for completion shall include final cleanup of the premises. See paragraph, "Work Sequence" in Section: SUMMARY OF WORK. 1.2 LIQUIDATED DAMAGES - CONSTRUCTION (APR 1984) FAR 52.211-12 a. If the Contractor fails to complete the work within the time specified in the contract, or any extension, the Contractor shall pay to the Government as liquidated damages, the sum of $5,300.00 for each day of delay. b. If the Government terminates the Contractor's right to proceed, the resulting damage will consist of liquidated damages until such reasonable time as may be required for final completion of the work together with any increased costs occasioned the Government in completing the work. c. If the Government does not terminate the Contractor's right to proceed, the resulting damage will consist of liquidated damages until the work is completed or accepted. 1.3 CONTRACT DRAWINGS, MAPS AND SPECIFICATIONS (DEC 1991) DFARS 252.236-7001 a. The Government-- 1. Will provide the Contractor, without charge, 5 sets of large-scale contract drawings and specifications except publications incorporated into the technical provisions by reference; 2. Will furnish additional sets on request, for the cost of reproduction; and 3. May, at its option, furnish the Contractor one set of reproducibles, or half-size drawings, in lieu of the drawings in paragraph (a)(1) of this clause. b. The Contractor shall-- 1. Check all drawings furnished immediately upon receipt; 2. Compare all drawings and verify the figures before laying out the work; 3. Promptly notify the Contracting Officer of any discrepancies; and DOCUMENT 00800 Page 1 4. Be responsible for any errors which might have been avoided by complying with this paragraph (b) c. Large scale drawings shall, in general, govern small scale drawings. Figures marked on drawings shall, in general, be followed in preference to scale measurements. d. Omissions from the drawings or specifications or the misdescription of details of work which are manifestly necessary to carry out the intent of the drawings and specifications, or which are customarily performed, shall not relieve the contractor from performing such omitted or misdescribed details of the work, but shall be performed as if fully and correctly set forth and described in the drawings and specifications. e. The work shall conform to the specifications and the contract drawings identified on the following index of drawings: Drawing Sheet No. No. Title ---------------------------------------------------------- BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT BOSTON, MASSACHUSETTS 1878 1 (T-1) Cover Sheet and Index 1.4 DESIGNATED BILLING OFFICE (NEDCD) Reference Contract Clause titled "PROMPT PAYMENT FOR CONSTRUCTION CONTRACTS" located in SECTION 00700, CONTRACT CLAUSES. The "designated billing office" will be the Construction Area Engineer, Resident Engineer or project office where the Contracting Officer Representative for this contract is located. The Contractor will be notified of the exact location of this office at the project preconstruction conference specified in Section 01010 SUMMARY OF WORK. 1.5 BID GUARANTEE (SEP 1996) FAR 52.228-1 (a) Failure to furnish a bid guarantee in the proper form and amount, by the time set for opening of bids, may be cause for rejection of the bid. (b) The bidder shall furnish a bid guarantee in the form of a firm commitment, e.g., bid bond supported by good and sufficient surety or sureties acceptable to the Government, postal money order, certified check, cashier's check, irrevocable letter of credit, or, under Treasury Department regulations, certain bonds or notes of the United States. The Contracting Officer will return bid guarantees, other than bid bonds, (1) to unsuccessful bidders as soon as practicable after the opening of bids, and (2) to the successful bidder upon execution of contractual documents and bonds (including any necessary coinsurance or reinsurance agreements), as required by the bid as accepted. (c) The amount of the bid guarantee shall be twenty percent of the bid price or $3,000,000, whichever is less. (d) If the successful bidder, upon acceptance of its bid by the Government within the period specified for acceptance, fails to execute all contractual documents or furnish executed bond(s) within 10 days after receipt of the forms by the bidder, the Contracting Officer may terminate the contract for default. DOCUMENT 00800 page 2 (e) In the event the contract is terminated for default, the bidder is liable for any cost of acquiring the work that exceeds the amount of its bid, and the bid guarantee is available to offset the difference. 1.6 INSURANCE REQUIRED The insurance requirements set forth in this Special Contract Requirement apply only to dredging activities to be conducted in the following non-Federal berth areas. MASSPORT Berths: Dennis Kay, Deputy Port Director of Operations, Massachusetts Port Authority, Maritime Department Fish Pier East, Bldg II Northern Ave, Boston, MA 02210 - (617) 946-4439 (617) 946-4422 (fax) Mr. Paul Pace, Distrigas, 18 Rover St, Everett, MA 02149 - (617) 381-8254 (617) 381-8599 (fax) Mr. John Spigel or Mr. Tony LiBurdi, Prolerized of New England, P.O. Box 48, Everett, MA 02149 - (617) 389-8300 (617) 389-8030 (fax) The Contractor shall indemnify each of the Berth owners listed above for property damage and personal injury arising from dredging activities occurring at non-Federal berth areas. The Contractor shall not commence work at the non-Federal berths listed above under this contract until he has obtained all the insurance required by this Special Contract Requirement. The types and minimum amounts of the insurance to be provided for by the Contractor shall be as follows: A. Worker's Compensation Insurance The Contractor shall, before commencing performance of the contract, provide by insurance, or by evidence of satisfactory compliance with the regulations of the Commonwealth of Massachusetts regarding self-insurance, for the payment of compensation and the furnishing of other benefits under Chapter 152 of the General Laws, as amended, and the Longshoreman's and Harbor Workers Compensation Act, to all persons to be employed under the contract working in berth areas, and he shall continue insurance in full force and effect during the term of the contract. Failure to provide and continue in force such benefits as aforesaid shall be deemed a material breach of the berth areas dredging portion of the contract and shall operate as an immediate termination thereof. B. Public Liability (Bodily Injury Liability and Property Damage Liability Insurance) The Contractor shall purchase and maintain until final acceptance of the work such Public Liability Insurance as shall protect him from claims for damages for bodily injury, including accidental death, as well as from claims for property damage, which may arise from operations under this contract, whether such operations be by himself or by any Subcontractor or by anyone directly or indirectly employed by either of them, in the amounts set forth below: Bodily Injury Liability Insurance for bodily injuries, including wrongful death, to any one person, and as the result of any one occurrence; and Property Damage Liability Insurance for damages on account of any one occurrence and for damages as the result of all occurrences during the policy period for a combined single limit of $10,000,000. Said policy shall be on an occurrence basis and the Authority shall be included as DOCUMENT 00800 Page 3 an Additional Insured. C. Contingency Liability The above policies for Public Liability (Bodily Injury Liability and Property Damage Liability Insurance) must be so written as to include Contingent Public Liability Insurance to protect the Contractor against claims arising from the operations of subcontractors, and in the same limits as set forth in "B" above. D. Subcontractor's Public Liability (Bodily Injury Liability and Property Damage Liability Insurance) Subcontractors shall carry Public Liability Insurance, as in "B" and "C" above with limits of: Bodily Injury Liability Insurance for bodily injuries, including wrongful death, to any one person, and as the result of any one occurrence; and Property Damage Liability Insurance for damages on account of any one occurrence and for damages as the result of all occurrences during the policy period for a combined single limit of $10,000,000. Said policy shall be on an occurrence basis and the Massachusetts Port Authority shall be included as an Additional Insured. E. Protection an Indemnity Coverage The Contractor shall purchase Protection and Indemnity coverage, including and endorsement for hull removal for all vessels used in the above-described berth areas, with minimum coverage of at least $2,000,000. F. Exclusions Any exclusions contained in policies required under this contract shall be subject to buy-back by the Contractor and/or Subcontractors in order that the particular coverage removed from the policy by the Exclusion may be purchased by the Contractor or Subcontractor and be included under the insurance requirements hereunder. G. Fire Insurance Each berth owner, at its expense, will secure Fire and Extended Coverage Insurance on any of its pre-existing buildings. Loss, if any, shall be adjusted to the berth owners, and payable as the respective interests may appear. Berth owners do not provide coverage to tenant interests. Each berth owner's obligation to secure insurance is limited as stated herein. The Contractor shall provide property insurance (Builders Risk/Fire Legal Liability) upon the entire work at the berths listed above to the full insurable interest thereof and shall with respect to said property insurance designate the owner of the respective property as Additional Insured as their interest may appear. For Insurance purposes, the site of work and/or the project site includes not only the limited physical work areas involved but also certain other areas of operations set up for utility, sanitary, electrical, water, pollution control, disposal and cleaning purposes: to furnish materials for the work including storage and stock pile areas and all routes between and among them. H. General No cancellation, or modification whether by the insurer or by the insured, shall be valid unless written notice thereof is given by the party proposing cancellation of modification to the other party and to the officer or agent who awarded the contract, at least fifteen days prior to DOCUMENT 00800 Page 4 the intended effective date thereof, which date shall be expressed in said notice. Notice sent by the party proposing cancellation or modification by registered mail, postage pad with a return receipt of the addressee required, shall be sufficient notice. An affidavit of any duly authorized officer, agency, or employee of the insurer or of the insured as the case may be, that he has sent such notice addressed as aforesaid shall be prima facie evidence of the sending thereof. This section shall apply to the legal representatives, trustee in bankruptcy, receiver, assignee, trustee, and the successor in interest of any such Contractor. The insurance herein before stipulated shall be carried until all work required to be performed at non-Federal berth areas under the terms of the contract is satisfactorily completed as evidence by the formal acceptance by the Contracting Officer. Certified copies of all required insurance policies shall be delivered in duplicate to the Contracting Officer. Each policy shall be with a responsible insurance company or companies, qualified to assume the risk, and acceptable to the Contracting Officer. The cost of all insurance required by the Contractor or Subcontractors for work at non-Federal berth areas shall be included in the applicable bid items shown on the BIDDING SCHEDULE. For all liability insurance required under this Special Contract Requirement, each berth owner shall be included as an Additional Insured. If by the terms of this insurance a mandatory deductible is required, in the event of a paid claim the Contractor shall be responsible for the deductible amount. 1.7 PERFORMANCE OF WORK BY THE CONTRACTOR (APR 1984) FAR 52.236-1 The Contractor shall perform on the site, and with its own organization, work equivalent to at least seventy-five percent (75%) of the total amount of work to be performed under the contract. This performance may be reduced by a supplemental agreement to this contract if, during performing the work, the Contractor requests a reduction and the Contracting Officer determines that the reduction would be to the advantage of the Government. 1.8 PERFORMANCE AND PAYMENT BONDS (APR 1984) FAR 28.102. Within ten (10) days after the prescribed forms are presented to the bidder to whom award is made for signature, a performance bond (Standard Form 25) and a payment bond (Standard Form 25A), each with good and sufficient surety or sureties acceptable to the Government, shall be furnished. Each form shall show the contract number to which the bond applies. The penal sums of such bonds will be as follows: a. Performance Bond: The penal sum of the performance bond shall equal one hundred percent (100%) of the contract price. In accordance with the Federal Tax Lien Act of 1966, the performance bond shall provide coverage for taxes imposed by the United States which are collected, deducted, or withheld from wages paid by the Contractor in carrying out the contract. b. Payment Bond: (1) When the contract price is $1,000,000 or less, the penal sum will be fifty percent (50%) of the contract price. (2) When the contract price is in excess of $1,000,000 but not more than $5,000,000, the penal sum shall be forty percent (40%) of the contract price. DOCUMENT 00800 Page 5 (3) When the contract price is more than $5,000,000, the penal sum shall be $2,500,000. 1.9 OBSTRUCTION OF NAVIGABLE WATERWAYS (DEC 1991) (a) The Contractor shall -- (1) Promptly recover and remove any material, plant, machinery, or appliance which the Contractor loses, dumps, throws overboard, sinks, or misplaces, and which, in the opinion of the Contracting Officer, may be dangerous to or obstruct navigation; (2) Give immediate notice, with description and locations of any such obstructions, to the Contracting Officer; and (3) When required by the Contracting Officer, mark or buoy such obstructions until the same are removed. (b) The Contracting Officer may -- (1) Remove the obstructions by contract or otherwise should the Contractor refuse, neglect, or delay compliance with paragraph (a) of this clause; and (2) Deduct the cost of removal from any monies due or to become due to the Contractor; or (3) Recover the cost of removal under the Contractor's bond. (c) The Contractor's liability for the removal of a vessel wrecked or sunk without fault or negligence is limited to that provided in Sections 15, 19, and 20 of the River and Harbor Act of March 3, 1889 (33 U.S.C. 409 et.seq.). 1.10 PAYMENT FOR MOBILIZATION AND DEMOBILIZATION (DEC 1991) DFARS 252.236-7004. a. The Government will pay all costs for the mobilization and demobilization of all of the Contractor's plant and equipment at the contract lump sum price for this item. (1) Sixty percent of the lump sum price upon completion of the Contractor's mobilization at the work site. (2) The remaining 40 percent upon completion of demobilization. b. The Contracting Officer may require the Contractor to furnish cost data to justify this portion of the bid if the Contracting Officer believes that the percentages in paragraphs a(1) and a(2) of this clause do not bear a reasonable relation to the cost of the work in this contract. (1) Failure to justify such price to the satisfaction of the Contracting Officer will result in payment, as determined by the Contracting Officer, of -- (i) Actual mobilization costs at completion of mobilization; (ii) Actual demobilization costs at completion of demobilization; and (iii) The remainder of this item in the final payment under this contract. (2) The Contracting Officer's determination of the actual costs in paragraph b(1) of this clause is not subject to appeal. DOCUMENT 00800 Page 6 1.11 QUANTITY SURVEYS. (a) The original and final quantity surveys will be conducted by the Government, and the data derived from these surveys shall be used in computing the quantities of work performed and the actual construction completed and in place. (b) The Contractor shall conduct surveys for any periods for which progress payments are requested, and other surveys as required by the specifications and drawings. These surveys shall be conducted under the direction of a representative of the Contracting Officer, unless the contracting Officer waives this requirement in a specific instance. The Government shall make such computations as are necessary to determine the quantities of work performed or finally in place. The Contractor shall make the computations based on the surveys for any periods for which progress payments are requested. (c) Promptly upon completing a survey, the Contractor shall furnish the originals of all field notes and all other records relating to the survey or to the layout of the work to the Contracting Officer, who shall use them as necessary to determine the amount of progress payments. The Contractor shall retain copies of all such material furnished to the Contracting Officer. 1.12 LAYOUT OF WORK (APR 1984) 52.236-17 The Contractor shall lay out its work from Government established base lines and bench marks indicated on the drawings, and shall be responsible for all measurements in connection with the layout. The Contractor shall furnish, at its own expense, all stakes, templates, platforms, equipment, tools, materials, and labor required to lay out any part of the work. The Contractor shall be responsible for executing the work to the lines and grades that may be established or indicated by the Contracting Officer. The Contractor shall also be responsible for maintaining and preserving all stakes and other marks established by the Contracting Officer until authorized to remove them. If such marks are destroyed by the Contractor or through its negligence before their removal is authorized, the Contracting Officer may replace them and deduct the expense of the replacement from any amounts due or to become due to the Contractor. -- End of Special Contract Requirements -- DOCUMENT 00800 Page 7 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT PROJECT TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS 01010 SUMMARY OF WORK 01025 MEASUREMENT AND PAYMENT 01050 FIELD ENGINEERING 01130 ENVIRONMENTAL PROTECTION 01135 WATER QUALITY MONITORING AND CONTROL 01300 SUBMITTAL PROCEDURES 01440 CONTRACTOR QUALITY CONTROL 01500 CONSTRUCTION FACILITIES AND TEMPORARY CONTROLS 01600 PLANT AND EQUIPMENT 01900 GENERAL SAFETY REQUIREMENTS DIVISION 02 - SITE WORK 02482 DREDGING 02491 UNDERWATER DRILLING AND BLASTING 02492 UNDERWATER DIVING WORK -- End of Project Table of Contents -- PROJECT TABLE OF CONTENTS PAGE 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS SECTION 01010 SUMMARY OF WORK PART 1 GENERAL 1.1 SUMMARY 1.1.1 General Description of the Work 1.2 SUBMITTALS 1.3 PROJECT/SITE CONDITIONS 1.3.1 Physical Data 1.4 SEQUENCING AND SCHEDULING 1.4.1 Hours of Operations 1.4.2 Work Sequence 1.4.2.1 General 1.4.2.2 Progress Schedule 1.4.3 Organization at the Site 1.4.3.1 General 1.4.3.2 Rate of Progress 1.5 WORK LIMITS 1.6 STORAGE AREAS 1.7 COORDINATION 1.7.1 Notice of Mariners 1.7.2 Aids to Navigation 1.7.3 Boston Lobstermen 1.7.4 Coast Guard 1.7.5 Harbormaster 1.7.6 Docking Pilots 1.7.7 Coordination with Berth Owners 1.7.8 Weekly Schedule to Users of the Harbor 1.8 MASSACHUSETTS DEPT OF ENVIRONMENTAL PROTECTION (MDEP) SIGN 1.9 PRECONSTRUCTION CONFERENCE PART 2 PRODUCTS (NOT USED) PART 3 EXECUTION (NOT USED) -- End of Section Table of Contents -- SECTION TABLE OF CONTENTS 01010 PAGE 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION 01010 SUMMARY OF WORK PART 1 GENERAL 1.1 SUMMARY The work of this contract is described in the following documents: a. Specifications titled: BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT BOSTON, MASSACHUSETTS b. Contract Drawings as listed in the Special Contract Requirements. Furnish all plant, labor, equipment, appliances and materials, and carry out all operations, including monitoring and other field engineering, as necessary to accomplish the work, complete. Perform the work in strict accordance with these specifications and the contract drawings, and subject to the terms and conditions of the contract and all applicable permits, certifications, codes and regulations. 1.1.1 General Description of the Work The general description below is given to indicate the approximate scope of this project only. It does not limit the work required under the project drawings and specifications: The work of this project consists of maintenance and improvement dredging of Boston Harbor channels and berths, Boston, Massachusetts. The channels consist of three tributaries: the Chelsea, the Mystic, and the Reserved. The work requires the construction of in-channel disposal cells up to seven nautical miles from the areas shown to be dredged. Overlying maintenance material from the dredge sites and disposal cells will be disposed in the cells and the cells will be capped using clean granular material. Improvement dredging material dredged from the Harbor and from construction of the disposal cells will be disposed of at the Masschusetts Bay Disposal Site (MBDS) approximately 30 nautical miles from the Harbor. 1.2 SUBMITTALS Government approval is required for submittals with a "GA" designation; submittals having an "FIO" designation are for information only. The following shall be submitted in accordance with Section 01300 SUBMITTAL DESCRIPTIONS: SD-07 Schedules Progress Schedule; GA,C reviewer. In accordance with the contract provisions, the Contractor shall, within five (5) days after receipt of notice to proceed or as otherwise determined by the Contracting Officer, submit for approval a practicable progress schedule. When changes are authorized that result in contract time extensions, the Contractor shall submit a modified chart for approval by the Contracting Officer. 1.3 PROJECT/SITE CONDITIONS 1.3.1 Physical Data SECTION 01010 Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT Data and information furnished or referred to below is for the Contractor's information. The Government shall not be responsible for any interpretation of or conclusion drawn from the data or information by the Contractor. a. Site Conditions: The indications of physical conditions on the drawings and in the specifications are the result of site investigations and surveys. The conditions represented prevailed at the time the investigations and surveys were made. A pre-dredge survey of Boston Harbor will be performed by the Government prior to the start of Contractor dredging operations at the site. Before commencing work at the site, the Contractor shall verify the conditions indicated on the drawings and in the specifications and perform all other surveys as needed or as required in the contract documents. b. Weather Conditions: The monthly normal mean temperature and the monthly normal mean precipitation for the site maybe obtained by the Contractor from the nearest U.S. National Weather Service Office. c. Transportation: The Contractor shall make his own investigation on the use of municipal, State and Federal highways, roads, bridges, and railroads. d. Flow Data: The maximum current in the Boston Harbor and the upper portion of the Main Ship Channel during flood and ebb is one foot per second. e. Tide Conditions: The mean range of tide at Boston Harbor is 9.4 feet and the spring range is 11.0 feet. The Massachusetts Bay Disposal Site is subject to open ocean conditions. f. Channel Traffic: Boston Harbor and the adjacent areas to be dredged are mainly used by deep draft commercial vessels, fishing vessels, and numerous small recreation and commercial craft, which may cause some interference with contract operations. Oil barges frequent the harbor during the winter heating season. The Contractor shall move the dredging equipment if vessel traffic requires it, based on the determination of the docking pilot. g. Height Limitations: The Contractor shall coordinate his construction activities with the FAA and Massport Aviation Department's Operation Unit. Height limitations of crane booms, hoisting equipment or other equipment used by the contractor to complete the dredging shall conform to the ceiling heights established by the FAA. The Government submitted a FAA Form 7460 to the FAA on December 19, 1997 for equipment height of 120 feet above mean sea level. The Contractor shall review of the submittal and the FAA response when available and submit to the FAA a request for any necessary amendments. The FAA will require at least 45 days for review the submittal. The Contractor shall review the submittal and the FAA response when available and submit to the FAA a request for any necessary amendments. The FAA will require the Contractor to stop work in the event declining weather conditions hinder visibility to the extent that the Contractor's plant becomes a hazard to flying aircraft. Also, when performing dredging operations in the Reserved or Main Ship channel near the airport, the dredge shall not be moored in the area during non-work periods or the craine boom shall be lowered. 1.4 SEQUENCING AND SCHEDULING 1.4.1 Hours of Operations Except as specified for particular items of work, such as blasting, the Contractor will be allowed to perform work 24 hours per day, 7 days per week, including holidays, for the entire performance period. Refer to other sections of these specifications for environmental requirements and SECTION 01010 Page 2 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT restrictions to dredging and disposal activities and for temporary suspension of the work, if required. Contractor coordination with the berth owners is required to accomplish this work. To reduce the impact on rush hour traffic, transit through the Chelsea Street and McArdle Street bridges that requires opening the bridges will be prohibited Monday through Friday 7:30 to 9:30 A.M. and 4:30 to 6:30 P.M. 1.4.2 Work Sequence 1.4.2.1 General There are certain essential criteria relative to the preparation of a work sequence and time schedule which the Contractor will be required to implement and follow during the prosecution of the work. See Section 02482 for the required order of work. Minor variations in the sequence of the items of work as approved may be made by the Contractor, provided such variations do not conflict with critical elements of the schedule and permit requirements. Variations shall be approved by the Contracting Officer prior to implementation. 1.4.2.2 Progress Schedule The progress schedule shall be in the form of a chart graphically indicating the sequence proposed to accomplish each work feature or operation. The chart shall be prepared to show the starting and completion dates of all work features on a linear horizontal time scale beginning with date of Notice to Proceed and indicating calendar days to completion. Contractor shall indicate on the chart the important work features or operations that are critical to the timely overall completion of the project. Key dates for such important work features and portions of work features are milestone dates and shall be so indicated on the chart. This schedule will be the medium through which the timeliness of the Contractor's construction effort is appraised. Anticipated adverse weather delay days shall be included in the schedule. 1.4.3 Organization at the Site 1.4.3.1 General The contractor shall employ ample personnel and sufficient equipment to accomplish the work of this contract in the least amount of time, within the specified prosecution period. 1.4.3.2 Rate of Progress Should the Contractor fail to maintain a satisfactory rate of progress, the Contracting Officer may require that additional personnel and equipment be placed on the work and weekend and overtime work be performed, in order that the work be brought up to schedule and maintained. 1.5 WORK LIMITS The work shall be restricted to the areas as shown on the contract drawings in addition to storage areas provided by the Government. 1.6 STORAGE AREAS Storage areas within the limits of work will be provided to the Contractor by the Government as indicated below. The areas will be made available for Contractor's office trailers, one Government Field Office Trailer, parking, and other minor materials. See Section 01500 CONSTRUCTION FACILITIES AND TEMPORARY CONTROLS for additional information on trailers. The Contractor shall confine his storage areas to the limits as designated or approved by the Contracting Officer and shall be responsible for the security of the SECTION 01010 PAGE 3 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT areas. Upon completion of the contract, the Contractor shall remove all equipment and materials, except as otherwise specified, and restore the site to its original condition as approved by the Contracting Officer at no additional cost to the Government. a. Two staging/storage areas on Massport property are available for use by the Contractor and the Government as listed below. Berthing will be available for the Contractor's barges at both of the sites listed. The Contractor shall verify the locations of the actual sites and all applicable conditions for their use with Massport representatives and the Contracting Officer: 1) Conley Terminal, First Street and Farragut Road, South Boston. Massport Representatives is Mr. Dennis Kay, Deputy Port Director for Operations, tel. 617-946-4439. 2) East Boston Pier 1, 1 South Breman Street, East Boston. Massport Representative is Mr. Orville Wilson, Director of Property Management, tel. 617-478-6920. 1.7 COORDINATION 1.7.1 Notice to Mariners Before beginning dredging operations and barge transport of dredged materials, the Contractor shall coordinate with the Coast Guard to issue a "Notice to Mariners" regarding the Contractor's operations. 1.7.2 Aids to Navigation Aids to navigation have been placed by the Coast Guard. The Contractor shall coordinate with the Coast Guard in advance of dredging and disposal work to provide for any necessary relocation or movement of aids to navigation. The Contractor shall also contact the Coast Guard at the completion of all work and the removal of all dredging plant from the Harbor. Point of Contact for Coast Guard: Mr. Matt Stuck (617) 223-8347 (617) 223-8073 (fax) 1.7.3 Boston Lobstermen Before beginning dredging operations and barge transport of dredged materials, the Contractor shall coordinate work areas and barge routes with the Boston Harbor Lobstermen's Cooperative, (Mr. Al Ferent, 287 K Street, South Boston, MA 02127 Telephone Number (617) 268-4199; and the Massachusetts Lobstermen's Association Mr. Bill Adler, 8 Otis Place, Scituate, MA 02066, Telephone Numbers (617) 545-6984 and (617) 545-7837(fax). 1.7.4 Coast Guard All work conducted in areas in or adjacent to the ship channel shall be coordinated with the U.S. Coast Guard. 1.7.5 Harbormaster Before beginning dredging operations and barge transport of dredged materials, the Contractor shall coordinate his work operations with the Boston Harbor Master, Mr. Erik Hahn, Boston Police Department, Telephone Number (617) 343- 4721, (617) 343-5349(fax), Internet harborhahn@juno.com. 1.7.6 Docking Pilots Because the tributaries to be dredged are narrow and in many cases will not permit ship traffic during dredging operations, timely communication between the dredge and the Docking Pilots is necessary to avoid conflicts. The Contractor shall maintain daily telephone contact with the dispatchers SECTION 01010 Page 4 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT at Boston Towing and Transportation (617) 567-9100 ext 111 or ext 112 and Bay State Towing (617) 561-0223. While dredge operations are underway the Contractor shall monitor VHF channel 13. Since vessel movements are apt to occur on a random basis, the Contractor shall provide a positive means of communication between the dredge and the towing companies such as a cell phone number. 1.7.7 Coordination with Berth Owners The Contractor shall coordinate his work operations with the owners of berth areas a minimum of 14 days prior to dredging or other work at or adjacent to a berth area. Scheduling of dredging activities at active berth areas will require working around anticipated ship docking and waying schedules. Points of contact for berth areas are listed below: MASSPORT Berths: Dennis Kay, Deputy Port Director of Operations, Massachusetts Port Authority, Maritime Department Fish Pier East, Bldg II Northern Ave, Boston, MA 02210 - (617) 946-4439 (617) 946-4422 (fax) Mr. Paul Pace, Distrigas, 18 Rover St, Everett, Ma 02149 - (617 381- 8524 (617) 381-8599 (fax) Mr. John Spigel or Mr. Tony LiBurdi, Prolerized of New England, P.O. Box 48, Everett, Ma 02149 - (617) 389-8300 (617) 389-8030 (fax) 1.7.8 Weekly Schedule to Users of the Harbor Coordination with users of the harbor is critical for a smooth operation. All parties should have knowledge of the others' potential activities. Therefore, the Contractor shall prepare a weekly schedule of dredging and disposal activities and forward it to the following: US Coast Guard Mr. Matt Stuck (617) 223-8073 (fax) Boston Lobstermen Mr. Bill Adler (617) 545-7837 (fax) Harbormaster Mr. Erik Hahn (617) 343-5349 (fax) Docking Pilots Mr. Dave Galman (617) 567-2583 (fax) Mr. Mike Duarte (617) 561-0813 (fax) Boston Pilots Mr. Art Wittamore (617) 569-4502 (fax) This weekly schedule shall identify all anticipated dredging and disposal activities and shall be updated as appropriate. 1.8 MASSACHUSETTS DEPT OF ENVIRONMENTAL PROTECTION (MDEP) SIGN Massachusetts Department of Environmental Protection file number signs shall be displayed at the Contractor's project office site and all dredges. The signs shall be not less than two square feet and not more than three square feet in size. The words "Massachusetts Department of Environmental Protection", and the project File Numbers shall be neatly displayed on the signs. "Orders of Conditions" issued by the various project area Conservation Commissions are attached at the end of Section 01130 ENVIRONMENTAL PROTECTION. Project file numbers for the various project areas are listed below: (1) Everett: Federal Channel 22-0037 Distrigas of Massachusetts - 22-0039. Prolerized N.E. Co. - 22-0040. (2) Revere Federal Channel - 061-0288. SECTION 01010 Page 5 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT (3) Chelsea Federal Channel - 011-0054. (4) Boston: Portions of the Federal Channel in the Reserved Channel, Inner Confluence, Mystic River - 6-685. Conley Terminal Berths 11 - 17 (formerly 11 - 15) at the mouth of the Reserved Channel East First Street and Farragut Road, South Boston - 6 -687. Boston Army Base 666 Summer Street, South Boston - 6-686. Medford Street Terminal in the Mystic River, 333 Medford Street, Charlestown - 6-688. Morgan Terminal, 100 Terminal Street, Charlestown - 6-689. Mystic Pier, Terminal Street, Charlestown - 6-690. North Jetty, Northern Avenue, South Boston - 6-691. 1.9 PRECONSTRUCTION CONFERENCE The Government will conduct a preconstruction conference to inform the Contractor concerning the labour standards clauses, safety, environmental premits and other conditions of the contract. The Contracting Officer will also review the contract requirements relative to the conditions contained in the "Water Quality Certification" and other environmental permits issued for this project. It is mandatory that this preconstruction conference be attended by the Contractor, the Contractor's on-site construction manager, the Contractor's person in charge of monitoring and all other Contractor's staff who hold a supervisory position in the field, prior to beginning any work on the contract. PART 2 PRODUCTS (NOT USED) PART 3 EXECUTION (NOT USED) --End of Section-- SECTION 01010 Page 6 BOSTON HARBOUR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS SECTION 01025 MEASUREMENT AND PAYMENT PART 1 GENERAL 1.1 SUBMITTALS 1.2 LUMP SUM PAYMENT ITEMS 1.3 UNIT PRICE PAYMENT ITEMS 1.4 BIDDING SCHEDULE - BASE BID PAYMENT ITEMS (DREDGING BOSTON HARBOUR CHANNELS) 1.4.1 Item No. 0001, "Mobilization and Demobilization for Dredging Operations" 1.4.2 Item No. 0002, "Mobilization and Demobilization for Blasting Operations" 1.4.3 Item No. 0003, "Maintenance Dredging and Disposal" 1.4.4 Item No. 0004, "Improvement Dredging and Disposal" 1.4.5 Item No. 0005, "Rock Excavation from Federal Channel" 1.4.6 Item No. 0006, "Debris Removal." 1.4.7 Item No. 0007, "Removal and Disposal of Obstruction" 1.4.8 Item No. 0008, "Water Quality Monitoring" 1.4.9 Item No. 0009, "Removal of Abandoned Water Tunnel" 1.4.10 Item No. 0010, "Bond costs" 1.5 BIDDING SCHEDULE - ADDITIVE BID ITEMS (DREDGING AT BERTH AREAS) PART 2 PRODUCTS (NOT USED) PART 3 EXECUTION (NOT USED) - -- End of Section Table of Contents -- SECTION TABLE OF CONTENTS 01025 PAGE 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION 01025 MEASUREMENT AND PAYMENT PART 1 GENERAL 1.1 SUBMITTALS Government approval is required for all submittals with a "GA" designation; submittals having an "FIO" designation are for information only. The following shall be submitted in accordance with Section 01300 SUBMITTAL PROCEDURES: SD-01 Data Weight Certificates; FIO, C reviewer. Submit certified weight certificates for debris removed from Boston Harbor under payment item "Debris Removal". 1.2 LUMP SUM PAYMENT ITEMS Payment items for the work of this contract for which contract lump sum payments will be made are listed in the BIDDING SCHEDULE and described below. All costs for items of work, which are not specifically mentioned to be included in a particular lump sum or unit price payment item, shall be included in the listed lump sum item most closely associated with the work involved. The lump sum price and payment made for each item listed shall constitute full compensation for furnishing all plant, labor, materials, and equipment, and performing any associated Contractor quality control, environmental protection, meeting safety requirements, tests and reports, and for performing all work required for which separate payment is not otherwise provided. 1.3 UNIT PRICE PAYMENT ITEMS Payment items for the work of this contract on which the contract unit price payments will be made are listed in the BIDDING SCHEDULE and described below. The unit price and payment made for each item listed shall constitute full compensation for furnishing all plant, labor, materials, and equipment, and performing any associated Contractor quality control, environmental protection, meeting safety requirements, tests and reports, and for performing all work required for each of the unit price items. 1.4 BIDDING SCHEDULE - BASE BID PAYMENT ITEMS (DREDGING BOSTON HARBOR CHANNELS) Base Bid Payment Items for the work of this contract on which the contract progress payments will be based are listed in the BIDDING SCHEDULE and are described below. All costs for items of work, which are not specifically mentioned to be included in a particular Bidding Schedule Base Bid payment item, shall be included in the listed item most closely associated with the work involved. 1.4.1 Item No. 0001, "Mobilization and Demobilization for Dredging Operations" a. Payment will be made for costs associated with mobilization and demobilization for dredging operations, as defined in Special Contract Requirements clause "PAYMENT FOR MOBILIZATION AND DEMOBILIZATION." Separate payment will be made for the mobilization and demobilization of equipment and materials for performing blasting operations as specified SECTION 01025 Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT below for Item No. 0002. b. Unit of measure: lump sum. 1.4.2 Item No. 0002, "Mobilization and Demobilization for Blasting Operations" a Payment will be made for costs associated with mobilization and demobilization of equipment and materials for performing blasting operations, as defined in Special Contract Requirements clause "PAYMENT FOR MOBILIZATION AND DEMOBILIZATION." Separate payment will be made for the mobilization and demobilization of equipment and materials for performing dredging operations as specified above for Item No. 0001. b Unit of measure: lump sum. 1.4.3 Item No. 0003, "Maintenance Dredging and Disposal" a. The contract price per cubic yard for "Maintenance Dredging and Disposal" shall include all cost of removal and disposal of all soft sediments, defined as silty or maintenance material, from the channels of Boston Harbor as specified in Section 02482 DREDGING and indicated on contract drawings. Permits require that all soft material, regardless of its depth or location in the work, be removed by an environmental bucket. Disposal includes construction of the in-channel disposal cells, placement of the stored silty sediments into the cells, placement of the silty sediments excavated from Boston Harbor into the cells, final capping of the cells with clean material, and cell thickness and coverage determination surveys and testing, all as specified in Section 02482 DREDGING. b. For the construction of disposal cells: no separate measurement or payment will be made for the removal and disposal of material below the channel overdepth limit. The cost of removal and disposal of such material shall be considered incidental to maintenance dredging. c. The total amount of material removed and paid for under the contract for this Item, will be measured by the cubic yard in place by computing the volume between the bottom surface shown by soundings of the last pre-dredge survey made immediately before dredging of the soft material and the bottom hard material surface shown by the soundings of a post-dredge survey made as soon as practicable after the removal of the soft material, including that within the limits of the side slopes and specified channel overdepth as described in Section 02482 DREDGING, paragraph OVERDEPTH AND SIDE SLOPES, less any deductions that may be required for misplaced material described in paragraph DISPOSAL OF EXCAVATED MATERIAL. d. The contract price per cubic yard for dredging of the soft sediments from Boston Harbor channels shall include the cost of removal and disposal of all soft sediment materials from channel areas, as specified or indicated on the contract drawings. Dredging and disposal of the soft sediments from berth areas will be measured and paid for separately, as specified below in paragraph BIDDING SCHEDULE - ADDITIVE BID ITEMS (DREDGING AT BERTH AREAS). e. The contract drawings listed in Special Contract Requirements, Paragraph "Contract Drawings, Maps and Specifications" are believed to accurately represent conditions existing on the date of the last survey shown on the drawings, but the depths shown thereon will be verified and corrected by soundings taken by the Government immediately before dredging. Determination of quantities removed and the deductions made to determine quantities after having once been made by the Contracting Officer, will not be reopened, except on evidence of collusion, fraud, or obvious error. f. Monthly partial payments will be based on approximate quantities determined by Contractor quality control surveys. The pre-dredge survey SECTION 01025 Page 2 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT made immediately before dredging of the soft material and the post-dredge survey made as soon as practicable after the removal of the soft material will be performed by the Government at no cost to the Contractor. g. Additional Government and Contractor surveys shall be performed as specified in Section 02482 DREDGING for cell cap thickness and coverage determination. h. Unit of measure: cubic yard. 1.4.4 Item No. 0004, "Improvement Dredging and Disposal" a. The contract price per cubic yard for "Improvement Dredging and Disposal" shall include all costs of removal and disposal of all hard material, defined as hard or improvement material, from Boston Harbor channels after removal and disposal of the overlying soft sediments material as specified in Section 02482 DREDGING, and indicated on contract drawings. Disposal includes placing the hard material in scows transporting the material to the Massachusetts Bay Disposal Site, and depositing the material at the disposal site, as specified in Section 02482 DREDGING. Dredging and disposal of the hard material from berth areas will be measured and paid for separately, as specified below in paragraph BIDDING SCHEDULE - ADDITIVE BID ITEMS (DREDGING AT BERTH AREAS). b. The total amount of hard material removed and paid for under the contract, will be measured by the cubic yard in place by computing the volume between the bottom surface, created after removal of the overlying soft sediments, as shown by soundings of the post-dredge survey made after removing the soft sediments and the bottom surface shown by the soundings of a post-dredge survey made as soon as practicable after the dredging, disposal and capping work has been completed, including that within the limits of the overdepth and side slopes described in Section 02482 DREDGING, paragraph OVERDEPTH AND SIDE SLOPES, less any deductions that may be required for misplaced material described in paragraph DISPOSAL OF EXCAVATED MATERIAL. No separate measurement or payment will be made for hard material removed below the limits of channel overdepth to create disposal cells. c. The contract price per cubic yard for improvement dredging shall include the cost of removal and disposal of all hard materials as specified herein or indicated on the maps and drawings, except ledge rock, large boulders, and other materials, which cannot be removed without systematic drilling and blasting. Rock excavation will be measured and paid for as specified below under Item No. 0005, "Rock Excavation from Federal Channel." d. Determination of quantities of improvement material removed under this item, and the deductions made to determine quantities, after having once been made by the Contracting Officer, will not be reopened, except on evidence of collusion, fraud, or obvious error. e. Monthly partial payments will be based on approximate quantities determined by Contractor quality control surveys. The pre-dredge survey made immediately before dredging of the hard material and the post-dredge survey made as soon as praticable after the removal of the hard material will be performed by the Government at no cost to the Contractor. f. Unit of measure: cubic yard. 1.4.5 Item No. 0005, "Rock Excavation from Federal Channel" a. The contract price per cubic yard for rock excavation from the Federal Channel shall include the cost of removal and disposal of all ledge rock, large boulders, and other unclassified materials, which cannot be removed without systematic drilling and blasting. Prior to rock excavation, the Contractor shall remove all of the overlying material, which in the SECTION 01025 Page 3 BOSTON HARBOUR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT judgement of the Contracting Officer can be removed by the use of the Contractor's plant. Rock material shall then be removed in accordance with Section 02491 UNDERWATER DRILLING AND BLASTING. The total amount of rock material removed and paid for under the contract, will be measured by the cubic yard in place by computing the volume between the bottom surface, created after removal of the overlying material, as shown by soundings of the post-dredge survey after removing the overlying material and the bottom surface shown by the soundings of a post-dredge survey made as soon as practicable after dredging the rock material, including that within the limits of the overdepth and side slopes described in Section 02482 DREDGING, paragraph OVERDEPTH AND SIDE SLOPES, less any deductions that may be required for misplaced material described in paragraph DISPOSAL OF EXCAVATED MATERIAL. Disposal includes replacing the rock material in scows, transporting the material to the Massachusetts Bay Disposal Site, and depositing the material at the disposal site, as specified in Section 02491 UNDERWATER DRILLING AND BLASTING. b. Determination of quantities of rock material removed under this item and the deductions made to determine quantities after having once been made by the Contracting Officer, will not be reopened, except on evidence of collusion, fraud, or obvious error. c. Monthly partial payments will be based on approximate quantities determined by Contractor quality control surveys. The pre-dredge survey made immediately before drilling and blasting and removal of the rock material and the post-dredge survey made as soon as practicable after the removal of the rock material will be performed by the Government at no cost to the Contractor. d. Unit of measure: cubic yard. 1.4.6 Item No. 0006, "Debris Removal." a. The contract price per Ton for debris removal from Boston Harbour channels shall include all costs in connection with the collection, storage and handling, and the removal from the site and proper disposal of debris recovered from the bottom and all floating debris. Bottom debris includes cables, derelict moorings, broken and abandoned pilings, line, and all objects which, in the opinion of the Contracting Officer, are unsuitable for placement in the in-channel disposal cells or the Massachusetts Bay Disposal Site. Generally, all floating debris and bottom debris larger than 10 feet in any dimension will be considered unsuitable for disposal in cells or ocean dumping. Debris shown on the drawings as "Obstruction" will be measured and paid for under Item No. 0007, "Removal and Disposal of Obstruction" below. b. Unit of measure: Ton (2,000) pounds). 1.4.7 Item No. 0007, "Removal and Disposal of Obstruction" a. Payment will be made for all costs associated with operations necessary for the location, removal and proper disposal and obstruction indicated on the contract drawings. b. Verification of removal will be made by the Government using soundings. c. Unit of measure: One job, Lump Sum. 1.4.8 Item No. 0008, "Water Quality Monitoring" a. Payment will be made for all costs associated with water quality monitoring in connection with Boston Harbor channel dredging operations. b. Unit of measure: Lump Sum. SECTION 01025 Page 4 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 1.4.9 Item No. 0009, "Removal of Abandoned Water Tunnel" a. Payment will be made for all costs associated with the removal of the existing abandoned waterline as specified in Section 02482 DREDGING and as indicated on the contract drawings. b. Unit of Measure: One job, Lump Sum. 1.4.10 Item No. 0010 "Bond costs" Bond costs shall include the cost of Bid, Performance, and Payment Bonds. See Section 00700, Contract Clauses, clause entitled "Notice of Evaluation Preference for Small Disadvantaged Business Concerns -- Construction Acquisitions -- Test Program (Apr 1996)". Unit of measure: One job, Lump Sum. 1.5 BIDDING SCHEDULE - ADDITIVE BID ITEMS (DREDGING AT BERTH AREAS) Additive Bid Payment Items for the work of this contract on which the contract progress payments will be based are listed in the BIDDING SCHEDULE and are described below. All costs for items of work, which are not specifically mentioned to be included in a particular Bidding Schedule Additive payment item, shall be included in the listed item most closely associated with the work involved. Except as otherwise specified below, "Maintenance Dredging and Disposal" and "Improvement Dredging and Disposal" work at non-Federal berth areas will be measured and paid for in the same manner as specified above under the Base Bid items for Item No. 0003, "Maintenance Dredging and Disposal" and Item No. 0004, "Improvement Dredging and Disposal." a. The quantity of soft material dredged and disposed from berth areas will be calculated from the pier face seaward. No separate measurement or payment will be made for the dredging of material sloughing from adjacent areas. The Contractor shall estimate the quantity of material that will slough from adjacent areas and include the cost of dredging that material in the unit price bid for item "Maintenance Dredging and Disposal" for each berth area. b. No separate measurement or payment will be made for mobilization and demobilization for dredging operations at non-Federal berth areas: all such costs will be considered incidential to the work of dredging at berth areas. c. No separate measurement or payment will be made for disposal of dredged material from non-Federal berth areas including construction of disposal cells for the disposal of soft material and the disposal of hard material at the Massachusetts Bay Disposal Site., and depositing the material at the disposal site: all such costs will be considered incidential to the work of dredging at berth areas. d. No separate measurement or payment will be made for bond costs for dredging operations at non-Federal berth areas: all such costs will be considered incidential to the work of dredging at berth areas. e. No separate measurement or payment will be made for the insurance requirements set forth in the special Contract Requirement, which only apply to dredging activities to be conducted in the non-Federal berth areas: all such costs will be considered incidential to the work of dredging at berth areas. f. No separate measurement or payment will be made for Debris removal during dredging operations at non-Federal berth areas: all such costs will be considered incidential to the work of dredging at berth areas. SECTION 01025 Page 5 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT g. No separate measurement or payment will be made for water quality monitoring resulting from the work at non-Federal berth areas: all such costs will be considered incidental to the work of dredging at berth areas. PART 2 PRODUCTS (NOT USED) PART 3 EXECUTION (NOT USED) - -- End of Session -- SECTION 01025 Page 6 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS SECTION 01050 FIELD ENGINEERING PART 1 GENERAL 1.1 SUMMARY 1.1.1 Engineering Services 1.1.2 Existing Control Points 1.1.3 Survey Datum 1.2 SUBMITTALS 1.3 LAYOUT OF WORK 1.4 CONTRACTOR SURVEYS 1.4.1 Personnel 1.4.2 Survey Plans 1.4.3 Quality Control Surveys 1.4.4 Method of Surveying 1.4.4.1 Soundings 1.5 QUANTITY SURVEYS 1.5.1 Quantity Surveys 1.5.2 Government Quantity Surveys 1.5.3 Contractor Quantity Surveys 1.5.4 Field Notes 1.6 FINAL EXAMINATION AND ACCEPTANCE 1.6.1 Final Examination 1.6.2 Final Acceptance 1.7 TIDE GAGES/STAFFS/CHARTS PART 2 PRODUCTS (NOT USED) PART 3 EXECUTION (NOT USED) -- End of Section Table of Contents -- SECTION TABLE OF CONTENTS 01050 PAGE 1 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT SECTION 01050 FIELD ENGINEERING PART 1 GENERAL 1.1 SUMMARY 1.1.1 Engineering Services The Contractor shall provide and pay for field engineering services required for the project: a. Survey work required in execution of this project, except for surveys performed by the Contracting Officer as indicated in these specifications. b. Civil, structural or other professional engineering services specified, or required to execute Contractor's construction methods. 1.1.2 Existing Control Points The Contracting Officer will identify existing control points as required. 1.1.3 Survey Datum Some of the contract drawings refer to Mean Low Water (MLW) and some contract drawings refer to Mean Lower Water (MLLW). The Government will and the Contractor shall perform all surveys using the Mean Lower Low Water (MLLW) datum. 1.2 SUBMITTALS Contracting Officer approval is required for submittals with a "GA" designation; submittals having an "FIO" designation are for information only. The following shall be submitted in accordance with Section 01300 SUBMITTAL PROCEDURES: SD-01 Data Field Data; GA, C reviewer. Submit sufficient field data, including depth sounder rolls in a usable format and field survey notes, so that the Contractor's submittal survey plot may be reproduced by the Government by referring only to this field data. SD-01 Data Survey Data; GA, C reviewer. Submit all quality control survey data including plots. Plots shall show a sufficient number of soundings along each line to indicate the general shape of the bottom along with a schedule for correcting deficiencies. Plots shall be submitted no more than 2 days after completion of field work. SD-08 Statements Survey Personnel; GA; C reviewer. Furnish a complete listing of the personnel who will perform the survey work required by the contract. The listing shall include a brief summary Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT of the hydrographic survey experience of each person. The list shall be submitted prior to the preconstruction conference. SD-01 Data Charts; FIO, C reviewer.. Current and tide charts for the area(s) being dredged shall be submitted. SD-04 Drawings Survey Plans; GA, C reviewer. Submit survey plans specified below. Field surveys shall not begin until these plans are approved. 1.3 LAYOUT OF WORK a. The Contracting Officer will furnish bench marks and horizontal control points as may be required in the performance of the work. b. From these control points the Contractor shall lay out the work by establishing all lines and grades at the site necessary to control the work and shall be responsible for all measurements that may be required for the execution of the work as prescribed in the specifications and/or shown on the contract drawing. The Contractor shall place and establish such stakes and markers as may be necessary for control and guidance of his operations. All survey data shall be recorded in accordance with standard and approved methods. All field notes, sketches, recordings and computations made by the Contractor shall be available at all times during the progress of the work for ready examination by the Contracting Officer representative. c. The Contractor shall furnish, at his own expense, all such stakes, spikes, steel pins, templates, platforms, equipment, tools and material and all labor as may be required in laying out any part of the work from the control points established by the Government. It shall be the responsibility of the Contractor to maintain and preserve all stakes and other markers established by him until authorized to remove them. If any of the control points established at the site by the Government are destroyed by or through the negligence of the Contractor prior to their authorized removal, the points will be replaced by the Government. The expense of replacement will be deducted from any amount due or which may become due the Contractor. The Contracting Officer may require that the work be suspended at any time when horizontal and vertical control points established at the site by the Contractor are not reasonably adequate to permit checking the work. Such suspension will be withdrawn upon proper replacement of the control points. d. In order to facilitate approximate positioning of the dredging plant, the Contractor shall have painted or welded marks placed at 10 foot intervals along all four sides of the deck of the dredging plant. 1.4 CONTRACTOR SURVEYS 1.4.1 Personnel The Contractor survey work to be performed under this contract shall be accomplished by, and/or reviewed and approved by a surveyor familiar with and having personal experience with hydrographic surveys. In addition, the survey personnel shall also be familiar with and have personal experience with hydrographic surveys. 1.4.2 Survey Plans Prior to the start of any work at the site, the Contractor shall prepare a SECTION 01050 Page 2 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT plan describing the survey method(s) to be used: a. to complete the layout and sequencing of the work b. to conduct the progress surveys c. to conduct the quality control surveys 1.4.3 Quality Control Surveys The Contractor shall examine his work by conducting hydrographic surveys at no more than 30-day intervals, upon completion of separable portions of the work, and upon completion of the entire work. The Contractor shall prepare survey maps based on the results of these surveys. These maps shall be used, by the Contractor, to satisfy himself of the effectiveness of his operations. Particular attention shall be directed to attainment of contract depth and comparison of actual progress and in-place quantities dredged with scheduled progress. Contractor surveys will not be used for final payment or acceptance. See Section 02482 DREDGING for additional Contractor survey requirements relative to disposal cell construction. 1.4.4 Method of Surveying 1.4.4.1 Soundings To assure that the method of surveying is acceptable, the Contractor shall submit, as part of the Quality Control Plan a detailed proposal setting out the proposed method of surveying. Soundings shall be referred to Mean Lower Low Water (MLLW) and shall be performed with a depthsounder having a vertical accuracy of 0.1 foot. In general, sounding lines shall be perpendicular to the channel limits and shall extend a minimum of 3 times the channel depth outsidd of the limits except where limited by the surrounding topography or lack of sufficient depth for the survey boat. For the first disposal cell, the range of the Contractor survey shall be 1 barge length (up to 300 feet) beyond the perimeter of the cells. For subsequent cells, the range of the contractor survey will be at least 50 feet beyond the perimeter of the cell. The interval between sounding lines shall be a maximum of 50 feet. Control points used for the surveys shall be occupied and proven by checking reference angles in the field. Depth measuring equipment must use a recording depthsounder with a transducer beam angle not exceeding 8 degrees. Horizontal positioning systems shall be a Differential Global Positioning System (DGPS). Whatever system is used shall be capable of locations accurate to 1 meter or better of the true position. At the start of each day's soundings, following any lengthy breaks and at the end of the day's soundings a bar check shall be taken within two feet of the project depth and recorded on the depthsounder roll. Events marks shall be marked and titled on depthsounder rolls. Sounding lines shall be numbered on the depthsounder rolls and plots. Events marks shall correlate horizontal position with depth and shall be marked and numbered on depthsounder rolls. They shall be taken at 30 second intervals. The Contractor will be required to submit to the Contracting Officer sufficient field data, including depthsounder rolls in a usable format, corrected for tide, and corresponding boat plots and track sheets, so that the Contractor's submitted survey plot may be reproduced by the Government by referring only to this field data. After completion of the Contractor's survey, the results will be plotted and reviewed by the Contractor to insure that all work was completed in accordance with contract requirements and submitted to the Contracting Officer on a floppy disk in ASCII format. A re- survey of the area after correction of deficiencies will be required to assure that correction has been achieved. Upon completion of the project sufficient surveys will have been performed and plots submitted to assured that the proper depth has been achieved throughout the entire project. Submission of all Contractor quality control survey data, including plots, is required prior to performance of final examination and acceptance surveys by the Government. The results of quality control survey should be utilized by the Contractor to ensure that work was performed in accordance with contract requirements. Final acceptance by SECTION 01050 Page 3 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT the Contracting Officer will be in accordance with SECTION 01025 MEASUREMENT AND PAYMENT of these specifications. Automated electronic sweeping shall be preformed by the Contractor for all completed areas of improvement dredging. All of the sweep data shall be submitted on 3-1/2 inch floppy disks with X,Y and Z ASCII files containing Easting, Northing, and true Elevations, decimated by shoalest soundings in a 25 foot grid pattern. The files shall be positioned on NAD Mass Mainland Zone (2001 NAD 1927) and datum referenced to MLLW. 1.5 QUANTITY SURVEYS 1.5.1 Quantity Surveys Quantity surveys shall be conducted, and the data derived from these surveys shall be used in computing the quantities of work performed or finally in place. 1.5.2 Government Quantity Surveys The Contracting Officer will conduct the original and final surveys for Boston Harbor channels, berth areas, and the disposal cells and make all quantity computations based on those surveys. The surveys will be performed at no expense to the Contractor, except as noted in Article "Final Examination and Acceptance" below and as specified in Section 02482 DREDGING. All surveys by the Government will be performed using "Multibeam" survey equipment. The Contractor shall give a minimum of 3 days notice before completion of a portion of the work requiring a post-dredge survey. A minimum of 2 days will be required by the Government for completion of each of the post-dredge surveys at the site and another 10 to 15 days for calculation of quantities removed and verification of completion of work. 1.5.3 Contractor Quantity Surveys The Contractor shall conduct the surveys for any periods for which progress payments are requested. The Contractor will make the computations based on these surveys. All surveys accomplished by the Contractor shall be conducted under the direction of the Contracting Officer, unless the Contracting Officer waives this requirement for each specific instance. The Contractor shall also perform an electronic sweep of all improvement dredging areas and furnish the sweep data to the Contracting Officer. Additional Government and Contractor surveys shall be performed as specified in section 02482 DREDGING for cell cap thickness and coverage determination. 1.5.4 Field Notes Promptly upon completing a survey, the Contractor shall furnish the originals of all field notes and all other records relating to the survey to the Contracting Officer, who shall use them as necessary to determine the amount of progress payments. The Contractor shall retain copies of all such material furnished to the Contracting Officer. 1.6 FINAL EXAMINATION AND ACCEPTANCE 1.6.1 Final Examination As soon as practicable after the completion of the entire work and after examination by the Contractor using electronic sweep equipment for full coverage of the entire work area, the work will be thoroughly examined by the Contracting Officer. Examinations by the Contracting officer will be SECTION 01050 Page 4 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT made at the expense of the Government by soundings or full coverage electronic sweeping operations, or both, as determined by the Contracting Officer. Should any shoals or other lack of contract depth be disclosed by this examination, the Contractor shall remove these shoals by dredging, at the contract rate, or by otherwise removing the shoals, as directed by the Contracting Officer. The Contractor or his authorized representative will be notified if and when soundings and/or sweeps are to be made. One individual will be allowed to accompany the survey party during the final examination survey(s). When the area is found to be satisfactorily cleared, it will be accepted finally. Should more than one final examination survey of an area be required, the cost of all additional surveys of that area will be deducted from amounts due or to become due the Contractor. These survey costs will be based upon a rate of $2,400.00 per day for each day in which the Contracting Officer survey plant is engaged in sounding or sweeping operations, and/or is en route to or from the site, or held at or near the site for such operations. 1.6.2 Final Acceptance Final acceptance of the whole or any part of the work, and the deductions or corrections of deductions made thereon will not be reopened after having once been made, except on evidence of collusion, fraud, or obvious error. 1.7 TIDE GAGES/STAFFS/CHARTS Contractor shall set a minimum of two standard tide boards within site of the dredge operator. Tide board elevations will be set to proper elevations by surveying using only previously established vertical datum issued by the U.S. Army Corps of Engineers. All tide boards will be set to the correct Corps of Engineers reference datum for this project. Tide boards shall be maintained for the duration of the dredging project. Current and tide charts for the area(s) being dredged for the duration of the project shall be submitted by the Contractor and shall be available on site. PART 2 PRODUCTIONS (NOT USED) PART 3 EXECUTION (NOT USED) -- End of Section -- SECTION 01050 Page 5 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS SECTION 01130 ENVIRONMENTAL PROTECTION PART 1 GENERAL 1.1 REFERENCES 1.2 DEFINITIONS 1.3 SUBMITTALS 1.4 ENVIRONMENTAL PROTECTION REQUIREMENTS 1.4.1 Protection of Features 1.4.2 Permits 1.4.3 Special Environmental Requirements 1.4.3.1 Independent Observer (I/O) 1.4.3.2 Fisheries Observer 1.4.3.3 Marine Mammal Observer 1.4.4 Environmental Assessment of Contract Deviations 1.5 ENVIRONMENTAL PROTECTION PLAN 1.5.1 List of Federal, State, and Local Laws and Regulations 1.5.2 Spill Control Plan 1.5.3 Contaminant Prevention Plan 1.5.4 Environmental Monitoring 1.5.5 Protection of Fish and Wildlife Resources PART 2 PRODUCTS (NOT USED) PART 3 EXECUTION 3.1 SPECIAL ENVIRONMENTAL PROTECTION REQUIREMENTS 3.1.1 Commercial Borrow 3.1.2 Disposal of Solid Wastes 3.1.3 Disposal of Contractor Generated Hazardous Wastes 3.1.4 Fuels and Lubricants 3.2 HISTORICAL, ARCHAEOLOGICAL, AND CULTURAL RESOURCES 3.2.1 Discovered Historic, Archaeological, and Cultural Resources 3.3 PROTECTION OF WATER RESOURCES 3.4 PROTECTION OF AIR RESOURCES 3.4.1 Particulates 3.5 INSPECTION 3.6 MAINTENANCE OF POLLUTION CONTROL FACILITIES 3.7 TRAINING OF CONTRACTOR PERSONNEL --End of Section Table of Contents-- SECTION TABLE OF CONTENTS 01130 PAGE 1 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT SECTION 01130 ENVIRONMENTAL PROTECTION PART 1 GENERAL 1.1 REFERENCES The publications listed below form a part of this specification to the extent referenced. The publications are referred to in the text by basic designation only. CODE OF FEDERAL REGULATIONS (CFR) 40 CFR 261 Identification and listing of Hazardous Waste ENGINEERING MANUALS (EM) EM 385-1-1 (1996) U.S. Army Corps of Engineers Safety and Health Requirements Manual 1.2 DEFINITIONS Environmental pollution and damage is defined as the presence of chemical, physical, or biological elements or agents that adversely affect human health or welfare; unfavorably alter ecological balances of plant or animal communities; or degrade the environment from an aesthetic, cultural or historic perspective. Environmental protection is the prevention/control of pollution and habitat disruption that may occur during construction. The control of environmental pollution and damage requires consideration of air, water, land. biological and cultural resources; and includes management of visual aesthetics; noise; solid, chemical, gaseous, and liquid waste; radiant energy and radioactive materials; and other pollution. 1.3 SUBMITTALS Government approval is required for submittals with a "GA" designation; submittals having an "FIO" designation are for information only. The following shall be submitted in accordance with Section 01300 SUBMITTAL PROCEDURES: SD-01 Data Fish Startle Equipment and Sonar; GA, E reviewer. Submit for review and approval sufficient data showing compliance with specification requirements. SD-08 Statements Fisheries Observer; GA, E reviewer. Submit for review and approval the name and qualifications of the Fisheries Observer. Prevent evidence that the Fisheries Observer is acceptable to the Massachusetts Division of Marine Fisheries and the National Marine Fisheries Service. SD-08 Statements Marine Mammal Observer; GA, E reviewer. SECTION 01130 Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT Submit for review and approval the name and qualifications of the Marine Mammal Observer. Present evidence that the Marine Mammal Observer meets the qualifications as specified in the "Conditions Recommended be the National Marine Fisheries Service for Projects Funded or Undertaken by the Corps of Engineers that Include Disposal of Dredged Material at the Corps of Engineers that Include Disposal of Dredged Material at the Massachusetts Bay Disposal Site" attached at the end of this section. 1.4 ENVIRONMENTAL PROTECTION REQUIREMENTS The Contractor shall comply with all applicable Federal, State, and local laws, regulations and permits. The Contractor shall provide environmental protective measures and procedures to prevent and control pollution, limit habitat disruption, and correct environmental damage that occurs during construction 1.4.1 Protection of Features The Contractor shall protect all environmental features indicated in permits and in these contract documents in spite of interference which their preservation may cause to the Contractor's work under the contract. 1.4.2 Permits This section supplements the Contractor's responsibility under the contract clause PERMITS AND RESPONSIBILITIES to the extent that the Government has already obtained the listed environmental permits issued for the Boston Harbor Navigation Improvement Project. A Water Quality Certification (WQC) issued by the Massachusetts Department of Environmental Protection; Coastal Zone Consistency Determination; U.S. Army Corps of Engineers permits (to be added by an amendment to this solicitation); MEPA; Ch 91 (Pending); and various "Order of Conditions" issued by the Boston, Everett, Revere, and Chelsea Conservation Commissions have been obtained for this project. The Contractor shall comply with permit terms and conditions that are applicable to this contract. Such applicable terms and conditions have been extracted from the permits and are specified in the various sections of these specifications and on the contract drawings. The above referenced documents shall not be relied on for contract requirements. In the event a discrepancy is discovered between the reference documents and these specifications or the contract drawings, the Contracting Officer will rely on permit requirements and conditions to resolve perceived conflicts. Copies of the WQC and various "Order of Conditions" issued by the Boston Conservation Commission and other affected communities obtained for this project are included at the end of this section for reference only. 1.4.3 Special Environmental Requirements The Contractor shall comply with the special environmental requirements included below. These special environmental requirements are an outgrowth of environmental commitments made by the Government during the project development. 1.4.3.1 Independent Observer (I/O) The Government will provide the services of an Independent Observer (I/O). The I/O will be responsible for reporting project activities to the Executive Office of Environmental Affairs and a Technical Advisory Committee. Funding of the I/O will be the Government's responsibility, The Contractor shall coordinate and discuss his work operations with the Contracting Officer on a daily basis who will coordinate and discuss those operations with the I/O. The Contractor shall provide the I/O with transportation to and from the dredge(s) and access to materials and equipment necessary in the performance of his duties. 1.4.3.2 Fisheries Observer SECTION 01130 Page 2 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT The Contractor shall provide the services of a Fisheries Observer with qualifications acceptable to the Massachusetts Division of Marine Fisheries and the National Marine Fisheries Service. The Fisheries Observer will be responsible for prohibiting blasting operations during the passage of schools of fish and other duties as specified, including performing marine mammal observer duties in the absence of the Marine Mammal Observer. Funding of the Fisheries Observer shall be the Contractor's responsibility. The Fisheries Observer shall be approved by the Contracting Officer. The Contractor shall provide sonar equipment and fish startle equipment for the exclusive use of the Fisheries Observer for performing dredging operations at the specific locations and time periods specified in Section 02482 DREDGING. Sonar (hydroacoustic monitoring equipment) shall be a side-scan type, which can provide a low target recognition value, distance to fish, determine the direction the fish are traveling, and provide a record of the information collected on a tape or disk. Fish startle equipment shall be capable of deterring fish from the family Cupeidae (blueback herring, alewife) using high amplitude sound at specific -------- frequencies. The equipment shall be similar or approved equal to Electronic Fish Startle System (EFSS) by Sonalysts, Inc., 215 Parkway North, Waterford, CT. 1.4.3.3 Marine Mammal Observer The Contractor shall provide the services of a Marine Mammal Observer with qualifications and duties as specified in the "Conditions Recommended by the National Marine Fisheries Service for Projects Funded or Undertaken by the Corps of Engineers that Include Disposal of Dredged Material at the Massachusetts Bay Disposal Site" attached at the end of this section. The Marine Mammal Observer will be responsible for prohibiting harassment of marine mammals and sea turtles during disposal operations. Funding of the Marine Mammal Observer shall be the Contractor's responsibility. The Marine Mammal Observer shall be approved by the Contracting Officer. 1.4.4 Environmental Assessment of Contract Deviations The contract specifications have been prepared to comply with the permit conditions and all special conditions and mitigation measures of an environmental nature which were established during the planning and development of this project. The Contractor is advised that deviations from the drawings or specifications (e.g., disposal areas, staging areas, alternate access routes, etc.) could result in the requirement for the Government to reanalyze the project from an environmental standpoint. Deviations from the construction methods and procedures indicated by the plans and specifications which may have an environmental impact will require a review, processing, and approval time by the Government. The Government reserves the right to disapprove alternate methods, even if they are more cost effective, if the Government determines that the proposed alternate method will have an adverse environmental impact or unreasonable delay. 1.5 ENVIRONMENTAL PROTECTION PLAN Within 20 calendar days of Notice of Award, the Contractor shall submit an Environmental Protection Plan for review and acceptance by the Contracting Officer. Acceptance is conditional and is predicated upon satisfactory performance during construction. The Contracting Officer reserves the right to require the Contractor to make changes in the Environmental Protection Plan or operations if the Government determines that environmental protection requirements are not being met. The plan shall detail the actions which the Contractor shall take to comply with all applicable Federal, State, and local laws, regulations and permits SECTION 01130 Page 3 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT concerning environmental protection and pollution control and abatement, as well as the additional specific requirements of this contract. No physical work at the site shall begin prior to acceptance of the Contractor's plan. The environmental protection plan shall include, but not be limited to, the following: 1.5.1 List of Federal, State, and Local Laws and Regulations The Contractor shall provide as part of the Environmental Protection Plan a list of all Federal, State, and local environmental laws and regulations which apply to the construction operations under the contract. 1.5.2 Spill Control Plan The Contractor shall include as part of the environmental protection plan, a Spill Control Plan. The plan shall include the procedures, instructions, and reports to be used in the event of an unforeseen spill of a substance regulated by the Emergency Response and Community Right-to-Know Act or regulated under State or local laws or regulations. The Spill Control Plan supplements the requirements of EM 385-1-1, and shall also conform to requirements located in SECTION 01135 WATER QUALITY MONITORING. This plan shall include as a minimum: a. The name of the individual who will be responsible for implementing and supervising the containment and cleanup. b. Training requirements for Contractor's personnel and methods of accomplishing the training. c. A list of materials and equipment to be immediately available at the job site, tailored to cleanup work of the potential hazard(s) identified. The list shall include an emergency fuel boom to be stored on site for deployment in the event of any water spillage cause by any equipment d. The names and locations of suppliers of containment materials and locations of additional fuel oil recovery, cleanup, restoration, and material-placement equipment available in case of an unforeseen spill emergency. e. The methods and procedures to be used for expeditious contaminant containment and cleanup. f. The name of the individual who will report any spills or hazardous substance releases and who will follow up with complete documentation. This individual shall immediately notify the Contracting Officer in addition to the legally required Federal, State, and local reporting channels (including the National Reponse Center 1-800-424-8802) if a reportable quantity spill occurs. The plan shall contain a list of the required reporting channels and telephone numbers. 1.5.3 Contaminant Prevention Plan As a part of the Environmental Protection Plan, the Contractor shall prepare a contaminant prevention statement identifying potentially hazardous substances to be used on the job site and intended actions to prevent accidental or intentional introduction of such materials into the air, water, or ground. The Contractor shall detail provisions to be taken to meet Federal, State, and local laws and regulations regarding the storage and handling of these materials. 1.5.4 Environmental Monitoring The Contractor shall include in the plan the details of environmental monitoring requirements under the applicable laws, regulations and permits, SECTION 01130 Page 4 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT as specified in these specifications, and a description of how this monitoring will be accomplished. See also Section 01135 WATER QUALITY MONITORING AND CONTROL. 1.5.5 Protection of Fish and Wildlife Resources The Contractor shall prepare and submit a "Fish Detection and Protection Plan" and a "Marine Mammal Protection Plan" as part of the Environmental Protection Plan. The plans shall include the names and qualifications of the designated observers, as well as specific details regarding protection of fish and wildlife resources during the work, including the type of fish deterrent system that will be used. If at any time during the implementation of the project, a significant fish kill or significant water quality problem occurs, and can be attributed to the project, all site activities impacting the water shall follow the Contractor's approved contingency plan, as discussed in Section 01135 WATER QUALITY MONITORING AND CONTROL, or shall cease until the source of the problem is identified. Adequate mitigating measures shall be followed as outlined in the contingency plan or upon discussion with the appropriate state and local agencies. The Contractor shall also comply with all aspects of the "Legal Requirements for operation of any vessel around North Atlantic Right Whales;" and other requirements relative to the protection of marine mammals attached at the end of this section. See also section 02491 UNDERWATER DRILLING AND BLASTING for additional requirements for the protection of fish and wildlife to be included in the plans. PART 2 PRODUCTS (NOT USED) PART 3 EXECUTION 3.1 SPECIAL ENVIRONMENTAL PROTECTION REQUIREMENTS 3.1.1 Commercial Borrow Prior to bringing commercially obtained borrow material onsite, the Contractor shall provide the Contracting Officer with the location of the pit or pits, the names of the owners and operators, and the types and estimated quantities of materials to be obtained from each source. Additional capping material requirements are included in Section 02482 DREDGING. 3.1.2 Disposal of Solid Wastes Solid waste is rubbish, floating and bottom debris, waste materials, garbage, and other discarded solid materials (excluding hazardous waste as defined in following paragraphs). Solid waste shall be placed in containers and disposed on a regular schedule. All handling and disposal shall be conducted in such a way as to prevent spillage and contamination. The Contractor shall transport all solid waste off Government property and dispose in compliance with Federal, State, and local requirements and permits. The Contractor shall submit to the Contracting Officer a "Solid Waste Management Plan" or "Debris Management Plan" as part of the Environmental Protection Plan. Additional requirements for debris management to be included in the plan are located in Sections 01135 WATER QUALITY MONITORING AND CONTROL and 02482 DREDGING 3.1.3 Disposal of Contractor Generated Hazardous Wastes Hazardous wastes are hazardous substances as defined in 40 CFR 261, or as defined by applicable State and local regulations. Hazardous waste generated by construction activities shall be removed from the work area and be disposed in compliance with Federal, State, local requirements and permits. The Contractor shall segregate hazardous waste from other materials and wastes, and shall protect it from the weather by placing it in a safe covered location; precautionary measures against accidental SECTION 01130 Page 5 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT spillage such as berming or other appropriate measures shall be taken. Hazardous waste shall be removed from Government property within 60 days. Hazardous waste shall not be dumped onto the ground, into storm sewers or open water courses, or into the sanitary sewer system. 3.1.4 Fuels and Lubricants Fueling and lubrication of equipment and motor vehicles shall be conducted in a manner that affords the maximum protection against spills and evaporation. Daily inspections of fuel and lubrication systems shall be made for leakage. All leakage discovered by the inspection shall be repaired outside of the resource area and the established buffer zone. Lubricants and waste oil to be discarded shall be stored in marked corrosion-resistant containers and recycled or disposed in accordance with Federal, State, and local laws, regulations, and permits. 3.2 HISTORICAL, ARCHAEOLOGICAL, AND CULTURAL RESOURCES 3.2.1 Discovered Historic, Archaeological, and Cultural Resources If during construction activities, items are observed that may have historic or archaeological value (e.g., Native American human remains or associated objects are discovered), such observations shall be reported immediately to the Contracting Officer so that the appropriate authorities may be notified and a determination made as to their significance and what, if any, special disposition of the finds should be made. The Contractor shall cease all activities that may result in impact to or the destruction of these resources. The Contractor shall prevent his employees from trespassing on, removing, or otherwise disturbing such resources. 3.3 PROTECTION OF WATER RESOURCES The Contractor shall keep construction activities under surveillance, management, and control to avoid pollution of surface and ground waters. 3.4 PROTECTION OF AIR RESOURCES Special management techniques as set out below shall be implemented to control air pollution by the construction activities. These techniques supplement the requirements of Federal, State, and local laws and regulations; and the safety requirements under this Contract. If any of the following techniques conflict with the requirements of Federal, State, or local laws or regulations, or safety requirements under this contract, then those requirements) shall be followed in lieu of the following.shall be followed in lieu of the following. 3.4.1 Particulates Airborne particulates, including dust particles, from construction activities and processing and preparation of materials shall be controlled at all times, including weekends, holidays, and hours when work is not in progress. The Contractor shall maintain all excavations, stockpiles, haul roads, plant sites, disposal sites, borrow areas, and all other work areas free from airborne dust which would cause a hazard or nuisance. 3.5 INSPECTION If the Contracting Officer notifies the Contractor in writing of any observed noncompliance with contract requirements or Federal, State, or local laws, regulations, or permits, the Contractor shall inform the Contracting Officer of proposed corrective action and take such action to correct the noncompliance. If the Contractor fails to comply promptly, the Contracting Officer may issue an order stopping all or part of the work until satisfactory corrective action is taken. No time extensions will be granted or costs or damages allowed to the Contractor for any such suspension. SECTION 01130 Page 6 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 3.6 MAINTENANCE OF POLLUTION CONTROL FACILITIES The Contractor shall maintain all constructed pollution control facilities and portable pollution control devices for the duration of the contract or for the length of time construction activities create the particular pollutant. 3.7 TRAINING OF CONTRACTOR PERSONNEL Contractor personnel shall be trained in environmental protection and pollution control. The Contractor shall conduct environmental protection/pollution control meetings for all Contractor personnel monthly. The training and meeting agenda shall include methods of detecting and avoiding pollution, familiarization with pollution standards, both statutory and contractual, installation and care of facilities (vegetative cover, etc.), and instruments required for monitoring purposes to ensure adequate and continuous environmental protection/pollution control. Anticipated hazardous or toxic chemicals or wastes, and other regulated contaminants, shall also be discussed. Other items to be discussed shall include recognition and protection of archaeological sites and artifacts. END OF SECTION SECTION 01130 Page 7 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT ATTACHMENTS BOSTON HARBOR FISHERIES (AND MARINE MAMMAL) OBSERVER CRITERIA The fisheries observer should have an educational background in marine biology, general experience aboard dredges, and hands on field experience with Massachusetts marine fish species. A person who does not have a college degree in marine biology or related field may be qualified as an observer if s/he has field experience with fisheries, sonar, and fish startle systems.. 1. Education: College degrees (B.S. or higher) in marine biology or related field. 2. Field Experience and Equivalents: a. Documented field research focused on Massachusetts marine fish species or its habitat OR has worked at least two years on a commercial fishing vessel identifying and locating at least two of the following fish species, rainbow smelt, alewife, blueback herring, menhaden, winter flounder, and striped bass, using sonar AND b. Has at least one month of work experience with a fish startle system. 3. Dredge Experience; Experience in any capacity aboard dredges of the same type as those to be used in the proposed project, would be helpful. 4. Skill Set - Observers must be able to: a. identify the following six species; rainbow smelt (Osmerus mordax), alewife (Alosa pseudoharengus), blueback herring (Alosa -------------------- ----- aestivailis), menhaden (Brevoortia tyrannus), winter flounder ----------- ------------------- (Pseudoplenectes americanus), and striped bass (Morone saxatilis). -------------------------- ---------------- b. take standard field measurements (total length and weight or fish killed by blasting (i.e. floating at the surface), if more than a few dozen fish. If hundreds or thousands of fish are killed, then representative samples will be taken. c. run the fish startle system and observe and record the behavior of fish before and during use of the fish startle system. d. observe fish patterns and any marine mammals (such as harbor porpoises and seals) in the area, and advise dredge and disposal operators on the appropriate blast timing to avoid impacting these biological resources. e. provide a summary report of data collected on fish behavior, before and during the use of the fish startle system, results of fish killed (including species, length, and weight) during blasting, and observations of marine mammals to dredging and blasting operations. SECTION 01130 Page 8 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT CONDITIONS RECOMMENDED BY THE NATIONAL MARINE FISHERIES SERVICE FOR PROJECTS FUNDED OR UNDERTAKEN BY THE CORPS OF ENGINEERS THAT INCLUDE DISPOSAL OF DREDGED MATERIAL AT THE MASSACHUSETTS BAY DISPOSAL SITE March 27, 1997 (1) From February 1 through May 30 of any year, disposal vessels including tugs, barges, and scows transiting between the dredge site and the Massachusetts Bay Disposal Site shall operate at speeds not to exceed 5 knots after sunset, before sunrise, or in daylight conditions where visibility is less than one nautical mile. Disposal shall not proceed if these requirements cannot be met due to weather or sea conditions. In that regard, the vessel captain and/or contractor should be aware of predicted conditions before departing for the disposal site. The intent of this condition is to reduce the potential for vessel collisions with threatened and endangered species, including right whales. (2) From February 1 through May 30 of any year, an approved marine observer (i.e., meeting the attached National Marine Fisheries Service (NMFS) criteria on observer qualifications, including the specified skill sets for sea turtles and whales) must be present aboard disposal vessel transiting between the dredge site and the Massachusetts Bay Disposal Site during daylight hours. When threatened or endangered species are observed to be present, the vessel captain shall, except when precluded by safety considerations, follow the advice of the marine mammal observer to avoid harassment of or direct impact to individual animals. The observer shall fully complete a separate Corps of Engineers marine mammal observation report for every sighting and shall ensure that this report is received by the Corps New England District, Environmental Resources Section (fax number (978) 318-8560) and The Regulatory Compliance Branch (fax number (978) 318-8303) within one week of the trip date. The observer shall maintain contact with the NMFS (Habitat and Protected Resource Division, phone number (508) 281-9328) and other recognized experts to provide and receive information regarding the presence and distribution of threatened and endangered species in Massachusetts Bay. All right whale sightings (including location) shall be reported to Ms. Pat Genior at NMFS Woods Hole (telephone number (508) 495-2264) at the end of the day. The intent of this condition is to reduce the potential for vessel collisions with threatened and endangered species, including right whales, and to minimize potential impacts of dredged material disposal on threatened and endangered species. Marine mammal observers shall use the following guidelines to minimize conflicts with threatened or endangered species: (a) A marine mammal observer shall be posted on lookout at all times during daylight hours when disposal vessels have left the harbor and are underway or at the disposal site. (b) Disposal vessels shall not approach threatened or endangered species closer that 100 feet (see additional condition below for approaching right whales). (c) Disposal vessels shall adhere to the attached NMFS regulations for approaching right whales, 50 CFR Part 222.32, which restrict approaches within 500 yards of a right whale and specify avoidance measures for vessels that encounter right whales. (d) If threatened or endangered species are sighted within 500 feet from the disposal point, dredged material shall not be released. In this case, the vessel captain may elect to wait until the animals move away from the disposal point prior to disposal, or, subject to the judgement of the observer, may dispose at an authorized alternative disposal location under the same restrictions noted herein for disposal at the primary disposal SECTION 01130 Page 9 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT location. (e) If threatened or endangered species are sighted between 500 feet and 1500 feet from the disposal point, the observer shall note the animal's behavior, relative position, and direction and speed of movement to determine if release of dredged material is likely to harass or endanger the animals. For example, whales actively feeding at or near the disposal point are more likely that resting whales to interact with released sediments. If the observer judges that disposal is likely to harass or endanger the animals, the observer shall inform the vessel captain and disposal shall be delayed until the animals change their behavior or move away such that the observer judges that no danger to the animals will result from disposal. OBSERVER CREDENTIALS Certain credentials and experience might indicate an observer has the skills listed below. Ideally, the applicant will have an educational background in marine biology, general experience aboard dredges, and hands on field experience with the species of concern. A person who does not have a college degree in marine biology or a related field may be qualified as an observer if she/he has successfully completed an approved endangered species dredge observer training program (item 3a), and has twice the experience identified as necessary in items 2b, 3c, and 3d. 1. EDUCATION: College degree (BS or higher) in marine biology or a related field, and 2. DREDGE/FLOAT EXPERIENCE: a) For shortnose sturgeon or sea turtle observers: Work for a minimum or one week in any capacity aboard dredges of the same type as those to be used in the proposed project, or b) For large whale observers: Work for a minimum of two months as a naturalist or wildlife guide aboard an active whale watch vessel or other vessel primarily engaged in the observation of large whales in the wild, and 3. FIELD EXPERIENCE AND EQUIVALENTS a) Successful completion of an approved endangered species dredge observer training course, or b) Documented field research focused on the species or its habitat, or c) Work for a minimum of four months as an endangered species observer-in-training aboard dredges that have interacted with the species in question, or d) Active involvement for a minimum of one year in organized responses to protected species stranding events where sea turtles and marine mammals are identified and handles. Note: If dredge operations are likely to interact with more than one group of protected species, the observer must demonstrate that he/she has all of the respective skill sets. 4. SKILLS SETS a) Observers must be able to identify sea turtle species. b) Observers must be able to advise dredge operators on the appropriate maneuvering to avoid harassing or impacting sea turtles. SECTION 01130 Page 10 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT c) Observers must be able to indentify endangered whale species that may be encountered during project operations. d) Observers must be able to discern whale behaviors, such as milling, traveling, and feeding. e) Observers must be able to demonstrate knowledge of individually distinctive markings on humpback and right whale for indentification purposes. SECTION 01130 Page 11 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT I. Legal Requirements for operation of any vessel around North Atlantic Right Whales: 50 CFR Parts 217 and 222 222.32 Approaching North Atlantic Right Whales (a) Prohibitions. Except as provided under paragraph (c) of this section, it is unlawful for any person subject to the jurisdiction of the United States to commit, attempt to commit, to solicit another to commit, or cause to be committed any of the following acts: (1) Approach (including by interception) within 500 yards (460m) of a right whale by vessel, aircraft, or any other means; (2) Fail to undertake required right whale avoidance measures specified under paragraph (b) of this section. (b) Right Whale Avoidance Measures. Except as provided under paragraph (c) of this section, the following avoidance measures must be taken if within 500 yards (460m) of a right whale: (1) If underway, a vessel must steer a course away from the right whale, and immediately leave the area at a slow safe speed; (2) An aircraft must take a course away from the right whale, and immediately leave the area at a constant air speed. (c) Exceptions. The following exceptions apply to this section, but any person who claims the applicability of an exception has the burden of proving that the exception is applicable: (1) Paragraph (a) and (b) of this section do not apply if a right whale approach is authorized by NMFS through a permit issued under subpart C (Endangered Fish or Wildlife Permits) of this part or through a similar authorization. (2) Paragraph (a) and (b) of this section do not apply where compliance would create an imminent and serious threat to a person, vessel, or aircraft (3) Paragraph (a) and (b) of this section do not apply when approaching to investigate a right whale entanglement or injury, or to assist in the disentanglement or rescue of a right whale. (4) Paragraphs (a) and (b) of this section do not apply to an aircraft unless the aircraft is conducting whale watch activities or is being operated for that purpose. (5) Paragraph (b) of this section does not apply to the extent that a vessel is restricted in her ability to maneuver, and because of the restriction, cannot comply with paragraph (b) of this section. II. Requirements on operation around any large whale or sea turtle for purposes of ocean disposal at the Massachusetts Bay Disposal Site: (a) Operational restrictions. (1) Disposal operators must not approach within 500 yards (460m) of any large whale or 100 yards of any sea turtle with a vessel; (2) Disposal operators must follow the avoidance measures described below: (b) Avoidance Measures. Except as provided under paragraph (c) of this section, the following avoidance measure must be taken if within 500 yards SECTION 01130 Page 12 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT (460m) of any large whale or 100 yards of any sea turtle: (1) If underway, a vessel must steer a course away from the whale or sea turtle, and immediately leave the area at a slow safe speed; (c) Exceptions. The following exceptions apply to this section, but any person who claims the applicability of an exception has the burden of proving that the exception is applicable: (1) These requirements do no apply where compliance would create an imminent and serious threat to a person or vessel. (2) These requirements do not apply when approaching to investigate a right whale entanglement or injury, or to assist in the disentanglement or rescue of a right whale, provided that permission is received from NMFS or a NMFS designee prior to the approach. (3) Paragraph (b) of this section does not apply to the extent that a vessel is restricted in her ability to maneuver (as defined in 72 COLREGS 33 CFR), and because of the restriction, cannot comply with paragraph (b) of this section. III. REQUIREMENTS FOR RELEASE OF DREDGED MATERIAL AT THE MASSACHUSETTS BAY DISPOSAL SITE: If threatened or endangered species of any kind (including whales and sea turtles) are sighted within 500 yards from the disposal point, operators must wait for the animals to leave the area or must use an alternative disposal point specified by the Corps of Engineers (NAE) within the boundary of the designated disposal site. If threatened or endangered species of any kind are sighted between 500 and 1500 yards from the disposal point, the observer shall note animals behavior, relative position, and direction and speed of movement to determine if release of dredged material is likely to harass or endanger the animals. For example, whale actively feeding at or near the disposal point are more likely than resting whales to interact with released sediments. If the observer judges that disposal is likely to harass or endanger the animals, the observer shall inform the vessel caption. Disposal shall be delayed until the animals change their behavior or move away such that the observer judges that no danger to the animals will result from disposal. In the event that behavior and direction of movement is unpredictable, operators should use the alternative approved disposal point. In the presence of right whales, the most protective operational measure is advised. IV. OTHER RESPONSIBILITIES OF VESSEL OPERATOR/ONBOARD OBSERVER (AS APPROPRIATE): (a) The observer is responsible for contacting NMFS early warning network for the most recent information on whale movements and locations prior to departure for the disposal site to check for the presence of whales. (b) The observer shall report all whale sightings, noting location, to the early warning network at the end of the day. The point of contact is Pat Gerrior, NMFS-Woods Hole, (508) 495-2264. The World Wide Web site is http://whale.wheelock.edu/whalenet-stuff/rw_intro.html. SECTION 01130 Page 13 AMENDED WATER QUALITY CERTIFICATION BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT PROJECT DESCRIPTION Federal Channels page 2 Existing conditions page 4 Sediment quality page 4 In-channel disposal page 5 Army Base Berths page 8 Conley Terminal Berths page 10 Distrigas Berth page 12 Medford Street Terminal page 14 Moran Terminal page 16 Mystic Terminal Pier 1 page 18 Mystic Terminal Piers 2, 49, and 50 page 20 North Jetty Terminal page 22 Prolerized of New England Berth page 24 TECHNICAL ADVISORY COMMITTEE page 26 List of Commenters page 26 CONDITIONS A. General page 28 B. Regarding Disposal into Cells page 33 C. Cap Placement and Integrity page 34 D. Recolonization of Cap page 37 E. Water Column Monitoring: Disposal page 38 F. Water Column Monitoring: Dredging page 42 G. Water Column Monitoring: Baseline page 42 H. Protection of Fisheries page 43 I. Alternative Technology page 43 Berth locations Mystic River: Distrigas, Medford St. Terminal, Moran Terminal, Prolerized Chelsea River: (none) Inner Confluence: Mystic Terminal Pier 1, 2, 49, 50 Reserved Channel: Army Base, Conley Terminal Main Ship Channel: North Jetty Terminal BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS SECTION 01135 WATER QUALITY MONITORING AND CONTROL PART 1 GENERAL 1.1 SUBMITTALS 1.2 RELATED WORK SPECIFIED ELSEWHERE 1.3 GENERAL 1.4 COORDINATION MEETING 1.5 DIVISION OF RESPONSIBILITIES 1.5.1 Monitoring Data 1.5.2 Contract Administration Actions 1.6 ADMINISTRATIVE REPORTING REQUIREMENTS 1.6.1 Recommendations for Changes 1.6.2 Monitoring Data and Reports (36 Hour) 1.6.3 Monitoring Report for Each Monitoring Event 1.6.4 Summary Tables 1.6.5 Summary Report 1.7 LABORATORY CERTIFICATION 1.7.1 Laboratory Chemical Analyses 1.7.2 Laboratory Biological Tests 1.7.3 Laboratory Detection Limits 1.8 CONTINGENCY PLAN PART 2 PRODUCTS (NOT USED) PART 3 EXECUTION 3.1 DREDGING REQUIREMENTS 3.1.1 Environmental Clamshell Bucket 3.1.2 Environmental Bucket Control 3.1.3 Debris Management Plan 3.1.3.1 Release of Oily Material 3.1.3.2 Discharge of Sediment 3.1.3.3 Communication During Discharge 3.1.4 Equivalent Alternative Dredging Technology 3.2 WATER COLUMN MONITORING - BASELINE 3.3 WATER COLUMN MONITORING - DREDGING OF DISPOSAL CELLS 3.4 WATER COLUMN MONITORING - DISPOSAL OPERATIONS 3.4.1 Plume Location Equipment 3.4.2 Special Monitoring for Mystic River Federal Channel 3.4.2.1 Construction Events and Frequency of Sampling 3.4.2.2 Depth of Sample 3.4.2.3 Location of Plume Samples 3.4.2.4 Location of Reference Samples 3.4.2.5 Time of Sampling: 3.4.2.6 Reporting 36 Hour Data 3.4.2.7 Plume Cross Sectional Figure 3.4.2.8 Dissolved Oxygen Measurements 3.4.3 Special Monitoring for the Chelsea River Federal Channel 3.4.4 Monitoring for TSS and Turbidity 3.4.5 Monitoring of Material from Berths 3.4.5.1 Bioassays of Material from Mystic River and Berths 3.4.5.2 Bioassays Protocols 3.4.6 Bioaccumulation of Metals 3.4.7 Plan Views of the Post-Disposal Plume 3.5 EXCEEDENCES OF WATER QUALITY CRITERIA 3.5.1 Acute and Chronic Water Quality in the Mixing Zone SECTION TABLE OF CONTENTS 01135 PAGE 1 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT 3.5.2 Exceedences of Water Quality Standards Attributable to Project Activities 3.5.3 Repeat Samples 3.5.4 Implementation of Contingency Plan - Acute Water Quality Criteria 3.5.5 Implementation of Contingency Plan - Chronic Water Quality Criteria 3.5.6 Exceedance of Total Suspended Solids (TSS) Criteria -- End of Section Table of Contents -- SECTION TABLE OF CONTENTS 01135 PAGE 2 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION 01135 WATER QUALITY MONITORING AND CONTROL PART 1 GENERAL 1.1 SUBMITTALS Government approval is required for submittals with a "GA" designation; submittals having an "FIO" designation are for information only. The following shall be submitted in accordance with Section 01300 SUBMITTAL PROCEDURES: SD-01 Data Water Quality Monitoring Requirements Plan; GA, E reviewer. The details of water quality monitoring requirements under this section and a description of how this monitoring will be accomplished shall be submitted to the Contracting Officer for approval. The submittal shall include a sample collection plan, a field positioning plan, a lab analysis plan, sample transportation and turn around times, a listing of monitoring personal and their qualifications, chain of custody requirements, and sample data summary sheets. SD-08 Statements Laboratory Certification; GA, E reviewer. Submit statements that the laboratory contracted for the chemical analyses specified in this section is certified by the Massachusetts Department of Environmental Protection for wastewater analysis of the metals of concern and PCBs. Alternative documentation of proficiency may be submitted for approval. SD-09 Reports Monitoring Data and Reports; GA, E reviewer. Monitoring data and reports shall be submitted to the Contracting Officer and others as specified. SD-01 Data Contingency Plan; FIO, C reviewer. The Contractor shall submit a contingency plan as specified in this section and required by the Water Quality Certificate attached at the end of Section 01130 ENVIRONMENTAL PROTECTION. The Plan shall address mitigation measures to be taken if acute water quality criteria are exceeded. Environmental Bucket Performance Data; GA, E reviewer. Submit demonstrated capability of the environmental bucket to meet the specified suspended solids and turbidity performance standards. 