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, 1996
[ ] 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. Employer
incorporation or organization) Identification No.)
375 Hudson Street, New York, New York 10014
(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 registered
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. [ ]
As of March 24, 1997, 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 $53,120,462.
As of March 24, 1997, 4,381,069 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 predominantly engaged through its
subsidiaries in general building construction and
construction management in the United States and abroad, and
also has limited real estate operations 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.
Financial information about the Company's construction
and real estate segments appears in the Consolidated
Financial Statements and in footnote 15 on page 29 in Part
II, Item 8 of this report.
At December 31, 1996, The Turner Corporation and
subsidiaries employed approximately 2,800 staff employees,
of which 1,500 held supervisory positions and 1,300 held non-
supervisory positions.
Construction Business
The Company'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. It also 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 full service regional offices and
satellite branch offices. Its objective is to be a major
builder in each city or region in which it has an office.
The Company's principal construction subsidiary is Turner
Construction Company. Universal Construction Company 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 and Midwest, and the Caribbean Islands.
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 marshaling of the manpower
required for the project, the awarding of subcontracts and
the direction and management of the construction operation.
During 1996, 1995 and 1994, general building contracting
activities represented 86%, 83% and 81%, 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 mechanical 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
1996, 1995 and 1994, construction management services and
consulting represented 14%, 17% and 19%, 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 fixed price contracts,
cost-plus fixed fee contracts and variations of these types
of contracts, including cost-plus guaranteed maximum price
contracts. The majority of Turner Construction's business
involves negotiated contracts. The remainder of its
contracts are secured by competitive bidding.
As the various segments of the United States non-
residential construction market continue to shift, the
Company responds to and positions itself to take advantage
of the stronger market segments. During the last several
years, the Company's construction subsidiaries increased
their focus on manufacturing, education, research and
development, healthcare, retail, public, justice and
amusement including aquariums, arenas, theme parks, and
similar projects. Approximately 74% in dollar value of the
contracts awarded to the construction subsidiaries in 1996
were in these areas. The remaining 26% of the contracts
awarded were in the Company's commercial market segment.
The Company is a partner with Karl Steiner Holding AG
("Steiner") of Switzerland in a joint venture by the name of
Turner Steiner International SA, which renders general
building construction and construction consulting services
outside Turner Construction's and Steiner's traditional home
markets.
In South America, Turner Construction Company is a
partner with Birmann SA of Brazil in a joint venture doing
business as Turner South America. The purpose of the joint
venture is to provide construction, construction management
and consulting services to clients in Brazil and other South
American markets.
The Company is also a partner with EMCON in a joint
venture by the name of ET Environmental Corporation, which
provides environmental engineering, general building
construction, and construction management services on
environmental projects throughout the United States.
The Company was involved in a number of major projects in
1996 including Ericsson Stadium, the home of the new
National Football League team, the Carolina Panthers, in
Charlotte, North Carolina, the new Arthur Ashe Tennis Center
for the United States Tennis Association in New York City,
and several educational facilities such as the New Albany
High School in Ohio, the Chelsea Middle School in
Massachusetts and several renovation and construction
projects for the town of Darien, Connecticut. In total, the
Company completed approximately 28 million square feet of
construction in 1996.
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 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 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 secured in 1996
and published industry data, Turner Construction believes
that it is one of the largest general building contractors
operating principally within the United States.
A portion of the Company's construction activity is
performed under payment and performance bonds obtained from
the Company's 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, to date this limitation has not
restricted the Company's ability to secure new work. There
could be circumstances, however, when this limitation could
influence the Company's selection of prospective projects to
pursue.
At December 31, 1996, the anticipated earnings associated
with backlog from work to be completed under construction,
construction management and construction consulting
contracts and awards believed to be firm but not yet
confirmed by signed formal contracts was $99.5 million.
Anticipated earnings from work to be completed on contracts
and awards at December 31, 1995 was $92.1 million.
Approximately 38% of the December 31, 1996 earnings backlog
from construction contracts relates to work expected to be
performed during 1998 and beyond. Backlog is important to
long-range planning and continuity of work for the Company's
permanent staff. However, anticipated earnings from
construction contracts should not be used as the basis of
predictions with respect to future operating results.
The anticipated value of work associated with backlog
from work to be completed under construction, construction
management and construction consulting contracts and awards
believed to be firm but not yet confirmed by signed formal
contracts was $4.08 billion at December 31, 1996. The
anticipated value of work to be completed on contracts and
awards at December 31, 1995 was $3.99 billion.
Approximately 36% of the December 31, 1996 construction
backlog is expected to be completed during 1998 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 also
includes costs directly incurred by owners in connection
with work under construction management and similar
contracts. It is essentially a measure of construction
activity.
Because of the varying proportion of construction,
construction management and construction consulting work,
there is no direct correlation between inflation and the
anticipated work or earnings associated with backlog.
At December 31, 1996, Turner Construction employed
approximately 2,700 staff employees, of whom about 1,500
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 1996, approximately 2,500
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").
During the early 1980's, the Company acquired and developed
a number of real estate properties. In 1987, the Company
decided to cease its new development activities. Since that
time, the Company's real estate portfolio has been reduced
from $200 million at the end of 1987 to $70 million at the
end of 1996. The real estate portfolio, which is owned
either directly or through joint venture interests, includes
commercial office properties, a mixed-use warehouse/service
property, residential properties, undeveloped land and
certain buildings and hangars located at an air industrial
park.
During 1996, the Company sold two developed properties
and two land parcels all at their approximate carrying
value. 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.
At December 31, 1996, TDC had 3 employees, who were
management and marketing personnel.
RHI owns and leases an air cargo distribution facility
located at the Rickenbacker Air Industrial Park in Columbus,
Ohio. In 1994, the Company sold its master lease and
development rights to the 1600 acre air industrial park
adjacent to the distribution facility. In addition, in 1995
the Company renegotiated a lease with the existing lessee
extending the maturity date from 1996 to 2010.
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 Company,
Inc., which owns a small office building in which its
offices are located. The Company's corporate headquarters
and New York branch office occupy 100,000 square feet of
space which is leased until 2005. Rental expense for this
space during 1996 was $2.46 million. Significant
construction projects typically have temporary field
offices.
Turner Construction operates two equipment and storage
yards, located in Newark, New Jersey and Cincinnati, Ohio
for the storage and repair of its construction tools and
equipment. Turner Construction owns the Ohio storage and
repair yard and leases the New Jersey facility. Universal
Construction Company 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 Company Inc., and The Lathrop
Company, Inc. each own construction equipment, earth-moving
equipment and small tools.
Item 3 Legal Proceedings
The Company is a defendant in various litigation incident
to its business and in some instances the amounts sought
include substantial claims and counterclaims. Although the
outcome of litigation cannot be predicted with certainty, in
the opinion of management based on the facts known at this
time, the resolution of such litigation is not anticipated
to have a material adverse effect on the financial position
or results of operations of the Company.
Because of the risk associated with the industry and the
number of disputes that often occur, each year the Company
incurs substantial legal expenses in pursuit of its claims
or in defense against actions taken against it.
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
1996 High Low Close
First $10.125 $8.50 $10.00
Second 12.00 9.75 11.50
Third 11.625 10.125 11.125
Fourth 11.375 8.25 10.25
1995 High Low Close
First $9.375 $7.75 $8.00
Second 11.875 7.875 10.00
Third 10.875 9.625 10.00
Fourth 10.125 7.75 8.375
No dividends were declared or paid in 1996 or 1995. As of March 24, 1997,
there were approximately 2,263 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)
1996 1995 1994 1993 1992
Value of construction $3,317,774 $3,281,495 $2,670,433 $2,790,371 $2,644,122
completed
Revenue from $2,838,052 $2,727,001 $2,174,836 $2,098,247 $2,200,475
construction contracts
Cost of 2,765,901 2,658,462 2,118,361 2,029,478 2,129,055
construction contracts
Earnings from $ 72,151 $ 68,539 $ 56,475 $ 68,769 $ 71,420
construction contracts
Income from construction $ 5,304 $ 11,285 $ 7,103(a) $ 2,422(b)$16,519
operations
Income (loss) from real
estate operations (383) (227) 1,312 (6,870) (5,218)
Net income (loss) (1,695) 1,274 3,650 (6,205) 4,000(c)
Net income (loss) per
common share-primary (0.66) (0.11) 0.35 (1.55) 0.50
Dividends per Series B
preferred share 2.16 2.16 2.16 2.16 2.16
Dividends per Series C
preferred share 85.00 85.00 85.00 85.00 38.00
Stockholders' equity $ 60,130 $ 1,296 $ 59,216 $ 54,683 $60,721
Weighted average common
shares outstanding
primary 5,323,727 5,270,453 5,186,879 5,186,442 5,074,943
Total assets $ 894,596 $ 823,963 $ 715,329 $ 671,081$ 729,988
Notes payable due
after one year and
convertible debenture $ 62,593 $ 88,610 $ 94,892 $ 69,545$ 77,365
(a) Includes restructuring credits of $1,145.
(b) Includes restructuring charges of $8,500.
(c) Includes extraordinary gain of $316 and cumulative effect
of accounting change of $1,454.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations 1996 vs. 1995
The Company reported a net loss of $1.7 million in 1996
compared to net income of $1.3 million in 1995. After
taking into account dividends paid to preferred
shareholders, the Company reported a loss of $0.66 per
common share in 1996. In 1995, the Company reported a loss
of $0.11 per common share. Results for 1996 include the
impact of additional losses relating to a construction
project in Minneapolis, and losses incurred by the Company's
Caribbean operations. Results for 1995 also included a loss
on the Minneapolis project, and the write-down of a long
outstanding account receivable associated with an overseas
project. The write-down was the result of a ruling against
the Company in February 1996 in its effort to collect this
receivable.
Revenue from construction contracts continued its upward
trend, increasing $111 million in 1996 to $2.84 billion.
This growth in construction revenue is largely due to work
put in place from new contracts secured in 1996. The $3.4
billion of new contracts secured in 1996 is an increase of
$635.4 million or 23% over 1995, and was at the Company's
highest level since 1988.
Construction operating and general and administrative
expenses increased 17% to $66.8 million in 1996 compared to
$57.3 million in 1995. This increase is due primarily to
increased construction activity, expenses associated with
management changes made during the second half of 1996, and
a write-off of goodwill.
Interest expense decreased $1.5 million (or 17%) to $7.7
million in 1996. This decrease is primarily the result of
lower debt levels in 1996 compared to 1995. These results
are described more fully in the discussion that follows.
Construction
The value of construction completed, which includes in
addition to revenue, construction costs incurred by owners
on construction management and similar projects, increased
$36.3 million to $3.32 billion in 1996, the highest level of
activity since 1989. The Company's revenue from
construction contracts and costs of construction contracts
both increased by 4% from 1995 to $2.84 billion and $2.77
billion, respectively.
The value of new contracts secured in 1996 was $3.43
billion, up 23% from the $2.79 billion secured in 1995. The
anticipated earnings associated with these new contracts
represents an increase of $14.1 million from 1995. This
increase in construction activity enabled the Company to
increase its year end backlog of work to be completed by
$87.5 million to $4.08 billion at December 31, 1996.
Estimated earnings associated with this backlog also
increased from 1995 to $99.5 million, its highest level in
five years. These factors reflect the emphasis the Company
has placed on its marketing activities, as well as the
continued growth of the Company's traditional non-
residential construction markets.
Approximately 38% of the earnings backlog and 36% of the
value of construction backlog relates to work to be
performed in 1998 and beyond. Estimated earnings from
construction backlog should not be used as a basis for
predicting future operating results.
Earnings from construction contracts improved 5% in 1996
over 1995 from $68.5 million to $72.2 million. As a
percentage of revenue, earnings from construction contracts
showed a slight increase from 2.51% to 2.54%, but were below
the level of 2.60% achieved in 1994. The 1996 earnings
included the recognition of $5.0 million of additional
losses on a contract in Minneapolis, and losses on
construction contracts of $4.9 million incurred by the
Company's Caribbean operations. The Caribbean operations,
had losses from construction contracts of $2.1 million and
$7.7 million in 1995 and 1994, respectively. As a result of
this performance over the past several years, the Company
does not intend to actively pursue additional construction
contracts in the Caribbean. In 1995, earnings from
construction contracts included the recognition of a $4.9
million loss on the Minneapolis project, and the write-down
of a $3.2 million account receivable regarding a project in
Egypt completed in 1987. The write-down was the result of a
ruling against the Company in February 1996 in its effort to
collect this receivable. Work under construction management
contracts as a percentage of value of construction completed
continued to decline, from 17% in 1995 to 14% in 1996.
Construction management contracts normally involve lower
risk, and therefore carry lower fees, than other types of
contracts. The trend away from less profitable construction
management work has therefore contributed to the improvement
in construction earnings.
The Company's sureties limit the annual amount of new
payment and performance bonds available to the Company.
Each year this limit has increased commensurate with the
Company's growth in revenues. While the limitation did not
restrict the Company's ability to secure new work in 1996,
there could be circumstances where the limitation might
influence the selection of prospective projects.
Construction Operating and General and Administrative
Expenses
Operating expenses directly in support of construction
operations increased 16% to $53 million in 1996 from $45.7
million in 1995. The increase is due primarily to increased
levels of construction activity. The increased level of
activity includes the Company's emphasis on its marketing
activities. As a direct result of these marketing efforts
the Company secured more new contracts in 1996 than it had
in any of the prior eight years. Additionally, an increase
in employee benefit costs (most notably medical premiums)
contributed to expenses being higher than in previous years.
General and administrative expenses, which include
corporate overhead expenses, increased 20% to $13.9 million
from $11.6 million in 1995. This increase is most
attributable to expenses related to management changes, and
the write-off of $1.3 million of goodwill associated with
two subsidiaries acquired in the mid 1980's. The Company
determined, based on market conditions and assumptions
reflected in internal operating plans, that the goodwill was
impaired.
Real Estate
Losses from real estate operations amounted to $383,000 in
1996 compared to losses of $227,000 in 1995. The Company
sold two developed properties and two land parcels in 1996
as it continues to dispose of properties at essentially
their carrying value. In 1995, the Company sold one
developed property with an adjacent land parcel and a number
of condominium units, all at their carrying value. Rental
and other income and the cost of operations declined by 12%
and 14%, respectively, due to the sales of properties in
1996 and 1995.
In 1996, the Company had a net loss from real estate
operations other than property sales of $398,000, compared
with a net loss of $509,000 in 1995. However, because
expenses included $3.6 million of depreciation and
amortization in 1996 and $3.9 million in 1995, positive cash
flow was realized in each of these years, even after payment
of interest on real estate debt.
Until conditions in the real estate market improve to the
point that will permit the Company to readily conduct real
estate transactions, the Company will continue to review the
asset value of the properties for impairment and make
adjustments as necessary. Management believes the timing of
future sales for developed properties may be accelerated as
more stable market conditions begin to prevail. For
undeveloped land parcels, however, a prolonged period of
time will be required to achieve reasonable values.
Interest Expense and Other Income
Interest expense decreased 17% to $7.7 million in 1996 from
$9.3 million in 1995. This decrease was due primarily to
lower debt levels in 1996.
Interest expense associated with real estate debt declined
by 29% due primarily to debt paydowns from the sale of
properties. Interest expense is further discussed in Notes
6 and 15 to the Consolidated Financial Statements.
Other income in 1996 amounted to $1.8 million compared to
$1.5 million in 1995. This increase is primarily due to
increased interest income attributable to higher investment
balances maintained by the Company.
Income Taxes
The Company had a substantial provision for income taxes in
1996 even though it had a loss before income taxes. This
was primarily attributable to state income and other taxes
and the non-deductibility of certain operating costs,
primarily the write-off of goodwill.
The Company has recorded $16 million of deferred tax assets
that resulted principally from net operating loss and tax
credit carryforwards. Management believes that no valuation
allowance is required for these assets because they result
primarily from timing differences, which will be reversed in
the future.
Fourth Quarter 1996 Compared to Third Quarter 1996
Results for the fourth quarter of 1996 amounted to a net
loss of $1.6 million compared to net income of $375,000 for
the third quarter. After taking into account dividends on
preferred shares, the net loss per common share amounted to
$0.39 in the fourth quarter. The third quarter had a net
loss per common share of $0.02. Construction revenue was
$779.7 million for the fourth quarter compared to $756.7
million in the third quarter, and earnings from construction
contracts were $19.9 million and $21.2 million for the same
periods, respectively. The significant change in the
fourth quarter results was due to a $1.4 million write-down
of an account receivable related to a project in the
Caribbean.
Fourth quarter operating and general and administrative
expenses amounted to $19.5 million compared to $18.9 million
in the third quarter. The increase was primarily
attributable to the write-off of goodwill in the fourth
quarter.
Interest expense decreased $162,000 in the fourth quarter
due primarily to the sale of a real estate property with
associated debt. Other income increased $153,000 in the
fourth quarter due primarily to higher investment balances
maintained in the fourth quarter.
Results of Operations 1995 vs. 1994
The Company reported net income of $1.3 million in 1995
compared to $3.7 million in 1994. After taking into
consideration the payment of dividends to preferred
shareholders, the Company reported a loss of $0.11 per
common share in 1995 compared to income of $0.35 per common
share in 1994.
The results reported in 1995 included the recognition of a
significant loss on a major project in Minneapolis, and the
write-down of an account receivable related to a project in
Egypt completed in 1987. The 1994 results were largely due
to a net tax benefit of $3.2 million primarily resulting
from losses incurred in Puerto Rico and the reversal of
excess tax reserves. The excess tax reserves resulted from
the planned liquidation of one of the Company's inactive
foreign subsidiaries.
Construction operating and general and administrative
expenses increased 13% from 1994 to 1995. This increase is
a result of an increase in construction activity and heavier
than usual legal costs. In addition, 1994 included a pretax
restructuring credit of $1.1 million that represented excess
restructuring reserves. The balance of the accrued
liability of $897,000 associated with the restructuring
reserve set up in 1993 was absorbed by the end of 1995,
according to the program previously established.
Real estate operations produced a $227,000 loss in 1995
compared to income of $1.3 million in 1994. Most of the
1994 results were attributable to the sale of lease rights
at the Company's Rickenbacker facility. During 1995 the
Company sold one developed property with an adjacent land
parcel and a number of condominium units, all at their
approximate carrying value. Rental and other income and the
cost of operations declined by 28% and 24%, respectively.
This decline was due to the sales of properties in 1994 and
1995 and the renegotiated lease of certain facilities at the
Rickenbacker Air Industrial Park in 1995.
Interest expense increased 17% to $9.3 million in 1995 from
$7.9 million in 1994. Although the amount of the Company's
1995 average borrowings declined when compared to 1994, the
interest rates incurred averaged over 11% in 1995 compared
to approximately 7% in 1994 due to the coupon rate of the
Senior Notes sold in the fourth quarter of 1994.
Other income in 1995 amounted to $1.5 million compared to a
loss of $2,000 in 1994. In 1994, the Company charged to
other income the absorption on a pretax basis of the
cumulative foreign translation adjustment relating to the
planned liquidation of one of the Company's inactive foreign
subsidiaries. Exclusive of the cumulative foreign
translation adjustment other income would have amounted to
$1.2 million.
Financial Condition
At December 31, 1996, the Company had cash of $122 million,
compared with $88 million at the end of 1995.
Cash provided by operating activities amounted to $33.3
million and is a reflection of the continuous improvement in
cash management procedures at the domestic construction
level. A significant portion of this cash will be disbursed
in the first quarter of 1997 to fund outstanding trade
accounts payable. The cash generated from operations was
sufficient to satisfy all the Company's cash requirements
during the year.
The increase in construction activity, and the continued
shift away from construction management contracts were also
factors contributing to the improved cash flows from
operating activities.
Cash provided by investing activities amounted to $16.6
million and was due primarily to the sale of two developed
real estate properties, two land parcels and the sale of
marketable securities.
Cash used in financing activities amounted to $15.9 million
and is primarily attributable to the excess of debt paydowns
over borrowings. Funds provided by the sale of real estate
properties were used to pay down associated debt. In
addition, the Company paid down the outstanding balances on
certain loans and lines of credit used for general operating
purposes.
Management believes the Company's current cash position, in
addition to cash flows from construction activities, its $41
million revolving credit facility and amounts available from
overnight credit facilities, will be sufficient to support
the Company's short term and foreseeable long term
activities. Debt maturing in 1997 will be paid from funds
generated from operations or will be refinanced before its
actual maturity date.
Inflation
Inflation and changing prices during the current fiscal year
did not significantly affect the major markets in which the
Company conducts its business. In view of the moderate rate
of inflation, its impact on the Company's business has not
been significant.
Earnings Per Share
The Financial Accounting Standards Board has issued a new
pronouncement which would establish new standards for
computing and presenting earnings per share as well as new
standards for disclosing information about an entity's
capital structure.
This statement will eliminate the presentation of primary
earnings per share and would require presentation of basic
earnings per share, in addition to diluted earnings per
share. The principal difference between primary and basic
earnings per share is that common stock equivalents are not
considered in the computation of basic earnings per share.
This statement is effective for years ending after December
15, 1997. The Company will conform with the new standard in
1997 which will require the restatement of prior years'
earnings per share. Management believes that the impact
upon adoption will not be material to the financial
statements.
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page No.
