-----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, JtLjZojGXa8MjzpROlpTMyYB9zhVugOQ0tM4J0CtHNv01gFbnaazCVEh0q9RqjO6 9zboyz3Y0F4EpX3w593JTQ== 0000077543-05-000084.txt : 20051104 0000077543-05-000084.hdr.sgml : 20051104 20051104114935 ACCESSION NUMBER: 0000077543-05-000084 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051104 DATE AS OF CHANGE: 20051104 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06314 FILM NUMBER: 051179104 BUSINESS ADDRESS: STREET 1: 73 MT WAYTE AVE CITY: FRAMINGHAM STATE: MA ZIP: 01701 BUSINESS PHONE: 5086282000 10-Q 1 form10q_3q05.htm 3RD Q 2005 FORM 10-Q Form 10-Q, 3rd Quarter 2005

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2005

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-6314

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

MASSACHUSETTS                                                                                                    04-1717070
(State or other jurisdiction of                                                                                     (I.R.S. Employer
incorporation or organization)                                                                                     Identification No.)

73 MT. WAYTE AVENUE, FRAMINGHAM, MASSACHUSETTS 01701-9160
(Address of principal executive offices)
(Zip code)

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

NONE
(Former name, former address and former fiscal year,
if changed since last report)

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No ___

The number of shares of Common Stock, $1.00 par value per share, of registrant outstanding at October 31, 2005 was 25,639,315.

Page 1 of 34

                                          PERINI CORPORATION & SUBSIDIARIES

                                                        INDEX


                                                                                                        Page Number
Part I. -      Financial Information:

               Item 1.    Financial Statements (Unaudited)

                          Consolidated Condensed Balance Sheets -                                            3
                          September 30, 2005 and December 31, 2004

                          Consolidated Condensed Statements of Income -                                      4
                          Three Months and Nine Months ended September 30, 2005 and 2004

                          Consolidated Condensed Statement of Stockholders' Equity -                         5
                          Nine Months ended September 30, 2005

                          Consolidated Condensed Statements of Cash Flows  -                                 6
                          Nine Months ended September 30, 2005 and 2004

                          Notes to Consolidated Condensed Financial Statements                               7 - 19

               Item 2.    Management's Discussion and Analysis of Financial Condition and Results of
                          Operations                                                                        20 - 30

               Item 3.    Quantitative and Qualitative Disclosures About Market Risk                         31

               Item 4.    Controls and Procedures                                                            31

Part II. -     Other Information:

               Item 1.     Legal Proceedings                                                                 32

               Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds                       32

               Item 3.     Defaults Upon Senior Securities                                                   33

               Item 4.     Submission of Matters to a Vote of Security Holders                               33

               Item 5.     Other Information                                                                 33

               Item 6.     Exhibits                                                                          33

               Signatures                                                                                    34

Part I. – Financial Information

Item 1. Financial Statements (Unaudited)

                                         PERINI CORPORATION AND SUBSIDIARIES
                                  CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
                                 SEPTEMBER 30, 2005 (UNAUDITED) AND DECEMBER 31, 2004
                                                    (In Thousands)

                                          ASSETS                                             SEPT. 30,       DEC. 31,
                                                                                                2005           2004
                                                                                            -------------   -----------

Cash and Cash Equivalents (Note 3)                                                             $ 100,099     $ 136,305
Accounts Receivable, including retainage                                                         345,030       372,909
Unbilled Work                                                                                     93,932        90,280
Deferred Tax Asset                                                                                 3,594         4,110
Other Current Assets                                                                               7,105         4,112
                                                                                            -------------   -----------
     Total Current Assets                                                                      $ 549,760     $ 607,716
                                                                                            -------------   -----------

Property and Equipment, less Accumulated Depreciation of $24,497 in 2005 and
$21,286 in 2004                                                                                $  53,224     $  17,486
                                                                                            -------------   -----------

Goodwill                                                                                       $  12,678     $  12,678
                                                                                            -------------   -----------

Other Assets                                                                                   $   2,351     $  16,385
                                                                                            -------------   -----------

                                                                                               $ 618,013     $ 654,265
                                                                                            =============   ===========
                           LIABILITIES AND STOCKHOLDERS' EQUITY

Current Maturities of Long-term Debt                                                           $  10,641     $     759
Accounts Payable, including retainage                                                            278,294       344,684
Deferred Contract Revenue                                                                         57,115        57,111
Accrued Expenses                                                                                  20,689        27,133
                                                                                            -------------   -----------
     Total Current Liabilities                                                                 $ 366,739     $ 429,687
                                                                                            -------------   -----------

Long-term Debt, less current maturities included above (Note 11)                               $  17,429     $   8,608
                                                                                            -------------   -----------

Other Long-term Liabilities (Note 8)                                                           $  37,909     $  41,936
                                                                                            -------------   -----------

Contingencies and Commitments (Note 5)

Stockholders' Equity:
  Preferred Stock (Note 5)                                                                     $      56     $      56
  Series A Junior Participating Preferred Stock                                                        -             -
  Stock Purchase Warrants                                                                            461           965
  Common Stock                                                                                    25,629        25,233
  Additional Paid-in Capital                                                                     114,997       110,058
  Retained Earnings                                                                               81,897        64,826
                                                                                            -------------   -----------
                                                                                               $ 223,040     $ 201,138
  Accumulated Other Comprehensive Loss                                                           (27,104)      (27,104)
                                                                                            -------------   -----------
     Total Stockholders' Equity                                                                $ 195,936     $ 174,034
                                                                                            -------------   -----------

                                                                                               $ 618,013     $ 654,265
                                                                                            =============   ===========

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

                                                       PERINI CORPORATION AND SUBSIDIARIES
                                             CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
                                                 (In Thousands, Except Share and Per Share Data)


                                                                                           THREE MONTHS                       NINE MONTHS
                                                                                          ENDED SEPT. 30,                   ENDED SEPT. 30,
                                                                                   ------------------------------     -----------------------------

                                                                                       2005             2004              2005            2004
                                                                                   -------------    -------------     -------------   -------------

Revenues (Note 9)                                                                     $ 380,314        $ 467,743       $ 1,130,251      $1,443,855

Cost of Operations                                                                      355,442          444,110         1,058,040       1,372,963
                                                                                   -------------    -------------     -------------   -------------

Gross Profit                                                                          $  24,872        $  23,633       $    72,211      $   70,892

General and Administrative Expenses                                                      14,710           12,912            40,982          31,720
                                                                                   -------------    -------------     -------------   -------------

INCOME FROM CONSTRUCTION OPERATIONS (Note 9)                                          $  10,162        $  10,721       $    31,229      $   39,172

Other Income (Expense), Net                                                                  29             (688)             (638)         (3,939)
Interest Expense                                                                           (418)            (198)           (1,091)           (506)
                                                                                   -------------    -------------     -------------   -------------

Income before Income Taxes                                                            $   9,773        $   9,835       $    29,500      $   34,727

Provision for Income Taxes (Note 6)                                                      (3,821)          (3,405)          (11,538)         (4,900)
                                                                                   -------------    -------------     -------------   -------------

NET INCOME                                                                             $   5,952       $    6,430      $    17,962     $    29,827
                                                                                   =============    =============     =============   =============

Less:  Accrued Dividends on $21.25 Preferred Stock (Note 8)                                (297)            (297)             (891)           (891)
                                                                                   -------------    -------------     -------------   -------------

NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS                                          $   5,655        $   6,133       $    17,071     $    28,936
                                                                                   =============    =============     =============   =============

BASIC EARNINGS PER COMMON SHARE (Note 7)                                              $    0.22        $    0.26       $      0.67     $      1.24
                                                                                   =============    =============     =============   =============

DILUTED EARNINGS PER COMMON SHARE (Note 7)                                            $    0.22        $    0.25       $      0.66     $      1.16
                                                                                   =============    =============     =============   =============


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 7):
   BASIC                                                                             25,541,087       23,905,884        25,391,997      23,375,987
   Effect of Dilutive Stock Options, Warrants and Restricted Stock Units Outstanding    495,239        1,005,803           623,442       1,550,448
                                                                                   -------------    -------------     -------------   -------------
   DILUTED                                                                           26,036,326       24,911,687        26,015,439      24,926,435
                                                                                   -------------    -------------     -------------   -------------

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

                                                          PERINI CORPORATION AND SUBSIDIARIES
                                          CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
                                                       FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
                                                                       (In Thousands)

                                                                                                                   Accumulated
                                                              Stock                   Additional                      Other
                                               Preferred     Purchase      Common      Paid-in      Retained      Comprehensive
                                                 Stock       Warrants      Stock       Capital      Earnings          Loss             Total
                                              ------------  -----------  -----------  -----------   ----------  ------------------   -----------

Balance - December 31, 2004                          $ 56        $ 965      $25,233    $ 110,058     $ 64,826           $ (27,104)    $ 174,034

Net income                                              -            -            -            -       17,962                   -        17,962

Preferred stock dividends accrued                       -            -            -            -         (891)                  -          (891)
($15.9375 per share*)

Common stock options and stock purchase
warrants exercised                                      -         (504)         255        1,175            -                   -           926

Income tax benefit attributable to nonqualified
stock options exercised                                 -            -            -        1,216            -                   -         1,216

Restricted stock compensation expense                   -            -            -        2,891            -                   -         2,891

Common Stock issued                                     -            -          141         (343)           -                   -          (202)

                                              --------------------------------------------------------------------------------------------------
Balance - September 30, 2005                         $ 56        $ 461      $25,629    $ 114,997     $ 81,897           $ (27,104)    $ 195,936
                                              ==================================================================================================

*Equivalent to $1.5938 per Depositary Share

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

                                      PERINI CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                                (In Thousands)

                                                                                            NINE MONTHS
                                                                                          ENDED SEPT. 30,
                                                                                    ----------------------------
                                                                                       2005            2004
                                                                                    ------------   -------------

Cash Flows from Operating Activities:
  Net income                                                                          $  17,962       $  29,827
  Adjustments to reconcile net income to net cash from operating activities:
       Depreciation and amortization                                                      4,182           3,981
       Restricted stock compensation expense                                              2,891               -
       Income tax benefit from stock options exercised                                    1,216               -
       Deferred income taxes                                                              7,691           4,334
       Gain on sale of equipment                                                           (100)           (718)
       Gain on sale of marketable securities                                               (482)              -
       Unrealized loss on marketable securities                                             523               -
       Other items, net                                                                     674              59
       Cash used by changes in components of working capital other
         than cash, current maturities of long-term debt and deferred tax asset         (44,574)         (8,682)
                                                                                    ------------   -------------

    NET CASH (USED BY) PROVIDED FROM OPERATING ACTIVITIES                             $ (10,017)      $  28,801
                                                                                    ------------   -------------

Cash Flows from Investing Activities:
  Acquisition of Cherry Hill Construction, Inc., net of cash balance acquired (Note 4)$ (19,970)      $       -
  Acquisition of property and equipment                                                  (8,230)         (3,941)
  Proceeds from sale of property and equipment                                            1,104           1,017
  Proceeds from sale of marketable securities                                             4,758               -
  Proceeds from other investing activities                                                  663             884
                                                                                    ------------   -------------

    NET CASH USED BY INVESTING ACTIVITIES                                             $ (21,675)      $  (2,040)
                                                                                    ------------   -------------

Cash Flows from Financing Activities:
  Proceeds from long-term debt                                                        $   4,520       $   1,428
  Reduction of long-term debt                                                            (9,599)           (349)
  Proceeds from exercise of common stock options and stock purchase warrants                926           7,630
  Issuance of common stock                                                                 (202)              -
  Expenditure for stock registration                                                       (159)         (1,181)
                                                                                    ------------   -------------

    NET CASH (USED BY) PROVIDED FROM FINANCING ACTIVITIES                             $  (4,514)      $   7,528
                                                                                    ------------   -------------

Net (Decrease) Increase in Cash                                                       $ (36,206)      $  34,289
Cash at Beginning of Year                                                               136,305          67,823
                                                                                    ------------   -------------

Cash at End of Period                                                                 $ 100,099       $ 102,112
                                                                                    ============   =============



Supplemental Disclosure of Cash Paid During the Period For:
  Interest                                                                            $   1,092       $     506
                                                                                    ============   =============
  Income taxes                                                                        $   2,987       $   1,587
                                                                                    ============   =============

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

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(1) Basis of Presentation
The unaudited consolidated condensed financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2004. In the opinion of management, the accompanying unaudited consolidated condensed financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position as of September 30, 2005 and December 31, 2004, results of operations for the three month and nine month periods ended September 30, 2005 and 2004, and cash flows for the nine month periods ended September 30, 2005 and 2004. The results of operations for the nine months ended September 30, 2005 may not be indicative of the results that may be expected for the year ending December 31, 2005 because the Company’s results are primarily generated from a limited number of significant active construction contracts. Therefore, such results can vary depending on the timing of progress achieved and changes in estimated profitability of projects being reported.

(2) Significant Accounting Policies
The significant accounting policies followed by the Company and its subsidiaries in preparing its consolidated financial statements are set forth in Note (1) to such financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. The Company has made no significant change in these policies during 2005.

In conjunction with the finalization of the purchase price allocation for the acquisition of Cherry Hill, the Company adjusted the estimated useful lives and estimated salvage values of the Cherry Hill fixed assets. Additionally, effective May 1, 2005, the Company prospectively changed its method of calculating depreciation for construction and computer-related equipment from accelerated methods to the straight-line method. As a result of these changes, the Cherry Hill fixed assets and fixed assets acquired by the Company on or after May 1, 2005 will have depreciation provided based on estimated useful lives ranging from five to twenty years and estimated salvage values ranging from ten to forty percent of the acquisition cost. Cherry Hill’s previous policy, which continued to be applied by the Company up until the finalization of the purchase price allocation, was to provide depreciation on a straight-line basis over lives ranging from five to thirty-nine years with no provision for estimated salvage values. The Company’s previous policy, which will continue to apply to fixed assets acquired prior to May 1, 2005 (except for the Cherry Hill fixed assets), was to provide depreciation on construction and computer-related equipment primarily using accelerated methods over lives ranging from three to seven years and the straight-line method for remaining depreciable property over lives ranging from three to thirty years with no provision for estimated salvage values. These changes were adopted to recognize a more realistic periodic charge to income based on the Company’s historical experience as well as to enhance financial statement comparability with most other public construction companies.

The effect of the change in depreciation policy in 2005 was to increase net income for the nine months ended September 30, 2005 by approximately $0.4 million (all of which relates to the Cherry Hill fixed assets acquired effective January 1, 2005) and to increase both basic and diluted earnings per common share by $0.02. Since the new depreciation policy was applied on a prospective basis and fixed assets acquired prior to May 1, 2005 have continued to be depreciated under the policy previously in effect, the cumulative effect of a change in accounting principle or pro forma effects of retroactive application disclosure is not required in accordance with the provisions of Accounting Principles Board Opinion No. 20, “Accounting Changes”.

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(3) 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 Condensed 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 September 30, 2005 and December 31, 2004, cash and cash equivalents consisted of the following (in thousands):

                                                              Sept. 30,          Dec. 31,
                                                                2005               2004
                                                           --------------    ----------------
Corporate cash and cash equivalents (available
  for general corporate purposes)                             $ 55,767            $ 81,024

Company's share of joint venture cash and
  cash equivalents (available only for joint venture
  purposes, including future distributions)                     44,332              55,281
                                                           --------------    ----------------
                                                              $100,099            $136,305
                                                           ==============    ================

(4) Acquisition of Cherry Hill Construction, Inc.
On January 21, 2005, the Company completed the acquisition of 100% of the outstanding capital stock of Cherry Hill Construction, Inc. ("Cherry Hill"), a privately held construction company based in Jessup, Maryland, for approximately $22 million in cash. Cherry Hill is an established civil contractor operating in the Mid-Atlantic and Southeast regions specializing in excavation, foundations, paving and construction of civil infrastructure. The acquisition was effective as of January 1, 2005 and, accordingly, Cherry Hill's financial results are included in the Company's consolidated results of operations and financial position beginning in the first quarter of 2005.

The transaction was accounted for using the purchase method of accounting as required by FASB Statement No. 141, "Business Combinations". The cost to acquire Cherry Hill, which consists of the $22 million cash consideration referred to above and $400,000 of other direct acquisition costs, was less than the estimated fair value of the assets acquired less the liabilities assumed. The resulting excess of the fair value of acquired net assets over cost was generally allocated as a pro rata reduction of the estimated fair value of the non-current assets acquired in accordance with SFAS No. 141. The following table summarizes fair value of the assets acquired and liabilities assumed as of January 1, 2005 after the allocation described above (in thousands):

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(4) Acquisition of Cherry Hill Construction, Inc. (continued)

     Current assets                                        $ 46,920
     Property and equipment, net                             32,155
     Other long-term assets                                     376
     Intangible assets                                          790
                                                        ------------
          Total assets acquired                            $ 80,241
     Current liabilities                                    (39,604)
     Long-term debt                                         (12,167)
     Long-term deferred tax liabilities                      (6,023)
                                                        ------------

     Total Acquisition Costs                               $ 22,447
                                                        ============

The amount assigned to intangible assets primarily represents the Company's estimate of the fair value of contract backlog acquired as of January 1, 2005 and was based on an independent appraisal. The intangible assets will be amortized using the straight-line method over an approximate 2.5-year period based on the estimated durations of the contracts acquired.

Since the acquisition was effective as of January 1, 2005, the Company's actual 2005 year to date results include Cherry Hill for the total period. Therefore, the following pro forma financial information is only presented for the comparative three month and nine month periods ended September 30, 2004 (in thousands, except per share data):

                                                Three Months Ended                 Nine Months Ended
                                                September 30, 2004                September 30, 2004
                                           -----------------------------    --------------------------------
                                               Actual        Pro forma           Actual         Pro forma
                                           -------------   -------------    ---------------  ---------------

Revenues                                       $467,743       $ 505,902         $1,443,855       $1,558,332
Gross profit                                   $ 23,633       $  29,093         $   70,892       $   87,271
Net income                                     $  6,430       $   7,730         $   29,827       $   33,727

Basic earnings per common share                $   0.26       $    0.31         $     1.24       $     1.40
Diluted earnings per common share              $   0.25       $    0.30         $     1.16       $     1.32

The pro forma results have been prepared for comparative purposes only and include certain adjustments such as increased interest expense on acquisition debt, reduced depreciation expense related to the reduction of the fixed asset carrying values due the application of purchase accounting (as described above), and additional amortization expenses related to intangible assets arising from the acquisition. The pro forma results are not necessarily indicative either of the results of operations that actually would have resulted had the acquisition been in effect on January 1, 2004 or of future results.

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(5) Contingencies and Commitments

(a) Mergentime - Perini Joint Ventures vs. WMATA Matter
On May 11, 1990, contracts with two joint ventures in which Perini Corporation, or Perini, held a 40% interest were terminated by the Washington Metropolitan Area Transit Authority, or WMATA, on two subway construction projects in the District of Columbia. The contracts were awarded to the joint ventures in 1985 and 1986. However, Perini and Mergentime Corporation, or 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 had a dispute regarding progress on the projects. After both construction contracts were terminated, 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, 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, and on February 16, 1999, the Court of Appeals vacated the District Court's final judgment and ordered the District Court to review its prior findings 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.

On February 28, 2001, a successor District Court Judge informed the parties that he could not certify adequate familiarity with the record to complete the remaining proceedings; therefore, he granted the joint ventures' motion for a new trial. The joint ventures are seeking $28.9 million, plus interest, from WMATA, and WMATA is seeking $29.3 million from the joint ventures. A new trial 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, or the Joint Venture, in which Perini Corporation, or Perini, is the 40% minority partner and Tutor-Saliba Corporation, or Tutor-Saliba, of Sylmar, California 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, or the LAMTA, seeking to recover costs for extra work required by the LAMTA in connection with the construction of certain tunnel and station projects. In February 1999, the LAMTA countered with civil claims under the California False Claims Act against the Joint Venture, Tutor-Saliba and Perini jointly and severally (together, TSP). Ronald N. Tutor, the Chairman and Chief Executive Officer of Perini since March 2000, is also the chief executive officer and the sole stockholder of Tutor-Saliba.

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(5) Contingencies and Commitments (continued)

(b) Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter (continued)
Claims concerning the construction of the LAMTA projects were tried before a jury in 2001. During trial, the Judge ruled that the Joint Venture had failed to comply with the Court's prior discovery orders and the Judge penalized TSP for the alleged non-compliance by dismissing the Joint Venture's claims and by ruling, without a jury finding, that TSP was liable to the LAMTA for damages on the LAMTA's counterclaims. The Judge then instructed the jury that TSP was liable to the LAMTA and charged the jury with the responsibility of determining the amount of the damages based on the Judge's ruling. The jury awarded the LAMTA approximately $29.6 million in damages.

On March 26, 2002, the Judge amended the award, ordering TSP to pay the LAMTA 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 appealed the Judge's discovery sanction, the subsequent judgment and the amended judgment.

On January 25, 2005, the State of California Court of Appeal issued an opinion in which it reversed the entire $63.0 million trial court's judgment and found that the trial court judge had abused his discretion and violated TSP's due process rights and imposed an impermissibly overbroad sanction in issuing terminating sanctions that prevented the Joint Venture from presenting its claims and severely limited TSP in defending itself against the LAMTA's lawsuit. The Court of Appeal also directed the trial court to dismiss LAMTA's claims that TSP had violated the Unfair Competition Law and remanded the Joint Venture's claims against LAMTA for extra work required by LAMTA and LAMTA's counterclaim under the California False Claim Act against TSP to the trial court for further proceedings, including a new trial. The LAMTA petitioned the Court of Appeal for rehearing and the California Supreme Court for review. Both petitions were denied and the case was remanded and has been reassigned for a new trial.

The ultimate financial impact of the lawsuit 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
In November 2002, the San Francisco City Attorney, on behalf of the City and County of San Francisco and the citizens of California, filed a civil action with a demand for a jury trial against the Tutor-Saliba, Perini & Buckley Joint Venture, or the Joint Venture, Perini Corporation, or Perini, Tutor-Saliba Corporation, or Tutor-Saliba, Buckley & Company, Inc., or Buckley, and their bonding companies in the United States District Court in San Francisco relating to seven projects for work on the expansion of the San Francisco International Airport. A second amended complaint was filed in July 2003 which, among other things, added Ronald N. Tutor as a defendant. The Joint Venture was established by Tutor-Saliba, Perini and Buckley through two joint venture agreements dated October 28, 1996 and February 11, 1997. The Joint Venture had agreements with the Owner to perform work ("Contracts") on only two of the above projects ("Projects") and, as part of those Contracts, the Joint Venture provided performance and payment bonds to the Owner ("Bonds").

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(5) Contingencies and Commitments (continued)

(c) City of San Francisco vs. Tutor-Saliba, Perini & Buckley Joint Venture Matter (continued)
On or about May 24, 2004, the Court granted substantial portions of the defendants' motion to dismiss the plaintiffs' second amended complaint with leave to amend certain causes of action. On June 21, 2004, the plaintiffs filed their third amended complaint. In the third amended complaint, the plaintiffs allege, among other things, various overcharges, bidding violations, violations of minority contracting regulations, civil fraud, violation of the California False Claims and Unfair Competition Acts and breach of contract. In addition, the plaintiffs allege that the defendants have violated the United States Racketeer Influenced Corrupt Organizations Act ("RICO"). The plaintiffs have asserted approximately $45 million in actual damages against the Joint Venture and each of its partners as well as substantial liquidated damages, treble damages, punitive and exemplary damages, various civil penalties and a declaration that Tutor-Saliba and the Joint Venture are irresponsible bidders.

The defendants filed a Motion to Dismiss the Third Amended Complaint in August, 2004. The Court ruled on the Motion To Dismiss, granting it in part, and denying it in part. Specifically, the Court dismissed one of the two bases Plaintiffs' alleged to establish a RICO action; the breach of contract claim against Tutor-Saliba and the Joint Venture for their alleged violations of minority contracting regulations; and the request that the Court declare Tutor-Saliba and the Joint Venture to be irresponsible bidders. The Court has set a trial date in January, 2007.

Tutor-Saliba is the managing partner of the Joint Venture and, in December 1997, Perini sold its entire 20% interest in the Joint Venture to Tutor-Saliba. As part of that sale agreement, Tutor-Saliba agreed to indemnify Perini from any liability that Perini is required to pay by reason of or arising out of any event or occurrence subsequent to the date of the sale of Perini's interest in the Joint Venture in any way connected with the joint venture agreements, the Contracts, the Projects and the Bonds. It is unclear based on the plaintiff's current complaint whether the claims against the Joint Venture arise out of events that occurred subsequent to the date of the sale of Perini's interest. The ultimate financial impact of this action is not yet determinable.

(d) Redondo/Perini Joint Venture vs. Siemens Transportation Matter
This is a binding arbitration proceeding arising out of a contract between the Redondo/Perini Joint Venture, or RPJV, a joint venture in which Perini and Redondo Construction Corp., or Redondo, each have a 50% interest and the Siemens Transportation Partnership, S.E., Puerto Rico, or STP. STP is constructing a public metropolitan passenger rail transportation project for the Commonwealth of Puerto Rico and RPJV is responsible for the design and construction of a portion of the project.

On March 19, 2002, Redondo filed a petition for reorganization under 11 U.S.C. Chapter 11 in U.S. Bankruptcy Court for the District of Puerto Rico. On December 23, 2002, RPJV filed an arbitration demand against STP seeking the recovery of additional costs related to design changes and the late completion of the design. On January 31, 2003, STP filed a counter-demand against RPJV seeking the recovery of damages allegedly related to defects in design and construction and the late completion of RPJV's work along with the repayment for alleged advances previously paid to RPJV. Arbitration evidentiary hearings commenced and are continuing.

