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FORM 10-K
Securities and Exchange Commission Commission File No. 1-6314
Washington, DC 20549
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(MarkOne)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Act of
1934.
For the fiscal year ended December 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to ____________
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Perini Corporation
(Exact name of registrant as specified in its charter)
Massachusetts 04-1717070
(State of Incorporation) (IRS Employer Identification No.)
73 Mt. Wayte Avenue, Framingham, Massachusetts 01701
(Address of principal executive offices) (Zip Code)
(508) 628-2000
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which
registered
Common Stock, $1.00 par value The American Stock Exchange
$2.125 Depositary Convertible Exchangeable The American Stock Exchange
Preferred Shares, each representing 1/10th
Share of $21.25 Convertible Exchangeable
Preferred Stock, $1.00 par value
Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
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The aggregate market value of voting stock held by nonaffiliates of the
registrant is $28,846,432 as of February 28, 1997.
The number of shares of Common Stock, $1.00 par value per share, outstanding at
February 28, 1997 is 4,898,648 .
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Documents Incorporated by Reference
Portions of the annual proxy statement for the year ended December 31, 1996 are
incorporated by reference into Part III.
<PAGE>
PERINI CORPORATION
INDEX TO ANNUAL REPORT
ON FORM 10-K
PAGE
----
PART I
Item 1: Business 2
Item 2: Properties 13
Item 3: Legal Proceedings 14
Item 4: Submission of Matters to a Vote of Security Holders 14
PART II
Item 5: Market for the Registrant's Common Stock and Related 14
Stockholder Matters
Item 6: Selected Financial Data 15
Item 7: Management's Discussion and Analysis of Financial 16 - 21
Condition and Results of Operations
Item 8: Financial Statements and Supplementary Data 21
Item 9: Disagreements on Accounting and Financial Disclosure 21
PART III
Item 10: Directors and Executive Officers of the Registrant 22
Item 11: Executive Compensation 23
Item 12: Security Ownership of Certain Beneficial Owners and 23
Management
Item 13: Certain Relationships and Related Transactions 23
PART IV
Item 14: Exhibits, Financial Statement Schedules and Reports on 24
Form 8-K
Signatures 25
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<PAGE>
PART I.
ITEM 1. BUSINESS
General
Perini Corporation and its subsidiaries (the "Company" unless the
context indicates otherwise) provides general contracting, including building
and civil construction, and construction management and design-build services to
private clients and public agencies throughout the United States and selected
overseas locations. The Company is also engaged in real estate development
operations which are conducted by Perini Land & Development Company, a
wholly-owned subsidiary with offices in Arizona, Georgia and Massachusetts. The
Company was incorporated in 1918 as a successor to businesses which had been
engaged in providing construction services since 1894.
Because the Company's results consist in part of a limited number of
large transactions in both construction and real estate, results in any given
fiscal quarter can vary depending on the timing of transactions and the
profitability of the projects being reported. As a consequence, quarterly
results may reflect such variations.
Information on lines of business and foreign business is included under
the following captions of this Annual Report on Form 10-K for the year ended
December 31, 1996.
<TABLE>
Annual Report
On Form 10-K
Caption Page Number
<S> <C>
Selected Consolidated Financial Information Page 15
Management's Discussion and Analysis Pages 16 - 21
Footnote 13 to the Consolidated Financial Statements, entitled Business Segments Pages 46 - 47
and Foreign Operations
</TABLE>
While the "Selected Consolidated Financial Information" presents
certain lines of business information for purposes of consistency of
presentation for the five years ended December 31, 1996, additional information
(business segment and foreign operations) required by Statement of Financial
Accounting Standards No. 14 for the three years ended December 31, 1996 is
included in Note 13 to the Consolidated Financial Statements.
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<PAGE>
A summary of revenues by product line for the three years ended
December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Revenues (in thousands)
Year Ended December 31,
-------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Construction:
Building $ 834,888 $ 748,412 $ 626,391
Heavy 389,540 308,261 324,493
----------- ------------ -----------
Total Construction Revenues $1,224,428 $ 1,056,673 $ 950,884
----------- ------------ -----------
Real Estate:
Sales of Real Estate $ 7,639 $ 10,738 $ 33,188
Building Rentals 19,446 16,799 16,388
Interest Income 14,406 12,396 7,031
All Other 4,365 4,462 4,554
----------- ------------ -----------
Total Real Estate Revenues $ 45,856 $ 44,395 $ 61,161
----------- ------------ -----------
Total Revenues $1,270,284 $ 1,101,068 $ 1,012,045
=========== ============ ===========
</TABLE>
Construction
The general contracting and construction management services provided
by the Company consist of planning and scheduling the manpower, equipment,
materials and subcontractors required for the timely completion of a project in
accordance with the terms and specifications contained in a construction
contract. The Company was engaged in over 180 construction projects in the
United States and overseas during 1996. The Company has three principal
construction operations: building, civil and international.
The civil operation undertakes large heavy construction projects
throughout the United States, with current emphasis on major metropolitan areas
such as Boston, New York City, Chicago and Los Angeles. The civil operation
performs construction and rehabilitation of highways, subways, tunnels, dams,
bridges, airports, marine projects, piers and waste water treatment facilities.
The Company has been active in civil operations since 1894, and believes that it
has particular expertise in large and complex projects. The Company believes
that infrastructure rehabilitation is, and will continue to be, a significant
market in the 1990's and beyond.
The building operation provides its services through regional offices
located in several metropolitan areas: Boston and Philadelphia, serving New
England and the Mid-Atlantic area; Detroit and Chicago, operating in Michigan
and the Midwest region; and Phoenix, Las Vegas, Los Angeles and San Francisco,
serving Arizona, Nevada and California. In 1992, the Company combined its
building operations into a new wholly-owned subsidiary, Perini Building Company,
Inc. This new company combines substantial resources and expertise to better
serve clients within the building construction market, and enhances Perini's
name recognition in this market. The Company undertakes a broad range of
building construction projects including health care, correctional facilities,
sports complexes, hotels, casinos, residential, commercial, civic, cultural and
educational facilities.
The international operation engages in both civil and building
construction services overseas, funded primarily in U.S. dollars by agencies of
the United States government. In selected situations, it pursues private work
internationally.
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<PAGE>
Construction Strategy
The Company plans to continue to increase the amount of civil
construction work it performs because of the relatively higher margin
opportunities available from such work. The Company believes the best
opportunities for growth in the coming years are in the urban infrastructure
market, particularly in Boston, metropolitan New York, Chicago, Los Angeles and
other major cities where it has a significant presence, and in other large,
complex projects. The Company's strategy in building construction is to maximize
profit margins; to take advantage of certain market niches; and to expand into
new markets compatible with its expertise. Internally, the Company plans to
continue both to strengthen its management through management development and
job rotation programs, and to improve efficiency through strict attention to the
control of overhead expenses and implementation of improved project management
systems. Finally, the Company continues to expand its expertise to assist public
owners to develop necessary facilities through creative public/private ventures.
During 1996, the Company also adopted a plan to enhance the
profitability of its construction operations by emphasizing gross margin and
bottom line improvement ahead of top line revenue growth. This plan calls for
the Company to focus its financial and human resources on construction
operations which are consistently profitable and to de-emphasize marginal
business units. Consistent with that Plan, the Company currently is closing or
downsizing and refocusing four business units. The Company also sold a mine
reclamation subsidiary last year, which was not an integral part of its core
building and civil construction operations.
Backlog
As of December 31, 1996 the Company's construction backlog was $1.52
billion compared to backlogs of $1.53 billion and $1.54 billion as of December
31, 1995 and 1994, respectively.
<TABLE>
<CAPTION>
Backlog (in thousands) as of December 31,
-----------------------------------------------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Northeast $ 643,114 42% $ 749,017 49% $ 803,967 52%
Mid-Atlantic 113,289 8 179,324 12 26,408 2
Southeast 56,925 4 33,223 2 783 -
Midwest 97,954 6 325,055 21 293,168 19
Southwest 425,901 28 94,725 6 174,984 11
West 139,079 9 134,259 9 193,996 13
Other Foreign 41,438 3 18,919 1 45,473 3
------------ ---- ------------ ---- ------------ ----
Total $ 1,517,700 100% $ 1,534,522 100% $1,538,779 100%
============ ==== ============ ==== ============ ====
</TABLE>
The Company includes a construction project in its backlog at such time
as a contract is awarded or a firm letter of commitment is obtained. As a
result, the backlog figures are firm, subject only to the cancellation
provisions contained in the various contracts. The Company estimates that
approximately $402 million of its backlog will not be completed in 1997.
The Company's backlog in the Northeast region of the United States
remains strong because of its ability to meet the needs of the growing
infrastructure construction and rehabilitation market in this region,
particularly in the metropolitan Boston and New York City areas. The backlog
increase in the Southwest region is indicative of the increased demand by the
hotel-casino market in Nevada, while the decrease in backlog in the Midwest is
due, in part, to a downsizing of certain business units. Other fluctuations in
backlog are viewed by management as transitory.
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<PAGE>
Types of Contracts
The four general types of contracts in current use in the construction
industry are:
o Fixed price contracts ("FP"), which include unit price contracts,
usually transfer more risk to the contractor but offer the opportunity,
under favorable circumstances, for greater profits. With the Company's
increasing move into civil construction and publicly bid building
construction in response to current opportunities, the percentage of
fixed price contracts continue to represent the major portion of the
backlog.
o Cost-plus-fixed-fee contracts ("CPFF") which provide greater safety for
the contractor from a financial standpoint but limit profits.
o Guaranteed maximum price contracts ("GMP") which provide for a
cost-plus-fee arrangement up to a maximum agreed price. These contracts
place risks on the contractor but may permit an opportunity for greater
profits than cost-plus-fixed-fee contracts through sharing agreements
with the client on any cost savings.
o Construction management contracts ("CM") under which a contractor
agrees to manage a project for the owner for an agreed-upon fee which
may be fixed or may vary based upon negotiated factors. The contractor
generally provides services to supervise and coordinate the
construction work on a project, but does not directly purchase contract
materials, provide construction labor and equipment or enter into
subcontracts.
Historically, a high percentage of company contracts have been of the
fixed price type. Construction management contracts remain a relatively small
percentage of company contracts. A summary of revenues and backlog by type of
contract for the most recent three years follows:
<TABLE>
<CAPTION>
Revenues - Year Ended
December 31, Backlog As Of December 31,
- ----------------------------------- -------------------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
59% 67% 54% Fixed Price 62% 74% 68%
41 33 46 CPFF, GMP or CM 38 26 32
---- ---- ---- ---- ---- ----
100% 100% 100% 100% 100% 100%
==== ==== ==== ==== ==== ====
</TABLE>
Clients
During 1996, the Company was active in the building, heavy and
international construction markets. The Company performed work for over 125
federal, state and local governmental agencies or authorities and private
customers during 1996. No material part of the Company's business is dependent
upon a single or limited number of private customers; the loss of any one of
which would not have a materially adverse effect on the Company. As illustrated
in the following table, the Company continues to serve a significant number of
private owners. During the period 1994-1996, the portion of construction
revenues derived from contracts with various governmental agencies remains
relatively constant at 52% in 1996 and 56% in 1995 and 1994.
Revenues by Client Source
Year Ended December 31,
-----------------------------------
1996 1995 1994
---- ---- ----
Private Owners 48% 44% 44%
Federal Governmental Agencies 5 8 11
State, Local and Foreign Governments 47 48 45
---- ---- ----
100% 100% 100%
==== ==== ====
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<PAGE>
All Federal government contracts are subject to termination provisions, but as
shown in the table above, the Company does not have a material amount of such
contracts.
General
The construction business is highly competitive. Competition is based
primarily on price, reputation for quality, reliability and financial strength
of the contractor. While the Company experiences a great deal of competition
from other large general contractors, some of which may be larger with greater
financial resources than the Company, as well as from a number of smaller local
contractors, it believes it has sufficient technical, managerial and financial
resources to be competitive in each of its major market areas.
The Company will endeavor to spread the financial and/or operational
risk, as it has from time to time in the past, by participating in construction
joint ventures, both in a majority and in a minority position, for the purpose
of bidding on projects. These joint ventures are generally based on a standard
joint venture agreement whereby each of the joint venture participants is
usually committed to supply a predetermined percentage of capital, as required,
and to share in the same predetermined percentage of income or loss of the
project. Although joint ventures tend to spread the risk of loss, the Company's
initial obligations to the venture may increase if one of the other participants
is financially unable to bear its portion of cost and expenses. For a possible
example of this situation, see "Legal Proceedings" on page 14. For further
information regarding certain joint ventures, see Note 2 to Notes to
Consolidated Financial Statements.
While the Company's construction business may experience some adverse
consequences if shortages develop or if prices for materials, labor or equipment
increase excessively, provisions in certain types of contracts often shift all
or a major portion of any adverse impact to the customer. On fixed price type
contracts, the Company attempts to insulate itself from the unfavorable effects
of inflation by incorporating escalating wage and price assumptions, where
appropriate, into its construction bids. Gasoline, diesel fuel and other
materials used in the Company's construction activities are generally available
locally from multiple sources and have been in adequate supply during recent
years. Construction work in selected overseas areas primarily employs expatriate
and local labor which can usually be obtained as required. The Company does not
anticipate any significant impact in 1997 from material and/or labor shortages
or price increases.
Economic and demographic trends tend not to have a material impact on
the Company's civil construction operation. Instead, the Company's civil
construction markets are dependent on the amount of heavy civil infrastructure
work funded by various governmental agencies which, in turn, may depend on the
condition of the existing infrastructure or the need for new expanded
infrastructure. The building markets in which the Company participates are
dependent on economic and demographic trends, as well as governmental policy
decisions as they impact the specific geographic markets.
The Company has minimal exposure to environmental liability as a result
of the activities of Perini Environmental Services, Inc. ("Perini
Environmental"), a wholly-owned subsidiary of the Company. Perini Environmental
provides hazardous waste engineering and construction services to both private
clients and public agencies nationwide. Perini Environmental is responsible for
compliance with applicable law in connection with its clean up activities and
bears the risk associated with handling such materials. In addition to strict
procedural guidelines for conduct of this work, the Company and Perini
Environmental generally carry insurance or receive satisfactory indemnification
from customers to cover the risks associated with this business. The Company
also owns real estate nationwide and as an owner, is subject to laws governing
environmental responsibility and liability based on ownership. The Company is
not aware of any environmental liability associated with its ownership of real
estate property.
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<PAGE>
The Company has been subjected to a number of claims from former
employees of subcontractors regarding exposure to asbestos on the Company's
projects. None of the claims have been material. The Company also operates
construction machinery in its business and will, depending on the project or the
ease of access to fuel for such machinery, install fuel tanks for use on-site.
Such tanks run the risk of leaking hazardous fluids into the environment. The
Company, however, is not aware of any emissions associated with such tanks or of
any other environmental liability associated with its construction operations or
any of its corporate activities.
Progress on projects in certain areas may be delayed by weather
conditions depending on the type of project, stage of completion and severity of
the weather. Such delays, if they occur, may result in more volatile quarterly
operating results.
In the normal course of business, the Company periodically evaluates its
existing construction markets and seeks to identify any growing markets where it
feels it has the expertise and management capability to successfully compete or
withdraw from markets which are no longer economically attractive.
Real Estate
The Company's real estate development operations are conducted by Perini
Land & Development Company ("PL&D"), a wholly owned subsidiary, which has been
involved in real estate development since the early 1950's. PL&D has
traditionally engaged in real estate development in Arizona, California,
Florida, Georgia and Massachusetts. In 1993, PL&D significantly reduced its
staff in California and has suspended any new land acquisition in that area. In
1996, PL&D took the same steps in Florida. PL&D's development operations
generally involve identifying attractive parcels, planning and development,
arrange financing, obtaining needed zoning changes and permits, site
preparation, installation of roads and utilities and selling the land.
Originally, PL&D concentrated on land development. In appropriate situations,
PL&D has also constructed buildings on the developed land for rental or sale.
Early in 1997, PL&D changed its strategy on certain of its properties
from maximizing value by holding them through the necessary development and
stabilization periods to a new strategy of generating short-term liquidity
through an accelerated disposition or bulk sale. This change in strategy
substantially reduced the estimated future cash flow from these properties.
Therefore, an impairment loss on those properties has resulted in PL&D's
recording a non-cash charge in an aggregate amount of approximately $80 million
as of December 31, 1996, in accordance with Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of". An estimated allocation of the write down,
by geographic areas, is California ($59 million), Arizona ($18 million), and
Florida ($3 million).
In 1992, based on a weakening in property values and a national real
estate recession, PL&D took a $30 million pre-tax net realizable value write
down against earnings. Following the charges taken in 1992 and 1996, it is
management's belief that none of its real estate properties are currently
carried at amounts in excess of their net realizable values or otherwise require
a write down in accordance with SFAS No. 121. PL&D will continue periodically to
review its portfolio to assess the desirability of accelerating its sales
through price concessions or sale at an earlier stage of development. In
circumstances in which asset strategies are changed, such as in 1997, and
properties brought to market on an accelerated basis, those assets, if
necessary, are adjusted to reflect the lower of carrying amounts or fair value
less cost to sell. Similarly, if the long term outlook for a property in
development or held for future sale is adversely changed, the Company will
adjust its carrying value to reflect such an impairment in value.
To achieve full value for some of its real estate holdings, in
particular its investments in Rincon Center, PL&D may have to hold that property
several years and currently intends to do so.
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<PAGE>
Real Estate Strategy
Since 1990, PL&D has taken a number of steps to reduce the size of its
operations. In early 1990, all new real estate investment was suspended pending
market improvement, all but critical capital expenditures were curtailed on
on-going projects, and PL&D's work force was cut by over 60%. Certain project
loans were extended, with such extension usually requiring pay downs and
increased annual amortization of the remaining loan balance. Since that time,
PL&D has operated with a reduced staff and has adjusted its activity to meet the
demands of the market.
PL&D's real estate development project mix includes planned community,
industrial park, commercial office, multi-unit residential, urban mixed use and
single family home developments. PL&D's emphasis is on the sale of completed
product and also developing the projects in its inventory with the highest near
term sales potential. It may also selectively seek new development opportunities
in which it serves as development manager with limited equity exposure, if any.
Real Estate Properties
----------------------
The following is a description of the Company's major development
projects and properties by geographic area:
Florida
West Palm Beach and Palm Beach County - In 1996, PL&D sold its ownership
interest in the Bear Lakes Country Club to the club membership. The sale
represented PL&D's last investment in PL&D's development at the "Villages of
Palm Beach Lakes" which is now completely sold out.
At Metrocentre, a 51-acre commercial/office park at the intersection of
Interstate 95 and 45th Street in West Palm Beach, one site totaling 2 acres was
sold in 1996. The park consists of 17 parcels, of which 5 acres currently remain
unsold. The park provides for 570,500 square feet of mixed commercial uses.
Massachusetts
Perini Land and Development or Paramount Development Associates, Inc.
("Paramount"), a wholly-owned subsidiary of PL&D, owns the following projects:
Raynham Woods Commerce Center, Raynham - In 1987, Paramount acquired a
409-acre site located in Raynham, Massachusetts. During 1988, Paramount
completed infrastructure work on a major portion of the site (330 acres) which
is being developed as a mixed use corporate campus style park known as "Raynham
Woods Commerce Center". From 1989 through 1995, Paramount sold an aggregate of
56 acres to various users, including the division of a major U.S. company for
use as its headquarters, to a developer who was working with a major national
retailer for a retail site, and to a major insurance company. In 1990, Paramount
built two commercial buildings in the park which are currently approximately 90%
occupied. In 1996, 2 additional acres of land were sold to a previous tenant
from one of the Paramount-owned buildings. The park is planned to eventually
contain 2.5 million square feet of office, R&D, light industrial and mixed
commercial space.
Easton Business Center, Easton - In 1989, Paramount acquired a 40-acre
site in Easton, Massachusetts, which already had been partially developed.
Paramount completed the work and is currently marketing the site to
commercial/industrial users. No sales were closed in 1996.
Wareham - In early 1990, Paramount acquired an 18.9-acre parcel of land
at the junction of Routes 495 and 58 in Wareham, Massachusetts. The property is
being marketed to both retail and commercial/industrial users. No sales were
closed in 1996.
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<PAGE>
Georgia
The Villages at Lake Ridge, Clayton County - During 1987, PL&D (49%)
entered into a joint venture with 138 Joint Venture partners to develop a
348-acre planned commercial and residential community in Clayton County to be
called "The Villages at Lake Ridge" six miles south of Atlanta's Hartsfield
International Airport. Since its acquisition, the joint venture has put in a
substantial portion of the infrastructure, all of the recreational amenities,
and through 1995 had sold 251 single family lots to developers. An additional 42
lots were sold in 1996, along with a 13.6 acre tract designed for 52 lots. Prior
to 1996 the joint venture also sold a 16-acre parcel for use as an elementary
school and developed a 278 unit apartment complex which it later sold to a third
party buyer. Because most of the homes built within the development are to first
time buyers, demand is highly sensitive to mortgage rates and other costs of
ownership. Financing restrictions generally require the joint venture to allow
developers to take down finished lots only as homes built on previously acquired
lots are sold. As a result, any slowdown in home sales will influence joint
venture sales quickly thereafter. The development plan calls for mixed
residential densities of apartments and moderate priced single-family homes
totaling 1,158 dwelling units in the residential tracts, plus 220,000 square
feet of retail and 220,000 square feet of office space in the commercial tracts.
The Oaks at Buckhead, Atlanta - All remaining units in this project were
sold in 1996. Sales commenced on this 217-unit residential condominium project
at a site in the Buckhead section of Atlanta near the Lenox Square Mall in 1992.
The project consists of 201 residences in a 30-story tower plus 16 adjacent
three-story townhome residences. PL&D (50%) developed this project in joint
venture with a subsidiary of a major Taiwanese company.
California
Rincon Center, San Francisco - Major construction on this mixed-use
project in downtown San Francisco was completed in 1989. The project,
constructed in two phases, consists of 320 residential units, approximately
423,000 square feet of office space, 63,000 square feet of retail space, and a
700-space parking garage. Following its completion in 1988, the first phase of
the project was sold and leased back by the developing partnership. The first
phase consists of about 223,000 square feet of office space and 42,000 square
feet of retail space. The Phase I office space continues to be close to 100%
leased with the regional telephone directory company as the major tenant on
leases which, under a lease extension currently being finalized, will run into
2003. The retail space is currently 97% leased. Phase II of the project, which
began operations in late 1989, consists of approximately 200,000 square feet of
office space, 21,000 square feet of retail space, a 14,000 square foot U.S.
postal facility, and 320 apartment units. Currently, close to 98% of the office
space, 77% of the retail space and virtually all of the 320 residential unit are
leased. The major tenant in the office space in Phase II, starting in mid-1997,
will be a major national insurance company who will be moving into 155,000
square feet, replacing most of the space previously occupied by the Ninth
Circuit Court of Appeals which recently moved out. PL&D currently holds a 46%
interest in, and is managing general partner of, the partnership which is
developing the project. The land related to this project is being leased from
the U.S. Postal Service under a ground lease which expires in 2050.
In addition to the project financing and guarantees disclosed in the
first, second and third paragraphs of Note 11 to Notes to Consolidated Financial
Statements, the Company has advanced approximately $83 million to the
partnership through December 31, 1996, of which approximately $5 million was
advanced during 1996, primarily to paydown some of the principal portion of
project debt which was renegotiated during 1993. In 1996, operations before
principal repayment of debt created a positive cash flow on an annual basis.
- 9 -
<PAGE>
Two major loans on this property, in aggregate totaling over $75
million, were scheduled to mature in 1993. During 1993, both loans were extended
for five additional years. To extend these loans, PL&D provided approximately $6
million in new funds which were used to reduce the principal balances of the
loans. In 1996, and over the next two years, additional amortization will be
required, some of which may not be covered by operating cash flow and,
therefore, at least 80% of those funds not covered by operations will be
provided by PL&D as managing general partner. Lease payments and loan
amortization obligations at Rincon Center are $7.3 million in 1997. Based on
Company forecasts, it could be required to contribute as much as $8.4 million to
cover these obligations and costs associated with the tenant turnover mentioned
above, which are not covered by project cash flow in 1997. The interest rates on
much of the debt financing covering Rincon Center are variable based on various
rate indices. With the exception of approximately $20 million of the financing,
none of the debt has been hedged or capped and is subject to market
fluctuations. From time to time, the Company reviews the costs and anticipated
benefits from hedging Rincon Center's interest rate commitments. Based on
current costs to further hedge rate increases and market conditions, the Company
has elected not to provide any additional hedges at this time.
As part of the Rincon One sale and operating lease-back transaction, the
joint venture agreed to obtain an additional financial commitment on behalf of
the lessor to replace at least $33 million of long-term financing by January 1,
1998. If the joint venture has not secured a further extension or new commitment
for financing on the property for at least $33 million, the lessor will have the
right under the lease to require the joint venture to purchase the property for
a stipulated amount of approximately $18.8 million in excess of the then
outstanding debt. Management currently believes it will be able to extend the
financing or refinance the building such that this sale back to the Company will
not occur.
During 1993 PL&D agreed, if necessary, to lend Pacific Gateway
Properties (PGP), the other General Partner in the project, funds to meet its
20% share of cash calls. In return PL&D receives a priority return from the
partnership on those funds and penalty fees in the form of rights to certain
distributions due PGP by the partnership controlling Rincon. From 1993-1996,
PL&D advanced $4 million under this agreement, primarily to meet the principal
payment obligations of the loan extensions described above.
The Resort at Squaw Creek - Early in 1997, PL&D signed a letter of
intent to sell its interest in the joint venture through which the Company holds
its ownership interest in the Resort. The agreed upon price is $21 million with
a closing scheduled no later than July 1, 1997 and incentives for the buyer to
close on or before May 1, 1997. During 1996, the Company acquired the interest
of another partner increasing its effective interest in the property to 34%.
Given the proposed transaction, the Company took an approximately $57 million
write down on this project at year end. If the transaction is not consummated,
the Company anticipates either acquiring controlling interest of the property or
selling its total interest through the use of the buy/sell provision of the
joint venture agreement.
As part of the Squaw Creek Associates partnership agreement, either
partner may initiate a buy/sell agreement on or after January 1, 1997. Such
buy/sell agreement is similar to those often found in real estate development
partnerships. It provides for the recipient of the offer to have the option of
selling its share at the proportionate amount applicable based on the offer
price and the specific priority of payout as called for under the partnership
agreement based on a sale and termination of the partnership.
Currently, in addition to the project financing and guarantees disclosed
in paragraphs four and five of Note 11 to Notes to Consolidated Financial
Statements, the Company has advanced approximately $79 million to the joint
venture through December 1996, of which approximately $3 million was advanced
during 1996, for the cost of operating expenses, debt amortization and interest
payments.
If the proposed sale of the Company's interest is consummated, all
contingent liabilities would be
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<PAGE>
released or provided for through indemnification.
The project which was completed in 1991, includes a 405-unit hotel,
36,000 square feet of conference facilities, a Robert Trent Jones, Jr. golf
course, 48 single-family lots, all but one of which have been sold, three
restaurants, an ice skating rink, pool complex, fitness center, and 11,500
square feet of various retail support facilities. In addition, a second phase is
planned to include an additional 409-unit hotel facility, 36 townhouses, 27,000
square feet of conference space, 5000 square feet of retail space and a parking
structure. No activity on the second phase will begin until stabilization is
attained on phase one and market conditions warrant additional investment.
Corte Madera, Marin County - After many years of intensive planning,
PL&D obtained approval for a 151 single-family home residential development on
its 85-acre site in Corte Madera and, in 1991, was successful in gaining water
rights for the property. In 1992, PL&D initiated development on the site which
was continued into 1993. This development is one of the last remaining in-fill
areas in southern Marin County. In 1993, when PL&D decided to scale back its
operations in California, it also decided to sell this development in a
transaction which closed in early 1994. The transaction calls for PL&D to get
the majority of its funds from the sale of residential units or upon the sixth
anniversary of the sale whichever takes place first, and, although indemnified,
to leave in place certain bonds and other assurances previously given to the
town of Corte Madera guaranteeing performance in compliance with approvals
previously obtained. Sale of the units began in August of 1995 and by year end,
10 units were under contract or closed. During 1996, another 29 closings were
recorded.
Arizona
Airport Commerce Center, Tucson - In 1982, the 1-10 partnership
purchased 112 acres of industrially- zoned property near the Tucson
International Airport. During 1983, the partnership added 54 acres to that
project, bringing its total size to 166 acres. This project has experienced a
low level of sales activity due to an excess supply of industrial property in
the marketplace. However, the partnership built and fully leased a 14,600 square
foot office/warehouse building in 1987 on a building lot in the park, which was
sold during 1991. From 1990 through 1995, the partnership sold 51 acres within
the park. In 1996, another 22 acres were sold. Early in 1997, PL&D agreed to
sell its remaining interest in the project to its partner. The transaction is
expected to close by mid-year.
Perini Central Limited Partnership, Phoenix - In 1985, PL&D (75%)
entered into a joint venture with the Central United Methodist Church to master
plan and develop approximately 4.4 acres of the church's property in midtown
Phoenix. Located adjacent to the Phoenix Art Museum and near the Heard Museum,
the project is positioned to become the mixed use core of the newly formed
Phoenix Arts District. In 1990, the project was successfully rezoned to permit
development of 580,000 square feet of office, 37,000 square feet of retail and
162 luxury apartments. Plans for the first phase of this project, known as "The
Coronado" have been put on hold. Currently, the joint venture is exploring
possible sale opportunities for all or part of the property.
Grove at Black Canyon, Phoenix - The project consists of an office park
complex on a 30-acre site located off of Black Canyon Freeway, a major Phoenix
artery, approximately 20 minutes from downtown Phoenix. When complete, the
project will include approximately 650,000 square feet of office, hotel,
restaurant and/or retail space. Development, which began in 1986, is scheduled
to proceed in phases as market conditions dictate. In 1987, a 150,000 square
foot office building was completed within the park and now is 97% leased with
approximately half of the building leased to a major area utility company.
During 1993, PL&D (50%) successfully restructured the financing on the project
by obtaining a seven year extension with some amortization and a lower fixed
interest rate. The annual amortization commitment is not currently covered by
operating cash flow. In the near term, it appears approximately $700,000 per
year of support to cover loan amortization will continue to be required. No new
development within the park was begun in 1996, however, the lease covering space
occupied by the major office tenant was
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<PAGE>
extended an additional seven years to the year 2004 on competitive terms. In
1995, a day care center was completed on an 8-acre site along the north entrance
of the park. In 1996, no new sales were closed but 2.9 acre and 1.5 acre parcels
of land are both under contract for 1997 closings.
Sabino Springs Country Club, Tucson - During 1990, the Tucson Board of
Supervisors unanimously approved a plan for this 410-acre residential golf
course community close to the foothills on the east side of Tucson. In 1991,
that approval, which had been challenged, was affirmed by the Arizona Supreme
Court. When fully developed, the project will consist of 496 single-family
homes. In 1993, PL&D recorded the master plat on the project and sold a major
portion of the property to an international real estate company. An 18-hole
Robert Tent Jones, Jr. designed championship golf course and clubhouse were
completed within the project in 1995. Although it will require some
infrastructure development before sale, PL&D still retains 33 estate lots for
sale in future years.
Capitol Plaza, Phoenix - In 1996, PL&D sold this 1.75-acre parcel of
land located in the Governmental Mall area of Phoenix.
General
The Company's real estate business is influenced by both economic
conditions and demographic trends. A depressed economy may result in lower real
estate values and longer absorption periods. Higher inflation rates may increase
the values of current properties, but often are accompanied by higher interest
rates which may result in a slowdown in property sales because of higher
carrying costs. Important demographic trends are population and employment
growth. A significant reduction in either of these may result in lower real
estate prices and longer absorption periods.
Generally, there has been no material impact on PL&D's real estate
development operations over the past 10 years due to interest rate increases.
However, an extreme and prolonged rise in interest rates could create market
resistance for all real estate operations in general, and is always a potential
market obstacle. Historically, PL&D has, in some cases, employed hedges or caps
to protect itself against increases in interest rates on any of its variable
rate debt and, therefore, was insulated from extreme interest rate risk on
borrowed funds, although specific projects may have been impacted if the
decision had been made not to hedge or to hedge at higher than current rates.
The future use of such hedges or caps is somewhat restricted under the terms of
the New Credit Agreement.
Over the past few years, the Company has sold out its relatively low
cost debt-free land in Florida acquired in the late 1950's, and its sales mix
has begun to contain land purchased at current market prices. In 1996 and future
years, as the mix of land sold contain little or none of the lower cost land,
the gross margin on real estate revenues will decrease substantially.
Insurance and Bonding
All of the Company's properties and equipment, both directly owned or
owned through partnerships or joint ventures with others, are covered by
insurance and management believes that such insurance is adequate.
In conjunction with its construction business, the Company is often
required to provide various types of surety bonds. The Company has dealt with
the same surety for over 75 years and it has never been refused a bond. Although
from time-to-time the surety industry encounters limitations affecting the
bondability of very large projects and the Company occasionally has encountered
limits imposed by its surety, these limits have not had an adverse impact on its
operations.
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<PAGE>
Employees
The total number of personnel employed by the Company is subject to
seasonal fluctuations, the volume of construction in progress and the relative
amount of work performed by subcontractors. During 1996 the maximum number of
employees employed was approximately 2,700 and the minimum was approximately
2,100.
The Company operates as a union contractor. As such, it is a signatory
to numerous local and regional collective bargaining agreements, both directly
and through trade associations, throughout the country. These agreements cover
all necessary union crafts and are subject to various renewal dates. Estimated
amounts for wage escalation related to the expiration of union contracts are
included in the Company's bids on various projects and, as a result, the
expiration of any union contract in the current fiscal year is not expected to
have any material impact on the Company.
ITEM 2. PROPERTIES
Properties applicable to the Company's real estate development
activities are described in detail by geographic area in Item 1. Business on
pages 7 through 12. All other properties used in operations are summarized
below:
Owned or Leased Approximate Approximate Square
Principal Offices by Perini Acres Feet of Office Space
- ----------------- --------- ----- --------------------
Framingham, MA Owned 9 110,000
Phoenix, AZ Leased - 22,000
Southfield, MI Leased - 13,900
Hawthorne, NY Leased - 12,500
Los Angeles, CA Leased - 2,000
Las Vegas, NV Leased - 3,000
Atlanta, GA Leased - 1,700
Chicago, IL Leased - 14,700
Philadelphia, PA Leased - 2,100
---- -----------
9 181,900
==== ===========
Principal Permanent Storage Yards
- ---------------------------------
Bow, NH Owned 70
Framingham, MA Owned 6
Las Vegas, NV Leased 2
Novi, MI Leased 3
----
81
====
The Company's properties are generally well maintained, in good
condition, adequate and suitable for the Company's purpose and fully utilized.
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<PAGE>
ITEM 3. LEGAL PROCEEDINGS
As previously reported, the Company is a party to an action entitled
Mergentime Corporation et. al. v. Washington Metropolitan Transit Authority v.
Insurance Company of North America (Civil Action No. 89-1055) in the U.S.
District Court for the District of Columbia. The action involves WMATA's
termination of the general contractor, a joint venture in which the Company was
a minority partner, on two contracts to construct a portion of the Washington,
D.C. subway system, and certain claims by the joint venture against WMATA for
claimed delays and extra work.
On July 30, 1993, the Court upheld the termination for default, and
found both joint venturers and their surety jointly and severally liable to
WMATA for damages in the amount of $16.5 million, consisting primarily of
WMATA's excess reprocurement costs, but specifically deferred ruling on the
amount of the joint venture's claims against WMATA. Since the other joint
venture partner may be unable to meet its financial obligations under the award,
the Company could be liable for the entire amount.
At the direction of the judge now presiding over the action, during the
third quarter of 1995, the parties submitted briefs on the issue of WMATA's
liability on the joint venture's claims for delays and for extra work. As a
result of that process, the company established a reserve with respect to the
litigation. Management believes the reserve should be adequate to cover the
potential ultimate liability in this matter.
In the ordinary course of its construction business, the Company is
engaged in other lawsuits. The Company believes that such lawsuits are usually
unavoidable in major construction operations and that their resolution will not
materially affect its results of future operations and financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is traded on the American Stock Exchange
under the symbol "PCR". The quarterly market price ranges (high-low) for 1996
and 1995 are summarized below:
1996 1995
---- ----
Market Price Range per Common Share: High Low High Low
- ----------------------------------- ---- --- ---- ---
Quarter Ended
March 31 9 - 7 1/2 11 7/8 - 9 3/8
June 30 12 1/8 - 7 3/4 11 1/2 - 9 1/2
September 30 12 1/4 - 8 5/8 13 3/8 - 10 1/8
December 31 9 1/4 - 7 1/2 12 1/4 - 7 7/8
For information on dividend payments, see Selected Financial Data in
Item 6 below and "Dividends" under Management's Discussion and Analysis in Item
7 below.
As of February 28, 1997, there were approximately 1,023 record holders
of the Company's Common Stock.
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Selected Consolidated Financial Information
(In thousands, except per share data)
<TABLE>
OPERATING SUMMARY 1996 1995 1994 1993 1992
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues
Construction Operations $ 1,224,428 $ 1,056,673 $ 950,884 $ 1,030,341 $ 1,023,274
Real Estate Operations 45,856 44,395 61,161 69,775 47,578
------------- ------------ ------------ ------------ ------------
Total Revenues $ 1,270,284 $ 1,101,068 $ 1,012,045 $ 1,100,116 $ 1,070,852
------------- ------------ ------------ ------------ ------------
Costs:
Cost of Operations $ 1,215,806 $ 1,086,213 $ 960,248 $ 1,047,330 $ 1,018,663
Write down of Certain Real Estate
Assets (Note 4) 79,900 - - - 30,000
------------- ------------ ------------ ------------ ------------
$ 1,295,706 $ 1,086,213 $ 960,248 $ 1,047,330 $ 1,048,663
------------- ------------ ------------ ------------ ------------
Gross Profit (Loss) $ (25,422) $ 14,855 $ 51,797 $ 52,786 $ 22,189
General, Administrative & Selling
Expenses 33,988 37,283 42,985 44,212 41,328
------------- ------------ ------------ ------------ ------------
Income (Loss) From Operations $ (59,410) $ (22,428) $ 8,812 $ 8,574 $ (19,139)
Other Income (Expense), Net (492) 814 (856) 5,207 436
Interest Expense (9,871) (8,582) (7,473) (5,655) (7,651)
------------- ------------ ------------ ------------ ------------
Income (Loss) Before Income Taxes $ (69,773) $ (30,196) $ 483 $ 8,126 $ (26,354)
(Provision) Credit for Income Taxes (830) 2,611 (180) (4,961) 9,370
------------- ------------ ------------ ------------ ------------
Net Income (Loss) $ (70,603) $ (27,585) $ 303 $ 3,165 $ (16,984)
------------- ------------ ------------ ------------ ------------
Per Share of Common Stock:
Earnings (loss) $ (15.13) $ (6.38) $ (0.42) $ 0.24 $ (4.69)
------------- ------------ ------------ ------------ ------------
Cash dividends declared $ - $ - $ - $ - $ -
------------- ------------ ------------ ------------ ------------
Book value $ 2.14 $ 17.06 $ 23.79 $ 24.49 $ 23.29
------------- ------------ ------------ ------------ ------------
Weighted Average Number of
Common Shares Outstanding 4,808 4,655 4,380 4,265 4,079
------------- ------------ ------------ ------------ ------------
FINANCIAL POSITION
SUMMARY *
Working Capital $ 56,744 $ 36,545 $ 29,948 $ 36,877 $ 31,028
------------- ------------ ------------ ------------ ------------
Current Ratio 1.19.1 1.12:1 1.13:1 1.17:1 1.14:1
------------- ------------ ------------ ------------ ------------
Long-term Debt, less current
maturities $ 96,893 $ 84,155 $ 76,986 $ 82,366 $ 85,755
------------- ------------ ------------ ------------ ------------
Stockholders' Equity $ 35,558 $ 105,606 $ 132,029 $ 131,143 $ 121,765
------------- ------------ ------------ ------------ ------------
Ratio of Long-term Debt to Equity 2.72.1 .80:1 .58:1 .63:1 .70:1
------------- ------------ ------------ ------------ ------------
Total Assets $ 464,292 $ 539,251 $ 482,500 $ 476,378 $ 470,696
------------- ------------ ------------ ------------ ------------
OTHER DATA
Backlog at Year-end $ 1,517,700 $ 1,534,522 $ 1,538,779 $ 1,238,141 $ 1,169,553
------------- ------------ ------------ ------------ ------------
</TABLE>
* See Pro Forma impact on 1996 as if the New Equity transaction had been
closed as of December 31, 1996 (see Note 14 to Notes to Consolidated
Financial Statements).
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations -
1996 Compared to 1995
In spite of record revenues and earnings from domestic construction operations
during 1996, the Company's total operations resulted in a net loss of $70.6
million (or $15.13 per common share) on revenues of $1.3 billion in 1996
compared to a net loss of $27.6 million in 1995 (or $6.38 per common share) on
revenues of $1.1 billion. The reason for the net loss in 1996 was a change in
the Company's real estate strategy on certain of its properties from maximizing
value by holding them through the necessary development and stabilization
periods to a new strategy of generating short-term liquidity through an
accelerated disposition or bulk sale. The change in strategy substantially
reduced the estimated future cash flows from these properties. Therefore, a
non-cash impairment loss on those properties, in the aggregate amount of $79.9
million, was provided in the fourth quarter of 1996 in accordance with SFAS No.
121 (see Notes (1)(d) and 4 to Notes to Consolidated Financial Statements).
Revenues amounted to $1.270 billion in 1996, a record level for the second
consecutive year, an increase of $169 million (or 15%) compared to the 1995
revenues of $1.101 billion. This increase was almost entirely due to an increase
in construction revenues of $167 million (or 16%), from $1.057 billion in 1995
to $1.224 billion in 1996. This increase in construction revenues was divided
fairly equally between building and heavy (or "civil") construction operations.
Building construction revenues increased $87 million (or 12%), from $748 million
in 1995 to $835 million in 1996 while civil construction revenues increased $80
million (or 26%), from $309 million in 1995 to $389 million in 1996. These
revenue increases reflect the impact of several fast track hotel/casino projects
in the western and midwestern United States, several prison/detention and
medical facilities projects in the northeastern United States, and several
long-term infrastructure rehabilitation projects in the metropolitan New York,
Boston and Los Angeles areas.
In spite of the 15% increase in revenues, the gross profit decreased $40.3
million, from a gross profit of $14.9 million in 1995 to a gross loss of $25.4
million in 1996. The primary reason for the gross loss in 1996 was the $79.9
million real estate write down referred to above which caused the increase in
gross loss from real estate from $1.0 million in 1995 to $80.9 million in 1996.
This increase in gross loss was partially offset by a substantial increase in
gross profit from construction operations of $39.6 million, from $15.9 million
in 1995 to $55.5 million in 1996. Overall gross profit margins on both building
and civil construction operations in 1996 exceeded those experienced in 1995.
The lower than normal gross profit from construction operations recognized in
1995 included a pretax charge, which aggregated $25.6 million, to provide for a
liability related to previously disclosed litigation in Washington, D.C. (see
Note 11 to Notes to Consolidated Financial Statements), and downward revisions
in estimated probable recoveries on certain outstanding contract claims. These
pretax charges in 1995, coupled with the increased construction revenues in 1996
referred to above, including the favorable profit impact in 1996 of several
large infrastructure projects, primarily in the metropolitan New York, Boston
and Los Angeles areas, resulted in the substantial increase in gross profit from
construction operations in 1996.
General, administrative and selling expenses decreased by $3.3 million (or 9%),
from $37.3 million in 1995 to $34.0 million in 1996 due primarily to continued
emphasis on reducing overall overhead expenses in conjunction with the Company's
re-engineering efforts commenced in prior years, the sale in June of 1996 of
Pioneer Construction, a former subsidiary of the Company located in West
Virginia, and the continuation of the gradual down-sizing of the Company's real
estate and environmental remediation construction operations.
Other income (expense), net decreased $1.3 million, from income of $.8 million
in 1995 to a loss of $.5 million in 1996 primarily due to higher bank charges
experienced in 1996 in conjunction with the Company's renegotiation of certain
provisions of its Revolving Credit Agreement and Bridge Loan Agreement and, to a
lesser degree, a reduction in gains from the sale of certain underutilized
operating
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<PAGE>
facilities and less interest income.
Interest expense increased by $1.3 million (or 15%), from $8.6 million in 1995
to $9.9 million in 1996 due to a higher average level of borrowings during 1996.
The Company recognized income tax expense for the year ending December 31, 1996
of $.8 million on a pretax loss of $69.8 million, whereas in 1995, the Company
recognized a tax benefit of $2.6 million on a pretax loss of $30.2 million. The
1996 income tax expense is primarily for state income taxes relating to certain
jurisdictions in which the Company had net taxable income. The Company did not
provide any federal tax benefit in 1996, whereas in 1995, a partial tax benefit
was provided on the Company's pretax loss, due to certain accounting
limitations. As a result, an amount estimated to be approximately $92.0 million
of future pretax earnings should benefit from minimal, if any, federal tax
charges. The net deferred tax assets reflect management's estimate of the amount
that will, more likely than not, be realized (see Note 5 to Notes to
Consolidated Financial Statements).
Results of Operations -
1995 Compared to 1994
The Company's 1995 operations resulted in a net loss of $27.6 million or $6.38
per common share on revenues of $1.1 billion compared to net income of $.3
million or a loss of $.42 per common share (after giving effect to the dividend
payments required on its preferred stock) on revenues of $1.0 billion in 1994.
The primary reasons for this decrease in earnings were a pretax charge of $25.6
million in connection with previously disclosed litigation in Washington, D.C.
and downward revisions in estimated probable recoveries on certain outstanding
contract claims, and lower than normal profit margins on certain civil
construction contracts, including a significant reduction in the profit level on
a tunnel project in the Midwest.
Revenues reached a record level of $1.101 billion in 1995, an increase of $89
million (or 9%) compared to the 1994 revenues of $1.012 billion. This increase
resulted primarily from an increase in construction revenues of $106 million (or
11%) from $.951 billion in 1994 to $1.057 billion in 1995. This increase in
construction revenues resulted primarily from an increase in building
construction revenues of $122 million (or 19%), from $626 million in 1994 to
$748 million in 1995, primarily due to substantially increased volume in the
Midwest region resulting from a substantially higher backlog in that area
entering 1995 combined with several hotel/casino projects acquired during 1995.
This increase was partially offset by a decrease in building construction
revenues in the Eastern and Western regions, as well as in the overall civil
construction operations, due primarily to the timing in the start-up of several
significant new projects and the completion early in 1995 of several other major
projects. Revenues from real estate operations also decreased by $16.8 million
(or 27%) from $61.2 million in 1994 to $44.4 million in 1995 due to the
non-recurring sale in 1994 of two investment properties ($8.3 million) and fewer
land sales in Massachusetts and California during 1995.
In spite of the 9% increase in revenues, the gross profit in 1995 decreased by
$36.9 million, from $51.8 million in 1994 to $14.9 million in 1995, due
primarily to an overall decrease in gross profit from construction operations of
$32.1 million (or 67%), from $48.0 million in 1994 to $15.9 million in 1995. The
primary reasons for this decrease were a pretax charge of $25.6 million in
connection with previously disclosed litigation in Washington, D.C. and downward
revisions in estimated probable recoveries on certain outstanding contract
claims, and lower than normal profit margins on certain civil construction
contracts, including a significant reduction in the profit level on a tunnel
project in the Midwest. In addition, the overall gross profit from real estate
operations decreased by $4.8 million, from a profit of $3.8 million in 1994 to a
loss of $1.0 million in 1995 due to the sale in 1994 of the last parcels of high
margin land in Florida and in a project in Massachusetts which was partially
offset by improved operating results in 1995 from its two major on-going
operating properties in California.
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<PAGE>
Total general, administrative and selling expenses decreased by $5.7 million (or
13%) from $43.0 million in 1994 to $37.3 million in 1995. This decrease
primarily reflects reduced bonuses, an increased allocation of various insurance
costs to projects in 1995, and a continuation during 1995 of the Company's
re-engineering efforts commenced in prior years.
The increase in other income (expense), net, of $1.7 million, from a net expense
of $.9 million in 1994 to a net income of $.8 million in 1995, is primarily due
to an increase in interest income and, to a lesser extent, a gain realized on
the sale of certain underutilized operating facilities, including a quarry, in
1995.
The increase in interest expense of $1.1 million (or 15%), from $7.5 million in
1994 to $8.6 million in 1995, primarily results from a higher average level of
borrowings during 1995.
The Company recognized a tax benefit in 1995 equal to $2.6 million or 9% of the
pretax loss. A portion of the tax benefit related to the 1995 loss was not
recognized because of certain accounting limitations. However, an amount
estimated to be approximately $20 million of future pretax earnings should
benefit from minimal, if any, federal tax charges.
Financial Condition
Cash and Working Capital
During 1996, the Company used $24.3 million in cash for operating activities,
primarily for changes in working capital, and $21.1 million for investment
activities, primarily to fund construction and real estate joint ventures. These
uses of cash were provided by $26.1 million from financing activities, primarily
increases in borrowings under the Company's Revolving Credit and Bridge Loan
facilities, and a $19.3 million reduction in cash on hand. In addition, the
Company has future financial commitments to certain real estate joint ventures
as described in Note 11 to Notes to Consolidated Financial Statements.
During 1995, the Company provided $24.6 million in cash from operating
activities, primarily due to an overall increase in accounts payable and
advances from joint ventures; $9.0 million from financing activities due to an
increase in borrowings under its revolving credit facility; and $23.9 million
from cash distributions from certain joint ventures. These increases in cash
were used to increase cash on hand by $21.2 million, with the balance used for
various investment activities, primarily to fund construction and real estate
joint ventures.
Since 1990, the Company has paid down $42.8 million of real estate debt on
wholly-owned real estate projects (from $50.9 million to $8.1 million),
utilizing proceeds from sales of property and general corporate funds.
Similarly, real estate joint venture debt has been reduced by $163 million over
the same period. As a result, the Company has reached a point at which revenues
from further real estate sales that, in the past, have been largely used to
retire real estate debt will be increasingly available to improve general
corporate liquidity subject to certain restrictions contained in the New Credit
Agreement referred to in Note 14 to Notes to Consolidated Financial Statements.
