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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
For the fiscal year ended December 31, 1998
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 New York Stock Exchange
(with preferred stock purchase rights)
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 February 26, 1999, 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 New York Stock Exchange) was $107,947,744.
As of February 26, 1999, 7,899,448 shares of Turner'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.
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SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER
THE SECURITIES LITIGATION REFORM ACT OF 1995
This Annual Report on Form 10-K includes forward-looking statements. We
have based these forward-looking statements on our current expectations and
projections about future events. These statements appear in various places in
this Form 10-K, including the sections entitled "Business", "Legal Proceedings",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Quantitative and Qualitative Disclosures about Market Risk" and
"Financial Statements and Supplementary Data." These forward-looking statements
are subject to risks, uncertainties and assumptions including, among other
things, the following:
o the accuracy of our estimates as to future revenues from and future costs
to be incurred on construction projects;
o our dependence on construction activity in the markets we serve; and
o the impact of competition and economic conditions on our business.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this report might not occur.
PART I
Item 1 Business
Turner, established in 1902, is a holding company predominantly
engaged through its subsidiaries in general building construction
and construction management in the United States, with limited construction
operations abroad. We also have 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 our construction and real estate segments
appears in the Consolidated Financial Statements and in Note 16 in Part II,
Item 8 of this report.
Turner is one of the largest construction contractors in the United
States. Turner participates in the general building segment of the general
building construction market. We are currently one of the leading companies in
various sectors of the general building construction market, including the
construction of commercial office buildings, healthcare facilities,
pharmaceutical plants and R&D laboratories, education and science centers,
correctional facilities, sports complexes and distribution/warehouse
facilities. Within these market sectors, we have expertise in the
construction of many specialty facilities such as hospitals, stadiums,
correctional facilities, airport terminals, "clean rooms" and research
facilities. Our special projects divisions perform tenant fit-out and
renovation work and build smaller, free-standing structures. We do not
currently participate in the single-family home market or in heavy
construction such as roads, bridges and power plants.
In our 97-year history, Turner has completed a number of notable projects,
including the United Nations Headquarters building, Madison Square Garden and
Lincoln Center in New York. More recently, we built the Rock and Roll Hall of
Fame and Museum in Cleveland, Ohio, Ericsson Stadium (the home of the Carolina
Panthers), Arthur Ashe Stadium (the home of the United States Open Tennis
Tournament) and the Swiss Bank Headquarters in Stamford, Connecticut. During
1998, Turner completed projects including Princeton Stadium in Princeton, New
Jersey, Swiss Re America Headquarters in Armonk, New York and Shirley Maximum
Security Correctional Facility in Shirley, Massachusetts. Over the last year, we
began work on several significant projects including the Bristol-Myers Squibb
Laboratory Renovation project in New Jersey, new stadiums for the Cincinnati
Bengals and Detroit Tigers, and the Merck office complex in West Point,
Pennsylvania. In addition, late in 1998, American Airlines awarded us a
five-year project for terminal facilities at Miami International Airport. In
recent years, we have benefited from repeat business, with approximately 69% of
our 1998 contracts coming from repeat customers.
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The U.S. building construction market is comprised of various sectors.
Within these sectors, demand may increase or decrease regionally and over
time. In addition, the factors that affect demand in the various sectors may be
different. For example, commercial construction is typically subject to changes
in regional vacancy rates and overall levels of business activity. Demand for
health care and education facilities is typically subject to changing
demographics and levels of government spending. Ten years ago, we were
principally focused in the commercial office building sector. Since that time,
we have sought to diversify our business to take advantage of opportunities
available in other sectors and to reduce our exposure to cyclical trends
affecting only a limited portion of the construction industry. We increased our
focus on healthcare facilities, airport terminals, entertainment facilities,
such as stadiums, manufacturing facilities, including "clean rooms" and research
facilities. Year-to-year operations may be adversely affected by general
economic conditions that are unfavorable for business and industry.
Construction Business
Turner's construction business is conducted by a number of construction
subsidiaries. Our principal construction subsidiary is Turner Construction
Company. Additionally, two wholly-owned subsidiaries, Universal Construction
Company, Inc. and The Lathrop Company, Inc., are active principally in the
Southeast and Midwest sections of the United States.
Construction Activities
Our construction activities include:
General Contracting (87% of our value of construction completed in 1998).
When we act as a general contractor, we normally are responsible for the entire
project and are paid the entire price for the completed project. Most aspects of
the construction, however, are performed by subcontractors who are paid by us.
We plan and schedule the project, procure materials, marshal the workforce
required for the project, award subcontracts and direct and manage construction
operations. When providing design/build services in general contracting, we
design and complete the entire project. We hire the designer, supervise the
design and act as a general contractor. These projects are generally not
competitively bid, and we believe that our role in the design phase of the
project enables us to more accurately estimate the cost of the project. In
design/build/finance, we additionally enter into an arrangement with a partner
who seeks to arrange financing for the project.
Construction Management (12% of our value of construction completed in
1998). When we provide construction management services, we monitor and
coordinate the progress of the work done by contractors who are typically
employed directly by the owner to build the project. Construction management
contracts generally involve less risk than do projects in which we are the
general contractor. However, the potential profit from construction management
contracts is typically less than the potential profit we expect to earn as a
general contractor.
Consulting (1% of our value of construction completed in 1998). When
providing consulting services, we act as an advisor to our client. For example,
we may provide advice on budget review, constructability, scheduling, materials
or building codes. In certain situations, we act as an agent of the client by
monitoring the progress of another contractor. We also provide construction
maintenance, preconstruction planning, and feasibility studies as part of our
consulting services.
Discussion about our backlog appears in Management's Discussion and
Analysis of Financial Condition and Results of Operations beginning in Part II,
Item 7 of this report.
A portion of Turner's construction activity is performed under payment and
performance bonds obtained from our sureties. Projects requiring surety bonds
are usually either publicly funded or private projects which often require
FHA-type mortgage insurance. While our sureties limit the amount of new payment
and performance bonds available, to date this limitation has not restricted our
ability to secure new work. There could be circumstances, however, when this
limitation could influence our selection of prospective projects to pursue.
Turner is a partner with Karl Steiner Holding AG ("Steiner Holding") of
Switzerland in a joint venture by the name of Turner Steiner International LLC,
which provides general contracting, construction management and consulting
services outside Turner's and Steiner Holding's traditional home markets.
Turner is also a partner with EMCON in a joint venture by the name of ET
Environmental Corporation, which provides environmental engineering, general
contracting and construction management services on environmental projects
throughout the United States.
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Contracts
We generally enter into one of the following types of contracts with our
clients: guaranteed maximum price, lump sum and cost plus fee. In 1998,
consistent with past experience, the majority of our contracts was the result of
a negotiation process, as opposed to competitive bidding.
Guaranteed Maximum Price (55% of our value of construction completed in
1998). With a guaranteed maximum price contract, the owner is required to pay
costs, materials and other charges up to a guaranteed maximum price. In many
cases, the owner and Turner share the costs savings if the actual costs of
construction are less than the guaranteed maximum price. Turner assumes the risk
that costs may exceed the guaranteed maximum price. Guaranteed maximum price
contracts allow the construction process to begin before plans and
specifications are finalized. Normally, the guaranteed maximum price itself is
not negotiated until the design is at least 70% complete. Guaranteed maximum
price contracts are typically entered into when we perform general contracting
services.
Lump Sum (21% of our value of construction completed in 1998). Under lump
sum contracts, there is a fixed price for the project. The fixed price of lump
sum contracts eliminates the client's price risk, but there is no sharing of any
cost savings. Turner assumes any costs above the fixed price, and any cost
savings flow directly to us. On projects which are competitively bid, lump sum
arrangements are generally required by the bidding procedures. Lump sum may also
be used in negotiated situations. In either event, Turner uses a lump sum
contract for a project only if the plans and specifications for the project are
complete so as to allow costs to be fully estimated. Lump sum contracts are
typically entered into when we perform general contracting services.
Cost Plus Fee (24% of our value of construction completed in 1998). Under
these contracts, the owner is required to pay costs, materials and other charges
plus a fee for our services. Cost plus fee contracts expose the client to the
risk of cost overruns. For us, cost plus fee contracts normally involve less
risk and less profit than lump sum or guaranteed maximum price contracts. Cost
plus fee contracts may be entered into when we perform general contracting,
construction management or consulting services. Under these contracts, our
reimbursable costs and fee may be fixed in amount or subject to a maximum
amount.
Business Units
We have a network of 24 full-service business units and 17 satellite
offices located in or near many major cities in the United States. Each business
unit or office in the network operates as a decentralized profit center, with
each business unit responsible for the creation of an annual profit plan. Each
business unit is typically led by a general manager who has the overall
responsibility and accountability for the management and operation of the
business unit.
A full-service business unit includes staff in each of our
disciplines--business development, estimating, purchasing, accounting, cost
control and project management. Many of these support services report directly
to the general manager, with the operations manager and project executives
assuming responsibility and accountability for operations and project
management.
Most of our 24 full-service units have a special projects division. Each
of these divisions is generally set up as an independent profit center within
the respective business unit. The special projects divisions perform tenant
fit-out and renovation work and build smaller, free-standing structures, such
as restaurants, warehouses and convenience stores. In 1998, the special projects
divisions had approximately 780 active projects across the United States. The
total value of construction completed by the special projects divisions in 1998
was $664 million.
A satellite office typically engages in business development and project
management, delegating staff functions, such as estimating, purchasing,
accounting and cost-control to a full-service business unit. Each satellite
office also reports to a full-service business unit.
In general, contracts are secured either through the business development
department in the business unit--headed by a senior staff person, usually the
Manager of Business Development--or through the Corporate Sales and Marketing
Strategies Department at Turner's New York headquarters. The latter department
is headed by a Senior Vice President. The Corporate Sales and Marketing
Strategies Department also develops sales strategies for Turner and each of the
business units and satellite offices and has responsibility for Turner's
national accounts. We maintain relationships with local architects, facility
managers, and repeat customers with the goal of participating in a project
from the planning stage.
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Employees
As of December 31, 1998, we employed approximately 3,200 staff employees,
of whom about 1,900 were executives, project managers, superintendents,
engineers, purchasing agents, estimators, senior accountants and other
supervisory personnel. In addition, we employ supervisors and skilled building
workers for construction work which has not been subcontracted to contractors.
During 1998, approximately 2,200 supervisors and skilled building workers were
employed at various times.
Competition
The United States building construction industry is intensely competitive
and highly fragmented with no participant, we believe, having a greater than 5%
market share. We compete both with major contractors and with smaller
contractors. Competition in the industry takes a number of forms, including
reputation, fee levels, quality of service and degree of risk assumption. Each
large population center generally has a number of smaller, locally based
building contractors accustomed to undertaking all but the largest and most
complicated projects. Also, contractors who have no local presence in areas
where we have an office can successfully compete for and obtain projects there,
notwithstanding the lack of a local presence.
Real Estate
During the early 1980's, we acquired and developed a number of real estate
properties. In 1987, we decided to cease our real estate development activities
and to divest our real estate investments. Since that time, our real estate
portfolio has been reduced from a carrying value of more than $240.0 million at
the end of 1987 to $40.5 million as of December 31, 1998. Among the properties
we currently own, either directly or through joint venture interests, are an air
cargo distribution facility in Columbus, Ohio and undeveloped land in Virginia,
Illinois and Florida. The air cargo distribution facility is under a lease
until 2010 to an investment grade tenant. As of December 31, 1998, the remaining
debt on the air cargo facility was $11.4 million. Currently, we have no
employees exclusively managing our real estate operations.
Item 2 Properties
Turner'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 where its offices
are located. Our corporate headquarters and New York business unit occupy
100,000 square feet of space that is leased until 2005. Rental expense for this
space during 1998 was $2.63 million. Significant construction projects typically
have temporary field offices.
We lease major construction equipment such as hoists, cranes and personnel
lifts from equipment suppliers for use on particular projects and generally own
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
Given the nature of the construction industry and the contracting process,
disputes often arise among builders, subcontractors and customers. These
disputes have the potential to result in the assertion of claims and litigation.
Each year we incur substantial legal expenses in defense of claims against us
and in pursuit of our claims.
We are a defendant in various litigation incident to our business, and in
certain instances the amounts sought include substantial claims and
counterclaims. Although we cannot predict the outcome with certainty, in our
opinion based on the facts known by us at this time, we anticipate that the
resolution of such litigation will not have a material adverse effect on our
business, operating results or financial condition.
Item 4 Submission of Matters to a Vote of Security Holders
None
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PART II
Item 5 Market for the Registrant's Common Equity and Related Stockholder Matters
Turner's common stock has been listed and traded on the New York Stock
Exchange under the symbol TUR since December 16, 1998. Before that date, it was
listed on the American Stock Exchange. The following table sets forth high and
low closing prices per share of our common stock. The prices for our common
stock have been restated to reflect a three-for-two stock split payable in the
form of a 50% stock dividend distributed on August 14, 1998.
<TABLE>
<CAPTION>
Quarterly Stock Information
----------------------------------------------
<S> <C> <C>
1998 High Low
First $20.000 $16.500
Second 20.167 16.333
Third 18.078 13.750
Fourth 18.625 14.000
----------------------------------------------
1997 High Low
First $9.500 $6.833
Second 11.667 8.000
Third 15.333 10.417
Fourth 17.750 13.083
</TABLE>
No dividends were declared or paid on Turner's common stock in 1998 or
1997. As of February 26, 1999, there were approximately 2,065 record holders of
Turner's common stock.
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Item 6 Selected Financial Data
The Turner Corporation and Subsidiaries
Five-year Summary of Financial Information
(in thousands, except share amounts)
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Value of construction completed ......... $ 4,129,721 $ 3,639,754 $ 3,317,774 $ 3,281,495 $ 2,670,433
------------ ------------ ------------ ------------ ------------
Revenue from construction contracts ..... $ 3,698,994 $ 3,170,744 $ 2,838,052 $ 2,727,001 $ 2,174,836
Cost of construction contracts .......... 3,600,311 3,084,236 2,765,901 2,658,462 2,118,361
------------ ------------ ------------ ------------ ------------
Earnings from construction contracts .... $ 98,683 $ 86,508 $ 72,151 $ 68,539 $ 56,475
Income from construction operations ..... $ 31,174 $ 18,185 $ 5,304 $ 11,285 $ 7,103(b)
Income (loss) from real estate operations (764) (839) (383) (227) 1,312
Net income (loss) ....................... 19,633 5,893(a) (1,695) 1,274 3,650
Basic earnings (loss) per common share:
Income (loss) before extraordinary loss 2.21 0.85 (0.45) (0.07) 0.24
Net income (loss) ..................... 2.21 0.49 (0.45) (0.07) 0.24
Diluted earnings per common share:
Income before extraordinary loss ...... 1.50 0.64 (c) (c) 0.20
Net income ............................ 1.50 0.41 (c) (c) 0.20
Dividends per Series C preferred share .. 60.21 85.00 85.00 85.00 85.00
Dividends per Series D preferred share .. 60.21 35.42 -- -- --
Dividends per Series B preferred share .. 2.16 2.16 2.16 2.16 2.16
Stockholders' equity .................... $ 88,766 $ 76,136 $ 60,130 $ 61,296 $ 59,216
Weighted average common shares
outstanding ........................... 8,001,425 7,929,739 7,858,022 7,790,688 7,687,251
Weighted average common and common
equivalent shares outstanding ......... 12,382,739 12,268,714 (c) (c) 9,053,754
Total assets ............................ $ 1,129,063 $ 972,687 $ 894,596 $ 823,963 $ 715,329
Notes payable due after one year and
convertible debenture ................. $ 13,481 $ 16,770 $ 62,593 $ 88,613 $ 94,891
</TABLE>
(a) Includes extraordinary loss of $2,899, net of tax.
(b) Includes restructuring credits of $1,145.
(c) Antidilutive.
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Item 7 Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Turner determines construction earnings under the percentage of completion
method. Under this method, Turner 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. Turner's
construction contracts generally extend over more than one year. During the
course of the work, we make revisions in costs and earnings estimates in the
year in which the facts that require the revision become known. Due to
uncertainties inherent in the estimation process, it is reasonably possible that
we may revise our estimates from time to time.
Value of construction completed includes, in addition to revenue from
construction contracts, construction costs incurred directly by owners on
certain construction management and similar projects. Because of the varying
proportion of general building construction, construction management and
construction consulting contracts, which generally have different anticipated
profit margins, the relationship between the value of work completed and
earnings from construction contracts is not necessarily meaningful in the short
run.
Revenue from construction contracts represents the value of construction
completed during the period, exclusive of costs incurred by owners in connection
with work under construction management and similar contract types. It is a
measure of the gross construction revenue that flows directly through Turner
from construction contracts.
Cost of construction contracts includes all direct material, labor and
subcontracting costs, and those indirect costs related to contract performance
that are identifiable with or allocable to contracts.
Construction operating expenses are costs incurred by Turner's
construction operating units and subsidiaries that are not directly attributable
to construction contracts, such as business development, estimating, purchasing,
accounting, cost control, general office support and similar costs attributed to
our construction activities. These construction operating expenses are expensed
as incurred.
General and administrative expenses represent corporate overhead expenses.
Value of new contracts secured represents the value of construction to be
completed under contracts awarded through formal signed contractual commitments
during the period.
Backlog represents the value of construction to be completed in future
periods from contracts secured but not yet started or fully completed. The
average duration of a project in backlog, excluding projects to be performed by
our special projects divisions, is approximately 18 months. Estimated earnings
from construction contracts, which represents the anticipated earnings
associated with the estimated value of construction to be completed, cannot and
should not be used as the basis for predicting future net income.
Our cash and cash equivalents and marketable securities balances at any
particular time include substantial monies received from owners on construction
contracts which have not yet been remitted for the purchase of materials,
payment of subcontractors and other construction costs.
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Results of Operations
The following table summarizes the consolidated results of operations and
the related percentages of revenues for the years ended December 31, 1996, 1997
and 1998.
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------------------------
1996 1997 1998
----------------------- --------------------- -----------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenue from construction contracts $ 2,838,052 100.00% $ 3,170,744 100.00% $ 3,698,994 100.00%
Cost of construction contracts 2,765,901 97.46% 3,084,236 97.27% 3,600,311 97.33%
----------- ----- ----------- ---- ----------- ----
Earnings from construction contracts 72,151 2.54% 86,508 2.73% 98,683 2.67%
Construction operating expenses 52,962 1.87% 52,500 1.66% 53,220 1.44%
General and administrative expenses 13,885 0.49% 15,823 0.50% 14,289 0.39%
----------- ----- ----------- ---- ----------- ----
Income from construction operations 5,304 0.18% 18,185 0.57% 31,174 0.84%
Losses from real estate operations (383) (0.01%) (839) (0.03%) (764) (0.02%)
Interest expense (7,735) (0.27%) (6,406) (0.20%) (933) (0.03%)
Interest and other income, net 1,782 0.06% 5,046 0.16% 7,379 0.20%
----------- ----- ----------- ---- ----------- ----
Income (loss) before income taxes (1,032) (0.04%) 15,986 0.50% 36,856 0.99%
Income tax provision 663 0.02% 7,194 0.23% 17,223 0.46%
----------- ----- ----------- ---- ----------- ----
Income (loss) before extraordinary loss (1,695) (0.06%) 8,792 0.27% 19,633 0.53%
Extraordinary loss on early
extinguishment of debt, net of tax -- -- (2,899) (0.09%) -- --
----------- ----- ----------- ---- ----------- ----
Net income (loss) $ (1,695) (0.06%) $ 5,893 0.18% $ 19,633 0.53%
=========== ===== =========== ==== =========== ====
</TABLE>
Results of Operations 1998 versus 1997
Revenue from construction contracts was a record $3.7 billion in 1998
versus $3.2 billion in 1997, an increase of 17% due to increased market
penetration in the key market sectors in which we compete, particularly the
commercial office building sector, as well as an enhanced sales and marketing
effort. The value of construction completed was a record $4.1 billion in 1998
versus $3.6 billion in 1997, an increase of 13%.
Earnings from construction contracts were a record $98.7 million in 1998
versus $86.5 million in 1997, an increase of 14%. The increase in earnings is
directly related to the increased revenue from construction contracts in 1998.
As a percentage of revenue, earnings from construction contracts decreased
slightly to 2.67% in 1998 from 2.73% in 1997. However, as a percentage of the
value of construction completed, earnings from construction contracts were 2.39%
in 1998 versus 2.38% in 1997.
Construction operating expenses were $53.2 million in 1998 versus $52.5
million in 1997, an increase of 1%. Due to Turner's increased construction
activity in 1998, we were able to allocate a greater percentage of construction
operating costs to cost of construction contracts than in 1997. In addition,
1998 includes a net periodic pension credit of $4.2 million versus a $0.6
million charge in 1997 relating to Turner's qualified defined benefit pension
plan, due to a higher return achieved on plan assets. The 1998 pension credit
was offset by an increase in expenses related to Turner's incentive compensation
plan as a result of improved earnings. As a percentage of construction revenue,
construction operating expenses were 1.44% in 1998 versus 1.66% in 1997.
General and administrative expenses were $14.3 million in 1998 versus
$15.8 million in 1997, a decrease of 10%. Expenses for 1997 include a
non-recurring charge of approximately $2.0 million related to stock awards
granted to directors in connection with the termination of the directors'
retirement plan.
Income from construction operations, reflecting the factors discussed
above, was $31.2 million in 1998 versus $18.2 million in 1997, an increase of
71%. As a percentage of earnings from construction contracts, income from
constructions operations was 32% in 1998 versus 21% in 1997.
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Losses from real estate operations were $0.8 million in 1998 and 1997. We
sold one undeveloped land parcel in 1998 for $1.5 million at approximately its
carrying value, and entered into a 90 year ground lease arrangement on another
land parcel. The ground lease tenant is currently constructing a commercial
office building on the site. Our proceeds from real estate sales were
approximately $1.4 million in 1998 and $22.9 million in 1997. Rental and other
income from real estate operations declined by 55% to $1.9 million in 1998 and
the related cost of operations declined by 58% to $1.1 million in 1998, due to
the sales of properties in 1998 and 1997. Losses from real estate operations
included depreciation and amortization expense of $1.5 million for 1998 and $2.3
million for 1997. Because these expenses are non-cash, Turner's real estate
operations generated positive cash flow after payments of interest on real
estate debt for each of these years.
Interest expense was $0.9 million in 1998 versus $6.4 million in 1997, a
decrease of 85% primarily due to lower debt levels as a result of real estate
sales, debt repayments and the conversion of a debenture. In 1997, we paid down
$10.3 million of building mortgages, and in December 1997 we repaid the $39.5
million principal balance of our 11.74% senior notes. Interest expense also
decreased as a result of Steiner Holding's election to convert its $6.0 million
8.5% convertible debenture into 6,000 shares of Series D preferred stock as of
June 30, 1997.
Interest and other income, net was $7.4 million in 1998 versus $5.0
million in 1997, an increase of 46%. Interest income was $9.3 million in 1998
versus $5.1 million in 1997, an increase of 82% due to increased income from
higher investment balances of cash and cash equivalents and marketable
securities. We have been able to maintain these higher investment balances due
to increased construction acitivity, higher levels of profitability and improved
cash management practices. As noted above, these investment balances consist
principally of monies received from owners on construction projects which have
not yet been remitted for the purchase of materials, payment of subcontractors
and other construction costs. Also included in other income in 1998 is a $2.0
million impairment loss on an investment in a construction material supply
company.
Income taxes. The provision for income taxes resulted in an effective rate
of 46.7% in 1998 and 45.0% in 1997. The difference between this rate and the 35%
statutory federal rate is primarily due to state and local taxes. The effective
rate for 1998 also includes the impact of the non-deductibility of certain
operating costs, primarily executive compensation in excess of $1.0 million.
Net income was $19.6 million in 1998 versus net income of $5.9 million in
1997. The 1997 results included the impact of a $2.9 million extraordinary loss,
net of tax, due to the early extinguishment of debt. Basic earnings per share
were $2.21 in 1998 versus $0.85 before the extraordinary loss of $0.36, and
$0.49 after the extraordinary loss, in 1997, all after taking into account the
dividends paid to preferred stockholders. Diluted earnings per share were $1.50
in 1998 versus $0.64 before the extraordinary loss of $0.23, and $0.41 after the
extraordinary loss, in 1997.
Value of new contracts secured was $4.30 billion in 1998 versus $3.37
billion in 1997, an increase of 28%. We attribute the improvement to our
increased market penetration in the general building market sectors in which we
compete.
The backlog of value of construction to be completed was $4.50 billion as
of December 31, 1998 versus $4.01 billion as of December 31, 1997, an increase
of 12%. Anticipated earnings associated with backlog from construction contracts
were $113.2 million as of December 31, 1998 versus $104.7 million as of December
31, 1997, an increase of 8%. We attribute these results to increased market
penetration in the key market sectors in which we compete and our enhanced sales
and marketing effort.
Approximately 30% of the earnings backlog and 31% of the value of
construction backlog relates to work to be performed in 2000 and beyond.
Estimated earnings from construction backlog should not be used as a basis for
predicting future operating results.
Results of Operations 1997 versus 1996
Revenue from construction contracts was $3.2 billion in 1997 versus $2.8
billion in 1996, an increase of 12% due to the continuation of a strong general
building construction market across the United States. The value of construction
completed was $3.6 billion in 1997 versus $3.3 billion in 1996, an increase of
10%.
9
<PAGE> 11
Earnings from construction contracts were $86.5 million in 1997 versus
$72.2 million in 1996, an increase of 20%. As a percentage of revenue, earnings
from construction contracts increased to 2.73% in 1997 from 2.54% in 1996, its
highest level since 1993. These results reflected not only the growth in
construction revenues but also an improvement in margins of new contracts
secured over the past several years. As of January 1997, Turner stopped pursuing
new construction contracts in the Caribbean and ceased its Caribbean operations
in March 1998. During 1997, our Caribbean operations incurred losses on
construction contracts of $2.0 million due to continued labor inefficiencies and
corrective work. In 1996, the Caribbean operations had losses from construction
contracts of $4.9 million. Also included in 1996 was the recognition of $5.0
million of losses on a contract in Minneapolis. The losses on the Minneapolis
project were principally related to significant changes in the design and scope
of the project, which resulted in increased costs and time extensions, as well
as certain changes to original estimates of costs. Late in 1998, Turner settled
these issues with the owner at an amount within the losses previously recorded.
Construction operating expenses and general and administrative expenses
were $68.3 million in 1997 versus $66.8 million in 1996, an increase of 2%. As a
percentage of construction revenue, construction operating expenses and general
and administrative expenses were 2.16% in 1997 versus 2.36% in 1996. Expenses
for 1997 include a non-recurring charge of approximately $2.0 million related to
stock awards granted to directors in connection with the termination of the
directors' retirement plan. Included in 1996 were expenses of $2.5 million
related to management changes, and the write-off of $1.3 million of goodwill
associated with two subsidiaries acquired in the mid 1980's that management
determined was impaired.
Income from construction operations, reflecting the factors discussed
above, was $18.2 million in 1997 versus $5.3 million in 1996, an increase of
243%. As a percentage of earnings from construction contracts, income from
construction operations was 21% in 1997 versus 7% in 1996.
Losses from real estate operations were $0.8 million in 1997 versus $0.4
million in 1996, an increase of 119%. We sold three developed properties, a real
estate joint venture interest, two land parcels and a number of condominium
units in 1997 as we continued to dispose of properties at approximately their
carrying values. In 1996, we sold two developed properties and two land parcels,
all at approximately their carrying values. Our proceeds from real estate sales
were approximately $22.9 million in 1997 and $18.5 million in 1996. Rental and
other income from real estate operations declined by 47% to $4.1 million in 1997
and the related cost of operations declined by 40% to $2.7 million in 1997, due
to the sales of properties in 1997 and 1996. Losses from real estate operations
included depreciation and amortization expense of $2.3 million for 1997 and $3.7
million for 1996. Because these expenses are non-cash, Turner's real estate
operations generated positive cash flow after payments of interest on real
estate debt for each of these years.
Interest expense was $6.4 million in 1997 versus $7.7 million in 1996, a
decrease of 17% primarily due to lower debt levels as a result of real estate
sales, debt repayments and the conversion of a debenture. In 1997, Turner paid
down $10.3 million in building mortgages. Interest expense also decreased as a
result of Steiner Holding's election to convert its $6.0 million 8 1/2%
convertible debenture into 6,000 shares of Series D preferred stock as of June
30, 1997.
Interest and other income, net was $5.0 million in 1997 versus $1.8
million in 1996, an increase of 183% due to increased interest income
attributable to higher investment balances maintained by Turner.
Income taxes. The provision for income taxes resulted in an effective tax
rate of 45.0% in 1997. The difference between this rate and the 34% statutory
federal rate is primarily attributable to state and local taxes. In 1996, Turner
had a substantial provision for income taxes 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.
Net income was $5.9 million in 1997 versus a net loss of $1.7 million in
1996. The 1997 results included the impact of a $2.9 million extraordinary loss,
net of tax, due to the early extinguishment of debt. Basic earnings per share
before the extraordinary loss were $0.85 in 1997 versus a loss of $0.45 per
share in 1996, both after taking into account dividends paid to the preferred
stockholders. Basic earnings per share were $0.49 after the extraordinary loss
of $0.36 in 1997. Diluted earnings per share before the extraordinary loss were
$0.64 in 1997. Diluted earnings per share were $0.41 after the extraordinary
loss of $0.23 in 1997.
Financial Condition, Liquidity and Capital Resources
As of December 31, 1998, Turner had cash, cash equivalents and marketable
securities of $281.6 million, compared with $172.1 million as of December 31,
1997 and $122.0 million at the end of 1996. Management believes Turner's current
cash position, in addition to cash flows from construction activities, its $45.0
million revolving credit facility and amounts available from overnight credit
facilities, will be sufficient to support Turner's short-term and foreseeable
long-term requirements. Debt maturing in 1999 and capital expenditures in 1999
will be paid from funds generated from operations.
10
<PAGE> 12
Cash flows for 1998 resulted in a net increase of funds of $15.6 million.
Cash flows provided by operating activities amounted to $124.0 million due
primarily to an increase in construction activity and the timing of associated
receipts and disbursements. Cash flows used in investing activities amounted to
$96.5 million, principally due to purchases and sales of marketable securities.
Cash used in financing activities amounted to $11.9 million in 1998 and was
primarily attributable to stock repurchases and debt payments.
In November 1997, we announced the adoption of a stock repurchase program
for 5% of our common stock. In August 1998, we announced that we had completed
that program and may repurchase up to an additional 5% of our common stock.
Repurchases may be made from time to time in the open market or in negotiated
transactions as market and economic conditions warrant and may be discontinued
at any time. Turner will fund repurchases through internally generated funds.
Capital expenditures in 1998, excluding real estate related capital
expenditures, were $4.9 million versus $6.1 million in 1997, a decrease of $1.2
million. Significant capital expenditures in 1998 included computer hardware and
software and leasehold improvements. We do not expect our capital expenditures
for 1999 to vary significantly from the level incurred over the last two years.
There was $0.1 million in real estate related capital expenditures in 1998
versus $0.4 million in 1997. We do not anticipate any significant real estate
related capital expenditures for 1999.
Turner has a $45.0 million unsecured revolving credit facility that can be
used for borrowings for general corporate purposes. The facility matures in 2001
and contains two one-year extension options. Turner also maintains $8.5 million
of overnight credit facilities with various banks. Turner had no borrowings
under these facilities during 1997 or 1998.
Inflation
Inflation and price changes during 1998 did not significantly affect the
major markets in which Turner conducts its business. In view of the moderate
rate of inflation, its impact on our business has not been significant.
Year 2000
The Year 2000 issue results from computer programs and circuitry that do
not differentiate between the year 1900 and the year 2000 because they are
written using two- rather than four-digit dates to define the applicable year.
If not corrected, many computer applications and date-sensitive devices could
fail or create erroneous results before, on or after January 1, 2000. The Year
2000 issue affects virtually all companies and organizations, including Turner.
Turner has developed, circulated and is implementing a plan, the goal of
which is to assure that Turner will achieve Year 2000 readiness in time to avoid
significant Year 2000 failures. We are proceeding with our assessment of the
Year 2000 readiness issues for our computer systems, business processes,
facilities and equipment to assure their continued functionality. We are also
continuing our assessment of the readiness of external entities, including
subcontractors, suppliers, vendors, and customers that interface with us. To
that end, Turner has taken the following actions:
- Computer Systems. Turner periodically upgrades its computer systems as
its needs require. We began to upgrade the software for our internal computer
systems in 1997, and we expect to complete this process, including the upgrade
of our financial, project management and human resources systems, by the second
quarter of 1999. Vendors of our new internal computer systems certified them to
be Year 2000 compliant. Turner's computer hardware is limited to stand-alone and
networked desk-top systems. Turner has assessed the Year 2000 readiness of its
computer hardware and potential risks to Turner's operations, and intends to
replace those systems that may pose a risk to Turner's operations in 1999. With
regard to computer equipment that is not Year 2000 compliant, but does not pose
a risk to Turner, as, for example, a desk-top computer used for word processing,
Turner intends in 1999 to replace that equipment as part of routine upgrading.
- Business Processes. Turner has and continues to assess the potential
impact of Year 2000 on its business processes. Internally, Turner has prepared
and distributed a memorandum outlining a plan of preparedness to all of Turner's
financial managers in our headquarters and business units. The plan requires
each manager to assess the risks of Year 2000 issues at his or her business
unit or department, and it describes Turner's policies on testing, upgrading,
and dealing with third parties as they relate to Year 2000. Each manager is
required to report back to headquarters on his or her assessment of the unit's
readiness. We have modified our contract terms for any subcontractor hired to
install or construct structures or equipment that may be affected by Year 2000
issues. We also require any vendor selling equipment that may be affected by
Year 2000 issues to sign a contract. In both cases, the contract terms require
the subcontractor or vendor to represent and warrant that the work performed by
the subcontractor or the equipment sold by the vendor is Year 2000 compliant.
The subcontractor or the vendor also must agree to indemnify Turner and the
owner of the building from any claims arising out of the breach of such
representation and warranty. Turner is in the process of contacting its key
suppliers and subcontractors regarding their Year 2000 readiness.
- Facilities and Equipment. Turner does not actually own or operate
significant construction machinery, but we have implemented a policy of
inquiring as to the Year 2000 compliance of subcontractors' equipment and
suppliers' products. We have upgraded our phone switch with Year 2000
compliant components in our New York headquarters and are assessing the
equipment of other offices. The cost of our phone switch upgrade was under
$50,000. Although Turner intends to upgrade its e-mail and networking software
and hardware by mid-1999, we will still be vulnerable to any Year 2000 problems
incurred by third-party telecommunications companies.
The costs incurred for upgrading our computer systems are being funded
with cash flows from operations. The costs incurred principally relate to new
systems being implemented to improve business functionality rather than solely
to address Year 2000 issues. These costs have not been and are not expected to
be material in relation to Turner's overall results of operations or financial
position.
Turner believes that its internal computer systems, facilities, and
equipment will be Year 2000 compliant. However, there is no assurance that all
of the planned upgrades will be completed in time or function as intended. As we
have no contingency plan other than to deal as expeditiously as possible with
situations if and when they arise, we may experience significant disruptions,
the cost of which we are unable to estimate at this time. We also believe that
disruptions in some of our subcontractors' operations will not significantly
affect our projects because we have relationships with other subcontractors with
similar expertise. We cannot assume, however, that an adequate supply of
subcontractors will be available.
11
<PAGE> 13
Item 7A Quantitative and Qualitative Disclosures about Market Risk
Turner does not have a material exposure to risks associated with foreign
currency fluctuations related to our operations. Turner does not use derivative
financial instruments in its operations or investment portfolio. Turner does not
have a material exposure to market risks associated with changes in interest
rates given (a) the relative stability of interest rates currently, (b) Turner's
lack of significant balances of variable interest rate debt and (c) the absence
of a long-term holding strategy for our marketable debt securities. Turner does
not believe it has any other material exposure to market risks associated with
interest rates.
12
<PAGE> 14
Item 8 Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page No.
--------
Financial Statements:
Report of Independent Public Accountants.......................... 14
Consolidated Balance Sheets - as of December 31, 1998 and 1997.... 15
Consolidated Statements of Operations - for the years ended
December 31, 1998, 1997 and 1996................................ 16
Consolidated Statements of Stockholders' Equity - for the years
ended December 31, 1998, 1997 and 1996.......................... 17
Consolidated Statements of Cash Flows - for the years ended
December 31, 1998, 1997 and 1996................................ 18
Notes to Consolidated Financial Statements........................ 19-34
Responsibilities for Financial Reporting.......................... 35
13
<PAGE> 15
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, 1998
and 1997, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1998. 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, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
New York, New York
February 19, 1999
14
<PAGE> 16
The Turner Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share amounts)
<TABLE>
<CAPTION>
As of December 31, 1998 1997
- ------------------------------------------------------------------------------------------------
Assets
<S> <C> <C>
Cash and cash equivalents ......................................... $ 168,879 $ 153,241
Marketable securities (Note 2) .................................... 112,766 18,902
Construction receivables: (Note 3)
Due on contracts ............................................. 358,502 334,802
Retainage .................................................... 188,148 180,329
Unbilled construction costs and related earnings ............. 159,093 139,969
Real estate (Note 4) .............................................. 40,494 44,378
Property and equipment, net (Note 5) .............................. 22,298 23,241
Prepaid pension cost (Note 10) ................................... 67,066 62,854
Other assets ...................................................... 11,817 14,971
----------- -----------
Total assets ...................................................... $ 1,129,063 $ 972,687
=========== ===========
Liabilities
Construction accounts payable and accrued expenses:
Trade ........................................................ $ 540,435 $ 469,734
Retainage .................................................... 216,077 189,480
Billings in excess of construction costs and related earnings 128,029 105,021
Notes payable (Note 6) ............................................ 18,891 21,719
Deferred income taxes (Note 7) .................................... 18,417 17,097
Other liabilities ................................................. 118,448 93,500
----------- -----------
Total liabilities ................................................. 1,040,297 896,551
----------- -----------
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 D 8.5% cumulative convertible (6,000 shares issued
and outstanding; $6,000 liquidation preference) ........... 6 6
Series B cumulative convertible (850,000 shares issued;
838,731 and 844,966 outstanding) .......................... 839 845
Common stock, $1 par value
(20,000,000 shares authorized; 8,382,581 and 5,440,738 issued) 8,383 5,441
Paid in capital ................................................... 45,392 50,250
Retained earnings ................................................. 44,113 26,436
----------- -----------
98,742 82,987
Less: Loan to Employee Stock Ownership Plan (Note 11) ............ (1,832) (4,349)
Treasury stock, at cost (503,434 and 138,509 common shares) (8,144) (2,502)
----------- -----------
Total stockholders' equity ........................................ 88,766 76,136
----------- -----------
Total liabilities and stockholders' equity ........................ $ 1,129,063 $ 972,687
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
15
<PAGE> 17
The Turner Corporation and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share amounts)
<TABLE>
<CAPTION>
For the years ended December 31, 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Value of construction completed (see below) ................. $ 4,129,721 $ 3,639,754 $ 3,317,774
- -------------------------------------------------------------------------------------------------------------
Revenue from construction contracts ......................... $ 3,698,994 $ 3,170,744 $ 2,838,052
Cost of construction contracts .............................. 3,600,311 3,084,236 2,765,901
------------ ------------ ------------
Earnings from construction contracts ...................... 98,683 86,508 72,151
Construction operating expenses ............................. 53,220 52,500 52,962
General and administrative expenses ......................... 14,289 15,823 13,885
------------ ------------ ------------
Income from construction operations ....................... 31,174 18,185 5,304
Losses from real estate operations (see below) .............. (764) (839) (383)
Interest expense (Note 16) .................................. (933) (6,406) (7,735)
Interest and other income, net (Note 14) ................... 7,379 5,046 1,782
------------ ------------ ------------
Income (loss) before income taxes ......................... 36,856 15,986 (1,032)
Income tax provision (Note 7) ............................... 17,223 7,194 663
------------ ------------ ------------
Income (loss) before extraordinary loss ................... 19,633 8,792 (1,695)
Extraordinary loss on early extinguishment of debt,
net of tax (Note 6) .................................... -- (2,899) --
------------ ------------ ------------
Net income (loss) ......................................... $ 19,633 $ 5,893 $ (1,695)
============ ============ ============
Basic earnings (loss) per common share:
Income (loss) before extraordinary loss (Note 15) ...... $ 2.21 $ 0.85 $ (0.45)
Extraordinary loss ..................................... -- (0.36) --
Net income (loss) ...................................... 2.21 0.49 (0.45)
Diluted earnings (loss) per common share:
Income before extraordinary loss (Note 15) ............. $ 1.50 $ 0.64 (a)
Extraordinary loss ..................................... -- (0.23) --
Net income ............................................. 1.50 0.41 (a)
Weighted average common shares outstanding .................. 8,001,425 7,929,739 7,858,022
Weighted average common and common equivalent shares
outstanding ............................................ 12,382,739 12,268,714 (a)
- -------------------------------------------------------------------------------------------------------------
Value of construction completed consists of the following:
Revenue from construction contracts ......................... $ 3,698,994 $ 3,170,744 $ 2,838,052
Construction costs incurred by owners in connection with work
under construction management and similar contracts .... 430,727 469,010 479,722
------------ ------------ ------------
Value of construction completed ........................ $ 4,129,721 $ 3,639,754 $ 3,317,774
============ ============ ============
Real estate operations consist of the following:
Real estate sales ........................................... $ 1,500 $ 23,567 $ 19,454
Cost of sales ............................................... (1,500) (23,567) (19,439)
Rental and other income ..................................... 1,872 4,137 7,834
Cost of operations .......................................... (1,127) (2,705) (4,498)
Depreciation and amortization expense ....................... (1,509) (2,271) (3,734)
------------ ------------ ------------
Losses from real estate operations ..................... $ (764) $ (839) $ (383)
============ ============ ============
</TABLE>
(a) Antidilutive
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
16
<PAGE> 18
The Turner Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity
(in thousands, except share amounts)
<TABLE>
<CAPTION>
For the years ended December 31, 1998 1997 1996
- --------------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
--------- ----------- --------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Convertible preferred stock, Series C
Balance as of January 1 and December 31 ..... 9,000 $ 9 9,000 $ 9 9,000 $ 9
--------- ----------- --------- -------- --------- --------
Convertible preferred stock, Series D
Balance as of January 1 ..................... 6,000 6 -- -- -- --
Preferred stock issued ...................... -- -- 6,000 6 -- --
--------- ----------- --------- -------- --------- --------
Balance as of December 31 ................... 6,000 6 6,000 6 -- --
--------- ----------- --------- -------- --------- --------
Convertible preferred stock, Series B
Balance as of January 1 ..................... 844,966 845 847,925 848 848,560 849
Preferred stock retired ..................... (6,235) (6) (2,959) (3) (635) (1)
--------- ----------- --------- -------- --------- --------
Balance as of December 31 ................... 838,731 839 844,966 845 847,925 848
--------- ----------- --------- -------- --------- --------
Common stock
Balance as of January 1 ..................... 5,440,738 5,441 5,290,861 5,291 5,270,040 5,270
Three-for-two stock split ................... 2,720,127 2,720 -- -- -- --
Common stock issued ......................... 221,716 222 149,877 150 20,821 21
--------- ----------- --------- -------- --------- --------
Balance as of December 31 ................... 8,382,581 8,383 5,440,738 5,441 5,290,861 5,291
--------- ----------- --------- -------- --------- --------
Paid in capital
Balance as of January 1 ..................... 50,250 38,388 38,305
Three-for-two stock split ................... (2,720) -- --
Excess of proceeds over par value of common
stock issued ........................... 1,676 1,328 83
Exercise of stock awards with treasury stock (2,299) -- --
Tax benefits from stock options exercised ... 216 309 --
Retirement of Series B preferred stock ...... (158) (96) --
Retirement of common stock purchase rights .. (1,573) -- --
Conversion of debenture to Series D preferred
stock .................................. -- 5,994 --
Issuance of stock awards and stock options .. -- 4,327 --
----------- -------- --------
Balance as of December 31 ................... 45,392 50,250 38,388
----------- -------- --------
Retained earnings
Balance as of January 1 ..................... 26,436 22,580 26,102
Net income (loss) ........................... 19,633 5,893 (1,695)
Dividends on Series C preferred stock ....... (542) (765) (765)
Dividends on Series D preferred stock........ (361) (212) --
Dividends on Series B preferred stock........ (1,815) (1,827) (1,832)
Tax benefits on Series B preferred stock
dividends .............................. 762 767 770
----------- -------- --------
Balance as of December 31 ................... 44,113 26,436 22,580
----------- -------- --------
Loan to Employee Stock Ownership Plan
Balance as of January 1 ..................... (4,349) (6,595) (8,673)
Repayment from loan to ESOP ................. 2,517 2,246 2,078
----------- -------- --------
Balance as of December 31 ................... (1,832) (4,349) (6,595)
----------- -------- --------
Treasury stock
Balance as of January 1 ..................... 138,509 (2,502) 45,549 (391) 51,090 (508)
Three-for-two stock split ................... 69,255 -- -- -- -- --
Purchases of treasury stock ................. 417,200 (6,782) 97,079 (2,170) -- --
Treasury stock issued ....................... (121,530) 1,140 (4,119) 59 (5,541) 117
--------- ----------- --------- -------- --------- --------
Balance as of December 31 ................... 503,434 (8,144) 138,509 (2,502) 45,549 (391)
--------- ----------- --------- -------- --------- --------
Total stockholders' equity .................. $ 88,766 $ 76,136 $ 60,130
=========== ======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
17
<PAGE> 19
The Turner Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
For the years ended December 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ................................................. $ 19,633 $ 5,893 $ (1,695)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization expense ........................... 10,842 10,708 12,685
Net periodic pension charge (credit) ............................ (4,212) 617 (1,227)
Provision for deferred income taxes ............................. 1,320 3,089 5
Investment impairment ........................................... 2,000 -- --
Write-off of goodwill ........................................... -- -- 1,290
Stock-based compensation charge ................................. -- 4,379 --
Extraordinary loss on early extinguishment of debt .............. -- 4,392 --
Changes in operating assets and liabilities:
Increase in construction receivables .......................... (50,643) (58,697) (67,087)
Increase in construction accounts payable and accrued expenses 120,306 104,515 85,350
Decrease (increase) in other assets ........................... (1,454) 2,477 3,833
Increase in other liabilities ................................. 26,172 15,428 146
--------- --------- ---------
Net cash provided by operating activities ......................... 123,964 92,801 33,300
--------- --------- ---------
Cash flows from investing activities:
Purchases of marketable securities ................................ (109,036) (18,902) (257)
Proceeds from sale of marketable securities ....................... 15,151 -- 5,025
Distributions from real estate joint ventures ..................... 54 590 1,215
Purchases of property and equipment ............................... (4,914) (6,117) (7,371)
Proceeds from sale of property and equipment ...................... 73 502 290
Proceeds from sale of real estate, net ............................ 1,416 22,942 18,509
Increase in real estate ........................................... (83) (431) (2,143)
Repayments on notes receivable .................................... 873 1,181 1,295
--------- --------- ---------
Net cash provided by (used in) investing activities ............... (96,466) (235) 16,563
--------- --------- ---------
Cash flows from financing activities:
Common stock issued ............................................... 1,898 1,485 172
Cash dividends to preferred stockholders .......................... (2,718) (2,804) (2,597)
Repayments from loan to ESOP ...................................... 2,517 2,246 2,078
Principal payments under capital lease obligations ................ (2,052) (2,160) (3,016)
Retirement of common stock purchase rights ........................ (1,573) -- --
Payments on borrowings ............................................ (3,150) (54,002) (18,044)
Proceeds from borrowings .......................................... -- -- 5,507
Premium on early extinguishment of debt ........................... -- (3,901) --
Proceeds from issuance of treasury stock .......................... -- -- 49
Purchases of treasury stock ....................................... (6,782) (2,170) --
--------- --------- ---------
Net cash used in financing activities ............................. (11,860) (61,306) (15,851)
--------- --------- ---------
Net increase in cash and cash equivalents ....................... 15,638 31,260 34,012
Cash or cash equivalents at beginning of year ................... 153,241 121,981 87,969
--------- --------- ---------
Cash and cash equivalents at end of year ........................ $ 168,879 $ 153,241 $ 121,981
========= ========= =========
- -------------------------------------------------------------------------------------------------------------
Non-cash investing activities:
Note receivable from sale of net assets of construction affiliate $ 1,200 $ -- $ --
Non-cash financing activities:
Capital lease obligations incurred by the Company ............... 2,374 2,076 2,568
Conversion of debenture to Series D convertible preferred stock . -- 6,000 --
Treasury stock issued under stock-based compensation plans ...... 1,140 -- --
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
18
<PAGE> 20
The Turner Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, except share amounts)
The Turner Corporation and Subsidiaries is a construction contractor,
which also has limited real estate operations. Turner is predominantly engaged
in general building construction and construction management throughout the
United States, with limited construction operations abroad. The primary
construction market sectors in which we operate are the commercial office
building, healthcare, pharmaceutical plants and R&D laboratories, education and
science, correctional facilities, sports and distribution/warehouse sectors.
Turner also performs interior construction work and construction consulting
services. Construction contracts include lump sum contracts, cost plus fee
contracts and variations of these types of contracts, including guaranteed
maximum price contracts. Specialty trade contractors are used extensively as
subcontractors in the performance of our construction contracts.
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Turner and
our proportionate interest in the accounts of construction affiliates and
construction joint ventures. Turner also has investments in real estate joint
ventures, which are accounted for under the cost method. 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 that we 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 our financial
statements are reasonable and prudent; however, actual results could differ from
those estimates.
Construction Operations
Turner determines construction earnings under the percentage of completion
method. Under this method, we recognize 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 our
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. Unapproved change orders and
claims, primarily due to owner-caused delays, incomplete specifications or
similar reasons, are included in earnings from construction contracts at their
estimated recoverable amounts based on the related contract costs when
realization is probable and the amount can be reliably estimated. Management
believes that Turner has contractual or legal bases for pursuing recovery of
unapproved change orders and claims. The settlement of these amounts depends on
individual circumstances and negotiations with the counterparty; accordingly,
the timing of the collection will vary and may extend beyond one year.
Turner continuously reviews estimated earnings from construction contracts
and makes necessary adjustments based on current evaluations of the indicated
outcome. In 1998, 1997 and 1996, we wrote down certain construction receivables
deemed unrecoverable.
