EXHIBIT 3.01
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RESTATED CERTIFICATE OF INCORPORATION
OF
GREAT LAKES DREDGE & DOCK CORPORATION
1. Name. The name of the Corporation is Great Lakes Dredge & Dock
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Corporation.
2. Registered Office and Agent. The address of the Corporation's
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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
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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
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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
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1. Issue in Series. Preferred Stock may be issued from time to
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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
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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
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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,
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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
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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,
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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
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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
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1. Designation; Number of Shares. The first series of Preferred Shares
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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.
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2. Accrual and Payment of Dividends.
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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,
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however, that the foregoing shall not prohibit the Corporation from
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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
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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.
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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).
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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
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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.
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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."
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5. Redemption Procedure.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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C. CLASS A AND CLASS B COMMON STOCK
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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
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dividends as may be declared by the Board of Directors, provided that if
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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8. Merger, etc. In connection with any merger, consolidation, or
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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
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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
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ballot unless the bylaws of the Corporation shall so provide.
7. Right to Amend. The Corporation reserves the right to amend any
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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
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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.
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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
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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
--------------------------
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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.
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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
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