With the exception of the major properties referred to in Note 11 to Notes to
Consolidated Financial Statements, this trend should continue over the next
several years with debt on projects often being fully repaid prior to full
project sell-out. In addition, the Company made a strategic decision in the
early 1990's to change its mix of construction work by increasing the relative
percentage of potentially higher margin civil construction projects. The working
capital required to support civil construction projects is substantially more
than the normal building construction project because of its equipment intensive
nature, progress billing terms imposed by certain public owners and, in some
instances, time required to process contract change orders. The Company has
addressed these problems by relying on corporate borrowings, extending certain
maturing real estate loans (with such extensions usually requiring pay downs and
increased annual amortization of the remaining loan balance), suspending the
acquisition of new real estate inventory, significantly reducing
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<PAGE>
development expenses on certain projects, utilizing stock in payment of certain
expenses, utilizing cash internally generated from operations and selling its
interest in certain engineering and construction business units that were not an
integral part of the Company's ongoing building and civil construction
operations. The Company also implemented company-wide cost reduction programs in
1990, and again in 1991 and 1993 to improve long-term financial results and
suspended the dividend on its common stock during the fourth quarter of 1990 and
suspended payment of dividends on its $21.25 Convertible Exchangeable Preferred
Stock in the first quarter of 1996. Also, the Company increased the aggregate
amount available under its revolving credit agreement during the period from $70
million to $114.5 million at December 31, 1995, plus, effective February 26,
1996, another $15 million under a Bridge Loan Agreement. In addition to
internally generated funds, at December 31, 1996, the Company has $18.3 million
available under its revolving credit facility and $15 million available under
its Bridge Loan Agreement. The financial covenants to which the Company is
subject include minimum levels of working capital, debt/net worth ratio, net
worth level, interest coverage and certain restrictions on real estate
investments, all as defined in the loan documents. Although the Company would
have been in violation of certain of the covenants during 1996, it obtained
waivers of such violations. Effective January 17, 1997, the Company's liquidity
and access to future borrowings, as required, during the next few years were
significantly enhanced by the "New Equity" and "New Credit Agreement" referred
to in Note 14 to Notes to Consolidated Financial Statements.
The working capital current ratio stood at 1.19:1 at the end of 1996, compared
to 1.12:1 at the end of 1995 and to 1.13:1 at the end of 1994. Of the total
working capital of $56.7 million at the end of 1996, approximately $8 million
may not be converted to cash within the next 12 to 18 months.
Long-term Debt
Long-term debt was $96.9 million at the end of 1996, an increase of $12.7
million compared with $84.2 million at the end of 1995, which was an increase of
$7.2 million compared with $77.0 million at the end of 1994. The ratio of
long-term debt to equity increased from .58:1 at the end of 1994 to .80:1 at the
end of 1995 and 2.72:1 at the end of 1996 due to increases in long-term debt
coupled with the negative impact on
equity of the net losses experienced by the Company in 1995 and 1996.
Stockholders' Equity
The Company's book value per common share stood at $2.14 at December 31, 1996,
compared to $17.06 per common share and $23.79 per common share at the end of
1995 and 1994, respectively. The major factors impacting stockholders' equity
during the three-year period under review were the net losses recorded in 1995
and 1996 and, to a lesser extent, preferred dividends paid or accrued, and stock
issued in partial payment of certain expenses.
At December 31, 1996, there were 1,276 common stockholders of record based on
the stockholders list maintained by the Company's transfer agent.
Dividends
There were no cash dividends declared or paid on the Company's outstanding
Common Stock during the three years ended December 31, 1996.
During 1994 and 1995, the Company declared and paid the regular quarterly cash
dividends of $5.3125 per share on the Company's convertible exchangeable
preferred shares for an annual total of $21.25 per share (equivalent to
quarterly dividends of $.53125 per depositary share for an annual total of
$2.125 per depositary share). In conjunction with the covenants of the 1995
Amended Revolving Credit Agreement (see Note 3 to Notes to Consolidated
Financial Statements), the Company was required to suspend the payment of
quarterly dividends on its preferred stock until the Bridge Loan commitment was
no longer
- 19 -
<PAGE>
outstanding, if a default exists under the terms of the Amended Revolving Credit
Agreement, or if the ratio of long-term debt to equity exceeded 50%. Therefore,
the dividend that normally would have been declared during December of 1995 and
payable on March 15, 1996, as well as subsequent quarterly dividends in 1996,
have not been declared or paid (although they have been fully accrued due to the
"cumulative" feature of the preferred stock). A New Credit Agreement,
superseding the loan agreements referred to above, was approved January 17, 1997
and provides that the Company may not pay cash dividends or make other
restricted payments, as defined, prior to September 30, 1998 and thereafter may
not pay cash dividends or make other restricted payments unless: (i) the Company
is not in default under the New Credit Agreement; (ii) commitments under the
credit facility have been reduced to less than $90 million; (iii) restricted
payments in any quarter, when added to restricted payments made in the prior
three quarters, do not exceed fifty percent (50%) of net income from continuing
operations for the prior four quarters; and (iv) net worth (after taking into
consideration the amount of the proposed cash dividend or restricted payment) is
at least equal to the amount shown below, adjusted for non-cash charges incurred
in connection with any disposition or write down of any real estate investment,
provided that unadjusted net worth must be at least $60 million:
(In thousands)
Adjusted for 1996
Real Estate
Unadjusted Write Down
October 1, 1998 to December 30, 1998 $161,977 $82,077
December 31, 1998 to March 31, 1999 $167,303 $87,403
April 1, 1999 to June 30, 1999 $170,129 $90,229
July 1, 1999 to September 30, 1999 $172,955 $93,055
October 1, 1999 to January 1, 2000 $175,781 $95,881
For purposes of the New Credit Agreement, net worth shall include the net
proceeds from the sale of the Series B Preferred Stock to the Investors. In
addition, under the terms of the Series B Preferred Stock, the Company may not
pay any cash dividends on its Common Stock until after September 1, 2001, and
then only to the extent such dividends do not exceed in aggregate more than
twenty-five percent (25%) of the Company's consolidated net income available for
distribution to Common shareholders (after preferred dividends); provided,
however, that the Company shall have elected and paid cash dividends on the
Series B Preferred Stock for the preceding four quarters.
The Board of Directors intends to resume payment of dividends as the Company
satisfies the terms of the New Credit Agreement, the provisions of the Series B
Preferred Stock and the Board deems it prudent to do so.
Outlook
Looking ahead, the overall construction backlog at the end of 1996 was $1.518
billion which approximates the 1995 year-end backlog of $1.535 billion. This
backlog has a good balance between building and civil work and a higher overall
estimated profit margin. Approximately 53% of the current backlog relates to
building construction projects which generally represent lower risk, lower
margin work and approximately 47% of the current backlog relates to heavy
construction projects which generally represent higher risk, but correspondingly
higher margin work. During 1996, the Company also adopted a plan to enhance the
profitability of its construction operations by emphasizing gross margin and
bottom line improvement ahead of top line revenue growth. This plan calls for
the Company to focus its financial and human resources on construction
operations which are consistently profitable and to de-emphasize marginal
business units. Consistent with that Plan, the Company currently is closing or
downsizing and refocusing four business units. The Company believes the outlook
for its building and civil construction businesses continues to be promising.
- 20 -
<PAGE>
With the sale of the final 21 acres during 1994, the Company's Villages of Palm
Beach Lakes, Florida land was completely sold out. Because of its low book
value, sales of this acreage have provided a major portion of the Company's real
estate profit in recent years. With the sale of this property complete, the
Company's ability to generate profit from real estate sales and the related
gross margin will be reduced as was the case in 1996. In addition, five
projects, which aggregate approximately 6% of the Company's real estate asset
values, are projected to produce an estimated average 3% gross margin over the
period through ultimate disposition. As such, future gross margins from sales of
real estate will be impacted by the operations and/or disposition of these
properties.
With the closing of the new equity transaction and New Credit Agreement becoming
effective on January 17, 1997 (see Note 14 to Notes to Consolidated Financial
Statements), the Company's near term liquidity position has improved
substantially, enabling payments to vendors to generally be made in accordance
with normal payment terms. In order to generate cash and reduce the Company's
dependence on bank debt to fund the working capital needs of its core
construction operations as well as to lower the Company's substantial interest
expense and strengthen the balance sheet in the longer term, the Company will
continue to sell certain real estate assets as market opportunities present
themselves; to actively pursue the favorable conclusion of various construction
claims; to focus new construction work acquisition efforts on various niche
markets and geographic areas where the Company has a proven history of success;
to downsize or close operations with marginal prospects for success; to continue
to restrict the payment of cash dividends on the Company's $1 par value common
stock and depositary convertible exchangeable preferred stock; and to continue
to seek ways to control overhead expenses. In addition, the Company recently
completed a review of all of its real estate assets which resulted in a change
of strategies related to certain of those assets to a new strategy of generating
short-term liquidity of up to an additional $30 million for the Company.
Management believes that cash generated from operations, existing credit lines,
additional borrowings and projected sale of certain real estate assets referred
to above should be adequate to meet the Company's funding requirements for at
least the next twelve months.
Forward-looking Statements
This Management's Discussion and Analysis of Financial Condition and Results of
Operations, including "Outlook" and other sections of this Annual Report,
contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including statements that are based on current expectations, estimates and
projections about the industries in which the Company operates, management's
beliefs and assumptions made by management. Words such as "expects",
"anticipates", "intends", "plans", "believes", "seeks", "estimates", variations
of such words and similar expressions are intended to identify such forward-
looking statements. These statements are not guarantees of future performance
and involve certain risks, uncertainties and assumptions which are difficult to
predict. Therefore, actual outcomes and results may differ materially from those
in such forward-looking statements. The Company undertakes no obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Reports of Independent Public Accountants, Consolidated Financial
Statements, and Supplementary Schedules, are set forth on the pages that follow
in this Report and are hereby incorporated herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
- 21 -
<PAGE>
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the information to be set forth in the section
entitled "Election of Directors" in the definitive proxy statement involving
election of directors in connection with the Annual Meeting of Stockholders to
be held on May 15, 1997 (the "Proxy Statement"), which section is incorporated
herein by reference. The Proxy Statement will be filed with the Securities and
Exchange Commission not later than 120 days after December 31, 1996 pursuant to
Regulation 14A of the Securities and Exchange Act of 1934, as amended.
Listed below are the names, offices held, ages and business experience
of all executive officers of the Company.
<TABLE>
Name, Offices Held and Age Year First Elected to Present Office and Business Experience
<S> <C>
David B. Perini, Director, Chairman He has served as a Director, President, Chief Executive Officer and
and Chief Executive Officer - 59 Acting Chairman since 1972. He became Chairman on March 17, 1978
and has worked for the Company since 1962 in various capacities.
Prior to being elected President, he served as Vice President and
General Counsel.
Richard J. Rizzo, Executive Vice He has served in this capacity since January
President, Building Construction - 53 1994, which entails overall responsibility for the Company's
building construction operations. Prior thereto, he served as President
of Perini Building Company (formerly known as Mardian Construction
Co.) since 1985, and in various other operating capacities since 1977.
John H. Schwarz, Executive Vice He has served as Executive Vice President, Finance and
President, Finance and Administration since August 1994. He also served as Chief Executive
Administration of the Company - 58 Officer of Perini Land and Development Company, which entails
overall responsibility for the Company's real estate operations
since April 1992 through 1995. Prior to that, he served as Vice President,
Finance and Controls of Perini Land and Development Company. Previously,
he served as Treasurer from August 1984, and Director of Corporate
Planning since May 1982. He joined the Company in 1979 as Manager of
Corporate Development.
Donald E. Unbekant, Executive Vice He has served in this capacity since January 1994, which entails overall
President, Civil Construction - 65 responsibility for the Company's civil construction operations. Prior
thereto, he served in the Metropolitan New York Division of the
Company as President since 1992, Vice President and General Manager since
1990 and Division Manager since 1984.
</TABLE>
The Company's officers are elected on an annual basis at the Board of
Directors Meeting immediately following the Shareholders Meeting in May, to hold
such offices until the Board of Directors Meeting following the next Annual
Meeting of Shareholders and until their respective successors have been duly
appointed or until their tenure has been terminated by the Board of Directors,
or otherwise.
- 22 -
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In response to Items 11-13, reference is made to the information to be
set forth in the section entitled "Election of Directors" in the Proxy
Statement, which is incorporated herein by reference.
- 23 -
<PAGE>
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PERINI CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
(a)1. The following financial statements and supplementary financial
information are filed as part of this report:
Pages
<S> <C>
Financial Statements of the Registrant
- --------------------------------------
Consolidated Balance Sheets as of December 31, 1996 and 1995 26 - 27
Consolidated Statements of Operations for the three years ended December 31, 1996, 28
1995 and 1994
Consolidated Statements of Stockholders' Equity for the three years ended December 29
31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the three years ended December 31, 1996, 30 - 31
1995 and 1994
Notes to Consolidated Financial Statements 32 - 48
Report of Independent Public Accountants 49
(a)2. The following financial statement schedules are filed as part of this
report:
Pages
Report of Independent Public Accountants on Schedules 50
Schedule I -- Condensed Financial Information of Registrant 51 - 55
Schedule II -- Valuation and Qualifying Accounts and Reserves 56
</TABLE>
All other schedules are omitted because of the absence of the conditions
under which they are required or because the required information is
included in the Consolidated Financial Statements or in the Notes
thereto.
(a)3. Exhibits
The exhibits which are filed with this report or which are incorporated
herein by reference are set forth in the Exhibit Index which appears on
pages 57 through 60. The Company will furnish a copy of any exhibit not
included herewith to any holder of the Company's common and preferred
stock upon request.
(b) During the quarter ended December 31, 1996, the Registrant made no
filings on Form 8-K.
- 24 -
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.
Perini Corporation
(Registrant)
Dated: March 27, 1997
David B. Perini
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
(i) Principal Executive Officer
David B. Perini Chairman and Chief
Executive Officer March 27, 1997
/s/David B. Perini
------------------
David B. Perini
(ii) Principal Financial Officer
John H. Schwarz Executive Vice President
Finance & Administration March 27, 1997
/s/John H. Schwarz
------------------
John H. Schwarz
(iii) Principal Accounting Officer
Barry R. Blake Vice President and
Controller March 27, 1997
/s/Barry R. Blake
-----------------
Barry R. Blake
(iv) Directors
David B. Perini )
Richard J. Boushka ) By
Marshall M. Criser )
Thomas E. Dailey ) /s/David B. Perini
------------------
Albert A. Dorman ) David B. Perini
Arthur J. Fox, Jr. )
Nancy Hawthorne ) Attorney in Fact
Michael R. Klein ) Dated: March 27, 1997
Douglas J. McCarron )
John H. McHale )
Jane E. Newman )
Bart W. Perini )
Ronald N. Tutor )
- 25 -
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
December 31, 1996 and 1995
(In thousands except per share data)
Assets
- ------
1996 1995
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash, including cash equivalents of $9,071 and $29,059 (Note 1) $ 9,745 $ 29,059
Accounts and notes receivable, including retainage of $63,423 and $69,884 188,120 180,978
Unbilled work (Note 1) 35,600 28,304
Construction joint ventures (Notes 1 and 2) 78,233 61,846
Real estate inventory, at the lower of cost or market (Notes 1 and 4) 37,914 14,933
Deferred tax asset (Notes 1 and 5) 3,513 13,039
Other current assets 1,655 2,186
-------- --------
Total current assets $354,780 $330,345
-------- --------
REAL ESTATE DEVELOPMENT INVESTMENTS (Notes 1 and 4):
Land held for sale or development (including land development costs) at
the lower of cost or market $ 21,520 $ 41,372
Investments in and advances to real estate joint ventures
(Notes 2 and 11) 71,253 148,225
Real estate properties used in operations, less accumulated depreciation
of $3,444 in 1995 - 2,964
Other 49 302
-------- --------
Total real estate development investments $ 92,822 $192,863
-------- --------
PROPERTY AND EQUIPMENT, at cost (Note 1):
Land $ 793 $ 809
Buildings and improvements 13,075 13,548
Construction equipment 10,535 15,597
Other equipment 9,726 9,911
-------- --------
$ 34,129 $ 39,865
Less - Accumulated depreciation 23,013 27,299
-------- --------
Total property and equipment, net $ 11,116 $ 12,566
-------- --------
OTHER ASSETS:
Other investments $ 3,999 $ 1,839
Goodwill (Note 1) 1,575 1,638
-------- --------
Total other assets $ 5,574 $ 3,477
-------- --------
$464,292 $539,251
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 26-
<PAGE>
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
- ------------------------------------
1996 1995
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 3) $ 16,421 $ 5,697
Accounts payable, including retainage of $57,131 and $58,749 183,407 197,052
Advances from construction joint ventures (Note 2) 47,544 34,830
Deferred contract revenue (Note 1) 23,841 23,443
Accrued expenses 26,823 32,778
--------- --------
Total current liabilities $298,036 $293,800
--------- --------
DEFERRED INCOME TAXES AND OTHER LIABILITIES (Notes 1, 5 & 6) $ 31,297 $ 52,663
--------- --------
LONG-TERM DEBT, less current maturities included above (Note 3):
Real estate development $ 4,287 $ 3,660
Other 92,606 80,495
--------- --------
Total long-term debt $ 96,893 $ 84,155
--------- --------
MINORITY INTEREST (Note 1) $ 2,508 $ 3,027
--------- --------
CONTINGENCIES AND COMMITMENTS (Note 11)
STOCKHOLDERS' EQUITY (Notes 1, 7, 8, 9, 10 and 14):
Preferred stock, $1 par value -
Authorized - 1,000,000 shares
Issued and outstanding - 100,000 shares
($25,000 aggregate liquidation preference) $ 100 $ 100
Series A junior participating preferred stock, $1 par value -
Authorized - 200,000
Issued - none - -
Common stock, $1 par value -
Authorized - 15,000,000 shares
Issued - 5,032,427 shares and 4,985,160 shares 5,032 4,985
Paid-in surplus 57,080 57,659
Retained earnings (deficit) (20,666) 52,062
ESOT related obligations ( 3,856) (4,965)
--------- ---------
$ 37,690 $109,841
Less - Common stock in treasury, at cost - 133,779 shares and 265,735 2,132 4,235
--------- --------
shares
Total stockholders' equity $ 35,558 $105,606
--------- --------
$464,292 $539,251
======== ========
</TABLE>
- 27 -
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Operations
For the years ended December 31, 1996, 1995 & 1994
(In thousands, except per share data)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
REVENUES (Notes 2 and 13) $1,270,284 $1,101,068 $1,012,045
----------- ----------- ----------
COSTS AND EXPENSES (Notes 2 and 10):
Cost of operations $1,215,806 $1,086,213 $ 960,248
Write down of certain real estate assets (Note 4) 79,900 - -
General, administrative and selling expenses 33,988 37,283 42,985
----------- ----------- ----------
$1,329,694 $1,123,496 $1,003,233
----------- ----------- ----------
INCOME (LOSS) FROM OPERATIONS (Note 13) $ (59,410) $ (22,428) $ 8,812
----------- ----------- ----------
Other income (expense), net (Note 6) (492) 814 (856)
Interest expense (Note 3) (9,871) (8,582) (7,473)
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES $ (69,773) $ (30,196) $ 483
(Provision) credit for income taxes (Notes 1 and 5) (830) 2,611 (180)
----------- ----------- -----------
NET INCOME (LOSS) $ (70,603) $ (27,585) $ 303
=========== =========== ==========
EARNINGS (LOSS) PER COMMON SHARE (Note 1) $ (15.13) $ (6.38) $ (.42)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 28 -
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Stockholders' Equity
For the Years Ended December 31, 1996, 1995 & 1994
(In thousands, except per share data)
ESOT
Preferred Common Paid-In Retained Related Treasury
Stock Stock Surplus Earnings Obligation Stock Total
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance-December 31, 1993 $100 $4,985 $59,875 $ 83,594 $(6,982) $(10,429) $131,143
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Net Income - - - 303 - - 303
Preferred stock-cash
dividends declared
($21.25 per share*) - - - (2,125) - - (2,125)
Treasury stock issued in
partial payment of
incentive compensation - - (835) - - 2,444 1,609
Restricted stock awarded - - (39) - - 165 126
Payments related to ESOT -
notes - - - - 973 973
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Balance-December 31, 1994 $100 $4,985 $59,001 $ 81,772 $(6,009) $ (7,820) $132,029
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Net Loss - - - (27,585) - - (27,585)
Preferred stock-cash
dividends declared or
accrued ($21.25 per
share*) - - - (2,125) - - (2,125)
Treasury stock issued in
partial payment of
incentive compensation - - (1,342) - - 3,585 2,243
Payments related to ESOT
notes - - - - 1,044 - 1,044
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Balance-December 31, 1995 $100 $4,985 $57,659 $ 52,062 $(4,965) $ (4,235) $105,606
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Net Loss - - - (70,603) - - (70,603)
Preferred stock
dividends accrued ($21.25
per share*) - - - (2,125) - - (2,125)
Treasury stock issued in
partial payment of
incentive compensation - - (830) - - 1,867 1,037
Payment of director fees - - (102) - - 236 134
Payment of finance fee
(Note 3) - 47 353 - - - 400
Payments related to ESOT
notes - - - - 1,109 - 1,109
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Balance-December 31, 1996 $100 $5,032 $57,080 $(20,666) $(3,856) $(2,132) $ 35,558
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
</TABLE>
*Equivalent to $2.125 per depositary share (see Note 7).
The accompanying notes are an integral part of these financial statements.
- 29 -
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
For the years ended December 31, 1996, 1995 & 1994
(In thousands)
Cash Flows from Operating Activities: 1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net income (loss) $(70,603) $(27,585) $ 303
Adjustments to reconcile net income (loss) to net cash from
operating activities -
Depreciation and amortization 2,590 2,769 2,879
Non-current deferred taxes and other liabilities (21,366) 19,175 (5,306)
Distributions greater (less) than earnings of joint ventures
and affiliates (4,586) 12,880 2,995
Write down of certain real estate properties 79,900 - -
Cash provided from (used by) changes in components of working capital other
than cash, notes payable and current maturities of long-term debt:
(Increase) decrease in accounts receivable (7,142) (29,358) (28,611)
(Increase) decrease in unbilled work (7,296) (8,095) (5,285)
(Increase) decrease in construction joint ventures (380) 2,643 (662)
(Increase) decrease in deferred tax asset 9,526 (6,973) 1,636
(Increase) decrease in other current assets 849 2,109 233
Increase (decrease) in accounts payable (13,645) 48,997 35,024
Increase (decrease) in advances from construction joint
ventures 12,714 26,020 (14,390)
Increase (decrease) in deferred contract revenue 398 (15,486) 13,062
Increase (decrease) in accrued expenses (8,080) (3,106) (15,126)
Real estate development investments other than joint ventures 4,500 2,757 11,451
Other non-cash items, net (1,689) (2,174) (3,231)
--------- --------- ---------
NET CASH PROVIDED FROM (USED BY) OPERATING ACTIVITIES $(24,310) $ 24,573 $ (5,028)
--------- --------- ---------
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment $ 2,098 $ 3,115 $ 989
Cash distributions of capital from unconsolidated joint
ventures 8,753 23,858 13,112
Acquisition of property and equipment (1,449) (1,960) (2,493)
Improvements to land held for sale or development (515) (193) (334)
Improvements to real estate properties used
in operations (123) (263) (140)
Capital contributions to unconsolidated joint ventures (20,224) (29,373) (20,199)
Advances to real estate joint ventures, net (7,312) (7,735) (6,559)
Investments in other activities (2,374) 190 14
--------- --------- ---------
NET CASH USED BY INVESTING ACTIVITIES $(21,146) $(12,361) $(15,610)
--------- --------- ---------
- 29 -
<PAGE>
<CAPTION>
Consolidated Statements of Cash Flows (Continued)
For the years ended December 31, 1996, 1995 & 1994
(In thousands)
Cash Flows from Financing Activities: 1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Proceeds from long-term debt $ 27,006 $ 12,033 $ 3,127
Repayment of long-term debt (2,435) (3,145) (10,129)
Cash dividends paid - (2,125) (2,125)
Treasury stock issued 1,171 2,243 1,735
Finance fee paid in stock 400 - -
--------- --------- ---------
NET CASH PROVIDED FROM (USED BY) FINANCING ACTIVITIES $ 26,142 $ 9,006 $ (7,392)
--------- --------- ---------
Net Increase (Decrease) in Cash $(19,314) $ 21,218 $(28,030)
Cash and Cash Equivalents at Beginning of Year 29,059 7,841 35,871
--------- --------- ---------
Cash and Cash Equivalents at End of Year $ 9,745 $ 29,059 $ 7,841
========= ========= =========
Supplemental Disclosures of Cash Paid During the Year For:
Interest $ 9,596 $ 8,715 $ 7,308
========= ========= =========
Income tax payments $ 221 $ 121 $ 1,176
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 31 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1996, 1995 & 1994
[1] Summary of Significant Accounting Policies
[a] Principles of Consolidation
The consolidated financial statements include the accounts of Perini
Corporation, its subsidiaries and certain majority-owned real estate joint
ventures (the "Company"). All subsidiaries are currently wholly-owned. All
significant intercompany transactions and balances have been eliminated in
consolidation. Non-consolidated joint venture interests are accounted for on the
equity method with the Company's share of revenues and costs in these interests
included in "Revenues" and "Cost of Operations," respectively, in the
accompanying consolidated statements of operations. All significant intercompany
profits between the Company and its joint ventures have been eliminated in
consolidation. Taxes are provided on joint venture results in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes".
[b] Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates 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. The most significant
estimates with regard to these financial statements relate to the estimating of
final construction contract profits in accordance with accounting for long-term
contracts (see Note 1(c) below), estimating future cash flows of real estate
development projects (see Note 1(d) below) and estimating potential liabilities
in conjunction with certain contingencies and commitments, as discussed in Note
11. Actual results could differ from these estimates.
[c] Method of Accounting for Contracts
Profits from construction contracts and construction joint ventures are
generally recognized by applying percentages of completion for each year to the
total estimated profits for the respective contracts. The percentages of
completion are determined by relating the actual cost of the work performed to
date to the current estimated total cost of the respective contracts. When the
estimate on a contract indicates a loss, the Company's policy is to record the
entire loss. The cumulative effect of revisions in estimates of total cost or
revenue during the course of the work is reflected in the accounting period in
which the facts that caused the revision become known. An amount equal to the
costs attributable to unapproved change orders and claims is included in the
total estimated revenue when realization is probable. Profit from unapproved
change orders and claims is recorded in the year such amounts are resolved.
In accordance with normal practice in the construction industry, the Company
includes in current assets and current liabilities amounts related to
construction contracts realizable and payable over a period in excess of one
year. Unbilled work represents the excess of contract costs and profits
recognized to date on the percentage of completion accounting method over
billings to date on certain contracts. Deferred contract revenue represents the
excess of billings to date over the amount of contract costs and profits
recognized to date on the percentage of completion accounting method on the
remaining contracts.
[d] Methods of Accounting for Real Estate Operations
All real estate sales are recorded in accordance with SFAS No. 66. Gross profit
is not recognized in full unless the collection of the sale price is reasonably
assured and the Company is not obliged to perform significant activities after
the sale. Unless both conditions exist, recognition of all or a part of gross
profit is deferred.
The gross profit recognized on sales of real estate is determined by relating
the estimated total land, land development and construction costs of each
development area to the estimated total sales value of the property in the
development.
- 32 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[1] Summary of Significant Accounting Policies (continued)
[d] Methods of Accounting for Real Estate Operations (continued)
Real estate investments are stated at the lower of the carrying amounts, which
includes applicable interest and real estate taxes during the development and
construction phases, or fair value less cost to sell in accordance with SFAS No.
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". SFAS No. 121 requires that assets to be held and used
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. An impairment has
occurred when the carrying amount of the assets exceed the related undiscounted
future cash flows of a development. SFAS No. 121 also provides that when
management has committed to a plan to dispose of specific real estate assets,
the assets should be reported at the lower of the carrying amount or fair value
less cost to sell. Estimating future cash flows of a development involves
estimating the current sales value of the development less the estimated costs
of completion (to the stage of completion assumed in determining the selling
price), holding and disposal. Estimated sales values are forecast based on
comparable local sales (where applicable), trends as foreseen by knowledgeable
local commercial real estate brokers or others active in the business and/or
project specific experience such as offers made directly to the Company relating
to the property. If the estimated future cash flows of a development is less
than the carrying amount of a development, SFAS No. 121 requires a provision to
be made to reduce the carrying amount of the development to fair value less cost
to sell. The Company recently changed its strategy with respect to certain real
estate assets which resulted in a write down that is described in Note 4 below.
[e] Depreciable Property and Equipment
Land, buildings and improvements, construction and computer-related equipment
and other equipment are recorded at cost. Depreciation is provided primarily
using accelerated methods for construction and computer-related equipment and
the straight-line method for the remaining depreciable property.
[f] Goodwill
Goodwill represents the excess of the costs of subsidiaries acquired over the
fair value of their net assets as of the dates of acquisition. These amounts are
being amortized on a straight-line basis over 40 years.
[g] Income Taxes
The Company follows SFAS No. 109, "Accounting for Income Taxes," (see Note 5).
Deferred income tax assets and liabilities are recognized for the effects of
temporary differences between the financial statement carrying amounts and the
income tax basis of assets and liabilities using enacted tax rates. In addition,
future tax benefits, such as net operating loss carryforwards, are recognized
currently to the extent such benefits are more likely than not to be realized as
an economic benefit in the form of a reduction of income taxes in future years.
[h] Earnings (Loss) Per Common Share
Computations of earnings (loss) per common share amounts are based on the
weighted average number of common shares outstanding (4,808,000 shares in 1996,
4,655,000 shares in 1995 and 4,380,000 shares in 1994). During the three-year
period ended December 31, 1996, earnings (loss) per common share reflect the
effect of $2,125,000 of preferred dividends declared or accrued during the year.
Common stock equivalents related to additional shares of common stock issuable
upon exercise of stock options (see Note 9) have not been included since their
effect would be immaterial or antidilutive. Earnings (loss) per common share on
a fully diluted basis are not presented because the effect of conversion of the
Company's depositary convertible exchangeable preferred shares into common stock
is antidilutive.
- 33 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[1] Summary of Significant Accounting Policies (continued)
[i] Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with original
maturities of three months or less.
[j] Reclassifications
Certain prior year amounts have been reclassified to be consistent with the
current year classifications.
[k] Impact of Recently Issued Accounting Standards
During 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of", effective January 1, 1996, which requires the determination of
whether an impairment has occurred to be based on undiscounted cash flows. If it
is determined that an impairment has occurred, the impaired asset must be
written down to fair value less cost to sell. While SFAS No. 121 specifically
applies to the Company's real estate development business (see Note (1)(d)
above), its adoption did not have a material impact on the accompanying
financial statements since the application of the Company's prior policy of
recording its real estate assets at the lower of cost or market produced similar
results.
Also during 1995, SFAS No. 123, "Accounting for Stock-based Compensation" was
issued. This statement requires the fair value of stock options and other
stock-based compensation issued to employees to be either included as
compensation expense in the income statement, or the pro-forma effect on net
income and earnings per share to be disclosed in the footnotes to the financial
statements commencing in 1996. The Company has elected to adopt SFAS No. 123 on
a disclosure basis and, as such, the effect of its implementation did not have a
material impact on the accompanying financial statements (see Note 9 below).
- 34 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[2] Joint Ventures
The Company, in the normal conduct of its business, has entered into partnership
arrangements, referred to as "joint ventures," for certain construction and real
estate development projects. Each of the joint venture participants is usually
committed to supply a predetermined percentage of capital, as required, and to
share in a predetermined percentage of the income or loss of the project.
Summary financial information (in thousands) for construction and real estate
joint ventures accounted for on the equity method for the three years ended
December 31, 1996 follows:
Construction Joint Ventures
<TABLE>
Financial position at December 31, 1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Current assets $329,999 $227,578 $232,025
Property and equipment, net 32,145 22,491 19,386
Current liabilities (236,752) (151,311) (132,326)
--------- --------- ---------
Net assets $125,392 $ 98,758 $119,085
========= ========= =========
Operations for the year ended December 31, 1996 1995 1994
--------- --------- ---------
Revenue $753,214 $348,730 $544,546
Cost of operations 702,997 329,414 505,347
--------- --------- ---------
Pretax income $ 50,217 $ 19,316 $ 39,199
========= ========= =========
Company's share of joint ventures
Revenue $446,793 $182,799 $241,784
Cost of operations 413,935 177,990 224,039
--------- --------- ---------
Pretax income $ 32,858 $ 4,809 $ 17,745
========= ========= =========
Equity $ 78,233 $ 61,846 $ 66,346
========= ========= =========
<CAPTION>
The Company has a centralized cash management arrangement with certain
construction joint ventures in which it is the sponsor. Under this arrangement,
excess cash is controlled by the Company; cash is made available to meet the
individual joint venture requirements, as needed; and interest income is
credited to the ventures at competitive market rates. In addition, certain joint
ventures sponsored by other contractors, in which the Company participates,
distribute cash at the end of each quarter to the participants who will then
return these funds at the beginning of the next quarter. Of the total cash
advanced at the end of 1996 ($47.5 million) and 1995 ($34.8 million),
approximately $25.6 million in 1996 and $12.1 million in 1995 was deemed to be
temporary.
Real Estate Joint Ventures
Financial position at December 31, 1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Property held for sale or development $ 12,683 $ 18,350 $ 28,885
Investment properties, net 168,833 173,468 177,258
Other assets 64,530 61,700 62,101
Long-term debt (69,195) (72,603) (77,968)
Other liabilities* (334,087) (305,755) (277,184)
---------- ---------- ---------
Net assets (liabilities) $(157,236) $(124,840) $(86,908)
========== ========== =========
Operations for the year ended December 31, 1996 1995 1994
---------- --------- ---------
Revenue $ 42,921 $ 49,560 $ 58,326
---------- ---------- ---------
Cost of operations -
Depreciation $ 6,614 $ 7,304 $ 7,245
Other 64,289 73,829 71,211
---------- ---------- ---------
$ 70,903 $ 81,133 $ 78,456
---------- ---------- ---------
Pretax income (loss) $ (27,982) $ (31,573) $(20,130)
========== ========== =========
Company's share of joint ventures
Revenue $ 22,502 $ 23,424 $ 27,059
---------- ---------- ---------
Cost of operations -
Depreciation $ 3,441 $ 3,275 $ 3,323
Other ** 19,127 20,888 26,682
---------- ---------- ---------
$ 22,568 $ 24,163 $ 30,005
---------- ---------- ---------
Pretax income (loss) $ (66) $ (739) $ (2,946)
========== ========== =========
Equity *** $(125,877) $ (46,640) $(30,095)
Advances 222,341 198,741 181,934
---------- ---------- ---------
Total Equity and Advances $ 96,464 $ 152,101 $151,839
========== ========== =========
Total Equity and Advances, Long-term $ 71,253 $ 148,225 $148,843
Total Equity and Advances, Short-term **** 25,211 3,876 2,996
---------- ---------- ---------
$ 96,464 $ 152,101 $151,839
========== ========== =========
</TABLE>
- 35 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[2] Joint Ventures (continued)
* Included in "Other liabilities" are advances from joint venture partners
in the amount of $259.3 million in 1994, $287.6 million in 1995, and
$255.0 million in 1996. Of the total advances from joint venture
partners, $181.9 million in 1994, $198.7 million in 1995, and $222.3
million in 1996 represented advances from the
Company.
** Other costs are reduced by the amount of interest income recorded by the
Company on its advances to the respective joint ventures.
*** When the Company's equity in a real estate joint venture is combined
with advances by the Company to that joint venture, each joint venture
has a positive investment balance at December 31, 1996.
**** Included in real estate inventory classified as current.
[3] Long-term Debt
Long-term debt of the Company at December 31, 1996 and 1995 consists of the
following (in thousands):
<TABLE>
1996 1995
------ ------
<S> <C> <C>
Real Estate Development:
Industrial revenue bonds, at 65% of prime, payable in semi-annual installments $ 891 $ 1,034
Mortgages on real estate, at rates ranging from 8% to 10.82%,
payable in installments 7,222 5,521
-------- -------
Total $ 8,113 $ 6,555
Less - current maturities 3,826 2,895
-------- -------
Net real estate development long-term debt $ 4,287 $ 3,660
======== =======
Other:
Revolving credit loans at an average rate of 8.1% in 1996 and 1995 $ 85,000 $73,000
PB Capital bridge loan at a rate of prime plus 4% 10,000 -
ESOT Notes at 8.24%, payable in semi-annual installments (Note 7) 3,495 4,484
Industrial revenue bonds at various rates, payable in installments to 2005 4,000 4,000
Other indebtedness 2,706 1,813
-------- -------
Total $105,201 $83,297
Less - current maturities 12,595 2,802
-------- -------
Net other long-term debt $ 92,606 $80,495
======== =======
</TABLE>
Payments required under these obligations amount to approximately $16,421 in
1997, $6,139 in 1998, $1,754 in 1999, $85,000 in 2000, $ - in 2001 and $4,000
for the years 2002 and beyond.
Effective December 12, 1994, the Company entered into a new revolving credit
agreement with a group of major banks which provided, among other things, for
the Company to borrow up to an aggregate of $125 million, with a $25 million
maximum of such amount also being available for letters of credit, of which
$11.2 million was outstanding at December 31, 1996. The Company may choose from
three interest rate alternatives including a prime-based rate, as well as other
interest rate options based on LIBOR (London inter-bank offered rate) or
participating bank certificate of deposit rates.
The revolving credit agreement, as well as certain other loan agreements,
provides for, among other things, maintaining specified working capital and
tangible net worth levels and, additionally, imposes limitations on indebtedness
and future investment in real estate development projects. During 1996, the
Company would have been in violation of certain of these financial covenants;
however, the Company obtained waivers of any such violations. Effective February
26, 1996, certain modifications were made to the revolving credit agreement
including, among other things, additional collateral which consists of all
available assets not included as collateral in other agreements and suspension
of payment of the 53 1/8 cent per share quarterly
- 36 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[3] Long-term Debt (continued)
dividend on the Company's Depositary Convertible Exchangeable Preferred Shares
(see Note 7) until certain financial criteria are met. Also, effective February
26, 1996, the Company entered into a Bridge Loan Agreement with its revolver
banks to borrow up to an additional $15 million at an interest rate of prime
plus 2%. During November 1996, the Bridge Loan Facility was temporarily
increased by $10 million to allow PB Capital Partners, L.P. ("PB Capital"), one
of the investors in the Company's new Series B Cumulative Convertible Preferred
Stock ("Series B Preferred Stock") (see Note 14 "Subsequent Events" for details
of this transaction), to participate 100% in the additional Bridge Loan by
temporarily loaning $10 million to the Company until such time as the issuance
of the new Series B Preferred Stock was approved by the Company's shareholders.
In connection with this transaction, the Company paid PB Capital a fee of
$400,000 payable in shares of the Company's $1.00 par value Common Stock (47,267
shares) valued at fair market value at the time of the transaction. Concurrent
with the approval of the Series B Preferred Stock by the Company's shareholders
on January 17, 1997, the Company issued its Series B Preferred Stock for
approximately $30 million, repaid the $10 million temporary Bridge Loan from PB
Capital, and entered into a new revolving credit agreement with its bank group
(the "New Credit Agreement"). Under the New Credit Agreement, the previous
Revolving Credit Agreement and Bridge Loan Facility were combined into a single
$129.5 million Credit Facility and the expiration dates extended from 1997 to
January 1, 2000. The New Credit Agreement provides for scheduled mandatory
reductions of the total Credit Facility and compliance with certain financial
ratios and other financial limitations (see Note 14).
[4] Write Down of Certain Real Estate Assets
The Company recently changed its real estate strategy on certain of its
properties from maximizing value by holding them through the necessary
development and stabilization periods to a new strategy of generating short-term
liquidity through an accelerated disposition or bulk sale. This change in
strategy substantially reduced the estimated future cash flow from those
properties. Therefore, an impairment loss on those properties, in an aggregate
amount of $79.9 million, representing the excess of book value of those
properties over their estimated future cash flow, was provided in the fourth
quarter of 1996 in accordance with SFAS No. 121. An estimated allocation of the
write down by geographic area is California ($59.9 million), Arizona ($18
million), and Florida ($2 million). Revenues and pretax loss related to these
properties included in the 1996 Statement of Operations were approximately $14.6
million and $.5 million, respectively.
[5] Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109. This
standard determines deferred income taxes based on the estimated future tax
effects of differences between the financial statement and tax bases of assets
and liabilities, given the provisions of enacted tax laws.
- 37 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[5] Income Taxes (continued)
The (provision) credit for income taxes is comprised of the following (in
thousands):
Federal State Total
------- ----- -----
1996
Current $ - $ (736) $ (736)
Deferred - (94) (94)
-------- -------- --------
$ - $ (830) $ (830)
======== ======== ========
1995
Current $ - $ (11) $ (11)
Deferred 2,726 (104) 2,622
-------- -------- --------
$ 2,726 $ (115) $ 2,611
======== ======== ========
1994
Current $ - $ (21) $ (21)
Deferred (108) (51) (159)
-------- -------- --------
$ (108) $ (72) $ (180)
======== ======== ========
The table below reconciles the difference between the statutory federal income
tax rate and the effective rate provided in the statements of operations.
1996 1995 1994
---- ---- ----
Statutory federal income tax rate (34)% (34)% 34 %
State income taxes, net of federal tax benefit 1 - 4
Change in valuation allowance 34 25 -
Goodwill and other - - (1)
----- ----- -----
Effective tax rate 1 % (9)% 37 %
===== ===== =====
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of December 31, 1996 and 1995 (in
thousands):
<TABLE>
1996 1995
------------------------------------ --------------------------------
Deferred Deferred Tax Deferred Deferred Tax
Tax Assets Liabilities Tax Assets Liabilities
<S> <C> <C> <C> <C>
Provision for estimated losses $ 30,291 $ - $ 5,646 $ -
Contract losses 6,562 - 5,642 -
Joint ventures - construction - 8,176 - 4,929
Joint ventures - real estate - 21,962 - 20,419
Timing of expense recognition 4,370 - 4,253 -
Capitalized carrying charges - 1,813 - 2,187
Net operating loss carryforwards 16,157 - 13,675 -
Alternative minimum tax credit
carryforwards 2,419 - 2,419 -
General business tax credit
carryforwards 3,532 - 3,532 -
Foreign tax credit carryforwards 979 - 978 -
Other, net 413 321 576 985
--------- --------- -------- --------
$ 64,723 $ 32,272 $36,721 $28,520
Valuation allowance for deferred
tax assets (32,945) - (9,342) -
--------- --------- -------- --------
Total $ 31,778 $ 32,272 $27,379 $28,520
========= ========= ======== ========
</TABLE>
The net of the above is deferred taxes in the amount of $494 in 1996 and $1,141
in 1995 which is classified
- 38 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[5] Income Taxes (continued)
in the respective Consolidated Balance Sheets as follows:
1996 1995
---- ----
Long-term deferred tax liabilities
(included in "Deferred Income
Taxes and Other Liabilities") $ 4,007 $14,180
Short-term deferred tax asset 3,513 13,039
------- -------
$ 494 $ 1,141
======= =======
A valuation allowance is provided to reduce the deferred tax assets to a level
which, more likely than not, will be realized. The net deferred assets reflect
management's estimate of the amount which will be realized from future taxable
income which can be predicted with reasonable certainty.
As a result of not providing any federal income tax benefit in 1996 and only a
partial benefit in 1995, approximately $92 million of future pretax earnings
should benefit from minimal, if any, federal tax provisions.
At December 31, 1996, the Company has unused tax credits and net operating loss
carryforwards for income tax reporting purposes which expire as follows (in
thousands):
Unused Investment Foreign Net Operating Loss
Tax Credits Tax Credits Carryforwards
1997 - 2000 $ - $ 979 $ -
2001 - 2005 3,532 - 1,696
2006 - 2010 - - 45,825
------- ------ -------
$ 3,532 $ 979 $47,521
======= ====== =======
Net operating loss carryforwards may be limited in the event of certain changes
in ownership interests of significant stockholders. In addition, approximately
$2.8 million of the net operating loss carryforwards can only be used against
the taxable income of the corporation in which the loss was recorded for tax and
financial reporting purposes.
[6] Deferred Income Taxes and Other Liabilities and Other Income (Expense), Net
Deferred Income Taxes and Other Liabilities
Deferred income taxes and other liabilities at December 31, 1996 and 1995
consist of the following (in thousands):
1996 1995
------- -------
Deferred Income Taxes $ 4,007 $14,180
Insurance related liabilities 9,385 20,484
Employee benefit-related liabilities 5,016 5,110
Other 12,889 12,889
-------- -------
$31,297 $52,663
======== =======
Other Income (Expense), Net
Other income (expense) items for the three years ended December 31, 1996 consist
of the following (in thousands):
1996 1995 1994
------- ------- -------
Interest and dividend income $ 1,018 $ 1,369 $ 205
Minority interest (Note 1) 416 10 24
Bank fees (1,906) (1,099) (1,100)
Miscellaneous income (expense), net (20) 534 15
-------- -------- --------
$ (492) $ 814 $ (856)
======== ======== ========
- 39 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[7] Capitalization
In July 1989, the Company sold 262,774 shares of its $1 par value common stock,
previously held in treasury, to its Employee Stock Ownership Trust ("ESOT") for
$9,000,000. The ESOT borrowed the funds via a placement of 8.24% Senior
Unsecured Notes ("Notes") guaranteed by the Company. The Notes are payable in 20
equal semi-annual installments of principal and interest commencing in January
1990. The Company's annual contribution to the ESOT, plus any dividends
accumulated on the Company's common stock held by the ESOT, will be used to
repay the Notes. Since the Notes are guaranteed by the Company, they are
included in "Long-Term Debt" with an offsetting reduction in "Stockholders'
Equity" in the accompanying Consolidated Balance Sheets. The amount included in
"Long-Term Debt" will be reduced and "Stockholders' Equity" reinstated as the
Notes are paid by the ESOT.
In June 1987, net proceeds of approximately $23,631,000 were received from the
sale of 1,000,000 depositary convertible exchangeable preferred shares (each
depositary share representing ownership of 1/10 of a share of $21.25 convertible
exchangeable preferred stock, $1 par value) at a price of $25 per depositary
share. Annual dividends are $2.125 per depositary share and are cumulative.
Generally, the liquidation preference value is $25 per depositary share plus any
accumulated and unpaid dividends. The preferred stock of the Company, as
evidenced by ownership of depositary shares, is convertible at the option of the
holder, at any time, into common stock of the Company at a conversion price of
$37.75 per share of common stock. The preferred stock is redeemable at the
option of the Company at any time at $25 per share plus any unpaid dividends.
The preferred stock is also exchangeable at the option of the Company, in whole
but not in part, on any dividend payment date into 8 1/2% convertible
subordinated debentures due in 2012 at a rate equivalent to $25 principal amount
of debentures for each depositary share.
[8] Series a Junior Participating Preferred Stock
Under the terms of the Company's Shareholder Rights Plan, as amended, the Board
of Directors of the Company declared a distribution on September 23, 1988 of one
preferred stock purchase right (a "Right") for each outstanding share of common
stock. Under certain circumstances, each Right will entitle the holder thereof
to purchase from the Company one one-hundredth of a share (a "Unit") of Series A
Junior Participating Cumulative Preferred Stock, $1 par value (the "Preferred
Stock"), at an exercise price of $100 per Unit, subject to adjustment. The
Rights will not be exercisable or transferable apart from the common stock until
the earlier to occur of (i) 10 days following a public announcement that a
person or group (an "Acquiring Person") has acquired 20% or more of the
Company's outstanding common stock (the "Stock Acquisition Date"), (ii) 10
business days following the announcement by a person or group of an intention to
make an offer that would result in such persons or group becoming an Acquiring
Person or (iii) the declaration by the Board of Directors that any person is an
"Adverse Person", as defined under the Plan. The Rights will not have any voting
rights or be entitled to dividends.
Upon the occurrence of a triggering event as described above, each Right will be
entitled to that number of Units of Preferred Stock of the Company having a
market value of two times the exercise price of the Right. If the Company is
acquired in a merger or 50% or more of its assets or earning power is sold, each
Right will be entitled to receive common stock of the acquiring company having a
market value of two times the exercise price of the Right. Rights held by such a
person or group causing a triggering event may be null and void. The Rights are
redeemable at $.02 per Right by the Board of Directors at any time prior to the
occurrence of a triggering event.
On January 17, 1997, the Board of Directors amended the Company's Shareholder
Rights Plan to; (i) permit the acquisition of the Series B Preferred Stock by
certain investors (see Note 14 "Subsequent Events"), any additional Preferred
Stock issued as a dividend thereon, any Common Stock issued upon
- 40 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[8] Series a Junior Participating Preferred Stock (continued)
conversion of the Series B Preferred Stock and certain other events without
triggering the distribution of the Rights; (ii) lower the threshold for the
occurrence of a Stock Acquisition Date from 20% to 10%; and (iii) extend the
expiration date of the Plan from September 23, 1998 to January 21, 2007.
[9] Stock Options
At December 31, 1996 and 1995, 481,610 shares of the Company's authorized but
unissued common stock were reserved for issuance to employees under its 1982
Stock Option Plan. Options are granted at fair market value on the date of grant
and generally become exercisable in two equal annual installments on the second
and third anniversary of the date of grant and expire eight years from the date
of grant. Options for 240,000 shares of common stock granted in 1992 become
exercisable on March 31, 2001 if the Company achieves a certain profit target in
the year 2000; may become exercisable earlier if certain interim profit targets
are achieved; and to the extent not exercised, expire 10 years from the date of
grant. A summary of stock option activity related to the Company's stock option
plan is as follows:
<TABLE>
Option Price Per Share Shares
Number of Weighted Available
Shares Range Average To Grant
<S> <C> <C> <C> <C>
Outstanding at December 31, 1994 421,525 $11.06-$33.06 $17.58 60,085
Granted 10,000 $10.44 $10.44
Canceled (52,875) $11.06-$33.06 $20.85
Outstanding at December 31, 1995 378,650 $10.44-$33.06 $16.65 102,960
Granted - $ - -
Canceled (15,150) $11.06-$33.06 $20.53
Outstanding at December 31, 1996 363,500 $10.44-$33.06 $16.48 118,110
</TABLE>
Options outstanding at December 31, 1996 and related weighted average price and
life information follows:
Remaining Grant Options Options Exercise
Life (Years) Date Outstanding Exercisable Price
- ------------ ---- ----------- ----------- -----
1 05/17/89 17,850 17,850 $33.06
2 05/17/90 19,750 19,750 $24.00
3 07/16/91 55,900 55,900 $11.06
4 12/21/92 240,000 90,000 $16.44
6 03/22/94 20,000 10,000 $13.00
7 05/18/95 10,000 - $10.44
When options are exercised, the proceeds are credited to stockholders' equity.