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(5) Contingencies and Commitments (continued)

(d) Redondo/Perini Joint Venture vs. Siemens Transportation Matter (continued)

On October 7, 2004, STP filed suit against Perini in New York State court seeking enforcement against Perini of a Guaranty Agreement that allegedly guarantees the performance and payment obligations of the subject RPJV/Siemens Contract in an amount to be determined at trial, but not less than $27 million. This action has been stayed pending the arbitration.

On December 3, 2004, the Arbitrators dismissed RPJV's claims for general delay damages, and general conditions, its claim for damages under cardinal change theory and the claim amount of a subcontractor. RPJV's remaining claims are for $46.7 million. STP's revised claim is now approximately $26 million, including its claim for alleged advances already paid.

Management has made an estimate of the anticipated total cost recovery on this project and it is included in revenue recorded to date. To the extent new facts become known or the final cost recovery included in the claim settlement varies from this estimate, the impact of the change will be reflected in the financial statements at that time.

(e) Perini/Kiewit/Cashman Joint Venture-Central Artery/Tunnel Project Matter
Perini/Kiewit/Cashman Joint Venture, or PKC, a joint venture in which Perini 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, or MHD, for work performed by PKC on a portion of the Central Artery/Tunnel project in Boston, Massachusetts. 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, or the 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. On March 20, 2002, the Superior Court of the Commonwealth of Massachusetts approved PKC's request to confirm the DRB's $17.4 million award. The MHD has appealed the Superior Court decision to the Appeals Court of the Commonwealth of Massachusetts and the appeal is pending. Oral argument was held on October 19, 2005.

The DRB has also ruled on a binding basis that PKC is entitled to three additional compensation awards totaling $27.8 million for impacts and inefficiencies caused by MHD to certain of PKC's work. MHD has filed actions in the Massachusetts Superior Court seeking to vacate these awards, and PKC has answered, seeking to confirm them. PKC is awaiting a decision from the Court on cross-motions in two of these actions, which were argued in February 2005. The third action has not yet been heard.

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 removed the "Second DRB" members under this provision, although those members have continued to hear claims that were pending when it was terminated. Replacement

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(5) Contingencies and Commitments (continued)

(e) Perini/Kiewit/Cashman Joint Venture-Central Artery/Tunnel Project Matter (continued)
("Third") DRB members have been agreed upon. The issue of which claims are "pending" before which DRB has been the subject of rulings by the Second DRB and extensive litigation, some of which is still ongoing.

Over the past several months, the MHD has refused to pay the Second DRB for its services, and it contends that PKC may not pay MHD's share of those expenses. PKC has nevertheless paid the Second DRB for both parties' share. This issue is currently the subject of litigation to halt the Second DRB proceedings or overturn its decisions.

The pending claims yet to be decided by the Second DRB on a binding basis total $103.6 million (exclusive of interest). The remaining claims to be decided by the Third DRB on a binding basis total $22.8 million (exclusive of interest).

Management has made an estimate of the total anticipated cost recovery on this project and it is included in revenue recorded to date. To the extent new facts become known or the final cost recovery included in the claim settlement varies from this estimate, the impact of the change will be reflected in the financial statements at that time.

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. In September 2004, the Attorney General's office presented a list of items that it believed constitute possible false claims. PKC made a responsive presentation to the Attorney General's office in January 2005. PKC vigorously denies that it submitted any false claims and is cooperating with the Attorney General's office in the ongoing investigation.

(f) $21.25 Preferred Shareholders Class Action Lawsuit
On October 15, 2002, Frederick Doppelt, Arthur I. Caplan and Leland D. Zulch filed a lawsuit individually, and as representatives of a class of holders of the Company's $2.125 Depositary Convertible Exchangeable Preferred Shares, representing 1/10 Share of $21.25 Convertible Exchangeable Preferred Stock ("Depositary Shares") against certain current and former directors of Perini. Mr. Doppelt is a current director of Perini and Mr. Caplan is a former director of Perini. Specifically, the original complaint alleged that the defendants breached their fiduciary duties owed to the holders of the Depositary Shares and to Perini. The plaintiffs principally alleged that the defendants improperly authorized the exchange of Series B Preferred Stock for common stock while simultaneously refusing to pay accrued dividends due on the Depositary Shares.

In July 2003, the plaintiffs filed an amended complaint. The amended complaint added an allegation that the defendants had further breached their fiduciary duties by authorizing a tender offer for the purchase of up to 90% of the Depositary Shares and an allegation that the collective actions of the defendants constitute unfair and deceptive business practices under the provisions of the Massachusetts Consumer Protection Act. The amended complaint withdrew the allegation of a breach of fiduciary duty owed to Perini, but retained the allegation

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(5) Contingencies and Commitments (continued)

(f) $21.25 Preferred Shareholders Class Action Lawsuit (continued)
with respect to a breach of those duties owed to the holders of the Depositary Shares.

On April 12, 2004, pursuant to Defendants' Motions to Dismiss, the Court dismissed the claim under the Massachusetts Consumer Protection Act. The Court did not dismiss the claim for breach of fiduciary duty, except as such claim relates to the tender offer for the purchase the Company's Depositary Shares. Pursuant to the Court's April 12, 2004 Order, in May 2004 the plaintiffs filed a third amended complaint and a motion for class certification. Defendants filed an answer denying any and all claims of wrongdoing and asserting affirmative defenses.

On November 30, 2004, Perini announced that the parties had reached an agreement for settlement of the Action. Under the terms of the settlement, Perini would purchase all of the Depositary Shares submitted in the settlement for consideration per share of $19.00 in cash and one share of Perini common stock.

On April 19, 2005, the District Court of Massachusetts conditionally certified a class of holders of Depositary Shares for purposes of settlement only. On May 5, 2005, the Court preliminarily approved the settlement as being fair, just, reasonable and adequate, pending a final hearing.

On September 21, 2005, the Court gave final approval to the settlement as being fair, just, reasonable and adequate.

The settlement and the number of Depositary Shares participating in the settlement became final on October 24, 2005. Under the terms of the settlement, effective November 2, 2005, the Company purchased all of the 374,185 participating Depositary Shares that were submitted for $19.00 in cash and one share of the Company's common stock for each Depositary Share for an aggregate of $7.1 million in cash and 374,185 shares of common stock. After consummation of the settlement, 185,088 Depositary Shares remain outstanding and Frederick Doppelt will resign from his position as a director of Perini.

(6) Provision For Income Taxes
The provision for income taxes reflects a lower-than-normal tax rate for the nine months ended September 30, 2004 due to the realization of a portion of the federal tax benefit not recognized in prior years due to certain accounting limitations.

(7) Earnings per Common Share
Basic earnings per common share was computed by dividing net income less dividends accrued on the $21.25 Preferred Stock during the period (see Note 8) by the weighted average number of common shares outstanding. Diluted earnings per common share was similarly computed after giving consideration to the dilutive effect of stock options, warrants and restricted stock units outstanding on the weighted average number of common shares outstanding.

There were no options or stock purchase warrants whose exercise price exceeded the average market price of the Common Stock at September 30, 2005 and 2004. The effect of the assumed conversion of the Company's outstanding $21.25 Preferred Stock into Common Stock was antidilutive for all periods presented.

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(8) Dividends
(a) Common Stock
There were no cash dividends declared or paid on the Company's outstanding Common Stock during the periods presented in the consolidated condensed financial statements included herein.

(b) $21.25 Preferred Stock
The covenants of the Company's prior credit agreements required the Company to suspend the payment of quarterly dividends on its $21.25 Preferred Stock until certain financial criteria were met. While quarterly dividends on the $21.25 Preferred Stock have not been paid since 1995, they have been fully accrued due to the "cumulative" feature of the $21.25 Preferred Stock. Accordingly, the aggregate amount of dividends in arrears at September 30, 2005 is approximately $11.9 million, which represents approximately $212.50 per share of $21.25 Preferred Stock or approximately $21.25 per Depositary Share. Based on the terms of the settlement with holders of the Company's $2.125 Depositary Shares (see Notes 5(f) and 11(c)), approximately $5.1 million of accrued dividends are included in "Total Current Liabilities" and the remaining $6.8 million of accrued dividends are included in "Other Long-term Liabilities" in the Consolidated Condensed Balance Sheets as of September 30, 2005. 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 did so at each of the last eight annual meetings of stockholders.

(9) Business Segments
The following tables set forth certain business segment information relating to the Company's operations for the nine month and three month periods ended September 30, 2005 and 2004 (in thousands):

Nine months ended September 30, 2005
                                                                   Reportable Segments
                                               ------------------------------------------------------------
                                                                                Management                                          Consolidated
                                                 Building         Civil         Services         Totals           Corporate             Total
                                               --------------  -------------  -------------   -------------    ----------------    ----------------

Revenues                                         $   719,415      $ 191,956     $ 218,880      $ 1,130,251           $       -         $ 1,130,251
Income from Construction Operations              $    17,595      $   8,014     $  15,829      $    41,438           $ (10,209) *      $    31,229
Assets                                           $   235,391      $ 279,029     $  39,817      $   554,237           $  63,776  **     $   618,013

Nine months ended September 30, 2004
                                                                   Reportable Segments
                                               ------------------------------------------------------------
                                                                                Management                                          Consolidated
                                                 Building         Civil         Services         Totals           Corporate             Total
                                               --------------  -------------  -------------   -------------    ----------------    ----------------

Revenues                                         $ 1,008,112      $ 110,470     $ 325,273      $ 1,443,855            $      -         $ 1,443,855
Income from Construction Operations              $    21,670      $   2,081     $  22,720      $    46,471            $ (7,299) *      $    39,172
Assets                                           $   291,547      $ 228,139     $  47,160      $   566,846            $ 87,371  **     $   654,217

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(9) Business Segments (continued)

Three months ended September 30, 2005
                                                                   Reportable Segments
                                               ------------------------------------------------------------
                                                                                Management                                          Consolidated
                                                 Building         Civil         Services         Totals           Corporate             Total
                                               --------------  -------------  -------------   -------------    ----------------    ----------------

Revenues                                         $   246,976       $ 77,860     $ 55,478         $ 380,314            $      -           $ 380,314
Income from Construction Operations              $     6,661       $  3,450     $  3,686         $  13,797            $ (3,635) *        $  10,162

Three months ended September 30, 2004
                                                                   Reportable Segments
                                               ------------------------------------------------------------
                                                                                Management                                          Consolidated
                                                 Building         Civil         Services         Totals           Corporate             Total
                                               --------------  -------------  -------------   -------------    ----------------    ----------------

Revenues                                         $   346,602       $ 46,665     $ 74,476         $ 467,743            $      -           $ 467,743
Income from Construction Operations              $     6,988       $    852     $  5,653         $  13,493            $ (2,772) *        $  10,721

* In all periods, consists of corporate general and administrative expenses.

** In all periods, corporate assets consist principally of cash and cash equivalents, net deferred tax asset, land held for sale and other investments available for general corporate purposes.

(10) Employee Pension 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 Company also has an unfunded supplemental retirement plan for certain employees whose benefits under the defined benefit plan are reduced because of compensation limitations under federal tax laws. In accordance with SFAS No. 132R, “Employers’ Disclosures About Pensions and Other Post-Retirement Benefits”, the pension disclosure presented below includes aggregated amounts for both of the Company’s plans. The following table sets forth the net pension cost by component for the three month and nine month periods ended September 30, 2005 and 2004 (in thousands):

                                                             Three Months                Nine Months
                                                           Ended Sept. 30,             Ended Sept. 30,
                                                       -------------------------  --------------------------
                                                          2005          2004         2005           2004
                                                       ----------   ------------  ----------    ------------

Service cost - benefits earned during the period*       $      -        $   174     $     -         $ 1,245
Interest cost on projected benefit obligation                997          1,012       3,139           3,404
Expected return on plan assets                            (1,175)        (1,032)     (3,099)         (2,967)
Amortization of prior service costs                            -             (7)          -              11
Recognized actuarial loss                                    355             10       1,245             935
                                                       ----------   ------------  ----------    ------------

  Net periodic pension cost                              $   177        $   157     $ 1,285         $ 2,628

Effect of curtailment*                                         -              -           -             247
                                                       ----------   ------------  ----------    ------------
     Total Pension Cost                                  $   177        $   157     $ 1,285         $ 2,875

                                                       ==========   ============  ==========    ============

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(10) Employee Pension Plans (continued)

On April 1, 2005, the Company made a $9.0 million contribution to its defined benefit pension plan and does not expect to make further contributions to the pension plan in 2005.

* Effective June 1, 2004, all benefit accruals under the Company's pension plan were frozen; however, the current vested benefit will be preserved. In accordance with SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits", a one-time charge of $0.2 million was recorded in 2004.

(11) Subsequent Events

(a) Acquisition of Rudolph & Sletten, Inc.
On October 3, 2005, the Company completed the acquisition of Rudolph & Sletten, Inc., a privately held construction and construction management company, for approximately $53 million in cash. Based in Redwood City, California, and covering the major California construction markets of Los Angeles, Silicon Valley, San Francisco and Sacramento, Rudolph & Sletten is an established building contractor and construction management company specializing in corporate campuses, healthcare, biotech, pharmaceutical and high-tech projects. Rudolph & Sletten will be included in the Company's consolidated results of operations and financial position beginning in the fourth quarter of 2005.

(b) Amended and Restated Credit Agreement
On October 14, 2005, the Company entered into an Amended and Restated Credit Agreement with Bank of America, N.A. and TD Banknorth (the "Amended Agreement"). The Amended Agreement amends and restates in its entirety a previously existing credit agreement dated as of January 23, 2002, as amended through March 31, 2005 (the "Existing Agreement").

The Amended Agreement provides for a secured revolving credit facility (the "Revolving Facility") of up to $50 million, unchanged from the Existing Agreement. The Amended Agreement also provides for an increase in the aggregate amount of letters of credit that may be issued under the agreement from $7.5 million to $15 million. Outstanding letters of credit reduce availability under the Revolving Facility on a dollar-for-dollar basis. The termination date of the Revolving Facility was extended from June 30, 2007 to June 30, 2008.

In addition, the Amended Agreement provides for a new $30 million secured term loan (the "Term Loan"), which was used to refinance a portion of the purchase price for the Rudolph and Sletten acquisition. The new Term Loan amortizes in equal quarterly principal payments of $1.5 million commencing December 31, 2005 and continuing through October 14, 2010.

At the Company's option, borrowings outstanding under the Amended Agreement bear interest at a fluctuating rate equal to (a) the adjusted LIBOR rate, as defined, plus 200 basis points or (b) the prime rate, as defined.

Similar to the Existing Agreement, the Amended Agreement requires the Company, among other things, to meet certain financial covenants, including maintaining minimum tangible net worth levels, fixed charge coverage and operating profit levels as well as a minimum working

PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)

(11) Subsequent Events (continued)

(b) Amended and Restated Credit Agreement (continued)
capital ratio. The Amended Agreement also includes operational covenants customary for facilities of this type, including restrictions on incurring additional indebtedness without the consent of the lenders, other than for insurance premiums and construction equipment, as well as limitations on liens, investments, restricted payments, mergers and the purchase and sale of assets outside of the normal course of business. Similar to the Existing Agreement, the Company's obligations under the Amended Agreement are guaranteed by substantially all of the Company's current and future subsidiaries, and secured by substantially all of the Company's and its subsidiaries' assets, including a pledge of all of the capital stock of the subsidiaries.

(c) Settlement of Preferred Stock Class Action Lawsuit
On September 28, 2005, the Company announced that the United States District Court for the District of Massachusetts approved the previously announced settlement of the class action lawsuit filed by holders of our $2.125 Depositary Convertible Exchangeable Preferred Shares (the "Depositary Shares"). The settlement and the number of Depositary Shares participating in the settlement became final on October 24, 2005. Under the terms of the settlement, effective November 2, 2005, the Company purchased all of the 374,185 participating Depositary Shares that were submitted for $19.00 in cash and one share of the Company's common stock for each Depositary Share for an aggregate of $7.1 million in cash and 374,185 shares of common stock.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

Perini Corporation is a leading construction services company, based on revenues, as ranked by Engineering News-Record, offering diversified general contracting, construction management and design-build services to private clients and public agencies throughout the world. We have provided construction services since 1894 and have established a strong reputation within our markets for executing large, complex projects on time and within budget while adhering to strict quality control measures. We offer general contracting, preconstruction planning and comprehensive project management services, including the planning and scheduling of the manpower, equipment, materials and subcontractors required for a project. We also offer self-performed construction services including site work, concrete forming and placement and steel erection.

Our business is conducted through three primary segments: building, civil, and management services. Our building segment focuses on large, complex projects in the hospitality and gaming, sports and entertainment, educational, transportation and healthcare markets. Our civil segment is involved in public works construction primarily in the northeast and mid-Atlantic regions of the United States, including the repair, replacement and reconstruction of the United States public infrastructure such as highways, bridges and mass transit systems. Our management services segment provides diversified construction, design-build and maintenance services to the U.S. military and government agencies as well as power producers, surety companies and multi-national corporations.

Significant Accounting Policies

Our significant accounting policies are described in Note 1 of Notes to Consolidated Financial Statements included in Item 15 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2004. Our critical accounting policies are also identified and discussed in Item 7 of said Annual Report on Form 10-K. We have made no significant change in these policies during 2005.

In conjunction with the finalization of the purchase price allocation for the acquisition of Cherry Hill, the Company adjusted the estimated useful lives and estimated salvage values of the Cherry Hill fixed assets. Additionally, effective May 1, 2005, the Company prospectively changed its method of calculating depreciation for construction and computer-related equipment from accelerated methods to the straight-line method. As a result of these changes, the Cherry Hill fixed assets and fixed assets acquired by the Company on or after May 1, 2005 will have depreciation provided based on estimated useful lives ranging from five to twenty years and estimated salvage values ranging from ten to forty percent of the acquisition cost. Cherry Hill's previous policy, which continued to be applied by the Company up until the finalization of the purchase price allocation, was to provide depreciation on a straight-line basis over lives ranging from five to thirty-nine years with no provision for estimated salvage values. The Company's previous policy, which will continue to apply to fixed assets acquired prior to May 1, 2005 (except for the Cherry Hill fixed assets), was to provide depreciation on construction and computer-related equipment primarily using accelerated methods over lives ranging from three to seven years and the straight-line method for remaining depreciable property over lives ranging from three to thirty years with no provision for estimated salvage values. These changes were adopted to recognize a more realistic periodic charge to income based on the Company's historical experience as well as to enhance financial statement comparability with most other public construction companies.

Recent Developments

Settlement of Preferred Stock Class Action Lawsuit

On September 28, 2005, we announced that the United States District Court for the District of Massachusetts approved the previously announced settlement of the class action lawsuit filed by holders of our $2.125 Depositary Convertible Exchangeable Preferred Shares (the "Depositary Shares"). The settlement and the number of Depositary Shares participating in the settlement became final on October 24, 2005. Under the terms of the settlement, effective November 2, 2005, we purchased all of the 374,185 participating Depositary Shares that were submitted for $19.00 in cash and one share of our common stock for each Depositary Share for an aggregate of $7.1 million in cash and 374,185 shares of common stock. After consummation of the settlement, 185,088 Depositary Shares remain outstanding and Frederick Doppelt will resign from his position as a director of Perini.

As a result of the settlement, approximately $2.3 million of previously accrued and unpaid dividends relating to the 374,185 Depositary Shares that we purchased will be reversed. We estimate that this reversal will result in a favorable impact on our fourth quarter and full year 2005 diluted earnings per share of approximately $0.09 per share.

Acquisition of Rudolph and Sletten, Inc.

On October 3, 2005, we completed our acquisition of Rudolph and Sletten, Inc. Based in Redwood City, California, and covering the major California construction markets of Los Angeles, Silicon Valley, San Francisco and Sacramento, Rudolph and Sletten is an established building contractor and construction management company with approximately $650 million in annual revenues for its fiscal year ended September 30, 2005 and an estimated backlog of $945 million at September 30, 2005. Rudolph and Sletten specializes in corporate campuses, healthcare, biotech, pharmaceutical and high-tech projects. Rudolph and Sletten will operate as a wholly-owned subsidiary of our company, and the existing Rudolph and Sletten senior management team will remain in place.

We purchased 100% of Rudolph and Sletten's capital stock for approximately $53 million in cash. The transaction was financed with cash on hand, a portion of which was subsequently refinanced with a new $30 million term loan under our amended and restated credit agreement. See "Amended and Restated Credit Agreement" below for a description of our amended and restated credit agreement.

We believe that the Rudolph and Sletten acquisition represents a strong strategic fit with our existing operations, and expands our building construction capabilities in the western United States. In addition, the acquisition of Rudolph and Sletten is expected to provide us with capabilities and resources to meet the growing requirements of our building segment backlog, particularly in the gaming market. The acquisition will also contribute Rudolph and Sletten's strong base of business in attractive market segments such as corporate campuses and healthcare facilities, further diversifying our end markets.

Amended and Restated Credit Agreement

On October 14, 2005, we entered into an Amended and Restated Credit Agreement with Bank of America, N.A. and TD Banknorth (the "Amended Agreement"). The Amended Agreement amends and restates in its entirety our previously existing credit agreement dated as of January 23, 2002, as amended through March 31, 2005 (the "Existing Agreement").

basis. The termination date of the Revolving Facility was extended from June 30, 2007 to June 30, 2008.

Significant New Work Awards

In October 2005, we announced the receipt of several significant new contracts by our building construction segment in the hospitality and gaming market. Both the Trump International Hotel and Tower Las Vegas and The Cosmopolitan Resort and Casino in Las Vegas with a combined estimated construction contract value in excess of $1.4 billion were included in our $3.3 billion backlog at September 30, 2005. In addition, we announced the receipt of a $462.8 million contract for construction of the 2 million-square-foot expansion of the Foxwoods Resort Casino in southeastern Connecticut which is not included in our $3.3 billion backlog at September 30, 2005. All three projects are currently scheduled for completion in early to mid-2008.

In May 2005, we announced that we have been selected for a multi-billion construction contract from MGM MIRAGE to build a major portion of Project CityCenter in Las Vegas, Nevada. The estimated value of our construction contract is in excess of $3 billion, and has not been included in our $3.33 billion backlog at September 30, 2005 pending finalization of contract scope, terms and conditions. MGM MIRAGE has stated it plans to complete the entire project by the end of 2009.

Backlog Analysis for 2005

The following table provides an analysis of our backlog by business segment for the nine month period ended September 30, 2005:

                                     Backlog at           New Business             Revenue               Backlog at
                                  December 31, 2004        Awarded               Recognized            Sept. 30, 2005
                                  -----------------   ------------------     -------------------     ------------------
                                                                    (In thousands)
Building                               $   570.1              $ 2,645.7               $   719.4              $ 2,496.4
Civil                                      230.7                  472.2                   192.0                  510.9
Management Services                        350.7                  187.0                   218.9                  318.8
                                -----------------     ------------------     -------------------     ------------------
Total                                  $ 1,151.5              $ 3,304.9               $ 1,130.3              $ 3,326.1
                                =================     ==================     ===================     ==================

Results of Operations

Comparison of the Third Quarter of 2005 with the Third Quarter of 2004

Although revenues decreased by $87.4 million as the timing of new work awards was slower than anticipated, gross profit in 2005 increased by $1.3 million, from $23.6 million in 2004 to $24.9 million in 2005, due primarily to the impact of the Cherry Hill acquisition in January 2005. Moreover, all of the Company's business segments experienced improved gross margins in 2005. However, income before income taxes of $9.8 million was unchanged from that experienced in 2004, due primarily to an increase in general and administrative expenses of $1.8million (or 14.0%) due to the inclusion of expenses of Cherry Hill in 2005 and an increase in compensation expense related to the amortization of certain restricted stock awards granted in the second half of 2004. The increase in general and administrative expenses was partly offset by a $0.7 million decrease in other income (expense). In addition, interest expense increased by $0.2 million and the provision for income taxes increased by $0.4 million. As a result, net income decreased by $0.4 million (or 6.2%), from $6.4 million in 2004 to $6.0 million in 2005. Basic earnings per common share were $0.22 for the three months ended September 30, 2005, compared to $0.26 for the three months ended September 30, 2004. Diluted earnings per common share were

$0.22 for the three months ended September 30, 2005, compared to $0.25 for the three months ended September 30, 2004.

                                      Revenues for the
                                Three Months Ended Sept. 30,
                            --------------------------------------      Increase           %
                                2005                   2004            (Decrease)      Change
                            --------------        ----------------   ----------------------------
                                                (In millions)

Building                          $ 247.0                 $ 346.6         $ (99.6)        (28.7)%
Civil                                77.9                    46.7            31.2          66.8 %
Management Services                  55.5                    74.5           (19.0)        (25.5)%
                            --------------        ----------------   -------------
Total                             $ 380.4                 $ 467.8         $ (87.4)        (18.7)%
                            ==============        ================   =============

Overall revenues decreased by $87.4 million (or 18.7%), from $467.8 million in 2004 to $380.4 million in 2005. This decrease was due primarily to a decrease in building construction revenues of $99.6 million (or 28.7%), from $346.6 million in 2004 to $247.0 million in 2005, due primarily to the timing of the start-up of new work in the hospitality and gaming market as the timing of new work awards was slower than anticipated. Management services revenues decreased by $19.0 million (or 25.5%), from $74.5 million in 2004 to $55.5 million in 2005, due primarily to a decreased volume of work related to the rebuilding of Iraq. These decreases were partly offset by an increase in civil construction revenues of $31.2 million (or 66.8%), from $46.7 million in 2004 to $77.9 million in 2005, due primarily to the impact of the Cherry Hill acquisition.

