-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TVX+ZzkAsA8/6v2d5UDa9P8cntBj+y6mSUdMH/5/Kl9+Xjp2qa41TxCOj+FrshIc ek+9Vv0rBK3NqBVJxbDIng== 0000077543-96-000003.txt : 19960328 0000077543-96-000003.hdr.sgml : 19960328 ACCESSION NUMBER: 0000077543-96-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960327 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERINI CORP CENTRAL INDEX KEY: 0000077543 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL BUILDING CONTRACTORS - NONRESIDENTIAL BUILDINGS [1540] IRS NUMBER: 041717070 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06314 FILM NUMBER: 96539040 BUSINESS ADDRESS: STREET 1: 73 MT WAYTE AVE CITY: FRAMINGHAM STATE: MA ZIP: 01701 BUSINESS PHONE: 5086282000 10-K 1 1995 FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1995 TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to _________________ Commission file number 1-6314 Perini Corporation (Exact name of registrant as specified in its charter) Massachusetts 04-1717070 ------------- ---------- State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 73 Mt. Wayte Avenue, Framingham, Massachusetts 01701 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 508-628-2000 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 The American Stock Exchange Exchangeable 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 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. The aggregate market value of voting stock held by nonaffiliates of the registrant is $29,652,513 as of March 1, 1996. The number of shares of Common Stock, $1.00 par value per share, outstanding at March 1, 1996 is 4,723,754. DOCUMENTS INCORPORATED BY REFERENCE Portions of the annual proxy statement for the year ended December 31, 1995 are incorporated by reference into Part III. 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 13 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 15 Stockholder Matters Item 6: Selected Financial Data 15 Item 7: Management's Discussion and Analysis of Financial 16 Condition and Results of Operations Item 8: Financial Statements and Supplementary Data 19 Item 9: Disagreements on Accounting and Financial Disclosure 19 PART III - -------- Item 10: Directors and Executive Officers of the Registrant 20 Item 11: Executive Compensation 20 Item 12: Security Ownership of Certain Beneficial Owners and 20 Management Item 13: Certain Relationships and Related Transactions 20 PART IV - ------- Item 14: Exhibits, Financial Statement Schedules and Reports on 21 Form 8-K Signatures 22 - 1 - PART I. ITEM 1. BUSINESS - ------------------ General - ------- Perini Corporation and its subsidiaries (the "Company" unless the context indicates otherwise) is engaged in two principal businesses: construction and real estate development. The Company was incorporated in 1918 as a successor to businesses which had been engaged in providing construction services since 1894. 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. Historically, the Company's construction business involved four types of operations: civil and environmental ("heavy"), building, international and pipeline. However, the Company sold its pipeline construction business in January, 1993. The Company's real estate development operations are conducted by Perini Land & Development Company, a wholly-owned subsidiary with extensive development interests concentrated in historically attractive markets in the United States - Arizona, California, Florida, Georgia and Massachusetts, but has not commenced the development of any new real estate projects since 1990. 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. In 1988, the Company, in conjunction with two other companies, formed a new entity called Perland Environmental Technologies, Inc. ("Perland"). Perland provides consulting, engineering and construction services primarily on a turn-key basis for hazardous material management and clean-up to both private clients and public agencies nationwide. The Company's investment in Perland was increased from 47 1/2% to 100% in recent years as a result of Perland repurchasing its stock owned by the outside investors. During 1995, Perland's name was changed to Perini Environmental Services, Inc. In January 1993, the Company sold its 74%-ownership in Majestic, its Canadian pipeline construction subsidiary, for $31.7 million which resulted in an after tax gain of approximately $1.0 million. Although Majestic was profitable in both 1992 and 1991, it participated in a sector of the construction business that was not directly related to the Company's core construction operations. The sale of Majestic served to generate liquid assets which improved the Company's financial condition without affecting its core construction business. Effective July 1, 1993, the Company acquired Gust K. Newberg Construction Co.'s ("Newberg") interest in certain construction projects and related equipment. The purchase price for the acquisition was (i) approximately $3 million in cash for the equipment paid by a third party leasing company which, in turn, simultaneously entered into an operating lease agreement with the Company for the use of said equipment, (ii) $1 million in cash paid by the Company and (iii) 50% of the aggregate net profits earned from each project from April 1, 1993 through December 31, 1994 and, with regard to one project, through December 31, 1995. This acquisition has been accounted for as a purchase. - 2 - 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, 1995. Annual Report On Form 10-K Caption Page Number ------- ----------- Selected Consolidated Financial Information Page 15 Management's Discussion and Analysis Page 16 Footnote 13 to the Consolidated Financial Statements, entitled Business Segments and Foreign Operations Page 40 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, 1995, additional information (business segment and foreign operations) required by Statement of Financial Accounting Standards No. 14 for the three years ended December 31, 1995 is included in Note 13 to the Consolidated Financial Statements. A summary of revenues by product line for the three years ended December 31, 1995 is as follows: Revenues (in thousands) Year Ended December 31, ------------------------------------------------ 1995 1994 1993 ---- ---- ---- Construction: Building $ 770,427 $ 640,721 $ 762,451 Heavy 286,246 310,163 267,890 ---------- ---------- ---------- Total Construction Revenues $1,056,673 $ 950,884 $1,030,341 ---------- ---------- ---------- Real Estate: Sales of Real Estate $ 10,738 $ 33,188 $ 40,053 Building Rentals 16,799 16,388 19,313 Interest Income 12,396 7,031 6,110 All Other 4,462 4,554 4,299 ---------- ---------- ---------- Total Real Estate Revenues $ 44,395 $ 61,161 $ 69,775 ---------- ---------- ---------- Total Revenues $1,101,068 $1,012,045 $1,100,116 ========== ========== ========== 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 160 construction projects in the United States and overseas during 1995. The Company has three principal construction operations: heavy, building, and international, having sold its Canadian pipeline construction business in January 1993. The Company also has a subsidiary engaged in hazardous waste remediation. The heavy operation undertakes large civil construction projects throughout the United States, with current emphasis on major metropolitan areas such as Boston, New York City, Chicago and Los Angeles. The heavy 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 heavy operations since 1894, and believes that it has particular expertise in large and complex projects. The Company believes that infrastructure - 3 - rehabilitation is and will continue to be a significant market in the 1990's. 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 heavy 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. Construction Strategy --------------------- The Company plans to continue to increase the amount of heavy 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 acquisition during 1993 of Chicago-based Newberg referred to above is consistent with this strategy. 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. Backlog ------- As of December 31, 1995, the Company's construction backlog was $1.53 billion compared to backlogs of $1.54 billion and $1.24 billion as of December 31, 1994 and 1993, respectively. Backlog (in thousands) as of December 31, ------------------------------------------------------- 1995 1994 1993 ----------------- ----------------- ----------------- Northeast $ 749,017 49% $ 803,967 52% $ 552,035 45% Mid-Atlantic 179,324 12 26,408 2 34,695 3 Southeast 33,223 2 783 - 34,980 3 Midwest 325,055 21 293,168 19 143,961 12 Southwest 94,725 6 174,984 11 314,058 25 West 134,259 9 193,996 13 143,251 11 Other Foreign 18,919 1 45,473 3 15,161 1 ---------- ---- ---------- ---- ---------- --- Total $1,534,522 100% $1,538,779 100% $1,238,141 100% ========== ==== ========== ==== ========== ==== 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 $657 million of its backlog will not be completed in 1996. 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 increase in the Midwest region primarily reflects an increase in building work in that area. Other fluctuations in backlog are viewed by management as transitory. - 4 - 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 heavy 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: Revenues - Year Ended Backlog As Of December 31, December 31, - --------------------- -------------------- 1995 1994 1993 1995 1994 1993 - ---- ---- ---- ---- ---- ---- 67% 54% 56% Fixed Price 74% 68% 65% 33 46 44 CPFF, GMP or CM 26 32 35 - ---- ---- ---- ---- ---- --- 100% 100% 100% 100% 100% 100% ==== ==== ==== ==== ==== ==== Clients ------- During 1995, the Company was active in the building, heavy and international construction markets. The Company performed work for over 100 federal, state and local governmental agencies or authorities and private customers during 1995. 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 1993-1995, the portion of construction revenues derived from contracts with various governmental agencies remains relatively constant at 56% in 1995 and 1994, and 54% in 1993. Revenues by Client Source ------------------------- Year Ended December 31, ----------------------- 1995 1994 1993 ---- ---- ---- Private Owners 44% 44% 46% Federal Governmental Agencies 8 11 12 State, Local and Foreign Governments 48 45 42 ---- ---- --- 100% 100% 100% ==== ==== ==== 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. - 5 - 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 13. 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 1996 from material and/or labor shortages or price increases. Economic and demographic trends tend not to have a material impact on the Company's heavy construction operation. Instead, the Company's heavy 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, most of which is residential, 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. 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 - 6 - 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 engages in real estate development in Arizona, California, Florida, Georgia and Massachusetts. However, in 1993, PL&D significantly reduced its staff in California and has suspended any new land acquisition in that area. PL&D's development operations generally involve identifying attractive parcels, planning and development, arranging 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. For the past five years PL&D has been affected by the reduced liquidity in real estate markets brought on by the cutbacks in real estate funding by commercial banks, insurance companies and other institutional lenders. Many traditional buyers of PL&D properties are other developers or investors who depend on third party sources for funding. As a result, some potential PL&D transactions have been cancelled, altered or postponed because of financing problems. Over this period, PL&D looked to foreign buyers not affected by U.S. banking policies or in some cases, provided seller financing to complete transactions. Based on a weakening in property values which has come with the industry credit crunch and the national real estate recession, PL&D took a $31 million pre-tax net realizable value writedown against earnings in 1992. The charge affected those properties which PL&D had decided to sell in the near term. Currently it is management's belief that its remaining real estate properties are not carried at amounts in excess of their net realizable values. PL&D periodically reviews 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 and properties brought to market on an accelerated basis, those assets, if necessary, are adjusted to reflect the lower of cost or market value. To achieve full value for some of its real estate holdings, in particular its investments in Rincon Center and the Resort at Squaw Creek, the Company may have to hold those properties several years and currently intends to do so. Real Estate Strategy -------------------- Since 1990, PL&D has taken a number of steps to minimize the adverse financial impact of current market conditions. 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 workforce was cut by over 60%. Certain project loans were extended, with such extension usually requiring paydowns and increased annual amortization of the remaining loan balance. Going forward, PL&D will operate with a reduced staff and adjust 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, resort and single family home developments. Given the current real estate environment, 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 1994, PL&D completed the sale - 7 - of all of the original 1,428 acres located in West Palm Beach at the development known as "The Villages of Palm Beach Lakes". PL&D's only continuing interest in the project is its ownership in the Bear Lakes Country Club which under agreement with the membership can be turned over to the members when membership reaches 650. Current membership is 438. The club includes two championship golf courses designed by Jack Nicklaus. At Metrocentre, a 51-acre commercial/office park at the intersection of Interstate 95 and 45th Street in West Palm Beach, one site totaling 2.78 acres was sold in 1995. That site was sold to a national motel chain. The park consists of 17 parcels, of which 2 1/4 (7.3 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, on which it had done preliminary investigatory and zoning work under an earlier purchase option period. During 1988, Paramount secured construction financing and 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". During 1989, Paramount completed the sale of a 24-acre site to be used as a headquarters facility for a division of a major U.S. company. During 1990, construction was completed on this facility. In 1990 construction was also completed on two new commercial buildings by Paramount. During 1992, a 17-acre site was sold to a developer who was working with a major national retailer. The site has since been developed into the first retail project in the park. No new land sales were made in 1993, but in 1994, an 11-acre site was sold to the same major U.S. company which had acquired land in 1989, and in 1995 a 4-acre site was sold to a major insurance company. Although the two Paramount commercial buildings owned within the park experienced some tenant turnover in late 1994 and into 1995, they remain 90% occupied. 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 had already been partially developed. Paramount completed the work in 1990 and is currently marketing the site to commercial/industrial users. No sales were closed in 1995. 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 1995. 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. By year end 1990, the first phase infrastructure and recreational amenities were in place. In 1991, the joint venture completed the infrastructure on 48 lots for phased sales of improved lots to single family home builders and sold nine. During 1992, the joint venture sold an additional 60 lots and also sold a 16-acre parcel for use as an elementary school. During 1993, unusually wet weather in the spring delayed construction on improvements required to deliver lots as scheduled. As a result, the sale of an additional 58 lots in 1993 were below expectation. Although 1994 started off strong, rising interest rates created a slowdown in activity later in the year. For the year, 52 lots were sold. In 1995, the pace picked up again and a record 72 lots were sold. 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. - 8 - The Oaks at Buckhead, Atlanta - 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. At year end 207 units were either sold or under contract. Sixty-nine of these units were closed in 1995, up from 53 for 1994. PL&D (50%) is developing 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 rental 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 run into early 1998. The retail space is currently 90% 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 100% of the office space, 94% of the retail space and virtually all of the 320 residential units are leased. The major tenant in the office space in Phase II is the Ninth Circuit Federal Court of Appeals which is leasing approximately 176,000 square feet. That lease expires at the end of 1996. Currently, the space is being shown to potential tenants for possible 1997 occupancy. 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 $78 million to the partnership through December 31, 1995, of which approximately $5 million was advanced during 1995, primarily to paydown some of the principal portion of project debt which was renegotiated during 1993. In 1995, operations before principal repayment of debt created a positive cash flow on an annual basis. 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 1995 and over the next three 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 through 1997 are as follows: $7.5 million in 1996 and $7.3 million in 1997. Based on Company forecasts, it could be required to contribute as much as $9.4 million to cover these and possible tenant improvement requirements not covered by project cash flow through 1997. While the budgeted shortfall includes an estimate for tenant improvements, they may or may not be required. Although management believes operating expenses will be covered by operating cash flow at least through 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 - 9 - 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. During 1993, 1994 and 1995, PL&D advanced $1.7 million, $.3 million and $.9 million, respectively, under this agreement, primarily to meet the principal payment obligations of the loan extensions described above. The Resort at Squaw Creek - During 1990, construction was completed on the 405-unit first phase of the hotel complex of this major resort-conference facility. In mid-December of that year, the resort was opened. In 1991, final work was completed on landscaping the golf course, as well as the remaining facilities to complete the first phase of the project. The first phase of the project 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 three of which had been sold or put under contract by early 1993, three restaurants, an ice skating rink, pool complex, fitness center and 11,500 square feet of various retail support facilities. The second phase of the project is planned to include an additional 409-unit hotel facility, 36 townhouses, 27,000 square feet of conference space, 5,000 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. While PL&D has an effective 18% ownership interest in this joint venture, it has additional financial commitments as described below. 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 $76 million to the joint venture through December 31, 1995, of which approximately $3.3 million was advanced during 1995, for the cost of operating expenses, debt amortization and interest payments. Further, it is anticipated the project may require additional funding by PL&D before it reaches stabilization which may take several years. During 1992, the majority partner in the joint venture sold its interest to a group put together by an existing limited partner. As a part of that transaction, PL&D relinquished its managing general partnership position to the buying group, but retained a wide range of approval rights. The result of the transaction was to strengthen the financial support for the project and led to an extension of the bank financing on the project to mid-1995. The $48 million of bank financing on the project was extended again in 1995 and currently matures in May, 1997, with an option by the borrower to extend an additional year. As part of Squaw Creek Associates partnership agreement, either partner may initiate a buy/sell agreement on or after January 1, 1997. Such buy/sell agreement, which is similar to those often found in real estate development partnerships, provides for the recipient of the offer to have the option of selling its share or purchasing its partners 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. The Company does not anticipate such a circumstance, because until the end of the year 2001, the partner would lose the certainty of a $2 million annual preferred return currently guaranteed by the Company. However, an exercise of the buy/sell agreement by its partner could force the Company to sell its ownership at a price possibly significantly less than its full value should the Company be unable to buy out its partner and forced to sell at the price initiated by its partner. The operating results of this project are weather sensitive. For example, a large snowfall in late 1994 helped improve results during the 1994-5 ski season. As a result, through October of 1995, the resort showed marked improvement over the previous year. Snowfall in late 1995, however, did not match the previous year which adversely affected results in late 1995 and in early 1996. 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. - 10 - Arizona ------- I-10 West, Phoenix - In 1979, I-10 Industrial Park Developers ("I-10"), an Arizona partnership between Paramount Development Associates, Inc. (80%) and Mardian Development Company (20%), purchased approximately 160 acres of industrially zoned land located immediately south of the Interstate 10 Freeway, between 51st and 59th Avenues in the City of Phoenix. The project experienced strong demand through 1988. With the downturn in the Arizona real estate markets, subsequent to 1988, sales slowed. However, in 1995 the remaining 13.3 acres were sold and this project is sold out. Airport Commerce Center, Tucson - In 1982, the I-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. In 1990, the partnership sold 14 acres to a major airline for development as a processing center and, in 1992, sold a one acre parcel adjacent to the existing property. After experiencing no new sales in 1993, approximately 12 acres were sold in 1994 and an additional 24 acres were sold in 1995. Currently, 87 acres remain to be sold. 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 pending improved market conditions. In 1993, PL&D obtained a three-year extension of the construction start date required under the original zoning and for the present is continuing to hold the project in abeyance. 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, which caused PL&D to have to provide approximately $1.2 million in 1994 and $.7 million in 1995 to cover the shortfall. 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 1994 nor were any land sales consummated. However, the lease covering space occupied by the major office tenant was 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. 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 developed, the project will consist of 496 single-family homes. An 18-hole Robert Trent Jones, Jr. designed championship golf course and clubhouse were completed within the project in 1995. 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. 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 1988, PL&D acquired a 1.75-acre parcel of land located in the Governmental Mall area of Phoenix. Original plans were to either develop a 200,000 square foot office building on the site to be available to government and government related tenants or to sell the site. The project has currently been placed on hold pending a change in market conditions. - 11 - 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. The well publicized real estate problems experienced by the commercial bank and savings and loan industries in the early 90's have resulted in sharply curtailed credit available to acquire and develop real estate; further, the continuing national weakness in commercial office markets has significantly slowed the pace at which PL&D has been able to proceed on certain of its development projects and its ability to sell developed product. In some or all cases, it has also reduced the sales proceeds realized on such sales and/or required extended payment terms. 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. PL&D, in some cases, employs hedges or caps to protect itself against increases in interest rates on any of its variable rate debt and, therefore, is insulated from extreme interest rate risk on borrowed funds, although specific projects may be impacted if the decision has been made not to hedge or to hedge at higher than current rates. The Company has been replacing relatively low cost debt-free land in Florida acquired in the late 1950's with land purchased at current market prices. In 1995 and into the future, as the mix of land sold contains proportionately less low cost land, the gross margin on real estate revenues will decrease. 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. However, due to conditions in the insurance market, the Company's California properties, both directly owned and owned in partnership with others, are not fully covered by earthquake insurance. 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. 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 1995, the maximum number of employees employed was approximately 3,000 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. - 12 - 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 San Francisco, CA Leased - 3,500 Hawthorne, NY Leased - 12,500 West Palm Beach, FL Leased - 5,000 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 -- ------- 9 190,400 == ======= Principal Permanent Storage Yards - --------------------------------- Bow, NH Owned 70 Framingham, MA Owned 6 E. Boston, MA Owned 3 Las Vegas, NV Leased 2 Novi, MI Leased 3 -- 84 == The Company's properties are generally well maintained, in good condition, adequate and suitable for the Company's purpose and fully utilized. 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. - 13 - 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. - 14 - 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 1995 and 1994 are summarized below: 1995 1994 -------------- -------------- Market Price Range per Common Share: High Low High Low - ----------------------------------- ------ ----- ------ ----- Quarter Ended March 31 11 7/8 - 9 3/8 13 7/8 - 11 1/4 June 30 11 1/2 - 9 1/2 13 3/8 - 10 7/8 September 30 13 3/8 - 10 1/8 11 1/2 - 9 1/8 December 31 12 1/4 - 7 7/8 11 1/8 - 9 1/8 For information on dividend payments, see Selected Financial Data in Item 6 below and "Dividends" under Management's Discussion and Analysis on Item 7 below. As of March 1, 1996, there were approximately 1,327 record holders of the Company's Common Stock. ITEM 6. SELECTED FINANCIAL DATA - -------------------------------- SELECTED CONSOLIDATED FINANCIAL INFORMATION (In thousands, except per share data)
OPERATING SUMMARY 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Revenues Construction operations $1,056,673 $ 950,884 $1,030,341 $1,023,274 $ 919,641 Real estate operations 44,395 61,161 69,775 47,578 72,267 ----------- ----------- ----------- ----------- ---------- Total Revenues $1,101,068 $1,012,045 $1,100,116 $1,070,852 $ 991,908 ----------- ----------- ----------- ----------- ---------- Gross Profit $ 14,855 $ 51,797 $ 52,786 $ 22,189 $ 60,854 General, Administrative & Selling Expenses (37,283) (42,985) (44,212) (41,328) (48,530) ----------- ----------- ----------- ----------- ----------- Income (Loss) From Operations $ (22,428) $ 8,812 $ 8,574 $ (19,139) $ 12,324 Other Income (Expense), Net 814 (856) 5,207 436 1,136 Interest Expense (8,582) (7,473) (5,655) (7,651) (9,022) ----------- ----------- ----------- ----------- ----------- Income (Loss) Before Income Taxes $ (30,196) $ 483 $ 8,126 $ (26,354) $ 4,438 (Provision) Credit for Income Taxes 2,611 (180) (4,961) 9,370 (1,260) ----------- ----------- ----------- ----------- ----------- Net Income (Loss) $ (27,585) $ 303 $ 3,165 $ (16,984) $ 3,178 ----------- ----------- ----------- ----------- ---------- Per Share of Common Stock: Earnings (loss) $ (6.38) $ (.42) $ .24 $ (4.69) $ .27 ----------- ----------- ----------- ----------- ---------- Cash dividends declared $ - $ - $ - $ - $ - ----------- ----------- ----------- ----------- ------ Book value $ 17.06 $ 23.79 $ 24.49 $ 23.29 $ 28.96 ----------- ----------- ----------- ----------- ---------- Weighted Average Number of Common Shares Outstanding 4,655 4,380 4,265 4,079 3,918 ----------- ----------- ----------- ----------- ---------- FINANCIAL POSITION SUMMARY Working Capital $ 36,545 $ 29,948 $ 36,877 $ 31,028 $ 30,724 ----------- ----------- ----------- ----------- ---------- Current Ratio 1.12:1 1.13:1 1.17:1 1.14:1 1.16:1 Long-term Debt, less current maturities $ 84,155 $ 76,986 $ 82,366 $ 85,755 $ 96,294 ----------- ----------- ----------- ----------- ---------- Stockholders' Equity $ 105,606 $ 132,029 $ 131,143 $ 121,765 $ 138,644 ----------- ----------- ----------- ----------- ---------- Ratio of Long-term Debt to Equity .80:1 .58:1 .63:1 .70:1 .69:1 ----------- ----------- ----------- ----------- ---------- Total Assets $ 539,251 $ 482,500 $ 476,378 $ 470,696 $ 498,574 ----------- ----------- ----------- ----------- ---------- OTHER DATA Backlog at Year-end $1,534,522 $1,538,779 $1,238,141 $1,169,553 $1,233,958 ----------- ----------- ----------- ----------- ----------
- 15 - ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- 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 heavy 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 heavy 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. (as more fully discussed in Note 11 to Notes to Consolidated Financial Statements) and downward revisions in estimated probable recoveries on certain outstanding contract claims, and lower than normal profit margins on certain heavy 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. 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, tax charges. ---------------------------------------------------------- Looking ahead, we must consider the Company's construction backlog and - 16 - remaining inventory of real estate projects. The overall construction backlog at the end of 1995 was $1.535 billion which approximates the 1994 record year-end backlog of $1.539 billion. This backlog has a better balance between building and heavy work and a higher overall estimated profit margin. With the sale of the final 21 acres during 1994, the Company's Villages of Palm Beach Lakes, Florida land inventory 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 1995. Between 1989 and 1995, property prices in general have fallen substantially due to the reduced liquidity in real estate markets and reduced demand. Recently, the Company has noted improvement in some property areas. This trend has had some effect on residential property sales which were closed in 1995. However, this trend is still neither widespread nor proven to be sustainable. RESULTS OF OPERATIONS - 1994 COMPARED TO 1993 The Company's 1994 operations resulted in net income of $.3 million on revenues of $1.0 billion and a loss of 42 cents per common share (after giving effect to the dividend payments required on its preferred stock) compared to net income of $3.2 million or 24 cents per common share on revenues of $1.1 billion in 1993. In spite of the overall decrease in revenues during 1994, income from operations increased slightly compared to 1993 results. An increase in interest expense in 1994 and the non-recurring $1 million net gain after tax in 1993 from the sale by the Company of its 74%-ownership interest in Majestic Contractors Limited ("Majestic"), its Canadian pipeline subsidiary, contributed to the overall decrease in net income. Revenues amounted to $1.012 billion in 1994 compared to $1.100 billion in 1993, a decrease of $88 million (or 8%). This decrease resulted primarily from a net decrease in construction revenues of $79 million (or 8%) from $1.030 billion in 1993 to $.951 billion in 1994 due to a decrease in volume from building operations of $126 million (or 17%), from $752 million in 1993 to $626 million in 1994. The decrease in revenue from building operations was primarily due to the prolonged start-up phases on certain projects. This decrease was partially offset by an increase in revenues from civil and environmental construction operations of $47 million (or 17%), from $278 million in 1993 to $325 million in 1994, due to an increased heavy construction backlog going into 1994. In addition to the overall decrease in construction revenues, revenues from real estate operations decreased $8.6 million (or 12%), from $69.8 million in 1993 to $61.2 million in 1994, due primarily to the non-recurring sale ($23.2 million) in 1993 of a partnership interest in certain commercial rental properties in San Francisco and a $5.2 million decrease in land sales in Arizona. The decrease in real estate revenues was partially offset from the sale of two investment properties in 1994 ($8.3 million) and increased land sales in Massachusetts ($5.4 million) and California ($4.9 million). In spite of the 8% decrease in total revenues, the gross profit in 1994 decreased only $1.0 million (or 2%), from $52.8 million in 1993 to $51.8 million in 1994. The gross profit from construction operations decreased $1.1 million (or 2.3%), from $49.1 million in 1993 to $48.0 million in 1994, due to the negative profit impact from the reduction in building construction revenues referred to above and a loss from international operations resulting from unstable economic and political conditions in a certain overseas location where the Company is working. These decreases were partially offset by slightly higher margins on the construction work performed in 1994 (5.0% in 1994 compared with 4.8% in 1993) and a slight overall increase ($.1 million) in the gross profit from real estate operations, from $3.7 million in 1993 compared to $3.8 million in 1994. Total general, administrative and selling expenses decreased by $1.2 million (or 3%) in 1994, from $44.2 million in 1993 to $43.0 million in 1994 due to several factors, the more significant ones being a $2.1 million expense for severance incurred in 1993 in connection with re-engineering some of the business units, which was partially offset by the full year impact of expenses related to the acquisition referred to in Note 1 to Notes to Consolidated Financial Statements. The decrease in other income (expense), net of $6.1 million, from income of $5.2 million in 1993 to a net loss of $.9 million in 1994 is primarily due to the pretax gain in 1993 of $4.6 million on the sale of Majestic and, to a lesser degree, an increase in other expenses in 1994, primarily bank fees. The increase in interest expense of $1.8 million (or 32%), from $5.7 million in 1993 to $7.5 million in 1994 primarily results from higher interest rates during 1994 and higher average level of borrowings. - 17 - FINANCIAL CONDITION CASH AND WORKING CAPITAL 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. 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 1994, the Company used $15.6 million in cash for investment activities, primarily to fund construction and real estate joint ventures; $7.4 million for financing activities, primarily to pay down company debt; and $5.0 million to fund operating activities, primarily changes in working capital. During 1993, the Company used $39.1 million of cash for investment activities, primarily to fund construction and real estate joint ventures; $3 million for financing activities, primarily to pay down Company debt; and $1.6 million to fund operating activities, primarily changes in working capital. Since 1990, the Company has paid down $44.3 million of real estate debt on wholly-owned real estate projects (from $50.9 million to $6.6 million), utilizing proceeds from sales of property and general corporate funds. Similarly, real estate joint venture debt has been reduced by $158 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. 