In addition, the income tax savings attributable to nonqualified options
exercised are credited to paid-in surplus. As discussed in Note (1)(k) above,
the Company elected the optional pro forma disclosures under SFAS No. 123 as if
the Company adopted the cost recognition requirements in 1995 which are
discussed below.
The fair value of the options granted during 1995 is $58,000 and was estimated
on the date of grant using the Black-Scholes option-pricing model with the
following assumptions: dividend yield of 0%, expected volatility of 37%,
risk-free interest rate of 6.58%, and expected life of 8 years. If SFAS No. 123
had been fully implemented, stock based compensation costs would have increased
the net loss in 1996 and 1995 by $19,000 or less than one cent per common share.
The effect of applying SFAS No. 123 in this pro forma disclosure may not be
indicative of future amounts.
- 41 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[10] Employee Benefit Plans
The Company and its U.S. subsidiaries have a defined benefit plan that covers
its executive, professional, administrative and clerical employees, subject to
certain specified service requirements. The plan is noncontributory and benefits
are based on an employee's years of service and "final average earnings", as
defined. The plan provides reduced benefits for early retirement and takes into
account offsets for social security benefits. All employees are vested after 5
years of service. Net pension cost for 1996, 1995 and 1994 follows (in
thousands):
1996 1995 1994
------ ------ ------
Service cost - benefits earned
during the period $ 1,247 $ 988 $ 1,178
Interest cost on projected
benefit obligation 3,062 2,956 2,936
Return on plan assets:
Actual (4,053) (6,971) 1,229
Deferred 1,263 4,217 (3,839)
-------- -------- --------
Net pension cost $ 1,519 $ 1,190 $ 1,504
======== ======== ========
Actuarial assumptions used:
Discount rate 7 1/2%* 7 %** 8 3/4%***
Rate of increase in compensation 4 % 4 %** 5 1/2%
Long-term rate of return on assets 8 % 8 % 8 %
* Rate was changed effective December 31, 1996 and resulted in a $2.7
million decrease in the projected benefit obligation referred to below.
** Rates were changed effective December 31, 1995. The decrease in the
discount rate resulted in an increase in the projected benefit
obligations of $8.1 million, while the decrease in the rate of increase
in compensation resulted in a decrease in the projected benefit
obligations of $1.3 million, resulting in a net increase of $6.8 million
in 1995 in the projected benefit obligations referred to below.
*** Rate was changed from 71/2% effective December 31, 1994 and resulted in
a net decrease of $5.6 million in the projected benefit obligation.
The Company's plan has assets in excess of its accumulated benefit obligations.
Plan assets generally include equity and fixed income funds. The status of the
Company's employee pension benefit plan is summarized below (in thousands):
<TABLE>
December 31,
1996 1995
-------- -------
<S> <C> <C>
Assets available for benefits:
Funded plan assets at fair value $40,618 $37,542
Accrued pension expense 4,355 4,122
-------- --------
Total assets $44,973 $41,664
-------- --------
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including vested benefits of $40,198 and $40,596 $39,760
$39,050
Effect of future salary increases 3,628 3,831
-------- --------
Projected benefit obligations $44,224 $43,591
-------- --------
Assets available more (less) than projected benefits $ 749 $(1,927)
======== ========
Consisting of:
Unamortized net liability existing at date of adopting SFAS No. 87 $ (24) $ (29)
Unrecognized net gain (loss) 347 (2,408)
Unrecognized prior service cost 426 510
-------- --------
$ 749 $(1,927)
======== ========
</TABLE>
- 42 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[10] Employee Benefit Plans (continued)
The Company also has a contributory Section 401(k) plan and a noncontributory
employee stock ownership plan (ESOP) which cover its executive, professional,
administrative and clerical employees, subject to certain specified service
requirements. Under the terms of the Section 401(k) plan, the provision is based
on a specified percentage of profits, subject to certain limitations.
Contributions to the related employee stock ownership trust (ESOT) are
determined by the Board of Directors and may be paid in cash or shares of
Company common stock.
The Company's policy is generally to fund currently the costs accrued under the
pension plan, Section 401(k) plan and the ESOP.
The Company also has an unfunded supplemental retirement plan for certain
employees whose benefits under principal salaried retirement plans are reduced
because of compensation limitations under federal tax laws. Pension expense for
this plan was $.2 million in each of the last three years. At December 31, 1996,
the projected benefit obligation was $1.4 million. A corresponding accumulated
benefit obligation of $.9 million has been recognized as a liability in the
consolidated balance sheet and is equal to the amount of the vested benefits.
In addition, the Company has an incentive compensation plan for key employees
which is generally based on achieving certain levels of profit within their
respective business units.
The aggregate amounts provided under these employee benefit plans were $8.5
million in 1996, $7.6 million in 1995 and $9.2 million in 1994.
The Company also contributes to various multiemployer union retirement plans
under collective bargaining agreements, which provide retirement benefits for
substantially all of its union employees. The aggregate amounts provided in
accordance with the requirements of these plans were $8.5 million in 1996, $12.6
million in 1995 and $12.4 million in 1994. The Multiemployer Pension Plan
Amendments Act of 1980 defines certain employer obligations under multiemployer
plans. Information regarding union retirement plans is not available from plan
administrators to enable the Company to determine its share of unfunded vested
liabilities.
[11] Contingencies and Commitments
In connection with the Rincon Center real estate development joint venture, the
Company's wholly-owned real estate subsidiary has guaranteed the payment of
interest on both mortgage and bond financing covering a project with loans
totaling $56 million; has issued a secured letter of credit to collateralize
$3.7 million of these borrowings; has guaranteed amortization payments on these
borrowings which the Company estimates to be a maximum of $3.9 million; and has
guaranteed a master lease under a sale operating lease-back transaction. In
calculating the potential obligation under the master lease guarantee, the
Company has an agreement with its lenders which employs a 10% discount rate and
no increases in future rental rates beyond current lease terms. Based on these
assumptions, management believes its additional future obligation will not
exceed $4.6 million. The Company has also guaranteed the $3.7 million letter of
credit, the subsidiary's $3.9 million amortization guaranty and any obligation
under the master lease during the next two years. As part of the sale operating
lease-back transaction, the joint venture, in which the Company's real estate
subsidiary is a 46% general partner, agreed to obtain a financial commitment on
behalf of the lessor to replace at least $43 million of long-term financing by
July 1, 1993. To satisfy this obligation, the partnership successfully extended
existing financing to July 1, 1998. To complete the extension, the partnership
had to advance funds to the lessor sufficient to reduce the
- 43 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[11] Contingencies and Commitments (continued)
financing from $46.5 million to $40.5 million. Subsequent payments through 1996
have further reduced the loan to $36.2 million. In addition, as part of the
obligations of the extension, the partnership will have to further amortize the
debt from its current level to $33 million through additional lease payments
over the next two years. If by January 1, 1998, the joint venture has not
received a further extension or new commitment for financing on the property for
at least $33 million, the lessor will have the right under the lease to require
the joint venture to purchase the property for approximately $18.8 million in
excess of the then outstanding debt.
In 1993, the joint venture also extended $29 million of the $61 million
financing then outstanding through October 1, 1998. This extension required a
$.6 million up front paydown. Subsequent payments through 1996 further reduced
the loan by $4.6 million. The joint venture may be required to amortize up to
$6.4 million more of the principal, however, under certain conditions, that
amortization could be as low as $4.9 million. Total lease payments and loan
amortization obligations at Rincon Center are $7.3 million in 1997. It is
expected that some but not all of these requirements will be generated by the
project's operations. The Company's real estate subsidiary and, to a more
limited extent, the Company, is obligated to fund any of the loan amortization
and/or lease payments at Rincon in the event sufficient funds are not generated
by the property or contributed to it by its partners. Based on current Company
forecasts, it is expected the maximum exposure to service these commitments in
1997 is $8.4 million. The 1997 estimate assumes a period of approximately 5
months during which a portion of the building is unoccupied as that segment of
the building is improved for the use of a new tenant currently expected to take
occupancy in 1997.
In a separate agreement related to this same property, the 20% co-general
partner has indicated it does not currently have nor does it expect to have the
financial resources to fund its share of capital calls. Therefore, the Company's
wholly-owned real estate subsidiary agreed to lend this 20% co-general partner
on an as-needed basis, its share of any capital calls which the partner cannot
meet. In return, the Company's subsidiary receives a priority return from the
partnership on those funds it advances for its partner and penalty fees in the
form of rights to certain other distributions due the borrowing partner from the
partnership. The severity of the penalty fees increases in each succeeding year
for the next several years. The subsidiary has advanced approximately $4 million
to date under this agreement.
In connection with a second real estate development joint venture known as the
Resort at Squaw Creek, the Company's wholly-owned real estate subsidiary has
guaranteed the payment of interest on mortgage financing with a total bank loan
value currently estimated at $46 million; has guaranteed $10 million of loan
principal; has posted a letter of credit for $2.0 million as its part of credit
support required to extend the maturity of the loan to May 1997; and has
guaranteed leases which aggregate $1.1 million on a present value basis as
discounted at 10%. Effective May 1, 1995, the loan was renewed for an additional
two years with an option to renew for a third year. Required principal payments
are $250,000 per quarter for the first year and $500,000 per quarter for the
second year. The borrower has the right to extend the loan to May 1, 1998 on
similar terms but with an increase in quarterly amortization to $750,000.
The subsidiary also has an obligation through the year 2001 to cover
approximately a $2 million per year preferred return to its joint venture
partner at the Resort if the funds are not generated from hotel operations.
Although results have shown improvement since the Resort opened in late 1990, it
is not expected that hotel operations will contribute to the obligation during
1997. Under the terms of the loan extension, payment of the preferred return out
of operating profits requires lender approval. In February 1997, the Company's
wholly-owned real estate subsidiary entered into a letter of intent to sell its
- 44 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[11] Contingencies and Commitments (continued)
partnership position in this property to one of its partners. If this
transaction is consummated, it is anticipated that all of the contingent
liabilities related to this project will be removed.
Included in the loan agreements related to the above joint ventures, among other
things, are provisions that, under certain circumstances, could limit the
subsidiary's ability to dividend funds to the Company. In the opinion of
management, these provisions should not affect the operations of the Company or
the subsidiary.
On July 30, 1993, the U.S. District Court (D.C.), in a preliminary opinion,
upheld terminations for default on two adjacent contracts for subway
construction between Mergentime-Perini, under two joint ventures, and the
Washington Metropolitan Area Transit Authority ("WMATA") and found the
Mergentime Corporation, Perini Corporation and the Insurance Company of North
America, the surety, jointly and severally liable to WMATA for damages in the
amount of $16.5 million, consisting primarily of excess reprocurement costs to
complete the projects. Many issues were left partially or completely unresolved
by the opinion, including substantial joint venture claims against WMATA. As a
result of developments in the case during the third quarter of 1995, the Company
established a reserve with respect to the litigation. Management believes the
reserve should be adequate to cover the potential ultimate liability in this
matter.
Contingent liabilities also include liability of contractors for performance and
completion of both company and joint venture construction contracts. In
addition, the Company is a defendant in various lawsuits. In the opinion of
management, the resolution of these matters will not have a material effect on
the results of operation or financial condition as reported in the accompanying
financial statements.
[12] Unaudited Quarterly Financial Data
The following table sets forth unaudited quarterly financial data for the years
ended December 31, 1996 and 1995 (in thousands, except per share amounts):
1996 by Quarter
1st 2nd 3rd 4th
--- --- --- ---
Revenues $270,029 $316,492 $340,670 $343,093
Net income (loss) $ 1,487 $ 2,024 $ 2,311 $(76,425)*
Earnings (loss) per common share $ .20 $ .31 $ .37 $ (15.79)
1995 by Quarter
1st 2nd 3rd 4th
--- --- --- ---
Revenues $263,089 $306,961 $232,974 $298,044
Net income (loss) $ 872 $ 886 $(30,674)** $ 1,331
Earnings (loss) per common share $ .08 $ .08 $ (6.61) $ .17
* Includes a non-cash $79.9 million write down of certain real estate
assets (see Note 4).
** Includes a charge, which aggregates $25.6 million, to provide for
reserves related to previously disclosed litigation discussed in Note 11
and downward revisions in estimated probable recoveries on certain
outstanding contract claims.
- 45 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[13] Business Segments and Foreign Operations
The Company is currently engaged in the construction and real estate development
businesses. The Company provides general contracting, construction management
and design-build services to private clients and public agencies throughout the
United States and selected overseas locations. The Company's construction
business involves three types of operations: civil, building and international.
The Company's real estate development operations are concentrated in Arizona,
California, Florida, Georgia and Massachusetts; however, the Company has not
commenced the development of any new real estate projects since 1990. The
following tables set forth certain business and geographic segment information
relating to the Company's operations for the three years ended December 31, 1996
(in thousands):
Business Segments
Revenues
1996 1995 1994
------------ ------------ ----------
Construction $1,224,428 $1,056,673 $ 950,884
Real Estate 45,856 44,395 61,161
------------ ------------ ----------
$1,270,284 $1,101,068 $1,012,045
============ ============ ==========
Income (Loss) From Operations
1996 1995 1994
------------ ------------ -----------
Construction $ 28,198 $ (15,322) $ 13,989
Real Estate (82,467) (2,921) 732
Corporate (5,141) (4,185) (5,909)
------------ ------------ -----------
$ (59,410) $ (22,428) $ 8,812
============ ============ ===========
Assets
1996 1995 1994
------------ ------------ -----------
Construction $ 318,333 $ 298,564 $ 262,850
Real Estate 132,215 209,789 209,635
Corporate* 13,744 30,898 10,015
------------ ------------ -----------
$ 464,292 $ 539,251 $ 482,500
============ ============ ===========
Capital Expenditures
1996 1995 1994
------------ ------------ -----------
Construction $ 1,449 $ 1,960 $ 2,491
Real Estate 8,989 9,555 10,274
------------ ------------ -----------
$ 10,438 $ 11,515 $ 12,765
============ ============ ===========
Depreciation
1996 1995 1994
------------ ------------ -----------
Construction $ 2,032 $ 2,369 $ 2,551
Real Estate** 558 400 328
------------ ------------ -----------
$ 2,590 $ 2,769 $ 2,879
============ ============ ===========
Geographic Segments
Revenues
1996 1995 1994
------------ ------------ -----------
United States $1,256,323 $1,084,390 $ 996,832
Foreign 13,961 16,678 15,213
------------ ------------ -----------
$1,270,284 $1,101,068 $1,012,045
============ ============ ===========
- 46 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1996, 1995 & 1994 (continued)
[13] Business Segments and Foreign Operations (continued)
Income (Loss) From Operations
1996 1995 1994
------------ ------------ -----------
United States $ (55,047) $ (15,405) $ 17,275
Foreign 778 (2,838) (2,554)
Corporate (5,141) (4,185) (5,909)
------------ ------------ -----------
$ (59,410) $ (22,428) $ 8,812
============ ============ ===========
Assets
1996 1995 1994
----------- ----------- -----------
United States $ 446,408 $ 503,114 $ 467,298
Foreign 4,140 5,239 5,187
Corporate* 13,744 30,898 10,015
----------- ----------- -----------
$ 464,292 $ 539,251 $ 482,500
=========== =========== ===========
* In all years, corporate assets consist principally of cash, cash
equivalents, marketable securities and other investments available for
general corporate purposes.
** Does not include approximately $3 to $4 million of depreciation that
represents its share from real estate joint ventures. (See Note 2 to
Notes to the Consolidated Financial Statements.)
Contracts with various federal, state, local and foreign governmental agencies
represented approximately 52% of construction revenues in 1996 and 56% in 1995
and 1994.
[14] Subsequent Events
New Equity
At a special stockholders' meeting on January 17, 1997, the Company's
stockholders approved two proposals that allowed the Company to close its new
equity transaction with an investor group led by Richard C. Blum & Associates,
L.P. immediately after the meeting. The transaction included, among other
things, classification by the Board of Directors of 500,000 shares of preferred
stock of the Company as Series B Cumulative Convertible Preferred Stock, par
value $1.00 per share, (the "Series B Preferred Stock"), issuance of 150,150
shares of Series B Preferred Stock at $200 per share (or $30 million) to the
investor group, (with the remainder of the shares set aside for possible future
payment-in-kind dividends to the holders of the Series B Preferred Stock),
amendments to the Company's By-Laws that redefines the Executive Committee and
added certain powers (generally financial in nature), including the power to
give overall direction to the Company's Chief Executive Officer, appointment of
three new members recommended by the investor group to the Board of Directors,
appointment of these same new directors to constitute a majority of the
Executive Committee referred to above and repayment of the $10 million temporary
Bridge Loan referred to in Note 3. Tutor-Saliba Corporation, a corporation
controlled by a newly appointed Director who is also a member of the Executive
Committee and a newly appointed Officer of the Company, is a participant in
certain construction joint ventures with the Company. The Company currently
participates in active joint ventures with Tutor-Saliba Corporation, with a
total contract value of over $1 billion.
- 47 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,
1996, 1995 & 1994 (continued)
[14] Subsequent Events (continued)
If this transaction had been closed on or before December 31, 1996, the pro
forma impact on the December 31, 1996 balance sheet would have been as follows
(in millions):
As Reported Pro Forma
----------- ---------
Working Capital $ 56.7 $ 85.1
Other Investments $ 4.0 $ 2.6
Series B Preferred Stock $ -- $ 27.0
Stockholders' Equity $ 35.6 $ 35.6
Total Assets $ 464.3 $ 492.9
Dividends on the Series B Preferred Stock are generally payable at an annual
rate of 7% when paid in cash and 10% when paid in-kind Series B Preferred Stock.
According to the terms of the Series B Preferred Stock, it (i) ranks junior in
cash dividend and liquidation preference to the $21.25 Convertible Exchangeable
Preferred Stock and senior to Common Stock, (ii) provides that no cash dividends
will be paid on any shares of Common Stock except for certain limited dividends
beginning in 2001, (iii) is convertible into shares of Common Stock at an
initial conversion price of approximately $9.68 per share (equivalent to
3,101,571 shares), (iv) has the same voting rights as shareholders of Common
Stock immediately equal to the number of shares of Common Stock into which the
Series B Preferred Stock can be converted, (v) generally has a liquidation
preference of $200 per share of Series B Preferred Stock, (vi) is optionally
redeemable by the Company after three years at a redemption price equal to the
liquidating value per share and higher amounts if a Special Default, as defined,
has occurred, (vii) is mandatorily redeemable by the Company if a Special
Default has occurred and a holder of the Series B Preferred Stock requests such
a redemption, (viii) is mandatorily redeemable by the Company of approximately
one-third of the shares still outstanding on January 17, 2005 and one-third of
the remaining shares in each of the next two years.
New Credit Agreement
Concurrent with the closing of the equity transaction referred to above, the
Company entered into a new renegotiated Revolving Credit Agreement (the "New
Credit Agreement") with the same Bank Group.
Under the New Credit Agreement, the previous Revolving Credit Agreement and
Bridge Loan Facility were combined into a single $129.5 million Credit Facility
and the expiration dates extended from 1997 to January 1, 2000. The New Credit
Agreement provides for scheduled mandatory reductions of the total $129.5 Credit
Facility in the amount of $15.0 million in 1997, $15.0 million in 1998, $12.5
million in 1999 and the balance in 2000. Receipt of 50% of the net proceeds from
real estate sales in excess of $20 million and 80% of net proceeds from the sale
of certain other assets immediately reduce the total commitment under the Credit
Facility and can represent all or part of the decrease on the scheduled
mandatory reduction dates. In consideration of the restructuring of the Credit
Facilities, the Bank Group received fees in the amount of $444,000 and stock
purchase warrants enabling the participating banks to purchase up to 420,000
shares of the Company's Common Stock, $1.00 par value, at $8.30 per share, the
average fair market value of the stock for the five business days prior to the
January 17, 1997 closing.
The New Credit Agreement provides for, among other things, maintaining specified
working capital and tangible net worth levels, minimum operating cash flow
levels, as defined, limitations on indebtedness and certain limitations on
future cash dividends.
- 48-
<PAGE>
Report of Independent Public Accountants
To the Stockholders of Perini Corporation:
We have audited the accompanying consolidated balance sheets of PERINI
CORPORATION (a Massachusetts corporation) and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Perini Corporation
and subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 14, 1997
- 49-
<PAGE>
Report of Independent Public Accountants on Schedules
To the Stockholders of Perini Corporation:
We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements included in this Form 10-K, and have issued
our report thereon dated February 14, 1997. Our audits were made for the purpose
of forming an opinion on the consolidated financial statements taken as a whole.
The supplemental schedules listed in the accompanying index are the
responsibility of the Company's management and are presented for the purpose of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state, in all material respects, the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 14, 1997
- 50
<PAGE>
<TABLE>
<CAPTION>
Schedule I
Perini Corporation (Parent Company)
Condensed Financial Information of Registrant
Balance Sheet
(In Thousands of Dollars)
Assets
December 31,
---------------------------------
1996 1995
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 10,614 $ 36,928
Accounts and notes receivable, including retainage of $11,041
and $12,271, respectively 31,795 48,283
Unbilled work 20,375 15,564
Construction joint ventures 71,070 56,335
Deferred tax asset 3,513 13,039
Other current assets 1,423 1,969
----------- -----------
Total current assets $ 138,790 $ 172,118
----------- -----------
INVESTMENTS AND OTHER ASSETS:
Investments in subsidiaries $ 138,559 $ 174,645
Other 3,804 1,641
----------- -----------
Total investments and other assets $ 142,363 $ 176,286
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Land $ 793 $ 809
Buildings and improvements 11,931 12,404
Construction equipment 7,411 9,581
Other 5,556 5,749
----------- -----------
$ 25,691 $ 28,543
Less: Accumulated depreciation 15,807 17,649
----------- -----------
Total property and equipment, net $ 9,884 $ 10,894
----------- -----------
$ 291,037 $ 359,298
=========== ===========
</TABLE>
The "Notes to Consolidated Financial Statements of Perini Corporation and
Subsidiaries" are an integral part of these statements. See accompanying "Notes
to Condensed Financial Information of Registrant".
- 51 -
<PAGE>
<TABLE>
<CAPTION>
Schedule I
Perini Corporation (Parent Company)
Condensed Financial Information of Registrant
Balance Sheet (Continued)
(In Thousands of Dollars)
Liabilities and Stockholders' Equity
December 31,
---------------------------------
1996 1995
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 12,595 $ 2,802
Accounts payable, including retainage of $5,639 and $5,568,
respectively 22,350 31,759
Advances from construction joint ventures 44,478 34,830
Deferred contract revenue 2,612 7,181
Accrued expenses 16,648 16,802
---------- ----------
Total current liabilities $ 98,683 $ 93,374
---------- ----------
DEFERRED INCOME TAXES AND OTHER LIABILITIES $ 25,094 $ 45,465
---------- ----------
INTERCOMPANY NOTES AND ADVANCES PAYABLE, net $ 39,096 $ 34,358
---------- ----------
LONG-TERM DEBT, less current maturities included above $ 92,606 $ 80,495
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value:
Authorized: 1,000,000 shares
Issued and outstanding: 100,000 shares
($25,000,000 aggregate liquidation preference) $ 100 $ 100
Series A junior participating preferred stock, $1 par value:
Authorized: 200,000 shares
Issued: None
Common stock, $1 par value:
Authorized: 15,000,000 shares
Issued: 5,032,427 shares and 4,985,160 shares 5,032 4,985
Paid-in surplus 57,080 57,659
Retained earnings (deficit) (20,666) 52,062
ESOT related obligations (3,856) (4,965)
---------- ----------
$ 37,690 $ 109,841
Less: Common stock in treasury, at cost - 133,779 shares and
265,735 shares 2,132 4,235
---------- -----------
Total stockholders' equity $ 35,558 $ 105,606
---------- -----------
$ 291,037 $ 359,298
========== ===========
</TABLE>
The "Notes to Consolidated Financial Statements of Perini Corporation and
Subsidiaries" are an integral part of these statements. See accompanying "Notes
to Condensed Financial Information of Registrant".
- 52 -
<PAGE>
Schedule I
Perini Corporation (Parent Company)
Condensed Financial Information of Registrant
Statement of Operations
(In Thousands of Dollars)
<TABLE>
For the years ended December 31,
----------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
REVENUE:
Construction operations $102,786 $161,444 $145,453
Share of construction joint ventures 276,739 129,987 161,219
---------- ---------- ----------
$379,525 $291,431 $306,672
---------- ---------- ----------
COST OF OPERATIONS:
Construction operations $101,107 $174,239 $137,579
Share of construction joint ventures 253,210 127,384 146,524
---------- ---------- ----------
$354,317 $301,623 $284,103
---------- ---------- ----------
GROSS PROFIT FROM OPERATIONS $ 25,208 $ (10,192) $ 22,569
General, administrative and selling expenses 17,758 16,983 21,797
---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS $ 7,450 $ (27,175) $ 772
Other Income (Expense), net (1,391) 306 (1,373)
Interest expense including intercompany interest of
$1,726, $4,805 and $4,759, respectively (11,123) (12,933) (11,614)
---------- ---------- ----------
LOSS BEFORE INCOME TAXES AND
EQUITY IN NET LOSS OF SUBSIDIARIES $ (5,064) $ (39,802) $ (12,215)
Equity in net income (loss) of subsidiaries (64,709) 9,606 12,698
---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES $ (69,773) $ (30,196) 483
(Provision) Credit for income taxes (830) 2,611 (180)
---------- ---------- ----------
NET INCOME (LOSS) $ (70,603) $ (27,585) $ 303
========== ========== ==========
</TABLE>
The "Notes to Consolidated Financial Statements of Perini Corporation and
Subsidiaries" are an integral part of these statements. See accompanying "Notes
to Condensed Financial Information of Registrant".
- 53 -
<PAGE>
Schedule I
Perini Corporation (Parent Company)
Condensed Financial Information of Registrant
Statement of Cash Flows
(In Thousands of Dollars)
<TABLE>
For the years ended December 31,
--------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (70,603) $(27,585) $ 303
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 1,191 1,203 1,451
Noncurrent deferred taxes and other liabilities (20,371) 13,100 3,698
Distributions greater (less) than earnings of joint
ventures (5,734) 12,385 (2,013)
Equity in net income (loss) of subsidiaries 64,709 (9,606) (12,698)
Cash provided from (used by) changes in
components of working capital other than cash
and current maturities of long-term debt 14,418 36,898 (49,590)
Other non-cash items, net (732) (1,455) (249)
------------ ----------- -----------
NET CASH PROVIDED FROM (USED BY)
OPERATING ACTIVITIES $ (17,122) $ 24,940 $ (59,098)
------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment $ 1,359 $ 1,069 $ 951
Cash distributions of capital from unconsolidated
construction joint ventures 4,642 19,445 13,112
Acquisition of property and equipment (745) (1,242) (1,334)
Capital contributions to unconsolidated
construction joint ventures (12,920) (27,734) (16,778)
(Decrease) increase in intercompany notes,
advances and equity (23,949) (169) 37,992
Investment in other activities (2,163) 313 -
------------ ----------- -----------
NET CASH PROVIDED FROM (USED BY)
INVESTING ACTIVITIES $ (33,776) $ (8,318) $ 33,943
------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt $ 24,706 $ 12,033 $ 3,127
Repayment of long-term debt (1,693) (1,802) (317)
Treasury stock issued 1,171 2,243 1,735
Finance fee paid in stock 400 - -
Cash dividends paid - (2,125) (2,125)
------------ ----------- -----------
NET CASH PROVIDED FROM (USED BY)
FINANCING ACTIVITIES $ 24,584 $ 10,349 $ 2,420
------------ ---------- ------------
Net increase (decrease) in cash and cash equivalents $ (26,314) $ 26,971 $ (22,735)
Cash and cash equivalents at beginning of year 36,928 9,957 32,692
------------ ---------- ------------
Cash and cash equivalents at end of year $ 10,614 $ 36,928 $ 9,957
============ ========== ============
Supplemental disclosures of cash paid during the year for:
Interest $ 9,122 $ 8,227 $ 6,614
============ ========== ============
Income tax payments $ 221 $ 121 $ 1,230
============ ========== ============
</TABLE>
The "Notes to Consolidated Financial Statements of Perini Corporation and
Subsidiaries" are an integral part of these statements. See accompanying "Notes
to Condensed Financial Information of Registrant".
- 54 -
<PAGE>
Schedule I
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT
[1] Basis of Presentation
Pursuant to the rules and regulations of the Securities and Exchange Commission,
the Condensed Financial Statements of the Registrant do not include all of the
information and notes normally included with financial statements prepared in
accordance with generally accepted accounting principles. It is, therefore,
suggested that these Condensed Financial Statements be read in conjunction with
the Consolidated Financial Statements and Notes thereto included in the
Registrant's Annual Report as referenced in Form 10-K, Part II, Item 8, page 21.
Certain financial statement amounts have been reclassified to conform to the
1996 presentation.
[2] Cash Dividends from Subsidiaries
Dividends of $8.9 million in 1996, $1.0 million in 1995 and $4.2 million in 1994
were paid to the Registrant by certain unconsolidated construction joint
ventures.
[3] Long-term Debt
Payments required by the Registrant amount to approximately $12,595,000 in 1997,
$2,345,000 in 1998, $1,261,000 in 1999, $85,000,000 in 2000, $ - in 2001 and
$4,000,000 for the years 2002 and beyond.
- 55 -
<PAGE>
Schedule II
Perini Corporation and Subsidiaries
Valuation and Qualifying Accounts and Reserves
for the Years Ended December 31, 1996, 1995 and 1994
(In Thousands of Dollars)
<TABLE>
Additions
Balance at Charged Charged to Deductions Balance
Beginning to Costs Other from at End
Description of Year & Expenses Accounts Reserves of Year
- ----------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1996
- ----------------------------
Reserve for doubtful accounts $ 351 $ - $ - $ 191 (1) $ 160
======= ======= ==== ====== =======
Reserve for depreciation on $ 3,444 $ 558 $ - $4,002 (2) $ -
real estate properties used ======= ======= ==== ====== =====
in operations
Reserve for real estate $10,497 $79,900 $ - $6,314 (4) $84,083
investments ======= ======= ==== ====== =======
Year Ended December 31, 1995
Reserve for doubtful accounts $ 351 $ - $ - $ - $ 351
======= ======= ==== ====== =======
Reserve for depreciation on $ 3,698 $ 387 $ - $ 641 (3) $ 3,444
real estate properties used ======= ======= ==== ====== =======
in operations
Reserve for real estate $11,471 $ - $ - $ 974 (4) $10,497
investments ======= ======= ==== ====== =======
Year Ended December 31, 1994
Reserve for doubtful accounts $ 351 $ - $ - $ - $ 351
======= ======= ==== ====== =======
Reserve for depreciation on $ 3,637 $ 328 $ - $ 267 (4) $ 3,698
real estate properties used ======= ======= ==== ====== =======
in operations
Reserve for real estate $20,838 $ - $ - $9,367 (4) $11,471
investments ======= ======= ==== ====== =======
</TABLE>
(1) Represents write-off of a bad debt.
(2) Represents $265 of reserve reclassified with related asset to "Real
estate inventory", with the balance representing sales of real estate
properties.
(3) Represents reserves reclassified with related asset to "Real estate
inventory".
(4) Represents sales of real estate properties.
- 56-
<PAGE>
Exhibit Index
The following designated exhibits are, as indicated below, either filed herewith
or have heretofore been filed with the Securities and Exchange Commission under
the Securities Act of 1933 or the Securities Act of 1934 and are referred to and
incorporated herein by reference to such filings.
Exhibit 3. Articles of Incorporation and By-laws
Incorporated herein by reference:
3.1 Restated Articles of Organization - As amended
through January 17, 1997 - Exhibit 3.1 to 1996
Form 10-K filed herewith.
3.2 By-laws - As amended and restated as of January
17, 1997 - Exhibit 3.2 to Form 8-K filed on
February 14, 1997.
Exhibit 4. Instruments Defining the Rights of Security Holders,
Including Indentures
Incorporated herein by reference:
4.1 Certificate of Vote of Directors Establishing a
Series of a Class of Stock determining the
relative rights and preferences of the $21.25
Convertible Exchangeable Preferred Stock -
Exhibit 4(a) to Amendment No. 1 to Form S-2
Registration Statement filed June 19, 1987; SEC
Registration No. 33-14434.
4.2 Form of Deposit Agreement, including form of
Depositary Receipt - Exhibit 4(b) to Amendment
No. 1 to Form S-2 Registration Statement filed
June 19, 1987; SEC Registration No. 33-14434.
4.3 Form of Indenture with respect to the 8 1/2%
Convertible Subordinated Debentures Due June 15,
2012, including form of Debenture - Exhibit 4(c)
to Amendment No. 1 to Form S-2 Registration
Statement filed June 19, 1987; SEC Registration
No. 33-14434.
4.4 Shareholder Rights Agreement dated as of
September 23, 1988, as amended and restated as
of May 17, 1990, as amended and restated as of
January 17, 1997, between Perini Corporation and
State Street Bank and Trust Company, as Rights
Agent - Exhibit 4.4 to Amendment No. 1 to
Registration Statement on Form 8-A/A filed on
January 29, 1997.
4.5 Stock Purchase and Sale Agreement dated as of
July 24, 1996 by and among the Company, PB
Capital and RCBA, as amended - Exhibit 4.5 to
the Company's Quarterly Report on Form 10-Q/A
for the fiscal quarter ended September 30, 1996
filed on December 11, 1996.
4.8 Certificate of Vote of Directors Establishing a
Series of Preferred Stock, dated January 16,
1997 - Exhibit 4.8 to Form 8-K filed on February
14, 1997.
4.9 Stock Assignment and Assumption Agreement dated
as of December 13, 1996 by and among the
Company, PB Capital and ULLICO (filed as Exhibit
4.1 to the Schedule 13D filed by ULLICO on
December 16, 1996 and
- 57 -
<PAGE>
Exhibit Index
(Continued)
incorporated herein by reference).
4.10 Stock Assignment and Assumption Agreement dated
as of January 17, 1997 by and among the Company,
RCBA and The Common Fund - Exhibit 4.10 to Form
8-K filed on February 14, 1997.
4.11 Voting Agreement dated as of January 17, 1997 by
and among PB Capital, David B. Perini, Perini
Memorial Foundation, David B. Perini
Testamentary Trust, Ronald N. Tutor, and
Tutor-Saliba Corporation - Exhibit 4.11 to Form
8-K filed on February 14, 1997.
4.12 Registration Rights Agreement dated as of
January 17, 1997 by and among the Company, PB
Capital and ULLICO - Exhibit 4.12 to Form 8-K
filed on February 14, 1997.
Exhibit 10. Material Contracts
Incorporated herein by reference:
10.1 1982 Stock Option and Long Term Performance
Incentive Plan - Exhibit A to Registrant's Proxy
Statement for Annual Meeting of Stockholders
dated April 15, 1992.
10.2 Perini Corporation Amended and Restated General
Incentive Compensation Plan - Exhibit 10.2 to
1991 Form 10-K, as filed.
10.3 Perini Corporation Amended and Restated
Construction Business Unit Incentive
Compensation Plan - Exhibit 10.3 to 1991 Form
10-K, as filed.
10.4 $125 million Credit Agreement dated as of
December 6, 1994 among Perini Corporation, the
Banks listed herein, Morgan Guaranty Trust
Company of New York, as Agent, and Shawmut Bank,
N.A., Co-Agent - Exhibit 10.4 to 1994 Form 10-K,
as filed.
10.5 Amendment No. 1 as of February 26, 1996 to the
Credit Agreement dated as of December 6, 1994
among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts (f/k/a Shawmut Bank, N.A.), as
Co-Agent Exhibit 10.5 to 1995 Form 10-K, as
filed.
10.6 Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Bridge Banks
listed herein, Morgan Guaranty Trust Company of
New York, as Agent, and Fleet National Bank of
Massachusetts (f/k/a Shawmut Bank, N.A.) as
Co-Agent - Exhibit 10.6 to 1995 Form 10-K, as
filed.
10.7 Amendment No. 2 as of July 30, 1996 to the
Credit Agreement dated as of December 6, 1994
and Amendment No. 1 as of July 30, 1996 to the
Bridge Credit Agreement dated February 26, 1996
among Perini Corporation, the Banks
- 58 -
<PAGE>
Exhibit Index
(Continued)
listed herein, Morgan Guaranty Trust Company of
New York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.7 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.8 Amendment No. 2 as of September 30, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.8 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.9 Amendment No. 3 as of October 2, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.9 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.10 Amendment No. 4 as of October 15, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.10 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.11 Amendment No. 5 as of October 21, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.11 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.12 Amendment No. 6 as of October 24, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.12 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.13 Amendment No. 7 as of November 1, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.13 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.14 Amendment No. 8 as of November 4, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 and Amendment No. 3 as of November 4, 1996
- 59-
<PAGE>
Exhibit Index
(Continued)
to the Credit Agreement dated December 6, 1994
among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.14 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.15 Amendment No. 9 as of November 12, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 and Amendment No. 4 as of November 12, 1996
to the Credit Agreement dated December 6, 1994
among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.15 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.16 Management Agreement dated as of January 17,
1997 by and among the Company, Ronald N. Tutor
and Tutor-Saliba Corporation - Exhibit 10.16 to
Form 8-K filed on February 14, 1997.
10.17 Amended and Restated Credit Agreement dated as
of January 17, 1997 among Perini Corporation,
the Banks listed herein and Morgan Guaranty
Trust Company of New York, as Agent, and Fleet
National Bank, as Co- Agent - filed herewith.
Exhibit 21. Subsidiaries of Perini Corporation - filed herewith.
Exhibit 23. Consent of Independent Public Accountants - filed herewith.
Exhibit 24. Power of Attorney - filed herewith.
Exhibit 27. Financial Data Schedule - filed herewith.
- 60 -
<PAGE>
Exhibit 21
Perini Corporation
Subsidiaries of the Registrant
<TABLE>
Percentage of
Place of Interest or Voting
Name Organization Securities Owned
<S> <C> <C>
Perini Corporation Massachusetts
Perini Building Company, Inc. Arizona 100%
Perini Environmental Services, Inc. Delaware 100%
International Construction Management Services, Inc. Delaware 100%
Percon Constructors, Inc. Delaware 100%
Perini International Corporation Massachusetts 100%
Bow Leasing Company, Inc. New Hampshire 100%
Perini Land & Development Company Massachusetts 100%
Paramount Development Associates, Inc. Massachusetts 100%
I-10 Industrial Park Developers AZ General Partnership 80%
Glenco-Perini - HCV Partners CA Limited Partnership 85%
Squaw Creek Associates CA General Partnership 40%
Perland Realty Associates, Inc. Florida 100%
Rincon Center Associates CA Limited Partnership 46%
Perini Central Limited Partnership AZ Limited Partnership 75%
Perini Eagle Limited Partnership AZ Limited Partnership 50%
Perini/138 Joint Venture GA General Partnership 49%
Perini/RSEA Partnership GA General Partnership 50%
</TABLE>
- 61 -
<PAGE>
Exhibit 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our reports,
dated February 14, 1997, included in Perini Corporation's Annual Report on this
Form 10-K for the year ended December 31, 1996, and into the Company's
previously filed Registration Statements Nos. 2-82117, 33-24646, 33-46961, 33-
53190, 33-53192, 33-60654, 33-70206, 33-52967, 33-58519 and 333-03417.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 27, 1997
- 62 -
<PAGE>
Exhibit 24
Power of Attorney
We, the undersigned, Directors of Perini Corporation, hereby severally
constitute David B. Perini, John H. Schwarz and Richard E. Burnham, and each of
them singly, our true and lawful attorneys, with full power to them and to each
of them to sign for us, and in our names in the capacities indicated below, any
Annual Report on Form 10-K pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 to be filed with the Securities and Exchange Commission and
any and all amendments to said Annual Report on Form 10-K, hereby ratifying and
confirming our signatures as they may be signed by our said Attorneys to said
Annual Report on Form 10-K and to any and all amendments thereto and generally
to do all such things in our names and behalf and in our said capacities as will
enable Perini Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission.
WITNESS our hands and common seal on the date set forth below.
/s/David B. Perini Director March 26, 1997
David B. Perini Date
/s/Richard J. Boushka Director March 26, 1997
Richard J. Boushka Date
/s/Marshall M. Criser Director March 26, 1997
Marshall M. Criser Date
Director March 26, 1997
Thomas E. Dailey Date
/s/Albert A. Dorman Director March 26, 1997
Albert A. Dorman Date
/s/Arthur J. Fox, Jr. Director March 26, 1997
Arthur J. Fox, Jr. Date
/s/ Nancy Hawthorne Director March 26, 1997
Nancy Hawthorne Date
/s/ Michael R. Klein Director March 26, 1997
Michael R. Klein Date
Director March 26, 1997
Douglas J. McCarron Date
/s/John J. McHale Director March 26, 1997
John J. McHale Date
/s/Jane E. Newman Director March 26, 1997
Jane E. Newman Date
/s/Bart W. Perini Director March 26, 1997
Bart W. Perini Date
/s/ Ronald N. Tutor Director March 26, 1997
Ronald N. Tutor Date
- 63 -
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Balance Sheets as of December 31, 1996 and the Consolidated Statements of
Operations for the twelve months ended December 31, 1996 as qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000077543
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<CASH> 9,745
<SECURITIES> 0
<RECEIVABLES> 188,120
<ALLOWANCES> 0
<INVENTORY> 37,914
<CURRENT-ASSETS> 354,780 <F1>
<PP&E> 34,129
<DEPRECIATION> (23,013)
<TOTAL-ASSETS> 464,292 <F2>
<CURRENT-LIABILITIES> 298,036
<BONDS> 96,893
100
0
<COMMON> 5,032
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 464,292 <F3>
<SALES> 0
<TOTAL-REVENUES> 1,270,284
<CGS> 0
<TOTAL-COSTS> (1,215,806)
<OTHER-EXPENSES> (492)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (9,871)
<INCOME-PRETAX> (69,773) <F4>
<INCOME-TAX> (830)
<INCOME-CONTINUING> (70,603)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (70,603)
<EPS-PRIMARY> (15.13)
<EPS-DILUTED> 0
<FN>
<F1> Includes Equity in Construction Joint Ventures of $78,233,
Unbilled Work of $35,600, and Other Short-Term Assets of
$5,168, not currently reflected in this tag list.
<F2> Includes investments in and advances to Real Estate Joint
Ventures of $71,253, Land Held for Sale or Development of
$21,520, and Other Long-Term Assets of $5,623, not currently
reflected in this tag list.
<F3> Includes Deferred Income Taxes and Other Liabilities of
$31,297, Minority Interest of $2,508, Paid-In Surplus of
$57,080, Retained Deficit of $20,666, ESOT Related
Obligations of $(3,856), and Treasury Stock of $(2,132).
<F4> Includes General, Administrative and Selling Expenses of
$33,988 and a write down of certain real estate assets of
$79,900, not currently reflected on this tag list.
</FN>
</TABLE>
The Commonwealth of Massachusetts
Michael Joseph Connolly
Secretary of State
One Ashburton Place, Boston, Mass. 02108
Federal Identification No. 04-1717070
RESTATED ARTICLES OF ORGANIZATION
General Laws, Chapter 156B, Section 74
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
restated articles of organization. The fee for filing this certificate is
prescribed by General Laws, Chapter 156B, Section 114.
Make check payable to the Commonwealth of Massachusetts.
We, David B. Perini, President and Patricia A. Kelly, Clerk of Perini
Corporation located at 73 Mt. Wayte Avenue, Framingham, Massachusetts 01701 do
hereby certify that the following restatement of the articles of organization of
the corporation was duly adopted at a meeting held on December 9, 1987, by vote
of the Board of Directors.
1. The name by which the corporation shall be known is:
See Article 1 of Exhibit A
2. The purposes for which the corporation is formed are as follows:
See Article 2 of Exhibit A
3. The total number of shares and the par value, if any, of each class of
stock which the corporation is authorized to issue is as follows:
See Article 3 of Exhibit A
<TABLE>
WITHOUT PAR VALUE WITH PAR VALUE
CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
<S> <C> <C> <C>
Preferred 1,000,000 $1.00
Common 7,500,000 $1.00
</TABLE>
1
<PAGE>
4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting
powers, qualifications, special or relative rights or privileges as to
each class thereof and any series now established.
See Article 4 of Exhibit A
5. The restrictions, if any, imposed by the articles of organization upon
the transfer of shares of stock of any class are as follows:
See Article 5 of Exhibit A
6. Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution,
or for limiting, defining, or regulating the powers of the corporation,
or of its directors or stockholders, or of any class of stockholders:
See Article 6 of Exhibit A
EXHIBIT A
PERINI CORPORATION
RESTATED ARTICLES OF ORGANIZATION
1. The name by which the corporation shall be known is:
PERINI CORPORATION
2. The purposes for which the corporation is formed are as follows:
To carry on a general contracting and construction business;
to carry on a general mining business; to carry on a general business with
respect to oil, gas and other natural resources; to carry on a general real
estate development and operations business; to carry on a general business of
promoting, conducting or producing any one or more lawful athletic or amusement
activities and exhibitions; to carry on a general business of manufacturing or
otherwise producing, acquiring, preparing for market, buying and selling,
dealing in and with and disposing of any and all kinds of construction, sporting
and amusement equipment, materials and supplies and any and all products and
by-products thereof, any and all ingredients, supplies and items in any stage of
production, used or useful in combination with, in substitution for or otherwise
in connection with or of which any one or more such products, by-products,
ingredients, supplies or items form or are suitable to form, a component part
and all related machinery, appliances, apparatus and tools; to acquire, hold,
use and dispose of property of whatever kind and wherever situated, and rights
and interests therein, including going enterprises and the acquisition of
interests in and obligations of other
2
<PAGE>
concerns (wherever and however organized) or of individuals, and while the owner
thereof to exercise all the rights, powers and privileges of ownership in the
same manner and to the same extent that an individual might; to discover, invent
or acquire rights and interests in inventions, designs, patents, patent rights
and licenses, trademarks, trade names, copyrights and trade secrets in any
field, whether or not cognate to any other activity of the corporation and to
hold, use, sell, license the use of or otherwise utilize, deal in or dispose of
the same; to lend money, credit or security to, to guarantee or assume
obligations of and to aid in any other manner other concerns (wherever and
however organized) or individuals, any obligation of which or any interest in
which is held by this corporation or in the affairs or prosperity of which this
corporation has a lawful interest, and to do all acts and things designed to
protect, improve or enhance the value of any such obligation or interest; to
join with others in any enterprise conducive to the success of the corporation,
in such manner and on such terms and conditions as may be agreed upon; and in
general, whether as principal or as agent or contractor for others and in any
manner, to do every act and thing and to carry on any and all businesses and
activities in any way connected with any of the foregoing which may lawfully be
done or carried on by business corporations wherever such one or more businesses
or activities may be so done and to exercise all the powers conferred by the
laws of The Commonwealth of Massachusetts upon business corporations, provided,
however, that the corporation is not organized for any purpose which prevents
the provisions of Chapter 156 B of the General Laws of said Commonwealth and
acts in amendment thereof and in addition thereto, from being applicable to it.
3. The total number of shares and the par value, if any, of each class of
stock which the corporation is authorized to issue is as follows:
Without Par Value With Par Value
Number of Number of
Class of Stock Shares Shares Par Value
Common None 7,500,000 $1.00
Preferred None 1,000,000 1.00
Series of Preferred Stock
$21.25 Convertible
Exchangeable
Preferred Stock None 100,000 1.00
Two classes of stock are authorized, Common Stock having a par value of
$1.00 per share and Preferred Stock having a par value of $1.00 per share. Stock
of any class or series authorized pursuant hereto may be issued from time to
time by authority of the Board of Directors for such consideration as from time
to time may be fixed by vote of the Board of Directors.
3
<PAGE>
I. The Preferred Stock may consist of one or more series. The Board of
Directors may, from time to time, establish and designate the different series
and the variations in the relative rights and preferences as between the
different series as provided in Section II hereof, but in all other respects all
shares of the Preferred Stock shall be identical. In the event that at any time
the Board of Directors shall have established and designated one or more series
of Preferred Stock consisting of a number of shares less than all of the
authorized number of shares of Preferred Stock, the remaining authorized shares
of Preferred Stock shall be deemed to be shares of an undesignated series of
Preferred Stock until designated by the Board of Directors as being a part of a
series previously established or a new series then being established by the
Board of Directors.
II. Subject to the provisions of this Description of Classes of Stock,
the Board of Directors is authorized to establish one or more series of
Preferred Stock and, to the extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts, to fix and determine the preferences, voting
powers, qualifications and special or relative rights or privileges of each
series including, but not limited to:
(a) the number of shares to constitute such series and the distinctive
designation thereof;
(b) the dividend rate on the shares of such series and the preferences, if
any, and the special and relative rights of such shares of such series
as to dividend;
(c) whether or not the shares of such series shall be redeemable, and, if
redeemable, the price, terms and manner of redemption;
(d) the preferences, if any, and the special and relative rights of the
shares of such series upon liquidation of the corporation;
(e) whether or not the shares of such series shall be subject to the
operation of a sinking or purchase fund and, if so, the terms and
provisions of such fund;
(f) whether or not the shares of such series shall be convertible into
shares of any other class or of any other series of the same or any
other class of stock of the corporation and, if so, the conversion
price or ratio and other conversion rights;
(g) the conditions under which the shares of such series shall have
separate voting rights or no voting rights; and
(h) such other designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions of such series to the full extent now and hereafter
permitted by the laws of the Commonwealth of Massachusetts.
4
<PAGE>
Notwithstanding the fixing of the number of shares constituting a
particular series, the Board of Directors may at any time authorize the
issuance of additional shares of the same series.
III. Holders of Preferred Stock shall be entitled to receive, when and
as delivered by the Board of Directors, but only out of funds legally available
for the payment of dividends, cash dividends at the rates fixed by the Board of
Directors for the respective series, payable on such dates in each year as the
Board of Directors shall fix for the respective series as provided in Section II
(hereinafter referred to as "dividend dates"). Until all accrued dividends on
each series of Preferred Stock shall have been paid through the last preceding
dividend date on each such series, no dividend or distribution shall be made to
holders of Common Stock other than a dividend payable in Common Stock of the
corporation. Dividends on shares of any cumulative series of Preferred Stock
shall accumulate from and after the day on which such shares are issued, but
arrearage in the payment thereof shall not bear interest. Nothing herein
contained shall be deemed to limit the right of the corporation to purchase or
otherwise acquire at any time any shares of its capital stock.
