-----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, VzpJPBZP9DB15cm8dKIXWA1qdUdp+OSQ0t3lVoaZAhC7N2VfY5Ee4LTk5mR/HYXB cghx65JNQNPwAPz6I3VhMw== 0000077543-03-000006.txt : 20030331 0000077543-03-000006.hdr.sgml : 20030331 20030331090844 ACCESSION NUMBER: 0000077543-03-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030331 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: 03627295 BUSINESS ADDRESS: STREET 1: 73 MT WAYTE AVE CITY: FRAMINGHAM STATE: MA ZIP: 01701 BUSINESS PHONE: 5086282000 10-K 1 form10k_2002.htm 2002 FORM 10-K 2002 Form 10-K
FORM 10-K

Securities and Exchange Commission                                                                                Commission File No. 1-6314
Washington, DC 20549

(Mark One)

[X]      Annual Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934.

For the fiscal year ended December 31, 2002

[   ]      Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to ____________

Perini Corporation
(Exact name of registrant as specified in its charter)

Massachusetts                                                                                                                             04-1717070
(State of Incorporation)                                                                                                            (IRS Employer Identification No.)

73 Mt. Wayte Avenue, Framingham, Massachusetts                                                            01701
(Address of principal executive offices)                                                                                  (Zip Code)

(508) 628-2000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class                                                                        Name of each exchange on which registered

Common Stock, $1.00 par value                                                   The American Stock Exchange

$2.125 Depositary Convertible Exchangeable                            The American Stock Exchange
   Preferred Shares, each representing 1/10th
   Share of $21.25 Convertible Exchangeable
   Preferred Stock, $1.00 par value

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X

Indicate by check mark if registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes      No X

The aggregate market value of voting Common Stock held by nonaffiliates of the registrant is $20,659,948 as of June 28, 2002, the last business day of the registrant's most recently completed second quarter. The Company does not have any non-voting Common Stock.

The number of shares of Common Stock, $1.00 par value per share, outstanding at February 24, 2003 is 22,664,135.

Documents Incorporated by Reference

Portions of the annual proxy statement for the year ended December 31, 2001 are incorporated by reference in Part III. 

                                                 PERINI CORPORATION

                                               INDEX TO ANNUAL REPORT

                                                    ON FORM 10-K

                                                                                                            PAGE

PART I

Item 1:                 Business                                                                            2 - 11

Item 2:                 Properties                                                                          12

Item 3:                 Legal Proceedings                                                                   12 - 16

Item 4:                 Submission of Matters to a Vote of Security Holders                                 16 - 17

PART II

Item 5:                 Market for the Registrant's Common Stock and Related Stockholder Matters            18

Item 6:                 Selected Financial Data                                                             19 - 20

Item 7:                 Management's Discussion and Analysis of Financial Condition and Results of
                        Operations                                                                          21 - 28

Item 7A:                Quantitative and Qualitative Disclosure About Market Risk                           28

Item 8:                 Financial Statements and Supplementary Data                                         28

Item 9:                 Change in and Disagreements with Accountants on Accounting and Financial
                        Disclosure                                                                          28

PART III

Item 10:                Directors and Executive Officers of the Registrant                                  29

Item 11:                Executive Compensation                                                              29

Item 12:                Security Ownership of Certain Beneficial Owners and Management and
                        Related Stockholder Matters                                                         29

Item 13:                Certain Relationships and Related Transactions                                      29

PART IV

Item 14:                Controls and Procedures                                                             30

Item 15:                Exhibits, Financial Statement Schedules and Reports on Form 8-K                     30 - 31

Signatures                                                                                                  32

Certifications                                                                                              33 - 34

PART I.

ITEM 1. BUSINESS

Forward-looking Statements

      The statements contained in this Annual Report on Form 10-K that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation, statements regarding the Company's or its management's expectations, hopes, beliefs, intentions or strategies regarding the future. These forward-looking statements are based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the Company) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the continuing validity of the underlying assumptions and estimates of total forecasted project revenues, costs and profits and project schedules; the outcomes of pending or future litigation, arbitration or other dispute resolution proceedings; the availability of borrowed funds on terms acceptable to the Company; changes in federal and state appropriations for infrastructure projects; possible changes or developments in worldwide or domestic political, social, economic, business, industry, market and regulatory conditions or circumstances; and actions taken or not taken by third parties including the Company's customers, suppliers, business partners, and competitors and legislative, regulatory, judicial and other governmental authorities and officials. Also see "Risk Factors" on pages 9 and 10. Should one or more of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Introduction

      Perini Corporation and its subsidiaries (the "Company", unless the context indicates otherwise) are engaged in the construction business. The Company was incorporated in 1918 as a successor to businesses which had been engaged in providing construction services since 1894. The Company currently 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 two basic segments or operations: building and civil.

      The general building and civil contracting 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, plans and specifications contained in a construction contract. The Company provides these services by using traditional general contracting arrangements, such as fixed price, guaranteed maximum price and cost plus award fee contracts and, to a lesser extent, construction management or design-build contracting arrangements. These contract types and the risks generally inherent therein are discussed below:

  • Fixed price contracts (“FP”), which include fixed unit price contracts, are generally used in competitively bid public civil construction projects and, to a lesser degree, building construction projects and generally commit the contractor to provide all of the resources required to complete a project for a fixed sum or at fixed unit prices. Usually FP contracts transfer more risk to the contractor but offer the opportunity, under favorable circumstances, for greater profits. With the Company’s publicly bid civil construction projects, fixed price contracts continue to represent a significant portion of the backlog. Also, design-build projects are generally performed under a FP contract.

  • Cost plus award fee contracts (“CPAF”) provide for reimbursement of the costs, as defined, of resources required to complete a project, but usually have a lower base fee and an incentive fee based on cost and/or schedule performance. CPAF contracts serve to minimize the contractor’s financial risk, but may limit profits.
  • Guaranteed maximum price contracts (“GMP”) provide for a cost plus fee arrangement up to a maximum agreed upon price. These contracts place risks on the contractor for amounts in excess of the GMP, but may permit an opportunity for greater profits than under CPAF contracts through sharing agreements with the owner on any cost savings that may be realized. A significant portion of the Company’s building work is performed under GMP contracts.

  • 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 agreements with subcontractors. CM contracts serve to minimize the contractor’s financial risk, but may limit profit relative to the overall scope of a project.

      Under certain situations which include, but are not limited to, contract type, project size, complexity or geographic location, the Company will continue to attempt to minimize its financial and/or operational risk, as it has in the past, by participating in construction joint ventures, often as the sponsor or manager of the project, for the purpose of bidding and, if awarded, performing the agreed upon construction services. These joint ventures are based on a 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 on a joint and several basis. Although joint venture arrangements tend to minimize the risk of loss, the Company's initial obligations to the joint venture may increase as a result of the joint and several nature of the arrangement if one of the other participants is financially unable to bear its portion of required capital contributions.

      In the normal course of the 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 decides to withdraw from markets which are no longer economically attractive.

Operating Structure

      The building and civil segments operate as decentralized profit centers as more fully described below and independently identify, estimate and negotiate or submit bids to obtain projects and are accountable for the successful completion of projects awarded. Each segment has Company personnel assigned to perform the following functions: executive which coordinates and has overall responsibility for the other functions performed by the segment; work acquisition which includes business development, marketing, preconstruction services and the estimating process; operations which provides overall planning and supervision of the project teams including project staffing, such as project managers, superintendents, engineers, schedulers, equipment and safety personnel, as required for each project; and financial control which includes staffing of financial control personnel assigned to projects. These segments are supported by certain centralized corporate functions, including treasury, human resources, risk management, legal, internal audit, information technology, tax and accounting functions.

      The building operation provides its services through regional offices located in several metropolitan areas: Boston, serving New England, the Mid-Atlantic and Southeast areas; and Phoenix and Las Vegas, serving Arizona, Nevada and California. The building operation also maintains satellite offices in Carlsbad, California, Celebration, Florida and Detroit, Michigan. The Company's building contracting services are provided by Perini Building Company, Inc., a wholly owned subsidiary. This 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 and is well known for its hospitality and gaming industry projects, and for its health care facilities, correctional facilities, sports complexes, multi-unit residential, commercial, civic, cultural and educational facilities. In addition, the Company completed the acquisition of James A. Cummings, Inc. ("Cummings"), an established building contractor in the South Florida region, in January 2003. Cummings will operate as a wholly owned subsidiary of the Company as part of the building construction segment.

      Perini Management Services, Inc. ("PMSI", formerly Perini International Corporation), a wholly owned subsidiary, provides a broad range of construction services (primarily building) to United States government agencies in the U.S. and selected overseas locations, funded primarily in U.S. dollars. In addition, a joint venture managed by PMSI provides maintenance/modification and support services at ten nuclear power generating plant sites in the Midwest and in the East under a multi-year contract with a private client. In selected situations, PMSI pursues other work internationally. PMSI is combined with Perini Building Company to form the Company's building segment for financial reporting purposes.

      The civil operation provides its services through regional offices located in the Boston and New York City metropolitan areas and undertakes large public civil projects in the East, with current emphasis on the major New York City and Boston metropolitan areas, and selectively in other geographic locations in the United States. The Company's civil contracting services are provided by "Perini Civil", which is an operating division of Perini Corporation, and include construction and rehabilitation of highways, bridges, subways, tunnels, airports, marine projects and waste water treatment facilities. The Company has been active in civil operations since 1894 and believes that it has particular expertise in large and complex civil construction projects. The Company believes that infrastructure rehabilitation is, and will continue to be, a significant market in 2003 and beyond.

Strategy

      Overall, the Company continues to focus on optimizing value for its shareholders by actively pursuing higher margin projects in markets where it has considerable expertise and developing project opportunities through its strong client relationships, as well as managing its operations to achieve on-time delivery, tight cost controls, safe working conditions and high quality standards. The Company's current strategy is to concentrate on the civil construction market in the East and specialized niche building construction markets throughout the United States, with the goal in both markets to continue to increase profit margins. In addition, the Company is continuing the process of pursuing a strategy to profitably expand its construction business internally or through acquisition as it recently did with the acquisition of Cummings in January 2003. (See Note 14 of Notes to Consolidated Financial Statements.) The Company believes the best opportunities for growth in the coming years for its civil construction business are in the urban infrastructure market, particularly in metropolitan New York and Boston, and selectively in other large, complex projects throughout the United States. The Company's strategy in building construction is to take advantage of its positive reputation in certain niche markets and to expand into new markets compatible with its expertise. Internally, the Company plans to continue to improve efficiency through strict attention to project control procedures and the control of overhead expenses. Finally, the Company continues to expand its expertise to assist public owners to develop necessary facilities through creative alternative project delivery methods, including public/private ventures, design-build and design-build-operate-maintain ("DBOM") arrangements.

Revenues

      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, 2002.

                                                                                           Annual Report
                                                                                           on Form 10-K
                                            Caption                                         Page Number

Selected Consolidated Financial Information                                                   19 - 20

Management's Discussion and Analysis                                                          21 - 28

Note 12 of Notes to Consolidated Financial Statements entitled "Business Segments"            62 - 64

      While the "Selected Consolidated Financial Information" presents certain business segment information for purposes of consistency of presentation for the five years ended December 31, 2002, additional business segment information required by Statement of Financial Accounting Standards No. 131, "Disclosures About Segments of an

Enterprise and Related Information", for the three years ended December 31, 2002 is included in Note 12 of Notes to Consolidated Financial Statements.

      A summary of revenues by business segment for each of the three years in the period ended December 31, 2002 is as follows (in thousands):

                    Revenues For Year Ended December 31,
                ---------------------------------------------
                     2002            2001            2000
                -------------   -------------   -------------

Building          $  772,513     $ 1,199,439     $   826,191
Civil                312,528         353,957         279,469
                -------------   -------------   -------------
     Total        $1,085,041     $ 1,553,396     $ 1,105,660
                =============   =============   =============

      During 2002, the Company was active in the building, civil and, to a lesser extent, the international construction markets, and performed work for over 44 federal, state and local governmental agencies or authorities and private customers under approximately 78 separate contracts. A significant portion of the increase in building construction revenues during 2001 was due to the impact of the Mohegan Sun Phase II Expansion Project ("Mohegan Sun Project") initially obtained in 1999 (see comments under "Backlog" below) and two large hotel/casino projects in the southwestern region of the United States, all three of which were substantially complete in early 2002. Due to the Company's trend toward fewer but larger contracts, a material part of the Company's business has been dependent on a limited number of private customers and/or public agencies in recent years (see Note 12 of Notes to Consolidated Financial Statements).

                       Revenues by Client Source

                                                Year Ended December 31,
                                             -------------------------------
                                              2002        2001       2000
                                             --------    -------    --------

Private Owners                                 65%        73%         68%
Federal Governmental Agencies                   5          3           4
State, Local and Foreign Governments           30          24         28
                                             --------    -------    --------
                                              100%        100%       100%
                                             ========    =======    ========

      Historically, a high percentage of Company contracts have been of the fixed price and GMP type. A summary of revenues and backlog by type of contract for the most recent three years follows:


     Revenues - Year Ended
         December 31,                                  Backlog as of December 31,
- --------------------------------                      ------------------------------

  2002        2001       2000                          2002       2001       2000
- ----------  ---------  ---------                      --------   --------   --------

   35%        25%        32%    Fixed Price             30%        41%        46%
   65          75         68    CPAF, GMP or CM         70         59         54
- ----------  ---------  ---------                      --------   --------   --------
  100%        100%       100%                          100%       100%       100%
==========  =========  =========                      ========   ========   ========

Backlog

      The Company includes a construction project in its backlog at such times as a contract is awarded or a firm letter of commitment is obtained, and funding is in place. As a result, the backlog figures are firm, subject only to the cancellation provisions contained in the various contracts. Historically, these provisions have not had a material adverse effect on the Company.

      As of December 31, 2002, the Company had a year end construction backlog of $990 million compared to $1.214 billion at December 31, 2001 and to the record year end backlog of $1.789 billion at December 31, 2000. The backlog is summarized below by geographic area and also by business segment:

                                     Backlog (in thousands) as of December 31,
                     --------------------------------------------------------------------------
                              2002                      2001                      2000
                     -----------------------   -----------------------   ----------------------

Northeast               $ 219,619      22%      $   548,728      45%      $ 1,219,166     68%
Mid-Atlantic               81,153       8            30,261       3            53,334      3
Southeast                 106,742      11             9,058       1           115,165      6
Midwest                   172,539      17           247,648      20           110,867      6
Southwest                 134,381      14           141,478      12           206,796     12
West                      198,251      20           135,709      11              885       -
Foreign                    77,490       8           100,653       8            82,518      5
                     -------------   -------   -------------   -------   -------------  -------

Total                   $ 990,175     100%      $ 1,213,535     100%      $ 1,788,731    100%
                     =============   =======   =============   =======   =============  =======

      The relatively high level of backlog in the Northeast region of the United States and overall record backlog at the end of 2000 was primarily due to the Mohegan Sun Project and several civil projects obtained as the Company continued to meet the needs of the growing infrastructure and rehabilitation market in this region, particularly the Metropolitan New York and Boston areas. The primary reasons for the decrease in backlog in the Northeast region and overall at the end of 2001 are due to the substantial completion of the Mohegan Sun Project and the slow down in the private and public works awards after the terrorist attacks in September of 2001. The primary reasons for the continued decrease in the level of backlog in the Northeast region and overall at the end of 2002 are a temporary decrease in the number of public works projects available to bid in Perini Civil's market area and increased competition encountered from other contractors when bidding on the reduced level of work available. The fluctuation in backlog in the other regions is partly due to the timing of the signing and start-up of new contracts rather than a longer term trend.


                                  Backlog (in thousands) as of December 31,
                 -----------------------------------------------------------------------------
                         2002                       2001                       2000
                 ------------------------   -----------------------    -----------------------

Building             $ 779,613      79%      $   738,546       61%       $ 1,051,364      59%
Civil                  210,562      21           474,989       39            737,367      41
                 --------------   -------   -------------    ------    -------------   -------
Total                $ 990,175     100%      $ 1,213,535      100%       $ 1,788,731     100%
                 ==============   =======   =============    ======    =============   =======

      The Company estimates that approximately $260 million of its backlog at December 31, 2002 will not be completed in 2003.

The Contract Process

      The Company identifies potential projects that it might be interested in pursuing from a variety of sources, including, but not limited to, advertisements by federal, state and local governmental agencies, meetings of the Company's business development personnel with potential customers to discuss their current and future construction projects or programs, meeting with knowledgeable participants in the construction industry such as architects, engineers, bankers and sureties, and general awareness of current events and trends in business and various levels of government spending and budgets.

      After ascertaining the projects available, the Company further refines the list by considering other criteria, such as project size, duration, availability of estimating and project personnel, current backlog, perceived competitive advantages and disadvantages, prior experience on similar projects, contracting agency or owner, geographic location, type of contract and other financial and operational risk factors.

      After deciding which contracts to pursue, the Company usually has to complete a prequalification process with the applicable agency or owner. The prequalification process generally limits bidders to those companies with operational experience and financial capability to effectively complete the particular project(s) in accordance with the plans, specifications and construction schedule.

      The estimating process generally involves three phases. Initially, the Company performs a detailed review of the plans and specifications, summarizes the various types of work involved and related estimated quantities, determines the project duration or schedule, and highlights the unique and riskier aspects of the project. After the initial review, a decision is made to continue to pursue the project or not. Assuming the answer is positive, the Company performs the second phase of the estimating process which consists of estimating the cost and availability of labor, material, equipment, subcontractors and the project team required to complete the project on time and in accordance with the plans and specifications. The final phase consists of a detailed review of the estimate by management including, among other things, assumptions regarding cost, approach, means and methods, productivity and risk. After the final review of the cost estimate, management adds an amount for profit to arrive at the total bid amount.

      Public bids to various governmental agencies are generally awarded to the lowest bidder. Bids or negotiated contracts with public or private owners are generally awarded to the lowest bidder, but many times other factors, such as shorter project schedules or prior experience with the owner, result in the award of the contract based upon factors other than price. Most public sector contracts provide for termination of the contract at the election of the contracting agency. In such events, the Company is generally entitled to receive reimbursement for all costs incurred on the project plus a reasonable profit. Many of the Company's contracts are subject to interim or final completion dates or milestones with liquidated damages assessed against the Company if the specified milestone dates are not achieved. Historically, such provisions have not had a material adverse effect on the Company.

      During the normal course of most projects, the owner and sometimes the contractor initiate modifications or changes to the original contract to reflect, among other things, changes in specifications or design, method or manner of performance, facilities, equipment, materials, site conditions and period for completion of the work. Generally the scope and price of these modifications are documented in a "change order" to the original contract and reviewed, approved and paid in accordance with the normal change order provisions of the contract. Many times, the change orders define the scope of work and the contractor is directed to proceed, but the price of the work is subject to further negotiations after the work is performed by the contractor. Other times, an owner may direct the contractor to perform certain change order work when both scope and price are not approved in advance or are in dispute. If the owner decides the directive does not result in additional compensation to the contractor and the contractor believes the directives to be outside the scope of the original bid documents, or if the physical conditions found on the project site are different from those presented in the bid documents, or for any variety of other reasons the contractor believes the directive to perform the work creates costs that could not reasonably be anticipated from the bid documents, the contract permits the contractor to make a request for an adjustment to the contract price. Such adjustment requests are often called "contract claims". The process for resolving claims may vary from one contract to another but, in general, there is a process to attempt to resolve claims at the project supervisory level through the normal change order process or with higher levels of management within the organization of the contractor and the owner. Depending upon the terms of the contract, claim resolution may employ a variety of other resolution methods including mediation, binding or non-binding arbitration, or litigation. Regardless of the process, it is typical that when a potential claim arises on a project, the contractor has the contractual obligation to perform the work and must incur the related costs. The contractor does not recoup the costs until the claim is resolved. It is not uncommon for the claim resolution process to take months or years to resolve, especially if it involves litigation.

      The Company's contracts generally involve work durations in excess of one year. Revenue on contracts in process is generally recorded under the percentage of completion contract accounting method. For a more detailed discussion of the Company's policy in these areas, see Note 1(d) of Notes to Consolidated Financial Statements, entitled "Method of Accounting for Contracts".

      Because the Company's operating results are primarily generated from a limited number of significant active construction projects, operating results in any given fiscal quarter can vary depending on the timing of progress achieved and changes in the estimated profitability of the projects being reported. Progress on projects in certain areas may also be

delayed by weather conditions depending on the type of project, stage of completion and severity of the weather. Such delays, if they occur, may result in inconsistent quarterly operating results due to more or less progress than anticipated being achieved on certain projects. Therefore, the reported operating results for any one fiscal quarter may not be indicative of future results.

Competition

      The construction business is highly competitive. Competition is based primarily on price, reputation for on time completion, quality and reliability, availability of surety capacity 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 and have 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, combined with a positive reputation for performance, to be competitive in each of its major market areas.

Construction Costs

      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 owner. On fixed price 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. Construction 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 2003 from material and/or labor shortages or price increases.

Certain Economic Trends

     The Company's civil construction markets are dependent on the amount of civil infrastructure work funded by various governmental agencies which, in turn, may depend on the condition of the existing infrastructure, the need for new or expanded infrastructure and other federal, state or local government budget requirements. 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.

Government Regulations and Environmental Matters

      The Company's operations are subject to compliance with regulatory requirements of federal, state and municipal authorities, including regulations covering labor relations, safety standards, affirmative action and the protection of the environment including requirements in connection with water discharge, air emissions and hazardous and toxic substance discharge. Under the Federal Clean Air Act and Clean Water Act, the Company must apply water or chemicals to reduce dust on road construction projects and to contain water contaminants in run-off water at construction sites. In certain circumstances, the Company may also be required to hire subcontractors to dispose of hazardous wastes encountered on a project in accordance with a plan approved in advance by the Owner. The Company believes that it is in substantial compliance with all applicable laws and regulations. However, future amendments to current laws or regulations imposing more stringent requirements could have a material adverse effect on the Company.

      In addition, the Company believes it 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 that was phased out during 1997. Perini Environmental provided hazardous waste engineering and construction services to both private clients and public agencies nationwide. Perini Environmental was responsible for compliance with applicable laws in connection with its clean up activities and bore the risk associated with handling such materials. In addition to strict procedural guidelines for conduct of this work, the Company and Perini Environmental generally carried insurance or received satisfactory indemnification from customers to cover the risks associated with this business. During 2002, the Company also owned real estate in three states and as an owner, is subject to laws governing environmental responsibility

and liability based on ownership. The Company is not aware of any significant environmental liability associated with its ownership of real estate.

      The Company has been named in five unresolved claims from former employees of subcontractors regarding exposure to asbestos on certain Company projects. All of these pending claims are covered by insurance.

Risk Factors

      The Company and its business segments are subject to a number of risks, including those summarized below. Such risks could have a material adverse effect on the Company's financial condition, results of operations and cash flows. Also, see disclosure under "Forward-looking Statements" on page 2.

  • Highly Competitive Industry – The Company is involved in a very competitive business, especially with respect to those contracts awarded through the competitive bidding process. In certain instances, the Company competes against contractors that have greater financial and other resources than the Company.

  • Decrease in Governmental Funding of Infrastructure Projects – The Company’s civil construction markets are dependent on the amount of civil infrastructure work funded by various governmental agencies which, in turn, may depend on the condition of the existing infrastructure, the need for new or expanded infrastructure and other federal, state or local government budget requirements.

  • Negative Economic and Demographic Trends – The building markets in which the Company participates are dependent to some degree on economic and demographic trends, as well as government policy decisions as they impact the specific geographic markets.

  • Fixed Price and Fixed Unit Price Contracts Shift Risk of Increased Costs to Company – A substantial portion of the Company’s revenues and current backlog are based on fixed price or fixed unit price contracts that involve risks relating to the Company’s potential responsibility for increased cost of performance under the contract. Generally, under these contracts any increase in the Company’s unit cost not caused by a modification or compensable change to the original contract, whether due to inflation, inefficiency, faulty estimates or other factors, is absorbed by the Company. There are a number of other factors that could create differences in contract performance and results as compared to the original contract estimate for which the owner may be partially liable that include, among other things, differing site conditions, availability of materials and abnormal weather conditions.

  • Other Contract Provisions – All federal, state and local government contracts and many of the Company’s other contracts provide for termination of the contract at the convenience of the owner. In addition, many of the Company’s contracts are subject to specific completion schedule requirements with liquidated damages charged to the Company in the event the construction schedules are not achieved. Historically, such provisions have not had a material adverse effect on the Company.

    Design-build projects carry additional risks such as design error and scope of work risks. It is the Company’s practice to actively manage the design effort and to obtain project-specific insurance for this risk.

  • The Contract Process May Shift Timing and Other Related Payment Risks to Company – Generally under the terms of a contract, the Company is required to perform extra or change order work as directed by the owner even if the owner hasn’t agreed in advance on the scope and/or price of the work to be performed. While this process may result in an approved change order to the original contract in accordance with the relevant contract terms, many times this process results in disputes either (1) over whether or not the work performed is beyond the scope of the work included in the original project plans and specifications or (2) if the parties agree that the work performed qualifies as extra work, the price the owner is willing to pay for the extra work. In addition, this process can result in the Company funding additional working capital for a lengthy period of time before an undisputed change order is approved and funded by the owner. When the parties disagree about extra work, the Company generally is at a disadvantage since it is contractually obligated to complete the work which may adversely impact the timely

scheduling of other project work, as well as the specified contract milestone date(s). Significant extra work that isn’t resolved on a timely basis or is resolved for less than anticipated amounts also adversely impacts the Company’s working capital, cash flow and possibly earnings.

  • Unsatisfactory Resolution of Certain Ongoing Litigation – As discussed in Item 3. Legal Proceedings included elsewhere in this Form 10-K, the Company is involved, either directly or indirectly, in construction contracts involving certain lawsuits, alternative dispute resolution or other proceedings (“proceedings”) that involve significant dollar amounts. The Company believes that the resolution of these proceedings will not have a material effect on the Company’s results of operations and financial condition based on the current status of the respective proceedings. However, if any one or all of these proceedings result in adverse decisions against the Company, it could have a material adverse effect on the Company’s business.

Real Estate Operations

      Effective June 30, 1999, management adopted a plan to withdraw completely from the real estate development business and to wind down the operations of Perini Land and Development Company ("PL&D"), the Company's real estate development subsidiary. Accordingly, approximately 95% of the property has been liquidated since June 30, 1999. Remaining properties are classified on the balance sheet as either "Land held for sale, net" or included in "Other Assets". (See Note 5 of Notes to Consolidated Financial Statements.)

      PL&D or Paramount Development Associates, Inc. ("Paramount"), a wholly owned subsidiary of PL&D, owned the following real estate properties during 2002:

Massachusetts

      Raynham Woods Commerce Center, Raynham - During the late 1980's, Paramount acquired a 409-acre site (equivalent to 300 net saleable acres) located in Raynham, Massachusetts and completed infrastructure work on a major portion of the site which was being developed as a mixed-use corporate park. From 1989 through 2001, an aggregate of 156 net acres was sold to various users. Paramount sold 19 net acres during 2002 which leaves approximately 125 buildable acres for sale.

Arizona

      Sabino Springs Estates, 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 1993, PL&D sold a major portion of the property to an international real estate company, who completed a championship golf course and clubhouse within the project in 1995. During 2002, PL&D completed the sale of the balance of the property.

Insurance and Bonding

      All of the Company's properties and equipment, both directly owned or owned through joint ventures with others, are covered by insurance and management believes that such insurance is adequate. In addition, the Company maintains general liability, excess liability and workers' compensation insurance in amounts it believes are consistent with its risk of loss and industry practice. During 2000 and 2001, the Company was able to significantly limit its financial risk under its workers' compensation and general liability insurance coverage by purchasing traditional insurance policies in a favorable insurance market. Due to tight conditions in the insurance market, effective for the calendar year 2002 and continuing into 2003, the Company found it necessary to purchase workers' compensation and general liability policies at substantially higher premiums with a Company self-insured deductible limit of $250,000 per occurrence, with appropriate aggregate caps on losses retained.

      As a normal part of the construction business, the Company is often required to provide various types of surety bonds as an additional level of security of its performance. The Company's ability to obtain surety bonds primarily depends upon its capitalization, working capital, past performance, management expertise and certain external factors including the overall capacity of the surety market. Surety companies consider such factors in relationship to the amount

of the Company's backlog and their underwriting standards, which may change from time to time. Since 2001, the surety industry has undergone significant changes with several companies withdrawing completely from the industry or significantly reducing their bonding commitment. In addition, certain re-insurers of surety risk have limited their participation in this market since 2001. The Company has surety arrangements with several sureties, one of which it has dealt with for over 75 years and another of which owns approximately 21% of the Company's outstanding common stock (see Note 13 of Notes to Consolidated Financial Statements). While this tightening of the surety industry has not had a significant impact on the Company's operations, the inability to obtain surety bonds would have a material adverse effect on the Company's future business.

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 2002, the average number of employees was approximately 3,200 with a maximum of approximately 4,800 and a minimum of approximately 1,800.

      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 next fiscal year is not expected to have any material impact on the Company.

ITEM 2. PROPERTIES

      Properties for sale applicable to the Company's previously discontinued real estate activities are described in detail in Item 1. Business on page 10. Properties used in operations are summarized below:

                                                                                                  Aproximate
                               Business               Owned or            Approximate               Square
                              Segment(s)          Leased by Perini           Acres           Feet of Office Space
                           ------------------     ------------------     ---------------     ---------------------
   Principal Offices
- ------------------------
Framingham, MA               Building and Civil         Owned                   9                   100,000
Phoenix, AZ                    Building                Leased                   -                    22,700
Hawthorne, NY                    Civil                 Leased                   -                    12,800
Las Vegas, NV                  Building                Leased                   -                     7,400
Celebration, FL                Building                Leased                   -                     4,800
Carlsbad, CA                   Building                Leased                   -                     3,900
Detroit, MI                    Building                Leased                   -                     2,500
                                                                         ---------------     ---------------------
                                                                                9                   154,100
                                                                         ===============     =====================

  Principal Permanent
     Storage Yards
- ------------------------
Bow, NH                          Civil                  Owned                  70
Framingham, MA             Building and Civil           Owned                   6
Las Vegas, NV                  Building                Leased                   2
                                                                         ---------------
                                                                               78
                                                                         ===============

      The Company believes its properties are well maintained, in good condition, adequate and suitable for the Company's purpose and fully utilized.

ITEM 3. LEGAL PROCEEDINGS

Mergentime - Perini Joint Ventures vs. WMATA Matter

      On May 11, 1990, contracts with two joint ventures in which Perini Corporation held a minority interest ("Joint Ventures") were terminated by the Washington Metropolitan Area Transit Authority ("WMATA") on two adjacent subway construction contracts in the District of Columbia. The contracts were awarded to the Joint Ventures in 1985 and 1986. However, Perini and Mergentime Corporation ("Mergentime"), the 60% managing partner, entered into an agreement in 1987 under which Perini withdrew from the Joint Ventures and Mergentime assumed complete control over the performance of both projects. This agreement did not relieve Perini of its responsibilities to WMATA as a Joint Venture partner. After Perini withdrew from the Joint Ventures, Mergentime and WMATA were embroiled in a dispute regarding progress on the projects. Each party blamed the other for delays that were impacting both cost and progress and the parties were unable to resolve their dispute. Ultimately, both construction contracts were terminated by WMATA and WMATA retained Perini, acting independently, to complete both projects.

      Subsequently, the Joint Ventures brought an action in the United States District Court for the District of Columbia against WMATA, seeking damages for delays, unpaid extra work and wrongful termination and WMATA brought an action against the Joint Ventures seeking damages for additional costs to complete the projects. After a bench trial before two District Court Judges (the initial Judge died before the matter could be concluded), the District Court found the Joint Ventures liable to WMATA for damages in the amount of approximately $16.5 million and WMATA liable to the Joint Ventures for damages in the amount of approximately $4.3 million.

      The Joint Ventures appealed the judgment to the United States Court of Appeals for the District of Columbia ("Court of Appeals"), arguing, among other things, that the second District Court Judge had issued his final decision

without fully familiarizing himself with the record of the initial District Court Judge. On February 16, 1999, the Court of Appeals vacated the District Court's final judgment and ordered the successor District Court Judge to review the findings of the initial Judge and hold further hearings in regard to the Joint Ventures' affirmative claims. In addition, the Court of Appeals held that statutory interest on any of the claims will not accrue until final judgment is entered sometime in the future. Later in 1999, the case was transferred to a new successor District Court Judge.

      On February 28, 2001, the new successor District Court Judge informed the parties that in the absence of a new trial, he could not certify adequate familiarity with the record to complete the remaining proceedings; therefore, he ordered that the Joint Ventures' motion for a new trial be granted.

      A new trial before the new successor District Court Judge was completed in January 2002 and a decision is still pending. The ultimate financial impact of the Judge's pending decision is not yet determinable; therefore, no provision for loss, if any, has been recorded in the financial statements.

Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter

      During 1995, a joint venture, Tutor-Saliba-Perini ("TSP"), in which Perini Corporation is a 40% minority partner and Tutor-Saliba Corporation of Sylmar, CA is the 60% managing partner, filed a complaint in the Superior Court of the State of California for the County of Los Angeles against the Los Angeles County Metropolitan Transportation Authority ("MTA") seeking to recover costs for extra work required by the MTA in connection with the construction of the Wilshire/Normandie Subway Station. TSP is seeking additional compensation from the MTA for claims related to the construction and in February 1999 the MTA countered with civil claims under the California False Claims Act against TSP, Tutor-Saliba Corporation, Perini Corporation and other parties. Ronald N. Tutor, the Chairman and CEO of Perini Corporation since March of 2000, is also the CEO and the sole stockholder of Tutor-Saliba Corporation (see Note 13).

      Claims concerning the construction of the Wilshire/Normandie Subway Station were tried before a Jury in 2001. During trial, the Judge ruled that TSP had failed to comply with the Court's prior discovery orders and the Judge penalized TSP for its alleged non-compliance by dismissing TSP's claim and by ruling, without a Jury finding, that TSP was liable to the MTA for damages on the MTA's counterclaim. The Judge then instructed the Jury that TSP was liable to the MTA and charged the Jury with the responsibility of determining the amount of the damages based on the Judge's ruling. The Jury awarded the MTA approximately $29.6 million in damages.

      On March 26, 2002, the Judge amended the award, ordering TSP to pay the MTA an additional $33.4 million in costs and attorney fees, with the aggregate $63.0 million award subject to interest at an annual rate of 10% from the date of the award.

      TSP and the other plaintiffs/defendants in counterclaim have appealed the Judge's discovery sanction, the subsequent Jury award and the amended award. The ultimate financial impact of the Judge's ruling and/or the awards is not yet determinable. Therefore, no provision for loss, if any, has been recorded in the financial statements.

City of San Francisco vs. Tutor-Saliba, Perini & Buckley Joint Venture Matter

      On November 1, 2002, the San Francisco City Attorney, on behalf of the City and County of San Francisco and the citizens of California ("Plaintiffs"), filed a civil action with a demand for a jury trial against Tutor-Saliba Corporation ("TSC"), the Tutor-Saliba, Perini & Buckley Joint Venture ("JV"), Perini Corporation ("Perini"), Buckley & Company, Inc. ("Buckley") and their bonding companies in the United States District Court in San Francisco relating to seven contracts for work on the expansion of the San Francisco International Airport. The Plaintiffs allege various overcharges, bidding violations, violations of minority contracting regulations, civil fraud, and violation of the California and San Francisco False Claims and California Unfair Competition Acts. In addition, the Plaintiffs allege that TSC has violated the United States Racketeer Influenced Corrupt Organizations Act. The Plaintiffs have asserted $30 million in damages and are seeking treble damages, various civil penalties and debarment of the JV and TSC from doing business with the City of San Francisco. The Plaintiffs have not allocated their claims for damages and penalties amongst the defendants or the seven contracts at issue, only two of which involved the JV. TSC is the managing partner of the JV, and in December

1997, Perini sold its entire 20% interest in the JV to TSC. TSC has agreed to indemnify Perini from any liability arising out of the joint venture, including legal fees and expenses.

Perini/Kiewit/Cashman Joint Venture - Central Artery/Tunnel Project Matter

      Perini/Kiewit/Cashman Joint Venture ("PKC"), a joint venture in which Perini Corporation holds a 56% interest and is the managing partner, is currently pursuing a series of claims for additional contract time and/or compensation against the Massachusetts Highway Department ("MHD") for work performed by PKC on a portion of the Central Artery/Tunnel project in Boston, Massachusetts. The claims relate to the construction of the Northbound Mainline Central Artery Tunnel from Kneeland Street to Congress Street. During construction, MHD ordered PKC to perform changes to the work and issued related direct cost changes with an estimated value, excluding time delay and inefficiency costs, in excess of $100 million. In addition, PKC encountered a number of unforeseen conditions during construction that greatly increased PKC's cost of performance.

      Certain of PKC's claims have been presented to a Disputes Review Board ("DRB") which consists of three construction experts chosen by the parties. To date, the DRB has ruled on a binding basis that PKC is entitled to additional compensation for its contract time delay claim in the amount of $17.4 million. A Judge of the Massachusetts Superior Court has issued a decision upholding the DRB's binding award to PKC. Although MHD challenged several of the DRB's decisions relative to the contract time delay award discussed above, PKC received a favorable ruling on March 20, 2002 from the Superior Court of the Commonwealth of Massachusetts that approved PKC's request to have MHD comply with the DRB's decision to award the $17.4 million for the time delay. The MHD has appealed the Superior Court decision to the Appeals Court of the Commonwealth of Massachusetts.

      The DRB has also ruled on a binding basis that PKC is entitled to additional compensation for impacts and inefficiencies caused by MHD to PKC's underpinning work in the amount of $5.6 million and that PKC is entitled to additional compensation for impacts and inefficiencies caused by MHD to PKC's utility work in the amount of $11.5 million. PKC has filed applications in these actions seeking to confirm the awards and MHD has filed civil actions in Massachusetts Superior Court seeking to vacate these awards.

      Under the Dispute Resolution Rules of the contract, either party may periodically terminate the services of some or all of the DRB members provided that members who are removed under this provision will remain on the DRB through the completion of any then pending claims. The MHD has chosen to remove the current DRB members under this provision and those members are in the process of completing hearings on all pending claims. Although the replacement DRB members have been agreed upon, proceedings before the current DRB and new DRB have been postponed pending resolution of the current negotiations discussed below.

      The pending claims yet to be decided by the current/replacement DRB on a binding basis have an anticipated value of $43 million. The remaining claims to be decided by the replacement DRB on a non-binding basis have an anticipated value of $80 million.

      On August 14, 2002 the Massachusetts Attorney General's office, pursuant to its authority under the Massachusetts False Claims Act, served a Civil Investigative Demand ("CID") on Perini and the other joint venture partners. The CID sought the production of certain construction claims documentation in connection with the Central Artery/Tunnel Contract No. C11A1. PKC vigorously denies that it submitted any false claims and is cooperating with the Attorney General's Office in the ongoing investigation.

      In December 2002, PKC and MHD entered into an agreement whereby the parties agreed to attempt to resolve by negotiation and mediation all of the outstanding claims on the project. As part of the agreement, the MHD recommended for approval by the Massachusetts Turnpike Authority a contract modification that provides for provisional payments to PKC totaling $25 million against PKC's outstanding claims. To date, PKC has received $23.75 million of those provisional payments. The parties also agreed to stay the pending litigation and DRB proceedings during the negotiations. The ultimate financial impact of resolving all of the claims on this project is not yet determinable.

Perini Building Company, Inc. vs. Saginaw Chippewa Indian Tribe of Michigan Matter

      In 1995, Perini Building Company, Inc. ("PBC"), a wholly owned subsidiary of Perini Corporation, was hired by the Saginaw Chippewa Indian Tribe ("Tribe") to construct a hotel/casino resort in Mt. Pleasant, Michigan. Since the design for the project was still in process at the time of contract, the parties planned to proceed with construction on a fast-track basis as the design was completed by the Tribe's architect. Although PBC completed a major portion of construction under this fast-track arrangement, a final design was never completed by the Tribe's architect. Ultimately, a dispute arose between the Tribe and the architect regarding the architect's failure to complete the design and the Tribe eventually terminated all contracts on the project, including its contract with the architect and its contract with PBC. Separate arbitration proceedings were then initiated between the Tribe and the architect and between the Tribe and PBC.

      On June 5, 2000, the American Arbitration Association found in favor of PBC against the Tribe, awarding PBC approximately $8.9 million in damages, plus costs and attorney/consultants fees in the amount of approximately $1.2 million. On October 30, 2000, PBC filed an action to enforce the award in the Tribal Court of the Saginaw Chippewa Indian Tribe. On January 31, 2002, the Tribal Court refused to confirm the award, claiming that the Tribal Court does not have jurisdiction because the Tribe is immune from suit as a sovereign nation. The contract between PBC and the Tribe provides that PBC may seek enforcement of the award in United States Federal Court if the Tribal Court finds that it does not have jurisdiction. In February 2002, PBC filed an action to enforce the arbitration award in the United States District Court for Michigan ("USDC") and in March 2002 PBC moved for Summary Judgment of its claim in that action. In addition, in February 2002, PBC filed an appeal of the Tribal Court's refusal to enforce the award in the Saginaw Chippewa Appellate Court. The Tribe moved to dismiss the Federal Court action. On October 11, 2002, PBC's appeal to the Tribal Appellate Court was heard by a three judge panel.

      Subsequent to the appeal hearing, negotiations between PBC and the Tribe produced a settlement of the dispute whereby PBC received a final cash payment in December 2002. Settlement of the dispute did not have a material impact on the Company's 2002 results of operations.

San Francisco State University vs. Perini Matter

      This is an action originally brought in 1999 in San Francisco County Superior Court by San Francisco State University ("SFSU") against Perini and several subcontractors in conjunction with the design and construction of a student dormitory. SFSU alleged that the building suffered from water leakage and structural deficiencies. SFSU sought damages in excess of $85 million, including damages for leak repairs and mold abatement, damages for structural repairs, damages for economic losses, punitive damages and attorneys' fees. Perini asserted that the building was properly designed and constructed under the contractually identified building code.

      Perini was defended by its insurance carriers under a reservation of rights. Perini had brought a third party action for comparative indemnity, equitable indemnity, implied contractual indemnity and declaratory relief against nine of Perini's subcontractors and lower-tier subcontractors.

      The trial began on June 25, 2002 and proceeded until August 2, 2002 when all claims, counterclaims and crossclaims of all parties were settled and that settlement was approved by the Court. Under the terms of the settlement, Perini has paid to SFSU economic damages in the amount of $16.7 million and will make certain defined repairs and/or modifications to the building.

      Also under the terms of the settlement, Perini's subcontractors and insurance carriers for both Perini and its subcontractors have contributed substantially to the total amount of the settlement. As a result, management believes that the settlement of this case will not have a material effect on the Company's results of operations or financial condition.

$21.25 Preferred Shareholders Class Action Lawsuit

      On May 3, 2001 the Company, including several of its current and former directors ("Defendant Directors"), was served with a complaint entitled Frederick Doppelt, Arthur I. Caplan and Michael Miller v. Perini Corporation, et al, Supreme Court of the State of New York, County of New York, Civil Action No. 602156/01. Each plaintiff is a

holder of the Company's $21.25 Convertible Exchangeable Preferred Stock ("$21.25 Preferred Stock"). One plaintiff, Mr. Doppelt, is a current Director of the Company and one plaintiff, Mr. Caplan, is a former Director of the Company. Plaintiffs purport to bring the action individually and on behalf of the entire class of holders of the $21.25 Preferred Stock.

      The Plaintiffs have asserted claims for breach of contract, breach of fiduciary duty, fraud and negligent misrepresentation. The Plaintiffs principally allege that the Company and its Defendant Directors improperly authorized the exchange of Series B Preferred Stock for Common Stock without first paying all accrued dividends on the $21.25 Preferred Stock. More specifically, Plaintiffs allege that the Company and its Defendant Directors violated the terms of the $21.25 Preferred Stock when, in March 2000, the Company authorized the exchange of Series B Preferred Stock for Common Stock. The Plaintiffs further allege that the Company and its Defendant Directors issued a false and misleading prospectus in 1987 relating to the issuance of the $21.25 Preferred Stock. The Plaintiffs seek payment of accrued dividends, claiming they are owed approximately $11.7 million as of May 3, 2001, and other unspecified punitive and exemplary damages.

      On May 23, 2001, the Company and the Defendant Directors removed the action from the Supreme Court of New York to the United States District Court for the Southern District of New York. On June 26, 2001, the Plaintiffs filed an Amended Complaint whereby the Plaintiffs limited their Class Action to an action for breach of contract against the Company and an action for breach of fiduciary duty against the Defendant Directors. The Company and the Defendant Directors moved to dismiss all of Plaintiffs' claims. On March 12, 2002, all claims against the Company and the Defendant Directors were dismissed by the United States District Court for the Southern District of New York.

      In April 2002, the Plaintiffs appealed the dismissal to the United States Court of Appeals for the Second Circuit. On December 23, 2002, the Plaintiffs' appeal was dismissed by the United States Court of Appeals for the Second Circuit.

      On October 15, 2002, the Plaintiffs filed a new action for breach of fiduciary duty against the Defendant Directors in the United States District Court for the District of Massachusetts. On January 6, 2003, the Defendant Directors moved to dismiss all of the Plaintiffs' Massachusetts claims. The Defendant Directors are awaiting the Plaintiffs' response.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

EXECUTIVE OFFICERS OF THE REGISTRANT

      Listed below are the names, offices held, ages and business experience of all executive officers of the Company.


Name, Offices Held and Age                 Year First Elected to Present Office and Business Experience

Ronald N. Tutor, Director, Chairman and    Since March 29, 2000 he serves as a Director, Chairman and Chief
Chief Executive Officer - 62               Executive Officer.  Prior to that, he served as a Director and Chairman
                                           since July 1, 1999; a Director and Vice Chairman since January 1, 1998;
                                           and as a Director and Acting Chief Operating Officer since January 17,
                                           1997.  He is the Chairman, President and Chief Executive Officer of
                                           Tutor-Saliba Corporation, a California based construction contractor,
                                           since prior to 1995 and has actively managed that company since 1966.

Robert Band, Director, President and       Since March 29, 2000 he serves as a Director, President and Chief
Chief Operating Officer - 55               Operating Officer. Prior to that, he served as a Director, President and
                                           Chief Executive Officer since May 12, 1999.  He has served as Executive
                                           Vice President and Chief Financial Officer since December 1997.  Prior to
 


                                           that, he served as President of Perini Management Services, Inc.
                                           (formerly Perini International Corporation) since January 1996 and as
                                           Senior Vice President, Chief Operating Officer of Perini International
                                           Corporation since April 1995.  Previously, he served as Vice President
                                           Construction from July 1993 and in various operating and financial
                                           capacities since 1973, including Treasurer from May 1988 to January 1990.

Zohrab B. Marashlian, President, Perini    He was elected to his current position in December 1997, which entails
Civil Construction - 58                    overall responsibility for the Company's civil construction operations.
                                           Prior to that, he served as President of the Company's Metropolitan New
                                           York Division since April 1995 and as Senior Vice President, Operations
                                           of the Company's Metropolitan New York Division since January 1994.
                                           Previously, he served in various project management capacities with the
                                           Company since 1985, including Project Manager and Vice President - Area
                                           Manager.  Prior to that, he served in various capacities for the Company
                                           on projects in New York and overseas since 1971.

Craig W. Shaw, President, Perini           He was elected to his current position in October 1999, which entails
Building Company - 48                      overall responsibility for the Company's building construction
                                           operations. Prior to that he served as President, Perini Building
                                           Company, Western U.S. Division since April 1995 and Senior Vice
                                           President, Construction for Perini Building Company's Western U.S.
                                           Division since January 1994 and as Vice President, Construction for
                                           Perini Building Company's Western U.S. Division since 1986.  Previously,
                                           he served in various project management capacities with the Company since
                                           1978, including Project Manager from 1979 to 1986.

      The Company's officers are elected on an annual basis at the Board of Directors' Meeting immediately following the Annual Meeting of Stockholders in May, to hold such offices until the Board of Directors' Meeting following the next Annual Meeting of Stockholders and until their respective successors have been duly appointed or until their tenure has been terminated by the Board of Directors, or otherwise.

PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Market Information

      The Company's Common Stock is traded on the American Stock Exchange under the symbol "PCR". The quarterly market high and low sales price ranges for 2002 and 2001 are summarized below:

                                                      2002                            2001
                                           ------------------------       -------------------------
                                             High           Low              High           Low
                                           ----------     ---------       -----------    ----------
Market Price Range per Common Share:
- ------------------------------------
Quarter Ended
March 31                                      $ 7.28        $   5.75          $ 7.35        $ 2.94
June 30                                         6.40            3.40           10.00          5.90
September 30                                    4.58            3.50            9.40          5.45
December 31                                     4.44            3.00            7.60          6.10

Dividends

      There were no cash dividends declared on the Company's Common Stock during 2002 and 2001. For additional information on dividend payments, see "Dividends" under Management's Discussion and Analysis in Item 7 below.

Holders

      At February 24, 2003, there were 1,106 common stockholders of record based on the stockholders list maintained by the Company's transfer agent.

ITEM 6. SELECTED FINANCIAL DATA

Selected Consolidated Financial Information
(In thousands, except per share data)

      The following selected financial data has been derived from audited financial statements and should be read in conjunction with the consolidated financial statements, the related notes thereto and the independent auditors' report thereon, included elsewhere in this Form 10-K and in previously filed annual reports on Form 10-K of Perini Corporation.