1.2 RELATED WORK SPECIFIED ELSEWHERE a. Additional requirements relative to water quality monitoring and testing including submittal of a Debris Management Plan, Bathymetry Surveys, and Cap Thickness and Coverage Determination are specified in Section 02482 DREDGING. SECTION 01135 Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT b. Additional requirements relative to water quality monitoring and testing including protection of finfish and marine mammals are specified in Section 02491 UNDERWATER DRILLING AND BLASTING. 1.3 GENERAL Water Quality Certification and other permit requirements for this contract have been extracted from the Certification and other permits and are specified in this and other sections of these specifications. The Water Quality Certification (WQC) issued by the Massachusetts Department of Environmental Protection, U.S. Army Corps of Engineers, and various "Order of Conditions" issued by the Boston, Everett, Revere, and Chelsea Conservation Commissions have been obtained and are attached at the end of Section 01130 ENVIRONMENTAL PROTECTION for information purposes only. The referenced documents shall not be relied on for contract requirements. In the event a discrepancy is discovered between the reference documents and these specifications or the contract drawings, the Contractor shall notify the Contracting Officer for clarification. The Contracting Officer will rely on permit requirements and the Orders of Conditions to resolve perceived conflicts. 1.4 COORDINATION MEETING The Contractor shall meet with representatives of the Commonwealth of Massachusetts Department of Environmental Protection and other regulatory agencies, prior to undertaking field work, to review the conditions of the Water Quality Certification, which are specified in these specifications. At a minimum, attendees will include the Corps of Engineer's project manager and Contracting Officer, the Massport project manager, the construction contractor's project manager, the Independent Observer, the monitoring project manager, and all other Contractor staff who will hold a supervisory position in the field. The purpose of this meeting is to provide the opportunity for regulatory and project staff responsible for the project to clarify project requirements relative to Water Quality Certification conditions. 1.5 DIVISION OF RESPONSIBILITIES 1.5.1 Monitoring Data The Contractor shall be responsible for all monitoring data and reports which include physical, chemical, and biological tests during dredging and disposal operations, as specified in this section. Items of work required by the Water Quality Certificate and not specified in this or other sections of these specifications will be performed by others. 1.5.2 Contract Administration Actions Except as otherwise specified in this section, the Government will be responsible for contract administration actions relative to water quality monitoring. The Government will direct the implementing mitigation measures found in the contingency plan if acute water quality criteria are exceeded. The contingency plan is a submittal requirement of this section. 1.6 ADMINISTRATIVE REPORTING REQUIREMENTS 1.6.1 Recommendations for Changes The Contractor may initiate recommendations for changes to the Water Quality Certification (WQC) or other permit requirements specified in this and other sections of these specifications. Such recommendations shall be submitted in writing to the contracting Officer, who will coordinate the request. Massport and the Corps will coordinate the change request with the Massachusetts Department of Environmental Protection (DEP) and other agencies as appropriate. SECTION 01135 Page 2 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 1.6.2 Monitoring Data and Reports (36 Hour) The Contractor shall forward all 36 hour monitoring data and reports referenced in this section, via fax and in electronic form, to Deborah Hadden, Massachusetts Port Authority, Logan Office Center, One Harborside Drive, Suite 200 South Boston, MA 02128, Voice: (617) 946-4426, FAX: (617) 946-4422, E:Mail: dhadden@massport.com and Catherine Demos, US Army Corps of Engineers, New England District 696 Virginia Road, Concord, Massachusetts 01742-2751, Voice: (781) 647-8231, FAX: (781) 647-8560, E:Mail: CATHERINE.J.DEMOS@usace.army.mil, as well as those listed below:. a. All 36 hour monitoring data and reports shall be forwarded to the Department of Envrionmental Protection; attention Judith Perry and Steven Lipman, 1 Winter Street, Boston, MA 02108; to Deerin Babb-Brott, CZM, 100 Cambridge St., Boston, 02202; and to the Independent Observer, Steve Wolf, ENSR, 36 Nagog Park, Acton, MA 01720. Samples shall be taken to an analytical laboratory at the end of each sampling day. Data required within 36 hours of receipt of the samples by the analytical laboratory shall be FAXed to the same individuals at DEP at 617-292-5696; CZM at 617-727-2754; and at ENSR at 508-635-9180; or made available electronically. b. The 36 hour monitoring data shall be made available to DEP, CZM, and to other members of the project's Technical Advisory Committee in electronic form (disk or e-mail) or through World Wide Web access and updated on a weekly basis. 1.6.3 Monitoring Report for Each Monitoring Event Within 7 business days of each monitoring event a monitoring report shall be transmitted to Deborah Hadden, Massachusetts Port Authority, Logan Office Center, One Harborside Drive, Suite 200 South Boston, MA 02128, Voice: (617) 946-4426, FAX: (617) 946-4422, E:Mail: dhadden@massport.com; and Catherine Demos, US Army Corps of Engineers, New England District 696 Virginia Road, Concord, Massachusetts 01742-2751, Voice: (978) 318-8231, FAX: (978) 318-8560, E-Mail: CATHERINE.J.DEMOS@usace.army.mil. The report and comments made by the Contracting Officer will be returned to the Contractor with 2 business days. The Contractor shall resolve all comments made by the Contracting Officer and deliver the final report back to Deborah Hadden and Catherine Demos, and to the Massachusetts Department of Environmental Protection and CZM and ENSR addresses noted above within 1 business day. The report shall include: date; time and tide; time of sample collection; time that disposal occurred; sample locations shown on a plan of reasonable scale; depth of sample; laboratory report of analytical results for contaminants including appropriate QA/QC test results for blanks; duplicates; spikes; and matrix spikes. The source of the barge-load of sediment shall also be acknowledged in the monitoring report for all disposal events. 1.6.4 Summary Tables Summary tables of all data for each monitoring event shall be provided with each monitoring report. The tables shall be designed to allow easy comparison of: a. All parameters measured at a given site and at a given time together with the appropriate reference site values, and b. Individual parameters at a given site over all time for the event together with reference site values. 1.6.5 Summary Report A summary report shall be prepared at the completion of all work and SECTION 01135 Page 3 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT submitted to the Contracting Officer within 30 days of the capping of the final cell. The report shall present, in concise form, the operational methods for dredging and disposal, and project impacts as determined by monitoring data. The origin of the last barge load of sediment placed in each cell shall be documented and provided to the Contracting Officer with the final project report. 1.7 LABORATORY CERTIFICATION 1.7.1 Laboratory Chemical Analyses The laboratory to perform the chemical analyses specified in this section shall be certified by the Massachusetts Department of Environmental Protection for wastewater analysis of the metals of concern and PCBs. Alternative documentation of proficiency may be submitted to the Contracting Officer for approval. 1.7.2 Laboratory Biological Tests The laboratory to perform the biological tests (bioassays) specified in this Section shall adhere to approved EPA test protocols in all respects, including demonstration of species sensitivity to reference toxicants, and attainment of required endpoints for control bioassays. Failure to adhere to approved EPA test protocols as determined by the Massachusetts Department of Environmental Protection, in consultation with EPA, shall invalidate the test and a repeat test(s) shall be run. 1.7.3 Laboratory Detection Limits The laboratory detection limits for the analyses specified in this section shall be sufficiently low to provide reliable data at the following chronic water quality criteria for dissolved metals, total recoverable mercury and PCB aroclors (ug/1) (from the Massachusetts Surface Water Quality Standards): arsenic 36, cadmium 9.2, chromium (VI) 50, copper 2.4, lead 8.1, nickel 8.2, zinc 81, total recoverable mercury .025, PCB aroclors .030. It shall be the responsibility of the Contractor to ensure that the contract laboratory provides evidence/data indicating that the laboratory can provide clean sampling and handling techniques, that the analytical methods used (for example, EPA 1600 series) shall include a preconcentration step using gold amalgamation for mercury or equivalent and a chelate (APDC-DDDC) preconcentration step or equivalent for other metals, as well as that contract personnel obtain sufficient sample in order to achieve good data at the necessary low detection limits to meet these requirements. 1.8 CONTINGENCY PLAN The Contractor shall prepare and submit to the Contracting Officer a contingency plan which outlines measures to be taken if water quality criteria for the parameter(s) of concern and the TSS are exceeded. This contingency plan must be approved by the Corps of Engineers in coordination with Massport, and the Massachusetts Department of Environmental Protection (MADEP) prior to the start of construction. The plan shall include materials and equipment that will be available to the Contractor during the duration of this contract, such as sorbet booms, silt curtains, flocculating agents, or other equipment. This plan may also include other techniques such as slowing the rate of disposal or disposal techniques such as direct placement via clamshell bucket or tremie tube. The Contractor may suggest to the Contracting Officer other contingency measures that will be acceptable to the Corps of Engineers. Include also contingency measures to be activated in the event of a significant fish kill attributed to the project. PART 2 PRODUCTS (NOT USED) SECTION 01135 Page 4 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT PART 3 EXECUTION 3.1 DREDGING REQUIREMENTS 3.1.1 Environmental Clamshell Bucket Dredging of all soft surface sediments in the Mystic and Chelsea Rivers, the Inner Confluence and the Reserved Channel Federal channels and in the associated non-federal project berth areas shall be done using a closed environmental clamshell bucket, such as the CableArm bucket, or approved equal. The dredge bucket shall be designed to completely enclose the dredged sediment and water captured. The bucket shall not have teeth. (This is to prevent the bucket from digging into the hard parent material.) The bucket shall be equipped with escape valves which shut when the bucket is withdrawn from the water column. The environmental dredge bucket shall have demonstrated the capability of meeting the following water quality performance standards; a. Suspended solids shall not exceed 25 mg/1 over background at 25 m (75 ft) from operation when ambient levels are lower than 100 mg/1. b. Turbidity shall not exceed ambient levels by more than 30% at 25 m (75 ft) from operation. 3.1.2 Environmental Bucket Control The Contractor shall demonstrate that for Maintenance dredging the dredge operator has sufficient control over bucket depth in the water and bucket closure so that sediment re-suspension from bucket contact with the bottom and due to bucket over-filling can be minimized. 3.1.3 Debris Management Plan The Contractor shall follow an approved Debris Management Plan. See SECTION 01130 ENVIRONMENTAL PROTECTION for plan submittal requirements. Where pilings or other debris is found to interfere with environmental bucket closure or equipment operation, a conventional clamshell bucket may be used to extract the pilings/debris. Abandoned piles shall be cut or broken off rather than extracted. Sediment removal during such activity shall be minimized to the greatest extent practicable. Berths adjacent to pile structures include but are not limited to Conley berths 11-17, Moran Terminal, Mystic Pier 1 and Berths 49 and 50, and North Jetty. Historic pilings or debris may exist at other project sites. 3.1.3.1 Release of Oily Material All oily material released during dredging or other project activity shall be promptly collected and disposed at a licensed facility. 3.1.3.2 Discharge of Sediment All barges used shall be in good operating condition and shall contain the sediment and water placed in it so that minimal discharge of sediment or water occurs until the barge has been transported to the authorized disposal location(s). Deck barges shall not be used to contain channel or berth dredged sediments unless the barge has been modified to provide for complete containment of the sediments. 3.1.3.3 Communication During Discharge The Contractor shall provide the sampling and monitoring crew with a signal acceptable to both parties indicating when the dumping of sediment from the barge begins. This is essential since monitoring events are timed relative to the dumping event. Page 5 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT 3.1.4 Equivalent Alternative Dredging Technology Alternatives to the Environmental Clamshell Bucket technology for the removal of soft material will not be considered under this contract. However, the Contractor may submit a "Value Engineering Change Proposal" under the terms and conditions of contract clause "VALUE ENGINEERING -- CONSTRUCTION (MAR 1998)--ALTERNATE I (APR 1984), following contract award, See Section 00700, Contract Clauses. 3.2 WATER COLUMN MONITORING - BASELINE Baseline water column data was collected under a previous contract. Data collected was for the recommended analyses including: dissolved metals (arsenic, cadmium, copper, chromium, lead, mercury, nickel, zinc,) and PCBs, as well as TSS and dissolved oxygen (D.0). The data was collected from a plume generated by a ship in the Inner Confluence. Relevant results were included in a written report for "Sample Event #3" prepared by the U.S. Army Corps of Engineers Environmental Laboratory, Hubbardston, MA. The report is available for review as specified in paragraph "Existing Reports and Historical Data" of Section 02482 DREDGING. 3.3 WATER COLUMN MONITORING - DREDGING OF DISPOSAL CELLS Spatial and temporal distribution of the sediment plume shall be documented (See paragraph WATER COLUMN MONITORING - DISPOSAL OPERATIONS below) under conditions of slack tide and maximum tidal current within the first month of dredging surface maintenance material from the cell(s). Dredging shall have been on-going for at least two hours and dredge cycle time shall be recorded and reported for this period. Documentation for each tidal condition shall include: a. A plan view figure (similar to Figure 3.5, Appendix F, FEIR/S attached at the end of this section) depicting contours of turbidity or light transmittance values over an area encompassing the dredging activity and extending a minimum of 300 feet upcurrent and 1000 feet downcurrent and 200 feet laterally from the dredging activity; depths depicted shall be mid water column and within three feet of the bottom; b. A figure in cross section depicting contours of turbidity or light transmittance along a line 300 feet downcurrent of the dredging activity and perpendicular to the general current direction extending 200 feet laterally from the dredging activity; full depth of the water column shall be represented. c. The documentation shall be reported as specified above in paragraph "Monitoring Report for Each Monitoring Event." 3.4 WATER COLUMN MONITORING - DISPOSAL OPERATIONS 3.4.1 Plume Location Equipment Plume location equipment, for example a transmissometer, shall be used to ensure that all downcurrent samples are located within the maximum density (lateral dimension only) of a sediment plume. The instrumentation used to locate the plume shall be capable of providing real-time display and data capture of light transmittance or turbidity as a depth profile. Measurements shall be of sufficient spatial and temporal coverage such that the following requirements can be met: a. A plan view figure (similar to figure 3.5, Appendix F, FEIR/S)attached at the end of this section) can be generated depicting contours of turbidity or light transmittance values over an area extending a minimum of 300 feet upcurrent and 1000 feet downcurrent and 200 feet laterally from the project activity at a specified depth; Page 6 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT b. A figure in cross-section can be generated depicting contours of turbidity or light transmittance along a line 300 feet downcurrent of the project activity and perpendicular to the general current direction extending 200 feet laterally from the project activity. The full depth of the water column shall be represented. 3.4.2 Special Monitoring for Mystic River Federal Channel Water column sampling and analysis for total PCBs, dissolved copper, cadmium, lead, total mercury and TSS (total suspended solids) shall be conducted when soft surface sediments from Mystic River Federal channel are disposed in-channel disposal cells, as follows: 3.4.2.1 Construction Events and Frequency of Sampling This requirement shall apply to disposal activity at the first cell(s) filled with Mystic River soft surface sediments, and to the first three disposal events in each tributary in which more than 3000 cy of Mystic River sediments are disposed per tidal cycle. a. Monitoring at the first cell shall occur during two days in the first week that disposal occurs in the cell. Monitoring shall also occur during three days that disposal occurs once the cell is at least 50 percent filled to its design capacity. A record of the number of scow loads and the volume of each shall be included with the monitoring reports required by this section. b. In order to allow the Contractor to safely monitor disposal events, this requirement shall apply to one disposal event (or series of events if more than one disposal event occurs in a given tidal cycle) per day. When disposal events occur during both high tide periods in a day, the Contractor shall monitor the event associated with the most favorable weather and light conditions. 3.4.2.2 Depth of Sample All samples (including reference samples) shall be obtained from within 3 feet of the harbor bottom outside the cell and from the mid-water column. These samples shall be combined. Alternatively, a depth integrated composite sample may be obtained from the same depths. 3.4.2.3 Location of Plume Samples Plume samples shall be obtained 300 feet downcurrent from the cell. Distances shall be measured from the closest boundary of the cell. NOTE: For all water column samples required by this specification, ---- downcurrent and upcurrent shall be determined relative to the bottom current direction, as indicated for the specific tide time on NOAA Tidal Charts for Boston Harbor. 3.4.2.4 Location of Reference Samples Reference samples shall be obtained to represent local background water conditions outside the affect of sediment disposal events. Acceptable locations for reference samples include: a. A point 1000 feet upcurrent (with respect to bottom current direction) of an active disposal cell, and b. A point 300 ft downcurrent from the disposal cell prior to disposal, provided there has been no dredging at the cell for 12 hours and that no disposal into the cell (or into an upcurrent adjacent cell) occurred on the same tidal cycle. Other locations may be approved by the Contracting Officer in coordination with the Massachusetts SECTION 01135 Page 7 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT Department of Environmental Protection upon request. 3.4.2.5 Time of Sampling: a. At 0.5 and 1.0 Hours Post Disposal: Plume samples shall be obtained 0.5 hours and 1.0 hours after the disposal event. Location of samples must be 300 feet downcurrent as specified; however, time maybe modified slightly in order to meet the requirement to obtain the sample from the plume. If multiple dumps will occur on any one tidal cycle, timing for the plume sample shall be measured from the last dump. These samples shall be analyzed separately and will be used for determining whether acute criteria are met. One reference sample shall be obtained prior to disposal and analyzed for comparison to the 0.5 and 1.0 hour plume samples. b. At 4 to 6 Hours Post Disposal: Two or more additional plume samples shall be collected one hour apart during the period four to six hours after disposal, and a single composite sample prepared for analysis. This sample represents the average disposal plume for the period up to twelve hours after disposal. Tidal conditions are expected to be approximately slack low. Two upcurrent reference samples shall be obtained during the 4 to 6 hour post-disposal period and combined for one analysis. These samples will be used to determine whether chronic criteria are met. 3.4.2.6 Reporting 36 Hour Data The resulting monitoring data shall be reported as specified above in paragraph "ADMINISTRATIVE REPORTING REQUIREMENTS" within 36 hours from the time the analytical laboratory receives the samples. If the 36 hour deadline occurs after 5 pm or during the weekend, the data may be reported by 9 AM the following business day. Failure to meet this requirement may result in a Stop Work Order from the Contracting Officer. The Contractor shall report the data on a form similar in detail to that attached at the end of this section. 3.4.2.7 Plume Cross Sectional Figure A cross sectional figure of the plume at 300 ft down current from the cell shall be generated with the plume location equipment as specified in paragraph "Plume Location Equipment", above, immediately following the collection of the 1.0 hour plume sample for each monitoring event. 3.4.2.8 Dissolved Oxygen Measurements A series of at least three dissolved oxygen measurements shall be made with real time instrumentation at all locations, depts and times specified above. 3.4.3 Special Monitoring for the Chelsea River Federal Channel Water column sampling and analysis as described above shall also be conducted during five (5) days of disposal occurring in cell(s) in the Chelsea River. 3.4.4 Monitoring for TSS and Turbidity Monitoring for TSS and turbidity is required during the first week of in- channel disposal into a cell. Sampling shall occur during three days. Requirements for sample locations, timing, depth, reporting and cross-section figure are as described above in paragraph "Special Monitoring for Mystic River Federal Channel." SECTION 01135 Page 8 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 3.4.5 Monitoring of Material from Berths Monitoring as specified above shall also be conducted when sediment from Prolerized, Distrigas, and Mystic Terminal Berths 2, 49 and 50 comprises more than 50% of the materials in a large load disposed in harbor bottom cells. Samples shall be analyzed for dissolved chromium, arsenic, nickel, zinc, and total mercury as well as dissolved copper, cadmium, lead, total PCBs, TSS and D.O. 3.4.5.1 Bioassays of Material from Mystic River and Berths Bioassays shall be conducted to monitor (1) disposal of Mystic River sediments, and (2) disposal of sediment from Prolerized, Distrigas, and Mystic Terminal Berths 2, 49 and 50. Water Samples shall be obtained on one day during the first two days of Monitoring for normal disposal operations as required in paragraph "Special Monitoring for Mystic River Federal Channel" and "Monitoring of Material from Berths" above. The tests shall be run using a composite of two (or more) water samples collected one hour apart at a location 300 ft downcurrent from the cell during the period four to six hours following disposal. Water samples from the appropriate reference sites shall be tested likewise. 3.4.5.2 Bioassay Protocols Two bioassays shall be conducted on each required sample as follows. The sea urchin fertilization test shall be conducted according to EPA protocols for chronic end point(s). Likewise the seven-day (Mysidopsis bahia) ---------------- (shimp) test shall be conducted according to EPA protocols for chronic end points. The purpose of this requirement is to assess the biological effects of a combination of pollutants which may be present; water quality criteria alone do not address this factor. In addition, where chemical criteria are exceeded and biological tests indicate no adverse effect, the Massachusetts Department of Environmental Protection will consider the biological test results as more significant in determining whether any operational mitigation measures are to be required. 3.4.6 Bioaccumulation of Metals Bioaccumulation of metals arsenic, cadmium, lead, and mercury (As, Cd, Pb, Hg,) and organics (PCBs, PAHs,) shall be assessed in blue mussels (Mytilus ------- edulis) in Boston Harbor using MWRA protocols for deployment and analysis ------ of contaminants (as approved by EPA). The MWRA's reference station at Central Wharf shall be used. (Timing of this test may be coordinated with reference site). This test shall be conducted during the first six months of the project. At a minimum, caged mussels shall be deployed for at least 60 days at four sites at mid water column depth approximately 1000 ft from the area occupied by all the disposal cells, as follows: two sites beyond the most southerly disposal cell in the Inner Confluence and two sites upstream of the most upstream cell in the Mystic River. The details of this task shall be provided in advance to the Contracting Officer for review and approval. The purpose of this requirement is to determine longer term impacts to biological resources within a likely zone of impact from the project than can be determined with chemical analysis of water samples alone. 3.4.7 Plan Views of the Post-Disposal Plume During the first month of disposal activity, plan views of the post- disposal plume shall be generated using the plume tracking equipment described in paragraph, "Plume Location Equipment" above. Such plan views shall be provided showing areal extent of the plumes at the water surface, at mid-water column and within a foot of the bottom. Date shall be gathered between one and two hours following a disposal event on five occasions. This documentation shall be provided as specified above in SECTION 01135 Page 9 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT paragraph "ADMINISTRATIVE REPORTING REQUIREMENTS." 3.5 EXCEEDENCES OF WATER QUALITY CRITERIA 3.5.1 Acute and Chronic Water Quality in the Mixing Zone The mixing zone for dredging and disposal of project sediments shall be 300 feet downcurrent from the activity. At this point, both acute and chronic water quality criteria * shall be met. Acute criteria shall be met within the mixing zone at all times. Monitoring for water column contaminants is detailed in paragraphs "WATER COLUMN MONITORING - DISPOSAL OPERATIONS" and "WATER COLUMN MONITORING - DREDGING OF DISPOSAL CELLS" above and the requirements are designed to allow the Massachusetts Department of Environmental Protection to determine whether water quality standards and criteria are being met; * Acute criteria are defined as the one hour average concentration which should not be exceeded more than once every three years on average; chronic criteria are defined as the 4 day average concentration which should not be exceeded more than once every three years, except that the PCB chronic criterion is a 24 hour limit of exposure. 3.5.2 Exceedences of Water Quality Standards Attributable to Project Activities Exceedences of contaminant Water Quality Standards shall be attributed to project activities when the sample concentration obtained down-current from the project activity exceeds the particular standard and the sample concentration is at least 30% higher than the appropriate reference sample concentration. In the case of dissolved oxygen, real time measurements of D.O. shall be used and failure to meet water quality standards shall be deemed evident when there is a statistical difference at the 95% confidence interval between the down-current sample mean and the appropriate reference sample mean. 3.5.3 Repeat Samples If water samples collected at the edge of the mixing zone fail to meet water quality standards and this effect is attributed to project activities as specified above, repeat samples shall be obtained under similar conditions within 24 hours after the laboratory obtains the results of the first set of samples. The repeat samples shall be analyzed for the parameter(s) of concern and for TSS. Verification that the samples were obtained within the sediment plume or that there was no plume shall be provided (see paragraph "Need for Continued Monitoring" above). The analytical data shall be submitted as specified above in paragraph, "Monitoring Data and Reports" within 36 hours after the sample is received by the laboratory. 3.5.4 Implementation of Contingency Plan - Acute Water Quality Criteria If two consecutive water samples collected in accordance with paragraph, "Repeat Samples" above fail to meet acute water quality criteria as specified in paragraph, "Exceedences of Water Quality Standards Attributable to Project Activities" above, the Contractor shall take the following actions designed to limit such exceedences: the mitigation measures included in the contingency plan, as pre-approved by the Contracting Officer in coordination with the Massachusetts Department of Environmental Protection, shall be immediately implemented or all disposal activities shall cease in the affected work area until an alternative proposal is provided to and approved, which shall then be immediately implemented. 3.5.5 Implementation of Contingency Plan - Chronic Water Quality Criteria SECTION 01135 Page 10 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT If two consecutive water samples collected in accordance with paragraph, "Repeat Samples" above fail to meet chronic water quality criteria as specified in paragraph, "Exceedences of Water Quality Standards Attributable to Project Activities" above, then the following action shall be implemented: work may continue provided chronic bioassay tests as specified in paragraph "Bioassays of Material from Mystic River and Berths" above are undertaken within 48 hours, or the Contracting Officer receives proposed mitigation measures within 48 hours and mitigation measures approved by the Contracting Officer are implemented within 48 hours of the approval. Such measures may include operational controls such as reductions in dredge production rate, silt curtain containment of the disposal cell or activity, and/or other mitigation measures to be determined by the Contracting Officer in consultation with the Massachusetts Department of Environmental Protection. The Contracting Officer in coordination with the Massachusetts Department of Environmental Protection will require water column testing to establish the effectiveness of any operational controls implemented. 3.5.6 Exceedance of Total Suspended Solids (TSS) Criteria If TSS exceeds the performance goal of 200 mg/1 at 500 ft downcurrent of the disposal cell, the Contracting Officer in coordination with the Massachusetts Department of Environmental Protection will evaluate the significance of the TSS data and determine the requirements for additional mitigation. -- End of Section -- SECTION 01135 Page 11 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT WATER QUALITY CERTIFICATION TRANSMITTAL NO. DISPOSAL OPERATION MONITORING Dredged Material Location: In-Channel Disposal Location: - ------------------------- ---------------------------- Date: Weather: Time of Disposal Event: High Tide/Low Tide: Other events/comments:
- ------------------------------------------------------------------------------------------------------------------------------------ Lapsed Time Position Position Depth of Tide(ft) Turbidity TSS DO Time (X) (Y) Sample Range (mg/l) (mg/l) (hours) (ft) (NTU) - ------------------------------------------------------------------------------------------------------------------------------------ Performance goal 200 - ------------------------------------------------------------------------------------------------------------------------------------ Location - ------------------------------------------------------------------------------------------------------------------------------------ 1000* up (reference) - ------------------------------------------------------------------------------------------------------------------------------------ 300* down 0.50 - ------------------------------------------------------------------------------------------------------------------------------------ 300* down 1.00 - ------------------------------------------------------------------------------------------------------------------------------------ 1000* up (reference) composite - ------------------------------------------------------------------------------------------------------------------------------------ 300* down 4-6 composite - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Lapsed Total Mercury Cadmium Lead Copper Arsenic Nickel Zinc Chromium Time PCBs (ug/l) (ug/l) (ug/l) (ug/l) (ug/l)* (ug/l)* (ug/l)* (ug/l)* (hours) (ug/l) - ------------------------------------------------------------------------------------------------------------------------------------ Acute Criterion 1.8 4.2 210 2.4 69 74 90 1100 - ------------------------------------------------------------------------------------------------------------------------------------ Chronic Citeria 0.025 9.2 8.1 2.4 36 8.2 81 50 - ------------------------------------------------------------------------------------------------------------------------------------ Location - ------------------------------------------------------------------------------------------------------------------------------------ 1000* up (reference) - ------------------------------------------------------------------------------------------------------------------------------------ 300* down 0.50 - ------------------------------------------------------------------------------------------------------------------------------------ 300* down 1.00 - ------------------------------------------------------------------------------------------------------------------------------------ 1000* up (reference) composite - ------------------------------------------------------------------------------------------------------------------------------------ 300* down 4-6 composite - ------------------------------------------------------------------------------------------------------------------------------------
* For barges containing more than 50% of Prolerized, Distrigas, and/or Mystic Terminal Berths 2, 49, 50 material. [MAP APPEARS HERE] Figure 3.5 Maximum mixing zone (greater than 42 mg/L) for TSS based on a typical multiple instantaneous release scenario (DS3000 [~6000yd/3/day]) at the Inner Confluence disposal site BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS SECTION 01300 SUBMITTAL PROCEDURES PART 1 GENERAL 1.1 SUBMITTAL IDENTIFICATION 1.2 SUBMITTAL CLASSIFICATION 1.2.1 Government Approved 1.2.2 Information Only 1.3 APPROVED SUBMITTALS 1.4 DISAPPROVED SUBMITTALS 1.5 WITHHOLDING OF PAYMENT PART 2 PRODUCTS (Not Applicable) PART 3 EXECUTION 3.1 GENERAL 3.2 SUBMITTAL REGISTER (ENG FORM 4288) 3.3 SCHEDULING 3.4 TRANSMITTAL FORM (ENG FORM 4025) 3.5 SUBMITTAL PROCEDURE 3.5.1 Procedures 3.5.1.1 Construction/Operations Division ("C" Reviewer) 3.5.1.2 Engineering/Planning Division ("E" Reviewer) 3.5.1.3 Safety Office ("S" Reviewer) 3.5.1.4 Information on Submittal Status 3.5.2 Transmittal Procedure (ENG FORM 4025) 3.6 DEVIATIONS 3.6.1 Substitutions 3.6.1.1 Basis of Contract 3.6.1.2 Consideration of Substitutions 3.6.1.3 Representation 3.6.1.4 Implied Substitutions 3.6.1.5 Approval 3.6.1.6 Notification of Acceptance or Rejection 3.7 CONTROL OF SUBMITTALS 3.7 Deviations 3.8 CONTROL OF SUBMITTALS 3.9 GOVERNMENT APPROVED SUBMITTALS 3.10 INFORMATION ONLY SUBMITTALS 3.11 STAMPS - -- End of Section Table of Contents -- SECTION TABLE OF CONTENTS 01300 PAGE 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION 01300 SUBMITTAL PROCEDURES PART 1 GENERAL 1.1 SUBMITTAL IDENTIFICATION Submittals required are identified by SD numbers as follows: SD-01 Data SD-04 Drawings SD-06 Instructions SD-07 Schedules SD-08 Statements SD-09 Reports SD-13 Certificates SD-14 Samples SD-18 Records SD-19 Operation and Maintenance Manuals 1.2 SUBMITTAL CLASSIFICATION Submittals are identified with submittal description (SD) numbers and are classified as follows: 1.2.1 Government Approved Governmental approval is required for extensions of design, critical materials, deviations, equipment whose compatibility with the entire system must be checked, and other items as designated by the Contracting Officer. Within the terms of the Contract Clause entitled "Specifications and Drawings for Construction," they are considered to be "shop drawings." 1.2.2 Information Only All submittals not requiring Government approval will be for information only. They are not considered to be "shop drawings" within the terms of the Contract Clause referred to above. 1.3 APPROVED SUBMITTALS The Contracting Officer's approval of submittals shall not be construed as a complete check, but will indicate only that the general method of construction, materials, detailing and other information are satisfactory. Approval will not relieve the Contractor of the responsibility for any error which may exist, as the Contractor under the CQC requirements of this contract is responsible for dimensions, the design of adequate connections and details, and the satisfactory construction of all work. After submittals have been approved by the Contracting Officer, no resubmittal for the purpose of substituting materials or equipment will be considered unless accompanied by an explanation of why a substitution is necessary. 1.4 DISAPPROVED SUBMITTALS SECTION 01300 Page 1 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT The Contractor shall make all corrections required by the Contracting Officer and promptly furnish a corrected submittal in the form and number of copies specified for the initial submittal. If the Contractor considers any correction indicated on the submittals to constitute a change to the contract, a notice in accordance with the Contract Clause "Changes" shall be given promptly to the Contracting Officer. 1.5 WITHHOLDING OF PAYMENT Payment for materials incorporated in the work will not be made if required approvals have not been obtained. PART 2 PRODUCTS (Not Applicable) PART 3 EXECUTION 3.1 GENERAL The Contractor shall make submittals as required by the specifications. The Contracting Officer may request submittals in addition to those specified when deemed necessary to adequately describe the work covered in the respective sections. Units of weights and measures used on all submittals shall be the same as those used in the contract drawings. Each submittal shall be complete and in sufficient detail to allow ready determination of compliance with contract requirements. Prior to submittal, all items shall be checked and approved by the Contractor's Quality Control (CQC) representative and each item shall be stamped, signed, and dated by the CQC representative indicating action taken. Proposed deviations from the contract requirements shall be clearly identified. Submittals shall include items such as: Contractor's, manufacturer's, or fabricator's drawings; descriptive literature including (but not limited to) catalog cuts, diagrams, operating charts or curves; test reports; test cylinders; samples; O&M manuals (including parts list); certifications; warranties; and other such required submittals. Submittals requiring Government approval shall be scheduled and made prior to the acquisition of the material of equipment covered thereby. Samples remaining upon completion of the work shall be picked up and disposed of in accordance with manufacturer's Material Safety Data Sheets (MSDS) and in compliance with existing laws and regulations. 3.2 SUBMITTAL REGISTER (ENG FORM 4288) At the end of this section is one set of ENG Form 4288 listing items of equipment and materials for which submittals are required by the specifications; this list may not be all inclusive and additional submittals may be required. The Contractor will also be given the submittal register as a diskette containing the computerized ENG Form 4288 and instructions on the use of the diskette. Columns "d" through "q" have been completed by the Government; the Contractor shall complete columns "a" and "r" through "t" and submit the forms (hard copy plus associated electronic file) to the Contracting Officer for approval within 15 calendar days after Notice to Proceed. The Contractor shall keep this diskette up-to-date and shall submit it to the Government together with the monthly payment request. The approved submittal register will become the scheduling document and will be used to control submittals throughout the life of the contract. The submittal register and the progress schedules shall be coordinated. 3.3 SCHEDULING Submittals covering component items forming a system or items that are interrelated shall be scheduled to be coordinated and submitted concurrently. Certifications to be submitted with the pertinent drawings shall be so scheduled. Adequate time (a minimum of 21 calendar days SECTION 01300 PAGE 2 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT exclusive of mailing time) shall be allowed and shown on the register for review and approval. No delay damages or time extensions will be allowed for time lost in late submittals. 3.4 TRANSMITTAL FORM (ENG FROM 4025) The sample transmittal form (ENG Form 4025) attached to this section shall be used for submitting both Government approved and information only submittals in accordance with the instructions on the reverse side of the form. These forms will be furnished to the Contractor. This form shall be properly completed by filling out all the heading blank spaces and identifying each item submitted. Special care shall be exercised to ensure proper listing of the specification paragraph and/or sheet number of the contract drawings pertinent to the data submitted for each item. 3.5 SUBMITTAL PROCEDURE Submittals shall be made as follows: 3.5.1 Procedures Submit six (6) copies of each submittal item with an attached ENG FORM 4025 Transmittal Form. 3.5.1.1 Construction/Operations Division ("C" Reviewer) A "C" in column "r" indicates that the submittal review action is by New England District (NAE) Construction/Operations Division. Send all such submittals to the project Resident or Area Engineer, as applicable. 3.5.1.2 Engineering/Planning Division ("E" Reviewer) An "E" on the attached submittal register, column "r" indicates that the submittal review action is by the New England District (NAE) Engineering/Planning Division. Send all such submittals to the U.S. Army Corps of Engineers, New England District 696 Virginia Road, Concord, Massachusetts 01742-2751. 3.5.1.3 Safety Office ("S" Reviewer) An "S" on the attached submittal register, column "r" indicates that the submittal review action is by the New England District (NAE) Safety Officer. Send all such submittals to the U.S. Army Corps of Engineers, New England District 696 Virginia Road, Concord, Massachusetts 01742-2751. 3.5.1.4 Information on Submittal Status All Contractor requests for current status of submittal reviews shall be made through the Resident Engineer. 3.5.2 Transmittal Procedure (ENG FORM 4025) Each copy of a submittal item shall have an attached transmittal ENG FORM 4025. In addition to the above, and commensurate with the submittal review process, as indicated below, separate information copies of ENG FORM 4025, only, (i.e., without enclosures) shall be forwarded by the Contractor directly to each of the following, as applicable: (a) Submittals reviewed by Resident Engineer ("C" reviewer): One copy each to the Area Engineer, and the Construction/Operations Division, NAE. (b) Submittals reviewed by Area Engineer ("C" reviewer): One copy each to the Resident Engineer, and the Construction/Operations Division, NAE. SECTION 01300 Page 3 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT (c) Submittals reviewed by Engineering/Planning ("E reviewer") Division, NAB: One copy each to the Area Engineer, the Resident Engineer, and the Construction/Operations Division, NAE. (d) Submittals reviewed by Safety Office ("S reviewer"), NAE: One copy each to the Area Engineer, the Resident Engineer and the Construction Division, NAE. (e) Additional information copies for a submittal may be directed; these shall be to addresses indicated in specification section and concurrent with the submittal. Send Resident Engineer one copy of transmittal letters to the addressee. 3.6 DEVIATIONS For submittals which include proposed deviations requested by the Contractor, the column "variation" of ENG FORM 4025 shall be checked. The Contractor shall set forth in writing the reason for any deviations and annotate such deviations on the submittals. The Government reserves the right to rescind inadvertent approval of submittals containing unnoted deviations. 3.6.1 Substitutions 3.6.1.1 Basis of Contract The contract is based on the materials, equipment, and methods described in the contract documents. 3.6.1.2 Consideration of Substitutions The Contracting Officer will consider proposals for substitutions of materials, equipment, and methods only when such proposals are accompanied by full and complete technical data and all other information required by the Contracting Officer to evaluate the proposed substitution. Document each request with complete data substantiating compliance of proposed substitution with contract documents. 3.6.1.3 Representation Requests constitute a representation that the Contractor: a. Has investigated proposed product and determined that it meets or exceeds, in all respects, specified product. b. Will provide the same warranty for substitution as for specified product. c. Will coordinate installation and make other changes which may be required for work to be completed in all respects. d. Waives claims for additional costs which may subsequently become apparent due to substitution. 3.6.1.4 Implied Substitutions Substitutions will not be considered when they are indicated or implied on shop drawings or product data submittals without separate written request, or when acceptance will require substantial revision of contract documents. 3.6.1.5 Approval Do not substitute materials, equipment, or methods unless such substitution has been specifically approved in writing for this work by the Contracting Officer. SECTION 01300 Page 4 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 3.6.1.6 Notification of Acceptance or Rejection The Contracting Officer will determine acceptability of proposed substitutions, and will notify Contractor of acceptance or rejection in writing. 3.7 CONTROL OF SUBMITTALS The Contractor shall carefully control his procurement operations to ensure that each individual submittal is made on or before the Contractor scheduled submittal date shown on the approved "Submittal Register." 3.7 Deviations For submittals which include proposed deviations requested by the Contractor, the column "variation" of ENG Form 4025 shall be checked. The Contractor shall set forth in writing the reason for any deviations and annotate such deviations on the submittal. The Government reserves the right to rescind inadvertent approval of submittals containing unnoted deviations. 3.8 CONTROL OF SUBMITTALS The Contractor shall carefully control his procurement operations to ensure the each individual submittal is made on or before the Contractor scheduled submittal date shown on the "Submittal Register." 3.9 GOVERNMENT APPROVED SUBMITTALS Upon completion of review of submittals requiring Government approval, the submittals will be identified as having received approval by being so stamped and dated. Four copies of the submittal will be retained by the Contracting Officer and two copies of the submittal will be returned to the Contractor. 3.10 INFORMATION ONLY SUBMITTALS Normally submittals for information only will not be returned. Approval of the Contracting Officer is not required on information only submittals. The Government reserves the right to require the Contractor to resubmit any item found not to comply with the contract. This does not relieve the Contractor from the obligation to furnish material conforming to the plans and specifications; will not prevent the Contracting Officer from requiring removal and replacement of nonconforming material incorporated in the work; and does not relieve the Contractor of the requirement to furnish samples for testing by the Government laboratory or for check testing by the Government in those instances where the technical specifications so prescribe. 3.11 STAMPS Stamps used by the Contractor on the submittal data to certify that the submittal meets contract requirements shall be similar to the following: SECTION 01300 Page 5 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT ________________________________________________________________________________ CONTRACTOR (Firm Name) ____ Approved ____ Approved with corrections as noted on submittal data and/or attached sheets (s). SIGNATURE:____________________________________________________________ TITLE:________________________________________________________________ DATE:_________________________________________________________________ ________________________________________________________________________________ -- END OF SECTION -- SECTION 01300 Page 6 SUBMITTAL REGISTER
- ------------------------------------------------------------------------------------------------------------------------------------ SUBMITTAL REGISTER (ER415 1-10) - ------------------- ------------------------------------------------------------------------------------------------- TITLE AND LOCATION CONTRACTOR BOSTON HARBOR NAVIGTION IMPROVMENT AND BERTH DREDGING PROJECT - ------------------------------------------------------------------------------------------------------------------------------------ TYPE OF SUBMITTAL CLASSI- FICATION I C A N E O I C S S R & N G T T S T T M F O I D R C A I O V A R V TRANS- I SPECIFICATION R U H T R F S R M R E P E I MITTAL T PARAGRAPH DESCRITION OF A C E E E I A E A M R P V T NO. E NUMBER ITEM SUBMITTED W T D M P C M C N A N R I Y M D I I U E O A P O U T O M O E A N O L N R T L R A I N E V W N N T G N E T T E E D L O L N E E O O A S S S S S S S S S N Y T D R a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. - ----------------------------------------------------------------------------------------------------------------------------------- 1.4.2.2 Progress Schedule X X C - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- CONTRACT NO. DACW 33-98-C-00 - ----------------------------------------------------------------------------------------------------------------------------------- CONTRACTOR SPECIFICATION ACTION 01010 - ----------------------------------------------------------------------------------------------------------------------------------- CONTRACTOR CONTRACTOR GOVERNMENT SCHEDULE DATES ACTION ACTION - --------------------------------------------------------------------------------------------------------------- SUBMIT APPROVAL MATERIAL TO NEEDED NEEDED GOVERN- SUBMIT BY BY DATE MENT DATE REMARKS C C O O D D E E s. t. u. v. w. x. y. z aa. - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ HG FORM 4288, JUL 98 SPECSINTACT PAGE 1 OF 8 PAGES
- ------------------------------------------------------------------------------------------------------------------------------------ SUBMITTAL REGISTER (ER415 1-10) - ------------------------------------------------------------------------------------------------------------------------------------ TITLE AND LOCATION BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT CONTRACTOR - ------------------------------------------------------------------------------------------------------------------------------------ TYPE OF SUBMITTAL CLASSI- FICATION ------------------------------------- I C A N E O I C S S R & N G T T S T T M F O I R C A I O V A R V TRANS- I SPECIFICATION D U H T R F S R M R E P E I MITTAL T PARAGRAPH DESCRIPTION OF R C E E E I A E A M R P V T NO. E NUMBER ITEM SUBMITTED A T D M P C M C N A N R I Y M D W I U E O A P O U T O M O E A I O L N R T L R A I N E V W N N T N N E T T E E D L O L N E E O O A G S S S S S S S S N Y T D R a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. - ------------------------------------------------------------------------------------------------------------------------------ 1.1 Weight Certificates X X C - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------
CONTRACT NO. DACW33-98-C-00 - ------------------------------------------------------------------------------------------------------------------------------ CONTRACTOR SPECIFICATION SECTION 01025 - ------------------------------------------------------------------------------------------------------------------------------ CONTRACTOR CONTRACTOR GOVERNMENT SCHEDULE DATES ACTION ACTION - ------------------------------------------------------------------------------------------------------- SUBMIT APPROVAL MATERIAL TO NEEDED NEEDED GOVERN- SUBMIT BY BY C DATE MENT C DATE REMARKS O O D D E E s. t. u. v. w. x. y. z. aa. - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ NG FORM 4288, JUL 98 SPECSINTACT PAGE 2 OF 8 PAGES
SUBMITTAL REGISTER
- ----------------------------------------------------------------------------------------------------------------------------------- SUBMITTAL REGISTER (ER 415 1-10) - ----------------------------------------------------------------------------------------------------------------------------------- TITLE AND LOCATION BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT - ------------------------------------------------------------------------------------------------------------------------------------ TYPE OF SUBMITTAL CLASSI- FICATION ------------------------------------------------------ I C A N E O I C S S R & N G T T S T T M F O I D R C A I O V A R V TRANS- I SPECIFICATION R U H T R F S R M R E P E I MITTAL T PARAGRAPH DESCRIPTION OF A C E E E I A E A M R P V T NO. E NUMBER ITEM SUBMITTED W T D M P C M C N A N R I Y M D I I U E O A P O U T O M O E A N O L N R T L R A I N E V W N N T G N E T T E E D L O L N E E O O A S S S S S S S S S N Y T D R a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. - ----------------------------------------------------------------------------------------------------------------------------------- 1.2 Field Data X X C - ----------------------------------------------------------------------------------------------------------------------------------- 1.2 Survey Data X X C - ----------------------------------------------------------------------------------------------------------------------------------- 1.2 Survey Personnel X X C - ----------------------------------------------------------------------------------------------------------------------------------- 1.2 Charts X X C - ----------------------------------------------------------------------------------------------------------------------------------- 1.4.2 Survey Plans X X C - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------ CONTRACT NO. DACW33-98-C-00 - ------------------------------------------------------------------------------------------------------------ CONTRACTOR SPECIFICATION SECTION 01050 - ------------------------------------------------------------------------------------------------------------ CONTRACTOR CONTRACTOR GOVERNMENT SCHEDULE DATES ACTION ACTION - ------------------------------------------------------------------------------------------------------------ SUBMIT APPROVAL MATERIAL TO NEEDED NEEDED GOVERN- SUBMIT BY BY DATE MENT DATE REMARKS C C O O D D E E S. T. U. V. W. X. Y. Z. aa. - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ PAGE 3 OF 8 PAGES
- ------------------------------------------------------------------------------------------------------------------------------------ SUBMITTAL REGISTER (ER415 1-10) - ---------------------------------------------------------------------------------------------------------------- TITLE AND LOCATION BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT - ---------------------------------------------------------------------------------------------------------------- TYPE OF SUBMITTAL CLASSI- FICATION ------------------------------------- I C A N E O I C S S R & N G T T S T T M F O I D R C A I O V A R V TRANS- I SPECIFICATION R U H T R F S R M R E P E I MITTAL T PARAGRAPH DESCRIPTION OF A C E E E I A E A M R P V T NO. E NUMBER ITEM SUBMITTED W T D M P C M C N A N R I Y M D I I U E O A P O U T O M O E A N O L N R T L R A I N E V W N N T G N E T T E E D L O L N E E O O A S S S S S S S S S N Y T D R a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. - ------------------------------------------------------------------------------------------------------------------------------ 1.3 Fish Startle Equipment and Sonar X X E - ------------------------------------------------------------------------------------------------------------------------------ 1.3 Fisheries Observer X X E - ------------------------------------------------------------------------------------------------------------------------------ 1.3 Marine Mammal Observer X X E - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------
CONTRACT NO. DACW33-98-C-00 - ------------------------------------------------------------------------------------------------------------------------------ CONTRACTOR SPECIFICATION SECTION 01130 - ------------------------------------------------------------------------------------------------------------------------------ CONTRACTOR CONTRACTOR GOVERNMENT SCHEDULE DATES ACTION ACTION - ------------------------------------------------------------------------------------------------------- SUBMIT APPROVAL MATERIAL TO NEEDED NEEDED GOVERN- SUBMIT BY BY C DATE MENT C DATE REMARKS O O D D E E s. t. u. v. w. x. y. z. aa. - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ ENG FORM 4288, JUL 98 SPECSINTACT PAGE 4 OF 8 PAGES
- ------------------------------------------------------------------------------------------------------------------------------------ SUBMITTAL REGISTER (ER415 1-10) - ------------------- -------------------------------------------- ------------------ TITLE AND LOCATION CONTRACTOR BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT - ------------------------------------------------------------------------------------------- TYPE OF SUBMITTAL CLASSI- FICATION ------------------------------------- I C A N E O I C S S R & N G T T S T T M F O I D R C A I O V A R V TRANS- I SPECIFICATION R U H T R F S R M R E P E I MITTAL T PARAGRAPH DESCRIPTION OF A C E E E I A E A M R P V T NO. E NUMBER ITEM SUBMITTED W T D M P C M C N A N R I Y M D I I U E O A P O U T O M O E A N O L N R T L R A I N E V W N N T G N E T T E E D L O L N E E O O A S S S S S S S S S N Y T D R a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. - ------------------------------------------------------------------------------------------------------------------------------ 1.2 Water Quality Monitoring X X E - ------------------------------------------------------------------------------------------------------------------------------ Requirements Plan - ------------------------------------------------------------------------------------------------------------------------------ 1.8 Laboratory Certification X X E - ------------------------------------------------------------------------------------------------------------------------------ 1.7.2 Monitoring Data and Reports X X E - ------------------------------------------------------------------------------------------------------------------------------ 1.9 Contingency Plan X X C - ------------------------------------------------------------------------------------------------------------------------------ 1.2 Environmental Bucket Performance X X E - ------------------------------------------------------------------------------------------------------------------------------ Data - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------
CONTRACT NO. DACW33-98-C-00 - ------------------------------------------------------------------------------------------------------------------------------ CONTRACTOR SPECIFICATION SECTION 01135 - ------------------------------------------------------------------------------------------------------------------------------ CONTRACTOR CONTRACTOR GOVERNMENT SCHEDULE DATES ACTION ACTION - ------------------------------------------------------------------------------------------------------- SUBMIT APPROVAL MATERIAL TO NEEDED NEEDED GOVERN- SUBMIT BY BY C DATE MENT C DATE REMARKS O O D D E E s. t. u. v. w. x. y. z. aa. - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ NG FORM 4288, JUL 98 SPECSINTACT PAGE 5 OF 8 PAGES
- ----------------------------------------------------------------------------------------------------------------------------------- SUBMITTAL REGISTER (ER415 1-10) - ----------------------------------------------------------------------------------------------------------------------------------- TITLE AND LOCATION BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT - ------------------------------------------------------------------------------------------------------------------------------------ TYPE OF SUBMITTAL CLASSI- FICATION ------------------------------------------------------ I C A N E O I C S S R & N G T T S T T M F O I D R C A I O V A R V TRANS- I SPECIFICATION R U H T R F S R M R E P E I MITTAL T PARAGRAPH DESCRIPTION OF A C E E E I A E A M R P V T NO. E NUMBER ITEM SUBMITTED W T D M P C M C N A N R I Y M D I I U E O A P O U T O M O E A N O L N R T L R A I N E V W N N T G N E T T E E D L O L N E E O O A S S S S S S S S S N Y T D R a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 1.1 Plant and Equipment X X E - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------ CONTRACT NO. DACW33-98-C-00 - ------------------------------------------------------------------------------------------------------------ CONTRACTOR SPECIFICATION SECTION 01600 - ------------------------------------------------------------------------------------------------------------ CONTRACTOR CONTRACTOR GOVERNMENT SCHEDULE DATES ACTION ACTION - ------------------------------------------------------------------------------------------------------------ SUBMIT APPROVAL MATERIAL TO NEEDED NEEDED GOVERN- SUBMIT BY BY DATE MENT DATE REMARKS C C O O D D E E s. t. u. v. w. x. y. z. aa. - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ PAGE 7 8 PAGES
- ----------------------------------------------------------------------------------------------------------------------------------- SUBMITTAL REGISTER (ER415 1-10) - ----------------------------------------------------------------------------------------------------------------------------------- TITLE AND LOCATION BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT - ------------------------------------------------------------------------------------------------------------------------------------ TYPE OF SUBMITTAL CLASSI- FICATION ------------------------------------------------------ I C A N E O I C S S R & N G T T S T T M F O I D R C A I O V A R V TRANS- I SPECIFICATION R U H T R F S R M R E P E I MITTAL T PARAGRAPH DESCRIPTION A C E E E I A E A M R P V T NO. E NUMBER ITEM SUBMITTED W T D M P C M C N A N R I Y M D I I U E O A P O U T O M O E A N O L N R T L R A I N E V W N N T G N E T T E E D L O L N E E O O A S S S S S S S S S N Y T D R a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. - ----------------------------------------------------------------------------------------------------------------------------------- 1.6 Inspection of Disposal X X C - ----------------------------------------------------------------------------------------------------------------------------------- 1.3 Scow Cards X X C - ----------------------------------------------------------------------------------------------------------------------------------- 1.3 Disposal Positioning Plan X X C - ----------------------------------------------------------------------------------------------------------------------------------- 1.3 Work Plan X X E - ----------------------------------------------------------------------------------------------------------------------------------- 1.3 Cell Cappimg Plan X X E - ----------------------------------------------------------------------------------------------------------------------------------- 1.3 Cell Cap Thickness and Coverage X X E - ----------------------------------------------------------------------------------------------------------------------------------- Determination Data - ----------------------------------------------------------------------------------------------------------------------------------- 1.3 MWRA Water Tunnel Removal Plan X X E - ----------------------------------------------------------------------------------------------------------------------------------- 1.3 Abandoned Cable - Boston Edison X X E - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------ CONTRACT NO. DACW33-98-C-00 - ------------------------------------------------------------------------------------------------------------ CONTRACTOR SPECIFICATION SECTION 02482 - ------------------------------------------------------------------------------------------------------------ CONTRACTOR CONTRACTOR GOVERNMENT SCHEDULE DATES ACTION ACTION - ------------------------------------------------------------------------------------------------------------ SUBMIT APPROVAL MATERIAL TO NEEDED NEEDED GOVERN- SUBMIT BY BY DATE MENT DATE REMARKS C C O O D D E E s. t. u. v. w. x. y. z. aa. - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ NG FORM 4288, JUL 98 SPECSINTACT PAGE 7 OF PAGES
- ------------------------------------------------------------------------------------------------------------------------------------ SUBMITTAL REGISTER (ER415 1-10) - ---------------------------------------------------------------------------------------------------------------- TITLE AND LOCATION BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT - ---------------------------------------------------------------------------------------------------------------- TYPE OF SUBMITTAL CLASSI- FICATION ------------------------------------- I C A N E O I C S S R & N G T T S T T M F O I R C A I O V A R V TRANS- I SPECIFICATION D U H T R F S R M R E P E I MITTAL T PARAGRAPH DESCRIPTION OF R C E E E I A E A M R P V T NO. E NUMBER ITEM SUBMITTED A T D M P C M C N A N R I Y M D W I U E O A P O U T O M O E A I O L N R T L R A I N E V W N N T N N E T T E E D L O L N E E O O A G S S S S S S S S N Y T D R a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. - ------------------------------------------------------------------------------------------------------------------------------ 1.6.2 Blasting Safety Plan X X E - ------------------------------------------------------------------------------------------------------------------------------ 1.6.3 Licenses X X C - ------------------------------------------------------------------------------------------------------------------------------ 1.6.4 Daily Blasting Log X X C - ------------------------------------------------------------------------------------------------------------------------------ 3.1.1 Preblast Survey X X E - ------------------------------------------------------------------------------------------------------------------------------ 3.2.1 Test Blast Program X X E - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------
CONTRACT NO. DACW33-98-C-00 - ------------------------------------------------------------------------------------------------------------------------------ CONTRACTOR SPECIFICATION SECTION 02491 - ------------------------------------------------------------------------------------------------------------------------------ CONTRACTOR CONTRACTOR GOVERNMENT SCHEDULE DATES ACTION ACTION - ------------------------------------------------------------------------------------------------------- SUBMIT APPROVAL MATERIAL TO NEEDED NEEDED GOVERN- SUBMIT BY BY C DATE MENT C DATE REMARKS O O D D E E s. t. u. v. w. x. y. z. aa. - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ NG FORM 4288, JUL 98 SPECSINTACT PAGE 8 OF 8 PAGES
BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS SECTION 01440 CONTRACTOR QUALITY CONTROL PART 1 GENERAL 1.1 PAYMENT PART 2 PRODUCTS (Not Applicable) PART 3 EXECUTION 3.1 GENERAL 3.2 QUALITY CONTROL PLAN 3.2.1 General 3.2.2 Content of the CQC Plan 3.2.3 Acceptance of Plan 3.2.4 Notification of Changes 3.3 IMPLEMENTATION OF GOVERNMENT RESIDENT MANAGEMENT SYSTEM FOR CONTRACTOR QUALITY CONTROL OF CONTRACT 3.4 COORDINATION MEETING 3.5 QUALITY CONTROL ORGANIZATION 3.5.1 General 3.5.2 CQC System Manager 3.5.3 CQC Personnel 3.5.4 Additional Requirement 3.5.5 Organizational Changes 3.6 SUBMITTALS 3.7 CONTROL 3.7.1 Preparatory Phase 3.7.2 Initial Phase 3.7.3 Follow-up Phase 3.7.4 Additional Preparatory and Initial Phases 3.8 TESTS 3.8.1 Testing Procedure 3.8.2 Testing Laboratories 3.8.2.1 Capability Check 3.8.2.2 Capability Recheck 3.8.3 On-Site Laboratory 3.8.4 Furnishing or Transportation of Samples for Testing 3.9 COMPLETION INSPECTION 3.10 DOCUMENTATION 3.11 SAMPLE FORMS 3.12 NOTIFICATION OF NONCOMPLIANCE - -- End of section Table of Contents -- SECTION TABLE OF CONTENTS 01440 PAGE 1 BOSTON HARBOUR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION 01440 CONTRACTOR QUALITY CONTROL PART 1 GENERAL 1.1 PAYMENT Separate payment will not be made for providing and maintaining an effective Quality Control program, and all costs associated therewith shall be included in the applicable unit prices of lump-sum prices contained in the Bidding Schedule. PART 2 PRODUCTS (Not Applicable) PART 3 EXECUTION 3.1 GENERAL The Contractor is responsible for quality control and shall establish and maintain an effective quality control system in compliance with the Contract Clause entitled "Inspection of Construction." The quality control system shall consist of plans, procedures, and organization necessary to produce an end product which complies with the contract requirements. The system shall cover all constuction operations, both onsite and offsite, and shall be keyed to the proposed construction sequence. The project superintendent will be held responsible for the quality of work on the job and is subject to removal by the Contracting Officer for non-compliance with quality requirements specified in the contract. The project superintendent in this context shall mean the individual with the responsibility for the overall management of the project including quality and production. 3.2 QUALITY CONTROL PLAN 3.2.1 General The Contractor shall furnish for review by the Government, not later than 15 days after receipt of notice to proceed, the Contractor Quality Control (CQC) Plan proposed to implement the requirements of the Contract Clause entitled "Inspection of Construction." The plan shall indentify personnel, procedures, control, instructions, test, records, and forms to be used. The Government will consider an interim plan for the first 14 days of operation. Construction will be permitted to begin only after acceptance of the CQC Plan or acceptance of an interim plan applicable to the particular feature of work to be started. Work outside of the features of work included in an accepted interim plan will not be permitted to begin until acceptance of a CQC Plan or another interim plan containing the additional features of work to be started. 3.2.2 Content of the CQC Plan The CQC Plan shall include, as a minimum, the following to cover all construction operations, both onsite and offsite, including work by subcontractors, fabricators, suppliers, and purchasing agents: a. A description of the quality control organization, including a chart showing lines of authority and acknowledgment that the CQC staff shall implement the three phase control system for all aspects of the work specified. The staff shall include a CQC System Manager who shall report to the project superintendent. SECTION 01440 Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT b. The name, qualifications (in resume format), duties, responsibilities, and authorities of each person assigned a CQC function. c. A copy of the letter to the CQC System Manager signed by an authorized official of the firm which describes the responsibilities and delegates sufficient authorities to adequately perform the functions of the CQC System Manager, including authority to stop work which is not in compliance with the contract. The CQC Systems Manager shall issue letters of direction to all other various quality control representatives outlining duties, authorities, and responsibilities. Copies of these letters will also be furnished to the Government. d. Procedures for scheduling, reviewing, certifying, and managing submittals, including those of subcontractors, offsite fabricators, suppliers, and purchasing agents. These procedures shall be in accordance with Section 01300 SUBMITTAL PROCEDURES. e. Control, verification, and acceptance testing procedures for each specific test to include the test name, specification paragraph requiring test, feature of work to be tested, test frequency, and person responsible for each test. (Laboratory facilities will be approved by the Contracting Officer.) f. Procedures for tracking preparatory, initial, and follow-up control phases and control, verification, and acceptance tests including documentation. g. Procedures for tracking construction deficiencies from identification through acceptable corrective action. These procedures will establish verification that identified deficiencies have been corrected. h. Reporting procedures, including proposed reporting formats. See paragraph IMPLEMENTATION OF GOVERNMENT RESIDENT MANAGEMENT SYSTEM FOR CONTRACTOR QUALITY CONTROL OF CONTRACT below. i. A list of the definable features of work. A definable feature of work is a task which is separate and distinct from other tasks and has separate control requirements. It could be identified by different trades or disciplines, or it could be work by the same trade in a different environment. Although each section of the specifications may generally be considered as a definable feature of work, there are frequently more than one definable feature under a particular section. This list will be agreed upon during the coordination meeting. 3.2.3 Acceptance of Plan Acceptance of the Contractor's plan is required prior to the start of construction. Acceptance is conditional and will be predicated on satisfactory performance during the construction. The Government reserves the right to require the Contractor to make changes in his CQC Plan and operations including removal of personnel, as necessary, to obtain the quality specified. 3.2.4 Notification of Changes After acceptance of the CQC Plan, the Contractor shall notify the Contracting Officer in writing of any proposed change. Proposed changes are subject to acceptance by the Contracting Officer. 3.3 IMPLEMENTATION OF GOVERNMENT RESIDENT MANAGEMENT SYSTEM FOR CONTRACTOR QUALITY CONTROL OF CONTRACT SECTION 01440 Page 2 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT The Contractor shall utilize a Government furnished CQC Programming Module (A computerized executable file which is DOS based and operates on a minimum of 80386 IBM compatible computer and uses an HP3 Laserjet or later printer). The module includes a daily CQC Reporting System form which also must be used. This form may be in addition to other Contractor desired reporting forms. However, all other such reporting forms shall be consolidated into this one Government specified Daily CQC Report Form. The Contractor will also be required to complete Government-Furnished Module elements which include, but is not limited to, subcontractor codes, planned cumulative progress earnings, subcontractor information showing trade, name, address, point-of-contact, and insurance expiration dates, definable features of work, pay activity and activity information, required Quality Control tests tied to individual activities, planned User Schooling tied to specific specification paragraphs and contractor activities, Installed Property Listing, Transfer Property Listing and Submittal information relating to specification section, description, activity number, review period and expected procurement period. The sum of all activity values shall equal the contract amount, and all Bid Items, Options and Additives shall be separately identified, in accordance with the "Bidding Schedule". Bid Items may include multiple Activities, but Activities may only be assigned to one such Bid Item. This Module shall be completed to the satisfaction of the Contracting Officer prior to any contract payment (except of Bonds, Insurance and/or Mobilization, as approved by the Contracting Officer) and shall be updated as require. (1) During the course of the contract, the Contractor will receive various Quality Assurance comments from the Government that will reflect corrections needed to Contractor activities or reflect outstanding or future items needing the attention of the Contractor. The Contractor will acknowledge receipt of these comments by specific number reference on his Daily CQC Report, and will also reflect on his Daily CQC Report when these items are specifically completed or corrected to permit Government verification. (2) The Contractor's schedule system shall include, as specific and separate activities, all Preparatory Phase Meeting (inspection), all O&M Manuals and all Test Plans of Electrical and Mechanical Equipment or Systems that require validation testing or instructions to Government representatives. 3.4 COORDINATION MEETING After the Preconstruction Conference, before start of construction, and prior to acceptance by the Government of the CQC Plan, the Contractor shall meet with the Contracting Officer or Authorized Representative and discuss the Contractor's quality control system. The CQC Plan shall be submitted for review a minimum of 15 calendar days prior to the Coordination Meeting. During the meeting, a mutual understanding of the system details shall be developed, including the forms for recording the CQC operations, control activities, testing, administration of the system for both onsite and offsite work, and the interrelationship of Contractor's Management and control with the Government's Quality Assurance. Minutes of the meeting shall be prepared by the Government and signed by both the Contractor and the Contracting Officer. The minutes shall become a part of the contract file. There may be occasions when subsequent conferences will be called by either party to reconfirm mutual understandings and/or address deficiencies in the CQC system or procedures which may require corrective action by the Contractor. 3.5 QUALITY CONTROL ORGANIZATION 3.5.1 General SECTION 01440 Page 3 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT The requirements for the CQC organization are a CQC System Manager and sufficient number of additional qualified personnel to ensure contract compliance. The Contractor shall provide a CQC organization which shall be at the site at all times during progress of the work and with the complete authority to take any action necessary to ensure compliance with the contract. All CQC staff members shall be subject to acceptance by the Contracting Officer. 3.5.2 CQC System Manager The Contractor shall identify as CQC System Manager an individual within his organization at the site of the work who shall be responsible for overall management of CQC and have the authority to act in all CQC matters for the Contractor. The CQC System Manager shall have a minimum of five years construction experience on construction similar to this contract. This CQC System Manager shall be on the site at all times during construction and will be employed by the prime Contractor. The CQC System Manager shall be assigned as System Manager but may have duties as project superintendent in addition to quality control. An alternate for CQC System Manager will be identified in the plan to serve in the event of the System Manager's absence. The requirements for the alternate will be the same as for the designated CQC System Manager. 3.5.3 CQC Personnel 3.5.4. Additional Requirement In addition to the above experience and education requirements the CQC System Manager shall have completed the course entitled "Construction Quality Management For Contractors." This course is periodically offered at the Corps of Engineers New England District Office. Call Ms. Joan Garder at (978) 318- 8286 for information on the course. 3.5.5 Organizational Changes The Contractor shall maintain his CQC at full strength at all times. When it is necessary to make changes to the CQC staff the Contractor shall revise the CQC Plan to reflect the changes and submit the changes to the Contracting Officer for acceptance. 3.6 SUBMITTALS Submittals shall be made as specified in Section 01300 SUBMITTAL PROCEDURES. The CQC organization shall be responsible for certifying that all submittals are in compliance with the contract requirements. 3.7 CONTROL Contractor Quality Control is the means by which the Contractor ensures that the construction, to include that of subcontractors and suppliers, complies with the requirements of the contract. At least three phases of control shall be conducted by the CQC System Manager for each definable feature of work as follows: 3.7.1 Preparatory Phase This phase shall be performed prior to beginning work on each definable feature of work, after all required plans/documents/materials are approved/accepted, and after copies are at the work site. This phase shall include: a. A review of each paragraph of applicable specifications. b. A review of the contract drawings. SECTION 01440 Page 4 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT c. A check to assure that all materials and/or equipment have been tested, submitted, and approved. d. Review of provisions that have been made to provide required control inspection and testing. e. Examination of the work area to assure that all required preliminary work has been completed and is in compliance with the contract and verification of the dredging limits with the Contracting Officer and the berth owners. f. A physical examination of required materials and equipment to assure that they are on hand, conform to approved shop drawings or submitted data, and are properly stored. g. A review of the appropriate activity hazard analysis to assure safety requirements are met. h. Discussion of procedures for controlling quality of the work including repetitive deficiencies. Document construction tolerances and workmanship standards for that feature of work. i. A check to ensure that the portion of the plan for the work to be performed has been accepted by the Contracting Officer. j. Discussion of the initial control phase. k. The Government shall be notified at least 24 hours in advance of beginning the preparatory control phase. This phase shall include a meeting conducted by the CQC System Manager and attened by the superintendent, other CQC personnel (as applicable), and the foreman responsible for the definable feature. The results of the preparatory phase actions shall be documented by separate minutes prepared by the CQC System Manager and attached to the daily CQC report. The Contractor shall instruct applicable workers as to the acceptable level of workmanship required in order to meet contract specifications. 1. That all required permits have been obtained and plans for implementation are in place and reviewed. 3.7.2 Initial Phase This phase shall be accomplished at the beginning of a definable feature of work. The following shall be accomplished. a. A check of work to ensure that it is in full compliance with contract requirements. Review minutes of the preparatory meeting. b. Verify adequacy of controls to ensure full contract compliance. Verify required control inspection and testing. c. Establish level of workmanship and verify that it meets minimum acceptable workmanship standards. Compare with required sample panels as appropriate. d. Resolve all differences. e. Check safety to include compliance with and upgrading of the safety plan and activity hazard analysis. Review the activity analysis with each worker. f. The Government shall be notified at least 24 hours in advance of beginning the initial phase. Separate minutes of this phase shall be prepared by the CQC System Manager and attached to the daily SECTION 01440 Page 5 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT CQC report. Exact location of initial phase shall be indicated for future reference and comparision with follow-up phases. g. The initial phase should be repeated for each new crew to work onsite, or any time acceptable specified quality standards are not being met. 3.7.3 Follow-up Phase Daily checks shall be performed to assure control activities, including control testing, are providing continued compliance with contract requirements, until completion of the particular feature of work. The checks shall be made a matter of record in the CQC documentation. Final follow-up checks shall be conducted and all deficiencies corrected prior to the start of additional features of work which may be affected by the deficient work. The Contractor shall not build upon or conceal non-conforming work. 3.7.4 Additional Preparatory and Initial Phases Additional preparatory and initial phases shall be conducted on the same definable features of work if the quality of on-going work is unacceptable, if there are changes in the applicable CQC staff, onsite production supervision or work crew, if work on a definable feature is resumed after a substantial period of inactivity, or if other problems develop. 3.8 TESTS 3.8.1 Testing Procedure The Contractor shall perform specified or required tests to verify that control measures are adequate to provide a product which conforms to contract requirements. Upon request, the Contractor shall furnish to the Government duplicate samples of test specimens for possible testing by the Government. Testing includes operation and/or acceptance tests when specified. The Contractor shall procure the services of a Corps of Engineers approved testing laboratory or establish an approved testing laboratory at the project site. The Contractor shall perform the following activities and record and provide the following data: a. Verify that testing procedures comply with contract requirements. b. Verify that facilities and testing equipment are available and comply with testing standards. c. Check test instrument calibration data against certified standards. d. Verify that recording forms and test identification control number system, including all of the test documentation requirements, have been prepared. e. Results of all tests taken, both passing and failing tests, will be recorded on the CQC report for the date taken. Specification paragraph reference, location where tests were taken, and the sequential control number identifying the test will be given. If approved by the Contracting Officer, actual test reports may be submitted later with a reference to the test number and date taken. An information copy of tests performed by an offsite or commercial test facility will be provided directly to the Contracting Officer. Failure to submit timely test reports as stated may result in nonpayment for related work performed and disapproval of the test facility for this contract. 3.8.2 Testing Laboratories SECTION 01440 Page 6 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 3.8.2.1 Capability Check The Government reserves the right to check laboratory equipment in the proposed laboratory for compliance with the standards set forth in the contract specifications and to check the laboratory technician's testing procedures and techniques. Laboratories utilized for testing soils, water, biological organisms concrete, asphalt, and steel shall meet criteria detailed in Section 01135 WATER QUALITY MONITORING AND CONTROL. 3.8.2.2 Capability Recheck If the selected laboratory fails the capability check, the Contractor will be assessed a charge of $300.00 to reimburse the Government for each succeeding recheck of the laboratory of the checking of a subsequently selected laboratory. Such costs will be deducted from the contract amount due the Contractor. 3.8.3 On-Site Laboratory The Government reserves the right to utilize the Contractor's control testing laboratory and equipment to make assurance tests and to check the Contractor's testing procedures, techniques, and test results at no additional cost to the Government. 3.8.4 Furnishing or Transportation of Samples for Testing Costs incidental to the transportation of samples or materials will be borne by the Contractor. Samples of materials for test verification and acceptance testing by the Government shall be delivered to the Corps of Engineers District 696 Virginia Road, Concord, Massachusetts 01742-2751. Coordination for each specific test, exact delivery location, and dates will be made through the Contracting Officer. 3.9 COMPLETION INSPECTION At the completion of all work or any increment thereof established by a completion time stated in the Contract, the CQC System Manager shall conduct an inspection of the work and develop a list of items which do not conform to the approved drawings and specifications. Such a list of deficiencies shall be included in the CQC documentation, as required by paragraph DOCUMENTATION below, and shall include the estimated date by which the deficiencies will be corrected. The CQC System Manager or staff shall make a second inspection to ascertain that all deficiencies have been corrected and so notify the Contracting Officer. These inspections and any deficiency corrections required by this paragraph will be accomplished within the time stated for completion of the entire work. 3.10 DOCUMENTATION The Contractor shall maintain current records providing factual evidence that required quality control activities and/or tests have been performed. These records shall include the work of subcontractors and suppliers and shall be on an acceptable form that includes as a minimum, the following information: a. Contractor/subcontractor and their area of responsibility. b. Operating plan/equipment with hours worked, idle, or down for repair. c. Work performed each day, giving location, description, and by whom. When Network Analysis (NAS) is used, identify each phase of work performed each day by NAS activity number. SECTION 01440 Page 7 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT d. Test and/or control activities performed with results and references to specifications/drawings requirements. The control phase should be identified (Preparatory, Initial, Follow-up). List deficiencies noted along with corrective action. e. Quantity of materials received at the site with statement as to acceptability, storage, and reference to specifications/drawings requirements. f. Submittals reviewed, with contract reference, by whom, and action taken. g. Off-site surveillance activities, including actions taken. h. Job safety evaluations stating what was checked, results, and instructions or corrective actions. i. Instructions given/received and conflicts in plans and/or specifications. j. Contractor's verification statement. These records shall indicate a description of trades working on the project; the number of personnel working; weather conditions encountered; and any delays encountered. These records shall cover both conforming and deficient features and shall include a statement that equipment and materials incorporated in the work and workmanship comply with the contract. The original and one copy of these records in report form shall be furnished to the Government daily within 24 hours after the date(s) covered by the report, except that reports need not be submitted for days on which no work is performed. As a minimum, one report shall be prepared and submitted for every seven days of no work and on the last day of no a work period. All calendar days shall be accounted for throughout the life of the contract. The first report following a day of no work shall be for that day only. Reports shall be signed and dated by the CQC System Manager. The report from the CQC System Manager shall include copies of test reports and copies of reports prepared by all subordinate quality control personnel. 3.11 SAMPLE FORMS Sample forms are enclosed at the end of this section. The Contractor may use his own forms, provided they are of similar detail and are approved by the Contracting Officer. The Contractor shall create his forms to be compatble with the Government furnished CQC Programming Module specified above in paragraph "IMPLEMENTATION OF GOVERNMENT RESIDENT MANAGEMENT SYSTEM FOR CONTRACTOR QUALITY CONTROL OF CONTRACT." 3.12 NOTIFICATION OF NONCOMPLIANCE The Contracting Officer will notify the Contractor of any detected noncompliance with the foregoing requirements. The Contractor shall take immediate corrective action after receipt of such notice. Such notice, when delivered to the Contractor at the worksite, shall be deemed sufficient for the purpose of notification. If the Contractor fails or refuses to comply promptly, the Contracting Officer may issue an order stopping all or part of the work until satisfactory corrective action has been taken. No part of the time lost due to such stop orders shall be made the subject of claim for extension of time or for excess costs or damages by the Contractor -- End of Section -- SECTION 01440 Page 8 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT Contractor/Sub. Name _____________________________________________________ DAILY CONSTRUCTION QUALITY CONTROL REPORT FOR WORK IN FEDERAL CHANNEL - --------------------------------------------------------------------- Date: ___________ Day: ____________ Contract No: _________________ Description and Location of Work:_________________________________________ __________________________________________________________________________ Tide: (high) (low) (high) (low) Sea Condition: ---------------------------------------------------------- Weather: Temp: Cloud condition Wind speed/direction ------------------------------------------------------------- Environmental Protection: Management Area of responsibility a. Consultant - ________________________________________________________ b. Contractor - ________________________________________________________ c. Subcontractor - _____________________________________________________ d. Surveyor - __________________________________________________________ e. Supplier - __________________________________________________________ f. Technical Support - _________________________________________________ 1. WORK PERFORMED TODAY (Indicate location and description of work performed. Refer to work performed by individuals listed by letter above.)___________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 2. Results of Surveillance (Include satisfactory work completed, or deficiencies with action to be taken.) a. Preparatory Inspection: _________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ b. Initial Inspection: ___________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ c. Follow-up Inspection: _________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 3. Tests Required by Specifications, Performed and the Results: a. ______________________________________________________________________ b. ______________________________________________________________________ c. ______________________________________________________________________ SECTION 01440 Page 9 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 4. Verbal Instruction Received; (List any instructions given by Government personnel on construction deficiencies, retesting required, etc. and action.) __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 5. Remarks: (Cover all conflicts in plans, specifications, or instructions.) __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 6. Safety Inspection (Report violations, corrective instruction given; and corrective actions taken.) __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 7. Quantities Completed; Item # Item # Quantity: Quantity: - ----------------------------------------------------------------------------- Item # Item # Quantity: Quantity: - ----------------------------------------------------------------------------- 8. Time # LABOR HOURS EQUIPMENT ----- ----- --------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- 9. Additional Comments: __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ Contractor's Verification: The above report is complete and correct and all material and equipment used and work performed during this reporting period are in compliance with the contract plans and specifications except as noted above. ___________________________________ Contractor Quality Control Representative SECTION 01440 Page 10 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT Contractor/Sub. Name _____________________________________________________ DAILY CONSTRUCTION QUALITY CONTROL REPORT FOR WORK AT NON- FEDERAL BERTHS - ------------------------------------------------------------------------- Date: ___________ Day: ____________ Contract No: _________________ Description and Location of Work:_________________________________________ __________________________________________________________________________ Tide: (high) (low) (high) (low) Sea Condition: ---------------------------------------------------------- Weather: Temp: Cloud condition Wind speed/direction ------------------------------------------------------------- Environmental Protection: Management Area of responsibility a. Consultant - ________________________________________________________ b. Contractor - ________________________________________________________ c. Subcontractor - _____________________________________________________ d. Surveyor - __________________________________________________________ e. Supplier - __________________________________________________________ f. Technical Support - _________________________________________________ 1. WORK PERFORMED TODAY (Indicate location and description of work performed. Refer to work performed by individuals listed by letter above.)___________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 2. Results of Surveillance (Include satisfactory work completed, or deficiencies with action to be taken.) a. Preparatory Inspection: _________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ b. Initial Inspection: ___________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ c. Follow-up Inspection: _________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 3. Tests Required by Specifications, Performed, and the Results: a. ______________________________________________________________________ b. ______________________________________________________________________ c. ______________________________________________________________________ SECTION 01440 Page 11 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 4. Verbal Instruction Received; (List any instructions given by Government personnel on construction deficiencies, retesting required, etc. and action.) __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 5. Remarks: (Cover all conflicts in plans, specifications, or instructions.) __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 6. Safety Inspection (Report violations, corrective instruction given; and corrective actions taken.) __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 7. Quantities Completed; Item # Item # Quantity: Quantity: - ----------------------------------------------------------------------------- Item # Item # Quantity: Quantity: - ----------------------------------------------------------------------------- 8. Time # LABOR HOURS EQUIPMENT ----- ----- --------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- 9. Additional Comments: __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ Contractor's Verification: The above report is complete and correct and all material and equipment used and work performed during this reporting period are in compliance with the contract plans and specifications except as noted above. ___________________________________ Contractor Quality Control Representative SECTION 01440 Page 12 Daily Berth Dredging Log Date:
- ------------------------------------------------------------------------------------------------------------------------------------ Berth Est. Soft Material Disposal Cell Used Est. Hard Material Est. Debris Remarks Dredged This Date Dredged This Date Removed (Tons) (CY)1 (CY)1 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
1. Quantity, prior to post dredge survey, shall be estimated using visual observation unless survey data is available. The remarks column must indicate the method used to estimate quantities. INSPECTOR'S DAILY REPORT OF DISPOSAL BY SCOW Permittee______________________________ Disposal Area________________________ Permit/Contract No. ___________________ Date_________________________________ Project________________________________ Towboat______________________________ Dredging Contractor____________________ Owner________________________________
Trip Scow Started From Disposal Returned To Round Trip Loran C or Lat/Long Coord.* Dist./Dir. No. No. Place Time Time Place Time Time Dist. Specified Actual From Buoy - ---------------------------------------------------------------------------------------------------------------------------- ------------------------------ ------------------------------ - ---------------------------------------------------------------------------------------------------------------------------- ------------------------------ ------------------------------ - ---------------------------------------------------------------------------------------------------------------------------- Trip No. Pockets Reason Pocket Disposal Sea Conditions/ Scow Load Scow No. Loaded Dumped Not Dumped Depth Speed Weather Visibility (Cu. Yds.) Draft - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Comments: *Use Loran C values unless unavailable. - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Time on Time off Hours on Duty Reviewed By - ---------------------------------------------- Permittee's Representative/ - ---------------------------------------------- Resident Inspector - ---------------------------------------------------------------------------------------------------------------------------- Total Hours on Duty - ----------------------------------------------------------------------------------------------------------------------------
To the Division Engineer, US Army Engineer Division, New England, Waltham, MA: I certify that I informed the tug captain of the conditions of the U.S. Army corps of Engineers permit regarding the distance from the buoy and the speed of scow during the release of the dredged material. I also informed the captain that failure to comply with these conditions would constitute a violation of the permit and would be reported to the Corps. I certify that this report is correct and that I am not an employee of the dredging or towing firm, or the permittee, nor have I been employed by any of them at any time during the past 6 months. ______________________________ ____________________ (Signature of Inspector) (Certification No.) Print Name Here:_____________________________________________ SCOW LOAD CARD TRIP# DATE SCOW# MEASUREMENTS AT THE JOB MEASUREMENTS AT THE DUMP POCKET# DEPTH CU. YARDS POCKET# DEPTH CU. YARDS ------ ------ 1 1 -------------- -------------- ------ ------ 2 2 -------------- -------------- ------ ------ 3 3 -------------- -------------- ------ ------ 4 4 -------------- -------------- ------ ------ 5 5 -------------- -------------- ------ ------ 6 6 -------------- -------------- ------ ------ 7 7 -------------- -------------- TOTAL CU. YARDS _____ TOTAL CU. YARDS _____ NOTE: THE DEPTH IS THE DISTANCE BETWEEN THE TOP OF THE COMBING MEASURED DOWN TO THE MATERIAL IN THE POCKET IN TENTHS. PLEASE STAPLE THIS AND THE COMPUTER PRINTOUT TO THE INSPECTORS DUMP LOG BY THE TRIP NUMBER.