Financial Statements:
Report of Independent Public Accountants 12
Consolidated Balance Sheets - as of December 31, 1996
and 1995 13
Consolidated Statements of Operations - for the years ended
December 31, 1996, 1995 and 1994 14
Consolidated Statements of Stockholders' Equity - for the
years ended December 31, 1996, 1995 and 1994 15
Consolidated Statements of Cash Flows - for the years
ended December 31, 1996, 1995 and 1994 16
Notes to Consolidated Financial Statements 17-30
Responsibilities for Financial Reporting 31
Report of Independent Public Accountants
To the Stockholders and Board of Directors of The Turner
Corporation:
We have audited the accompanying consolidated balance sheets
of The Turner Corporation (a Delaware corporation) and
Subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the
period ended December 31, 1996. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of The Turner Corporation and Subsidiaries as of
December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
New York, New York
February 26, 1997
The Turner Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share amounts)
As of December 31, 1996 1995
Assets
Cash and cash equivalents $121,981 $87,969
Marketable securities - 4,838
Construction receivables: (Note 3)
Due on contracts 306,109 263,797
Retainage 147,640 140,301
Unbilled construction costs and related earnings 142,654 125,218
Real estate (Note 4) 69,760 90,939
Property and equipment, net (Note 5) 23,225 22,161
Prepaid pension cost (Note 10) 63,471 63,444
Other assets 19,756 25,296
Total assets $894,596 $823,963
Liabilities
Construction accounts payable and accrued expenses:
Trade $410,304 $362,867
Retainage 165,049 134,941
Billings in excess of construction costs and related
earnings 84,367 76,562
Notes payable and convertible debenture (Note 6) 81,805 94,790
Deferred income taxes (Note 7) 11,526 12,257
Other liabilities 81,415 81,250
Total liabilities 834,466 762,667
Commitments and contingencies (Note 13)
Stockholders' Equity (Note 12)
Preferred stock, $1 par value (2,000,000 shares authorized):
Series C 8.5% cumulative convertible (9,000 shares issued
and outstanding; $9,000 liquidation preference) 9 9
Series B cumulative convertible (850,000 shares issued;
847,925 and 848,560 outstanding) 848 849
Common stock, $1 par value
(20,000,000 shares authorized; 5,290,861 and 5,270,040
issued) 5,291 5,270
Paid in capital 38,388 38,305
Net unrealized loss on marketable securities - (58)
Retained earnings 22,580 26,102
67,116 70,477
Less: Loan to Employee Stock Ownership Plan (Note 11 )(6,595) (8,673)
Treasury stock, at cost (45,549 and 51,090 common
shares) (391) (508)
Total stockholders' equity 60,130 61,296
Total liabilities and stockholders' equity $894,596 $823,963
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
The Turner Corporation and Subsidiaries
Consolidated Statements Of Operations
(in thousands, except share amounts)
For the years ended December 31, 1996 1995 1994
Value of construction completed $3,317,774 $3,281,495 $2,670,433
(see below)
Revenue from construction contracts $2,838,052 $2,727,001 $2,174,836
Cost of construction contracts 2,765,901 2,658,462 2,118,361
Earnings from construction contracts 72,151 68,539 56,475
Construction operating expenses 52,962 45,699 41,296
General and administrative expenses 13,885 11,555 9,221
Restructuring credits (Note 2) - - (1,145)
Income from construction operations 5,304 11,285 7,103
Income (loss) from real estate operations (383) (227) 1,312
(see below)
Interest expense (Note 15) (7,735) (9,267) (7,923)
Other income (loss), net (Note 14) 1,782 1,470 (2)
Income (loss) before income taxes (1,032) 3,261 490
Income tax provision (benefit): (Note 7)
Current 658 1,025 (2,329)
Deferred 5 962 (831)
Total income tax provision (benefit) 663 1,987 (3,160)
Net income (loss) $ (1,695) $ 1,274 $ 3,650
Net income (loss) per common share:
Primary $ (0.66) $ (0.11) $ 0.35
Fully diluted (a) (a) $ 0.30
Weighted average common and common equivalent shares outstanding:
Primary 5,323,727 5,270,453 5,186,879
Fully diluted 6,174,068 6,119,013 6,035,835
Value of construction completed consists of the following:
Revenue from construction contracts $2,838,052 $2,727,001 $2,174,836
Construction costs incurred by owners
in connection with work under
construction management and similar
contracts 479,722 554,494 495,597
Value of construction completed $3,317,774 $3,281,495 $2,670,433
Real estate operations consist of
the following:
Real estate sales $ 19,454 $ 9,007 $ 9,279
Cost of sales (19,439) (8,725) (7,600)
Rental and other income 7,834 8,886 12,416
Cost of operations (4,667) (5,455) (7,187)
Depreciation and amortization expense (3,565) (3,940) (5,596)
Income (loss) from real estate operations$ (383) $ (227) $ 1,312
(a) Antidilutive
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
The Turner Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity
(in thousands, except share amounts)
For the years ended December 31,
1996 1995 1994
Shares Amount Shares Amount Shares Amount
Convertible preferred
stock, Series C
Balance at beginning and
end of year 9,000 $ 9 9,000 $ 9 9,000 $ 9
Convertible preferred
stock, Series B
Balance at beginning
of year 848,560 849 848,956 849 849,011 849
Preferred stock retired (635) (1) (396) - (55) -
Balance at end of year 847,925 848 848,560 849 848,956 849
Common stock
Balance at beginning
of year 5,270,040 5,270 5,199,941 5,200 5,134,778 5,135
Common stock issued 20,821 21 70,099 70 65,163 65
Balance at end of year 5,290,861 5,291 5,270,040 5,270 5,199,941 5,200
Paid in capital
Balance at beginning
of year 38,305 37,778 37,280
Excess of proceeds over
par value of common
stock issued 151 527 498
Cost of treasury stock
issued in excess of
proceeds (68) - -
Balance at end of year 38,388 38,305 37,778
Net unrealized loss on
marketable securities
Balance at beginning of year (58) (276) -
Change in unrealized loss
for the year 58 218 (276)
Balance at end of year - (58) (276)
Cumulative foreign translation
adjustment
Balance at beginning of year - - (787)
Change in cumulative translation
adjustment during the year - - 787
Balance at end of year - - -
Retained earnings
Balance at beginning of year 26,102 26,656 24,834
Net income (loss) for the year (1,695) 1,274 3,650
Cash dividends on Series C
preferred stock,
$85.00 per share (765) (765) (765)
Cash dividends on Series B
preferred stock,
$2.16 per share (1,832) (1,833) (1,833)
Tax benefits on Series B
preferred stock dividends 770 770 770
Balance at end of year 22,580 26,102 26,656
Loan to Employee Stock Ownership
Plan (ESOP)
Balance at beginning of year (8,673) (10,468) (12,105)
Repayment from loan to ESOP 2,078 1,795 1,637
Balance at end of year (6,595) (8,673) (10,468)
Treasury stock
Balance at beginning of year 51,090 (508) 53,489 (532) 53,489 (532)
Purchase of treasury stock - - 3,000 (26) - -
Treasury stock issued (5,541) 117 (5,399) 50 - -
Balance at end of year 45,549 (391) 51,090 (508) 53,489 (532)
Total stockholders' equity 60,130 $ 61,296 $ 59,216
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
The Turner Corporation and Subsidiaries
Consolidated Statements Of Cash Flows
(in thousands)
For the years ended December 31, 1996 1995 1994
Cash flows from operating activities:
Net income (loss) $ (1,695) $ 1,274 $ 3,650
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 12,685 11,526 9,366
Net periodic pension credit (1,227) (685) (1,052)
Provision (benefit) for deferred
income taxes 5 962 (831)
Gain on real estate sales (15) (282) (1,679)
Write-off of goodwill 1,290 - -
Restructuring credits - - (1,145)
Cumulative foreign translation charge - - 1,193
Changes in operating assets and liabilities:
Increase in construction receivables (67,087) (92,086) (35,071)
Increase in construction accounts
payable and accrued expenses 85,350 102,497 30,019
Decrease in restructuring reserve - (897) (6,458)
Decrease in other assets 3,848 6,729 2,157
Increase in other liabilities 146 11,094 6,794
Net cash provided by operating
activities 33,300 40,132 6,943
Cash flows from investing activities:
Purchases of marketable securities (257) (267) (255)
Proceeds from sale of marketable securities 5,025 - 8,644
Distributions from joint ventures 1,215 5,628 5,000
Purchases of property and equipment (7,371) (4,556) (3,569)
Proceeds from sale of property and equipment 290 469 1,916
Proceeds from sale of real estate, net 18,509 8,581 7,049
Increase in real estate (2,143) (2,064) (3,423)
Repayments on notes receivable 1,295 3,807 2,888
Net cash provided by investing activities 16,563 11,598 18,250
Cash flows from financing activities:
Common stock issued 172 597 563
Cash dividends to preferred stockholders (2,597) (2,598) (2,598)
Repayments from loan to ESOP 2,078 1,795 1,637
Principal payments under capital lease
obligations (3,016) (2,689) -
Proceeds from borrowings 5,507 24,001 80,497
Payments on borrowings (18,044) (41,141) (75,983)
Proceeds from issuance of treasury stock 49 50 -
Purchase of treasury stock - (26) -
Net cash provided by (used in) financing
activities (15,851) (20,011) 4,116
Net increase in cash and cash equivalents 34,012 31,719 29,309
Cash and cash equivalents at beginning of
year 87,969 56,250 26,941
Cash and cash equivalents at end of year $ 121,981 $ 87,969 $ 56,250
Noncash financing activities:
Capital lease obligations incurred by
the Company $ 2,568 $ 7,740 $ -
Noncash investing activities:
Change in unrealized loss on
marketable securities 58 218 (276)
Notes provided upon the sale of real
estate - - 1,849
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
The Turner Corporation and Subsidiaries
Notes To Consolidated Financial Statements
(in thousands, except share amounts)
The Turner Corporation and Subsidiaries (the Company) is a
multinational construction contractor, which also has
limited real estate operations in the United States. The
Company is predominantly engaged in general building
construction and construction management throughout the
United States. The construction operations primarily relate
to the construction of commercial, multifamily residential,
manufacturing, research and development, healthcare,
entertainment, education, justice and other building
structures. The Company also performs interior construction
work and construction consulting services. Specialty trade
contractors are used extensively by the Company as
subcontractors in the performance of its construction
contracts.
1. Summary of Significant Accounting Policies
Changes in Presentation: To be more consistent with
industry practice, in 1996, the Company changed the
presentation of its consolidated balance sheet to a format
that aligns the components of construction receivables with
the corresponding components of construction accounts
payable and accrued expenses. Prior years presented have
been changed to conform to the current year presentation.
Principles of Consolidation: The consolidated financial
statements include the accounts of the Company and its
proportionate interest in the accounts of construction
affiliates and construction joint ventures. The Company
also has investments 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.
Use of Estimates: The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of
revenues and expenses during the reporting period.
Management believes that the estimates utilized in preparing
the Company's financial statements are reasonable and
prudent, however, actual results could differ from those
estimates.
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 cost of the work completed bears to the
estimated total cost 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. Due to uncertainties inherent in the estimation
process, it is reasonably possible that such estimates will
be revised over the next year. 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 1996,
1995 and 1994, 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 are carried at cost less
accumulated depreciation, write-downs and reserves.
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, 3-10 years. Leasehold improvements (the Company
as lessee) to property used in Company operations are
amortized on a straight-line basis over the lease terms.
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: The Company considers all investments purchased with
maturities of 90 days or less to be cash equivalents.
The Company's other liabilities include approximately
$48,800 and $50,900 net payable to banks for checks drawn
but not cleared as of December 31, 1996 and 1995,
respectively.
Marketable Securities: Marketable securities which consist
primarily of equity and bond mutual funds are classified as
available-for-sale and are reported at fair value.
Unrealized gains and losses are reported as a separate
component of stockholders' equity.
Long-Lived Assets: Effective January 1, 1996, the Company
adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of". This statement
requires that long-lived assets to be held and used be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset
may not be recoverable. If such review indicates that the
asset is impaired, given that the carrying amount of an
asset exceeds the sum of its expected future cash flows, on
an undiscounted basis, the asset's carrying amount should be
written down to fair value. In addition, SFAS No. 121
requires that long-lived assets to be disposed of be
reported at the lower of carrying amount or fair value less
cost to sell. The effect of the adoption of this standard
was not material to the financial statements.
Income Taxes: Deferred income tax assets or liabilities are
computed based on the difference between the financial
reporting and income tax bases of assets and liabilities
using the enacted marginal tax rate. Deferred income tax
expenses or benefits are based on the changes in the asset
or liability from period to period.
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.
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.
Stock-Based Compensation: The Company accounts for its
stock-based employee compensation plans using the intrinsic
value based method, under which compensation cost is
measured as the excess of the stock's market price at the
grant date over the amount an employee must pay to acquire
the stock.
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 involved a reduction in the number of staff,
plus the consolidation of offices and facilities and the
reorganization of support functions. This program was
implemented in 1994 and was substantially completed by the
end of the year. The balance of the unused reserve of
$1,145 was credited to income in the fourth quarter of 1994.
During 1995, the final costs were incurred and the reserve
was closed out with no material impact to the results of
operations.
3. Construction Receivables
Construction receivables include $147,640 of retainage at
December 31, 1996, of which approximately 87% will be
collected by December 31, 1997. Construction receivables
include estimated net claims. Claims made by the Company
involve negotiations and in some cases litigation. The
Company believes that it has established legal bases for
pursuing recovery of recorded claims and it is management's
intention to pursue these claims and litigate, if necessary,
until a decision or settlement is reached. Claims involve
the use of estimates and it is reasonably possible that
revisions to the estimated recoverable amounts of recorded
claims could be made within the next year. 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 $9,400 and $8,200 at December 31, 1996
and 1995, respectively.
4. Real Estate
The Company owns a portfolio of real estate, either directly
or through joint venture interests, that includes commercial
office properties, a mixed-use warehouse/service property,
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, 1996 and 1995 was
$28,195 and $30,732, respectively.
Given the current real estate market, the Company presently
intends to hold and use its real estate properties. The
Company has determined that the real estate properties will
be available for sale as conditions in the real estate
market continue to improve to the point that such properties
can be sold for prices which the Company believes reflect
the reasonable value of the properties. Management believes
the timing of future sales of developed properties may be
accelerated as more stable market conditions begin to
prevail. However, 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 prolonged period of time in order to
achieve reasonable prices upon disposition. The carrying
amounts of the Company's interests in these developed
properties were $41,129 and $61,115 and in the undeveloped
land parcels were $28,631 and $29,824 at December 31, 1996
and 1995, respectively.
The Company actively monitors market conditions and makes
assumptions about future events with respect to the
property, market conditions and anticipated investor rates
of return, to assess whether the carrying amount of the
property may not be recoverable. On a periodic basis,
generally not exceeding two to three years, the Company has
independent appraisals performed for significant real estate
properties, for the purpose of assisting management in
determining a property's fair value and the appropriate
timing of disposition. Judgments 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. Changes in
assumptions and the Company's evaluation of the market could
cause these estimates to change within the next year.
5. Property and Equipment
Property and equipment as of December 31, 1996 and 1995 consisted of
the following:
1996 1995
Buildings and improvements $14,804 $13,725
Office machines and furniture 25,856 22,733
Equipment 22,173 21,094
Total 62,833 57,552
Less:accumulated depreciation
and amortization (39,608) (35,391)
Net $23,225 $22,161
6. Notes Payable and Convertible Debenture
Notes payable and convertible debenture as
of December 31, 1996 and 1995 consisted
of the following:
1996 1995
Senior Notes $39,500 $39,500
Building mortgages 10,336 20,057
Revenue bonds 12,800 13,400
Employee Stock Ownership Plan 7,300 9,300
Convertible debenture 6,000 6,000
Other 5,869 6,533
Total $81,805 $94,790
Senior Notes: In December 1994, the Company sold $39,500 of
Senior Notes in a private placement to institutional
investors, including the Company's pension plan (Note 10).
The Notes bear interest at a fixed rate of 11.74% and mature
in even principal amounts on the third through seventh
anniversary dates of the Notes. The Note Purchase Agreement
contains various financial covenants, the most restrictive
of which is a fixed-charge coverage requirement.
Building Mortgages: The variable rate mortgage bears
interest at a rate of prime plus 0.5% and matures in varying
installments through 2000. In connection with another
variable rate building mortgage bearing interest at LIBOR
plus 2.25%, in 1994, the Company entered into an interest
rate swap agreement with a bank for a notional amount equal
to the underlying mortgage. The swap agreement had provided
a fixed interest rate of 6.96%. The underlying property and
interest rate swap were sold in 1996. The weighted average
interest rate for 1996 and 1995 on the variable rate
mortgages was approximately 8.80% and 9%, respectively.
Fixed rate mortgages of $4,785 bear interest at 7% or 7.375%
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 1996 and 1995 was approximately 3.53% and
3.96%, respectively. The bonds are supported by a letter of
credit for which the Company pays 1.25% per annum.
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 1996 and 1995 was approximately 5.99% and 6.08%,
respectively. The loan agreement contains various financial
covenants, including the maintenance of a minimum amount of
stockholders' equity and debt coverage ratio. At December
31, 1996, the minimum stockholders' equity required was
$52,500 and increases by an amount equal to 50% of the
consolidated net income of the Company for each subsequent
fiscal year.
Revolving Credit Facility: In June 1996, the Company
amended its unsecured revolving credit facility to provide
for borrowings up to $41,250, the proceeds of which are used
for general corporate purposes. Up to $10 million of the
facility may be used for letters of credit. The facility
matures in June 1999, with the option at the end of each of
the first two years of the agreement to extend an additional
year up to June 2001. No borrowings were outstanding at
December 31, 1996 and 1995. The Company did not use the
facility at any time in 1996. The current facility permits
the Company to choose between various interest rate options.
The weighted average interest rate for 1995 was
approximately 8.44%. The Company pays a commitment fee at
an annual rate of 0.5% on the unused portion of the
facility. The facility contains various financial
covenants, the most restrictive of which is a fixed-charge
coverage requirement.
Convertible Debenture: The Company has 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 8.5% 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).
Other: The Company maintains overnight credit facilities
with various banks at varying rates. The Company had
available $10,000, none of which was drawn down at December
31, 1996 and December 31, 1995. The facilities are subject
to periodic renewal from the banks and certain facilities
carry annual commitment fees ranging from 0.375% to 0.5%.
During 1996 and 1995, the weighted average interest rates
were 8.80% and 8.87%, respectively.
The Company leases certain computer equipment and vehicles
under agreements which are classified as capital leases and
bear a weighted average implicit interest rate of 6.69%.
The leases have original terms ranging from three to five
years and payments under the leases are due in varying
installments through 2000. At December 31, 1996 and 1995,
obligations under capital lease arrangements were $4,603 and
$5,051, respectively.
Aggregate maturities of notes due are as follows:
1997 1998 1999 2000 2001 Thereafter
$19,212 $12,922 $13,023 $14,837 $13,011 $8,800
The Company was in compliance with all financial covenants
as of December 31, 1996 under its various credit facilities.
Interest cost approximates amounts paid for the years ended
December 31, 1996, 1995 and 1994.
At December 31, 1996, the carrying value of the real estate
that was pledged as collateral for notes payable was
$41,079.
7. Income Taxes
The components of the income tax provision (benefit) are as follows:
1996 1995 1994
Current:
Federal $ 139 $ 131 $ (2,924)
Foreign - 300 59
State & Local 519 594 536
658 1,025 (2,329)
Deferred:
Federal 5 962 1,659
Foreign - - (2,482)
State & Local - - (8)
5 962 (831)
Total $ 663 $ 1,987 $ (3,160)
The current Federal provision for the year ended December
31, 1996 reflects the benefit of the utilization of net
operating loss carryforwards of approximately $3,000.
Deferred income taxes result from temporary differences
between the financial reporting carrying amounts and the tax
bases of assets and liabilities. The source of these
differences and tax effect of each at December 31, 1996 and
1995 are as follows:
Deferred Income Tax
Liability (Asset)
1996 1995
Construction earnings $ - $ 583
Employee benefit plans 23,425 23,654
Depreciation 4,141 4,050
Real estate properties (2,362) (1,787)
Net operating loss benefits (8,971) (9,778)
Alternative minimum tax credit
carryforward (2,451) (2,451)
Jobs credit carryforward (75) (75)
Deferred compensation plan (470) (511)
Contributions carryover (1,525) (1,278)
Other (186) (150)
$ 11,526 $ 12,257
The Company has recorded $16,040 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 the future
reversals of existing taxable temporary differences
primarily related to the Company's employee benefit plans.
A comparison of the Federal statutory rate with the company's
effective tax rate is as follows:
1996 1995 1994
Statutory Federal income tax rate (benefit) (34.0)% 34.0% 34.0%
State and local taxes, net of Federal benefit 33.2% 12.0% 86.6%
Effective foreign tax rate - 6.1% (489.3)%
Reserve reversals - - (355.2)%
Goodwill amortization and write-off 51.9% 1.8% 20.8%
Other 13.1% 7.1% 58.2%
Effective tax rate (benefit) 64.2% 61.0% (644.9)%
Income taxes refunded were $498, $507 and $455 for 1996,
1995, and 1994, respectively.
For Federal income tax purposes, the Company has available
at December 31, 1996 a net operating loss carryforward of
$17,308 which is available to offset future taxable income
and expires from 2006 through 2009, 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 $471 at December 31,
1996.
