-----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, FGvkKA3B49g/4K/MD3KU6CTxwVO3iNsBBJg3C8A1HtXlv5T1TreFI/m5VVygaEqk uI1xg7J5nSk6LRNtX8C9pA== 0000950124-97-003664.txt : 19970703 0000950124-97-003664.hdr.sgml : 19970703 ACCESSION NUMBER: 0000950124-97-003664 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19970702 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CORE INDUSTRIES INC CENTRAL INDEX KEY: 0000091817 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 381052434 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: 1934 Act SEC FILE NUMBER: 005-35132 FILM NUMBER: 97635417 BUSINESS ADDRESS: STREET 1: PO BOX 2000 STREET 2: 500 NORTH WOODWARD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48304 BUSINESS PHONE: 3136423400 MAIL ADDRESS: STREET 1: PO BOX 2000 STREET 2: 500 NORTH WOODWARD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48304 FORMER COMPANY: FORMER CONFORMED NAME: SOS CONSOLIDATED INC DATE OF NAME CHANGE: 19780228 FORMER COMPANY: FORMER CONFORMED NAME: SOSS MANUFACTURING CO DATE OF NAME CHANGE: 19690218 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CORE INDUSTRIES INC CENTRAL INDEX KEY: 0000091817 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 381052434 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: PO BOX 2000 STREET 2: 500 NORTH WOODWARD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48304 BUSINESS PHONE: 3136423400 MAIL ADDRESS: STREET 1: PO BOX 2000 STREET 2: 500 NORTH WOODWARD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48304 FORMER COMPANY: FORMER CONFORMED NAME: SOS CONSOLIDATED INC DATE OF NAME CHANGE: 19780228 FORMER COMPANY: FORMER CONFORMED NAME: SOSS MANUFACTURING CO DATE OF NAME CHANGE: 19690218 SC 14D9 1 SOLICITATION STATEMENT 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------ SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------------ CORE INDUSTRIES INC (Name of Subject Company) CORE INDUSTRIES INC (Name of Person Filing Statement) ------------------------------ COMMON STOCK, PAR VALUE $1.00 PER SHARE (Title of Class of Securities) 218675 10 6 (CUSIP Number of Class of Securities) ------------------------------ DAVID R. ZIMMER PRESIDENT AND CHIEF EXECUTIVE OFFICER CORE INDUSTRIES INC 500 NORTH WOODWARD AVENUE BLOOMFIELD HILLS, MICHIGAN 48303 (248) 642-3400 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person(s) Filing Statement) ------------------------------ Copy to: DONALD J. KUNZ HONIGMAN MILLER SCHWARTZ AND COHN 2290 FIRST NATIONAL BUILDING DETROIT, MICHIGAN 48226 (313) 256-7704 ================================================================================ 2 ITEM 1. SECURITY AND SUBJECT COMPANY The name of the subject company is Core Industries Inc, a Nevada corporation (the "Company"), and the address of the principal executive offices of the Company is 500 North Woodward Avenue, Bloomfield Hills, Michigan 48304. The title of the class of equity securities to which this statement relates is Common Stock, par value $1.00 per share, of the Company (the "Shares"). ITEM 2. TENDER OFFER OF THE BIDDER This statement relates to the tender offer (the "Offer") disclosed in a Tender Offer Statement on Schedule 14D-1/13D, dated July 2, 1997 (the "Schedule 14D-1") of UD Nevada Corp., a Nevada corporation ("Purchaser") and a wholly owned subsidiary of United Dominion Industries Limited, a corporation organized under the laws of Canada ("Parent"), to purchase all outstanding Shares at a price of $25.00 per Share (such amount, or any greater amount paid pursuant to the Offer, the "Per Share Amount"), net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 2, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). The Offer is being made pursuant to the Agreement and Plan of Merger among Parent, Purchaser and the Company, dated as of June 25, 1997 (the "Merger Agreement"). The Merger Agreement provides, among other things, that, upon the terms and subject to the conditions contained therein, and in accordance with the General Corporation Law of the State of Nevada ("Nevada law"), as promptly as practicable after the satisfaction or waiver of the conditions contained therein, and the purchase of Shares pursuant to the Offer, Purchaser will be merged with and into the Company (the "Merger"). According to the Schedule 14D-1, the address of the principal executive offices of Purchaser and of Parent is 2300 One First Union Center, 301 South College Street, Charlotte, North Carolina 28202-6039. ITEM 3. IDENTITY AND BACKGROUND (a) The name and business address of the Company, which is the person filing this statement, are set forth in Item 1 above. (b) Each material contract, agreement, arrangement and understanding between the Company or its affiliates and (i) its executive officers, directors or affiliates and (ii) the Purchaser, Parent, its executive officers, directors or affiliates is described in the attached Schedule I or set forth below. The Merger Agreement. The following is a summary of the Merger Agreement, a copy of which is filed as Exhibit 99.1. Such summary is qualified in its entirety by reference to the Merger Agreement. The Offer. The Merger Agreement provides for the commencement of the Offer as promptly as reasonably practicable, but in no event later than five business days after the initial public announcement of the execution of the Merger Agreement. The obligation of Purchaser to accept for payment Shares tendered pursuant to the Offer is subject to the satisfaction of the Minimum Condition and certain other conditions that are described in this Item 3. Purchaser and Parent have agreed with the Company that no change in the Offer may be made that decreases the price per Share payable in the Offer, that changes the form of consideration payable in the Offer, that reduces the number of Shares to be purchased in the Offer, that imposes conditions to the Offer in addition to those set forth in this Item 3, or that changes the Minimum Condition. The Merger. The Merger Agreement provides that, upon the terms and subject to the conditions thereof, and in accordance with Nevada Law, at the Effective Time, Purchaser shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Purchaser will cease and the Company will continue as the Surviving Corporation and as an indirect wholly owned subsidiary of Parent. Notwithstanding the foregoing, Parent may elect at any time prior to the fifth business day immediately preceding the date on which the Proxy Statement (as hereinafter defined) is mailed initially to the Company's stockholders, to merge the Company into Purchaser or another direct or indirect wholly owned subsidiary of 3 Parent. In such event, the parties agreed to execute an appropriate amendment to the Merger Agreement in order to reflect the foregoing and to provide, as the case may be, that Purchaser or such other wholly owned subsidiary of Parent shall be the Surviving Corporation. Upon consummation of the Merger, each issued and then outstanding Share (other than any Shares owned by Purchaser, Parent, the Company or any wholly owned subsidiary of Parent or the Company and any Shares that are held by stockholders who have properly exercised their rights of dissent with respect to such Shares in accordance with Nevada Law) shall be cancelled and converted automatically into the right to receive the Merger Consideration. Pursuant to the Merger Agreement, each share of common stock, par value $.01 per share, of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one share of common stock, par value $.01 per share, of the Surviving Corporation. The Merger Agreement provides that the directors of Purchaser immediately prior to the Effective Time will be the initial directors of the Surviving Corporation and that the officers of the Company immediately prior to the Effective Time will be the initial officers of the Surviving Corporation. The Merger Agreement provides that, unless otherwise determined by Parent prior to the Effective Time, and subject to the requirements described below with respect to indemnification, at the Effective Time, the Articles of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation and shall be amended and restated to conform to the Articles of Incorporation of Purchaser as in effect immediately prior to the Effective Time; provided, however, that, at the Effective Time, Article I of the Articles of Incorporation of the Surviving Corporation shall be amended to read as follows: "The name of the corporation is Core Industries Inc" and the Articles of Incorporation of the Surviving Corporation shall be amended if required to comply with the requirements described below with respect to indemnification. The Merger Agreement also provides that the Bylaws of Purchaser, as in effect immediately prior to the Effective Time, will be the Bylaws of the Surviving Corporation. Company Stockholders' Meeting; Proxy Statement. Pursuant to the Merger Agreement, unless not required under Nevada Law, the Company shall duly call, give notice of, convene and hold a special meeting of its stockholders as soon as practicable following consummation of the Offer for the purpose of considering and taking action on the Merger Agreement and the transactions contemplated thereby (the "Stockholders' Meeting"). The Merger Agreement provides that, unless not required under Nevada law, the Company shall, as soon as practicable following consummation of the Offer, file with the Commission under the Exchange Act, and use its best reasonable efforts to have cleared by the Commission, a proxy statement and related proxy materials (the "Proxy Statement") with respect to the Stockholders' Meeting and shall cause the Proxy Statement to be mailed to stockholders of the Company at the earliest practicable time. The Company has also agreed, subject to the fiduciary duties of the Board under applicable law as advised in writing by counsel, to include in the Proxy Statement the unanimous recommendation of the Board that the stockholders of the Company approve and adopt the Merger Agreement and the transactions contemplated thereby and to use its best reasonable efforts to obtain such approval and adoption. Parent and Purchaser have each agreed to vote all Shares beneficially owned by them in favor of the Merger. Conduct of Business. Pursuant to the Merger Agreement, the Company has covenanted and agreed that, between the date of the Merger Agreement and the election or appointment of Purchaser's designees to serve on the Company's Board of Directors (the "Purchaser's Election Date"), unless Parent shall otherwise agree in writing, each of the Company and its Subsidiaries (as defined in the Merger Agreement) shall conduct its business only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and its Subsidiaries and to preserve the current relationships of the Company and the Subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary has significant business relations. The Merger Agreement also provides that, except with the prior written consent of Parent or as contemplated by the Merger Agreement, neither the Company nor any Subsidiary shall, between the date of the Merger Agreement and the Purchaser's Election Date, directly or indirectly do, or propose to do, any of the following: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational 2 4 documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 696,049 Shares issuable pursuant to employee and director stock options outstanding on the date thereof) or (ii) any assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for such declarations, set asides, and payment of cash dividends declared at times and in amounts consistent with the Company's current dividend policy ($.06 per Share per quarter); (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (e) (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any material amount of assets other than in the ordinary course of business; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice; (iii) enter into any contract or agreement other than contracts or agreements entered into in the ordinary course of business, consistent with past practice and which require payments by the Company or its Subsidiaries in an aggregate amount of less than U.S. $250,000; (iv) terminate, cancel or request any material change in, or agree to any material change in, any of certain specified material contracts and with respect to all other material contracts, except in the ordinary course of business consistent with past practice; (v) authorize any single capital expenditure (excluding software development activity) which is in excess of U.S. $250,000 or capital expenditures which are, in the aggregate, in excess of U.S. $1,000,000 for the Company and its Subsidiaries taken as a whole; or (vi) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter described in this clause (e); (f) increase the compensation payable or to become payable to its officers or employees, except for increases in accordance with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment or severance agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee or circulate to any employee any details of any proposal to adopt or amend any such plan; (g) take any action, other than reasonable and usual actions in the ordinary course of business and consistent with past practice, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against on the Company's consolidated balance sheet included in its Quarterly Report on Form 10-Q for the period ended