Cost of construction contracts includes all direct material, labor and
subcontracting costs, and those indirect costs related to contract performance
that are identifiable with or allocable to contracts. Construction operating
expenses are costs incurred by Turner's construction operating units and
subsidiaries that are not directly attributable to construction contracts, such
as business development, estimating, purchasing, accounting, cost control,
general office support and similar costs attributed to our construction
activities, and are expensed as incurred.
Under certain contracts, owners of buildings make payments directly to
suppliers and subcontractors for all or for portions of work covered by the
contract. Turner considers such costs in determining contract percentage of
completion and reports such amounts in the value of construction completed.
19
<PAGE> 21
Real Estate Operations
Fixed minimum rental income is generally recognized on a straight-line
basis over the life of the lease. Additional rents provided under operating
leases with tenants are recognized when earned and the amounts can be reasonably
estimated.
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
Turner 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 (Turner as lessee)
to property used in our operations are amortized on a straight-line basis over
the lease terms. Tenant improvements (Turner 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, while expenditures for
betterments are capitalized.
Cash and Cash Equivalents
Turner considers all investments purchased with maturities of 90 days or
less to be cash equivalents.
The carrying amount of cash and cash equivalents approximates fair value
due to the short-term maturity of these amounts.
Other liabilities include approximately $73,600 and $57,600 net payable to
banks for checks drawn but not cleared as of December 31, 1998 and 1997,
respectively.
Marketable Securities
Marketable debt and equity securities are classified as available-for-sale
and reported at fair value. The fair value of marketable securities is based on
quoted market prices for such investments. Unrealized gains and losses, if any,
are reported as other comprehensive income. The cost basis of securities is
determined on a specific identification basis in calculating gains and losses.
Interest and dividend income and realized gains and losses on sales of
marketable securities are included in Interest and Other Income on the
Statements of Operations.
Long-Lived Assets
Long-lived assets to be held and used are 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,
when the carrying amount of an asset exceeds the sum of its expected future cash
flows, on an undiscounted basis, the asset's carrying amount is written down to
fair value. Long-lived assets to be disposed of are reported at the lower of
carrying amount or fair value less cost to sell.
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.
Turner does not provide for U.S. federal income taxes on undistributed
earnings of foreign subsidiaries since it is our intention to permanently
reinvest those earnings outside the United States.
20
<PAGE> 22
Earnings Per Common Share
In 1997, Turner adopted Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share," which replaced the calculation of
primary and fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for prior periods have been
restated to conform to the new requirements.
Basic earnings per common share are 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 shares outstanding. Diluted
earnings per common share are adjusted to reflect the incremental number of
shares issuable under stock-based compensation plans, 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 adjustments are dilutive.
Stock-Based Compensation
Turner 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.
Comprehensive Income
In 1998, Turner adopted SFAS No. 130, "Reporting Comprehensive Income."
This statement establishes standards for reporting and display of comprehensive
income and its components in a separate financial statement. Comprehensive
income includes net income plus other comprehensive income, which includes
unrealized gains and losses on marketable securities that are "available for
sale," changes in additional minimum pension liabilities and changes in foreign
currency translation adjustments. Turner has not presented statements of
comprehensive income, as other comprehensive income was not material.
2. Marketable Securities
Marketable securities as of December 31, 1998 and 1997 consisted of the
following:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Corporate obligations ........................ $ 47,610 $ 18,902
Treasury securities .......................... 16,378 --
State & municipal securities ................. 48,778 --
-------- --------
Total......................................... $112,766 $ 18,902
======== ========
</TABLE>
Realized gains and losses on sales of marketable securities for 1998, 1997
and 1996 were not significant. As of December 31, 1998 and 1997, there were no
unrealized gains or losses reported as the market value of the securities
approximated cost.
As of December 31, 1998, scheduled maturities of investments within one
year were $37,289, one year to five years were $71,758 and greater than five
years were $3,719. As of December 31, 1997, scheduled maturities of investments
within one year were $14,700 and within one to five years were $4,202.
3. Construction Receivables and Construction Payables
Construction receivables include $188,148 of retainage as of December 31,
1998, of which approximately 90% is anticipated to be collected by December 31,
1999.
The carrying amount of construction receivables and construction payables
approximate fair value as these amounts generally are due or payable within our
operating cycle.
21
<PAGE> 23
4. Real Estate
Turner owns a portfolio of real estate, either directly or through joint
venture interests, that includes an air cargo distribution facility, commercial
office properties, and undeveloped land. The properties are located in the
Southeast, Mid-Atlantic and Midwest regions. The carrying amounts of our
interests in developed properties were $19,221 and $20,767 and in undeveloped
land parcels were $21,273 and $23,611 as of December 31, 1998 and 1997,
respectively. Accumulated depreciation as of December 31, 1998 and 1997 was
$24,902 and $23,393, respectively.
Turner's most significant real estate asset is the air cargo distribution
facility located in Columbus, Ohio, with a carrying amount of $16,027 as of
December 31, 1998, which is under a long term lease until 2010 to an investment
grade tenant. With recent improvements in the real estate markets, we have been
able to sell certain developed and undeveloped properties at approximately their
carrying amounts. The remaining properties will be held until such time that
they can be sold for prices which we believe reflect reasonable values.
Management anticipates a longer holding period may result for our undeveloped
land parcels, as land values have generally been slower to recover than
developed properties. Turner actively monitors market conditions and evaluates
economic and market factors to estimate the fair values of the properties and
the appropriate timing of disposition, both of which may change with changes in
economic and market conditions.
5. Property and Equipment
Property and equipment as of December 31, 1998 and 1997 consisted of the
following:
<TABLE>
<CAPTION>
1998 1997
======== ========
<S> <C> <C>
Buildings and improvements ...................... $ 15,405 $ 14,526
Office machines and furniture ................... 29,090 26,921
Equipment ....................................... 24,674 22,225
-------- --------
Total ........................................... 69,169 63,672
Less: accumulated depreciation
and amortization ......................... (46,871) (40,431)
-------- --------
Net ............................................. $ 22,298 $ 23,241
======== ========
</TABLE>
6. Notes Payable
Notes payable as of December 31, 1998 and 1997 consisted of the following:
<TABLE>
<CAPTION>
1998 1997
======== ========
<S> <C> <C>
Revenue bonds ................................... $ 11,400 $ 12,100
Employee Stock Ownership Plan ................... 2,650 5,100
Capital lease obligations ....................... 4,841 4,519
-------- --------
Total ........................................... $ 18,891 $ 21,719
======== ========
</TABLE>
Revenue Bonds
Adjustable rate revenue refunding bonds are collateralized by letters of
credit and mature in varying installments through 2010. The bonds bear interest
at a weekly variable rate. The weighted average interest rate for 1998, 1997 and
1996 was 3.48%, 3.72% and 3.53%, respectively. The bonds are supported by a
letter of credit which carries an annual fee of 1.25%.
Employee Stock Ownership Plan (ESOP)
This loan was used to fund Turner's loan to the ESOP and matures in July
1999. Interest is payable at a variable rate equal to 83% of the prime rate or a
percentage of LIBOR, at our option. The loan is collateralized by a first
mortgage on a real estate property and letters of credit. The loan allows for
collateral substitution and upon disposition of such property may require
additional collateral to maintain loan-to-value relationships. The weighted
average interest rate for 1998, 1997 and 1996 was 6.15%, 6.09% and 5.99%,
respectively. The loan agreement contains various financial covenants, including
the maintenance of a minimum amount of stockholders' equity and debt coverage
ratio. As of December 31, 1998, the minimum stockholders' equity required was
$59,877 and increases by the sum of 50% of the consolidated net income and the
aggregate net proceeds received from the issuance of equity securities for each
subsequent fiscal year.
22
<PAGE> 24
Capital Lease Obligations
Turner leases certain computer equipment and vehicles under agreements
which are classified as capital leases. The weighted average implicit interest
rates for 1998, 1997 and 1996 were 6.83%, 6.69% and 6.69%, respectively. The
leases have original terms of three years and payments under the leases are due
in varying installments through 2001.
Revolving Credit Facility
In September 1998, Turner amended its unsecured revolving credit facility
to provide for borrowings up to $45,000, the proceeds of which can be used for
general corporate purposes. Turner had no borrowings under this facility at any
time during 1998 or 1997. Up to $10 million of the facility may be used for
letters of credit. The facility matures in July 2001, with two options to extend
an additional one year each up to June 2003. The current facility permits us to
choose between various interest rate options. We pay an annual commitment fee on
the unused portion of the facility ranging from 0.25% to 0.5%. The facility
contains various financial covenants, the most restrictive of which is the
fixed-charge coverage ratio.
Other Credit Facilities
Turner maintains overnight credit facilities of $8,500 with various banks
at varying rates. Turner did not use any of these facilities during 1998 or
1997. 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, the weighted average interest rate was 8.80%.
Senior Notes
On December 22, 1997, Turner exercised its option to prepay the senior
notes which had a remaining balance of $39,500. The senior notes were scheduled
to mature in 2001 and carried interest at a fixed rate of 11.74%. Under the note
agreement, we were required to pay a make-whole premium upon any debt
prepayment, which is reflected as an extraordinary loss of $2,899, net of tax.
Building Mortgages
The variable rate mortgages were retired upon the sale of the underlying
properties in August 1997 and October 1996. The weighted average interest rate
for 1997 and 1996 on the variable rate mortgages was approximately 8.64% and
8.80%, respectively. The fixed rate mortgages, which carried interest of 7% and
7.375%, were retired in December 1997 and September 1997 upon the sale of the
underlying properties.
Convertible Debenture
The $6,000 8.5% convertible debenture was scheduled to mature in July
1997. In June 1997, the holder exercised its option to convert the full
debenture principal balance into 6,000 shares of Series D preferred stock.
Aggregate maturities of notes due are as follows:
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 Thereafter
----- ----- ----- ----- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
$5,410 $2,445 $1,889 $1,347 $1,100 $6,700
</TABLE>
Turner was in compliance with all financial covenants under its credit
facilities as of December 31, 1998.
Interest expense approximates amounts paid for the years ended December
31, 1998, 1997 and 1996.
As of December 31, 1998, the carrying value of the real estate that was
pledged as collateral for notes payable was $22,253.
The fair value of notes payable is estimated based on our year-end,
risk-adjusted incremental borrowing rate for similar liabilities. As of December
31, 1998 and 1997, the carrying amount of notes payable approximated fair value.
23
<PAGE> 25
7. Income Taxes
The components of the income tax provision are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current:
Federal .................... $13,745 $ 2,889 $ 139
State & local .............. 2,158 1,216 519
------- ------- -------
15,903 4,105 658
------- ------- -------
Deferred:
Federal .................... 1,267 3,089 5
State ...................... 53 -- --
------- ------- -------
1,320 3,089 5
------- ------- -------
Total .......................... $17,223 $ 7,194 $ 663
======= ======= =======
</TABLE>
The current federal provisions for the years ended December 31, 1997 and
1996 reflect the benefit of the utilization of net operating loss carryforwards
of approximately $10,600 and $3,000, respectively. The extraordinary loss on
early extinguishment of debt in 1997 is reported net of the related tax benefit
of $1,493.
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 as of
December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Deferred Income Tax
Liability (Asset)
-------------------
1998 1997
---- ----
<S> <C> <C>
Employee benefit plans ................ $ 22,678 $ 20,614
Depreciation .......................... 3,699 3,922
Real estate properties ................ (2,307) (2,592)
Federal net operating loss benefits ... (2,229) (2,165)
Investment impairment ................. (820) --
Jobs credit carryforward .............. (202) (202)
Deferred compensation plan ............ (763) (646)
Contributions carryover ............... (860) (1,445)
Other ................................. (779) (389)
-------- --------
Total.................................. $ 18,417 $ 17,097
======== ========
</TABLE>
As of December 31, 1998, Turner had recorded $7,960 of deferred tax assets
resulting principally from net operating loss carryforwards and deductible
temporary differences related to real estate properties. Management believes
that no valuation allowance is required for these assets due to the future
reversals of existing taxable temporary differences primarily related to
Turner's employee benefit plans.
A comparison of the federal statutory rate with Turner's effective tax
rate is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------ ----- ------
<S> <C> <C> <C>
Statutory federal income tax rate (benefit) ..... 35.0% 34.0% (34.0)%
State and local taxes, net of federal benefit ... 6.0 7.6 33.2
Non-deductible executive compensation............ 2.8 -- --
Goodwill amortization and write-off ............. 0.8 0.6 51.9
Other ........................................... 2.1 2.8 13.1
---- ---- ----
Effective tax rate .......................... 46.7% 45.0% 64.2%
==== ==== ====
</TABLE>
Income taxes paid were $16,285, $2,069 and $1,276 for 1998, 1997, and
1996, respectively.
For federal income tax purposes, Turner has available as of December 31,
1998 a net operating loss carryforward of $6,368 that is available to offset
future taxable income and expires in 2009.
The deferred tax liability related to cumulative undistributed earnings of
foreign subsidiaries that were permanently reinvested was $60 as of December 31,
1998.
24
<PAGE> 26
8. Incentive Compensation Plans
Turner sponsors an Incentive Compensation Plan (ICP) which authorizes
payments of awards to executive officers and other designated employees in the
form of cash. 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 1998 and 1997 were $9,341 and $4,621,
respectively.
9. Stock-Based Compensation Plans
Turner has a stock incentive plan adopted in 1998, a non-qualified stock
option plan adopted in 1997, and an incentive stock option plan adopted in 1992.
The 1998 plan provides for the granting of employee options, stock appreciation
rights, dividend equivalent rights, restricted stock, performance units and
performance shares to employees, officers and directors of Turner. The 1998 plan
provides for awards to be granted at a price at the discretion of the
compensation committee. The 1992 and 1997 plans provide for the granting of
options to officers, directors and designated employees to purchase shares of
common stock of Turner. The 1992 plan provides for options to be granted at a
price not less than the market price of the common stock on the date of grant,
while the 1997 plan provides for options to be granted at a price that is not
less than 85% of the average market price of the stock for the twenty trading
days prior to the date of grant. In addition, the 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.
Turner may grant options or awards for up to 750,000 shares of common
stock under the 1998 plan. Turner may grant options for up to 600,000 and
750,000 shares of common stock under the 1992 and 1997 plans, respectively.
Options and awards granted generally vest up to three years from the date of
grant. Options and awards are exercisable generally in whole or in part up to
ten years from the date of grant. The vesting period and term of the options and
awards may vary and are at the discretion of the compensation committee.
In 1997, a total of 340,500 stock awards of Turner's common stock were
granted to the Chairman and to certain directors. The stock awards, which were
fully vested at the date of grant, had a weighted average fair value of $10.83
at the date of grant and are subject to certain contractual restrictions. The
award granted to the Chairman was distributed in March 1998. The awards to
directors were granted in lieu of vested retirement benefits and will be
distributed to directors on the ninetieth day following the later of their
seventieth birthday or their ceasing to be a director. In conjunction with these
distributions, Turner may withhold shares to satisfy tax withholding
requirements.
Turner accounts for these plans using the intrinsic value based method,
under which compensation cost is recognized on the date of grant to the extent
the exercise price is less than the market price of the underlying stock at the
date of grant. In 1997, compensation costs of $4,379 were recognized related to
the stock awards and stock options granted during the year. If Turner had
decided to account for stock-based compensation awards using the fair value
based method, under which compensation cost would be measured at the grant date
based on the fair value of the awards and recognized over the vesting period,
Turner would have recognized additional compensation costs, net of tax, of
$1,644 in 1998, lower compensation costs, net of tax, of $38 in 1997 and
additional compensation costs, net of tax, of $123 in 1996. As a result, basic
earnings per common share would have been $0.21 lower in 1998, $.01 higher in
1997, and $0.01 lower in 1996. Diluted earnings per common share would have been
$0.13 lower in 1998, unchanged in 1997, and $0.01 lower in 1996. 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 1998, 1997 and 1996, respectively: dividend yield
of 0.0%, 0.0% and 2.5%; expected volatility of 32%, 33% and 30%; risk-free
interest rates of 5.66%, 6.52% and 6.06% for stock options granted to officers
and designated employees and 5.43%, 6.13% and 6.50% for options granted to
non-employee directors; and expected lives of five years for all plans.
25
<PAGE> 27
A summary of the status of Turner's stock option plans as of December 31,
1998, 1997 and 1996, and changes during the years then ended is presented in the
table below:
<TABLE>
<CAPTION>
1998 1997 1996
----------------------- ----------------------- ---------------------
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Exercise Exercise Exercise
Amount Price Amount Price Amount Price
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Outstanding as of January 1 .................. 1,285,513 $ 8.16 1,065,102 $ 7.75 1,127,397 $ 8.31
Granted at market price ...................... 543,470 18.41 229,500 10.76 139,875 6.02
Granted below market price ................... -- -- 329,664 7.39 -- --
Exercised .................................... (210,530) 8.17 (216,465) 6.61 (22,350) 5.33
Canceled ..................................... (12,818) 10.60 (122,288) 10.06 (179,820) 10.21
--------- --------- ---------
Outstanding as of December 31 ................ 1,605,635 11.61 1,285,513 8.16 1,065,102 7.75
Exercisable as of December 31 ................ 711,939 9.82 764,037 7.73 948,177 7.98
Weighted average fair value of options granted
at market price ........................... 7.18 4.28 1.75
Weighted average fair value of options granted
below market price ........................ -- 4.60 --
</TABLE>
The following table summarizes information about options outstanding as of
December 31, 1998:
<TABLE>
<CAPTION>
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
- ----------- ------------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
293,051 5.2 $ 5.16-7.30 $ 5.59 293,051 $ 5.59
541,564 5.6 7.39-10.17 8.35 236,084 9.59
283,950 8.5 10.58-15.50 11.69 73,200 14.34
487,070 9.4 16.50-18.88 18.81 109,604 18.59
- ---------- -------
1,605,635 7.2 5.16-18.88 11.61 711,939 9.82
========== =======
</TABLE>
10. Employee Benefit Plans
Defined Benefit Pension Plans
Turner has a noncontributory defined benefit pension plan which covers
salaried employees who meet minimum age and length of service requirements. In
1991, Turner 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.
In 1994, Turner amended the defined benefit pension plan to add a cash
balance plan feature, to provide benefits to plan participants that were
previously provided under a defined contribution retirement plan. Past benefits
earned by plan participants prior to curtailment were 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 result in a reduction of the prepaid pension asset in future
years.
26
<PAGE> 28
Turner 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. Turner amortizes the full amount of the unrecognized net
actuarial gains and losses 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 and 1,162,500 shares of
Turner's common stock.
The following table sets forth the funded status of the defined benefit
pension plan and the amounts recognized in the financial statements as of
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
-------- ---------
Change in projected benefit obligation:
<S> <C> <C>
Benefit obligation as of January 1 .............. $ 159,490 $ 133,911
Service cost .................................... 10,325 9,662
Interest cost ................................... 11,590 10,624
Plan amendments ................................. 2,446 --
Actuarial losses ................................ 20,855 14,971
Benefits paid ................................... (11,925) (9,678)
--------- ---------
Benefit obligation as of December 31 ............ 192,781 159,490
--------- ---------
Change in plan assets:
Fair value of plan assets as of January 1 ....... 257,164 207,886
Actual return on plan assets .................... 41,064 58,956
Benefits paid ................................... (11,925) (9,678)
--------- ---------
Fair value of plan assets as of December 31 ..... 286,303 257,164
--------- ---------
Plan assets in excess of projected benefit obligation 93,522 97,674
Unrecognized net actuarial gains ..................... (36,877) (43,095)
Unrecognized prior service cost ...................... 11,302 10,036
Unrecognized net transition asset .................... (881) (1,761)
--------- ---------
Prepaid pension cost ............................ $ 67,066 $ 62,854
========= =========
</TABLE>
The components of the net periodic pension charge (credit) recognized for
1998, 1997 and 1996 were:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Service cost ....................... $ 10,325 $ 9,662 $ 8,432
Interest cost ...................... 11,590 10,624 9,301
Expected return on plan assets ..... (22,637) (19,411) (18,348)
Amortization of net transition asset (881) (881) (881)
Amortization of prior service cost . 1,180 1,098 777
Net actuarial gains recognized ..... (3,789) (475) (508)
-------- -------- --------
Net periodic pension charge (credit) $ (4,212) $ 617 $ (1,227)
======== ======== ========
</TABLE>
The weighted average assumptions used in measuring the actuarial amounts
for the plan were:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Discount rate ........................................... 6.50% 7.25% 7.50%
Rate of compensation increase - cash balance plan ....... 6.00% 4.75% 4.25%
Expected long-term rate of return on plan assets ........ 9.00% 9.59% 9.64%
</TABLE>
Turner also sponsors three non-qualified defined benefit plans relating to
officers and directors. The net periodic benefit cost of the plans was $447 and
$370 for 1998 and 1997, respectively. As Turner funds these plans on a
pay-as-you-go basis, there were no plan assets as of December 31, 1998 and 1997.
The accrued projected benefit obligation for the plans was $2,033 and $1,487 as
of December 31, 1998 and 1997, respectively.
27
<PAGE> 29
Defined Contribution Pension Plan
Turner 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. The aggregate amount
charged to expense was $2,161, $1,911, and $1,742 in 1998, 1997 and 1996,
respectively.
Postretirement Benefit Plan
Employees retiring from Turner 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 deductibles, co-payment provisions and other
limitations. Retirees pay for a portion of the total cost of their medical
insurance which is dependent on the individual's total years of service at
retirement. The medical plans of Turner are funded on a pay-as-you-go basis.
The following table sets forth the funded status of the postretirement
benefit plan and the amounts recognized in the financial statements as of
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Change in accumulated postretirement benefit obligation:
Benefit obligation as of January 1 ................ $ 21,332 $ 21,601
Service cost ...................................... 469 425
Interest cost ..................................... 1,538 1,490
Plan participants contributions ................... 470 430
Actuarial losses (gains) .......................... 1,746 (1,084)
Benefits paid ..................................... (1,670) (1,530)
-------- --------
Benefit obligation as of December 31 .............. $ 23,885 $ 21,332
-------- --------
Change in plan assets:
Fair value of plan assets as of January 1 ......... $ -- $ --
Actual return on plan assets ...................... -- --
Employer contributions ............................ 1,200 1,100
Plan participants' contributions .................. 470 430
Benefits paid ..................................... (1,670) (1,530)
-------- --------
Fair value of plan assets as of December 31 ....... $ -- $ --
-------- --------
Accumulated postretirement benefit obligation in excess
of plan assets .................................... $(23,885) $(21,332)
Unrecognized net actuarial gains ....................... (629) (2,390)
Unrecognized net transition obligation ................. 13,865 14,856
-------- --------
Accrued postretirement benefit obligation .............. $(10,649) $ (8,866)
======== ========
</TABLE>
The components of the net periodic postretirement benefit cost for 1998,
1997 and 1996 were:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Service cost ................................... $ 469 $ 425 $ 371
Interest cost .................................. 1,538 1,490 1,546
Amortization of net transition obligation ...... 991 991 991
Net actuarial gains recognized ................. (15) (57) --
------- ------- -------
Net periodic postretirement benefit cost ....... $ 2,983 $ 2,849 $ 2,908
======= ======= =======
</TABLE>
28
<PAGE> 30
The accumulated postretirement benefit obligation and net periodic
postretirement benefit cost were computed using an assumed weighted average
discount rate of 6.50% in 1998, 7.25% in 1997 and 7.50% in 1996. The health care
cost trend rate was assumed to be 8% in 1998 decreasing by 1% a year to 6% in
2000 and 5.5% in 2001 and beyond. A one percentage point change in the assumed
health care cost trend rate would have the following effects:
<TABLE>
<CAPTION>
1% Increase 1% Decrease
----------- -----------
<S> <C> <C>
Aggregate effect on annual service cost and
interest cost................................... $ 94 $ (85)
Effect on accumulated postretirement
benefit obligation.............................. 1,353 (1,248)
</TABLE>
In 1998, Turner adopted SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which revised the disclosures about
its employee benefit plans. The statement did not change the measurement or
recognition of those plans. Turner has restated prior years to conform to the
new disclosure requirements.
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
Turner has a leveraged Employee Stock Ownership Plan (ESOP) for salaried
employees who meet minimum age and length of service requirements. To fund the
ESOP, Turner 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. As of December 31, 1998, the number of allocated and
unallocated shares were 779,715 and 59,016, respectively.
The Series B stock is callable, in whole or in part, at the option of
Turner, at a price per share expressed as a percentage of the issue price of
$21.29. At our option, the call may be satisfied by common shares, cash or a
combination thereof. The call price was 112% in 1994 and decreases annually to
100% in July 1999. The trustee may, at any time, convert each share of Series B
stock into one and one-half shares 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 26, 1999, was $28.49 per preferred share. At
Turner's option, redemption by an employee may be satisfied by common shares,
cash or a combination thereof.
The Series B preferred stockholders are entitled to the same voting rights
as the holders of the number of shares of common stock into which the Series B
stock held is convertible. Dividends on Series B stock are $2.16 per share per
annum.
The loan to the ESOP is on the same terms as Turner'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
Turner. All contributions to the ESOP in excess of dividends are treated as
compensation expense. The fair value of the loan receivable from the ESOP is
estimated based on estimated future cash flows discounted at a risk-adjusted
rate. As of December 31, 1998 and 1997, the carrying amount approximated fair
value.
Compensation expense and interest income for the years ended December 31,
1998, 1997 and 1996 were:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Compensation expense........................ $857 $726 $632
Interest income............................. 222 352 464
</TABLE>
The interest income earned by Turner on the ESOP loan offsets the interest
expense incurred on the original borrowing, with no impact on the results of
operations.
29
<PAGE> 31
12. Stockholders' Equity
On July 24, 1998, the Board of Directors declared a three-for-two stock
split of Turner's common stock, effected in the form of a 50% stock dividend
paid on August 14, 1998 to all stockholders of record on August 3, 1998. All
agreements concerning stock options and other commitments payable in shares of
Turner's common stock provide for the issuance of additional shares due to the
declaration of the stock split. Historical share and per share amounts in the
financial statements have been adjusted to reflect the stock split on a
retroactive basis. However, share amounts presented in the Consolidated Balance
Sheets and Consolidated Statements of Stockholders' Equity reflect the actual
share amounts outstanding for each period presented. In connection with the
stock split, $2,720 was transferred to common stock from the paid in capital
account as the common stock's par value remained at $1.00 per share.
On July 20, 1992, Turner 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. On June 30, 1997, the 8.5% debenture was
converted into 6,000 shares of Series D 8.5% convertible preferred stock.
The Series C stock is convertible into 1,500,000 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 Series D stock is convertible
into 900,000 shares of common stock. The Series C and the Series D stocks have,
and the Series E stock will have, a liquidation preference of $1,000 per share.
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 Turner'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 Turner is
six quarters or more in arrears in paying dividends.
In connection with the purchase of Turner's securities by Steiner, we
executed an agreement providing us 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 certain
instances with regard to sales by Turner of more than five percent of its stock.
In addition, if we issue additional stock or convertible or exchangeable
securities, Steiner will have the option in certain instances to purchase
similar securities to the extent necessary to maintain its percentage ownership.
This agreement also includes a standstill provision which restricted Steiner's
ability to accumulate additional equity in Turner and to take certain other
actions relating to seeking control of Turner.
In August 1998, Turner irrevocably waived the standstill provision. As a
result, the dividend formula on the Series C and Series D stock changed so that
in lieu of being entitled to dividends at a rate of $85.00 per share per year,
the holders of the Series C and Series D stock became entitled to receive an
amount equal to the dividends, if any, paid on the number of shares of common
stock into which the Series C and Series D stock could be converted.
If Turner issues, in a transaction or related series of transactions,
common stock or convertible or exchangeable securities totaling at least 15% of
our 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.
Turner has a right of first refusal with regard to sales or transfers of
the Turner securities owned by Steiner constituting more than five percent of
our outstanding common stock, on a fully diluted basis. In addition, Turner has
the option to repurchase the securities owned by Steiner, upon a change in
control in the ownership of Steiner.
30
<PAGE> 32
If the price of Turner's common stock is below $4.67 per share for at
least 20 consecutive trading days (or if the agreement is not extended), Steiner
may require Turner either to find a buyer (which may be Turner) for all of
Steiner's holdings (or, in some instances, all its holdings except the 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 Turner's common stock. Turner 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.
On December 29, 1998, Turner paid Steiner $1,573 to retire Steiner's
rights, which it waived, to purchase additional shares of common stock to
maintain its percentage ownership through December 28, 1998. The amount paid was
charged against the paid in capital account.
13. Commitments and Contingencies
Turner (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, 1998, 1997 and 1996 amounted to $9,658, $9,610 and
$9,392, respectively. Future minimum rental payments are as follows:
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 Thereafter
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$8,743 $8,354 $6,557 $5,129 $4,321 $8,805
</TABLE>
Turner (as lessor) has operating leases with tenants for the air cargo
distribution facility and the commercial office property which have terms of up
to 15 years, and a ground lease on a land parcel for 90 years. Rental income
under the air cargo distribution facility lease represented 86%, 39% and 21% of
total rental income for 1998, 1997 and 1996, respectively. Future minimum rental
revenue from non-cancelable leases in effect as of December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 Thereafter
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$1,841 $1,791 $1,791 $1,791 $1,791 $8,140
</TABLE>
Turner has guaranteed $2,750 of a $5,000 letter of credit facility and
$275 of a $500 line of credit facility of Turner Steiner International LLC, in
which Turner holds a 50% ownership interest.
Turner is a defendant in various litigation incident to its business and
in certain 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 our financial position or results of operations. As these matters
continue to proceed through the litigation process to ultimate resolution, it is
reasonably possible that our estimation of the effect of such matters could
change within the next year.
14. Interest and Other Income, net
The major components of Interest and Other Income, net are as follows:
1998 1997 1996
------- ------- -------
Interest income .......... $ 9,299 $ 5,108 $ 2,140
Investment impairment .... (2,000) -- --
Other .................... 80 (62) (358)
------- ------- -------
Net................... $ 7,379 $ 5,046 $ 1,782
======= ======= =======
31
<PAGE> 33
15. Earnings Per Share
The following table reconciles the components of basic and diluted
earnings per common share for "income (loss) before extraordinary loss" for the
years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
Numerator:
<S> <C> <C> <C>
Income (loss) before extraordinary loss ..................... $ 19,633 $ 8,792 $ (1,695)
Preferred stock dividends, net of tax benefits .............. (1,956) (2,037) (1,827)
------------ ------------ ------------
Income (loss) available to common stockholders before
extraordinary loss - Basic ............................... 17,677 6,755 (3,522)
------------ ------------ ------------
Effect of dilutive securities: (a)
Series C preferred stock dividends ....................... 542 765 --
Series D preferred stock dividends ....................... 361 212 --
Convertible debenture interest expense, net of tax ....... -- 140 --
Series B preferred stock dividends, net of tax benefits .. 1,053 1,060 --
Series B preferred stock dividend differential ........... (1,053) (1,060) --
------------ ------------ ------------
903 1,117 --
------------ ------------ ------------
Income (loss) available to common stockholders before
extraordinary loss - Diluted ............................. $ 18,580 $ 7,872 $ (3,522)
============ ============= =============
Denominator:
Weighted average common shares outstanding - Basic .......... 8,001,425 7,929,739 7,858,022
------------ ------------ ------------
Effect of dilutive securities: (a)
Stock-based compensation plans ........................... 720,157 670,395 --
Series C convertible preferred stock ..................... 1,500,000 1,500,000 --
Series D convertible preferred stock ..................... 900,000 900,000 --
Series B convertible preferred stock ..................... 1,261,157 1,268,580 --
------------ ------------ ------------
4,381,314 4,338,975 --
------------ ------------ ------------
Weighted average common and common equivalent shares
outstanding - Diluted .................................... 12,382,739 12,268,714 7,858,022
=========== ============ =============
Basic earnings (loss) per common share before extraordinary loss $ 2.21 $ 0.85 $ (0.45)
Diluted earnings per common share before extraordinary loss .... 1.50 0.64 (a)
</TABLE>
(a) The common equivalent shares for the year ended December 31, 1996 were:
124,394 shares for the Stock-based compensation plans, 1,500,000 shares for the
Series C convertible preferred stock, 900,000 shares for the convertible
debenture, and 1,272,361 shares for the Series B convertible preferred stock.
The common equivalent shares for these securities were not included in the
calculation of diluted earnings per common share because the effect would
be antidilutive.
32
<PAGE> 34
16. Operating Segment Information
Turner's one reportable operating segment is our construction segment;
however, information regarding the real estate segment is also presented. The
construction segment provides general contracting, construction management and
consulting services.
The Consolidated Statements of Operations provides information regarding
segment profit/loss and segment revenues. Certain other financial data for
Turner's segments are presented below:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
Total assets at year end:
Construction .................... $ 841,016 $ 790,969 $ 744,186
Real estate ..................... 42,402 46,509 72,606
---------- ---------- ----------
Segment total ................... 883,418 837,478 816,792
Unallocated amounts:
Cash and cash equivalents ... 129,927 113,800 75,731
Marketable securities ....... 112,766 18,902 --
Other ....................... 2,952 2,507 2,073
---------- ---------- ----------
Consolidated total .............. $1,129,063 $ 972,687 $ 894,596
========== ========== ==========
Depreciation and amortization expense:
Construction .................... $ 9,333 $ 8,437 $ 8,951
Real estate ..................... 1,509 2,271 3,734
---------- ---------- ----------
Consolidated total .............. $ 10,842 $ 10,708 $ 12,685
========== ========== ==========
Interest expense:
Construction .................... $ 321 $ 321 $ 393
Real estate ..................... 612 1,263 2,147
Corporate ....................... -- 4,822 5,195
---------- ---------- ----------
Consolidated total .............. $ 933 $ 6,406 $ 7,735
========== ========== ==========
Capital expenditures:
Construction .................... $ 4,914 $ 6,117 $ 7,371
Real estate ..................... 83 431 2,143
---------- ---------- ----------
Consolidated total .............. $ 4,997 $ 6,548 $ 9,514
========== ========== ==========
<CAPTION>
The value of construction completed related to Turner's products and services
provided by our construction segment was:
1998 1997 1996
---------- ----------- ----------
<S> <C> <C> <C>
General contracting ...................... $3,601,070 $3,089,099 $2,744,630
Construction management .................. 505,695 517,196 546,851
Consulting ............................... 22,956 33,459 26,293
---------- ---------- ----------
Construction segment total ............ $4,129,721 $3,639,754 $3,317,774
---------- ---------- ----------
</TABLE>
Turner's revenue and assets predominantly relate to our United States
operations, with immaterial amounts related to foreign operations.
In 1998, Turner adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which revised the disclosures about our
operating segments. Turner has restated prior years to conform to the new
disclosure requirements.
33
<PAGE> 35
17. Quarterly Financial Information (unaudited)
<TABLE>
<CAPTION>
1998 Quarter Ended March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Value of construction completed ...... $ 906,438 $1,033,616 $1,105,095 $1,084,572
Revenue from construction contracts .. 814,435 923,419 963,305 997,835
Earnings from construction contracts . 21,576 22,247 24,920 29,940
Income before income taxes ........... 6,499 7,477 9,722 13,158
Net income ........................... 3,574 4,113 5,347 6,599
Basic earnings per common share (a) .. $ 0.37 $ 0.44 $ 0.60 $ 0.80
Diluted earnings per common share (a) 0.27 0.31 0.41 0.52
1997 Quarter Ended March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Value of construction completed ...... $ 792,338 $ 889,286 $ 987,532 $ 970,598
Revenue from construction contracts .. 700,072 770,276 851,866 848,530
Earnings from construction contracts . 18,215 19,003 21,355 27,935
Income before income taxes ........... 2,257 2,937 4,076 6,716
Income before extraordinary loss ..... 1,241 1,615 2,242 3,694
Net income ........................... 1,241 1,615 2,242 795(b)
Basic earnings per common share: (a)
Income before extraordinary loss $ 0.10 $ 0.15 $ 0.21 $ 0.39
Net income ...................... 0.10 0.15 0.21 0.03
Diluted earnings per common share: (a)
Income before extraordinary loss $ 0.08 $ 0.12 $ 0.16 $ 0.27
Net income ...................... 0.08 0.12 0.16 0.04
</TABLE>
- -------------------
(a) The quarterly per share amounts are computed independently of annual
amounts.
(b) The fourth quarter includes an extraordinary loss on early extinguishment
of debt of $2,899, net of tax.
34
<PAGE> 36
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 Turner'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, 1998. Management has made
available to Arthur Andersen LLP all of Turner'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
Turner. Management believes the internal accounting controls in use provide
reasonable assurance that Turner'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, Turner 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.
35
<PAGE> 37
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 Turner's definitive proxy statement to be filed with the
Securities and Exchange Commission prior to April 30, 1999, is incorporated
herein by reference.
Executive Officers of Turner
<TABLE>
<CAPTION>
Served as an Officer in the Capacity
Name Age Office Indicated Since
- ---- --- ------ ---------------
<S> <C> <C> <C>
Ellis T. Gravette, Jr. 73 Chairman of the Board, Chief Chairman since 8/9/96.
Executive Officer and Director
Robert E. Fee 62 President, Chief Operating Officer President and Chief Operating Officer
and Director since 9/21/98.
Harold J. Parmelee 61 President-Asset Management and President-Asset Management
Director since 9/21/98.
Donald G. Sleeman 44 Senior Vice President, Chief Senior Vice President and Chief
Financial Officer and Chief Financial Officer since 8/22/96;
Accounting Officer Chief Accounting Officer since
3/13/97.
Ralph W. Johnson 62 Senior Vice President 6/11/93
Sara J. Gozo 35 Vice President, Secretary and Vice President and Secretary since
General Counsel 10/24/94; General Counsel since
12/20/96.
Anthony C. Breu 51 Senior Vice President 1/23/98
Roger M. Lang 58 Senior Vice President 11/14/97
Robert T. Meyer 56 Vice President 3/13/97
Grant H. Liang 62 Vice President 8/7/97
Hilton O. Smith 52 Vice President 7/11/98
Michael J. Murphy 35 Controller 5/8/98
Andrew S. Alexander 38 Treasurer 5/8/98
</TABLE>
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 and has been an employee of Turner or a construction subsidiary in
an executive, managerial or engineering capacity for the past five years except
for Mr. Gravette, Ms. Gozo and Mr. Liang. From 1986 to 1996, Mr. Gravette served
as President, Ardath Associates, Inc. From 1989 to 1993, Ms. Gozo practiced
construction law at Shea & Gould, and until October 1994, at Thelen, Marrin,
Johnson & Bridges, both New York City law firms. From 1989 to 1996, Mr. Liang
was the Director of Information Systems at White & Case, a New York City law
firm. From 1969 to 1989, Mr. Liang served as Vice President, Manager,
Information and Automation Planning, and held various executive information
systems positions within Bowery Savings Bank.
36
<PAGE> 38
Item 11 Executive Compensation
The information which will appear under the caption "Remuneration of
Executive Officers" in Turner's definitive proxy statement, to be filed with the
Securities and Exchange Commission prior to April 30, 1999, is incorporated
herein by reference.
Item 12 Security Ownership of Certain Beneficial Owners and Management
The information under the caption "Election of Directors" in Turner's
definitive proxy statement, to be filed with the Securities and Exchange
Commission prior to April 30, 1999 with respect to the ownership by certain
beneficial owners and management of Turner's stock, is incorporated herein by
reference.
Item 13 Certain Relationships and Related Transactions
Information under the caption "Election of Directors" and "Compensation
Committee Interlocks and Insider Participation" in Turner's definitive proxy
statement, to be filed with the Securities and Exchange Commission prior to
April 30, 1999 with respect to certain relationships and related transactions,
is incorporated herein by reference.
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
a) Documents filed as part of this report (including documents
incorporated herein by reference):
1. Financial Statements:
Page No.
--------
- Report of Independent Public Accountants 14
- Consolidated Balance Sheets - as of December 31, 1998 and 1997 15
- Consolidated Statements of Operations - for the years ended
December 31, 1998, 1997 and 1996 16
- Consolidated Statements of Stockholders' Equity - for the years
ended December 31, 1998, 1997 and 1996 17
- Consolidated Statements of Cash Flows - for the years ended
December 31, 1998, 1997 and 1996 18
- Notes to Consolidated Financial Statements 19-34
- Responsibilities for Financial Reporting 35
2. Consent of Independent Public Accountants
Individual financial statements of Turner 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
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C> <C>
3(a)(i) Restated Certificate of Incorporation, as of Incorporated herein by reference to Exhibit 3 to the
4/5/84. Registration Statement on Form S-14 of The Turner
Corporation, File No. 2-90235.
3(a)(ii) Amendment dated 5/19/86. Incorporated herein by reference to Exhibit 3(a) to
the Company's 1989 Annual Report on Form 10-K.
3(a)(iii) Amendment dated 9/12/88. Incorporated herein by reference to Exhibit 3(a) to
the Company's 1989 Annual Report on Form 10-K.
3(a)(iv) Amendment dated 7/10/89. Incorporated herein by reference to Exhibit 3(a) to
the Company's 1989 Annual Report on Form 10-K.
</TABLE>
37
<PAGE> 39
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C> <C>
3(a)(v) Certificate of Designations relating Incorporated herein by reference to Exhibit 2 to the
to Series C 8-1/2% Convertible Company's Form 8-K dated July 20, 1992.
Preference Stock.
3(a)(vi) Certificate of Designations relating Incorporated herein by reference to Exhibit 3 to the
to Series D 8-1/2% Convertible Company's Form 8-K dated July 20, 1992.
Preference Stock.
3(a)(vii) Certificate of Designations relating Incorporated herein by reference to Exhibit 4 to the
to Series E 8-1/2% Convertible Company's Form 8-K dated July 20, 1992.
Preference Stock.
3(a)(viii) Certificate of Designations relating Incorporated herein by reference to Exhibit C to Exhibit 1
to Series F Participating Preference Stock to the Company's Form 8-A dated September 3, 1998.
3(a)(ix) Certificate of Elimination relating to Filed with this report.
Series A Junior Participating Preference
Stock.
3(b) By-Laws, as amended 12/9/98. Filed with this report.
4(a) Shareholders' Rights Agreement, dated as of Incorporated herein by reference to Exhibit 1 to the
September 21, 1998, between the Company and Company's Form 8-A dated September 3, 1998.
The First Chicago Trust Company of New York.
4(b) Agreement regarding Security Holder's Incorporated herein by reference to Exhibit 5 to the
Rights, Obligations and Options, dated Company's Form 8-K dated July 20, 1992.
July 20, 1992, between the Company and
Karl Steiner Holding AG.
10(c)(i) The Company's Executive Incentive Incorporated herein by reference to Exhibit 10.3 to the
Compensation Plan. Registration Statement on Form S-14 of The Turner
Corporation, File No. 2-90235.
10(c)(ii) The Company's 1981 Stock Option Incorporated herein by reference to Exhibit 10(c)(v) to
Plan, as amended. the Company's 1988 Annual Report on Form 10-K.
10(c)(iii) The Company's 1986 Stock Option Incorporated herein by reference to Exhibit 10(c)(vii) to
Plan, as amended. the Company's 1988 Annual Report on Form 10-K.
10(c)(iv) The Company's 1992 Stock Option Incorporated herein by reference to the Company's
Plan. 1992 Annual Proxy Statement on Form 14A dated April 6, 1992.
10(c)(v) The Company's Incentive Compensation Incorporated herein by reference to Exhibit 10(c)(v) to
Plan. the Company's 1983 Annual Report on Form 10-K.
10(c)(vi) The Company's Retirement Benefit Incorporated herein by reference to Exhibit 10(c)(vi) to
Equalization Plan, amended and the Company's 1992 Annual Report on Form 10-K.
restated as of 1/22/92.
10(c)(vii) The Company's Defined Contribution Incorporated herein by reference to Exhibit 10(c)(vii) to
Retirement Equalization Plan. the Company's 1992 Annual Report on Form 10-K.
10(c)(viii) The Company's Supplemental Executive Incorporated herein by reference to Exhibit 10(c)(viii) to
Defined Benefit Retirement Plan. the Company's 1992 Annual Report on Form 10-K.
10(c)(ix) The Company's Supplemental Executive Incorporated herein by reference to Exhibit 10(c)(ix) to
Defined Contribution Retirement Plan. the Company's 1992 Annual Report on Form 10-K.
</TABLE>
38
<PAGE> 40
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C> <C>
10(c)(x) Tax Deferred Savings Income Plan Incorporated herein by reference to Exhibit 10(c)(ix) to
amended and restated as of 1/1/89. Company's 1991 Annual Report on Form 10-K.
10(c)(xi) Employees' Cash Balance Retirement Filed with this report.
Plan - Restated as of 1/1/94, together
with amendments, dated 6/1/98, and
7/1/98.
10(c)(xii) Resolution Regarding The Director's Incorporated herein by reference to Exhibit 10(c)(xvi) to
Option and Option Agreement, dated the Company's 1997 Annual Report on Form 10-K.
8/7/97.
10(c)(xiii) The Company's 1997 Non-Qualified To be filed by amendment.
Stock Option Plan.
10(c)(xiv) The Company's 1998 Stock Incentive Plan. Incorporated herein by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-8,
File No. 333-61745.
10(d)(i) LLC Agreement, dated as of December 22, Filed with this report.
1997, between the Company and Karl
Steiner Holding AG.
10(d)(ii) Amendment No. 1 to LLC Agreement, Filed with this report.
dated as of January 1, 1998 between
the Company and Karl Steiner
Holding AG
10(e) Letter Agreement with Karl Steiner Filed with this report.
Holding AG, dated 12/29/98, regarding
waiver of Position Maintenance Option.
10(f) Revolving Credit Facility Agreement Filed with this report.
dated as of August 14, 1998 among the
Company, Turner Construction Company,
the Banks party thereto, and Bank One,
N.A., as agent.
10(g) Form of Change of Control Agreement between The Filed with this report.
Turner Corporation and Messrs. Fee, Parmelee,
Sleeman, respectively, President, President-Asset
Management, Chief Financial Officer, and Messrs.
Breu, Johnson, Lang, respectively, Senior Vice
Presidents, and between The Turner Corporation and
Messrs. Robinson and Manteuffel, Executive Vice
Presidents of Turner Construction Company and
Messrs. Dorais, Maxwell, Mitnick, Quimby, Smith,
Wille, respectively, Senior Vice Presidents of
Turner Construction Company dated 11/25/97.
10(h) Form of Change of Control Agreement with Filed with this report.
65 other officers of The Turner Corporation
or Subsidiaries dated 11/25/97.
11 Computation of earnings per share. Incorporated herein by reference to Note 15 to the
Company's Consolidated Financial Statements.
21 Subsidiaries of the Registrant. Filed with this report.
27(a) Financial Data Schedule-1998. Filed with this report.
27(b) Financial Data Schedule-1997 Restated. Filed with this report.
</TABLE>
39
<PAGE> 41
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: February 22, 1999 By: /s/ E.T. Gravette, Jr.
--------------------------------
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
- ---- -------- ----
/s/ H. Baumann-Steiner Director February 22, 1999
- ----------------------------
(H. Baumann-Steiner)
/s/ W.G. Ehlers Director February 22, 1999
- ----------------------------
(W.G. Ehlers)
/s/ R.E. Fee President, Chief Operating February 22, 1999
- ---------------------------- Officer and Director
(R.E. Fee)
/s/ A.G. Fieger Director February 22, 1999
- ----------------------------
(A.G. Fieger)
/s/ E.T. Gravette, Jr. Chairman of the Board, February 22, 1999
- ---------------------------- Chief Executive Officer
(E.T. Gravette, Jr.) and Director
/s/ T.C. Leppert Director February 22, 1999
- ----------------------------
(T.C. Leppert)
/s/ L. Lomo Director February 22, 1999
- ----------------------------
(L. Lomo)
/s/ C.H. Moore, Jr. Director February 22, 1999
- ----------------------------
(C.H. Moore, Jr.)
/s/ H.J. Parmelee President-Asset Management February 22, 1999
- ---------------------------- and Director
(H.J. Parmelee)
/s/ D.G. Sleeman Senior Vice President, February 22, 1999
- ---------------------------- Chief Financial Officer and
(D.G. Sleeman) Chief Accounting Officer
/s/ G.J. Records, Jr. Director February 22, 1999
- ----------------------------
(G.J. Records, Jr.)
/s/ P.K. Steiner Director February 22, 1999
- ----------------------------
(P.K. Steiner)
/s/ G.A. Walker Director February 22, 1999
- ----------------------------
(G.A. Walker)
/s/ J.O. Whitney Director February 22, 1999
- ----------------------------
(J.O. Whitney)
40
<PAGE> 42
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated February 19, 1999 included in this Form 10-K, into the Company's
previously filed Registration Statements on Form S-8 (File Nos. 2-64509,
33-33867, 333-43577 and 333-61745).
ARTHUR ANDERSEN LLP
New York, New York
March 2, 1999
41
<PAGE> 43
3. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C> <C>
3(a)(i) Restated Certificate of Incorporation, as of Incorporated herein by reference to Exhibit 3 to the
4/5/84. Registration Statement on Form S-14 of The Turner
Corporation, File No. 2-90235.
3(a)(ii) Amendment dated 5/19/86. Incorporated herein by reference to Exhibit 3(a) to
the Company's 1989 Annual Report on Form 10-K.
3(a)(iii) Amendment dated 9/12/88. Incorporated herein by reference to Exhibit 3(a) to
the Company's 1989 Annual Report on Form 10-K.
3(a)(iv) Amendment dated 7/10/89. Incorporated herein by reference to Exhibit 3(a) to
the Company's 1989 Annual Report on Form 10-K.
3(a)(v) Certificate of Designations relating Incorporated herein by reference to Exhibit 2 to the
to Series C 8-1/2% Convertible Company's Form 8-K dated July 20, 1992.
Preference Stock.
3(a)(vi) Certificate of Designations relating Incorporated herein by reference to Exhibit 3 to the
to Series D 8-1/2% Convertible Company's Form 8-K dated July 20, 1992.
Preference Stock.
3(a)(vii) Certificate of Designations relating Incorporated herein by reference to Exhibit 4 to the
to Series E 8-1/2% Convertible Company's Form 8-K dated July 20, 1992.
Preference Stock.
3(a)(viii) Certificate of Designations relating Incorporated herein by reference to Exhibit C to Exhibit 1
to Series F Participating Preference Stock to the Company's Form 8-A dated September 3, 1998.
3(a)(ix) Certificate of Elimination relating to Filed with this report.
Series A Junior Participating Preference
Stock.
3(b) By-Laws, as amended 12/9/98. Filed with this report.
4(a) Shareholders' Rights Agreement, dated Incorporated herein by reference to Exhibit 1 to the
as of September 21, 1998, between the Company's Form 8-A dated September 3, 1998.
Company and The First Chicago Trust
Company of New York.