8. Incentive Compensation Plans
The Company sponsors the Executive Incentive Compensation
Plan (EICP) which 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. The award
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 to
expense in 1996, 1995 and 1994 aggregated $23, $33 and $849,
respectively. No awards were made under the EICP in 1996.
The staff Incentive Compensation Plan (ICP), which
authorized payment of awards in the form of cash and common
stock of the Company to certain salaried employees who were
not participants in the Company's EICP, was liquidated
during the first quarter of 1995 with the issuance of 21,272
shares of the Company's common stock to the current
participants of the program. Each share was valued at
$7.919, which was the average market price of the Company's
common stock over the last 20 business days of December
1994. The total gross value of the liquidation was $282.
The amounts charged to expense in 1994 aggregated $134.
9. Stock-Based Compensation Plans
The Company has an incentive stock option plan adopted in
1992 which provides 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, incentive stock option plans
adopted in 1981 and 1986 have been terminated and no new
options can be granted under these plans, although
unexercised options remain outstanding.
The Company may grant options for up to 400,000 shares of
common stock under each plan. 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.
The Company accounts for these plans using the intrinsic
value based method, under which no compensation cost was
recognized at the date the option was granted. The Company
has decided not to account for stock option grants using the
fair value based method pursuant to SFAS No. 123 "Accounting
for Stock-Based Compensation", under which compensation cost
would be measured at the grant date based on the fair value
of the options awarded and recognized over the vesting
period. If the fair value based method had been used, the
Company would have recognized additional compensation costs,
net of tax, of $123 and $113 in 1996 and 1995, respectively.
As a result, both primary and fully diluted earnings per
common share would have been reduced by $0.02 in 1996 and
1995. Since the fair value based method has not been
applied to options granted prior to January 1, 1995, the
resulting proforma compensation cost may not be
representative of that to be expected in future years.
The fair value of each option granted was estimated on the
date of grant using the Black-Scholes option pricing model
with the following weighted-average assumptions used for
grants in 1996 and 1995, respectively: dividend yield of
2.5% for both years; expected volatility of 30% for both
years; risk-free interest rates of 6.06% and 7.90% for
incentive stock options granted to officers and designated
employees and 6.50% and 5.96% for options granted to non-
employee directors; expected lives of five years for both
the 1992 Plan options and the 1986 Plan options.
A summary of the status of the Company's incentive stock
option plans as of December 31, 1996 and 1995, and changes
during the years then ended is presented in the table below:
1996 1995
Wtd Avg Wtd Avg
Exercise Exercise
Amount Price Amount Price
Outstanding at January 1 751,598 $ 12.46 744,428 $ 13.26
Granted 93,250 9.03 69,300 8.18
Exercised (14,900) 8.00 (9,000) 8.06
Canceled (119,880) 15.32 (53,130) 18.82
Outstanding at December 31 710,068 11.62 751,598 12.46
Exercisable at December 31 632,118 11.97 745,453 12.48
Weighted average fair value of
options granted $ 2.63 $ 2.57
The following table summarizes information about options outstanding
at December 31, 1996:
Options Outstanding Options Exercisable
Wtd Avg
Remaining Range of Wtd Avg Wtd Avg
Amount Contractual Exercise Exercise Amount Exercise
Outstanding Life (years) Price Price Exercisable Price
193,600 7.05$ 7.75-8.00$ 7.88 193,600 $ 7.88
186,050 7.50 8.44-11.31 8.86 108,100 8.93
179,818 4.01 12.50-14.5714.42 179,818 14.42
150,600 1.96 15.13-24.7516.48 150,600 16.48
710,068 5.32 7.75-24.7511.62 632,118 11.97
10. Employee Benefit Plans
Defined Benefit Pension Plan: The Company has a
noncontributory defined benefit pension plan which covers
salaried employees who meet minimum age and length of
service requirements.
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 under the
benefit formula. Benefits earned prior to the curtailment
were based on members' years of service and averaged final
salary.
Effective January 1, 1994, the Company amended the defined
benefit pension plan to add a cash balance plan feature, to
provide benefits to plan participants that were previously
provided under the defined contribution retirement plan.
Past benefits earned by plan participants prior to
curtailment are not changed and benefits earned by
participants for future service are provided under a
different benefit formula. New participants earn benefits
only under the revised formula. The new benefit formula
provides for credits into notional individual account
balances based upon salary and years of service. Management
anticipates that the cash balance plan will significantly
reduce the net periodic pension credit recognized in future
years, and result in a reduction of the prepaid pension
asset.
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.
The Company amortizes unrecognized prior service costs
related to the curtailed benefits on a straight-line basis
over a period not exceeding the average life expectancy of
retirees.
The Company amortizes the full amount of the unrecognized
pension actuarial gains and losses for the year on a
straight-line basis over the average remaining service
period of employees.
Plan assets consist primarily of pooled equity, debt and
short-term investment funds, a pooled real estate equity
fund, 775,000 shares of the Company's common stock and
$9,500 of the Company's Senior Notes (Note 6).
The table below, which reflects the updated actuarial
measurement at June 30, 1996, sets forth the funded status
of the defined benefit pension plan and the amounts
recognized in the Company's financial statements at December
31, 1996 and 1995 and for the years then ended:
1996 1995
Actuarial present value of benefit obligations:
Vested benefits $ 129,922 $ 115,219
Accumulated benefit obligation 133,911 119,256
Projected benefit obligation 133,911 119,256
Plan assets at fair value 207,886 187,382
Plan assets in excess of projected benefit obligation 73,975 68,126
Unrecognized prior service cost 7,277 8,054
Unrecognized net gain (15,139) (9,213)
Remaining unrecognized net asset being recognized
over 15 years (2,642) (3,523)
Prepaid pension cost $ 63,471 $ 63,444
Components of net periodic pension credit:
Service cost $ 8,432 $ 6,444
Interest cost on projected benefit obligation 9,301 8,532
Actual return on plan assets (29,668) (42,154)
Net amortization and deferral 10,708 26,493
Net periodic pension credit $ (1,227) $ (685)
The assumptions used in measuring the actuarial value of
projected benefit obligations and determining the net
periodic pension credit were:
1996 1995
Weighted average discount rate 7.50% 7.50%
Rate of compensation increase - cash balance feature 4.25% 4.25%
Weighted average expected long-term
rate of return on plan assets 9.64% 9.80%
Defined Contribution Pension Plans: From April 1, 1991 to
December 31, 1993, the Company sponsored a defined
contribution retirement plan covering salaried employees who
met minimum age and length of service requirements.
Contributions were based on salaries and length of service.
The Company also sponsors a Section 401(k) tax deferred
savings plan which covers salaried employees who meet
minimum age and length of service requirements. Matching
contributions are based on employee contributions and are
limited to one-half of the first 3% of the employee's
compensation. Effective January 1, 1994, the defined
contribution retirement plan was merged into the Section
401(k) tax deferred savings plan. No additional
contributions will be made to the defined contribution
retirement plan. Benefits earned under the Section 401(k)
tax deferred savings plan remain unchanged. The aggregate
amount charged to expense for these plans was $1,742, $1,578
and $1,653 in 1996, 1995 and 1994, respectively.
Postretirement Benefit Plan: 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.
The following table sets forth the funded status of the plan
and the amounts recognized in the Company's financial
statements at December 31, 1996 and 1995 and for the years
then ended:
1996 1995
Actuarial present value of accumulated
postretirement benefit obligation:
Retirees $13,854 $15,328
Fully eligible active plan participants 2,023 1,882
Other active plan participants 5,724 4,954
Accumulated unfunded postretirement benefit
obligation 21,601 22,164
Remaining unrecognized transition obligation
being recognized over 20 years (15,847) (16,838)
Unrecognized net gain (loss) 1,363 (17)
Accrued postretirement benefit obligation $ 7,117 $ 5,309
Net periodic postretirement benefit cost includes
the following components:
Service cost $ 371 $ 293
Interest cost 1,546 1,610
Amortization of unrecognized transition
obligation 991 991
Amortization of unrecognized gain - (21)
Net periodic postretirement benefit cost $ 2,908 $ 2,873
Impact of one percent increase in healthcare trend rate:
Aggregate impact on annual service cost and
interest cost $ 111 $ 140
Increase in accumulated postretirement
benefit obligation $ 1,336 $ 1,371
The accumulated postretirement benefit obligation was
computed using an assumed weighted average discount rate of
7.5% in 1996 and 1995. The healthcare cost trend rate was
assumed to be 10% in 1996 decreasing by 1% a year to 6% in
2000 and 5.5% in 2001 and beyond.
Employee benefit plan obligations are determined using
actuarial estimates. These estimates are based on
historical information along with certain assumptions about
future events. Changes in those assumptions as well as
changes in actual experience could cause these estimates to
change within the next year.
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 as the loan is repaid.
The allocated shares vest after five years of service. At
December 31, 1996, the number of allocated and unallocated
shares were 606,529 and 241,396, respectively.
The Series B stock is callable, in whole or in part, at the
option of the Company, 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 was 112% in 1995 and
decreases to 100% by 1999. 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 February 25,
1997, was $19.00 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 the same 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
allocated and unallocated 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, 1996, 1995 and 1994 were:
1996 1995 1994
Compensation expense $632 $589 $412
Interest income $464 $622 $546
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 8.5% convertible
preferred stock and 6,000 shares of Series D 8.5%
convertible preferred stock for a total of $15,000. On July
22, 1992, the Series D stock was exchanged for an 8.5%
convertible debenture due in 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 8.5% 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 as-converted basis) more than 10% 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 providing the
Company and Steiner with certain rights, obligations and
options which terminate 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% 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 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% 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 would
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,
1996, 1995 and 1994 amounted to $9,392, $9,438 and $9,254,
respectively. Future minimum rental payments are as
follows:
1997 1998 1999 2000 2001 Thereafter
$9,160 $8,571 $7,560 $6,886 $5,323 $13,867
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 $247,
$285, and $373 for 1996, 1995 and 1994, respectively.
Tenant leases on commercial office and mixed-use properties
have original 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, 1996 are as follows:
1997 1998 1999 2000 2001 Thereafter
$4,517 $3,474 $3,134 $2,917 $2,493 $14,842
The Company has jointly and severally guaranteed completion
of a $108,400 construction contract which was entered into
by Turner Steiner International SA, in which the Company has
a 50% interest. The Company has also guaranteed $2,750 of a
$5,000 letter of credit facility and $275 of a $500 line of
credit facility of Turner Steiner International SA.
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 through
December 31, 1997.
The Company has also guaranteed up to $1,700 of a credit
facility of a supplier of materials to certain of its
contracts.
The Company owns an air cargo distribution facility and is
the ground lessee on the underlying land located at an air
industrial park. The Company has leased the facility and
land to a tenant for a term of 15 years expiring in 2010.
Rental income under this lease represented 21%, 23% and 37%
of total rental income for 1996, 1995 and 1994,
respectively.
The Company is a defendant in various litigation incident
to its business and in some instances the amounts sought
include substantial claims and counterclaims. Although the
outcome of litigation cannot be predicted with certainty, in
the opinion of management based on the facts known at this
time, the resolution of such litigation is not anticipated
to have a material adverse effect on the financial position
or results of operations of the Company. As these matters
continue to proceed through the litigation process to
ultimate resolution, it is reasonably possible that the
Company's estimation of the effect of such matters could
change within the next year.
14. Other Income, net
The major components of Other Income, net are as follows:
1996 1995 1994
Interest and dividend income $ 2,140 $ 1,260 $ 974
Investment loss (155) - (79)
Cumulative foreign translation reversal - - (1,193)
Other (203) 210 296
$ 1,782 $ 1,470 $ (2)
15. Business Segments
The Consolidated Statements of Operations provide segment
information regarding revenues and operating expenses.
Certain other financial data of the Company's business
segments (construction and real estate) are presented below:
1996 1995 1994
Identifiable assets at year end
Construction $ 678,422 $ 609,718 $ 512,738
Real estate 72,606 95,221 116,007
General corporate 143,568 119,024 86,584
$ 894,596 $ 823,963 $ 715,329
Depreciation and amortization
expense:
Construction $ 8,525 $ 7,228 $ 3,144
Real estate 3,734 3,940 5,596
General corporate 426 358 626
$ 12,685 $ 11,526 $ 9,366
Interest expense:
Construction $ 393 $ 580 $ 82
Real estate 2,147 3,011 3,586
General corporate 5,195 5,676 4,255
$ 7,735 $ 9,267 $ 7,923
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. Marketable securities are reported at fair
value.
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 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, risk-adjusted incremental
borrowing rate for similar liabilities.
At December 31, 1996 and 1995, the fair value of notes
payable was $76,954 and $90,383, respectively.
Convertible Debenture: The fair value of the convertible
debenture is estimated based on the greater of the Company's
year-end, risk-adjusted 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, 1996 and 1995, the fair value was $6,662 and
$6,193, respectively.
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, 1996
and 1995, the fair value was $7,059 and $8,914,
respectively.
Interest Rate Swap Agreements: The Company uses unleveraged
interest rate swaps to provide fixed interest rates for
selected periods of time on certain outstanding loans (Note
6). Cash settlements on the swaps occur monthly and are
recorded as an adjustment to interest expense. The fair
value of the interest rate swap agreements 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 asset was $65 at December 31, 1995. The Company had no
interest rate swaps outstanding at December 31, 1996.
17. Quarterly Financial Information (Unaudited)
1996 Quarter Ended March 31 June 30 September 30 December 31
Value of construction completed $ 733,375 $ 802,978 $ 912,133 $ 869,288
Revenue from construction
contracts 593,551 708,141 756,678 779,682
Earnings from construction
contracts 17,812 13,199 21,201 19,939
Income (loss) before income
taxes 1,974 (2,772) 676 (910)
Net income (loss) 1,086 (1,525) 375 (1,631)
Primary earnings (loss) per
common share (a) 0.12 (0.37) (0.02) (0.39)
Fully diluted earnings per
common share (a) 0.10 (b) (b) (b)
1995 Quarter Ended March 31 June 30 September 30 December 31
Value of construction completed $ 708,828 $ 819,842 $ 889,978 $ 862,847
Revenue from construction
contracts 609,495 685,151 740,664 691,691
Earnings from construction
contracts 16,398 18,174 19,019 14,948
Income (loss) before income
taxes 1,726 2,196 2,459 (3,120)
Net income (loss) 1,006 1,151 1,161 (2,044)
Primary earnings (loss) per
common share (a) 0.11 0.13 0.13 (0.47)
Fully diluted earnings per
common share (a) 0.09 0.11 0.11 (b)
(a) The quarterly per share amounts are computed independently of annual
amounts.
(b) Antidilutive
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 error or fraud. The financial statements include
amounts that are based on management's best estimates and
judgments. 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 LLP (see
Report of Independent Public Accountants) for each of the
three years in the period ended December 31, 1996.
Management has made available to Arthur Andersen LLP 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 LLP 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. Management has operational
and financial personnel perform procedures to provide
assurance of compliance with controls and policies. In
addition, based upon management's assessment of risk,
operational, financial and special reviews are performed by
contracted auditors to periodically test the effectiveness
of selected controls. 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
contracted auditors and the independent public accountants
on a periodic basis to assure itself that each is carrying
out its responsibilities.
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, 1997, is
incorporated herein by reference.
Executive Officers of the Registrant
Served as an Officer
in the Capacity
Name Age Office Indicated Since
Ellis T. Gravette, Jr. 71 Chairman of the Board, Chairman since 08/09/96.
Chief Executive Officer
and Director
Harold J. Parmelee 59 President and Director President since 5/11/90.
David J. Smith 56 Senior Vice President
and Chief Administrative
Officer Chief Administrative
Officer since 8/22/96.
Donald G. Sleeman 42 Senior Vice President, Senior Vice President
Chief Financial Officer and Chief Financial
and Chief Accounting Officer since 8/22/96;
Officer Chief Accounting Officer
since 3/13/97.
Ralph W. Johnson 60 Senior Vice President 6/11/93.
Sara J. Gozo 33 Vice President, Vice President and
Secretary and General Secretary since 10/24/94;
Counsel General Counsel since
12/20/96.
Anthony C. Breu 49 Vice President and Vice President since
Assistant to the 11/11/94; Assistant to
Chairman the Chairman since
12/20/96.
Richard H. Esau, Jr. 62 Vice President 6/11/93.
Robert T. Meyer 54 Vice President 3/13/97.
Francis C. O'Connor 54 Vice President 11/1/92.
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.
Gravette, Mr. Smith and Ms. Gozo. From 1986-1996 Mr.
Gravette served as President, Ardath Associates, Inc. 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. From 1989 to
1993, Ms. Gozo practiced construction law at Shea & Gould,
and until October 1994, at Thelen, Marrin, Johnson &
Bridges.
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, 1997, 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, 1997 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, 1997 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 12
- Consolidated Balance Sheets - as of December 31, 1996
and 1995 13
- Consolidated Statements of Operations - for the years
ended December 31, 1996, 1995 and 1994 14
- Consolidated Statements of Stockholders' Equity - for
the years ended December 31, 1996, 1995 and 1994 15
- Consolidated Statements of Cash Flows - for the years ended
December 31, 1996, 1995 and 1994 16
- Notes to Consolidated Financial Statements 17-30
- Responsibilities for Financial Reporting 31
2. Consent of Independent Public Accountants 39
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.
3. 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 by reference to
3(a)(iii)Amendment dated 9/12/88. Exhibit 3(a) to the Company's 1989
3(a)(iv)Amendment dated 7/10/89. Annual Report on Form 10-K.
Exhibit No. Description
3(b)By-Laws, as amended Incorporated herein by reference
to 6/11/93. to Exhibit 3(b) to the Company's
1993 Annual Report on Form 10-K.
3(c)(i)Certificate of Designations Incorporated herein by reference to
relating to Series C 8-1/2% Exhibit 2 to the Company's Form 8-K
Convertible Preference Stock. 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.
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 Incorporated herein by reference
Stock Option Plan, to Exhibit 10(c)(v) to the Company's
as amended. 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 Incorporated herein by reference to the
Stock Option Plan. Registration Statement on Form S-8.
Option Plan.
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.
Exhibit No. Description
10(c)(vi)The Company's Incorporated herein by reference to
Retirement Benefit Exhibit 10(c)(vi) to the Company's
amended and restated 1992 Annual Report on Form 10-K.
as of 1/22/92.
10(c)(vii)The Company's Defined Incorporated herein by reference
Contribution Retirement to Exhibit 10(c)(vii) to the Company's
Equalization Plan. 1992 Annual Report on Form 10-K.
10(c)(viii)The Company's Incorporated herein by reference to
Supplemental Executive Exhibit 10(c)(viii) to the Company's
Defined Benefit 1992 Annual Report on Form 10-K.
Retirement Plan.
10(c)(ix)The Company's Incorporated herein by reference to
Supplemental Executive Exhibit 10(c)(ix) to the Company's
Defined Contribution 1992 Annual Report on Form 10-K.
Retirement Plan.
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 reference to
Stock Purchase Plan. Registration Statement on Form S-8,
File No. 33-33867.
10(c)(xii)Employees' Retirement Incorporated herein by reference to
Plan - Restated as of Exhibit 10(c)(vii) to the Company's
1/1/87. 1991 Annual Report on Form 10-K.
10(c)(xiii)Employees' Incorporated herein by reference to
Retirement Income Plan Exhibit 10(c)(viii) to the Company's
as of 4/1/91. 1991 Annual Report on Form 10-K.
10(c)(xiv)Directors' Retirement Incorporated herein by reference to
Plan. Exhibit 10(c)(xiv) to the Company's
1994 Annual Report on Form 10-K.
10(d) Asset Purchase Agreement Incorporated herein by reference to
dated 6/3/92, between Exhibit 10(d) to the Company's 1992
Turner Steiner Annual Report on Form 10-K.
International SA and
Turner International
Industries, Inc., and
Turner International
(U.K.) Ltd.
10(e) Joint Venture and Incorporated herein by reference to
Shareholders' Agreement Exhibit 10(e) to the Company's 1992 Annual
dated 6/3/92 between Report on Form 10-K.
The Turner Corporation
and Karl Steiner
Holding AG.
10(f) Purchase Agreement dated Incorporated herein by reference
June 3, 1992 between Karl to Exhibit 1 to the Company's
Steiner Holding AG and The Form 8-K dated July 20, 1992.
Turner Corporation.
Exhibit No. Description
10(g)(i)The Company's Revolving Incorporated herein by reference
Credit Facility dated to Exhibit 10(g)(i) to the Company's
as of 12/30/92. 1993 Annual Report on Form 10-K.
10(g)(ii)Amendment No. 1 to Incorporated herein by reference to
Credit Agreement dated Exhibit 10(g)(ii) to the Company's
as of 12/31/93. 1993 Annual Report on Form 10-K.
10(g)(iii)Amended and restated
Credit Agreement as of
7/1/96.
10(h) Form of Change of Control
Agreement between The
Turner Corporation and
Messrs.Gravette, Parmelee,
Smith, Sleeman, Fee, Little,
Manteuffel, Robinson and
Sibson, respectively, Chairman,
President, Chief Administrative
Officer, Chief Financial Officer,
and Executive Vice Presidents
dated November 20, 1996.
10(i) Form of Change of Control
Agreement with 58 other
officers of parent or subsidiaries
dated November 20, 1996.