February 28, 1997 or subsequently incurred in the ordinary course of business and consistent with past practice; or (j) settle or comprise any pending or threatened suit, action or claim that is material or which relates to any of the transactions contemplated by the Merger Agreement; or (k) announce an intention, enter into any formal or informal agreement, or otherwise make a commitment, to do any of the foregoing or any action that would result in any of the conditions to the Offer not being satisfied (other than as contemplated by the Merger Agreement). Designation of Directors. The Merger Agreement provides that, promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to time thereafter, Purchaser shall be entitled to designate up to such number of directors, rounded up to the next whole number, on the Board as shall give Purchaser representation on the Board equal to the product of the total number of directors on the Board (giving effect to the directors elected pursuant to the following sentence) multiplied by the percentage that the 3 5 aggregate number of Shares beneficially owned by Purchaser or any affiliate of Purchaser at such time bears to the total number of Shares then outstanding. Pursuant to the Merger Agreement, the Company agrees, at such time of purchase, to promptly take all actions necessary to cause Purchaser's designees to be elected as directors of the Company, including increasing the size of the Board or securing the resignations of incumbent directors or both. The Merger Agreement also provides that, at such times, the Company shall use its best efforts to cause persons designated by Purchaser to constitute the same percentage as persons designated by Purchaser shall constitute of the Board of (a) each committee of the Board (some of whom may be required to be independent as required by applicable law or requirements of the New York Stock Exchange), (b) each board of directors of each Subsidiary and (c) each committee of each such board, in each case only to the extent permitted by applicable law. Notwithstanding the foregoing, the Merger Agreement provides that until the time Purchaser acquires a majority of the then outstanding Shares on a fully diluted basis, the Company shall use its best efforts to ensure that all the members of the Board and each committee of the Board and such boards and committees of the Subsidiaries as of the date thereof who are not employees of the Company shall remain members of the Board and of such boards and committees. Amendments. The Merger Agreement provides that following the election or appointment of Parent's designees in accordance with the immediately preceding paragraph and prior to the Effective Time, any amendment of the Merger Agreement or the Articles of Incorporation or Bylaws of the Company, any termination of the Merger Agreement by the Company, any extension by the Company of the time for the performance of any of the obligations or other acts of Parent or Purchaser or any waiver of any of the Company's rights thereunder will require the concurrence of a majority of those directors of the Company then in office other than directors designated by Purchaser or directors who are employees of the Company or, if no such directors are then in office, no such amendment, termination, extension or waiver shall be effected which is materially adverse to the holders of Shares (other than Parent and its subsidiaries). Access to Information; Confidentiality. Pursuant to the Merger Agreement, from the date of the Merger Agreement to the consummation of the Offer, the Company agreed to, and to cause its Subsidiaries and the officers, directors, employees, auditors and agents of the Company and its Subsidiaries to, afford the officers, employees and agents of Parent and Purchaser complete access at all reasonable times to the officers, employees, agents, properties, offices, plants and other facilities, books and records of the Company and each Subsidiary and to furnish Parent and Purchaser with all financial, operating and other data and information as Parent or Purchaser, through its officers, employees or agents, may reasonably request. Parent and Purchaser agreed in the Merger Agreement to keep such information confidential in accordance with the confidentiality agreement, dated October 2, 1996 (the "Confidentiality Agreement"), between Parent and the Company. Pursuant to the Merger Agreement, the Company, Parent and Purchaser agreed, from the date of the Merger Agreement to the completion of the Offer, to the extent permitted by applicable law, to cooperate reasonably with each other to effect an orderly transition including, without limitation, with respect to communications with the Company's customers and employees. No Solicitation of Transactions. The Company has agreed that neither the Company nor any Subsidiary shall, directly or indirectly, through any officer, director, agent or otherwise, solicit, initiate or encourage the submission of any proposal or offer from any person relating to any acquisition or purchase of all or any material portion of the assets of, or any equity interest in, the Company or any material Subsidiary or any business combination with the Company or any material Subsidiary or participate in any negotiations regarding, or furnish to any other person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other person to do or seek any of the foregoing. Notwithstanding the foregoing, the Merger Agreement permits the Board to furnish information to, or enter into discussions or negotiations with, any person in connection with an unsolicited (from the date of the Merger Agreement) proposal in writing by such person to acquire the Company pursuant to a merger, consolidation, share exchange, business combination or other similar transaction or to acquire all or substantially all of the assets of the Company or any of its Subsidiaries, if, and only to the extent that, (a) the Board, after consultation with independent legal counsel (which may include its regularly engaged independent legal counsel), determines in good faith that such action is required for the Board to comply with its fiduciary duties to stockholders imposed by Nevada Law and (b) prior to furnishing such 4 6 information to, or entering into discussions or negotiations with, such person, the Company uses its reasonable best efforts to obtain from such person an executed confidentiality agreement on terms no less favorable to the Company than those contained in the Confidentiality Agreement (or obtained a confidentiality agreement prior to the date of the Merger Agreement). Pursuant to the Merger Agreement, the Company agreed to immediately cease and cause to be terminated all existing discussions or negotiations with any parties conducted prior to the date of the Merger Agreement with respect to any of the foregoing. Moreover, the Company agreed (x) to notify Parent promptly if any such proposal or offer, or any inquiry or contact with any person with respect thereto, is made and (y) not to release any third party from, or waive any provision of, any confidentiality or, subject to the fiduciary duties of the Board, standstill agreement to which the Company is or may become a party. Treatment of Stock Options; Deferred Director Fees. The Merger Agreement provides that each outstanding option to purchase Shares granted under the Company's 1978 Stock Option Plan, 1988 Stock Option Plan, 1988 Director Discounted Stock Option Plan, 1991 Director Discounted Stock Option Plan and 1993 Performance Incentive Plan (the "Stock Option Plans") shall, immediately prior to the Effective Time, become exercisable regardless of the vesting schedule contained in any stock option agreement or in any of the Stock Option Plans and shall be canceled at the Effective Time. In the event that any unexercised option is canceled by the Company, each holder of a canceled option shall be entitled to receive, at the Effective Time or as soon as practicable thereafter, from the Company, in consideration for the cancellation of such option, an amount (subject to any applicable withholding tax) in cash equal to the product of (a) the number of Shares previously subject to such option and (b) the excess, if any, of the Merger Consideration over the exercise price per Share previously subject to such option. The Merger Agreement also provides that, at the Effective Time, the Company shall pay to each individual who served as a director of the Company prior to the Effective Time any and all deferred director fees owed to such individual. Indemnification and Insurance. Pursuant to the Merger Agreement, the Articles of Incorporation and Bylaws of the Surviving Corporation are required to contain provisions no less favorable with respect to indemnification than are set forth in Article VI of the Bylaws of the Company, which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights thereunder of individuals who at any time to and including the Effective Time were directors, officers, employees, fiduciaries or agents (collectively "Representatives") of the Company in respect of acts or omissions occurring at or prior to the Effective Time (including, without limitation, the matters contemplated by the Merger Agreement), unless such modification shall be required by law. Moreover, from and after the Purchaser's Election Date, the Merger Agreement prohibits the amendment, repeal or other modification of the indemnification and advancement of expenses provisions of Article VI of the Bylaws of the Company or the Articles of Incorporation or Bylaws of any of its Subsidiaries in any manner that would adversely affect the rights thereunder of Representatives of the Company or its Subsidiaries in respect of actions or omissions occurring at or prior to the Effective Time (including, without limitation, the matters contemplated by the Merger Agreement), unless such modification is required by law. The Merger Agreement also provides that prior to the Effective Time, the Company shall, and after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify and hold harmless, each present and former Representative of the Company and each Subsidiary (collectively, the "Indemnified Parties") against all costs and expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, criminal, administrative or investigative, arising out of or pertaining to any action or omission in their capacity as a Representative, whether occurring before or after the Effective Time, for a period of six years after the date of the Merger Agreement (and shall pay any expenses in advance of the final disposition of any such action or proceeding to each Indemnified Party to the fullest extent permitted under Nevada Law, and, with respect to Indemnified Parties who are or were directors or officers of the Company, upon receipt from the Indemnified Party to whom expenses are advanced of any undertaking to repay such advances required under Nevada Law). 5 7 Pursuant to the Merger Agreement, the Company, from and after the date of the Merger Agreement and to and including the Effective Time, and the Surviving Corporation, from the Effective Time until six years thereafter, each agreed to use its best efforts to maintain in effect, if available, the current directors' and officers' liability insurance policies maintained by the Company (provided that the Surviving Corporation may substitute therefor policies of at least the same coverage containing terms and conditions which are not materially less favorable) with respect to matters occurring on or prior to the Effective Time; provided, however, that in no event shall the Surviving Corporation be required to expend more than an amount per year equal to 250% of current annual premiums paid by the Company for such insurance (which annual premiums the Company has represented in the Merger Agreement to be approximately $110,000). The Merger Agreement provides that in the event the Company or the Surviving Corporation or any of their respective successors or assigns (a) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (b) transfers all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of the Company or the Surviving Corporation, as the case may be, or at Parent's option, Parent, shall assume the obligations described above. The Merger Agreement provides that the obligations described above shall survive the Effective Time. Employee Benefits. Pursuant to the Merger Agreement, for a period of one year from the Effective Time, Parent has agreed to, or to cause the Company or the Surviving Corporation to, maintain the employee benefit plans (other than the Stock Option Plans) which the Company maintains for the benefit of, or which are open to, a majority of the employees of the Company on the terms in effect on the date of the Merger Agreement, or such other plans, arrangements or programs as will provide employees with benefits that in the aggregate are substantially equivalent to, and no less favorable than, those provided under the employee benefit plans (other than the Stock Option Plans) as in effect on the date of the Merger Agreement. In addition, Parent shall, or shall cause the Surviving Corporation to, assume and agree to perform certain specified agreements (the "Change of Control Agreements") in the same manner and to the same extent that the Company is required to perform such agreements. The Change of Control Agreements are described in Schedule I hereto. Representations and