4(b) Agreement regarding Security Holder's Incorporated herein by reference to Exhibit 5 to the
Rights, Obligations and Options, dated Company's Form 8-K dated July 20, 1992.
July 20, 1992, between the Company
and Karl Steiner Holding AG.
10(c)(i) The Company's Executive Incentive Incorporated herein by reference to Exhibit 10.3 to the
Compensation Plan. Registration Statement on Form S-14 of The Turner
Corporation, File No. 2-90235.
10(c)(ii) The Company's 1981 Stock Option Incorporated herein by reference to Exhibit 10(c)(v) to
Plan, as amended. the Company's 1988 Annual Report on Form 10-K.
10(c)(iii) The Company's 1986 Stock Option Incorporated herein by reference to Exhibit 10(c)(vii) to
Plan, as amended. the Company's 1988 Annual Report on Form 10-K.
10(c)(iv) The Company's 1992 Stock Option Incorporated herein by reference to the Company's 1992 Annual
Plan. Proxy Statement on Form 14A dated April 6, 1992.
</TABLE>
42
<PAGE> 44
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C> <C>
10(c)(v) The Company's Incentive Compensation Incorporated herein by reference to Exhibit 10(c)(v) to
Plan. the Company's 1983 Annual Report on Form 10-K.
10(c)(vi) The Company's Retirement Benefit Incorporated herein by reference to Exhibit 10(c)(vi) to
Equalization Plan, amended and the Company's 1992 Annual Report on Form 10-K.
restated as of 1/22/92.
10(c)(vii) The Company's Defined Contribution Incorporated herein by reference to Exhibit 10(c)(vii) to
Retirement Equalization Plan. the Company's 1992 Annual Report on Form 10-K.
10(c)(viii) The Company's Supplemental Executive Incorporated herein by reference to Exhibit 10(c)(viii) to
Defined Benefit Retirement Plan. the Company's 1992 Annual Report on Form 10-K.
10(c)(ix) The Company's Supplemental Executive Incorporated herein by reference to Exhibit 10(c)(ix) to
Defined Contribution Retirement Plan. the Company's 1992 Annual Report on Form 10-K.
10(c)(x) Tax Deferred Savings Income Plan Incorporated herein by reference to Exhibit 10(c)(ix) to
amended and restated as of 1/1/89. Company's 1991 Annual Report on Form 10-K.
10(c)(xi) Employees' Cash Balance Retirement Filed with this report.
Plan--Restated as of 1/1/94, together
with amendments, dated 6/1/98 and
7/1/98.
10(c)(xii) Resolution Regarding The Director's Incorporated herein by reference to Exhibit 10(c)(xvi) to
Option and Option Agreement, dated the Company's 1997 Annual Report on Form 10-K.
8/7/97.
10(c)(xiii) The Company's 1997 Non-Qualified To be filed by amendment.
Stock Option Plan.
10(c)(xiv) The Company's 1998 Stock Incentive Plan. Incorporated herein by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-8,
File No. 333-61745.
10(d)(i) LLC Agreement, dated as of December 22, Filed with this report.
1997, between the Company and Karl
Steiner Holding AG.
10(d)(ii) Amendment No. 1 to LLC Agreement, dated Filed with this report.
as of January 1, 1998 between the
Company and Karl Steiner Holding AG.
10(e) Letter Agreement with Karl Steiner Filed with this report.
Holding AG, dated 12/29/98, regarding
waiver of Position Maintenance Option.
10(f) Revolving Credit Facility Agreement Filed with this report.
dated as of August 14, 1998 among the
Company, Turner Construction Company,
the Banks party thereto, and Bank One,
N.A., as agent.
</TABLE>
43
<PAGE> 45
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C> <C>
10(g) Form of Change of Control Agreement Filed with this report.
between The Turner Corporation and Messrs.
Fee, Parmelee, Sleeman, respectively,
President, President-Asset Management,
Chief Financial Officer, and Messrs. Breu,
Johnson, Lang, respectively, Senior Vice
Presidents, and between The Turner Corporation
and Messrs. Robinson and Manteuffel, Executive
Vice Presidents of Turner Construction Company and
Messrs. Dorais, Maxwell, Mitnick, Quimby, Smith,
Wille, respectively, Senior Vice Presidents of
Turner Construction Company dated 11/25/97.
10(h) Form of Change of Control Agreement with
65 other officers of The Turner Corporation
or Subsidiaries dated 11/25/97. Filed with this report.
11 Computation of earnings per share. Incorporated herein by reference to Note 15 to the
Company's Consolidated Financial Statements.
21 Subsidiaries of the Registrant. Filed with this report.
27(a) Financial Data Schedule-1998. Filed with this report.
27(b) Financial Data Schedule-1997 Restated. Filed with this report.
</TABLE>
44
<PAGE> 1
Exhibit 3(a)(ix)
CERTIFICATE OF ELIMINATION OF
SERIES A JUNIOR PARTICIPATING PREFERENCE STOCK
OF
THE TURNER CORPORATION
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
The Turner Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DOES HEREBY CERTIFY:
FIRST: That, pursuant to the authority conferred upon the Board of
Directors by the General Corporation Law of the State of Delaware at a meeting
of the Board of Directors of The Turner Corporation on August 14, 1998,
resolutions were duly adopted setting forth the proposed elimination of the
Series A Junior Participating Preference Stock as set forth herein:
RESOLVED, that no shares of the Series A Junior Participating
Preference Stock are outstanding and none will be issued.
RESOLVED, that a Certificate of Elimination be executed, which shall
have the effect when filed in Delaware of eliminating from the
Corporation's Restated Certificate of Incorporation all references
to the Series A Junior Participating Preference Stock.
SECOND: None of the authorized shares of the of the Series A Junior
Participating Preference Stock are outstanding and none will be issued.
THIRD: In accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Restated Certificate of
Incorporation is hereby amended to eliminate all reference to the Series A
Junior Participating Preference Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 22nd day
of September, 1998.
/s/ Ellis T. Gravette
--------------------------------
Ellis T. Gravette, Jr.
Chairman of the Board and
Chief Executive Officer
Attest:
/s/ Sara J. Gozo
- -----------------------
Sara J. Gozo
Vice President and
Secretary
<PAGE> 2
CERTIFICATE OF ELIMINATION OF
SERIES A JUNIOR PARTICIPATING PREFERENCE STOCK
OF
THE TURNER CORPORATION
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
The Turner Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DOES HEREBY CERTIFY:
FIRST: That, pursuant to the authority conferred upon the Board of
Directors by the General Corporation Law of the State of Delaware at a meeting
of the Board of Directors of The Turner Corporation on August 14, 1998,
resolutions were duly adopted setting forth the proposed elimination of the
Series A Junior Participating Preference Stock as set forth herein:
RESOLVED, that no shares of the Series A Junior Participating
Preference Stock are outstanding and none will be issued.
RESOLVED, that a Certificate of Elimination be executed, which shall
have the effect when filed in Delaware of eliminating from the
Corporation's Restated Certificate of Incorporation all references
to the Series A Junior Participating Preference Stock.
SECOND: None of the authorized shares of the of the Series A Junior
Participating Preference Stock are outstanding and none will be issued.
THIRD: In accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Restated Certificate of
Incorporation is hereby amended to eliminate all reference to the Series A
Junior Participating Preference Stock.
<PAGE> 3
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 22nd day
of September, 1998.
/s/ Ellis T. Gravette, Jr.
--------------------------------
Ellis T. Gravette, Jr.
Chairman of the Board and
Chief Executive Officer
Attest:
/s/ Sara J. Gozo
- -----------------------
Sara J. Gozo
Vice President and
Secretary
-2-
<PAGE> 1
Exhibit 3(b)
THE TURNER CORPORATION
BY-LAWS
DATED: DECEMBER 9, 1998
<PAGE> 2
THE TURNER CORPORATION
BY-LAWS
ARTICLE I
Meetings of Stockholders
Section 1.1 Annual Meetings. The annual meeting of the stockholders shall
be held each year on such date, and at such time and place (within or without
the State of Delaware) as may be designated by the Board of Directors.
Section 1.2 Special Meetings. Special meetings of the stockholders may be
called at any time by the Secretary at the direction of the Board of Directors,
to be held on such date, and at such time and place (within or without the State
of Delaware) as may be designated by the Board of Directors.
Section 1.3 Notice of Meeting; Record Date; Quorum, Voting. Notice of
every meeting of stockholders shall be given, and a record date for the meeting
shall be established, in accordance with the General Corporation Law of the
State of Delaware. The presence at any meeting, in person or by proxy, of the
holders of record of a majority of the shares then issued and outstanding and
entitled to vote shall be necessary and sufficient to constitute a quorum for
the transaction of business, except as otherwise provided by law. Directors
shall be chosen by a plurality of the votes cast. Except as otherwise provided
by the Certificate of Incorporation of the Corporation or by law, all other
questions shall be determined by a majority of the votes cast.
Section 1.4 Notification of Stockholder Nominations. In order to nominate
one or more candidates for election to the Board of Directors at an annual
meeting of stockholders, not later than 120 days before the first anniversary of
the date of the preceding annual meeting of stockholders, the stockholder must
notify the Secretary of the Corporation in writing of the name of each person
whom the stockholder proposes to nominate for election to the Board of Directors
and provide the Secretary of the Corporation with regard to each such person the
information about that person which would be required to be included in a proxy
statement subject to Section 14 of the Securities Exchange Act of 1934, as
amended (or the applicable successor to that Section). No nomination by a
stockholder will be valid unless it is the subject of a notice to the Secretary
of the Corporation given as required by this Paragraph.
ARTICLE II
Board of Directors
Section 2.1 Number. The number of Directors which shall constitute the
whole Board of Directors shall be not less than nine nor more than fifteen, as
may be fixed from time to time by resolution of the Board of Directors. The
Board of Directors shall consist of thirteen Directors until changed as herein
provided.
<PAGE> 3
Section 2.2 Classification, Election and Term of Office. The Board of
Directors shall be divided into three classes, which shall be as nearly equal in
number as possible. Directors shall be elected for three year terms. Newly
created Directorships resulting from an increase in the number of Directors or
vacancies occurring in the Board of Directors may be filled by the Board. Each
Director (whether elected at an annual meeting or to fill a vacancy or
otherwise) shall continue in office until his or her successor shall have been
elected and qualified or until his or her earlier death, resignation or removal
in the manner hereinafter provided.
Section 2.3 Meetings, Quorum and Manner of Acting. A meeting
("Organization Meeting") of the Board of Directors shall be held for
organization, for the election of officers and for the transaction of such other
business as may properly come before the meeting, within thirty days after each
annual election of Directors.
The Board of Directors by resolution may provide for the holding of
regular meetings and may fix the times and places at which such meetings shall
be held. Notice of regular meetings shall not be required to be given, provided
that whenever the time or place of regular meetings shall be fixed or changed,
notice of the action shall be mailed promptly to each Director who shall not
have been present at the meeting at which the action was taken, addressed to the
Director at his or her residence or usual place of business.
Special meetings of the Board of Directors shall be held upon call
by or at the direction of the Chairman of the Board, the Vice Chairman, if any,
the Chief Executive Officer, the President or any three Directors. Except as
otherwise required by law, notice of each special meeting shall be mailed to
each Director, addressed to the Director at his or her residence or usual place
of business, at least two days before the day on which the meeting is to be
held, or shall be sent to the Director at such place by telegram or facsimile,
or telephoned or delivered to the Director personally, not later than the day
before the day on which the meeting is to be held. Such notice shall state the
time and place of the meeting, but need not state the purpose thereof, unless
otherwise required by law.
Notice of any meeting need not be given to any Director who shall
attend the meeting in person or who shall waive notice thereof, before or after
the meeting, in writing. At each meeting of the Board of Directors, the presence
of a majority of the whole Board of Directors as constituted from time to time
shall be necessary and sufficient to constitute a quorum for the transaction of
business. In the absence of a quorum, a majority of those present at the time
and place of any meeting may adjourn the meeting from time to time until a
quorum shall be present and the meeting may be held as adjourned without further
notice or waiver. A majority of those present at any meeting at which a quorum
is present may decide any question brought before such meeting, except as
otherwise provided by law, the Certificate of Incorporation of the Corporation
or these By-Laws.
Members of the Board of Directors may participate in a meeting of
the Board by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting in such manner shall constitute presence in
person at the meeting.
3
<PAGE> 4
Section 2.4 Action Without a Meeting. Any action which might have been
taken under these By-Laws by vote of the Directors at a meeting of the Board of
Directors may be taken without a meeting if all the members of the Board of
Directors consent thereto in writing, and the writing or writings are filed with
the minutes of the Board of Directors.
Section 2.5 Resignation of Directors. Any Director may resign at any time
by giving written notice of such resignation to the Board of Directors. Unless
otherwise specified in the notice, the resignation shall take effect upon
receipt thereof by the Board of Directors, and the acceptance of such
resignation shall not be necessary to make it effective.
Section 2.6 Compensation of Directors. Directors who are not employees of
the Corporation or any subsidiary of the Corporation shall receive such
reasonable compensation for their services as Directors, whether in the form of
salary or a fixed fee for attendance at meetings, as the Board of Directors may
from time to time determine, as well as reimbursement for expenses. Directors
who are employees of the Corporation or its subsidiaries may not receive
compensation, but shall be reimbursed for expenses incurred in connection with,
performing as Directors of the Corporation. Nothing herein contained shall be
construed to preclude any Director from serving the Corporation or any
subsidiary in any other capacity and receiving compensation therefor.
ARTICLE III
Officers
Section 3.1 Officers. The Board of Directors shall elect a Chairman of the
Board, a Chief Executive Officer, a President, one or more Vice Presidents, a
Treasurer and a Secretary and, in its discretion, may elect a Vice Chairman of
the Board, one or more Executive Vice Presidents, one or more Senior Vice
Presidents and a Controller, all of which officers shall be Executive Officers.
The Board of Directors may designate one or more of these officers as the Chief
Operating Officer, the Chief Financial Officer, the Chief Administrative Officer
and the Chief Accounting Officer. The Board of Directors may, from time to time,
fill vacancies and elect additional Executive Officers and such other officers
(including one or more Assistant Vice Presidents, Assistant Controllers,
Assistant Treasurers and Assistant Secretaries) as it may deem appropriate. Any
two or more offices may be held by the same person, except that the Offices of
the President and the Secretary may not be held by the same person. The Board of
Directors may also elect a President-Asset Management.
Section 3.2. Election, Term of Office and Qualifications. Each officer
(except such officers as may be appointed in accordance with the provisions of
Section 3.3) shall be elected by the Board of Directors. Except as specified in
the resolution of the Board of Directors electing a particular officer, each
officer will hold office until the officer resigns in the manner provided in
Section 3.4 or is removed in the manner provided in Section 3.5. The Chairman of
the Board, the Vice Chairman of the Board, if any, the Chief Executive Officer
and the President must be members of the Board of Directors. None of the other
officers need be a Director.
Section 3.3 Subordinate Officers and Agents. The Board of Directors may
from time to time appoint other officers or agents to hold office for such
period, have such authority and perform such duties as may be provided in the
resolutions appointing them. The Board of Directors may delegate to any officer
or agent the power to appoint any such subordinate officers or agents and to
prescribe their respective authorities and duties.
4
<PAGE> 5
Section 3.4 Resignations. Any officer may resign at any time by giving
written notice of such resignation to the Board of Directors, or, in the case of
a subordinate officer appointed in accordance with Section 3.3, the appointing
officer or agent. Unless otherwise specified in such written notice, a
resignation will take effect when it is received by the Board of Directors, or,
in the case of a subordinate officer, by the appointing officer or agent, and
the acceptance of a resignation will not be necessary to make it effective.
Section 3.5 Removal. Except as specified in the resolution of the Board of
Directors electing a particular officer, any officer designated in Section 3.1
may be removed with or without cause at any time by the Board of Directors. Any
officer or agent appointed in accordance with Section 3.3 may be removed with or
without cause at any time by the Board of Directors or by any Executive Officer
of the Corporation.
Section 3.6 Chairman of the Board. The Chairman of the Board may be the
Chief Executive Officer. The Chairman of the Board shall preside at all meetings
of the Board of Directors and of the stockholders, and shall have such other
powers and perform such other duties as are given to him or her by these By-Laws
or are from time to time assigned to him or her by the Board of Directors. The
Board will maintain a succession plan which will be in place in the absence or
incapacity of the Chairman.
Section 3.7(1) President. The President may be the Chief Executive Officer
of the Corporation. If the President is not the Chief Executive Officer, the
President shall assist the Chief Executive Officer in the control and
supervision of the business, property and affairs of the Corporation. The
President shall also have such additional powers and duties as from time to time
may be assigned to the President by the Board of Directors or by the Chairman of
the Board. The President may be the Chief Operating Officer of the Corporation.
In the absence or incapacity of the President, all the duties of the President
shall be performed by the Vice Chairman or, if there is no Vice Chairman, by the
Chief Executive Officer if the President is not the Chief Executive Officer or
by such other Executive Officer as is designated by the Board of Directors.
Section 3.7(2) President - Asset Management. The President - Asset
Management will be assigned duties by the Chief Executive Officer of the
Corporation.
Section 3.8 Vice Chairman of the Board. In the absence or incapacity of
the Chairman of the Board or the President, the Vice Chairman of the Board, if
any, shall perform the duties of the Chairman of the Board or the President, as
the case may be. The Vice Chairman of the Board shall also have such other
powers and perform such other duties as from time to time may be assigned to the
Vice Chairman of the Board by the Board of Directors or by the Chairman of the
Board.
Section 3.9 Executive Vice Presidents and Senior Vice Presidents.
Executive Vice Presidents and Senior Vice Presidents shall have such powers and
perform such duties as may be assigned to them by the Board of Directors, the
Chief Executive Officer or the President.
Section 3.10 Controller. The Controller, if there is one, shall keep or
cause to be kept full and accurate accounts of the financial transactions of the
Corporation and shall render an account of such transactions whenever required
by the Chief Executive Officer or the Board of Directors. The Controller shall
also perform such other duties as the Chief Executive Officer or the President
may assign to the Controller.
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Section 3.11 Treasurer. The Treasurer shall have custody of all the funds
and securities of the Corporation and shall also perform such other duties as
the Chief Executive Officer or the President may assign to the Treasurer.
Section 3.12 Secretary. The Secretary shall give all required notices of
the meetings of the stockholders and of the Board of Directors, attend and act
as Secretary at all meetings of the stockholders, the Board of Directors and the
Executive Committee, keep the records thereof and be the custodian of the seal
of the Corporation. The Secretary shall also perform such other duties as the
Chairman, Vice Chairman, Chief Executive Officer or the President may assign to
the Secretary.
Section 3.13 Chief Executive Officer. The Chief Executive Officer will be
the Chairman of the Board, the President or another person designated by the
Board of Directors. The Chief Executive Officer shall have the responsibility
for carrying out the policies of the Board of Directors and, subject to the
control of the Board, shall provide general leadership in matters of policy and
planning and have general responsibility for supervising the business, property
and affairs of the Corporation. In the absence or incapacity of the Chief
Executive Officer, the individual who shall succeed to the responsibilities of
the Chief Executive Officer shall follow sequentially as listed below:
1. President and Chief Operating Officer
2. Such Executive Vice President as the Board shall determine
3. Senior Vice President, Chief Financial Officer, Chief
Accounting Officer
Section 3.14 Chief Operating Officer. The Chief Operating Officer shall
have responsibility for overseeing the operations of the Corporation and shall
have such additional powers and duties as are assigned to the Chief Operating
Officer by the Chief Executive Officer.
Section 3.15 Chief Financial Officer. The Chief Financial Officer shall
oversee the financial activities of the Corporation and shall have such
additional powers and duties as are assigned to the Chief Financial Officer by
the Chief Executive Officer.
Section 3.16 Chief Administrative Officer The Chief Administrative
Officer, if there is one, shall oversee the operation of all the administrative
services of the corporation and shall have such additional powers and duties as
are assigned to the Chief Administrative Officer by the Chief Executive Officer
or the President.
Section 3.17 Chief Accounting Officer. The Chief Accounting Officer shall
have responsibility for overseeing the financial accounting and financial
controls of the Corporation and shall have such additional powers and duties as
are assigned to the Chief Accounting Officer by the Chief Executive Officer, the
President or the Chief Financial Officer.
Section 3.18 General Duties of Officers. Each officer other than those
specified above, shall perform such duties and have such powers as from time to
time may be assigned to him or her by the Board of Directors, the Chief
Executive Officer or the President.
Section 3.19 Unless the full title President-Asset Management is used in
any reference in these By-Laws, the use of the term "President" shall refer to
any President of the Corporation.
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ARTICLE IV
Committees
Section 4.1 Executive Committee. The Board of Directors at any time may
designate an Executive Committee consisting of the Chairman of the Board, the
Vice Chairman, if any, the Chief Executive Officer, the President, and at least
three additional members of the Board of Directors. The members of the Executive
Committee, other than the Chairman of the Board, the Vice Chairman, the Chief
Executive Officer and the President, will serve at the pleasure of the Board of
Directors. The Chairman of the Board shall be the Chairman of the Executive
Committee. If any member of the Committee shall cease to be a member of the
Board of Directors, he or she shall cease to be a member of the Committee. If
any vacancy in the Committee shall occur, the remaining members of the
Committee, though less than a quorum, shall continue to act until such vacancy
is filled by the Board of Directors. The Secretary of the Corporation shall be
the Secretary of the Committee. The Committee may adopt rules for the conduct of
its business. Meetings of the Committee shall be held at the call of the
Chairman of the Executive Committee or any member of the Committee. Four members
will constitute a quorum at any meeting of the Committee.
During the intervals between the meetings of the Board of Directors,
the Executive Committee shall have all the authority of the Board of Directors,
except in reference to (i) approving or adopting, or recommending to the
stockholders, any action or matter expressly required by the General Corporation
Law of the State of Delaware to be submitted to stockholders for approval or
(ii) adopting, amending or repealing any By-law of the Corporation, or (iii)
amending or repealing any resolution of the Board of Directors. Action taken at
any meeting of the Committee shall be reported at the next meeting of the Board
of Directors.
Section 4.2 Compensation and Stock Option Committee. The Board of
Directors at any time may designate a Compensation and Stock Option Committee
consisting of five Directors who are not Executive Officers or employees of the
Corporation or any subsidiary and who are eligible to serve under the terms of
plans which the Board of Directors has specified are to be administered by the
Committee. Except to the extent prohibited by specific plans or the laws
(including tax laws) regarding specific plans, or to the extent it would
adversely affect available exemptions from Section 16(b) of the Securities
Exchange Act of 1934, as amended, the Chairman of the Board, the Vice Chairman,
the Chief Executive Officer and the President of the Corporation will be
non-voting members of the Committee and may attend committee meetings at the
invitation of the voting members of the Committee. The members of the Committee
shall serve at the pleasure of the Board of Directors. If any member of the
Committee shall cease to be a member of the Board of Directors, or otherwise
becomes ineligible to serve, he or she shall cease to be a member of the
Committee.
The Committee shall administer incentive plans to the extent
specified by the Board of Directors, will approve the salaries and other
compensation paid to the Executive Officers of the Corporation, other than the
compensation of the Chairman of the Board, the Vice Chairman of the Board, if
any, the Chief Executive Officer and the President, the compensation of whom
will be approved by the Board of Directors. Action taken at any meeting of the
Committee shall be reported at the next meeting of the Board of Directors.
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Section 4.3 Audit Committee. At each Organization Meeting, the Board of
Directors shall designate an Audit Committee, which shall consist of five
Directors who are not Executive Officers or employees of the Corporation or any
subsidiary. The members of the Committee shall serve at the pleasure of the
Board of Directors. If any member of the Committee shall cease to be a member of
the Board of Directors, or otherwise becomes ineligible to serve, he or she
shall cease to be a member of the Committee.
The Committee shall recommend the firm of independent public
accountants to act as the Corporation's independent auditors, confer with the
Corporation's independent auditors as to the scope of their proposed audit,
review the findings and recommendations of the independent auditors, review with
the Corporation's internal audit and accounting personnel the Corporation's
financial controls, procedures and practices, and review the Corporation's
compliance with any operating policy statement which may be in effect. Action
taken at any meeting of the Committee shall be reported at the next meeting of
the Board of Directors.
Section 4.4 Nominating Committee or Committee on Corporate Governance. The
Board of Directors shall designate a Nominating Committee or a Committee on
Corporate Governance, consisting of five Directors who are not Executive
Officers or employees of the Corporation or any subsidiary. The Chairman of the
Board, the Vice Chairman, if any, the Chief Executive Officer and the President
will be non-voting members of the Committee and may attend Committee meetings at
the invitation of the voting members of the Committee. The members of the
Committee, other than the Chairman of the Board, the Vice Chairman, the Chief
Executive Officer and the President, shall serve at the pleasure of the Board of
Directors. If any member of the Committee shall cease to be a member of the
Board of Directors, or otherwise becomes ineligible to serve, he or she shall
cease to be a member of the Committee.
The Committee, shall, among other things, select and recommend
nominees for directorships to the Board of Directors. Action taken at any
meeting of the Committee shall be reported at the next meeting of the Board of
Directors.
Section 4.5 Other Committees. The Board of Directors may designate such
other committees as may from time to time be found necessary or convenient for
the proper conduct of the business of the Corporation, and may specify the
duties and authority of each of those committees. Each committee designated by
the Board of Directors will consist of five Directors who are not Executive
Officers or employees of the Corporation or any subsidiary. The Chairman of the
Board, the Vice Chairman, if any, the Chief Executive Officer and the President
will serve as non-voting members of each committee designated by the Board of
Directors and may attend committee meetings at the invitation of the voting
members of the Committee. Action taken at any meeting of any committee
designated by the Board of Directors shall be reported at the next meeting of
the Board of Directors.
Section 4.6 Actions by Committee Without Meetings. Any action required or
permitted to be taken by any committee of the Board of Directors may be taken
without a meeting if all members of the committee consent in writing to the
adoption of a resolution authorizing the action.
Section 4.7 Participation in Meetings by Telephone. Any one or more of the
members of any committee of the Board of Directors may participate in a meeting
of such committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
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Section 4.8 Corporate Management Group. The Board of Directors shall
designate a Corporate Management Group which shall consist of the Chairman of
the Board, the Vice Chairman, if any, the Chief Executive Officer, the
President, the Chief Financial Officer, the General Counsel, one member of the
Executive Management Group of Turner Construction Company and such other
Executive Officers as are appointed by the Chief Executive Officer to serve on
the Committee. Each shall serve at the pleasure of the Board of Directors. The
Corporate Management Group shall serve as the Senior Operations Group of the
Corporation and in that capacity shall perform whatever oversight duties are
deemed necessary to assure that the operations of the Corporation are in
accordance with the standards as prescribed by the Board of Directors or the
Chairman of the Board. The Corporate Management Group shall have such other
duties and authority as prescribed by the Board of Directors or the Chairman.
ARTICLE V
Execution of Instruments and
Deposit of Corporate Funds
Section 5.1 Construction Contracts. The Board of Directors may from time
to time adopt rules regarding authority of Executive Officers or other employees
or agents of the Corporation, or officers, employees or agents of its
subsidiaries, to approve contracts for, and to submit binding proposals with
respect to, the design, the construction or the management of the construction
of buildings and other projects.
Section 5.2 Guarantees. (a) The Corporation may not guarantee any single
obligation of any other persons (including subsidiaries of the Corporation), and
the Corporation will cause the By-Laws of each of its wholly-owned subsidiaries
to provide that the subsidiary may not guarantee any single obligation of any
other persons (including other subsidiaries of the Corporation), if the
obligation exceeds the net worth of The Turner Corporation, without the prior
approval of the Board of Directors. The Board of Directors may from time to time
adopt rules regarding authority of Executive Officers or other employees or
agents of the Corporation, to approve guarantees by the Corporation as to which
the obligation of the Corporation will not exceed that amount.
(b) The Corporation may not guarantee obligations of other persons
(including subsidiaries of the Corporation) if the cumulative face amount of the
guarantee obligations of the Corporation, Turner Construction Company and their
respective subsidiaries for the preceding twelve month period exceeds in total
four (4) times the net worth of The Turner Corporation (not including guarantees
which have been separately approved by the Board of Directors) without the prior
approval of the Board of Directors.
Section 5.3 Payment and Performance Bonds and Lien Bonds. The Board of The
Turner Corporation recognizes that The Turner Corporation indemnifies the surety
companies for the purpose of obtaining Performance and Payment Bonds and Lien
Bonds provided by the sureties with respect to Turner Construction Company and
various other subsidiaries of The Turner Corporation and Turner Construction
Company. The Board of The Turner Corporation also recognizes the due diligence
that the surety companies perform prior to issuing any bonds.
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Therefore, obligations of Turner Construction Company and various
other subsidiaries of The Turner Corporation and Turner Construction Company
that require a Payment and Performance Bond or Lien Bond backed by The Turner
Corporation are subject to the approval of management working in conjunction
with the sureties.
Section 5.4 Bank Accounts. Funds of the Corporation not otherwise employed
shall be deposited to its credit in such banks or trust companies or with such
bankers or other depositories and in such general accounts, payroll accounts,
dividend accounts or special accounts as may be designated by the Chairman of
the Board, the Vice Chairman of the Board, if any, the Chief Executive Officer,
the President, an Executive Vice President, the Chief Financial Officer, the
Treasurer or any other Executive Officer authorized to do so by the Board of
Directors.
Section 5.5 Checks and Drafts. All checks or drafts drawn on the general
accounts of the Corporation shall be signed by any two Executive Officers or
such other two persons as may be designated by the Chairman of the Board, the
Vice Chairman of the Board, if any, the Chief Executive Officer, the President
or the Chief Financial Officer, or any other Executive Officer designated by the
Board of Directors.
Checks or drafts drawn on payroll accounts, or dividend accounts, or
special accounts shall be signed by actual or facsimile signature by any one
Executive Officer or by such other person as may be designated by the Chairman
of the Board, the Vice Chairman of the Board, if any, the Chief Executive
Officer, the President or the Chief Financial Officer.
Section 5.6 Notes and Loans. Promissory notes, bills of exchange and/or
acceptances, and loans of Corporation funds must be signed or, in the case of
loans, approved by two Executive Officers, one of whom shall be the Chairman of
the Board, the Vice Chairman of the Board, if any, the Chief Executive Officer,
the President, the Chief Financial Officer or such other Executive Officer as
may be designated by the Chairman of the Board, the Vice Chairman of the Board,
if any, the Chief Executive Officer or the President.
Section 5.7 Other Contracts and Instruments. All other contracts and
instruments binding the Corporation shall be executed in the name and on behalf
of the Corporation by an Executive Officer or by such other person as may be
authorized by the Board of Directors. Such authorization may be general or
confined to specific instances. Authorization of a person other than an
Executive Officer to execute contracts and instruments in the name and on behalf
of the Company will not be valid unless set forth in a formal resolution
submitted and approved by the Board of Directors or the members of the Corporate
Management Group as the case may be.
Section 5.8 Surety Bonds. The Chief Financial Officer, or such other
Executive Officer as may be designated by the Chairman of the Board, the Vice
Chairman of the Board, if any, the Chief Executive Officer or the President may
execute surety bonds and the applications therefor in connection with any
proposal or contract which has been properly authorized.
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Section 5.9 Capital Transactions and Investments. Capital transactions in
excess of $250,000 in the case of the Corporation or Turner Construction
Company, and $100,000 in the case of any other subsidiary, including the
purchase or sale of securities, real or personal property or other investments,
not made in the ordinary course of the construction business of the Corporation
or a subsidiary, and acquisitions of or mergers with other companies shall be
authorized by the Board of Directors. Investments made and disposed of pursuant
to or in connection with the Corporation's cash management program shall be
authorized by the Chief Financial Officer or such other Executive officer as the
Chief Financial Officer or the Chief Executive Officer may designate.
Investments in, or disposals of, undeveloped or developed real estate by the
Corporation or any subsidiary shall be authorized by the Board of Directors
either specifically or by delegation pursuant to such procedural policies as may
be established from time to time by the Board of Directors.
Section 5.10 Electronic Banking. Electronic banking agreements entered
into in the name of the Corporation must be signed by two Executive Officers,
one of whom shall be either the Chairman of the Board, the Vice Chairman of the
Board, if any, the Chief Executive Officer, the President, the Chief Financial
Officer, the Treasurer or such other Executive Officer as may be designated by
the Chairman of the Board, the Vice Chairman of the Board, if any, the Chief
Executive Officer, the President or the Chief Financial Officer.
All electronic fund transfers must be authorized by two Executive
Officers, one of whom shall be either the Chairman of the Board, the Vice
Chairman of the Board, if any, the Chief Executive Officer, the President, the
Chief Financial Officer, the Treasurer or such other Executive Officer or
individual as may be designated by the Chairman of the Board, the Vice Chairman
of the Board, if any, the Chief Executive Officer, the President or the Chief
Financial Officer.
ARTICLE VI
Corporate Seal
Section 6.1 Corporate Seal. The corporate seal shall be circular in form
and shall bear the name of the Corporation and words and figures denoting its
organization under the laws of the State of Delaware and the year thereof and
otherwise shall be in such form as shall be approved from time to time by the
Board of Directors.
ARTICLE VII
Amendments
Section 7.1 Amendments. The By-Laws of the Corporation may be amended or
repealed and new By-Laws may be made, by an affirmative vote of holders of a
majority of the outstanding shares of stock of the Corporation entitled to vote,
or by the affirmative vote of a majority of the Directors present at any meeting
of the Board of Directors.
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ARTICLE VIII
Indemnification
Section 8.1 General. Each person who was or is made a party or is
threatened to be made a party to or is involved (including, without limitation,
as a witness) in any threatened, pending or completed action, suit, arbitration,
alternative dispute resolution mechanism, investigation, administrative hearing
or any other proceeding, whether civil, criminal, administrative or
investigative ("Proceeding") brought by reason of the fact that such person (the
"Indemnitee") is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director or officer of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan, whether the basis of
such Proceeding is alleged action in an official capacity as a director or
officer or in any other capacity while serving as such a director or officer,
shall be indemnified and held harmless by the Corporation to the full extent
authorized by the General Corporation Law of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), or by other applicable law as then in effect, against all expenses,
liabilities, losses and claims (including attorneys' fees, judgments, fines,
excise taxes under the Employee Retirement Income Security Act of 1974, as
amended from time to time, penalties and amounts to be paid in settlement)
actually incurred or suffered by such Indemnitee in connection with such
Proceeding (collectively, "Losses").
Section 8.2 Derivative Actions. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to or is involved
(including, without limitation, as a witness) in any Proceeding brought by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that such person (also an "Indemnitee") is or was a director or officer of
the Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan, against Losses actually incurred or suffered by the Indemnitee in
connection with the defense or settlement of such action or suit if the
Indemnitee acted in good faith and in a manner the Indemnitee reasonably
believed to be in or not opposed to the best interests of the Corporation,
provided that no indemnification shall be made in respect of any claim, issue or
matter as to which Delaware law expressly prohibits such indemnification by
reason of an adjudication of liability of the Indemnitee unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
the Indemnitee is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
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Section 8.3 Indemnification in Certain Cases. Notwithstanding any other
provision of this Article VIII, to the extent that an Indemnitee has been wholly
successful on the merits or otherwise in any Proceeding referred to in Sections
8.1 or 8.2 of this Article VIII on any claim, issue or matter therein, the
Indemnitee shall be indemnified against Losses actually incurred or suffered by
the Indemnitee in connection therewith. If the Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Corporation shall indemnify the Indemnitee, against Losses actually incurred
or suffered by the Indemnitee in connection with each successfully resolved
claim, issue or matter. In any review or Proceeding to determine such extent of
indemnification, the Corporation shall bear the burden of proving any lack of
success and which amounts sought in indemnity are allocable to claims, issues or
matters which were not successfully resolved. For purposes of this Section 8.3
and without limitation, the termination of any such claim, issue or matter by
dismissal with or without prejudice shall be deemed to be a successful
resolution as to such claim, issue or matter.
Section 8.4 Procedure. (a) Any indemnification under Sections 8.1 and 8.2
of this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the Indemnitee is proper (except that the right of the
Indemnitee to receive payments pursuant to Section 8.5 of this Article VIII
shall not be subject to this Section 8.4) in the circumstances because the
Indemnitee has met the applicable standard of conduct. Such determination shall
be made promptly, but in no event later than 60 days after receipt by the
Corporation of the Indemnitee's written request for indemnification. The
Secretary of the Corporation shall, promptly upon receipt of the Indemnitee's
request for indemnification, advise the Board of Directors that the Indemnitee
has made such request for indemnification.
(b) The entitlement of the Indemnitee to indemnification shall be
determined in the specific case (1) by the Board of Directors by a majority vote
of the directors who are not parties to such Proceeding, even though less than a
quorum (the "Disinterested Directors"), or (2) by a committee of the
Disinterested Directors designated by a majority vote of the Disinterested
Directors, even though less than a quorum, or (3) if there are no Disinterested
Directors, or if such Disinterested Directors so direct, by independent legal
counsel, or (4) by the stockholders.
(c) In the event the determination of entitlement is to be made by
independent legal counsel, such independent legal counsel shall be selected by
the Board of Directors and approved by the Indemnitee. Upon failure of the Board
of Directors to so select such independent legal counsel or upon failure of the
Indemnitee to so approve, such independent legal counsel shall be selected by
the American Arbitration Association in New York, New York or such other person
as such Association shall designate to make such selection.
(d) If the Board of Directors or independent legal counsel shall have
determined that the Indemnitee is not entitled to indemnification to the full
extent of the Indemnitee's request, the Indemnitee shall have the right to seek
entitlement to indemnification in accordance with the procedures set forth in
Section 8.6 of this Article VIII.
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(e) If the person or persons empowered pursuant to Section 8.4(b) of this
Article VIII to make a determination with respect to entitlement to
indemnification shall have failed to make the requested determination within 60
days after receipt by the Corporation of such request, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and the Indemnitee shall be absolutely entitled to such indemnification,
absent (i) misrepresentation by the Indemnitee of a material fact in the request
for indemnification or (ii) a final judicial determination that all or any part
of such indemnification is expressly prohibited by law.
(f) The termination of any proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, adversely affect the rights of the Indemnitee to indemnification
hereunder except as may be specifically provided herein, or create a presumption
that the Indemnitee did not act in good faith and in a manner which the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation or create a presumption that (with respect to any criminal
action or proceeding) the Indemnitee had reasonable cause to believe that the
Indemnitee's conduct was unlawful.
(g) For purposes of any determination of good faith hereunder, the
Indemnitee shall be deemed to have acted in good faith if the Indemnitee's
action is based on the records or books of account of the Corporation or an
affiliate, including financial statements, or on information supplied to the
Indemnitee by the officers of the Corporation or an affiliate in the course of
their duties, or on the advice of legal counsel for the Corporation or an
affiliate or on information or records given or reports made to the Corporation
or an affiliate by an independent certified public accountant or by an appraiser
or other expert selected with reasonable care to the Corporation or an
affiliate. The Corporation shall have the burden of establishing the absence of
good faith. The provisions of this Section 8.4(g) of this Article VIII shall not
be deemed to be exclusive or to limit in any way the other circumstances in
which the Indemnitee may be deemed to have met the applicable standard of
conduct set forth in these By-Laws.
(h) The knowledge and/or actions, or failure to act, of any other
director, officer, agent or employee of the Corporation or an affiliate shall
not be imputed to the Indemnitee for purposes of determining the right to
indemnification under these By-Laws.
Section 8.5 Advances for Expenses and Costs. All expenses (including
attorneys' fees) incurred by or on behalf of the Indemnitee (or reasonably
expected by the Indemnitee to be incurred by the Indemnitee within three months)
in connection with any Proceeding shall be paid by the Corporation in advance of
the final disposition of such Proceeding within twenty days after the receipt by
the Corporation of a statement or statements from the Indemnitee requesting from
time to time such advance or advances whether or not a determination to
indemnify has been made under Section 8.4 of this Article VIII. The Indemnitee's
entitlement to such advancement of expenses shall include those incurred in
connection with any Proceeding by the Indemnitee seeking an adjudication or
award in arbitration pursuant to these By-Laws. The financial ability of an
Indemnitee to repay an advance shall not be a prerequisite to the making of such
advance. Such statement or statements shall reasonably evidence such expenses
incurred (or reasonably expected to be incurred) by the Indemnitee in connection
therewith and shall include or be accompanied by a written undertaking by or on
behalf of the Indemnitee to repay such amount if it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified therefor
pursuant to the terms of this Article VIII.
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Section 8.6 Remedies in Cases of Determination Not to Indemnify or to
Advance Expenses. (a) In the event that (i) a determination is made that the
Indemnitee is not entitled to indemnification hereunder, (ii) advances are not
made pursuant to Section 8.5 of this Article VIII or (iii) payment has not been
timely made following a determination of entitlement to indemnification pursuant
to Section 8.4 of this Article VIII, the Indemnitee shall be entitled to seek a
final adjudication either through an arbitration proceeding or in an appropriate
court of the State of Delaware or any other court of competent jurisdiction of
the Indemnitee's entitlement to such indemnification or advance.
(b) In the event a determination has been made in accordance with the
procedures set forth in Section 8.4 of this Article VIII, in whole or in part,
that the Indemnitee is not entitled to indemnification, any judicial proceeding
or arbitration referred to in paragraph (a) of this Section 8.6 shall be de novo
and the Indemnitee shall not be prejudiced by reason of any such prior
determination that the Indemnitee is not entitled to indemnification, and the
Corporation shall bear the burdens of proof specified in Sections 8.3 and 8.4 of
this Article VIII in such proceeding.
(c) If a determination is made or deemed to have been made pursuant to the
terms of Sections 8.4 or 8.6 of this Article VIII that the Indemnitee is
entitled to indemnification, the Corporation shall be bound by such
determination in any judicial proceeding or arbitration in the absence of (i) a
misrepresentation of a material fact by the Indemnitee or (ii) a final judicial
determination that all or any part of such indemnification is expressly
prohibited by law.
(d) To the extent deemed appropriate by the court, interest shall be paid
by the Corporation to the Indemnitee at a reasonable interest rate for amounts
which the Corporation indemnifies or is obliged to indemnify the Indemnitee for
the period commencing with the date on which the Indemnitee requested
indemnification (or reimbursement or advancement of expenses) and ending with
the date on which such payment is made to the Indemnitee by the Corporation.
Section 8.7 Rights Non-Exclusive. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Sections of this Article
VIII shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any law,
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in such person's official capacity and as to action in another
capacity while holding such office.
Section 8.8 Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan, against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article VIII.
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Section 8.9 Definition of Corporation. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan, shall stand in the same position under this Article VIII with respect to
the resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued.
Section 8.10 Other Definitions. For purposes of this Article VIII,
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith
and in a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation" as
referred to in this Article VIII.
Section 8.11 Survival of Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to this Article VIII shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person. No
amendment, alteration, rescission or replacement of these By-Laws or any
provision hereof shall be effective as to an Indemnitee with respect to any
action taken or omitted by such Indemnitee in Indemnitee's position with the
Corporation or any other entity which the Indemnitee is or was serving at the
request of the Corporation prior to such amendment, alteration, rescission or
replacement.
Section 8.12 Indemnification of Employees who are not Directors or
Officers and Indemnification of Agents of the Corporation. The Corporation may,
by action of the Board of Directors from time to time, grant rights to
indemnification and advancement of expenses to employees who are not directors
or officers and to agents of the Corporation with the same scope and effect as
the provisions of this Article VIII with respect to the indemnification of
directors and officers of the Corporation.
Section 8.13 Savings Clause. If this Article VIII or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each person entitled to
indemnification under the first paragraph of this Article VIII as to all losses
actually and reasonably incurred or suffered by such person and for which
indemnification is available to such person pursuant to this Article VIII to the
full extent permitted by any applicable portion of this Article VIII that shall
not have been invalidated and to the full extent permitted by applicable law.
16
<PAGE> 17
Exhibit 10(c)(xi)
EMPLOYEES' CASH BALANCE RETIREMENT PLAN
OF
THE TURNER CORPORATION
Amended and Restated as of January 1, 1994
Dated: , 1995
<PAGE> 18
Table of Contents
Section Page
- ------- ----
1. DEFINITIONS.............................................................1
2. MEMBERSHIP.............................................................10
3. CREDITED SERVICE.......................................................10
4. BENEFITS...............................................................12
5. CONTRIBUTIONS..........................................................35
6. ADMINISTRATION OF PLAN.................................................36
7. THE TRUST..............................................................39
8. AMENDMENT AND TERMINATION..............................................39
9. ALLOCATION OF ASSETS ON TERMINATION....................................41
10. STATUTORY LIMITATIONS ON MAXIMUM BENEFITS..............................44
11. LIMITATIONS IN THE EVENT OF TERMINATION................................44
12. EMPLOYMENT WITH AFFILIATES, JOINT VENTURES, FOREIGN
SUBSIDIARIES, PREDECESSORS AND IN A CAPACITY OTHER THAN AN
EMPLOYEE; LEAVES OF ABSENCE; LEASED EMPLOYEES..........................46
13. MISCELLANEOUS..........................................................48
14. TOP-HEAVY PROVISIONS...................................................51
15. CESSATION OF ACCRUALS..................................................53
16. EARLY RETIREMENT WINDOW................................................54
17. SUPPLEMENTAL RETIREMENT BENEFIT........................................55
-i-
<PAGE> 19
Appendix A1: Earnings Credit - Supplemental Rate
Appendix A2: Earnings Credit - Aggregate Supplemental Allowance
Appendix B: Actuarial Factors
Appendix C: Special Provisions Applicable to Former Participants in The
Lacona, Inc. Retirement Plan
Appendix D: Special Provisions Applicable to Former Participants in The
Lathrop Company, Inc. Retirement Plan
Appendix E: Schedule of Members Not Eligible for Early Retirement Benefit
Appendix F: Supplemental Retirement Benefit
Appendix G: Special Provisions Establishing a Health Benefits Account and
Governing Certain Transfers to Such Account
-ii-
<PAGE> 1
Exhibit 10(c)(xi)
EMPLOYEES' CASH BALANCE RETIREMENT PLAN OF
THE TURNER CORPORATION
INTRODUCTION
The Employees' Cash Balance Retirement Plan of The Turner
Corporation, formerly the "Employees' Retirement Plan of The Turner
Corporation," was established effective as of January 1, 1948, and has been
amended from time to time thereafter.
As set forth in the Plan, effective April 1, 1991 the Plan was
curtailed for accounting purposes and all benefits under the Plan ceased to
accrue. All benefits accrued before that date are referred to as "Old Plan
Benefits." Retirement benefits for eligible employees for the period commencing
April 1, 1991 will be provided under a separate defined contribution plan known
as the Employees' Retirement Income Plan of The Turner Corporation.
Contributions under the Retirement Income Plan will cease for service after
1993. Turner has amended and restated this Plan as set forth herein, effective
January 1, 1994 and subject to the receipt of a favorable determination letter
from the Internal Revenue Service, to provide for certain benefits for eligible
employees in respect of service after 1993. Such benefits are referred to as
"Cash Balance Benefits." All assets of the Plan shall be available to pay Old
Plan Benefits and Cash Balance Benefits, and the Plan shall be considered a
single plan within the meaning of section 414(l) of the Code.
If a person retired or terminated employment prior to the effective
date of any amendment to the Plan, his membership in the Plan and the benefits
payable on his account shall be governed by the applicable provisions of the
Plan as in effect on the date of his retirement or termination of employment,
except to the extent the provisions of the Plan specifically provide otherwise
(or as otherwise required by law).
Effective January 1, 1994, the Plan has been amended to provide for
the payment of health benefits as provided in Appendix G to the Plan.
SECTION 1. DEFINITIONS
The following words and phrases shall have the following meanings,
unless a different meaning is plainly required by the context:
1.1 "Accrued Benefit" shall mean, for any Member as of any date of
determination on or after January 1, 1994, the sum of the Old Plan Benefit and
the Cash Balance Benefit.
The Old Plan Benefit determines the benefit in respect of Credited
Service before April 1, 1991, and is the sum of (a) and (b), where (a) is
the normal Retirement Allowance computed under Section 4.1(b)(i) and
4.1(b)(ii) on the basis of the Member's Final Average Salary at such date
of determination (but not beyond March 31, 1991) and the Credited Service
the Member would have if he continued as an Employee uninterrupted until
his Normal Retirement Date; multiplied by a fraction, the numerator of
which is the Member's Credited Service as of the date of determination
(but not beyond March 31, 1991) and the denominator of which is the
Credited Service the Member would have if he continued as an Employee
uninterrupted until his Normal Retirement Date, and (b) is the amount of
the Member's supplemental retirement benefit, if any, as specified in
Appendix F.
The Cash Balance Benefit determines the benefit in respect of
Credited Service on and after January 1, 1994 and is determined in
accordance with Section 1.6.
As of any date prior to January 1, 1994 the Accrued Benefit shall be
determined on the basis of the benefit formula in effect on the date of
determination.
1.2 "Affiliate" shall mean any corporation or trade or business
that, together with the Company, is treated as a single employer under the first
sentence of section 414(b) or under section 414(c) or 414(m) of the Code and any
other entity required to be aggregated with the Company pursuant to regulations
under section 414(o) of the Code.
<PAGE> 2
1.3 "Benefit Commencement Date" shall mean the first date as of
which a member's benefit under the Plan is paid.
1.4 "Board of Directors" shall mean the Board of Directors of The
Turner Corporation.
1.5 "Cash Balance Account" shall mean the bookkeeping account
established for certain Members, in respect of Credited Service after December
31, 1993, in accordance with Section 4.1(c).
1.6 "Cash Balance Benefits" shall mean benefits payable under the
Plan attributed to a Member's Cash Balance Account which account shall be
converted into benefits on the basis of the actuarial factors described in
Section B.6 of Appendix B.
1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.8 "Committee" shall mean the Committee designated pursuant to
Section 6.1 hereof.
1.9 "Company," collectively or individually as the context may
indicate, shall mean The Turner Corporation, Turner Construction Company, their
successors and any other corporations or entities which may be authorized from
time to time by the Board of Directors to participate in, and which adopt, the
Plan. The Board of Directors and the board of directors or other governing body
of each such other corporation or entity shall establish the terms and
conditions on which such corporation or entity and its employees shall
participate.
1.10 "Credited Service" shall mean the period of employment
specified in Section 3.
1.11 "Distributee" means, effective January 1, 1993, an Employee or
former Employee. In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are Distributees with regard to the interest of the
spouse or former spouse.
1.12 "Direct Rollover" means, effective January 1, 1993, a payment
by the Plan to the Eligible Retirement Plan specified by a Distributee.
1.13 "Early Retirement Date" shall mean the first day of the month
coincident with or next following the date on which the Member is at least age
55 and has completed at least 15 Years of Service.