10(j) Note Purchase Agreement 11.74% Incorporated herein by reference
Senior Notes Due 2001 dated as of to Exhibit 10(j) to the Company's
December 1, 1994. 1994 Annual Report on Form 10-K.
11 Computation of earnings per share.
21 Subsidiaries of the Registrant.
27(a) Financial Data Schedule-1996.
27(b) Financial Data Schedule-1995 Restated
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 13, 1997 By:
E. T. Gravette, Jr.
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
Director March 13, 1997
(H. Baumann-Steiner)
Director March 13, 1997
(W. G. Ehlers)
Director March 13, 1997
(A. G. Fieger)
Chairman of the March 13, 1997
(E. T. Gravette, Jr.)Board, Chief Executive
Officer and Director
Director March 13, 1997
(L. Lomo)
Director March 13, 1997
(C. H. Moore, Jr.)
President and Director March 13, 1997
(H. J. Parmelee)
Senior Vice President March 13, 1997
(D. G. Sleeman) and Chief Financial Officer
Name Capacity Date
Director March 13, 1997
(P. K. Steiner)
Director March 13, 1997
(G. A. Walker)
Director March 13, 1997
(J. O. Whitney)
Director March 13, 1997
(F. W. Zuckerman)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation of our report dated February 26, 1997
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 LLP
New York, New York
March 24, 1997
EXHIBIT INDEX
Exhibit No. Description
3(a)(i) Certificate of Incorporated herein by reference to
Incorporation, as Exhibit 3 to the Registration Statement
amended to 7/10/89. on Form S-14 of The Turner Corporation,
No. 2- 90235.
3(a)(ii)Amendment dated 5/19/86. Incorporated herein by reference to
3(a)(iii)Amendment dated 9/12/88. Exhibit 3(a) to the Company's 1989 Annual
3(a)(iv)Amendment dated 7/10/89. Report on Form 10-K.
3(b) By-Laws, as amended Incorporated herein by reference to
to 6/11/93. Exhibit 3(b) to the Company's 1993 Annual
Report on Form 10-K.
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 by reference to
relating to Series D 8-1/2% Exhibit 3 to Company's Form 8-K
Convertible Preference Stock. dated July 20, 1992.
3(c)(iii)Certificate of Designations Incorporated herein by reference to
relating to Series E 8-1/2% Exhibit 4 to the Company's Form 8-K
Convertible Preference Stock. dated July 20, 1992.
4(a) Shareholders Rights Incorporated herein by reference to
Agreement. the Registration Statement on Form 8-A
dated September 9, 1988.
4(b) Agreement regarding Security Incorporated herein by reference to
Holder's Rights, Obligations Exhibit 5 to the Company's Form 8-K
and Options. dated July 20, 1992.
10(c)(i)The Company's Executive Incorporated herein by reference to
Incentive Compensation Exhibit 10.3 to the Registration
Plan. Statement on Form S-14 of The
Turner Corporation, No. 2-90235.
Exhibit No. Description
10(c)(ii)The Company's 1981 Stock Incorporated herein by reference to
Option Plan, as amended. 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 to
Stock Option Plan, 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
Option Plan. the Registration Statement on Form S-8.
10(c)(v)The Company's Incentive Incorporated herein by reference to
Compensation Plan. 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
amended and restated as of 1992 Annual Report on Form 10-K.
1/22/92.
10(c)(vii)The Company's Defined Incorporated herein by reference to
Contribution Retirement Exhibit 10(c)(vii) to the Company's
Equalization Plan. 1992 Annual Report on Form 10-K.
10(c)(viii)The Company's Supplemental Incorporated herein by reference to
Executive Defined Benefit Exhibit 10(c)(viii) to the Company's
Retirement Plan. 1992 Annual Report on Form 10-K.
10(c)(ix)The Company's Supplemental Incorporated herein by reference to
Executive Defined Contribution 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 reference to
Stock Purchase Plan. Registration Statement on Form S-8,
File No. 33-33867.
10(c)(xii)Employees' Retirement Incorporated herein by reference to
Plan - Restated as of Exhibit 10(c)(vii) to the Company's
1/1/87. 1991 Annual Report on Form 10-K.
10(c)(xiii)Employees' Retirement Incorporated herein by reference to
Income Plan as of 4/1/91. Exhibit 10(c)(viii) to the Company's
1991 Annual Report on Form 10-K.
10(c)(xiv)Directors' Retirement Plan. Incorporated herein by reference to
Exhibit 10(c)(xiv) to the Company's
1994 Annual Report on Form 10-K.
Exhibit No. Description
10(d)Asset Purchase Agreement Incorporated herein by reference to
dated 6/3/92, between Exhibit 10(d) to the Company's 1992
Turner Steiner International Annual Report on Form 10-K.
SA and Turner International
Industries, Inc., and Turner
International (U.K.)
Ltd.
10(e) Joint Venture and Incorporated herein by reference to
Shareholders'Agreement dated Exhibit 10(e) to the Company's 1992
6/3/92 between The Turner Annual Report on Form 10-K.
Corporation and Karl
Steiner Holding AG.
10(f) Purchase Agreement dated Incorporated herein by reference to
June 3, 1992 between Karl Exhibit 1 to the Company's Form 8-K
Steiner Holding AG and The dated July 20, 1992.
Turner Corporation.
10(g)(i)The Company's Revolving Incorporated herein by reference to
Credit Facility dated as of Exhibit 10(g)(i) to the Company's
12/30/92. 1993 Annual Report on Form 10-K.
10(g)(ii)Amendment No. 1 to Incorporated herein by reference to
Credit Agreement dated Exhibit 10(g)(ii) to the Company's
as of 12/31/93. 1993 Annual Report on Form 10-K.
10(g)(iii)Amended and restated
Credit Agreement as of 7/1/96.
10(h) Form of Change of Control
Agreement between The Turner
Corporation and Messrs. Gravette,
Parmelee, Smith, Sleeman, Fee,
Little, Manteuffel, Robinson and
Sibson, respectively, Chairman,
President, Chief Administrative
Officer, Chief Financial Officer, and
Executive Vice Presidents dated
November 20, 1996.
10(i) Form of Change of Control
Agreement with 58 other
officers of parent or subsidiaries
dated November 20, 1996.
10(j) Note Purchase Agreement 11.74% Incorporated herein by reference to
Senior Notes Due 2001 dated as of Exhibit 10(j) to the Company's
December 1, 1994. 1994 Annual Report on Form 10-K.
11 Computation of earnings per share.
21 Subsidiaries of the Registrant.
27(a) Financial Data Schedule-1996.
27(b) Financial Data Schedule-1995 Restated.
$41,250,000
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
December 30, 1992
and amended and restated as of
July 1, 1996
among
The Turner Corporation,
as Borrower,
Turner Construction Company,
as Guarantor,
The Banks Party Hereto,
and
Morgan Guaranty Trust Company of New York,
as Agent
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
1.1. Definitions 1
1.2. Accounting Terms and Determinations 16
ARTICLE 2
THE CREDITS
2.1. Commitments to Lend 16
2.2. Method of Borrowing 17
2.3. Notes 18
2.4. Maturity of Loans 19
2.5. Interest Rates 19
2.6. Fees 23
2.7. Optional Termination or Reduction of
Commitments 23
2.8. Method of Electing Interest Rates 24
2.9. Mandatory Termination of Commitments 25
2.10. Optional Prepayments 25
2.11. General Provisions as to Payments 26
2.12. Funding Losses 27
2.13. Computation of Interest and Fees 27
2.14. Letters of Credit 27
ARTICLE 3
CONDITIONS
3.1. Effective Date 31
3.2. Borrowings and Issuances of Letters
of Credit 32
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
4.1. Corporate Existence and Power 33
4.2. Corporate and Governmental
Authorization; No Contravention 33
4.3. Binding Effect 34
4.4. Financial Information 34
4.5. Litigation 34
4.6. Compliance with ERISA 34
4.7. Environmental Matters 35
4.8. Compliance with Laws 35
4.9. Contractual Arrangements 35
4.10. Taxes 35
4.11. Subsidiaries 36
4.12. Not an Investment Company 36
4.13. Full Disclosure 36
ARTICLE 5
COVENANTS
5.1. Information 36
5.2. Payment of Obligations 40
5.3. Maintenance of Property; Insurance 40
5.4. Conduct of Business and Maintenance
of Existence 41
5.5. Compliance with Laws 41
5.6. Inspection of Property, Books and
Records 42
5.7. Current Ratio 43
5.8. Debt 43
5.9. Minimum Consolidated Adjusted Net
Worth 43
5.10. Fixed Charge Coverage 43
5.11. Cash Flow Restriction 43
5.12. Debt of Guarantor 44
5.13. Clean-up Period 44
5.14. Investments 45
5.15. Negative Pledge 46
5.16. Consolidations, Mergers and Sales of
Assets 47
5.17. Use of Proceeds 47
ARTICLE 6
DEFAULTS
6.1. Events of Default 48
6.2. Notice of Default 50
6.3. Cash Cover 51
ARTICLE 7
THE AGENT
7.1. Appointment and Authorization 51
7.2. Agent and Affiliates 51
7.3. Action by Agent 51
7.4. Consultation with Experts 51
7.5. Liability of Agent 52
7.6. Indemnification 52
7.7. Credit Decision 52
7.8. Successor Agent 53
7.9. Agent's Fee 53
ARTICLE 8
CHANGE IN CIRCUMSTANCES
8.1. Basis for Determining Interest Rate
Inadequate or Unfair 53
8.2. Illegality 54
8.3. Increased Cost and Reduced Return 55
8.4. Taxes 56
8.5. Base Rate Loans Substituted for
Affected Fixed Rate Loans 58
ARTICLE 9
GUARANTY
9.1. The Guaranty 59
9.2. Guaranty Unconditional 59
9.3. Discharge Only Upon Payment In Full;
Reinstatement In Certain Circumstances 60
9.4. Waiver by the Guarantor 60
9.5. Subrogation 61
9.6. Stay of Acceleration 61
9.7. Limit of Liability 61
ARTICLE 10
MISCELLANEOUS
10.1. Notices 61
10.2. No Waivers 62
10.3. Expenses; Indemnification 62
10.4. Sharing of Set-Offs 63
10.5. Amendments and Waivers 63
10.6. Successors and Assigns 64
10.7. Collateral 66
10.8. Governing Law 66
10.9. Counterparts; Integration 66
10.10. WAIVER OF JURY TRIAL 66
10.11. Prepayments of Loans on the
Effective Date 66
10.12. Intercreditor Agreement 66
10.13. Role of Chemical Bank 67
Pricing Schedule
Exhibit A Note
Exhibit B-1 Opinion of Counsel
for the Borrower
and the Guarantor
EXHIBIT B-2 Opinion of General
Counsel of
the Borrower and the Guarantor
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 9, 1992
Annex B Memorandum from R.E. Bailey dated
June 24, 1992
AGREEMENT dated as of July 1, 1996 among THE
TURNER CORPORATION, TURNER CONSTRUCTION COMPANY, the BANKS
party hereto and MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto (other than BANK ONE,
COLUMBUS, N.A.) are parties to a Credit Agreement dated as
of December 30, 1992, as amended;
WHEREAS, CHEMICAL BANK desires to reduce its
Commitment under the Agreement to zero and cease to be a
party to the Agreement on the Effective Date; and
WHEREAS, the parties hereto (other than CHEMICAL
BANK) wish, upon satisfaction of the conditions set forth in
Section 3.1 hereof, to amend and restate the Agreement as
set forth herein and to add BANK ONE, COLUMBUS, N.A. as a
party thereto;
NOW, THEREFORE, the parties hereto agree as
follows:
DEFINITIONS
. The following terms, as used herein, have the
following meanings:
"Adjusted CD Rate" has the meaning set forth in
Section 0.
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 0.
"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.
"Agreement", when used with reference to this
Agreement, means this Agreement as in effect from time to
time prior to the Effective Date, as amended and restated by
the Amendment as of the Effective Date and as further
amended from time to time thereafter.
"Amendment" means this agreement dated as of July
1, 1996 amending and restating the Agreement.
"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 0.
"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
0.
"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 0, and their respective successors and shall
include, as the context may require, any Bank in its
capacity as an Issuing Bank.
"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 (i) a Loan which bears
interest at the Base Rate pursuant to the applicable Notice
of Borrowing or Notice of Interest Rate Election or the
provisions of Article or (ii) an overdue amount which was a
Base Rate Loan immediately before it became overdue.
"Base Rate Margin" means a rate per annum
determined in accordance with the Pricing Schedule.
"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 1995 Form 10-K" means the Borrower's
annual report on Form 10-K for 1995, as filed with the
Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
"Borrowing" means a borrowing hereunder
consisting of Loans made to the Borrower on the same day
pursuant to Article, all of which Loans are of the same type
(subject to Article) and have the same initial Interest
Period. A Borrowing is a "Domestic Borrowing" if such Loans
are Domestic Loans or a "Euro-Dollar Borrowing" if such
Loans are Euro-Dollar Loans. A Domestic Borrowing is a "CD
Borrowing" if such Domestic Loans are CD Loans or a "Base
Rate Borrowing" if such Domestic Loans are Base Rate Loans.
"CD Base Rate" has the meaning set forth in
Section 0.
"CD Loan" means (i) a Loan which bears interest
at a CD Rate pursuant to the applicable Notice of Borrowing
or Notice of Interest Rate Election or (ii) an overdue
amount which was a CD Loan immediately before it became
overdue.
"CD Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
"CD Rate" means a rate of interest determined
pursuant to Section 0 on the basis of an Adjusted CD Rate.
"CD Reference Banks" means The Bank of New York
and Morgan Guaranty Trust Company of New York.
"Commitment" means (i) with respect to any Bank
listed on the signature pages hereof, the amount set forth
opposite the name of such Bank as its Commitment on such
signature pages or (ii) with respect to any Assignee, the
amount of the transferor Bank's Commitment assigned to such
Assignee pursuant to Section 10.6(c), in each case as such
amount may be reduced from time to time pursuant to Section
or changed as a result of an assignment pursuant to Section
10.6(c).
"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 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.
"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 (and, for purposes of
Section 5.15 and the definitions of Material Debt and
Material Financial Obligations, all 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 or similar instrument, (vi) all Debt secured by a
Lien on any asset of such Person, whether or not such Debt
is otherwise an obligation of such Person and (vii) 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.
"Derivatives Obligations" of any Person means all
obligations (after giving effect to any applicable netting
provisions) of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity
or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect
to any of the foregoing transactions) or any combination of
the foregoing transactions.
"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 0.
"Effective Date" means the date on which the
Agent shall have received all the documents and payments
specified in or pursuant to Section.
"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, 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 (i) a Loan which bears
interest at a Euro-Dollar Rate pursuant to the applicable
Notice of Borrowing or Notice of Interest Rate Election or
(ii) an overdue amount which was a Euro-Dollar Loan
immediately before it became overdue.
"Euro-Dollar Margin" means a rate per annum
determined in accordance with the Pricing Schedule.
"Euro-Dollar Rate" means a rate of interest
determined pursuant to Section 0 on the basis of an Adjusted
London Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal
London offices of The Bank of New York and Morgan Guaranty
Trust Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning
set forth in Section 0.
"Event of Default" has the meaning set forth in
Section.
"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.
"Fiscal Quarter" means a fiscal quarter of the
Borrower.
"Fiscal Year" means a fiscal year of the
Borrower.
"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 (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.
"Fixed Rate Borrowing" means a CD Borrowing or a
Euro-Dollar Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or both.
"Group of Loans" means at any time a group of
Loans consisting of (i) all Base Rate Loans having the same
Interest Period at such time, (ii) all Euro-Dollar Loans
having the same Interest Period at such time or (iii) all CD
Loans having the same Interest Period at such time, provided
that, if a Loan of any particular Bank is converted to or
made as a Base Rate Loan pursuant to Article, such Loan
shall be included in the same Group or Groups of Loans from
time to time as it would have been in if it had not been so
converted or made.
"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 holder of such
Debt of the payment thereof or to protect such holder
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 substance,
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), without duplication:
(i) income taxes,
(ii) depreciation and amortization,
(iii) Fixed Charges, and
(iv) any reduction in the carrying value
of the Borrower's Rickenbacker Facility
minus:
(v) 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.
"Indemnitee" has the meaning set forth in Section
0.
"Intercreditor Agreement" means the Intercreditor
Agreement dated as of December 20, 1994, between the
institutional investors and the banks listed on the
signature pages thereof.
with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in
the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six months
thereafter, as the Borrower may elect in the applicable
notice; 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 would otherwise end
after the Termination Date shall end on the Termination
Date.
with respect to each CD Loan, the period
commencing on the date of borrowing specified in the
applicable Notice of Borrowing or on the date specified
in an applicable Notice of Interest Rate Election and
ending 30, 60, 90 or 180 days thereafter, as the
Borrower may elect in the applicable notice; 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 would otherwise end
after the Termination Date shall end on the Termination
Date.
with respect to each Base Rate Loan, the
period commencing on the date of borrowing specified in
the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate
Election and ending 30 days thereafter, and each
successive period of 30 days commencing on the last day
of the immediately preceding Interest Period applicable
thereto; 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, Guarantee, time deposit or otherwise (but not
including any demand deposit).
"Issuing Bank" means Morgan Guaranty Trust Company
of New York.
"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.
"Letter of Credit" means a letter of credit issued
hereunder by an Issuing Bank.
"Letter of Credit Exposure" means, with respect to
any Bank at any time, the sum of (x) such Bank's ratable
share of all Reimbursement Obligations then owing to the
Issuing Banks and (y) such Bank's ratable participation in
the aggregate amount then available or thereafter to become
available for drawing under the terms of all Letters of
Credit then outstanding.
"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, or any other type of preferential
arrangement that has the practical effect of creating a
security interest, 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 loan made by a Bank pursuant to
Section; provided that, if any such loan or loans (or
portions thereof) are combined or subdivided pursuant to a
Notice of Interest Rate Election, the term "Loan" shall
refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts
resulting from such subdivision, as the case may be.
"London Interbank Offered Rate" has the meaning
set forth in Section 0.
"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 or face amount exceeding $1,000,000.
"Material Financial Obligations" means payment or
collateralization obligations in respect of Derivatives
Obligations and/or a principal or face amount of Debt of the
Borrower and/or one or more of its Subsidiaries, arising in
one or more related or unrelated transactions, exceeding in
the aggregate $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 0 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.
"Notice of Interest Rate Election" has the meaning
set forth in Section.
"Notice of Letter of Credit Issuance" has the
meaning set forth in Section 0.
"Parent" means, with respect to any Bank, any
Person controlling such Bank.
"Participant" has the meaning set forth in Section
0.
"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
limited liability company, 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.
"Pricing Schedule" means the Pricing Schedule
attached hereto.
"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.
"Quarterly Payment Dates" means each March 31,
June 30, September 30 and December 31.
"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.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Reimbursement Obligations" means the obligations
of the Borrower to reimburse the Issuing Banks for drawings
under the Letters of Credit.
"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 Loans
and/or having Letter of Credit Exposures equal in amount to
at least 66 2/3% of the sum of the aggregate principal
amount of the Loans and the aggregate amount of the Letter
of Credit Exposures then outstanding.
"Revolving Credit Period" means the period from
and including the Effective Date to but not including the
Termination Date.
"Rickenbacker Guaranty" means the amended 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 Facility" means the amended
Reimbursement 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, as to any Person, 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 such Person. Unless otherwise
specified, "Subsidiary" means a Subsidiary of 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 Ratings
Services 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 Ratings Services 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 July 1, 1999 (or July 1,
2000 or July 1, 2001 if the Revolving Credit Period shall
have been extended to such date pursuant to Section 0) 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 Corporation" 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.
"United States" means the United States of
America, including the States thereof and the District of
Columbia, but excluding its territories and possessions.
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; provided
that, if the Borrower notifies the Agent that the Borrower
wishes to amend any covenant in Article to eliminate or
otherwise adjust for the effect of any change in generally
accepted accounting principles on the operation of such
covenant (or if the Agent notifies the Borrower that the
Required Banks wish to amend Article for such purpose), then
the Borrower's compliance with such covenant shall be
determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change
in generally accepted accounting principles became
effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Borrower
and the Required Banks.
THE CREDITS
. 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
during the Revolving Credit Period, provided that,
immediately after each such loan is made, the sum of the
aggregate outstanding principal amount of Loans by such Bank
plus its Letter of Credit Exposure 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 such Borrowing may
be in the aggregate amount of the unused Commitments) and
shall be made from the several Banks ratably in proportion
to their respective Commitments. Within the foregoing
limits, the Borrower may borrow under this Section, repay or
prepay Loans to the extent permitted by Section and reborrow
at any time during the Revolving Credit Period under this
Section.
The Revolving Credit Period may be extended,
in the manner set forth in this subsection (b), on July
1, 1997 and/or on July 1, 1998 (in either case the
"Extension Date"), in each case for a period of one year
after the date on which the Revolving Credit Period would
otherwise have expired. If the Borrower wishes to
request an extension of the Revolving Credit Period on an
Extension Date, it shall give written notice to that
effect to the Agent not less than 60 nor more than 90
days prior to such 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 such 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 Revolving Credit Period shall be extended,
effective on such Extension Date, to July 1, 2000 or July
1, 2001, as the case may be.