                                                  2002              2001             2000                1999              1998
                                             ----------------  ---------------  ----------------    ----------------  ---------------
OPERATING SUMMARY
- -----------------

CONTINUING OPERATIONS:
Revenues:
Building                                         $   772,513      $ 1,199,439       $   826,191         $   696,407      $   679,296
Civil                                                312,528          353,957           279,469             323,077          332,026
                                             ----------------  ---------------  ----------------    ----------------  ---------------
Total                                            $ 1,085,041      $ 1,553,396       $ 1,105,660         $ 1,019,484      $ 1,011,322

Cost of Operations                                 1,026,391        1,495,834         1,053,328             969,015          957,651
                                             ----------------  ---------------  ----------------    ----------------  ---------------

Gross Profit                                     $    58,650      $    57,562       $    52,332         $    50,469      $    53,671
G&A Expense                                           32,770           28,061            24,977              26,635           27,397
                                             ----------------  ---------------  ----------------    ----------------  ---------------
Income From Operations                           $    25,880      $    29,501       $    27,355         $    23,834      $    26,274

Other (Income) Expense, Net                              520              227              (949)                (72)             652
Interest Expense                                       1,485            2,006             3,966               7,128            8,473
                                             ----------------  ---------------  ----------------    ----------------  ---------------
Income From Continuing
  Operations Before Income Taxes                 $    23,875      $    27,268       $    24,338         $    16,778      $    17,149

Provision (Credit) for Income Taxes                      801              850               (43)                421            1,100
                                             ----------------  ---------------  ----------------    ----------------  ---------------
Income From Continuing Operations                $    23,074      $    26,418       $    24,381         $    16,357      $    16,049
                                             ----------------  ---------------  ----------------    ----------------  ---------------

DISCONTINUED OPERATIONS:
Loss From Operations                             $         -      $         -       $         -         $      (694)     $    (4,397)
Loss on Disposal of Real Estate
  Business Segment                                         -                -                 -             (99,311)               -
                                             ----------------  ---------------  ----------------    ----------------  ---------------
Loss From Discontinued Operations                $         -      $         -       $         -         $  (100,005)     $    (4,397)
                                             ----------------  ---------------  ----------------    ----------------  ---------------

Net Income (Loss)                                $    23,074      $    26,418       $    24,381         $   (83,648)     $    11,652
                                             ================  ===============  ================    ================  ===============


                                                  2002              2001             2000                1999              1998
                                             ----------------  ---------------  ----------------    ----------------  ---------------
Per Share of Common Stock:
  Basic Earnings (Loss):
Income From Continuing Operations                   $   0.92      $      1.07       $      0.39 (1)     $      1.80      $      1.91
Loss From Discontinued Operations                          -                -                 -               (0.12)           (0.83)
Estimated Loss on Disposal                                 -                -                 -              (17.72)               -
                                             ----------------  ---------------  ----------------    ----------------  ---------------
Total                                               $   0.92      $      1.07       $      0.39         $    (16.04)     $      1.08
                                             ================  ===============  ================    ================  ===============

  Diluted Earnings (Loss):
Income From Continuing Operations                   $   0.91      $      1.04       $    0.39 (1)       $    1.80        $    1.91
Loss From Discontinued Operations                          -                -                 -               (0.12)           (0.83)
Estimated Loss on Disposal                                 -                -                 -              (17.72)               -
                                             ----------------  ---------------  ----------------    ----------------  ---------------
Total                                               $   0.91      $      1.04       $      0.39         $    (16.04)       $    1.08
                                             ================  ===============  ================    ================  ===============

  Cash Dividend Declared                            $      -      $         -       $         -         $       -        $         -
                                             ----------------  ---------------  ----------------    ----------------  ---------------

  Book Value                                        $   2.72      $      2.40       $      1.57         $    (11.31)     $      4.17
                                             ----------------  ---------------  ----------------    ----------------  ---------------

Weighted Average Common Shares Outstanding:
Basic                                                 22,664           22,623            18,521               5,606            5,318
                                             ----------------  ---------------  ----------------    ----------------  ---------------
Diluted                                               22,939           23,442            18,527               5,606            5,318
                                             ----------------  ---------------------------------    ----------------  ---------------

FINANCIAL POSITION SUMMARY
- --------------------------

Working Capital                                    $ 115,908      $    93,369       $    80,477         $    48,430      $    57,665
                                             ----------------  ---------------  ----------------    ----------------  ---------------

Current Ratio (2)                                1.44:1            1.24:1           1.20:1              1.15:1            1.20:1
                                             ----------------  ---------------  ----------------    ----------------  ---------------

Long-term Debt, less current maturities            $  12,123      $     7,540       $    17,218         $    41,091      $    75,857
                                             ----------------  ---------------  ----------------    ----------------  ---------------

Stockholders' Equity (Deficit)                     $  86,649      $    79,408       $    60,622         $   (36,618)     $    50,558
                                             ----------------  ---------------  ----------------    ----------------  ---------------

Ratio of Long-term Debt to Equity                 .14:1            .09:1             .28:1               n.a.             1.50:1
                                             ----------------  ---------------  ----------------    ----------------  ---------------

Redeemable Series B Cumulative
  Convertible Preferred Stock                      $       -      $         -       $         -         $    37,685      $    33,540
                                             ----------------  ---------------  ----------------    ----------------  ---------------

Total Assets (2)                                   $ 402,389      $   501,241       $   487,478         $   385,767      $   452,496
                                             ----------------    ----------------  ---------------  ----------------  ---------------

OTHER DATA
- ----------

Backlog at Year End                                $ 990,175      $ 1,213,535       $ 1,788,731         $ 1,658,077      $ 1,232,256
                                             ----------------  ---------------  ----------------    ----------------  ---------------

(1)      As discussed in Note (1)(i) of Notes to Consolidated Financial Statements, Basic and Diluted Earnings Per Share for 2000 have been restated.

(2)      As discussed in Note (1)(b) of Notes to Consolidated Financial Statements, the Company now presents its interests in joint ventures in the Consolidated Balance Sheets using the proportionate consolidation method. Accordingly, the Current Ratio and Total Assets included above have been restated for all periods presented to reflect this change.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

      The Company was incorporated in 1918 as a successor to businesses which had been engaged in providing construction services since 1894. The Company currently 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 two basic segments or operations: building and civil. The general building and civil contracting 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 provides these services by using traditional general contracting arrangements, such as fixed price, guaranteed maximum price and cost plus award fee contracts and, to a lesser extent, construction management or design-build contracting arrangements. The Company, in the normal conduct of its business, enters into partnership arrangements, referred to as "joint ventures," for certain construction 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.

Critical Accounting Policies

      The Company's significant accounting policies are described in Note 1 of Notes to Consolidated Financial Statements included in Item 15 of this Form 10-K.

      Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company's construction business involves making significant estimates and assumptions in the normal course of business relating to its Company and joint venture contracts due to, among other things, the one-of-a-kind nature of most of its projects, long-term duration of its contract cycle and type of contract utilized. Therefore, management believes that "Method of Accounting for Contracts" is the most important and critical accounting policy. The most significant estimates with regard to these financial statements relate to the estimating of total forecasted construction contract revenues, costs and profits in accordance with accounting for long-term contracts (see Note 1(d) of Notes to Consolidated Financial Statements) and estimating potential liabilities in conjunction with certain contingencies, including the outcome of pending or future litigation, arbitration or other dispute resolution proceedings relating to contract claims (see Note 2 of Notes to Consolidated Financial Statements). Actual results could differ in the near term from these estimates and such differences could result in a material adverse effect on the Company's financial condition, results of operations and cash flows.

      Method of Accounting for Contracts - Revenues and profits from the Company's contracts and construction joint venture contracts are recognized by applying percentages of completion for the period to the total estimated profits for the respective contracts. Percentage of completion is 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 during the accounting period in which it is estimated. In the ordinary course of business, at a minimum on a quarterly basis, the Company prepares updated estimates of the total forecasted revenue, cost and profit or loss for each contract. The cumulative effect of revisions in estimates of the total forecasted revenue and costs, including unapproved change orders and claims, during the course of the work is reflected in the accounting period in which the facts that caused the revision become known. The financial impact of these revisions to any one contract is a function of both the amount of the revision and the percentage of completion of the contract. An amount equal to the costs incurred which are attributable to unapproved change orders and claims is included in the total estimated revenue when realization is probable. (For a further discussion of unapproved change orders and claims, see "The Contract Process" under Item 1 on pages 6 through 8 of this Form 10-K.) Profit from unapproved change orders and claims is recorded in the period such amounts are resolved.

      Deferred contract revenue represents the excess of billings to date over the amount of contract costs and profits (or contract revenue) recognized to date on the percentage of completion accounting method on certain contracts. Unbilled work represents the excess of contract costs and profits (or contract revenue) recognized to date on the percentage of completion accounting method over billings to date on the remaining contracts. Unbilled work results when (1) the appropriate contract revenue amount has been recognized in accordance with the percentage of completion accounting method, but a portion of the revenue recorded cannot be billed currently due to the billing terms defined in the contract and/or (2) costs, recorded at estimated realizable value, related to unapproved change orders or claims are incurred. For unapproved change orders or claims that cannot be resolved in accordance with the normal change order process as defined in the contract, the Company may employ other dispute resolution methods, including mediation, binding and non-binding arbitration, or litigation (see Item 3, Legal Proceedings in this Form 10-K and Note 2, "Contingencies and Commitments", of Notes to Consolidated Financial Statements). The prerequisite for billing unapproved change orders and claims is the final resolution and agreement between the parties. At December 31, 2002, unbilled work related to Company and joint venture contracts is discussed in Note 1(d) of Notes to Consolidated Financial Statements.

      Accounting for Construction Joint Ventures - Prior to 2002, the Company's interests in construction joint ventures were accounted for on the equity method in the Consolidated Balance Sheets and on the proportionate consolidation method in the Consolidated Statements of Income, with the Company's share of revenues and costs in these interests included in Revenues and Cost of Operations, respectively. Beginning in 2002, construction joint venture interests are accounted for using the proportionate consolidation method in the Consolidated Balance Sheets as well as the Consolidated Statements of Income, whereby the Company's proportionate share of each joint venture's assets, liabilities, revenues and cost of operations are included in the appropriate classifications in the consolidated financial statements. The Company believes the change, which results in presenting all joint venture activity using a consistent methodology in both the Consolidated Balance Sheets and Consolidated Statements of Income, is preferable.

      Although this change impacted various classifications within Current Assets and Current Liabilities in the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows, it had no impact on net working capital or other categories of long-term assets or liabilities in the Consolidated Balance Sheets. It also had no impact on the Consolidated Statements of Income or basic or diluted earnings per common share for any period presented. Prior year Consolidated Balance Sheets and Consolidated Statements of Cash Flows have been restated to conform to the 2002 presentation.

      Defined Benefit Retirement Plan - The status of the Company's defined benefit pension plan obligations, related plan assets and cost is presented in Note 10 of Notes to Consolidated Financial Statements entitled "Employee Benefit Plans". Plan obligations and annual pension expense are determined by actuaries using a number of key assumptions which include, among other things, the discount rate, the estimated future return on plan assets and the anticipated rate of future salary increases. The discount rate of 7.25% used for purposes of computing the 2002 annual pension expense was determined at the beginning of the calendar year based on high-quality corporate bond yields as of that date. The Company plans to lower the discount rate used for computing the 2003 annual pension expense to 6.75% due to a decline in high-quality corporate bond yields as of the end of 2002.

      The estimated return on plan assets is primarily based on historical long-term returns of equity and fixed income markets according to the Company's targeted allocation of plan assets (65% equity and 35% fixed income). While the weighted estimated return on asset rate has been 9% in recent years, the Company plans to lower this rate to 7.0% in 2003 based on recent equity market performance compared to long-term historical averages.

      The plans' accumulated benefit obligation exceeded the fair value of plan assets on December 31, 2002 and 2001 in amounts greater than the accrued pension liability previously recorded. Accordingly, the Company increased its accrual by $13.7 million in 2002 and $5.9 million in 2001 with the offset to accumulated other comprehensive income (loss), a reduction of stockholders' equity.

      As a result of the expected changes in assumptions for 2003 noted above and asset losses during 2002, the Company anticipates that pension expense will increase from $1.2 million in 2002 to $3.4 million in 2003. Cash contributions are anticipated to stay at the 2002 level of between $2 million and $3 million.

Related Party Transactions

      As part of a $30 million equity infusion in January 1997, the Company entered into an agreement with Tutor-Saliba Corporation ("TSC"), a construction company based in California, and Ronald N. Tutor, Chief Executive Officer and sole stockholder of TSC, to provide certain management services. TSC participated in joint ventures with the Company before the agreement and continues to participate in joint ventures with the Company after the agreement. The Company's share of revenue from these joint ventures amounted to $48.8 million, $17.9 million and $4.6 million in 2002, 2001 and 2000, respectively. Primarily as a result of TSC participating in a $40 million equity infusion in March 2000, TSC currently owns approximately 12% of the Company's outstanding Common Stock. Mr. Tutor has been Chairman and Chief Executive Officer of the Company since March 2000. (For details of compensation to TSC and Mr. Tutor and other information on related party transactions, see Note 13 of Notes to Consolidated Financial Statements.)

Results of Operations -
2002 Compared to 2001

      Net income for the year ended 2002 was $23.1 million, a 13% decrease from the record $26.4 million net income recorded in 2001. Basic earnings per common share were $0.92 for the year ended 2002 compared to $1.07 for the year ended 2001. Diluted earnings per common share were $0.91 per common share compared to $1.04 for the year ended 2001. Overall, the decrease in 2002 operating results reflects a continued strong but lower profit contribution from the building construction segment and an increased profit contribution from the civil construction segment.

      Revenues from construction operations decreased by $468.4 million (or 30.2%), from $1,553.4 million in 2001 to $1,085.0 million in 2002. This decrease was due primarily to a decrease in building construction revenues of $426.9 million (or 35.6%), from $1,199.4 million in 2001 to $772.5 million in 2002. Civil construction revenues decreased $41.5 million (or 11.7%), from $354.0 million in 2001 to $312.5 million in 2002. The decrease in revenues from building construction operations was due primarily to the decrease in the Company's year-end backlog at December 31, 2001 compared to the record year-end backlog at December 31, 2000, including a decreased volume of work at the Mohegan Sun Project in Connecticut, as well as on two large hotel/casino projects in the southwestern United States, all of which were substantially completed in early 2002. The decrease in revenues from civil construction operations was also due primarily to the decrease in the Company's year-end backlog at December 31, 2001 compared to the record year-end backlog at December 31, 2000.

      Income from construction operations (see Note 12 of Notes to Consolidated Financial Statements for business segment information) decreased by $2.9 million (or 8.2%), from $35.5 million in 2001 to $32.6 million in 2002. Building construction operating income decreased by $5.4 million, from $31.6 million in 2001 to $26.2 million in 2002, due primarily to the decrease in revenues discussed above. This decrease was partly offset by an increase in the average gross margin on building construction contracts from 4.0% in 2001 to 5.9% in 2002, due primarily to favorable close-out experience on several hotel/casino projects in 2002 and an upward profit revision on an overseas project. In addition, building construction operating income was negatively impacted by a $2.7 million (or 16.6%) increase in building construction-related general and administrative expenses primarily in connection with the pursuit of new work opportunities, including the opening of a new office near Orlando, Florida. Despite the decrease in revenues discussed above, civil construction operating income increased by $2.5 million, from $3.9 million in 2001 to $6.4 million in 2002, due primarily to an upward profit revision on a civil infrastructure project in New York City in 2002 as well as recognition of a smaller loss in 2002 compared to 2001 on a Central Artery/Tunnel "Big Dig" joint venture project in Boston, Massachusetts. In addition, civil construction operating income was negatively impacted by a $1.2 million (or 20.7%) increase in civil construction-related general and administrative expenses, due primarily to a reduced ability to allocate expenses to various joint ventures as well as an increase in outside professional fees.

      Interest expense decreased by $0.5 million, from $2.0 million in 2001 to $1.5 million in 2002, due primarily to a reduction in the average amount of debt outstanding under the Company's Credit Agreement as well as lower interest rates in 2002.

      The lower than normal tax rate for the three year period ended December 31, 2002 is primarily due to the utilization of tax loss carryforwards from prior years. Because of certain accounting limitations, the Company was not able to recognize a portion of the tax benefit related to the operating losses experienced in fiscal 1999, 1996 and 1995. As of December 31, 2002, an amount estimated to be approximately $79 million of future pretax earnings could benefit from minimal, if any, federal tax provisions. The net deferred tax assets reflect management's estimate of the amount that will, more likely than not, be realized (see Note 4 of Notes to Consolidated Financial Statements). In addition, the provision for income taxes in 2002 reflects the reversal of the federal alternative minimum tax provided in 2001 which is no longer required based on the provisions of the Job Creation and Worker Assistance Act of 2002, and the credit for income taxes in 2000 reflect the reversal of foreign taxes accrued in prior years that were no longer required.

Results of Operations -
2001 Compared to 2000

      Net income for the year ended 2001 increased 8% to a record $26.4 million, compared to net income of $24.4 million for the year ended 2000. Basic earnings per common share were $1.07 for the year ended 2001, as compared to $0.39 for the year ended 2000. Diluted earnings per common share were $1.04 for the year ended 2001, as compared to $0.39 for the year ended 2000. Overall, the improved 2001 operating results reflect a continued strong and improved profit contribution from the building construction segment and, to a lesser extent, the positive impact of lower interest expense due primarily to continued reduction in the amount of long-term debt outstanding and lower interest rates in 2001.

      Revenues from construction operations increased $447.7 million (or 40.5%), from $1,105.7 million in 2000 to a record $1,553.4 million in 2001. This increase was due primarily to an increase in building construction revenues of $373.2 million (or 45.2%), from $826.2 million in 2000 to $1,199.4 million in 2001. In addition, civil construction revenues increased $74.5 million (or 26.7%), from $279.5 million in 2000 to $354.0 million in 2001. The increase in revenues from building construction operations was due primarily to the Company's record year-end backlog at December 31, 2000, including an increase in the volume of work completed at the Mohegan Sun Project in Connecticut, as well as the construction of three large hotel/casino projects in the southwestern United States. The increase in revenues from civil construction operations also reflected the Company's record year-end backlog at December 31, 2000, including the start-up of several infrastructure projects in the metropolitan New York area.

      Income from construction operations increased by $2.8 million (or 8.6%), from $32.7 million in 2000 to $35.5 million in 2001 due to an increase in income from building construction operations that more than offset a decrease in income from civil construction operations. Building construction operating income increased by $4.5 million (or 16.6%), from $27.1 million in 2000 to $31.6 million in 2001, due primarily to the increase in revenues discussed above which was largely offset by a decrease in the gross margin from 4.8% in 2000 to 4.0% in 2001 because 2000 included the favorable close-out of certain projects. In addition, building construction operating income was negatively impacted by a $3.6 million (or 28.3 %) increase in building construction-related general and administrative expenses primarily in connection with the pursuit of new work opportunities. Despite the increase in civil construction revenues discussed above, civil construction operating income decreased by $1.7 million (or 30.4%), from $5.6 million in 2000 to $3.9 million in 2001, due primarily to a downward profit revision on a Central Artery/Tunnel "Big Dig" project in Boston, Massachusetts.

      Other (income) expense decreased by $1.1 million, from a net income of $0.9 million in 2000 to a net expense of $0.2 million in 2001, due primarily to a decrease in interest income as a result of a decrease in the level of short-term cash investments, as well as lower interest rates in 2001.

      Interest expense decreased by $2.0 million, from $4.0 million in 2000 to $2.0 million in 2001, due primarily to

the continued reduction in the amount of long-term debt outstanding under the Company's credit facility as described in Note 3 of Notes to Consolidated Financial Statements, as well as lower interest rates in 2001.

Financial Condition

Cash and Working Capital

      Cash and cash equivalents as reported in the accompanying Consolidated Statements of Cash Flows consist of amounts held by the Company as well as the Company's proportionate share of amounts held by construction joint ventures. Cash held by the Company is available for general corporate purposes while cash held by construction joint ventures is available only for joint venture-related uses. Cash held by construction joint ventures is distributed from time to time to the Company and to the other joint venture participants in accordance with their percentage interest after the joint venture partners determine that a cash distribution is prudent. Cash distributions received by the Company from its construction joint ventures are then available for general corporate purposes. At December 31, 2002, 2001 and 2000, cash held by the Company and available for general corporate purposes was $11.2 million, $7.2 million and $34.0 million, respectively, and the Company's proportionate share of cash held by joint ventures and available only for joint venture-related uses was $35.8 million, $49.3 million and $61.8 million, respectively.

      During 2002, the Company used $9.5 million of cash on hand to fund operating activities ($3.6 million), investing activities ($0.6 million), and to reduce debt by a net amount of $5.3 million. The $3.6 million in cash used by operating activities was due primarily to the need to fund working capital requirements on certain joint venture construction contracts where unapproved change orders and/or contract claims remain to be resolved. (See Note 1(d) of Notes to Consolidated Financial Statements.)

      During 2001, the Company used $39.2 million of cash on hand to fund operating activities ($24.2 million); investing activities ($5.5 million), primarily for the acquisition of property and equipment; and financing activities ($9.5 million), primarily to reduce debt by a net amount of $9.8 million. Cash generated from operating activities decreased from a positive $0.8 million in 2000 to a negative $24.2 million in 2001 due primarily to the need to fund working capital requirements on certain Company construction contracts where unapproved change orders and/or contract claims remain to be resolved. (See Note 1(d) of Notes to Consolidated Financial Statements.)

      During 2000, the Company generated $0.8 million in cash from operating activities and $0.1 million in cash from investing activities. The funds generated plus $7.4 million in cash on hand were used for financing activities ($8.3 million) primarily to reduce debt. Financing activities in 2000 include net proceeds of $37.3 million received from the issuance of Common Stock in connection with the recapitalization of the Company as discussed in Note 7 of Notes to Consolidated Financial Statements, as well as net proceeds of $7.1 million received from a refinancing of the Company's corporate headquarters building. These funds were primarily used to pay down debt.

      During 2000, the Company's liquidity was significantly enhanced by the sale of 9,411,765 shares of Common Stock for an aggregate of $40 million (before fees and expenses) (see Note 7 of Notes to Consolidated Financial Statements) and by the refinancing of the Company's corporate headquarters building for $7.5 million (before fees and expenses) (see Note 3 of Notes to Consolidated Financial Statements). These financing transactions enabled the Company to reduce its dependence on bank debt to fund the working capital needs of its core construction operations, resulting in a significant reduction in interest expense. Also, in January 2002, the Company entered into an agreement with a new bank group to refinance its existing credit facility with a new $45 million revolving credit facility. In February 2003, the credit facility was amended to increase the revolving credit facility from $45 million to $50 million (see Note 3 of Notes to Consolidated Financial Statements), which will provide the Company with greater flexibility in providing the working capital needed to support the anticipated growth of the Company's construction activities. The financial covenants to which the Company is subject include, among other things, maintaining specified working capital, tangible net worth and operating profit levels, interest coverage minimums, and limitations on indebtedness, all as defined in the loan documents. Also, during the past three years, the Company has made substantial progress on its strategy for resolving several major construction claims and liquidating its real estate assets.

      The Company had $115.9 million of working capital at the end of 2002 compared to $93.4 million at the end of 2001 and $80.5 million at the end of 2000. The working capital current ratio was 1.44:1 at the end of 2002 compared to 1.24:1 at the end of 2001 and 1.20:1 at the end of 2000.

Long-term Debt

      Long-term debt was $12.1 million at the end of 2002, up from $7.5 million in 2001, and down compared to $17.2 million in 2000 and $41.1 million in 1999.

Stockholders' Equity

      As more fully described in Note 7 of Notes to Consolidated Financial Statements, effective March 29, 2000, the Company completed a recapitalization which included the sale of 9,411,765 shares of Common Stock for an aggregate of $40 million in cash (before fees and expenses) and the exchange of 100% of its Redeemable Series B Cumulative Convertible Preferred Stock for an aggregate of 7,490,417 shares of Common Stock. The effect of the recapitalization on the Company's stockholders' equity was to increase stockholders' equity by approximately $76.2 million, from a negative net worth of approximately $36.6 million at December 31, 1999 to a positive net worth of approximately $39.6 million upon completion of the recapitalization.

      The Company's book value per common share was $2.72 at December 31, 2002, compared to $2.40 at December 31, 2001, and $1.57 at December 31, 2000. The major factors impacting stockholders' equity during the three year period under review were the recapitalization completed in 2000, the net income recorded in all three years and, to a lesser extent, preferred dividends paid in-kind or accrued, and common stock options exercised. Also, the Company was required to recognize an additional minimum pension liability of approximately $13.7 million in 2002 and $5.9 million in 2001 in accordance with SFAS No. 87, "Employers' Accounting for Pensions" which resulted in an aggregate $19.6 million Accumulated Other Comprehensive Loss deduction in stockholders' equity. (See Note 10 of Notes to Consolidated Financial Statements.) Adjustments to the amount of this additional minimum pension liability will be recorded in future years based upon periodic re-evaluation of the funded status of the Company's pension plans.

Dividends

(a) Common Stock
     There were no cash dividends declared or paid on the Company’s outstanding Common Stock during the three years ended December 31, 2002.

(b) $21.25 Preferred Stock
     In conjunction with the covenants of the Company’s prior Credit Agreements, the Company was required to suspend the payment of quarterly dividends on its $21.25 Preferred Stock until certain financial criteria were met. Quarterly dividends on the $21.25 Preferred Stock have not been paid since 1995 (although they have been fully accrued due to the “cumulative” feature of the $21.25 Preferred Stock).

    The aggregate amount of dividends in arrears is approximately $15,405,000 at December 31, 2002, which represents approximately $154.05 per share of $21.25 Preferred Stock or approximately $15.41 per Depositary Share and is included in “Other Long-term Liabilities” in the Consolidated Balance Sheets. Under the terms of the $21.25 Preferred Stock, the holders of Depositary Shares are entitled to elect two additional Directors when dividends have been deferred for more than six quarters, and they have done so at each of the last five Annual Meetings.

     As of December 31, 2000, the financial criteria in the Company’s Credit Agreement which restricted the payment of dividends were satisfied, thereby making the resumption of dividends possible if the Company believed that its working capital was sufficient to warrant the resumption of payment of the regular dividend or any of the dividends

in arrears on the $21.25 Preferred Stock. The Company does not currently have any plans or target date for when this action may occur. This decision is based on the following circumstances:

  • A strong working capital position provides the Company the option of performing large projects without a joint venture partner or to assume the sponsoring partner position resulting in a larger proportionate interest and a greater share of joint venture profits.

  • A significant amount of working capital is dedicated to the funding requirements of the Company’s construction backlog, including collection of receivables, and the timely resolution of unapproved change orders and contract claims.

  • The Company is currently in the process of pursuing a strategy to profitably expand its construction business internally or through acquisition, either of which will likely require additional capital. In January 2003, the Company completed the acquisition of James A. Cummings, Inc. for $20.0 million (see Note 14 of Notes to Consolidated Financial Statements).

     The Board of Directors does not believe that it is, or will be, proper or prudent to pay or commit to pay dividends on the $21.25 Preferred Stock for the foreseeable future, and it is not obligated to do so under the terms of the $21.25 Preferred Stock.

(c) Series B Preferred Stock
     For an analysis of in-kind dividends paid on the Series B Preferred Stock for the period from December 31, 1999 to March 29, 2000, the date on which the holders of Series B Preferred Stock exchanged their shares of Series B Preferred Stock into shares of the Company’s Common Stock, see Note 8(b) of Notes to Consolidated Financial Statements.

Outlook

  • Construction Operations – The construction backlog at the end of 2002 was $990 million (or $1.160 billion when adjusted for the addition of backlog from the January 2003 acquisition of James A. Cummings, Inc.) compared to $1.214 billion at the end of 2001. This decrease is the result of the impact that the events of September 2001 and a continuation of the economic slowdown have had on private and public works contract awards during this period. The Company is expecting an improving new work award period once the economic and geopolitical picture begins to improve. The demand for the Company’s preconstruction services remains at a high level, and plans for public works construction at the local, state and federal levels remain strong in its market areas. With three years of record earnings behind it, the Company plans to continue to focus on optimizing value for its shareholders by actively pursuing higher margin projects in markets where it has considerable expertise and developing project opportunities through its strong client relationships, as well as managing its operations to achieve on time delivery, tight cost controls, safe working conditions and high quality standards. The Company is also continuing to pursue a strategy to profitably expand its construction business internally or through acquisition.

  • Recapitalization and Liquidity – With the successful completion on March 29, 2000 of the “Recapitalization” described in Note 7 of Notes to Consolidated Financial Statements and with three years of record earnings, the Company’s financial condition, including in particular its stockholders’ equity, working capital and liquidity, have improved significantly. In addition, the terms of the Credit Agreement were amended in February 2003 to increase the revolving credit facility from $45 million to $50 million and to extend the term of the Credit Agreement from January 2004 to June 2005. The Company will continue to actively pursue the favorable conclusion of various unapproved change orders and construction claims, to focus new construction work acquisition efforts on various niche markets and geographic areas where the Company has a proven history of success, and to continue to seek ways to control overhead expenses.

Management believes that cash generated from operations, existing credit lines and timely resolution and payment of various unapproved change orders and construction claims referred to above should be adequate to meet the Company’s funding requirements for at least the next twelve months.

New Accounting Pronouncements

      In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". The FASB also issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an Amendment of FASB Statement No. 123".

      SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and is effective for exit or disposal activities that are initiated after December 31, 2002. The Company expects that the adoption of the provisions of SFAS No. 146 will not have a material impact on its consolidated financial position or results of operations.

      SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based compensation and amends the disclosure requirements prescribed by SFAS No. 123, "Accounting for Stock-Based Compensation". As permitted under SFAS No. 148, the Company adopted the disclosure requirements in 2002 and plans to evaluate the effect of the remaining provisions of SFAS No. 148 in 2003.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      The Company's exposure to market risk for changes in interest rates relates primarily to the Company's revolving credit debt (see Note 3 of Notes to Consolidated Financial Statements) and short-term investment portfolio. As of December 31, 2002, the Company had $5.0 million borrowed under its revolving credit agreement and $30.0 million of short-term investments classified as cash equivalents.

      The Company borrows under its bank revolving credit facility for general corporate purposes, including working capital requirements and capital expenditures. Borrowings under the bank credit facility bear interest at the applicable LIBOR or base rate, as defined, and therefore, the Company is subject to fluctuations in interest rates. If the average effective 2002 borrowing rate of 4.5% changed by 10% (or 0.45%) during the next twelve months, the impact, based on the Company's ending 2002 revolving debt balance, would be an increase or decrease in net income and cash flow of approximately $23,000.

      The Company's short-term investment portfolio consists primarily of highly liquid instruments with maturities of three months or less.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The Independent Auditors' Report, Consolidated Financial Statements, and Supplementary Schedules are set forth in Item 15 in this Report and are hereby incorporated herein.

ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

      See Form 8-K dated April 16, 2002 for disclosure of matters related to our change in auditors.

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Information relating to the directors of the Company is set forth in the section entitled "Election of Directors" in the definitive proxy statement in connection with the Annual Meeting of Stockholders to be held on May 15, 2003 (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, 2002 pursuant to Regulation 14A of the Securities and Exchange Act of 1934, as amended. Information relating to the executive officers of the Company is set forth in Part I of this report under the caption "Executive Officers of the Registrant".

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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 sections entitled "Election of Directors", "Ownership of Common Stock by Directors, Officers and Preferred Stock Nominees", "Certain Other Beneficial Holders", "Securities Authorized for Issuance Under Equity Compensation Plans" and "Certain Transactions" in the Proxy Statement, which are incorporated herein by reference.

PART IV.

ITEM 14. CONTROLS AND PROCEDURES

(a)      Evaluation of disclosure controls and procedures

      The Company's principal executive officer and principal financial officer have evaluated the Company's disclosure controls and procedures (as such term is defined in paragraph (c) of the Exchange Act Rules 13a-14 and 15d-14) as of a date within 90 days of the filing date of this annual report on Form 10-K. In conjunction with their initial evaluation, they formed a Disclosure Controls and Procedures Committee to formalize the Company's disclosure controls and procedures. Based on their latest evaluation, they have concluded that the Company's disclosure controls and procedures are operating effectively.

(b)      Changes in internal controls

      There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their latest evaluation.

ITEM 15. 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, 2002 and 2001                                       35 - 36

          Consolidated Statements of Income for the years ended December 31, 2002, 2001 and 2000             37

          Consolidated Statements of Stockholders' Equity for the years ended December 31, 2002, 2001        38
          and 2000

          Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000         39 - 40

          Notes to Consolidated Financial Statements                                                         41 - 65

          Independent Auditors' Report                                                                       66

(a)2.     The following financial statement schedules are filed as part of this report:
                                                                                                             Pages

          Independent Auditors' Report on Schedule                                                           67

          Schedule II - Valuation and Qualifying Accounts and Reserves                                       68

          All other schedules are omitted because of the absence of the conditions under which they are required or
          because the required information is included in the Consolidated Financial Statements or in the Notes
          thereto.

(a)3.     Exhibits

          The exhibits which are filed with this report or which are incorporated herein by reference are set forth
          in
          the Exhibit Index which appears on  pages 69 through 71.  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)       Reports on Form 8-K

          A report on Form 8-K was filed on December 20, 2002 that reported on the Company's signing of a Stock
          Purchase and Sale Agreement to acquire James A. Cummings, Inc., a privately held construction company
          based in Fort Lauderdale, Florida, for $20 million in cash in "Item 5. Other Events" in said Form 8-K.

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, thereunto duly authorized.

                                                                Perini Corporation
                                                                (Registrant)

Dated:  March 31, 2003                                          By:  /s/Robert Band
                                                                Robert Band
                                                                President and Chief Operating Officer

        Pursuant to the requirements of the Securities 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
    Ronald N. Tutor                                Chairman and Chief Executive Officer             March 31, 2003

By:  /s/Ronald N. Tutor
Ronald N. Tutor

(ii) Principal Financial Officer
    Robert Band                                    President and Chief Operating Officer            March 31, 2003

By:  /s/Robert Band
Robert Band

(iii) Principal Accounting Officer
    Michael E. Ciskey                              Vice President and Controller                    March 31, 2003

By:  /s/Michael E. Ciskey
Michael E. Ciskey

(iv)  Directors

    Ronald N. Tutor                                )
    Peter Arkley                                   )
    Robert Band                                    ) /s/Robert Band
    Wayne L. Berman                                ) Robert Band
    Frederick Doppelt                              ) Attorney in Fact
    Robert A. Kennedy                              ) Dated:  March 31, 2003
    Michael R. Klein                               )
    Raymond R. Oneglia                             )

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Ronald N. Tutor, certify that:

1. I have reviewed this annual report on Form 10-K of Perini Corporation (the "registrant");

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

     b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

     a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 31, 2003                                                   /s/Ronald N. Tutor
                                                                                     Ronald N. Tutor, Chairman and Chief Executive Officer

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Robert Band, certify that:

1. I have reviewed this annual report on Form 10-K of Perini Corporation (the "registrant");

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

     b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

     a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 31, 2003                                                   /s/Robert Band
                                                                                     Robert Band, President, Chief Operating Officer and Principal                                                                                      Financial Officer

Consolidated Balance Sheets
December 31, 2002 and 2001

(In thousands, except share data)

Assets
                                                                                         2002            2001
                                                                                      ------------    ------------
CURRENT ASSETS:
  Cash, including cash equivalents of $30,042 and $36,686 (Note 1)                       $ 47,031        $ 56,542
  Accounts and notes receivable, including retainage of $66,284 and $97,610               218,172         318,174
  Unbilled work (Note 1)                                                                  112,563          97,425
  Land held for sale, net (Note 5)                                                          2,173          11,740
  Other current assets                                                                      1,992           1,949
                                                                                      ------------    ------------
     Total current assets                                                                $381,931        $485,830
                                                                                      ------------    ------------




PROPERTY AND EQUIPMENT, at cost (Note 1):
  Land                                                                                   $    489        $    489
  Buildings and improvements                                                               13,496          12,850
  Construction equipment                                                                   12,338          10,240
  Other equipment                                                                           7,577           7,594
                                                                                      ------------    ------------
                                                                                         $ 33,900        $ 31,173

  Less - Accumulated depreciation                                                          19,858          18,768
                                                                                      ------------    ------------

     Total property and equipment, net                                                   $ 14,042        $ 12,405
                                                                                      ------------    ------------




OTHER ASSETS (Notes 5 and 6)                                                             $  6,416        $  3,006
                                                                                      ------------    ------------


                                                                                         $402,389        $501,241
                                                                                      ============    ============

The accompanying notes are an integral part of these consolidated financial statements.

Liabilities and Stockholders' Equity
                                                                                               2002                2001
                                                                                           --------------      --------------
CURRENT LIABILITIES:
  Current maturities of long-term debt (Note 3)                                                $     416           $  10,249
  Accounts payable, including retainage of $37,357 and $72,275                                   162,456             265,008
  Deferred contract revenue (Note 1)                                                              65,868              72,129
  Accrued expenses                                                                                37,283              45,075
                                                                                           --------------      --------------
     Total current liabilities                                                                 $ 266,023           $ 392,461
                                                                                           --------------      --------------

LONG-TERM DEBT, less current maturities included above (Note 3)                                $  12,123           $   7,540
                                                                                           --------------      --------------

OTHER LONG-TERM LIABILITIES (Notes 6, 8 and 10)                                                $  37,594           $  21,832
                                                                                           --------------      --------------

CONTINGENCIES AND COMMITMENTS (Note 2)

STOCKHOLDERS' EQUITY (Notes 1, 7, 8, 9 and 10):
  Preferred stock, $1 par value -
     Authorized - 1,000,000 shares
     Designated, issued and outstanding - 99,990 shares of $21.25 convertible
       exchangeable preferred stock ($24,998 aggregate liquidation preference)                 $     100           $     100
     Series A junior participating preferred stock, $1 par value -
       Designated - 200,000 shares
       Issued - none                                                                                   -                   -
  Stock purchase warrants                                                                          2,233               2,233
  Common stock, $1 par value -
     Authorized - 40,000,000 shares
     Issued - 22,724,664 shares                                                                   22,725              22,725
  Paid-in surplus                                                                                 95,546              97,671
  Retained earnings (deficit)                                                                    (13,417)            (36,491)
  Less - common stock in treasury, at cost - 60,529 shares                                          (965)               (965)
                                                                                           --------------      --------------
                                                                                               $ 106,222           $  85,273
  Accumulated other comprehensive loss                                                           (19,573)             (5,865)
                                                                                           --------------      --------------
     Total stockholders' equity                                                                $  86,649           $  79,408
                                                                                           --------------      --------------

                                                                                               $ 402,389           $ 501,241
                                                                                           ==============      ==============

Consolidated Statements of Income
For the Years Ended December 31, 2002, 2001 and 2000

(In thousands, except per share data)

                                                                       2002             2001            2000
                                                                 ---------------  ---------------  -------------

Revenues (Note 12)                                                  $ 1,085,041      $ 1,553,396    $ 1,105,660

Cost of Operations                                                    1,026,391        1,495,834      1,053,328
                                                                 ---------------  ---------------   -------------

Gross Profit                                                        $    58,650      $    57,562    $    52,332

General and Administrative Expenses                                      32,770           28,061         24,977
                                                                 ---------------  ---------------  -------------

INCOME FROM OPERATIONS (Note 12)                                    $    25,880      $    29,501    $    27,355

Other (Income) Expense, Net (Note 6)                                        520              227           (949)
Interest Expense (Note 3)                                                 1,485            2,006          3,966
                                                                 ---------------  ---------------  -------------

Income before Income Taxes                                          $    23,875      $    27,268    $    24,338

Provision (Credit) for Income Taxes (Notes 1 and 4)                         801              850            (43)
                                                                 ---------------  ---------------  -------------

NET INCOME                                                          $    23,074      $    26,418    $    24,381
                                                                 ===============  ===============  =============




NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS (Note 1)               $    20,949      $    24,293    $     7,299
                                                                 ===============  ===============  =============


BASIC EARNINGS PER COMMON SHARE (Note 1)                            $      0.92      $      1.07    $      0.39
                                                                 ===============  ===============  =============

DILUTED EARNINGS PER COMMON SHARE (Note 1)                          $      0.91      $      1.04    $      0.39
                                                                 ===============  ===============  =============

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Stockholders' Equity
For the Years Ended December 31, 2002, 2001 and 2000

(In thousands, except per share data)

                                                                                                            Accumulated
                                                      Stock                            Retained                   Other
                                       Preferred    Purchase      Common     Paid-In   Earnings    Treasury    Comprehensive
                                         Stock      Warrants      Stock      Surplus   (Deficit)    Stock          Loss          Total
- -----------------------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1999                 $ 100      $ 2,233     $ 5,743    $43,561   $(87,290)     $ (965)        $      -   $(36,618)
- -----------------------------------------------------------------------------------------------------------------------------------------
Net Income                                      -            -           -          -     24,381           -                -     24,381

Preferred Stock dividends accrued
($21.25 per share*)                             -            -           -     (2,125)         -           -                -     (2,125)

Series B Preferred Stock dividends
in kind issued (Note 8)                         -            -           -     (1,161)         -           -                -     (1,161)

Accretion related to Series B
Preferred Stock (Note 8)                        -            -           -        (96)         -           -                -        (96)

Net proceeds received from
issuance of Common Stock (Note 7)               -            -       9,412     27,887          -           -                -     37,299

Exchange of Series B Preferred
Stock for Common Stock (Note 7)                 -            -       7,490     31,452          -           -                -     38,942

- -----------------------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 2000                 $ 100      $ 2,233    $ 22,645    $99,518   $(62,909)     $ (965)        $      -   $ 60,622
- -----------------------------------------------------------------------------------------------------------------------------------------
Net Income                                      -            -           -          -     26,418           -                -     26,418

Other comprehensive income (loss):
  Minimum pension liability (Note 10)           -            -           -          -          -           -           (5,865)    (5,865)
                                                                                                                              -----------
Total comprehensive income                                                                                                        20,553
                                                                                                                              -----------

Preferred Stock dividends accrued
($21.25 per share*)                             -            -           -     (2,125)         -           -                -     (2,125)

Common Stock options exercised                  -            -          80        278          -           -                -        358
- -----------------------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 2001                 $ 100      $ 2,233    $ 22,725    $97,671   $(36,491)     $ (965)        $ (5,865)  $ 79,408
- -----------------------------------------------------------------------------------------------------------------------------------------
Net Income                                      -            -           -          -     23,074           -                -     23,074

Other comprehensive income (loss):
  Minimum pension liability (Note 10)           -            -           -          -          -           -          (13,708)   (13,708)
                                                                                                                              -----------
Total comprehensive income                                                                                                         9,366
                                                                                                                              -----------

Preferred Stock dividends accrued
($21.25 per share*)                             -            -           -     (2,125)         -           -                -     (2,125)

- -----------------------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 2002                 $ 100      $ 2,233    $ 22,725    $95,546   $(13,417)     $ (965)       $ (19,573)  $ 86,649
- -----------------------------------------------------------------------------------------------------------------------------------------

*Equivalent to $2.125 per Depositary Share (see Note 8).

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Cash Flows
For the Years Ended December 31, 2002, 2001 and 2000

(In thousands)

                                                                                         2002          2001           2000
                                                                                     ------------  ------------   -----------
Cash Flows from Operating Activities:

  Net income                                                                           $  23,074      $ 26,418       $24,381

  Adjustments to reconcile net income to net cash from operating activities -

  Depreciation                                                                             2,457         1,915         1,617

  Amortization of deferred debt expense and other deferred expenses                          745           687           574

  Cash provided from (used by) changes in components of working capital other than
  cash and current maturities of long-term debt:

     (Increase) decrease in:
        Accounts and notes receivable                                                    102,322       (49,253)      (87,467)
        Unbilled work                                                                    (15,138)       (1,008)      (25,850)
        Other current assets                                                                 (43)          309         2,215
     Increase (decrease) in:
        Accounts payable                                                                (102,552)       13,606       106,655
        Deferred contract revenue                                                         (6,261)        4,159       (18,658)
        Accrued expenses                                                                  (7,792)      (18,656)        3,319

  Other long-term liabilities                                                               (405)       (2,321)       (5,652)

  Other items, net                                                                           (39)         (101)         (332)
                                                                                     ------------  ------------   -----------

  NET CASH (USED BY) PROVIDED FROM OPERATING ACTIVITIES                                $  (3,632)     $(24,245)        $ 802
                                                                                     ------------  ------------   -----------

Cash Flows from Investing Activities:

  Proceeds from sale of property and equipment                                         $     455      $    199         $ 435

  Acquisition of property and equipment                                                   (4,510)       (4,528)       (1,793)

  Proceeds from (investment in) land held for sale, net                                    4,072        (1,126)        2,081

  Investment in other activities                                                            (646)          (57)         (609)
                                                                                     ------------  ------------   -----------

  NET CASH (USED BY) PROVIDED FROM INVESTING ACTIVITIES                                $    (629)     $ (5,512)        $ 114
                                                                                     ------------  ------------   -----------

Consolidated Statements of Cash Flows (Continued)
For the Years Ended December 31, 2002, 2001 and 2000

(In thousands)

                                                                             2002            2001            2000
                                                                         -------------   --------------  -------------
Cash Flows from Financing Activities:

  Proceeds from issuance of common stock, net                                $      -        $       -       $ 37,299

  Proceeds from long-term debt                                                  5,000              572          7,757

  Reduction of long-term debt                                                 (10,250)         (10,399)       (53,390)

  Proceeds from exercise of common stock options                                    -              358              -
                                                                         -------------   --------------  -------------


  NET CASH USED BY FINANCING ACTIVITIES                                      $ (5,250)       $  (9,469)      $ (8,334)
                                                                         -------------   --------------  -------------

Net Decrease in Cash                                                         $ (9,511)       $ (39,226)      $ (7,418)

Cash and Cash Equivalents at Beginning of Year                                 56,542           95,768        103,186
                                                                         -------------   --------------  -------------

Cash and Cash Equivalents at End of Year (Note (1)(j))                       $ 47,031        $  56,542       $ 95,768
                                                                         =============   ==============  =============



Supplemental Disclosures of Cash Paid During the Year For:

  Interest                                                                   $  2,441        $   2,063       $  4,242
                                                                         =============   ==============  =============

  Income tax payments                                                        $  1,885        $   1,130       $  1,320
                                                                         =============   ==============  =============

Supplemental Disclosure of Noncash Transactions:

  Dividends paid in shares of Series B Preferred Stock (Note 8)              $      -        $      -        $  1,161
                                                                         =============   ==============  =============

  Exchange of Series B Preferred Stock into Common Stock
  at $5.50 per share (Note 7)                                                $      -        $      -        $ 38,942
                                                                         =============   ==============  =============

The accompanying notes are an integral part of these consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000

[1] Summary of Significant Accounting Policies

[a] Nature of Business
The Company was incorporated in 1918 as a successor to businesses which had been engaged in providing construction services since 1894. The Company currently 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 two basic segments or operations: building and civil. The general building and civil contracting 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 provides these services by using traditional general contracting arrangements, such as fixed price, guaranteed maximum price and cost plus award fee contracts and, to a lesser extent, construction management or design-build contracting arrangements.

In an effort to limit its financial and/or operational risk on certain large or complex projects, the Company participates in construction joint ventures, often as sponsor or manager of the project, for the purpose of bidding and, if awarded, providing the agreed upon construction services. Each participant usually agrees in advance to provide a predetermined percentage of capital, as required, and to share in the same percentage of profit or loss of the project.

[b] Principles of Consolidation
The consolidated financial statements include the accounts of Perini Corporation and its wholly owned subsidiaries (the “Company”). All significant intercompany transactions and balances have been eliminated in consolidation.

Prior to 2002, the Company’s interests in construction joint ventures were accounted for on the equity method in the Consolidated Balance Sheets and on the proportionate consolidation method in the Consolidated Statements of Income. Beginning in 2002, construction joint venture interests are accounted for using the proportionate consolidation method in the Consolidated Balance Sheets as well as the Consolidated Statements of Income, whereby the Company’s proportionate share of each joint venture’s assets, liabilities, revenues and cost of operations are included in the appropriate classifications in the consolidated financial statements. The Company believes the change, which results in presenting all joint venture activity using a consistent methodology in both the Consolidated Balance Sheets and Consolidated Statements of Income, is preferable.

Although this change impacted various classifications within Current Assets and Current Liabilities in the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows, it had no impact on net working capital or other categories of long-term assets or liabilities in the Consolidated Balance Sheets. It also had no impact on the Consolidated Statements of Income or basic or diluted earnings per common share for any period presented. Prior year Consolidated Balance Sheets and Consolidated Statements of Cash Flows have been restated to conform to the 2002 presentation.

[c] Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s construction business involves making significant estimates and assumptions in the normal course of business relating to its Company and joint venture construction contracts due to, among other things, the one-of-a-kind nature of most of its projects, long-term duration of its contract cycle and type of contract utilized. The most significant estimates with regard to these financial statements relate to the estimating of total forecasted construction contract revenues, costs and profits in accordance with accounting for long-term contracts (see Note 1(d) below) and estimating potential liabilities in conjunction with certain contingencies, including the outcome of pending or future litigation, arbitration or other dispute resolution proceedings (see Note 2 below). Actual results could differ in the near term from these estimates and such differences could have a material adverse effect on the Company’s financial condition, results of operations and cash flows.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[1] Summary of Significant Accounting Policies (continued)

[d] Method of Accounting for Contracts
Revenues and profits from the Company’s contracts and construction joint venture contracts are generally recognized by applying percentages of completion for the period 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. However, on construction management contracts, profit is generally recognized in accordance with the contract terms, usually on the as billed method, which is generally consistent with the level of effort incurred over the contract period. When the estimate on a contract indicates a loss, the Company’s policy is to record the entire loss during the accounting period in which it is estimated. In the ordinary course of business, at a minimum on a quarterly basis, the Company prepares updated estimates of the total forecasted revenue, cost and profit or loss for each contract. The cumulative effect of revisions in estimates of total cost or revenue, including unapproved change orders and claims, during the course of the work is reflected in the accounting period in which the facts that caused the revision become known. An amount equal to the costs incurred which are attributable to unapproved change orders and claims is included in the total estimated revenue when realization is probable. Profit from unapproved change orders and claims is recorded in the period such amounts are resolved.

