SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______ to_______
Commission File No. 1-8719
THE TURNER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3209884
(State or other jurisdiction of (I.
R.S
.
Emp
loy
er
incorporation or organization)
Identification No.)
375 Hudson Street, New York, New York 100
14
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (212)
229-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange
Title of Class on which regist
ere
d
Common Stock, $1 Par Value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form
10-K. [X]
As of March 21, 1994, the aggregate market value on that date of
the common stock held by non-affiliates (based upon the last sale
price for the common stock on the American Stock Exchange) was
$45,966,858.
As of March 21, 1994, 5,109,457 shares of the registrant's common
stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of definitive proxy statement to be filed pursuant to
Section 14(a) of the Securities Exchange Act of 1934 - Part III, Items
10-13.
PART I
Item 1. Business.
The Turner Corporation (the "company") is a holding company that
is engaged together with its subsidiaries in general building
construction and construction management in the United States and
abroad and in real estate investment in the United States. The Turner
Corporation establishes general policy direction, coordination and
planning, and provides cash management, internal accounting control
and other management services for its operating subsidiaries.
Due to economic conditions generally, and to factors specifically
affecting the commercial real estate market, beginning in 1989, there
was a significant slowdown in commercial construction. In an effort
to minimize the effects of this slowdown, during the last several
years, the company's construction subsidiaries increased their focus
on municipal, institutional, public, justice and amusement (i.e.,
hospital, university, aviation, aquariums, arenas and similar)
projects. Approximately 55% in dollar value of the contracts awarded
to the construction subsidiaries in 1993 were in this area.
During 1993, plans were developed to significantly reduce the
company's future operating costs and expenses and to improve
productivity. This restructuring program principally involves a
reduction in the number of staff, plus the consolidation of offices
and facilities and the reorganization of support functions. This
program will be implemented in 1994 and is expected to be completed in
1995.
During the early 1980's, the company acquired and developed a
number of properties. In 1987, the Company decided to discontinue its
property development activities and began trying to dispose of the
properties it owned.
During 1993, the company sold three real estate properties and a
number of condominium units for $23.5 million which was essentially
the carrying amount of the properties on the company's books. While
the company continues to seek purchasers for its real estate
properties, it is unlikely it will be able to dispose of its
properties in their entirety until there are more stable market
conditions in the areas in which the company's properties are located.
Financial information about the registrant's operations in its
construction and real estate segments appear in the consolidated
financial statements and in footnote 15 on page 34 in Part II, Item 8
of this report.
At December 31, 1993, The Turner Corporation and subsidiaries
employed approximately 2,500 staff employees, of which 1,400 held
supervisory positions and 1,100 held non-supervisory positions.
Construction Business.
The Turner Corporation's construction business is conducted by a
number of construction subsidiaries (together, "Turner Construction").
Turner Construction is engaged primarily in the construction of
commercial and multi-family residential buildings, manufacturing and
research facilities, hospitals, correctional facilities, stadiums and
other entertainment facilities, airports and other structures. Also,
it has a division which does interior work, such as building-out
office space. Turner Construction normally does not build roads,
dams, or similar infrastructure elements. Turner Construction
primarily acts as a general building contractor or as a construction
manager. However, Turner Construction also sometimes acts as a
consultant to owners and others.
Although Turner Construction is a nationwide (and to a lesser
extent, worldwide) construction firm, Turner Construction attempts to
compete locally in major cities of the United States through
essentially self-contained regional offices and partially self-
contained branch offices. Its effort is to be a major builder in each
city or region in which it has an office.
The Turner Corporation's principal construction subsidiary is
Turner Construction Company. Universal Construction Co., Inc., The
Lathrop Company Inc., and Turner Caribe Inc., wholly-owned subsidiary
companies of The Turner Corporation or Turner Construction Company,
are also engaged in construction activities in the United States
principally in the Southeast, Midwest and Puerto Rico. BFW
Construction Co., Inc. was a wholly owned subsidiary of the Company
through June 30, 1993 and was engaged in construction activities in
the Southwest.
When it acts as a general building contractor, Turner
Construction normally undertakes to construct a project and is paid
the entire price for the completed project. Most aspects of the
construction, however, are performed by subcontractors who are paid by
Turner Construction. The functions actually performed by Turner
Construction are the planning and scheduling of a construction
project, the procurement of materials, the marshalling of the manpower
required for the project, the awarding of subcontracts and the
direction and management of the construction operation. During 1993,
1992, and 1991 general building contracting activities represented
69%, 78%, and 83% respectively of Turner Construction's value of work
completed.
Turner Construction makes extensive use of specialty contractors
(such as structural steel contractors, electrical contractors and
plumbing contractors) as subcontractors in the performance of its
construction contracts. The extent to which work is performed by
workmen on its own payroll varies with the location of a particular
project and is largely dependent on the availability of experienced
subcontractors in a particular area. Work performed by Turner
Construction is generally limited to temporary facilities, foundation,
concrete, masonry and carpentry work.
In its performance of construction management services, Turner
Construction, for a fee, monitors and coordinates the progress of the
work done by specialty contractors who are employed directly by the
owner to build the project. During 1993, 1992 and 1991 management
construction services and consulting represented 31%, 22% and 17%,
respectively, of Turner Construction's value of work completed.
Construction management contracts involve less risk than do projects
in which Turner Construction is a general building contractor.
However, the profit from construction management contracts can be
substantially less than that which Turner Construction can earn when
it acts as a general building contractor.
Construction contracts include lump sum or fixed price contracts,
cost-plus fixed fee contracts and variations thereof including cost-
plus guaranteed total contracts. The majority of Turner
Construction's business involves negotiated contracts. The remainder
of its contracts are secured by competitive bidding.
Turner International Industries, Inc. and its subsidiaries were
engaged in construction activities during 1993 in the United Kingdom,
Kuwait, Taiwan and other foreign countries.
The company is also a partner with Karl Steiner Holding AG
("Steiner") of Switzerland in a joint venture by the name of Turner
Steiner International S.A., which renders general building
construction and construction consulting services outside Turner
Construction's and Steiner's respective home markets.
The United States building construction industry is intensely
competitive and Turner Construction Company and the other domestic
construction subsidiaries compete with other major contractors as well
as with small contractors. Competition in the industry takes on a
number of forms, including fee levels, quality of service and degree
of risk assumption. Construction companies can expand their
operations rapidly and each large population center generally has a
number of medium-sized building contractors accustomed to undertaking
all but the largest and most complicated projects. Through its
organizational structure of permanently established decentralized
branch offices and subsidiaries, Turner Construction competes directly
with those locally based contractors. Year-to-year operations may be
adversely affected by general economic conditions which are
unfavorable for business and industry. Exact statistical data is not
available for determining the relative size of construction companies,
however, based on the contract value of construction contracts
received in 1993 and published industry data, Turner Construction
believes that it is one of the largest building contractors operating
principally within the United States.
A portion of the company's construction activity is performed
under payment and performance bonds obtained through bonding capacity
from its sureties. Projects requiring surety bonds are usually either
publicly funded or private projects, which often require FHA - type
mortgage insurance. While the company's sureties limit the amount of
new payment and performance bonds available, this limitation did not
significantly restrict the company's ability to secure new work.
There could be certain circumstances, however, when this limitation
could influence the company's selection of prospective projects to
pursue.
At December 31, 1993, the anticipated earnings associated with
backlog from work to be completed under construction, construction
management and construction consulting contracts and under awards
believed to be firm but not yet confirmed by signed formal contracts
was $91.8 million. The anticipated earnings from work to be completed
on contracts and awards at December 31, 1992 was $96.6 million.
Approximately 49% of the December 31, 1993 earnings backlog from
construction contracts relates to work expected to be performed during
1995 and beyond. The backlog is important to long-range planning and
continuity of work for the company's permanent staff. However,
anticipated earnings from construction contracts cannot and should not
be used as the basis of predictions with respect to future net income.
The anticipated value of work to be completed under construction,
construction management and construction consulting contracts and
under awards believed to be firm but not yet confirmed by signed
formal contracts was $4.66 billion at December 31, 1993. The
anticipated value of work to be completed on contracts and awards at
December 31, 1992 was $5.09 billion. Approximately 53% of the
December 31, 1993 construction backlog is expected to be completed
during 1995 and beyond.
Value of construction completed represents the cost of work put
in place and materials fabricated during the year and related earnings
pursuant to construction and construction management contracts,
together with fees and reimbursed expenses from consulting contracts.
It is essentially a measure of construction activity during the year
rather than "sales" or "revenues" in the sense that those terms are
used in other industries.
Because of the varying proportion of construction, construction
management and construction consulting work, the impact of inflation
on the value of construction completed, changes in anticipated
earnings from construction contracts and anticipated value of work
completed will not necessarily be correlative.
At December 31, 1993, Turner Construction employed approximately
2,400 staff employees, of whom about 1,320 were executives, project
managers, superintendents, engineers, purchasing agents, estimators,
senior accountants and other supervisory personnel. In addition,
Turner Construction employs foremen and building craftsmen for
construction work which has not been subcontracted to specialty
contractors. During 1993, approximately 3,300 foremen and building
craftsmen were employed at various times.
Real Estate.
The Company's subsidiaries involved in real estate operations are
Rickenbacker Holdings, Inc. ("RHI"), and Turner Development
Corporation and subsidiaries ("TDC"). Turner Construction also has
certain real estate holdings, either directly or through joint venture
interests, which are currently being marketed. These holdings relate
to residential condominium developments in Boston and Puerto Rico.
From 1980 to 1987, TDC engaged in real estate development in the
United States, principally in Florida, Georgia, Illinois, Michigan and
Virginia. TDC developed and marketed office buildings and other
commercial and residential properties, principally in metropolitan
suburban areas.
TDC essentially discontinued new development activity in 1987.
It is attempting to sell land parcels previously held for development
as well as certain developed projects. At December 31, 1993, TDC
owned properties in seven states.
TDC's development projects were financed principally by
construction and mortgage loans. TDC is attempting to market projects
to institutional and other investors in commercial real estate. In
connection with sales of projects, TDC may be required to guarantee
levels of occupancy and rentals for limited periods.
Turner Medical Building Services ("TMBS") is engaged in project
consulting and development services for ancillary medical and other
health care facilities. Its principal clients are hospitals,
physician group practice clinics, nursing home and life care sponsors.
TMBS provides management of architectural and construction services.
TMBS subcontracts the design and construction of its projects.
At December 31, 1993, TDC (including Turner Medical Building
Services) had 4 employees, of whom 3 were management, marketing and
other supervisory personnel.
RHI owns and leases an air cargo distribution facility located at
the Rickenbacker Airport in Columbus, Ohio. It is attempting to
market fifteen hundred acres of an adjacent property. It has one
principal tenant of the facility whose lease expires in 1996. Unless
RHI is able to extend the lease or replace the tenant, its earnings
will be adversely affected.
Item 2. Properties.
The Company's executive offices and offices of subsidiary
companies are located in leased facilities in commercial office
buildings, except for Universal Construction Co., Inc., which owns a
small office building in which its offices are located. The company's
corporate headquarters and New York branch office are in 100,000
square feet of space which is leased until 2005. Rental expense for
this space during 1993 was $2,140,000. Each construction project has
temporary field offices.
Turner Construction operates three equipment and storage yards,
located in Newark, New Jersey, Cincinnati, Ohio and St. Louis,
Missouri for the storage and repair of its construction tools and
equipment. Turner Construction owns the Ohio storage and repair yards
and leases the New Jersey, and Missouri facilities. Universal
Construction Co., Inc., owns a yard, while The Lathrop Company, Inc.,
leases yards for the storage and repair of construction equipment.
Turner Construction leases major construction equipment such as
hoists, cranes and personnel lifts from equipment suppliers for use on
particular projects and generally owns only small tools and other
miscellaneous equipment; Universal Construction Co., Inc., and The
Lathrop Company, Inc. each own construction equipment, earth-moving
equipment and small tools.
TDC holds as an investment a wholly-owned apartment complex which
it had previously developed, located in Orlando, Florida (200 units).
This property is encumbered by a mortgage note payable.
RHI owns certain buildings and air cargo handling equipment at
the Rickenbacker Airport in Columbus, Ohio, which collateralize
related revenue bonds.
Item 3. Legal Proceedings.
The company is a defendant in various routine litigations
incident to its business. While in some instances the amounts sought
are very substantial, and certain parties are withholding amounts
included in construction receivables pending the outcome of the
litigation, in the opinion of management the resolution of such
litigation will not have a material adverse effect on the financial
position or results of operations of the company.
Item 4. Submission of Matters to a Vote of Security Holders.
None
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The Turner Corporation common stock is listed on the
American Stock Exchange under the symbol TUR.
Quarterly Stock Information
_________________________________________
1993 High Low Close
First $11.750 $7.375 $11.50
Second 12.875 11.00 12.50
Third 13.00 9.625 9.875
Fourth 10.50 6.75 7.875
_________________________________________
1992 High Low Close
First $11.875 $6.375 $9.75
Second 10.375 8.375 8.50
Third 9.875 8.00 9.00
Fourth 8.875 6.875 7.25
No dividends were declared or paid in 1993 or 1992. As of March
21, 1994, there were approximately 3,065 record holders of the
registrant's common stock.
Item 6. Selected Financial Data
The Turner Corporation and
Subsidiaries
FIVE- YEAR SUMMARY OF
FINANCIAL INFORMATION
(in thousands, except share
amounts)
1993 1992 1991 1990 1989
Value of construction $2,768, $2,644 $2,672, $3,258 $3,561
completed 379 ,794 475 ,325 ,597
Earnings from construction $67,434 $ $ $ $
contracts 73,118 68,672 84,107 83,004
Earnings (losses) from real (8,069 (7,603 (10,712 (30,23 ( (17,87
estate operations ) ) ) 3) d 6)
)
Gross earnings $59,365 $ $ $ $
65,515 57,960 53,874 65,128
Net income (loss) (6,205 ( 4,000 ( 11,342 ( (10,76 2,769
) a b c 8)
) ) )
Net income (loss) per common (1.55) .50 2.06 (2.41) .54
share - primary
Dividends per Series B 2.16 2.16 2.16 2.16 .87
preferred share
Dividends per Series C 85.00 38.00
preferred share -- -- --
Dividends per common share 1.00
-- -- .50 1.075
Stockholders' equity $54,683 $ $ $ $
60,721 46,403 35,755 50,309
Weighted average common 5,186,4 5,074, 4,981,1 4,925, 4,456,
shares outstanding - primary 42 943 52 072 240
Total assets $664,20 $ $ $ $
6 726,55 734,841 782,25 886,47
8 6 6
Notes payable due after one $ 69,545 $ $ $ $
year and convertible 77,635 103,420 78,393 100,96
debenture 7
(a) Includes restructuring
charges of $8,500.
(b) Includes extraordinary
gain of $316 and cumulative
effect of accounting change
of $1,454.
(c) Includes pension
curtailment gain of $29,862.
(d) Includes write-down of
real estate properties of
$15,900.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations 1993 vs. 1992
The company reported a net loss of $6.2 million in 1993 or $1.55 per
common share compared to net income of $4.0 million in 1992 or $0.50
per common share. This change is primarily attributable to provisions
for restructuring charges in 1993 of $5.6 million and real estate
valuation adjustments in 1993 of $4.0 million, both net of tax. Also
1992's net income included a non-recurring extraordinary gain of $.3
million from the extinguishment of debt and a gain of $1.5 million due
to the cumulative effect of an accounting change, both net of tax.
Gross earnings declined 9.4 percent from 1992 to $59.4 million
primarily due to a decline in construction earnings and an increase in
the real estate loss due to the valuation adjustments noted above.
General and administrative expenses also increased 26 percent
primarily due to increased interest costs associated with corporate
credit facilities and costs incurred in implementing the company's
"Total Quality Management" program.
1993's results are more fully described in the discussion that
follows.
Construction:
Earnings from construction for 1993 were $67.4 million or 7.8 percent
less than 1992. Despite a 4.7 percent increase in construction
completed, earnings from construction contracts declined, due in part
to the continuing soft market and to more intense competition that has
put pressure on fees from work secured over the last two years. In
addition, provisions were made for certain contract disputes that are
expected to be concluded in future periods.
The nature of the company's construction activity has also shifted in
recent years, resulting in a significant increase in construction
management contracts which represented 25 percent of the value of
construction completed in 1993 as opposed to 17 percent in 1992 and 11
percent in 1991. While this type of contract normally involves lower
risk than other types of construction contracts it also typically
carries lower fees than other types of contracts. Therefore, the
increasing frequency of construction management contracts has
contributed to the decline in the profitability ratio (construction
earnings divided by value of construction completed).
The value of new contracts secured in 1993 was $2.67 billion, down 15
percent from 1992. The reduction in sales is a result of a continuing
soft market and more intense competition. The sales increase that had
been experienced in 1992 by focusing on selected markets was not
repeated in 1993 due to the increased competition in these markets;
however, the commercial markets began to rebound in 1993 and the
company's penetration in these markets has also improved. In
addition, construction management sales in 1993 have declined in favor
of more traditional general contracting projects, the effects of which
should be reflected in 1994.
According to F.W. Dodge, the company's traditional non-residential
building market is expected to increase by approximately 10 percent in
1994 and management believes it is well positioned to take advantage
of this growth.
The company's sureties limit the annual amount of new payment and
performance bonds available to the company. This limitation did not
significantly restrict the company's ability to secure new business in
1993; however, there could be certain circumstances in which it could
influence the company's selection of prospective projects.
At the end of 1993 the anticipated earnings associated with backlog
from work to be completed under contracts and awards believed to be
firm were $91.8 million, down five percent from 1992. The backlog in
terms of value of construction to be completed declined 8.5 percent
from 1992 to $4.66 billion. The decline in both backlog earnings and
construction volume is a reflection of the reduced sales in 1993 and
carryover of the reduced fees from contracts secured in 1992. On
average, fees on contracts secured in 1993 were slightly higher than
fees secured in 1992, which management believes is an indication that
the decline in fees is reversing.
Approximately 49 percent of the earnings backlog and 53 percent of the
value of construction backlog relates to work to be performed in 1995
and beyond. Estimated earnings from construction backlog cannot and
should not be used as a basis for predicting future net income.
Real Estate:
Losses from real estate operations increased 6 percent from 1992 to
$8.1 million. While operating costs were reduced in 1993 due to the
sale of properties, the outsourcing of property management operations,
and reduced interest costs, an additional valuation provision of $6.0
million was charged to real estate operations in 1993 as a reserve
against asset values in relation to their carrying value.
The company's real estate portfolio is carried at estimated net
realizable value or at cost, as applicable. During 1993 the company
sold three properties and certain condominium units at their
approximate carrying value.
Management believes that the timing of future sales will depend upon
achieving reasonable values under more stable market conditions which
the company estimates may take up to two years for the developed
properties and a more prolonged period for the undeveloped land
parcels.
Until conditions in the real estate market improve to the point that
will permit the company to conduct real estate transactions, the
company will continue to review the asset values of the unsold
properties in relation to prospective net realizable value and make
adjustments as necessary.
As part of a transaction in 1986 in which the company acquired the
development rights to the 1,600-acre Rickenbacker Air Industrial Park,
the company entered into a lease, as lessor, for a 100-acre site for a
term of 10 years. Under the original term of the lease agreement, the
company may continue to experience losses of approximately $.5 million
per year, before taxes, primarily due to depreciation charges relating
to the facility's buildings and equipment. These losses do not have a
significant impact on the company's cash flow. The company is
currently negotiating with the tenant to renew the lease when it
expires in 1996. Unless the company is able to extend the lease or
replace the tenant, expiration of the lease will adversely affect the
company's earnings.
Operating and General and Administrative Expenses:
Recognizing the ongoing decline in its traditional markets and the
reduced profitability from work secured, the company has taken steps
to reduce its future expense base. In the fourth quarter the company
recorded an $8.5 million ($5.6 million after tax) provision for
restructuring. The provision included estimated expenses required to
implement the company's plan to consolidate certain support functions
company-wide and to scale down operations in shrinking geographic
markets. These measures were taken to streamline operations and
improve profitability and the company expects that they will begin to
benefit financial performance in the later periods of 1994 with the
full impact being felt in 1995 and thereafter. The benefits are
expected to come from reduced staff and staff support costs.
In total, operating and general and administrative expenses increased
2.3 percent to $59.8 million in 1993 exclusive of the restructuring
charge noted above. The majority of the change reflects an increase
in interest costs associated with corporate credit facilities, costs
incurred in implementing the company's "Total Quality Management"
program which was put in place in most of the company's business units
in 1993 and an increase in the company's employee benefit expenses.
Operating expenses for construction and real estate operating expenses
continued to decline due to the benefit of a full year of cost
reduction programs put into effect in prior years.
Other Income:
In 1993 the company recorded other losses of $.9 million down from
$2.9 million in 1992. The other losses are primarily associated with
the investment in Turner Steiner International S.A. (TSI), which
resulted in a $3.0 million loss to the company in 1993 compared to a
$1.7 million loss in 1992. This foreign investment continues to
operate at a loss as it establishes itself in markets in Europe, the
Middle East and the Far East. Work has been secured in all three
markets and TSI is expected to approach profitability in the latter
part of 1994. In 1992 other losses also included an investment in
other overseas operations which was sold in 1993. The 1993 losses were
partially offset by gains recorded from the company's investments in
marketable securities.
Income Taxes:
In 1993 the company derived a net tax benefit of 37 percent of the pre-
tax loss. In 1992 the provision for income taxes amounted to 44
percent of pre-tax income. The difference is primarily attributable
to a minimum state and local tax obligation not associated with
operating results.
The company has recorded $16.8 million of deferred tax assets having
resulted principally from net operating loss and tax credit
carryforwards. Management believes that no valuation allowance is
required for these assets due to available tax planning strategies
primarily related to the company's pension plan.
Fourth Quarter 1993 Compared to Third Quarter 1993:
Results for the fourth quarter of 1993 amounted to a net loss of $9.0
million or $1.83 per common share compared to net income of $.9
million or $0.09 per common share recorded in the third quarter. A
significant amount of the fourth quarter results were attributable to
the restructuring charge and the real estate valuation charge noted
above.
Fourth quarter construction operations reported value of construction
completed of $715.1 million and operating income of $5.8 million
compared to $735.2 million and $8.2 million, respectively in the third
quarter. The decline in fourth quarter performance is attributable to
projects winding down in the latter part of the year which have been
replaced by new work scheduled to start after the first quarter of
1994.
Exclusive of the valuation charge, real estate operating losses
decreased by 33 percent from the third to the fourth quarter.
Essentially this improvement was attributable to reduced costs due to
the sale of properties.
Operating and general and administrative expenses, exclusive of the
restructuring charge, increased 7 percent from the third quarter
primarily due to the reduction in construction activity noted above
which resulted in a reduction in the amount of staff costs chargeable
to projects.
In the fourth quarter of 1993 the company recorded a $1.1 million
other loss compared to $.4 million of other income recorded in the
third quarter. The positive results in the third quarter reflected
gains on the sale of marketable securities most of which were recorded
in that period. The losses in the fourth quarter were mostly
attributable to the TSI results.
1992 Compared to 1991:
The company reported net income of $4.0 million in 1992 compared with
$11.3 million in 1991. However, the 1991 net income was due entirely
to a $29.9 million gain from curtailment of a pension plan. The 1992
results were primarily due to improved performance in both the
construction and real estate segments of the company's operations, as
well as reductions in operating and overhead expenses. Included in
1992's results was a $1.7 million net loss associated with the
investment in Turner Steiner International S.A. which was charged to
Other Income.
Construction earnings increased by $4.4 million due to improved
earnings on work carried over from prior years. Losses from real
estate operations decreased by $3.1 million, primarily due to improved
operating results and declining interest rates. Operating and general
and administrative expenses decreased by $10.4 million due to the
company's continued cost containment efforts which had begun in prior
years. In 1992 the company also recorded an extraordinary gain of $.3
million from the extinguishment of debt and a gain of $1.5 million due
to the cumulative effect of an accounting change, both net of tax.
Financial Condition:
In total, the company recorded a decrease in cash and cash equivalents
in 1993 of $12.8 million or 33 percent from 1992, primarily related to
the paydown of real estate debt.
Operating activities provided positive cash flows of $8.5 million
primarily associated with construction profitability. The charges for
restructuring and real estate valuation had no cash impact in 1993.
Much of the restructuring charge is expected to be expended in the
first two quarters of 1994 and management believes that cash provided
from operations, its revolving credit facility and its short-term
borrowing capacity will be sufficient to fund the expenditures.
Cash flows provided by investing activities amounted to $5.5 million
and were due primarily to the funds received from the sale of real
estate properties. The company also invested $6.5 million in a
condominium project in Boston which is expected to be substantially
sold by the end of 1994. Cash flows used in financing activities
amounted to $26.9 million, primarily attributed to the paydown of debt
associated with the real estate properties sold.
Management believes the company's cash flows from construction
backlog, its $40 million revolving credit facility and amounts
available from overnight credit facilities will be sufficient to
support the company's operations. Debt maturing in 1994 will be paid
from funds generated from operations or will be refinanced prior to
its actual maturity date.
Fair Value of Financial Instruments:
As described in Note 16 to the financial statements, certain financial
instruments have fair values which differ from their carrying amounts.
The difference in the values related on Notes payable reflect current
favorable interest rates and terms, given the underlying value of the
loan collateral.
Inflation:
Inflation and changing prices during the current fiscal year have not
significantly affected the major markets in which the company conducts
its business. Domestically, prices have remained relatively stable.
In view of the moderate rate of inflation, its impact on the company's
business has not been significant.
Investments in Equity Securities:
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" which mandates that debt
and equity securities not classified as either held-to-maturity
securities or trading securities are classified as available-for-sale
securities and reported at fair value, with unrealized gains and
losses excluded from earnings and reported as a separate component of
stockholders' equity. The Statement is effective for fiscal years
beginning after December 15, 1993, and is to be initially applied as
of the beginning of an enterprise's fiscal year. The company's
investment in marketable securities would be classified as available-
for-sale. The company will adopt the standard at the beginning of
1994 and management believes that the impact will not be material to
the financial statements.
Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page No.
Financial Statements:
Report of Independent Public Accountants 14
Consolidated Balance Sheets - as of December 31, 1993
and 1992 15
Consolidated Statements of Operations - for the years ended
December 31, 1993, 1992 and 1991 16
Consolidated Statements of Stockholders' Equity - for the
years ended December 31, 1993, 1992 and 1991 17
Consolidated Statements of Cash Flows - for the years
ended December 31, 1993, 1992 and 1991 18
Notes to Consolidated Financial Statements 19-36
Responsibilities for Financial Reporting 37
Schedules Included - for the years ended December 31, 1993, 1992 and
1991:
II - Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees
Other than Related Parties. 38-40
IX - Short-Term Borrowings 41
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Turner Corporation:
We have audited the accompanying consolidated balance sheets of The
Turner Corporation (a Delaware corporation) and Subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1993. These financial
statements and the schedules referred to below are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
As further discussed in Note 4 to the consolidated financial
statements, the Company has significant interests in real estate
properties which are carried at the lower of cost or estimated net
realizable value. The financial statements do not purport to present
these real estate interests at their current market value or
liquidation value, which may be less than the carrying amounts
presented. The Company's management presently intends to hold these
real estate interests until they can be sold for prices which they
believe reflect reasonable values under more stable market conditions.
Management expects to dispose of their interests in the developed
properties for those prices generally within the next two years, and
to hold the undeveloped land parcels for a longer period of time.
In our opinion, the financial statements referred to above present
fairly, in all materials respects, the financial position of The
Turner Corporation and Subsidiaries as of December 31, 1993 and 1992,
and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles.
As discussed in Note 10 to the consolidated financial statements,
effective January 1, 1993, the Company changed its method of
accounting for postretirement benefits other than pensions. As also
discussed in Note 10 to the consolidated financial statements,
effective January 1, 1992, the Company changed its method of
accounting for amortizing unrecognized pension actuarial gains and
losses for the defined benefit pension plan.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the
index to the financial statements are presented for the purposes of
complying with the Securities and Exchange Commission's rules and are
not part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein
in relation to the basic financial statements taken as a whole.
New York, New York ARTHUR ANDERSEN & CO.
March 4, 1994
The Turner Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
As of 1993 1992
Decembe
r 31,
Assets
Cash $25,485 $38,305
and
cash
equival
ents
Marketa 13,046 13,613
ble
securit
ies
Constru
ction
receiva
bles:
(Note
3)
315,741 341,982
Due on
contrac
ts
includi
ng
retaina
ge
83,135 84,597
Estimat
ed
unbille
d
constru
ction
costs
and
related
earning
s
Real 117,275 142,348
estate
(Note
4)
Propert 17,725 21,849
y and
equipme
nt, net
(Note
5)
Prepaid 63,207 53,533
pension
cost
(Note
10)
Other 28,592 30,331
assets
Total $664,20 $726,55
assets 6 8
Liabili
ties
Constru
ction
account
s
payable
:
$239,15 $257,15
Trade 6 4
117,647 129,094
Due on
complet
ion of
contrac
ts
78,495 81,160
Accrued
estimat
ed work
complet
ed
Notes 102,365 133,045
payable
and
convert
ible
debentu
re
(Note
6)
Deferre 13,708 18,165
d
income
taxes
(Note
7)
Other 58,152 47,219
liabili
ties
Total 609,523 665,837
liabili
ties
Commitm
ents
and
conting
encies
(Note
13)
Stockho (Note 12)
lders'
Equity
Preferr
ed
stock,
$1 par
value
(2,000,
000
shares
authori
zed):
Series
C 8
1/2%
cumulat
ive
convert
ible
(9,000
shares
issued
and
outstan
ding;
9 9
$9,000
liquida
tion
prefere
nce)
Series
B
cumulat
ive
convert
ible
(850,00
0
shares
issued;
849,011
849 849
and
849,494
outstan
ding)
Common
stock,
$1 par
value
5,135 5,071
(20,000
,000
shares
authori
zed,
5,134,7
78 and
5,070,5
35
issued)
Paid in 37,280 36,699
capital
Cumulat (787) (783)
ive
foreign
transla
tion
adjustm
ent
Retaine 24,834 32,869
d
earning
s
67,320 74,714
Less: (12,105 (13,668
Loan to ) )
Employe
e Stock
Ownersh
ip Plan
(Note
11)
(532) (325)
Treasur
y
stock,
at cost
(53,489
and
22,647
common
shares)
Total 54,683 60,721
stockho
lders'
equity
Total $664,20 $726,55
liabili 6 8
ties
and
stockho
lders'
equity
The
accompa
nying
Notes
to
Consoli
dated
Financi
al
Stateme
nts are
an
integra
l part
of
these
stateme
nts.