. Method of Borrowing.(a) 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:
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;
the aggregate amount of such Borrowing;
whether the Loans comprising such Borrowing are to
bear interest initially at the Base Rate, a CD Rate or
a Euro-Dollar Rate; and
in the case of a Fixed Rate Borrowing, the duration
of the initial Interest Period applicable thereto,
subject to the provisions of the definition of Interest
Period.
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.
Not later than 12:00 Noon (New York City
time) on the date of each Borrowing, each Bank shall 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 referred to in Section. Unless
the Agent determines that any applicable condition
specified in Article 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.
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 subsection (c)
of this Section 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 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.
. 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.
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 0
hereto with appropriate modifications to reflect the fact
that it evidences solely Loans of the relevant type.
Each reference in this Agreement to the "Note" of such
Bank shall be deemed to refer to and include any or all
of such Notes, as the context may require.
Upon receipt of each Bank's Note pursuant to
Section 0, the Agent shall forward such Note to such
Bank. Each Bank shall record the date, amount and type
of each Loan made by it and the date and amount of each
payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection
with any transfer or enforcement of its Note, endorse on
the schedule forming a part thereof appropriate notations
to evidence the foregoing information with respect to
each such Loan then outstanding; 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 Note and to attach to and make a part of its
Note a continuation of any such schedule as and when
required.
. Maturity of Loans. Each Loan shall mature, and
the principal amount thereof shall be due and payable, on
the Termination Date.
. 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 (i) the
Base Rate Margin plus (ii) the Base Rate for such day. Such
interest shall be payable for each Interest Period on the
last day thereof and, with respect to the principal amount
of any Base Rate Loan converted to a CD Loan or a Euro-
Dollar Loan, on each date a Base Rate Loan is so converted.
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% plus the
rate otherwise applicable to Base Rate Loans for such day.
Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each day during
each Interest Period applicable thereto, at a rate per
annum equal to the sum of the CD Margin for such day plus
the Adjusted CD Rate applicable to such Interest Period;
provided that if any CD Loan shall, as a result of clause
(2)(b) of the definition of Interest Period, have an
Interest Period of less than 30 days, such CD Loan shall
bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. 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 sum of 2% plus the
higher of (i) the rate applicable to Base Rate Loans for
such day and (ii) the sum of the CD Margin plus the
Adjusted CD Rate applicable to such Loan immediately
before such payment was due.
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 day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within
the meaning of 12 C.F.R. 327.4(a) (or any successor
provision) to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change
in the Assessment Rate.
Each Euro-Dollar Loan shall bear interest on
the outstanding principal amount thereof, for each day
during each Interest Period applicable thereto, at a rate
per annum equal to the sum of the Euro-Dollar Margin for
such day plus the Adjusted London Interbank Offered Rate
applicable to such Interest Period. 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 "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.
Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the
sum of 2% plus the Euro-Dollar Margin for such day plus
the higher of (i) 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 shall exist, at a rate per annum equal to the sum
of 2% plus the rate applicable to Base Rate Loans for
such day) and (ii) the Adjusted London Interbank Offered
Rate applicable to such Loan immediately before such
payment was due.
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
of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence
of manifest error.
Each Reference Bank agrees to use its best
efforts to furnish quotations to the Agent as
contemplated by this Section. 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 shall apply.
Fees. (a)The Borrower shall pay to the Agent, for
the account of the Banks ratably in proportion to their
Commitments, a commitment fee for each day at the Commitment
Fee Rate (specified in the Pricing Schedule) on the amount
by which the aggregate amount of the Commitments exceeds the
sum of the aggregate outstanding principal amount of the
Loans and the aggregate amount of the Letter of Credit
Exposures on such day. Such commitment fee shall accrue
from and including the Effective Date to but excluding the
date on which the Commitments terminate in their entirety.
Fees accrued under this subsection shall be payable
quarterly in arrears on each Quarterly Payment Date and on
the date on which the Commitments terminate in their
entirety.
The Borrower shall pay to the Agent for the
account of the Banks, ratably in proportion to their
Commitments, a letter of credit fee accruing daily on the
aggregate amount then available for drawing under all
Letters of Credit at a rate per annum determined in
accordance with the Pricing Schedule. Fees accrued under
this subsection shall be payable quarterly in arrears on
each Quarterly Payment Date, on the date on which the
Commitments terminate in their entirety and (if later) on
the date on which the Letter of Credit Exposures
terminate in their entirety.
The Borrower shall pay to the Agent on the
Effective Date for the account of each Bank a
participation fee in an amount equal to either (i) 0.25%
of the Commitment of such Bank if such Bank originally
offered to commit for at least $10,000,000 or (ii) 0.15%
of the Commitment of such Bank if such Bank originally
offered to commit for at least $5,000,000 but less than
$10,000,000.
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 at such time no Loans are outstanding and no
Bank has any Letter of Credit Exposure or (ii) ratably
reduce from time to time by an aggregate amount of
$5,000,000 or a larger multiple of $1,000,000, the aggregate
amount of the Commitments in excess of the sum of the
aggregate outstanding principal amount of the Loans and the
aggregate amount of the Letter of Credit Exposures.
Method of Electing Interest Rates. (a) The Loans
included in each Borrowing shall bear interest initially at
the type of rate specified by the Borrower in the applicable
Notice of Borrowing. Thereafter, the Borrower may from time
to time elect to change or continue the type of interest
rate borne by each Group of Loans (subject in each case to
the provisions of Article), as follows:
if such Loans are Base Rate Loans, the Borrower
may elect to convert such Loans to CD Loans as of any
Domestic Business Day or to Euro-Dollar Loans as of any
Euro-Dollar Business Day;
if such Loans are CD Loans, the Borrower may
elect to convert such Loans on the last day of any
applicable Interest Period to Base Rate Loans or
Euro-Dollar Loans or elect to continue such Loans as CD
Loans for an additional Interest Period; and
if such Loans are Euro-Dollar Loans, the Borrower
may elect to convert such Loans on the last day of any
applicable Interest Period to Base Rate Loans or CD
Loans or elect to continue such Loans as Euro-Dollar
Loans for an additional Interest Period.
Each such election shall be made by delivering a notice (a
"Notice of Interest Rate Election") to the Agent not later
than 11:00 A.M. (New York City time) on the third
Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective
(unless the relevant Loans are Domestic Loans and are to be
converted to Domestic Loans of the other type or are CD Rate
Loans to be continued as CD Rate Loans for an additional
Interest Period, in which case such notice shall be
delivered to the Agent not later than 11:00 A.M. (New York
City time) on the second Domestic Business Day before such
conversion or continuation is to be effective). A Notice of
Interest Rate Election may, if it so specifies, apply to
only a portion of the aggregate principal amount of the
relevant Group of Loans; provided that (i) such portion is
allocated ratably among the Loans comprising such Group and
(ii) the portion to which such notice applies, and the
remaining portion to which it does not apply, are each
$5,000,000 or any larger multiple of $1,000,000. If no such
notice is timely received prior to the end of an Interest
Period, the Borrower shall be deemed to have elected that
such Group of Loans be converted to Base Rate Loans.
Each Notice of Interest Rate Election shall
specify:
the Group of Loans (or portion thereof) to which
such notice applies;
the date on which the conversion or continuation
selected in such notice is to be effective, which shall
comply with the applicable clause of subsection (a)
above;
if the Loans comprising such Group are to be
converted, the new type of Loans and, if the Loans are
to be converted to Fixed Rate Loans, the duration of
the next succeeding Interest Period applicable thereto;
and
if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period,
the duration of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition
of Interest Period.
Upon receipt of a Notice of Interest Rate
Election from the Borrower pursuant to subsection (a)
above, the Agent shall promptly notify each Bank of the
contents thereof and such notice shall not thereafter be
revocable by the Borrower.
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.
Optional Prepayments. (a) The Borrower may
(i) upon notice to the Agent not later than 11:00
A.M. (New York City time) on the date of prepayment,
prepay any Group of Base Rate Loans on any Domestic
Business Day;
(ii) upon at least three Euro-Dollar Business
Days' notice to the Agent, prepay any Group of Euro-
Dollar Loans on the last day of any Interest Period
applicable thereto; or
(iii) upon at least two Domestic Business Days'
notice to the Agent, prepay any Group of CD Loans on the
last day of any Interest Period applicable thereto; in each
case in whole or 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 Group.
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.
. General Provisions as to Payments. (a) The
Borrower shall make each payment of (i) principal of, and
interest on, the Loans, (ii) the Reimbursement Obligations
and interest thereon and (iii) fees payable hereunder (other
than fees payable directly to the Issuing Banks), 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.
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 the Reimbursement
Obligations or interest thereon 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.
Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment
is due 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.
Funding Losses. If the Borrower makes any payment
of principal with respect to any Fixed Rate Loan or any
Fixed Rate Loan is converted (pursuant to Articles or or
otherwise) on any day other than the last day of an Interest
Period applicable thereto, or the last day of an applicable
period fixed pursuant to Section 0, or if the Borrower fails
to borrow, prepay, convert or continue any Fixed Rate Loans
after notice has been given to any Bank in accordance with
Section 0, 0, or 0, 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 conversion
or failure to borrow, prepay, convert or continue, provided
that such Bank shall have delivered to the Borrower a
certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest
error.
. 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).
. Letters of Credit. (a) Subject to the terms and
conditions set forth in this Agreement, any Issuing Bank may
issue letters of credit hereunder from time to time before
the tenth Domestic Business Day before the Termination Date
upon the request of the Borrower; provided that, immediately
after each Letter of Credit is issued, (i) the aggregate
amount of the Letter of Credit Exposures shall not exceed
$10,000,000 and (ii) with respect to each Bank, the sum of
its Letter of Credit Exposure plus the aggregate outstanding
principal amount of its Loans shall not exceed the amount of
its Commitment. Upon the issuance by an Issuing Bank of a
Letter of Credit, the Issuing Bank shall be deemed, without
further action by any party hereto, to have sold to each
Bank, and each Bank shall be deemed, without further action
by any party hereto, to have purchased from the Issuing
Bank, a participation in such Letter of Credit and the
related Reimbursement Obligations in the proportion that its
Commitment bears to the aggregate amount of the Commitments.
The Borrower shall give the relevant Issuing
Bank notice at least ten days prior to the requested
issuance of a Letter of Credit specifying the date such
Letter of Credit is to be issued, and describing the
terms of such Letter of Credit and the nature of the
transactions to be supported thereby (such notice,
including any such notice given in connection with the
extension of a Letter of Credit, being called a "Notice
of Letter of Credit Issuance"). Upon receipt of a Notice
of Letter of Credit Issuance, the Issuing Bank shall
promptly notify the Agent, and the Agent shall promptly
notify each Bank of the contents thereof and of the
amount of such Bank's participation in such Letter of
Credit. The issuance by the Issuing Bank of each Letter
of Credit shall, in addition to the conditions precedent
set forth in Article III, be subject to the conditions
precedent that such Letter of Credit shall be in such
form and contain such terms as shall be satisfactory to
the Issuing Bank and that the Borrower shall have
executed and delivered such other instruments and
agreements relating to such Letter of Credit as the
Issuing Bank shall have reasonably requested. The
Borrower shall also pay to each Issuing Bank for its own
account a fronting fee and issuance, drawing, amendment
and extension charges in the amounts and at the times
agreed to by the Borrower and such Issuing Bank. The
extension or renewal of any Letter of Credit shall be
deemed to be an issuance of such Letter of Credit, and if
any Letter of Credit contains a provision pursuant to
which it is deemed to be extended unless notice of
termination is given by the Issuing Bank, the Issuing
Bank shall timely give such notice of termination unless
it has theretofore timely received a Notice of Letter of
Credit Issuance and the other conditions to issuance of a
Letter of Credit have also theretofore been met with
respect to such extension. No Letter of Credit shall
have a term of more than one year; provided that a Letter
of Credit may contain a provision pursuant to which it is
deemed to be extended on an annual basis unless notice of
termination is given by the Issuing Bank; provided
further that no Letter of Credit shall have a term
extending or be so extendible beyond the fifth Domestic
Business Day before the Termination Date.
Upon receipt from the beneficiary of any
Letter of Credit of any notice of a drawing under such
Letter of Credit, the Issuing Bank shall notify the Agent
and the Agent shall promptly notify the Borrower and each
other Bank as to the amount to be paid as a result of
such drawing and the payment date. The Borrower shall be
irrevocably and unconditionally obligated forthwith to
reimburse the Issuing Bank for any amounts paid by the
Issuing Bank upon any drawing under any Letter of Credit,
without presentment, demand, protest or other formalities
of any kind. All such amounts paid by the Issuing Bank
and remaining unpaid by the Borrower shall bear interest,
payable on demand, for each day until paid at a rate per
annum equal to the sum of 2% plus the rate applicable to
Base Rate Loans for such day. In addition, each Bank
will pay to the Agent, for the account of the Issuing
Bank, immediately upon the Issuing Bank's demand at any
time during the period commencing after such drawing
until reimbursement therefor in full by the Borrower, an
amount equal to such Bank's ratable share of such drawing
(in proportion to its participation therein), together
with interest on such amount for each day from the date
of the Issuing Bank's demand for such payment (or, if
such demand is made after 12:00 Noon (New York City time)
on such date, from the next succeeding Domestic Business
Day) to the date on which such Bank pays such amount at
the rate of interest applicable to Base Rate Loans for
such day. The Issuing Bank will pay to each Bank ratably
all amounts received from the Borrower for application in
payment of its Reimbursement Obligations in respect of
any Letter of Credit, but only to the extent such Bank
has made payment to the Issuing Bank in respect of such
Letter of Credit pursuant hereto.
The obligations of the Borrower and each Bank
under subsection (c) above shall be absolute,
unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement,
under all circumstances whatsoever, including without
limitation the following circumstances:
(i) any lack of validity or
enforceability of this Agreement or any Letter of
Credit or any document related hereto or thereto;
(ii) any amendment or waiver of or any
consent to departure from all or any of the
provisions of this Agreement or any Letter of
Credit or any document related hereto or thereto;
(iii) the use which may be made of any
Letter of Credit by, or any acts or omission of, a
beneficiary of any Letter of Credit (or any Person
for whom the beneficiary may be acting);
(iv) the existence of any claim, set-
off, defense or other rights that the Borrower may
have at any time against a beneficiary of any
Letter of Credit (or any Person for whom the
beneficiary may be acting), the Banks (including
the Issuing Bank) or any other Person, whether in
connection with this Agreement or such Letter of
Credit or any document related hereto or thereto
or any unrelated transaction;
(v) any statement or any other
document presented under any Letter of Credit
proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(vi) payment under any Letter of
Credit against presentation to the Issuing Bank of
a draft or certificate that does not comply with
the terms of such Letter of Credit, provided that
the Issuing Bank's determination that documents
presented under such Letter of Credit comply with
the terms thereof shall not have constituted gross
negligence or willful misconduct of the Issuing
Bank; or
(vii) any other act or omission to act
or delay of any kind by any Bank (including the
Issuing Bank), the Agent or any other Person or
any other event or circumstance whatsoever that
might, but for the provisions of this clause
(vii), constitute a legal or equitable discharge
of the Borrower's obligations hereunder.
The Borrower agrees to indemnify and hold
harmless each Bank (in its capacity as an Issuing Bank or
otherwise) and the Agent from and against any and all
claims, damages, losses, liabilities, costs or expenses
which such Bank or the Agent may incur (including,
without limitation, any claims, damages, losses,
liabilities, costs or expenses which any Issuing Bank may
incur by reason of or in connection with the failure of
any other Bank to fulfill or comply with its obligations
to such Issuing Bank hereunder (but nothing herein
contained shall affect any rights the Borrower may have
against such defaulting Bank)), and none of the Banks (in
its capacity as an Issuing Bank or otherwise) or the
Agent or any of their officers or directors or employees
or agents shall be liable or responsible, by reason of or
in connection with the execution and delivery or transfer
of or payment or failure to pay under any Letter of
Credit, including without limitation any of the
circumstances enumerated in subsection (d) above, as well
as (i) any error, omission, interruption or delay in
transmission or delivery of any message, by mail, cable,
telegraph, telex or otherwise, (ii) any error in
interpretation of technical terms, (iii) any loss or
delay in the transmission of any document required in
order to make a drawing under a Letter of Credit, (iv)
any consequences arising from causes beyond the control
of the relevant Issuing Bank, including without
limitation any government acts, or any other
circumstances whatsoever in making or failing to make
payment under such Letter of Credit; provided that the
Borrower shall not be required to indemnify any Issuing
Bank for any claims, damages, losses, liabilities, costs
or expenses, and the Borrower shall have a claim for
direct (but not consequential) damage suffered by it, to
the extent found by a court of competent jurisdiction to
have been caused by (x) the willful misconduct or gross
negligence of such Issuing Bank in determining whether a
request presented under any Letter of Credit complied
with the terms of such Letter of Credit or (y) such
Issuing Bank's failure to pay under any Letter of Credit
after the presentation to it of a request strictly
complying with the terms and conditions of the Letter of
Credit. Nothing in this subsection (e) is intended to
limit the obligations of the Borrower under any other
provision of this Agreement. To the extent the Borrower
does not indemnify an Issuing Bank as required by this
subsection, the Banks agree to do so ratably in
proportion to their Commitments.
CONDITIONS
. Effective Date. This Amendment shall become
effective, and the Agreement shall be amended and restated
to read in full as set forth herein, when the Agent shall
have received:
counterparts hereof signed by each of the
parties listed on the signature pages hereof (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 facsimile,
telex or other written confirmation from such party
that it has executed a counterpart hereof);
a duly executed Note for the account of each
Bank dated on or before the Effective Date complying
with the provisions of Section;
for the account of each Bank, repayment of all
outstanding Loans, if any, made by it under the
Agreement before the Effective Date, together with
interest accrued thereon and all unpaid commitment fees
accrued for its account under this Agreement for the
period up to but excluding the Effective Date;
for the account of each Bank, the participation
fee payable for its account pursuant to Section 0;
(i) an opinion of Rogers & Wells, counsel for
the Borrower and the Guarantor, substantially in the
form of Exhibit -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 Sara J. Gozo, Assistant 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;
an opinion of Davis Polk & Wardwell, special
counsel for the Agent, substantially in the form of
Exhibit 0 hereto and covering such additional matters
relating to the transactions contemplated hereby as the
Required Banks may reasonably request; and
all documents the Agent 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.
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.
. Borrowings and Issuances of Letters of Credit.
The obligation of any Bank to make a Loan on the occasion of
any Borrowing, and any obligation of an Issuing Bank to
issue (or renew or extend the term of) any Letter of Credit,
is subject to the satisfaction of the following conditions:
the fact that the Effective Date shall have
occurred on or prior to July 1, 1996;
receipt by the Agent of a Notice of Borrowing as
required by Section, or receipt by the Issuing Bank of
a Notice of Letter of Credit Issuance as required by
Section 0;
the fact that, immediately before and after such
Borrowing or issuance of a Letter of Credit, no Default
shall have occurred and be continuing; and
the fact that the representations and warranties
of the Borrower contained in this Agreement shall be
true on and as of the date of such Borrowing or
issuance of a Letter of Credit.
Each Borrowing and issuance of a Letter of Credit hereunder
shall be deemed to be a representation and warranty by the
Borrower on the date of such Borrowing or issuance of a
Letter of Credit as to the facts specified in clauses (c)
and (d) of this Section.
REPRESENTATIONS AND
WARRANTIES OF THE BORROWER
The Borrower represents and warrants that:
. 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.
. 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.
. 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.
. Financial Information.
The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of
December 31, 1995 and the related consolidated statements
of operations, cash flows and stockholders' equity for
the Fiscal Year then ended, reported on by Arthur
Andersen LLP and set forth in the Borrower's 1995 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.
Since December 31, 1995 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. Taxes. 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.
. 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.
. Not an Investment Company. The Borrower is not
an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
. 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.
COVENANTS
The Borrower agrees that, so long as any Bank has
any Commitment or Letter of Credit Exposure hereunder or any
amount payable under any Note remains unpaid:
. Information. The Borrower will deliver to each
of the Banks:
as soon as available and in any event within 90
days after the end of each Fiscal Year, 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 operations 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
LLP or other independent public accountants of
nationally recognized standing;
as soon as available and in any event within 45
days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, a consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries
as of the end of such Fiscal Quarter and the related
consolidated statements of operations and cash flows
for such Fiscal Quarter and for the portion of Fiscal
Year ended at the end of such Fiscal Quarter, setting
forth in each case in comparative form the figures for
the corresponding Fiscal Quarter and the corresponding
portion of the 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;
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 operations
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;
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
Fiscal Quarter covered by such financial statements and
the related consolidating statements of operations for
such Fiscal Quarter and for the portion of the Fiscal
Year ended at the end of such Fiscal Quarter, setting
forth in each case in comparative form the figures for
the corresponding Fiscal Quarter and the corresponding
portion of the 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;
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;
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 heretofore provided to the Banks under this
clause (f);
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 5.7 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 the Pricing Schedule 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;
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;
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;
promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so
mailed;
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;
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
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.
. 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.
. 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.
. 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 5.4 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.
. 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.
. 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 5.6 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 5.6, (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 5.6
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 5.6; 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.
. Current Ratio. Consolidated Adjusted Current
Assets will at no time be less than 100% of Consolidated
Adjusted Current Liabilities.
. Debt The Leverage Ratio will at no time exceed
2.50 to 1.
. Minimum Consolidated Adjusted Net Worth.