------------------------------------------------------------------- ENGINE LOG SERVICE ENGINE GENERATOR PUMP - ------------------------------------------------------------------------------------------------------------------------------------ TIME R.P.M. OIL FUEL OIL WATER DRIVE PRESS. PRESS. TEMP TEMP AMP OIL OIL WATER FUEL CYCLES VOLTS BEARING PACKING - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ --------------------- FUEL ON BOARD --------------------- SIGNATURE _______________________________________________________ HYDRAULIC FLUID --------------------- GREASING ---------------------
- ------------------------------------------------------------------------------------------------------------------------- REPORT OF OPERATIONS-PIPELINE, DIPPER OR BUCKET DREDGES REPORTS CONTROL SYMBOL ENGCW-0-13 - ------------------------------------------------------------------------------------------------------------------------- THEN: TO: FROM: REPORT NO: - ------------------------------------------------------------------------------------------------------------------------- CHARACTER [_] ????^ [_]NEW [_]??? [_]STATUS [_] COMPLETION [_]??? DATE OR PERIOD OF REPORT ????^ WORK - ------------------------------------------------------------------------------------------------------------------------- NAME AND TYPE SIZE PIPELINE DREDGE OR BUCKET ^???? DREDGE HORSEPOWER OF DREDGE PUMP SUCTION PIPE?? CUTTER OR BUCKET ^????? ---------------------------------------------------------------------------------------------------------------- NUMBER OF DREDGE ???? ???? TOTAL WORK ??? PER DAY DAYS PER WEEK CREW MEMBERS ???? SCHEDULE - ------------------------------------------------------------------------------------------------------------------------ NAME AUTO WIDTH DEPTH OVERDEPTH PROJECT DIMENSIONS ---------------------------------------------------------------------------------------------------------------- AND BAR LOCATION (include ???? ????) - ------------------------------------------------------------------------------------------------------------------------ ABSOLUTE DENSITY IN PLACE DENSITY ^???? ???? CHARACTER ???? ??? ^?????? -------------------------------------------------------------------------------------------------------------- OF ???? SIZE GEOLOGICAL CLASSIFICATION MATERIAL 13- MM ?? MM 13.. MM - ------------------------------------------------------------------------------------------------------------------------ CONTRACT NUMBER [_]CONTRACTOR [_]??? LABOR TOTAL NO.OF OR DREDGING DAYS ON ??? ORDER WORK WAS DONE - ------------------------------------------------------------------------------------------------------------------------ CHANNEL AVERAGE BEFORE DREDGING AFTER DREDGING MINIMUM BEFORE DREDGING AFTER DREDGING CONDITION DEPTH SOUNDING - ------------------------------------------------------------------------------------------------------------------------ RIVER MINIMUM TIME MAXIMUM TIME GRADE LOCATION STAGE - ------------------------------------------------------------------------------------------------------------------------ WEATHER ^?? ???? ??? velocity wind (maximum velocity direction) CONDITION ???^ - ------------------------------------------------------------------------------------------------------------------------ WORK PERFORMED DISTRIBUTION OF TIME - ------------------------------------------------------------------------------------------------------------------------ ITEM UNIT QUANTITY EFFECTIVE WORKING TIME HOURS MIN (chargeable to rest of work) - ------------------------------------------------------------------------------------------------------------------------ AVERAGE WIDTH OF CUT FEET PUMPING OR DREDGING - ------------------------------------------------------------------------------------------------------------------------ TOTAL ADVANCE THIS PERIOD FEET PCT, OF EFFECTIVE RENTAL TIME % - ------------------------------------------------------------------------------------------------------------------------ TOTAL ADV, PREVIOUS TO THIS PERIOD FEET BOOSTER (in hours) hrs mins. - ------------------------------------------------------------------------------------------------------------------------ TOTAL ADVANCE TO DATE FEET NON-EFFECTIVE WORKING TIME - -------------------------------------------------------------- FLOATING PIPE: SHORE PIPE FEET (chargeable to rest of work) - ------------------------------------------------------------------------------------------------------------------------ TOTAL LENGTH OF DISCHARGE PIPE FEET HANDLING PIPE LINES - ------------------------------------------------------------------------------------------------------------------------ AVERAGE LIFT FEET HANDLING ANCHOR LINES - ------------------------------------------------------------------------------------------------------------------------ AVERAGE PUMP SPEED R.P.M. CLEARING PUMP AND PIPE LINE - ------------------------------------------------------------------------------------------------------------------------ AVG, DREDGED PER PUMP, MR, GROSS CU.YDS. CLEARING CUTTER OR SUCTION HEAD - ------------------------------------------------------------------------------------------------------------------------ SCOWS LOADED NUMBER WAITING FOR SCOWS - ------------------------------------------------------------------------------------------------------------------------ AVERAGE LOAD PER SCOW CU.YDS. TO AND FROM WHARF OR ANCHORAGE - ------------------------------------------------------------------------------------------------------------------------ CUBIC YARDS REMOVED CHANGING LOCATION OF PLANT ON JOB - ------------------------------------------------------------------------------------------------------------------------ AMOUNT DREDGED THIS PERIOD: LOSS DUE TO OPPOSING NATURAL ELEMENTS ------------------------------------------------------- (1) GROSS (computed amount) LOSS DUE TO PASSING VESSELS - ------------------------------------------------------------------------------------------------------------------------ (2) CREDITED (pay ^???) SHORE LINE AND SHORE WORK - ------------------------------------------------------------------------------------------------------------------------ AMOUNT PREVIOUSLY REPORTED: WAITING FOR BOOSTER ------------------------------------------------------- (1) GROSS (^???? ????) MINOR OPER. REPAIRS (explain in remarks) - ------------------------------------------------------------------------------------------------------------------------ (2) CREDITED (pay ???) WAITING FOR ATTENDANT PLANT - ------------------------------------------------------------------------------------------------------------------------- TOTAL AMOUNT DREDGED TO DATE: PREPARATION AND MAKING UP TOW -------------------------------------------------------- (1) GROSS (??? ????) TRANSFERRING PLANT BETWEEN WORKS - ------------------------------------------------------------------------------------------------------------------------- (2) CREDITED (??? ????) LAY TIME OFF SHIFT AND SATURDAYS - ------------------------------------------------------------------------------------------------------------------------- ATTENDANT PLANT SUNDAYS AND HOLIDAYS - ------------------------------------------------------------------------------------------------------------------------- ITEM NAME OR NUMBER HOURS FIRE DRILL - ------------------------------------------------------------------------------------------------------------------------- MISCELLANEOUS (explain in remarks) - ------------------------------------------------------------------------------------------------------------------------- TOTAL NON-EFFECTIVE WORKING TIME - ------------------------------------------------------------------------------------------------------------------------- PCT OF NON-EFFECTIVE RENTAL TIME - ------------------------------------------------------------------------------------------------------------------------- TOTAL EFFECTIVE AND NON-EFFECTIVE % - ---------------------------------------------------------------- TIME (chargeable to rest of work) - ------------------------------------------------------------------------------------------------------------------------- PCT. OF TOTAL TIME IN PERIOD % - ------------------------------------------------------------------------------------------------------------------------- LOST TIME (not chargeable to rest of worK) MAJOR REPAIRS AND ALTERATIONS - ------------------------------------------------------------------------------------------------------------------------- CESSATION - ------------------------------------------------------------------------------------------------------------------------- COLLISIONS - ------------------------------------------------------------------------------------------------------------------------- MISCELLANEOUS (explain in remarks) - ------------------------------------------------------------------------------------------------------------------------- NUMBERS OF BY DISTRICT PERSONNEL BY ??? & ??? PERSONNEL TOTAL LOST TIME -------------------------------------------------------- INSPECTIONS PERCENTAGE OF TOTAL TIME % - ------------------------------------------------------------------------------------------------------------------------- CONTRACT ^??????? ?????? ?????? ???????? ?????????? ????? USE ONLY CHANGE ORDER OR ???? [_] NO [_]YES TOTAL TIME IN PERIOD -------------------------------------------------------- (If "YES", explain under reports or ^???)
=================================================================================================================================== SUMMARY OF COSTS - ----------------------------------------------------------------------------------------------------------------------------------- ITEMS COST - ----------------------------------------------------------------------------------------------------------------------------------- DIRECT PLANT OPERATING COSTS UNIFORM DAILY RATE BASIS (To be completed when submitting ^????? and Completion reports.) CHARGES:_________ DAYS AT $_________ PER DAY (Item 19, ENG Form 22 (costs)- adjusted to exclude plans increment cost.) OR ACTUAL PLANT COSTS (To be completed when submitting Annual report.) PAYROLLS (gross)............................................................................ $____________ SUBSISTENCE & QUARTERS OF PER DIEM & MILEAGE................................................ $____________ FUEL ___________ BARRELS AT $____________ PER BARREL........................................ $____________ WATER....................................................................................... $____________ LUBRICANTS.................................................................................. $____________ PLANT OWNERSHIP COSTS (or computed below)................................................... $____________ INSURANCE................................................................................... $____________ ATTENDANT PLANT............................................................................. $____________ MISCELLANEOUS............................................................................... $____________ SUBTOTAL--UNIFORM DAILY RATE OR ACTUAL COSTS.................................................................. $_____________ SUBTOTAL--PLANT UNIT COST $ PER CUBIC YARD. =================================================================================================================================== SHORE WORK SUBTOTAL--SHORE WORK COSTS.................................................................................... $_____________ SUBTOTAL--SHORE WORK UNIT COSTS $ PER CUBIC YARD. =================================================================================================================================== OTHER COSTS SURVEYS........................................................................................ $____________ INSPECTION AND SUPERVISION..................................................................... $____________ OVERHEAD....................................................................................... $____________ OTHER INDIRECT COSTS........................................................................... $____________ SUBTOTAL--OTHER COSTS......................................................................................... $_____________ SUBTOTAL--OTHER UNIT COST $ PER CUBIC YARD. =================================================================================================================================== GRAND TOTAL--ALL COSTS........................................................................................ $_____________ GRAND TOTAL--ALL UNIT COSTS $ PER CUBIC YARD. =================================================================================================================================== OPERATING SUPPLIES ANNUAL REPORT DATA - ------------------------------------ -------------------- COMMODITIES CONSUMED INVENTORY (complete when submitting Annual Report) --------------------- -------------------- ---------------------------------------------------------------------- UNIT QUANTITY QUANTITY VALUE COST PER RENTAL MINUTE Per min. - -------------- -------- ------------ ------------ -------- (Based on total operating cost)...... $_____________ FUEL (oil) BRLS TOTAL COST OF PLANT - -------------- -------- ------------ ------------ -------- (End of F.Y. reporting period)....... $_____________ LUBRICANT BOOK VALUE (oil) GAL (End of F.Y. reporting period)....... $_____________ - -------------- -------- ------------ ------------ -------- BALANCE IN PLANT ACCOUNT LUBRICANT (End of F.Y. reporting period)....... $_____________ (grease) LBS ===================================================== ================ - -------------- -------- ------------ ------------ -------- PLANT OWNERSHIP COSTS WATER GAL (Actual for F.Y. reporting period): - -------------- -------- ------------ ------------ -------- DEPRECIATION................................... $_____________ - -------------- -------- ------------ ------------ -------- REPAIRS (Adjusted)............................. $_____________ CESSATION OF WORK.............................. $_____________ - -------------- -------- ------------ ------------ -------- SMALL TOOLS, ETC............................... $_____________ SUBSISTENCE SUPPLIES............................ - ------------------------------------------------- -------- MISCELLANEOUS SUPPLIES.......................... - ------------------------------------------------- -------- -------------- TOTAL........................................... $ TOTAL............................................... $ ================================================= ======== ====================================================================== REMARKS - ----------------------------------------------------------------------------------------------------------------------------------- SUBMITTED BY (Name, title, and signature) RECOMMENDED BY (Name, title, and signature) APPROVED BY (Name, title, and signature) ===================================================================================================================================
DAILY WORK REPORT Job Location__________________________ Dredge________________ Date______________ Operation_____________________ Shift ____________________ Wether_______________ Type Material - Sand _______ Mud _______ Clay_______ Silt _________ Other_______ ____________________ __________________ ____________________ - -------------------------------------------------------------------------------- STOP START LOST TIME EXPLAIN HRS. MIN. - -------------------------------------------------------------------------------- ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ OPERATORS SIGNATURE______________________ BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS SECTION 01500 CONSTRUCTION FACILITIES AND TEMPORARY CONTROLS PART 1 GENERAL 1.1 REFERENCES 1.3 AVAILABILITY OF UTILITIES 1.2.1 Temporary Connections 1.2.2 Temporary Equipment and Lines 1.3 TELEPHONE SERVICE 1.4 SANITATION PART 2 PRODUCTS 2.1 SAFETY SIGN 2.2 CONSTRUCTION SIGN 2.3 GOVERNMENT FIELD OFFICE PART 3 EXECUTION 3.1 CLEANING DURING CONSTRUCTION 3.1.1 Daily Cleaning 3.1.2 On-Site Container 3.1.3 Removal of Waste 3.1.4 Burning 3.2 SAFETY SIGN 3.3 CONSTRUCTION SIGN 3.4 GOVERNMENT FIELD OFFICE (TRAILER) 3.5 SECURITY AT THE SITE 3.6 REMOVAL OF TEMPORARY MATERIALS AND EQUIPMENT - -- End of Section Table of Contents -- SECTION TABLE OF CONTENTS 01500 PAGE 1 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT SECTION 01500 CONSTRUCTION FACILITIES AND TEMPORARY CONTROLS PART 1 GENERAL 1.1 REFERENCES The publications listed below form a part of this specification to the extent referenced. The publications are referred to in the text by basic designation only. NATIONAL FIRE PROTECTION ASSOCIATION (NFPA) NFPA 70 (1996) National Electrical Code 1.2 AVAILABILITY OF UTILITIES The Contractor shall provide all temporary facilities and controls required for the execution of the work, including arranging for water, heat, and electricity for Contractor and Government trailers. Each utility at Massport's properties shall be metered and paid for by the Contractor at prevailing rates charged by Massport. 1.2.1 Temporary Connections The Contractor, at his own expense and in a workmanlike manner satisfactory to the Contracting Officer, shall install and maintain all necessary temporary connections, distribution lines and all meters required to measure the amount of each utility used; and he shall remove them prior to final acceptance of the construction. 1.2.2 Temporary Equipment and Lines All required temporary electrical equipment and lines shall be furnished, installed, connected, and maintained by the Contractor according to the COE EM 385-1-1, Section 11.D and shall be removed prior to final acceptance of the work. Temporary wiring shall conform to Article 305 of NFPA 70. Materials and equipment need not be new, but must be in good repair and serviceable condition. Prior to being energized, the systems and devices will be checked and approved for polarity, continuity of ground, and resistance to ground. Periodic inspections of systems and devices will be made by the Contractor at intervals not to exceed one (1) week. 1.3 TELEPHONE SERVICE Provide and maintain separate lines for facsimile machine and two standard telephone service lines to the Government Field Office. Telephone service shall be accessible during all work hours. 1.4 SANITATION Adequate sanitary conveniences of a type approved for the use of persons employed on the work shall be provided, properly secluded from public observation, and maintain by the Contractor in such a manner as required or approved by the Contracting Officer. These conveniences shall be maintained at all times without nuisance. Upon completion of the work, the convenience shall be removed by the Contractor from the premises, leaving the premises, clean and free from nuisance. PART 2 PRODUCTS 2.1 SAFETY SIGN SECTION 01500 Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT Sign shall be 3 feet by 6 feet and shall conform to the requirements of Drawing No. STD-36 attached at the end of this section. 2.2 CONSTRUCTION SIGN Sign shall conform to the requirements of the Standard Construction Sign Detail attached at the end of this section. 2.3 GOVERNMENT FIELD OFFICE Field office shall be a trailer approximately 12' x 60'. The trailer shall include, as a minimum, two overhead shelves, two double desks with pedestals, a 36" x 72" plan table, a plan rack, a moveable office desk, chairs for all desks, 4 folding chairs, an enclosed toilet, a water cooler, two telephones, a new facsimile machine, a plain paper photocopy machine, and one partition. Doors shall be provided with cylinder locks and six keys. PART 3 EXECUTION 3.1 CLEANING DURING CONSTRUCTION 3.1.1 Daily Cleaning Execute daily cleaning to keep the work, the site and adjacent properties free from accumulation of waste materials, rubbish and windblown debris, resulting from construction operations. 3.1.2 On-Site Container Provide on-site containers for the collection of waste materials, debris and rubbish. 3.1.3 Removal of Waste Remove waste materials, debris and rubbish from the site periodically and dispose of off Government property in accordance with applicable laws and regulations. 3.1.4 Burning No burning of brush or debris will be permitted at the site. 3.2 SAFETY SIGN The Contractor shall construct a safety sign at a location directed by the Contracting Officer. The sign shall be erected as soon as possible and within 15 calendar days after date of receipt of Notice to Proceed. The data required by the sign shall be inserted. No separate payment will be made for erecting and maintaining the safety sign and all costs in connection therewith will be considered a subsidiary obligation of the Contractor. The sign will remain the property of the Contractor. Previously used signs may be reused when satisfactorily reconditioned. 3.3 CONSTRUCTION SIGN The Contractor shall furnish, erect, and maintain a construction sign. The information needed to complete the wording on the sign will be furnished by the Contracting Officer and will be essentially as shown on the cover of the specifications. The sign shall be erected not later than 15 calendar days after receipt of Notice to Proceed at a location selected by the Contracting Officer. Upon completion of the work, the sign will remain the property of the Contractor. No separate payment will be made for furnishing, erecting and maintaining the construction sign. SECTION 01500 Page 2 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT 3.4 GOVERNMENT FIELD OFFICE (TRAILER) The Contractor shall provide a trailer for the Government field office. The contractor shall provide all services and supplies in connection with maintaining the trailer including cleaning, janitorial services, heating, lighting, water supply, and sanitary services. The trailer will be located by the Contractor where directed. No separate payment will be made for the trailer and all costs shall be included in the items comprising the bid schedule. The trailer, after completion of the work, will become the property of the contractor and be removed from the site. The trailer shall be secured against overturning by an approved anchorage system consisting of a minimum of four soil anchors firmly set in solid ground. 3.5 SECURITY AT THE SITE The Contractor shall be responsible for site security during the course of the work. 3.6 REMOVAL OF TEMPORARY MATERIALS AND EQUIPMENT Remove temporary materials, equipment, services, and construction prior to completion of work. Clean and repair damages caused by installation or use of temporary facilities. Return site to pre-construction condition. -- END OF SECTION -- SECTION 01500 Page 3 CORPS OF ENGINEERS U.S. ARMY [GRAPH APPEARS HERE] (CONTRACTOR'S NAME) (ADDRESS) SAFETY IS A JOB REQUIREMENT ELEVATION --------- THIS CONTRACT HAS OPERATED SINCE (APPROPRIATE DATE) WITHOUT A LOST TIME INJURY [GRAPH APPEARS HERE] PREVIOUS RECORD DAYS SECTION C-C ----------- ELEVATION 3" x 6" SIGN --------- ------------ SEALE ????^ (4" x 8" SIGN SIMILAR) ----------------------- NOTE: ---- I And ^?????? is at 3" x 6" sign ??? ????????? for ?????? required ?????? ???? contract. SPECIFICATIONS - -------------- 1. Posts, ????? and ????? shall be No. 1 yellow ??? or approved ???, SOS, Fed.???? MM-R-?? 2. All expand surfaces, including edges, shall be ?????? and cost of ???? and ???? ?????? to ???? ???? [LOGO APPEARS TTP-P5c, as amended. ???? ???? of sign, shall be given HERE] ??? ???? costs of green point confirming to Fed. Spec ?T-P Bid, ???? 24260. All other inforces shall conforming to ??? ???? ????? 3. ???? following point shall be ???? Buffalo Colour C20 WI as performed by Sherwin - Williams Co., or approved ????. 4. Plywood shall conform to Product Standard PS 1-55, A-c, EXT-DFPA. DEPARTMENT OF THE ???? ????? ????? ???? ???? ????? ???? ???? STANDARD CONSTRUCTION DETAIL SAFETY SIGN ELEVATIONS AND SECTION ????? DATE JUNE 1967 S T D - 36 NED STANDARD DWG. 8'-0" - ------------------------------------------------------------------------- (RED LETTERS ON WHITE BACKGROUND) RED - ------------------------------------------------------------------------- [LOGO] US ARMY, CORPS OF ENGINEERS. NEW ENGLAND DIVISION PROJECT TITLE PROJECT NAME CONT'D 4'-0" CONSTRUCTION BY: CONSTRUCTION MANAGER: CONTRACTOR NAME NEW ENGLAND DIVISION. AND CORPS OF ENGINEERS ADDRESS ADDRESS CONT'D PLANNED COMPLETION DATE: - ------------------------------------------------------------------------- METAL OVER 3/4" CDX PLYWOOD - -------------------------------------------------------------------------------- 1 DEPARTMENT OF THE ARMY NEW ENGLAND DIVISION STANDARD CORPS OF ENGINEERS CONSTRUCTION SIGN WALTHAM, MA DETAIL 1 - -------------------------------------------------------------------------------- BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS SECTION 01600 PLANT AND EQUIPMENT PART 1 GENERAL 1.1 SUBMITTALS 1.2 PLANT AND EQUIPMENT 1.2.1 Sufficient Capacity 1.2.2 Minimum Capacity 1.2.3 Reduction in Capacity 1.2.4 Inspections and Certifications 1.3 LICENSE REQUIREMENTS 1.4 PERMIT REQUIREMENTS 1.5 HEIGHT LIMITATIONS PART 2 PRODUCTS (Not Used) PART 3 EXECUTION (Not Used) - -- End of Section Table of Contents -- SECTION TABLE OF CONTENTS 01600 PAGE 1 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT SECTION 01600 PLANT AND EQUIPMENT PART 1 GENERAL 1.1 SUBMITTALS Government approval is required for submittals with a "GA" designation; submittals having an "FIO" designation are for information only. The following shall be submitted in accordance with Section 01300 SUBMITTAL PROCEDURES; SD-07 Schedules Plant and Equipment; FIO, E reviewer. Submit a schedule of the plant and equipment the Contractor intends to employ in the performance of the work of this contract. Submit also copies of all applicable inspections and certifications for all floating plant and equipment. 1.2 PLANT AND EQUIPMENT 1.2.1 Sufficient Capacity The Contractor shall keep on the job sufficient plant and equipment to meet the requirements of the work. The plant and equipment shall be in satisfactory operating condition and be capable of safely and efficiently performing the work. The plant and equipment shall be subject to inspection by the Contracting Officer at all times. 1.2.2 Minimum Capacity The plant and equipment listed on the Plant and Equipment Schedule submitted with the Contractor's bid is the minimum which the Contractor shall place and keep on the job unless otherwise determined by the Contracting Officer. The listing of plant and equipment is not to be construed as an agreement on the part of the Government that the equipment is adequate to perform the required work. 1.2.3 Reduction in Capacity No reduction in the capacity of the plant and equipment employed on the work shall be made except by written permission of the Contracting Officer. The measure of the capacity of the plant and equipment shall be its actual performance on the work covered by this contract. 1.2.4 Inspections and Certifications Prior to commencement of work at the site, the Contractor shall submit to the Contracting Officer for review, copies of all applicable inspections and certifications of floating plant and equipment as required by Federal, State and local laws and regulations. See also SAFETY AND HEALTH REQUIREMENTS MANUAL EM 385-1-1, Sections 16 and 19. Such inspections and certifications shall be current and maintained in force for the duration of this contract. Each item of floating plant and equipment shall have on board a waste oil management plan which details the intended disposal method for waste oil. All equipment used in the prosecution of the work that uses fuel, oil or hydraulic fluid shall be inspected daily for leakage. 1.3 LICENSE REQUIREMENTS SECTION 01600 Page 1 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT Each vessel exceeding twenty-six feet in length, excluding sheer, which is used for pushing, hauling alongside, or any other method of towing, and not required by law to have a valid Certificate of Inspection by the U.S. Coast Guard, shall be under the actual direction and control of a person licensed for towing in the geographic area of the work by the U.S. Coast Guard. Licensed persons shall not perform command or other duties in excess of twelve hours in any consecutive twenty-four hour period except in an emergency. 1.4 PERMIT REQUIREMENTS The Contractor's plant and equipment employed on the work shall meet the requirements of all applicable permit and certifications issued for the project as specified in these specifications. 1.5 HEIGHT LIMITATIONS Height limitations for equipment shall conform to the FAA requirements for the various areas of the project. The Contractor is responsible for coordinating these height limitations prior to commencing with the work. PART 2 PRODUCTS (Not Used) PART 3 EXECUTION (Not Used) -- End of Section -- SECTION 01600 Page 2 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 01 - GENERAL REQUIREMENTS SECTION 01900 GENERAL SAFETY REQUIREMENTS PART 1 GENERAL 1.1 Copies of Safety and Health Requirements Manual 1.2 SUBMITTALS 1.2.1 Statements 1.2.2 Accident Prevention Plan Submittal 1.3 UNFORESEEN HAZARDOUS MATERIAL PART 2 PRODUCTS (Not Applicable) PART 3 EXECUTION 3.1 WEEKLY SAFETY MEETINGS 3.2 UNDERWATER DIVING OPERATIONS - -- End of Section Table of Contents -- SECTION TABLE OF CONTENTS 01900 PAGE 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION 01900 GENERAL SAFETY REQUIREMENTS PART 1 GENERAL 1.1 Copies of Safety and Health Requirements Manual One copy of COE EM 385-1-1 will be provided to the Contractor. Additional copies may be ordered at a cost of $31.00 each (Check or Money Order only) from the following address: U.S. Government Printing Office (GPO) Superintendent of Documents PO Box 371954 Pittsburgh, PA 15250-7954 (GPO Stock Number for the manual is 0008-022-00-310-0) The manual may be purchased by calling 202-512-1800 and using a credit card (Mastercard or Visa only). COE EM 385-1-1 may be viewed at the COE Technical Library, at 424 Trapelo Road, Waltham, MA 02254-9149, Building 116N. The Manual may also be viewed or downloaded free of charge via the Internet USACE Homepage (http:/www.usace.army.mil). Follow the organizational link to the Safety and Occupational Health Office. 1.2 SUBMITTALS Submit the following for acceptance by the Contracting Officer. Follow the administrative procedures for making submittals as specified in Section 01300 SUBMITTAL PROCEDURES. 1.2.1 Statements a. Site Specific Accident Prevention Plan. b. Phased Job Activity Hazard Analysis. c. Machinery Inspection Certification: Submit certification that machinery floating plant and other mechanized equipment is in safe operating condition (see COE EM 385-1-1, paragraph 16.A.01 and 19.A.01). d. Modification to Equipment: Submit manufacturer's written approval of modifications or additions to hoisting equipment. Government acceptance of submittal must be attained before such equipment can be brought on the job-site. e. Safety Meeting Report: Submit safety meeting reports detailing the subjects discussed at safety meetings within three days after each meeting. 1.2.2 Accident Prevention Plan Submittal Submit a plan outlining Contractor proposals for accident prevention in accordance with Contract Clause "ACCIDENT PREVENTION." Reference COE EM 385-1-1, 01.A.07 (page 2) and Appendix "A" (pages A-1 through A-5) for the guidelines for preparation of Accident Prevention Plans. SECTION 01900 Page 1 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT a. List all major definable features of work to be completed under this contract. b. Accident Reporting 1) All accidents shall be investigated. 2) The Plan must state that all lost-time injuries and property damage accidents (excluding on-the-road vehicle accidents) in which the property damage exceeds $2,000.00 shall be reported to the Area Engineer within 48 hours of the accident. 3) In the event of an accident or occupational illness which results in a lost work day or $2,000.00 or more in property damage, an ENG Form 3394 shall be completed, signed by the Contractor, and submitted to the NAE Safety Office within five working days. c. Submit an "Activity Hazard Analysis" for each definable feature of the work identified in "a" above. Submit each "Activity Hazard Analysis" a minimum of 15 days prior to the start of that phase of work. Submit Activity Hazard Analysis Worksheets in accordance with COE EM 385-1-1, paragraphs 01.A.09 and 01.A.10 and FIGURE 1-1. A major phase of work is defined as an operation involving a type of work presenting hazards not experienced in previous operations or where a new subcontractor or work crew is to perform. The analysis shall define all activities to be performed and identify the sequence of work, the specific hazards anticipated, and the control measures to be implemented to eliminate or reduce each hazard to an acceptable level. Work shall not proceed on that phase until the activity hazard analysis has been accepted by the Contracting Officer and a preparatory meeting has been conducted by the Contractor to discuss its contents with all engaged in the activities, including the Contractor, subcontractor(s), and Government on-site representatives. The activity hazard analyses shall be continuously reviewed with the quality control definable features of work and when appropriate modified to address changing site conditions or operations. d. Severe Weather Plan: The Contractor shall submit a Severe Weather Plan describing the actions to be taken to protect persons and property in the event of severe weather warnings or extreme sea conditions. Submit the plan as an attachment to the Accident Prevention Plan, for review and acceptance. This plan shall include but not be limited to the following: 1. The types of storms anticipated (Winter storm, Hurricane, Tornado). 2. The time intervals before storms when action will be taken and the details of the actions to be taken 3. List of the equipment to be used on the project and its ability to handle adverse weather. 4. Distance from the work area to a safe place in the harbor and the time required to move the equipment. 5. Method of securing equipment. 6. List of equipment to be utilized to make the move to a safe place in the harbor (tug boats, work boats, etc.), to include the name and horsepower of the equipment. 7. Methods of securing equipment not moved. SECTION 01900 Page 2 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT 8. Plan of evacuation to include immediate reaction plans to be taken for all storm occurrences, particularly sudden storms. 9. A statement that full time monitoring of the NOAA marine weather broadcasts and other local commercial weather forecasting services will be the Contractor's primary source of information in the decision process to implement action under the severe weather plan. 1.3 UNFORESEEN HAZARDOUS MATERIAL If hazardous materials are encountered during construction operations that may be dangerous to human health upon disturbance, stop that portion of work and notify the Contracting Officer immediately. Within 14 calendar days the Government will determine if the material is hazardous. If the material is not hazardous or poses no danger, the Government will direct the Contractor to proceed without change. If the material is hazardous and handling of the material is necessary to accomplish the work, the Government will issue a modification pursuant to "FAR 52.243-4, Changes" and "FAR 52.236-2, Differing Site Conditions." PART 2 PRODUCTS (Not Applicable) PART 3 EXECUTION 3.1 WEEKLY SAFETY MEETINGS In accordance with COE EM 385-1-1, Section 1, paragraph 01.B.03, at least once a month Contractor shall conduct a safety meeting for all supervisors and foremen. Additionally, at least one safety meeting per week shall be conducted by the foremen for all workers. After each safety meeting, a safety meeting report shall be completed. A copy of a suggested weekly safety meeting form is attached at the end of this section. 3.2 UNDERWATER DIVING OPERATIONS In the event that underwater diving operations become necessary due to the work of this contract, such operations shall be conducted in accordance with Section 02492 UNDERWATER DIVING WORK. -- End of Section -- SECTION 01900 Page 3 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT WEEKLY SAFETY MEETING CENAE Date Held _____________ Time __________________ SUBJECT: CONTACT NO. DACW33-97-C-00 __ - WEEKLY SAFETY MEETING CONTRACTOR ___________________________ PERSONNEL PRESENT -------------------- Date and Time Held: __________________ Contr. Sub. Govt. .................... Conducted By: ________________________ -------- ---- ------ All persons attending the meeting must sign the bottom or back of this form. Subjects discussed (Note, delete, or add): COE EM 385-1-1, Section: __________ Accident Prevention Plan ______ Individual Protective Equipment _______ Prevention of Falls ______ Back Injury/Safe Lifting Techniques _______ Fire Prevention ______ Sanitation, First Aid, Waste Disposal _______ Tripping Hazards ______ Clean-up - trash, nails in lumber _______ Staging, Ladders, Concrete Forms, Safety Nets ______ Hand Tools, Power Tools, Machinery, Chain Saws ______ Equipment Inspection & Maintenance (Zero Defects) ______ Hoisting Equipment, Winch and Crane Safety ______ Ropes, Hooks, Chains and Slings ______ Vehicles Operation Safety ______ Electrical Grounding, Temporary Wiring, GFCI ______ Lockouts/Safe clearance procedures (electrical, pressure, moving parts) ______ Welding, Cutting ______ Excavation Hazard/Rescue ______ Loose Rock/Steep Slopes ______ Explosives ______ Water Safety ______ Boat Safety ______ HAZMAT, Toxic hazards, MSDS, respiratory, ventilation ______ Other Items of concern specific to this contract: CQC Rep. Signature ________________ CR Inspector ____________________ SECTION 01900 Page 4 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 02 - SITE WORK SECTION 02482 DREDGING PART 1 GENERAL 1.1 DEFINITIONS 1.1.1 Soft Material 1.1.2 Hard Material 1.2 RELATED WORK SPECIFIED ELSEWHERE 1.3 SUBMITTALS 1.4 EXISTING CONDITIONS 1.4.1 Material to be Dredged 1.4.2 Results of Explorations 1.4.3 Existing Reports and Historical Data 1.4.4 Artificial Obstructions 1.4.5 Existing Utilities 1.4.5.1 Private Utilities and Public Agencies 1.4.5.2 Protection of Utility Lines 1.4.5.3 Removal of Utility Lines 1.5 OVERDEPTH AND SIDE SLOPES 1.5.1 Allowable and Required Overdepth 1.5.2 Side Slopes 1.5.2.1 Side Slopes at Disposal Cells 1.5.2.2 Side Slopes at Berths 1.5.3 Excessive Dredging 1.5.4 Protection of Existing Structures 1.6 INSPECTION OF DISPOSAL 1.6.1 Communication 1.6.2 Transportation PART 2 PRODUCTS 2.1 CLEAN GRANULAR MATERIAL FOR CAPPING DISPOSAL CELLS PART 3 EXECUTION 3.1 CONDUCT OF DREDGING WORK 3.1.1 Order of Work 3.1.2 Disposal of Excavated Material 3.1.3 Interference with Navigation 3.1.4 Ranges, Gages, and Lines 3.1.5 Method of Communication 3.1.6 Debris Management 3.1.6.1 Clearing of Main Ship Channel Debris 3.1.7 Underwater Diving Operations 3.2 DREDGING BOSTON HARBOR 3.2.1 Dredging of Soft Material 3.2.2 Dredging of Hard Material 3.2.3 Dredging of Berth Areas 3.2.4 Underwater Utilities 3.2.5 Removal of Abandoned Water Tunnel 3.3 CONSTRUCTION OF IN-CHANNEL DISPOSAL CELLS 3.3.1 Work Restrictions for the Protection of Fisheries 3.3.2 Location and Number of Cells 3.3.3 Verification of Electronic Positioning System 3.3.4 Cell Filling at High Tide 3.3.5 Cell Construction Surveys by the Government SECTION TABLE OF CONTENTS 02482 PAGE 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 3.3.6 Cell Construction Surveys by the Contractor 3.3.6.1 Documentation 3.3.7 Passage of Vessels 3.3.8 Initial In-channel Disposal Cell 3.3.9 Dredging of Hard Material in Cells 3.3.10 Placement of soft Material in Cells 3.3.11 Documentation 3.3.12 Capping of In-Channel Disposal Cells 3.3.12.1 General 3.3.12.2 Cap Placement and Integrity 3.3.12.3 Cap Thickness and Coverage Determination 3.4 TOW BOATS AND SCOWS 3.4.1 Tow Boats 3.4.2 Scows 3.4.2.1 Scow Pocket Doors - -- End of Section Table of Contents -- SECTION TABLE OF CONTENTS 02482 PAGE 2 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT SECTION 02482 DREDGING PART 1 GENERAL 1.1 DEFINITIONS 1.1.1 Soft Material "Soft" or maintenance material is defined as the accumulated silty sediments within the channel and berth areas. The "soft" material also includes material that sloughs off the banks when dredging adjacent to the piers in the berth areas. Permits require that all "soft" material, regardless of its depth or location in the work, be removed by a special environmental bucket, and sealed in cells dredged beneath the federal channels as specified in this section and as indicated on the contract drawings. All material, capable of being removed using the environmental bucket, will be considered soft material, unsuitable for unconfined ocean disposal. 1.1.2 Hard Material "Hard material" is defined as parent improvement material, except rock, to be removed from Boston Harbor after removal and disposal of the overlying soft material with the environmental bucket. Hard material shall be removed as specified in this Section, and as indicated on the contract drawings. Rock material is defined in Section 02491 UNDERWATER DRILLING AND BLASTING. 1.2 RELATED WORK SPECIFIED ELSEWHERE a. Additional requirements relative to water quality monitoring and testing, and submittal of Environmental Bucket Performance Data are specified in Section 01135 WATER QUALITY MONITORING AND CONTROL. b. Additional requirements relative to water quality monitoring and testing, including protection of finfish and marine mammals, are specified in Sections 01130 ENVIRONMENTAL PROTECTION and 02491 UNDERWATER DRILLING AND BLASTING. 1.3 SUBMITTALS Government approval is required for submittals with a "GA" designation; submittals having "FIO" designation are for information only. The following shall be submitted in accordance with Section 01300 SUBMITTALS: SD-1 Data Inspection of Disposal; FIO, C Reviewer. Submit names of inspectors certified by the Corps of Engineers to be used for monitoring disposal activities for the Government. Scow Cards; GA, C Reviewer. Submit scow cards for each scow to be used for contract work. Scow cards shall have information specified in paragraph "Scows." Disposal Positioning Plan; GA, C Reviewer. The Contractor shall submit a disposal positioning plan, which details the method proposed to position the scows over the disposal cells and to locate SECTION 02482 Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT the limits of the disposal cells which may be DGPS, laser technology or other means of identifying the scows position and orientation before disposal. A means of visually verifying location, such as computer imaging, shall be integral with the positioning system. Work Plan; GA, E Reviewer. The Contractor shall submit a work plan for construction of the in-channel disposal cells, channel dredging, and berth dredging. Anticipated equipment, cells locations, cell capacity, temporary soft material storage method and location, expected coordination requirements, survey requirements, soft material placement, sloughing calculations at berths, proposed measures for avoiding pier damage, potential underwater diving operations and proposed measures to avoid overdredging, are items to be considered, at a minimum, for inclusion in the work plan. Cell Capping Plan; Ga, E Reviewer. Submit a cell capping plan describing the source and gradation of capping material, a complete sequence and schedule of events, proposed equipment to be used, and the methods to be employed to ensure the proper capping of cells as specified. The plan shall also include the Contractor's proposed methodology for cap thickness and coverage determination. Submit a 20 pound representative sample of the capping material to the Contracting Officer. Cell Cap Thickness and Coverage Determination Data; GA, E Reviewer. Submit cell capping thickness and coverage determination data for each cell capped, within 14 days of completion of data collection. Include data collection methods and results obtained. Provide a certification for each cell that the cell construction is in compliance with the performance requirements of these specifications. If a cell is not in compliance, then state the materials and methods proposed to achieve compliance. MWRA Water Tunnel Removal Plan; GA, E REviewer. Submit the proposed method of demolition and removal of the MWRA "Old Section 38" water tunnel. Include the proposed procedures for breaking-up the tunnel, removing all of the resulting debris, and verifying that the tunnel has been completely removed. Abandoned Cable - Boston Edison; GA, E Reviewer. Submit the proposed method of dredging operation in the vicinity of Boston Edison power lines (both live and abandoned) near the Chelsea Street bridge. The submittal shall include, but not be limited to : notification contacts; locating procedures, including diving operations as necessary; and coordination prior to moving lines. 1.4 EXISTING CONDITIONS 1.4.1 Material to be Dredged Dredged material is referred to in these specifications as either "soft" material, "hard" material, "rock" or "debris." The material to be removed to accomplish the specified dredging work is anticipated to be silt, sand, clay, glacial till and rock. Requirements for the excavation of rock material are specified in Section 02491 UNDERWATER DRILLING AND BLASTING. The Contractor is expected to examine the site of the work and determine the character of the materials to be dredged. 1.4.2 Results of Explorations Explorations to determine the character of materials to be removed, have SECTION 02482 Page 2 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT been made by the Government for selected areas of this project. Graphic logs of explorations are shown on the contract drawings. Grain size analysis curves are attached at the end of this section. Although the results of such explorations are representative of subsurface conditions at their respective locations and for their respective vertical reaches, local variations in the subsurface materials are to be expected and, if encountered, will not be considered materially different within the purview of the contract. 1.4.3 Existing Reports and Historical Data Listed below are reports and historical data, relative to the dredging of Boston Harbor, which are available for viewing at the Corps of Engineers District Office. Advance arrangements to view the reports may be made with Mr. Peter Jackson (978) 318-8861. U.S. Army Corps of Engineers, and Massachusetts Port Authority, 1994, Draft Environmental Impact Report (EOEA File Number 8695) and Draft Environmental Impact Statement, Boston Harbor, Massachusetts, Navigation and Berth Dredging Project, 2 volumes, April 1994. U.S. Army Corps of Engineers, and Massachusetts Port Authority, 1995, Final Environmental Impact Report (EOEA File Number 8695) and Final Environmental Impact Statement, Boston Harbor, Massachusetts, Navigation and Berth Dredging Project, 3 volumes, June 1995. U.S. Army Corps of Engineers, Design Memorandum, Boston Harbor, Massachusetts, Navigation Improvement Project, April 1996. ENSR. Oct. 1997, Summary Report of Independent Observations Phase 2 - Boston Harbor Navigation Improvement Project. Prepared for Massachusetts Costal Zone Management. ENSR Document Number 4479-001-150, ENSR, Acton, MA. Science Applications International Corporation, Postcap Monitoring of Boston Harbor Navigation Improvement Project (BHNIP) Phase 1: Assessment of Inner Confluence CAD Cell, Prepared for U.S. Army Corps of Engineers, SAIC Report No. 413, SAIC, Newport, RI. Written report for "Sample Event #3" prepared by the U.S. Army Corps of Engineers Environmental Laboratory, Hubbardston, MA. Reference Section 01135 WATER QUALITY MONITORING AND CONTROL Paragraph "WATER COLUMN MONITORING - BASELINE." 1.4.4 Artificial Obstructions The Contractor may encounter bottom debris such as, but not limited to, pieces of broken cable, rope, miscellaneous metal, and broken and abandoned piles. The Government has no knowledge of existing wrecks, wreckage, or other artificial obstructions of such size or character as to require the use of explosives for its removal. However, special or additional plant may be required for economical removal of some items, such as abandoned pilings, and the obstruction described below in paragraph "Clearing of Main Ship Channel Debris." During dredging operations, the Contractor shall remove all debris encountered. Debris removed from the dredging area shall be separated and stockpiled for disposal. Disposal in accordance with local, Federal, and State laws and regulations shall be the responsibility of the Contractor. In case the actual conditions differ from those stated or shown, or both, an adjustment in contract price or time of completion, or both, will be made in accordance with "FAR 52.236-2, Differing Site Conditions." 1.4.5 Existing Utilities 1.4.5.1 Private Utilities and Public Agencies SECTION 02482 Page 3 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT The following tabulation of utility owners and public agencies is provided for the convenience of the Contractor: a. Edison: Contact Beverly Shultz (617) 424-2711. b. NYNEX: Contact Everette Bryan (617) 381-6423. c. Boston Gas: Contact Dennis Peri (617) 723-5512 ext 4434. d. MWRA: Contact John McComack (617) 241-4637. 1.4.5.2 Protection of Utility Lines Existing utility lines that are shown on the drawings or the locations of which are made known to the Contractor prior to dredging, and that are to be retained, shall be protected from damage during dredging, and if damaged shall be satisfactorily repaired by the Contractor at no additional cost to the Government. Prior to commencement of dredging, the Contractor shall coordinate with the Contracting Officer and the applicable utility company to mark the exact locations of existing utilities, and establish in detail the proposed method of protecting the existing utilities. In the event that the Contractor damages any existing utility lines that are not shown on the drawings or the locations of which are not known to the Contractor, report thereof shall be made immediately to the Contracting Officer. If the Contracting Officer determines that repairs shall be made by the Contractor, such repairs will be ordered under the Contract Clause entitled "DIFFERING SITE CONDITIONS." 1.4.5.3 Removal of Utility Lines The Contracting Officer and the applicable utility company or owner shall be notified in ample time to mark the exact locations of existing utilities to be removed under this contract, and establish in detail the proposed method of protecting any existing adjacent utilities. 1.5 OVERDEPTH AND SIDE SLOPES 1.5.1 Allowable and Required Overdepth To cover the inaccuracies of the dredging process, material actually removed from within the specific areas to be dredged, to depths as specified below for allowable overdepth, will be estimated and paid for at the contract price. Allowable overdepth dredging will be permitted to a depth of not more than 1.7 feet for all dredging will be permitted to a depth of not more than 1.7 feet for all dredging areas shown, except in areas of rock excavation. There is a required overdepth for rock excavation only. Overdepth dredging of rock will be required to a depth of not more than 2 feet below the project depth in all dredging areas where rock is encountered. An allowable overdepth will be permitted to a depth of not more than 2 feet below the required overdepth in all areas where rock excavation is performed. Allowable and required overdepth dredging will be measured and paid for at the applicable contract price in the same manner as specified for the overlying dredge material. 1.5.2 Side Slopes 1.5.2.1 Side Slopes at Disposal Cells The Contractor shall construct disposal cells with side slopes of 1 vertical to 2 horizontal. However, the Contractor may construct the side slopes steeper than 1 vertical to 2 horizontal to increase cell volume, as approved by the Contracting Officer on a case by case basis. Contracting Officer approval will be based on the impact steeper slopes will have on the stability of adjacent structures and the stability of the cell.. Cells shall be constructed to maintain a 50 foot separation from the edge of the SECTION 02482 Page 4 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT federal channel limits and all adjoining cells. 1.5.2.2 Side Slopes at Berths Material actually removed, within the limits approved by the Contracting Officer, to provide for final project depth at the land side of the berths and 1 vertical on 3 horizontal elsewhere, but not in excess of the amount originally lying above these limiting side slopes, will be estimated and paid for, whether dredged in the original position or by dredging the space below the pay slope plane at the bottom of the slope for upslope material capable of falling into the cut. In computing the limiting amount of side slope dredging, an overdepth of 1.7 feet measured vertically will be used. The above is not to be taken as a guarantee that all slopes will stand on a slope of 1 vertical and 3 horizontal. The Contractor shall make his own determination as to what the angle of repose will be on all side slopes. The Contractor will be required to exercise care in dredging near wharfs and piers so as not to overdredge to such an extent as to undermine the structures or in any way impair the stability of such structures. 1.5.3 Excessive Dredging Material taken from beyond the limits as extended in paragraph OVERDEPTH AND SIDE SLOPES above will be deducted from the total amount dredged as excessive overdepth dredging, or excessive side-slope dredging for which payment will not be made. 1.5.4 Protection of Existing Structures The Contractor shall conduct the dredging operation such that it does not undermine, weaken or otherwise impair existing structures located in or near the areas to be dredged. The Contractor shall investigate the existing structures at the site and plan the dredging work accordingly. The Contractor shall be held responsible for any damage to the existing facilities resulting from dredging. The Contractor could be directed by the Contracting Officer to fill overdredged areas with clean material at no cost to the Government. Filling of overdredged areas may require permit modifications to be obtained by the Contractor. 1.6 INSPECTION OF DISPOSAL No disposal shall be done unless an inspector, approved by the Contracting Officer is present. The inspector shall be available on a full-time basis to cover all phases of operations in connection with disposal of the dredged materials. The Contractor shall be responsible for and provide qualified disposal inspection services at no additional cost to the Government. The Contractor shall notify the Contracting Officer of the names of the Corps of Engineers Certified inspectors to be used prior to commencement of work. Every discharge of dredge material must be officially witnessed and properly documented by an onboard inspector who has been trained by, and who holds a current certification from the New England District, Army Corps of Engineers. Failure to adhere to this requirement will be considered a serious violation of this contract and cause for an immediate stop-work order by the Contracting Officer and which could precipitate substantial penalties including but not necessarily limited to fines, withholding of funds and/or non-payment due to misplaced materials. 1.6.1 Communication The Contractor shall provide the Contracting Officer with 2 hand-held VHF radios capable of communicating with the Contractor's marine plant for the duration of the contract. 1.6.2 Transportation SECTION 02482 Page 5 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT The Contractor shall furnish, on the request of the Contracting Officer or Independent Observer, the use of such boats, boatmen, laborers, and material forming a part of the ordinary and usual equipment and crew of the equipment or marine plant as may be reasonably necessary in inspecting and monitoring the work. The Contractor shall furnish, on the request of the Contracting Officer or Independent Observer, suitable transportation from all points on shore designated by the Contracting Officer to and from the various pieces of plant, and the work site. PART 2 PRODUCTS 2.1 CLEAN GRANULAR MATERIAL FOR CAPPING DISPOSAL CELLS The material used to cap the soft material in the disposal cells shall be clean well-graded granular material which primarily sand having less than 10% of the material passing a #200 sieve and less than 10% of the material retained by a #4 sieve. The Contractor shall provide grain size data and representative samples of cap material to the Contracting Officer as part of the capping plan. PART 3 EXECUTION 3.1 CONDUCT OF DREDGING WORK 3.1.1 Order of Work The Contractor shall start and complete the work in the order of precedence as prescribed below or as otherwise approved by the Contracting Officer. See Section 01010 for additional requirements relative to project coordination and sequence of work. The Contractor shall first construct a single disposal cell. Cell construction shall commence by dredging and storing the overlying soft material, and transporting the dredged hard material to Massachusetts Bay Disposal Site (MBDS) for disposal. Once the initial disposal cell has been constructed, dredging of the channel and berth areas shall begin. After soft material has been placed in a disposal cell, capping of the cell shall commence as specified in paragraph "CONSTRUCTION OF IN-CHANNEL DISPOSAL CELLS" below. The Contractor shall prepare and submit to the Contracting Officer for review and approval a progress schedule in accordance with Section 01010, Paragraph "Work Sequence." 3.1.2 Disposal of Excavated Material The material excavated shall be transported and disposed as specified in this section in paragraph DREDGING BOSTON HARBOR. Other dredged material disposal providing a beneficial use such as landfill daily cover or capping, as identified by the Contractor and approved by the Contracting Officer, is encouraged. Except as otherwise authorized by the Contracting Officer in writing, no dumping shall be done unless an inspector approved by the Corps of Engineers is present at the time. Any material that is deposited elsewhere than in places designated or approved by the Contracting Officer will not be paid for and the Contractor will be required to remove such misplaced material and deposit it where directed at the Contractor's expense. 3.1.3 Interference with Navigation Minimize interference with the use of channels and passages. The Contracting Officer will direct the shifting or moving of dredges or the interruption of dredging operations to accomodate the movement of vessels SECTION 02482 Page 6 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT and floating equipment, if necessary. The Contractor shall comply with all requests from the Contracting Officer to move or interrupt dredging operations for a reasonable time period at on additional cost to the Government. During winter months there is heavy usage of the Chelsea River by tankers; coordination with docking pilots will be necessary on a daily basis. 3.1.4 Ranges, Gages, and Lines Furnish, set, and maintain ranges, buoys, and markers needed to define the work and to facilitate inspection. Establish and maintain gages in locations observable from each part of the work so that the depth may be determined. Suspend dredging when the gages or ranges cannot be seen or followed. The Contracting Officer will furnish, upon request by the Contractor, survey lines, points, and elevations necessary for the setting of ranges, gages, and buoys. 3.1.5 Method of Communication Provide a system of communication between the dredge crew, the sampling/monitoring contractor, the towboat, the Independent Observer, the disposal inspector, and the Contracting Officer. Portable two-way marine radios are acceptable. 3.1.6 Debris Management A debris management plan shall be developed, accepted by the Contracting Officer and followed by the Contractor. The plan shall be submitted as part of the Environmental Protection Plan, as specified in Section 01130 ENVIRONMENTAL PROTECTION. This plan shall include accommodation for specific removal of the debris identified in paragraph "Clearing of Main Ship Channel Debris" below, as well as latent debris discovered during dredging operations. Each day during dredging operations, the Contractor shall use a boat to collect and remove floating debris resulting from project activities. Floating debris shall also be removed from within barges. Debris removed from the bottom during dredging operations, which is not suitable for disposal in the cells or at the Massachusetts Bay Disposal Site (MBDS), shall also be collected and removed from the site. Abandoned and broken piles within 25 feet of a structure shall be broken or cut off rather than extracted. Containers for temporary storage of the collected debris shall be maintained on the dredge or support barge. 3.1.6.1 Clearing of Main Ship Channel Debris An obstruction has been identified in the -35 - foot portion of the Main Ship Channel opposite Castle Island, as shown on the contract drawings. The Contractor shall locate and remove the debris. A plan for locating, removing, and disposing of the debris shall be included in the Contractor's "Debris Management Plan". 3.1.7 Underwater Diving Operations In the event that underwater diving operations become necessary due to the work of this contract, such operations shall be conducted in accordance with Section 02492 UNDERWATER WORK. 3.2 DREDGING BOSTON HARBOR Consistent with the environmental dredging window restrictions, the Contractor shall begin by constructing the initial disposal cell. Once the disposal cell is excavated, dredging of the Boston Harbor Channels and berths shall commence. 3.2.1 Dredging of Soft Material SECTION 02482 Page 7 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT An environmental bucket shall be used for dredging the soft material from Boston Harbor. No dragging of material will be allowed except as directed by the Contracting Officer. The soft material shall be transported in scows and deposited in the in-channel disposal cells shown on the drawings. Construction of the in-channel disposal cells is specified below in paragraph "CONSTRUCTION OF IN-CHANNEL DISPOSAL CELLS" The maximum distance soft material must be transported will not exceed 7 nautical miles. Placement of soft material in disposal cells will only be permitted during the interval 1 hour before high tide to 2 hours after high tide. No disposal shall take place during passage of tugboat in escort of large vessels, such as tankers, while the vessel is within 1000 feet of a disposal cell until the Contracting Officer directs otherwise. Use of a fully automated horizontal positioning system capable of locations within 1.0 meter of the true position is required to ensure proper positioning of the scows over the disposal cell. 3.2.2 Dredging of Hard Material The environmental bucket is required only for the removal of soft material. Hard material shall be placed in dump scows and transported to the Massachusetts Bay Disposal Site and disposed at a taut wire buoy. The location of the Mass Bay Disposal Site is shown on the drawing attached at the end of this section. The National Marine Fisheries Service (NMFS) has placed specific conditions governing the use of the Massachusetts Bay Disposal Site: See Section 01130 ENVIRONMENTAL PROTECTION for information on the NMFS conditions governing the use of the Massachusetts Bay Disposal Site. 3.2.3 Dredging of Berth Areas The Contractor shall dredge the berth areas shown on the drawings. The limits of the berth areas shall be verified with the berth owners and the Contracting Officer prior to dredging. Dredging of the berth areas shall be performed as the adjacent Federal Channel is dredged. The requirements listed above for dredging of soft and hard material apply to dredging of the berth areas. However, prior to removing the dredge plant from the site, the Contractor will make a final pass along the fender face to remove material expected to slough off of the slope under the piers. Sloughed material removed from the trench shall be disposed in the in-channel disposal cells. The Contractor is directed not to dig below the overdepth elevation. 3.2.4 Underwater Utilities Utility locations which are known are shown on the drawings. Utility companies contacted for information included: Boston Edison, Bell Atlantic, MWRA, Boston Gas, Boston Water and Sewer Commission, and the MBTA. Water and sewer pipelines, cables, and a gas siphon were identified in the Chelsea Creek area and cables were identified in the Reserved Channel. The Contractor shall note the location of these utilities and take special precautions when dredging in their vicinity. "No Spud" areas are marked on the contract drawings for protection of known utilities. The Contractor shall not dredge the area of channel over the MWRA "Section 8" waterline as noted on the contract drawings. The Contractor shall dredge the area of channel over the Boston Gas Siphon to a depth of -35 feet with an allowable overdepth of 1.7 feet, as shown on the contract drawings. To prevent damage to the gas siphon, the Contractor is directed not to dig below the overdepth elevation. Removal of the "Old Section 38" abandoned water tunnel shall be completed prior to dredging the area over the gas siphon. 3.2.5 Removal of Abandoned Water Tunnel The Contractor shall verify the location and remove the abandoned MWRA concrete lined water tunnel known as "Old Section 38" to the limits as SECTION 02482 Page 8 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT shown on the contract drawings. The Contractor shall submit a proposal detailing the methods he intends to implement to accomplish demolition and removal of the water tunnel. Demolition methods may include underwater cutting, breaking, controlled blasting and other methods approved by the Contracting Officer. Underwater blasting shall be performed in accordance with Section 02491 UNDERWATER DRILLING AND BLASTING, with peak particle velocities no greater than 1.0 inch per second, due to the proximity of the gas siphon. 3.3 CONSTRUCTION OF IN-CHANNEL DISPOSAL CELLS 3.3.1 Work Restrictions for the Protection of Fisheries Cell excavation and disposal activities located upstream of the Tobin Bridge in the Mystic River and at cells 1, 2, and 3 in the Inner Confluence occurring from February 15 to June 15 shall be conducted with a fish startle system, sonar, and an approved fisheries observer. However, the Contractor has the option of not performing cell excavation and disposal activities at these cells during the above time period; provided all contract work can be performed within the specified prosecution period. See Section 01130 ENVIRONMENTAL PROTECTION for fisheries observer, fish startle system and, sonar equipment requirements. No restrictions are placed on work for the protection of fisheries in the Chelsea River upstream of the McArdle Bridge (Meridian Street). Cell excavation and disposal activities will not be permitted during the period February 15 to June 15 of any year at cell locations 3A, 4, 5, 6, 7, 8, and 9 in the Inner Confluence, as shown on the contract drawings. 3.3.2 Location and Number of Cells All dredged soft material, which by definition is unsuitable for unconfined ocean disposal, shall be placed in cells dredged beneath the federal channels and the unsuitable material shall be capped. Capping of any cell shall be completed within 30 days of the start of cap placement. The soft material may swell as much as 50% prior to consolidation within the cells and the cells shall be sized accordingly. After actual swell and consolidation data is obtained from Government and Contractor surveys during the prosecution of the work, the Contractor shall use that data to size future cells. The disposal cells shall be located in the areas shown on the drawings. Coordinates delineating the limits of each of the constructed in-channel disposal cells shall be furnished to the Contracting Officer. The Contractor shall size the disposal cells to contain all soft material dredged, including material which may slough off of the slope under the piers adjacent to the berths and incidental hard material if dredged along with the soft material. Post-dredge soundings will be provided by the Government for both berths and the disposal cells in order to calculate soft material volumes before dredging of the hard material. It is the Contractor's responsibility to ensure adequate disposal cell capacity exists for all soft material to be dredged. The Contractor will be required to continue to dredge additional disposal cells at his expense for disposal of all of the soft material dredged. However, cell construction shall be programmed to ensure that no empty or partially filled cells remain at the completion of soft material disposal operations. A table of disposal cell locations and proposed cell depths is attached at the end of this section. The coordinates given in the table serve as a guide only and will be adjusted by the Contracting Officer dependant on the actual field conditions encountered. 3.3.3 Verification of Electronic Positioning System Visual indicators shall be deployed clearly delineating the disposal cells during all periods of active disposal into the cells, until the accuracy of SECTION 02482 Page 9 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT electronic positioning equipment is verified by the Contracting Officer. Use of differential global positioning system (DGPS) accurate to 1 meter or better, with real time graphic display will satisfy this condition. The purpose of this requirement is to enable the dredge operator and regulatory agency inspectors to verify that disposal occurs into the permitted cells. 3.3.4 Cell Filling at High Tide Sediment disposal into any cell shall occur only during high tide, defined for this activity as the time from 1 hour before to 2 hours after the predicted Boston high tide time. The purpose of this requirement is to provide maximum dilution and minimal dispersion and transport of fine contaminated sediment during disposal operations. If an alternative technology is proposed and approved by the Contracting Officer that allows the material to be placed directly in the disposal cell without passing through the water column, disposal may occur at any time during the tidal cycle. 3.3.5 Cell Construction Surveys by the Government The following bathymetric surveys will be conducted by the Government during cell construction: A pre-dredge survey will be made by the Government prior to commencement of dredging operations; an after-dredge survey will be made by the Government after the dredging of the soft material from the cells; a survey will be made by the Government immediately prior to the commencement of cell capping; and an after-dredge survey will be made by the Government after the sand cap is placed. The Contractor shall notify the Contracting Officer a minimum of 5 days prior to completion of an item of work listed above that requires a Government survey to allow adequate time to prepare for the surveys. The Contractor shall also allow a reasonable amount of time for the completion of each Government survey. For the first cell, the range of the survey will be 1 barge length (up to 300 feet) beyond the perimeter of the cells. For subsequent cells, the range of the survey will be at least 50 feet beyond the perimeter of the cell. If a placement problem is detected, then the Contractor will be required to remove all misplaced material and deposit it in the cell and to submit a revised positioning plan for Contracting Officer approval. 3.3.6 Cell Construction Surveys by the Contractor The following bathymetric surveys shall be conducted by the Contractor during cell construction: After dredging of hard material from cells; after placement of soft material in cells; and within 2 weeks after capping as specified below in paragraph, "Cap Thickness and Coverage Determination." Surveys shall be run on 25 foot intervals, with all subsequent surveys done on the same spacing, tracks and reference lines. Copies of all Contractor surveys shall be submitted to the Contracting Officer within 2 days after completion of the respective survey. For the first cell, the range of the Contractor survey shall be 1 barge length (up to 300 feet) beyond the perimeter of the cells. For subsequent cells, the range of the Contractor survey will be at least 50 feet beyond the perimeter of the cell. If a placement problem is detected, then the Contractor will be required to remove all misplaced material and deposit it in the cell and to submit a revised positioning plan for Contracting Officer approval. Further surveys by the Contractor may be required to verify accurate placement of the soft material and the cell cap. 3.3.6.1 Documentation The results of bathymetric surveys performed by the Contractor and by the Government shall be combined and documentation provided by the Contractor for all cells as follows: a. Cell bottom elevation and status (i.e., active disposal, completed SECTION 02482 Page 10 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT disposal, completed capping, etc.) of all cells shall be shown in matrix chart form, similar to the chart attached at the end of this section; b. the matrix chart shall be provided to the Contracting Officer within 7 business days of completion of the caps for each of the first three cells and thereafter as specified below; c. the matrix chart shall be updated and provided to the Contracting Officer every three months thereafter throughout the remainder of the project; d. Contractor and Government bathymetric survey data shall be shown in graphic form for each cell where disposal has occurred. This graphic report shall be provided to the Contracting Officer within 30 days of completion of each cap. 3.3.7 Passage of Vessels No cell shall be filled during passage of tug boat in escort or tanker vessels while the vessel is within 1000 ft of the disposal cell. 3.3.8 Initial In-channel Disposal Cell Soft material overlying the area of the initial in-channel disposal cell shall be dredged using an environmental bucket and the material temporarily stored in tight scows or other suitable containers within a reasonable distance of the disposal cell. The environmental bucket shall conform to the performance standards as indicated in Section 01135 WATER QUALITY MONITORING AND CONTROL. 3.3.9 Dredging of Hard Material in Cells After the soft material is removed the Contractor will be allowed to change buckets to remove the underlying hard material. The hard material shall be placed in dump scows and transported to the Massachusetts Bay Disposal Site for disposal at a taut wire buoy. 3.3.10 Placement of Soft Material in Cells Overlying soft material, stored in scows during construction of the initial disposal cells, shall be carefully placed in the disposal cells as specified. Placement of soft material within the disposal cells shall be such that mounding of the soft material is minimized. The Contractor shall redistribute all mounds of soft material that project above the -45 foot MLLW datum to other areas of the disposal cells. 3.3.11 Documentation The origin of the last barge load of sediment placed in each cell shall be documented and provided to the Contracting Officer with the final project report, as required by Section 01175 WATER QUALITY MONITORING AND CONTROL. 3.3.12 Capping of In-Channel Disposal Cells 3.3.12.1 General After placement of soft material in a disposal cell, the Contractor will be required to wait a minimum of 30 days, but not more than 60 days, to allow the soft material to settle before closing the cell. Each cell shall be closed by construction of a cell cap, consisting of 2 uniform layers of the specified clean granular fill material. Each cell cap shall be constructed a minimum of 3 feet thick over the top of the soft material. Capping of a cell shall be completed within 30 days of the start of cap placement. The Contractor shall submit a capping plan for approval prior to placement of SECTION 02482 Page 11 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT the cap. Cap material shall be as specified above. Precautions shall be taken to ensure that no portion of the cap projects above -42 feet MLLW, Portions of the cap protruding above -42 MLLW may require removal as directed by the Contracting Officer at the expense of the Contractor. In addition to capping the cells constructed by the Contractor under this contract, the Contractor shall complete the cap on the southern portion of the existing disposal cell of maintenance material constructed in July 1997. Final capping of this cell shall be completed within two months of the channel deepening in the Inner Confluence. However, completion of this in capping the first 3 disposal cells. The location of the existing cell is shown on the contract drawings. Completion of the cap on the existing cell shall comply with requirements for capping of Contractor constructed cells. 3.3.12.2 Cap Placement and Integrity The disposal cell cap shall be placed gradually, in 2 uniform layers, so as to minimize disturbance to the unconsolidated soft material in the disposal cells. In order to calculate drift of cap material during placement, the Contractor shall measure and record real time current measurements at the surface, mid-level and at the bottom of the water column in the immediate area of the capping operation. The cap placement method shall be adjusted to ensure necessary cap thickness over the entire cell area. The Contractor shall ensure that the edges of the cap meet the minimum thickness requirement. Further, there shall be no mechanical disturbance of the sand cap by means including but not limited to drag bar, clamshell bucket, and barge spudding, unless such disturbance is pre-approved by the Contracting Officer. Obtaining core samples will not be considered "mechanical disturbance". 3.3.12.3 Cap Thickness and Coverage Determination Within two weeks of capping, each of the first three disposal cells shall be surveyed by the Contractor using a combination of methods to verify to the Government that each cap has three feet of thickness over a minimum of 90% of the cell and that the zone of mixed dredged silt and cap material (i.e., within the three foot cap) is less than 12 inches. Methods used to provide this verification shall include acoustic sub-bottom profiling, vibracore sampling consisting of a minimum of 4 cores per acre, and may include other proven technologies. Vibracore sampling shall consist of 4 cores per acre, with a minimum of 3 cores per cell. The location of the cores shall be as selected by the Contracting Officer Unproven technologies may be acceptable for cap thickness and coverage determination provided proper validation is furnished to the Contracting Officer for his approval. After the Contractor has proven the effectiveness of his cap thickness and coverage determination methodology for the first three cells, the Contracting Officer will approve the methodology for cell cap verification for all other project cells. The Contracting Officer will determine the effectiveness of the Contractor's cap thickness and coverage determination methodology, and will so acknowledge in writing. If the Contractor's cap thickness and coverage determination methodology has not been approved within three months of completion of the first cell cap, then disposal in all other project cells shall cease. New cell construction will not be permitted until new or additional cap placement verification methodology is proposed by the Contractor, accepted by the Contracting Officer for trial, and its effectiveness demonstrated by the Contractor on completed cells. If data collected indicates that a completed cell is not in compliance with these specifications, the Contractor shall continue capping operations and SECTION 02482 Page 12 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT cap verification testing until contract compliance is demonstrated. 3.4 TOW BOATS AND SCOWS See also Section 01600 PLANT AND EQUIPMENT 3.4.1 Tow Boats All tow boats used for towing to disposal areas shall be equipped with DGPS and track recording navigational equipment of approved equivalent electronic navigation equipment, radar, corrected compass, marine radio, and depth sounding equipment which is to be maintained in operating condition during each tow. The tow boats utilized by the Contractor for this purpose shall be of a size adequate for towing in the open ocean and shall have necessary reserve power for maneuvering with scows and under emergency conditions as well as for control of scows at the disposal point. 3.4.2 Scows The Contractor shall provide and maintain markings on all scows clearly indicating the draft of the scow and shall provide scow cards for each scow used on the contract work. The scow cards shall show dimensions and volumes of individual pockets of scows and total volumes for varying depths below coaming or top of pockets. The Contractor shall also provide draft verses displacement curves for all scows. This is to enable the Contracting Officer personnel to make determination of scow volume and corresponding drafts under partial and full load conditions. These measurements are to be made at the time of initial use of each scow. This information will then be furnished to disposal inspectors to enable them to estimate scow volume from draft of scows for each scow being towed to the disposal area. The scow volume estimates are for use in connection with disposal area monitoring studies and are not intended to be used in determining quantities dredged. At the beginning of the work and as additional scows arrive on the project, sufficient time shall be allowed by the Contractor and assistance of Contractor personnel shall be made available by the Contractor for the purpose of obtaining the measurements of each scow under various partial and full load conditions. During the entire period of contract work, the Contractor shall provide and maintain sufficient spot or floodlights to permit the reading of the draft on the sides of scows at bow and stern from the tow boat at night and when visibility is impaired. The draft readings will be required for each scow towed to the disposal area and will be made by the disposal inspector. The Contractor shall ensure that adequate time is allowed by the tow boat captain for these readings to be obtained. 3.4.2.1 Scow Pocket Doors Due to the fine nature of the dredge material, the Contractor will be required to achieve proper closure and adequate tightness of pocket doors to eliminate any seepage or leakage of material. The use of plastic material to cover cracks in scow pockets will not be allowed. -- End of Section -- SECTION 02482 Page 13 [MAP OF MASSACHUSETTS BAY DISPOSAL SITE APPEARS HERE] Description: This site is a circular area with a diameter of 2 nautical miles and center at 42 degrees 25.1' N, 70 degrees 35.0' W. From the center, the Marblehead Tower bears true 295 degrees at 24,916 yards and Bakers Island Horn bears true 308 degrees at 23,237 yards. The authorized disposal point (within the overall disposal area) is specified for each dredging project in other project documents. Depth range: 272 to 302 feet MLW. NOTE: The map depicts the disposal site's location in relation to landmarks. It is not intended for use in navigation. BOSTON HARBOR DISPOSAL CELLS GENERALIZED LOCATIONS AND DEPTHS
Cell Corner Mass State Plane NAD27 Depth Cell Corner Mass State Plane NAD27 Depth No. I.D. Northing Easting (MLLW) No. I.D. Northing Easting (MLLW) =============================================== =============================================== I1 NE 502,550 723,133 55 I7 NE 504,777 723,044 60 SE 502,083 723,006 SE 504,256 723,336 SW 502,085 722,943 SW 504,253 723,083 NW 502,558 722,954 NW 504,701 722,832 - ----------------------------------------------- ----------------------------------------------- I3 NE 503,646 723,188 55 I8 NE 505,062 723,564 60 SE 503,146 723 166 SE 504,889 723,664 SW 503,155 722,969 SW 504,319 723,358 NW 503,654 722,990 NW 504,797 723,092 - ----------------------------------------------- ----------------------------------------------- I3a NE 504,190 723.312 55 I9 NE 505,324 724,032 55 SE 503,701 723,191 SE 505,149 724,128 SW 503,704 722,991 SW 504,916 723,711 NW 504,204 723,014 NW 505,090 723,614 - ----------------------------------------------- ----------------------------------------------- I4 NE 504,422 722,409 60 C1 NE 509,963 731,161 60 SE 503,969 722,585 SE 509,474 731,246 SW 503,969 722,373 SW 509,444 731,074 NW 504,353 722,227 NW 509,890 730,996 - ----------------------------------------------- ----------------------------------------------- I5 NE 504,828 722,851 48 C2 NE 509,449 731,250 58 SE 504,388 722,565 SE 509,028 731,324 SW 504,480 722,425 SW 509,950 731,160 NW 504,875 722,681 NW 509,419 731,078 - ----------------------------------------------- ----------------------------------------------- I6 NE 504,942 722,536 55 C3 NE 509,415 731,053 56 SE 504,600 722,324 SE 508,939 731,136 SW 504,617 722,118 SW 508,850 730,949 NW 505,036 722,390 NW 509,381 730,856 - ----------------------------------------------- -----------------------------------------------
BOSTON HARBOR DISPOSAL CELLS GENERALIZED LOCATIONS AND DEPTHS
Cell Corner Mass State Plane NAD27 Depth Cell Corner Mass State Plane NAD27 Depth No. I.D. Northing Easting (MLLW) No. I.D. Northing Easting (MLLW) =============================================== =============================================== C4 NE 509,879 730,972 56 C10 NE 507,155 730,300 65 SE 509,440 731,049 SE 508,727 730,040 SW 509,405 730,852 SW 506,831 729,869 NW 509,754 730,791 NW 507,259 730,129 - ----------------------------------------------- ----------------------------------------------- C5 NE 509,713 730,773 58 C11 NE 506,685 730,015 58 SE 508,964 730,903 SE 506,211 729,245 SW 509,107 730,504 SW 506,361 729,584 NW 509,405 730,636 NW 506,788 729,844 - ----------------------------------------------- ----------------------------------------------- C6 NE 508,909 730,913 55 C12 NE 506,163 729,815 58 SE 508,754 730,749 SE 505,649 729,245 SW 508,878 730,403 SW 505,795 729,159 NW 509,061 730,484 NW 506,318 729,558 - ----------------------------------------------- ----------------------------------------------- C7 NE 508,745 730,702 55 M1 NE 506,230 717,379 55 SE 508,287 730,498 SE 506,105 717,358 SW 508,297 730,353 SW 506,181 716,890 NW 508,856 730,392 NW 506,306 716,911 - ----------------------------------------------- ----------------------------------------------- C8 NE 508,236 730,499 55 M2 NE 506,056 717,350 55 SE 507,738 730,465 SE 505,891 717,322 SW 507,748 730,315 SW 505,967 716,854 NW 508,247 730,349 NW 506,132 716,882 - ----------------------------------------------- ----------------------------------------------- C9 NE 507,688 730,461 65 M3 NE 506,101 717,915 70 SE 507,198 730,326 SE 506,017 717,901 SW 507,301 730,155 SW 506,097 717,407 NW 507,698 730,312 NW 506,222 717,428 - ----------------------------------------------- -----------------------------------------------
BOSTON HARBOR DISPOSAL CELLS GENERALIZED LOCATIONS AND DEPTHS
Cell Corner Mass State Plane NAD27 Depth Cell Corner Mass State Plane NAD27 Depth No. I.D. Northing Easting (MLLW) No. I.D. Northing Easting (MLLW) =============================================== =============================================== M4 NE 505,968 717,893 70 M10 NE 505,642 719,738 65 SE 505,803 717,865 SE 505,445 719,706 SW 505,883 717,372 SW 505,525 719,213 NW 506,048 717,399 NW 505,722 719,245 - ----------------------------------------------- ----------------------------------------------- M5 NE 506,057 718,190 60 M11 NE 505,395 719,698 60 SE 505,965 718,221 SE 505,198 719,666 SW 506,009 717,950 SW 505,278 719,172 NW 506,093 717,964 NW 505,478 719,205 - ----------------------------------------------- ----------------------------------------------- M6 NE 505,911 718,240 70 M12 NE 505,149 719,658 65 SE 505,632 718,335 SE 505,000 719,634 SW 505,791 717,914 SW 505,066 719,138 NW 505,960 717,942 NW 505,229 719,164 - ----------------------------------------------- ----------------------------------------------- M7 NE 506,011 718,711 55 M13 NE 505,697 720,304 60 SE 505,729 718,664 SE 505,603 720,289 SW 505,993 718,575 SW 505,683 719,796 NW 506,025 718,628 NW 505,832 719,820 - ----------------------------------------------- ----------------------------------------------- M8 NE 505,534 719,154 55 M14 NE 505,554 720,281 70 SE 505,073 719,077 SE 505,356 720,249 SW 505,312 718,914 SW 505,437 719,755 NW 505,567 718,957 NW 505,634 719,788 - ----------------------------------------------- ----------------------------------------------- M9 NE 505,840 719,770 56 M15 NE 505,307 720,241 65 SE 505,691 719,746 SE 505,110 720,209 SW 505,772 719,253 SW 505,190 719,715 NW 505,920 719,277 NW 505,387 719,747 - ----------------------------------------------- -----------------------------------------------
BOSTON HARBOR DISPOSAL CELLS GENERALIZED LOCATIONS AND DEPTHS
Cell Corner Mass State Plane NAD27 Depth Cell Corner Mass State Plane NAD27 Depth No. I.D. Northing Easting (MLLW) No. I.D. Northing Easting (MLLW) ================================================================= =========================================================== M16 NE 505,060 720,201 65 M22 NE 504,944 721,333 50 SE 504,929 720,180 SE 504,781 721,320 SW 504,994 719,683 SW 504,846 720,823 NW 505,141 719,707 NW 504,984 720,634 - ----------------------------------------------------------------- ----------------------------------------------------------- M17 NE 505,457 720,822 55 M23 NE 505,371 721,875 55 SE 505,266 720,807 SE 505,160 722,122 SW 505,348 720,298 SW 505,238 721,407 NW 505,669 720,350 NW 505,408 721,421 - ----------------------------------------------------------------- ----------------------------------------------------------- M18 NE 505,216 720,803 65 M24 NE 505,132 722,091 48 SE 505,016 720,787 SE 504,942 721,967 SW 505,102 720,258 SW 504,989 721,387 NW 505,299 720,290 NW 505,189 721,403 - ----------------------------------------------------------------- ----------------------------------------------------------- M19 NE 504,966 720,783 65 M25 NE 504,894 721,936 48 SE 504,852 720,773 SE 504,801 721,875 SW 504,923 720,229 SW 504,775 721,369 NW 505,052 720,250 NW 504,939 721,383 - ----------------------------------------------------------------- ----------------------------------------------------------- M20 NE 505,412 721,371 55 NE SE 505,243 721,357 SE SW 505,283 720,859 SW NW 505,453 720,873 NW - ----------------------------------------------------------------- ----------------------------------------------------------- M21 NE 505,193 721,353 65 NE SE 504,993 721,337 SE SW 505,034 720,839 SW NW 505,234 720,855 NW - ----------------------------------------------------------------- -----------------------------------------------------------
Disposal Cell Construction Status Report Date: - ------------------------------------------------------------------------------------------------------------------ Cell Average Channel Corner Bottom Elev. Current Cell No. Location Coordinates MLLW Status* Remarks - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------
*Status Key: Cell Excavation Active (incl. date started) Cell Excavation Complete (include date) Disposal Active (incl. date started) Disposal Complete (include date) Capping Active (incl. date started) Capping Complete (include date) Cap verified (include date) Page 1 LOCATION INDEX OF SOILS TEST RESULTS
AREA BORING SAMPLE DEPTH (FT) CLASSIFICATION (SAMPLE ELEV -MLW) - -------------------------------------------------------------------------------- BOSTON ARMY BASE FD-93-1 2.0 - 4.0 Silty SAND (SM)* (36.2 - 38.2) FD-93-2 4.0 - 6.0 Lean CLAY (CL) (37.7 - 39.7) (LL=47, PL=25, PL=22) FD-93-3 4.9 - 6.9 Lean CLAY (CL) & SILT (37.1 - 39.1) (LL=37, PL=20, PI=17, SG=2.85) FD-93-3 6.9 - 8.9 Silty SAND (SM)* (39.1 - 41.1) - -------------------------------------------------------------------------------- NOTCH FD-93-4 3.1 - 5.1 Lean CLAY (CL) & SLIT (41.7 - 43.7) (LL=49, PL=26, PI=23) FD-93-5 3.0 - 5.0 Lean CLAY (CL)* (40.7 - 42.7) (LL=49, PL=26, PI=23, SG=2.80) FD-93-6 0.0 - 2.3 Lean CLAY (CL)* (36.7 -39.0) FD-93-6 3.0 - 5.0 Lean CLAY (CL)* (39.7 - 41.7) - -------------------------------------------------------------------------------- _INNER CONFLUENCE FD-93-7 5.4 - 7.4 SAND (SP-SM)* (40.3 - 42.3) FD-93-7 7.4 - 9.4 Silty SAND (SM)* (42.3 - 44.3) (SG=2.79) FD-93-8 0.0 - 2.0 Silty SAND (SM)* (39.5 - 41.5) FD-93-8 2.0 - 4.0 Clayey SAND (SC)* (41.5 - 43.5) FD-93-9 2.0 - 4.0 Silty SAND (SM)* (42.5 - 44.5) - -------------------------------------------------------------------------------- MYSTIC RIVER FD-93-10 5.0 - 7.0 Clayey SAND (SC)* (41.7 - 43.7) (SG=2.83) FD-93-12 2.5 - 3.5 Lean SILT and CLAY* (38.6 - 39.6) (LL=42, PL=21, PI=21) FD-93-12 3.5 - 5.5 Silty SAND (SM) (39.6 - 41.6) FD-93-13 7.3 - 8.3 Fat CLAY (LL=51, (43.5 - 44.5) PL=25, PI=26, SG=2.80) - -------------------------------------------------------------------------------- CHELSEA RIVER FD-93-14 5.0 - 7.0 Sandy Silt (SM)* (40.3 - 42.3) (SG=2.76) FD-93-14 7.0 - 9.0 Silty GRAVEL (GM)* (42.3 - 44.3) - --------------------------------------------------------------------------------