                                      Income from Construction
                                         Operations for the
                                Three Months Ended Sept. 30,                 Increase
                                --------------------------------------      (Decrease)           %
                                      2005                 2004              In Income         Change
                                -----------------    -----------------    ---------------   -------------
                                                     (In millions)

Building                            $  6.7               $  7.0               $ (0.3)          (4.3)%
Civil                                  3.4                  0.9                  2.5          277.8 %
Management Services                    3.7                  5.6                 (1.9)         (33.9)%
                                -----------------    -----------------    ---------------
Subtotal                            $ 13.8               $ 13.5               $  0.3            2.2 %

Less:  Corporate                      (3.7)                (2.8)                (0.9)         (32.1)%
                                -----------------    -----------------    ---------------
Total                               $ 10.1               $ 10.7               $ (0.6)          (5.6)%
                                =================    =================    ===============

Income from operations (excluding corporate) increased by $0.3 million (or 2.2%), from $13.5 million in 2004 to $13.8 million in 2005. Building construction income from operations decreased by $0.3 million (or 4.3%), from $7.0 million in 2004 to $6.7 million in 2005, due primarily to the decrease in revenues discussed above. Partly offsetting the negative impact of the decrease in building construction revenues was a higher gross profit margin, largely due to profit increases recognized upon the completion and close-out of several hospitality and gaming market projects. Management services income from operations decreased by $1.9 million (or 33.9%), from $5.6 million in 2004 to $3.7 million in 2005, also due primarily to the decrease in revenues discussed above. Civil construction income from operations increased by $2.5 million (or 277.8%), from $0.9 million in 2004 to $3.4 million in 2005, due primarily to the impact of the Cherry Hill acquisition. Partly offsetting the higher civil construction gross profit margin in 2005 was a $1.6 million increase in civil construction-related general and administrative expenses, due primarily to the addition of Cherry Hill in 2005. In addition, income from operations was negatively impacted by a $0.9 million increase in corporate general and administrative expenses, from $2.8 million in 2004 to $3.7 million in 2005, due primarily to a $0.5 million increase in compensation expense related to the amortization of certain restricted

stock awards granted in the second half of 2004.

Other income (expense) decreased by $0.7 million, from an expense of $0.7 million in 2004 to zero in 2005, due primarily to $0.2 million in expenses recorded in the third quarter of 2004 related to a public stock offering as well as a $0.2 million decrease in the amortization of the intangible asset established in conjunction with the acquisition of Cummings in January 2003 (which is now fully amortized).

Interest expense increased by $0.2 million, from $0.2 million in 2004 to $0.4 million in 2005, due to interest expense on mortgage debt and equipment financing debt assumed in conjunction with the Cherry Hill acquisition.

The provision for income taxes increased by $0.4 million in 2005, from $3.4 million in 2004 to $3.8 million in 2005, based on a higher effective tax rate of 39.1% in 2005 compared to 34.6% in 2004.

Comparison of the Nine Months Ended September 30, 2005 with the Nine Months Ended September 30, 2004

Although revenues decreased by $313.6 million as the timing of new work awards was slower than anticipated, gross profit in 2005 increased by $1.3 million (or 1.8%), from $70.9 million in 2004 to $72.2 million in 2005, as all of the Company's business segments experienced improved gross margins in 2005. However, income before income taxes decreased by $5.2 million (or 15.0%), from $34.7 million in 2004 to $29.5 million in 2005, due primarily to an increase in general and administrative expenses of $9.3 million (or 29.0%) due to the addition of Cherry Hill in 2005 and an increase in compensation expense related to the amortization of certain restricted stock awards granted in the second half of 2004. The increase in general and administrative expenses was partly offset by a $3.3 million decrease in other income (expense). In addition, interest expense increased by $0.6 million and the provision for income taxes increased by $6.6 million, from $4.9 million in 2004 to $11.5 million in 2005, due to the realization in 2004 of a portion of the federal tax benefit not recognized in prior years due to certain accounting limitations. As a result, net income decreased by $11.8 million (or 39.6%), from $29.8 million in 2004 to $18.0 million in 2005. Basic earnings per common share were $0.67 for the nine months ended September 30, 2005, compared to $1.24 for the nine months ended September 30, 2004. Diluted earnings per common share were $0.66 for the nine months ended September 30, 2005, compared to $1.16 for the nine months ended September 30, 2004.

Assuming an effective income tax rate of 39%, pro forma net income for the nine months ended September 30, 2004 would have been $21.2 million, compared to reported net income of $18.0 million for the nine months ended September 30, 2005. Similarly, pro forma basic earnings per share for the nine months ended September 30, 2004 would have been $0.87, compared to reported basic earnings per share of $0.67 for the nine months ended September 30, 2005. Pro forma diluted earnings per share for the nine months ended September 30, 2004 would have been $0.81, compared to reported diluted earnings per share of $0.66 for the nine months ended September 30, 2005.

                                         Revenues for the
                                  Nine Months Ended Sept. 30,
                             --------------------------------------    Increase             %
                                   2005                2004           (Decrease)          Change
                             -----------------   ------------------  --------------    -------------
                                                   (In millions)

Building                         $   719.4            $ 1,008.1         $ (288.7)         (28.6)%
Civil                                192.0                110.5             81.5           73.8 %
Management Services                  218.9                325.3           (106.4)         (32.7)%
                             -----------------   ------------------  --------------
Total                            $ 1,130.3            $ 1,443.9         $ (313.6)         (21.7)%
                             =================   ==================  ==============

Overall revenues decreased by $313.6 million (or 21.7%), from $1,443.9 million in 2004 to $1,130.3 million in 2005. This decrease was due primarily to a decrease in building construction revenues of $288.7 million (or 28.6%), from $1,008.1 million in 2004 to $719.4 million in 2005, due primarily to the timing of the start-up of new work in the hospitality and gaming market as the timing of new work awards was slower than anticipated. Management services revenues decreased by $106.4 million (or 32.7%), from $325.3 million in 2004 to $218.9 million in 2005 due primarily to a decreased volume of work related to the rebuilding of Iraq. These decreases were partly offset by an increase in civil construction revenues of $81.5 million (or 73.8%), from $110.5 million in 2004 to $192.0 million in 2005, due primarily to the impact of the Cherry Hill acquisition.

                                 Income from Construction
                                    Operations for the
                            Nine Months Ended Sept. 30,               Increase
                            -----------------------------------      (Decrease)           %
                                2005                 2004            In Income         Change
                            --------------      ---------------    --------------   -------------
                                                 (In millions)

Building                        $ 17.6               $ 21.7            $ (4.1)          (18.9)%
Civil                              8.0                  2.1               5.9           281.0 %
Management Services               15.8                 22.7              (6.9)          (30.4)%
                            --------------      ---------------    --------------
Subtotal                        $ 41.4               $ 46.5            $ (5.1)          (11.0)%

Less:  Corporate                 (10.2)                (7.3)             (2.9)          (39.7)%
                            --------------      ---------------    --------------
Total                           $ 31.2               $ 39.2            $ (8.0)          (20.4)%
                            ==============      ===============    ==============

Income from operations (excluding corporate) decreased by $5.1 million (or 11.0%), from $46.5 million in 2004 to $41.4 million in 2005. Building construction income from operations decreased by $4.1 million (or 18.9%), from $21.7 million in 2004 to $17.6 million in 2005, due primarily to the decrease in revenues discussed above. Partly offsetting the negative impact of the decrease in building construction revenues was a higher gross profit margin, largely due to profit increases recognized upon the completion and close-out of several hospitality and gaming market projects. Management services income from operations decreased by $6.9 million (or 30.4%), from $22.7 million in 2004 to $15.8 million in 2005, also due primarily to the decrease in revenues discussed above. Partly offsetting the negative impact of the decrease in management services revenues was a higher gross profit margin, largely due to profit increases recognized upon the completion and close-out of two overseas projects. Civil construction income from operations increased by $5.9 million (or 281.0%), from $2.1 million in 2004 to $8.0 million in 2005, due primarily to the impact of the Cherry Hill acquisition. Partly offsetting the higher civil construction gross profit margin in 2005 was a $5.3 million increase in civil construction-related general and administrative expenses, due primarily to the addition of Cherry Hill in 2005. In addition, income from operations was negatively impacted by a $2.9 million increase in corporate general and administrative expenses, from $7.3 million in 2004 to $10.2 million in 2005, due primarily to a $2.9 million increase in compensation expense related to the amortization of certain restricted stock awards granted in the second half of 2004.

Other income (expense) decreased by $3.3 million, from an expense of $3.9 million in 2004 to an expense of

$0.6 million in 2005, due primarily to a decrease of $1.5 million of expenses related to a public stock offering, as well as a $1.4 million decrease in the amortization of the intangible asset established in conjunction with the acquisition of Cummings in January 2003 (which is now fully amortized), and a $0.2 million one-time charge recorded in the second quarter of 2004 due to the decision to freeze all benefit accruals under our defined benefit pension plan effective June 1, 2004.

Interest expense increased by $0.6 million, from $0.5 million in 2004 to $1.1 million in 2005, due to interest expense on mortgage debt and equipment financing debt assumed in conjunction with the Cherry Hill acquisition.

The provision for income taxes increased by $6.6 million, from $4.9 million in 2004 to $11.5 million in 2005, since the results for the nine months ended September 30, 2004 reflect a lower than normal tax rate due to the realization of a portion of the federal tax benefit not recognized in prior years due to certain accounting limitations.

Reconciliation of Reported Net Income to Pro Forma Net Income for the Nine Months Ended September 30, 2004

As mentioned above, our reported net income was $29.8 million for the nine months ended September 30, 2004. Our reported basic earnings per common share were $1.24 for the nine months ended September 30, 2004. Our reported diluted earnings per share were $1.16 for the nine months ended September 30, 2004. Assuming an effective income tax rate of 39%, pro forma net income for the nine months ended September 30, 2004 would have been $21.2 million, as compared to reported net income of $29.8 million for the nine months ended September 30, 2004. Similarly, pro forma basic earnings per common share for the nine months ended September 30, 2004 would have been $0.87, as compared to reported basic earnings per common share of $1.24 for the nine months ended September 30, 2004. Pro forma diluted earnings per common share for the nine months ended September 30, 2004 would have been $0.81, as compared to reported diluted earnings per common share of $1.16 for the nine months ended September 30, 2004. The reconciliation of reported net income to pro forma net income for the nine months ended September 30, 2004 is set forth below:


                                                                                                 Nine Months
                                                                                                     Ended
                                                                                               September 30, 2004
                                                                                            -------------------------
                                                                                             (In thousands, except
                                                                                                per share data)
Reported net income                                                                                 $ 29,827
Plus:  Provision for income taxes                                                                      4,900
                                                                                            -------------------------
Income before income taxes                                                                            34,727
Provision for income taxes assuming 39% effective rate                                                13,544
                                                                                            -------------------------
Pro forma net income                                                                                $ 21,183

Less: Dividends accrued on Preferred Stock                                                              (891)
                                                                                            -------------------------
Pro forma total available for common stockholders                                                   $ 20,292
                                                                                            =========================


Pro forma basic earnings per common share                                                           $   0.87
                                                                                            =========================

Pro forma diluted earnings per common share                                                         $   0.81
                                                                                            =========================

Weighted average common shares outstanding:
   Basic                                                                                              23,376
   Effect of dilutive stock options, warrants and restricted stock units outstanding                   1,550
                                                                                            -------------------------
   Diluted                                                                                            24,926
                                                                                            -------------------------

No reconciliation of reported net income to pro forma net income for the nine month period ended September

30, 2005 and the three month periods ended September 30, 2005 and 2004 are provided since the actual effective tax rate approximates the pro forma tax rate of 39%; therefore, there would be no significant difference between actual results and pro forma results for nine month period ended September 30, 2005 and for the three month periods ended September 30, 2005 and 2004.

To supplement our unaudited consolidated financial statements presented on a generally accepted accounting principles (GAAP) basis, we sometimes use non-GAAP measures of net income, earnings per share and other measures that we believe are appropriate to enhance an overall understanding of our historical financial performance and future prospects. The non-GAAP results, which are adjusted to exclude certain costs, expenses, gains and losses from the comparable GAAP measures, are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside of our core operating results. These non-GAAP results are among the indicators management uses as a basis for evaluating our financial performance as well as for forecasting future periods. For these reasons, management believes these non-GAAP measures can be useful to investors, potential investors and others. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or earnings per share prepared in accordance with GAAP.

Liquidity and Capital Resources

Cash and Working Capital
On October 14, 2005, we entered into an Amended and Restated Credit Agreement with Bank of America, N.A. and TD Banknorth (the "Amended Agreement"). The Amended Agreement amends and restates in its entirety our previously existing credit agreement dated as of January 23, 2002, as amended through March 31, 2005 (the "Existing Agreement").

Interest accrues on borrowings under the Amended Agreement at an annual rate equal to, at our option, either (1) adjusted LIBOR plus 200 basis points or (2) the prime rate. Outstanding letters of credit under the Amended Agreement are subject to a per annum fee equal to 150 basis points. We are also required to pay administrative fees, commitment fees, letter of credit issuance and administration fees and certain expenses, and to provide certain indemnities, all of which we believe are customary for financings of this type.

Similar to the Existing Agreement, the Amended Agreement requires us to meet certain financial covenants, including:

a minimum working capital ratio of current assets over current liabilities of at least 1.20 to 1.00 at the end of each fiscal quarter;
a minimum tangible net worth of at least $150 million plus, on a cumulative basis, 50% of consolidated net income for each consecutive two fiscal quarters ended on June 30 and December 31 of each fiscal year;
a minimum fixed charge coverage ratio of consolidated EBITDA (net income plus taxes, interest, depreciation and amortization and less capital expenditures) over covered charges

(which include interest expense, cash taxes, scheduled payments of principal and interest and current period dividends on our outstanding preferred stock) of at least 1.50 to 1.00 as of the end of each fiscal quarter, calculated for the four consecutive fiscal quarters then ending;

minimum consolidated net income of at least $1.00 for each fiscal quarter; and
minimum net operating profit levels of at least $27.5 million in the aggregate for the fiscal year ending December 31, 2005, at least $35 million in the aggregate for each of the four consecutive quarter periods ending March 31, 2006, June 30, 2006, September 30, 2006 and December 31, 2006, and at least $40 million in the aggregate for the four consecutive quarter period ending March 31, 2007 and for each period of four consecutive fiscal quarters ending thereafter.

The Amended Agreement also includes operating covenants which we believe are customary for financings of this type, including restrictions on indebtedness, liens, investments, restricted payments, mergers and the purchase and sale of assets outside of the normal course of business. The Amended Agreement also provides for events of default which we believe are customary for financings of this type, with corresponding grace periods. The operating covenants and events of default under our Amended Agreement are substantially similar to those under the Existing Agreement.

As with the Existing Agreement, our obligations outstanding under the Amended Agreement are guaranteed by substantially all of our current and future subsidiaries, and are secured by substantially all of our and our subsidiaries' assets, including a pledge of all of the capital stock of our domestic subsidiaries.

Cash and cash equivalents as reported in the accompanying consolidated condensed financial statements consist of amounts held by us as well as our proportionate share of amounts held by construction joint ventures. Cash held by us 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 us and to the other joint venture participants in accordance with our respective percentage interest after the joint venture partners determine that a cash distribution is prudent. Cash distributions received by us from our construction joint ventures are then available for general corporate purposes. At September 30, 2005 and December 31, 2004, cash held by us and available for general corporate purposes was $55.8 million and $81.0 million, respectively, and our proportionate share of cash held by joint ventures and available only for joint venture-related uses was $44.3 million and $55.3 million, respectively.

A summary of cash flows for each of the nine month periods ended September 30, 2005 and 2004 is set forth below:

                                                            Nine Months
                                                         Ended September 30,
                                                     ----------------------------
                                                        2005            2004
                                                     ------------    ------------
                                                            (In millions)
          Cash flows from:
            Operating activities                       $ (10.0)         $ 28.8
            Investing activities                         (21.7)           (2.0)
            Financing activities                          (4.5)            7.5
                                                     ------------    ------------
          Net increase (decrease) in cash              $ (36.2)         $ 34.3
          Cash at beginning of year                      136.3            67.8
                                                     ------------    ------------
          Cash at end of period                        $ 100.1         $ 102.1
                                                     ============    ============

During the first nine months of 2005, we used $36.2 million of cash on hand to fund $10.0 million in cash flow used by operating activities, principally to fund working capital requirements; $21.7 million to fund cash flow used by investing activities, principally to fund the January 2005 acquisition of Cherry Hill; and $4.5 million to fund cash flow used by financing activities, which was primarily used to pay down a portion of the debt we assumed in conjunction with the acquisition of Cherry Hill. As a result, our consolidated cash balance decreased by $36.2 million, from $136.3 million at December 31, 2004 to $100.1 million at September 30, 2005.

Working capital increased from $178.0 million at the end of 2004 to $183.0 million at September 30, 2005. The current ratio increased from 1.41x at December 31, 2004 to 1.50x at September 30, 2005.

On April 1, 2005, we made a $9.0 million contribution to our defined benefit pension plan and do not expect to make further contributions to the pension plan in 2005.

The amount of unbilled work increased by $3.6 million, from $90.3 million at December 31, 2004 to $93.9 million at September 30, 2005, due primarily to the addition of Cherry Hill and to the timing of certain contract billings.

Long-term Debt
Long-term debt at September 30, 2005 was $17.4 million, an increase of $8.8 million from December 31, 2004, due to mortgage debt and equipment financing debt assumed in conjunction with the Cherry Hill acquisition. Accordingly, the long-term debt to equity ratio increased from .05x at December 31, 2004 to .09x at September 30, 2005.

Dividends
There were no cash dividends declared or paid on our outstanding Common Stock during the periods presented herein.

The covenants in our prior credit agreements required us to suspend the payment of quarterly dividends on our $21.25 Preferred Stock until certain financial criteria were met. While quarterly dividends on the $21.25 Preferred Stock have not been paid since 1995, 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 $11.9 million as of September 30, 2005.

In November 2004, an agreement was reached to settle the class action lawsuit filed by the holders of the $21.25 Preferred Stock. (See Note 5(f) of Notes to Consolidated Condensed Financial Statements). On September 28, 2005, we announced that the United States District Court for the District of Massachusetts

approved the settlement. The settlement and the number of $2.125 Depositary Convertible Exchangeable Preferred Shares (the "Depositary Shares") participating in the settlement became final on October 24, 2005. Under the terms of the settlement, effective November 2, 2005, we purchased all of the 374,185 participating Depositary Shares that were submitted for $19.00 in cash and one share of our common stock for each Depositary Share for an aggregate of $7.1 million in cash and 374,185 shares of common stock. After consummation of the settlement, 185,088 Depositary Shares remain outstanding.

Our Board of Directors has not decided that our working capital and other conditions warrant the resumption of payment of the regular dividend or any of the dividends in arrears on the $21.25 Preferred Stock. We do not have any plans or target date for resuming the dividend, given the following circumstances:

A strong working capital position provides us with 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 our construction backlog, including collection of receivables and the resolution of unapproved change orders and contract claims, and to obtaining surety bonds required by our business.
We are pursuing a strategy of expanding our construction business internally and through acquisitions, both of which will likely require additional capital. In January 2005, we completed the acquisition of Cherry Hill for $20 million in cash, net of the cash balance acquired, and on October 3, 2005 we completed the acquisition of Rudolph & Sletten, Inc. for $53 million in cash.

Forward-looking Statements

The statements contained in this Management's Discussion and Analysis of the Consolidated Condensed Financial Statements and other sections of this Form 10-Q 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 our expectations, hopes, beliefs, intentions or strategies regarding the future. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) 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, our ability to successfully and timely complete construction projects; our ability to convert MGM Project CityCenter and other pending awards to backlog; our ability to successfully complete the integration of Rudolph and Sletten; the risk that we will incur unanticipated costs related to the acquired operations or not realize expected revenues, synergies and cost savings; the potential delay, suspension, termination or reduction in scope of a construction project; 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 us; the ability to retain certain members of management; the ability to obtain surety bonds to secure our performance under certain construction contracts; possible labor disputes or work stoppages within the construction industry; 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 our customers, suppliers, business partners, and competitors and legislative, regulatory, judicial and other governmental authorities and officials; and other risks and uncertainties discussed under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission on March 4, 2005. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the Company's exposure to market risk from that described in the Company's annual report on Form 10-K, Item 7A., since December 31, 2004.

Item 4. Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures. The effectiveness of our disclosure controls and procedures is necessarily limited by the staff and other resources available to us and, although we have designed our disclosure controls and procedures to address the geographic diversity of our operations, this diversity inherently may limit the effectiveness of those controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective, in that they provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

There was no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. In making its assessment of changes in internal control over financial reporting as of September 30, 2005, management has excluded Cherry Hill Construction, Inc. ("Cherry Hill") because this company was acquired in January 2005. The assets and revenues of Cherry Hill as of and for the nine months ended September 30, 2005 represent approximately 12% and 8.5%, respectively, of our consolidated assets and revenues as of and for the nine months ended September 30, 2005. As part of our integration of Cherry Hill, we are in the process of incorporating our controls and procedures into the operations of Cherry Hill.

In connection with these rules, we will continue to review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

Part II. - Other Information

Item 1. Legal Proceedings

$21.25 Preferred Shareholders Class Action Lawsuit
On October 15, 2002, Frederick Doppelt, Arthur I. Caplan and Leland D. Zulch filed a lawsuit individually,
and as representatives of a class of holders of the Company's $2.125 Depositary Convertible Exchangeable
Preferred Shares, representing 1/10 Share of $21.25 Convertible Exchangeable Preferred Stock ("Depositary
Shares") against certain current and former directors of Perini. Mr. Doppelt is a current director of Perini
and Mr. Caplan is a former director of Perini. Specifically, the original complaint alleged that the
defendants breached their fiduciary duties owed to the holders of the Depositary Shares and to Perini. The
plaintiffs principally allege that the defendants improperly authorized the exchange of Series B Preferred
Stock for common stock while simultaneously refusing to pay accrued dividends due on the Depositary Shares.

In July 2003, the plaintiffs filed an amended complaint. The amended complaint added an allegation that the
defendants had further breached their fiduciary duties by authorizing a tender offer for the purchase of up
to 90% of the Depositary Shares and an allegation that the collective actions of the defendants constitute
unfair and deceptive business practices under the provisions of the Massachusetts Consumer Protection Act.
The amended complaint withdrew the allegation of a breach of fiduciary duty owed to Perini, but retained the
allegation with respect to a breach of those duties owed to the holders of the Depositary Shares.

On April 12, 2004, pursuant to Defendants' Motions to Dismiss, the Court dismissed the claim under the
Massachusetts Consumer Protection Act. The Court did not dismiss the claim for breach of fiduciary duty,
except as such claim relates to the tender offer for the purchase the Company's Depositary Shares. Pursuant
to the Court's April 12, 2004 Order, in May 2004 the plaintiffs filed a third amended complaint and a motion
for class certification. Defendants filed an answer denying any and all claims of wrongdoing and asserting
affirmative defenses.

On November 30, 2004, Perini announced that the parties had reached an agreement for settlement of the
Action. Under the terms of the settlement, Perini would purchase all of the Depositary Shares submitted in
the settlement for consideration per share of $19.00 in cash and one share of Perini common stock.

On April 19, 2005, the District Court of Massachusetts conditionally certified a class of holders of
Depositary Shares for purposes of settlement only. On May 5, 2005, the Court preliminarily approved the
settlement as being fair, just, reasonable and adequate, pending a final hearing.

On September 21, 2005, the Court gave final approval to the settlement as being fair, just, reasonable and
adequate.

The settlement and the number of Depositary Shares participating in the settlement became final on October
24, 2005. Under the terms of the settlement, effective November 2, 2005, the Company purchased all of the
374,185 participating Depositary Shares that were submitted for $19.00 in cash and one share of the
Company's common stock for each Depositary Share for an aggregate of $7.1 million in cash and 374,185 shares
of common stock. After consummation of the settlement, 185,088 Depositary Shares remain outstanding and
Frederick Doppelt will resign from his position as a director of Perini.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None

(b) Not applicable

Part II. - Other Information (continued)

Item 3. Defaults Upon Senior Securities

(a) None

(b) In accordance with the covenants of certain prior credit agreements, the Company was required to
suspend the payment of quarterly dividends on its $21.25 Convertible Exchangeable Preferred Stock
("$21.25 Preferred Stock") until certain financial criteria were met. Although the financial criteria
were satisfied as of December 31, 2000, the Company has not paid dividends on the $21.25
Preferred Stock since 1995. While the Company's most recent Credit Facility does not currently
restrict such dividends, the Board of Directors does not believe that it is proper or prudent to pay or
commit to pay dividends on the $21.25 Preferred Stock for the foreseeable future based on the
Company's other working capital requirements. See additional comments under "Liquidity and
Capital Resources - Dividends" on pages 29 and 30 of this Quarterly Report. As of September 30,
2005, the aggregate amount of dividends in arrears is approximately $11.9 million, which represents
approximately $212.50 per share of $21.25 Preferred Stock or approximately $21.25 per
Depositary Share. While these dividends have not been declared or paid, they have been fully
accrued in accordance with the "cumulative" feature of the $21.25 Preferred Stock.