In accordance with normal practice in the construction industry, the Company includes in current assets and current liabilities amounts related to construction contracts realizable and payable over a period in excess of one year. 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 certain contracts. 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 the remaining contracts. Unbilled work at December 31, 2002 and 2001, consisted of the following (in thousands): 

                                                   2002            2001
                                               -------------    ------------
Unbilled costs and profits incurred to date      $ 19,498 *      $ 23,784 *
Unapproved change orders                           30,289          25,638
Claims                                             62,776          48,003
                                               -------------    ------------
                                                 $112,563        $ 97,425
                                               =============    ============

*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.

The prerequisite for billing “Unbilled costs and profits incurred to date” is provided in the defined billing terms of each of the applicable contracts. The prerequisite for billing "Unapproved change orders" or "Claims" is the final resolution and agreement between the parties. The amount of unbilled work at December 31, 2002 estimated by management to be collected beyond one year is approximately $22.1 million.

[e] 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 over lives from three to seven years and the straight-line method for the remaining depreciable property over lives from three to thirty years.

[f] Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Recoverability is evaluated by comparing the carrying value of the asset to the undiscounted cash flows associated with the affected assets. When this comparison indicates that the carrying value of the asset is greater than the undiscounted cash flows, a loss is recognized for the difference between the carrying value and estimated fair value. Fair value is determined based on market quotes, if available, or is based on valuation techniques.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[1] Summary of Significant Accounting Policies (continued)

[g] Goodwill
Effective January 1, 2002, the accounting for goodwill changed to comply with SFAS No. 142, “Goodwill and Other Intangible Assets”. Goodwill in the amount of approximately $1 million is included in “Other Assets” in the accompanying Consolidated Balance Sheets and represents the excess of the costs of subsidiaries acquired over the fair value of their net assets as of the dates of acquisition (see Note 6). While these amounts were being amortized on a straight-line basis over 40 years through 2001 at an annual rate of $63,000, amortization was discontinued in 2002 in accordance with SFAS No. 142. Goodwill is now subject to an assessment for impairment by applying a fair value test, at a minimum, on an annual basis. Based on the initial and annual impairment tests completed during 2002, the Company concluded that goodwill was not impaired. Therefore, the implementation of SFAS No. 142 did not have a material impact on the Company’s financial statements.

[h] Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” (see Note 4). Deferred income tax assets and liabilities are recognized for the effects of temporary differences between the financial statement carrying amounts and the income tax basis of assets and liabilities using enacted tax rates. In addition, future tax benefits, such as net operating loss carryforwards, are recognized currently to the extent such benefits are more likely than not to be realized as an economic benefit in the form of a reduction of income taxes in future years.

[i] Earnings Per Common Share
Earnings per common share amounts were calculated in accordance with SFAS No. 128, “Earnings Per Share”. Basic earnings per common share (“EPS”) was computed by dividing net income less dividends, other requirements related to Preferred Stock and the loss on the induced conversion of Series B Preferred in 2000 by the weighted average number of common shares outstanding. Diluted earnings per common share was computed by giving effect to all dilutive potential common shares outstanding. For all of the applicable periods presented, the assumed conversion of the Company’s Depositary Convertible Exchangeable Preferred Shares, Series B Preferred Shares and Stock Purchase Warrants into common stock was not included in the computation of diluted earnings per common share since the effect would be antidilutive.

Basic and diluted earnings per common share for each of the three years in the period ending December 31, 2002 are calculated as follows (in thousands except per share amounts): 

                                                                                                         2000,
                                                                     2002               2001         As Restated
                                                                ----------------   ---------------- ---------------

Net Income                                                             $ 23,074           $ 26,418       $  24,381
                                                                ----------------   ---------------- ---------------
Less:
Accrued dividends on $21.25 Preferred Stock (Note 8)                   $ (2,125)          $ (2,125)      $  (2,125)
Dividends declared on Series B Preferred Stock (Note 8)                       -                  -          (1,161)
Accretion deduction required to reinstate mandatory
 redemption value of Series B Preferred Stock over a
 period of 8-10 years (Note 8)                                                -                  -             (96)
Loss on the induced conversion of Series B Preferred (Note 7)                 -                  -         (13,700)
                                                                ----------------   ---------------- ---------------
                                                                       $ (2,125)          $ (2,125)      $ (17,082)
                                                                ----------------   ---------------- ---------------

Net income available for common stockholders                           $ 20,949           $ 24,293       $   7,299
                                                                ================   ================ ===============

Weighted average shares outstanding for basic EPS                        22,664             22,623          18,521
Effect of dilutive stock options outstanding                                275                819               6
                                                                ----------------   ---------------- ---------------
Weighted average shares outstanding for diluted EPS                      22,939             23,442          18,527
                                                                ----------------   ---------------- ---------------

Basic earnings per Common Share                                        $   0.92           $   1.07       $    0.39
                                                                ================   ================ ===============
Diluted earnings per Common Share                                      $   0.91           $   1.04       $    0.39
                                                                ================   ================ ===============

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[1] Summary of Significant Accounting Policies (continued)

[i] Earnings Per Common Share (continued)
Subsequent to the issuance of the 2001 financial statements, management has determined that EITF D-42, The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock, required that the fair value of the common shares issued in excess of the common shares issuable under the original conversion terms as a result of the recapitalization discussed in Note 7, should have been subtracted from net income to determine net earnings available for common stockholders for the purpose of computing earnings per share. This charge had previously been excluded from the calculation. Accordingly, actual basic and diluted earnings per share for 2000 have been restated from $1.13 per share to $0.39 per share.

[j] Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with original maturities of three months or less.

Cash and cash equivalents as reported in the accompanying Consolidated Balance Sheets consist of amounts held by the Company that are available for general corporate purposes and the Company’s proportionate share of amounts held by construction joint ventures that are available only for joint venture-related uses. Cash held by construction joint ventures is distributed from time to time to the Company and to the other joint venture participants in accordance with their percentage interest after the joint venture partners determine that a cash distribution is prudent. Cash distributions received by the Company from its construction joint ventures are then available for general corporate purposes. At December 31, 2002 and 2001, cash and cash equivalents consisted of the following (in thousands): 

                                                          2002         2001
                                                       -----------  -----------

Corporate cash and cash equivalents (available
  for general corporate purposes)                        $ 11,220     $  7,164

Company's share of joint venture cash and
  cash equivalents (available only for joint venture
  purposes, including future distributions)                35,811       49,378
                                                       -----------  -----------
                                                         $ 47,031     $ 56,542
                                                       ===========  ===========

[k] Stock-Based Compensation
The Company accounts for stock options granted to employees and directors using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related Interpretations. No stock-based employee compensation cost is reflected in net income since all stock options granted by the Company had an exercise price equal to or greater than the fair market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation", to stock-based employee and director compensation (in thousands). The effect of applying SFAS No. 123 in this pro forma disclosure may not be indicative of future charges.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[1] Summary of Significant Accounting Policies (continued)

[k] Stock-Based Compensation (continued)

                                                Year Ended December 31,
                                        -----------------------------------------
                                           2002           2001          2000
                                        ------------  ------------- -------------

Net income, as reported                    $ 23,074       $ 26,418      $ 24,381
Less:  Total stock-based employee
  compensation expense determined
  under fair value based method for
  all awards                                 (2,831)        (2,846)       (3,194)
                                        ------------  ------------- -------------
Net income, pro forma                      $ 20,243       $ 23,572      $ 21,187
                                        ============  ============= =============

Basic earnings per share:
  As reported (See Note (1)(i))            $   0.92       $   1.07      $   0.39
  Pro forma                                $   0.80       $   0.94      $   0.22

Diluted earnings per share:
  As reported  (See Note (1)(i))           $   0.91       $   1.04      $   0.39
  Pro forma                                $   0.79       $   0.91      $   0.22

[l] Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents approximate fair value due to the short term nature of these items. The carrying value of receivables and other amounts arising out of normal contract activities, including retentions, which may be settled beyond one year, is estimated to approximate fair value. See Note 3, “Financial Commitments” for disclosure of the fair value of long-term debt.

[m] Reclassifications
Certain prior year amounts have been reclassified to be consistent with the current year classifications.

[n] New Accounting Pronouncements
In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". The FASB also issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an Amendment of FASB Statement No. 123".

SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and is effective for exit or disposal activities that are initiated after December 31, 2002. The Company expects that the adoption of the provisions of SFAS No. 146 will not have a material impact on its consolidated financial position or results of operations.

SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based compensation and amends the disclosure requirements prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation”. As permitted under SFAS No. 148, the Company adopted the disclosure requirements in 2002 and plans to evaluate the effect of the remaining provisions of SFAS No. 148 in 2003.

[2] Contingencies and Commitments

(a) Mergentime - Perini Joint Ventures vs. WMATA Matter

On May 11, 1990, contracts with two joint ventures in which Perini Corporation held a minority interest (“Joint Ventures”) were terminated by the Washington Metropolitan Area Transit Authority (“WMATA”) on two adjacent subway construction contracts in the District of Columbia. The contracts were awarded to the Joint Ventures in 1985 and 1986. However, Perini and Mergentime Corporation (“Mergentime”), the 60% managing partner, entered into an

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[2] Contingencies and Commitments (continued)

(a) Mergentime - Perini Joint Ventures vs. WMATA Matter (continued)

agreement in 1987 under which Perini withdrew from the Joint Ventures and Mergentime assumed complete control over the performance of both projects. This agreement did not relieve Perini of its responsibilities to WMATA as a Joint Venture partner. After Perini withdrew from the Joint Ventures, Mergentime and WMATA were embroiled in a dispute regarding progress on the projects. Each party blamed the other for delays that were impacting both cost and progress and the parties were unable to resolve their dispute. Ultimately, both construction contracts were terminated by WMATA and WMATA retained Perini, acting independently, to complete both projects.

Subsequently, the Joint Ventures brought an action in the United States District Court for the District of Columbia against WMATA, seeking damages for delays, unpaid extra work and wrongful termination and WMATA brought an action against the Joint Ventures seeking damages for additional costs to complete the projects. After a bench trial before two District Court Judges (the initial Judge died before the matter could be concluded), the District Court found the Joint Ventures liable to WMATA for damages in the amount of approximately $16.5 million and WMATA liable to the Joint Ventures for damages in the amount of approximately $4.3 million.

The Joint Ventures appealed the judgment to the United States Court of Appeals for the District of Columbia (“Court of Appeals”), arguing, among other things, that the second District Court Judge had issued his final decision without fully familiarizing himself with the record of the initial District Court Judge. On February 16, 1999, the Court of Appeals vacated the District Court’s final judgment and ordered the successor District Court Judge to review the findings of the initial Judge and hold further hearings in regard to the Joint Venture’s affirmative claims. In addition, the Court of Appeals held that statutory interest on any of the claims will not accrue until final judgment is entered sometime in the future. Later in 1999, the case was transferred to a new successor District Court Judge.

On February 28, 2001, the new successor District Court Judge informed the parties that in the absence of a new trial, he could not certify adequate familiarity with the record to complete the remaining proceedings; therefore, he ordered that the Joint Ventures’ motion for a new trial be granted.

A new trial before the new successor District Court Judge was completed in January 2002 and a decision is still pending. The ultimate financial impact of the Judge's pending decision is not yet determinable; therefore, no provision for loss, if any, has been recorded in the financial statements.

(b) Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter

During 1995, a joint venture, Tutor-Saliba-Perini (“TSP”), in which Perini Corporation is a 40% minority partner and Tutor-Saliba Corporation of Sylmar, CA is the 60% managing partner, filed a complaint in the Superior Court of the State of California for the County of Los Angeles against the Los Angeles County Metropolitan Transportation Authority (“MTA”) seeking to recover costs for extra work required by the MTA in connection with the construction of the Wilshire/Normandie Subway Station. TSP is seeking additional compensation from the MTA for claims related to the construction and in February 1999 the MTA countered with civil claims under the California False Claims Act against TSP, Tutor-Saliba Corporation, Perini Corporation and other parties. Ronald N. Tutor, the Chairman and CEO of Perini Corporation since March of 2000, is also the CEO and the sole stockholder of Tutor-Saliba Corporation (see Note 13).

Claims concerning the construction of the Wilshire/Normandie Subway Station were tried before a Jury in 2001. During trial, the Judge ruled that TSP had failed to comply with the Court’s prior discovery orders and the Judge penalized TSP for its alleged non-compliance by dismissing TSP’s claim and by ruling, without a Jury finding, that TSP was liable to the MTA for damages on the MTA’s counterclaim. The Judge then instructed the Jury that TSP was liable to the MTA and charged the Jury with the responsibility of determining the amount of the damages based on the Judge’s ruling. The Jury awarded the MTA approximately $29.6 million in damages.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[2] Contingencies and Commitments (continued)

(b) Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter (continued)

On March 26, 2002, the Judge amended the award, ordering TSP to pay the MTA an additional $33.4 million in costs and attorney fees, with the aggregate $63.0 million award subject to interest at an annual rate of 10% from the date of the award.

TSP and the other plaintiffs/defendants in counterclaim have appealed the Judge’s discovery sanction, the subsequent Jury award and the amended award. The ultimate financial impact of the Judge’s ruling and/or the awards is not yet determinable. Therefore, no provision for loss, if any, has been recorded in the financial statements.

(c) City of San Francisco vs. Tutor-Saliba, Perini & Buckley Joint Venture Matter

On November 1, 2002, the San Francisco City Attorney, on behalf of the City and County of San Francisco and the citizens of California (“Plaintiffs”), filed a civil action with a demand for a jury trial against Tutor-Saliba Corporation (“TSC”), the Tutor-Saliba, Perini & Buckley, Joint Venture (“JV”), Perini Corporation (“Perini”), Buckley & Company, Inc. (“Buckley”) and their bonding companies in the United States District Court in San Francisco relating to seven contracts for work on the expansion of the San Francisco International Airport. The Plaintiffs allege various overcharges, bidding violations, violations of minority contracting regulations, civil fraud, and violation of the California and San Francisco False Claims and California Unfair Competition Acts. In addition, the Plaintiffs allege that TSC has violated the United States Racketeer Influenced Corrupt Organizations Act. The Plaintiffs have asserted $30 million in damages and are seeking treble damages, various civil penalties and debarment of the JV and TSC from doing business with the City of San Francisco. The Plaintiffs have not allocated their claims for damages and penalties amongst the defendants or the seven contracts at issue, only two of which involved the JV. TSC is the managing partner of the JV, and in December 1997, Perini sold its entire 20% interest in the JV to TSC. TSC has agreed to indemnify Perini from any liability arising out of the joint venture, including legal fees and expenses.

(d) Perini/Kiewit/Cashman Joint Venture - Central Artery/Tunnel Project Matter

Perini/Kiewit/Cashman Joint Venture (“PKC”), a joint venture in which Perini Corporation holds a 56% interest and is the managing partner, is currently pursuing a series of claims for additional contract time and/or compensation against the Massachusetts Highway Department (“MHD”) for work performed by PKC on a portion of the Central Artery/Tunnel project in Boston, Massachusetts. The claims relate to the construction of the Northbound Mainline Central Artery Tunnel from Kneeland Street to Congress Street. During construction, MHD ordered PKC to perform changes to the work and issued related direct cost changes with an estimated value, excluding time delay and inefficiency costs, in excess of $100 million. In addition, PKC encountered a number of unforeseen conditions during construction that greatly increased PKC’s cost of performance.

Certain of PKC’s claims have been presented to a Disputes Review Board (“DRB”) which consists of three construction experts chosen by the parties. To date, the DRB has ruled on a binding basis that PKC is entitled to additional compensation for its contract time delay claim in the amount of $17.4 million. A Judge of the Massachusetts Superior Court has issued a decision upholding the DRB’s binding award to PKC. Although MHD challenged several of the DRB’s decisions relative to the contract time delay award discussed above, PKC received a favorable ruling on March 20, 2002 from the Superior Court of the Commonwealth of Massachusetts that approved PKC’s request to have MHD comply with the DRB’s decision to award the $17.4 million for the time delay. The MHD has appealed the Superior Court decision to the Appeals Court of the Commonwealth of Massachusetts.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[2] Contingencies and Commitments (continued)

(d) Perini/Kiewit/Cashman Joint Venture - Central Artery/Tunnel Project Matter (continued)

The DRB has also ruled on a binding basis that PKC is entitled to additional compensation for impacts and inefficiencies caused by MHD to PKC’s underpinning work in the amount of $5.6 million and that PKC is entitled to additional compensation for impacts and inefficiencies caused by MHD to PKC’s utility work in the amount of $11.5 million. PKC has filed applications in these actions seeking to confirm the awards and MHD has filed civil actions in Massachusetts Superior Court seeking to vacate these awards.

Under the Dispute Resolution Rules of the contract, either party may periodically terminate the services of some or all of the DRB members provided that members who are removed under this provision will remain on the DRB through the completion of any then pending claims. The MHD has chosen to remove the current DRB members under this provision and those members are in the process of completing hearings on all pending claims. Although the replacement DRB members have been agreed upon, proceedings before the current DRB and the new DRB have been postponed pending resolution of the current negotiations discussed below.

The pending claims yet to be decided by the current/replacement DRB on a binding basis have an anticipated value of $43 million. The remaining claims to be decided by the replacement DRB on a non-binding basis have an anticipated value of $80 million.

On August 14, 2002 the Massachusetts Attorney General’s office, pursuant to its authority under the Massachusetts False Claims Act, served a Civil Investigative Demand (“CID”) on Perini and the other joint venture partners. The CID sought the production of certain construction claims documentation in connection with the Central Artery/Tunnel Contract No. C11A1. PKC vigorously denies that it submitted any false claims and is cooperating with the Attorney General’s Office in the ongoing investigation

In December 2002, PKC and MHD entered into an agreement whereby the parties agreed to attempt to resolve by negotiation and mediation all of the outstanding claims on the project. As part of the agreement, the MHD recommended for approval by the Massachusetts Turnpike Authority a contract modification that provides for provisional payments to PKC totaling $25 million against PKC’s outstanding claims. To date, PKC has received $23.75 million of those provisional payments. The parties also agreed to stay the pending litigation and DRB proceedings during the negotiations. The ultimate financial impact of resolving all of the claims on this project is not yet determinable.

(e) $21.25 Preferred Shareholders Class Action Lawsuit

On May 3, 2001 the Company, including several of its current and former directors (“Defendant Directors”), was served with a complaint entitled Frederick Doppelt, Arthur I. Caplan and Michael Miller v. Perini Corporation, et al, Supreme Court of the State of New York, County of New York, Civil Action No. 602156/01. Each plaintiff is a holder of the Company’s $21.25 Convertible Exchangeable Preferred Stock (“$21.25 Preferred Stock”). One plaintiff, Mr. Doppelt, is a current Director of the Company and one plaintiff, Mr. Caplan, is a former Director of the Company. Plaintiffs purport to bring the action individually and on behalf of the entire class of holders of the $21.25 Preferred Stock.

The Plaintiffs have asserted claims for breach of contract, breach of fiduciary duty, fraud and negligent misrepresentation. The Plaintiffs principally allege that the Company and its Defendant Directors improperly authorized the exchange of Series B Preferred Stock for Common Stock without first paying all accrued dividends on the $21.25 Preferred Stock. More specifically, Plaintiffs allege that the Company and its Defendant Directors violated the terms of the $21.25 Preferred Stock when, in March 2000, the Company authorized the exchange of Series B Preferred Stock for Common Stock. The Plaintiffs further allege that the Company and its Defendant Directors issued a false and misleading prospectus in 1987 relating to the issuance of the $21.25 Preferred Stock. The Plaintiffs seek payment of accrued dividends, claiming they are owed approximately $11.7 million as of May 3, 2001, and other

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[2] Contingencies and Commitments (continued)

(e) $21.25 Preferred Shareholders Class Action Lawsuit (continued)

unspecified punitive and exemplary damages.

On May 23, 2001, the Company and the Defendant Directors removed the action from the Supreme Court of New York to the United States District Court for the Southern District of New York. On June 26, 2001, the Plaintiffs filed an Amended Complaint whereby the Plaintiffs limited their Class Action to an action for breach of contract against the Company and an action for breach of fiduciary duty against the Defendant Directors. The Company and the Defendant Directors moved to dismiss all of Plaintiffs’ claims. On March 12, 2002, all claims against the Company and the Defendant Directors were dismissed by the United States District Court for the Southern District of New York.

In April 2002, the Plaintiffs appealed the dismissal to the United States Court of Appeals for the Second Circuit. On December 23, 2002, the Plaintiffs’ appeal was dismissed by the United States Court of Appeals for the Second Circuit.

On October 15, 2002, the Plaintiffs filed a new action for breach of fiduciary duty against the Defendant Directors in the United States District Court for the District of Massachusetts. On January 6, 2003, the Defendant Directors moved to dismiss all of the Plaintiffs’ Massachusetts claims. The Defendant Directors are awaiting the Plaintiffs’ response.

(f) Other

Contingent liabilities also include liability of contractors for performance and completion of both Company and joint venture construction contracts. In addition to the legal matters described above, the Company is involved in various lawsuits, arbitration and alternative dispute resolution (“ADR”) proceedings. In the opinion of management, the resolution of these proceedings will not have a material effect on the Company’s results of operations or financial condition.

[3] Financial Commitments

Long-term Debt

Long-term debt of the Company at December 31, 2002 and 2001 consists of the following (in thousands):

                                                                                2002           2001
                                                                             ------------   ------------

Borrowing under revolving credit facility at an average rate of 4.5% in 2002    $  5,000       $      -
Term loan under credit facility at an average rate of 6.8% in 2001                     -          9,764
Mortgage on corporate headquarters building, at a rate of approximately 9%,
  payable in equal monthly installments over a ten year period, with a balloon
  payment of approximately $5.3 million in 2010                                    7,162          7,322
Other indebtedness                                                                   377            703
                                                                             ------------   ------------
Total                                                                           $ 12,539       $ 17,789
Less - current maturities                                                            416         10,249
                                                                             ------------   ------------
       Net long-term debt                                                       $ 12,123       $  7,540
                                                                             ============   ============

Payments required under these obligations amount to approximately $416,000 in 2003, $272,000 in 2004, $5,241,000 in 2005, $241,000 in 2006, $247,000 in 2007 and $6,122,000 in 2008 and beyond.

On January 23, 2002, the Company entered into an agreement with two banks to refinance its former credit facility with a new credit agreement (the “Credit Agreement”). The Credit Agreement provides for a $45 million revolving credit facility through January 2004 which, if not extended or repaid, converts amounts then outstanding to a three year term

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[3] Financial Commitments (continued)

loan with equal quarterly principal payments.

The Credit Agreement provides that the Company can choose from interest rate alternatives including a prime-based rate, as well as options based on LIBOR (London inter-bank offered rate). Up to $5.0 million of the unborrowed revolving commitment is available for letters of credit.

The Credit Agreement requires, among other things, maintaining specified working capital, tangible net worth and operating profit levels, interest coverage minimums, and limitations on indebtedness. The Credit Agreement also provides that collateral shall consist of all available assets not included as collateral in other agreements.

In February 2003, the terms of the Credit Agreement were amended to increase the revolving credit facility from $45 million to $50 million; to extend the term of the Credit Agreement from January 2004 to June 2005; to increase the amount of unborrowed revolving commitment available for letters of credit from $5.0 million to $7.5 million; and to adjust certain financial covenants. Other terms of the Credit Agreement remained the same, including the provision that amounts due in June 2005, if not extended or repaid, convert to a three year term loan.

The fair value of the balance outstanding under the Credit Agreement approximates the carrying value due to the variable nature of the interest rates. For fixed rate debt, fair value is determined based on discounted cash flows for the debt at Company’s current incremental borrowing rate for similar types of debt. The estimated fair value of fixed rate debt at December 31, 2002 is $8.2 million.

Leases

The Company leases certain construction equipment, vehicles and office space under non-cancelable operating leases. Future minimum rent payments under non-cancelable operating leases as of December 31, 2002 are as follows (in thousands): 

                                           Amount
                                         ------------

2003                                        $  3,595
2004                                           3,036
2005                                           2,516
2006                                           1,432
2007                                             802
Thereafter                                     1,301
                                         ------------
Subtotal                                    $ 12,682

Less -  Sublease rental agreements              (836)
                                         ------------

Total                                       $ 11,846
                                         ============

Rental expense under long-term operating leases of construction equipment, vehicles and office space was $3,781,000 in 2002, $3,146,000 in 2001 and $2,567,000 in 2000.

Although not material to the Company's consolidated financial position or results of operations, the Company also leases certain construction equipment under capital lease arrangements from time to time. Amounts relating to capital leases are included in the accompanying Consolidated Balance Sheets under "Construction Equipment" and "Long-term Debt".

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[4] 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 expense is comprised of the following (in thousands):

                          Federal        State        Foreign         Total
                        -----------  -------------  ------------   ------------
2002
  Current                   $ (249)       $ 1,050        $    -          $ 801
  Deferred                       -              -             -              -
                        -----------  -------------  ------------   ------------
                            $ (249)       $ 1,050        $    -          $ 801
                        ===========  =============  ============   ============
2001
  Current                   $  360        $   490        $    -          $ 850
  Deferred                       -              -             -              -
                        -----------  -------------  ------------   ------------
                            $  360        $   490        $    -          $ 850
                        ===========  =============  ============   ============
2000
  Current                   $  580        $   209        $ (832)         $ (43)
  Deferred                       -              -             -              -
                        -----------  -------------  ------------   ------------
                            $  580        $   209        $ (832)         $ (43)
                        ===========  =============  ============   ============

The table below reconciles the difference between the statutory federal income tax rate and the effective rate provided for income before income taxes in the consolidated statements of income. 

                                                      2002          2001           2000
                                                  -------------  ------------  -------------

Statutory federal income tax rate                     35%            35%            34%
State income taxes, net of federal tax benefit         3              1              1
Foreign taxes                                          0              0             (3)
Recognition of tax benefit                           (35)           (33)           (32)
                                                  -------------  ------------  -------------
Effective tax rate                                     3%             3%             0%
                                                  =============  ============  =============

The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of December 31, 2002 and 2001 (in thousands):

                                                            2002           2001
                                                         ------------   ------------
Deferred Tax Assets
Provision for estimated real estate losses                  $    175       $  7,728
Contract losses                                                1,985            231
Timing of expense recognition                                    383          3,026
Net operating loss and capital loss carryforwards             33,689         31,759
Alternative minimum tax credit carryforwards                   2,960          3,310
General business tax credit carryforwards                      3,045          3,533
Other, net                                                       953            868
                                                         ------------   ------------
                                                            $ 43,190       $ 50,455
Valuation allowance for deferred tax assets*                 (28,208)       (35,854)
                                                         ------------   ------------
Deferred tax assets                                         $ 14,982       $ 14,601
                                                         ------------   ------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[4] Income Taxes (continued)


                                                             2002           2001
                                                         ------------   ------------
Deferred Tax Liabilities
Joint ventures - construction                              $ (14,569)     $ (11,999)
Joint ventures - real estate                                       -            (29)
Capitalized carrying charges                                    (413)        (2,573)
                                                         ------------   ------------
Deferred tax liabilities                                   $ (14,982)     $ (14,601)
                                                         ------------   ------------

Net deferred tax asset (liability)                         $       -      $       -
                                                         ============   ============

* A valuation allowance is provided to reduce the deferred tax assets to a level which, more likely than not, will be realized. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. The net deferred tax assets reflect management’s estimate of the amount which will, more likely than not, be realized from future taxable income.

As a result of not providing federal income tax benefit applicable to losses recorded in certain prior years for financial reporting purposes, benefit from these losses is realized in 2002, 2001 and 2000 by not having to provide federal income tax of approximately $8.5 million, $9.0 million and $8.0 million, respectively. At December 31, 2002, approximately $79 million of future pretax book earnings could benefit from minimal, if any, federal tax provisions.

At December 31, 2002, the Company has unused tax credits and net operating loss carryforwards for income tax reporting purposes which expire as follows (in thousands): 

                           Unused        Net Operating
                         Investment          Loss
                         Tax Credits     Carryforwards
                        --------------  ----------------

2003                          $ 3,045          $      -
2004 - 2006                         -             1,404
2007 - 2021                         -            94,849
                        --------------  ----------------
                              $ 3,045          $ 96,253
                        ==============  ================

Net operating loss carryforwards and unused tax credits may be limited in the event of certain changes in ownership interests of significant stockholders. In addition, approximately $1.4 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.

[5] Land Held for Sale, Net

Effective June 30, 1999, management adopted a plan to withdraw completely from the real estate development business and to wind down the operations of Perini Land and Development Company ("PL&D"), the Company's wholly owned real estate development subsidiary. Accordingly, both the historical and current real estate results were presented as a discontinued operation in accordance with accounting principles generally accepted in the United States of America. A $99,311,000 non-cash provision, which represents the estimated loss on disposal of this business segment, was recorded at that time. Although the Company had a reasonable expectation that the plan, when adopted, could be executed within a twelve-month period, the plan was not entirely completed because potential buyers who had executed purchase and sale agreements with the Company withdrew from the purchase of two properties, namely the bulk sale of the Massachusetts properties and the sale of the Perini Central property in Phoenix, AZ. In addition, a program to pursue the bulk sale of the Sabino Springs property in Tucson, Arizona took longer than originally anticipated. With the sale

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[5] Land Held for Sale, Net (continued)

of the Perini Central property in 2001 and the bulk sale of the Sabino Springs property in the fourth quarter of 2002, the remaining land to be sold at December 31, 2002 consists of certain fully-developed parcels in Raynham, Massachusetts. Management's current plan is to continue to market the remaining land for sale as a bulk sale or as individual parcels over an estimated 36 to 48 month "sell off" period.

In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" and management's revised plans, the remaining inventory of land has been classified as "Land held for sale, net" in the accompanying Consolidated Balance Sheets as of December 31, 2002 with the amount estimated to be sold during the next twelve months included in Current Assets and the balance included in "Other Assets" (see Note 6 "Other Assets"). Operating results from the remaining land are included in "Other (Income) Expense, Net".

Real estate revenues related to continuing operations were $8,304,000 in 2002 which were offset by related costs and expenses of a similar amount. Real estate revenues related to discontinued operations were $1,936,000 in 2001 and $3,491,000 in 2000. Also, in accordance with SFAS No. 144, land held for sale is stated at the lower of its carrying amount ($5,348,000) or its fair value less cost to sell. A provision to reflect a write-down of the carrying amount of the remaining land to fair value less cost to sell was not required during 2002.

[6] Other Assets, Other Long-term Liabilities and Other (Income) Expense, Net

Other Assets, Other Long-term Liabilities and Other (Income) Expense, Net consist of the following (in thousands) for the periods presented:

Other Assets
                                                                 2002           2001
                                                             -------------  -------------
     Land held for sale, net (Note 5)                            $  3,175       $      -
     Deferred expenses                                              1,801          1,900
     Goodwill (Note 1)                                              1,017          1,017
     Other investments                                                 63             63
     Intangible asset (Note 10)                                       360             26
                                                             -------------  -------------
                                                                 $  6,416       $  3,006
                                                             =============  =============

Other Long-term Liabilities
                                                                 2002           2001
                                                             -------------  -------------
     Accrued dividends on $21.25
       Preferred Stock (Note 8)                                  $ 15,405       $ 13,280
     Employee benefit related liabilities                           2,256          2,661
     Minimum pension liability adjustment (Note 10)                19,933          5,891
                                                             -------------  -------------
                                                                 $ 37,594       $ 21,832
                                                             =============  =============

Other (Income) Expense, Net
                                                                 2002           2001          2000
                                                             -------------  -------------  ------------
     Interest  income                                            $   (297)      $   (404)     $ (1,216)
     Bank fees                                                        302            328           341
     Miscellaneous (income) expense, net                              515            303           (74)
                                                             -------------  -------------  ------------
                                                                 $    520       $    227      $   (949)
                                                             =============  =============  ============

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[7] Recapitalization

On March 29, 2000 (the “Closing Date”), the Company completed the sale of 9,411,765 shares of its common stock, par value $1.00 (the “Common Stock”), for an aggregate of $40 million, or $4.25 per share (the “Purchase”), to an investor group led by Tutor-Saliba Corporation (“TSC”), and including O&G Industries, Inc. (“O&G”), and National Union Fire Insurance Company of Pittsburgh, Pa., a wholly owned subsidiary of American International Group, Inc. (“National Union” and together with TSC and O&G, the “New Investors”) pursuant to a Securities Purchase Agreement dated as of February 5, 2000 by and among the Company and the New Investors. Tutor-Saliba Corporation is owned and controlled by Ronald N. Tutor, who serves as Chairman of the Company’s Board of Directors and Chief Executive Officer. (See Note 13 for disclosure of “Related Party Transactions” between the New Investors and the Company.)

In connection with the Purchase, TSC acquired 2,352,942 shares of Common Stock for a total consideration of $10,000,000, O&G acquired 2,352,941 shares of Common Stock for a total consideration of $10,000,000 and National Union acquired 4,705,882 shares of Common Stock for a total consideration of $20,000,000.

Concurrent with the closing of the Purchase and as a condition thereto, the Company converted, pursuant to what was considered to be an induced conversion from an accounting perspective, 100% of its Redeemable Series B Cumulative Convertible Preferred Stock (the “Series B Preferred Stock”) (which had a current accreted face amount of approximately $41.2 million) for an aggregate of 7,490,417 shares of common stock at an exchange price of $5.50 per share (the “Exchange” and together with the Purchase, the “Transaction”) pursuant to certain Exchange Agreements by and between the Company and each of The Union Labor Life Insurance Company, acting on behalf of its Separate Account P (“ULLICO”), PB Capital Partners, L.P. (“PB Capital”) and The Common Fund for Non-Profit Organizations (“The Common Fund”). The holders of the Series B Preferred Stock had previously been entitled to convert their shares to common stock at an exchange price of $9.68. The Company recognized a charge to earnings available to common shareholders of $13.7 million relative to this transaction in the Company’s calculation of basic and diluted earnings per share in 2000 (see Note (1)(i)).

In connection with the Transaction, the Company amended its By-Laws to remove provisions creating an Executive Committee of the Board of Directors and granting certain powers to it and amended its Restated Articles of Organization as of the Closing Date to increase the number of authorized shares of Common Stock from 15,000,000 shares to 40,000,000 shares and to amend the Series B Preferred Stock Certificate of Vote. The Company also entered into a Shareholders’ Agreement and a Registration Rights Agreement, each by and among the Company, the New Investors, Ronald N. Tutor, BLUM Capital Partners, L.P., PB Capital, The Common Fund and ULLICO dated as of the Closing Date. The Shareholders’ Agreement contains provisions that define, among other things, certain put and call rights and rights of first refusal between National Union and TSC, tag-along rights of the New Investors and former holders of Series B Preferred Stock and certain procedures to protect the Company’s use of its net operating losses (“NOLs”) for tax purposes. Since the Common Stock issued in connection with the Transaction was not registered under the Securities Act, the Registration Rights Agreement contains provisions that define the rights of the New Investors and former holders of Series B Preferred Stock to require the Company, under certain circumstances, to register some or all of the shares under the Securities Act after March 29, 2003. In addition, the Company entered into an Amendment to the Shareholder Rights Agreement dated as of the Closing Date whereby the Transaction would not trigger the dilutive provisions of the Agreement.

A Special Committee of the Company’s Board of Directors approved the Transaction after receiving a fairness opinion from an investment banking firm. A majority of outstanding common shares, including a majority of shares held by disinterested shareholders, were voted in favor of the Transaction at a Special Meeting of Stockholders held on March 29, 2000.

The shares of Common Stock issued in the Purchase represent approximately 42% of the Company’s voting rights and the New Investors have the right to nominate three members to the Company’s Board of Directors. The former holders of the Series B Preferred Stock now control approximately 33% of the Company’s voting rights and continue to be entitled to nominate two members to the Company’s Board of Directors.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[7] Recapitalization (continued)

In connection with the Transaction and as a condition thereto, the Company also entered into an Amended and Restated Credit Agreement with its lenders that extended the credit facility from January 2001 to January 2003 (see Note 3). The effect of the Transaction on Stockholders’ Equity was to increase Stockholders’ Equity by approximately $76.2 million, $37.3 million from the Purchase (gross proceeds of $40.0 million less related capital expenses of $2.7 million) and $38.9 million from the Exchange (current accreted value of $41.2 million less non-accreted capital expenses of $2.3 million). See the Consolidated Statement of Stockholders’ Equity for the year ended December 31, 2000.

[8] Capital Stock and Stock Purchase Warrants

(a) $21.25 Convertible Exchangeable Preferred Stock ("$21.25 Preferred Stock")
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 $21.25 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 $21.25 Preferred Stock is redeemable at the option of the Company at any time at $25 per share plus any unpaid dividends. The $21.25 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. In conjunction with the covenants of certain of the Company’s prior Credit Agreements, the Company was required to suspend the payment of quarterly dividends on its $21.25 Preferred Stock (equivalent to $2.125 per Depositary Share) until certain financial criteria were met. Dividends on the $21.25 Preferred Stock have not been declared since 1995 (although they have been fully accrued due to the “cumulative” feature of the $21.25 Preferred Stock). The aggregate amount of dividends in arrears is approximately $15,405,000 at December 31, 2002, which represents approximately $154.05 per share of $21.25 Preferred Stock or approximately $15.41 per Depositary Share and is included in “Other Long-term Liabilities” in the accompanying Consolidated Balance Sheets. Under the terms of the $21.25 Preferred Stock, the holders of the Depositary Shares were entitled to elect two additional Directors since dividends had been deferred for more than six quarters and have done so at each of the last five Annual Meetings of Stockholders.

(b) Redeemable Series B Cumulative Convertible Preferred Stock
At a special stockholders’ meeting on January 17, 1997, the Company’s stockholders approved two proposals that allowed the Company to close an equity transaction with a private investor group. The transaction included, among other things, classification by the Board of Directors of 500,000 shares of Preferred Stock of the Company as Redeemable Series B Cumulative Convertible Preferred Stock, par value $1.00 per share, (the “Series B Preferred Stock”), issuance of 150,150 shares of Series B Preferred Stock at $200 per share (or $30 million) to the investor group, (with the remainder of the shares set aside for possible future payment-in-kind dividends to the holders of the Series B Preferred Stock), amendments to the Company’s By-Laws that redefined the Executive Committee and added certain powers (generally financial in nature), including the power to give overall direction to the Company’s Chief Executive Officer, appointment of three new members, recommended by the investor group, to the Board of Directors, and appointment of these same new directors to constitute a majority of the Executive Committee referred to above. Tutor-Saliba Corporation, a corporation controlled by the Chairman of the Board of Directors of the Company, who was also a member of the Executive Committee, is a participant in certain construction joint ventures with the Company (see Note 13 “Related Party Transactions”).

In-kind dividends on the Series B Preferred Stock were paid at an annual rate of 10% of the liquidation preference of $200.00 per share with additional shares of Series B Preferred Stock compounded on a quarterly basis. According to the terms of the Series B Preferred Stock, it (i) ranked junior in cash dividend and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[8] Capital Stock and Stock Purchase Warrants (continued)

(b) Redeemable Series B Cumulative Convertible Preferred Stock (continued)
liquidation preference to the $21.25 Convertible Exchangeable Preferred Stock and senior to Common Stock, (ii) provided that no cash dividends will be paid on any shares of Common Stock except for certain limited dividends beginning in 2001, (iii) was convertible into shares of Common Stock at an initial conversion price of approximately $9.68 per share (equivalent to 3,101,571 shares on January 17, 1997), (iv) had the same voting rights as shareholders of Common Stock immediately equal to the number of shares of Common Stock into which the Series B Preferred Stock could be converted, (v) generally had a liquidation preference of $200 per share of Series B Preferred Stock, (vi) was optionally redeemable by the Company after three years at a redemption price equal to the liquidating value per share and higher amounts if a Special Default, as defined, had occurred, (vii) was mandatorily redeemable by the Company if a Special Default had occurred and a holder of the Series B Preferred Stock requested such a redemption, (viii) was mandatorily redeemable by the Company for approximately one-third of the shares still outstanding on January 17, 2005 and one-third of the shares in each of the next two years.

The initial proceeds ($30,030,000) received upon the issuance of 150,150 Series B Preferred Shares were reduced by related expenses of approximately $3.5 million. Due to the redeemable feature of the Series B Preferred Stock, this reduction had to be added back (or accreted) to reinstate its mandatory redemption value over a period of 8-10 years, with an offsetting charge to paid-in surplus.

Concurrent with the Purchase described in Note 7 above and as a condition thereto, the Company exchanged 100% of its Series B Preferred Stock for Common Stock, $1.00 par value. See Note 7 for details of the Exchange and other changes related to the Series B Preferred Stock.

An analysis of Series B Preferred Stock transactions from December 31, 1999 to the March 29, 2000 Exchange date follows:

                                  Number of
                                   Shares            Amount
                               ----------------  ---------------
                                                 (in thousands)
Balance at December 31, 1999           200,184         $ 37,685
10% in-kind dividends issued             5,802            1,161
Accretion                                    -               96
                               ----------------  ---------------
Balance March 29, 2000                 205,986         $ 38,942
                               ================  ===============

(c) Series A Junior Participating Preferred Stock
Under the terms of the Company’s Shareholder Rights Plan, as amended, the Board of Directors of the Company declared a distribution on September 23, 1988 of one Preferred Stock purchase right (a “Right”) for each outstanding share of Common Stock. Under certain circumstances, each Right will entitle the holder thereof to purchase from the Company one one-hundredth of a share (a “Unit”) of Series A Junior Participating Cumulative Preferred Stock, $1 par value (the “Preferred Stock”), at an exercise price of $100 per Unit, subject to adjustment. The Rights will not be exercisable or transferable apart from the Common Stock until the earlier to occur of (i) 10 days following a public announcement that a person or group (an “Acquiring Person”) has acquired 20% or more of the Company’s outstanding Common Stock (the “Stock Acquisition Date”), (ii) 10 business days following the announcement by a person or group of an intention to make an offer that would result in such persons or group becoming an Acquiring Person or (iii) the declaration by the Board of Directors that any person is an “Adverse Person”, as defined under the Plan. The Rights will not have any voting rights or be entitled to dividends.

Upon the occurrence of a triggering event as described above, each Right will be entitled to that number of Units of Preferred Stock of the Company having a market value of two times the exercise price of the Right. If the Company is acquired in a merger or 50% or more of its assets or earning power is sold, each Right will be entitled to receive Common Stock of the acquiring company having a market value of two times the exercise

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[8] Capital Stock and Stock Purchase Warrants (continued)

(c) Series A Junior Participating Preferred Stock (continued)
price of the Right. Rights held by such a person or group causing a triggering event may be null and void. The Rights are redeemable at $.02 per Right by the Board of Directors at any time prior to the occurrence of a triggering event.

On January 17, 1997, the Board of Directors amended the Company’s Shareholder Rights Plan to (i) permit the acquisition of the Series B Preferred Stock by certain investors (see Note 8(b) above), any additional Preferred Stock issued as a dividend thereon, any Common Stock issued upon conversion of the Series B Preferred Stock and certain other events without triggering the distribution of the Rights; (ii) lower the threshold for the occurrence of a Stock Acquisition Date from 20% to 10%; and (iii) extend the expiration date of the Plan from September 23, 1998 to January 21, 2007. In addition, the Board of Directors amended the Company’s Shareholder Rights Plan, effective March 29, 2000, to permit the Purchase and Exchange as described in Note 7 above and certain other events without triggering the distribution of the Rights.

(d) Stock Purchase Warrants
In connection with an Amended Credit Agreement effective January 17, 1997 with the Company’s bank group at that time, the bankers received Stock Purchase Warrants to purchase up to 420,000 shares of the Company’s Common Stock, $1.00 par value, at a purchase price of $8.30 per share, at any time during the ten year period ending January 17, 2007. The grant date present value of the Stock Purchase Warrants ($2,233,000) was calculated using the Black-Scholes option pricing model and was accounted for by an increase in Stockholders’ Equity, with the offset being a valuation account netted against the related Revolving Credit Loans. The valuation account was amortized over the three year term of the Credit Agreement, with the offsetting charge being to Other (Income) Expense, Net.

[9] Stock Options

Effective May 25, 2000, the Company’s stockholders approved the adoption of the Special Equity Incentive Plan which provides that up to 3,000,000 shares of the Company’s Common Stock will be available for the granting of non-qualified stock options to key executives, employees and directors of the Company. Options are granted at not less than the fair market value on the date of grant, as defined. Options granted during the years ended December 31, 2000 and 2001 were granted at amounts ranging from fair market value to $1.50 per share in excess of fair market value. Options generally expire 10 years from the date of grant. Options outstanding under the Special Equity Incentive Plan are exercisable in three equal annual installments, on the date of grant and on the first and second anniversary of the date of grant, except for options granted on May 25, 2000 to purchase 62,700 shares that are exercisable in full on the third anniversary of the date of grant. A summary of stock option activity related to the Company’s Special Equity Incentive Plan is as follows: 

                                                        Option Price Per Share
                                                     -----------------------------     Shares
                                        Number                         Weighted      Available
                                       of Shares         Range          Average       to Grant
                                      ------------   --------------   ------------  -------------
Approved May 25, 2000                      --             --              --           3,000,000
Granted                                 2,792,700    $3.13-$4.50         $4.47        (2,792,700)
                                      ------------                                  -------------
Outstanding at December 31, 2000        2,792,700    $3.13-$4.50         $4.47           207,300
Granted                                    20,000    $8.10               $8.10           (20,000)
Exercised                                 (79,666)   $4.50               $4.50                 -
                                      ------------                                  -------------
Outstanding at December 31, 2001
  and 2002                              2,733,034    $3.13-$8.10         $4.50           187,300
                                      ============                                  =============

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[9] Stock Options (continued)

At December 31, 2001, 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 under this plan were granted at fair market value on the date of grant, as defined, and generally become exercisable in two equal annual installments on the second and third anniversary of the date of grant and expire eight to ten years from the date of grant. Options for 184,000 shares of Common Stock granted in 1992 and options for 10,000 shares of Common Stock granted in 1994 expired in 2002. In addition, during 2002 the provisions of the 1982 Stock Option Plan expired. Therefore, at December 31, 2002, the only shares of the Company's authorized but unissued Common Stock still reserved for issuance under the 1982 Stock Option Plan were the 67,500 shares applicable to the remaining outstanding options. A summary of stock option activity related to the Company's 1982 Stock Option Plan is as follows:

                                                               Option Price Per Share
                                                            -----------------------------    Shares
                                               Number                         Weighted      Available
                                              of Shares         Range          Average      to Grant
                                             ------------   --------------   ------------  ------------
Outstanding at December 31, 2000 and 2001        261,500    $ 5.29-$16.44        $ 13.43       220,110
  Canceled                                      (194,000)   $13.00-$16.44        $ 16.26      (220,110)
                                             ------------                                  ------------
Outstanding at December 31, 2002                  67,500    $ 5.29               $  5.29             -
                                             ============                                  ============

In addition, the Company has authorized but unissued Common Stock reserved for certain other options granted as follows: 

                                                         Grant         Options        Exercise
                     Grantee                             Date        Outstanding        Price
- ---------------------------------------------------   ------------  ---------------  ------------

Members of former Board Executive Committee,
    as Redefined (see Note 8)                         01/17/97             225,000         $8.38

Certain Executive Officers                            01/19/98             135,000         $8.66

Member of former Board Executive Committee            12/10/98              45,000         $5.29
                                                      01/04/99              30,000         $5.13

The terms of these options are generally similar to options granted under the 1982 Plan, including the exercise price being equal to fair market value, as defined, at date of grant, and timing of installment exercise dates, except for the timing of the exercisability of the January 1997 options, which was May 17, 2000.

Options outstanding at December 31, 2002 and related weighted average price and life information follows:

     Remaining          Grant        Options         Options       Exercise
   Life (Years)         Date       Outstanding     Exercisable       Price
- --------------------  ----------  ---------------  -------------   ----------
         3             01/17/97          225,000        225,000        $8.38
         4             01/19/98          135,000        135,000        $8.66
         4             12/10/98          112,500        112,500        $5.29
         5             01/04/99           30,000         30,000        $5.13
         8             03/29/00        2,000,000      2,000,000        $4.50
         8             05/25/00          234,700        172,000        $4.13
         8             09/12/00          378,334        378,334        $4.50
         8             11/15/00          100,000        100,000        $4.50
         9             07/09/01           20,000         13,334        $8.10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[9] Stock Options (continued)

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.

The Company has elected the optional pro forma disclosures under SFAS No. 123, "Accounting for Stock-Based Compensation" as if the Company adopted the cost recognition requirements in 1995 (see Note 1(k)). The Company has no options outstanding relating to either 1995 or 1996. The estimated values shown below and utilized in the Company's pro forma SFAS No. 123 disclosures are based on the Black-Scholes option pricing model for options granted in 1997 through 2002.