* Grain size distribution curve included INDEX TEST RESULTS AND SAMPLE DESCRIPTIONS BOSTON HARBOR TEST PROGRAM
==================================================================================================================================== Boring Sample Liquid Plastic Plasticity Specific Sample Description Limit Limit Index Gravity ==================================================================================================================================== - ------------------------------------------------------------------------------------------------------------------------------------ FD1 2 Brown Fine to Medium SAND, little course send and fine gravel, little silt - ------------------------------------------------------------------------------------------------------------------------------------ FD2 3 47 25 22 Gray lean CLAY, little silt, trace course to fine sand - ------------------------------------------------------------------------------------------------------------------------------------ FD3 3 37 20 17 2.85 Gray lean CLAY, and SILT, trace gravel - ------------------------------------------------------------------------------------------------------------------------------------ FD3 4 Gray Fine to Medium SAND, trace course sand, little silt - ------------------------------------------------------------------------------------------------------------------------------------ FD4 2 49 25 24 Gray lean CLAY and SILT - ------------------------------------------------------------------------------------------------------------------------------------ FD5 1B 49 26 23 2.80 Gray lean CLAY, trace fine to medium sand - ------------------------------------------------------------------------------------------------------------------------------------ FD6 1A Dark gray lean silty CLAY, little fine to medium sand, trace coarse sand and fine gravel - ------------------------------------------------------------------------------------------------------------------------------------ FD6 2 Gray lean CLAY, little fine to medium sand, trace coarse sand and fine gravel - ------------------------------------------------------------------------------------------------------------------------------------ FD7 2 Brown medium to fine SAND, some coarse sand and fine to coarse gravel, little silt - ------------------------------------------------------------------------------------------------------------------------------------ FD7 3 2.79 Light gray SILT and fine SAND, some medium to coarse sand, little gravel, trace clay - ------------------------------------------------------------------------------------------------------------------------------------ FD8 1 Gray fine SAND, some silt, trace medium and coarse sand, trace fine gravel - ------------------------------------------------------------------------------------------------------------------------------------ FD8 2 Light gray fine to medium SAND, some course sand and fine gravel, some silt - ------------------------------------------------------------------------------------------------------------------------------------ FD9 2 Light gray fine to medium SAND, some course sand and fine to coarse gravel, little silt - ------------------------------------------------------------------------------------------------------------------------------------ FD10 2 2.83 Blue gray SILT, and fine sand, some medium to coarse sand, some fine to coarse gravel - ------------------------------------------------------------------------------------------------------------------------------------ FD12 1B 42 21 21 Gray lean SILT and CLAY - ------------------------------------------------------------------------------------------------------------------------------------ FD12 2 Gray fine to medium SAND, some silt, some coarse to medium sand, some fine gravel - ------------------------------------------------------------------------------------------------------------------------------------ FD13 1B 51 25 26 2.80 Gray ???^ CLAY - ------------------------------------------------------------------------------------------------------------------------------------ FD14 2 Brown SILT and fine SAND, some coarse to medium sand, little fine gravel - ------------------------------------------------------------------------------------------------------------------------------------ FD14 3 2.76 Brown medium to fine SAND, some silt, little gravel ====================================================================================================================================
Borings FD1 to FD3 are in the Boston Army Base vicinity. Borings FD4 to FD6 are in the Notch. Borings FD7 to FD9 are in the Inner Confluence. Borings FD10 to FD13 are in the Mystic River. Borings FD14 is in the Chelsea River. Project 93317 October 22, GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] GRAIN SIZE DISTRIBUTION TEST REPORT [GRAPH APPEARS HERE] BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 02 - SITE WORK SECTION 02491 UNDERWATER DRILLING AND BLASTING PART 1 GENERAL 1.1 REFERENCES 1.2 RELATED WORK SPECIFIED ELSEWHERE 1.3 DEFINITIONS 1.3.1 Soft Material 1.3.2 Hard Material 1.3.3 Rock Material 1.4 PERFORMANCE REQUIREMENTS 1.4.1 Responsibilities 1.4.1.1 General 1.4.2 Coordination 1.4.2.1 Schedules 1.4.2.2 Permits 1.4.2.3 Fisheries Observer 1.4.3 Work Restrictions 1.4.3.1 Protection of Finfish and Marine Mammals 1.4.3.2 Reserved Channel Blasting Operations 1.4.3.3 Other Restrictions 1.5 SUBMITTALS 1.6 QUALITY CONTROL 1.6.1 Qualifications 1.6.2 Blasting Safety Plan 1.7 LIGHTNING PROTECTION 1.8 RECORDKEEPING 1.8.1 Daily Explosive Material Summary 1.8.2 Report of Loss 1.8.3 Licenses 1.8.4 Daily Blasting Log 1.9 DELIVERY, STORAGE, AND HANDLING 1.9.1 Safety 1.10 PROJECT/SITE CONDITIONS 1.10.1 EXISTING CONDITIONS PART 2 PRODUCTS - NOT USED PART 3 EXECUTION 3.1 EXAMINATION 3.1.1 Preblast Survey 3.2 PREPARATION 3.2.1 Test Blast Program 3.3 BLASTING METHODS AND PROCEDURES 3.3.1 General 3.3.2 Blasting Control 3.3.2.1 Submittals 3.3.2.2 Vibration Control 3.4 DISPOSAL OF DREDGED ROCK MATERIAL -- End of section Table of Contents -- SECTION TABLE OF CONTENTS 02491 Page 1 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT SECTION 02491 UNDERWATER DRILLING AND BLASTING PART 1 GENERAL 1.1 REFERENCES The publications listed below form a part of this specification to the extent referenced. The publications are referred to in the text by basic designation only. ENGINEERING MANUALS (EM) EM 385-1-1 (1996) U.S. Army Corps of Engineers, Safety and Health Requirements Manual 1.2 RELATED WORK SPECIFIED ELSEWHERE a. Requirements relative to water quality monitoring and testing including Data are specified in Section 01135 WATER QUALITY MONITORING AND CONTROL. b. Additional requirements relative to water quality monitoring and testing, including protection of finfish and marine mammals, are specified in Section 01130 ENVIRONMENTAL PROTECTION. c. Measurement and payment for rock material removal and disposal is specified Section 01025 MEASUREMENT AND PAYMENT. d. See also EM 385-1-1 U.S. Army Corps of Engineers, Safety and Health Requirements Manual, Section 29 for additional requirements relative to blasting. 1.3 DEFINITIONS 1.3.1 Soft Material "Soft" or maintenance material is defined in Section 02482 DREDGING. 1.3.2 Hard Material "Hard material" is defined in Section 02482 DREDGING. 1.3.3 Rock Material "Rock material" must be of such composition as, in the opinion of the Contracting Officer, requires blasting or the use of special plant for its removal. All other materials including wrecks, snags, stumps, piles, fragments of rock, and boulders, capable of being removed by the dredge in one piece will be classified and paid for under other items of work, as applicable. Rock material shall be removed and disposed as specified in this section, and as indicated on contract drawings. 1.4 PERFORMANCE REQUIREMENTS 1.4.1 Responsibilities 1.4.1.1 General The Contractor's blasting program and methods shall be those necessary to accomplish the excavation shown on the contract drawings in accordance with the procedures specified in this section. The Contractor will be required to make necessary plans, examinations, surveys, and test blasts to SECTION 02491 Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT determine the quantity of explosives that can be fired without injuries to persons, and fish and wildlife, or damage to personal or public property. 1.4.2 Coordination 1.4.2.1 Schedules The Contractor shall thoroughly coordinate his schedules for blasting with the proper authorities, Federal, State, and local. No blasting will be done unless the Contractor is notified by all concerned parties that he may blast. 1.4.2.2 Permits The Contractor will be required to obtain all necessary permits from the local authorities to perform blasting operations. The Contracting Officer shall be notified in writing that all permits have been obtained. 1.4.2.3 Fisheries Observer The Contractor shall provide the services of an approved fisheries observer to monitor fish passage and report on any possible fish kills from the blasting operations. The Contractor shall cooperate with the observer in his observations and recommendations. The Contractor, in cooperation with the fisheries observer, shall also avoid impacts to marine mammals during blasting operations See Section 01130 ENVIRONMENTAL PROTECTION for Fisheries Observer qualifications and approval action requirements. 1.4.3 Work Restrictions 1.4.3.1 Protection of Finfish and Marine Mammals No blasting shall be performed in the Mystic River and the Inner Confluence from February 15 to June 15 of any year to protect winter flounder spawning and anadromous fish. Blasting shall also comply with the following restrictions: a. No blasting will be permitted during periods of dead slack water consistent with safety requirements. b. All blasting operations are contingent upon using sonar, and with a Fisheries Observer present. Significant schools of fish may appear in the area at any time of year. In the event that a fish school is detected during these fish passage periods, the Contractor shall temporarily stop blasting operations when so advised by the Fisheries Observer. c. A fish startle system shall be used if blasting occurs in the Reserved Channel during anadromous fish runs between February 15 and June 15. See Section 01130 ENVIRONMENTAL PROTECTION for fish startle system and, sonar equipment requirements. d. To reduce fish mortality, all blasting shall be conducted using inserted delays of a fraction of a second per hole and stemming shall be rock or similar material placed into the top of the borehole to deaden the shock wave reaching the water column. e. The Fisheries Observer and the Contractor shall also maintain observations for marine mammals in the area and avoid blasting while the animals are in visible range. 1.4.3.2 Reserved Channel Blasting Operations Blasting operations in the Reserved Channel and in the nearby portion of the Main Ship Channel will be permitted during any time of the year. SECTION 02491 Page 2 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT However, the other requirements stated above for the protection of finfish and marine mammals will apply. 1.4.3.3 Other Restrictions Blasting will not be permitted on Sundays or on State or Federal Legal Holidays, unless approved in advance in writing by the Contracting Officer. 1.5 SUBMITTALS Government approval is required for submittals with a "GA" designation; submittals having an "FIO" designation are for information or for acceptance only. The following shall be submitted in accordance with Section 01300 SUBMITTAL PROCEDURES. SD-08, Statements Blasting Safety Plan; FIO, E Reviewer. Prior to blasting, submit a plan for protection of surrounding structures, equipment, vessels and the environment. Acceptance of the plan by the Contracting Officer will not relieve the Contractor of the responsibility for producing safe and satisfactory results. SD-01, Data Licenses; FIO, C Reviewer. Prior to blasting, submit a list of blasting license holders and their responsibilities for this project. SD-18, Records Daily Blasting Log; FIO, C Reviewer. Submit the required daily blasting log of operations on a weekly basis. SD-09, Reports Preblast Survey; FIO, E Reviewer. Prior to blasting, submit a preblast structural survey of existing structures. SD-09, Reports Test Blast Program; FIO, E Reviewer. After test blasting, submit the results of the test blast program. Acceptance of the plan by the Contracting Officer will not relieve the Contractor of the responsibility for producing safe and satisfactory results. 1.6 QUALITY CONTROL 1.6.1 Qualifications The Contractor shall employ a specialist qualified in vibration control methods and who is capable of analyzing results obtained from seismograph readings. A minimum of 30 days prior to commencement of blasting operations, the Contractor shall provide the Contracting Officer with the written qualifications of the seismic specialist to include but not be limited to past experience, training, and education. The acceptability of the specialist is subject to the approval of the Contracting Officer. The Contractor shall provide a minimum of three seismographs to measure and SECTION 02491 Page 3 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT vibrations of nearby structures caused by each blast detonated under the contract. Seismograph operators shall be qualified personnel capable of setting up instruments at designated locations and efficiently recording the blast. 1.6.2 Blasting Safety Plan No later than 30 days after receipt of Notice to Proceed, the Contractor shall submit a Blasting Plan for review and acceptance. If the plan is not acceptable, the Contractor shall revise and resubmit the plan. The Contracting Officer will require seven days for review and acceptance of the revised plan. The Contractor shall also submit a weekly blasting operation schedule to the Contracting Officer to facilitate the Corps' monitoring of the effects of blasting operations on the fishery resource; include also the Fisheries (marine mammal) Observer report. This schedule shall be provided by Wednesday of the week before the blasting is to occur. The schedule shall include, as a minimum, the days when blasting will occur and the areas to be blasted. No blasting shall be started until after the Blasting Safety Plan has been reviewed and accepted by the Contracting Officer. In addition to the requirements of EM 385-1-1, Section 29, the Contractor's Blasting Plan shall include, as a minimum, the following items: (1) Proposed method of transportation, storage, and handling of explosives. (2) Procedure for monitoring the blast operations and handling misfires. (3) Location, size, depth, and spacing of blast holes, type of explosive and method of loading and detonating, and maximum number of holes to be detonated per blast. Type of blasting machine to be used and when last tested. (4) Type of instrumentation to be used, manufacturer, and when last calibrated and/or certified. (5) List of licenses, permits, and/or clearances required, when applied for, and date of approval or anticipated approval by Federal, State, and local concerns. (6) A format for maintaining a record of individual blasts (i.e. the "Daily Blasting Log") throughout the life of the project designed to record pertinent data before, during, and after the blasting operation. Pertinent information shall include, but not be limited to, those items specified in paragraph "Daily Blasting Log". (7) Names and qualifications of specialists for vibration control analysis and airblast over-pressure measurements, see paragraph "Qualifications". Names and addresses of all certified blasters and users. (8) Plan showing location of warning signs and signals to be used Method of controlling vessel traffic and communications. (9) Name and address of Contractor's representative to which any claims for damage due to blasting should be addressed. (10) A test plan which encompasses the requirements of the Test Blast Program specified below. This plan shall also include the planned test patterns and weights of explosives of each test blast with the anticipated and the allowed peak particle velocities and peak positive airblast pressures at structures most likely to receive damage from the test blast. SECTION 02491 Page 4 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT (11) The plan shall be signed off by the Contractor's "Contractor Quality Control System Manager." 1.7 LIGHTNING PROTECTION The Contractor shall furnish, maintain, and operate lightning-detection equipment during the entire period of blasting operations and/or during the periods that explosives are stored at the site. The equipment shall be similar and equal to the Litton TSM/C Thunderstorm Monitor and Lightning Warning Instrument, as manufactured by Litton Industries, Inc., Environmental Systems Division, Camarillo, California. The equipment shall be installed in accordance with the manufacturer's written instructions. When the lightning- detection device indicates a blasting hazard potential. Personnel shall be evacuated from all areas where explosives are present. The lightning protection equipment shall be identified in the Blasting Plan. 1.8 RECORDKEEPING 1.8.1. Daily Explosive Material Summary The Contractor shall keep a daily record of transactions, to be maintained at each storage magazine. The inventory records shall be updated at the close of business each day. Records shall show class and quantities received and issued, and total remaining on hand at the end of each day. The remaining stock shall be checked each day, and any discrepancies that would indicate a theft or loss of explosive material shall be reported immediately. 1.8.2 Report of Loss Should a loss or theft of explosives occur, all circumstances and details of the loss/theft will be immediately reported to he nearest office of the Bureau of Alcohol, Tobacco and Firearms (ATF), as well as to the local law enforcement authorities and the Contracting Officer's Representative. 1.8.3 Licenses The Contractor shall provide the Contacting Officer with a list of Contractor's blasting license holders, and only these personnel shall be permitted to handle explosives and conduct blasting operations. 1.8.4 Daily Blasting Log The Contractor shall provide the Contacting Officer, on a weekly basis, a daily log of blasting operations. The log shall be updated at close of business each day. The log shall include the number of blasts; time and date of blast; the blast locations and patterns; pounds of explosive used per hole; average water and substrate depth; millisecond delays used; the drill tip elevation at the top of bedrock for each hole drilled as recorded by the Contractor under the direction of the Contracting Officer's representative; and the occurrence of any fish kills. 1.9 DELIVERY, STORAGE, AND HANDLING 1.9.1 Safety The Contractor shall take all reasonable precautions for the protection of individuals and property exposed to his operations. Such precautions shall include, but are not limited to: (1) The amount of explosives permitted aboard the plant at one time will be subject to the approval of the Contacting Officer, but in no case shall amount exceed that required by the Contractor for one day's operations. SECTION 02491 Page 5 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT (2) Provision shall be made for jettisoning explosives in emergencies. It shall be the Contractor's responsibility for retrieving the same after the emergency is over. (3) The Contractor shall take all necessary precautions to prevent damage to any vessel (moored or underway), structures or property, and preserve the crew or occupants thereof from exposure to injury as a result of his operations. (4) In order to prevent flyrock damage, blasting mats shall be employed unless four or more feet of water overlies the rock surface. (5) The Contractor shall look out for and take all precautions necessary to warn and/or protect swimmers, divers, or other individuals in the water exposed to his operations prior to blasting. (6) Transport of explosives and detonators shall be in vehicles suitably grounded and protected from lightning strikes and electrical storm phenomena, in accordance with Federal and State requirements. (7) No explosive material shall be handled, transported, or in any way made use of during any period of electrical storms, of lightning, or other electrical phenomenon. In the event that any such condition should appear imminent or occur, or if some known leakage of electricity should occur in the neighborhood of or in the work area, while the transport, handling, making up, charging, or such like use of explosives is being effected, then the work area shall be evacuated and abandoned completely until at least 30 minutes after the condition has ceased or the leakage stopped. The Contracting Officer shall be notified prior to any blasting or loading operation so that stationary or mobile radio transmissions are not made on the site. (8) The handling, storage, and use of explosives shall be governed by the applicable provisions of the section on "Blasting" of the Corps of Engineers Manual EM 385-1-1, dated September 1996, entitled, "Safety and Health Requirements Manual." In addition, the Contractor shall make necessary arrangements as may be required by the applicable U.S. Coast Guard, State, County, Municipal, or Port Authority codes, rules, regulations, and laws, and shall be responsible for compliance therewith, including storage of explosives. All handling, use, and storage of explosives will be under the personal supervision of a Licensed Blaster. No blasting is permitted when visibility is less than 1,500 feet in fog or rain, and between beginning of evening nautical twilight, and ending of morning nautical twilight. 1.10 PROJECT/SITE CONDITIONS 1.10.1 EXISTING CONDITIONS The rock to be excavated is from the geologic formation locally known as the Cambridge slate in early literature and as argillite in later references. Argillite is used as the classification for this project. The bedrock map of the area by the United States Geological Survey describes the argillite as gray, laminated to massively bedded with poorly developed bedding-plane partings, having locally imperfect slaty cleavage, and with minor inter bedded sandstone and (or) quartzite. Bedrock was encountered by several borings in the Mystic River Channel and in the Boston Army base vicinity as described on the graphic logs shown on the drawings. The bedrock surface is expected to be irregular and its actual occurrence within dredge depth is unknown. SECTION 02491 Page 6 BOSTON HARBOUR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT Contractors are expected to examine the site of the work, cores and logs, and, after investigation, decide for themselves, the character of materials and make their bids accordingly. The Government assumes no responsibility for the types of material encountered, nor does it guarantee that other materials will not be encountered in performance of the work. The removal cost of such other materials shall be included in the Bid Prices. Other subsurface data are referenced in Section 02482 Dredging. PART 2 PRODUCTS - NOT USED PART 3 EXECUTION 3.1 EXAMINATION 3.1.1 Preblast Survey The Contractor shall provide one qualified person from his organization and his specialist on vibration control to work as a team with a representative of the Contracting Officer in making a preblast structural survey. A representative sample of structures (approximately 20 percent), as determined by the Contractor, that could receive seismic motion greater than 0.5 inch per second or airblast over pressure greater than 0.01 psi, shall be inspected and their condition documented. The Contractor may perform additional preblast surveys of additional structures, at his option and at no additional expense to the Government. All existing outstanding structural defects such as broken windows shall be photographically documented. Video photography may be utilized in addition to still photographs to augment particularly large areas of poor condition, but shall not be used in lieu of the written reporting procedure. Each structure shall be documented as to its construction, foundation type, condition, and closest distance to rock removal locations. The preblast survey inspection methods will be subject to the approval of the Contracting Officer. The Contractor shall prepare a preblast survey report and submit the report to the Contracting Officer. All necessary rights of entry to properties subject to a preblast survey shall be obtained by the Contractor. Owners of all properties that could receive seismic motion greater than 0.5 inch per second or airblast over pressure greater than 0.01 psi shall be notified prior to the commencement of blasting. 3.2 PREPARATION 3.2.1 Test Blast Program A test blast program shall be conducted by the Contractor, consisting of a minimum of three test blasts in each area of rock excavation. The purpose of the test program is to allow the Contractor to establish the desired effects for excavation, the safe limits of vibration and airblast over-pressure. The test blast program shall be conducted and reported in strict accordance with procedures outlined in these specifications covering blasting methods and vibration control. No test blasting shall be started until after the location for the individual test blasts has been reviewed and approved by the Contracting Officer. Test blasting in the Mystic River and Inner Confluence, if necessary, will be permitted only between June 16 of one year through February 14, inclusive, of the next year. The test event shall begin with a small number of charges and extend upward to the maximum yield to be used. The final test event shall simulate as close as practicable the explosive charge type, size, overlying water depth, charge configuration, charge separation, initiation methods, and emplacement conditions anticipated for the largest detonations. Upon any SECTION 02491 Page 7 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT evidence of any damage to preblast survey structures, test blasting shall cease until the Contracting Officer has been notified and adjustments made. One copy of the record for the test blasts shall be submitted in tabular form to the Contracting Officer. After the series of test blasts, the Contractor shall examine the representative structures of the preblast survey as previously specified. All new damage resulting from the test blasting shall be reported in detail to the Contracting Officer, including photographs. At the conclusion of the test blast program, the Contractor shall examine all reports, surveys, test data, and other pertinent information: the conclusions reached shall be the basis for developing a completely engineered procedure for blasting. The procedures shall include sketches showing blasting patterns, weights and explosives, wiring, and charge emplacement. The developed procedure shall be submitted for review to the Contracting Officer, and upon completion of the review and acceptance, it shall be appended to and become a part of the blasting plan. A period of seven days will be required for review and acceptance by the Contracting Officer of the proposed procedure. Such review period shall not be the basis for a claim against the Government for delay. In no event shall operational blasting proceed until the developed procedure for blasting has been reviewed and accepted by the Contracting Officer. If the procedure is not acceptable, the Contractor shall revise and resubmit the procedure. The Contracting Officer will require five days for review and acceptance of the revised procedure. 3.3 BLASTING METHODS AND PROCEDURES 3.3.1 General The Contractor shall take appropriate measures for controlling blast damage which shall include but are not limited to: a. Choosing a suitable ignition pattern with millisecond delay detonators to minimize the instantaneous impulse. b. Using lower charges in the first detonating delay than those in subsequent delays. c. Taking precautions to avoid flashover, which shall include the following measures unless otherwise allowed by the Contracting Officer: (1) Keeping the top of the hole uncharged for a depth equal to at least one-half the burden width. (2) Using low sensitivity explosives in the entire pattern or loading the holes alternatively with high and low sensitivity explosives. (3) Inspecting the ignition system using ground fault testing. d. One person shall be charged with overall development of pattern design, loading and connection the explosives and may supervise subordinates, who also shall have blasting credentials to accomplish the same duties. e. Proper lighting plant shall fully illuminate the drilling and loading barge(s) when work is being conducted without full daylight. Drilling shall be vertical with a hole diameter of 6-inches or smaller. Blast holes shall be accurately positioned a Differential Global Positioning System (DGPS) and recorded with electronic drill monitoring. f. The Contractor shall determine a safe means to drill, load and connect the firing lines to the submerged borings. The vertical SECTION 02491 Page 8 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT loading casing shall be seated into rock and accurately positioned be modern survey procedures. 3.3.2 Blasting Control 3.3.2.1 Submittals On a semi-monthly basis, the Contractor shall submit in tabular form a record for each blast which shall consist of positively identified, date and time and location of blast, amount of explosives used, peak particle velocity, and all other data necessary to adequately control blasting operations. A memorandum or telephone report on vibration intensity shall be submitted within 24 hours when specifically requested by the Contracting Officer or without request when such intensity exceeds a peak particle velocity of 1.5 inches per second. 3.3.2.2 Vibration Control The vibration specialist shall adopt appropriate measures for blast damage reduction and shall be fully involved in a design of the test blasting and monitoring program and the final production blasting and monitoring program. As a minimum, seismic monitoring equipment shall be placed on the tower and another lower location on or in the Tobin Bridge for monitoring blasting in the Mystic River, and at the Conley Terminal and Boston Army Base for monitoring blasting in the Reserved Channel. Other monitoring stations shall be set up as necessary to gain reliable data on blast effects to structures deemed sensitive by the vibration specialist, Contractor, or Contracting Officer. Fourteen days shall be allowed for the Contracting Officer to review and accept the final blasting plan. The vibration specialist shall be retained throughout the operational program to provide and vertify round-by-round blasting records. Millisecond delay caps shall be used on all blasting work. Blasting shall be controlled in such a manner that the maximum ground vibration level at any structure which is vulnerable to damage shall not exceed a zero-to-peak particle velocity of 1.0 inches per second nor an energy ratio of 1.0. The instrumentation shall record all three orthoganal components (vertical, radial, and transverse with respect to the location of the blast) of particle velocity direct (or shall have sufficient resolution of acceleration or displacement such that particle velocity can be readily and accurately determined from the records). The instantaneous vector sum of the three directional components of vibration will be used to compute the maximum vibration level. 3.4 DISPOSAL OF DREDGED ROCK MATERIAL Rock material shall be placed in dump scows and transported to the Massachusetts Bay Disposal Site and disposed at a taut wire buoy. The location of the Mass Bay Disposal Site is shown on the drawing attached at the end of Section 02482 DREDGING. The National Marine Fisheries Service (NMFS) has placed specific conditions governing the use of the Massachusetts Bay Disposal Site: See Section 01130 ENVIROMENTAL PROTECTION for information on the NMFS conditions governing the use of the Massachusetts Bay Disposal Site. -- End of Section -- SECTION 02491 Page 9 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION TABLE OF CONTENTS DIVISION 02 - SITE WORK SECTION 02492 UNDERWATER DIVING WORK PART 1 GENERAL 1.1 SUMMARY 1.1.1 Location of Diving Operations 1.1.2 Underwater Work 1.1.3 Time of Year and Weather 1.1.4 Depths of Diving Operations and Visibility 1.1.5 Types of Diving Operations 1.1.6 Potential Diving Tasks 1.1.7 Measurement and Payment 1.2 REFERENCES 1.3 SUBMITTALS 1.3.1 Accepted Submittals 1.3.2 Unaccepted Submittals 1.3.3 Submittal Procedure 1.3.3.1 Procedures 1.3.3.2 Diving Coordinator Review 1.3.3.3 Information on Submittal Status 1.3.3.4 Deviations 1.3.4 Government Accepted Submittals 1.3.5 Information Only Submittals 1.3.6 Submittal Items 1.3.6.1 Contractor Safe Practices Manual 1.3.7 Medical Requirements; GA: See Revisions to COE EM 385-1-1, Section 30, Paragraph 30.A.12. 1.3.7.1 Site Specific Diving Operational Plans 1.4 REGULATORY REQUIREMENTS 1.4.1 Policy 1.5 PRE-DIVE CONFERENCE (See COE EM 385-1-1, Section 30, Paragraph 30.A.14 and 30.A.15) 1.6 MANNING LEVELS FOR DIVE TEAMS (See COE EM 385-1-1, dated 3 Sep 96, Appendix N) PART 2 PRODUCTS (Diving Equipment) 2.1 EQUIPMENT REQUIREMENTS (See COE EM 385-1-1, Section 30, dated 3 Sep 96. PART 3 EXECUTION 3.1 SURFACE SUPPLIED AIR OPERATIONS (See COE EM 385-1-1, Section 30, Paragraph 30C) 3.2 MIXED GAS DIVING OPERATIONS - -- End of Section Table of Contents -- SECTION TABLE OF CONTENTS 02492 Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT SECTION 02492 UNDERWATER DIVING WORK PART 1 GENERAL 1.1 SUMMARY 1.1.1 Location of Diving Operations The location of services to be performed under this contract include Boston Harbor Channels and Berth areas. 1.1.2 Underwater Work Provide diving services and equipment as necessary to perform the work of this contract. 1.1.3 Time of Year and Weather Diving operations may be conducted year round and in all weather conditions. 1.1.4 Depths of Diving Operations and Visibility Depths of diving operations may range from 10 to 80 feet, and may include both clear and limited visibility conditions. 1.1.5 Types of Diving Operations The surface supplied air mode of diving shall be used for all underwater work. 1.1.6 Potential Diving Tasks A partial list of potential underwater tasks that may be necessary due to the work performed under this contract are as follows: a. Underwater investigations and inspections may be necessary in support of underwater drilling and blasting operations. b. Services may include conducting underwater surveys to see what is on the channel or berth area bottom prior to dredging. c. The Contractor may utilize underwater investigations and surveys as a part of his disposal cell coverage and thickness verification methodology. d. Diving operations may be necessary for the attachment of rigging equipment for removal of debris and obstructions. e. Diving operations may be necessary for locating and marking underwater utilities with buoys to reduce the risk of damage due to the dredging operation. f. Diving operations may be necessary for assisting in retrieving dredge equipment lost in the water during the dredging operation. g. Diving operations may be necessary for performing scientific observations and sampling in support of water quality monitoring and control. h. The Contractor may utilize underwater surveys to verify complete removal of the MWRA "Old Section 38" water tunnel. SECTION 02492 Page 1 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 1.1.7 Measurement and Payment No separate measurement or payment will be made for the work of this section. All costs associated with underwater diving work shall be included in the unit and lump sum Bidding Schedule payment items most closely associated with the work involved. 1.2 REFERENCES The publications listed below form a part this specification to the extent referenced. The publications are referred to in the text by basic designation only. CORPS OF ENGINEERS (COE) COE EM 385-1-1 (1996) Safety & Health Requirements Manual 1.3 SUBMITTALS The items listed in subpart "Submittal Items" below shall be submitted to the Contracting Officer for review and acceptance by the New England District Safety Officer and the USACE Diving Coordinator (UDC). 1.3.1 Accepted Submittals The acceptance of submittals by the Contracting Officer shall not be construed as a complete check, but will indicate only that the submittal generally complies with regulatory requirements. Acceptance will not relieve the Contractor of the responsibility for compliance with COE EM 385-1-1, Section 30. After submittals have been accepted by the Contracting Officer or his designated representative, no resubmittal will be given consideration unless accompanied by an explanation as to why changes are necessary. 1.3.2 Unaccepted Submittals The Contractor shall make all corrections required by the Contracting Officer and promptly furnish a corrected submittal in the form and number of copies as specified for the initial submittal. If the Contractor considers any correction indicated on the submittals to constitute a change to the contract, notice shall be given promptly to the Contracting Officer. 1.3.3 Submittal Procedure Submittals shall be made as follows: 1.3.3.1 Procedures Submit six (6) copies of each submittal item to the USACE Diving Coordinator. For emergency work, FAX or hand carry one copy of each -------------- submittal. In extreme emergencies, review actions may take place at the dive site, just prior to the dive operation. 1.3.3.2 Diving Coordinator Review Review action on all submittals is by the New England District Diving Coordinator (UDC), Mr. George Norton, Telephone Number (978) 318-8870. 1.3.3.3 Information on Submittal Status All Contractor requests for current status of submittal reviews shall be made through the Project Resident Engineer. SECTION 02492 Page 2 BOSTON HARBOR NAVIGATION IMPROVMENT AND BERTH DREDGING PROJECT 1.3.3.4 Deviations For submittals which include proposed deviations requested by the Contractor, the Contractor shall set forth in writing the reason for the deviations and annotate such deviations on the submittal. The Government reserves the right to rescind inadvertent approval of submittals containing unnoted deviations. 1.3.4 Government Accepted Submittals Upon completion of review of submittals requiring Government acceptance, the submittals will be identified as having received acceptance by being so noted and dated. Four copies of the submittal will be retained by the Contracting Officer and copies of the submittal will be returned to the Contractor. 1.3.5 Information Only Submittals Normally submittals for information only will not be returned. Acceptance of the Contracting Officer is not required on information only submittals. These submittals will be used for information purposes. The Government reserves the right to require the Contractor to resubmit any item found not to comply with the contract. This does not relieve the Contract or from the obligation to comply with these specifications and will not prevent the Contracting Officer from requiring contract compliance. 1.3.6 Submittal Items The Contractor shall submit all items listed below. The Contracting Officer may request submittals in addition to those listed when deemed necessary to adequately describe the work covered in the particular work order. Each submittal shall be complete and in sufficient detail to allow ready determination of compliance with contract requirements. Prior to submittal, all items shall be checked and approved by the Contractor's Quality Control (CQC) representative and shall be stamped, signed, and the contract requirements. Proposed deviations from the contract requirements shall be clearly identified. 1.3.6.1 Contractor Safe Practices Manual The Contractor shall develop and maintain a safe practices manual. The safe practices manual shall contain all of the information required by 29 CFR 1910.420 and the additional information as specified below. This manual shall encompass the Contractor's entire diving program and be available at all times at the dive location to each dive team member and the Government representative. The safe practices manual shall include the items listed in paragraph 30.A.11 of COE EM 385-1-1, Section 30, and verification of dive team qualifications and experience. Verification of dive team qualifications and experience includes divers, diving supervisor, and tenders. Evidence that each dive team member has current certification in cardiopulmonary resuscitation (CPR) and first aid shall be submitted. A lack of experience or qualifications to perform the tasks stated in the dive plan will be cause for rejection or cessation of operations. 1.3.7 Medical Requirements; GA; See Revisions to COE EM 385-1-1, Section 30, Paragraph 30.A.12. 1.3.7.1 Site Specific Diving Operational Plans A site specific diving operations plan shall be developed for each separate diving operation. This plan shall be submitted to the Contracting Officer for review and acceptance by the New England District UDC, prior to commencement of diving operations. The accepted plan shall be at the diving location at all times and be made available to the Government diving SECTION 02492 Page 3 BOSTON HARBOR NAVIGATION IMPROVEMENT AND BERTH DREDGING PROJECT inspector upon request. As a minimum, the plan shall contain the information required by COE EM 385-1-1, Section 30, Paragraph 30.A.13. 1.4 REGULATORY REQUIREMENTS All diving operations performed under this contract shall comply with COE EM 385-1-1, Section 30, dated 3 Sep 96. The New England District may elect to implement and enforce more stringent diving requirements than stated in the above reference, but under no circumstances will the operational requirements to be less than specified in the reference. 1.4.1 Policy It is the policy of the Corps of Engineers that all contract diving operations be conducted in a prudent manner that will provide for maximum efficiency and minimize the potential for personal injury, loss of life, occupational illness and/or property damage. The Contractor shall not utilize drivers if the objective can be more safely and effectively accomplished by another means, e.g., using remote controlled television system in lieu of drivers. The Contractor shall demonstrate that each diver is: (1) Medically fit to dive. (2) Adequately trained and have the required proficiency for the work assigned. (3) Provided with and adheres to prescribed safe operating procedures. (4) Trained with and required to use all equipment and/or tools to safely perform the assigned tasks. 1.5 PRE-DIVE CONFERENCE (see COE EM 385-1-1, Section 30, Paragraph 30.A.14 and 30.A.15) 1.6 MANNING LEVELS FOR DIVE TEAMS (see COE EM 385-1-1, dated 3 Sep 96, Appendix N) PART 2 PRODUCTS (Diving Equipment) 2.1 EQUIPMENT REQUIREMENTS (See COE EM 385-1-1, Section 30, dated 3 Sep 96. PART 3 EXECUTION 3.1 SURFACE SUPPLIED AIR OPERATIONS (See COE EM 385-1-1, Section 30, Paragraph 30C) 3.2 MIXED GAS DIVING OPERATIONS Mixed gas diving operations will not be permitted for the work of this contract. -- End of Section -- SECTION 02492 Page 4 EX-10.04 10 CONTRACT EXHIBIT 10.04 [LOGO] [LETTERHEAD OF DEPARTMENT OF THE ARMY] May 12, 1998 Office of the Chief Procurement Branch Pier 400 Constructors 2122 York Road Oak Brook, Illinois 60521 Gentlemen: You are hereby notified that your bid, in the total estimated amount of $141,485,450.00, for Items Nos. 0001-0021, for Stage 2, Port of Los Angeles, Pier 400 Deep Draft, Navigation Improvements Los Angeles and Long Beach Harbors, San Pedro Bay, Los Angeles County, California, Invitation for Bid No. DACW09-97- B-0009, is accepted and the award of Contract No. DACW09-97-C-0035 is made to you. The Government reserves the right to award Option Items Nos. 0022A, 0022B and 0023 at a later date. Payments are to be made from Appropriation No. 96X3122 CONST GEN COE CIVIL S96041 BB012 12 300 A0000 (WN) in the amount of $7,900,000.00 and 96X8862 CONTRIBUTED FUNDS S96041 FW141 12 300 A0000 (WN) in the amount of $0. This is a Continuing contract, reference Special Clauses, Section 00800, Paragraph 17 of the Solicitation entitled "Continuing Contracts", EFARS 52.232-5002. You are not to proceed with the performance of work under the contract until you are in receipt of a Notice to Proceed from me. You are required to furnish satisfactory Performance and Payment Bonds within ten (10) days from the date of this award, before you proceed with the work. Bonds should bear the surety company's bond number. Sincerely, /s/ J. A. Eugino J. A. Eugino Contracting Officer
- ------------------------------------------------------------------------------------------------------------------------------------ 1. SOLICITATION NO. 2. TYPE OF SOLICITATION 3. DATE ISSUED PAGE OF PA SOLICITATION, OFFER, DACWO9-37-B-0009 03/18/97 AND AWARD [x] SEALED BID (IFB) (Construction, Alteration, or Repair) [_] NEGOTIATED (RFP) - ------------------------------------------------------------------------------------------------------------------------------------ IMPORTANT - The "offer" section on the reverse must be fully completed by offeror. - ------------------------------------------------------------------------------------------------------------------------------------ 4. CONTRACT NO. 5. REQUISITION/PURCHASE REQUEST NO. 6. PROJECT NO. DACW09- 97-C-0035 WS1SYN- 7361-9506 - ------------------------------------------------------------------------------------------------------------------------------------ 7. ISSUED BY CODE SPLCTC06 8. ADDRESS OFFER TO SPLCTC06 LOS ANGELES DISTRICT, COE LOS ANGELES DISTRICT, COE CESPL-CT- P (S. OLIVER- HALL) CESPL-CT- P (S. OLIVER- HALL) P.O. BOX 522711 P.O. BOX 522711 LOS ANGELES, CA 90053-2325 LOS ANGELES, CA 90053-2325 - ------------------------------------------------------------------------------------------------------------------------------------ 9. FOR INFORMATION A. NAME B. TELEPHONE NO. (Include area code) (NO COLLECT CALLS) CALL SANDY OLIVER-HALL CO6 (213) 452-3243 - ------------------------------------------------------------------------------------------------------------------------------------ SOLICITATION - ------------------------------------------------------------------------------------------------------------------------------------ NOTE: In sealed bid solicitations "offer' and "offeror" mean "bid" and "bidder". - ------------------------------------------------------------------------------------------------------------------------------------ 10. THE GOVERNMENT REQUIRES PERFORMANCE OF THE WORK DESCRIBED IN THESE DOCUMENTS (Title, identifying no data): Stage 2. Port of Los Angeles, Pier 400 Deep Draft, Navigation Improvements. Los Angeles and Long Beach Harbors, San Pedro Bay, Los Angeles County, California The Estimated Cost of this Acquisition is over $10,000,000.00 Any contract awarded under this solicitation will be made pursuant to PL 100-656 "Small Business Competitiveness Demonstration Program." Bidders are advised that this project may be delayed, cancelled or revised at any time during the solicitation, selection and/or final award process. - ------------------------------------------------------------------------------------------------------------------------------------ 11. The Contractor shall begin performance within 10 calendar days and complete it within 900 calendar days after receiving ---- ---- [_] award [x] notice to proceed. This performance period is [x] mandatory. [ ] negotiable. (See Section 00800.) ------------- - ------------------------------------------------------------------------------------------------------------------------------------ 12A. THE CONTRACTOR MUST FURNISH ANY REQUIRED PERFORMANCE AND PAYMENT BONDS 128. CALENDAR DAYS If YES, "indicate within now many calendar days a after award item 128.) [X] YES [_] NO 010 - ------------------------------------------------------------------------------------------------------------------------------------ 13. ADDITIONAL SOLICITATION REQUIREMENTS: A. Sealed offers in original and 0 copies to perform the work required are due at the place specified in Item 8 by 1.00 P.M. --- ----------- (hour) local time 4/29/97 (date). If this is a sealed bid solicitation, offers must be publicity opened at that time. Sealed envelopes containing offers shall be marked to show the offerer's name and address, the solicitation number, and the date and time offers are due. B. An offer guarantee [x] is. [_] is not required. SEE SECTION 00100, BID GUARANTEE FORM AND AMOUNT C. All offers are subject to the (1) work requirements, and (2) other provisions and clauses incorporated in the solicitation in full text or by reference. D. Offers providing less than 60 calendar days for Government acceptance after the date offers are due will not be considered and will be rejected. - ------------------------------------------------------------------------------------------------------------------------------------
1442-101 STANDARD FORM 1442 ? REV 4-1 Contract No. DACW09-97-C-0035 SCHEDULE OF PAYMENT
ITEM DESCRIPTION QUANTITY U/I UNIT PRICE AMOUNT - ---- --------------------------------- ----------------- --- -------------- ----------------- 0001 MOBILIZATION AND DEMOBILIZATION 1.00 JB L.S. . $ 6,400,000.00 -------------- ----------------- 0002 DREDGE ELEMENT 101 207,000.00 CH 3.30 683,100.00 -------------- ----------------- 0003 DREDGE ELEMENT 102 267,000.00 CM 6.00 1,602,000.00 -------------- ----------------- 0004 DREDGE ELEMENT 103 710,000.00 CM 3.70 2,627,000.00 -------------- ----------------- 0005 DREDGE ELEMENT 104 500,000.00 CM 3.50 1,750,000.00 -------------- ----------------- 0006 DREDGE ELEMENT 105 2,500,000.00 CM 4.75 11,875,000.00 -------------- ----------------- 0007 DREDGE ELEMENT 106 2,073,000.00 CM 7.50 15,547,500.00 -------------- ----------------- 0008 DREDGE ELEMENT 107 320,000.00 CM 3.00 960,000.00 -------------- ----------------- 0009 DREDGE ELEMENT 108 1,653,000.00 CM 7.50 12,397,500.00 -------------- ----------------- 0010 DREDGE ELEMENT 109 1,042,000.00 CM 2.80 2,917,600.00 -------------- ----------------- 0011 DREDGE ELEMENT 110 1,800,000.00 CM 3.25 5,850,000.00 -------------- ----------------- 0012 DREDGE ELEMENT 111 2,973,000.00 CM 3.10 9,216,300.00 -------------- ----------------- 0013 DREDGE ELEMENT 112 770,000.00 CM 3.60 2,772,000.00 -------------- ----------------- 0014 DREDGE ELEMENT 113 1,798,000.00 CM 3.60 6,472,800.00 -------------- -----------------
00010-4 Contract No. DACW09-97-C-0035 SCHEDULE OF PAYMENT CONTINUATION
ITEM DESCRIPTION QUANTITY U/I UNIT PRICE AMOUNT - ---- ---------------------- ------------ --- ------------- ----------------- 0015 (Continued) 0015 DREDGE ELEMENT 114 1,205,000.00 CM 3.60 4,338,000.00 ------------- ----------------- 0016 DREDGE ELEMENT 114A 241,000.00 CM 3.50 843,500.00 ------------- ----------------- 0017 DREDGE ELEMENT 215 0017A FIRST 325,000 CUBIC METERS 325,000.00 CM 30.30 9,847,500.00 ------------- ----------------- 0017B OVER 325,000 CUBIC METERS 300,000.00 CM 10.00 3,000,000.00 ------------- ----------------- 0018 PLACE QUARRY RUN (R101-R106, R109, R110) 2,990,000.00 MT 13.53 40,454,700.00 ------------- ----------------- 0019 PLACE ROCK ELEMENT 107 - A-500 ARMOR STONE 100,000.00 MT 13.53 1,353,000.00 ------------- ----------------- 0020 PLACE ROCK ELEMENT 108 - A-1 ARMOR STONE 15,000.00 MT 13.53 202,950.00 ------------- ----------------- 0021 PLACE GEOTEXTILE FILTER 2,500.00 M 150.00 375,000.00 ------------- ----------------- 0022 OPTION ITEM - DREDGE ELEMENT 116 0022A FIRST 100,000 100,000.00 CM 3.60 360,000.00 ------------- ----------------- 0022B OVER 100,000 TO 1,500,000 1,400,000.00 CM 3.60 5,040,000.00 ------------- ----------------- 0023 OPTION ITEM - FILL QUALITY CONTROL AND 1.00 JB L.S. . 800,000.00 ------------- ----------------- INSTRUMENTATION INSTALLATION TOTAL ESTIMATED AMOUNT PLUS OPTION ITEMS: $ 147,685,450.00 ----------------- TOTAL ESTIMATED CONTRACT AMOUNT: $ 141,485,450.00 -----------------
*DENOTES A CHANGE END OF SECTION 00010 NOTE: THE GOVERMENT RESERVES THE RIGHT TO AWARD OPTION ITEMS 0022A, 0022B AND 0023 AT A LATER DATE. Encl 1 to Amend. No. 0002 00010-5 [LOGO] [LETTERHEAD OF DEPARTMENT OF THE ARMY APPEARS HERE] May 9, 1997 Small and Disadvantaged Business Utilization Office Great Lake Dredge & Dock/Connolly Pacific Joint Venture, dba Pier 400 Constructors ATTN: Michelle K. Youssef Contract Plan Administrator 2122 York Road Oak Brook, Illinois 60521 Gentlemen: Reference is made to Solicitation No. DACW09-97-B-0009 for Stage 2, Port of Los Angeles, Pier 400 Deep Draft, Navigation Improvements Los Angeles and Long Beach Harbors, San Pedro Bay, Los Angeles County, California. Your subcontracting plan dated May 1, 1997, submitted pursuant to Contract Clause No. 34, "Small Business and Small Disadvantaged Business Subcontracting Plan - DOD Contracts - Alternate I" is hereby approved. Sincerely, /s/ J. A. Eugino J. A. Eugino Contracting officer [LOGO] [LETTERHEAD OF DEPARTMENT OF THE ARMY] REPLY TO ATTENTION OF: Office of the Chief 97 Apr 30 Contract Compliance Branch SUBJECT: Request for Preaward Information for IFB # DACW09-97-B-0009, Stage 2, Port of Los Angeles, Pier 400 Deep Draft, Los Angeles and Long Beach Harbors, Los Angeles, County, California Pier 400 Constructors 2122 York Road Oak Brook, Illinois 60521 Mr. Douglas B. Mackie: In accordance with Section 00100, Paragraph 5, Contractor Responsibility, Pre-Award Survey, contained in the above-referenced project, please provide the following information in order to perform a preaward survey on your firm: 1. List of projects completed for the past three years, including dollar amount of each contract. 2. List of projects in progress, percentage of work completed, including dollar value of each contract. 3. The name and qualifications of the employee designated to act as the Project Superintendent/Manager for this contract. 4. Copy of latest financial statement. 5. General description of your firm. Please forward this information to Mrs. Pat Bonilla, Contract Compliance Branch, P. O. Box 2711, Los Angeles, California 90053-2325, or express mail to 911 Wilshire Blvd., Room 1040, Los Angeles, California 90017-3401, as soon as possible. If you have any questions regarding this matter, please call (213) 452-3255 or use FAX (213) 452-4187. Sincerely, /s/ Pat Bonilla for Tina A. Frazier Chief, Contract Compliance Branch [LOGO APPEARS HERE] US Army Corps of Engineers Los Angeles District Contracting Division ================================================================================ FAX COVER SHEET ================================================================================ To Douglas Machie Pier 400 Constructures --------------- ---------------------- NAME OFFICE ????^ 630-574-3000 630-574-3007 ------------ ------------ Telephone No. Fax No. ================================================================================ From Par Bonilla ----------- ------------- NAME OFFICE ???^ 213-452-3255 COMM: (213) 452-4187 ------------ -------------------- TELEPHONE NO. FAX NO. ================================================================================ Subject Request for ?????^ Survey Info --------------------------------------------------- 97-B-0009 --------------------------------------------------- ================================================================================ Message Please call upon receipt of this FAX --------------------------------------------------- Thanks --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- ================================================================================ Pages 3 Including Cover [LOGO OF GREAT LAKES DREDGE & DOCK COMPANY] FAX TRANSMISSION GREAT LAKES DREDGE & DOCK COMPANY 2122 YORK ROAD OAK BROOK, IL 60521-1930 - -------------------------------------------------------------------------------- HYDRAULIC DREDGING DIVISION - -------------------------------------------------------------------------------- TELEPHONE: (630) 574-3000 FAX: (630) 574-1515 PLEASE DELIVER THE FOLLOWING AS SOON AS POSSIBLE: DATE: 2 May 1997 - -------------------------------------------------------------------------------- TO: Mike Ellis / Clint Larison - -------------------------------------------------------------------------------- COMPANY: Connelly - Pacific - -------------------------------------------------------------------------------- FAX PHONE NO: 562-435-2035 - -------------------------------------------------------------------------------- FROM: Mike Ernst - -------------------------------------------------------------------------------- SUBJECT: Pre-Award Info - Pier 400 - Stage 2 - -------------------------------------------------------------------------------- NO. OF PAGE(S): 4 (including cover page) PLEASE NOTIFY US IMMEDIATELY IF TRANSMISSION IS RECEIVED IMPROPERLY NOTES: - -------------------------------------------------------------------------------- ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ********** -IND. XMT JOURNAL- ********* DATE MAY-02-1997 ****** TIME 10:48 ***** DATE/TIME = MAY-02-1997 10:46 JOURNAL No. = 06 COMM.RESULT = OK PAGE(S) = 004/004 DURATION = 00:01'30 FILE NO. = 011 MODE = MEMORY TRANSMISSION DESTINATION = 15624352035 RECEIVED ID = /310 435 2035 RESOLUTION = FINE ********************** - - ***** - - ***************** SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS SUBCONTRACTING PLAN CONTRACTOR: Great Lakes Dredge & Dock/Connolly Pacific Joint Venture ADDRESS: 2122 York Road, Oak Brook, IL 60521 SOLICITATION OR CONTRACT NUMBER: DACW09-97-B-0009 PROJECT TITLE: Stage 2, Port of Los Angeles, Pier 400 TOTAL AMOUNT OF CONTRACT: $147,685,450.00 STATEMENT OF CORPORATE POLICY ----------------------------- The following with any attachments, is hereby submitted as a Subcontracting Plan to satisfy the applicable requirements as set forth in the above-mentioned solicitation. Reference (Construction/Service) Contract Clause No. FAR 52.219.9, "Small Business and Small Disadvantaged Business Subcontracting Plan (Feb. 1990) ALT.1." Great Lakes Dredge & Dock/Connolly Pacific Joint Venture as contractor for the United States Army Corps of Engineers, understands clearly the government's requirements that the successful large business prime contractor provide the maximum practical opportunity for Small Business and Small Disadvantaged Business concerns to participate in the performance of the contract's subcontracting program. Great Lakes Dredge & Dock/Connolly Pacific Joint Venture is committed, as a corporate policy, to compliance with both, the principle of government regulation, dealing with the issue of Small Business (SM), Small Disadvantaged Businesses (SDB's) and Historically Black Colleges/Minority Institutions (HBCU/MI's) subcontracting. The Subcontracting Plan which follows, details our commitments in this regard. 1. Type of Plan (Check One) ------------ X Individual plan (All elements developed specifically for this --- contract and applicable for the full term of this contract). ___ Master plan (Goals developed for this contract; all other elements standard; must be renewed annually). ___ Commercial products plan (Contractor sells large quantities of off-the-shelf commodities to many Government agencies. Plans/goals negotiated by a lead agency on a company-wide basis rather than for individual contracts. Plan effective only during year approved. Contractor must provide copy of lead agency approval). Subcontracting Plan Stage 2, Port of Los Angeles, Pier 400 DACW09-97-B-0009 Page 2 2. Goals - BASE ----- a. Total estimated dollar value of all planned subcontracting, i.e., with all types of organizations under this contract, is $8,859,547. --- b. Total estimated dollar value and percentage of planned subcontracting with large business concerns: $3,543,819.00 - 40% c. Total estimated dollar value and percentage of planned subcontracting with small business concerns: $5,315,728.00 - (60%). d. Total dollars planned to be subcontracted to Small Non-Disadvantaged Business Concerns: $4,518,369.00 - (85% of C.). e. Total dollars planned to be subcontracted to Small Disadvantaged Business Concerns: $531,572.00 - (10% of A.). This amount includes Historical Black Colleges/Minority Institutions (HBCU/MI). d. Total dollars planned to be subcontracted to Women Owned Business Concerns: $265,786.00 - (5% of A.). Goals - INCLUDING OPTIONS ----- a. Total estimated dollar value of ali planned subcontracting, i.e., with all types of organizations under this contract, is $9,830,586.00 --- b. Total estimated dollar value and percentage of planned subcontracting with large business concerns: $3,932,234.00 - 40% c. Total estimated dollar value and percentage of planned subcontracting with small business concerns: $5,898,352.00 - (60%). d. Total dollars planned to be subcontracted to Small Non-Disadvantaged Business Concerns: $5,13,599.00 - (85% of C.). e. Total dollars planned to be subcontracted to Small Disadvantaged Business Concerns: $589,835.00 - (10% of A.). This amount includes Historical Black Colleges/Minority Institutions (HBCU/MI). d. Total dollars planned to be subcontracted to Women Owned Business Concerns: $294,918.00 - (5% of A.). 3. Indirect and overhead costs have not been included in establishing goals for both Small Subcontracting Plan Stage 2, Port of Los Angeles, Pier 400 DACW09-97-B-0009 Page 3 Business and Small Disadvantaged Business Concerns. 4. All products and/or services to be subcontracted under this contract, with --- the types of organizations supplying them: (i.e., LARGE BUSINESS (LG), SMALL BUSINESS (SB), SMALL DISADVANTAGED BUSINESS (SDB) AND WOMEN OWNED BUSINESS (WOB). a. Subcontracted Product/Service LG SB SDB WOB Fuel X X Marine Supplies X X X X Lubricants X Marine Hardware X X X Paper Products X Wire Rope & Cordage X Towing X Survey Services X b. We intend to continue the use of our known SB/SDB/HBCU/MI Concerns in the categories above and will make every effort to expand this list. ------------------------------------------ We are training our field office managers in the company purchasing policies and allowing them more purchasing authorities. 5. The following methods are used in developing the subcontracting goals. a. Subcontracting plan prior percentages. b. Availability of vendors in various geographic locations as indicated by prior experience. c. Availability of vendors in project locations which could increase the number of SDB/HBCU/MI sources to award subcontracts. 6. Potential sources are identified as follows: a. Existing company vendor list. b. Advertisements run in local newspapers. c. Make maximum use of the new SB/SDB/HBCU/MI names received from the sources listed. d. New SB/SDB/HBCU/MI and WOB letters received from SBA and individual Subcontracting Plan Stage 2, Port of Los Angeles, Pier 400 DACW09-97-B-0009 Page 4 businesses. e. Seek out, through their own industry contacts, new and capable SB/SDB/HBCU/MI suppliers and technical support. f. Attend small and minority business conferences and trade fairs. 7. Program Administrator --------------------- a. The following employee will administer this Subcontracting Plan for Great Lakes Dredge & Dock/Connolly Pacific Joint Venture. Name: Michelle K. Youssef Title: Contract Plans Administrator Address: 2122 York Road, Oak Brook, IL 60521 Telephone: 630/574-2996 Duties: This employee has general overall responsibility for Great Lakes Dredge & Dock Company subcontracting program, i.e., developing, preparing, and executing individual subcontracting plans and monitoring performance relative to the requirements of this particular plan. These duties include, but are not limited to, the following activities: a. Developing and promoting company-wide policy initiatives that demonstrate the company's support for awarding contracts and subcontracts to small and small disadvantaged business concerns and assure that small and small disadvantaged businesses are included on the source lists for solicitations for products and services they are capable of providing: b. Developing and maintaining bidder's lists of small and small disadvantaged business concerns from all possible sources; c. Ensuring periodic rotation of potential subcontractors on bidder's lists: d. Ensuring that procurement "packages" are designed to permit the maximum possible participation of small and small disadvantaged businesses; e. Make arrangements for the utilization of various sources for the identification of small and small disadvantaged businesses such as the SBA's Procurement Automated Source System (PASS), the National Minority Purchasing Council Vendor Information Service, the Subcontracting Plan Stage 2, Port of Los Angeles, Pier 400 DACW09-97-B-0009 Page 5 Office of Minority Business Data Center in the Department of Commerce, and the facilities of local small business and minority associations, and contact with Federal agency's Small and Disadvantaged Business Utilization Specialist (SADBUS). f. Overseeing the establishment and maintenance of contract and subcontract award records; g. Attending or arranging for the attendance of company counselors at Business Opportunity Workshops, Minority Business Enterprise Seminars, Trade Fairs, Procurement Conferences, etc; h. Ensure small and small disadvantaged business concerns are made aware of subcontracting opportunities and how to prepare responsive bids to the company; i. Conducting or arranging for the conduct of training for purchasing personnel regarding the intent and impact of Public Law 95-507 on purchasing procedures; j. Monitoring the company's performance and making any adjustments necessary to achieve the subcontract plan goals; k. Preparing and submitting timely, required subcontract reports; l. Coordinating the company's activities during the conduct of compliance reviews by Federal agencies; and, 8. Equitable Opportunity --------------------- Great Lakes Dredge & Dock/Connolly-Pacific Joint Venture will maintain an open door policy to all suppliers wishing to participate and emphasis is continually placed on locating additional Small and Disadvantaged Business Concerns. This will be accomplished through outreach efforts as follows: a. Contacts with minority and small business trade associations. b. Contacts with business development organizations. c. Attendance at small and minority business procurement conferences and trade fairs. d. Develop a unique outreach program that will include the use of Historical Black Subcontracting Plan Stage 2, Port of Los Angeles, Pier 400 DACW09-97-B-0009 Page 6 Colleges and Universities and Minority Institutions (HBCU/MI in nontraditional areas such as technical assistance and marketing applications. Set-aside acquisitions for exclusive HBCU and MI participation maybe used if project needs technical assistance which higher educational institutions can provide. e. Sources will be requested from SBA's PASS system. f. The following internal efforts will be made to guide and encourage buyers: 1. Workshop, seminars and training programs will be conducted. 2. Activities will be monitored to evaluate compliance with this subcontracting plan. Small and Small Disadvantaged Business Concern source lists, guides and other data identifying Small and Small Disadvantaged Business Concerns will be maintained and utilized by Buyers in soliciting subcontracts. 9. Flow-Down Clause ---------------- Great Lakes Dredge & Dock/Connolly Pacific Joint Venture agrees to include the provisions under FAR 52.219-9, "Utilization of Small Business Concerns and Small Disadvantaged Business Concerns", in all subcontracts that offer further subcontracting opportunities. All subcontractors, except small business concerns, that receive subcontracts in excess of $500,000 ($1,000,000 for construction) must adopt and comply with a plan similar to the plan required by FAR 52.219-9, "Small Business and Small Disadvantaged Business Subcontracting Plan." (FAR 19.704 (a)(4). 10. Reporting and Cooperation ------------------------- Great Lakes Dredge & Dock/Connolly Pacific Joint Venture gives assurance of (1) cooperation in any studies or surveys that may be required; (2) submission of periodic reports which show compliance with the subcontracting plan, (3) submission of Standard Form (SF)294, "Subcontracting Report for Individual Contracts,: and SF-295, "Summary Subcontract Report," in accordance with the instructions on the forms, and (4) ensuring that subcontractors agree to submit Standard Forms 294 and 295. 11. Recordkeeping ------------- The following is a recitation of the types of records Great Lakes Dredge & Dock/Connolly Pacific Joint Venture will maintain to demonstrate the procedures adopted to comply with the requirement and goals in the subcontracting plan: These records will include, but not be limited to, the following: Subcontracting Plan Stage 2, Port of Los Angeles, Pier 400 DACW09-97-B-0009 Page 7 a. Small and small disadvantaged business concerns source lists, guides, and other data identifying such vendors; b. Organizations contacted in an attempt to locate small and small disadvantaged business sources; c. On a contract-by-contract basis, records on all subcontract solicitations over $100,000 which indicate for each solicitation (1) whether small business concerns were solicited, and if not, why not; (2) whether small disadvantaged business concerns were solicited, and if not, why not; and (3) reason for the failure of solicited small or small disadvantaged business concerns to receive the subcontract award; d. Records to support other outreach efforts, e.g., contacts with minority and small business trade associations, attendance at small and minority business procurement conferences and trade fairs; e. Records to support internal guidance and encouragement provided to buyers through (1) workshops, seminars, training programs, incentive awards, and (2) monitoring of activities to evaluate compliances; and f. On a contract-by-contract basis, records to support subcontract award data including the name, address and business size of each subcontractor. This subcontracting plan was submitted by: Signature: /s/ Michelle K. Youssef -------------------------------------- Typed Name: Michelle K. Youssef Title: Contract Plans Administrator Date Prepared: May 1, 1997 Phone No: (630) 574-2996 Solicitation No: DACW09-97-B-0009 CERTIFICATE OF CORPORATE PRINCIPALS 1) IF THE OFFEROR IS A JOINT VENTURE, COMPLETE THE FOLLOWING: Great Lakes Dredge & Dock Company /s/ Signature Illegible^^ President/CEO - -------------------- ------------------------- ---------------- (Company Name) (Signature) (Title) Connolly-Pacific Co. /s/ Signature Illegible^^ Chairman - -------------------- ------------------------- ---------------- (Company Name) (Signature) (Title) ____________________ _________________________ ________________ (Company Name) (Signature) (Title) 2) IF THE OFFEROR IS PARTNERSHIP, LIST FULL NAME OF ALL PARTNERS: ____________________ _________________________ ________________ (Company Name) (Signature) (Title) ____________________ _________________________ ________________ (Company Name) (Signature) (Title) ____________________ _________________________ ________________ (Company Name) (Signature) (Title) 3) IF THE OFFEROR IS A CORPORATION, THE FOLLOWING CERTIFICATION SHOULD BE COMPLETED: CERTIFICATE AS TO CORPORATE PRINCIPAL I, __________________________, certify that I am the Secretary of the corporation named as principal in the within contract; that ___________________, who signed the said contract on behalf of the principal, was the ______________________ of the corporation; that I know his signature and that his signature is genuine; and that said contract was duly signed, sealed and attested for in behalf of said corporation by authority of its governing body. _______________________ CORPORATE PRINCIPAL CORPORATE SEAL _______________________ SECRETARY 00010-2a TABLE OF CONTENTS SECTION 00600 REPRESENTATIONS & CERTIFICATIONS
PARAGRAPH CLAUSE TITLE PAGE 1 52.203-8 CANCELLATION, RESCISSION, AND RECOVERY OF FUNDS FOR ILLEGAL OR IMPROPER 00600-1 ACTIVITY (JAN 1997) 2 52.203-2 CERTIFICATE OF INDEPENDENT PRICE DETERMINATION (APR 1995) 00600-1 3 52.203-11 CERTIFICATION AND DISCLOSURE REGARDING PAYMENTS TO INFLUENCE CERTAIN 00600-2 FEDERAL TRANSACTIONS (APR 1991) 4 52.204-3 TAXPAYER IDENTIFICATION (MAR 1994) 00600-3 5 52.209-5 CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED DEBARMENT, AND 00600-5 OFFER RESPONSIBILITY MATTERS (MAR 1996) 6 52.214-2 TYPE OF BUSINESS ORGANIZATION -- SEALED BIDDING (JUL 1997) 00600-6 7 52.219-1 SMALL BUSINESS PROGRAM REPRESENTATIONS (JAN 1997) 00600-6 8 52.219-2 EQUAL LOW BIDS (OCT 1995) 00600-8 9 52.219-19 SMALL BUSINESS CONCERN REPRESENTATION FOR THE SMALL BUSINESS 00600-9 COMPETITIVENESS DEMONSTRATION PROGRAM (JAN 1997) 10 52.222-21 CERTIFICATION OF NONSEGREGATED FACILITIES (APR 1984) 00600-10 11 52.222-22 PREVIOUS CONTRACTS AND COMPLIANCE REPORTS (APR 1984) 00600-11 12 52.223-1 CLEAN AIR AND WATER CERTIFICATION (APR 1984) 00600-11 13 52.223-13 CERTIFICATION OF TOXIC CHEMICAL RELEASE REPORTING (OCT 1996) 00600-12 14 252.204-7001 COMMERCIAL AND GOVERNMENT ENTITY (CAGE) CODE REPORTING (DEC 1991) 00600-13 15 252.209-7001 DISCLOSURE OF OWNERSHIP OR CONTROL BY THE GOVERNMENT OF A TERRORIST 00600-13 COUNTRY (SEP 1994) 16 252.209-7003 DISCLOSURE OF COMMERCIAL TRANSACTIONS WITH THE GOVERNMENT OF A TERRORIST 00600-14 COUNTRY (SEPT 1994)
i SECTION 00600 REPRESENTATIONS & CERTIFICATIONS 17 252.219-7000 SMALL DISADVANTAGED BUSINESS CONCERN REPRESENTATION (DoD CONTRACTS) 00600-15 (JAN 1997) 18 252.225-7006 BUY AMERICAN ACT -- TRADE AGREEMENTS -- BALANCE OF PAYMENTS PROGRAM 00600-16 CERTIFICATE (JAN 1994) 19 252.225-7035 BUY AMERICAN ACT -- NORTH AMERICAN FREE TRADE AGREEMENT IMPLEMENTATION 00600-18 ACT -- BALANCE OF PAYMENTS PROGRAM CERTIFICATE (MAY 1995) 20 252.247-7022 REPRESENTATION OF EXTENT OF TRANSPORTATION BY SEA (AUG 1992) 00600-19
ii SECTION 00600 REPRESENTATIONS & CERTIFICATIONS 1 52.203-8 CANCELLATION, RESCISSION, AND RECOVERY OF FUNDS FOR ILLEGAL OR IMPROPER ACTIVITY (JAN 1997) (a) If the Government receives information that a contractor or a person has engaged in conduct constituting a violation of subsection (a), (b), (c), or (d) of Section 27 of the Office of Federal Procurement Policy Act (41 U.S.C. 423) (the Act), as amended by section 4304 of the 1996 National Defense Authorization Act for Fiscal Year 1996 (Pub. L. 104-106), the Government may-- (1) Cancel the solicitation, if the contract has not yet been awarded or issued; or (2) Rescind the contract with respect to which-- (i) The Contractor or someone acting for the Contractor has been convicted for an offense where the conduct constitutes a violation of subsection 27 (a) or (b) of the Act for the purpose of either-- (A) Exchanging the information covered by such subsections for anything of value: or (B) Obtaining or giving anyone a competitive advantage in the award of a Federal agency procurement contract, or (ii) The head of the contracting activity has determined, based upon a preponderance of the evidence, that the Contractor or someone acting for the Contractor has engaged in conduct constituting an offense ^??? punishable under subsections 27(e) (1) of the Act. (b) If the Government rescinds the contract under paragraph (a) of this clause, the Government is entitled to recover, in addition to any penalty prescribed by law, the amount expended under the contract. (c) The rights and remedies of the Government specified herein are not exclusive, and are in addition to any other rights and remedies provided by law, regulation, or under this contract. (End of clause) 2 52.203-2 CERTIFICATE OF INDEPENDENT PRICE DETERMINATION (APR 1985) (a) The offeror certifies that-- (1) The price in this offer have been arrived at independently, without, for the purpose of restricting competition, any consultation, communication, or agreement which any other offeror or competitor relating to (i) those prices, (ii) the intention to submit an offer, or (iii) the methods or factors used to calculate the prices offered; (2) The price in this offer have not been and will not be knowingly 00600-1 disclosed by the offeror, directly or indirectly, to any other offeror or competitor before bid opening (in the case of a sealed bid solicitation) or contract award (in the case of a negotiated solicitation) unless otherwise required by law; and (3) No attempt has been made or will be made by the offeror to induce any other concern to submit or not to submit an offer for the purpose of restricting competition. (b) Each signature on the offer is considered to be a certification by the signatory that the signatory-- (1) Is the person in the offeror's organization responsible for determining the prices being offered in this bid or proposal, and that the signatory has not participated and will not participate in any action contrary to subparagraphs (a) (1) through (a) (3) above; or (2) (i) Has been authorized, in writing, to act as agent for the following principals in certifying that those principals have not participated, and will not participate in any action contrary to subparagraphs (a) (1) through (a) (3) above _________ _________________________________________________________________ (insert full name of person(s) in the offeror's organization responsible for determining the prices offered in this bid or proposal, and the title of his or her position in the offeror's organization); (ii) As an authorized agent, does certify that the principals named in subdivision (b) (2) (i) above have not participated, and will not participate, in any action contrary to subparagraphs (a) (1) through (a) (3) above; and (iii) As an agent, has not personally participated, and will not participate, in any action contrary to subparagraphs (a) (1) through (a) (3) above. (c) If the offeror deletes or modifies subparagraph (a) (2) above, the offeror must furnish with its offer a signed statement setting forth in detail the circumstances of the disclosure. (End of provision) 3 52.203-11 CERTIFICATION AND DISCLOSURE REGARDING PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS (APR 1991) (a) The definitions and prohibitions contained in the clause, at PAR 52.203-12, Limitation on Payments to Influence Certain Federal Transactions, included in this solicitation, are hereby incorporated by reference in paragraph (b) of this certification. (b) The offeror, by signing its offer, hereby certifies to the best of his or her knowledge and belief that on or after December 23, 1989,-- (1) No Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress on him or her behalf in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment or modification of any Federal contract, grant, loan, or cooperative agreement; (2) If any funds other than Federal appropriated funds (including profit or fee received under a covered Federal transaction) have been paid, or will be paid, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress on his or her behalf in connection with this solicitation, the offeror shall complete and submit, with its offer, OMB standard form LLL, Disclosure of Lobbying Activities, to the Contracting Officer; and (3) He or she will include the language of this certification in all subcontract awards at any tier and require that all recipiants of subcontract awards in excess of $100,000 shall certify and disclose accordingly. (c) Submission of this certification and disclosure is a prerequisite for making or entering into this contract imposed by section 1352, title 31, United States Code. Any person who makes an expenditure prohibited under this provision or who fails to file or amend the disclosure form to be filed or amended by this provision, shall be subject to a civil penalty of not less than $10,000, and not more than $100,000, for each such failure. (End of provision) 4 52.204-3 TAXPAYER IDENTIFICATION (MAR 1994) (a) Definitions. "Common parent," as used in this solicitation provision, means that corporate entity that owns or controls an affiliated group of corporations that files its Federal income tax returns on a consolidated basis, and of which the offeror is a member. "Corporate status," as used in this solicitation provision, means a 00600-3 designation as to whether the offeror is a corporate entity, an unincorporated entity (e.g., sole proprietorship or partnership), or a corporation providing medical and health care services. "Taxpayer Identification Number (TIN)," as used in this solicitation provision, means the number required by the IRS to be used by the offeror in reporting income tax and other returns. (b) All offerors are required to submit the information required in paragraphs (c) through (e) of this solicitation provision in order to comply with reporting requirements of 26 U.S.C 6041, 6041A, and 6050M and implementing regulations issued by the Internal Revenue Service (IRS). If the resulting contract is subject to the reporting requirements described in FAR 4.903, the failure or refusal by the offeror to furnish the information may result in a 31 percent reduction of payments otherwise due under the contract. (c) Taxpayer Identification Number (TIN). Pier 400 Constructors: None ---- [X][X] TIN: REFER TO THE RIGHT: Great Lakes Dredge & Dock ------------------. Company: 36-1163930 ---------- [_] TIN has been applied for. Connolly-Pacific Co.: 46-0349158 ---------- [_] TIN is not required because: [_] Offeror is a nonresident alien, foreign corporation, or foreign partnership that does not have income effectively connected with the conduct of a trade or business in the U.S. and does not have an office or place of business or a fiscal paying agent in the U.S. ?????^ [_] Offeror is an agency or instrumentality of a foreign government; [_] Offeror is an agency or instrumentality of a Federal, state, or local government; [_] Other. State basis, _____________________________________ (d) Corporate Status. [_] Corporation providing medical and health care services, or engaged in the billing and collecting of payments for such services; [_] Other corporate entity; [_] Not a corporate entity; [_] Sole proprietorship [X][X] Partnership (a joint venture) [_] Hospital or extended care facility described in 26 CFR 501 (c) (3) that is exempt from taxation under 26 CFR 501 (a). (e) Common Parent. [_] Offeror is not owned or controlled by a common parent as defined in paragraph (a) of this clause. [X][X] Name and TIN of common parent: Name REFER EXPLANATIONS BELOW: ---------------------------- TIN ____________________________ "Pier 400 Constructors" is a joint venture of "Great Lakes Dredge & Dock Company" and "Connolly-Pacific Co." "Great Lakes Dredge & Dock Company" common parent: Name: Great Lakes International, Inc. ------------------------------- TIN: 36-3015839 ---------- "Connolly-Pacific Co." common parent: Name: L.G. Everist, Inc. ------------------ TIN: 46-0229601 ---------- (End of provision) 5 52.209-5 CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED DEBARMENT, AND OTHER RESPONSIBILITY MATTERS (MAR 1996) (a)(i) The Offeror certifies, to the best of its knowledge and belief, that-- (i) The Offeror and/or any of its Principals-- (A) Are [_] are not [X] presently debarred, suspended, proposed for debarment, or declared ineligible for the award of contracts by any Federal agency; (B) Have [_] have not [X], within a three-year period preceding this offer, been convinced of or had a civil judgment rendered against them for: commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (Federal, state, or local) contract or subcontract: violation of Federal or state antitrust statutes relating to the submission of offers: or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, or receiving stolen property; and (C) Are [_] are not [X] presently indicted for, or otherwise criminally or civilly charged by a governmental entity with, commission of any of the offenses enumerated in subdivision (a)(l)(1)(B) of this provision. (ii) The Offeror has [_] has not [X], within a three-year period preceding this offer, had one or more contracts terminated for default by any Federal agency. (2) "Principals," for the purposes of this certification, means officers; directors; owners; partners; and, persons having primary management or supervisory responsibilities within a business entity (e.g., general manager: plant manager: head of a subsidiary, division, or business segment, and similar positions). THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF THE UNITED STATES AND THE MAKING OF A FALSE, PICTITIOUS, OR FRAUDULENT CERTIFICATION MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER SECTION 1001, TITLE 18, UNITED STATES CODE. (b) The Offeror shall provide immediate written notice to the Contracting Officer if, at any time prior to contract award, the Offeror learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances. 00600-5 (c) A certification that any of the items in paragraph (a) of this provision exists will not necessarily result in withholding of an award under this solicitation. However, the certification will be considered in connection with a determination of the Offeror's responsibility. Failure of the Offeror to furnish a certification or provide such additional information as requested by the Contracting Officer may render the Offeror nonresponsible. (d) Nothing contained in the foregoing shall be construed to require establishment of a system of records in order to render, in good faith, the certification required by paragraph (a) of this provision. The knowledge and information of an Offeror is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings. (e) The certification in paragraph (a) of this provision is a material representation of fact upon which reliance was placed when making award. If it is later determined that the Offeror knowingly rendered an erroneous certification, in addition to other remedies available to the Government, the Contracting Officer may terminate the contract resulting from this solicitation for default. (End of Provision) 6 52.214-2 TYPE OF BUSINESS ORGANIZATION--SEALED BIDDING (JUL 1987) The bidder, by checking the applicable box, represents that-- (a) It operates as [_] a corporation incorporated under the laws of the State of _______________, [_] an individual, [_] a partnership, [_] a nonprofit organization, or [X] a joint venture; or (b) If the bidder is a foreign entity, it operates as [_] an individual, [_] a partnership, [_] a nonprofit organization, [_] a joint venture, or [_] a corporation, registered for business in _____________ (country) (End of provision) 7 52.219-1 SMALL BUSINESS PROGRAM REPRESENTATIONS (JAN 1997) (a)(1) The standard industrial classification (SIC) code for this acquisition is 1629 (2) The small business size standard is $13.5 million (3) The small business size standard for a concern which submits an 00600-6 offer in its own name, other than on a construction or service contract, but which proposes to furnish a product which it did not itself manufacture, is 500 employees. (b) Representations. (1) The offeror represents as part of its offer that it [ ] is, [X] is not a small business concern. (2) (Complete only if offeror represented itself as a small business concern in block (b)(1) of this section.) The offeror represents as part of its offer that is [ ] is, [ ] is not a small disadvantaged business concern. (3) (Complete only if offeror represented itself as a small business concern in block (b)(1) of this section.) The offeror represents as part of its offer that it [ ] is, [ ] is not a woman- owned small business concern. (c) Definitions. "Joint venture," for purposes of a small disadvantaged business (SDB) set-aside or price evaluation preference (as prescribed at 13 CFR 124.321), is a concern that is owned and controlled by one or more socially and economically disadvantaged individuals entering into a joint venture agreement with one or more business concerns and is considered to be affiliated for size purposes with such other concern(s). The combined annual receipts or employees of the concerns entering into the joint venture must meet the applicable size standard corresponding to the SIC code designated for the contract. The majority of the venture's earnings must accrue directly to the socially and economically disadvantaged individuals in the SDB concern(s) in the joint venture. The percentage of the ownership involvement in a joint venture by disadvantaged individuals must be at least 51 percent. "Small business concern," as used in this provision, means a concern, including its affiliates, that is independently owned and operated, not dominant in the field of operation in which it is bidding on Government contracts, and qualified as a small business under the criteria in 13 CFR Part 121 and the size standard in paragraph (a) of this provision. "Small disadvantaged business concern," as used in this provision, means a small business concern that (1) is at least 51 percent unconditionally owned by one or more individuals who are both socially and economically disadvantaged, or a publicly owned business having at least 51 percent of its stock unconditionally owned by one or more socially and economically disadvantaged individuals, and (2) has its management and daily business controlled by one or more such individuals. This term also means a small business concern that is at least 51 percent unconditionally owned by an economically disadvantaged Indian tribe or Native Hawaiian Organization, or a publicly owned business having at least 51 percent of its stock 00600-7 unconditionally owned by one or more of these entities, which has its management and daily business controlled by members of an economically disadvantaged Indian tribe or Native Hawaiian Organization, and which meets the requirements of 13 CFR Part 124. "Women-owned small business concern," as used in this provision, means a small business concern-- (1) Which is at least 51 percent owned by one or more women or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and (2) Whose management and daily business operations are controlled by one or more women. (d) Notice. (1) If this solicitation is for supplies and has been set aside, in whole or in part, for small business concerns, then the clause in this solicitation providing notice of the set-aside contains restrictions on the source of the end items to be furnished. (2) Under 15 U.S.C 645 (d), any person who misrepresents a firm's status as a small or small disadvantaged business concern in order to obtain a contract to be awarded under the preference programs established pursuant to sections 8 (a) 8 (d), 9, or 15 of the small Business Act or any other provision of the Federal law that specifically references section 8(d) for a definition of program eligibility, shall-- (i) Be punished by imposition of fine, imprisonment, or both: (ii) Be subject to administrative remedies, including suspension and debarment: and (iii) Be in ineligible for participation in programs conducted under the authority of the Act. (End of provision) 8 52.219-2 EQUAL LOW BIDS (OCT 1995) (a) This applies to small business concerns only. (b) The bidder's status as a labor surplus area (LSA) concern may affect entitlement to award in case of tie bids. If the bidder wishes to be considered for this priority, the bidder must identify, in the following space, the LSA in which the costs to be incurred on account of manufacturing or production (by the bidder or the first-tier subcontractors) amount to more than 50 percent of the contract price. -------------------------------------------------------------------- 00600-8 --------------------------------------------------------------------------- (c) Failure to identify the labor surplus areas as specified in paragraph (b) of this provision will preclude the bidder from receiving priority consideration. If the bidder is awarded a contract as a result of receiving priority consideration under this provision and would not have otherwise received award, the bidder shall perform the contract or cause the contract to be performed in accordance with the obligations of an LSA concern. (End of provision) 9 52.219-19 SMALL BUSINESS CONCERN REPRESENTATION FOR THE SMALL BUSINESS COMPETITIVENESS DEMONSTRATION PROGRAM (JAN 1997) (a) Definition. "Emerging small business" as used in this solicitation, means a small business concern whose size is no greater than 50 percent of the numerical size standard applicable to the standard industrial classification code assigned to a contracting opportunity. (b) (Complete only if the Offeror has represented itself under the provision at 52.219-1 as a small business concern under the size standards of this solicitation.) The Offeror [ ] is, [X] is not an emerging small business. (c) (Complete only if the Offeror is a small business or an emerging small business, indicating its size range.) Offeror's number of employees for the past 12 months (check this column if size standard stated in solicitation is expressed in terms of number of employees) or Offeror's average annual gross revenue for the last 3 fiscal years (check this column if size standard stated in solicitation is expressed in terms of annual receipts). (Check one of the following.)