Consolidated Adjusted Net Worth will not as of any date (a
"date of determination") be less than the sum of (a)
$52,500,000, plus (b) the aggregate net proceeds received by
the Borrower or any Consolidated Subsidiary from the
issuance of equity securities after December 31, 1995 and on
or before such date of determination, 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 of determination (commencing with the
fiscal year ending on December 31, 1996) for which such
consolidated net income is greater than zero.
. Fixed Charge Coverage. The Fixed Charge Ratio
will not, for any period of four consecutive Fiscal
Quarters, be less than 1.45 to 1.
. 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 lend 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, lent or otherwise transferred to
Schedule B Subsidiaries and their Subsidiaries during any
Fiscal Year will not exceed (a) the aggregate amount of cash
and cash equivalents distributed during such Fiscal 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) $4,000,000.
. Debt of Guarantor. The sum, without
duplication, of
(i) total Debt of the Guarantor and its
Subsidiaries (determined on a consolidated basis),
excluding the Guarantor's guaranty of up to $39,500,000
aggregate principal amount of the Borrower's Senior
Notes due 2001, 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 $59,250,000; 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 $59,250,000, no more than $56,550,000
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 $56,550,000 limit being reduced from time to time by
the amount of any reduction in the $59,250,000 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.
Clean-up Period. The Borrower shall not permit
any Loans to be outstanding during a period of at least five
consecutive Domestic Business Days during each calendar
year. Such periods may be designated by the Borrower and
may differ from year to year; provided that no period so
designated for any calendar year shall begin less than 30
days after the end of the period so designated for the
previous calendar year.
. 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;
(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;
and
(v) any other Investment, provided that,
immediately after such Investment is made, the aggregate
cost of all Investments made pursuant to this clause (v), in
each case net of any return of capital or proceeds of sale,
does not exceed 15% of Consolidated Adjusted Net Worth;
provided that Turner Investment Corporation may invest the
Steiner Proceeds (as such term is defined in the Waiver
dated as of July 9, 1992 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.
. 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 $100,000,000;
(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.
. 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.
. Use of Proceeds. The proceeds of the Loans made
under this Agreement and the Letters of Credit will be used
by the Borrower solely for the general corporate purposes of
the Borrower and its 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.
DEFAULTS
Events of Default. If one or more of the
following events ("Events of Default") shall have occurred
and be continuing:
the Borrower shall fail to pay when due any
principal of any Loan or any Reimbursement Obligation
or shall fail to pay within three days of the due date
thereof any interest, fees or other amount payable
hereunder;
the Borrower shall fail to observe or perform
any covenant contained in Section 5.7, 5.8, 5.9, 5.10,
5.11, 5.13, 5.16 or 5.17;
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;
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;
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);
the Borrower or any Subsidiary shall fail to
make any payment in respect of any Material Financial
Obligations when due or within any applicable grace
period;
any event or condition shall occur which results
in the acceleration of the maturity of any Material
Debt or enables (or, with the giving of notice or lapse
of time or both, would enable) the holder of such Debt
or any Person acting on such holder's behalf to
accelerate the maturity thereof;
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;
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;
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;
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;
judgments or orders for the payment of money in excess of
$1,000,000 shall be rendered against the Borrower or any
Subsidiary and such judgments or orders shall continue
unsatisfied and unstayed for a period of 30 days; or 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 more than
50% of the aggregate principal amount of the Loans, by
notice to the Borrower declare the Loans (together with
accrued interest thereon) to be, and the Loans 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 Loans (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.
. Notice of Default. The Agent shall give notice
to the Borrower under Section 0 or 0 promptly upon being
requested to do so by any Bank and shall thereupon notify
all the Banks thereof.
. Cash Cover. If an Event of Default, shall have
occurred and be continuing, the Borrower shall, if requested
by the Agent upon the instruction of Banks having more than
50% in aggregate amount of the Letter of Credit Exposures,
pay to the Agent an amount in immediately available funds
(which funds shall be held as collateral pursuant to
arrangements satisfactory to the Agent) equal to the
aggregate amount then available or thereafter to become
available for drawing under all Letters of Credit then
outstanding, provided that, upon the occurrence of any Event
of Default specified in Section 0 or 0 with respect to the
Borrower or the Guarantor, the Borrower shall pay such
amount forthwith without any notice or demand or any other
act by the Agent or the Banks.
THE AGENT Error! Bookmark not
defined.
. 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.
. 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.
. 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.
. 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.
. 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, 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, facsimile
transmission or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
. 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
or the Guarantor) against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss
or liability (except such as result from such indemnitees'
gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this
Agreement or any action taken or omitted by such indemnitees
hereunder.
. 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.
. Successor Agent. The Agent may resign at any
time by giving 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 $100,000,000; 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.
. 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.
CHANGE IN CIRCUMSTANCES
. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest
Period for any CD Loan or Euro-Dollar Loan:
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
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, (i) the obligations of the Banks
to make CD Loans or Euro-Dollar Loans, as the case may be,
or to continue or convert outstanding Loans as or into CD
Loans or Euro-Dollar Loans, as the case may be, shall be
suspended and (ii) each outstanding CD Loan or Euro-Dollar
Loan, as the case may be, shall be converted into a Base
Rate Loan on the last day of the then current Interest
Period applicable thereto. 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.
. Illegality. If, on or after July 1, 1996, the
adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, 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 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, or to continue or convert outstanding
Loans as or into Euro-Dollar Loans, 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
notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either
(a) on the last day of the then current Interest Period
applicable to such Euro-Dollar Loan if such Bank may
lawfully continue to maintain and fund such Loan to such day
or (b) immediately if such Bank shall determine that it may
not lawfully continue to maintain and fund such Loan to such
day.
. Increased Cost and Reduced Return. (a) If on
or after July 1, 1996, the adoption of any applicable law,
rule or regulation, or any change in any applicable law,
rule or regulation, 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 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 (i) with respect to any CD Loan any such
requirement included in an applicable Domestic Reserve
Percentage and (ii) 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 or its
obligations in respect of Letters of Credit 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 of issuing or participating in any
Letter of Credit, 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.
If any Bank shall have determined that, after
July 1, 1996, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in
any such law, rule or regulation, 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.
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.
. Taxes. (a) For the purposes of this Section,
the following terms have the following meanings:
"Taxes" means any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings
with respect to any payment by the Borrower or the
Guarantor, as the case may be, pursuant to this Agreement or
under any Note, and all liabilities with respect thereto,
excluding (i) in the case of each Bank and the Agent, taxes
imposed on its income, and franchise or similar taxes
imposed on it, by a jurisdiction under the laws of which
such Bank or the Agent (as the case may be) is organized or
in which its principal executive office is located or, in
the case of each Bank, in which its Applicable Lending
Office is located and (ii) in the case of each Bank, any
United States withholding tax imposed on such payments but
only to the extent that such Bank is subject to United
States withholding tax at the time such Bank first becomes a
party to this Agreement.
"Other Taxes" means any present or future stamp or
documentary taxes and any other excise or property taxes, or
similar charges or levies, which arise from any payment made
pursuant to this Agreement or under any Note or from the
execution or delivery of, or otherwise with respect to, this
Agreement or any Note.
Any and all payments by the Borrower or the
Guarantor to or for the account of any Bank or the Agent
hereunder or under any Note shall be made without
deduction for any Taxes or Other Taxes; provided that, if
the Borrower or the Guarantor shall be required by law to
deduct any Taxes or Other Taxes from any such payments,
(i) the sum payable shall be increased as necessary so
that after making all required deductions (including
deductions applicable to additional sums payable under
this Section) such Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the
Borrower or the Guarantor, as the case may be, shall make
such deductions, (iii) the Borrower or the Guarantor, as
the case may be, shall pay the full amount deducted to
the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower or
the Guarantor, as the case may be, shall furnish to the
Agent, at its address referred to in Section, the
original or a certified copy of a receipt evidencing
payment thereof.
The Borrower agrees to indemnify each Bank
and the Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts
payable under this Section) paid by such Bank or the
Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or
with respect thereto. This indemnification shall be paid
within 15 days after such Bank or the Agent (as the case
may be) makes demand therefor.
Each Bank organized under the laws of a
jurisdiction outside the United States, on or prior to
the date of its execution and delivery of this Agreement
in the case of each Bank listed on the signature pages
hereof and on or prior to the date on which it becomes a
Bank in the case of each other Bank, and from time to
time thereafter if requested in writing by the Borrower
(but only so long as such Bank remains lawfully able to
do so), shall provide the Borrower and the Agent with
Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Bank is
entitled to benefits under an income tax treaty to which
the United States is a party which exempts such Bank from
United States withholding tax or reduces the rate of
withholding tax on payments of interest for the account
of such Bank or certifying that the income receivable
pursuant to this Agreement is effectively connected with
the conduct of a trade or business in the United States.
For any period with respect to which a Bank
has failed to provide the Borrower or the Agent with the
appropriate form pursuant to Section 8.4(d) (unless such
failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which such form
originally was required to be provided), such Bank shall
not be entitled to indemnification under Section 8.4(b)
or (c) with respect to Taxes imposed by the United
States; provided that if a Bank, which is otherwise
exempt from or subject to a reduced rate of withholding
tax, becomes subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall
take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
If the Borrower or the Guarantor is required
to pay additional amounts to or for the account of any
Bank pursuant to this Section, then such Bank will change
the jurisdiction of its Applicable Lending Office if, in
the judgment of such Bank, such change (i) will eliminate
or reduce any such additional payment which may
thereafter accrue and (ii) is not otherwise
disadvantageous to such Bank.
. Base Rate Loans Substituted for Affected Fixed
Rate Loans. If (i) the obligation of any Bank to make, or
convert outstanding Loans to, Euro-Dollar Loans has been
suspended pursuant to Section or (ii) any Bank has demanded
compensation under Section or with respect to its CD Loans
or Euro-Dollar Loans 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 exist:
all Loans which would otherwise be made by such
Bank as (or continued as or converted into) CD Loans or
Euro-Dollar Loans, as the case may be, shall instead be
Base Rate Loans (on which interest and principal shall
be payable contemporaneously with the related Fixed
Rate Loans of the other Banks); and
after each of its CD Loans or Euro-Dollar Loans,
as the case may be, has been repaid (or converted to a
Base Rate Loan), 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.
If such Bank notifies the Borrower that the circumstances
giving rise to such notice no longer apply, the principal
amount of each such Base Rate Loan shall be converted into a
CD Loan or Euro-Dollar Loan, as the case may be, on the
first day of the next succeeding Interest Period applicable
to the related CD Loans or Euro-Dollar Loans of the other
Banks.
GUARANTY
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, the Guarantor shall
forthwith on demand pay the amount not so paid at the place
and in the manner specified in this Agreement.
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:
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;
any modification or amendment of or supplement to
this Agreement or any Note;
any release, impairment, non-perfection or invalidity
of any direct or indirect security for any obligation
of the Borrower under this Agreement or any Note;
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;
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 with any unrelated
transactions, provided that nothing herein shall
prevent the assertion of any such claim by separate
suit or compulsory counterclaim;
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
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. 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 terminated, there shall be
no outstanding Letters of Credit 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 at such time as though such payment had been due
but not made at such time.
. 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.
. Subrogation. Upon making any payment with
respect to the obligations of the Borrower hereunder, the
Guarantor shall be subrogated to the rights of the payee
against the Borrower with respect to such payment; provided
that the Guarantor shall not enforce any payment by way of
subrogation against the Borrower so long as (i) any Bank has
any Commitment or Letter of Credit Exposure hereunder or
(ii) any amount payable by the Borrower hereunder remains
unpaid.
. Stay of Acceleration. If acceleration of the
time for payment of any amount payable by the Borrower under
this Agreement or any Note 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.
. 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.
MISCELLANEOUS
. 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: (a) in
the case of the Borrower, the Guarantor or the Agent, at its
address, facsimile number or telex number set forth on the
signature pages hereof, (b) in the case of any Bank, at its
address, facsimile number or telex number set forth in its
Administrative Questionnaire or (c) in the case of any
party, such other address, facsimile number 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 facsimile
transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is
received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iv) if given by
any other means, when delivered at the address specified in
this Section; provided that notices to the Agent or any
Issuing Bank under Article or Article shall not be effective
until received.
. No Waivers. No failure or delay by the Agent
or any Bank or Issuing 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.
. Expenses; 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 (without duplication) the
fees and disbursements of outside counsel and the allocated
cost of inside 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.
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
the Loans or the Letters of Credit; 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.
. 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 its Note or its share of any Reimbursement Obligation
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 its Note or its share of such
Reimbursement Obligation, the Bank receiving such
proportionately greater payment shall purchase such
participations in the Notes and the Reimbursement
Obligations held by or for the account of 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 and the Reimbursement Obligations held
by or for the account of 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 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
or Reimbursement Obligation, 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.
. 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 or any Issuing Bank is affected thereby,
by the Agent or any Issuing Bank, as relevant); 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 the amount of any Reimbursement Obligation or any
interest thereon or any fees hereunder, (iii) postpone the
date fixed for any payment of principal of or interest on
any Loan or any Reimbursement Obligation or any interest
thereon or any fees hereunder or for the termination of any
Commitment or (except as expressly provided in Section) the
expiry date of any Letter of Credit, (iv) release the
Guarantor from its obligations hereunder or (v) change the
percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes and/or Letter of Credit
Exposures, 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 9 shall not be effective unless also signed by the
Guarantor.
. 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 the
Banks.
Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or all or any
part of its Loans and Letter of Credit Exposure. 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, the Issuing Banks 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 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 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).
Any Bank may at any time assign to one or
more banks or other institutions (each an "Assignee")
all, or a proportionate part (equivalent to an initial
Commitment of not less than $5,000,000) 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 0 hereto
executed by such Assignee and such transferor Bank, with
(and subject to) the subscribed consent of the Borrower
(which shall not be unreasonably withheld), the Agent and
the Issuing Banks; provided that if an Assignee is an
affiliate of such transferor Bank or was a Bank
immediately prior to such assignment, no such consent of
the Borrower shall be required. 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, a new Note
is 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 or a state thereof,
it shall 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.
Any Bank may at any time assign all or any
portion of its rights under this Agreement and its Note
to a Federal Reserve Bank. No such assignment shall
release the transferor Bank from its obligations
hereunder.
No Assignee, Participant or other transferee
of any Bank's rights shall be entitled to receive any
greater payment under Section or 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, or 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.
Upon the consummation of any assignment
pursuant to Section 0, the Assignee shall be bound by the
provisions of the Intercreditor Agreement as one of the
"Banks" referred to therein.
. Collatera. 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.
Governing Law. This Agreement and each Note shall
be governed by and construed in accordance with the laws of
the State of New York.
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.
. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, 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 OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
. Prepayments of Loans on the Effective Date.
Notwithstanding anything to the contrary in this Agreement,
the Borrower may prepay any Loans outstanding under this
Agreement on the Effective Date as contemplated by Section 0
by paying the principal amount to be prepaid together with
interest accrued thereon to the date of prepayment. If any
such prepayment is made, the Borrower will reimburse the
Banks pursuant to Section for any resulting funding losses.
. Intercreditor Agreement. Each Bank that is not
already a party to the Intercreditor Agreement agrees, for
the benefit of each of the parties thereto, to be bound by
the provisions thereof as one of the "Banks" referred to
therein.
. Role of Chemical Bank. Chemical Bank is signing
this Amendment solely for the purpose of reducing its
Commitment under the Agreement as in effect before the
Effective Date (the "Existing Agreement") to zero and
complying with the provisions of Section 10.05 of the
Existing Agreement, which states that any reduction of the
Commitment of any Bank (except a ratable reduction of the
Commitments of all Banks) requires the consent of all the
Banks. After the Effective Date, Chemical Bank will have no
obligations under the Agreement as amended and restated
hereby, but will continue to have, with respect to events
occurring prior to the Effective Date, the obligations set
forth in Section 7.06 of the Existing Agreement and the
benefits of the indemnification provisions set forth in
Sections 8.03 and 10.03 thereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed by their respective
authorized officers as of the day and year first above
written.
THE TURNER CORPORATION THE TURNER CORPORATION
By /s/ Donald G. Sleeman By /s/ David J. Smith
Title: Vice President, Title: Senior Vice President
Treasurer & Controller & CFO
375 Hudson Street 375 Hudson Street
New York, NY 10014 New York, NY 10014
Facsimile: (212) 229-6073 Facsimile: (212) 229-6073
TURNER CONSTRUCTION COMPANY TURNER CONSTRUCTION COMPANY
By /s/ David J. Smith By /s/ Donald G. Sleeman
Title: Senior Vice President Title: Vice President,
& CFO Treasurer & Controller
375 Hudson Street 375 Hudson Street
New York, NY 10014 New York, NY 10014
Facsimile: (212) 229-6073 Facsimile: (212) 229-6073
Commitments
$11,250,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Carl J. Mehldau, Jr.
Title: Associate
$11,250,000 THE BANK OF NEW YORK
By /s/ Gregory R. Reimers
Title: Vice President
$11,250,000 HARRIS TRUST AND SAVINGS BANK
By /s/ Wes W. Frangul
Title: Vice President
$ 7,500,000 BANK ONE, COLUMBUS, N.A.
By /s/ Douglas H. Klamfoth
Title: Vice President
$ 0 CHEMICAL BANK
By /s/ Peter C. Eckstein
Title: Vice President
Total Commitments
$41,250,000
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Carl J. Mehldau, Jr.
Title: Associate
60 Wall Street
New York, NY 10260
Facsimile: (212) 648-5014
PRICING SCHEDULE
Each of "Euro-Dollar Margin", "CD Margin", "Base
Rate Margin", "Commitment Fee Rate" and "LC Fee Rate" means,
for any day, the rate set forth below in the row opposite
such term and in the column corresponding to the "Pricing
Level" that applies for such day:
Level I Level II Level III
Euro-Dollar 1.75% 2.00% 2.25%
Margin
CD Margin 1.875% 2.125% 2.375%
Base Rate 0% 0.25% 0.50%
Margin
Commitment 0.50% 0.50% 0.50%
Fee
Rate
LC Fee Rate 1.75% 2.00% 2.25%
For purposes of this Schedule, the following terms have
the following meanings:
"Level I Pricing" applies for any day if the Fixed Charge
Ratio for the period of four consecutive Fiscal Quarters ended
at the end of the most recent Fiscal Quarter for which a
compliance certificate has been (or should have been)
delivered pursuant to Section 0 is greater than or equal to
1.9 to 1 and Consolidated Adjusted Net Worth as of the end of
such most recent Fiscal Quarter is greater than or equal to
$75,000,000.
"Level II Pricing" applies for any day if Level I Pricing
does not apply and the Fixed Charge Ratio for the period of
four consecutive Fiscal Quarters ended at the end of the most
recent Fiscal Quarter for which a compliance certificate has
been (or should have been) delivered pursuant to Section 0 is
greater than or equal to 1.6 to 1 and Consolidated Adjusted
Net Worth as of the end of such most recent Fiscal Quarter is
greater than or equal to $65,000,000.
"Level III Pricing" applies for any day if neither Level
I Pricing nor Level II Pricing applies for such day.
"Pricing Level" refers to the determination of which
Level I Pricing, Level II Pricing or Level III Pricing applies
for any day.
NOTE
New York, New York
___________ __, 199_
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, on the Termination
Date the unpaid principal amount of each Loan made by the
Bank to the Borrower pursuant to the Credit Agreement
referred to below. 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
thereof and all repayments of the principal thereof shall be
recorded by the Bank and, if the Bank so elects in
connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding may be
endorsed by the Bank on the schedule attached hereto, or on
a continuation of such schedule attached to and made a part
hereof; 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, as amended
and restated as of July 1, 1996 among The Turner
Corporation, Turner Construction Company, the banks party
thereto 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.
The payment in full of the principal of and
interest on this Note has been unconditionally guaranteed by
Turner Construction Company.
The
Turner Corporation
By____________________
Name:
Title:
LOANS AND PAYMENTS OF PRINCIPAL
__________________________________________________________________________
Amount Type Amount of
of Principal Notation
Date Loan Repaid Made By
__________________________________________________________________________
OPINION OF ROGERS & WELLS,
COUNSEL FOR THE BORROWER AND THE GUARANTOR
[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 (the "Borrower") and Turner Construction Company
(the "Guarantor") in connection with the Amendment and
Restatement dated as of July 1, 1996 (the "Amended Credit
Agreement") of the Credit Agreement dated as of December 30,
1992 among the Borrower, the Guarantor, the banks party
thereto and Morgan Guaranty Trust Company of New York, as
Agent. Terms defined in the Amended Credit Agreement are
used herein as therein defined. This opinion is being
rendered to you at the request of our clients pursuant to
Section 0 of the Amended Credit Agreement.
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 on the foregoing, 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 its state of incorporation and
has all corporate powers required to carry on its business
as now conducted.
2. The execution, delivery and performance by the
Borrower of the Amended Credit Agreement and the Notes and
by the Guarantor of the Amended Credit Agreement are within
their 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 certificate of incorporation or by-laws of the Borrower
or the Guarantor or of any agreement, judgment, injunction,
order, decree or other instrument of which we are aware
binding upon the Borrower or any of its Subsidiaries 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 Amended 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 the respective terms except as the same
may be limited by bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights
generally and by general principles of equity.
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 Amended
Credit Agreement or the Notes.