                                                          Assumptions
                                ------------------------------------------------------------------
                                                    Expected       Risk-free
 Grant Date      Fair Value     Dividend Yield     Volatility    Interest Rate     Expected Life
- --------------  --------------  -------------------------------  ---------------   ---------------

     01/17/97     $ 1,070,127         0%               39%           6.50%                8
     07/08/97     $    44,086         0%               38%           6.31%                8
     01/19/98     $ 1,027,758         0%               37%           5.57%                8
     12/10/98     $   399,485         0%               39%           4.63%                8
     01/04/99     $    75,600         0%               37%           4.82%                8
     03/29/00     $ 6,180,000         0%               54%           6.17%               10
     05/25/00     $   125,400         0%               49%           6.38%               10
     05/25/00     $   382,000         0%               54%           6.38%               10
     09/12/00     $ 1,358,800         0%               55%           5.78%               10
     11/15/00     $   245,000         0%               53%           5.71%               10
     07/09/01     $   124,600         0%               66%           5.34%               10

[10] Employee Benefit Plans

The Company has a defined benefit pension plan that covers its executive, professional, administrative and clerical employees, subject to certain specified service requirements. The plan is noncontributory and benefits are based on an employee’s years of service and “final average earnings”, as defined. The plan provides reduced benefits for early retirement and takes into account offsets for social security benefits. All employees are vested after five years of service. The Company also has an unfunded supplemental retirement plan for certain employees whose benefits under the defined benefit pension plan are reduced because of compensation limitations under federal tax laws. In accordance with SFAS No. 132, “Employers’ Disclosures About Pensions and Other Post-Retirement Benefits”, pension disclosure as presented below includes aggregated amounts for both of the Company’s plans, except where otherwise indicated.

Net pension cost for 2002, 2001 and 2000 follows (in thousands):

                                                          2002            2001             2000
                                                       ------------    ------------    -------------

Service cost - benefits earned during the period           $ 1,459         $ 1,094          $   963
Interest cost on projected benefit obligation                4,529           4,404            4,259
Expected return on plan assets                              (4,899)         (4,831)          (4,633)
Amortization of transition obligation                            -               -                6
Amortization of prior service costs                             25             (26)              (4)
Recognized actuarial loss                                       56              68               33
                                                       ------------    ------------    -------------
Net pension cost                                           $ 1,170         $   709          $   624
                                                       ============    ============    =============

Actuarial assumptions used:
  Discount rate                                              7.25%           7.50%            7.75%
  Rate of increase in compensation                           6.00%           6.00%            6.00%
  Long-term rate of return on assets                         9.00%           9.00%            9.00%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[10] Employee Benefit Plans (continued)

The following tables provide a reconciliation of the changes of the fair value of assets in the plan and plan benefit obligations during the two year period ended December 31, 2002, and a statement of the funded status as of December 31, 2002 and 2001 (in thousands):

Reconciliation of Fair Value of Plan Assets
                                                                     2002          2001
                                                                 -------------  ------------

Balance at beginning of year                                        $  46,164     $  52,567
Actual return on plan assets                                           (6,387)       (2,994)
Employer contribution                                                   2,370           159
Benefit payments                                                       (3,620)       (3,568)
                                                                 -------------  ------------
Balance at end of year                                              $  38,527     $  46,164
                                                                 =============  ============

Reconciliation of Projected Benefit Obligation
                                                                     2002          2001
                                                                 -------------  ------------
Balance at beginning of year                                        $  64,244     $  59,992
Service cost                                                            1,459         1,094
Interest cost                                                           4,529         4,404
Plan amendments                                                           298             -
Actuarial loss                                                          3,893         2,322
Benefit payments                                                       (3,620)       (3,568)
                                                                 -------------  ------------
Balance at end of year                                              $  70,803     $  64,244
                                                                 =============  ============

Funded Status
                                                                     2002          2001
                                                                 -------------  ------------
Funded status at December 31,                                       $ (32,276)    $ (18,080)
Unrecognized prior service cost                                           299            26
Unrecognized loss                                                      28,098        12,975
                                                                 -------------  ------------
Net amount recognized, before additional minimum liability          $  (3,879)    $  (5,079)
                                                                 =============  ============

The following table presents amounts included in the Consolidated Balance Sheets as of December 31, 2002 and 2001 (in thousands): 

                                                   2002          2001
                                                ------------  ------------

Accrued benefit liability                         $ (23,812)    $ (10,970)
Intangible asset (Note 6)                               360            26
Accumulated other comprehensive income               19,573         5,865
                                                ------------  ------------
Net amount recognized at year end                 $  (3,879)    $  (5,079)
                                                ============  ============

Other comprehensive income attributable to a change in the additional minimum pension liability recognized pursuant to SFAS No. 87, "Employers' Accounting for Pensions" amounted to $13.7 million in 2002 and $5.9 million in 2001. The cumulative amount of $19.6 million generally represents the excess of the accumulated benefit obligations of the Company's pension plans over the fair value of the plans' assets as of December 31, 2002 compared to the unfunded accrued pension liability previously recognized. This amount is reflected as a long-term liability as of December 31, 2002 (see Note 6) with the offset being a reduction in stockholders' equity. Subsequent adjustments to the amount of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[10] Employee Benefit Plans (continued)

this additional minimum pension liability will be recorded in future years, if required, based upon periodic re-evaluation of the funded status of the Company's pension plans.

The Company's plans have benefit obligations in excess of the fair value of the plans' assets. Plan assets generally include equity and fixed income funds. The following table provides information relating to each of the plan's benefit obligations compared to the fair value of its assets as of December 31, 2002 and 2001 (in thousands):

                                                      2002                                         2001
                                    ------------------------------------------   ------------------------------------------
                                                     Benefit                                      Benefit
                                      Pension     Equalization                     Pension     Equalization
                                       Plan           Plan           Total          Plan           Plan           Total
                                    ------------  --------------  ------------   ------------  --------------  ------------

Projected benefit obligation           $ 68,107         $ 2,696      $ 70,803       $ 61,470         $ 2,774      $ 64,244
Accumulated benefit obligation         $ 59,986         $ 2,353      $ 62,339       $ 54,894         $ 2,240      $ 57,134
Fair value of plan assets              $ 38,527         $     -      $ 38,527       $ 46,164         $     -      $ 46,164

Projected benefit obligation
greater than Fair value of
plan assets                            $ 29,580         $ 2,696      $ 32,276       $ 15,306         $ 2,774      $ 18,080
                                    ------------  --------------  ------------   ------------  --------------  ------------

Accumulated benefit obligation
greater than Fair value of
plan assets                            $ 21,459         $ 2,353      $ 23,812       $  8,730         $ 2,240      $ 10,970
                                    ------------  --------------  ------------   ------------  --------------  ------------

The Company has a contributory Section 401(k) plan which covers its executive, professional, administrative and clerical employees, subject to certain specified service requirements. The 401(k) expense provision approximated $0.7 million in 2002, $0.1 million in 2001 and $0.6 million in 2000. Prior to 2002, the Company’s contribution was generally based on a specified percentage of profits, subject to certain limitations, as well as approval by the Company’s Board of Directors of any discretionary Company contributions to the Section 401(k) plan. Beginning in 2002, the Company’s contribution is based on a non-discretionary match of employees’ contributions, as defined.

In addition, the Company has an incentive compensation plan for key employees which is generally based on the Company’s achievement of a certain level of profit.

The Company also contributes to various multi-employer 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 approximately $7.3 million in 2002, $8.8 million in 2001 and $4.9 million in 2000. The Multi-employer Pension Plan Amendments Act of 1980 defines certain employer obligations under multi-employer plans. Information regarding union retirement plans is not available from plan administrators to enable the Company to determine its share of unfunded vested liabilities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[11] Unaudited Quarterly Financial Data

The following table sets forth unaudited quarterly financial data for the years ended December 31, 2002 and 2001 (in thousands, except per share amounts): 

                                                                 2002 by Quarter
                                          -----------------------------------------------------------------
                                              1st               2nd              3rd               4th
                                          ------------      ------------      -----------      ------------
Revenues                                     $321,370          $268,307        $ 232,805         $ 262,559
                                          ------------      ------------      -----------      ------------
Gross profit                                 $ 12,999          $ 12,363        $  12,376         $  20,912
                                          ------------      ------------      -----------      ------------
Net income                                   $  5,215          $  4,690        $   3,644         $   9,525
                                          ------------      ------------      -----------      ------------

Basic earnings per common share              $   0.21          $   0.18        $    0.14         $    0.39
                                          ------------      ------------      -----------      ------------

Diluted earnings per common share            $   0.20          $   0.18        $    0.14         $    0.39
                                          ------------      ------------      -----------      ------------

                                                                  2001 by Quarter
                                          -----------------------------------------------------------------
                                              1st               2nd              3rd               4th
                                          ------------      ------------      -----------      ------------
Revenues                                     $352,178          $421,222        $ 417,476         $ 362,520
                                          ------------      ------------      -----------      ------------
Gross profit                                 $ 13,499          $ 14,857        $  13,608         $  15,598
                                          ------------      ------------      -----------      ------------
Net income                                   $  6,820          $  7,359        $   5,843         $   6,396
                                          ------------      ------------      -----------      ------------

Basic earnings per common share              $   0.28          $   0.30        $    0.23         $    0.26
                                          ------------      ------------      -----------      ------------

Diluted earnings per common share            $   0.28          $   0.29        $    0.22         $    0.25
                                          ------------      ------------      -----------      ------------

[12] Business Segments

Business segment information presented below was determined in accordance with SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information".

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 two basic segments: building and civil. The building operation services both private clients and public agencies from offices located in Boston, Phoenix, Las Vegas, Detroit and Celebration, FL and includes a broad range of building construction projects, such as hotels, casinos, health care facilities, correctional facilities, sports complexes, multi-unit residential, commercial, civic, cultural and educational facilities. The civil operation is focused on public civil work in the East and selectively in other geographic locations and includes large, ongoing urban infrastructure repair and replacement projects such as highway and bridge rehabilitation, mass transit projects and waste water treatment facilities. During the years 2000 through 2002, the Company’s chief operating decision making group consisted of the Chairman and Chief Executive Officer, the President and Chief Operating Officer, the President of Perini Building Company and the President of Perini Civil Construction. This group decides how to allocate resources and assess performance of the business segments. Generally, the Company evaluates performance of its operating segments on the basis of income from operations and cash flow. The accounting policies applied by each of the segments are the same as those described in the Summary of Significant Accounting Policies (see Note 1). The following tables set forth certain business and geographic segment information relating to the Company’s operations for each of the three years in the period ended December 31, 2002 (in thousands):

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[12] Business Segments (continued)

2002                                    Reportable Segments
                           ----------------------------------------------
                                                                                             Consolidated
                              Building         Civil          Totals         Corporate          Total
                           ---------------  -------------  --------------   ------------    ---------------

Revenues                      $   772,513      $ 312,528      $1,085,041       $      -        $ 1,085,041
Income from Operations        $    26,225      $   6,390      $   32,615       $ (6,735) (a)   $    25,880
Assets                        $   158,241      $ 223,036      $  381,277       $ 21,112  (b)   $   402,389
Capital Expenditures          $     2,175      $   2,335      $    4,510       $      -        $     4,510

2001                                    Reportable Segments
                           ----------------------------------------------
                                                                                             Consolidated
                              Building         Civil          Totals         Corporate          Total
                           ---------------  -------------  --------------   ------------    ---------------

Revenues                      $ 1,199,439      $ 353,957      $1,553,396       $      -        $ 1,553,396
Income from Operations        $    31,612      $   3,918      $   35,530       $ (6,029) (a)   $    29,501
Assets                        $   234,022      $ 246,326      $  480,348       $ 20,893  (b)   $   501,241
Capital Expenditures          $     1,408      $   3,120      $    4,528       $      -        $     4,528

2000                                    Reportable Segments
                           ----------------------------------------------
                                                                                             Consolidated
                              Building         Civil          Totals         Corporate          Total
                           ---------------  -------------  --------------   ------------    ---------------

Revenues                      $   826,191      $ 279,469      $1,105,660       $      -        $ 1,105,660
Income from Operations        $    27,076      $   5,624      $   32,700       $ (5,345) (a)   $    27,355
Assets                        $   224,502      $ 215,886      $  440,388       $ 47,090  (b)   $   487,478
Capital Expenditures          $       727      $   1,066      $    1,793       $      -        $     1,793

(a)      In all years, consists of corporate general and administrative expenses.

(b)      In all years, corporate assets consist principally of cash, cash equivalents, marketable securities, land held for sale and other investments available for general corporate purposes.

Revenues from the Mohegan Sun Project in the building segment totaled approximately $153 million (or 14% of consolidated revenues) in 2002, $457 million (or 29%) in 2001 and $319 million (or 29%) in 2000. Revenues from various agencies of the City of New York in the civil segment totaled approximately $185 million (or 17%) in 2002, $185 million (or 12%) in 2001, and $117 million (or 11%) in 2000.

Information concerning principal geographic areas is as follows:

                                                              Revenues
                                             --------------------------------------------
                                                 2002           2001            2000
                                             -------------  --------------  -------------

United States                                 $ 1,029,097     $ 1,516,810    $ 1,065,304
Foreign and U.S. Territories                       55,944          36,586         40,356
                                             -------------  --------------  -------------

Total                                         $ 1,085,041     $ 1,553,396    $ 1,105,660
                                             =============  ==============  =============

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[12] Business Segments (continued) 
                                                   Income (Loss) from Operations
                                             --------------------------------------------

                                                 2002           2001            2000
                                             -------------  --------------  -------------

United States                                    $ 26,731        $ 32,654       $ 35,106
Foreign and U.S. Territories                        5,884           2,876         (2,406)
Corporate                                          (6,735)         (6,029)        (5,345)
                                             -------------  --------------  -------------

Total                                            $ 25,880        $ 29,501       $ 27,355
                                             =============  ==============  =============

Long-lived assets outside the United States are immaterial and therefore not presented here.

There have been no differences from the last annual report in the basis of measuring segment profit or loss. The decrease in assets related to the building segment in 2002 compared to 2001 is due primarily to a decrease in retainage receivable on several large projects. This decrease is transitory and is not indicative of any long-term trend.

[13] Related Party Transactions

Effective with the issuance of Series B Preferred Stock in 1997, the Company entered into an agreement with Tutor-Saliba Corporation (“TSC”), a California corporation engaged in the construction industry, and Ronald N. Tutor, Chief Executive Officer and sole stockholder of TSC, to provide certain management services, as defined. At January 17, 1997, TSC held 351,318 shares of the Company’s $1.00 par value Common Stock. TSC participates in joint ventures with the Company, the Company’s share of which contributed $48.8 million, $17.9 million, and $4.6 million to the Company’s consolidated revenues in 2002, 2001 and 2000, respectively. Mr. Tutor was appointed as one of the three new directors in accordance with the terms of the Series B Preferred Stock transaction, a member of the Executive Committee of the Board and, during 1997, acting Chief Operating Officer of the Company. Effective January 1, 1998, Mr. Tutor was elected Vice Chairman of the Board of Directors and effective July 1, 1999 was elected Chairman of the Board of Directors. Effective March 29, 2000, Mr. Tutor was appointed Chief Executive Officer of the Company. Compensation for the management services consists of payment of $250,000 per year to TSC, options granted to Mr. Tutor, and incentive compensation of $231,000 awarded to Mr. Tutor in 2002 and $250,000 awarded to Mr. Tutor in 2001. All of the stock options granted to Mr. Tutor were granted at or above fair market value on the date of grant and are summarized as follows:

                Option
  Grant         Price Per        Number       Expiration
   Date           Share         of Shares        Date
- -----------    ------------    ------------   ------------

  01/17/97        $8.38            150,000       01/16/05
  12/10/98        $5.29             45,000       12/09/06
  01/04/99        $5.13             30,000       01/03/07
  03/29/00        $4.50          1,000,000       03/28/10

In late 2000, the Company entered into a joint venture arrangement with TSC, the sponsoring partner, whereby the Company was to primarily provide certain prequalification and proposal support services to the joint venture in return for a fixed fee of $500,000 payable subsequent to the award and start-up of the project. In addition, the agreement provided that the Company would not be liable for any costs, losses, liabilities or damages that may arise from the project. The Company recorded the $500,000 fixed fee as income in 2001 when its commitment to the joint venture

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)

[13] Related Party Transactions (continued)

was fulfilled. Payment of the fee was received from TSC in February, 2002. In late 2001, the Company entered into a similar joint venture arrangement with TSC, the sponsoring partner, whereby the Company was to primarily provide certain prequalification and proposal support services to the joint venture in return for a fixed fee of $200,000 payable subsequent to the award and start-up of the project. In addition, the agreement provided that the Company would not be liable for any costs, losses, liabilities or damages that may arise from the project. The Company recorded the $200,000 fixed fee as income in 2002 when the contract was awarded to the joint venture. Payment of the fee was received from TSC in February, 2002.

In late 2002, the Company entered into an arrangement with TSC whereby TSC provided a financial guarantee in order for the Company to secure a performance and payment bond on a building project with an estimated contract value of approximately $135 million. As compensation for the financial guarantee, the Company paid TSC a fee of $1.0 million in February 2003.

The new investors that provided $40 million of new equity in the Company on March 29, 2000 as described in Note 7 consist of Tutor-Saliba Corporation (see above), O&G Industries, Inc. (“O&G”), a participant in certain construction joint ventures with the Company, and National Union Fire Insurance Company of Pittsburgh, Pa., a wholly owned subsidiary of American International Group, Inc. (“AIG”), one of the Company’s sureties and a provider of insurance and insurance related services to the Company. After this investment, the cumulative holdings of each of the new investors were as follows: 

                 Number of        Percentage of Total
                   Shares          Shares Outstanding
                -------------   -------------------------
TSC                2,704,260             12.0%
O&G                2,502,941             11.1%
AIG                4,705,882             20.8%

Each of the new investors is entitled to appoint a member to the Company's Board of Directors. O&G participates in joint ventures with the Company, the Company's share of which contributed $0.6 million to the Company's consolidated revenues in 2001. Payments to AIG for surety, insurance and insurance related services approximated $9.5 million in 2002, $8.2 million in 2001 and $4.6 million in 2000.

[14] Subsequent Events

On January 23, 2003, the Company completed the acquisition of James A. Cummings, Inc., a privately held construction company based in Fort Lauderdale, Florida, for $20 million in cash, financed in part through the Company's credit facility. James A. Cummings, Inc. is an established building construction and construction management company in the South Florida region specializing in the construction of schools, public and commercial facilities. At January 1, 2003, James A. Cummings, Inc. had a firm backlog of approximately $170 million. The acquisition will be effective as of January 1, 2003 and, accordingly, James A. Cummings, Inc. will be included in the Company's consolidated results of operations and financial position beginning in the first quarter of 2003.

Independent Auditors' Report



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, 2002 and 2001, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2002. 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 auditing standards generally accepted in the United States. 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, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

As discussed in Note (1)(b) to the consolidated financial statements, in 2002 the Company changed its method of reporting its interests in construction joint ventures in the Consolidated Balance Sheets from the equity method to the proportionate consolidation method and retroactively restated the 2001 and 2000 consolidated financial statements for the change. As discussed in Note (1)(i) to the consolidated financial statements, basic and diluted earnings per share for the year ended December 31, 2000 have been restated.

DELOITTE & TOUCHE LLP



Boston, Massachusetts
March 21, 2003

Independent Auditors' Report on Schedule



To the Stockholders of Perini Corporation:

We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated financial statements included in this Form 10-K, and have issued our report thereon dated March 21, 2003, which expresses an unqualified opinion and includes an explanatory paragraph concerning a retroactive change in presentation of the Company's joint ventures in the consolidated balance sheets from the equity method to the proportionate consolidation method and the restatement of basic and diluted earnings per share for the year ended December 31, 2000. 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 the purpose of complying with the Securities and Exchange Commission's rules and is not part of the consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the consolidated 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 consolidated financial statements taken as a whole.

DELOITTE & TOUCHE LLP



Boston, Massachusetts
March 21, 2003

                                                                                                                                       Schedule II

Perini Corporation and Subsidiaries
Valuation and Qualifying Accounts and Reserves
for the Years Ended December 31, 2002, 2001 and 2000
(In Thousands of Dollars)

                                                               Additions
                                                       ---------------------------
                                         Balance at      Charged     Charged to     Deductions       Balance
                                          Beginning     to Costs &      Other          from          at End
                                           of Year       Expenses     Accounts       Reserves        of Year
                                         ------------  ------------  ------------- -------------   ------------
Description

Year Ended December 31, 2002
Reserve for real estate investments       $  9,972      $    --       $    --       $   7,457  (1)  $  2,515
                                         ============  ============  ============= =============   ============

Year Ended December 31, 2001
Reserve for real estate investments       $ 17,621      $    --      $     --       $   7,649  (1)  $  9,972
                                         ============  ============  ============= =============   ============

Year Ended December 31, 2000
Reserve for real estate investments       $ 23,622      $    --      $     --       $   6,001  (1)  $ 17,621
                                         ============  =========================== =============   ============


(1)     Represents sales or other dispositions of real estate properties.

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 March 29, 2000 -
                        Exhibit 3.1 to Form 8-K filed on April 12, 2000.

               3.2      By-laws - As amended and restated as of March 29, 2000 - Exhibit 3.2 to
                        Form 8-K filed on April 12, 2000.

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
                        Statement No. 33-14434.

               4.2      Form of Deposit Agreement, including form of Depositary Receipt - Exhibit4(b)
                        to Amendment No. 1 to Form S-2 Registration Statement filed June19, 1987;
                        SEC Registration Statement 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
                        Statement No. 33-14434.

               4.4      Shareholder Rights Agreement dated as of September 23, 1988, as
                        amended and restated as of May 17, 1990, as amended and restated as of
                        January 17, 1997, between Perini Corporation and State Street Bank and
                        Trust Company, as Rights Agent - Exhibit 4.4 to Amendment No. 1 to
                        Registration Statement on Form 8-A/A filed on January 29, 1997, and as
                        further amended as of March 29, 2000 - Exhibit 4.3 to Form 8-K filed on April
                        12, 2000.

               4.13     Exchange Agreement by and between Perini Corporation and The Union
                        Labor Life Insurance Company, acting on behalf of its Separate Account P,
                        dated as of February 7, 2000 - Exhibit 10.1 to Form 8-K filed on April 12,
                        2000.

Exhibit Index
(Continued)

                 4.14      Exchange Agreement by and between Perini Corporation and PB Capital
                           Partners, L.P., dated as of February 14, 2000 - Exhibit 10.2 to Form 8-K filed
                           on April 12, 2000.

                 4.15      Exchange Agreement by and between Perini Corporation and The Common
                           Fund for Non-Profit Organizations, dated as of February 14, 2000 - Exhibit
                           10.3 to Form 8-K filed on April 12, 2000.

                 4.16      Registration Rights Agreement by and among Perini Corporation, Tutor-
                           Saliba Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union
                           Fire Insurance Company of Pittsburgh, Pa., BLUM Capital Partners, L.P., PB
                           Capital Partners, L.P., The Common Fund for Non-Profit Organizations, and
                           The Union Labor Life Insurance Company, acting on behalf of its Separate
                           Account P, dated as of March 29, 2000 - Exhibit 4.1 to Form 8-K filed on
                           April 12, 2000.

                 4.17      Shareholders' Agreement by and among Perini Corporation, Tutor-Saliba
                           Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union Fire
                           Insurance Company of Pittsburgh, Pa., BLUM Capital Partners, L.P., PB
                           Capital Partners, L.P., The Common Fund for Non-Profit Organizations, and
                           The Union Labor Life Insurance Company, acting on behalf of its Separate
                           Account P, dated as of March 29, 2000 - Exhibit 4.2 to Form 8-K filed on
                           April 12, 2000.

 Exhibit 10.     Material Contracts

                 Incorporated herein by reference:

                 10.2      Perini Corporation Amended and Restated General Incentive Compensation Plan
                           (1997) - Exhibit 10.2 to 1997 Form 10-K filed on March 30, 1998.

                 10.3      Perini Corporation Amended and Restated Construction Business Unit Incentive
                           Compensation Plan - Exhibit 10.3 to 1997 Form 10-K filed on March 30, 1998.

                 10.16     Management Agreement dated as of January 17, 1997 by and among the Company,
                           Ronald N. Tutor and Tutor-Saliba Corporation - filed herewith.

                 10.31     Amendment No. 2 dated as of December 31, 1999 to the Management
                           Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba
                           Corporation - Exhibit 10.31 to Form 10-Q filed on May 9, 2000.

                 10.32     Special Equity Incentive Plan - Exhibit A to Registrant's Proxy Statement for
                           Annual Meeting of Stockholders dated April 19, 2000.

Exhibit Index
(Continued)

                  10.33    Securities Purchase Agreement by and among Perini Corporation and Tutor-
                           Saliba Corporation, O&G Industries, Inc. and National Union Fire Insurance
                           Company of Pittsburgh, PA, dated as of February 5, 2000 - Exhibit 10.1 to Form
                           8-K filed on February 9, 2000.

                  10.34    Promissory Note dated as of September 6, 2000 by and among Mt. Wayte
                           Realty, LLC (a wholly-owned subsidiary of Perini Corporation) and The
                           Manufacturers Life Insurance Company (U.S.A.) - Exhibit 10.34 to Form 10-Q
                           filed on November 6, 2000.

                  10.35    Credit Agreement dated January 23, 2002 among Perini Corporation, Fleet National
                           Bank, as Administrative Agent, Fleet National Bank, as Arranger, and the Lenders
                           Party Hereto - Exhibit 10.35 to Form 10-K filed on March 21, 2002.

                  10.36    Amendment No. 4 dated as of December 31, 2001 to the Management Agreement by
                           and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation - filed
                           herewith.

                  10.37    Stock Purchase and Sale Agreement dated December 16, 2002 by and among the
                           Company, James A. Cummings, Inc., James A. Cummings, William R. Derrer and
                           Michael F. Lanciault - filed herewith.

                  10.38    Employment Agreement dated January 23, 2003 by and among the Company, James A.
                           Cummings, Inc. and James A. Cummings - filed herewith.

                  10.39    First Amendment and Waiver dated February 14, 2003 to Credit Agreement among
                           Perini Corporation, Fleet National Bank, as Administrative Agent, and the Lenders -
                           filed herewith.

 Exhibit 18.      Preferability Letter Re:  Change in Accounting Principles - filed herewith.

 Exhibit 21.      Subsidiaries of Perini Corporation - filed herewith.

 Exhibit 23.      Consent of Independent Auditors - filed herewith.

 Exhibit 24.      Power of Attorney - filed herewith.

 Exhibit 99.      Additional Exhibits

                  99.1      Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350,
                            As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - filed
                            herewith.

                  99.2      Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350,
                            As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - filed
                            herewith.
EX-10 3 rontmgmtagr_1997.htm RONALD N. TUTOR MANAGEMENT AGREEMENT Ronald N. Tutor Management Agreement, January 17, 1997

MANAGEMENT AGREEMENT

     THIS MANAGEMENT AGREEMENT (the “Agreement”) is made and entered into as of January 17, 1997 by and among Perini Corporation, a Massachusetts corporation (“Perini”), Tutor-Saliba Corporation, a California corporation (“Tutor-Saliba”) and Ronald N. Tutor (“Tutor”), an individual and President of Tutor-Saliba.

     WHEREAS, Perini has had some difficulty meeting its cash requirements for the past year due to, inter alia, its high level of capital-intensive civil construction work and the cash support required by its real estate assets;

     WHEREAS, Perini’s financial condition has impeded its ability to perform on existing projects and to bid on new projects;

     WHEREAS, during the course of 1996, Perini engaged in an extensive search for new capital to support its cash needs and to provide it the opportunity to improve operations and improve its competitiveness in the general contracting and construction industry;

     WHEREAS, as a result of its search for capital, Perini entered into a Stock Purchase and Sale Agreement dated July 24, 1996 by and among Perini, PB Capital Partners, L.P., a Delaware limited partnership (“PB Capital Partners”), and Richard C. Blum & Associates, L.P., a California limited partnership (“RCBA”) (as amended through the date hereof, the “Stock Purchase Agreement”), pursuant to which it is contemplated that Perini will issue convertible preferred stock to PB Capital Partners in exchange for an investment by PB Capital Partners of $30,030,000 (the “Investment”);

      WHEREAS, Tutor-Saliba is a limited partner of PB Capital Partners;

     WHEREAS, Tutor-Saliba directly owns approximately 7.24% of the outstanding common stock, par value $1.00 per share (the “Common Stock”) of Perini;

     WHEREAS, Tutor-Saliba has from time to time engaged in construction joint ventures with Perini under the name Tutor-Saliba/Perini;

     WHEREAS, considering the existing and potential relationships, direct and indirect, between Tutor-Saliba and Perini, as well as Tutor’s expertise and achievements in the construction industry, the parties hereto desire, in connection with and contingent upon the Investment, that Tutor-Saliba provide the services of Tutor to Perini, for the purpose of providing direction to Perini with respect to its ongoing and future construction operations and improving Perini’s operating efficiency and thus its ability to successfully compete for new projects and in new areas;

     NOW THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the parties hereby agree as follows:

      1. Effectiveness. Unless sooner terminated pursuant to Section 6 hereof, this Agreement shall become effective on the date of the closing of the Investment (the "Effective Date").

      2. Management.

           (a) Tutor-Saliba and Tutor each hereby agree to provide to Perini the management services of Tutor, to assist Perini from time to time (but for no more than ten (10) days in any calendar month, unless the parties otherwise agree in writing) as described in Section 2(b) hereof or as the parties hereto may otherwise agree.

           (b) Tutor shall initially serve as acting Chief Operating Officer of Perini, and will provide direction with respect to Perini's ongoing and future construction operations, with the goal of achieving greater operating efficiencies, reducing Perini's need for working capital, reducing Perini's exposure to risk by negotiating and bidding on construction projects that will yield higher profit margins than current projects, negotiating with Perini's lenders, bonding companies and insurers, and generally improving Perini's cash flow situation and competitive position in the general contracting and construction industry.

           (c) Perini hereby agrees to take all action which may be required to: (i) appoint Tutor acting Chief Operating Officer of Perini; (ii) provide Tutor with the use of an office at Perini's principal executive offices and administrative and other support services as may be reasonably necessary in connection with the performance of Tutor's services under Section 2(b) hereof; (iii) make available to Tutor the services of such of its employees and consultants as may be reasonably necessary to the performance of the services described in Section 2(b) above; and (iv) issue the Option (as defined below) and otherwise pay the management fee pursuant to Section 3 hereof.

      3. Compensation. In return for the provision of Tutor's services, Perini shall pay a management fee as follows:

           (a) On the Effective Date, Perini shall issue to Tutor, pursuant to Perini's 1982 Stock Option and Long-Term Performance Incentive Compensation Plan, as amended (the "Plan") (or, in the event options are unavailable for issuance under such plan, with similar terms and conditions as under the Plan), an option (the "Option") exercisable for 150,000 shares of Common Stock, with an exercise price per share equal to the closing price of the Common Stock on the American Stock Exchange on the day prior to the Effective Date. The Option will first become exercisable forty months after the Effective Date.

           (b) Beginning on the Effective Date, Perini shall pay a fee to Tutor-Saliba at the rate of $150,000 per year, such amount to be paid in twelve equal monthly installments in arrears on the 15th of each month, or as the parties hereto shall otherwise agree in writing.

2

      4. Limitation of Liability.

           (a) Neither Tutor nor Tutor-Saliba makes any express or implied representation, warranty or guaranty to Perini relating to the services to be performed by Tutor pursuant to this Agreement or the quality or results of such services.

           (b) Neither Tutor nor Tutor-Saliba shall be liable to Perini or to any of its subsidiaries or affiliates or to any third party for failure to perform the services to be performed by either of them pursuant to this Agreement for any expense, claim, loss or damage, including, without limitation, indirect, special, consequential or exemplary damages, suffered other than by reason of such party's intentional failure to perform the services to be performed by such party pursuant to this Agreement, or by reason of action taken or omitted to be taken by such party which was in bad faith and in a manner not reasonably believed by such party to be in the best interests of Perini.

      5. Indemnification. Perini shall indemnify and hold Tutor and Tutor-Saliba harmless against all loss, cost, liability and expense arising out of the performance of this Agreement by Tutor and Tutor-Saliba, upon the same terms and conditions as those provided to officers and directors of Perini by Section 9 of the By-laws of Perini. A true, complete and correct copy of Section 9 of the By-laws of Perini is attached hereto as Exhibit A.

      6. Termination. Unless earlier terminated by the parties, this Agreement shall terminate upon the earliest to occur of (i) December 31, 1998, (ii) Tutor's inability to perform the services contemplated hereby, whether because of death, disability or otherwise, (iii) written notice from Perini to Tutor after, in the determination of a majority of the Executive Committee of the Board of Directors of Perini, Tutor has failed to perform his obligations under this Agreement, and (iv) the reasonable determination by the Board of Directors or Executive Committee of Perini, and written notice thereof to Tutor, that it would be inadvisable for Tutor to continue performing the services contemplated by this Agreement.

      7. Governing Law. This Agreement shall be construed under and governed by the internal laws of the Commonwealth of Massachusetts without regard to its conflict of laws provisions.

      8. Notices. Any notice, request, demand or other communication required or permitted hereunder shall be in writing and shall be deemed to have been given if delivered or sent by facsimile transmission, upon receipt, or if sent by registered or certified mail, upon the sooner of the date on which receipt is acknowledged or the expiration of three days after deposit in United States post office facilities properly addressed with postage prepaid. All notices to a party will be sent to the addresses set forth below or to such other address or person as such party may designate by notice to each other party hereunder:

3

TO TUTOR-SALIBA
OR TUTOR:                  Tutor-Saliba Corporation
                           c/o Ronald N. Tutor
                           15901 Olden Street
                           Sylmar, CA 91342
With a copy to:            [COUNSEL]

TO PERINI:                 Perini Corporation
                           73 Mt. Wayte Avenue
                           Framingham, MA 01701-9160
                           Attn:  Mr. David B. Perini

With a copy to:            Goodwin, Procter & Hoar LLP
                           Exchange Place
                           Boston, MA  02109
                           Fax (617) 523-1231
                           Attn:  Richard A. Soden, Esq.

Any notice given hereunder may be given on behalf of any party by such party’s counsel or other authorized representative.

      9. Entire Agreement. This Agreement, including the exhibit referred to herein, is complete, reflects the entire agreement of the parties with respect to its subject matter, and supersedes all previous written or oral negotiations, commitments and writings. No promises, representations, understandings, warranties and agreements have been made by any of the parties hereto except as referred to herein; and all inducements to the making of this Agreement relied upon by either party hereto have been expressed herein.

      10. Assignability; Binding Effect. This Agreement shall not be assignable by any of the parties hereto without the written consent of the other parties. This Agreement shall be binding upon and enforceable by, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns.

      11. Execution in Counterparts. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.

      12. Amendments. This Agreement may not be amended or modified, nor may compliance with any covenant set forth herein be waived, except by a writing duly and validly executed by each party hereto, or in the case of a waiver, the party waiving compliance.

      13. Confidentiality. Tutor-Saliba and Tutor each hereby agree (i) to keep confidential and not use in any manner adverse to Perini or any of its subsidiaries or affiliates any confidential information about Perini, any of its subsidiaries or any of its affiliates, including

4

without limitation financial information, trade secrets, bidding processes and other information with respect to actual or prospective bids made or being considered to be made by any of them and (ii) to indemnify and hold harmless Perini, its subsidiaries and its affiliates for any and all loss, cost, liability and expense arising out of a breach of this provision.

5

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first set forth above by their duly authorized representatives. 

                    PERINI CORPORATION

                    By:  /s/David B. Perini 
                    Title:


                    TUTOR-SALIBA CORPORATION

                    By:  /s/Ronald N. Tutor
                    Title:  President


                    RONALD N. TUTOR

                    /s/Ronald N. Tutor

6

EXHIBIT A

Section 9. Indemnification of Directors and Officers

     9.1 General. Subject to the provision of this Section and any limitations imposed by law, the corporation shall indemnify its directors and officers against all expenses incurred by them in connection with any proceeding in which they are involved by reason of their serving in such capacities except that (i) no indemnification shall be provided for any director or officer with respect to any matter as to which he shall have been adjudicated not to have acted in good faith and in the reasonable belief that his action was in the best interests of the corporation, or with respect to a criminal matter, that he had reasonable cause to believe that his conduct was unlawful, and (ii) no indemnification shall be provided by any director or officer with respect to a proceeding by or in the right of the corporation in which he is adjudicated to be liable to the corporation. Such indemnification may be provided to an officer or director in connection with a proceeding in which it is alleged that he received an improper personal benefit by reason of his position, regardless of whether the claim involves his services in such capacity, subject to the foregoing limitation, unless it shall have been determined that an improper personal benefit was received by the director or officer. Except as provided in Section 9.2, indemnification under this Section 9 shall be authorized in each case as determined by the board of directors, which may act notwithstanding that one or more of these members are parties to the proceeding in question or otherwise have an interest in such indemnification.

     9.2 Mandatory Indemnification. Notwithstanding any contrary provision of this Section, if a director or officer of the corporation has been wholly successful on the merits in defense of any proceeding in which he was involved by reason of his position or as a result of his serving in such capacity (including the termination of investigative or other proceedings without a finding of fault on the part of the director or officer), he shall be indemnified by the corporation against all expenses incurred by him in connection therewith.

     9.3 Definitions. For purposes of this Section 9:

           (a) A "director" or "officer" means any person serving in an office filled by appointment or election by the directors or the stockholders and also includes (i) a director or officer of the corporation serving at the request of the corporation as a director, officer, employee, trustee, partner or other agent of another organization (ii) any person who formerly served as a director or officer, and (iii) the heirs or personal representatives of such persons;

           (b) "Expenses" means all expenses (including attorney's fees and disbursements) actually and reasonably incurred in defense of a proceeding or in successfully seeking

indemnification under Section 9.2 hereof, and any judgments, awards, fines, penalties and reasonable amounts paid in settlement of a proceeding; and

           (c) A "proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and any claim which could be the subject of a proceeding.

     9.4 Advances. Except as limited by law, expenses incurred by a director or officer in defending any proceeding in which he is involved by reason of serving in such capacities may be paid by the corporation in advance of final disposition of the proceeding upon receipt of his written undertaking to repay such amount if it is ultimately determined that he is not eligible to be indemnified, which undertaking shall be an unlimited general obligation but need not be secured and may be accepted without regard to the financial ability of such persons to make repayment; provided, that no such advance payment shall be made if it is determined by the board of directors on the basis of the circumstances known at the time (without further investigation) that said director or officer will ultimately be ineligible to be indemnified under this Section 9.

     9.5 Settlement Proceedings. If a proceeding is compromised or settlement in a matter which imposes a liability or obligation upon a director or officer, (i) no indemnification shall be provided to him with respect to a proceeding by or in the right of the corporation unless the board of directors determines in its discretion that indemnification is appropriate under the circumstances, and (ii) no indemnification shall be provided to him with respect to any other type of proceeding if it is determined by the board of directors that said director or officer is ineligible to be indemnified under this Section 9. The determination by the board of directors in each case shall be made on the basis of the circumstances known to it at that time without further investigation.

     9.6 Insurance. The corporation shall have power to purchase and maintain insurance on behalf of any director, officer, employee or agent of the corporation against any liability or cost incurred by him in any such capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability or cost.

     9.7 Employee Benefit Plans. If the corporation or any of its directors or offices sponsors, undertakes or incurs any responsibility as a fiduciary with respect to an employee benefit plan, then, for purposes of indemnification of such person under this Section (i) a “director” or “officer” shall be deemed to include any director or officer of the corporation who serves at its request in any capacity with respect to said plan, (ii) such director or officer shall be deemed not to have failed to have acted in good faith and in the reasonable belief that his action has in the best interests of the corporation if he acted in good faith and in the reasonable belief that his action was in the best interest of the participants or beneficiaries of said plan, and (iii) “expenses” shall be deemed to include any taxes or penalties assessed on such director or officer with respect to said plan under applicable law.

     9.8 Other Provisions. The provisions of this Section 9 shall not be construed to limit the power of the corporation to indemnify its officers or directors to the full extent permitted by law and enter specific agreements or arrangements for this purpose. In addition, the corporation shall have power to indemnify any of its agents or employees or employees who are not directors or officers on any terms consistent with law which it deems to be appropriate.

     9.9 Amendment. The provisions of this Section 9 may be amended or repealed by the stockholders; however, no such amendment or repeal which adversely affects the rights of a director or officer under this Section 9 with respect to his acts or omissions at any time prior to such amendment or repeal, shall apply to him without consent.

EX-10 4 rtamnd_4.htm RONALD N. TUTOR'S MANAGEMENT AGREEMENT - AMEND #4 Amendement No. 4 to Ronald N. Tutor Management Agreement

AMENDMENT NUMBER 4 TO MANAGEMENT AGREEMENT

     THIS AMENDMENT NUMBER 4 TO MANAGEMENT AGREEMENT (the “Amendment”) is made and entered into as of December 31, 2001, by and between Perini Corporation, a Massachusetts corporation (“Perini”), Tutor-Saliba Corporation, a California corporation (“Tutor-Saliba”) and Ronald N. Tutor (“Tutor”), an individual and President of Tutor-Saliba (Perini, Tutor-Saliba and Tutor collectively, the “Parties”).

     RECITALS

     WHEREAS, Perini, Tutor-Saliba and Tutor entered into Management Agreement as of January 17, 1997 (the “Management Agreement”), whereby, among other things, Tutor-Saliba agreed to provide certain services of Tutor to Perini;

     WHEREAS, on or by December 31, 2000, by Amendment No. 3 to that Management Agreement it was extended so that it would terminate, if not earlier, on December 31, 2001;

     WHEREAS, the Parties desire to include Ronald N. Tutor, Chairman and Chief Executive Officer of the Company as a participant in the Corporate Incentive Compensation Plan beginning in 2002. Mr. Tutor will participate on the same terms and conditions as Group I, Executive Officers. The potential bonus to be earned will be based upon the Compensation as defined under Section 3(b) of the Management Agreement; and

     WHEREAS, the Parties desire again to extend the termination date of the Management Agreement.

     NOW THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the Parties hereby agree as follows:

1.      Paragraph 6 of the Management Agreement, as amended, shall be amended in its entirety to read as follows:

               6.      Termination. Unless earlier terminated by the parties, this Agreement shall terminate upon the earliest to occur of (i) December 31, 2002, (ii) Tutor's inability to perform the services contemplated hereby, whether because of death, disability or otherwise, (iii) written notice from Perini to Tutor after, in the determination of a majority of the Board of Directors of Perini, Tutor has failed to perform his obligations under this Agreement, and (iv) the reasonable determination by the Board of Directors of Perini, and written notice thereof to Tutor, that it would be inadvisable for Tutor to continue performing the services contemplated by this Agreement, or (v) the consummation of a sale of Perini to a party other than Tutor or his affiliates.

2.     Section 3(c) of the Management Agreement shall be added as follows:

               (c)      Beginning in 2002 and continuing as long as the Management Agreement is in force, Ronald N. Tutor, Chairman and Chief Executive Officer of the Company shall participate in the Corporate Incentive Compensation Plan under the same terms and conditions as Group I, Executive Officers. The potential bonus will be based upon the Compensation as defined under Section 3(b) of the Management Agreement.

3.      Except as specifically amended herein, all other provisions of the Management Agreement as amended shall remain unchanged and in full force and effect.

4.      This Amendment may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

     IN WITNESS HEREOF, each of the parties hereto have caused a counterpart of this Amendment to be executed and delivered as of the date first above written by their duly authorized representatives. 

        PERINI CORPORATION


        By:  /s/Robert Band
        Title:  President & Chief Operating Officer


        TUTOR-SALIBA CORPORATION


        By:  /s/Ronald N. Tutor
        Title:  President


        RONALD N. TUTOR


        By: /s/Ronald N. Tutor
        Title:
EX-10 5 jacstockpuragr.htm JAMES A. CUMMINGS, INC. STOCK PURCHASE AGREEMENT James A. Cummings, Inc. Stock Purchase and Sale Agreement

                                                                                                         Execution Copy

STOCK PURCHASE AND SALE AGREEMENT


by and among


PERINI CORPORATION,
as Buyer,


and


JAMES A. CUMMINGS, INC.,
as the Company


and


James A. Cummings,
William R. Derrer, and
Michael F. Lanciault


as the Stockholders of the Company


December 16, 2002

                                  TABLE OF CONTENTS



                                                                                Page

Article I - PURCHASE AND SALE OF COMPANY SHARES; CLOSING...........................1
         Section 1.1.    Purchase and Sale of Company Shares.......................1
         Section 1.2.    Purchase Price and Payment................................1
         Section 1.3.    Adjustment to Purchase Price..............................2
         Section 1.4.    Time and Place of Closing.................................4
         Section 1.5.    Deliveries at Closing.....................................4
         Section 1.6.    Stockholders' Representative..............................5
         Section 1.7.    Deposit Escrow............................................7
         Section 1.8.    Additional Payment........................................7
         Section 1.9.    Further Assurances........................................7

Article II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................8
         Section 2.1.    Existence; Good Standing; Authority.......................8
         Section 2.2.    Authorization and Non-Contravention.......................8
         Section 2.3.    Corporate Records.........................................9
         Section 2.4.    Capitalization............................................9
         Section 2.5.    Subsidiaries.............................................10
         Section 2.6.    Financial Statements.....................................10
         Section 2.7.    Absence of Undisclosed Liabilities.......................11
         Section 2.8.    Absence of Certain Developments..........................11
         Section 2.9.    Accounts Receivable; Accounts Payable....................12
         Section 2.10.   Transactions with Affiliates.............................13
         Section 2.11.   Consents and Approvals...................................13
         Section 2.12.   Real and Personal Property...............................13
         Section 2.13.   Tax Matters..............................................17
         Section 2.14.   Certain Contracts and Arrangements.......................19
         Section 2.15.   Intellectual Property....................................21
         Section 2.16.   Litigation ..............................................22
         Section 2.17.   Labor and Employment Matters.............................22
         Section 2.18.   Permits; Compliance with Laws............................25
         Section 2.19.   Employee Benefit Programs................................25
         Section 2.20.   Insurance Coverage.......................................28
         Section 2.21.   Investment Banking; Brokerage............................28
         Section 2.22.   Environmental Matters....................................29
         Section 2.23.   Customers and Partners...................................30
         Section 2.24.   Suppliers; Subcontractors................................31
         Section 2.25.   Bids; Proposals..........................................31
         Section 2.26.   Warranty and Related Matters.............................31
         Section 2.27.   Illegal Payments.........................................32
         Section 2.28.   Solvency.................................................32

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         Section 2.29.   Privacy of Customer Information..........................32
         Section 2.30.   Government Contracts.....................................32
         Section 2.31.   Backlog    ..............................................33
         Section 2.32.   Banking Relationships....................................33
         Section 2.33.   Powers of Attorney.......................................33
         Section 2.34.   Disclosure ..............................................33

Article III - SEVERAL REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS..............34
         Section 3.1.    Company Shares...........................................34
         Section 3.2.    Authority................................................35
         Section 3.3.    Investment Banking; Brokerage............................35
         Section 3.4.    Agreements...............................................35
         Section 3.5.    Powers of Attorney.......................................36

Article IV - REPRESENTATIONS AND WARRANTIES OF BUYER..............................36
         Section 4.1.    Existence; Good Standing; Authority......................36
         Section 4.2.    No Conflict..............................................37
         Section 4.3.    Litigation...............................................37
         Section 4.4.    Investment Banking; Brokerage............................37
         Section 4.5.    Investment Intent........................................37

Article V - CERTAIN COVENANTS OF THE PARTIES......................................38
         Section 5.1.    Conduct of Business Prior to Closing.....................38
         Section 5.2.    Following the Closing....................................41
         Section 5.3.    Covenants of the Buyer...................................46
         Section 5.4.    Further Action...........................................48
         Section 5.5.    Press Releases...........................................48
         Section 5.6.    Board of Directors.......................................48

Article VI - EMPLOYEE MATTERS.....................................................48
         Section 6.1.    Employees; Benefits......................................48

Article VII - CONDITIONS TO CLOSING...............................................49
         Section 7.1.    Conditions to Obligations of the Buyer...................49
         Section 7.2.    Conditions to Obligations of the Company and Stockholders51

Article VIII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION........52
         Section 8.1.    Survival.................................................52
         Section 8.2.    Several Indemnification by the Stockholders..............52
         Section 8.3.    Indemnification by the Buyer.............................55
         Section 8.4.    [Intentionally Omitted]..................................55
         Section 8.5.    Notice; Defense of Claims................................55
         Section 8.6.    Satisfaction of Indemnification Obligations..............57

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         Section 8.7.    Treatment of Indemnity Payments..........................57
         Section 8.8.    Losses Net of Insurance..................................57

Article IX - TERMINATION..........................................................57
         Section 9.1.    Termination..............................................57
         Section 9.2.    Effect of Termination....................................59
         Section 9.3.    Treatment of Deposit Upon Termination....................59
         Section 9.4.    Waiver...................................................59

Article X - GENERAL PROVISIONS....................................................60
         Section 10.1.   Notices    ..............................................60
         Section 10.2.   Fees and Expenses........................................61
         Section 10.3.   Certain Definitions......................................61
         Section 10.4.   Interpretation...........................................64
         Section 10.5.   Counterparts.............................................64
         Section 10.6.   Amendments...............................................65
         Section 10.7.   Entire Agreement; Severability...........................65
         Section 10.8.   Third Party Beneficiaries................................65
         Section 10.9.   Governing Law............................................65
         Section 10.10.  Assignment...............................................65
         Section 10.11.  Consent to Jurisdiction..................................65
         Section 10.12.  Dispute Resolution.......................................65
         Section 10.13.  Mutual Drafting..........................................67
         Section 10.14.  Remedies.................................................67

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EXHIBITS

Exhibit A         Stockholders and Company Shares; Allocation of Purchase Price
Exhibit B         Form of Indemnification Escrow Agreement
Exhibit C         Form of Deposit Escrow Agreement
Exhibit D-1       Form of Employment Agreement for James A. Cummings
Exhibit D-2       Form of Employment Agreement for William R. Derrer
Exhibit D-3       Form of Employment Agreement for Michael F. Lanciault
Exhibit E         Form of Legal Opinion
Exhibit F         FIRPTA Certificate
Exhibit G         Form of Release

                                                     SCHEDULES


Schedule 2.1               Organization and Good Standing
Schedule 2.4               Capitalization
Schedule 2.5               Subsidiaries
Schedule 2.6               Financial Statements
Schedule 2.7               Absence of Undisclosed Liabilities
Schedule 2.8               Absence of Certain Developments
Schedule 2.9               Accounts Receivables
Schedule 2.10              Transactions with Affiliates
Schedule 2.11              Consents and Approvals
Schedule 2.12(a)           Real Property
Schedule 2.13              Tax Matters
Schedule 2.14              Certain Contracts and Arrangements
Schedule 2.15              Intellectual Property
Schedule 2.16              Litigation
Schedule 2.17(a)           Employees and Contingent Workers
Schedule 2.17(b)           Employment Matters
Schedule 2.17(c)           WARN Act
Schedule 2.17(d)           Affirmation Action
Schedule 2.18              Permit; Compliance with Laws
Schedule 2.19              Employee Benefit Programs
Schedule 2.20              Insurance
Schedule 2.22              Environmental Matters
Schedule 2.23              Customers, Distributors and Partners
Schedule 2.25              Bids
Schedule 2.26              Warranty and Related Matters
Schedule 2.30              Government Contracts
Schedule 2.31              Backlog
Schedule 2.32              Banking Relationships
Schedule 2.33              Powers of Attorney
Schedule 4.2               No Conflict
Schedule 4.4               Investment Banking; Brokerage

iv


Schedule 5.1               Proposed Bonuses
Schedule 5.2(c)            Gross Margin
Schedule 5.2(d)            Allocations Schedule
`

STOCK PURCHASE AND SALE AGREEMENT

     This STOCK PURCHASE AND SALE AGREEMENT (this "Agreement") is dated as of December 16, 2002 by and among James A. Cummings, Inc., a Florida corporation (the "Company"), Perini Corporation, a Massachusetts corporation ("Buyer"), and James A. Cummings, William R. Derrer and Michael F. Lanciault (each, a "Stockholder" and collectively, the "Stockholders").