1.14 "Earnings Credit" shall be applicable to Cash Balance Benefits
and shall mean the annual rate of earnings credited to a Member's Cash Balance
Account, with respect to each Plan Year. The Earnings Credit shall consist of a
guaranteed minimum rate of 4.5% per annum plus, if applicable, a supplemental
rate. For Employees who were Members both at the beginning and end of each Plan
Year and continuously throughout such Plan Year, the guaranteed rate of 4.5%
shall be applied in full, both on the Member's Cash Balance Account as of the
beginning of the Plan Year and on the Pay-Based Credit made with respect to such
Member for such Plan Year. For Employees who are Members for a fractional period
during such Plan Year, either because of their joining the Plan after the
beginning of the Plan Year or taking a distribution of their Cash Balance
Account during the Plan Year, including by virtue of the election of an annuity
form of payment, the guaranteed rate of 4.5% shall be applied proportionally, on
a compound-interest basis, reflecting the period during the Plan Year of such
membership.
The supplemental rate, if any, will be applied to all Members who
have a Cash Balance Account and have not reached their Benefit
Commencement Date, as of the end of the Plan Year for which the
supplemental rate is calculated. Such rate will be calculated first in the
aggregate for all such Members, in accordance with Appendix A1 hereto.
The aggregate supplemental amount determined pursuant to the
preceding paragraph (if any) applicable to the Cash Balance Account shall
be allocated among all Members as of the end of a Plan Year for whom such
allocation is applicable, as shown in Appendix A2 hereto.
2
<PAGE> 3
1.15 "Eligible Retirement Plan" means, effective January 1, 1993,
(i) an individual retirement account described in Section 404(a) of the Code,
(ii) an individual retirement annuity described in Section 408(b) of the Code,
(iii) an annuity plan described in Section 403(a) of the Code, or (iv) to the
extent provided by Section 401(a)(31)(D) of the Code, a qualified trust
described in Section 401(a) of the Code, that accepts a Distributee's Eligible
Rollover Distribution. However, in the case of an Eligible Rollover Distribution
to a surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity only.
1.16 "Eligible Rollover Distribution" means, effective January 1,
1993, a distribution of all or any portion of the balance to the credit of a
Distributee, except that an Eligible Rollover Distribution does not include (i)
any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's designated beneficiary, or for a
specified period of ten years or more, (ii) any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code, and (iii) the
portion of any distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities).
1.17 "Employee" shall mean a person who is a salaried employee of
the Company, who is paid on a semi-monthly or monthly basis, and who is not
covered by a collective bargaining agreement (unless the agreement provides
otherwise).
1.18 "Equivalent Actuarial Value" or "Actuarial Equivalent" shall
mean equivalent value determined on the basis of the applicable factors set
forth in Appendix B.
1.19 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
1.20 "Final Average Salary" relates to the Old Plan Benefit and
shall mean twelve times the Member's highest average monthly Salary during any
60 consecutive months within the last 120 months prior to April 1, 1991, his
retirement, or termination of employment, whichever occurs first, in respect of
which he received a Salary or during all months in respect of which he received
a Salary if less than 60 months. If, in any period included in the computation
of Final Average Salary, the Member has completed less than the normal number of
hours for a full time Employee, his Salary shall be adjusted to a full time
basis for the purposes of such computation.
1.21 "Hour of Service" shall mean an hour (a) for which an Employee
is directly or indirectly paid, or entitled to payment, by the Company for the
performance of duties, (b) during any period for which an Employee is directly
or indirectly paid, or entitled to payment, by the Company for reasons (such as
vacation, sickness or disability) other than the performance of duties, or (c)
during any period of military service for which Credited Service is granted
under Section 3.3 below. The number of Hours of Service to be credited to an
Employee for the performance of duties shall be ascertained from the appropriate
records of the Company, and the number of Hours of Service to be credited for
non-work periods shall be based upon the Employee's customarily scheduled
working hours immediately prior to the absence, except that Employees whose
hours of employment are not required to be counted or recorded by any Federal
law (other than ERISA) shall be credited with such Hours of Service for
employment or non-work periods as the Committee shall determine to be
appropriate and not inconsistent with ERISA.
An Employee shall be considered to be entitled to payment for any
hour during any of the periods described above in respect of which back
pay is either awarded or agreed to by the Company (irrespective of
mitigation of damages).
Hours of Service shall be computed and credited in accordance with
section 2530.200b-2(b) and (c) of the Department of Labor regulations,
which are incorporated herein by this reference thereto, with no
duplication of credit.
1.22 "Investment Manager" shall mean the person appointed pursuant
to Section 6.11 to direct the investment and management of the Plan assets held
under the Trust Agreement.
3
<PAGE> 4
1.23 "Member" shall mean any person included in the membership of
the Plan as provided in Section 2.
1.24 "Normal Retirement Date" shall mean the first day of the month
coincident with or next following the later of (a) the date on which a Member's
65th birthday occurs or (b) in the case of a Member whose Plan membership
commences after age 60, the fifth anniversary of the date his Plan membership
commenced; provided, however, that a Member's retirement benefit under the Plan
shall be fully vested and nonforfeitable and shall be determined under Section
4.1 (as if the date of his termination were his Normal Retirement Date), if he
terminates employment after attainment of age 65 (or in the case of a Member
whose Plan membership commences after age 60, the fifth anniversary of the date
his Plan membership commenced) but before his Normal Retirement Date.
Notwithstanding the preceding sentence, in the case of any Member
whose Plan membership commenced prior to January 1, 1988, "Normal
Retirement Date" shall mean the first day of the month next following the
month in which a Member's 65th birthday occurs or a Member's 65th birthday
if it occurs on the first day of the month; provided, however, that a
Member's retirement benefit under the Plan shall be fully vested and
nonforfeitable upon attainment of his 65th birthday (if he is then
employed by the Company).
1.25 "Old Plan Benefit" shall mean the normal Retirement Allowance
described under Section 1.1(a) and Section 1.1(b).
1.26 "Plan" shall mean the Employees' Cash Balance Retirement Plan
of The Turner Corporation (formerly known as the "Employees' Retirement Plan of
The Turner Corporation") herein set forth effective January 1, 1994 and as
amended from time to time thereafter.
1.27 "Plan Year" shall mean the calendar year (January 1 through
December 31).
1.28 "Retirement Allowance" shall mean the amount payable to a
Member and his beneficiary, if any, under the Plan.
1.29 "Salary" shall mean a Member's regular salary as an Employee,
plus all amounts that would have been paid as regular salary had the Member not
elected a reduction in salary under a plan qualifying under sections 401(k),
125, 402(a)(8), 402(h)(1)(B) or 403(b) of the Code, but shall not include
commissions, overtime or severance pay, bonuses, shift differentials, relocation
allowances, mortgage interest differentials paid in connection with relocations,
geographic differentials, expense reimbursements, tax "gross-ups", life
insurance premiums, jury duty pay or military service pay received from other
than the Company, tuition reimbursements, the value of long-term incentive
awards or any sums received by an Employee under a profit sharing or any other
employee benefit plan including the Plan. As of January 1 of each calendar year
beginning on or after January 1, 1988, the applicable limitation as set forth in
section 401(a)(17) of the Code or as determined by the Commissioner of Internal
Revenue for that calendar year pursuant to such section shall become effective
as the maximum Salary to be taken into account for Plan purposes, provided that
the imposition of this limitation on Salary shall not reduce a Member's previous
Accrued Benefit.
1.30 "Social Security Integration Level" relates to the Old Plan
Benefit and shall mean, with respect to a Member for a calendar year, the
average (without indexing) of the Taxable Wage Base in effect for each calendar
year during the 35-year period ending with the last day of the calendar year in
which the Member attains (or will attain) his Social Security Retirement Age. In
determining a Member's Social Security Integration Level for a calendar year,
the Taxable Wage Base for the current calendar year and any subsequent calendar
year shall be assumed to be the same as the Taxable Wage Base in effect as of
the beginning of the calendar year for which the determination is being made. A
Member's Social Security Integration Level for a calendar year after the 35-year
period described in this Section 1.30 is the Member's Social Security
Integration Level for the calendar year during which the Member attained Social
Security Retirement Age. A Member's Social Security Integration Level for a
calendar year before the 35-year period described in this Section 1.30 is the
Taxable Wage Base in effect as of the beginning of the calendar year. The
Member's Social Security Integration Level shall be recomputed with respect to
each calendar year.
4
<PAGE> 5
1.31 "Social Security Retirement Age" relates to the Old Plan
Benefit and shall mean age 65 with respect to a Member who was born before
January 1, 1938; age 66 with respect to a Member who was born after December 31,
1937 and before January 1, 1955; and age 67 with respect to a Member who was
born after December 31, 1954.
1.32 "Statutory Joint and Survivor Annuity" shall mean the form of
payment described in Section 4.6(a).
1.33 "Supplementary Allowance" shall mean an additional amount paid
with respect to an Old Plan Benefit only, that is equal to the amount which
shall be sufficient to raise the disability Retirement Allowance with regard to
the Old Plan Benefit determined in Section 4.5(b)(i) to 1-1/2% of the Member's
Final Average Salary multiplied by the Member's years of Credited Service at the
time of disability retirement, but not in excess of 40 such years; such
Supplementary Allowance to continue until such time as the Member is eligible
for a disability benefit under Title II of the Social Security Act or reaches
age 65, whichever is earlier.
1.34 "Taxable Wage Base" shall mean for each calendar year the
maximum amount of an individual's annual earnings subject to tax under the
provisions of the Federal Insurance Contributions Act as from time to time in
effect.
1.35 "Trust Agreement" shall mean the agreement established pursuant
to the Plan and described in Section 7, as the same may be amended from time to
time.
1.36 "Trustee" shall mean the Trustee under the Trust Agreement, or
any successor trustee.
1.37 "Year of Service" shall mean a calendar year during which an
Employee has at least 1,000 Hours of Service.
1.38 The masculine pronoun whenever used shall include the feminine
pronoun and the singular shall include the plural where the context requires it.
SECTION 2. MEMBERSHIP
2.1 Every person who was a Member of the Plan on December 31, 1993
shall continue to be a Member.
2.2 An Employee hired after March 1, 1991 shall become a Member and
shall be entitled to a Cash Balance Benefit only if the Employee is credited
with an Hour of Service on or after January 1, 1994. Such an Employee shall
become a Member as of the first day of the first calendar month, on or after
January 1, 1994, following the later of (a) the last day of (i) the
twelve-consecutive-month period beginning on the Employee's first day of
employment, if the Employee has at least 1,000 Hours of Service during such
period, or, if the Employee does not have at least 1,000 Hours of Service during
such period, (ii) a calendar year (beginning after the first day of employment)
during which the Employee has 1,000 Hours of Service, and (b) the date the
Employee attains age 21.
2.3 For the purpose of determining eligibility for membership, a
termination of employment and reemployment of an Employee who has not become a
Member shall be disregarded and all pre-termination Hours of Service shall be
credited.
2.4 A Member in the Plan shall continue as such until such time as
no further benefits are payable to him or on his account under the Plan, or
until his employment has terminated without his having any rights to benefits
under the Plan.
2.5 If a person is reemployed as an Employee after a termination of
his membership, he shall be reinstated as a Member on the first day of the month
following the date of his reemployment.
5
<PAGE> 6
SECTION 3. CREDITED SERVICE
3.1 In the case of an Employee who is credited with at least one
Hour of Service in a Plan Year beginning on or after January 1, 1988, service
credited under the Plan shall include all full calendar months of employment as
an Employee without regard to the Employee's Normal Retirement Date. For
purposes of benefit computation, the years of Credited Service of a full time
Employee shall be the number of whole years, and fractions thereof, equal to
one-twelfth of the number of full calendar months of his Credited Service.
Notwithstanding the foregoing, effective September 1, 1993, with respect to (and
only with respect to) Employees with an Hour of Service on or after such date,
the Credited Service of a Member who was a foreman for the Company prior to
becoming a Member and who terminates service with the Company on or after such
date, shall include Credited Service with respect to service (i) which the
Member would have been credited but for the Employee's prior coverage by a
collective bargaining agreement that does not provide for participation in the
Plan and (ii) was taken into account under another retirement plan or plans
maintained by the Company which provided for the participation of employees
covered by a collective bargaining agreement (each, a "Predecessor Union Plan");
provided, however, that notwithstanding any other provision of the Plan, the
Accrued Benefit shall be offset by the benefits accrued under any Predecessor
Union Plan.
3.2 For purposes of determining the Old Plan Benefit of any Employee
who is not employed on a full time, permanent basis, (i) service shall be
credited in a calendar year only if the Employee has 1,000 Hours of Service in
such year and (ii) in the case of any such Employee who renders at least 1,000
Hours of Service during a calendar year, Credited Service for the year shall be
based on the ratio (but not greater than 1.0) that his actual Hours of Service
in the year bear to the Hours of Service of a full time Employee. For purposes
of determining the Cash Balance Benefit of any Employee who is not employed on a
full time, permanent basis, the years of Credited Service shall be the number of
whole years, and fractions thereof, equal to one-twelfth of the number of full
calendar months of employment as an Employee.
3.3 In addition to credit granted under the foregoing provisions of
this Section 3, effective with respect to persons who are Employees on or after
January 1, 1976 or who are former Employees who are retired and in receipt of
benefits or who are entitled to a vested benefit on such date, periods of
military service in the armed forces of the United States shall be treated as
Credited Service to the extent required by applicable law; provided, however,
that if an Employee resumes employment with the Company prior to January 1, 1978
and he is not entitled under law to credit for his prior military service solely
because the period of his military service exceeded the maximum time limitations
imposed by law, such Employee shall be granted Credited Service for the portion
of his prior military service that is not in excess of such maximum time
limitations.
SECTION 4. BENEFITS
NORMAL RETIREMENT ALLOWANCE
4.1 (a) A Member who retires on his Normal Retirement Date shall
receive his Accrued Benefit as a normal Retirement Allowance as of such date
determined in accordance with Section 1.1 and the benefit formulas below.
Section 4.1(b) and 1.1 state the Old Plan Benefit applicable for Credited
Service before April 1, 1991. No benefit shall be accrued under the Plan for
Credited Service after March 31, 1991 and before January 1, 1994. Section 4.1(c)
states the Cash Balance Benefit applicable for Credited Service after December
31, 1993.
(b) Old Plan Benefit for Credited Service Before April 1,
1991. Effective January 1, 1989, the annual normal Retirement Allowance
for any Member in respect of Credited Service before April 1, 1991 shall
be the sum of (i) and (ii), but in no event less than the minimum benefit
under (iii), if applicable, determined as follows:
(i) For Credited Service not exceeding 35 years 1% of
the Member's Final Average Salary determined as of March 31, 1991,
plus 1/2 of 1% of that portion of his Final Average Salary
determined as of March 31, 1991 in excess of the Social Security
Integration Level determined as of March31, 1991, the sum multiplied
by the Member's number of years of Credited Service before April 1,
1991 (not in excess of 35); plus
6
<PAGE> 7
(ii) For Credited Service in excess of 35 years 1-1/2%
of the Member's Final Average Salary determined as of March31, 1991
multiplied by the number of the Member's years of Credited Service
before April 1, 1991 in excess of 35, but not to exceed 5 years.
(iii) Minimum Benefit. The Retirement Allowance
calculated above shall never be less than the Retirement Allowance
based on the Member's Credited Service and Salary through December
31, 1988, calculated under the provisions of Section 4.1(b) of the
Plan as in effect on December 31, 1988.
In the case of any Member whose retirement date, disability
retirement date, date of death (while employed) or other termination date is on
or after January 1, 1977 and before January1, 1989, the annual normal Retirement
Allowance shall be the greater of:
(i) 1% of the Member's Final Average Salary multiplied
by the Member's years of Credited Service, but not in excess of 40
such years, plus .5% of the excess of such Final Average Salary over
the Applicable Social Security Wage Base in respect of each of the
first 40 years of Credited Service, and
(ii) the Member's allowance under the Plan, based on his
service and compensation through December 31, 1976, computed in
accordance with the Plan as in effect on that date.
The Applicable Social Security Wage Base shall be the
maximum annual taxable wage base applicable under the Social
Security Act except that for periods ending prior to January1, 1977,
the Applicable Social Security Wage Base shall be deemed to be
$8,000.
(c) Cash Balance Benefits for Credited Service On and After January
1, 1994. The Accrued Benefit for any Member in respect of Credited Service on
and after January 1, 1994 shall be the Cash Balance Account established for such
Member. Credits shall be made to the Cash Balance Account of a Member pursuant
to this Section 4.1(c). Cash Balance Accounts shall be bookkeeping accounts, and
neither the maintenance of, nor the crediting of amounts to, such Accounts shall
be treated as (i) the allocation of assets of the Plan to, or a segregation of
such assets in, any such Account, or (ii) otherwise creating a right in any
person to receive specific assets of the Plan. Benefits provided under this
Section 4.1(c) shall be paid in the amounts, in the forms, and at the times
provided under the terms of the Plan.
Pay-Based Credits to Cash Balance Accounts. Each Member's Cash
Balance Account shall be credited with an amount determined under (i) or
(ii) below:
(i) New Members. The Cash Balance Account of each Member with
no Hour of Service credited before April 1, 1991 shall be credited at the
end of each Plan Year or, if earlier, on a Member's Benefit Commencement
Date, during which the Member was an Employee on or after January 1, 1994
with an amount equal to:
(A) 4% of Salary up to the Taxable Wage Base, plus
(B) 7% of Salary in excess of the Taxable Wage Base.
(ii) Members Hired Before April 1, 1991. The Cash Balance
Account of each Member credited with an Hour of Service before April 1,
1991 shall be credited at the end of each Plan Year or, if earlier, on the
Member's Benefit Commencement Date, with a percentage of Salary for such
Plan Year determined under the following schedule based on such Member's
attained age and completed years of Credited Service as of the end of the
Plan Year:
7
<PAGE> 8
<TABLE>
<CAPTION>
Completed Years of Credited Service
--------------------------------------------------------------
Age 1 - 9 10 - 19 20 - 29 30 - 34 35+
- ---------- --------- --------- --------- --------- ------
<S> <C> <C> <C> <C> <C>
24 or less 4.00%
25 - 34 4.75% 5.25%
35 - 44 5.25% 6.50% 7.25%
45 - 54 5.75% 7.25% 9.00% 10.00% 10.00%
55 - 59 6.50% 8.00% 10.00% 12.50% 12.50%
60 or more 6.50% 9.00% 11.00% 12.50% 12.50%
</TABLE>
Notwithstanding the foregoing, an Employee who is not
employed in a full time permanent basis during a Plan Year shall be
eligible to receive a pay-based credit for any such Plan Year only
if the Employee has at least 1,000 Hours of Service during the Plan
Year.
Earnings-Based Credits to Accounts. At the end of each
Plan Year and until the last day of the month preceding the Benefit
Commencement Date, if earlier, of a Member, the Cash Balance Account
of each Member shall be increased by an amount determined by
multiplying the Cash Balance Account as of the end of such Plan Year
by the Earnings Credit for such Plan Year.
(d) The distribution rules of Code section 401(a)(9), the
regulations thereunder and all applicable grandfather provisions are
hereby incorporated by reference.
POSTPONED RETIREMENT ALLOWANCE
4.2 (a) A Member who remains in the employment of the Company beyond
his Normal Retirement Date shall be eligible for a postponed Retirement
Allowance.
(b) The postponed Retirement Allowance shall commence on the
first day of the calendar month next following receipt by the Committee of
written application to receive such benefits; provided, however, that to
the extent required by section 401(a)(9) of the Code, payments hereunder
must commence on or before the April 1 of the calendar year next following
the calendar year in which the Member reaches age 70-1/2, without regard
to whether the Member's employment has terminated.
The postponed Retirement Allowance shall be equal to the
Member's Accrued Benefit, computed as of the Member's postponed retirement
date; provided, however, that in the case of a member whose employment
after his Normal Retirement Date is not substantial, such allowance shall
not be less than the allowance that the Member would have received under
Section 4.1 if he had retired on his Normal Retirement Date, actuarially
increased to reflect the deferred commencement of his allowance for each
month during which his employment is not substantial. For purposes of this
paragraph, a Member's employment will be considered to be substantial for
any month only if he renders 40 or more Hours of Service in such month.
Each Member who is considered to continue substantial employment with the
Company after his Normal Retirement Date shall receive a notice containing
the information described in Section 4.10. Such notice shall be furnished
to the Member during the calendar month in which his employment ceases to
be substantial.
In any case where payments are made to a Member while he
continues to accrue benefits under the Plan, the amount of his allowance
shall be recalculated as of each January 1 thereafter to reflect an
allowance in accordance with Section 4.1(b) taking into account all of the
Member's Years of Service, reduced (but not below the Member's normal
retirement benefit for the prior Plan Year) by the value of total benefit
distributions made to the Member by the close of the prior Plan Year.
8
<PAGE> 9
EARLY RETIREMENT ALLOWANCE
4.3 (a) A Member who has not reached his Normal Retirement Date but
who has reached his Early Retirement Date may retire on an early Retirement
Allowance, such retirement to take effect on the first day of a calendar month
not earlier than the month next following receipt by the Committee of written
application therefor made by the Member.
(b) The early Retirement Allowance shall be:
(i) An allowance deferred to commence as of the Member's
Normal Retirement Date which shall be equal to the Member's Old Plan
Benefit computed as of the effective date of the Member's early
retirement plus the Member's Cash Balance Benefit calculated as of
such Normal Retirement Date; or at the election of the Member,
(ii) An allowance commencing as of the first day of the
month following the effective date of his early retirement or as of
some other date (which shall be the first day of a month) between
such date and his Normal Retirement Date, provided the Benefit
Commencement Date shall not be earlier than the month next following
receipt by the Committee of the Member's written application
therefor. The allowance commencing at a date earlier than Normal
Retirement Date shall be equal to the Old Plan Benefit computed as
provided in clause (i) above, reduced by (A) 5/9% for each of the
first 60 months and (B) 5/18% for each additional month, by which
the allowance commencement date precedes Normal Retirement Date plus
the Cash Balance Benefit as of the effective date of early
retirement.
DEFERRED VESTED RETIREMENT ALLOWANCE
4.4 (a) For purposes of the Old Plan Benefit and the Cash Balance
Benefit, a Member who, for reasons other than retirement, terminates service
prior to completion of at least 5 Years of Service shall not be entitled to any
Plan benefit; provided, however, that the Cash Balance Benefit of a Member who
dies while employed by the Company prior to completion of 5 Years of Service
shall be fully vested upon such death. A Member who has completed 5 Years of
Service and who, for reasons other than retirement, terminates service, shall be
eligible for a deferred vested Retirement Allowance.
(b) The deferred vested Retirement Allowance shall be a
deferred allowance commencing on the Member's Normal Retirement Date and
shall be equal to the Member's Old Plan Benefit computed as of the
Member's date of termination plus the Member's Cash Balance Benefit
calculated as of Normal Retirement Date provided that, if, on the date of
his termination, the Member has completed 15 Years of Service, he may
elect at any time after his attainment of age 55 and prior to age 65 to
have his deferred vested Retirement Allowance commence as of the first day
of the calendar month next following receipt by the Committee of his
application therefor in a reduced amount determined in accordance with the
provisions of Section 4.3(b) in effect at the date of termination.
Notwithstanding any other provision of the Plan to the contrary, a Member
may elect, subject to the rules under Section 4.6(a) regarding waiver of
the Statutory Joint and Survivor Annuity (unless inapplicable by virtue of
Section 4.7(c)), to have the portion of his deferred vested Retirement
Allowance attributable to his Cash Balance Benefit paid to him at any time
after his termination of service.
DISABILITY RETIREMENT ALLOWANCE
4.5 (a) A Member who is employed and who has not reached his Normal
Retirement Date but who has completed 15 Years of Service may be retired from
service on a disability Retirement Allowance on the first day of a calendar
month not earlier than the month next following receipt by the Committee of
written application therefor made by the Member or by the Company, provided a
physician or physicians designated by the Committee shall certify, and the
Committee shall find, that such Member is totally incapacitated, mentally or
physically, for the further performance of duty, that such incapacity is likely
to be permanent, and that such Member should be retired.
9
<PAGE> 10
(b) The annual disability Retirement Allowance shall consist
of:
(i) a Retirement Allowance equal to the Member's Accrued
Benefit computed as of the time of disability retirement; plus
(ii) a Supplementary Allowance.
(c) Once each year the Committee may require any Member
receiving a disability Retirement Allowance who has not reached his Normal
Retirement Date to undergo a medical examination by a physician or
physicians designated by the Committee, such examination to be made at the
place of residence of such Member or other place mutually agreed upon.
Should any such Member refuse to submit to such medical examination, his
disability Retirement Allowance shall be discontinued until his withdrawal
of such refusal, and should his refusal continue for a year all rights in
and to the disability Retirement Allowance shall cease. If the Committee
finds from such medical examination or otherwise that the disability of a
Member receiving a disability Retirement Allowance who has not reached his
Normal Retirement Date has been removed and that he has regained earning
capacity, in whole or in part, his disability Retirement Allowance may,
under uniform rules applicable to all Members in similar situations, be
discontinued or reduced proportionately until he reaches his Normal
Retirement Date; provided that he shall be entitled to have his original
disability Retirement Allowance restored in whole or in part prior to his
Normal Retirement Date if, on the basis of a medical examination by a
physician or physicians designated by the Committee, the Committee finds
that he has again lost earning capacity because of the same disability. In
the event that such Member's disability Retirement Allowance is
discontinued as herein provided and he is not restored to service as an
Employee, he shall be entitled to a deferred vested Retirement Allowance
payable in accordance with Section 4.2 or 4.4 and computed on the basis of
his Final Average Salary and Credited Service at the time of his
disability retirement.
(d) For the purpose of this Section 4.5, incapacity,
disability and loss of earning capacity shall mean inability to engage in
any gainful employment offered him by the Company. If a Member has been
determined to be incapacitated and thereafter is employed by any other
person in any capacity, he shall be deemed to have regained earning
capacity as of the commencement of such employment.
NORMAL FORMS OF RETIREMENT ALLOWANCE
4.6 (a) If a Member is married on his Benefit Commencement Date
(disregarding payments of a Supplementary Allowance), and if he has not waived
the Statutory Joint and Survivor Annuity (with the consent of his spouse) as
described below and elected one of the optional forms of benefit described in
Section 4.7, the Retirement Allowance payable shall be of Equivalent Actuarial
Value to a benefit computed pursuant to Section 4.1(b) and (c), 4.2(b), 4.3(b),
4.5(b)(i) or 16.1, as the case may be, and shall be payable during the Member's
life, with the provision that after his death an allowance at one-half the rate
of the benefit payable to the Member shall be paid during the life of, and to,
his spouse on his Benefit Commencement Date (the "Statutory Joint and Survivor
Annuity").
Any death benefit payable under the Statutory Joint and
Survivor Annuity shall be paid to the person to whom the Member is married
on the Member's Benefit Commencement Date, notwithstanding a change in
marital status that may occur thereafter.
In connection with the commencement of a Retirement Allowance,
each Member shall file a written statement with the Committee indicating
whether he is married (and shall notify the Committee of any subsequent
change in his marital status occurring on or before his Benefit
Commencement Date). The Committee may delay the commencement of the
Retirement Allowance of a Member or any other person until such Member or
other person shall have furnished the Committee with such information as
the Committee may deem appropriate to administer the Plan, including such
information as the Committee may require to administer provisions relating
to the Statutory Joint and Survivor Annuity and pre-retirement spouse's
annuity benefits.
10
<PAGE> 11
A Member may waive the Statutory Joint and Survivor Annuity by
filing with the Committee a written notice to that effect (and effectively
electing one of the optional forms of Retirement Allowances described in
Section 4.7) within the 90-day period preceding his Benefit Commencement
Date. Any waiver of the Statutory Joint and Survivor Annuity filed by a
Member shall be effective only if accompanied by the written consent of
the Member's spouse and such consent explicitly acknowledges the effect of
such waiver (including acknowledgment of the form of allowance that will
be applicable and the identity of the person designated to receive any
amounts due under such form of allowance on the death of the Member) and
is witnessed by a notary public; provided, however, that no such consent
shall be necessary if either (i) the alternative form of payment elected
provides that after the Member's death, his surviving spouse is to receive
an allowance equal to at least the 50% allowance payable under the
Statutory Joint and Survivor Annuity, (ii) the Member establishes to the
satisfaction of the Committee that such written consent may not be
obtained because such spouse could not be located, (iii) the Member is
legally separated from his spouse or has been abandoned (within the
meaning of local law) by his spouse and has a court order to such effect,
unless a qualified domestic relations order provides otherwise, or (iv)
because of any such other circumstances as may be prescribed in Treasury
Regulations. If the Member's spouse is legally incompetent to give
consent, the spouse's legal guardian (who may be the Member) may give the
consent.
If any payment is made under the Plan in reasonable reliance
on (1) a written statement by the Member that he was unmarried, (2) a
spousal consent that on its face conformed to the requirements set forth
above, (3) evidence establishing to the Committee's satisfaction that a
Member's spouse could not be located, or (4) evidence that the Member is
legally separated from his spouse or has been abandoned by his spouse (and
a court order to such effect) the Plan's liability for such payment shall
be satisfied to the extent of such payment (and the Plan shall have no
liability to any spouse to such extent). Any subsequent change (by a
Member who has previously filed a waiver) in his form of Retirement
Allowance (other than a reinstatement of the Statutory Joint and Survivor
Annuity or election of Option 2 or 3 under Section 4.7(a) with the spouse
as the beneficiary) or in the person designated to receive any amounts due
under a particular form of Retirement Allowance on the death of the Member
(including any change under an option elected pursuant to Section 4.7)
shall not be effective unless a new waiver of the Statutory Joint and
Survivor Annuity (containing the witnessed consent of the Member's spouse
as described above) is filed with the Committee.
Any election filed with the Committee waiving the Statutory
Joint and Survivor Annuity may be revoked in writing by the Member not
later than his Benefit Commencement Date, effective as of the date of such
revocation. If a waiver is thus revoked, another waiver may be made (with
the consent of the spouse) in the manner described above. Elections
waiving the Statutory Joint and Survivor Annuity and revocations of such
elections shall be made in accordance with such additional rules or
procedures, not inconsistent with regulations adopted under the Code or
ERISA, as may be adopted by the Committee.
The Committee shall prepare a notice to Members which shall
describe in general terms (i) the Statutory Joint and Survivor Annuity,
(ii) the Member's right to waive such Annuity and to revoke any such
waiver, (iii) the rights of the Member's spouse with respect to such
Annuity, (iv) the general financial effect of waiving such Annuity and of
revoking such waiver (including examples), and (v) the eligibility
conditions and other material features of the optional forms of Retirement
Allowances available under the Plan, including their relative values. Such
notice shall also describe the Member's right to request further financial
information concerning the effect of waiving such Annuity, as described
below. Such notice shall be permanently posted in a location or locations
frequented by Members (and may, in the discretion of the Committee, be
provided to Members by any additional means selected by the Committee);
provided, however, that in lieu of permanent posting, the Committee may
furnish the required notice by any other means that complies with the
requirements of ERISA and that is calculated to be received by each Member
at least nine months before the earliest date such Member may retire. If a
Member shall so request in writing at least 90 days prior to the date as
of which his Retirement Allowance is to begin, the Committee shall furnish
to the Member (by mail or personal delivery), within 30 days from the date
of the Member's request, the additional information required by applicable
Treasury Regulations; provided, however, that the Committee need not
comply with more than one such request. Notwithstanding anything elsewhere
in the Plan to the contrary, if the Committee is required to furnish such
additional information, a
11
<PAGE> 12
Member's Retirement Allowance shall not begin until the 91st day following
the day on which the additional information is furnished.
The foregoing provisions shall apply to any Member who has an
Hour of Service (including any paid leave) on or after August 23, 1984.
The Committee shall interpret such provisions and the following provisions
of this Section 4.6(a), and shall take all such administrative actions
hereunder, as shall be necessary to comply with applicable provisions of
ERISA and the Code.
The applicability of the Statutory Joint and Survivor Annuity
in the case of any Member who performed an Hour of Service after December
31, 1975 (and whose Normal Retirement Date occurred after December 31,
1975) who is not covered by the foregoing provisions of this Section
4.6(a) shall be determined in accordance with the terms of the Plan in
effect on December 31, 1984.
Any Member who is alive on August 23, 1984 (whose Retirement
Allowance has not commenced prior to such date) and who had an Hour of
Service on or after September 2, 1974, but who is not covered by the
foregoing provisions of this Section, may elect to have the provisions of
this Section 4.6(a) of the Plan (concerning the Statutory Joint and
Survivor Annuity) as in effect on December 31, 1984 apply to him in the
same manner as though he were covered by the next preceding paragraph
hereof. Any such election may be made at any time after August 23, 1984
and prior to the Member's Benefit Commencement Date. The Committee shall
give all Members covered by this paragraph notice of the provisions hereof
at such time and in such manner as may be prescribed by Treasury rules and
regulations.
(b) If a Member is not married on the date as of which his
Retirement Allowance (including an allowance under Section 4.4, but
excluding an allowance under Section 4.5(b)(ii)) is to commence, his
annual allowance payable upon retirement shall be computed pursuant to
Section 4.1(b) and (c), 4.2(b), 4.3(b), 4.4(b), 4.5(b)(i) or 16.1 and paid
for the Member's life, with no allowance payable after his death.
(c) A Supplementary Allowance shall be payable in accordance
with Section 4.5(b)(ii).
OPTIONAL FORMS OF RETIREMENT ALLOWANCE
4.7 (a) Any Member may, by written notice received by the Committee
prior to his Benefit Commencement Date, elect to convert his Old Plan Benefit,
other than a Supplementary Allowance, otherwise payable to him after retirement
into an optional benefit of Equivalent Actuarial Value, in accordance with
Option 1, 2, 3, 4 or 5 described below. A Member may similarly elect to convert
his Cash Balance Benefit into an optional benefit of Equivalent Actuarial Value
in accordance with any Option described below; provided, however, that the Cash
Balance Benefit shall be payable in the form of an escalating annuity of
Equivalent Actuarial Value under which the annual benefit to the Member
increases by 3 percent on January 1 of each year (prorated monthly, on a
compound interest basis). The following restrictions shall apply under this
Section 4.7(a) and Section 4.7(c):
(i) The Member may not elect an option unless such
option provides for the payment of Retirement Allowance (a) over the
life of the Member or lives of the Member and a designated
beneficiary, (b) over a period not extending beyond the life
expectancy of the Member or the life expectancy of the Member and a
designated beneficiary (with any such life expectancy or
expectancies to be determined as of the date the Member's benefits
commence, notwithstanding any change in the Member's beneficiary
thereafter) or (c) in a combination of (a) and (b) above.
(ii) The Member may not elect an option under which
Retirement Allowance would be payable over a period that exceeds the
longer of the Member's life expectancy or the joint and survivor's
life expectancy of the Member and his spouse (whether or not his
spouse is his designated beneficiary), except that a longer period
shall be permissible so long as the Equivalent Actuarial Value of
the payments to be made to the Member under the form of allowance is
not less than 51% of the total value of the allowance that would
have been payable
12
<PAGE> 13
to the Member under Option 1, with any determinations hereunder to
be made as of the date the Member's allowance commences.
Option 1. A Retirement Allowance payable for the
Member's life, with no allowance payable after his death.
Option 2. A modified Retirement Allowance payable during
the Member's life, with the provision that after his death an
allowance in the same amount shall be paid during the life of, and
to, the beneficiary nominated by him by written designation duly
acknowledged and filed with the Committee when he elected the
option.
Option 3. A modified Retirement Allowance payable during
the Member's life, with the provision that after his death an
allowance at three-fourths the rate of his modified allowance shall
be paid during the life of, and to, the beneficiary nominated by him
by written designation duly acknowledged and filed with the
Committee when he elected the option.
Option 4. A modified Retirement Allowance payable during
the Member's life, with the provision that after his death an
allowance at one-half the rate of his modified allowance shall be
paid during the life of, and to, the beneficiary nominated by him by
written designation duly acknowledged and filed with the Committee
when he elected the option.
Option 5. A modified Retirement Allowance payable during
the Member's life, with the provision that if the Member dies after
Retirement Allowance payments have commenced and before 120 monthly
payments have been made to him, the remainder of such 120 monthly
payments will be paid to the beneficiary nominated by him by written
designation duly acknowledged and filed with the Committee when he
elected the option. If such Member and the beneficiary nominated by
him both die before 120 monthly payments have been made, the
commuted value of the remainder of such 120 payments shall be paid
in a lump sum to the estate of the later to survive of the Member
and such beneficiary.
Option 6. A lump sum equal to the Member's Cash Balance
Account, as determined subject to Section B.3 of Appendix B, with
the remainder of the Member's Retirement Allowance payable in the
form of a Statutory Joint and Survivor Annuity or Option 1, 2, 3, 4,
or 5, in accordance with the foregoing provisions of this Section.
(b) If a Member who elected Option 2, 3, 4, 5 or 6 dies prior
to his Benefit Commencement Date or his designated beneficiary under
Option 2, 3, or 4 dies prior to the date of commencement of the Member's
Retirement Allowance, the election shall thereby automatically be revoked.
The election of an optional benefit may be revoked or changed by the
Member only by written notice received by the Committee prior to the
Member's Benefit Commencement Date (and any such revocation or change
shall be subject to the requirements of Section 4.6(a)).
(c) Notwithstanding any provision of the Plan to the contrary,
if the Equivalent Actuarial Value of the Retirement Allowance payable to
any Member (commencing on the earliest Benefit Commencement Date permitted
under the Plan and as determined subject to Section B.3 of Appendix B)
does not exceed $3,500 on the date of his retirement or other termination
of employment, the Committee shall provide that the Member shall receive
his Retirement Allowance in the form of a lump-sum payment as of such
Benefit Commencement Date.
SPOUSE'S BENEFIT; CASH BALANCE DEATH BENEFIT
4.8 (a) If a married Member dies while employed by the Company and
proof of death satisfactory to the Committee is filed with the Committee, a
spouse's allowance shall be payable to his surviving spouse.
13
<PAGE> 14
If the Member's death occurs on or after either his 55th
birthday, or the date on which the sum of his age (including fractions of
a year rounded up to the nearest twelfth) and Years of Service equals 65,
any allowance payable under the first paragraph of this Section 4.8(a) to
the Member's spouse shall equal the allowance that would have been payable
to the spouse if the Member had retired or otherwise terminated employment
with fully vested rights on the date of his death (but had not then died)
and died immediately after beginning to receive a normal Retirement
Allowance under the Plan, calculated as provided under Section 4.1(b) and
(c), with Option 2 under Section 4.7 in effect with the spouse as his
beneficiary. Such annuity shall commence on the first day of the month
next following the Member's death, shall be payable without any reduction
to reflect the commencement of benefit payments before Normal Retirement
Date (subject to Section 4.10) and shall cease with the payment for the
month in which the spouse dies.
Notwithstanding Section 4.7(b), effective January 1, 1992, if
a Member's death occurs on or after the date such Member submits written
application for a disability Retirement Allowance as described in Section
4.5 and before commencement of the disability benefit, the allowance
payable under the first paragraph of this Section 4.8(a) shall be the
benefit described in Section 4.5(b), payable in accordance with Option 2
of Section 4.7 with the surviving spouse as beneficiary, commencing on the
first day of the month next following the Member's death and ceasing with
the payment for the month in which the spouse dies.
If a vested Member's death occurs before his 55th birthday,
before the sum of his age (including fractions of a year rounded up to the
nearest twelfth) and Years of Service equals 65 and not under the
circumstances described in the preceding paragraph, any allowance payable
under the first paragraph of this Section 4.8(a) to the Member's spouse
shall be equal to the allowance that would be payable to the spouse if the
Member had terminated employment on the day of his death (but had not then
died) and had died immediately after beginning to receive benefit payments
on the earliest date he could have commenced receiving a reduced
retirement benefit under Section 4.4(c) of the Plan if he had not died,
with the Statutory Joint and Survivor Annuity in effect. Such annuity
shall commence on the first day of the earliest month that the Member
could have commenced receiving a Retirement Allowance under Section 4.4(c)
of the Plan if he had not died and shall cease with the payment for the
month in which the spouse dies.
(b) Subject to Section 4.8(c) below, if a married Member who
has terminated employment with vested rights under the Plan dies prior to
the date his Retirement Allowance is to commence, a spouse's Retirement
Allowance shall be payable to his surviving spouse; provided, however,
that no such spouse's allowance shall be payable if the Member terminated
employment before his Early Retirement Date and had waived such death
benefit coverage (with the consent of his spouse as described in Section
4.8(c) below).
If the Member terminated employment with the Company after his
Normal Retirement Date or Early Retirement Date, any allowance payable
under the first paragraph of this Section 4.8(b) to his surviving spouse
shall commence on the first day of the next month following the Member's
death and shall cease with the payment for the month in which the spouse
dies. The amount of the allowance payable under the first paragraph of
this Section shall be equal to the allowance which would have been payable
to the spouse if the Member had elected to commence receiving payments
under Option 2 of Section 4.7, with his spouse as beneficiary and (subject
to Section 4.10) without reduction to reflect commencement of payment
before Normal Retirement Date.
If the Member terminated employment with the Company before
his Early Retirement Date and his death occurs before the earliest date as
of which he could have commenced to receive a Retirement Allowance, any
allowance payable under the first paragraph of this Section 4.8(b) to his
surviving spouse shall commence on the first day of the earliest month
that the Member could have commenced receiving a Retirement Allowance
under the Plan if he had not died and shall cease with the payment for the
month in which the spouse dies. The amount of the allowance payable under
the first paragraph of this Section shall be equal to the allowance that
would be payable to the spouse if the Member had survived to the earliest
date as of which payments could have commenced and had died immediately
14
<PAGE> 15
after beginning to receive a reduced Retirement Allowance on such date,
with the Statutory Joint and Survivor Annuity in effect.
If the Member terminated employment with the Company before
his Early Retirement Date and his death occurs on or after the earliest
date as of which he could have commenced to receive a Retirement
Allowance, any allowance payable under the first paragraph of this Section
4.8(b) to his surviving spouse shall commence on the first day of the
month next following the Member's death and shall cease with the payment
for the month in which the spouse dies. The amount of the allowance
payable under the first paragraph of this Section 4.8(b) shall be equal to
the allowance that would have been payable to the spouse if the Member had
elected to commence receiving a reduced immediate Retirement Allowance on
the day before his death, with the Statutory Joint and Survivor Annuity in
effect.
(c) A waiver of the death benefit coverage provided under
Section 4.8(b) may be made (on a prospective basis), by a Member who
terminates employment before reaching his Early Retirement Date, at any
time on or after the date the Member terminates employment with the
Company and before the date his Retirement Allowance commences, by filing
written notice with the Committee in form approved by such Committee. Any
waiver of such surviving spouse's benefit coverage by a Member shall be
effective only if the consent of the Member's spouse to such waiver is
indicated thereon in writing and such consent explicitly acknowledges the
effect of the waiver and is witnessed by a notary public; provided,
however, that no such consent shall be necessary if the Member establishes
to the satisfaction of the Committee that such written consent may not be
obtained because there is no spouse, the spouse cannot be located, or the
Member is legally separated from his spouse or has been abandoned (within
the meaning of local law) by his spouse and the Member has a court order
to such effect, unless a qualified domestic relations order provides
otherwise. If a Member's spouse is legally incompetent to give consent,
the spouse's legal guardian (who may be the Member) may give the consent.
If a Member terminates employment before reaching his Early Retirement
Date and does not waive the spouse's annuity benefit coverage described in
Section 4.8(b), the Retirement Allowance payable to the Member with
respect to the Member's Old Plan Benefit (and, after his death, on his
account) shall be reduced by the applicable percentage specified in the
following table for each year (or part thereof) commencing the first day
of the month coincident with or next following the Member's termination of
employment and ending upon commencement of the deferred allowance under
Section 4.4(c) or the first day of the month coincident with or next
following the Member's death. A Member's age as of the first day of any
month shall be deemed to be his age for the entire month for purposes of
determining the applicable percentage. Any such reduction shall be taken
into account in computing the amount of the spouse's annuity payable under
Section 4.8(b) in the event of the Member's death.
<TABLE>
<CAPTION>
Factors For Spouse's Coverage After
Termination of Service With a
Deferred Vested Retirement Allowance
------------------------------------
<S> <C> <C>
Under 40 5/100 of 1% per year
40-50 15/100 of 1% per year
50-55 25/100 of 1% per year
55-60 50/100 of 1% per year
60-65 1% per year
</TABLE>
If a Member waives the coverage provided hereunder, he may
revoke such waiver at any time prior to the date his benefits commence, by
filing a similar notice. A subsequent written waiver of the surviving
spouse's annuity coverage hereunder may then be made as described above
(with the consent of the Member's spouse).
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<PAGE> 16
The Committee shall prepare a notice which shall describe in
general terms (i) the spouse's annuity provided under Section 4.8(b), (ii)
the Member's right to waive such annuity and to revoke any such waiver,
(iii) the rights of the Member's spouse with respect to such annuity and
(iv) the general financial effect of waiving such spouse's annuity and of
revoking any such waiver. Such notice shall be furnished by mail or
personal delivery to each Member at least 30 days prior to the date his
employment terminates (or as soon as practical thereafter) or shall be
furnished by such other means as the Committee shall select that conform
to the requirements of ERISA.
(d) Sections 4.8(a), 4.8(b) and 4.8(c) above shall apply to
any Member who has an Hour of Service (including an hour of paid leave) on
or after August 23, 1984.
Notwithstanding the foregoing, any Member who terminated
employment by reason of early retirement prior to August 23, 1984 shall
have the predecessor provisions of Section 4.8(b) apply to him. Any other
Member who terminated employment after completion of 10 Years of Service
and who is not covered by Section 4.8(b), but who is alive on August 23,
1984 and who had an Hour of Service after December 31, 1975, may elect to
have the provisions of Section 4.8(b) apply to him; provided, however,
that the foregoing shall only apply if the Member files such an election
(on or after August 23, 1984) prior to his Benefit Commencement Date and a
charge shall be made for any surviving spouse's death benefit coverage
provided pursuant to this paragraph, in the same manner and amount as
would apply under Section 4.8(b). The Committee shall provide all Members
covered by this paragraph notice of the provisions hereof at such time and
in such manner as may be prescribed by Treasury rules and regulations.
(e) Notwithstanding the foregoing, if the Equivalent Actuarial
Value of the allowance payable to any surviving spouse under this Section
4.8 does not exceed $3,500 on the date of the Member's death, the
Committee shall provide that the spouse shall receive such allowance in
the form of a lump-sum payment as of such date.
(f) Notwithstanding any provision of the Plan to the contrary,
subject to the spousal waiver provisions of this Section 4.8, in the event
that a Member dies prior to the Member's Benefit Commencement Date, then
with respect to the Member's Cash Balance Account, 100% of such account
shall be payable in a single sum to the Member's beneficiary; provided,
however, that, with respect to the Cash Balance Account, the benefit
described in Section 4.8(a) shall be 100% of the Cash Balance Account.
PAYMENT OF RETIREMENT ALLOWANCES
4.9 (a) All Retirement Allowances except those payable under Option
6 shall be paid in monthly installments on the last day of the calendar month.
Allowances shall be payable to the Member, his spouse or beneficiary, as the
case may be, or any duly appointed attorney, guardian or committee therefor.
(b) Notwithstanding any other provision in the Plan to the
contrary, benefits may not commence to be paid to a Member before the
Member's Normal Retirement Date unless the Member so elects in accordance
with the procedures described in Section 4.6(a) (including, in the case of
a Member's spouse receiving a benefit other than in the form of a
Statutory Joint and Survivor Annuity, the spousal consent procedures
contained therein).
(c) Effective for distributions made on or after January 1,
1993, notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this Section, a Distributee
may elect, at the time and in the manner prescribed by the Plan
Administrator, and to the extent provided by Section 401(a)(31) of the
Code, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a
Direct Rollover.
RESTORATION OF RETIRED OR
TERMINATED MEMBERS TO SERVICE
4.10 (a) If a retired Member or a former Employee who is a Member
entitled to a deferred vested Retirement Allowance is restored to service as an
Employee, his Retirement Allowance, if then
16
<PAGE> 17
payable, shall cease and any election of an optional benefit in effect
thereunder shall become void. Any Credited Service and Years of Service to which
he was entitled when he retired or his service otherwise terminated shall be
restored to him, and upon subsequent retirement or other termination of service
his allowance shall be based on his Salary, Credited Service and Years of
Service before and after the period of prior retirement or prior termination of
service except that his Retirement Allowance upon subsequent retirement shall be
reduced by the Actuarial Equivalent of any Retirement Allowance payments he
received prior to his restoration to service; provided, however, that the value
of such reduction shall not exceed such benefit payments. If any such Member
dies during his period of restoration to service, the otherwise unreduced
allowance, if any, payable to his surviving spouse pursuant to Section 4.8(a) or
4.8(b) shall be reduced by the Actuarial Equivalent of any Retirement Allowance
payments received by the Member prior to his restoration to service (subject to
the proviso in the preceding sentence).
(b) If any retired Member is restored to service as an
Employee on or after his Normal Retirement Date, his Retirement Allowance
shall be discontinued during the period of restoration (and the provisions
of Section 4.1(a) shall apply to him). If any Member shall resume his
status as an Employee after his Normal Retirement Date and benefit
payments to him are suspended, the Committee shall furnish him with a
notice containing (1) a description of the specific reasons for the
suspension of benefit payments, (2) a general description of the Plan
provisions relating to the suspension (including the provisions of this
Section 4.10 and Section 4.2), (3) a copy of such provisions, (4) a
statement to the effect that applicable Department of Labor regulations
may be found in section 2530.203-3 of the Code of Federal Regulations and
(5) a description of the Plan's claims procedure. Such notice shall be
furnished by personal delivery or first class mail during the first
calendar month in which benefit payments are suspended.
(c) Subject to Section 4.10(a), if a Member who had previously
retired, and was receiving his Cash Balance Benefit in the form of a
monthly annuity, or otherwise terminated employment with entitlement to a
Retirement Allowance on or after January 1, 1994 is restored to service,
such Member's Cash Balance Account together with Salary, Credited Service
and Years of Service attributable thereto, shall be restored to the amount
in such Members Cash Balance Account at the time of original retirement or
other termination of employment, reduced by the Actuarial Equivalent of
any Retirement Allowance payments he received prior to his restoration to
service, provided that, if the Member had not commenced receipt of his
Cash Balance Benefit, the amount of such Member's restored account shall
include Earnings Credits from the date of original retirement or other
termination of employment to the Member's date of restoration to service.