---------------------------------------------------------- No. of Employees Avg. Annual Gross Revenues ---------------------------------------------------------- _____50 or fewer ______$1 million or less _____51-100 ______$1,000,001-$2 million _____101-250 ______$2,000,001-$3.5 million _____251-500 ______$3,500,001-$5 million
00600-9 ___501-750 ___$5,000,001-$10 million ___751-1,000 ___$10,000,001-$17 million ___Over 1,000 ___Over $17 million - ------------------------------------------------------------------- (End of provision) 10 52.222-21 CERTIFICATION OF NONSEGREGATED FACILITIES (APR 1984) (a) "Segregated facilities," as used in this provision, means any waiting rooms, work areas, rest rooms and wash rooms, restaurants and other eating areas, time clocks, locker rooms and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees, that are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, or national origin because of habit, local custom, or otherwise. (b) By the submission of this offer, the offeror certifies that it does not and will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it does not and will not permit its employees to perform their services at any location under its' control where segregated facilities are maintained. The offeror agrees that a breach of this certification is a violation of the Equal Opportunity clause in the contract. (c) The offeror further agrees that (except where it has obtained identical certifications from proposed subcontractors for specific time periods) it will-- (1) Obtain identical certificates from proposed subcontractors before the award of subcontracts under which the subcontractor will be subject to the Equal Opportunity clause; (2) Retain the certifications in the files; and (3) Forward the following notice to the proposed subcontractors (except if the proposed subcontractors have submitted identical certifications for specific time periods): NOTICE TO PROSPECTIVE SUBCONTRACTORS OF REQUIREMENT FOR CERTIFICATIONS OF NONSEGREGATED FACILITIES. A Certification of Nonsegregated Facilities must be submitted before the award of a subcontractor under which the subcontractor will be subject to the Equal Opportunity clause. The certification may be submitted either for each subcontractor or for all subcontractors. 00600-10 during a period (i.e., quarterly, semiannually, or annually). NOTE: The penalty for making false statements in offers is prescribed in 18 U.S.C. 1001. (End of provision) (R 7-2003.14(b)(1) (A) 1970 AUG) (R 1-12.803-10(d)) 11 52.222-22 PREVIOUS CONTRACTS AND COMPLIANCE REPORTS (APR 1984) The offeror represents that-- (a) It [X]* has, [_] has not, participated in a previous contract or - subcontract subject either to the Equal Opportunity clause of this solicitation, the clause originally contained in Section 310 of Executive Order No. 10925, or the clause contained in Section 201 of Executive Order No. 11114; (b) It [X]* has, [_] has not, filed all required compliance reports: and - (c) Representations indicating submission of required compliance reports, signed by proposed subcontractors, will be obtained before subcontract awards. (End of provision) (R 7-2003.14(b)(B),(1) 1973 APR) 12 52.233-1 CLEAN AIR AND WATER CERTIFICATION (APR 1984) The Offeror certifies that-- (a) Any facility to be used in the performance of this proposed contract is [_] is not [X] listed on the Environmental Protection Agency (EPA) List - of Violating Facilities; (b) The Offeror will immediately notify the Contracting Officer, before award, of the receipt of any communication from the Administrator, or a designee, of the EPA, indicating that any facility that the Offeror proposes to use for the performance of the contract is under consideration to be listed on the EPA List of Violating Facilities; and (c) The Offeror will include a certification substantially the same as this certification, including this paragraph (c), in every nonexempt subcontract. (End of provision) (AV 7-2003.71 1977 JUN) (AV 1-1.2302-1) *NOTE: Pier 400 Constructors is an entity with no employees. Both "Great Lakes Dredge & Dock Company" and "Connolly-Pacific Co." respond in an affirmative fashion to the representation. 00600-11 13 52.223-13 CERTIFICATION OF TOXIC CHEMICAL RELEASE REPORTING (OCT 1996) (a) Submission of this certification is a prerequisite for making or entering into this contract imposed by Executive Order 12969, August 8, 1995. (b) By signing this offer, the offeror certifies that ---- (1) As the owner or operator of facilities that will be used in the performance of this contract that are subject to the filing and reporting requirements described in section 313 of the Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA) (42 U.S.C. 11023) and section 6607 of the Pollution Prevention Act of 1990 (PPA) (42 U.S.C. 13106), the offeror will file and continue to file for such facilities for the life of the contract the Toxic Chemical Release Inventory Form (form R) as described in sections 313 (a) and (g) of EPCRA and section 6607 of PPA; or (2) None of its owned or operated facilities to be used in the performance of this contract is subject to the Form R filing and reporting requirements because each such facility is exempt for at least one of the following reasons: (Check each block that is applicable.) [X] (i) The facility does not manufacture, process, or otherwise use any toxic chemicals listed under section 313(c) of EPCRA, 42 U.S.C. 11023(e), [X] (ii) The facility does not have 10 or more full-time employees as specified in section 313(b) (1) (A) of EPCRA, 42 U.S.C. 11023 (b) (1) (A): [X] (iii) The facility does not meet the reporting thresholds of toxic chemicals established under section 313(f) of EPCRA, 42 U.S.C. 11023(f) (including the alternate thresholds at 40 CFR 372.27, provided an appropriate certification form has been filed with EPA); [X] (iv) The facility does not fail within standard Industrial Classification Code (SIC) designations 20 through 39 as set forth in Section 19.102 of the Federal Acquisition Regulation; or [_] (v) The facility is not located within any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samea, the United States Virgin Islands, the Northern Mariana Islands, or any other territory or possession over which the United States has jurisdiction. (End of provision) 00600-12 14 252.204-7001 COMMERCIAL AND GOVERNMENT ENTITY (CAGE) CODE REPORTING (DEC 1991) (a) The Offeror is requested to enter its CAGE code on its offer in the block with its name and address. The CAGE code entered must be for that name and address. Enter CAGE before the number. (b) If the Offeror does not have a CAGE code, it may ask the Contracting Officer to request one from the Defense Logistics Services Center (DLSC). The Contracting Officer will-- (1) Ask the Contractor to complete section 8 of a DD Form 2051, Request for Assignment of a Commercial and Government Entity (CAGE) Code; (2) Complete section A and forward the form to DLSC; and (3) Notify the Contractor of its assigned CAGE code. (c) Do not delay submission of the offer pending receipt of a CAGE code. (End of provision) 15 252.209-7001 DISCLOSURE OF OWNERSHIP OR CONTROL BY THE GOVERNMENT OF A TERRORIST COUNTRY (SEP 1994) (a) Definitions. As used in this provision-- (1) "Government of a terrorist country" includes the state and the government of a terrorist country, as well as any political subdivision, agency, or instrumentality thereof. (2) "Terrorist country" means a country determined by the Secretary of State, under section 6(j)(1)(A) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)(A)), to be a country the government of which has repeatedly provided support for acts of international terrorism. As of the date of this provision, terrorist countries include: Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria. (3) "Significant interest" means-- (i) Ownership of or beneficial interest in 5 percent or more of the firm's or subsidiary's securities. Beneficial interest includes holding 5 percent or more of any class of the firm's securities in "nominee shares," "street names," or some other method of holding securities that does not disclose the beneficial owner; (ii) Holding a management position in the firm, such as a director or officer; (iii) Ability to control or influence the election, appointment, or tenure of directors or officers in the firm; (iv) Ownership of 10 percent or more of the assets of a firm such as 00600-13 equipment, buildings, real estate, or other tangible assets of the firm; or (v) Holding 50 percent or more of the indebtedness of a firm. (b) Prohibited on award. In accordance with 10 U.S.C. 2327, no contract may be awarded to a firm or a subsidiary of a firm if the government of a terrorist country has a significant interest in the firm or subsidiary, unless a waiver is granted by the Secretary of Defense. (c) Disclosure. If the government of a terrorist country has a significant interest in the Offeror or a subsidiary of the Offeror, the Offeror shall disclose such interest in an attachment to its offer. If the Offeror is a subsidiary, it shall also disclose any significant interest the government of a terrorist country has in any firm that owns or controls the subsidiary. The disclosure shall include-- (1) Identification of each government holding a significant interest; and (2) A description of the significant interest held by each government. (End of provision) 16 252.209-2003 DISCLOSURE OF COMMERCIAL TRANSACTIONS WITH GOVERNMENT OF A TERRORIST COUNTRY (SEPT 1994) (a) Definitions. "Government of a terrorist country" and "terrorist country" are defined in the Reporting of Commercial Transactions with the Government of a Terrorist Country clause of this solicitation. (b) Disclosure. (1) Section 843 of the National Defence Authorization Act for Fiscal Year 1994 (Pub. L. 103-160) requires offerors to disclose commercial transactions conducted with the government of a terrorist country. If this offer exceeds 55,000,000, and if the Offeror has conducted such transactions, the Offeror shall disclose, in an attachment to its offer, each commercial transaction that it has conducted with the government of a terrorist country since February 28, 1994. The disclosure shall include-- (i) Identification of the government with which each transaction was conducted; and (ii) The nature of each transaction. (2) This disclosure requirement does not apply to-- 00600-14 (i) Transactions conducted by affiliates or subsidiaries of the Offeror; or (ii) Payment or receipt of payment of a judgment or award ordered by a court or arbitral tribunal of competent jurisdiction. (End of provision) 17 252.219-7000 SMALL DISADVANTAGED BUSINESS CONCERN REPRESENTATION (DoD CONTRACTS) (JAN 1997) (a) Definition. "Small disadvantaged business concern," as used in this provision, means a small business concern, owned and controlled by individuals who are both socially and economically disadvantaged, as defined by the Small Business Administration at 13 CFR Part 124, the majority of earnings of which directly accrue to such individuals. This term also means a small business concern owned and controlled by an economically disadvantaged Indian tribe or Native Hawaiian organization which meets the requirements of 13 CFR 124.112 or 13 CFR 124.113, respectively. In general, 13 CFR part 124 describes a small disadvantaged business concern as a small business concern-- (1) Which is at least 51 percent unconditionally owned by one or more socially and economically disadvantaged individuals; or (2) In the case of any publicly owned business, at least 51 percent of the voting stock is unconditionally owned by one or more socially and economically disadvantaged individuals; and (3) Whose management and daily business operations are controlled by one or more such individuals. (b) Representations. Check the category in which your ownership falls-- ____ Subcontinent Asian (Asian-Indian) American (U.S. citizen with origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, or Nepal) ____ Asian-Pacific American (U.S. citizen with origins from Japan, China, the Philippines, Vietnam, Korea, Sapoa, Guam, U.S Trust Territory of the Pacific Islands (Republic of Palsu), the Northern Mariana Islands, Laos, Kampuchea (Cambodia), Taiwan, Burma, Thailand, Malaysia, Indonesia, Singapore, Brunel, Republic of the Marshall Islands, or the Federated States of Micronesia) ____ Black American (U.S. Citizen) ____ Hispanic American (U.S. citizen with origins from South America, Central America, Mexico, Cuba, and the Dominican Republic, Puerto Rico, Spain, or Portugal) ____ Native American (American Indians, Eskimos, Aleuts, or Native 00600-15 Hawaiians, including Indian tribes or Native Hawaiian organizations) ____ Individual/concern, other than one of the preceding, currently certified for participation in the Minority Small Business and Capital Ownership Development Program under Section 8(a) of the Small Business Act. ____ Other (c) Complete the following-- (1) The Offeror is ____ is not X a small disadvantaged --- business concern (2) The Small Business Administration (SBA) has _____ has not ____ made a determination concerning the offeror's status as a small disadvantaged business concern. If the SBA has made a determination, the date of the determination was __________ and the offeror-- ____ Was found by SBA to be socially and economically disadvantaged and no circumstances have changed to vary that determination. ____ Was found by SBA not to be socially and economically disadvantaged but circumstances which caused the determination have changed. (d) Penalties and Remedies. Anyone who misrepresents the status of a concern as a small disadvantaged business for the purpose of securing a contract or subcontract shall-- (1) Be punished by imposition of fine, imprisonment or both (2) Be subject to administrative remedies, including suspension and debarment; and (3) Be ineligible for participation in programs conducted under authority of the Small Business Act. (End of provision) 18 252.225-7006 BUY AMERICAN ACT--TRADE AGREEMENTS--BALANCE OF PAYMENTS PROGRAM CERTIFICATE (JAN 1994) (a) Definitions. "Caribbean Basin country end product," "designated country and product," "domestic and product," "NAFTA country end product," "nondesignated country end product" "qualifying country end product," and "U.S. made end product" have the meaning given in the Trade Agreements or Buy American Act and Balance of Payments Program clauses of this solicitation. (b) Evaluation. Offers will be evaluated by giving preference to U.S. made end products, qualifying country and products, designated country end products, NAFTA country end products, and Caribbean Basin country and products over other end products. 00600-16 (c) Certifications. (1) The Offeror certifies that-- (i) Each end product, except the end products listed in paragraph (c) (2) of this provision, is a domestic end product (as defined in the Buy American Act and Balance of Payments Program clause of this solicitation): and (ii) Components of unknown origin are considered to have been mined, produced, or manufactured outside the United States or a qualifying country. (2) The Offeror must identify and certify all end products that are not domestic end products. (i) The Offeror certifies that the following supplies qualify as U.S. made end products but do not meet the definition of domestic end product: _________________________ (insert line item number) (ii) The Offeror certifies that the following supplies are qualifying country end products: _________________________ __________________________ (insert line item number) (insert country of origin) (iii) The Offeror certifies that the following supplies qualifying as designated country end products: _________________________ __________________________ (insert line item number) (insert country of origin) (iv) The Offeror certifies that the following supplies qualify as Caribbean Basin country end products: _________________________ __________________________ (insert line item number) (insert country of origin) (v) The Offeror certifies that the following supplies qualifies as NAFTA country end products: _________________________ __________________________ (insert line item number) (insert country of origin) (vi) The Offeror certifies that the following supplies are other nondesignated country end products. _________________________ __________________________ (insert line item number) (insert country of origin) 00600-17 [End of Provision] 19 252.225-7035 BUY AMERICAN ACT--NORTH AMERICAN FREE TRADE AGREEMENT IMPLEMENTATION ACT--BALANCE OF PAYMENTS PROGRAM CERTIFICATE (MAY 1995) (a) Definitions. "Domestic end Product," "qualifying country end product," and U.S. made end product" have the meanings given in the North American Free Trade Agreement Implementation Act or Buy American Act and Balance of Payments Program clauses of this solicitation. (b) Evaluation. Offers will be evaluated by giving preference to U.S. made end products, qualifying country end products, or NAFTA country end products over other end products. (c) Certifications. (1) The Offeror certifies that -- (i) Each end product, except the end products listed in paragraph (c) (2) of this provision, is a domestic end product (as defined in the Buy American Act and Balance of Payments Program clause of this solicitation); and (ii) Components of unknown origin are considered to have been mined, produced, or manufactured outside the United States or a qualifying country. (2) The Offeror must identify and certify all end products that are not domestic end products. (i) The Offeror certifies that the following supplies qualify as "U.S. made end products" but do not meet the definition of "domestic end products": ---------------------------- (insert line item number) (ii) The Offeror certifies that the following supplies are qualifying country (except Canada) end products: ---------------------------- --------------------------- (insert line item number) (insert country of origin) (iii) the Offeror certifies that the following supplies qualify as NAFTA country end products: ---------------------------- --------------------------- (insert line item number) (insert country of origin) (iv) The Offeror certifies that the following supplies are other non-NAFTA country end products: 00600-18 __________________________ __________________________ (insert line item number) (insert country of origin) (End of provision) 20 252.247-7022 REPRESENTATION OF EXTENT OF TRANSPORTATION BY SEA (AUG 1992) (a) The Offeror shall indicate by checking the appropriate blank in paragraph (b) of this provision whether transportation of supplies by sea is anticipated under the resultant contract. The term "supplies" is defined in the Transportation of Supplies by Sea clause of this solicitation. (b) Representation. The Offeror represents that it-- ______ Does anticipate that supplies will be transported by sea in the performance of any contract or subcontract resulting from this solicitation. X Does not anticipate that supplies will be transported by sea in ------ the performance of any contract or subcontract resulting from this solicitation. (c) Any contract resulting from this solicitation will include the Transportation of Supplies by Sea clause. If the Offeror represents that it will not use ocean transportation, the resulting contract will also include the Defense FAR Supplement clause at 252.247-7024. Notification of Transportation of Supplies by Sea. (End of provision) END OF SECTION 00600 00600-19 TABLE OF CONTENTS SECTION 00700 CONTRACT CLAUSES
PARAGRAPH CLAUSE TITLE PAGE 1 52.252-2 CLAUSES INCORPORATED BY REFERENCE (JUN 1988) 00700-1 2 52.202-1 I DEFINITIONS (OCT 1995)--ALTERNATE I (APR 1984) 00700-1 3 52.203-3 GRATUITIES (APR 1984) 00700-2 4 52.203-5 COVENANT AGAINST CONTINGENT FEES (APR 1984) 00700-2 5 52.203-7 ANTI-KICKBACK PROCEDURES (JUL 1995) 00700-3 6 52.203-10 PRICE OR FEE ADJUSTMENT FOR ILLEGAL OR IMPROPER ACTIVITY (JAN 1997) 00700-5 7 52.203-12 LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS (JAN 1990) 00700-6 8 52.204-4 PRINTING/COPYING DOUBLE-SIDED ON RECYCLED PAPER (JUN 1996) 00700-12 9 52.209-6 PROTECTING THE GOVERNMENT'S INTEREST WHEN SUBCONTRACTING WITH CONTRACTOR 00700-12 DEBARRED, SUSPENDED, OR PROPOSED FOR DEBARMENT (JUL 1995) 10 52.214-26 AUDIT AND RECORDS--SEALED BIDDING (OCT 1995) 00700-13 11 52.214-27 PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA--MODIFICATIONS-- 00700-14 SEALED BIDDING (OCT 1995) 12 52.214-28 SUBCONTRACTOR COST OR PRICING DATE--MODIFICATIONS--SEALED BIDDING (OCT 1995) 00700-16 13 52.219-8 UTILIZATION OF SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED SMALL 00700-17 BUSINESS CONCERNS (OCT 1995) 14 52.219-9 I SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED SMALL BUSINESS SUBCONTRACTING 00700-18 PLAN (AUG 1996)--ALTERNATE I (OCT 1995) 15 52.219-16 LIQUIDATED DAMAGES--SUBCONTRACTING PLAN (OCT 1995) 00700-22 16 52.222-3 CONVICT LABOR (AUG 1996) 00700-24
i SECTION 00700 CONTRACT CLAUSES 17 52.222-4 CONTRACT WORK HOURS AND SAFETY STANDARDS ACT--OVERTIME COMPENSATION 00700-24 (JUL 1995) 18 52.222-6 DAVIS-BACON ACT (FEB 1995) 00700-25 19 52.222-7 WITHHOLDING OF FUNDS (FEB 1988) 00700-28 20 52.222-8 PAYROLLS AND BASIC RECORDS (FEB 1988) 00700-25 21 52.222-9 APPRENTICES AND TRAINEES (FEB 1988) 00700-31 22 52.222-10 COMPLIANCE WITH COPELAND ACT REQUIREMENTS (FEB 1988) 00700-32 23 52.222-11 SUBCONTRACTS (LABOR STANDARDS) (FEB 1988) 00700-33 24 52.222-12 CONTRACT TERMINATION--DEBARMENT (FEB 1988) 00700-33 25 52.222-13 COMPLIANCE WITH DAVIS-BACON AND RELATED ACT REGULATONS (FEB 1988) 00700-34 26 52.222-14 DISPUTES CONCERNING LABOR STANDARDS (FEB 1988) 00700-34 27 52.222-15 CERTIFICATION OF ELIGIBILITY (FEB 1988) 00700-34 28 52.222-26 EQUAL OPPORTUNITY (APR 1984) 00700-34 29 52.222-27 AFFIRMATIVE ACTION COMPLIANCE REQUIREMENTS FOR CONSTRUCTION (APR 1984) 00700-36 30 52.222-35 AFFIRMATIVE ACTION FOR SPECIAL DISABLED AND VIETNAM ERA VETERANS (APR 1984) 00700-42 31 52.222-36 AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS (APR 1984) 00700-45 32 52.222-37 EMPLOYMENT REPORTS ON SPECIAL DISABLED VETERANS AND VETERANS OF THE 00700-46 VIETNAM ERA (JAN 1966) 33 52.223-2 CLEAN AIR AND WATER (APR 1984) 00700-47 34 52.223-6 DRUG-FREE WORKPLACE (JAN 1987) 00700-49 35 52.223-14 TOXIC CHEMICAL RELEASE REPORTING (OCT 1996) 00700-51
ii SECTION 00700 CONTRACT CLAUSES
36 52.225-5 BUY AMERICAN ACT--CONSTRUCTION MATERIALS (MAY 1992) 00700-52 37 52.225-11 RESTRICTIONS ON CERTAIN FOREIGN PURCHASES (OCT 1996) 00700-53 38 52.225-15 BUY AMERICAN ACT-- CONSTRUCTION MATERIALS UNDER TRADE AGREEMENTS ACT 00700-53 AND NORTH AMERICAN FREE TRADE AGREEMENT (JAN 1996) 39 52.226-1 UTILIZATION OF INDIAN ORGANIZATIONS AND INDIAN-OWNED ECONOMIC 00700-55 ENTERPRISE (SEP 1996) 40 52.227-1 AUTHORIZATION AND CONSENT (JUL 1995) 00700-56 41 52.227-2 NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INPRINGEMENT 00700-57 (AUG 1996) 42 52.227-4 PATENT INDEMNITY-- CONSTRUCTION CONTRACTS (APR 1984) 00700-58 43 52.227-11 PATENT RIGHTS-- RETENTION BY THE CONTRACTOR (SHORT FORM) (JUN 1989) 00700-58 44 52.227-12 PATENT RIGHTS-- RETENTION BY THE CONTRACTOR (LONG FORM) (JAN 1997) 00700-64 45 52.228-2 ADDITIONAL BOND SECURITY (JUN 1996) 00700-73 46 52.228-11 PLEDGES OF ASSETS (FEB 1992) 00700-74 47 52.229-3 FEDERAL, STATE, AND LOCAL TAXES (JAN 1991) 00700-75 48 52.229-5 TAXES-- CONTRACTS PERFORMED IN U.S. POSSESSIONS OR PUERTO RICO (APR 00700-76 1984) 49 52.232-5 PAYMENTS UNDER FIXED- PRICE CONSTRUCTION CONTRACTS (APR 1989) 00700-76 50 52.232-19 INTEREST (JUN 1996) 00700-79 51 52.232-23 ASSIGNMENT OF CLAIMS (JAN 1986) 00700-79 52 52.232-27 PROMPT PAYMENT FOR CONSTRUCTIONS CONTRACTS (MAR 1994) 00700-80 53 52.233-1 DISPUTES (OCT 1995) 00700-88
iii SECTION 00700 CONTRACT CLAUSES
54 52.233-3 PROTEST AFTER AWARD (AUG 1996) 00700-90 55 52.236-2 DIFFERING SITE CONDITIONS (APR 1984) 00700-91 56 52.236-3 SITE INVESTIGATION AND CONDITIONS AFFECTING THE WORK 00700-92 (APR 1984) 57 52.236-5 MATERIAL AND WORKMANSHIP (APR 1984) 00700-93 58 52.236-6 SUPERINTENDENCE BY THE CONTRACTOR (APR 1984) 00700-93 59 52.236-7 PERMITS AND RESPONSIBILITIES (NOV 1991) 00700-94 60 52.236-8 OTHER CONTRACTS (APR 1984) 00700-94 61 52.236-9 PROTECTION OF EXISTING VEGETATION, STRUCTURES, EQUIPMENT 00700-94 UTILITIES, AND IMPROVEMENTS (APR 1984) 62 52.236-10 OPERATIONS AND STORAGE AREAS (APR 1984) 00700-95 63 52.236-11 USE AND POSSESSION PRIOR TO COMPLETION (APR 1984) 00700-95 64 52.236-12 CLEANING UP (APR 1984) 00700-95 65 52.236-13 I ACCIDENT PREVENTION (NOV 1991)-- ALTERNATE I (NOV 1991) 00700-97 66 52.236-15 SCHEDULES FOR CONSTRUCTION CONTRACTS (APR 1984) 00700-98 67 52.236-17 LAYOUT OF WORK (APR 1984) 00700-99 68 52.236-21 I SPECIFICATIONS AND DRAWINGS FOR CONSTRUCTION (FEB 1997)-- 00700-99 ALTERNATE I (APR 1984) 69 52.236-26 PRECONSTRUCTION CONFERENCE (FEB 1996) 00700-101 70 52.242-13 BANKRUPTCY (JUL 1995) 00700-101 71 52.242-14 SUSPENSION OF WORK (APR 1984) 00700-102 72 52.243-4 CHANGES (AUG 1987) 00700-102 73 52.244-1 SUBCONTRACTS (FIXED-PRICE CONTRACTS) (FEB 1995) 00700-103
iv SECTION 00700 CONTRACT CLAUSES
74 52.246-12 INSPECTION OF CONSTRUCTION (AUG 1996) 00700-105 75 52.246-21 WARRANTY OF CONSTRUCTION (MAR 1994) 00700-107 76 52.248-3 I VALUE ENGINEERING--CONSTRUCTION (MAR 1989)--ALTERNATE I (APR 1984) 00700-108 77 52.249-2 I TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE) (SEP 1996)-- 00700-111 ALTERNATE I (SEP 1996) 78 52.249-10 DEFAULT (FIXED-PRICE CONSTRUCTION) (APR 1984) 00700-116 79 52.252-6 AUTHORIZED DEVIATIONS IN CLAUSES (APR 1984) 00700-117 80 52.253-1 COMPUTER GENERATED FORMS (JAN 1991) 00700-117 81 252.201-7000 CONTRACTING OFFICER'S REPRESENTATIVE (DEC 1991) 00700-118 82 252.203-7001 SPECIAL PROHIBITION ON EMPLOYMENT (NOV 1995) 00700-118 83 252.203-7002 DISPLAY OF DOD HOTLINE POSTER (DEC 1991) 00700-119 84 252.204-7000 DISCLOSURE OF INFORMATION (DEC 1991) 00700-120 85 252.204-7003 CONTROL OF GOVERNMENT PERSONNEL WORK PRODUCT (APR 1992) 00700-120 86 252.205-7000 PROVISION OF INFORMATION TO COOPERATIVE AGREEMENT HOLDERS (DEC 1991) 00700-121 87 252.209-7000 ACQUISITION FROM SUBCONTRACTORS SUBJECT TO ON-SITE INSPECTION UNDER THE 00700-121 INTERMEDIATE-RANGE NUCLEAR FORCES (INF) TREATY (NOV 1995) 88 252.209-7004 REPORTING OF COMMERCIAL TRANSACTIONS WITH THE GOVERNMENT OF A TERRORIST 00700-121 COUNTRY (SEP 1994) 89 252.219-7003 SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED SMALL BUSINESS SUBCONTRACTING 00700-123 PLAN (DOD CONTRACTS) (APR 1996) 90 252.223-7004 DRUG-FREE WORK FORCE (SEP 1988) 00700-124 91 252.225-7007 TRADE AGREEMENTS (JUL 1996) 00700-126
v SECTION 00700 CONTRACT CLAUSES 92 252.225-7012 PREFERENCE FOR CERTAIN DOMESTIC COMMODITIES (NOV 1995) 00700-129 93 252.225-7026 REPORTING OF CONTRACT PERFORMANCE OUTSIDE THE UNITED STATES (NOV 1995) 00700-130 94 252.225-7031 SECONDARY ARAB BOYCOTT OF ISRAEL (JUN 1992) 00700-131 95 252.225-7036 NORTH AMERICAN FREE TRADE AGREEMENT IMPLEMENTATION ACT (JAN 1994) 00700-132 96 252.227-7000 NON-ESTOPPEL (OCT 1966) 00700-133 97 252.227-7022 GOVERNMENT RIGHTS (UNLIMITED) (MAR 1979) 00700-134 98 252.227-7023 DRAWINGS AND OTHER DATA TO BECOME PROPERTY OF GOVERNMENT (MAR 1979) 00700-134 99 252.227-7033 RIGHTS IN SHOP DRAWINGS (APR 1966) 00700-134 100 252.231-7000 SUPPLEMENTAL COST PRINCIPLES (DEC 1991) 00700-135 101 252.232-7006 REDUCTION OR SUSPENSION OF CONTRACT PAYMENTS UPON FINDING OR FRAUD (AUG 1992) 00700-135 102 252.236-7000 MODIFICATION PROPOSALS--PRICE BREAKDOWN (DEC 1991) 00700-135 103 252.236-7008 CONTRACT PRICES--BIDDING SCHEDULES (DEC 1991) 00700-136 104 252.242-7000 POSTAWARD CONFERENCE (DEC 1991) 00700-136 105 252.243-7001 PRICING OF CONTRACT MODIFICATIONS (DEC 1991) 00700-136 106 252.247-7024 MODIFICATION OF TRANSPORTATION OF SUPPLIES BY SEA (NOV 1995) 00700-137 107 52.252-4 ALTERNATIONS IN CONTRACT
vi SECTION 00700 CONTRACT CLAUSES 1 52.252-2 CLAUSES INCORPORATED BY REFERENCE (JUN 1988) This contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. (End of clause) 2 52.202-1 I DEFINITIONS (OCT 1995) -- ALTERNATE I (APR 1984) (a) "Head of the agency" (also called "agency head") or "Secretary" means the Secretary (or Attorney General, Administrator, Governor, Chairperson, or other chief official, as appropriate) of the agency, including any deputy or assistant chief official of the agency; and the term "authorized representative" means any person, persons, or board (other than the Contracting Officer) authorized to act for the head of the agency or Secretary. (b) Commercial component means any component that is a commercial item. (c) Component means any item supplied to the Federal Government as part of an end item or of another component. (d) Nondevelopmental item means -- (1) Any previously developed item of supply used exclusively for governmental purposes by a Federal agency, a State or local government, or a foreign government with which the United States has a mutual defense cooperation agreement; (2) Any item described in paragraph (a) (1) of this definition that requires only minor modification or modifications of a type customarily available in the commercial marketplace in order to meet the requirements of the procuring department or agency; or (3) Any item of supply being produced that does not meet the requirements of paragraph (e) (1) or (e) (2) solely because the item is not yet in use. (e) "Contracting Officer" means a person with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings. The term includes certain authorized representatives of the Contracting Officer acting within the limits of their authority as delegated by the Contracting Officer. (f) Except as otherwise provided in this contract, the term "subcontracts" includes, but is not limited to, purchase orders and changes and modifications to purchase orders under this contract. (End of clause) 00700-1 3 52.203-3 GRATUITIES (APR 1984) (a) The right of the Contractor to proceed may be terminated by written notice if, after notice and hearing, the agency head or a designee determines that the Contractor, its agent, or another representative-- (1) Offered or gave a gratuity (e.g., an entertainment or gift) to an officer, official, or employee of the Government; and (2) Intended, by the gratuity, to obtain a contract or favorable treatment under a contract. (b) The facts supporting this determination may be reviewed by any court having lawful jurisdiction. (c) If this contract is terminated under paragraph (a) above, the Government is entitled-- (1) To pursue the same remedies as in a breach of the contract; and (2) In addition to any other damages provided by law, to exemplary damages of not less than 3 nor more than 10 times the cost incurred by the Contractor in giving gratuities to the person concerned, as determined by the agency head or a designee. (This subparagraph (c) (2) is applicable only if this contract uses money appropriated to the Department of Defense.) (d) The rights and remedies of the Government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract. (End of clause) (R 7-104.16 1952 MAR) 4 52.203-5 COVENANT AGAINST CONTINGENT FEES (APR 1954) (a) The Contractor warrants that no person or agency has been employed or retained to solicit or obtain this contract upon an agreement or understanding for a contingent fee, except a bona fide employee or agency. For breach or violation of this warranty, the Government shall have the right to annul this contract without liability or, in its discretion, to deduct from the contract price or consideration, or otherwise recover, the full amount of the contingent fee. (b) "Bona fide agency," as used in this clause, means an established commercial or selling agency, maintained by a contractor for the purpose of securing business, that neither exerts nor proposes to exert improper 00700-2 influence to solicit or obtain Government contracts nor holds itself out as being able to obtain any Government contract or contracts through improper influence. "Bona fide employee," as used in this clause, means a person, employed by a Contractor and subject to the Contractor's supervision and control as to time, place, and manner of performance, who neither exerts nor proposes to exert improper influence to solicit or obtain Government contracts nor holds out as being able to obtain any Government contract or contracts through improper influence. "Contingent fee," as used in this clause, means any commission, percentage, brokerage, or other fee that is contingent upon the success that a person or concern has in securing a Government contract. "Improper influence," as used in this clause, means any influence that induces or tends to induce a Government employee or officer to give consideration or to act regarding a Government contract on any basis other than the merits of the matter. (End of clause) (R 7-103.20 1968 JAN) (R 1-1.503) (R 1-7.102-18) 5 52.203-7 ANTI-KICKBACK PROCEDURES (JUL 1995) (a) Definitions. "Kickback," as used in this clause, means any money, fee, commission, credits, gift, gratuity, thing of value, or compensation of any kind which is provided, directly or indirectly, to any prime Contractor, prime Contractor employee, subcontractor, or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract or in connection with a subcontract relating to a prime contract. "Person," as used in this clause, means a corporation, partnership, business association of any kind, trust, joint-stock company, or individual. "Prime contract," as used in this clause, means a contract or contractual action entered into by the United States for the purpose of obtaining supplies, materials, equipment, or services of any kind. "Prime Contractor" as used in this clause, means a person who has entered into a prime contract with the United States. "Prime Contractor employee," as used in this clause, means any officer, 00700-3 partner, employee, or agent of a prime Contractor. "Subcontract," as used in this clause, means a contract or contractual action entered into by a prime Contractor or subcontractor for the purpose of obtaining supplies, materials, equipment, or services of any kind under a prime contract. "Subcontractor," as used in this clause, (1) means any person, other than the prime Contractor, who offers to furnish or furnishes any supplies, materials, equipment, or services of any kind under a prime contract or a subcontract entered into in connection with such prime contract, and (2) includes any person who offers to furnish or furnishes general supplies to the prime Contractor or a higher tier subcontractor. "Subcontractor employee," as used in this clause, means any officer, partner, employee, or agent of a subcontractor. (b) The Anti-kickback Act of 1986 (41 U.S.C. 51-58) (the Act), prohibits any person from-- (1) Providing or attempting to provide or offering to provide any kickback; (2) Soliciting, accepting, or attempting to accept any kickback; or (3) Including, directly or indirectly, the amount of any kickback in the contract price charged by a prime Contractor to the United States or in the contract price charged by a subcontractor to a prime Contractor or higher tier subcontractor. (c) (1) The Contractor shall have in place and follow reasonable procedures designed to prevent and detect possible violations described in paragraph (b) of this clause in its own operations and direct business relationships. (2) When the Contractor has reasonable grounds to believe that a violation described in paragraph (b) of this clause may have occurred, the Contractor shall promptly report in writing the possible violation. Such reports shall be made to the inspector general of the contracting agency, the head of the contracting agency if the agency does not have an inspector general, or the Department of Justice. (3) The Contractor shall cooperate fully with any Federal agency investigating a possible violation described in paragraph (b) of this clause. (4) The Contracting Officer may (i) offset the amount of the kickback against any monies owed by the United States under the prime contract and/or (ii) direct that the Prime Contractor withhold from sums owed a subcontractor under the prime contract the amount of the kickback. The Contracting Officer may order that monies withheld under subdivision (c) (4) (ii) of this clause be paid over to the Government unless the 00700-4 Government has already offset those monies under subdivision (c) (4) (i) of this clause. In either case, the Prime Contractor shall notify the Contracting Officer when the monies are withheld. (5) The Contractor agrees to incorporate the substance of this clause, including subparagraph (c) (5) but excepting subparagraph (c) (1), in all subcontracts under this contract which exceed $100,000. (End of clause) 6 52.203-10 PRICE OR FEE ADJUSTMENT FOR ILLEGAL OR, IMPROPER ACTIVITY (JAN 1997) (a) The Government, at its election, may reduce the price of a fixed- price type contract and the total cost and fee under a cost-type contract by the amount of profit or fee determined as set forth in paragraph (b) of this clause if the head of the contracting activity or designee determines that there was violation of subsection 27 (a), (b) or (c) of the Office of Federal Procurement Policy Act, as amended (41 U.S.C. 423), as implemented in section 3.104 of the Federal Acquisition Regulation. (b) The price or fee reduction referred to in paragraph (a) of this clause shall be-- (1) For cost-plus-fixed-fee contracts, the amount of the fee specified in the contract at the time of award, (2) For cost-plus-incentive-fee contracts, the target fee specified in the contract at the time of award, notwithstanding any minimum fee or "fee floor" specified in the contract; (3) For cost-plus-award-fee contracts-- (i) The base fee established in the contract at the time of contract award; (ii) If no base fee is specified in the contract, 30 percent of the amount of each award fee otherwise payable to the Contractor for each award fee evaluation period or at each award fee determination point. (4) For fixed-price-incentive contracts, the Government may-- (i) Reduce the contract target price and contract target profit both by an amount equal to the initial target profit specified in the contract at the time of contract award, or (ii) If an immediate adjustment to the contract target price and contract target profit would have a significant adverse impact on the incentive price revision relationship under the contract, or adversely affect the contract financing provisions, the Contracting Officer may defer such adjustment until establishment of the total final price of 00700-5 the contract. The total final price established in accordance with the incentive price revision provisions of the contract shall be reduced by an amount equal to the initial target profit specified in the contract at the time of contract award and such reduced price shall be the total final contract price. (5) For firm-fixed-price contracts, by 10 percent of the initial contract price or profit amount determined by the Contracting Officer from records or documents in existence prior to the date of the contract award. (c) The Government may, at its election, reduce a prime contractor's price or fee in accordance with the procedures of paragraph (b) of this clause for violations of the Act by its subcontractors by an amount not to exceed the amount of profit or fee reflected in the subcontract at the time the subcontract was first definitively priced. (d) In addition to the remedies in paragraphs (a) and (c) of this clause, the Government may terminate this contract for default. The rights and remedies of the Government specified herein are not exclusive, and are in addition to any other rights and remedies provided by law or under this contract. (End of clause) 7 52.203-12 LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS (JAN 1990) (a) Definitions. "Agency," as used in this clause, means executive agency as defined in 2.101. "Covered Federal action," as used in this clause, means any of the following Federal actions: (a) The awarding of any Federal contract. (b) The making of any Federal grant. (c) The making of any Federal loan. (d) The entering into of any cooperative agreement. (e) The extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. "Indian tribe" and "tribal organization," as used in this clause, have the meaning provided in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 4508) and include Alaskan Natives. "Influencing or attempting to influence," as used in this clause, means making, with the intent to influence, any communication to or appearance 00700-6 before an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any covered Federal action. "Local government," as used in this clause, means a unit of government in a State and, if chartered, established, or otherwise recognized by a State for the performance of a governmental duty, including a local public authority, a special district, an intrastate district, a council of governments, a sponsor group representative organization, and any other instrumentality of a local government. "Officer or employee of an agency," as used in this clause, includes the following individuals who are employed by an agency: (a) An individual who is appointed to a position in the Government under title 5, United States Code, including a position under a temporary appointment. (b) A member of the uniformed services, as defined in subsection 101 (3), title 37, United States Code. (c) A special Government employee, as defined in section 202, title 18, United States Code. (d) An individual who is a member of a Federal advisory committee, as defined by the Federal Advisory Committee Act, title 5, United States Code, appendix 2. "Person," as used in this clause, means an individual, corporation, company, association, authority, firm, partnership, society, State, and local government, regardless of whether such entity is operated for profit, or not for profit. This term excludes an Indian tribe, tribal organization, or any other Indian organization with respect to expenditures specifically permitted by other Federal law. "Reasonable compensation," as used in this clause, means, with respect to a regularly employed officer or employee of any person, compensation that is consistent with the normal compensation for such officer or employee for work that is not furnished to, not funded by, or not furnished in cooperation with the Federal Government. "Reasonable payment," as used in this clause, means, with respect to professional and other technical services, a payment in an amount that is consistent with the amount normally paid for such services in the private sector. "Recipient," as used in this clause, includes the Contractor and all subcontractors. This term excludes an Indian tribe, tribal organization, or any other Indian organization with respect to expenditures specifically permitted by other Federal law. "Regularly employed," as used in this clause, means, with respect to an 00700-7 officer or employee of a person requesting or receiving a Federal contract, an officer or employee who is employed by such person for at least 130 working days within 1 year immediately preceding the date of the submission that initiates agency consideration of such person for receipt of such contract. An officer or employee who is employed by such person for less than 130 working days within 1 year immediately preceding the date of the submission that initiates agency consideration of such person shall be considered to be regularly employed as soon as he or she is employed by such person for 130 working days. "State," as used in this clause, means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, a territory or possession of the United States, an agency or instrumentality of a State, and multi-State, regional, or interstate entity having governmental duties and powers. (b) Prohibitions. (1) Section 1352 of title 31, United States Code, among other things, prohibits a recipient of a Federal contract, grant, loan, or cooperative agreement from using appropriated funds to pay any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any of the following covered Federal actions: the awarding of any Federal contract; the making of any Federal grant; the making of any Federal loan; the entering into of any cooperative agreement; or the modification of any Federal contract, grant, loan, or cooperative agreement. (2) The Act also requires Contractors to furnish a disclosure if any funds other than Federal appropriated funds (including profit or fee received under a covered Federal transaction) have been paid, or will be paid, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with a Federal contract, grant, loan, or cooperative agreement. (3) The prohibitions of the Act do not apply under the following conditions: (1) Agency and legislative liaison by own employees. (A) The prohibition on the use of appropriated funds, in subparagraph (b) (1) of this clause, does not apply in the case of a payment of reasonable compensation made to an officer or employee of a person requesting or receiving a covered Federal action if the payment is for agency and legislative liaison activities not directly related to a covered Federal action. 00700-8 (B) For purposes of subdivision (b) (3) (i) (A) of this clause, providing any information specifically requested by an agency or Congress is permitted at any time. (C) The following agency and legislative liaison activities are permitted at any time where they are not related to a specific solicitation for any covered Federal action; (1) Discussing with an agency the qualities and characteristics (including individual demonstrations) of the person's products or services, conditions or terms of sale, and service capabilities. (2) Technical discussions and other activities regarding the application or adaptation of the person's products or services for an agency's use. (D) The following agency and legislative liaison activities are permitted where they are prior to formal solicitation of any covered Federal action-- (1) Providing any information not specifically requested but necessary for an agency to make an informed decision about initiation of a covered Federal action; (2) Technical discussions regarding the preparation of an unsolicited proposal prior to its official submission; and (3) Capability presentations by persons seeking awards from an agency pursuant to the provisions of the Small Business Act, as amended by Pub. L. 95-507, and subsequent amendments. (E) Only those services expressly authorized by subdivision (b) (3) (i) (A) of this clause are permitted under this clause. (ii) Professional and technical services. (A) The prohibition on the use of appropriated funds, in subparagraph (b) (i) of this clause, does not apply in the case of -- (1) A payment of reasonable compensation made to an officer or employee of a person requesting or receiving a covered Federal action or an extension, continuation, renewal, amendment, or modification of a covered Federal action, if payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that Federal action or for meeting requirements imposed by or pursuant to law as a condition for receiving that Federal action. (2) Any reasonable payment to a person, other than an officer or employee of a person requesting or receiving a covered Federal action or an extension, continuation, renewal, amendment, or modification of a covered Federal action if the payment is for 00700-9 professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that Federal action or for meeting requirements imposed by or pursuant to law as a condition for receiving that Federal action. Persons other than officers or employees of a person requesting or receiving a covered Federal action include consultants and trade associations. (B) For purposes of subdivision (b) (3) (ii) (A) of this clause, "professional and technical services" shall be limited to advice and analysis directly applying any professional or technical discipline. For example, drafting of a legal document accompanying a bid or proposal by a lawyer is allowable. Similarly, technical advice provided by an engineer on the performance or operational capability of a piece of equipment rendered directly in the negotiation of a contract is allowable. However, communications with the intent to influence made by a professional (such as a licensed lawyer) or a technical person (such as a licensed accountant) are not allowable under this section unless they provide advice and analysis directly applying their professional or technical expertise and unless the advice or analysis is rendered directly and solely in the preparation, submission or negotiation of a covered Federal action. Thus, for example, communications with the intent to influence made by a lawyer that do not provide legal advice or analysis directly and solely related to the legal aspects of his or her client's proposal, but generally advocate one proposal over another are not allowable under this section because the lawyer is not providing professional legal services. Similarly, communications with the intent to influence made by an engineer providing an engineering analysis prior to the preparation or submission of a bid or proposal are not allowable under this section since the engineer is providing technical services but not directly in the preparation, submission or negotiation of a covered Federal action. (C) Requirements imposed by or pursuant to law as a condition for receiving a covered Federal award include these required by law or regulation and any other requirements in the actual award documents. (D) Only these services expressly authorized by subdivisions (b) (3) (ii) (A) (1) and (2) of this clause are permitted under this clause. (E) The reporting requirements of FAR 3.803 (a) shall not apply with respect to payments of reasonable compensation made to regularly employed officers or employees of a person. (c) Disclosure. 00700-10 (1) The Contractor who requests or receives from an agency a Federal contract shall file with that agency a disclosure form, OMB standard from LLL, Disclosure of Lobbying Activities, if such person has made or has agreed to make any payment using nonappropriated funds (to include profits from any covered Federal action), which would be prohibited under subparagraph (b) (1) of this clause, if paid for with appropriated funds. (2) The Contractor shall file a disclosure form at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the information contained in any disclosure form previously filed by such person under subparagraph (c) (1) of this clause. An event that materially affects the accuracy of the information reported includes-- (i) A cumulative increase of $25,000 or more in the amount paid or expected to be paid for influencing or attempting to influence a covered Federal action; or (ii) A change in the person(s) or individual(s) influencing or attempting to influence a covered Federal action; or (iii) A change in the officer(s), employee(s), or Member(s) contacted to influence or attempt to influence a covered Federal action. (3) The Contractor shall require the submittal of a certification, and if required, a disclosure form by any person who requests or receives any subcontract exceeding $100,000 under the Federal contract. (4) All subcontractor disclosure forms (but not certifications) shall be forwarded from tier to tier until received by the prime Contractor. The prime Contractor shall submit all disclosures to the Contracting Officer at the end of the calendar quarter in which the disclosure form is submitted by the subcontractor. Each subcontractor certification shall be retained in the subcontract file of the awarding Contractor. (d) Agreement. The Contractor agrees not to make any payment prohibited by this clause. (e) Penalties. (1) Any person who makes an expenditure prohibited under paragraph (a) of this clause or who fails to file or amend the disclosure form to be filed or amended by paragraph (b) of this clause shall be subject to civil penalties as provided for by 31 U.S.C. 1352. An imposition of a civil penalty does not prevent the Government from seeking any other remedy that may be applicable. (2) Contractors may rely without liability on the representation made by their subcontractors in the certification and disclosure form. 00700-11 ^(?) Cost allowability. Nothing in this clause makes allowable or reasonable any costs which would otherwise be unallowable or unreasonable. Conversely, costs made specifically unallowable by the requirements in this clause will not be made allowable under any other provision. (End of Clause) 8 52.204-4 PRINTING/COPYING DOUBLE-SIDED ON RECYCLED PAPER (JUN 1996) (a) In accordance with Executive Order 12873, dated October 20, 1993, as amended by Executive Order 12995, dated March 25, 2996, the Offeror/Contractor is encouraged to submit paper documents, such as offers, letters, or reports, that are printed/copied double-sided on recycled paper that has at least 20 percent postconsumer material. (b) The 20 percent standard applies to high-speed copier paper, offset paper, forms bond, computer printout paper, carbonless paper, file folders, white woven envelopes, and other uncoated printed and writing paper, such as writing and office paper, book paper, cotton fiber paper, and cover stock. An alternative to meeting the 20 percent postconsumer material standard is 50 percent recovered material content of certain industrial by-products. (End of Clause) 9 52.209-6 PROTECTING THE GOVERNMENT'S INTEREST WHEN SUBCONTRACTING WITH CONTRACTORS DEBARRED, SUSPENDED, OR PROPOSED FOR DEBARMENT (JUL 1995) (a) The Government suspends or debars Contractors to protect the Government's interest. The Contractor shall not enter into any subcontract in excess of $25,000 with a Contractor that is debarred, suspended, or proposed for debarment unless there is a compelling reason to do so. (b) The Contractor shall require each proposed first-tier subcontractor, whose subcontract will exceed $25,000, to disclose to the Contractor, in writing, whether as of the time of award of the subcontract, the subcontractor, or its principals, is or is not debarred, suspended, or proposed for debarment by the Federal Government. (c) A corporate officer or a designee of the Contractor shall notify the Contracting Officer, in writing, before entering into a subcontract with a party that is debarred, suspended or proposed for debarment (see 00700-12 FAR 9.404 for information on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs). The notice must include the following: (1) The name of the subcontractor. (2) The Contractor's knowledge of the reasons for the subcontractor being on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs. (3) The compelling reason(s) for doing business with the subcontractor notwithstanding its inclusion on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs. (4) The systems and procedures the Contractor has established to ensure that it is fully protecting the Government's interests when dealing with such subcontractor in view of the specific basis for the party's debarment, suspension, or proposed debarment. (End of clause) 10 52.214-26 AUDIT AND RECORDS--SEALED BIDDING (OCT 1995) (a) As used in this clause, records includes books, documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form. (b) Cost or pricing data. If the Contractor has been required to submit cost or pricing data in connection with the pricing of any modification to this contract, the Contracting Officer, or an authorized representative of the Contracting Officer, in order to evaluate the accuracy, completeness, and currency of the cost of pricing data, shall have the right to examine and audit all of the Contractor's records, including computations and projections, related to-- (1) The proposal for the modification; (2) The discussions conducted on the proposal(s), including those related to negotiating; (3) Pricing of the modification, or (4) Performance of the modification. (c) Comptroller General. In the case of pricing any modification, the Comptroller General of the United States, or an authorized representative, shall have the same rights as specified in paragraph (b) of this clause. (d) Availability. The Contractor shall make available at its office at all reasonable times the materials described in reproduction, until 3 years after final payment under this contract, or for any other period specified 00700-13 in Subpart 4.7 of the Federal Acquisition Regulation (FAR). FAR Subpart 4.7, Contractor Records Retention, in effect on the data of this contract, is incorporated by reference in its entirety and made a part of this contract. (1) If this contract is completely or partially terminated, the records relating to the work terminated shall be made available for 3 years after any resulting final termination settlement. (2) Records pertaining to appeals under the Disputes clause or to litigation or the settlement of claims arising under or relating to the performance of this contract shall be made available until disposition of such appeals, litigation, or claims. (e) The Contractor shall insert a clause containing all the provisions of this clause, including this paragraph (e), in all subcontracts expected to exceed the threshold in FAR 15.804-2(a) (1) for submission of cost or pricing data. (End of clause) 11 52.214-27 PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA-- MODIFICATIONS-- SEALED BIDDING (OCT 1995) (a) This clause shall become operative only for any modification to this contract involving aggregate increases and/or decreases in costs, plus applicable profits, expected to exceed the threshold for the submission of cost or pricing data at FAR 15.804-2(a) (1), expect that this clause does not apply to a modification if an exception under FAR 15.804-1 applies. (b) If any price, including profit, negotiated in connection with any modification under this clause, was increased by any significant amount because (1) the Contractor or a subcontractor furnished cost or pricing data that were not complete, accurate, and current as certified in its Certificate of Current Cost or Pricing Data, (2) a subcontractor or prospective subcontrator furnished the Contractor cost or pricing data that were not complete, accurate, and current as certified in the Contractor's Certificate of Current Cost or Pricing Data, or (3) any of these parties furnished data of any description that were not accurate, the price shall be reduced accordingly and the contract shall be modified to reflect the reduction. This right to a price reduction is limited to that resulting from defects in data relating to modifications for which this clause becomes operative under paragraph (a) above. (c) Any reduction in the contract price under paragraph (b) above due to 00700-14 defective data from a prospective subcontractor that was not subsequently awarded the subcontract shall be limited to the amount, plus applicable overhead and profit markup, by which (1) the actual subcontract or (2) the actual cost to the Contractor, if there was no subcontract, was less than the prospective subcontract cost estimate submitted by the Contractor; provided, that the actual subcontract price was not itself affected by defective cost or pricing data. (d) (1) If the Contracting Officer determines under paragraph (b) of this clause that a price or cost reduction should be made, the Contractor agrees not to raise the following matters as defence: (i) The Contractor or subcontractor was a sole source supplier or otherwise was in a superior bargaining position and thus the price of the contract would not have been modified even if accurate, complete, and current cost or pricing data had been submitted. (ii) The Contracting Officer should have known that the cost or pricing data in issue were defective even though the Contractor or subcontractor took no affirmative action to bring the character of the data to the attention of the Contracting Officer. (iii) The Contract was based on an agreement about the total cost of the contract and there was no agreement about the cost of each item procure under the contract. (iv) The Contractor or subcontractor did not submit a Certificate of Current Cost or Pricing Data. (2) (i) Except as prohibited by subdivision (d) (2) (ii) of this clause, an offset in an amount determined appropriate by the Contracting Officer based upon the facts shall be allowed against the amount of a contract price reduction if-- (A) The Contractor certifies to the Contracting Officer that, to the best of the Contractor's knowledge and belief, the Contractor is entitled to the offset in the amount requested; and (B) The Contractor proves that the cost or pricing data were available before the date of agreement on the price of the contract (or price of the modification) and that the data were not submitted before such date. (ii) An offset shall not be allowed if-- (A) The understated data was known by the Contractor to be understated when the Certificate of Current Cost or Pricing Data was signed; or (B) The Government proves that the facts demonstrate that the contract price would not have increased in the amount to be offset even if the available data had been submitted before the date of 00700-15 agreement on price. (e) If any reduction in the contract price under this clause reduces the price of items for which payment was made prior to the date of the modification reflecting the price reduction, the Contractor shall be liable to and shall pay the United States at the time such overpayment is repaid-- (1) Simple interest on the amount of such overpayment to be computed from the date(s) of overpayment to the Contractor to the date the Government is repaid by the Contractor at the applicable underpayment rate effective for each quarter prescribed by the Secretary of the Treasury under 26 U.S.C. 6621(a) (2); and (2) A penalty equal to the amount of the overpayment, if the Contractor or subcontractor knowingly submitted cost or pricing data which were incomplete, inaccurate, or noncurrent. (End of clause) 12 52.214-28 SUBCONTRACTOR COST OR PRICING DATA--MODIFICATIONS--SEALED BIDDING (OCT 1995) (a) The requirements of paragraphs (b) and (c) of this clause shall (1) become operative only for any modification to this contract involving aggregate increases and/or decreases in costs, plus applicable profits, expected to exceed the threshold for submission of cost or pricing data at FAR 15.904-2(a) (1), and (2) be limited to such modifications. (b) Before awarding any subcontract expected to exceed the threshold for submission of cost or pricing data at FAR 15.804-2(a) (1), on the date of agreement on price or date of award, whichever is later; or before pricing any subcontract modifications involving aggregate increases and/or decreases in costs, plus applicable profits, expected to exceed the threshold for submission of cost or pricing data at FAR 15.804-2 (a) (1), the Contractor shall require the subcontractor to submit cost or pricing data (actually or by specific identification in writing), unless an exception under FAR 15.804-1 applies. (c) The Contractor shall require the subcontractor to certify in substantially the form prescribed in subsection FAR 15.804-4 that, to the best of its knowledge and belief, the data submitted under paragraph (b) of this clause were accurate, complete, and current as of the date of agreement on the negotiated price of the subcontract or subcontract modification. (d) The Contractor shall insert the substance of this clause, including 00700-16 this paragraph (d), in each subcontract that, when entered into, exceeds the threshold for submission of cost or pricing data as FAR 15.804-2(a) (1). (End of clause) 13 52.219-8 UTILIZATION OF SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED SMALL BUSINESS CONCERNS (OCT 1995) (a) It is the policy of the United States that small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals and small business concerns owned and controlled by women shall have the maximum practicable opportunity to participate in performing contracts let by any Federal agency, including contracts and subcontracts for subsystems, assemblies, components, and related services for major systems. It is further the policy of the United States that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals and small business concerns owned and controlled by women. (b) The Contractor hereby agrees to carry out this policy in the awarding of subcontracts to the fullest extent consistent with efficient contract performance. The Contractor further agrees to cooperate in any studies or surveys as may be conducted by the United States Small Business Administration or the awarding agency of the United States as may be necessary to determine the extent of the Contrator's compliance with this clause. (c) As used in this contract, the term "small business concern" shall mean a small business as defined pursuant to section 3 of the Small Business Act and relevant regulations promulgated pursuant thereto. The term "small business concern owned and controlled by socially and economically disadvantaged individuals" shall mean a small business concern (1) which is at least 51 percent unconditionally owned by one or more socially and economically disadvantaged individuals; or, in the case of any publicly owned business, at least 51 per centum of the stock of which is unconditionally owned by one or more socially and economically disadvantaged individuals; and (2) whose management and daily business operations are controlled by one or more of such individuals. This term also means a small business concern that is at least 51 percent unconditionally owned by an economically disadvantaged Indian tribe or 00700-17 Native Hawaiian Organization, or a publicly owned business having at least 51 percent of its stock unconditionally owned by one of these entities which has its management and daily business controlled by members of an economically disadvantaged Indian tribe or Native Hawaiian Organization, and which meets the requirements of 13 CFR 124. The Contractor shall presume that socially and economically disadvantaged individuals include Black Americans, Hispanic Americans, Native Americans, Asian-pacific Americans, Subcontinent Asian Americans, and other minorities, or any other individual found to be disadvantaged by the Administration pursuant to section 8(a) of the Small Business Act. The Contractor shall presume that socially and economically disadvantaged entities also include Indian Tribes and Native Hawaiian Organizations. (d) The term "small business concern owned and controlled by women shall mean a small business concern (i) which is at least 51 percent owned by one or more women, or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women, and (ii) whose management and daily business operations are controlled by one or more women; and (e) Contractors acting in good faith may rely on written representations by their subcontractors regarding their status as a small business concern, a small business concern owned and controlled by socially and economically disadvantaged individuals or a small business concern owned and controlled by women. (End of clause) 14 52.219-9 I SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED SMALL BUSINESS SUBCONTRACTING PLAN (AUG 1996)-- ALTERNATE I (OCT 1995) (a) This clause does not apply to small business concerns. (b) "Commercial product," as used in this clause, means a product is regular production that is sold in substantial quantities to the general public and/or industry at established catalog or market prices. It ^?? means a product which, in the opinion of the Contracting Officer, differs only insignificantly from the Contractor's commercial product. "Subcontract," as used in this clause, means any agreement (other than one involving an employer-employee relationship) entered into by a Federal Government prime Contractor or subcontractor calling for supplies or services required for performance of the contract or subcontract. (c) The apparent low bidder, upon request by the Contracting officer, 00700-18 shall submit a subcontracting plan, where applicable, which separately addresses subcontracting with small business concerns, with small disadvantaged business concerns and with women-owned small business concerns. If the bidder is submitting an individual contract plan, the plan must separately address subcontracting with small business concerns, small disadvantaged business concerns and women-owned small business concerns, with a separate part for the basic contract and separate parts for each option (if any). The plan shall be included in and made a part of the resultant contract. The subcontracting plan shall be submitted within the time specified by the Contracting Officer. Failure to submit the subcontracting plan shall make the bidder ineligible for the award of a contract. (d) The offeror's subcontracting plan shall include the following: (1) Goals, expressed in terms of percentages of total planned subcontracting dollars, for the use of small business concerns, small disadvantaged business concerns and women-owned business concerns as subcontractors. The offeror shall include all subcontracts that contribute to contract performance, and may include a proportionate share of products and services that are normally allocated as indirect costs. (2) A statement of -- (i) Total dollars planned to be subcontracted; (ii) Total dollars planned to be subcontracted to small business concerns; (iii) Total dollars planned to be subcontracted to small disadvantaged business concerns; and (iv) Total dollars planned to be subcontracted to women-owned small business concerns. (3) A description of the principal types of supplies and services to be subcontracted, and an identification of the types planned for subcontracting to (i) small business concerns, (ii) small disadvantaged business concerns and (iii) women-owned small business concerns. (4) A description of the method used to develop the subcontracting goals in paragraph (d)(1) of this clause. (5) A description of the method used to identify potential sources for solicitation purposes (e.g.) pre-existing company source lists, the Procurement Automated Source system (PASS) of the Small Business Administration, the National Minority Purchasing Council Vendor Information Service, the Research and Information Division of the Minority Business Development Agency in the Department of Commerce, or small, small disadvantaged and women-owned small business concerns trade associations). A firm may rely on the information contained in PASS as 00700-19 an accurate representation of a concern's size and ownership characteristics for purposes of maintaining a small business source list. A firm may rely on PASS as its small business source list. Use of the PASS as its source list does not relieve a firm of its responsibilities (e.g., outreach, assistance, counseling, publicizing subcontracting opportunities) in this clause. (6) A statement as to whether or not the offeror included indirect costs in establishing subcontracting goals, and a description of the method used to determine the proportionate share of indirect costs to be incurred with (i) small business concerns, (ii) small disadvantaged business concerns, and (iii) women-owned small business concerns. (7) The name of the individual employed by the offeror who will administer the offeror's subcontracting program, and a description of the duties of the individual. (8) A description of the efforts the offeror will make to assure that small, small disadvantaged and women-owned small business concerns have an equitable opportunity to compete for subcontracts. (9) Assurances that the offeror will include the clause in this contract entitled "Utilization of Small, Small Disadvantaged and Women-Owned Small Business Concerns" in all subcontracts that offer further subcontracting opportunities, and that the offeror will require all subcontractors (except small business concerns) who receive subcontracts in excess of $500,000 ($1,000,000 for construction of any public facility) to adopt a plan similar to the plan agreed to by the offeror. (10) Assurances that the offeror will (i) cooperate in any studies or surveys as may be required, (ii) submit periodic reports in order to allow the Government to determine the extent of compliance by the offeror with the subcontracting plan, (iii) submit Standard Form (SF) 294, Subcontracting Report for Individual Contracts, and/or SP 295, Summary Subcontract Report, in accordance with the instructions on the forms, and (iv) ensure that its subcontractors agree to submit Standard Forms 294 and 295. (11) A recitation of the types of records the offeror will maintain to demonstrate procedures that have been adopted to comply with the requirements and goals in the plan, including establishing source lists, and a description of its efforts to locate small, small disadvantaged and women-owned small business concerns and award subcontracts to them. The records shall include at least the following (on a plant-wide or company-wide basis, unless otherwise indicated). (i) Source lists (e.g., PASS), guides, and other data that identify 00700-20 small, small disadvantaged and women-owned small business concerns. (ii) Organizations contacted in an attempt to locate sources that are small, small disadvantaged or women-owned small business concerns. (iii) Records on each subcontract solicitation resulting in an award of more than $100,000, indicating (A) whether small business concerns were solicited and if not, why not, (B) whether small disadvantaged business concerns were solicited and if not, why not, (C) whether women-owned small business concerns were solicited and if not, why not, and (D) if applicable, the reason award was not made to a small business concern. (iv) Records of any outreach efforts to contact (A) trade associations, (B) business development organizations, and (C) conferences and trade fairs to locate small, small disadvantaged and women-owned small business sources. (v) Records of internal guidance and encouragement provided to buyers through (A) workshops, seminars, training, etc., and (B) monitoring performance to evaluate compliance with the program's requirements. (vi) On a contract-by-contract basis, records to support award data submitted by the offeror to the Government, including the name, address, and business size of each subcontractor. Contractors having company or division-wide annual plans need not comply with this requirement. (e) In order to effectively implement this plan to the extent consistent with efficient contract performance, the Contractor shall perform the following functions: (1) Assist small, small disadvantaged and women-owned small business concerns by arranging solicitations, time for the preparation of bids, quantities, specifications, and delivery schedule so as to facilitate the participation by such concerns. Where the contractor's lists of potential small, small disadvantaged and women-owned small business subcontractors are excessively long, reasonable effort shall be made to give all such small business concerns an opportunity to compete over a period of time. (2) Provide adequate and timely consideration of the potentialities of small, small disadvantaged and women-owned small business concerns in all "make-or-buy" decisions. (3) Counsel and discuss subcontracting opportunities with representatives of small, small disadvantaged and women-owned small business firms. (4) Provide notice to subcontractors concerning penalties and remedies for misrepresentations of business status as small, small disadvantaged 00700-21 or women-owned small business for the purpose of obtaining a subcontract that is to be included as part or all of a goal contained in the Contractor's subcontracting plan. (f) A master subcontracting plan on a plant or division-wide basis which contains all the elements required by (d) above, except goals, may be incorporated by reference as a part of the subcontracting plan required of the offeror by this clause; provided, (1) the master plan has been approved, (2) the offeror provides copies of the approved master plan and evidence of its approval to the Contracting officer, and (3) goals and any deviations from the master plan deemed necessary by the Contracting Officer to satisfy the requirements of this contract are set forth in the individual subcontracting plan. (g) (1) If a commercial product is offered, the subcontracting plan required by this clause may relate to the offeror's production generally, for both commercial and noncommercial products, rather than solely to the Government contract. In these cases, the offeror shall, with the concurrence of the Contracting Officer, submit one company-wide or division-wide annual plan. (2) The annual plan shall be reviewed for approval by the agency awarding the offeror its first prime contract requiring a subcontracting plan during the fiscal year, or by an agency satisfactory to the Contracting Officer. (3) The approved plan shall remain in effect during the offeror's fiscal year for all of the offeror's commercial products. (h) Prior compliance of the offeror with other such subcontracting plans under previous contracts will be considered by the Contracting Officer in determining the responsibility of the offeror for award of the contract. (i) The failure of the Contractor or subcontractor to comply in good faith with (1) the clause of this contract entitled "Utilization Of Small, Small Disadvantaged and Women-Owned Small Business Concerns," or (2) an approved plan required by this clause, shall be a material breach of the contract. (End of clause) 15 52.219-16 LIQUIDATED DAMAGES--SUBCONTRACTING PLAN (OCT 1995) (a) "Failure to make a good faith effort to comply with the subcontracting plan," as used in this clause, means a willful or intentional failure to perform in accordance with the requirements of the 00700-22 subcontracting plan approved under the clause in this contract entitled "Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan," or willful or intentional action to frustrate the plan. (b) If, at contract completion, or in the case of a commercial product plan, at the close of the fiscal year for which the plan is applicable, the Contractor has failed to meet its subcontracting goals and the Contracting Officer decides in accordance with paragraph (c) of this clause that the Contractor failed to make a good faith effort to comply with its subcontracting plan, established in accordance with the clause in this contract entitled "Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan," the Contractor shall pay the Government liquidated damages in an amount stated. The amount of probable damages attributable to the Contractor's failure to comply, shall be an amount equal to the actual dollar amount by which the Contractor failed to achieve each subcontract goal or, in the case of a commercial products plan, that portion of the dollar amount allocable to Government contracts by which the Contractor failed to achieve each subcontract goal. (c) Before the Contracting Officer makes a final decision that the Contractor has failed to make such good faith effort, the Contracting Officer shall give the Contractor written notice specifying the failure and permitting the Contractor to demonstrate what good faith efforts have been made. Failure to respond to the notice may be taken as an admission that no valid explanation exists. If, after consideration of all the pertinent data, the Contracting Officer finds that the Contractor failed to make a good faith effort to comply with the subcontracting plan, the Contracting Officer shall issue a final decision to that effect and require that the Contractor pay the Government liquidated damages as provided in paragraph (b) of this clause. (d) With respect to commercial product plans, i.e., company-wide or division-wide subcontracting plans approved under paragraph (g) of the clause in this contract entitled "Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan," the Contracting Officer of the agency that originally approved the plan will exercise the functions of the Contracting Officer under this clause on behalf of all agencies that awarded contracts covered by that commercial product plan. (e) The Contractor shall have the right of appeal, under the clause in this contract entitled, Disputes, from any final decision of the Contracting Officer. (f) Liquidated damages shall be in addition to any other remedies that the Government may have. 00700-23 (End of clause) 16 52.222-3 CONVICT LABOR (AUG 1996) The Contractor agrees not to employ in the performance of this contract any person undergoing a sentence of imprisonment which has been imposed by any court of a State, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Trust Territory of the Pacific Islands. This limitation, however, shall not prohibit the employment by the Contractor in the performance of this contract of persons on parole or probation to work at paid employment during the term of their sentence or persons who have been pardoned or who have served their terms. Nor shall it prohibit the employment by the Contractor in the performance of this contract of persons confined for violation of the laws of any of the States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Trust Territory of the Pacific Islands who are authorized to work at paid employment in the community under the laws of such jurisdiction, if-- (a)(1) The worker is paid or is in an approved work training program on a voluntary basis; (2) Representatives of local union central bodies or similar labor union organisations have been consulted; (3) Such paid employment will not result in the displacement of employed workers, or be applied in skills, crafts, or trades in which there is a surplus of available gainful labor in the locality, or impair existing contracts for services; and (4) The rates of pay and other conditions of employment will not be less than those paid or provided for work of a similar nature in the locality in which the work is being performed; and (b) The Attorney General of the United States has certified that the work-release laws or regulations of the jurisdiction involved are in conformity with the requirements of Executive Order 11755, as amended by Executive Orders 12608 and 12943. (End of clause) 17 52.222-4 CONTRACT WORK HOURS AND SAFETY STANDARDS ACT--OVERTIME COMPENSATION (JUL 1995) 00700-24 (a) Overtime requirements. No Contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics (see Federal Acquisition Regulation (FAR) 22.300) shall require or permit any such laborers or mechanics in any workweek in which the individual is employed on such work to work in excess of 40 hours in such workweek unless such laborer or mechanic receives compensation at a rate not less that 1 1/2 times the basic rate of pay for all hours worked in excess of 40 hours in such workweek. (b) Violation; liability for unpaid wages; liquidated damages. In the event of any violation of the provisions set forth in paragraph (a) of this clause, the Contractor and any subcontractor responsible therefor shall be liable for the unpaid wages. In addition, such Contractor and subcontractor shall be liable to the United States (in the case of work done under contract for the District of Columbia or a territory, to such District or to such territory), for liquidated damages. Such liquidated damages shall be computed with respect to each individual, laborer or mechanic employed in violation of the provisions set forth in paragraph (a) of this clause in the sum of $10 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of 40 hours without payment of the overtime wages required by provisions set forth in paragraph (a) of this clause. (c) Withholding for unpaid wages and liquidated damages. The Contracting Officer shall upon his or her own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld, from any moneys payable on account of work performed by the Contractor or subcontractor under any such contract or any other Federal contract with the same Prime Contractor, or any other Federally-assisted contract subject to the Contract Work Hours and Safety Standards Act which is held by the same Prime Contractor, such sums as may be determined to be necessary to satisfy any liabilities of such Contractor or subcontractor for unpaid wages and liquidated damages as provided in the provisions set forth in paragraph (b) of this clause. (d) Payrolls and basic records. (1) The Contractor or subcontractor shall maintain payrolls and basic payroll records during the course of contract work and shall preserve them for a period of 3 years from the completion of the contract for all laborers and mechanics working on the contract. Such records shall contain the name and address of each such employee, social security number, correct classifications, hourly rates of wages paid, daily and weekly number of hours worked, deductions made and actual wages paid. Nothing in this paragraph shall require the duplication 00700-25 of records required to be maintained for construction work by Department of Labor regulations at 29 CFR S.S(a)(3) implementing the Davis-Bacon Act. (2) The records to be maintained under paragraph (d)(1) of this clause shall be made available by the Contractor or subcontractor for inspection, copying, or transcription by authorized representatives of the Contracting Officer or the Department of Labor. The Contractor or subcontractor shall permit such representatives to interview employees during working hours on the job. (e) Subcontracts. The Contractor or subcontractor shall insert in any subcontracts exceeding $100,000, the provisions set forth in paragraphs (a) through (e) of this clause and also a clause requiring the subcontractors to include these provisions in any lower tier subcontracts. The Prime Contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the provisions set forth in paragraphs (a) through (e) of this clause. (End of clause) 18 52.222-6 DAVIS-BACON ACT (FEB 1995) (a) All laborers and mechanics employed or working upon the site of the work will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR Part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the Contractor and such laborers and mechanics. Contributions made or costs reasonably anticipated for bona fide fringe benefits under section 1(b)(2) of the Davis-Bacon Act on behalf of laborers or mechanics are considered wages paid to such laborers or mechanics, subject to the provisions of paragraph (d) of this clause, also, regular contributions made or costs incurred for more than a weekly period (but not less often than quarterly) under plans, funds, or programs which cover the particular weekly period, are deemed to be constructively made or incurred during such period. Such laborers and mechanics shall be paid not less than the appropriate wage rate and fringe benefits in the wage determination for the classification of work actually performed, without regard to skill, except 00700-26 as provided in the clause entitled Apprentices and Trainees. Laborers or mechanics performing work in more than one classification may be compensated at the rate specified for each classification for the time actually worked therein; provided, that the employer's payroll records accurately set forth the time spent in each classification in which work is performed. The wage determination (including any additional classifications and wage rates conformed under paragraph (b) of this clause) and the Davis-Bacon poster (WH-1321) shall be posted at all times by the Contractor and its subcontractors at the site of the work in a prominent and accessible place where it can be easily seen by the workers. (b) (1) The Contracting Officer shall require that any class of laborers or mechanics which is not listed in the wage determination and which is to be employed under the contract shall be classified in conformance with the wage determination. The Contracting Officer shall approve an additional classification and wage rate and fringe benefits therefor only when all the following criteria have been met: (i) The work to be performed by the classification requested is not performed by a classification in the wage determination. (ii) The classification is utilized in the area by the construction industry. (iii) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination. (iv) With respect to helpers, such a classification prevails in the area in which the work is performed. (2) If the Contractor and the laborers and mechanics to be employed in the classification (if known), or their representatives, and the Contracting Officer agree on the classification and wage rate (including the amount designated for fringe benefits, where appropriate), a report of the action taken shall be sent by the Contracting Officer to the Administrator of the Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, Washington, DC 20210. The Administrator or an authorized representative will approve, modify, or disapprove every additional classification action within 30 days of receipt and so advise the Contracting Officer or will notify the Contracting Officer within the 30-day period that additional time is necessary. (3) In the event the Contractor, the laborers or mechanics to be employed in the classification, or their representatives, and the Contracting Officer do not agree on the proposed classification and wage rate (including the amount designated for fringe benefits, where 00700-27 appropriate), the Contracting Officer shall refer the questions, including the views of all interested parties and the recommendation of the Contracting Officer, to the Administrator of the Wage and Hour Division for determination. The Administrator, or an authorized representative, will issue a determination within 30 days of receipt and so advise the Contracting Officer or will notify the Contracting Officer within the 30- day period that additional time is necessary. (4) The wage rate (including fringe benefits, where appropriate) determined pursuant to subparagraphs (b) (2) and (b) (3) of this clause shall be paid to all workers performing work in the classification under this contract from the first day on which work is performed in the classification. (c) Whenever the minimum wage rate prescribed in the contract for a class of laborers or mechanics includes a fringe benefit which is not expressed as an hourly rate, the Contractor shall either pay the benefit as stated in the wage determination or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof. (d) If the Contractor does not make payments to a trustee or other third person, the Contractor may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program; provided, that the Secretary of Labor has found, upon the written request of the Contractor, that the applicable standards of the Davis-Bacon Act have been met. The Secretary of Labor may require the Contractor to set aside in a separate account assets for the meeting of obligations under the plan or program. (End of clause) 19 52.222-7 WITHHOLDING OF FUNDS (FEB 1988) The Contracting Officer shall, upon his or her own action or upon written request of an authorized representative of the Department of Labor, withhold or cause to be withheld from the Contractor under this contract or any other Federal contract with the same Prime Contractor, or any other Federally assisted contract subject to Davis-Bacon prevailing wage requirements, which is held by the same Prime Contractor, so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees, and helpers, employed by the Contractor or any subcontractor the full amount of wages required by the contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee, or helper, employed or working on the 00700-28 site of work, all or part of the wages required by the contract, the Contracting Officer may, after written notice to the Contractor, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations have ceased. (End of clause) 20 52.222-8 PAYROLLS AND BASIC RECORDS (FEE 1988) (a) Payrolls and basic records relating thereto shall be maintained by the Contractor during the course of the work and preserved for a period of 3 years thereafter for all laborers and mechanics working at the site of the work. Such records shall contain the name, address, and social security number of each such worker, his or her correct classification, hourly rates of wages paid (including rates of contributions or costs anticipated for bons fide fringe benefits or cash equivalents thereof of the types described in section 1(b)(2)(g) of the Davis-Bacon Act), daily and weekly number of hours worked, deductions made, and actual wages paid. Whenever the Secretary of Labor has found, under paragraph (d) of the clause entitled Davis-Bacon Act, that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under a plan or program described in section 1(b)(2)(B) of the Davis-Bacon Act, the Contractor shall maintain records which show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual cost incurred in providing such benefits. Contractors employing apprentices or trainees under approved programs shall maintain written evidence of the registration of apprenticeship programs and certification of trainee programs, the registration of apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs. (b) (1) The Contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the Contracting Officer. The payrolls submitted shall set out accurately and completely all of the information required to be maintained under paragraph (g) of this clause. This information may be submitted in any form desired. Optional Form WH-347 (Federal Stock Number 029-005-00014-1) is available for this purpose and may be purchased from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. The Prime Contractor is responsible for the submission of copies of payrolls by all 00700-29 subcontractors. (2) Each payroll submitted shall be accompanied by a "Statement of Compliance," signed by the Contractor or subcontractor or his or her agent who pays or supervises the payment of the persons employed under the contract and shall certify-- (i) That the payroll for the payroll period contains the information required to be maintained under paragraph (a) of this clause and that such information is correct and complete: (ii) That each laborer or mechanic (including each helper, apprentice, and trainee) employed on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned, other than permissible deductions as set forth in the Regulations, 29 CFR Part 3; and (iii) That each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into the contract. (3) The weekly submission of a properly executed certification set forth on the reverse side of optional Form WK-347 shall satisfy the requirement for submission of the "Statement of Compliance" required by subparagraph (b) (2) of this clause. (4) The falsification of any of the certifications in this clause may subject the Contractor or subcontractor to civil or criminal prosecution under Section 1001 of Title 18 and Section 3729 of Title 31 of the United States Code. (c) The Contractor or subcontractor shall make the records required under paragraph (a) of this clause available for inspection, copying, or transcription by the Contracting Officer or authorized representatives of the Contracting Officer or the Department of Labor. The Contractor or subcontractor shall permit the Contracting Officer or representatives of the Contracting Officer or the Department of Labor to interview employees during working hours on the job. If the Contractor or subcontractors fails to submit required records or to make them available, the Contracting Officer may, after written notice to the Contractor, take such action as may be necessary to cause the suspension of any further payment. Furthermore, failure to submit the required records upon request or to make such records available may be grounds for debarment action pursuant to 29 CFR 5.12. (End of clause) 00700-30 21 52.222-9 APPRENTICES AND TRAINEES (FEB 1988) (a) Apprentices. Apprentices will be permitted to work at less than the predetermined rate for the work they performed when they are employed pursuant to and individually registered in a bona fide apprenticeship program registered with the U.S. Department of Labor, Employment and Training Administration, Bureau of Apprenticeship and Training, or with a State Apprenticeship Agency recognized by the Bureau, or if a person is employed in his or her first 90 days of probationary employment as an apprentice in such an apprenticeship program, who is not individually registered in the program, but who has been certified by the Bureau of Apprenticeship and Training or a State Apprenticeship Agency (where appropriate) to be eligible for probationary employment as an apprentice. The allowable ratio of apprentices to journeymen on the job site in any craft classification shall not be greater than the ratio permitted to the Contractor as to the entire work force under the registered program. Any worker listed on a payroll at an apprentice wage rate, who is not registered or otherwise employed as stated in this paragraph, shall be paid not less than the applicable wage determination for the classification of work actually performed. In addition, any apprentice performing work on the job site in excess of the ratio permitted under the registered program shall not be paid less than the applicable wage rate on the wage determination for the work actually performed. Where a contractor is performing construction on a project in a locality other than that in which its program is registered, the ratios and wage rates (expressed in percentages of the journeyman's hourly rate) specified in the Contractor's or subcontractor's registered program shall be observed. Every apprentice must be paid at not less than the rate specified in the registered program for the apprentice's level of progress, expressed as a percentage of the journeyman hourly rate specified in the applicable wage determination. Apprentices shall be paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for the applicable classification. If the Administrator determines that a different practice prevails for the applicable apprentice classification, fringes shall be paid in accordance with that determination. In the event the Bureau of Apprenticeship and Training, or a State Apprenticeship Agency recognized by the Bureau, withdraws approval of an apprenticeship program, the Contractor 00700-31 will no longer be permitted to utilize apprentices at less than the applicable predetermined rate for the work performed until an acceptable program is approved. (b) Trainees. Except as provided in 29 CFR 5.16, trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in a program which has received prior approval, evidenced by formal certification by the U.S. Department of Labor, Employment and Training Administration. The ratio of trainees to journeymen on the job site shall not be greater than permitted under the plan approved by the Employment and Training Administration. Every trainee must be paid at not less than the rate specified in the approved program for the trainee's level of progress, expressed as a percentage of the journeyman hourly rate specified in the applicable wage determination. Trainees shall be paid fringe benefits in accordance with the provisions of the trainee program. If the trainee program does not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed in the wage determination unless the Administrator of the Wage and Hourly Division determines that there is an apprenticeship program associated with the corresponding journeyman wage rate in the wage determination which provides for less than full fringe benefits for apprentices. Any employee listed on the payroll at a trainee rate who is not registered and participating in a training plan approved by the Employment and Training Administration shall be paid not less than the applicable wage rate in the wage determination for the classification of work actually performed. In addition, any trainee performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate in the wage determination for the work actually performed. In the event the Employment and Training Administration withdraws approval of a training program, the Contractor will no longer be permitted to utilize trainees at less than the applicable predetermined rate for the work performed until an acceptable program is approved. (c) Equal employment opportunity. The utilization of apprentices, trainees, and journeymen under this clause shall be in conformity with the equal employment opportunity requirements of Executive Order 11246, as amended, and 29 CFR Part 30. (End of clause) 22 52.222.10 COMPLIANCE WITH COPELAND ACT REQUIREMENTS (FEB 1988) 00700-32 The Contractor shall comply with the requirements of 29 CPR Part 3, which are hereby incorporated by the reference in this contract. (End of clause) 23 52.222-11 SUBCONTRACTS (LABOR STANDARDS) (FEB 1988) (a) The Contractor or subcontractor shall insert in any subcontracts the clauses entitled Davis-Bacon Act, Contract Work Hours and Safety Standards Act--Overtime Compensation, Apprentices and Trainees, Payrolls and Basic Records, Compliance with Copeland Act Requirements, Withholding of Funds, Subcontracts (Labor Standards), Contract Termination--Debarment, Disputes Concerning Labor Standards, Compliance with Davis-Bacon and Related Act Regulations, and Certification of Eligibility, and such other clauses as the Contracting Officer may, by appropriate instructions, require, and also a clause requiring subcontractors to include these clauses in any lower tier subcontracts. The Prime Contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with all the contract clauses cited in this paragraph. (b) (1) Within 14 days after award of the contract, the Contractor shall deliver to the Contracting Officer a completed Statement and Acknowledgement Form (SF 1413) for each subcontract, including the subcontractor's signed and dated acknowledgement that the clauses set forth in paragraph (a) of this clause have been included in the subcontract. (2) Within 14 days after the award of any subsequently awarded subcontract the Contractor shall deliver to the Contracting Officer an updated completed SP 1413 for such additional subcontract. (End of clause) 24 52.222-12 CONTRACT TERMINATION--DEBARMENT (FEB 1988) A breach of the contract clauses entitled Davis-Bacon Act, Contract Work Hours and Safety Standards Act--Overtime Compensation, Apprentices and Trainees, Payrolls and Basic Records, Compliance with Copeland Act Requirements, Subcontracts (Labor Standards), Compliance with Davis-Bacon and Related Act Regulations, or Certification of Eligibility may be grounds for termination of the contract, and for debarment as a Contractor and subcontractor as provided in 29 CFR 5.12. (End of clause) 00700-33 25 52.222-13 COMPLIANCE WITH DAVIS-BACON AND RELATED ACT REGULATIONS (FEB 1988) All rulings and interpretations of the Davis-Bacon and Related Acts contained in 29 CFR Parts 1, 3, and 5 are hereby incorporated by reference in this contract. (End of Clause) 26 52.222-14 DISPUTES CONCERNING LABOR STANDARDS (FEB 1988) The United States Department of Labor has set forth in 29 CFR Parts 5, 6, and 7 procedures for resolving disputes concerning labor standards requirements. Such disputes shall be resolved in accordance with those procedures and not the Disputes clause of this contract. Disputes within the meaning of this clause include disputes between