For purposes of this Description of Class of Stock, the amount of
dividends "accrued" on any shares of any cumulative series of Preferred Stock as
at any dividend date shall be deemed to be the amount of any unpaid dividends
accumulated thereon to and including such dividend date, whether or not earned
or declared. The amount of dividends "accrued" on any noncumulative series of
Preferred Stock shall mean only those dividends declared by the Board of
Directors, unless otherwise specified for such series by the Board of Directors
pursuant to Section II.
IV. Upon the voluntary or involuntary liquidation of the corporation,
before any payment or distribution of the assets of the corporation shall be
made to or set apart for any other class of stock, the holders of Preferred
Stock shall be entitled to payment of the amount of the preference payable upon
such liquidation of the corporation fixed by the Board of Directors for the
respective series as provided in Section II. If, upon any such liquidation, the
assets of the corporation shall be insufficient to pay in full to the holders of
the Preferred Stock the preferential amount aforesaid, then such assets, or the
proceeds thereof, shall be distributed among the holders of each series of
Preferred Stock ratably in accordance with the sums which would be payable on
such distribution if all sums payable were discharged in full. The voluntary
sale, conveyance, exchange or transfer of all or substantially all of the
property and assets of the corporation, the merger or consolidation of the
corporation into or with any other corporation, or the merger of any other
corporation into it, shall not be deemed to be a liquidation of the corporation
for the purpose of this Section IV.
V. Any shares of Preferred Stock which shall at any time have been
redeemed or which shall at any time have been surrendered for conversion or
exchange or for cancellation, pursuant to any sinking or purchase fund
provisions with respect to any series of Preferred Stock, shall be retired and
shall thereafter have the status of authorized and unissued shares of Preferred
Stock undesignated as to series.
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VI. The Common Stock shall have exclusive voting power except as
required by law and except to the extent the Board of Directors shall, at the
time any series of Preferred Stock is established, determine that the shares of
such series shall vote (i) together as a single class with shares of Common
Stock and/or with shares of Preferred Stock (or one or more other series
thereof) on all or certain matters presented to the stockholders and/or upon the
occurrence of any specified event or condition, and/or (ii) exclusively on
certain matters or, upon the occurrence of any specified even or condition, on
all or certain matters. The Board of Directors, in establishing a series of
Preferred Stock and fixing the voting rights thereof, may determine that the
voting power of each share of such series may be greater or less than the voting
power of each share of the Common Stock or of other series of Preferred Stock
notwithstanding that the shares of such series of Preferred Stock may vote as a
single class with the shares of other series of Preferred Stock and/or with the
shares of Common Stock.
4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting
powers, qualifications, special or relative rights or privileges as to
each class thereof and any series now established:
See Article 3 above.
5. The restrictions, if any, imposed by the articles of organization upon
the transfer of shares of stock of any class are as follows:
None.
6. Other lawful provisions for the conduct and regulation of the business
and affairs of the corporation, for its voluntary dissolution, or for
limiting, defining, or regulating the powers of the corporation, or of
its directors or stockholders, or of any class of stockholders are as
follows:
6.1 The directors may make, amend or repeal the by-laws in whole or in
part, except with respect to any provision thereof which by law or the
by-laws requires action by the stockholders.
6.2 Meetings of the stockholders may be held anywhere in the United States.
6.3 Except as specifically authorized by statute, no stockholder shall have
any right to examine any property or any books, accounts or other
writings of the corporation if there is reasonable ground for belief
that such examination will for any reason be adverse to the interests
of the corporation, and a vote of the board of directors refusing
permission to make such examination and setting forth that in the
opinion of the board of directors such examination would be adverse to
the interests of the corporation shall be prima facie evidence that
such examination would be adverse to the interests of the corporation.
Every such examination shall be subject to such reasonable regulations
as the board of directors may establish in regard thereto.
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6.4 The board of directors may specify the manner in which the accounts of
the corporation shall be kept and may determine what constitutes net
earnings, profits and surplus, what amounts, if any, shall be reserved
for any corporate purpose, and what amounts, if any, shall be declared
as dividends. Unless the board of directors otherwise specifies, the
excess of the consideration of any share of its capital stock with par
value issued by it over such par value shall be paid in surplus. All
surplus shall be available for any corporate purpose, including the
payment of dividends.
6.5 The corporation may purchase or otherwise acquire, hold, sell or
otherwise dispose of shares of its own capital stock, and such purchase
or holding shall not be deemed a reduction of its capital stock. The
corporation may reduce its capital stock in any manner authorized by
law. Such reduction may be effected by the cancellation and retirement
of any shares of capital stock held by it. Upon any reduction of
capital or capital stock, no stockholder shall have any right to demand
any distribution from the corporation, except as and to the extent that
the stockholders shall so have provided at the time of authorizing such
reduction.
6.6 Each director and officer of the corporation shall, in the performance
of his duties, be fully protected in relying in good faith upon the
books of account of the corporation, reports made to the corporation by
any of its officers or employees or by counsel, accountants, appraisers
or other experts or consultants selected with reasonable care by the
directors, or upon other records of the corporation.
6.7 The directors shall have the power to fix from time to time their
compensation.
6.8 The corporation may enter into contracts and otherwise transact
business as vendor, purchaser or otherwise with its directors, officers
and stockholders and with corporations, joint stock companies, trusts,
firms and associations in which they are or may be or become interested
as directors, officers, shareholders, members, trustees, beneficiaries
or otherwise as freely as though such adverse interest did not exist
even though the vote, action or presence of such director, officer or
stockholder may be necessary to obligate the corporation upon such
contract or transaction; and no such contract or transaction shall be
avoided and no such director, officer or stockholder shall be held
liable to account to the corporation or to any creditor or stockholder
of the corporation for any profit or benefit realized by him through
any such contract or transaction by reason of such adverse interest nor
by reason of any fiduciary relationship of such director, officer or
stockholder to the corporation arising out of such office or stock
ownership; provided (in the case of directors and officers but not in
the case of any stockholder who is not a director or officer of the
corporation) the nature of the interest of such director or officer,
though not necessarily the details or extent thereof, be known by or
disclosed to the directors. Ownership of beneficial interest in a
minority of the stock or securities of another corporation, joint stock
company, trust, firm or association shall not be deemed to constitute
an interest adverse to this corporation in such other corporation,
joint stock company, trust, firm or association and need
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not be disclosed. A general notice that a director or officer of the
corporation is interested in any corporation, joint stock company,
trust, firm or association shall be a sufficient disclosure as to such
director or officer with respect to all contracts and transactions with
that corporation, joint stock company, trust, firm, or association. In
any event the authorizing or ratifying vote of a majority of the
capital stock of the corporation outstanding and entitled to vote
passed at a meeting duly called and held for the purposes shall
validate any such contract or transaction as against all stockholders
of the corporation, whether of record or not at the time of such vote,
and as against all creditors and other claimants, under the
corporation, and no contract or transaction shall be avoided by reason
of any provision of this paragraph which would be valid but for these
provisions.
6.9 The terms and conditions upon which a sale or exchange of all the
property and assets, including the good will of the corporation, or any
part thereof, is voted may include the payment therefor in whole or in
part in shares, notes, bonds or other certificates of interest or
indebtedness of any voluntary association, trust, joint stock company
or corporation. Such vote or a subsequent vote may in the event of or
in contemplation of proceedings for the dissolution of the corporation
also provide, subject to the rights of creditors and preferred
stockholders, for the distribution pro rata among the stockholders of
the corporation, of the proceeds of any such sale or exchange, whether
such proceeds be in cash or in securities as aforesaid (at values to be
determined by the board of directors).
6.10 No director of this corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director notwithstanding any provision of law
imposing such liability; provided, however, that this Article shall not
eliminate or limit any liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Sections 61 or 62 of the Massachusetts Business Corporation Law, or
(iv) with respect to any transaction from which the director derived an
improper personal benefit.
No amendment or repeal of this Article shall adversely affect the
rights and protection afforded to a director of this corporation under this
Article for acts or omissions occurring while this Article is in effect.
- ------------------------------------------------------------------------------
We further certify that the foregoing restated articles of organization
effect no amendments to the articles of organization of the corporation as
heretofore amended, except amendments to the following articles:
None
8
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IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 9th day of December in the year 1987.
/s/ David B. Perini, President
- ------------------------------
/s/ Patricia A. Kelly, Clerk
- ----------------------------
- --------------------------------------------------------------------------------
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
I hereby approve the within restated articles of
organization and, the filing fee in the amount of
$150.00 having been paid, said articles are deemed to
have been filed with me this 8th day of January,
1988.
/s/ Michael J. Connolly
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
Photocopy of Restated Articles of Organization to be
sent to:
CT Corporation System
2 Oliver Street
Boston, Massachusetts 02109
Telephone: (617) 482-4420
- --------------------------------------------------------------------------------
The Commonwealth of Massachusetts
Michael Joseph Connolly
Secretary of State
One Ashburton Place, Boston, Mass. 02108
9
<PAGE>
Federal Identification No. 04-1717070
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
We, James M. Markert, Vice President and Robert E. Higgins, Clerk of Perini
Corporation located at 73 Mt. Wayte Avenue, Framingham, Massachusetts 01701 do
hereby certify that these ARTICLES OF AMENDMENT affecting Articles NUMBERED 3 of
the Articles of Organization were duly adopted at a meeting held on May 19,
1994, by vote of 3,207,986 shares of Common Stock out of 4,330,807 shares
outstanding being at least a majority of each type, class or series outstanding
and entitled to vote thereon:
TO CHANGE the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
Common: Common 7,500,000 $1.00
Preferred: Preferred 1,000,000 $1.00
CHANGE the total authorized to:
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
Common Common 15,000,000 $1.00
Preferred Preferred 1,000,000 $1.00
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of The General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date.
EFFECTIVE DATE: ___________
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto signed
our names this 27th day of June in the year 1994.
/s/ James M. Markert, Vice President
- ------------------------------------
10
<PAGE>
/s/ Robert E. Higgins, Clerk
- ----------------------------
- --------------------------------------------------------------------------------
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
I hereby approve the within articles of amendment
and, the filing fee in the amount of $7,500.00 having
been paid, said articles are deemed to have been
filed with me this 7th day of July, 1994.
/s/Michael Joseph Connolly
MICHAEL J. CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
Photocopy of Articles of Amendment to be sent
To:
Matthew C. Lau, Esq.
Jacobs Persinger & Parker
77 Water Street, New York, NY 10005
Tel: (212) 344-1866
- --------------------------------------------------------------------------------
The Commonwealth of Massachusetts
Michael Joseph Connolly
Secretary of State
One Ashburton Place, Boston, Mass. 02108
Federal Identification No. 04-1717070
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING
A SERIES OF A CLASS OF STOCK
11
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General Laws, Chapter 156B, Section 26
We, David B. Perini, President and Patricia A. Kelly, Clerk of Perini
Corporation located at 73 Mt. Wayte Avenue, Framingham, Massachusetts 01701 do
hereby certify that at a meeting of the directors of the corporation held on
September 23, 1988, the following vote establishing and designating a series of
a class of stock and determining the relative rights and preferences thereof was
duly adopted:
See continuation sheets attached.
VOTED: That pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Articles of
Organization, a series of Preferred Stock of the Corporation is hereby created
and that the designation and amount thereof and the voting powers, preferences
and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are as
follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 200,000.
Section 2. Dividends and Distributions.
(A) (i) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the first day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $20.00 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $1.00 per share, of the
Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Preferred Stock. The multiple of cash and non-cash dividends declared on the
Common Stock to which holders of the Series A Preferred Stock are entitled,
which shall be 100 initially but which shall be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Dividend Multiple". In
the event the Corporation shall at any time after September 23, 1988 (the
"Rights Declaration Date") declare or pay any dividend on
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<PAGE>
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the Dividend Multiple thereafter applicable to the determination of
the amount of dividends which holders of shares of Series A Preferred Stock
shall be entitled to receive shall be the Dividend Multiple applicable
immediately prior to such event multiplied by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(ii) Notwithstanding anything else contained in this paragraph
(A), the Corporation shall, out of funds legally available for that purpose,
declare a dividend or distribution on the Series A Preferred Stock as provided
in this paragraph (A) immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$20.00 per share on the Series A Preferred Stock shall nevertheless be paid out
of funds legally available for the purpose on such subsequent Quarterly Dividend
Payment Date.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 60 days prior to the date fixed
for the payment thereof.
Section 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the stockholders of the Corporation. The
number of votes which a holder of a share of Series A Preferred Stock is
entitled to cast, as the same may be adjusted from time to
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<PAGE>
time as hereinafter provided, is hereinafter referred to as the "Vote Multiple".
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the Vote Multiple
thereafter applicable to the determination of the number of votes per share to
which holders of shares of Series A Preferred Stock shall be entitled shall be
the Vote Multiple immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall
be in arrears in an amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, the holders of the Series A Preferred Stock shall have the
right to elect two (2) Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not be exercised unless the
holders of ten percent (10%) in number of shares of Series A Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum of
the holders of Common Stock shall not affect the exercise by the holders of
Series A Preferred Stock of such voting right. At any meeting at which the
holders of Series A Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting as a class,
to elect Directors to fill such vacancies, if any, in the Board of Directors as
may then exist up to two (2) Directors or, if such right is exercised at an
annual meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting does not amount to the required number, the
holders of the Series A Preferred Stock shall have the right to make such
increase in the number of Directors as shall be necessary to permit the election
by them of the required number.
(iii) Unless the holders of Series A Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series A Preferred Stock outstanding may
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<PAGE>
request, the calling of a special meeting of the holders of Series A Preferred
Stock, which meeting shall thereupon be called by the President, a Vice
President or the Clerk of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Series A Preferred Stock are entitled to vote
pursuant to this paragraph (C)(iii) shall be given to each holder of record of
Series A Preferred Stock by mailing a copy of such notice to him at his last
address as the same appears on the books of the Corporation. Such meeting shall
be called for a time not earlier than 20 days and not later than 60 days after
such order or request or, in default of the calling of such meeting within 60
days after such order or request, such meeting may be called on similar notice
by any stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Series A Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Series A
Preferred Stock shall have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Series A Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of Directors
may (except as provided in paragraph (C)(ii) of this Section 3) be filled by
vote of a majority of the remaining Directors theretofore elected by the holders
of the class of stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the holders of
a particular class of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Series A Preferred Stock to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Series A
Preferred Stock as a class shall terminate, and (z) the number of Directors
shall be such number as may be provided for in the Articles of Organization or
by-laws irrespective of any increase made pursuant to the provisions of
paragraph (C)(ii) of this Section 3 (such number being subject, however, to
change thereafter in any manner provided by law or in the Articles of
Organization or by-laws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence may be filled by
a majority of the remaining Directors.
(D) Except as otherwise required by applicable law or as set forth
herein, holders of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
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<PAGE>
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise
acquire for consideration any shares of stock ranking
junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the
Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in
proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation,
dissolution or winding up) with the Series A
Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares
of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either
as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of
stock ranking on a parity with the Series A Preferred
Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates
and other relative rights and preferences of the
respective series and classes, shall determine in
good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
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Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (x) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (1) $10,000.00 per share or
(2) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of Common Stock, or (y) to the holders of any other class
or series of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(x) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Neither the consolidation of nor merging of the Corporation with or
into any other corporation or corporations, nor the sale or other transfer of
all or substantially all of the assets of the Corporation, shall be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or exchanged, plus
accrued and unpaid dividends, if any, payable
17
<PAGE>
with respect to the Series A Preferred Stock. In the event the Corporation shall
at any time declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. Redemption.
(A) For purposes of this Section 8, the following terms have the
meanings indicated:
(i) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 20% or more of the shares of Common Stock then outstanding, but shall not
include the Corporation, any subsidiary of the Corporation, any employee benefit
plan of the Corporation or any subsidiary thereof or any entity holding shares
of Common Stock organized, appointed or established by the Corporation or any
subsidiary thereof for or pursuant to the terms of any such plan.
(ii) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(iii) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(a) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act) or has the right to dispose of;
(b) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such
right is exercisable immediately or after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
rights (other than rights initially exercisable for Series A Preferred
Stock), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or
18
<PAGE>
Associates until such tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act and (2) is not
also then reportable by such person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(c) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such Person
or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in clause (B) of subparagraph (b) of this paragraph
(iii)) or disposing of any securities of the Corporation.
(iv) "Disinterested Director" shall mean (A) any member of the
Corporation's Board of Directors who is not an officer or employee of the
Corporation or any of its subsidiaries and who is not an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person or nominee of an Acquiring
Person or any such Affiliate or Associate and was a member of the Corporation's
Board of Directors prior to the Rights Declaration Date, and (B) any Person who
subsequently becomes a member of the Company's Board of Directors who is not an
Acquiring Person or an Affiliate or an Associate of an Acquiring Person or
nominee of an Acquiring Person or any such Affiliate or Associate, if such
Person's nomination is recommended or approved by a majority of the
Disinterested Directors.
(v) "Person" shall mean any individual, firm, corporation
, partnership or other entity.
(B) Subject to Section 4 hereof, the Corporation may, at any time
(unless otherwise prevented by law) by the affirmative vote of a majority of the
directors then in office, including, if at the time of such vote there is an
Acquiring Person, a majority of the Disinterested Directors, redeem all or any
portion of the Series A Preferred Stock then outstanding. The amount per share
of Series A Preferred Stock to be redeemed to be paid upon any such redemption
shall be equal to $10,000.00 plus accrued and unpaid dividends, if any, payable
with respect thereto. The total sum payable per share of Series A Preferred
Stock on the date on which the Corporation redeems any shares of Series A
Preferred Stock (the "Redemption Date") is hereinafter referred to as the
"Redemption Price."
(C) If less than all of the outstanding shares of Series A Preferred
Stock are to be redeemed, the Corporation shall select the shares to be redeemed
by lot. Notice of redemption pursuant to this Section 8 shall be sent by
first-class mail, postage prepaid, to the holders of record of the shares of
Series A Preferred Stock to be redeemed at their respective addresses
19
<PAGE>
as the same shall appear on the books of the Corporation. Such notice shall be
mailed not less than 30 nor more than 60 days in advance of the applicable
Redemption Date and shall specify the Redemption Date, the Redemption Price and
the place at which payment may be obtained as to such shares. At any time on or
after the Redemption Date applicable thereto, the holders of record of shares of
Series A Preferred Stock to be redeemed on such Redemption Date shall be
entitled to receive the Redemption Price therefor upon actual delivery to the
Corporation or its agent of the certificates representing the shares to be
redeemed.
If such notice of redemption shall have been duly given, and if on or
before any Redemption Date the funds necessary for such redemption (taking into
account any conversions) shall have been deposited by the Corporation with a
bank or trust company designated by the Board of Directors and having capital
and surplus of at least $50,000,000 in trust for the pro rata benefit of the
holders of the shares of Series A Preferred Stock so called for redemption,
then, notwithstanding that any certificate for shares of Series A Preferred
Stock so called for redemption shall not have been surrendered for cancellation,
from and after such Redemption Date (unless there shall have been a default in
payment of the Redemption Price) all shares of Series A Preferred Stock so
called for redemption shall no longer be deemed to be outstanding and all rights
with respect to such shares shall forthwith cease and terminate, except only the
right of the holders thereof to receive from such bank or trust company upon
surrender of their certificate or certificates at any time after the time of
such deposit the funds so deposited, without interest. The balance of any funds
so deposited and unclaimed at the end of one year from such Redemption Date
shall be released or repaid to the Corporation, after which the holders of the
shares so called for redemption shall look only to the Corporation for payment
thereof, without interest.
Section 9. Ranking. Unless otherwise provided in the Articles of
Organization of the Corporation or a Certificate of Vote of Directors
Establishing a Class of Stock relating to a subsequently-designated series of
Preferred Stock of the Corporation, the Series A Preferred Stock shall rank
junior to the Corporation's $21.25 Convertible Exchangeable Preferred Stock and
any other series of the Corporation's Preferred Stock, as to the payment of
dividends and the distribution of assets on liquidation, dissolution or winding
up and shall rank senior to the Common Stock.
Section 10. Amendment. The Articles of Organization of the Corporation
and this Certificate of Vote shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely (within the meaning of
Section 77 of Chapter 156B of the Massachusetts General Laws) without the
affirmative vote of the holders of two-thirds or more of the outstanding shares
of Series A Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
20
<PAGE>
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 23rd day of September in the year 1988.
/s/ David B. Perini, President
- ------------------------------
/s/ Patricia A. Kelly, Clerk
- ----------------------------
- --------------------------------------------------------------------------------
THE COMMONWEALTH OF MASSACHUSETTS
Certificate of Vote of Directors
Establishing a Series of a Class of Stock
(General Laws, Chapter 156B, Section 26)
I hereby approve the within certificate and, the
filing fee in the amount of $75.00 having been paid,
said certificate is hereby filed this 27th day of
September, 1988.
/s/ Michael J. Connolly
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
Photo copy of Certificate to be sent
To:
- --------------------------------------------------------------------------------
THE COMMONWEALTH OF MASSACHUSETTS
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
Federal Identification No. 04-1717070
CERTIFICATE OF CORRECTION
21
<PAGE>
(General Laws, Chapter 156B, Section 6A)
1. Exact name of corporation: Perini Corporation
2. Document to be corrected: Restated Articles of Organization
3. The above-mentioned document was filed with the Secretary of the
Commonwealth on January 8, 1988.
4. Please state the inaccuracy or defect in said document:
Article 4 of Exhibit A to the Restated Articles of Organization omitted
a description of a series of preferred stock (the "$21.25 Convertible
Exchangeable Preferred Stock"), which was established by a Certificate
of Vote of Directors filed with the Secretary on June 19, 1987.
5. Please state corrected version of the document:
The corrected Article 4 of Exhibit A to the Restated Articles of
Organization, including a description of the $21.25 Convertible
Exchangeable Preferred Stock, is attached hereto as Attachment A.
SIGNED UNDER THE PENALTIES OF PERJURY, this 8th day of August, 1996.
/s/ David B. Perini, President
- ------------------------------
/s/ Richard E. Burnham, Clerk
- -----------------------------
Attachment A to Certificate of Correction
4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting
powers, qualifications, special or relative rights or privileges as to
each class thereof and any series now established:
See Article 3 above; annexed to this Exhibit as Annex 4A is a
description of the preferences, voting powers, qualifications, special or
relative rights or privileges as to the $21.25 Convertible Exchangeable
Preferred Stock.
22
<PAGE>
ANNEX 4A
(1) Designation. The series of the Preferred Stock created herein shall
consist of One Hundred Thousand (100,000) shares and shall be designated the
"$21.25 Convertible Exchangeable Preferred Stock." Said series is hereinafter
called the "Convertible Exchangeable Preferred Stock." The term "Preferred
Stock" as used herein shall mean the Preferred Stock authorized by the Restated
Articles of Organization, as amended, of the corporation and shall include the
Convertible Exchangeable Preferred Stock.
(2) Dividends. The holders of the Convertible Exchangeable Preferred
Stock shall be entitled to receive cash dividends when and as declared by the
Board of Directors out of funds legally available for such purposes, at the
annual rate of twenty-one and one quarter Dollars ($21.25) per share, and no
more, payable in quarterly installments on the 15th day of March, June,
September and December of each year (unless any such day is a non-business day,
in which event the next business day shall be the payment date) commencing on
September 15, 1987. Dividends on the Convertible Exchangeable Preferred Stock
shall begin to accrue and shall be cumulative from the date of original issue of
such shares (the "Issue Date") and shall be payable to the holders of record on
the record date fixed with respect to such payment. The date on which the
corporation initially issues any share of Convertible Exchangeable Preferred
Stock shall be its date of issue regardless of the number of times of transfer
of such share is made on the stock records of the corporation and regardless of
the number of certificates which may be issued to evidence such shares.
Accumulations of dividends on the Convertible Exchangeable Preferred Stock shall
not bear interest. If at any time the corporation pays less than the total
amount of dividends then accrued upon the Convertible Exchangeable Preferred
Stock and any other stock ranking on a parity as to dividends with the
Convertible Exchangeable Preferred Stock, dividends declared upon shares of
Convertible Exchangeable Preferred Stock and such other stock shall be declared
pro rata so that in all cases the amount of dividends declared per share on the
Convertible Exchangeable Preferred Stock and such other stock shall bear to each
other the same ratio that accumulated dividends per share on the shares of
Convertible Exchangeable Preferred Stock and such other stock bear to such
other.
Dividends payable on September 15, 1987 and on the date on any
redemption of the Convertible Exchangeable Preferred Stock not occurring on a
regular dividend payment date, shall be calculated on the basis of the actual
number of days elapsed (including the date of redemption) over a 360-day year.
Except as set forth above, in no event (so long as any Convertible
Exchangeable Preferred Stock shall remain outstanding) shall any cash dividends
whatsoever be declared or paid upon, nor shall any cash distribution be made
upon, the Common Stock, or any other stock of the corporation ranking junior to
or on a parity with the Convertible Exchangeable Preferred Stock as to dividends
unless full cumulative dividends on all outstanding shares of Convertible
Exchangeable Preferred Stock for all dividend payment periods terminating on or
prior to the date of the payment of such dividends shall have been paid or
declared and funds therefor set apart for such payment.
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<PAGE>
(3) Voting Rights. The holders of Convertible Exchangeable Preferred
Stock shall not, by virtue of their ownership thereof, be entitled to vote upon
any matter except as provided by this Clause (3) or as required by law. Whenever
the holders of the Convertible Exchangeable Preferred Stock shall be entitled to
exercise voting rights, each holder of record thereof shall have one vote for
each share so held.
If the equivalent of six (6) quarterly dividends payable on the
Convertible Exchangeable Preferred Stock is in arrears, the number of directors
of the corporation will be increased by two (2) and the holders of outstanding
Convertible Exchangeable Preferred Stock together with the holders of any
outstanding series of Preferred Stock ranking on a parity with the Convertible
Exchangeable Preferred Stock as to dividends or liquidation rights and as to
which the equivalent of six (6) quarterly dividends is in arrears (but only if
the holders of the shares of such other series would otherwise have a right to
elect directors as a result of a dividend arrearage), voting as a single class
without regard to series, will be entitled to elect the additional two directors
at a special meeting called for that purpose as hereinafter provided, or at any
annual meeting of stockholders. When such voting rights shall have vested in the
holders of the Convertible Exchangeable Preferred Stock, a special meeting to
elect such directors may be called by the Chief Executive Officer or Chairman of
the Board of the corporation or by the holders of 25% or more of the shares of
Preferred Stock of all series affected, in the manner provided in the
corporation's By-laws, or by law if no such provision is in effect. Whenever all
dividends in arrears have been paid or declared and funds therefor set apart for
payment, the number of directors of the corporation shall be reduced by two (2)
and such additional directors elected pursuant to this Clause (3) shall
forthwith cease to be directors and the contingent voting rights provided herein
for the election of two (2) directors shall cease, subject always to the same
provisions for the vesting of such contingent voting rights of the holders of
the Convertible Exchangeable Preferred Stock to elect two (2) directors in the
case of future dividend defaults.
In addition, without the vote of the holders of at least two-thirds
(2/3) of the number of shares of Convertible Exchangeable Preferred Stock then
outstanding, voting together as a class with the holders of any other
outstanding shares of Preferred Stock similarly affected, the corporation shall
not (i) amend, alter or repeal any of the preferences or rights of the holders
of the Convertible Exchangeable Preferred Stock so as to adversely affect such
preferences and rights, or (ii) create any class of stock ranking prior to the
Convertible Exchangeable Preferred Stock with respect to dividends or to the
distribution of assets in liquidation. Notwithstanding the foregoing sentence,
without the vote of a majority of the shares of the Convertible Exchangeable
Preferred Stock then outstanding, voting as a class, the corporation shall not
create any class of stock ranking on a parity with the Convertible Exchangeable
Preferred Stock with respect to dividends or to the distribution of assets in
liquidation.
(4)(A) Optional Redemption. The shares of Convertible Exchangeable
Preferred Stock may be redeemed at the option of the corporation, as a whole or
in part, at any time or from time to time, at the redemption prices referred to
below, provided that the Convertible Exchangeable Preferred Stock may not be
redeemable prior to June 15, 1990 unless the
24
<PAGE>
Closing Price (as hereinafter defined) of the Common Stock shall have equaled or
exceeded 150% of the conversion price for at least twenty (20) trading days
within thirty (30) consecutive trading days ending not more than five (5)
trading days prior to the date notice of redemption is given. For purposes of
this Clause (4), "Closing Price" shall mean the closing price of the Common
Stock on the principal national securities exchange on which such stock may be
listed or, if such stock is not then so listed, the closing price of the Common
Stock as shown by the National Association of Securities Dealers, Inc. National
Market or, if no such closing price is available, the average of the
representative last bid and asked prices of such Common Stock in the
over-the-counter market, as shown by the National Association of Securities
Dealers, Inc. Automated Quotation System Level I (or comparable system). The
redemption price payable shall be the then applicable price per share specified
below in effect on the date fixed for redemption plus dividends accrued and
unpaid on the shares to be redeemed, whether or not declared:
If redeemed during Redemption If redeemed during Redemption
the 12-month period Price Per the 12-month period Price Per
beginning June 15, Share beginning June 15, Share
1987 271.250 1992 260.625
1988 269.125 1993 258.500
1989 267.000 1994 256.375
1990 264.875 1995 254.250
1991 262.750 1996 252.125
and on or after June 15, 1997 at the redemption price of Two Hundred Fifty
Dollars ($250) per share, plus accrued and payable dividends to the date fixed
for redemption. If full cumulative dividends on the Convertible Exchangeable
Preferred Stock have not been paid in full, no shares of Convertible
Exchangeable Preferred Stock may be redeemed and the corporation may not
purchase or acquire any shares unless (i) the holders of two-thirds (2/3) of the
shares of the Convertible Exchangeable Preferred Stock shall have consented
thereto, or (ii) the corporation purchases or acquires any shares of the
Convertible Exchangeable Preferred Stock pursuant to a purchase or exchange
offer made on the same terms to all holders of the Convertible Exchangeable
Preferred Stock.
There is no mandatory redemption or sinking fund obligation with
respect to the Convertible Exchangeable Preferred Stock.
(B) Selection for Redemption. If less than all of the
outstanding shares of the Convertible Exchangeable Preferred Stock are to be
redeemed, the corporation will select the shares to be redeemed by lot, provided
that only whole shares shall be selected for redemption.
(C) Redemption Procedure. Notices of any redemption shall
be mailed (i) not less than thirty (30) nor more than sixty (60) days prior
to the date fixed for redemption to
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<PAGE>
the holders of shares of the Convertible Exchangeable Preferred Stock to be
redeemed at their respective addresses as the same appear upon the books of the
corporation; provided, however, that no defect in the mailing of such notice to
a holder shall affect its sufficiency with respect to other holders. Payment of
the redemption price of the shares redeemed shall be made at such place or
places of redemption as shall be determined by the Board of Directors of the
corporation and shall be specified in the notice of redemption and shall be made
against the surrender for cancellation of the certificates for the shares
redeemed. Any shares of Convertible Exchangeable Preferred Stock so noticed for
redemption may be converted into shares of Common Stock, as hereinafter
provided, at any time prior to the close of business on the date fixed for
redemption.
If notice of redemption shall have been mailed as hereinbefore provided
and if on or before the redemption date specified in such notice all funds
necessary for such redemption shall have been set aside by their corporation so
as to be available for the benefit of the holders of the shares so called for
redemption, then from and after the date fixed for the redemption the shares of
Convertible Exchangeable Preferred Stock so called for redemption,
notwithstanding that any certificate therefor shall not have been surrendered or
canceled, shall no longer be deemed outstanding, dividends thereon shall cease
to accrue and all rights of the holders with respect to such shares (including,
without limitation, the conversion rights provided for in Clause (6)) shall
forthwith on the redemption date cease and terminate, except only the right of
the holders thereof to receive upon surrender of certificates therefor the
amount payable upon redemption thereof, but without interest. Any shares of
Convertible Exchangeable Preferred Stock so noticed for redemption may be
converted into shares of Common Stock, as hereinafter provided, at any time
prior to the close of business on the date fixed for redemption.
(5)(A) Optional Exchange. In addition to the optional redemption rights
of the corporation as set forth in Clause (4) above, at the option of the
corporation the Convertible Exchangeable Preferred Stock shall be exchangeable
in whole but not in part on any dividend payment date beginning June 15, 1989
for the corporation's 8 1/2% Convertible Subordinated Debentures Due 2012 (the
"Debentures") to be issued substantially in the form set forth in the form of an
Indenture filed with the Securities and Exchange Commission as an Exhibit to the
corporation's Registration Statement on Form S-2 relating to the Convertible
Exchangeable Preferred Stock, Registration No. 33-14434 (the "Registration
Statement"). No such exchange shall be made unless all dividends accrued and
payable on the Convertible Exchangeable Preferred Stock to the date of the
exchange have been paid or declared and sufficient amounts set aside for their
payment. Upon election by the corporation to exchange the Convertible
Exchangeable Preferred Stock, each share of Convertible Exchangeable Preferred
Stock will be exchangeable for $250 principal amount of Debentures.
(B) Notice of Exchange. Notice of any exchange of the
Convertible Exchangeable Preferred Stock shall be mailed not less than thirty
(30) and not more than sixty (60) days prior to the date fixed for such exchange
to each holder of Convertible Exchangeable Preferred Stock, at such holder's
address as it appears on the books of the corporation,
26
<PAGE>
specifying the effective date of the exchange and the place where certificates
for shares of the Convertible Exchangeable Preferred Stock are to be surrendered
for Debentures and stating that dividends on shares of the Convertible
Exchangeable Preferred Stock will cease to accrue on and after the date of
exchange; provided, however, that no defect in the mailing of such notice shall
affect the validity of the proceedings for the exchange of any shares of the
Convertible Exchangeable Preferred Stock.
(C) Indenture; Opinion of Counsel. Prior to giving notice of
intention to exchange pursuant to Clause (5)(B) above, the corporation and a
bank or trust company selected by the corporation shall execute and deliver the
Indenture substantially in the form filed as an Exhibit to the Registration
Statement with such changes as may be required by law, stock exchange rule or
usage or that do not adversely affect the interests of the holders of the
Debentures. A copy of the Indenture may be inspected by the holders of any
shares of Convertible Exchangeable Preferred Stock at the offices of the
corporation during normal business hours. The corporation will not give notice
of its intention to exchange pursuant to Clause (5)(B) above unless it shall
file at the office or agency of the corporation maintained for the exchange of
Convertible Exchangeable Preferred Stock an opinion of counsel (who may be an
employee of the corporation) that the Indenture has been duly authorized,
executed and delivered by the corporation, has been duly qualified under the
Trust Indenture Act of 1939 (or that such qualification is not necessary) and
constitutes a valid and binding instrument enforceable against the corporation
in accordance with its terms (subject to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles, and subject to such other
qualifications as are then contained in opinions of counsel experienced in such
matters), and to the effect that the Debentures have been duly authorized and,
when executed and authenticated in accordance with the provisions of the
Indenture and delivered in exchange for the shares of Convertible Exchangeable
Preferred Stock, will constitute valid and binding obligations of the
corporation entitled to the benefits of the Indenture (subject as aforesaid);
and that the exchange of Debentures for the Convertible Exchangeable Preferred
Stock will not violate the laws of the state of incorporation of the
corporation; and that neither the execution and delivery of the Indenture or the
Debentures nor compliance with the terms, conditions or provisions of such
instruments will result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust or other agreement or instrument, known to such counsel, to which the
corporation or any of its subsidiaries is a party or by which it or any of them
is bound, or any decree, judgment, order, rule or regulation, known to counsel,
of any court or governmental agency or body having jurisdiction over the
corporation and such subsidiaries or any of their properties; and that the
Debentures have been duly registered for such exchange with the Securities and
Exchange Commission under a registration statement that has become effective
under the Securities Act of 1933 (the "Act") or that the exchange of the
Debentures for the shares of Convertible Exchangeable Preferred Stock is exempt
from registration under the Act.
(D) Exchange Procedure. If on the date fixed for
exchange, the corporation has taken all action required to authorize the
issuance of the Debentures in exchange for the
27
<PAGE>
Convertible Exchangeable Preferred Stock then, notwithstanding that the
certificates for such shares have not been surrendered for cancellation, from
and after the date fixed for exchange the shares of Convertible Exchangeable
Preferred Stock shall no longer be deemed outstanding, dividends thereon shall
cease to accrue and all rights of the holders with respect to such shares
(including, without limitation, the conversion rights provided for in Clause
(6)) shall terminate, except only the rights to receive dividends accrued and
unpaid as of the date of exchange and, upon surrender of certificates therefor,
the right to receive the Debentures, and the person or persons entitled to
receive the Debentures issuable upon exchange shall be treated for all purposes
as the registered holder or holders of such Debentures. Upon due surrender of a
certificate representing shares of Convertible Exchangeable Preferred Stock, the
holder thereof shall receive the principal amount of Debentures to which such
holder is thereby entitled. Any shares of Convertible Exchangeable Preferred
Stock so noticed for exchange may be converted into shares of Common Stock, as
hereinafter provided, at any time prior to the close of business on the date
fixed for exchange.
(6) Conversion Rights.
(A) Conversion Provisions. At any time subsequent to the Issue
Date, the holders of any one or more shares of the Convertible Exchangeable
Preferred Stock may, at their option, convert such share or shares, on the terms
and conditions set forth in this Clause (6), into fully paid and non-assessable
shares of Common Stock except that, with respect to any shares of Convertible
Exchangeable Preferred Stock called for redemption or exchange, the conversion
right shall terminate at the close of business on the date of redemption or
exchange, unless default is made in the payment of the redemption or exchange
price. Each shares of the Convertible Exchangeable Preferred Stock shall be
convertible into 6.62252 shares of Common Stock (equivalent to a conversion
price of $37.75 per share); provided; however, that the number of shares of
Common Stock issuable on conversion of each share of the Convertible
Exchangeable Preferred Stock (the "conversion rate") shall be subject to
adjustments in accordance with the provisions hereinafter set forth in this
Clause (6).
(B) Adjustment for Change in Capital Stock. If the
corporation
(i) pays a dividend or makes a distribution on its Common
Stock, in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock
into a greater number of shares;
(iii) combines its outstanding shares of Common Stock into
a smaller number of shares;
(iv) makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock; or
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<PAGE>
(v) issues by reclassification of its Common Stock any
shares of its capital stock;
then the conversion privilege and the conversion price in effect immediately
before such action shall be adjusted so that the holder of the Convertible
Exchangeable Preferred Stock thereafter converted may receive the number of
shares of capital stock of the corporation which he would have owned immediately
following such action if he had converted the Convertible Exchangeable Preferred
Stock immediately before the record date (or, if no record date, the effective
date) for such action. The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution and immediately after
the effective date in the case of a subdivision, combination or
reclassification.
If after an adjustment a holder of the Convertible Exchangeable
Preferred Stock upon conversion of it may receive shares of two or more classes
of capital stock of the corporation, the corporation shall determine the
allocation of the adjusted conversion price between the classes of capital
stock. After such allocation, the conversion privilege and conversion price of
each class of capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Stock contained in this Clause (6).
(C) Adjustment for Rights Issue. If the corporation
distributes any rights or warrants to the holders of its Common Stock entitling
them for a period expiring within sixty (60) days after the record date
mentioned below to purchase shares of Common Stock at a price per share less
than the current market price per share on that record date, the conversion
price shall be adjusted in accordance with the formula:
O + N x P
-----
C1 = C x M
---------
O + N
where
C1 = the adjusted conversion price.
C = the current conversion price.
O = the number of shares of Common Stock outstanding on the record
date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the
record date.
The adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive the rights or
warrants. Such adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights or warrants are not exercised prior
to the expiration therefor, the conversion price shall again be
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<PAGE>
adjusted to be the conversion price which would then be in effect if such record
date had not been fixed.
(D) Adjustment For Other Distributions. If the corporation
distributes to the holders of its Common Stock any of its assets or debt
securities or any rights or warrants to purchase securities of the corporation,
the conversion price shall be adjusted in accordance with the formula:
C1 = C x M - F
-----
M
where
C1 = the adjusted conversion price.
C = the current conversion price.
M = the current market price per share of
Common Stock on the record date mentioned
below.
F = the fair market value on the record date
of the assets, securities, rights or
warrants applicable to one share of Common
Stock. The corporation shall determine the
fair market value.
The adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive the distribution. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the conversion price shall
again be adjusted to the conversion price which would then be in effect if such
record date had not been fixed.
This Sub-Clause (D) does not apply to cash dividends or cash
distributions paid out of earnings or surplus as shown on the books of the
corporation. Also, this Sub-Clause (D) does not apply to rights or warrants
referred to in Sub-Clause (C) above.
(E) Adjustment for Reorganization. In case of any
consolidation or merger of the corporation into another corporation, or in the
case of any merger of another corporation into the corporation (other than a
merger with a corporation in which merger the corporation is the continuing
corporation and which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock), or in case of
any lease or transfer to another corporation of all or substantially all of the
assets of the corporation, the holder of each share of the Convertible
Exchangeable Preferred Stock then outstanding shall have the right thereafter,
subject to the terms and conditions of this Clause (6), to convert such share
into the kind and amount of shares of stock and other securities and property
receivable upon such consolidation, merger, lease or transfer by a holder of the
number of shares of Common Stock into which such share of Convertible
Exchangeable Preferred Stock might have been converted immediately prior to such
consolidation, merger, lease or transfer; and effective provision shall be made
in the Articles of Organization or Charter of the resulting or surviving
corporation or otherwise so that the provisions set forth
30
<PAGE>
in this Clause (6) shall thereafter be applicable, as nearly as practicable, to
any such other shares of stock and other securities and property deliverable
upon conversion of the Convertible Exchangeable Preferred Stock remaining
outstanding or other convertible exchangeable preferred stock received by the
holders in place thereof; and any such resulting or surviving corporation shall
expressly assume the obligation to deliver, upon the exercise of the conversion
privilege, such shares, securities or property as the holders of the Convertible
Exchangeable Preferred Stock remaining outstanding, or other convertible
preferred stock received by the holders in place thereof, may be entitled to,
and to make provision for the protection of the conversion right as herein
provided (unless the corporation assumes such obligation). In case securities or
property other than shares of Common Stock shall be issuable or deliverable upon
conversion as aforesaid, then all reference in this Sub-Clause (E) shall be
deemed to apply, so far as appropriate and as nearly as practicable, to such
other securities or property. The provisions of this Sub-Clause (E) shall
similarly apply to successive reorganizations, consolidations, mergers, leases
or transfers.
(F) Current Market Price. For the purposes of any computation
under this Clause (6), the current market price per share of Common Stock at any
date shall be deemed to be the average of the daily closing prices for any
thirty (30) consecutive business days selected by the corporation commencing not
more than forty-five (45) business days before the date in question. The closing
price for each day shall be the last reported sale of Common Stock on the
principal national securities exchange on which the Common Stock may be listed
or if such stock is not then so listed, the closing price of the Common Stock as
shown by the National Association of Securities Dealers, Inc. National Market
or, if no such closing price is available, at the average of the representative
last bid and asked prices of such Common Stock in the over-the-counter market,
as shown by the National Association of Securities Dealers, Inc. Automated
Quotation System Level I (or comparable system) or in the absence of any of the
foregoing, the fair market value as determined by the Board of Directors (whose
determination shall be conclusive).
(G) Fractional Shares. No fractional shares of Common Stock
shall be issued on any conversion, but in lieu thereof the corporation shall pay
in cash an amount equal to the current market value of such fractional interest
computed on the basis of the closing price as determined in accordance with the
provision of Sub-Clause (F) above, on the last trading day prior to the date
upon which conversion is deemed to have been effected. Any determination that
the corporation or the Board of Directors makes regarding fractional shares is
conclusive.
(H) When No Adjustment Required. No adjustment need be made
for a transaction referred to in Sub-Clause (B), (C) or (D) above if the holders
of the Convertible Exchangeable Preferred Stock are to participate in the
transaction on a basis and with notice that the Board of Directors determines to
be fair and appropriate in light of the basis and notice on which holders of
Common Stock participate in the transaction.
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<PAGE>
Notwithstanding the provisions of Sub-Clauses (B), (C), (D) and (E)
above, no adjustment of the conversion rate shall be required unless such
adjustment would require an increase or decrease of at least 1% conversion rate,
but in such case any adjustment that would otherwise be in the required then to
be made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment. All calculations under this Clause (6)
shall be made and rounded to the nearest one-hundredth of a share or the nearest
cent, as the case may be.
No payment or adjustment on account of dividends accumulated or in
arrears upon shares of the Conversion Exchangeable Preferred Stock, any other
series of Preferred Stock, or Common Stock, shall be made in connection with any
conversion, except as may otherwise be provided at the discretion of the Board
of Directors and except as provided hereinafter. Shares of Convertible
Exchangeable Preferred Stock surrendered for conversion during the period
between the date fixed as the record date for the payment of a dividend and the
date fixed as the dividend payment date must be accompanied by payment to the
corporation of an amount equal to the dividend payable on such shares on the
dividend payment date, provided, however, that if the corporation fixes a date
for redemption or for exchange of such shares of Convertible Exchangeable
Preferred Stock which is after such record date for the payment of dividends and
before such dividend payment date, then shares of Convertible Exchangeable
Preferred Stock surrendered for conversion after such record date and before
such dividend payment date need not be accompanied by payment to the corporation
of an amount equal to the dividend on such shares payable on such dividend
payment date.
No adjustment need be made for sales of Common Stock pursuant to a plan
for reinvestment of dividends or interest and no adjustment need to be made for
a change in the par value of the Common Stock.
No adjustment need be made in connection with the issuance of shares of
Common Stock upon conversion of the Convertible Exchangeable Preferred Stock or
the issuance of (including the issuance of awards, rights and options to
purchase) shares of Common Stock to employees or other eligible persons of the
corporation under plans duly adopted by the stockholders of the corporation.
The Board of Directors shall have the power to resolve any ambiguity or
correct any error in this Clause (6) and its action in so doing, as evidenced by
a Board resolution, shall be final and conclusive.
The certificate of any independent firm of public accountants of
recognized standing selected by the Board of Directors shall be satisfactory
evidence of the correctness of any computation made in this Clause (6).
(I) Notice of Adjustment. Whenever there is an adjustment
requiring a change in the conversion rate, the corporation shall file with the
transfer agent, or transfer agents, for the Convertible Exchangeable Preferred
Stock, a statement signed by the Secretary
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<PAGE>
of the corporation, describing specifically the event giving rise to such
adjustment and stating the adjustment which shall be made to the conversion
rate. The statement so filed shall be open to inspection by any holder of record
of shares of the Convertible Exchangeable Preferred Stock. The corporation shall
at that time of filing any such statement mail notice to the same at their
addresses appearing on the books of the corporation or supplied by them to the
corporation for the purpose of notice. In addition, the corporation shall
include a notice of the conversion rate with each dividend payment on the
Convertible Exchangeable Preferred Stock or otherwise give notice thereof
promptly after the due date for each such dividend, whenever there has been a
change in the conversion rate since the last previous dividend due date.
(J) Conversion Procedure. Upon surrender to the corporation at
the office of the transfer agent, or transfer agents, for the Convertible
Exchangeable Preferred Stock, or at such other place or places, if any, as the
Board of Directors of the corporation may determine, of certificates, duly
endorsed to the corporation or in blank, for shares of Convertible Exchangeable
Preferred Stock to be converted, together with appropriate evidence of the
payment of any transfer or similar tax, if required, and instructions in writing
to the corporation to convert such shares and specifying the name and address of
the person, corporation, firm or other entity to whom such shares are to be
issued, the corporation will issue (i) the number of full shares of Common Stock
issuable on conversion thereof as of the time of such surrender and as promptly
as practicable thereafter will deliver certificates for such shares of Common
Stock, and (ii) cash for any remaining fraction of a share, as provided in
Sub-Clause (G) above. The corporation shall pay any documentary, stamp or
similar issue or transfer tax due on the issue of shares of Common Stock upon
conversion; provided, however, that the holder shall pay any such tax which is
due because such shares are to be issued in a name other than that of such
holder.
The corporation shall at all times after the Issue Date reserve for
issuance upon conversion of the Convertible Exchangeable Preferred Stock a
sufficient number of full shares of Common Stock for the conversion of each
outstanding share of Convertible Exchangeable Preferred Stock at the current
conversion rate.
(K) Notice of Certain Transactions. If
(i) the corporation takes any action that would require
an adjustment in the conversion rate pursuant to
Sub-Clauses (B), (C), (D) and (E) of this Clause (6);
or
(ii) there is a voluntary or involuntary liquidation,
dissolution or winding-up of the corporation;
the corporation shall provide notice in the manner set forth in Sub-Clause (I)
of this Clause (6) of such action, stating therein the proposed date for a
distribution or the effective date of a reclassification, consolidation, merger,
lease, transfer, liquidation, dissolution or winding-up,
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<PAGE>
at least fifteen (15) days in advance of such date. Failure to mail the notice
or any defect therein shall not affect the validity of the transaction.
(L) Reduction of Conversion Price Below Par Value of Common
Stock. Before taking any action which would cause an adjustment reducing the
conversion price below the then par value (if any) of the Common Stock
deliverable upon conversion of the Convertible Exchangeable Preferred Stock, the
corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the corporation may validly and legally
issue fully paid and non-assessable shares of Common Stock at such adjusted
conversion price.
(M) Decrease in Conversion Price. The corporation from time to
time may decrease the conversion price by any amount for any period of time if
the period is at least 20 days and if the decrease is irrevocable during the
period. Whenever the conversion price is decreased, the corporation shall give
notice of the decrease at least 15 days prior to the date the decreased
conversion price takes effect, in the manner set forth in Sub-Clause (I) above,
which notice shall state the decreased conversion price and the period it will
be in effect. A decrease in the conversion price pursuant to this Sub-Clause (M)
shall not otherwise change or adjust the conversion price otherwise in effect
for purposes of this Clause (6).
(7) Liquidation Rights. In the event of any liquidation, dissolution or
winding up of the corporation, the holders of the shares of the Convertible
Exchangeable Preferred Stock shall be entitled to receive out of the assets of
the corporation available for distribution to stockholders, before any
distribution of assets is made to holders of Common Stock or any other stock of
the corporation ranking junior to the Convertible Exchangeable Preferred Stock
as to liquidation, distributions in an amount equal to the then applicable
redemption price, as set forth in Clause (4) hereof, in the case of a voluntary
liquidation, dissolution or winding up, or in the case of an involuntary
liquidation, dissolution or winding up an amount equal to Two Hundred Fifty
Dollars ($250) per share, plus in either case, an amount equal to the
accumulated and unpaid dividends thereon.