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. On the other hand, the softening of the national real estate market coupled with problems in the commercial banking industry have significantly reduced credit availability for both new real estate development projects and the sale of completed product, sources historically relied upon by the Company and its customers to meet liquidity needs for its real estate development business. The Company has addressed this problem 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 development expenses on certain projects, utilizing treasury stock in partial payment of amounts due under certain of its incentive compensation plans, utilizing cash internally generated from operations and, during the first quarter of 1992, selling its interest in Monenco. In addition, in January 1993, the Company sold its majority interest in Majestic for approximately $31.7 million in cash. Since Majestic had been fully consolidated, the net result to the Company was to increase working capital by $8 million and cash by $4 million. In addition, the Company implemented a company-wide cost reduction program 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. 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. Effective February 26, 1996, the Company entered into a Bridge Loan Agreement for an additional $15 million through July 31, 1996 (see Note 4 to Notes to Consolidated Financial Statements). Management believes that cash generated from operations, existing credit lines and additional borrowings should probably be adequate to meet the Company's funding requirements for at least the next twelve months. However, the withdrawal of many commercial lending sources from both the real estate and construction markets and/or restrictions on new borrowings and extensions on maturing loans by these very same sources cause uncertainties in predicting liquidity. In addition to internally generated funds, the Company has access to additional funds under its long-term revolving credit facility and Bridge Loan Agreement. At December 31, 1995, the Company has $24.5 million available under its revolving credit facility and, effective February 26, 1996, an additional $15 million became available under the 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 and interest coverage, all as defined in the loan documents. Although the Company was in violation of certain of the covenants during the latter part of 1995, it obtained waivers of such violations and, effective February 26, 1996, received modifications to the Credit Agreement which eliminated any non-compliance. - 18 - The working capital current ratio stood at 1.12:1 at the end of 1995, compared to 1.13:1 at the end of 1994 and to 1.17:1 at the end of 1993. Of the total working capital of $36.5 million at the end of 1995, approximately $6 million may not be converted to cash within the next 12 to 18 months. LONG-TERM DEBT Long-term debt was $84.2 million at the end of 1995, which represented an increase of $7.2 million compared with $77 million at the end of 1994, which was a decrease of $5.4 million compared with $82.4 million at the end of 1993. 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 due to the increase in long-term debt coupled with the negative impact on equity as a result of the net loss experienced by the Company in 1995. The ratio of long-term debt to equity improved from .63:1 at the end of 1993 to .58:1 at the end of 1994 due to the decrease in long-term debt achieved in 1994. STOCKHOLDERS' EQUITY The Company's book value per common share stood at $17.06 at December 31, 1995, compared to $23.79 per common share and $24.49 per common share at the end of 1994 and 1993, respectively. The major factor impacting stockholders' equity during the three-year period under review was the net loss recorded in 1995 and, to a lesser extent, preferred dividends paid or accrued, and treasury stock issued in partial payment of incentive compensation. At December 31, 1995, there were 1,346 common stockholders of record based on the stockholders list maintained by the Company's transfer agent. DIVIDENDS During 1993 and 1994, the Company 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). During 1995, the Board of Directors continued to declare and pay the regular quarterly cash dividend on the Company's preferred stock through December 15, 1995. In conjunction with the covenants of the new Amended Revolving Credit Agreement (see Note 4 to Notes to Consolidated Financial Statements), the Company is required to suspend the payment of quarterly dividends on its preferred stock until the Bridge Loan commitment is no longer outstanding, if a default exists under the terms of the Amended Revolving Credit Agreement, or if the ratio of long-term debt to equity exceeds 50%. Therefore, the dividend that normally would have been declared during December of 1995 and payable on March 15, 1996 has not been declared (although it has been fully accrued due to the "cumulative" feature of the preferred stock). The Board of Directors intends to resume payment of the cumulative dividend on the Company's preferred stock as the Company satisfies the terms of the new credit agreement and the Board deems it prudent to do so. There were no cash dividends declared during the three-year period ended December 31, 1995 on the Company's outstanding common stock. It is Management's intent to recommend reinstating dividends on common stock once it is prudent to do so. 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. - 19 - 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 16, 1996 (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, 1995 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. NAME, OFFICES HELD YEAR FIRST ELECTED TO PRESENT OFFICE AND AGE AND BUSINESS EXPERIENCE David B. Perini, He has served as a Director, President, Chief Executive Director, Chairman, Officer and Acting Chairman since 1972. He became Chairman President and on March 17, 1978 and has worked for the Company since 1962 Chief Executive in various capacities. Prior to being elected President, he Officer - 58 served as Vice President and General Counsel. Richard J. Rizzo, He has served in this capacity since January, 1994, which Executive Vice entails overall responsibility for the Company's building President, Building construction operations. Prior thereto, he served as Construction - 52 President of Perini Building Company (formerly known as Mardian Construction Co.) since 1985, and in various other operating capacities since 1977. John H. Schwarz, He has served as Executive Vice President, Finance and Executive Vice Administration since August, 1994, and as Chief Executive President, Finance Officer of Perini Land and Development Company, which and Administration entails overall responsibility for the Company's real estate of the Company and operations since April, 1992. Prior to that, he served as Chief Executive Vice President, Finance and Controls of Perini Land and Officer of Perini Development Company. Previously, he served as Treasurer from Land and August, 1984, and Director of Corporate Planning since May, Development 1982. He joined the Company in 1979 as Manager of Corporate Company - 57 Development. Donald E. Unbekant, He has served in this capacity since January, 1994, which Executive Vice entails overall responsibility for the Company's civil and President, Civil environmental construction operations. Prior thereto, he and Environmental served in the Metropolitan New York Division of the Company Construction - 64 as President since 1992, Vice President and General Manager since 1990 and Division Manager since 1984. 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. 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. - 20 - PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K - ------------------------------------------------------------------------- PERINI CORPORATION AND SUBSIDIARIES ----------------------------------- (a)1. The following financial statements and supplementary financial information are filed as part of this report: Pages ----- Financial Statements of the Registrant -------------------------------------- Consolidated Balance Sheets as of December 31, 1995 and 1994 23 - 24 Consolidated Statements of Operations for the three years ended December 31, 1995, 1994 and 1993 25 Consolidated Statements of Stockholders' Equity for the three years ended December 31, 1995, 1994 and 1993 26 Consolidated Statements of Cash Flows for the three years ended December 31, 1995, 1994 and 1993 27 - 28 Notes to Consolidated Financial Statements 29 - 41 Report of Independent Public Accountants 42 (a)2. The following financial statement schedules are filed as part of this report: Pages ----- Report of Independent Public Accountants on Schedule 43 Schedule II -- Valuation and Qualifying Accounts and Reserves 44 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. Separate condensed financial information of the Company has been omitted since restricted net assets of subsidiaries included in the consolidated financial statements and its equity in the undistributed earnings of 50% or less owned persons accounted for by the equity method do not, in the aggregate, exceed 25% of consolidated net assets. (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 45 and 46. 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, 1995, the Registrant made no filings on Form 8-K. - 21 - 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, 1996 s/David B. Perini ----------------- David B. Perini Chairman, President 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, President and Chief Executive Officer s/David B. Perini March 27, 1996 - ------------------ David B. Perini (ii) Principal Financial Officer John H. Schwarz Executive Vice President, Finance & Administration s/John H. Schwarz March 27, 1996 - ------------------ John H. Schwarz (iii) Principal Accounting Officer Barry R. Blake Vice President and Controller s/Barry R. Blake March 27, 1996 - ------------------ Barry R. Blake (iv) Directors David B. Perini ) Joseph R. Perini ) By Richard J. Boushka ) Marshall M. Criser ) s/David B. Perini ----------------- Thomas E. Dailey ) David B. Perini Albert A. Dorman ) Arthur J. Fox, Jr. ) Attorney in Fact John J. McHale ) Dated: March 27, 1996 Jane E. Newman ) Bart W. Perini ) - 22 - Consolidated Balance Sheets December 31, 1995 and 1994
(In thousands except per share data) Assets - ------ 1995 1994 ---- ---- CURRENT ASSETS: Cash, including cash equivalents of $29,059 and $3,518 (Note 1) $ 29,059 $ 7,841 Accounts and notes receivable, including retainage of $69,884 and $63,344 180,978 151,620 Unbilled work (Note 1) 28,304 20,209 Construction joint ventures (Notes 1 and 2) 61,846 66,346 Real estate inventory, at the lower of cost or market (Note 1) 14,933 11,525 Deferred tax asset (Notes 1 and 5) 13,039 6,066 Other current assets 2,186 3,041 -------- -------- Total current assets $330,345 $266,648 -------- -------- REAL ESTATE DEVELOPMENT INVESTMENTS: Land held for sale or development (including land development costs) at the lower of cost or market (Note 1) $ 41,372 $ 43,295 Investments in and advances to real estate joint ventures (Notes 1, 2 and 11) 148,225 148,843 Real estate properties used in operations, less accumulated depreciation of $3,444 and $3,698 2,964 6,254 Other 302 80 -------- -------- Total real estate development investments $192,863 $198,472 -------- -------- PROPERTY AND EQUIPMENT, at cost: Land $ 809 $ 1,134 Buildings and improvements 13,548 13,653 Construction equipment 15,597 15,249 Other equipment 9,911 12,552 -------- -------- $ 39,865 $ 42,588 Less - Accumulated depreciation (Note 1) 27,299 29,082 -------- -------- Total property and equipment, net $ 12,566 $ 13,506 -------- -------- OTHER ASSETS: Other investments $ 1,839 $ 2,174 Goodwill (Note 1) 1,638 1,700 -------- -------- Total other assets $ 3,477 $ 3,874 -------- -------- $539,251 $482,500
The accompanying notes are an integral part of these financial statements. - 23 - Liabilities and Stockholders' Equity
1995 1994 ---- ---- CURRENT LIABILITIES: Current maturities of long-term debt (Note 4) $ 5,697 $ 5,022 Accounts payable, including retainage of $58,749 and $52,224 197,052 148,055 Advances from construction joint ventures (Note 2) 34,830 8,810 Deferred contract revenue (Note 1) 23,443 38,929 Accrued expenses 32,778 35,884 --------- -------- Total current liabilities $293,800 $236,700 --------- -------- DEFERRED INCOME TAXES AND OTHER LIABILITIES (Notes 1, 5 & 6) 52,663 $ 33,488 --------- -------- LONG-TERM DEBT, less current maturities included above (Note 4): Real estate development $ 3,660 $ 6,502 Other 80,495 70,484 --------- -------- Total long-term debt $ 84,155 $ 76,986 --------- -------- MINORITY INTEREST (Note 1) $ 3,027 $ 3,297 --------- -------- CONTINGENCIES AND COMMITMENTS (Note 11) STOCKHOLDERS' EQUITY (Notes 1, 7, 8, 9 and 10): 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 - 4,985,160 shares 4,985 4,985 Paid-in surplus 57,659 59,001 Retained earnings 52,062 81,772 ESOT related obligations (4,965) (6,009) --------- --------- $109,841 $139,849 Less - Common stock in treasury, at cost - 265,735 shares and 490,674 shares 4,235 7,820 --------- -------- Total stockholders' equity $105,606 $132,029 --------- -------- $539,251 $482,500
- 24 - Consolidated Statements of Operations For the years ended December 31, 1995, 1994 & 1993 (In thousands, except per share data)
1995 1994 1993 ---- ---- ---- REVENUES (Notes 2 and 13) $1,101,068 $1,012,045 $1,100,116 ----------- ----------- ---------- COSTS AND EXPENSES (Notes 2 and 10): Cost of operations $1,086,213 $ 960,248 $1,047,330 General, administrative and selling expenses 37,283 42,985 44,212 ----------- ----------- ---------- $1,123,496 $1,003,233 $1,091,542 ----------- ----------- ---------- INCOME (LOSS) FROM OPERATIONS (Note 13) $ (22,428) $ 8,812 $ 8,574 ----------- ----------- ---------- Other income (expense), net (Note 6) 814 (856) 5,207 Interest expense (Notes 3 and 4) (8,582) (7,473) (5,655) ----------- ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES $ (30,196) $ 483 $ 8,126 (Provision) credit for income taxes (Notes 1 and 5) 2,611 (180) (4,961) ----------- ----------- ----------- NET INCOME (LOSS) $ (27,585) $ 303 $ 3,165 =========== =========== ========== EARNINGS (LOSS) PER COMMON SHARE (Note 1) $ (6.38) $ (.42) $ .24 =========== =========== ==========
The accompanying notes are an integral part of these financial statements. - 25 - Consolidated Statements of Stockholders' Equity For the Years Ended December 31, 1995, 1994 & 1993 (In thousands, except per share data)
Cumulative ESOT Preferred Common Paid-In Retained Translation Related Treasury Stock Stock Surplus Earnings Adjustment Obligation Stock - -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- -------------- Balance-December 31, 1992 $100 $4,985 $60,019 $ 82,554 $(4,696) $(7,888) $(13,309) - -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- -------------- Net income - - - 3,165 - - - Preferred stock-cash dividends declared ($21.25 per share*) - - - (2,125) - - - Treasury stock issued in partial payment of incentive compensation - - (143) - - - 2,872 Restricted stock awarded - - (1) - - - 8 Related to Sale of Majestic - - - - 4,696 - - Payments related to ESOT notes - - - - - 906 - - -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- -------------- Balance-December 31, 1993 $100 $4,985 $59,875 $ 83,594 $ - $(6,982) $(10,429) - -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- -------------- Net Income - - - 303 - - - Preferred stock-cash dividends declared ($21.25 per share*) - - - (2,125) - - - Treasury stock issued in partial payment of incentive compensation - - (835) - - - 2,444 Restricted stock awarded - - (39) - - - 165 Payments related to ESOT - notes - - - - - 973 - -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- -------------- Balance-December 31, 1994 $100 $4,985 $59,001 $ 81,772 $ - $(6,009) $ (7,820) - -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- -------------- Net Loss - - - (27,585) - - - Preferred stock-cash dividends declared or accrued ($21.25 per share*) - - - (2,125) - - - Treasury stock issued in partial payment of incentive compensation - - (1,342) - - - 3,585 Payments related to ESOT notes - - - - - 1,044 - - -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- -------------- Balance-December 31, 1995 $100 $4,985 $57,659 $ 52,062 $ - $(4,965) $ (4,235) - -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- --------------
*Equivalent to $2.125 per depositary share (see Note 7). The accompanying notes are an integral part of these financial statements. - 26 - Consolidated Statements of Cash Flows For the years ended December 31, 1995, 1994 & 1993 (In thousands)
Cash Flows from Operating Activities: 1995 1994 1993 -------- -------- -------- Net income (loss) $(27,585) $ 303 $ 3,165 Adjustments to reconcile net income (loss) to net cash from operating activities - Depreciation and amortization 2,769 2,879 3,515 Non-current deferred taxes and other liabilities 19,175 (5,306) 11,239 Distributions greater (less) than earnings of joint ventures and affiliates 12,880 2,995 (2,821) Gain on sale of Majestic (Note 6) - - (4,631) Cash provided from (used by) changes in components of working capital other than cash, notes payable and current maturities of long-term debt 16,571 (14,119) (19,653) Real estate development investments other than joint ventures 2,757 11,451 10,908 Other non-cash items, net (2,174) (3,231) (3,299) --------- --------- --------- NET CASH PROVIDED FROM (USED BY) OPERATING ACTIVITIES $ 24,573 $ (5,028) $ (1,577) --------- --------- --------- Cash Flows from Investing Activities: Proceeds from sale of property and equipment $ 3,115 $ 989 $ 1,344 Cash distributions of capital from unconsolidated joint ventures $ 23,858 13,112 4,977 Acquisition of property and equipment (1,960) (2,493) (4,387) Improvements to land held for sale or development (193) (334) (4,227) Improvements to real estate properties used in operations (263) (140) (614) Capital contributions to unconsolidated joint ventures (29,373) (20,199) (24,579) Advances to real estate joint ventures, net (7,735) (6,559) (16,031) Proceeds from sale of Majestic, net of subsidiary's cash - - 4,377 Investments in other activities 190 14 - --------- --------- ------ NET CASH USED BY INVESTING ACTIVITIES $(12,361) $(15,610) $(39,140) --------- --------- --------- - 27 - Consolidated Statements of Cash Flows (Continued) For the years ended December 31, 1995, 1994 & 1993 (In thousands) Cash Flows from Financing Activities: Proceeds from long-term debt $ 12,033 $ 3,127 $ 8,014 Repayment of long-term debt (3,145) (10,129) (11,600) Cash dividends paid (2,125) (2,125) (2,125) Treasury stock issued 2,243 1,735 2,736 --------- --------- -------- NET CASH PROVIDED FROM (USED BY) FINANCING ACTIVITIES $ 9,006 $ (7,392) $ (2,975) --------- --------- --------- Net Increase (Decrease) in Cash $ 21,218 $(28,030) $(43,692) Cash and Cash Equivalents at Beginning of Year 7,841 35,871 79,563 --------- --------- -------- Cash and Cash Equivalents at End of Year $ 29,059 $ 7,841 $ 35,871 ========= ========= ======== Supplemental Disclosures of Cash Paid During the Year For: Interest $ 8,715 $ 7,308 $ 5,947 ========= ========= ======== Income tax payments $ 121 $ 1,176 $ 843 ========= ========= ========
The accompanying notes are an integral part of these financial statements. - 28 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1995 1994 & 1993 [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". Effective July 1, 1993, the Company acquired Gust K. Newberg Construction Co.'s ("Newberg") interest in certain construction projects and related equipment. The purchase price for the acquisition was (i) approximately $3 million in cash for the equipment paid by a third party leasing company, which in turn simultaneously entered into an operating lease agreement with the Company for the use of said equipment, (ii) $1 million in cash paid by the Company, and (iii) 50% of the aggregate of net profits earned from each project from April 1, 1993 through December 31, 1994 and, with regard to one project, through December 31, 1995. This acquisition has been accounted for as a purchase. If this acquisition had been consummated as of January 1, 1993, the 1993 pro forma results would have been. Revenues of $1,134,264,000 and Net Income of $3,724,000 ($.37 per common share). [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 of net realizable value of real estate development projects (see Note 1(d) below) and estimating potential liability 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 became 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 claims is recorded in the year such claims 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. - 29 - 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. Real estate investments are stated at the lower of cost, which includes applicable interest and real estate taxes during the development and construction phases, or market. The market or net realizable value of a development is determined by estimating the sales value of the development in the ordinary course of business 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 net realizable value of a development is less than the cost of a development, a provision is made to reduce the carrying value of the development to net realizable value. At present, the Company believes its real estate properties are carried at amounts at or below their net realizable values considering the expected timing of their disposal. [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 Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," (see Note 5). [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 during the respective periods. During the three-year period ended December 31, 1995, earnings (loss) per common share reflect the effect of preferred dividends 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. [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. - 30 - [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, 1995 follows: CONSTRUCTION JOINT VENTURES Financial position at December 31, 1995 1994 1993 --------- --------- --------- Current assets $227,578 $232,025 $241,905 Property and equipment, net 22,491 19,386 17,228 Current liabilities (151,311) (132,326) (151,181) --------- --------- --------- Net assets $ 98,758 $119,085 $107,952 ========= ========= ========= Operations for the year ended December 31, 1995 1994 1993 --------- --------- --------- Revenue $348,730 $544,546 $626,327 Cost of operations 329,414 505,347 574,383 --------- --------- --------- Pretax income $ 19,316 $ 39,199 $ 51,944 ========= ========= ========= Company's share of joint ventures Revenue $182,799 $241,784 $293,547 Cost of operations 177,990 224,039 272,137 --------- --------- --------- Pretax income $ 4,809 $ 17,745 $ 21,410 ========= ========= ========= Equity $ 61,846 $ 66,346 $ 61,156 ========= ========= ========= The Company has a centralized cash management arrangement with most 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 1995 ($34.8 million) and 1994 ($8.8 million), approximately $12.1 million in 1995 and $5.5 million in 1994 was deemed to be temporary. REAL ESTATE JOINT VENTURES Financial position at December 31, 1995 1994 1993 --------- --------- --------- Property held for sale or development $ 18,350 $ 28,885 $ 35,855 Investment properties, net 173,468 177,258 191,606 Other assets 61,700 62,101 61,060 Long-term debt (72,603) (77,968) (103,090) Other liabilities* (305,755) (277,184) (256,999) ---------- --------- --------- Net assets (liabilities) $(124,840) $(86,908) $(71,568) ========== ========= ========= Operations for the year ended December 31, 1995 1994 1993 --------- --------- --------- Revenue $ 49,560 $ 58,326 $ 83,710 ---------- --------- --------- Cost of operations - Depreciation $ 7,304 $ 7,245 $ 8,660 Other 73,829 71,211 92,963 ---------- --------- --------- $ 81,133 $ 78,456 $101,623 ---------- --------- --------- Pretax income (loss) $ (31,573) $(20,130) $(17,913) ========== ========= ========= Company's share of joint ventures Revenue $ 23,424 $ 27,059 $ 43,590 ---------- --------- --------- Cost of operations - Depreciation $ 3,275 $ 3,323 $ 4,033 Other ** 20,888 26,682 40,716 ---------- --------- --------- $ 24,163 $ 30,005 $ 44,749 ---------- --------- --------- Pretax income (loss) $ (739) $ (2,946) $ (1,159) ========== ========= ========= Equity *** $ (49,580) $(33,091) $(27,768) ========== ========= ========= - 31 - * Included in "Other liabilities" are advances from joint venture partners in the amount of $236.8 million in 1993, $259.3 million in 1994, and $287.6 million in 1995. Of the total advances from joint venture partners, $165.9 million in 1993, $181.9 million in 1994, and $198.7 million in 1995 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, 1995. [3] NOTES PAYABLE TO BANKS During 1994, the Company maintained unsecured short-term lines of credit totaling $18 million. In support of these credit lines, the Company paid fees approximating 1/4 of 1% of the amount of the lines. These lines were canceled as of December 12, 1994 upon the effective date of the expanded credit agreement referred to in Note 4 below. Information relative to the Company's short-term debt activity under such lines in 1994 follows (in thousands): 1994 Borrowings during the year: Average $10,992 Maximum $18,000 At year-end $ - Weighted average interest rates: During the year 7.4% At year-end - [4] LONG-TERM DEBT Long-term debt of the Company at December 31, 1995 and 1994 consists of the following (in thousands):
1995 1994 ---- ---- Real Estate Development: Industrial revenue bonds, at 65% of prime, payable in semi-annual installments $ 1,034 $ 1,310 Mortgages on real estate, at rates ranging from prime plus 1 1/2% to 10.82%, payable in installments 5,521 6,588 ------- ------- Total $ 6,555 $ 7,898 Less - current maturities 2,895 1,396 ------- ------- Net real estate development long-term debt $ 3,660 $ 6,502 ======= ======= Other: Revolving credit loans at an average rate of 8.1% in 1995 and 8.6% in 1994 $73,000 $62,000 ESOT Notes at 8.24%, payable in semi-annual installments (Note 7) 4,484 5,396 Industrial revenue bonds at various rates, payable in installments to 2005 4,000 4,000 Other indebtedness 1,813 2,714 ------- ------- Total $83,297 $74,110 Less - current maturities 2,802 3,626 ------- ------- Net other long-term debt $80,495 $70,484 ======= =======
Payments required under these obligations amount to approximately $5,697 in 1996, $74,877 in 1997, $3,128 in 1998, $2,150 in 1999, $ - in 2000 and $4,000 for the years 2001 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 (aggregate limit under previous agreements was $85 million), with a $25 million maximum of such amount also being available for letters of credit, of which $17 million was outstanding at December 31, 1995. 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. Borrowings and repayments may be made at any time through December 6, 1997, at which time all outstanding loans under the agreement must be paid or otherwise refinanced. The Company must pay a commitment fee of 1/2 - 32 - of 1% annually on the unused portion of the commitment. The aggregate $125 million commitment is subject to permanent partial reductions based on certain events, as defined, such as proceeds from real estate sales over a defined annual minimum, certain claims and future equity offerings and was reduced accordingly during 1995 by $10.5 million. 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. As a result of the loss in the third quarter of 1995, the Company was in violation of certain of these financial covenants; however, the Company obtained waivers of any such violations and effective February 26, 1996, received modifications to the Credit Agreement which eliminated any non-compliance. Other modifications included, among other things, a requirement to reduce the amount of this loan commitment by $2 million per month for four months commencing the later of September 1, 1996 or the date of repayment and cancellation of the Bridge Loan referred to below; 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 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 through July 31, 1996 at an interest rate of prime plus 2%. The Bridge Loan Agreement provides for, among other things, interim mandatory reductions in the amount of the commitment equal to the net proceeds from sale of collateral not included in the Company's 1996 budget and 50% of the net proceeds from any new equity. [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. The (provision) credit for income taxes is comprised of the following (in thousands): Federal State Total ------- ----- ----- 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) ======== ======== ======== 1993 Current $(2,824) $ (430) $(3,254) Deferred (1,808) 101 (1,707) -------- -------- -------- $(4,632) $ (329) $(4,961) ======== ======== ======== The table below reconciles the difference between the statutory federal income tax rate and the effective rate provided in the statements of operations. 1995 1994 1993 ---- ---- ---- Statutory federal income tax rate (34)% 34 % 34 % State income taxes, net of federal tax benefit - 4 2 Change in valuation allowance 25 - - Sale of Canadian subsidiary - - 24 Goodwill and other - (1) 1 ----- ----- ----- Effective tax rate (9)% 37 % 61 % ===== ===== ===== - 33 - The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of December 31, 1995 and 1994 (in thousands):
1995 1994 ---------------------------------- ------------------------------- Deferred Deferred Tax Deferred Deferred Tax Tax Assets Liabilities Tax Assets Liabilities ---------- ----------- ---------- ----------- Provision for estimated losses $ 5,646 $ - $ 6,203 $ - Contract losses 5,642 - 887 - Joint ventures - construction - 4,929 - 8,088 Joint ventures - real estate - 20,419 - 25,668 Timing of expense recognition 4,253 - 13,867 - Capitalized carrying charges - 2,187 - 1,776 Net operating loss carryforwards 13,675 - 5,960 - Alternative minimum tax credit carryforwards 2,419 - 2,300 - General business tax credit carryforwards 3,532 - 3,637 - Foreign tax credit carryforwards 978 - 978 - Other, net 576 985 685 861 -------- -------- -------- -------- $36,721 $28,520 $34,517 $36,393 Valuation allowance for deferred tax assets (9,342) - (1,846) - -------- -------- -------- -------- Total $27,379 $28,520 $32,671 $36,393 ======== ======== ======== ========
The net of the above is deferred taxes in the amount of $1,141 in 1995 and $3,722 in 1994 which is classified in the respective Consolidated Balance Sheets as follows:
1995 1994 ---- ---- Long-term deferred tax liabilities (included in "Deferred Income Taxes and Other Liabilities") $14,180 $ 9,788 Short-term Deferred Tax Asset 13,039 6,066 ------- ------- $ 1,141 $ 3,722 ======= =======
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. At December 31, 1995, 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 ----------- ----------- ------------- 1996-2000 $ - $ 978 $ - 2001-2004 3,532 - 968 2005-2010 - - 39,251 ------ ------ ------- $3,532 $ 978 $40,219 ====== ====== ======= 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. - 34 - [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, 1995 and 1994 consist of the following (in thousands): 1995 1994 ------- ------ Deferred Income Taxes $14,180 $ 9,788 Insurance related liabilities 20,484 18,000 Employee benefit-related liabilities 5,110 4,700 Other 12,889 1,000 ------- ------- $52,663 $33,488 ======= ======= OTHER INCOME (EXPENSE), NET Other income (expense) items for the three years ended December 31, 1995 are as follows (in thousands): 1995 1994 1993 ------- ------- ------- Interest and dividend income $ 1,369 $ 205 $ 624 Minority interest (Note 1) 10 24 167 Gain on sale of Majestic - - 4,631 Bank fees (1,099) (1,100) (584) Miscellaneous income (expense), net 534 15 369 -------- -------- ------- $ 814 $ (856) $5,207 ======== ======== ======= [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, in whole or in part, at declining premiums until June 1997 and thereafter 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 occurrence of certain events viewed to be an attempt by a person or group to gain control of the Company (a "triggering - 35 - event"). The Rights will not have any voting rights or be entitled to dividends. Upon the occurrence of a triggering event, 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 and will expire on September 23, 1998. [9] STOCK OPTIONS At December 31, 1995 and 1994, 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 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: Number of Number of Option Price Shares Shares Per Share Exercisable ------ --------- ----------- Outstanding at December 31, 1993 434,425 $11.06-$33.06 143,000 Granted 20,000 $13.00 Canceled (32,900) $11.06-$33.06 Outstanding at December 31, 1994 421,525 $11.06-$33.06 251,525 Granted 10,000 $10.44 Canceled (52,875) $11.06-$33.06 Outstanding at December 31, 1995 378,650 $10.44-$33.06 198,650 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. [10] EMPLOYEE BENEFIT PLANS The Company and its U.S. subsidiaries have a defined benefit plan which 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 1995, 1994 and 1993 follows (in thousands): 1995 1994 1993 ------ ------ ------ Service cost - benefits earned during the period $ 988 $ 1,178 $ 1,000 Interest cost on projected benefit obligation 2,956 2,936 2,862 Return on plan assets: Actual (6,971) 1,229 (4,002) Deferred 4,217 (3,839) 1,309 Other - - 19 -------- -------- -------- Net pension cost $ 1,190 $ 1,504 $ 1,188 ======== ======== ======== Actuarial assumptions used: Discount rate 7 %* 8 3/4%** 7 1/2% Rate of increase in compensation 4 %* 5 1/2% 5 1/2% Long-term rate of return on assets 8 % 8 % 8 % * Rates were changed effective December 31, 1995 and resulted in a net increase of $6.8 million in the projected benefit obligation referred to below. ** Rate was changed effective December 31, 1994 and resulted in a net decrease of $5.6 million in the projected benefit obligation referred to below. - 36 - The Company's plan has assets in excess of accumulated benefit obligation. Plan assets generally include equity and fixed income funds. The status of the Company's employee pension benefit plan is summarized below (in thousands):
December 31, 1995 1994 -------- -------- Assets available for benefits: Funded plan assets at fair value $37,542 $31,762 Accrued pension expense 4,122 3,610 -------- -------- Total assets $41,664 $35,372 -------- -------- Actuarial present value of benefit obligations: Accumulated benefit obligations, including vested benefits of $39,050 and $39,760 $30,537 $30,179 Effect of future salary increases 3,831 4,546 -------- -------- Projected benefit obligations $43,591 $35,083 -------- -------- Assets available more (less) than projected benefits $(1,927) $ 289 ======== ======== Consisting of: Unamortized net liability existing at date of adopting SFAS No. 87 $ (29) $ (36) Unrecognized net loss (2,408) (268) Unrecognized prior service cost 510 593 -------- -------- $(1,927) $ 289 ======== ========