(d) Subject to Section 4.10(a), if a Member entitled to a Cash
Balance Benefit in addition to a Retirement Allowance attributable to
Credited Service before April 1, 1991 receives a lump sum payment of his
Cash Balance Account and is restored to service before the remainder of
his Retirement Allowance commences, or if a Member with no Credited
Service before April 1, 1991 receives a lump sum payment of his Cash
Balance Account and is restored to service, the Cash Balance Account,
together with Salary, Credited Service and Years of Service attributable
thereto, shall be restored to the amount in the Member's Cash Balance
Account at the time of original retirement or other termination of
employment plus Earnings Credits for the period from the date of original
retirement or other termination of employment to the Member's date of
restoration to service, provided he repays the amount of any lump sum
payment he received upon his initial termination of employment plus
Earnings Credits (not in excess of the interest rate prescribed by Code
Section 411(a)(7)(C)), from the date of original retirement or other
termination of employment to the Member's date of restoration to service.
If the Member does not repay the lump sum payment attributable to his Cash
Balance Account together with said Earnings Credits, upon the Member's
subsequent retirement or other termination of employment, such Member's
Cash Balance Benefit shall be computed based solely upon Salary and
Credited Service after the restoration to service, and Years of Service
before and after the restoration to service.
(e) If a Member receives a lump sum cash payment of his Cash
Balance Account and is in receipt of a Retirement Allowance attributable
to Credited Service before April 1, 1991, upon the Member's restoration to
service, the provisions of Section 4.10(a) or 4.10(b), as appropriate,
shall apply
17
<PAGE> 18
with respect to the Retirement Allowance of the Member attributable to
Credited Service before April 1, 1991. The restoration of the Member's
Cash Balance Account, together with Salary, Credited Service and Years of
Service attributable thereto shall be determined in accordance with
Section 4.10(d).
(f) If a former Member who was not entitled to a Retirement
Allowance is restored to service, his Cash Balance Account, Credited
Service and Years of Service to which he was previously entitled shall be
restored to him. The amount of such Member's restored Cash Balance Account
shall include Earnings Credits from the date of original termination of
employment to the Member's date of restoration to service. Upon later
termination of employment or retirement of a Member whose previous
Credited Service and Years of Service have been so restored, his
Retirement Allowance, if any, shall be based on the benefit formula then
in effect and his Salary, Credited Service and Years of Service before and
after the restoration to service.
INCREASES IN BENEFITS TO RETIRED MEMBERS
4.11 (a) Commencing with the monthly Retirement Allowance for the
month of January 1994, the amount of allowance payable on account of a Member
who (i) retired, (ii) commenced his deferred vested Retirement Allowance, or
(iii) died with a spouse's allowance payable, in each instance on or before
December 31, 1993, shall be increased by a percentage thereof. Such percentage
shall be determined in accordance with the following schedule:
<TABLE>
<CAPTION>
Retirement Date Pension Increase
----------------------- -----------------------------------
<S> <C>
12/31/90 or earlier 9.54%
1/1/91 through 12/31/93 9.54% multiplied by a fraction, the
numerator of which is the number of
months that retirement date
precedes 1/1/94, and the
denominator of which is 36.
</TABLE>
For purposes of this paragraph, a Member's retirement date shall be
deemed to be (1) in the case of a Member who terminated Service after reaching
his Early Retirement Date, the date the Member terminated Service; (2) in the
case of a Member who terminated Service before reaching his Normal Retirement
Date with a right to a deferred vested Retirement Allowance, the Benefit
Commencement Date; and (3) in the case of a Member whose surviving spouse was
entitled to a spouse's allowance under Section4.6, the Benefit Commencement
Date.
Certain increases in monthly allowances for Members who retired
under the Plan before 1991 have been made by prior amendments. Prior versions of
the Plan contain such provisions, and are incorporated herein by reference.
SECTION 5. CONTRIBUTIONS
5.1 All contributions required to provide the benefits under the
Plan shall be made by the Company, and no contributions shall be required by
Members.
5.2 It is the intention of the Company to continue the Plan and make
regular contributions to the Trustee each year in such amounts as are necessary
to maintain the Plan on a sound actuarial basis and to meet minimum funding
standards as prescribed by any applicable law. Any forfeitures shall be used to
reduce the Company contributions otherwise payable, and will not be applied to
increase the benefits any Member would otherwise receive under the Plan.
5.3 All expenses reasonably incurred in the administration of the
Plan shall be paid by the Trustee out of the Plan's assets (either directly or
through reimbursement of the Company for any such expenses paid by the Company),
except to the extent that the Company shall otherwise provide for such payment.
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<PAGE> 19
5.4 A Company contribution made as a result of a mistake of fact or
conditioned upon qualification of the Plan or any amendment thereof or upon the
deductibility of the contribution under section 404 of the Code shall be
returned to the Company upon request within one year after the payment of the
contribution, or the disallowance of the deduction (to the extent disallowed),
as the case may be.
SECTION 6. ADMINISTRATION OF PLAN
6.1 A Committee, as designated by resolution of the Board of
Directors, shall have authority to control and manage the operation and
administration of the Plan, except that the Committee shall have no authority or
responsibility for the investment or management of Plan assets other than as
provided under Section 6.12. In addition, the Committee shall have complete
discretionary authority to construe the terms of the Plan. The members of the
Committee shall be appointed by and shall serve at the pleasure of the Board of
Directors, and shall be deemed to be named fiduciaries within the meaning of
Section 402(a)(1) of ERISA.
6.2 There shall be not less than three persons acting as members of
the Committee. Subject to such limitation, the Board of Directors from time to
time may increase or decrease the number of members of the Committee as the
Board of Directors in its discretion shall deem appropriate.
6.3 Any person appointed a member of the Committee shall signify his
acceptance by filing written acceptance with the Board of Directors and with the
Secretary of the Committee. Any member of the Committee may resign by delivering
his written resignation to the Board of Directors and the Secretary of the
Committee, and such resignation shall become effective upon the date specified
therein.
6.4 The members of the Committee shall elect a Chairman and a
Secretary who may be but need not be a member of the Committee. The Committee
may allocate to any one or more of its members any duty or responsibility it may
have under the Plan and may designate any other person or persons to carry out
any responsibility of the Committee under the Plan. The Committee may employ
counsel, advisers and agents and such clerical, accounting and actuarial
services as they may require in carrying out the provisions of this Plan.
6.5 The Committee shall hold meetings upon such notice, at such
place or places, and at such time or times as it may from time to time
determine.
6.6 A majority of the members of the Committee at the time in office
shall constitute a quorum for the transaction of business. All resolutions or
other actions taken by the Committee at any meeting shall be by the vote of a
majority of the Committee.
6.7 The Committee shall be entitled to reimbursement for any
expenses incurred by it or any of its members in the performance of their duties
hereunder. No member of the Committee shall receive any compensation from the
Plan for his services as such.
6.8 Subject to the provisions of the Plan, the Committee from time
to time shall establish rules for the administration of the Plan and the
transaction of its business. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in such manner and to such extent as it
shall deem advisable to carry out the purposes of the Plan. The Committee may
interpret and construe the Plan, determine questions of eligibility and the
rights and status of Members and others under the Plan, and decide disputes
arising under the Plan.
6.9 The members of the Committee and the Company and its officers
and directors shall be entitled to rely upon all tables, valuations,
certificates and reports furnished by any actuary designated by the Committee,
upon all certificates and reports made by any accountants selected by the
Committee, and upon all opinions given by any legal counsel selected by the
Committee, and the members of the Committee and the Company and its officers and
directors shall not be deemed imprudent in respect to any action taken or
suffered by them in good faith in reliance upon any actuary, accountant, or
counsel.
6.10 The Company shall indemnify and save harmless each member of
the Committee against any cost or expense (including his attorney's fees) or
liability (including any sum paid in settlement of any claim)
19
<PAGE> 20
arising out of any act or omission to act as a member of the Committee, except
in the case of liability arising out of his own gross negligence or willful
misconduct and except, in the case of a Committee member who is a Director of
the Company, to the extent any such indemnification would be limited by
applicable state law.
6.11 The Committee shall appoint, as Investment Manager or Managers,
one or more persons qualified to act as such under Section 3(38) (B) of ERISA.
Each such person shall become an Investment Manager upon its acknowledgment in
writing that it is a fiduciary with respect to the Plan. Each Investment Manager
so appointed shall have exclusive responsibility for directing the investment
and management of the Plan assets to which its appointment applies, as
determined from time to time by the Committee, and neither the Committee nor the
Trustee shall have any responsibility for directing the investment and
management of such assets; provided that any Investment Manager may designate
the Trustee to carry out its responsibility with respect to a portion of Plan
assets as provided in the Trust Agreement.
Each Investment Manager shall exercise its fiduciary
responsibilities with respect to Plan assets allocated to it, including without
limitation any responsibility with respect to diversification imposed by law, as
if the assets allocated to it constituted the entire Plan assets.
The Committee may at any time remove any person serving as
Investment Manager upon written notice to such person. The Committee shall
thereupon appoint a new Investment Manager, or allocate the portion of Plan
assets for which the Investment Manager being removed had responsibility to
another Investment Manager, as provided above.
6.12 Notwithstanding the provisions of Section 6.11, the Committee
may allocate to itself the exclusive responsibility for directing the investment
and management of a portion of the assets of the Plan designated by the
Committee, provided that no allocation of a portion of Plan assets having a
value in excess of an amount equal to 20% of the total value of the assets of
the Plan (determined as of the date of the allocation) shall be made. For
purposes of this limitation, any investments in pooled equity and/or fixed
income funds managed by a bank, insurance company or investment manager
registered under the Investment Company Act of 1940, which funds are designed to
reflect established market indices, shall not be considered to be invested and
managed at the direction of the Committee.
6.13 The Committee shall establish a funding policy for the Plan
consistent with the objectives of the Plan and the requirements of ERISA.
6.14 The Committee shall establish and maintain a claims procedure
pursuant to which any Member (or beneficiary or spouse of a Member) whose claim
for benefits under the Plan has been denied shall be given (i) notice in writing
of such denial (stating the specific reasons therefor) and (ii) a reasonable
opportunity to have a full review of such denial by the Committee.
6.15 Any person may serve in more than one fiduciary capacity with
respect to the Plan.
SECTION 7. THE TRUST
The Company has entered into a Trust Agreement with the Trustee for
the purpose of providing benefits under the Plan. The assets of the Plan shall
be held in Trust under the Trust Agreement by the Trustee thereunder. The
Committee may remove the Trustee and appoint a successor under the terms of the
Trust Agreement. Benefits payable under the Plan shall be payable only out of
the assets held under the Trust Agreement, and, except to the extent provided
under Title IV of ERISA, the Company shall not be liable in any manner for the
payment of benefits under the Plan.
SECTION 8. AMENDMENT AND TERMINATION
8.1 The Company hopes and expects to continue the Plan indefinitely
but reserves the right to terminate, modify, alter or amend the Plan or the
Trust Agreement or to discontinue the payment of contributions from time to time
to any extent that it may, at its sole and complete discretion, deem advisable.
The foregoing right shall be exercised only by action of the Board of Directors
except that the Committee, by a written instrument duly
20
<PAGE> 21
executed by a majority of its members, may make (1)any amendment which may be
necessary or desirable to ensure the continued qualification of the Plan and its
related trust under the Code or which may be necessary to comply with the
requirements of ERISA or any regulations or interpretations issued by the
Department of Labor or the Internal Revenue Service with respect to the
requirements of ERISA or the Code, (2) any amendment which is required by the
provisions of any collective bargaining agreement between the Company and its
employees, and (3) any other amendment which will not involve an estimated
annual cost under the Plan (determined at the time of the amendment in a manner
consistent with the requirements of ERISA) in excess of $200,000. No such
amendment shall increase the duties or responsibilities of the Trustee without
its consent thereto in writing. No such amendment shall have the effect of
diverting the whole or any part of the principal or income of the Trust to
purposes other than for the exclusive benefit of Participants and others having
an interest in the Plan prior to the satisfaction of all liabilities with
respect to them.
8.2 After termination of the Plan, (i) the Company shall make no
further contributions under the Plan, (ii) except as otherwise required by any
applicable provisions of ERISA relating to pre-retirement spouse's annuity
benefits and Statutory Joint and Survivor Annuity benefits, and subject to any
applicable Plan provisions concerning payments under any optional form
(including the Statutory Joint and Survivor Annuity), no death or disability
benefits shall be payable under the Plan in respect of the death or disability,
after the date the Plan is terminated, of any Member and (iii) there shall be no
further accrual of Retirement Allowance (i.e., no increase in accrued Retirement
Allowance by reason of additional Credited Service, a change in a Member's Final
Average Salary or any other event). The Committee shall remain in existence and
all provisions of the Plan and the Trust Agreement shall remain in force which
are necessary in the opinion of the Committee, other than the provisions of the
Plan for contributions.
8.3 Upon termination of the Plan, the right of each Employee to
benefits accrued to the date of such termination that would be vested under the
provisions of the Plan in the absence of such termination shall continue to be
vested and nonforfeitable; and the right of each Employee to any other benefits
accrued to the date of termination shall be fully vested and nonforfeitable to
the extent then funded under the priority rules described in Section 9.1. In any
event, an Employee shall have recourse only against the assets of the Plan for
the payment of benefits thereunder, subject to any applicable guarantee
provisions of Title IV of ERISA.
8.4 No provision of this Section 8 or of Section 9, or any other
provision of the Plan or any document or agreement related thereto, shall
restrict the transfers and other actions provided for by Appendix G to the Plan.
SECTION 9. ALLOCATION OF ASSETS ON TERMINATION
9.1 In the event of the termination of the Plan in its entirety,
Plan assets held under the Trust Agreement shall be applied to provide for the
payment of benefits as stated below for the following classes in the order of
priority listed:
(a) to benefits payable to a Member, a Member's spouse or
beneficiary who (i) was in pay status as of the beginning of the
three-year period ending on the termination date of the Plan, based on the
provisions of the Plan (as in effect during the five-year period ending on
such date), under which such benefit would be the least, or (ii) would
have been in pay status as of the beginning of such three-year period if
the Member had retired prior to the beginning of the three-year period and
if his benefits had commenced (in the normal form of Retirement Allowance
specified under Section 4.4) as of the beginning of such period, based on
the provisions of the Plan (as in effect during the five-year period
ending on the termination date) under which such benefit would be the
least;
(b) to all other benefits of Members, spouses or beneficiaries
under the Plan to the extent such benefits are guaranteed by the Pension
Benefit Guaranty Corporation;
(c) to all other nonforfeitable benefits under the Plan; and
(d) to any other benefits under the Plan.
21
<PAGE> 22
If the Plan assets shall be inadequate to provide in full for
the allocations under any one of the above priorities, they shall be
distributed proportionately among the Members, spouses and beneficiaries
entitled to receive amounts under that priority except as provided below
with respect to the allocation of assets to the priority set forth in (c)
above.
If the assets of the Plan are insufficient to fully satisfy
the priority set forth in (c) above, the following allocation rule shall
apply:
(i) the available assets shall be applied to the payment
of nonforfeitable benefits under the Plan as in effect at the
beginning of the five-year period ending on the date of termination
of the Plan; and
(ii) if the available assets are sufficient to satisfy
benefits payable under (i) above (without regard to this clause
(ii)), then the benefits described in (i) above shall be determined
by the most recent Plan amendment effective during such five-year
period under which the assets available for allocation are
sufficient to satisfy in full the benefits described in (i) above
and any assets remaining shall be allocated under (i) above on the
basis of the Plan as amended by the next succeeding amendment
effective during such period.
If, after the termination of the Plan, the Committee
shall determine that continuance of the Trust Agreement is not in
the best interest of the Members, the Board of Directors may
terminate the Trust Agreement and upon such termination the Trustee
shall apply to the benefit of each Member, spouse or beneficiary,
the full Equivalent Actuarial Value of the annuities to which he may
be entitled under this Section 9.1. The application shall be made,
by the purchase of nontransferable annuity contracts or, as and to
the extent provided under Section 4.7(a), 4.7(c) or 4.8(e), by
lump-sum payments. Subject to Section 9.3 below, if the amounts held
under the Trust as of the date of termination of the Plan exceed the
amounts required under priorities (a) through (d) above, such excess
shall, after all liabilities of the Plan with respect to all Members
and their beneficiaries have been satisfied, revert to the Company
to the extent permitted by applicable law.
9.2 If at any time the Plan is terminated with respect to any group
of Employees under such circumstances as to constitute a partial termination of
the Plan within the meaning of section 411(d)(3) of the Code, the benefits of
participating Employees as to whom such termination occurred shall be vested in
accordance with the special vesting rules applicable upon termination of the
Plan, but shall otherwise be payable as though such termination had not
occurred; provided, however, that the Committee, subject to any necessary
governmental approval, shall certify to the Trustee the equitable share of the
Plan assets allocable to the Employees affected by the partial termination, and
shall instruct the Trustee to set aside and hold such share as a separate fund
to be applied for the benefit of such Employees in the manner described in
Section 9.1 above.
9.3 Notwithstanding the foregoing or anything elsewhere in the Plan,
in the event that (i) the Company shall cease to be a publicly owned corporation
having at least 500 stockholders, (ii) more than 30% of the Company's
outstanding securities entitled to vote in elections of the Board of Directors
shall be acquired by any person (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934), (iii) the Board of Directors
determines that a tender offer statement filed by any person (as so defined)
with the Securities and Exchange Commission indicates an intention on the part
of such person to acquire control of the Company, or (iv) during any period of
24 consecutive months, individuals who at the beginning of such period were on
the Board of Directors cease for any reason to constitute a majority of the
Board of Directors, the Plan shall terminate in its entirety on the effective
date of such event (hereinafter referred to as the "Effective Date"); unless the
Board of Directors prior to the Effective Date provides to the contrary.
In the event the Plan terminates on or following the Effective Date,
the Plan assets held under the Trust Agreement shall be applied to provide for
the payment of benefits in accordance with the order of priority listed in
Section 9.1; provided, however, that if the amounts held under the Trust as of
the date of termination of the Plan exceed the amounts required under priorities
(a) through (d) of Section 9.1, any such excess amounts shall be allocated among
the persons who were Members (including active Employees, terminated Employees,
retirees and
22
<PAGE> 23
beneficiaries with respect to whom future benefits are payable under the Plan)
on the day before the date as of which the Plan terminates in proportion to the
present value of each such Member's accrued normal retirement benefit on the
date of Plan termination, subject to the requirements of Revenue Ruling 71-446
and related Internal Revenue Service rules and regulations. Notwithstanding
Section 8, as of and following the Effective Date, this Section 9.3 may only be
amended with the consent of 3/4 of the Members (including the persons referenced
as Members in the preceding sentence).
SECTION 10. STATUTORY LIMITATIONS ON MAXIMUM BENEFITS
10.1 The limitations contained in section 415 of the Code and
regulations thereunder and all applicable grandfather provisions are hereby
incorporated by reference. If any Member hereunder is also a participant in
another employee retirement plan which (a) is a defined contribution plan within
the meaning of section 414(i) of the Code or a defined benefit plan within the
meaning of section 414(j) of the Code, and (b) is sponsored by the Company or an
Affiliate (as defined under section 415(h) of the Code for this purpose), then
the foregoing limitations shall be applied on an aggregate basis. Specifically,
any reduction in benefit accruals required under this provision and comparable
provisions of such other plans shall first be made, to the extent possible, to
the benefit accruals under the Plan, then to the employer contributions to the
Employees' Retirement Income Plan of The Turner Corporation, then to the
employer contributions to The Turner Corporation Employee Stock Ownership Plan,
and finally, to the employer contributions (excluding employee elective
deferrals) to the Tax Deferred Savings Plan of The Turner Corporation.
SECTION 11. LIMITATIONS IN THE EVENT OF TERMINATION
11.1 Restriction of Benefits Upon Plan Termination. Unless the
Commissioner of Internal Revenue determines that the provisions of this Section
11 are not necessary to prevent prohibited discrimination that may occur in the
event of an early termination of the Plan, in the event of termination of the
Plan, the benefit of any highly compensated employee within the meaning of
section 414(q) of the Code ("HCE") (and any former HCE) is limited to a benefit
that is nondiscriminatory under section 401(a)(4).
11.2 Restrictions on Distribution. (a) General rule. In any year,
the payment of benefits under the Plan to or on behalf of a restricted employee
shall not exceed an amount equal to the payments that would be made to or on
behalf of the restricted employee in that year under:
(i) A straight life annuity that is actuarial equivalent
of the accrued benefit and other benefits to which the restricted
employee is entitled under the plan (other than a social security
supplement); and
(ii) A social security supplement, if any, that the
restricted employee is entitled to receive.
(b) Restricted employee defined. For purposes of this Section
11.2, the term restricted employee generally means any HCE or former HCE.
However, an HCE or former HCE need not be treated as a restricted employee
in the current year if the HCE or former HCE is not one of the 25
nonexcludable employees and former employees of the employer with the
largest amount of compensation in the current or any prior year.
(c) Benefit defined. For purposes of this paragraph (c), the
term benefit includes, among other benefits, any periodic income, any
withdrawal values payable to a living employee or former employee, and any
death benefits not provided for by insurance on the employee's or former
employee's life.
11.3 Nonapplicability in certain cases. The restrictions in this
Section 11 do not apply, however, if any one of the following requirements is
satisfied:
(i) After taking into account payment to or on behalf of
the restricted employee of all benefits payable to or on behalf of
that restricted employee under the Plan, the
23
<PAGE> 24
value of plan assets equals or exceeds 110 percent of the value of
current liabilities, as defined in section 412(l)(7) of the Code.
(ii) The value of the benefits payable to or on behalf
of the restricted employee is less than one percent of the value of
current liabilities before distribution.
(iii) The value of the benefits payable to or on behalf
of the restricted employee must not exceed the amount described in
section 411(a)(11)(A) of the Code (restrictions on certain mandatory
distributions).
11.4 Determination of current liabilities. For purposes of this
paragraph, the Committee may use any reasonable and consistent method for
determining the value of current liabilities and the value of plan assets.
11.5 This Section 11 shall be ineffective if the Internal Revenue
Service determines that the provisions hereof are no longer necessary to qualify
the Plan under section 401 of the Code.
SECTION 12. EMPLOYMENT WITH AFFILIATES, JOINT VENTURES, FOREIGN SUBSIDIARIES,
PREDECESSORS AND IN A CAPACITY OTHER THAN AN EMPLOYEE; LEAVES OF
ABSENCE; LEASED EMPLOYEES
12.1 Any period during which a person is employed by an Affiliate
(either before or after employment with the Company) shall be treated as
employment as an Employee for all purposes of the Plan, except that (a) a person
shall not become a Member during any such period and (b) such period shall not
be considered Credited Service. If an Employee transfers from employment with
the Company to employment with an Affiliate, his employment with the Company
shall be deemed to terminate for purposes of the Plan at such time as he shall
be employed by neither the Company nor an Affiliate and the salary paid to him
by any such Affiliate shall be taken into account in determining his Salary. If
an Employee is employed at the same time by the Company and one or more
Affiliates during any period, he shall be treated for all purposes of the Plan
as though his employment during such period were entirely with the Company.
12.2 A Member who, at the request of the Company, is temporarily
employed by a corporation in which the Company is a stockholder or by a joint
venture or partnership in which the Company has an interest, shall be deemed to
be an Employee for all purposes of the Plan during the period of such employment
if he becomes an Employee after such period, and his regular salary during the
period paid to him by the corporation, joint venture or partnership shall be
deemed to be Salary within the meaning of Section 1.18 and his hours of service
(determined in the same manner as in the case of an Employee of the Company)
shall be deemed to be Hours of Service.
12.3 Any United States citizen who is a salaried employee of a
Foreign Subsidiary not covered by a collective bargaining agreement (unless the
agreement provides otherwise) shall be deemed to be an Employee of the Company
for all purposes of the Plan if (a) the Company has entered into an agreement
applicable to the Foreign Subsidiary under section 3121(1) of the Code to
provide United States Social Security coverage and (b) contributions under a
funded plan of deferred compensation are not provided by any other person with
respect to the remuneration paid to such citizen by the Foreign Subsidiary. His
regular salary from the Foreign Subsidiary shall be deemed to be Salary and his
hours of service (determined in the same manner as in the case of an Employee of
the Company) shall be deemed to be Hours of Service. "Foreign Subsidiary" shall
mean a corporation incorporated in a jurisdiction outside the United States (i)
at least 20% of the voting stock of which is owned by the Company or (ii) more
than 50% of the voting stock of which is owned by a foreign corporation
described in clause (i).
12.4 A person shall receive credit for any period of employment with
a predecessor to the Company to the extent (a)provided by the Company in its
discretion on a nondiscriminatory basis as to all persons similarly situated or
(b)required by section 414(a)(1) of the Code or regulations adopted pursuant to
section 414(a)(2) of the Code.
12.5 Any period during which a person is employed by the Company in
a capacity other than as an Employee shall be treated as employment as an
Employee for all purposes of the Plan except that (a) a person shall not become
a Member during any such period and (b) such period shall not be considered
Credited Service.
24
<PAGE> 25
No credit shall be given under this Section for any period during which a person
is not a common-law employee of the Company.
12.6 An Employee shall not be deemed to have terminated his
employment with the Company for the purpose of Sections 2 and 4.4 if he is on an
unpaid leave of absence approved by the Company and if he becomes an Employee
after the leave of absence. However, he shall not be credited with Hours of
Service, Years of Service or years of Credited Service during such period. If he
does not become an Employee after the leave, he shall be deemed to have
terminated his employment at the beginning of the leave.
12.7 In the case of any person who is a "leased employee" of the
Company, the entire period (whether before or after January1, 1984) during which
the individual performed services for the Company or any related company (within
the meaning of Section 103(b)(6)(C) of the Code) shall be treated as service
hereunder for all purposes of the Plan, except that (i) no person may become a
Member during any such period and (ii) no person may accrue Credited Service
during any such period (assuming such period is not being taken into account
under any other provision of the Plan). A person who is performing services for
the Company (and is not a common-law employee of the Company or Affiliate) shall
be considered a leased employee if:
(i) such services are provided pursuant to an agreement
between the Company and any other person (hereinafter referred to as
the "leasing organization"),
(ii) such person has performed the services for the
Company (or a related company, as defined above) on a substantially
full-time basis for a period of at least one year,
(iii) such services are of a type historically
performed, in the business field of the Company by employees, and
(iv) the person is not covered by a plan maintained by
the leasing organization that constitutes a safe harbor plan under
section 414(n) (5) of the Code.
In applying clause (iv) above, the Company may rely upon a
written certification by the leasing organization as to whether an
individual is covered by a plan of the type described.
SECTION 13. MISCELLANEOUS
13.1 The establishment of the Plan shall not confer upon any
Employee or Member the right to be continued in the employ of the Company, and
the Company expressly reserves the right to discharge any Employee, whether or
not a Member, whenever the interest of the Company, in its sole judgment and
discretion, may so require.
13.2 No benefit payable under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge and any attempt to so anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void; and no
such benefits shall be in any manner liable for, or subject to, the debts,
contracts, liabilities, engagements, obligations, or torts of any Member.
Notwithstanding the foregoing or anything elsewhere in the Plan to
the contrary, all benefits shall be paid under the Plan which are required to be
paid under the terms of any domestic relations order constituting a "qualified
domestic relations order" under ERISA, in such manner and to such person or
persons as such order shall specify.
The Committee shall establish reasonable procedures for determining
the qualified status of any domestic relations order and for administering
distributions under any such order. If any payments are required to be made
hereunder to any person under the terms of a qualified domestic relations order
on or after the earliest date the Member is eligible to retire early, but before
his actual retirement, the benefit payable hereunder shall be the portion of the
Member's benefit specified in such order, not taking into account the present
value of any subsidy for early retirement. Accordingly, the amount payable prior
to the date of the Member's actual retirement shall be based on the benefit that
would be payable to the Member, if he had retired on the date payments to such
other person are
25
<PAGE> 26
to begin and his benefit were reduced to reflect early commencement on the basis
of the interest rate used by the Pension Benefit Guaranty Corporation (for the
purpose of valuing immediate annuities under terminating single employer pension
plans) on the January 1 coincident with or next preceding the date benefits
commence under the order and the 1979 George B. Buck Mortality Table for Males
rated back one year.
13.3 The provisions of the Plan shall be governed by and construed
in accordance with ERISA and the laws of the State of New York.
13.4 The Plan shall not merge or consolidate with, or transfer its
assets and liabilities to, any other plan, unless each Member, spouse and
beneficiary would receive a benefit, were such other plan to terminate
immediately after such merger, consolidation or transfer, at least equal to the
benefit he would have received if the Plan had terminated immediately before
such merger, consolidation or transfer.
13.5 Any retirement benefit payment made under the Plan will be
subject to any applicable income tax withholding requirements. For this purpose,
the Committee shall provide the Trustee with any information that the Trustee
needs to satisfy such withholding obligations and with any other information
that may be required by regulations promulgated under the Code.
13.6 To the extent and in the manner required by ERISA, each Member
and beneficiary who receives an eligible rollover distribution (as defined by
the Code) from the Plan shall be notified of the special Federal income tax
provisions applicable to such distribution.
13.7 The Employees' Retirement Plan of Trans-Con Construction Co.,
Inc., as applied to all participants therein (including their beneficiaries)
(the "Trans-Con Plan"), was merged into the Plan as of December 31, 1987. The
priority categories set forth in Section 9.1 shall be modified in the manner
described in section 1.414(1)-1(e) of the Code and section 1.414(1)-1(f) of the
Treasury regulations. The Committee shall take such steps as are required to
assure that such data is maintained as is required under section 1.414(1)-1(i)
of the Treasury regulations.
Where applicable, any election made under the Trans-Con Plan (or
considered to have been under such plan) shall be considered an election under
the comparable provisions of the Plan.
13.8 The Employees' Retirement Plan of Universal Construction
Company, Inc., as applied to all participants therein (including their
beneficiaries) (the "Universal Plan"), was merged into the Plan as of April 1,
1988. The priority categories set forth in Section 9.1 shall be modified in the
manner described in section 1.414(1)-1(e) of the Code and section 1.414(1)-1(f)
of the Treasury regulations. The Committee shall take such steps as are required
to assure that such data is maintained as is required under section
1.414(1)-1(i) of the Treasury regulations.
Where applicable, any election made under the Universal Plan (or
considered to have been under such plan) shall be considered an election under
the comparable provisions of the Plan. In accordance with the Universal Plan, in
the case of an Employee who is a Member in the Universal Plan at the time such
Plan is merged into this Plan and who was a Member in the Universal Plan on
January 1, 1983, any period prior to January 1, 1983 during which such Employee
was employed by H.W. Pearce, Incorporated or any subsidiary of H.W. Pearce,
Incorporated shall be treated as employment as an Employee hereunder for
purposes of determining such Member's years of Credited Service, except that in
no event shall any Credited Service be given for periods prior to July 1, 1976.
SECTION 14. TOP-HEAVY PROVISIONS
If the Plan is or becomes a Top-Heavy Plan in any calendar year
beginning after 1983, the provisions of this Section 14 will supersede any
conflicting provisions of the Plan.
14.1 For purposes of this Section 14 the following definitions will
apply:
(i) "Key Employee" shall mean any employee of the
Company or an Affiliate who is a key employee within the meaning of
section 416(i) of the Code.
26
<PAGE> 27
(ii) "Top-Heavy Plan" shall mean the Plan for any
calendar year beginning after 1983 in which the Top-Heavy Ratio
exceeds 60%. Such determination shall be made as of January 1 of
each year, or as of such other date or dates as may be the valuation
date used by the Plan for minimum funding purposes (the
"Determination Date"), based on the value of the Plan benefits on
such date.
(iii) "Top-Heavy Ratio" shall mean the ratio for (1) the
account balances (in the case of a defined contribution plan) and
present value of accrued benefits (in the case of a defined benefit
plan) for Key Employees under all plans in the Aggregation Group to
(2) the account balances and present value of accrued benefits for
all employees in all plans in the Aggregation Group, calculated as
of the applicable Determination Date in accordance with section 416
of the Code and regulations thereunder (and with the present value
of accrued benefits to be determined on the basis of the 1979 George
B. Buck Mortality Table for Males rated back one year and an
interest rate of 5% per annum).
(iv) "Aggregation Group" means the Plan and any other
plan of the Company or an Affiliate which either (a) covers a Key
Employee or (b) is required to be aggregated with the Plan or any
such other plan in order for any such plan to satisfy the
requirements of section 401(a)(4) or 410(b) of the Code, together
with any other plan of the Company or any Affiliate but only if such
inclusion would cause the Plan to not be a Top-Heavy Plan and the
resulting Aggregation Group would satisfy the requirements of
sections 401(a)(4) and 410(b) of the Code.
14.2 For any calendar year in which the Plan is a Top-Heavy Plan,
the nonforfeitable interest of a Member who terminates employment other than by
death or retirement shall be determined under the following schedule:
<TABLE>
<CAPTION>
Years of Service Vesting Percentage
---------------- ------------------
<S> <C>
2 but fewer than 3........................20%
3 but fewer than 4........................40%
4 but fewer than 5........................60%
5 but fewer than 6........................80%
6 or more................................100%
</TABLE>
Notwithstanding the foregoing, if after having previously been a
Top-Heavy Plan, the Plan is no longer a Top-Heavy Plan in any calendar year, the
vesting schedule set forth above shall no longer apply (and vesting shall be
determined under otherwise applicable Plan provisions), except that (i) such
schedule shall continue to apply (with respect to his entire accrued benefit) to
a Member who has at least three Years of Service at the beginning of the
calendar year in which the Plan ceases to be a Top-Heavy Plan and (ii) in the
case of any other Member, with respect to his accrued benefit as of the
beginning of such calendar year, the vesting percentage applicable shall not be
less than the percentage applicable under the above schedule as of the beginning
of such calendar year.
14.3. (a) Notwithstanding any other provision in this Plan if in any
calendar year the Plan is a Top-Heavy Plan, the Retirement Allowance of any
Member (other than a Key Employee), payable as a life annuity commencing at
Normal Retirement Date, shall not be less than:
27
<PAGE> 28
(i) the product of the Member's average compensation for
the "testing period" (as determined under section 416(c)(1)(D) of
the Code) multiplied by the lesser of (A) 2% multiplied by the
number of years of employment after December 31, 1983 during which
years the Plan is a Top-Heavy Plan or (B) 20% minus
(ii) the Member's cumulative annual retirement benefit
under all other tax-qualified retirement plans maintained by the
Company of an Affiliate.
The amount of the reduction applicable under (ii) above shall
be determined by conversion of the Member's accrued benefit under each
other tax-qualified retirement plan into an actuarially equivalent life
annuity commencing at Normal Retirement Date, disregarding any portion of
such benefit that is attributable to contributions made by the Member.
The minimum accrual is determined without regard to any Social
Security benefit. The minimum accrual applies even though under other Plan
provisions the Member would not otherwise be entitled to receive an
accrual, or would have received a lesser accrual, for the calendar years
in which the Plan is a Top-Heavy Plan because (A) his compensation is less
than a stated amount, (B)he is not employed on the last day of the accrual
computation period or (C) the Plan is integrated with Social Security.
(b) For purposes of computing the minimum accrued benefit,
compensation will include all compensation, as that term is defined for
purposes of Section 10.1 and subject to section 401(a)(17) of the Code. If
the Plan becomes a Top-Heavy Plan, the maximum benefit limitations set
forth in the Plan shall comply with section 416(h) of the Code.
SECTION 15. CESSATION OF ACCRUALS
15.1 Effective as of March 31, 1991 the Plan was curtailed for
accounting purposes and all benefits under the Plan ceased to accrue except as
provided by Sections 16 and 17. Accordingly, in calculating the normal
Retirement Allowance under Section 4.1(b) and Old Plan Benefit no additional
Credited Service or compensation or changes in the Social Security wage base
after March 31, 1991 shall be considered other than for purposes of determining
the denominator of the fraction described in Section 1.1(a). Effective as of
January 1, 1994 and only in respect of Credited Service after that date, the
Cash Balance Benefit shall accrue in accordance with the provisions of the Plan.
SECTION 16. EARLY RETIREMENT WINDOW
16.1 A Member who performs an Hour of Service on or after May 1,
1991 and who has completed five or more Years of Service and attained age 62 as
of March 31, 1991 shall be entitled to the enhanced retirement benefit described
below, provided the Member notifies the Committee of his retirement by written
application prior to July 1, 1991.
(i) Notwithstanding the other provisions of the Plan, if
such Member did not yet attain the age of 65 on July 1, 1991 he
shall be automatically eligible for the following early retirement
benefits in lieu of any early retirement benefits available under
Section 4. The Member's early Retirement Allowance shall be an
allowance commencing July 1, 1991, equal to the Member's Accrued
Benefit computed on the basis of his Final Average Salary and
Credited Service as of March 31, 1991. In addition, such Member
shall receive $500 per month in addition to his normal Retirement
Allowance until the Member attains 65 years of age. In the event a
Member dies prior to attaining age 65 with a 100%, 75% or 50% joint
and survivor annuity in effect, the Member's surviving spouse shall
receive $500, $375 or $250 per month in addition to the 100%, 75% or
50% survivor annuity up to the date the Member would have attained
age 65.
(ii) Notwithstanding the other provisions of the Plan,
if such Member did attain an age of at least 65 on July 1, 1991, the
Member's normal Retirement Allowance (and the survivor annuity, if
any) shall be increased by 10 percent.
28
<PAGE> 29
Notwithstanding the preceding, the Members listed in Appendix E
shall not be eligible to receive benefits under this Section 16.1.
SECTION 17. SUPPLEMENTAL RETIREMENT BENEFIT
Active Members as of March 31, 1991 shall receive a supplemental
retirement benefit, if any, as specified in Appendix F.
* * * * * *
29
<PAGE> 30
IN WITNESS WHEREOF, THE TURNER CORPORATION has caused this
instrument to be executed as set forth herein, effective January 1, 1994
and subject to the receipt of a favorable determination letter from the
Internal Revenue Service, by its duly authorized officer this ____ day of
_________, 199_.
THE TURNER CORPORATION
By:
------------------------
ATTEST:
By:
----------------------
Secretary
30
<PAGE> 31
Appendix A1
EARNINGS CREDIT - AGGREGATE SUPPLEMENTAL RATE
Let t = Plan Year t, where Plan Year 1994 is denoted as t = 1.
Let MVA(t) = the market value account as of the end of any Plan
Year t.
Let SNA(t) = the stabilized notional account as of the end of any
Plan Year t. (ISNAt represents the initial calculation
of SNAt as of the end of the Plan Year for which SNAt is
being calculated).
Let CBA(t) = the aggregate of the actual Cash Balance Accounts as of
the end of the Plan Year t for all Members. (ICBAt
represents the initial calculation of CBAt as of the end
of the Plan Year for which CBAt is being calculated).
Let r(t) = the rate of return in any Plan Year t on a hypothetical
account with an asset mix of 65% in the Standard and
Poor's 500 Index and 35% in the Lehman Bros.
Intermediate Government/Corporate Bond Index or any
successor indices.
Let f(t) = the inflation rate in the Plan Year t as measured by the
United States Consumer Price Index for Urban Wage
Earners.
Let C(t) = the aggregate Pay-Based Credit made with respect to the
Plan Year t for all Members of the Plan as of the
beginning of the Plan Year t and who have not reached
their Benefit Commencement Date and who have a positive
Cash Balance Account as of the end of such Plan Year.
Let E(t) = the aggregate Pay-Based Credit made with respect to the
Plan Year t for all Employees who become Members of the
Plan during the Plan Year t and who have not reached
their Benefit Commencement Date as of the end of such
Plan Year.
Let B(t) = the aggregate benefit payments made with respect to Plan
Year t from the Cash Balance Accounts.
Calculate the following:
MVA(t) = MVAt-1 x (1 + rt) - Bt x (1 + rt)1/2 + Ct + Et
ISNAt = SNAt-1 x (1.06 + ft) - Bt x (1.06 + ft)1/2 + Ct + Et
SNAt = ISNAt + 0.5 x (MVA(t) - ISNA(t))
ICBA(t) = the aggregate of Members' Cash Balance Accounts as of the
end of Plan Year t after reflecting the Pay-Based Credit and
guaranteed 4.5% Earnings-Based Credit for such Plan Year.
A1-1
<PAGE> 32
Appendix A2
EARNINGS CREDIT - AGGREGATE SUPPLEMENTAL ALLOCATION
The aggregate supplemental allocation made to the Cash Balance Accounts at
the end of the Plan Year t shall be calculated as follows:
(a) If MVA(t) exceeds ICBA(t):
the smaller of (MVA(t) - ICBA(t)) and (SNA(t) - ICBA(t)), but in no
event less than zero.
(b) If MVAt is less than or equal to ICBA(t):
no supplemental allocation will be made.
The aggregate supplemental allocation as determined above shall then be
apportioned among all Members as of the end of the Plan Year t, for whom such
allocation is applicable, as follows:
(a) Determine the supplemental rate such that:
Aggregate supplemental allocation =
(sigma) (phi) (CBA(t)-1 + C(t)) x (1 + supplemental rate)
F.
+ (sigma) (phi) E(t) x (1 + supplemental rate)/p/
P.
where:
(1) Summation over F refers to all Members of the Plan as of the
beginning of the Plan Year t and who have not reached their
Benefit Commencement Date as of the end of such Plan Year, and
who have a positive Cash Balance Account as of the end of each
such Plan Year.
(2) Summation over P refers to all Employees who become Members of
the Plan during the Plan Year t and who have not reached their
Benefit Commencement Date as of the end of such Plan Year, and
who are Members as of the end of such Plan Year.
(3) p is the fractional part of the Plan Year in which an Employee
who becomes a Member of the Plan during the Plan Year t and
who has not reached his Benefit Commencement Date and who is a
Member as of end of such Plan Year is a Member.
(b) Apportion the aggregate supplemental allocation among all Members as
of the end of the Plan Year t for whom such allocation is
applicable, as follows:
(1) For a Member i of the Plan as of the beginning of the Plan
Year t and who has not reached his Benefit Commencement Date
as of the end of such Plan Year and has a positive Cash
Balance Account as of the end of such Plan Year:
CBA/i/(t) = (CBA/i/(t-1) + C/i/(t)) x (1 + supplemental rate)
A2-1
<PAGE> 33
(2) For an Employee i who becomes a Member of the Plan during the
Plan Year t and who has not reached his Benefit Commencement
Date and who is a Member as of the end of such Plan Year:
CBA/i/(t) = E/i/(t) x (1 + supplemental rate)/p/
A2-2
<PAGE> 34
Appendix B
ACTUARIAL FACTORS
B.1 Section 4.6(a), Options With Respect to Old Plan Benefits.
If the allowance payable to a Member, or on his behalf, is payable under
Section 4.6(a), under Option 2, 3 or 4 of Section 4.7(a) or under Section
4.8, the benefit payable with respect to a Member's Old Plan Benefit as a
life annuity shall be multiplied by the applicable reduction factor
indicated in the following table:
FACTORS IF MEMBER'S AND BENEFICIARY'S
NEAREST AGES AT REQUIREMENT ARE EQUAL
-------------------------------------
<TABLE>
<CAPTION>
NEAREST AGE AT (A) (B) (C)
BENEFIT COMMENCEMENT 100% 75% 50%
---------------------------------- -------- -------- ------
<S> <C> <C> <C>
55 82.30 86.11 90.30
56 81.86 85.75 90.02
57 81.42 85.39 89.74
58 80.98 85.02 89.46
59 80.54 84.66 89.18
60 80.10 84.29 88.90
61 79.66 83.94 88.62
62 79.22 83.56 88.34
63 78.78 83.19 88.06
64 78.34 82.82 87.78
65 77.90 82.46 87.50
66 77.46 82.10 87.22
67 77.02 81.74 86.94
68 76.58 81.38 86.66
69 76.14 81.02 86.38
70 75.70 80.66 86.10
</TABLE>
B-1
<PAGE> 35
The reduction factor will increase (or decrease) by 0.8%, in the
case of (A), by 0.67%, in the case of (B) and by 0.5%, in the case of (C), for
each year that the beneficiary is older (or younger) than the Member, except
that the applicable factor shall not exceed 99%. Factors for ages greater than
70 decrease by 0.44% per year in the case of (A), by 0.36% per year in the case
of (B) and by 0.28% per year in the case of (C).
B.2 Option 5 of Section 4.7(a). With respect to any Old Plan
Benefit, if the allowance payable to a Member, or on his behalf, is payable
under Option 5 of Section 4.7(a), the benefit payable as a life annuity shall be
multiplied by the applicable reduction factor indicated in the following table:
<TABLE>
<CAPTION>
NEAREST AGE AT
BENEFIT COMMENCEMENT FACTORS
-------------------- -------
<S> <C>
55 97.7%
56 97.4
57 97.1
58 96.7
59 96.3
60 95.8
61 95.3
62 94.7
63 94.0
64 93.2
65 92.4
66 91.5
67 90.5
68 89.5
69 88.3
70 87.1
</TABLE>
Factors for ages greater than 70 decrease by 1.2% per year.
B.3 Lump-Sum Payment. With respect to any Old Plan Benefit, the
amount of any lump-sum payment calculated under Section 4.7(c), Section 4.8(e),
or Section 9 shall equal the lump-sum value of the allowance that would be
payable under Option 1 commencing on the Member's Normal Retirement Date (or the
B-2
<PAGE> 36
date of his actual retirement if later) with such lump-sum value to be based on
the 1979 George B. Buck Mortality Table for Males rated back one year and the
interest rates used by the Pension Benefit Guaranty Corporation for the purpose
of valuing lump sums under terminating single employer pension plans on January
1 of the calendar year in which the benefits are first payable.
The foregoing interest rate assumptions shall also apply for
purposes of determining the amount of any death benefit payable in a lump sum
under Option 5 of Section 4.7(a). The amount of any lump-sum payment of a
Member's Cash Balance Benefit shall be equal to the amount of the Member's Cash
Balance Account. Any lump-sum payment provided under the Plan shall not be less
than the Actuarially Equivalent lump-sum value of the Member's benefit under the
Plan, determined using the interest rate or rates which would be used by the
Pension Benefit Guaranty Corporation (the "PBGC") for purposes of determining
the present value of the Member's benefits under the Plan if the Plan had
terminated within the first month of the Plan Year in which the distribution is
to be made with insufficient assets to provide benefits guaranteed by the PBGC
on that date.
B.4 Restoration to Service. If a Member retires or terminates his
service prior to the completion of 5 years of Credited Service following a prior
restoration to service as provided under Section 4.10 or in the case of a Member
who has postponed retirement as provided under Section 4.2(b) and commenced
receiving benefits required under Code section 401(a)(9) his annual benefit
payable as a life annuity on such subsequent retirement or termination shall be
reduced by subtracting an amount determined by dividing the aggregate dollar
amount of the benefits received prior to restoration to service or pursuant to
Code section 401(a)(9) by the applicable reduction factor indicated in the
following table:
<TABLE>
<CAPTION>
FACTOR TO DETERMINE ANNUAL FACTOR TO DETERMINE ANNUAL
NEAREST AGE AT SUBSEQUENT BENEFIT COMMENCING AT NEAREST AGE AT SUBSEQUENT BENEFIT COMMENCING
PAYMENT DATES NORMAL RETIREMENT PAYMENT DATES IMMEDIATELY
- ------------------------- -------------------------- ------------------------- --------------------------
<S> <C> <C> <C>
30 and below 1.0 65 10.0
31 - 35 1.5 66 9.7
36 - 40 2.0 67 9.4
41 - 45 2.5 68 9.1
46 - 50 3.5 69 8.8
51 - 54 5.0 70 8.5
55 12.0 71 8.3
56 11.8 72 8.0
57 11.6 73 7.7
58 11.4 74 7.4
59 11.2 75 7.1
</TABLE>
B-3
<PAGE> 37
<TABLE>
<S> <C>
60 11.0
61 10.8
62 10.6
63 10.4
64 10.2
</TABLE>
Factors for ages not shown in the table above shall be computed on a
basis consistent with that used to compute the factors set forth in the table
above.
B.5 Calculation of Adjustments of Maximum Benefits Under Section 10.
ACTUARIAL EQUIVALENT FACTORS FOR ADJUSTMENTS
OF MAXIMUM BENEFITS
<TABLE>
<CAPTION>
FACTOR A FACTOR B
-------- --------
NEAREST AGE AT BENEFIT IF SOCIAL SECURITY NEAREST AGE AT BENEFIT
COMMENCEMENT RETIREMENT AGE IS COMMENCEMENT/FACTOR
------------ ----------------- -------------------
65 66 67 AGE Factor AGE Factor
<S> <C> <C> <C> <C> <C> <C> <C>
55 .450 .422 .394 25 .155 41 .389
56 .486 .455 .425 26 .164 42 .413
57 .526 .493 .460 27 .173 43 .440
58 .569 .533 .498 28 .183 44 .469
59 .618 .579 .540 29 .193 45 .499
60 .672 .630 .588 30 .205 46 .533
61 .732 .686 .641 31 .216 47 .569
62 .800 .750 .700 32 .229 48 .608
63 .867 .800 .750 33 .242 49 .651
64 .933 .867 .800 34 .257 50 .697
65 1.000 .933 .867 35 .272 51 .747
66 1.106 1.000 .933 36 .288 52 .802
</TABLE>
B-4
<PAGE> 38
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
67 1.228 1.110 1.000 37 .306 53 .862
68 1.367 1.236 1.114 38 .324 54 .928
69 1.529 1.382 1.245 39 .344 55 1.000
70 1.716 1.551 1.397 40 .366
</TABLE>
- --------------------------------------------------------------------------------
Notes: (1) These factors, used to determine actuarial adjustments under Section
10, are determined on the same mortality basis underlying all other
factors of this Appendix A and an interest rate of 5% per annum.
(2) The actuarial adjustment to the dollar maximum benefit limitation in
Section 10 is determined by multiplying the dollar maximum by Factor A,
using the Member's age at the date Retirement Allowance payments begin;
if the Member's age is less than 55 when Retirement Allowance payments
begin, the result so determined for age 55 is then multiplied by Factor
B.
B.6 Actuarial Equivalents of Cash Balance Accounts. For purposes of
determining the amount of Cash Balance Benefits, the actuarial factors used
shall be the 1989 Buck Mortality Table weighted 80% for males and 20% for
females and the interest rates used by the Pension Benefit Guaranty Corporation
for purposes of valuing lump sums under terminating single employer pension
plans on January 1 of the calendar year in which the Cash Balance Benefits are
first payable.
B.7 Other Situations. In situations not covered by the above and
except as otherwise specifically provided in the Plan, whenever the term
"Equivalent Actuarial Value," "Equivalent Value" or "actuarially increased" or
any term of similar import is used herein, the actuarial factors (determined as
of the January 1 of the calendar year in which the applicable benefits for which
the determination is being made are first payable) shall be based on a 6% rate
of interest and the 1979 George B. Buck Mortality Table for Males rated back one
year.