Very truly yours,
EXHIBIT B-2
OPINION OF GENERAL COUNSEL
OF THE BORROWER AND THE GUARANTOR
[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 Amendment and Restatement
dated as of July 1, 1996 (the "Amended Credit Agreement") of
the Credit Agreement dated as of December 30, 1992 among the
Borrower, Guarantor, the banks party thereto 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 Amended 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 Amended 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 Amended Credit Agreement or the Notes.
Very truly yours,
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
Amendment and Restatement dated as of July 1, 1996 (the
"Amended Credit Agreement") of 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 (the "Guarantor"), the banks
party thereto (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 0 of the Amended
Credit Agreement. Terms defined in the Amended 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 of the Amended Credit Agreement and the Notes and
by the Guarantor of the Amended Credit Agreement are within
their respective corporate powers and have been duly
authorized by all necessary corporate action.
2. The Amended Credit Agreement constitutes a
valid and binding agreement of the Borrower and the
Guarantor and each Note constitutes a valid and binding
obligation of the Borrower, in each case enforceable in
accordance with its terms except as the same may be limited
by bankruptcy, insolvency, fraudulent conveyance or similar
laws affecting creditors' rights generally and by general
principles of equity.
We are members of the Bar of the State of New York
and the foregoing opinion is limited to the laws of the
State of New York, the federal laws of the United States and
the General Corporation Law of the State of Delaware. 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.
This opinion is rendered solely to you in
connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by
any other person without our prior written consent.
Very truly yours,
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among <NAME
OF ASSIGNOR> (the "Assignor"), <NAME OF ASSIGNEE> (the
"Assignee"), THE TURNER CORPORATION (the "Borrower") and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
WHEREAS, this Assignment and Assumption Agreement
(the "Agreement") relates to the Amendment and Restatement
dated as of July 1, 1996 (the "Amended Credit Agreement") of
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;
WHEREAS, as provided under the Amended Credit
Agreement, the Assignor has a Commitment to make Loans to
the Borrower and participate in Letters of Credit in an
aggregate principal amount at any time outstanding not to
exceed $__________;
WHEREAS, Loans made to the Borrower by the
Assignor under the Amended Credit Agreement in the aggregate
principal amount of $__________ are outstanding at the date
hereof;
WHEREAS, the Assignor's share of the total amount
available for drawing under Letters of Credit outstanding at
the date hereof is $__________; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Amended
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 Letter of Credit Exposure, 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 have the respective meanings set
forth in the Amended Credit Agreement.
SECTION 2. Assignment. The Assignor hereby
assigns and sells to the Assignee all of the rights of the
Assignor under the Amended 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 Amended 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, and Letter of
Credit Exposure of, the Assignor outstanding at the date
hereof. Upon the execution and delivery hereof by the
Assignor, the Assignee, [the Borrower, the Issuing Banks 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 Amended 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 Amended 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 the amount heretofore agreed between them.1 It
is understood that commitment and/or letter of credit 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 Amended 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, the Agent
and the Issuing Banks. This Agreement is conditioned upon
the consent of the Borrower, the Agent and the Issuing Banks
pursuant to Section 0 of the Amended Credit Agreement. The
execution of this Agreement by the Borrower, the Agent and
the Issuing Banks is evidence of this consent. Pursuant to
Section 0, the Borrower agrees to execute and deliver a 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 Guarantor, or the validity and enforceability of the
obligations of the Borrower or the Guarantor in respect of
the Amended 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.
SECTION 8. Intercreditor Agreement. The Assignee
acknowledges that it has received a copy of the
Intercreditor Agreement (as such term is defined in the
Amended Credit Agreement) and agrees, for the benefit of the
Senior Noteholders (as defined therein) and the other Banks
referred to therein, to be bound by the provisions thereof
as one of the "Banks" referred to therein.
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.
<NAME OF ASSIGNOR>
By_________________________
Name:
Title:
<NAME OF ASSIGNEE>
By__________________________
Name:
Title:
THE
TURNER CORPORATION
By__________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Name:
Title:
[Issuing Banks]
By__________________________
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 Amended Credit Agreement
referred to below
60 Wall Street
New York, NY 10260
Gentlemen:
The undersigned hereby agree to extend, effective
July 1, ____, the term of the Credit Agreement dated as of
December 30, 1992 as amended and restated as of July 1, 1996
among The Turner Corporation, Turner Construction
Corporation, the Banks party thereto and Morgan Guaranty
Trust Company of New York, as Agent (the "Amended Credit
Agreement") for one year to July 1, 200_. Terms defined in
the Amended 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:
[BANK]
By____________________________
Title:
[BANK]
By____________________________
Title:
[BANK]
By___________________________
Title:
[BANK]
By____________________________
Title: [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:
SCHEDULE A
Subsidiaries of the Borrower Not
Engaged in the Real Estate Development Business
Turner Construction Company
Turner International Industries, Inc.
Ameristone, Inc.
Mideast Construction Services, 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
TDC of Texas, Inc. (formerly B-F-W Construction Co., Inc.)
SCHEDULE B
Subsidiaries of the Borrower
Engaged in the Real Estate
Development Business
Turner Development Corporation
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 LimitedAgreement 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
dated January 6, 1993.
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 Birman Constru~coes A Corporate Joint Venture Agreement
LTA between Turner Construction Company
and Birman S/A Comercio
Expreendimentos Articles of
Incorporation dated December 5, 1995.
Buildings Diagnostics Group, Agreement dated February 15, 1995
a Limited Liability between Turner Construction Company,
Corporation A. Gary Fieger and Stanley Horowitz.
Turner Construction Company has a
30% interest in the Corporation.
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
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
Turner International (UK) Memorandum of Agreement with LTA
Ltd. Construction Ltd. of South Africa
dated April 9, 1996
SECTION
TARGET ITEM NUMBER TARGET NAME
Article 2, The Credits 2 (THE CREDITS)
Section 2.1, Extension of 2 (EXTENSION OF
Commitments COMMITMENTS)
Section 2.1, Extension of 2 (EXTENSION OF TD)
Termination Date
Section 2.2, Notice of Committed 2 (NOTICE OF
Borrowing (or Method of Borrowing) COMMITTED)
Section 2.3, Money Market Borrowings 2 (MONEY MARKET
BORROWINGS)
Section 2.3, Money Market 2 (MONEY MARKET
Borrowings, Subsection C BORROWINGS - C)
Section 2.3, Money Market 2 (MONEY MARKET
Borrowings, Subsection D BORROWINGS - D)
Section 2.3, Money Market 2 (MONEY MARKET
Borrowings, Subsection E BORROWINGS - E)
Section 2.3, Money Market 2 (MONEY MARKET
Borrowings, Subsection F BORROWINGS - F)
Section 2.4, Notice to Banks; 2 (NOTICE TO BANKS)
Funding of Loans
Section 2.4, Notice to Banks; 0 2 (NOTICE TO BANKS -
Funding of Loans, Subsection A A)
Section 2.5, Notes 2 (NOTES)
Section 2.6, Maturity of Loans (; 2 (MATURITY OF
Mandatory Prepayments) LOANS)
Section 2.7, Interest Rates 2 (INTEREST RATES)
Section 2.7, Interest Rates, 0 2 (INTEREST RATES -
Subsection A A)
Section 2.7, Interest Rates, 0 2 (INTEREST RATES -
Subsection D D)
Section 2.7, Interest Rates, 2 (INTEREST RATES -
Subsection E E)
Section 2.8, Fees 2 (FEES)
Section 2.?, Foreign Subsidiary 2 (FOREIGN
Costs, Subsection A SUBSIDIARY COSTS -
A)
Section 2.?, General Provisions as 2 (GENERAL PRO)
to Payments
Section 2.?, Mandatory Termination 2 (MANDATORY
TERMINATION)
Section 2.?, Mandatory Termination, 2 (MANDATORY
Subsection D TERMINATION - D)
Section 2.?, Method of Electing 2 (METHOD OF
Interest Rates ELECTING)
Section 2.?, Optional Prepayments 2 (OPTIONAL
PREPAYMENTS)
Section 2.?, Optional Prepayments, 0 2 (OPTIONAL
Subsection D PREPAYMENTS - D)
Article 3, Conditions 3 (CONDITIONS)
Section 3.1, Closings 3 (CLOSING)
Section 3.1, Closings, Subsection A 0 3 (CLOSING - A)
Section 3.1, Closings, Subsection B 0 3 (CLOSING - B)
Section 3.1, Closings, Subsection C 0 3 (CLOSING - C)
Section 3.2, Borrowings 3 (BORROWINGS)
Section 3.2, Borrowings, Subsection 3 (BORROWINGS - C)
C
Section 3.3, First Borrowing by Each 3 (FIRST BORROWING)
Eligible Subsidiary
Section 3.3, First Borrowing by Each 3 (FIRST BORROWING -
Eligible Subsidiary, Subsection A A)
Section 3.3, First Borrowing by Each 3 (FIRST BORROWING -
Eligible Subsidiary, Subsection B B)
Section 4.4, Financial Information 4 (FINANCIAL
INFORMATION)
Section 4.4, Financial Information, 4 (FINANCIAL
Subsection A INFORMATION - A)
Section 4.4, Financial Information, 4 (FINANCIAL
Subsection C INFORMATION - C)
Section 4.5, Litigation 4 (LITIGATION)
Section 4.12, Representations in 4 (REPS IN
Collateral Documents True and COLLATERAL DOCS)
Correct
Article 5, Covenants 5 (COVENANTS)
Article 5, Covenants 5 (DEBT OF
SUBSIDIARIES)
Article 5, Covenants 5 (INVESTMENTS)
Article 5, Covenants 5 (MERGERS AND SALES
OF)
Section 5.1, Information 5 (INFORMATION)
Section 5.1, Information, Subsection 5 (INFORMATION - A)
A
Section 5.1, Information, Subsection 5 (INFORMATION - B)
B
Section 5.1, Information, Subsection 5 (INFORMATION - C)
C
Section 5.2, Payment of Obligations 5 (PAYMENT OF
OBLIGATIONS
Section 5.3, Maintenance of Property 5 (MAINTENANCE OF
PROPERTY)
Section 5.4, Conduct of Business and 5 (CONDUCT OF
Maintenance of Existence BUSINESS)
Section 5.5, Compliance with Laws 5 (COMPLIANCE WITH
LAWS)
Section 5.6, Inspection of Property, 5 (INSPECTION)
Books and Records
Section 5.13, Negative Pledge 5 (NEGATIVE PLEDGE)
Section 5.?, Fixed Charge Coverage 5 (FIXED CHARGE
Ratio COVERAGE)
Article 6, Defaults 6 (DEFAULTS)
Section 6.1, Events of Default 6 (EVENTS OF
DEFAULT)
Section 6.1, Events of Default, 0 6 (EVENTS OF DEFAULT
Subsection A - A)
Section 6.1, Events of Default, 0 6 (EVENTS OF DEFAULT
Subsection B - B)
Section 6.1, Events of Default, 0 6 (EVENTS OF DEFAULT
Subsection C - C)
Section 6.1, Events of Default, 0 6 (EVENTS OF DEFAULT
Subsection G - G)
Section 6.1, Events of Default, 0 6 (EVENTS OF DEFAULT
Subsection H - H)
Article 8, Change in Circumstances 8 (CHANGE IN
CIRCUMSTANCES)
Section 8.1, Basis for Determining 8 (BASIS FOR
Interest Rate Inadequate or Unfair DETERMINING)
Section 8.1, Reduced Return 8 (INCREASED COST
AND)
Section 8.2, Illegality 8 (ILLEGALITY)
Section 8.3, Increased Cost and 8 (INCREASED COST
Reduced Return AND)
Section 8.5, Base Rate Loans 8 (BASE RATE LOANS)
Substituted for Affected Fixed Rate
Loans
Section 8.?, HLT Classification 8 (HLT
CLASSIFICATION)
Section 8.?, Taxes 8 (TAXES)
Section 8.?, Taxes, Subsection A 0 8 (TAXES - A)
Article (Guaranty), Section ?.?, G (RELEASE UPON
Release Upon Sale SALE)
Article ?, Miscellaneous (MISCELLANEOUS)
Section ?.1, Notices M (NOTICES)
Section ?.4, Sharing of Set-Offs M (SHARING OF SET-
OFFS)
Section ?.5, Amendments and Waivers M (AMENDMENTS AND
(Release of Collateral) WAIVERS)
Section ?.6, Successors and Assigns M (SUCCESSORS AND)
Section ?.8, Governing Law; M (GOVERNING LAW;
Submission to Jurisdiction
A G R E E M E N T
between
THE TURNER CORPORATION
and
DATED:
AGREEMENT between THE TURNER CORPORATION (the "Company") and
(the "Executive"), dated ,
199_.
W I T N E S S E T H:
WHEREAS, the Executive is a principal officer of the Company or a
subsidiary;
WHEREAS, the Company wishes to encourage continuity of management in
the event of any actual or threatened change of control of the Company; and
WHEREAS, the Executive wishes to be assured of adequate compensation
if the Executive's employment by the Company or a subsidiary terminates because
of a change of control of the Company;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Operation of Agreement
1.01 This Agreement will be effective immediately but will be
operative only upon the occurrence of a Change of Control, as defined in Section
1.02, which takes place prior to November 25, 1997 and while the Executive is
employed by the Company or a subsidiary.
1.02 A "Change of Control" will be deemed to occur when:
(i) the Company ceases to be required to file reports under
Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any successor to that
Section; or
(ii) any "person" (as defined in Sections 13(d) and 14(d) of
the Exchange Act) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
either (a) 35% or more of the outstanding common stock of the
Company, or (b) 35% of the outstanding securities of any other
class or classes which individually or together have the power
(other than upon a failure to pay dividends, unless that failure
has occurred) to elect a majority of the members of the Board of
Directors of the Company, except that an acquisition of
securities by an employee benefit plan of the Company or a
subsidiary will never be a Change of Control; or
(iii) the Board of Directors of the Company determines
that a tender offer statement filed by any person with the
Securities and Exchange Commission indicates an intention on the
part of that person to acquire control of the Company; or
(iv) there is a change in the membership of the Board of
Directors of the Company and immediately following the change a
majority of the members of the Board of Directors of the Company
are not persons who (a) had been directors of the Company for at
least the preceding 24 consecutive months or (b) when they
initially were elected to the Board, (x) were nominated (if they
were elected by the stockholders) or elected (if they were
elected by the directors) with the affirmative vote of two-thirds
of the directors who were Continuing Directors at the time of the
nomination or election by the Board and
(y) were not elected as a result of an actual or threatened
solicitation of proxies or consents by a person other than the
Board of Directors of the Company or an agreement intended to
avoid or settle such a proxy solicitation (the directors
described in clauses (a) and (b) being "Continuing Directors").
1.03 If there is a Change of Control of the type described in Section
1.02 (iii), but the tender offer or exchange offer which is the subject of the
tender offer statement does not take place or is withdrawn without the tendered
shares being purchased, upon a determination by the Board of Directors of the
Company that this has occurred, the Change of Control described in Section
1.02(iii) (but not any Change of Control of the type described in any other
subsection of Section 1.02), and all rights of the Executive to receive payments
under Section 2.01 or benefits under Section 2.02 upon a subsequent Termination
because of that Change of Control, will be rescinded. However, rescission of a
Change of Control of the type described in Section 1.02(iii) will not affect the
right of the Executive to receive the payments described in Section 2.01 and the
benefits described in Section 2.02 as a result of a Termination which occurs
between the time the Change of Control takes place and the time it is rescinded.
2. Payments
2.01 If there is a Termination, as defined in Section 2.04, with
regard to the Executive, the Company will pay to the Executive within 20 days
after the day on which the Termination occurs, in lieu of any salary (other than
salary for the pay period in which the Termination occurs and any unpaid salary
for prior pay periods), bonus, severance or similar payments, or damages, to
which the Executive might otherwise be entitled because of the termination under
any agreement with the Company or a subsidiary or any plan or program of the
Company or any subsidiary:
(i) A lump sum equal to (a) the Applicable Factor (defined below)
times the higher of the Executive's annual salary immediately before the Change
of Control and Executive's annual salary immediately before the Termination,
plus (b) the average of the bonus and similar payments made to the Executive
during each of the three full fiscal years of the Company immediately before the
fiscal year during which the Termination occurs. For the purposes of this
Agreement, the "Applicable Factor" at any time will be the lesser of (x) 2.99 or
(y) the number of years (to the nearest one-hundredth of a year) between the
date of the Termination and the Executive's 65th birthday (but not less than one
full year).
(ii) A lump sum equal to (and in full satisfaction of the obligations
of the Company with regard to) any unpaid compensation which had been deferred
under any plan or program of the Company or a subsidiary or any agreement
between the Executive and the Company or a subsidiary, including all accrued but
unpaid interest or sums in lieu of interest as provided in the plan, program or
agreement to the date the lump sum is paid.
(iii) If, notwithstanding Section 2.03 of this Agreement, any
stock options or stock appreciation rights held by the Executive expire as a
result of the Termination without becoming exercisable, a lump sum equal to (x)
the number of shares as to which the stock options or stock appreciation rights
expired without becoming exercisable, times (y) (I) the last reported sale price
on the date of the Termination of a share of the Company's common stock (or the
other class of securities to which the stock options or stock appreciation
rights relate) in the principal market in which the common stock (or other class
of securities) is traded (which on the date of this agreement is the American
Stock Exchange with regard to the common stock) or if the common stock (or other
class of securities) is not publicly traded on the date of the Termination, the
fair market value of a share of common stock (or of the other class of
securities) of the Company on that date (which, if the Change of Control
involved a tender offer or other payment for shares of common stock (or
securities of the other class), will not be less than the tender offer price or
other per share payment), minus (II) the per share exercise price of the stock
option or stock appreciation right.
2.02 After a Termination occurs, until the earlier of 2.99 years after
the date of the Termination and the Executive's 65th birthday, the Executive
will continue to be entitled to all employee welfare benefits (including death
benefits, disability benefits, and medical and dental benefits) and
indemnification rights, to which the Executive would have been entitled if the
Executive had continued to be employed by the Company or a subsidiary in the
position held by the Executive immediately before the Termination (but not less
than the employee welfare benefits to which the Executive would have been
entitled if the Executive had continued to be employed by the Company or a
subsidiary in the position held by the Executive immediately before the Change
of Control which resulted in the Termination).
2.03 At the time of a Change of Control, any stock options and stock
appreciation rights held by the Executive will immediately become exercisable in
full, notwithstanding any provisions of the stock options to the contrary
(except that no stock options or stock appreciation rights will become
exercisable earlier than the earliest date on which they could have been made
exercisable in accordance with the plan under which they were issued). This
provision will be deemed incorporated in all stock options and stock
appreciation rights held by the Executive, whether granted before or after the
date of this Agreement.
2.04 There will be a "Termination" with regard to the Executive if and
when:
(a) the Company and its subsidiaries terminate the Executive's
employment within 18 months after a Change of Control other than because of (i)
the Executive's death or "total disability," as defined in the then most current
Turner Staff Handbook, or (ii) the Executive's conviction of, or plea of no
contest 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) the Executive terminates the Executive's employment by the
Company and its subsidiaries within 18 months after a Change of Control for Good
Reason. "Good Reason" means the occurrence of any of the followingevents
without the prior express written consent of the Executive:
(i) A transfer of the Executive to a position which has a
lesser title or lesser responsibilities than those of the
position in which the Executive was employed immediately before
the Change of Control;
(ii) The assignment to the Executive of duties materially
less significant than those normally associated with the position
held by the Executive;
(iii) A material adverse change in (A) the Executive's
base salary from that in effect immediately prior to the Change
of Control or (B) what the Executive must achieve to qualify for
annual bonuses at least as great as the average annual bonus the
Executive received during the three full fiscal years of the
Company prior to the fiscal year in which the Change of Control
occurs;
(iv) The failure by the Company to provide to the Executive
(A) material perquisites, (B) vacation rights, (C) benefits
(including without limitation service credit for benefits) under
employee benefit and retirement plans, (D) indemnification for
all matters relating to his or her employment by the Company or
any of its affiliates, or (E) reimbursement for reasonable
expenses incurred by the Executive in the course of his or her
duties; in each case on a basis at least as favorable to the
Executive as those to which he or she was entitled immediately
before the Change of Control;
(v) The Company's requiring the Executive to locate his or
her office more than 100 miles distant from the location of his
or her office immediately prior to the Change of Control or
requiring the Executive to be absent from his or her office more
than 100 working days in any year, except in either case, to the
extent consistent with the Executive's office location changes
and travel before the Change of Control;
(vi) A breach by the Company of any employment agreement
between the Executive and the Company;
(vii) The liquidation or dissolution of the Company or
the transfer of a majority of its assets to a transferee which
does not become bound by this Agreement as contemplated by
Section 5.04.
Notwithstanding the foregoing, no occurrence will constitute Good Reason unless
(a) at least 30 days before the termination of employment, the Executive
notifies the Company's Board of Directors of the conditions which the Executive
believes constitute Good Reason and states in the notice that unless those
conditions are cured the Executive will terminate his or her employment with the
Company or a subsidiary, but those conditions are not cured prior to the
termination of employment, and (b) the termination of employment occurs within
60 days after the Executive learns of the conditions which constitute Good
Reason. An election by the Executive to terminate the Executive's employment
under this Section 2.04(b) will not be deemed a voluntary termination by the
Executive for any purpose.