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 and the Section 401(k) plan. 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 1995 and 1994 and $.1 million in 1993. At December 31, 1995 the projected benefit obligation was $1.3 million. A corresponding accumulated benefit obligation of $.8 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 $7.6 million in 1995, $9.2 million in 1994 and $8.5 million in 1993. 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 $12.6 million in 1995, $12.4 million in 1994, and $5.2 million in 1993. 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 $59 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 $7.2 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 - 37 - exceed $2.3 million. The Company has also guaranteed the $3.7 million letter of credit, $5.0 million of the subsidiary's $7.2 million amortization guaranty and any obligation under the master lease during the next three 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 financing from $46.5 million to $40.5 million. Subsequent payments through 1995 have further reduced the loan to $38.2 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 three 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 1995 further reduced the loan by $2.7 million. The joint venture may be required to amortize up to $9.1 million more of the principal, however, under certain conditions, that amortization could be as low as $6.8 million. Total lease payments and loan amortization obligations at Rincon Center through 1997 are as follows: $7.5 million in 1996 and $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 each of the years through 1997 is as follows: $5.4 million in 1996 and $4.0 million in 1997. Both years include an estimate for tenant improvements which may or may not be required. 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 $3 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 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 1996. Under the terms of the loan extension, payment of the preferred return out of operating profits requires lender approval. 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 - 38 - 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 (some of which are for significant amounts). In the opinion of management, the resolution of these matters will not have a material effect on the accompanying financial statements. - 39 - [12] UNAUDITED QUARTERLY FINANCIAL DATA The following table sets forth unaudited quarterly financial data for the years ended December 31, 1995 and 1994 (in thousands, except per share amounts):
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 1994 by Quarter --------------------------------------------------------- 1st 2nd 3rd 4th --- --- --- --- Revenues $174,391 $243,105 $304,776 $289,773 Net income (loss) $ 792 $ (2,649) $ 984 $ 1,176 Earnings (loss) per common share $ .06 $ (.73) $ .10 $ .15
[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 and environmental ("heavy"), 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, 1995 (in thousands): Business Segments Revenues 1995 1994 1993 ------------ ----------- ---------- Construction $1,056,673 $ 950,884 $1,030,341 Real Estate 44,395 61,161 69,775 ------------ ----------- ---------- $1,101,068 $1,012,045 $1,100,116 ============ =========== ========== Income (Loss) From Operations 1995 1994 1993 ------------ ----------- ---------- Construction $ (15,322) $ 13,989 $ 15,164 Real Estate (2,921) 732 240 Corporate (4,185) (5,909) (6,830) ------------ ----------- ----------- $ (22,428) $ 8,812 $ 8,574 ============ =========== =========== Assets 1995 1994 1993 ------------ ------------ ---------- Construction $ 298,564 $ 262,850 $ 219,604 Real Estate 209,789 209,635 218,715 Corporate* 30,898 10,015 38,059 ------------ ------------ ---------- $ 539,251 $ 482,500 $ 476,378 ============ ============ ========== Capital Expenditures 1995 1994 1993 ----------- ----------- ---------- Construction $ 1,960 $ 2,491 $ 4,387 Real Estate 9,555 10,274 23,590 ----------- ----------- ---------- $ 11,515 $ 12,765 $ 27,977 =========== =========== ========== - 40 - Depreciation 1995 1994 1993 ----------- ----------- ----------- Construction $ 2,369 $ 2,551 $ 2,552 Real Estate** 400 328 963 ----------- ----------- ----------- $ 2,769 $ 2,879 $ 3,515 =========== =========== =========== Geographic Segments Revenues 1995 1994 1993 ------------ ----------- ----------- United States $1,084,390 $ 996,832 $1,064,380 Foreign 16,678 15,213 35,736 ----------- ----------- ----------- $1,101,068 $1,012,045 $1,100,116 =========== =========== =========== Income (Loss) From Operations 1995 1994 1993 ----------- ----------- ----------- United States $ (15,405) $ 17,275 $ 17,249 Foreign (2,838) (2,554) (1,845) Corporate (4,185) (5,909) (6,830) ----------- ----------- ----------- $ (22,428) $ 8,812 $ 8,574 =========== =========== =========== Assets 1995 1994 1993 ----------- ----------- ----------- United States $503,114 $ 467,298 $ 433,488 Foreign 5,239 5,187 4,831 Corporate* 30,898 10,015 38,059 ----------- ----------- ----------- $539,251 $ 482,500 $ 476,378 =========== =========== =========== * 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 56% of construction revenues in 1995 and 1994, and 54% in 1993. - 41 - 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, 1995 and 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. 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, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Boston, Massachusetts February 26, 1996 - 42 - REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE ---------------------------------------------------- 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 26, 1996. Our audits were made for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The supplemental schedule listed in the accompanying index is the responsibility of the Company's management and is presented for purpose of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states, 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 26, 1996 - 43 - SCHEDULE II PERINI CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (IN THOUSANDS OF DOLLARS)
Additions ---------------------- Balance at Charged Charged to Deductions Balance Beginning to Costs Other from at End Description of Year & Expenses Accounts Reserves of Year - ----------- ---------- ---------- ---------- ---------- ------- Year Ended December 31, 1995 - ---------------------------- Reserve for doubtful accounts $ 351 $ - $ - $ - $ 351 ======= ======= ==== ====== ======= Reserve for depreciation on $ 3,698 $ 387 $ - $ 641 (1) $ 3,444 ======= ======= ==== ====== ======= real estate properties used in operations Reserve for real estate $11,471 $ - $ - $ 974 (2) $10,497 ======= ======= ==== ====== ======= investments Year Ended December 31, 1994 - ---------------------------- Reserve for doubtful accounts $ 351 $ - $ - $ - $ 351 ======= ======= ==== ====== ======= Reserve for depreciation on $ 3,637 $ 328 $ - $ 267 (2) $ 3,698 ======= ======= ==== ====== ======= real estate properties used in operations Reserve for real estate $20,838 $ - $ - $9,367 (2) $11,471 ======= ======= ==== ====== ======= investments Year Ended December 31, 1993 - ---------------------------- Reserve for doubtful accounts $ 351 $ - $ - $ - $ 351 ======= ======= ==== ====== ======= Reserve for depreciation on real estate properties used in operations $ 3,181 $ 920 $ - $ 464 (2) $ 3,637 ======= ======= ==== ====== ======= Reserve for real estate investments $29,968 $ - $ - $9,130 (2) $20,838 ======= ======= ==== ====== =======
(1) Represents reserve reclassed with related asset to "Real estate inventory". (2) Represents sales of real estate properties. - 44 - 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 July 7, 1994 - Exhibit 3.1 to 1994 Form 10-K, as filed. 3.2 By-laws - As amended through September 14, 1990 - Exhibit 3.2 to 1991 Form 10-K, as filed. 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 and Certificate of Vote of Directors adopting a Shareholders Rights Plan providing for the issuance of a Series A Junior Participating Cumulative Preferred Stock purchase rights as a dividend to all shareholders of record on October 6, 1988, as amended and restated as of May 17, 1990 - filed herewith. 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. - 45 - EXHIBIT INDEX (Continued) 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 - filed herewith. 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 - filed herewith. Exhibit 22. 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. - 46 - EXHIBIT 22 PERINI CORPORATION SUBSIDIARIES OF THE REGISTRANT Percentage of Interest or
Voting Name Place of Organization Securities Owned ---- --------------------- ---------------- Perini Corporation Massachusetts Perini Building Company, Inc. Arizona 100% Pioneer Construction, Inc. West Virginia 100% Perini Environmental Services, Inc. Delaware 100% International Construction Management Delaware 100% Services, Inc. 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 Massachusetts 100% Associates, Inc. I-10 Industrial Park Developers Arizona General 80% Partnership Perini Resorts, Inc. California 100% Glenco-Perini - HCV Partners California Limited 45% Partnership Squaw Creek Associates California General 40% Partnership Perland Realty Associates, Inc. Florida 100% Rincon Center Associates California Limited 46% Partnership Perini Central Limited Partnership Arizona Limited 75% Partnership Perini Eagle Limited Partnership Arizona Limited 50% Partnership Perini/138 Joint Venture Georgia General 49% Partnership Perini/RSEA Partnership Georgia General 50% Partnership
- 47 - EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our reports, dated February 26, 1996, included in Perini Corporation's Annual Report on this Form 10-K for the year ended December 31, 1995, 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 and 33-58519. ARTHUR ANDERSEN LLP Boston, Massachusetts March 26, 1996 - 48 - 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 13, 1996 - ----------------- -------- -------------- David B. Perini Date s/Joseph R. Perini Director March 13, 1996 - ------------------ -------- -------------- Joseph R. Perini Date s/Richard J. Boushka Director March 13, 1996 - -------------------- -------- -------------- Richard J. Boushka Date s/Marshall M. Criser Director March 13, 1996 - -------------------- -------- -------------- Marshall M. Criser Date s/Thomas E. Dailey Director March 13, 1996 - ------------------ -------- -------------- Thomas E. Dailey Date s/Albert A. Dorman Director March 13, 1996 - ------------------ -------- -------------- Albert A. Dorman Date s/Arthur J. Fox, Jr. Director March 13, 1996 - -------------------- -------- -------------- Arthur J. Fox, Jr. Date Director March 13, 1996 - -------------------- -------- -------------- Nancy Hawthorne Date s/John J. McHale Director March 13, 1996 - ---------------- -------- -------------- John J. McHale Date s/Jane E. Newman Director March 13, 1996 - ---------------- -------- -------------- Jane E. Newman Date s/Bart W. Perini Director March 13, 1996 - ---------------- -------- -------------- Bart W. Perini Date - 49 - EX-10 2 BRIDGE CREDIT AGREEMENT DATED 12/06/94 $15,000,000 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 Fleet National Bank of Massachusetts (f/k/a Shawmut Bank, N.A.), as Co-Agent 1 TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS SECTION 1.01. Definitions...................................... 1 SECTION 1.02. Accounting Terms and Determinations....................... 16 ARTICLE II THE CREDITS SECTION 2.01. The Bridge Loans. ............................... 16 SECTION 2.02. Method of Bridge Borrowing....................... 16 SECTION 2.03. Bridge Notes..................................... 18 SECTION 2.04. Maturity of Bridge Loans......................... 18 SECTION 2.05. Interest Rates. ................................. 18 SECTION 2.06. Bridge Commitment Fees........................... 18 SECTION 2.07. Participation Fee................................ 19 SECTION 2.08. Agency Fee. ..................................... 19 SECTION 2.09. Optional Termination or Reduction of Bridge Commitments.......................... 19 SECTION 2.10. Mandatory Termination or Reduction of Bridge Commitments.......................... 19 SECTION 2.11. Optional Prepayments............................. 20 SECTION 2.12. General Provisions as to Payments............................. 21 SECTION 2.13. Computation of Interest and Fees................................. 21 SECTION 2.14. Maximum Interest Rate............................ 21 SECTION 2.15. Bridge Letters of Credit......................... 22 - -------- The Table of Contents is not a part of this Agreement. Page ---- ARTICLE III CONDITIONS SECTION 3.01. Bridge Effectiveness........................................ 30 SECTION 3.02. Credit Events............................................... 32 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Corporate Existence and Power. ............................................... 34 SECTION 4.02. Corporate and Governmental Authorization; No Contravention................................... 34 SECTION 4.03. Binding Effect; Liens of Collateral Documents............................ 35 SECTION 4.04. Financial Information....................................... 35 SECTION 4.05. Litigation. ................................................ 36 SECTION 4.06. Compliance with ERISA....................................... 36 SECTION 4.07. Environmental Matters....................................... 37 SECTION 4.08. Taxes. ................................................ 38 SECTION 4.09. Subsidiaries................................................ 39 SECTION 4.10. Not an Investment Company................................... 39 SECTION 4.11. No Burdensome Restrictions; No Derivatives Obligations; Certain Existing Agreements..................... 39 SECTION 4.12. Full Disclosure............................................. 39 SECTION 4.13. Ownership of Property; Liens................................ 40 ARTICLE V COVENANTS SECTION 5.01. Information................................................. 40 SECTION 5.02. Payment of Obligations; No Derivatives Obligations......................... 44 SECTION 5.03. Maintenance of Property; Insurance....................................... 44 Page ---- SECTION 5.04. Conduct of Business and Maintenance of Existence....... 44 SECTION 5.05. Compliance with Laws....................... 45 SECTION 5.06. Inspection of Property, Books and Records.................... 45 SECTION 5.07. Current Ratio.............................. 45 SECTION 5.08. Debt. ............................... 45 SECTION 5.09. Minimum Consolidated Tangible Net Worth...................... 46 SECTION 5.10. Interest Coverage.......................... 46 SECTION 5.11. Negative Pledge............................ 47 SECTION 5.12. Consolidations, Mergers and Sales of Assets................ 48 SECTION 5.13. Use of Proceeds............................ 49 SECTION 5.14. Restricted Payments........................ 49 SECTION 5.15. Real Estate Investments.................... 50 SECTION 5.16. Other Investments.......................... 50 SECTION 5.17. Further Assurances......................... 50 ARTICLE VI DEFAULTS SECTION 6.01. Events of Default............. 51 SECTION 6.02. Cash Cover .................. 54 ARTICLE VII THE AGENT SECTION 7.01. Appointment and Authorization. ........................ 55 SECTION 7.02. Agent and Affiliates................. 55 SECTION 7.03. Action by Agent...................... 55 SECTION 7.04. Consultation with Experts............ 55 SECTION 7.05. Liability of Agent................... 55 SECTION 7.06. Indemnification...................... 56 SECTION 7.07. Credit Decision...................... 56 SECTION 7.08. Successor Agent...................... 56 SECTION 7.09. Collateral Documents................. 57 Page ---- ARTICLE VIII MISCELLANEOUS SECTION 8.01. Notices. ......................... 57 SECTION 8.02. No Waivers. ......................... 58 SECTION 8.03. Expenses; Documentary Taxes; Indemnification.......... 58 SECTION 8.04. Sharing of Setoffs................... 59 SECTION 8.05. Amendments and Waivers............... 60 SECTION 8.06. Successors and Assigns............... 60 SECTION 8.07. Certain Collateral................... 62 SECTION 8.08. Governing Law; Submission to Jurisdiction............. 62 SECTION 8.09. Counterparts; Integration............ 62 SECTION 8.10. WAIVER OF JURY TRIAL................. 62 Schedule I - Existing Debt Schedule II - Existing Liens Schedule III - Real and Personal Property Interests Owned by the Borrower and Its Subsidiaries Schedule IV - Certain Existing Agreements Schedule V - Other Reimbursement Obligations Schedule VI - Subsidiaries of the Borrower Schedule VII - Projected Net Cash from Claims, JV Capital Calls/Distributions and Sales of Certain Real Estate in 1996 Exhibit A - Bridge Note Exhibit B-1 - Opinion of Assistant General Counsel of the Borrower Exhibit B-2 - Opinion of New York Counsel for the Borrower Exhibit C-1 - Opinion of Special New York Counsel for the Agent Exhibit C-2 - Opinion of Special Arizona Counsel for the Agent Exhibit C-3 - Opinion of Special Massachusetts Counsel for the Agent Exhibit C-4 - Opinion of Special Florida Counsel for the Agent Exhibit D - Borrower Security Agreement Exhibit E - Borrower Pledge Agreement Exhibit F-1 - Subsidiary Guarantee Agreement Exhibit F-2 - Amendment No. 1 to the Subsidiary Guarantee Agreement Exhibit G - Subsidiary Security Agreement Exhibit H-1 - Deed of Trust Exhibit H-2 - Deed of Trust Exhibit I-1 - Form of Mortgage (Palm Beach County, Florida) Exhibit I-2 - Form of Mortgage (Plymouth County, Massachusetts) Exhibit I-3 - Form of Mortgage (First; Bristol County Massachusetts) Exhibit I-4 - Form of Mortgage (Second; Bristol County Massachusetts) Exhibit I-5 - Form of Mortgage (Middlesex County, Massachusetts) Exhibit I-6 - Form of Mortgage (Merrimack County, New Hampshire) Exhibit I-7 - Form of Mortgage (Wayne County, Michigan) Exhibit J - Subsidiary Pledge Agreement Exhibit K - Form of Assignment and Assumption Agreement Exhibit L - Bonding Company Letter BRIDGE CREDIT AGREEMENT ----------------------- AGREEMENT dated as of February 26, 1996 among PERINI CORPORATION, the BRIDGE BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent. ARTICLE I DEFINITIONS SECTION 1.01. Definitions. The following terms, as used herein, have the following meanings: "Administrative Questionnaire" means, with respect to each Bridge Bank, the administrative questionnaire in the form submitted to such Bridge Bank by the Agent and submitted to the Agent (with a copy to the Borrower) duly completed by such Bridge Bank. "Agent" means Morgan Guaranty Trust Company of New York in its capacity as agent for the Bridge Banks under the Financing Documents, and its successors in such capacity. "Assignee" has the meaning set forth in Section 8.06(c). "Available Bridge LC Amount" means at any time an amount equal to the excess, if any, of (i) the aggregate amount of the Bridge Commitments over (ii) the aggregate outstanding principal amount of the Bridge Loans. "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. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group. "Bonding Company" means Fidelity and Deposit Company of Maryland. "Borrower" means Perini Corporation, a Massachusetts corporation, and its successors. "Borrower Pledge Agreement" means the Borrower Pledge Agreement dated as of December 6, 1994 between the Borrower and the Agent, as amended and restated as of February 26, 1996 in substantially the form of Exhibit E hereto, and as the same may be amended 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 in substantially the form of Exhibit D hereto between the Borrower and the Agent and as the same may be amended from time to time as permitted herein and in accordance with the terms thereof (the Borrower Security Agreement dated as of December 6, 1994 executed and delivered in connection with the execution and delivery of the Credit Agreement having terminated upon collection by the Borrower of all the Collateral pledged thereunder). "Borrower's 1994 Form 10-K" means the Borrower's amended annual report on Form 10-K for 1994, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. "Bridge Bank" means each bank listed on the signature pages hereof, each Assignee which becomes a Bridge Bank pursuant to Section 8.06(c), and their respective successors. "Bridge Borrowing" means a borrowing hereunder consisting of Bridge Loans made to the Borrower at the same time by of one or more Bridge Banks on a single date and for a single Interest Period. "Bridge Commitment" means, with respect to each Bridge Bank, the amount set forth opposite the name of such Bridge Bank on the signature pages hereof as its Bridge Commitment, as such amount may be reduced from time to time pursuant to Section 2.09 and Section 2.10. "Bridge Effective Date" means the date this Agreement becomes effective in accordance with Section 3.01. "Bridge LC Bank" means BayBank, N.A. or such other Bridge Bank as the Borrower may designate from time to time (with the consent of such other Bridge Bank). "Bridge LC Exposure" means, at any time and for any Bridge Bank, an amount equal to such Bridge Bank's Percentage of the aggregate amount of Bridge Letter of Credit Liabilities in respect of all Bridge Letters of Credit at such time. "Bridge Letter of Credit" has the meaning set forth in Section 2.15(a). "Bridge Letter of Credit Liabilities" means, at any time and in respect of any Bridge Letter of Credit, the sum, without duplication, of (i) the amount available for drawing under such Bridge Letter of Credit plus (ii) the aggregate unpaid amount of all Bridge Reimbursement Obligations in respect of previous drawings made under such Bridge Letter of Credit. "Bridge Loan" means a loan made by a Bridge Bank pursuant to Section 2.02. "Bridge Loan Commitment" means for any Bridge Bank at any time an amount equal to the excess, if any, of such Bridge Bank's Bridge Commitment at such time over such Bridge Bank's Bridge LC Exposure at such time. "Bridge Notes" means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Bridge Loans, and "Bridge Note" means any one of such promissory notes issued hereunder. "Bridge Reimbursement Obligations" means at any date the obligations of the Borrower then outstanding under Section 2.15 to reimburse any Bridge Bank for the amount paid by such Bridge Bank in respect of a drawing under a Bridge Letter of Credit. "Bridge Termination Date" means July 31, 1996. "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. "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. "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 Security Agreement, the Subsidiary Pledge Agreement, the Deeds of Trust, the Mortgages and all other supplemental or additional security agreements, pledge agreements, mortgages or similar instruments delivered pursuant hereto or thereto. "Consolidated Capital Base" means, at any date, the Consolidated Tangible Net Worth of the Borrower at such date plus 75% of the principal amount of any Special Subordinated Debt outstanding at such date. "Consolidated Current Assets" means at any date the consolidated current assets of the Borrower and its Consolidated Subsidiaries excluding costs related to Claims, all determined as of such date. For purposes of this definition, "Claims" mean the amount (to the extent reflected in determining such consolidated current assets) of disputed or unapproved change orders in regards to scope and/or price that, in the Borrower's project management's opinion (and approved by the Borrower's senior management), will not be resolved in the normal course of business (i.e. through the change order process and without resort to litigation or arbitration) and which have not been previously reflected in the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of September 30, 1995. "Consolidated Current Liabilities" means at any date the consolidated current liabilities of the Borrower and its Consolidated Subsidiaries, determined as of such date. "Consolidated Earnings Before Interest and Taxes" means for any period Consolidated Net Income for such period (x) less (i) the Borrower's equity share of income (or plus the Borrower's equity share of loss) of unconsolidated joint ventures for such period and (ii) capitalized real estate taxes for such period, to the extent not permitted to be capitalized in accordance with generally accepted accounting principles as in effect on the date hereof, and (y) plus (i) cash distributions of earnings from unconsolidated joint ventures for such period and (ii) the aggregate amount deducted in determining such Consolidated Net Income in respect of Consolidated Interest Charges and income taxes. "Consolidated Interest Charges" means for any period the aggregate interest expense of the Borrower and its Consolidated Subsidiaries for such period including, without limitation, (i) the portion of any obligation under capital leases allocable to interest expense in accordance with generally accepted accounting principles, (ii) the portion of any debt discount that shall be amortized in such period and (iii) any interest accrued during such period which is capitalized in accordance with generally accepted accounting principles, and without any reduction on account of interest income. "Consolidated Net Income" means for any period the consolidated net income (or loss) of the Borrower and its Consolidated Subsidiaries for such period. "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" of any Person means at any date the consolidated stockholders' equity of such Person and its Consolidated Subsidiaries 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. "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 Bridge Effective Date. "Credit Event" means the making of a Bridge Loan or the issuance of a Bridge Letter of Credit or the extension of an Evergreen Bridge 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 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 (other than the Other Reimbursement Obligations and the obligation to reimburse Hong Kong and Shanghai Bank for $1,800,000 of letters of credit issued by it and outstanding on the date hereof), (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. "Deeds of Trust" means the Deed of Trust, Assignment of Leases and Rents, Security Agreement and Financing Statement dated as of December 6, 1994 for each of the properties described as Items 1 and 2 on Schedule III hereto, each substantially in the form of Exhibits H-1 and H-2 to the Credit Agreement. "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. "Environmental Laws" means any and all federal state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to the environment, the effect of the environment on human health or to emissions, discharges or releases of pollutants, contaminants, Hazardous Substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, Hazardous Substances or wastes or the clean-up or other remediation thereof. "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. "Event of Default" has the meaning set forth in Section 6.01. "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 or (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. "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 Business Day next succeeding such day, provided that (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding 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 Bridge Letter of Credit" means any Bridge 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 Credit Agreement, the Subsidiary Guarantee Agreement, the Notes (as defined in the Credit Agreement), the Bridge Notes and the Collateral Documents. "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. "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 8.03(b). "Interest Period" means with respect to each Bridge Borrowing the period commencing on the date of such Bridge Borrowing and ending 30 days thereafter; provided that any Interest Period which would otherwise end after the Bridge Termination Date shall end on the Bridge 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. "Lending Office" means, as to each Bridge Bank, its office located at its address set forth in its Administrative Questionnaire or such other office as such Bridge Bank may hereafter designate as its Lending Office by notice to the Borrower and the Agent. "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. "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $10,000,000. "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, less 75% of the principal amount of any Special Subordinated Debt outstanding on such date. "Mortgage Banks" means (i) Comerica Bank, as successor to Manufacturers National Bank of Detroit, in its capacity as holder of a Promissory Note of the Borrower dated April 4, 1991, in the original principal amount of $1,200,000, and the mortgagee pursuant to a mortgage on the property described as Item 15 in Part I of Schedule III hereto which secures such Promissory Note, and its successors and assigns, (ii) 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 III hereto which secured the obligations of the under such Letter of Credit and Reimbursement Agreement and (iii) 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 described as Items 1, 2, 3, 4, 5, 6, 8, 9, 12, 13 and 15 in Part I of Schedule III hereto. "Mortgages" means the Mortgage, Assignment of Leases and Rents, Security Agreement and Financing Statement dated as of February 26, 1996 for each of the Mortgaged Facilities described as Items 3, 4, 5, 6, 8, 9, 12, 13 and 15 in Part I of Schedule III hereto, each substantially in the form of Exhibits I-1 through I-7 hereto. "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. "Notice of Bridge Borrowing" has the meaning set forth in Section 2.02. "Obligor" means each of the Borrower and the Subsidiary Guarantors, and "Obligors" means all of the foregoing. "Other LC Bank" means each Bank listed on Schedule V attached hereto and its successors and assigns. "Other Letters of Credit" means the letters of credit described on Schedule V 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 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 Bridge Bank, any Person controlling such Bridge Bank. "Participant" has the meaning set forth in Section 8.06(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Percentage" means, with respect to each Bridge Bank, the percentage that such Bridge Bank's Bridge Commitment constitutes of the aggregate amount of the Bridge Commitments. "Performance Bridge Letter of Credit" means a Bridge 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. "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, a Delaware corporation, and its successor by merger, Perini Land and Development Company, Inc., a Massachusetts corporation, upon its reincorporation in Massachusetts on December 30, 1994. "Permitted Encumbrances" means, with respect to any real 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 generally accepted accounting principles; (b) carriers', warehousemen's, mechanics', materialmens', repairmens' 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 generally accepted accounting principles; and (c) other Liens or 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 real 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. "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. "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; provided that the Debt contemplated by Section 5.08(b)(ii) shall not constitute Real Estate Investments. "R. E. Dailey & Co." means R. E. Dailey & Co., a Michigan corporation. "Refunding Bridge Borrowing" means a Bridge Borrowing which, after application of the proceeds thereof, results in no net increase in the outstanding principal amount of Bridge Loans made by any Bridge 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. "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. "Required Bridge Banks" means at any time Bridge Banks having at least 60% of the aggregate amount of the Bridge Commitments or, if the Bridge Commitments shall have been terminated, holding Bridge Notes evidencing at least 60% of the aggregate unpaid principal amount of the Bridge Loans. "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; provided that none of the following shall constitute Restricted Payments: (i) the declaration and payment of dividends on preferred stock of the Borrower in an aggregate amount with respect to any four consecutive fiscal quarters not exceeding $5,125,000, (ii) the exchange of Special Subordinated Debt for the Borrower's $21.25 Convertible Exchangeable Preferred Shares, (iii) 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, between the Borrower and State Street Bank and Trust Company, as Rights Agent or (iv) cash payments in the ordinary course of business in full or partial settlement of employee stock options or similar incentive compensation arrangements. "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. "Special Subordinated Debt" means the 8 1/2% Convertible Subordinated Debentures due 2012 of the Borrower issuable in exchange for the Borrower's $21.25 Convertible Exchangeable Preferred Shares in accordance with the terms of the Certificate of Vote of Directors Establishing a Series of a Class of Stock fixing the relative rights and preferences of such Shares as originally filed with the Secretary of the Commonwealth of Massachusetts. "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. "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 executed and delivered pursuant to Section 3.01(c) of the Credit Agreement and attached hereto as Exhibit F-1, as amended by Amendment No. 1 dated as of February 26, 1996 in substantially the form of Exhibit F-2 hereto, and as the same may be amended 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, Pioneer Construction, Inc., a West Virginia corporation, 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 in substantially the form of Exhibit J hereto among the Subsidiary Guarantors party thereto and the Agent, as executed and delivered pursuant to Section 3.01(c) hereof and as the same may be amended 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 in substantially the form of Exhibit G hereto, and as the same may be amended from time to time as permitted herein and in accordance with the terms thereof. "Temporary Cash Investment" means investment of cash balances in United States Government securities or other short-term money market investments. "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 Bridge Loans at such date plus the aggregate amount of Bridge Letter of Credit Liabilities at such date with respect to all Bridge Letters of Credit. "Wholly-Owned Consolidated Subsidiary" means any Consolidated Subsidiary of the Borrower all of the shares of capital stock or other ownership 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 generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Borrower's independent public accountants) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Bridge Banks. ARTICLE II THE CREDITS SECTION 2.01. The Bridge Loans. From time to time prior to the Bridge Termination Date, each Bridge Bank severally agrees, on the terms and conditions set forth in this Agreement, to lend to the Borrower from time to time amounts not to exceed in the aggregate at any one time outstanding the amount of its Bridge Loan Commitment. Each Bridge Borrowing under this Section shall be in an aggregate principal amount of $1,000,000 or any larger multiple of $500,000 (except that any such Bridge Borrowing may be in the aggregate amount of the unused Bridge Commitments) and shall be made from the several Bridge Banks ratably in proportion to their respective Bridge 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 Bridge Loans and reborrow at any time prior to the Bridge Termination Date under this Section. SECTION 2.02. Method of Bridge Borrowing. (a) The Borrower shall give the Agent notice (a "Notice of Bridge Borrowing") not later than 11:30 A.M. (New York City time) on the date of each Bridge Borrowing specifying the date (which shall be a Business Day) and amount of such Bridge Borrowing. (b) Upon receipt of a Notice of Bridge Borrowing, the Agent shall promptly notify each Bridge Bank of the contents thereof and of such Bridge Bank's ratable share of such Bridge Borrowing and such Notice of Bridge 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 Bridge Borrowing, each Bridge Bank shall (except as provided in subsection (d) of this Section) make available its ratable share of such Bridge Borrowing, in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 8.01. 