Item 4. Submission of Matters to a Vote of Security Holders

(a) None

(b) Not applicable

(d) Not applicable

Item 5. Other Information

(a) None

(b) None

Item 6. Exhibits

Exhibit 10.1 Stock Purchase Agreement dated October 3, 2005 by and among Perini Corporation,
Rudolph and Sletten, Inc. and the Shareholders of Rudolph and Sletten, Inc. - filed herewith.

Exhibit 10.2 Amended and Restated Credit Agreement dated October 14, 2005 among Perini
Corporation, Bank of America, N.A., as Administrative Agent, Bank of America, N.A., as
Arranger, and the Lenders Party Hereto - filed herewith.

Exhibit 31.1 Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley
Act of 2002 - filed herewith.

Exhibit 31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 - filed herewith.

Exhibit 32.1 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.

Exhibit 32.2 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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

                                                                        Perini Corporation
                                                                        Registrant

Date: November 4, 2005                               /s/Michael E. Ciskey
                                                                        Michael E. Ciskey, Vice President and Chief Financial Officer
                                                                        Duly Authorized Officer and Principal Accounting Officer

EX-10 2 sparudolphandsletten.htm EXHIBIT 10.1 Stock Purchase Agreement, Rudolph and Sletten, Inc.

EXECUTION COPY

STOCK PURCHASE AGREEMENT

by and among

PERINI CORPORATION,
(“BUYER”)

RUDOLPH AND SLETTEN, INC.
(“COMPANY”)

and

THE SHAREHOLDERS OF THE COMPANY

(the “SHAREHOLDERS”)

October 3, 2005

                                                 TABLE OF CONTENTS


                                                                                                               Page



SECTION 1.        SALE OF SHARES AND PURCHASE PRICE...............................................................1
         1.1      Purchase and Sale...............................................................................1
         1.2      Delivery of Company Shares......................................................................1
         1.3      Purchase Price; Indemnity Escrow................................................................2
         1.4      Adjustment to Purchase Price....................................................................2
         1.5      Closing.........................................................................................4
         1.6      Shareholders' Representative....................................................................5
         1.7      Sales and Transfer Taxes........................................................................6

SECTION 2.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................6
         2.1      Organization and Qualifications of the Company and Subsidiaries.................................6
         2.2      Authority of the Company; Consents..............................................................7
         2.3      Capital Stock...................................................................................8
         2.4      Real Property...................................................................................8
         2.5      Personal Property; Liens; Condition of Properties..............................................10
         2.6      Financial Statements; Undisclosed Liabilities..................................................10
         2.7      Backlog........................................................................................11
         2.8      Taxes..........................................................................................11
         2.9      Accounts Receivable; Accounts Payable..........................................................14
         2.10     Absence of Certain Changes.....................................................................14
         2.11     Intellectual Property..........................................................................16
         2.12     Trade Secrets and Customer Lists...............................................................17
         2.13     Contracts......................................................................................18
         2.14     Litigation.....................................................................................19
         2.15     Compliance with Laws...........................................................................20
         2.16     Insurance......................................................................................20
         2.17     Warranty and Related Matters...................................................................20
         2.18     Finder's Fees..................................................................................21
         2.19     Approvals......................................................................................21
         2.20     Related Parties................................................................................21
         2.21     Employee Benefit Programs......................................................................22
         2.22     Environmental Matters..........................................................................24
         2.23     Labor  and Employment Matters..................................................................26
         2.24     Customers and Partners.........................................................................28
         2.25     Suppliers; Subcontractors......................................................................28
         2.26     Bids; Proposals................................................................................29
         2.27     Bank Accounts..................................................................................29
         2.28     Government Contracts...........................................................................29
         2.29     Illegal Payments...............................................................................29


SECTION 2A.       REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS.................................................30
         2A.1     Company Shares.................................................................................30
         2A.2     Authority......................................................................................30
         2A.3     Finder's Fee...................................................................................31
         2A.4     Agreements.....................................................................................31

SECTION 3.        COVENANTS OF THE COMPANY AND SHAREHOLDERS......................................................31
         3.1      Cooperation....................................................................................31
         3.2      Conduct of Business............................................................................31
         3.3      Access.........................................................................................34
         3.4      Further Assurances.............................................................................34
         3.5      No Solicitation................................................................................34
         3.6      Confidentiality................................................................................34
         3.7      Non-competition................................................................................35
         3.8      Accounts Receivable............................................................................36
         3.9      Realization of Gross Margin....................................................................36
         3.10     Unapproved or Pending Change Orders and Claims.................................................37
         3.11     Tax Matters....................................................................................38
         3.12     Intentionally Omitted..........................................................................39
         3.13     Payment of Certain Related Party Transactions..................................................39

SECTION 4.        REPRESENTATIONS AND WARRANTIES OF BUYER........................................................39
         4.1      Organization...................................................................................39
         4.2      Authority......................................................................................39
         4.3      Litigation.....................................................................................40
         4.4      Finder's Fees..................................................................................40
         4.5      Investment.....................................................................................40

SECTION 5.        COVENANTS OF BUYER.............................................................................40
         5.1      Cooperation by Buyer...........................................................................40
         5.2      Further Assurances.............................................................................40
         5.3      Confidentiality................................................................................41
         5.4      Employee Benefits..............................................................................41
         5.5      Bonus Payments.................................................................................41
         5.6      Trustee Acknowledgments........................................................................41

SECTION 6.        CONDITIONS TO CLOSING..........................................................................42
         6.1      Conditions to Buyer's Obligations..............................................................42
         6.2      Conditions to the Shareholders' Obligations....................................................44

SECTION 7.        TERMINATION PRIOR TO CLOSING...................................................................45
         7.1      Termination....................................................................................45
         7.2      Effect of Termination..........................................................................45
         7.3      Waiver.........................................................................................45

SECTION 8.        INDEMNIFICATION................................................................................46


         8.1      Indemnification by the Shareholders............................................................46
         8.2      Limitations on Indemnification by Shareholders.................................................47
         8.3      Indemnification by Buyer.......................................................................49
         8.4      Limitations on Indemnification by Buyer........................................................49
         8.5      Notice; Defense of Claims......................................................................50
         8.6      Survival of Warranties.........................................................................51

SECTION 9.        MISCELLANEOUS..................................................................................51
         9.1      Law Governing..................................................................................51
         9.2      Notices........................................................................................51
         9.3      Entire Agreement...............................................................................52
         9.4      Assignability..................................................................................52
         9.5      Publicity and Disclosures......................................................................53
         9.6      Captions and Gender............................................................................53
         9.7      Monetary Amounts...............................................................................53
         9.8      Certain Definitions............................................................................53
         9.9      Execution in Counterparts......................................................................53
         9.10     Amendments; Waivers............................................................................54
         9.11     Dispute Resolution.............................................................................54
         9.12     Fees and Expenses..............................................................................55
         9.13     Equitable Relief...............................................................................55
         9.14     Third Party Beneficiaries......................................................................56
         9.15     Termination of Shareholder Related Party Agreements............................................56

iii

                                              SCHEDULES AND EXHIBITS


Schedules


Schedule 2.1                    -         Subsidiary Capital Stock
Schedule 2.2                    -         Consents
Schedule 2.4(a)                 -         Owned Real Property
Schedule 2.4(b)                 -         Leased Real Property
Schedule 2.5                    -         Personal Properties; Liens; Conditions of Properties
Schedule 2.6(a)                 -         Financial Statements
Schedule 2.6(c)                 -         Liabilities
Schedule 2.6(d)                 -         Indebtedness
Schedule 2.7                    -         Backlog
Schedule 2.8                    -         Taxes
Schedule 2.9                    -         Accounts Receivable
Schedule 2.10                   -         Absence of Certain Changes
Schedule 2.11                   -         Intellectual Property
Schedule 2.13                   -         Material Contracts
Schedule 2.14                   -         Litigation
Schedule 2.16                   -         Insurance
Schedule 2.17                   -         Warranty and Related Matters
Schedule 2.18                   -         Finder's Fee
Schedule 2.19                   -         Approvals
Schedule 2.20                   -         Related Parties
Schedule 2.21(a)                -         Employee Benefit Programs
Schedule 2.21(c)                -         Unpaid Contributions
Schedule 2.21(d)                -         Post-Termination Benefits
Schedule 2.22(d)                -         Underground or Aboveground Storage Tanks
Schedule 2.23(a)                -         Contingent Workers
Schedule 2.23(b)                -         Labor Matters
Schedule 2.23(c)                -         WARN Act
Schedule 2.24(a)                -         Customers and Partners
Schedule 2.24(b)                -         Customer Unapproved Claims
Schedule 2.24(c)                -         Subcontractor and Supplier Unapproved Claims
Schedule 2.26                   -         Bids; Proposals
Schedule 2.27                   -         Bank Accounts
Schedule 2.28                   -         Government Contracts
Schedule 2A.4                   -         Agreements
Schedule 3.9                    -         Work-in-Progress
Schedule 3.10                   -         Billings on Unapproved Pending Change Orders and Claims
Schedule 6.1(m)                 -         Excluded Real Estate
Schedule 8.2(f)                 -         Shareholder Properties

Exhibits


Exhibit A                      -          Company Share Ownership; Wiring Instructions
Exhibit B                      -          Form of Indemnity Escrow Agreement
Exhibit C-1                    -          Form of General Release
Exhibit C-2                    -          Form of General Release
Exhibit D                      -          Form of Estoppel and Consent
Exhibit E                      -          Form of Opinion of Counsel
Exhibit F                      -          Form of Employment Agreement

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of October 3, 2005 (the "Effective Date") by and among Perini Corporation, a Massachusetts corporation ("Buyer"), Rudolph and Sletten, Inc., a California corporation (the "Company"), Allen A. Rudolph, Karen M. Rudolph and the other shareholders of the Company listed on Exhibit A hereto (each, a "Shareholder" and together the "Shareholders"). The Buyer and the Shareholders are referred to collectively herein as the "Parties."

W I T N E S S E T H

WHEREAS, the Shareholders own beneficially and of record all of the issued and outstanding capital stock of the Company, consisting of 317,660 shares of the Company's Class A common stock, without par value (the "Class A Common Stock") and 763,411 shares of the Company's Class B common stock, without par value (the "Class B Common Stock" and, together with the Class A Common Stock, the "Company Shares");

WHEREAS, each Shareholder desires to sell to Buyer and Buyer desires to purchase from each Shareholder all of the Company Shares owned by such Shareholder as set forth on Exhibit A attached hereto; and

WHEREAS, by purchasing all of the Company Shares pursuant to this Agreement, Buyer intends to acquire all of the outstanding Company Shares.

NOW, THEREFORE, in order to consummate said purchase and sale and in consideration of the mutual representations, warranties, covenants and agreements herein made, and upon the terms and subject to the conditions set forth herein, the Parties hereto agree as follows:

SECTION 1. SALE OF SHARES AND PURCHASE PRICE.

1.1 Purchase and Sale. On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from each Shareholder, and each Shareholder agrees to sell to Buyer, all of the Company Shares owned by such Shareholder for the consideration specified in this Section 1.

1.2 Delivery of Company Shares. At the Closing (as defined in Section 1.5), each Shareholder shall deliver or cause to be delivered to Buyer a certificate or certificates representing all of such Shareholder's Company Shares. Such stock certificates shall be duly endorsed in blank for transfer or shall be presented with stock powers duly executed in blank, with such other documents as may be required by Buyer to effect a valid transfer of such Company Shares by the Shareholders to Buyer, free and clear of any and all liens, restrictions, assessments, judgments, mortgages, easements, encumbrances, pledges, security interests and claims of any kind (collectively, "Liens"), other than restrictions under federal or state securities laws.

1.3 Purchase Price; Indemnity Escrow.

(a) In consideration of the sale by the Shareholders to Buyer of the Company Shares and in reliance on the representations and warranties of the Company and the Shareholders in this Agreement and subject to the satisfaction or waiver of all of the conditions contained in Section 6 of this Agreement, Buyer will pay an aggregate purchase price (the "Purchase Price") equal to Fifty Million Dollars ($50,000,000), subject to adjustment pursuant to Section 1.4. The Purchase Price shall be paid as follows:

(i) at the Closing, Buyer shall deposit the sum of Three Million Dollars ($3,000,000) (the "Indemnity Escrow") with The Bank of New York Trust Company, N.A. as escrow agent (the "Indemnity Escrow Agent") under the Indemnification Escrow Agreement in the form attached hereto as Exhibit B (the "Indemnity Escrow Agreement"). The Indemnity Escrow shall be held, administered and distributed in accordance with the terms of this Agreement and the Indemnity Escrow Agreement, and, except as otherwise provided herein, shall be the exclusive remedy of Buyer for any indemnification claims made pursuant to Section 8 hereof; and

(ii) at the Closing, Buyer shall deliver to the Shareholders' Representative (as defined in Section 1.6 hereof), on behalf of the Shareholders, by bank cashier's check or bank wire transfer of immediately available funds pursuant to the wiring instructions as set forth on Exhibit A hereto, an amount equal to (A) Forty-Seven Million Dollars ($47,000,000) plus or minus, as the case may be, (B) the adjustment required under Section 1.4(a).

1.4 Adjustment to Purchase Price.

(a) Not later than five (5) business days prior to the Closing Date, the Company shall deliver to Buyer the Base Balance Sheet (as defined in Section 2.6), together with worksheets and data that support the Base Balance Sheet and any other information that Buyer may reasonably request in order for Buyer to verify the amounts reflected on the Base Balance Sheet. The Base Balance Sheet shall be prepared in accordance with generally accepted United States accounting principles ("GAAP") consistently applied and otherwise consistent with the Company's past accounting methods and practices. The Company shall deliver to Buyer together with the Base Balance Sheet a calculation of the Net Worth as of June 30, 2005 based on the Base Balance Sheet and as adjusted to reflect (i) the completion of the Real Estate Transfers and the LLC Distribution (as defined in Sections 6.1(m) and (n), respectively) (including without limitation removal of the Excluded Real Estate as assets of the Company, elimination of any related mortgage debt that is paid and discharged or assumed in connection with such transactions and any additional liabilities incurred in connection with such transactions including, without limitation, any transfer or mortgage taxes or any other taxes), (ii) elimination of any accounts receivable reserve and (iii) the removal of the cash surrender value of key-man life insurance policies as assets of the Company (the "June 30 Net Worth"). If the June 30 Net Worth exceeds $28,078,028 (the "Base Net Worth"), the Purchase Price shall be increased by an amount equal to such excess. If the June 30 Net Worth is less than the Base Net Worth, the Purchase Price shall be decreased by the difference of such amounts.

(b) Within sixty (60) days after the Closing Date, the Company will deliver to the Shareholders' Representative an audited balance sheet of the Company as of September 30, 2005 (the "Closing Balance Sheet"), together with worksheets and data that support the Closing Balance Sheet. The Closing Balance Sheet shall be prepared in accordance with GAAP and otherwise consistent with the methodology used to prepare the Base Balance Sheet. The Closing Balance Sheet shall include (i) an accrual for the aggregate amount of Taxes (including, but not limited to, any built-in gains tax) payable by the Company after the Closing as a result of the Real Estate Transfers and the LLC Distribution (as defined in Section 6.1(n)) and (ii) an accrual for any bonus payments to be paid by Buyer under Section 5.5, which accrual shall not exceed the Accrued Bonus Amount (as defined in Section 3.2(v)(i)) less the aggregate amount of such bonus payments made by the Company prior to the Closing (such differential hereinafter referred to as the "Closing Bonus Accrual"). The Company will deliver to the Shareholders' Representative together with the Closing Balance Sheet a calculation of the Net Worth as of September 30, 2005 based on the Closing Balance Sheet, without giving effect to the Closing and as adjusted to reflect (i) the elimination of any accounts receivable reserve, (ii) a reduction equal to (A) the actual Net Income for the month ended September 30, 2005, less (B) an amount equal to the Shareholder's tax liability on the income of the Company for the month ended September 30, 2005, as computed for tax purposes without taking into account any income gain or loss resulting from any of the Real Estate Transfers or LLC Distribution, and assuming that the Shareholders are subject to tax at an aggregate federal, state and local tax rate of 21%, (iii) the removal of the cash surrender value of key-man life insurance policies as assets of the Company and (iv) the inclusion of the Company's deferred tax assets in an amount equal to Three Hundred Fifty Thousand Dollars ($350,000) (the "Closing Net Worth").

(i) The Closing Balance Sheet and the Closing Net Worth shall be binding upon the Parties if (A) the Shareholders' Representative fails to object in writing within ten (10) days after receipt of the Closing Balance Sheet or (B) the Shareholders' Representative approves the Closing Balance Sheet and the Closing Net Worth in writing.

(ii) If the Shareholders' Representative does not agree with the Closing Balance Sheet and the calculation of the Closing Net Worth, or Buyer and the Shareholders' Representative cannot mutually agree on the same, then within twenty (20) days following receipt by the Shareholders' Representative of the Closing Balance Sheet, Buyer and the Shareholders' Representative shall engage PricewaterhouseCoopers LLP or such other nationally recognized independent accounting firm mutually satisfactory to Buyer and the Shareholders' Representative (the "Neutral Auditor") to resolve such dispute. The Neutral Auditor shall review the Closing Balance Sheet and the Closing Net Worth and, within ten (10) business days of its appointment (or as soon as practicable after such ten (10) business day period), shall make any adjustments necessary thereto, and, upon completion of such review, such Closing Balance Sheet and the Closing Net Worth 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 Shareholders' Representative, 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.

(i) in the event the Closing Net Worth is less than the June 30 Net Worth, the Shareholders' Representative, on behalf of the Shareholders, shall pay to Buyer by wire transfer of immediately available funds, an amount equal to the difference between such amounts ("Negative Net Worth Adjustment Amount"), and the Purchase Price shall be decreased by such Negative Net Worth Adjustment Amount and

(ii) in the event the Closing Net Worth is greater than the June 30 Net Worth, Buyer shall pay the Shareholders' Representative, on behalf of the Shareholders, by wire transfer of immediately available funds an amount equal to the difference between such amounts ("Positive Net Worth Adjustment Amount"), and the Purchase Price shall be increased by such Positive Net Worth Adjustment Amount

The difference between the June 30 Net Worth and the Closing Net Worth is referred to as the "Net Worth Adjustment Amount."

(d) As used in this Section 1.4, "Net Worth" means total assets (excluding any deferred tax assets of the Company) minus total liabilities of the Company and the Subsidiary on a consolidated basis determined in accordance with GAAP, consistently applied, and otherwise consistent with the methodology used to prepare the Base Balance Sheet.

(e) As used in this Section 1.4, "Net Income" means the net income or loss of the Company and the Subsidiary on a consolidated basis determined in accordance with GAAP consistently applied, and otherwise consistent with the methodology used to prepare the June 30 Income Statement and adjusted to reflect the elimination of any income, gain or loss resulting from any of the Real Estate Transfers and the LLC Distribution.

(f) Notwithstanding anything in the Agreement to the contrary, the payment or non-payment of (i) any Positive Net Worth Adjustment Amount by Buyer or (ii) any Negative Net Worth Adjustment Amount by the Shareholders' Representative under this Section 1.4 shall not be subject to any of the limitations on indemnification contained in Section 8.

1.5 Closing. The closing of the purchase and sale provided for in this Agreement (the "Closing") shall be held at the offices of Goodwin Procter LLP, Exchange Place, Boston, Massachusetts 02109 at 10:00 a.m. local time on or before the later of (i) October 3, 2005 or (ii) the date that is two (2) business days following the satisfaction or waiver of the conditions set forth in Section 6, or at such other place or later date as may be fixed by mutual agreement of Buyer and the Shareholders' Representative (the "Closing Date").

1.6 Shareholders' Representative.

(a) In order to administer efficiently (i) the implementation of the Agreement by the Shareholders, (ii) the waiver of any condition to the obligations of the Shareholders to consummate the transactions contemplated hereby, and (iii) the settlement of any dispute with respect to this Agreement, the Shareholders hereby designate James F. Evans as their representative (the "Shareholders' Representative").

(b) In the event that the Shareholders' Representative dies, becomes legally incapacitated or resigns from such position, Paul A. Aherne shall fill such vacancy and shall be deemed to be the Shareholders' Representative for all purposes of this Agreement. Any change in the Shareholders' Representative shall be effective when Buyer is receives notice of such change.

(c) The Shareholders hereby authorize the Shareholders' Representative (i) to take all action necessary in connection with the implementation of this Agreement on behalf of the Shareholders, to waive any condition to the obligations of the Shareholders to consummate the transactions contemplated hereby, or to settle any dispute, (ii) to receive, on behalf of the Shareholders, any payments payable to the Shareholders under this Agreement from Buyer, including, without limitation, the Purchase Price, and to disburse such payments to the Shareholders, (iii) to give and receive all notices required or permitted to be given or received by the Shareholders under the Agreement and (iv) to take any and all additional action as is contemplated to be taken by or on behalf of the Shareholders by the terms of this Agreement, including without limitation, the execution and delivery of documents to transfer the Company Shares to Buyer.

(d) All decisions and actions by the Shareholders' Representative shall be binding upon all of the Shareholders, and no Shareholder shall have the right to object, dissent, protest or otherwise contest the same, except as provided in Section 1.6(e)(ii).

(e) By their execution of this Agreement, the Shareholders agree that:

(i) Buyer and Indemnity Escrow Agent shall be able to rely conclusively on the instructions and decisions of the Shareholders' Representative (with Buyer hereby acknowledging that the Shareholders' Representative may, with respect to any action, instruction or decision, seek guidance and/or approvals of the Shareholders before acting), as to any actions required or permitted to be taken by the Shareholders or the Shareholders' Representative hereunder, and no Party hereunder shall have any cause of action against Buyer for any action taken by Buyer in reliance upon the instructions or decisions of the Shareholders' Representative;

(ii) all actions, decisions and instructions of the Shareholders' Representative shall be conclusive and binding upon all of the Shareholders (except in the case of the Shareholders' Representative's fraud, bad faith or willful breach of this Agreement) and no Shareholder shall have any cause of action against the Shareholders' Representative for any action taken, decision made or instruction given by the

Shareholders' Representative under this Agreement (except pursuant to any separate agreement among the Shareholders);

(iii) remedies available at law for any breach of the provisions of this Section 1.6 are inadequate; therefore, Buyer shall be entitled to temporary and permanent injunctive relief without the necessity of proving damages if Buyer brings an action to enforce the provisions of this Section 1.6; and

(iv) 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, granted by the Shareholders to the Shareholders' Representative and shall be binding upon the executors, heirs, legal representatives and successors of each Shareholder.

(f) All fees and expenses incurred by the Shareholders' Representative shall be for the account of the Shareholders, including, without limitation, any payments made by the Shareholders' Representative under the Indemnity Escrow Agreement.

1.7 Sales and Transfer Taxes. All sales, use, recording, stamp, registration, conveyance, recording, and other such documentary, transfer taxes, fees, charges and duties (including any penalties and interest) under applicable law incurred in connection with this Agreement or the transactions contemplated hereby, including the sale and transfer of the Company Shares, any transfer of distribution of key-man life insurance policies, the LLC Distribution and the Real Estate Transfers will be borne and paid by the Shareholders, and the Shareholders shall promptly reimburse Buyer for the payment of any such tax, fee or duty which any Shareholder or the Company is required to make under applicable law.

SECTION 2. 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 Section 2. For purposes of this Section 2, references to "knowledge" of the Company or words of similar import shall be deemed to include, to and including the Closing Date, actual knowledge of Allen A. Rudolph, Karen M. Rudolph, Paul A. Aherne, and James F. Evans, in each case after due inquiry.

2.1 Organization and Qualifications of the Company and Subsidiaries.

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California with all requisite corporate power and authority to own or lease 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. The copies of the charter documents and by-laws of the Company, each as amended to date, and previously delivered to Buyer's counsel, are complete and correct, and no amendments thereto are pending. The Company is qualified to do business as a foreign corporation in each jurisdiction in which such qualification is necessary, except where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the assets, liabilities, business, condition (financial or otherwise) or results of operations of the Company

and the Subsidiary, taken as a whole (a "Material Adverse Effect"). Except for Ajax Trailer Company, Inc., a wholly owned subsidiary of the Company (the "Subsidiary"), the Company has no direct and indirect subsidiaries and investments in any other corporation or business entity. The Subsidiary is a corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation with all requisite corporate power and authority to own or lease 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. The copies of the Subsidiary's charter documents and by-laws, each as amended to date, and previously delivered to Buyer's counsel, are complete and correct, and no amendments thereto are pending. The Subsidiary is duly qualified to do business as a foreign corporation in each jurisdiction in which such qualification is necessary, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 2.1, all of the outstanding shares of capital stock of the Subsidiary are owned beneficially and of record by the Company free and clear of any and all Liens (other than restrictions under federal or state securities laws) and said shares have been duly and validly issued and are outstanding, fully paid and non-assessable.