the Contractor (or any of its subcontractors) and the contracting agency, the U.S. Department of Labor, or the employees of their representatives. (End of clause) 27 52.222-15 CERTIFICATION OF ELIGIBILITY (FEB 1988) (a) By entering into this contract, the Contractor certifies that neither it (nor he or she) nor any person or firm who has an interest in the Contractor's firm is a person or firm ineligible to be awarded Government contracts by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1). (b) No part of this contract shall be subcontracted to any person or firm ineligible for award of a Government contract by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1). (c) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C. 1001. (End of clause) 28 52.222-26 EQUAL OPPORTUNITY (APR 1984) (a) If, during any 12-month period (including the 12 months preceding the award of this contract), the Contractor has been or is awarded nonexempt Federal contracts and/or subcontracts that have an aggregate value in excess of $10,000, the Contractor shall comply with subparagraphs 00700-34 (b)(1) through (11) below. Upon request, the Contractor shall provide information necessary to determine the applicability of this clause. (b) During performing this Contract, the Contractor agrees as follows: (1) The Contractor shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. (2) The Contractor shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. This shall include, but not be limited to, (i) employment, (ii) upgrading, (iii) demotion, (iv) transfer, (v) recruitment or recruitment advertising, (vi) layoff of termination, (vii) rates of pay or other forms of compensation, and (viii) selection for training, including apprenticeship. (3) The Contractor shall post in conspicuous places available to employees and applicants for employment the notices to be provided by the Contracting Officer that explain this clause. (4) The Contractor shall, in all solicitations or advertisements for employees placed by or on behalf of the Contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin. (5) The Contractor shall send, to each labor union of representative of workers with which it has a collective bargaining agreement or other contract or understanding, the notice to be provided by the Contracting Officer advising the labor union or workers' representative of the Contractor's commitments under this clause, and post copies of the notice in conspicuous places available to employees and applicants for employment. (6) The Contractor shall comply with Executive Order 11246, as amended, and the rules, regulations, and orders of the Secretary of Labor. (7) The Contractor shall furnish to the contracting agency all information required by Executive Order 11246, as amended, and by the rules, regulations, and orders of the Secretary of Labor. Standard Form 100 (EEO-1), or any successor form, is the prescribed form to be filed within 30 days following the award, unless filed within 12 months preceding the date of award. (8) The Contractor shall permit access to its books, records, and accounts by the contracting agency or the Office of Federal Contract Compliance Programs (OFCCP) for the purposes of investigation to ascertain the Contractor's compliance with the applicable rules, 00700-35 regulations, and orders. (9) If the OFCCP determines that the Contractor is not in compliance with this clause or any rule, regulation, or order of the Secretary of Labor, this contract may be canceled, terminated, or suspended in whole or in part and the Contractor may be declared ineligible for further Government contracts, under the procedures authorized in Executive Order 11246, as amended. In addition, sanctions may be imposed and remedies invoked against the Contractor as provided in Executive Order 11246, as amended, the rules, regulations, and orders of the Secretary of Labor, or as otherwise provided by law. (10) The Contractor shall include the terms and conditions of subparagraph (b) (2) through (11) of this clause in every subcontract or purchase order that is not exempted by the rules, regulations, or orders of the Secretary of Labor issued under Executive Order 11246, as amended, so that these terms and conditions will be binding upon each subcontractor or vendor. (11) The Contractor shall take such action with respect to any subcontract or purchase order as the contracting agency may direct as a means of enforcing these terms and conditions, including sanctions for noncompliance; provided, that if the Contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of any direction, the Contractor may request the United States to enter into the litigation to protect the interests of the United States. (c) Notwithstanding any other clause in this contract, disputes relative to this clause will be governed by the procedures in 41 CFR 60- 1.1. (End of clause) (R 7-103.18 1978 SEP) (R 1-12.803-2) (R 7-607.13 1978 SEP) 29 52.222-27 AFFIRMATIVE ACTION COMPLIANCE REQUIREMENTS FOR CONSTRUCTION (APR 1984) (a) Definitions. "Covered area," as used in this clause, means the geographical area described in the solicitation for this contract. "Director," as used in this clause, means Director, Office of Federal Contract Compliance Programs (OFCCP), United States Department of Labor, or any person to whom the Director delegeses authority. "Employer's identification number," as used in this clause, means the Federal Social Security number used on the employer's quarterly federal tax 00700-36 return, U.S. Treasury Department Form 941. "Minority," as used in this clause, means-- (1) American Indian or Alaskan Native (all persons having origins in any of the original peoples of North America and maintaining identifiable tribal affiliations through membership and participation or community identification). (2) Asian and Pacific Islander (all persons having origins in any of the original peoples of the Far East, Southeast Asia, the Indian Subcontinent, or the Pacific Islands); (3) Black (all persons having origins in any of the black African racial groups not of Hispanic origin); and (4) Hispanic (all persons of Mexican, Puerto Rican, Cuban, Central or South American, or other Spanish culture or origin, regardless of race). (b) If the Contractor, or a subcontractor at any tier, subcontracts a portion of the work involving any construction trade, each such subcontract in excess of $10,000 shall include this clause and the Notice containing the goals for minority and female participation stated in the solicitation for this contract. (c) If the Contractor is participating in a Hometown Plan (41 CFR 60-4) approved by the U.S. Department of Labor in a covered area, either individually or through an association, its affirmative action obligations on all work in the plan area (including goals) shall comply with the plan for those trades that have unions participating in the plan. Contractors must be able to demonstrate participation in, and compliance with, the provisions of the plan. Each Contractor or subcontractor participating in an approved plan is also required to comply with its obligations under the Equal Opportunity clause, and to make a good faith effort to achieve each goal under the plan in each trade in which it has employees. The overall good-faith performance by other Contractors or subcontractors toward a goal in an approved plan does not excuse any Contractor's or subcontractor's failure to make good-faith efforts to achieve the plan's goals. (d) The Contractor shall implement the affirmative action procedures in subparagraph (g) (1) through (16) of this clause. The goals stated in the solicitation for this contract are expressed as percentages of the total hours of employment and training of minority and female utilization that the Contractor should reasonably be able to achieve in each construction trade in which it has employees in the covered area. If the Contractor performs construction work in a geographical area located outside of the covered area, it shall apply the goals established for the geographical area where that work is actually performed. The Contractor is expected to 00700-37 make substantially uniform progress toward its goals in each craft. (e) Neither the terms and conditions of any collective bargaining agreement, nor the failure by a Union with which the Contractor has a collective bargaining agreement, to refer minorities or women shall excuse the Contractor's obligations under this clause, Executive Order 11246, as amended, or the regulations thereunder. (f) In order for the nonworking training hours of apprentices and trainees to be counted in meeting the goals, apprentices and trainees must be employed by the Contractor during the training period, and the Contractor must have made a commitment to employ the apprentices and trainees at the completion of their training, subject to the availability of employment opportunities. Trainees must be trained pursuant to training programs approved by the U.S. Department of Labor. (g) The Contractor shall take affirmative action to ensure equal employment opportunity. The evaluation of the Contractor's compliance with this clause shall be based upon its effort to achieve maximum results from its actions. The Contractor shall document these efforts fully and implement affirmative action steps at least as extensive as the following: (1) Ensure a working environment free of harassment, intimidation, and coercion at all sites and in all facilities where the Contractor's employees are assigned to work. The Contractor, if possible, will assign two or more women to each construction project. The Contractor shall ensure that foremen, superintendents, and other onsite supervisory personnel are aware of and carry out the Contractor's obligation to maintain such a working environment, with specific attention to minority or female individuals working at these sites or facilities. (2) Establish and maintain a current list of sources for minority and female recruitment. Provide written notification to minority and female recruitment sources and community organizations when the Contractor or its unions have employment opportunities available, and maintain a record of the organizations' responses. (3) Establish and maintain a current file of the names, addresses, and telephone numbers of each minority and female off-the- street applicant, referrals of minorities or females from unions, recruitment sources, or community organizations, and the action taken with respect to each individual. If an individual was sent to the union hiring hall for referral and not referred back to the Contractor by the union or, if referred back, not employed by the Contractor, this shall be documented in the file, along with whatever additional actions the Contractor may have taken. (4) Immediately notify the Director when the union or unions with 00700-38 which the Contractor has a collective bargaining agreement has not referred back to the Contractor a minority or woman sent by the Contractor, or when the Contractor has other information that the union referral process has impeded the Contractor's efforts to meet its obligations. (5) Develop on-the-job training opportunities and/or participate in training programs for the area that expressly include minorities and women, including upgrading programs and apprenticeship and trainee programs relevant to the Contractor's employment needs, especially those programs funded or approved by the Department of Labor. The Contractor shall provide notice of these programs to the sources complied under subparagraph (g) (2) above. (6) Disseminate the Contractor's equal employment policy by-- (i) Providing notice of the policy to unions and to training, recruitment, and outreach programs, and requesting their cooperation in assisting the Contractor in meeting its contract obligations; (ii) Including the policy in any policy manual and in collective bargaining agreements; (iii) Publicizing the policy in this company newspaper, annual report, etc.; (iv) Reviewing the policy with all management personnel and with all minority and female employees at least once a year; and (v) Posting the policy on bulletin boards accessible to employees at each location where construction work is performed. (7) Review, at least annually, the Contractor's equal employment policy and affirmative action obligations with all employees having responsibility for hiring, assignment, layoff, termination, or other employment decisions. Conduct review of this policy with all onsite supervisory personnel before initiating construction work at a job site. A written record shall be made and maintained identifying the time and place of these meetings, persons attending, subject matter discussed, and disposition of the subject matter. (8) Disseminate the Contractor's equal employment policy externally by including it in any advertising in the news media, specifically including minority and female news media. Provide written notification to, and discuss this policy with, other Contractors and Subcontractors with which the Contractors does or anticipates doing business. (9) Direct recruitment efforts, both oral and written, to minority, female, and community organizations, to schools with minority and female students, and to minority and female recruitment and training organizations serving the Contractor's recruitment area and employment 00700-39 needs. Not later than 1 month before the date for acceptance of applications for apprenticeship or training by any recruitment source, send written notification to organizations such as the above, describing the openings, screening procedures, and tests to be used in the selection process. (10) Encourage present minority and female employees to recruit minority persons and women. Where reasonable, provide after-school, summer, and vacation employment to minority and female youth both on the site and in other areas of the Contractor's workforce. (11) Validate all tests and other selection requirements where required under 41 CFR 60-3. (12) Conduct, at least annually, an inventory and evaluation at least of all minority and female personnel for promotional opportunities. Encourage these employees to seek or to prepare for, through appropriate training, etc., opportunities for promotion. (13) Ensure that seniority practices job classifications, work assignments, and other personnel practices do not have a discriminatory effect by continually monitoring all personnel and employment-related activities to ensure that the Contractor's obligations under this contract are being carried out. (14) Ensure that all facilities and company activities are nonsegrated except that separate or single-user toilet and necessary changing facilities shall be provided to assure privacy between the sexes. (15) Maintain a record of solicitations for subcontracts for minority and female construction contractors and suppliers, including circulation of solicitations to minority and female contractor associations and other business associations. (16) Conduct a review, at least annually, of all supervisors' adherence to and performance under the Contractor's equal employment policy and affirmative action obligations. (h) The Contractor is encouraged to participate in voluntary associations that may assist in fulfilling one or more of the affirmative action obligations contained in subparagraphs (g)(1) through (16). The efforts of a contractor association, joint contractor-union, contractor-community, or similar group of which the contractor is a member and participant may be asserted as fulfilling one or more of its obligations under subparagraphs (g)(1) through (16), provided the Contractor (1) Actively participates in the group; (2) Makes every effort to ensure that the group has a positive impact on the employment of minorities and women in the industry; 00700-40 (3) Ensures that concrete benefits of the program are reflected in the Contractor's minority and female workforce participation; (4) Makes a good-faith effort to meet its individual goals and timetables; and (5) Can provide access to documentation that demonstrates the effectiveness of actions taken on behalf of the Contractor. The obligation to comply is the Contractor's, and failure of such a group to fulfill an obligation shall not be a defense for the Contractor's noncompliance. (i) A single goal for minorities and a separate single goal for women shall be established. The Contractor is required to provide equal employment opportunity and to take affirmative action for all minority groups, both male and female, and all women, both minority and nonminority. Consequently, the Contractor may be in violation of Executive Order 11246, as amended, if a particular group is employed in a substantially disparate manner. (j) The Contractor shall not use goals or affirmative action standards to discriminate against any person because of race, color, religion, sex, or national origin. (k) The Contractor shall not enter into any subcontract with any person or firm debarred from Government contracts under Executive Order 11246, as amended. (l) The Contractor shall carry out such sanctions and penalties for violation of this clause and of the Equal Opportunity clause, including suspension, termination, and cancellation of existing subcontracts, as may be imposed or ordered under Executive Order 11246, as amended, and its implementing regulations, by the OFCCP. Any failure to carry out these sanctions and penalties as ordered shall be a violation of this clause and Executive Order 11246, as amended. (m) The Contractor in fulfilling its obligations under this clause shall implement affirmative action procedures at least as extensive as those prescribed in paragraph (g) above, so as to achieve maximum results from its efforts to ensure equal employment opportunity. If the Contractor fails to comply with the requirements of Executive Order 11246, as amended, the implementing regulations, or this clause, the Director shall take action as prescribed in CFR 60-4. 8. (n) The Contractor shall designate a responsible official to-- (1) Monitor all employment-related activity to ensure that the Contractor's equal employment policy is being carried out; (2) Submit reports as may be required by the Government; and (3) Keep records that shall at least include for each employee the 00700-41 name, address, telephone number, construction trade, union affiliation (if any), employee identification number, social security number, race, sex, status (e.g., mechanic, apprentice, trainee, helper, or laborer), dates of changes in status, hours worked per week in the indicated trade, rate of pay, and locations at which the work was performed. Records shall be maintained in an easily understandable and retrievable form; however, to the degree that existing records satisfy this requirement, separate records are not required to be maintained. (o) Nothing contained herein shall be construed as a limitation upon the application of other laws that establish different standards of compliance or upon the requirements for the hiring of local or other area residents (e.g., those under the Public Works Employment Act of 1977 and the Community Development Block Grant Program). (End of clause) (R 7-603.60 1978 SEP) 30 52.22-35 AFFIRMATIVE ACTION FOR SPECIAL DISABLED AND VIETNAM ERA VETERANS (APR 1984) (a) Definitions. "Appropriate office of the State employment service system," as used in this clause, means the local office of the Federal-State national system of public employment offices assigned to serve the area where the employment opening is to be filled, including the District of Columbia, Guam, Puerto Rico, Virgin Islands, American Samoa, and the Trust Territory of the Pacific Islands. "Openings that the Contractor proposes to fill from within its own organization," as used in this clause, means employment openings for which no one outside the Contractor's organization (including any affiliates, subsidiaries, and the parent companies) will be considered and includes any openings that the Contractor proposes to fill from regularly established "recall" lists. "Openings that the Contractor proposes to fill under a customary and traditional employer-union hiring arrangement," as used in this clause, means employment openings that the Contractor proposes to fill from union halls, under their customary and traditional employer-union hiring relationship. "Suitable employment openings," as used in this clause-- (1) Includes, but is not limited to, openings that occur in jobs categorized as-- 00700-42 (i) Production and nonproduction; (ii) Plant and office; (iii) Laborers and mechanics; (iv) Supervisory and nonsupervisory; (v) Technical; and (vi) Executive, administrative, and professional positions compensated on a salary basis of less than $25,000 a year; and (2) Includes full-time employment, temporary employment of over 3 days, and part-time employment, but not openings that the Contractor proposes to fill from within its own organization or under a customary and traditional employer-union hiring arrangement, nor openings in an educational institution that are restricted to students of that institution. (b) General. (1) Regarding any position for which the employee or applicant for employment is qualified, the Contractor shall not discriminate against the individual because the individual is a special disabled or Vietnam Era veteran. The Contractor agrees to take affirmative action to employ, advance in employment, and otherwise treat qualified special disabled and Vietnam Era veterans without discrimination based upon their disability or veterans' Status in all employment practices such as-- (i) Employment; (ii) Upgrading; (iii) Demotion or transfer; (iv) Recruitment; (v) Advertising; (vi) Layoff or termination; (vii) Rates of pay or other forms of compensation; and (viii) Selection for training, including apprenticeship. (2) The Contractor agrees to comply with the rules, regulations, and relevant orders of the Secretary of Labor (Secretary) issued under the Vietnam Era Veterans' Readjustment Assistance Act of 1972 (the Act), as amended. (c) Listing openings. (1) The Contractor agrees to list all suitable employment openings existing at contract award of occurring during contract performance, at an appropriate office of the State employment service system in the locality where the opening occurs. These openings include those occurring at any Contractor facility, including one not connected with performing this contract. An independent corporate affiliate is exempt from this requirement. (2) State and local government agencies holding Federal contracts of $10,000 or more shall also list all their suitable openings with the 00700-43 appropriate office of the State employment service. (3) The listing of suitable employment openings with the State employment service system is required at least concurrently with using any other recruitment source or effort and involves the obligations of placing a bona fide job order, including accepting referrals of veterans and nonveterans. This listing does not require hiring any particular job applicant or hiring from any particular group of job applicants and is not intended to relieve the Contractor from any requirements of Executive orders or regulations concerning nondiscrimination in employment. (4) Whenever the Contractor becomes contractually bound to the listing terms of this clause, it shall advise the State employment service system, in each State where it has establishments, of the name and location of each hiring location in the State. As long as the Contractor is contractually bound to these terms and has so advised the State system, it need not advise the State system of subsequent contracts. The Contractor may advise the State system when it is no longer bound by this contract clause. (5) Under the most compelling circumstances, an employment opening may not be suitable for listing, including situations when (i) the Government's needs cannot reasonably be supplied, (ii) listing would be contrary to national security, or (iii) the requirements of listing would not be in the Government's interest. (d) Applicability. (1) This clause does not apply to the listing of employment openings which occur and are filled outside the 50 States, the District of Columbia, Puerto Rico, Guam, Virgin Islands, American Samoa, and the Trust Territory of the Pacific Islands. (2) The terms of paragraph (c) above of this clause do not apply to openings that the Contractor proposes to fill from within its own organization or under a customary and traditional employer-union hiring arrangement. This exclusion does not apply to a particular opening once an employer decides to consider applicants outside of its own organization or employer-union arrangement for that opening. (e) Postings. (1) The Contractor agrees to post employment notices stating (i) the Contractor's obligation under the law to take affirmative action to employ and advance in employment qualified special disabled veterans and veterans of the Vietnam era, and (ii) the rights of applicants and employees. (2) These notices shall be posted in conspicuous places that are available to employees and applicants for employment. They shall be in a form prescribed by the Director, Office of Federal Contract Compliance 00700-44 Programs, Department of Labor (Director), and provided by or through the Contracting Officer. (3) The Contractor shall notify each labor union or, representative of workers with which it has a collective bargaining agreement or other contract understanding, that the Contractor is bound by the terms of the Act, and is committed to take affirmative action to employ, and advance in employment, qualified special disabled and Vietnam Era veterans. (f) Noncompliance. If the Contractor does not comply with the requirements of this clause, appropriate actions may be taken under the rules, regulations, and relevant orders of the Secretary issued pursuant to the Act. (g) Subcontracts. The Contractor shall include the terms of this clause in every subcontract or purchase order of $10,000 or more unless exempted by rules, regulations, or orders of the Secretary. The Contractor shall act as specified by the Director to enforce the terms, including action for noncompliance. (End of clause) (R 7-103.27 1976 JUL) (R FPR Temp. Reg. 39) 31 52.222-36 AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS (APR 1984) (a) General. (1) Regarding any position for which the employee or applicant for employment is qualified, the Contractor shall not discriminate against any employee or applicant because of physical or mental handicap. The Contractor agrees to take affirmative action to employ, advance in employment, and otherwise treat qualified handicapped individuals without discrimination based upon their physical or mental handicap in all employment practices such as-- (i) Employment; (ii) Upgrading; (iii) Demotion or transfer; (iv) Recruitment; (v) Advertising; (vi) Layoff or termination; (vii) Rates of pay or other forms of compensation; and (viii) Selection for training, including apprenticeship, (2) The Contractor agrees to comply with the rules, regulations, and relevant orders of the Secretary of Labor (Secretary) issued under the Rehabilitation Act of 1973 (29 U.S.C. 793) (the Act), as amended. 00700-45 (b) Postings. (1) The Contractor agreed to post employment notices stating (i) the Contractor's obligation under the law to take affirmative action to employ and advance in employment qualified handicapped individuals and (ii) the rights of applicants and employees. (2) These notices shall be posted in conspicuous places that are available to employees and applicants for employment. They shall be in a form prescribed by the Director, Office of Federal Contract Compliance Programs, Department of Labor (Director), and provided by or through the Contracting Officer. (3) The Contractor shall notify each labor union or representative of workers with which it has a collective bargaining agreement or other contract understanding, that the Contractor is bound by the terms of Section 503 of the Act and is committed to take affirmative action to employ, and advance in employment, qualified physically and mentally handicapped individuals. (c) Noncompliance. If the Contractor does not comply with the requirements of this clause, appropriate actions may be taken under the rules, regulations, and relevant orders of the Secretary issued pursuant to the Act. (d) Subcontracts. The Contractor shall include the terms of this clause in every subcontract or purchase order in excess of $2,500 unless exempted by rules, regulations, or orders of the Secretary. The Contractor shall act as specified by the Director to enforce the terms, including action for noncompliance. (End of clause) (R 7-103.28 1976 MAY) (R FPR Temp. Reg. 38) 32 52.222-37 EMPLOYMENT REPORTS ON SPECIAL DISABLED VETERANS AND VETERANS OF THE VIETNAM ERA (JAN 1988) (a) The contractor shall report at least annually, as required by the Secretary of Labor, on: (1) The number of special disabled veterans and the number of veterans of the Vietnam era in the workforce of the contractor by job category and hiring location; and (2) The total number of new employees hired during the period covered by the report, and of that total, the number of special disabled veterans, and the number of veterans of the Vietnam era. (b) The above items shall be reported by completing the form entitled 00700-46 "Federal Contractor Veterans' Employment Report VETS-100." (c) Reports shall be submitted no later than March 31 of each year beginning March 31, 1998. (d) The employment activity report required by paragraph (a)(2) of this clause shall reflect total hires during the most recent 12-month period as of the ending date selected for the employment profile report required by paragraph (a)(1) of this clause. Contractors may select an ending date: (1) As of the end of any pay period during the period January through March 1st of the year the report is due, or (2) as of December 31, if the contractor has previous written approval from the Equal Employment Opportunity Commission to do so for purposes of submitting the Employer Information Report EEO-1 (Standard Form 100). (e) The count of veterans reported according to paragraph (a) of this clause shall be based on voluntary disclosure. Each contractor subject to the reporting requirements at 38 U.S.C 2012(d) shall invite all special disabled veterans and veterans of the Vietnam era who wish to benefit under the affirmative action program at 38 U.S.C. 2012 to identify themselves to the contractor. The invitation shall state that the information is voluntarily provided, that the information will be kept confidential, that disclosure or refusal to provide the information will not subject the applicant or employee to any adverse treatment and that the information will be used only in accordance with the regulations promulgated under 38 U.S.C. 2012. (f) Subcontracts. The Contractor shall include the terms of this clause in every subcontract or purchase order of $10,000 or more unless exempted by rules, regulations, or orders of the Secretary. (End of clause) 33 52.223-2 CLEAN AIR AND WATER (APR 1984) (a) "Air Act", as used in this clause, means the Clean Air Act (42 U.S.C. 7401, et seq.). "Clean air standards," as used in this clause, means-- (1) Any enforceable rules, regulations, guidelines, standards, limitations, orders, controls, prohibitions, work practices, or other requirements contained in, issued under, or otherwise adopted under the Air Act or Executive Order 11736; (2) An applicable implementation plan as described in section 110(d) of the Air Act (42 U.S.C. 7410(d)); (3) An approved implementation procedure or plan under section 111(c) 00700-47 or section 111(d) of the Air Act (42 U.S.C. 7411(c) of (d)); or (4) An approved implementation procedure under section 112(d) of the Air Act (42 U.S.C. 7412(d)). "Clean water standards," as used in this clause, means any enforceable limitation, control, condition, prohibition, standard, or other requirement promulgated under the Water Act or contained in a permit issued to a discharger by the EPA or by a State under an approved program, as authorized by section 402 of the Water Act (33 U.S.C. 1342), or by local government to ensure compliance with pretreatment regulations as required by section 307 of the Water Act (33 U.S.C. 1317). "Compliance," as used in this clause, means complained with-- (1) Clean air or water standards; or (2) A schedule or plan ordered or approved by a court of competent jurisdiction, the EPA, or an air or water pollution control agency under the requirements of the Air Act or Water Act and related regulations. "Facility," as used in this clause, means any building, plant, installation, structure, mine, vessel or other floating craft, location, or site of operations, owned, leased, or supervised by a Contractor or subcontractor, used in the performance of a contract or subcontractor. When a location or site of operations included more than one building, plant, installation, or structure, the entire location or site shall be deemed a facility except when the Administrator, or a designee, of the EPA determines that independent facilities are collocated in the geographical area. "Water Act," as used in this clause, means Clean Water Act (33 U.S.C. 1251, et seq.). (b) The Contractor agrees-- (1) To comply with all the requirements of section 114 of the Clean Air Act (42 U.S.C. 7414) and section 308 of the Clean Water Act (33 U.S.C. 1318) relating to inspection, monitoring, entry, reports, and information, as well as other requirements specified in action 114 and section 308 of the Air Act and the Water Act, and all regulations and guidelines issued to implement those acts before the award of this contract; (2) That no portion of the work required by this prime contract will be performed in a facility listed on the EPA list of Violating Facilities on the date when this contract was awarded unless and until the EPA eliminates the name of the facility from the listing; (3) To use best efforts to comply with clean air standards and clean water standards at the facility in which the contract is being performed; and 00700-48 (4) To insert the substance of this clause into any nonexempt subcontract, including this subparagraph (b)(4). (End of clause) (R 7-103.29 1975 OCT) (R 1-1.2302) 34 52.223-6 DRUG-FREE WORKPLACE (JAN 1997) (a) Definitions. As used in this clause-- "Controlled substance" means a controlled substance in Schedules I through V of section 202 of the Controlled Substances Act (21 U.S.C. 812) and as further defined in regulation at 21 CFR 1308.11 - 1308.15. "Conviction" means a finding of guilt (including a plea of nolo contendere) or imposition of sentence, or both, by any judicial body charged with the responsibility to determine violations of the Federal or State criminal drug statutes. "Criminal drug statute" means a Federal or non-Federal criminal statute involving the manufacture, distribution, dispensing, possession or use of any controlled substance. "Drug-free workplace" means the site(s) for the performance of work done by the Contractor in connection with a specific contract at which employees of the Contractor are prohibited from engaging in the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance. "Employee" means an employee of a Contractor directly engaged in the performance of work under a Government contract. "Directly engaged" is defined to include all direct cost employees and any other Contractor employee who has other than a minimal impact or involvement in contract performance. "Individual" means an offeror/contractor that has no more than one employee including the offeror/contractor. (b) The Contractor, if other than an individual, shall--within 30 days after award (unless a longer period is agreed to in writing for contracts of 30 days or more performance duration), or as soon as possible for contracts of less than 30 days performance duration-- (1) Publish a statement notifying its employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in the Contractor's workplace and specifying the actions that will be taken against employees for violations of such prohibition; (2) Establish an ongoing drug-free awareness program to inform such 00700-49 employees about-- (i) The dangers of drug abuse in the workplace; (ii) The Contractor's policy of maintaining a drug-free workplace; (iii) Any available drug counseling, rehabilitation, and employee assistance programs; and (iv) The penalties that may be imposed upon employees for drug abuse violations occurring in the workplace; (3) Provide all employees engaged in performance of the contract with a copy of the statement required by subparagraph (b)(1) of this clause; (4) Notify such employees in writing in the statements required by subparagraph (b) (1) of this clause that, as a condition of continued employment on this contract, the employee will-- (i) Abide by the terms of the statement; and (ii) Notify the employer in writing of the employee's conviction under a criminal drug statute for a violation occurring in the workplace no later than 5 days after such conviction. (5) Notify the Contracting Officer in writing within 10 days after receiving notice under subdivision (b)(4)(ii) of this clause, from an employee or otherwise receiving actual notice of such conviction. The notice shall include the position title of the employee; (6) Within 30 days after receiving notice under subdivision (b) (4)(ii) of this clause of a conviction, take one of the following actions with respect to any employee who is convicted of a drug abuse violation occurring in the workplace: (i) Taking appropriate personnel action against such employee, up to and including termination; or (ii) Require such employee to satisfactorily participate in a drug abuse assistance or rehabilitation program approved for such purposes by a Federal, State, or local health, law enforcements, or other appropriate agency, and (7) Make a good faith effort to maintain a drug-free workplace through implementation of subparagraphs (b)(1) through (b)(6) of this clause. (c) The Contractor, if an individual, agrees by award of the contract or acceptance of a purchase order, not to engage in the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance while performing this contract. (d) In addition to other remedies available to the Government, the Contractor's failure to comply with the requirements of paragraph (b) or (c) of this clause may, pursuant to FAR 23.506, render the Contractor subject to suspension of contract payments, termination of the contract 00700-50 for default, and suspension of debarment. (End of Clause) 35 52.223-14 TOXIC CHEMICAL RELEASE REPORTING (OCT 1996) (a) Unless otherwise exempt, the Contractor, as owner or operator of a facility used in the performance of this contract, shall file by July 1 for the prior calendar year an annual Toxic Chemical Release Inventory Form (Form R) as described in sections 313(a) and (g) of the Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA) (42 U.S.C. 11023 (a) and (g)), and section 6607 of the Pollution Prevention Act 1990 (PPA) (42 U.S.C 13106). The Contractor shall file, for each facility subject to the Form R filing and reporting requirements, the annual Form R throughout the life of the contract. (b) A Contractor owned or operated facility used in the performance of this contract is exempt from the requirement to file an annual Form R if-- (1) The facility does not manufacture, process, or otherwise use any toxic chemicals listed under section 313 (c) of EPCRA, 42 U.S.C 11023 (c); (2) The facility does not have 10 or more full-time employees as specified in section 313 (b) (1) (A) of EPCRA, 42 U.S.C. 11023 (b) (1) (A); (3) The facility does not meet the reporting thresholds of toxic chemicals established under Section 313 (f) of EPCRA, 42 U.S.C. 11023 (f) (including the alternate threshold at 40 CFR 372.27, provided an appropriate certification form has been filed with EPA); (4) The facility does not fall within Standard Industrial Classification Code (SIC) designations 20 through 39 as set forth in Section 19.102 of the Federal Acquisition Regulation (FAR); or (5) The facility is not located within any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American, Samoa, the United States Virgin Islands, the Northern Mariana Islands, or any other territory or possession over which the United States has jurisdiction. (c) If the Contractor has certified to an exemption in accordance with one or more of the criteria in paragraph (b) of this clause, and after award of the contract circumstances change so that any of its owned or operated facilities used in the performance of this contract is no longer exempt-- (1) The Contractor shall notify the Contracting Officer; and (2) The Contractor, as owner or operator of a facility used in the performance of this contract that is no longer exempt; shall (i) submit a 00700-51 Toxic Chemical Release Inventory Form (Form R) On or before July 1 for the prior calendar year during which the facility becomes eligible; and (ii) continue to file the annual Form R for the life of the contract for such facility. (d) The Contracting Officer may terminate this Contract or take other action as appropriate, if the Contractor fails to comply accurately and fully with the EPCRA and PPA toxic chemical release filing and reporting requirements. (e) Except for acquisitions of commercial items as defined in FAR Part 2. the Contractor shall-- (1) For competitive subcontracts expected to exceed $100,000 (including all options), include a solicitation provision substantially the same as the provision at FAR 52.223-33, Certification of Toxic Chemical Release Reporting; and (2) Include in any resultant subcontract exceeding $100,000 (including all options), the substance of this clause, except this paragraph (e). (End of clause) 36 52.225-5 BUY AMERICAN ACT--CONSTRUCTION MATERIALS (MAY 1992) (a) The Buy American Act (41 U.S.C. 10) provides that the Government give preference to domestic construction material. "Components," as used in this clause, means those articles, materials, and supplies incorporated directly into construction materials. "Construction materials," as used in this clause, means an article, material, or supply brought to the construction site for incorporation into the building or work. Construction material also includes an item brought to the site pre-assembled from articles, materials or supplies. However, emergency life safety systems, such as emergency lighting, fire alarm, and audio evacuation systems, which are discrete systems incorporated into a public building or work and which are produced as a complete system, shall be evaluated as a single and distinct construction material regardless of when or how the individual parts or components of such systems are delivered to the construction site. "Domestic construction material," as used in this clause, means (1) an unmanufactured construction material mined or produced in the United States, or (2) a construction material manufactured in the United States, if the cost of its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. Components of foreign origin of the same class or kind as the construction 00700-52 materials determined to be unavailable pursuant to subparagraph 25.202(a)(3) of the Federal Acquisition Regulation (FAR) shall be created as domestic. (b) The Contractor agrees that only domestic construction material will be used by the Contractor, subcontractors, materialmen, and suppliers in the performance of this contract, except for foreign construction materials, if any, listed in this contract. (The foregoing requirements are administered in accordance with Executive Order No. 10582, dated December 17, 1954, as amended, and Subpart 25.2 of the FAR). (End of clause) 37 52.225-11 RESTRICTIONS ON CERTAIN FOREIGN PURCHASES (OCT 1996) (a) Unless advance written approval of the Contracting Officer is obtained, the Contractor shall not acquire, for use in the performance of this contract, any supplies of services originating from sources within, or that were located in or transported from or through, countries whose products are banned from importation into the United States under regulations of the Office of Foreign Assets Control, Department of the Treasury. Those countries include Cuba, Iran, Iraq, Libya, and North Korea. (b) The Contractor shall not acquire for use in the performance of this contract any supplies or services from entities controlled by the Government of Iraq. (c) The Contractor agrees to insert the provisions of this clause, including this paragraph (c), in all subcontracts hereunder. (End of clause) 38 52.225-15 BUY AMERICAN ACT--CONSTRUCTION MATERIALS UNDER TRADE AGREEMENTS ACT AND NORTH AMERICAN FREE TRADE AGREEMENT (JAN 1996) (a) Definitions. As used in this clause-- "Components" means those articles, materials, and supplies incorporated directly into construction materials. "Construction material" means an article, material, or supply brought to the construction site for incorporation into the building or work. Construction material also includes an item brought to the site pre-assembled from articles, materials, or supplies. However, emergency life safety systems, such as emergency lighting, fire alarm, and audio 00700-53 evacuation systems, which are discrete systems incorporated into a public building or work and which are produced as a complete system, shall be evaluated as a single and distinct construction material regardless of when or how the individual parts or components of such Systems are delivered to the construction site. "Designated country construction material" means a construction material that (a) is wholly the growth, product, or manufacture of a designated country (as defined at FAR 25.401), or (b) in the case of a construction material which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed in a designated country into a new and different construction material distinct from the materials from which it was transformed. "Domestic construction material" means (1) an unmanufactured construction material mined or produced in the United States, or (2) a construction material manufactured in the United States, if the cost of its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. Components of foreign origin of the same class or kind as the construction materials determined to be unavailable pursuant to subparagraph 25.202(a) (3) of the Federal Acquisition Regulation (FAR) shall be treated as domestic. "North American Free Trade Agreement (NAFTA) country" means Canada or Mexico. "NAFTA country construction material" means a construction material that (a) is wholly the growth, product, or manufacture of a NAFTA country, or (b) in the case of a construction material which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed in a NAFTA country into a new and different construction material distinct from the materials from which it was transformed. (b) The Buy American Act (41 U.S.C 10) provides that the Government give preference to domestic material. In addition, the Trade Agreements Act and the North American Free Trade Agreement (NAFTA) provide that designated country and NAFTA construction materials are exempted from application of the Buy American Act. (c) The Contractor agrees that only domestic construction materials, NAFTA country construction materials or designated country construction materials will be used by the Contractor, subcontractors, material men and suppliers in the performance of this contract, except for other foreign construction materials, if any, listed in this contract. (End of clause) 00700-54 39 52.226-1 UTILIZATION OF INDIAN ORGANIZATIONS AND INDIAN-OWNED ECONOMIC ENTERPRISES (SEP 1996) (a) For Department of Defense contracts, this clause applies only if the contract includes a subcontracting plan incorporated under the terms of the clause at 52.219-9. Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan. It does not apply to contracts awarded based on a subcontracting plan submitted and approved under paragraph (g) of the clause at 52.219 (b) Definitions. As used in this clause: "Indian" means any person who is a member of any Indian tribe, band, group, pueblo or community which is recognized by the Federal Government as eligible for services from the Bureau of Indian Affairs (BIA) in accordance with 25 U.S.C. 1452(c) and any "Native" as defined in the Alaska Native Claims Settlement Act (43 U.S.C. 1601). "Indian organization" means the governing body of any Indian tribe or entity established or recognized by the governing body of an Indian tribe for the purposes of 25 U.S.C., Chapter 17. "Indian-owned economic enterprise" means any Indian-owned (as determined by the Secretary of the Interior) commercial, industrial, or business activity established or organized for the purpose of profit, provided that Indian ownership shall constitute not less than 51 percent of the enterprise. "Indian tribe" means any Indian tribe, band, group, pueblo or community, including native villages and native groups (including corporations organized by Kenai, Juneau, Sitka, and Kodiak) as defined in the Alaska Native Claims Settlement Act, which is recognized by the Federal Government as eligible for services from BIA in accordance with 25 U.S.C. 1542(c). "Interested party" means a prime contractor or an actual or prospective offeror whose direct economic interest would be affected by the award of a subcontract or by the failure to award a subcontract. (c) The Contractor agrees to use its best efforts to give Indian organizations and Indian-owned economic enterprises (25 U.S.C. 1544) the maximum practicable opportunity to participate in the subcontracts it awards to the fullest extent consistent with efficient performance of its contract. (1) The Contracting Officer and the Contractor, acting in good faith, may rely on the self-certification of an Indian organization or Indian- owned economic enterprise as to its eligibility, unless an interested party challenges its status or the Contracting Officer has independent reason to question that status. In the event of a challenge 00700-55 to the self-certification of a subcontractor, the Contracting Officer shall refer the matter to the U.S. Department of the Interior, Bureau of Indian Affairs (BIA), Attn: Chief, Division of Contracting and Grants Administration, 1849 C Street, NW, MS-334A-5IB, Washington, DC 20245. The BIA will determine the eligibility and notify the Contracting Officer. The 5 percent incentive payment will not be made within 50 working days of subcontract award or while a challenge is pending. If a subcontractor is determined to be an ineligible participant, no incentive payment will be made under the Indian Incentive Program. (2) The Contractor may request an adjustment under the Indian Incentive Program to the following: (i) The estimated cost of a cost-type contract. (ii) The target cost of a cost-plus-incentive-fee prime contract. (iii) The target cost and ceiling price of a fixed-price incentive prime contract. (iv) The price of a firm-fixed-price prime contract. (3) The amount of the equitable adjustment to the prime contract shall be 5 percent of the estimated cost, target cost or firm fixed- price included in the subcontract initially awarded to the Indian organization or Indian-owned economic enterprise. (4) The Contractor has the burden of proving the amount claimed and must assert its request for an adjustment prior to completion of contract performance. (d) The Contracting Officer, subject to the terms and conditions of the contract and the availability of funds, shall authorize an incentive payment of 5 percent of the amount paid to the subcontractor. Contracting Officers shall seek funding in accordance with agency procedures. The Contracting Officer's decision is final and not subject to the Disputes clause of this contract. (End of clause) 40 52.227-1 AUTHORIZATION AND CONSENT (JUL 1995) (a) The Government authorizes and consents to all use and manufacture, in performing this contract or any subcontract at any time, of any invention described in and covered by a United States patent (1) embodied in the structure or composition of any article the delivery of which is accepted by the Government under this contract or (2) used in machinery, tools, or methods whose use necessarily results from compliance by the 00700-56 Contractor or a subcontractor with (i) specifications of written provisions forming a part of this contract or (ii) specific written instructions given by the Contracting Officer directing the manner of performance. The entire liability to the Government for infringement of a patent of the United States shall be determined solely by the provisions of the indemnity clause, if any, included in this contract or any subcontract hereunder (including any lower-tier subcontract), and the Government assumes liability for all other infringement to the extent of the authorization and consent hereinabove granted. (b) The Contractor agrees to include, and require inclusion of, this clause, suitably modified to identify the parties, in all subcontracts at any tier for supplies or services (including construction, architect-engineer services, and materials, supplies, models, samples, and design or casting services expected to exceed the simplified acquisition threshold), however, omission of this clause from any subcontract, including those at or below the simplified acquisition threshold, does not affect this authorization and consent. (End of Clause) 41 52.227-2 NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (AUG 1996) (a) The Contractor shall report to the Contracting Officer, promptly and in reasonable written detail, each notice or claim of patent or copyright infringement based on the performance of this contract of which the Contractor has knowledge. (b) In the event of any claim or suit against the Government on account of any alleged patent or copyright infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or services performed under this contract, the Contractor shall furnish to the Government, when requested by the Contracting Officer, all evidence and information in possession of the Contractor pertaining to such suit or claim, such evidence and information shall be furnished at the expense of the Government except where the Contractor has agreed to indemnify the Government. (c) The Contractor agrees to include, and require inclusion of, this clause in all subcontracts at any tier for supplies or services (including construction and architect-engineer subcontracts and those for material, supplies, models, samples, or design or testing services) expected to exceed the simplified acquisition threshold at FAR 2.101. 00700-57 (End of clause) 42 52.227-4 PATENT INDEMNITY -- CONSTRUCTION CONTRACTS (APR 1984) Except as otherwise provided, the Contractor agrees to indemnify the Government and its officers, agents, and employees against liability, including costs and expenses, for infringement upon any United States patent (except a patent issued upon an application that is now or may hereafter be withheld from issue pursuant to a Secrecy Order under 35 U.S.C 181) arising out of performing this contract or out of the use or disposal by or for the account of the Government of supplies furnished or work performed under this contract. (End of clause) (R 7-602.16 1964 JUN) 43 52.227-11 PATENT RIGHTS -- RETENTION BY THE CONTRACTOR (SHORT FORM) (JUN 1989) (a) Definitions. (1) "Invention" means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code, or any novel variety of plant which is or may be protected under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). (2) "Made" when used in relation to any invention means the first actual reduction to practice of such invention. (3) "Nonprofit organization" means a university or other institution of higher education or an organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational organization qualified under a State nonprofit organization statute. (4) "Practical application" means to manufacture, in the case of a composition of product; to practice, in the case of a process or method, or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. (5) "Small business firm" means a small business concern as defined at section 2 of Pub. L. 85-536 (15 U.S.C. 632) and implementing regulations of the Administrator of the Small Business Administration. For the purpose of this clause, the size standards for small business concerns involved in Government procurement and subcontracting at 13 CFR 121.3- 8 and 13 CFR 121.3-12, respectively, will be used. (6) "Subject invention" means any invention of the contractor conceived or first actually reduced to practice in the performance of work under this contract, provided that in the case of a variety of plant, the date of determination (as defined in section 41(d) of the Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during the period of contract performance. (b) Allocation of principal rights. The Contractor may retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. 203. With respect to any subject invention which the Contractor retains title, the Federal Government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world. (c) Invention disclosure, election of title, and filing of patent application by Contractor. (1) The Contractor will disclose each subject invention to the Federal agency within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters. The disclosure to the agency shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the agency, the Contractor will promptly notify the agency of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. (2) The Contractor will elect in writing whether or not to retain title disclosure to the Federal agency. However, in any case where publication, on sale or public use has initiated the 1-year statutory period wherein valid patent protection can still be obtained in the United States, the period for election of title may be shortened by the agency to a date that is no more than 60 days prior to the end of the statutory period. (3) The Contractor will file its initial patent application on a 00700-59 subject invention to which it elects to retain title within 1 year after election if title or, if earlier, prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, or sale, or public use. The Contractor will file patent applications in additional countries or international patent offices within either 10 months of the corresponding initial patent application or 6 months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where such filing has been prohibited by a Secrecy Order. (4) Requests for extension of the time for disclosure election, and filing under subparagraphs (c) (1), (2), and (3) of this clause may, at the discretion of the agency, be granted. (d) Conditions when the Government may obtain title. The Contractor will convey to the Federal agency, upon written request, title to any subject invention-- (1) If the Contractor fails to disclose or elect title to the subject invention within the times specified in paragraph (c) of this clause, or elects not to retain title, provided, that the agency may only request title within 60 days after learning of the failure of the Contractor to disclose or elect within the specified times. (2) In those countries in which the Contractor fails to file patent applications within the times specified in paragraph (c) of this clause; provided, however, that if the Contractor has filed a patent application in a country after the times specified in paragraph (c) of this clause, but prior to its receipt of the written request of the Federal agency, the Contractor shall continue to retain title in that country. (3) In any country in which the Contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention. (e) Minimum rights to Contractor and protection of the Contractor right to file. (1) The Contractor will retain a nonexclusive royalty-free license throughout the world in each subject invention to which the Government obtains title, except if the Contractor fails to disclose the invention within the times specified in paragraph (c) of this clause. The Contractor's license extends to its domestic subsidiary and affiliates, if any, within the corporate structure of which the Contractor is a party and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of the Federal agency, except when transferred to the successor of that part of the 00700-60 Contractor's business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by the funding Federal agency to the extent necessary to achieve expeditious practical application of subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions at 37 CFR Part 404 and agency licensing regulations (if any). This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of the funding Federal agency to the extent the Contractor, its licensees, or the domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, the funding Federal agency will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by the funding Federal agency for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable regulations in 37 CFR Part 404 and agency regulations, if any, concerning the licensing of Government-owned inventions, any decision concerning the revocation or modification of the license. (f) Contractor action to protect the Government's interest. (1) The Contractor agrees to execute or to have executed and promptly deliver to the Federal agency all instruments necessary to (i) establish or confirm the rights the Government has throughout the world in those subject inventions to which the Contractor elects to retain title, and (ii) convey title to the Federal agency when requested under paragraph (d) of this clause and to enable the Government to obtain patent protection throughout the world in that subject invention. (2) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should 00700-61 require, as a minimum, the information required by subparagraph (c)(1) of this clause. The Contractor shall instruct such employees, through employee agreements or other suitable educational programs, on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars. (3) The Contractor will notify the Federal agency of any decisions not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, not less than 30 days before the expiration of the response period required by the relevant patent office. (4) The Contractor agrees to include within the specification of any United States patent application and any patent issuing thereon covering a subject invention, the following statement, "This invention was made with Government support under (identify the contract) awarded by (identify the Federal agency). The Government has certain rights in the invention." (g) Subcontracts. (1) The Contractor will include this clause, suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, or research work to be performed by a small business firm or domestic nonprofit organization. The subcontractor will retain all rights provided for the Contractor in this clause, and the Contractor will not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions. (2) The Contractor will include in all other subcontracts, regardless of tier, for experimental, developmental, or research work the patent rights clause required by Subpart 27.3. (3) In the case of subcontracts, at any tier, the agency, subcontractor, and the Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and the Federal agency with respect to the matters covered by the clause; provided, however, that nothing in this paragraph is intended to confer any jurisdiction under the Contract Disputes Act in connection with proceeding under paragraph (j) of this clause. (h) Reporting on utilization of subject inventions. The Contractor agrees to submit, on request, periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the Contractor, and such other data and information as the agency may reasonably specify. The Contractor also agrees to 00700-62 provide additional reports as may be requested by the agency in connection with any march-in proceeding undertaken by the agency in accordance with paragraph (j) of this clause. As required by 35 U.S.C. 202(c)(5), the agency agrees it will not disclose such information to persons outside the Government without permission of the Contractor. (i) Preference of United States industry. Notwithstanding any other provision of this clause, the Contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any product embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by the Federal agency upon a showing by the Contractor or its assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the Unites states or that under the circumstances domestic manufacture is not commercially feasible. (j) March-in rights. The Contractor agrees that, with respect to any subject invention in which it has acquired title, the Federal agency has the right in accordance with the procedures in 37 CFR 401.6 and any supplemental regulations of the agency to require the Contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request the Federal agency has the right to grant such a license itself if the Federal agency determines that-- (1) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (3) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (4) Such action is necessary because the agreement required by paragraph (i) of this clause has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. 00700-63 (k) Special provisions for contracts with nonprofit organizations. If the Contractor is a nonprofit organisation, it agrees that-- (1) Rights to a subject invention in the United States may not be assigned without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions, provided, that such assignee will be subject to the same provisions as the Contractor: (2) The Contractor will share royalties collected on a subject invention with the inventor, including Federal employee co-investors (when the agency deems it appropriate) when the subject invention is assigned in accordance with the 35 U.S.C. 202(e) and 37 CFR 401.10; (3) The balance or any royalties or income earned by the Contractor with respect to subject inventions, after payment of expenses (including payments to investors) incidental to the administration of subject inventions will be utilized for the support of scientific research or education; and (4) It will make efforts that are reasonable under the circumstances to attract licensees of subject inventions that are small business firms, and that it will give a preference to a small business firm when licensing a subject invention if the Contractor determines that the small business firm has a plan or proposal for marketing the invention which, if executed, is equally as likely to bring the invention to practical application as any plans or proposals from applicants that are not small business firms; provided, that the Contractor is also satisfied that the small business firm has the capability and resources to carry out its plan or proposal. The decision whether to give a preference in any specific case will be at the discretion of the contractor. However, the Contractor agrees that the Secretary of Commerce may review the Contractor's licensing program and decisions regarding small business applicants, and the Contractor will negotiate changes to its licensing policies, procedures, or practices with the Secretary of Commerce when the Secretary's review discloses that the Contractor could take reasonable steps to more effectively implement the requirements of this subparagraph (k) (4). (1) Communications. (Complete according to agency instructions.) (End of clause) 44 52.227-12 PATENT RIGHTS--RETENTION BY THE CONTRACTOR (LONG FORM) (JAN 1997) 00700-64 (a) Definitions. "Invention" means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). "Made" when used in relation to any invention means the conception or first actual reduction to practice of such invention. "Nonprofit organization" means a domestic university or other institution of higher education or an organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under section 501(^) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational organization qualified under a state nonprofit organization statute. "Practical application" means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. "Small business firm" means a small business concern as defined at section 2 of Pub. L. 85-536 (15 U.S.C. 632) and implementing regulations of the Administrator of the Small Business Administration. For the purpose of this clause, the size standards for small business concerns involved in Government procurement and subcontracting at 13 CFR 121.3-8 and 13 CFR 121.3-12, respectively, will be used. "Subject invention" means any invention of the Contractor conceived or first actually reduced to practice in the performance of work under this contract: provided, that in the case of a variety of plant, the date of determination (as defined in section 41(d) of the Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during the period of contract performance. (b) Allocation of principal rights. The Contractor may elect to retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. 203. With respect to any subject invention in which the Contractor elects to retain title, the Federal Government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world. (c) Invention disclosure, election of title, and filling of patent applications by Contractor. (1) The Contractor shall disclose each subject invention to the Contracting Officer within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent 00700-65 matters or within 6 months after the Contractor becomes aware that a subject invention has been made, whichever is earlier. The disclosure to the Contracting Officer shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding, to the extend known at the time of the disclosure, of the nature, purpose, operation, and physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale, or public use of the invention and whether a manuscript describing the invention has been submmitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the Contracting Officer, the Contractor shall promptly notify the Contracting Officer of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. (2) The Contractor shall elect in writing whether or not to retain title to any such invention by notifying the Federal agency at the time of disclosure or within 8 months of disclosure, as to those countries (including the United States) in which the contractor will retain title; provided, that in any case where publication, on sale, or public use has initiated the 1-year statutory period wherein valid patent protection can still be obtained in the United States, the period of election of title may be shortened by the agency to a date that is no more than 60 days prior to the end of the statutory period. (3) The Contractor shall file its initial patent application on an elected invention within 1 year after election or, if earlier, prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, on sale, or public use. The Contractor shall file patent applications in additional countries (including the European Patent Office and under the Patent Cooperation Treaty) within either 10 months of the corresponding initial patent application or 6 months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where such filing has been prohibited by a Secrecy Order. (4) Requests for extension of the time for disclosure to the Contracting Officer, election, and filing may, at the discretion of the funding Federal agency, be granted, and will normally be granted unless the Contracting Officer has reason to believe that a particular extension would prejudice the Government's interest. (d) Conditions when the Government may obtain title. The Contractor shall 00700-66 convey to the Federal agency, upon written request, title to any subject invention-- (1) If the Contractor elects not to retain title to a subject invention; (2) If the Contractor fails to disclose or elect the subject invention within the times specified in paragraph (c) above (the agency may only request title within 60 days after learning of the Contractor's failure to report or elect within the specified times); (3) In those countries in which the Contractor fails to file patent applications within the times specified in paragraph (c) above; provided, however, that if the Contractor has filed a patent application in a country after the times specified in paragraph (c) above, but prior to its receipt of the written request of the Federal agency, the Contractor shall continue to retain title in that country; or (4) In any country in which the Contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention. (e) Minimum rights to Contractor. (1) The Contractor shall retain a nonexclusive, royalty-free license throughout the world in each subject invention to which the Government obtains title except if the Contractor fails to disclose the subject invention within the time specified in paragraph (c) above. The Contractor's license extends to its domestic subsidiaries and affiliates, if any, within the corporate structure of which the Contractor is a part and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of the funding Federal agency except when transferred to the successor of that part of the Contractor's business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by the funding Federal agency to the extent necessary to achieve to expeditious practical application of the subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions in the Federal Property Management Regulations and agency licensing regulations (if any). This license shall not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of the funding Federal agency to the extent the Contractor, its licensees, or 00700-67 its domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, the funding Federal agency shall furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor shall be allowed 30 days (or such other time as may be authorized by the funding Federal agency for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable agency licensing regulations and 37 CFR 404 concerning the licensing of Government-owned inventions, any decision concerning the revocation or modification of its license. (f) Contractor action to protect the Government's interest. (1) The Contractor agrees to execute or to have executed and promptly deliver to the Federal agency all instruments necessary to (i) establish or confirm the rights the Government has throughout the world in those subject inventions to which the Contractor elects to retain title, and (ii) convey title to the Federal agency when requested under paragraph (d) above and subparagraph (n) (2) below, and to enable the Government to obtain patent protection throughout the world in that subject invention. (2) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provision of paragraph (c) above, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (c) (1) above. The Contractor shall instruct such employees through employee agreements or other suitable educational programs on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars. (3) The Contractor shall notify the Federal agency of any decision not to continue the prosecution of a patent application, pay maintainance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, not less than 30 days before the expiration of the response period required by the relevant patent office. (4) The Contractor agrees to include, within the specification of any United States patent application and any patent issuing thereon covering 00700-68 a subject invention, the following statement: "This invention was made with Government support under (identify the contract) awarded by (identify the Federal agency). The Government has certain rights in this invention." (5) The Contractor shall establish and maintain active and effective procedures to assure that subject inventions are promptly identified and disclosed to Contractor personnel responsible for patent matters within 6 months of conception and/or first actual reduction to practice, whichever occurs first in performance of work under this contract. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Contractor shall furnish the Contracting Officer a description of such procedures for evaluation and for determination as to their effectiveness. (6) The Contractor agrees, when licensing a subject invention, to arrange to avoid royalty charges on acquisitions involving Government funds, including funds derived through Military Assistance Program of the Government or otherwise derived through the Government, to refund any amounts received as royalty charges on the subject invention in acquisitions for, or on behalf of, the Government, and to provide for such refund in any instrument transferring rights in the invention to any party. (7) The Contractor shall furnish the Contracting Officer the following: (i) Interim reports every 12 months (or such longer period as may be specified by the Contracting Officer) from the date of the contract, listing subject inventions during that period and stating that all subject inventions have been disclosed or that there are no such inventions. (ii) A final report, within 3 months after completion of the contracted work, listing all subject inventions or stating that there were no such inventions, and listing all subcontracts at any tier containing a patent rights clause or stating that there were no such subcontracts. (8) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting 00700-69 Officer, the Contractor shall furnish a copy of such subcontract, and no more frequently than annually, a listing of the subcontracts that have been awarded. (9) In the event of a refusal by a prospective subcontractor to accept one of the clauses in subparagraph (g) (1) or (2) below, the Contractor (i) shall promptly submit a written notice to the Contracting Officer setting forth the subcontractor's reasons for such refusal and other pertinent information that may expedite disposition of the matter and (ii) shall not proceed with such subcontracting without the written authorization of the Contracting Officer. (10) The Contractor shall provide, upon request, the filing date, serial number and title, a copy of the patent application (including an English-Language version if filed in a language other than English), and patent number and issue date for any subject invention for which the Contractor has retained title. (11) Upon request, the Contractor shall furnish the Government an irrevocable power to inspect and make copies of the patent application file. (g) Subcontracts. (1) The Contractor shall include the clause at 52.227-11 of the Federal Acquisition Regulation (FAR), suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, or research work to be performed by a small business firm or nonprofit organization. The subcontractor shall retain all rights provided for the Contractor in this clause, and the Contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions. (2) The Contractor shall include this clause (FAR 52.227- 12) in all other subcontracts, regardless of tier, for experimental, developmental, or research work. (3) In the case of subcontracts, at any tier, when the prime award with the Federal agency was a contract (but not a grant or cooperative agreement), the agency, subcontractor, and the Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and the Federal agency with respect to those matters covered by this clause. (h) Reporting utilization of subject inventions. The Contractor agrees to submit on request periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received 00700-70 by the Contractor, and such other data and information as the agency may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by the agency in connection with any march-in proceedings undertaken by the agency in accordance with paragraph (5) of this clause. To the extent data or information supplied under this paragraph is considered by the Contractor, its licensee or assignee to be privileged and confidential and is so marked, the agency agrees that, to the extent permitted by law, it shall not disclose such information to persons outside the Government. (i) Preference for United States industry. Notwithstanding any other provision of this clause, the Contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by the Federal agency upon a showing by the Contractor or its assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) March-in rights. The Contractor agrees that with respect to any subject invention in which it has acquired title, the Federal agency has the right in accordance with the procedures in FAR 27.304-1(g) to require the Contractor, an assignee, or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request, the Federal agency has the right to grant such a license itself if the Federal agency determines that -- (1) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees, (3) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or 00700-71 (4) Such action is necessary because the agreement required by paragraph (i) of this clause has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (k) Special provisions for contracts with nonprofit organizations Reserved. (l) Communications. (Complete according to agency instructions.) (m) Other inventions. Nothing contained in this clause shall be deemed to grant to the Government any rights with respect to any invention other than a subject invention. (n) Examination of records relating to inventions. (1) The Contracting Officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the Contractor relating to the conception or first reduction to practice of inventions in the same field of technology as the work under this contract to determine whether-- (i) Any such inventions are subject inventions: (ii) The Contractor has established and maintains the procedures required by subparagraphs (f) (2) and (f) (3) of this clause; and (iii) The Contractor and its inventors have complied with the procedures. (2) If the Contracting Officer determines that an investor has not disclosed a subject invention to the Contractor in accordance with the procedures required by subparagraph (f) (5) of this clause, the Contracting Officer may, within 60 days after the determination, request title in accordance with subparagraphs (d) (2) and (d) (3) of this clause. However if the Contractor established that the failure to disclose did no result from the Contractor's fault or negligence, the Contracting Officer shall not request title. (3) If the Contracting Officer learns of an unreported Contractor invention which the Contracting Officers believes may be a subject invention, the Contractor may be required to disclose the invention to the agency for a determination of ownership rights. (4) Any examination of records under this paragraph shall be subject to appropriate conditions to protect the confidentiality of the information involved. (o) Withholding of payment (this paragraph does not apply to subcontracts). (1) Any time before final payment under this contract; the Contracting Officer may, in the Government's interest, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of the 00700-72 contract, whichever is less, shall have been set aside if, in the Contracting Officer's opinion, the Contractor fails to-- (i) Establish, maintain, and follow effective procedures for identifying and disclosing subject inventions pursuant to subparagraph (f) (5) above; (ii) Disclose any subject invention pursuant to subparagraph (c) (1) above; (iii) Deliver acceptable interim reports pursuant to subdivision (f) (7) (i) above; or (iv) Provide the information regarding subcontracts pursuant to subparagraph (f) (8) of this clause. (2) Such reserve or balance shall be withheld until the Contracting Officer has determined that the Contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause. (3) Final payment under this contract shall not be made before the Contractor delivers to the Contracting officer all disclosures of subject inventions required by subparagraph (c) (1) above, an acceptable final report pursuant to subdivision (f) (7) (ii) above, and all past due confirmatory instruments. (4) The Contracting Officer may decrease or increase the sums withheld up to the maximum authorized above. No amount shall be withheld under this paragraph while the amount specified by this paragraph is being withheld under other provisions of the contract. The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government right. (End of clause) 45 52.228-2 ADDITIONAL BOND SECURITY (JUN 1996) The Contractor shall promptly furnish additional security required to protect the Government and persons supplying labor or materials under this contract if-- (a) Any surety upon any bond, or issuing financial institution for other security, furnished with this contract becomes unacceptable to the Government; (b) Any surety fails to furnish reports on its financial condition as required by the Government; (c) The contract price is increased so that the penal sum of any bond becomes inadequate in the opinion of the Contracting Officer; or 00700-73 (d) The contract performance period is extended and an irrevocable letter of credit (ILC) is used as security. If the Contractor does not furnish an acceptable extension or replacement ILC, or other acceptable substitute, at least 30 days before an ILC's scheduled expiration, the Contracting Officer has the right to immediately draw on the ILC. (End of clause) 46 52.228-11 PLEDGES OF ASSETS (FEB 1992) (a) Offerors shall obtain from each person acting as an individual surety on a bid guarantee, a performance bond, or a payment bond-- (1) Pledge of assets; and (2) Standard Form 28, Affidavit of Individual Surety, (b) Pledges of assets from each person acting as an individual surety shall be in the form of-- (1) Evidence of an escrow account containing cash, certificates of deposit, commercial or Government securities, or other assets described in FAR 28.203-2 (except see 28.203-2 (b) (2) with respect to Government securities held in book entry form) and/or; (2) A recorded lien on real estate. The offeror will be required to provide-- (i) Evidence of title in the form of a certificate of title prepared by a title insurance company approved by the United States Department of Justice. This title evidence must show fee simple title vested in the surety along with any concurrence owners; whether any real estate taxes are due and payable, and any recorded encumbrances against the property, including the lien filed in favor of the Government as required by FAR 28.203-2 (d); (ii) Evidence of the amount due under any encumbrance shown in the evidence of title; (iii) A copy of the current real estate tax assessment of the property or a current appraisal dated no earlier than 6 months prior to the date of the bond, prepared by a professional appraiser who certifies that the appraisal has been conducted in accordance with the generally accepted appraisal standards as reflected in the Uniform Standards of Professional Appraisal Practice, as promulgaged by the Appraisal Foundation. (End of clause) 00700-74 47 52.229-3 FEDERAL, STATE, AND LOCAL TAXES (JAN 1991) (a) "Contract date," as used in this clause, means the date set for bid opening or, if this is a negotiated contract or a modification, the effective date of this contract or modification. "All applicable Federal, State, and legal taxes and duties," as used in this clause, means all taxes and duties, in effect on the contract date, that the taxing authority is imposing and collecting on the transactions or property covered by this contract. "After-imposed Federal tax," as used in this clause, means any new or increased Federal excise tax or duty, or tax that was exempted or excluded on the contract date but whose exemption was later revoked or reduced during the contract period, on the transactions or property covered by this contract that the Contractor is required to pay or bear as the result of legislative, judicial, or administrative action taking effect after the contract date. It does not include social security tax or other employment taxes. "After-relieved Federal tax," as used in this clause, means any amount of Federal excise tax or duty, except social security or other employment taxes, that would otherwise have been payable on the transactions or property covered by this contract, but which the Contractor is not required to pay or bear, or for which the Contractor obtains a refund or drawback, as the result of legislative, judicial, or administrative action taking effect after the contract date. (b) The contract price includes all applicable Federal, State, and local taxes and duties. (c) The contract price shall be increased by the amount of any after-imposed Federal tax, provided the Contractor warrants in writing that no amount for such newly imposed Federal excise tax or duty or rate increase was included in the contract price, as a contingency reserve or otherwise. (d) The contract price shall be decreased by the amount of any after-relieved Federal tax. (e) The contract price shall be decreased by the amount of any Federal excise tax or duty, except social security or other employment taxes, that the Contractor is required to pay or bear, or does not obtain a refund of, through the Contractor's fault, negligence, or failure to follow instructions of the Contracting Officer. (f) No adjustment shall be made in the contract price under this clause unless the amount of the adjustment exceeds 5250. (g) The Contractor shall promptly notify the Contracting Officer of all matters relating to any Federal excise tax or duty that reasonably may be 00700-75 expected to result in either an increase or decrease in the contract price and shall take appropriate action as the Contracting Officer directs. (h) The Government shall, without liability, furnish evidence appropriate to establish exemption from any Federal, State, or local tax when the Contractor requests such evidence and a reasonable basis exists to sustain the exemption. (End of clause) 48 52.229-5 TAXES--CONTRACTS PERFORMED IN U.S. POSSESSIONS OR PUERTO RICO (APR 1994) The term "local taxes," as used in the Federal, State, and local taxes clause of this contract, includes taxes imposed by a possession of the United States or by Puerto Rico. (End of Clause) (AV 7-103.10(c) 1963 NOV) (AV 1-11.401-3(a)) 49 52.232-5 PAYMENTS UNDER FIXED-PRICE CONSTRUCTION CONTRACTS (APR 1989) (a) The Government shall pay the Contractor the contract price as provided in this contract. (b) The Government shall make progress payments monthly as the work proceeds, or at more frequent intervals as determined by the Contracting Officer, on estimates of work accomplished which meets the standards of quality established under the contract, as approved by the Contracting Officer. The Contractor shall furnish a breakdown of the total contract price showing the amount included therein for each principal category of the work, which shall substantiate the payment amount requested in order to provide a basis for determining progress payments, in such detail as requested by the Contracting Officer. In the preparation of estimates the Contracting Officer may authorize material delivered on the site and preparatory work done to be taken into consideration. Material delivered to the Contractor at locations other than the site may also be taken into consideration if-- (1) Consideration is specifically authorized by this contract; and (2) The Contractor furnishes satisfactory evidence that it has acquired title to such material and that the material will be used to perform this contract. 00700-76 (c) Along with each request for progress payments, the contractor shall furnish the following certification, or payment shall not be made: I hereby certify, to the best of my knowledge and belief, that-- (1) The amounts requested are only for performance in accordance with the specifications, terms, and conditions of the contract; (2) Payments to subcontractors and suppliers have been made from previous payments received under the contract, and timely payments will be made from the proceeds of the payment covered by this certification, in accordance with subcontract agreements and the requirements of chapter 39 of Title 31, United States Code; and (3) This request for progress payments does not include any amounts which the prime contractor intends to withhold or retain from a subcontractor or supplier in accordance with the terms and conditions of the subcontract. _________________________ (Name) _________________________ (Title) _________________________ (Date) (d) If the Contractor, after making a certified request for progress payments, discovers that a portion or all of such request constitutes a payment for performance by the Contractor that fails to conform to the specifications, terms, and conditions of this contract (hereinafter referred to as the "unearned amount"), the Contractor shall-- (1) Notify the Contracting Officer of such performance deficiency; and (2) Be-obligated to pay the Government an amount (computed by the Contracting Officer in the manner provided in 31 U.S.C 3903(c) (1)) equal to interest on the unearned amount from the date of receipt of the unearned amount until-- (i) The date the Contractor notifies the Contracting Officer that the performance deficiency has been corrected; or (ii) The date the Contractor reduces the amount of any subsequent certified request for progress payments by an amount equal to the unearned amount. (e) If the Contracting Officer finds that satisfactory progress was achieved during any period for which a progress payment is to be made, the Contracting Officer shall authorize payment to be made in full. However, if satisfactory progress has not been made, the Contracting Officer may retain a maximum of 10 percent of the amount of the payment until 00700-77 satisfactory progress is achieved. When the work is substantially complete, the Contracting Officer may retain from previously withheld funds and future progress payments that amount the Contracting Officer considers adequate for protection of the Government and shall release to the Contractor all the remaining withheld funds. Also, on completion and acceptance of each separate building, public work, or other division of the contract, for which the price is stated separately in the contract, payment shall be made for the completed work without retention of a percentage. (f) All material and work covered by progress payments made shall, at the time of payment, become the sole property of the Government, but this shall not be construed as-- (1) Relieving the Contractor from the sole responsibility for all material and work upon which payments have been made or the restoration of any damaged work; or (2) Waiving the right of the Government to require the fulfillment of all of the terms of the contract. (g) In making these progress payments, the Government shall, upon request, reimburse the Contractor for the amount of premiums paid for performance and payment bonds (including coinsurance and reinsurance agreements, when applicable) after the Contractor has furnished evidence of full payment to the surety. The retainage provisions in paragraph (e) of this clause shall not apply to that portion of progress payments attributable to bond premiums. (h) The Government shall pay the amount due the Contractor under this contract after-- (1) Completion and acceptance of all work; (2) Presentation of a properly executed voucher; and (3) Presentation of release of all claims against the Government arising by virtue of this contract, other than claims, in stated amounts, that the Contractor has specifically excepted from this operation of the release. A release may also be required of the assignee if the Contractor's claim to amounts payable under this contract has been assigned under the Assignment of Claims Act of 1940 (31 U.S.C. 3727 and 41 U.S.C. 15). (i) Notwithstanding any provision of this contract, progress payments shall not exceed 80 percent on work accomplished on undefinitized contract actions. A "contract action" is any action resulting in a contract, as defined in FAR Subpart 2.1, including contract modifications for additional supplies or services, but not including contract modifications that are within the scope and under the terms of the contract, such as contract modifications issued pursuant to the Changes clause, or funding and other 00700-78 administrative changes (End of clause) 50 52.232-17 INTEREST (JUN 1996) (a) Except as otherwise provided in this contract under a Price Reduction for Defective Cost or Pricing Data clause or a Cost Accounting Standards Clause, all amounts that become payable by the Contractor to the Government under this contract (net of any applicable tax credit under the Internal Revenue Code (26 U.S.C. 1481)) shall bear simply interest from the date due until paid unless paid within 30 days of becoming due. The interest rate shall be the interest rate established by the Secretary of the Treasury as provided in Section 12 of the Contract Disputes Act of 1978 (Public Law 95- 563), which is applicable to the period in which the amount becomes due, as provided in paragraph (b) of this clause, and then at the rate applicable for each six-month period as fixed by the Secretary until the amount is paid. (b) Amounts shall be due at the earliest of the following dates: (1) The date fixed under this contract. (2) The date of the first written demand for payment consistent with this contract, including any demand resulting from a default termination. (3) The date the Government transmits to the Contractor a proposed supplemental agreement to confirm completed negotiations establishing the amount of debt. (4) If this contract provides for revision of prices, the date of written notice to the Contractor stating the amount of refund payable in connection with a pricing proposal or a negotiated pricing agreement not confirmed by contract modification. (c) The interest charge made under this clause may be reduced under the procedures prescribed in 32.614-2 of the Federal Acquisition Regulation in effect on the date of this contract. (End of clause) 51 52.232-23 ASSIGNMENT OF CLAIMS (JAN 1986) (a) The Contractor, under the Assignment of Claims Act, as amended, 31 U.S.C. 3727, 41 U.S.C. 15 (hereafter referred to as "the Act"), may assign its rights to be paid amounts due or to become due as a result of the performance of this contract to a bank, trust company, or other financing 00700-79 institution, including any Federal lending agency. The assignee under such an assignment may thereafter further assign or reassign its right under the original assignment to any type of financing institution described in the preceding sentence. (b) Any assignment or reassignment authorized under the Act and this clause shall cover all unpaid amounts payable under this contract, and shall not be made to more than one party, except that an assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in the financing of this contract. (c) The Contractor shall not furnish or disclose to any assignee under this contract any classified document (including this contract) or information related to work under this contract until the Contracting Officer authorizes such action in writing. (End of clause) 52 52.232-27 PROMPT PAYMENT FOR CONSTRUCTION CONTRACTS (MAR 1994) Notwithstanding any other payment terms in this contract, the Government will make invoice payments and contract financing payments under the terms and conditions specified in this clause. Payment shall be considered as being made on the day a check is dated or an electronic funds transfer is made. Definitions of pertinent terms are set forth in 32.902. All days referred to in this clause are calendar days, unless otherwise specified. (a) Invoice Payments. (1) For purposes of this clause, there are several types of invoice payments which may occur under this contract, as follows: (i) Progress payments, if provided for elsewhere in this contract, based on Contracting Officer approval of the estimated amount and value of work or services performed, including payments for reaching milestones in any project; (A) The due date for making such payments shall be 14 days after receipt of the payment request by the designated billing office. However, if the designated billing office fails to annotate the payment request with the actual date of receipt, the payment due date shall be deemed to be the 14th day after the date the Contractor's payment request is dated, provided a proper payment request is received and there is no disagreement over quantity, quality, or Contractor compliance with contract requirements. (B) The due date for payment of any amounts retained by the Contracting Officer in accordance with the clause at 52.232-8, 00700-80 Payments Under Fixed-Price Construction Contracts, shall be as specified in the Contract or, if not specified, 30 days after approval for release to the Contractor by the Contracting Officer. (ii) Final payments based on completion and acceptance of all work and presentation of release of all claims against the Government arising by virtue of the contract, and payments for partial deliveries that have been accepted by the Government (e.g., each separate building, public work, or other division of the contract for which the price is stated seperately in the contract). (A) The due date for making such payments shall be either the 30th day after receipt by the designated billing office of a proper invoice from the Contractor, or the 30th day after Government acceptance of the work or services completed by the Contractor, whichever is later. However, if the designated billing office fails to annotate the invoice with the date of actual receipt, the invoice payment due shall be deemed to be the 30th day after the date the Contractor's invoice is dated, provided a proper invoice is received and there is no disagreement over quantity, quality, or Contractor compliance with contract requirements. (B) On a final invoice where the payment amount is subject to contract settlement actions (e.g., release of claims), acceptance shall be deemed to have occurred on the effective date of the contract settlement. (2) An invoice is the Contractor's bill or written request for payment under the contract for work or services performed under the contract. An invoice shall be prepared and submitted to the designated billing office. A proper invoice must include the items listed in subdivisions (a) (2) (i) through (a) (2) (ix) of this clause. If the invoice does not comply with these requirements, the Contractor will be notified of the defect within 7 days after receipt of the invoice at the designated billing office. Untimely notification will be taken into account in the computation of any interest penalty owed the Contractor in the manner described in subparagraph (a) (4) of this clause: (i) Name and address of the Contractor. (ii) Invoice date. (iii) Contract number or other authorization for work or services performed (including order number and contract line item number). (iv) Description of work or services performed. (v) Delivery and payment terms (e.g., prompt payment discount terms). (vi) Name and address of Contractor official to whom payment is to be sent (must be the same as that in the contract or in a proper notice of 00700-81 assignment). (vii) Name (where practicable), title, phone number, and mailing address of person to be notified in event of a defective invoice. (viii) For payments described in subdivision (a) (1) (i) of this clause, substantiation of the amounts requested and certification in accordance with the requirements of the clause at 52.232-5. Payments Under Fixed-Price Construction Contracts. (ix) Any other information or documentation required by the contract. (3) An interest penalty shall be paid automatically by the designated payment office, without request from the Contractor, if payment is not made by the due date and the conditions listed in subdivisions (a) (3) (i) through (a) (3) (iii) of this clause are met, if applicable. (i) A proper invoice was received by the designated billing office. (ii) A receiving report or other Government documentation authorizing payment was processed and there was no disagreement over quantity, quality, Contractor compliance with any contract term or condition, or requested progress payment amount. (iii) In the case of a final invoice for any balance of funds due the Contractor for work or services performed, the amount was not subject to further contract settlement actions between the Government and the Contractor. (4) The interest penalty shall be at the rate established by the Secretary of the Treasury under section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611) that is in effect on the day after the due date, except where the interest penalty is prescribed by other governmental authority. This rate is referred to as the "Renegotiation Board Interest Rate," and it is published in the Federal Register semiannually on or about January 1 and July 1. The interest penalty shall accrue daily on the invoice payment amount approved by the Government and be compounded in 30- day increments inclusive from the first day after the due date through the payment date. That is, interest accrued at the end of any 30-day period will be added to the approved invoice payment amount and be subject to interest penalties if not paid in the succeeding 30-day period. If the designated billing office failed to notify the Contractor of a defective invoice within the periods prescribed in subparagraph (a) (2) of this clause, then the due date on the corrected invoice will be adjusted by subtracting the number of days taken beyond the prescribed notification of defects period. Any interest penalty owed the Contractor will be based on this adjusted due date. Adjustments will be made by the designated payment office for errors in calculating interest penalties, if requested by the Contractor. 