B-5
<PAGE> 39
July 27, 1988
Appendix C
Special Provisions Applicable to Former Participants
in The Lacona, Inc. Retirement Plan
Effective as of September 30, 1988, The Lacona, Inc. Retirement Plan
(the "Lacona Plan") shall be merged into the Plan. In connection with such
merger, the provisions of this Appendix B shall apply, effective September 30,
1988, notwithstanding any provisions elsewhere in the Plan to the contrary.
1. The following special provisions shall apply to any person who is
a participant in the Lacona Plan immediately prior to September 30, 1988
("Lacona Participant"), except as otherwise provided in paragraph 2 below:
(i) Each Lacona Participant shall become a Member of the Plan on
September 30, 1988.
(ii) The accrued pension benefit of each Lacona Participant under
the Plan in respect of periods of service as an employee of Lacona, Inc.
("Lacona") prior to January 1, 1989 shall be determined solely in
accordance with the provisions of the Lacona Plan as in effect immediately
prior to September 30, 1988 based solely on his "Credited Service" (as
defined in the Lacona Plan) on December 31, 1988 or any earlier date on
which the Lacona Participant ceases to be an employee of Lacona; provided,
however, that for the purpose of determining such accrued benefit under
the provisions of the Lacona Plan, "Final Average Earnings" and "Social
Security Amount," each as defined in the Lacona Plan, shall be determined
at the date of such Participant's actual retirement or other termination
of employment under the Plan.
(iii) The accrued pension benefit of each Lacona Participant in
respect of periods of service as an employee of Lacona from and after
January 1, 1989 or as an employee of any Company (other than Lacona) shall
be determined solely in accordance with the provisions of the Plan;
provided, however, that for the purpose of determining such accrued
benefit under the provisions of the Plan, service (and compensation in
respect thereof) as an employee of Lacona shall be included in the
determination of such Participant's Final Average Salary as defined in the
Plan.
(iv) For purposes of determining entitlement to an early or a
deferred vested Retirement Allowance under the Plan, "Vesting Years," as
defined in the Lacona Plan, shall be considered "Years of Service" under
the Plan and, where applicable, any election made under the Lacona Plan
shall be considered an election under the comparable provisions of the
Plan.
(v) Any Lacona Participant who retires or otherwise terminates
employment (other than by death) after attainment of age 60 and completion
of at least five Years of Service shall be eligible for an early
Retirement Allowance under the Plan.
(vi) Any Lacona Participant who retires or otherwise terminates
employment (other than by death) after completion of at least 10 Years of
Service but prior to age 60 shall be eligible to have a deferred vested
Retirement Allowance under Section 4.4 of the Plan commence before Normal
Retirement Date.
(vii) Any Lacona Participant who retires between ages 60 and 65 may
elect to have the portion of his accrued benefit under clause (ii) above
payable in the form of an actuarially equivalent Social Security Leveling
Option (with the remaining portion, under clause (iii) above, to be
payable in the form of Option 1, which is a straight life annuity). Under
the Social Security Leveling Option, the Participant's payments before
commencement of his Social Security benefit are larger than the payments
thereafter, so that the total income is approximately level. The actuarial
factors used to make such adjustment shall be a 7% rate of interest and
the 1979 George B. Buck Mortality Table for Males rated back one year.
C-1
<PAGE> 40
2. Any Lacona Participant who because of prior retirement or other
termination of employment is no longer employed by Lacona (or any Affiliate
thereof) on September 30, 1988 shall be entitled to benefits under the Plan in
respect of his prior service which shall be determined in all respects in
accordance with the terms of the Lacona Plan as in effect immediately prior to
September 30, 1988, except that any such Lacona Participation whose employment
with Lacona was terminated in 1988 in connection with Lacona's cessation of
operations shall be fully vested in his accrued benefit for purposes of
determining eligibility for a vested benefit under the terms of the Lacona Plan.
3. Effective September 30, 1988, all assets and liabilities of the
Lacona Plan shall become assets and liabilities of the Plan.
4. In connection with the merger of the Lacona Plan into the Plan,
the priority categories set forth in Section 9 of the Plan shall be modified in
the manner described in Treasury regulations section 1.414(1)-1(e) and section
1.414(1)-1(f). The Committee shall take such steps as are required to assure
that such data is maintained as is required under Treasury regulations section
1.414(1)-1(i).
C-2
<PAGE> 41
December 6, 1988
Appendix D
Special Provisions Applicable to Former Participants
in The Lathrop Company, Inc. Retirement Plan
Effective as of December 31, 1988, The Lathrop Company, Inc.
Retirement Plan (the "Lathrop Plan") shall be merged into the Plan. In
connection with such merger, the provisions of this Appendix C shall apply,
effective December 31, 1988, notwithstanding any provisions elsewhere in the
Plan to the contrary.
5. Each person who is a participant in the Lathrop Plan immediately
prior to December 31, 1988 ("Lathrop Participant") shall become a Member of the
Plan on December 31, 1988.
6. The following special provisions shall apply to any employee who
is a Lathrop Participant, except as otherwise provided in paragraph 3 below:
(i) With respect to each Lathrop Participant who is an Employee on
December 31, 1988, his accrued pension benefit (payable annually in the
form of a straight life annuity commencing at Normal Retirement Date)
under the Plan in respect of periods of service prior to January 1, 1989
shall be determined solely in accordance with the benefit accrual formula
of the Lathrop Plan as in effect immediately prior to December 31, 1988
based solely on his "Credited Service," "Final Average Earnings" and
"Social Security Amount" (each as defined in the Lathrop Plan) on December
31, 1988.
(ii) With respect to each Lathrop Participant who is an Employee on
December 31, 1988, no benefit shall accrue for any period prior to January
1, 1989, other than the accrued benefit described in subparagraph (i)
above, and his accrued pension benefit (payable annually in the form of a
straight life annuity commencing at Normal Retirement Date) under the Plan
in respect of periods of service from and after January 1, 1989 shall be
determined solely in accordance with the provisions of the Plan; provided,
however, that for the purpose of determining such accrued benefit under
the provisions of the Plan, compensation prior to January 1, 1989 shall be
taken into account (as if paid by a Company) in the determination of such
Participant's Final Average Salary as defined in the Plan.
(iii) For purposes of determining entitlement to an early or a
deferred vested Retirement Allowance under the Plan, periods of employment
with The Lathrop Company, Inc. ("Lathrop") prior to January 1, 1989 shall
be taken into account (as if such employment were with a Company) in
determining his "Years of Service" under the Plan.
(iv) Any Lathrop Participant who retires or otherwise terminates
employment (other than by death) after attainment of age 60 and completion
of at least five Years of Service shall be eligible for an early
Retirement Allowance under the Plan.
(v) Any Lathrop Participant who retires or otherwise terminates
employment (other than by death) after completion of at least 10 Years of
Service but prior to age 60 shall be eligible to have a deferred vested
Retirement Allowance under Section 4.4 of the Plan commence on the first
day of any month after his 60th birthday and on or before Normal
Retirement Date.
(vi) Any Lathrop Participant who retires between ages 60 and 65 may
elect to have the portion of his accrued benefit under clause (i) above
payable in the form of an actuarially equivalent Social Security Leveling
Option (with the remaining portion, under clause (ii) above, to be payable
in the form of Option 1, which is a straight life annuity). Under the
Social Security Leveling Option, the Participant's payments (under clause
(i) above) before commencement of his Social Security benefit are larger
than the payments (under clause (i) above) hereafter, so that the total
income (under clause (i) above) is approximately level. The actuarial
factors used to make such adjustment shall be a 7% rate of interest and
the 1951 Group Annuity Mortality Table with projection to 1966.
D-1
<PAGE> 42
(vii) The amount payable (with respect to all amounts accrued under
the Plan, including clause (i) and clause (ii) above) under any optional
form of benefit to any Lathrop Participant may not be less than the
actuarial equivalent of his accrued benefit under clause (i) above, based
on a 7% rate of interest and the 1951 Group Annuity Mortality Table with
projection to 1966.
7. Any Lathrop Participant who, because of prior retirement or other
termination of employment or any other reason is not an Employee on December 31,
1988 shall be entitled to benefits under the Plan in respect of his prior
service which shall be determined in all respects in accordance with the terms
of the Lathrop Plan as in effect immediately prior to December 31, 1988.
8. Where applicable, any election made under the Lathrop Plan shall
be considered an election under the comparable provisions of the Plan.
9. Effective December 31, 1988, all assets and liabilities of the
Lathrop Plan shall become assets and liabilities of the Plan.
D-2
<PAGE> 43
Appendix E
Schedule of Members who are not eligible for a retirement benefit
under Section 16:
J. Hunt Benoist
John H. Greenip
Harvey L. Hirst
Howard R. Corry
William E. McEnerney
Andrew C. Miller
Thomas B. Gerlach
E-1
<PAGE> 44
APPENDIX F
SUPPLEMENTAL RETIREMENT BENEFIT
<TABLE>
<CAPTION>
SOCIAL MONTHLY SUPPLEMENTAL
SECURITY NUMBER NAME RETIREMENT BENEFIT
- --------------- ---- ------------------
<S> <C> <C>
###-##-#### ANIBAL, FRED R. 748.81
###-##-#### BACHERT, HARRY J. 72.04
###-##-#### BARANSKI, RITA 89.73
###-##-#### BARRETT, ELIZABETH A. 24.10
###-##-#### BASIUS, F. L. 2,252.55
###-##-#### BAUER, G. B. 116.85
###-##-#### BECK, RALPH 2,825.00
###-##-#### BELARSKI, BARBARA J. 28.76
###-##-#### BERTKE, ROBERT J. 528.53
###-##-#### BEYER, DONALD A. 407.20
###-##-#### BOOTH, F. W. 1,818.37
###-##-#### BREED, JOHN M. 103.15
###-##-#### CANAVAN, W. F. 190.27
###-##-#### CANTWELL, LEWIS M. 141.49
###-##-#### CAPLAN, FLOYD 133.13
###-##-#### CHAPMAN, JOHN H. 221.20
###-##-#### CHOHLIS, ELLEN N. 36.78
###-##-#### CLARK, RON S. 423.66
###-##-#### CLARKE, R. S. 109.91
###-##-#### CONWAY, A. J. 126.69
</TABLE>
F-1
<PAGE> 45
<TABLE>
<CAPTION>
SOCIAL MONTHLY SUPPLEMENTAL
SECURITY NUMBER NAME RETIREMENT BENEFIT
- --------------- ---- ------------------
<S> <C> <C>
###-##-#### COOPER, THOMAS M. 1,504.64
###-##-#### CORCORAN, PETER J. 409.56
###-##-#### DAMIAO, ELENA M. 42.73
###-##-#### DANTCHIK, SANDRA 32.45
###-##-#### DAVIS, P. E. 372.82
###-##-#### DEMAIO, PHYLLIS V. $ 35.08
###-##-#### DENMAN, D. E. 2,235.06
###-##-#### DIPERNA, JOHN S. 549.72
###-##-#### DIPPOLD, ALINE V. 285.67
###-##-#### DITOMAS, E. E. 1,184.09
###-##-#### DOYLE, R. W. 162.97
###-##-#### DUCHARME, JOSEPH M. 285.18
###-##-#### DUFFY, OWEN J. 292.13
###-##-#### DWYER, JOANN C. 35.85
###-##-#### ENGELBERTH, THEODORE E. 543.70
###-##-#### ENNIS, JAMES R. 353.19
###-##-#### ESAU, RICHARD H. 98.15
900-00-0014 ETHERINGTON, DAVID F. 289.56
###-##-#### FARIELLO, D. J. 63.09
###-##-#### FASOLD, R. B. 130.58
###-##-#### FEE, R. E. 2,977.60
###-##-#### FOLSOM, RICHARD W. 637.79
</TABLE>
F-2
<PAGE> 46
<TABLE>
<CAPTION>
SOCIAL MONTHLY SUPPLEMENTAL
SECURITY NUMBER NAME RETIREMENT BENEFIT
- --------------- ---- ------------------
<S> <C> <C>
###-##-#### FRONTAIN, ANDRE G. 627.59
###-##-#### GENTRY, JIM C. 407.50
###-##-#### GREENIP, J. H. 411.79
###-##-#### GREENWOOD, JACK R. 131.85
###-##-#### HARDT, W. F. 378.42
###-##-#### HARP, LUCILLE GRACE 132.23
###-##-#### HAVEN, KATHERINE 17.02
###-##-#### HIRST, H. L. 1,100.00
###-##-#### HOFFMAN, CLARENCE G. 21.05
###-##-#### HOFFMAN, WILLIAM T. 2.02
###-##-#### HOFFMANN, E. F. $ 149.36
###-##-#### HORN, N. G. 1,739.18
###-##-#### HOYT, R. M. 484.96
###-##-#### HUBBARD, R. M. 583.65
###-##-#### HUBBARD, THOMAS N. 64.15
###-##-#### HUTH, GERALD S. 20.52
###-##-#### IVORY, BRYAN 844.80
###-##-#### JAMES, PAMELA M. 11.78
###-##-#### JANCEK, E. P. 945.06
###-##-#### JARBOE, R. W. 456.38
###-##-#### JOHNSON, OTIS 256.35
###-##-#### JOHNSON, RALPH W. 2,537.50
</TABLE>
F-3
<PAGE> 47
<TABLE>
<CAPTION>
SOCIAL MONTHLY SUPPLEMENTAL
SECURITY NUMBER NAME RETIREMENT BENEFIT
- --------------- ---- ------------------
<S> <C> <C>
###-##-#### JONES, FREDERIC J. 71.42
###-##-#### JONES, T. W. 608.73
###-##-#### KELLIS, WILLIAM F. 189.11
###-##-#### KEMP, JAMES C. 360.00
###-##-#### KENNEDY, PAUL J. 10.91
###-##-#### KERSTETTER, D. R. 3,099.30
###-##-#### KESTING, JAMES B. 66.97
###-##-#### KIDNEY, R. H. 2,420.54
###-##-#### KNIGHT, GERALD D. 409.61
###-##-#### KOLBE, HERMAN C. 2,037.98
###-##-#### KUESHNER, ANDREW A. 72.67
###-##-#### KUYPER, PIETER G. 78.42
###-##-#### LAWRENCE, ANTHONY P. 86.96
###-##-#### LODGE, GEORGE D. 870.03
###-##-#### LOHRE, TERRY J. 129.69
###-##-#### LOMBARDO, SAMUEL 2.90
###-##-#### LOVEQUIST, G. P. $ 125.75
###-##-#### LYNAM, PAUL D. 2,133.59
###-##-#### LYNCH, E. A. 410.34
###-##-#### MACTAGUE, DELIA B. 71.46
###-##-#### MARSHALL, MARGARET D. 209.74
900-00-0017 MARTIN, ROGER 27.53
</TABLE>
F-4
<PAGE> 48
<TABLE>
<CAPTION>
SOCIAL MONTHLY SUPPLEMENTAL
SECURITY NUMBER NAME RETIREMENT BENEFIT
- --------------- ---- ------------------
<S> <C> <C>
###-##-#### MASNER, DONN F. 74.91
###-##-#### MCALLISTER, ROBERT J. 243.46
###-##-#### MCBRIDE, R. G. 395.15
###-##-#### MCCARROLL, LORRAINE J. 78.68
###-##-#### MCCOOEY, E. D. 458.99
###-##-#### MCCULLOUGH, J. A. 2,979.14
###-##-#### MCCUNE, HOWARD G. 190.47
###-##-#### MCENERNEY, W. E. 148.51
###-##-#### MCLAUGHLIN, GERTRUDE F. 251.74
###-##-#### MCNEILL, ALFRED T. 3,475.00
###-##-#### MEYER, D. L. 395.62
###-##-#### MICKS, PATRICK J. 83.95
###-##-#### MILLER, C. A. 833.06
###-##-#### MOODY, WILLIAM 27.30
###-##-#### MOORE, PRISCILLA M. 54.39
###-##-#### MYERS, IRVING A. 114.72
###-##-#### NEWTON, B. J. 1,007.51
###-##-#### NOTEMYER, JOHN F. 1,274.71
###-##-#### ODACHOWSKI, JOHN A. 119.15
###-##-#### OLSAVICK, BERNARD J. 231.28
###-##-#### ORTLIEB, J. R. 1,122.80
###-##-#### O'CONNOR, MICHAEL V. 322.78
</TABLE>
F-5
<PAGE> 49
<TABLE>
<CAPTION>
SOCIAL MONTHLY SUPPLEMENTAL
SECURITY NUMBER NAME RETIREMENT BENEFIT
- --------------- ---- ------------------
<S> <C> <C>
###-##-#### O'REILLY, G. R. $ 2,081.80
###-##-#### O'ROURKE, VIRGINIA R. 52.43
###-##-#### O'TOOLE, MARGARET M. 18.76
###-##-#### PARMELEE, H. J. 3,475.00
###-##-#### PASTORE, PHILLIP R. 236.21
###-##-#### PFLUGER, PENELOPE 118.24
###-##-#### PHILLIPS, G. E. 164.73
###-##-#### PIAZZA, ANTHONY 145.10
###-##-#### PITT, A. G. 514.76
###-##-#### PRANN, ROBERT S. 36.42
###-##-#### QUINN, J. D. 394.41
###-##-#### REAVES, W. S. 1,199.30
###-##-#### REBOSIO, G. D. 573.48
###-##-#### REGENOLD, W. R. 507.91
###-##-#### RICHARDS, JACK A. 7.90
###-##-#### ROBERTSON, J. A. 142.91
###-##-#### ROSS, ROBERT P. 279.44
###-##-#### ROTH, Y. M. 2,625.00
###-##-#### ROWLAND, G. C. 572.12
###-##-#### ROYAL, CLAUDE WILFRED 153.45
###-##-#### SABIN, RITA A. 12.89
###-##-#### SANCHEZ, A. P. 2,754.26
</TABLE>
F-6
<PAGE> 50
<TABLE>
<CAPTION>
SOCIAL MONTHLY SUPPLEMENTAL
SECURITY NUMBER NAME RETIREMENT BENEFIT
- --------------- ---- ------------------
<S> <C> <C>
###-##-#### SANTANGELO, F. J. 261.01
###-##-#### SAWYER, REGINA T. 253.54
###-##-#### SCRIVNER, D. G. 775.38
###-##-#### SCROPOS, TED $ 40.85
###-##-#### SEDLAR, R. J. 345.36
###-##-#### SHARPE, HELEN S. 7.17
###-##-#### SHIVELY, R. E. 244.16
###-##-#### SHUMAKER, WILLIAM A. 34.97
###-##-#### SIBSON, D. B. 3,075.00
###-##-#### SIGMAN, WAYNE S. 24.69
###-##-#### SIMMS, W. FRANK 112.40
###-##-#### SIMONFAY, S. 1,102.10
###-##-#### SIRECI, G. EDWARD 332.80
###-##-#### SLEETH, L. W. 368.09
###-##-#### SMITH, ALEXANDER 321.44
###-##-#### SMITH, J. H. 551.23
###-##-#### SMITH, STANLEY S. 70.41
###-##-#### STICKLEY, HELEN M. 48.31
###-##-#### STRACESKI, CHARLENE A. 190.93
###-##-#### SUN, ING-SHAN 37.84
900-00-0030 TAYLOR, LANCE H. 121.16
###-##-#### THOMAS, F. H. 992.07
</TABLE>
F-7
<PAGE> 51
<TABLE>
<CAPTION>
SOCIAL MONTHLY SUPPLEMENTAL
SECURITY NUMBER NAME RETIREMENT BENEFIT
- --------------- ---- ------------------
<S> <C> <C>
###-##-#### TILKE, G. J. 648.01
###-##-#### TURNIER, J. R. 197.79
###-##-#### VICENS, LUCAS C. 46.02
###-##-#### VITAL, FRANK 198.87
###-##-#### WAHLBERG, ALLEN H. 2,556.03
###-##-#### WALTER, KURT G. 176.40
###-##-#### WANG, TONY T. 51.53
###-##-#### WEISS, DAVID 72.57
###-##-#### WENDLEK, RICHARD M. 69.60
###-##-#### WHITE, BARBARA $ 30.83
###-##-#### WHITE, G. H. 109.02
###-##-#### WILCOX, L. C. 246.27
###-##-#### WILLIAMS, C. W. 22.85
###-##-#### WONG, KENNETH C. 24.77
###-##-#### ZEPKA, VARSEN 15.60
</TABLE>
F-8
<PAGE> 52
APPENDIX G
Special Provisions Establishing a
Health Benefits Account and
Governing Certain Transfers to Such Account
1. Effective as of January 1, 1994, there is hereby established as a
part of the Plan a health benefits account (the "Health Benefits Account").
Effective as of January 1, 1994, the Health Benefits Account shall be
responsible for the payment of all Qualified Current Retiree Health Liabilities
of the Company on or after such date, except to the extent (i) the Company makes
or elects to make (A) such payment directly or (B) other alternative
arrangements for such payment, and (ii) the Company does not seek reimbursement
from the Health Benefits Account therefor. For purposes of this Appendix G,
payment of a Qualified Current Retiree Health Liability shall include (i) direct
payment and (ii) reimbursement to the Company for its, and to an employee or
former employee or spouse or dependent thereof for his or her, prior payment.
2. The Company may direct that, once in any Transfer Year, an amount
not in excess of the Excess Pension Assets be transferred to the Health Benefits
Account; provided that, to the extent required by Section 420(b)(3) of the Code,
no such Transfer shall exceed the amount reasonably estimated to be the amount
that will be paid from the Health Benefits Account during the applicable
Transfer Year for Qualified Current Retiree Health Liabilities that are with
respect to the applicable Liability Determination Year. Each Transfer (and any
income thereon) shall be used in its entirety in accordance with paragraph 7 of
this Appendix G to pay Qualified Current Retiree Health Liabilities that are
with respect to the applicable Liability Determination Year. To the extent
required by Section 420(d)(2) of the Code, the Company shall not make any
contributions to a "health benefits account," as defined in Section 420(e)(3) of
the Code, or to a "welfare benefit fund," as defined in Section 419(e)(1) of the
Code, with respect to any Qualified Current Retiree Health Liabilities with
respect to which a Transfer is made.
3. If, notwithstanding paragraph 2 of this Appendix G, any portion
of a Transfer (and income allocable thereto) is not used as provided by the
second sentence thereof, such portion shall be returned by the Health Benefits
Account to the remainder of the Plan.
4. The provisions of this paragraph shall apply to the establishment
and maintenance of the Health Benefits Account:
(a) All Transfers shall be credited to a separate account which shall be
maintained under the Plan solely for recordkeeping purposes (the "Separate
Account"). All funds accounted for in the Separate Account may, but need
not be, invested together with any or all other assets of the Plan.
(b) Plan assets attributable to the Health Benefits Account may not be
used for, or diverted to, any other purpose (including the payment of
pension benefits) prior to the satisfaction of all liabilities under this
Appendix G to provide for the payment of Qualified Current Retiree Health
Liabilities. Except as may otherwise be provided by paragraph 3 of this
Appendix G, any amounts remaining in the Health Benefits Account upon the
satisfaction of all obligations arising out of the operation of the Health
Benefits Account shall be returned to the Company.
(c) All reasonable expenses incurred in connection with the Health
Benefits Account shall be paid by the Plan to the extent directed by the
Committee, except to the extent paid by the Company. In the event of such
a direction by the Committee, expenses shall be allocated to the Health
Benefits Account or to the remainder of the Plan as determined by the
Committee taking into account such legal rules as it deems necessary or
appropriate; provided that, without limitation, expenses arising in
connection with determining Excess Pension Assets and Qualified Current
Retiree Health Liabilities, and thereby in connection with determining,
consistently with the tax-qualified status of the Plan, the amount that
may be the subject of a Transfer from the portion of the Plan not
comprising the Health Benefits Account, shall be paid by the Plan other
than from the Health Benefits Account, except to the extent paid by the
Company.
G-1
<PAGE> 53
(d) To the extent required by Section 1.401-14(c)(6) of the Treasury
Regulations (taking into account Section 420 of the Code where
applicable), in the event an individual's interest (if any) in the Health
Benefits Account is forfeited prior to the termination of the Plan, an
amount equal to the amount of such forfeiture shall be applied as soon as
practicable thereafter to reduce Company contributions and Transfers to
fund Qualified Current Retiree Health Liabilities.
(e) No payment of Qualified Current Retiree Health Liabilities shall be
made with respect to any liability that (i) does not arise in connection
with "retired employees, their spouses, or their dependents," within the
meaning of Section 1.401-14(b)(1) of the Treasury Regulations, unless
permitted by Section 420(a)(1) of the Code, or (ii) that arises in
connection with an individual who is a "key employee" for purposes of
Section 401(h)(6) of the Code or a spouse or dependent of such a "key
employee," unless a separate account is established and maintained to the
extent required by Section 401(h)(6) of the Code (taking into account
Section 420(a)(1) of the Code).
5. Section 420(c)(3) of the Code shall be satisfied with respect to
each Transfer.
6. The following definitions shall apply for purposes of this
Appendix G:
"Affected Employee" means, with respect to any Transfer, an individual who
is an employee on such Transfer Date and a former employee who was an
employee at any time during the one-year period ending on such Transfer
Date.
"Excess Pension Assets" means the excess, if any, of (i) the amount
determined with respect to the Plan under Section 412(c)(7)(A)(ii) of the
Code over (ii) the greater of (A) the amount determined with respect to
the Plan under Section 412(c)(7)(A)(i) of the Code or (B) 125% of the
Plan's "current liability," as defined in Section 412(c)(7)(B) of the
Code. With respect to each Transfer, the determination under the foregoing
sentence shall be made as of the most recent valuation date of the Plan
preceding the Transfer.
"Key Employee" means "key employee," as defined in section 416(i)(1) of
the Code.
"Liability Determination Year" shall mean, with respect to any Transfer,
the applicable Transfer Year.
"Qualified Current Retiree Health Liabilities" means "qualified current
retiree health liabilities," as defined in Section 420(e)(1)(A) of the
Code, other than liabilities of Key Employees not taken into account under
Section 420(e)(1)(D) of the Code, which "qualified current retiree health
liabilities" arise under or otherwise in connection with the welfare plans
maintained from time to time by the Company. Notwithstanding the
foregoing, Qualified Current Retiree Health Liabilities with respect to
any Liability Determination Year shall be reduced by any amount previously
contributed by the Company to a "health benefits account," as defined in
Section 420(e)(3) of the Code, or to a "welfare benefit fund," as defined
in Section 419(e)(1) of the Code, with respect to amounts that would,
without regard to this sentence, be Qualified Current Retiree Health
Liabilities with respect to such Liability Determination Year.
"Transfer" means a transfer described in paragraph 2 of this Appendix G.
"Transfer Date" means, with respect to any Transfer, the date of such
Transfer.
"Transfer Year" means any of calendar 1994 and 1995, and each such other
year as may in the future be permitted under Section 420 of the Code.
7. Each Transfer (and any income thereon) shall be used in its
entirety to pay Qualified Current Retiree Health Liabilities that are with
respect to the applicable Liability Determination Year (i) with or within, or as
soon as administratively practicable after, the applicable Transfer Year, or, if
later, (ii) as soon as administratively practicable after the receipt of an
acceptable favorable determination from the Internal Revenue Service to the
effect that this Appendix G does not adversely affect the tax-qualified status
of the Plan under Section 401(a) if the Code.
G-2
<PAGE> 54
8. Nothing in this Appendix G shall be construed to, or does,
prevent or otherwise restrict the amendment or termination of, without
limitation, the Plan, the Health Benefits Account or any welfare plan.
G-3
<PAGE> 55
Exhibit 10(c)(xi)
EXHIBIT A
AMENDMENTS TO THE
EMPLOYEE' CASH BALANCE RETIREMENT PLAN OF THE TURNER CORPORATION
1. Article 1 is amended effective June 1, 1998 by adding the following
paragraphs at the end thereof:
"1.39 IRS Interest Rate shall mean the annual rate of interest on 30-year
Treasury Securities, as specified by the Commissioner of Internal Revenue
for the second full calendar month preceding the applicable Stability
Period.
1.40 IRS Mortality Table shall mean the mortality table prescribed by the
Secretary of the Treasury under Code Section 417(e)(3)(A)(ii)(l) as in
effect on the first day of the applicable Stability Period.
1.41 Stability Period shall mean the Plan Year in which occurs the Benefit
Commencement Date for the distribution."
2. Section 4.7(c) is amended effective June 1, 1998 by deleting it in its
entirety and substituting the following:
"Notwithstanding any provision of the Plan to the contrary, for
distributions the payment of which has commenced prior to June 1, 1998, if
the Equivalent Actuarial Value of the Retirement Allowance payable to any
Member (commencing on the earliest Benefit Commencement Date permitted
under the Plan and as determined subject to Section B.3 of Appendix B)
does not exceed $3,500 on the date of his retirement or other termination
of employment, the Committee shall provide that
<PAGE> 56
Page 2
the Member shall receive his Retirement Allowance in the form of a
lump-sum payment as of such date. For distributions the payment of which
has not commenced prior to June 1, 1998, if the Equivalent Actuarial Value
of the Retirement Allowance payable to any Member (commencing on the
earliest Benefit Commencement Date permitted under the Plan and as
determined subject to Section B.3 of Appendix B) does not exceed $5,000 on
the date of his retirement or other termination of employment, the
Committee shall provide that the Member shall receive his Retirement
Allowance in the form of a lump-sum payment as of the later of June 1,
1998 or such date.
3. Section 4.8(e) is amended effective June 1, 1998 by deleting it in its
entirety and substituting the following:
"Notwithstanding the foregoing, for allowances the payment of which has
commenced prior to June 1, 1998, if the Equivalent Actuarial Value of the
allowance payable to any surviving spouse under this Section 4.B does not
exceed $3,500 on the date of the Member's death, the Committee shall
provide that such surviving spouse shall receive such allowance in the
form of a lump-sum payment as of such date. For allowances the payment of
which has not commenced prior to June 1, 1998, if the Equivalent Actuarial
Value of the allowance payable to such a surviving spouse under this
Section 4.8 does not exceed $5,000 on the date of the Member's death, the
Committee shall provide that such surviving spouse shall receive such
allowance in the form of a lump-sum payment as of the later of June 1,
1998 or such date."
<PAGE> 57
Page 3
4. Section B.3 of Appendix B is amended effective June 1, 1998 by deleting it
in its entirety and substituting the following:
Lump Sum Payment. For distributions commencing prior to June 1, 1998, with
respect to any Old Plan Benefit, the amount of any lump-sum payment
calculated under Section 4.7(c), Section 4.8(e), or Section 9 shall equal
the lump-sum value of the allowance that would be payable under Option 1
commencing on the Member's Normal Retirement Date (or the date of his
actual retirement, if later) with such lump-sum value to be based on the
1979 George B. Buck Mortality Table for Males rated back one year and the
interest rates used by the Pension Benefit Guaranty Corporation for the
purpose of valuing lump sums under terminating single employer pension
plans on January 1 of the calendar year in which the benefits are first
payable. For distributions commencing on or after June 1, 1998, the
lump-sum value of any distribution calculated pursuant to the preceding
sentence shall be based on the IRS Interest Rate and the IRS Mortality
Table. The interest rate assumptions set forth in the preceding sentence
shall also apply for purposes of determining the amount of any death
benefit payable in a lump sum under Option 5 of Section 4.7(a). The amount
of any lump-sum payment of a Member's Cash Balance Benefit shall be equal
to the amount of the Member's Cash Balance Account."
5. Section B.5 of Appendix B is amended effective June 1, 1998 by adding the
phrase
"(Effective For Distributions Commencing Prior to June 1, 1998)" after the
heading
<PAGE> 58
Page 4
"ACTUARIAL EQUIVALENT FACTORS FOR ADJUSTMENTS OF MAXIMUM BENEFITS" and
inserting the following paragraph at the end of the Section:
"For distributions commencing on or after June 1, 1998, the maximum
benefit that may be paid commencing at any age shall be of Equivalent
Actuarial Value to the maximum benefit payable to the Member at the
Member's Social Security Retirement Age based on the IRS Interest Rate and
IRS Mortality Table."
6. Section B.6 of Appendix B is amended effective June 1, 1998 by deleting it
in its entirety and substituting the following:
"Actuarial Equivalent of Cash Balance Accounts. For purposes of
determining the amount of Cash Balance Benefits the earliest Benefit
Commencement Date of which is prior to June 1, 1998, the actuarial factors
used shall be the 1989 Buck Mortality Table weighted 80% for males and 20%
for females and the interest rates used by the Pension Benefit Guaranty
Corporation for purposes of valuing lump sums under terminating single
employer pension plans on January 1 of the calendar year in which the Cash
Balance Benefits are first payable. For purposes of determining the amount
of Cash Balance Benefits the earliest Benefit Commencement Date of which
is on or after June 1, 1998, the actuarial factors used shall be the IRS
Interest Rate and the IRS Mortality Table."
<PAGE> 59
Third Amendment to the
Employees' Cash Balance Retirement Plan of The Turner Corporation
Effective June 1, 1998, the Employees' Gash Balance Retirement Plan of The
Turner Corporation (Amended and Restated as of January 1, 1994) (the "Plan") is
amended, as follows:
1. Section 3.1 is deleted and replaced with the following Sections 3.1 and
3.2:
"3.1 In the case of an Employee who is credited with at least one Hour of
Service in a Plan Year beginning on or after January 1, 1988, service
credited under the Plan shall include all full calendar months of
employment as an Employee without regard to the Employee's Normal
Retirement Date. For purposes of benefit computation, the years of
Credited Service of a full time Employee shall be the n amber of whole
years, and fractions thereof, equal to one-twelfth of the number of full
calendar months of his Credited Service."
"3.2 Notwithstanding the foregoing Section 3.1, effective September 1,
1993, with respect to (and only with respect to) Employees with an Hour of
Service on or after such date, the Credited Service of a Member who was a
foreman for the Company prior to becoming a Member and who terminates
service with the Company on or after such date, shall include service
which (i) would have been credited but for the Employee's prior coverage
by a collective bargaining agreement that does not provide for
participation in the Plan and (ii) was taken into account under another
retirement plan or plans maintained by the Company which provided for the
participation of employees covered by a collective bargaining agreement
(each, a "Predecessor Union Plan"); provided, however, that
notwithstanding any other provision of the Plan, the Accrued Benefit of
such a Member shall be reduced by the benefits accrued under any
Predecessor Union Plan which are attributable to service that is counted
as Credited Service. The Credited Service of a Member as determined
pursuant to this Section 3.2 shall apply only to the calculation of such
Member's Old Plan Benefit (if any) under Section 4. l(b) and percentage
under Section 4. l(c)(ii) (if any); and provided, further, however, that,
notwithstanding any provision of the Plan to the contrary, in no event
shall any Member to whom this Section 3.2 applies receive retroactive
crediting of any amount to his Cash Balance Account for service prior to
becoming a Member."
<PAGE> 60
2. Sections 3.2 and 3.3 (as in effect prior to this amendment) are renumbered
as Sections 3.3 and 3.4.
IN WITNESS WHEREOF, the Board of Directors has caused the foregoing
amendment to the Plan to be executed by its duly authorized representative,
effective as of June 1, 1998.
-------------------------
Name:
-------------------------
Witness:
-------------------------
Title:
<PAGE> 61
Exhibit 10(c)(xi)
EXHIBIT A
Amendments To The
Employees' Cash Balance Retirement Plan
Of The Turner Corporation
1. Article 12 is amended effective July 1, 1998 by changing the title to
read:
"Employment with Affiliates, Joint Ventures, Foreign Subsidiaries,
Predecessors and In a Capacity Other Than an Employee; Leaves of Absence;
Leased Employees; Prior Employment With Acquired Companies"
2. Article 12 is further amended effective July 1, 1998 by adding the
following paragraph at the end thereof:
"12.8 Notwithstanding any provision of the Plan to the contrary, any
period of employment with Auburndale Co., Inc., H.W. Pearce, Incorporated
(or any subsidiary of H.W. Pearce, Incorporated), Lacona, Inc., On-Site
Project Management, Inc., Service Products Buildings, Inc., or The Lathrop
Company, Inc., (collectively referred to as "the Acquired Companies") by a
person who became a Member immediately following the acquisition of any of
the Acquired Companies by the Company shall be treated as Credited Service
for purposes of determining the Member's Cash Balance Benefits. In
addition, any such previous employment with the Acquired Companies shall
be considered when determining whether the Member has an Hour of Service
credited before April 1, 1991 for purposes of calculating the pay-based
credit under Section 4.1(c). In no event shall this Section 12.8 be
construed to require or permit any Member to receive an Old Plan Benefit."
3. The second sentence of the second paragraph of Section 13.8 is amended
effective July 1, 1998 by deleting it in its entirety and substituting the
following:
"Except as provided in Section 12.8, in accordance with the Universal
Plan, in the case of an Employee who is a Member in the Universal Plan at
the time such Plan is merged into this Plan and who was a Member in the
Universal Plan on January 1, 1983, any period prior to January 1, 1983
during which such Employee was employed by H.W. Pearce, Incorporated or
any subsidiary of H.W. Pearce, Incorporated shall be treated as employment
as an Employee hereunder for purposes of determining such Member's years
of Credited Service, except that in no event shall any Credited Service be
given for periods prior to July 1, 1976."
<PAGE> 62
4. Appendix F is amended effective July 1, 1998 by inserting in alphabetical
order the following Supplemental Retirement Benefits for the individuals
listed below:
<TABLE>
<CAPTION>
Monthly Supplemental
Social Security Number Name Retirement Benefit
- ---------------------- ---- ------------------
<S> <C> <C>
###-##-#### Kenneth K. Butler $3,425.00
###-##-#### Jack D. Colboth 3,450.00
###-##-#### William M. Kershner 1,172.76
###-##-#### Robert J. Kuebler 2,019.00
###-##-#### Robert L. Maxwell 3,962.50
099-28- 1470 James H. Newman 674.63
###-##-#### Robert C. Riddle 1,041.39
###-##-#### Robert J. Steele 759.92
###-##-#### Harold E. Stewart 520.55
###-##-#### William O. Terry, Jr. 1,725.14
</TABLE>
<PAGE> 63
EXHIBIT B
Amendments To The
Supplemental Executive Defined Benefit Retirement Plan
Of The Turner Corporation
1. The Appendix is amended effective July 1, 1998 by inserting in
alphabetical order the following Supplemental Retirement Benefits for the
individuals listed below:
<TABLE>
<CAPTION>
Monthly Supplemental
Social Security Number Name Retirement Benefit
- ---------------------- ---- ------------------
<S> <C> <C>
###-##-#### Kenneth K. Butler $ 977.52
###-##-#### Jack D. Colboth 361.40
###-##-#### Robert L. Maxwell 1,508.31
</TABLE>
<PAGE> 1
Exhibit 10(d)(i)
LIMITED LIABILITY COMPANY AGREEMENT
OF
TURNER STEINER INTERNATIONAL, LLC
A Delaware Limited Liability Company
Dated as of December 22, 1997
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ................................................2
ARTICLE II FORMATION; NAME AND PLACE OF BUSINESS......................5
2.1. Formation of the Company; Certificate of Formation..........5
2.2. Name of the Company.........................................6
2.3. Principal Place of Business.................................6
2.4. Registered Agent and Office.................................6
ARTICLE III PURPOSES AND POWERS OF THE COMPANY........................6
3.1. Purposes....................................................6
3.2. Powers......................................................7
3.3. Modification of Purpose.....................................8
ARTICLE IV TERM AND TERMINATION OF THE COMPANY........................8
ARTICLE V CAPITAL; MEMBERSHIP INTEREST UNITS..........................8
5.1. Capital Contributions of the Members........................8
5.2. Capital Accounts............................................8
5.3. Membership Interest Units...................................9
5.4. Return of Capital..........................................10
ARTICLE VI ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS..........10
6.1. Allocation of Net Profit or Net Loss.......................10
6.2. Distributions..............................................10
ARTICLE VII MEMBERS AND MANAGEMENT...................................11
7.1. Members....................................................11
7.2. Rights and Duties of Members...............................11
7.3. Board of Managers..........................................13
7.4. Daily Management...........................................14
7.5. Representation of the Company..............................15
7.6. Liability to Third Parties.................................15
7.7. Indemnification of the Members, Managers, Officers and
any Affiliates..........................................15
<PAGE> 3
ARTICLE VIII FINANCIAL AND TAX MATTERS..............................17
8.1. Bank Accounts..............................................17
8.2. Books and Records..........................................17
8.3. Financial Statements and Information.......................18
8.4. Accounting Decisions.......................................18
8.5. Where Maintained...........................................18
8.6. Tax Matters................................................18
8.7. Fiscal Year................................................19
ARTICLE IX TRANSFER OF MEMBERSHIP INTEREST UNITS AND
SUBSTITUTION OR WITHDRAWAL OF MEMBERS................20
9.1. Transfers of Membership Interest Units.....................20
9.2. Transfers to Subsidiaries..................................20
9.3. Substituted Members........................................20
9.4. Additional Members.........................................21
9.5. Withdrawal of a Member.....................................21
ARTICLE X DISSOLUTION AND LIQUIDATION................................22
10.1. Events Causing Dissolution................................22
10.2. Cancellation of Certificate...............................24
10.3. Distributions Upon Dissolution............................24
10.4. Reasonable Time for Winding Up............................24
ARTICLE XI BEST EFFORTS OF THE MEMBERS...............................25
ARTICLE XII AGREEMENTS NOT TO COMPETE WITH THE COMPANY...............25
12.1. Agreement by Turner not to Compete........................25
12.2. Agreement by Steiner not to Compete.......................25
ARTICLE XIII TRANSFER OF TURNER ACTIVITIES IN SOUTH AMERICA..........26
ARTICLE XIV MISCELLANEOUS PROVISIONS.................................26
14.1. Compliance with Delaware LLC Act..........................26
14.2. Additional Actions and Documents..........................27
14.3. Notices...................................................27
14.4. Severability..............................................27
(ii)
<PAGE> 4
14.5. Exercise of Rights and Waiver.............................28
14.6. Successors and Assigns....................................28
14.7. Limitation on Benefits of this Agreement..................28
14.8. Amendment Procedure.......................................29
14.9. Entire Agreement..........................................29
14.10. Captions and Headings....................................29
14.11. Governing Law............................................29
14.12. Arbitration..............................................30
14.13. Expenses.................................................30
14.14. Execution in Counterparts................................31
(iii)
<PAGE> 5
LIMITED LIABILITY COMPANY AGREEMENT
OF
TURNER STEINER INTERNATIONAL, LLC
This LIMITED LIABILITY COMPANY AGREEMENT ("Agreement") is made and entered
into as of this _____ day of December, 1997, by and between
THE TURNER CORPORATION, a corporation organized under the laws of the
State of Delaware ("Turner"), and
KARL STEINER HOLDING AG, a corporation incorporated under the laws of
Switzerland ("Steiner"),
for the purpose of forming a limited liability company (the "Company")
pursuant to the provisions of the Delaware Limited Liability Company Act, 6 Del.
C. ss. ss. 18-101 et seq. (the "Delaware LLC Act").
Turner and Steiner and any other individuals and/or business entities
subsequently admitted as a member as hereinafter provided shall be known as and
referred to as "Members" and individually, as a "Member".
RECITALS
WHEREAS, Turner and Steiner are parties to a Joint Venture and
Shareholders Agreement dated June 3, 1992, regarding the operation of a joint
venture company known as Turner Steiner International SA, a corporation
organized under the laws of Belgium ("TSI"), owned jointly by Turner and
Steiner, with each holding 50% of the outstanding shares of TSI; and
WHEREAS, Turner and Steiner have determined that it is desirable at this
time to reorganize TSI as a limited liability company organized and existing
under the laws of the State of Delaware; and
WHEREAS, the Members have formed a limited liability company under the
name of "Turner Steiner International, LLC", pursuant to a Certificate of
Formation (the "Certificate") filed on November 5, 1997 with the Secretary of
State of the State of Delaware pursuant to and in conformity with the provisions
of the Delaware LLC Act;
NOW, THEREFORE, in consideration of the foregoing and of the covenants and
agreements hereinafter set forth, it is hereby agreed as follows:
<PAGE> 6
ARTICLE I
DEFINITIONS
Unless the context otherwise specifies or requires, capitalized terms used
herein shall have the respective meanings assigned hereto for all purposes of
this Agreement (such definitions to be equally applicable to both the singular
and the plural forms of the terms defined). Unless otherwise specified, all
references herein to Articles or Sections are to Articles or Sections of this
Agreement.
Affiliate: (a) Any Person directly or indirectly owning, controlling, or
holding power to vote ten percent (10%) or more of the outstanding voting
securities of the Person in question; (b) any Person ten percent (10%) or more
of whose outstanding voting securities are directly or indirectly owned,
controlled, or held with power to vote by the Person in question; (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the Person in question; (d) if the Person in question is a corporation, any
executive officer or director of the Person in question or of any corporation
directly or indirectly controlling the Person in question; (e) if the Person in
question is a partnership, any general partner owning or controlling ten percent
(10%) or more of either the capital or profits interest in such partnership; and
(f) if the Person in question is a limited liability company, any member owning
or controlling ten percent (10%) or more of either the capital or profits
interest in such limited liability company. As used in this definition of
"Affiliate," the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
Agreement: This Limited Liability Company Agreement, as it may be further
amended or supplemented from time to time.
Bankrupt: As defined in Section 10.1.
Bankruptcy: As defined in Section 10.1.
Board or the Board of Managers: As defined in Section 7.3.1.
Buyout Price: As defined in Section 9.5(a).
Capital Account: The capital account established and maintained for each
Member.
Capital Contributions: With respect to any Member, the amount of capital
contributed by such Member to the Company in accordance with Article V hereof.
2
<PAGE> 7
Certificate: The Certificate of Formation, and any and all amendments
thereto, filed on behalf of the Company with the Recording Office as required
under the Delaware LLC Act.
Chairman: As defined in Section 7.3.2.
Company: As defined in the preamble to this Agreement.
Company Assets: All assets and property, whether tangible or intangible
and whether real, personal, or mixed, at any time owned by or held for the
benefit of the Company.
Delaware LLC Act: As defined in the preamble to this Agreement.
Election Notice: As defined in Section 9.5(b).
Fair Market Value: With respect to an asset, the fair market value of such
asset (without regard to any liabilities or liens encumbering such asset) as
determined by the Board, and if the Board cannot agree on such determination, by
an independent investment banker selected by the Board.
Federal Bankruptcy Code: Title 11 of the United States Code, as amended.
Fiscal Period: Any period of time beginning (I) on the date first stated
above, or (II) on the first day after the end of any immediately preceding
Fiscal Period, and ending at the close of business on (i) the last day of a
Fiscal Year, (ii) the effective date of withdrawal from the Partnership by any
Partner, (iii) the effective date of any transfer of one or more Membership
Interest Units, (iv) the effective date of any distribution by the Partnership
to any Partner (including any distribution upon complete liquidation of the
Partnership), or (v) the day immediately before the effective date of any
Capital Contribution by any Partner to the Partnership.
Fiscal Year: As defined in Section 8.7.
GAAP: United States generally accepted accounting principles consistently
applied.
ICC Rules: As defined in Section 14.12.
Indemnitee: As defined in Section 7.7.1.
Internal Revenue Code: As defined in Section 5.2(b). Any reference herein
to a specific section or sections of the Internal Revenue Code shall be deemed
to include a
3
<PAGE> 8
reference to the Regulations thereunder, and to any corresponding
provision of future law and to the Regulations thereunder.
Majority in Interest of the Members: Members whose aggregate Percentage
Interests on the relevant date exceed fifty percent of the Percentage Interests
of all Members.
Managers: As defined in Section 7.3.1, the members of the Board of
Managers. Individually, a Manager.
Members: As defined in the preamble to this Agreement, and any person
admitted as an additional or substituted Member pursuant to this Agreement, so
long as any such person remains a Member. Reference to a "Member" means any one
of the Members.
Membership Interest Units: As defined in Section 5.3(a).
Net Profit and Net Loss: For any Fiscal Year (or Fiscal Period) of the
Company, Net Profit and Net Loss shall mean the net income or loss recognized by
the Company for federal income tax purposes during such period, taking into
account all items of income, gain, deduction and loss of the Company, computed
using the accrual method of accounting, and with the following adjustments: (i)
tax exempt income received by the Company shall be treated, for purposes of this
definition only, as gross income, and (ii) expenditures described in section
705(a)(2)(B) of the Internal Revenue Code shall be treated, for purpose of this
definition only, as deductible expenses.
Percentage Interest: As to any Member, that Member's entire interest in
the Company, including, without limitation, such Member's right to a share of
(i) the Company's income, gain, losses and deductions, and (ii) subject to
Section 10.3, the Company Assets, in accordance with this Agreement. The
Percentage Interest of each Member on any date shall be equal to a fraction, the
numerator of which shall be the number of Membership Interest Units held by such
Member on such date, and the denominator of which shall be the total number of
Membership Interest Units outstanding on such date.
Person: Any individual, corporation, association, partnership, limited
liability company, joint venture, trust, estate, or other entity or
organization.
Recording Office: The office of the Secretary of State of the State of
Delaware.
Regulations: As defined in Section 5.2(b). Any reference herein to a
specific section or sections of the Regulations shall be deemed to include a
reference to any corresponding provision of future Regulations.
4
<PAGE> 9
Steiner: As defined in the preamble to this Agreement.
Territory: The entire world, other than North America, Central America,
the Caribbean region, Switzerland, Germany and France.
TMM: As defined in Section 8.6.
transfer: As defined in Section 9.1.
TSI: As defined in the recitals to this Agreement.
Turner: As defined in the preamble to this Agreement.
Withdrawal Notice: As defined in Section 9.5.
Withdrawing Member: As defined in Section 9.5.
ARTICLE II
FORMATION; NAME AND PLACE OF BUSINESS
2.1. Formation of the Company; Certificate of Formation.
The Members of the Company hereby:
(a) acknowledge the formation of the Company by the Members as a limited
liability company pursuant to the Delaware LLC Act by virtue of the filing of
the Certificate with the Recording Office on November 5, 1997;
(b) confirm and agree to their status as Members of the Company;
(c) execute this Agreement for the purpose of continuing the existence of
the Company and establishing the rights, duties, and relationships of the
Members; and
(d) (i) agree that if the laws of any jurisdiction in which the Company
transacts business so require, the Members shall file, with the appropriate
office in that jurisdiction, any documents necessary for the Company to qualify
to transact business under such laws (except where such filing would expose the
Member to personal liability), and (ii) agree and obligate themselves to
execute, acknowledge, and cause to be filed for record, in the place or places
and manner prescribed by law, any amendments to the Certificate as may be
required, either by the Delaware LLC Act or by this Agreement, to reflect
changes in the information contained therein or otherwise to comply with
5
<PAGE> 10
the requirements of law for the continuation, preservation, and operation of the
Company as a limited liability company under the Delaware LLC Act.