The Turner Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share amounts)
For the years ended December 31, 1993 1992 1991
Value of construction completed (see $ 2,768, $2,644, $ 2,672,
below) 379 794 475
Earnings from construction contracts $67,43 $73,11 $68,67
4 8 2
Losses from real estate operations (see (8,069 (7,603 (10,71
below) ) ) 2)
Gross earnings 59,365 65,515 57,960
Operating expenses - construction 40,156 41,160 47,605
Operating expenses - real estate and other 3,053 4,143 6,027
General and administrative expenses 16,555 13,107 15,194
Restructuring charges (Note 2) 8,500 - -
Income (loss) from operations (8,899 7,105 (10,86
) 6)
Other income (loss), net (Note 14) (870) (2,903 29,816
)
Income (loss) before income taxes (9,769 4,202 18,950
)
Income tax provision (benefit): (Note 7)
Current 252 405 1,226
Deferred (3,816 1,567 6,382
)
Total income tax provision (benefit) (3,564 1,972 7,608
)
Income (loss) before extraordinary gain
and cumulative effect
of accounting change (6,205 2,230 11,342
)
Extraordinary gain, net of tax (Note 6) - 316 -
Cumulative effect of accounting change, - 1,454 -
net of tax (Note 10)
Net income (loss) $ (6,205 $ 4,000 $ 11,342
)
Primary earnings (loss) per common share:
Before extraordinary gain and $ (1.55) $ 0.15 $ 2.06
cumulative effect of accounting change
Extraordinary gain - 0.06 -
Cumulative effect of accounting - 0.29 -
change
Net income (loss) per common share $ (1.55) $ 0.50 $ 2.06
Fully diluted earnings (loss) per common
share:
Before extraordinary gain and (a) $ 0.15 $ 1.80
cumulative effect of accounting change
Extraordinary gain - 0.05 -
Cumulative effect of accounting - 0.25 -
change
Net income (loss) per common share (a) $ 0.45 $ 1.80
Weighted average common and common
equivalent shares outstanding
Primary 5,186, 5,074, 4,981,
442 943 152
Fully diluted (a) 5,924, 5,831,
437 152
Value of construction completed consists 1993 1992 1991
of the following:
Revenue from construction contracts:
Construction costs incurred by the $ 1,848, $1,993, $ 2,110,
company 800 749 379
Company's share of joint venture 160,02 134,28 200,04
construction costs 1 0 1
Earnings from construction contracts
(including joint venture earnings
of $3,253, $3,785 and $5,129 for 67,434 73,118 68,672
1993, 1992 and 1991, respectively)
Total revenue from construction contracts 2,076, 2,201, 2,379,
255 147 092
Construction costs incurred by owners
in connection with work
under construction management and 692,12 443,64 293,38
similar contracts 4 7 3
Value of construction completed $ 2,768, $2,644, $ 2,672,
379 794 475
Losses from real estate operations consist 1993 1992 1991
of the following:
Real estate sales $ 23,537 $ 252 $ 2,574
Cost of sales (23,57 (252) (2,666
1) )
Rental and other income 13,497 15,026 14,513
Direct operating costs (10,05 (14,87 (18,93
4) 9) 1)
Depreciation and amortization expense (5,460 (5,930 (6,202
) ) )
Write-downs and reserves (6,018 (1,820 -
) )
Losses from real estate operations $ (8,069 $(7,603 $ (10,71
) ) 2)
The accompanying Notes to Consolidated (a)
Financial Statements are an integral part Antidi
of these statements. lutive
The Turner Corporation
and Subsidiaries
CONSOLIDATED STATEMENTS
OF STOCKHOLDERS' EQUITY
(in thousands, except
share amounts)
For the years ended 19 19 19
December 31, 93 92 91
Shares Amount Shares Amount Shares Amount
Convertible preferred
stock, Series C
Balance at beginning of 9,000 $9 -- $-- -- $--
year
Preferred stock issued -- -- 9,000 9 -- --
Balance at end of year 9,000 9 9,000 9 -- --
Convertible preferred
stock, Series B
Balance at beginning of 849,49 849 850,00 850 850,00 850
year 4 0 0
Preferred stock retired (483) -- (506) (1) -- --
Balance at end of year 849,01 849 849,49 849 850,00 850
1 4 0
Common stock
Balance at beginning of 5,070, 5,071 4,980, 4,980 4,880, 4,880
year 535 088 311
Common stock issued 64,243 64 90,447 91 99,777 100
Balance at end of year 5,134, 5,135 5,070, 5,071 4,980, 4,980
778 535 088
Paid in capital
Balance at beginning of 36,699 26,997 26,202
year
Excess of proceeds over
par value of
Series C preferred -- 8,991 --
stock issued
Excess of proceeds over
par value of
common stock issued 575 695 774
Excess of proceeds over
cost of
treasury stock 6 16 21
issued
Balance at end of year 37,280 36,699 26,997
Cumulative foreign
translation adjustment
Balance at beginning of (783) (1,088 (1,068
year ) )
Change in cumulative
translation adjustments
during the year (4) 305 (20)
Balance at end of year (787) (783) (1,088
)
Unrealized loss on
marketable equity
securities
Balance at beginning of -- -- (456)
year
Sale of marketable -- -- 456
equity securities
Balance at end of year -- -- --
Retained earnings
Balance at beginning of 32,869 30,306 22,494
year
Net income (loss) for (6,205 4,000 11,342
the year )
Cash dividends on
Series C preferred
stock, $85.00,
$38.00 per share (765) (342) --
Cash dividends on (1,835 (1,835 (1,836
Series B preferred ) ) )
stock, $2.16 per share
Tax benefits on Series 770 740 740
B preferred stock
dividends
Cash dividends on -- -- (2,434
common stock, $0, $0, )
$.50 per share
Balance at end of year 24,834 32,869 30,306
Loan to Employee Stock
Ownership Plan (ESOP)
Balance at beginning of (13,66 (15,26 (16,74
year 8) 0) 2)
Repayment from loan to 1,563 1,592 1,482
ESOP
Balance at end of year (12,10 (13,66 (15,26
5) 8) 0)
Treasury stock
Balance at beginning of 22,647 (325) 25,965 (382) 27,371 (405)
year
Purchase of treasury 32,900 (240) -- -- 1,500 (22)
stock
Treasury stock issued (2,058 33 (3,318 57 (2,906 45
) ) )
Balance at end of year 53,489 (532) 22,647 (325) 25,965 (382)
Total stockholders' $54,68 $60,72 $46,40
equity 3 1 3
The accompanying Notes
to Consolidated
Financial Statements are
an integral part of
these statements.
T
h
e
T
u
r
n
e
r
C
o
r
p
o
r
a
t
i
o
n
a
n
d
S
u
b
s
i
d
i
a
r
i
e
s
C
O
N
S
O
L
I
D
A
T
E
D
S
T
A
T
E
M
E
N
T
S
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F
C
A
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F
L
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(
i
n
t
h
o
u
s
a
n
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,
e
x
c
e
p
t
s
h
a
r
e
a
m
o
u
n
t
s
)
F 1993 1992 1991
o
r
t
h
e
y
e
a
r
s
e
n
d
e
d
D
e
c
e
m
b
e
r
3
1
,
C
a
s
h
f
l
o
w
s
f
r
o
m
o
p
e
r
a
t
i
n
g
a
c
t
i
v
i
t
i
e
s
:
Ne ($6,20 $4,000 $11,34
t 5) 2
in
co
me
(l
os
s)
Ad
ju
st
me
nt
s
to
re
co
nc
il
e
ne
t
in
co
me
(l
os
s)
to
ne
t
ca
sh
pr
ov
id
ed
by
op
er
at
in
g
ac
ti
vi
ti
es
:
R 8,500 - -
e
s
t
r
u
c
t
u
r
i
n
g
c
h
a
r
g
e
s
W 6,018 1,820 -
r
i
t
e-
d
o
w
n
s
a
n
d
r
e
s
e
r
v
e
s
E - (571) -
x
t
r
a
o
r
d
i
n
a
r
y
g
a
i
n
C - (2,423 -
u )
m
u
l
a
t
i
v
e
e
f
f
e
c
t
o
f
a
c
c
o
u
n
t
i
n
g
c
h
a
n
g
e
E 3,027 3,928 875
q
u
i
t
y
i
n
a
f
f
i
l
i
a
t
e
s
'
n
e
t
l
o
s
s
D 9,824 11,043 11,450
e
p
r
e
c
i
a
t
i
o
n
a
n
d
a
m
o
r
t
i
z
a
t
i
o
n
N (9,674 (9,549 (4,824
e ) ) )
t
p
e
r
i
o
d
i
c
p
e
n
s
i
o
n
c
r
e
d
i
t
P (3,816 2,536 6,382
r )
o
v
i
s
i
o
n
(
b
e
n
e
f
i
t
)
f
o
r
d
e
f
e
r
r
e
d
i
n
c
o
m
e
t
a
x
e
s
P - - (29,86
e 2)
n
s
i
o
n
c
u
r
t
a
i
l
m
e
n
t
g
a
i
n
C
h
a
n
g
e
s
i
n
o
p
e
r
a
t
i
n
g
a
s
s
e
t
s
a
n
d
l
i
a
b
i
l
i
t
i
e
s
:
De 27,703 23,757 82,180
cr
ea
se
in
co
ns
tr
uc
ti
on
re
ce
iv
ab
le
s
De 88 2,253 311
cr
ea
se
in
in
co
me
ta
xe
s
re
ce
iv
ab
le
De (32,11 (25,85 (80,15
cr 0) 7) 2)
ea
se
in
co
ns
tr
uc
ti
on
ac
co
un
ts
pa
ya
bl
e
De 5,142 (8,986 9,216
cr )
ea
se
(i
nc
re
as
e)
in
ot
he
r
as
se
ts
an
d
li
ab
il
it
ie
s,
ne
t
8,497 1,951 6,918
Ne
t
ca
sh
pr
ov
id
ed
by
op
er
at
in
g
ac
ti
vi
ti
es
C
a
s
h
f
l
o
w
s
f
r
o
m
i
n
v
e
s
t
i
n
g
a
c
t
i
v
i
t
i
e
s
:
(25,91 (13,61 -
Pu 3) 3)
rc
ha
se
s
of
ma
rk
et
ab
le
se
cu
ri
ti
es
26,480 - -
Pr
oc
ee
ds
fr
om
sa
le
of
ma
rk
et
ab
le
se
cu
ri
ti
es
(8,137 (3,180 -
In ) )
ve
st
me
nt
s
in
jo
in
t
ve
nt
ur
es
(4,610 (4,373 (14,11
Pu ) ) 1)
rc
ha
se
s
of
pr
op
er
ty
an
d
eq
ui
pm
en
t
4,162 591 480
Pr
oc
ee
ds
fr
om
sa
le
of
pr
op
er
ty
an
d
eq
ui
pm
en
t
- - 1,058
Pr
oc
ee
ds
fr
om
sa
le
of
in
ve
st
me
nt
s
17,465 - 2,342
Pr
oc
ee
ds
fr
om
sa
le
of
re
al
es
ta
te
,
ne
t
(3,911 (2,468 (875)
In ) )
cr
ea
se
in
re
al
es
ta
te
5,536 (23,04 (11,10
Ne 3) 6)
t
ca
sh
pr
ov
id
ed
by
(u
se
d
in
)
in
ve
st
in
g
ac
ti
vi
ti
es
C
a
s
h
f
l
o
w
s
f
r
o
m
f
i
n
a
n
c
i
n
g
a
c
t
i
v
i
t
i
e
s
:
639 786 874
Co
mm
on
st
oc
k
is
su
ed
- 15,000 -
Co
nv
er
ti
bl
e
pr
ef
er
re
d
st
oc
k
is
su
ed
- - (2,434
Ca )
sh
di
vi
de
nd
s
to
co
mm
on
st
oc
kh
ol
de
rs
(2,600 (2,177 (1,836
Ca ) ) )
sh
di
vi
de
nd
s
to
pr
ef
er
re
d
st
oc
kh
ol
de
rs
1,563 1,592 1,482
Re
pa
ym
en
ts
fr
om
lo
an
to
ES
OP
62,963 42,386 10,852
Pr
oc
ee
ds
fr
om
bo
rr
ow
in
gs
(89,21 (34,32 (9,665
Pa 7) 1) )
ym
en
ts
on
bo
rr
ow
in
gs
- (1,201 -
Ca )
sh
us
ed
fo
r
de
bt
re
st
ru
ct
ur
in
g
- (5,034 -
Fu )
nd
in
g
of
jo
in
t
ve
nt
ur
e
bo
rr
ow
in
gs
39 73 66
Pr
oc
ee
ds
fr
om
is
su
an
ce
of
tr
ea
su
ry
st
oc
k
(240) - (22)
Pu
rc
ha
se
of
tr
ea
su
ry
st
oc
k
(26,85 17,104 (683)
Ne 3)
t
ca
sh
pr
ov
id
ed
by
(u
se
d
in
)
fi
na
nc
in
g
ac
ti
vi
ti
es
Ne (12,82 (3,988 (4,871
t 0) ) )
de
cr
ea
se
in
ca
sh
an
d
ca
sh
eq
ui
va
le
nt
s
Ca 38,305 42,293 47,164
sh
an
d
ca
sh
eq
ui
va
le
nt
s
at
be
gi
nn
in
g
of
ye
ar
Ca $25,48 $38,30 $42,29
sh 5 5 3
an
d
ca
sh
eq
ui
va
le
nt
s
at
en
d
of
ye
ar
No
nc
as
h
fi
na
nc
in
g
ac
ti
vi
ti
es
:
Mo
rt
ga
ge
no
te
as
su
me
d
by
th
e
bu
ye
r
in
co
nn
ec
ti
on
w $4,426 $ $ -
i -
t
h
t
h
e
s
a
l
e
o
f
r
e
a
l
e
s
t
a
t
e
- 6,000 -
Se
ri
es
D
co
nv
er
ti
bl
e
pr
ef
er
re
d
st
oc
k
ex
ch
an
ge
d
fo
r
a
co
nv
er
ti
bl
e
de
be
nt
ur
e
- 2,500 -
No
te
pa
ya
bl
e
fo
rg
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THE TURNER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share amounts)
1. Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated financial statements
include the accounts of The Turner Corporation and Subsidiaries and
their proportionate interest in the accounts of construction joint
ventures (the company). The company also has investments in
affiliates and in real estate joint ventures, which are accounted for
under the equity or cost method, as appropriate. All significant
intercompany transactions and balances are eliminated. Certain prior
year balances have been reclassified in the consolidated financial
statements in order to provide a presentation consistent with the
current year.
Construction Operations: The company determines construction earnings
under the percentage of completion method. Under this method, the
company recognizes as earnings that portion of the total earnings
anticipated from a contract which the value of the work completed
bears to the estimated total value of the work covered by the
contract. As the company's construction contracts generally extend
over more than one year, revisions in costs and earnings estimates
during the course of the work are reflected in the year in which the
facts which require the revision become known. When a loss is
forecasted for a contract, the full amount of the anticipated loss is
recognized in the period in which it is determined that a loss will
occur. Claims are included in earnings from construction contracts at
an amount based on the related contract costs when realization is
probable and the amount can be reliably estimated.
The company continuously reviews estimated earnings from construction
contracts and makes necessary adjustments based on current evaluations
of the indicated outcome. In 1993 and 1992, the company wrote down
certain construction receivables and claims deemed unrecoverable.
Under certain contracts, owners of buildings make payments directly to
suppliers and subcontractors for all or for portions of work covered
by the contract. The company considers such costs in determining
contract percentage of completion and reports such amounts in the
value of construction completed.
Real Estate Operations: Rental income, including fixed minimum rents
and additional rents, under operating leases with tenants is generally
recognized on a contractual basis.
Profit on sales of real estate is recognized in full when the profit
is determinable, an adequate down payment has been received,
collectability of the sales price is reasonably assured and the
earnings process is substantially complete. If the sales transaction
does not meet these criteria, all profit or a portion thereof is
deferred until such criteria are met.
The real estate properties which are held for investment are carried
at cost less accumulated depreciation and are assessed periodically
for impairment based on the sum of undiscounted future cash flows.
All other real estate properties and investments in real estate joint
ventures are carried at the lower of cost or estimated net realizable
value (Note 4).
Depreciation and Amortization: The company calculates depreciation on
property and equipment, and on real estate primarily on the straight-
line method. Estimated useful lives are as follows: buildings and
improvements, 20-40 years; office machines and furniture, 5-10 years;
and equipment, 10 years. Leasehold improvements (the company as
lessee) to property used in company operations are amortized on a
straight-line basis over the term of the lease. Tenant improvements
(the company as lessor) on real estate properties are amortized on a
straight-line basis over the term of the lease. Maintenance and
repairs are expensed currently, except that expenditures for
betterments are capitalized.
Cash Equivalents: The company considers all investments purchased
with maturities of 90 days or less to be cash equivalents.
Marketable Securities: Marketable securities are carried at the lower
of cost or market. Unrealized losses on marketable securities, held
for short term investment, are charged to expense.
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" which mandates that
debt and equity securities not classified as either held-to-maturity
securities or trading securities are classified as available-for-sale
securities and reported at fair value, with unrealized gains and
losses excluded from earnings and reported as a separate component of
stockholders' equity. SFAS No. 115 is effective for fiscal years
beginning after December 15, 1993, and is to be initially applied as
of the beginning of an enterprise's fiscal year. The company's
investments in marketable securities would be classified as available-
for-sale. The company will adopt the standard at the beginning of
1994 and management believes that the impact will not be material to
the financial statements.
Income Taxes: Prior to January 1, 1993, deferred income tax expenses
or credits were recorded to reflect the tax consequences of timing
differences between the recording of income and expenses for financial
reporting purposes and for purposes of filing income tax returns in
effect when the difference arose.
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred assets or liabilities are computed based
on the difference between the financial statement and income tax bases
of assets and liabilities using the enacted marginal tax rate.
Deferred income tax expenses or credits are based on the changes in
the asset or liability from period to period. The adoption of the
standard effective January 1, 1993 was not material to the
consolidated financial statements.
The company does not provide for U.S. Federal income taxes on
undistributed earnings of foreign subsidiaries since it is the
company's intention to permanently reinvest those earnings outside the
United States.
Foreign Currency Translation: Assets and liabilities of operations
that represent an investment in a foreign country are translated into
U.S. dollars at exchange rates in effect at year-end, while revenues
and expenses are translated at average exchange rates prevailing
during the year. The resulting translation gains and losses are
accumulated as a separate component of stockholders' equity. Foreign
exchange transaction gains and losses are included in results of
operations during the periods in which they arise.
Earnings Per Common Share: Primary earnings per common share is based
on net income less preferred stock dividends (net of tax benefits
relating to Series B preferred stock) divided by the weighted average
number of common and common equivalent shares outstanding. Fully
diluted earnings per common share is further adjusted to reflect the
assumed conversion of convertible preferred stock and the convertible
debenture, and the elimination of the preferred stock dividends and
interest expense on the convertible debenture, net of applicable
income taxes, if such conversions are dilutive.
2. Restructuring Charges
During 1993, plans were developed to significantly reduce the
company's future operating costs and expenses and to improve
productivity. This restructuring program principally involves a
reduction in the number of staff, plus the consolidation of offices
and facilities and the reorganization of support functions. This
program will be implemented in 1994 and is expected to be completed in
1995. The results of operations for 1993 include $8,500 of pretax
charges ($5,600 net of tax benefits, or $1.08 per share) relating to
this program. The charges include provisions for severance pay,
incentive programs relating to employee terminations, lease
terminations and other reorganization costs. The restructuring charge
is expected to be substantially expended in the first two quarters of
1994 and management believes that cash provided from operations, its
revolving credit facility and its short-term borrowing capacity will
be sufficient to fund the expenditures.
3. Construction Receivables
Due on contracts included $106,665 of retainage at December 31, 1993.
It is expected that approximately 85% of such retention will be
collected by December 31, 1994. At December 31, 1992, retainage was
$115,911. Construction receivables include estimated net claims. The
settlement of the claims depends on individual circumstances,
accordingly, the timing of the collection will vary and may extend
beyond one year. Those claims, primarily due to owner-caused delays,
incomplete specifications, or similar reasons, amounted to $10,800 and
$7,300 at December 31, 1993 and 1992, respectively.
4. Real Estate
The company owns a portfolio of real estate, either directly or
through joint venture interests, that includes commercial office
properties, mixed-use warehouse/service properties, residential
properties, undeveloped land, and certain buildings and hangars
located at an air industrial park. The properties are located
throughout the United States, but primarily in the Southeast and Great
Lakes regions. Accumulated depreciation at December 31, 1993 and 1992
was $32,710 and $31,050, respectively.
Given the current real estate market, the company has determined that
its interests in commercial office, mixed-use and residential
condominium properties, and undeveloped land parcels will be available
for sale when they can be sold for prices which the company believes
reflect the reasonable value of the properties under more stable
market conditions. Management expects to dispose of its interests in
commercial office, mixed-use and residential condominium properties
for those prices generally within the next two years. Given the
current market for undeveloped land parcels, management anticipates a
prolonged period before land values recover. Due to the relatively
low holding costs of the company's undeveloped land parcels, the
company intends to and has the ability to hold the properties for a
longer period of time in order to achieve more reasonable prices upon
disposition. The carrying amounts of the company's interests in these
developed properties were $55,609 and $54,102, and in the undeveloped
land parcels were $30,498 and $30,964 at December 31, 1993 and 1992,
respectively. These real estate interests are carried at the lower of
cost or estimated net realizable value. The net realizable values
reflect the company's estimates of the net sales proceeds less
anticipated capital expenditures through the estimated date of sale
and disposal costs, which have not been discounted to net present
value.
The company estimates the net realizable values by evaluating and
making assumptions about future events with respect to the property,
market conditions and anticipated investor rates of return. The net
realizable values reflect each disposition based on the company's
current intended holding period, and do not represent liquidation
values. Judgements regarding future events are not subject to precise
quantification or verification and may change from time to time as
economic and market factors, and the company's evaluation of them
change, and the effects of such changes may be significant.
The company actively monitors market conditions and reviews, on a
quarterly basis, the net realizable values of its real estate
interests and reduces carrying amounts when required. On a periodic
basis, generally not exceeding two to three years, the company has
independent appraisals performed for significant real estate interests
for the purpose of assisting management in determining their current
value and the appropriate timing of disposition. In connection with
the company's review of the carrying amounts of its real estate
interests, additional write-downs and reserves of $6,018 and $1,820
were recorded for the years ended December 31, 1993 and 1992,
respectively.
5. Property and Equipment
Property and equipment as of December 31, 1993 and 1992 consisted of:
1993 1992
Buildi $12,63 $13,43
ngs 3 2
and
improv
ements
Office 16,610 17,104
machin
es and
furnit
ure
Equipm 16,508 20,547
ent
Total 45,751 51,083
Less:
accumu
lated
deprec
iation
(28,02 (29,23
and 6) 4)
amorti
zation
Net $17,72 $21,84
5 9
6. Notes Payable and Convertible Debenture
Notes payable and convertible debenture as of December 31, 1993 and
1992 consisted of the following:
1993 1992
Land $31,87 $39,66
and 7 5
buildi
ng
mortga
ges
Revenu 20,500 38,135
e
bonds
Employ 12,800 14,300
ee
Stock
Owners
hip
Plan
Revolv 24,000 19,000
ing
credit
facili
ty
Conver 6,000 6,000
tible
debent
ure
Collat - 5,500
erized
credit
facili
ty
Other 7,188 10,445
Total $102,3 $133,0
65 45
Land and Building Mortgages: Variable rate mortgages bear interest at
rates ranging from prime to prime plus 1 percent and mature in varying
installments through 1998. The weighted average interest rate for
1993 and 1992 was approximately 6.64% and 6.87%, respectively. Fixed
rate mortgages bear interest at 9.375% and are due in varying
installments through 2001.
Revenue Bonds: Adjustable rate revenue refunding bonds collateralized
by properties at the air industrial park mature in varying
installments through 2010. The bonds bear interest at a weekly
variable rate. The weighted average interest rate for 1993 and 1992
was approximately 2.46% and 2.83%, respectively. The bonds are
supported by a letter of credit for which the company pays 1.50% per
annum. The company entered into an interest rate swap agreement with
a bank for a $15,000 notional amount providing for a fixed interest
rate of 4.13% through December 15, 1996.
Multi-family facility revenue bonds collateralized by a residential
property were retired in 1993 upon disposition of the property. The
bonds bore interest at a weekly variable rate. The weighted average
interest rate for 1993 and 1992 was approximately 3.32% and 5.81%,
respectively.
Extinguishment of Debt: In December 1992, the company restructured
certain debt relating to the air industrial park. The previously
outstanding revenue bonds, which carried a fixed interest rate of
8.75% were redeemed at 102% of par value. In addition, $2,500 of
other debt was forgiven. Proceeds for the redemption were primarily
provided by a series of adjustable rate revenue refunding bonds issued
in November 1992. The transaction resulted in a net extraordinary
gain of $316.
Employee Stock Ownership Plan (ESOP): This loan was used to fund the
company's loan to the ESOP and is payable in varying installments
through 1999. Interest is payable quarterly at a variable rate equal
to 83% of the prime rate or a percentage of LIBOR, at the company's
option. The loan is collateralized by first mortgages on certain real
estate properties and letters of credit. The loan allows for
collateral substitution and upon disposition of such properties may
require additional collateral to maintain loan-to-value relationships.
The weighted average interest rate for 1993 and 1992 was approximately
3.44% and 4.20%, respectively. The loan agreement contains various
covenants, including the maintenance of a minimum amount of
stockholders' equity and debt coverage ratio. At December 31, 1993,
the minimum stockholders' equity required was $50,000 and increases by
$4,000 annually to $74,000 in 1999.
Revolving Credit Facility: The company has an unsecured revolving
credit facility totaling $40,000, the proceeds of which are being used
for general corporate purposes, which expires in 1996. The current
facility permits the company to choose between various interest rate
options. The weighted average interest rate for 1993 and 1992 was
approximately 5.97% and 5.49%, respectively. The company pays a
commitment fee at an annual rate of 1/2 of 1% on the unused portion of
the facility. The facility contains various covenants, the most
restrictive of which is a fixed-charge coverage requirement.
Convertible Debenture: In July 1992, the company issued a $6,000 8.5%
convertible debenture which matures in 1997. The company may not
prepay the principal balance prior to its maturity. At the option of
the holder, the debenture is convertible into 6,000 shares of Series D
8 1/2 percent convertible preferred stock of the company. The holder
must convert the full debenture principal balance at the time of
conversion. The Series D stock is ultimately convertible into 600,000
shares of the company's common stock and carries terms similar to the
Series C stock of the company, except as to the election of directors
(Note 12).
Collateralized Credit Facility: The facility was collateralized by
mortgages on real estate and matured in 1993. The facility bore
interest at prime plus 1% or LIBOR plus 2.5%, at the company's
election. The weighted average interest rate for 1993 and 1992 was
approximately 5.70% and 6.34%, respectively.
Other: This amount includes a bank loan for the purpose of financing
improvements to the company's offices which had an outstanding balance
of $5,000 and $8,000 at December 31, 1993 and 1992, respectively. The
principal is payable in semi-annual installments through 1995. The
loan bears interest at LIBOR plus 0.25%. The weighted average
interest rate for 1993 and 1992, including associated letter of credit
fees, was approximately 4.85% and 5.47%, respectively.
The company maintains overnight credit facilities with various banks
at varying rates. The company had available $18,000, of which no
amounts were outstanding at December 31, 1993. The facilities are
subject to periodic renewal from the banks and certain facilities
carry annual commitment fees ranging from .375% to 1%.
Aggregate maturities of notes due are as follows:
1994 1995 1996 1997 1998 Therea
fter
$32,82 $21,76 $3,108 $9,449 $12,25 $22,97
0 2 0 6
Under the terms of the revolving credit facility, the company is
annually required to pay down the facility for five consecutive days.
Accordingly, any borrowings as of the end of the year are reflected as
due within one year in the above maturity table.
Interest cost, which approximates amounts paid, for the years ended
December 31, 1993, 1992 and 1991 was $7,427, $8,124 and $9,872,
respectively.
At December 31, 1993, $87,029 of real estate was pledged as collateral
for notes payable.
7. Income Taxes
The components of the income tax provision (benefit) are as follows:
1993 1992 1991
Curren
t:
Federa $ $ $ -
l ----- ----- ----
Foreig 145 196 144
n
State 107 464 1,082
&
Local
252 660 1,226
Deferr
ed:
Federa (4,027 2,099 5,990
l )
State 211 437 392
&
Local
(3,816 2,536 6,382
)
Total ($3,56 $3,196 $7,608
4)
The income tax provision (benefit) above consists of the following
components:
1993 1992 1991
Operat ($3,56 $1,972 $7,608
ions 4)
Extrao - 255 -
rdinar
y gain
Accoun - 969 -
ting
change
($3,56 $3,196 $7,608
4)
In the Statement of Operations for the year ended December 31, 1992,
the extraordinary gain and the cumulative effect of the accounting
change are shown net of the related tax provision.
Deferred income taxes result from temporary differences between the
financial statement carrying amounts and the tax bases of assets and
liabilities. The source of these differences and tax effect of each
at December 31, 1993 and for the years ended December 31, 1992 and
1991 are as follows:
Deferr Provis
ed ion
Income (Benef
Tax it)
for
Liabil Deferr
ity ed
(Asset Income
) Taxes
1993 1992 1991
Constr $556 ($314) ($2,41
uction 0)
earnin
gs
Pensio 24,287 4,216 12,243
n
plans
Deprec 5,572 (156) 475
iation
Real (2,362 159 350
estate )
proper
ties
Net (7,375 (1,886 (4,752
operat ) ) )
ing
loss
benefi
ts
Restru (2,890 - -
cturin )
g
charge
s
Altern (2,451) - -
ative
minimu
m tax
credit
carryf
orward
Jobs (75) - -
credit
carryf
orward
Deferr (787) (100) (484)
ed
compen
sation
plan
Contri (848) (231) (269)
bution
s
carryo
ver
Other 81 848 1,229
$13,70 $2,536 $6,382
8
The company has recorded $16,788 of deferred tax assets having
resulted principally from net operating loss and tax credit
carryforwards. Management believes that no valuation allowance is
required for those assets due to available tax planning strategies
related to the company's defined benefit pension plan and dispositions
of real estate assets.
A comparison of the Federal statutory rate with the company's
effective tax rate is as follows:
1993 1992 1991
Statut (34.0)% 34.0% 34.0%
ory
Federa
l
income
tax
rate
(benef
it)
State 2.2 8.3 5.1
and
local
taxes,
net of
Federa
l
benefi
t
Effect (1.6) 0.7 0.5
ive
foreig
n tax
rate
U.S. (1.4) -- --
posses
sion
tax
credit
Other (1.7) 1.4 0.5
Effect (36.5) 44.4% 40.1%
ive %
tax
rate
(benef
it)
Income taxes paid (refunded) were $73, $(3,397) and $(3,495) for 1993,
1992, and 1991, respectively.
For Federal income tax purposes, the company has available at December
31, 1993 a net operating loss carryforward of $19,551 which is
available to offset future taxable income and expires from 2004
through 2007, and an alternative minimum tax credit carryforward of
$2,451 which can be carried forward indefinitely.
The unrecognized deferred tax liability related to cumulative
undistributed earnings of foreign subsidiaries which were permanently
reinvested was $227 at December 31, 1993.
8. Incentive Compensation Plans
The company sponsors two incentive compensation plans. The Executive
Incentive Compensation Plan (EICP) authorizes payments of awards to
executive officers and other designated employees of the company in
the form of cash and common stock of the company, which may be
deferred in part at the election of the recipient. The committee that
administers the plan determines the particular recipients who are to
receive awards and the amounts of their respective awards. The
amounts charged (credited) to expense in 1993, 1992 and 1991
aggregated $39, $1,092 and $(242), respectively.
The staff Incentive Compensation Plan (ICP) authorizes payment of
awards in the form of cash and common stock of the company to certain
salaried employees who are not participants in the company's EICP.
All awards are deferred for a period of five years and are paid out in
cash and common stock over a six-year period thereafter. Recipients
must remain in the continuous employment of the company up to the
distribution date in order to receive the award. The amounts charged
to expense in 1993, 1992 and 1991 aggregated $116, $78, and $62,
respectively.
9. Stock Options
The company has incentive stock option plans adopted in 1986 and 1992
which provide for the granting of options to officers and designated
employees of the company to purchase shares of the common stock of the
company at a price not less than the market value of the common stock
on the date the option is granted. In addition, an incentive plan
adopted in 1981 has been terminated and no new options can be granted
under this plan, although unexercised options remain outstanding.
Options are exercisable in whole or in part from one to ten years from
the date of the grant at the discretion of the stock option committee.
Options granted under each plan may not exceed 400,000 shares. No
charges to income arise in connection with the plans.