     WHEREAS, the Stockholders own beneficially and of record all the issued and outstanding capital stock of the Company, as set forth on Exhibit A attached hereto (collectively, the “Company Shares”); and

     WHEREAS, each Stockholder desires to sell to Buyer, and Buyer desires to purchase from each Stockholder, all of the issued and outstanding Company Shares owned by such Stockholder on the terms and conditions set forth herein.

     NOW THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements, and upon the terms and subject to the conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Article I - PURCHASE AND SALE OF COMPANY SHARES; CLOSING

     Section 1.1. Purchase and Sale of Company Shares. Subject to the terms and conditions set forth in this Agreement and in reliance on the representations, warranties, covenants and agreements contained herein, at the Closing (as defined in Section 1.4), each Stockholder severally agrees to sell to Buyer, and Buyer agrees to purchase from each such Stockholder, all of the Company Shares owned by such Stockholder as set forth opposite such Stockholder’s name on Exhibit A hereto for the purchase price set forth in Section 1.2.

     Section 1.2. Purchase Price and Payment. The purchase price for the Company Shares shall be an amount equal to Twenty Million Dollars ($20,000,000) (the “Purchase Price”), subject to adjustment pursuant to Section 1.3, together with the Additional Payment (as defined in Section 1.8). In consideration of the sale by the Stockholders to the Buyer of the Company Shares and in reliance upon the representations, warranties covenants and agreements of the Company and the Stockholders herein contained, the Buyer, subject to the terms and conditions of this Agreement, agrees to cause the Purchase Price to be delivered as follows:

     (a)      Within two (2) business days of the execution and delivery of this Agreement, Buyer shall deliver to Boston Safe Deposit and Trust Company, as escrow agent (the "Deposit Escrow Agent") the sum of Five Hundred Thousand Dollars ($500,000.00) (the "Deposit") by wire transfer of immediately available funds. The Deposit Escrow Agent shall hold the Deposit in accordance with the terms of the Deposit Escrow Agreement (as defined in Section 1.7), including that all interest accrued on the

Deposit will be paid to Buyer, except that if the Deposit shall be retained by the Stockholders as liquidated damages under Section 9.3, then such interest shall be paid to the Stockholders (pro rata based upon each Stockholder's respective share amounts as set forth opposite such Stockholder's name in column 3 of Exhibit A attached hereto).

     (b)      At the Closing, Buyer shall deliver to each Stockholder by wire transfer of immediately available funds the amount equal to such Stockholder's pro rata share (as set forth opposite such Stockholder's name in column 3 of Exhibit A attached hereto) of an amount equal to the Purchase Price (i) less the Deposit, which shall be applied in the manner set forth in Section 1.2(c) below, and (ii) plus or minus any adjustment required under Section 1.3(a). Five (5) business days prior to the Closing Date, the Stockholders' Representative (as defined in Section 1.6) shall update Exhibit A to reflect any adjustments pursuant to Section 1.3(a) and shall deliver such updated Exhibit A to Buyer with wire transfer instructions for each Stockholder.

     (c)      Upon the completion of Closing, all accrued interest on the Deposit shall be paid by the Deposit Escrow Agent to the Buyer, the Deposit shall be converted to and shall become known as the "Indemnification Escrow Amount" and the Deposit Escrow Agent shall be converted to and shall become known as the "Indemnification Escrow Agent." The Indemnification Escrow Agent shall hold the Indemnification Escrow Amount in an account in accordance with the terms and conditions of the escrow agreement to be entered into by and among the Buyer, the Stockholders, the Stockholders' Representative and the Indemnification Escrow Agent at Closing substantially in the form of Exhibit B attached hereto (the "Indemnification Escrow Agreement"). Interest accrued on the Indemnification Escrow Amount will be paid to the party or parties receiving the Indemnification Escrow Amount in proportion to the amount received. The Deposit Escrow Agreement shall terminate as of the completion of Closing. The Indemnification Escrow Agreement shall provide that any remaining Indemnification Escrow Amount shall be paid to the Stockholders (pro rata based upon each Stockholder's respective share amounts as set forth opposite such Stockholder's name in column 3 of Exhibit A attached hereto) on the first anniversary of the Closing Date, provided that, if the Indemnification Escrow Agent receives notice from the Buyer that any portion of the Indemnification Escrow Amount is subject to a claim or claims for indemnification under this Agreement, then the Indemnification Escrow Agent shall only pay to the Stockholders that portion of the Indemnification Escrow Amount that is not subject to such claim or claims and shall retain the portion of the Indemnification Escrow Amount related to such claim or claims until such claim or claims have been resolved.

Section 1.3.      Adjustment to Purchase Price.

     (a)      Not later than five (5) business days prior to the Closing Date, the Company shall in good faith prepare an estimated balance sheet of the Company as of December 31, 2002 (the "Closing Balance Sheet"). The Closing Balance Sheet shall be prepared in accordance with GAAP consistently applied, reflecting the Company as an S corporation and otherwise consistent with the methodology used to prepare the

2

Company's Base Balance Sheet (as defined in Section 2.6(a)); provided that a deferred liability shall be reflected on the Closing Balance Sheet with respect to any deferred taxes, and a prepaid asset shall be reflected on the Closing Balance Sheet with respect to any prepaid taxes, as a result of timing differences between book income and taxable income as would generally be reflected on Schedule M-1 of the U.S. federal income tax return (Form 1120S) of the Company. Not later than five (5) business days prior to the Closing Date, the Company shall deliver to Buyer the Closing Balance Sheet, together with worksheets and data that support the Closing Balance Sheet and any other information that Buyer may reasonably request in order to verify the amounts reflected on the Closing Balance Sheet. The Purchase Price to be paid at the Closing shall be adjusted, dollar for dollar, up or down, as appropriate, to the extent that the Net Worth set forth on the Closing Balance Sheet (the "Estimated Closing Net Worth") exceeds or is less than $7,000,000.00 (the "Base Net Worth"), as applicable.

     (b)      Within thirty (30) days after the Closing Date, the Stockholders shall cause Madsen, Sapp, Mena, Rodriquez & Co., P.A. ("Accountant") to audit the Closing Balance Sheet and make any adjustments necessary thereto (the "Audited Balance Sheet") consistent with the provisions of this Section 1.3. The fees and expenses of the Accountant shall be borne by the Company. The Stockholders shall cause the Accountant, within thirty (30) days of the Closing, to deliver the Audited Balance Sheet to the Buyer, together with worksheets which detail any adjustments and the basis thereof.

          (i)      The Audited Balance Sheet, and the Net Worth as of December 31, 2002 reflected thereon, shall be binding upon the parties upon the written approval of such Audited Balance Sheet by the Buyer or the failure to object in writing within fifteen (15) days after receipt of the Audited Balance Sheet.

          (ii)      If the Buyer does not agree with the Audited Balance Sheet and the calculation of Net Worth stated thereon, and Buyer and Stockholders' Representative cannot mutually agree on the same, then within seventy-five (75) days following receipt by the Buyer of the Audited Balance Sheet, KPMG, LLP or such other nationally recognized independent accounting firm mutually satisfactory to Buyer and the Stockholders' Representative (the "Neutral Auditor") shall resolve such dispute. The Neutral Auditor shall review the Audited Balance Sheet and, within ten (10) business days of its appointment, shall make any adjustments necessary thereto, and, upon completion of such review, such Audited Balance Sheet and the Net Worth as of December 31, 2002 as determined by the Neutral Auditor shall be binding upon the parties. If such a review is conducted, then the party (i.e., Buyer, on the one hand, or the Stockholders, on the other hand) whose last proposed written offer for the settlement of the items in dispute, taken as a whole, was farther away from the final determination by the Neutral Auditor pursuant to the preceding sentence, shall pay all fees and expenses associated with such review.

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     The Net Worth reflected in the Audited Balance Sheet pursuant to this subsection (b) is referred to herein as (the “Closing Net Worth”).

     (c)      Within three (3) business days following determination of the Closing Net Worth in accordance with Section 1.3(b), (i) in the event the Closing Net Worth is less than the Estimated Closing Net Worth, each Stockholder shall pay to Buyer an amount equal to such Stockholder's pro rata share (as set forth opposite such Stockholder's name in column 3 of Exhibit A attached hereto) of the difference between such amounts and, (ii) in the event the Closing Net Worth is greater than the Estimated Closing Net Worth, Buyer shall pay to each Stockholder an amount equal to such Stockholder's pro rata share of the difference between such amounts (as set forth opposite such Stockholder's name in column 3 of Exhibit A attached hereto), in each case by wire transfer of immediately available funds. The difference between the Base Net Worth and the Closing Net Worth is referred to as the "Net Worth Adjustment Amount."

     (d)      As used in this Section 1.3, "Net Worth" means total assets minus total liabilities of the Company, in each case as determined in accordance with GAAP, consistently applied.

     (e)      Notwithstanding anything in the Agreement to the contrary, the payment of the Net Worth Adjustment Amount by the Stockholders under this Section 1.3 shall not be subject to any of the limitations on indemnification contained in Section 8.2(b).

     Section 1.4. Time and Place of Closing. Subject to the satisfaction or waiver of the conditions set forth in Article VII, the closing (the “Closing”) of the purchase and sale of the Company Shares and the other transactions contemplated by this Agreement shall be held at the offices of Goodwin Procter LLP, Exchange Place, Boston, Massachusetts, January 21, 2003, or at such other time or such other place as Buyer and the Stockholders’ Representative may mutually determine. The date on which the Closing actually occurs is sometimes referred to herein as the “Closing Date.”

     Section 1.5.      Deliveries at Closing.

     (a)      At the Closing, the Stockholders or the Company, as applicable, will deliver or cause to be delivered to Buyer the following:

          (i)      stock certificates evidencing all of the Company Shares, in each case duly endorsed in blank or accompanied by stock powers duly executed in blank, and such other documents as may be reasonably required by Buyer to effect a valid transfer of such Company Shares by such Stockholder, free and clear of any and all liens, claims, options, charges, pledges, mortgages, security interests, deeds of trust, voting agreements, voting trusts, encumbrances, rights or restrictions of any nature ("Claims");

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          (ii)      the minute books and stock transfer books of the Company and its Subsidiaries (as defined in Section 2.5); and

          (iii)      each of the certificates, instruments and other documents required to be delivered at the Closing pursuant to Section 7.1 hereof.

     (b)      At the Closing, Buyer will deliver or cause to be delivered to the Stockholders the following:

          (i)       the Purchase Price (as adjusted pursuant to Section. 1.3(a)) by wire transfer of immediately available funds to the accounts specified in writing by the Stockholders' Representative; and

          (ii)      each of the certificates and other documents required to be delivered at the Closing pursuant to Section 7.2 hereof.

Section 1.6. Stockholders' Representative.

     (a) By the execution and delivery of this Agreement, each Stockholder hereby irrevocably constitutes and appoints James A. Cummings as his true and lawful agent and attorney-in-fact (the "Stockholders' Representative"), with full power of substitution to act in such Stockholder's name, place and stead with respect to all transactions contemplated by and all terms and provisions of this Agreement, and to act on such Stockholder's behalf in any dispute, litigation or arbitration involving this Agreement, and to do or refrain from doing all such further acts and things, and execute all such documents as the Stockholders' Representative shall deem necessary or appropriate in connection with the transactions contemplated by this Agreement, including, without limitation, the power:

          (i)      to waive any condition to the obligations of such Stockholder to consummate the transactions contemplated by this Agreement;

          (ii)      to execute and deliver all ancillary agreements, certificates and documents (including any stock powers, the Deposit Escrow Agreement, the Indemnification Escrow Agreement and all notices contemplated by the Deposit Escrow Agreement and the Indemnification Escrow Agreement), and to make representations and warranties therein, on behalf of such Stockholder which the Stockholders' Representative deems necessary or appropriate in connection with the consummation of the transactions contemplated by this Agreement;

          (iii)      to receive on behalf of, and to distribute (after payment of (A) any unpaid expenses chargeable to the Stockholders or the Company prior to the Closing in connection with the transactions contemplated by this Agreement, and (B) amounts payable by the Stockholders pursuant to Section 1.3), all amounts payable to such Stockholder under the terms of this Agreement; and

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          (iv)      to do or refrain from doing any further act or deed on behalf of such Stockholder which the Stockholders' Representative deems necessary or appropriate in its sole discretion relating to the subject matter of this Agreement, as fully and completely as such Stockholder could do if personally present;

     provided, however, that (x) the Stockholders’ Representative shall not have the power to enter into any material modifications of this Agreement on behalf of the Stockholders; and (y) the Stockholders’ Representative shall not exercise his powers in a manner that is inconsistent with this Agreement or any amendments hereto executed by the Stockholders.

     (b)      The appointment of the Stockholders' Representative shall be deemed coupled with an interest and shall be irrevocable, and Buyer, its affiliates and any other Person may conclusively and absolutely rely, without inquiry, upon any action of the Stockholders' Representative on behalf of the Stockholders in all matters referred to herein. All notices delivered by Buyer or the Company (following the Closing) to the Stockholders' Representative (whether pursuant hereto or otherwise) for the benefit of the Stockholders shall constitute notice to the Stockholders. The Stockholders' Representative shall act for the Stockholders on all of the matters set forth in this Agreement in the manner the Stockholders' Representative believes to be in the best interest of the Stockholders and consistent with its obligations under this Agreement, but the Stockholders' Representative shall not be responsible to the Stockholders for any loss or damages it or they may suffer by reason of the performance by the Stockholders' Representative of its duties under this Agreement, other than loss or damage arising from willful violation of this Agreement or the law.

     (c)      Each Stockholder agrees to indemnify and hold harmless the Stockholders' Representative from any loss, damage or expense arising from the performance of its duties as the Stockholders' Representative hereunder, including, without limitation, the cost of legal counsel retained by the Stockholders' Representative on behalf of the Stockholders, but excluding any loss or damage arising from willful violation of this Agreement or the law; provided that this indemnification shall not exculpate the Stockholders' Representative from liability to the Stockholders for damages arising out of actions taken by the Stockholders' Representative beyond the scope of authority granted to the Stockholders' Representative pursuant to this Section 1.6.

     (d) All actions, decisions and instructions of the Stockholders' Representative taken, made or given pursuant to the authority granted to the Stockholders' Representative pursuant to this Section 1.6 shall be conclusive and binding upon each Stockholder, and no Stockholder shall have the right to object, dissent, protest or otherwise contest the same.

     (e)      The provisions of this Section 1.6 are independent and severable, shall constitute an irrevocable power of attorney, coupled with an interest and surviving death or dissolutions, granted by the Stockholders to the Stockholders' Representative and shall be binding upon the executors, heirs, legal representatives, successors and assigns of each such Stockholder.

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     (f)      The Stockholders' Representative shall receive and hold each Stockholder's Company Shares until Closing.

     (g)      The grant of power and authority set forth in this Section 1.6 shall terminate on three months following the first anniversary of the Closing Date.

     Section 1.7. Deposit Escrow. The Deposit shall be held in escrow by the Deposit Escrow Agent in an interest-bearing account in accordance with the terms and conditions of the escrow agreement to be entered into by and between the Company, the Stockholders, the Stockholders Representative, Buyer and the Deposit Escrow Agent substantially in the form attached hereto as Exhibit C (the “Deposit Escrow Agreement”). The Deposit Escrow Agreement shall provide, inter alia, that (i) upon the Closing, the interest earned on the Deposit shall be paid to the Buyer and the Deposit shall be applied in the manner set forth in Section 1.2(c), or (ii) upon the termination of this Agreement, the Deposit shall be treated as set forth in Section 9.3.

     Section 1.8. Additional Payment. Subject to Buyer’s right to set-off pursuant to Section 8.2(b)(iii) and certain provisions of the Employment Agreements and provided each such Stockholder is not in breach of this Agreement or any other agreement, document, instrument or any extension, replacement or supplemented agreement, document or instrument contemplated by this Agreement, on the fifth anniversary of the Closing, the Buyer shall pay to each Stockholder an amount equal to such Stockholder’s pro rata share of $1,000,000 (the “Additional Payment”) (as set forth opposite such Stockholder’s name in column 4 of Exhibit A attached hereto). The Additional Payment shall be treated for tax and accounting purposes as deferred purchase price for the Company Shares being purchased hereunder.

     Section 1.9. Further Assurances.

     (a)      The Stockholders from time to time after the Closing at the request of the Buyer and without further consideration shall execute and deliver such further instruments of transfer and assignment and take such other action as the Buyer may reasonably require to more effectively transfer and assign to, and vest in, the Buyer the Company Shares and all rights thereto, and to fully implement the provisions of this Agreement.

     (b)      The Buyer from time to time after the Closing at the request of any Stockholder and without further consideration shall execute and deliver such further instruments of transfer and assignment and take such other action as such Stockholder may reasonably require to more effectively and fully implement the provisions of this Agreement.

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Article II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     As a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated hereby, the Company hereby makes to Buyer the representations and warranties contained in this Article II. Provided that it is apparent by the description of any qualification, exception or other matter referenced or disclosed by the Company in any Schedule, any exhibit attached to this Agreement, the Base Balance Sheet (as defined below) or the Interim Balance Sheet (as defined below) that the subject matter of any qualification, exception or other matter pertains to any other representation, warranty or covenant of the Company under this Agreement, then such qualification, exception or other matter so referenced or disclosed shall be deemed to qualify, limit and restrict such other representations, warranties or covenants of the Company in this Agreement. Except for those representations and warranties expressly set forth in this Article II, the Company makes no representations or warranties, express or implied, at law or in equity, of any kind or nature whatsoever. Except for the financial statements provided in Schedule 2.6, the Company makes no representations or warranties, express or implied, at law or in equity, of any kind or nature whatsoever with respect to reports prepared by any third parties. No other representations, whether written or oral, have been made by the Company except as expressly set forth in this Article II; provided, however, that the foregoing shall not be deemed to limit any cause of action for fraud or intentional misrepresentation under this agreement or applicable law. For purposes hereof unless otherwise indicated, all references to the Company shall include all Subsidiaries (as defined below) of the Company and predecessors, if any.

     Section 2.1. Existence; Good Standing; Authority. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Florida. The Company has all requisite corporate power and authority to own, operate, lease and encumber its properties and carry on its business as currently conducted. Except as set forth on Schedule 2.1, the Company is duly licensed or qualified to do business as a foreign corporation under the laws of each other jurisdiction in which the character of its properties or in which the transaction of its business makes such qualification necessary. The copies of the Company’s Articles of Incorporation (the “Charter”) and by-laws, each as amended to date and made available to Buyer’s counsel, are complete and correct, the Company is not in violation of any term of its Charter or by-laws and no amendments thereto are pending.

     Section 2.2. Authorization and Non-Contravention. This Agreement and all agreements, documents and instruments executed and delivered by the Company pursuant hereto are valid and binding obligations of the Company, enforceable in accordance with their respective terms, assuming due authorization, execution and delivery of this Agreement by Buyer. The execution, delivery and performance of this Agreement and all agreements, documents and instruments executed and delivered by the Company pursuant hereto and the consummation of the transactions contemplated hereby, and by such other agreements, documents and instruments, have been duly authorized by all necessary corporate or other action of the Company. The execution and delivery of this Agreement and all agreements, documents and instruments executed and delivered by the Company pursuant hereto, and the performance of the transactions contemplated by this Agreement and such other agreements, documents and instruments, do not and will not: (i) violate or result in a violation of, conflict with or constitute

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or result in a violation of or default (whether after the giving of notice, lapse of time or both) or loss of benefit under any contract or obligation to which the Company is a party or by which its assets are bound, or any provision of its Charter or by-laws, or cause the creation of any Claim upon any of the assets of the Company; (ii) violate, conflict with or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, any provision of any law, regulation or rule, or any order of, or any restriction imposed by, any court or governmental agency applicable to the Company; (iii) require from the Company any notice to, declaration or filing with, or consent or approval of any governmental authority or other third party; or (iv) violate or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, accelerate any obligation under, or give rise to a right of termination of, any agreement, permit, license or authorization to which the Company is a party or by which the Company is bound.

     Section 2.3. Corporate Records. The corporate record books of the Company accurately reflect all corporate action taken by its stockholders and board of directors and committees. The corporate records of the Company are true and complete and copies of the originals of such documents will be delivered to Buyer following the execution of this Agreement.

     Section 2.4. Capitalization.

     (a)      The authorized capital stock of the Company consists of 10,000 shares of Common Stock, par value $1.00 per share, of which 4,125 shares were issued and outstanding as set forth on Schedule 2.4. All of the issued and outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable. As of the date of this Agreement, except as set forth on Schedule 2.4, there are no outstanding subscriptions, options, warrants, commitments, preemptive rights, agreements, arrangements or commitments of any kind relating to the issuance or sale of, or outstanding securities convertible into or exercisable or exchangeable for, any shares of capital stock of any class or other equity interests of the Company. Except as set forth on Schedule 2.4, there are no agreements or understandings to which the Company is a party with respect to the voting of any shares of capital stock of the Company or which restrict the transfer of any such shares. Except as set forth on Schedule 2.4, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of capital stock, other equity interests or any other securities of the Company and the Company has not redeemed any shares of its capital stock in the past three (3) years. As of the Closing, and after giving effect to the transactions contemplated hereby, all of the outstanding shares of capital stock of the Company will have been duly and validly authorized and issued, fully paid and non-assessable. As of the Closing, and after giving effect to the transactions contemplated hereby, other than as set forth on Schedule 2.4 there are (1) no preemptive rights, rights of first refusal, put or call rights or obligations or anti-dilution rights with respect to the issuance, sale or redemption of the Company's capital stock or any interests therein, (2) no rights to have the Company's capital stock registered for sale to the public in connection with the laws of any jurisdiction and (3) no documents, instruments or

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agreements relating to the voting of the Company's voting securities or restrictions on the transfer of the Company's capital stock.

     (b)      As of the date hereof and at the Closing, the Stockholders are and will be the sole record and beneficial owners of the Company Shares as set forth opposite their names on Exhibit A attached hereto, free and clear of any Claims, including Claims of spouses, former spouses and other family members. The Company Shares represent and at the Closing will represent all of the outstanding capital stock of the Company. The Company Shares were offered, issued, sold and delivered to the Stockholders and any predecessor holders of the Company Shares in compliance with applicable federal and state securities laws without giving rise to preemptive rights of any kind.

     Section 2.5. Subsidiaries. Except as set forth in Schedule 2.5, the Company does not own or control, directly or indirectly, any interest in any other corporation, partnership, limited liability company, association or other business entity (each a “Subsidiary”). Except as set forth in Schedule 2.5, the Company has not made any investment and does not hold any interest in or have any outstanding loan or advance to or from, any Person.

     Section 2.6. Financial Statements.

     (a)      The Company has previously furnished to Buyer and attached hereto as Schedule 2.6 are copies of the following financial statements: (i) the Company's audited balance sheets for the fiscal years ended December 31, 2001 (the "Base Balance Sheet"), December 31, 2000, December 31, 1999, December 31, 1998 and December 31, 1997 and the related audited statements of income, retained earnings and cash flows for the fiscal years then ended, with a report thereon by the independent certified public accountants of the Company, and (ii) the Company's unaudited balance sheet as of October 31, 2002 and the related unaudited statements of income, retained earnings and cash flows for the ten month period then ended (the balance sheet identified in (ii) above may be referred to as the "Interim Balance Sheet"). Such financial statements were prepared in conformity with GAAP, are consistent in all material respects with the books and records of the Company and fairly present the financial position of the Company as of the dates thereof and the results of operations and cash flows of the Company for the periods shown therein, subject to normal and recurring year end adjustments in the case of any such financial statements that are unaudited; provided, however, that any such normal and recurring year end adjustments will not have a Material Adverse Effect (as defined below) on the financial results, results of operations and/or cash flows reported in such unaudited financial statements. Nothing has come to the attention of the Company or the Stockholders since such respective dates that would indicate that such financial statements are not true and correct in all material respects as of the date thereof.

     (b)      Except for the Stockholders' guaranties expressly set forth in Sections 5.2(b) and (c) below, neither the Company nor any Stockholder makes any representations, warranties or guaranties with respect to any projections of income or cash flow, including without limitation any such projections previously provided to the Buyer.

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     Section 2.7. Absence of Undisclosed Liabilities. The Company does not have any liabilities or obligations of any nature, whether accrued, absolute, contingent, asserted, unasserted or otherwise, except liabilities or obligations (i) stated or adequately reserved against in the Base Balance Sheet, (ii) incurred as a result of or arising out of the transactions contemplated under this Agreement, (iii) incurred in the ordinary course of business since the date of the Base Balance Sheet or (iv) as set forth in Schedule 2.7.

     Section 2.8. Absence of Certain Developments. Since the date of the Base Balance Sheet, the Company has conducted its business only in the ordinary course consistent with past practice and, except as set forth in Schedule 2.8, there has not been:

     (a)      any change by itself or in conjunction with all other such changes, whether or not arising in the ordinary course of business, has had or could be reasonably likely to have a Material Adverse Effect;

     (b)      any Claim placed on any of the properties of the Company, other than purchase money liens and liens for taxes not yet due and payable;

     (c)      any purchase, sale or other disposition, or any agreement or other arrangement for the purchase, sale or other disposition, of any properties or assets by the Company, including any of its Intellectual Property (as defined below), involving the payment or receipt of more than $50,000;

     (d)      any damage, destruction or loss of Company property, whether or not covered by insurance, that has had or could be reasonably likely to have a Material Adverse Effect;

     (e)      any declaration, setting aside or payment of any dividend by the Company, or the making of any other distribution in respect of the capital stock of the Company, or any direct or indirect redemption, purchase or other acquisition by the Company of its own capital stock;

     (f)      any labor trouble or claim of unfair labor practices involving the Company, any change in the compensation payable or to become payable by the Company to any of its officers or employees other than normal merit increases to employees in accordance with its usual practices, or any bonus payment or arrangement made to or with any of such officers or employees or any establishment or creation of any employment, deferred compensation or severance arrangement or employee benefit plan with respect to such persons or the amendment of any of the foregoing;

     (g)      any resignation, termination or removal of any officer of the Company or material loss of personnel of the Company or material change in the terms and conditions of the employment of the Company's officers or key personnel;

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     (h)      any payment or discharge of a lien or liability of the Company which was not shown on the audited balance sheet of the Company as of the date of the Base Balance Sheet or incurred in the ordinary course of business thereafter;

     (i)      any contingent liability incurred by the Company as guarantor or otherwise with respect to the obligations of others or any cancellation of any debt or claim owing to, or waiver of any right of, the Company, including any write-off or compromise of any accounts receivable other than in the ordinary course of business consistent with past practice;

     (j)      any obligation or liability incurred by the Company to any of its officers, directors, stockholders or employees, or any loans or advances made by the Company to any of its officers, directors, stockholders or employees, except normal compensation and expense allowances payable to officers or employees in the ordinary course of business;

     (k)      any change in accounting methods or practices, collection policies, pricing policies or payment policies of the Company;

     (l)      any loss, or any development that could reasonably be expected to result in a loss, of any significant supplier, subcontractor, customer, distributor or account of the Company;

     (m)      any amendment or termination of any contract or agreement to which the Company is a party or by which it is bound, other than Change Orders (as defined below) made in the ordinary course of business;

     (n)      any arrangements relating to any royalty or similar payment based on the revenues, profits or sales volume of the Company, whether as part of the terms of the Company's capital stock or by any separate agreement;

     (o)      any pending transaction or executory agreement involving fixed price terms or fixed volume arrangements;

     (p)      any other transaction entered into by the Company other than transactions in the ordinary course of business;

     (q)      any amendment to the Company's Charter or by-laws; or

     (r)      any agreement whether in writing or otherwise, for the Company to take any of the actions specified in paragraphs (a) through (q) above.

     Section 2.9. Accounts Receivable; Accounts Payable.

     (a)      Schedule 2.9 sets forth each of the accounts receivable of the Company and due dates for such accounts receivable and all such accounts receivable are valid and enforceable claims, are not subject to any set-off or counterclaim, and are fully

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collectible in the normal course of business. Since the date of the Base Balance Sheet, the Company has collected its accounts receivable in the ordinary course of its business and in a manner which is consistent with past practices and has not accelerated any such collections, other than for default by the account debtor each of which are set forth on Schedule 2.9. The Company does not have any accounts receivable or loans receivable from any Affiliate or any individual Persons whose relationship with it or any of its directors, officers, employees or Stockholders is that of first cousin or closer.

     (b)      All accounts payable and notes payable of the Company arose in bona fide arm's length transactions in the ordinary course of business and no such account payable or note payable is delinquent in its payment. Since the date of the Base Balance Sheet, the Company has paid its accounts payable in the ordinary course of its business and in a manner which is consistent with its past practices. The Company does not have any account payable from any Affiliate or any individual Persons whose relationship with it or any of its directors, officers, employees or Stockholders is that of first cousin or closer.

     Section 2.10. Transactions with Affiliates. Except as set forth on Schedule 2.10, there are no loans, leases or other agreements or transactions between the Company or any present or former stockholder, director, officer or employee of the Company or any member of such officer’s, director’s, employee’s or stockholder’s immediate family, or any person controlled by such officer, director, employee or stockholder or his or her immediate family. No Stockholder, director, officer or senior employee of the Company or any of their respective spouses or family members, owns directly or indirectly, on an individual or joint basis, any interest in, or serves as an officer or director or in another similar capacity of, any competitor, customer, supplier or subcontractor of the Company, or any organization which has a material contract or arrangement with the Company.

     Section 2.11. Consents and Approvals.

     (a)      Except as set forth on Schedule 2.11, the execution, delivery and performance of this Agreement by the Company and the Stockholders will not, as of the Closing Date, require any consent, approval, authorization or other action by, or filing with or notification to, any federal, state, municipal, local, or any government or sovereign, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body (a "Governmental Authority").

     (b)      Except as set forth on Schedule 2.11, the execution, delivery and performance of this Agreement by the Company will not, as of the Closing Date, require any third-party consents, approvals, authorizations or actions.

     Section 2.12. Real and Personal Property.

     (a)      Real Property.

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     (i)      Schedule 2.12(a) lists all real property owned by the Company (the "Owned Real Property") and Schedule 2.12(a) lists all real property leased by the Company as a tenant (the "Leased Real Property").

     (ii)      The Company has good, record and marketable title to all of the Owned Real Property, free and clear of all liens, restrictions and encumbrances, except as set forth in Schedule 2.12(a).

     (iii)      The Company holds a valid and enforceable leasehold interest in all of the Leased Real Property, free of encumbrances that could cause an early termination of the Company's leasehold interest or impair the Company's use of the leasehold estate, except as set forth in Schedule 2.12(a).

     (iv)      The Company has not received any notice that it is in default under any of the covenants, easements or restrictions or other encumbrances on any of the Owned Real Property or the Leased Real Property (collectively, the "Real Property").

     (v)       The Company has not entered into any contracts for the sale of any of the Owned Real Property or any portion thereof. No lease or other agreement affecting any of the Owned Real Property contains any right of first refusal or option to purchase such property or any portion thereof or any other rights of others that might prevent the transfer of the Owned Real Property pursuant to this Agreement.

     (vi)      All of the Owned Real Property has access to a public way and utility services sufficient to satisfy legal requirements and the practical needs of the Owned Real Property as currently used and improved.

     (vii)      All of the Owned Real Property is in good condition and repair, all fixtures and equipment used in the operation of the Owned Real Property are in good working order, and, no capital expenditures with respect to the Owned Real Property will be required in the next five (5) years.

     (viii)      All of the Leased Real Property is in good condition and repair, all of the Company's fixtures and equipment used in the operation of the Leased Real Property are in good working order, and the Company does not anticipate being obligated under any of the Leases to make any material repairs to any of the Leased Real Property in the next five (5) years.

     (ix)      Except as set forth in Schedule 2.12(a), no construction at any of the Real Property is currently being undertaken by the Company or is planned to be undertaken by the Company within the next five (5) years.

     (x)      Except as set forth in Schedule 2.12(a), there are no actions, suits or proceedings (including, but not limited to, condemnation actions

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and arbitration proceedings) pending or, to the Knowledge of the Company threatened against Company at law or in equity or before or by any federal, state, municipal or other governmental court, department, commission, board, bureau, agency or instrumentality against any of the Owned Real Property or Company's interest therein, and there are no actions, suits or proceedings (including, but not limited to, condemnation actions and arbitration proceedings) pending or to the Knowledge of the Company threatened at law or in equity or before or by any federal, state, municipal or other governmental court, department, commission, board, bureau, agency or instrumentality on any of Company's direct or indirect interest in any of the Leased Real Property.

     (xi)      Except as set forth in Schedule 2.12(a), to the Company's Knowledge, the Owned Real Property and the Leased Real Property complies with all applicable zoning, building, environmental, health and public safety, subdivision, land use and similar laws, rules, ordinances and regulations, including, but not limited to, the Americans with Disabilities Act and the regulations issued thereunder.

     (xii)      No consent or approval is required from any governmental authority for the transfer of any of the Real Property pursuant to the transactions contemplated by this Agreement; no governmental, fire, life safety or other inspection is required in connection with the transfer of any of the Real Property pursuant to the transactions contemplated by this Agreement; and no new certificates of occupancy are required to be issued in connection with the transfer of any of the Real Property pursuant to the transactions contemplated by this Agreement.

     (xiii)      Except as listed in Schedule 2.12(a), there are no contracts or agreements related to the current use or operation of any of the Leased Real Property by the Company or the ownership or the current use or operation of the Owned Real Property that would have a Material Adverse Effect on the use, operation or, as to the Owned Real Property, ownership thereof if terminated. True, correct and complete copies of all contracts listed on Schedule 2.12(a) have been delivered to Buyer prior to the date hereof.

     (xiv)      All licenses, permits and/or other approvals required for the current use or operation by the Company of any of the Leased Real Property or the ownership or the current use or operation of any of the Owned Real Property are in full force and effect.

     (xv)      The leases to which the Company is a party that give rise to the Leased Real Property (the "Leases"), as well as the term and rent obligations thereunder are listed on Schedule 2.12(a). Each of the Leases is in full force and effect according to the terms set forth therein and has not been modified, amended or altered except as listed on Schedule 2.12(a). The information set forth on

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Schedule 2.12(a) with respect to each of the Leases is true and correct in all respects.

     (xvi)      True, correct and complete copies of the Leases and any modifications, amendments or alteration thereof have been delivered to Buyer prior to the date hereof.

     (xvii)      To the Company's Knowledge, all obligations of each landlord under each of the Leases have been performed to date, subject to expiration of any applicable grace, notice and curative periods.

     (xviii)      The Company is not in default under any Lease, and has not received any notice of default. The Company has no Knowledge of any facts or circumstances which, with the giving of notice or the passage of time or both, would constitute a default by the Company under any Lease.

     (xix)      All security deposits under the Leases are listed in Schedule 2.12(a).

     (xx)      None of the Leases require the consent of the landlord or the landlord's lender to the transfer of any of the Leased Real Property pursuant to the transactions contemplated by this Agreement.

     (xxi)      The Company has not assigned any of the Leases and has not sublet all or any portion of its leased premises under any of the Leases.

     (xxii)      Each parcel of Owned Real Property is a separate lot for real estate tax and assessment purposes, and no other real property is included in such tax parcel. There are no Taxes (as defined below), assessments, fees, charges or similar costs or expenses imposed by any governmental authority, association or other entity having jurisdiction over the Real Property (collectively, the "Real Estate Impositions") against the Company's interest in any Real Property or portion thereof which are delinquent. There is no pending or threatened increase or special assessment or reassessment of any Real Estate Impositions against the Company's interest in any Real Property, except as set forth on Schedule 2.12(a).

     (b)      Personal Property. The Company has good, valid and (if applicable) marketable title to all personal property and to those assets reflected on the Base Balance Sheet or acquired by it after the date thereof (except for any personal property disposed of since that date in the ordinary course of business), free and clear of Claims, except for liens for Taxes not yet due and payable, and minor liens and encumbrances that do not materially detract from the value of the such personal property subject thereto or impair the operations of the Company. All equipment included in such properties which is necessary to the business of the Company is in good condition and repair (ordinary wear and tear excepted) and all leases of personal property to which the

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Company is a party are fully effective and afford the Company peaceful and undisturbed possession of the subject matter of the lease. The property and assets of the Company are sufficient for the conduct of its business as presently conducted.

     Section 2.13. Tax Matters.

     (a)      The Company has filed all returns, declarations, reports, claims for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto and including any amendment thereof (each a "Tax Return") that it was required to file under applicable laws and regulations. All such Tax Returns were correct and complete in all respects and have been prepared in substantial compliance with all applicable laws and regulations. All Taxes due and owing by Company (whether or not shown on any Tax Return) have been paid. The Company currently is not the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Claims for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company.

     (b)      The Company has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

     (c)      Neither the Company nor any Stockholder or director or officer (or employee responsible for Tax matters) of the Company expects any authority to assess any additional Taxes for any period for which Tax Returns have been filed. No foreign, federal, state, or local tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to the Company. Except as set forth in Schedule 2.13, the Company has not received from any foreign, federal, state, or local taxing authority (including jurisdictions where the Company has not filed Tax Returns) any (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any taxing authority against the Company. Schedule 2.13 lists all federal, state, local, and foreign income Tax Returns filed with respect to the Company for taxable periods ended on or after December 31, 1995, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. The Company has delivered to Buyer correct and complete copies of all federal income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by the Company filed or received since December 31, 1995.

     (d)      The Company has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

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     (e)      The Company has not filed a consent under Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code"), concerning collapsible corporations. The Company is not a party to any agreement, contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of (i) any "excess parachute payment" within the meaning of Code Section 280G (or any corresponding provision of state, local or foreign Tax law) and (ii) any amount that will not be fully deductible as a result of Code Section 162(m) (or any corresponding provision of state, local or foreign Tax law). The Company has not been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii). The Company has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. The Company is not a party to or bound by any Tax allocation or sharing agreement. The Company (A) has not been a member of an any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of state, local or foreign law filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company) or (B) does not have any liability or obligation of whatever kind or nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes (each a "Liability") for the Taxes of any Person (other than for the Company) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.

     (f)      Schedule 2.13 sets forth the following information with respect to the Company as of the most recent practicable date (as well as on an estimated pro forma basis as of the Closing giving effect to the consummation of the transactions contemplated hereby): (A) the basis of the Company in its assets; and (B) the amount of any net operating loss, net capital loss, unused investment or other credit, unused foreign tax, or excess charitable contribution allocable to the Company.

     (g)      The unpaid Taxes of the Company (A) did not, as of October 31, 2002, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the October 31, 2002 Interim Balance Sheet or in any notes thereto and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing their Tax Returns, except as set forth on Schedule 2.13. Since the date of the Base Balance Sheet, the Company has not incurred any liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the ordinary course of business consistent with past custom and practice.

     (h)      The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or

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portion thereof) ending after the Closing Date as a result of any: (A) change in method of accounting for a taxable period ending on or prior to the Closing Date; (B) "closing agreement" as described in Code Section 7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C) intercompany transactions or any excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign income Tax law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; or (E) prepaid amount received on or prior to the Closing Date.

     (i)      The Company has not distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code Section 355 or Section 361.

     (j)      Company has been a validly electing S corporation within the meaning of Code Sections 1361 and 1362 at all times since 1989, and the Company will be an S corporation up to and including (the day before, if no Section 338(h)(10) Election is made) the Closing Date.

     (k)      Schedule 2.13 identifies each of the Company's Subsidiaries that is a "qualified subchapter S subsidiary" within the meaning of Code Section 1361(b)(3)(B). Each Subsidiary so identified has been a qualified subchapter S subsidiary at all time since the date shown on such schedule up to and including (the day before, if no Section 338(h)(10) Election is made) the Closing Date.

     (l)      Company shall not be liable for any Tax under Code Section 1374 in connection with the deemed sale of the Company's assets (including the assets of any qualified subchapter S subsidiary) caused by the Section 338(h)(10) Election. Neither the Company nor any qualified subchapter S subsidiary of the Company has, in the past 10 years, (A) acquired assets from another corporation in a transaction in which Company's Tax basis for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the stock of any corporation which is a qualified subchapter S subsidiary.

     Section 2.14. Certain Contracts and Arrangements. Except as set forth in Schedule 2.14, the Company is not a party or subject to or bound by:

     (a)      any subcontracts or purchase orders by the Company involving a commitment or payment by the Company in excess of $500,000 or any other contract or agreement involving a commitment or payment by the Company in excess of $100,000;

     (b)      any contract, lease or agreement which is not cancelable by the Company without penalty on not less than ninety (90) days notice;

     (c)      any contract containing covenants directly and expressly limiting in any respect the freedom of the Company to compete in any line of business or with any person or entity or containing any exclusive dealing obligations;

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     (d)      any contract or agreement relating to the licensing, distribution, development, purchase, sale or servicing of its software or hardware products except in the ordinary course of business consistent with past practices or any of its Intellectual Property;

     (e)      any indenture, mortgage, promissory note, loan agreement, guaranty, letter of credit, bond, surety or other agreement or commitment for borrowing, any pledge or security arrangement or any bonding or surety agreement or arrangement;

     (f)      any stock redemption or purchase agreements or other agreements affecting or relating to the capital stock of the Company, including, without limitation, any agreement with any stockholder of the Company which includes anti-dilution rights, registration rights, voting arrangements, operating covenants or similar provisions;

     (g)      any pension, profit sharing, retirement or stock option plans, or any employment, severance or change of control agreement;

     (h)      any royalty, dividend or similar arrangement based on the revenues or profits of the Company or any contract or agreement involving fixed price or fixed volume arrangements;

     (i)      any joint venture, partnership, manufacturer, development or supply agreement or other agreement which involves a sharing of revenues, profits, losses, costs or liabilities by the Company with any other Person or any fixed price or similar agreement or any agreement to provide equity of debt financing or develop any project;

     (j)      any acquisition, merger or similar agreement;

     (k)      any collective bargaining agreement or other agreement with any labor union or other employee representative of a group of employees;

     (l)      any contract with any governmental entity;

     (m)    any contract not executed in the ordinary course of business;

     (n)      any tax sharing agreement;

     (o)      any agreement granting to any Person the right to purchase assets or services; or

     (p)      any other material contract involving the payment of more than $100,000 by or to the Company.

True and correct copies of each agreement referred to in Schedule 2.14 have been provided to the Buyer, or detailed summaries thereof provided on Schedule 2.14. All such contracts, agreements, leases and instruments are valid and are in full force and effect and constitute legal,

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valid and binding obligations of the Company and, to the Company’s Knowledge, of the other parties thereto, and are enforceable substantially in accordance with their respective terms. The Company has no Knowledge of any notice or threat to terminate any such contracts, agreements, leases or instruments. Neither the Company nor, to the Company’s Knowledge, any other party is in default in complying with any provisions of any such contract, agreement, lease or instrument, or any other contract, agreement, lease or instrument, and no condition or event or fact exists which, with notice, lapse of time or both, could constitute a default thereunder on the part of the Company.

Except as set forth in Schedule 2.14, since December 31, 1997 the Company has not received written notice of any stop work order, suspension of work order or default notice or suspension with respect to any agreement or contract on Schedule 2.14. Except as set forth in Schedule 2.14, since December 31, 1992, the Company has not received any threat of debarment or agreed to any voluntary exclusion to refrain from submitting bids or proposals on any contracts.

     Section 2.15. Intellectual Property

     (a)      Except as disclosed in Schedule 2.15, the Company has exclusive ownership of, or exclusive license to use, all patent, copyright, trade secret, trademarks, service marks, domain names or other proprietary rights used or to be used in the Company's business as presently conducted (collectively, "Intellectual Property"). The Company's rights in all of such Intellectual Property are freely transferable. The Company has received no notice of claims or demands of any other person pertaining to any of such Intellectual Property and no proceedings have been instituted, or are pending or threatened, which challenge the rights of the Company in respect thereof. Except as disclosed in Schedule 2.15, the Company has the right to use, free and clear of claims or rights of other persons, all customer lists, designs, manufacturing or other processes, computer software, systems, data compilations, research results and other information required for or incident to its products or its business as presently conducted.

     (b) All patents, patent applications, trademarks, trademark applications and registrations and registered copyrights which are owned by or licensed to the Company and all other items of Intellectual Property are listed in Schedule 2.15. Except as set forth on Schedule 2.15, all of such patents, patent applications, trademark registrations, trademark applications and registered copyrights have been duly registered in, filed in or issued by the United States Patent and Trademark Office, the United States Register of Copyrights, or the corresponding offices of other jurisdictions as identified on Schedule 2.15, and have been properly maintained and renewed in accordance with all applicable provisions of law and administrative regulations of the United States and each such jurisdiction.

     (c)      All licenses or other agreements under which the Company is granted rights in Intellectual Property are listed in Schedule 2.15. All said licenses or other agreements are in full force and effect, there is no default by any party thereto, and, except as set forth on Schedule 2.15, all of the Company's rights thereunder are freely

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assignable. The licensors under said licenses and other agreements have and had all requisite power and authority to grant the rights purported to be conferred thereby.

     (d)      All licenses or other agreements under which the Company has granted rights to others in Intellectual Property owned or licensed by the Company are listed in Schedule 2.15. All of said licenses or other agreements are in full force and effect, there is no default by any party thereto, constitute legal, valid and binding obligations of the Company and, to the Company's Knowledge, of the other parties thereto, and are enforceable substantially in accordance with their respective terms; neither the Company nor, to the Company's Knowledge, any other party is in default (subject to expiration of any applicable grace, notice or curative period) in complying with any provisions of any said licenses or other agreements, and no condition or event or fact exists which, with notice, lapse of time or both, could constitute a default thereunder on the part of the Company; and, except as set forth on Schedule 2.15, all of the Company's rights thereunder are freely assignable.

     (e)      The Company has taken all steps required in accordance with sound business practice to establish and preserve its ownership of all Intellectual Property rights with respect to its products, services and technology. The Company has no Knowledge of any infringement by others of any of its Intellectual Property rights. The present business, activities and products of the Company do not infringe any Intellectual Property of any other person.

     Section 2.16. Litigation. Except as set forth on Schedule 2.16, there is no litigation, binding dispute resolution proceeding or governmental or administrative proceeding or investigation pending or to the Knowledge of the Company, any investigation or any litigation, binding dispute resolution proceeding or governmental or administrative proceeding threatened against the Company or affecting the properties or assets of the Company, or, as to matters related to the Company, against any officer, director, stockholder or key employee of the Company in their respective capacities in such positions, nor to the Company’s Knowledge, has there occurred any event nor does there exist any condition on the basis of which any such claim may be asserted. Schedule 2.16 includes a description of all current litigation, claims, proceedings or investigations involving the Company or any of its officers, directors, stockholders or key employees in connection with the business of the Company and all litigation, claims, proceedings or investigations involving the Company or any of its officers, directors, stockholders or key employees relating to contractual matters, criminal matters, employment, sexual harassment or wages and hours laws (but not including workers compensation or insurance related claims) occurring, arising or existing during the past three (3) years.

     Section 2.17. Labor and Employment Matters.

     (a)      Schedule 2.17(a) contains a complete and accurate list of all of employees of the Company ("Employees") as of the date specified on such list, showing the position, annual base salary, bonus potential and other compensation for each Employee. Schedule 2.17(a) also contains a complete and accurate list of all of the Contingent Workers (as defined in Section 2.17(e) below) as of the date specified on such

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list, showing for each Contingent Worker such individual's role in the business, fee or compensation arrangements and other contractual terms with the Company.