2.2 Authority of the Company; Consents. The Company has full right, power and authority to enter into this Agreement and each agreement, document and instrument to be executed and delivered by it pursuant to or as contemplated by this Agreement and to carry out the transactions contemplated hereby and thereby. The execution, delivery and performance by the Company of this Agreement and each such other agreement, document and instrument have been duly authorized by all necessary action of the Company, and no other action on the part of the Company is required in connection therewith. This Agreement and each agreement, document and instrument to be executed and delivered by the Company pursuant to or as contemplated by this Agreement constitute, or will when executed and delivered by the Company constitute (assuming the valid execution of this Agreement by Buyer), valid and binding obligations of the Company enforceable in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the rights of creditors generally and subject to the rules of law governing (and all limitations on) specific performance, injunctive relief and other equitable remedies. The execution, delivery and performance by the Company of this Agreement and each such other agreement, document and instrument in order to consummate the transactions contemplated by this Agreement:

(a) do not and will not violate any provision of the charter or by-laws of the Company or the Subsidiary;

(b) do not and will not violate any laws of the United States or any state or other jurisdiction applicable to the Company or the Subsidiary or require the Company or the Subsidiary to obtain any approval, consent or waiver of, or to make any filing with, any person or entity (including any Governmental Authority) that has not been obtained or made;

(c) except for required consents in respect of certain Material Contracts as set forth on Schedule 2.2, do not and will not result in a breach of, constitute a default under, accelerate any obligation under, require a consent under, cause a termination under, or give rise to a right of termination of any indenture or loan or credit agreement or any other material

agreement, contract, instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment, injunction, decree, determination or arbitration award, whether written or oral, to which the Company or the Subsidiary is a party or by which the property of the Company or the Subsidiary is bound or affected, or result in the creation or imposition of any Lien on any of the assets of the Company or the Subsidiary; and

(d) except, in the case of each of (b) and (c) above, where the violation, requirement, breach, default, acceleration, termination or Lien, as the case may be, could not reasonably be expected to have a Material Adverse Effect.

2.3 Capital Stock.

(a) The total authorized capital stock of the Company consists of 2,000,000 shares of Class A common stock, without par value and 10,000,000 shares of Class B common stock, without par value (collectively, the "Common Stock"). As of the date hereof, 317,660 shares of Class A common stock are issued and outstanding and 763,411 shares of Class B common stock are issued and outstanding. All of the issued and outstanding shares of Common Stock are, and when delivered by each Shareholder to Buyer pursuant to this Agreement will be, duly authorized, validly issued, fully paid and nonassessable, and are free and clear of any and all Liens (other than transfer restrictions under federal and state securities laws).

(b) Exhibit A attached hereto sets forth a list of all holders of the Common Stock. The Company represents that (i) each Shareholder owns of record and beneficially the number of shares of Common Stock set forth opposite each Shareholder's name in Exhibit A; (ii) the Common Stock set forth on Exhibit A as being owned by the respective Shareholders represents all of the issued and outstanding Common Stock and Common Stock Equivalents (as defined below) of the Company, (iii) the ownership percentage listed on Exhibit A for each Shareholder is a true and correct statement of the allocations of proportionate ownership of the outstanding Common Stock and (iv) the Company's official stock ledger is consistent in all respects with Exhibit A. There are no outstanding subscriptions, commitments, preemptive rights, agreements, arrangements or commitments of any kind for or relating to the issuance, sale, registration or voting of any shares of capital stock of any class, other equity interests or Common Stock Equivalents (as defined below) of the Company or the Subsidiary, except for the sale of the Company Shares contemplated by this Agreement. Neither the Company nor the Subsidiary has outstanding (i) any securities convertible into, exchangeable or exercisable for, or carrying the right to acquire any capital stock or other equity securities of the Company or the Subsidiary or (ii) any options, warrants, subscriptions, rights, calls, agreements, demands or other arrangements or commitments of any character obligating the Company or the Subsidiary to issue any capital stock or equity securities or any interest therein ((i) and (ii) collectively, "Common Stock Equivalents").

2.4 Real Property.

(a) Owned Real Property. All of the real property owned by the Company and the Subsidiary is identified in Schedule 2.4(a) (the "Real Estate"). Fee simple ownership of the Real Estate is vested in the Company, free and clear of all Liens except (i) the lien of

real estate taxes not yet due and payable, (ii) non-monetary encumbrances that do not materially impair the value of the subject Real Estate or materially restrict the Company's current use thereof and (iii) provisions of existing building and zoning laws. No lease or other agreement affecting the Real Estate contains any rights of first refusal or options or rights to purchase the Real Estate or any portion thereof. Schedule 2.4(a) lists each contract and agreement related to the use, ownership or operation of the Real Estate or any portion thereof (other than contracts for maintenance, janitorial, landscaping or similar services, which, individually, requires the payment, on an annual basis, of less than $100,000). True, correct and complete copies of all contracts listed in Schedule 2.4(a) have been previously delivered to Buyer. Except as set forth in Schedule 2.4(a), the Real Estate complies in all material respects with all applicable zoning, building, health and public safety, subdivision, land sales or similar laws, rules, ordinances or regulations and all applicable Environmental Laws (as defined in Section 2.22(k)), and the Company has not received written notice of a violation of any such law, ordinance or regulation or Environmental Law. Other than the Company, or as disclosed on Schedule 2.4(a), no third party has the right to occupy, possess or use any portion of the Real Estate. There are no material defects in the physical condition of any land, buildings or improvements constituting part of the Real Estate. None of the Real Estate is located in an area designated by any Governmental Authority as being within a flood plain or subject to special flood or other hazards. Access to the Real Estate is by a public way or public street. All water, sewer, gas, electric, telephone, drainage and other utilities required by law or necessary for the current operation of the Real Estate have been connected under valid permits and pursuant to valid easements where required, and are sufficient to service the operation of the business of the Company and the Subsidiary. There are no actions, suits or proceedings (including arbitration or condemnation proceedings) pending or, to the Company's knowledge, threatened, which could reasonably be expected to have a Material Adverse Effect on any portion of the Real Estate or the Company's interest therein, at law or in equity or before or by any federal, state, municipal, local, foreign or other Governmental department, commission, board, bureau, agency or instrumentality (each, a "Governmental Authority"). 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.

(b) Leased Real Property. All of the real property leased by the Company or the Subsidiary as tenant or lessee is identified in Schedule 2.4(b) (collectively referred to herein as the "Leases"). The Company and the Subsidiary hold the tenant's interests under the Leases. Neither the Company nor the Subsidiary has assigned, mortgaged or otherwise encumbered their interests in the Leases, or sublet any portion of the premises leased under the Leases. Each Lease is in full force and effect and constitutes the entire agreement between the relevant landlord and the Company or the Subsidiary with respect to the premises described in such Lease. True, accurate and complete copies of the Leases have been previously delivered to Buyer. The Company has no knowledge of any event which now constitutes, or which upon the giving of notice or the passage of time, or both, would give rise to any default in the performances by the Company or any tenants, subtenants or licensees of the Company of any obligation under any of the Leases.

2.5 Personal Property; Liens; Condition of Properties.

(a) Personal Property. A complete description of the furniture, fixtures, machinery, equipment, tools and other tangible assets of the Company and the Subsidiary as of June 30, 2005 is contained in Schedule 2.5 attached hereto. Except as specifically disclosed in Schedule 2.5 attached hereto, the Company and the Subsidiary have good and marketable title to all of its personal property, tangible and intangible. Except as set forth in Schedule 2.5, none of such property or assets of the Company or the Subsidiary, tangible or intangible, is subject to any Lien. Except as set forth in Schedule 2.5, no financing statement under the Uniform Commercial Code with respect to any such property or assets is active in any jurisdiction, and neither the Company nor the Subsidiary has signed any such active financing statement or any security agreement authorizing any secured party thereunder to file any such financing statement.

(b) The assets listed in Schedule 2.5 and reflected in the Base Balance Sheet (the "Assets") are all of the assets used or held for use in the business of the Company and the Subsidiary as the same has been operated prior to the date hereof and such assets constitute all of the assets necessary for Buyer to continue to operate the business of the Company and the Subsidiary as it has been operated prior to Closing. Except as set forth in Schedule 2.5 hereto, the Assets (i) are in working order (reasonable wear and tear excepted, and age), (ii) have been and shall through the Closing be maintained in a manner consistent with the past maintenance practices of the Company and (iii) conform with all applicable state and federal statutes, ordinances, regulations and laws.

2.6 Financial Statements; Undisclosed Liabilities.

(a) Attached hereto as Schedule 2.6(a) are (i) the audited consolidated balance sheets of the Company as of September 30, 2004 and September 30, 2003 and audited consolidated statements of income, changes in stockholders' equity and cash flow of the Company for the each of twelve-month periods then ended and (ii) the audited consolidated balance sheet of the Company as of June 30, 2005 (the "Base Balance Sheet") and audited consolidated statements of income and cash flow of the Company for the nine-month period then ended (the "June 30 Income Statement").

All of such financial statements (i) have been prepared in accordance with GAAP applied consistently during the periods covered thereby, and (ii) are complete and correct in all material respects and present fairly in all material respects the financial condition of the Company and the Subsidiary, at the dates of said statements and the results of its operations for the periods covered thereby, subject, in the case of unaudited financial statements, to normal and customary year end adjustments which, individually and in the aggregate, will not be material.

(b) As of the date of the Base Balance Sheet, the Company and the Subsidiary had no material liabilities, whether accrued, absolute, contingent or otherwise, asserted or unasserted, known or unknown (including without limitation liabilities as guarantor or

otherwise with respect to obligations of others, or liabilities for Taxes (as defined in Section 2.8) due or then accrued or to become due or contingent or potential liabilities relating to activities of the Company and the Subsidiary or the conduct of their business prior to the date of the Base Balance Sheet regardless of whether claims in respect thereof had been asserted as of such date), except liabilities stated or adequately reserved against on the Base Balance Sheet (only to the extent of the amount provided for therein).

(c) As of the date hereof and as of the Closing Date, the Company and the Subsidiary do not and will not have any material liabilities, whether accrued, absolute, contingent or otherwise, asserted or unasserted, known or unknown (including without limitation liabilities as guarantor or otherwise with respect to obligations of others, or liabilities for taxes due or then accrued or to become due or contingent or potential liabilities relating to activities of the Company and the Subsidiary or the conduct of their business prior to the date hereof, regardless of whether claims in respect thereof had been asserted as of such date), whether or not of a type required to be shown on a balance sheet prepared in accordance with GAAP, except liabilities (i) stated or adequately reserved against on the Base Balance Sheet (only to the extent of the amount provided for therein), (ii) incurred in the ordinary course of business after the date of this Agreement to the extent permitted by this Agreement or (iii) as disclosed in Schedule 2.6(c) (only to the extent of the amount provided for therein).

(d) Except as set forth on Schedule 2.6(d) attached hereto to the extent of the amounts therein, as of the date hereof, the Company and the Subsidiary have no indebtedness for borrowed money (including without limitation, obligations under leases required to be capitalized in accordance with GAAP).

2.7 Backlog. As of June 30, 2005 the Company had a Backlog (as defined below) as set forth in Schedule 2.7 attached hereto. 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 letters of intent or notices of intent to award such projects have been received but 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.

2.8 Taxes.

(a) For purposes of this Agreement:

"Code" means the Internal Revenue Code of 1986, as amended.

"Tax" or "Taxes" 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.

"Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

(b) Except as set forth on Schedule 2.8:

(i) Each of the Company and the Subsidiary has filed all Tax Returns that it was required to file under applicable laws and regulations. To the Company's knowledge, all such Tax Returns are correct and complete in all respects and were prepared in compliance with all applicable laws and regulations. All Taxes due and owing by the Company or any of the Subsidiaries (whether or not shown on any Tax Return) have been paid or reserved on the Closing Balance Sheet and included in the calculation of Closing Net Worth. Neither the Company nor the Subsidiary currently is 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 or the Subsidiary does not file Tax Returns that the Company or the Subsidiary is or may be subject to taxation by that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company or the Subsidiary.

(ii) Each of the Company and the Subsidiary 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, Shareholder, or other third party.

(iii) During the last five (5) years no Governmental Authority has engaged in any Tax audit of the Company or the Subsidiary. No director or officer (or employee responsible for Tax matters) of the Company or the Subsidiary expects any taxing 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 or the Subsidiary. Neither the Company nor the Subsidiary has received from any foreign, federal, state, or local taxing authority (including jurisdictions where the Company or the Subsidiary has not filed Tax Returns) any (a) notice indicating an intent to open an audit or other review, (b) request for information related to Tax matters, or (c) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any taxing authority against the Company or the Subsidiary. Schedule 2.8 lists all federal, for taxable periods ended on or after December 31, 2000, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. Correct and complete copies of all federal, state, local,

and foreign income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by the Company or the Subsidiary filed or received since December 31, 2000, have been delivered to Buyer.

(iv) Neither the Company nor the Subsidiary has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

(v) Neither the Company nor the Subsidiary has ever filed a consent under Code Section 341(f) concerning collapsible corporations. Neither the Company nor the Subsidiary is a party to any agreement, contract, arrangement or plan that has resulted or could result, separately or in the aggregate, in the payment of (a) any "excess parachute payment" within the meaning of Code Section 280G (or any corresponding provision of state, local or foreign Tax law) or (b) 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). Neither the Company nor the Subsidiary has 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). Each of the Company and the Subsidiary has disclosed on their 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. Neither the Company nor the Subsidiary is a party to or bound by any Tax allocation or sharing agreement. Neither the Company nor the Subsidiary (a) has been a member of a group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company) or (b) has any liability for the Taxes of any person (other than the Company or the Subsidiary) 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. Neither the Company nor the Subsidiary has ever owned a direct or indirect interest in any person (other than the Subsidiary).

(vi) The unpaid Taxes of the Company and the Subsidiary (a) do not exceed the reserve for Tax liabilities (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Base Balance Sheet (rather than 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 and the Subsidiary in filing their Tax Returns. Since the date of the Base Balance Sheet, neither the Company nor the Subsidiary has 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.

(vii) Neither the Company nor the Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or 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 transaction or 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.

(viii) Neither the Company nor the Subsidiary has 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 Code Section 361.

(c) The Company (and any predecessor of the Company) has been a validly electing S corporation within the meaning of Code Sections 1361 and 1362 at all times since July 1, 2000 and the Company will be an S corporation up to and including the Closing Date. Each Shareholder is eligible to own shares of Common Stock of the Company without causing the termination of the S corporation status of the Company.

2.9 Accounts Receivable; Accounts Payable.

(a) Schedule 2.9 sets forth each of the accounts receivable of the Company and the Subsidiary as of June 30, 2005, aged by month. All such accounts receivable are valid and enforceable claims, are not subject to any set-off or counterclaim, and are fully collectible in the normal course of business. Since the date of the Base Balance Sheet, the Company and the Subsidiary have collected their accounts receivable in the ordinary course of their respective business and in a manner which is consistent with past practices and has not accelerated any such collections. Except as set forth in Schedule 2.9 and Schedule 2.20, as of June 30, 2005, neither the Company nor the Subsidiary has any accounts receivable or loans receivable from any affiliate or any individual persons whose relationship with any of the Company's or the Subsidiary's directors, officers or employees or any shareholder is that of first cousin or closer.

(b) All accounts payable and notes payable of the Company and the Subsidiary 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 and the Subsidiary have paid their accounts payable in the ordinary course of their respective business and in a manner which is consistent with their respective past practices. Except as set forth in Schedule 2.20, as of June 30, 2005, neither the Company nor the Subsidiary has any account payable to any affiliate or any individual persons whose relationship with any of the Company's or the Subsidiary's directors, officers, employees or Shareholders is that of first cousin or closer (other than expense reimbursement obligations incurred in the ordinary course of business).

2.10 Absence of Certain Changes. Since the date of the Base Balance Sheet, the Company and the Subsidiary have conducted their business only in the ordinary course and consistent with past practices, and except as disclosed in Schedule 2.10 attached hereto there has not been:

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

(b) any contingent liability incurred by the Company or the Subsidiary as guarantor or otherwise with respect to the obligations of others or any cancellation of any material debt or claim owing to, or waiver of any material right of, the Company or the Subsidiary;

(c) any Lien placed on any of the assets of the Company or the Subsidiary which remains in existence on the date hereof or will remain on the Closing Date;

(d) any material obligation or liability of any nature, whether accrued, absolute, contingent or otherwise, asserted or unasserted, known or unknown, incurred by the Company or the Subsidiary other than obligations and liabilities incurred in the ordinary course of business consistent with the terms of this Agreement;

(e) any purchase, sale or other disposition, or any agreement or other arrangement for the purchase, sale or other disposition, of any of the properties or assets of the Company or the Subsidiary other than in the ordinary course of business (except for the transfers of the Excluded Real Estate);

(f) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting any of the properties, assets or business of the Company or the Subsidiary;

(g) any labor dispute or claim of unfair labor practices involving the Company or the Subsidiary; any change in the compensation (in the form of salaries, wages, incentive arrangements or otherwise) payable or to become payable by the Company or the Subsidiary to any of its officers, employees, agents or independent contractors, or any bonus payment or arrangement made to or with any of such officers, employees, agents or independent contractors (other than shares granted under the Company's employee stock grant program on July 1, 2005); entering into any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any officer, director or employee of the Company or the Subsidiary;

(h) any change, or the obtaining of information concerning a prospective change, with respect to the officers or management of the Company or the Subsidiary, any grant of any severance or termination pay to any officer or employee of the Company or the Subsidiary or any increase in benefits payable under any existing severance or termination pay policies or employment agreements other than (i) normal merit increases for salaried employees or (ii) increases or grants required by contracts disclosed herein;

(i) any obligation or liability incurred by, or any payment, loan or advance made by the Company or the Subsidiary to any Shareholder, any of its officers or employees or any family members of any of the foregoing, except normal compensation and expense allowances payable to such officers or employees;

(j) any change in the manner of keeping books, accounts or records, accounting methods or practices, standard costs, credit practices or collection or pricing policies used by the Company or the Subsidiary;

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

(l) any purchase by the Company or the Subsidiary of any asset costing more than $100,000, any sale by the Company or the Subsidiary of any asset having a net book value of $100,000 or more, or any purchase by the Company of any equity interest in any entity;

(m) any material change in the Company's or the Subsidiary's business organization or business relationships with suppliers, subcontractors, customers and others having business relations with the Company or the Subsidiary (other than changes that occur in the ordinary course of business that are not expected to have a Material Adverse Effect);

(n) any change in the kind and amount of insurance maintained by the Company or the Subsidiary;

(o) any (i) declaration, setting aside or payment of any dividend or other distribution by the Company or the Subsidiary with respect to its capital stock, (ii) direct or indirect redemption, purchase or other acquisition by the Company or the Subsidiary of its capital stock or Common Stock Equivalents, (iii) issuance or sale of any capital stock or Common Stock Equivalents of the Company or the Subsidiary or (iv) grant, issuance or exercise of options, warrants, subscriptions, preemptive rights, agreements, arrangements or commitments of any kind for or relating to the issuance, sale, registration or voting of any shares of capital stock of any class or other equity interests or Common Stock Equivalents of the Company or the Subsidiary;

(p) any payment on any indebtedness or capital leases, except regularly scheduled payments pursuant to the terms of such indebtedness and leases;

(q) any amendment or termination of any Material Contract to which the Company or the Subsidiary is a party or by which it is bound (other than change orders in the ordinary course of business); or

(r) any agreement or understanding whether in writing or otherwise, that would result in any of the transactions or events or require the Company or the Subsidiary to take any of the actions specified in paragraphs (a) through (r) above.

2.11 Intellectual Property.

(a) Schedule 2.11 attached hereto contains a complete and accurate list of all patents, patent applications, registered trademarks, registered service marks, registered trade names and registered copyrights which are owned by the Company and the Subsidiary ("Company Owned Intellectual Property"). The Company and the Subsidiary exclusively own the Company Owned Intellectual Property and own or possess adequate rights to use all other

patents, patent applications, trademarks, service marks, trade names, copyrights, inventions, technology and software ("Intellectual Property") presently used by the Company and the Subsidiary and which are material to the business of the Company and the Subsidiary as presently conducted (such Intellectual Property, "Company Intellectual Property").

(b) All patents, patent applications, trademarks and copyrights that are Company Owned Intellectual Property which are issued by, registered with or the subject of an application filed with, as applicable, the U.S. Patent and Trademark Office, the U.S. Copyright Office or in any similar office or agency anywhere in the world have been duly maintained (including the payment of maintenance fees) and are not expired, cancelled or abandoned.

(c) There are no pending or, to the Company's knowledge, threatened claims against the Company or the Subsidiary or any of their employees alleging that (i) any of the Intellectual Property or the Company's or the Subsidiary's business, infringes or conflicts with the rights of any other party under any patent, trademark, service mark, copyright, trade secret or other intellectual property right ("Third Party Rights") or (ii) the Company or the Subsidiary or any of their employees has misappropriated any Third Party Rights.

(d) Neither the operation of the business of the Company or the Subsidiary as presently conducted nor any Company Owned Intellectual Property infringes or violates any Third Party Right other than the rights under any patent, and to the Company's knowledge, neither the operation of the business of the Company or the Subsidiary as presently conducted nor any Company Owned Intellectual Property infringes or violates any Third Party Rights under any patent.

(e) Neither the Company nor the Subsidiary has received any communications alleging that any of the Company Owned Intellectual Property is invalid or unenforceable.

(f) No current or former employee or consultant of the Company or the Subsidiary owns any right, title or interest in or to any of the Company Owned Intellectual Property.

(g) To the Company's knowledge, no third party has violated or infringed or is violating or infringing any of the Company Owned Intellectual Property.

(h) Neither the Company nor the Subsidiary (i) has granted to anyone a license to or right to use any Company Owned Intellectual Property; or (ii) is obligated to or pays royalties or other fees to anyone with respect to the Company's or the Subsidiary's use of any Company Owned Intellectual Property.

2.12 Trade Secrets and Customer Lists. The Company and the Subsidiary have the right to use, free and clear of any claims or rights of others, all trade secrets, inventions, customer lists and manufacturing and secret processes required for or incident to the manufacture, design, tooling assembly or marketing of products sold, manufactured, licensed, under development or produced by them, including products licensed from others, currently or within the ten (10) years preceding the Closing Date. There are no payments required to be made by the Company or the Subsidiary for the use of such trade secrets, inventions, customer

lists and manufacturing and secret processes. Neither the Company nor the Subsidiary is using or in any way making use, without authorization, of any confidential information or trade secrets of any third party, including without limitation, a former employer of any present or past employee of the Company or the Subsidiary or of any of their predecessors or affiliates.

2.13 Contracts. Schedule 2.13 hereto lists all of the following contracts, commitments, plans, agreements and licenses to which the Company or the Subsidiary is a party or to which it is subject as of the date which is five (5) business days prior to the Closing Date (complete and correct copies (written descriptions in the case of any of the foregoing that are verbal) of which have been delivered to Buyer), (collectively, "Material Contracts"):

(a) any employment contract or any plan or contract providing for bonuses, pensions, options, stock purchases, deferred compensation, retirement payments, profit sharing, collective bargaining or the like, or any contract or agreement with any labor union;

(b) any subcontracts or purchase orders involving a commitment or payment in excess of $5,000,000 or any other contracts or agreements creating any obligation of or to the Company or the Subsidiary of $5,000,000 or more with respect to any such contract;

(c) any contract or agreement providing for the purchase of all or substantially all of its requirements of a particular product from a supplier;

(d) any fixed price contract or agreement for any project equal to or in excess of $5,000,000;

(e) any acquisition, merger or similar agreement with respect to the acquisition of capital stock or assets between the Company and any third party;

(f) any contract or agreement containing covenants limiting the freedom of the Company or the Subsidiary to compete in any line of business or with any person or entity or containing any exclusive dealing obligation;

(g) any contract or agreement for the purchase of any fixed asset involving amounts greater than $100,000 or having a term longer than one (1) year, whether or not such purchase is in the ordinary course of business;

(h) any license agreement (as licensor or licensee) involving amounts greater than $100,000 or having a term longer than one (1) year, other than non-enterprise software licenses (e.g. personal computers);

(i) any indenture, mortgage, promissory note, loan agreement, guaranty or other agreement or commitment for the borrowing of money, any pledge or security arrangement;

(j) any surety bond (bid, performance or other), letter of credit, agreement of guarantee or indemnification (other than indemnification provisions in commercial agreements, leases and other arrangements entered into in the ordinary course of business), or

any commitment to issue any such surety bond, letter of credit, agreement of guarantee or indemnification;

(k) any contract or agreement (including any employment or severance agreement) with any current or former officer, employee, consultant, director or shareholder of the Company or the Subsidiary or with any persons or organizations controlled by or affiliated with any of them (other than contracts or agreements relating solely to confidentiality or non-solicitation agreements to which any current employee is bound);

(l) any contract with any Governmental Authority;

(m) any registration rights agreements, warrants, warrant agreements or other rights to subscribe for securities, any voting agreements, voting trusts, shareholder agreements or other similar arrangements or any stock purchase or repurchase agreements or stock restriction agreements;

(n) any partnership, joint venture, or other similar contract, arrangement or agreement or any other agreement or arrangement involving a sharing of profits, revenues, losses or costs with any entity; or

(o) except as set forth on Schedule 2.20, any contract not executed in the ordinary course of business.

Each Material Contract is valid and is in full force and effect and constitutes the legal, valid and binding obligation of the Company or the Subsidiary, as the case may be, and, to the knowledge of the Company, the other parties thereto, enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the rights of creditors generally and subject to the rules of law governing (and all limitations on) specific performance, injunctive relief and other equitable remedies. Neither the Company, the Subsidiary nor, to the knowledge of the Company, any other party to any Material Contract, is in default in complying with any provisions thereof, and no condition or event or fact exists which, with notice, lapse of time or both would constitute a default thereof on the part of the Company or the Subsidiary or, to the knowledge of the Company, on the part of any other party thereto in any such case that could reasonably be expected to have a Material Adverse Effect. True, correct and complete copies of each Material Contract have been provided or made available to Buyer at the Company's headquarters.