Warranties. The Merger Agreement contains various representations and warranties of the parties thereto, including representations by the Company as to the Company's filings with the Commission, consolidated financial statements of the Company and its Subsidiaries, the absence of certain changes or events concerning the Company's business, compliance with law and certain contracts, litigation, insurance, licenses and permits, employee benefit plans, labor matters, ownership of assets, trademarks, patents and copyrights, environmental matters, brokers, taxes, absence of certain business practices and letters of credit, surety bonds and guarantees. The Company also represented in the Merger Agreement that (a) the Board has unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including each of the Offer and the Merger, are fair to and in the best interests of the stockholders of the Company, (ii) approved and adopted the Merger Agreement and the transactions, including, without limitation, the Offer, the purchase of Shares pursuant to the Offer and the Merger, contemplated thereby, (iii) taken all action to redeem the rights issued to stockholders pursuant to the Rights Agreement dated September 16, 1987 between the Company and Harris Trust and Savings Bank, (iv) amended the Company's Bylaws to provide that the provisions of Sections 78.378 to 78.3793 of the Nevada Law shall not apply to the Company, and (v) recommended that the stockholders of the Company accept the Offer and approve and adopt the Merger Agreement and the transactions, including, without limitation, the Merger, contemplated thereby and (b) approval of the Merger Agreement by the Board constitutes approval of a "memorandum of understanding" setting forth the principal terms of a transaction governed by, and within the meaning of, Article Eleventh of the Company's Articles of Incorporation. Approval by the Board of such a "memorandum of understanding" renders inapplicable to the Merger certain provisions in the Company's Articles of Incorporation that would otherwise require the approval of the Merger by the holders of not less than four-fifths of the outstanding Shares. 6 8 Parent represented and warranted to the Company in the Merger Agreement, among other things, that Parent has, or has commitments to obtain, sufficient funds to permit Purchaser to acquire all the outstanding Shares in the Offer and the Merger, evidence of which has been provided to the Company. Conditions to the Merger. Under the Merger Agreement, the respective obligations of each party to effect the Merger are subject to the satisfaction at or prior to the Effective Time of the following conditions and only the following conditions: (a) the Merger Agreement and the transactions contemplated by the Merger Agreement shall have been approved and adopted by the affirmative vote of the stockholders of the Company (unless the vote of the stockholders is not required by Nevada Law); (b) any waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated; (c) no foreign, United States or state governmental authority or other agency or commission or foreign, United States or state court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is then in effect and has the effect of making the acquisition of Shares by Parent or Purchaser or any affiliate of either of them or the consummation of the Merger illegal or otherwise restricting, preventing or prohibiting the consummation of the transactions contemplated by the Merger Agreement; and (d) Purchaser or its permitted assignee shall have purchased all Shares validly tendered and not withdrawn pursuant to the Offer; provided, however, that neither Parent nor Purchaser shall be entitled to assert the failure of this condition if, in breach of the Merger Agreement or the terms of the Offer, Purchaser fails to purchase any Shares validly tendered and not withdrawn pursuant to the Offer. Termination. The Merger Agreement may be terminated and the Merger and the other transactions contemplated by the Merger Agreement may be abandoned at any time prior to the Effective Time, notwithstanding any requisite approval and adoption of the Merger Agreement and the transactions contemplated thereby by the stockholders of the Company: (a) by mutual written consent duly authorized by the Boards of Directors of Parent, Purchaser and the Company prior to Purchaser's Election Date; (b) by Parent, Purchaser or the Company if (i) the Effective Time shall not have occurred on or before December 31, 1997 (so long as the party seeking such termination has not failed to fulfill any obligation under the Merger Agreement, which failure has been the cause of, or resulted in, the failure of the Effective Time to occur on or before such date) or (ii) any court of competent jurisdiction in the United States or other governmental authority shall have issued an order, decree, ruling or taken any other action restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and nonappealable; (c) by Parent, upon approval of its Board of Directors, if (i) due to an occurrence or circumstance that would result in a failure to satisfy any condition to the Offer, Purchaser shall have (A) failed to commence the Offer within 30 days following the date of the Merger Agreement, (B) terminated the Offer without having accepted any Shares for payment thereunder or (C) failed to pay for Shares pursuant to the Offer within 90 days following the commencement of the Offer; unless such action or inaction under (A), (B) or (C) shall have been caused by or resulted from the failure of Parent or Purchaser to perform in any material respect any material covenant or agreement of either of them contained in the Merger Agreement or the material breach by Parent or Purchaser of any material representation or warranty of either of them contained in the Merger Agreement or (ii) prior to the purchase of Shares pursuant to the Offer, the Board or any committee thereof shall have withdrawn or modified in a manner adverse to Purchaser or Parent its approval or recommendation of the Offer, the Merger Agreement, the Merger or any other transaction contemplated by the Merger Agreement or shall have recommended another merger, consolidation, business combination with, or acquisition of, the Company or its assets or another tender offer or exchange offer for Shares, or shall have resolved to do any of the foregoing; or (d) by the Company, upon approval of the Board, if (i) due to an occurrence or circumstance that would result in a failure to satisfy any condition to the Offer, Purchaser shall have (A) failed to commence the Offer within 30 days following the date of this Agreement, (B) terminated the Offer without having accepted any Shares for payment thereunder or (C) failed to pay for Shares pursuant to the Offer within 90 days following the commencement of the Offer, unless such action or inaction under (A), (B), and (C) shall have been caused by or resulted from the failure of the Company to perform in any material respect any material covenant or agreement of it contained in the Merger Agreement or the material breach by the Company of any material representation or warranty of it 7 9 contained in the Merger Agreement or (ii) prior to the purchase of Shares pursuant to the Offer, the Board shall have withdrawn or modified in a manner adverse to Purchaser or Parent its approval or recommendation of the Offer, the Merger Agreement, the Merger or any other transaction contemplated by the Merger Agreement in order to approve the execution by the Company of a definitive agreement providing for the acquisition of the Company or any of its assets by a sale, merger or other business combination or in order to approve a tender offer or exchange offer for Shares by a third party, in either case, as the Board determines in good faith that such action is required for the Board to comply with its fiduciary duties to stockholders, after consultation with its independent legal counsel and financial advisers, and is on terms more favorable to the Company's stockholders than the Offer and the Merger taken together; provided, however, that such termination under clause (ii) above shall not be effective until the Company has made payment to Parent of the Fee (as hereinafter defined) required to be paid as described below and has deposited with a mutually acceptable escrow agent U.S. $3.0 million for reimbursement to Parent and Purchaser of Expenses (as hereinafter defined). In the event of the termination of the Merger Agreement, the Merger Agreement provides that it shall forthwith become void, and there shall be no liability on the part of any party hereto, except under the provisions of the Merger Agreement related to fees and expenses described below and confidentiality and except for liability of any party for breach of the Merger Agreement prior to its termination. Fees and Expenses. The Merger Agreement provides that in the event that (a) any person (including, without limitation, the Company or any affiliate thereof), other than Parent or any affiliate of Parent, shall have become the beneficial owner of more than 25% of the then outstanding Shares and the Merger Agreement shall have been terminated and within 12 months of such termination a Third Party Acquisition (as defined hereinafter) shall occur; or (b) any person shall have commenced, publicly proposed or communicated to the Company a proposal that is publicly disclosed for a tender or exchange offer for 25% or more (or which, assuming the maximum amount of securities that could be purchased, would result in any person beneficially owning 25% or more of the then outstanding Shares) or otherwise for the direct or indirect acquisition of the Company or all or substantially all of its assets for per Share consideration having a value greater than the Per Share Amount and (i) the Offer shall have remained open for at least 20 business days, (ii) the Minimum Condition shall not have been satisfied and (iii) the Merger Agreement shall have been terminated; or (c) the Merger Agreement is terminated pursuant to the termination provisions described in clause (c)(ii) or (d)(ii) of the second preceding paragraph, then, in any such event, the Company shall pay Parent promptly (but in no event later than one business day after the first of such events shall have occurred) a fee of U.S. $10.0 million (the "Fee"), which amount shall be payable in immediately available funds, plus all Expenses (as hereinafter defined). The Merger Agreement also provides that so long as neither Parent nor Purchaser is in material breach of its obligations under the Merger Agreement, if (a) the Merger Agreement is terminated as described in clause (c) of the third preceding paragraph due to the material breach of the Company's obligations under the Merger Agreement or (b) the Merger Agreement is terminated as described in clause (c) of the third preceding paragraph because of the failure of representations and warranties of the Company to be true and correct, which failures in the aggregate have or are reasonably likely to have any change or effect that is or is reasonably likely to be materially adverse to the business, operations, condition (financial or otherwise), assets or liabilities (including, without limitation, contingent liabilities) of the Company and its Subsidiaries taken as a whole (a "Material Adverse Effect"), then, in either case (a) or (b), the Company shall promptly reimburse Parent and Purchaser for all Expenses. "Expenses" is defined in the Merger Agreement to mean all out-of-pocket expenses and fees up to U.S. $3.0 million in the aggregate (including, without limitation, fees and expenses payable to all banks, investment banking firms, other financial institutions and other persons and their respective agents and counsel for arranging, committing to provide or providing any financing for the transactions contemplated by the Merger Agreement or structuring such transactions and all fees of counsel, accountants, experts and consultants to Parent and Purchaser, and all printing and advertising expenses) actually incurred or accrued by either of them or on their behalf in connection with the transactions contemplated by the Merger Agreement, including, without limitation, the financing thereof, and actually incurred or accrued by banks, investment 8 10 banking firms, other financial institutions and other persons and assumed by Parent and Purchaser in connection with the negotiation, preparation, execution and performance of the Merger Agreement, the structuring and financing of the transactions contemplated by the Merger Agreement and any financing commitments or agreements relating thereto. In the event that the Company shall fail to pay the Fee or any Expenses when due, the term "Expenses" is deemed to include the costs and expenses actually incurred or accrued by Parent and Purchaser (including, without limitation, fees and expenses of counsel) in connection with the collection under and enforcement of the fees and expenses provision of the Merger Agreement, together with interest on such unpaid Fee and Expenses, commencing on the date that the Fee or such Expenses became due, at a per annum rate equal to the rate of interest publicly announced by Morgan Guaranty Trust Company of New York, from time to time, in the City of New York, as such bank's prime rate plus 1.00 percentage point. "Third Party Acquisition" is defined in the Merger Agreement to mean the