Option plan transactions during 1993 and 1992 are summarized in the
following table:
Price
Range
1993 1992
Per
Share
Outsta 645,32 579,38 $8.44
nding 8 8 - $
Januar 27.50
y 1
Grante 135,50 97,500 8.00
d 0 -
12.50
Exerci (800) - 8.50
sed
Cancel (20,24 (31,56 8.00
ed 0) 0) -
25.50
Outsta 759,78 645,32 8.00
nding 8 8 -
Decemb 27.50
er 31
Exerci 636,56 633,94 8.44
sable 8 9 -
at 27.50
Decemb
er 31
Option 405,29 83,230
s 0
availa
ble
for
grant
at
Januar
y 1
Option 277,53 405,29
s 0 0
availa
ble
for
grant
at
Decemb
er 31
10. Employee Benefit Plans
The company has a noncontributory defined benefit pension plan which
covers salaried employees who meet minimum age and length of service
requirements. Benefits are based on members' years of service and
averaged final salary.
The projected unit credit actuarial method is used to determine the
recognition of net periodic pension expense and to determine funding
requirements. The company will continue to fund the plan as required.
Plan assets consist primarily of pooled equity, debt and short-term
investment funds, a pooled real estate equity fund and 675,000 shares
of the company's common stock.
On March 31, 1991, the company curtailed its defined benefit pension
plan such that benefits do not accrue to plan participants for future
years of service. The curtailment resulted in a pre-tax gain of
$29,862 which is included in Other income, net for the year ended
December 31, 1991.
Effective January 1, 1992, the company changed the method for
amortizing unrecognized pension actuarial gains and losses for the
defined benefit pension plan, under which the full amount of the net
actuarial gain or loss in the year is being amortized over a period
not exceeding the average life expectancy of employees. The effect of
the change in accounting method for the year ended December 31, 1992
related to the 1992 pension expense was to increase net income by
$641, net of tax, or $.12 per share on primary earnings per share and
$.10 per share on fully diluted earnings per share. The cumulative
effect of the change on prior years was to increase net income by
$1,454, net of tax, or $.29 per share on primary earnings per share
and $.25 per share on fully diluted earnings per share.
The pro forma amounts below have been adjusted for the effect of
retroactive application of the change in accounting method as if the
change had been adopted effective January 1, 1991.
For
the
years
ended
Decemb
er 31,
1992 1991
Income
before
extrao
rdinar
y
gain
and
cumula
tive
$2,230 $11,504
effect
of
accoun
ting
change
Primar
y
earnin
gs per
$ $
common .15 2.09
share
Fully
dilute
d
earnin
gs
per $ $
common .15 1.83
share
Net $2,546 $12,796
income
Primar
y
earnin
gs per
$ $
common .21 2.39
share
Fully
dilute
d
earnin
gs
per $ $
common .20 2.05
share
The table below sets forth the funded status of the defined benefit
pension plan and amounts recognized in the company's financial
statements at December 31, 1993 and 1992 and for the years then ended:
1993 1992
Actuar
ial
presen
t
value
of
benefi
t
obliga
tions:
$81,84 $80,06
Vested 3 3
benefi
ts
86,670 85,341
Accumu
lated
benefi
t
obliga
tion
86,670 85,341
Projec
ted
benefi
t
obliga
tion
Plan 163,09 153,33
assets 9 0
at
fair
value
Plan
assets
in
excess
of
projec
ted
76,429 67,989
benefi
t
obliga
tion
Unreco 1,825 2,003
gnized
prior
servic
e cost
Unreco (9,763 (10,29
gnized ) 4)
net
gain
Remain
ing
unreco
gnized
net
asset
(5,284 (6,165
being ) )
recogn
ized
over
15
years
Prepai 63,207 53,533
d
pensio
n cost
Compon
ents
of net
period
ic
pensio
n
credit
:
Intere
st
cost
on
projec
ted
benefi
t
6,829 6,725
obliga
tion
(15,64 (12,02
Actual 6) 2)
return
on
plan
assets
Net (857) (4,252
amorti )
zation
and
deferr
al
Net ($9,67 ($9,54
period 4) 9)
ic
pensio
n
credit
The assumptions used in measuring the actuarial value of projected
benefit obligations and determining the net periodic pension credit
were:
1993 1992
Weight 8.25% 8.25%
ed
averag
e
discou
nt
rate
Rate N/A N/A
of
compen
sation
increa
se
Expect
ed
long-
term
rate
of
return
on
10.0% 10.0%
plan
assets
The company amortizes unrecognized prior service costs on a straight-
line basis over a period not exceeding the average life expectancy of
retirees.
Effective January 1, 1994, the company formed a cash balance plan to
provide pension benefits to its employees, that were previously
provided separately under the curtailed defined benefit pension plan
and the defined contribution retirement plan. Management anticipates
that the cash balance plan will significantly reduce the net periodic
pension credit recognized in 1994 and future years, and result in a
reduction of the prepaid pension asset.
The company also sponsors a defined contribution retirement plan,
effective April 1, 1991, and a Section 401(k) tax deferred savings
plan which covers salaried employees who meet minimum age and length
of service requirements. Contributions to the defined contribution
retirement plan are based on salaries and length of service. Matching
contributions which began July 1, 1991, to the Section 401(k) plan are
based on employee contributions and are limited to one-half of the
first 3% of the employee's compensation. The aggregate amount charged
to expense for these plans was $6,933 and $7,542 in 1993 and 1992,
respectively.
Employees retiring from the company and eligible for an immediate
benefit from the retirement plans (generally age 55 with 15 years of
service) are eligible to continue their current medical insurance
coverage into retirement. The medical benefits continue to be subject
to the deductibles, copayment provisions and other limitations.
Retirees pay for a portion of the total cost of their medical
insurance and starting with 1993 retirements, the portion of the total
cost will be dependent on the individual's total company service at
retirement. The medical plans of the company are funded on a pay as
you go basis.
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The statement mandates accrual of
postretirement health benefits during the years that employees render
service.
The company will amortize to expense, over a 20-year period, the
discounted present value of the obligation as of the adoption date.
The table below sets forth the funded status of the plans and the
amounts recognized in the company's financial statements at December
31, 1993 and for the year then ended.
_________________________________________________________________
Actuarial present value of accumulated postretirement benefit
obligation:
Retirees $16,162
Fully eligible active plan participants 1,371
Other active plan participants 4,788
Accumulated unfunded postretirement benefit
obligation 22,321
Remaining unrecognized transition obligation (18,820)
Unrecognized net loss (1,744)
Accrued postretirement benefit obligation $1,757
_________________________________________________________________
Net periodic postretirement benefit cost includes the following
components:
Service cost $286
Interest cost 1,612
Amortization of unrecognized transition obligation 991
_________________________________________________________________
Net periodic postretirement benefit cost $2,889
_________________________________________________________________
Impact of one percent increase in healthcare trend rate:
Aggregate impact on 1993 service cost and interest cost $120
Increase in December 31, 1993 accumulated postretirement
benefit obligation $1,619
_________________________________________________________________
The accumulated postretirement benefit obligation was computed using
an assumed weighted average discount rate of 7.5%. The healthcare
cost trend rate was assumed to be 13% in 1993 decreasing by 1% a year
to 6% in 2000 and 5.5% in 2001 and beyond.
In November 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112 "Employers'
Accounting for Postemployment Benefits." This statement mandates the
accrual of all types of postemployment benefits provided to former or
inactive employees, their beneficiaries, and covered dependents after
employment but before retirement. The company will adopt this
standard effective January 1, 1994. Management believes the impact
when the standard is adopted will not be material to the consolidated
financial statements.
11. Employee Stock Ownership Plan
The company has a leveraged Employee Stock Ownership Plan (ESOP) for
salaried employees who meet minimum age and length of service
requirements. To fund the ESOP, the company originally borrowed
$18,092. Proceeds of this borrowing were loaned to the ESOP, which
purchased 850,000 shares of Series B convertible preferred stock.
Eligible employees are allocated the Series B stock over the term of
the ten-year ESOP loan. The allocated shares vest after five years of
service.
The Series B stock is callable, in whole or in part, at the option of
the company at any time after July 1, 1994, at a price per share
expressed as a percentage of the issue price of $21.29. At the
company's option, the call may be satisfied by common shares, cash or
a combination thereof. The call price is 112% in 1994 and decreases
to 100% in 1999 and for years thereafter. The trustee may, at any
time, convert each share of Series B stock into one share of common
stock.
Prior to the retirement of the ESOP debt, employees can only redeem
their vested preferred shares upon death or age 70 1/2. Once the debt
is retired, shares can be redeemed at retirement, termination or
death. The redemption value is established at the end of each year by
an independent appraiser. The latest appraised value dated March 17,
1994 was $18.00 per preferred share. At the company's option,
redemption by an employee may be satisfied by common shares, cash or a
combination thereof.
The preferred stockholders are entitled to identical voting rights as
the holders of common shares.
The loan to the ESOP is on the same terms as the company's bank loan.
The ESOP will repay the loan (plus interest) with proceeds from the
quarterly dividends paid on the Series B stock and contributions from
the company. All contributions to the ESOP in excess of dividends are
treated as compensation expense.
Compensation expense and interest income for the years ended December
31, 1993, 1992 and 1991 were:
1993 1992 1991
Compen $340 $215 $585
sation
expens
e
Intere $509 $627 $1,018
st
income
The interest income earned by the company on the ESOP loan offsets the
interest expense incurred on the original borrowing, with no impact on
the results of operations.
12. Stockholders' Equity
On July 20, 1992, the company sold Karl Steiner Holding AG (Steiner)
9,000 shares of Series C 8 1/2 percent convertible preferred stock and
6,000 shares of Series D 8 1/2 percent convertible preferred stock for
a total of $15,000. On July 22, 1992, the Series D stock was
exchanged for an 8 1/2 percent convertible debenture due 1997 in the
principal amount of $6,000 (Note 6).
The Series C stock is convertible into 1,000,000 shares of common
stock or can be exchanged for 9,000 shares of Series E 8 1/2 percent
convertible preferred stock (which is substantially identical to the
Series C stock, except as to transferability and election of
directors). The debenture is convertible into 6,000 shares of Series
D stock, which is convertible into 600,000 shares of common stock.
The Series C stock has, and the Series D and Series E stock will have,
a liquidation preference of $1,000 per share and a cumulative dividend
preference of $85 per share per year. At their option, the holders of
the Series C, Series D and Series E stock will have the right to
convert either the full amount or a partial percentage into common
stock.
While the Series C stockholders own securities constituting (on an
after-converted basis) more than 10 percent of the company's
outstanding common stock, on a fully diluted basis, the Series C
stockholders have the right to elect, as a class, between one and
three directors, depending on the percentage of the outstanding stock
owned. Holders of Series D and Series E stock, and Series C stock
(except when they are entitled to elect at least one director as a
class), vote on an as-converted basis as though they held common
stock. Holders of Series C or Series D stock also have the right to
elect a director if the company is six quarters or more in arrears in
paying dividends.
In connection with the purchase of the company's securities by
Steiner, the company executed an agreement which provided the company
and Steiner with certain rights, obligations and options which
terminates on June 30, 2002, unless extended.
Under this agreement, Steiner has the right of first refusal in some
instances with regard to sales by the company of more than five
percent of its stock. In addition, if the company issues additional
stock or convertible or exchangeable securities, Steiner will have the
option in some instances to purchase similar securities to the extent
necessary to maintain its percentage ownership.
If the company issues, in a transaction or related series of
transactions, common stock or convertible or exchangeable securities
totaling at least 15 percent of the company's outstanding common
stock, on a fully diluted basis, the Series C stock will be redeemable
during a 30-day period at its liquidation preference plus accrued or
accumulated dividends, unless the holders of two-thirds of the Series
C stock approve the transaction.
The company has a right of first refusal with regard to sales or
transfers of the company's securities owned by Steiner constituting
more than five percent of the company's outstanding common stock, on a
fully diluted basis. In addition, the company has the option to
repurchase the company's securities owned by Steiner, upon a change in
control in the ownership of Steiner.
If after December 31, 1994, the price of the company's common stock is
below $7 for at least 20 consecutive trading days (or if the agreement
is not extended), Steiner may require the company either to find a
buyer (which may be the company) for all of Steiner's holdings (or all
its holdings except the debenture or Series D stock), or to sell
Steiner additional common stock equal to Steiner's existing holdings
on an as-converted basis, at a price selected by Steiner which is not
higher than 115 percent of the market price of the company's common
stock. The company will not decide until it knows the terms on which
it is to find a buyer for Steiner's holdings or to sell Steiner
additional common stock, which of the two options it will elect.
13. Commitments and Contingencies
The company (as lessee) leases office space under operating leases
having remaining non-cancelable lease terms in excess of one year.
Rental expense for the years ended December 31, 1993, 1992 and 1991
amounted to $9,779, $10,103 and $10,393, respectively. Future minimum
rental payments are as follows:
1994 1995 1996 1997 1998 Therea
fter
$8,856 $8,873 $8,161 $6,588 $5,484 $22,62
9
The company (as lessor) has operating leases with tenants that provide
for fixed minimum rent and reimbursement of a portion of operating
costs. Additional rents for reimbursements included in rental income
amounted to $390, $447, and $506 for 1993, 1992 and 1991,
respectively.
Tenant leases on commercial office and mixed-use properties have terms
of up to ten years, and leases on residential properties generally
have terms of one year or less. Minimum future rental revenue from
non-cancelable leases in effect at December 31, 1993 are as follows:
1994 1995 1996 1997 1998 Therea
fter
$10,97 $9,609 $2,742 $1,509 $836 $546
6
In connection with the company's investment in a real estate joint
venture to develop certain condominium properties in Boston,
Massachusetts, the company has guaranteed, jointly and severally with
its joint venture partner, the construction loan provided to the joint
venture in the amount of $13,000. The loan is primarily secured by a
mortgage and security agreement covering the property and various
other assignment of rights and interests.
The company has jointly and severally guaranteed completion of a
$88,800 construction contract which was entered into by Turner Steiner
International, S.A., in which the company has a 50% interest.
In connection with the sale of certain assets and liabilities of a
construction subsidiary, the company agreed to guaranty or otherwise
indemnify their surety up to $15,000 in obtaining bonds in excess of
$45,000.
The company owns certain buildings, hangars and equipment and is the
ground lessee on the underlying land located at an air industrial
park. The company has leased to a tenant the buildings, hangars,
equipment and land with an initial term of 10 years expiring in 1996.
The tenant was acquired by a third party in 1989. As part of the
acquisition, the acquirer agreed to assume the tenant's lease
obligations for the balance of its initial term and agreed to make
joint efforts with the company to find a replacement tenant for the
facility. Unless the company is able to replace the tenant,
expiration of the lease may adversely affect the company's earnings.
Rental income under this lease represented 33% of total rental income
for 1993.
The company is a defendant in various routine litigations incident to
its business. While in some instances the amounts sought are very
substantial and certain parties are withholding amounts included in
construction receivables, pending the outcome of the litigation, in
the opinion of management the resolution of such litigation will not
have a material adverse effect on the financial position and results
of operations of the company.
14. Other Income, net
The major components of Other income, net are as follows:
1993 1992 1991
Intere $1,036 $1,035 $1,297
st and
divide
nd
income
Invest 861 - -
ment
income
Pensio
n
curtai
lment
- - 29,862
gain
(Note
10)
Equity (3,027 (3,928 (875)
in ) )
affili
ates'
net
loss
Other 260 (10) (468)
($870) ($2,90 $29,81
3) 6
15. Business Segments
The Consolidated Statements of Operations provide segment information
regarding revenues and operating expenses. Interest expense has been
included in each segment presented. Certain other financial data of
the company's business segments (construction and real estate) are
presented below:
1993 1992 1991
Identi
fiable
assets
at
year
end:
Constr $452,3 $483,2 $498,1
uction 93 45 80
Real 125,98 143,79 147,01
estate 0 2 9
Genera 85,833 99,521 89,642
l
corpor
ate
$664,2 $726,5 $734,8
06 58 41
Deprec
iation
and
amorti
zation
expens
e:
Constr $3,034 $3,706 $3,937
uction
Real 5,460 5,930 6,202
estate
Genera 1,330 1,407 1,311
l
corpor
ate
$9,824 $11,04 $11,45
3 0
16. Disclosures about Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:
Cash and Cash Equivalents: The carrying amount of cash and cash
equivalents approximates fair value due to the short-term maturity of
these amounts.
Marketable Securities: The fair value of marketable securities is
based on quoted market prices for such investments. At December 31,
1993 and 1992, the fair value approximates the carrying amount.
Construction Receivables and Construction Payables: The carrying
amount of construction receivables and construction payables
approximate fair value as these amounts generally are due or payable
within the company's operating cycle.
Notes Payable: The fair value of notes payable secured by real estate
properties that mature within one year, is estimated based on
management's intent with respect to refinancing. For those debt
instruments which have been subsequently extinguished, the carrying
amount approximates fair value. Otherwise, the fair value of such
notes payable is estimated based on the company's risk adjusted
incremental borrowing rate upon refinancing, given the underlying
value of the loan collateral.
The fair value of notes payable secured by real estate properties with
maturities in excess of one year, is estimated based on discounting
the future cash flows at the company's year-end risk adjusted
incremental borrowing rate for a similar debt instrument, given the
underlying value of the loan collateral.
The fair value of unsecured notes payable is estimated based on the
company's year-end incremental borrowing rate for similar liabilities.
The above methodologies for determining the fair value of notes
payable reflect recent agreements entered into and currently under
negotiation by the company. At December 31, 1993 and 1992, the fair
value of notes payable was $95,021 and $114,580, respectively.
Convertible Debenture: The fair value of the convertible debenture is
estimated based on the greater of the company's incremental borrowing
rate for a similar debt instrument, or the value of the debt assuming
conversion at the year-end stock price, which would reflect the
probability of conversion by the debt holder. At December 31, 1993
and 1992, the fair value was $6,000.
ESOP Loan Receivable: The fair value of the loan receivable from the
ESOP is estimated based on the fair value of the company's borrowing
to fund the ESOP. At December 31, 1993 and 1992, the fair value was
$12,255 and $13,533, respectively.
Interest Rate Swap Agreement: The fair value of the interest rate
swap agreement on the adjustable rate revenue refunding bonds is
estimated based on the discounted value of the difference between the
fixed payments on the swap and the payments that would be required at
current market fixed rates for a similar financial instrument. The
fair value of the interest rate swap liability was $286 at December
31, 1993. The fair value of the interest rate swap was zero at
December 31, 1992.
17. QUARTERLY FINANCIAL INFORMATION (Unaudited)
1993 March June 30 Septemb Decembe
Quarte 31 er 30 r 31
r
Ended
Value $ 580,941 $ 737,080 $ 735,223 $ 715,135
of
constr
uction
comple
ted
Gross $ 15,758 $ 14,936 $ 16,952 $ 11,719
earnin
gs
Income 1,704 1,280 1,816 (14,569 (
(loss) ) a
before )
income
taxes
Net 946 909 911 (8,971)
income
(loss)
Primar .09 .09 .09 (1.83)
y
earnin
gs
(loss)
per
common
share
(e)
Fully .08 .08 .07 (b)
dilute
d
earnin
gs
(loss)
per
common
share
(e)
1992 March June 30 Septemb Decembe
Quarte 31 er 30 r 31
r
Ended
Value $ 594,208 $ 669,885 $ 687,136 $ 693,565
of
constr
uction
comple
ted
Gross $ 13,335 $ 15,646 $ 18,787 $ 17,747
earnin
gs
Income (1,740) 2,275 2,276 1,391
(loss)
before
income
taxes
Income
(loss)
before
extrao
rdinar
y gain
and
(1,040) 1,268 1,216 786
cumula
tive
effect
of
accoun
ting
change
Net 414 ( 1,268 1,216 1,102 (
income c d
) )
Primar
y
earnin
gs
(loss)
per
common
share:
(e)
Before
extrao
rdinar
y item
and
cumula
tive
effect
of (.26) .20 .16 .05
accoun
ting
change
Net .03 .20 .16 .11
income
per
common
share
Fully
dilute
d
earnin
gs
(loss)
per
common
share:
(e)
Before
extrao
rdinar
y item
and
cumula
tive
effect
of (.22) .17 .14 .05
accoun
ting
change
Net .02 .17 .14 .10
income
per
common
share
(a)
The
fourth
quarte
r
includ
es a
restru
cturin
g
charge
of
$8,500
and
real
estate
write-
downs
and
reserv
es of
$5,188
.
(b)
Antidi
lutive
.
(c)
The
first
quarte
r
includ
es the
cumula
tive
effect
of a
change
in
accoun
ting
method
of
$1,454
.
(d)
The
fourth
quarte
r
includ
es an
extrao
rdinar
y gain
of
$316.
(e)
The
quarte
rly
per
share
amount
s are
comput
ed
indepe
ndentl
y of
annual
amount
s.
Responsibilities for Financial Reporting
The management of The Turner Corporation and Subsidiaries has the
responsibility for preparing the accompanying consolidated financial
statements and for their integrity and objectivity. The financial
statements were prepared in accordance with generally accepted
accounting principles applied on a consistent basis and are not
misstated due to material fraud or error. The financial statements
include amounts that are based on management's best estimates and
judgements. Management also prepared the other information in the
annual report and is responsible for its accuracy and consistency with
the financial statements.
The fair presentation of the company's financial position, results of
operations and cash flows are reported on by the independent public
accountants, Arthur Andersen & Co. (see Report of Independent Public
Accountants) for each of the three years in the period ended December
31, 1993. Their report emphasizes that the company has significant
interests in real estate properties, the carrying amounts of which are
based on management's present intent to hold these properties until
market conditions improve to the extent necessary to achieve
reasonable prices upon disposition. Management has made available to
Arthur Andersen & Co. all of the company's financial records and
related data, as well as the minutes of stockholders' and directors'
meetings. Furthermore, management believes that all representations
made to Arthur Andersen & Co. during its audit were valid and
appropriate.
To fulfill the responsibility for the reporting of financial results,
management maintains a system of accounting and internal controls,
including a program of internal audits which encompasses operational,
financial and special audits. Management seeks to assure the quality
of financial reporting by careful selection and training of
supervisory and management personnel, by organization structures that
provide an appropriate division of responsibility, and by
communication of accounting and business policies and procedures
throughout the company. Management believes the internal accounting
controls in use provide reasonable assurance that the company's assets
are safeguarded, that transactions are executed in accordance with
management's authorizations, and that the financial records are
reliable for the purpose of preparing financial statements. In
addition, the company has distributed a statement of its policies for
conducting business affairs in a lawful and ethical manner and
receives reports of compliance annually.
The Board of Directors, through the Audit Committee of the Board,
meets separately and jointly with management, the internal auditors
and the independent public accountants on a periodic basis to assure
itself that each is carrying out its responsibilities.
THE TURNER CORPORATION
and Subsidiaries
SCHEDULE II - AMOUNTS RECEIVABLE
FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
at December 31, 1993
Col. A Col. B Col. C C Col. E
o
l
.
D
D
e
d
u
c
t
i
o
n
s
Balance Amounts Amount Balance
at s at Dec.
31, 1993
Name of Jan. 1, Addition Collecte Written Current Non-
Debtor 1993 s d Off Current
R. Wille $100,000 $100,000
- - - -
S. 165,000 165,000
Robinson - - - -
J. 100,000 100,000
Little - - - -
M. Smith 115,221 115,221
- - - -
J. 130,178 112,516 17,662
McCullou - - -
gh
Y. Roth 130,847 7,660 123,187
- - -
N. Makes 117,000 17,000 100,000
- - -
R. Wund 168,941 80,000 70,000 18,941
- -
W. 85,597 22,700 108,297
Manteuff - -
el
These
loans
were
made in
accordan
ce with
company
policy
relating
to the
purchase
of a new
residenc
e in
connecti
on with
transfer
s,
reassign
ments or
other
circumst
ances
relating
to the
business
of the
company.
The
loans
outstand
ing at
12/31/93
bear
interest
at rates
ranging
from
4.32% to
10.50%
and
mature
at
various
dates
from
1994 to
2003 and
in most
instance
s are
collater
alized.
Certain
amounts
in
column E
constitu
te
"bridge"
loans
made
pending
a
sale of
a
transfer
red
employee
's home
and bear
no
interest
.
THE TURNER CORPORATION
and Subsidiaries
SCHEDULE II - AMOUNTS RECEIVABLE
FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
at December 31, 1992
Col. A Col. B Col. C C Col. E
o
l
.
D
D
e
d
u
c
t
i
o
n
s
Balance Amounts Amount Balance
at s at Dec.
31, 1992
Name of Jan. 1, Addition Collecte Written Current Non-
Debtor 1992 s d Off Current
R. Wille $100,000 $100,000
- - - -
J. 100,000 $50,000 $50,000 -
Turnier - -
S. 165,000 165,000
Robinson - - - -
J. 100,000 100,000
Little - - - -
M. Smith 101,817 $13,404 115,221
- - -
J.McCull 130,178 $112,516 17,662
ough - - -
Y. Roth 130,847 130,847
- - - -
N. Makes 117,000 117,000
- - - -
R. Wund 68,941 100,000 150,000 18,941
-
These
loans
were
made in
accordan
ce with
company
policy
relating
to the
purchase
of a new
residenc
e in
connecti
on with
transfer
s,
reassign
ments or
other
circumst
ances
relating
to the
business
of the
company.
The
loans
outstand
ing at
12/31/92
bear
interest
at rates
ranging
from
5.06% to
8.75%
and
mature
at
various
dates
from
1993 to
2001 and
in most
instance
s are
collater
alized.
Certain
amounts
in
column E
constitu
te
"bridge"
loans
made
pending
a
sale of
a
transfer
red
employee
's home
and bear
no
interest
.
THE TURNER CORPORATION
and Subsidiaries
SCHEDULE II - AMOUNTS RECEIVABLE
FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
at December 31, 1991
Col. A Col. B Col. C C Col. E
o
l
.
D
D
e
d
u
c
t
i
o
n
s
Balance Amounts Amount Balance
at s at Dec.
31, 1991
Name of Jan. 1, Addition Collecte Written Current Non-
Debtor 1991 s d Off Current
R. Wille $109,789 $9,789 $100,000
- - -
J. 100,000 $100,000 -
Turnier - - -
S. 165,000 165,000
Robinson - - - -
J. 100,000 100,000
Little - - - -
M. Smith 103,189 $1,372 101,817
- - -
J.McCull 112,516 $17,662 112,516 17,662
ough - -
Y. Roth 130,847 130,847
- - - -
N. Makes 117,000 117,000
- - - -
These
loans
were
made in
accordan
ce with
company
policy
relating
to the
purchase
of a new
residenc
e in
connecti
on with
transfer
s,
reassign
ments or
other
circumst
ances
relating
to the
business
of the
company.
The
loans
outstand
ing at
12/31/91
bear
interest
at rates
ranging
from
6.5% to
8.75%
and
mature
at
various
dates
from
1992 to
2001 and
in most
instance
s are
collater
alized.
Certain
amounts
in
column E
constitu
te
"bridge"
loans
made
pending
a
sale of
a
transfer
red
employee
's home
and bear
no
interest
.
THE TURNER CORPORATION
and Subsidiaries
SCHEDULE IX -- SHORT-
TERM BORROWINGS
Maximum Average Weighte
d
Weighte Amount Amount Average
d
Category of Aggregate Balance at Average Outstan Outstan Interes
Short Tem Borrowings ding ding t Rate
End of Interes During During During
t the the the
Period Rate Period Period Period
(2) (3) (3)
Amounts Payable to 199 0 n/a $11,000 $4,952, 6.31%
banks for Borrowing: 3 ,000 500
(1)
199 0 n/a $6,750, $2,120, 5.78%
2 000 833
199 0 n/a $14,650 $4,339, 8.08%
1 ,000 167
(1) - Short- term
borrowing facilities
are maintained with
various banks and are
subject to periodic
renewals.
(2) - The maximum
amount outstanding is
based upon month end
balances.
(3) - Average was
computed using month
end balances and
interest rates.
Item 9. Change in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information with respect to the directors and nominees for
directors which will appear in the registrant's definitive proxy statement
to be filed with the Securities and Exchange Commission prior to April 30,
1994, is incorporated herein by reference.
Executive Officers of the Registrant.
Served as an Officer
in the Capacity
Name Age Office Indicated Since
Alfred T. McNeill57 Chairman of the Board, Chairman since
3/1/89.
Chief Executive Officer
and Director
Harold J. Parmelee56 President and Director President
since 5/11/90.
Ralph Beck 55 Senior Vice President Secretary since 12/31/93.
and Secretary
Joseph V. Vumbacco48 Senior Vice President and Senior V.P. since 12/5/86.
General Counsel
David J. Smith 53 Senior Vice President and 1/1/94.
Chief Financial Officer
Allen H. Wahlberg60 Senior Vice President 1/1/91.
Ralph W. Johnson 57 Senior Vice President 6/11/93.
Donald R. Kerstetter63Senior Vice President 6/11/93.
Richard H. Esau, Jr.59 Vice President 6/11/93.
Francis C. O'Connor 51 Vice President 11/1/92.
Garrett Thompson 51 Vice President 3/1/93.
Donald G. Sleeman 39 Treasurer 1/15/92.
Anthony C. Breu 46 Controller 6/1/88.
Each executive officer holds office at the pleasure of the Board of
Directors.
Each of the executive officers listed above is an employee of The
Turner Corporation or Turner Construction Company and has been an employee
of these companies or other construction subsidiaries in an executive,
managerial or engineering capacity for the past five years except for Mr.
Smith. From 1983 to 1993 Mr. Smith served as Vice President and Treasurer
of Mack Trucks, Inc., a subsidiary of Renault. From 1976 to 1983 Mr.
Smith held various executive financial positions within the Renault
organization.
Item 11. Executive Compensation.
The information which will appear under the caption "Remuneration of
Executive Officers" in the registrant's definitive proxy statement to be
filed with the Securities and Exchange Commission prior to April 30, 1994,
is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information under the caption "Election of Directors" in the
registrant's definitive proxy statement to be filed with the Securities
and Exchange Commission prior to April 30, 1994 with respect to the
ownership by certain beneficial owners and management of the registrant's
stock is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information under the caption "Election of Directors" in the
registrant's definitive proxy statement to be filed with the Securities
and Exchange Commission prior to April 30, 1994 with respect to certain
relationships and related transactions is incorporated herein by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form -8-
K.
a) Documents filed as part of this report (including documents
incorporated herein by reference):
1. Financial Statements:
Page No.
- Report of Independent Public Accountants 14
- Consolidated Balance Sheets - as of December 31, 1993 and
1992 15
- Consolidated Statements of Operations - for the years
ended
December 31, 1993, 1992 and 1991 16
- Consolidated Statements of Stockholders' Equity - for the
years
ended December 31, 1993, 1992 and 1991 17
- Consolidated Statements of Cash Flows - for the years
ended
December 31, 1993, 1992 and 1991 18
- Notes to Consolidated Financial Statements 19-
36
- Responsibilities for Financial Reporting 37
2. Financial Statement Schedules:
Page No.
II. Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees Other
than Related Parties 38-40
IX Short-Term Borrowings 41
3. Consent of Independent Public Accountants 50
Individual financial statements of the registrant and financial
statement schedules not included above are omitted since they are either
not required or not applicable or the information has been presented in
the notes to consolidated financial statements.
4. Exhibits
Exhibit No. Description
3(a)(i) Certificate of Incorporated herein by
Incorporation, as reference to Exhibit 3 to the
amended to 7/10/89. Registration Statement on
Form S-14 of The Turner
Corporation, No. 2- 90235.
3(a)(ii) Amendment dated, 5/19/86 Incorporated herein
3(a)(iii) Amendment dated, 9/12/88 by reference to Exhibit 3(a)
3(a)(iv) Amendment dated, 7/10/89 to the Company's 1989 Annual
Report on Form 10-K.
3(b) By-Laws, as amended
to 6/11/93.
3(c)(i) Certificate of Designations Incorporated herein
relating to Series C 8-1/2% by reference to Exhibit
Convertible Preference Stock. 2 to the Company's Form 8-K
dated July 20, 1992.
3(c)(ii) Certificate of Designations Incorporated herein
relating to Series D 8-1/2% by reference to
Convertible Preference Stock. Exhibit 3 to the
Company's Form 8-K
dated July 20, 1992.