3. Certain Tax-Related Payments
3.01 If the Executive becomes subject to excise tax under Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), because any
payment made or other thing done under this Agreement constitutes an "excess
parachute payment," as that term is defined in Section 4999 of the Code, the
Company will pay the Executive not later than 20 days after a demand made by the
Executive, cash equal to the amount necessary to reimburse the Executive for the
excise tax and for all additional Federal, state and local excise, income or
other taxes which become due, or will become due, because of the payments under
this Section, assuming the Executive pays Federal, state and local income taxes
at the highest marginal rate applicable to individuals living and working where
the Executive lives and works. If there is a dispute between the Executive and
the Company regarding the amount the Company is required to pay under this
Section 3, that dispute will be resolved by the accounting firm which audited
the Company's financial statements immediately before the Change of Control or
another nationally recognized accounting firm mutually acceptable to the Company
and the Executive.
4. Letter of Credit
4.01 As promptly as practicable after (a) a Change of Control occurs
or (b) someone commences a solicitation of proxies or a tender offer which, if
successful, would result in a Change of Control, the Company will obtain a
letter of credit from a major national or New York State chartered bank which
will expire not earlier than 24 months after the Change of Control occurs and
which provides that the Executive may, by certifying (i) that a Termination with
respect to the Executive has occurred, and (ii) the amount due to the Executive
under Section 2, draw against the letter of credit the amount stated in the
certificate to be due to the Executive under Section 2. The agreement between
the Company and the bank which issues the letter of credit may specifically
state that the bank will have no responsibility for determining whether the
statements in the certificate from the Executive are correct. If the Executive
draws under the letter of credit any sum which is not due to the Executive under
Section 2, promptly on demand from the Company, the Executive will pay to the
Company the sum which is not due to the Executive plus interest on that sum at
10% per annum from the date the Executive draws the sum under the letter of
credit to the date the Executive pays the sum over to the Company.
5. General Provisions
5.01 This Agreement will not limit the right of the Company or the
Executive to terminate or alter the terms of the Executive's employment prior to
a Change of Control.
5.02 If the Executive brings suit to enforce any payment obligation of
the Company under this Agreement and a judgment is entered against the Company,
the Executive will be entitled to recover from the Company, (i) all legal
expenses incurred by the Executive in connection with the suit and (ii) an
amount equal to twice the amount which the Company would otherwise have been
required to pay to the Executive pursuant to Section 2.
5.03 If any provisions of this Agreement are determined to be invalid,
the remaining provisions will remain in full force and effect to the fullest
extent permitted by law.
5.04 This Agreement will be binding upon and inure to the benefit of
the Company and any successor of the Company, including any corporation which
acquires (by merger, consolidation or otherwise) all or substantially all the
assets of the Company (which successor, after it acquires all or substantially
all the assets of the Company, will be the "Company" for the purposes of this
Agreement). This Agreement will be binding upon and inure to the benefit of
(and be enforceable by) the Executive and, after the Executive dies or is
determined not to be competent, the Executive's executors or other legal
representatives.
5.05 The Executive will be entitled to the payments specified in
Section 2 without regard to whether the Executive seeks or obtains other
employment after a Termination and without reduction for any compensation
received from other employment after the Termination.
5.06 Any notice or other communication under or relating to this
Agreement must be in writing and will be deemed given on the day on which it is
delivered in person or by overnight courier service or sent by facsimile
transmission to the Company at the general facsimile number at its principal
office or to the Executive at a facsimile number specified by the Executive
(with acknowledgment of receipt at the number to which sent), or on the third
business day after the day on which it is sent from within the United States of
America by first class mail, addressed (i) if to the Company or its Board of
Directors, at the principal offices of the Company, attention General Counsel
and (ii) if to the Executive, to the Executive's office or to the Executive's
home address as shown on the personnel records of the Company, or at such other
address as is specified by the Executive to the Company after the date of this
Agreement in the manner provided in this Section.
5.07 This Agreement contains the entire agreement of the parties with
respect to the subject matter of this Agreement and supersedes all prior
agreements and understandings with respect to that subject matter, whether oral
or written. This Agreement may be amended only by a writing signed by the
Company, with approval of its Board of Directors, and the Executive.
5.08 The Company may withhold from payments it is required to make
under this Agreement and from other payments of compensation to the Executive
all sums, including taxes, which the Company determines it is required by law to
withhold because of payments made under this Agreement.
5.09 This Agreement will be governed by, and construed under, the laws
of the State of New York applicable to contracts made and to be performed in
that state.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year shown on the first page.
THE TURNER CORPORATION
By___________________________
Chairman of the Board
______________________________
A G R E E M E N T
between
THE TURNER CORPORATION
and
DATED:
AGREEMENT between THE TURNER CORPORATION (the "Company") and
(the "Executive"), dated November 20,
199 .
W I T N E S S E T H:
WHEREAS, the Executive is a principal officer of the Company or a
subsidiary;
WHEREAS, the Company wishes to encourage continuity of management in
the event of any actual or threatened change of control of the Company; and
WHEREAS, the Executive wishes to be assured of adequate compensation
if the Executive's employment by the Company or a subsidiary terminates because
of a change of control of the Company;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Operation of Agreement
1.01 This Agreement will be effective immediately but will be
operative only upon the occurrence of a Change of Control, as defined in Section
1.02, which takes place prior to November 25, 1997 and while the Executive is
employed by the Company or a subsidiary.
1.02 A "Change of Control" will be deemed to occur when:
(i) the Company ceases to be required to file reports under
Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any successor to that Section; or
(ii) any "person" (as defined in Sections 13(d) and 14(d) of
the Exchange Act) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
either (a) 35% or more of the outstanding common stock of the
Company, or (b) 35% of the outstanding securities of any other
class or classes which individually or together have the power
(other than upon a failure to pay dividends, unless that failure
has occurred) to elect a majority of the members of the Board of
Directors of the Company, except that an acquisition of
securities by an employee benefit plan of the Company or a
subsidiary will never be a Change of Control; or
(iii) the Board of Directors of the Company determines
that a tender offer statement filed by any person with the
Securities and Exchange Commission indicates an intention on the
part of that person to acquire control of the Company; or
(iv) there is a change in the membership of the Board of
Directors of the Company and immediately following the change a
majority of the members of the Board of Directors of the Company
are not persons who (a) had been directors of the Company for at
least the preceding 24 consecutive months or (b) when they
initially were elected to the Board, (x) were nominated (if they
were elected by the stockholders) or elected (if they were
elected by the directors) with the affirmative vote of two-thirds
of the directors who were Continuing Directors at the time of the
nomination or election by the Board and (y) were not elected as a
result of an actual or threatened solicitation of proxies or
consents by a person other than the Board of Directors of the
Company or an agreement intended to avoid or settle such a proxy
solicitation (the directors described in clauses (a) and (b)
being "Continuing Directors").
1.03 If there is a Change of Control of the type described in Section
1.02 (iii), but the tender offer or exchange offer which is the subject of the
tender offer statement does not take place or is withdrawn without the tendered
shares being purchased, upon a determination by the Board of Directors of the
Company that this has occurred, the Change of Control described in Section
1.02(iii) (but not any Change of Control of the type described in any other
subsection of Section 1.02), and all rights of the Executive to receive payments
under Section 2.01 or benefits under Section 2.02 upon a subsequent Termination
because of that Change of Control, will be rescinded. However, rescission of a
Change of Control of the type described in Section 1.02(iii) will not affect the
right of the Executive to receive the payments described in Section 2.01 and the
benefits described in Section 2.02 as a result of a Termination which occurs
between the time the Change of Control takes place and the time it is rescinded.
2. Payments
2.01 If there is a Termination, as defined in Section 2.04, with
regard to the Executive, the Company will pay to the Executive within 20 days
after the day on which the Termination occurs, in lieu of any salary (other than
salary for the pay period in which the Termination occurs and any unpaid salary
for prior pay periods), bonus, severance or similar payments, or damages, to
which the Executive might otherwise be entitled because of the Termination under
any agreement with the Company or a subsidiary or any plan or program of the
Company or any subsidiary:
(I) A lump sum equal to (a) the higher of the Executive's annual
salary immediately before the Change of Control and the Executive's annual
salary immediately before the Termination, plus (b) the average of the bonus
and similar payments made to the Executive during each of the three full fiscal
years of the Company immediately before the fiscal year during which the
Termination occurs.
(ii) A lump sum equal to (and in full satisfaction of the
obligations of the Company with regard to) any unpaid compensation which had
been deferred under any plan or program of the Company or a subsidiary or any
agreement between the Executive and the Company or a subsidiary, including all
accrued but unpaid interest or sums in lieu of interest as provided in the plan,
program or agreement to the date the lump sum is paid.
(iii) If, notwithstanding Section 2.03 of this Agreement, any
stock options or stock appreciation rights held by the Executive expire as a
result of the Termination without becoming exercisable, a lump sum equal to (x)
the number of shares as to which the stock options or stock appreciation rights
expired without becoming exercisable, times (y) (I) the last reported sale price
on the date of the Termination of a share of the Company's common stock (or the
other class of securities to which the stock options or stock appreciation
rights relate) in the principal market in which the common stock (or other class
of securities) is traded (which on the date of this agreement is the American
Stock Exchange with regard to the common stock), or if the common stock (or
other class of securities) is not publicly traded on the date of the
Termination, the fair market value of a share of common stock (or of the other
class of securities) of the Company on that date (which, if the Change of
Control involved a tender offer or other payment for shares of common stock (or
securities of the other class), will not be less than the tender offer price or
other per share payment), minus (II) the per share exercise price of the stock
option or stock appreciation right.
2.02 After a Termination occurs, until the earlier of one year after
the date of the Termination and the Executive's 65th birthday, the Executive
will continue to be entitled to all employee welfare benefits (including death
benefits, disability benefits, and medical and dental benefits) and
indemnification rights, to which the Executive would have been entitled if the
Executive had continued to be employed by the Company or a subsidiary in the
position held by the Executive immediately before the Termination (but not less
than the employee welfare benefits to which the Executive would have been
entitled if the Executive had continued to be employed by the Company or a
subsidiary in the position held by the Executive immediately before the Change
of Control which resulted in the Termination).
2.03 At the time of a Change of Control, any stock options and stock
appreciation rights held by the Executive will immediately become exercisable in
full, notwithstanding any provisions of the stock options to the contrary
(except that no stock options or stock appreciation rights will become
exercisable earlier than the earliest date on which they could have been made
exercisable in accordance with the plan under which they were issued). This
provision will be deemed incorporated in all stock options and stock
appreciation rights held by the Executive, whether granted before or after the
date of this Agreement.
2.04 There will be a "Termination" with regard to the Executive if and
when:
(a) the Company and its subsidiaries terminate the Executive's
employment within 18 months after a Change of Control other than because of (i)
the Executive's death or "total disability," as defined in the then most current
Turner Staff Handbook, or (ii) the Executive's conviction of, or plea of no
contest 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) the Executive terminates the Executive's employment by the
Company and its subsidiaries within 18 months after a Change of Control for Good
Reason. "Good Reason" means the occurrence of any of the following events
without the prior express written consent of the Executive:
(i) A transfer of the Executive to a position which has a
lesser title or lesser responsibilities than those of the
position in which the Executive was employed immediately before
the Change of Control;
(ii) The assignment to the Executive of duties materially
less significant than those normally associated with the position
held by the Executive;
(iii) A material adverse change in (A) the Executive's base
salary from that in effect immediately prior to the Change of
Control or (B) what the Executive must achieve to qualify for
annual bonuses at least as great as the average annual bonus the
Executive received during the three full fiscal years of the
Company prior to the fiscal year in which the Change of Control
occurs;
(iv) The failure by the Company to provide to the Executive
(A) material perquisites, (B) vacation rights, (C) benefits
(including without limitation service credit for benefits) under
employee benefit and retirement plans, (D) indemnification for
all matters relating to his or her employment by the Company or
any of its affiliates, or (E) reimbursement for reasonable
expenses incurred by the Executive in the course of his or her
duties; in each case on a basis at least as favorable to the
Executive as those to which he or she was entitled immediately
before the Change of Control;
(v) The Company's requiring the Executive to locate his or
her office more than 100 miles distant from the location of his
or her office immediately prior to the Change of Control or
requiring the Executive to be absent from his or her office more
than 100 working days in any year, except in either case, to the
extent consistent with the Executive's office location changes
and travel before the Change of Control;
(vi) A breach by the Company of any employment agreement
between the Executive and the Company;
(vii) The liquidation or dissolution of the Company or the
transfer of a majority of its assets to a transferee which does
not become bound by this Agreement as contemplated by Section
5.04.
Notwithstanding the foregoing, no occurrence will constitute Good Reason unless
(a) at least 30 days before the termination of employment, the Executive
notifies the Company's Board of Directors of the conditions which the Executive
believes constitute Good Reason and states in the notice that unless those
conditions are cured the Executive will terminate his or her employment with the
Company or a subsidiary, but those conditions are not cured prior to the
termination of employment, and (b) the termination of employment occurs within
60 days after the Executive learns of the conditions which constitute Good
Reason. An election by the Executive to terminate the Executive's employment
under this Section 2.04(b) will not be deemed a voluntary termination by the
Executive for any purpose.
3. Certain Tax-Related Payments
3.01If the Executive becomes subject to excise tax under Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), because any
payment made or other thing done under this Agreement constitutes an "excess
parachute payment," as that term is defined in Section 4999 of the Code, the
Company will pay the Executive not later than 20 days after a demand made by the
Executive, cash equal to the amount necessary to reimburse the Executive for the
excise tax and for all additional Federal, state and local excise, income or
other taxes which become due, or will become due, because of the payments under
this Section, assuming the Executive pays Federal, state and local income taxes
at the highest marginal rate applicable to individuals living and working where
the Executive lives and works. If there is a dispute between the Executive and
the Company regarding the amount the Company is required to pay under this
Section 3, that dispute will be resolved by the accounting firm which audited
the Company's financial statements immediately before the Change of Control or
another nationally recognized accounting firm mutually acceptable to the Company
and the Executive.
4. Letter of Credit
4.01As promptly as practicable after (a) a Change of Control occurs or
(b) someone commences a solicitation of proxies or a tender offer which, if
successful, would result in a Change of Control, the Company will obtain a
letter of credit from a major national or New York State chartered bank which
will expire not earlier than 24 months after the Change of Control occurs and
which provides that the Executive may, by certifying (i) that a Termination with
respect to the Executive has occurred, and (ii) the amount due to the Executive
under Section 2, draw against the letter of credit the amount stated in the
certificate to be due to the Executive under Section 2. The agreement between
the Company and the bank which issues the letter of credit may specifically
state that the bank will have no responsibility for determining whether the
statements in the certificate from the Executive are correct. If the Executive
draws under the letter of credit any sum which is not due to the Executive under
Section 2, promptly on demand from the Company, the Executive will pay to the
Company the sum which is not due to the Executive plus interest on that sum at
10% per annum from the date the Executive draws the sum under the letter of
credit to the date the Executive pays the sum over to the Company.
5. General Provisions
5.01 This Agreement will not limit the right of the Company or the
Executive to terminate or alter the terms of the Executive's employment prior to
a Change of Control.
5.02 If the Executive brings suit to enforce any payment obligation of
the Company under this Agreement and a judgment is entered against the Company,
the Executive will be entitled to recover from the Company, (i) all legal
expenses incurred by the Executive in connection with the suit and (ii) an
amount equal to twice the amount which the Company would otherwise have been
required to pay to the Executive pursuant to Section 2.
5.03 If any provisions of this Agreement are determined to be
invalid, the remaining provisions will remain in full force and effect to the
fullest extent permitted by law.
5.04 This Agreement will be binding upon and inure to the benefit
of the Company and any successor of the Company, including any corporation which
acquires (by merger, consolidation or otherwise) all or substantially all the
assets of the Company (which successor, after it acquires all or substantially
all the assets of the Company, will be the "Company" for the purposes of this
Agreement). This Agreement will be binding upon and inure to the benefit of
(and be enforceable by) the Executive and, after the Executive dies or is
determined not to be competent, the Executive's executors or other legal
representatives.
5.05 The Executive will be entitled to the payments specified in
Section 2 without regard to whether the Executive seeks or obtains other
employment after a Termination and without reduction for any compensation
received from other employment after the Termination.
5.06 Any notice or other communication under or relating to this
Agreement must be in writing and will be deemed given on the day on which it is
delivered in person or by overnight courier service or sent by facsimile
transmission to the Company at the general facsimile number at its principal
office or to the Executive at a facsimile number specified by the Executive
(with acknowledgment of receipt at the number to which sent), or on the third
business day after the day on which it is sent from within the United States of
America by first class mail, addressed (i) if to the Company or its Board of
Directors, at the principal offices of the Company, attention General Counsel
and
(ii) if to the Executive, to the Executive's office or to the
Executive's home address as shown on the personnel records of the Company, or at
such other address as is specified by the Executive to the Company after the
date of this Agreement in the manner provided in this Section.
5.07 This Agreement contains the entire agreement of the parties with
respect to the subject matter of this Agreement and supersedes all prior
agreements and understandings with respect to that subject matter, whether oral
or written. This Agreement may be amended only by a writing signed by the
Company, with approval of its Board of Directors, and the Executive.
5.08 The Company may withhold from payments it is required to make
under this Agreement and from other payments of compensation to the Executive
all sums, including taxes, which the Company determines it is required by law to
withhold because of payments made under this Agreement.
5.09 This Agreement will be governed by, and construed under, the laws
of the State of New York applicable to contracts made and to be performed in
that state.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year shown on the first page.
THE TURNER CORPORATION
By___________________________
Chairman of the Board
______________________________
_______________________________
1 Amount should combine principal together with accrued
interest and breakage compensation, if any, to be paid by
the Assignee, net of any portion of any upfront fee to be
paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically
or by formula rather than as a fixed sum.
EXHIBIT 11
The Turner Corporation and Subsidiaries
Computation of Earnings Per Share
Primary 1996 1995 1994
Weighted average shares outstanding used in the
computation of reported earnings per share 5,254,953 5,222,127 5,177,303
Common stock equivalents granted under employee
stock option and stock purchase plans and
assumed tobe outstanding 68,774 48,326 9,576
Weighted average common and common equivalent
shares outstanding - Primary 5,323,727 5,270,453 5,186,879
Income (loss) less Series B preferred
dividends (net of tax) and Series C preferred
dividends ($3,522,000)($554,000)$1,822,000
Primary earnings (loss) per common share $(0.66) $(0.11) $0.35
Fully Diluted 1996 1995 1994
Weighted average shares outstanding used
in the computation of reported earnings
per share 5,254,953 5,222,124 5,177,303
Common stock equivalents granted under employee
stock option and stock purchase plans 71,190 48,326 9,576
Conversion of Series B convertible preferred
stock to common stock 847,925 848,560 848,956
Weighted average common and common equivalent
shares outstanding - Fully Diluted 6,174,068 6,119,013 6,035,835
Income (loss) less Series C preferred
dividends and Series B preferred dividend
differential, net of tax $(3,522,000) $(554,000)$1,822,000
Fully diluted earnings (loss) per common
share ($0.57) ($0.09) $0.30
Note: The conversion of the Series C Convertible Preferred Stock and
the Convertible Debenture is considered to be antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains certain summary financial information extracted from the
Company's financial statements and notes thereto and is qualified in its
entirety by reference to such financial statements. The Company files an
unclassified balance sheet, certain line items are not applicable. All values
except share amounts are in thousands.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 121,981
<SECURITIES> 0
<RECEIVABLES> 453,749
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 62,833
<DEPRECIATION> 39,608
<TOTAL-ASSETS> 894,596
<CURRENT-LIABILITIES> 0
<BONDS> 81,805
<COMMON> 5,291
0
857
<OTHER-SE> 53,982
<TOTAL-LIABILITY-AND-EQUITY> 894,596
<SALES> 0
<TOTAL-REVENUES> 2,865,340
<CGS> 0
<TOTAL-COSTS> 2,793,572
<OTHER-EXPENSES> 66,847
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,735
<INCOME-PRETAX> (1,032)
<INCOME-TAX> 663
<INCOME-CONTINUING> (1,695)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,695)
<EPS-PRIMARY> (.66)
<EPS-DILUTED> (.57)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains certain summary financial information extracted from the
Company's financial statements and notes thereto and is qualified in its
entirety by reference to such financial statements.The Company files an
unclassified balance sheet, certain line items are not applicable. All values
except share amounts are in thousands.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 87,969
<SECURITIES> 4,838
<RECEIVABLES> 404,098
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 57,552
<DEPRECIATION> 35,391
<TOTAL-ASSETS> 823,963
<CURRENT-LIABILITIES> 0
<BONDS> 94,790
<COMMON> 5,270
0
858
<OTHER-SE> 55,168
<TOTAL-LIABILITY-AND-EQUITY> 823,963
<SALES> 0
<TOTAL-REVENUES> 2,744,894
<CGS> 0
<TOTAL-COSTS> 2,676,582
<OTHER-EXPENSES> 57,254
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,267
<INCOME-PRETAX> 3,261
<INCOME-TAX> 1,987
<INCOME-CONTINUING> 1,274
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,274
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.09)
</TABLE>
EXHIBIT 21
Subsidiaries Of The Registrant
Percentage
Jurisdiction 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, Inc. 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
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 (UK) Limited England
100
Turner International Limited Bermuda 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.