occurrence of any of the following events: (i) the acquisition of the Company by merger, consolidation or other business combination transaction by any person other than Parent, Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by any Third Party of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole; (iii) the acquisition by a Third Party of 50% or more of the outstanding Shares whether by tender offer, exchange offer or otherwise; (iv) the adoption by the Company of a plan of liquidation or the declaration or payment of an extraordinary dividend; or (v) the repurchase by the Company or any of its Subsidiaries of 50% or more of the outstanding Shares. Except as set forth above, all costs and expenses incurred by Parent, Purchaser and the Company in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement shall be paid by the party incurring such expenses, whether or not any such transaction is consummated. Confidentiality Agreement. The following is a summary of the Confidentiality Agreement, a copy of which is filed as Exhibit 99.3. Such summary is qualified in its entirety by reference to the Confidentiality Agreement. On October 2, 1996, Parent entered into the Confidentiality Agreement with the Company. Under the Confidentiality Agreement, Parent agreed to use information furnished by the Company or gathered by Parent by inspection of the Company and its Subsidiaries that is not otherwise generally available to the public (other than as a result of disclosure by Parent or its representatives) (the "Evaluation Materials") exclusively for the purpose of evaluating an acquisition transaction with the Company. In addition, Parent agreed not to disclose any of the Evaluation Materials other than under certain circumstances. Under the Confidentiality Agreement, Parent agreed that for a period of two years from the date of the Confidentiality Agreement neither it nor any of its affiliates would in any manner, directly or indirectly: (a) effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause or participate in or in any way assist any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any securities (or beneficial ownership thereof) or assets of the Company; (ii) any tender or exchange offer, merger or other business combination involving the Company; (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company; or (iv) any "solicitation" of "proxies" (as such terms are used in the proxy rules of the Commission) or consents to vote any voting securities of the Company; (b) form, join or in any way participate in a "group" (as defined under the Exchange Act); (c) otherwise act, alone or in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company, (d) take any action which might force the Company to make a public announcement regarding any of the types of matters set forth in (a) above; or (e) enter into any discussions or arrangements with any third party with respect to any of the foregoing. Parent also agreed under the Confidentiality Agreement that for a period of one year from the date of the Confidentiality Agreement none of its employees who gain access to the Evaluation Material and no employee resident in its Charlotte, North Carolina corporate office directly or indirectly would solicit to employ any of the current officers or employees of the Company without obtaining the prior written consent of the Company. 9 11 Fee Agreement. The following is a summary of the letter agreement dated June 20, 1997, between Parent and the Company (the "Fee Agreement"), a copy of which is filed as Exhibit 99.2. Such summary is qualified in its entirety by reference to the Fee Agreement. Parent and the Company entered into the Fee Agreement on June 20, 1997, which attached as an exhibit a draft copy of the Merger Agreement. Pursuant to the Fee Agreement, Parent represented that it had completed its due diligence investigation with respect to the Company and its assets, properties, claims, liabilities and business, that Parent was satisfied with the results of such investigation, that Parent had scheduled a meeting of its Board of Directors for Wednesday, June 25, 1997 to consider approval of the Merger Agreement, and that management of Parent would recommend that its Board approve the Merger Agreement. The Company represented that it had scheduled a meeting of the Board for not later than Tuesday, June 24, 1997, to consider approval of the Merger Agreement, and that management of the Company would recommend that the Board approve the Merger Agreement. Pursuant to the Fee Agreement, the Company agreed that, in the event (i) the Board did not approve the Merger Agreement on or before June 25, 1997, (ii) an authorized officer of the Company did not execute and deliver the Merger Agreement on or before June 25, 1997, or (iii) management of the Company rescinded its agreement to the Merger Agreement prior to Parent's execution thereof, then the Company would pay promptly to Parent, as liquidated damages, a fee of $10,000,000 (the "Fee") plus all Expenses (as defined in the Merger Agreement) up to a maximum of $3,000,000. The Fee Agreement also provides that, notwithstanding the foregoing, the Fee Agreement would terminate without liability accruing to either party if (a) the Board of Directors of Parent shall not have approved the Merger Agreement by 11:59 p.m., Eastern Daylight Savings Time on June 25, 1997, or (ii) an authorized officer of Parent shall not have executed and delivered the Merger Agreement by 11:59 p.m., Eastern Daylight Savings Time on such date. In the event either of such conditions were not satisfied, the Company would have no obligation to pay the Fee or Expenses. ITEM 4. THE SOLICITATION OR RECOMMENDATION. (a) Recommendations of the Board of Directors. The Board of Directors has unanimously approved the Merger Agreement and the transactions contemplated thereby and determined that each of the Offer and the Merger is fair to, and in the best interests of, the stockholders of the Company. The Board of Directors unanimously recommends that all holders of Shares accept the Offer and tender their Shares pursuant to the Offer. (b) Background; Reasons for the Recommendation. In the summer of 1996, three investment banking firms were interviewed by representatives of the Company to seek assistance regarding long-term strategic planning alternatives, including the possible sale of the Company. In August 1996, a financial advisor under general engagement by Parent contacted Harold M. Marko, a director and Chairman Emeritus of the Company, to arrange a meeting between Mr. Marko and Richard A. Bearse, a senior vice president of Parent. On September 5, 1996, Mr. Bearse met with Mr. Marko and Alan E. Schwartz, a director of the Company, to discuss Parent's business and desire to acquire attractive companies with strong market positions in proprietary engineered products. On October 2, 1996, Parent, through its wholly-owned subsidiary United Dominion Industries, Inc., entered into a confidentiality agreement with the Company agreeing to keep certain information confidential and not to take certain action to obtain control of the Company. See "Confidentiality Agreement" in Item 3. On October 9, 1996, members of the Company's senior management, including David R. Zimmer, the Company's President and Chief Executive Officer, Mr. Marko, Mr. Schwartz and Lawrence J. Murphy, the Company's Executive Vice President, met with Mr. Bearse and William R. Holland, Parent's Chairman and Chief Executive Officer, to discuss interest in a possible business combination. On November 7, 1996, Parent delivered a draft letter of intent outlining a proposal for Parent to acquire the Company. On November 20, 1996, the Company's Board of Directors met to consider Parent's proposal; at that meeting, the Company's Board of Directors also met with representatives of Goldman, Sachs & Co. ("Goldman Sachs"), and the Board of Directors determined, based on the results of the earlier interviews 10 12 described above, to engage Goldman Sachs as the Company's financial advisor. Over the next several months, representatives of Goldman Sachs contacted, and in some cases met with, those companies, including Parent, which senior management of the Company and Goldman Sachs had determined to be the most likely potential purchasers of the Company. During that period, the Company's Board of Directors and Executive Committee received ongoing updates of such process. On March 26, 1997, upon the recommendation of the Compensation Committee of the Company's Board of Directors, the Board of Directors approved the execution of the Change of Control Agreements with the Company's executives described in Schedule I hereto (except that Mr. MacGuidwin's Change of Control Agreement was approved on May 27, 1997). On May 12, 1997, Mr. Zimmer, Mr. Murphy and Mark J. MacGuidwin, the Company's Vice President-Finance and Chief Financial Officer, along with representatives of Goldman Sachs, met with representatives of Parent's senior management, including Mr. Holland and Mr. Bearse, to update Parent on the Company's recent operations and activities. Following the meeting, on May 14, 1997, Parent delivered to Goldman Sachs Parent's expression of interest and a draft letter of intent outlining the material terms of a proposed acquisition of the Company. Shortly thereafter, the Company, through Goldman Sachs, advised Parent that although the Company did not wish to enter into a letter of intent it encouraged Parent to proceed with developing a formal proposal. Beginning May 22, 1997, representatives of Parent met with members of the Company's senior management and visited various Company locations to conduct on-site review of the Company's businesses and to conduct due diligence examinations. In addition, representatives of the Company and Parent, their financial advisors and legal counsel commenced negotiation of the definitive terms of the Merger Agreement. During the business day of June 16, 1997, as a result of increases in the market price of the Shares, the Company publicly announced that it was engaged in discussions with a third party relating to a possible sale of the Company. On the morning of June 17, 1997, Mr. Holland notified Mr. Zimmer that Parent would not proceed with consideration of the transaction unless it received assurances that if a third party acquired the Company, the Company would compensate Parent. On June 20, 1997, representatives of Parent and the Company completed substantive negotiations on the Merger Agreement, and the Company's Board of Directors met, along with representatives of Goldman Sachs, to review the Merger Agreement, issues related to the Merger Agreement and Parent's request for an interim compensation arrangement. At the June 20, 1997 meeting, the Company's Board of Directors, among other things, redeemed the Company's preferred share purchase rights and approved the execution by the Company and Parent of a letter agreement providing that if the Company's Board of Directors did not approve the Merger Agreement on or before June 25, 1997, an authorized officer of the Company did not execute and deliver the Merger Agreement to Parent on or before June 25, 1997 or the Company approved and executed the Merger Agreement but rescinded its agreement to the Merger Agreement prior to the execution thereof by Parent, then the Company would pay to Parent, as liquidated damages, a fee of $10,000,000 plus out-of-pocket expenses of up to $3,000,000, unless parent's Board of Directors had not approved the Merger Agreement, and an authorized officer of Parent had not executed and delivered the Merger Agreement, by 11:59 p.m. on June 25, 1997. See "Fee Agreement" in Item 3. On June 24, 1997, the Company's Board of Directors met. At that meeting, representatives of Goldman Sachs were present. After a presentation with respect to the Merger Agreement, including Goldman Sachs' oral opinion described below, the Company's Board of Directors unanimously approved the Merger Agreement and the Offer and the Merger contemplated by it. On June 25, 1997, upon being advised that the Company's Board of Directors had approved the Merger, the Offer and the other transactions contemplated by the Merger Agreement, Parent's Board of Directors approved the Merger Agreement. The Merger Agreement was executed by the Company, Parent and Purchaser on the evening of June 25, 1997, and a press release announcing the execution of the Merger Agreement was issued on the morning of June 26, 1997. In making the determinations and recommendations set forth in Item 4(a) above, the Board considered a number of factors, including, without limitation, the following: (i) The terms and conditions of the Offer and the Merger Agreement; 11 13 (ii) Various presentations by management at Board of Director meetings held on and before June 24, 1997 regarding the financial condition, results of operations, business and prospects of the Company, including the prospects of the Company if it were to remain independent; (iii) The results of contacts by Goldman Sachs on behalf of the Company with certain potential strategic acquirors; (iv) The trading price of the Shares and that the $25.00 per Share Offer price represents a premium of approximately 27% over the closing sales price for the Shares on the New York Stock Exchange on June 13, 1997, the last trading day prior to the public announcement of the Company's ongoing discussions with a third party; (v) The presentation