3(c)(iii) Certificate of Designations Incorporated herein by
relating to Series E 8-1/2% reference to Exhibit 4 to
Convertible Preference Stock. the Company's Form 8-K
dated July 20, 1992.
Exhibit No. Description
4(a) Shareholders Rights Incorporated herein by
Agreement. reference to the Registration
Statement on Form 8-A
dated September 9, 1988.
4(b) Agreement regarding Security Incorporated herein
Holder's Rights, Obligations by reference to
and Options. Exhibit 5 to the
Company's Form 8-K
dated July 20, 1992.
10(c)(i) The Company's Executive Incorporated herein
Incentive Compensation by reference to
Plan. Exhibit 10.3 to the Registration
Statement on Form S-14 of The
Turner Corporation, No. 2-90235.
10(c)(ii) The Company's 1981 Stock Incorporated herein by reference
Option Plan, as amended. to Exhibit 10(c)(v) to the Company's
1988 Annual Report on Form 10-K.
10(c)(iii) The Company's 1986 Incorporated herein by reference
Stock Option Plan, to Exhibit 10(c)(vii) to the as amended
as amended. Company's 1988 Annual Report on
Form 10-K.
10(c)(iv) The Company's 1992 Stock Incorporated herein by reference to the
Option Plan. Registration Statement on Form S-8.
10(c)(v) The Company's Incentive Incorporated herein
Compensation Plan. by reference to Exhibit 10(c)(v) to
the Company's 1983 Annual Report
on Form 10-K.
10(c)(vi) The Company's Retirement Incorporated herein by reference
Benefit Equalization Plan,to Exhibit 10(c)(vi) to the Company's
amended and restated as of 1992 Annual Report
1/22/92. on Form 10-K.
10(c)(vii) The Company's Defined Incorporated herein
Contribution Retirement by reference to Exhibit 10(c)(vii) to
Equalization Plan. the Company's 1992 Annual Report
on Form 10-K.
Exhibit No. Description
10(c)(viii) The Company's Supplemental Incorporated herein
Executive Defined Benefit by reference to Exhibit 10(c)(viii) to
Retirement Plan. the Company's 1992 Annual Report
on Form 10-K.
10(c)(ix) The Company's Supplemental Incorporated herein
Executive Defined Contribution by reference to Exhibit 10(c)(ix) to
Retirement Plan. the Company's 1992 Annual Report
on Form 10-K.
10(c)(x) Tax Deferred Savings Incorporated herein by
Income Plan amended and reference to Exhibit 10(c)(ix)
restated as of 1/1/89. to the Company's 1991
Annual Report on Form 10-K.
10(c)(xi) Option Exchange and Incorporated herein by
Stock Purchase Plan. reference to Registration Statement
on Form S-8, File No. 33-33867.
10(c)(xii) Employees' Retirement Incorporated herein by
Plan - Restated as of reference to Exhibit 10(c)(vii)
1/1/87. to the Company's 1991
Annual Report on Form 10-K.
10(c)(xiii) Employees' Retirement Incorporated herein
Income Plan as of 4/1/91. by reference to
Exhibit 10(c)(viii) to
the Company's 1991
Annual Report on Form 10-K.
10(d) Asset Purchase Agreement Incorporated herein
dated 6/3/92, between by reference to
Turner Steiner International Exhibit 10(d) to
S.A. and Turner International the Company's 1992
Industries, Inc., and Turner Annual Report on Form 10-K.
International Industries (U.K.)
Ltd.
10(e) Joint Venture and Shareholders Incorporated herein
Agreement dated 6/3/92 between by reference to
The Turner Corporation and Karl Exhibit 10(e) to
Steiner Holding AG. the Company's 1992
Annual Report on Form 10-K.
Exhibit No. Description
10(f) Purchase Agreement dated Incorporated herein
June 3, 1992 between Karl by reference to
Steiner Holding AG and The Exhibit 1 to the
Turner Corporation. Company's Form 8-K
dated July 20, 1992.
10(g)(i) The Company's Revolving
Credit Facility dated as of
12/30/92.
10(g)(ii) Amendment No. 1 to
Credit Agreement dated
as of 12/31/93.
10(h) Form of Change of Control Agree-
ment between The Turner Corp-
oration and Messrs. McNeill,
Parmelee, Smith and Vumbacco,
respectively, Chairman,
President, Chief Financial Officer
and General Counsel dated
July 1, 1993.
10(i) Form of Change of Control
Agreement with 56 other
officers of parent or subsidiaries
dated July 1, 1993.
11 Computation of per share
earnings.
22 Subsidiaries of the Registrant.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE TURNER CORPORATION
Registrant
Date: March 11, 1994 By: A. T. McNeill
A. T. McNeill
Chairman of the Board,
Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Name Capacity Date
H. Baumann-Steiner Director March 11, 1994
(H. Baumann-Steiner)
H. D. Conant Director March 11, 1994
(H. D. Conant)
W. G. Ehlers Director March 11, 1994
(W. G. Ehlers)
A. G. Fieger Director March 11, 1994
(A. G. Fieger)
E. T. Gravette, Jr. Director March 11, 1994
(E. T. Gravette, Jr.)
L. Lomo Director March 11, 1994
(L. Lomo)
E. J. McMahon Director March 11, 1994
(E. J. McMahon)
Name Capacity Date
A. T. McNeill Chairman of the Board, March 11, 1994
(A. T. McNeill Chief Executive Officer
and Director
C. H. Moore, Jr. Director March 11, 1994
(C. H. Moore, Jr.)
H. J. Parmelee President and Director March 11, 1994
(H. J. Parmelee)
D. J. Smith Senior Vice President March 11, 1994
(D. J. Smith) and Chief Financial
Officer
P. K. Steiner Director March 11, 1994
(P. K. Steiner)
G. A. Walker Director March 11, 1994
(G. A. Walker)
J. O. Whitney Director March 11, 1994
(J. O. Whitney)
F. W. Zuckerman Director March 11, 1994
(F. W. Zuckerman)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated March 4, 1994 included in this Form
10-K, into the Company's previously filed Registration Statements on
Form S-8 (File Nos. 2-64509 and 33-33867).
ARTHUR ANDERSEN & CO.
New York, New York
March 30, 1994
EXHIBIT INDEX
Exhibit No. Description
3(a)(i) Certificate of Incorporated herein
Incorporation, as by reference to
amended to 7/10/89. Exhibit 3 to the
Registration Statement
on Form S-14 of The
Turner Corporation,
No. 2-90235.
3(a)(ii) Amendment dated, 5/19/86 Incorporated herein
3(a)(iii) Amendment dated, 9/12/88 by reference to
3(a)(iv) Amendment dated, 7/10/89 Exhibit 3(a) to the
Company's 1989 Annual
Report on Form 10-K.
3(b) By-Laws, as amended
to 6/11/93.
3(c)(i) Certificate of Designations Incorporated herein
relating to Series C 8-1/2% by reference to
Convertible Preference Stock. Exhibit 2 to the
Company's Form 8-K
dated July 20, 1992.
3(c)(ii) Certificate of Designations Incorporated herein
relating to Series D 8-1/2% by reference to
Convertible Preference Stock. Exhibit 3 to the
Company's Form 8-K
dated July 20, 1992.
3(c)(iii) Certificate of Designations Incorporated herein
relating to Series E 8-1/2% by reference to
Convertible Preference Stock. Exhibit 4 to the
Company's Form 8-K
dated July 20, 1992.
Exhibit No. Description
4(a) Shareholders Rights Incorporated herein
Agreement. by reference to the
Registration
Statement on Form 8-A
dated September 9, 1988
4(b) Agreement regarding Security Incorporated herein
Holder's Rights, Obligations by reference to
and Options. Exhibit 5 to the
Company's Form 8-K
dated July 20, 1992.
10(c)(i) The Company's Executive Incorporated herein
Incentive Compensation by reference to
Plan. Exhibit 10.3 to the
Registration Statement
on Form S-14 of The
Turner Corporation, No.
2-90235.
10(c)(ii) The Company's 1981 Stock Incorporated herein
Option Plan, as amended. by reference to
Exhibit 10(c)(v) to the
Company's 1988 Annual
Report on Form 10-K.
10(c)(iii) The Company's 1986 Incorporated herein by
Stock Option Plan, referenceto Exhibit 10(c)(vii)
as amended. to the Company's
1988 Annual Report on
Form 10-K.
10(c)(iv) The Company's 1992 Stock Incorporated herein by
Option Plan. reference to the
Registration Statement
on Form S-8.
10(c)(v) The Company's Incentive Incorporated herein by
Compensation Plan. reference to
the Exhibit 10(c)(v)
to the Company's 1983
Annual Report on Form 10-K.
10(c)(vi) The Company's Retirement Incorporated herein by reference to
Benefit Equalization Plan, Exhibit 10(c)(vi) to the Company's 1992
amended and restated as of Annual Report on Form 10-K.
1/22/92.
Exhibit No. Description
10(c)(vii) The Company's Defined Incorporated herein by reference to
Contribution Retirement Exhibit 10(c)(vii) to the Company's 1992
Equalization Plan. Annual Report on Form 10-K.
10(c)(viii) The Company's Supplemental Incorporated herein
Executive Defined Benefit by reference to Exhibit 10(c)(viii) to
Retirement Plan. the Company's 1992 Annual Report
on Form 10-K.
10(c)(ix) The Company's Supplemental Incorporated herein by reference
Executive Defined Contribution to Exhibit 10(c)(ix) to the Company's
Retirement Plan. 1992 Annual Report on Form 10-K.
10(c)(x) Tax Deferred Savings Incorporated herein by reference to
Income Plan amended and Exhibit 10(c)(ix) to the Company's
restated as of 1/1/89. 1991 Annual Report
on Form 10-K.
10(c)(xi) Option Exchange and Incorporated herein by
Stock Purchase Plan. reference to Registration
Statement on Form S-8,
File No. 33-33867.
10(c)(xii) Employees' Retirement Incorporated herein
Plan - Restated as of by reference to
1/1/87. Exhibit 10(c)(vii) to
the Company's 1991
Annual Report on Form
10-K.
10(c)(xiii) Employees' Retirement Incorporated herein
Income Plan as of 4/1/91. by reference to
Exhibit 10(c)(viii) to
the Company's 1991
Annual Report on Form 10-K.
10(d) Asset Purchase Agreement Incorporated herein
dated 6/3/92, between by reference to
Turner Steiner International Exhibit 10(d) to
S.A. and Turner International the Company's 1992
Industries, Inc., and Turner Annual Report on Form
International Industries (U.K.) 10-K.
Ltd.
10(e) Joint Venture and Shareholders Incorporated herein
Agreement dated 6/3/92 between by reference to
The Turner Corporation and Karl Exhibit 10(e) to
Steiner Holding AG. the Company's 1992
Annual Report on Form
10-K.
Exhibit No. Description
10(f) Purchase Agreement dated Incorporated herein
June 3, 1992 between Karl by reference to
Steiner Holding AG and The Exhibit 1 to the
Turner Corporation. Company's Form 8-K
dated July 20, 1992.
10(g)(i) The Company's Revolving
Credit Facility dated as of
12/30/92.
10(g)(ii) Amendment No. 1 to
Credit Agreement dated
as of 12/31/93.
10(h) Form of change Control Agree-
ment between The Turner Corp-
oration and Messrs. McNeill,
Parmelee, Smith and Vumbacco,
respectively, Chairman, President,
Chief Financial Officer and General
Counsel dated July 1, 1993.
10(i) Form of Change of Control Agree-
ment with 56 other officers of
parent or subsidiaries dated
July 1, 1993.
11 Computation of per share
earnings.
22 Subsidiaries of the Registrant.
The Turner Corporation By-Laws Exhibit 3(b)
THE TURNER CORPORATION
BY-LAWS
DATED: JUNE 11, 1993
THE TURNER CORPORATION
BY-LAWS
ARTICLE I
Meetings of Stockholders
Section 1.1 Annual Meetings. The annual meeting of the stockholders
shall be held each year on such date, and at such time and place (within or
without the State of Delaware) as may be designated by the Board of
Directors.
Section 1.2 Special Meetings. Special meetings of the stockholders
may be called at any time by the Secretary at the direction of the Board of
Directors, to be held on such date, and at such time and place (within or
without the State of Delaware) as may be designated by the Board of
Directors.
Section 1.3 Notice of Meeting; Record Date; Quorum; Voting. Notice
of every meeting of stockholders shall be given, and a record date for the
meeting shall be established, in accordance with the General Corporation
Law of the State of Delaware. The presence at any meeting, in person or by
proxy, of the holders of record of a majority of the shares then issued and
outstanding and entitled to vote shall be necessary and sufficient to
constitute a quorum for the transaction of business, except as otherwise
provided by law. Directors shall be chosen by a plurality of the votes
cast. Except as otherwise provided by the Certificate of Incorporation of
the Corporation or by law, all other questions shall be determined by a
majority of the votes cast.
ARTICLE II
Board of Directors
Section 2.1 Number. The number of Directors which shall constitute
the
whole Board of Directors shall be not less than nine nor more than fifteen,
as may be fixed from time to time by resolution of the Board of Directors.
The Board of Directors shall consist of twelve Directors until changed as
herein provided.
Section 2.2 Classification, Election and Term of Office. The Board
of Directors shall be divided into three classes, which shall be as nearly
equal in number as possible. Directors shall be elected for three year
terms. Newly created Directorships resulting from an increase in the
number of Directors or vacancies occurring in the Board of Directors may
be filled by the Board. Each Director (whether elected at an annual
meeting or to fill a vacancy or otherwise) shall continue in office until
his successor shall have been elected and qualified or until his earlier
death, resignation or removal in the manner hereinafter provided.
Section 2.3 Meetings, Quorum and Manner of Acting. A meeting
("Organization Meeting") of the Board of Directors shall be held for
organization, for the election of officers and for the transaction of such
other business as may properly come before the meeting, within thirty days
after each annual election of Directors.
The Board of Directors by resolution may provide for the holding of
regular meetings and may fix the times and places at which such meetings
shall be held. Notice of regular meetings shall not be required to be
given, provided that whenever the time or place of regular meetings shall
be fixed or changed, notice of the action shall be mailed promptly to each
Director who shall not have been present at the meeting at which the action
was taken, addressed to him at his residence or usual place of business.
Special meetings of the Board of Directors shall be held upon call by
or at the direction of the Chairman of the Board, the President or any
Director. Except as otherwise required by law, notice of each special
meeting shall be mailed to each Director, addressed to him at his residence
or usual place of business, at least two days before the day on which the
meeting is to be held, or shall be sent to him at such place by telegram,
radio, cable, telex, or telecopier, or telephoned or delivered to him
personally, not later than the day before the day on which the meeting is
to be held. Such notice shall state the time and place of the meeting, but
need not state the purpose therefore, unless otherwise required by law.
Notice of any meeting need not be given to any Director who shall
attend the meeting in person or who shall waive notice thereof, before or
after the meeting, in writing. At each meeting of the Board of Directors
the presence of a majority of the whole Board of Directors as constituted
from time to time shall be necessary and sufficient to constitute a quorum
for the transaction of business. In the absence of a quorum, a majority of
those present at the time and place of any meeting may adjourn the meeting
from time to time until a quorum shall be present and the meeting may be
held as adjourned without further notice of waiver. A majority of those
present at any meeting at which a quorum is present may decide any question
brought before such meeting, except as otherwise provided by law, the
Certificate of Incorporation of the Corporation or these By-Laws.
Members of the Board of Directors may participate in a meeting of
the Board by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other, and participation in a meeting in such manner shall
constitute presence in person at the meeting.
Section 2.4 Action Without a Meeting. Any action which might have
been taken under these By-Laws by vote of the Directors at a meeting of the
Board of Directors may be taken without a meeting if all the members of the
Board of Directors consent thereto in writing, and the writing or writings
are filed with the minutes of the Board of Directors.
Section 2.5 Resignation of Directors. Any Director may resign at
any time by giving written notice of such resignation of the Board of
Directors. Unless otherwise specified in the notice, the resignation shall
take effect upon receipt thereof by the Board of Directors, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 2.6 Compensation of Directors. Directors shall receive such
reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with expenses, if any, as
the Board of Directors may from time to time determine. Nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
ARTICLE III
Officers
Section 3.1 Officers. The Board of Directors shall elect a Chairman
of the Board, a President, a Chairman of the Executive Committee, one or
more Vice Presidents, a Controller, a Treasurer and a Secretary and, in its
discretion, a Vice Chairman of the Board, one or more Executive Vice
Presidents and one or more Senior Vice Presidents, all of which officers
shall be Executive Officers. The Board of Directors may, from time to
time, fill vacancies and elect additional Executive Officers and such other
officers (including one or more Assistant Vice Presidents, Assistant
Controllers, Assistant Treasurers and Assistant Secretaries) as it may deem
appropriate. Any two or more offices may be held by the same person,
except that the Offices of the President and the Secretary may not be held
by the same person.
Section 3.2. Election, Term of Office and Qualifications. Each
officer (except such officers as may be appointed in accordance with the
provisions of Section 3.3) shall be elected by the Board of Directors.
Each such officer shall hold his office until the next Organization Meeting
and until his successor shall have been elected or until his death, or
until he shall have resigned in the manner provided in Section 3.4 or shall
have been removed in the manner provided in Section 3.5. The Chairman of
the Board, the Vice Chairman of the Board, the Chairman of the Executive
Committee and the President shall be members of the Board of Directors but
none of the other officers need be a Director.
Section 3.3 Subordinate Officers and Agents. The Board of Directors
from time to time may appoint other officers or agents to hold office for
such period, have such authority and perform such duties as may be provided
in the resolutions appointing them. The Board of Directors may delegate to
any officer or agent the power to appoint any such subordinate officers or
agents and to prescribe their respective terms of office, authorities and
duties.
Section 3.4 Resignations. Any officer may resign at any time by
giving written notice of such resignation to the Board of Directors, or, in
the case of a subordinate officer appointed in accordance with Section 3.3,
the appointing officer or agent. Unless otherwise specified in such
written notice, such resignation shall take effect upon receipt thereof by
the Board of Directors, and the acceptance of such resignation shall not be
necessary to make it effective.
Section 3.5 Removal. Any officer specifically designated in Section
3.1 may be removed with or without cause at any meeting of the Board of
Directors by affirmative vote of a majority of the Directors then in
office. Any officer or agent appointed in accordance with the provisions of
Section 3.3 may be removed with or without cause at any meeting of the
Board of Directors by affirmative vote of a majority of the Directors
present at such meeting, or at any time by any superior officer or agent
upon whom such power of removal shall have been conferred by the Board of
Directors.
Section 3.6 Vacancies. A vacancy in any office by reason of death,
resignation, removal, disqualification or any other cause shall be filled
for the unexpired portion of the term in the manner prescribed by these By-
Laws for regular election or appointment to such office.
Section 3.7 Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the Board of Directors and of the stockholders,
and shall have such other powers and perform such other duties as are given
to him by these By-Laws or as from time to time may be assigned to him by
the Board of Directors. In the absence or incapacity of the Chairman of
the Board, his duties as Chairman shall be performed by such Executive
Officer as is designated by the Chairman of the Board or the Board of
Directors.
If the Chairman of the Board has been designated the Chief Executive
Officer, he shall perform the duties and have the powers of the Chief
Executive Officer.
Section 3.8 Chief Executive Officer. The Chief Executive Officer
shall have the responsibility for carrying out the policies of the Board of
Directors and, subject to the control of the Board, shall provide general
leadership in matters of policy and planning and have general and active
charge, control and supervision of the business, property and affairs of
the Corporation, and shall determine the duties of and may assign titles to
non-officers.
The Chairman of the Board is designated as the Chief Executive
Officer. In his absence or incapacity, the duties and powers of the Chief
Executive Officer shall be performed by such Executive Officer as is
designated by the Chairman of the Board or the Board of Directors.
Section 3.9 President. The President shall have such powers and
duties as are given by these By-Laws or as from time to time may be
assigned to him by the Board of Directors or by the Chairman of the Board
if the Chairman has been designated the Chief Executive Officer.
If the Chairman of the Board has been designated the Chief Executive
Officer, the President shall assist the Chairman of the Board in the
control and supervision of the business, property and affairs of the
Corporation. The President may be designated the Chief Operating Officer of
the Corporation.
Section 3.10 Chairman of the Executive Committee. The Chairman of
the Executive Committee shall preside at all meetings of the Executive
Committee. He shall perform such other duties as the Board of Directors
may assign to him.
Section 3.11 Vice Chairman of the Board. In the absence or
incapacity of the Chairman of the Board, the Vice Chairman of the Board, if
any, shall perform the duties of the Chairman of the Board. He shall have
such other powers and perform such other duties as are given him by these
By-Laws or as from time to time may be assigned to him by the Board of
Directors or by the Chief Executive Officer.
Section 3.12 Executive Vice Presidents and Senior Vice Presidents.
Executive Vice Presidents and Senior Vice Presidents shall have such powers
and perform such duties as may be assigned to them by the Board of
Directors, the Chief Executive Officer or the President.
Section 3.13 Controller. The Controller shall keep or cause to be
kept full and accurate accounts of the financial transactions of the
Corporation and shall render an account of such transactions whenever
required by the Chief Executive Officer or the Board of Directors. He
shall perform such other duties as the Chief Executive Officer or the
President may assign to him.
Section 3.14 Treasurer. The Treasurer shall have custody of all the
funds and securities of the Corporation and shall perform such other duties
as the Chief Executive Officer or the President may assign to him.
Section 3.15 Secretary. The Secretary shall give all required
notices of the meetings of the stockholders and of the Board of Directors,
attend and act as Secretary at all meetings of the stockholders, the Board
of Directors and the Executive Committee, keep the records thereof and be
the custodian of the seal of the Corporation. He shall perform such other
duties as the Chief Executive Officer may assign to him.
Section 3.16 General Duties of Officers. Each officer, other than
the Chairman of the Board and the President, in addition to such other
powers and duties as are given to him by these By-Laws, shall perform such
duties and have such powers as from time to time may be assigned to him by
the Board of Directors, the Chief Executive Officer or the President.
ARTICLE IV
Committees
Section 4.1 Executive Committee. At each Organization Meeting, the
Board of Directors shall designate an Executive Committee which shall
consist of the Chairman of the Board, the Chairman of the Executive
Committee, the President and not less than two other Directors. The
members of the Committee shall serve at the pleasure of the Board of
Directors until the next Organization Meeting. If any member of the
Committee shall cease to be a member of the Board of Directors, he shall
cease to be a member of the Committee. If any vacancy in the Committee
shall occur, the remaining members of the Committee, though less than a
quorum, shall continue to act until such vacancy is filled by the Board of
Directors. The Secretary of the Committee shall be the Secretary of the
Corporation. The Committee may appoint from its membership other officers
for its own proceedings and adopt rules for the conduct of its business.
Meetings of the Committee shall be held at the call of the Chairman of the
Executive Committee or, in the absence of the Chairman, at the call of any
member of the Committee. The number of members of the Committee required
for a quorum at any meeting thereof shall be three.
During the intervals between the meetings of the Board of Directors,
the Executive Committee shall have all the authority of the Board of
Directors, except the authority to submit any matter to stockholders, fill
vacancies in the Board of Directors or any committee of the Board, fix the
compensation as such of Directors and members of committees of Directors,
adopt, amend or repeal By-Laws, or amend or repeal any resolution of the
Board of Directors, which, by its terms, prohibits such amendment or
repeal. Action taken at any meeting shall be reported at the next meeting
of the
Board of Directors.
Section 4.2 Compensation and Stock Option Committee. At each
Organization Meeting, the Board of Directors shall designate a Compensation
and Stock Option Committee which shall consist of not less than three
Directors who are eligible to serve under the terms of the Executive
Incentive Compensation Plan, Incentive Compensation Plan, 1978 Stock Option
Plan, 1981 Incentive Stock Option Plan and such other plans as the Board of
Directors may have adopted and designated the Committee as the committee to
administer the plan. The members of the Committee shall serve at the
pleasure of the Board of Directors until the next Organization Meeting. If
any member of the Committee shall cease to be a member of the Board of
Directors, or otherwise becomes ineligible to serve, he shall cease to be a
member of the Committee.
The Committee shall administer the Executive Incentive Compensation
Plan, Incentive Compensation Plan, 1978 Stock Option Plan, 1981 Incentive
Stock Option Plan and such other plans as the Board of Directors may have
adopted and designated the Committee as the committee to administer the
plan, and approve the salaries of and other compensation paid to all
Executive Officers of the Corporation, except the salaries of the Chairman
of the Board, the Vice Chairman of the Board, the President, the Chairman
of the Executive Committee, a member of this Committee and the
compensation, as such, of Directors and members of committees of Directors,
which shall be approved by the Board of Directors. Action taken at any
meeting of the Committee shall be reported at the next meeting of the Board
of Directors.
Section 4.3 Contract Review Committee. At each Organization
Meeting, the Board of Directors shall designate a Contract Review Committee
which shall consist of the Chairman of the Board, the President and other
Executive Officers of the Corporation or any subsidiary of the Corporation.
The members of the Committee shall serve at the pleasure of the Board of
Directors until the next Organization Meeting. If any member of the
Committee shall cease to be an Executive Officer, he shall cease to be a
member of the Committee. A majority of the members of the Committee, which
majority shall include either the Chairman of the Board or the President,
shall be necessary to constitute a quorum at any meeting.
The Contract Review Committee shall have authority in respect of
construction contract matters as provided in Section 5.1 of these By-Laws
and shall have such additional authority as may be designated from time to
time by resolution of the Board of Directors. Action taken by the
Committee shall be reported at the next meeting of the Board of Directors
or the Executive Committee.
Section 4.4 Audit Committee. At each Organization Meeting, the
Board of Directors shall designate an Audit Committee which shall consist
of not less than three Directors who are not Executive Officers. The
members of the Committee shall serve at the pleasure of the Board of
Directors until the next Organization Meeting. If any member of the
Committee shall cease to be a member of the Board of Directors, or
otherwise becomes ineligible to serve, he shall cease to be a member of the
Committee.
The Committee shall recommend the firm of independent public
accountants to act as the Corporation's independent auditors, confer with
the Corporation's independent auditors as to the scope of their proposed
audit, review the findings and recommendations of the independent auditors,
review with the Corporation's internal audit and accounting personnel, the
Corporation's financial controls, procedures and practices, and review the
Corporation's compliance with its operating policy statement. Action taken
at any meeting of the Committee shall be reported at the next meeting of
the Board of Directors.
Section 4.5 Nominating Committee. At each Organization Meeting, the
Board of Directors shall designate a Nominating Committee which shall
consist of the Chairman of the Board and not less than two other Directors
neither of whom is an Executive Officer. The members of the Committee
shall serve at the pleasure of the Board of Directors until the next
Organization Meeting. If any member of the Committee shall cease to be a
member of the Board of Directors, or otherwise becomes ineligible to serve,
he shall cease to be a member of the Committee.
The Committee shall select and recommend nominees for
directorships to the Board of Directors and review senior management
organizational plans. Action taken at any meeting of the Committee shall
be reported at the next meeting of the Board of Directors.
Section 4.6 Other Committees. The Board of Directors may designate
such other committees as may from time to time be found necessary or
convenient for the proper conduct of the business of the Corporation, and
their duties and authority. Action taken at any meeting of any such
committee shall be reported at the next meeting of the Board of Directors.
Section 4.7 Actions by Committee Without Meetings. Any action
required or permitted to be taken by any committee of the Board of
Directors may be taken without a meeting if all members of the committee
consent in writing to the adoption of a resolution authorizing the action.
Section 4.8 Participation in Meetings by Telephone. Any one or more
of the members of any committee of the Board of Directors may participate
in a meeting of such committee by means of a conference telephone or
similar communications equipment allowing all persons participating in the
meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
ARTICLE V
Execution of Instruments and
Deposit of Corporate Funds
Section 5.1 Contracts. The authority to approve contracts for, and
to submit binding proposals with respect to the design, the construction or
the management of the construction of buildings and other projects as
required by the By-Laws of any subsidiary shall be exercised as follows:
Contracts and proposals having an estimated total cost of $2,000,000
or less by Managers of Special Projects Divisions or other offices of
Turner Construction Company. provided such Managers have been so authorized
by the Contract Review Committee.
Contracts and proposals having an estimated total cost of $10,000,000
or less by Executive Officers and those Vice Presidents designated as
Construction Executives, in the case of Turner Construction Company, or, in
the case of any other subsidiary, by the Chairman of the Board of such
subsidiary or any other executive officer designated by such Chairman of
the Board, without additional approval or authorization.
Contracts and proposals having an estimated total cost in excess of
$10,000,000 to $20,000,000 upon the prior approval and authorization by a
Group Vice President, or, in absence, by a Senior Vice President, an
Executive Vice President, the President, the Vice Chairman, or the Chairman
of the Board of Turner Construction Company, or, in the case of any
subsidiary, upon the approval and authorization by the Chairman of the
Board of such subsidiary or any other executive officer designated by such
Chairman.
Contracts and proposals having an estimated total cost in excess of
$20,000,000, to $25,000,000 in the case of Turner Construction Company,
upon the prior approval and authorization by the President or Chairman of
Turner Construction Company.
Contracts and proposals having an estimated total cost in excess of
$25,000,000 in the case of Turner Construction Company, or, in excess of
$20,000,000, in the case of any other subsidiary, upon the prior approval
and authorization by the Contract Review Committee.
All contracts and proposals approved and authorized in accordance
with these By-Laws, shall be reported promptly to the Contract Review
Committee.
Terms and conditions in contracts and proposals, which may include
those relating to joint ventures, partnerships or other joint undertakings
with others, which the Contract Review Committee may, from time to time,
specify, relating to the design, the construction or the management of the
construction, required to be approved by the Corporation by the By-Laws of
any subsidiary of the Corporation, shall require the prior approval and
authorization of the Contract Review Committee.
Any contract for the purchase of materials for and/or for the
subletting of portions of the work covered by a general contract, which
general contract has been properly executed or authorized, may be executed
by, or the execution authorized by, an Executive Officer or Construction
Executive of the Corporation or a subsidiary, providing the consideration
for such material contract or subcontract does not exceed the sum of
$500,000 or in the event such material contract or subcontract provides for
a performance and payment bond by a responsible surety, then $2,000,000.
Where the contract consideration exceeds the foregoing limits, the
execution of the contract shall require the approval (1) in the case of
Turner Construction Company of the Chairman of the Board, or the Vice
Chairman of the Board, or the President, or the Executive Vice President,
or a Group Vice President, or a Senior Vice President, or such other
Executive Officer as may be designated by the Chairman of the Board or the
President, and (2) in the case of any other subsidiary, the Chairman of the
Board.
Except as otherwise specifically determined by the Board of Directors
or the Executive Committee, the By-Laws of all subsidiaries of the
Corporation shall contain contract approval provisions consistent with the
foregoing.
Section 5.2 Bank Accounts. Funds of the Corporation not otherwise
employed shall be deposited to its credit in such banks or trust companies
or with such bankers or other depositories and in such general accounts,
payroll accounts, dividend accounts or special accounts as may be
designated by the Chairman of the Board, the Vice Chairman of the Board,
the President, an Executive Vice President, the Treasurer or any other
Executive Officer authorized so to do by the Board of Directors.
Section 5.3 Checks and Drafts. All checks or drafts drawn on the
general accounts of the Corporation shall be signed by any two Executive
Officers or such other persons as may be designated by the Chairman of the
Board, or the Vice Chairman of the Board, the President, an Executive Vice
President, the Treasurer or any other Executive Officer authorized so to do
by the Board of Directors.
Checks or drafts drawn on payroll accounts, or dividend accounts, or
special accounts shall be signed by any one Executive Officer or such other
person, or by facsimile signature, as may be designated by the Chairman of
the Board, the Vice Chairman of the Board, the President, an Executive Vice
President, the Treasurer or any other Executive Officer authorized so to do
by the Board of Directors.