     (b)      Except as set forth in Schedule 2.17(b):

          (i)      there is no, and during the past year there has not been any, labor strike, picketing of any nature, general labor dispute, slowdown or any other concerted interference with normal operations, stoppage or lockout pending, or threatened against or affecting the Company;

          (ii)      the Company does not have any duty to bargain with any union or labor organization or other Person purporting to act as exclusive bargaining representative (in each case, a "Union") of any Employees or Contingent Workers with respect to the wages, hours or other terms and conditions of employment of any Employee or Contingent Worker and no Union claims or demands to represent any Employees or Contingent Workers and there are no organizational campaigns in progress with respect to any of the Employees or Contingent Workers and no question concerning representation of such individuals exists;

          (iii)      there is no collective bargaining agreement or other Contract with any Union, or work rules or practices agreed to with any Union, binding on the Company with respect to any Employees or Contingent Workers;

          (iv)      the Company has not engaged in any unfair labor practices;

          (v)      the Company is in compliance with all applicable laws and regulations respecting labor, employment, fair employment practices, work place safety and health, terms and conditions of employment, wages and hours;

          (vi)      the Company is not delinquent in any payments to any Employee or Contingent Worker for any wages, salaries, commissions, bonuses, fees or other direct compensation due with respect to any services performed for it to the date hereof or amounts required to be reimbursed to such Employees or Contingent Workers;

          (vii)      there are no formal or informal grievances, complaints or charges with respect to employment or labor matters (including, without limitation, charges of employment discrimination, retaliation or unfair labor practices) pending or threatened in any judicial, regulatory or administrative forum, or under any private dispute resolution procedure;

          (viii)      none of the employment policies or practices of the Company are currently being audited, or to the Company's Knowledge, being investigated by any Governmental Authority;

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          (ix)      the Company is not subject to any judgment, consent decree, compliance order or administrative order or private settlement contract in respect of any labor or employment matters;

          (x)      the Company is, and at all times has been, in material compliance with the requirements of the Immigration Reform Control Act of 1986;

          (xi)      all Employees are employed at-will;

          (xii)      consummation of the transactions contemplated by this Agreement will not adversely affect the authority of any Employee to work in the United States;

          (xiii)      no Employee is a party to or bound by any contract agreement or undertaking or subject to any judgment that may materially interfere with the use of such person's best efforts to promote the interests of the Company; and

          (xiv)      there is no enforceable policy, plan or program of paying severance pay or any form of severance compensation in connection with the termination of any Employee or Contingent Worker.

     (c)      Except as set forth on Schedule 2.17(c), the Company has not experienced a "plant closing," "business closing," or "mass layoff" (as defined in the Worker Adjustment and Retraining Act of 1986 ("WARN Act") or any similar state, local or foreign law or regulation ("collectively, with the WARN Act, "Plant Closing Laws")) affecting any site of employment of the Company or one or more facilities or operating units within any site of employment or facility of the Company, without complying with any applicable Plant Closing Laws, and, during the 90-day period preceding the date hereof, no Employee has suffered an "employment loss" (as defined in the WARN Act). Schedule 2.17(c) sets forth for each employee who has suffered an "employment loss" during the 90-day period preceding the date hereof (i) the name of such employee (ii) the date of hire of such employee, (iii) such employee's regularly scheduled hours over the six month period prior to such "employment loss", and (m) such employee's last job title(s), location, assignment(s) and department(s).

     (d)      Except as disclosed in Schedule 2.17(d), the Company is not subject to any affirmative action obligations under any law, including, without limitation, Executive Order 11246 and is not a government contractor for purposes of any law with respect to the terms and conditions of employment, including without limitation, the Service Contracts Act or prevailing wage laws.

     (e)      Schedule 2.17(a) lists all independent contractors, consultants, temporary employees, leased employees or other servants or agents classified by the Company as other than employees or compensated other than through wages paid by the

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Company and reported on a form W-2 or W-3 (collectively, "Contingent Workers") employed or used with respect to the operation of the Company. To the extent that any Contingent Workers are employed or retained by the Company, the Company has properly classified and treated them in accordance with applicable laws and for purposes of all employee benefit plans and perquisites.

     (f)      The employment agreements set forth in Schedule 2.17(a) (the "Company Employment Agreements") are in full force and effect and are valid and binding obligations enforceable against each Employee thereto. No party to any Company Employment Agreement has breached his, her or its obligations thereunder. The consummation of the transaction contemplated hereby shall not affect the enforceability of any Company Employment Agreement.

     Section 2.18. Permits; Compliance with Laws. The Company has all franchises, authorizations, approvals, orders, consents, licenses, certificates, permits, registrations, qualifications or other rights and privileges (collectively “Permits”) necessary to permit it to own its property and to conduct its business as it is presently conducted and all such Permits are valid and in full force and effect. No Permit is subject to termination as a result of the execution of this Agreement or consummation of the transactions contemplated hereby. The Company is now and has heretofore been in compliance with all applicable statutes, ordinances, orders, rules and regulations promulgated by any U.S. federal, state, municipal or other Governmental Authority, which apply to the conduct of its business. The Company is not subject to any unsatisfied judgment, consent decree, compliance order or administrative order with respect to any aspect of the business, affairs, properties or assets of the Company and, except as disclosed in Schedule 2.18, has not received any unresolved request for information, notice, demand letter, administrative inquiry or formal or informal complaint or claim from any regulatory agency with respect to any aspect of the business, affairs, properties or assets of the Company.

     Section 2.19. Employee Benefit Programs.

     (a)      Schedule 2.19 sets forth a list of every Employee Program (as defined below) that has been maintained by the Company or an ERISA Affiliate at any time during the six-year period ending on the Closing Date.

     (b)      No Employee Program which has ever been maintained by the Company or an ERISA Affiliate, which has been intended to qualify under Section 401(a) or 501(c)(9) of the Code and which has requested a determination or approval letter from the Internal Revenue Service ("IRS") regarding its qualification under such section has been denied a favorable determination or approval letter and each such Employee Program has, in fact, qualified under the applicable section of the Code from the effective date of such Employee Program through and including the Closing Date (or, if earlier, the date that all of such Employee Program's assets were distributed). No event or omission has occurred which would cause any Employee Program to lose its qualification or otherwise fail to satisfy the relevant requirements to provide tax-favored benefits under the applicable Code Section (including without limitation Code Sections 105, 125, 401(a) and 501(c)(9)). Each asset held under any such Employee Program may

25

be liquidated or terminated without the imposition of any redemption fee, surrender charge or comparable liability. No partial termination (within the meaning of Section 411(d)(3) of the Code) has occurred with respect to any Employee Program.

     (c)      Neither the Company nor any ERISA Affiliate has any Knowledge of any failure of any party to comply with any laws applicable with respect to the Employee Programs that have ever been maintained by the Company or any ERISA Affiliate. With respect to any Employee Program ever maintained by the Company or any ERISA Affiliate, there has been no (i) "prohibited transaction," as defined in Section 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Code Section 4975, (ii) failure to comply with any provision of ERISA, other applicable law, or any agreement, or (iii) non-deductible contribution, which, in the case of any of (i), (ii), or (iii), could subject the Company or any ERISA Affiliate to liability either directly or indirectly (including, without limitation, through any obligation of indemnification or contribution) for any damages, penalties, or taxes, or any other loss or expense. No litigation or governmental administrative proceeding (or investigation) or other proceeding (other than those relating to routine claims for benefits) is pending or threatened with respect to any such Employee Program. All payments and/or contributions required to have been made (under the provisions of any agreements or other governing documents or applicable law) with respect to all Employee Programs ever maintained by the Company or any ERISA Affiliate, for all periods prior to the Closing Date, either have been made or have been accrued (and all such unpaid but accrued amounts are described on Schedule 2.19).

     (d)      Neither the Company nor any ERISA Affiliate has incurred any liability under title IV of ERISA which has not been paid in full prior to the Closing. There has been no "accumulated funding deficiency" (whether or not waived) with respect to any Employee Program ever maintained by the Company or any ERISA Affiliate and subject to Code Section 412 or ERISA Section 302. With respect to any Employee Program maintained by the Company or any ERISA Affiliate and subject to Title IV of ERISA, there has been no (nor will there be any as a result of the transactions contemplated by this Agreement) (i) "reportable event," within the meaning of ERISA Section 4043 or the regulations thereunder, for which the notice requirement is not waived by the regulations thereunder, and (ii) event or condition which presents a material risk of a plan termination or any other event that may cause the Company or any ERISA Affiliate to incur liability or have a lien imposed on its assets under Title IV of ERISA. Except as described in Schedule 2.19, no Employee Program maintained by the Company or any ERISA Affiliate and subject to Title IV of ERISA (other than a Multiemployer Plan) has any "unfunded benefit liabilities" within the meaning of ERISA Section 4001(a)(18), as of the Closing Date. With respect to each Multiemployer Plan maintained by the Company or any ERISA Affiliate, Schedule 2.19 states the amount of withdrawal liability or other termination liability that would be incurred by the Company or ERISA Affiliate if there were a cessation of operations or of the obligation to contribute to such plan as of the Closing Date. None of the Employee Programs ever maintained by the Company or any ERISA Affiliate has ever provided health care or any

26

other non-pension benefits to any employees after their employment is terminated (other than as required by part 6 of subtitle B of title I of ERISA) or has ever promised to provide such post-termination benefits.

     (e)      With respect to each Employee Program maintained by the Company within the six years preceding the Closing Date, complete and correct copies of the following documents (if applicable to such Employee Program) have previously been delivered to Buyer: (i) all documents embodying or governing such Employee Program, and any funding medium for the Employee Program (including, without limitation, trust agreements) as they may have been amended to the date hereof; (ii) the most recent IRS determination or approval letter with respect to such Employee Program under Code Section 401(a) or 501(c)(9), and any applications for determination or approval subsequently filed with the IRS; (iii) the six most recently filed IRS Forms 5500, with all applicable schedules and accountants' opinions attached thereto; (iv) the six most recent actuarial valuation reports completed with respect to such Employee Program; (v) the summary plan description for such Employee Program (or other descriptions of such Employee Program provided to employees) and all modifications thereto; (vi) any insurance policy (including any fiduciary liability insurance policy or fidelity bond) related to such Employee Program; (vii) any registration statement or other filing made pursuant to any federal or state securities law and (viii) all material correspondence between the Company and any state or federal agency within the last six years with respect to such Employee Program.

     (f)      Each Employee Program required to be listed on Schedule 2.19 may be amended, terminated, or otherwise modified by the Company to the greatest extent permitted by applicable law, including the elimination of any and all future benefit accruals under any Employee Program and no provision of any Employee Program document has failed to effectively reserve the right of the Company or the ERISA Affiliate to so amend, terminate or otherwise modify such Employee Program.

     (g)      Each Employee Program ever maintained by the Company (including each non-qualified deferred compensation arrangement) has been maintained in compliance with all applicable requirements of federal and state securities laws including (without limitation, if applicable) the requirements that the offering of interests in such Employee Program be registered under the Securities Act of 1933 and/or state "Blue Sky" laws.

     (h)      Each Employee Program ever maintained by the Company or an ERISA Affiliate has complied with the applicable notification and other applicable requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, Health Insurance Portability and Accountability Act of 1996, the Newborns' and Mothers' Health Protection Act of 1996, the Mental Health Parity Act of 1996, and the Women's Health and Cancer Rights Act of 1998.

     (i)      For purposes of this section:

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          (i)      "Employee Program" means (A) all employee benefit plans within the meaning of ERISA Section 3(3), including, but not limited to, multiple employer welfare arrangements (within the meaning of ERISA Section 3(40)), plans to which more than one unaffiliated employer contributes and employee benefit plans (such as foreign or excess benefit plans) which are not subject to ERISA; (B) all stock option plans, stock purchase plans, bonus or incentive award plans, severance pay policies or agreements, deferred compensation agreements, supplemental income arrangements, vacation plans, and all other employee benefit plans, agreements, and arrangements (including any informal arrangements) not described in (A) above, including without limitation, any arrangement intended to comply with Code Section 120, 125, 127, 129 or 137; and (C) all plans or arrangements providing compensation to employee and non-employee directors. In the case of an Employee Program funded through a trust described in Code Section 401(a) or an organization described in Code Section 501(c)(9), or any other funding vehicle, each reference to such Employee Program shall include a reference to such trust, organization or other vehicle;

          (ii)      An entity "maintains" an Employee Program if such entity sponsors, contributes to, or provides benefits under or through such Employee Program, or has any obligation (by agreement or under applicable law) to contribute to or provide benefits under or through such Employee Program, or if such Employee Program provides benefits to or otherwise covers employees of such entity (or their spouses, dependents, or beneficiaries);

          (iii)      An entity is an "ERISA Affiliate" of the Company if it would have ever been considered a single employer with the Company under ERISA Section 4001(b) or part of the same "controlled group" as the Company for purposes of ERISA Section 302(d)(8)(C); and

          (iv)      "Multiemployer Plan" means an employee pension or welfare benefit plan to which more than one unaffiliated employer contributes and which is maintained pursuant to one or more collective bargaining agreements.

     Section 2.20. Insurance Coverage. The Company has in full force and effect general commercial general liability, professional liability, workers compensation and employer’s liability, fire and casualty, environmental, pollution and such other appropriate insurance policies with coverages as identified in Schedule 2.20. Except as disclosed in Schedule 2.20, there are currently no claims pending against the Company under any insurance policies currently in effect and covering the property, business or employees of the Company, and all premiums due and payable with respect to the policies maintained by the Company have been paid to date and there is no threatened termination of any such policies or arrangements.

     Section 2.21. Investment Banking; Brokerage. There are no claims for investment banking fees, brokerage commissions, broker’s or finder’s fees or similar compensation in

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connection with the transactions contemplated by this Agreement payable by the Company or based on any arrangement or agreement made by or on behalf of the Company.

     Section 2.22. Environmental Matters.

     (a)      The Company has not generated, transported, used, handled, processed, stored, treated, disposed of, or managed any Hazardous Material (as defined below) other than in accordance with all Environmental Laws (as defined below). Except as specifically stated in Schedule 2.22(a), no Hazardous Material has been or is threatened to be spilled, released, discharged, or disposed of at any site presently or formerly owned, operated, leased, or used by the Company, or is present in the soil, sediment, water or groundwater at any such site in violation of Environmental Laws and the Company has not received any citations or notices regarding violations of such Environmental Laws. No Hazardous Material has been transported from any site presently or formerly owned, operated, leased, or used by the Company for treatment, storage, or disposal at any other place, other than in accordance with all Environmental Laws. Except as specifically stated in Schedule 2.22 (a), the Company does not presently own, operate, lease, or use, nor has it previously owned, operated, leased, or used any site on which underground storage tanks are or were located in violation of Environmental Laws and the Company has not received any citations or notices regarding violations of such Environmental Laws. Except as specifically stated in Schedule 2.22(a), no lien has been imposed by any governmental agency on any property, facility, machinery, or equipment owned, operated, leased, or used by the Company in connection with the presence of any Hazardous Material. Notwithstanding anything contained in this Section 2.22(a) above and in limitation thereof, no representation or warranty is made with respect to any such spill, release, discharge or disposal, or any transportation of Hazardous Material, or the existence of underground storage tanks or events respecting the same, occurring after termination of the Company's ownership, operation, lease or use of such site. Notwithstanding anything contained in this Section 2.22(a), no representation or warranty is made with respect to sites owned by third parties and operated or used by the Company in its capacity as a general contractor, with respect to any such spill, release, discharge or disposal, or any transportation of Hazardous Materials, or the existence of underground storage tanks or events respecting the same, occurring other than as a result of operations or use of the site by the Company or its subcontractors.

     (b)      Except as specifically stated in Schedule 2.22(b), (i) the Company does not have any liability under, nor has it violated, any Environmental Law; (ii) the Company, any property presently owned, operated, leased, or used by it, and any facilities and operations thereon, are presently in compliance with all applicable Environmental Laws; (iii) the Company has not entered into or been subject to any judgment, consent decree, compliance order, or administrative order with respect to any environmental or health and safety matter or received any request for information, notice, demand letter, administrative inquiry, or formal or informal complaint or claim with respect to any environmental or health and safety matter or the enforcement of any

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Environmental Law; and (iv) the Company does not have any reason to believe that any of the items enumerated in this subsection will be forthcoming.

     (c)      Except as specifically stated in Schedule 2.22(c), no site owned, operated, leased, or used by the Company contains any asbestos or asbestos-containing material, any polychlorinated biphenyls ("PCBs") or equipment containing PCBs, or any urea formaldehyde foam insulation. Notwithstanding anything contained in this Section 2.22(c), no representation or warranty is made with respect to sites owned by third parties and operated or used by the Company in its capacity as a general contractor, other than as a result of operations or use of the site by the Company or its subcontractors.

     (d)      The Company has duly recorded and timely reported to each federal, state or local authority all information required under all Environmental Laws, and has duly maintained, made, or filed with each federal, state or local authority all records, notices and reports required under all Environmental Laws and has provided to Buyer copies of all documents, records, and information available to the Company concerning any environmental or health and safety matter relevant to the Company, whether generated by the Company, or others, including without limitation, environmental audits, environmental risk assessments, site assessments, documentation regarding off-site disposal of Hazardous Materials, and reports, correspondence, permits, licenses, approvals, consents, and other authorizations related to environmental or health and safety matters issued by any governmental agency.

     (e)      For purposes of this Section 2.22:

          (i)      "Hazardous Material" shall mean and include any hazardous waste, hazardous material, hazardous substance, petroleum product, oil and waste oil, toxic substance, pollutant, contaminant, or other substance which may pose a threat to the environment or to human health or safety, as defined or regulated under any Environmental Law; and

          (ii)      "Environmental Law" shall mean any environmental or health and safety-related law, regulation, rule, ordinance, by-law, license, permit, condition or binding decision of any government entity at the foreign, federal, state, or local level, whether existing as of the date hereof, previously enforced, or subsequently enacted.

     Section 2.23. Customers and Partners. Schedule 2.23 sets forth the name of each customer of the Company who accounted for more than five percent (5%) of the revenues of the Company for each of the fiscal years ended December 31, 2001 and December 31, 2000 and/or for the ten months ended October 31, 2002 (the “Customers”) together with the names of any persons or entities with which the Company has a material strategic partnership or similar relationship (“Partners”). No Customer or Partner of the Company has canceled or otherwise terminated its relationship with the Company or has materially decreased its usage or purchase of the services or products of the Company since December 31, 2001. To the Company’s Knowledge, no Customer or Partner has any expressed plan or intention to terminate, cancel or

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otherwise materially and adversely modify its relationship with the Company or to decrease materially or limit its usage, purchase or distribution of the services or products of the Company.

Except as set forth in Schedule 2.23, the Company does not have any pending net positive or negative claim, change order, or request for equitable adjustment in excess of $500,000 (“Change Orders”), between the Company and any of its Customers, Suppliers or Subcontractors that could adversely affect the gross margins on the contracts to which they relate. Schedule 2.23 indicates whether each Change Order listed thereon is classified as either approved or pending. A change order shall be deemed to be “pending” if a written request for a change to the contract price has been made by the Company or its Customers, Suppliers or Subcontractors and not yet approved in writing by the other party.

     Section 2.24. Suppliers; Subcontractors. The Company’s relationships with its major suppliers (“Suppliers”) and major subcontractors (“Subcontractors”) are good commercial working relationships, and, since the date of the Base Balance Sheet, no supplier or subcontractor that the Company has paid or is under contract to pay $100,000 or more during said period has canceled, materially modified, or otherwise terminated its relationship with the Company, or materially decreased availability of its services, supplies or materials to the Company. To the Company’s Knowledge, no supplier or subcontractor has any expressed plan or intention to do any of the foregoing.

     Section 2.25. Bids; Proposals. Schedule 2.25 sets forth a list of outstanding or in-process bids or proposals by the Company. Except as specifically set forth on Schedule 2.25 no bid or proposal, if awarded, would obligate the Company to make an equity investment in any Person, to make payments to third parties to develop any project or to provide or arrange for financing for any project.

     Section 2.26. Warranty and Related Matters. Schedule 2.26 sets forth (i) a complete list of all claims made to the Company’s sureties within the past three (3) years with respect to any matters related to or arising out of all outstanding contractual warranties and guarantees on any of the construction projects or jobs completed by or service provided by the Company for itself, a customer or a third party (each such service shall be referred to herein as a “Company Service”) and (ii) a complete list of all outstanding contractual warranties and guarantees with respect to any Company Service completed since January 1, 2002, excluding warranties and guarantees furnished by Subcontractors and material suppliers for which the Company has no liability or obligation. Except for the claims listed on Schedule 2.26, there are no pending or, to the Company’s Knowledge, threatened claims against the Company relating to any work performed by the Company, product liability, warranty or other similar claims against the Company alleging that any Company Service is defective or fails to meet any product or service warranties. There are (a) no inherent, systemic or chronic problems in any Company Service including, but not limited to, any problems related to mold or fungal growth resulting from a deficiency or problem with any Company Service and (b) no liabilities for warranty or other claims or returns with respect to any Company Service relating to any such defects or problems. To the Company’s Knowledge, to the extent a Company Service includes design services, there are no inherent design defects.

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     Section 2.27. Illegal Payments. Neither the Company nor any Person affiliated with the Company has ever offered, made or received on behalf of the Company any illegal payment or contribution of any kind, directly or indirectly, including, without limitation, payments, gifts or gratuities, to any person, entity, or United States or foreign national, state or local government officials, employees or agents or candidates therefore or other persons.

     Section 2.28. Solvency. The Company has not: (a) made a general assignment for the benefit of creditors; (b) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by its creditors; (c) suffered the appointment of a receiver to take possession of all, or substantially all, of its assets; (d) suffered the attachment or other judicial seizure of all, or substantially all, of its assets; (e) admitted in writing its inability to pay its debts as they come due; or (f) made an offer of settlement, extension or composition to its creditors generally.

     Section 2.29. Privacy of Customer Information. The Company has not used and does not currently use any of the consumer or customer information that it has received or currently receives through its website or otherwise in an unlawful manner, or in a manner violative of the Company’s privacy policy or the privacy rights of its consumers or customers. The Company has not collected any customer information through its website or otherwise in an unlawful manner or in violation of its privacy policy. The Company has commercially reasonable security measures in place to protect the consumer or customer information it receives through its website or otherwise and which it stores in its computer systems from illegal use by third parties or use by third parties in a manner violative of the rights of privacy of its customers.

     Section 2.30. Government Contracts. The Company has (a) no obligation to renegotiate any federal, state, municipal, tribal or local government, quasi-government, sovereign or quasi-sovereign agreements, contracts, subcontracts or commitments (each a “Government Contract”), (b) not been suspended, debarred, or to the Company’s Knowledge, proposed for suspension and/or debarment, voluntarily excluded from qualifying to bid and/or bidding on or otherwise found not responsible to bid on any contracts for construction and/or design work on a public construction project, (c) not been audited by any such Governmental entity with respect to any Government Contracts entered into or goods and services provided by Company or any of its Affiliates, except audits resulting in determinations neutral or favorable to the Company or as set forth on Schedule 2.30, (d) not been investigated by any such Governmental entity with respect to any Government Contract entered into or goods and services provided by the Company or any of its Affiliates, except audits resulting in determinations neutral or favorable to the Company, (e) not had a contract terminated by any Governmental entity for default or failure to perform in accordance with applicable standards or (f) not been alleged to have submitted a claim for additional time and/or compensation on a construction project that was in any way false and/or fraudulent. Except as set forth on Schedule 2.30, the Company has never had any outstanding Government Contracts which require it to obtain or maintain a United States government security clearance or a foreign government security clearance. Except as set forth on Schedule 2.30, to the Company’s Knowledge, all Government Contracts of the Company are fully funded, none have been cancelled and none are subject to cancellation as a matter of right prior to the expiration thereof. With respect to all Government Contracts, the Company has not received any written notice from any Governmental entity that

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any costs incurred in excess of $10,000 have been disallowed by a contracting officer’s final decision. Except as set forth on Schedule 2.30, as of the date of this Agreement, all required reports and filings have been submitted with respect to any Government Contracts. For the purposes of this Agreement, the term “Governmental” shall be used to describe any federal, state, municipal, tribal or local government or quasi-government.

     Section 2.31. Backlog. For the period ending October 31, 2002, the Company has a Backlog (as defined below) as set forth in Schedule 2.31. None of the orders constituting the Backlog has been cancelled or materially reduced, and each of such orders on backlog is at a price and on terms (including margin) consistent with the Company’s past practices and the ordinary course of business. The term “Backlog” means (a) the value of incomplete work-in-progress under written, fully executed contracts with project owners; (b) the potential, but undetermined guaranteed maximum prices of projects in the pre-construction services phase under agreements with owners under which the Company acts as construction manager and constructor; and (c) the bid amount for projects awarded to the Company, for which contracts with the owner have not been executed. The Company makes no representation or warranty that contracts representing Backlog items described in (b) or (c) above will be executed or the proposed gross maximum prices proposed thereunder will be accepted by the respective owners. Neither the Company nor the Stockholders makes any representation, warranty or guaranty that the Backlog shall be achieved before or after Closing, except to the extent set forth in Section 5.2(c).

     Section 2.32. Banking Relationships. Schedule 2.32 sets forth the names and locations of all banks, trust companies, savings and loan associations and other financial institutions at which the Company maintains safe deposit boxes or accounts of any nature and the names of all persons authorized to have access thereto, draw thereon or make withdrawals there from. At the Closing, copies of all records, including all signatures or authorization cards, pertaining to such safe deposit boxes and bank accounts will be delivered to the Buyer.

     Section 2.33. Powers of Attorney. Except as disclosed in Schedule 2.33, the Company has not granted any powers of attorney which are presently outstanding.

Section 2.34. Disclosure. The representations and warranties made or contained in this Agreement, the Schedules and exhibits hereto and the certificates and statements executed and delivered in connection herewith and all other information provided in writing relating to matters referred to in the foregoing documents by the Company and the Stockholders to the Buyer in connection with the transactions contemplated hereby, when taken together, do not and shall not contain any untrue statement of a material fact and do not and shall not omit to state a material fact required to be stated herein or therein or necessary in order to make such representations, warranties or other material not misleading in the light of the circumstances in which they were made or delivered. To the Company’s Knowledge, there is no material fact directly relating to the assets, liabilities, business, operations or condition (financial or other) of the Company (including any competitive developments other than facts which relate to general economic or industry trends or conditions) that has a Material Adverse Effect on the same. No current officer or director of the Company who is a Stockholder and to the Company’s Knowledge, no other Stockholder has been: (a) subject to voluntary or involuntary petition under the federal

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bankruptcy laws or any state insolvency law or the appointment of a receiver, fiscal agent or similar officer by a court for his or her business or property or that of any partnership of which he or she was a general partner or any corporation or business association of which he or she was an executive officer; (b) convicted in a criminal proceeding or named as a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or been otherwise accused of any act of moral turpitude; (c) the subject of any order, judgment, or decree (not subsequently reversed, suspended or vacated) of any court of competent jurisdiction permanently or temporarily enjoining him or her from, or otherwise imposing limits or conditions on his or her ability to engage in any securities, investment advisory, banking, insurance or other type of business or acting as an officer or director of a public company; (d) found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission (“SEC”) or the Commodity Futures Trading Commission to have violated any federal or state commodities, securities or unfair trade practices law, which judgment or finding has not been subsequently reversed, suspended, or vacated; or (e) has engaged in other conduct that would be required to be disclosed in a prospectus under Item 401(f) of SEC Regulation S-K.

Article III - SEVERAL REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS

     As a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated hereby, each Stockholder hereby severally makes to Buyer each of the representations and warranties set forth in this Article III with respect to such Stockholder, severally and not jointly with the other Stockholders, subject to the qualifications and exceptions set forth in the Schedules. Provided that it is apparent by the description of any qualification, exception or other matter referenced or disclosed by the Stockholders in any Schedule, any exhibit attached to this Agreement, the Base Balance Sheet or the Interim Balance Sheet that the subject matter of any qualification, exception or other matter pertains to any other representation, warranty or covenant of the Stockholders under this Agreement, then such qualification, exception or other matter so referenced or disclosed shall be deemed to qualify, limit and restrict such other representations, warranties or covenants of the Stockholders in this Agreement. Except for the financial statements provided in Schedule 2.6, the Stockholders make no representations or warranties, express or implied, at law or in equity, of any kind or nature whatsoever with respect to reports prepared by any third parties. Except for those representation and warranties expressly set forth in this Article III, no Stockholder makes any representations or warranties, express or implied, at law or in equity, of any kind or nature whatsoever, provided, however, that the foregoing shall not be deemed to limit any cause of action for fraud or intentional misrepresentation under this agreement or applicable law.

     Section 3.1. Company Shares. Such Stockholder owns of record and beneficially the number and class or series of the Company Shares set forth opposite such Stockholder’s name in Exhibit A attached hereto. Such Company Shares are, and when delivered by such Stockholder to Buyer pursuant to this Agreement will be, free and clear of any and all Claims, including Claims of spouses, former spouses and other family members, other than Claims by Buyer resulting from this Agreement.

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     Section 3.2. Authority.

     (a)      This Agreement and all agreements, documents and instruments executed and delivered by each Stockholder pursuant hereto are valid and binding obligations of such Stockholder enforceable in accordance with their respective terms, assuming due authorization, execution and delivery of this Agreement by Buyer. Each Stockholder has full right, authority, power and capacity to enter into this Agreement and all agreements, documents and instruments executed and delivered by such Stockholder pursuant hereto and to carry out the transactions contemplated hereby and thereby.

     (b)      The execution, delivery and performance by each Stockholder of this Agreement and all agreements, documents and instruments executed and delivered by such Stockholder pursuant hereto and the consummation of the transactions contemplated by this Agreement and such other agreements, documents and instruments do not and will not: (i) violate or result in a violation of, conflict with or constitute or result in a violation of or default (whether after the giving of notice, lapse of time or both) under, accelerate any obligation under, or give rise to a right of termination of, any contract, agreement, obligation, permit, license or authorization to which the Company or such Stockholder is a party or by which any of them or their respective assets are bound, or any provision of such Stockholder's organizational documents, if applicable, except with respect to any required consents or approvals as disclosed in Schedule 2.11; (ii) violate or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, any provision of any law, regulation or rule, or any order of, or any restriction imposed by, any court or governmental agency applicable to the Company or such Stockholder; (iii) require from the Company or such Stockholder any notice to, declaration or filing with, or consent or approval of, any governmental authority or other third party, except with respect to any required consents or approvals as disclosed in Schedule 2.11, or (iv) violate or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, accelerate any obligation under, or give rise to a right of termination of, any agreement, permit, license or authorization to which the Company or such Stockholder is a party or by which the Company or such Stockholder is bound, except with respect to any required consents or approvals as disclosed in Schedule 2.11.

     Section 3.3. Investment Banking; Brokerage. There are no claims for investment banking fees, brokerage commissions, broker’s or finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement payable by any Stockholder or based on any arrangement or agreement made by or on behalf of the Company or any Stockholder.

     Section 3.4. Agreements. Each such Stockholder who is employed by the Company is not a party to any non-competition, trade secret or confidentiality agreement with any party other than the Company. There are no agreements or arrangements not contained herein or disclosed in a Schedule hereto, to which such Stockholder is a party relating to the business of the Company or to such Stockholder’s rights and obligations as a stockholder, director or officer of the Company. No Stockholder owns any shares of the Buyer or has any agreements,

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arrangements or relationships relating to the Buyer or any of its Affiliates. Such Stockholder does not own, directly or indirectly, on an individual or joint basis, any material interest in, or serve as an officer or director of, any customer, competitor, supplier or subcontractor of the Company, or any organization which has a contract or arrangement with the Company. Such Stockholder has not at any time transferred any of the stock of the Company held by or for such holder to any employee of the Company, which transfer constituted or could be viewed as compensation for services rendered to the Company by said employee. The execution, delivery and performance of this Agreement will not violate or result in a default or acceleration of any obligation under any contract, agreement, indenture or other instrument involving the Company to which such Stockholder is a party.

     Section 3.5. Powers of Attorney. Except as set forth in Section 1.6 or Schedule 2.33, none of the Stockholders has granted any powers of attorney which are presently outstanding with respect to the Company or the Company Shares.

Article IV -REPRESENTATIONS AND WARRANTIES OF BUYER

     As material inducement to the Company and the Stockholders to enter into this Agreement, and consummate the transaction contemplated hereby, Buyer hereby makes to the Company and the Stockholders the representations and warranties in this Article IV. Except for those representation and warranties expressly set forth in this Article IV, Buyer does not make any representations or warranties, express or implied, at law or in equity, of any kind or nature whatsoever, concerning the organization, business, assets, liabilities and operations of the Buyer.

     Section 4.1. Existence; Good Standing; Authority.

     (a)      Buyer is a Massachusetts corporation, duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Massachusetts with full corporate power and authority to own, operate, lease and encumber its properties and to conduct its business in the manner and in the places where such properties are owned or leased or such business is conducted by it.

     (b)      Buyer has the corporate power and authority to execute and deliver this Agreement and each agreement, document and instrument to be executed and delivered by or on behalf of Buyer pursuant to this Agreement and to carry out the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and all agreements, documents and instruments executed and delivered by Buyer pursuant hereto, the performance by Buyer of its obligations hereunder and under such other agreements and the consummation of the transactions contemplated hereby and by such other agreements, have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and, assuming the due authorization, execution and delivery of this Agreement by the Stockholders and the Company, this Agreement will constitutes a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms.

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     Section 4.2. No Conflict. Neither the execution and delivery by Buyer of this Agreement and the other agreements, documents and instruments contemplated hereby, nor the consummation by Buyer of the transactions in accordance with the terms hereof and thereof, does not and will not, conflict with or result in a breach of any provisions of Buyer’s certificate of incorporation or by-laws or other organizational documents. Except as set forth in Schedule 4.2, the execution and delivery by Buyer of this Agreement and the other agreements documents and instruments contemplated hereby does not and will not (a) result in a breach of, constitute a default under, accelerate any obligation under, or give rise to a right of termination of any indenture, loan or credit agreement, or any other agreement, mortgage, lease, permit, order, judgment or decree to which Buyer is a party and which is material to the business and financial condition of Buyer and its parent and affiliated organizations on a consolidated basis; or (b) violate, conflict with or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, any provision of any law, regulation or rule, or any order of, or any restriction imposed by, any court or governmental agency applicable to Buyer.

Section 4.3. Litigation. There is no litigation, binding dispute resolution proceeding or governmental or administrative proceeding or investigation pending against the Buyer or threatened against Buyer which would prevent or hinder the consummation of the transactions contemplated by this Agreement.

     Section 4.4. Investment Banking; Brokerage. Except as set forth on Schedule 4.4, there are no claims for investment banking fees, brokerage commissions, broker’s or finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement payable by Buyer or based on any arrangement or agreement made by or on behalf of Buyer. Any fees or similar compensation set forth on Schedule 4.4 shall be the sole responsibility and liability of Buyer.

     Section 4.5. Investment Intent. The Buyer represents that it is acquiring the Company Shares solely for its account for investment purposes and not for distribution or resale. By such representation, the Buyer means that no other person has a beneficial interest in the Company Shares to be transferred at the Closing. The Buyer does not intend to dispose of all or any part of the Company Shares except in compliance with the provisions of the Securities Act and applicable state securities laws. The Buyer acknowledges that the Company Shares to be transferred at Closing have not been registered under the Securities Act in reliance on an exemption available under the rules and regulations thereof. The Buyer hereby agrees that the following or similar legend will be placed on the face of the certificates evidencing the Company Shares:

     “These securities have not been registered under the Securities Act of 1933, as amended (“Act”), or any state securities laws and may not be sold or otherwise transferred or disposed of except pursuant to an effective registration statement under the Act and any applicable state securities laws, or an opinion of counsel satisfactory to counsel to the issuer that an exemption from registration under the act and any applicable state securities laws is available.”

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Article V - CERTAIN COVENANTS OF THE PARTIES

     Section 5.1. Conduct of Business Prior to Closing. The Company and the Stockholders severally hereby make the covenants and agreements set forth in this Section 5.1 and the Stockholders agree to cause the Company to comply with such agreement and covenants. No stockholder shall have any right of indemnity or contribution from the Company with respect to the breach of any covenant or agreement hereunder.

     (a)      Conduct of Business. Between the date of this Agreement and the Closing Date, without the prior written consent of Buyer, the Company will:

          (i)      Conduct its business only in the ordinary course and refrain from changing or introducing any method of management or operations except in the ordinary course of business and consistent with prior practices;

          (ii)      Refrain from making any purchase, sale or disposition of any asset or property other than in the ordinary course of business consistent with prior practices, from purchasing any capital assets other than in the ordinary course of business consistent with past practices, and from mortgaging, pledging, subjecting to a lien or otherwise encumbering any of its properties or assets other than in the ordinary course of business consistent with prior practices;

          (iii)      Refrain from incurring any contingent liability as a guarantor or otherwise with respect to the obligations of others, and from incurring any other contingent or fixed obligations or liabilities other than in the ordinary course of business consistent with prior practices, provided that fixed price contracts shall be deemed to be in the ordinary course of business and shall not require the prior consent of Buyer, however, the Company shall notify Buyer upon execution of any such fixed price contract and promptly provide Buyer a copy thereof if requested by Buyer;

          (iv)      Have in effect and maintain at all times all insurance of the kind, in the amount and with the insurers set forth on Schedule 2.20 hereto or equivalent insurance with any substitute insurers approved in writing by Buyer;

          (v)      Refrain from making any change or incurring any obligation to make a change in its Charter, by-laws or authorized or issued capital stock;

          (vi)      Refrain from declaring, setting aside or paying any dividend, making any other distribution in respect of its capital stock, making any direct or indirect redemption, purchase or other acquisition of its stock or issuing any debt or equity security of the Company;

          (vii)      Refrain from making or change any election, change an annual accounting period, adopt or change any accounting method, file any

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amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to the Company (except as any Tax claim or assessment resulting from any audit disclosed in Schedule 2.13), render any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would have the effect of increasing the Tax liability of the Company for any period ending after the Closing Date or decreasing any Tax attribute of the Company existing on the Closing Date;

          (viii)      Use its commercially reasonable efforts to keep intact the Company, including keeping available its present officers and employees and to preserving the goodwill of all suppliers, subcontractors, customers, independent contractors and others having business relations with the Company, provided that the Company may terminate any such relationship without the prior consent of Buyer upon a material breach or default by such other party of its agreement or relationship with the Company;

          (ix)      Use its commercially reasonable efforts to prevent any change with respect to its management and supervisory personnel and banking arrangements;

          (x)      Permit Buyer and its authorized representatives to have full access to all its employees, properties, assets, records (other than employee records), Tax Returns, contracts and documents and furnish to Buyer or its authorized representatives such financial and other information concerning the Company as Buyer may from time to time reasonably request;

          (xi)      Permit Buyer and its authorized representatives to have full access to employee records for each employee, except to each such employee's personnel file, which shall be made available only upon written consent of the employee;

          (xii)      Not communicate or take any action to reduce the exercise price of any option to purchase capital stock of the Company including any communications or actions to cancel any options to purchase capital stock of the Company in exchange for the grant of a stock option by the Company (or its successor) at a later date;

          (xiii)      Not pay any severance or termination pay, except pursuant to written agreements outstanding, or policies or practices existing, on the date of this Agreement and as set specifically forth on Schedule 2.17, or adopt or amend a severance plan;

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          (xiv)      Not establish, adopt or amend any employee benefit plan, pay any bonus (except such bonuses or proposed bonuses disclosed in Schedule 5.1) or make any profit-sharing or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers, employees, consultants or independent contractors; and

          (xv)      Not hire any employee at the level of manager or above or with an annual base salary in excess of $150,000, or promote any employee except in order to fill a position vacated after the date of this Agreement, or engage any consultant or independent contractor for a period exceeding ninety (90) days or for a fee exceeding $50,000;

provided, however, if the Company takes any action identified in clauses (i) through (iii) above that is permitted in the ordinary course of business consistent with prior practices, the Company will promptly notify Buyer of such action.

     (b)      Authorization from Others. The Company and the Stockholders will use commercially reasonable efforts to obtain all authorizations, consents and permits of others required to permit the consummation by the Company and the Stockholders of the transactions contemplated by this Agreement.

     (c)      Notice of Default. Promptly upon the occurrence of, or promptly upon the Company's or any of the Stockholder's Knowledge of the impending or threatened occurrence of, any event which would cause or constitute a breach or default, or would have caused or constituted a breach or default had such event occurred or been known to the Company or any of the Stockholders prior to the date hereof, of any of the representations, warranties or covenants of the Company or any of the Stockholders contained in this Agreement or in any Schedule or exhibit referred to in this Agreement or would cause the Company or any Stockholder to be unable to satisfy any condition to Buyer's obligation to consummate this Agreement and the transaction contemplated hereby, the Company or Stockholder, as applicable, shall give detailed written notice thereof to the other parties and shall use commercially reasonable efforts to prevent or promptly remedy the same. Provided that the Company and the Stockholders have fully complied with Section 5.1 hereof, neither the Company nor any Stockholder shall be required to give notice of or remedy a pending or threatened breach or default under this Agreement that results solely and directly from actions taken by the Company solely in the ordinary course of business and permitted by Section 5.1(a) hereof after the date of this Agreement.

     (d)      Consummation of Agreement. The Company and each of the Stockholders shall use commercially reasonable efforts to perform and fulfill all conditions and obligations on their part to be performed and fulfilled under this Agreement, to the end that the transactions contemplated by this Agreement shall be fully carried out.

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     (e)      Cooperation. The Company and the Stockholders shall cooperate with all reasonable requests of Buyer and Buyer's counsel that are consistent with this Agreement in connection with the consummation of the transactions contemplated hereby, including, without limitation, delivering all items required under Section 7.1 hereof.

     (f)      No Solicitation of Other Offers. From the date of this Agreement until the Closing, neither the Company, the Stockholders, nor any of their representatives will, directly or indirectly, solicit, encourage, assist, initiate discussions or engage in negotiations with, provide any information to, or enter into any agreement or transaction with, any person or persons, other than Buyer, concerning the possible acquisition of the Company Shares, the Company or any of its assets, except for the sale of assets in the ordinary course of business of the Company consistent with the terms of this Agreement.

     (g)      Confidentiality; Trading in Securities. The Company and the Stockholders agree that, unless and until the Closing has been consummated, each of the Company, the Stockholders and their officers, directors, agents and representatives, will hold in strict confidence, and will not use, any confidential or proprietary data or information obtained from Buyer with respect to its business or financial condition except for the purpose of evaluating, negotiating and completing the transaction contemplated hereby. Information generally known in Buyer's industry or which has been disclosed to the Company by third parties who have a right to do so shall not be deemed confidential or proprietary information for purposes of this agreement. Notwithstanding the foregoing, in the event the Company or Stockholder is required by law to disclose such information, the Company or such Stockholder will provide the Buyer with prompt notice of such requirement so the Buyer may seek an appropriate protective order and failing the entry of such protective order, the Company or such Stockholder may disclose only such information as determined by independent legal counsel is required and will exercise reasonable efforts to maintain the assurance that confidential treatment will be accorded such information. If the transaction contemplated by this Agreement is not consummated, the Company and the Stockholders will return to Buyer (or certify that they have destroyed) all copies of such data and information, including but not limited to financial information, customer lists, business and corporate records, worksheets, test reports, Tax Returns, lists, memoranda, and other documents prepared by or made available to the Company or any of the Stockholders in connection with the transaction. Each Stockholder acknowledges that Buyer is a public company and that the federal securities laws prohibit trading in its securities on the basis of material inside information; accordingly, each Stockholder undertakes to refrain from any such trading and to take reasonable steps to prevent any officers, directors, agents and representatives of the Company from doing so.

     Section 5.2. Following the Closing.

     (a)      Non-competition. Each of Stockholders James A. Cummings ("Cummings") and William R. Derrer ("Derrer"), severally and not jointly, agrees that from the date of this Agreement and until the later to occur of (i) 5 years following the

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Closing, (ii) two years following the termination of such Stockholder's employment agreement to be entered into in substantially the form attached hereto as Exhibit D-1 or any extension thereof (each an "Employment Agreement") under Sections 6(a), 6(b) or 6(e) thereof or (iii) upon the termination of such Stockholder's employment thereunder pursuant to Sections 6(c), 6(d) or 6(f) thereof, he will not, without the prior written consent of Buyer, directly or indirectly, within the State of Florida, engage in any activity, or participate or invest in, or provide or facilitate the provision of financing to, or assist (whether as owner, part-owner, shareholder, member, partner, director, officer, trustee, employee, agent or consultant, or in any other capacity) any business, organization or person other than the Company (or Affiliate of the Company) (including any such business, organization or person involving, or which is, a family member of the Stockholder) whose construction business, activities, products or services are, competitive with any of the construction business, activities, products or services conducted or offered by the Company, Buyer or their respective Affiliates. Without implied limitation, the forgoing covenant shall be deemed to prohibit (a) hiring or engaging or attempting to hire or engage for or on behalf of himself or any such competitor any officer or employee of the Company, Buyer or any of their respective Affiliates, or any former employee of the Company, Buyer or any of their respective Affiliates who was employed during the period between the date six (6) months immediately preceding the date determined under subpart (i), (ii) or (iii) above, (b) encouraging for or on behalf of himself or any such competitor any such officer or employee to terminate his or her relationship or employment with the Company, Buyer or any of their respective Affiliates, (c) soliciting for or on behalf of himself or any such competitor any client of the Company, Buyer or any of their respective Affiliates and (d) diverting to any Person any client or business opportunity of the Company, Buyer or any of their respective Affiliates. Notwithstanding anything herein to the contrary, such Stockholder may make passive investments in any enterprise the shares of which are publicly traded if such investment constitutes less than five percent (5%) of the equity of such enterprise.

     (b)      Accounts Receivable. The Stockholders, severally and not jointly, guaranty that all of the accounts receivable (both current and retainage) as of December 31, 2002, all of which are set forth on Schedule 2.9 (which schedule shall be updated as of December 31, 2002 and delivered by the Stockholders at the Closing) will be fully collected prior to the first anniversary of the Closing and agree to reimburse Buyer for any shortfall on a dollar for dollar basis; provided that if any retainage accounts receivables have not been collected prior to such date, Buyer shall only be permitted to make a claim for that portion of the retainage accounts receivable that Buyer believes in good faith will not be collectible in accordance with the Company's customary business practices; and provided further that Buyer shall not be permitted to collect under Section 5.2(b) and 5.2(c) for the same Loss. Following such reimbursement by the Stockholder and if requested by the Stockholders, Buyer agrees to assign any delinquent accounts for which the Stockholders reimburse Buyer to the Stockholders to the extent of their reimbursement and Buyer agrees that if delinquent accounts receivable for which the Stockholders reimburse Buyer are subsequently collected by Buyer, then Buyer shall

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refund the Stockholders' reimbursement to the extent of such collections. Buyer's sole remedy for default on the part of a Stockholder under this Section 5.2(b) shall be those remedies set forth in Section 8.2 hereof for Buyer Indemnifiable Claims, subject to the limitations and qualifications set forth in Sections 8.2(b)(i), (ii), and (iv) through (vii).

     (c)      Realization of Gross Margin.

          (i)      The Company and the Stockholders represent that Schedule 5.2(c) sets forth all of the Company's work-in-progress and the gross margin for each project included therein, on a project by project basis. The Company and the Stockholders will deliver to Buyer at the Closing an updated Schedule 5.2(c) as of December 31, 2002.

          (ii)      The Stockholders, severally and not jointly, shall pay to Buyer their respective pro-rata shares (based on their relative share amounts set forth on Exhibit A) of the positive aggregate sum, if any, of the Gross Margin Results (defined below) for all projects listed on Schedule 5.2(c). The term "Gross Margin Result" for each project shall mean the positive or negative difference of:

               (A)      the product of the Guaranteed Gross Margin for such project (as set forth in the fifth column of Schedule 5.2(c)) multiplied by the percentage of completion of such project as of December 31, 2003; less

               (B)      the amount that is eligible to be booked as gross profit for such project as of the December 31, 2003 (determined in accordance with GAAP consistently applied and consistent with the Company's accounting principles and methods existing as of the date of this Agreement), including the effect of change orders for such project made after December 31, 2002.

          (iii)      Within five (5) business days after the first anniversary of the Closing, the Stockholders shall in good faith prepare and deliver to the Buyer a Gross Margin Results report in accordance with GAAP consistently applied and consistent with the Company's accounting principles and methods existing as of the date of this Agreement, together with worksheets and data that support the Gross Margin Results report and any other information that the Buyer may reasonably request in order to verify the Gross Margin Results. The Gross Margin Results report and the Gross Margin Results reflected thereon, shall be binding upon the parties upon the approval of such Gross Margin Results report by the Buyer or the failure to object in writing within thirty (30) days after receipt thereof by the Buyer. If the Buyer does not agree with the Gross Margin Results report and the calculation of Gross Margin Results stated thereon, and Buyer and Stockholders' Representative cannot mutually agree on the same, then within forty-five (45) days following receipt by the Buyer of the Gross Margin Results

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report, the Neutral Auditor shall resolve such dispute. The Neutral Auditor shall review the Gross Margin Results report and, within ten (10) business days of its appointment, shall make any adjustments necessary thereto, and, upon completion of such review, such Gross Margin Results report and the Gross Margin Results as of December 31, 2003 as determined by the Neutral Auditor shall be binding upon the parties. If such a review is conducted, then the party (i.e., Buyer, on the one hand, or the Stockholders, on the other hand) whose last proposed written offer for the settlement of the items in dispute, taken as a whole, was farther away from the final determination by the Neutral Auditor pursuant to the preceding sentence, shall pay all fees and expenses associated with such review.

          (iv)      Buyer's sole remedy for default on the part of a Stockholder under this Section 5.2(c) shall be those remedies set forth in Section 8.2 hereof for Buyer Indemnifiable Claims, subject to the limitations and qualifications set forth in Sections 8.2(b)(i), (ii), and (iv) through (vii). Notwithstanding anything in this Agreement to the contrary (including Section 8.1), Buyer will be entitled to make claims against the Stockholders under this Section 5.2(c) until February 23, 2004.

     (d)      Tax Matters.

          (i)      Straddle Period. In the case of any Taxable period that includes (but does not end on) the Closing Date (a "Straddle Period"), the amount of any Taxes based on or measured by income or receipts of the Company for the Pre-Closing Tax Period shall be determined based on an interim closing of the books as of the close of business on the Closing Date (and for such purpose, the Taxable period of any partnership or other pass-through entity in which the Company or any of its Subsidiaries holds a beneficial interest shall be deemed to terminate at such time) and the amount of Taxes not based on or measured by income or receipts of the Company and its Subsidiaries for a Straddle Period which relate to the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the entire Taxable period multiplied by a fraction the numerator of which is the number of days in the Taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period.