of Goldman Sachs at the June 24, 1997 Board of Directors' meeting and its oral opinion (which was subsequently confirmed in writing) to the effect that, as of the date of such opinion, the $25.00 in cash to be received by holders of the Shares in the Offer and the Merger was fair to the Company's stockholders. A copy of the opinion of Goldman Sachs, which sets forth the assumptions made, matters considered and limitations on the review undertaken by Goldman Sachs, is attached hereto and filed as Exhibit 99.6, and incorporated herein by reference. STOCKHOLDERS ARE URGED TO READ THE OPINION OF GOLDMAN SACHS CAREFULLY IN ITS ENTIRETY; (vi) That the Merger Agreement permits the Company if, and only to the extent that, the Board of Directors of the Company after consulting with Goldman Sachs and independent counsel and taking into consideration the advice of Goldman Sachs and upon the advice of such counsel, determines in good faith that such action is required by the Board of Directors to comply with its fiduciary duty to stockholders imposed by Nevada law to furnish information in response to requests which were not solicited by the Company after date of the Merger Agreement to third parties pursuant to confidentiality agreements, and to participate in discussions and negotiations with any third party that has submitted an unsolicited proposal in writing to the Company to acquire the Company; (vii) The termination provisions of the Merger Agreement, which were a condition to Parent's proposal, providing that Parent would be entitled to a fee of $10 million and reimbursement of expenses of up to $3 million upon the termination of the Merger Agreement under certain circumstances; and (viii) The representation of Parent and the Purchaser that Parent has, or has commitments to obtain, sufficient funds to permit Purchaser to consummate the Offer and the Merger. The Board of Directors did not assign relative weights to the factors or determine that any factor was of particular importance. Rather, the Board of Directors viewed its position and recommendations as being based on the totality of the information presented to and considered by it. ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The Company retained Goldman Sachs as its financial advisor in connection with the possible sale or merger of the Company. The Company has agreed to pay Goldman Sachs for its services an aggregate financial advisory fee equal to 1% of the total consideration paid by a purchaser in any such transaction. The Company also has agreed to reimburse Goldman Sachs for its out-of-pocket expenses, including the reasonable fees and expenses of its counsel, and to indemnify Goldman Sachs against certain liabilities, including liabilities under the federal securities laws, arising in connection with its engagement. In the ordinary course of its business, Goldman Sachs may from time to time effect transactions and hold positions in securities of the Company and Parent. Except as disclosed herein, neither the Company nor any person acting on its behalf currently intends to employ, retain or compensate any other person to make solicitations or recommendations to security holders on its behalf concerning the Offer or the Merger. 12 14 ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES. (a) No transactions in the Shares have been effected during the past 60 days by the Company or, to the best of the Company's knowledge, by any executive officer, director, affiliate or subsidiary of the Company. (b) To the best of the Company's knowledge, to the extent permitted by applicable securities laws, rules or regulations, except for (i) Shares the sale of which may result in liability for the holder(s) under Section 16(b) of the Exchange Act, (ii) Shares which are subject to restrictions on transfer and (ii) gifts of Shares to family members or charitable organizations, each executive officer, director and affiliate of the Company currently intends to tender all Shares over which he or she has sole dispositive power to the Purchaser. ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY. (a) The Company is not engaged in any negotiation in response to the Offer which relates to or would result in (i) an extraordinary transaction, such as a merger or reorganization, involving the company or any subsidiary of the Company; (ii) a purchase, sale or transfer of a material amount of assets by the Company or any subsidiary of the company; (iii) a tender offer for or other acquisition of securities by or of the Company; or (iv) any material change in the present capitalization or dividend policy of the Company. (b) There are no transactions, Board of Directors' resolutions, agreements in principle or signed contracts in response to the Offer that relate to or would result in one or more of the events referred to in Item 7(a) above. ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED. None. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 99.1 Agreement and Plan of Merger, dated as of June 25, 1997, among the Company, Parent and Purchaser Exhibit 99.2 Letter Agreement, dated as of June 20, 1997, between the Company and Parent Exhibit 99.3 Confidentiality Agreement dated October 2, 1996 between the Company and Parent Exhibit 99.4 Form of Letter addressed to stockholders of the Company, dated July 2, 1997 Exhibit 99.5 Press Release issued by the Company on June 26, 1997 Exhibit 99.6 Opinion of Goldman, Sachs & Company dated June 25, 1997 Exhibit 99.7 Change of Control Agreement between the Company and Mark J. MacGuidwin dated May 27, 1997 Exhibit 99.8 Change of Control Agreement between the Company and David R. Zimmer dated March 26, 1997.* Exhibit 99.9 Change of Control Agreement between the Company and Lawrence J. Murphy dated March 26, 1997.* Exhibit 99.10 Change of Control Agreement between the Company and Thomas G. Hooper dated March 26, 1997.* Exhibit 99.11 Change of Control Agreement between the Company and James P. Dixon dated March 26, 1997.*
- --------------- * Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ending February 28, 1997. 13 15 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. CORE INDUSTRIES INC By: /s/ DAVID R. ZIMMER ---------------------------------- David R. Zimmer President and Chief Executive Officer 14 16 SCHEDULE I CORE INDUSTRIES INC 500 NORTH WOODWARD AVENUE BLOOMFIELD HILLS, MICHIGAN 48303 INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER --------------- This Information Statement is being mailed on or about July 2, 1997, to the holders of record of the Shares at the close of business on or about June 27, 1997, as a part of the Company's Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer by UD Nevada Corp. (the "Schedule 14D-9"). You are receiving this Information Statement in connection with the possible election of persons designated by the Purchaser to a majority of the seats on the Board of Directors of the Company. The Merger Agreement requires the Company to use all reasonable efforts to cause the Purchaser Designees (as defined below) to be elected to the Board of Directors under the circumstances described therein. This Information Statement is required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. See "Board of Directors and Executive Officers-Right to Designate Directors; The Purchaser Designees." You are urged to read this Information Statement carefully. You are not, however, required to take any action. Capitalized terms used herein and not otherwise defined herein shall have the meaning set forth in the Schedule 14D-9. Pursuant to the Merger Agreement, Purchaser commenced the Offer on July 2, 1997. The Offer is scheduled to expire at 12:00 midnight, Eastern Daylight Savings Time, on Wednesday, July 30, 1997, unless the Offer is extended. The terms of the Merger Agreement, a summary of the events leading up to the Offer and the execution of the Merger Agreement and other information concerning the Offer and the Merger are contained in the Offer to Purchase, the related Letter of Transmittal and the Schedule 14D-9, copies of which are being delivered to the Company's shareholders contemporaneously herewith. The information contained in this Information Statement concerning Purchaser and the Purchaser Designees has been furnished to the Company by Purchaser, and the Company assumes no responsibility for the accuracy or completeness of such information. BOARD OF DIRECTORS AND EXECUTIVE OFFICERS GENERAL The Shares are the only class of voting securities of the Company outstanding. Each Share has one vote. As of June 27, 1997, there were 10,752,608 Shares outstanding. The Board of Directors currently consists of seven members, each of whom is elected to a three year term. Each director holds office until such director's successor is elected and qualified or until such director's earlier resignation or removal. RIGHT TO DESIGNATE DIRECTORS; THE PURCHASER DESIGNEES Pursuant to the Merger Agreement, promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to time thereafter, Purchaser shall be entitled to designate up to such number of directors (the "Purchaser Designees"), rounded up to the next whole number, on the Company's Board of Directors as shall give Purchaser representation on the Board of Directors equal to the product of the total number of directors on the Board of Directors (giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Purchaser or any affiliate of Purchaser at such time bears to the total number of Shares then outstanding, and the Company shall, at such 15 17 time, promptly take all actions necessary to cause the Purchaser Designees to be elected as directors of the Company, including increasing the size of the Board of Directors or securing the resignations of incumbent directors or both. At such times, the Company shall use its best efforts to cause persons designated by Purchaser to constitute the same percentage as persons designated by Purchaser shall constitute of the Board of Directors of (i) each committee of the Board of Directors, (ii) each board of directors of each subsidiary of the Company and (iii) each committee of each such board, in each case only to the extent permitted by applicable law. Notwithstanding the foregoing, until the time Purchaser acquires a majority of the then outstanding Shares on a fully diluted basis, the Company shall use its best efforts to ensure that all the members of the Board of Directors and each committee of the Board of Directors and such boards and committees of such subsidiaries as of the date of the Merger Agreement who are not employees of the Company shall remain members of the Board of Directors and of such boards and committees. Purchaser has informed the Company that each of the Purchaser Designees listed below has consented to act as a director. It is expected that the Purchaser Designees may assume office at any time following the purchase by Purchaser of a majority of the Shares pursuant to the Offer, which purchase cannot be earlier than July 30, 1997, and that, upon assuming office, the Purchaser Designees will thereafter constitute at least a majority of the Board of Directors. Biographical information concerning each of the Purchaser Designees is presented on the following page. 16 18 PURCHASER DESIGNEES The following table sets forth the name, age present principal occupation or employment, and material occupations, positions, offices or employments and business addresses thereof for the past five years of each Purchaser Designee. Each such person is a citizen of the United States, and his business address is 2300 One First Union Center, 301 South College Street, Charlotte, North Carolina 28202-6039.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS HELD NAME AND AGE DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF ------------ ------------------------------------------------------------------- William R. Holland, 58....................... Chairman of Parent since 1987, and Chief Executive Officer of Parent since 1986. Robert E. Drury, 52.......................... Executive Vice President and Chief Administrative Officer of Parent since 1995. Chief Financial Officer of Parent, 1992-1995, and Senior Vice President of Parent, 1993-1995. Vice President of Parent, 1987-1993. Richard A. Bearse, 58........................ Senior Vice President, Planning and Development of Parent since 1996. President of Building Products segment of Parent, 1995-1996. President and Chief Executive Officer of Flair Corporation, a manufacturer of air and filtration systems (and a subsidiary of Parent), 4647 Southwest 40th Avenue, Ocala, Florida 34474-5799, 1991-1995. Jan K. Ver Hagen, 59......................... President and Chief Operating Officer of Parent since 1994. Vice Chairman, Emerson Electric Co., a manufacturer of a broad range of electrical and electronic products, 8000 W. Florissant Ave., St. Louis, Missouri 63136, 1988-1994. Glenn A. Eisenberg, 36....................... Senior Vice President and Chief Financial Officer of Parent since 1995. Vice President of Planning and Development of Parent, 1992-1995. Director of Corporate Finance and Investor Relations of Parent, 1991-1992. J. Milton Childress, II, 39.................. Vice President of Parent since 1996. Director of Corporate Development of Parent, 1992-1996. Richard L. Magee, 39......................... Vice President of Parent since 1996. Associate General Counsel of Parent since 1993. Assistant General Counsel of Parent, 1989-1993.