Section 5.4 Notes and Loans. Promissory notes, bills of exchange
and/or acceptances, guarantees and loans of Corporation funds must be
signed or, in the case of loans, approved by two Executive Officers, one of
whom shall be either the Chairman of the Board, the President, the
Treasurer or such other Executive Officer as may be designated by the
Chairman of the Board or the President.
Section 5.5 Other Contracts and Instruments. All other contracts
and instruments binding the Corporation shall be executed in the name and
on behalf of the Corporation as maybe authorized by the Board of Directors.
Such authorization may be general or confined to specific instances.
Section 5.6 Surety Bonds. The Treasurer, or, in his absence, such
other Executive Officer as may be designated by the Chairman of the Board
or the President, may execute surety bonds and the application therefor in
connection with the requirements of any proposal or contract which has been
properly authorized.
Section 5.7 Capital Transactions and Investments. Capital
transactions in excess of $250,000 in the case of the Corporation or Turner
Construction Company and $100,000 in the case of any other subsidiary,
including the purchase or sale of securities, real or personal property or
other investments, not made in the ordinary course of the construction
business of the Corporation or any subsidiary, and acquisitions of or
mergers with other companies shall be authorized by the Board of Directors,
or as otherwise provided in these By-Laws and provided further that, the
Chairman of the Corporation shall have authority to approve capital
transactions in excess of $100,000 but less than $250,000, of any other
subsidiary. Investments made and disposed of pursuant to or in connection
with the Corporation's case management program shall be authorized by the
Treasurer or such other officer as he or the Chief Executive Officer may
designate. Investments in, or disposal of, undeveloped or developed real
estate by the Corporation or any subsidiary shall be authorized by the
Board of Directors either specifically or by delegation pursuant to such
procedural policies as may be established from time to time by the Board of
Directors.
Section 5.8 Electronic Banking. Electronic banking agreements
entered into in the name of the Corporation must be signed by two Executive
Officers, one of whom shall be either the Chairman of the Board, the
President, the Treasurer or such other Executive Officer as may be
designated by the Chairman of the Board or President.
All electronic fund transfers must be authorized by two Executive
Officers, one of whom shall be either the Chairman of the Board, the
President, the Treasurer or such other Officers and individuals as may be
designated by the Chairman of the Board or President.
ARTICLE VI
Corporate Seal
Section 6.1 Corporate Seal. The corporate seal shall be circular in
form and shall bear the name of the Corporation and words and figures
denoting its organization under the laws of the State of Delaware and the
year thereof and otherwise shall be in such form as shall be approved from
time to time by the Board of Directors.
ARTICLE VII
Amendments
Section 7.1 Amendments. All By-Laws of the Corporation may be
amended or repealed and new By-Laws may be made, by an affirmative vote of
holders of a majority of the outstanding shares of stock of the Corporation
entitled to vote, or by an affirmation vote of a majority of the Directors
present at any meeting of the Board of Directors.
ARTICLE VIII
Indemnification
Section 8.1 Indemnification. The Corporation shall indemnify
Directors or Officers of the Corporation in the manner and to the fullest
extent now or hereafter permitted by law in connection with any threatened,
pending or completed action, suit or proceeding (including civil, criminal,
administrative or investigative proceedings) arising out of their service
to the Corporation or to another organization at the Corporation's request.
Persons who are not Directors or Officers of the Corporation may be
similarly
indemnified in respect of such service to the extent authorized at any time
by the Board of Directors. The provisions of this Section shall be
applicable to actions or proceedings commenced after the adoption hereof,
whether arising from acts or omissions occurring before or after the
adoption hereof, and to persons who have ceased to be Directors, Officers
or employees and shall inure to the benefit of their heirs, executors and
administrators.
[CONFORMED COPY]
$40,000,000
CREDIT AGREEMENT
dated as of
December 30, 1992
among
The Turner Corporation,
as Borrower,
Turner Construction Company,
as Guarantor,
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.......................... 1
1.02 Accounting Terms and Determinations.. 12
1.03 Types of Borrowings.................. 12
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend.................. 13
2.02 Notice of Borrowings................. 13
2.03 Notice to Banks; Funding of Loans.... 14
2.04 Notes................................ 15
2.05 Maturity of Loans.................... 15
2.06 Interest Rates....................... 15
2.07 Fees ................................ 20
2.08 Optional Termination or Reduction of
Commitments....................... 21
2.09 Mandatory Termination of
Commitments....................... 21
2.10 Optional Prepayments................. 21
2.11 General Provisions as
to Payments........................ 21
2.12 Funding Losses....................... 22
2.13 Computation of Interest and Fees..... 22
2.14 Withholding Tax Exemption............ 23
2.15 Foreign Withholding Taxes
and Other Costs.................... 23
ARTICLE III
CONDITIONS
SECTION 3.01 Effectiveness........................ 24
3.02 Borrowings........................... 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE BORROWER
SECTION 4.01 Corporate Existence and Power....... 26
4.02 Corporate and Governmental
Authorization; No Contravention... 26
4.03 Binding Effect...................... 26
4.04 Financial Information............... 27
4.05 Litigation.......................... 28
4.06 Compliance with ERISA............... 28
4.07 Environmental Matters............... 28
4.08 Compliance with Laws................ 28
4.09 Contractual Arrangements............ 28
4.10 Taxes............................... 29
4.11 Subsidiaries........................ 29
4.12 Not an Investment Company........... 29
4.13 Full Disclosure..................... 29
ARTICLE V
COVENANTS
SECTION 5.01 Information......................... 30
5.02 Payment of Obligations.............. 33
5.03 Maintenance of Property; Insurance.. 34
5.04 Conduct of Business and
Maintenance of Existence.......... 34
5.05 Compliance with Laws................ 34
5.06 Inspection of Property,
Books and Records................. 35
5.07 Current Ratio....................... 36
5.08 Debt................................ 36
5.09 Minimum Consolidated
Net Worth......................... 36
5.10 Fixed Charge Coverage............... 36
5.11 Cash Flow Restriction............... 36
5.12 Debt of Guarantor................... 37
5.13 Clean-up Period..................... 38
5.14 Investments......................... 38
5.15 Negative Pledge..................... 39
5.16 Consolidations, Mergers and
Sales of Assets................... 40
5.17 Use of Proceeds..................... 40
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default................... 41
6.02 Notice of Default................... 43
ARTICLE VII
THE AGENT
SECTION 7.01 Appointment and Authorization....... 44
7.02 Agent and Affiliates................ 44
7.03 Action by Agent..................... 44
7.04 Consultation with Experts........... 44
7.05 Liability of Agent.................. 44
7.06 Indemnification..................... 45
7.07 Credit Decision..................... 45
7.08 Successor Agent..................... 45
7.09 Agent's Fee......................... 46
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair......... 46
8.02 Illegality.......................... 46
8.03 Increased Cost and Reduced Return... 47
8.04 Base Rate Loans Substituted for
Affected Fixed Rate Loans......... 49
ARTICLE IX
GUARANTY
SECTION 9.01 The Guaranty........................ 49
9.02 Guaranty Unconditional.............. 49
9.03 Discharge Only Upon Payment
In Full; Reinstatement In
Certain Circumstances............. 50
9.04 Waiver by the Guarantor............. 51
9.05 Subrogation......................... 51
9.06 Stay of Acceleration................ 51
9.07 Limit of Liability.................. 51
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Notices............................. 51
10.02 No Waivers.......................... 52
10.03 Expenses; Documentary Taxes
Indemnification................... 52
10.04 Sharing of Set-Offs................. 53
10.05 Amendments and Waivers.............. 53
10.06 Successors and Assigns.............. 53
10.07 Collateral.......................... 55
10.08 Governing Law....................... 55
10.09 Counterparts; Integration........... 55
10.10 WAIVER OF JURY TRIAL................ 55
Exhibit A - Note
Exhibit B-1- Opinion of Counsel for the Company
EXHIBIT B-2- Opinion of General Counsel of
the Company
Exhibit C - Opinion of Special Counsel for the
Agent
Exhibit D - Assignment and Assumption Agreement
Exhibit E - Extension Agreement
Schedule A - Subsidiaries of the Borrower Not
Engaged in the Real Estate
Development Business
Schedule B - Subsidiaries of the Borrower Engaged
in the Real Estate Development
Business
Schedule C - Designated Joint Ventures and Designated
Joint Venture Agreements
Annex A - Waiver dated as of July 29, 1992 to
the Existing Agreement
Annex B - Memorandum from R.E. Bailey dated
June 24, 1992
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of December 30, 1992 among THE
TURNER CORPORATION, as Borrower, TURNER CONSTRUCTION COMPANY,
as Guarantor, the BANKS listed on the signature pages hereof
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
W I T N E S S E T H:
WHEREAS, The Turner Corporation has requested that
the Banks listed on the signature pages hereof make a
revolving credit facility available to it on the terms and
conditions set forth herein;
WHEREAS, The Turner Corporation anticipates that a
significant portion of the proceeds of the facility will be
used (i) to facilitate the business of its wholly-owned
subsidiary, Turner Construction Company or (ii) to repay
borrowings outstanding under the Existing Agreement (as
defined below) which were guaranteed by Turner Construction
Company; and
WHEREAS, the banks are not willing to make the
facility available unless Turner Construction Company
guarantees the obligations of The Turner Corporation
hereunder;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as
used herein, have the following meanings:
"Adjusted CD Rate" has the meaning set forth in
Section 2.06(b).
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 2.06(c).
"Administrative Questionnaire" means, with respect
to each Bank, an administrative questionnaire in the form
prepared by the Agent and submitted to the Agent (with a copy
to the Borrower) duly completed by such Bank.
"Agent" means Morgan Guaranty Trust Company of New
York in its capacity as agent for the Banks hereunder, and its
successors in such capacity.
"Applicable Lending Office" means, with respect to
any Bank, (i) in the case of its Domestic Loans, its Domestic
Lending Office and (ii) in the case of its Euro-Dollar Loans,
its Euro-Dollar Lending Office.
"Assessment Rate" has the meaning set forth in
Section 2.06(b).
"Assets Attributable to Minority Interests" at any
date means, with respect to any asset that (i) would be
reflected on the consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries if such balance sheet were
prepared as of such date and (ii) is owned by a Consolidated
Subsidiary that is not wholly owned by the Borrower, a
percentage of the amount of such asset that would be reflected
on such balance sheet that is equal to the percentage of the
equity of such Consolidated Subsidiary that would be reflected
as a minority interest on such balance sheet.
"Assignee" has the meaning set forth in Section
10.06(c).
"Backlog Earnings" with respect to any construction
project on any date means that portion of the Backlog Volume
with respect to such construction project as of such date that
is attributable to earnings expected to be realized after such
date from a contract theretofore obtained but not yet
completed with respect to such construction project.
"Backlog Volume" with respect to any construction
project on any date means construction costs expected to be
incurred in respect of, and earnings expected to be realized
from, a contract theretofore obtained but not yet completed
with respect to such construction project, in each case as of
such date.
"Bank" means each bank listed on the signature pages
hereof, each Assignee which becomes a Bank pursuant to Section
10.06(c), and their respective successors.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate for such day and
(ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such
day.
"Base Rate Loan" means a loan to be made by a Bank
as a Base Rate Loan in accordance with the applicable Notice
of Borrowing or pursuant to Article VIII.
"Base Rate Margin" has the meaning set forth in
Section 2.06(a).
"Benefit Arrangement" means at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA which
is not a Plan or a Multiemployer Plan and which is maintained
or otherwise contributed to by any member of the ERISA Group.
"Borrower" means The Turner Corporation, a Delaware
corporation, and its successors.
"Borrower's 1991 Form 10-K" means the Borrower's
annual report on Form 10-K for 1991, as filed with the
Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
"Borrowing" has the meaning set forth in Section
1.03.
"CD Base Rate" has the meaning set forth in Section
2.06(b).
"CD Loan" means a loan to be made by a Bank as a CD
Loan in accordance with the applicable Notice of Borrowing.
"CD Margin" has the meaning set forth in Section
2.06(b).
"CD Reference Banks" means The Bank of New York,
Chemical Bank and Morgan Guaranty Trust Company of New York.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the
signature pages hereof, as such amount may be reduced from
time to time pursuant to Sections 2.08 and 2.09.
"Consolidated Adjusted Current Assets" means at any
date the consolidated current assets of the Borrower and its
Consolidated Subsidiaries determined as of such date on the
assumption that all real estate of the Borrower and its
Consolidated Subsidiaries which on such date is held for sale
is a current asset.
"Consolidated Adjusted Current Liabilities" means at
any date (i) the consolidated current liabilities of the
Borrower and its Consolidated Subsidiaries plus (ii) the
current liabilities of any Person (other than the Borrower or
a Consolidated Subsidiary) which are Guaranteed by the
Borrower or a Consolidated Subsidiary, all determined as of
such date on the assumption that consolidated current
liabilities includes all obligations of the Borrower or a
Consolidated Subsidiary of which the Borrower reasonably
expects the obligor would be relieved (by discharge,
assumption by a third party or otherwise) upon the sale of
real estate which on such date is held for sale.
"Consolidated Adjusted Net Worth" means at any date
the consolidated stockholders' equity of the Borrower and its
Consolidated Subsidiaries, determined as of such date, minus
the amount of any investment in any joint venture, partnership
or other joint enterprise (except a Designated Joint Venture
or a Joint General Contractor Arrangement) that would be
reflected on a consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries if such balance sheet were
prepared as of such date.
"Consolidated Adjusted Total Assets" means at any
date the total consolidated assets of the Borrower and its
Consolidated Subsidiaries, determined as of such date, after
deducting therefrom (i) Assets Attributable to Minority
Interests and (ii) treasury stock, goodwill, trademarks, trade
names, patents and deferred charges, unamortized debt discount
and all other intangible assets of the Borrower and its
Consolidated Subsidiaries.
"Consolidated Debt" means at any date the Debt of
the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis as of such date.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Borrower in its consolidated
financial statements if such statements were prepared as of
such date.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price
of property or services, except trade accounts payable arising
in the ordinary course of business, (iv) all obligations of
such Person as lessee which are capitalized in accordance with
generally accepted accounting principles, (v) all
non-contingent obligations of such Person to reimburse or
prepay any bank or other Person in respect of amounts paid or
payable under a letter of credit, banker's acceptance or
similar instrument, (vi) all other obligations of such Person
that are secured by a Lien or Liens on assets of such Person,
(vii) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such
Person, and (viii) all Debt of others Guaranteed by such
Person.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Designated Joint Venture" means any joint venture
listed on Schedule C hereto.
"Designated Joint Venture Agreement" means any
agreement listed on Schedule C hereto.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in New
York City are authorized by law to close.
"Domestic Lending Office" means, as to each Bank,
its office located at its address set forth in its
Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as
its Domestic Lending Office by notice to the Borrower and the
Agent; provided that any Bank may so designate separate
Domestic Lending Offices for its Base Rate Loans, on the one
hand, and its CD Loans, on the other hand, in which case all
references herein to the Domestic Lending Office of such Bank
shall be deemed to refer to either or both of such offices, as
the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans
or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.06(b).
"Effective Date" means the date this Agreement
becomes effective in accordance with Section 3.01.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions
relating to the environment, the effect of the environment on
human health or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into
the environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants,
contaminants, Hazardous Substances or wastes or the clean-up
or other remediation thereof.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower or any Subsidiary
and all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414
of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for
international business (including dealings in dollar deposits)
in London.
"Euro-Dollar Lending Office" means, as to each Bank,
its office, branch or affiliate located at its address set
forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Euro-Dollar Lending
Office) or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Euro-Dollar Lending
Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a loan to be made by a Bank
as a Euro-Dollar Loan in accordance with the applicable Notice
of Borrowing.
"Euro-Dollar Margin" has the meaning set forth in
Section 2.06(c).
"Euro-Dollar Reference Banks" means the principal
London offices of The Bank of New York, Chemical Bank and
Morgan Guaranty Trust Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set
forth in Section 2.06(c).
"Event of Default" has the meaning set forth in
Section 6.01.
"Existing Agreement" means the Credit Agreement
dated as of June 19, 1990 among The Turner Corporation, Turner
Construction Company, the Banks listed therein and Morgan
Guaranty Trust Company of New York, as Agent.
"Federal Funds Rate" means, for any day, the rate
per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York
on the Domestic Business Day next succeeding such day,
provided that (i) if such day is not a Domestic Business Day,
the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and
(ii) if no such rate is so published on such next succeeding
Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to Morgan Guaranty Trust
Company of New York on such day on such transactions as
determined by the Agent.
"Fixed Charge Ratio" for any period means Income
Available for Fixed Charges for such period divided by Fixed
Charges for such period.
"Fixed Charges" for any period means interest
expense (including interest expense under capital leases) and
rental expense under operating leases, to the extent deducted
in determining the consolidated net income of the Borrower and
its Consolidated Subsidiaries for such period.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or any combination of the foregoing.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt of any other Person and, without
limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or
otherwise) or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Debt of the payment
thereof or to protect such obligee against loss in respect
thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means Turner Construction Company, a New
York corporation, and its successors.
"Hazardous Substances" means any toxic, radioactive,
caustic or otherwise hazardous substances, including
petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"Income Available for Fixed Charges" for any period
means the consolidated net income of the Borrower and its
Consolidated Subsidiaries for such period, plus (to the extent
deducted in determining such consolidated net income) income
taxes and Fixed Charges.
"Indemnitee" has the meaning set forth in Section
9.03(b).
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date of
such Borrowing and ending 1, 2, 3 or 6 months thereafter, as
the Borrower may elect in the applicable Notice of Borrowing;
provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another
calendar month, in which case such Interest Period shall
end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each CD Borrowing, the period commencing
on the date of such Borrowing and ending 30, 60, 90 or 180
days thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest
Period determined pursuant to clause (b) below) which
would otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date.
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days
thereafter; provided that:
(a) any Interest Period (other than an Interest
Period determined pursuant to clause (b) below) which
would otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute.
"Investment" means any investment in any Person,
whether by means of share purchase, capital contribution,
loan, time deposit or otherwise.
"Joint General Contractor Arrangement" means an
arrangement pursuant to which a Subsidiary of the Borrower
engaged in the construction business and one or more other
entities act as co-general contractors or co-construction
managers or in a similar capacity with respect to a specific
construction project or group of construction projects;
provided that such arrangement does not involve an Investment
in real property by the Borrower, such Subsidiary or any such
other entity.
"Leverage Ratio" means at any date Consolidated Debt
at such date divided by Consolidated Adjusted Net Worth at
such date.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan
and "Loans" means Domestic Loans or Euro-Dollar Loans or any
combination of the foregoing.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.06(c).
"Material Debt" means Debt (other than the Notes) of
the Borrower and/or one or more of its Subsidiaries, arising
in one or more related or unrelated transactions, in an
aggregate principal amount exceeding $1,000,000.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of $5,000,000.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3)
of ERISA to which any member of the ERISA Group is then making
or accruing an obligation to make contributions or has within
the preceding five plan years made contributions, including
for these purposes any Person which ceased to be a member of
the ERISA Group during such five year period.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Loans, and "Note"
means any one of such promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in
Section 2.02.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section
10.06(b).
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision
or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit
plan (other than a Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i)
is maintained, or contributed to, by any member of the ERISA
Group for employees of any member of the ERISA Group or (ii)
has at any time within the preceding five years been
maintained, or contributed to, by any Person which was at such
time a member of the ERISA Group for employees of any Person
which was at such time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York in New
York City from time to time as its Prime Rate.
"Reference Banks" means the CD Reference Banks or
the Euro-Dollar Reference Banks, as the context may require,
and "Reference Bank" means any one of such Reference Banks.
"Refunding Borrowing" means a Borrowing which, after
application of the proceeds thereof, results in no net
increase in the outstanding principal amount of Loans made by
any Bank to the Borrower.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Required Banks" means at any time Banks having at
least 66 2/3% of the aggregate amount of the Commitments or,
if the Commitments shall have been terminated, holding Notes
evidencing at least 66 2/3% of the aggregate unpaid principal
amount of the Loans.
"Rickenbacker Guaranty" means the amended and
restated Guaranty dated as of November 1, 1992 from the
Guarantor and the Borrower to Bank One, Columbus, N.A.
pursuant to which the Borrower and the Guarantor have agreed
to guarantee certain obligations of Rickenbacker Holdings,
Inc., as amended from time to time.
"Rickenbacker Loan Agreement" means the amended and
restated Loan Agreement dated as of November 1, 1992 between
Rickenbacker Port Authority and Rickenbacker Holdings, Inc.,
as amended from time to time.
"Schedule A Subsidiary" means any corporation set
forth on Schedule A hereto.
"Schedule B Subsidiary" means any corporation set
forth on Schedule B hereto.
"Subsidiary" means any corporation or other entity
of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
the time directly or indirectly owned by the Borrower.
"Temporary Cash Investment" means any Investment in
(i) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any
agency thereof, (ii) obligations of any state or municipality,
or any agency or instrumentality thereof, that are rated at
least AA or SP-1 by Standard & Poor's Corporation or Aa or
MIG-1 by Moody's Investors Service, Inc., (iii) commercial
paper rated, or money market preferred stock issued by Persons
whose commercial paper is rated, at least A-1 by Standard &
Poor's Corporation or P-1 by Moody's Investors Service, Inc.,
(iv) time deposits with, including certificates of deposit
issued by, or banker's acceptances issued by, any office of
any bank or trust company which (A) is organized under the
laws of the United States or any state thereof, Japan or a
country that is a member of the European Economic Community
and (B) has capital, surplus and undivided profits aggregating
at least $50,000,000 (or the equivalent thereof in foreign
currency) or (v) repurchase agreements with respect to
securities described in clause (i) above entered into with an
office of a bank or trust company meeting the criteria
specified in clause (iv) above, provided in each case that
such Investment matures within one year from the date of
acquisition thereof by the Borrower or a Subsidiary.
"Termination Date" means December 30, 1995, or
December 30, 1996 if the term of this Agreement shall have
been extended pursuant to Section 2.01(b), or, if such day is
not a Euro-Dollar Business Day, the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the Termination
Date shall be the next preceding Euro-Dollar Business Day.
"Turner Development" means Turner Development
Corporation, a Delaware corporation, and its successors.
"Turner Investment Corporation" means Turner
Investment Corporation, a Delaware corporation, and its
successors.
"Unfunded Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the value
of all benefit liabilities under such Plan, determined on a
plan termination basis using the assumptions prescribed by the
PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but
unpaid contributions), all determined as of the then most
recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member
of the ERISA Group to the PBGC or any other Person under Title
IV of ERISA.
SECTION 1.02. Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required
to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from
time to time, applied on a basis consistent (except for
changes concurred in by the Borrower's independent public
accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks.
SECTION 1.03. Types of Borrowings. The term
"Borrowing" denotes the aggregation of Loans of one or more
Banks to be made to the Borrower pursuant to Article II on a
single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement by reference to the
pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. (a) Each Bank
severally agrees, on the terms and conditions set forth in
this Agreement, to make loans to the Borrower from time to
time prior to the Termination Date; provided that the
aggregate principal amount of Loans by such Bank at any one
time outstanding shall not exceed the amount of its
Commitment. Each Borrowing hereunder shall be in an aggregate
principal amount of $5,000,000 or any larger multiple of
$1,000,000 (except that any Borrowing may be in the aggregate
unused amount of the Commitments) and shall be made from the
several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may
borrow, repay, or, to the extent permitted by Section 2.10,
prepay Loans and reborrow at any time prior to the Termination
Date.
(b) The term of this Agreement may be extended, in
the manner set forth in this subsection (b), on December 30,
1993 (the "Extension Date") for a period of one year after the
date on which it would otherwise have expired. If the
Borrower wishes to request an extension of the term of this
Agreement on the Extension Date, it shall give written notice
to that effect to the Agent not less than 60 nor more than 90
days prior to the Extension Date, whereupon the Agent shall
notify each of the Banks of such notice. Each Bank will use
its best efforts to respond to such request, whether
affirmatively or negatively, within 30 days after receiving
notice from the Agent. If all Banks respond affirmatively,
then, subject to receipt by the Agent prior to the Extension
Date of counterparts of an Extension Agreement in
substantially the form of Exhibit E hereto duly completed and
signed by all of the parties hereto, the term of this
Agreement shall be extended, effective on the Extension Date,
to December 30, 1996.
SECTION 2.02. Notice of Borrowings. The Borrower
shall give the Agent notice (a "Notice of Borrowing") not
later than 11:00 A.M. (New York City time) on (x) the date of
each Base Rate Borrowing, (y) the second Domestic Business Day
before each CD Borrowing and (z) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic Borrowing
or a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are
to be CD Loans, Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Fixed Rate Borrowing, the
duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest
Period.
SECTION 2.03. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time)
on the date of each Borrowing, each Bank shall (except as
provided in subsection (c) of this Section) make available its
ratable share of such Borrowing, in Federal or other funds
immediately available in New York City, to the Agent at its
address specified in or pursuant to Section 10.01. Unless the
Agent determines that any applicable condition specified in
Article III has not been satisfied, the Agent will make the
funds so received from the Banks available to the Borrower at
the Agent's aforesaid address.
(c) If any Bank makes a new Loan hereunder on a day
on which the Borrower is to repay all or any part of an
outstanding Loan from such Bank, such Bank shall apply the
proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount
being borrowed by the Borrower and the amount being repaid
shall be made available by such Bank to the Agent as provided
in subsection (b) of this Section, or remitted by the Borrower
to the Agent as provided in Section 2.11, as the case may be.
(d) Unless the Agent shall have received notice
from a Bank prior to the date of any Borrowing that such Bank
will not make available to the Agent such Bank's share of such
Borrowing, the Agent may assume that such Bank has made such
share available to the Agent on the date of such Borrowing in
accordance with subsections (b) and (c) of this Section 2.03
and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount.
If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each
day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at
(i) in the case of the Borrower, a rate per annum equal to the
higher of the Federal Funds Rate and the interest rate
applicable to such Borrowing pursuant to Section 2.06 and (ii)
in the case of such Bank, the Federal Funds Rate. If such
Bank shall repay to the Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Loan included in
such Borrowing for purposes of this Agreement.
SECTION 2.04. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of
such Bank for the account of its Applicable Lending Office in
an amount equal to the aggregate unpaid principal amount of
such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and
the Agent, request that its Loans of a particular type be
evidenced by a separate Note in an amount equal to the
aggregate unpaid principal amount of such Loans. Each such
Note shall be in substantially the form of Exhibit A hereto
with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant type. Each reference
in this Agreement to a "Note" or the "Notes" of such Bank
shall be deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Agent shall mail such Note to such Bank.
Each Bank shall record the date, amount, type and maturity of
each Loan made by it and the date and amount of each payment
of principal made with respect thereto, and prior to any
transfer of its Note shall endorse on the schedule forming a
part thereof appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding,
which endorsements shall be, in the absence of manifest error,
presumptive evidence of the amount of Loans outstanding at the
time of such transfer; provided that the failure of any Bank
to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under the Notes.
Each Bank is hereby irrevocably authorized by the Borrower so
to endorse its Notes and to attach to and make a part of any
Note a continuation of any such schedule as and when required.
SECTION 2.05. Maturity of Loans. Each Loan
included in any Borrowing shall mature, and the principal
amount thereof shall be due and payable, on the last day of
the Interest Period applicable to such Borrowing.
SECTION 2.06. Interest Rates. (a) Each Base Rate
Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the sum of the Base
Rate Margin for such day plus the Base Rate for such day.
Such interest shall be payable for each Interest Period on the
last day thereof. Any overdue principal of or interest on any
Base Rate Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the sum of
2.75% plus the Base Rate for such day. The "Base Rate Margin"
for any day means:
(i) .25% if, at least one Domestic Business Day
prior to such day, the Borrower has delivered all
financial statements and certificates required to be
delivered before such day pursuant to Section 5.01(a)
through (g), and (A) the Fixed Charge Ratio for the most
recent fiscal quarter with respect to which a certificate
has been delivered pursuant to Section 5.01(g), as set
forth on such certificate, is greater than or equal to
1.9 to 1 and (B) Consolidated Adjusted Net Worth as of
the last day of such fiscal quarter, as set forth on such
certificate, is greater than or equal to $75,000,000;
(ii) .5% if one or more of the conditions specified
in the foregoing clause (i) are not met and, at least one
Domestic Business Day prior to such day, the Borrower has
delivered all financial statements and certificates
required to be delivered on or before such day pursuant
to Section 5.01(a) through (g), and (A) the Fixed Charge
Ratio for the most recent fiscal quarter with respect to
which a certificate has been delivered pursuant to
Section 5.01(g), as set forth on such certificate, is
greater than or equal to 1.6 to 1 and (B) Consolidated
Adjusted Net Worth as of the last day of such fiscal
quarter, as set forth on such certificate, is greater
than or equal to $65,000,000; or
(iii) .75% for all other days.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each day during the
Interest Period applicable thereto, at a rate per annum equal
to the sum of the CD Margin for such day plus the applicable
Adjusted CD Rate; provided that if any CD Loan or any portion
thereof shall, as a result of clause (2)(b) of the definition
of Interest Period, have an Interest Period of less than 30
days, such portion shall bear interest for each day during
such Interest Period at the rate applicable to Base Rate Loans
for such day. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest
Period is longer than 90 days, 90 days after the first day
thereof. Any overdue principal of or interest on any CD Loan
shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the higher of (i) the sum of
4.375% plus the Adjusted CD Rate applicable to such Loan and
(ii) the sum of 2.75% plus the Base Rate for such day.
The applicable "CD Margin" for any day means:
(i) 1.875% if, at least one Domestic Business Day
prior to such day, the Borrower has delivered all
financial statements and certificates required to be
delivered on or before such day pursuant to Section
5.01(a) through (g), and (A) the Fixed Charge Ratio for
the most recent fiscal quarter with respect to which a
certificate has been delivered pursuant to Section
5.01(g), as set forth on such certificate, is greater
than or equal to 1.9 to 1 and (B) Consolidated Adjusted
Net Worth as of the last day of such fiscal quarter, as
set forth on such certificate, is greater than or equal
to $75,000,000;
(ii) 2.125% if one or more of the conditions
specified in the foregoing clause (i) are not met and, at
least one Domestic Business Day prior to such day, the
Borrower has delivered all financial statements and
certificates required to be delivered on or before such
day pursuant to Section 5.01(a) through (g), and (A) the
Fixed Charge Ratio for the most recent fiscal quarter
with respect to which a certificate has been delivered
pursuant to Section 5.01(g), as set forth on such
certificate, is greater than or equal to 1.6 to 1 and (B)
Consolidated Adjusted Net Worth as of the last day of
such fiscal quarter, as set forth on such certificate, is
greater than or equal to $65,000,000; or
(iii) 2.375% for all other days.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period
is the rate of interest determined by the Agent to be the
average (rounded upward, if necessary, to the next higher
1/100 of 1%) of the prevailing rates per annum bid at 10:00
A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two
or more New York certificate of deposit dealers of recognized
standing for the purchase at face value from each CD Reference
Bank of its certificates of deposit in an amount comparable to
the principal amount of the CD Loan of such CD Reference Bank
to which such Interest Period applies and having a maturity
comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement (including without limitation any basic,
supplemental or emergency reserves) for a member bank of the
Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of new non-personal
time deposits in dollars in New York City having a maturity
comparable to the related Interest Period and in an amount of
$100,000 or more. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in
the Domestic Reserve Percentage.
"Assessment Rate" means for any Interest Period the
net annual assessment rate (rounded upward, if necessary, to
the next higher 1/100 of 1%) actually incurred by Morgan
Guaranty Trust Company of New York to the Federal Deposit
Insurance Corporation (or any successor) for such
Corporation's (or such successor's) insuring time deposits at
offices of Morgan Guaranty Trust Company of New York in the
United States during the most recent period for which such
rate has been determined prior to the commencement of such
Interest Period.