Since June 30, 2002, the Company has not (a) been ordered to stop or suspend any work as a result of, or relating to, deficiencies in work or a failure to perform or (b) received any notice of default or suspension with respect to any Material Contract. Since June 30, 2002, 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.

2.14 Litigation. Except as set forth in Schedule 2.14 attached hereto, there is no litigation, binding dispute resolution proceeding, claim or Governmental or administrative proceeding or investigation pending or, to the knowledge of the Company, threatened against (a) the Company or the Subsidiary, (b) against any Shareholder, officer, director or key employee of the Company or the Subsidiary involving any Company Shares or the business of the Company

or the Subsidiary or (c) which could prevent or hinder the consummation of the transactions contemplated by this Agreement. With respect to each matter set forth therein, Schedule 2.14 attached hereto sets forth a description of the forums for the matter, the parties thereto and the type and amount of relief sought.

2.15 Compliance with Laws. The Company and the Subsidiary are currently in material compliance and have in the past complied in all material respects with all applicable statutes, ordinances, orders, rules and regulations promulgated by any Governmental Authority, and neither the Company nor the Subsidiary has received any notice of a violation or alleged violation of any such statute, ordinance, order, rule or regulation.

2.16 Insurance. As of August 31, 2005, the Company and the Subsidiary have general commercial liability, professional liability, workers compensation and employer's liability, fire and casualty, environmental, pollution and such other appropriate insurance policies with coverage as identified in Schedule 2.16. Except as set forth in Schedule 2.16, as of August 31, 2005, there are no claims pending against the Company or the Subsidiary under any such insurance policies and to the Company's knowledge, there is no threatened termination of any such policies or arrangements. Said insurance policies and arrangements are in full force and effect, all premiums with respect thereto are currently paid, and the Company and the Subsidiary are in compliance in all material respects with the terms of such policies. There is no claim by the Company or the Subsidiary pending under any such policies as to which coverage has been questioned, denied or disputed by the insurer. Each such insurance policy shall continue to be in full force and effect through the date of the Closing.

2.17 Warranty and Related Matters. Schedule 2.17 sets forth (i) a complete list of all claims made to the sureties of the Company and the Subsidiary within the past five (5) 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 or the Subsidiary 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 a Company Service completed since January 1, 2003 that extend beyond one (1) year from the date of completion of such Company Service, excluding warranties and guarantees furnished by subcontractors, material suppliers or other third parties and excluding warranties and guarantees for which the Company has reasonable and appropriate insurance coverage. Except for the claims listed on Schedule 2.17, there are no pending or, to the Company's knowledge, threatened claims against the Company or the Subsidiary relating to any Company Service or any other work performed by the Company or the Subsidiary, product liability, warranty or other similar claims (including any claim alleging that any Company Service is defective or fails to meet any product or service warranties). To the Company's knowledge, 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 (except for such liabilities for which the Company has reasonable and appropriate insurance coverage). To the Company's knowledge, to the extent a Company Service includes design services, there are no inherent design defects.

2.18 Finder's Fees. Neither the Company nor the Subsidiary has incurred or become liable for any broker's commission or finder's fee relating to or in connection with the transactions contemplated by this Agreement, except as set forth in Schedule 2.18, which fee shall be payable by the Company for the account of the Shareholders from the proceeds of the Purchase Price paid to the Shareholders.

2.19 Approvals. Except as set forth in Schedule 2.19, the Company holds all permits, registrations, licenses, franchises, certifications and other approvals (collectively, the "Approvals") from third parties including, without limitation Governmental Authorities, that are required to operate the business of, or were otherwise obtained by, the Company and the Subsidiary. Each Approval is validly held by the Company or the Subsidiary, as the case may be, is in full force and effect, and the Company or the Subsidiary is operating in compliance therewith. The Approvals include, but are not limited to, those required in order for the Company and the Subsidiary to conduct their respective business under federal, state or local statutes, ordinances, orders, requirements, rules, regulations, or laws pertaining to environmental protection, public health and safety, worker health and safety, buildings, highways or zoning. None of the Approvals is subject to termination as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby, and, to the knowledge of the Company, Buyer will not be required to obtain any further Approvals to continue to conduct the business of the Company and the Subsidiary after the Closing. Neither the Company nor the Subsidiary is subject to or bound by any agreement, judgment, decree or order which could reasonably be expected to have a Material Adverse Effect. Neither the Company nor the Subsidiary is 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 or the Subsidiary and has not received any request for information, notice, demand letter, administrative inquiry or formal or informal complaint or claim from any Governmental Authority with respect to any aspect of the business, affairs, properties or assets of the Company or the Subsidiary which has not been fully resolved.

2.20 Related Parties. Except as set forth in Schedule 2.20, (a) since December 31, 2002 through June 30, 2005, there have been no transactions between the Company or the Subsidiary and any Related Party (as defined below) or any payment (however characterized) by the Company or any Subsidiary to any Related Party or by any Related Party to the Company or the Subsidiary and (b) there is no lease, agreement or commitment between the Company or the Subsidiary and any Related Party. As used in the preceding sentence, the term "transaction" includes, but is not limited to, any sale and or other transfer of property or assets, the lease or other use of the property or assets, the provision of services and the furnishing of personnel, whether or not for consideration. Except as set forth in Schedule 2.20, or as disclosed herein (i) no Related Party has any interest in any property of the Company or the Subsidiary, real or personal, tangible or intangible, including, but not limited to, Intellectual Property, (ii) no Related Party is indebted to the Company or the Subsidiary and (iii) neither the Company nor the Subsidiary is indebted to any Related Party. For purposes of this Agreement, "Related Party" means (A) an individual who is an officer, director, partner or Shareholder of the Company or the Subsidiary, (B) any member of the family of, or any individual who has the same home as, any individual (or the spouse of any such individual) described in clause (A) above, (C) any trust, estate or partnership of which an individual described in clause (A) or (B) above is a grantor, fiduciary, beneficiary or partner or (D) any person or entity (or any subsidiary of such

person or entity) of which one or more persons or entities described in clause (A), (B) or (C) above have either (x) aggregate record or beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of at least 10% of the outstanding equity securities or at least 10% of the outstanding voting securities or (y) the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting securities, by contract or otherwise.

2.21 Employee Benefit Programs.

(a) Schedule 2.21(a) attached hereto sets forth a list of each employee benefit plan (whether or not within the meaning of ERISAss.3(3) and whether or not subject to ERISA), including each employee pension plan, employee welfare, multiemployer plan (within the meaning of ERISAss.ss.3(37) or 4001(a)(3) (a "Multiemployer Plan")), multiple employer welfare arrangement (within the meaning of ERISAss.3(40)), written or oral employment or consulting agreement, change in control agreement, severance pay plan or agreement, employee relations policy (or practice, agreement or arrangement), agreements with respect to leased or temporary employees, vacation plan or arrangement, sick pay plan, stock purchase plan, stock option plan, fringe benefit plan, incentive plan, bonus plan, cafeteria or flexible spending account plan and any deferred compensation agreement (or plan, program, or arrangement) covering any present or former employee, director or consultant of the Company and which is sponsored or maintained by or to which contributions are made by either (1) the Company (including the Subsidiary), or (2) any other organization which together with the Company is treated as a single employer under Codess.ss.414(b) or (c) (an "ERISA Affiliate") or to which the Company, the Subsidiary or any ERISA Affiliate has any liability. Each and every such plan, program, policy, practice, arrangement and agreement is hereinafter referred to as an "Employee Program." 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), or any other funding vehicle, each reference to such Employee Program shall include a reference to such trust, organization or vehicle.

(b) Each Employee Program which has been intended to qualify under Section 401(a) or 501(c)(9) of the Code has received a favorable determination or approval letter from the Internal Revenue Service ("IRS") regarding its qualification under such section and has, to the Company's knowledge, been 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 reasonably be expected to 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 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) There has been no material failure of the Company or any ERISA Affiliate to comply with any laws or agreements applicable with respect to the Employee Programs. With respect to any Employee Program, there has been no (i) "prohibited transaction," as

defined in Section 406 of the ERISA or Code Section 4975, (ii) material failure to comply with any provision of ERISA, other applicable law, or any agreement, or (iii) non deductible contribution, which, in the case of either of (i) or (ii), could reasonably be expected to subject the Company to liability 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, to the Company's knowledge, threatened with respect to any such Employee Program. All payments 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, for all periods prior to the Closing Date, either have been made or have been or will be accrued for in the Closing Balance Sheet (and all such unpaid but accrued amounts as of August 31, 2005 are described in Schedule 2.21(c) attached hereto, other than union benefits payable, which are described in said schedule as of June 30, 2005).

(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, the Subsidiary or any Affiliate and subject to Code Section 412 or ERISA Section 302. With respect to any Employee Program maintained by the Company, the Subsidiary or any 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, the Subsidiary or any Affiliate to incur liability or have a lien imposed on its assets under Title IV of ERISA. 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. Neither the Company, the Subsidiary nor any Affiliate has ever maintained a Multiemployer Plan. Except as set forth in Schedule 2.21(d), none of the Employee Programs has ever provided health care or any 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, 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 three most recently filed IRS Forms 5500, with all applicable schedules and accountants' opinions attached thereto; (iv) the three 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 correspondence to and from any state or federal agency within the last six years with respect to such Employee Program.

(f) Each Employee Program required to be listed in Schedule 2.21(a) attached hereto may be amended, terminated, or otherwise modified by the Company or an ERISA Affiliate, as applicable, to the greatest extent permitted by applicable law, including the elimination of any and all future benefit accruals under any Employee Program and no employee communications or provision of any Employee Program document has failed to effectively reserve the right of the Company or the Subsidiary to so amend, terminate or otherwise modify such Employee Program.

(g) Each Employee Program 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 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.

2.22 Environmental Matters.

(a) The Company and the Subsidiary are in compliance with all Environmental Laws, and hold and are in compliance with all environmental permits, certificates, licenses, approvals, registrations and authorizations required under all Environmental Laws in connection with their respective businesses ("Company Environmental Permits"). All Company Environmental Permits are in full force and effect and will not by their terms expire less than ninety (90) days following the Closing Date.

(b) Neither the Company nor the Subsidiary has received any request for information, demand, administrative inquiry, notice of claim, notice of intent to bring a "citizens suit" under any Environmental Laws, formal or informal complaint or claim, or other notification that, or other information indicating that, it is or may be potentially liable or responsible under Environmental Laws, and there is no civil, administrative, or criminal proceeding pending or threatened against the Company or the Subsidiary, or any person for whose conduct the Company or the Subsidiary is or may be held responsible, under any Environmental Laws. The Company does not have any reason to believe that any of the items enumerated in this subsection (b) will be forthcoming.

(c) Neither the Company nor the Subsidiary has produced, processed, used, generated, treated, stored, handled, disposed of, accepted for disposal transferred or recycled any Hazardous Material at any property now or formerly owned, operated or leased by the Company or the Subsidiary except in compliance with Environmental Laws.

(d) No polychlorinated biphenyls ("PCBs") or equipment containing PCBs; asbestos or asbestos-containing materials; lead or lead-based paint; urea formaldehyde foam insulation; or toxic mold, mildew or fungi (i) are present, or ever have been present, at any property now or formerly owned, operated or leased by the Company or the Subsidiary or, to the Company's knowledge, at any building constructed by the Company or the Subsidiary or (ii) has resulted in damages to or at any property now or formerly owned, operated or leased by the Company or the Subsidiary or any building constructed by the Company or the Subsidiary where such damages are not covered by insurance (or where such coverage is in dispute with the insurer) maintained by the Company or the Subsidiary. Except as set forth in Schedule 2.22(d), there are no underground or aboveground storage tanks, active or abandoned, at any property now or formerly owned, operated or leased by the Company or the Subsidiary.

(e) Neither the Company nor the Subsidiary, has transported or disposed of, or allowed or arranged for any third party to transport or dispose of, any Hazardous Material to or at any location that is listed or proposed for listing on the National Priorities List (the "NPL") promulgated pursuant to CERCLA, CERCLIS, or any equivalent list of sites for cleanup under any analogous state program.

(f) Except as authorized by Environmental Laws, (i) neither the Company nor the Subsidiary, has Released any Hazardous Material on, in, from, under or at any real property now or formerly owned, operated or leased by the Company or the Subsidiary, and (ii) no Hazardous Material has been Released into, is threatened to be Released into, or has come to be located in the Environment at any property now or formerly owned, operated or leased by the Company or the Subsidiary, and no such property is listed or proposed for listing on the NPL, CERCLIS, or any equivalent list of sites under any analogous state program.

(g) There is no hazardous waste treatment, storage or disposal facility, landfill, surface impoundment or underground injection well, as those terms are defined under any Environmental Laws, located at any of the real property owned, operated or leased by the Company or the Subsidiary.

(h) There are no environmental liens recorded on any property owned by the Company or the Subsidiary.

(i) The Company has provided or made available to Buyer all documents, records and information available to the Company and the Subsidiary concerning any environmental or health and safety matter relevant to the Company or the Subsidiary or to any property now owned, operated or leased by the Company or the Subsidiary, whether generated by the Company or by the Subsidiary or by 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 Authority.

(j) No consent, approval, authorization, registration, or filing is required under Environmental Laws in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

(k) For purposes of this Agreement, (i) "Environment" shall mean soil, sediment, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins and wetlands), groundwaters, drinking water supplies, land, surface or subsurface strata, ambient air (including indoor air), plant and animal life (including fish and all other aquatic life), and any other environmental medium or natural resources; (ii) "Environmental Laws" shall mean all applicable foreign, federal, state, tribal, and local civil and criminal laws, principles of common law, by-laws, regulations, rules, ordinances, codes, decrees, orders, licenses, permits, conditions, judicial interpretations thereof, judgments, rulings, directives, or judicial or administrative orders, and the requirements of any Governmental Authority having jurisdiction with respect thereto, applicable to the regulation or protection of the Environment, the health and safety of persons and property, or any other environmental matters, whether existing as of the date hereof, previously enforced, or subsequently enacted, as any of the foregoing have been amended or may be amended from time to time; (iii) "Hazardous Material" shall mean any compound, chemical, contaminant, pollutant, toxic substance, hazardous waste, hazardous material, or hazardous substance, as any of the foregoing may be defined, identified, or regulated under or pursuant to any Environmental Laws, and including, without limitation, asbestos, asbestos-containing materials, PCBs, toxic mold, mildew or fungi, or any oil, waste oil, petroleum, or petroleum product which may pose a threat to the Environment or to human health and safety; and (iv) "Released" shall mean released, spilled, leaked, pumped, poured, drained, emitted, emptied, discharged, injected, escaped, leached, disposed, dumped, or otherwise introduced to, or allowed to escape into or through, the Environment.

2.23 Labor and Employment Matters.

(a) Prior to the date hereof, the Company has provided to Buyer contains a complete and accurate list of all of the non-union employees of the Company and the Subsidiary as of August 31, 2005 ("Business Employees") describing for each such Business Employee, the position, whether classified as exempt or non-exempt for wage and hour purposes, date of hire, business location, annual base salary, weekly/hourly rates of compensation and the budgeted, aggregate amount of all bonus, severance and other amounts to be paid to all Business Employees at the Closing or otherwise in connection with the transactions contemplated hereby. Schedule 2.23(a) contains a complete and accurate list of all of the independent contractors, consultants, temporary employees, leased employees or other servants or agents employed or used with respect to the operation of the business of the Company and the Subsidiary and classified by the Company or the Subsidiary as other than Business Employees or compensated other than through wages paid by the Company or the Subsidiary through its payroll department and reported on a form W-4 ("Contingent Workers"), showing for each Contingent Worker such individual's role in the business, fee or compensation arrangements and other contractual terms with the Company or the Subsidiary.

(b) Except as set forth in Schedule 2.23(b), (i) there is no, and during the past year there has not been any, labor strike, picketing of any nature, labor dispute, slowdown or

any other concerted interference with normal operations, stoppage or lockout pending or, to the Company's knowledge the Company, threatened against or effecting the business of the Company or the Subsidiary; (ii) neither the Company nor the Subsidiary has any duty to bargain with any union or labor organization or other person purporting to act as exclusive bargaining representative of any Business Employees or Contingent Workers with respect to the wages, hours or other terms and conditions of employment of any Business Employee or Contingent Worker or pursuant to a collective bargaining relationship or agreement permitted by Section 8(f) of the National Labor Relations Act, 29 U.S.C. s. 158(f) ("Section 8(f)"); (iii) to the Company's knowledge, no union claims or demands to represent Business Employee or Contingent Worker, there are no organizational campaigns in progress with respect to any of the Business Employees or Contingent Workers and no question concerning representation of such individuals exists; (iv) 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 or the Subsidiary with respect to any Business Employee or Contingent Worker; (v) neither the Company nor the Subsidiary has engaged in any unfair labor practice; (vi) the Company and the Subsidiary are 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; (vii) neither the Company nor the Subsidiary is delinquent in any payments to any Business 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 Business Employees or Contingent Workers; (viii) there are no, and within the last three (3) years there have been no formal or informal grievances, complaints or charges with respect to employment or labor matters (including, without limitation, allegations of employment discrimination, retaliation or unfair labor practices) pending or, to Company's knowledge, threatened against the Company or the Subsidiary in any judicial, regulatory or administrative forum, under any private dispute resolution procedure or internally; (ix) none of the employment policies or practices of Seller or the Subsidiary are currently being audited or investigated, or to the knowledge of the Company, subject to imminent audit or investigation by any Governmental Authority; (x) neither the Company nor the Subsidiary is, and within the last three (3) years neither the Company nor the Subsidiary has been, subject to any order, decree, injunction or judgment by any Governmental Authority or private settlement contract in respect of any labor or employment matters; (xi) the Company and the h Subsidiary are in material compliance with the requirements of the Immigration Reform Control Act of 1986; (xii) all Business Employees are employed at-will and no Business Employees are subject to any contract with the Company or any Subsidiary; (xiii) there is no policy, plan or program of paying severance pay or any form of severance compensation in connection with the termination of any Business Employee or Contingent Worker.

(c) Except as set forth on Schedule 2.23(c) attached hereto, neither the Company nor the Subsidiary has experienced a "plant closing," "business closing," or "mass layoff" as defined in the WARN Act or any similar state, local or foreign law or regulation affecting any site of employment of the Company or the Subsidiary or one or more facilities or operating units within any site of employment or facility of the Company or the Subsidiary, and, during the 90-day period preceding the date hereof, no Business Employee has suffered an "employment loss," with respect to the Company or the Subsidiary as defined in the WARN Act. Schedule 2.23(c) sets forth for each Business Employee who has suffered such

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 (iv) such employee's last job title(s), location, assignment(s) and department(s).

The Company and the Subsidiary are in compliance with all applicable affirmative action obligations under any law, including without limitation, Executive Order 11246. To the extent that any Contingent Workers are employed, the Company has properly classified and treated them in accordance with applicable laws and for purposes of all employee benefit plans and perquisites.

2.24 Customers and Partners.

(a) Schedule 2.24(a) sets forth the name of each customer of the Company and the Subsidiary that accounted for more than five percent (5%) of the revenues of the Company and the Subsidiary for each of the fiscal years ended September 30, 2003 and September 30, 2004 and/or for the nine months ended June 30, 2005 (the "Customers") together with the names of any persons or entities with which the Company or the Subsidiary has a material strategic partnership or similar relationship ("Partners"). No Customer or Partner of the Company or the Subsidiary has canceled or otherwise terminated its relationship with the Company or the Subsidiary or has materially decreased its usage or purchase of the services or products of the Company or the Subsidiary since December 31, 2002. Except as set forth on Schedule 2.24(a), to the Company's knowledge, no Customer or Partner has any expressed plan or intention to terminate, cancel or otherwise materially and adversely modify its relationship with the Company or the Subsidiary or to decrease materially or limit its usage, purchase or distribution of the services or products of the Company or the Subsidiary.

(b) Except as set forth in Schedule 2.24(b), as of June 30, 2005, neither the Company nor the Subsidiary has any unapproved or pending net positive or net negative claim, change order, or request for equitable adjustment involving direct or indirect cost incurred or anticipated to be incurred by the Company that is included in the Company's estimated final revenue or credited to estimated final cost in excess of $ 250,000, with any of its customers that could adversely affect the gross margin on the contracts to which they relate.

(c) Except as set forth in Schedule 2.24(c), as of June 30, 2005, neither the Company nor the Subsidiary has any unapproved or pending net positive or net negative claim, change order, or request for equitable adjustment from a subcontractor or supplier of the Company in excess of $ 1,000,000.

2.25 Suppliers; Subcontractors. The Company's and the Subsidiary's relationships with their suppliers and 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 $250,000 or more has canceled, materially modified, or otherwise terminated its relationship with the Company or the Subsidiary, or materially decreased availability of its services, supplies or materials to the Company or the Subsidiary. To the Company's knowledge, no supplier or subcontractor has any expressed plan or intention to do any of the foregoing.

2.26 Bids; Proposals. Schedule 2.26 sets forth a list of outstanding or in-process bids or proposals by the Company and the Subsidiary as of June 30, 2005. Except as specifically set forth on Schedule 2.26 no bid or proposal, if awarded, would obligate the Company or the Subsidiary 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.

2.27 Bank Accounts. Schedule 2.27 attached hereto sets forth the names and locations of all banks and other financial institutions at which the Company and the Subsidiary maintain accounts or safe deposit boxes of any nature and the names of all persons authorized to have access thereto, draw thereon or make withdrawals therefrom. At the Closing, copies of all records, including all signature and authorization cards, pertaining to such accounts and safe deposit boxes will be delivered to Buyer.

2.28 Government Contracts. Neither the Company nor the Subsidiary has (a) any 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) 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) been audited by any Governmental Authority with respect to any Government Contracts entered into or goods and services provided by the Company or the Subsidiary or any of their affiliates, except audits resulting in determinations neutral or favorable to the Company or the Subsidiary or as set forth on Schedule 2.28, (d) been investigated by any Governmental Authority with respect to any Government Contract entered into or goods and services provided by the Company or the Subsidiary or any of their Affiliates, except audits resulting in determinations neutral or favorable to the Company or the Subsidiary, (e) had a contract terminated by any Governmental Authority for default or failure to perform in accordance with applicable standards or (f) 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 2.28, neither the Company nor the Subsidiary has ever 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 2.28, to the Company's knowledge, all Government Contracts of the Company and the Subsidiary are fully funded, none have been cancelled and none are subject to cancellation as a matter of right prior to the expiration thereof. Neither the Company nor the Subsidiary has ever been disallowed by a contracting officer's final decision any costs incurred in excess of $10,000 under any Government Contract. Except as set forth on Schedule 2.28, as of the date of this Agreement, all required reports and filings have been submitted with respect to any Government Contracts.

2.29 Illegal Payments. Neither the Company, the Subsidiary nor any of their affiliates 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.

Notwithstanding any provision to the contrary contained in this Section 2, the Company shall not be deemed to have breached any representation or warranty contained herein based upon the omission of any item required to be set forth on a particular schedule to this Agreement if such item has been disclosed in response to any other schedule hereto and sufficient information has been provided in connection with such disclosure (taking into account the context in which the disclosure was made) to reasonably inform the recipient that such disclosure would also apply to the subject schedule.

SECTION 2A. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.

As a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated hereby, each Shareholder hereby severally makes to Buyer each of the representations and warranties set forth in this Section 2A. No Shareholder shall have any right of indemnity or contribution from the Company with respect to the breach of any of his or her representations or warranties hereunder.

2A.1 Company Shares. Each Shareholder owns of record and beneficially the number of the Company Shares set forth opposite such Shareholder's name in Exhibit A. Such Company Shares are, and when delivered by such Shareholder to Buyer pursuant to this Agreement will be, duly authorized, validly issued, fully paid, non-assessable and free and clear of any and all Liens, (other than transfer restrictions under federal or state securities laws).

2A.2 Authority. Each Shareholder has all requisite authority, right, power and capacity to enter into this Agreement and each agreement, document and instrument to be executed and delivered by or on behalf of such Shareholder pursuant to or as contemplated by this Agreement and to carry out the transactions contemplated hereby and thereby. Without limitation of the foregoing, each individual (i) who established any trust which is a Shareholder which holds Company Shares has obtained all necessary consents and approvals required under the terms of the trust and/or (ii) that is a Shareholder who holds any Company Shares which are community property, has obtained any necessary approvals from such individual's spouse, to legally and validly consummate the transactions contemplated by this Agreement. This Agreement and each agreement, document and instrument to be executed and delivered by any Shareholder pursuant to or as contemplated by this Agreement constitute, or when executed and delivered will constitute, valid and binding obligations of such Shareholder and his or her respective executors, heirs and assigns, as the case may be, enforceable in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the rights of creditors generally and subject to the rules of law governing (and all limitations on) specific performance, injunctive relief and other equitable remedies. The execution, delivery and performance by each Shareholder of this Agreement and each such agreement, document and instrument:

(a) do not and will not violate any laws of the United States, or any state or other jurisdiction applicable to such Shareholder or require such Shareholder to obtain any approval, consent or waiver of, or make any filing with, any person or entity (including any Governmental Authority) that has not been obtained or made; and

(b) do not and will not result in a breach of, constitute a default under, accelerate any obligation under or give rise to a right of termination of any indenture or loan or credit agreement or any other agreement, contract, instrument, Lien, lease, permit, authorization, order, writ, judgment, injunction, decree, determination or arbitration award to which such Shareholder is a party or by which the property of such Shareholder is bound or affected, or result in the creation or imposition of any Lien on any of the assets or properties of the Company or the Subsidiary.