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 Bridge Banks available to the Borrower at the Agent's aforesaid address. (d) If any Bridge Bank makes a new Bridge Loan hereunder on a day on which the Borrower is to repay all or any part of an outstanding Bridge Loan from such Bridge Bank, such Bridge Bank shall apply the proceeds of its new Bridge 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 Bridge 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 Bridge Bank prior to noon (New York City time) on the date of such Bridge Borrowing that such Bridge Bank will not make available to the Agent such Bridge Bank's share of such Bridge Borrowing, the Agent may assume that such Bridge Bank has made such share available to the Agent on the date of such Bridge 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 Bridge Bank shall not have so made such share available to the Agent, such Bridge Bank and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.05 and (ii) in the case of such Bridge Bank, the Federal Funds Rate. If such Bridge Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bridge Bank's Bridge Loan included in such Bridge Borrowing for purposes of this Agreement. SECTION 2.03. Bridge Notes. (a) The Bridge Loans of each Bridge Bank shall be evidenced by a single Bridge Note payable to the order of such Bridge Bank for the account of its Lending Office. (b) Upon receipt of each Bridge Bank's Bridge Note pursuant to Section 3.01(c), the Agent shall forward such Bridge Note to such Bridge Bank. Each Bridge Bank shall record the date, amount and maturity of each Bridge 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 Bridge Bank so elects in connection with any transfer or enforcement of its Bridge Note, endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Bridge Loan then outstanding; provided that the failure of any Bridge Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Bridge Notes. Each Bridge Bank is hereby irrevocably authorized by the Borrower so to endorse its Bridge Note and to attach to and make a part of its Bridge Note a continuation of any such schedule as and when required. SECTION 2.04. Maturity of Bridge Loans. Each Bridge Loan included in any Bridge Borrowing shall mature, and the principal amount thereof shall be due and payable, on the last day of the Interest Period applicable to such Bridge Borrowing. SECTION 2.05. Interest Rates. Each Bridge Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Bridge Loan is made until it becomes due, at a rate per annum equal to the sum of 2% plus the Base Rate for such day. Such interest shall be payable for each Interest Period on the last day thereof. Any overdue principal of or interest on any Base Rate 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 Bridge Loans for such day. SECTION 2.06. Bridge Commitment Fees. The Borrower shall pay to the Agent for the account of each Bridge Bank a commitment fee at the rate of 0.6% per annum on the daily average unused portion of such Bridge Bank's Bridge Commitments. Such commitment fees shall accrue from and including the Bridge Effective Date to but excluding the Bridge Termination Date. Such commitment fees shall be payable on the last day of each fiscal quarter of the Borrower prior to the Bridge Termination Date and on the Bridge Termination Date. SECTION 2.07. Participation Fee. The Borrower shall pay to the Agent for the account of each Bridge Bank on the Bridge Effective Date a participation fee in an amount equal to 2.0% of such Bridge Bank's Bridge Commitment. 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 Bridge Commitments. The Borrower may, upon 3 Business Days' notice to the Agent, terminate at any time, or proportionately permanently reduce from time to time by an aggregate amount of $1,000,000 or any larger multiple of $1,000,000, the unused portions of the Bridge Commitments. If the Bridge Commitments are terminated in their entirety, all accrued commitment fees shall be payable on the effective date of such termination. SECTION 2.10. Mandatory Termination or Reduction of Bridge Commitments. (a) The Bridge Commitments shall terminate on the Bridge Termination Date, and any Bridge Loans then outstanding (together with accrued interest thereon) shall be due and payable on such date. (b) The Bridge Commitments of all Bridge Banks shall be permanently, automatically and ratably reduced: (i) immediately upon receipt by the Borrower or any Subsidiary of the proceeds from the collection, sale or other disposition of any Collateral (excluding (A) payments in the ordinary course on construction contracts, (B) operating receipts from Real Estate Investments, (C) liability insurance proceeds and (D) income of not more than $35,000 earned from Temporary Cash Investments) by an amount equal to 100% of such proceeds net of all out-of-pocket costs, all senior mortgage debt, fees, commissions and other expenses reasonably incurred in respect of such collection, sale or disposition and any taxes paid or payable (as estimated by a financial officer of the Borrower in good faith) 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 such net proceeds received by the Borrower and its Subsidiaries exceeds, in the case of an item of Collateral specified in Schedule VII hereto, the amount set forth opposite such item or, in the case of other Collateral, $2,000,000 in the aggregate for all such other Collateral; and (ii) by $15,000,000 upon the completion of an issuance by the Borrower of convertible preferred stock or other equity issue; provided that in the event that the proceeds of such issuance net of all out-of-pocket expenses reasonably incurred in respect of such issuance and any taxes paid or payable (as estimated by a financial officer of the Borrower in good faith) in respect thereof exceeds $30,000,000, the aggregate amount of the Commitments shall be reduced by an amount not less than the sum of $15,000,000 plus 50% of the excess over $30,000,000 of such proceeds. (c) On each day on which any Bridge Commitment is reduced pursuant to this Section, the Borrower shall repay such principal amount (together with accrued interest thereon) of each Bridge Bank's outstanding Bridge Loans as may be necessary so that after such repayment the aggregate unpaid principal amount of such Bridge Bank's Bridge Loans, together with such Bridge Bank's Percentage of the aggregate amount of Bridge Letter of Credit Liabilities, does not exceed the amount of such Bridge Bank's Bridge Commitment after giving effect to such reduction. In the event that the aggregate amount of the Bridge Commitments is reduced to an amount less than the aggregate amount of Bridge Letter of Credit Liabilities at such time in respect of all Bridge Letters of Credit, the Borrower hereby agrees that it shall forthwith, without any demand or taking of any other action by the Required Bridge 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 Bridge Letter of Credit Liabilities for the benefit of all Bridge Banks. (d) Any reduction of the Bridge Commitments described in clauses (a) and (b) above shall be applied to reduce the Bridge Commitments pro rata. 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 Business Day, prepay on such Business Day any Base Rate Bridge Borrowing in whole at any time, or from time to time in part in amounts aggregating $1,000,000 or any larger multiple of $500,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Bridge Loans of the several Bridge Banks included in such Bridge Borrowing. (b) Upon receipt of a notice of prepayment pursuant to this Section, the Agent shall promptly notify each Bridge Bank of the contents thereof and of such Bridge 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 Bridge 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 8.01. The Agent will promptly distribute to each Bridge Bank its ratable share of each such payment received by the Agent for the account of the Bridge Banks. Whenever any payment of principal of, or interest on, the Bridge Loans or of fees shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding 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 Bridge 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 Bridge Bank on such due date an amount equal to the amount then due such Bridge Bank. If and to the extent that the Borrower shall not have so made such payment, each Bridge Bank shall repay to the Agent forthwith on demand such amount distributed to such Bridge Bank together with interest thereon, for each day from the date such amount is distributed to such Bridge Bank until the date such Bridge Bank repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.13. 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 2.14. Maximum Interest Rate. (a) Nothing contained in this Agreement or the Bridge Notes shall require the Borrower to pay interest at a rate exceeding the maximum rate permitted by applicable law. Neither this Section nor Section 8.08 is intended to limit the rate of interest payable for the account of any Bridge 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 Bridge Bank by supervening provisions of U.S. federal law. (b) If the amount of interest payable for the account of any Bridge 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 Bridge 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 Bridge Bank in respect of any interest computation period is reduced pursuant to clause (b) of this Section 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 Bridge Bank, then the amount of interest payable for its account in respect of such subsequent interest 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 Bridge Bank has been increased pursuant to this clause (c) exceed the aggregate amount by which interest paid for its account has theretofore been reduced pursuant to clause (b) of this Section. SECTION 2.15. Bridge Letters of Credit. (a) Subject to the terms and conditions hereof, the Bridge LC Bank agrees to issue letters of credit hereunder from time to time before the Bridge Termination Date upon the request of the Borrower (such letters of credit issued, the "Bridge Letters of Credit"); provided that, immediately after each such Bridge Letter of Credit is issued, the aggregate amount of the Bridge Letter of Credit Liabilities for all Bridge Letters of Credit shall not exceed the Available Bridge LC Amount. Upon the date of issuance by the Bridge LC Bank of a Bridge Letter of Credit in accordance with this Section 2.15, the Bridge LC Bank shall be deemed, without further action by any party hereto, to have sold to each Bridge Bank, and each Bridge Bank shall be deemed, without further action by any party hereto, to have purchased from the Bridge LC Bank, a participation in such Bridge Letter of Credit and the related Bridge Letter of Credit Liabilities in proportion to its Percentage. (b) The Borrower shall give the Bridge LC Bank at least three Business Days' prior notice (effective upon receipt) specifying the date each Bridge Letter of Credit is to be issued, and describing the proposed terms of such Bridge Letter of Credit and the nature of the transactions proposed to be supported thereby. Upon receipt of such notice the Bridge LC Bank shall promptly notify the Agent, and the Agent shall promptly notify each Bridge Bank of the contents thereof and of the amount of such Bridge Bank's participation in such proposed Bridge Letter of Credit. The issuance by the Bridge LC Bank of any Bridge Letter of Credit shall, in addition to the conditions precedent set forth in Article III (the satisfaction of which the Bridge LC Bank shall have no duty to ascertain), be subject to the conditions precedent that such Bridge Letter of Credit shall be satisfactory to the Bridge LC Bank and that the Borrower shall have executed and delivered such other instruments and agreements relating to such Bridge Letter of Credit as the Bridge LC Bank shall have reasonably requested. Each Bridge Letter of Credit shall have an expiry date not later than the Bridge Termination Date. (c) The Borrower shall pay to the Agent a letter of credit fee at a rate equal to (i) 1.75% per annum on the aggregate amount available for drawings under each Performance Bridge Letter of Credit issued from time to time and (ii) 2.75% per annum on the aggregate amount available for drawings under each Financial Bridge Letter of Credit issued from time to time, any such fee to be payable for the account of the Bridge Banks ratably in proportion to their Percentages. Such fee shall be payable in arrears on the last day of each fiscal quarter of the Borrower for so long as such Bridge Letter of Credit is outstanding and on the date of termination thereof. The Borrower shall pay to the Bridge LC Bank additional fees and expenses in the amounts and at the times as agreed between the Borrower and the Bridge LC Bank. (d) Upon receipt from the beneficiary of any Bridge Letter of Credit of any demand for payment or other drawing under such Bridge Letter of Credit, the Bridge LC Bank shall notify the Agent and the Agent shall promptly notify the Borrower and each other Bridge 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 Bridge LC Bank to the Borrower and each Bridge Bank shall be only to determine that the documents (including each demand for payment or other drawing) delivered under each Bridge Letter of Credit issued by it in connection with such presentment shall be in conformity in all material respects with such Bridge Letter of Credit. The Bridge LC Bank shall endeavor to exercise the same care in the issuance and administration of the Bridge 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 Bridge LC Bank, each Bridge 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 Bridge Bank's Percentage, to reimburse the Bridge LC Bank on demand for the amount of each payment made by the Bridge LC Bank under each Bridge Letter of Credit issued by the Bridge 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 Bridge 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 Business Day) to the date of payment by such Bridge Bank of such amount at a rate of interest per annum equal to the Federal Funds Rate for such day. (e) The Borrower shall be irrevocably and unconditionally obligated forthwith to reimburse the Bridge LC Bank for any amounts paid by the Bridge LC Bank upon any drawing under any Bridge Letter of Credit, without presentment, demand, protest or other formalities of any kind; provided that neither the Borrower nor any Bridge Bank shall hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower or such Bridge Bank to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of the Bridge LC Bank in determining whether a request presented under any Bridge Letter of Credit complied with the terms of such Bridge Letter of Credit or (ii) such Bridge Bank's failure to pay under any Bridge Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of the Bridge Letter of Credit. All such amounts paid by the Bridge 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 Bridge Loans for such day. The Bridge LC Bank will pay to each Bridge Bank ratably in accordance with its Percentage all amounts received from the Borrower for application in payment, in whole or in part, of the Bridge Reimbursement Obligation in respect of any Bridge Letter of Credit, but only to the extent such Bridge Bank has made payment to the Bridge LC Bank in respect of such Bridge Letter of Credit pursuant to Section 2.15(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 Bridge 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 Bridge Letters of Credit issued or to be issued hereunder or participations therein, and the result shall be to increase the cost to any Bridge Bank of issuing or maintaining any Bridge Letter of Credit or any participation therein, or reduce any amount receivable by any Bridge Bank hereunder in respect of any Bridge Letter of Credit (which increase in cost, or reduction in amount receivable, shall be the result of such Bridge Bank's reasonable allocation of the aggregate of such increases or reductions resulting from such event), then, upon demand by such Bridge 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 Bridge Bank, from time to time as specified by such Bridge Bank, such additional amounts as shall be sufficient to compensate such Bridge Bank for such increased costs or reductions in amount incurred by such Bridge Bank. A certificate of such Bridge Bank submitted by such Bridge 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 2.15 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 against the Bridge LC Bank, any Bridge Bank or any beneficiary of a Bridge Letter of Credit. The Borrower further agrees with the Bridge LC Bank and the Bridge Banks that the Bridge LC Bank and the Bridge Banks shall not be responsible for, and the Borrower's Bridge Reimbursement Obligation in respect of any Bridge 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 Bridge Letter of Credit or any financing institution or other party to whom any Bridge 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 Bridge Letter of Credit or any such transferee. The Bridge 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 Bridge Letter of Credit issued, extended or renewed by it. The Borrower agrees that any action taken or omitted by the Bridge LC Bank or any Bridge Bank under or in connection with each Bridge 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 Bridge LC Bank or any Bridge Bank under any liability to the Borrower. (h) To the extent not inconsistent with clause (g) above, the Bridge LC Bank shall be entitled to rely, and shall be fully protected in relying upon, any Bridge 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 Bridge LC Bank. The Bridge 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 Bridge Banks as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Bridge 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 2.15, the Bridge 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 Bridge Banks, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Bridge Banks and all future holders of participations in any Bridge Letters of Credit. (i) The Borrower hereby indemnifies and holds harmless each Bridge Bank and the Agent from and against any and all claims and damages, losses, liabilities, costs or expenses which such Bridge Bank or the Agent may incur (or which may be claimed against such Bridge 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 Bridge Letter of Credit, including, without limitation, any claims, damages, losses, liabilities, costs or expenses which the Bridge LC Bank may incur by reason of or in connection with the failure of any other Bridge Bank to fulfill or comply with its obligations to the Bridge LC Bank hereunder (but nothing herein contained shall affect any rights the Borrower may have against such defaulting Bridge Bank); provided that the Borrower shall not be required to indemnify any Bridge 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 Bridge LC Bank in determining whether a request presented under any Bridge Letter of Credit complied with the terms of such Bridge Letter of Credit or (ii) the Bridge LC Bank's failure to pay under any Bridge Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of the Bridge Letter of Credit. Nothing in this Section 2.15(i) is intended to limit the obligations of the Borrower under any other provision of this Agreement. (j) Each Bridge Bank shall, ratably in accordance with its Percentage, indemnify the Bridge 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 Bridge LC Bank's failure to pay under any Bridge Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of the Bridge Letter of Credit) that such indemnitees may suffer or incur in connection with this Section 2.15 or any action taken or omitted by such indemnitees hereunder. (k) In its capacity as a Bridge Bank the Bridge LC Bank shall have the same rights and obligations as any other Bridge Bank. SECTION 2.16. 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 Bridge Note, and all liabilities with respect thereto, excluding (i) in the case of each Bridge 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 Bridge 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 Bridge Bank, in which its Lending Office is located and (ii) in the case of each Bridge Bank, any United States withholding tax imposed on such payments but only to the extent that such Bridge Bank is subject to United States withholding tax at the time such Bridge Bank first becomes a party to this Agreement. "Other Taxes" means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, which arise from any payment made pursuant to this Agreement or under any Bridge Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Bridge Note. (b) Any and all payments by the Borrower to or for the account of any Bridge Bank or the Agent hereunder or under any Bridge 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, the sum payable hereunder or under any Bridge Note to any Bridge Bank or the Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) such Bridge 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 8.01, the original or a certified copy of a receipt evidencing payment thereof. (c) In addition, the Borrower agrees to pay all Other Taxes. (d) The Borrower agrees to indemnify each Bridge Bank and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by such Bridge 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 Bridge Bank or the Agent (as the case may be) makes demand therefor. (e) Each Bridge 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 Bridge Bank listed on the signature pages hereof and on or prior to the date on which it becomes a Bridge Bank in the case of each other Bridge Bank, and from time to time thereafter if requested in writing by the Borrower (but only so long as such Bridge 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 Bridge Bank is entitled to benefits under an income tax treaty to which the United States is a party which exempts the Bridge Bank from United States withholding tax or reduces the rate of withholding tax on payments of interest for the account of such Bridge 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 Bridge Bank at the time such Bridge 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. (f) For any period with respect to which a Bridge Bank has failed to provide the Borrower or the Agent with the appropriate form pursuant to subsection (d) of this Section (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 Bridge Bank shall not be entitled to indemnification under subsection (b) or (c) of this Section with respect to Taxes imposed by the United States; provided that if a Bridge 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 Bridge Bank shall reasonably request to assist such Bridge Bank to recover such Taxes. (g) If the Borrower is required to pay additional amounts to or for the account of any Bridge Bank pursuant to this Section, then such Bridge Bank will change the jurisdiction of its Lending Office if, in the judgment of such Bridge Bank, such change (i) will eliminate or reduce any such additional payment which may thereafter accrue and (ii) if such change, in the judgment of such Bridge Bank, is not otherwise disadvantageous to such Bridge Bank. ARTICLE III CONDITIONS SECTION 3.01. Bridge 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 8.05): (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 confirmation from such party of execution of a counterpart hereof by such party); (b) receipt by the Agent of counterparts of Amendment No. 1 to the Subsidiary Guarantee Agreement duly executed by each of the Obligors listed on the signature pages thereof; (c) receipt by the Agent of (i) counterparts of the following, each dated the date hereof and duly executed by the parties specified below: (1) the Borrower Pledge Agreement between the Agent and the Borrower, (2) the Borrower Security Agreement between the Agent and the Borrower, (3) the Subsidiary Security Agreement among the Agent and the Subsidiary Guarantors, (4) the Subsidiary Pledge Agreement among the Agent and the Subsidiary Guarantors and (ii) and all other documents and certificates to be delivered pursuant to the foregoing on the Bridge Effective Date (including appropriately completed and duly executed Uniform Commercial Code financing statements required thereby); (d) receipt by the Agent of evidence satisfactory to the Agent that arrangements satisfactory to it shall have been made for recording the Mortgages on the Mortgaged Facilities described in Items 3, 4, 5, 6, 8, 9 and 12 in Part I of Schedule III and filing the Uniform Commercial Code financing statements referred to in paragraph (c) above on or promptly after the Bridge Effective Date; (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) in which the chief executive office of the Borrower and each Subsidiary Guarantor is located, setting forth the results of Uniform Commercial Code file searches conducted in the name of the Borrower and each Subsidiary Guarantor, as the case may be; (g) receipt by the Agent of evidence satisfactory to the Agent of the insurance coverage required by Section 5.03; (h) with respect to the Mortgaged Facilities described in Items 3 and 4 in Part I of Schedule III, receipt by the Agent of title reports with respect thereto issued by a title insurance company reasonably acceptable to the Agent and dated no more than 45 days prior to the Bridge Effective Date showing no Liens except Permitted Liens with respect thereto; (i) receipt by the Agent of duly executed Bridge Notes for the account of each Bridge Bank dated on or before the Bridge Effective Date complying with the provisions of Section 2.03; (j) receipt by the Agent of (i) an opinion of the Assistant General Counsel of the Borrower and (ii) an opinion of Jacobs Persinger & Parker, New York counsel for the Borrower, substantially in the forms of Exhibits B-1 and B-2, respectively, and covering such additional matters relating to the transactions contemplated hereby as the Required Bridge Banks may reasonably request; (k) receipt by the Agent of (i) an opinion of Davis Polk & Wardwell, special New York counsel for the Agent, (ii) an opinion of Meyer, Hendricks, Victor, Ruffner & Bivens, special Arizona counsel for the Agent, (iii) an opinion of Goodwin, Proctor & Hoar, Massachusetts counsel for the Borrower and (iv) Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., special Florida counsel for the Agent, substantially in the forms of Exhibits C-1, C-2, C-3 and C-4, respectively, hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Bridge Banks may reasonably request; (l) receipt by the Agent of counterparts of Amendment No. 1 to the Credit Agreement dated the date hereof duly executed by the Borrower, the Banks and the Agent; (m) receipt by the Agent of a Bonding Company Letter substantially in the form of Exhibit L hereto dated not later than the Bridge Effective Date and duly executed by the Borrower and the Bonding Company; and (n) 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; provided that this Agreement shall not become effective or be binding on any party hereto unless all of the foregoing conditions are satisfied not later than February 29, 1996. The Agent shall promptly notify the Borrower and the Bridge Banks of the Bridge Effective Date, and such notice shall be conclusive and binding on all parties hereto. SECTION 3.02. Credit Events. The obligation of any Bridge Bank to make a Bridge Loan on the occasion of any Bridge Borrowing and of the Bridge LC Bank to issue a Bridge Letter of Credit (or to permit the extension of an Evergreen Bridge 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 Bridge Borrowing as required by Section 2.02, in the case of a Bridge Borrowing or (ii) by the Bridge LC Bank of notice as required by Section 2.15, in the case of a Bridge Letter of Credit; (b) the fact that, after giving effect to such Credit Event, the Usage shall not exceed the aggregate amount of the Bridge Commitments and the fact that the Commitments (as defined in the Credit Agreement) shall be fully utilized; (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 Bridge 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 Bridge Banks) shall be true on and as of the date of such Bridge Borrowing; (e) the ability of the Borrower to obtain bonding for new construction projects shall not be less than or more limited than at the date hereof; (f) the payment by the Borrower of all amounts theretofore payable pursuant to Section 8.03 within seven days of demand; (g) at any time on or after March 8, 1996, receipt by the Agent of (i) evidence of recording of the Mortgages on the Mortgaged Facilities described in Items 13 and 15 in Part I of Schedule III and (ii) opinions of counsel in each jurisdiction in which the foregoing Mortgages are recorded in form and substance satisfactory to the Agent covering such matters relating thereto as the Required Bridge Banks may reasonably request; (h) at any time on or after March 28, 1996, receipt by the Agent of a policy of title insurance with respect to each Mortgage and Deed of Trust relating to the Mortgaged Facilities described as Items 1, 2, 3, 4, 5, 6, 9 and 13 in Part I of Schedule III, insuring the perfection, enforceability and first priority of the Lien created under such Mortgage or Deed of Trust, as the case may be, as a valid first mortgage or deed of trust Lien, as the case may be, on the Mortgaged Facilities described therein, in form and substance reasonably satisfactory to the Agent and in the respective amounts specified in Part I of Schedule III (with all premiums, expenses and fees paid or caused to be paid by the Borrower), each of which policies shall (i) be issued by a title company reasonably satisfactory to the Agent, (ii) have been supplemented by such endorsements as shall be reasonably requested by the Agent (including, without limitation, endorsements relating to usury, revolving credit, doing business and restrictions) and (iii) contain only such exceptions to title as shall be reasonably satisfactory to the Agent, provided that the parties hereto agree that the Permitted Liens constitute satisfactory exceptions to title. Each Bridge Borrowing shall be deemed to be a representation and warranty by the Borrower on the date of such Bridge 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. (a) 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. (b) The execution, delivery and performance by each Obligor of the amendments to the Financing Documents to which it is a party and the performance by each Obligor of the Financing Documents as so amended 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 as so amended, on any asset of such Obligor or any of its Subsidiaries. SECTION 4.03. Binding Effect; Liens of Collateral Documents. (a) This Agreement constitutes a valid and binding agreement of the Borrower and the Bridge Notes, 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. The Borrower Security Agreement and the Subsidiary Pledge Agreement, when executed and delivered in accordance with this Agreement, will constitute valid and binding agreements of each Obligor party thereto enforceable against each such Obligor in accordance with their respective terms. Each amendment to each Financing Document, when executed and delivered in accordance with this Agreement, and each Financing Document as so amended will constitute a valid and binding agreement of the Obligor party thereto in each case enforceable in accordance with its terms. (b) 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 1 of Schedule III hereto. The list of property of the Borrower and each of its Subsidiaries, security interests in which are governed by Article IX of the UCC as in effect in the relevant jurisdictions, set forth in Part 2 of Schedule III hereto is complete in all material respects. The location, ownership, status and lien information provided in Schedule III for each item of real property and each type of personal property are complete and correct. (c) 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, 1994 and the related consolidated statements of income, stockholders' equity and cash flows for the fiscal year then ended, reported on by Arthur Andersen & Co. and set forth in the Borrower's 1994 Form 10-K, a copy of which has been delivered to each of the Bridge Banks, fairly present, in conformity with generally accepted accounting principles, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. (b) The unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of September 30, 1995 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, 1995 as filed with the Securities and Exchange Commission on Form 10-Q, a copy of which has been delivered to each of the Bridge Banks, fairly present, in conformity with generally accepted accounting principles applied on a basis consistent with the financial statements referred to in subsection (a) of this Section, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such nine month period (subject to normal year-end adjustments). (c) Since September 30, 1995 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 1994 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 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 Bridge 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 Addtional 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. (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 Bridge 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 have an interest as of the date hereof are listed in Schedule VI 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. (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 IV hereto. SECTION 4.12. Full Disclosure. All information heretofore furnished by the Borrower to the Agent or any Bridge 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 Bridge 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 Bridge 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. ARTICLE V COVENANTS The Borrower agrees that, so long as any Bridge Bank has any Bridge Commitment hereunder or any amount payable under any Bridge Note remains unpaid or any Bridge Letter of Credit remains outstanding or any Bridge Reimbursement Obligation with respect thereto remains unpaid: SECTION 5.01. Information. The Borrower will deliver to each of the Bridge 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 & Co. 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 and consolidating condensed balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated and consolidating condensed statements 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, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of the Borrower; (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 previously delivered to the Bridge Banks; (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the chief financial officer or the chief accounting officer of the Borrower (i) setting forth in reasonable detail the calculations required to establish whether the Borrower was in compliance with the requirements of Sections 5.07 to 5.10, inclusive, 5.12, 5.14 and 5.15 on the date of such financial statements and (ii) 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; (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) simultaneously with the delivery of each set of financial statements set forth above, a schedule, dated as of the date of such financial statements, 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, and the percentage of completion and anticipated completion date of 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; (f) 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; (g) promptly upon the mailing thereof to the shareholders of the Borrower generally, copies of all financial statements, reports and proxy statements so mailed; (h) 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; (i) 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; (j) 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 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; (k) 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); (l) prompt notice of any decision by the Borrower or any of its Subsidiaries not to meet a capital call by any joint venture in which the Borrower or any such Subsidiary is participating; (m) 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 (n) 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 Bridge 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 generally accepted accounting principles, 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 business; and will furnish to the Bridge 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. 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 generally accepted accounting principles 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 Bridge Bank at such Bridge Bank's expense (subject to Section 8.03(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; provided that in any event the Borrower shall hold a meeting for representatives of the Bridge Banks at least once each fiscal quarter, at a time and place in Framingham, Boston or New York City to be determined by the Agent on 10 Business Days' notice, for purposes of holding such discussions with such of the Borrower's officers, employees and independent public accountants as the Agent shall designate at the reasonable request of any Bridge Bank. SECTION 5.07. Current Ratio. Consolidated Current Assets will at no time be less than 100% of Consolidated Current Liabilities. 