(c) Each Euro-Dollar Loan shall bear interest on
the outstanding principal amount thereof, for each day during
the Interest Period applicable thereto, at a rate per annum
equal to the sum of the Euro-Dollar Margin for such day plus
the applicable Adjusted London Interbank Offered Rate. Such
interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than three
months, three months after the first day thereof.
The "Euro-Dollar Margin" for any day means:
(i) 1.75% if, at least one Domestic Business Day
prior to such day, the Borrower has delivered all
financial statements and certificates required to be
delivered before such day pursuant to Section 5.01(a)
through (g), (A) the Fixed Charge Ratio for the most
recent fiscal quarter with respect to which a certificate
has been delivered pursuant to Section 5.01(g), as set
forth on such certificate, is greater than or equal to
1.9 to 1 and (B) Consolidated Adjusted Net Worth as of
the last day of such fiscal quarter, as set forth on such
certificate, is greater than or equal to $75,000,000;
(ii) 2% if one or more of the conditions specified
in the foregoing clause (i) are not met and, at least one
Domestic Business Day prior to such day, the Borrower has
delivered all financial statements and certificates
required to be delivered before such day pursuant to
Section 5.01(a) through (g), (A) the Fixed Charge Ratio
for the most recent fiscal quarter with respect to which
a certificate has been delivered pursuant to Section
5.01(g), as set forth on such certificate, is greater
than or equal to 1.6 to 1 and (B) Consolidated Adjusted
Net Worth as of the last day of such fiscal quarter, as
set forth on such certificate, is greater than or equal
to $65,000,000; or
(iii) 2.25% for all other days.
The "Adjusted London Interbank Offered Rate"
applicable to any Interest Period means a rate per annum equal
to the quotient obtained (rounded upward, if necessary, to the
next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to
any Interest Period means the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London
interbank market at approximately 11:00 A.M. (London time) two
Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the
maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five
billion dollars in respect of "Eurocurrency liabilities" (or
in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United
States office of any Bank to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in
the Euro-Dollar Reserve Percentage.
(d) Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due
to but excluding the date of actual payment, at a rate per
annum equal to the sum of 4.25% plus the higher of (i) the
Adjusted London Interbank Offered Rate applicable to such Loan
and (ii) the quotient obtained (rounded upward, if necessary,
to the next higher 1/100 of 1%) by dividing (x) the average
(rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which one day (or, if
such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer
than three months as the Agent may select) deposits in dollars
in an amount approximately equal to such overdue payment due
to each of the Euro-Dollar Reference Banks are offered to such
Euro-Dollar Reference Bank in the London interbank market for
the applicable period determined as provided above by (y) 1.00
minus the Euro-Dollar Reserve Percentage (or, if the
circumstances described in clause (a) or (b) of Section 8.01
shall exist, at a rate per annum equal to the sum of 2.75%
plus the Base Rate for such day).
(e) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give
prompt notice to the Borrower and the participating Banks by
telex or cable of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of
manifest error.
(f) Each Reference Bank agrees to use its best
efforts to furnish quotations to the Agent as contemplated
hereby. If any Reference Bank does not furnish a timely
quotation, the Agent shall determine the relevant interest
rate on the basis of the quotation or quotations furnished by
the remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of
Section 8.01 shall apply.
SECTION 2.07. Fees.
(a) Commitment Fee. The Borrower shall pay to the
Agent for the account of each Bank a commitment fee at the
rate of 1/2 of 1% per annum on the unused portion of such
Bank's Commitment. Such commitment fee shall accrue from and
including the Effective Date to but excluding the Termination
Date. Accrued fees under this Section shall be payable
quarterly on each March 31, June 30, September 30 and December
31 and on the Termination Date.
(b) Participation Fee. The Borrower shall pay to
the Agent on the Effective Date, for the account of the Banks
in proportion to their respective Commitments, participation
fees in an amount equal to 1/4 of 1% of the aggregate amount
of the Commitments.
SECTION 2.08. Optional Termination or Reduction of
Commitments. The Borrower may, upon at least three Domestic
Business Days' notice to the Agent, (i) terminate the
Commitments at any time, if no Loans are outstanding at such
time or (ii) ratably reduce from time to time by an aggregate
amount of $5,000,000 or any larger multiple of $1,000,000 the
aggregate unused amount of the Commitments.
SECTION 2.09. Mandatory Termination of Commitments.
The Commitments shall terminate on the Termination Date, and
any Loans then outstanding (together with accrued interest
thereon) shall be due and payable on such date.
SECTION 2.10. Optional Prepayments. (a) The
Borrower may, upon notice to the Agent given no later than
11:00 A.M. (New York City time) on the date of prepayment,
prepay any Base Rate Borrowing in whole at any time, or from
time to time in part in amounts aggregating $5,000,000 or any
larger multiple of $1,000,000, by paying the principal amount
to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be
applied to prepay ratably the Loans of the several Banks
included in such Borrowing.
(b) Except as provided in Section 8.02, the
Borrower may not prepay all or any portion of the principal
amount of any Fixed Rate Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant
to this Section, the Agent shall promptly notify each Bank of
the contents thereof and of such Bank's ratable share of such
prepayment and such notice shall not thereafter be revocable
by the Borrower.
SECTION 2.11. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and
interest on, the Loans and of fees hereunder (except the
participation fee under Section 2.07(b), which shall be paid
at such time on the Effective Date as all of the conditions in
Section 3.01 shall have been satisfied or waived), not later
than 12:00 Noon (New York City time) on the date when due, in
Federal or other funds immediately available in New York City,
to the Agent at its address referred to in Section 10.01. The
Agent will promptly distribute to each Bank its ratable share
of each such payment received by the Agent for the account of
the Banks. Whenever any payment of principal of, or interest
on, the Domestic Loans or of fees shall be due on a day which
is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business
Day. Whenever any payment of principal of, or interest on,
the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar
month, in which case the date for payment thereof shall be the
next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended
time.
(b) Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment is
due from the Borrower to the Banks hereunder that the Borrower
will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on
such date and the Agent may, in reliance upon such assumption,
cause to be distributed to each Bank on such due date an
amount equal to the amount then due such Bank. If and to the
extent that the Borrower shall not have so made such payment,
each Bank shall repay to the Agent forthwith on demand such
amount distributed to such Bank together with interest
thereon, for each day from the date such amount is distributed
to such Bank until the date such Bank repays such amount to
the Agent, at the Federal Funds Rate.
SECTION 2.12. Funding Losses. If the Borrower
makes any payment of principal with respect to any Fixed Rate
Loan (pursuant to Article VI or VIII or otherwise) on any day
other than the last day of the Interest Period applicable
thereto, or the last day of an applicable period fixed
pursuant to Section 2.06(d), or if the Borrower fails to
borrow any Fixed Rate Loans after notice has been given to any
Bank in accordance with Section 2.03(a), the Borrower shall
reimburse each Bank within 15 days after demand for any
resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan), including
(without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment
or failure to borrow, provided that such Bank shall have
delivered to the Borrower a certificate setting forth the
amount of such loss or expense and, in reasonable detail, the
calculation thereof, which certificate shall be conclusive in
the absence of manifest error.
SECTION 2.13. Computation of Interest and Fees.
Interest based on the Prime Rate hereunder shall be computed
on the basis of a year of 365 days (or 366 days in a leap
year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All
other interest and fees shall be computed on the basis of a
year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day).
SECTION 2.14. Withholding Tax Exemption. At least
five Domestic Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any
Bank, each Bank that is not incorporated under the laws of the
United States of America or a state thereof agrees that it
will deliver to each of the Borrower and the Agent two duly
completed copies of United States Internal Revenue Service
Form 1001 or 4224, certifying in either case that such Bank is
entitled to receive payments from the Borrower under this
Agreement and the Notes without deduction or withholding of
any United States federal income taxes. Each Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver to
each of the Borrower and the Agent two additional copies of
such form (or a successor form) on or before the date that
such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form so
delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the
Borrower or the Agent, in each case certifying that such Bank
is entitled to receive payments from the Borrower under this
Agreement and the Notes without deduction or withholding of
any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Bank from duly
completing and delivering any such form with respect to it and
such Bank advises the Borrower and the Agent that it is not
capable of receiving such payments without any deduction or
withholding of United States federal income tax.
SECTION 2.15. Foreign Withholding Taxes and Other
Costs. (a) All payments by the Borrower of principal of and
interest on the Notes and of all other amounts payable by it
under this Agreement are payable without deduction for or on
account of any present or future taxes, duties or other
charges levied or imposed by the government of any
jurisdiction outside the United States of America or by any
political subdivision or taxing authority thereof or therein
through withholding or deduction with respect to any such
payments. If any such taxes, duties or other charges are so
levied or imposed, the Borrower will pay additional interest
or will make additional payments in such amounts so that every
net payment of principal of and interest on the Notes and of
all other amounts payable by it under this Agreement, after
withholding or deduction for or on account of any such present
or future taxes, duties or other charges, will not be less
than the amount provided for herein. The Borrower shall
furnish promptly to the Agent official receipts evidencing
such withholding or deduction.
(b) If the cost to any Bank of making or
maintaining any Loan to the Borrower is increased, or the
amount of any sum received or receivable by any Bank (or its
Applicable Lending Office) is reduced by an amount deemed by
such Bank to be material, by reason of the fact the Borrower
conducts business in a jurisdiction outside the United States
of America, the Borrower shall indemnify such Bank for such
increased cost or reduction within 15 days after demand by
such Bank (with a copy to the Agent). A certificate of such
Bank claiming compensation under this subsection (b) and
setting forth the additional amount or amounts to be paid to
it hereunder and, in reasonable detail, the calculation
thereof shall be conclusive in the absence of manifest error.
(c) Each Bank will promptly notify the Borrower and
the Agent of any event of which it has knowledge that will
entitle such Bank to additional interest or payments pursuant
to subsection (b) and will designate a different Applicable
Lending Office, if, in the judgment of such Bank, such
designation will avoid the need for, or reduce the amount of,
such compensation and will not be otherwise disadvantageous to
such Bank.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall
become effective on the date (the "Effective Date") that each
of the following conditions shall have been satisfied (or
waived in accordance with Section 10.05):
(a) receipt by the Agent of counterparts hereof
signed by each of the Borrower, the Guarantor, the Banks
and the Agent (or, in the case of any party as to which
an executed counterpart shall not have been received,
receipt by the Agent in form satisfactory to it of
telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such
party);
(b) receipt by the Agent for the account of each
Bank of a duly executed Note of the Borrower dated on or
before the Effective Date complying with the provisions
of Section 2.04;
(c) receipt by the Agent of (i) an opinion of
Rogers & Wells, counsel for the Borrower and the
Guarantor, substantially in the form of Exhibit B-1
hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required
Banks may reasonably request and (ii) an opinion of
Joseph V. Vumbacco, General Counsel of the Borrower and
the Guarantor, substantially in the form of Exhibit B-2
hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required
Banks may reasonably request;
(d) receipt by the Agent of an opinion of Davis
Polk & Wardwell, special counsel for the Agent,
substantially in the form of Exhibit C hereto and
covering such additional matters relating to the
transactions contemplated hereby as the Required Banks
may reasonably request;
(e) receipt by the Agent of all documents it may
reasonably request relating to the existence of the
Borrower and the Guarantor, the corporate authority for
and the validity of this Agreement and the Notes, and any
other matters relevant hereto, all in form and substance
satisfactory to the Agent; and
(f) repayment in full (which repayment may be made
by application of the proceeds of a borrowing hereunder)
of the loans, if any, outstanding under the Existing
Agreement and payment of all accrued interest on such
loans and all fees accrued under the Existing Agreement
to but excluding such date.
provided that this Agreement shall not become effective or be
binding on any party hereto unless all of the foregoing
conditions are satisfied not later than January 15, 1993. The
Agent shall promptly notify the Borrower and the Banks of the
Effective Date, and such notice shall be conclusive and
binding on all parties hereto. Upon the effectiveness of this
Agreement, the Commitments, as such term is defined in the
Existing Agreement, shall terminate without any further action
by any party.
SECTION 3.02. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing
as required by Section 2.02;
(b) the fact that, immediately before and after
such Borrowing, no Default shall have occurred and be
continuing; and
(c) the fact that the representations and
warranties of the Borrower contained in this Agreement
(except, in the case of a Refunding Borrowing, the
representations and warranties set forth in Sections
4.04(d) and 4.05 as to any matter which has theretofore
been disclosed in writing by the Borrower to the Banks)
shall be true on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of
such Borrowing as to the facts specified in clauses (b) and
(c) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention. The execution, delivery and
performance by the Borrower of this Agreement and the Notes,
and by the Guarantor of this Agreement, are within the
Borrower's and the Guarantor's respective corporate powers,
have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene,
or constitute a default under, any provision of applicable law
or regulation or of the respective certificate of
incorporation or respective by-laws of the Borrower or the
Guarantor or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or the
Guarantor or result in the creation or imposition of any Lien
on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower and
the Guarantor, and the Notes, when executed and delivered in
accordance with this Agreement, will constitute valid and
binding obligations of the Borrower, and all of such documents
are or will be enforceable in accordance with their respective
terms, except as (i) the validity, binding nature or
enforceability hereof or thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by
equitable principles of general applicability.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of December 31, 1991 and
the related consolidated statements of income and retained
earnings and cash flows for the fiscal year then ended,
reported on by Arthur Andersen & Co. and set forth in the
Borrower's 1991 Form 10-K, a copy of which has been delivered
to each of the Banks, fairly present, in conformity with
generally accepted accounting principles, the consolidated
financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of September 30,
1992 and the related unaudited consolidated statements of
income and retained earnings and cash flows for the nine
months then ended, set forth in the Borrower's quarterly
report for the fiscal quarter ended September 30, 1992 as
filed with the Securities and Exchange Commission on Form
10-Q, a copy of which has been delivered to each of the Banks,
fairly present, in conformity with generally accepted
accounting principles applied on a basis consistent with the
financial statements referred to in subsection (a) of this
Section, the consolidated financial position of the Borrower
and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such
nine-month period (subject to normal year-end adjustments).
(c) The consolidating balance sheets of the
Borrower and its Consolidated Subsidiaries as of December 31,
1991 and the related consolidating statements of income and
retained earnings and (for the Borrower, Turner Development
and the general contracting business of the Borrower and its
Consolidated Subsidiaries) cash flows for the fiscal year then
ended and the consolidating balance sheets of the Borrower and
its Consolidated Subsidiaries as of September 30, 1992 and the
related consolidating statements of income and retained
earnings and (for the Borrower, Turner Development and the
general contracting business of the Borrower and its
Consolidated Subsidiaries) cash flows for the nine months then
ended, copies of which have been delivered to each of the
Banks, are the respective consolidating financial statements
used by the Borrower in preparing the consolidated financial
statements referred to in subsections (a) and (b) above and
were prepared on the basis of accounting principles consistent
with those used in preparing such respective consolidated
financial statements.
(d) Since September 30, 1992 there has been no
material adverse change in the business, financial position,
results of operations or prospects of (i) the Guarantor or
(ii) the Borrower and its Consolidated Subsidiaries,
considered as a whole.
SECTION 4.05. Litigation. There is no action, suit
or proceeding pending against, or to the knowledge of the
Borrower threatened against or affecting, the Borrower or any
of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could
materially adversely affect the business, consolidated
financial position or consolidated results of operations of
the Borrower and its Consolidated Subsidiaries or which in any
manner draws into question the validity of this Agreement or
the Notes.
SECTION 4.06. Compliance with ERISA. Each member
of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue
Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of
ERISA and the Internal Revenue Code with respect to each Plan.
No member of the ERISA Group has (i) sought a waiver of the
minimum funding standard under Section 412 of the Internal
Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement, or made any amendment
to any Plan or Benefit Arrangement, which has resulted or
could result in the imposition of a Lien or the posting of a
bond or other security under ERISA or the Internal Revenue
Code or (iii) incurred any liability under Title IV of ERISA
other than a liability to the PBGC for premiums under Section
4007 of ERISA.
SECTION 4.07. Environmental Matters. The Borrower
has reasonably concluded that Environmental Laws are unlikely
to have a material adverse effect on the business, financial
condition, results of operations or prospects of the Borrower
and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.08. Compliance with Laws. The Borrower
and its Subsidiaries are in compliance with all applicable
laws, ordinances, rules, regulations and requirements of
governmental authorities except where the necessity of
compliance therewith is being contested in good faith by
appropriate proceedings and except where the failures to be in
compliance therewith, in the aggregate, do not, and are not
reasonably expected to, have a material adverse effect on the
business, financial position, results of operations or
prospects of the Borrower and its Subsidiaries, considered as
a whole.
SECTION 4.09. Contractual Arrangements. Each
contract or agreement to which the Borrower or any of its
Subsidiaries is a party is a valid and binding obligation of
each party thereto, the Borrower or the Subsidiary of the
Borrower that is a party thereto is not in default thereunder,
and the Borrower has no knowledge of a continuing default
thereunder by any other party thereto, except to the extent
that the cumulative effect of any such agreements not being
valid and binding and of any such defaults does not have a
material adverse effect on the business, financial position,
results of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.10. Taxes. United States Federal income
tax returns of the Borrower and its Subsidiaries have been
examined and closed through the fiscal year ended December 31,
1983. The Borrower and its Subsidiaries have filed all United
States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid
all taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary. The
charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of taxes or other governmental
charges are, in the opinion of the Borrower, adequate.
SECTION 4.11. Subsidiaries. Each of the Borrower's
corporate Subsidiaries that actively engages in business is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation,
and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
SECTION 4.12. Not an Investment Company. The
Borrower is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
SECTION 4.13. Full Disclosure. All information
heretofore furnished by the Borrower to the Agent or any Bank
for purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all such information
hereafter furnished by the Borrower to the Agent or any Bank
will be, true and accurate in all material respects on the
date as of which such information is stated or certified. The
Borrower has disclosed to the Banks in writing any and all
facts which materially and adversely affect or may affect (to
the extent the Borrower can now reasonably foresee), the
business, operations or financial condition of the Borrower
and its Consolidated Subsidiaries, taken as a whole, or the
ability of the Borrower or the Guarantor to perform its
obligations under this Agreement.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has
any Commitment hereunder or any amount payable under any Note
remains unpaid:
SECTION 5.01. Information. The Borrower will
deliver to each of the Banks:
(a) as soon as available and in any event within 90
days after the end of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such fiscal
year and the related consolidated statements of income
and retained earnings and cash flows for such fiscal
year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on in
a manner acceptable to the Securities and Exchange
Commission by Arthur Andersen & Co. or other independent
public accountants of nationally recognized standing;
(b) as soon as available and in any event within 45
days after the end of each of the first three quarters of
each fiscal year of the Borrower, a consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries
as of the end of such quarter and the related
consolidated statements of income and retained earnings
and cash flows for such quarter and for the portion of
the Borrower's fiscal year ended at the end of such
quarter, setting forth in each case in comparative form
the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal
year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally
accepted accounting principles and consistency by the
chief financial officer or the chief accounting officer
of the Borrower;
(c) simultaneously with the delivery of each set of
consolidated financial statements referred to in clause
(a) above, consolidating balance sheets of the Borrower
and each of its Consolidated Subsidiaries as of the end
of the fiscal year covered by such financial statements
and the related consolidating statements of income and
retained earnings and (for the Borrower, Turner
Development and the general contracting business of the
Borrower and its Consolidated Subsidiaries) cash flows
for the fiscal year then ended, certified by the chief
financial officer or the chief accounting officer of the
Borrower as being the consolidating financial statements
used by the Borrower in preparing such consolidated
financial statements and as being prepared on the basis
of accounting principles consistent with those used in
preparing such consolidated financial statements;
(d) simultaneously with the delivery of each set of
consolidated financial statements referred to in clause
(b) above, consolidating balance sheets of the Borrower
and its Consolidated Subsidiaries as of the end of the
quarter covered by such financial statements and the
related consolidating statements of income and retained
earnings and (for the Borrower, Turner Development and
the general contracting business of the Borrower and its
Consolidated Subsidiaries) cash flows for the quarter and
for the portion of the Borrower's fiscal year ended at
the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding
quarter and the corresponding portion of the Borrower's
previous fiscal year, certified by the chief financial
officer or the chief accounting officer of the Borrower
as being the consolidating financial statements used by
the Borrower in preparing such consolidated financial
statements and as being prepared on the basis of
accounting principles consistent with those used in
preparing such consolidated financial statements;
(e) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b)
above, (i) a modified consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end
of the period covered by such financial statements
prepared on the basis of accounting principles consistent
with those on the basis of which the consolidated balance
sheet delivered pursuant to clause (a) or (b) above was
prepared, except that such modified balance sheet shall
present assets and liabilities as current and long-term
and shall be prepared on the assumption that all real
estate of the Borrower and its Consolidated Subsidiaries
which, as of the end of such period, is held for sale is
a current asset and that all obligations of the Borrower
and its Consolidated Subsidiaries of which the Borrower
reasonably expects the obligor would be relieved (by
discharge, assumption by a third party or otherwise) upon
the sale of such real estate are current liabilities and
(ii) a certificate of the chief financial officer or the
chief accounting officer of the Borrower stating that
such modified balance sheet was prepared in accordance
with clause (i) above;
(f) simultaneously with delivery of each set of
financial statements referred to in clauses (a) and (b)
above, a summary of each construction project of the
Borrower and its Subsidiaries with respect to which a
contract has been obtained but not completed, the Backlog
Volume of which is greater than $10,000,000 or the
Backlog Earnings of which are greater than $500,000 as of
the end of the period covered by such financial
statements, which summary shall be in the form of the
summary provided to the Banks under Section 5.01(f) of
the Existing Agreement;
(g) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b)
above, a certificate of the chief financial officer or
the chief accounting officer of the Borrower (i) setting
forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the
requirements of Sections 5.07 to 5.12, inclusive, and
Section 5.14(c) on the date of such financial statements
and to determine the Fixed Charge Ratio and Consolidated
Adjusted Net Worth for purposes of Section 2.06(a), (b)
and (c) and (ii) stating whether any Default exists on
the date of such certificate and, if any Default then
exists, setting forth the details thereof and the action
which the Borrower is taking or proposes to take with
respect thereto;
(h) simultaneously with the delivery of each set of
financial statements referred to in clause (a) above, a
statement of the firm of independent public accountants
which reported on such statements (i) whether anything
has come to their attention to cause them to believe that
any Default existed on the date of such statements and
(ii) confirming the calculations set forth in the
officer's certificate delivered simultaneously therewith
pursuant to clause (g) above;
(i) within five days after any officer of the
Borrower obtains knowledge of any Default, if such
Default is then continuing, a certificate of the chief
financial officer or the chief accounting officer of the
Borrower setting forth the details thereof and the action
which the Borrower is taking or proposes to take with
respect thereto;
(j) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so
mailed;
(k) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto
and any registration statements on Form S-8 or its
equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed
with the Securities and Exchange Commission;
(l) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA)
with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has
given or is required to give notice of any such
reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii)
receives notice of complete or partial withdrawal
liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii)
receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such
notice; (iv) applies for a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code,
a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy
of such notice and other information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; or (vii)
fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the
imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer or
the chief accounting officer of the Borrower setting
forth details as to such occurrence and action, if any,
which the Borrower or applicable member of the ERISA
Group is required or proposes to take; and
(m) from time to time such additional information
regarding the financial position or business of the
Borrower and its Subsidiaries as the Agent, at the
request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower
will pay and discharge, and will cause each Subsidiary to pay
and discharge, at or before maturity, all their respective
material obligations and liabilities, including, without
limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will
maintain, and will cause each Subsidiary to maintain, in
accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance.
(a) The Borrower will keep, and will cause each Subsidiary to
keep, all property useful and necessary in its business in
good working order and condition, ordinary wear and tear
excepted.
(b) The Borrower will insure and keep insured, and
will cause each of its Subsidiaries to insure and keep
insured, with financially sound and reputable insurers, so
much of their respective properties, in such amounts (and with
such deductibles), as companies engaged in a similar business
in accordance with good business practice customarily insure
properties of a similar character against loss by fire and
from other causes. In addition, the Borrower will, and will
cause each Subsidiary to, maintain with financially sound and
reputable insurers public liability insurance against claims
for personal injury, death or property damage suffered by
others upon or in or about any premises occupied by it or
occurring as a result of its ownership, maintenance or
operation of any automobiles, trucks or other vehicles,
aircraft or other facilities or as a result of the use of
products manufactured, constructed or sold by it or services
rendered by it, and such other insurance, in such amounts (and
with such deductibles) as is usually carried by companies
engaged in a similar business and as is in accordance with
good business practice.
SECTION 5.04. Conduct of Business and Maintenance
of Existence. The Borrower will continue, and will cause each
Subsidiary to continue, to engage in business of the same
general type as now conducted by the Borrower and its
Subsidiaries, and will preserve, renew and keep in full force
and effect, and will cause each Subsidiary to preserve, renew
and keep in full force and effect their respective corporate
existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of
business; provided that nothing in this Section 5.04 shall
prohibit (i) mergers and consolidations permitted by
Section 5.16 or (ii) the termination of the corporate
existence of any Subsidiary other than the Guarantor if the
Borrower in good faith determines that such termination is in
the best interest of the Borrower and is not materially
disadvantageous to the Banks.
SECTION 5.05. Compliance with Laws. The Borrower
will comply, and cause each Subsidiary to comply, with all
applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without
limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except where the necessity of
compliance therewith is contested in good faith by appropriate
proceedings and except where the failures to comply therewith,
in the aggregate, do not, and are not reasonably expected to,
have a material adverse effect on the business, financial
position, results of operations or prospects of the Borrower
and its Subsidiaries, considered as a whole.
SECTION 5.06. Inspection of Property, Books and
Records. The Borrower will keep, and will cause each
Subsidiary to keep, proper books of record and account in
which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary to
permit, representatives of any Bank at such Bank's expense to
visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books
and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and
independent public accountants, all at such reasonable times
and as often as may reasonably be desired. Each Bank shall
hold in confidence all non-public information obtained
pursuant to this Section 5.06 and marked or otherwise
identified in writing as being confidential, except to the
extent that such information (i) becomes generally available
to the public other than as the result of disclosure by any
Bank, (ii) was available to any Bank on a non-confidential
basis prior to its disclosure to any Bank pursuant to this
Section 5.06, (iii) becomes available to any Bank on a
non-confidential basis from a source other than the Borrower
or any of its Subsidiaries at a time when such source is
permitted to make such information available to such Bank, or
(iv) is pertinent to any litigation between the Borrower or
any of its Subsidiaries and such Bank; provided that any Bank
may disclose such information (x) to any other Bank, which
shall be subject to the provisions of this Section 5.06 with
respect to such information, (y) at the request of a bank
regulatory agency or in connection with an examination of such
Bank by bank examiners and (z) to such Bank's independent
auditors and legal counsel, it being understood that
disclosure of such information pursuant to clause (y) or (z)
of this proviso shall not otherwise limit the applicability of
this sentence to such information and that, at the time of
disclosure of such information pursuant to clause (z) of this
proviso, such Bank shall inform such independent auditor or
legal counsel that such information is subject to this Section
5.06; and provided, further, that if any Bank is requested or
required in connection with any legal process to disclose any
such information, such Bank will, to the extent it may
lawfully do so, provide the Borrower with prompt notice of
such request or requirement; unless the Borrower provides such
Bank with evidence (including, without limitation, a court
order) satisfactory to such Bank that it is not compelled to
disclose such information in connection with such legal
process, such Bank may, at such time as it is compelled to do
so, disclose that portion of such information that it is
compelled to disclose.
SECTION 5.07. Current Ratio. Consolidated Adjusted
Current Assets will at no time be less than 100% of
Consolidated Adjusted Current Liabilities.
SECTION 5.08. Debt. The Leverage Ratio will at no
time during any period set forth below exceed the ratio set
forth opposite such period:
Period Maximum Leverage Ratio
Effective Date through
December 31, 1993 350%
January 1, 1994 through
December 31, 1994 325%
January 1, 1995 through
December 31, 1995 300%
January 1, 1996 through
December 31, 1996 275%
SECTION 5.09. Minimum Consolidated Adjusted Net
Worth. Consolidated Adjusted Net Worth will not as of any
date during the term of this Agreement be less than the sum of
(a) $50,000,000, plus (b) the aggregate net proceeds received
by the Borrower or any Consolidated Subsidiary from the
issuance of equity securities after the date of this Agreement
and on or before such date, plus (c) an amount equal to 50% of
the consolidated net income of the Borrower and its
Subsidiaries for each fiscal year ending on or before such
date (commencing with the fiscal year ending on December 31,
1993) for which such consolidated net income is greater than
zero.
SECTION 5.10. Fixed Charge Coverage. The Fixed
Charge Ratio will not, for any period of four consecutive
fiscal quarters ending during a year set forth below, be less
than the ratio set forth opposite such year:
Minimum Fixed
Year Charge Ratio
1992 1.15
1993 1.25
1994 1.375
1995 1.50
1996 1.625
SECTION 5.11. Cash Flow Restriction. The Borrower
will not, and will not permit any Schedule A Subsidiary or any
Subsidiary of a Schedule A Subsidiary to, directly or
indirectly, contribute or loan or otherwise transfer any cash
or cash equivalents to any Schedule B Subsidiary or any
Subsidiary of a Schedule B Subsidiary except to the extent
necessary to permit the Schedule B Subsidiaries and their
Subsidiaries (a) to pay expenses in respect of real estate
owned by them, (b) to satisfy obligations under Designated
Joint Venture Agreements and (c) to pay selling, general and
administrative expenses (including without limitation,
principal of and interest on indebtedness of Schedule B
Subsidiaries and their Subsidiaries), and then only to the
extent that cash to pay such expenses and to satisfy such
obligations is unavailable from other sources, including
rental or other income produced by real estate owned by
Schedule B Subsidiaries and their Subsidiaries; provided that
the aggregate amount of cash and cash equivalents that may be
contributed, loaned or otherwise transferred to Schedule B
Subsidiaries and their Subsidiaries during any calendar year
will not exceed (a) the aggregate amount of cash and cash
equivalents distributed during such year by Schedule B
Subsidiaries and their Subsidiaries to the Borrower and
Schedule A Subsidiaries and their Subsidiaries that are wholly
owned by the Borrower as dividends or in repayment of loans,
plus (b) the amount set forth below opposite such year:
Year Amount
1993 $12,000,000
1994 $ 5,000,000
1995 $ 4,000,000
1996 $ 4,000,000
SECTION 5.12. Debt of Guarantor. The sum, without
duplication, of (i) total Debt of the Guarantor and its
Subsidiaries (determined on a consolidated basis), plus (ii)
contingent obligations of the Guarantor and its Subsidiaries
to reimburse or prepay any bank or other Person in respect of
amounts paid or payable under a letter of credit, banker's
acceptance or similar instrument (except letters of credit,
banker's acceptances and similar instruments that support, or
are created as a result of the payment of, trade accounts
payable of the Guarantor and its Subsidiaries arising in the
ordinary course of business), plus (iii) the aggregate amount
of all present and future obligations of Persons under
operating leases that are guaranteed by the Guarantor or any
of its Subsidiaries will at no time exceed $58,000,000;
provided that such amount shall be reduced from time to time
by an amount equal to the amount of any reduction in the
maximum liability of the Guarantor under the Rickenbacker
Guaranty; and provided, further, that, of such $58,000,000, no
more than $55,300,000 may consist of debt for borrowed money,
Guarantees of debt of other persons for borrowed money and
contingent obligations of the type referred to in clause (ii)
above (such $55,300,000 limit being reduced from time to time
by the amount of any reduction in the $58,000,000 limit
pursuant to the immediately preceding proviso), and the
remaining amount may consist only of present and future
obligations of the Guarantor and its Subsidiaries under
operating leases that are guaranteed by the Guarantor or any
of its Subsidiaries.
SECTION 5.13. Clean-up Period. The Borrower shall
not permit any Loans to be outstanding during a period (which
may be selected by the Borrower and may differ from year to
year) of at least five consecutive Domestic Business Days
during the fourth calendar quarter of each year during the
term of this Agreement.