2A.3 Finder's Fee. Except for the fees payable by the Company under the agreement referenced in Schedule 2.18 (which fees will be paid from the proceeds of the Purchase Price paid to the Shareholders), each Shareholder represents and warrants that he or she has not directly or indirectly incurred or become liable for any broker's commission or finder's fee relating to or in connection with the transactions contemplated by this Agreement.

2A.4 Agreements. No Shareholder is a party to any non-competition, trade secret or confidentiality agreement with any party other than the Company or the Subsidiary. There are no agreements or arrangements not disclosed in a Schedule hereto, to which any Shareholder is a party relating to the business of the Company or the Subsidiary or to such Shareholder's rights and obligations as a Shareholder, director or officer of the Company or the Subsidiary. Except as disclosed in Schedule 2A.4, no Shareholder owns, directly or indirectly, on an individual or joint basis, any material interest in, or serve as an officer or director of, any customer, competitor or supplier of the Company or the Subsidiary, or any organization which has a contract or arrangement with the Company or the Subsidiary.

SECTION 3. COVENANTS OF THE COMPANY AND SHAREHOLDERS.

The Company and each Shareholder hereby covenant and agree with Buyer as follows:

3.1 Cooperation. From the date hereof and prior to the Closing, the Company and each Shareholder will use its, his or her reasonable best efforts, and will cooperate with Buyer in all material respects, to secure all necessary consents, approvals, authorizations, exemptions and waivers from third parties (including any consents required under or in connection with any Material Contract) as shall be required in order to effectuate the transactions contemplated hereby, and will otherwise use its reasonable best efforts to cause the consummation of such transactions in accordance with the terms and conditions hereof.

3.2 Conduct of Business. Except as may be otherwise expressly permitted by this Agreement or with the prior written consent of Buyer, from the date hereof and prior to the Closing, the Company and the Subsidiary will: (a) operate only in the ordinary course, consistent with past practice; (b) use its reasonable best efforts to preserve intact its business organization; (c) continue in full force and effect all of its existing insurance policies (or comparable insurance); and (d) use its reasonable efforts to preserve its relationships and agreements with its subcontractors, suppliers and customers, licensors and licensees and others having business dealings with it in a manner consistent with past practices. Except as may be otherwise expressly permitted by this Agreement (including the Real Estate Transfers) or required by law or, with the prior written consent of Buyer, from the date hereof through the Closing or earlier termination of this Agreement, neither the Company nor the Subsidiary shall:

(i) borrow any funds or incur any contingent liability as a guarantor or otherwise with respect to the obligations of others, or incur any other contingent or fixed obligations or liabilities other than in the ordinary course of business consistent with prior practices;

(ii) sell, lease, exchange, license or otherwise dispose of any of its properties or assets;

(iii) create, or permit to be created, any Lien upon any of its properties or assets, except (A) liens for Taxes not due, (B) purchase money security interests and (C) mechanics' liens being disputed in good faith;

(iv) make any increase in, or any commitment to increase, the compensation, benefits or other payments payable or provided to, or to become payable to, any officer, director, employee, Shareholder or agent;

(v) alter the manner of keeping its books, accounts or records or change any of the accounting practices, principles, periods or methods used by it;

(vi) create, modify or increase any benefits under any bonus, deferred compensation, pension, profit sharing, retirement, insurance, severance, stock purchase, stock option or other fringe benefit plan, arrangement or practice or any other Employee Program, whether formal or informal, pay any bonus (other than the bonus payments in the amounts and to the Business Employees as set forth on a schedule provided to Buyer by the Company prior to Closing, which bonus payments shall not exceed, in the aggregate, the amount accrued for such bonus payments on the Company's balance sheet as of August 31, 2005 (the "Accrued Bonus Amount")) or pay any benefit not required under any such plan, arrangement or practice as in effect on the date hereof;

(vii) change the terms of any of accounts receivable;

(viii) declare or pay any dividends in cash, securities or other property, make any other distribution with respect to its capital stock (other than cash distributions to the Shareholders not to exceed the net proceeds received by the Company from the transfer of the Excluded Real Estate), acquire, directly or indirectly, by redemption or otherwise, any of its capital stock, or issue any debt or equity security;

(ix) make any other payment (however characterized) to a Related Party;

(x) be party to any merger, consolidation or other business combination;

(xi) organize any new subsidiary or acquire any capital stock of any person or any equity or ownership interest in any business;

(xii) prepay any obligation having a maturity of more than 90 days from the date it was issued and incurred;

(xiii) enter into or modify any employment agreement or similar commitment;

(xiv) enter into or modify, or engage in any negotiations with respect to, any collective bargaining, union agreement or similar commitment;

(xv) make or commit to any capital expenditure or acquire any property or assets (other than raw materials, parts and components purchased in the ordinary course of business consistent with past practice) which, individually or in the aggregate, exceed $100,000;

(xvi) enter into any agreement or commitment having a term in excess of one year;

(xvii) enter into any agreement or commitment that restricts the Company or the Subsidiary from carrying on its business anywhere in the world;

(xviii) pay, discharge or satisfy any claim, liability or obligation (absolute, accrued, contingent or otherwise), other than any payment, discharge or satisfaction in the ordinary course of business and consistent with past practice;

(xix) cancel any debts or waive any claims or rights of substantial value;

(xx) enter into any contract or agreement that would constitute a Material Contract;

(xxi) amend or modify any Material Contract or waive, delay the exercise of, release or assign any right or claim under, any Material Contract;

(xxii) make or change any Tax election, change an annual accounting period, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to the Company or the Subsidiary, surrender 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 the Subsidiary, 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 or the Subsidiary for any period ending after the Closing Date or decreasing any Tax attribute of the Company or the Subsidiary existing on the Closing Date;

(xxiii) agree or otherwise commit, whether in writing or otherwise, to do any of the foregoing; or

(xxiv) discharge, satisfy, waive or release of any material right of value or collection or compromise of any accounts receivable other than in the ordinary course of business and consistent with the Company's past practices.

3.3 Access. From the date hereof and through the Closing, the Company shall (a) provide Buyer and its representatives with such information as Buyer or its representatives may from time to time request with respect to the Company and the transactions contemplated by this Agreement, (b) provide Buyer and its representatives access, in a manner so as not to interfere with the business of the Company and the Subsidiary, during regular business hours and upon one (1) business day prior notice to the properties, books and records of the Company and the Subsidiary as Buyer or its representatives may from time to time reasonably request and (c) permit Buyer and its representatives to discuss, in a manner so as not to interfere with the business of the Company and the Subsidiary, the business of the Company and the Subsidiary with their respective officers and their key employees, distributors and suppliers.

3.4 Further Assurances. At any time and from time to time after the Closing, the Shareholders shall, at the request of Buyer and without further consideration, execute and deliver such further instruments or documents and take all such further action as Buyer may reasonably request in order to evidence or otherwise facilitate and implement the consummation of the transactions contemplated hereby.

3.5 No Solicitation. Between the date hereof and the earlier to occur of the Closing Date or the termination of this Agreement, neither the Company, the Subsidiary, any Shareholder nor any of their respective managers, directors, officers, partners, affiliates, attorneys, investment bankers or accountants will, directly or indirectly, solicit, initiate, knowingly encourage, discuss or negotiate with, provide any information to, enter into any agreement with or otherwise cooperate in any way with, any person or entity other than Buyer concerning any Competing Transaction (as defined below). The Company, the Subsidiary and each Shareholder shall promptly (and in any event within two (2) business days of the occurrence of the relevant event) inform Buyer orally and in writing of any proposals or inquiries which it receives from any person or entity concerning a possible Competing Transaction or that would reasonably be expected to lead to a possible Competing Transaction, including, to the extent known by the Company, the identity of the party making the inquiry or proposal and the terms and conditions thereof. For purposes of this Agreement, the term "Competing Transaction" means any of the following: (i) any merger, consolidation, business combination or other similar transaction involving the Company or the Subsidiary; (ii) any sale, lease, exchange, transfer or other disposition of all or substantially all of the assets of the Company or the Subsidiary; (iii) any issuance, sale, lease, exchange, transfer or other disposition of any Company Shares or any other equity interest in the Company or the Subsidiary; or (iv) any sale, exchange, transfer or other disposition by Shareholder of any interest in the Company.

3.6 Confidentiality. No Shareholder will for any reason, directly or indirectly, for itself or himself or any other person, use or disclose any trade secrets, confidential information, know how, proprietary information or other intellectual property of the Company or the Subsidiary transferred (directly or indirectly) to Buyer as a result of the consummation of the transactions contemplated in this Agreement. The Company and the Shareholders agree that, unless and until the Closing has been consummated, each of the Company, the Shareholders 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,

independently developed, known or procured by the Company, 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 a Shareholder is required by law to disclose such information, the Company or such Shareholder, or the Shareholders' Representative on behalf of such Shareholder, 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 Shareholder 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 Shareholders 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 Shareholders in connection with the transaction. Each Shareholder 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 Shareholder 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.

3.7 Non-competition. From the date of this Agreement and until the fifth anniversary of the Closing (in the case of Allen A. Rudolph and Karen M. Rudolph) and until the third anniversary of the Closing (in the case of Martin Sisemore, Rick Millitello, Gary Walz, Dennis Giles, Joe Francini and James F. Evans (collectively, the "Executives"), no Major Shareholder (as defined in Section 8.1) will, without the prior written consent of Buyer, directly or indirectly, anywhere within the States of Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah or Washington, engage in the commercial building general contracting business, 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 Major Shareholder) that is engaged in commercial building general contracting. From the date of this Agreement and until the fifth anniversary of the Closing (in the case of Allen A. Rudolph and Karen M. Rudolph) and until the fourth anniversary of the Closing (in the case of the Executives), each Major Shareholder shall be prohibited from (a) hiring or engaging or attempting to hire or engage for or on behalf of such Major Shareholder or any such competitor any officer or employee of the Company, Buyer or any of their respective affiliates, (b) encouraging for or on behalf of such Major Shareholder 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 such Major Shareholder 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 Major Shareholder 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.

3.8 Accounts Receivable. If, as of August 31, 2006, the Company and the Subsidiary have not collected in full without set-off or counterclaim all of the Receivables (as defined below) after using commercially reasonable best efforts, then the Buyer may recover from the Indemnity Escrow, subject to the Representation and Warranty Cap and the Shareholder Basket, and the provisions of Section 8 of this Agreement related thereto, the amount of the Receivables that has not been collected as of such date; provided that if any retainage Receivables or notes Receivables have not been collected prior to such date, Buyer shall only be entitled to receive that portion of the retainage Receivable or notes Receivable that Buyer believes in good faith will not be collectible in accordance with the Company's customary business practices. Buyer's sole source of recourse for any amounts payable by the Shareholders under this Section 3.8 that are not paid shall be the Indemnity Escrow. Following any such payment from the Indemnity Escrow and if requested by the Shareholders, (a) Buyer agrees to assign to the Shareholders' Representative, on behalf of the Shareholders, any uncollected Receivables for which the Shareholders reimburse Buyer to the extent of their reimbursement and (b) Buyer agrees that if uncollected Receivables for which the Shareholders reimburse Buyer are subsequently collected by Buyer, then Buyer shall refund the Shareholders' reimbursement to the extent of such collections (any such refund(s) to be paid to the Shareholders' Representative, on behalf of the Shareholders). For purposes of this Section 3.8, "Receivables" means all accounts and notes receivable of the Company and the Subsidiary (both current and retainage) set forth on the Company's balance sheet as of August 31, 2005. Any claims for indemnification under Section 8 hereof by Buyer for Losses involving a breach by the Shareholders of this Section 3.8 may be asserted by Buyer until thirty (30) days after the later of (i) the final determination of the Gross Margin Results in accordance with Section 3.9 and (ii) the final determination of the Unresolved PCO and Claims Report in accordance with Section 3.10.

3.9 Realization of Gross Margin.

(a) The Company and the Shareholders represent that Schedule 3.9 sets forth all of the work-in-progress of the Company and the Subsidiary as of June 30, 2005 and the projected fee or gross margin for each project included therein, on a project by project basis. The Shareholders' Representative will deliver to Buyer an updated Schedule 3.9 dated as of August 31, 2005 ("Updated Schedule 3.9") as soon as reasonably practicable following the Closing Date but no later than sixty (60) days thereafter.

(b) Within five (5) days after final determination of the Gross Margin Results (as defined below) as provided in Section 3.9(c) below, Buyer may recover from the Indemnity Escrow, subject to Section 3.9(d), the Representation and Warranty Cap and the Shareholder Basket, and the provisions of Section 8 of this Agreement related thereto, an amount equal to the excess, if any, of (i) ninety percent (90%) of the aggregate projected fee or gross margin as of August 31, 2005 for all projects listed on Updated Schedule 3.9 based on the value of each individual project, as of the Closing Date, over (ii) the sum of the Gross Margin Results for all of such projects. The term "Gross Margin Result" for each project shall mean the positive or negative difference of:

(i) the projected fee gross margin for such project as set forth on Updated Schedule 3.9; less

(ii) the gross margin for such project as of August 31, 2006 (determined in accordance with GAAP consistently applied and consistent with the Company's accounting principles and methods existing as of August 31, 2005)

(c) Within eighty (80) business days after the first anniversary of the Closing, Buyer shall in good faith prepare and deliver to the Shareholders' Representative a Gross Margin Results report in accordance with GAAP consistently applied and consistent with the Company's accounting principles and methods existing as of August 31, 2005, together with worksheets and data that support the Gross Margin Results report and any other information that the Shareholders' Representative 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 Shareholders' Representative or the failure of Shareholders' Representative to object in writing within thirty (30) days after receipt thereof by the Buyer. If the Shareholders' Representative does not agree with the Gross Margin Results report and the calculation of Gross Margin Results stated thereon, and Buyer and the Shareholders' Representative cannot mutually agree on the same, then within forty-five (45) days following receipt by the Shareholders' Representative of the Gross Margin Results report, Buyer and the Shareholders' Representative shall engage the Neutral Auditor to 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 the Closing Date 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 Shareholders, 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.

(d) Buyer's sole source of recourse for any amounts payable under this Section 3.9 shall be the Indemnity Escrow.

(e) Any claims for indemnification under Section 8 hereof by Buyer for Losses involving a breach by the Shareholders of this Section 3.9 may be asserted by Buyer until thirty (30) days after the later of (i) the final determination of the Gross Margin Results in accordance with this Section 3.9 and (ii) the final determination of the Unresolved PCO and Claims Report in accordance with Section 3.10.

3.10 Unapproved or Pending Change Orders and Claims. The Shareholders' Representative will deliver to Buyer updated versions of Schedule 2.24(b) and Schedule 2.24(c), dated as of August 31, 2005, as soon as reasonably practicable after the Closing Date but no later than sixty (60) days thereafter ("Schedule 3.10"). The pending change orders and claims set forth on Schedule 3.10 are hereafter referred to as the "Unapproved or Pending Change Orders and Claims").

(b) Within eighty (80) days after the first anniversary of the Closing Date (the "First Anniversary"), Buyer shall in good faith prepare and deliver to the Shareholders' Representative a report (the "Unresolved PCO and Claims Report") setting forth all

outstanding or Unapproved or Pending Change Orders and Claims as of August 31, 2006 (the "Unresolved PCO and Claims"), together with worksheets and data that support the Unresolved PCO and Claims Report and any other information that the Shareholders' Representative may reasonably request in order to verify the Unresolved PCO and Claims Report and the Unresolved PCO and Claims reflected thereon. The Unresolved PCO and Claims Report shall be binding upon the parties upon the approval of such Unresolved PCO and Claims Report by the Shareholders' Representative or the failure of the Shareholders' Representative to object in writing within thirty (30) days after receipt thereof by the Shareholders' Representative of such report. If the Shareholders' Representative does not agree with the Unresolved PCO and Claims Report, and Buyer and the Shareholders' Representative cannot mutually agree on the same, then within forty-five (45) days following receipt by the Shareholders' Representative of the Unresolved PCO and Claims Report, Buyer and the Shareholders' Representative shall engage the Neutral Auditor to resolve such dispute. The Neutral Auditor shall review the Unresolved PCO and Claims Report and, within ten (10) business days of its appointment, shall make any adjustments necessary thereto, and, upon completion of such review, such Unresolved PCO and Claims Report 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 Shareholders, 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.

(c) Within five (5) days after final determination of the Unresolved PCO and Claims as provided in subparagraph (b) of this Section 3.10, the Buyer may recover from the Indemnity Escrow, subject to subparagraph (d) below, the Representation and Warranty Cap and the Shareholder Basket, and the provisions of Section 8 of this Agreement related thereto, an amount equal to one hundred percent (100%) of the Unresolved PCO and Claims to the extent included in the calculation of Closing Net Worth.

(d) Buyer's sole source of recourse for any amounts payable by the Shareholders under this Section 3.10 shall be the Indemnity Escrow.

(e) Any claims for indemnification under Section 8 hereof by Buyer for Losses involving a breach by the Shareholders of this Section 3.10 may be asserted by Buyer until thirty (30) days after the later of (i) the final determination of the Gross Margin Results in accordance with Section 3.9 and (ii) the final determination of the Unresolved PCO and Claims Report in accordance with this Section 3.10.

3.11 Tax Matters.

(a) The Shareholders shall fully cooperate, as and to the extent reasonably requested by Buyer, in connection with and any audit, litigation or other proceeding with respect to Taxes of the Company or the Subsidiary for all taxable periods ending on or before the Closing Date and all Stub Periods.

(b) The Shareholders agree, upon request, (i) 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 on the Company or the Subsidiary (including, but not limited to, with respect to the transactions contemplated hereby), and (ii) to provide Buyer with all information that Buyer, the Company or the Subsidiary may be required to report pursuant to Code Section 6043 and all Treasury Regulations promulgated thereunder.

(c) All tax-sharing agreements or similar agreements with respect to or involving the Company or the Subsidiary shall be terminated as of the Closing Date and, after the Closing Date, the Company and the Subsidiary shall not be bound thereby or have any liability thereunder.

3.12 Intentionally Omitted.

3.13 Payment of Certain Related Party Transactions. By no later than the delivery date of the Closing Balance Sheet in accordance with Section 1.4(b), all accounts, notes and loans receivable of the Company and the Subsidiary from any Related Party that are outstanding as of the Closing shall have been paid in full (including such arrangements listed on Schedule 2.20 designated as being paid pursuant to this Section 3.13), provided, however, that the notes issued by each of Marcus Staniford, Bryan Morrissey, Danett Debrine and Sergio Vazquez in favor of the Company in the amounts listed on Schedule 2.20 shall remain outstanding and shall be paid in accordance with their respective terms.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.

Buyer hereby represents and warrants to the Company and the Shareholders as follows:

4.1 Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts with all requisite corporate power and authority to own or lease 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.

4.2 Authority. Buyer has all requisite corporate power and authority to enter into this Agreement and each agreement, document and instrument to be executed and delivered by it pursuant to or as contemplated by this Agreement and to carry out the transactions contemplated hereby and thereby. The execution, delivery and performance by Buyer of this Agreement and each such other agreement, document and instrument have been duly authorized by all necessary action of Buyer, and no other action on the part of Buyer is required in connection therewith. This Agreement and each agreement, document and instrument to be executed and delivered by Buyer pursuant to or as contemplated by this Agreement constitute (assuming the valid execution of this Agreement by the Company and the Shareholders), or will when executed and delivered by Buyer constitute, valid and binding obligations of Buyer, enforceable in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the rights of creditors generally and subject to the rules of law governing (and all limitations on) specific performance, injunctive relief and other equitable remedies. The execution, delivery and performance by Buyer of this Agreement and each such other agreement, document and instrument in order to consummate the transactions contemplated by this Agreement:

(a) do not and will not violate any provision of the charter or by-laws of Buyer;

(b) do not and will not violate any laws of the United States or any state or other jurisdiction applicable to Buyer or require Buyer to obtain any approval, consent or waiver of, or to make any filing with, any person or entity (including any Governmental Authority) that has not been obtained or made; and

(c) do not and will not result in a breach of, constitute a default under, accelerate any obligation under, require a consent under, cause a termination under, or give rise to a right of termination of any indenture or loan or credit agreement or any other agreement, contract, instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment, injunction, decree, determination or arbitration award, whether written or oral, to which Buyer is a party or by which the property of Buyer is bound or affected, or result in the creation or imposition of any Lien on any of the assets of Buyer.

4.3 Litigation. There is no litigation, claim or Governmental or administrative proceeding or investigation pending or, to the knowledge of Buyer, threatened against Buyer which could prevent or hinder the consummation of the transactions contemplated by this Agreement.

4.4 Finder's Fees. Buyer has not incurred nor become liable for any broker's commission or finder's fee relating to or in connection with this Agreement or the transactions contemplated hereby.

4.5 Investment. Buyer is not acquiring the Company Shares with a view to or for sale in connection with any distribution thereof within the meanings of the Securities Act of 1933, as amended.

SECTION 5. COVENANTS OF BUYER.

Buyer hereby covenants and agrees with the Company and the Shareholders as follows:

5.1 Cooperation by Buyer. From the date hereof and prior to the Closing, Buyer shall use its reasonable efforts, and will cooperate with the Company in all material respects, to secure all necessary consents, approvals, authorizations, exemptions and waivers from third parties as shall be required in order to effectuate the transactions contemplated hereby, and shall otherwise use its best efforts to cause the consummation of such transactions in accordance with the terms and conditions hereof.

5.2 Further Assurances. At any time or from time to time after the Closing, Buyer shall, at the request of the Shareholders' Representative, execute and deliver any further instruments or documents and take all such further action as the Shareholders' Representative may reasonably request in order to evidence or otherwise facilitate the consummation of the transactions contemplated hereby.

5.3 Confidentiality. The Buyer hereby covenants and agrees that, unless and until the Closing has been consummated, Buyer and its officers, directors, 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 Shareholders 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, independently developed, known or procured by 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.

5.4 Employee Benefits. Following the Closing Date, Buyer in its sole discretion shall either (a) continue to maintain the retirement, health and welfare benefits, programs or arrangements of the Company for the Business Employees who remain employed by the Company after the Closing Date; or (b) permit such Business Employees to participate in the retirement, health and welfare benefit plans, programs or arrangements of the Buyer (other than the Perini Corporation Pension Plan); provided, to the extent that service is relevant for purposes of eligibility, vesting, calculation of any benefit, or benefit accrual under any of the retirement, health and welfare benefit plans, programs or arrangements of the Buyer, the Buyer shall credit such Business Employees for service on or prior to the Closing Date that was recognized by the Company for purposes of the retirement, health and welfare benefit plans, programs or arrangements maintained by the Company.

5.5 Bonus Payments. Within sixty (60) days following the Closing Date, Buyer agrees to make the bonus payments in the aggregate amount equal to the Closing Bonus Accrual (as set forth on a schedule provided to Buyer by the Company prior to Closing). In furtherance of the foregoing, within fifteen (15) days following the Closing Date, the Shareholders' Representative agrees to provide Buyer with a schedule setting forth the names of each Business Employee entitled to receive a bonus payment and the amount of such bonus payment to be made to such Business Employee (which, in the aggregate, shall not exceed the Closing Bonus Accrual).

5.6 Trustee Acknowledgments. Within ten (10) days of the Closing Date, each non-Major Shareholder organized as a trust (a "Trust Shareholder") and holding Company Shares shall have delivered to Buyer an acknowledgement and consent from each trustee of such non-Major Shareholder, in a form mutually agreed upon by Buyer and the Company (the "Trustee Consent"); and each Major Shareholder (as defined in Section 8.1) organized as a trust and

holding Company Shares shall have delivered to Buyer on or prior to the Closing Date a Trustee Consent from each trustee of such Major Shareholder.

SECTION 6. CONDITIONS TO CLOSING.

6.1 Conditions to Buyer's Obligations. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction (or waiver) on or prior to the Closing Date of all of the following conditions:

(a) Representations; Warranties; Covenants. Each of the representations and warranties of the Company and the Shareholders contained in Sections 2 and 2A shall be true and correct as of the date of this Agreement and true and correct in all material respects (except for such representations and warranties that are qualified by their terms as to materiality, which representations and warranties as so qualified shall be true in all respects) at and as of the Closing, as though made at and as of the Closing (except to the extent expressly made as of a specified date, which shall be true and correct in all materials respects as of such date); and the Company and the Shareholders shall, on or before the Closing, have performed all of their obligations hereunder, or the same shall have been waived in writing by Buyer, which by the terms hereof are to be performed on or before the Closing.

(b) No Material Change. There shall have been no material adverse change in the assets, liabilities, business, condition (financial or otherwise), results of operations or prospects of the Company and the Subsidiary since the date hereof, whether or not in the ordinary course of business.

(c) No Litigation. There shall have been no determination by Buyer, acting in good faith, that the consummation of the transactions contemplated by this Agreement has become inadvisable or impracticable by reason of the institution or threat by any person or any Governmental Authority of litigation, proceedings or other action against Buyer, the Company, the Subsidiary or any Shareholder.

(d) Consents. The Company and the Subsidiary (i) shall have made all filings with and notifications of Governmental Authorities and other entities required to be made by the Company and the Subsidiary in connection with the execution and delivery of this Agreement, the performance of the transactions contemplated hereby and the continued operation of the business of the Company and the Subsidiary subsequent to the Closing; and (ii) shall have received all authorizations, waivers, consents and permits, in form and substance reasonably satisfactory to Buyer, from all third parties, including, without limitation, applicable Governmental Authorities, lessors, lenders and contract parties, required to permit the continuation of the business of the Company and the Subsidiary and the consummation of the transactions contemplated by this Agreement, including the transfer to Buyer of the Company Shares and to avoid a breach, default, termination, acceleration or modification of any Material Contract.