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 December 31, 1995 and listed on Schedule I hereof, (ii) Debt under this Agreement, (iii) Debt under the Credit Agreement, (iv) Debt owing to joint ventures in which the Borrower is participating, (v) up to $3,000,000 of Debt to finance insurance premiums, (vi) Debt owing by the Borrower to a Subsidiary and evidenced by an intercompany note pledged to the Agent under the Subsidiary Pledge Agreement and (vii) any refinancing, extension, renewal or refunding of the Debt referred to in clauses (i) through (v) above; provided that in any event at no time shall Modified Parent Company Debt exceed $150,000,000 and at no time shall the aggregate outstanding amount of Debt to finance insurance premiums and any refinancing, extension, renewal or refunding thereof exceed $3,000,000. (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 December 31, 1995 and listed on Schedule I hereof, (ii) Debt under the Subsidiary Guarantee Agreement, (iii) Debt owing to joint ventures in which such Subsidiary is participating, (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) any refinancing, extension, renewal or refunding of the Debt referred to in clauses (i) through (iv) above. SECTION 5.09. Minimum Consolidated Tangible Net Worth. Consolidated Tangible Net Worth of the Borrower will at no time be less than the Minimum Compliance Level, determined as set forth below. The "Minimum Compliance Level" is an amount equal to the Base Compliance Amount subject to increase (but in no case subject to decrease) from time to time as follows: (i) at the end of each fiscal year commencing after December 31, 1996 for which Consolidated Net Income is a positive number, the Minimum Compliance Level shall be increased effective at the last day of such fiscal year by an amount equal to 50% of such Consolidated Net Income; and (ii) on the date of each issuance by the Borrower subsequent to December 31, 1996 of any capital stock or other equity interest, the Minimum Compliance Level shall be increased by an amount equal to 75% of the amount of the net proceeds received by the Borrower on account of such issuance. For purposes of this Section, "Base Compliance Amount" means (i) for any date during the period from and including December 31, 1995 to but excluding June 30, 1996, $100,000,000 and (ii) for any date during the period from and including June 30, 1996 to the Bridge Termination Date, $105,000,000. SECTION 5.10. Interest Coverage. Consolidated Earnings Before Interest and Taxes for each fiscal period specified below shall be not less than the percentage specified below of Consolidated Interest Charges for such fiscal period: quarter ending March 31, 1996 300% two quarters ending June 30, 1996 300% 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 December 31, 1995 securing Debt outstanding on December 31, 1995 as described in Schedule II; (b) any Lien existing on any asset of any corporation at the time such corporation becomes a Consolidated Subsidiary of the Borrower and not created in contemplation of such event; (c) any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset, provided that such Lien attaches to such asset concurrently with or within 90 days after the acquisition thereof and such Lien secures only such Debt; (d) any Lien on any asset of any corporation existing at the time such corporation is merged or consolidated with or into the Borrower or a Consolidated Subsidiary of the Borrower and not created in contemplation of such event; (e) any Lien existing on any asset prior to the acquisition thereof by the Borrower or a Consolidated Subsidiary of the Borrower and not created in contemplation of such acquisition; (f) 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; (g) Liens incidental to conduct of its business or the ownership of its assets which (i) do not secure Debt and (ii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; (h) Permitted Encumbrances; (i) Liens (whether statutory, by contract or at common law and whether in the nature of a security interest or constructive trust or otherwise) of subcontractors, architects, engineers, surveyors, laborers, materialmen, bonding companies and other Persons performing labor or services or providing material for construction projects in and under construction contracts to which the Borrower or any of its Subsidiaries is a party as general or prime contractor, subcontractor or construction manager; (j) 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 (k) Liens created by the Collateral Documents. SECTION 5.12. Consolidations, Mergers and Sales of Assets. (a) The Borrower will not (i) consolidate or merge with or into any other Person or sell, lease or otherwise transfer all or any substantial part of its assets to any other Person or (ii) permit any Material Subsidiary (other than a Subsidiary Guarantor) to consolidate or merge with or into, or transfer all or any substantial part of its assets to, any Person other than the Borrower or a Wholly-Owned Consolidated Subsidiary; provided that the Borrower or a Material Subsidiary other than Perini Land and Development may sell or otherwise transfer assets if Aggregate Asset Sale Proceeds after such sale less Aggregate Reinvested Proceeds does not at any time exceed $15,000,000. "Aggregate Asset Sale Proceeds" means the sum of the proceeds of each sale in a single transaction or series of related transactions by the Borrower or any Subsidiary, on or after the Bridge Effective Date, of fixed assets yielding proceeds in excess of 5% of the Consolidated Tangible Net Worth of the Borrower. "Aggregate Reinvested Proceeds" means the amount of Aggregate Asset Sale Proceeds used to purchase fixed assets for use in the same general business presently conducted by the Borrower or the Subsidiary that realized such proceeds, as the case may be, provided such proceeds are so used within 18 months of receipt thereof. The Borrower will not permit any Subsidiary Guarantor to consolidate or merge with or into, or transfer all or any substantial part of its assets to, any Person; provided that the foregoing shall not prohibit (i) any Subsidiary Guarantor from selling, leasing or otherwise transferring assets in the ordinary course of its business or (ii) R. E. Dailey & Co. from transferring all of its assets to Perini Building Company. (b) The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise dispose of any item of Collateral (except Accounts, Inventory and items listed in Schedule VII hereto up to the amounts specified therein) unless (i) each of the Bridge Banks shall have given its prior written consent thereto and (ii) the consideration therefor (x) shall be at least equal to the fair market value of such asset (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) and (y) in the case of any agreement entered into on or after the Bridge Effective Date for the sale, lease or other disposition of such Collateral shall consist of cash payable at closing; provided that the prior written consent of the Bridge Banks shall not be required for any sale, lease or other disposition of any item of Collateral having a fair market value not exceeding $100,000 if the aggregate amount of the fair market value of all such items of Collateral sold, leased or otherwise disposed of during any fiscal year does not exceed $500,000 and the Borrower delivers to each of the Bridge Banks prompt written notice of each such sale, lease or other disposition. SECTION 5.13. Use of Proceeds. The proceeds of the Bridge Loans made under this Agreement will be used by the Borrower for general corporate purposes other than for making or carrying Real Estate Investments. 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 aggregate amount of all dividends which constitute Restricted Payments declared and other Restricted Payments made during any period of four consecutive fiscal quarters will not exceed an amount equal to 50% of the excess, if any, of (x) Consolidated Net Income for such period over (y) the aggregate amount of preferred stock dividends not constituting Restricted Payments paid during such period. The Borrower will not declare any dividend payable more than 120 days after the date of declaration thereof; provided that the Borrower will not declare or pay any preferred stock dividend until the Bridge Credit Agreement is repaid in full and 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 cumulative amount of Net Real Estate Investments made (i) at any time during the period beginning January 1, 1996 and ending December 31, 1996 shall exceed $4,000,000 or (ii) during any fiscal year thereafter shall exceed $4,000,000 plus 25% of the amount, if any, by which the Net Real Estate Investments made during the preceding period were less than the applicable limitation specified above for such period. For purposes of this Section, the cumulative amount of "Net Real Estate Investments" made during any period, as measured at any date during such period, is the aggregate amount of Real Estate Investments made by the Borrower and its Consolidated Subsidiaries from and including the first day of such period to and including such date, less the sum of all cash or cash equivalent payments received by the Borrower or one of its Consolidated Subsidiaries, as the case may be, in respect of Real Estate Investments from and including the first day of such period to and including such date. SECTION 5.16. Other Investments. 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; (c) Temporary Cash Investments; and (d) any Investment not otherwise permitted by the foregoing clauses of this Section if, immediately after such Investment is made or acquired, the aggregate net book value of all Investments permitted by this clause (d) does not exceed 5% of Consolidated Tangible Net Worth; provided that no Real Estate Investment may be made pursuant to clause (b), (c) or (d) above. SECTION 5.17. 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 Bridge Loan, any Bridge Reimbursement Obligation, any fees or any other amount payable hereunder; (b) the Borrower shall fail to pay when due or within five Business Days thereof any interest on any Bridge Loan; (c) the Borrower shall fail to observe or perform any covenant contained in Sections 5.07 to 5.17, 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 Bridge Bank; (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 Bridge Notes or Bridge 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 case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; (j) an involuntary case or other proceeding shall be commenced against the Borrower or any Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Borrower or any Subsidiary under the federal bankruptcy laws as now or hereafter in effect; (k) any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $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 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) fewer than two of the following people shall be members of the Board of Directors of the Borrower: David Perini, Joseph Perini and Bart Perini; or (iii) the Borrower shall cease to own 100% of the capital stock of any Subsidiary Guarantor; 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 Bridge 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 Bridge Banks having more than 50% in aggregate amount of the Bridge Commitments, by notice to the Borrower terminate the Bridge Commitments and they shall thereupon terminate, and (ii) if requested by Bridge Banks holding Bridge Notes evidencing more than 50% in aggregate principal amount of the Bridge Loans, by notice to the Borrower declare the Bridge Notes (together with accrued interest thereon) to be, and the Bridge Notes shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the 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 Bridge Banks, the Bridge Commitments shall thereupon terminate and the Bridge 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 Bridge Banks having more than 50% in aggregate amount of the Bridge 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 Bridge Bank, it shall pay) to the Agent an amount in immediately available funds equal to the then aggregate Bridge Letter of Credit Liabilities for all Bridge Letters of Credit to be held as security therefor for the benefit of all Bridge 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 Bridge Bank and shall thereupon notify all the Bridge Banks thereof. ARTICLE VII THE AGENT SECTION 7.01. Appointment and Authorization. Each Bridge 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 Bridge Bank and may exercise or refrain from exercising the same as though it were not the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or affiliate of the Borrower as if it were not the Agent hereunder. SECTION 7.03. Action by Agent. The obligations of the Agent 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. 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 Bridge 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 Bridge Bank shall, ratably in accordance with its Bridge Commitment, indemnify the Agent, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrower) against any cost, expense (including 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. SECTION 7.07. Credit Decision. Each Bridge Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bridge 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 Bridge Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Bridge 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 Bridge Banks and the Borrower. Upon any such resignation, the Required Bridge Banks shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Bridge 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 Bridge 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), the Agent shall act or refrain from acting in accordance with written instructions from the Required Bridge 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. (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 MISCELLANEOUS SECTION 8.01. 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 Bridge 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. SECTION 8.02. No Waivers. No failure or delay by the Agent or any Bridge 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 8.03. 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, in connection with the preparation of the Financing Documents, any waiver or consent under any Financing Document, or any amendment of any Financing Document or any Default or alleged Default and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Agent and each Bridge 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 collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. The Borrower shall indemnify each Bridge 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 Bridge 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 Financing Document or any actual or proposed use of proceeds of Bridge 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 8.04. Sharing of Setoffs. Each Bridge 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 Bridge Loan or Bridge Reimbursement Obligation owed to it which is greater than the proportion received by any other Bridge Bank in respect of the aggregate amount due with respect to any Bridge Loan or Bridge Reimbursement Obligation owed to such other Bridge Bank, the Bridge Bank receiving such proportionately greater payment shall purchase such participations in the Bridge Loans and Bridge Reimbursement Obligations owed to the other Bridge Banks, and such other adjustments shall be made, as may be required so that all such payments with respect to the Bridge Loans and Bridge Reimbursement Obligations owed to the Bridge Banks shall be shared by the Bridge Banks pro rata; provided that (i) nothing in this Section shall impair the right of any Bridge 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 or under the Credit Agreement and (ii) nothing in any Financing Documents shall require any Bridge Bank to share any payments received by such Bridge Bank if such payments were made in respect of any obligations (including without limitation Other Reimbursement Obligations and Other Mortgage/Lease Obligations) not constituting Bridge Loans or Bridge 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 Bridge Loan or Bridge 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. SECTION 8.05. Amendments and Waivers. Any provision of this Agreement or the Bridge 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 Bridge Banks (and, if the rights or duties of the Agent are affected thereby, by it); provided that no such amendment or waiver shall, unless signed by all the Bridge Banks, (i) increase or decrease the Bridge Commitment of any Bridge Bank (except for a ratable decrease in the Bridge Commitments of all Bridge Banks), amend Section 2.10(d) hereof or subject any Bridge Bank to any additional obligation, (ii) reduce the principal of or rate of interest on any Bridge Loan or any fees hereunder, (iii) postpone the date fixed for any payment of principal of or interest on any Bridge Loan, any Bridge Reimbursement Obligation or any fees hereunder or for termination of any Bridge Commitment (provided that the Required Banks may extend the Bridge Termination Date from time to time up to but no later than September 30, 1996), (iv) change the percentage of the Bridge Commitments or of the aggregate unpaid principal amount of the Bridge Notes, or the number of Bridge Banks, which shall be required for the Bridge Banks or any of them to take any action under this Section or any other provision of the Financing Documents, (v) release any Subsidiary Guarantor from the Subsidiary Guarantee Agreement, (vi) amend Section 8.04 or 8.06 hereof or (vii) notwithstanding any provision of any Collateral Document to the contrary, release any item of Collateral from the Lien provided by the Collateral Documents except for the sale or other disposition of such item by the Agent in the exercise of its rights as provided therein (provided that unless an Event of Default has occurred and is continuing, the Agent may release any Collateral at the request of the Borrower, without the consent of each of the Bridge Banks, if (i) such release is required in connection with any sale, lease or other disposition of such Collateral and (ii) such sale, lease or other disposition is in accordance with and permitted by the terms hereof (including without limitation Sections 2.10(b)(i) and 5.12(b)) and of the Credit Agreement). SECTION 8.06. 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 Bridge Banks. (b) Any Bridge Bank may at any time grant to one bank or other institution (a "Participant") a participating interest in its Bridge Commitment and its Bridge Loans in the full amount of its Bridge Commitment. In the event of any such grant by a Bridge Bank of a participating interest to a Participant, whether or not upon notice to the Borrower and the Agent, such Bridge 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 Bridge Bank in connection with such Bridge Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bridge Bank may grant such a participating interest shall provide that such Bridge 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 Bridge Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of Section 8.05 without the consent of the Participant. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). (c) Any Bridge Bank may assign to one bank or other institution (each an "Assignee") all of its rights and obligations under this Agreement and the Bridge Notes and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit K hereto executed by such Assignee and such transferor Bridge Bank, with (and subject to) the subscribed consent of the Borrower (which shall not be unreasonably withheld) and the Agent; provided that if an Assignee is an affiliate of such transferor Bridge Bank or another Bridge Bank, no such consent shall be required. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Bridge Bank of an amount equal to the purchase price agreed between such transferor ... Bridge Bank and such Assignee, such Assignee shall be a Bridge Bank party to this Agreement and shall have all the rights and obligations of a Bridge Bank with a Bridge Commitment as set forth in such instrument of assumption, and the transferor Bridge 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 Bridge Bank, the Agent and the Borrower shall make appropriate arrangements so that, if required, a new Bridge Note is issued to the Assignee. In connection with any such assignment, the transferor Bridge Bank shall pay to the Agent an administrative fee for processing such assignment in the amount of $2,500. (d) Any Bridge Bank may at any time assign all or any portion of its rights under this Agreement and its Bridge Note to a Federal Reserve Bank. No such assignment shall release the transferor Bridge Bank from its obligations hereunder. SECTION 8.07. Certain Collateral. Each of the Bridge Banks represents to the Agent and each of the other Bridge Banks that it in good faith is not relying upon any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. SECTION 8.08. Governing Law; Submission to Jurisdiction. This Agreement and each Bridge 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 8.09. 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 8.10. WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, THE AGENT AND THE BRIDGE 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 8.11. Reduced Return. If any Bridge 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 Bridge Bank (or its Parent) as a consequence of such Bridge Bank's obligations hereunder to a level below that which such Bridge 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 Bridge Bank to be material, then from time to time, within 15 days after demand by such Bridge Bank (with a copy to the Agent), the Borrower shall pay to such Bridge Bank such additional amount or amounts as will compensate such Bridge Bank (or its Parent) for such reduction. Each Bridge 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 Bridge Bank to compensation pursuant to this Section. A certificate of any Bridge 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 Bridge Bank may use any reasonable averaging and attribution methods. SECTION 8.12. 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 Bridge Bank or Bank (as defined in the Credit Agreement) 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 Bridge Bank or Bank to obtain any consent from any other Bridge Bank or 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 8.13. Subordinate Mortgages. (a) Harris Trust and Savings Bank hereby consent to the execution, delivery and recordation of the Mortgage relating to the Mortgaged Facility described as Item 12 in Part I of Schedule III. (b) Comerica Bank hereby consents to the execution, delivery and recordation of the Mortgage relating to the Mortgaged Facility described as Item 15 in Part I of Schedule III. 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/ David B. Perini Title: President & CEO By /s/ John H. Schwarz Title: Executive Vice President 73 Mount Wayte Avenue Framingham, MA 01701 Facsimile number: (508) 628-2960 Bridge Commitments - ------------------ Bridge Commitment: MORGAN GUARANTY TRUST COMPANY $ 3,096,000.00 OF NEW YORK By /s/ D. Linda Scheuplein Title: Vice President Bridge Commitment: FLEET NATIONAL BANK OF $ 5,280,000.00 MASSACHUSETTS f/k/a SHAWMUT BANK, N.A. By /s/ Lisa S. Coney Title: Vice President Bridge Commitment: BANK OF AMERICA NATIONAL TRUST AND $ 2,184,000.00 SAVINGS ASSOCIATION By /s/ Donald J. Chin Title: Vice President Bridge Commitment: BAYBANK, N.A., $ 1,440,00.00 as Bridge Bank and as Bridge LC Bank By /s/ Timothy M. Laurion Title: Vice President Bridge Commitment: COMERICA BANK $ 1,200,000.00 By /s/ Angela B. Petersen Title: First Vice President Bridge Commitment: HARRIS TRUST & SAVINGS BANK $ 1,200,000.00 By /s/ Sandra J. Sanders Title: Vice President Bridge Commitment: STATE STREET BANK AND TRUST COMPANY $ 600,000.00 By /s/ Linda A. Moulton Title: Vice President - ----------------- Total Bridge Commitments $15,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent By /s/ D. Linda Scheuplein Title: Vice President 60 Wall Street New York, New York 10260 Attn: Robert Bottamedi Telex number: 177615 MGT UT Facsimile number: (212) 648-5023 EX-10 3 AMEND. NO. 1 AS OF 02/26/96 TO THE CREDIT AGRMNT. AMENDMENT NO. 1 TO CREDIT AGREEMENT AMENDMENT NO. 1 dated as of February 26, 1996 among PERINI CORPORATION (the "Borrower"), the BANKS listed on the signature pages hereof (the "Banks") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent"). W I T N E S S E T H : WHEREAS, the parties hereto have heretofore entered into a Credit Agreement dated as of December 6, 1994 (the "Agreement"); and WHEREAS, the parties hereto desire to amend the Agreement as provided hereinafter. NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Agreement shall have the meaning assigned to such term in the Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Agreement shall from and after the date hereof refer to the Agreement as amended hereby. 2. Amendment of Section 1.01 of the Agreement. Section 1.01 of the Agreement is amended hereby by: (A) adding thereto the following definitions: "Bridge Bank" means each bank listed on the signature pages of the Bridge Credit Agreement, each Assignee (as defined therein) which becomes a Bridge Bank pursuant to Section 8.06(c) thereof, and their respective successors. "Bridge Commitment" means a commitment by a Bridge Bank under the Bridge Credit Agreement. "Bridge Credit Agreement" means the Agreement dated as of February 26, 1996 among Perini Corporation, the Bridge Banks and Morgan Guaranty Trust Company, as Agent. "Bridge Loan" means a loan made by a Bridge Bank under the Bridge Credit Agreement. "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. "Mortgage Banks" means (i) Comerica Bank, as successor to Manufacturers National Bank of Detroit, in its capacity as holder of a Promissory Note of the Borrower dated April 4, 1991, in the original principal amount of $1,200,000, and the mortgagee pursuant to a mortgage on the property described as Item 15 in Part I of Schedule III hereto which secures such Promissory Note, and its successors and assigns, (ii) 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 III hereto which secured the obligations of the under such Letter of Credit and Reimbursement Agreement and (iii) 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. "Other LC Bank" means each bank listed on Schedule V attached hereto, its successors and assigns. "Other Letters of Credit" means the letters of credit described on Schedule V 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 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, 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. "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. (B) deleting the definition of "Construction Claim"; (C) deleting "two, three or six" in clause (1) of the definition of "Interest Period" and inserting in lieu thereof "two or three"; (D) revising each of the following definitions to read as follows: "Borrower Pledge Agreement" means the Borrower Pledge Agreement dated as of December 6, 1994 between the Borrower and the Agent, as amended and restated as of February 26, 1996 in substantially the form of Exhibit E-2 hereto, and as the same may be amended 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 in substantially the form of Exhibit D hereto between the Borrower and the Agent and as the same may be amended from time to time as permitted herein and in accordance with the terms thereof (the Borrower Security Agreement dated as of December 6, 1994 executed and delivered in connection with the execution and delivery of this Agreement having terminated upon collection by the Borrower of all the Collateral pledged thereunder). "Collateral Documents" means the Borrower Pledge Agreement, the Borrower Security Agreement, the Subsidiary Security Agreement, the Subsidiary Pledge Agreement, the Deeds of Trust, the Mortgages and all other supplemental or additional security agreements, pledge agreements, mortgages or similar instruments delivered pursuant hereto or thereto. "Deeds of Trust" means the Deed of Trust, Assignment of Leases and Rents, Security Agreement and Financing Statement dated as of December 6, 1994 for each of the properties described as Items 1 and 2 on Schedule III hereto, each substantially in the form of Exhibits H-1 and H-2 hereto. "Financing Documents" means this Agreement, the Bridge Credit Agreement, the Subsidiary Guarantee Agreement, the Notes, the Bridge Notes (as defined in the Bridge Credit Agreement) and the Collateral Documents. "Mortgaged Facilities" means the properties described as Items 1, 2, 3, 4, 5, 6, 8, 9, 12, 13 and 15 in Part I of Schedule III hereto. "Mortgages" means the Mortgage, Assignment of Leases and Rents, Security Agreement and Financing Statement dated as of February 26, 1996 for each of the Mortgaged Facilities described as Items 3, 4, 5, 6, 8, 9, 12, 13 and 15 in Part I of Schedule III hereto, each substantially in the form of Exhibits I-1 through I-5 hereto. "Paramount Development Associates" means Paramount Development Associates, Inc., a Massachusetts corporation. "Perini Land and Development" means Perini Land and Development Company, a Delaware corporation, and its successor by merger, Perini Land and Development Company, Inc., a Massachusetts corporation, upon its reincorporation in Massachusetts on December 30, 1994. "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 executed and delivered pursuant to Section 3.01(c) hereof and attached hereto as Exhibit F-1, as amended by Amendment No. 1 dated as of February 26, 1996 in substantially the form of Exhibit F-2 hereto, and as the same may be amended 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, Pioneer Construction, Inc., a West Virginia corporation, 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 in substantially the form of Exhibit J hereto among the Subsidiary Guarantors party thereto and the Agent, as executed and delivered pursuant to Section 3.01(c) of the Bridge Credit Agreement and as the same may be amended 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 in substantially the form of Exhibit G hereto, and as the same may be amended from time to time as permitted herein and in accordance with the terms thereof. (E) changing "Perini" to "the Borrower's" each time it appears in "Consolidated Current Assets"; and (F) renumbering clauses (v) and (vi) as (vi) and (vii) in the definition of "Debt" and adding the following clause: "(v) all non-contingent obligations of such Person to reimburse issuers of letters of credit for drawings under such letters of credit (other than the Other Reimbursement Obligations and the obligation to reimburse Hong Kong and Shanghai Bank for $1,800,000 of letters of credit issued by it and outstanding on the date hereof)," 3. Amendment of Section 2.09 of the Agreement. Section 2.09 of the Agreement is hereby amended by adding the following proviso at the end of the first sentence: "; provided that any such voluntary termination or reduction of Commitments may only be made after the repayment in full of the Bridge Loans and Bridge Reimbursement Obligations and termination of the Bridge Commitments under the Bridge Credit Agreement and termination of the Bridge Letters of Credit." 4. Amendment of Section 2.10(b) of the Agreement. Clauses (i) through (iii) of Section 2.10(b) of the Agreement are hereby amended to read in their entirety as follows: "(i) immediately upon receipt by the Borrower or any Subsidiary of the proceeds from the collection, sale or other disposition of any Collateral (excluding (A) payments in the ordinary course on construction contracts, (B) operating receipts from Real Estate Investments, (C) liability insurance proceeds and (D) income of not more than $70,000 earned from Temporary Cash Investments during any fiscal year) by an amount equal to (1) 100% of such proceeds net of all out-of-pocket costs, all senior mortgage debt, fees, commissions and other expenses reasonably incurred in respect of such collection, sale or disposition and any taxes paid or payable (as estimated by a financial officer of the Borrower in good faith) in respect thereof less (2) the amount by which the Bridge Commitments are reduced pursuant to Section 2.10(b)(i) of the Bridge Credit Agreement with respect to such sale or other disposition; provided that no such reduction shall be required unless and until, and then only to the extent that, the aggregate amount of such net proceeds received by the Borrower and its Subsidiaries exceeds, in the case of an item of Collateral specified in Schedule VII hereto, the amount set forth opposite such item or, in the case of other Collateral, $2,000,000 in the aggregate for all such other Collateral; (ii) immediately upon the completion of an issuance by the Borrower of convertible preferred stock or other equity issue, by an amount equal to (1) $15,000,000 less (2) the amount by which the Bridge Commitments are reduced pursuant to Section 2.10(b)(ii) of the Bridge Credit Agreement with respect to such issuance; provided that in the event that the proceeds of such issuance net of all out-of-pocket expenses reasonably incurred in respect of such issuance and any taxes paid or payable (as estimated by a financial officer of the Borrower in good faith) in respect thereof exceeds $30,000,000, the aggregate amount of the Commitments shall be reduced by an amount not less than the sum of (A) $15,000,000 plus (B) 50% of the excess over $30,000,000 of such proceeds less (C) the amount by which the Bridge Commitments are reduced pursuant to Section 2.10(b)(ii) of the Bridge Credit Agreement with respect to such issuance; and (iii) by $2,000,000 on the first Euro-Dollar Business Day of each month during the period beginning the later of (x) the repayment of all amounts payable under, and termination of, the Bridge Credit Agreement or (y) September 1, 1996 and ending December 31, 1996 unless such period is extended by the Required Banks at any time or from time to time prior to the end of such period as it may be so extended from time to time." 5. Amendment of Section 2.11(a) of the Agreement. Section 2.11(a) of the Agreement is hereby amended by adding the following proviso at the end of the first sentence: "; provided that any such voluntary prepayments may only be made after repayment in full of the Bridge Loans and Bridge Reimbursement Obligations and termination of the Bridge Commitments under the Bridge Credit Agreement and termination of the Bridge Letters of Credit." 6. Amendment of Section 2.16(c) of the Agreement. Section 2.16(c) of the Agreement is hereby amended by: (A) changing "1.00%" to "1.75%" in clause (i); and (B) changing "2.25%" to "2.75%" in clause (ii). 7. Amendment of Section 2.17 of the Agreement. Section 2.17 of the Agreement is hereby amended to read in its entirety. "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 Lending Office is located and (ii) in the case of each Bank, any United States withholding tax imposed on such payments but only to the extent that such Bank is subject to United States withholding tax at the time such Bank first becomes a party to this Agreement. "Other Taxes" means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, which arise from any payment made pursuant to this Agreement or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note. (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, the sum payable hereunder or under any Note to any Bank or the Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) such Bank or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower 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 8.01, the original or a certified copy of a receipt evidencing payment thereof. (c) In addition, the Borrower agrees to pay all Other Taxes. (d) The Borrower agrees to indemnify each Bank and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by such Bank or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be paid within 15 days after such Bank or the Agent (as the case may be) makes demand therefor. (e) 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. (f) For any period with respect to which a Bank has failed to provide the Borrower or the Agent with the appropriate form pursuant to subsection (d) of this Section (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 subsection (b) or (c) of this Section 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. (g) If the Borrower is required to pay additional amounts to or for the account of any Bank pursuant to this Section, then such Bank will change the jurisdiction of its 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) if such change, in the judgment of such Bank, is not otherwise disadvantageous to such Bank." 8. Amendment of Section 3.01(j) of the Agreement. Section 3.01(j) of the Agreement is hereby amended by changing "General Counsel" to "Vice President-Counsel". 