          (ii)      Section 338(h)(10) Election. At Buyer's option, the Company and each Stockholder shall join with Buyer in making an election under Code Section 338(h)(10) (and any corresponding election under state, local, and foreign tax law) with respect to the purchase and sale of the Company stock hereunder (collectively, a "Section 338(h)(10) Election"). The Stockholders shall include any income, gain, loss, deduction, or other tax item resulting from the Section 338(h)(10) Election on their Tax Returns to the extent required by applicable law. Buyer shall pay any additional Tax imposed on the Stockholders over the amount of Tax due by the Stockholders had the Section 338(h)(10) Election not been made, including (A) any Tax imposed under Code Section 1374, (B) any tax imposed under Treasury Regulations Section 1.338(h)(10)-

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1(d)(5), (C) any state, local or foreign Tax imposed on the Company's or its Subsidiaries' gain, and Buyer shall indemnify the Stockholders against any actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys' fees and expenses arising out of any failure to pay any such Taxes, or (D) a "gross up" for the Tax on the payment of the additional Taxes described in (A) through (C) above in an amount sufficient to put the Stockholders in the same position in which they would have been if no Section 338(h)(10) Election had been made.

          (iii)      Purchase Price Allocation. Buyer, the Company, and the Stockholders agree that the Purchase Price and the liabilities of the Company and its qualified subchapter S subsidiaries (plus other relevant items) will be allocated to the assets of the Company and its qualified subchapter S subsidiaries for all purposes (including Tax and financial accounting) in an Allocation Schedule prepared by Buyer and the Stockholders' Representative in accordance with the residual method following Closing but in any event prior to April 15, 2004. Buyer, the Company, the Company's Subsidiaries, and the Stockholders shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation.

          (iv)      S Corporation Status. The Company shall not and the Stockholders shall not cause the Company to revoke the Company's election to be taxed as an S corporation within the meaning of Code Sections 1361 and 1362. The Company and the Stockholders shall not take or allow any action (other than the sale of the Company's stock pursuant to this agreement) that would result in the termination of the Company's status as a validly electing S corporation within the meaning of Code Sections 1361 and 1362.

          (v)      Tax Periods Ending on or before Closing Date. Buyer shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Company and its Subsidiaries for all periods ending on or prior to the Closing Date which are filed after the Closing Date. Buyer shall permit the Stockholders' Representative to review and comment on each such Tax Return described in the preceding sentence prior to filing. To the extent permitted by applicable law, the Stockholders shall include any income, gain, loss, deduction or other tax items for such periods on their Tax Returns in a manner consistent with the Schedule K-1s furnished by the Company to the Stockholders for such periods.

          (vi)      Cooperation on Tax Matters.

               (A)      Buyer, the Company and its Subsidiaries, and the Stockholders shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns and any audit, litigation or other proceeding with respect to Taxes. Such

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cooperation shall include the retention and (upon the other party's request) the provision of records and information reasonably relevant to any such audit, litigation, or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Company and its Subsidiaries, the Stockholders, and Buyers agree (A) to retain all books and records with respect to Tax matters pertinent to the Company and its Subsidiaries relating to any taxable period beginning before the Closing Date until expiration of the statute of limitations (and, to the extent notified by Buyer or the Stockholders, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company and its Subsidiaries or the Stockholders, as the case may be, shall allow the other party to take possession of such books and records.

               (B)      Buyer and the Stockholders further agree, upon request, to use their best efforts to obtain any certificate or other document from any governmental authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including with respect to the transactions contemplated hereby).

          (vii)       Tax Sharing Agreements. All tax sharing agreements or similar agreements with respect to or involving the Company and its Subsidiaries shall be terminated as of the Closing Date and, after the Closing Date, the Company and its Subsidiaries shall not be bound thereby or have any liability thereunder.

          (viii)      Certain Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement shall be paid by the Stockholders when due, and the Stockholders shall, at their own expense, file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees, and, if required by applicable law, Buyer shall, and shall cause its affiliates to, join in the execution of any such Tax Returns and other documentation.

     (e)      Audited Balance Sheet. The parties shall cooperate with the Accountant in preparing the Audited Balance Sheet.

     Section 5.3. Covenants of the Buyer.

     (a)      Confidentiality. The Buyer hereby covenants and agrees that, unless and until the Closing has been consummated, Buyer and its officers, directors,

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agents and representatives will hold in strict confidence, and will not use any confidential or proprietary data or information obtained from the Company or the Stockholders with respect to the business or financial condition of the Company except for the purpose of evaluating, negotiating and completing the transaction contemplated hereby. Notwithstanding the foregoing, in the event the Buyer is required by law to disclose such information, the Buyer will provide the Company with prompt notice of such requirement so the Company may seek an appropriate protective order and failing the entry of such protective order, the Buyer may disclose only such information as determined by independent legal counsel is required and will exercise reasonable efforts to maintain the assurance that confidential treatment will be accorded such information. Information generally known in the industries of the Company or which has been disclosed to Buyer by third parties who have a right to do so shall not be deemed confidential or proprietary information for purposes of this agreement. If the transaction contemplated by this Agreement is not consummated, Buyer will return to the Company (or certify that it has destroyed) all copies of such data and information, including but not limited to financial information, customer lists, business and corporate records, worksheets, test reports, tax returns, lists, memoranda, and other documents prepared by or made available to Buyer in connection with the transaction.

     (b)      Insurance. Until such time as the Stockholders cease to be employees of the Company or Buyer, Buyer shall cause the Company to obtain and/or maintain in full force and effect (i) policies of insurance that do not increase the Company's deductible beyond commercially reasonable limits or decrease the Company's maximum limits of liability beyond the current levels based on the policies that the Company currently has in place and identified on Schedule 2.20 (except for the life insurance policies listed therein) and (ii) equivalent director and officer insurance provided to similarly situated employees of Buyer. Until such time as Cummings and Derrer cease to be employees of the Company or Buyer, Cummings and Derrer, in their capacities as qualifying licensee general contractors for and on behalf of the Company, shall be named as additional insureds under each such policy without any premium liability. After the Closing, the Buyer shall take the appropriate steps to add the directors and officers of the Company as additional insureds (until such time as such persons cease to be employees of the Company or Buyer) under all appropriate policies without any premium liability to such directors and officers. After Closing, Buyer shall cause the Company to cooperate with and assist the Stockholders and any other officers and directors of the Company and their respective successors, executors, administrators, estates and heirs, in connection with any claims they have or may have, as additional insureds, under any and all policies of insurance maintained by the Company prior to or by the Company or the Buyer after Closing.

     (c)      Name of the Company. Without the prior written consent of Cummings, until the earlier of (i) the fifth anniversary of the Closing or, (ii) the termination of Mr. Cummings' employment with the Company, the Buyer shall not change the name of the Company from "James A. Cummings, Inc."

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     Section 5.4. Further Action. Each of the parties hereto shall use its respective commercially reasonable efforts to take or cause to be taken all appropriate action, do or cause to be done all things necessary, proper or advisable, and execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated by this Agreement.

     Section 5.5. Press Releases. Each of the Buyer, Company and Stockholders will, and will cause each of their Affiliates and representatives to, maintain the confidentiality of this Agreement and will not, and will cause each of their Affiliates not to, issue or cause the publication of any press release or other public announcement with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other parties hereto which consent shall not be unreasonably withheld; provided, however, that a party may, without the prior consent of the other parties hereto, issue or cause publication of any such press release or public announcement to the extent that such party reasonably determines, after consultation with outside legal counsel, such action to be required by law or by the rules of any applicable self-regulatory organization, in which event such party shall (i) in the case of the Company or any Stockholder, provide the proposed press release or public announcement in advance of its issuance to Buyer and allow Buyer reasonable time to comment on such proposed press release or public announcement and (ii) in the case of Buyer, provide the proposed press release or public announcement in advance of its issuance to the Stockholders’ Representative and allow the Stockholders’ Representative reasonable time to comment on such proposed press release or public announcement.

     Section 5.6. Board of Directors. On or prior to the next regularly scheduled meeting of the Board of Directors of Buyer, James A. Cummings shall have been appointed to the Board of Directors of Buyer as a Class II Director, provided that Mr. Cummings shall have the right to decline such appointment (in which case this covenant shall be deemed to have been waived) or later resign.

Article VI - EMPLOYEE MATTERS

     Section 6.1. Employees; Benefits. To the extent that service is relevant for purposes of determining eligibility, vesting, level of benefits or otherwise (but not the actual accrual of benefits) under any employee benefit plan, program or arrangement established or maintained by Buyer (other than any defined benefit pension plan) following the Closing Date for the benefit of Company Employees, such plan, program or arrangement shall credit such Company Employees for service on or prior to the Closing Date that was recognized by the Company or its Subsidiaries, as the case may be, for purposes of employee benefit plans, programs or arrangements maintained by the Company. In addition, with respect to any welfare benefit plan (as defined in Section 3(1) of ERISA) established or maintained by Buyer following the Closing Date for the benefit of Company Employees, such plan shall waive any pre-existing condition exclusions with respect to such Company Employees to which they would not have been subject had they participated or continued to participate in the medical plan of the Company and provide that any covered expenses incurred on or before the Closing Date by any Company Employee or

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by a covered dependent shall be taken into account for purposes of satisfying applicable deductible coinsurance and maximum out-of-pocket provisions after the Closing Date.

Article VII - CONDITIONS TO CLOSING

     Section 7.1. Conditions to Obligations of the Buyer. The obligation of Buyer to consummate this Agreement and the transactions contemplated hereby are subject to the fulfillment, prior to or at the Closing, of the following conditions precedent:

     (a)      Representations; Warranties; Covenants. Each of the representations and warranties of the Company contained in Article II and each of the representations and warranties Stockholders contained Article III shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing except for breaches that, individually or in the aggregate, have neither had nor could reasonably be likely to have a Material Adverse Effect. The Company and each of the Stockholders shall, on or before the Closing, have performed all of their obligations hereunder which by the terms hereof are to be performed on or before the Closing, except for actions taken by the Company and the Stockholders in accordance with Section 5.1(a) that have not had nor could reasonably likely have a Material Adverse Effect.

     (b)      No Material Change. There shall have been no material adverse change in the financial condition, properties, assets, liabilities, business or operations of the Company since the date hereof, in excess of $100,000, provided that any change in the financial condition, properties, assets, liabilities, business or operations of the Company since the date hereof that results solely and directly from actions taken by the Company and the Stockholders in accordance with Section 5.1(a) shall not be considered for purposes of this Section 7.1(b).

     (c)      Certificate from Officers. The Company shall have delivered to Buyer a certificate of the Company's Chief Executive Officer and Chief Financial Officer dated as of the Closing to the effect that the conditions set forth in paragraph (a) and (b) above in this Section 7.1 have been satisfied.

     (d)      Indemnification Escrow Agreement. Each of the Stockholders, the Stockholders' Representative and the Indemnification Escrow Agent shall have executed and delivered the Indemnification Escrow Agreement.

     (e)      Opinion of Counsel. On the Closing Date, Buyer shall have received from Katz, Barron, Squitero & Faust, P.A., counsel for the Company and the Stockholders, an opinion as of said date, in the form attached hereto as Exhibit E.

     (f)      No Litigation. No action to enjoin the consummation of the transactions contemplated by this Agreement shall have been instituted or threatened by any person or any federal, state or other governmental authority.

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     (g)      Employment and Non-Competition Agreements. Each of James A. Cummings, William R. Derrer and Michael F. Lanciault shall have executed and delivered to Buyer an Employment Agreement in substantially the form of Exhibit D-1, Exhibit D-2 and Exhibit D-3 attached hereto, respectively.

     (h)      Foreign Investment in Real Property Tax Act Withholding. At or prior to the Closing, Buyer shall have received from each Stockholder a "transferor's certificate of non-foreign status" as provided in the Treasury Regulations under Section 1445 of the Code outstanding in the form attached hereto as Exhibit F attached hereto.

     (i)      Employee Programs. The Company shall have taken all steps necessary under the relevant documents and applicable law to maintain the qualification of each Employee Program identified on Schedule 2.19 notwithstanding the purchase of the Company Shares by Buyer and, at Buyer's request, shall have taken all steps to terminate or wind up each such Employee Program at no cost to the Company.

     (j)      Resignations. The Company shall have delivered to Buyer the resignations of all of the Directors of the Company and of such officers of the Company as may be requested by Buyer at least five days prior to the Closing, such resignations to be effective at the Closing.

     (k)      Releases. The Company shall have delivered to Buyer general releases signed by each of the Stockholders and by each officer and Director of the Company of all claims which any of them have against the Company in the form attached here to as Exhibit G.

     (l)      Loans. All notes, debt instruments or other credit arrangements between Company and any Stockholder shall have been re-paid in full or cancelled.

     (m)      Accountant Letter. The Company's Accountant shall have consented in writing to allowing the Buyer's accountants to rely upon their reports for the purposes of any reports that Buyer is required to file with the SEC and to provide Buyer and its accountants access to their working papers relating to the Company.

     (n)      Consents. The Company shall have obtained all consents required to be obtained by it to consummate the transactions contemplated by this Agreement, including, without limitation, those set forth on Schedule 2.2 and Schedule 2.11.

     (o)      Stock Redemption Agreement. The Company shall have delivered to Buyer an agreement that terminates the Amended and Restated Stock Redemption Agreement, dated April 10, 1989, as amended, by and among the Company and the stockholders named therein.

     (p)      Lender Consent and Financing. Buyer shall have received all necessary consents from Fleet National Bank and Banknorth, N.A. (the "Lenders") for the transactions contemplated hereby under that certain Credit Agreement dated as of

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January 23, 2002 (the "Credit Agreement") and received approval from the Lenders to borrow sufficient funds thereunder to finance the transactions contemplated hereby.

     Section 7.2. Conditions to Obligations of the Company and Stockholders. The obligation of the Company and the Stockholders to consummate this Agreement and the transactions contemplated hereby is subject to the fulfillment, prior to or at the Closing, of the following conditions precedent:

     (a)      Representations; Warranties; Covenants. Each of the representations and warranties of Buyer contained in Article IV shall be true and correct in all material respects as though made on and as of the Closing; Buyer shall, on or before the Closing, have performed all of its obligations hereunder which by the terms hereof are to be performed on or before the Closing; and Buyer shall have delivered to the Company and the Stockholders a certificate of the President or any Vice President of Buyer dated on the Closing to such effect.

     (b)      Employment and Non-Competition Agreements. The Buyer shall have executed and delivered to James A. Cummings an Employment Agreement in substantially the form of Exhibit D-1 attached hereto, to William R. Derrer an Employment Agreement in substantially the form of Exhibit D-2 attached hereto and to Michael F. Lanciault an Employment Agreement in substantially the form of Exhibit D-3 attached hereto.

     (c)      Indemnification. The Buyer shall have executed and delivered to Mr. Cummings its customary Indemnification Agreement for directors and officers.

     (d)      Indemnification Escrow Agreement. Each of the Buyer and the Indemnification Escrow Agent shall have executed and delivered the Indemnification Escrow Agreement.

     (e)      Release of Certain Obligations. Cummings and his spouse, Janyth R. Cummings, shall have obtained a release from Bank One, N.A. or Bank One, N.A. shall have agreed to release each of them upon the Closing.

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Article VIII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

     Section 8.1. Survival. Each of the representations, warranties, agreements, covenants and obligations herein or in any Schedule or certificate delivered by any party incident to the transactions contemplated hereby is material and may be relied upon by the party receiving the same and shall survive the Closing regardless of any investigation by or Knowledge of such party until the date after which no claim may be made thereunder pursuant to Section 8.2 hereof and shall not merge into the performance of any obligation by any party hereto, subject to the provisions of Article 8 hereof, provided that the obligations set forth in Section 5.2(a) (Noncompetition) shall survive as described therein.

     Section 8.2. Several Indemnification by the Stockholders.

     (a)      Subject to Section 8.2(b) hereof, each Stockholder and his successors, executors, administrators, estates, heirs, beneficiaries and permitted assigns agree subsequent to the Closing, severally and not jointly, to indemnify and hold harmless the Buyer, its subsidiaries and their affiliates and their respective officers, directors, employees and agents and the Company (individually, a "Buyer Indemnified Party" and collectively, the "Buyer Indemnified Parties") from and against and in respect of all losses, liabilities, obligations, damages, deficiencies, actions, suits, proceedings, demands, assessments, orders, judgments, fines, penalties, costs and expenses (including the reasonable fees, disbursements and expenses of attorneys, accountants and consultants) of any kind or nature whatsoever (whether or not arising out of third-party claims and including all amounts paid in investigation, defense or settlement of the foregoing) sustained, suffered or incurred by or made against (collectively "Losses" and individually a "Loss") any Buyer Indemnified Party arising out of, based upon or in connection with:

          (i)       fraud or an intentional misrepresentation made to Buyer by the Company or any Stockholder of any of their representations or warranties in this Agreement or in any Schedule, exhibit, certificate (including the certificate required by Section 7.1(c)), financial statement, agreement or other instrument delivered under or in connection with this Agreement;

          (ii)      any breach of any representation or warranty made to Buyer by the Company or any Stockholder in this Agreement or in any Schedule, exhibit, certificate (including the certificate required by Section 7.1(c)), financial statement, agreement or other instrument delivered under or in connection with this Agreement;

          (iii)      any breach of any covenant, guaranty or agreement made to Buyer by the Company or any Stockholder in this Agreement or in any Schedule, exhibit, certificate (including the certificate required by Section 7.1(c)), financial statement, agreement or other instrument delivered under or in connection with this Agreement; and

52

          (iv)      any loss, claim, liability, expense, or other damage attributable to (i) all Taxes (or the non-payment thereof) of the Company and its Subsidiaries for all Taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any Taxable period that includes (but does not end on) the Closing Date ("Pre-Closing Tax Period"), including, without limitation, any increase in Taxes due to the unavailability of any loss or deduction claimed by the Company, except to the extent such Taxes are included in the calculation of the Closing Net Worth as reflected in the Audited Balance Sheet, (ii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Company or any of its Subsidiaries (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar state, local, or foreign law or regulation, and (iii) any and all Taxes of any person (other than the Company and its Subsidiaries) imposed on the Company or any of its Subsidiaries as a transferee or successor, by contract or pursuant to any law, rule, or regulation, which Taxes relate to an event or transaction occurring before the Closing. The Stockholders shall reimburse Buyer for any Taxes of the Company or its Subsidiaries which are the responsibility of Stockholders pursuant to this Section 8.2(a)(iv) within fifteen (15) business days after payment of such Taxes by Buyer, the Company, or its Subsidiaries.

     Claims under clauses (i) through (iv) of this Section 8.2(a) shall be hereinafter collectively referred to as “Buyer Indemnifiable Claims,” and Losses claimed thereunder shall be hereinafter collectively referred to as “Buyer Indemnifiable Losses.”

     (b)      Limitations on Indemnification by the Stockholders.

          (i)      Maximum Indemnification. Subject to the exceptions set forth in Section 8.2(b)(iii), the Stockholders' obligation to indemnify Buyer Indemnified Parties in respect of any and all Buyer Indemnifiable Losses shall be limited, in the aggregate, to an amount equal Five Hundred Thousand Dollars ($500,000) (the "Indemnity Cap Amount") which claims shall be made against the Indemnification Escrow and not against any other assets of the Stockholders.

          (ii)      Company's Threshold Amount. Subject to the exceptions set forth in subsection Section 8.2(b)(iii), no indemnification shall be payable with respect to Buyer Indemnifiable Losses except to the extent the cumulative amount of all Buyer Indemnifiable Losses under Section 8.2(a) exceeds One Hundred Thousand Dollars ($100,000.00) in the aggregate (the "Threshold Amount"), whereupon any amounts of such Buyer Indemnifiable Losses in excess of the Threshold Amount shall be recoverable in accordance with the terms hereof.

          (iii)      No Limitation on Certain Claims. Notwithstanding anything herein to the contrary, Buyer Indemnified Parties shall be entitled to dollar-for-dollar indemnification from the first dollar and shall not be subject to

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the Threshold Amount, the Indemnity Cap Amount or any limitation as to time (except as provided in Section 8.2(b)(iv)) in seeking indemnification from the Stockholders with respect to any of the following:

               (A)      Losses described in or arising under Sections 8.2(a)(i) and 8.2(a)(iv); and

               (B)      Losses involving a breach by the Company or any Stockholder of any of the representations and warranties contained in Sections 2.2, 2.4, 2.13, 2.21, 2.27, 3.1, 3.2, 3.3 and 5.1(g) hereof.

Additionally, notwithstanding anything herein to the contrary, Buyer Indemnified Parties shall be entitled to claim against the Indemnification Escrow, set-off against the Additional Payment and proceed against the Stockholders directly for any Losses listed under Sections 8.2(b)(iii)(A) and (B).

          (iv)      Time Limitation. Except for the right of set-off against the Additional Payment, no indemnification shall be payable to a Buyer Indemnified Party with respect to any Buyer Indemnifiable Claim asserted after the first anniversary of the Closing Date (the "Expiration Date"); provided that claims related to Buyer Indemnifiable Losses described in or arising under Sections 8.2(a)(i) and 8.2(a)(iv), or involving a breach by the Company or any Stockholder of any of the representations and warranties contained in Sections 2.2, 2.4, 2.13, 2.21, 2.27, 3.1, 3.2, 3.3 and 5.1(g) may be asserted until the fifth anniversary of the Closing Date. Any claim for indemnification as to which notice has been given prior to any of the above expiration dates shall survive such expiration until final resolution of such claim.

          (v)      In no event shall any Stockholder be obligated to indemnify a Buyer Indemnified Party for any Losses pursuant to this Article VIII in excess of such Stockholder's pro rata portion of such Loss, which pro rata portion shall be determined in accordance with such Stockholder's pro rata portion of the Purchase Price as allocated pursuant to Exhibit A, nor shall any Stockholder be obligated to indemnify a Buyer Indemnified Party for any Losses attributable to a breach of this Agreement by any other Stockholder.

          (vi)      In no event shall any Stockholder be obligated to indemnify a Buyer Indemnified Party for any Losses arising out of or related to events beyond the reasonable control of the Company or the Stockholders, such as war, war like operations, terrorism, shortages, embargos and reductions in the capitalization of the Company or changes in principles or methods of accounting after the Closing.

          (vii)      In no event shall any Stockholder have any right of indemnity or contribution from the Company with respect to any Buyer Indemnifiable Losses.

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     Section 8.3. Indemnification by the Buyer. Buyer and its successors and permitted assigns agree subsequent to the Closing to indemnify and hold harmless each of the Stockholders, and their respective successors, executors, administrators, estates and heirs (individually, a “Stockholder Indemnified Party” and collectively, the “Stockholder Indemnified Parties”) from and against and in respect of all Losses arising out of, based upon or in connection with:

     (a)      any breach of any representation or warranty made by Buyer in this Agreement or in any Schedule, exhibit, certificate, financial statement, agreement or other instrument delivered under or in connection with this Agreement;

     (b)      any breach of any covenant or agreement made by Buyer in this Agreement or in any Schedule, exhibit, certificate, agreement or other instrument delivered under or in connection with this Agreement;

     (c)      fraud or an intentional misrepresentation by the Buyer of any of its representations, or warranties in this Agreement or in any Schedule, exhibit, certificate, financial statement, agreement or other instrument delivered under or in connection with this Agreement; and

     (d)      Solely as to Stockholders Cummings and Derrer and their respective successors, executors, administrators, estates and heirs, all liability of any kind or nature in their capacities as employees of the Company who are qualifying licensee general contractors for actions taken on behalf of the Company in such capacity, including without limitation liability for construction defects, design defects, personal injury and property damage occurring on job sites, citations, fines, penalties, or other administrative or legal remedies for violation of applicable laws, regulations or codes pertaining to jobs or job sites, provided that, no indemnification will be available under this Section 8.3(d) if the Buyer establishes that the Stockholders Cummings or Derrer did not act in good faith or acted without believing that their actions were in the best interests of the Company at the time such actions were taken.

     Claims under clauses (a) through (d) of this Section 8.3 shall be hereinafter collectively referred to as “Stockholder Indemnifiable Claims,” and Losses in respect of such claims shall be hereinafter collectively referred to as “Stockholder Indemnifiable Losses.”

     Section 8.4. [Intentionally Omitted].

     Section 8.5. Notice; Defense of Claims.

     (a)       Notice of Claims. Promptly after receipt by an indemnified party of notice of any claim, liability or expense to which the indemnification obligations hereunder would apply, the indemnified party shall give notice thereof in writing (a "Claim Notice") to the indemnifying party, but the omission to so notify the indemnifying party promptly will not relieve the indemnifying party from any liability except (i) to the extent that the indemnifying party shall have been materially prejudiced

55

as a result of the failure or delay in giving such Claim Notice and (ii) that no indemnification will be payable to an indemnified party with respect to any claim for which the Claim Notice is given after expiration of the period for which such claim may be made pursuant to Section 8.2(b)(iv) of this Agreement. Such Claim Notice shall state the information then available regarding the amount and nature of such claim, liability or expense and shall specify the provision or provisions of this Agreement under which the liability or obligation is asserted.

     (b)      Third Party Claims. With respect to third party claims, if within twenty (20) days after receiving the Claim Notice the indemnifying party gives written notice (the "Defense Notice") to the indemnified party stating that (i) it may be liable under the provisions hereof for indemnity in the amount of such claim if such claim were successful and (ii) that it disputes and intends to defend against such claim, liability or expense at its own cost and expense, then counsel for the defense shall be selected by the indemnifying party (subject to the consent of the indemnified party which consent shall not be unreasonably withheld) and the indemnified party shall not be required to make any payment with respect to such claim, liability or expense as long as the indemnifying party is conducting a good faith and diligent defense at its own expense; provided, however, that the assumption of defense of any such matters by the indemnifying party shall relate solely to the claim, liability or expense that is subject or potentially subject to indemnification.

     The indemnifying party shall have the right, with the consent of the indemnified party, which consent shall not be unreasonably withheld, to settle all identifiable matters related to claims by third parties which are susceptible to being settled provided that such settlement include a complete release of the indemnified party. The indemnifying party shall keep the indemnified party apprised of the status of the claim, liability or expense and any resulting suit, proceeding or enforcement action, shall furnish the indemnified party with all documents and information that the indemnified party shall reasonably request and shall consult with the indemnified party prior to acting on major matters, including settlement discussions. Notwithstanding anything herein stated, the indemnified party shall at all times have the right to fully participate in such defense at its own expense directly or through counsel; provided, however, if the named parties to the action or proceeding include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate under applicable standards of professional conduct, the expense of separate counsel for the indemnified party shall be paid by the indemnifying party.

     If no Defense Notice is given by the indemnifying party, or if diligent good faith defense is not being or ceases to be conducted by the indemnifying party, the indemnified party may, at the expense of the indemnifying party, undertake the defense of (with counsel selected by the indemnified party), and shall have the right to compromise or settle, such claim, liability or expense. If such claim, liability or expense is one that by its nature cannot be defended solely by the indemnifying party, then the indemnified party shall make available all information and assistance that the indemnifying party may reasonably request and shall cooperate with the indemnifying party in such defense.

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     (c)      Non-Third Party Claims. With respect to non-third party claims, if within thirty (30) days after receiving the Claim Notice the indemnifying party does not give written notice to the indemnified party that it contests such indemnity, the amount of indemnity payable for such claim shall be as set forth in the Claim Notice. If the indemnifying party provides written notice to the indemnified party within such 30-day period that it contests such indemnity, the parties shall attempt in good faith to reach an agreement with regard thereto within thirty (30) days of delivery of the indemnifying party's notice. If the parties cannot reach agreement within such 30-day period, the matter shall be submitted to J.A.M.S./Endispute, Inc. for arbitration pursuant to Section 10.12.

     Section 8.6. Satisfaction of Indemnification Obligations. In the event that a Buyer Indemnified Party sustains or incurs Losses (including, without limitation, attorneys fees) for which it is entitled to indemnification from the Stockholders under this Agreement, such Buyer Indemnified Party shall be entitled to: (i) claim against the Indemnification Escrow Amount in accordance with the terms of the Indemnification Escrow Agreement or (ii) for any claims under Section 8.2(b)(iii), claim against the Indemnification Escrow Amount in accordance with the terms of the Indemnification Escrow Agreement, set off against the Additional Payment, proceed against the Stockholders directly and seek any and all other rights and remedies Buyer may have. In the event that a Stockholder Indemnified Party sustains or incurs Losses (including, without limitation, attorneys’ fees) for which it is entitled to indemnification from the Buyer under this Agreement, in addition to all other rights or remedies that it may have, such Stockholder Indemnified Party shall be entitled to proceed against the Buyer directly.

     Section 8.7. Treatment of Indemnity Payments. All payments made by the Stockholders or Buyer, as the case may be, to or for the benefit of the other parties pursuant to this Article VIII shall be treated as adjustments to the Purchase Price for tax purposes, and such agreed treatment shall govern for purposes of this Agreement.

     Section 8.8. Losses Net of Insurance. The amount payable to any Indemnified Party under this Article VIII shall be net of any amounts actually recovered by such Indemnified Party under any applicable insurance policy; provided that, if Buyer fails to maintain insurance coverages required to be maintained after Closing under this Agreement, then Buyer will be deemed to have actually recovered the lesser of the limits of liability of the policy or the amount of Losses of a type that would have been covered by such policy.

Article IX - TERMINATION

     Section 9.1. Termination. This Agreement may be terminated:

     (a)      at any time, by the mutual written consent of each of the Stockholders, the Company and Buyer;

     (b)      by the Company or the Stockholders' Representative, if the Company or the Stockholders, as applicable, are not then in material breach of any term

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of this Agreement, upon written notice to Buyer, upon a material breach of any representation, warranty or covenant of Buyer contained in this Agreement, provided that such breach is not capable of being cured or has not been cured within fifteen (15) days after the giving of written notice thereof by the Company or the Stockholders' Representative to Buyer;

     (c)      by Buyer, if Buyer is not then in material breach of any term of this Agreement, upon written notice to the Company and Stockholders' Representative, upon a material breach of any representation, warranty or covenant of the Company or any of the Stockholders contained in this Agreement, provided that such breach is not capable of being cured or has not been cured within fifteen (15) days after the giving of written notice thereof by the Company or the Stockholders' Representative to Buyer;

     (d)      by Buyer, if Buyer's investigations and inspections discover matters, facts or circumstances that would, in Buyer's opinion, constitute a breach or violation of any warranty, representation or covenant on the part of the Company or the Stockholders under this Agreement then Buyer may terminate this Agreement by delivering written notice thereof to the Company and the Stockholders' Representative at any time on or prior to the date that is thirty (30) days after the date of this Agreement, which date has been established because time is of the essence (the "Due Diligence Termination Date"), in which case, the Deposit shall be returned to Buyer and this Agreement shall be of no further force or effect (except the provisions designated for survival under Section 9.2 below);

     (e)      upon written notice by the Company or the Stockholders' Representative at any time after the Due Diligence Termination Date if any of the conditions set forth in Section 7.2 of this Agreement have not been satisfied prior to January 21, 2003 (the "Target Closing Date"), such written notice to set forth such conditions which have not been so satisfied;

     (f)      upon written notice by Buyer at any time after the Due Diligence Termination Date if any of the conditions set forth in Section 7.1 of this Agreement (except Section 7.1(p)) have not been satisfied prior to the Target Closing Date, such written notice to set forth such conditions which have not been so satisfied;

     (g)      upon written notice by the Company or the Stockholders' Representative on the Target Closing Date if the conditions set forth in Section 7.1(p) have not been satisfied or waived in writing by Buyer on or prior to such date;

     (h)      upon written notice by Buyer at any time if the Lenders refuse in writing to grant the consent required under the Credit Agreement for the transactions contemplated hereby or to permit Buyer to borrow sufficient funds thereunder to finance the transactions contemplated hereby; and

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     (i)       upon written notice by Buyer if the conditions set forth in Section 7.1(p) of this Agreement have not been satisfied or waived on or prior to the Target Closing Date.

Buyer, the Company and each of the Stockholders agree that the Stockholders’ Representative may, upon written notice to the Buyer, unilaterally change the Target Closing Date to a date no later than March 21, 2003 if all of the conditions set forth in Section 7.1 (except the conditions set forth in Section 7.1(p)) have been satisfied by January 21, 2003; it being understood that the right of the Stockholders’ Representative to extend the Target Closing Date in accordance with this sentence shall prevail over the Buyer’s right to terminate this Agreement under Section 9.1(i).

     Section 9.2. Effect of Termination. All obligations of the parties hereunder shall cease upon any termination pursuant to Section 9.1, provided, however, that (i) the provisions of this Article IX, Sections 2.21, 3.3, 4.4, 5.1(g), 5.3(a), 5.5, and Article X hereof shall survive any termination of this Agreement, (ii) subject to Section 9.3(a), nothing herein shall relieve any party from any liability for a material error or omission in any of its representations or warranties contained herein or a material failure to comply with any of its covenants, conditions or agreements contained herein, and (iii) the Deposit shall be treated as provided in Section 9.3 hereof, provided further, however, that (A) in the event of termination under Sections 9.1(c), in addition to the return of the Deposit to the Buyer pursuant to Section 9.3, the liability of the Company and the Stockholders shall not exceed the aggregate sum of Five Hundred Thousand Dollars ($500,000.00), subject to the provisions of Section 5.1(c), (B) in the event of termination under Section 9.1(f), the liability of the Stockholders shall be limited to the forfeiture of the Deposit and (C) in the event of any termination under Section 9.1, the liability of the Buyer shall be limited to the forfeiture of the Deposit if such forfeiture is required under Section 9.3.

     Section 9.3. Treatment of Deposit Upon Termination. If this Agreement is terminated at any time prior to Closing, the Deposit shall be treated as follows:

     (a)      If such termination is pursuant to Sections 9.1(b), (e), (g), (h) or (i) the Deposit Escrow Agent shall be instructed to promptly pay the Deposit and all accrued interest to the Stockholders (pro rata based on each Stockholder's respective share amounts as set forth opposite such Stockholder's name in column 3 of Exhibit A attached hereto) by wire transfer as provided in the Deposit Escrow Agreement and the Stockholders shall be entitled to retain the Deposit for its own account as liquidated damages for such termination. Such liquidated damages shall be the Company's and the Stockholders' sole remedy for such termination.

     (b)      If such termination is pursuant to any section other than Sections 9.1(b), (e), (g), (h) or (i) the Deposit Escrow Agent shall be instructed to promptly pay the Deposit and all accrued interest to the Buyer by wire transfer as provided in the Deposit Escrow Agreement.

     Section 9.4. Waiver. At any time prior to the Closing, Buyer, the Company and the Stockholders hereto may (a) extend the time for the performance of any of the obligations or

59

other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered by the other party pursuant hereto or (c) waive compliance with any of the agreements of the other party or conditions to its own obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Waiver of any term or condition of this Agreement by a party shall not be construed as a waiver of any subsequent breach or waiver of the same term or condition by such party, or a waiver of any other term or condition of this Agreement by such party.

     Anything in this Agreement to the contrary notwithstanding, if any of the conditions specified in Section 7.1 hereof have not been satisfied, Buyer shall have the right to proceed with the transactions contemplated hereby without waiving any of its rights hereunder, and if any of the conditions specified in Section 7.2 hereof have not been satisfied, the Company and Stockholders shall have the right to proceed with the transactions contemplated hereby without waiving any of their rights hereunder.

Article X - GENERAL PROVISIONS

     Section 10.1. Notices. All notices, requests, claims, demands and other communications under this Agreement will be in writing and will be deemed given if delivered personally, sent by overnight courier (providing proof of delivery), or via facsimile to the parties at the following addresses (or at such other address for a party as specified by like notice): 

          (a)  if to the Company, to:

          James A. Cummings, Inc.
          3055 Harbor Drive, Unit 1001
          Ft. Lauderdale, FL  33316
          Attn:  James A. Cummings
          Facsimile:  (954) 467-1536

          with copy to:

          Katz, Barron, Squitero & Faust, P.A.
          2699 South Bayshore Drive, 7th Floor
          Miami, Florida 33133
          Attn: Erica L. English, Esquire
          Facsimile: (305) 285-9227

          (b)  if to the Stockholders' Representative, to:

          James A. Cummings
          3055 Harbor Drive, Unit 1001
          Ft. Lauderdale, FL  33316
          Attn:  James A. Cummings

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          Facsimile:  (954) 467-1536

          (c)  If to Buyer, to:

          Perini Corporation
          73 Mount Wayte Avenue
          Framingham, MA  01701
          Attn:  Mr. Robert Band
          Facsimile:  (508) 628-2278

          with a copy to:

          Goodwin Procter  LLP
          Exchange Place
          Boston, MA  02109
          Attn:  Richard A. Soden, Esquire
          Facsimile:  (617) 523-1231

     Section 10.2. Fees and Expenses. Except as provided otherwise herein, each of Buyer, on the one hand, and the Stockholders (on behalf of the Company and the Stockholders) on the other hand, shall bear its own expenses in connection with the negotiation and the consummation of the transactions contemplated by this Agreement, and no expenses for the Stockholders shall be charged to or otherwise payable by the Company.

     Section 10.3. Certain Definitions. For purposes of this Agreement:

     (a)      An "Affiliate" of any Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person or any Person that falls within the definition of "affiliate" under the Securities Exchange Act of 1934, as amended;

     (b)      "GAAP" means U.S. generally accepted accounting principles, consistently applied;

     (c)      "Knowledge" means the actual knowledge or awareness of a Person after reasonable inquiry within such Person's organization. The Company's Knowledge shall mean the Knowledge of James A. Cummings and William R. Derrer.

     (d)      "Material Adverse Effect" means an adverse effect on the assets, liabilities, condition (financial or other), business or results of operations of the Company in excess of $100,000;

     (e)      "Person" means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity; and

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     (f)      "Tax" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

     (g)      "Threatened" - the term "threatened" means if a Person expresses an intention, whether verbal or in writing, to take any action against another Person.

     (h)       Cross references:

         "Accountant"                                           Section 1.3(b)
         "Additional Payment"                                   Section 1.8
         "Affiliate"                                            Section 10.3(a)
         "Agreement"                                            Preamble
         "Audited Balance Sheet"                                Section 1.3(b)
         "Backlog"                                              Section 2.31
         "Base Balance Sheet"                                   Section 2.6(a)
         "Base Net Worth"                                       Section 1.3(a)
         "Buyer Indemnifiable Claims"                           Section 8.2(a)
         "Buyer Indemnifiable Losses"                           Section 8.2(a)
         "Buyer Indemnified Party or Parties"                   Section 8.2(a)
         "Buyer"                                                Preamble
         "Change Orders"                                        Section 2.23
         "Charter"                                              Section 2.1
         "Claim Notice"                                         Section 8.5(a)
         "Claims"                                               Section 1.5(a)(i)
         "Closing Balance Sheet"                                 Section 1.3(a)
         "Closing Date"                                         Section 1.4
         "Closing Net Worth"                                    Section 1.3(b)
         "Closing"                                              Section 1.4
         "Code"                                                 Section 2.13(e)
         "Company Employment Agreements"                        Section 2.17(f)
         "Company Service"                                      Section 2.26
         "Company Shares"                                       Preamble
         "Company"                                              Preamble
         "Contingent Workers"                                   Section 2.17(e)
         "Credit Agreement"                                     Section 7.1(p)
         "Customers"                                            Section 2.23
         "Defense Notice"                                       Section 8.5(b)
         "Deposit Escrow Agent"                                 Section 1.2(a)

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         "Deposit Escrow Agreement"                             Section 1.7
         "Deposit"                                              Section 1.2(a)
         "Due Diligence Termination Date"                       Section 9.1(d)
         "Employee Programs"                                    Section 2.19(i)
         "Employees"                                            Section 2.17(a)
         "Employment Agreement"                                 Section 5.2(a)
         "Environmental Law"                                    Section 2.22(e)(ii)
         "ERISA Affiliate"                                      Section 2.19(h)(iii)
         "ERISA"                                                Section 2.19(c)
         "Closing Balance Sheet"                                Section 1.3(a)
         "Estimated Closing Net Worth"                          Section 1.3(a)
         "Expiration Date"                                      Section 8.2(b)(iv)
         "GAAP"                                                 Section 10.3
         "Governmental"                                         Section 2.30
         "Governmental Authority"                               Section 2.11
         "Government Contract"                                  Section 2.30
         "Hazardous Materials"                                  Section 2.22(e)(i)
         "Indemnification Escrow Agent"                         Section 1.3(c)
         "Indemnification Escrow Agreement"                     Section 1.3(c)
         "Indemnification Escrow Amount"                        Section 1.3(c)
         "Indemnity Cap Amount"                                 Section 8.2(b)(i)
         "Intellectual Property"                                Section 2.15(a)
         "Interim Balance Sheet"                                Section 2.6(a)
         "IRS"                                                  Section 2.19(b)
         "Knowledge"                                            Section 10.3(c)
         "Leased Real Property"                                 Section 2.12(a)(i)
         "Leases"                                               Section 2.12(a)(xv)
         "Lenders"                                              Section 7.1(p)
         "Liability"                                            Section 2.13(e)
         "Loss"                                                 Section 8.2(a)
         "Material Adverse Effect"                              Section 10.3(d)
         "Multiemployer Plan"                                   Section 2.19(h)(iv)
         "Net Worth Adjustment Amount"                          Section 1.3(c)
         "Net Worth"                                            Section 1.3(d)
         "Neutral Auditor"                                      Section 1.3(b)(ii)
         "Owned Real Property"                                  Section 2.12(a)(i)
         "Partners"                                             Section 2.23
         "PCBs"                                                 Section 2.22(c)
         "Permits"                                              Section 2.18
         "Person"                                               Section 10.3(e)
         "Plant Closing Laws"                                   Section 2.17(c)
         "Audited Balance Sheet"                                Section 1.3(b)
         "Pre-Closing Tax Period"                               Section 8.2(a)(iv)
         "Purchase Price"                                       Section 1.2
         "Real Estate Impositions"                              Section 2.12(a)(xxii)

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         "Real Property"                                        Section 2.12(a)(iv)
         "SEC"                                                  Section 2.34
         "Stockholder Indemnifiable Claims"                     Section 8.3
         "Stockholder Indemnifiable Losses"                     Section 8.3
         "Stockholder Indemnified Party or Parties"             Section 8.3
         "Stockholder(s)"                                       Preamble
         "Stockholders' Representative"                         Section 1.6
         "Straddle Period"                                      Section 5.2(d)(i)
         "Subcontractors"                                       Section 2.24
         "Subsidiary"                                           Section 2.5
         "Suppliers"                                            Section 2.24
         "Target Closing Date"                                  Section 9.1(e)
         "Tax Return"                                           Section 2.13(a)
         "Tax"                                                  Section 10.3(f)
         "Threatened"                                           Section 10.3(g)
         "Threshold Amount"                                     Section 8.2(b)(ii)
         "Union"                                                Section 2.17(b)(ii)
         "WARN Act"                                             Section 2.17(c)

     Section 10.4. Interpretation. When a reference is made in this Agreement to an Article, Section, Schedule or exhibit, such reference will be to an Article or Section of, or a Schedule or exhibit to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole and not to any particular provision of this Agreement, unless a particular Article, Section, Schedule or exhibit is designated. All terms used herein with initial capital letters have the meanings ascribed to them herein and all terms defined in this Agreement will have such defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.

     Section 10.5. Counterparts. This Agreement may be executed in one or more counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the parties and delivered to

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the other parties. The parties agree that facsimile signatures shall have the same force and effect as original signatures and agree to exchange original signature pages by overnight delivery following exchange of facsimile signatures.

     Section 10.6. Amendments. This Agreement may not be amended or modified, nor may compliance with any condition or covenant set forth herein be waived, except by a writing duly and validly executed by Buyer, the Company and the Stockholders’ Representative, or in the case of a waiver, the party waiving compliance, provided that the Stockholders’ Representative may make a waiver on behalf of all the Stockholders.

     Section 10.7. Entire Agreement; Severability. This Agreement (including the Schedules, exhibits, documents and instruments referred to herein) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement. If any term, condition or other provision of this Agreement is found to be invalid, illegal or incapable of being enforced by virtue of any rule of law, public policy or court determination, all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect.

     Section 10.8. Third Party Beneficiaries. Except as expressly provided in this Agreement, each party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person other than the parties hereto.

     Section 10.9. Governing Law. This Agreement will be governed by, and construed in accordance with, the internal laws of the State of Florida regardless of the laws that might otherwise govern under applicable principles of conflict of laws.

     Section 10.10. Assignment. This Agreement shall be assignable by the Buyer to any wholly-owned subsidiary of Buyer although no such assignment shall relieve the Buyer of any liabilities or obligations under this Agreement. This Agreement may not be assigned or delegated by any of the Stockholders or the Company without the prior written consent of the Buyer in its sole discretion. This Agreement and the obligations of the parties hereunder (including specifically but without limitation the indemnification obligations of the Company and each of the Stockholders set forth in Article VIII) shall be binding upon and enforceable by, and shall inure to the benefit of, the parties hereto and their respective successors, executors, administrators, estates, heirs and permitted assigns, and no others.

     Section 10.11. Consent to Jurisdiction. Each of the parties hereby consents to personal jurisdiction, service of process and venue in the federal or state courts of the State of Florida for any claim, suit or proceeding arising under this Agreement, or in the case of a third party claim subject to indemnification hereunder, in the court where such claim is brought.

     Section 10.12. Dispute Resolution. All disputes, claims, or controversies arising out of or relating to this Agreement or any other agreement executed and delivered pursuant to this Agreement or the negotiation, validity or performance hereof and thereof or the transactions contemplated hereby and thereby that are not resolved by mutual agreement shall be resolved solely and exclusively by binding arbitration to be conducted before J.A.M.S./Endispute, Inc. or

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its successor. The arbitration shall be held in Miami, Florida before a single arbitrator and shall be conducted in accordance with the rules and regulations promulgated by J.A.M.S./Endispute, Inc. unless specifically modified herein.

The parties covenant and agree that the arbitration shall commence within ninety (90) days of the date on which any party files a written demand for arbitration hereto. In connection with the arbitration proceeding, the arbitrator shall have the power to order the production of documents by each party and any third-party witnesses. In addition, each party may take up to three dispositions as of right, and the arbitrator may in his or her discretion allow additional depositions upon good cause shown by the moving party. In connection with any arbitration, each party shall provide to the other, no later than seven (7) business days before the date of the arbitration, the identity of all persons that may testify at the arbitration and a copy of all documents that may be introduced at the arbitration or considered or used by a party’s witness or expert. The arbitrator’s decision and award shall be made and delivered within six (6) months of the selection of the arbitrator. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or finding of liability. The arbitrator shall not have the power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages or any other damages that are specifically excluded under this Agreement, and each party hereby irrevocably waives any claim to such damages.

     The parties covenant and agree that they will participate in the arbitration in good faith and that they will, (i) bear their own attorneys’ fees, costs and expenses in connection with the arbitration, and (ii) share equally in the fees and expenses charged by the Arbitrator. Any party unsuccessfully refusing to comply with an order of the Arbitrators shall be liable for costs and expenses, including attorneys’ fees, incurred by the other party in enforcing the award. This Section 10.12 applies equally to requests for temporary, preliminary or permanent injunctive relief, except that in the case of temporary or preliminary injunctive relief any party may proceed in court without prior arbitration for the purpose of avoiding immediate and irreparable harm or to enforce its rights under any non-competition covenants.

     Each of Buyer, the Company and the Stockholders (a) hereby unconditionally and irrevocably submits to the jurisdiction of the United States District Court for the Southern District of Florida, for the purpose of enforcing the award or decision in any such proceeding and (b) hereby waives, and agrees not to assert in any civil action to enforce the award, any claim that it is not subject personally to the jurisdiction of the above-named court, that its property is exempt or immune from attachment or execution, that the civil action is brought in an inconvenient forum, that the venue of the civil action is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (c) hereby waives and agrees not to seek any review by any court of any other jurisdiction which may be called upon to grant an enforcement of the judgment of any such court. Final judgment against Buyer, the Company or the Stockholders in any such action, suit or proceeding may be enforced in other jurisdictions by suit, action or proceeding on the judgment, or in any other manner provided by or pursuant to the laws of such other jurisdiction; provided, however, that to enforce such final judgment any party may at its option bring suit, or institute other judicial proceedings, in any state or federal

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court of the United States or of any country or place where the other parties or their assets, may be found.

     Section 10.13. Mutual Drafting. The parties hereto are sophisticated and have been represented by attorneys throughout the transactions contemplated hereby who have carefully negotiated the provisions hereof. As a consequence, the parties do not intend that the presumptions of laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement or any agreement or instrument executed in connection herewith, and therefore waive their effects.

     Section 10.14. Remedies. It is specifically understood and agreed that any breach of the provisions of this Agreement or any other agreement executed and delivered pursuant to this Agreement by any party hereto will result in irreparable injury to the other parties hereto, that the remedy at law alone will be an inadequate remedy for such breach, and that, in addition to any other remedies which they may have, such other parties may enforce their respective rights by actions for specific performance (to the extent permitted by law and this Agreement).

[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase and Sale Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. 

              COMPANY:


              JAMES A. CUMMINGS, INC.