SECTION 5.14. Investments. (a) Neither the
Borrower nor any Consolidated Subsidiary will make or acquire
any Investment in any Person other than:
(i) Investments in Subsidiaries existing on the
date hereof; provided that any Investment in a Schedule B
Subsidiary or a Subsidiary thereof may be made only
pursuant to the terms of Section 5.11;
(ii) loans to employees of the Borrower or any of
its Subsidiaries; provided that the aggregate outstanding
principal amount of such loans shall not at any time
exceed $4,000,000;
(iii) Temporary Cash Investments; and
(iv) time deposits with, including certificates of
deposit issued by, or banker's acceptances issued by, any
office of any bank or trust company which (A) is
organized under the laws of a jurisdiction other than the
United States or any state thereof, Japan or a country
that is a member of the European Economic Community and
(B) has capital, surplus and undivided profits
aggregating at least $50,000,000 (or the equivalent
thereof in foreign currency); provided that the aggregate
amount of Investments pursuant to this clause (iv) shall
not at any time exceed $5,000,000;
provided that Turner Investment Corporation may invest the
Steiner Proceeds (as such term is defined in the Waiver dated
as of July 29, 1992 to the Existing Agreement, a copy of which
Waiver is attached hereto as Annex A) in accordance with the
guidelines set forth in a memorandum from R.E. Bailey dated
June 24, 1992, a copy of which is attached hereto as Annex B;
provided, further, that upon the liquidation by Turner
Investment Corporation of its investments of the Steiner
Proceeds, the proceeds of such liquidation shall be used first
to repay the outstanding loan from the Borrower to Turner
Investment Corporation, and any remaining proceeds will be
distributed to the Borrower as a dividend.
(b) Notwithstanding subsection (a) of this Section
5.14, the Borrower and its Subsidiaries may acquire the entire
equity interest in any Person engaged in the general
contracting business in any municipality in which neither the
Borrower nor any of its Subsidiaries has an office for the
conduct of such business; provided that the Borrower and its
Subsidiaries shall not acquire more than one such Person in
any such municipality; and provided, further, that (i) the
aggregate cash consideration paid by the Borrower and its
Subsidiaries for all such equity interests during any period
of twelve consecutive months shall not exceed $5,000,000 and
(ii) the total cash consideration paid by the Borrower and its
Subsidiaries for such equity interests in any one Person shall
not exceed $5,000,000.
SECTION 5.15. Negative Pledge. Neither the
Borrower nor any Subsidiary will create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by
it, except:
(a) Liens existing on the date of this Agreement
securing Debt outstanding, or that may be incurred
pursuant to committed credit lines existing, on the date
of this Agreement in an aggregate principal amount not
exceeding $150,000,000;
(b) any Lien existing on any asset of any
corporation at the time such corporation becomes a
Subsidiary and not created in contemplation of such
event;
(c) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of
the cost of acquiring such asset, provided that such Lien
attaches to such asset concurrently with or within 90
days after the acquisition thereof;
(d) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Subsidiary and
not created in contemplation of such acquisition;
(e) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by
any Lien permitted by any of the foregoing clauses of
this Section, provided that such Debt is not increased
and is not secured by any additional assets; and
(f) Liens arising in the ordinary course of its
business which (i) do not secure Debt, (ii) do not secure
any obligation in an amount exceeding $10,000,000 and
(iii) do not in the aggregate materially detract from the
value of its assets or materially impair the use thereof
in the operation of its business.
SECTION 5.16. Consolidations, Mergers and Sales of
Assets. The Borrower will not, and will not permit any of its
Subsidiaries to, enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution) or convey, sell, lease,
assign, transfer or otherwise dispose of, all or substantially
all of its property, business or assets, or make any material
change in the present method of conducting business, except
that (i) any Subsidiary may be merged into the Borrower
(providing that the Borrower shall be the surviving
corporation) or merged or consolidated with or into any one or
more other Subsidiaries; (ii) any Subsidiary may sell, lease,
transfer or otherwise dispose of any of its assets to the
Borrower or a wholly-owned Subsidiary of the Borrower; and
(iii) the Borrower may be merged or consolidated with any
other Person, provided that the Borrower is the surviving
corporation and no Default would occur hereunder after giving
effect thereto; provided, however, that no Schedule B
Subsidiary or Subsidiary of a Schedule B Subsidiary shall be
merged or consolidated with or into, or shall sell, lease,
transfer or otherwise dispose of any of its assets to, the
Borrower or any Schedule A Subsidiary or Subsidiary of a
Schedule A Subsidiary. Neither the Borrower nor any of its
Subsidiaries shall sell or otherwise dispose of any of its
assets except for sales or other dispositions in the ordinary
course of business of (x) obsolete or worn out property or (y)
other property; provided that the aggregate book value of such
other property so sold or disposed of in any twelve month
period (exclusive of sales and dispositions pursuant to the
following proviso) shall not exceed 10% of the Consolidated
Adjusted Total Assets of the Borrower and its Subsidiaries at
the beginning of such period; and provided, further, that the
Schedule B Subsidiaries and their Subsidiaries and
Rickenbacker Holdings, Inc., a Delaware corporation, and its
Subsidiaries may sell, lease or otherwise transfer real estate
assets or interests therein in arm's-length transactions
otherwise permitted hereunder.
SECTION 5.17. Use of Proceeds. The proceeds of the
Loans made under this Agreement will be used by the Borrower
solely (i) to satisfy current liabilities of the Borrower
(including any borrowings outstanding under the Existing
Agreement) and (ii) to make advances to Schedule A
Subsidiaries and their Subsidiaries, the proceeds of which
will be used solely to satisfy current liabilities of the
Schedule A Subsidiaries and their Subsidiaries. None of such
proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying
or carrying any "margin stock" within the meaning of
Regulation U.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of
the following events ("Events of Default") shall have occurred
and be continuing:
(a) the Borrower shall fail to pay when due any
principal of any Loan, or shall fail to pay within three
days of the due date thereof any interest, fees or other
amount payable hereunder;
(b) the Borrower shall fail to observe or perform
any covenant contained in Section 5.07, 5.08, 5.09, 5.10,
5.11, 5.13, 5.16 or 5.17;
(c) the Borrower shall fail to observe or perform
any covenant contained in Section 5.12, 5.14 or 5.15 for
seven days after written notice thereof has been given to
the Borrower by the Agent at the request of any Bank;
(d) the Borrower shall fail to observe or perform
any covenant or agreement contained in this Agreement
(other than those covered by clause (a), (b) or (c)
above) for 30 days after written notice thereof has been
given to the Borrower by the Agent at the request of any
Bank;
(e) any representation, warranty, certification or
statement made by the Borrower or the Guarantor in this
Agreement or in any certificate, financial statement or
other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when
made (or deemed made);
(f) the Borrower or any Subsidiary shall fail to
make any payment in respect of any Material Debt when due
or within any applicable grace period;
(g) any event or condition shall occur which
results in the acceleration of the maturity of any
Material Debt, or the termination (other than a
termination by the Borrower or a Subsidiary at a time
when no default exists with respect thereto) prior to its
scheduled expiration of any commitment in respect of any
Material Debt, or enables (or, with the giving of notice
or lapse of time or both, would enable) the holder of any
Material Debt or any Person acting on such holder's
behalf to accelerate the maturity thereof or terminate
any commitment in respect thereof prior to its scheduled
maturity;
(h) the Guarantor's obligations hereunder shall at
any time cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability
thereof shall be contested by the Guarantor, or the
Guarantor shall deny it has any further liability or
obligation hereunder;
(i) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part
of its property, or shall consent to any such relief or
to the appointment of or taking possession by any such
official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall admit in
writing its inability to pay its debts as they become
due, or shall take any corporate action to authorize any
of the foregoing;
(j) an involuntary case or other proceeding shall
be commenced against the Borrower or any Subsidiary
seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or
any substantial part of its property, and such
involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an
order for relief shall be entered against the Borrower or
any Subsidiary under the federal bankruptcy laws as now
or hereafter in effect;
(k) any member of the ERISA Group shall fail to pay
when due an amount or amounts aggregating in excess of
$1,000,000 which it shall have become liable to pay under
Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or
any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan;
or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that
any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group
to incur a current payment obligation in excess of
$1,000,000;
(l) a judgment or order for the payment of money in
excess of $1,000,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order
shall continue unsatisfied and unstayed for a period of
30 days; or
(m) any person or group of persons (within the
meaning of Section 13 or 14 of the Securities Exchange
Act of 1934, as amended) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under said Act)
of 22% or more of the outstanding shares of common stock
of the Borrower; or, during any period of 12 consecutive
calendar months, individuals who were directors of the
Borrower on the first day of such period shall cease to
constitute a majority of the board of directors of the
Borrower;
then, and in every such event, the Agent shall (i) if
requested by Banks having more than 50% in aggregate amount of
the Commitments, by notice to the Borrower terminate the
Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in
aggregate principal amount of the Loans, by notice to the
Borrower declare the Notes (together with accrued interest
thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby
waived by the Borrower; provided that in the case of any of
the Events of Default specified in clause (i) or (j) above
with respect to the Borrower or the Guarantor, without any
notice to the Borrower or any other act by the Agent or the
Banks, the Commitments shall thereupon terminate and the Notes
(together with accrued interest thereon) shall become
immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby
waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall
give notice to the Borrower under Section 6.01(c) or (d)
promptly upon being requested to do so by any Bank and shall
thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each
Bank irrevocably appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers
under this Agreement and the Notes as are delegated to the
Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan
Guaranty Trust Company of New York shall have the same rights
and powers under this Agreement as any other Bank and may
exercise or refrain from exercising the same as though it were
not the Agent, and Morgan Guaranty Trust Company of New York
and its affiliates may accept deposits from, lend money to,
and generally engage in any kind of business with the Borrower
or any Subsidiary or affiliate of the Borrower as if it were
not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of
the Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Agent
shall not be required to take any action with respect to any
Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent
may consult with legal counsel (who may be counsel for the
Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the
Agent nor any of its affiliates, nor any of their respective
directors, officers, agents or employees shall be liable for
any action taken or not taken by it in connection herewith (i)
with the consent or at the request of the Required Banks or
(ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its affiliates, nor
any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty
or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower; (iii) the
satisfaction of any condition specified in Article III, except
receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness or genuineness of this
Agreement, the Notes or any other instrument or writing
furnished in connection herewith. The Agent shall not incur
any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it to be genuine
or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify the
Agent, its affiliates and their respective directors,
officers, agents and employees (to the extent not reimbursed
by the Borrower) against any cost, expense (including counsel
fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitee's gross
negligence or willful misconduct) that such indemnitee may
suffer or incur in connection with this Agreement or any
action taken or omitted by such indemnitee hereunder.
SECTION 7.07. Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon the Agent or any other Bank, and based on such documents
and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement.
Each Bank also acknowledges that it will, independently and
without reliance upon the Agent or any other Bank, and based
on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in
taking or not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may
resign at any time by giving written notice thereof to the
Banks and the Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor
Agent; provided that if such successor Agent is not a Bank,
such appointment shall be subject to the consent of the
Borrower, which consent shall not be unreasonably withheld.
If no successor Agent shall have been so appointed by the
Required Banks, and shall have accepted such appointment,
within 30 days after the retiring Agent gives notice of
resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a commercial
bank organized or licensed under the laws of the United States
of America or of any State thereof and having a combined
capital and surplus of at least $50,000,000; provided that if
such successor Agent is not a Bank, such appointment shall be
subject to the consent of the Borrower, which consent shall
not be unreasonably withheld. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested
with all the rights and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article shall inure
to its benefit as to any actions taken or omitted to be taken
by it while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay
to the Agent for its own account fees in the amounts and at
the times previously agreed upon between the Borrower and the
Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any Fixed Rate Borrowing:
(a) the Agent is advised by the Reference Banks
that deposits in dollars (in the applicable amounts) are
not being offered to the Reference Banks in the relevant
market for such Interest Period, or
(b) Banks having 50% or more of the aggregate
amount of the Commitments advise the Agent that the
Adjusted CD Rate or the Adjusted London Interbank Offered
Rate, as the case may be, as determined by the Agent will
not adequately and fairly reflect the cost to such Banks
of funding their CD Loans or Euro-Dollar Loans, as the
case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower
and the Banks, whereupon until the Agent notifies the Borrower
that the circumstances giving rise to such suspension no
longer exist, the obligations of the Banks to make CD Loans or
Euro-Dollar Loans, as the case may be, shall be suspended.
Unless the Borrower notifies the Agent at least two Domestic
Business Days before the date of any Fixed Rate Borrowing for
which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, such Borrowing shall
instead be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, on or after the date
of this Agreement, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar
Loans to the Borrower and such Bank shall so notify the Agent,
the Agent shall forthwith give notice thereof to the other
Banks and the Borrower, whereupon until such Bank notifies the
Borrower and the Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank
to make Euro-Dollar Loans to the Borrower shall be suspended.
Before giving any notice to the Agent pursuant to this
Section, such Bank shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank,
be otherwise disadvantageous to such Bank. If such Bank shall
determine that it may not lawfully continue to maintain and
fund any of its outstanding Euro-Dollar Loans to the Borrower
to maturity and shall so specify in such notice, the Borrower
shall immediately prepay in full the then outstanding
principal amount of each such Euro-Dollar Loan, together with
accrued interest thereon. Concurrently with prepaying each
such Euro-Dollar Loan, the Borrower shall borrow a Base Rate
Loan in an equal principal amount from such Bank (on which
interest and principal shall be payable contemporaneously with
the related Euro-Dollar Loans of the other Banks), and such
Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return.
(a) If, on or after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by any Bank (or its Applicable Lending Office) with
any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency:
(i) shall subject any Bank (or its Applicable
Lending Office) to any tax, duty or other charge with
respect to its Fixed Rate Loans, its Note or its
obligation to make Fixed Rate Loans, or shall change the
basis of taxation of payments to any Bank (or its
Applicable Lending Office) of the principal of or
interest on its Fixed Rate Loans or any other amounts due
under this Agreement in respect of its Fixed Rate Loans
or its obligation to make Fixed Rate Loans (except for
changes in the rate of tax on the overall net income of
such Bank or its Applicable Lending Office imposed by the
jurisdiction in which such Bank's principal executive
office or Applicable Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding (A) with respect to
any CD Loan any such requirement included in an
applicable Domestic Reserve Percentage and (B) with
respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve
Percentage), special deposit, insurance assessment
(excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate)
or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Bank
(or its Applicable Lending Office) or shall impose on any
Bank (or its Applicable Lending Office) or on the United
States market for certificates of deposit or the London
interbank market any other condition affecting its Fixed
Rate Loans, its Note or its obligation to make Fixed Rate
Loans;
and the result of any of the foregoing is to increase the cost
to such Bank (or its Applicable Lending Office) of making or
maintaining any Fixed Rate Loan, or to reduce the amount of
any sum received or receivable by such Bank (or its Applicable
Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be
material, then, within 15 days after demand by such Bank (with
a copy to the Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for
such increased cost or reduction.
(b) If any Bank shall have determined that, after
the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on capital of
such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank
(or its Parent) could have achieved but for such adoption,
change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15
days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank (or its Parent) for such
reduction.
(c) Each Bank will promptly notify the Borrower and
the Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Bank to
compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error. In
determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans. If (i) the obligation of any Bank
to make Euro-Dollar Loans to the Borrower has been suspended
pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03(a) and the Borrower shall, by
at least five Euro-Dollar Business Days' prior notice to such
Bank through the Agent, have elected that the provisions of
this Section shall apply to such Bank, then, unless and until
such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer
apply:
(a) all Loans which would otherwise be made by such
Bank as CD Loans or Euro-Dollar Loans, as the case may
be, shall be made instead as Base Rate Loans (on which
interest and principal shall be payable contemporaneously
with the related Fixed Rate Loans of the other Banks),
and
(b) after each of its CD Loans or Euro-Dollar
Loans, as the case may be, has been repaid, all payments
of principal which would otherwise be applied to repay
such Fixed Rate Loans shall be applied to repay its Base
Rate Loans instead.
ARTICLE IX
GUARANTY
SECTION 9.01. The Guaranty. The Guarantor hereby
unconditionally guarantees the full and punctual payment
(whether at stated maturity, upon acceleration or otherwise)
of the principal of and interest on each Note issued by the
Borrower pursuant to this Agreement, and the full and punctual
payment of all other amounts payable by the Borrower under
this Agreement. Upon failure by the Borrower to pay
punctually any such amount, Guarantor shall forthwith on
demand pay the amount not so paid at the place and in the
manner specified in this Agreement.
SECTION 9.02. Guaranty Unconditional. The
obligations of the Guarantor hereunder shall be unconditional
and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the
Borrower under this Agreement or any Note, by operation
of law or otherwise;
(ii) any modification or amendment of or supplement
to this Agreement or any Note;
(iii) any release, non-perfection or invalidity of
any direct or indirect security for any obligation of the
Borrower under this Agreement or any Note;
(iv) any change in the corporate existence,
structure or ownership of the Borrower or the Guarantor,
or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Borrower or its assets
or any resulting release or discharge of any obligation
of the Borrower contained in this Agreement or any Note;
(v) the existence of any claim, set-off or other
rights which the Guarantor may have at any time against
the Borrower, the Agent, any Bank or any other Person,
whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent
the assertion of any such claim by separate suit or
compulsory counterclaim;
(vi) any invalidity or unenforceability relating to
or against the Borrower for any reason of this Agreement
or any Note, or any provision of applicable law or
regulation purporting to prohibit the payment by the
Borrower of the principal of or interest on any Note or
any other amount payable by the Borrower under this
Agreement; or
(vii) any other act or omission to act or delay of
any kind by the Borrower, the Agent, any Bank or any
other Person or any other circumstance whatsoever which
might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the
Guarantor's obligations hereunder.
SECTION 9.03. Discharge Only Upon Payment In Full;
Reinstatement In Certain Circumstances. The Guarantor's
obligations hereunder shall remain in full force and effect
until the Commitments shall have been terminated and the
principal of and interest on the Notes and all other amounts
payable by the Borrower under this Agreement shall have been
paid in full. If at any time any payment of the principal of
or interest on any Note or any other amount payable by the
Borrower under this Agreement is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, the
Guarantor's obligations hereunder with respect to such payment
shall be reinstated as though such payment had been due but
not made at such time.
SECTION 9.04. Waiver by the Guarantor. The
Guarantor irrevocably waives acceptance hereof, presentment,
demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken
by any Person against the Borrower or any other Person.
SECTION 9.05. Subrogation. The Guarantor
irrevocably waives any and all rights to which it may be
entitled, by operation of law or otherwise, upon making any
payment hereunder to be subrogated to the rights of the payee
against the Borrower with respect to such payment or otherwise
to be reimbursed, indemnified or exonerated by the Borrower in
respect thereof.
SECTION 9.06. Stay of Acceleration. If
acceleration of the time for payment of any amount payable by
the Borrower under this Agreement or the Notes is stayed upon
the insolvency, bankruptcy or reorganization of the Borrower,
all such amounts otherwise subject to acceleration under the
terms of this Agreement shall nonetheless be payable by the
Guarantor hereunder forthwith on demand by the Agent made at
the request of the requisite proportion of the Banks specified
in Article VI of this Agreement.
SECTION 9.07. Limit of Liability. The obligations
of the Guarantor hereunder shall be limited to an aggregate
amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance under Section 548
of the United States Bankruptcy Code or any comparable
provisions of any applicable state law.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and
other communications to any party hereunder shall be in
writing (including bank wire, telex, facsimile transmission or
similar writing) and shall be given to such party: (x) in the
case of the Borrower, the Guarantor or the Agent, at its
address or telex number set forth on the signature pages
hereof, (y) in the case of any Bank, at its address or telex
number set forth in its Administrative Questionnaire or (z) in
the case of any party, such other address or telex number as
such party may hereafter specify for the purpose by notice to
the Agent and the Borrower. Each such notice, request or
other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified
in this Section and the appropriate answerback is received,
(ii) if given by mail, 72 hours after such communication is
deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section;
provided that notices to the Agent under Article II or Article
VIII shall not be effective until received.
SECTION 10.02. No Waivers. No failure or delay by
the Agent or any Bank in exercising any right, power or
privilege hereunder or under any Note shall operate as a
waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 10.03. Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the
Agent, in connection with the preparation and administration
of this Agreement, any waiver or consent hereunder or any
amendment hereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by the Agent and each Bank,
including reasonable fees and disbursements of counsel, in
connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings
resulting therefrom. The Borrower shall indemnify each Bank
against any transfer taxes, documentary taxes, assessments or
charges made by any governmental authority by reason of the
execution and delivery of this Agreement or any Note.
(b) The Borrower agrees to indemnify the Agent and
each Bank, their respective affiliates and the respective
directors, officers, agents and employees of the foregoing
(each an "Indemnitee") and hold each Indemnitee harmless from
and against any and all liabilities, losses, damages, costs
and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be
incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether
or not such Indemnitee shall be designated a party thereto)
brought or threatened relating to or arising out of this
Agreement or any actual or proposed use of proceeds of Loans
hereunder; provided that no Indemnitee shall have the right to
be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as determined by a court of
competent jurisdiction.
SECTION 10.04. Sharing of Set-Offs. Each Bank
agrees that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of
the aggregate amount of principal and interest due with
respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the
aggregate amount of principal and interest due with respect to
any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such
other adjustments shall be made, as may be required so that
all such payments of principal and interest with respect to
the Notes held by the Banks shall be shared by the Banks pro
rata; provided that nothing in this Section shall impair the
right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to
such exercise to the payment of indebtedness of the Borrower
or the Guarantor, as the case may be, other than its
indebtedness hereunder. Each of the Borrower and the
Guarantor agrees, to the fullest extent it may effectively do
so under applicable law, that any holder of a participation in
a Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim
and other rights with respect to such participation as fully
as if such holder of a participation were a direct creditor of
the Borrower or the Guarantor in the amount of such
participation.
SECTION 10.05. Amendments and Waivers. Any
provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in writing
and is signed by the Borrower and the Required Banks (and, if
the rights or duties of the Agent are affected thereby, by the
Agent); provided that no such amendment or waiver shall,
unless signed by all the Banks, (i) increase or decrease the
Commitment of any Bank (except for a ratable decrease in the
Commitments of all Banks) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of
interest on any Loan or any fees hereunder, (iii) postpone the
date fixed for any payment of principal of or interest on any
Loan or any fees hereunder or for termination of the
Commitments, or (iv) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes, or
the number of Banks, which shall be required for the Banks or
any of them to take any action under this Section or any other
provision of this Agreement; provided, further, that any
amendment or waiver of any provision of Article IX shall not
be effective unless also signed by the Guarantor.
SECTION 10.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of its
Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon
notice to the Borrower and the Agent, such Bank shall remain
responsible for the performance of its obligations hereunder,
and the Borrower and the Agent shall continue to deal solely
and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement. Any agreement
pursuant to which any Bank may grant such a participating
interest shall provide that such Bank shall retain the sole
right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to
approve any amendment, modification or waiver of any provision
of this Agreement; provided that such participation agreement
may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i),
(ii), (iii) or (iv) of Section 10.05 without the consent of
the Participant. The Borrower agrees that each Participant
shall, to the extent provided in its participation agreement,
be entitled to the benefits of Article VIII with respect to
its participating interest. An assignment or other transfer
which is not permitted by subsection (c) or (d) below shall be
given effect for purposes of this Agreement only to the extent
of a participating interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to one or more
banks or other institutions (each an "Assignee") all, or a
proportionate part of all, of its rights and obligations under
this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit D
hereto executed by such Assignee and such transferor Bank,
with (and subject to) the subscribed consent of the Borrower,
which consent shall not be unreasonably withheld, and the
Agent; provided that if an Assignee is an affiliate of such
transferor Bank or is another Bank, no such consent shall be
required; and provided, further, that if such assignment is of
a proportionate part of a Bank's rights and obligations, the
portion of such Bank's Commitment which is assigned shall be
not less than $5,000,000. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between
such transferor Bank and such Assignee, such Assignee shall be
a Bank party to this Agreement and shall have all the rights
and obligations of a Bank with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall
be released from its obligations hereunder to a corresponding
extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to
this subsection (c), the transferor Bank, the Agent and the
Borrower shall make appropriate arrangements so that, if
required, new Notes are issued to the Assignee. In connection
with any such assignment, the transferor Bank shall pay to the
Agent an administrative fee for processing such assignment in
the amount of $2,500. If the Assignee is not incorporated
under the laws of the United States of America or a state
thereof, it shall, prior to the first date on which interest
or fees are payable hereunder for its account, deliver to the
Borrower and the Agent certification as to exemption from
deduction or withholding of any United States federal income
taxes in accordance with Section 2.14.
(d) Any Bank may at any time, without the consent
of the Borrower or the Agent, assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve
Bank. No such assignment shall release the transferor Bank
from its obligations hereunder.
(e) No Assignee, Participant or other transferee of
any Bank's rights shall be entitled to receive any greater
payment under Section 8.03 than such Bank would have been
entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02 or 8.03
requiring such Bank to designate a different Applicable
Lending Office under certain circumstances or at a time when
the circumstances giving rise to such greater payment did not
exist.
SECTION 10.07. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it in
good faith is not relying upon any "margin stock" (as defined
in Regulation U) as collateral in the extension or maintenance
of the credit provided for in this Agreement.
SECTION 10.08. Governing Law. This Agreement and
each Note shall be governed by and construed in accordance
with the laws of the State of New York.
SECTION 10.09. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and
all prior agreements and understandings, oral or written,
relating to the subject matter hereof.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH OF THE
BORROWER, THE GUARANTOR, THE AGENT AND THE BANKS HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
THE TURNER CORPORATION
By /s/ Allen H. Wahlberg
Title: Senior Vice President,
Chief Financial Officer
and Assistant Secretary
By /s/ Donald G. Sleeman
Title: Treasurer
375 Hudson Street
New York, New York 10014
Attention: General Counsel
Telex number:
TURNER CONSTRUCTION COMPANY
By /s/ Allen H. Wahlberg
Title: Vice President and
Assistant Secretary
By /s/ Donald G. Sleeman
Title: Treasurer
375 Hudson Street
New York, New York 10014
Attention: General Counsel
Telex number:<PAGE>
Commitments
$10,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ David T. Ellis
Title: Vice President
$10,000,000 THE BANK OF NEW YORK
By /s/ Stephen G. Petrula
Title: Vice President
$10,000,000 CHEMICAL BANK
By /s/ Richard W. Stewart
Title: Vice President
$10,000,000 HARRIS TRUST AND SAVINGS BANK
By /s/ Joseph E. Long II
Title: Vice President
_________________
Total Commitments
$40,000,000
===========<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ David T. Ellis
Title: Vice President
60 Wall Street
New York, New York 10260
Attention: Robert Bottamedi
Telex number: 177615
<PAGE>
EXHIBIT A
NOTE
New York, New York
December 30, 1992
For value received, The Turner Corporation, a
Delaware corporation (the "Borrower"), promises to pay to the
order of
(the "Bank"), for the account of its Applicable Lending
Office, the unpaid principal amount of each Loan made by the
Bank to the Borrower pursuant to the Credit Agreement referred
to below on the last day of the Interest Period relating to
such Loan. The Borrower promises to pay interest on the
unpaid principal amount of each such Loan on the dates and at
the rate or rates provided for in the Credit Agreement. All
such payments of principal and interest shall be made in
lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty
Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal thereof
shall be recorded by the Bank and, prior to any transfer
hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding
shall be endorsed by the Bank on the schedule attached hereto,
or on a continuation of such schedule attached to and made a
part hereof, which endorsements shall be, in the absence of
manifest error, presumptive evidence of the amount of Loans
outstanding at the time of such transfer; provided that the
failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the
Credit Agreement dated as of December 30, 1992 among The
Turner Corporation, as Borrower, Turner Construction Company,
as Guarantor, the banks listed on the signature pages thereof
and Morgan Guaranty Trust Company of New York, as Agent (as
the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment hereof and
the acceleration of the maturity hereof.
Pursuant to the Credit Agreement, payment of
principal and interest on this Note is unconditionally
guaranteed by Turner Construction Company, a New York
corporation.
THE TURNER CORPORATION
By____________________
Title:
By____________________
Title:
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
______________________________________________________________________________
Amount Type Amount of
of of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
EXHIBIT B-1
OPINION OF
COUNSEL FOR THE COMPANY
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have acted as counsel for The Turner Corporation,
a Delaware corporation (the "Borrower"), in connection with
the Credit Agreement (the "Credit Agreement") dated as of
December 30, 1992 among the Borrower, Turner Construction
Company, a New York corporation, as Guarantor (the
"Guarantor"), the banks listed on the signature pages thereof
and Morgan Guaranty Trust Company of New York, as Agent.
Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Based upon the foregoing and such examination of law
as we have deemed necessary, we are of the opinion that:
1. Each of the Borrower and the Guarantor is a
corporation duly incorporated, validly existing and in good
standing under the laws of the state of its incorporation, and
has all corporate powers required to carry on its business as
now conducted.
2. The execution, delivery and performance by the
Borrower and the Guarantor of the Credit Agreement and by the
Borrower of the Notes and are within the Borrower's and the
Guarantor's respective corporate powers, have been duly
authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental
body, agency or official and do not contravene, or constitute
a default under, any provision of applicable law or regulation
or of the respective certificates of incorporation or by-laws
of the Borrower and the Guarantor or of any agreement,
judgment, injunction, order, decree or other instrument of
which we are aware binding upon the Borrower or the Guarantor
or result in the creation or imposition of any Lien under any
agreement of which we are aware on any asset of the Borrower
or any of its Subsidiaries.
3. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and the Guarantor, and the
Notes constitute valid and binding obligations of the
Borrower, in each case enforceable against the Borrower or the
Guarantor, as the case may be, in accordance with their
respective terms, except as (i) the enforceability thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally and (ii)
rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability.
4. There is no action, suit or proceeding of which
we are aware pending against, or to the best of our knowledge
threatened against or affecting, the Borrower or any of its
Subsidiaries before any court or arbitrator or any
governmental body, agency or official which in any manner
draws into question the validity of the Credit Agreement or
the Notes.
Very truly yours,
<PAGE>
EXHIBIT B-2
OPINION OF GENERAL
COUNSEL OF THE COMPANY
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am General Counsel of The Turner Corporation, a
Delaware corporation (the "Borrower"), and Turner Construction
Company, a New York corporation (the Guarantor").
I have examined the Credit Agreement (the "Credit
Agreement") dated as of December 30, 1992 among the Borrower,
Guarantor, the banks listed on the signature pages thereof and
Morgan Guaranty Trust Company of New York, as Agent, as well
as originals or copies, certified or otherwise identified to
my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and
have conducted such other investigations of fact and law as I
have deemed necessary or advisable for purposes of this
opinion. Terms defined in the Credit Agreement are used
herein as therein defined.
Upon the basis of the foregoing, I am of the opinion
that:
1. Each of the Borrower and the Guarantor is a
corporation duly incorporated, validly existing and in good
standing under the laws of the state of its incorporation, and
has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
2. The execution, delivery and performance by the
Borrower and the Guarantor of the Credit Agreement and by the
Borrower of the Notes do not contravene, or constitute a
default under, any provision of any agreement, judgment,
injunction, order, decree or other instrument of which I am
aware binding upon the Borrower or the Guarantor or result in
the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries.
3. There is no action, suit or proceeding of which
I am aware pending against, or to the best of my knowledge
threatened against or affecting, the Borrower or any of its
Subsidiaries before any court or arbitrator or any
governmental body, agency or official, in which there is a
reasonable possibility of an adverse decision which could
materially adversely affect the business, consolidated
financial position or consolidated results of operations of
the Borrower its Consolidated Subsidiaries, considered as a
whole or which in any manner draws into question the validity
of the Credit Agreement or the Notes.