None of the Purchaser Designees (i) is currently a director of, or holds any position with, the Company, (ii) has a familial relationship with any of the directors or executive officers of the Company or (iii) to the best knowledge of the Company, beneficially owns any securities (or rights to acquire any securities) of the Company. The Company has been advised by Purchaser that, to the best of Purchaser's knowledge, none of the Purchaser Designees has been involved in any transactions with the Company or any of its directors, executive officers or affiliates which are required to be disclosed pursuant to the rules and regulations of the Commission, except as may be disclosed herein or in the Schedule 14D-9. 17 19 DIRECTORS Information with respect to the directors of the Company is as follows:
NAME AND YEAR POSITION AND OFFICES WITH THE COMPANY TERM FIRST BECAME A DIRECTOR AGE AND OTHER PRINCIPAL OCCUPATION* EXPIRES ----------------------- --- ------------------------------------- ------- Harold M. Marko (1955).......................... 71 Chairman Emeritus of the Company...... 1998 Alan E. Schwartz (1960)......................... 71 Partner, Honigman Miller Schwartz and Cohn, Detroit, Michigan, attorneys.... 1998 Richard P. Kughn (1988)......................... 67 Chairman and Chief Executive Officer, Kughn Enterprises, a sole proprietorship engaged in the management of various business interests............................. 1999 David R. Zimmer (1992).......................... 50 President and Chief Executive Officer of the Company........................ 1999 Lawrence J. Murphy (1992)....................... 55 Executive Vice President and Secretary of the Company........................ 2000 Lloyd E. Reuss (1997)........................... 60 Former President, General Motors Corporation........................... 2000 Robert G. Stone, Jr. (1976)..................... 74 Chairman Emeritus, Kirby Corporation, Houston, Texas, inland and off-shore marine transportation and diesel repair................................ 2000
Mr. Murphy is a director of Jabil Circuit, Inc. Mr. Reuss is a director of the following corporations: Detroit Mortgage & Realty; Handleman Company; International Speedway Corporation; and U.S. Sugar Corporation. Mr. Stone is a director of the following corporations: Novacare; Russell Reynolds Associates, Inc.; Tandem Computers, Inc.; Tejas Gas Corporation; and several funds managed by Scudder, Stevens & Clark. He is Director Emeritus of The Chubb Corporation, Corning, Inc., The Japan Fund, and The Pittston Company. Mr. Stone is also a Fellow of Harvard College. Mr. Schwartz is a director of the following corporations: The Detroit Edison Company; DTE Energy Company; Handleman Company; Howell Industries, Inc.; Pulte Corporation; and Unisys Corporation. Mr. Kughn is a director of AAA Michigan and Chairman Emeritus of Lionel L.L.C. Mr. Zimmer is a director of Twin Disc, Incorporated. BOARD OF DIRECTORS MEETINGS AND COMMITTEES During the fiscal year ended August 31, 1996, the Board of Directors held eight meetings. All of the directors attended at least 75 percent of their respective board and committee meetings. The Company has a standing Audit Committee. The members of the Audit Committee are Harold M. Marko, Lloyd E. Reuss, and Alan E. Schwartz. During fiscal 1996, the Audit Committee held two meetings. The duties of the Audit Committee include recommending to the Board of Directors annually the - --------------- * The indicated occupations have been held by each director for the past five years, except that: Mr. Stone served as Chairman of the Board of Kirby Corporation until April, 1995; Mr. Kughn served as Chairman and Chief Executive Officer of Lionel Trains, Inc. until September, 1995; Mr. Zimmer served as President and Chief Executive Officer of New Venture Gear, Inc. from January, 1990 until March, 1992 (when he became President of Core Industries Inc); and Mr. Reuss served as President of General Motors Corporation from August, 1990 until April, 1992 and as Executive Vice President of New Vehicles and Systems of General Motors Corporation from April, 1992 until January, 1993. 18 20 appointment of the independent auditors; reviewing with the independent auditors the scope and results of the audit; reviewing the independent auditors' fees, including fees for professional services unrelated to the audit; and reviewing with the independent auditors and management the adequacy of the Company's accounting and financial controls. The Company has a standing Compensation Committee. The members of the Compensation Committee are Richard P. Kughn and Robert G. Stone, Jr. During fiscal 1996, the members of the Compensation Committee held two meetings as well as informal discussions in lieu of formal committee meetings. The duties of the Compensation Committee are: recommending to the Board of Directors the compensation arrangements for senior management and directors; and recommending to the Board compensation plans in which officers or directors are eligible to participate. The Company has a standing Executive Committee. The members of the Executive Committee are Harold M. Marko, Alan E. Schwartz and David R. Zimmer. During fiscal 1996, the Executive Committee held twelve meetings. The Executive Committee has and may exercise the authority of the Board of Directors in the management of the business of the Company between the meetings of the Board of Directors. The Company has a standing Nominating Committee. All of the non-employee members of the Board of Directors serve as the Nominating Committee. The Nominating Committee considers the performance of incumbent directors and recommends to the stockholders nominees for election as directors. During fiscal 1996, the members of the Nominating Committee held informal discussions in lieu of formal committee meetings. EXECUTIVE OFFICERS The following sets forth certain information with respect to these persons who constitute the Company's executive officers as of June 27, 1997. These officers have been appointed to terms which continue until the next annual meeting of shareholders.
FIRST SERVED NAME AND POSITION AGE AS OFFICER IN ----------------- --- ------------- David R. Zimmer........................................... 50 March 1992 President and Chief Executive Officer Lawrence J. Murphy........................................ 55 October 1990 Executive Vice President Mark J. MacGuidwin........................................ 45 October 1996 Vice President -- Finance and Chief Financial Officer Thomas G. Hooper.......................................... 53 October 1990 Treasurer and Controller James P. Dixon............................................ 53 January 1994 Vice President -- Technology
Certain biographical information with respect to Messrs. Zimmer and Murphy is contained above under the caption "Directors." Mr. MacGuidwin has been employed by the Company as its Vice President-Finance and Chief Financial Officer since October 1996. He previously served as the Vice President -- Controller of Varity Corporation (from April, 1995) and as Vice President -- Finance of Libbey-Owens-Ford Co. (from October, 1990). Mr. Hooper has served as the Treasurer and Controller of the Company since October 1990. Mr. Dixon has served as the Vice President-Technology of the Company since January 1997, and previously served as the Vice President -- Planning of the Company from January 1994 and as the Vice President-Marketing of the Company from October 1990. 19 21 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the shares of the Company's Common Stock beneficially owned as of March 31, 1997 by the Company's directors, executive officers identified in the "Summary Compensation Table," and all directors and officers as a group. To the knowledge of the Company, no other persons were the beneficial owners of more than 5% of the Company's Common Stock on such date.
SHARES PERCENT OF BENEFICIALLY OUTSTANDING NAME OWNED SHARES(1) ---- ------------ ----------- Harold M. Marko............................................. 427,236(2) 3.9% Alan E. Schwartz............................................ 190,300(3) 1.7 Richard P. Kughn............................................ 68,109(4) (5) David R. Zimmer............................................. 173,075(6) 1.6 Lawrence J. Murphy.......................................... 51,879(7) (5) Lloyd Reuss................................................. 1,000 (5) Robert G. Stone, Jr......................................... 3,375 (5) Mark J. MacGuidwin.......................................... 0 (5) Thomas G. Hooper............................................ 16,667(8) (5) James P. Dixon.............................................. 16,935(9) (5) All directors and executive officers as a group (10 persons including those listed above)............................. 948,576(10) 8.6
- --------------- (1) Includes shares which such persons have the right to purchase within 60 days after March 31, 1997 upon the exercise of certain stock options. (2) In addition, 73,700 shares are owned by Mr. Marko's wife, as to which shares Mr. Marko disclaims any beneficial interest. Includes 35,736 shares subject to stock options exercisable within 60 days following March 31, 1997. (3) In addition, 15,471 shares are owned by Mr. Schwartz's wife, as to which shares Mr. Schwartz disclaims any beneficial interest. Includes 45,027 shares subject to stock options exercisable within 60 days following March 31, 1997. (4) Includes 68,109 shares subject to stock options exercisable within the 60 days following March 31, 1997. (5) Shares beneficially owned do not exceed one percent of the Company's Common Stock. (6) Includes 155,335 shares subject to stock options exercisable within the 60 days following March 31, 1997. (7) Includes 38,166 shares subject to stock options exercisable within the 60 days following March 31, 1997. (8) Includes 11,500 shares subject to stock options exercisable within the 60 days following March 31, 1997. (9) Includes 11,333 shares subject to stock options exercisable within the 60 days following March 31, 1997. (10) Includes 365,206 shares subject to stock options exercisable within 60 days following March 31, 1997. 20 22 STOCK PRICE PERFORMANCE GRAPH The Stock Price Performance Graph below shall not be deemed incorporated by reference by any general statement incorporating by reference this Schedule 14D-9 and/or Information Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. The following Stock Price Performance Graph compares the cumulative stockholder return for the Company's common stock with the cumulative total return of the Standard & Poor's 500 Composite Index and the Standard & Poor's Diversified Manufacturers Index for the past five years. Measurement Period (Fiscal Core S & P Diversified Year Covered Industries Inc S & P 500 Mfr 1991 100 100 100 1992 120 108 98 1993 221 124 124 1994 170 131 138 1995 191 159 181 1996 205 189 224 Compound Return 15.4% 13.6% 17.5%
21 23 SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1) -------------------------------- NAME AND FISCAL PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) OPTIONS(#) OTHER ------------------ ------ --------- ----------- ---------- ----- David R. Zimmer 1996 $313,333 $211,239 83,000 -- President and Chief 1995 300,000 200,803 -- -- Executive Officer 1994 291,667 152,015 83,000 -- Lawrence J. Murphy 1996 201,667 118,925 46,000 -- Executive Vice President 1995 195,000 108,400 -- -- and Secretary 1994 190,000 84,311 46,000 -- Raymond H. Steben, Jr. 1996 123,283 53,961 30,000 -- Vice President -- Finance 1995 151,667 73,855 -- -- and Chief Financial Officer(3) 1994 145,000 43,514 30,000 -- James P. Dixon 1996 150,000 94,407 14,000 -- Vice President -- Technology 1995 145,667 82,463 -- -- 1994 137,000 34,936 14,000 $62,888(4) Thomas G. Hooper 1996 115,333 46,060 12,000 -- Treasurer and Controller 1995 110,000 44,926 -- -- 1994 108,333 21,452 12,000 --
- --------------- (1) Other annual compensation, which was less than the lesser of $50,000 or 10% of the individual's bonus and salary, is not shown. (2) Inclusive of $112,068, $56,162, $26,792, $49,998 and $23,746 in 1996; $112,303, $60,625, $41,305, $46,119 and $25,126 in 1995; and $81,215, $36,536, $23,290, $18,854 and $15,136 in 1994 awarded to the five named individuals, respectively, in unrestricted common stock of the Company as part of the earned annual bonus. (3) Mr. Steben was employed by the Company as Vice President -- Finance and Chief Financial Officer until June 17, 1996. (4) Mr. Dixon relocated his household during the 1994 fiscal year. Of the amount shown, $58,382 was part of a relocation reimbursement agreed to in fiscal year 1990. OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF NUMBER OF % OF OPTIONS STOCK PRICE APPRECIATION SECURITIES GRANTED TO EXERCISE OR FOR OPTION TERM(2) UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------------- NAME OPTIONS FISCAL YEAR ($/SHARE)(1) DATE 0%($) 5%($) 10%($) ---- ---------- ------------ ------------ ---------- ----- ----- ------ David R. Zimmer.............. 83,000 37.3% $13.75 11/29/05 0 $ 717,726 $ 1,818,859 Lawrence J. Murphy........... 46,000 20.7 13.75 11/29/05 0 397,726 1,008,042 Raymond H. Steben, Jr. ...... 30,000 13.5 13.75 11/29/05 0 259,419 657,419 James P. Dixon............... 14,000 6.3 13.75 11/29/05 0 121,062 306,795 Thomas G. Hooper............. 12,000 5.4 13.75 11/29/05 0 103,768 262,968 Total Stockholders(3)........ 0 92,724,413 234,981,868