2.2. Name of the Company.
The name under which the Company shall conduct its business is "Turner
Steiner International, LLC". The business of the Company may be conducted under
any other name permitted by the Delaware LLC Act that is deemed necessary or
desirable by a Majority in Interest of the Members, in their sole and absolute
discretion. The Members shall promptly execute, file, and record any assumed or
fictitious name certificates required by the laws of the State of Delaware or
any jurisdiction in which the Company conducts business.
2.3. Principal Place of Business.
The principal place of business of the Company shall be 375 Hudson Street,
New York, New York 10014-3667 or such other place as the Members may, from time
to time, select.
2.4. Registered Agent and Office.
The registered agent and office of the Company in the State of Delaware
shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. At any time, the Board
may designate another registered agent and/or registered office of the Company.
ARTICLE III
PURPOSES AND POWERS OF THE COMPANY
3.1. Purposes.
The purpose of the Company shall be to engage in any lawful business that
may be engaged in by a limited liability company organized under the Delaware
LLC Act, as such business activities may be determined by the Members from time
to time.
In particular, the Company has been formed for the purpose of providing
professional services related to the design and construction of buildings and
other structures in the Territory, including, but not limited to, design and
construction
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management, services as a general contractor, project management,
consulting and property development and consulting services.
The Company shall not involve itself in any activities which would
require the Company to make any investment in any property or to undertake any
liabilities or other obligations related to the payment for, or completion of,
any aspect of any building or other structure, unless those liabilities or other
obligations are to be fully reimbursed by an owner or other person financially
able to provide that reimbursement.
3.2. Powers.
The Company shall have the power to do any and all acts and things
necessary, appropriate, advisable, or convenient for the furtherance and
accomplishment of the purposes of the Company, including, without limitation, to
engage in any kind of activity and to enter into and perform obligations of any
kind necessary to or in connection with, or incidental to, the accomplishment of
the purposes of the Company, so long as said activities and obligations may be
lawfully engaged in or performed by a limited liability company under the
Delaware LLC Act.
By way of example and not of limitation, the Company may (subject to the
limitations set forth in Section 3.1):
(a) acquire, lease, let, construct, dispose of or exchange any personal
property, material or equipment, and, in general, engage in all commercial,
industrial and financial activities related directly or indirectly to its
purpose, including any subcontracting in general and the management of
intellectual rights and industrial or commercial property relating to such
subcontracting;
(b) acquire, lease, let, construct, dispose of or exchange any real
property needed to achieve its purpose; and
(c) manage, supervise and control (to the extent practicable) any
associated companies and any companies in which it holds an interest of any
kind, and grant loans, in whatsoever form and for whatsoever duration, to any
said companies. It may participate, by contribution in cash or in kind, by
merger, subscription, participation, or otherwise, in any companies or firms
existing or to be formed, in or outside Delaware, with a purpose identical,
similar to or related to, or useful for developments of the Company's purpose.
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3.3. Modification of Purpose.
Subject to the requirements of the Delaware LLC Act, the Company's purpose
may be extended or restricted by unanimous approval of the Members.
ARTICLE IV
TERM AND TERMINATION OF THE COMPANY
The Company is formed for a perpetual existence, and shall continue until
it is dissolved and terminated as provided in Article X below and Sections
18-801 through 18-804 of the Delaware LLC Act.
ARTICLE V
CAPITAL; MEMBERSHIP INTEREST UNITS
5.1. Capital Contributions of the Members.
The Members shall each make an initial Capital Contribution of $100.
Turner shall make the contribution contemplated by Article XIII below, and the
Members shall, upon the liquidation and dissolution of TSI, promptly contribute
to the Company all or substantially all of the assets and related liabilities
which the Members shall have received as part of such liquidation and
dissolution. Persons or entities hereafter admitted as Members of the Company
shall make such contributions of cash, property or services to the Company as
shall be determined by the Members, acting unanimously, at the time of each such
admission.
5.2. Capital Accounts.
(a) A single, separate Capital Account shall be maintained for each
Member. Subject to Section 5.3(b) below, (i) each Member's Capital Account shall
be credited with the amount of money and the Fair Market Value (without
reduction for any liabilities secured by such contributed property that the
Company assumes or takes subject to) of property contributed by that Member to
the Company, the amount of any Company liabilities assumed by such Member and
such Member's allocated share of any Net Profit for each complete Fiscal Period
or Fiscal Year; and (ii) each Member's Capital Account shall be debited with the
amount of money and the Fair Market Value of property distributed to such
Member, the amount of any liabilities of such Member assumed by the Company, and
such Member's distributive share of Net Loss for each complete Fiscal Period or
Fiscal Year.
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(b) Notwithstanding any provision of this Agreement to the contrary,
each Member's Capital Account shall be maintained and adjusted so as to reflect
each Member's "interest in the Company," as described in Section 1.704-1(b)(3)
of the Income Tax Regulations (the "Regulations") promulgated under the Internal
Revenue Code of 1986, as in effect and hereafter amended (the "Internal Revenue
Code").
5.3. Membership Interest Units.
(a) Each Member shall receive, in exchange for its Capital
Contributions, a number of units of ownership interest in the Company (which
shall be considered personal property for all purposes) consisting of (i) such
Member's Percentage Interest, from time to time, in Net Profits and Net Losses,
(ii) such Member's right to receive distributions in accordance with this
Agreement, (iii) such Member's right to vote or grant or withhold consents with
respect to Company matters, as provided herein or in the Delaware LLC Act and
(iv) such Member's other rights and privileges as herein provided (the
"Membership Interest Units").
(b) Any Member, including any substitute Member, who shall receive a
Membership Interest Unit (or whose number of Membership Interest Units shall be
increased), by means of a transfer to such Member of all or a portion of the
Membership Interest Units of another Member, shall have a Capital Account that
includes the Capital Account of the transferor Member (or the applicable
percentage thereof in case of a transfer of part of the transferor Member's
Membership Interest Units). The Capital Account of any transferor of a
Membership Interest Unit shall be appropriately reduced.
5.4. Return of Capital.
Except upon the dissolution of the Company or as may be specifically
provided in this Agreement, no Member shall have the right to demand or to
receive the return of all or any part of its Capital Account or its Capital
Contributions to the Company.
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ARTICLE VI
ALLOCATION OF PROFITS AND LOSSES;
DISTRIBUTIONS
6.1. Allocation of Net Profit or Net Loss.
(a) Net Profit, Net Loss, credits, and all items thereof for a Fiscal Year
(or a Fiscal Period) shall be allocated among the Members in accordance with
their respective Percentage Interests as of the last day of such Fiscal Year or
Fiscal Period.
(b) The Members intend that allocations pursuant to Section 6.1(a) reflect
each Member's "interest in the Company" as described in Section 1.704-1(b)(3) of
the Regulations, and the Board shall make such changes to Section 6.1(a) as they
believe are necessary to meet the requirements of such Regulations.
(c) For Federal income tax purposes, items of taxable income, gain, loss,
deduction and credit shall be allocated to the members in a manner determined by
the Board to correspond to the allocation of the Net Profit and Net Loss with
respect to which such items relate; provided, that such allocations shall be
consistent with the principles of Section 704(c) of the Code and the Regulations
promulgated thereunder and Regulations Section 1.704-1(b)(4)(i); and, provided
further, that upon complete withdrawal of any Member from the Company, the Board
may, in its discretion, allocate items of taxable income or loss to such Member
to account for any book/tax differences with respect to such Member's Capital
Account.
6.2. Distributions.
Distributions shall be made at the times and places designated by the
Board of Managers.
ARTICLE VII
MEMBERS AND MANAGEMENT
7.1. Members.
The names and business addresses of the Members of the Company are
set forth on Schedule I attached hereto, as the same may be amended from time to
time.
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7.2. Rights and Duties of Members.
7.2.1. Meetings of the Members.
Meetings of the Members shall be held at the place and time
designated from time to time by the Board of Managers, and may also be called by
Members representing at least 20% of the Membership Interest Units of the
Company.
7.2.2. Actions Requiring Unanimous Approval of the Members. The unanimous
approval of the Members of the Company, upon proposal of the Board of Managers,
is required for any of the following decisions:
(a) action by the Company (or any of its Affiliates) to redeem,
purchase or accept a pledge of any of the Membership Interest Units of the
Company;
(b) the sale or disposition, in any transaction or series of related
transactions, of assets constituting in the aggregate 10% or more of the
consolidated total assets of the Company and its subsidiaries, as
reflected on their books and records (in accordance with GAAP);
(c) entering into any agreement or letter of intent with respect to
any merger, consolidation, amalgamation, joint venture, or partnership
involving the Company;
(d) modification of the Company's purposes as set forth in Section
3.1 herein; or
(e) taking any other action requiring the approval of Members under
the Delaware LLC Act.
Any abstention by a Member shall be considered a negative vote.
7.2.3. Actions Requiring Approval of a Three-fourths Majority of the
Members. The approval of three-fourths of the Members (as represented by their
Percentage Interests), upon proposal by the Board of Managers, is required for
any of the following decisions:
(a) voluntary liquidation, dissolution or winding up of the Company,
except as otherwise set forth elsewhere in this Agreement;
(b) commencing, settling or compromising any proceeding in the name
of the Company;
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(c) any change in the allocation of Net Profits and Net Losses, or
distribution of Net Profits, as set forth in Article VI above; or
(d) an amendment to the Certificate or this Agreement.
Any abstention by a Member shall be considered a negative vote.
7.2.4. Actions Requiring Approval of a Majority in Interest of the
Members. Subject to the provisions of Sections 7.2.2 and 7.2.3 above, all other
decisions requiring approval of the Members may be made by a Majority in
Interest of the Members. Any abstention by a Member shall be considered a
negative vote.
7.2.5. Action by Consent. The Members may take action by a vote of Members
at a meeting in person or by proxy, or without a meeting if the number of
Members required to approve such action consent thereto in writing, and the
writing is filed with the minutes of proceedings of the Members. In no instance
where action is authorized by written consent need a meeting of Members be
called or notice given. Meetings of the Members in person shall be presided over
by the Chairman of the Board of Managers, or in his or her absence, by another
Manager, or by a Member present at the meeting as designated by the Members
attending such meeting in person or by proxy.
7.2.6. Filing of Certificates. Any Member, authorized by the appropriate
majority of Members, may execute and file on behalf of the Company with the
Secretary of State of the State of Delaware any certificates of correction of,
or certificates of amendment to, the Company's Certificate, one or more restated
Certificates and certificates of merger or consolidation and, upon the
dissolution and completion of winding up of the Company, a certificate of
cancellation canceling the Company's Certificate.
7.3. Board of Managers.
7.3.1. Appointment and Composition of the Board of Managers. The Members
hereby agree that responsibility for management of the business and affairs of
the Company shall be delegated to a board of managers pursuant to Section 18-402
of the Delaware LLC Act (the "Board" or the "Board of Managers").
The Members shall appoint managers to the Board in proportion to their
Percentage Interests. The initial Board shall be composed of four (4) managers
(collectively, the "Managers"), two (2) of whom shall be appointed by Turner
(the "A Managers"), two (2) of whom shall be appointed by Steiner (the "B
Managers"). Any change in the composition of the Board shall be made in
accordance with Section 7.2.3 herein.
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Each Manager shall serve until such Manager submits his or her written
resignation to the Board, until removed by the Member who shall have appointed
him or her to the Board or until the Termination Date. In the event that a
Manager is removed, resigns, or is otherwise unable to serve as a Manager, the
Member who appointed him or her shall have the right to appoint his or her
successor, subject to approval by the other Members, which shall not be
unreasonably withheld.
7.3.2. Chairman of the Board. The Board shall elect one of the Managers as
Chairman of the Board (the "Chairman"). The Chairman shall serve at the
discretion of the Board. The Chairman shall have the powers specified in this
Agreement, and such other powers as may be delegated to him or her by the
Members.
7.3.3. Meetings and Actions of the Board. The Board may meet upon 72
hours' notice from the Chairman, or from two Managers. Notice shall be valid if
given by telephone, or in writing, by cable, telex or facsimile transmission. A
Manager shall be presumed to have received proper notice if he or she is present
or represented at a meeting. A Manager may also waive any right of complaint for
lack of notice or any irregularity in the notice, before or after a meeting
which he or she did not attend. The meetings of the Board shall be held in the
place indicated in the notice. Meetings shall be chaired by the Chairman of the
Board, or in his or her absence, by a Manager designated by the Board. The
chairman of the meeting may appoint a secretary of the meeting, who need not be
a Manager.
Any Manager prevented from attending a meeting may authorize another
Manager to represent him or her at the said meeting, such proxy to be given by
telephone, or in writing, by cable, telex, telephone or facsimile transmission.
A Manager may represent more than one of his or her fellow Managers and may
cast, in addition to his or her own vote, as many votes as he or she has
proxies.
The Board of Managers may deliberate and take action only if at least one
half of its A Managers and one half of its B Managers are present or
represented. Every decision of the Board shall be made by a majority of the
Managers present or represented and in the event of one or more abstentions, by
a majority of the other Managers. In the case of a tie, the issue shall be
referred to the Members for decision.
The decisions of the Board shall be recorded in minutes signed by the
Chairman and the secretary of the meeting and by those Managers who express a
wish to do so. These minutes shall be kept in a minute book. Proxies given for
the meeting shall be annexed to the minutes of such meeting.
7.3.4. Action by Consent. The Board may take action by a vote of the
Managers at a meeting in person or by proxy, or without a meeting if the number
of the Managers required to approve such action consent thereto in writing, and
the writing is
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filed with the minutes of proceedings of the Board. In no instance where action
is authorized by written consent need a meeting of the Board be called or notice
given.
7.3.5. Managers' Expenses. The Managers shall be reimbursed for normal and
properly justified expenses incurred in the exercise of their duties, but will
not be reimbursed for expenses associated with attendance at meetings of the
Members or the Board of Managers. Any the sums so reimbursed shall be charged to
general expenses of the Company.
7.3.6. Scope of Authority. The Board shall be vested with the power to
perform all acts necessary or useful to realize the purpose of the Company, and
shall have the power to do all things which are not expressly reserved to the
Members under this Agreement or the Delaware LLC Act.
7.4. Daily Management.
The Board may delegate authority for the daily management of the Company,
the management of one or more activities of the Company's business, or the
implementation of the Board's decisions to one or more Managers, Members, the
Chairman of the Board, other officers or agents of the Company, or such other
Persons as the Board may designate from time to time. Such Persons may take
actions within the scope of their delegation without further written approval by
the Board, except that the creation of a permanent establishment in any country
will require specific prior written approval of the Board.
7.5. Representation of the Company.
Any action not in the ordinary course of business shall be authorized by
the Chairman of the Board of Managers, acting at the direction of the Board, or
by two Managers acting jointly, one being an A Manager and the other a B
Manager.
7.6. Liability to Third Parties.
7.6.1. Liability to Third Parties. Except as otherwise required in the
Delaware LLC Act, the debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company, and none of the Members shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member or participating in the management of the Company.
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7.6.2. Members' Standard of Care. (a) The failure of the Company to
observe any formalities or requirements relating to the exercise of its powers
or management of its business or affairs under the Delaware LLC Act or this
Agreement shall not be grounds for imposing personal liability on the Members
for liabilities of the Company, and (b) in discharging their duties hereunder,
Managers, Members and their officers and directors shall be fully protected in
relying in good faith upon the records required to be maintained under Article
VIII and upon such information, opinions, reports or statements by any of their
members, their agents, or any other Person, as to matters the Managers, Members
and their officers or directors reasonably believe are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits or losses of the Company or any other facts pertinent to the existence
and amount of assets from which distributions to Members might properly be paid.
No Manager or Member (or any of their respective officers or directors) shall be
liable to the Company except for actions or omissions not subject to
indemnification hereunder pursuant to Section 7.7.1.
7.7. Indemnification of the Members, Managers, Officers and any Affiliates.
7.7.1. In accordance with Section 18-108 of the Delaware LLC Act, the
Company shall indemnify and hold harmless all Members, Managers, officers and
Affiliates thereof, and all members, representatives, board members, officers
and directors of such Affiliate (individually, in each case, an "Indemnitee") to
the fullest extent permitted by law from and against any and all losses, claims,
demands, costs, damages, liabilities (joint or several), expenses of any nature
(including attorneys' fees and disbursements), judgments, fines, settlements,
and other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
the Indemnitee may be involved, or threatened to be involved as a party or
otherwise, arising out of or incidental to the business or activities of or
relating to the Company, regardless of whether the Indemnitee continues to be a
Member, a Manager, an Officer, or an Affiliate thereof, or a member, a board
member, an officer or a director of such Affiliate, at the time any such
liability or expense is paid or incurred; provided, however, that this provision
shall not eliminate or limit the liability of an Indemnitee (a) for any breach
of the Indemnitee's duty of loyalty to the Company or its Members, (b) for acts
or omissions which involve intentional misconduct or a knowing violation of law,
or (c) for any transaction from which the Indemnitee received any improper
personal benefit.
7.7.2. Expenses incurred by an Indemnitee in defending any claim, demand,
action, suit or proceeding subject to this Section 7.7 shall, from time to time,
upon request by the Indemnitee be advanced by the Company prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Company of an undertaking
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by or on behalf of the Indemnitee to repay such amount, if it shall be
determined in a judicial proceeding or a binding arbitration that such
Indemnitee is not entitled to be indemnified as authorized in this Section 7.7.
7.7.3. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, vote of the Members, as a matter of law or equity, or otherwise, both
as to an action in the Indemnitee's capacity as a Member, a Manager, an officer,
or any Affiliate thereof, or as a member, board member, an officer or a director
of such Affiliate, and as to an action in another capacity, and shall continue
as to an Indemnitee who has ceased to serve in such capacity and shall inure to
the benefit of the heirs, successors, assigns, and administrators of the
Indemnitee.
7.7.4. The Company may purchase and maintain insurance on behalf of the
Members and such other Persons as the Members shall determine against any
liability that may be asserted against or expense that may be incurred by such
Persons in connection with the offering of interests in the Company or the
business or activities of the Company, regardless of whether the Company would
have the power to indemnify such Persons against such liability under the
provisions of this Agreement.
7.7.5. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 or otherwise by reason of the fact that the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted or not
expressly prohibited by the terms of this Agreement or the Delaware LLC Act.
7.7.6. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
ARTICLE VIII
FINANCIAL AND TAX MATTERS
8.1. Bank Accounts.
All funds of the Company shall be deposited in its name in such checking
and savings accounts, time deposits, certificates of deposit or other accounts
at such banks as shall be designated by the Board from time to time, and the
Board shall arrange for the appropriate conduct of such account or accounts.
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8.2. Books and Records.
8.2.1. The Company shall keep, or cause to be kept, accurate, full and
complete books and accounts showing assets, liabilities, income, operations,
transactions and the financial condition of the Company. Such books and accounts
shall be prepared on the accrual basis of accounting and, except for the purpose
of determining Net Profit and Net Loss, in accordance with GAAP. Any Member,
member of the Board or its respective designee shall have access to the books
and records at any reasonable time during regular business hours and shall have
the right to copy said records at its expense.
8.2.2. The Company shall maintain the following additional records:
(a) a current list of the full name and business address of each
Member and Manager;
(b) copies of the Company's federal, state and local income tax
returns and reports, if any, for the three most recent Fiscal Years, or as
required by applicable law;
(c) copies of this Agreement, including all amendments thereto; and
(d) all financial statements of the Company for the three most
recent Fiscal Years, or as required by applicable law.
8.3. Financial Statements and Information.
(a) All financial statements prepared pursuant to this Section 8.3 shall
present fairly the financial position and operating results of the Company and
shall be prepared in accordance with GAAP on the accrual basis for each Fiscal
Year during the term of this Agreement.
(b) As soon as practicable, but in any event within ninety (90) days after
the end of each Fiscal Year, the Company will cause to be prepared balance
sheets and related consolidated statements of income, Members' equity and
changes in cash flow, along with an annual report detailing the activities of
the Company during the Fiscal Year in question, and such other reports and
information concerning the business and affairs of the Company as may be
reasonably requested by the Board, or otherwise required by the Delaware LLC
Act.
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8.4. Accounting Decisions.
All decisions as to accounting matters, except as specifically provided to
the contrary herein, shall be made by the officers of the Company.
8.5. Where Maintained.
The books, accounts and records of the Company at all times shall be
maintained at the Company's principal office.
8.6. Tax Matters.
(a) The Company shall cause to be prepared and delivered to each Member,
in a timely fashion after the end of each Fiscal Year, copies of all federal,
state and local income tax returns filed by the Company for such Fiscal Year, as
well as the Forms K-1 (and similar state and local reports) relevant to such
Member. Such returns shall be prepared on the accrual basis, and shall
accurately reflect the results of operations of the Company for such Fiscal
Year, as determined for purposes of each relevant tax.
(b) Turner is hereby designated the "tax matters member" (as defined in
the Internal Revenue Code) of the Company (the "TMM") and is hereby authorized
and required to represent the Company (at the expense of the Company) in
connection with all examinations of the affairs of the Company by any federal,
state or local tax authorities, including any resulting administrative or
judicial proceedings, and to expend funds of the Company for professional
services and costs associated therewith. The TMM shall keep all Members fully
informed of the progress of any such examination, audit or other proceeding, and
all Members shall have the right to participate in any such examination, audit
or other proceeding. The TMM shall not settle or otherwise compromise any issue
in any such examination, audit or other proceeding without the prior consent of
three-fourths of other Members in accordance with Section 7.2.3 above.
(c) All tax elections required or permitted to be made under the Internal
Revenue Code and any applicable state or local tax law shall be made at the
discretion of the TMM, and any decision with respect to the treatment of Company
transactions on the Company's federal, state or local tax returns shall be made
in such manner as may be approved by the TMM.
(d) For United States federal income tax purposes, the Company will not
elect under Section 301.7701-3 of the Regulations to be classified as a
corporation.
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8.7. Fiscal Year.
Except as otherwise required, the fiscal year of the Company for
financial, accounting, federal, state and local income tax purposes shall be
January 1 to December 31 of each year (the "Fiscal Year").
ARTICLE IX
TRANSFER OF MEMBERSHIP INTEREST UNITS
AND SUBSTITUTION OR WITHDRAWAL
OF MEMBERS
9.1. Transfers of Membership Interest Units.
(a) Except as otherwise set forth in this Article IX, no Member may sell,
assign, pledge or otherwise transfer or encumber (collectively "transfer") all
or any part of its Membership Interest Units.
(b) The Members shall amend Schedule I hereto from time to time to reflect
transfers made in accordance with, and as permitted under, this Article IX. Any
purported transfer in violation of this Article IX shall be null and void and
shall not be recognized by the Company.
(c) The term "transfer," when used in this Article IX with respect to a
Membership Interest Unit, shall include any sale, assignment, gift, pledge,
hypothecation, mortgage, exchange, or other disposition.
9.2. Transfers to Subsidiaries.
Subject to the provisions of this Article IX, a Member may at any time
transfer all or any part of its Membership Interest Units in the Company to a
wholly-owned subsidiary provided that such transfer shall not cause a
termination of the Company under Section 708 of the Internal Revenue Code. Such
transfer of Membership Interest Units will not relieve the transferring Member
of its obligations under this Agreement, and each Member will do all things
necessary to cause its transferee subsidiaries to comply with this Article IX.
If a Member sells any shares of such subsidiary to a third party, the Member
shall cause its subsidiary to transfer all its Membership Interest Units back to
the transferring Member or to another wholly-owned subsidiary of such Member.
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9.3. Substituted Members.
A transferee of Membership Interest Units shall be admitted as a
substituted Member only upon (a) the prior written consent of all other Members
(subject to Section 9.2), (b) the transferee agreeing to be bound by the
Certificate and this Agreement as then in effect, and (c) receipt of any
necessary regulatory approvals. Unless and until a transferee is admitted as a
substituted Member, the transferee shall have no right to exercise any of the
powers, rights, and privileges of a Member hereunder nor any right to receive
distributions in accordance with its Percentage Interest and the associated tax
obligations. A Member who has transferred all of its Membership Interest Units
shall cease to be a Member in accordance with the provisions of this Article IX
and thereafter shall have no further powers, rights, and privileges as a Member
hereunder except as provided in Section 7.7.
9.4. Additional Members.
The Members, acting unanimously, shall have the right to admit additional
Members upon such terms and conditions, at such time or times, and for such
Capital Contributions as shall be determined by all of the Members; and in
connection with any such admission, the Members shall amend Schedule I hereof to
reflect the name, address and Percentage Interests of the additional Members and
any agreed upon changes in the number of Managers.
9.5. Withdrawal of a Member.
Any Member shall have the right to withdraw from the Company at any time
by a notice (a "Withdrawal Notice") to the other Member. If any Member gives a
Withdrawal Notice pursuant to this Section 9.5, the following will occur:
(a) The Member giving the Withdrawal Notice (the "Withdrawing
Member") will, at the time it gives the Withdrawal Notice, specify a cash price
at which the Withdrawing Member would be willing either to sell all its
Membership Interest Units or to purchase all the other Member's Membership
Interest Units (the "Buyout Price").
(b) Within 45 days after the Withdrawing Member gives the Withdrawal
Notice, the other Member will notify the Withdrawing Member in a notice (the
"Election Notice") indicating whether the other Member elects to purchase all
the Withdrawing Member's Membership Interest Units for the Buyout Price or to
sell all of
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such Member's Membership Interest Units to the Withdrawing Member for the Buyout
Price.
(c) If the other Member does not send the Withdrawing Member an
Election Notice within the 45 day period, the Withdrawing Member must purchase
such other Member's Membership Interest Units for the Buyout Price.
(d) The sale of Membership Interest Units by or to the Withdrawing
Member will take place at the principal office of the Company at a date and time
specified in the Election Notice, which will be not later than 30 days after the
Election Notice is given (or, if no Election Notice is given, on a day specified
by the Withdrawing Member which is not more than 30 days after the period for
the other Member to give the Election Notice has expired). At that time the
selling Member will transfer its Membership Interest Units to the purchasing
Member against payment of the Buyout Price. If the purchasing Member fails to
make the required payment, the selling Member may, but will not be required to,
purchase the purchasing Member's Membership Interest Units for the Buyout Price.
A purchase by the selling Member will not affect any claim the selling Member
may have against the purchasing Member for failure to fulfill the purchasing
Member's contractual obligation to purchase the selling Member's Membership
Interest Units for the Buyout Price.
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.1. Events Causing Dissolution.
The Company shall be dissolved and its affairs wound up upon the
occurrence of any of the following events:
(a) the written consent of all of the Members to dissolve and wind
up the affairs of the Company;
(b) the sale or other disposition by the Company of all or
substantially all of the Company Assets and the collection of all amounts
derived from any such sale or other disposition, including all amounts
payable to the Company under any promissory notes or other evidences of
indebtedness taken by the Company and the satisfaction of contingent
liabilities of the Company in connection with such sale or other
disposition (unless the Members shall elect to distribute such
indebtedness to the Members in liquidation);
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<PAGE> 26
(c) the occurrence of any event that, under the Delaware LLC Act,
would cause the dissolution of the Company or that would make it unlawful
for the business of the Company to be continued;
(d) the Bankruptcy, dissolution or liquidation of a Member; or
(e) the withdrawal of a Member, unless the remaining Members consent
to continue the Company.
For the purposes of this Agreement, the term "Bankruptcy" shall mean, and
the Member shall be deemed "Bankrupt" upon, (i) the entry of a decree or order
for relief of the Member by a court of competent jurisdiction in any involuntary
case involving the Member under any bankruptcy, insolvency, or other similar law
now or hereafter in effect; (ii) the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator, or other similar agent for the
Member or for any substantial part of the Member's assets or property; (iii) the
ordering of the winding up or liquidation of the Member's affairs; (iv) the
filing with respect to the Member of any proceeding against the Member seeking
to adjudicate it a bankrupt or insolvent, or seeking dissolution, liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for the Member or for any
substantial part of its property, which proceeding shall remain undismissed or
unstayed for a period of 90 days pursuant to Section 305 of the Federal
Bankruptcy Code (or any corresponding provision of any future United States
bankruptcy law) or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against it or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property); (v) institution by the Member of
any proceeding or voluntary case seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of its debts under
any law relating to bankruptcy, insolvency, reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other similar
official for the party or for any part of its assets or property; (vi) the
consent by the Member to the entry of an order for relief in an involuntary case
under any such law or to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other similar
official for the Member or for any substantial part of the Member's assets or
property; (vii) the making by the Member of any general assignment for the
benefit of creditors; or (viii) the failure by the Member generally to pay its
debts as such debts become due.
22
<PAGE> 27
10.2. Cancellation of Certificate.
Upon the dissolution of the Company, the Certificate shall be canceled in
accordance with the provisions of Section 18-203 of the Delaware LLC Act, and
any Person responsible for winding up the affairs of the Company shall promptly
notify the Members of such dissolution.
10.3. Distributions Upon Dissolution.
(a) Upon the dissolution of the Company, the Members (or any other person
or entity responsible for winding up the affairs of the Company) shall proceed
without any unnecessary delay to sell or otherwise liquidate the Company Assets
and pay or make due provision for the payment of all debts, liabilities and
obligations of the Company.
(b) The Members (or any other person or entity responsible for winding up
the affairs of the Company) shall distribute the net liquidation proceeds and
any other liquid assets of the Company (after the payment of all debts,
liabilities (including any trade balances with Members) and obligations of the
Company, the payment of expenses of liquidation of the Company, and the
establishment of a reasonable reserve in an amount estimated by the Members to
be sufficient to pay any amounts reasonably anticipated to be required to be
paid by the Company) shall be distributed to the Members in the following
manner: first, pro rata, in proportion to the positive balances in their
respective Capital Accounts until such Capital Accounts are reduced to zero, and
second, any remaining amount to the Members in proportion to the relative
amounts of their total Capital Contributions made to the Company over the life
of the Company. Upon the consent of all Members, Company Assets may be
distributed in-kind to the Members in the manner set forth in the previous
sentence using valuation mechanisms mutually agreed upon by the Members.
10.4. Reasonable Time for Winding Up.
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Company and the liquidation of its assets pursuant
to Section 10.3 in order to minimize any losses otherwise attendant upon such a
winding up.
ARTICLE XI
BEST EFFORTS OF THE MEMBERS
Each Member executing this Agreement (and any amendment thereto) agrees to
use its best efforts to cause the Company to become engaged in the business of
providing
23
<PAGE> 28
professional services relating to the design and the construction of
buildings and other structures, as more fully set forth in Article III above,
and otherwise to carry out the purposes of this Agreement.
ARTICLE XII
AGREEMENTS NOT TO COMPETE WITH THE COMPANY
12.1. Agreement by Turner not to Compete.
Turner agrees that Turner or any of its subsidiaries or Affiliates will
not engage, directly or indirectly, at any place within the Territory, in any
activities of the type described in Section 3.1, any activities which are
substantially similar to, or competitive with, activities of the type described
in Section 3.1, for the period of time ending at the earliest of
(i) three years after the earliest date when neither Turner nor any of its
subsidiaries owns any Membership Interest Units,
(ii) the earliest date on which Turner and its subsidiaries own no
Membership Interest Units and Steiner and its subsidiaries own less than a
majority of the Membership Interest Units, or
(iii) the earliest date on which the Company permanently ceases to do
business;
provided, however, that Turner or its subsidiaries may engage in the Territory
in construction projects for the United States government or entities holding
contracts with the United States government for which the Company is not
eligible due to United States security laws or regulations, and may carry out
through the Company certain other contracts not transferred to the Company.
12.2. Agreement by Steiner not to Compete.
Steiner agrees that Steiner or any of its subsidiaries or Affiliates will
not engage directly or indirectly, at any place within the Territory, in any
activities of the type described in Section 3.1 or any activities which are
substantially similar to, or competitive with, activities of the type described
in Section 3.1, for the period of time ending at the earliest of
(i) three years after the earliest date when neither Steiner nor any of
its subsidiaries owns any Membership Interest Units,
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<PAGE> 29
(ii) the earliest date on which Steiner and its subsidiaries own no
Membership Interest Units and Turner and its subsidiaries own less than a
majority of the Membership Interest Units, or
(iii) the earliest date on which the Company permanently ceases to do
business;
provided, however, that Steiner or its subsidiaries may engage in the Territory
in construction projects for the Swiss government or entities holding contracts
with the Swiss government for which the Company is not eligible due to Swiss
security laws or regulations.
ARTICLE XIII
TRANSFER OF TURNER ACTIVITIES IN SOUTH AMERICA
Turner agrees that it will transfer to the Company all its current
activities in South America, including the Turner Birmann joint venture, at a
date to be mutually agreed by the parties.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1. Compliance with Delaware LLC Act.
The Members agree not to take any action or fail to take any action which,
considered alone or in the aggregate with other actions or events, would result
in the termination of the Company under the Delaware LLC Act.
14.2. Additional Actions and Documents.
The Members agree to take or cause to be taken such further actions, to
execute, acknowledge, deliver and file or cause to be executed, acknowledged,
delivered and filed such further documents and instruments, and to use their
best efforts to obtain such consents, as may be necessary or as may be
reasonably requested in order to fully effectuate the purposes, terms and
conditions of this Agreement, whether before, at or after the closing of the
transactions contemplated by this Agreement.
25
<PAGE> 30
14.3. Notices.
All notices and other communications required or permitted to be given
under this Agreement must be in writing and will be deemed effected when
delivered in person or sent by facsimile transmission, if promptly confirmed in
writing, or on the tenth business day after the day on which mailed from within
the United States of America or Switzerland to the following address:
If to Turner:
The Turner Corporation
375 Hudson Street
New York, NY 10014-3667
Attention: Chairman of the Board
Telecopier No.: (212) 229-6094
If to Steiner:
Karl Steiner Holding AG
Hagenholstrasse 60
89050 Zurich, Switzerland
Attention: Chairman of the Board
Telecopier No.: (01) 305.24.40
Each Member may designate by notice in writing to the other Members a new
address to which any notices or other communications may thereafter be so given,
served or sent.
14.4. Severability.
The invalidity of any one or more provisions hereof or of any other
agreement or instrument given pursuant to or in connection with this Agreement
shall not affect the remaining portions of this Agreement or any such other
agreement or instrument or any part thereof, all of which are inserted
conditionally on their being held valid in law; and in the event that one or
more of the provisions contained herein or therein should be invalid, or should
operate to render this Agreement or any such other agreement or instrument
invalid, this Agreement and such other agreements and instruments shall be
construed as if such invalid provisions had not been inserted.
14.5. Exercise of Rights and Waiver.
No failure or delay on the part of a Member, a Manager or the Company in
exercising any right, power or privilege hereunder and no course of dealing
among the
26
<PAGE> 31
Members, the Managers and the Company shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any other rights or
remedies which a Member, Manager or the Company would otherwise have at law or
in equity or otherwise.
14.6. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of the
Members and their respective successors and permitted assigns.
14.7. Limitation on Benefits of this Agreement.
This Agreement is only for the benefit of the parties hereto, and nothing
herein, expressed or implied, is intended or will be construed as conferring
upon any person or entity, other than the parties hereto (or their respective
successors and assigns as permitted hereunder), any rights or remedies under or
by reason of, and no person or entity, other than the parties hereto (or their
respective successors and assigns as permitted hereunder), is entitled to rely
in any way upon, this Agreement.
14.8. Amendment Procedure.
This Agreement may only be modified or amended by the unanimous written
consent of the Members.
14.9. Entire Agreement.
The Members agree that this Agreement contains the entire agreement among
the Members with respect to the transactions contemplated herein, and supersedes
all prior oral or written agreements, commitments or understandings with respect
to the matters provided for herein and therein; provided, however, that this
Agreement shall not be deemed to cancel and supersede the Joint Venture and
Shareholders Agreement dated June 3, 1992 between Turner and Steiner regarding
TSI until TSI shall have been liquidated and dissolved, and the Capital
Contributions related thereto as contemplated by Section 5.1 shall have been
made.
27
<PAGE> 32
14.10. Captions and Headings.
The captions and headings of the Articles and paragraphs of this Agreement
are for convenience only, and do not constitute a part of this Agreement or
affect the meaning of any of its provisions.
14.11. Governing Law.
This Agreement, the rights and obligations of the parties hereto, and any
claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware thereof.
14.12. Arbitration.
All disputes arising from or in any way in connection with this Agreement
shall be finally settled through binding arbitration conducted pursuant to the
Rules of Conciliation and Arbitration of the International Chamber of Commerce
in effect as of the date of the initiation of any dispute submitted to
arbitration under this section ("ICC Rules"), by three arbitrators appointed in
accordance with the ICC Rules. Except as provided in this Section 14.12, no
modification or amendment of the ICC Rules applicable to any such arbitration
shall be binding upon the parties unless agreed to in writing by the parties.
In each such arbitration, each party to the dispute shall appoint one
arbitrator within 30 days of receipt by the respondent of the request for
arbitration, and the arbitrators so appointed by the parties shall appoint the
third arbitrator (who shall be the Chairman), within 30 days of the confirmation
of the later of the two arbitrators appointed by the parties. If the parties to
the arbitration cannot agree on the appointment of the third arbitrator, the
third arbitrator shall be appointed by the International Court of Arbitration in
accordance with Article 1.4 of the ICC Rules.
If a party initiating the request for arbitration fails to appoint an
arbitrator within the required time period, the dispute shall be deemed to be
withdrawn. If the respondent party fails to appoint an arbitrator within the
required time period, then the process shall continue without the participation
of the respondent's arbitrator.
The arbitration proceedings shall be conducted in the English language, at
a location to be agreed upon by the parties (with the parties acting in good
faith).
28
<PAGE> 33
The arbitrators shall apportion the costs of the arbitration (including
any administrative costs and fees of the arbitrators and fees of experts hired
by the arbitrators, but excluding any fees of counsel or other experts of the
claimant or the respondent) as part of their arbitral award. Among other
remedies otherwise available to them, such arbitrators shall be authorized to
order injunctive relief or the specific performance of any provision contained
herein. Any award rendered by the arbitrators shall be final and binding upon
the parties to such arbitration, and judgment upon such award, including any
costs of arbitration referred to above, together with interest, may be entered
in accordance with applicable laws in any court of competent jurisdiction.
14.13. Expenses.
Each Member will pay its own expenses incurred in connection with this
Agreement.
14.14. Execution in Counterparts.
This Agreement may be executed in counterparts each of which shall be
deemed to be an original and all of which shall be deemed to be one and the same
agreement.
29
<PAGE> 34
IN WITNESS WHEREOF, the undersigned have duly executed this Limited
Liability Company Agreement, or have caused this Limited Liability Company
Agreement to be duly executed on their behalf, as of the day and year first
herein above set forth.
THE TURNER CORPORATION
By:
-----------------------------------
Name:
Title:
KARL STEINER HOLDING AG
By:
-----------------------------------
Name:
Title:
<PAGE> 35
SCHEDULE I
<TABLE>
<CAPTION>
Name and business addresses of
the Members: Percentage Interests:
- --------------------------------- ---------------------------------------
<S> <C>
The Turner Corporation 50%
375 Hudson Street
New York, N.Y. 10014
Karl Steiner Holding AG 50%
Hagenholstrasse 60
89050 Zurich, Switerland
</TABLE>
<PAGE> 1
Exhibit 10(d)(ii)
AMENDMENT NO. 1 TO
LIMITED LIABILITY COMPANY AGREEMENT
OF
TURNER STEINER INTERNATIONAL, LLC
This AMENDMENT NO. 1 TO LIMITED LIABILITY COMPANY AGREEMENT ("Amendment No. 1")
is made and entered into effective as of the 1st day of January, 1998, by and
between THE TURNER CORPORATION, a corporation organized under the laws of the
State of Delaware ("Turner"), and KARL STEINER HOLDING AG, a corporation
incorporated under the laws of Switzerland ("Steiner").
WHEREAS, Turner and Steiner are parties to a Limited Liability Company
Agreement dated as of December 22, 1997 (the "LLC Agreement"), and
WHEREAS, Turner and Steiner desire at this time to amend certain
provisions of the LLC Agreement relating to the contribution by each party of
its interest in Turner Steiner International S.A., a Belgium corporation
("TSI"),
NOW, THEREFORE, Turner and Steiner hereby agree to amend the LLC
Agreement, effective as of the date hereof, as follows:
1. Contribution of Interests in TSI. Section 5.1 of the LLC Agreement is
hereby amended to read:
5.1 Capital Contributions of the Members. The Members shall each
make an initial Capital Contribution of $100. Turner shall make the
contribution contemplated by Article XIII below, and Turner and
Steiner shall contribute to the Company the entire interest held by
each Member in TSI pursuant to a Contribution Agreement dated as of
the date hereof. Persons or entities hereafter admitted as Members
of the Company shall make such contributions of cash, property or
services to the Company as shall be determined by the Members,
acting unanimously, at the time of each such admission.
<PAGE> 2
2. Termination of Joint Venture Agreement. Section 14.9 of the LLC
Agreement is hereby amended to read:
14.9. Entire Agreement. The Members agree that this Agreement
contains the entire agreement among the Members with respect to the
transactions contemplated herein, and supersedes all prior oral or
written agreements, commitments or understandings with respect to
the matters for herein and therein; provided, however, that this
Agreement shall not be deemed to cancel and supersede the Joint
Venture and Shareholders Agreement dated June 3, 1992 between Turner
and Steiner regarding TSI until Turner and Steiner have contributed
the entirety of each of their respective interests to LLC, as
contemplated by Section 5.1 of this Agreement.
3. No Other Amendment. Except as amended, modified or supplemented by this
Amendment No. 1, the LLC Agreement is confirmed and remains in full force and
effect.
This Amendment No. 1 may be executed in one or more counterparts, each of
which shall for all purposes be deemed an original and all of which shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment No.
1, or have caused this Amendment No. 1 to be duly executed on their behalf, as
of the date first set forth above.
THE TURNER CORPORATION
By:
-------------------------------------
Name:
Title:
KARL STEINER HOLDING AG
By:
-------------------------------------
Name:
Title:
-2-
<PAGE> 1
Exhibit 10(e)
Karl Steiner Holding AG
Hagenholzstrasse 60
CH-8050 Zurich, Switzerland
December 29, 1998
The Turner Coporation
375 Hudson Street
New York, New York 10014 U.S.A.
Dear Sirs:
In consideration of $1,572,576 paid by the Turner Corporation
("Turner") to Karl Steiner Holding AG ("Steiner"), Steiner hereby waives its
rights under the provisions of Section 5 of the Agreement Regarding Security
Holder's Rights, Obligations and Options dated July 20, 1992 between turner and
Steiner, including its rights to receive notice of each issuance or sale by
turner of any shares of its Common Stock or certain other securities and its
rights to purchase additional shares of Common Stock necessary to enable Steiner
to maintain the same percentage of the outstanding Common Stock that it owned
before Turner issued or sold such additional shares of Common Stock or other
securities, insofar as such provisions relate to shares of Common Stock or other
securities issued or sold by Turner during the period from July 20, 1992 through
December 28, 1998. The foregoing waiver relates only to the provisions of
Section 5 of such Agreement and only the period referred to, and all other
provisions of such Agreement that are presently in force and effect shall remain
in force and effect in accordance with the terms thereof.
Very truly yours,
Karl Steiner Holding AG
By: /s/ Heinrich Baumann-Steiner
----------------------------
Heinrich Baumann-Steiner
Agreed to:
The Turner Corporation
By:/s/ Donald G. Sleeman
---------------------
Donald G. Sleeman
Senior Vice President and Chief Financial Officer
<PAGE> 1
Exhibit 10(f)
08/14/98
#8127537.06
$45,000,000
CREDIT AGREEMENT
dated as of
August 14, 1998
by and among
The Turner Corporation,
as Borrower,
Turner Construction Company,
as Guarantor,
The Banks Party Hereto,
and
Bank One, N.A.,
as Agent
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE 1: DEFINITIONS.......................................................1
1.1. Definitions...........................................................1
1.2. Accounting Terms and Determinations...................................7
ARTICLE 2: THE CREDITS.......................................................7
2.1. Commitments to Lend...................................................8
2.2. Method of Borrowing...................................................8
2.3. Notes.................................................................9
2.4. Maturity of Loans.....................................................9
2.5. Interest Rates........................................................9
2.6. Fees.................................................................11
2.7. Optional Termination or Reduction of Commitments.....................11
2.8. Method of Electing Interest Rates....................................11
2.9. Mandatory Termination of Commitments.................................12
2.10. Optional Prepayments.................................................12
2.11. General Provisions as to Payments....................................12
2.12. Funding Losses.......................................................13
2.13. Computation of Interest and Fees.....................................13
2.14. Letters of Credit....................................................13
ARTICLE 3: CONDITIONS.......................................................15
3.1. Effective Date.......................................................15
3.2. Borrowings and Issuances of Letters of Credit........................16
ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF THE BORROWER...................16
4.1. Corporate Existence and Power........................................16
4.2. Corporate and Governmental Authorization; No Contravention...........16
4.3. Binding Effect.......................................................16
4.4. Financial Information................................................16
4.5. Litigation...........................................................17
4.6. Compliance with ERISA................................................17
4.7. Environmental Matters................................................17
4.8. Compliance with Laws.................................................17
4.9. Contractual Arrangements.............................................17
4.10. Taxes................................................................17
4.11. Subsidiaries.........................................................17
4.12. Not an Investment Company............................................18
4.13. Full Disclosure......................................................18
ARTICLE 5: COVENANTS........................................................18
5.1. Information..........................................................18
5.2. Payment of Obligations...............................................20
5.3. Maintenance of Property; Insurance...................................20
5.4. Conduct of Business and Maintenance of Existence.....................20
5.5. Compliance with Laws.................................................21
5.6. Inspection of Property, Books and Records............................21
5.7. Current Ratio........................................................21
i
<PAGE> 3
5.8. Debt.................................................................21
5.9. Minimum Consolidated Adjusted Net Worth..............................21
5.10. Fixed Charge Coverage................................................22
5.11. Intentionally Deleted................................................22
5.12. Debt of Guarantor....................................................22
5.13. Investments..........................................................22
5.14. Negative Pledge......................................................23
5.15. Consolidations, Mergers and Sales of Assets..........................23
5.16. Use of Proceeds......................................................23
5.17. Real Estate Development..............................................24
ARTICLE 6: DEFAULTS.........................................................24
6.1. Events of Default....................................................24
6.2. Notice of Default....................................................25
6.3. Cash Cover...........................................................25
ARTICLE 7: THE AGENT........................................................26
7.1. Appointment and Authorization........................................26
7.2. Agent and Affiliates.................................................26
7.3. Action by Agent......................................................26
7.4. Consultation with Experts............................................26
7.5. Liability of Agent...................................................26
7.6. Indemnification......................................................26
7.7. Credit Decision......................................................26
7.8. Successor Agent......................................................27
7.9. Agent's Fee..........................................................27
ARTICLE 8: CHANGE IN CIRCUMSTANCES..........................................27
8.1. Basis for Determining Interest Rate Inadequate or Unfair.............27
8.2. Illegality...........................................................27
8.3. Increased Cost and Reduced Return....................................28
8.4. Taxes................................................................28
8.5. Base Rate Loans Substituted for Affected Eurodollar Loans............29
ARTICLE 9: GUARANTY.........................................................30
9.1. The Guaranty.........................................................30
9.2. Guaranty Unconditional...............................................30
9.3. Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances..............................................30
9.4. Waiver by the Guarantor..............................................31
9.5. Subornation..........................................................31
9.6. Stay of Acceleration.................................................31
9.7. Limit of Liability...................................................31
ARTICLE 10: MISCELLANEOUS...................................................31
10.1. Notices.............................................................31
10.2. No Waivers..........................................................31
10.3. Expenses; Indemnification...........................................32
10.4. Sharing of Set-Offs.................................................32
10.5. Amendments and Waivers..............................................32
10.6. Successors and Assigns..............................................33
10.7. Collateral..........................................................34
ii
<PAGE> 4
10.8. Governing Law.......................................................34
10.9. Counterparts; Integration...........................................34
10.10. WAIVER OF JURY TRIAL................................................34
Pricing Schedule
Exhibit A Note
Exhibit B Opinion of Counsel for the Borrower and the Guarantor
Exhibit C Opinion of General Counsel of the Borrower and the
Guarantor
Exhibit D Assignment and Assumption Agreement
Exhibit E Extension Agreement
Schedule A Subsidiaries of the Borrower
iii
<PAGE> 5
CREDIT AGREEMENT dated as of August 14, 1998 by and among THE TURNER
CORPORATION, as Borrower, TURNER CONSTRUCTION COMPANY, as Guarantor, the BANKS
party hereto and BANK ONE, N.A., as Agent.
W I T N E S S E T H :
ARTICLE 1: DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein, have
the following meanings:
"Adjusted London Interbank Offered Rate" has the meaning set forth
in Section 2.5(b).
"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 Bank One, N.A. in its capacity as agent for the Banks
hereunder, and its successor(s), if any, in such capacity.
"Agreement" means this Agreement as in effect from time to time and
as further amended from time to time hereafter.
"Applicable Lending Office" means, with respect to any Bank, (i) in
the case of its Base Rate Loans, its Domestic Lending Office, and (ii) in the
case of its Eurodollar Loans, its Eurodollar Lending Office.
"Assets Attributable to Minority Interests" at any date means, with
respect to any asset that (i) would be reflected on the consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries if such balance sheet
were prepared as of such date, and (ii) is owned by a Consolidated Subsidiary
that is not wholly owned by the Borrower, a percentage of the amount of such
asset that would be reflected on such balance sheet that is equal to the
percentage of the equity of such Consolidated Subsidiary that would be reflected
as a minority interest on such balance sheet.
"Assignee" has the meaning set forth in Section 10.6(c).
"Backlog Earnings", with respect to any construction project on any
date, means that portion of the Backlog Volume with respect to such construction
project as of such date that is attributable to earnings expected to be realized
after such date from a contract theretofore obtained but not yet completed with
respect to such construction project.
"Backlog Volume", with respect to any construction project on any
date, means construction costs expected to be incurred in respect of, and
earnings expected to be realized from, a contract theretofore obtained but not
yet completed with respect to such construction project, in each case as of such
date.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 10.6(c), and their respective
successors and assigns, and shall include, as the context may require, Bank One,
N.A. in its capacity as 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 8, 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 1997 Form 10-K" means the Borrower's annual report on
Form 10-K for 1997, 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 2, all of which Loans are of
the same type (subject to Article 8) and have the same initial Interest Period.