(e) Certificate from Officers. The Company shall have delivered to Buyer a certificate of the Company's President and Chief Financial Officer dated as of the Closing to

the effect that the statements set forth in paragraph (a) and (b) above in this Section 6.1 are true and correct.

(f) Indemnity Escrow Agreement. The Shareholders' Representative, Buyer and the Indemnity Escrow Agent shall have executed and delivered the Indemnity Escrow Agreement.

(g) Company Shares. The Shareholders shall have delivered to Buyer stock certificates evidencing the Company Shares, duly endorsed in favor of Buyer for transfer or presented with stock powers duly executed in favor of Buyer.

(h) Resignations. Buyer shall have received resignations of (a) Allen A. Rudolph and Karen M. Rudolph from all officer, director and employee positions with the Company and the Subsidiary and (b) each director of the Company and the Subsidiary, such resignations to be effective as of the Closing.

(i) Releases. Buyer shall have received General Releases executed by each Shareholder and each director and officer of the Company and the Subsidiary, in the forms attached hereto as Exhibits C-1 and C-2, as applicable.

(j) Estoppel and Consent. Buyer shall have received an executed Estoppel and Consent from the landlord under each Lease, in substantially the form attached hereto as Exhibit D.

(k) Opinion of Counsel. Buyer shall have received from Thelen Reid & Priest LLP, counsel to the Company, an opinion as of the Closing Date, in the form attached hereto as Exhibit E.

(l) Intentionally Omitted.

(m) Real Estate Transfers. The Company (1) shall have transferred all of its title and interest in and to the real property described on Schedule 6.1(m) attached hereto (the "Excluded Real Estate") and all obligations relating to the Excluded Real Estate such that neither the Company nor the Subsidiary (A) has any interest in the Excluded Real Estate and (B) has any mortgage, indebtedness or other obligations related to the Excluded Real Estate (the "Real Estate Transfers") and (2) shall have delivered to Buyer documents evidencing the Real Estate Transfers, which shall be in form and substance reasonably satisfactory to Buyer.

(n) LLC Distribution. The Company shall have distributed to the Shareholders all of the membership and other equity interests of R&S Holding Company, LLC, a California limited liability company (the "LLC"), held by the Company (the "LLC Distribution").

(o) Employment Agreements. Each of Martin Sisemore, Rick Millitello, Gary Walz, Dennis Giles, Joe Francini and James F. Evans shall have executed and delivered to Buyer an employment agreement in substantially the form attached hereto as Exhibit F.

(p) Regulatory Approvals. All governmental and regulatory filings, authorizations and approvals that are required for the transfer of the Company Shares to Buyer and the consummation of the transactions contemplated hereby shall have been duly made and obtained.

(q) Related Party Transactions. (i) All outstanding accounts, notes and loans receivable of the Company and the Subsidiary from any Related Party shall have been paid in full (excluding those arrangements designated on Schedule 2.20 as being paid in accordance with Section 3.13), provided, however, that the notes issued by each of Marcus Staniford, Bryan Morrissey, Danett Debrine and Sergio Vazquez in favor of the Company in the amounts listed on Schedule 2.20 shall remain outstanding and shall be paid in accordance with their respective terms and (ii) all other arrangements and transactions between the Company or the Subsidiary and any Related Party existing on or prior to the Closing Date shall have been terminated and the Company and the Subsidiary released from all obligations thereunder, except the month-to-month leases for the Company's facilities located at (A) 1250 L'Avenida Street, Mountain View, California and (B) 1260 L'Avenida Street, Mountain View, California, as set forth on Schedule 2.20.

6.2 Conditions to the Shareholders' Obligations. The obligation of the Shareholders to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction (or waiver) on or prior to the Closing Date of all of the following conditions:

(a) Representations; Warranties; Covenants. Each of the representations and warranties of Buyer contained in Section 4 shall be true and correct as of the date of this Agreement and true and correct in all material respects at and as of the Closing, as though made on and as of the Closing; Buyer shall, on or before the Closing, have performed all of its obligations hereunder, or the same shall have been waived in writing by the Company or the Shareholders Representative, which by the terms hereof are to be performed on or before the Closing; and Buyer shall have delivered to the Shareholders a certificate of the President or any Vice President of Buyer dated on the Closing to such effect.

(b) No Litigation. There shall have been no determination by the Shareholders, acting in good faith, that the consummation of the transactions contemplated by this Agreement has become inadvisable or impracticable by reason of the institution or threat by any person or any federal, state or other governmental authority of material litigation, proceedings or other action against Buyer, the Company, the Subsidiary or any Shareholder.

(c) Purchase Price. Buyer shall have delivered the Purchase Price to the Company and the Indemnity Escrow Agent in accordance with Section 1.2 hereof.

(d) Indemnity Escrow Agreement. The Shareholders' Representative, Buyer and the Indemnity Escrow Agent shall have executed and delivered the Indemnity Escrow Agreement.

(e) Employment Agreements. Buyer shall have executed and delivered to each of Martin Sisemore, Rick Millitello, Gary Walz, Dennis Giles, Joe Francini and James F. Evans an employment agreement in substantially the form attached hereto as Exhibit G.

(f) Regulatory Approvals. All governmental and regulatory filings, authorizations and approvals that are required for the consummation of the transactions contemplated hereby shall have been duly made and obtained.

SECTION 7. TERMINATION PRIOR TO CLOSING.

7.1 Termination. This Agreement may be terminated prior to the Closing:

(a) at any time, by the mutual written consent of Buyer and the Shareholders' Representative;

(b) by the Shareholders' Representative, if neither the Company nor the Shareholders are then in material breach of any term 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 thirty (30) days after the giving of notice thereof by the Shareholders' 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 Shareholders' Representative, upon a material breach of any representation, warranty or covenant of the Company or any Shareholder contained in this Agreement, provided that such breach is not capable of being cured or has not been cured within thirty (30) days after the giving of notice thereof by Buyer to the Shareholders' Representative; and

(d) by Buyer or the Shareholders' Representative at any time after October 3, 2005, if the Closing has not occurred by such date and the Party seeking termination is not then in breach of any of the terms of this Agreement.

7.2 Effect of Termination. In the event of any termination of this Agreement pursuant to Section 7.1, there shall be no further liability or obligations hereunder on the part of any party hereto or their respective affiliates; provided, however, that nothing herein shall relieve either party from liability for any breach of this Agreement existing at the time of such termination.

7.3 Waiver. At any time prior to the Closing, the Parties may (a) extend the time for the performance of any of the obligations or 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.

SECTION 8. INDEMNIFICATION.

8.1 Indemnification by the Shareholders. Subsequent to the Closing, each (i) non-Major Shareholder and his or her respective executors, administrators, estates, heirs, beneficiaries and permitted assigns severally and (ii) each of Allen A. Rudolph, Karen M. Rudolph, Paul A. Aherne, Joseph Francini, Dennis Giles, James F. Evans, Martin Sisemore and Gary Walz (collectively, the "Major Shareholders") and his or her respective executors, administrators, estates, heirs, beneficiaries and permitted assigns, jointly and severally, will indemnify and hold harmless Buyer, its subsidiaries and their respective affiliates and their respective officers, directors, employees and agents (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:

(a) fraud or an intentional misrepresentation by the Company or any Shareholder of any of their 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;

(b) any breach of any representation or warranty made by the Company or any Shareholder in this Agreement or in any Schedule, exhibit, certificate, financial statement, agreement or other instrument delivered under or in connection with this Agreement;

(c) any breach of any covenant or agreement made by the Company, any Shareholder or the Shareholders' Representative in this Agreement or in any Schedule, exhibit, certificate, financial statement, agreement or other instrument delivered under or in connection with this Agreement;

(d) any liabilities of any kind relating to, based upon, arising out of or in connection with the Excluded Real Estate, the Real Estate Transfers (including any mortgage, indebtedness or other obligations related to the Excluded Real Estate), the LLC or the LLC Distribution; and

(e) notwithstanding whether there is a breach of any of the representations and warranties set forth in Section 2 hereof (including without limitation, Section 2.8), any liability for (i) Taxes (or the nonpayment thereof) of the Company, the LLC or the Subsidiary for (A) all taxable periods ending on or before the Closing Date and (B) the portion through the end of the Closing Date of any taxable period that includes (but does not end on) the Closing Date (a "Stub Period"), including without limitation any and all Taxes (including under Code Section 1374 or similar provision of state, local or foreign law) relating to the Real Estate Transfers or the LLC Distribution and (ii) any and all Taxes of any person (other than the Company, the LLC and the Subsidiary) imposed on any Buyer Indemnified Party as a

transferee or successor, by contract, pursuant to any law, rule or regulation or otherwise which relate to an event or transaction occurring before the Closing or in connection with the Closing. For purposes of clause (i)(B) of the preceding sentence, the portion attributable to a Stub Period of any Tax based on or measured by income or receipts of the Company, the LLC or the Subsidiary 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, the LLC or the Subsidiary holds a beneficial interest shall be deemed to terminate at such time), and the portion attributable to a Stub Period of any other Tax 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 Stub Period and the denominator of which is the number of days in the entire taxable period.

Losses described in or arising under clauses (a) through (e) of this Section 8.1 are collectively referred to as "Buyer Indemnifiable Losses."

8.2 Limitations on Indemnification by Shareholders.

(a) Maximum Indemnification. Subject to the exceptions set forth in subsection (f) of this Section 8.2, the obligation of the Shareholders to indemnify Buyer Indemnified Parties in respect of any Buyer Indemnifiable Losses described in or arising under (i) Section 8.1(b) or (ii) Section 8.1(c) (other than a breach of Sections 1.4(c)(i) and 3.7) (collectively, "Representation and Warranty Losses") shall be limited, in the aggregate, to an amount equal to Three Million Dollars ($3,000,000) (the "Representation and Warranty Cap").

(b) Shareholder Basket. Subject to the exceptions set forth in subsection (f) of this Section 8.2, no indemnification shall be payable with respect to Representation and Warranty Losses except to the extent the cumulative amount of all Representation and Warranty Losses exceeds One Hundred Thousand Dollars ($100,000) in the aggregate (the "Shareholder Basket"), whereupon the amount of such Representation and Warranty Losses in excess of the Shareholder Basket shall be recoverable in accordance with the terms hereof.

(c) Time Limitation. Subject to the exceptions set forth in subsection (f) of this Section 8.2, no indemnification shall be payable to a Buyer Indemnified Party with respect to any claim relating to Representation and Warranty Losses asserted after the first anniversary of the Closing Date (the "Expiration Date"); provided that any claim for indemnification as to which notice has been given prior to the Expiration Date shall survive such expiration until final resolution of such claim; and provided further that, claims relating to Representation and Warranty Losses involving a breach by the Shareholders of any of the covenants or agreements contained in Sections 3.8, 3.9 or 3.10 may be asserted until thirty (30) days after the later of (i) the final determination of the Gross Margin Results in accordance with Section 3.9 and (ii) final determination of the Unresolved PCO and Claims Report in accordance with Section 3.10.

(d) Insurance. Any Buyer Indemnifiable Loss shall be net of the dollar amount of any insurance or other proceeds actually received by the Buyer Indemnified Parties with respect to the Buyer Indemnifiable Loss. Any Buyer Indemnified Party seeking indemnity hereunder shall use commercially reasonable efforts to seek coverage (including

both costs of defense and indemnity) under applicable insurance policies with respect to any such Buyer Indemnifiable Loss.

(e) Non-Compete Losses. Notwithstanding anything herein to the contrary, in the event of any Buyer Indemnifiable Loss resulting from, based upon or arising out of a breach by a Shareholder of Section 3.7 of this Agreement, the Buyer Indemnified Parties shall be entitled to seek recovery from such breaching Shareholder and no other Shareholder, and such breaching Shareholder's liability for such Buyer Indemnifiable Loss shall not exceed an amount equal to such breaching Shareholder's ownership percentage (as set forth on Exhibit A) multiplied by the Purchase Price.

(f) No Limitation on Certain Claims. Notwithstanding anything herein to the contrary, but subject to Sections 8.2(d) and (e), Buyer Indemnified Parties shall be entitled to dollar-for-dollar indemnification from the first dollar and shall not be subject to the Shareholder's Basket, or the Representation and Warranty Cap, or any limitation as to time in seeking indemnification with respect to any of the following:

(i) Losses described in or arising under Section 8.1(a), Section 8.1(c) (for the limited purpose of and to the extent of any Losses due to a breach of Sections 1.4(c)(i) and 3.7), Section 8.1(d) or Section 8.1(e); or

(ii) Losses described in or arising under Section 8.1(b) involving (A) a breach by the Company of any of the representations and warranties contained in Sections 2.2 and 2.3 hereof, (B) a breach by the Company of the representations and warranties contained in Section 2.22 but solely as such representations and warranties apply to the properties listed on Schedule 8.2(f) or (C) a breach by any Shareholder of any of the representations and warranties contained in Sections 2A.1 and 2A.2 hereof (in which case such breaching Shareholder shall be severally liable up to a maximum amount equal to such breaching Shareholder's ownership percentage (as set forth on Exhibit A) multiplied by the Purchase Price).

If the same or substantially similar facts or circumstances constitute a breach of a representation or warranty and provide the basis for a claim under Sections 8.1(a), (c) (for the limited purpose of and to the extent of any Losses due to a breach of Section 1.4(c)(i)), Section 8.1(d) or Section 8.1(e), the limitations contained in this Agreement with respect to Representation and Warranty Losses shall not apply to such claim.

Additionally, notwithstanding anything herein to the contrary, Buyer Indemnified Parties shall be entitled to claim against the Indemnity Escrow and proceed against the Shareholders directly for any Losses described in Sections 8.2(f)(i) and (ii).

In no event shall any Shareholder 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 Shareholders, such as war, war like operations, terrorism, shortages, embargos and reductions in the capitalization of the Company after the Closing or changes in principles or methods of accounting after the Closing.

8.3 Indemnification by Buyer. Buyer and its successors and permitted assigns agree subsequent to the Closing to indemnify and hold harmless the Shareholders (individually, a "Shareholder Indemnified Party" and collectively, the "Shareholder Indemnified Parties") from and against and in respect of all Losses arising out of, based upon or in connection with:

(a) fraud or an intentional misrepresentation by 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;

(b) 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; and

(c) 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.

Losses described in or arising under clauses (a) through (c) of this Section 8.3 are collectively referred to as "Shareholder Indemnifiable Losses."

8.4 Limitations on Indemnification by Buyer.

(a) Maximum Indemnification. Buyer's obligation to indemnify the Shareholder Indemnified Parties in respect of the Shareholder Indemnifiable Losses described in or arising under Sections 8.3(b) and (c) (other than a breach of the covenants set forth in Sections 1.3(a)(ii), 1.4(c)(ii) and 5.5) shall be limited, in the aggregate, to an amount equal to Three Million Dollars ($3,000,000).

(b) Buyer's Basket. No indemnification shall be payable with respect to Shareholder Indemnifiable Losses described in or arising under Sections 8.3(b) and (c) (other than a breach of the covenants set forth in Sections 1.3(a)(ii), 1.4(c)(ii) and 5.5) except to the extent the cumulative amount of all such Shareholder Indemnifiable Losses exceeds One Hundred Thousand Dollars ($100,000) in the aggregate (the "Buyer Basket"), whereupon the amount of such Shareholder Indemnifiable Losses in excess of the Buyer Basket shall be recoverable in accordance with the terms hereof.

(c) No Limitation on Certain Claims. Notwithstanding anything herein to the contrary, Shareholder Indemnified Parties shall be entitled to dollar-for-dollar indemnification from the first dollar and shall not be subject to the Buyer Basket or any maximum amount of claims, whether pursuant to this Section 8.4 or otherwise, or any limitation as to time (except as provided in Section 8.4(d)) in seeking indemnification from the Buyer with respect to Shareholder Indemnifiable Losses described in or arising under Sections 8.3(a) and (c) (solely with respect to a breach of the covenants set forth in Sections 1.3(a)(ii), 1.4(c)(ii) and 5.5).

(d) Time Limitation. No indemnification shall be payable to a Shareholder Indemnified Party with respect to any claim asserted after the Expiration Date which relates to the Shareholder Indemnifiable Losses described in or arising under Sections 8.3(b) and (c)

(other than a breach of the covenants set forth in Sections 1.3(a)(ii), 1.4(c)(ii) and 5.5); provided that any claim for indemnification as to which notice has been given prior to the Expiration Date shall survive such expiration until final resolution of such claim.

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 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 or 8.4(d) (as the case may be) 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 thirty (30) 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 the indemnifying parties' obligation to indemnify the indemnified party therefore will be fully satisfied. 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 shall, 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.

(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 9.11.

8.6 Survival of Warranties. All representations, warranties, agreements, covenants and obligations in this Agreement and in any Schedule or certificate delivered by any party incident to the transactions contemplated hereby are 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 and shall not merge into the performance of any obligation by any party hereto, subject to the provisions of this Section 8.

SECTION 9. MISCELLANEOUS.

9.1 Law Governing. 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.

9.2 Notices. Any notice, request, demand other communication required or permitted hereunder shall be in writing and shall be deemed to have been given (a) if delivered or sent by facsimile transmission, upon acknowledgment of receipt by the recipient, (b) if sent by a nationally recognized overnight courier, properly addressed with postage prepaid, on the next business day (or Saturday if sent for Saturday delivery) or (c) if sent by registered or certified mail, upon the sooner of receipt or the expiration of three (3) days after deposit in United States post office facilities properly addressed with postage prepaid. All notices given to the Shareholders' Representative shall constitute notice to each Shareholder. All notices will be sent to the addresses set forth below or to such other address as such party may designate by notice to each other party hereunder:

If to Buyer:

Perini Corporation
73 Mount Wayte Avenue
Framingham, MA 01701
Attention: Robert Band, President Facsimile: (508) 628-2010

with copies to:

Goodwin Procter LLP
Exchange Place
Boston, MA 02109
Attn: Robert P. Whalen, Jr.
Facsimile Number: (617) 523-1231

If to the Company or the Shareholders' Representative:

Rudolph and Sletten, Inc.
1600 Seaport
Suite 350
Redwood City, CA 94063
Attn: Allen A. Rudolph
James F. Evans
Facsimile Number: (650) 599-9233

with a copy to:

Thelen Reid & Priest LLP
101 Second Street
Suite 1800
San Francisco, CA 94105
Attn: Philip W. Peters
Facsimile Number: (415) 371-1211

Any notice given hereunder may be given on behalf of any Party by its counsel or other authorized representative.

9.3 Entire Agreement. This Agreement, including the Schedules and Exhibits referred to herein and the other writings specifically identified herein or contemplated hereby or delivered in connection with the transactions contemplated hereby, 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.

9.4 Assignability. This Agreement shall not be assignable by either Party without the prior written consent of the other Parties; provided, however, that Buyer may assign this Agreement to any direct or indirect subsidiary of Buyer although no such assignment shall relieve Buyer of any liabilities hereunder. This Agreement and the obligations of the parties

hereunder (including specifically but without limitation the indemnification obligations of the Shareholders set forth in Section 8) 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.

9.5 Publicity and Disclosures. None of the Shareholders, the Company, Buyer or any of their respective subsidiaries or affiliates shall issue or cause the publication of any press release or other announcement or disclosure (including, without limitation, any such announcement or disclosure to employees or customers of the Company) with respect to this Agreement or the transactions contemplated hereby without the prior written consent of Buyer, in the case of a desired press release or announcement by the Company, or of the Company in the case of a desired press release or announcement by Buyer, in any such case which consent shall not be unreasonably withheld. Notwithstanding the foregoing, Buyer or an affiliate may release such disclosures as are required by any applicable law or regulation, including pursuant to applicable requirements of the securities laws or any stock exchange or self-regulatory organization, in each case so long as written notice is given to the Company at least twenty-four (24) hours prior to any such disclosure.

9.6 Captions and Gender. The captions in this Agreement are for convenience only and shall not affect the construction or interpretation of any term or provision hereof. The use in this Agreement of the masculine pronoun in reference to a party hereto shall be deemed to include the feminine or neuter pronoun, as the context may require.

9.7 Monetary Amounts. All references to monetary amounts, unless otherwise specified to the contrary, are expressed in United States dollars.

9.8 Certain Definitions. For purposes of this Agreement, the term:

(a) "affiliate" of a person shall mean a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned person;

(b) "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise;

(c) "person" means an individual, corporation, partnership, association, limited liability company, trust, joint ventures, any unincorporated organization, any other business entity, or a government entity; and

(d) "subsidiary" means any affiliate of a person that is controlled by such person, including, without limitation through the ownership, directly indirectly, of more than fifty percent (50%) of the issued and outstanding equity interests of such affiliate.

9.9 Execution in Counterparts. 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.

9.10 Amendments; Waivers. 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 each of the parties hereto, or, in the case of a waiver, the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege, or any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.

9.11 Dispute Resolution. Except with respect to injunctive relief, which may be sought in a court of competent jurisdiction, as more specifically set forth below, 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 its successor. The arbitration shall be held in San Francisco, California, with regard to matters raised by Buyer and Boston, Massachusetts, with regard to matters raised by the Company or the Shareholders, in each case 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 depositions as of right, and the arbitrator may in his or her discretion allow additional depositions upon good cause shown by the moving party. However, the arbitrator shall not have the power to order the answering of interrogatories or the response to requests for admission. 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, that they will share equally the fees and expenses of J.A.M.S./Endispute, Inc. and that they will each bear their own attorneys' fees and expenses, except as otherwise provided herein. The arbitrator may in his or her discretion assess costs and expenses (including the reasonable attorneys' fees and expenses of the prevailing party) against any Party to a proceeding. 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 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 limited purpose of avoiding immediate and irreparable harm. The provisions of this Section shall be enforceable in any court of competent jurisdiction. The prevailing party in any action for injunctive relief will be entitled to payment of reasonable attorneys' fees and expenses.

Each of the Parties hereto irrevocably and unconditionally consents to the exclusive jurisdiction of J.A.M.S./Endispute, Inc. to resolve 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 and further consents to the jurisdiction of the courts of Massachusetts and California, as the case may be, for the purposes of enforcing the arbitration provisions of this Section 9.11. Each Party further irrevocably waives any objection to proceeding before J.A.M.S./Endispute, Inc. based upon lack of personal jurisdiction or to the laying of the venue and further irrevocably and unconditionally waives and agrees not to make a claim in any court that arbitration before J.A.M.S./Endispute, Inc. has been brought in an inconvenient forum. Each of the Parties hereto hereby consents to service of process by registered mail at the address to which notices are to be given. Each of the Parties hereto agrees that its or his submission to jurisdiction and its or his consent to service of process by mail are made for the express benefit of the other parties hereto.

9.12 Fees and Expenses. Buyer will bear its own expenses in connection with the negotiation and the consummation of the transactions contemplated by this Agreement and the agreements entered into in connection herewith. The Shareholders shall bear the expenses of the Company, the LLC, the Subsidiary, the Shareholders' Representative and the Shareholders in connection with the negotiation and the consummation of the transactions contemplated by this Agreement and the agreements entered into in connection herewith. No expenses of the Company, the LLC, the Subsidiary, the Shareholders' Representative or the Shareholders relating in any way to the purchase and sale of the Company Shares hereunder and the transactions contemplated hereby, including without limitation legal, accounting or other professional expenses, shall in any way be charged to or paid by Buyer, or paid or accrued by the Company or the Subsidiary, except to the extent such expenses (i) are paid by the Company prior to Closing or (ii) are accrued by the Company on the Closing Balance Sheet and included in the calculation of the Closing Net Worth as finally determined pursuant to Section 1.4.

9.13 Equitable Relief. The Company and the Shareholders acknowledge and agree that the Company's business is unique and that the damages that may result from the Shareholders' failure to consummate the transactions contemplated by this Agreement and that damages at law would be inadequate for such failure or breach. Accordingly, only to the extent available under applicable law, the Company and the Shareholders acknowledge that Buyer will be entitled to specific performance, an injunction or other appropriate equitable relief in connection with any such failure or breach. The Company and the Shareholders further acknowledge and agree that this Section 9.13 shall not, and shall not be deemed to, limit in any way any other rights or remedies which Buyer may have at law or otherwise due to such failure or breach.

9.14 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.

9.15 Termination of Shareholder Related Party Agreements. By executing this Agreement, each Shareholder acknowledges and agrees that any agreement between or among the Shareholders and the Company, including without limitation, the Amended and Restated Agreement between Non-Voting Shareholders and Rudolph and Sletten, Inc., dated as of July 1, 2005, is hereby terminated without the necessity of further act or deed and that such Shareholder has no further rights or obligations under any such agreement.

[END OF TEXT]

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

   BUYER:

   PERINI CORPORATION


   By: /s/Michael E. Ciskey
       Name:  Michael E. Ciskey
       Title: Vice President & CFO


   COMPANY:

   RUDOLPH AND SLETTEN, INC.


   By: /s/Allen A. Rudolph
       Name:  Allen A. Rudolph
       Title:  President


   SHAREHOLDERS:


   VOTING SHAREHOLDERS


/s/Allen A. Rudolph
      Allen A. Rudolph


/s/Karen M. Rudolph
      Karen M. Rudolph


/s/Paul Aherne
      Paul Aherne


   NON-VOTING SHAREHOLDERS



/s/Allen A. Rudolph
      Allen A. Rudolph