If upon voluntary or involuntary liquidation, dissolution or winding
upon of the corporation, the amounts payable with respect to the Convertible
Exchangeable Preferred Stock and any other shares of stock of the corporation
ranking as to any such distribution on a parity with the Convertible
Exchangeable Preferred Stock are not paid in full, the holders of the
Convertible Exchangeable Preferred Stock and of such other shares shall share
ratably in any such distribution of assets of the corporation in proportion to
the full respective preferential amounts to which they are entitled. After
payment of the full amount of liquidating distribution to which they are
entitled, the holders of shares of Convertible Exchangeable Preferred Stock
shall not be entitled to any further participation in any distribution of assets
by the corporation.
Neither the consolidation of nor merging of the corporation with or
into any other corporation nor corporations, nor the lease or transfer of all or
substantially all of the assets of
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<PAGE>
the corporation shall be deemed to be a liquidation, dissolution or a winding up
of the corporation within the meaning of any of the provisions of this Clause
(7).
(8) Status of Shares Redeemed, Exchanged or Converted. All shares of
Convertible Exchangeable Preferred Stock redeemed, exchanged or converted
pursuant to Clause (4), (5) or (6) hereof and all shares of the Convertible
Exchangeable Preferred Stock otherwise reacquired by the corporation and
subsequently canceled shall be restored to the status of authorized and unissued
Preferred Stock undesignated as to series subject to reissuance by the Board of
Directors.
(9) Subdivision of Shares. The Board of Directors may at any time
subdivide the shares of Convertible Exchangeable Preferred Stock as of an
effective date fixed by the Board of Directors. Except as otherwise provided by
law, notice of the proposed subdivision and the effective date shall be mailed
to each holder of record of Convertible Exchangeable Preferred Stock not less
than fifteen (15) days before the effective date. The dividend rate, conversion
rate and liquidation rights in effect immediately prior to the close of business
on the effective date of such subdivision shall be proportionately reduced as of
the close of business on the effective date of such division.
(10) "Common Stock" Defined. Whenever reference is herein made to
"Common Stock," "Common Stock" shall mean any stock of any class of the
corporation which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the corporation and which is not subject to redemption by the
corporation. However, Common Stock issuable upon conversion of the Convertible
Exchangeable Preferred Stock shall include only shares of the class designated
as Common Stock as of the original date of issuance of shares of the Convertible
Exchangeable Preferred Stock, or shares of the corporation of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the corporation and which are not subject to redemption by the corporation;
provided that if at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from such
reclassifications bears to the total number of shares of all classes resulting
from all such reclassifications.
(11) No Preemptive Rights. The holders of the Convertible Exchangeable
Preferred Stock shall not have any preemptive rights.
- --------------------------------------------------------------------------------
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, Secretary
One Ashburton Place, Boston, Massachusetts 02108-1512
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Federal Identification No. 04-1717070
CERTIFICATE OF VOTE OF DIRECTORS
ESTABLISHING A SERIES OF A CLASS OF STOCK
General Laws, Chapter 156B, Section 26
We, David B. Perini, President and Richard E. Burnham, Clerk of Perini
Corporation located at 73 Mt. Wayte Avenue, Framingham, Massachusetts 01701 do
hereby certify that at a meeting of the directors of the corporation held on
January 10, 1997, the following vote establishing and designating a series of a
class of stock and determining the relative rights and preferences thereof was
duly adopted:
That pursuant to the authority vested in the Board of Directors of this
Corporation in accordance with the provisions of its Restated Articles of
Organization, as amended, a series of Preferred Stock (the "Series B Cumulative
Convertible Preferred Stock") of the Corporation be, and it hereby is, created
and that the designation and amount thereof and the voting powers, preferences
and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations and restrictions thereof are as
set forth on Exhibit A hereto.
EXHIBIT A
Series B Cumulative Convertible Preferred Stock
1. Designation and Amount. There shall be a series of Preferred Stock
designated as "Series B Cumulative Convertible Preferred Stock" and the number
of shares constituting such series shall be 500,000, of which 150,150 shall be
issued initially (the date of such issuance, the "Original Issue Date") and the
remainder shall be reserved for issuance as dividends pursuant to Section 3
below. The number of shares designated as shares of Series B Cumulative
Convertible Preferred Stock may be decreased (but not increased) by the Board of
Directors without a vote of stockholders; provided, however, that such number
may not be decreased without the approval of the holders of 66-2/3% of the then
outstanding shares of Series B Cumulative Convertible Preferred Stock.
2. Preemptive Rights. Holders of shares of Series B Cumulative
Convertible Preferred Stock are not entitled to any preemptive or subscription
rights in respect of any securities of the Corporation.
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<PAGE>
3. Dividends.
(a) The holders of shares of Series B Cumulative Convertible
Preferred Stock shall be entitled to receive, when and as authorized and
declared by the Board of Directors out of funds at the time legally available
therefor, dividends at the Cash Dividend Rate (defined below) per annum times
the Liquidation Preference (defined below in Section 4(a)) if paid in cash, or
at the In-Kind Dividend Rate (defined below) per annum times the Liquidation
Preference if paid in additional shares of Series B Cumulative Convertible
Preferred Stock, and no more, which shall be fully cumulative, shall accrue with
respect to any such share from the original date of issuance of such share
without interest and shall be payable quarterly in arrears on March 15, June 15,
September 15 and December 15 of each year (a "Dividend Payment Date"),
commencing March 15, 1997 (except that if any such date is a Saturday, Sunday or
legal holiday, then such dividend shall be payable on the next day that is not a
Saturday, Sunday or legal holiday) to holders of record as they appear upon the
stock transfer books of the Corporation on each March 1, June 1, September 1 and
December 1 immediately preceding the payment dates, or such other dates as shall
be fixed at the time of the authorization and declaration by the Board of
Directors (or, to the extent permitted by applicable law, a duly authorized
committee thereof), which date shall not be less than ten (10) nor more than
sixty (60) days preceding the relevant dividend payment date. For purposes
hereof, the term "legal holiday" shall mean any day on which banking
institutions are authorized to close in New York, New York. The amount of
dividends payable per share of Series B Cumulative Convertible Preferred Stock
for each quarterly dividend period shall be computed by dividing the annual
dividend amount by four and shall include fractional shares. The amount of
dividends payable for the initial dividend period and any period shorter than a
full quarterly period during which shares are outstanding shall be computed on
the basis of a 360-day year of twelve 30-day months and the actual number of
days elapsed in the period in which payable. No interest shall be payable in
respect of any dividend payment on the Series B Cumulative Convertible Preferred
Stock or any other Parity Dividend Stock (as hereinafter defined) which may be
in arrears. The "Cash Dividend Rate" shall be 9 percent per annum if a Special
Default (defined below) has occurred and is continuing at any time during the
applicable Annual Payment Period (defined below) or Semiannual Payment Period
(defined below), and shall be 7 percent per annum at all other times. The
"In-Kind Dividend Rate" shall be 12 percent per annum if a Special Default has
occurred and is continuing at any time during the applicable Annual Payment
Period or Semiannual Payment Period, and shall be 10 percent per annum at all
other times.
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(b) Any dividend payments may be made, in the sole discretion
of the Board of Directors, as follows (for purposes of this determination, the
Designated Directors (defined below in Section 13) shall not vote):
(i) Prior to December 15, 1999:
(1) on or prior to the Original Issue Date and prior to
December 15, 1997 and 1998, the Board of Directors shall determine
whether dividend payments payable on the next four Dividend Payment
Dates beginning December 15 (each, an "Annual Payment Period") shall be
paid in (i) cash or (ii) additional shares of Series B Cumulative
Convertible Preferred Stock valued at the Liquidation Preference (but
not in any combination of cash and additional shares of Series B
Cumulative Convertible Preferred Stock); provided, however, that the
first Annual Payment Period shall commence March 15, 1997, and run for
three Dividend Payment Dates if the Original Issue Date is between
December 15, 1996 and March 15, 1997;
(2) in the event that, during an Annual Payment Period when
the Board has elected to pay dividends on the Series B Cumulative
Convertible Preferred Stock in cash, the Corporation fails to
authorize, declare and pay in cash on a Dividend Payment Date the full
amount of the cash dividend due at the Cash Dividend Rate, then, on or
prior to such Dividend Payment Date, the Board shall authorize, declare
and pay a supplemental stock dividend in shares of Series B Cumulative
Convertible Preferred Stock (valued at the Liquidation Preference)
equal to the difference between the dividend that would have been paid
in-kind at the In-Kind Dividend Rate (assuming that the Board had
elected to pay dividends for such period in-kind and assuming that a
Special Default existed) and the cash dividend actually declared and
paid on such Dividend Payment Date and on the previous Dividend Payment
Date during such Annual Payment Period, if any.
(ii) On or after December 15, 1999:
(1) On or prior to December 15, 1999 and on or prior to each
June 15 and December 15 thereafter, the Board of Directors shall
determine whether dividend payments accruing on the next two Dividend
Payment Dates beginning on such Dividend Payment Date (each a
"Semiannual Payment Period") shall be paid in (i) cash or (ii)
additional shares of Series B Cumulative Convertible Preferred Stock
valued at the Liquidation Preference (but not in any combination of
cash and additional shares of Series B Cumulative Convertible Preferred
Stock);
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(2) in the event that, during a Semiannual Payment Period when
the Board has elected to pay dividends on the Series B Cumulative
Convertible Preferred Stock in cash, the Corporation fails to
authorize, declare and pay in cash on a Dividend Payment Date the full
amount of the cash dividend due at the Cash Dividend Rate, then, on
such Dividend Payment Date, the Board shall authorize, declare and pay
a supplemental stock dividend in shares of Series B Cumulative
Convertible Preferred Stock (valued at the Liquidation Preference)
equal to the difference between the dividend that would have been paid
in-kind at the In-Kind Dividend Rate (assuming that the Board had
elected to pay dividends for such period in-kind and assuming that a
Special Default existed) and the cash dividend actually declared and
paid on such Dividend Payment Date and on the previous Dividend Payment
Date during such Semiannual Payment Period, if any.
(iii) All shares of Series B Cumulative Convertible
Preferred Stock issued as a dividend with respect to
the Series B Cumulative Convertible Preferred Stock
shall thereupon be duly authorized, validly issued,
fully paid and nonassessable.
(c) In the case of shares of Series B Cumulative Convertible
Preferred Stock issued on the Original Issue Date, dividends shall accrue and be
cumulative from such date. In the case of shares of Series B Cumulative Con
vertible Preferred Stock issued as a dividend on shares of Series B Cumulative
Convertible Preferred Stock, dividends shall accrue and be cumulative from the
dividend payment date in respect of which such shares were (or should have been)
issued as a dividend.
(d) Each fractional share of Series B Cumulative Convertible
Preferred Stock outstanding shall be entitled to a ratably proportionate amount
of all dividends accruing with respect to each outstanding share of Series B
Cumulative Convertible Preferred Stock, and all such dividends with respect to
such outstanding fractional shares shall be cumulative and shall accrue (whether
or not declared), and shall be payable in the same manner and at such times as
provided for above with respect to dividends on each outstanding share of Series
B Cumulative Convertible Preferred Stock. Each fractional share of Series B
Cumulative Convertible Preferred Stock outstanding shall also be entitled to a
ratably proportionate amount of any other distributions made with respect to
each outstanding share of Series B Cumulative Convertible Preferred Stock, and
all such distributions shall be payable in the same manner and at the same time
as distributions on each outstanding share of Series B Cumulative Convertible
Preferred Stock.
(e) No dividends or other distributions shall be
authorized, declared, paid or set apart for payment on any shares of Common
Stock or
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<PAGE>
other stock of the Corporation ranking junior as to dividends to the Series B
Cumulative Convertible Preferred Stock (collectively, the "Junior Dividend
Stock") except for dividends or distributions that are not Extraordinary Equity
Payments (defined below in Section 8(h)).
(f) If at any time any dividend on the $21.25 Convertible
Exchangeable Preferred Stock (the "$21.25 Preferred Stock") or any other stock
of the Corporation hereafter issued ranking senior as to dividends to the Series
B Cumulative Convertible Preferred Stock (collectively with the $21.25 Preferred
Stock, the "Senior Dividend Stock") shall be in arrears, in whole or in part,
then (except to the extent allowed by the terms of such Senior Dividend Stock)
no cash dividend shall be authorized, declared, paid or set apart for payment on
the Series B Cumulative Convertible Preferred Stock unless and until all accrued
and unpaid dividends with respect to the Senior Dividend Stock for all payment
periods ending on or prior to the date of payment of the current dividend on the
Series B Cumulative Convertible Preferred Stock shall have been authorized,
declared and paid or set apart for payment. Dividends payable in additional
shares of Series B Cumulative Convertible Preferred Stock are permitted and not
subordinated in payment to payment of dividends on the Senior Dividend Stock.
(g) No dividends or other distributions shall be authorized,
declared, paid or set apart for payment on any class or series of the
Corporation's stock heretofore or hereafter issued ranking, as to dividends, on
a parity with the Series B Cumulative Convertible Preferred Stock (the "Parity
Dividend Stock") for any period unless full cumulative dividends have been, or
contemporaneously are, authorized, declared and paid or set apart in trust for
such payment on the Series B Cumulative Convertible Preferred Stock for all
dividend payment periods terminating on or prior to the date of payment of such
full cumulative dividends. No full dividends (other than dividends payable in
additional shares of Series B Cumulative Convertible Preferred Stock) shall be
authorized, declared, paid or set apart for payment on the Series B Cumulative
Convertible Preferred Stock for any period unless full cumulative dividends have
been, or contemporaneously are, authorized, declared and paid or set apart for
payment on the Parity Dividend Stock for all dividend periods terminating on or
prior to the date of payment of such full cumulative dividends. When accrued
dividends are not paid in full on the Series B Cumulative Convertible Preferred
Stock and the Parity Dividend Stock, all cash dividends authorized, declared and
paid or set apart for payment on the Series B Cumulative Convertible Preferred
Stock and the Parity Dividend Stock shall be authorized, declared, paid or set
apart for payment pro rata so that the amount of dividends authorized, declared,
paid or set apart for payment per share on the Series B Cumulative Convertible
Preferred Stock and the Parity Dividend Stock shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per
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<PAGE>
share on the Series B Cumulative Convertible Preferred Stock and the Parity
Dividend Stock bear to each other.
4. Liquidation Preference.
(a) The liquidation preference of the Series B Cumulative
Convertible Preferred Stock shall be $200.00 per share (the "Liquidation
Preference"). Subject to the full payment of the liquidation preferences of the
$21.25 Preferred Stock and the shares of stock of the Corporation hereafter
issued ranking senior as to liquidation rights to the Series B Cumulative
Convertible Preferred Stock (the "Senior Liquidation Stock"), in the event of a
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of shares of Series B Cumulative Convertible Preferred
Stock shall be entitled to receive out of the assets of the Corporation, whether
such assets are stated capital or surplus of any nature, an amount equal to the
dividends accrued and unpaid on such shares on the date of final distribution to
such holders, whether or not declared, without interest, plus a sum equal to the
Liquidation Preference, and no more, before any payment shall be made or any
assets distributed to the holders of shares of Common Stock or any other class
or series of the Corporation's stock hereafter issued ranking junior as to
liquidation rights to the Series B Cumulative Convertible Preferred Stock
(collectively, the "Junior Liquidation Stock").
(b) The assets of the Corporation available for distribution
after the liquidation preferences of the Senior Liquidation Stock are fully met
shall be distributed ratably among the holders of the Series B Cumulative
Convertible Preferred Stock and any other class or series of the Corporation's
stock hereafter issued ranking on a parity as to liquidation rights with the
Series B Cumulative Convertible Preferred Stock in proportion to the respective
preferential amounts to which each is entitled (but only to the extent of such
preferential amounts); provided, however, that after payment in full of the
Liquidation Preferences, the holders of the shares of the Series B Cumulative
Convertible Preferred Stock shall not be entitled to any further participation
in any distribution of assets by the Corporation. Neither a consolidation or
merger of the Corporation with or into another corporation nor a merger of any
other corporation with or into the Corporation, nor a sale or transfer of all or
any part of the Corporation's assets for cash, securities or other property,
will be considered a liquidation, dissolution or winding up of the Corporation.
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5. Limitation on Share Repurchase. If at any time any dividends on the
Series B Cumulative Convertible Preferred Stock shall be in arrears or the
Corporation shall have failed to make any purchase of shares of Series B
Cumulative Convertible Preferred Stock tendered to it pursuant to Section 7, the
Corporation shall not -- and the Corporation shall not permit any other
corporation or legal entity directly or indirectly controlled by the Corporation
(collectively, the "subsidiaries") to -- repurchase, redeem, retire or otherwise
acquire any shares of Junior Dividend Stock, Junior Liquidation Stock, or any
warrants, rights, calls or options exercisable for or convertible into any
shares of Junior Dividend Stock or Junior Liquidation Stock, except by
conversion into or exchange for shares of Junior Dividend Stock or Junior
Liquidation Stock and other than purchases, redemptions, retirements or
acquisitions made pursuant to and as required by the terms of any employee
incentive or benefit plan of the Corporation or any subsidiary of the
Corporation in effect on July 24, 1996 or as amended or adopted by the
Corporation with approval of the Executive Committee of the Corporation.
Notwithstanding the preceding sentence, any subsidiary which is wholly owned by
the Corporation may repurchase, redeem, retire or otherwise acquire shares of
its stock.
6. Redemption at Option of the Corporation.
(a) So long as shares of Common Stock shall have traded on the
Primary Exchange (defined below) (i) for at least forty (40) of the forty-five
(45) trading days (each of which trading days shall be after the third
anniversary of the Original Issue Date (the "Third Anniversary")) immediately
preceding the Determination Date (defined below), and (ii) on each of the ten
(10) consecutive trading days immediately prior to the Determination Date
(defined below), at a Closing Price (as hereinafter defined) in excess of the
Hurdle Percentage (defined below) of the conversion price then in effect for the
Series B Cumulative Convertible Preferred Stock for each such trading day, all,
but not less than all, of Series B Cumulative Convertible Preferred Stock may
thereafter be redeemed at the election of the Board of Directors made on any
date (the "Determination Date") on or after the Third Anniversary, for the
Redemption Price (defined below in Section 7(b)), plus an amount in cash equal
to accrued and unpaid dividends thereon, whether or not authorized or declared,
to but excluding the date fixed for redemption. For purposes of the
determination of the Board called for in the preceding sentence, the Designated
Directors (defined below in Section 13) shall not vote. The date on which such
shares shall be redeemed shall be a date that is at least ten (10), but no more
than thirty (30), business days after the Determination Date (during which
period the holders of the Series B Cumulative Convertible Preferred Stock may,
but shall not be required to, convert such stock into Common Stock). The Hurdle
Percentage shall be 150% from and after the Third Anniversary, and to the fifth
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anniversary of the Original Issue Date; thereafter, the Hurdle Percentage shall
be 125%. "Primary Exchange" shall mean the American Stock Exchange or such other
principal national securities exchange or quotation system on which the Common
Stock of the Corporation is quoted or listed or admitted to trading.
(b) Not more than thirty (30) nor less than ten (10) business
days prior to the redemption date fixed by the Board of Directors, the
Corporation shall give notice by hand or overnight courier to the holders of
record of shares of the Series B Cumulative Convertible Preferred Stock to be
redeemed, addressed to such holders at their last addresses as shown upon the
stock transfer books of the Corporation. Each such notice of redemption shall
specify the date fixed for redemption; the Redemption Price (defined below in
Section 7(b)) plus an amount in cash equal to accrued and unpaid dividends
thereon, whether or not authorized or declared, to but excluding the date fixed
for redemption; the place or places of payment; that payment will be made upon
presentation and surrender of the shares of Series B Cumulative Convertible
Preferred Stock; that on and after the redemption date dividends will cease to
accrue on such shares; the then effective conversion price pursuant to Section
8; and that the right of holders to convert shares of Series B Cumulative
Convertible Preferred Stock shall terminate at the close of business on the
business day prior to the redemption date (unless the Corporation defaults in
the payment of the Redemption Price plus an amount in cash equal to accrued and
unpaid dividends thereon, whether or not authorized or declared, to but
excluding the date fixed for redemption).
(c) Any notice as herein provided shall be deemed to be given
when delivered to the address specified in the preceding section. On or after
the date fixed for redemption as stated in such notice, each holder of the
shares called for redemption, unless such holder has exercised such holder's
right to convert shares of Series B Cumulative Convertible Preferred Stock as
provided above, shall surrender the certificate representing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the Redemption Price (defined below in Section
7(b)) plus an amount in cash equal to accrued and unpaid dividends thereon,
whether or not authorized or declared, to but excluding the date fixed for
redemption. If less than all the shares evidenced by any such surrendered
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares. Notice having been given as aforesaid, if, on the date fixed
for redemption, funds necessary for the redemption shall be available therefor
and shall have been irrevocably deposited or set aside in trust for the holders
of the shares of Series B Cumulative Convertible Preferred Stock, then,
notwithstanding that the certificates representing any shares so called for
redemption shall not have been surrendered, dividends with respect to the
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shares so called shall cease to accrue after the date fixed for redemption, such
shares shall no longer be deemed outstanding, the holders thereof shall cease to
be stockholders of the Corporation and all rights whatsoever with respect to the
shares so called for redemption (except the right of the holders to receive the
Redemption Price plus an amount in cash equal to accrued and unpaid dividends
thereon, whether or not authorized or declared, to but excluding the date fixed
for redemption, without interest upon surrender of their certificates therefor)
shall terminate. If funds legally available for such purpose are not sufficient
for redemption of the shares of Series B Cumulative Convertible Preferred Stock
to be redeemed, then the certificates representing such shares shall be deemed
not to be surrendered, such shares shall remain outstanding and the rights of
holders of shares of Series B Cumulative Convertible Preferred Stock thereafter
shall continue to be only those of a holder of shares of the Series B Cumulative
Convertible Preferred Stock.
(d) Except as provided in Section 7, the shares of Series B
Cumulative Convertible Preferred Stock shall not be subject to the operation of
any mandatory purchase, retirement or sinking fund.
7. Mandatory Repurchase and Repurchase at Option of the Holder.
(a) On the eighth anniversary of the Original Issue Date, the
Corporation shall purchase from each holder of shares of Series B Cumulative
Convertible Preferred Stock one-third of the number of shares of the Series B
Cumulative Convertible Preferred Shares held by such holder on such eighth
anniversary. On the ninth anniversary of the Original Issue Date, the
Corporation shall purchase from each holder of shares of Series B Cumulative
Convertible Preferred Stock one-half of the number of shares of the Series B
Cumulative Convertible Preferred Shares held by such holder on such ninth
anniversary. On the tenth anniversary of the Original Issue Date, the
Corporation shall purchase from each holder of shares of Series B Cumulative
Convertible Preferred Stock the number of shares of the Series B Cumulative
Convertible Preferred Shares held by such holder on such tenth anniversary.
Repurchases made pursuant to this Section 7(a) shall be effected on such
anniversary date (or such other day as the holder and the Corporation may agree)
and shall be for the Redemption Price (defined below in Section 7(b)) plus an
amount in cash equal to the accrued and unpaid dividends thereon, whether or not
authorized or declared, to but excluding the date fixed for repurchase. Any
shares of Series B Cumulative Convertible Preferred Stock which would have
accrued but have not been paid on any shares tendered for purchase shall be
deemed to be tendered for purchase.
(b) (i) If one or more Special Defaults shall occur
at any time or from time to time on or after the Original Issue Date, each
holder of
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shares of the Series B Cumulative Convertible Preferred Stock shall have the
right, at such holder's option exercisable at any time within 120 days after the
happening of each such Special Default, to require the Corporation to purchase
all or any part of the shares of Series B Cumulative Convertible Preferred Stock
then held by such holder as such holder may elect at the Redemption Price
(defined below) plus, in each case, an amount in cash equal to the accrued and
unpaid dividends thereon, whether or not authorized or declared, to but
excluding the date fixed for redemption. Any shares of Series B Cumulative
Convertible Preferred Stock which would have accrued but have not been paid on
any shares tendered for purchase shall be deemed to be tendered for purchase.
The "Redemption Price" shall be the Liquidation Preference where there have been
no Special Defaults, and -- after there has been one or more Special Defaults --
shall be 130% of the greater of the Liquidation Preference or the market value
of the Common Stock (valued at the average of the Closing Prices on the
preceding twenty (20) trading days immediately prior to the occurrence of the
Special Default) into which the Series B Cumulative Convertible Preferred Stock
would then be convertible assuming such shares to be immediately convertible
(whether or not such shares were then actually convertible);
(ii) A "Special Default" shall mean any of the
following events which occur after the Original Issuance Date and while any
shares of the Series B Cumulative Convertible Preferred Stock are outstanding:
(1) the disbanding or other restructuring, reorganization, or
reconstitution (including without limitation change in the number of
members) of the Executive Committee of the Board without the prior
written approval of a majority of the members of the Executive
Committee who were members prior to such change (and, for so long as
the holders of the Series B Cumulative Convertible Preferred Stock
shall have the right to designate more than one director to the
Executive Committee pursuant to Section 13(b) below, including the
members so designated by the holders of the Series B Cumulative
Convertible Preferred Stock);
(2) the taking of any of the following actions by the
Corporation or the Board without the approval of a majority of the
members of the Executive Committee of the Board (whether or not such
action was taken by the Board in view of its fiduciary duties pursuant
to the last sentence of Section 3.3(A) of the By-Laws of the
Corporation, as amended): (A) any borrowing or guarantee by the
Corporation exceeding $15 million, (B) except for issuance of stock or
stock options pursuant to the Corporation's incentive compensation
plans or programs, any issuance of stock (whether common or preferred,
whether voting or non-voting, whether junior, pari passu, or senior to
the Series B Cumulative Convertible Preferred Stock) other than
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Common Stock of the Corporation in an aggregate amount not
exceeding five percent (5%) of the Common Stock of the Corporation
issued and outstanding on the Original Issue Date, (C) any strategic
alliance (other than a construction joint venture) involving a capital
commitment by the Corporation exceeding $5 million, (D) any asset sale
by the Corporation or lease as lessor exceeding $5 million (other than
equipment dispositions in the normal course of business); (E) any
redemption or amendment of the Rights (defined below) or the preferred
stock of the Corporation issuable upon the exercise of such Rights, or
any amendment of the Rights Agreement (defined below), and (F) any
termination of (other than a termination upon expiration) or amendment
to the management agreement among the Corporation, Ronald Tutor and
Tutor-Saliba Corporation; provided, however, that for purposes of this
Section 8(b)(ii)(2), approval of the Executive Committee shall not be
required for any decision by the Board of Directors to redeem the
Series B Cumulative Convertible Preferred Stock pursuant to Section
6(a);
(3) any change by the Corporation in the composition of the
Executive Committee of the Board which results in members of such
Committee selected by the holders of the Series B Cumulative
Convertible Preferred Stock pursuant to Section 13(b) below being fewer
than the number of directors that the holders of the Series B
Cumulative Convertible Preferred Stock are then entitled to designate
pursuant to that provision or the failure of the Corporation to
nominate for director the persons designated by the holders of the
Series B Cumulative Convertible Preferred Stock in accordance with
Section 13(a) below; or
(4) solely for purposes of the right to elect additional
directors pursuant to Section 9(b) and not for purposes of any other
Section, the failure of the Corporation to authorize, declare, and pay
dividends payable in Series B Cumulative Convertible Preferred Stock
when due in accordance with Section 3.
(c) The date fixed for each such repurchase shall be (x) the
anniversary of the Original Issue Date immediately succeeding the notice given
pursuant to Section 7(a), or (y) the 121st day following the occurrence of the
Special Default giving rise to a repurchase pursuant to Section 7(b). The place
of payment shall be at an office or agency in Boston, Massachusetts fixed
therefor by the Corporation or, if not fixed, at the principal executive office
of the Corporation.
(d) The Corporation shall, within 20 days of the occurrence of
a Special Default, give a written notice thereof by registered or certified
mail, postage prepaid, return receipt requested, to the holders of record of
shares of the Series B Cumulative Convertible Preferred Stock, addressed to
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such holders at their last addresses as shown upon the stock transfer books of
the Corporation. Each such notice shall specify the Special Default which has
occurred and the date of such occurrence, the place or places of payment, the
then effective conversion price pursuant to Section 8, the then effective
repurchase price and the date the right of such holder to require such
repurchase shall terminate. Any notice that is mailed as herein provided shall
be conclusively presumed to have been duly given, whether or not the holder of
shares of Series B Cumulative Convertible Preferred Stock receives such notice;
and failure to give such notice by mail, or any defect in such notice, to the
holders of any shares shall not affect the validity of the proceedings for the
repurchase of any other shares of Series B Cumulative Convertible Preferred
Stock.
(e) (i) On the date fixed for any such repurchase, each holder
of shares of Series B Cumulative Convertible Preferred Stock who elects to have
shares of Series B Cumulative Convertible Preferred Stock held by it purchased
shall surrender the certificate representing such shares to the Corporation at
the place designated in such notice together with an election to have such
purchase made and shall thereupon be entitled to receive payment therefor
provided in this Section 7. If less than all the shares represented by any such
surrendered certificate are repurchased, a new certificate shall be issued
representing the unpurchased shares. Dividends with respect to the shares of
Series B Cumulative Convertible Preferred Stock so purchased shall cease to
accrue after the date so purchased, such shares shall no longer be deemed
outstanding after such date and the holders thereof shall cease to be
stockholders of the Corporation and all rights whatsoever with respect to the
shares so purchased shall terminate.
(ii) If the funds legally available for such purchase are not
sufficient to purchase all the shares of Series B Cumulative Convertible
Preferred Stock tendered to the Corporation for purchase, the Corporation shall
purchase the greatest number of whole shares for which such funds are so
available on a pro rata basis among all tendering holders based on the ratio of
the number of shares tendered by each of them to the aggregate amount of all
shares so tendered, and the certificates representing the unpurchased shares
shall be deemed not to be surrendered for repurchase, such unpurchased shares
shall remain outstanding and the rights of the holders of shares of Series B
Cumulative Convertible Preferred Stock thereafter shall continue to be those of
a holder of shares of the Series B Cumulative Convertible Preferred Stock;
provided, however, the Corporation shall thereafter be required to repurchase
all such remaining shares at the first date it has sufficient funds legally
available for such purpose at the price it would have paid at the date such
shares were actually tendered and the Corporation shall give notice as aforesaid
to each holder whose shares were not repurchased for such reason and such holder
shall
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thereafter have the right to elect to have such shares repurchased, such
election to be made within 30 days of receipt of such notice. For purposes of
this Section, the Corporation shall be deemed not to have sufficient funds
legally available for any such purchase if the Board of Directors reasonably
determines that immediately after such repurchase the Corporation would be
insolvent.
(iii) For so long as there remain shares of Series
B Cumulative Convertible Preferred Stock that have been surrendered for
repurchase in accordance with this Section 7 that have not been so repurchased
by the Corporation:(1) the number of members of the Board of Directors shall be
increased by such number as is necessary to allow the election of the directors
specified in clause (2) of this Section, and (2) the holders of the Series B
Cumulative Convertible Preferred Stock, voting separately as a class, shall have
the right to elect an additional number of directors to the Board of Directors
such that the Designated Directors (defined below in Section 13) who are serving
on the Board of Directors, plus the directors elected by such holders voting as
a class under this clause, constitute a majority of Board. The right of the
holders of the Series B Cumulative Convertible Preferred Stock to vote for such
additional directors shall terminate when shares of the Series B Cumulative
Convertible Preferred Stock properly tendered for repurchase pursuant to this
Section 7 have been repurchased. The term of office of all directors so elected
shall terminate immediately upon the termination of the right of the holders of
the Series B Cumulative Convertible Preferred Stock to vote for such additional
directors, and the number of directors of the Board of Directors shall
immediately thereafter be reduced.
(iv) The foregoing right of the holders of the
Series B Cumulative Convertible Preferred Stock with respect to the election of
additional directors may be exercised at each annual meeting of stockholders or
at any special meeting of stockholders held for such purpose. If the right to
elect additional directors shall have accrued to the holders of the Series B
Cumulative Convertible Preferred Stock more than thirty (30) days preceding the
date established for the next annual meeting of stockholders, the President of
the Corporation shall, within five (5) days after the delivery to the
Corporation at its principal office of a written request for a special meeting
signed by the holders of at least 10% of all outstanding shares of the Series B
Cumulative Convertible Preferred Stock, call a special meeting of the holders of
the Series B Cumulative Convertible Preferred Stock to be held as promptly as
practicable after the delivery of such request for the purpose of electing such
additional directors.
(v) The holders of the Series B Cumulative
Convertible Preferred Stock voting as a class shall have the right to remove
with or without cause at any time and replace any directors such holders shall
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have elected pursuant to this Section 7 and the holders of each other class of
stock of the Corporation shall not have the right to remove any such directors.
8. Conversion.
(a) Right of Conversion. Each share of Series B Cumulative
Convertible Preferred Stock, whether issued originally or in-kind as a dividend
payment, shall be convertible at the option of the holder thereof, at any time
(provided, however, that where the Corporation has elected to redeem such stock,
the option of the holder described in this section must be exercised prior to
the close of business on the business day prior to the date fixed for redemption
of such share as herein provided), into fully paid and nonassessable shares of
Common Stock and such other securities and property as hereinafter provided, at
the rate of that number of shares of Common Stock for each full share of Series
B Cumulative Convertible Preferred Stock that is equal to the Liquidation
Preference plus an amount in cash equal to the accrued and unpaid dividends
thereon, whether or not authorized or declared, divided by the conversion price
applicable per share of Common Stock. For purposes of this Section 8(a), the
"conversion price" applicable per share of Common Stock shall initially be equal
to Nine Dollars and Sixty-Eight and Two-Hundred Nineteen One-Thousandths Cents
($9.68219), and shall be adjusted from time to time to the nearest
one-thousandth of a cent after the Original Issue Date in accordance with the
provisions of this Section 8.
(b) Conversion Procedures.
(i) Any holder of shares of Series B Cumulative
Convertible Preferred Stock desiring to convert such shares into Common Stock
shall surrender the certificate or certificates representing such shares of
Series B Cumulative Convertible Preferred Stock at the office of the transfer
agent for the Series B Cumulative Convertible Preferred Stock, which certificate
or certificates, if the Corporation shall so require, shall be duly endorsed to
the Corporation or in blank, or accompanied by proper instruments of transfer to
the Corporation or in blank, accompanied by irrevocable written notice to the
Corporation that the holder elects so to convert such shares of Series B
Cumulative Convertible Preferred Stock and specifying the name or names (with
address or addresses) in which a certificate or certificates evidencing shares
of Common Stock are to be issued.
(ii) Subject to Section 8(k) hereof, no payments or
adjustments in respect of dividends on shares of Series B Cumulative Convertible
Preferred Stock surrendered for conversion or on account of any dividend on the
Common Stock issued upon conversion shall be made upon the conversion of any
shares of Series B Cumulative Convertible Preferred Stock.
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(iii) The Corporation shall, as soon as practicable after
such deposit of certificates representing shares of Series B Cumulative
Convertible Preferred Stock accompanied by the written notice and compliance
with any other conditions herein contained, deliver at such office of the
transfer agent to the person for whose account such shares of Series B
Cumulative Convertible Preferred Stock were so surrendered or to the nominee or
nominees of such person certificates representing the number of full shares of
Common Stock to which such person shall be entitled as aforesaid, together with
a cash adjustment in respect of any fraction of a share of Common Stock as
hereinafter provided. Subject to the following provisions of this paragraph,
such conversion shall be deemed to have been made as of the date of such
surrender of the shares of Series B Cumulative Convertible Preferred Stock to be
converted, and the person or persons entitled to receive the Common Stock
deliverable upon conversion of such Series B Cumulative Convertible Preferred
Stock shall be treated for all purposes as the record holder or holders of such
Common Stock on such date.
(c) Adjustment of Conversion Price. The conversion price at
which a share of Series B Cumulative Convertible Preferred Stock is convertible
into Common Stock shall be subject to adjustment from time to time as follows:
(i) (1) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock exclusively in Common Stock
or shall pay or make a dividend or other distribution on any other class of
stock of the Corporation which dividend or distribution includes Common Stock or
shall exchange outstanding Rights (as defined in Section 8(j) hereof) for shares
of Common Stock, the conversion price in effect at the opening of business on
the day following the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution or to exchange such Rights shall
be reduced by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares constituting
such dividend or other distribution or exchange, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination.
(2) In case the Corporation shall issue or
otherwise sell or distribute shares of Common Stock for a consideration per
share in cash or property less than the most recent Closing Price prior to the
time of such issuance (and, if shares are issued, sold, or distributed pursuant
to the exercise or conversion of options, warrants, convertible securities, or
other rights, the exercise or conversion price thereof when such options,
warrants,
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convertible securities, or rights were granted or issued was less than the
Closing Price (defined below in Section 8(h) at the time of issuance of such
options, warrants, convertible securities, or other rights), the conversion
price then in effect shall be reduced by multiplying such conversion price by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately prior to such issuance, sale or distribution plus the
number of shares of Common Stock which the aggregate consideration received by
the Corporation for such issuance, sale or distribution (such consideration, if
other than cash, as determined by the Board of Directors, whose determination
shall be conclusive and described in a vote of the Board of Directors) would
purchase at the current market price per share and the denominator shall be the
number of shares of Common Stock outstanding immediately after giving effecting
to such issuance, sale or distribution.
(ii) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock consisting exclusively of, or
shall otherwise issue to all or substantially all holders of its Common Stock,
rights or warrants entitling the holders thereof to subscribe for or purchase
shares of Common Stock at a price per share less than the then current market
price per share (determined as provided in subparagraph (vii) of this Section
8(c)) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, the conversion price
in effect at the opening of business on the day following the date fixed for
such determination shall be reduced by multiplying such conversion price by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. In case any rights or warrants referred to in
this subparagraph (ii) in respect of which an adjustment shall have been made
shall expire unexercised, the conversion price shall be readjusted at the time
of such expiration to the conversion price that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants. For the purposes of this Section 8(c)(ii), if both a
Distribution Date and a Section 11(a)(ii) Event (as such terms are defined in
the Rights Agreement by and between the Corporation and the First National Bank
at Boston, dated as of September 23, 1988, as amended (the "Rights Agreement"))
shall have occurred, then the later to occur of such events shall
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be deemed to constitute an issuance of rights to purchase shares of Common
Stock.
(iii) In case outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common Stock, the conversion
price in effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the conversion price in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such reduction
or increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.
(iv) (1) In case the Corporation shall, by dividend
or otherwise, make a Section 8(c)(iv) Distribution (defined below in Section
8(h)) to all or substantially all holders of its Common Stock, the conversion
price shall be reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately following the close of
business on the Determination Date (as defined in Section 8(h)) by a fraction of
which the numerator shall be the current market price per share (determined as
provided in subparagraph (vii) of this Section 8(c)) of the Common Stock on the
Determination Date less the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors), on the date of such effectiveness, of the portion of
the Section 8(c)(iv) Distribution so distributed applicable to one share of
Common Stock and the denominator shall be such current market price per share of
the Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following the Determination Date. If the Board of
Directors so determines as aforesaid the fair market value of any distribution
for purposes of this subparagraph (iv) by reference to the actual or when-issued
trading market for any securities comprising such distribution, it must in doing
so consider the prices in such market over the same period used in computing the
current market price per share of Common Stock pursuant to subparagraph (vii) of
this Section 8(c).
(2) Notwithstanding the foregoing, if the
Corporation elects to reserve, for distribution to the holders of the Series B
Cumulative Convertible Preferred Stock upon the conversion of the shares of
Series B Cumulative Convertible Preferred Stock, the evidences of the
Corporation's indebtedness, shares of any class of stock, or assets that would
have been distributed to the holders of the Series B Cumulative Convertible
Preferred Stock if they had converted their shares into shares of Common Stock
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so that any such holder converting shares of Series B Cumulative Convertible
Preferred Stock will receive upon such conversion, in addition to the shares of
the Common Stock to which such holder is entitled, the amount and kind of such
evidences of the Corporation's indebtedness, shares of any class of stock, or
assets which such holder would have received if such holder had, immediately
prior to the Determination Date for such distribution of securities, converted
its shares of Series B Cumulative Convertible Preferred Stock into Common Stock,
the fair market value of the securities shall, for purposes of this subparagraph
(iv), be deemed to be zero.
(v) Subject to the last sentence of this subparagraph
(v), in case the Corporation shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (excluding any cash
representing an amount per share of capital stock of the Corporation to the
extent such cash does not constitute an Extraordinary Equity Payment), the
conversion price shall be reduced so that the same shall equal the price
determined by multiplying the conversion price in effect immediately prior to
the effectiveness of the conversion price reduction contemplated by this
subparagraph (v) by a fraction of which the numerator shall be the current
market price per share (determined as provided in subparagraph (vii) of this
Section 8(c)) of the Common Stock on the Determination Date less the amount of
cash so distributed and not excluded as above provided applicable to one share
of Common Stock and the denominator shall be such current market price per share
of the Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following the Determination Date. Notwithstanding
the foregoing, if the Corporation elects to reserve the cash to be distributed
for distribution to the holders of the Series B Cumulative Convertible Preferred
Stock upon the conversion of the shares of Series B Cumulative Convertible
Preferred Stock so that any such holder converting shares of Series B Cumulative
Convertible Preferred Stock will receive upon such conversion, in addition to
the shares of the Common Stock to which such holder is entitled, the amount of
cash which such holder would have received if such holder had, immediately prior
to the Determination Date for such distribution of cash, converted its shares of
Series B Cumulative Convertible Preferred Stock into Common Stock, then the
conversion price shall not be so reduced.
(vi) In case a tender or exchange offer made by the
Corporation or any subsidiary of the Corporation for all or any portion of the
Corporation's Common Stock shall expire and such tender or exchange offer shall
involve the payment by the Corporation or such subsidiary of consideration per
share of Common Stock having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors) at the last time (the
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"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the current market
price per share (determined as provided in subparagraph (vii) of this Section
8(c)) of the Common Stock on the Trading Day next succeeding the Expiration
Time, the conversion price shall be reduced so that the same shall equal the
price determined by multiplying the conversion price in effect immediately prior
to the Expiration Time by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding (including any tendered or exchanged
shares) on the Expiration Time multiplied by the current market price per share
(determined as provided in subparagraph (vii) of this Section 8(c)) of the
Common Stock on the Trading Day next succeeding the Expiration Time and the
denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) on the Expiration
Time and the current market price per share (determined as provided in
subparagraph (vii) of this Section 8(c)) of the Common Stock on the Trading Day
next succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the Expiration
Time.
(vii) For purposes of any computation under this
section, the current market price per share of Common Stock on any date shall be
deemed to be the volume-weighted average trading price of the Common Stock for
the five-day period before the earlier of the day in question and the "ex" date
with respect to any issuance or distribution requiring such computation;
provided, however, that for purposes of clause (3) of this paragraph, the
current market price per share shall be deemed to be the volume- weighted
average trading price of the Common Stock for the five-day period after the "ex
date." For purposes of this subparagraph (vii), the term "ex" date, (1) when
used with respect to any issuance or distribution, means the first date on which
the Common Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to receive
such issuance or distribution, (2) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which the Common
Stock trades regular way on such exchange or in such market after the time at
which such subdivision or combination becomes effective, and (3) when used with
respect to any tender or exchange offer, means the first date on which the
Common Stock trades regular way on such exchange or in such market after the
Expiration Time of such offer.
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(viii) The Corporation may make such reductions in the
conversion price, in addition to those required by subparagraphs (i), (ii),
(iii), (iv), (v) and (vi) of this Section 8(c), as it considers to be advisable
to avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes.
(ix) No adjustment in the conversion price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in the conversion price; provided, however, that any adjustments which
by reason of this subparagraph (ix) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
(x) Notwithstanding any other provision of this
Section 8 and without implication that the contrary would otherwise be true, no
issuance, dividend or distribution requiring adjustment of the conversion price
pursuant to Section 8(c) hereof shall be deemed to have occurred in the event
that, upon, following or in connection with the redemption or expiration of the
Rights or the termination of the Rights Agreement or otherwise, the Corporation
enters into a new agreement that is comparable in purpose and effect to the
Rights Agreement (as determined by the Board of Directors, whose determination
shall be conclusive) and distributes rights to purchase Preferred Stock (or
other similar stock purchase rights under such agreement that are attached to
the Common Stock) to the holders of Common Stock.
(xi) Whenever the conversion price is adjusted as
herein provided:
(1) the Corporation shall compute the adjusted conversion
price and shall prepare a certificate signed by the
Treasurer of the Corporation setting forth the
adjusted conversion price and showing in reasonable
detail the acts upon which such adjustment is based,
and such certificate shall forthwith be filed with
the transfer agent for the Series B Cumulative
Convertible Preferred Stock; and
(2) a notice stating the conversion price has been
adjusted and setting forth the adjusted conversion
price shall forthwith be required, and as soon as
practicable after it is required, such notice shall
be mailed by the Corporation to all record holders of
shares of Series B Cumulative Convertible Preferred
Stock at their last addresses as they shall appear
upon the stock transfer books of the Corporation.
(d) No Fractional Shares. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon conversion
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of Series B Cumulative Convertible Preferred Stock. If more than one certificate
representing shares of Series B Cumulative Convertible Preferred Stock shall be
surrendered for conversion at one time by the same holder, the number of full
shares issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Series B Cumulative Convertible Preferred Stock so
surrendered. Instead of any fractional share of Common Stock that would
otherwise be issuable upon conversion of any shares of Series B Cumulative
Convertible Preferred Stock, the Corporation shall pay a cash adjustment in
respect of such fractional interest in an amount equal to the same fraction of
the market price per share of Common Stock (as determined by the Board of
Directors or in any manner prescribed by the Board of Directors, which, so long
as the Common Stock is listed on the Primary Exchange, shall be the reported
last sale price regular way on the Primary Exchange) at the close of business on
the day of conversion.
(e) Reclassification, Consolidation, Merger, or Sale of
Assets. If any capital reorganization or reclassification of the capital stock
of the Corporation, or consolidation or merger of the Corporation with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, cash or other property with respect to
or in exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holders of the Series B Cumulative Convertible
Preferred Stock shall have the right to acquire and receive upon conversion of
the Series B Cumulative Convertible Preferred Stock, which right shall be pari
passu with the rights of holders of Parity Dividend Stock and senior to the
rights of the holders of Junior Dividend Stock and Junior Liquidation Stock (but
after and subject to the rights of holders of Senior Dividend Stock and Senior
Liquidation Stock, if any), such shares of stock, securities, cash or other
property issuable or payable (as part of the reorganization, reclassification,
consolidation, merger or sale) with respect to or in exchange for such number of
outstanding shares of Common Stock as would have been received upon conversion
of the Series B Cumulative Convertible Preferred Stock at the conversion price
then in effect, whether or not such stock is then convertible. The Corporation
will not effect any such consolidation, merger or sale, unless prior to the
consummation thereof the successor corporation (if other than the Corporation)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument in reasonable and customary form
mailed or delivered to the holders of the Series B Cumulative Convertible
Preferred Stock at the last address of each such holder appearing on the books
of the Corporation, the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase.
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(f) Reservation of Shares; Transfer Taxes; Etc.
(i) The Corporation shall at all times reserve and keep
available, out of its authorized and unissued stock,
solely for the purpose of effecting the conversion of
the Series B Cumulative Convertible Preferred Stock,
such number of shares of its Common Stock or Common
Stock free of preemptive rights as shall from time to
time be sufficient to effect the conversion of all
shares of Series B Cumulative Convertible Preferred
Stock from time to time outstanding. The Corporation
shall from time to time, in accordance with the laws
of the State of Massachusetts, increase the number of
authorized shares of Common Stock if at any time the
number of shares of authorized and unissued Common
Stock shall not be sufficient to permit the
conversion of all the then outstanding shares of
Series B Cumulative Convertible Preferred Stock.
(ii) If any shares of Common Stock required to be reserved
for purposes of conversion of the Series B Cumulative
Convertible Preferred Stock hereunder require
registration with or approval of any governmental
authority under any Federal or State law before such
shares may be issued upon conversion, the Corporation
will in good faith and as expeditiously as possible
endeavor to cause such shares to be duly registered
or approved, as the case may be. If the Common Stock
is listed on the American Stock Exchange or any other
national securities exchange or national quotation
service, the Corporation will list and keep listed on
such exchange, upon official notice of issuance, all
shares of Common Stock issuable upon conversion of
the shares of Series B Cumulative Convertible
Preferred Stock.
(iii) The Corporation shall pay any and all issue or other
taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of
the Series B Cumulative Convertible Preferred Stock.
The Corporation shall not, however, be required to
pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of Common
Stock (or other securities or assets) in a name other
than that in which the shares of Series B Cumulative
Convertible Preferred Stock so converted were
registered, and no such issue or delivery shall be
made unless and until the person requesting such
issue has paid to the Corporation the amount of such
tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.
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(g) Prior Notice of Certain Events. In case:
(i) the Corporation shall declare or authorize a
redemption or repurchase of in excess of five percent
of the then outstanding shares of Common Stock; or
(ii) the Corporation shall authorize the granting to all
holders of Common Stock of rights or warrants to
subscribe for or purchase any shares of stock of any
class or of any other rights or warrants (other than
pursuant to the Rights Agreement or, following the
redemption or expiration of the Rights or the
termination of the Rights Agreement, any new
shareholder rights agreement that is comparable in
purpose and effect to the Rights Agreement); or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common
Stock, or a change in par value, or from par value to
no par value, or from no par value to par value), or
of any consolidation or merger to which the
Corporation is a party and for which approval of any
stockholders of the Corporation shall be required, or
of the sale or transfer of all or substantially all
of the assets of the Corporation or of any compulsory
share exchange whereby the Common Stock is converted
into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Series B Cumulative Convertible Preferred Stock, and shall cause to be mailed to
the holders of record of the Series B Cumulative Convertible Preferred Stock, at
their last addresses as they shall appear upon the stock transfer books of the
Corporation, at least fifteen days prior to the applicable record date
hereinafter specified, a notice stating, as the case may be, (x) the record date
(if any) for the purpose of such dividend, distribution, redemption, repurchase
or granting of rights or warrants or, if no record date is to be set, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distribution, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up is expected to
become effective, and the date, if any, as of which it is expected that holders
of shares of Common Stock of record shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the
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mailing thereof shall affect the validity of the corporate action required to be
specified in such notice).