- --------------- (1) Vesting of the options, i.e. the right to exercise, initially depends upon accelerated growth in the market value of the Company's stock. One-third of the granted options will vest if the Company's stock averages greater than $15.81 for 30 calendar days before November 30, 1998, another one-third will vest if the Company's stock price averages greater than $18.18 for 30 calendar days before such date and the final 22 24 one-third will vest if the Company's stock price averages $20.91 for 30 calendar days before such date. Any options that fail to become exercisable under these provisions will vest 9 1/2 years from the grant date. (2) "Potential realizable value" is disclosed in response to SEC rules which require such disclosure for illustration only. The values disclosed are not intended to be, and should not be interpreted by stockholders as, representations or projections of future value of the Company's stock. (3) To lend perspective to the illustrative "potential realizable value," if the Company's stock price increased five percent or 10 percent per year from the date of the grant of the options for 10 years (disregarding dividends and assuming for purpose of the calculation a constant number of shares outstanding), the total increase in the value of all shares presently outstanding is shown above as "potential realizable value" for all of the Company's stockholders ("Total Stockholders"). AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED IN- NUMBER OF UNEXERCISED THE-MONEY OPTIONS AT SHARES OPTIONS AT FY END(#) FISCAL YEAR END($) ACQUIRED VALUE ---------------------------- ---------------------------- NAME ON EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- ----------- ----------- ----------- ------------- ----------- ------------- David R. Zimmer........... 0 0 107,667 158,333 $475,000 $118,750 Lawrence J. Murphy........ 0 0 22,833 76,667 8,906 -- Raymond H. Steben, Jr. ... 0 0 18,000 50,000 23,000 -- James P. Dixon............ 0 0 6,667 23,333 13,750 -- Thomas G. Hooper.......... 0 0 7,500 20,000 4,156 --
CHANGE OF CONTROL AGREEMENTS Messrs. Zimmer, Murphy, MacGuidwin, Hooper and Dixon, along with certain other key employees of the Company ("covered employees"), are parties to Change of Control Agreements with the Company entered into between March and May, 1997. Under the Change of Control Agreements, each of the covered employees is entitled to receive certain benefits from the Company if a "Change in Control" (defined to include the acquisition by any third party of 40% or more of the combined voting power of the Company's then outstanding securities) occurs and if the covered employee's employment is, within two years following the Change in Control, either terminated by the Company without cause or the covered employee resigns from the employ of the Company for "Good Reason" (defined to include the assignment to the covered employee of any duties inconsistent in any respect with the covered employee's position, other actions that result in a diminution in the covered employee's position, authority, duties or responsibilities, a reduction by the Company in the covered employee's base salary, a failure by the Company to maintain plans providing benefits at least as beneficial as those provided by any benefit or compensation plan, the Company's requiring the covered employee to be based at any office or location in excess of 50 miles from his office location immediately before the Change in Control, and in the case of Mr. Zimmer and Mr. Murphy (but not in the case of the other individuals listed above) the voluntary termination of employment by the covered employee during the period beginning with the first day of the 13th full calendar month following any Change in Control and ending on the later to occur of (a) the last day of the 13th full calendar month following such Change in Control or (b) the date 90 days after the Company gives the covered employee written notice that such Change in Control has occurred. The benefits to which covered employees are entitled in the foregoing circumstances include the payment to the covered employee in a lump sum in cash within 30 days after the date of termination a severance payment in an amount equal to 100% of the covered employee's annual compensation, certain outplacement services and the continuation of certain employee benefits for a period following termination. In addition, in the foregoing circumstances each covered employee (with the exception of Mr. MacGuidwin) will, for a period of two years, be obligated to consult with the Company and not to 23 25 compete with the Company, in connection with which the Company must pay the covered employee 100% (200% in the case of Mr. Zimmer or Mr. Murphy) of the covered employee's annual compensation. PENSION PLANS The Company has a tax-qualified Defined Benefit Pension Plan and a nonqualified Benefit Equalization Plan, both of which cover salaried employees of corporate headquarters and of certain divisions. The Defined Benefit Pension Plan provides pension and disability benefits for covered employees. Employees with five or more years of service are entitled to annual pension benefits beginning at normal retirement age (65). The annual retirement benefit is equal to 1.25% of the employee's final average compensation (substantially the same as Annual Compensation as reported in the above Summary Compensation Table) plus .65% of the employee's final average compensation in excess of the Social Security taxable wage base multiplied by the employee's years of service. In no event may the retirement benefit exceed 65% of the final average compensation. The unfunded Benefit Equalization Plan provides for the payment of additional amounts to covered employees so that the total amount paid will equal the pension benefit which would have been calculated under the Defined Benefit Pension Plan formula without regard to the limitations added to the Defined Benefit Pension Plan to conform to Section 415 and 401(a)(17) of the Internal Revenue Code of 1986. The following table shows estimated annual retirement benefits payable under both plans to an employee at normal retirement age of 65 on a single life annuity basis assuming a Social Security taxable wage base of an employee currently age 60:
YEARS OF SERVICE FINAL AVERAGE -------------------------------------------------------------------- COMPENSATION 15 20 25 30 35 ------------- -- -- -- -- -- $125,000...................... $ 32,876 $ 43,834 $ 54,793 $ 65,751 $ 76,710 150,000...................... 40,001 53,334 66,668 80,001 93,335 175,000...................... 47,126 62,834 78,543 94,251 109,960 200,000...................... 54,251 72,334 90,418 108,501 126,585* 225,000...................... 61,376 81,834 102,293 122,751* 143,210* 250,000...................... 68,501 91,334 114,168 137,001* 159,835* 300,000...................... 82,751 110,334 137,918* 165,501* 193,085* 350,000...................... 97,001 129,334* 161,668* 194,001* 226,335* 400,000...................... 111,251 148,334* 185,418* 222,501* 259,585* 450,000...................... 125,501* 167,334* 209,168* 251,001* 292,500* 500,000...................... 139,751* 186,334* 232,918* 279,501* 325,000*
- --------------- * Section 415 of the Internal Revenue Code limits the benefits which can be paid from any funded pension plan that qualifies for federal tax exemption. The amount for calendar year 1996 is $120,000. In addition, Section 401(a)(17) of the Internal Revenue Code limits the amount of compensation that may be used in the calculation of the benefit to $150,000 for 1996. The credited years of service under the Company's pension plans to each of the persons named above are: David R. Zimmer -- 4 years; Lawrence J. Murphy -- 15 years; Raymond H. Steben, Jr. -- 3 years; James P. Dixon -- 6 years; and Thomas G. Hooper -- 15 years. COMPENSATION OF DIRECTORS The current standard arrangement for compensation of directors is as follows: officers of the Company who are directors do not receive any additional compensation for services as a director. Each director who is not an officer of the Company receives a director fee in the annual amount of $11,000 plus $1,750 for each board meeting attended up to a maximum of $15,750 in meeting fees. There are six regularly scheduled board meetings per year. An additional sum of $1,000 per meeting is paid for attendance at a committee meeting if such meeting falls on a day on which a meeting of the entire Board of Directors is not held. Non-employee directors may elect to defer compensation for services as a director until the person ceases to be a director. All deferred amounts are held in the general funds of the Company and bear interest at the prime rate from the 24 26 date such fees would otherwise be paid. Two directors have elected to defer their compensation pursuant to this plan. The non-employee directors of the Company are eligible to participate in the Company's 1991 Director Discounted Stock Option Plan. Under that Plan, directors may elect to receive stock options exercisable at either 50% or 75% of market value on each January 1 in lieu of director fees payable in cash. The number of options granted annually is that number of options which provides aggregate discount from market value equal to the cash fees forfeited. Under the Plan, 200,000 shares were reserved for issuance. Two of the Company's directors elected to participate in the 1991 Director Discounted Stock Option Plan in fiscal 1996, and stock options for a total of 12,941 shares (exercisable at $9.56 per share) were granted to them in fiscal 1996. All such options have a term of 10 years, and none had been exercised as of August 31, 1996. 25 27 EXHIBIT INDEX
EXHIBIT NO. PAGE IN SEQUENTIAL NUMBERING SYSTEM - ------- ----------------------------------- 99.1 Agreement and Plan of Merger, dated as of June 25, 1997, among the Company, Parent and Purchaser. 99.2 Letter Agreement, dated as of June 20, 1997, between the Company and Parent. 99.3 Confidentiality Agreement dated October 2, 1996 between the Company and Parent. 99.4 Form of Letter addressed to stockholders of the Company, dated July 2, 1997.* 99.5 Press Release issued by the Company on June 26, 1997. 99.6 Opinion of Goldman, Sachs & Company dated June 25, 1997.* 99.7 Change of Control Agreement between the Company and Mark J. MacGuidwin dated May 27, 1997. 99.8 Change of Control Agreement between the Company and David R. Zimmer dated March 26, 1997.** 99.9 Change of Control Agreement between the Company and Lawrence J. Murphy dated March 26, 1997.** 99.10 Change of Control Agreement between the Company and Thomas G. Hooper dated March 26, 1997.** 99.11 Change of Control Agreement between the Company and James P. Dixon dated March 26, 1997.**
- --------------- * Included in copies mailed to stockholders. ** Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ending February 28, 1997. 26 EX-99.1 2 EXHIBIT 99.1 1 EXHIBIT 99.1 AGREEMENT AND PLAN OF MERGER among UNITED DOMINION INDUSTRIES LIMITED, UD NEVADA CORP. and CORE INDUSTRIES INC Dated as of June 25, 1997 2 TABLE OF CONTENTS
Page ---- ARTICLE I. THE OFFER SECTION 1.01 The Offer........................................................1 SECTION 1.02 Company Action...................................................2 ARTICLE II. THE MERGER SECTION 2.01 The Merger.......................................................3 SECTION 2.02 Effective Time, Closing..........................................4 SECTION 2.03 Effect of the Merger.............................................4 SECTION 2.04 Articles of Incorporation; Bylaws................................4 SECTION 2.05 Directors and Officers...........................................4 SECTION 2.06 Conversion of Securities.........................................5 SECTION 2.07 Employee and Director Stock Options; Deferred Director Fees......5 SECTION 2.08 Surrender of Shares: Stock Transfer Books........................5 ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY SECTION 3.01 Organization and Qualification; Subsidiaries.....................7 SECTION 3.02 Articles of Incorporation and Bylaws.............................7 SECTION 3.03 Capitalization...................................................7 SECTION 3.04 Authority Relative to this Agreement.............................8 SECTION 3.05 No Conflict, Required Filings and Consents.......................8 SECTION 3.06 Compliance.......................................................9 SECTION 3.07 SEC Filings; Financial Statements................................9 SECTION 3.08 Absence of Certain Changes or Events............................10 SECTION 3.09 Absence of Litigation...........................................11 SECTION 3.10 Employee Benefit Plans..........................................11 SECTION 3.11 Labor Matters...................................................12 SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement................13 SECTION 3.13 Tangible Property; Real Property and Leases.....................13 SECTION 3.14 Trademarks, Patents and Copyrights..............................14 SECTION 3.15 Taxes...........................................................14 SECTION 3.16 Environmental Matters...........................................15 SECTION 3.17 Material Contracts..............................................16
i 3 SECTION 3.18 Insurance; Workers' Compensation................................16 SECTION 3.19 Certain Payments; Absence of Certain Business Practices.........16 SECTION 3.20 Licenses and Permits............................................16 SECTION 3.21 Letters of Credit, Surety Bonds, Guarantees.....................16 SECTION 3.22 Brokers.........................................................17 ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER SECTION 4.01 Corporate Organization..........................................17 SECTION 4.02 Authority Relative to This Agreement............................17 SECTION 4.03 No Conflict; Required Filings and Consents......................17 SECTION 4.04 Financing.......................................................18 SECTION 4.05 Offer Documents; Proxy Statement................................18 SECTION 4.06 Due Diligence...................................................19 SECTION 4.07 Brokers.........................................................19 ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER SECTION 5.01 Conduct of Business by the Company Pending the Merger...........19 ARTICLE VI. ADDITIONAL AGREEMENTS SECTION 6.01 Special Stockholders' Meeting...................................21 SECTION 6.02 Proxy Statement.................................................21 SECTION 6.03 Company Board Representation; Section 14(f).....................22 SECTION 6.04 Access to Information; Confidentiality..........................23 SECTION 6.05 No Solicitation of Transactions.................................23 SECTION 6.06 Employee Benefits Matters; Employment Agreements................24 SECTION 6.07 Directors' and Officers' Indemnification and Insurance..........24 SECTION 6.08 Notification of Certain Matters.................................25 SECTION 6.09 Further Action; Reasonable Best Efforts.........................25 SECTION 6.10 Public Announcements............................................26 SECTION 6.11 Confidentiality Agreement.......................................26 ARTICLE VII. CONDITIONS TO THE MERGER SECTION 7.01 Conditions to the Merger........................................26