9. Amendment of Section 3.02 of the Agreement. Section 3.02 of the Agreement is hereby amended by: (A) changing the period at the end of clause (d) to "; and"; (B) adding the following clause after clause (d): "(e) the ability of the Borrower to obtain bonding for new construction projects shall not be less than or more limited than at the date hereof; (f) the payment by the Borrower of all amounts theretofore payable pursuant to Section 9.03 within seven days of demand; and (g) at any time on or after March 8, 1996, receipt by the Agent of (i) evidence of recording of the Mortgages on the Mortgaged Facilities described in Items 13 and 15 in Schedule III and (ii) opinions of counsel in each jurisdiction in which the foregoing Mortgages are recorded in form and substance satisfactory to the Agent covering such matters relating thereto as the Required Banks may reasonably request; and (h) at any time on or after March 28, 1996, receipt by the Agent of a policy of title insurance with respect to each Mortgage and Deed of Trust relating to the Mortgaged Facilities described as Items 1, 2, 3, 4, 5, 6, 9 and 13 in Part I of Schedule III, insuring the perfection, enforceability and first priority of the Lien created under such Mortgage or Deed of Trust, as the case may be, as a valid first mortgage or deed of trust Lien, as the case may be, on the Mortgaged Facilities described therein, in form and substance satisfactory to the Agent and in the respective amounts specified in Part I of Schedule III (with all premiums, expenses and fees paid or caused to be paid by the Borrower), each of which policies shall (i) be issued by a title company reasonably satisfactory to the Agent, (ii) have been supplemented by such endorsements as shall be requested by the Agent (including, without limitation, endorsements relating to usury, revolving credit, doing business and restrictions) and (iii) contain only such exceptions to title as shall be reasonably satisfactory to the Agent, provided that the parties hereto agree that the Permitted Liens (excluding for this purpose Permitted Encumbrances described in clause (c) of the definition thereof unless satisfactory to the Agent) constitute satisfactory exceptions to title. and (C) changing the phrase "(c) and (d)" in the last sentence of such Section to "(c), (d), (e) and (f)". 10. Amendment of Section 4.02 of the Agreement. Section 4.02 of the Agreement is hereby amended by: (A) adding "(a)" at the beginning thereof; and (B) by adding the following at the end thereof: "(b) The execution, delivery and performance by each Obligor of the amendments dated as of February 26, 1996 to the Financing Documents to which it is a party and the performance by each Obligor of the Financing Documents as so amended 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 as so amended, on any asset of such Obligor or any of its Subsidiaries." 11. Amendment of Section 4.03 of the Agreement. Section 4.03 of the Agreement is hereby amended by: (A) adding "(a)" at the beginning thereof; (B) adding the following after the second sentence of subsection (a): "The Borrower Security Agreement and the Subsidiary Pledge Agreement, when executed and delivered in accordance with the Bridge Credit Agreement, will constitute valid and binding agreements of each Obligor party thereto enforceable against each such Obligor in accordance with their respective terms. Each amendment to each Financing Document, when executed and delivered in accordance with the Bridge Credit Agreement, and each Financing Document as so amended will constitute a valid and binding agreement of the Obligor party thereto in each case enforceable in accordance with its terms." (C) adding at the end of subsection (a) the following: "(b) 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) are listed in Part 1 of Schedule III hereto. The list of personal property of the Borrower and each of its Subsidiaries, security interests in which are governed by Article IX of the UCC as in effect in the relevant jurisdictions, set forth in Part 2 of Schedule III hereto is complete in all material respects. The location, ownership, status and lien information provided in Schedule III for each item of real property and each type of personal property are complete and correct. (c) The" (D) deleting "Subject to Section 2.17, the" in subsection (c); and (E) adding ", as amended by the amendments thereto dated as of February 26, 1996," before "create valid" in subsection (c). 12. Amendment of Section 4.08 of the Agreement. Section 4.08 of the Agreement is hereby amended by changing the date of "1986" to "1989". 13. Amendment of Section 4.09 of the Agreement. Section 4.09 of the Agreement is hereby amended by adding the following before the first sentence thereof: "All of the Borrower's Subsidiaries and all joint ventures and partnerships in which the Borrower or any of its Subsidiaries have an interest as of the date hereof are listed in Schedule VI hereto and the state of incorporation or organization and the ownership interest of each thereof specified therein are complete and correct." 14. Amendment of Section 4.11 of the Agreement. Section 4.11 of the Agreement is hereby amended by: (A) adding at the end of the caption ; No Derivatives Obligations; Certain Existing Agreements"; (B) adding "(a)" after the caption; and (C) by adding the following subsection at the end of the section: "(b) Neither the Borrower nor any of its Subsidiaries is party to any Derivatives Obligation except the Rincon swap. (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 IV hereto." 15. Amendment of Section 5.01 of the Agreement. Section 5.01 of the Agreement is hereby amended by: (A) adding "(1)" at the beginning of subsection (b) and adding the following at the end of subsection (b): "(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 previously delivered to the Banks;" (B) changing the letter designation of clause (k) to "(n)"; and (C) adding the following new clauses (k), (l) and (m): "(k) 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); (l) prompt notice of any decision by the Borrower or any of its Subsidiaries not to meet a capital call by any joint venture in which the Borrower or any such Subsidiary is participating; (m) prompt notice of the Borrower's or any Subsidiary's 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" 16. Amendment of Section 5.02 of the Agreement. Section 5.02 of the Agreement is hereby amended by: (A) adding "; No Derivatives Obligations" in the caption; (B) adding "(a)" after the caption; and (C) adding the following subsection at the end of subsection (a): "(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." 17. Amendment of Section 5.06 of the Agreement. Section 5.06 of the Agreement is hereby amended by adding at the end thereof: "; provided that in any event the Borrower shall hold a meeting for representatives of the Banks at least once each fiscal quarter, at a time and place in Framingham, Boston or New York City to be determined by the Agent on 10 Business Days' notice, for purposes of holding such discussions with such of the Borrower's officers, employees and independent public accountants as the Agent shall designate at the reasonable request of any Bank." 18. Amendment of Section 5.08 of the Agreement. Section 5.08 of the Agreement is hereby amended by: (A) revising subsection (a) to read in its entirety as follows: "(a) After the date hereof, the Borrower will not incur or suffer to exist any Debt other than (i) Debt existing on December 31, 1995 and listed on Schedule I hereof, (ii) Debt under this Agreement, (iii) Debt under the Bridge Credit Agreement, (iv) Debt owing to joint ventures in which the Borrower is participating, (v) up to $3,000,000 of Debt to finance insurance premiums, (vi) Debt owing by the Borrower to a Subsidiary and evidenced by an intercompany note pledged to the Agent under the Pledge Agreement and (vii) any refinancing, extension, renewal or refunding of the Debt referred to in clauses (i) through (v) above; provided that in any event at no time shall Modified Parent Company Debt exceed $150,000,000 and at no time shall the aggregate outstanding amount of Debt to finance insurance premiums and any refinancing, extension, renewal or refunding thereof exceed $3,000,000." and (B) revising subsection (b) to read in its entirety as follows: "(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 December 31, 1995 and listed on Schedule I hereof, (ii) Debt under the Subsidiary Guarantee Agreement, (iii) Debt owing to joint ventures in which such Subsidiary is participating, (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 (vi) any refinancing, extension, renewal or refunding of the Debt referred to in clauses (i) through (iv) above." 19. Amendment of Section 5.09 of the Agreement. Section 5.09 of the Agreement is hereby amended by: (A) changing "1993" to "1996" both times it appears in the second sentence; and (B) revising the third sentence to read as follows: "For purposes of this Section, "Base Compliance Amount" means (i) for any date during the period from and including December 31, 1995 to but excluding June 30, 1996, $100,000,000, (ii) for any date during the period from and including June 30, 1996 to but excluding September 30, 1996, $105,000,000, (iii) for any date during the period from and including September 30, 1996 to but excluding December 31, 1996, $112,000,000, (iv) for any date during the period from and including December 31, 1996 to but excluding March 31, 1997, $125,000,000 and (v) for any date during the period from and including March 31, 1997 to the Termination Date, $125,000,000 plus 50% of Consolidated Net Income during such period without giving effect to any negative amount of Consolidated Net Income during any fiscal quarter or fiscal year during such period." 20. Amendment of Section 5.10 of the Agreement. Section 5.10 of the Agreement is hereby amended to read in its entirety as follows: "Consolidated Earnings Before Interest and Taxes for each fiscal period specified below shall be not less than the percentage specified below of Consolidated Interest Charges for such fiscal period: quarter ending March 31, 1996 300% two quarters ending June 30, 1996 300% three quarters ending September 30, 1996 250% four quarters ending December 31, 1996 250% four quarters ending each March 31, June 30, September 30 and December 31 thereafter 200%" 21. Amendment of Section 5.11(i) of the Agreement. Section 5.11 is hereby amended by: (A) relettering clause (i) as clause (k) and (B) adding after clause (h) the following: "(i) Liens (whether statutory, by contract or at common law and whether in the nature of a security interest or constructive trust or otherwise) of subcontractors, architects, engineers, surveyors, laborers, materialmen, bonding companies and other Persons performing labor or services or providing material for construction projects in and under construction contracts to which the Borrower or any of its Subsidiaries is a party as general or prime contractor, subcontractor or construction manager; (j) Liens granted to Fidelity and Deposit Company of Maryland (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" 22. Amendment of Section 5.12 of the Agreement. Section 5.12 of the Agreement is amended by: (A) revising the proviso in the last sentence of subsection (a) to read in its entirety as follows: "provided that the foregoing shall not prohibit (i) any Subsidiary Guarantor from selling, leasing or otherwise transferring assets in the ordinary course of its business or (ii) R. E. Dailey & Co. from transferring all of its assets to Perini Building Company." (B) revising subsection (b) to read in its entirety as follows: "(b) The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise dispose of any item of Collateral (except Accounts, Inventory and items listed in Schedule VII hereto up to the amounts specified therein) unless (i) each of the Banks shall have given its prior written consent thereto and (ii) the consideration therefor (x) shall be at least equal to the fair market value of such asset (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) and (y) in the case of any agreement entered into on or after the Effective Date of the Bridge Credit Agreement for the sale, lease or other disposition of Collateral shall consist of cash payable at closing; provided that the prior written consent of the Required Banks shall not be required for any sale, lease or other disposition of any item of Collateral having a fair market value not exceeding $100,000 if the aggregate amount of the fair market value of all such items of Collateral sold, leased or otherwise disposed of during any fiscal year does not exceed $500,000 and the Borrower delivers to each of the Banks prompt written notice of each such sale, lease or other disposition." 23. Amendment of Section 5.14 of the Agreement. The first sentence of Section 5.14 of the Agreement is hereby amended by adding the following proviso at the end thereof: "; provided that the Borrower will not declare or pay any preferred stock dividend while (i) any Bridge Commitment or Bridge Letter of Credit is outstanding or any Bridge Loan or Bridge Reimbursement Obligation is outstanding or (ii) any Default is continuing or (iii) the aggregate outstanding amount of the Borrower's Debt exceeds 50% of the Borrower's Consolidated Tangible Net Worth." 24. Amendment of Section 6.01(n) of the Agreement. Section 6.01(n) of the Agreement is hereby amended by deleting "subject to Section 2.17,". 25. Amendment of Section 7.01 of the Agreement. Section 7.01 of the Agreement is hereby amended by adding at the end thereof the following: "Each Bank which is also an Other LC Bank or a Mortgage Bank also makes the foregoing appointment in its capacity as an Other LC Bank or a Mortgage Bank, as the case may be, and agrees that the provisions of this Article VII, including without limitation Sections 7.05 and 7.06, shall be for the benefit of the Agent mutatis mutandis when acting in respect of such Other LC Bank or Mortgage Bank, its Other Reimbursement Obligations, its Other Letters of Credit or its Other Mortgage/Lease Obligations." 26. Amendment of Section 9.04 of the Agreement. Section 9.04 of the Agreement is hereby amended by adding at the end of the proviso in the first sentence "or under the Bridge Credit Agreement and nothing in any Financing Documents shall require any Bank to share any payments received by such Bank if such payments were made in respect of any obligations (including without limitation Other Reimbursement Obligations and Other Mortgage/Lease Obligations) not constituting Loans or Reimbursement Obligations." 27. Amendment of Section 9.05 of the Agreement. Section 9.05 of the Agreement is hereby amended by adding at the end thereof: ", (vii) amend Section 9.04 or 9.06 hereof or (viii) notwithstanding any provision of any Collateral Document to the contrary, release any item of Collateral from the Lien provided by the Collateral Documents, except for the sale or other disposition of such item by the Agent in the exercise of its rights as provided therein (provided that unless an Event of Default has occurred and is continuing, the Agent may release any Collateral at the request of the Borrower, without the consent of each of the Banks, if (i) such release is required in connection with any sale, lease or other disposition of such Collateral and (ii) such sale, lease or other disposition is in accordance with and permitted by the terms hereof (including without limitation Sections 2.10(b)(i) and 5.12(b)) and of the Bridge Credit Agreement)." 28. Amendment of Section 9.06 of the Agreement. Section 9.06 of the Agreement is amended by: (A) adding "in amounts of at least the lesser of its Commitment and $5,000,000" at the end of the first sentence of subsection (b) and after "or a proportionate part" in the first sentence of subsection (c); (B) adding "or another Bank" after "transferor Bank" in the proviso to the first sentence of subsection (c); and (C) changing "Exhibit I" to "Exhibit K" in subsection (c). 29. Amendment of Schedules to the Agreement. The Schedules to the Agreement are hereby deleted and Schedules I to VII in the form attached hereto are added to the Agreement. 30. Amendment of Table of Contents of the Agreement. The Table of Contents of the Agreement is hereby amended as appropriate to reflect the foregoing amendments. 31. Consent to Other Financing Documents and Amendments of Other Financing Documents. Each Bank hereby consents to the execution and delivery of the Borrower Security Agreement, the Borrower Pledge Agreement, Amendment No. 1 to the Subsidiary Guarantee Agreement, the Subsidiary Security Agreement and the Subsidiary Pledge Agreement. 32. Representations and Warranties. The Borrower represents and warrants that the representations and warranties of each Obligor contained in each Financing Document, as amended, to which it is a party are true on and as of the date hereof. 33. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. 34. Counterparts; Effectiveness. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment shall become effective as of the date hereof when the Agent shall have received duly executed counterparts hereof signed by the Borrower and the Required Banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party). IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. PERINI CORPORATION By /s/ David B. Perini Title: President & CEO By /s/ John H. Schwarz Title: Executive Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ D. Linda Scheuplein Title: Vice President FLEET NATIONAL BANK OF MASSACHUSETTS (f/k/a SHAWMUT BANK, N.A.) By /s/ Lisa S. Coney Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By /s/ Donald J. Chin Title: Vice President BAYBANK, N.A., as Bank and as LC Bank By /s/ Timothy M. Laurion Title: Vice President COMERICA BANK By /s/ Angela B. Petersen Title: First Vice President HARRIS TRUST & SAVINGS BANK By /s/ Sandra J. Sanders Title: Vice President STATE STREET BANK AND TRUST COMPANY By /s/ Linda M. Moulton Title: Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent By /s/ D. Linda Scheuplein Title: Vice President EX-4 4 SHAREHOLDER RIGHTS AGREEMENT PERINI CORPORATION and THE FIRST NATIONAL BANK OF BOSTON as Rights Agent Shareholder Rights Agreement Dated as of September 23, 1988 as amended and restated as of May 17, 1990 Table of Contents ----------------- SECTION PAGE 1 Certain Definitions........................... 1 2 Appointment of Rights Agent................... 5 3 Issue of Right Certificates................... 6 4 Form of Right Certificates.................... 8 5 Countersignature and Registration............. 9 6 Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates................................ 10 7 Exercise of Rights; Exercise Price; Expiration Date of Rights.............................. 11 8 Cancellation and Destruction of Right Certificates.......................... 13 9 Reservation and Availability of Preferred Stock............................. 13 10 Preferred Stock Record Date................... 15 11 Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights............... 15 12 Certificate of Adjusted Exercise Price or Number of Shares............................ 25 13 Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................. 25 14 Fractional Rights and Fractional Shares....... 28 15 Rights of Action.............................. 29 16 Agreement of Right Holders.................... 29 17 Right Certificate Holder Not Deemed a Shareholder............................... 30 18 Concerning the Rights Agent................... 30 19 Merger or Consolidation or Change of Name of Rights Agent.......................... 31 20 Duties of Rights Agent........................ 32 21 Change of Rights Agent........................ 34 22 Issuance of New Right Certificates............ 35 23 Redemption and Termination.................... 36 24 Exchange .................................... 38 25 Notice of Certain Events...................... 38 26 Notices.................................... 39 27 Supplements and Amendments.................... 40 28 Successors.................................... 41 29 Determinations and Actions by the Board of Directors....................... 41 30 Benefits of this Agreement.................... 42 31 Severability............................... 42 32 Governing Law................................. 42 33 Counterparts.................................. 42 34 Descriptive Headings.......................... 43 Exhibit A -- Form of Certificate of Vote of Directors Establishing Series A Junior Participating Cumulative Preferred Stock Exhibit B -- Form of Right Certificate Exhibit C -- Form of Summary of Rights SHAREHOLDER RIGHTS AGREEMENT Agreement, dated as of September 23, 1988, as amended and restated as of May 17, 1990, between Perini Corporation, a Massachusetts corporation (the "Company"), and The First National Bank of Boston, a national banking association (the "Rights Agent"). W I T N E S S E T H WHEREAS, on September 23, 1988 the Board of Directors of the Company authorized and declared a dividend distribution of one Right (as hereinafter defined) for each outstanding share of Common Stock, par value $1.00 per share, of the Company (the "Common Stock") outstanding as of the close of business on October 6, 1988 (the "Record Date"), (other than shares of Common Stock held in the Company's treasury on the Record Date), and contemplates the issuance of one Right for each share of Common Stock of the Company issued (whether originally issued or sold from the Company's treasury) between the Record Date and the earlier of the Distribution Date and the Expiration Date (as such terms are defined in Section 3 hereof), each Right initially representing the right to purchase one one-hundredth of a share of Series A Junior Participating Cumulative Preferred Stock of the Company having the rights, powers and preferences set forth in the form of Certificate of Vote of Directors Establishing a Series of a Class of Stock attached hereto as Exhibit A, upon the terms and subject to the conditions hereinafter set forth (the "Rights"); WHEREAS, in accordance with the terms of the Shareholder Rights Agreement dated as of September 23, 1988 (the "Rights Agreement") between the Company and the Rights Agent, the Company deems it advisable and in the best interests of its shareholders to make certain amendments to the Rights Agreement; NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree that the Rights Agreement is hereby amended and restated as follows: Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: (a) "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 (i) the Company, (ii) any Subsidiary of the Company (as such term is hereinafter defined), (iii) any employee benefit plan of the Company or any Subsidiary of the Company (as such term is hereinafter defined), (iv) any entity or Person holding shares of Common Stock organized, appointed or established by the Company or any Subsidiary for or pursuant to the terms of any such plan or (v) The Perini Memorial Foundation, Inc., The Joseph Perini Memorial Foundation, or any of the various trusts established under the Wills of Louis R. Perini, Sr., Joseph R. Perini, Sr. or Charles B. Perini, Sr. The Persons described in clauses (i) through (v) above are referred to herein as "Exempt Persons." Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as the result of an acquisition of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more of the Common Stock of the Company then outstanding; provided, however, that if a Person shall become the Beneficial Owner of 20% or more of the Common Stock of the Company then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional shares of Common Stock of the Company, then such Person shall be deemed to be an "Acquiring Person". (b) "Adverse Person" shall mean any Person declared to be an Adverse Person by the Board of Directors upon a determination of the Board of Directors that the criteria set forth in Section 11(a)(ii)(B) apply to such Person. (c) "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"), as in effect on the date of this Agreement; provided, however, that no Person who is a director or officer of the Company shall be deemed an Affiliate or an Associate of any other director or officer of the Company solely as a result of his or her position as director or officer of the Company. (d) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities: (i) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, beneficially owns (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Agreement) or has the right to dispose of; (ii) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, 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 these Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," (1) securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; (2) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event; or (3) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event, which Rights were acquired by such Person or any of such Person's Affiliates or Associates prior to the Distribution Date or pursuant to Sections 3(a), 11(i) or 22 hereof; 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 (iii) 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 Section 1(d)(ii) hereof) or disposing of any securities of the Company; provided, however, that (1) no Person engaged in business as an underwriter of securities shall be deemed the Beneficial Owner of any securities acquired through such Person's participation as an underwriter in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition and (2) no Person who is a director or an officer of the Company shall be deemed, solely as a result of his or her position as director or officer of the Company, the Beneficial Owner of any securities of the Company that are beneficially owned by any other director or officer of the Company. (e) "Business Day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the Commonwealth of Massachusetts are authorized or obligated by law or executive order to close. (f) "Close of business" on any given date shall mean 5:00 P.M., Boston time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., Boston time, on the next succeeding Business Day. (g) "Common Stock" shall mean the Common Stock, par value $1.00 per share, of the Company, except that "Common Stock" when used with reference to any Person other than the Company shall mean the capital stock with the greatest voting power, or the equity securities or other equity interests having power to control or direct the management, of such Person or, if such Person is a Subsidiary of another Person, the Person which ultimately controls such first-mentioned Person and which has issued and outstanding such capital stock, equity securities or equity interests. (h) "Disinterested Director" shall mean (i) any member of the Company's Board of Directors who is not an employee of the Company or any of its Subsidiaries and is not an Acquiring Person, an Adverse Person or an Affiliate or Associate of any such Person or a representative or nominee of an Acquiring Person, an Adverse Person or any such Affiliate or Associate and was a member of the Company's Board of Directors prior to the date of this Agreement, and (ii) any person who subsequently becomes a member of the Company's Board of Directors who is not an Acquiring Person, an Adverse Person or an Affiliate or Associate of any such Person or a representative or nominee of an Acquiring Person, an Adverse Person or of any such Affiliate or Associate, if such Person's nomination is recommended or approved by a majority of the Disinterested Directors. (i) "Distribution Date" shall have the meaning defined in Section 3(a) hereof. (j) "Exercise Price" shall have the meaning defined in Section 7(b) hereof. (k) "Expiration Date" and "Final Expiration Date" shall have the meanings defined in Section 7(a) hereof. (l) "Fair Market Value" of any securities or other property shall be as determined in accordance with Section 11(d) hereof. (m) "Person" shall mean any individual, firm, corporation, partnership or other entity. (n) "Preferred Stock" shall mean shares of Series A Junior Participating Cumulative Preferred Stock, par value $1.00 per share, of the Company having the rights and preferences set forth in the form of Certificate of Vote of Directors Establishing a Series of a Class of Stock attached hereto as Exhibit A. (o) "Principal Party" shall have the meaning defined in Section 13(b) hereof. (p) "Redemption Price" shall have the meaning defined in Section 23 hereof. (q) "Section 11(a)(ii) Event" shall mean any event described in Section 11(a)(ii) hereof. (r) "Section 13 Event" shall mean any event described in clauses (x), (y) or (z) of Section 13(a) hereof. (s) "Stock Acquisition Date" shall mean 5:00 p.m. Boston time on the date of the first public announcement (which, for purposes of this definition shall include, without limitation, a press release or a report filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such. (t) A "Subsidiary" of any Person shall mean any other Person of which a majority of the voting power of the voting equity securities or voting interests is owned, directly or indirectly, by such Person, or which is otherwise controlled by such Person. (u) "Triggering Event" shall mean any Section 11(a)(ii) Event or any Section 13 Event. Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date (as hereinafter defined in Section 3(a)) also be the holders of the Common Stock) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable. In the event the Company appoints one or more Co- Rights Agents, the respective duties of the Rights Agent and any Co-Rights Agents shall be as the Company shall determine. Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the close of business on the tenth day after the Stock Acquisition Date, (ii) the close of business on the tenth Business Day after the date of the commencement, by any Person, other than an Exempt Person, of a tender or exchange offer if, upon consummation thereof, such Person would be an Acquiring Person or (iii) the determination by the Board of Directors of the Company, pursuant to the criteria set forth in Section 11(a)(ii)(B) hereof, that a Person is an Adverse Person (including any such date which is after the date of this Agreement and prior to the issuance of the Rights) (the earliest of such dates being herein referred to as the "Distribution Date"), (x) the Rights will be evidenced (subject to the provisions of Section 3(b) hereof) by certificates for the Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates, and (y) the Rights will be transferable only in connection with the transfer of the underlying shares of Common Stock. As soon as practicable after the Company has notified the Rights Agent of the occurrence of the Distribution Date, the Rights Agent will send, by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the Distribution Date, at the address of such holder shown on the records of the Company, one or more certificates, in substantially the form of Exhibit B hereto (the "Right Certificates"), evidencing one Right for each share of Common Stock so held. In the event that an adjustment in the number of Rights per share of Common Stock has been made pursuant to Section 11(o) hereof, the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) at the time of distribution of the Right Certificates, so that Right Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and after the close of business on the Distribution Date, the Rights will be evidenced solely by such Right Certificates. (b) Not later than ten days after the Record Date, the Company will send a copy of a Summary of Rights, in substantially the form attached hereto as Exhibit C (the "Summary of Rights"), by first-class, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the Record Date, at the address of such holder shown on the records of the Company. With respect to certificates for the Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for the Common Stock with or without a copy of the Summary of Rights attached thereto, and the registered holders of the Common Stock shall also be the registered holders of the associated Rights. Until the Distribution Date (or earlier redemption, expiration or termination of the Rights), the transfer of any of the certificates for the Common Stock outstanding on the Record Date, even without a copy of the Summary of Rights attached thereto, shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificate. (c) Certificates for the Common Stock issued after the Record Date, but prior to the earlier of the Distribution Date or the Expiration Date, shall be deemed also to be certificates for Rights, and shall bear the following legend: This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Shareholder Rights Agreement between Perini Corporation and The First National Bank of Boston, as Rights Agent, dated as of September 23, 1988, as amended as of May , 1990 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of Perini Corporation. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Perini Corporation may redeem the Rights at a redemption price of $0.02 per Right, subject to adjustment, under the terms of the Rights Agreement. Perini Corporation will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under certain circumstances, Rights issued to or held by Acquiring Persons, Adverse Persons or any Affiliates or Associates thereof (as defined in the Rights Agreement) and any subsequent holder of such Rights may become null and void. With respect to such certificates containing the foregoing legend, until the earlier of the Distribution Date or the Expiration Date, the Rights associated with the Common Stock represented by such certificates shall be evidenced by such certificates alone, and the transfer of any of such certificates shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. In the event that the Company purchases or acquires any shares of Common Stock after the Record Date but prior to the Distribution Date, any Rights associated with such Common Stock shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associated with the shares of Common Stock which are no longer outstanding. Section 4. Form of Right Certificates. (a) The Right Certificates (and the forms of election to purchase shares and of assignment and certificate to be printed on the reverse thereof) shall each be substantially in the form of Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law, rule or regulation or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of Section 11 and Section 22 hereof, the Right Certificates, whenever distributed, shall be dated as of the Record Date, and on their face shall entitle the holders thereof to purchase such number of one one-hundredths of a share of Preferred Stock as shall be set forth therein at the price set forth therein (the "Exercise Price"), but the number of such shares and the Exercise Price shall be subject to adjustment as provided herein. (b) Any Right Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights beneficially owned by (i) an Acquiring Person, an Adverse Person or any Associate or Affiliate of such a Person, (ii) a transferee of an Acquiring Person or an Adverse Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person or Adverse Person becomes such, or (iii) a transferee of an Acquiring Person or an Adverse Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person or Adverse Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person or Adverse Person to holders of equity interests in such Acquiring Person or Adverse Person or to any Person with whom the Acquiring Person or Adverse Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of Section 7(e) hereof, and any Right Certificate issued pursuant to Section 6 or Section 11 upon transfer, exchange, replacement or adjustment of any other Right Certificate referred to in this sentence, shall contain the following legend: The Rights represented by this Right Certificate are or were beneficially owned by a Person who was or became an Acquiring Person, an Adverse Person or an Affiliate or an Associate of an Acquiring Person or an Adverse Person (as such terms are defined in the Rights Agreement). This Right Certificate and the Rights represented hereby may become null and void under certain circumstances as specified in Section 7(e) of the Rights Agreement. The Company shall give notice to the Rights Agent promptly after it becomes aware of the existence and identity of any Acquiring Person or Adverse Person or any Associate or Affiliate thereof. Section 5. Countersignature and Registration. (a) The Right Certificates shall be executed on behalf of the Company by its Chairman of the Board, its President or any Vice President and by its Treasurer or any Assistant Treasurer, either manually or by facsimile signature, and shall have affixed thereto the Company's seal or a facsimile thereof which shall be attested by the Clerk or any Assistant Clerk of the Company, either manually or by facsimile signature. The Right Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificates may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at one of its offices designated as the appropriate place for surrender of Right Certificates upon exercise or transfer, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates. Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time after the close of business on the Distribution Date, and at or prior to the close of business on the Expiration Date, any Right Certificate or Certificates may be transferred, split up, combined or exchanged for another Right Certificate or Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a share of Preferred Stock (or following a Triggering Event, Preferred Stock, cash property, debt securities, common stock or any combination thereof) as the Right Certificate or Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Certificates to be transferred, split up, combined or exchanged, with the form of assignment and certificate duly executed, at the office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Right Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person entitled thereto a Right Certificate or Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates. (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will execute and deliver a new Right Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights. (a) Subject to Section 7(e) hereof, the registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase and the certificate on the reverse side thereof duly executed, to the Rights Agent at the office or offices of the Rights Agent designated for such purpose, together with payment of the aggregate Exercise Price for the total number of one one-hundredths of a share of Preferred Stock (or other securities, cash or other assets, as the case may be) as to which such surrendered Rights are then exercised, at or prior to the earlier of (i) the close of business on September 23, 1999 (the "Final Expiration Date") or (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the earlier of (i) or (ii) being herein referred to as the "Expiration Date"). Except as set forth in Section 7(e) hereof and notwithstanding any other provision of this Agreement, any Person who prior to the Distribution Date becomes a record holder of shares of Common Stock may exercise all of the rights of a registered holder of a Right Certificate with respect to the Rights associated with such shares of Common Stock in accordance with the provisions of this Agreement, as of the date such Person becomes a record holder of shares of Common Stock. (b) The Exercise Price for each one one-hundredth of a share of Preferred Stock pursuant to the exercise of a Right shall initially be $100.00, shall be subject to adjustment from time to time as provided in Section 11 and Section 13(a) hereof and shall be payable in lawful money of the United States of America in accordance with Section 7(c) below. (c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and the certificate on the reverse side thereof duly executed, accompanied by payment of the Exercise Price for the shares to be purchased and an amount equal to any applicable transfer tax (as determined by the Rights Agent) in cash, or by certified check or bank draft payable to the order of the Company, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)(A) requisition from any transfer agent of Preferred Stock (or make available, if the Rights Agent is the transfer agent therefor) certificates for the number of one one-hundredths of a share of Preferred Stock to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of shares of Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-hundredths of a share of Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company will direct the depositary agent to comply with such request, (ii) when appropriate, requisition from the Company the amount of cash, if any, to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof, (iii) promptly after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder and (iv) when appropriate, after receipt promptly deliver such cash to or upon the order of the registered holder of such Right Certificate. In the event that the Company is obligated to issue other securities (including Common Stock) of the Company, pay cash or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities, cash or other property are available for distribution by the Rights Agent, if and when appropriate. (d) In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14 hereof. (e) Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person, an Adverse Person or any Associate or Affiliate of such a Person or (ii) a transferee of an Acquiring Person or an Adverse Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person or an Adverse Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person or Adverse Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person or Adverse Person to holders of equity interests in such Acquiring Person or Adverse Person or to any Person with whom the Acquiring Person or Adverse Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e), shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Right Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person, an Adverse Person or any Affiliates or Associates thereof or any transferee of any of them hereunder. (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder of Rights upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise, and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Right Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. Section 9. Reservation and Availability of Preferred Stock. (a) The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock or any authorized and issued shares of Preferred Stock held in its treasury, the number of shares of Preferred Stock that will be sufficient to permit the exercise in full of all outstanding and exercisable Rights. (b) The Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares of Preferred Stock issued or reserved for issuance to be listed, upon official notice of issuance, upon the principal national securities exchange, if any, upon which the Common Stock is listed or, if the principal market for the Common Stock is not on any national securities exchange, to be eligible for quotation on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") or any successor thereto or other comparable quotation system. (c) The Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the occurrence of a Section 11(a)(ii) Event as of which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with Section 11(a)(iii) hereof, or as soon as required by law following the Distribution Date, as the case may be, a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing and (iii) cause such registration statement to remain effective (with a prospectus that at all times meets the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, and (B) the Expiration Date. The Company will also take such action as may be appropriate under, and which will ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend for a period of time not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. Notwithstanding any such provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained. (d) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all shares of Preferred Stock delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Exercise Price), be duly and validly authorized and issued and fully paid and nonassessable. (e) The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any certificates for shares of Preferred Stock upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Right Certificates to a person other than, or in respect of the issuance or delivery of securities in a name other than that of, the registered holder of the Right Certificates evidencing Rights surrendered for exercise or to issue or deliver any certificates for securities in a name other than that of the registered holder upon the exercise of any Rights until such tax shall have been paid (any such tax being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due. Section 10. Preferred Stock Record Date. Each Person in whose name any certificate for Preferred Stock is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the shares of Preferred Stock represented thereby on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Exercise Price (and any applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the Preferred Stock transfer books of the Company are closed, such person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Stock transfer books of the Company are open. Prior to the exercise of the Right evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a shareholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights. The Exercise Price, the number and kind of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a)(i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares or (D) issue any shares of its capital stock in a reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of capital stock issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were open, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof. (ii) In the event (A) any Person, alone or together with its Affiliates and Associates, shall become an Acquiring Person; or (B) the Board of Directors of the Company shall declare any Person to be an Adverse Person, after (x) a determination that such Person, alone or together with its Affiliates and Associates, has become the Beneficial Owner of 10% or more of the outstanding shares of Common Stock and (y) a determination by the Board of Directors, after reasonable inquiry and investigation, including such consultation, if any, with such persons as such directors shall deem appropriate, that (a) such Beneficial Ownership by such Person is intended to cause, is reasonably likely to cause or will cause the Company to repurchase the Common Stock beneficially owned by such Person or to cause pressure on the Company to take action or enter into a transaction or series of transactions which would provide such Person with short-term financial gain under circumstances where the Board of Directors determines that the best long-term interests of the Company and its shareholders, but for the actions and possible actions of such Person, would not be served by taking such action or entering into such transactions or series of transactions at that time or (b) such Beneficial Ownership is causing or reasonably likely to cause a material adverse impact (including, but not limited to, impairment of relationships with customers or impairment of the Company's ability to maintain its competitive position) on the business or prospects of the Company; provided, however, that the Board of Directors of the Company may not declare a Person to be an Adverse Person if, prior to the time that such Person acquired 10% or more of the shares of Common Stock then outstanding, such Person provided to the Board of Directors in writing a statement of such Person's purpose and intentions in connection with the proposed acquisition of Common Stock, together with any other information reasonably requested of such Person by the Board of Directors, and the Board of Directors, based on such statement and reasonable inquiry and investigation, including such consultation, if any, with such persons as the directors shall deem appropriate, determines to notify and notifies such Person in writing that it will not declare such Person to be an Adverse Person; provided further, that the Board of Directors may expressly condition in any manner a determination not to declare a Person an Adverse Person on such conditions as the Board of Directors may select, including without limitation, such Person's not acquiring more than a specified amount of stock and/or on such Person's not taking actions inconsistent with the purposes and intentions disclosed by such Person in the statement provided to the Board of Directors. No delay or failure by the Board of Directors to declare a Person to be an Adverse Person shall in any way waive or otherwise affect the power of the Board of Directors subsequently to declare a Person to be an Adverse Person. In the event that the Board of Directors should at any time determine, upon reasonable inquiry and investigation, including consultation with such persons as the directors shall deem appropriate, that such Person has not met or complied with any condition specified by the Board of Directors, the Board of Directors may at any time thereafter declare such Person to be an Adverse Person pursuant to the provisions of this Section 11(a)(ii)(B); then, and in each such case, promptly following any such occurrence, proper provision shall be made so that each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have a right to receive, upon exercise thereof at the then current Exercise Price in accordance with the terms of this Agreement, such number of shares of Preferred Stock of the Company as shall equal the result obtained by (x) multiplying the then current Exercise Price by the then number of one one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event and dividing that product by (y) 50% of the Fair Market Value per one one-hundredth of a share of the Preferred Stock (determined pursuant to Section 11(d)) on the date of the occurrence of any one of the events listed above in this Section 11(a)(ii); provided, however, that if the transaction that would otherwise give rise to the foregoing adjustment is also subject to the provisions of Section 13 hereof, then only the provisions of Section 13 shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii). (iii) In the event that there shall not be sufficient Treasury shares or authorized but unissued shares of Preferred Stock to permit the exercise in full of the Rights in accordance with the foregoing Section 11(a)(ii), the Company shall take all action as may be necessary to authorize and reserve for issuance such number of additional shares of Preferred Stock as may from time to time be required to be issued upon the exercise in full of all Rights outstanding and, if necessary, shall use its best efforts to obtain shareholder approval thereof. Notwithstanding the foregoing provisions of this Section 11(a)(iii), in lieu of issuing shares of Preferred Stock in accordance with Section 11(a)(ii) hereof, if a majority of the Disinterested Directors then in office determines that such action is necessary or appropriate and is not contrary to the interests of the holders of the Rights, they may elect to cause the Company to pay, and if sufficient shares of Preferred Stock cannot be issued for such purpose in accordance with the provisions hereof, the Company shall issue or pay upon the exercise of the Rights, cash, property, debt securities, shares of Preferred Stock or Common Stock, or any combination thereof, having an aggregate Fair Market Value equal to the Fair Market Value of the shares of Preferred Stock which otherwise would have been issuable pursuant to Section 11(a)(ii). Any such election by a majority of the Disinterested Directors of the Company must be made and publicly announced within 30 days of the date on which any Section 11(a)(ii) Event first occurs following the Stock Acquisition Date. (b) If the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Stock entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Stock (or securities having the same rights, privileges and preferences as the shares of Preferred Stock ("preferred stock equivalents")) or securities convertible into Preferred Stock or preferred stock equivalents at a price per share of Preferred Stock or per share of preferred stock equivalents (or having a conversion price per share, if a security convertible into Preferred Stock or preferred stock equivalents) less than the Fair Market Value (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock to be offered (and the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Fair Market Value and the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and preferred stock equivalents to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be the Fair Market Value thereof determined in accordance with Section 11(d) hereof. Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such rights or warrants are not so issued, the Exercise Price shall be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed. (c) If the Company shall fix a record date for the making of a distribution to all holders of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular periodic cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or subscription rights or warrants (excluding those referred to in Section 11(b)), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof) per one one-hundredth of a share of Preferred Stock on such record date, less the Fair Market Value (as determined pursuant to Section 11(d) hereof) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such convertible securities, subscription rights or warrants applicable to one one-hundredth of a share of Preferred Stock and the denominator of which shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof) per one one-hundredth of a share of Preferred Stock. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would be in effect if such record date had not been fixed. (d) For the purpose of this Agreement, the "Fair Market Value" of any share of Preferred Stock, Common Stock or any other stock or any Right or other security or any other property shall be determined as provided in this Section 11(d). (i) In the case of a publicly-traded stock or other security, the Fair Market Value on any date shall be deemed to be the average of the daily closing prices per share of such stock or per unit of such other security for the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date, provided, however, that in the event that the Fair Market Value per share of any share of stock is determined during a period following the announcement by the issuer of such stock of (x) a dividend or distribution on such stock payable in shares of such stock or securities convertible into shares of such stock or (y) any subdivision, combination or reclassification of such stock, and prior to the expiration of the 30 Trading Day period after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the Fair Market Value shall be properly adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the securities are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such security is listed or admitted to trading; or, if not listed or admitted to trading on any national securities exchange, the last quoted price (or, if not so quoted, the average of the last quoted high bid and low asked prices) in the over-the-counter market, as reported by NASDAQ or such other system then in use; or, if on any such date no bids for such security are quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such security selected by the Board of Directors of the Company. If on any such date no market maker is making a market in such security, the Fair Market Value of such security on such date shall be determined reasonably and with utmost good faith to the holders of the Rights by the Board of Directors of the Company, including, if at the time of such determination there is an Acquiring Person or an Adverse Person, a majority of the Disinterested Directors then in office, or if there are no Disinterested Directors, by a nationally recognized investment banking firm selected by the Board of Directors, which determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. The term "Trading Day" shall mean a day on which the principal national securities exchange on which such security is listed or admitted to trading is open for the transaction of business or, if such security is not listed or admitted to trading on any national securities exchange, a Business Day. (ii) If a security is not publicly held or not so listed or traded, "Fair Market Value" shall mean the fair value per share of stock or per other unit of such security, determined reasonably and with utmost good faith to the holders of the Rights by the Board of Directors of the Company, including, if at the time of such determination there is an Acquiring Person or an Adverse Person, a majority of the Disinterested Directors then in office, or if there are no Disinterested Directors, by a nationally recognized investment banking firm selected by the Board of Directors, which determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights; provided, however, that for the purposes of making any adjustment provided for by Section 11(a)(ii) hereof, the Fair Market Value of a share of Preferred Stock shall not be less than the product of the then Fair Market Value of a share of Common Stock multiplied by the higher of the then Dividend Multiple or Vote Multiple applicable to the Preferred Stock (as defined in the Certificate of Vote of Directors establishing the Preferred Stock attached as Exhibit A hereto) and shall not exceed 105% of the product of the then Fair Market Value of a share of Common Stock multiplied by the higher of the then Dividend Multiple or Vote Multiple applicable to the Preferred Stock. (iii) In the case of property other than securities, the Fair Market Value thereof shall be determined reasonably and with utmost good faith to the holders of Rights by the Board of Directors of the Company, including, if at the time of such determination there is an Acquiring Person, a majority of the Disinterested Directors then in office, or if there are no Disinterested Directors, by a nationally recognized investment banking firm selected by the Board of Directors, which determination shall be described in a statement filed with the Rights Agent and shall be binding upon the Rights Agent and the holders of the Rights. (e) Anything herein to the contrary notwithstanding, no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock or one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment or (ii) the Expiration Date. (f) If as a result of any provision of Section 11(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Section 11(a), (b), (c), (e), (g) through (k) and (m), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like terms to any such other shares. (g) All Rights originally issued by the Company subsequent to any adjustment made to the Exercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, the number of one one-hundredths of a share of Preferred Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Exercise Price as a result of the calculations made in Section 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of one one-hundredths of a share of Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying (x) the number of one one-hundredths of a share of Preferred Stock for which a Right may be exercisable immediately prior to this adjustment by (y) the Exercise Price in effect immediately prior to such adjustment of the Exercise Price and (ii) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price. (i) The Company may elect on or after the date of any adjustment of the Exercise Price to adjust the number of Rights, in substitution for any adjustment in the number of shares of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of one one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten- thousandth) obtained by dividing the Exercise Price in effect immediately prior to adjustment of the Exercise Price by the Exercise Price in effect immediately after adjustment of the Exercise Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Exercise Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Exercise Price) and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement. (j) Irrespective of any adjustment or change in the Exercise Price or the number of one one-hundredths of a share of Preferred Stock issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Exercise Price per share and the number of shares which were expressed in the initial Right Certificates issued hereunder. (k) Before taking any action that would cause an adjustment reducing the Exercise Price below the then stated value, if any, of the number of one one-hundredths of a share of Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Preferred Stock at such adjusted Exercise Price. (l) In any case in which this Section 11 shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuing to the holder of any Right exercised after such record date the number of one one-hundredths of a share of Preferred Stock or other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of one one-hundredths of a share of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment. (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Exercise Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its sole discretion shall determine to be advisable in order that any consolidation or subdivision of the Preferred Stock, issuance wholly for cash of any shares of Preferred Stock at less than the Fair Market Value, issuance wholly for cash of shares of Preferred Stock or securities which by their terms are convertible into or exchangeable for shares of Preferred Stock, stock dividends or issuance of rights, options or warrants referred to hereinabove in this Section 11, hereafter made by the Company to holders of its Preferred Stock, shall not be taxable to such shareholders. (n) The Company covenants and agrees that it shall not, at any time after the Distribution Date, (i) consolidate with, (ii) merge with or into, or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction or a series of related transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries taken as a whole, to any other Person or Persons if (x) at the time of or immediately after such consolidation, merger or sale there are any rights, warrants or other instruments outstanding or agreements or arrangements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights, or (y) prior to, simultaneously with or immediately after such consolidation, merger or sale the shareholders of a Person who constitutes, or would constitute, the "Principal Party" for the purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates. The Company further covenants and agrees that after the Distribution Date it will not, except as permitted by Section 23 or Section 27 hereof, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights. (o) In the event the Company shall at any time after the date of this Agreement and prior to the Distribution Date (i) declare a dividend on the outstanding Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of shares or (iv) issue any shares of its capital stock in a reclassification of the outstanding Common Stock, the number of Rights associated with each share of Common Stock shall be proportionately adjusted so that the number of Rights thereafter associated with each share of Common Stock following any such event shall equal the result obtained by multiplying the number of Rights associated with each share of Common Stock immediately prior to such event by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of any such event listed in clauses (i), (ii), (iii) or (iv) above and the denominator of which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event listed in clauses (i), (ii), (iii) or (iv) above. (p) The exercise of Rights under Section 11(a)(ii) shall only result in the loss of rights under Section 11(a)(ii) to the extent so exercised and shall not otherwise affect the rights of holders of Right Certificates under this Rights Agreement, including rights to purchase securities of the Principal Party following a Section 13 Event which has occurred or may thereafter occur, as set forth in Section 13 hereof. Upon exercise of a Right Certificate under Section 11(a)(ii), the Rights Agent shall return such Right Certificate duly marked to indicate that such exercise has occurred. Section 12. Certificate of Adjusted Exercise Price or Number of Shares. Whenever an adjustment is made as provided in Section 11, Section 13 or Section 23(d) hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the Preferred Stock and the Common Stock a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate in accordance with Section 26 hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment contained therein and shall not be deemed to have knowledge of any such adjustment unless and until it shall have received such certificate. Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary of the Company in a transaction which is not prohibited by Section 11(n) hereof), and the Company shall not be the continuing or surviving corporation of such consolidation or merger, (y) any Person (other than a Subsidiary of the Company in a transaction which is not prohibited by Section 11(n) hereof) shall consolidate with the Company, or merge with and into the Company and the Company shall be the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the shares of Common Stock shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (z) the Company shall sell, mortgage or otherwise transfer (or one or more of its Subsidiaries shall sell, mortgage or otherwise transfer), in one transaction or a series of related transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company or any Subsidiary of the Company in one or more transactions, each of which is not prohibited by Section 11(n) hereof), then, and in each such case, proper provision shall be made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall have the right to receive, upon the exercise thereof at the then current Exercise Price in accordance with the terms of this Agreement, such number of validly authorized and issued, fully paid and nonassessable shares of freely tradeable Common Stock of the Principal Party (as hereinafter defined in Section 13(b)), free and clear of rights of call or first refusal, liens, encumbrances or other adverse claims, as shall be equal to the result obtained by (1) multiplying the number of such one one-hundredths of a share for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event) by the Exercise Price in effect immediately prior to such first occurrence, and dividing that product by (2) 50% of the Fair Market Value (determined pursuant to Section 11(d) hereof) per share of the Common Stock of such Principal Party on the date of consummation of such consolidation, merger, sale or transfer; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply to such Principal Party; and (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock to permit exercise of all outstanding Rights in accordance with this Section 13(a)) in connection with such consummation as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights. (b) "Principal Party" shall mean (i) in the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to the merger or consolidation; and (ii) in the case of any transaction described in clause (z) of the first sentence of Section 13(a), the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions; provided, however, that in any such case, (x) if the Common Stock of such Person is not at such time and has not been continuously over the preceding 12-month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the Common Stock of which is and has been so registered, "Principal Party" shall refer to such other Person; and (y) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stocks of two or more of which are and have been so registered, "Principal Party" shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value of shares outstanding. (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless prior thereto (x) the Principal Party shall have a sufficient number of authorized shares of its Common Stock which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13, and (y) the Company and each Principal Party and each other Person who may become a Principal Party as a result of such consolidation, merger, sale or transfer shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in Section 13(a) and (b) and further providing that, as soon as practicable after the date of any consolidation, merger, sale or transfer of assets mentioned in Section 13(a), the Principal Party at its own expense will (i) prepare and file a registration statement under the Securities Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and use its best efforts to cause such registration statement to remain effective (with a prospectus that at all times meets the requirements of the Securities Act) until the Expiration Date; (ii) use its best efforts to qualify or register the Rights and the securities purchasable upon exercise of the Rights under the blue sky laws of such jurisdictions as may be necessary or appropriate; (iii) use its best efforts to list (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on a national securities exchange or to meet the eligibility requirements for quotation on NASDAQ; and (iv) deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all material respects with the requirements for registration on Form 10 under the Exchange Act. The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. Section 14. Fractional Rights and Fractional Shares. (a) The Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(o) hereof, or to distribute Right Certificates which evidence fractional Rights. If the Company elects not to issue such fractional Rights, the Company shall pay, in lieu of such fractional Rights, to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the Fair Market Value of a whole Right, as determined pursuant to Section 11(d) hereof. (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock). If the Company elects not to issue such fractional shares, the Company shall pay, in lieu of fractional shares of Preferred Stock that are not integral multiples of one one-hundredth of a share of Preferred Stock, to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the Fair Market Value of one one-hundredth of a share of Preferred Stock. For purposes of this Section 14(b), the Fair Market Value of one one-hundredth of a share of Preferred Stock shall be determined pursuant to Section 11(d) hereof for the Trading Day immediately prior to the date of such exercise. (c) The holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares upon exercise of a Right, except as permitted by this Section 14. Section 15. Rights of Action. All rights of action in respect of this Agreement, other than rights of action vested in the Rights Agent pursuant to Sections 18 and 20 hereof, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Right Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Right evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement. Holders of Rights shall be entitled to recover the reasonable costs and expenses, including attorneys' fees, incurred by them in any action to enforce the provisions of this Agreement. Section 16. Agreement of Right Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: (a) prior to the Distribution Date, each Right will be transferable only simultaneously and together with the transfer of shares of Common Stock; (b) after the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the office or offices of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer; (c) the Company and the Rights Agent may deem and treat the person in whose name a Right Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as the result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority prohibiting or otherwise restraining performance of such obligations; provided, however, that the Company must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible. Section 17. Right Certificate Holder Not Deemed a Shareholder. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the shares of Preferred Stock or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof. Section 18. Concerning the Rights Agent. (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and Administration of this Agreement, including the costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly. The indemnity provided for herein shall survive the expiration of the Rights and the termination of this Agreement. (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate for Common Stock, Preferred Stock, or other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons. Section 19. Merger or Consolidation or Change of Name of Rights Agent. (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust or shareholder services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. (b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound: (a) The Rights Agent may consult with legal counsel selected by it (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of "Fair Market Value") be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by a person believed by the Rights Agent to be the Chairman of the Board, a Vice Chairman of the Board, the President, a Vice President, the Treasurer, any Assistant Treasurer, the Secretary or an Assistant Secretary, the Clerk or an Assistant Clerk of the Company and delivered to the Rights Agent. Any such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. (c) The Rights Agent shall be liable hereunder only for its own negligence, bad faith or willful misconduct. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming void pursuant to Section 7(e) hereof) or any adjustment required under the provisions of Sections 11, 13 or 23(c) hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after receipt of a certificate describing any such adjustment furnished in accordance with Section 12 hereof), nor shall it be responsible for any determination by the Board of Directors of the Company of current market value of the Rights or Preferred Stock pursuant to the provisions of Section 14 hereof; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock or Preferred Stock to be issued pursuant to this Agreement or any Right Certificate or as to whether any shares of Common Stock or Preferred Stock will, when so issued, be validly authorized and issued, fully paid and nonassessable. (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder and certificates delivered pursuant to any provision hereof from any person believed by the Rights Agent to be the Chairman of the Board, any Vice Chairman of the Board, the President, a Vice President, the Secretary or an Assistant Secretary, the Clerk, an Assistant Clerk, the Treasurer or an Assistant Treasurer of the Company, and is authorized to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent under this Agreement and the date on or after which such action shall be taken or such omission shall be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than five Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instructions in response to such application specifying the action to be taken or omitted. (h) The Rights Agent and any shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company or to the holders of the Rights resulting from any such act, omission, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof. (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. (k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause (1) or clause (2) thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company. Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the Company, and to each transfer agent of the Common Stock and the Preferred Stock, by registered or certified mail, and to the holders of the Right Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent (with or without cause) upon thirty (30) days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and Preferred Stock by registered or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the incumbent Rights Agent or the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a corporation organized and doing business under the laws of the United States or of the Commonwealth of Massachusetts or the State of New York (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the Commonwealth of Massachusetts or the State of New York), in good standing, which is authorized under such laws to exercise stock transfer or corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an Affiliate of a corporation described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred Stock, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Exercise Price per share and the number or kind or class of shares of stock or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, or upon the exercise, conversion or exchange of securities hereafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Right Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the person to whom such Right Certificate would be issued, and (ii) no such Right Certificate shall be issued if, and to the extent that, appropriate adjustments shall otherwise have been made in lieu of the issuance thereof. Section 23. Redemption and Termination. (a) The Board of Directors of the Company may, at its option, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.02 per Right, subject to adjustments as provided in Section 23(d) hereof (such redemption price being hereinafter referred to as the "Redemption Price"). The Rights may be redeemed only until the earliest of (i) 5:00 p.m., Boston time, on the tenth day after the Stock Acquisition Date, (ii) the declaration by the Board of Directors that any Person is an Adverse Person, (iii) the occurrence of a Section 13 Event, or (iv) the Final Expiration Date. The Rights may not be redeemed at any time while there is an Acquiring Person or an Adverse Person or at any time on or after the date of a change (resulting from one or more proxy or consent solicitations) in a majority of the directors in office at the commencement of any such solicitation if any Person who is a participant in any such solicitation is an Adverse Person or has stated (or, if upon the commencement of such solicitation a majority of the Board of Directors of the Company has determined in good faith) that such Person (or any of its Affiliates or Associates) intends to take, or may consider taking, any action which would result in such person becoming an Acquiring Person or which would cause the occurrence of a Triggering Event unless there are Disinterested Directors then in office and redemption of the Rights is authorized by the Board of Directors, including at least a majority of the Disinterested Directors. (b) Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. Promptly after the action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to the Rights Agent and to all such holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23, or in connection with the purchase, acquisition or redemption of shares of Common Stock prior to the Distribution Date. (c) The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock (based on the Fair Market Value of the Common Stock as of the time of redemption) or any other form of consideration deemed appropriate by the Board. (d) In the event the Company shall at any time after the date of this Rights Agreement (i) pay any dividend on Common Stock in shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock into a greater number of shares or (iii) combine the outstanding shares of Common Stock into a smaller number of shares of the outstanding shares of Common Stock, then and in each such event the Redemption Price after such event shall equal the Redemption Price immediately prior to such event multiplied by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which is the number of shares of Common Stock outstanding immediately after such event; provided, however, that in each case such adjustment to the Redemption Price shall be made only if the amount of the Redemption Price shall be reduced or increased by $0.002 per Right. Section 24. Exchange (a) The Company may, only if there are Disinterested Directors then in office and such action is authorized by the Board of Directors, including at least a majority of the Disinterested Directors then in office, at any time on or after the occurrence of a Section 11(a)(ii) Event, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock or Preferred Stock (or any combination thereof) at an exchange ratio of one share of Common Stock or one one-hundredth of a share of Preferred Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the "Exchange Ratio"). (b) Immediately upon the action of the Company ordering the exchange of any Rights pursuant to subsection (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of shares of Common Stock or one one-hundredths of a share of Preferred Stock (or any combination thereof) equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give notice of any such exchange in accordance with Section 26 hereof; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. Each such notice of exchange will state the method by which the exchange of the shares of Common Stock or Preferred Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights. Section 25. Notice of Certain Events. (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make any other distribution to the holders of Preferred Stock (other than a regular periodic cash dividend out of earnings or retained earnings of the Company), or (ii) to offer to the holders of Common Stock or Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Common Stock or Preferred Stock or shares of stock of any class or any other securities, rights or options, or (iii) to effect any reclassification of its Common Stock or Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Common Stock or Preferred Stock), or (iv) to effect any consolidation or merger into or with, or to effect any sale, mortgage or other transfer (or to permit one or more of its Subsidiaries to effect any sale, mortgage or other transfer), in one transaction or a series of related transactions, of 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person (other than a Subsidiary of the Company in one or more transactions each of which is not prohibited by Section 11(n) hereof), or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the shares of Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the shares of Common or Preferred Stock for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Common or Preferred Stock, whichever shall be the earlier. (b) In case any Section 11(a)(ii) Event shall occur, then the Company shall as soon as practicable thereafter give to each registered holder of a Right Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) hereof. Section 26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: Perini Corporation 73 Mt. Wayte Avenue Framingham, Massachusetts 01701 Attention: Corporate Secretary Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: The First National Bank of Boston P.O. Box 1865 Boston, MA 02105-1865 Attention: Shareholder Services Division Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate (or, prior to the Distribution Date, to the holder of any certificate representing shares of Common Stock) shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. Section 27. Supplements and Amendments. Prior to the Distribution Date and subject to the penultimate sentence of this Section 27, the Company and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement as the Company may deem necessary or desirable without the approval of any holders of certificates representing shares of Common Stock. From and after the Distribution Date and subject to the penultimate sentence of this Section 27, the Company and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the approval of any holder of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) to shorten or lengthen any time period hereunder (which shortening or lengthening shall be effective only if there are Disinterested Directors then in office and shall require the concurrence of such Disinterested Directors if (A) such supplement or amendment occurs at or after the time a Person becomes an Acquiring Person or an Adverse Person or (B) such supplement or amendment occurs on or after the date of a change (resulting from one or more proxy or consent solicitations) in a majority of the directors then in office at the commencement of such solicitation if any Person who is a participant in such solicitation is an Adverse Person or has stated (or, if upon the commencement of such solicitation, a majority of the Board of Directors of the Company has determined in good faith) that such Person (or any of its Affiliates or Associates) intends to take, or may consider taking, any action which would result in such Person becoming an Acquiring Person or which would cause the occurrence of a Triggering Event), or (iv) to change or supplement the provisions hereof in any manner which the Company may deem necessary or desirable and which shall not adversely affect the interests of the holders of Right Certificates (other than an Acquiring Person, an Adverse Person or any Affiliate or Associate of such a Person); provided, however, that this Agreement may not be supplemented or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating to when the Rights may be redeemed at such time as the Rights are not then redeemable or (B) any other time period unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and the benefits to, the holders of Rights. Upon the delivery of such certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment. Notwithstanding anything contained in this Agreement to the contrary, no supplement or amendment shall be made on or after the Distribution Date which changes the Redemption Price, the Final Expiration Date, the Exercise Price or the number of one one-hundredths of a share of Preferred Stock for which a Right is exercisable or which affects any right vested in the Rights Agent. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock. Section 28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. Section 29. Determinations and Actions by the Board of Directors. For all purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in effect on the date hereof. The Board of Directors of the Company (with, where specifically provided for herein, the concurrence of the Disinterested Directors) shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board (with, where specifically provided for herein, the concurrence of the Disinterested Directors) or to the Company, or as may be necessary or advisable in the administration of this Agreement, including without limitation, the right and power to (i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board of Directors (or, where specifically provided for herein, by the Disinterested Directors) in good faith shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject any member of the Board of Directors or any of the Disinterested Directors to any liability to the holders of the Rights or to any other person. Section 30. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, registered holders of the Common Stock). Section 31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company (including, if at the time of such determination, there is an Acquiring Person or an Adverse Person, a majority of the Disinterested Directors then in office) determines in its good faith judgment that severing the invalid language from the Agreement would adversely affect the purpose or effect of the Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the close of business on the tenth day following the date of such determination by the Board of Directors. Section 32. Governing Law. This Agreement, each Right and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the Commonwealth of Massachusetts and for all purposes shall be governed by and construed in accordance with the laws of such Commonwealth applicable to contracts to be made and to be performed entirely within Massachusetts. Section 33. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 34. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their respective corporate seals to be hereunto affixed, all as of the day and year first above written. [Corporate Seal] PERINI CORPORATION By Name: Title: [Corporate Seal] THE FIRST NATIONAL BANK OF BOSTON, as Rights Agent By Name: Title: EX-4 5 EXHIBIT A TO SHAREHOLDER RIGHTS AGREEMENT EXHIBIT A - ---------- FORM OF CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK of PERINI CORPORATION Pursuant to General Laws, Chapter 156B, Section 26 of 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 07101, 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 relative rights and preferences thereof was duly adopted. 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 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 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 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. 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. 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 withih 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 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 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 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 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. IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto signed our names this 23rd day of September in the year 1988. President Clerk EX-4 6 EXHIBIT B TO SHAREHOLDER RIGHTS AGREEMENT EXHIBIT B - ---------- [Form of Right Certificate] Certificate No. R- ____________ Rights NOT EXERCISABLE AFTER SEPTEMBER 23, 1998 OR EARLIER IF NOTICE OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.02 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID]. (THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID UNDER CERTAIN CIRCUMSTANCES AS SPECIFIED IN SECTION 7(6) OF THE RIGHTS AGREEMENT.] Right Certificate PERINI CORPORATION This certifies that ___________________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Shareholder Rights Agreement dated as of September 23, 1988, as amended as of May 17, 1990 (the "Rights Agreement") between Perini Corporation, a Massachusetts corporation (the "Company"), and The First National Bank of Boston (the "Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to the close of business on September 23, 1998 at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one one-hundredth of a share of a fully paid, non-assessable share of the Series A Junior Participating Cumulative Preferred Stock (the "Preferred Stock") of the Company, at a purchase price of $________ per one one-hundredth of a share (the "Exercise Price"), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase and the related Certificate duly executed. The number of Rights evidenced by this Right Certificate (and the number of shares which may be purchased upon exercise thereof) set forth above, and the Exercise Price per share set forth above, are the number and Exercise Price as of September 23, 1988, based on the Preferred Stock as constituted at such date. Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Right Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a Person who, after such transfer, became a Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event. As provided in the Rights Agreement, the Exercise Price and the number of shares of Preferred Stock or other securities which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events. This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the principal offices of the Company and the Rights Agent and are also available upon written request to the Company or the Rights Agent. This Right Certificate, with or without other Right Certificates, upon surrender at the office or offices of the Rights Agent designated for such purpose, may be exchanged for another Right Certificate or Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of shares of Preferred Stock as the Rights evidenced by the Right Certificate or Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Certificates for the number of whole Rights not exercised. Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Board of Directors of the Company at its option at a redemption price of $0.02 per Right (payable in cash, Common Stock or other consideration deemed appropriate by the Board of Directors). No fractional shares of stock will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement. No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Preferred Stock, Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Rights Agreement. This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. [Corporate Seal] PERINI CORPORATION Attested: By___________________________ Name: Title: [Chairman, President By________________________ or Vice President] [Clerk or Assistant Clerk] Countersigned: _____________________________ Name: THE FIRST NATIONAL BANK OF Title: [Treasurer or BOSTON, as Rights Agent Assistant Treasurer] - -------------------------- Authorized Signature [Form of Reverse Side of Right Certificate] FORM OF ASSIGNMENT FOR VALUE RECEIVED_____________________________________________ hereby sells, assigns and transfers unto - --------------------------------------------------------------- (Please print name and address of transferee) - --------------------------------------------------------------- this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint _______________ Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution. Dated: _______________, 19__ ---------------------------- Signature Signature Guaranteed:________________________ CERTIFICATE ----------- The undersigned hereby certifies by checking the appropriate boxes that: (1) the Rights evidenced by this Right Certificate ____ are _____ are not being transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); and (2) after due inquiry and to the best knowledge of the undersigned, the undersigned ___ did ___ did not directly or indirectly acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: _____________, 19__ _____________________________ Signature NOTICE ------ The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever. FORM OF ELECTION TO PURCHASE ---------------------------- (To be executed if holder desires to exercise the Right Certificate.) To PERINI CORPORATION: The undersigned hereby irrevocably elects to exercise ____________ Rights represented by this Right Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of: Please insert social security or other identifying number: ___________________________________ - ---------------------------------------------------------------- (Please print name and address) - ---------------------------------------------------------------- If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance of such Rights shall be registered in the name of and delivered to: Please insert social security or other identifying number:____________________________________ - ---------------------------------------------------------------- (Please print name and address) - ---------------------------------------------------------------- - ---------------------------------------------------------------- Dated: ______________, 19__ ----------------------------- Signature Signature Guaranteed:_______________________ CERTIFICATE ----------- The undersigned hereby certifies by checking the appropriate boxes that: (1) the Rights evidenced by this Right Certificate ____ are ____ are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); and (2) after due inquiry and to the best knowledge of the undersigned, the undersigned ____ did ____ did not directly or indirectly acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated:_________________, 19__ _____________________________ Signature NOTICE ------ The signature to the foregoing Election to Purchase and Certificate must correspond to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever. EX-4 7 EXHIBIT C TO SHAREHOLDER RIGHTS AGREEMENT EXHIBIT C - --------- SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK On September 23, 1988, the Board of Directors of Perini Corporation (the "Company") declared a dividend distribution of one Preferred Stock Purchase Right for each outstanding share of Common Stock of the Company to stockholders of record at the close of business on October 6, 1988. Each Right entitles the registered holder to purchase from the Company a unit consisting of one one-hundredth of a share (a "Unit") of Series A Junior Participating Cumulative Preferred Stock, par value $1.00 per share (the "Preferred Stock"), at a cash Exercise Price of $100.00 per Unit, subject to adjustment. The description and terms of the Rights are set forth in a Shareholder Rights Agreement dated as of September 23, 1988, as amended as of May 17, 1990 between the Company and The First National Bank of Boston, as Rights Agent. Initially, the Rights will not be exercisable and will be attached to all outstanding shares of Common Stock. No separate Right Certificates will be distributed until the Distribution Date. The Rights will separate from the Common Stock and the Distribution Date will occur upon the earliest of (i) 10 days following a public announcement that a person or group of affiliated or associated persons (other than the Company and certain of its affiliates and other exempted persons)(an "Acquiring Person") has acquired beneficial ownership of 20% or more of the outstanding shares of Common Stock (the date of said announcement being referred to as the "Stock Acquisition Date"), (ii) 10 business days following the commencement of a tender offer or exchange offer that would result in a person or group becoming an Acquiring Person or (iii) the declaration by the Board of Directors that any person is an "Adverse Person." The Board of Directors could declare a person to be an Adverse Person after (1) a determination that such person, alone or together with its affiliates and associates, has become the beneficial owner of 10% or more of the outstanding shares of Common Stock and (2) a determination by the Board of Directors, after reasonable inquiry and investigation, including such consultation, if any, with such persons as such directors shall deem appropriate, that (a) such beneficial ownership by such person is intended to cause, is reasonably likely to cause or will cause the Company to repurchase the Common Stock beneficially owned by such person or to cause pressure on the Company to take action or enter into a transaction or series of transactions which would provide such person with short-term financial gain under circumstances where the Board of Directors determines that the best long-term interests of the Company and its stockholders, but for the actions and possible actions of such person, would not be served by taking such action or entering into such transaction or series of transactions at that time or (b) such beneficial ownership is causing or is reasonably likely to cause a material adverse impact (including, but not limited to, impairment of relationships with customers or impairment of the Company's ability to maintain its competitive position) on the business or prospects of the Company; provided, however, that the Board of Directors of the Company may not declare a person to be an Adverse Person if, prior to the time that such person acquired 10% or more of the shares of Common Stock then outstanding, such person provided to the Board of Directors in writing a statement of such person's purpose and intentions in connection with the proposed acquisition of Common Stock, together with any other information reasonably requested of such person by the Board of Directors, and the Board of Directors, based on such statement and such reasonable inquiry and investigation, including such consultation, if any, with such persons as the directors shall deem appropriate, determines to notify and notifies such person in writing that it will not declare such person to be Adverse Person; provided further, that the Board of Directors may expressly condition in any manner a determination not to declare a person an Adverse Person on such conditions as the Board of Directors may select, including without limitation such person's not acquiring more than a specified amount of stock and/or on such person's not taking actions inconsistent with the purposes and intentions disclosed by such person in the statement provided to the Board of Directors. No delay or failure by the Board of Directors to declare a person to be an Adverse Person shall in any way waive or otherwise affect the power of the Board of Directors subsequently to declare a person to be an Adverse Person. In the event that the Board of Directors should at any time determine, upon reasonable inquiry and investigation, including consultation with such persons as the directors shall deem appropriate, that such person has not met or complied with any condition specified by the Board of Directors, the Board of Directors may at any time thereafter declare the person to be an Adverse Person. Until the Distribution Date (or earlier redemption or expiration of the Rights), (a) the Rights will be evidenced by the Common Stock certificates and will be transferred with and only with such Common Stock certificates, (b) new Common Stock certificates issued after October 6, 1988 will contain a notation incorporating the Shareholder Rights Agreement by reference, and (c) the surrender for transfer of any certificates for Common Stock will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate. The Rights are not exercisable until the Distribution Date and will expire at the close of business on September 23, 1998, unless previously redeemed by the Company as described below. As soon as practicable after the Distribution Date, Right Certificates will be mailed to holders of record of Common Stock as of the close of business on the Distribution Date and, thereafter, the separate Right Certificates alone will represent the Rights. Except as otherwise determined by the Board of Directors, only shares of Common Stock issued prior to the Distribution Date will be issued with Rights. In the event that a Stock Acquisition Date occurs or the Board of Directors determines that a person is an Adverse Person, proper provision will be made so that each holder of a Right will thereafter have the right to receive upon exercise that number of Units of Preferred Stock of the Company having a market value of two times the exercise price of the Right (such right being referred to as the "Subscription Right"). In the event that, at any time following the Stock Acquisition Date, (i) the Company is acquired in a merger or other business combination transaction or (ii) 50% or more of the Company's assets or earning power is sold, each holder of a Right shall thereafter have the right to receive, upon exercise, common stock of the acquiring company having a market value equal to two times the exercise price of the Right (such right being referred to as the "Merger Right"). The holder of a Right will continue to have the Merger Right whether or not such holder has exercised the Subscription Right. Rights that are or were beneficially owned by an Acquiring Person or an Adverse Person may (under certain circumstances specified in the Shareholder Rights Agreement) become null and void. At any time after a Stock Acquisition Date occurs or the Board of Directors determines that a person is an Adverse Person, the Board of Directors may, at its option, exchange all or any part of the then outstanding and exercisable Rights for shares of Common Stock or Units of Preferred Stock at an exchange ratio of one share of Common Stock or one Unit of Preferred Stock per Right. The Exercise Price payable, and the number of Units of Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than the current market price of the Preferred Stock, or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above). With certain exceptions, no adjustment in the Exercise Price will be required until cumulative adjustments amount to at least 1% of the Exercise Price. The Company is not obligated to issue fractional Units. If the Company elects not to issue fractional Units, in lieu thereof an adjustment in cash will be made based on the fair market value of the Preferred Stock on the last trading date prior to the date of exercise. Any of the provisions of the Shareholder Rights Agreement may be amended by the Board of Directors of the Company at any time prior to the Distribution Date. From and after the Distribution Date, the Board of Directors of the Company may, subject to certain limitations specified in the Rights Agreement, amend the Rights Agreement to cure any ambiguity, defect or inconsistency, to shorten or lengthen any time period under the Rights Agreement, or to make other changes that do not adversely affect the interests of the Rights holders (excluding the interests of Acquiring Persons, Adverse Persons or their Affiliates or Associates). The Rights may be redeemed in whole, but not in part, at a price of $0.02 per Right (payable in cash, Common Stock or other consideration deemed appropriate by the Board of Directors) by the Board of Directors at any time prior to the date on which a person is declared to be an Adverse Person, the tenth day after the Stock Acquisition Date or the occurrence of an event giving rise to the Merger Right. Immediately upon the action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and thereafter the only right of the holders of Rights will be to receive the redemption price. Until a Right is exercised, the holder will have no rights as a stockholder of the Company (beyond those as an existing stockholder), including the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Preferred Stock (or other consideration) of the Company or for common stock of an acquiring company as set forth above. A copy of the Shareholder Rights Agreement dated as of September 23, 1988, as amended and restated as of May 17, 1990, has been filed with the Securities and Exchange Commission as an Exhibit to a Current Report on Form 8-K dated May 17, 1990. A copy of the Shareholder Rights Agreement is available free of charge from the Company. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Shareholder Rights Agreement. EX-27 8 FDS -- WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 This schedule contains summary financial information extracted from Consolidated Balance Sheets as of December 31, 1995 and the Consolidated Statements of Operations for the twelve months ended December 31, 1995 as qualified in its entirety by reference to such financial statements. 0000077543 1,000 12-MOS DEC-31-1995 DEC-31-1995 29,059 0 180,978 0 14,933 330,345 39,865 (27,299) 539,251 293,800 84,155 100 0 4,985 0 539,251 0 1,101,068 0 (1,086,213) 814 0 (8,582) (30,196) 2,611 (27,585) 0 0 0 (27,585) (6.38) 0 Includes Equity in Construction Joint Ventures of $61,846, Unbilled Work of $28,304, and Other Short-Term Assets of $15,225, not currently reflected in this tag list. Includes investments in and advances to Real Estate Joint Ventures of $148,225, Land Held for Sale or Development of $41,372, and Other Long-Term Assets of $6,743 not currently reflected in this tag list. Includes Deferred Income Taxes and Other Liabilities of $52,663, Minority Interest of $3,027, Paid-In Surplus of $57,659, Retained Earnings of $52,062, ESOT Related Obligations of $(4,965), and Treasury Stock of $(4,235). Includes General, Administrative and Selling Expenses of $37,283, not currently reflected on this tag list.
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