(h) Definitions. The following definitions shall apply to
terms used in this Section 8:
(i) "Closing Price" on any day shall mean the closing
sale price regular way on such day or, in case no
such sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in
each case on the Primary Exchange, or, if not quoted
or listed or admitted to trading on any national
securities exchange or quotation system, the average
of the closing bid and asked prices of the Common
Stock on the over-the-counter market on the day in
question as reported by the National Quotation Bureau
Incorporated, or a similarly generally accepted
reporting service, or if not so available in such
manner, as furnished by any American Stock Exchange
member firm selected from time to time by the Board
of Directors of the Corporation for that purpose.
(ii) "Determination Date" shall mean, with respect to any
dividend, distribution or other transaction or event
in which the holders of Common Stock have the right
to receive any cash, securities or other property or
assets or in which the Common Stock (or other
applicable security) is exchanged for or converted
into any combination of cash, securities or other
property, the date fixed for determination of
stockholders entitled to receive such cash,
securities or other property or assets (whether such
date is fixed by the Board of Directors or by
statute, contract or otherwise).
(iii) "Extraordinary Equity Payment" shall mean:
(1) the declaration or payment on or after the
Original Issue Date by the Corporation, or
any of its subsidiaries of any dividend or
distribution on any class or series of its
stock other than:
(A) any dividend or distribution from one
subsidiary of the Corporation to a wholly-owned
subsidiary of the Corporation or from a subsidiary of
the Corporation to the Corporation; provided that all
of such dividend paid or distribution made, net of
applicable withholding taxes, is received by the
Corporation, or such recipient subsidiary;
(B) any regularly scheduled (whether or not
overdue) periodic cash dividend on the $21.25
Preferred Stock and Series B Cumulative Convertible
Preferred Stock in accordance with the terms thereof
as in effect on the Original Issue Date;
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(C) any cash dividends on the Common Stock
or other capital stock after September 1, 2001 that
do not exceed in aggregate more than twenty-five
percent (25%) of the Corporation's consolidated net
income available for distribution to common
shareholders (after preferred dividends); provided,
however, that the Corporation shall have elected, for
the preceding four fiscal quarters, to pay cash
dividends on the Series B Cumulative Convertible
Preferred Stock and shall have paid in full such
dividends in cash when due;
(2) any repurchases, redemptions, retirements or
other acquisitions directly or indirectly by
the Corporation or any of its subsidiaries
on or after the Original Issue Date of any
stock of the Corporation or any of its
subsidiaries (other than a wholly-owned
subsidiary) (other than redemptions or
repurchases of the Series B Cumulative
Convertible Preferred Stock in accordance
with Sections 6 and 7).
(iv) "Fundamental Change" shall mean the occurrence of any
transaction or event in connection with a plan or agreement to which,
in either case, the Corporation is a party pursuant to which all or
substantially all of the shares of Common Stock shall be exchanged for,
converted into, acquired for or constitute solely the right to receive
cash, securities, property or other assets (whether by means of an
exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise);
provided, however, in the case of a plan involving more than one such
transaction or event, for purposes of adjustment of the conversion
price, such Fundamental Change shall be deemed to have occurred when
substantially all of the shares of Common Stock of the Corporation
shall be exchanged for, converted into or acquired for or constitute
solely the right to receive cash, securities, property or other assets,
but the adjustment shall be based upon the consideration which the
holders of Common Stock received in such transaction or event as a
result of which more than 50% of the shares of Common Stock of the
Corporation shall have been exchanged for, converted into, or acquired
for or constitute solely the right to receive cash, securities,
property or other assets; provided, further, that such term does not
include (i) any such transaction or event in which the Corporation
and/or any of its subsidiaries are the issuers of all the cash,
securities, property or other assets exchanged, acquired or otherwise
issued in such transaction or event, or (ii) any such transaction or
event in which the holders of Common Stock receive securities of an
issuer other than the Corporation if, immediately following such
transaction or event, such holders hold a majority of the securities
having the power to vote normally in the election of directors of such
other issuer outstanding immediately following such transaction or
other event.
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(v) "Section 8(c)(iv) Distribution" shall mean
evidences of the Corporation's indebtedness, shares of any class of stock, or
assets, including securities, but excluding any rights or warrants referred to
in subparagraph (ii) of Section 8(c), excluding any dividend or distribution
paid in cash, and excluding any dividend or distribution referred to in
subparagraph (i) of Section 8(c).
(vi) "Trading Day" shall mean a day on which the
national securities exchange or the NASDAQ National Market System used to
determine the Closing Price is open for the transaction of business or the
reporting of trades.
(i) Dividend or Interest Reinvestment Plans. Notwithstanding
the foregoing provisions, the issuance of any shares of Common Stock pursuant to
any plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional amounts
in shares of Common Stock under any such plan, and the issuance of any shares of
Common Stock or options or rights to purchase such shares pursuant to any
employee benefit plan or program of the Corporation or pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security issued or
outstanding on the Original Issue Date (except as expressly provided in Section
8(c)(i) or 8(c)(ii) with respect to certain events under the Rights Agreement),
and any issuance of Rights (defined below) or other rights referred to in
Section 8(c)(x), shall not be deemed to constitute an issuance of Common Stock,
options, warrants, rights, or exercisable, exchangeable or convertible
securities by the Corporation or any of its subsidiaries to which any of the
adjustment provisions described above in this Section 8 applies. There shall
also be no adjustment of the conversion price in case of the issuance of any
stock (or options, warrants, rights, or securities convertible into or
exchangeable or exercisable for stock) of the Corporation except as specifically
described in this Section 8. If any action would require adjustment of the
conversion price pursuant to more than one of the provisions described above,
only one adjustment shall be made and such adjustment shall be the amount of
adjustment which has the highest absolute value to the holders of Series B
Cumulative Convertible Preferred Stock.
(j) Preferred Share Purchase Rights. So long as Preferred
Share Purchase Rights, of the kind authorized and declared on September 23, 1988
and distributed by the Corporation in September 1988 as the same have been and
may hereafter be amended ("Rights"), are attached to the outstanding shares of
Common Stock of the Corporation, each share of Common Stock issued upon
conversion of the shares of Series B Cumulative Convertible Preferred Stock
prior to the earliest of any Distribution Date (as defined in the Rights
Agreement), the date of redemption of the Rights or the date of
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expiration of the Rights shall be issued with Rights in an amount equal to the
amount of Rights then attached to each such outstanding share of Common Stock.
(k) Certain Additional Rights. In case the Corporation shall,
by dividend or otherwise, authorize, declare or make a distribution on its
Common Stock referred to in Section 8(c)(iv) or Section 8(c)(v), the holder of
each share of Series B Cumulative Convertible Preferred Stock, upon the
conversion thereof subsequent to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution and prior to
the effectiveness of the conversion price adjustment in respect of such
distribution pursuant to Section 8(c)(iv) or Section 8(c)(v), shall be entitled
to receive for each share of Common Stock into which such share of Series B
Cumulative Convertible Preferred Stock is converted, the portion of the
evidences of indebtedness, shares of stock, cash and assets so distributed
applicable to one share of Common Stock; provided, however, that, at the
election of the Corporation (whose election shall be evidenced by a vote of the
Board of Directors) with respect to all holders so converting, the Corporation
may, in lieu of distributing to such holder any portion of such distribution not
consisting of cash or securities of the Corporation, pay such holder an amount
in cash equal to the fair market value thereof (as determined by the Board of
Directors, whose determination shall be conclusive and described in a vote of
the Board of Directors). If any conversion of a share of Series B Cumulative
Convertible Preferred Stock described in the immediately preceding sentence
occurs prior to the payment date for a distribution to holders of Common Stock
which the holder of the share of Series B Cumulative Convertible Preferred Stock
so converted is entitled to receive in accordance with the immediately preceding
sentence, the Corporation may elect (such election to be evidenced by a
resolution of the Board of Directors) to distribute to such holder a due bill
for the evidences of indebtedness, shares of stock, cash or assets to which such
holder is so entitled; provided that such due bill (i) meets any applicable
requirements of the principal national securities exchange or other market on
which the Common Stock is then traded and (ii) requires payment or delivery of
such evidences of indebtedness, shares of stock, cash or assets no later than
the date of payment or delivery thereof to holders of Common Stock receiving
such distribution. The rights provided in this Section 8(k) with respect to
distribution referred to in Section 8(c)(iv) or Section 8(c)(v) shall be in lieu
of, and not in addition to, the rights accorded to holders of Series B
Cumulative Convertible Preferred Stock in those Sections.
(l) Other. Notwithstanding any other provision in this Section
8 to the contrary, if the Corporation shall, by dividend or otherwise,
authorize, declare or make a distribution on its Common Stock referred to in
Section 8(c)(iv) and such distribution shall include shares of stock of one or
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more corporations that immediately prior to such distribution was or would have
been a subsidiary (a "Spin-Off"), the holder of each share of Series B
Cumulative Convertible Preferred Stock shall be entitled to receive its pro rata
share of the securities distributed in the Spin-Off as if such holder had been
the holder of record of the number of shares of Common Stock into which the
Series B Cumulative Convertible Preferred Stock would be convertible (but for
any restrictions on convertibility contained in this Certificate of Vote) as of
the record date for such distribution. The rights provided in this Section 8(l)
with respect to Spin-Offs shall be in lieu of, and not in addition to, the
rights accorded to holders of Series B Cumulative Convertible Preferred Stock
with respect to Spin-Offs in Section 8(c)(iv).
9. Voting Rights.
(a) General. The holders of shares of Series B Cumulative
Convertible Preferred Stock shall each initially have Twenty and Sixty-Five
Thousand Six Hundred and Forty-Eight Hundred-Thousandths (20.65648) votes for
each share held, which such shares shall be voted as a class with the holders of
the Common Stock on all matters on which the Common Stock may vote, except as
set forth below. Upon the occurrence of any event that causes an adjustment to
the conversion price pursuant to Section 8(c), the number of votes possessed by
each share of Series B Cumulative Convertible Stock shall be adjusted such that
the number of votes possessed by each such share immediately after the event
giving rise to the adjustment under Section 8(c) shall be the number, rounded to
the nearest one-hundred thousandth, equal to the Liquidation Preference divided
by the conversion price immediately after such event. Any shares of Series B
Cumulative Convertible Preferred Stock held by the Corporation or any entity
controlled by the Corporation shall not have voting rights hereunder and shall
not be counted in determining the presence of a quorum.
(b) Special Default Voting Rights.
(i) Whenever a Special Default exists, (1) the number
of members of the Board of Directors shall be increased by such number as is
necessary to allow the election of the directors specified in clause (2), and
(2) the holders of the Series B Cumulative Convertible Preferred Stock, voting
separately as a class, shall have the right to elect an additional number of
directors to the Board of Directors such that Designated Directors selected by
the holders of the Series B Cumulative Convertible Preferred Stock, plus the
directors elected by such holders voting as a class under this clause,
constitute a majority of Board. Notwithstanding the foregoing sentence, the
holders of the Series B Cumulative Convertible Preferred Stock (voting
separately as a class) will not have the right to vote for additional directors
pursuant to this Section
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9(b) where (x) such holders have exercised their right to elect additional
directors pursuant to Section 7(e)(iii), and (y) such additional directors
continue to serve as such. The right of the holders of the Series B Cumulative
Convertible Preferred Stock to vote for such additional directors shall
terminate at the earlier to occur of (A) when such Special Default no longer
exists or (ii) two years after the election of directors pursuant to clause (2)
of the first sentence of this Section. The term of office of all directors so
elected shall terminate immediately upon the termination of the right of the
holders of the Series B Cumulative Convertible Preferred Stock to vote for such
additional directors, and the number of directors of the Board of Directors
shall immediately thereafter be reduced.
(ii) The foregoing right of the holders of the Series B
Cumulative Convertible Preferred Stock with respect to the election of
additional directors may be exercised at each annual meeting of stockholders or
at any special meeting of stockholders held for such purpose. If the right to
elect directors shall have accrued to the holders of the Series B Cumulative
Convertible Preferred Stock more than thirty (30) days preceding the date
established for the next annual meeting of stockholders, the President of the
Corporation shall, within five (5) days after the delivery to the Corporation at
its principal office of a written request for a special meeting signed by the
holders of at least 10% of all outstanding shares of the Series B Cumulative
Convertible Preferred Stock, call a special meeting of the holders of the Series
B Cumulative Convertible Preferred Stock to be held as promptly as practicable
after the delivery of such request for the purpose of electing such additional
directors.
(iii) The holders of the Series B Cumulative
Convertible Preferred Stock referred to above voting as a class shall have the
right to remove with or without cause at any time and replace any directors such
holders shall have elected pursuant to this Section 9(c) and the holders of each
other class of stock of the Corporation shall not have the right to remove any
such directors.
(c) Class Voting Rights. So long as any shares of the Series B
Cumulative Convertible Preferred Stock are outstanding, the Corporation shall
not, directly or indirectly, without the affirmative vote or consent of the
holders of at least 66 2/3% (unless a higher percentage shall then be required
by applicable law or the Corporation's Articles) of all outstanding shares of
the Series B Cumulative Convertible Preferred Stock voting separately as a
class: (i) amend, alter or repeal any provision of the Articles, Certificate of
Vote, or the bylaws of the Corporation, if such amendment, alteration or repeal
would alter the contract rights, as expressly set forth herein, of the Series B
Cumulative Convertible Preferred Stock or otherwise to adversely affect the
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rights of the holders thereof or the holders of the Common Stock, (ii) create,
authorize or issue, or amend the terms of in a manner adversely affect the
rights of the holders the Series B Cumulative Convertible Preferred Stock, or
reclassify shares of any authorized stock of the Corporation into, or increase
the authorized amount of, any Senior Dividend Stock, Senior Liquidation Stock,
Parity Dividend Stock, or Parity Liquidation Stock or any security convertible
into such senior or Parity Stock, or (iii) approve a Fundamental Change.
10. Outstanding Shares. For purposes of this Certificate of Vote, all
shares of Series B Cumulative Convertible Preferred Stock issued by the
Corporation shall be deemed outstanding except (i) from the date fixed for
redemption pursuant to Section 6 hereof, all shares of Series B Cumulative
Convertible Preferred Stock that have been so called for redemption under
Section 6, to the extent provided thereunder; (ii) from the date of surrender of
certificates representing shares of Series B Cumulative Convertible Preferred
Stock, all shares of Series B Cumulative Convertible Preferred Stock converted
into Common Stock or repurchased pursuant to Section 7 hereof; and (iii) from
the date of registration of transfer, all shares of Series B Cumulative
Convertible Preferred Stock held of record by the Corporation or any
majority-owned subsidiary of the Corporation.
11. Transfer Restrictions.
(a) Legends on Series B Cumulative Convertible Preferred Stock
and Common Stock. The certificates representing shares of Series B Cumulative
Convertible Preferred Stock shall, unless otherwise agreed by the Corporation
and the holders of any such certificates, bear a legend substantially to the
following effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE AND ANY SECURITIES ISSUABLE
UPON CONVERSION OR EXCHANGE HEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR (ii) AN APPLICABLE EXEMPTION FROM
REGISTRATION THEREUNDER. ANY SALE PURSUANT TO CLAUSE (ii) OF THE
PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO PERINI CORPORATION TO THE EFFECT THAT SUCH
EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE.
IN ADDITION, THE VOTING, SALE, ASSIGNMENT, TRANSFER, PLEDGE OR
HYPOTHECATION OF THE SHARES REPRESENTED BY
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THIS CERTIFICATE IS FURTHER SUBJECT TO RESTRIC TIONS WHICH ARE
CONTAINED IN THE RESTATED ARTICLES OF ORGANIZATION OF PERINI
CORPORATION, IN THE CERTIFICATE OF VOTE GOVERNING THESE SHARES AND IN A
STOCK PURCHASE AGREEMENT DATED AS OF JULY 24, 1996, AS AMENDED, A COPY
OF EACH OF WHICH IS ON FILE WITH PERINI CORPORATION AND WILL BE
FURNISHED BY THE CORPORATION TO THE STOCKHOLDER ON REQUEST AND WITHOUT
CHARGE."
(b) Transfer Agent Requirements. The transfer agent (which may
be the Corporation) for the Series B Cumulative Convertible Preferred Stock
shall not be required to accept for registration of transfer any shares of
Series B Cumulative Convertible Preferred Stock bearing the legend contained in
paragraph (a) above, except upon presentation of evidence satisfactory to
transfer agent that the restrictions on transfer of shares of the Series B
Cumulative Convertible Preferred Stock referred to in the legend in paragraph
(a) have been complied with, all in accordance with such reasonable regulations
as the Corporation may from time to time agree with the transfer agent for
shares of the Series B Cumulative Convertible Preferred Stock.
12. Status of Acquired Shares. Shares of Series B Cumulative
Convertible Preferred Stock redeemed or repurchased by the Corporation, received
upon conversion pursuant to Section 8 or otherwise acquired by the Corporation
will be restored to the status of authorized but unissued shares of Preferred
Stock, without designation as to class, and may thereafter be issued, but not as
shares of Series B Cumulative Convertible Preferred Stock.
13. Special Covenants.
(a) Nomination of Directors. Effective as of the Original
Issue Date, the Corporation shall elect to the board of directors three
directors designated by the holders of such stock (such directors, together with
their replacements as provided below, the "Designated Directors"), one of whom
shall be a Class I director, one of whom shall be a Class II director, and one
of whom shall be a Class III director. The holders of a majority of the Series B
Cumulative Convertible Preferred Stock shall designate the classes of such
initial Designated Directors.
(i) In the event that any Designated Director shall
resign, be unable to serve, or be removed (a "Replaced Designated Director"),
the holders of a majority of the Series B Cumulative Convertible Preferred Stock
shall have the right to designate a replacement to serve as Designated
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Director until the next meeting of shareholders at which directors of the same
class as the Replaced Designated Director are elected. Any Designated Director
may be removed from the Board, with or without cause, by the holders of a
majority of the Series B Cumulative Convertible Preferred Stock.
(ii) Except as provided below, at any time when the
term of a Designated Director shall have ended and there shall be a meeting of
shareholders of the Corporation to elect directors, the Corporation shall
nominate for election to the board of directors, as a successor to any
Designated Director serving pursuant to Section 13(a) or clause (i) of such
provision, such person as is designated to be a Designated Director by the
holders of a majority of the Series B Cumulative Convertible Preferred Stock.
(iii) In the event that the holders of the Series B
Cumulative Convertible Preferred Stock dispose of such stock or Conversion
Shares (defined below) representing more than sixty-six and two-thirds percent
(66-2/3%) and less than or equal to eighty percent (80%) of the voting power of
the Series B Cumulative Convertible Preferred Stock issued on the Original Issue
Date (plus any payment-in-kind dividends paid thereon), the number of Designated
Directors shall be reduced to two. If there are then more than two Designated
Directors serving on the board, the holders of a majority of the Series B
Cumulative Convertible Preferred Stock shall remove one such Designated Director
and the holders of such stock shall not have any right, pursuant to clause (ii)
or otherwise, to cause the Corporation to nominate a designated successor to
such removed director.
(iv) In the event that the holders of the Series B
Cumulative Convertible Preferred Stock dispose of such stock or Conversion
Shares representing more than eighty percent (80%) and less than or equal ninety
percent (90%) of the voting power of the Series B Cumulative Convertible
Preferred Stock issued on the Original Issue Date (plus any payment-in-kind
dividends paid thereon), the number of Designated Directors shall be reduced to
one. If there is then more than one Designated Director serving on the board,
the holders of a majority of the Series B Cumulative Convertible Preferred Stock
shall remove all but one such Designated Director and the holders of such stock
shall not have any right, pursuant to clause (ii) or otherwise, to cause the
Corporation to nominate a designated successor to such removed director(s).
(v) In the event that the holders of the Series B
Cumulative Convertible Preferred Stock dispose of such stock or Conversion
Shares representing more than ninety percent (90%) of the voting power of the
Series B Cumulative Convertible Preferred Stock issued on the Original Issue
Date (plus any payment-in-kind dividends paid thereon), there shall be no
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Designated Directors and any Designated Directors then serving on the board
shall be removed, and their terms in office shall immediately expire, without
any further action of the holders of such stock.
(vi) The right to nominate directors pursuant to this
provision is in addition to, and not in limitation of, any other rights and
powers of the Series B Cumulative Convertible Preferred Stock. Directors
nominated by the holders of the Series B Cumulative Convertible Preferred Stock
in their capacity as holders of capital stock of the Corporation and not
pursuant to clause (i), (ii), or (iii) above are not Designated Directors for
purposes of this Certificate of Vote.
(vii) The vote of the holders of Series B Cumulative
Convertible Preferred Stock referred to in this Section may be exercised at a
meeting of such holders or by written consent of holders with the requisite
percentage of the voting power outstanding.
(viii)Upon the reasonable request of the Corporation,
the holders of the Series B Cumulative Convertible Preferred Stock shall certify
in writing to the Corporation their holding of Conversion Shares.
(ix) For purposes of this Section:
(1) "voting power" shall mean the number of
votes each such share possesses in the election of
directors; and
(2) "Conversion Shares" shall mean the
shares of Common Stock which are both (A) issuable or
issued upon conversion of the Series B Cumulative
Convertible Preferred Stock pursuant to the terms of
this Certificate of Vote of Directors, and (B) held
by a person who either (x) acquired the shares of the
Series B Cumulative Convertible Preferred Stock from
which the shares referred to in clause (A) of this
definition were converted and has held such Common
Stock continuously thereafter, or (y) acquired the
shares referred to in clause (A) of this definition
from a person referred to in clause (B)(x) of this
definition through a distribution to the partners by,
or dissolution of, a partnership.
(b) Appointment to Executive Committee. At any time at
which the holders of the Series B Cumulative Convertible Preferred Stock shall
have the right to nominate directors for election to the board pursuant to
Section 13(a) hereof, such holders shall also have the right to designate a like
number of persons from among the members of the board of directors to be
members of the Executive Committee of the board (the "Designated Executive
Committee Members"). In the event that any Designated Executive Committee Member
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shall resign, be unable to serve, or be removed, the holders of a majority of
the Series B Cumulative Convertible Preferred Stock shall have the right to
designate a replacement Designated Executive Committee Member. Any Designated
Executive Committee Member may be removed from the Executive Committee, with or
without cause, by the holders of a majority of the Series B Cumulative
Convertible Preferred Stock.
(c) Approval of Certain Actions. Neither the Corporation nor
the Board shall take any of the following actions without the approval of a
majority of the members of the Executive Committee of the Board: (A) any
borrowing or guarantee by the Corporation exceeding $15 million, (B) except for
issuance of stock or stock options pursuant to (x) the Corporation's incentive
compensation plans and programs, (y) any warrants outstanding on the Original
Issue Date, or (z) the Rights, any issuance of stock (whether common or
preferred, whether voting or non-voting, whether junior, pari passu, or senior
to the Series B Cumulative Convertible Preferred Stock) other than Common Stock
in an aggregate amount not exceeding five percent (5%) of the Common Stock
issued and outstanding on the Original Issue Date, (C) any strategic alliance
(other than a construction joint venture) involving a capital commitment by the
Corporation exceeding $5 million, (D) any asset sale by the Corporation or lease
by it as lessor exceeding $5 million (other than equipment dispositions in the
normal course of business); (E) any redemption or amendment of the Rights or the
preferred stock of the Corporation issuable upon the exercise of such Rights, or
any amendment of the Rights Agreement; and (F) any termination of (other than a
termination upon expiration) or amendment to the management agreement among the
Corporation, Ronald Tutor and Tutor-Saliba Corporation; provided, however, that
for purposes of this Section 13(c), approval of the Executive Committee shall
not be required for any decision by the Board of Directors to redeem the Series
B Cumulative Convertible Preferred Stock pursuant to Section 6(a).
Notwithstanding the foregoing sentence, the board of directors of the
Corporation may take any of the actions specified in the preceding sentence if,
after having consulted with and considered the advice of outside counsel, it has
reasonably determined in good faith that the failure of the board to take such
action would be likely to cause the members of such board to breach their
fiduciary duties under applicable law.
14. Severability of Provisions. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were
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increased or decreased, then such court may make such change as shall be
necessary to render the provision in question effective and valid under
applicable law.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 15th day of January in the year 1997.
/s/ David B. Perini, President
- ------------------------------
/s/ Richard E. Burnham, Clerk
- -----------------------------
- --------------------------------------------------------------------------------
THE COMMONWEALTH OF MASSACHUSETTS
Certificate of Vote of Directors Establishing
A Series of a Class of Stock
(General Laws, Chapter 156B, Section 26)
I hereby approve the within certificate and, the
filing fee in the amount of $100.00 having been paid,
said certificate is hereby filed this 16th day of
January 1997.
/s/William Francis Galvin
William Francis Galvin
Secretary of the Commonwealth
Photocopy of Certificate to Be Sent
To:
Richard A. Soden, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Tel: (617) 570-1000
70
[CONFORMED COPY]
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
January 17, 1997
among
PERINI CORPORATION,
The BANKS Listed Herein
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
-------------------
FLEET NATIONAL BANK, as Co-Agent
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT dated as of January 17, 1997 among PERINI
CORPORATION (with its successors, the "Borrower"), the BANKS listed on the
signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent
(with its successors in such capacity, the "Agent"), amending and restating the
Credit Agreement dated as of December 6, 1994 (as amended, the "Original Credit
Agreement") among the Borrower, the banks listed on the signature pages thereof
and the Agent and the Bridge Credit Agreement dated as of February 26, 1996 (as
amended, the "Bridge Credit Agreement") among the Borrower, the banks listed on
the signature pages thereof and the Agent.
WHEREAS, the parties to this Agreement are parties to the
Original Credit Agreement and the Bridge Credit Agreement;
WHEREAS, the Borrower has requested amendments to certain
provisions of the Original Credit Agreement and the Bridge Credit Agreement as
incorporated in this Agreement, and the Banks and the Agent have agreed to such
amendments, subject to the satisfaction of the terms and conditions set forth
herein, which amendments shall become effective only at such time as this
Agreement becomes effective in accordance with Section 3.01;
WHEREAS, the parties have agreed that upon the effectiveness
of this Agreement, any outstanding "Loans" made pursuant to the Original Credit
Agreement by each Bank (as defined herein) shall be consolidated with any
outstanding "Bridge Loans" made pursuant to the Bridge Credit Agreement by such
Bank and all such "Loans" and "Bridge Loans," together with all other "Loans"
made pursuant to this Agreement by such Bank, shall constitute "Loans"
hereunder, shall be governed by the terms and conditions of this Agreement and
shall be evidenced by an amended and restated promissory note of the Borrower,
substantially in the form of Exhibit A;
WHEREAS, the parties have agreed that, upon the effectiveness
of this Agreement, any outstanding "Letters of Credit" issued pursuant to the
Original Credit Agreement and any outstanding "Bridge Letters of Credit" issued
pursuant to the Bridge Credit Agreement, together with all other "Letters of
Credit" issued pursuant to this Agreement, shall constitute "Letters of Credit"
hereunder and shall be governed by the terms and conditions of this Agreement;
and
WHEREAS, in order to set forth in one document, for the
convenience of the parties, the text of the Original Credit Agreement and the
Bridge Credit
<PAGE>
Agreement, in each case as amended by the amendments to be made upon the
effectiveness hereof, the Original Credit Agreement and the Bridge Credit
Agreement will, upon satisfaction of the conditions set forth in Section 3.01
hereof, be amended and restated to read in full as set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Administrative Questionnaire" means, with respect to each
Bank, the administrative questionnaire in the form submitted to such Bank by the
Agent and submitted to the Agent (with a copy to the Borrower) duly completed by
such Bank.
"Adjusted Euro-Dollar Rate" means, with respect to any
Interest Period, 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 Euro-Dollar Rate by (ii) 1.00 minus the Euro-Dollar Reserve
Percentage.
"Affected Subsidiary" has the meaning set forth in Section
9.05(b).
"Affiliate" means, with respect to any Person, (i) any other
Person that directly, or indirectly through one or more intermediaries, controls
such Person (a "Controlling Person") or (ii) any other Person which is
controlled by or is under common control with a Controlling Person. As used
herein, the term "control" of any Person means the possession, directly or
indirectly, of the power to vote 10% or more of any class of voting securities
of such Person or to direct or cause the direction of the management or policies
of a Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks under the Financing Documents, and its
successors in such capacity.
"Applicable Base Rate Margin" means (i) in the case of Tranche
A Loans, 1.00% and (ii) in the case of Tranche B Loans, 2.00%.
"Applicable Euro-Dollar Margin" means 2.25%.
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<PAGE>
"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 Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Asset Sale Letter" means a letter from the Borrower to the
Banks and the Agent listing certain potential asset sales and a minimum cash
price for each such asset sale, which letter shall have been delivered to the
Banks and the Agent not less than five Domestic Business Days prior to the
Effective Date and shall be in form and substance satisfactory to each Bank.
"Assignee" has the meaning set forth in Section 9.06(c).
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement entered into by a Lender and an Assignee with the consent
of the Agent, substantially in the form of Exhibit L.
"Available LC Amount" means at any time an amount equal to the
lesser of (x) $25,000,000 and (y) the excess, if any, of (i) the aggregate
amount of the Tranche A Commitments over (ii) the aggregate outstanding
principal amount of the Tranche A Loans.
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section 9.06(c), and their
respective successors.
"Bankruptcy Proceeding" means, with respect to any Person, a
case or other proceeding seeking liquidation, reorganization or other relief
with respect to such Person 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 such
Person or any substantial part of its property.
"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 Tranche B Loan or (ii) a Tranche
A Loan which bears interest based on the Base Rate pursuant to the applicable
Notice of Borrowing or Notice of Interest Rate Election pursuant to the
provisions of Article VIII.
"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
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<PAGE>
Plan and which is maintained or otherwise contributed to by any member of the
ERISA Group.
"Bonding Company" means Fidelity and Deposit Company of
Maryland.
"Borrower" means Perini Corporation, a Massachusetts
corporation, and its successors.
"Borrower Pledge Agreement" means the Amended and Restated
Borrower Pledge Agreement dated as of December 6, 1994 between the Borrower and
the Agent, as amended and restated as of February 26, 1996, as amended and
restated as of the date hereof in substantially the form of Exhibit C, and as
the same may be amended, modified, supplemented and restated from time to time
as permitted herein and in accordance with the terms thereof.
"Borrower Security Agreement" means the Borrower Security
Agreement dated as of February 26, 1996 between the Borrower and the Agent, as
amended and restated as of the date hereof in substantially the form of Exhibit
B, and as the same may be amended, modified, supplemented and restated from time
to time as permitted herein and in accordance with the terms thereof.
"Borrower's 1995 Form 10-K" means the Borrower's annual report
on Form 10-K for the fiscal year ended December 31, 1995, as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Borrowing" means a borrowing under the Original Credit
Agreement, the Bridge Credit Agreement or this Agreement consisting of Loans
made to the Borrower at the same time by one or more Banks on a single date and
for a single Interest Period.
"Bridge Credit Agreement" means the Bridge Credit Agreement
dated as of February 26, 1996 among the Borrower, the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as the
agent for such banks, as amended to the Effective Date.
"Bridge Note" has the meaning set forth in Section 2.03.
"Business Plan" means, at any time, the most recently
delivered of (i) the business plan delivered pursuant to Section 3.01(q) and
(ii) the annual projected consolidated balance sheets and income statements,
operating and capital expenditure budgets and cash flow forecasts for the
Borrower and its Consolidated Subsidiaries delivered pursuant to Section
5.01(i).
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<PAGE>
"Cash Management Letter" means a letter from the Borrower to
the Banks and the Agent describing the cash management system of the Borrower
and its Subsidiaries as of the Effective Date, as set forth on Schedule 3.01(p).
"Casualty" has the meaning provided for such term in any
Mortgage.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, and any
rules or regulations promulgated thereunder.
"Class" refers to a determination whether a Loan is a Tranche
A Loan or a Tranche B Loan (or whether a Borrowing is to be comprised of, or a
Commitment relates to the making of, Tranche A Loans or Tranche B Loans).
"Collateral" means all property, real and personal, tangible
and intangible, with respect to which Liens are created or are purported to be
created pursuant to the Collateral Documents.
"Collateral Documents" means the Borrower Pledge Agreement,
the Borrower Security Agreement, the Subsidiary Pledge Agreement, the Subsidiary
Security Agreement, the Mortgages and all other supplemental or additional
security agreements, pledge agreements, mortgages, deeds of trust or similar
instruments Delivered pursuant hereto or thereto.
"Commitment" means a Tranche A Commitment or a Tranche B
Commitment and "Commitments" means all or any combination of the foregoing, as
the context may require.
"Commitment Reduction Date" means the last Domestic Business
Day occurring in each of December 1997, December 1998, March 1999, June 1999 and
September 1999.
"Condemnation" has the meaning provided for such term in any
Mortgage.
"Consolidated Adjusted Tangible Net Worth" means, at any date,
Consolidated Tangible Net Worth, plus to the extent deducted in determining the
consolidated net income (or loss) of the Borrower and its Consolidated
Subsidiaries, the aggregate amount of non-cash charges incurred in accordance
with GAAP after the Effective Date in connection with any Dispositions or
write-downs of any Real Estate Investments or of any other real property of the
Borrower or any Subsidiary, minus to the extent included in determining the
consolidated net income (or loss) of the Borrower and its Consolidated
Subsidiaries, the aggregate amount of non-cash gains realized in accordance with
GAAP after the Effective Date in connection with
5
<PAGE>
Dispositions of any Real Estate Investments or of any other real property of the
Borrower or any Subsidiary, all determined as of such date.
"Consolidated Capital Expenditures" means, for any period, the
aggregate amount of expenditures by the Borrower and its Consolidated
Subsidiaries for plant, property and equipment during such period (including any
such expenditure by way of acquisition of a Person or by way of assumption of
indebtedness or other obligations of a Person, to the extent reflected as plant,
property and equipment), but excluding any such expenditures made for the
replacement or restoration of assets to the extent financed by condemnation
awards or proceeds of insurance received with respect to the loss or taking of
or damage to the asset or assets being replaced or restored. The term
"Consolidated Capital Expenditures" shall not include any Real Estate
Investments.
"Consolidated Subsidiary" of any Person means at any date any
Subsidiary of such Person or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date.
"Consolidated Tangible Net Worth" means, at any date, the
consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries (including the Series B Preferred Stock, whether or not otherwise
included in stockholders' equity), less their consolidated Intangible Assets,
all determined as of such date. For purposes of this definition "Intangible
Assets" means the amount (to the extent reflected in determining such
consolidated stockholders' equity) of (i) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) subsequent to September 30, 1996 in the book value of any asset owned
by the Borrower or a Consolidated Subsidiary and (ii) all unamortized debt
discount and expense, capitalized real estate taxes (to the extent not permitted
to be capitalized in accordance with generally accepted accounting principles as
in effect on the date hereof), goodwill, patents, trademarks, service marks,
trade names, copyrights, organization or developmental (other than real estate
developmental) expenses and other intangible items.
"Construction Business" means the general contracting,
construction management, engineering and design-build services business of the
Borrower and its Consolidated Subsidiaries.
"Credit Event" means the making of a Loan or the issuance of a
Letter of Credit or the extension of an Evergreen Letter of Credit.
"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
6
<PAGE>
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 non- contingent obligations of such Person as lessee which
are capitalized in accordance with generally accepted accounting principles, (v)
all obligations of such Person to reimburse issuers of letters of credit for
drawings under such letters of credit, (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; provided
that advances to the Borrower or a Subsidiary by a joint venture out of the
Borrower's or such Subsidiary's share of the undistributed earnings of such
joint venture shall not constitute Debt.
"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
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.
"Disposition" means any sale, lease, assignment, transfer,
Casualty, Condemnation, or other disposition.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City or Massachusetts
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 this Agreement becomes
effective in accordance with Section 3.01.
"Environmental Laws" means any and all federal state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses,
7
<PAGE>
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.
"Environmental Liabilities" means any and all liabilities of
or relating to the Borrower or any of its Subsidiaries (including any
liabilities derived from an entity which is, in whole or in part, a predecessor
of the Borrower or any of its Subsidiaries), whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which arise under or
relate to matters covered by Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Subsidiary, are treated as a single employer under Section 414
of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative Questionnaire
as its Euro-Dollar Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Tranche A Loan which bears interest
based on the Adjusted Euro-Dollar Rate pursuant to the applicable Notice of
Borrowing or Notice of Interest Rate Election.
"Euro-Dollar Rate" means, with respect to any Interest Period,
the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which deposits in dollars are offered to each of
the Euro-Dollar Reference Banks in the London interbank market at approximately
11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the principal amount of
the
8
<PAGE>
Euro-Dollar Loan of such Euro-Dollar Reference Bank to which such Interest
Period is to apply and for a period of time comparable to such Interest Period.
"Euro-Dollar Reference Banks" means the principal London
offices of Bank of America National Trust and Savings Association and Morgan
Guaranty Trust Company of New York.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents). The Adjusted Euro-Dollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
"Event of Default" has the meaning set forth in Section 6.01.
"Evergreen Letter of Credit" has the meaning set forth in
Section 2.16(b).
"Exempt Group" means (i) any employee benefit plan of the
Borrower or any Subsidiary, (ii) any entity or Person holding shares of common
stock of Borrower organized, appointed or established by the Borrower or any
Subsidiary for or pursuant to the terms of any such plan, (iii) The Perini
Memorial Foundation, Inc., The Joseph Perini Memorial Foundation, or any of the
various trusts established under the wills of Lewis R. Perini, Senior, Joseph R.
Perini, Senior or Charles B.
Perini, Senior, or (iv) the Investor.
"Exercise Price Letter" means an Exercise Price Letter,
completed and delivered by the Agent to the Borrower, dated the Effective Date
and countersigned by the Borrower, substantially in the form of Exhibit Q.
"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
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<PAGE>
Day, and (ii) if no such rate is so published on such next succeeding Domestic
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to Morgan Guaranty Trust Company of New York on such day on such
transactions as determined by the Agent.
"Financial Letter of Credit" means any Letter of Credit which
constitutes a financial standby letter of credit within the meaning of Appendix
A to Regulation H of the Board of Governors of the Federal Reserve System or
other applicable capital adequacy guidelines promulgated by bank regulatory
authorities (including without limitation workmen's compensation letters of
credit).
"Financing Documents" means this Agreement, the Notes, the
Subsidiary Guarantee Agreement, the Collateral Documents, the Warrants, the
Warrantholders Rights Agreement, the Securityholders Agreement and all other
supplemental or additional agreements and instruments delivered pursuant hereto
or thereto.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Group of Loans" means, at any time, a group of Loans
consisting of (i) all Loans which are Base Rate Loans at such time or (ii) all
Loans which are Euro- Dollar 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 Section 8.02 or 8.04, 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 or bid and performance bonds and
guarantees in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Harrah's LC" means the Letter of Credit dated September 27,
1996, letter of credit no. 00103213, issued by the LC Bank in the amount of
$4,650,000 in favor of Harrah's Operating Co. Inc.
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<PAGE>
"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.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Interest Period" means, with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing as specified in
the applicable Notice of Borrowing or on the date specified in the applicable
Notice of Interest Rate Election and ending one, two or three months thereafter,
as the Borrower may elect in such Notice of Borrowing or Notice of Interest Rate
Election, as the case may be; provided that:
(a) any Interest Period that would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Euro-Dollar Business Day;
(b) any Interest Period that begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of
a calendar month; and
(c) any Interest Period that would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, Guarantee, time deposit or
otherwise.
"Investor" means PB Capital Partners, L.P., a Delaware limited
partnership.
"Investor Group" means the Investor, The Common Fund, Separate
Account P, RCBA, Richard C. Blum, Ronald Tutor, Tutor-Saliba Corp., and their
respective Affiliates.
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<PAGE>
"LC Bank" means BayBank, N.A., and its successors, or such
other Bank as the Borrower may designate from time to time (with the consent of
such other Bank).
"LC Exposure" means, at any time and for any Bank, an amount
equal to such Bank's Tranche A Commitment Percentage at such time multiplied by
the aggregate amount of Letter of Credit Liabilities in respect of all Letters
of Credit at such time.
"Letter of Credit" has the meaning set forth in Section
2.16(a).
"Letter of Credit Liabilities" means, at any time and in
respect of any Letter of Credit, the sum, without duplication, of (i) the amount
available for drawing under such Letter of Credit plus (ii) the aggregate unpaid
amount of all Reimbursement Obligations in respect of previous drawings made
under such Letter of Credit.
"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 2.02 of
the Original Credit Agreement, Section 2.02 of the Bridge Credit Agreement or
Section 2.02 hereof; 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.
"Loan Commitment" means for any Bank at any time an amount
equal to the excess, if any, of such Bank's Commitment at such time over such
Bank's LC Exposure at such time.
"Management Agreement" means a management agreement between
the Borrower and Tutor-Saliba Corp. entered into in accordance with the Stock
Purchase Agreement.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $10,000,000.
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<PAGE>
"Material Subsidiary" means at any time a Subsidiary which as
of such time meets the definition of a "significant subsidiary" contained as of
the date hereof in Regulation S-X of the Securities and Exchange Commission.
"Modified Parent Company Debt" means at any date the Debt of
the Borrower (other than Debt payable to any Wholly-Owned Consolidated
Subsidiary) determined on an unconsolidated basis as of such date.
"Mortgage Amendments" means the amendments to the mortgages
and deeds of trust described in Part III of Schedule 4.03(c), each substantially
in the form of Exhibit K-1 or Exhibit K-2 hereto.
"Mortgage Banks" means (i) Harris Trust and Savings Bank, as
successor to Barclays Bank PLC, Boston Branch, in its capacity as the issuer of
a letter of credit for the account of the Borrower in the initial stated amount
of $4,106,850, the maker of a commitment to lend up to $4,106,850 to the
Borrower pursuant to the Letter of Credit and Reimbursement Agreement dated as
of October 1, 1985 and the "Bank" described in the mortgage on the property
described as Item 12 in Part I of Schedule 4.03(c) hereto which secure the
obligations of the Borrower under such Letter of Credit and Reimbursement
Agreement and (ii) Fleet Credit Corporation, as the lessor of computer equipment
and other personal property to the Borrower and certain of its Subsidiaries and
joint ventures pursuant to the Master Equipment Lease No. 1100641700 dated
December 30, 1988 (including the Addendum thereto dated December 30, 1988), and
the schedules executed thereunder prior to February 26, 1996.
"Mortgaged Facilities" means the properties encumbered by the
Mortgages and described as Items 1, 2, 3, 4, 5, 6, 7, 10, 11 and 12 in Part I of
Schedule 4.03(c) hereto.
"Mortgages" means the mortgages or deeds of trust described in
Part III of Schedule 4.03(c), as amended as of the date hereof by the Mortgage
Amendments, and as the same may be amended, modified, supplemented and restated
from time to time as permitted herein and in accordance with the terms hereof
and thereof, and "Mortgage" means any of the foregoing.
"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.
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<PAGE>
"Net Income from Continuing Operations" means, for any period,
the consolidated net income of the Borrower and its Consolidated Subsidiaries
for such period, but eliminating any extraordinary items of income or expense.
"Net Proceeds" means, with respect to any Disposition by the
Borrower or any Subsidiary of any asset, property or business, an amount equal
to the proceeds received by the Borrower or any Subsidiary in respect thereof
(including Insurance Proceeds (as defined in any Mortgage) received in respect
of any Casualty, but only to the extent exceeding the aggregate amount to
restore or replace the applicable Mortgaged Facility (or portion thereof subject
to such Casualty), and including all Awards (as defined in any Mortgage)
received in respect of any Condemnation, less (without duplication)
out-of-pocket transaction costs, all senior mortgage debt required to be repaid
at the time of such Disposition, fees, commissions and other transaction
expenses reasonably incurred by the Borrower or such Subsidiary in connection
with such Disposition and any taxes paid or payable (as estimated by a financial
officer of the Borrower in good faith) in respect thereof.
"Net Working Investment" means, at any date, an amount
calculated as follows:
(i) the aggregate amount of accounts and notes receivable,
unbilled work and investments in construction joint ventures which are shown as
current assets,
minus
(ii) the aggregate amount of accounts payable, advances from
construction joint ventures, deferred contract revenue and accrued expenses,
in each case as shown on the consolidated balance sheet for the Borrower and its
Consolidated Subsidiaries determined as of such date; provided that for purposes
of calculating any increase or decrease in Net Working Investment to determine
Operating Cash Flow, Net Working Investment on the first day of the relevant
measurement period shall be deemed to be the lesser of $45,000,000 and the
amount calculated as shown above.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A, evidencing the obligation of the Borrower to repay the
Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section
2.02.
"Notice of Interest Rate Election" has the meaning set forth
in Section 2.02(f).
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<PAGE>
"Obligor" means each of the Borrower and the Subsidiary
Guarantors, and "Obligors" means all of the foregoing.
"Operating Cash Flow" means, for any period, an amount
calculated as follows:
(i) the consolidated revenues of the Borrower and its
Consolidated Subsidiaries less the consolidated cost of operations of the
Borrower and its Consolidated Subsidiaries, in each case to the extent
attributable to the Construction Business for such period;
minus
(ii) the aggregate consolidated amount of all general,
administrative and selling expenses of the Borrower and its Consolidated
Subsidiaries for such period;
minus (or plus)
(iii) any increase (or decrease) in Net Working Investment
from the last day of such period relative to Net Working Investment on
the first day of such period.
"Original Credit Agreement" means the $125,000,000 Credit
Agreement dated as of December 6, 1994 among the Borrower, the banks listed
therein and Morgan Guaranty Trust Company of New York, as agent for such banks,
as amended to the Effective Date.
"Original Note" has the meaning set forth in Section 2.03.
"Other Asset" means any asset, property or business of the
Borrower or any Subsidiary, other than any Real Estate Investment or any other
real property, if the aggregate amount of Net Proceeds in respect of any
Disposition thereof shall exceed $25,000.
"Other LC Bank" means each Bank listed on Schedule 1.01
attached hereto and its successors and assigns.
"Other Letters of Credit" means the letters of credit
described on Schedule 1.01 attached hereto.
"Other Mortgage/Lease Obligations" means the obligations of
the Borrower to any Mortgage Banks under the documents, agreements and
instruments described in the definition of Mortgage Banks, and all other
supplemental or
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<PAGE>
additional documents, agreements and instruments delivered in connection
therewith prior to February 26, 1996.
"Other Reimbursement Obligations" means, at any date, the
obligations of the Borrower, whether or not contingent at such time and whether
direct or as a guarantee, to reimburse any Other LC Banks for the amount paid or
payable by such Other LC Bank in respect of a drawing under an Other Letter of
Credit.
"Paramount Development Associates" means Paramount Development
Associates, Inc., a Massachusetts corporation.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Performance Letter of Credit" means a Letter of Credit which
constitutes a performance standby letter of credit within the meaning of
Appendix A to Regulation H of the Board of Governors of the Federal Reserve
system or other applicable capital adequacy guidelines promulgated by bank
regulatory authorities, it being understood that the Harrah's LC and similar
types of Letters of Credit are Performance Letters of Credit.
"Perini Building Company" means Perini Building Company, Inc.,
an Arizona corporation.
"Perini International" means Perini International Corporation,
a Massachusetts corporation.
"Perini Land and Development" means Perini Land and
Development Company, Inc. a Massachusetts corporation.
"Permitted Accounts" means, collectively, (i) the deposit,
checking, operating and other bank accounts listed on Schedule 4.15, (ii)
payroll and petty cash accounts opened in the ordinary course of business with
imprest balances not to exceed $7,500 for each such account, (iii) all other
deposit, checking, operating and other bank accounts established after the
Effective Date with the prior written consent of the Required Banks, (iv) the
Cash Collateral Account established pursuant to the Borrower Security Agreement
and (v) the Cash Collateral Account established pursuant to the Subsidiary
Security Agreement.
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<PAGE>
"Permitted Encumbrances" means, with respect to any property
owned or leased by the Borrower or any of its Subsidiaries:
(a) Liens for taxes, assessments or other governmental charges
not yet due or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Borrower or such Subsidiary, as the case may be, in accordance with
GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising by operation of law in the ordinary
course of business so long as (A) the underlying obligations are not overdue for
a period of more than 60 days or (B) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect thereto
are maintained on the books of the Borrower or such Subsidiary, as the case may
be, in accordance with GAAP;
(c) other Liens or, with respect to real property, title
defects (including matters which an accurate survey might disclose) which (x) do
not secure Debt; and (y) do not materially detract from the value of such
property or materially impair the use thereof by the Borrower or such Subsidiary
in the operation of its business.
"Permitted Liens" means the Liens permitted to exist under
Section 5.11.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
"Pledged Securities" has the meaning set forth in Section 1 of
the Borrower Pledge Agreement and the Subsidiary Pledge Agreement.
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<PAGE>
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"RCBA" means Richard C. Blum & Associates, L.P., a California
limited partnership.
"Real Estate Investment" means (i) the acquisition,
construction or improvement of any real property, other than real property used
by the Borrower or a Consolidated Subsidiary in the conduct of its Construction
Business or (ii) any Investment in any Person (including Perini Land and
Development or another Consolidated Subsidiary, but without duplication of any
Real Estate Investment made by such Person with the proceeds of such Investment)
engaged in real estate investment or development or whose principal assets
consist of real property.
"R. E. Dailey & Co." means R. E. Dailey & Co., a Michigan
corporation.
"Refunding Borrowing" means a Borrowing which, after
application of the proceeds thereof, results in no net increase in the
outstanding principal amount of Loans made by any Bank.
"Regulated Activity" means any generation, treatment, storage,
recycling, transportation or Release of any Hazardous Substance.
"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 at any date the obligations
of the Borrower then outstanding under Section 2.16 to reimburse any Bank for
the amount paid by such Bank in respect of a drawing under a Letter of Credit.
"Release" means any discharge, emission or release, including
a Release as defined in CERCLA at 42 U.S.C. ss. 9601(22). The term "Released"
has a corresponding meaning.
"Release of Claims" means the Release of Claims dated as of
the Closing Date among the Borrower, the Subsidiary Guarantors, the Banks and
the Agent, substantially in the form of Exhibit M.
"Required Banks" means at any time Banks having at least 60%
of the aggregate amount of the Commitments or, if the Commitments shall have
been terminated, holding Notes evidencing at least 60% of the aggregate unpaid
principal amount of the Loans.