00700-82 (i) For the sole purpose of computing an interest penalty that might be due the Contractor for payments described in subdivision (a) (1) (ii) of this clause, Government acceptance or approval shall be deemed to have occurred constructively on the 7th day after the Contractor has completed the work or services in accordance with the terms and conditions of the contract. In the event that actual acceptance or approval occurs within the constructive acceptance or approval period, the determination of an interest penalty shall be based on the actual date of acceptance or approval. Constructive acceptance or constructive approval requirements do not apply if there is a disagreement over quantity, quality, or Contractor compliance with a contract provision. These requirements also do not compel Government officials to accept work or services, approve Contractor estimates, perform contract administration functions, or make payment prior to fulfilling their responsibilities. (ii) The following periods of time will not be included in the determination of an interest penalty. (A) The period taken to notify the Contractor of defects in invoices submitted to the Government, but this may not exceed 7 days. (B) The period between the defects notice and resubmission of the corrected invoice by the Contractor. (iii) Interest penalties will not continue to accrue after the filing of a claim for such penalties under the clause at 52.233-1. Disputes, or for more than 1 year. Interest penalties of less than $1.00 need not be paid. (iv) Interest penalties are not required on payment delays due to disagreement between the Government and Contractor over the payment amount or other issues involving contract compliance, or on amounts temporarily withheld or retained in accordance with the terms of the contract. Claims involving disputes, and any interest that may be payable, will be resolved in accordance with the clause at 52.233-1, Disputes. (5) An interest penalty shall also be paid automatically by the designated payment office, without request from the Contractor, if a discount for prompt payment is taken improperly. The interest penalty will be calculated on the amount of discount taken for the period beginning with the first day after the end of the discount period through the date when the Contractor is paid. (6) If this contract was awarded on or after October 1, 1989, a penalty amount, calculated in accordance with regulations issued by the Office of 00700-83 Management and Budget, shall be paid in addition to the interest penalty amount if the Contractor-- (i) Is owed an interest penalty: (ii) Is not paid the Interest penalty within 10 days after the date the invoice amount is paid; and; (iii) Makes a written demand, not later than 40 days after the date the invoice amount is paid, that the agency pay such a penalty. (b) Contract Financing Payments. (1) For purposes of this clause, if applicable, "contract financing payment" means a Government disbursement of monies to a Contractor under a contract clause or other authorization prior to acceptance of supplies or services by the Government, other than progress payments based on estimates of amount and value of work performed. Contract financing payments include advance payments and interim payments under cost-type contracts. (2) If this contract provided for contract financing, requests for payment shall be submitted to the designated billing office as specified in this contract or as directed by the Contracting Officer. Contract financing payments shall be made on this ______ day after receipt of a proper contract financing request by the designated billing office. In the event that an audit or other review of a specific financing request is required to ensure compliance with the terms and conditions of the contract, the designated payment office is not compelled to make payment by the due specified. For advance payments, loans, or other arrangements that do not involve recurrent submissions of contract financing requests payment shall be made in accordance with the corresponding contract terms or as directed by the Contracting Officer. Contract financing payments shall not be assessed an interest penalty for payment delays. (c) The Contractor shall include in each subcontract for property or services (including a material supplier) for the purpose of performing this contract the following: (1) A payment clause which obligates the Contractor to pay the subcontractor for satisfactory performance under its subcontract not later than 7 days from receipt of payment out of such amounts as are paid to the Contractor under this contract. (2) An interest penalty clause which obligates the Contractor to pay the subcontractor an interest penalty for each payment not made in accordance with the payment clause-- (i) For the period beginning on the day after the required payment date and ending on the date on which payment of the amount due is made; 00700-84 and (ii) Computed at the rate of interest established by the Secretary of the Treasury, and published in the Federal Register, for interest payments under section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611) in effect at the time the Contractor accrues the obligation to pay an interest penalty. (3) A clause requiring each subcontractor to include a payment clause and an interest penalty clause conforming to the standards set forth in subparagraphs (c) (1) and (c) (2) of this clause in each of its subcontracts, and to require each of its subcontractors to include such clauses in their subcontracts with each lower-tier subcontractor or supplier. (d) The clauses required by paragraph (c) of this clause shall not be construed to impair the right of Contractor or a subcontractor at any tier to negotiate, and to include in their subcontract, provisions which-- (1) Permit the Contractor or a subcontractor to retain (without cause) a specified percentage of each progress payment otherwise due to a subcontractor for satisfactory performance under the subcontract without incurring any obligation to pay a late payment interest penalty, in accordance with terms and conditions agreed to by the parties to the subcontract, giving such recognition as the parties deem appropriate to the ability of a subcontractor to furnish a performance bond and a payment bond; (2) Permit the Contractor or subcontractor to make a determination that part or all of the subcontractor's request for payment may be withheld in accordance with the subcontract agreement; and (3) Permit such withholding without incurring any obligation to pay a late payment penalty if-- (i) A notice conforming to the standards of paragraph (g) of this clause has been previously furnished to the subcontractor: and (ii) A copy of any notice issued by a Contractor pursuant to subdivision (d) (3) (i) of this clause has been furnished to the Contracting Officer. (e) If a Contractor, after making a request for payment to the Government but before making a payment to a subcontractor for the subcontractor's performance covered by the payment request, discovers that all or a portion of the payment otherwise due such subcontractor is subject to withholding from the subcontractor in accordance with the subcontract agreement, then the Contractor shall-- (1) Furnish to the subcontractor a notice conforming to the standards of paragraph (g) of this clause as soon as practicable upon ascertaining 00700-85 the cause giving rise to a withholding, but prior to the due date for subcontractor payment; (2) Furnish to the Contracting Officer, as soon as practicable, a copy of the notice furnished to the subcontractor pursuant to subparagraph (e) (1) of this clause; (3) Reduce the subcontractor's progress payment by an amount not to exceed the amount specified in the notice of withholding furnished under subparagraph (e) (1) of this clause; (4) Pay the subcontractor as soon as practicable after the correction of the identified subcontract performance deficiency, and-- (i) Make such payment within-- (A) Seven days after correction of the identified subcontract performance deficiency (unless the funds therefor must be recovered from the Government because of a reduction under subdivision (e) (5) (i)) of this clause; or (B) Seven days after the Contractor recovers such funds from the Government; or (ii) Incur an obligation to pay a late payment interest penalty computed at the rate of interest established by the Secretary of the Treasury, and published in the Federal Register, for interest payments under section 12 of the Contracts Disputes Act of 1978 (41 U.S.C. 611) in effect at the time the Contractor accrues the obligation to pay an interest penalty; (5) Notify the Contracting Officer upon-- (i) Reduction of the amount of any subsequent certified application for payment; or (ii) Payment to the subcontractor of any withheld amounts of a progress payment, specifying -- (A) The amounts withheld under subparagraph (e) (1) of this clause; and (B) The dates that such withholding began and ended; and (6) Be obligated to pay to the Government an amount equal to interest on the withheld payments (computed in the manner provided in 31 U.S.C. 3903 (c) (1)), from the 8th day after receipt of the withheld amounts from the Government until -- (i) The day the identified subcontractor performance deficiency is corrected; or (ii) The date that any subsequent payment is reduced under subdivision (e) (5) (i) of this clause, (f) (1) If a Contractor, after making payment to a first-tier subcontractor, receives from a supplier or subcontractor of the first- tier 00700-86 subcontractor (hereafter referred to as a "second-tier subcontractor") a written notice in accordance with section 2 of the Act of August 24, 1925 (40 U.S.C. 270b, Miller Act), asserting a deficiency in such first-tier subcontractor's performance under the contract for which the Contractor may be ultimately liable, and the Contractor determines that all or a portion of future payments otherwise due such first-tier subcontractor is subject to withholding in accordance with the subcontract agreement, then the Contractor may, without incurring an obligation to pay an interest penalty under subparagraph (a) (6) of this clause-- (i) Furnish to the first-tier subcontractor a notice conforming to the standards of paragraph (g) of this clause as soon as practicable upon making such determination; and (ii) Withhold from the first-tier subcontractor's next available progress payment or payments an amount not to exceed the amount specified in the notice of withholding furnished under subdivision (f) (1) (i) of this clause. (2) As soon as practicable, but not later than 7 days after receipt of satisfactory written notification that the identified subcontract performance deficiency has been corrected, the Contractor shall pay the amount withheld under subdivision (f) (1) (ii) of this clause to such first-tier subcontractor, or shall incur an obligation to pay a Late payment interest penalty to such first-tier subcontractor computed at the rate of interest established by the Secretary of the Treasury, and published in the Federal Register, for interest payments under section 12 of the Contracts Disputes Act of 1978 (41 U.S.C. 611) in effect at the time the Contractor accrues the obligation to pay an interest penalty. (g) A written notice of any withholding shall be issued to a subcontractor (with a copy to the Contracting Officer of any such notice issued by the Contractor), specifying-- (1) The amount to be withheld; (2) The specific causes for the withholding under the terms of the subcontract; and (3) The remedial actions to be taken by the subcontractor in order to receive payment of the amounts withheld. (h) The Contractor may not request payment from the Government of any amount withheld or retained in accordance with paragraph (d) of this clause until such time as the Contractor has determined and certified to the Contracting Officer that the subcontractor is entitled to the payment of such amount. (i) A dispute between the Contractor and subcontractor relating to the amount or entitlement of a subcontractor to a payment or a late payment 00700-87 interest penalty under a clause included in the subcontract pursuant to paragraph (c) of this clause does not constitute a dispute to which the United States is a party. The United States may not be interpleaded in any judicial or administrative proceeding involving such a dispute. (j) Except as provided in paragraph (i) of this clause, this clause shall not limit or impair any contractual, administrative, or judicial remedies otherwise available to the Contractor or a subcontractor in the event of a dispute involving late payment or nonpayment by the Contractor or deficient subcontract performance or nonperformance by a subcontractor. (k) The Contractor's obligation to pay an interest penalty to a subcontractor pursuant to the clauses included in a subcontract under paragraph (c) of this clause shall not be construed to be an obligation of the United States for such interest penalty. A cost reimbursement claim may not include any amount for reimbursement of such interest penalty. (End of Clause) 53 52.233-1 DISPUTES (OCT 1995) (a) This contract is subject to the Contract Disputes Act of 1978, as amended (41 U.S.C. 601-613). (b) Except as provided in the Act, all disputes arising under or relating to this contract shall be resolved under this clause. (c) "Claim," as used in this clause, means a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract. A claim arising under a contract, unlike a claim relating to that contract, is a claim that can be resolved under a contract clause that provides for the relief sought by the claimant. However, a written demand or written assertion by the Contractor seeking the payment of money exceeding $100,000 is not a claim under the Act until certified as required by subparagraph (d) (z) of this clause. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim under the Act. The submission may be converted to a claim under the Act, by complying with the submission and certification requirements of this clause, if it is disputed either as to liability or amount or is not acted upon in a reasonable time. (d) (1) A claim by the Contractor shall be made in writing and, unless otherwise stated in this contract, submitted within 6 years after accrual of the claim to the Contracting officer for a written decision. A claim by 00700-88 the Government against the Contractor shall be subject to a written decision by the Contracting Officer. (2) (i) Contractors shall provide the certification specified in subparagraph (d) (2) (iii) of this clause when submitting any claim-- (A) Exceeding $100,000; or (B) Regardless of the amount claimed, when using-- (1) Arbitration conducted pursuant to S U.S.C. 575-580; or (2) Any other alternative means of dispute resolution (ADR) technique that the agency elects to handle in accordance with the Administrative Dispute Resolution Act (ADRA). (ii) The certification requirement does not apply to issues in controversy that have not been submitted as all or part of a claim. (iii) The certification shall state as follows: "I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the Contractor believes the Government is liable; and that I am duly authorized to certify the claim on behalf of the Contractor." (3) The certification may be executed by any person duly authorized to bind the Contractor with respect to the claim. (e) For Contractor claims of $100,000 or less, the Contracting Officer must, if requested in writing by the Contractor, render a decision within 60 days of the request. For Contractor-certified claims over $100,000, the Contracting Officer must, within 60 days, decide the claim or notify the Contractor of the date by which the decision will be made. (f) The Contracting Officer's decision shall be final unless the Contractor appeals or files a suit as provided in the Act. (g) If the claim by the Contractor is submitted to the Contracting Officer or a claim by the Government is presented to the Contractor, the parties, by mutual consent, may agree to use ADR. If the Contractor refuses an offer for alternative disputes resolution, the Contractor shall inform the Contracting Officer, in writing, of the Contractor's specific reasons for rejecting the request. When using arbitration conducted pursuant to S U.S.C. 575-580, or when using any other ADR technique that the agency elects to handle in accordance with ADRA, any claim, regardless of amount, shall be accomplished by the certification described in subparagraph (d) (2) (iii) of this clause, and executed in accordance with subparagraph (d) (3) of this clause. (h) The Government shall pay interest on the amount found due and unpaid from (1) the date that the Contracting Officer receives the claim (certified, if required); or (2) the date that payment otherwise would be 00700-89 due, if that date is later, until the date of payment. With regard to claims having defective certifications, as defined in (FAR) 48 CFR 33.201, interest shall be paid from the date that the Contracting Officer initially receives the claim. Simple interest on claims shall be paid at the rate, fixed by the Secretary of the Treasury as provided in the Act, which is applicable to the period during which the Contracting Officer receives the claim and then at the rate applicable for each 6-month period as fixed by the Treasury Secretary during the pendency of the claim. (i) The Contractor shall proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under the contract, and comply with any decision of the Contracting Officer. (End of clause) 54 52.233-3 PROTEST AFTER AWARD (AUG 1996) (a) Upon receipt of a notice of protest (as defined in FAR 33.101) or a determination that a protest is likely (see FAR 33.102 (d)), the Contracting Officer may, by written order to the Contractor, direct the Contractor to stop performance of the work called for by this contract. The order shall be specifically identified as a stop-work order issued under this clause. Upon receipt of the order, the Contractor shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage. Upon receipt of the final decision in the protest, the Contracting Officer shall either-- (1) Cancel the stop-work; or (2) Terminate the work covered by the order as provided in the Default, or the Termination for Convenience of the Government, clause of this contract. (b) If a stop-work order issued under this clause is canceled either before or after a final decision in the protest, the Contractor shall resume work. The Contracting Officer shall make an equitable adjustment in the delivery schedule or contract price, or both, and the contract shall be modified, in writing, accordingly, if-- (1) The stop-work order results in an increase in the time required for, or in the Contractor's cost properly allocable to, the performance of any part of this contract; and (2) The Contractor asserts its right to an adjustment within 30 days after the end of the period of work stoppage; provided, that if the 00700-90 Contracting Officer decides the facts justify the action, the Contracting Officer may receive and act upon a proposal at any time before final payment under this contract. (c) If a stop-work order is not canceled and the work covered by the order is terminated for the convenience of the Government, the Contracting Officer shall allow reasonable costs resulting from the stop-work order in arriving at the termination settlement. (d) If a stop-work order is not canceled and the work covered by the order is terminated for default, the Contracting Officer shall allow, by equitable adjustment or otherwise, reasonable costs resulting from the stop-work order. (e) The Government's rights to terminate this contract at any time are not affected by action taken under this clause. (f) If, as the result of the Contractor's intentional or negligent misstatement, misrepresentation, or miscertification, a protest related to this contract is sustained, and the Government pays costs, as provided in FAR 33.102 (b)(2) or 33.104 (h)(1), the Government may require the Contractor to reimburse the Government the amount of such costs. In addition to any other remedy available, and pursuant to the requirements of Subpart 32.6, the Government may collect this debt by offsetting the amount against any payment due the Contractor under any contract between the Contractor and the Government. (End of clause) 55 52.236-2 DIFFERING SITE CONDITIONS (APR 1984) (a) The Contractor shall promptly, and before the conditions are disturbed, give a written notice to the Contracting Officer of (1) subsurface or latent physical conditions at the site which differ materially from those indicated in this contract, or (2) unknown physical conditions at the site, of an unusual nature, which differ materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in the contract. (b) The Contracting Officer shall investigate the site conditions promptly after receiving the notice. If the conditions do materially so differ and cause an increase or decrease in the Contractor's cost of, or the time required for, performing any part of the work under this contract, whether or not changed as a result of the conditions, an equitable adjustment shall be made under this clause and the contract modified in writing accordingly. 00700-91 (c) No request by the Contractor for an equitable adjustment to the contract under this clause shall allowed, unless the Contractor has given the written notice required; provided, that the time prescribed in (a) above for giving written notice may be extended by the Contracting Officer. (d) No request by the Contractor for an equitable adjustment to the contract for differing site conditions shall be allowed if made after final payment under this contract. (End of clause) 56 52.236-3 SITE INVESTIGATION AND CONDITIONS AFFECTING THE WORK (APR 1984) (a) The Contractor acknowledges that it has taken steps reasonably necessary to ascertain the nature and location of the work, and that it has investigated and satisfied itself as to the general and local conditions which can affect the work or its cost, including but not limited to (1) conditions bearing upon transportation, disposal, handling, and storage of materials; (2) the availability of labor, water, electric power, and roads, (3) uncertainties of weather, river stages, tides, or similar physical conditions at the site; (4) the conformation and conditions of the ground; and (5) the character of equipment and facilities needed preliminary to and during work performance. The Contractor also acknowledges that it has satisfied itself as to the character, quality and quantity of surface and subsurface materials or obstacles to be encountered insofar as this information is reasonably ascertainable from an inspection of the site, including all exploratory work done by the Government, as well as from the drawings and specifications made a part of this contract. Any failure of the Contractor to take the actions described and acknowledged in this paragraph will not relieve the Contractor from responsibility for estimating properly the difficulty and cost of successfully performing the work, or for proceeding to successfully perform the work without additional expense to the Government. (b) The Government assumes no responsibility for any conclusions or interpretations made by the Contractor based on the information made available by the Government. Nor does the Government assume responsibility for any understanding reached or representation made concerning conditions which can affect the work by any of its officers or agents before the execution of this contract, unless that understanding or representation is expressly stated in this contract. 00700-92 (End of clause) 57 52.236-5 MATERIAL AND WORKMANSHIP (APR 1984) (a) All equipment, material, and articles incorporated into the work covered by this contract shall be new and of the most suitable grade for the purpose intended, unless otherwise specifically provided in this contract. References in the specifications to equipment, material, articles, or patented processes by trade name, make, or catalog number, shall be regarded as establishing a standard of quality and shall not be construed as limiting competition. The Contractor may, at its option, use any equipment, material, article, or process that, in the judgment of the Contracting Officer, is equal to that named in the specifications, unless otherwise specifically provided in this contract. (b) The Contractor shall obtain the Contracting Officer's approval of the machinery and mechanical and other equipment to be incorporated into the work. When requesting approval, the Contractor shall furnish to the Contracting Officer the name of the manufacturer, the model number, and other information concerning the performance, capacity, nature, and rating of the machinery and mechanical and other equipment. When required by this contract or by the Contracting Officer, the Contractor shall also obtain the Contracting Officer's approval of the material or articles which the Contractor contemplates incorporating into the work. When requesting approval, the Contractor shall provide full information concerning the material or articles. When directed to do so, the Contractor shall submit samples for approval at the Contractor's expense, with all shipping charges prepaid. Machinery, equipment, material, and articles that do not have the required approval shall be installed or used at the risk of subsequent rejection. (c) All work under this contract shall be performed in a skillful and workmanlike manner. The Contracting Officer may require, in writing, that the Contractor remove from the work any employee the Contracting Officer deems incompetent, careless, or otherwise objectionable. (End of clause) (R 7-602.9 1964 JUN) 58 52.236-6 SUPERINTENDENCE BY THE CONTRACTOR (APR 1984) At all times during performances of this contract and until the work is 00700-93 completed and accepted, the Contractor shall directly superintend the work or assign and have on the work site a competent superintendent who is satisfactory to the Contracting Officer and has authority to act for the Contractor. (End of Clause) 59 52.236-7 PERMITS AND RESPONSIBILITIES (NOV 1991) The Contractor shall, without additional expense to the Government, be responsible for obtaining any necessary licenses and permits, and for complying with any Federal, State, and municipal laws, codes, and regulations applicable to the performing of the work. The Contractor shall also be responsible for all damages to persons or property that occur as a result of the Contractor's fault or negligence. The Contractor shall also be responsible for all materials delivered and work performed until completion and acceptance of the entire work, except for any completed unit of work which may have been accepted under the contract. (End of clause) 60 52.236-8 OTHER CONTRACTS (APR 1984) The Government may undertake or award other contracts for additional work at or near the site of the work under this contract. The Contractor shall fully cooperate with the other contractors and with Government employees and shall carefully adapt scheduling and performing the work under this contract to accommodate the additional work, needing any direction that may be provided by the Contracting Officer. The Contractor shall not commit or permit any act that will interfere with the performance of work by any other contractor or by Government employees. (End of clause) 61 52.236-9 PROTECTION OF EXISTING VEGETATION, STRUCTURES, EQUIPMENT, UTILITIES, AND IMPROVEMENTS (APR 1984) (a) The Contractor shall preserve and protect all structures, equipment, and vegetation (such as trees, shrubs, and grass) on or adjacent to the work site, which are not to be removed and which do not unreasonably interfere with the work required under this contract. The Contractor 00700-94 shall only remove trees when specifically authorized to do so, and shall avoid damaging vegetation that will remain in place. If any limbs or branches of trees are broken during contract performance, or by the careless operation of equipment, or by workmen, the Contractor shall trim those limbs or branches with a clean cut and paint the cut with a tree- pruning compound as directed by the Contracting Officer. (b) The Contractor shall protect from damage all existing improvements and utilities (1) at or near the work site, and (2) on adjacent property of a third party, the locations of which are made known to or should be known by the Contractor. The Contractor shall repair any damage to those facilities, including those that are the property of a third party, resulting from failure to comply with the requirements of this contract or failure to exercise reasonable care in performing the work. If the Contracting fails or refuses to repair the damage promptly, the Contractor Officer may have the necessary work performed and charge the cost to the Contractor. (End of clause) 62 52.236-10 OPERATIONS AND STORAGE AREAS (APR 1984) (a) The Contractor shall confine all operations (including storage of materials) on Government premises to areas authorized or approved by the Contracting Officer. The Contractor shall hold and save the Government, its officers and agents, free and harmless from liability of any nature occasioned by the Contractor's performance. (b) Temporary buildings (e.g., storage sheds, shops, offices) and utilities may be erected by the Contractor only with the approval of the Contracting Officer and shall be built with labor and materials furnished by the Contractor without expense to the Government. The temporary buildings and utilities shall remain the property of the Contractor and shall be removed by the Contractor at its expense upon completion of the work. With the written consent of the Contracting Officer, the buildings and utilities may be abandoned and need not be removed. (c) The Contractor shall, under regulations prescribed by the Contracting Officer, use only established roadways, or use temporary roadways constructed by the Contractor when and as authorized by the Contracting Officer. When materials are transported in prosecuting the work, vehicles shall not be loaded beyond the leading capacity recommended by the manufacturer of the vehicle or prescribed by any Federal, State, or local 00700-95 law or regulation. When it is necessary to cross curbs or sidewalks, the Contractor shall protect them from damage. The Contractor shall repair or pay for the repair of any damaged curbs, sidewalks, or roads. (End of clause) 63 52.236-11 USE AND POSSESSION PRIOR TO COMPLETION (APR 1984) (a) The Government shall have the right to take possession of or use any completed or partially completed part of the work. Before taking possession of or using any work, the Contracting Officer shall furnish the Contractor a list of items of work remaining to be performed or corrected on those portions of the work that the Government intends to take possession of or use. However, failure of the Contracting Officer to list any item of work shall not relieve the Contractor of responsibility for complying with the terms of the contract. The Government's possession or use shall not be deemed an acceptance of any work under the contract. (b) While the Government has such possession or use, the Contractor shall be relieved of the responsibility for the loss of or damage to the work resulting from the Government's possession or use, notwithstanding the terms of the clause in this contract entitled "Permits and Responsibilities." If prior possession or use by the Government delays the progress of the work or causes additional expense to the Contractor, an equitable adjustment shall be made in the contract price or the time of completion, and the contract shall be modified in writing accordingly. (End of clause) 64 52.236-12 CLEANING UP (APR 1984) The Contractor shall at all times keep the work area, including storage areas, free from accumulations of waste materials. Before completing the work, the Contractor shall remove from the work and premises any rubbish, tools, scaffolding, equipment, and materials that are not the property of the Government. Upon completing the work, the Contractor shall leave the work area in a clean, neat, and orderly condition satisfactory to the Contracting Officer. (End of clause) 00700-96 65 52.236-13 I ACCIDENT PREVENTION (NOV 1991)--ALTERNATE I (NOV 1991) (a) The Contractor shall provide and maintain work environments and procedures which will (1) safeguard the public and Government personnel, property, materials, supplies, and equipment exposed to Contractor operations and activities; (2) avoid interruptions of Government operations and delays in project completion dates; and (3) control costs in the performance of this contract. (b) For these purposes on contracts for construction or dismantling, demolition, or removal of improvements, the Contractor shall-- (1) Provide appropriate safety barricades, signs, and signal lights; (2) Comply with the standards issued by the Secretary of Labor at 29 CFR Part 1926 and 29 CFR Part 1910; and (3) Ensure that any additional measures the Contracting Officer determines to be reasonably necessary for the purposes are taken, (c) If this contract is for construction or dismantling, demolition or removal of improvements with any Department of Defense agency or component, the Contractor shall comply with all pertinent provisions of the latest version of U.S. Army Corps of Engineers Safety and Health Requirements Manual, EM 385-1-1, in effect on the date of the solicitation. (d) Whenever the Contracting Officer becomes aware of any noncompliance with these requirements or any condition which poses a serious or imminent danger to the health or safety of the public or Government personnel, the Contracting Officer shall notify the Contractor orally, with written confirmation, and request immediate initiation of corrective action. This notice, when delivered to the Contractor or the Contractor's representative at the work site, shall be deemed sufficient notice of the noncompliance and that corrective action is required. After receiving the notice, the Contractor shall immediately take corrective action. If the Contractor fails or refuses to promptly take corrective action, the Contracting Officer may issue an order stopping all or part of the work until satisfactory corrective action has been taken. The Contractor shall not be entitled to any equitable adjustment of the contract price or extension of the performance schedule on any stop order issued under this clause. (e) The Contractor shall insert this clause, including this paragraph (e), with appropriate changes in the designation of the parties, in subcontracts. (f) Before commencing the work, the Contractor shall-- (1) Submit a written proposed plan for implementing this clause. The plan shall include an analysis of the significant hazards to life, limb, 00700-97 and property inherent in contract work performance and a plan for controlling these hazards; and (2) Meet with representatives of the Contracting Officer to discuss and develop a mutual understanding relative to administration of the overall safety program. (End of clause) 66 52.236-15 SCHEDULES FOR CONSTRUCTION CONTRACTS (APR 1984) (a) The Contractor shall, within five days after the work commences on the contract or another period of time determined by the Contracting Officer, prepare and submit to the Contracting Officer for approval three copies of a practicable schedule showing the order in which the Contractor proposes to perform the work, and the dates on which the Contractor contemplates starting and completing the several salient features of the work (including acquiring materials, plant, and equipment). The schedule shall be in the form of a progress chart of suitable scale to indicate appropriately the percentage of work scheduled for completion by any given date during the period. If the Contractor fails to submit a schedule within the time prescribed, the Contracting Officer may withhold approval of progress payments until the Contractor submits the required schedule. (b) The Contractor shall enter the actual progress on the chart as directed by the Contracting Officer, and upon doing so shall immediately deliver three copies of the annotated schedule to the Contracting Officer. If, in the opinion of the Contracting Officer, the Contractor falls behind the approved schedule, the Contractor shall take steps necessary to improve its progress, including those that may be required by the Contracting Officer, without additional cost to the Government. In this circumstance, the Contracting Officer may require the Contractor to increase the number of shifts, overtime operations, days of work, and/or the amount of construction plant, and to submit for approval any supplementary schedule or schedules in chart form as the Contracting Officer deems necessary to demonstrate how the approved rate of progress will be regained. (c) Failure of the Contractor to comply with the requirements of the Contracting Officer under this clause shall be grounds for a determination by the Contracting Officer that the Contractor is not prosecuting the work with sufficient diligence to ensure completion within the time specified in the contract. Upon making this determination, the Contracting Officer may terminate the Contractor's right to proceed with the work, or any separable part of it, in accordance with the default terms of this contract. 00700-98 (End of clause) 67 52.236-17 LAYOUT OF WORK (APR 1984) The Contractor shall lay out its work from Government-established base lines and bench marks indicated on the drawings, and shall be responsible for all measurements in connection with the layout. The Contractor shall furnish, at its own expense, all stakes, templates, platforms, equipment, tools, materials, and labor required to lay out any part of the work. The Contractor shall be responsible for executing the work to the lines and grades that may be established or indicated by the Contracting Officer. The Contractor shall also be responsible for maintaining and preserving all stakes and other marks established by the Contracting Officer until authorized to remove them. If such marks are destroyed by the Contractor or through its negligence before their removal is authorized, the Contracting Officer may replace them and deduct the expense of the replacement from any amounts due or to become due to the Contractor. (End of clause) (R 7-604.3 1965 JAN) 68 52.236-21 I SPECIFICATIONS AND DRAWINGS FOR CONSTRUCTION (FEB 1997) -- ALTERNATE I (APR 1984) (a) The Contractor shall keep on the work site a copy of the drawings and specifications and shall at all times give the Contracting Officer access thereto. Anything mentioned in the specifications and not shown on the drawings, or shown on the drawings and not mentioned in the specifications, shall be of like effect as if shown or mentioned in both. In case of difference between drawings and specifications, the specifications shall govern. In case of discrepancy in the figures, in the drawings, or in the specifications, the matter shall be promptly submitted to the Contracting Officer, who shall promptly make a determination in writing. Any adjustment by the Contractor without such a determination shall be at its own risk and expense. The Contracting Officer shall furnish from time to time such detailed drawings and other information as considered necessary, unless otherwise provided. (b) Wherever in the specifications or upon the drawings the words "directed", "required", "ordered", "designated", "prescribed", or words of like import are used, it shall be understood that the "direction", 00700-99 "requirement", "order", "designation", or "prescription", of the Contracting Officer is intended and similarly the words "approved", "acceptable", "satisfactory", or words of like import shall mean "approved by," or "acceptable to", or "satisfactory to" the Contracting Officer, unless otherwise expressly stated. (c) Where "as shown", "as indicated", "as detailed", or words of similar import are used, it shall be understood that the reference is made to the drawings accompanying this contract unless stated otherwise. The word "provided" as used herein shall be understood to mean "provide complete in place," that is "furnished and installed". (d) Shop drawings means drawings, submitted to the Government by the Contractor, subcontractor, or any lower tier subcontractor pursuant to a construction contract, showing in detail (1) the proposed fabrication and assembly of structural elements, and (2) the installation (i.e., fit and attachment details) of materials or equipment. It includes drawings, diagrams, layouts, schematics, descriptive literature, illustrations, schedules, performance and test data, and similar materials furnished by the contractor to explain in detail specific portions of the work required by the contract. The Government may duplicate, use, and disclose in any manner and for any purpose shop drawings delivered under this contract. (e) If this contract requires shop drawings, the Contractor shall coordinate all such drawings, and review them for accuracy, completeness, and compliance with contract requirements and shall indicate its approval thereon as evidence of such coordination and review. Shop drawings submitted to the Contracting Officer without evidence of the Contractor's approval may be returned for resubmission. The Contracting Officer will indicate an approval or disapproval of the shop drawings and if not approved as submitted shall indicate the Government's reasons therefor. Any work done before such approval shall be at the Contractor's risk. Approval by the Contracting Officer shall not relieve the Contractor from responsibility for any errors or omissions in such drawings, nor from responsibility for complying with the requirements of this contract, except with respect to variations described and approved in accordance with (f) below. (f) If shop drawings show variations from the contract requirements, the Contractor shall describe such variations in writing, separate from the drawings, at the time of submission. If the Contracting Officer approves any such variation, the Contracting Officer shall issue an appropriate contract modification, except that, if the variation is minor or does not involve a change in price or in the time of performance, a modification need not be issued. 00700-100 (g) The Contractor shall submit to the Contracting Officer for approval four copies (unless otherwise indicated) of all shop drawings as called for under the various headings of these specifications. Three sets (unless otherwise indicated) of all shop drawings, will be retained by the Contracting Officer and one set will be returned to the Contractor. Upon completing the work under this contract, the Contractor shall furnish a complete set of all shop drawings as finally approved. These drawings shall show all changes and revisions made up to the time the equipment is completed and accepted. (End of clause) 69 52.236-26 PRECONSTRUCTION CONFERENCE (FEB 1995) If the Contracting Officer decides to conduct a preconstruction conference, the successful offeror will be notified and will be required to attend. The Contracting Officer's notification will include specific details regarding the date, time, and location of the conference, any need for attendance by subcontractors, and information regarding the items to be discussed. (End of clause) 70 52.242-13 BANKRUPTCY (JUL 1995) In the event the Contractor enters into proceedings relating to bankruptcy, whether voluntary or involuntary, the Contractor agrees to furnish, by certified mail or electronic commerce method authorized by the contract, written notification of the bankruptcy to the Contracting Officer responsible for administering the contract. This notification shall be furnished within five days of the initiation of the proceedings relating to bankruptcy filing. This notification shall include the date on which the bankruptcy petition was filed, the identity of the court in which the bankruptcy petition was filed, and a listing of Government contract numbers and contracting offices for all Government contracts against which final payment has not been made. This obligation remains in effect until final payment under this contract. (End of clause) 00700-101 71 52.242-14 SUSPENSION OF WORK (APR 1984) (a) The Contracting Officer may order the Contractor, in writing, to suspend, delay, or interrupt all or any part of the work of this contract for the period of time that the Contracting Officer determines appropriate for the convenience of the Government. (b) If the performance of all or any part of the work is, for an unreasonable period of time, suspended, delayed, or interrupted (1) by an act of the Contracting Officer in the administration of this contract, or (2) by the Contracting Officer's failure to act within the time specified in this contract (or within a reasonable time if not specified), an adjustment shall be made for any increase in the cost of performance of this contract (excluding profit) necessarily caused by the unreasonable suspension, delay, or interruption, and the contract modified in writing accordingly. However, no adjustment shall be made under this clause for any suspension, delay, or interruption to the extent that performance would have been so suspended, delayed, or interrupted by any other cause, including the fault or negligence of the Contractor, or for which an equitable adjustment is provided for or excluded under any other term or condition of this contract. (c) A claim under this clause shall not be allowed (1) for any costs incurred more than 20 days before the Contractor shall have notified the Contracting Officer in writing of the act or failure to act involved (but this requirement shall not apply as to a claim resulting from a suspension order), and (2) unless the claim, in an amount stated, is asserted in writing as soon as practicable after the termination of the suspension, delay, or interruption, but not later than the date of final payment under the contract. (End of clause) 72 52.243-4 CHANGES (AUG 1987) (a) The Contracting Officer may, at any time, without notice to the sureties, if any, by written order designated or indicated to be a change order, make changes in the work within the general scope of the contract, including changes-- (1) In the specifications (including drawings and designs); (2) In the method or manner of performance of the work; (3) In the Government-furnished facilities, equipment, materials, services, or site; or 00700-102 (4) Directing acceleration in the performance of the work. (b) Any other written or oral order (which, as used in this paragraph (b), includes direction, instruction, interpretation, or determination) from the Contracting Officer that causes a change shall be treated as a change order under this clause; provided, that the Contractor gives the Contracting Officer written notice stating (1) the date, circumstances, and source of the order and (a) that the Contractor regards the order as a change order. (c) Except as provided in this clause, no order, statement, or conduct of the Contracting Officer shall be treated as a change under this clause or entitle the Contractor to an equitable adjustment. (d) If any change under this clause causes an increase or decrease in the Contractor's cost of, or the time required for the performance of any part of the work under this contract, whether or not changed by any such order, the Contracting Officer shall make an equitable adjustment and modify the contract in writing. However, except for an adjustment based on defective specifications, no adjustment for any change under paragraph (b) of this clause shall be made for any costs incurred more than 20 days before the Contractor gives written notice as required. In the case of defective specifications for which the Government is responsible, the equitable adjustment shall include any increased cost reasonably incurred by the Contractor in attempting to comply with the defective specifications. (e) The Contractor must assert its right to an adjustment under this clause within 30 days after (1) receipt of a written change order under paragraph (a) of this clause or (2) the furnishing of a written notice under paragraph (b) of this clause, by submitting to the Contracting Officer a written statement describing the general nature and amount of the proposal, unless this period is extended by the Government. The statement of proposal for adjustment may be included in the notice under paragraph (b) above. (f) No proposal by the Contractor for an equitable adjustment shall be allowed if asserted after final payment under this contract. (End of clause) 73 S2.244-1 SUBCONTRACTS (FIXED-PRICE CONTRACTS) (FEB 1995) (a) This clause does not apply to fi??-fixed-price contracts and fixed- price contracts with economic price adjustment. However, it does apply to subcontracts resulting from unpriced modifications to such contracts. (b) "Subcontract," as used in this clause, includes but is not limited 00700-103 to purchase orders, and changes and modifications to purchase orders. The Contractor shall notify the Contracting Officer reasonably in advance of entering into any subcontract if the Contractor does not have an approved purchasing system and if the subcontract-- (1) Is proposed to exceed $100,000; or (2) Is one of a number of subcontracts with a single subcontractor, under this contract, for the same or related supplies or services, that in the aggregate are expected to exceed $100,000. (c) The advance notification required by paragraph (b) above shall include-- (1) A description of the supplies or services to be subcontracted; (2) Identification of the type of subcontract to be used; (3) Identification of the proposed subcontractor and an explanation of why and how the proposed subcontractor was selected, including the competition obtained; (4) The proposed subcontract price and the Contractor's cost or price analysis; (5) The subcontractor's current, complete, and accurate cost or pricing data and Certificate of Current Cost or Pricing Data, if required by other contract provisions; (6) The subcontractor's Disclosure Statement or Certificate relating to Cost Accounting Standards when such data are required by other provisions of this contract; and (7) A negotiation memorandum reflecting-- (i) The principal elements of the subcontract price negotiations; (ii) The most significant considerations controlling establishment of initial or revised prices; (iii) The reason cost or pricing data were or were not required; (iv) The extent, if any, to which the Contractor did not rely on the subcontractor's cost or pricing data in determining the price objective and in negotiating the final price; (v) The extent, if any, to which it was recognized in the negotiation that the subcontractor's cost or pricing data were not accurate, complete, or current; the action taken by the Contractor and subcontractor; and the effect of any such defective data on the total price negotiated; (vi) The reasons for any significant difference between the Contractor's price objective and the price negotiated; and (vii) A complete explanation of the incentive fee or profit plan when incentives are used. The explanation shall identify each critical performance element, management decisions used to quantify 00700-104 each incentive element, reasons for the incentives, and a summary of all trade-off possibilities considered. (d) The Contractor shall obtain the Contracting Officer's written consent before placing any subcontract for which advance notification is required under paragraph (b) above. However, the Contracting Officer may ratify in writing any such subcontract. Ratification shall constitute the consent of the Contracting Officer. (e) Even if the Contractor's purchasing system has been approved, the Contractor shall obtain the Contracting Officer's written consent before placing subcontracts identified below: _________ (f) Unless the consent or approval specifically provides otherwise, neither consent by the Contracting Officer to any subcontract nor approval of the Contractor's purchasing system shall constitute a determination (1) of the acceptability of any subcontract terms or conditions (2) of the acceptability of any subcontract price or of any amount paid under any subcontract, or (3) to relieve the Contractor of any responsibility for performing this contract. (g) No subcontract placed under this contract shall provide for payment on a cost-plus-a-percentage-of-cost basis, and any fee payable under cost- reimbursement subcontracts shall not exceed the fee limitations in subsection 15.903(d) of the Federal Acquisition Regulation (FAR). (h) The Government reserves the right to review the Contractor's purchasing system as set forth in FAR Subpart 44.3. (End of clause) 74 52.246-12 INSPECTION OF CONSTRUCTION (AUG 1996) (a) Definition. "Work" includes, but is not limited to, materials, workmanship, and manufacture and fabrication of components. (b) The Contractor shall maintain an adequate inspection system and perform such inspections as will ensure that the work performed under the contract conforms to contract requirements. The Contractor shall maintain complete inspection records and make them available to the Government. All work shall be conducted under the general direction of the Contracting Officer and is subject to Government inspection and test at all places and at all reasonable times before acceptance to ensure strict compliance with the terms of the contract. (c) Government inspections and tests are for the sole benefit of the Government and do not-- (1) Relieve the Contractor of responsibility for providing adequate 00700-105 quality control measures: (2) Relieve the Contractor of responsibility for damage to or loss of the material before acceptance; (3) Constitute or imply acceptance; or (4) Affect the continuing rights of the Government after acceptance of the completed work under paragraph (i) below. (d) The presence or absence of a Government inspector does not relieve the Contractor from any contract requirement, nor is the inspector authorized to change any term or condition of the specification without the Contracting Officer's written authorization. (e) The Contractor shall promptly furnish, at no increase in contract price, all facilities, labor, and material reasonably needed for performing such safe and convenient inspections and tests as may be required by the Contracting Officer. The Government may charge to the Contractor any additional cost of inspection or test when work is not ready at the time specified by the Contractor for inspection or test, or when prior rejection makes reinspection or retest necessary. The Government shall perform all inspections and tests in a manner that will not unnecessarily delay the work. Special, full size, and performance tests shall be performed as described in the contract. (f) The Contractor shall, without charge, replace or correct work found by the Government not to conform to contract requirements, unless in the public interest the Government consents to accept the work with an appropriate adjustment in contract price. The Contractor shall promptly segregate and remove rejected material from the premises. (g) If the Contractor does not promptly replace or correct rejected work, the Government may (1) by contract or otherwise, replace or correct the work and charge the cost to the Contractor or (2) terminate for default the Contractor's right to proceed. (h) If, before acceptance of the entire work, the Government decides to examine already completed work by removing it or tearing it out, the Contractor, on request, shall promptly furnish all necessary facilities, labor, and material. If the work is found to be defective or nonconforming in any material respect due to the fault of the Contractor or its subcontractors, the Contractor shall defray the expenses of the examination and of satisfactory reconstruction. However, if the work is found to meet contract requirements, the Contracting Officer shall make an equitable adjustment for the additional services involved in the examination and reconstruction, including, if completion of the work was thereby delayed, an extension of time. (i) Unless otherwise specified in the contract, the Government shall 00700-106 accept, as promptly as practicable after completion and inspection, all work required by the contract or that portion of the work the Contracting Officer determines can be accepted separately. Acceptance shall be final and conclusive except for latent defects, fraud, gross mistakes amounting to fraud, or the Government's rights under any warranty or guarantee. (End of clause) 75 52.246-21 WARRANTY OF CONSTRUCTION (MAR 1994) (a) In addition to any other warranties in this contract, the Contractor warrants, except as provided in paragraph (i) of this clause, that work performed under this contract conforms to the contract requirements and is free of any defect in equipment, material, or design furnished, or workmanship performed by the Contractor or any subcontractor or supplier at any tier. (b) This warranty shall continue for a period of 1 year from the date of final acceptance of the work. If the Government takes possession of any part of the work before final acceptance, this warranty shall continue for a period of 1 year from the date the Government takes possession. (c) The Contractor shall remedy at the Contractor's expense any failure to conform, or any defect. In addition, the Contractor shall remedy at the Contractor's expense any damage to Government-owned or controlled real or personal property, when that damage is the result of-- (1) The Contractor's failure to conform to contract requirements; or (2) Any defect of equipment, material, workmanship, or design furnished. (d) The Contractor shall restore any work damaged in fulfilling the terms and conditions of this clause. The Contractor's warranty with respect to work repaired or replaced will run for 1 year from the date of repair or replacement. (e) The Contracting Officer shall notify the Contractor, in writing, within a reasonable time after the discovery of any failure, defect, or damage. (f) If the Contractor fails to remedy any failure, defect, or damage within a reasonable time after receipt of notice, the Government shall have the right to replace, repair, or otherwise remedy the failure, defect, or damage at the Contractor's expense. (g) With respect to all warranties, express or implied, from subcontractors, manufactures, or suppliers for work performed and materials furnished under this contract, the Contractor shall-- 00700-107 (1) Obtain all warranties that would be given in normal commercial practice; (2) Require all warranties to be executed, in writing, for the benefit of the Government, if directed by the Contracting Officer; and (3) Enforce all warranties for the benefit of the Government, if directed by the Contracting Officer. (h) In the event the Contractor's warranty under paragraph (b) of this clause has expired, the Government may bring suit at its expense to enforce a subcontractor's, manufacturer's, or supplier's warranty. (i) Unless a defect is caused by the negligence of the Contractor or subcontractor or supplier at any tier, the Contractor shall not be liable for the repair of any defects of material or design furnished by the Government nor for the repair of any damage that results from any defect in Government-furnished material or design. (j) This warranty shall not limit the Government's rights under the Inspection and Acceptance clause of this contract with respect to latent defects, gross mistakes, or fraud. (End of clause) (R 7-604.4 1976 JUL) 76 52.248-3 I VALUE ENGINEERING--CONSTRUCTION (MAR 1989)--ALTERNATE I (APR 1984) (a) General. The Contractor is encouraged to develop, prepare, and submit value engineering change proposals (VECP's) voluntarily. The Contractor shall share in any instant contract savings realized from accepted VECP's, in accordance with paragraph (f) below. (b) Definitions. "Collateral costs," as used in this clause, means agency costs of operation, maintenance, logistic support, or Government-furnished property. "Collateral savings," as used in this clause, means those measurable net reductions resulting from a VECP in the agency's overall projected collateral costs, exclusive of acquisition savings, whether or not the acquisition cost changes. "Contractor's development and implementation costs," as used in this clause, means those costs the Contractor incurs on a VECP specifically in developing, testing, preparing, and submitting the VECP, as well as those costs the Contractor incurs to make the contractual changes required by Government acceptance of a VECP. "Government costs," as used in this clause, means those agency costs that result directly from developing and implementing the VECP, such as 00700-108 any net increases in the cost of testing, operations, maintenance, and logistic support. The term does not include the normal administrative costs of processing the VECP. "Instant contract savings," as used in this clause, means the estimated reduction in Contractor cost of performance resulting from acceptance of the VECP, minus allowable Contractor's development and implementation costs, including subcontractors' development and implementation costs (see paragraph (h) below). "Value engineering change proposal (VECP)" means a proposal that** (1) Requires a change to this, the instant contract, to implement and (2) Results in reducing the contract price or estimated cost without impairing essential functions or characteristics: provided, that it does not involve a change** (i) In deliverable end item quantities only, or (ii) To the contract type only. (c) VECP preparation. As a minimum, the Contractor shall include in each VECP the information described in subparagraphs (1) through (7) below. If the proposed change is affected by contractually required configuration management or similar procedures, the instructions in those procedures relating to format, identification, and priority assignment shall govern VECP preparation. The VECP shall include the following: (1) A description of the difference between the existing contract requirement and that proposed, the comparative advantages and disadvantages of each, a justification when an item's function or characteristics are being altered, and the effect of the change on the end item's performance. (2) A list and analysis of the contract requirements that must be changed if the VECP is accepted, including any suggested specification revisions. (3) A separate, detailed cost estimate for (i) the affected portions of the existing contract requirement and (ii) the VECP. The cost reduction associated with the VECP shall take into account the Contractor's allowable development and implementation costs, including any amount attributable to subcontractors under paragraph (h) below. (4) A description and estimate of costs the Government may incur in implementing the VECP, such as test and evaluation and operating and support costs. (5) A prediction of any effects the proposed change would have on collateral costs to the agency. (6) A statement of the time by which a contract modification accepting the VECP must be issued in order to achieve the maximum cost reduction. 00700-109 noting any effect on the contract completion time or delivery schedule. (7) Identification of any previous submissions of the VECP, including the dates submitted, the agencies and contract numbers involved, and previous Government actions, if known. (d) Submission. The Contractor shall submit VECP's to the Resident Engineer at the worksite, with a copy to the Contracting Officer. (e) Government action. (1) The Contracting Officer shall notify the Contractor of the status of the VECP within 45 calendar days after the contracting office receives it. If additional time is required, the Contracting Officer shall notify the Contractor within the 45-day period and provide the reason for the delay and the expected date of the decision. The Government will process VECP's expeditiously; however, it shall not be liable for any delay in acting upon a VECP. (2) If the VECP is not accepted, the Contracting Officer shall notify the Contractor in writing, explaining the reasons for rejection. The Contractor may withdraw any VECP, in whole or in part, at any time before it is accepted by the Government. The Contracting Officer may require that the Contractor provide written notification before undertaking significant expenditures for VECP effort. (3) Any VECP may be accepted, in whole or in part, by the Contracting Officer's award of a modification to this contract citing this clause. The Contracting Officer may accept the VECP, even though an agreement on price reduction has not been reached, by issuing the Contractor a notice to proceed with the change. Until a notice to proceed is issued or a contract modification applies a VECP to this contract, the Contractor shall perform in accordance with the existing contract. The Contracting Officer's decision to accept or reject all or part of any VECP shall be final and not subject to the Disputes clause or otherwise subject to litigation under the Contract Disputes Act of 1978 (41 U.S.C. 601-613). (f) Sharing. (1) Rates. The Government's share of savings is determined by subtracting Government costs from instant contract savings and multiplying the result by (i) 45 percent for fixed-price contracts or (ii) 75 percent for cost-reimbursement contracts. (2) Payment. Payment of any share due the Contractor for use of a VECP on this contract shall be authorized by a modification to this contract to-- (i) Accept the VECP; (ii) Reduce the contract price or estimated cost by the amount of instant contract savings; and (iii) Provide the Contractor's share of savings by adding the amount calculated to the contract price or fee. 00700-110 (g) Subcontracts. The Contractor shall include an appropriate value engineering clause in any subcontract of $50,000 or more and may include one in subcontracts of lesser value. In computing any adjustment in this contract's price under paragraph (f) above, the Contractor's allowable development and implementation costs shall include any subcontractor's allowable development and implementation costs clearly resulting from a VECP accepted by the Government under this contract, but shall exclude any value engineering incentive payments to a Subcontractor. The Contractor may choose any arrangement for subcontractor value engineering incentive payments; provided, that these payments shall not reduce the Government's share of the savings resulting from the VECP. (h) Data. The Contractor may restrict the Government's right to use any part of a VECP or the supporting data by marking the following legend on the affected parts: "These data, furnished under the Value Engineering--Construction clause of contract ________________, shall not be disclosed outside the Government or duplicated, used, or disclosed, in whole or in part, for any purpose other than to evaluate a value engineering change proposal submitted under the clause. This restriction does not limit the Government's right to use information contained in these data if it has been obtained or is otherwise available from the Contractor or from another source without limitations." If a VECP is accepted, the Contractor hereby grants the Government unlimited rights in the VECP and supporting data, except that, with respect to data qualifying and submitted as limited rights technical data, the Government shall have the rights specified in the contract modification implementing the VECP and shall appropriately mark the data. (The terms "unlimited rights" and "limited rights" are defined in Part 27 of the Federal Acquisition Regulation.) (End of clause) 77 52.249-2 I TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE) (SEP 1996)-- ALTERNATE I (SEP 1996) (a) The Government may terminate performance of work under this contract in whole or, from time to time in part if the Contracting Officer determines that a termination is in the Government's interest. The Contracting Officer shall terminate by delivering to the Contractor a Notice of Termination specifying the extent of termination and the effective date. 00700-111 (b) After receipt of a Notice of Termination, and except as directed by the Contracting Officer, the Contractor shall immediately proceed with the following obligations, regardless of any delay in determining or adjusting any amounts due under this clause: (1) Stop work as specified in the notice. (2) Place no further subcontracts or orders (referred to as subcontracts in this clause) for materials, services, or facilities, except as necessary to complete the continued portion of the contract. (3) Terminate all subcontracts to the extent they relate to the work terminated. (4) Assign to the Government, as directed by the Contracting Officer, all right, title, and interest of the Contractor under the subcontracts terminated, in which case the Government shall have the right to settle or pay any termination settlement proposal arising out of those terminations. (5) With approval or ratification to the extent required by the Contracting Officer, settle all outstanding liabilities and termination settlement proposals arising from the termination of subcontracts, the approval or ratification will be final for purposes of this clause. (6) As directed by the Contracting Officer, transfer title and deliver to the Government (i) the fabricated or unfabricated parts, work in process, completed work, supplies, and other material produced or acquired for the work terminated, and (ii) the completed or partially completed plans, drawings, information, and other property that, if the contract had been completed, would be required to be furnished to the Government. (7) Complete performance of the work not terminated. (8) Take any action that may be necessary, or that the Contracting Officer may direct, for the protection and preservation of the property related to this contract that is in the possession of the Contractor and in which the Government has or may acquire an interest. (9) Use its best efforts to sell, as directed or authorized by the Contracting Officer, any property of the types referred to in subparagraph (b) (c) of this clause; provided, however, that the Contractor (i) is not required to extend credit to any purchaser and (ii) may acquire the property under the conditions prescribed by, and at prices approved by, the Contracting Officer. The proceeds of any transfer or disposition will be applied to reduce any payments to be made by the Government under this contract, credited to the price or cost of the work, or paid in any other manner directed by the Contracting Officer. 00700-112 (c) The Contractor shall submit complete termination inventory schedules no later than 120 days from the effective date of termination, unless extended in writing by the Contracting Officer upon written request of the Contractor within this 120-day period. (d) After expiration of the plant clearance period as defined in Subpart 45.6 of the Federal Acquisition Regulation, the Contractor may submit to the Contracting Officer a list, certified as to quantity and quality, of termination inventory not previously disposed of, excluding items authorized for disposition by the Contracting Officer. The Contractor may request the Government to remove those items or enter into an agreement for their storage. Within 15 days, the Government will accept title to those items and remove them or enter into a storage agreement. The Contracting Officer may verify the list upon removal of the items, or if stored, within 45 days from submission of the list, and shall correct the list, as necessary, before final settlement. (e) After termination, the Contractor shall submit a final termination settlement proposal to the Contracting Officer in the form and with the certification prescribed by the Contracting Officer. The Contractor shall submit the proposal promptly, but no later than 1 year from the effective date of termination, unless extended in writing by the Contracting Officer upon written request of the Contractor within this 1 year period. However, if the Contracting Officer determines that the facts justify it, a termination settlement proposal may be received and acted on after 1 year or any extension. If the Contractor fails to submit the proposal within the time allowed, the Contracting Officer may determine, on the basis of information available, the amount, if any, due the Contractor because of the termination and shall pay the amount determined. (f) Subject to paragraph (e) of this clause, the Contractor and the Contracting Officer may agree upon the whole or any part of the amount to be paid or remaining to be paid because of the termination. The amount may include a reasonable allowance for profit on work done. However, the agreed amount, whether under this paragraph (f) or paragraph (g) of this clause, exclusive of costs shown in subparagraph (g) (3) of this clause, may not exceed the total contract price as reduced by (1) the amount of payments previously made and (2) the contract price of work not terminated. The contract shall be modified, and the Contractor paid the agreed amount. Paragraph (g) of this clause shall not limit, restrict, or affect the amount that may be agreed upon to be paid under this paragraph. (g) If the Contractor and Contracting Officer fail to agree on the whole amount to be paid the Contractor because of the termination of work, the Contracting Officer shall pay the Contractor the amounts determined as 00700-113 follow, but without duplication of any amounts agreed upon under paragraph (f) of this clause: (1) For contract work performed before the effective date of termination, the total (without duplication of any items) of-- (i) The cost of this work; (ii) The cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated portion of the contract if not included in subdivision (g) (1) (1) of this clause; and (iii) A sum, as profit on subdivision (g) (1) (1) of this clause, determined by the Contracting Officer under 49.202 of the Federal Acquisition Regulation, in effect on the date of this contract, to be fair and reasonable; however, if it appears that the Contractor would have sustained a loss on the entire contract had it been completed, the Contracting Officer shall allow no profit under this subdivision (iii) and shall reduce the settlement to reflect the indicated rate of loss. (2) The reasonable costs of settlement of the work terminated, including-- (i) Accounting, legal, clerical, and other expenses reasonably necessary for the preparation of termination settlement proposals and supporting data; (ii) The termination and settlement of subcontracts (excluding the amounts of such settlements), and (iii) Storage, transportation, and other costs incurred, reasonably necessary for the preservation, protection, or disposition of the termination inventory. (h) Except for normal spoilage, and except to the extent that the Government expressly assumed the risk of loss, the Contracting Officer shall exclude from the amounts payable to the Contractor under paragraph (g) of this clause, the fair value, as determined by the Contracting Officer, of property that is destroyed, lost, stolen, or damaged so as to become undeliverable to the Government or to a buyer. (i) The cost principles and procedures of Part 31 of the Federal Acquisition Regulation, in effect on the date of this contract, shall govern all costs claimed, agreed to, or determined under this clause. (j) The Contractor shall have the right of appeal, under the Disputes clause, from any determination made by the Contracting Officer under paragraph (e), (g), or (1) of this clause, except that if the Contractor failed to submit the termination settlement proposal or request for equitable adjustment within the time provided in paragraph (e) or (l), respectively, and failed to request a time extension, there is no right of 00700-114 appeal. (k) In arriving at the amount due the Contractor under this clause, there shall be deducted-- (1) All unliquidated advance or other payments to the Contractor under the terminated portion of this contract; (2) Any claim which the Government has against the Contractor under this contract; and (3) The agreed price for, or the proceeds of sale of, materials, supplies, or other things acquired by the Contractor or sold under the provisions of this clause and not recovered by or credited to the Government. (l) If the termination is partial, the Contractor may file a proposal with the Contracting Officer for an equitable adjustment of the price(s) of the continued portion of the contract. The Contracting Officer shall make any equitable adjustment agreed upon. Any proposal by the Contractor for an equitable adjustment under this clause shall be requested within 90 days from the effective date of termination unless extended in writing by the Contracting Officer. (m) (1) The Government may, under the terms and conditions it prescribes, make partial payments and payments against costs incurred by the Contractor for the terminated portion of the contract, if the Contracting Officer believes the total of these payments will not exceed the amount to which the Contractor will be entitled. (2) If the total payments exceed the amount finally determined to be due, the Contractor shall repay the excess to the Government upon demand, together with interest computed at the rate established by the Secretary of the Treasury under 50 U.S.C. App. 1215(b)(2). Interest shall be computed for the period from the date the excess payment is received by the Contractor to the date the excess is repaid. Interest shall not be charged on any excess payment due to a reduction in the Contractor's termination settlement proposal because of retention or other disposition, or a later date determined by the Contracting Officer because of the circumstances. (n) Unless otherwise provided in this contract or by statute, the Contractor shall maintain all records and documents relating to the terminated portion of this contract for 3 years after final settlement. This includes all books and other evidence bearing on the Contractor's costs and expenses under this contract. The Contractor shall make these records and documents available to the Government, at the Contractor's office, at all reasonable times, without any direct charge. If approved 00700-115 by the Contracting Officer, photographs, microphotographs, or other authentic reproductions may be maintained instead of original records and documents. (End of clause) 78 52.249-10 DEFAULT (FIXED-PRICE CONSTRUCTION) (APR 1984) (a) If the Contractor refuses or fails to prosecute the work or any separable part, with the diligence that will insure its completion within the time specified in this contract including any extension, or fails to complete the work within this time, the Government may, be written notice to the Contractor, terminate the right to proceed with the work (or the separable part of the work) that has been delayed. In this event, the Government may take over the work and complete it by contract or otherwise, and may take possession of and use any materials, appliances, and plant on the work site necessary for completing the work. The Contractor and its sureties shall be liable for any damage to the Government resulting from the Contractor's refusal or failure to complete the work within the specified time, whether or not the Contractor's right to proceed with the work is terminated. This liability includes any increased costs incurred by the Government in completing the work. (b) The Contractor's right to proceed shall not be terminated nor the Contractor charged with damages under this clause, if- (1) The delay in completing the work arises from unforeseeable causes beyond the control and without the fault or negligence of the Contractor. Examples of such causes include (i) acts of God or of the public enemy, (ii) acts of the Government in either its sovereign or contractual capacity, (iii) acts of another Contractor in the performance of a contract with the Government, (iv) fires, (v) floods, (vi) epidemics, (vii) quarantine restrictions, (viii) strikes, (ix) freight embargoes, (x) unusually severe weather, or (xi) delays of subcontractors or suppliers at any tier arising from unforeseeable causes beyond the control and without the fault or negligence of both the Contractor and the subcontractors or suppliers; and (2) The Contractor, within 10 days from the beginning of any delay (unless extended by the Contracting Officer), notifies the Contracting Officer in writing of the causes of delay. The Contracting Officer shall ascertain the facts and the extent of delay. If, in the judgment of the Contracting Officer, the findings of fact warrant such action, the time for completing the work shall be extended. The findings of the 00700-116 Contracting Officer shall be final and conclusive on the parties, but subject to appeal under the disputes clause. (c) If, after termination of the Contractor's right to proceed, it is determined that the Contractor was not in default, or that the delay was excusable, the rights and obligations of the parties will be the same as if the termination had been issued for the convenience of the Government. (d) The rights and remedies of the Government in this clause are in addition to any other rights and remedies provided by law or under this contract. (End of clause) 79 52.252-8 AUTHORIZED DEVIATIONS IN CLAUSES (APR 1994) (a) The use in this solicitation or contract of any Federal Acquisition Regulation (48 CFR Chapter 1) clause with an authorized deviation is indicated by the addition of "(DEVIATION)" after the date of the clause. (b) The use in this solicitation or contract of any ___________ (48 CFR _________) clause with an authorized deviation is indicated by the addition of "(DEVIATION)" after the name of the regulation. (End of clause) (NM) 80 52.253-1 COMPUTER GENERATED FORMS (JAN 1991) (a) Any data required to be submitted on a Standard or Optional Form prescribed by the Federal Acquisition Regulation (FAR) may be submitted on a computer generated version of the form provided there is no change to the name, content, or sequence of the data elements on the form, and provided the form carries the Standard of Optional Form number and edition date. (b) Unless prohibited by agency regulations, any date required to be submitted on an agency unique form prescribed by an agency supplement to the FAR may be submitted on a computer generated version of the form provided there is no change to the name, content, or sequence of the data elements on the form and provided the form carries the agency form number and edition date. (c) If the Contractor submits a computer generated version of a form that is different than the required form, then the rights and obligations of the parties will be determined based on the content of the required 00700-117 form. (End of clause) 81 252.201-7000 CONTRACTING OFFICER'S REPRESENTATIVE (DEC 1991) (a) Definition. "Contracting Officer's representative" means an individual designated in accordance with subsection 201.602-2 of the Defense Federal Acquisition Regulation Supplement and authorized in writing by the Contracting Officer to perform specific technical or administrative functions. (b) If the Contracting Officer designated a contracting officer's representative (COR), the Contractor will receive a copy of the written designation. It will specify the extent of the COR's authority to act on behalf of the Contracting Officer. The COR is not authorized to make any commitments or changes that will affect price, quality, quantity, delivery, or any other term or condition of the contract. (End of clause) 82 252.203-7001 SPECIAL PROHIBITION ON EMPLOYMENT (NOV 1995) (a) Definitions. As used in this clause-- (1) "Arising out of a contract with the DoD" means any act in connection with-- (i) Attempting to obtain, (ii) Obtaining, or (iii) Performing a contract or first-tier subcontract of any agency, department, or component of the Department of Defense (DoD). (2) "Conviction of fraud or any other felony" means any conviction for fraud or a felony in violation of state or Federal criminal statutes, whether entered on a verdict or plea, including a plea of nolo contendare, for which sentence has been imposed. (3) "Date of conviction" means the date the judgment was entered against the individual. (b) 10 U.S.C. 2408 provides that any individual who is convicted after September 29, 1988, of fraud or any other felony arising out of a contract with the DoD is prohibited from: (1) Working in a management or supervisory capacity on any DoD contract or first-tier subcontract; 00700-118 (2) Serving on the board of directors of any DoD Contractor or first-tier subcontractor; or (3) Serving as a consultant to any DoD Contractor or first-tier subcontractor. (c) Unless waived, the prohibition in paragraph (b) applies for five years from the date of conviction. (d) 10 U.S.C. 2408 further provides that a defense Contractor or first-tier subcontractor shall be subject to a criminal penalty of not more than $500,000 if convicted of knowingly-- (1) Employing a person under a prohibition specified in paragraph (b) of this clause; or (2) Allowing such person to serve on the board of directors of the Contractor or first-tier subcontractor. (e) In addition to the criminal penalties contained in 10 U.S.C. 2408, the Government may consider other available remedies, such as-- (1) Suspension or debarment; (2) Cancellation of the contract at no cost to the Government; or (3) Termination of the contract for default. (f) The Contractor may submit written requests for waiver of the prohibitions in paragraph (b) of this clause to the Contracting Officer. Requests shall clearly identify-- (1) The person involved; (2) The nature of the conviction and resultant sentence or punishment imposed; (3) The reasons for the requested waiver; and, (4) An explanation of why a waiver is in the interest of national security. (g) The Contractor agrees to include the substance of this clause, appropriately modified to reflect the identity and relationship of the parties, in all first-tier subcontracts exceeding the simplified acquisition threshold in Part 13 of the Federal Acquisition Regulation, except those for commercial items or components. (h) Pursuant to 10 U.S.C. 2408(c), defence contractors and subcontractors may obtain information as to whether a particular person has been convicted of fraud or any other felony arising out of a contract with the DoD by contacting The Office of Justice Programs, The Denial of Benefits Office, U.S. Department of Justice, telephone (202) 307-1065. (End of clause) 83 252.203-7002 DISPLAY OF DOD HOTLINE POSTER (DEC 1991) 00700-119 (a) The Contractor shall display prominently in common work areas within business segments performing work under Department of Defence (DoD) contracts, DoD Hotline Posters prepared by the DoD Office of the Inspector General. (b) DoD Hotline Posters may be obtained from the DoD Inspector General, ATTN: Defense Hotline, 400 Army Navy Drive, Washington, DC 22202-2684. (c) The Contractor need not comply with paragraph (a) of this clause if it has established a mechanism, such as a hotline, by which employees may report suspected instances of improper conduct, and instructions that encourage employees to make such reports. [End of clause) 84 252.204-7000 DISCLOSURE OF INFORMATION (DEC 1991) (a) The Contractor shall not release to anyone outside the Contractor's organization any unclassified information, regardless of medium (e.g., film, tape, document), pertaining to any part of this contract or any program related to this contract, unless-- (1) The Contracting Officer has given prior written approval; or (2) The information is otherwise in the public domain before the date of release. (b) Requests for approval shall identify the specific information to be released, the medium to be used, and the purpose for the release. The Contractor shall submit its request to the Contracting Officer at least 45 days before the proposed date for release. (e) The Contractor agrees to include a similar requirement in each subcontract under this contract. Subcontractors shall submit requests for authorization to release through the prime Contractor to the Contracting Officer. (End of clause) 85 252.204-7003 CONTROL OF GOVERNMENT PERSONNEL WORK PRODUCT (APR 1992) The Contractor's procedures for protecting against unauthorized disclosure of information shall nor require Department of Defence employees or members of the Armed Forces to relinquish control of their work products, whether classified or not, to the Contractor. (End of clause) 00700-120 86 252.205-7000 PROVISION OF INFORMATION TO COOPERATIVE AGREEMENT HOLDERS (DEC 1991) (a) Definition. "Cooperative agreement holder" means a State or local government; a private, nonprofit organization; a tribal organization (as defined in section 4(c) of the Indian Self-Determination and Education Assistance Act (Pub. L. 93-268; 25 U.S.C. 450(c))); or an economic enterprise (as defined in section 3(a) of the Indian Financing Act of 1974 (Pub. L. 93-362; 25 U.S.C. 1452(e))) whether such economic enterprise is organized for profit or nonprofit purposes; which has an agreement with the Defence Logistics Agency to furnish procurement technical assistance to business entities. (b) The Contractor shall provide cooperative agreement holders, upon their request, with a list of those appropriate employees or offices responsible for entering into subcontracts under defence contracts. The list shall include the business address, telephone number, and area of responsibility of each employee or office. (c) The Contractor need not provide the listing to a particular cooperative agreement holder more frequently than once a year. (End of clause) 87 252.209-7000 ACQUISITION FROM SUBCONTRACTORS SUBJECT TO ON-SITE INSPECTION UNDER THE INTERMEDIATE-RANGE NUCLEAR FORCES (INF) TREATY (NOV 1995) (a) The Contractor shall not deny consideration for a subcontract award under this contract to a potential subcontractor subject to on-site inspection under the INF Treaty, or a similar treaty, solely or in part because of the actual or potential presence of Soviet inspectors at the subcontractor's facility, unless the decision is approved by the Contracting Officer. (b) The Contractor shall incorporate this clause, including this paragraph (b), in all solicitations and contracts exceeding the simplified acquisition threshold in Part 13 of the Federal Acquisition Regulation, except those for commercial items. (End of clause) 88 252.209-7004 REPORTING OF COMMERCIAL TRANSACTIONS WITH THE GOVERNMENT OF A TERRORIST 00700-121 COUNTRY (SEP 1994) (a) Definitions. As used in this clause-- (1) "Government of a terrorist country" includes the state and the government of a terrorist country, as well as any political subdivision, agency, or instrumentality thereof. (2) "Terrorist country" means a country determined by the Secretary of State, under section 6(j) (1) (A) of the Export Administration Act of 1979 (50 U.S.C. App. 2405 (j) (i) (A)), as of 60 days before the contract award date, to be a country the government of which has repeatedly provided support for acts of international terrorism. As of the date of this clause, terrorist countries include: Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria. (b) Reporting. (1) In accordance with section 843 of the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 103-160), if this contract exceeds $5,000,000, the Contractor shall report each commercial transaction that it conducts with the government of a terrorist country during the period of performance of this contract (but not beyond September 30, 1996). (2) This reporting requirement does not apply to-- (i) Transactions conducted by affiliates of subsidiaries of the Contractor; a (ii) Payment or receipt of payment of a judgment or award ordered by a court or arbitral tribunal of competent jurisdiction. (3) The Contractor shall submit reports in the following format: Title of Report: Report of Commercial Transactions with the Government of a Terrorist Country Date of Report: Contract Number: Contractor's Name and Address: Name and Telephone Number of Individual Submitting Report: Commercial Transactions with the Government of a Terrorist Country: Country Nature of Commercial Transaction ________________ ___________________________________________ ________________ ___________________________________________ 00700-122 (4) The Contractor shall submit reports annually by September 30, but not beyond September 30, 1996. Each report shall include transactions conducted during the preceding one-year period of contract performance. (5) The Contractor shall submit reports to: Deputy Director of Defense Procurement (Foreign Contracting), OUSD (A&T) DF (FC), Washington, DC 20301-3060. (End of clause) 89 252.219-7003 SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED SMALL BUSINESS SUBCONTRACTING PLAN (DoD CONTRACTS) (APR 1996) This clause supplements the Federal Acquisition Regulation 52.219-9, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan, clause of this contract. (a) Definitions. "Historically black colleges and universities," as used in this clause, means institutions determined by the Secretary of Education to meet the requirements of 34 CFR 608.2. The term also means any nonprofit research institution that was an integral part of such a college or university before November 14, 1986. "Minority institutions," as used in this clause, means institutions meeting the requirements of section 1046(3) of the Higher Education Act of 1965 (20 U.S.C. 113Sd-5(3)). The term also includes Hispanic-serving institutions as defined in section 316(b)(1) of such Act (20 U.S.C. 1059c(b)(1)). (b) Except for company or division-wide commercial items subcontracting plans, the term "small disadvantaged business," when used in the FAR 52.219-9 clause, includes historically black colleges and universities and minority institutions, in addition to small disadvantaged business concerns. (c) Work under the contract or its subcontracts shall be credited toward meeting the small disadvantaged business concern goal required by paragraph (d) of the FAR 52.219-9 clause when: (1) It is performed on Indian lands or in joint venture with an Indian tribe or a tribally-owned corporation, and (2) It meets the requirements of 10 U.S.C. 2323a. (d) Subcontracts awarded to workshops approved by the Committee for Purchase from People Who are Blind or Severely Disabled (41 U.S.C. 46-48), may be counted toward the Contractor's small business subcontracting goal, (e) A mentor firm, under the Pilot Mentor-Protege Program established under Section 831 of Pub. L. 101-510, as amended, may count toward its small disadvantaged business goal, subcontracts awarded -- (1) Protege firms which are qualified organizations employing the severely handicapped; and (2) Former protege firms that meet the criteria in Section 831(g)(4) of Pub. L. 101-510. (f) The master plan approval referred to in paragraph (f) of the FAR 52.219-9 clause is approval by the Contractor's cognisant contract administration activity. (g) In those subcontracting plans which specifically identify small, small disadvantaged, and women-owned small businesses, the Contractor shall notify the Administrative Contracting Officer of any substitutions of firms that are not small, small disadvantaged, or women-owned small businesses for the firms listed in the subcontracting plan. Notifications shall be in writing and shall occur within a reasonable period of time after award of the subcontract. Contractor-specified formats shall be acceptable. (End of clause) 90 252.223-7004 DRUG-FREE WORK FORCE (SEP 1988) (a) Definitions. (1) "Employee in a sensitive position," as used in this clause, means an employee who has been granted access to classified information; or employees in other positions that the Contractor determines involve national security, health or safety, or functions other than the foregoing requiring a high degree of trust and confidence. (2) "Illegal drugs," as used in this clause, means controlled substances included in Schedules I and II, as defined by section 802(G) of Title 21 of the United States Code, the possession of which is unlawful under Chapter 13 of that Title. The term "illegal drugs" does not mean the use of a controlled substance pursuant to a valid prescription or other uses authorized by law. (b) The Contractor agrees to institute and maintain a program for achieving the objective of a drug-free work force. While this clause defines criteria for such a program, contractors are encouraged to implement alternative approaches comparable to the criteria in paragraph (c) that are designed to achieve the objectives of this clause. (c) Contractor programs shall include the following, or appropriate alternatives; (1) Employee assistance programs emphasizing high level direction, 00700-124 education, counseling, rehabilitation, and coordination with available community resources; (2) Supervisory training to assist in identifying and addressing illegal drug use by Contractor employees; (3) Provision for self-referrals as well as supervisory referrals to treatment with maximum respect for individual confidentiality consistent with safety and security issues; (4) Provision for identifying illegal drug users, including testing on a controlled and carefully monitored basis. Employee drug testing programs shall be established taking account of the following: (i) The Contractor shall establish a program that provides for testing for the use of illegal drugs by employees in sensitive positions. The extent of and criteria for such testing shall be determined by the Contractor based on considerations that include the nature of the work being performed under the contract, the employee's duties, the efficient use of Contractor resources, and the risks to health, safety, or national security that could result from the failure of an employee adequately to discharge his or her position. (ii) In addition, the Contractor may establish a program for employee drug testing-- (A) When there is a reasonable suspicion that an employee uses illegal drugs; or (B) When an employee has been involved in an accident or unsafe practice: (C) As part of or as a follow-up to counseling or rehabilitation for illegal drug use; (D) As part of a voluntary drug testing program. (iii) The Contractor may establish a program to test applicants for employment for illegal drug use. (iv) For the purpose of administering this clause, testing for illegal drugs may be limited to those substances for which testing is prescribed by section 2.1 of Subpart B of the "Mandatory Guidelines for Federal Workplace Drug Testing Programs" (53 FR 11980 (April 11 1988)), issued by the Department of Health and Human Services. (d) Contractors shall adopt appropriate personnel procedures to deal with employees who are found to be using drugs illegally. Contractors shall not allow any employee to remain on duty or perform in a sensitive position who is found to use illegal drugs until such time as the Contractor, in accordance with procedures established by the Contractor, determines that the employee may perform in such a position. (e) The provisions of this clause pertaining to drug testing programs 00700-125 shall not apply to the extent they are inconsistent with state or local law, or with an existing collective bargaining Agreement, provided that with respect to the latter, the Contractor agrees that those issues that are in conflict will be a subject of negotiation at the next collective bargaining session. [End of clause] 91 252.225-7007 TRADE AGREEMENTS (JUL 1996) (a) Definitions. (1) "Caribbean Basin country end product"-- (i) Means an article that-- (A) Is wholly the growth, product, or manufacture of a Caribbean Basin country (as defined in section 25.401 of the FAR); or (B) Has, in the case of an article which consists in whole or in part of materials from another country or instrumentality, been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. The term includes services (except transportation services) incidental to its supply, provided that the value of those incidental services does not exceed the value of the product itself. It does not include service contracts as such. (ii) Excludes products, other than petroleum and any product derived from petroleum, that are not granted duty-free treatment under the Caribbean Basin Economic Recovery Act (19 U.S.C. 2703 (b)). These exclusions presently consist of-- (A) Textiles and apparel articles that are subject to textile agreements; (B) Footwear, handbags, luggage, flat goods, work gloves, and leather wearing apparel not designated as eligible articles for the purpose of the Generalized System of Preferences under Title V of the Trade Act of 1974; (C) Tuna, prepared or preserved in any manner in airtight containers; and (D) Watches and watch parts (including cases, bracelets, and straps) of whatever type, including, but not limited to, mechanical, quartz digital, or quartz analog, if such watches or watch parts contain any material which is the product of any country to which Harmonized Tariff Schedule column 2 rates of duty apply. 