              By:/s/James A. Cummings
                    Name: James A. Cummings
                    Title:




              STOCKHOLDERS:



               /s/James A. Cummings
               James A. Cummings




               /s/William R. Derrer
               William R. Derrer




               /s/Michael F. Lanciault
               Michael F. Lanciault




              BUYER:


              PERINI CORPORATION



              By:/s/Robert Band
                  Name:  Robert Band
                  Title: President & Chief Operating Officer

EXHIBIT A
Stockholders; Company Shares; Purchase Price Allocation

      (1)                            (2)                 (3)                       (4)
                                   Company                                     Share of
Name and Address                    Shares           Pro Rata Share        Additional Payment

James A. Cummings                   3000                72.73%                    72.73%
3055 Harbor Drive, Unit 1001
Ft. Lauderdale, FL 33316

William R. Derrer                   1000                24.24%                    24.24%
1420 N.E. 102 Street
Miami Shores, FL 33138


Michael F. Lanciault                 125                 3.03%                     3.03%
9700 N.W. 33 Street
Sunrise, FL 33351
EX-10 6 jacempagr.htm JAMES A. CUMMINGS EMPLOYMENT AGREEMENT James A. Cummings Employment Agreement

                                                                                                              Execution Copy

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (the “Agreement”) is made as of January 21, 2003 (the “Effective Date”), by and between James A. Cummings, Inc., a Florida corporation (the “Employer”) and wholly owned subsidiary of Perini Corporation, a Massachusetts corporation (“Parent”), and James A. Cummings (the “Executive”). In consideration of the mutual covenants contained in this Agreement, the Employer, the Parent and the Executive agree as follows:

     1.      Employment. The Employer agrees to employ the Executive and the Executive agrees to be employed by the Employer on the terms and subject to the conditions set forth in this Agreement.

     2.      Capacity. The Executive shall serve the Employer during the Executive's employment hereunder as Chief Executive Officer. Executive shall have the rights and shall perform the duties customary for the position of Chief Executive Officer and shall report to the Chairman and Chief Executive Officer of Parent (the "Parent Chairman and CEO").

     3.      Term. Subject to the provisions of Section 6, the term of employment pursuant to this Agreement (the "Term") shall be five (5) years from the Effective Date.

     4.      Compensation and Benefits. The regular compensation and benefits payable to the Executive under this Agreement shall be as follows:

          (a)      Salary. For all services rendered by the Executive under this Agreement, the Employer shall pay the Executive a salary (the "Salary") at the annual rate of Two Hundred Fifty Thousand Dollars ($250,000.00), through May 31, 2004. Salary shall be reviewed prior to and increased (if and as the Compensation Committee (the "Parent Compensation Committee") of the Board of Directors of Parent (the "Parent Board") deems appropriate), but not decreased, as of May 31 of each year during the Term beginning as of May 31, 2004. Salary shall be payable in periodic installments in accordance with the Employer's usual practice for its senior executives (but not less frequently than twice per month).

          (b)      Bonus. Beginning with the fiscal year ending December 31, 2003, the Executive shall be eligible for a bonus based upon the terms and conditions of the Perini Corporation Amended and Restated Construction Business Unit Incentive Compensation Plan established by the Parent Board or the Parent Compensation Committee in the form attached hereto as Exhibit A (the "IC Plan") and as follows; provided, however, that (x) the annual bonus to Executive for any fiscal year of the Employer shall be no more than one hundred percent (100%) of Salary at the rate in effect for such fiscal year; (y) such bonus, if any, shall be payable in cash and not stock; and (z) the IC Plan shall exclude amendments thereto made after the Effective Date hereof unless the Executive shall consent in writing, which consent shall not be unreasonably withheld.

               (i)      The Performance Goal (defined below), for the fiscal year ending December 31, 2003 shall be $4,500,000.00 (provided that if the period from Closing to the end of such fiscal year shall be less than 12 months, the Target shall be prorated accordingly). For fiscal years ending on December 31 of each subsequent fiscal year during the Term, the Performance Goal shall be an amount reasonably determined by the Parent Chairman and CEO, the Parent Board or its Compensation Committee after discussions with Executive and other senior executives of the Employer. The term "Performance Goal" shall have the meaning given such term in the documents governing the IC Plan, but only solely with respect to the pretax profit of Employer and not with respect to the pretax profit of Parent or any of Parent's Affiliates.

               (ii)      The Pretax Profits - Business Unit (within the meaning given such term in the documents governing the IC Plan, but only with respect to the pretax profit of Employer and not with respect to the pretax profit of Parent or any of Parent's Affiliates), shall be determined in accordance with GAAP, before federal and state income taxes, and shall exclude the effect of the following items:

                    (A)      any bonuses awarded to Messrs. Cummings, Derrer or Lanciault;

                    (B)      any expenses incurred in connection with (x) the financing of Parent's acquisition of the Employer or (y) any loans provided to the Employer by Parent or any of Parent's affiliates;

                    (C)      any gain, loss, income or expense resulting from a change in the Employer's accounting methods, principles or practices after the date hereof other than a change necessary to cause such accounting methods, principles or practices to conform to GAAP consistent with past practices;

                    (D)      any expenses directly or indirectly incurred by Parent in connection with the acquisition of Employer by Parent; or

                    (E)      any corporate assessments or charges (including any additional depreciation, amortization or other cash or non-cash expense or income and any amortization of goodwill or other intangibles resulting from the acquisition of the Employer by Parent) from Parent or any of its Affiliates other than the reimbursement of any out-of-pocket expenses incurred by Parent (or any affiliate of Parent) that the Employer would incur on a stand-alone basis (considering competitive market rates at which the same could be obtained from third party sources), and under no circumstances will any such reimbursement exceed, on a pro rata basis, the corresponding amounts charged to any other affiliate of Parent.

          (c)      Regular Benefits.

               (i)      The Executive shall also be entitled to participate in any employee benefit plans, medical insurance plans, life insurance plans, disability income plans, retirement plans, vacation plans, expense reimbursement plans and other

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benefit plans which the Parent may from time to time have in effect for all or most of its senior executives. Such participation shall be subject to the terms of the applicable plan documents, generally applicable policies of the Parent, applicable law and the discretion of the Parent Board, the Parent Compensation Committee or any administrative or other committee provided for in or contemplated by any such plan, provided however that no such plan shall be amended in a discriminatory manner so as to adversely affect the Executive vis a vis the other participants in such plan. Nothing contained in this Agreement shall be construed to create any obligation on the part of Parent or the Employer to establish any such plan or to maintain the effectiveness of any such plan which may be in effect from time to time. Executive shall be entitled to the additional benefits identified in Schedule 1 attached hereto.

               (ii)      To the extent that service is relevant for purposes of determining eligibility, vesting, level of benefits or otherwise (but not the actual accrual of benefits) under any employee benefit plan, program or arrangement established or maintained by Parent (other than any defined benefit pension plan) following the Effective Date for the benefit of Employer's employees, such plan, program or arrangement shall credit the Executive for service on or prior to the Effective Date that was recognized by the Employer, for purposes of employee benefit plans, programs or arrangements maintained by the Employer. In addition, with respect to any welfare benefit plan (as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended) established or maintained by Parent following the Effective Date of this Agreement for the benefit of Employer's employees, such plan shall waive any pre-existing condition exclusions with respect to the Executive to which he would not have been subject had he participated or continued to participate in the medical plan of the Employer and provide that any covered expenses incurred on or before the Effective Date by the Executive or by his covered dependent shall be taken into account for purposes of satisfying applicable deductible coinsurance and maximum out-of-pocket provisions after the Effective Date.

          (d)      Taxation of Payments and Benefits. The Employer shall undertake to make deductions, withholdings and tax reports with respect to payments and benefits under this Agreement to the extent that it reasonably and in good faith believes that it is required to make such deductions, withholdings and tax reports. Payments under this Agreement shall be in amounts net of any such deductions or withholdings. Nothing in this Agreement shall be construed to require the Employer to make any payments to compensate the Executive for any adverse tax effect associated with any payments or benefits or for any deduction or withholding from any payment or benefit.

          (e)      Vacation. The Executive shall be entitled to eleven (11) weeks of compensated vacation annually (i.e., each one year period beginning on the Effective Date).

          (f)      Change of Control. Upon the consummation of a transaction during the Term of this Agreement involving the liquidation or dissolution of the Employer, sale of

3

substantially all of the assets of the Employer, sale of the outstanding stock of the Employer or a merger or consolidation involving the Employer that, in any such case, (x) results in a person other than Parent or an affiliate of Parent owning the stock or substantially all of the assets of the Employer and (y) pursuant to which such person does not assume the obligation of Parent to pay the Executive his pro rata share of the Additional Payment (the "Additional Payment") required under Section 1.8 of the Purchase Agreement in accordance with the terms therein and herein, then Parent agrees to pay the Executive his pro rata share of the Additional Payment upon the consummation of any such transaction.

          (g)      Exclusivity of Salary and Benefits. The Executive shall not be entitled to any compensation or benefits in consideration of his performance of services under this Agreement, other than those provided under this Agreement.

     5.      Extent of Service. During the Executive's employment under this Agreement, the Executive shall, subject to the direction and supervision of the Parent Chairman and CEO or his designee, devote the Executive's full business time, best efforts and business judgment, skill and knowledge to the advancement of the Employer's and Parent's interests and to the discharge of the Executive's duties and responsibilities under this Agreement. The Executive shall not engage in any other business activity, except as may be approved in writing by the Parent Chairman and CEO; provided that nothing in this Agreement shall be construed as preventing the Executive from either (a) investing the Executive's assets in any company or other entity in a manner not prohibited by Section 7(d) and serving or continuing to serve on boards of directors of such companies or other entities, in such manner as shall not adversely affect the performance of Executive's duties pursuant to this Agreement; (b) serving or continuing to serve on boards of directors of civic and charitable organizations; or (c) serving or continuing to serve as the Vice President of the Boys and Girls Club of Broward County. All companies, other entities and organizations of which the Executive is currently a member of the board of directors or equivalent governing body are listed on Schedule 2.

     6.      Termination and Termination Benefits. Notwithstanding the provisions of Section 3, the Executive's employment under this Agreement shall terminate under the following circumstances set forth in this Section 6.

          (a)      Termination by the Employer For Cause. The Executive's employment under this Agreement may be terminated by the Employer "for cause" without further liability on the part of the Employer effective immediately upon written notice to the Executive by the Parent Chairman and CEO following the occurrence of any of the following events, and any such termination shall constitute a termination "for cause:"

               (i)      dishonest statements or acts of the Executive with respect to the Employer or any affiliate of the Employer;

               (ii)      the commission by or indictment of the Executive for (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud ("indictment," for these purposes, meaning an indictment, probable cause hearing

4

or any other procedure pursuant to which an initial determination of probable or reasonable cause with respect to such offense is made);

               (iii)      failure to perform to the reasonable satisfaction of the Parent Chairman and CEO a significant portion of the Executive's duties and responsibilities assigned or delegated under this Agreement, which failure continues, in the reasonable judgment of the Parent Chairman and CEO, after written notice given to the Executive by the Parent Chairman and CEO;

               (iv)      the commission by Executive of a grossly negligent act or failure to act (or series or combination thereof) that is or are materially detrimental to the interests of the Employer or any affiliate of Employer; and

               (v)      material breach by the Executive of any of the Executive's obligations under this Agreement that remains uncured thirty (30) days after written notice thereof from the Parent Chairman and CEO to Executive.

     If Executive shall be terminated by reason of material breach of this Agreement pursuant to Section 6(a)(v) above, and if Executive shall commence arbitration contesting such termination pursuant to the provisions of Section 8 hereof, and if the arbitrators determine (and such determination is sustained on any appeals) that the Parent Chairman and CEO improperly terminated Executive pursuant to Section 6(a)(v), then such termination shall be deemed to have been made by Employer without cause pursuant to Section 6(c) below.

     Failure to achieve the Performance Goal for any fiscal year shall not constitute a basis for termination by the Employer for cause.

          (b)      Termination by the Executive Without Cause. The Executive's employment under this Agreement may be terminated by the Executive by written notice to the Parent Chairman and CEO at least ninety (90) days prior to the effective date of such termination.

          (c)      Termination by the Employer Without Cause. Subject to the payment of Termination Benefits pursuant to Section 6(g), the Executive's employment under this Agreement may be terminated by the Employer without cause upon written notice to the Executive by the Parent Chairman and CEO. In such event, Executive shall have the rights as provided in Section 6(g) below as to compensation and the provisions of Section 7(d) below and Section 5.2(a) of the Stock Purchase Agreement, dated as of the Effective Date, between Parent and the stockholders named therein (the "Purchase Agreement") shall immediately terminate and, if such termination occurs before the first anniversary of the date of the Closing (as defined in the Purchase Agreement) the provisions of Section 5.2(b) and 5.2(c) of the Purchase Agreement shall immediately terminate.

          (d)      Termination by the Executive For Cause. Executive may terminate his employment under this Agreement by giving the Parent Chairman and CEO written notice of such termination upon or at any time following the occurrence of any of the following events, and each such termination shall constitute a termination "for cause":

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               (i)       a material breach by the Employer of its agreements or obligations under this Agreement that remains uncured more than thirty (30) days after written notice thereof from the Executive to the Parent Chairman and CEO; provided that, with respect to a non-monetary material breach that is curable but cannot be cured through the exercise of reasonable efforts within such thirty (30) day period, the Employer shall have such additional period of time as may be reasonably necessary to effect a cure thereof, if the Employer shall so request in writing prior to expiration of the initial thirty (30) day period; or

               (ii)      a default of monetary obligations owed to Executive by Parent or Employer under the Purchase Agreement or under that certain Indemnification Agreement between Parent and the Executive dated as of the date hereof that remains uncured more than thirty (30) days after written notice thereof from Executive to Parent.

The cure periods set forth in subsection (i) and (ii) above are alternative and not cumulative. All such cure periods may be waived by the Employer in writing.

          (e)       Incapacity of Executive. Subject to applicable law, at any time after Executive shall have become disabled (as defined in the Parent's disability plans in effect at such time), the Employer may fully and finally terminate the Executive's employment under this Agreement by written notice to the Executive. Termination under this Section 6(e) shall be effective as of the date provided in such notice. In the event of such termination, Executive shall have the rights as provided in Parent's short-term and long-term disability plans as then in effect.

          (f)      Death of Executive. This Agreement shall automatically terminate upon the death of Executive. In the event of such termination, Executive's estate shall have the right to receive all accrued but unpaid Salary due to Executive at the time of his death.

          (g)      Certain Termination Benefits. Unless otherwise specifically provided in this Agreement or otherwise required by law, all compensation and benefits payable to the Executive under this Agreement shall terminate on the date of termination of the Executive's employment under this Agreement. Notwithstanding the foregoing, in the event of termination of the Executive's employment with the Employer pursuant to Sections 6(c) or 6(d) above, the Employer shall provide to the Executive the termination benefits ("Termination Benefits") set forth in (i)-(v) below, and in the event of termination of the Executive's employment pursuant to Sections 6(e) or 6(f), the Employer shall provide the Executive the Termination Benefits set forth in (iii)-(v) below:

               (i)      Continuation of the Executive's Salary at the rate then in effect pursuant to Section 4(a);

               (ii)      any and all payments required by Section 1.8 of the Purchase Agreement, which payments shall accelerate and be payable immediately;

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               (iii)      an amount equal to the bonus, if any, otherwise payable to Executive on account of the entire fiscal year in which such termination occurs, multiplied by a fraction, the numerator of which shall be the number of days in the fiscal year preceding the effective date of termination and the denominator of which shall be 365;

               (iv)      continuation of group health plan benefits to the extent authorized by and consistent with 29 U.S.C.ss. 1161 et seq. (commonly known as "COBRA"), with the cost of the regular premium for such benefits shared in the same relative proportion by the Employer or Parent and the Executive as in effect on the date of termination; and

               (v)      all other amounts to which Executive is entitled hereunder, including, without limitation any expense reimbursement amounts accrued to the effective date of termination.

The Termination Benefits set forth in (i) above shall continue effective until the earlier of (A) the expiration of the Term or (B) twelve (12) months after the date of termination; provided that in the event that the Executive commences any employment or self-employment during the period during which the Executive is entitled to receive Termination Benefits (the “Termination Benefits Period”), the remaining amount of Salary due pursuant to Section 6(g)(i) for the period from the commencement of such employment or self-employment to the end of the Termination Benefits Period shall be reduced by one-half and the payments provided under Section 6(g)(iv) shall cease effective as of the date of commencement of such employment or self-employment. The Employer’s liability for Salary continuation pursuant to Section 6(g)(i) shall be reduced by the amount of any severance pay due or otherwise paid to the Executive pursuant to any severance pay plan or stay bonus plan of the Employer or Parent. Notwithstanding the foregoing, nothing in this Section 6(g) shall be construed to affect the Executive’s right to receive COBRA continuation entirely at the Executive’s own cost to the extent that the Executive may continue to be entitled to COBRA continuation after the Executive’s right to cost sharing under Section 6(g)(iv) ceases. The Executive shall give prompt notice of the date of commencement of any employment or self-employment during the Termination Benefits Period and shall respond promptly to any reasonable inquiries concerning any employment or self-employment in which the Executive engages during the Termination Benefits Period. The pro rated bonus payment, if any, provided in Section 6(g)(iii) shall be paid on the date provided in the IC Plan (which shall not be amended in a discriminatory manner so as to adversely affect the Executive vis a vis the other participants in the IC Plan) or by the Parent Board or Parent Compensation Committee.

Notwithstanding anything to the contrary in this Agreement, the Executive shall not be entitled to any Termination Benefit under this Agreement unless the Executive first (i) enters into a valid and irrevocable release of all claims against the Employer, Parent and any affiliate of the Employer or Parent (and their respective directors, officers, employees and agents) arising out of, in connection with or related to this Agreement

7

and/or Executive’s relationship with Employer, Parent or any affiliate of the Employer or Parent as employee, officer, director or agent, in a form then reasonably acceptable to Parent, except for (A) claims arising out of the Purchase Agreement or the transactions contemplated therein, including any and all Stockholder Indemnifiable Claims and Stockholder Indemnifiable Losses (as such terms are defined in Section 8.3 of the Purchase Agreement, (B) all claims covered by any and all policies of insurance maintained by Employer prior to or by Employer or the Parent after closing of the Purchase Agreement, to the extent of the proceeds of such policies received by Employer or the Parent (and as to such claims, the Employer and Parent hereby waive all rights of subrogation), (C) claims for indemnification by the Executive under Section 20 of this Agreement, the Executive’s Director Indemnification Agreement or the by-laws of Parent, (D) claims arising out of grossly negligent or intentionally wrongful tortious conduct on the part of Employer, Parent or any affiliates of Employer or Parent (but claims arising out of, in connection with or related to grossly negligent or intentional breach of this Agreement by Employer shall not be so excluded from the release), or (E) all rights and claims of Executive as the owner of stock or any other equitable or beneficial interest in Employer, Parent or any affiliate of Employer or Parent or any other claim based on contractual relationships between Executive and Employer, Parent or any affiliate of Employer or Parent independent of this Agreement; and (ii) resigns from any and all positions, including, without implication of limitation, as a director, trustee, and officer, that the Executive then holds with the Employer, Parent and any affiliate of the Employer or Parent.

          (h)      Termination of Qualifier Status: Effective immediately upon any termination of this Agreement whatsoever, Executive shall be entitled to resign and withdraw from his capacity as a qualifying licensee general contractors for and on behalf of the Employer, including without limitation by withdrawing his general contractor's license from any and all open permits for construction activities by Employer.

     7.      Confidential Information, Noncompetition and Cooperation.

          (a)      Confidential Information. As used in this Agreement, "Confidential Information" means information belonging to the Employer and the Parent which is of value to the Employer or the Parent in the course of conducting its business and the disclosure of which could result in a competitive or other disadvantage to the Employer or the Parent. Confidential Information includes, without limitation, financial information, reports, and forecasts; inventions, improvements and other intellectual property; trade secrets; know-how; designs, processes or formulae; software; market or sales information or plans; customer lists; and business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management of the Employer or the Parent. Confidential Information includes information developed by the Executive in the course of the Executive's employment by the Employer, as well as other information to which the Executive may have access in connection with the Executive's employment. Notwithstanding the foregoing, Confidential Information does not include information in the public domain, unless due to breach of the Executive's duties under Section 7(b).

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          (b)       Confidentiality. The Executive understands and agrees that the Executive's employment creates a relationship of confidence and trust between the Executive, the Employer and the Parent with respect to all Confidential Information. At all times, both during the Executive's employment with the Employer and after its termination, the Executive will keep in confidence and trust all such Confidential Information, and will not use or disclose any such Confidential Information without the written consent of the Employer, except as may be necessary in the ordinary course of performing the Executive's duties to the Employer or the Parent. Notwithstanding anything heretofore stated in this Section 7, Executive's obligations under this Section 7 shall not, after termination or expiration of this Agreement, apply to (x) general know-how, (y) construction methods, processes and concepts developed by the Employer prior to the Effective Date, and (z) Executive's general knowledge and experience pertaining to the construction business.

          (c)      Documents, Records, etc. All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to the Executive by the Employer or the Parent or are produced by the Executive in connection with the Executive's employment will be and remain the sole property of the Employer or the Parent, as the case may be. The Executive will return to the Employer or the Parent all such materials and property as and when requested by the Employer or the Parent. In any event, the Executive will return all such materials and property immediately upon termination of the Executive's employment for any reason. The Executive will not retain with the Executive any such material or property or any copies thereof after such termination.

          (d)      Noncompetition and Nonsolicitation. The Executive agrees that from the date of this Agreement and until the later to occur of (i) 5 years following the date hereof, (ii) two years following the termination of the Executive's employment hereunder pursuant to Sections 6(a), 6(b) or 6(e) or (iii) upon the termination of Executive's employment hereunder pursuant to Sections 6(c), 6(d) or 6(f), he will not, without the prior written consent of the Employer, directly or indirectly, within the State of Florida, engage in any activity, or participate or invest in, or provide or facilitate the provision of financing to, or assist (whether as owner, part-owner, shareholder, member, partner, director, officer, trustee, employee, agent or consultant, or in any other capacity), any business, organization or person other than the Employer or the Parent (or any affiliate of the Employer or Parent), and including any such business, organization or person involving, or which is, a family member of the Executive, whose construction business, activities, products or services are, competitive with any of the construction business, activities, products or services conducted or offered by the Employer or Parent or any affiliate of the Employer or Parent. Without implied limitation, the foregoing covenant shall be deemed to prohibit (a) hiring or engaging or attempting to hire or engage for or on behalf of himself or any such competitor any officer or employee of the Employer or the Parent (or any affiliate of the Employer or Parent), or any former employee of the Employer or the Parent (or any affiliate of the Employer or Parent) who was employed during the period between the date six (6) months immediately preceding the date determined under subpart (i), (ii) or (iii) above, (b) encouraging for or on behalf of himself or any such competitor any such officer or employee to terminate his or her

9

relationship or employment with the Employer or the Parent (or any affiliate of the Employer or Parent), (c) soliciting for or on behalf of himself or any such competitor any client of the Employer or the Parent (or any affiliate of the Employer or Parent) and (d) diverting to any Person any client or business opportunity of the Employer or the Parent (or any affiliate of the Employer or Parent). Notwithstanding anything herein to the contrary, such Stockholder may make passive investments in any competitive enterprise if such investment constitutes less than 5% of the equity of such enterprise.

          (e)      Third-Party Agreements and Rights. The Executive hereby confirms that the Executive is not bound by the terms of any agreement with any previous employer or other party which restricts in any way the Executive's use or disclosure of information or the Executive's engagement in any business. The Executive represents to the Employer that the Executive's execution of this Agreement, the Executive's employment with the Employer and the performance of the Executive's proposed duties for the Employer will not violate any obligations the Executive may have to any such previous employer or other party. In the Executive's work for the Employer, the Executive will not disclose or make use of any information in violation of any agreements with or rights of any such previous employer or other party, and the Executive will not bring to the premises of the Employer any copies or other tangible embodiments of non-public information belonging to or obtained from any such previous employment or other party.

          (f)      Litigation and Regulatory Cooperation. During and after the Executive's employment, the Executive shall cooperate fully with the Employer and the Parent in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Employer or the Parent which relate to events or occurrences that transpired while the Executive was employed by the Employer. The Executive's full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Employer or the Parent at mutually convenient times. During and after the Executive's employment, the Executive also shall cooperate fully with the Employer and the Parent in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while the Executive was employed by the Employer. The Employer or the Parent shall reimburse to Executive for any out-of-pocket expenses incurred in connection with the Executive's performance of obligations pursuant to this Section 7(f).

          (g)      Injunction. The Executive agrees that it would be difficult to measure any damages caused to the Employer and the Parent which might result from any breach by the Executive of the promises set forth in this Section 7, and that in any event money damages would be an inadequate remedy for any such breach. Accordingly, subject to Section 8 of this Agreement, the Executive agrees that if the Executive breaches, or proposes to breach, any portion of this Agreement, the Employer and the Parent shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to the Employer or the Parent.

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     8.      Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive's employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in accordance with the provisions of Section 10.12 of the Purchase Agreement, which is incorporated herein by this reference (and, for purposes hereof, references to "Company" in said Section 10.12 shall be deemed to refer to Employer and/or Parent as the context requires and references to "Stockholder(s)" in said Section 10.12 shall be deemed to refer to Executive).

     9.      Consent to Jurisdiction. To the extent that any court action is permitted consistent with or to enforce this Agreement, the parties hereby consent to the jurisdiction of the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, and the United States District Court for the Southern District of Florida. Accordingly, with respect to any such court action, the Executive, Employer and Parent (a) each submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

     10.      Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements between the parties with respect to any related subject matter.

     11.      Assignment; Successors and Assigns, etc. None of the parties may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party; provided that the Employer or the Parent may assign its rights under this Agreement without the consent of the Executive in the event that the Employer or the Parent shall effect a reorganization, consolidate with or merge into any other corporation, partnership, organization or other entity, or transfer all or substantially all of its properties or assets to any other corporation, partnership, organization or other entity. This Agreement shall inure to the benefit of and be binding upon the Employer, the Parent and the Executive, their respective executors, administrators, heirs and permitted successors and assigns.

     12.      Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

     13.      Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

11

     14.      Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Employer or, in the case of the Employer or the Parent, at its main offices, attention of the Parent Chairman and CEO, and shall be effective on the date of delivery in person or by courier or three (3) days after the date mailed.

     15.      Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Employer and Parent.

     16.       Governing Law. This is a Florida contract and shall be construed under and be governed in all respects by the laws of the State of Florida, without giving effect to the conflict of laws principles of such State.

     17.      Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

     18.      Location: The principal location for performance of Executive's services hereunder shall be at the offices of the Employer, which are currently located in Broward County, Florida, subject to reasonable travel requirements during the course of such performance. Executive's duties require travel between the principal office and each project on a regular basis. No change in location of the principal office outside Florida shall be made without Executive's prior written consent.

     19.       Insurance: Commencing as of the Effective Date and continuing through the expiration or termination hereof, Parent shall cause the Employer to obtain and/or maintain in full force and effect (i) policies of insurance that do not increase the Employer's deductibles beyond commercially reasonable limits or decrease the Employer's maximum limits of liability beyond its current level based on the policies that the Employer currently has in place and identified on Schedule 3 hereto and (ii) equivalent director and officer insurance provided to similarly situated employees of Parent. The Executive, in his capacity as a qualifying licensee general contractor for and on behalf of the Employer, shall be named as an additional insured through the termination of this Agreement under each such policy without any premium liability. After the Effective Date and through the termination of this Agreement, Parent shall take the appropriate steps to add the Executive as an additional insured under all appropriate policies without any premium liability to him. After the Effective Date, Parent shall cause the Employer to cooperate with and assist the Executive and his successors, executors, administrators, estates and heirs, in connection with any claims he has or may have, as an additional insured, under any and all policies of insurance maintained by the Employer prior to or by the Employer or Parent after the Effective Date.

     20.      Indemnification. The Employer and Parent agree to indemnify and hold harmless the Executive, and his successors, executors, administrators, estates and heirs, from and against all liability of any kind or nature accruing on or after the date hereof against Executive in his capacity as a qualifying licensee general contractor for and on behalf of the Employer, including

12

without limitation liability for construction defects, design defects, environmental matters, personal injury and property damage occurring on job sites, citations, fines, penalties, or other administrative or legal remedies for violation of applicable laws, regulations or codes pertaining to jobs or job sites.

     No indemnification shall be payable to Executive with respect to any claim asserted after the sixtieth (60th) day following expiration of the statute of limitations (if any) applicable to such claim. Any claim for indemnification as to which notice has been given prior to any of the above expiration dates shall survive such expiration until final resolution of such claim.

     The procedures set forth in Section 8.5 of that certain Stock Purchase and Sale Agreement dated as of December 16, 2002 (the “Purchase Agreement”) shall be used for any such claim.

     Notwithstanding anything in this Agreement to the contrary, the Employer and Parent shall not be liable to the Executive for any indemnification hereunder for Losses (as defined in the Purchase Agreement) arising out of, based upon or in connection with any fraud, gross negligence, willful misconduct, criminal act or intentional breach of this Agreement of or by the Executive.

13

IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Employer and the Parent, by a duly authorized officer, and by the Executive, as of the Effective Date. 

                       EMPLOYER


                       JAMES A. CUMMINGS, INC.





                       By: /s/ James A. Cummings
                            Name: James A. Cummings
                            Title:

                       PARENT

                       PERINI CORPORATION



                       By: /s/ Robert Band
                            Name: Robert Band
                            Title: President & Chief Operating Officer

                       EXECUTIVE


                       /s/ James A. Cummings
                       James A. Cummings
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Schedule 1

Additional Benefits

  1. Monthly car allowance equal to the monthly lease or purchase amortization payment on a 2003 S500 Mercedes Benz on a three year lease, together with insurance, maintenance and gas expenses.

  2. The cost of club memberships to the Tower Club, Lauderdale Yacht Club, Safari Club and the Hunting Club.

  3. General contractor's license renewal fees and the cost of all continuing education required to maintain such license.

  4. Ordinary and reasonable expenses incurred in connection with performance of Executive's services under this Agreement. The Executive will receive a corporate American Express card.

All such additional benefits shall be paid directly by Employer to the applicable third party and shall not be required to be first advanced by Executive.

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Schedule 2

Board Positions

  1. Tri-County Commuter Rail Authority, Broward County appointee for civic/business interests 1997 - present, Chair 2001- 02

  2. United Way Regional Representative

  3. Broward Workshop, 1993 to present

  4. Boys and Girls Club of Broward County - Vice President, Board of Directors

  5. Florida Atlantic University Foundation - Board Member

  6. Broward County Homeless Assistance

  7. Association of General Contractors' of South Florida

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Schedule 3

Insurance Policies

JAMES A. CUMMINGS, INC. COMMERCIAL POLICIES:

                               Limit         Aggregate
         Policy              Per Occur.        Limit        Deductible      Effective         Company
- -------------------------- --------------- -------------- --------------- --------------- ----------------

General Liability               $1M             $2M       $0              7/02-7/03       Zurich

Umbrella                        $15M           $15M       $0              7/02-7/03       Westchester

Excess Umbrella                 $35M           $35M       $0              7/02-7/03       Zurich

Product Liability               $1M             $2M       $0              7/02-7/03       Zurich

Professional Liability          $1M             $1M       $25,000         10/02-10/03     Lexington

Project (Dillard)
Professional Liability          $5M             $5M       $50,000         02/00-05/03     Zurich

Work Comp.                       ----Statutory----        $0              01/02-01/03     Zenith

Employers Liability           $500,000       $500,000     $0              01/02-01/03     Zenith

Property                      Schedule       Schedule     $5,000          7/02-7/03       Zurich

Pollution                     $300,000       $300,000     $500            7/02-7/03       Zurich

Auto                            $1M             $1M       $1,000          7/02-7/03       Zurich

Equipment                     Schedule       Schedule     $5,000          7/02-7/03       Travelers

Crime                         $500,000       $500,000     $5,000          7/02-7/03       Zurich


CUMMINGS-CENTEX ROONEY COMMERCIAL POLICIES:

                               Limit         Aggregate
         Policy              Per Occur.        Limit        Deductible      Effective         Company
- -------------------------- --------------- -------------- --------------- --------------- ----------------

General Liability               $1M             $2M               $5,000  11/97-5/99      Underwriters

Exhibit A

IC Plan

 EX-10 7 firstamend_2003.htm 1ST AMEND & WAIVER TO CREDIT AGR 2/14/03 First Amendement and Waiver, February 14, 2003

                                                                                                                        Execution Version

PERINI CORPORATION

FIRST AMENDMENT AND WAIVER

      THIS FIRST AMENDMENT AND WAIVER (this "Amendment") is entered into as of February 14, 2003 by and among PERINI CORPORATION, a Massachusetts corporation (the "Borrower"), with its chief executive office at 73 Mt. Wayte Avenue, Framingham, Massachusetts 01701 and FLEET NATIONAL BANK, as Administrative Agent (the "Administrative Agent") and the Lenders under the Credit Agreement, as defined below. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement, as defined below.

R E C I T A L S

      WHEREAS, the Borrower, the Administrative Agent and the Lenders have previously entered into a Credit Agreement dated as of January 23, 2002 (the "Credit Agreement");

      WHEREAS, the Borrower has requested and the Administrative Agent and the Lenders have agreed that the Commitment of the Lenders to make Revolving Loans shall increase from an aggregate amount of $45,000,000 to an aggregate amount of $50,000,000 on the terms and conditions set forth herein;

      WHEREAS, the Borrower has requested that a waiver of the Borrower's compliance with a certain financial covenant under the Credit Agreement be granted and that certain modifications be made to the Credit Agreement, and the Lenders have agreed to grant such waiver and permit such modifications to the Credit Agreement on the terms and conditions set forth herein;

      WHEREAS, by letter dated January 21, 2003, the Lenders granted their consent to the acquisition by the Borrower on such date of all of the outstanding stock of James A. Cummings, Inc., a Florida corporation ("JAC"), conditioned on the delivery of certain documents set forth herein;

      NOW THEREFORE, in consideration of the foregoing premises and the mutual benefits to be derived by the Borrower, the Administrative Agent and the Lenders from a continuing relationship under the Credit Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

      A. Amendments to Credit Agreement.

1. Section 1.01 of the Credit Agreement is hereby amended as follows:

      (a) The following defined terms are hereby amended in their entirety to read as follows:

“Available LC Amount” means at any time an amount equal to the lesser of (x) $7,500,000 and (y) the excess, if any, of (i) the aggregate amount of the

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Commitments over (ii) the aggregate outstanding principal amount of the Revolving Loans.

“Commitment” means, with respect to each Lender, (i) on the Effective Date, such Lender’s commitment to make Revolving Loans pursuant to Section 2.01(a) and Term Loans pursuant to Section 2.01(b), in each case, up to such Lender’s Revolving Credit Commitment and (ii) thereafter, such amount as reduced from time to time pursuant to Section 2.09 and Section 2.10.

“Consolidated Tangible Net Worth” means, at any date, the consolidated stockholders’ equity of the Borrower and its Consolidated Subsidiaries, less the sum of: (a) their consolidated Intangible Assets, (b) reserves not already deducted from assets, (c) value of minority interests in Subsidiaries, (d) value of non-compete agreements, (e) loans to shareholders, officers, employees and Affiliates (other than a Joint Venture), and at any date on and after December 31, 2002, (f) the value of assets attributable to overfunding of Plan or Multiemployer Plan benefit obligations, plus at any date on and after December 31, 2002, the amount of all liabilities attributable to underfunding of Plan or Multiemployer Plan benefits obligations, all of the foregoing to the extent included in such consolidated stockholders’ equity and 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 December 31, 2000 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, franchises, organization or developmental expenses, unamortized equity costs, and other assets that would be classified as intangible assets under GAAP.

“Revolving Credit Termination Date” means the earlier of (i) June 30, 2005, or (b) the date of termination in whole of the Commitments pursuant to Section 6.01.

     (b)  The defined term “Effective Date Commitment Amount” is hereby deleted, and the following defined term “Revolving Credit Commitment” substituted in its place:

“Revolving Credit Commitment” means, (a) in the aggregate, $50,000,000; and (b) for each Lender, $50,000,000 multiplied by the percentage set forth below for such Lender:

          Fleet National Bank           66.67%
          Banknorth, N.A.               33.33%

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      (c) The following new defined term is hereby added:

“Peekskill Facility” means the office building/maintenance facility located at 1022 Lower South Street, Peekskill, New York.

2. Section 5.07 of the Credit Agreement is hereby amended by amending subsections (a) and (f) in their entirety to read as follows:

      (a) Minimum Net Operating Profit. As of the end of each fiscal quarter, the Borrower shall not permit Net Operating Profit to be less than the amount set forth for such quarter below, calculated in the aggregate for the four consecutive fiscal quarters then ending:

     Fiscal Quarters Ending                 Minimum Net Operating Profit

            3/31/03                                $18,000,000
            6/30/03                                $21,000,000
            9/30/03                                $24,000,000
    12/31/03 and thereafter                        $25,000,000

     (f)  Maximum Capital Expenditures. The Borrower will not permit the aggregate amount of Consolidated Capital Expenditures during any fiscal year, commencing with the fiscal year ending December 31, 2001, to exceed $5,000,000, excluding any Consolidated Capital Expenditures made or incurred in connection with (i) the acquisition of the Peekskill Facility; and (ii) any other purchase(s) of any building(s) to be used in the operations of Perini Building not to exceed $700,000 in the aggregate as to all such purchases.

3. Section 5.08 of the Credit Agreement is hereby amended by adding the following new subsection “(g)" immediately following existing subsection “(f)":

     (g) Debt owing to M&T Bank, National Association, or any of its affiliates, not to exceed $1,700,000 with respect to the mortgage financing for the Peekskill Facility, and any refinancing, extension, renewal or refunding thereof, provided that any refinancing, extension, renewal or refunding of any such Debt shall not increase the principal amount of such Debt outstanding at the time of such refinancing, extension, renewal or refunding.

4. Section 5.13 of the Credit Agreement is hereby amended in its entirety to read as follows:

Real Estate Investments. The Borrower will not, and will not permit any Consolidated Subsidiary to, make any Real Estate Investment; provided that this Section shall not prohibit the Borrower or any Consolidated Subsidiary from (i) acquiring the Peekskill

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Facility, or (ii) incurring reasonable costs associated with the Peekskill Facility or any other real property owned by the Borrower or any Consolidated Subsidiary on the date hereof in accordance with the Real Estate Plan.

5. Schedule 4.03(b) (“Real Property Interests”), Schedule 4.07(b) (“Information Supplied With Respect To Environmental Matters”), Schedule 4.09 (“Subsidiaries of Perini Corporation”), Schedule 4.15 (“Schedule Of Bank Accounts”), Schedule 5.08 (“Debt Of The Borrower And Its Subsidiaries”) and Schedule 5.10 (“Existing Liens) are hereby deleted and the new Schedule 4.03(b), Schedule 4.07(b), Schedule 4.09, Schedule 4.15, Schedule 5.08 and Schedule 5.10 attached to this Amendment are substituted in their stead.

      B. Representations and Warranties. The Borrower represents and warrants to the Administrative Agent and the Lenders that: (a) the Borrower has the full power and authority to execute, deliver and perform its respective obligations under, the Credit Agreement, as amended by this Amendment, (b) the execution and delivery of this Amendment has been duly authorized by all necessary action of the Board of Directors of the Borrower; (c) the representations and warranties contained or referred to in Article IV of the Credit Agreement are true and accurate in all material respects as of the date of this Amendment; and (d) other than other than the Borrower's failure to comply with the covenant set forth in Section 5.07(a) (Minimum Net Operating Profit) of the Credit Agreement, as in effect immediately prior to the Effective Date (the "Covenant Default"), for the fiscal quarter ending December 31, 2002 (the "Fiscal Period"); no Event of Default has occurred and is continuing or will result after giving effect to this Amendment and the transactions contemplated by this Amendment and the Credit Agreement.

      C. Other.

      1. This Amendment shall take effect upon receipt by the Administrative Agent of:

          (i) this Amendment duly executed and delivered by the Borrower;

          (ii) the (a) $33,333,333.33 Amended and Restated Revolving Credit Note payable by the Borrower to Fleet National Bank, and (b) the $16,666,666.67 Amended and Restated Revolving Credit Note payable by the Borrower to Banknorth, N.A., each duly executed and delivered by the Borrower;

          (iii) new Annex A to the Borrower Pledge Agreement executed by the Borrower, together with original stock certificate #11 evidencing 4125 shares of JAC standing in the name of the Borrower and an executed and undated stock power with respect to such shares;

          (iv) the Joinder Agreement, substantially in the form of Exhibit A to Subsidiary Guarantee Agreement, executed by JAC;

          (v) the Joinder Agreement, substantially in the form of Exhibit A to Security Agreement, executed by JAC;

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          (vi) a Clerk's Certificate executed by the Clerk of the Borrower with regard to resolutions, organizational matters and officer incumbencies;

          (vii) Legal Existence/Good Standing Certificate issued by the Massachusetts Secretary of the Commonwealth for the Borrower;

          (viii) a Secretary's Certificate executed by the Secretary of JAC with regard to resolutions, organizational matters and officer incumbencies;

          (ix) Certified copies of organizational documents for JAC on file with the Florida Secretary of State,

          (x) Legal Existence/Good Standing Certificate issued by the Florida Secretary of State for JAC;

          (xi) an opinion of counsel for the Borrower and JAC, addressed to the Administrative Agent and dated the date of this Amendment which opinion meets the Administrative Agent's reasonable legal opinion requirements;

          (xii) payment to the Administrative Agent, for the pro rata accounts of the Lenders, of an Amendment and Renewal Fee in the amount of $75,000 to be debited to account number #0236422481 with Fleet National Bank; and

          (xiii) Payment of all costs and expenses (including, without limitation, the reasonable costs and expenses of the Administrative Agent's counsel) incurred by the Administrative Agent in connection with this Amendment.

      2. In reliance upon the representations of the Borrower to the Administrative Agent and the Lenders that no Default or Event of Default exists under the Credit Agreement other than the Covenant Default, the Lenders hereby waive the Covenant Default for the Fiscal Period.

      This waiver is limited to the Covenant Default for the Fiscal Period only and is not, nor shall it be construed as, a waiver of any other Default or Event of Default under the Credit Agreement, now existing or hereafter occurring, nor shall anything herein or the Lenders' actions hereunder be construed so as to imply that the Lenders have agreed, or are obligated, to grant any future waivers under the Credit Agreement. Nothing in this Amendment shall be construed to be an amendment of any provision of the Credit Agreement, and, except as otherwise expressly provided herein, all of the provisions of the Credit Agreement shall remain in full force and effect.

      3. This Amendment is executed as an instrument under seal and shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts without regard to its conflicts of law rules. All parts of the Credit Agreement, the Financing Documents and the Fee Letter not affected by this Amendment are hereby ratified and affirmed in all respects, provided that if any provision of the Credit Agreement shall conflict or be inconsistent with this Amendment, the terms of this Amendment shall supersede and prevail. Upon the

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execution of this Amendment, all references to the Credit Agreement in that document, or in any related document, shall mean the Credit Agreement as amended by this Amendment. Except as expressly provided in this Amendment, the execution and delivery of this Amendment does not and will not amend, modify or supplement any provision of, or constitute a consent to or a waiver of any noncompliance with the provisions of the Credit Agreement, and, except as specifically provided in this Amendment, the Credit Agreement shall remain in full force and effect. This Amendment may be executed in one or more counterparts with the same effect as if the signatures hereto and thereto were upon the same instrument.

[SIGNATURE PAGE FOLLOWS]

      IN WITNESS WHEREOF, each of the Borrower, the Administrative Agent and the Lenders in accordance with Section 9.05 of the Credit Agreement, has caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date set forth in the preamble on page one of this Amendment.

                                  BORROWER:

WITNESSED AS TO BOTH:             PERINI CORPORATION


/s/Tammi A. Rice                  By: /s/Robert Band
Tammi A. Rice                            Robert Band
Print Name                               President and Chief Operating Officer


                                  By: /s/Susan C. Mellace
                                         Susan C. Mellace
                                         Treasurer

                                  ADMINISTRATIVE AGENT:

                                  FLEET NATIONAL BANK, as Administrative Agent


                                  By: /s/Thomas F. Brennan
                                         Thomas F. Brennan
                                         Senior Vice President


                                  LENDERS:

                                  FLEET NATIONAL BANK


                                  By: /s/Thomas F. Brennan
                                         Thomas F. Brennan
                                         Senior Vice President


                                  BANKNORTH, N.A.


                                  By: /s/Jon R. Sundstrom
                                         Jon R. Sundstrom
                                         Senior Vice President
EX-18 8 ex18_0303.htm EXHIBIT 18 TO 2002 FORM 10-K Exhibit 18 to 2002 Form 10-K

                                                                                                                              Exhibit 18

Preferability Letter Re: Change in Accounting Principles

March 21, 2003



Perini Corporation
73 Mt. Wayte Avenue
Framingham, MA 01701

Dears Sirs/Madams:

We have audited the consolidated financial statements of Perini Corporation (the "Company") as of December 31, 2002 and 2001, and for each of the three years in the period ended December 31, 2002, included in your Annual Report on Form 10-K to the Securities and Exchange Commission and have issued our report thereon dated March 21, 2003, which expresses an unqualified opinion and includes an explanatory paragraph concerning a retroactive change in presentation of the Company's joint ventures in the consolidated balance sheets from the equity method to the proportionate consolidation method and the restatement of basic and diluted earnings per share for the year ended December 31, 2000. Note (1)(b) to such consolidated financial statements contains a description of your adoption during the year ended December 31, 2002 of this change in presentation of the Company's joint ventures and its retroactive application to the 2001 and 2000 consolidated financial statements. In our judgment, such change is to an alternative accounting principle that is preferable under the circumstances.

Yours truly,

DELOITTE & TOUCHE LLP
Boston, Massachusetts

 EX-21 9 ex21_0303.htm EXHIBIT 21 TO 2002 FORM 10-K Exhibit 21 to 2002 Form 10-K

                                                                                                                             Exhibit 21

Perini Corporation
Subsidiaries of the Registrant

                                                                                                        Percentage
                                                                                                        of Interest
                                                                                                         or Voting
                                                                               Place of                 Securities
                              Name                                           Organization                  Owned
- -----------------------------------------------------------------     ----------------------------     --------------

Perini Corporation                                                    Massachusetts

        Perini Building Company, Inc.                                 Arizona                              100%

        Perini Management Services, Inc. (f/k/a Perini
        International Corporation)                                    Massachusetts                        100%

        James A. Cummings, Inc.*                                      Florida                              100%

        Perini Environmental Services, Inc.                           Delaware                             100%

        International Construction Management Services, Inc.          Delaware                             100%

               Percon Constructors, Inc.                              Delaware                             100%

        Bow Leasing Company, Inc.                                     New Hampshire                        100%

        Perini Land & Development Company, Inc.                       Massachusetts                        100%

               Paramount Development Associates, Inc.                 Massachusetts                        100%


*Acquisition effective January 1, 2003.
EX-23 10 ex23_0303.htm EXHIBIT 23 TO 2002 FORM 10-K Exhibit 23 to 2002 Form 10-K

                                                                                                                   Exhibit 23

Consent of Independent Auditors

We consent to the incorporation by reference of our reports, dated March 21, 2003, which expresses an unqualified opinion and includes an explanatory paragraph concerning a retroactive change in presentation of the Company's joint ventures in the consolidated balance sheets from the equity method to the proportionate consolidation method and the restatement of basic and diluted earnings per share for the year ended December 31, 2000, included in Perini Corporation's Annual Report on this Form 10-K for the year ended December 31, 2002, into the Company's previously filed Registration Statements Nos. 2-82117, 33-24646, 33-46961, 33-53190, 33-53192, 33-60654, 33-70206, 33-52967, 33-58519, 333-03417, 333-26423, 333-51911, 333-75905 and 333-40370.

DELOITTE & TOUCHE LLP



Boston, Massachusetts
March 25, 2003

 EX-24 11 ex24_0303.htm EXHIBIT 24 TO 2002 FORM 10-K Exhibit 24 to 2002 Form 10-K

                                                                                                                   Exhibit 24

Power of Attorney

We, the undersigned, Directors of Perini Corporation, hereby severally constitute Robert Band and Dennis M. Ryan, 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/Peter Arkley                        Director        March 12, 2003
- ---------------                       ----------- -------------------
Peter Arkley                                              Date

/s/Robert Band                         Director        March 12, 2003
- --------------                        ----------- -------------------
Robert Band                                               Date

/s/Wayne L. Berman                     Director        March 12, 2003
- ------------------                    ----------- -------------------
Wayne L. Berman                                           Date

/s/Frederick Doppelt                   Director        March 12, 2003
- --------------------                  ----------- -------------------
Frederick Doppelt                                         Date

                                       Director
- --------------------                  ----------- -------------------
Asher B. Edelman                                          Date

/s/Robert A. Kennedy                   Director        March 12, 2003
- --------------------                  ----------- -------------------
Robert A. Kennedy                                         Date

/s/Michael R. Klein                    Director        March 12, 2003
- -------------------                   ----------- -------------------
Michael R. Klein                                          Date

/s/Raymond R. Oneglia                  Director        March 12, 2003
- ---------------------                 ----------- -------------------
Raymond R. Oneglia                                        Date

/s/Ronald N. Tutor                     Director        March 12, 2003
- ------------------                    ----------- -------------------
Ronald N. Tutor                                           Date
EX-99 12 rtex99_10303.htm RONALD N. TUTOR CERTIFICATTION 03/31/03 Exhibit 99.1 to 2002 Form 10-K

                                                                                                          Exhibit 99.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Perini Corporation (the “Company”) on Form 10-K for the fiscal year ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald N. Tutor, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:

      (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

      (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 31, 2003                                                  /s/Ronald N. Tutor
                                                                                     Ronald N. Tutor, Chairman and Chief Executive Officer

 EX-99 13 rbex99_20303.htm ROBERT BAND CERTIFICATION 03/31/03 Robert Band Ex 99.2 to 2002 Form 10-K

                                                                                                                   Exhibit 99.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Perini Corporation (the “Company”) on Form 10-K for the fiscal year ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Band, President, Chief Operating Officer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 31, 2003                                                                       /s/ Robert Band
                                                                                                         Robert Band, President, Chief Operating Officer and
                                                                                                         Principal Financial Officer

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