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<PAGE>
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's capital stock (except dividends
payable solely in shares of its capital stock) or (ii) any payment on account of
the purchase, redemption, retirement or acquisition of (a) any shares of the
Borrower's capital stock or (b) any option, warrant or other right to acquire
shares of the Borrower's capital stock.
"Rincon Agreements" means all agreements, documents and
instruments to which the Borrower, Rincon Center Associates or any other
Subsidiary of the Borrower or Rincon Center Associates is a party relating to
Rincon Center in San Francisco, California.
"Rincon Swap" means the interest rate exchange transaction
between Rincon Center Associates, a California limited partnership, as Fixed
Rate Payor, and Citicorp Real Estate, Inc., as Variable Rate Payor, as confirmed
by the Confirmation for Interest Rate Exchange Transaction date October 18, 1993
with Transaction Reference Number 931913.
"Securityholders Agreement" means the Securityholders
Agreement dated as of the date hereof among the Borrower, the Series B
Shareholders named therein and the Banks, substantially in the form of Exhibit
P.
"Separate Account P" means The Union Labor Life Insurance
Company Separate Account P.
"Series B Preferred Stock" means the Series B Cumulative
Convertible Preferred Stock of the Borrower.
"Stock Purchase" means the purchase by the Investor, The
Common Fund and Separate Account P of an aggregate 150,150 shares of Series B
Preferred Stock and all of the other transactions contemplated by the Stock
Purchase Agreement, including the exhibits and schedules thereto, to be
consummated on or before the Effective Date.
"Stock Purchase Agreement" means the Stock Purchase and Sale
Agreement dated as of July 24, 1996 among RCBA, the Investor and the Borrower,
as amended by letter agreements dated August 21, 1996, September 16, 1996,
September 30, 1996 and October 9, 1996 and by the Second Amendment to Stock
Purchase Agreement dated as of November 8, 1996.
"Subsidiary" of any Person means any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person.
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<PAGE>
"Subsidiary Guarantee Agreement" means the Subsidiary
Guarantee Agreement dated as of December 6, 1994 between the Borrower, the
Subsidiary Guarantors party thereto and the Agent, as amended by Amendment No. 1
dated as of February 26, 1996, as amended and restated as of the date hereof in
substantially the form of Exhibit D, and as the same may be amended, modified,
supplemented and restated from time to time as permitted herein and in
accordance with the terms thereof.
"Subsidiary Guarantor" means each of Perini Building Company,
Perini International, Perini Land and Development, R. E. Dailey & Co., Paramount
Development Associates, Perini Environmental Services, Inc., a Delaware
corporation, Perini Resorts, Inc., a California corporation and each other
Subsidiary of the Borrower which becomes a party to the Subsidiary Guarantee
Agreement, and their respective successors.
"Subsidiary Pledge Agreement" means the Subsidiary Pledge
Agreement dated as of February 26, 1996 among the Subsidiary Guarantors party
thereto and the Agent, as amended and restated as of the date hereof in
substantially the form of Exhibit F, and as the same may be amended, modified,
supplemented and restated from time to time as permitted herein and in
accordance with the terms thereof.
"Subsidiary Security Agreement" means the Subsidiary Security
Agreement dated as of December 6, 1994 among the Subsidiary Guarantors party
thereto and the Agent, as amended and restated as of February 26, 1996, as
amended and restated as of the date hereof in substantially the form of Exhibit
E, and as the same may be amended, modified, supplemented and restated from time
to time as permitted herein and in accordance with the terms thereof.
"Temporary Cash Investments" means investments of cash
balances in a Permitted Account in United States Government securities or other
short-term money market investments; provided that after January 31, 1997, the
arrangements for any such investments must be satisfactory to the Required Banks
and the Agent, including for purposes of perfecting the security interest of the
Agent therein.
"Termination Date" means the first Domestic Business Day of
January, 2000.
"The Common Fund" means The Common Fund for Non-Profit
Organizations for the account of its Equity Fund.
"Tranche A Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the signature pages hereof as
its Tranche A Commitment, as such amount may be reduced from time to time
pursuant
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to Section 2.09 and Section 2.10. The aggregate amount of the Tranche A
Commitments of the Banks on the Effective Date is $110,000,000.
"Tranche A Commitment Percentage" means, with respect to each
Bank at any time, the percentage that such Bank's Tranche A Commitment
constitutes of the aggregate amount of the Tranche A Commitments at such time.
"Tranche A Loan" means a "Tranche A Loan" made by a Bank
pursuant to Section 2.01(a) of the Original Credit Agreement or a Loan made by a
Bank pursuant to Section 2.01(b) of this Agreement.
"Tranche B Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the signature pages hereof as
its Tranche B Commitment, as such amount may be reduced from time to time
pursuant to Section 2.09 and Section 2.10. The aggregate amount of the Tranche B
Commitments of the Banks on the Effective Date is $19,536,000.
"Tranche B Loan" means a "Tranche B Loan" made by a Bank
pursuant to Section 2.01(b) of the Original Credit Agreement, a "Bridge Loan"
made by a Bank pursuant to the Bridge Credit Agreement or a Loan made by a Bank
pursuant to Section 2.01(c) of this Agreement.
"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.
"Usage" means, at any date, the sum of the aggregate
outstanding principal amount of the Loans at such date plus the aggregate amount
of Letter of Credit Liabilities at such date with respect to all Letters of
Credit.
"Warrantholders Rights Agreement" means the Warrantholders
Rights Agreement dated as of the date hereof among the Borrower and the Banks,
substantially in the form of Exhibit O.
"Warrants" has the meaning set forth in Section 2.18.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary of the Borrower all of the shares of capital stock or other ownership
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interests of which (except directors' qualifying shares) are at the time
directly or indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants) with the most
recent audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing"
denotes the aggregation of Loans of one or more Banks made to the Borrower
pursuant to Article II of the Original Credit Agreement, the Bridge Credit
Agreement or this Agreement on the same date, all of which Loans are of the same
type (subject to Article VIII) and, except in the case of Base Rate Loans, have
the same Interest Period or initial Interest Period. Borrowings are classified
for purposes of this Agreement by reference to the Class of Loans comprising
such Borrowing (e.g., a "Tranche A Borrowing" is a Borrowing comprised of
Tranche A Loans) or by reference to the pricing of the Loans comprising such
Borrowing (e.g., a "Euro- Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans).
ARTICLE II
THE CREDITS
SECTION 2.01. The Loans.
(a) Consolidation of Loans and Bridge Loans. Prior to the
Effective Date, each Bank has made "Loans" to the Borrower pursuant to the
Original Credit Agreement and "Bridge Loans" (comprised of "Bridge Revolving
Loans" and "Bridge Term Loans") to the Borrower pursuant to the Bridge Credit
Agreement. On the Effective Date, (i) the Borrower shall repay all "Bridge Term
Loans" outstanding under the Bridge Credit Agreement, (ii) all outstanding
"Loans" and "Bridge Revolving Loans" shall be deemed to be "Loans" hereunder,
(iii) all "Tranche A Loans" outstanding under the Original Credit Agreement on
the Effective Date shall be deemed to be "Tranche A Loans" hereunder, (iv) all
"Bridge Revolving Loans" outstanding under the Bridge Credit Agreement and all
"Tranche B Loans" outstanding under the Original Credit Agreement on the
Effective Date shall be deemed to be "Tranche B Loans" hereunder and (v) all
"Euro-Dollar Loans" outstanding under the Original Credit Agreement shall
continue as Euro-Dollar Loans hereunder, with the Interest Period for each such
Euro-Dollar Loan unchanged.
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(b) Tranche A Loans. From time to time prior to the
Termination Date, each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to make loans to the Borrower from time to time in
amounts such that the sum of (i) the aggregate principal amount of all Tranche A
Loans outstanding for such Bank plus (ii) the LC Exposure for such Bank does not
exceed, in the aggregate at any time, the amount of such Bank's Tranche A
Commitment. Each Borrowing under this Section shall be in an aggregate principal
amount of $500,000 or any larger multiple thereof (except that any such
Borrowing may be in the aggregate amount of the unused Tranche A Commitments)
and shall be made from the several Banks ratably in proportion to their
respective Tranche A Commitments. Within the foregoing limits, the Borrower may
borrow under this Section, repay, or to the extent permitted by Section 2.10 or
Section 2.11, prepay Tranche A Loans and reborrow at any time prior to the
Termination Date under this Section. Each Tranche A Loan shall be a Base Rate
Loan or, subject to Article VIII, a Euro-Dollar Loan if specified as such in the
applicable Notice Of Borrowing.
(c) Tranche B Loans. From time to time prior to the
Termination Date, each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to make loans to the Borrower from time to time in
amounts such that the aggregate principal amount of all Tranche B Loans
outstanding for such Bank does not exceed, in the aggregate at any time, the
amount of such Bank's Tranche B Commitment. Each Borrowing under this Section
shall be in an aggregate principal amount of $500,000 or any larger multiple
thereof (except that any such Borrowing may be in the aggregate amount of the
unused Tranche B Commitments) and shall be made from the several Banks ratably
in proportion to their respective Tranche B Commitments. Within the foregoing
limits, the Borrower may borrow under this Section, repay, or to the extent
permitted by Section 2.10 or Section 2.11, prepay Tranche B Loans and reborrow
at any time prior to the Termination Date under this Section. Each Tranche B
Loan shall be a Base Rate Loan.
SECTION 2.02. Method of Borrowing; Method of Electing Interest
Rates.
(a) The Borrower shall give the Agent notice (a "Notice of
Borrowing") not later than 11:30 A.M. (New York City time) on the date of each
Base Rate Borrowing and at least three Euro-Dollar Business Days before each
Euro-Dollar 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 Euro-Dollar Business Day
in the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
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(iii) whether the Loans comprising such Borrowing shall be
Tranche A Loans or Tranche B Loans;
(iv) whether the Tranche A Loans comprising such Borrowing
shall be a Base Rate Loans or Euro-Dollar Loans; and
(v) in the case of a Euro-Dollar Borrowing, the duration of
the 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 1:30 P.M. (New York City time) on the date
of each Borrowing, each Bank shall (except as provided in subsection (d) of this
Section) make available its ratable share of such Borrowing, in Federal or other
funds immediately available in New York City, to the Agent at its address
referred to in Section 9.01. Unless the Agent determines that any applicable
condition specified in Article III has not been satisfied, the Agent will make
the funds so received from the Banks available to the Borrower at the Agent's
aforesaid address.
(d) If any Bank makes a new Loan hereunder on a day on which
the Borrower is to repay all or any part of an outstanding Loan from such Bank,
such Bank shall apply the proceeds of its new Loan to make such repayment and
only an amount equal to the difference (if any) between the amount being
borrowed and the amount being repaid shall be made available by such Bank to the
Agent as provided in subsection (c) of this Section, or remitted by the Borrower
to the Agent as provided in Section 2.12, as the case may be.
(e) Unless the Agent shall have received notice from a Bank
prior to the date of any borrowing (or, in the case of a Base Rate Borrowing,
prior to noon (New York City time) on the date of such Borrowing) that such Bank
will not make available to the Agent such Bank's share of such Borrowing, the
Agent may assume that such Bank has made such share available to the Agent on
the date of such Borrowing in accordance with subsections (c) and (d) of this
Section 2.02 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
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interest rate applicable thereto pursuant to Section 2.05 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.
(f) 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 VIII), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day;
and
(ii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or elect to continue such Loans
as Euro-Dollar Loans for an additional Interest Period, in each case effective
on the last day of the then current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent at least three Euro-Dollar Business Days 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 $500,000 or any larger multiple thereof.
(g) 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 (f) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if such new Loans are Euro-Dollar Loans, the duration
of the initial Interest Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans
for an additional Interest Period, the duration of such additional Interest
Period.
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Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(h) 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. If the Borrower fails to deliver a timely Notice of
Interest Rate Election to the Agent for any Group of Euro-Dollar Loans, such
Loans shall be converted into Base Rate Loans on the last day of the then
current Interest Period applicable thereto.
SECTION 2.03. Notes.
(a) In connection with the effectiveness of the Original
Credit Agreement, the Borrower delivered to the Agent, for the account of each
Bank, duly executed "Notes" substantially in the form of Exhibit A to the
Original Credit Agreement (collectively, the "Original Notes") to evidence the
"Loans" of each Bank under the Original Credit Agreement and in connection with
the effectiveness of the Bridge Credit Agreement, the Borrower delivered to the
Agent, for the account of each Bank, duly executed "Bridge Notes" substantially
in the form of Exhibit A to the Bridge Credit Agreement (collectively, the
"Bridge Notes") to evidence the "Bridge Loans" of each Bank under the Bridge
Credit Agreement. On or prior to the Effective Date, (i) the Borrower shall
deliver to the Agent, for the account of each Bank, duly executed Notes,
substantially in the form of Exhibit A hereto and (ii) each Bank shall deliver
to the Agent, for cancellation and delivery to the Borrower promptly after the
Effective Date, its Original Note and its Bridge Note (or in the case of loss
thereof, a written agreement of indemnity by such Bank for such loss in
customary form and executed by such Bank). On the Effective Date, each Bank's
Original Note and Bridge Note shall be amended and restated by such duly
executed new Note, and each Bank's Original Note and Bridge Note shall be
canceled. From and after the Effective Date, the Loans of each Bank (whether
made under the Original Credit Agreement, the Bridge Credit Agreement or this
Agreement) shall be evidenced by a single Note payable to the order of such Bank
for the account of its Applicable Lending Office.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that its Loans of a particular Class or 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, with appropriate
modifications to reflect the fact that it evidences solely Loans of the relevant
Class or 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
2.03(a) or Section 2.03(b), the Agent shall forward such Note to such Bank. Each
Bank shall
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record the date, amount and maturity 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 2.04. Maturity of Loans. Unless payable earlier
pursuant to Section 2.10 or Section 6.01, each Loan shall mature, and the
principal amount thereof shall be due and payable, on the Termination Date.
SECTION 2.05. Interest Rates.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Base Rate Loan is made
until it becomes due, at a rate per annum equal to the sum of the Applicable
Base Rate Margin plus the Base Rate for such day. Such interest shall be payable
on the last Domestic Business Day of each month. 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 such Base Rate Loan for such day.
(b) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Euro-Dollar
Margin plus the applicable Adjusted Euro-Dollar Rate. Such interest shall be
payable for each Interest Period on the last day thereof.
(c) Any overdue principal of or interest on any Euro-Dollar
Loan shall bear interest, payable on demand, for each day from and including the
date payment thereof was due to but excluding the date of actual payment, at a
rate per annum equal to the sum of 2% plus the higher of (i) the sum of the
Applicable Euro-Dollar Margin plus the Adjusted Euro-Dollar Rate applicable to
such Loan and (ii) the Applicable Euro-Dollar Margin plus the quotient obtained
(rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (x)
the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other period of
time not longer than three months as the Agent may elect) deposits in dollars in
an amount approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered
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to such Euro-Dollar Reference Bank in the London interbank market for the
applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar
Reserve Percentage (or, if the circumstances described in clause (a) or (b) of
Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the
rate applicable to Base Rate Loans for such day).
(d) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to the Borrower and the
Banks of each rate of interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
(e) Each Euro-Dollar Reference Bank agrees to use its best
efforts to furnish quotations to the Agent as contemplated hereby. If any
Euro-Dollar Reference Bank does not furnish a timely quotation, the Agent shall
determine the relevant interest rate on the basis of the quotation or quotations
furnished by the remaining Euro-Dollar Reference Bank or Banks or, if none of
such quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
SECTION 2.06. Commitment Fees. The Borrower shall pay to the
Agent, for the account of each Bank, a commitment fee at the rate of 0.60% per
annum on the daily average unused portion of such Bank's aggregate Commitments.
Such commitment fees shall accrue from and including the Effective Date to but
excluding the Termination Date. Such commitment fees shall be payable on the
last day of each fiscal quarter of the Borrower prior to the Termination Date
and on the Termination Date.
SECTION 2.07. Restructuring Fee. The Borrower shall pay to the
Agent, for the account of each Bank, a restructuring fee in an amount equal to
0.25% of such Bank's aggregate Commitments, with one-half of such restructuring
fee payable on the Effective Date and one-half of such restructuring fee payable
on the second anniversary of the Effective Date.
SECTION 2.08. Agency Fee. The Borrower shall pay to the Agent
as compensation for its services hereunder and under the Collateral Documents
agency fees payable in the amounts and at the times heretofore agreed between
the Borrower and the Agent.
SECTION 2.09. Optional Termination or Reduction of
Commitments. The Borrower may, upon three Domestic Business Days' notice to the
Agent, terminate at any time, or proportionately permanently reduce from time to
time by an aggregate amount of $100,000 or any larger multiple thereof, the
unused portions of the Commitments. If the Commitments are terminated in their
entirety, all accrued commitment fees shall be payable on the effective date of
such termination.
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SECTION 2.10. Mandatory Termination or Reduction of
Commitments.
(a) The Commitments shall terminate on the Termination Date,
and all Loans then outstanding and all Letter of Credit Liabilities (in each
case, together with accrued interest thereon) shall be due and payable on such
date.
(b) On each Commitment Reduction Date, the Commitments of all
Banks shall be permanently, automatically and ratably reduced by an aggregate
amount as set forth below:
Commitment Reduction Aggregate Amount of
Date Occurring in Reduction in Commitments
December 1997 $15,000,000
December 1998 $15,000,000
March 1999 $ 2,500,000
June 1999 $ 5,000,000
September 1999 $ 5,000,000
provided that if the Commitments shall be reduced at any time in accordance with
Section 2.09 or 2.10(c), such reductions shall be applied to decrease the
amounts set forth above, first to decrease the aggregate amount of reduction in
Commitments required on the first Commitment Reduction Date, then to decrease
the aggregate amount of reduction in Commitments required on the second
Commitment Reduction Date and thereafter to decrease subsequent amounts in
chronological order.
(c) The Commitments of all Banks shall be permanently,
automatically and ratably reduced as follows:
(i) immediately upon receipt by the Borrower or any Subsidiary
at any time of any proceeds from any Disposition of any Real Estate Investment
or any other real property of the Borrower or any Subsidiary (excluding
operating receipts from Real Estate Investments), by an amount equal to 50% of
the Net Proceeds realized by the Borrower or any Subsidiary in respect thereof;
provided that no such reduction shall be required unless and until, and then
only to the extent that, the aggregate amount of Net Proceeds realized by the
Borrower and its Subsidiaries in respect of all Dispositions of Real Estate
Investments and other real property after the Effective Date exceeds
$20,000,000; and
(ii) immediately upon receipt by the Borrower or any
Subsidiary of any proceeds from any Disposition of any Other Assets (excluding
(A) payments in the ordinary course on construction contracts, (B) operating
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receipts from Real Estate Investments, (C) liability insurance proceeds and (D)
income of not more than $100,000 earned from Temporary Cash Investments during
any fiscal year) by an amount equal to 80% of the Net Proceeds realized by the
Borrower or any Subsidiary in respect thereof; provided that no such reduction
shall be required unless and until the aggregate amount of Net Proceeds from all
Dispositions of Other Assets after the Effective Date and not previously applied
to reduce the Commitments pursuant to this clause (ii) shall equal or exceed
$125,000 or any higher integral multiple of $125,000, at which time the
Commitments shall be reduced by 80% of $125,000 (i.e., $100,000) or 80% of such
higher integral multiple of $125,000, as the case may be.
(d) On each day on which the Commitments are reduced pursuant
to this Section 2.10, the Borrower shall repay the principal amount (together
with accrued interest thereon) of each Bank's outstanding Loans as may be
necessary so that after such repayment, (i) the aggregate unpaid principal
amount of each Bank's Tranche A Loans plus such Bank's LC Exposure does not
exceed the amount of such Bank's Tranche A Commitment after giving effect to
such reduction and (ii) the aggregate principal amount of such Bank's Tranche B
Loans does not exceed the amount of such Bank's Tranche B Commitment after
giving effect to such reduction. In the event that the aggregate amount of the
Tranche A Commitments is reduced to an amount less than the aggregate amount of
Letter of Credit Liabilities at such time in respect of all Letters of Credit,
the Borrower hereby agrees that it shall forthwith, without any demand or taking
of any other action by the Required Banks or the Agent, pay to the Agent an
amount in immediately available funds equal to the difference to be held as
security for the Letter of Credit Liabilities for the benefit of all Banks
pursuant to arrangements satisfactory to the Agent and the Banks.
(e) Any reduction of the Commitments described in Section
2.10(a), 2.10(b) or 2.10(c) shall be applied first to reduce the Tranche B
Commitments of the Banks ratably in proportion to their respective Tranche B
Commitments and, once the Tranche B Commitments are reduced to zero, then to
reduce the Tranche A Commitments of the Banks ratably in proportion to their
respective Tranche A Commitments.
SECTION 2.11. Optional Prepayments.
(a) The Borrower may, upon notice to the Agent not later than
11:30 A.M. (New York City time) on any Domestic Business Day, prepay on such
Domestic Business Day the Group of Base Rate Loans in whole at any time, or from
time to time in part in amounts aggregating $100,000 or any larger multiple
thereof, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in such
Borrowing.
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(b) Subject to Section 2.13, the Borrower may, upon notice to
the Agent not later than 11:30 A.M. (New York City time) on any Euro-Dollar
Business Day, prepay on such Euro-Dollar Business Day the Loans comprising a
Group of Euro-Dollar Loans in whole at any time, or from time to time in part in
amounts aggregating $100,000 or any larger multiple thereof, 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.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and
interest on, the Loans and of fees hereunder, not later than 1:30 P.M. (New York
City time) on the date when due, in Federal or other funds immediately available
in New York City, to the Agent at its address referred to in Section 9.01. The
Agent will promptly distribute to each Bank its ratable share of each such
payment received by the Agent for the account of the Banks. Whenever any payment
of principal of, or interest on, the Base Rate Loans or of fees shall be due on
a day which is not a Domestic Business Day, the date for payment thereof shall
be extended to the next succeeding Domestic Business Day. Whenever any payment
of principal of, or interest on, the Euro-Dollar Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case the date for payment
thereof shall be the next preceding Euro-Dollar Business Day. If the date for
any payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due 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 2.13. Funding Losses. If the Borrower makes any
payment of principal with respect to any Euro-Dollar Loan or any Euro-Dollar
Loan is converted to a Base Rate Loan (pursuant to Article II, Section VI or
VIII or otherwise) on any day other than the last day of the Interest Period
applicable thereto, or the last day of an applicable period fixed pursuant to
Section 2.05(c), or if the Borrower fails to borrow or prepay any Euro-Dollar
Loans after notice has been given to any Bank in accordance with Section 2.02(b)
or 2.11(c), the Borrower shall reimburse each Bank on demand for any resulting
loss or expense incurred by it (or by any 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, 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 2.14. Computation of Interest and Fees. Interest based
on the Prime Rate 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 commitment
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 2.15. Maximum Interest Rate.
(a) Nothing contained in this Agreement or the Notes shall
require the Borrower to pay interest at a rate exceeding the maximum rate
permitted by applicable law. Neither this Section 2.15 nor Section 9.08 is
intended to limit the rate of interest payable for the account of any Bank to
the maximum rate permitted by the laws of the State of New York if a higher rate
is permitted with respect to such Bank by supervening provisions of U.S. federal
law.
(b) If the amount of interest payable for the account of any
Bank on any interest payment date in respect of the immediately preceding
interest computation period, computed pursuant to Section 2.05, would exceed the
maximum amount permitted by applicable law to be charged by such Bank, the
amount of interest payable for its account on such interest payment date shall
be automatically reduced to such maximum permissible amount.
(c) If the amount of interest payable for the account of any
Bank in respect of any interest computation period is reduced pursuant to
Section 2.15(b) and the amount of interest payable for its account in respect of
any subsequent interest computation period, computed pursuant to Section 2.05,
would be less than the maximum amount permitted by applicable law to be charged
by such Bank, then the amount of interest payable for its account in respect of
such subsequent interest
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computation period shall be automatically increased to such maximum permissible
amount; provided that at no time shall the aggregate amount by which interest
paid for the account of any Bank has been increased pursuant to this Section
2.15(c) exceed the aggregate amount by which interest paid for its account has
theretofore been reduced pursuant to Section 2.15(b).
SECTION 2.16. Letters of Credit.
(a) Prior to the Effective Date, upon the request of the
Borrower, the LC Bank has issued "Letters of Credit" pursuant to the Original
Credit Agreement and "Bridge Letters of Credit" pursuant to the Bridge Credit
Agreement. On the Effective Date, all of such "Letters of Credit" and "Bridge
Letters of Credit" shall be deemed to be Letters of Credit hereunder. Subject to
the terms and conditions hereof, the LC Bank agrees to issue letters of credit
hereunder from time to time before the Termination Date upon the request of the
Borrower (such letters of credit issued, collectively with the "Letters of
Credit" issued pursuant to the Original Credit Agreement and the "Bridge Letters
of Credit" issued pursuant to the Bridge Credit Agreement, the "Letters of
Credit"); provided that, immediately after each such Letter of Credit is issued,
(i) the aggregate amount of the Letter of Credit Liabilities for all Letters of
Credit shall not exceed the Available LC Amount and (ii) the aggregate amount of
the Letter of Credit Liabilities for all Performance Letters of Credit shall not
exceed the greater of (x) $5,000,000 and (y) the sum of $3,000,000 plus the
amount of Letter of Credit Liabilities (not to exceed $4,650,000) in respect of
the Harrah's LC. Upon the date of issuance by the LC Bank of a Letter of Credit
in accordance with this Section 2.16, the LC 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 LC Bank, a participation in such Letter of Credit and the related
Letter of Credit Liabilities in proportion to its Tranche A Commitment
Percentage.
(b) The Borrower shall give the LC Bank at least three
Domestic Business Days' prior notice (effective upon receipt) specifying the
date each Letter of Credit is to be issued, and describing the proposed terms of
such Letter of Credit and the nature of the transactions proposed to be
supported thereby. Upon receipt of such notice the LC 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 proposed Letter
of Credit. The issuance by the LC Bank of any Letter of Credit shall, in
addition to the conditions precedent set forth in Article III (the satisfaction
of which the LC Bank shall have no duty to ascertain), be subject to the
conditions precedent that such Letter of Credit shall be satisfactory to the LC
Bank and that the Borrower shall have executed and delivered such other
instruments and agreements relating to such Letter of Credit as the LC Bank
shall have reasonably requested. Each Letter of Credit shall have an expiry date
not later than one year after its date of issue; provided that no Letter of
Credit shall have a term extending
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beyond the Termination Date; and provided further that any such Letter of Credit
may include an evergreen or renewal option, pursuant to which the expiry date of
such Letter of Credit will be automatically extended unless notice of
non-renewal is given by the LC Bank (provided that such Letter of Credit has an
absolute expiry date not later than the Termination Date); and provided further
that the LC Bank shall deliver notice of non-renewal at the time such notice is
required to be given unless requested not to by the Borrower, which request will
be treated in the same manner as a request for issuance of a new Letter of
Credit on the same terms (any such Letter of Credit, an "Evergreen Letter of
Credit").
(c) The Borrower shall pay to the Agent a letter of credit fee
at a rate equal to 2.75% per annum on the aggregate amount available for
drawings under each Letter of Credit issued from time to time, any such fee to
be payable for the account of the Banks ratably in proportion to their Tranche A
Commitment Percentages. Such fee shall be payable in arrears on the last day of
each fiscal quarter of the Borrower for so long as such Letter of Credit is
outstanding and on the date of termination thereof. The Borrower shall pay to
the LC Bank additional fees and expenses in the amounts and at the times as
agreed between the Borrower and the LC Bank.
(d) Upon receipt from the beneficiary of any Letter of Credit
of any demand for payment or other drawing under such Letter of Credit, the LC
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 demand or
drawing and the respective payment date. The responsibility of the LC Bank to
the Borrower and each Bank shall be only to determine that the documents
(including each demand for payment or other drawing) delivered under each Letter
of Credit issued by it in connection with such presentment shall be in
conformity in all material respects with such Letter of Credit. The LC Bank
shall endeavor to exercise the same care in the issuance and administration of
the Letters of Credit as it does with respect to letters of credit in which no
participations are granted, it being understood that in the absence of any gross
negligence or willful misconduct by the LC Bank, each Bank severally agrees that
it shall be unconditionally and irrevocably liable without regard to the
occurrence of any Event of Default or any condition precedent whatsoever, pro
rata to the extent of such Bank's Tranche A Commitment Percentage, to reimburse
the LC Bank on demand for the amount of each payment made by the LC Bank under
each Letter of Credit issued by the LC Bank to the extent such amount is not
reimbursed by the Borrower pursuant to clause (e) below together with interest
on such amount for each day from the date of the LC Bank's demand for such
payment (or, if such demand is made after 11:00 A.M. (New York City time) on
such date, from the next succeeding Domestic Business Day) to the date of
payment by such Bank of such amount at a rate of interest per annum equal to the
Federal Funds Rate for such day.
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(e) The Borrower shall be irrevocably and unconditionally
obligated forthwith to reimburse the LC Bank for any amounts paid by the LC Bank
upon any drawing under any Letter of Credit, without presentment, demand,
protest or other formalities of any kind; provided that neither the Borrower nor
any Bank shall hereby be precluded from asserting any claim for direct (but not
consequential) damages suffered by the Borrower or such Bank to the extent, but
only to the extent, caused by (i) the willful misconduct or gross negligence of
the LC Bank in determining whether a request presented under any Letter of
Credit complied with the terms of such Letter of Credit or (ii) such 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. All such amounts paid by the LC 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 Tranche A Base
Rate Loans for such day. The LC Bank will pay to each Bank, ratably in
accordance with its Tranche A Commitment Percentage, all amounts received from
the Borrower for application in payment, in whole or in part, of the
Reimbursement Obligation in respect of any Letter of Credit, but only to the
extent such Bank has made payment to the LC Bank in respect of such Letter of
Credit pursuant to Section 2.16(d).
(f) If after the date hereof, 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 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 tax, reserve, special deposit or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder or participations therein, and the result shall be to increase
the cost to any Bank of issuing or maintaining any Letter of Credit or any
participation therein, or reduce any amount receivable by any Bank hereunder in
respect of any Letter of Credit (which increase in cost, or reduction in amount
receivable, shall be the result of such Bank's reasonable allocation of the
aggregate of such increases or reductions resulting from such event), then, upon
demand by such Bank (which demand shall not be unreasonably delayed, provided
that a demand within six months of the accrual of such increased cost or
reduction in amount receivable will not be deemed to be unreasonably delayed),
the Borrower agrees to pay to such Bank, from time to time as specified by such
Bank, such additional amounts as shall be sufficient to compensate such Bank for
such increased costs or reductions in amount incurred by such Bank. A
certificate of such Bank submitted by such Bank to the Borrower shall be
conclusive as to the amount thereof in the absence of manifest error.
(g) The Borrower's obligations under this Section 2.16 shall
be absolute and unconditional under any and all circumstances and irrespective
of any setoff, counterclaim or defense to payment which the Borrower may have or
have had
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against the LC Bank, any Bank or any beneficiary of a Letter of Credit. The
Borrower further agrees with the LC Bank and the Banks that the LC Bank and the
Banks shall not be responsible for, and the Borrower's Reimbursement Obligation
in respect of any Letter of Credit shall not be affected by, among other things,
the validity or genuineness of documents or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, any of its
Subsidiaries, the beneficiary of any Letter of Credit or any financing
institution or other party to whom any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrower or any of its Subsidiaries
against the beneficiary of any Letter of Credit or any such transferee. The LC
Bank shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit issued, extended or renewed
by it. The Borrower agrees that any action taken or omitted by the LC Bank or
any Bank under or in connection with each Letter of Credit and the related
drafts and documents, if done in good faith and without gross negligence, shall
be binding upon the Borrower and shall not put the LC Bank or any Bank under any
liability to the Borrower.
(h) To the extent not inconsistent with clause (g) above, the
LC Bank shall be entitled to rely, and shall be fully protected in relying upon,
any Letter of Credit, draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the LC Bank. The LC Bank shall be fully justified in failing
or refusing to take any action under this Agreement unless it shall first have
received such advice or concurrence of the Required Banks as it reasonably deems
appropriate or it shall first be indemnified to its reasonable satisfaction by
the Banks against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. Notwithstanding any
other provision of this Section 2.16, the LC Bank shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Required Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon the Banks and all
future holders of participations in any Letters of Credit.
(i) The Borrower hereby indemnifies and holds harmless each
Bank and the Agent from and against any and all claims and damages, losses,
liabilities, costs or expenses which such Bank or the Agent may incur (or which
may be claimed against such Bank or the Agent by any Person whatsoever) 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 claims, damages, losses, liabilities, costs or expenses which
the LC Bank may incur by reason of or in
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connection with the failure of any other Bank to fulfill or comply with its
obligations to the LC Bank hereunder (but nothing herein contained shall affect
any rights the Borrower may have against such defaulting Bank); provided that
the Borrower shall not be required to indemnify any Bank or the Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, caused by (i) the willful misconduct or gross negligence of the
LC Bank in determining whether a request presented under any Letter of Credit
complied with the terms of such Letter of Credit or (ii) the LC 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 Section 2.16(i) is intended to limit the obligations of the
Borrower under any other provision of this Agreement.
(j) Each Bank shall, ratably in accordance with its Tranche A
Commitment Percentage, indemnify the LC Bank, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees' gross negligence or willful
misconduct or the LC 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) that such indemnitees may suffer or incur in connection
with this Section 2.16 or any action taken or omitted by such indemnitees
hereunder.
(k) In its capacity as a Bank the LC Bank shall have the same
rights and obligations as any other Bank.
SECTION 2.17. Taxes.
(a) For purposes of this Section, the following terms have the
following meanings:
"Taxes" means any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings with
respect to any payment by the Borrower 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 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 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 2.17) 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 shall make such deductions, (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the Agent,
at its address referred to in Section 9.01, 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 2.17) 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 the 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. If the form provided by a Bank at the time such
Bank first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in subsection (a) of this Section.
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(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
2.17(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
2.17(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 is required to pay additional amounts to
or for the account of any Bank pursuant to this Section 2.17, 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 2.18. Warrants. In consideration for the Banks'
agreements to amend the Original Credit Agreement and the Bridge Credit
Agreement as set forth herein and in consideration for the Banks' agreements to
make available the Loans and Letters of Credit hereunder, subject to the terms
and conditions set forth herein, the Borrower on the Effective Date shall issue
to the Banks warrants (collectively, the "Warrants") initially exercisable for
420,000 shares of the Borrower's common stock, par value $1.00 per share. Each
of the Warrants shall be in substantially the form of Exhibit N, shall be issued
on the Effective Date to each of the Banks ratably in accordance with their
respective aggregate Commitments, and shall be duly executed and registered in
the name of each Bank or such other name or names as such Bank shall have
notified the Agent and the Borrower not less than two Domestic Business Days
before the Effective Date.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become
effective on the date that each of the following conditions shall have been
satisfied (or waived in accordance with Section 9.05), but only if each of such
conditions shall have been satisfied (or waived) on or before January 31, 1997:
(a) receipt by the Agent of counterparts of this Agreement
signed by each of the parties hereto (or, in the case of any party as to which
an executed counterpart shall not have been received, receipt by the Agent in
form satisfactory to it of telegraphic, facsimile, telex or other written
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confirmation from such party of execution of a counterpart hereof by such
party);
(b) receipt by the Agent of duly executed Notes for the
account of each Bank, dated on or before the Effective Date and complying with
the provisions of Section 2.03, and of certificates representing the Warrants
for the account of each Bank, all duly executed and registered in accordance
with Section 2.18;
(c) receipt by the Agent of counterparts of the following,
each dated as of the date hereof and duly executed by each of the parties
thereto:
(1) the Borrower Pledge Agreement,
(2) the Borrower Security Agreement,
(3) the Subsidiary Security Agreement,
(4) the Subsidiary Pledge Agreement,
(5) the Subsidiary Guarantee Agreement,
(6) the Release of Claims,
(7) the Warrantholders Rights Agreement,
(8) the Securityholders Agreement, and
(9) the Exercise Price Letter;
(d) receipt by the Agent of all documents and certificates
required to be delivered pursuant to any Financing Document on or prior to the
Effective Date (including appropriately completed and duly executed Uniform
Commercial Code financing statements);
(e) receipt by the Agent of all Pledged Securities;
(f) receipt by the Agent of copies of file search reports from
the Uniform Commercial Code filing officer in each jurisdiction (i) in which any
Mortgaged Facility is located or (ii) which is identified in the Perfection
Certificate (as defined in the Borrower Security Agreement or Subsidiary
Security Agreement, as the case may be), setting forth the results of Uniform
Commercial Code, tax lien and judgment lien searches conducted in the name of
the Borrower and each Subsidiary Guarantor, as the case may be;
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(g) receipt by the Agent of evidence satisfactory to the Agent
that arrangements satisfactory to it shall have been made for recording the
Mortgage Amendments;
(h) receipt by the Agent of an endorsement to each title
insurance policy delivered to the Agent pursuant to the Bridge Credit Agreement
insuring that the coverage under such policy is unaffected by this Agreement and
the Mortgage Amendments;
(i) receipt by the Agent of evidence satisfactory to the Agent
of the insurance coverage required by Section 5.03;
(j) receipt by the Agent of evidence satisfactory to the Agent
that (i) prior to or simultaneously with the transactions hereunder contemplated
to take place on the Effective Date, the Investor, The Common Fund and Separate
Account P shall purchase an aggregate 150,150 shares of Series B Preferred Stock
in accordance with the Stock Purchase Agreement (with the Investor purchasing
not less than 85,150 of such shares), (ii) on the Effective Date, the Borrower
shall receive aggregate cash proceeds from the Investor, The Common Fund and
Separate Account P of not less than $30,030,000 in respect thereof (with not
less than $17,030,000 of such cash proceeds received from the Investor), and
(iii) all transactions contemplated by the Stock Purchase Agreement to be
consummated on or before the closing date for such purchase will take place
prior to or simultaneously with the transactions hereunder contemplated to take
place on the Effective Date;
(k) receipt by the Agent of (i) an opinion of the Vice
President, Counsel and Corporate Secretary of the Borrower and (ii) an opinion
of Goodwin, Procter & Hoar LLP, special counsel for the Borrower, covering the
matters set forth on Exhibits G and H, respectively, or with such changes as
shall be acceptable to the Agent and the Required Banks and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(l) receipt by the Agent of (i) an opinion of Davis Polk &
Wardwell, special New York counsel for the Agent, covering the matters set forth
on Exhibit I, or with such changes as shall be acceptable to the Agent and the
Required Banks and (ii) an opinion of each of: (w) Osborn Maledon, special
Arizona counsel for the Agent, (x) Greenberg, Traurig, Hoffman, Lipoff, Rosen &
Quentel, P.A., special Florida counsel for the Agent, (y) McLane, Graf,
Raulerson & Middleton, special New Hampshire counsel to the Agent and (z) Miro &
Weiner, P.C., special Michigan counsel to the Agent, in each case substantially
in the form of the opinion delivered by such counsel as a condition to the
occurrence of the "Bridge Effective Date" under the
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Bridge Credit Agreement, except that (I) each such opinion will be dated the
Effective Date, (II) each reference therein to the Original Credit Agreement or
the Bridge Credit Agreement shall be to this Credit Agreement, (III) each
reference to any of any other Financing Documents will include such Financing
Documents as amended to and including the Effective Date and (IV) each such
opinion shall contain other appropriate changes (including to cause each such
opinion to be current to the Effective Date) as shall be acceptable to the Agent
and the Required Banks and shall cover such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably request;
(m) receipt by the Agent, on behalf of the Banks and on behalf
of itself in its capacity as Agent, of all interest, fees and other amounts
(other than principal, subject to Section 3.01(t) below) due and payable under
the Original Credit Agreement, the Bridge Credit Agreement or hereunder
(including fees and expenses payable pursuant to Section 9.03 hereunder) of
which the Borrower has received notice;
(n) each Bank's satisfaction in its sole good faith discretion
as to the absence of any material adverse change in any aspect of the business,
operations, properties, prospects or condition (financial or otherwise) of the
Borrower and its Subsidiaries, or any event or condition that is reasonably
likely to result in such a material adverse change;
(o) receipt by the Agent of a certificate signed by the chief
financial officer or treasurer of the Borrower to the effect that, both before
and immediately after the making of the Loans, the issuance of the Warrants and
the consummation of the Stock Purchase and the other transactions contemplated
to take place on the Closing Date, (i) no Default shall have occurred and be
continuing and (ii) the representations and warranties of the Borrower and any
Subsidiaries made in or pursuant to any Financing Documents are true;
(p) receipt by the Agent of a Cash Management Letter, in form
and substance satisfactory to the Banks;
(q) receipt by each of the Banks, at least two weeks prior to
the Effective Date, of (i) a business plan for the Borrower and its Subsidiaries
prepared by the Borrower and the Investor in accordance with GAAP, in a form and
containing such detail as may be reasonably satisfactory to the Banks, (ii) any
other information it may reasonably request concerning the financial condition,
results of operations, liabilities (contingent or otherwise, including with
respect to environmental liabilities and employee and retiree benefits) and
prospects of, and the financial reporting and accounting systems
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and the management information systems of, the Borrower and satisfaction by each
Bank in its sole good faith discretion with all such information;
(r) receipt by each of the Banks of copies of the Management
Agreement and any other agreements between the Borrower or any of its
Subsidiaries and any members of the Investor Group (other than agreements
between the Borrower or any of its Subsidiaries and Tutor-Saliba Corp. which
shall have been entered into in the ordinary course of the Construction
Business), all of which shall be in form and substance satisfactory to the
Banks;
(s) receipt by the Agent of all documents it may reasonably
request relating to the existence of the Obligors, the corporate authority for
and the validity of the Financing Documents and any other matters relevant
hereto, all in form and substance satisfactory to the Agent;
(t) receipt by the Agent of evidence satisfactory to it that
prior to or simultaneously with the transactions hereunder contemplated to take
place on the Effective Date, that all "Bridge Term Loans" outstanding under the
Bridge Credit Agreement shall be repaid in full (with accrued interest thereon)
on the Effective Date and that upon the effectiveness of this Agreement, (i) the
sum of the aggregate outstanding principal amount of the Tranche A Loans plus
the aggregate amount of all Letter of Credit Liabilities shall not exceed the
aggregate amount of the Tranche A Commitments and (ii) the aggregate outstanding
principal amount of the Tranche B Loans shall not exceed the aggregate amount of
the Tranche B Commitments;
(u) receipt by the Agent of each Bank's Original Note and
Bridge Note (or any agreements of indemnity, if applicable, in accordance with
Section 2.03(a));
(v) receipt by the Agent and the Banks of the Asset Sale
Letter, in form and substance satisfactory to each Bank;
(w) receipt by the Agent and the Banks of the information
described in Sections 5.01(e), 5.01(f), 5.01(g) and 5.01(h) for the most recent
date prior to the Effective Date when such information would have been
deliverable pursuant to such sections, which information shall be provided in a
format that is acceptable to the Banks; and
(x) receipt by the Agent of evidence satisfactory to it that
all approvals, consents and other actions by or in respect of, or filings with
any governmental body, agency, official, authority or any other Person required
in connection with the Stock Purchase or the transactions contemplated by the
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Stock Purchase Agreement or any Financing Documents shall have been obtained,
taken or made.
This Agreement shall not become effective or be binding on any party hereto
unless all of the foregoing conditions are satisfied not later than January 31,
1997. Prior to the effectiveness of this Agreement in accordance with this
Section 3.01, none of the terms and conditions of the Original Credit Agreement,
the Bridge Credit Agreement or any Financing Document (as defined in the
Original Credit Agreement or the Bridge Credit Agreement) shall be amended,
waived or otherwise modified by this Agreement and all of such terms and
conditions shall remain in full force and effect and are hereby ratified and
confirmed in all respects. 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.
SECTION 3.02. Credit Events. The obligation of any Bank to
make a Loan on the occasion of any Borrowing and of the LC Bank to issue a
Letter of Credit (or to permit the extension of an Evergreen Letter of Credit)
on the occasion of a request therefor by the Borrower is subject to the
satisfaction of the following conditions:
(a) receipt (i) by the Agent of a Notice of Borrowing as
required by Section 2.02, in the case of a Borrowing or (ii) by the LC Bank of
notice as required by Section 2.16, in the case of a Letter of Credit;
(b) the fact that, after giving effect to such Credit Event,
the Usage shall not exceed the aggregate amount of the Commitments;
(c) the fact that, immediately after such Credit Event, no
Default shall have occurred and be continuing;
(d) the fact that the representations and warranties of each
Obligor contained in each Financing Document to which it is a party (except, in
the case of a Refunding Borrowing, the representation and warranty set forth in
Section 4.04(c) hereof as to any material adverse change which has theretofore
been disclosed in writing by the Borrower to the Banks) shall be true on and as
of the date of such Borrowing;
(e) the ability of the Borrower to obtain bonding for new
construction projects shall not be less than or more limited than on the
Effective Date; and
(f) the payment by the Borrower of all amounts theretofore
payable pursuant to Section 9.03 within seven days of demand.
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Each Borrowing shall be deemed to be a representation and warranty by the
Borrower on the date of such Borrowing as to the facts specified in clauses (b),
(c), (d), (e) and (f) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of Massachusetts, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by each Obligor of the
Financing Documents to which it is a party are within its 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 such Obligor
or of any agreement, judgment, injunction, order, decree or other instrument
binding upon such Obligor or any of its Subsidiaries or result in the creation
or imposition of any Lien, except Liens created by the Collateral Documents, on
any asset of such Obligor or any of its Subsidiaries.
SECTION 4.03. Binding Effect; Liens of Collateral Documents.
(a) Each of the Financing Documents (other than the Notes and
the Warrants) to which the Borrower is a party constitutes a valid and binding
agreement of the Borrower and the Notes and the Warrants, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower, in each case enforceable in accordance with their
respective terms. Each of the Financing Documents to which any Subsidiary
Guarantor is a party, when executed and delivered in accordance with this
Agreement, will constitute valid and binding agreements of each Subsidiary
Guarantor party thereto, in each case enforceable against each such Subsidiary
Guarantor in accordance with their respective terms.
(b) The Borrower has reserved and will keep available for
issuance upon exercise of the Warrants the total number of shares of common
stock of the
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Borrower that shall be deliverable upon exercise of all Warrants from time to
time outstanding. The issuance of the Warrants has been duly and validly
authorized and the shares of common stock issuable upon exercise of the
Warrants, when issued and sold in accordance with the Warrants, will be duly and
validly issued, fully paid and nonassessable and free of preemptive rights.
(c) All real property in which the Borrower or any of its
Subsidiaries has an interest, directly or indirectly (whether through an
interest in a joint venture or partnership or otherwise) as of the date hereof
is listed in Part I of Schedule 4.03(c) hereto. The list of personal property of
the Borrower and each of its Subsidiaries set forth in Part II of Schedule
4.03(c), security interests in which are governed by Article 9 of the UCC as in
effect in the relevant jurisdictions, is complete in all material respects. The
location, ownership status and lien information provided in Schedule 4.03(c) for
each item of real property and each type of personal property are complete and
correct.
(d) The Collateral Documents create valid security interests
in, and first mortgage Liens on, the Collateral purported to be covered thereby,
which security interests and mortgage Liens are and will remain perfected
(except in the case of inventory located at construction sites) security
interests and duly recorded mortgage Liens, prior to all other Liens except
Liens permitted by the Collateral Documents.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 1995 and the related consolidated
statements of income, stockholders' equity and cash flows for the fiscal year
then ended, reported on by Arthur Andersen LLP and set forth in the Borrower's
1995 Form 10-K, a copy of which has been delivered to each of the Banks, fairly
present, in conformity with GAAP, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of September 30, 1996 and the related
unaudited consolidated statements of income, stockholders' equity and cash flows
for the nine months then ended, set forth in the Borrower's quarterly report for
the fiscal quarter ended September 30, 1996 as filed with the Securities and
Exchange Commission on Form 10-Q, a copy of which has been delivered to each of
the Banks, fairly present, in conformity with GAAP applied on a basis consistent
with the financial statements referred to in subsection (a) of this Section, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated
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results of operations and cash flows for such nine month period (subject to
normal year-end adjustments).
(c) Since June 30, 1996 there has been no material adverse
change in the business, financial position, results of operations or prospects
of the Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. Except as disclosed in the
Borrower's 1995 Form 10-K and the Form 10-Q referred to in Section 4.04(b)
above, 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 any Financing Document.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of ERISA
and the Internal Revenue Code with respect to each Plan and is in compliance in
all material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability to the PBGC or any other Person under Title IV of ERISA
other than a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters.
(a) In the ordinary course of its business, the Borrower
conducts periodic reviews of the effect of Environmental Laws on the business,
operations and properties of the Borrower and its Subsidiaries and compliance
therewith. The Borrower and its Subsidiaries also attempt, whenever possible, to
negotiate specific provisions in contracts for construction services that
allocate to the contracting governmental agency or private owner, the entire
risk and responsibility for Hazardous Substances encountered during the course
of construction. On the basis of such reviews and contract provisions and
procedures, the Borrower has reasonably concluded that the costs and associated
liabilities of compliance with Environmental Laws are unlikely to have a
material adverse effect on the business, financial
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condition, results of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
(b) Without limiting the foregoing, as of the Effective Date:
(i) no notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review
is pending or, to the knowledge of the Obligors, threatened by any
governmental or other entity with respect to any (A) alleged violation
by the Borrower or any of its Subsidiaries of any Environmental Law
involving any Mortgaged Facility, (B) alleged failure by the Borrower
or any of its Subsidiaries to have any environmental permit,
certificate, license, approval, registration or authorization required
in connection with the conduct of its business at any Mortgaged
Facility, (C) Regulated Activity conducted at any Mortgaged Facility or
(D) Release of Hazardous Substances at or in connection with any
Mortgaged Facility;
(ii) other than generation of Hazardous Substances in
compliance with all applicable Environmental Laws, no Regulated Activity has
occurred at or on any Mortgaged Facility;
(iii) no polychlorinated biphenyls, radioactive material, urea
formaldehyde, lead, asbestos, asbestos-containing material or underground
storage tank (active or abandoned) is or has been present at any Mortgaged
Facility;
(iv) no Hazardous Substance has been Released (and no written
notification of such Release has been filed) or is present (whether or not in a
reportable or threshold planning quantity) at, on or under any Mortgaged
Facility;
(v) no Mortgaged Facility is listed or, to the knowledge of
the Obligors, proposed for listing, on the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal,
state or foreign list of sites requiring investigation or clean-up; and
(vi) there are no Liens under Environmental Laws on any
Mortgaged Facility, no government actions have been taken or are in process
which could subject any Mortgaged Property to such Liens and neither the
Borrower nor any of its Subsidiaries would be required to place any notice or
restriction relating to Hazardous Substances in any deed to any Mortgaged
Facility.