A Borrowing is a "Base Rate Borrowing" if such Loans are Base Rate Loans or a
"Eurodollar Borrowing" if such Loans are Eurodollar Loans.
<PAGE> 6
"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 2.7 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 the
sum of (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.
"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 5.14 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.
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<PAGE> 7
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Columbus, Ohio 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.
"Effective Date" means the date on which the Agent shall have
received all the documents and payments specified in or pursuant to Section 3.1.
"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.
"Eurodollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Eurodollar 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
Eurodollar Lending Office), or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Eurodollar Lending Office by notice to
the Borrower and the Agent.
"Eurodollar Loan" means (i) a Loan which bears interest at a
Eurodollar Rate pursuant to the applicable Notice of Borrowing or Notice of
Interest Rate Election, or (ii) an overdue amount which was a Eurodollar Loan
immediately before it became overdue.
"Eurodollar Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
"Eurodollar Rate" means a rate of interest determined pursuant to
Section 2.5(c) on the basis of an Adjusted London Interbank Offered Rate.
"Eurodollar Reserve Percentage" has the meaning set forth in
Section 2.5(b).
"Event of Default" has the meaning set forth in Section 6.1.
"Extension Date" has the meaning set forth in Section 2.1(b).
"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 Bank One, N.A. 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.
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<PAGE> 8
"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, or (ii)
all Eurodollar 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 8, 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, and (iii) Fixed Charges.
"Indemnitee" has the meaning set forth in Section 10.3 (b).
"Interest Period" means (1) with respect to each Eurodollar 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 Eurodollar Business Day shall be extended to the next
succeeding Eurodollar Business Day unless such Eurodollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Eurodollar Business Day;
(b) any Interest Period which begins on the last Eurodollar
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 Eurodollar 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.
(2) 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 Eurodollar Business Day shall be extended to
the next succeeding Eurodollar 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.
4
<PAGE> 9
"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 Bank One, N.A.
"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 the
Issuing Bank.
"Letter of Credit Exposure" means, with respect to any Bank at any
time, the sum of (i) such Bank's ratable share of all Reimbursement Obligations
then owing to the Issuing Bank, and (ii) 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 2.1; 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
2.5(c).
"Material Debt" means Debt (other than the Notes) of the Borrower
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal 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 A hereto, evidencing the obligation of the Borrower to repay the
Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.2.
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.8.
"Notice of Letter of Credit Issuance" has the meaning set forth in
Section 2.14(b).
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"Participant" has the meaning set forth in Section 10.6 (b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
5
<PAGE> 10
"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 per annum announced by the
Agent from time to time as its prime rate, with any change thereto effective as
of the opening of business on the day of the change; which Prime Rate is not
necessarily the best interest rate offered by Agent.
"Quarterly Payment Dates" means each March 31, June 30, September 30
and December 31.
"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 Bank 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
August 1, 1995, from the Guarantor and the Borrower to Bank One, 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 August 1, 1995, between Bank One, N.A. and Rickenbacker Holdings,
Inc., as amended from time to time.
"Schedule A Subsidiary" means any corporation set forth on Schedule
A hereto.
"Short Term Investment" means any investment grade Investment,
including but not limited to Investments such as (i) asset-backed securities,
(ii) mortgaged-backed securities, (iii) collateralized mortgage obligations,
(iv) commercial paper, (v) repurchase agreements with respect to securities
described in clauses (i) through (iii) above entered into with an office of a
bank, trust company, brokerage company or issuer 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); provided that any such Investment described in this
definition, or the issuer or guarantor thereof, is rated at least BBB by
Standard & Poors Rating Services or Baa by Moody's Investor Service, Inc., and
in each case that such Investment matures within five years from the date of
acquisition thereof by the Borrower or a Subsidiary.
"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.
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<PAGE> 11
"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, 2001 (or July 1, 2002 or July 1,
2003 if the Revolving Credit Period shall have been extended to such date
pursuant to Section 2.1(b)) or, if such day is not a Eurodollar Business Day,
the next succeeding Eurodollar Business Day unless such Eurodollar Business Day
falls in another calendar month, in which case the Termination Date shall be the
next preceding Eurodollar Business Day.
"Turner Development Corporation" means Turner Development
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.
SECTION 1.2. 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 5 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 5 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.
ARTICLE 2: THE CREDITS
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<PAGE> 12
SECTION 2.1. 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 2.10 and reborrow at any time during the Revolving Credit Period under
this Section.
(b) The Revolving Credit Period may be extended, in the manner set
forth in this subsection (b), on July 1, 1999 and/or on July 1, 2000 (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, 2002 or July 1, 2003, as the case may be.
SECTION 2.2. Method of Borrowing. (a) The Borrower shall give the
Agent notice (a "Notice of Borrowing") not later than 11:00 A.M. (Eastern
Standard Time) on (y) the date of each Base Rate Borrowing, and (z) the third
Eurodollar Business Day before each Eurodollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Eurodollar
Business Day in the case of a Eurodollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate or a Eurodollar Rate; and
(iv) in the case of a Eurodollar Borrowing, the duration of
the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
(b) 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.
(c) Not later than 12:00 Noon (Eastern Standard 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 Columbus, Ohio, to
the Agent at its address referred to in Section 10.1. Unless the Agent
determines that any applicable condition specified in Article 3 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.
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<PAGE> 13
(d) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with 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 2.5,
and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.3. Notes. (a) The Loans of each Bank shall be evidenced by
a single Note payable to the order of such Bank for the account of its
Applicable Lending Office in an amount equal to the aggregate unpaid principal
amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that its Loans of a particular type be evidenced by a separate Note in an amount
equal to the aggregate unpaid principal amount of such Loans. Each such Note
shall be in substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans of the relevant
type. Each reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.1(b), 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.
SECTION 2.4. Maturity of Loans. Each Loan shall mature, and the
principal amount thereof shall be due and payable, on the Termination Date.
SECTION 2.5. 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 Eurodollar
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.
(b) Each Eurodollar 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 Eurodollar 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, every 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 Eurodollar
Reserve Percentage.
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The "London Interbank Offered Rate" applicable to any Interest
Period means the rate per annum (rounded to the nearest 1/16 of 1%) appearing on
the Screen as the London Interbank Offered Rate for deposits in dollars at
approximately 11:00 A.M. London time (or as soon thereafter as practicable) two
Eurodollar Business Days prior to the first day of such Interest Period in an
amount approximately equal to the principal amount of the requested Eurodollar
Loan. If such rate does not appear on the Screen (or, if the Screen shall cease
to be publicly available or if the information contained on the Screen, in the
Agent's reasonable judgment, shall cease to accurately reflect such London
Interbank Offered Rate, as reported by any publicly available source of similar
market data selected by the Agent that, in the Agent's reasonable judgment,
accurately reflects such London Interbank Offered Rate), the London Interbank
Offered Rate shall mean, with respect to any Eurodollar Loan for any Interest
Period, the arithmetic mean, as determined by the Agent, of the rate per annum
(rounded to the nearest 1/16 of 1%) quoted by the Agent at approximately 11:00
A.M. London time (or as soon thereafter as practicable) two Eurodollar Business
Days prior to the first day of the Interest Period for such Eurodollar Loan for
the offering by the Agent to leading banks in the London Interbank market of
deposits in dollars having a term comparable to such Interest Period and in an
amount comparable to the principal amount of the Eurodollar Loan to be made by
the Agent for such Interest Period.
"Screen" means, with respect to dollars, the relevant Dow Jones
Markets Page on which appears the London Interbank Offered Rate for deposits in
dollars; provided that, if there is no such Dow Jones Markets Page, the relevant
Reuters Screen Page will be substituted.
"Eurodollar 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
Eurodollar 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 Eurodollar
Reserve Percentage.
(c) Any overdue principal of or interest on any Eurodollar 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 Eurodollar 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 Eurodollar 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 the Agent appearing on the Screen for the applicable
period determined as provided above, by (y) 1.00 minus the Eurodollar Reserve
Percentage (or, if the circumstances described in clause (a) or (b) of Section
8.1 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.
(d) 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.
(e) If the Agent 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 Banks or, if none of such quotations is
available on a timely basis, the provisions of Section 8.1 shall apply.
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SECTION 2.6. 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.
(b) 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.
SECTION 2.7. 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.
SECTION 2.8. 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 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to Eurodollar Loans as of any Eurodollar
Business Day; and
(ii) if such Loans are Eurodollar Loans, the Borrower may
elect to convert such Loans on the last day of any applicable
Interest Period to Base Rate Loans, or elect to continue such Loans
as Eurodollar 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. (Eastern Standard Time)
on the third Eurodollar Business Day before the conversion or continuation
selected in such notice 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.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) 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;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if the Loans are to be converted to
Eurodollar Loans, the duration of the next succeeding Interest
Period applicable thereto; and
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(iv) if such Loans are to be continued as Eurodollar 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.
(c) 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.
SECTION 2.9. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date and any Loans then outstanding (together
with accrued interest thereon) shall be due and payable on such date.
SECTION 2.10. Optional Prepayments. (a) The Borrower may
(i) upon notice to the Agent not later than 11:00 A.M.
(Eastern Standard Time) on the date of prepayment, prepay any Group
of Base Rate Loans on any Domestic Business Day; or
(ii) upon at least three Eurodollar Business Days' notice to
the Agent, prepay any Group of Eurodollar 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 (except in the case of the prepayment of the full
aggregate outstanding amount of any Group of Loans, in which case such full
aggregate outstanding balance may be prepaid), 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 of Loans.
(b) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof, and of such
Bank's ratable share of such prepayment and such notice shall not thereafter be
revocable by the Borrower.
SECTION 2.11. General Provisions as to Payments. (a) The Borrower
shall make each payment of (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 Bank), not later than
12:00 Noon (Eastern Standard Time) on the date when due, in Federal or other
funds immediately available in Columbus, Ohio, to the Agent at its address
referred to in Section 10.1. 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 Base Rate 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 Eurodollar Loans shall be due on a
day which is not a Eurodollar Business Day, the date for payment thereof shall
be extended to the next succeeding Eurodollar Business Day unless such
Eurodollar Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Eurodollar Business Day. If the
date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due 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.
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SECTION 2.12. Funding Losses. If the Borrower makes any payment of
principal with respect to any Eurodollar Loan or any Eurodollar Loan is
converted (pursuant to Articles 6 or 8 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 2.5(c), or if the Borrower fails to
borrow, prepay, convert or continue any Eurodollar Loans after notice has been
given to any Bank in accordance with Section 2.2(b), 2.8(c), or 2.10(b), 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.
SECTION 2.13. Computation of Interest and Fees. Interest based on
the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.14. Letters of Credit. (a) Subject to the terms and
conditions set forth in this Agreement, the 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 the 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.
(b) The Borrower shall give the 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 the 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 the 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.
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(c) 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
(Eastern Standard 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.
(d) 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.
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(e) The Borrower agrees to indemnify and hold harmless each Bank
(including Bank One, N.A. in its capacity as 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
the 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 the Issuing Bank
hereunder (but nothing herein contained shall affect any rights the Borrower may
have against such defaulting Bank)), and none of the Banks (including Bank One,
N.A. in its capacity as 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, or
(iv) any consequences arising from causes beyond the control of the 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 the
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 the Issuing
Bank in determining whether a request presented under any Letter of Credit
complied with the terms of such Letter of Credit, or (y) the 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 the Issuing Bank as required by this subsection, the
Banks agree to do so ratably in proportion to their Commitments.
ARTICLE 3: CONDITIONS
SECTION 3.1. Effective Date. This Agreement shall become effective
when the Agent shall have received:
(a) 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);
(b) a duly executed Note for the account of each Bank dated on or
before the Effective Date complying with the provisions of Section 2.3;
(c) for the account of each Bank, repayment of all outstanding
Loans, if any, made by it under the Restated and Amended Credit Agreement
by and among the Borrower, the Guarantor, certain of the Banks parties
hereto and Morgan Guaranty Trust Company as Agent, the predecessor
agreement of this Agreement, before the Effective Date, together with
interest accrued thereon and all unpaid commitment fees accrued for its
account under said agreement for the period up to but excluding the
Effective Date, as well as reimbursement to the Banks for any resulting
funding losses pursuant to Section 2.12 of said agreement;
(d) (i) an opinion of Fried, Frank, Harris, Shriver & Jacobson,
counsel for the Borrower and the Guarantor, substantially in the form of
Exhibit B, hereto, and (ii) an opinion of Sara J. Gozo, General Counsel of
the Borrower and the Guarantor, substantially in the form of Exhibit C
hereto; and
(e) 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.
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SECTION 3.2. 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 the Issuing Bank to issue (or renew or extend the term of) any
Letter of Credit, is subject to the satisfaction of the following conditions:
(a) the fact that the Effective Date shall have occurred on or prior
to July 1, 1998;
(b) receipt by the Agent of a Notice of Borrowing as required by
Section 2.2, or receipt by the Issuing Bank of a Notice of Letter of
Credit Issuance as required by Section 2.14(b);
(c) 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
(d) 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.
ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants to the Agent and the Banks
now or hereafter parties hereto that:
SECTION 4.1. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.2. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes, and by the Guarantor of this Agreement, are within the
Borrower's and the Guarantor's respective corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the respective certificate of incorporation or respective
by-laws of the Borrower or the Guarantor or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or the
Guarantor or result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries.
SECTION 4.3. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and the Guarantor, and the Notes, when
executed and delivered in accordance with this Agreement, will constitute valid
and binding obligations of the Borrower, and all of such documents are or will
be enforceable in accordance with their respective terms, except as (i) the
validity, binding nature or enforceability hereof or thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
SECTION 4.4. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 1997 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 1997 Form 10-K, a copy of which has been delivered to each of the
Banks, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such Fiscal Year.
(b) Since December 31, 1997 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.
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SECTION 4.5. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could materially adversely
affect the business, consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries, or which in any
manner draws into question the validity of this Agreement or the Notes.
SECTION 4.6. Compliance with ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards of ERISA and
the Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code, or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
SECTION 4.7. Environmental Matters. The Borrower has reasonably
concluded that Environmental Laws are unlikely to have a material adverse effect
on the business, financial condition, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.8. Compliance with Laws. The Borrower and its Subsidiaries
are in compliance with all applicable laws, ordinances, rules, regulations and
requirements of governmental authorities, except where the necessity of
compliance therewith is being contested in good faith by appropriate proceedings
and except where the failures to be in compliance therewith, in the aggregate,
do not, and are not reasonably expected to, have a material adverse effect on
the business, financial position, results of operations or prospects of the
Borrower and its Subsidiaries, considered as a whole.
SECTION 4.9. Contractual Arrangements. Each contract or agreement to
which the Borrower or any of its Subsidiaries is a party is a valid and binding
obligation of each party thereto, the Borrower or the Subsidiary of the Borrower
that is a party thereto is not in default thereunder, and the Borrower has no
knowledge of a continuing default thereunder by any other party thereto, except
to the extent that the cumulative effect of any such agreements not being valid
and binding and of any such defaults does not have a material adverse effect on
the business, financial position, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.10. Taxes. The Borrower and its Subsidiaries have filed
all United States Federal income tax returns and all other material tax returns
which are required to be filed by them, and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower or any
Subsidiary. The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.
SECTION 4.11. Subsidiaries. Each of the Borrower's corporate
Subsidiaries that actively engages in business is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
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SECTION 4.12. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.13. Full Disclosure. All information heretofore furnished
by the Borrower to the Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Agent or any Bank will
be, true and accurate in all material respects on the date as of which such
information is stated or certified. The Borrower has disclosed to the Banks in
writing any and all facts which materially and adversely affect or may affect
(to the extent the Borrower can now reasonably foresee), the business,
operations or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the ability of the Borrower or the Guarantor
to perform its obligations under this Agreement.
ARTICLE 5: 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:
SECTION 5.1. Information. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after the
end of each Fiscal Year, 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;
(b) 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;
(c) simultaneously with the delivery of each set of consolidated
financial statements referred to in clause (a) above, consolidating
balance sheets of the Borrower and each of its Consolidated Subsidiaries
as of the end of the Fiscal Year covered by such financial statements and
the related consolidating statements of 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;
(d) simultaneously with the delivery of each set of consolidated
financial statements referred to in clause (b) above, consolidating
balance sheets of the Borrower and its Consolidated Subsidiaries as of the
end of the 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;
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(e) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, (i) a modified
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of the period covered by such financial
statements prepared on the basis of accounting principles consistent with
those on the basis of which the consolidated balance sheet delivered
pursuant to clause (a) or (b) above was prepared, except that such
modified balance sheet shall present assets and liabilities as current and
long-term and shall be prepared on the assumption that all real estate of
the Borrower and its Consolidated Subsidiaries which, as of the end of
such period, is held for sale is a current asset and that all obligations
of the Borrower and its Consolidated Subsidiaries of which the Borrower
reasonably expects the obligor would be relieved (by discharge, assumption
by a third party or otherwise) upon the sale of such real estate are
current liabilities, and (ii) a certificate of the chief financial officer
or the chief accounting officer of the Borrower stating that such modified
balance sheet was prepared in accordance with clause (i) above;
(f) simultaneously with delivery of each set of financial
statements referred to in clauses (a) and (b) above, a summary of each
construction project of the Borrower and its Subsidiaries with respect to
which a contract has been obtained but not completed, the Backlog Volume
of which is greater than $10,000,000 or the Backlog Earnings of which are
greater than $500,000 as of the end of the period covered by such
financial statements, which summary shall be in the form of the summary
heretofore provided to the Banks under this clause (f);
(g) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of the Borrower
(i) setting forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the requirements of
Sections 5.7 to 5.12, inclusive, 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;
(h) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
whether anything has come to their attention to cause them to believe that
any Default existed on the date of such statements, and (ii) confirming
the calculations set forth in the officer's certificate delivered
simultaneously therewith pursuant to clause (g) above;
(i) within five days after any officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief accounting officer
of the Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(j) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(k) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q
and 8-K (or their equivalents) which the Borrower shall have filed with
the Securities and Exchange Commission;
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(1) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC, (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent
or has been terminated, a copy of such notice, (iii) receives notice from
the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect
of, or appoint a trustee to administer any Plan, a copy of such notice,
(iv) applies for a waiver of the minimum funding standard under Section
412 of the Internal Revenue Code, a copy of such application, (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC, (vi) gives
notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a
copy of such notice, or (vii) fails to make any payment or contribution to
any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or
makes any amendment to any Plan or Benefit Arrangement which has resulted
or could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth details as to such
occurrence and action, if any, which the Borrower or applicable member of
the ERISA Group is required or proposes to take; and
(m) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.2. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
SECTION 5.3. Maintenance of Property; Insurance.
(a) The Borrower will keep, and will cause each Subsidiary to keep,
all property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted.
(b) The Borrower will insure and keep insured, and will cause each
of its Subsidiaries to insure and keep insured, with financially sound and
reputable insurers, so much of their respective properties, in such amounts (and
with such deductibles), as companies engaged in a similar business in accordance
with good business practice customarily insure properties of a similar character
against loss by fire and from other causes. In addition, the Borrower will, and
will cause each Subsidiary to, maintain with financially sound and reputable
insurers public liability insurance against claims for personal injury, death or
property damage suffered by others upon or in or about any premises occupied by
it or occurring as a result of its ownership, maintenance or operation of any
automobiles, trucks or other vehicles, aircraft or other facilities or as a
result of the use of products manufactured, constructed or sold by it or
services rendered by it, and such other insurance, in such amounts (and with
such deductibles) as is usually carried by companies engaged in a similar
business and as is in accordance with good business practice.
SECTION 5.4. 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 5.15 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.
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SECTION 5.5. Compliance with Laws. The Borrower will comply, and
cause each Subsidiary to comply, with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including, without
limitation, Environmental Laws and ERISA and the rules and regulations
thereunder), except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings, and except where the failures to comply
therewith, in the aggregate, do not, and are not reasonably expected to, have a
material adverse effect on the business, financial position, results of
operations or prospects of the Borrower and its Subsidiaries, considered as a
whole.
SECTION 5.6. 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.
SECTION 5.7. Current Ratio. Consolidated Adjusted Current Assets
will at no time be less than 100% of Consolidated Adjusted Current Liabilities.
SECTION 5.8. Debt. The Leverage Ratio will at no time exceed 2.50 to
1.
SECTION 5.9. 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) $67,000,000, plus (b) the aggregate net proceeds received by
the Borrower or any Consolidated Subsidiary from the issuance of equity
securities after December 31, 1997 and on or before such date of determination;
but specifically excluding the aggregate net proceeds received by the Borrower
from the issuance of equity securities which are used by the Borrower to acquire
the equity interest of the Borrower owned by Karl Steiner Holding AG; 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, 1998) for which such
consolidated net income is greater than zero.
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SECTION 5.10. Fixed Charge Coverage. The Fixed Charge Ratio will
not, for any period of four consecutive Fiscal Quarters, be less than 1.45 to 1.
SECTION 5.11. Intentionally Deleted.
SECTION 5.12. Debt of Guarantor. The sum, without duplication, of
(i) total Debt of the Guarantor and its Subsidiaries (determined on
a consolidated basis), plus
(ii) contingent obligations of the Guarantor and its Subsidiaries to
reimburse or prepay any bank or other Person in respect of amounts paid or
payable under a letter of credit, banker's acceptance or similar
instrument (except letters of credit, banker's acceptances and similar
instruments that support, or are created as a result of the payment of,
trade accounts payable of the Guarantor and its Subsidiaries arising in
the ordinary course of business), plus
(iii) the aggregate amount of all present and future obligations of
Persons under operating leases that are guaranteed by the Guarantor or any
of its Subsidiaries
will at no time exceed $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 $56,000,000 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 $56,000,000 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.
SECTION 5.13. Investments. (a) Neither the Borrower nor any
Consolidated Subsidiary will make or acquire any Investment in any Person other
than:
(i) Investments in Subsidiaries, provided such Subsidiaries are
existing on the date hereof;
(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;
(v) Short Term Investments; and
(vi) any other Investment, provided that, immediately after such
Investment is made, the aggregate cost of all Investments made pursuant to
this clause (vi), in each case net of any return of capital or proceeds of
sale, does not exceed 30% of Consolidated Adjusted Net Worth.
(b) Notwithstanding subsection (a) of this Section 5.13, the
Borrower and its Subsidiaries may acquire an equity interest in any Person
engaged in the general contracting business; provided, 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
$10,000,000, and (ii) the total cash consideration paid by the Borrower and its
Subsidiaries for such equity interests in any one Person shall not exceed
$10,000,000.
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SECTION 5.14. 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.
SECTION 5.15. 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; and provided further, that none of the Borrower, the
Guarantor, or any of the Subsidiaries of Borrower, or any Subsidiaries of such
Subsidiaries, shall enter into any merger or consolidation with any Person
engaged in the business of real estate development as its primary business.
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 Turner Development Corporation and its
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.
SECTION 5.16. 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.
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SECTION 5.17. Real Estate Development. None of the Borrower, the
Guarantor, or any of the Subsidiaries of the Borrower, or any subsidiaries of
such Subsidiaries, shall (a) engage in the business of real estate development
as its primary business, or (b) invest in or become a party to any real estate
joint venture, partnership or other joint enterprise that would be reflected on
a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries;
provided, however, that nothing contained herein shall limit or restrict the
ability of the Borrower, the Guarantor, or any of the Subsidiaries of the
Borrower, or any subsidiaries of such Subsidiaries, to contribute real estate
assets to any such joint venture, partnership or other joint enterprise, so long
as such contribution is the only obligation or duty (other than administrative
obligations or duties such as reporting requirements) of the Borrower, the
Guarantor, or any of the Subsidiaries of the Borrower, or any subsidiaries of
such Subsidiaries, related thereto.
ARTICLE 6: DEFAULTS
SECTION 6.1. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan or any Reimbursement Obligation or shall fail to pay within three
days of the due date thereof any interest, fees or other amount payable
hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.7, 5.8, 5.9, 5.10, 5.11, 5.15 or 5.16;
(c) the Borrower shall fail to observe or perform any covenant
contained in Section 5.12, 5.13 or 5.14 for seven days after written
notice thereof has been given to the Borrower by the Agent at the request
of any Bank;
(d) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
(a), (b) or (c) above) for 30 days after written notice thereof has been
given to the Borrower by the Agent at the request of any Bank;
(e) any representation, warranty, certification or statement made by
the Borrower or the Guarantor in this Agreement or in any certificate,
financial statement or other document delivered pursuant to this Agreement
shall prove to have been incorrect in any material respect when made (or
deemed made);
(f) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Financial Obligations when due or within any
applicable grace period;
(g) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or 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;
(h) the Guarantor's obligations hereunder shall at any time cease to
be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by the Guarantor, or
the Guarantor shall deny it has any further liability or obligation
hereunder;
(i) the Borrower or any Subsidiary shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall admit in writing
its inability to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(j) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect;
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(k) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating
that any Material Plan must be terminated; or there shall occur a complete
or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a
current payment obligation in excess of $1,000,000;
(l) 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
(m) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act) of
30% 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.
SECTION 6.2. Notice of Default. The Agent shall give notice to the
Borrower under Section 6.1(c) or 6.1(d) promptly upon being requested to do so
by any Bank and shall thereupon notify all the Banks thereof.
SECTION 6.3. 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
6.1(i) or 6.1(j) 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.
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ARTICLE 7: THE AGENT
SECTION 7.1. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the Notes as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.2. Agent and Affiliates. Bank One, N.A. 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 Bank
One, N.A. 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.
SECTION 7.3. 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 6.
SECTION 7.4. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.5. 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 3, 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.
SECTION 7.6. 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.
SECTION 7.7. 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.
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SECTION 7.8. 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.
SECTION 7.9. Agent's Fee. The Borrower shall pay to the Agent for
its own account fees in the amounts and at the times previously agreed upon
between the Borrower and the Agent.
ARTICLE 8: CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any
Eurodollar Loan:
(a) the Agent is advised that deposits in dollars (in the applicable
amounts) are not appearing on the Screen or are not being offered to the
Agent in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted London Interbank Offered
Rate as determined by the Agent will not adequately and fairly reflect the
cost to such Banks of funding their Eurodollar Loans 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 Eurodollar Loans, or to continue or convert outstanding Loans as or into
Eurodollar Loans shall be suspended, and (ii) each outstanding Eurodollar Loan
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 Eurodollar Borrowing for
which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, such Borrowing shall instead be made as a Base Rate
Borrowing.
SECTION 8.2. Illegality. If, on or after July 1, 1998, 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 Eurodollar 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 Eurodollar
Lending Office) to make, maintain or fund its Eurodollar 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 Eurodollar Loans, or to continue or
convert outstanding Loans as or into Eurodollar Loans, shall be suspended.
Before giving any notice to the Agent pursuant to this Section, such Bank shall
designate a different Eurodollar 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 Eurodollar
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
Eurodollar 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.
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SECTION 8.3. Increased Cost and Reduced Return. (a) If on or after
July 1, 1998, 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
with respect to any Eurodollar Loan any such requirement included in an
applicable Eurodollar Reserve Percentage), special deposit, insurance assessment
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 Eurodollar Loans, its Note or its obligation to make
Eurodollar 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 Eurodollar 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.
(b) If any Bank shall have determined that, after July 1, 1998, 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.
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 8.4. Taxes. (a) For the purposes of this Section 8.4,
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.
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"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.
(b) 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 10.1, the original or a certified copy of a receipt
evidencing payment thereof.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
SECTION 8.5. Base Rate Loans Substituted for Affected Eurodollar
Loans. If (i) the obligation of any Bank to make, or convert outstanding Loans
to, Eurodollar Loans has been suspended pursuant to Section 8.2, or (ii) any
Bank has demanded compensation under Section 8.3 or 8.4 with respect to its
Eurodollar Loans and the Borrower shall, by at least five Eurodollar 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:
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(a) all Loans which would otherwise be made by such Bank as (or
continued as or converted into) Eurodollar Loans shall instead be Base
Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Eurodollar Loans of the other Banks);
and
(b) after each of its Eurodollar Loans has been repaid (or converted
to a Base Rate Loan), all payments of principal which would otherwise be
applied to repay such Eurodollar 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 Eurodollar Loan on the first day of the next succeeding
Interest Period applicable to the related Eurodollar Loans of the other Banks.
ARTICLE 9: GUARANTY
SECTION 9.1. 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.
SECTION 9.2. Guaranty Unconditional. The obligations of the
Guarantor hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under this Agreement
or any Note, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement or any Note;
(iii) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of the Borrower under this
Agreement or any Note;
(iv) any change in the corporate existence, structure or ownership
of the Borrower or the Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or its
assets or any resulting release or discharge of any obligation of the
Borrower contained in this Agreement or any Note;
(v) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Borrower, the Agent, any Bank
or any other Person, whether in connection herewith or with any unrelated
transactions, provided that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Borrower for any reason of this Agreement or any Note, or any provision of
applicable law or regulation purporting to prohibit the payment by the
Borrower of the principal of or interest on any Note or any other amount
payable by the Borrower under this Agreement; or
(vii) any other act or omission to act or delay of any kind by the
Borrower, the Agent, any Bank or any other Person or any other
circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the Guarantor's
obligations hereunder.
SECTION 9.3. 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.
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SECTION 9.4. 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. The Guarantor
agrees and acknowledges that the terms and provisions of this Agreement, any
Note and any other agreement, document or instrument executed in connection with
any of the foregoing may be modified and amended without prior notice to or the
consent of the Guarantor, all such notices being hereby waived by the Guarantor,
for itself and its successors and assigns.
SECTION 9.5. Subornation. 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.
SECTION 9.6. 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 6.
SECTION 9.7. Limit of Liability. The obligations of the Guarantor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any applicable state law.
ARTICLE 10: MISCELLANEOUS
SECTION 10.1. 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 the
Issuing Bank under Article 2 or Article 8 shall not be effective until received.
SECTION 10.2. No Waivers. No failure or delay by the Agent or any
Bank or the 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.
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SECTION 10.3. 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.
(b) The Borrower agrees to indemnify the Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in connection
with any investigative, administrative or judicial proceeding (whether or not
such Indemnitee shall be designated a party thereto) brought or threatened
relating to or arising out of this Agreement or any actual or proposed use of
proceeds of 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.
SECTION 10.4. 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.
SECTION 10.5. 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 the Issuing Bank is affected
thereby, by the Agent or the 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 2.14) 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.
32
<PAGE> 37
SECTION 10.6. 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.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
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 Bank and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole right
and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i), (ii), (iii) or
(iv) of Section 10.5 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 8 with respect to its
participating interest. An assignment or other transfer which is not permitted
by subsection (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (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 D 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 Bank;
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 8.4.
(d) 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.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.3 or 8.4
than such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.2, 8.3 or 8.4 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.
33
<PAGE> 38
SECTION 10.7. Collateral. Each of the Banks represents to the Agent
and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 10.8. Governing Law. This Agreement and each Note shall be
governed by and construed in accordance with the laws of the State of Ohio.
SECTION 10.9. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 10.10. WAIVER OF JURY TRIAL. AGENT, EACH BANK, BORROWER AND
GUARANTOR, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM. NONE OF AGENT, ANY BANK,
BORROWER OR GUARANTOR SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE,
ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT
BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY ANY OF AGENT,
ANY BANK, BORROWER OR GUARANTOR, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL
OF THEM.
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
By By
----------------------------------- -----------------------------------
Title: Title:
---------------------------- ----------------------------
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
By By
----------------------------------- -----------------------------------
Title: Title:
---------------------------- ----------------------------
375 Hudson Street 375 Hudson Street
New York, NY 10014 New York, NY 10014
Facsimile: (212) 229-6073 Facsimile: (212) 229-6073
34
<PAGE> 39
Commitments
- -----------
$15,000,000 BANK OF NEW YORK
By
------------------------------------------
Title:
------------------------------------
$15,000,000 HARRIS TRUST AND SAVINGS BANK
By
------------------------------------------
Title:
------------------------------------
$15,000,000 BANK ONE, N.A.
By
------------------------------------------
Title:
------------------------------------
====================
$45,000,000 Total Commitments
BANK ONE, N.A., as Agent
By
---------------------------------
Title: Vice President
35
<PAGE> 40
PRICING SCHEDULE
Each of "Eurodollar 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:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Level I Level II Level III Level IV
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Eurodollar
Margin 1.375% 1.50% 1.625% 1.75%
- --------------------------------------------------------------------------------
Base Rate
Margin 0% 0% 0% 0.25%
- --------------------------------------------------------------------------------
Commitment Fee
Rate 0.25% 0.375 0.375% 0.50%
- --------------------------------------------------------------------------------
LC Fee
Rate 1.375% 1.50% 1.625% 1.75%
- --------------------------------------------------------------------------------
</TABLE>
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 5.1(g) is greater than or equal to 2.5
to 1 and Consolidated Adjusted Net Worth as of the end of such most recent
Fiscal Quarter is greater than or equal to $100,000,000.
"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 5.1(g) is greater than or equal to 2.2 to 1 and Consolidated Adjusted
Net Worth as of the end of such most recent Fiscal Quarter is greater than or
equal to $85,000,000.
"Level III Pricing" applies for any day if Level I Pricing and Level
II Pricing do 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 5.1(g) 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 IV Pricing" applies for any day if Level I Pricing, Level II
Pricing and Level III Pricing do 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 5.1(g) 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. In any event, Level IV Pricing shall
apply if Level I Pricing, Level II Pricing and Level III Pricing do not apply.
"Pricing Level" refers to the determination of which Level I
Pricing, Level II Pricing, Level III Pricing, or Level IV Pricing applies for
any day.
<PAGE> 41
EXHIBIT A
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 Bank One, N.A.,
100 East Broad Street, Columbus, Ohio 43271.
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 July __, 1998, by and among The Turner Corporation, Turner
Construction Company, the Banks parties thereto and Bank One, N.A., 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:
<PAGE> 42
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Amount Amount of
of Principal
Date Loan Type Repaid Notation Made By
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 43
EXHIBIT B
[LETTERHEAD]
July __, 1998
To the Banks and the Agent
Referred to Below
c/o Bank One, N.A.
100 East Broad Street
Columbus, Ohio 43271
Dear Sirs:
We have acted as counsel for The Turner Corporation (the "Borrower")
and Turner Construction Company (the "Guarantor") in connection with the Credit
Agreement dated as of July __, 1998 (the "Credit Agreement") by and among the
Borrower, the Guarantor, the banks parties thereto and Bank One, N.A., as Agent.
Terms defined in the Credit Agreement are used herein as therein defined. This
opinion is being rendered to you at the request of our clients pursuant to
Section 3.1(d) of the 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
Credit Agreement and the Notes and by the Guarantor of the 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.
<PAGE> 44
To the Banks and the Agent 2 July __, 1998
3. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and the Guarantor, and the Notes constitute valid and binding
obligations of the Borrower, in each case enforceable against the Borrower or
the Guarantor, as the case may be, in accordance with their respective terms
except as 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 Credit Agreement or the Notes.
Very truly yours,
<PAGE> 45
EXHIBIT C
[LETTERHEAD]
August 14, 1998
To the Banks and the Agent
Referred to Below
c/o Bank One, N.A.
100 East Broad Street
Columbus, Ohio 43271
Dear Sirs:
I am General Counsel of The Turner Corporation, a Delaware corporation (the
"Borrower"), and Turner Construction Company, a New York corporation (the
"Guarantor").
I have examined the Credit Agreement dated as of August 14, 1998 (the "Credit
Agreement") by and among the Borrower, Guarantor, the banks listed on the
signature pages thereof and Bank One, N.A., as Agent, as well as originals or
copies, certified or otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public official and other instruments and
have conducted such other investigations of fact and law as I have deemed
necessary or advisable for purposes of this opinion. Terms defined in the Credit
Agreement are used herein as therein defined.
Upon the basis of the foregoing, I am of the opinion that:
1. Each of the Borrower and the Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of its
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
2. The execution, delivery and performance by the Borrower and the Guarantor
of the Credit Agreement and by the Borrower of the Notes do not
contravene, or constitute a default under, any provision of any agreement,
judgment, injunction, order, decree or other instrument of which I am
aware binding upon the Borrower or the Guarantor or result in the creation
or imposition of any Lien under any agreement of which I am aware 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 and its
Consolidated Subsidiaries, considered as a whole or which in any manner
draws into question the validity of the Credit Agreement or the Notes.
The Company is, however, engaged in routine litigation consistent with
that of prior years, the cost of which has a material impact on the
Borrower's earnings and which if the Borrower and its Subsidiaries were
consistently unsuccessful would result in adverse decisions which would
materially affect their results of operations.
Very truly yours,
<PAGE> 46
EXHIBIT D
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 BANK ONE, N.A., as Agent (the "Agent").
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Credit Agreement dated as of August 14, 1998 (the "Credit
Agreement") by and 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 Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
Loans made by, 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 Bank and the Agent] and the payment of the
amounts specified in Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights and be obligated to
perform the obligations of a Bank under the Credit Agreement with a Commitment
in an amount equal to the Assigned Amount, and (ii) the Commitment of the
Assignor shall, as of the date hereof, be reduced by a like amount and the
Assignor released from its obligations under the Credit Agreement to the extent
such obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds 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
- ----------
(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.
<PAGE> 47
Assignee. Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the account of such other
party to the extent of such other party's interest therein and shall promptly
pay the same to such other party.
SECTION 4. Consent of the Borrower, the Agent and the Issuing Bank.
This Agreement is conditioned upon the consent of the Borrower, the Agent and
the Issuing Bank pursuant to Section 10.6(c) of the Credit Agreement. The
execution of this Agreement by the Borrower, the Agent and the Issuing Bank is
evidence of this consent. Pursuant to Section 10.6(c), 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 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 Ohio.
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.
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:
BANK ONE, N.A., as Agent
By
----------------------------------------
Name:
Title:
BANK ONE, N.A., as Issuing Bank
By
----------------------------------------
Name:
Title:
<PAGE> 48
EXHIBIT E
EXTENSION AGREEMENT
The Turner Corporation
375 Hudson Street
New York, New York 10014
Bank One, N.A.
100 East Broad Street
Columbus, Ohio 43271
Gentlemen:
The undersigned hereby agree to extend, effective August 1, _____,
the term of the Credit Agreement dated as of August 14, 1998, by and among The
Turner Corporation, Turner Construction Corporation, the Banks party thereto and
Bank One, N.A., as Agent (the "Credit Agreement") for one year to August 1,
200__. Terms defined in the Credit Agreement are used herein as therein defined.
This Extension Agreement shall be construed in accordance with and
governed by the laws of the State of Ohio.
BANK ONE, N.A., as Agent
By
------------------------------------------
Title:
------------------------------------
[BANK]
By
----------------------------------------
Title:
----------------------------------
[BANK]
By
----------------------------------------
Title:
----------------------------------
[BANK]
By
----------------------------------------
Title:
----------------------------------
[BANK]
By
----------------------------------------
Title:
----------------------------------
[BANK]
By
----------------------------------------
Title:
----------------------------------
Agreed and accepted:
THE TURNER CORPORATION
<PAGE> 49
By
----------------------------------------
Title:
----------------------------------
By
----------------------------------------
Title:
----------------------------------
TURNER CONSTRUCTION COMPANY
By
----------------------------------------
Title:
----------------------------------
By
----------------------------------------
Title:
----------------------------------
BANK ONE, N.A., as Agent
By
----------------------------------------
Title:
----------------------------------
<PAGE> 50
SCHEDULE A
Subsidiaries of the Borrower
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.)
<PAGE> 51
Exhibit 10(f)
FIRST AMENDMENT TO CREDIT AGREEMENT dated as of October 15, 1998 by
and among THE TURNER CORPORATION, as Borrower, TURNER CONSTRUCTION COMPANY, as
Guarantor, the BANKS party hereto and BANK ONE, N.A., as Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto entered into the Credit Agreement having a
stated effective date of August 14, 1998 (the "Credit Agreement"), and the
parties desire to designate the effective date of the Credit Agreement as
September 21, 1998, and to otherwise amend the Credit Agreement as hereinafter
set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall
have the meanings for such terms set forth in the Credit Agreement.
2. Effective Date. The Effective Date of the Credit Agreement is hereby
deemed to be for all purposes, and shall be, September 21, 1998. All references
in the Credit Agreement to the date of "August 14, 1998" as the Effective Date
are hereby deleted, and substituted with the date of "September 21, 1998".
3. Amendment of Section 3. Notwithstanding anything contained in Section
3.1(b) to the contrary, the parties hereto agree and acknowledge that the
execution and delivery of the Note shall not be a condition precedent to the
effectiveness of the Credit Agreement, and that the Credit Agreement was and is
effective as of the date of September 21, 1998. The parties hereto further agree
and acknowledge that the execution and delivery of the Note by the Borrower in
accordance with the terms and conditions set forth in the Credit Agreement shall
be a condition precedent to any obligation of the Banks to make a Loan on the
occasion of any Borrowing. Finally, the parties hereto agree that the reference
to the date of "July 1, 1998" in the first line of Section 3.2(a) on page 22 is
hereby deleted, and replaced with the date of "September 21, 1998".
4. Confirmation and Ratification. Except as specifically modified and
amended pursuant to the terms hereof, the Credit Agreement remains unchanged and
in full force and effect as written. The parties hereto hereby ratify and
confirm in all respects, as of the date hereof, all of the terms, conditions,
representations, warranties, covenants and provisions contained therein, as
modified and amended hereby, and the Borrower and Guarantor each hereby confirms
and ratifies in all respects all of their respective obligations to the Banks
and the Agent thereunder.
<PAGE> 52
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
By By
----------------------------------- -----------------------------------
Title: Title:
---------------------------- ----------------------------
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
By By
----------------------------------- -----------------------------------
Title: Title:
---------------------------- ----------------------------
375 Hudson Street 375 Hudson Street
New York, NY 10014 New York, NY 10014
Facsimile: (212) 229-6073 Facsimile: (212) 229-6073
BANK OF NEW YORK
By
-----------------------------------
Title:
-----------------------------
HARRIS TRUST AND SAVINGS BANK
By
-----------------------------------
Title:
-----------------------------
BANK ONE, N.A.
By
-----------------------------------
Title: Vice President
BANK ONE, N.A., as Agent
By
-----------------------------------
Title: Vice President
<PAGE> 1
Exhibit 10(g)
A G R E E M E N T
between
THE TURNER CORPORATION
and
DATED: NOVEMBER 25, 1997
<PAGE> 2
AGREEMENT between THE TURNER CORPORATION (the "Company") and
(the "Executive"), dated November 25, 1997.
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 during the Protected Period (as defined in Section 1.04
below) 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
<PAGE> 3
-2-
(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
<PAGE> 4
-3-
(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.
1.04 For purposes of this Agreement, the "Protected Period" shall be
the three year period commencing November 25, 1997; provided, however, that the
Protected Period shall be automatically extended for one (1) year on November
25, 2000 and on each November 25 thereafter unless the Company
<PAGE> 5
-4-
shall have given written notice to the Executive at least ninety (90) days prior
thereto that the Protected Period shall not be so extended; and provided
further, however, that notwithstanding any such notice by the Company not to
extend, the Protected Period shall not end if prior to the expiration thereof
any person (as that term is defined below) has indicated an intention or taken
steps reasonably calculated to effect a Change in Control, in which event the
Protected Period shall end only after such person publicly announces that it has
abandoned all efforts to effect a Change in Control.
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
<PAGE> 6
-5-
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
<PAGE> 7
-6-
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
<PAGE> 8
-7-
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;
<PAGE> 9
-8-
(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
<PAGE> 10
-9-
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
<PAGE> 11
-10-
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
<PAGE> 12
-11-
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
<PAGE> 13
-12-
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
<PAGE> 14
-13-
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
------------------------------
<PAGE> 1
Exhibit 10(h)
A G R E E M E N T
between
THE TURNER CORPORATION
and
DATED: NOVEMBER 25, 1997
<PAGE> 2
AGREEMENT between THE TURNER CORPORATION (the "Company") and (the
"Executive"), dated November 25, 1997.
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 during the Protected Period (as defined in Section 1.04
below) 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
<PAGE> 3
-2-
(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
<PAGE> 4
-3-
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.
1.04 For purposes of this Agreement, the "Protected Period" shall be
the three year period commencing November 25, 1997; provided, however, that the
Protected Period shall be automatically extended for one (1) year on November
25, 2000 and on each November 25 thereafter unless the Company shall have given
written notice to the Executive at least ninety (90) days prior thereto that the
Protected Period shall not be so extended; and provided further,
<PAGE> 5
-4-
however, that notwithstanding any such notice by the Company not to extend, the
Protected Period shall not end if prior to the expiration thereof any person (as
that term is defined below) has indicated an intention or taken steps reasonably
calculated to effect a Change in Control, in which event the Protected Period
shall end only after such person publicly announces that it has abandoned all
efforts to effect a Change in Control.
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.
<PAGE> 6
-5-
(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),
<PAGE> 7
-6-
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.
<PAGE> 8
-7-
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
<PAGE> 9
-8-
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.
<PAGE> 10
-9-
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
<PAGE> 11
-10-
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
<PAGE> 12
-11-
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
<PAGE> 13
-12-
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
<PAGE> 14
-13-
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
------------------------------
<PAGE> 15
CHANGE OF CONTROL AGREEMENTS
NOVEMBER 25, 1997
Signed Agreement Returned
Ellis T. Gravette, Jr.*
Harold J. Parmelee* 11/14/97
Robert E. Fee* (Did not get - never signed last agreement.)
J. Glenn Little, II* 11/19/97 - Resigned 12/5/97
W. Richard Manteuffel* 11/26/97
Stuart B. Robinson* 12/1/97
D. Barry Sibson* Resigned 12/10/97
David J. Smith* 11/18/97
Donald G. Sleeman* 11/14/97
Ralph W. Johnson 11/20/97
Roger M. Lang 11/14/97
Robert L. Maxwell 11/24/97
Michael B. Smith 11/21/97
Roderick F. Wille 11/24/97
Anthony C. Breu 11/20/97
Sara J. Gozo 11/25/97
Karl F. Almstead 11/25/97
Joseph P. Bellanca 11/25/97
Nicholas E. Billotti 12/3/97
Russell L. Burns 12/2/97
Kenneth K. Butler 11/26/97
Charles T. Buuck 11/21/97
James W. Carpenter 11/19/97
Paul R. Creighton 12/12/97
Peter J. Davoren (Did not get - never signed last agreement.)
<PAGE> 16
Donald E. Denman 11/24/97
John A. DiCiurcio** 1/9/98
Richard N. Dorais
Richard H. Esau, Jr. 11/19/97 - Resigned 11/30/97
John J. Fumosa
Thomas B. Gerlach, Jr. 1/16/98
Jerre R. Glover 12/1/97
Walter F. Heyde 11/18/97
Robert H. Kidney 11/21/97
Joseph J. Kilar** 1/7/98
Robert H. Kimmig 11/20/97
Charles W. Koch 12/4/97
Saro J. LaScala 12/8/97
Robert D. Levine 11/25/97
Grant H. Liang** 12/24/97
Paul D. Little 11/25/97
Richard T. Lombardi 11/26/97
Philip B. Lovell 11/26/97
Nicholas T. Makes (Did not get - never signed last agreement.)
Geoffrey I. Marshall 11/26/97
Gary R. McCullough
John S. McIntire
James C. McKenna** 11/31/97
Edward V. McNeill 11/24/97
Robert T. Meyer 11/14/97
Rodney J. Michalka (Did not get - never signed last agreement.)
James I. Mitnick 12/5/97
Thomas G. Mormino 12/2/97
Francis C. O'Connor 11/19/97
Paul T. Pettersen 11/18/97
<PAGE> 17
Jeffrey B. Porter 12/9/97
Edward D. Quimby 11/26/97
James J. Rasche (Did not get - never signed last agreement.)
W. Shelby Reaves 12/5/97
Hilton O. Smith
Bruce E. Traegde** Resigned 11/15/97
Victor J. Tomazic 11/26/97
Joseph A. Turner, III 2/17/98
James E. Verzella 12/4/97
Robert G. Widing 11/20/97
Kenneth L. Wilson 11/21/97
Robert L. Wund (Did not get - never signed last agreement.)
George R. Zinser
* RECEIVED 2.99 PLAN
** THIS IS THE FIRST TIME THEY ARE GETTING A CHANGE OF CONTROL AGREEMENT.
*** 12/11/97 NEW VICE PRESIDENTS
Thomas D. Bean 1/13/98
William M. Brennan 1/5/98
Gary J. Heinerichs 1/5/98
Emil J. Konrath 1/9/98
<PAGE> 1
EXHIBIT 21
Subsidiaries Of The Registrant
<TABLE>
<CAPTION>
Percentage
Jurisdiction of Voting
Incorporation Held
-----------------------------
<S> <C> <C>
Mideast Construction Services, Inc. Delaware 100
Universal Construction Company 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
Turner International (U.S.V.I.), Delaware 100
Inc.
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
Rickenbacker Holdings, Inc. Delaware 100
Rickenbacker Development Corporation Delaware 100
</TABLE>
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.
<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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 168,879
<SECURITIES> 112,766
<RECEIVABLES> 705,743
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 69,169
<DEPRECIATION> 46,871
<TOTAL-ASSETS> 1,129,063
<CURRENT-LIABILITIES> 0
<BONDS> 18,891
0
854
<COMMON> 8,383
<OTHER-SE> 79,529
<TOTAL-LIABILITY-AND-EQUITY> 1,129,063
<SALES> 0
<TOTAL-REVENUES> 3,702,366
<CGS> 0
<TOTAL-COSTS> 3,604,447
<OTHER-EXPENSES> 67,509
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 933
<INCOME-PRETAX> 36,856
<INCOME-TAX> 17,223
<INCOME-CONTINUING> 19,633
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,633
<EPS-PRIMARY> 2.21
<EPS-DILUTED> 1.50
</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>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> Dec-31-1997
<CASH> 153,241
<SECURITIES> 18,902
<RECEIVABLES> 655,100
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 63,672
<DEPRECIATION> 40,431
<TOTAL-ASSETS> 972,687
<CURRENT-LIABILITIES> 0
<BONDS> 21,719
0
860
<COMMON> 5,441
<OTHER-SE> 69,835
<TOTAL-LIABILITY-AND-EQUITY> 972,687
<SALES> 0
<TOTAL-REVENUES> 3,198,448
<CGS> 0
<TOTAL-COSTS> 3,112,779
<OTHER-EXPENSES> 68,323
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,406
<INCOME-PRETAX> 15,986
<INCOME-TAX> 7,194
<INCOME-CONTINUING> 8,792
<DISCONTINUED> 0
<EXTRAORDINARY> (2,899)
<CHANGES> 0
<NET-INCOME> 5,893
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.41
</TABLE>