00700-126 (2) "Components," "domestic end product," "end product," "nonqualifying country," "qualifying country," and "qualifying country end product" have the meanings given in the Buy American Act and Balance of Payments Program clause of this contract. (3) "Designated country" means: Aruba Japan Austria Lesotho Bangladesh Liechtenstein Belgium Luxembourg Benin Malawi Bhutan Maldives Botswana Mali Burkino Faso Nepal Burundi Netherlands Canada Niger Cape Verde Norway Central African Republic Portugal Chad Republic of Korea Comoros Rwanda Denmark Singapore Finland Somalia France Spain Gambia Sudan Germany Sweden Greece Switzerland Guinea Tanzania U.R. Haiti Uganda Ireland United Kingdom Israel Western Samoa Italy Yemen (4) "Designated country end product" means an article that-- (i) Is wholly the growth, product, or manufacture of the designated country; or (ii) Has, in the case of an article which consists in whole or in part of materials from another country or instrumentality, been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. The term includes services (except transportation services) incidental to its supply, provided that the value of those incidental services does not exceed the value 00700-127 of the product itself. It does not include service contracts as such. (5) "NAFTA country end product" means an article that-- (i) Is wholly the growth, product, or manufacture of the NAFTA country; or (ii) Has, in the case of an article which consists in whole or in part of materials from another country or instrumentality, been substantially transformed in a NAFTA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. The term includes services (except transportation services) incidental to its supply, provided that the value of those incidental services does not exceed the value of the product itself. It does not include service contracts as such. (6) "North American Free Trade Agreement (NAFTA) country" means Canada or Mexico. (7) "Nondesignated country end product" means any end product which is not a U.S. made end product or a designated country end product. (8) "United States" means the United States, its possessions, Puerto Rico and any other place subject to its jurisdiction, but does not include leased bases or trust territories. (9) "U.S. made end product" means an article which is-- (i) Wholly the growth, product or manufacture of the United States, or (ii) In the case of an article which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed in the United States into a new and distinct article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. (b) This clause implements the Trade Agreements Act of 1979 (19 U.S.C. 2501 et seq.), the North American Free Trade Agreement Implementation Act of 1993, and the Caribbean Basin Initiative by providing a preference for U.S. made end products and designated country end products over nondesignated country end products, except nondesignated country end products which are qualifying country end products, NAFTA country end products, or Caribbean Basin end products. (c) The Contractor agrees to deliver under this contract only U.S. made end products unless, in its offer. It specified delivery of qualifying country, designated country, NAFTA country, or nondesignated country end products in the Buy American Act--Trade Agreements--Balance of Payments Program Certificate provision. (1) Offerors may not supply a nondesignated country end product 00700-128 unless-- (i) It is a qualifying country end product, Caribbean Basin country end product, or a NAFTA country end product; (ii) The contracting Officer has determined that offers of U.S. made end products or qualifying, designated, NAFTA, or Caribbean Basin Country end products from responsive, responsible offerors are either not received or are insufficient to fill the Government's requirements; or (iii) A national interest waiver has been granted under section 302 of the Trade Agreements Act of 1979 (see FAR 2S.402(c)). (2) An offer certifying that a qualifying country end product, a designated country and product, a NAFTA country end product, or a Caribbean Basin country end product will be supplied requires the Contractor to supply a qualifying country end product, a designated country end product, a NAFTA country end product, or a Caribbean Basin country end product, whichever is certified, or, at the Contractor's option, a U.S. made end product. (d) The offered price of end products listed and certified under paragraphs (c) (2) (i) and (vi) of the Buy American Act--Trade Agreements-- Balance of Payments Program Certificate provision of the solicitation must include all applicable duty. The offered price of qualifying country end products, designated country end products, NAFTA country end products, and Caribbean Basin country end products for line items subject to the Trade Agreements Act or the North American Free Trade Agreement Implementation Act, should not include custom fees or duty. (End of clause) 92 252.225-7012 PREFERENCE FOR CERTAIN DOMESTIC COMMODITIES (NOV 1995) (a) The Contractor agrees to deliver under this contract only such of the following articles that have been grown, reprocessed, reused, or produced in the United States, its possessions, or Puerto Rico-- (1) Food; (2) Clothing; (3) Tents, tarpaulins, or covers; (4) Cotton and other natural fiber products; (5) Woven silk or woven silk blends; (6) Spun silk yarn for cartridge cloth; (7) Synthetic fabric, and coated synthetic fabric; (8) Canvas products; 00700-129 (9) Wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles); or (10) Any item of individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials. (b) This clause does not apply-- (1) To supplies listed in FAR 25.108(d)(1), or other supplies for which the Government has determined that a satisfactory quality and sufficient quantity cannot be acquired as and when needed at U.S. market prices; (2) To foods which have been manufactured or processed in the United States, its possessions, or Puerto Rico; (3) To chemical warfare protective clothing produced in the countries listed in subsection 225.872-1 of the Defense FAR Supplement; or (4) To commercial items or components purchased from subcontractors or suppliers. (End of clause) 93 252.225-7026 REPORTING OF CONTRACT PERFORMANCE OUTSIDE THE UNTIED STATES (NOV 1995) (a) Reporting criteria. Reporting under this clause is required for-- (1) Offers exceeding $10 million, if the Offeror is aware at the time the offer is submitted that it or its first-tier subcontractor intends to perform any part of the contract that exceeds $500,000 outside the United States and Canada, if that part could be performed inside the United States or Canada; (2) Contracts exceeding $10 million, when any part that exceeds $500,000 could be performed inside the United States or Canada, but will be performed outside the United States and Canada. If the information was submitted with the offer, it need not be resubmitted unless it changes; and (3) Contracts exceeding $500,000, when any part that exceeds $25,000 will be performed outside the United States, unless a foreign place of performance is-- (i) The principal place of performance; and (ii) Indicated by the Offeror's entry in the Place of Performance provision of the solicitation. (b) Submission of reports. (1) The Offeror shall submit reports required by paragraph (a)(1) of this clause with its offer. (2) The Contractor shall submit reports required by paragraph (a)(2) of 00700-130 this clause to the Contracting Officer as soon as the information is known, with a copy to the addressee in paragraph (b) (3) of this clause. With respect to performance by a first-tier subcontractor, this information shall be reported, to the maximum extent practicable, at least 30 days before award of the subcontract. (3) The Contractor shall submit reports required by paragraph (a) (3) of this clause within 10 days of the end of each Government quarter to-- Deputy Director of Defense Procurement (Foreign Contracting) OUSD (A&T) DP (FC) Washington, DC 20301-3060 (4) The Offeror/Contractor shall submit reports on DD Form 2139, Report of Contract Performance Outside the United States. Computer- generated reports are acceptable, provided the report contains all information required by DD Form 2139. Copies of DD Form 2139 may be obtained from the Contracting Officer. (c) Flowdown requirements. (1) The Contractor shall include a clause substantially the same as this one in all first-tier subcontracts exceeding $100,00, except subcontracts for commercial items, construction, ores, natural gases, utilities, petroleum products and crudes, timber (logs), or subsistence. (2) The Contractor shall provide the prime contract number to subcontractors for reporting purposes. (d) Information required. Information to be reported on the part of this contract performed outside the United States (or outside the United States and Canada for reports required by paragraphs (a) (1) and (a) (2) of this clause) includes that for-- (i) Subcontracts; (ii) Purchases; and (iii) Intracompany transfers when transfers originate in a foreign location. (End of clause) 94 252.225-7031 SECONDARY ARAB BOYCOTT OF ISRAEL (JUN 1992) (a) Definitions. As used in this clause-- (1) "Foreign person" means any person other than a United States person as defined in section 16(2) of the Export Administration Act of 1979 (50 U.S.C. App. Sec 2415). 00700-131 (2) "United States person" is defined in section 15(2) of the Export Administration Act of 1979 and means any United States resident or national (other than an individual resident outside the United States and employed by other than a United States person), any domestic concern (including any permanent domestic establishment of any foreign concern), and any foreign subsidiary or affiliate (including any permanent foreign establishment) of any domestic concern which is controlled in fact by such domestic concern, as determined under regulations of the President. (b) Certification. By submitting this offer, the Offeror, if a foreign person, company or entity, certifies that it-- (1) Does not comply with Secondary Arab Boycott of Israel; and (2) Is not taking or knowingly agreeing to take any action, with respect to the Secondary Boycott of Israel by Arab countries, which 50 U.S.C. App. Sec 2407(a) prohibits a United States person from taking. (End of clause) 95 252.225-7036 NORTH AMERICAN FREE TRADE AGREEMENT IMPLEMENTATION ACT (JAN 1994) (a) Definitions. (1) "Components," "domestic end product," "end product," "nonqualifying country," "qualifying country," and "qualifying country end product" have the meanings given in the Buy American Act and Balance of Payments Program clause of this contract. (2) "North American Free Trade Agreement (NAFTA) country" means Canada or Mexico. (3) "NAFTA country end product" means an article that-- (i) Is wholly the growth, product, or manufacture of a NAFTA country; or (ii) Has, in the case of an article which consists in whole or in part of materials from another country or instrumentality, been substantially transformed in a NAFTA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. The term includes services (except transportation services) incidental to its supply, provided that the value of those incidental services does not exceed the value of the product itself. It does not include service contracts as such (4) "Non-NAFTA country end product" means any end product which is not a U.S. trade end product or a NAFTA country end product. 00700-132 (5) "United States" means the United States, its designated possessions, Puerto Rico, and any other place subject to its jurisdiction, but does not include leased bases or trust territories. (6) "U.S. made end product" means an article which is-- (i) Wholly the growth, product or manufacture of the United States, or (ii) In the case of an article which consists in whole or in part of materials from another country or instrumentality, has been substantially transformed in the United States into a new and distinct article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. (b) This clause implements the North American Free Trade Agreement Implementation Act of 1993 by providing a preference for U.S. made end products and NAFTA country end products over non-NAFTA country end products, except non-NAFTA country end products which are qualifying country end products. (c) The Contractor agrees to deliver under this contract only U.S. made end products unless, in its offer, it specified delivery of qualifying country, NAFTA country, or non-NAFTA country end products in the Buy American Act--North American Free Trade Agreement Implementation Act-- Balance of Payments Program Certificate provision. An offer certifying that a qualifying country end product or a NAFTA country end product will be supplied requires the Contractor to supply a qualifying country end product or a NAFTA country end product, whichever is certified, or, at the Contractor's option, a U.S. made end product. (d) The offered price of end products listed and certified under paragraphs (c) (2) (i) and (iv) of the Buy American Act--North American Free Trade Agreement Implementation Act--Balance of Payments Program Certificate provision of the solicitation must include all applicable duty. The offered price of qualifying country end products or NAFTA country end products for line items subject to the North American Free Trade Agreement Implementation Act, should not include custom fees or duty. (End of clause) 96 252.227-7000 NON-ESTOPPEL (OCT 1966) The Government reserves the right at any time to contest the enforceability, validity, scope of, or the title to any patent or patent application herein licensed without waiving or forfeiting any right under this contract. 00700-133 (End of clause) 97 252.227-7022 GOVERNMENT RIGHTS (UNLIMITED) (MAR 1979) The Government shall have unlimited rights, in all drawings, designs, specifications, notes and other works developed in the performance of this contract, including the right to use same on any other Government design or construction without additional compensation to the Contractor. The Contractor hereby grants to the Government a paid-up license throughout the world to all such works to which he may assert or establish any claim under design patent or copyright laws. The Contractor for a period of three (3) years after completion of the project agrees to furnish the original or copies of all such works on the request of the Contracting Officer. (End of clause) 98 252.227-7023 DRAWINGS AND OTHER DATA TO BECOME PROPERTY OF GOVERNMENT (MAR 1979) All designs, drawings, specifications, notes and other works developed in the performance of this contract shall become the sole property of the Government and may be used on any other design or construction without additional compensation to the Contractor. The Government shall be considered the "person for whom the work was prepared" for the purpose of authorship in any copyrightable work under 17 U.S.C. 201(b). With respect thereto, the Contractor agrees not to assert or authorize others to assert any rights nor establish any claim under the design patent or copyright laws. The Contractor for a period of three (3) years after completion of the project agrees to furnish all retained works on the request of the Contracting Officer. Unless otherwise provided in this contract, the Contractor shall have the right to retain copies of all works beyond such period. (End of clause) 99 252.227-7033 RIGHTS IN SHOP DRAWINGS (APR 1966) (a) Shop drawings for construction means drawings, submitted to the Government by the Construction Contractor, subcontractor or any lower-tier subcontractor pursuant to a construction contract, showing in detail (i) the proposed fabrication and assembly of structural elements and (ii) the 00700-134 installation (i.e., form, fit, and attachment details) of materials or equipment. The Government may duplicate, use, and disclosure in any manner and for any purpose shop drawings delivered under this contract. (b) This clause, including this paragraph (b), shall be included in all subcontracts hereunder at any tier. (End of clause) 100 252.231-7000 SUPPLEMENTAL COST PRINCIPLES (DEC 1991) When the allowability of costs under this contract is determined in accordance with Part 31 of the Federal Acquisition Regulation (FAR), allowability shall also be determined in accordance with Part 231 of the Defense FAR Supplement, in effect on the date of this contract. (End of clause) 101 252.232-7006 REDUCTION OR SUSPENSION OF CONTRACT PAYMENTS UPON FINDING OF FRAUD (1992) (a) 10 U.S.C. 2307(e) permits the head of the agency to reduce or suspend further payments to the Contractor upon a written determination by the agency head that substantial evidence exists that the Contractor's request for advance, partial, or progress payments is based on fraud. The provisions of 10 U.S.C. 2307(e) are in addition to any other rights or remedies provided the Government by law or under contract. (b) Actions taken by the Government in accordance with 10 U.S.C. 2307(e) shall not constitute an excusable delay under the Default clause of this contract or otherwise relieve the Contractor of its obligations to perform under this contract. (End of clause) 102 252.236-7000 MODIFICATION PROPOSALS -- PRICE BREAKDOWN (DEC 1991) (a) The Contractor shall furnish a price breakdown, itemized as required an within the time specified by the Contracting Officer, with any proposal for a contract modification. (b) The price breakdown-- (1) Must include sufficient detail to permit an analysis of profit, and of all costs for-- 00700-135 (i) Material; (ii) Labor; (iii) Equipment; (iv) Subcontracts; and (v) Overhead; and (2) Must cover all work involved in the modification, whether the work was deleted, added, or changed. (c) The Contractor shall provide similar price breakdowns to support any amounts claimed for subcontracts. (d) The Contractor's proposal shall include a justification for any time extension proposed. (End of clause) 103 252.236-7008 CONTRACT PRICES--BIDDING SCHEDULES (DEC 1991) (a) The Government's payment for the items listed in the Bidding Schedule shall constitute full compensation to the Contractor for-- (1) Furnishing all plant, labor, equipment, appliances, and materials; and (2) Performing all operations required to complete the work in conformity with the drawings and specifications. (b) The contractor shall include in the prices for the items listed in the Bidding schedule all costs for work in the specifications, whether or not specifically listed in the Bidding Schedule. (End of provision) 104 252.242-7000 POSTAWARD CONFERENCE (DEC 1991) The Contractor agrees to attend any postaward conference convened by the contracting activity or contract administration office in accordance with Federal Acquisition Regulation Subpart 42.5. (End of clause) 105 252.243-7001 PRICING OF CONTRACT MODIFICATIONS (DEC 1991) When costs are a factor in any price adjustment under this contract, the contract costs principles and procedures in FAR Part 31 an DFARS Part 231, in effect on the date of this contract, apply. 00700-136 (End of clause) 106 252.247-7024 NOTIFICATION OF TRANSPORTATION OF SUPPLIES BY SEA (NOV 1995) (a) The Contractor has indicated by the response to the solicitation provision, Representation of Extent of Transportation by Sea, that it did not anticipate transporting by sea any supplies. If, however, after the award of this contract, the Contractor learns that supplies, as defined in the Transportation of Supplies by Sea clause of this contract, will be transported by sea, the Contractor-- (1) Small notify the Contracting Officer of that fact; and (2) Hereby agrees to comply with all the terms and conditions of the Transportation of Suppliers by Sea clause of this contract. (b) The Contractor shall including this clause, including this paragraph (b), revised as necessary to reflect the relationship of the contracting parties, in all subcontracts hereunder, except (effective May 1, 1996) subcontracts for the acquisition of commercial items or components. (End of clause) 107 52.254-4 ALTERATIONS IN CONTRACT Portions of this contract are altered as follows: The Contractor's subcontracting plan is hereby included and made a material part of this Contract pursuant to Contract Clause No. 14, "Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan (Alternate I)" FAR 52.219-9. 00700-137 CONTRACT: 92235 =============== CC: PED, MDE FILE: 92235 [LETTERHEAD OF DEPARTMENT OF THE ARMY APPEARS HERE] [LOGO] Pier 400 Project Office 06 April 1998 (97C0035-0028) SUBJECT: Request for Proposal Pier 400 Constructors 1925 Pier D Street Long Beach, California 90802-1089 Gentlemen: Reference Contract No. DACW09-97-C-0035, Stage 2, Port of Los Angeles, Pier 400 Deep Draft, Navigation Improvements, San Pedro Bay, Los Angeles County, California. You are hereby requested to furnish a detailed Cost Proposal to perform the following scope of work: Detailed cost breakdown for the Dredge "Florida" under the following conditions: 1. Standby unit cost rate. ------- 2. Full operation unit cost rate to include various material -------------- classifications, 3. Extended overhead rate Your proposal, including a complete break down of costs and/or credits, is to be submitted to the Project Engineer within ten (10) calendar days after receipt of this letter. The break down of costs shall include labor, equipment, overhead and profit for Pier 400 Constructors as well as any subcontractors. The break-down must be in sufficient detail as required by the contract clause entitled, "Modification of Proposals Price Break Down", to permit comprehensive review of all materials, labor equipment, overhead costs, and profit for all subcontractors costs as well as for the cost incurred by the Prime Contractor. For indentification purposes, reference the assigned Activity No. WN028 on all correspondence regarding this matter. Should you have any questions regarding this matter, contact this office. Sincerely, /s/ Julie A. Martinez, Julie A. Martinez, P.E. Contracting Officer's Representative Copies Furnished: LADO Contract Files (DACW09-97-C-0035) Area Office Reader File Resident Office Reader File CESPL-CO-CM (Bert Romero) CESPL-PM-C (Ted Gula) Julie Martinez Bob Garda [LOGO] [LETTERHEAD OF DEPARTMENT OF THE ARMY] MAY 12 1997 REPLY TO ATTENTION OF: Office of the Chief Procurement Branch Pier 400 Constructors 2122 York Road Oak Brook, Illinois 60521 Gentlemen: Transmitted for your information and files is an executed copy of Contract No. DACW09-97-C-0035 for Stage 2, Port of Los Angeles, Pier 400 Deep Draft, Navigation Improvements Los Angeles and Long Beach Harbors, San Pedro Bay, Los Angeles County, California, in the amount of $141,485,450.00. Enclosed are sample payroll forms setting forth the payroll information required to be furnished weekly by you and your subcontractors, together with instructions pertaining thereto. It is requested that you submit one copy only each week to the Project Engineer. Should you use other types of payroll forms, it is required that you attach DD Form 879, Statement of Compliance, to each ----------------------- weekly submittal, an initial supply of which is enclosed. Additional copies of these forms may be obtained on request by calling (213)452-3252. Enclosed also is a copy of "Instructions to Contractor Relative to Labor Provision of Contract." Additionally, we have enclosed a supply of SF Form 1413, Statement and Acknowledgement, which is to be submitted to the Project Engineer - ----------------------------- in accordance with Contract Clause entitled "Subcontractors." Your attention is invited to the following: a. The Contract Clause entitled "Superintendence by the Contractor." A written designation of a foreman or superintendent stating his authority will be furnished to the Contracting Officer, for approval, prior to the employment of such foreman or superintendent. b. Four (4) copies of each of the Performance and Payment Bonds are forwarded to you with the delivery order. Please execute the original and two (2) copies of each Bond, in accordance with instruction on the reverse side of the Bonds and return directly to this office; and, in addition, observe the instruction which require typewritten or printed names under all signatures to the contract and bonds. -2- A copy of the Department of Labor minimum wage decision included in your contract must be posted in a prominent and easily accessible place at the site of work so that all pages thereof are visible to your employees along with WH Publication 1321, "Notice to Employees", enclosed herewith. The Contract Clause entitled "Display of Hotline Poster" requires you to display DOD Hotline Posters (enclosed), if this contract is in the amount of $5 million or more, unless you have established an internal reporting mechanism program. Sincerely, /s/ J. A. Eugino J. A. Eugino Contracting Officer Enclosures CF: Project Engineer, William Gallegos DEFENSE H O T L I N E FOR FRAUD, WASTE, ABUSE REPORTING _______________________________________________________________________________ 800/424-9098-toll free _______________________________________________________________________________ 223-5080-Autovon _______________________________________________________________________________ 693-5080-FTS _______________________________________________________________________________ 693-5080 Washington, D.C. Metro area. _______________________________________________________________________________ OR WRITE: DEFENSE HOTLINE THE PENTAGON WASHINGTON, D.C. 20301 - 1900 IDENTITIES OF WRITERS & CALLERS FULLY PROTECTED - ------------------------------------------------------------------------------------------------------------------------------------ DATE BOND EXECUTED (Must be same or later than date of PERFORMANCE BOND contract) OMB No.: 9000-0045 (See instructions on reverse) Expires: 09/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ Public reporting burden for this collection of information is estimated to average 25 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the FAR Secretariat (MVR), Federal Acquisition Policy Division, GSA, Washington, DC 20405 - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL (Legal name and business address) TYPE OF ORGANIZATION ("X" one) Pier 400 Constructors 2122 York Road [_] INDIVIDUAL [_] PARTNERSHIP Oak Brook, Illinois 60521 [X] JOINT VENTURE [_] CORPORATION ------------------------------------------------------ STATE OF INCORPORATION - ------------------------------------------------------------------------------------------------------------------------------------ SURETY(IES) (Names(s) and business address(es) PENAL SUM OF BOND ------------------------------------------------------ MILLION(S) THOUSAND(S) HUNDRED(S) CENTS 141 485 450 00 ------------------------------------------------------ CONTRACT DATE CONTRACT NO. MAY 12 1997 DACW09-97-C-0035 - ------------------------------------------------------------------------------------------------------------------------------------ OBLIGATION: We, the Principal and Surety(ies), are firmly bound to the United States of America (hereinafter called the Government) in the above penal sum. For payment of the penal sum, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally. However, where the Sureties are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" as well as "severally" only for the purpose of allowing a joint action or actions against any or all of us. For all other purposes, each Surety binds itself, jointly and severally with the Principal, for the payment of the sum shown opposite the name of the Surety. If no limit of liability is indicated, the limit of liability is the full amount of the penal sum. CONDITIONS: The Principal has entered into the contract identified above. THEREFORE: The above obligation is void if the Principal - (a)(1) Performs and fulfills all the undertakings, covenants, terms, conditions, and agreements of the contract during the original term of the contract and any extensions thereof that are granted by the Government, with or without notice to the Surety(ies), and during the life of any guaranty required under the contract, and (2) performs and fulfills all the undertakings, covenants, terms conditions, and agreements of any and all duly authorized modifications of the contract that hereafter are made. Notice of those modifications to the Surety(ies) are waived. (b) Pays to the Government the full amount of the taxes imposed by the Government, if the said contract is subject to the Miller Act, (40 U.S.C. 270a-270e), which are collected, deducted, or withheld from wages paid by the Principal in carrying out the construction contract with respect to which this bond is furnished. WITNESS: The Principal and Surety(ies) executed this performance bond and affixed their seals on the above date. - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL - ------------------------------------------------------------------------------------------------------------------------------------ 1. 2. 3. SIGNATURE(S) (Seal) (Seal) (Seal) Corporate - ------------------------------------------------------------------------------------------------------------ Seal NAME(S) & 1. 2. 3. TITLE(S) (Typed) - ------------------------------------------------------------------------------------------------------------------------------------ INDIVIDUAL SURETY(IES) - ------------------------------------------------------------------------------------------------------------------------------------ 1. 2. SIGNATURE(S) (Seal) (Seal) - ------------------------------------------------------------------------------------------------------------------------------------ NAME(S) 1. 2. (Typed) - ------------------------------------------------------------------------------------------------------------------------------------ CORPORATE SURETY(IES) - ------------------------------------------------------------------------------------------------------------------------------------ SURETY A - ------------------------------------------------------------------------------------------------------------------------------------ NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - ------------------------------------------------------------------------------------------------------------ 1. 2. Corporate SIGNATURE(S) Seal - ------------------------------------------------------------------------------------------------------------ NAME(S) & 1. 2. TITLE(S) (Typed) - ------------------------------------------------------------------------------------------------------------------------------------ AUTHORIZED FOR LOCAL REPRODUCTION STANDARD FORM 26 (REV. 5-98) Previous edition not usable Prescribed by GSA-FAR (48 CFR) 63.228(b)
============================================================================================================== CORPORATE SURETY(IES) (CONTINUED) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT B ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT C ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT D ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT E ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT F ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT G ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - --------------------------------------------------------------------------------------------------------------
---------------------------------------------- BOND RATE PER THOUSAND($) TOTAL($) PREMIUM ---------------------------------------------- INSTRUCTIONS 1. This form is authorized for use in connection with Government contracts. Any deviation from this form will require the written approval of the Administrator of General Services. 2. Insert the full legal name and business address of the Principal in the space designated "Principal" on the face of the form. An authorized person shall sign the bond. Any person signing in a representative capacity (e.g., an attorney-in-fact) must furnish evidence of authority if that representative is not a member of the firm, partnership, or joint venture, or an officer of the corporation involved. 3. (a) Corporations executing the bond as sureties must appear on the Department of the Treasury's list of approved sureties and must act within the limitation listed therein. Where more than one corporate surety is involved, their names and addresses shall appear in the spaces (Surety A, Surety B, etc.) headed "CORPORATE SURETY(IES)." In the space designated "SURETY(IES)" on the face of the form, insert only the letter identification of the sureties. (b) Where individual sureties are involved, a completed Affidavit of Individual Surety (Standard Form 28) for each individual surety, shall accompany the bond. The Government may require the surety to furnish additional substantiating information concerning their financial capability. 4. Corporations executing the bond shall affix their corporate seals. Individuals shall execute the bond opposite the word "Corporate Seal" and shall affix an adhesive seal if executed in Maine, New Hampshire, or any other jurisdiction requiring adhesive seals. 5. Type the name and title of each person signing this bond in the space provided. ================================================================================ STANDARD FORM 25 (REV.5-96) BACK
=================================================================================================================================== PERFORMANCE BOND DATE BOND EXECUTED (Must be same or later than date of contract) OMB No.: 9000-0045 (SEE INSTRUCTIONS ON REVERSE) Expires: 09/30/98 - ----------------------------------------------------------------------------------------------------------------------------------- Public reporting burden for this collection of information is estimated to average 25 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the FAR Secretariat (MVR), Federal Acquisition Policy Division, GSA, Washington, DC 20405 - ----------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL (Legal name and business address) TYPE OF ORGANIZATION ("X" one) Pier 400 Constructors [_] INDIVIDUAL [_] PARTNERSHIP 2122 York Road Oak Brook, Illinois 60521 [X] JOINT VENTURE [_] CORPORATION -------------------------------------------- STATE OF INCORPORATION - ----------------------------------------------------------------------------------------------------------------------------------- SURETY(IES) (Name(s) and business address(es) PENAL SUM OF BOND -------------------------------------------- MILLION(S) THOUSAND(S) HUNDRED(S) CENTS 141 485 450 00 -------------------------------------------- CONTRACT DATE CONTRACT NO. MAY 12 1997 DACW09-97-C-0035 =================================================================================================================================== OBLIGATION: We, the Principal and Surety(ies), are firmly bound to the United States of America (hereinafter called the Government) in the above penal sum. For payment of the penal sum, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally. However, where the Sureties are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" as well as "severally" only for the purpose of allowing a joint action or actions against any or all of us. For all purposes, each Surety binds itself, jointly and severally with the Principal, for the payment of the sum shown opposite the name of the Surety. If no limit of liability is indicated, the limit of liability is the full amount of the penal sum. CONDITIONS: The Principal has entered into the contract identified above. THEREFORE: The above obligation is void if the Principal - (a)(1) Performs and fulfills all the undertakings, covenants, terms, conditions, and agreements of the contract during the original term of the contract and any extensions thereof that are granted by the Government, with or without notice to the Surety(ies), and during the life of any guaranty required under the contract, and (2) performs and fulfills all the undertakings, covenants, terms, conditions, and agreement of any and all duly authorized modifications of the contract that hereafter are made. Notice of those modifications to the Surety(ies) are waived. (b) Pays to the Government the full amount of the taxes imposed by the Government, if the said contract is subject to the Miller Act, (40 U.S.C. 270a-270e), which are collected, deducted, or withheld from wages paid by the Principal in carrying out the construction contract with respect to which this bond is furnished. WITNESS: The Principal and Surety(ies) executed this performance bond and affixed their seals on the above date. =================================================================================================================================== PRINCIPAL - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. 3. SIGNATURE(S) (Seal) (Seal) (Seal) Corporate - ----------------------------------------------------------------------------------------------------------------------- 1. 2. 3. Seal NAME(S) & TITLE(S) (Typed) =================================================================================================================================== INDIVIDUAL SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. SIGNATURE(S) (Seal) (Seal) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. NAME(S) (Typed) =================================================================================================================================== CORPORATE SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- STATE OF INC. LIABILITY LIMIT SURETY A NAME & ADDRESS $ ------------------------------------------------------------------------------------------------------------ 1. 2. Corporate SIGNATURE(S) Seal ------------------------------------------------------------------------------------------------------------ NAME(S) & 1. 2. TITLE(S) (Typed) =================================================================================================================================== AUTHORIZED FOR LOCAL REPRODUCTION STANDARD FORM 25 (REV. 5-96) Previous edition not usable Prescribed by GSA-FAR (48 CFR) 53.228(b)
============================================================================================================== CORPORATE SURETY(IES) (CONTINUED) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT B ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT C ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT D ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT E ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT F ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT G ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - --------------------------------------------------------------------------------------------------------------
---------------------------------------------- BOND RATE PER THOUSAND($) TOTAL($) PREMIUM ---------------------------------------------- INSTRUCTIONS 1. This form is authorized for use in connection with Government contracts. Any deviation from this form will require the written approval of the Administrator of General Services. 2. Insert the full legal name and business address of the Principal in the space designated "Principal" on the face of the form. An authorized person shall sign the bond. Any person signing in a representative capacity (e.g., an attorney-in-fact) must furnish evidence of authority if that representative is not a member of the firm, partnership, or joint venture, or an officer of the corporation involved. 3. (a) Corporations executing the bond as sureties must appear on the Department of the Treasury's list of approved sureties and must act within the limitation listed therein. Where more than one corporate surety is involved, their names and addresses shall appear in the spaces (Surety A, Surety B, etc.) headed "CORPORATE SURETY(IES)." In the space designated "SURETY(IES)" on the face of the form, insert only the letter identification of the sureties. (b) Where individual sureties are involved, a completed Affidavit of Individual Surety (Standard Form 28) for each individual surety, shall accompany the bond. The Government may require the surety to furnish additional substantiating information concerning their financial capability. 4. Corporations executing the bond shall affix their corporate seals. Individuals shall execute the bond opposite the word "Corporate Seal" and shall affix an adhesive seal if executed in Maine, New Hampshire, or any other jurisdiction requiring adhesive seals. 5. Type the name and title of each person signing this bond in the space provided. ================================================================================ STANDARD FORM 25 (REV.5-96) BACK
=================================================================================================================================== PERFORMANCE BOND DATE BOND EXECUTED (Must be same or later than date of contract) OMB No.: 9000-0045 (SEE INSTRUCTIONS ON REVERSE) Expires: 09/30/98 - ----------------------------------------------------------------------------------------------------------------------------------- Public reporting burden for this collection of information is estimated to average 25 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the FAR Secretariat (MVR), Federal Acquisition Policy Division, GSA, Washington, DC 20405 - ----------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL (Legal name and business address) TYPE OF ORGANIZATION ("X" one) Pier 400 Constructors [_] INDIVIDUAL [_] PARTNERSHIP 2122 York Road Oak Brook, Illinois 60521 [X] JOINT VENTURE [_] CORPORATION -------------------------------------------- STATE OF INCORPORATION - ----------------------------------------------------------------------------------------------------------------------------------- SURETY(IES) (Name(s) and business address(es) PENAL SUM OF BOND -------------------------------------------- MILLION(S) THOUSAND(S) HUNDRED(S) CENTS 141 485 450 00 -------------------------------------------- CONTRACT DATE CONTRACT NO. MAY 12 1997 DACW09-97-C-0035 =================================================================================================================================== OBLIGATION: We, the Principal and Surety(ies), are firmly bound to the United States of America (hereinafter called the Government) in the above penal sum. For payment of the penal sum, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally. However, where the Sureties are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" as well as "severally" only for the purpose of allowing a joint action or actions against any or all of us. For all other purposes, each Surety binds itself, jointly and severally with the Principal, for the payment of the sum shown opposite the name of the Surety. If no limit of liability is indicated, the limit of liability is the full amount of the penal sum. CONDITIONS: The Principal has entered into the contract identified above. THEREFORE: The above obligation is void if the Principal - (a)(1) Performs and fulfills all the undertakings, covenants, terms, conditions, and agreements of the contract during the original term of the contract and any extensions thereof that are granted by the Government, with or without notice to the Surety(ies), and during the life of any guaranty required under the contract, and (2) performs and fulfills all the undertakings, covenants, terms, conditions, and agreements of any and all duly authorized modifications of the contract that hereafter are made. Notice of those modifications to the to the Surety(ies) are waived. (b) Pays to the Government the full amount of the taxes imposed by the Government, if the said contract is subject to the Miller Act, (40 U.S.C. 270a-270e), which are collected, deducted, or withheld from wages paid by the Principal in carrying out the construction contract with respect to which this bond is furnished. WITNESS: The Principal and Surety(ies) executed, this performance bond and affixed their seals on the above date. =================================================================================================================================== PRINCIPAL - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. 3. SIGNATURE(S) (Seal) (Seal) (Seal) Corporate - ----------------------------------------------------------------------------------------------------------------------- 1. 2. 3. Seal NAME(S) & TITLE(S) (Typed) =================================================================================================================================== INDIVIDUAL SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. SIGNATURE(S) (Seal) (Seal) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. NAME(S) (Typed) =================================================================================================================================== CORPORATE SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- STATE OF INC. LIABILITY LIMIT SURETY A NAME & ADDRESS $ ------------------------------------------------------------------------------------------------------------ 1. 2. Corporate SIGNATURE(S) Seal ------------------------------------------------------------------------------------------------------------ NAME(S) & 1. 2. TITLE(S) (Typed) =================================================================================================================================== AUTHORIZED FOR LOCAL REPRODUCTION STANDARD FORM 25 (REV. 5-96) Previous edition not usable Prescribed by GSA-FAR (48 CFR) 53.228(b)
============================================================================================================== CORPORATE SURETY(IES) (CONTINUED) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT B ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT C ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT D ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT E ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT F ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT G ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - --------------------------------------------------------------------------------------------------------------
---------------------------------------------- BOND RATE PER THOUSAND($) TOTAL($) PREMIUM ---------------------------------------------- INSTRUCTIONS 1. This form is authorized for use in connection with Government contracts. Any deviation from this form will require the written approval of the Administrator of General Services. 2. Insert the full legal name and business address of the Principal in the space designated "Principal" on the face of the form. An authorized person shall sign the bond. Any person signing in a representative capacity (e.g., an attorney-in-fact) must furnish evidence of authority if that representative is not a member of the firm, partnership, or joint venture, or an officer of the corporation involved. 3. (a) Corporations executing the bond as sureties must appear on the Department of the Treasury's list of approved sureties and must act within the limitation listed therein. Where more than one corporate surety is involved, their names and addresses shall appear in the spaces (Surety A, Surety B, etc.) headed "CORPORATE SURETY(IES)." In the space designated "SURETY(IES)" on the face of the form, insert only the letter identification of the sureties. (b) Where individual sureties are involved, a completed Affidavit of Individual Surety (Standard Form 28) for each individual surety, shall accompany the bond. The Government may require the surety to furnish additional substantiating information concerning their financial capability. 4. Corporations executing the bond shall affix their corporate seals. Individuals shall execute the bond opposite the word "Corporate Seal" and shall affix an adhesive seal if executed in Maine, New Hampshire, or any other jurisdiction requiring adhesive seals. 5. Type the name and title of each person signing this bond in the space provided. ================================================================================ STANDARD FORM 25 (REV.5-96) BACK
=================================================================================================================================== PERFORMANCE BOND DATE BOND EXECUTED (Must be same or later than date of contract) OMB No.: 9000-0045 (SEE INSTRUCTIONS ON REVERSE) Expires: 09/30/98 - ----------------------------------------------------------------------------------------------------------------------------------- Public reporting burden for this collection of information is estimated to average 25 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the FAR Secretariat (MVR), Federal Acquisition Policy Division, GSA, Washington, DC 20405 - ----------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL (Legal name and business address) TYPE OF ORGANIZATION ("X" one) Pier 400 Constructors [_] INDIVIDUAL [_] PARTNERSHIP 2122 York Road Oak Brook, Illinois 60521 [X] JOINT VENTURE [_] CORPORATION -------------------------------------------- STATE OF INCORPORATION - ----------------------------------------------------------------------------------------------------------------------------------- SURETY(IES) (Name(s) and business address(es) PENAL SUM OF BOND -------------------------------------------- MILLION(S) THOUSAND(S) HUNDRED(S) CENTS 141 485 450 00 -------------------------------------------- CONTRACT DATE CONTRACT NO. MAY 12 1997 DACW09-97-C-0035 =================================================================================================================================== OBLIGATION: We, the Principal and Surety(ies), are firmly bound to the United States of America (hereinafter called the Government) in the above penal sum. For payment of the penal sum, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally. However, where the Sureties are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" as well as "severally" only for the purpose of allowing a joint action or actions against any or all of us. For all other purposes, each Surety binds itself, jointly and severally with the Principal, for the payment of the sum shown opposite the name of the Surety. If no limit of liability is indicated, the limit of liability is the full amount of the penal sum. CONDITIONS: The Principal has entered into the contract identified above. THEREFORE: The above obligation is void if the Principal - (a)(1) Performs and fulfills all the undertakings, covenants, terms, conditions, and agreements of the contract during the original term of the contract and any extensions thereof that are granted by the Government, with or without notice to the Surety(ies), and during the life of any guaranty required under the contract, and (2) performs and fulfills all the undertakings, covenants, terms, conditions, and agreement of any and all duly authorized modifications of the contract that hereafter are made. Notice of those modifications to the Surety(ies) are waived. (b) Pays to the Government the full amount of the taxes imposed by the Government, if the said contract is subject to the Miller Act, (40 U.S.C. 270a-270e), which are collected, deducted, or withheld from wages paid by the Principal in carrying out the construction contract with respect to which this bond is furnished. WITNESS: The Principal and Surety(ies) executed, this performance bond and affixed their seals on the above date. =================================================================================================================================== PRINCIPAL - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. 3. SIGNATURE(S) (Seal) (Seal) (Seal) Corporate - ----------------------------------------------------------------------------------------------------------------------- 1. 2. 3. Seal NAME(S) & TITLE(S) (Typed) =================================================================================================================================== INDIVIDUAL SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. SIGNATURE(S) (Seal) (Seal) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. NAME(S) (Typed) =================================================================================================================================== CORPORATE SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- STATE OF INC. LIABILITY LIMIT SURETY A NAME & ADDRESS $ ------------------------------------------------------------------------------------------------------------ 1. 2. Corporate SIGNATURE(S) Seal ------------------------------------------------------------------------------------------------------------ NAME(S) & 1. 2. TITLE(S) (Typed) =================================================================================================================================== AUTHORIZED FOR LOCAL REPRODUCTION STANDARD FORM 25 (REV. 5-96) Previous edition not usable Prescribed by GSA-FAR (48 CFR) 53.228(b)
============================================================================================================== CORPORATE SURETY(IES) (CONTINUED) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT B ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT C ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT D ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT E ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT F ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - -------------------------------------------------------------------------------------------------------------- SURETY NAME & STATE OF INC. LIABILITY LIMIT G ADDRESS $ - -------------------------------------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate Seal - -------------------------------------------------------------------------------------------------------------- NAME(S) 2. TITLES(S) (Typed) - --------------------------------------------------------------------------------------------------------------
---------------------------------------------- BOND RATE PER THOUSAND($) TOTAL($) PREMIUM ---------------------------------------------- INSTRUCTIONS 1. This form is authorized for use in connection with Government contracts. Any deviation from this form will require the written approval of the Administrator of General Services. 2. Insert the full legal name and business address of the Principal in the space designated "Principal" on the face of the form. An authorized person shall sign the bond. Any person signing in a representative capacity (e.g., an attorney-in-fact) must furnish evidence of authority if that representative is not a member of the firm, partnership, or joint venture, or an officer of the corporation involved. 3. (a) Corporations executing the bond as sureties must appear on the Department of the Treasury's list of approved sureties and must act within the limitation listed therein. Where more than one corporate surety is involved, their names and addresses shall appear in the spaces (Surety A, Surety B, etc.) headed "CORPORATE SURETY(IES)." In the space designated "SURETY(IES)" on the face of the form, insert only the letter identification of the sureties. (b) Where individual sureties are involved, a completed Affidavit of Individual Surety (Standard Form 28) for each individual surety, shall accompany the bond. The Government may require the surety to furnish additional substantiating information concerning their financial capability. 4. Corporations executing the bond shall affix their corporate seals. Individuals shall execute the bond opposite the word "Corporate Seal" and shall affix an adhesive seal if executed in Maine, New Hampshire, or any other jurisdiction requiring adhesive seals. 5. Type the name and title of each person signing this bond in the space provided. ================================================================================ STANDARD FORM 25 (REV.5-96) BACK
=================================================================================================================================== PAYMENT BOND DATE BOND EXECUTED (Must be same or later than date of contract) FORM APPROVED (see instructions on reverse) OMB No.: 9000-0045 - ----------------------------------------------------------------------------------------------------------------------------------- Public reporting burden for this collection of information is estimated to average 25 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the FAR Secretariat (MVR), Office of Federal Acquisition Policy GSA, Washington, DC 20405: and to the Office of Management and Budget. Paperwork Reduction Project (8000-004?^). Washington, D.C. 20503. - ----------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL (Legal name and business address) TYPE OF ORGANIZATION ("X" one) Pier 400 Constructors [_] INDIVIDUAL [_] PARTNERSHIP 2122 York Road Oak Brook, Illinois 60521 [X] JOINT VENTURE [_] CORPORATION -------------------------------------------- STATE OF INCORPORATION - ----------------------------------------------------------------------------------------------------------------------------------- SURETY(IES) (Name(s) and business address(es) PENAL SUM OF BOND -------------------------------------------- MILLION(S) THOUSAND(S) HUNDRED(S) CENTS 2 500 000 00 -------------------------------------------- CONTRACT DATE CONTRACT NO. MAY 12 1997 DACW09-97-C-0035 =================================================================================================================================== OBLIGATION: We, the Principal and Surety(ies), are firmly bound to the United States of America (hereinafter called the Government) in the above penal sum. For payment of the penal sum, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally. However, where the Sureties are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" as well as "severally" only for the purpose of allowing a joint action or actions against any or all of us. For all other purposes, each Surety binds itself, jointly and severally with the Principal, for the payment of the sum shown opposite the name of the Surety. If no limit of liability is indicated, the limit of liability is the full amount of the penal sum. CONDITIONS: The above obligation is void if the Principal promptly makes payment to all persons having a direct relationship with the Principal or a subcontractor of the Principal for furnishing labor, material or both in the prosecution of the work provided for in the contract indentified above, and any authorized modifications of the contract that subsequently are made. Motice of those modifications to the Surety(ies) are waived. WITNESS: The Principal and Surety(ies) executed, this payment bond and affixed their seals on the above date. =================================================================================================================================== PRINCIPAL - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. 3. SIGNATURE(S) (Seal) (Seal) (Seal) Corporate - ----------------------------------------------------------------------------------------------------------------------- 1. 2. 3. Seal NAME(S) & TITLE(S) (Typed) =================================================================================================================================== INDIVIDUAL SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. SIGNATURE(S) (Seal) (Seal) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. NAME(S) (Typed) =================================================================================================================================== CORPORATE SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- STATE OF INC. LIABILITY LIMIT SURETY A NAME & ADDRESS $ ------------------------------------------------------------------------------------------------------------ 1. 2. Corporate SIGNATURE(S) Seal ------------------------------------------------------------------------------------------------------------ NAME(S) & 1. 2. TITLE(S) (Typed) =================================================================================================================================== NSN 4340-01-152-8061 EXPIRATION DATE 12-31-82 25-205 STANDARD FORM 25-A (REV. 1-??^) Previous edition not usable Prescribed by GSA-FAR (48 CFR) 53.228(b)
- ---------------------------------------------------------------------------------------------------------- CORPORATE SURETY(IES) (Continued) - ---------------------------------------------------------------------------------------------------------- SURETY B SURETY C SURETY D SURETY E SURETY F SURETY G - -------------------------------------------------------------------------------- NAME & 1. STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - -------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ----------------------------------------------------------------------------------------------------------
INSTRUCTIONS 1. This form, for the protection of persons supplying labor and material, is used when a payment bond is required under the Act of August 24, 1935, 49 Stat. 793 (40 U.S.C. 270a-270e). Any deviation from this form will require the written approval of the Administrator of General Services. 2. Insert the full legal name and business address of the Principal in the space designated "Principal" on the face of the form. An authorized person shall sign the bond. Any person signing in a representative capacity (e.g., an attorney-in-fact) must furnish evidence of authority if that representative is not a member of the firm, partnership or joint venture, or an officer of the corporation involved. 3. (a) Corporations executing the bond as sureties must appear on the Department of the Treasury's list of approved sureties and must act within the limitation listed therein. Where more than one corporate surety is involved, their names and addresses shall appear in the spaces (Surety A, Surety B, etc.) headed CORPORATE SURETY(IES)." In the space designated "SURETY(IES)" on the face of the form, insert only the letter identification of the sureties. (b) Where individual sureties are involved, a completed Affidavit of Individual Surety (Standard Form 28) for each individual surety, shall accompany the bond. The Government may require the surety to furnish additional substantiating information concerning their financial capability. 4. Corporations executing thee bond shall affix their corporate seals. Individuals shall execute the bond opposite the word "Corporate Seal", and shall affix an adhesive seal if executed in Maine, New Hampshire, or any other jurisdiction requiring adhesive seals. 5. Type the name and title of each person signing this bond in the space provided. - -------------------------------------------------------------------------------
=================================================================================================================================== PERFORMANCE BOND DATE BOND EXECUTED (Must be same or later than date of contract) FORM APPROVED (see instructions on reverse) OMB No.: 9000-0045 - ----------------------------------------------------------------------------------------------------------------------------------- Public reporting burden for this collection of information is estimated to average 25 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the FAR Secretariat (VRS), Office of Federal Acquisition Policy Division, GSA, Washington, DC 20405: One to the Office of Management and Budget. Paperwork Reduction Project (9000-0045). Washington D.C. 20503. - ----------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL (Legal name and business address) TYPE OF ORGANIZATION ("X" one) Pier 400 Constructors [_] INDIVIDUAL [_] PARTNERSHIP 2122 York Road Oak Brook, Illinois 60521 [X] JOINT VENTURE [_] CORPORATION -------------------------------------------- STATE OF INCORPORATION - ----------------------------------------------------------------------------------------------------------------------------------- SURETY(IES) (Name(s) and business address(es) PENAL SUM OF BOND -------------------------------------------- MILLION(S) THOUSAND(S) HUNDRED(S) CENTS 2 500 000 00 -------------------------------------------- CONTRACT DATE CONTRACT NO. MAY 12 1997 DACW09-97-C-0035 =================================================================================================================================== OBLIGATION: We, the Principal and Surety(ies), are firmly bound to the United States of America (hereinafter called the Government) in the above penal sum. For payment of the penal sum, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally. However, where the Sureties are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" as well as "severally" only for the purpose of allowing a joint action or actions against any or all of us. For all other purposes, each Surety binds itself, jointly and severally with the Principal, for the payment of the sum shown opposite the name of the Surety. If no limit of liability is indicated, the limit of liability is the full amount of the penal sum. CONDITIONS: The above obligation is void if the Principal promptly makes payment to all persons having a direct relationship with the Principal or a subcontractor of the Principal for furnishing labor, material or both in the prosecution of the work provided for in the contract indentified above, and any authorized modifications of the contract that subsequently are made. Notice of those modifications to the Surety(ies) are waived. WITNESS: The Principal and Surety(ies) executed, this payment bond and affixed their seals on the above date. =================================================================================================================================== PRINCIPAL - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. 3. SIGNATURE(S) (Seal) (Seal) (Seal) Corporate - ----------------------------------------------------------------------------------------------------------------------- 1. 2. 3. Seal NAME(S) & TITLE(S) (Typed) =================================================================================================================================== INDIVIDUAL SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. SIGNATURE(S) (Seal) (Seal) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. NAME(S) (Typed) =================================================================================================================================== CORPORATE SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- STATE OF INC. LIABILITY LIMIT SURETY A NAME & ADDRESS $ ------------------------------------------------------------------------------------------------------------ 1. 2. Corporate SIGNATURE(S) Seal ------------------------------------------------------------------------------------------------------------ NAME(S) & 1. 2. TITLE(S) (Typed) =================================================================================================================================== NSN 4340-01-152-8081 EXPIRATION DATE 12-31-92 25-205 STANDARD FORM 25-A (REV. 1-??) Previous edition not usable Prescribed by GSA-FAR (48 CFR) 53.228(b)
- ---------------------------------------------------------------------------------------------------------- CORPORATE SURETY(IES) (Continued) - ---------------------------------------------------------------------------------------------------------- SURETY B SURETY C SURETY D SURETY E SURETY F SURETY G - -------------------------------------------------------------------------------- NAME & 1. STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - -------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ----------------------------------------------------------------------------------------------------------
INSTRUCTIONS 1. This form, for the protection of persons supplying labor and material, is used when a payment bond is required under the Act of August 24, 1935, 49 Stat. 793 (40 U.S.C. 270a-270e). Any deviation from this form will require the written approval of the Administrator of General Services. 2. Insert the full legal name and business address of the Principal in the space designated "Principal" on the face of the form. An authorized person shall sign the bond. Any person signing in a representative capacity (e.g., an attorney-in-fact) must furnish evidence of authority if that representative is not a member of the firm, partnership or joint venture, or an officer of the corporation involved. 3. (a) Corporations executing the bond as sureties must appear on the Department of the Treasury's list of approved sureties and must act within the limitation listed therein. Where more than on corporate surety is involved, their names and addresses shall appear in the spaces (Surety A, Surety B, etc.) headed CORPORATE SURETY(IES)." In the space designated "SURETY(IES)" on the face of the form, insert only the letter identification of the sureties. (b) Where individual sureties are involved, a completed Affidavit of individual Surety (Standard Form 28) for each individual surety, shall accompany the bond. The Government may require the surety to furnish additional substantiating information concerning their financial capability. 4. Corporations executing thee bond shall affix their corporate seals. Individuals shall execute the bond opposite the word "Corporate Seal", and shall affix an adhesive seal if executed in Maine, New Hampshire, or any other jurisdiction requiring adhesive seals. 5. Type the name and title of each person signing this bond in the space provided. - --------------------------------------------------------------------------------
=================================================================================================================================== PAYMENT BOND DATE BOND EXECUTED (Must be same or later than date of contract) FORM APPROVED (see instructions on reverse) OMB No.: 9000-0045 - ----------------------------------------------------------------------------------------------------------------------------------- Public reporting burden for this collection of information is estimated to average 25 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the FAR Secretariat (VRS), Federal Office of Acquisition Policy Division, GSA, Washington, DC 20405: and to the Office of Management and Budget, Paperwork Reduction Project (9000-0045). Washington, D.C. 20503. - ----------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL (Legal name and business address) TYPE OF ORGANIZATION ("X" one) Pier 400 Constructors [_] INDIVIDUAL [_] PARTNERSHIP 2122 York Road Oak Brook, Illinois 60521 [X] JOINT VENTURE [_] CORPORATION -------------------------------------------- STATE OF INCORPORATION - ----------------------------------------------------------------------------------------------------------------------------------- SURETY(IES) (Name(s) and business address(es)) PENAL SUM OF BOND -------------------------------------------- MILLION(S) THOUSAND(S) HUNDRED(S) CENTS 2 500 000 00 -------------------------------------------- CONTRACT DATE CONTRACT NO. MAY 12 1997 DACW09-97-C-0035 =================================================================================================================================== OBLIGATION: We, the Principal and Surety(ies), are firmly bound to the United States of America (hereinafter called the Government) in the above penal sum. For payment of the penal sum, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally. However, where the Sureties are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" as well as "severally" only for the purpose of allowing a joint action or actions against any or all of us. For all other purposes, each Surety binds itself, jointly and severally with the Principal, for the payment of the sum shown opposite the name of the Surety. If no limit of liability is indicated, the limit of liability is the full amount of the penal sum. CONDITIONS: The above obligation is void if the Principal promptly makes payment to all persons having a direct relationship with the Principal or a subcontractor of the Principal for furnishing labor, material or both in the prosecution of the work provided for in the contract indentified above, and any authorized modifications of the contract that subsequently are made. Notice of those modifications to the Surety(ies) are waived. WITNESS: The Principal and Surety(ies) executed, this performance bond and affixed their seals on the above date. =================================================================================================================================== PRINCIPAL - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. 3. SIGNATURE(S) (Seal) (Seal) (Seal) Corporate - ----------------------------------------------------------------------------------------------------------------------- 1. 2. 3. Seal NAME(S) & TITLE(S) (Typed) =================================================================================================================================== INDIVIDUAL SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. SIGNATURE(S) (Seal) (Seal) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. NAME(S) (Typed) =================================================================================================================================== CORPORATE SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- STATE OF INC. LIABILITY LIMIT SURETY A NAME & ADDRESS $ ------------------------------------------------------------------------------------------------------------ 1. 2. Corporate SIGNATURE(S) Seal ------------------------------------------------------------------------------------------------------------ NAME(S) & 1. 2. TITLE(S) (Typed) =================================================================================================================================== NSN 4340-01-152-8081 EXPIRATION DATE 12-31-92 25-205 STANDARD FORM 25-A (REV. 1-??)^ Previous edition not usable Prescribed by GSA-FAR (48 CFR) 53.228(b)
- ---------------------------------------------------------------------------------------------------------- CORPORATE SURETY(IES) (Continued) - ---------------------------------------------------------------------------------------------------------- SURETY B SURETY C SURETY D SURETY E SURETY F SURETY G - -------------------------------------------------------------------------------- NAME & 1. STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - -------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ----------------------------------------------------------------------------------------------------------
INSTRUCTIONS 1. This form, for the protection of persons supplying labor and material, is used when a payment bond is required under the Act of August 24, 1935, 49 Stat. 793 (40 U.S.C. 270a-270e). Any deviation from this form will require the written approval of the Administrator of General Services. 2. Insert the full legal name and business address of the Principal in the space designated "Principal" on the face of the form. An authorized person shall sign the bond. Any person signing in a representative capacity (e.g., an attorney-in-fact) must furnish evidence of authority if that representative is not a member of the firm, partnership or joint venture, or an officer of the corporation involved. 3. (a) Corporations executing the bond as sureties must appear on the Department of the Treasury's list of approved sureties and must act within the limitation listed therein. Where more than on corporate surety is involved, their names and addresses shall appear in the spaces (Surety A, Surety B, etc.) headed CORPORATE SURETY(IES)." In the space designated "SURETY(IES)" on the face of the form, insert only the letter identification of the sureties. (b) Where individual sureties are involved, a completed Affidavit of individual Surety (Standard Form 28) for each individual surety, shall accompany the bond. The Government may require the surety to furnish additional substantiating information concerning their financial capability. 4. Corporations executing thee bond shall affix their corporate seals. Individuals shall execute the bond opposite the word "Corporate Seal", and shall affix an adhesive seal if executed in Maine, New Hampshire, or any other jurisdiction requiring adhesive seals. 5. Type the name and title of each person signing this bond in the space provided. - --------------------------------------------------------------------------------
=================================================================================================================================== PAYMENT BOND DATE BOND EXECUTED (Must be same or later than date of contract) FORM APPROVED (see instructions on reverse) OMB No.: 9000-0045 - ----------------------------------------------------------------------------------------------------------------------------------- Public reporting burden for this collection of information is estimated to average 25 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the FAR Secretariat (VRS), Office of Federal Acquisition Policy, Washington, DC 20405 one to the Office of Management and Budget. Paperwork Reduction Pro??^:(9000-0045). Washington D.C. 20502. - ----------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL (Legal name and business address) TYPE OF ORGANIZATION ("X" one) Pier 400 Constructors [_] INDIVIDUAL [_] PARTNERSHIP 2122 York Road Oak Brook, Illinois 60521 [X] JOINT VENTURE [_] CORPORATION -------------------------------------------- STATE OF INCORPORATION - ----------------------------------------------------------------------------------------------------------------------------------- SURETY(IES) (Name(s) and business address(es) PENAL SUM OF BOND -------------------------------------------- MILLION(S) THOUSAND(S) HUNDRED(S) CENTS 2 500 000 00 -------------------------------------------- CONTRACT DATE CONTRACT NO. MAY 12 1997 DACW09-97-C-0035 =================================================================================================================================== OBLIGATION: We, the Principal and Surety(ies), are firmly bound to the United States of America (hereinafter called the Government) in the above penal sum. For payment of the penal sum, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally. However, where the Sureties are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" as well as "severally" only for the purpose of allowing a joint action or actions against any or all of us. For all other purposes, each Surety binds itself, jointly and severally with the Principal, for the payment of the sum shown opposite the name of the Surety. If no limit of liability is indicated, the limit of liability is the full amount of the penal sum. CONDITIONS: The above obligation is void if the Principal promptly makes payment to all persons having a direct relationship with the Principal or a subcontractor of the Principal for furnishing labor, material or both in the prosecution of the work provided for in the contract indentified above, and any authorized modifications of the contract that subsequently are made. Notice of those modifications to the Surety(ies) are waived. WITNESS: The Principal and Surety(ies) executed, this payment bond and affixed their seals on the above date. =================================================================================================================================== PRINCIPAL - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. 3. SIGNATURE(S) (Seal) (Seal) (Seal) Corporate - ----------------------------------------------------------------------------------------------------------------------- 1. 2. 3. Seal NAME(S) & TITLE(S) (Typed) =================================================================================================================================== INDIVIDUAL SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. SIGNATURE(S) (Seal) (Seal) - ----------------------------------------------------------------------------------------------------------------------------------- 1. 2. NAME(S) (Typed) =================================================================================================================================== CORPORATE SURETY(IES) - ----------------------------------------------------------------------------------------------------------------------------------- STATE OF INC. LIABILITY LIMIT SURETY A NAME & ADDRESS $ ------------------------------------------------------------------------------------------------------------ 1. 2. Corporate SIGNATURE(S) Seal ------------------------------------------------------------------------------------------------------------ NAME(S) & 1. 2. TITLE(S) (Typed) =================================================================================================================================== NSN 4340-01-152-8081 EXPIRATION DATE 12-31-82 25-205 STANDARD FORM 25-A (REV. 1-??) Previous edition not usable Prescribed by GSA-FAR (48 CFR) 53.228(b)
- ---------------------------------------------------------------------------------------------------------- CORPORATE SURETY(IES) (Continued) - ---------------------------------------------------------------------------------------------------------- SURETY B SURETY C SURETY D SURETY E SURETY F SURETY G - -------------------------------------------------------------------------------- NAME & 1. STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - -------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ---------------------------------------------------------------------------------------------------------- NAME & STATE OF INC. LIABILITY LIMIT ADDRESS $ - -------------------------------------------------------------------------------- SIGNATURE(S) 2. Corporate - -------------------------------------------------------------------------------- Seal NAME(S) & 1. 2. TITLE(S) Type(s) - ----------------------------------------------------------------------------------------------------------
INSTRUCTIONS 1. This form, for the protection of persons supplying labor and material, is used when a payment bond is required under the Act of August 24, 1935, 49 Stat. 793 (40 U.S.C. 270a-270e). Any deviation from this form will require the written approval of the Administrator of General Services. 2. Insert the full legal name and business address of the Principal in the space designated "Principal" on the face of the form. An authorized person shall sign the bond. Any person signing in a representative capacity (e.g., an attorney-in-fact) must furnish evidence of authority if that representative is not a member of the firm, partnership or joint venture, or an officer of the corporation involved. 3. (a) Corporations executing the bond as sureties must appear on the Department of the Treasury's list of approved sureties and must act within the limitation listed therein. Where more than on corporate surety is involved, their names and addresses shall appear in the spaces (Surety A, Surety B, etc.) headed CORPORATE SURETY(IES)." In the space designated "SURETY(IES)" on the face of the form, insert only the letter identification of the sureties. (b) Where individual sureties are involved, a completed Affidavit of individual Surety (Standard Form 28) for each individual surety, shall accompany the bond. The Government may require the surety to furnish additional substantiating information concerning their financial capability. 4. Corporations executing thee bond shall affix their corporate seals. Individuals shall execute the bond opposite the word "Corporate Seal", and shall affix an adhesive seal if executed in Maine, New Hampshire, or any other jurisdiction requiring adhesive seals. 5. Type the name and title of each person signing this bond in the space provided. - ------------------------------------------------------------------------------- [LOGO] [LETTERHEAD OF DEPARTMENT OF THE ARMY APPEARS HERE] MAY 12, 1997 REPLY TO: ATTENTION OF: Office of the Chief Procurement Branch SUBJECT: Contract No. DACW09-97-C-0035 Pier 400 Constructors 2122 York Road Oak brook, Illinois 60521 Gentlemen: By Executive Order No. 11246, dated 24 September 1965, your contract with the Department of the Army contains a provision by which you agree not to discriminate against any employee or applicant for employment because of race, color, religion, sex or national origin. Further, you have agreed to insert this provision in appropriate subcontracts. Your contract requires you to display Posters setting forth the provisions of the Equal Opportunity clause. They should be placed in conspicuous places, available to employees and applicants for employment; and in a manner that will protect them from destruction by elements and other causes. Enclosed is an "Equal Employment Opportunity" poster which you have agreed to display. Additional copies will be supplied on request for subcontractors who are subject to these requirements. Please do not hesitate to call on us if you have any questions concerning your obligations under the Equal Opportunity clause or the display of posters. Sincerely, /s/ J. A. Eugino J. A. Eugino Contracting Officer Enclosure CF: Project Engineer, Williams Gallegos EQUAL EMPLOYMENT IS THE LAW PRIVATE INDUSTRY, STATE, AND LOCAL GOVERNMENT Title VII of the Civil Rights Acts of 1964, as amended, prohibits job discrimination because of race, color, religion, sex or national origin. Applicants to and employees of private employers, state/local governments, and public/private educational institutions are protected. Also covered are employment agencies, labor unions and apprenticeship programs. Any person who believes he or she has been discriminated against should contact immediately The U.S. Equal Employment Opportunity Commission (EEOC) 2401 E St., N.W. Washington, D.C. 20506 or an EEOC District Office, listed in most telephone directories under U.S. Government. FEDERAL CONTRACT EMPLOYMENT Executive Order 11246, as amended, prohibits job discrimination because of race, color, religion, sex or national origin and requires affirmative action to ensure ^?????? of opportunity in all aspects of employment. Section 503 of the Rehabilitation Act of 1973 prohibits job discrimination because of handicap and requires affirmative action to employ and advance in employment qualified handicapped workers. Section 402 of the Vietnam Era Veterans' Readjustment Assistance Act of 1974 prohibits job discrimination and requires affirmative action to employ and advance in employment (1) qualified Vietnam era veterans during the first four years after their discharge and (2) qualified disabled veterans throughout their working life if they have a 30 percent or more disability. Applicants to and employees of any company with a federal government contract or subcontract are protected. Any person who believes a contractor has violated its affirmative action obligations, including nondiscrimination, under Executive Order 11246, as amended, or under Section 503 of the Rehabilitation Act should contact immediately The Employment Standards Administration Office of Federal Contract Compliance Programs (OFCCP) Third and Constitution Ave., N.W. Washington, D.C. 20210 or an OFCCP regional office, listed in most telephone directories under U.S. Government, Department of Labor, Complaints specifically under the veterans' law should be filed with the Veteran's Employment Service through local offices of the state employment service. All complaints must be filed within 180 days from date of alleged violation. [LOGO] U.S. Department of Labor Employment Standards Administration Office of Federal Contract Compliance Programs ??????^ DE OPORTUNIDAD EN EL EMPLEO ES LA LEY INDUSTRIAS PRIVADAS, GOBIERNOS LOCALES Y ESTATALES El Titulo VII de la Ley de Derechos Civiles de 1964, enmendado, prohibe la discriminacion en el empleo por razon de raza, color, religion, sexo o nacionalidad de origen. La ley protege a los empleados y solicitantes de empleo en empresas privadas, gobiernos estatales y locales e instituciones educacionales publicas y privadas. Tambien abarce las agencias de empleo, sindicatos de trabajadores y programas de aprendizaje, Cualquler persona, tanto hombre como mujer, que crea que has sido obeto de discriminacion debe escribir inmediatamente a The U.S. Equal Employment Opportunity Commission (EEOC) 2401 E St., N.W. Washington, D.C. 20506 o a cualquler oficina regional de EEOC, las que se encuentran en las gulas telefonicas locales balo el nombre de: U.S. Government. La Orden Ejectiva Numero 11246, enmendada, prohibe la discriminacion en el empleo por razon origon de raza; color; religion; sexo o-naolonalidad de origon y exige accion positiva para garantizar la iguaidad de oportunidad en todos los aspectos del empleo. Las Seccion 503 de la Ley de Rehabilitacion de 1973, prohibe la discriminacion en el empleo contra personas que sufran de impedimentos fisicos o mentales y exige accion positiva en el empleo y promocion de personas que sufran de impedimentos fisicos o mentales, siempre que reunan las condiciones indispensables para el desemperio del empleo. La Seccion 402 de la Ley de 1974 de Asistencia para el Reajuste de los Veteranos de la Era de Vietnam, prohibe la discriminacion en el empleo y exige accion positiva en el empleo y promocion de (1) veteranos de la era de Vietnam, durante los primeros cuatro anos despues de haber sido separados del servicio activo, siempre que reunan las condiciones indispensables para el desempeno del empleo (2) ciertos veteranos que tengan un 30 por ciento o mas de impedimentos fisicos o mentales mientras puedan trabajar, slempre que reunan las condiciones indispensables para el desempeno del empleo. La ley protege a los solicitantes de empleo y empleados de cualquier compania que tenga un contrato o subcontrato con el goblemo federal. Cualquier persona que crea que uno de estos contratistas no ha cumplido con sus obligaciones de tomar, accion positiva, inciuyendo la de no discriminar, bajo la Orden Ejecutiva 11246, enmendada, o bajo la Seccion 503 de la Ley de Rehabilitacion, debe escribir inmediatamente a The Employment Standards Administration Office of Federal Contract Compliance Programs (OFCCP) Third and Constitution Ave., N.W. Washington, D.C. 20210 o a cualquier oficina regional de OFCCP, las que se encuentran en la mayoria de las guias telefonicas bajo: U.S. Government; Department of Labor. Las reciamaciones especificaments comprendidas bajo la ley de veteranos, deben de dirigirse a Veterans' Employment Service por medio de los oficinas locales del servicio de empleo de estado. Todas las roclamaciones deben de ser registradas dentro de los 180 dias subsequentes a la fecha del supuesto acto de discriminacion. INSTRUCTIONS TO CONTRACTOR Relative to Labor Provisions of Contract These instructions contain a resume of the various provisions of the contract relative to labor, together with information for the guidance of the Contractor in complying therewith. CONVICT LABOR stipulates against employment of any person undergoing - ------------- imprisonment at hard labor. Equal Opportunity Clause requires the Contractor to take affirmative action to - ------------------------ employ personnel without regard to their race, creed, color, sex or national origin; to state this fact in all soliciations for employment; to send to each labor union with which he has an agreement, a notice advising the labor union or worker's representative of the Contractor's commitments under this Equal Opportunity clause; to comply with Executive Order 11246 of 24 September 1965, as amended; to furnish all information and reports and permit access to his books; and further provides that, in the event of non-compliance, the contract may be terminated and also, that the Contractor will include said provisions in his subcontracts. Davis-Bacon Act requires the Contractor and his subcontractors to pay all - --------------- mechanics and laborers employed directly upon the site of the work, unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll) deductions as are permitted by the Copeland Regulations (29 CFR, Part 3), in accordance with the wage rates contained in the wage determination decision of the Secretary of Labor which is included in the contract and made a part thereof; to post at the site of work in a prominent place where it can be easily seen by the workers, a copy of such wage determination; to classify or reclassify any class of laborers or mechanics, including apprentices and trainees not listed in the wage determination, conformably to the wage determination decision. CONTRACT WORK HOURS AND SAFETY STANDARDS ACT - OVERTIME COMPENSATION. - -------------------------------------------------------------------- Under this law no laborer or mechanic, including apprentices, trainees, watchmen and guards, shall be required or permitted to work more than eight (8) hours per day in any calendar day or in excess of forty (40) hours in any workweek in which he is employed on any work under this contract except upon the condition that compensation is paid to such laborer or mechanic for all hours worked in excess of eight (8) hours per day or in excess of forty (40) hours per week at not less than one and one-half times the basic rates of pay. In the event of any violation of the provisions of this clause, the Contractor shall be liable to any affected employee for any amounts due and to the United States for liquidated damages. Apprentices and Trainees shall be employed only when they are registered as - ------------------------ such. The Contractor shall furnish written evidence of the registration under a bona fide apprenticeship or trainee program. PAYROLLS AND BASIC RECORDS. Payrolls and basic records will be maintained during - -------------------------- the course of the work and shall be preserved for a period of three (3) years thereafter for all laborers and mechanics, including apprentices, trainees, watchmen, and guards working at the site of work. All employment records shall be available for inspection by representatives of the Contracting Officer and the U.S. Department of Labor, and shall permit such representatives to interview employees during working hours on the job. The Contractor will be responsible for timely submission of his own and all subcontractors' weekly payrolls under the contract. COMPLIANCE WITH COPELAND REGULATIONS. Rulings and interpretations of the - ------------------------------------ Secretary of Labor pursuant to said Act as outlined in Section 3 of the Copeland Act Regulations, set forth permissible deductions. Section 3.6 prescribes the procedure for making written application for other deduction required by compelling circumstances. Permissible deductions are set forth in the instructions accompanying the Sample Payroll furnished herewith. The application must be made prior to making said deductions and is applicable only to the contract under which the request is made. WITHHOLDING OF FUNDS. This clause provides that the Contracting Officer may - -------------------- withhold from the payment due the Contractor such amounts as may be necessary to pay laborers and mechanics, including apprentices, trainees, watchmen, and guards, employed by the Contractor or any subcontractor the full amount of wages as required by the Contract; and to pay liquidated damages under the clause "Contract Work Hours and Safety Standards Act - Overtime Compensation." SUBCONTRACTS provides that the foregoing clauses, and the clause CONTRACT - ------------ ----------------- -------- TERMINATION - DEBARMENT shall be incorporated into all subcontracts. - ----------------------- CONTRACT TERMINATION - DEBARMENT provides that breach of the above clauses may - -------------------------------- be grounds for debarment. 2 SUBCONTRACTORS requires, within seven (7) days after award of any subcontract - -------------- either by the Prime Contractor or a subcontractor, the submission of a statement signed by the subcontractor, setting forth the name and address of the subcontractor, a summary of the work, and acknowledgement of the inclusion of labor clauses in the subcontract. Minority Business Enterprises Subcontracting Program. This clause requires that, - ---------------------------------------------------- for contracts in excess of $500,000, the Contractor will establish and conduct a program to enable minority business enterprises to be considered fairly as subcontractors and suppliers. The Program will be implemented in accordance with paragraph (a)(1-7) of General Provision titled "Minority Business Enterprises Subcontracting Program." Local Affirmative Action Plan - This clause set forth the requirements that - ----------------------------- contractors and subcontractors include in all construction and subcontracts in excess of $10,000, the Provision of Clause 74 and any manpower utilization goals which may be applicable under the contract. THE CONTRACT PROVISIONS AND INSTRUCTION CONTAINED HEREIN ARE APPLICABLE TO ALL SUBCONTRACTORS EMPLOYING LABORERS AND MECHANICS, INCLUDING APPRENTICES, TRAINEES, WATCHMEN, AND GUARDS DIRECTLY UPON THE SITE OF THE WORK. ADDITIONAL COPIES OF THESE INSTRUCTIONS FOR USE OF SUCH SUBCONTRACTORS MAY BE OBTAINED ON REQUEST TO THE CONTRACT SECTION OF THE PROCUREMENT AND SUPPLY DIVISION, LOS ANGELES DISTRICT, CORPS OF ENGINEERS. 3 EX-21.01 11 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21.01 Subsidiaries of the Registrant ------------------------------
Jurisdiction Name of Incorporation Organization Ownership ---- ----------------------------- --------- Great Lakes Dredge & Dock Company New Jersey 100% Great Lakes International, Ind. Delaware 100% Dawson Dredging Company Delaware 100% Gates Construction Corp. New Jersey 100% Fifty-Three Dredging Corporation New Jersey 100% Amboy Aggregates (A JOINT VENTURE) New Jersey 50% NATCO Limited Partnership Delaware 75% North American Trailing Company Delaware 80%
EX-25.01 12 STATEMENTS OF ELIGIBILITY AND QUALIFICATION ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ---------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- GREAT LAKES DREDGE & DOCK CORPORATION (Exact name of obligor as specified in its charter) Delaware 13-3634726 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Table of Additional Registrants -------------------------------
Great Lakes Dredge New Jersey 36-1163930 & Dock Company Great Lakes International, Inc. Delaware 36-3015839 Dawson Dredging Company Delaware 36-3503893 Gates Construction Corp. New Jersey 22-1539854 Fifty-Three Dredging New Jersey 36-3177787 Corporation
2122 York Road Oak Brook, Illinois 60521 (Address of principal executive offices) (Zip code) ______________________ Series B 11-1/4% Senior Subordinated Notes due 2008 (Title of the indenture securities) ================================================================================ 1. General information. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject.
- --------------------------------------------------------------------------------- Name Address - --------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers. Yes. 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. 16. List of Exhibits. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a- 29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 25th day of September, 1998. THE BANK OF NEW YORK By: /s/ MARY BETH A. LEWICKI ------------------------------- Name: MARY BETH A. LEWICKI Title: ASSISTANT VICE PRESIDENT -4- Exhibit 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 1998, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin.................... $ 6,397,993 Interest-bearing balances............. 1,138,362 Securities: Held-to-maturity securities........... 1,062,074 Available-for-sale securities......... 4,167,240 Federal funds sold and Securities pur- chased under agreements to resell..... 391,650 Loans and lease financing receivables: Loans and leases, net of unearned income ...................36,538,242 LESS: Allowance for loan and lease losses ................631,725 LESS: Allocated transfer risk reserve............................0 Loans and leases, net of unearned income, allowance, and reserve...... 35,906,517 Assets held in trading accounts......... 2,145,149 Premises and fixed assets (including capitalized leases)................... 663,928 Other real estate owned................. 10,895 Investments in unconsolidated subsidiaries and associated companies............................. 237,991 Customers' liability to this bank on acceptances outstanding............... 992,747 Intangible assets....................... 1,072,517 Other assets............................ 1,643,173 ----------- Total assets............................ $55,830,236 =========== LIABILITIES Deposits: In domestic offices................... $24,849,054 Noninterest-bearing ........10,011,422 Interest-bearing ...........14,837,632 In foreign offices, Edge and Agreement subsidiaries, and IBFs...... 15,319,002 Noninterest-bearing ...........707,820 Interest-bearing ...........14,611,182 Federal funds purchased and Securities sold under agreements to repurchase... 1,906,066 Demand notes issued to the U.S. Treasury.............................. 215,985 Trading liabilities..................... 1,591,288 Other borrowed money: With remaining maturity of one year or less............................. 1,991,119 With remaining maturity of more than one year through three years........ 0 With remaining maturity of more than three years......................... 25,574 Bank's liability on acceptances exe- cuted and outstanding................. 998,145 Subordinated notes and debentures....... 1,314,000 Other liabilities....................... 2,421,281 ----------- Total liabilities....................... 50,631,514 ----------- EQUITY CAPITAL Common stock............................ 1,135,284 Surplus................................. 731,319 Undivided profits and capital reserves.............................. 3,328,050 Net unrealized holding gains (losses) on available-for-sale securities............................ 40,198 Cumulative foreign currency transla- tion adjustments...................... ( 36,129) ----------- Total equity capital.................... 5,198,722 ----------- Total liabilities and equity capital ... $55,830,236 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi | Alan R. Griffith | Directors J. Carter Bacot | - -------------------------------------------------------------------------------- EX-27 13 FINANCIAL DATA SCHEDULE
5 0000885538 GREAT LAKES DREDGE & DOCK CORP. 1,000 6-MOS 12-MOS DEC-31-1998 DEC-31-1997 JAN-01-1998 JAN-01-1997 JUN-30-1998 DEC-31-1997 550 1,717 0 0 43,999 40,749 482 450 9,626 9,195 80,319 91,156 217,960 212,040 80,652 73,324 234,907 245,555 41,134 49,594 0 0 0 0 0 0 60,000 60,000 22,867 18,156 234,907 245,555 0 0 127,017 258,296 0 0 105,933 228,383 9,920 18,922 0 0 2,195 6,303 9,455 8,136 3,411 2,667 4,710 3,802 0 0 0 0 0 0 4,710 3,802 0 0 0 0
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