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(c) No environmental investigation, study, audit, test, review
or other analysis has been conducted of which the Obligors have knowledge in
relation to any Mortgaged Facility which has not been delivered to the Banks.
SECTION 4.08. Taxes. United States Federal income tax returns
of the Borrower and its Subsidiaries have been examined and closed through the
fiscal year ended December 31, 1989. 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 4.09. Subsidiaries. All of the Borrower's Subsidiaries
and all joint ventures and partnerships in which the Borrower or any of its
Subsidiaries has an interest as of the date hereof are listed in Schedule 4.09
hereto and the state of incorporation or organization and the ownership interest
of each Subsidiary, joint venture and partnership specified therein are complete
and correct. Each of the Borrower's corporate Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.10. Not an Investment Company. The Borrower is not
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
SECTION 4.11. No Burdensome Restrictions; No Derivatives
Obligations; Certain Existing Agreements.
(a) No contract, lease, agreement or other instrument to which
the Borrower or any of its Subsidiaries is a party or by which any of its
property is bound or affected, no charge, corporate restriction, judgment,
decree or order and no provision of applicable law or governmental regulation
has or is reasonably expected to materially and adversely affect the business,
operations or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the ability of the Borrower to perform its
obligations under this Agreement.
(b) Neither the Borrower nor any of its Subsidiaries is party
to any Derivatives Obligation except the Rincon Swap.
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(c) All agreements to which the Borrower or any Subsidiary
Guarantor is a party or by which it is bound (other than the Financing
Documents) containing a negative pledge or limitations on its incurrence of Debt
or sale of assets are listed on Schedule 4.11 hereto.
SECTION 4.12. 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 (or in the case of
projections and similar information based on reasonable estimates) 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 reasonably be expected to materially and adversely 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 to perform its obligations under this Agreement.
SECTION 4.13. Ownership of Property; Liens. The Borrower and
its Subsidiaries have good and marketable title to and are in lawful possession
of, or have valid leasehold interests in, or have the right to use pursuant to
valid and enforceable agreements or arrangements, all of their respective
properties and other assets (real or personal, tangible, intangible or mixed),
except where the failure to have or possess the same with respect to such
properties or other assets could not, in the aggregate, 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. None
of such properties or other assets is subject to any Lien except Permitted
Liens.
SECTION 4.14. Representations and Warranties Incorporated from
Other Financing Documents. As of the Effective Date, each of the representations
and warranties made in this Agreement, the Subsidiary Guarantee Agreement, the
Collateral Documents, the Warrants and the Warrantholders Rights Agreement by
any of the parties thereto is true and correct in all material respects, and
such representations and warranties are hereby incorporated herein by reference
with the same effect as though set forth in their entirety herein, as qualified
therein.
SECTION 4.15. Bank Accounts and Cash Management System. All
deposit, checking, operating or other bank accounts maintained by the Borrower
or any Subsidiary Guarantor (other than payroll and petty cash accounts opened
in the ordinary course of business with imprest balances not to exceed $7,500
for each such account) and, for each such account, the name of the account
party, the name of the bank, the account number and the type of account, are
listed on Schedule 4.15. The
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Cash Management Letter provides a complete and accurate description of the cash
management system of the Borrower and its Subsidiaries.
SECTION 4.16. Representations in Perfection Certificates. All
of the information set forth in each Perfection Certificate (as defined in the
Borrower Security Agreement or the Guarantor Security Agreement) delivered to
the Agent prior to the Effective Date is correct and complete as of the
Effective Date.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains unpaid or any
Letter of Credit remains outstanding or any Reimbursement Obligation with
respect thereto remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each
of the Banks:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, consolidated and
consolidating balance sheets of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of income, stockholders'
equity 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) (1) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statement of income and cash flows for such quarter and for the portion of the
Borrower's fiscal year ended at the end of such quarter, setting forth in each
case in comparative form the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation, GAAP
and consistency by the chief financial officer or the chief accounting officer
of the Borrower;
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(2) as soon as available and in any event within 45 days after
the end of each quarter of each fiscal year of Perini Land and Development, a
cash flow statement for Perini Land and Development for such quarter in a format
consistent with the format of the cash flow statement for Perini Land and
Development for the quarter ended December 31, 1995 and previously delivered to
the Banks;
(c) simultaneously with the delivery of each set of financial
statements referred to in clause (a) or (b) above:
(1) a certificate of the chief financial officer or the chief
accounting officer of the Borrower (x) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in compliance with
the requirements of Sections 5.07 to 5.10, inclusive, 5.12, 5.14, 5.15 and 5.17
on the date of such financial statements and (y) stating whether there exists on
the date of such certificate any Default 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; and
(2) a report prepared by management of the Borrower, in
sufficient detail as may be reasonably acceptable to the Required Banks,
providing a description of and an explanation for any material variances between
such financial statements and the Business Plan;
(d) 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 there existed
on the date of such statements any Default and (ii) confirming the calculations
set forth in the officer's certificate delivered simultaneously therewith
pursuant to clause (c) above;
(e) as soon as available and in any event within 45 days after
the end of each quarter of each fiscal year of the Borrower, a copy of the most
recent "retainage report", "new work potential report" and "new work acquisition
report" (including a description of new work and a comparison of such new work
to the new work projected in the Business Plan) prepared by management of the
Borrower, substantially in the format for such information delivered pursuant to
Section 3.01(w);
(f) as soon as available and in any event within 45 days after
the end of each quarter of each fiscal year of the Borrower (subject to the
proviso at the end of this Section 5.01(f)), a schedule in substantially the
format for
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such information delivered pursuant to Section 3.01(w), dated as of the last day
of such quarter (or month, as the case may be) listing each construction
contract which provides for aggregate total payments in excess of $2,500,000 and
with respect to which the Borrower or a Consolidated Subsidiary of the Borrower
is a party or participates through a joint venture, and setting forth as of the
date of such schedule for each such contract the Borrower's original estimate of
revenue and profit, the Borrower's current estimate of revenue and profit,
cumulative realized and estimated remaining revenue and profit, "cash ahead/cash
behind" information, the percentage of completion and anticipated completion
date of each such contract and a forecast by quarter of the remaining cash flows
for each such contract, certified as to consistency, accuracy and reasonableness
of estimates by the chief financial officer or the chief accounting officer of
the Borrower; provided that if the Borrower shall fail to comply with its
obligations under Section 5.01(g) or 5.01(h) due to extenuating circumstances
for five Domestic Business Days after the due date thereof or such later date as
the Required Banks may approve, the Borrower shall thereafter be required to
provide the information described in this Section 5.01(f) on a monthly basis,
within twenty Domestic Business Days after the end of each month;
(g) as soon as available and in any event within three
Domestic Business Days after the end of each period of two calendar weeks, a
copy of the weekly and monthly cash flow projections which management of the
Borrower has customarily prepared every two weeks by project, by division and on
a consolidated basis, prepared in a manner and format easily comparable to the
financial information provided under Section 5.01(f), substantially in the
format for such information delivered pursuant to Section 3.01(w), with a
variance analysis comparing the current projections to the most recent prior
projections;
(h) as soon as available and in any event within two Domestic
Business Days after the last day of each calendar week, a weekly "flash report,"
substantially in the format for such information delivered pursuant to Section
3.01(w), providing information regarding:
(i) the Borrower's approximate consolidated aggregate cash
receipts and cash disbursements for such week and for the most recent three
prior weeks;
(ii) the Borrower's cash balances as of the close of business
on the last day of such week and as of the close of business on the last day of
the most recent three prior weeks;
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(iii) the aggregate principal amount of all Borrowings and
outstanding Letters of Credit as of the close of business on the last day of
such week and as of the close of business on the last day of the most recent
three prior weeks;
(iv) the estimated amounts of outstanding checks, net
borrowings from joint ventures (including a listing of the major net borrowings
by project) and overdue obligations, including held checks, as of the close of
business on the last day of such week and as of the close of business on the
last day of the most recent three prior weeks; and
(v) any material developments of which the chief financial
officer of the Borrower is aware relating to, or any changes in, any
construction contracts, including any profit write-downs and/or any loss of
float in an amount which exceeds $100,000 for any individual construction
contract and "significant" cash flow timing variances (relative to the most
recent information provided pursuant to the Business Plan or Section 5.01(f))
that are not expected to be reversed within ninety days of the date when such
timing variance is expected to occur (or has occurred), with "significant" for
purposes of this Section 5.01(h) meaning a cash flow variance of $500,000 or
more for any individual construction contract;
(i) by March 31 of each fiscal year, the annual projected
consolidated and consolidating balance sheets and income statements, operating
and capital expenditure budgets and cash flow forecasts, prepared on a quarterly
basis and in accordance with GAAP, for the Borrower and its Consolidated
Subsidiaries for the next succeeding three fiscal years, presented on a
quarterly basis and in a format reasonably acceptable to the Required Banks, and
certified by the chief financial officer of the Borrower as containing
reasonable assumptions to the best of his knowledge;
(j) forthwith upon the occurrence of any Default, 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;
(k) prompt notice of the occurrence of any "Special Default"
as defined in clause (ii) of Section 7(b) of the "Certificate of Vote of
Directors Establishing Series B Cumulative Convertible Preferred Stock of Perini
Corporation," or of any other circumstance causing the "Cash Dividend Rate" in
respect of the Series B Preferred Stock to increase from 7% or the "In-Kind
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Dividend Rate" in respect of the Series B Preferred Stock to increase from 10%;
(l) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(m) 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 annual, quarterly or monthly
reports which the Borrower shall have filed with the Securities and Exchange
Commission;
(n) 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 407 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;
(o) prompt notice of the receipt of any complaint, order,
citation, notice or other written communication from any Person with respect to
(i) the existence or alleged existence of a violation of any applicable
Environmental Law at or on, or of any Environmental Liability arising with
respect to, any Mortgaged Facility, (ii) any Release on any Mortgaged Facility
or any part thereof in a quantity that is reportable under any applicable
Environmental
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Law, and
(iii) any pending or threatened proceeding for the
termination, suspension or non-renewal of any permit required under any
applicable Environmental Law with respect to any Mortgaged Facility;
(p) prompt notice of any change in the Borrower's ability to
obtain bonding for new construction projects (including without limitation a
reduction in the amount of bonding commitments of any bonding company to the
Borrower and any restrictions on use of such commitments);
(q) prompt notice of any decision by the Borrower, any of its
Subsidiaries or any joint venture partner not to meet a capital call by any
joint venture in which the Borrower or any such Subsidiary is participating;
(r) prompt notice of the Borrower or any Subsidiary obtaining
or increasing an interest in a joint venture or partnership which, in the case
of any construction joint venture, need not be given until reasonably promptly
after a bid by such joint venture for a construction contract shall have been
accepted; and
(s) from time to time such additional information regarding
the financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations; No Derivatives
Obligations.
(a) 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 GAAP, appropriate reserves for the accrual of any of the same.
(b) The Borrower will not, nor will it permit any of its
Subsidiaries to, become a party to any Derivatives Obligation except the Rincon
Swap.
SECTION 5.03. Maintenance of Property; Insurance. 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; will maintain, and will cause each Subsidiary to maintain (either
in the name of the Borrower or in such Subsidiary's own name) with financially
sound and reputable insurance companies, insurance on all their property in at
least such amounts and against at least such risks as are usually insured
against in the same general area by companies of established repute engaged in
the same or a similar
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business; and will furnish to the Banks, upon written request from the Agent,
full information as to the insurance carried.
SECTION 5.04. Conduct of Business and Maintenance of
Existence. The Borrower will continue, and will cause each Subsidiary Guarantor
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 Guarantor 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.
SECTION 5.05. Compliance with Laws. The Borrower will comply,
and cause each Subsidiary to comply, in all material respects 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.
SECTION 5.06. Inspection of Property, Books and Records.
(a) The Borrower will keep, and will cause each Subsidiary to
keep, proper books of record and account in which full, true and correct entries
in conformity with GAAP 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
(subject to Section 9.03(a)(ii)) 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.
(b) The Borrower shall hold a meeting for representatives of
the Banks at least once each fiscal quarter, at a time and place to be
determined by the Agent (after consultation with the Banks) on ten Domestic
Business Days' notice to the Borrower and the Banks, for purposes of holding
such discussions with the chief executive officer, chief operating officer and
chief financial officer of the Borrower (each of whom shall attend each such
meeting) and such other of the Borrower's officers, employees and independent
public accountants as the Borrower shall designate or as the Agent shall
designate at the reasonable request of any Bank.
SECTION 5.07. Minimum Working Capital Ratio. The Borrower will
not permit the ratio of (i) the consolidated current assets (excluding cash and
cash equivalents) of the Borrower and its Consolidated Subsidiaries at any time
to (ii) the consolidated current liabilities (excluding Debt under this
Agreement) of the Borrower and its Consolidated Subsidiaries at such time to be
less than 1:1.
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SECTION 5.08. Debt.
(a) After the date hereof, the Borrower will not incur or
suffer to exist any Debt other than:
(i) Debt existing on September 30, 1996 and listed on Schedule
5.08 hereof;
(ii) Debt under this Agreement;
(iii) Debt owing to joint ventures in which the Borrower is
participating;
(iv) Debt incurred to finance insurance premiums, in an
aggregate principal amount not to exceed $3,000,000 at any time;
(v) Debt owed by the Borrower to a Subsidiary and evidenced by
an intercompany note pledged to the Agent under the Subsidiary Pledge Agreement;
(vi) Debt incurred or assumed by the Borrower for the purpose
of financing all or any part of the cost of acquiring any fixed assets of the
Borrower (including through capital leases), provided that the aggregate amount
of all such Debt incurred or assumed by the Borrower and its Consolidated
Subsidiaries during any period of twelve consecutive calendar months shall not
exceed an aggregate principal amount of $3,000,000; and
(vii) any refinancing, extension, renewal or refunding of the
Debt referred to in clauses (i) through (vi) above; provided that (x) Modified
Parent Company Debt shall not at any time exceed $150,000,000 and (y) any
refinancing, extension, renewal or refunding of any such Debt shall not increase
the principal amount of such Debt.
(b) After the date hereof, the Borrower will not permit any
Subsidiary to incur or suffer to exist any Debt other than
(i) Debt existing on September 30, 1996 and listed on Schedule
5.08 hereof;
(ii) Debt under the Subsidiary Guarantee Agreement;
(iii) Debt owing to joint ventures in which such Subsidiary is
participating;
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(iv) Debt owing by a Subsidiary to the Borrower and evidenced
by an intercompany note pledged to the Agent under the Borrower Security
Agreement; and
(v) Debt incurred or assumed by a Subsidiary for the purpose
of financing all or any part of the cost of acquiring any fixed assets of such
Subsidiary (including through capital leases), provided that the aggregate
amount of all such Debt incurred or assumed by the Borrower and its Consolidated
Subsidiaries during any period of twelve consecutive calendar months shall not
exceed an aggregate principal amount of $3,000,000; and
(vi) any refinancing, extension, renewal or refunding of the
Debt referred to in clauses (i) through (v) above; provided that any extension,
renewal or refunding on any such Debt shall not increase the principal amount of
such Debt.
SECTION 5.09. Minimum Consolidated Adjusted Tangible Net
Worth. The Borrower will not permit Consolidated Adjusted Tangible Net Worth
during any fiscal quarter set forth below to be less than the amount set forth
below opposite such fiscal quarter:
Minimum Consolidated
Fiscal Quarter Ending Adjusted Tangible Net Worth
December 31, 1996 $109,244,000
March 31, 1997 $109,661,000
June 30, 1997 $110,078,000
September 30, 1997 $110,495,000
December 31, 1997 $112,899,000
March 31, 1998 $113,275,000
June 30, 1998 $115,651,000
September 30, 1998 $115,977,000
December 31, 1998 $119,303,000
March 31, 1999 $119,629,000
June 30, 1999 $121,955,000
September 30, 1999 $122,281,000
December 31, 1999 $126,611,000
SECTION 5.10. Minimum Operating Cash Flow. The Borrower shall
not permit Operating Cash Flow for any period specified below to be less than
the amount set forth below opposite such period:
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Minimum
Period Operating Cash Flow
January 1, 1997 through March 31, 1997 ($20,000,000)
January 1, 1997 through June 30, 1997 ($10,000,000)
January 1, 1997 through September 30, 1997 $0
January 1, 1997 through December 31, 1997 $10,000,000
Each four consecutive fiscal quarters
ending March 31, 1998 and thereafter $15,000,000
SECTION 5.11. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary of the Borrower will create, assume or suffer to exist
any Lien on any asset (including, without limitation, capital stock of
Subsidiaries) now owned or hereafter acquired by it, except:
(a) Liens existing on September 30, 1996 securing Debt
outstanding on September 30, 1996 as described in Schedule 5.11;
(b) 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 and such Lien secures only such
Debt;
(c) 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;
(d) Permitted Encumbrances;
(e) Liens granted to the Bonding Company to secure amounts
owing by the Borrower or any of its Subsidiaries in connection with surety
bonds, undertakings and instruments of guarantee issued by the Bonding Company
on behalf of the Borrower or any of its Subsidiaries in the ordinary course of
their respective businesses; and
(f) Liens created by the Collateral Documents.
SECTION 5.12. Consolidations, Mergers and Sales of Assets.
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, consolidate or merge with or into any other Person, other than
a Subsidiary into a Subsidiary Guarantor or into the Borrower.
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(b) The Borrower will not, and will not permit any of its
Subsidiaries to, sell, lease or otherwise dispose of any of its or their assets,
other than:
(i) Sales of inventory in the ordinary course of their
respective businesses;
(ii) Dispositions of Temporary Cash Investments;
(iii) Dispositions of other assets if (x) each of the Banks
shall have given its prior written consent thereto and (y) the consideration
therefor shall consist of cash payable at closing in an amount at least equal to
the fair market value of such assets (as determined in good faith by a financial
officer of the Borrower or, if such value exceeds $15,000,000, by the board of
directors of the Borrower or a duly constituted committee thereof); provided
that the prior written consent of the Banks shall not be required for either (A)
a Disposition of any asset having a fair market value less than $100,000 if the
aggregate amount of the fair market value of all such Dispositions during any
fiscal year is less than $500,000 and the Borrower delivers to each of the Banks
prompt written notice of each such Disposition or (B) a Disposition of any asset
listed on the Asset Sale Letter if the consideration therefor equals or exceeds
the amount set forth thereon;
(iv) operating leases at market rentals of residential and
commercial space held by the Borrower or any of its Subsidiaries in connection
with their real estate investment and development activities, but only to the
extent that such leases are entered into in the ordinary course of their
respective businesses, consistent with past practices as in effect prior to the
Effective Date; and
(v) operating leases at market rentals of portions of office
space not then utilized by the Borrower or any of its Subsidiaries in the
Borrower's headquarters office building in Framingham, Massachusetts.
SECTION 5.13. Use of Proceeds. The proceeds of the Loans made
under this Agreement will be used by the Borrower for general corporate
purposes. None of such proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying
any "margin stock" within the meaning of Regulation U.
SECTION 5.14. Restricted Payments. The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Payment; provided that the
foregoing shall not restrict or prohibit:
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(a) cash payments in the ordinary course of business in full
or partial settlement of employee stock options or in full or partial settlement
of similar incentive compensation arrangements providing employees options,
warrants or other rights to acquire shares of the Borrower's capital stock to
employees, up to an aggregate amount not to exceed $100,000 during any period of
twelve consecutive calendar months;
(b) the redemption, for an aggregate redemption price not
exceeding $200,000, of the "Rights" issued pursuant to the Shareholder Rights
Agreement dated as of September 23, 1988, as amended to the Effective Date; and
(c) other Restricted Payments (other than any purchase or
redemption of any shares of Series B Preferred Stock) made after September 30,
1998, but only if and to the extent that, before and after giving effect
thereto: (i) no Default shall have occurred and be continuing; (ii) the
aggregate amount of the Commitments shall be less than $90,000,000; (iii) the
aggregate amount of all Restricted Payments during any fiscal quarter, when
added to the aggregate amount of all Restricted Payments during the three
immediately preceding fiscal quarters, shall not exceed 50% of Net Income from
Continuing Operations for the four immediately preceding fiscal quarters; (iv)
Consolidated Tangible Net Worth shall be at least $60,000,000; and (v)
Consolidated Adjusted Tangible Net Worth during each period set forth below
shall be at least: Minimum Consolidated Adjusted Period Tangible Net Worth
October 1, 1998 - December 30, 1998 $161,977,000
December 31, 1998 - March 31, 1999 $167,303,000
April 1, 1999 - June 30, 1999 $170,129,000
July 1, 1999 - September 30, 1999 $172,955,000
Thereafter $175,781,000
and provided further, that neither the Borrower nor or any of its Subsidiaries
shall, directly or indirectly, at any time purchase or redeem any shares of
Series B Preferred Stock until all of the obligations under this Agreement shall
be repaid in full and all Commitments hereunder terminated.
SECTION 5.15. Real Estate Investments. The Borrower will not,
and will not permit any Consolidated Subsidiary to, make any Real Estate
Investment if, after giving effect thereto, the aggregate amount of all Real
Estate Investments (determined on a gross basis and not, for example, net of any
proceeds received in respect of any Real Estate Investments) made by the
Borrower or any of its
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Consolidated Subsidiaries during any fiscal year set forth below shall exceed
the amount set forth below opposite such fiscal year:
Maximum Amount of
Real Estate Investments
Fiscal Year Ending During Fiscal Year
December 31, 1996 $12,000,000
December 31, 1997 $12,500,000
December 31, 1998 $8,600,000
December 31, 1999 $3,000,000
SECTION 5.16. Purchase of Assets; Investments. Neither the
Borrower nor any Consolidated Subsidiary will acquire any assets other than in
the ordinary course of business. Neither the Borrower nor any Consolidated
Subsidiary will make or acquire any Investment in any Person other than:
(a) Real Estate Investments permitted by Section 5.15;
(b) Investments in Subsidiaries or joint ventures principally
engaged in the Construction Business; and
(c) Temporary Cash Investments;
provided that no Real Estate Investments may be made pursuant to clause (b) or
(c) above. Without limiting the generality of the foregoing, the Borrower will
not, and will not permit any Subsidiary to, acquire or create any Subsidiary
without the consent of the Required Banks and arrangements satisfactory to the
Required Banks for (x) a pledge of the stock of such Subsidiary to the Agent for
the benefit of the Banks, (y) a guaranty by such Subsidiary of the obligations
of the Borrower hereunder and (z) a grant of a Lien on the assets of such
Subsidiary to the Agent for the benefit of the Banks to secure such guaranty.
SECTION 5.17. Capital Expenditures.
(a) The Borrower will not permit the aggregate amount of
Consolidated Capital Expenditures during any fiscal year, commencing with the
fiscal year ending December 31, 1996, to exceed $3,000,000.
(b) All Consolidated Capital Expenditures by the Borrower or
any Consolidated Subsidiaries shall be in connection with the Construction
Business.
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SECTION 5.18. Transactions with Affiliates. Neither the
Borrower nor any Subsidiary will, directly or indirectly, enter into or permit
to exist any transaction (including the Disposition of any asset or property or
the rendering of any service) with any member of the Investor Group or any other
Affiliate of the Borrower on terms that are less favorable to the Borrower or
such Subsidiary, as the case may be, than those which might be obtained by the
Borrower at the time from a Person which is not an Affiliate of the Borrower.
Neither the Borrower nor any Subsidiary shall, directly or indirectly, pay or
become obligated to pay any fees or other amounts to or for the account of any
member of the Investor Group other than (i) dividends payable in respect of the
Investor's shares of Series B Preferred Stock in accordance with the terms
thereof as in effect on the Effective Date, (ii) the amounts set forth in
Section 10.3 of the Stock Purchase Agreement, (iii) the participation fee equal
to 4% of the amount of the "Bridge Term Loans" under the Bridge Credit
Agreement, payable in shares of common stock of the Borrower in accordance with
the letter agreement between the Investor and the Borrower entered into in
connection with the Investor's purchase of a participation in such "Bridge Term
Loans" and (iv) fees payable to Tutor-Saliba Corp. in accordance with the terms
and conditions of the Management Agreement.
SECTION 5.19. Amendments or Waivers. Without the prior written
consent of the Required Banks, neither the Borrower nor any Subsidiary will
agree to any amendment or waiver to the Stock Purchase Agreement, the terms of
the Series B Preferred Stock, the Management Agreement, any other agreements
with any members of the Investor Group (other than agreements between the
Borrower or any of its Subsidiaries and Tutor-Saliba Corp. which shall have been
entered into in the ordinary course of the Construction Business) or any Rincon
Agreements or to any amendment or waiver of any material provision of any other
material partnership or joint venture agreements.
SECTION 5.20. Debt Payments. Other than any refinancing or
refunding of Debt permitted by Section 5.08, neither the Borrower nor any
Subsidiary will prepay, redeem, defease (whether actually or in substance),
purchase in any manner or make any payment in respect of principal, interest or
premium in respect of any Debt (or deposit or set aside funds for the purpose of
any of the foregoing) other than regularly scheduled repayments of principal and
payments of interest required in accordance with the terms of the instruments
governing such Debt to the extent set forth on Schedule 5.20.
SECTION 5.21. Cash Management System. Without the prior
written consent of the Required Banks, the Borrower will not modify the cash
management system of the Borrower and its Subsidiaries from that described in
the Cash Management Letter. Neither the Borrower nor any Subsidiary Guarantor
shall maintain any deposit, checking, operating or other bank accounts other
than the Permitted Accounts.
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SECTION 5.22. Further Assurances.
(a) The Borrower will, and will cause each of its Subsidiaries
to, at its sole cost and expense, do, execute, acknowledge and deliver all such
further acts, deeds, conveyances, mortgages, assignments, notices of assignment,
transfers and assurances as the Agent shall from time to time request, which may
be necessary or desirable in the reasonable judgment of the Agent from time to
time to assure, perfect, convey, assign, transfer and confirm unto the Agent the
property and rights conveyed or assigned pursuant to the Collateral Documents,
or which the Borrower or such Subsidiaries may be or may hereafter become bound
to convey or assign to the Agent or which may facilitate the performance of the
terms of the Collateral Documents or the filing, registering or recording of the
Collateral Documents.
(b) All costs and expenses in connection with the security
interests and Liens created by the Collateral Documents, including reasonable
legal fees and other reasonable costs and expenses in connection with the
granting, perfecting and maintenance of such security interests and Liens, the
preparation, execution, delivery, recordation or filing of documents and any
other acts in connection with the grant of such security interests and Liens as
the Agent may reasonably request, shall be paid by the Borrower promptly when
due.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Loan, any Reimbursement Obligation, any fees or any other amount payable
hereunder;
(b) the Borrower shall fail to pay any interest on any Loan
within five Domestic Business Days after the due date thereof;
(c) the Borrower or any Subsidiary Guarantor shall fail to
observe or perform any covenant contained in Sections 5.07 to 5.22, inclusive,
or in Section 3.01 of the Subsidiary Guarantee Agreement;
(d) any Obligor shall fail to observe or perform any covenant
or agreement contained in any Financing Document (other than those covered by
clauses (a), (b) and (c) above) for 10 days after written notice thereof has
been given to such Obligor by the Agent at the request of any Bank;
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(e) any representation, warranty, certification or statement
made by any Obligor in any Financing Document or in any certificate, financial
statement or other document delivered pursuant thereto shall prove to have been
incorrect in any material respect when made (or deemed made);
(f) the Borrower shall fail to make any payment in respect of
any Debt (other than the Notes or Reimbursement Obligations) when due or within
any applicable grace period;
(g) any Subsidiary shall fail to make any payment in respect
of any Debt the aggregate principal amount of which is $250,000 or more when due
or within any applicable grace period;
(h) any event or condition shall occur which results in the
acceleration of the maturity of any Debt of the Borrower or any Subsidiary 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;
(i) the Borrower or any Subsidiary shall commence a voluntary
Bankruptcy Proceeding or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary Bankruptcy
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 take any corporate action to authorize any of the foregoing;
(j) an involuntary Bankruptcy Proceeding shall be commenced
against the Borrower or any Subsidiary and such involuntary Bankruptcy
Proceeding shall remain undismissed and unstayed for a period of 60 days; or an
order for relief shall be entered against the Borrower or any Subsidiary under
the federal bankruptcy laws as now or hereafter in effect;
(k) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5,000,000 which it shall have
become liable to pay to the PBGC or any other Person 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
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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 $5,000,000;
(l) a judgment or order for the payment of money in excess of
$5,000,000 shall be rendered against the Borrower or any Subsidiary and such
judgment or order shall continue unsatisfied, unstayed and unbonded for a period
of 10 days;
(m) any of the following: (i) any person or group or persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) (other than the Exempt Group) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of 25% or more of the outstanding shares of
common stock of the Borrower; (ii) the Borrower shall cease to own 100% of the
capital stock of any Subsidiary Guarantor; (iii) members of the Investor Group,
collectively, shall cease to own collectively at least 75,075 shares of Series B
Preferred Stock or shall cease to be the beneficial owners of at least 20% of
the outstanding shares of common stock of the Borrower or the beneficial owners
of shares of Series B Preferred Stock convertible into at least 20% of the
outstanding shares of common stock of the Borrower; (iv) individuals designated
by members of the Investor Group to serve on the executive committee of the
Board of Directors of the Borrower shall cease to constitute a majority of the
members of such executive committee; (v) the powers of the executive committee
of the Board of Directors of the Borrower shall be diminished in any material
respect; or (vi) RCBA shall cease to be the general partner of the Investor; or
(n) any Financing Document shall 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 any Obligor, or the Agent on behalf of the Banks
shall at any time fail to have a valid and perfected Lien on all of the
Collateral purported to be subject to such Lien, subject to no prior or equal
Lien except Liens permitted by the Collateral Documents, or any Obligor shall so
assert in writing;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Borrower declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are
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hereby waived by the Obligors; provided that in the case of any of the Events of
Default specified in clause (i) or (j) above with respect to any Obligor,
without any notice to the Borrower or any other act by the Agent or the Banks,
the Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Obligors.
SECTION 6.02. Cash Cover. The Borrower hereby agrees, in
addition to the provisions of Section 6.01 hereof, that upon the occurrence and
during the continuance of any Event of Default, it shall, if requested by the
Agent upon instructions from Banks having more than 50% in aggregate amount of
the Commitments, pay (and, in the case of any of the Events of Default specified
in clause (i) or (j) above with respect to any Obligor, forthwith, without any
demand or the taking of any other action by the Agent or any Bank, it shall pay)
to the Agent an amount in immediately available funds equal to the then
aggregate Letter of Credit Liabilities for all Letters of Credit to be held as
security therefor for the benefit of all Banks pursuant to arrangements
satisfactory to the Agent and the Banks.
SECTION 6.03. Notice of Default. The Agent shall give notice
to the Borrower under Section 6.01(d) promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Financing Documents as are
delegated to the Agent by the terms thereof, together with all such powers as
are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under the Financing
Documents as any other Bank and may exercise or refrain from exercising the same
as though it were not the Agent, and Morgan Guaranty Trust Company of New York
and its affiliates may accept deposits from, lend money to, and generally engage
in any kind of business with the Borrower or any Subsidiary or affiliate of the
Borrower as if it were not the Agent hereunder.
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SECTION 7.03. Action by Agent. The obligations of the Agent
under the Financing Documents are only those expressly set forth herein. Without
limiting the generality of the foregoing, the Agent shall not be required to
take any action with respect to any Default, except as expressly provided in
Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for an Obligor), 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; provided that no Bank shall be
required to reimburse the Agent (to the extent not paid by the Borrower) for the
fees and expenses of any experts (other than any legal counsel and Ernst & Young
LLP) who shall not have been approved by the Required Banks.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks or (ii) in
the absence of its own gross negligence or willful misconduct. Neither the Agent
nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with the Financing Documents or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the Borrower;
(iii) the satisfaction of any condition specified in Article III, except receipt
of items required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of any Financing Document or any other instrument
or writing furnished in connection herewith. The Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and their
respective directors, officers, agents, advisors and employees (to the extent
not reimbursed by the Borrower) against any cost, expense (including reasonable
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. Each
Bank agrees that the indemnity set forth in this Section 7.06 shall require each
Bank to pay (to the extent not reimbursed by the Borrower) the reasonable fees
and disbursements of counsel retained by the Agent in connection with this
Agreement and the reasonable fees and disbursements of Ernst & Young LLP and
other experts approved by the Required Banks retained by the Agent in connection
with this Agreement, but no Bank shall be required to indemnify any
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advisor retained by the Agent, and no Bank shall hereby indemnify the Agent for
any indemnity given by the Agent to any advisor (other than an indemnity for
reasonable fees and disbursements in accordance with the agreement to pay
reasonable fees and disbursements set forth in this sentence), unless such Bank
shall have separately given its express written consent to give such indemnity.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any
time by giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. 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 $150,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
SECTION 7.09. Collateral Documents.
(a) As to any matters not expressly provided for in the
Collateral Documents (including the timing and methods of realization upon the
Collateral), and which do not otherwise require the signature of all Banks
pursuant to Section 9.05, the Agent shall act or refrain from acting in
accordance with written instructions from the Required Banks or, in the absence
of such instructions, in accordance with its discretion; provided that the Agent
shall not be obligated to take any action if the Agent believes that such action
is or may be contrary to any applicable law or might cause the Agent to incur
any loss or liability for which it has not been indemnified to its satisfaction.
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(b) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the security interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part under the Collateral Documents. The Agent shall have no duty to
ascertain or inquire as to the performance or observance of any of the terms of
the Collateral Documents by any Obligor.
ARTICLE VIII
CHANGE IN CIRCUMSTANCE
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period for any
Euro-Dollar Loan:
(a) the Agent is advised by the Reference Banks that deposits
in dollars (in the applicable amounts) are not being offered to the Reference
Banks in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted Euro-Dollar Rate, as determined
by the Agent will not adequately and fairly reflect the cost to such Banks of
funding their Euro-Dollar 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 Euro-Dollar Loans or to convert Base Rate Loans
into Euro-Dollars Loans shall be suspended and (ii) each outstanding Euro-Dollar
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 Euro-Dollar
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, such Borrowing shall instead be made as a
Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any change
in any applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it
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unlawful or impossible for any Bank (or its Euro-Dollar Lending Office) to make,
maintain or fund its Euro-Dollar Loans and such Bank shall so notify the Agent,
the Agent shall forthwith give notice thereof to the other Banks and the
Borrower, whereupon until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans, or to convert outstanding Loans into
Euro-Dollar Loans, shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. If such Bank shall determine that it may not lawfully continue to maintain
and fund any of its outstanding Euro-Dollar Loans to maturity and shall so
specify in such notice, each Euro-Dollar Loan of such Bank then outstanding
shall be converted to a Base Rate Loan (and the Borrower shall contemporaneously
pay accrued interest on such Euro-Dollar Loan to the date of conversion) either
(a) on the last day of the then current Interest Period applicable to such
Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund such
Loan to such day or (b) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return.
(a) If after the date hereof, 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:
(i) shall subject any Bank (or its Applicable Lending Office)
to any tax, duty or other charge with respect to its Euro-Dollar Loans, its Note
or its obligation to make Euro-Dollar Loans, or shall change the basis of
taxation of payments to any Bank (or its Applicable Lending Office) of the
principal of or interest on its Euro-Dollar Loans or any other amounts due under
this Agreement in respect of its Euro-Dollar Loans or its obligation to make
Euro- Dollar Loans (except for changes in the rate of tax on the overall net
income of such Bank or its Applicable Lending Office imposed by the jurisdiction
in which such Bank's principal executive office or Applicable Lending Office is
located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding with respect to any
Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar
Reserve
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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
Euro-Dollar Loans, its Note or its obligation to make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Euro-Dollar Loan, or
to reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Bank to be material, then, within 15 days
after demand by such Bank (with a copy to the Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank for
such increased cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change 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
reasonable 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.
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SECTION 8.04. Base Rate Loans Substituted for Affected Euro-
Dollar Loans. If (i) the obligation of any Bank to make or maintain Euro-Dollar
Loans has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03(a) and the Borrower shall, by at least five
Euro-Dollar Business Days' prior notice to such Bank through the Agent, have
elected that the provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as
(or continued as or converted into) Euro-Dollar Loans shall be made instead as
Base Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid (or
converted to a Base Rate Loan), all payments of principal which would otherwise
be applied to repay such Euro-Dollar Loans shall be applied to repay its Base
Rate Loans instead.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Borrower or the Agent, at its address or telex or
facsimile number set forth on the signature pages hereof, (y) in the case of any
Bank, at its address or telex or facsimile number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other address
or telex or facsimile 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 such
facsimile is transmitted to the facsimile number specified in this Section and
receipt of such facsimile is confirmed, either orally or in writing, by the
party receiving such transmission, (iii) if given by certified 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 under Article II shall not be effective until received.
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SECTION 9.02. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege under any Financing
Document 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 therein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes; Indemnification.
(a) The Borrower shall pay (i) all out-of-pocket expenses of
the Agent, including fees and disbursements of special counsel for the Agent,
any firm of independent public accountants, financial advisors and other experts
retained by the Agent in connection with the preparation of the Financing
Documents, any waiver or consent under any Financing Document, any amendment of
any Financing Document or any Default or alleged Default or otherwise in
connection with this Agreement or any other Financing Documents (provided that,
except in the case of fees and disbursements incurred in connection with the
preparation of the Financing Documents, any waiver or consent under any
Financing Document, any amendment of any Financing Document or any Default or
alleged Default, all of which shall be paid by the Borrower, the Borrower shall
not be required to pay the fees and disbursements of any firm of independent
public accounts, financial advisors and other experts retained by the Agent
(other than special counsel for the Agent, whose fees and expenses shall not be
limited by this parenthetical) to the extent such fees and disbursements exceed,
in the aggregate: (i) $60,000 during the period from the Effective Date until
the first anniversary of the Effective Date or (ii) $50,000 during any period of
twelve consecutive calendar months after the first anniversary of the Effective
Date); and (ii) if an Event of Default occurs, all out-of-pocket expenses
incurred by the Agent and each Bank, including fees and disbursements of counsel
(including allocated costs of internal counsel and disbursements of internal
counsel), in connection with such Event of Default and any 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 any Financing Document.
(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 (including allocated costs of internal counsel and
disbursements of internal counsel), which may be incurred by any 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 any
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Financing Document or any actual or proposed use of proceeds of Loans hereunder;
provided that no Indemnitee shall have the right to be indemnified hereunder for
such Indemnitee's own gross negligence or willful misconduct as determined by a
court of competent jurisdiction.
(c) The Borrower agrees to indemnify each Indemnitee and hold
each Indemnitee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind (including without limitation reasonable
expenses of investigation by engineers, environmental consultants and similar
technical personnel and reasonable fees and disbursements of counsel including
allocated costs of internal counsel and disbursements of internal counsel) of
any Indemnitee arising out of, in respect of or in connection with any and all
Environmental Liabilities. Without limiting the generality of the foregoing, the
Borrower hereby waives all rights for contribution or any other rights of
recovery with respect to liabilities, losses, damages, costs or expenses arising
under or related to Environmental Laws that it might have by statute or
otherwise against any Indemnitee.
SECTION 9.04. Sharing of Setoffs. Each Bank agrees that if it
shall, by exercising any right of setoff or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount due with respect to any Loan or
Reimbursement Obligation owed to it which is greater than the proportion
received by any other Bank in respect of the aggregate amount due with respect
to any Loan or Reimbursement Obligation owed to such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Loans and Reimbursement Obligations owed to the other
Banks, and such other adjustments shall be made, as may be required so that all
such payments with respect to the Loans and Reimbursement Obligations owed to
the Banks shall be shared by the Banks pro rata; provided that (i) nothing in
this Section shall impair the right of any Bank to exercise any right of setoff
or counterclaim it may have and to apply the amount subject to such exercise to
the payment of indebtedness of the Borrower other than its indebtedness
hereunder and (ii) nothing in any Financing Documents shall require any Bank to
share any payments and distributions received by such Bank if such payments and
distributions were made in respect of any obligations (including without
limitation Other Reimbursement Obligations and Other Mortgage/Lease Obligations)
not constituting Loans or Reimbursement Obligations. The Borrower agrees, to the
fullest extent it may effectively do so under applicable law, that any holder of
a participation in a Loan or Reimbursement Obligation, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of setoff 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 in the
amount of such participation.
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SECTION 9.05. Amendments and Waivers. (a) 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 LC Bank are affected
thereby, by the Agent or the LC Bank, as the case may be); 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), (ii) amend Section 2.10 or 5.12(b)(iii), (iii)
subject any Bank to any additional obligation, (iv) reduce the principal of or
rate of interest on any Loan or any fees hereunder, (v) postpone the date fixed
for any payment of principal of or interest on any Loan, any Reimbursement
Obligation or any fees hereunder or for termination or reduction of any
Commitment, (vi) reinstate the Commitments or cause the Notes to be no longer
immediately due and payable after the Commitments shall have been terminated and
the Notes shall have become immediately due and payable pursuant to Section
6.01, (vii) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or change the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section 9.05
or any other provision of any Financing Documents, (viii) release any Subsidiary
Guarantor from the Subsidiary Guarantee Agreement, (ix) amend Section 9.04, 9.05
or 9.06 hereof or (x) notwithstanding any provision of any Collateral Document
to the contrary, modify any definition of Collateral in any Financing Document
or release any item of Collateral from any Lien provided by any Collateral
Document except for the sale or other disposition of such item by the Agent in
the exercise of its rights as provided therein as in effect on the Effective
Date (provided that unless an Event of Default has occurred and is continuing or
the Agent has received written notice from the Borrower or any Bank of the
existence of any Default, the Agent may release any item of Collateral at the
request of the Borrower, without the consent of any Banks if (A) such release is
required in connection with any Disposition of such Collateral, (B) such
Collateral is listed on the Asset Sale Letter and the consideration therefor is
cash in an amount at least equal to the minimum cash price shown on the Asset
Sale Letter and (C) such Disposition is in accordance with and permitted by the
terms hereof (including without limitation Sections 2.10(c) and 5.12(b)).
(b) Without limiting the effect of Section 9.05(a), the
Borrower may, at any time prior to commencement of a voluntary Bankruptcy
Proceeding by Perini Land and Development or any Subsidiary of Perini Land and
Development (an "Affected Subsidiary"), request from the Banks a waiver of any
resulting Event of Default. Such request shall be by written notice accompanied
by such relevant information as shall enable the Banks and the Agent to evaluate
such request. Upon receipt of such request and such information, the Banks and
the Agent will promptly evaluate the potential consequences of such Bankruptcy
Proceeding. If, based on their evaluation, the Required Banks and the Agent
conclude that commencement and continuation of such voluntary Bankruptcy
Proceeding will not have an adverse impact
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on the Banks' interests, the Banks shall promptly so notify the Borrower in
writing. Upon receipt of such notification, the Event of Default which would
otherwise result from the commencement of such voluntary Bankruptcy Proceeding
by such Affected Subsidiary shall be deemed waived, provided that such voluntary
Bankruptcy Proceeding has not been commenced prior to such notification and is
commenced within 30 days after such notification. If for any reason such
voluntary Bankruptcy Proceeding is not commenced with respect to such Affected
Subsidiary during such 30-day period, the Borrower may thereafter at any time
again request from the Banks a waiver with respect to such Affected Subsidiary
or any other Affected Subsidiary pursuant to the foregoing procedures.
The effect of delivery by the Banks of any such notification
shall be limited as set forth above and shall not be deemed a waiver of any
other right, remedy or event of default under any Financing Documents. The
Borrower will reimburse the Banks and the Agent for any out-of-pocket expenses
they may incur in connection with conducting any evaluation referred to above
(including, without limitation, fees and expenses of counsel and financial
professionals) and will, at its own expense, provide to the Banks and the Agent
such information as the Agent may request in order to facilitate such evaluation
(including, without limitation, satisfactory opinions of counsel to the
Borrower).
SECTION 9.06. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrower may not assign or otherwise transfer any of
its rights under this Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one bank or other
institution (a "Participant") a participating interest in its Commitment and its
Loans in the full amount of its Commitment. In the event of any such grant by a
Bank of a participating interest to a Participant, whether or not upon notice to
the Borrower and the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of the Borrower hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this Agreement;
provided that such participation agreement may provide that such Bank will not
agree to any modification, amendment or waiver of this Agreement described in
clause (i), (ii) or (iii) of Section 9.05 without the consent of the
Participant. An assignment or other transfer which is not permitted by
subsection
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(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 assign to one or more banks, financial
institutions or "accredited investors" (as defined in Regulation D of the
Securities Act of 1933, as amended as of the Effective Date) (each an
"Assignee") all or any part (subject to the proviso below) 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 M, executed by such Assignee and such
transferor Bank with the subscribed consent of the Agent, which consent shall
not be unreasonably withheld or delayed; provided that (i) if an Assignee is an
affiliate of such transferor Bank or another Bank, no such consent shall be
required, (ii) unless the Assignee is an affiliate of such transferor Bank, the
Assignee is another Bank or the assignment shall be for all of the transferor
Bank's rights and obligations under the Credit Agreement, the assignment must be
of at least an aggregate $5,000,000 of the transferor Bank's Commitments and
(iii) any assignment of part of any Bank's rights and obligations shall include
equally proportionate parts of such Bank's Tranche A Commitment and Tranche B
Commitment. 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 or requested by the Assignee, a new Note is
issued to the Assignee. In connection with any such assignment, the transferor
Bank or the Assignee, as agreed between them, shall pay to the Agent an
administrative fee for processing such assignment in the amount of $2,500.
(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 (i.e., an
agency of the Federal government known as a "Federal Reserve Bank"). No such
assignment shall release the transferor Bank from its obligations hereunder.
SECTION 9.07. Certain 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.
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SECTION 9.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be construed in accordance with and governed by
the law of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 9.09. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE
OBLIGORS, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11. Other Reimbursement Obligations. The execution
of this Agreement and any other documents, agreements or instruments in
connection herewith does not constitute a waiver or amendment of any term or
condition of any documents, agreements or instruments evidencing or otherwise
delivered in connection with the Other Reimbursement Obligations or the Other
Mortgage/Lease Obligations. No Bank shall have any rights or obligations under
any such documents, agreements or instruments unless party thereto and as set
forth therein. Nothing in any Financing Documents requires any Bank to obtain
any consent from any other Bank in taking actions permitted to be taken in
accordance with the terms and conditions of any documents, agreements or
instruments evidencing or otherwise delivered in connection with the Other
Reimbursement Obligations or Other Mortgage/Lease Obligations to which it is a
party, or in omitting to take any such actions.
SECTION 9.12. Consent to Subordinate Mortgage. Harris Trust
and Savings Bank hereby consents to the execution, delivery and recordation of
the Mortgage Amendment relating to the Mortgaged Facility described as Item 12
in Part I of Schedule 4.03(c).
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SECTION 9.13. Consent to Execution and Delivery of Certain
Financing Documents. Each of the Banks consents to, and authorizes the Agent to
execute and deliver, the Subsidiary Guarantee Agreement, the Borrower Pledge
Agreement, the Borrower Security Agreement, the Subsidiary Pledge Agreement, the
Subsidiary Security Agreement and the Mortgage Amendments.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
PERINI CORPORATION
By: /s/ John H. Schwarz
Name: John H. Schwarz
Title: Executice Vice President,
Finance & Administration
By: /s/ Susan C. Mellace
Name: Susan C. Mellace
Title: Vice President & Treasurer
73 Mount Wayte Avenue
Framingham, MA 01701
Facsimile number: (508) 628-2960
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ D. Linda Scheuplein
Name: D. Linda Scheuplein
Title: Vice President
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Tranche A Tranche B
Commitments Commitments BANKS
$22,704,000 $4,032,230 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ D. Linda Scheuplein
Name: D. Linda Scheuplein
Title: Vice President
$38,720,000 $6,876,672 FLEET NATIONAL BANK
By: /s/ Frederick W. Reinhardt
Name: Frederick W. Reinhardt
Title: Vice President
$16,016,000 $2,844,442 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Donald J. Chin
Name: Donald J. Chin
Title: Vice President
$10,560,000 $1,875,456 BAYBANK, N.A., as Bank and as LC Bank
By: /s/ David F. Eusden
Name: David F. Eusden
Title: Authorized Officer
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$8,800,000 $1,562,880 COMERICA BANK
By: /s/ Timothy K. McLaughlin
Name: Timothy K. McLaughlin
Title: Vice President
$8,800,000 $1,562,880 HARRIS TRUST & SAVINGS BANK
By: /s/ Michael C. Wood
Name: Michael C. Wood
Title: Vice President
$4,400,000 $781,440 STATE STREET BANK AND TRUST
COMPANY
By: /s/ Kenneth J. Mooney
Name: Kenneth J. Mooney
Title: Vice President
- ------------ -----------
$110,000,000 $19,536,000 TOTAL COMMITMENTS
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EACH OF THE UNDERSIGNED SUBSIDIARY
GUARANTORS CONSENTS TO THE AMENDMENT
AND RESTATEMENT OF THE CREDIT
AGREEMENT AND THE BRIDGE CREDIT
AGREEMENT AS SET FORTH HEREIN:
PERINI BUILDING COMPANY, INC.
By: /s/ Barry R. Blake
Name: Barry R. Blake
Title: Vice President & Controller
By: /s/ Susan C. Mellace
Name: Susan C. Mellace
Title: Vice President & Treasurer
PERINI INTERNATIONAL CORPORATION
By: /s/ Richard E. Burnham
Name: Richard E. Burnham
Title: Secretary
By: /s/ Barry R. Blake
Name: Barry R. Blake
Title: Assistant Treasurer
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PERINI LAND AND DEVELOPMENT
COMPANY, INC.
By: /s/ John M. Bolis
Name: John M. Bolis
Title: Vice President
By: /s/ Joanne Choate
Name: Joanne Choate
Title: Chief Accountant & Treasurer
R. E. DAILEY & CO.
By: /s/ David B. Perini
Name: David B. Perini
Title: President
By: /s/ Richard E. Burnham
Name: Richard E. Burnham
Title: Secretary
PARAMOUNT DEVELOPMENT
ASSOCIATES, INC.
By: /s/ John M. Bolis
Name: John M. Bolis
Title: Vice President
By: /s/ Joanne Choate
Name: Joanne Choate
Title: Chief Accountant & Treasurer
85