Very truly yours,
<PAGE>
EXHIBIT C
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the
Credit Agreement (the "Credit Agreement") dated as of December
30, 1992 among The Turner Corporation, a Delaware corporation
(the "Borrower"), Turner Construction Company, a New York
corporation, as Guarantor (the "Guarantor"), the banks listed
on the signature pages thereof (the "Banks") and Morgan
Guaranty Trust Company of New York, as Agent (the "Agent"),
and have acted as special counsel for the Agent for the
purpose of rendering this opinion pursuant to Section 3.01(d)
of the Credit Agreement. Terms defined in the Credit
Agreement are used herein as therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the
opinion that:
1. The execution, delivery and performance by the
Borrower and the Guarantor of the Credit Agreement and by the
Borrower of the Notes are within the Borrower's and the
Guarantor's respective corporate powers and have been duly
authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and the Guarantor, and the
Notes constitute valid and binding obligations of the
Borrower, in each case enforceable in accordance with their
respective terms, except as (i) the validity, binding nature
or enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by
equitable principles of general applicability.
In giving the foregoing opinion, we express no
opinion as to the effect (if any) of any law of any
jurisdiction (except the State of New York) in which any Bank
is located which limits the rate of interest that such Bank
may charge or collect.
Very truly yours,
<PAGE>
EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among
[ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"), THE
TURNER CORPORATION (the "Borrower") and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement
(the "Agreement") relates to the Credit Agreement dated as of
December 30, 1992 among the Borrower, Turner Construction
Company, as Guarantor, the Assignor and the other Banks party
thereto, as Banks, and the Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the
Assignor has a Commitment to make Loans to the Borrower in an
aggregate principal amount at any time outstanding not to
exceed $__________;
WHEREAS, Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount
of $__________ are outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its Commitment thereunder
in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding
Loans, and the Assignee proposes to accept assignment of such
rights and assume the corresponding obligations from the
Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, the parties hereto
agree as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings
set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns
and sells to the Assignee all of the rights of the Assignor
under the Credit Agreement to the extent of the Assigned
Amount, and the Assignee hereby accepts such assignment from
the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the
Assigned Amount, including the purchase from the Assignor of
the corresponding portion of the principal amount of the Loans
made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee,
the Borrower and the Agent and the payment of the amounts
specified in Section 3 required to be paid on the date hereof
(i) the Assignee shall, as of the date hereof, succeed to the
rights and be obligated to perform the obligations of a Bank
under the Credit Agreement with a Commitment in an amount
equal to the Assigned Amount, and (ii) the Commitment of the
Assignor shall, as of the date hereof, be reduced by a like
amount and the Assignor released from its obligations under
the Credit Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein
shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in
Federal funds an amount equal to $_________. It is
understood that commitment and/or facility fees accrued to the
date hereof are for the account of the Assignor and such fees
accruing from and including the date hereof are for the
account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under
the Credit Agreement which is for the account of the other
party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
SECTION 4. Consent of the Borrower and the
Agent/Agreement of the Borrower. This Agreement is
conditioned upon the consent of the Borrower and the Agent
pursuant to Section 10.06(c) of the Credit Agreement. The
execution of this Agreement by the Borrower and the Agent is
evidence of this consent. Pursuant to Section 10.06(c) of the
Credit Agreement, the Borrower agrees to execute and deliver a
substitute Note payable to the order of the Assignee to
evidence the assignment and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor
makes no representation or warranty in connection with, and
shall have no responsibility with respect to, the solvency,
financial condition, or statements of the Borrower, or the
validity and enforceability of the obligations of the Borrower
in respect of the Credit Agreement or any Note. The Assignee
acknowledges that it has, independently and without reliance
on the Assignor, and based on such documents and information
as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the
business, affairs and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York.
SECTION 7. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
THE TURNER CORPORATION
By__________________________
Title:
By__________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By__________________________
Title:
<PAGE>
EXHIBIT E
EXTENSION AGREEMENT
The Turner Corporation
375 Hudson Street
New York, New York 10014
Morgan Guaranty Trust Company
of New York, as Agent
under the Credit Agreement
referred to below
60 Wall Street
New York, NY 10260
Gentlemen:
The undersigned hereby agree to extend, effective
December 30, 1993, the term of the Credit Agreement dated as
of December 30, 1992 among The Turner Corporation, Turner
Construction Corporation, the Banks listed therein and Morgan
Guaranty Trust Company of New York, as Agent (the "Credit
Agreement") for one year to December 30, 1996. Terms defined
in the Credit Agreement are used herein as therein defined.
This Extension Agreement shall be construed in
accordance with and governed by the laws of the State of New
York.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By____________________________
Title:
THE BANK OF NEW YORK
By____________________________
Title:
CHEMICAL BANK
By___________________________
Title:
HARRIS TRUST AND SAVINGS BANK
By____________________________
Title:
Agreed and accepted:
THE TURNER CORPORATION
By________________________
Title:
By________________________
Title:
TURNER CONSTRUCTION COMPANY
By________________________
Title:
By________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By____________________
Title:
<PAGE>
SCHEDULE A
Subsidiaries of the Borrower Not
Engaged in the Real Estate Development Business
Turner Construction Company
Turner International Industries, Inc.
Ameristone, Incorporated
Mideast Construction Services, Inc.
B-F-W Construction Co., Inc.
Universal Construction Company Inc.
Trans-Con of Delaware Inc.
Turner Co-Generation Investment Corporation
Rickenbacker Holdings, Inc.
Rickenbacker Development Corporation
Turner Energy Services, Inc.
Turner Investment Corporation
Burwharf Corporation
<PAGE>
SCHEDULE B
Subsidiaries of the Borrower
Engaged in the Real Estate
Development Business
Turner Development Corporation
<PAGE>
SCHEDULE C
Designated Joint Ventures and
Designated Joint Venture Agreements
Designated Joint Designated Joint
Venture Venture Agreements
The Turner Corporation
Turner-Harwood Ventures Agreement of Limited Partnership
Limited Partnership of Turner-Harwood Ventures
Limited Partnership dated
July 14, 1988
Bellewood Commons Limited Agreement of Limited Partnership
Partnership of Bellewood Commons Limited
Partnership dated September
8, 1988
Turner Steiner Agreement dated July 20, 1992.
International SA 50% jointly owned with Karl
Steiner Holding AG
Birmden Associates Joint Venture Agreement between
Burwharf Corporation, a wholly
owned subsidiary of The Turner
Corporation, and A & N Corporation.
Agreement to be signed in 1992
Turner Construction Company
Diversified/Turner Joint Joint Venture Agreement between
Venture Agreement Diversified Investors, Inc. and
Turner Construction Company
dated May 13, 1985
Rickenbacker One, A Agreement and Certificate of
Limited Partnership Limited Partnership dated
June 27, 1985
Turner Development Corporation
One Laurel Place, Ltd. One Laurel Place, Ltd. Agreement
of Limited Partnership dated
April 4, 1980
Agreement dated December 20, 1982
assigning limited partnership
interests
Fairmont Turner Venture Joint Venture Agreement dated
January 31, 1980, as amended by
amendments dated January 31,
1980 and April 21, 1982
Pacific First Plaza Agreement of Limited Partnership
Limited Partnership of Pacific First Plaza Limited
Partnership dated
December 29, 1988
Portland Avenue Investors Limited Partnership Agreement and
Limited Partnership Certificate of Limited
Partnership of Portland Avenue
Investors, A Limited Partnership
dated August 20, 1985
Trident Associates Limited Partnership Agreement
dated August 27, 1980
Turner Harwood Venture Turner Harwood Venture at
at Willowwood Plaza Willowwood Joint Venture
Agreement dated
February 14, 1986
Agreement of Sale and Purchase
dated November 24, 1986
between Turner
Development Corporation and
Damon Harwood Company, Inc.
Amendment & Agreement of Sale
and Purchase dated September
13, 1988 between Turner-Harwood
Venture at Willowwood and the
Equitable Life Assurance
Society of the United States
TDC-Harwood Venture at TDC-Harwood Venture at Fair Oaks
Fair Oaks III III Joint Agreement dated
October 21, 1983
Agreement of Sale and Purchase
dated January 10, 1985 between
TDC-Harwood Venture at Fair
Oaks III and the Equitable
Variable Life Insurance Company
TDC-Harwood Venture Turner-Harwood Venture at Pinewood
at Pinewood Plaza Joint Venture Agreement dated
August 1, 1985
Lexcon Building Systems, Inc.
Galbraeth - 600 Superior Amended and Restated Agreement of
Limited Partnership Limited Partnership of Galbraeth-
600 Superior Limited Partnership
dated May 1, 1989
Turner Energy Services, Inc.
19% of Turner Power A corporate joint venture between
Group, Inc. Turner Energy Services, Inc.,
Data Acquisitions Services, Inc.
and DAS Cogeneration Corporation,
dated July 1, 1986, as amended on
June 19, 1987
Turner International Industries, Inc.
7.5% of TSA Construction Ltd.
50% of Turner A.B.S.
International Inc.
Turner International Limited
38% of D&J Construction Shareholders Agreement dated
Company Limited August 5, 1985
20% of D&J Excavating
Company Limited
Ameristone, Incorporated
50% of Grant Ameristone
Limited
[COMPOSITE CONFORMED COPY]
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of December 31, 1993 to the
Credit Agreement dated as of December 30, 1992 (the
"Agreement") among THE TURNER CORPORATION (the "Borrower"),
TURNER CONSTRUCTION COMPANY, as Guarantor, the BANKS listed
on the signature pages thereof (the "Banks") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower and the undersigned Banks
desire to amend the definition of Fixed Charges, the
definition of Income Available for Fixed Charges, the
definition of Consolidated Adjusted Current Liabilities, the
covenant relating to Fixed Charge Coverage and the covenant
relating to Debt in the Agreement;
NOW, THEREFORE, the undersigned parties hereto
agree as follows:
SECTION 1. Definitions; References. Unless
otherwise specifically defined herein, each term used herein
which is defined in the Agreement has the meaning assigned
to such term in the Agreement. Each reference to "hereof",
"hereunder", "herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each
other similar reference contained in the Agreement shall
from and after the date hereof refer to the Agreement as
amended hereby.
SECTION 2. Fixed Charges. The definition of
"Fixed Charges" in Section 1.01 of the Agreement is amended
to read as follows:
"Fixed Charges" for any period means (i) interest
expense (including interest expense under capital
leases) and rental expense under operating leases, to
the extent deducted in determining the consolidated net
income of the Borrower and its Consolidated
Subsidiaries for such period, and (ii) dividends on
preferred stock of the Borrower and its Consolidated
Subsidiaries for such period.
SECTION 3. Income Available for Fixed Charges.
The definition of "Income Available for Fixed Charges" in
Section 1.01 of the Agreement is amended to read as follows:
"Income Available for Fixed Charges" for any
period means the consolidated net income of the
Borrower and its Consolidated Subsidiaries for such
period, plus (to the extent deducted in determining
such consolidated net income), without duplication:
(i) income taxes,
(ii) depreciation and amortization,
(iii) Fixed Charges,
(iv) any reduction in the carrying value of the
Borrower's Rickenbacker facility, and
(v) if such period includes the fourth fiscal
quarter of 1993, the restructuring charge
and reserves relating to real estate taken
by the Borrower and its Consolidated
Subsidiaries in such fiscal quarter,
minus the sum of:
(vi) any increase during such period in the
carrying value of the Borrower's
Rickenbacker facility, to the extent that
such increase is included in such
consolidated net income, and
(vii) all cash payments made by the Borrower and
its Consolidated Subsidiaries during such
period that were not deducted in determining
such consolidated net income because they
were provided for in the restructuring
charge referred to in clause (v) above.
SECTION 4. Consolidated Adjusted Current
Liabilities. The definition of "Consolidated Adjusted
Current Liabilities" in Section 1.01 of the Agreement is
amended to read as follows:
"Consolidated Adjusted Current Liabilities" means
at any date (i) the consolidated current liabilities of
the Borrower and its Consolidated Subsidiaries plus
(ii) the current liabilities of any Person (other than
the Borrower or a Consolidated Subsidiary) which are
Guaranteed by the Borrower or a Consolidated
Subsidiary, all determined as of such date on the
assumption that consolidated current liabilities
includes all obligations of the Borrower or a
Consolidated Subsidiary of which the Borrower
reasonably expects the obligor would be relieved (by
discharge, assumption by a third party or otherwise)
upon sale of real estate which on such date is held for
sale; provided that consolidated current liabilities of
the Borrower and its Consolidated Subsidiaries shall
not include any payments of principal of the Loans.
SECTION 5. Fixed Charge Coverage. Section 5.10
of the Agreement is amended to read as follows:
SECTION 5.10. Fixed Charge Coverage. The Fixed
Charge Ratio will not, for any period of four
consecutive fiscal quarters ending during any Period
set forth below, be less than the ratio set forth
opposite such Period:
Minimum Fixed
Period Charge Ratio
October 1, 1993 through 1.10
September 30, 1994
October 1, 1994 through 1.25
December 31, 1994
January 1, 1995 through 1.35
September 30, 1995
October 1, 1995 through 1.60
December 31, 1996
SECTION 6. Debt. Section 5.08 of the Agreement
is amended to read as follows:
SECTION 5.08. Debt. The Leverage Ratio
will at no time during any Period set forth below
exceed the ratio set forth opposite such Period:
Period Maximum Leverage Ratio
January 1, 1994 through 3.00
December 31, 1994
January 1, 1995 through 2.75
December 31, 1995
January 1, 1996 through 2.50
December 31, 1996
SECTION 7. Interest Rates. (a) The definition
of "Base Rate Margin" in Section 2.06(a) of the Agreement is
amended to read as follows:
The "Base Rate Margin" for any day means 0.75%.
(b) The definition of "CD Margin" in Section 2.06(b)
of the Agreement is amended to read as follows:
The applicable "CD Margin" for any day means
2.375%.
(c) The definition of "Euro-Dollar Margin" in Section
2.06(c) of the Agreement is amended to read as follows:
The "Euro-Dollar Margin" for any day means 2.25%.
SECTION 8. Restricted Payments. The undersigned
parties intend to negotiate in good faith a further
amendment of the Agreement to add a covenant restricting the
aggregate amount that may be applied by the Borrower and its
Subsidiaries from time to time to pay dividends on or
repurchase or otherwise retire shares of the Borrower's
capital stock and/or any options, warrants or other rights
to acquire shares of its capital stock.
SECTION 9. Rights Otherwise Unaffected. This
Amendment is limited to the matters expressly set forth
herein. Except to the extent specifically amended hereby,
all terms of the Agreement shall remain in full force and
effect.
SECTION 10. Governing Law. This Amendment shall
be governed by and construed in accordance with the laws of
the State of New York.
SECTION 11. Counterparts; Effectiveness. This
Amendment may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same
instrument. This Amendment shall become effective as of the
date and year first written above when the Agent shall have
received (i) duly executed counterparts hereof signed by the
Borrower, the Guarantor and the Required Banks (or, in the
case of any party as to which an executed counterpart shall
not have been received, the Agent shall have received
telegraphic, telex or other written confirmation from such
party of execution of a counterpart hereof by such party)
and (ii) payment of an amendment fee for the account of each
Bank equal to 3/16 of 1% of such Bank's Commitment.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the date first
above written.
THE TURNER CORPORATION
By /s/David J. Smith
Title: Senior Vice
President and
Chief Financial
Officer
TURNER CONSTRUCTION COMPANY
By /s/Donald G. Sleeman
Title: Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/David T. Ellis
Title: Vice President
THE BANK OF NEW YORK
By /s/Parry D. Gosling
Title: Assistant Vice
President
CHEMICAL BANK
By /s/Peter C. Eckstein
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By /s/David L. Sauerman
Title: Vice President
Exhibit 10(h)
A G R E E M E N T
between
THE TURNER CORPORATION
and
DATED AS OF JULY 1, 1993
AGREEMENT between THE TURNER CORPORATION (the "Company") and
(the "Executive"), dated as of July 1, 1993
W I T N E S S E T H
WHEREAS, the Executive is a principal officer of the Company, and the
Company wishes to assure itself of continuity of management in the event of
any actual or threatened change in control of the company;
NOW THEREFORE, it is hereby agreed as follows:
1. Operation of Agreement
1.01 This Agreement shall be effective immediately but shall be
operative only upon the occurrence of a Change in Control, as defined in
paragraph 1.02, prior to June 30, 1996 and while the Executive is in the
employ of the Company.
1.02 A "Change of Control" shall be deemed to have occurred if
(i) the Company shall cease to be a publicly owned
corporation
having at least 500 stockholders, or
(ii) more than 30% of the Company's outstanding securities
entitled to vote in elections of directors shall be acquired by any
person
(as such term is used in sections 13(d) and 14(d) of the Securities
Exchange Act of 1934), or
(iii) the Board of Directors of the Company determines
that
a tender offer statement filed by any person (as so defined) with the
Securities and Exchange Commission indicates an intention on the
part of such person to acquire control of the Company, or
(iv) during any period of 24 consecutive months commencing
before or after the date of this Agreement, individuals who at the
beginning of such period were directors of the Company cease for
any reason to constitute a majority of its Board of Directors.
2. Employment
2.01 The Company shall employ the Executive, and the Executive shall
serve the Company, from the date of a Change of Control until (i) the
second anniversary of such Change of Control or (ii) the Executive's 65th
birthday, whichever shall first occur (the "Period of Employment").
2.02 During the Period of Employment the Executive shall serve in the
position in which he served, and have the duties which he performed,
immediately prior to the Change of Control.
2.03 The Executive shall not be required to locate his office more
than 100 miles distant from his office immediately prior to the Change of
Control, or to be absent therefrom more than 100 working days in any year.
3. Compensation
3.01 For all services rendered during the Period of Employment, the
Executive shall receive:
(i) a salary, payable monthly, at the annual rate of
salary of the Executive paid immediately prior to a Change of Control,
which such increases as shall be awarded in accordance with the Company's
regular administrative practices in effect immediately prior to the Change
in Control, and
(ii) an annual award under the Company's Executive
Incentive
Compensation Plan in accordance with the Company's regular
administrative
practices in effect immediately prior to the Change of Control.
3.02 Upon a Change in Control, any stock options and stock
appreciation rights held by the Executive shall become exercisable
immediately.
3.03 During the Period of Employment the Executive shall be entitled
to (i) perquisites, (ii) vacation rights, (iii) benefits (and service
credit for benefits) under employee benefit and retirement plans, or (iv)
indemnification by the Company or any of its affiliates and (v)
reimbursement of reasonable expenses incurred by him in the course of his
duties, in each case on a basis at least as favorable to the Executive as
that applicable immediately prior to the Change in Control.
4. Termination
4.01 In the event of a Termination, as defined in paragraph 4.03, the
Company shall pay to the Executive within 20 days, in lieu of all damages
to which he might otherwise be entitled under this Agreement.
(a) A lump sum, equal to the total of the salary that would have been
paid pursuant to paragraph 3.01 (i) for a period of 2.99 years from the
date of Termination (but in no event beyond the Executive's 65th birthday)
if such Termination had not occurred, without discount to present value and
without regard to any increase in salary which would otherwise have been
paid, plus the average over the preceding three years of any bonus or award
paid under the Company's Executive Incentive Compensation Plan.
(b) A lump sum, in full substitution for any rights under all
outstanding awards and elections to Defer under the Executive Incentive
Compensation Plan held by the Executive at the time of such Termination.
4.02 In the event of Termination, the Executive shall continue to be
entitled to all employee welfare benefits (including death benefits,
disability benefits, and medical and dental benefits) and indemnification
rights, as if the Executive had continued to be employed by the Company
under this Agreement for a period of 2.99 years from the date of
Termination (but in no event beyond the Executive's 65th birthday).
4.03 "Termination" shall mean:
(a) Termination by the Company of the Executive's
employment for any reason other than "Total Disability," as defined in the
Turner Staff Handbook as amended to June 1987, or "Cause," defined as the
Executive's conviction of, or plea of nolo contendere to, a felony or a
crime involving moral turpitude or intended to result in gain to or
personal enrichment of the Executive at the Company's expense; or
(b) Termination by the Executive of his employment upon the
occurrence of any of the following events:
(i) Failure to reelect the Executive to, or removal of
the
Executive from, any office, directorship or other
position
held by him immediately prior to a Change of Control;
(ii) A significant adverse change in the Executive's
compensation
or any other breach of this Agreement by the
Company, which
in either event is not remedied within 30 days after
delivery to
the Board of Directors of written notice from the Executive;
(iii) The liquidation or dissolution of the Company or the
transfer of
a majority of its assets to a transferee who is not bound by
this
Agreement pursuant to paragraph 5.04;
provided that the Executive shall elect to terminate his employment by
written notice to the Board of Directors, given within one month after the
occurrence of the event or the expiration of any applicable cure period.
An election by the Executive to terminate his employment under this sub-
paragraph shall be deemed a voluntary termination by the Executive for any
purpose.
5. General Provisions
5.01 This Agreement shall not limit the right of the Company or the
Executive to terminate his employment prior to a Change of Control.
5.02 In the event that the Executive brings suit to enforce any
payment obligations of the Company to Section 4 of this Agreement and
judgment therein is entered against the Company, the Executive shall be
entitled to recover from the Company (a) all legal expenses incurred by the
Executive in connection with the suit and (b) an amount equal to twice the
amount which the Company would otherwise have been required to pay to the
Executive pursuant to such Section 4.
5.03 If any provision of this Agreement shall be determined to be
invalid, the remaining provisions shall remain in full force to the fullest
extent permitted by law.
5.04 This Agreement shall be binding upon and inure to the benefit of
the Company and any successor of the Company including any corporation
acquiring (by way of merger, consolidation or otherwise) all or
substantially all of the assets of this Company (and such successor shall
thereafter be deemed "the Company" for the purposes of this Agreement), but
shall not otherwise be assignable by the Company.
5.05 This Agreement shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE TURNER CORPORATION
By:______________________
Chairman of the Board
By:______________________
Exhibit
10(i)
A G R E E M E N T
between
and
DATED AS OF JULY 1, 1993
AGREEMENT between
(the "Company") and
(the "Executive"), dated
as of July 1, 1993.
W I T N E S S E T H
WHEREAS, the Executive is a principal officer of the Company,
and the Company wishes to assure itself of continuity of
management in the event of any actual or threatened change in
control of The Turner Corporation ("Turner"), its parent company;
NOW THEREFORE, it is hereby agreed as follows:
1. Operation of Agreement
1.01 This Agreement shall be effective immediately but shall
be operative only upon the occurrence of a Change in Control, as
defined in paragraph 1.02, prior to June 30, 1996 and while the
Executive is in the employ of the Company.
1.02 A "Change of Control" shall be deemed to have occurred
if at any time when the Company is a majority-owned subsidiary of
Turner,
(i) Turner shall cease to be a publicly owned
corporation
having at least 500 stockholders, or
(ii) more than 30% of the Turner's outstanding
securities
entitled to vote in elections of directors shall be acquired
by any person
(as such term is used in sections 13(d) and 14(d) of the
Securities
Exchange Act of 1934), or
(iii) the Board of Directors of Turner determines
that a tender
offer statement filed by any person (as so defined) with the
Securities and
Exchange Commission indicates an intention on the part of
such person to
acquire control of Turner, or
(iv) during any period of 24 consecutive months
commencing
before or after the date of this Agreement, individuals who
at the
beginning of such period were directors of Turner cease for
any reason to constitute a majority of its Board of
Directors.
2. Employment
2.01 The Company shall employ the Executive, and the
Executive shall serve the Company, from the date of a Change of
Control until (i) the second anniversary of such Change of Control
or (ii) the Executive's 65th birthday, whichever shall first occur
(the "Period of Employment").
2.02 During the Period of Employment the Executive shall
serve in the position in which he served, and have the duties
which he performed, immediately prior to the Change of Control.
2.03 The Executive shall not be required to locate his
office more than 100 miles distant from his office immediately
prior to the Change of Control, or to be absent therefrom more
than 100 working days in any year.
3. Compensation
3.01 For all services rendered during the Period of
Employment, the Executive shall receive:
(i) a salary, payable monthly, at the annual
rate of salary of the Executive paid immediately prior to a
Change of Control, which such increases as shall be awarded in
accordance with the Company's regular administrative practices in
effect immediately prior to the Change in Control, and
(ii) an annual award under the Company's
Executive Incentive
Compensation Plan in accordance with the Company's regular
administrative
practices in effect immediately prior to the Change of
Control.
3.02 Upon a Change in Control, any stock options and stock
appreciation rights held by the Executive shall become exercisable
immediately.
3.03 During the Period of Employment the Executive shall be
entitled to (i) perquisites, (ii) vacation rights, (iii) benefits
(and service credit for benefits) under employee benefit and
retirement plans, or (iv) indemnification by the Company or any of
its affiliates and (v) reimbursement of reasonable expenses
incurred by him in the course of his duties, in each case on a
basis at least as favorable to the Executive as that applicable
immediately prior to the Change in Control.
4. Termination
4.01 In the event of a Termination, as defined in paragraph
4.03, the Company shall pay to the Executive within 20 days, in
lieu of all damages to which he might otherwise be entitled under
this Agreement.
(a) A lump sum, equal to the total of the salary that would
have been paid pursuant to paragraph 3.01 (i) for a period of one
year from the date of Termination (but in no event beyond the
Executive's 65th birthday) if such Termination had not occurred,
without discount to present value and without regard to any
increase in salary which would otherwise have been paid, plus the
average over the preceding three years of any bonus or award paid
under the Company's Executive Incentive Compensation Plan.
(b) A lump sum, in full substitution for any rights under
all outstanding awards and elections to Defer under the Executive
Incentive Compensation Plan held by the Executive at the time of
such Termination.
4.02 In the event of Termination, the Executive shall
continue to be entitled to all employee welfare benefits
(including death benefits, disability benefits, and medical and
dental benefits) and indemnification rights, as if the Executive
had continued to be employed by the Company under this Agreement
for a period of one year from the date of Termination (but in no
event beyond the Executive's 65th birthday).
4.03 "Termination" shall mean:
(a) Termination by the Company of the
Executive's employment for any reason other than "Total
Disability," as defined in the Turner Staff Handbook as amended to
June 1987, or "Cause," defined as the Executive's conviction of,
or plea of nolo contendere to, a felony or a crime involving moral
turpitude or intended to result in gain to or personal enrichment
of the Executive at the Company's expense; or
(b) Termination by the Executive of his employment
upon the occurrence of any of the following events:
(i) Failure to reelect the Executive to, or
removal of the
Executive from, any office, directorship or
other position
held by him immediately prior to a Change of
Control;
(ii) A significant adverse change in the
Executive's compensation
or any other breach of this Agreement by
the Company, which
in either event is not remedied within 30 days
after delivery to
the Board of Directors of written notice from the
Executive;
(iii) The liquidation or dissolution of the
Company or the transfer of
a majority of its assets to a transferee who is not
bound by this
Agreement pursuant to paragraph 5.04;
provided that the Executive shall elect to terminate his
employment by written notice to the Board of Directors, given
within one month after the occurrence of the event or the
expiration of any applicable cure period. An election by the
Executive to terminate his employment under this sub-paragraph
shall be deemed a voluntary termination by the Executive for any
purpose.
5. General Provisions
5.01 This Agreement shall not limit the right of the Company
or the Executive to terminate his employment prior to a Change of
Control.
5.02 In the event that the Executive brings suit to enforce
any payment obligations of the Company to Section 4 of this
Agreement and judgment therein is entered against the Company, the
Executive shall be entitled to recover from the Company (a) all
legal expenses incurred by the Executive in connection with the
suit and (b) an amount equal to twice the amount which the Company
would otherwise have been required to pay to the Executive
pursuant to such Section 4.
5.03 If any provision of this Agreement shall be determined
to be invalid, the remaining provisions shall remain in full force
to the fullest extent permitted by law.
5.04 This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company including
any corporation acquiring (by way of merger, consolidation or
otherwise) all or substantially all of the assets of this Company
(and such successor shall thereafter be deemed "the Company" for
the purposes of this Agreement), but shall not otherwise be
assignable by the Company.
5.05 This Agreement shall be governed by the laws of the
State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
By:_____________________
Chairman of the Board
By:_____________________
<TABLE>
Exhibit 11
THE TURNER CORPORATION
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
PRIMARY 1993 1992 1991
<S> <C> <C> <C>
Weighted average common and common
equivalent shares outstanding "5,186,442 " "5,074,943 " "4,981,152 "
Income (loss) before extraordinary gain and
"cumulative effect of accounting change,"
less Series B preferred dividends (net of tax)
and Series C preferred dividends "($8,035,000)" "$792,000 " "$10,246,000 "
"Extraordinary gain, net of tax" - "316,000 " -
"Cumulative effect of accounting change,"
net of tax - "1,454,000 " -
Net income (loss) available to
common shareholders "($8,035,000)" "$2,562,000 " "$10,246,000 "
Primary earnings (loss) per common share:
Before extraordinary gain and
cumulative effect of accounting change ($1.55) $0.15 $2.06
Extraordinary gain - 0.06 -
Cumulative effect of accounting change - 0.29 -
Net income (loss) per common share ($1.55) $0.50 $2.06
THE TURNER CORPORATION
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FULLY DILUTED
<S> <C> <C> <C>
Weighted average shares outstanding used
in the computation of primary earnings per share "5,186,442 " "5,074,943 " "4,981,152 "
Conversion of Series B convertible preferred stock
to common stock "849,011 " "849,494 " "850,000 "
Weighted average common and common
equivalent shares outstanding "6,035,453 " "5,924,437 " "5,831,152 "
Income (loss) before extraordinary gain and
"cumulative effect of accounting change,"
less Series C preferred dividends and Series B
"preferred dividend differential, net of tax" "($8,035,000)" "$868,000 " "$10,498,000 "
"Extraordinary gain, net of tax" - "316,000 " -
"Cumulative effect of accounting change, net of tax" - "1,454,000 " -
Net income (loss) available to common
shareholders "($8,035,000)" "$2,638,000 " "$10,498,000 "
Fully diluted earnings per common share:
Before extraordinary gain and cumulative
effect of accounting change ($1.33) $0.15 $1.80
Extraordinary gain - 0.05 -
Cumulative effect of accounting change - 0.25 -
Net income (loss) per common share ($1.33) $0.45 $1.80
Note:For 1992 the Series C Convertible Preferred Stock and the Convertible Debenture are antidilutive.
</TABLE>
EXHIBIT 22
Subsidiaries of the Registrant
Jurisdiction Percentage
of Voting Securities
Incorporation Held
Ameristone, Incorporated Delaware 100
Burwharf Corporation Delaware 100
Mideast Construction Services, Inc. Delaware 100
Turner Investment Corporation Delaware 100
Universal Construction Company Inc. Delaware 100
Trans-Con of Delaware Inc. Delaware 100
TDC of Texas Delaware 100
Turner Construction Company New York 100
Turner Construction Company of Texas Texas 100
The Lathrop Company, Inc. Delaware 100
Service Products Buildings, Inc. Ohio 100
Auburndale Company, Inc. Ohio 100
Seaboard Construction Company Delaware 100
Turner Caribe, Inc. Delaware 100
Caribe Investment Corporation Delaware 100
Offshore Services, Inc. Delaware 100
Turner International (U.S.V.I.), Inc. Delaware 100
Turner Development Corporation Delaware 100
TDC Corp. of Florida Delaware 100
Turner International Industries, Inc. Delaware 100
Turner (East Asia) Pte. Limited Singapore 100
Turner International Industries (UK) Limited England 100
Turner International Limited Bermuda 100
Turner International (Micronesia) Inc.Delaware 100
Turner Overseas Services Limited Delaware 100
Turner International (Pakistan), Inc. Delaware 100
Rickenbacker Holdings, Inc. Delaware 100
Rickenbacker Development Corporation Delaware 100
Other subsidiaries of the company are omitted since such
subsidiaries, considered in the aggregate as a single subsidiary,
would not constitute a significant subsidiary. All of the foregoing
subsidiaries are consolidated in the financial statements.