ii 4 ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER SECTION 8.01 Termination.....................................................27 SECTION 8.02 Effect of Termination...........................................28 SECTION 8.03 Fees and Expenses...............................................28 SECTION 8.04 Amendment.......................................................30 SECTION 8.05 Waiver..........................................................30 ARTICLE IX. GENERAL PROVISIONS SECTION 9.01 Non-Survival of Representations, Warranties and Agreements......30 SECTION 9.02 Notices.........................................................30 SECTION 9.03 Certain Definitions.............................................31 SECTION 9.04 Severability....................................................32 SECTION 9.05 Entire Agreement, Assignment....................................32 SECTION 9.06 Parties in Interest.............................................32 SECTION 9.07 Specific Performance............................................33 SECTION 9.08 Governing Law...................................................33 SECTION 9.09 Headings........................................................33 SECTION 9.10 Counterparts....................................................33
iii 5 GLOSSARY OF DEFINED TERMS
Location of Definitions ----------- affiliate....................................................... Section 9.03(a) Agreement....................................................... Preamble Articles of Merger.............................................. Section 2.02 beneficial owner................................................ Section 9.03(b) Blue Sky Laws................................................... Section 3.05(b) Board........................................................... Recitals business day.................................................... Section 9.03(c) Certificates.................................................... Section 2.08(b) Code............................................................ Section 3.10(a) Company......................................................... Preamble Competing Proposal.............................................. Section 8.03(a)(ii) Confidentiality Agreement....................................... Section 6.04(c) control......................................................... Section 9.03(d) control by...................................................... Section 9.03(d) Disclosure Schedule............................................. Section 3.01 Effective Time.................................................. Section 2.02 Environmental Law............................................... Section 3.16(a) ERISA........................................................... Section 3.10(a) ERISA Affiliate................................................. Section 3.10(a) Exchange Act.................................................... Section 1.02(b) Expenses........................................................ Section 8.03(c) Fee............................................................. Section 8.03(a) GAAP............................................................ Section 3.07(b) Goldman, Sachs.................................................. Section 1.02(a) Hazardous Substances............................................ Section 3.16(a) HSR Act......................................................... Section 3.05(b) Indemnified Parties............................................. Section 6.07(b) Information Statement........................................... Section 3.12 IRS............................................................. Section 3.10(a) Material Adverse Effect......................................... Section 3.01 Material Contracts.............................................. Section 3.17 Material Subsidiaries........................................... Section 3.01 Merger.......................................................... Recitals Merger Consideration............................................ Section 2.06(a) Minimum Condition............................................... Section 1.01(a) Multiemployer Plan.............................................. Section 3.10(a) Nevada Law...................................................... Recitals 1996 Balance Sheet.............................................. Section 3.07(c) 1997 Balance Sheet.............................................. Section 3.15
iv 6 Offer........................................................... Recitals Offer Documents................................................. Section 1.01(b) Offer to Purchase............................................... Section 1.01(b) Parent.......................................................... Preamble Paying Agent.................................................... Section 2.08(a) Per Share Amount................................................ Recitals person.......................................................... Section 9.03(e) Proxy Statement................................................. Section 3.12 Purchaser....................................................... Preamble Purchaser's Election Date....................................... Section 5.01 Qualified Plan.................................................. Section 3.10(a) Schedule 14D-1.................................................. Section 1.01(b) Schedule 14D-9.................................................. Section 1.02(b) SEC............................................................. Section 1.01(b) SEC Reports..................................................... Section 3.07(a) Securities...................................................... Section 3.07(a) Shares.......................................................... Recitals Special Stockholders' Meeting................................... Section 6.01 Stock Option Plans.............................................. Section 2.07 Subsidiary...................................................... Section 3.01 subsidiary...................................................... Section 9.03(f) Surviving Corporation........................................... Section 2.01 Tax or Taxes.................................................... Section 3.15(j) Third Party..................................................... Section 8.03(e) Third Party Acquisition......................................... Section 8.03(f) Transactions.................................................... Section 3.04 Under Common Control with....................................... Section 9.03(d)
v 7 AGREEMENT AND PLAN OF MERGER, dated as of June 25, 1997 (this "Agreement"), among UNITED DOMINION INDUSTRIES LIMITED, a corporation organized under the laws of Canada ("Parent"), UD NEVADA CORP., a Nevada corporation and an indirect wholly owned subsidiary of Parent ("Purchaser"), and CORE INDUSTRIES INC, a Nevada corporation (the "Company"). W I T N E S S E T H: WHEREAS, the Boards of Directors of Parent, Purchaser and the Company have each determined that it is in the best interests of their respective stockholders for Parent to acquire the Company upon the terms and subject to the conditions set forth herein; WHEREAS, in furtherance of such acquisition, it is proposed that Purchaser shall make a cash tender offer (the "Offer") to acquire all the issued and outstanding shares of common stock, par value U.S. $1.00 per share, of the Company (the "Shares") for U.S. $25.00 per Share (such amount, or any greater amount per Share paid pursuant to the Offer, being hereinafter referred to as the "Per Share Amount") net to the seller in cash, subject to withholding of taxes, if applicable, upon the terms and subject to the conditions of this Agreement and the Offer; WHEREAS, the Board of Directors of the Company (the "Board"), including all the disinterested directors on the Board, has unanimously approved the making of the Offer and resolved and agreed to recommend that holders of Shares tender their Shares pursuant to the Offer; WHEREAS, also in furtherance of such acquisition, the Boards of Directors of Parent, Purchaser and the Company have each approved the merger (the "Merger") of Purchaser with and into the Company in accordance with the General Corporation Law of the State of Nevada ("Nevada Law") following the consummation of the Offer and upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Purchaser and the Company hereby agree as follows: ARTICLE I. THE OFFER SECTION 1.01 The Offer. (a) Provided that this Agreement shall not have been terminated in accordance with Section 8.01 and none of the events or circumstances set forth in Annex A hereto shall have occurred or be existing, Purchaser shall commence the Offer as promptly as reasonably practicable after the date hereof, but in no event later than five business days after the first public announcement of the execution hereof by all of the parties hereto. The obligation of Purchaser to accept for payment and pay for Shares tendered pursuant to the Offer shall be subject to the condition (the "Minimum Condition") that at least the number of Shares that combined with the Shares already owned by Parent, Purchaser or any of their affiliates shall constitute a majority of the then outstanding 1 8 Shares on a fully diluted basis (including, without limitation, all Shares issuable upon the conversion of any convertible securities or upon the exercise of any options, warrants or rights) shall have been validly tendered and not withdrawn prior to the expiration of the Offer and also shall be subject to the satisfaction of the other conditions set forth in Annex A hereto. Purchaser expressly reserves the right to waive any such condition (other than the Minimum Condition), to increase the price per Share payable in the Offer, and to make any other changes in the terms and conditions of the Offer; provided, however, that no change may be made which decreases the price per Share payable in the Offer or which changes the form of consideration to be paid in the Offer or which reduces the maximum number of Shares to be purchased in the Offer or which imposes conditions to the Offer in addition to those set forth in Annex A hereto or which changes the Minimum Condition. The Per Share Amount shall, subject to applicable withholding of taxes, be net to the seller in cash, upon the terms and subject to the conditions of the Offer. Subject to the terms and conditions of the Offer (including, without limitation, the Minimum Condition), Purchaser shall pay, as promptly as practicable after expiration of the Offer, for all Shares validly tendered and not withdrawn. (b) As soon as reasonably practicable on the date of commencement of the Offer, Purchaser shall file with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments and supplements thereto, the "Schedule 14D-1") with respect to the Offer and the other Transactions (as hereinafter defined), which shall have been provided to the Company and to which the Company shall not have reasonably objected. The Schedule 14D-1 shall contain or shall incorporate by reference an offer to purchase (the "Offer to Purchase") and forms of the related letter of transmittal and any related summary advertisement (the Schedule 14D-1, the Offer to Purchase and such other documents, together with all supplements and amendments thereto, being referred to herein collectively as the "Offer Documents"). Parent, Purchaser and the Company agree to correct promptly any information provided by any of them for use in the Offer Documents which shall have become false or misleading, and Parent and Purchaser further agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer Documents as so corrected to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. SECTION 1.02 Company Action. (a) The Company hereby approves of and consents to the Offer and represents that (i) the Board, at a meeting duly called and held on June 20, 1997, has unanimously (A) determined that this Agreement and the transactions contemplated hereby, including each of the Offer and the Merger, are fair to and in the best interests of the stockholders of the Company, (B) approved and adopted this Agreement and the transactions, including, without limitation, the Offer, the purchase of Shares pursuant to the Offer and the Merger, contemplated hereby, (C) taken all action to redeem the rights issued to stockholders pursuant to the Rights Agreement dated September 16, 1987 between the Company and Harris Trust and Savings Bank, (D) amended the Company's Bylaws to provide that the provisions of Sections 78.378 to 78.3793 of the Nevada Law shall not apply to the Company, and (E) recommended that the stockholders of the Company accept the Offer and approve and adopt this Agreement and the transactions, including, without limitation, the Merger, contemplated hereby, (ii) approval of this Agreement by the Board constitutes approval of a "memorandum of understanding" setting forth the principal terms of a transaction governed by, and within the meaning of, Article Eleventh of the Company's Articles of Incorporation, and (iii) Goldman, Sachs & Co. ("Goldman, Sachs") has delivered to the Board an 2 9 opinion to the effect that the consideration to be received by the holders of Shares (other than Parent, Purchaser and their affiliates) pursuant to each of the Offer and the Merger is fair to such holders of Shares. Subject only to the fiduciary duties of the Board under applicable law as advised by the Company's counsel, the Company hereby consents to the inclusion in the Offer Documents of the recommendation of the Board described in the immediately preceding sentence. The Company has been advised by each of its directors and executive officers that they intend either to tender or cause to be tendered all Shares beneficially owned by them to Purchaser pursuant to the Offer or to vote such Shares in favor of the approval and adoption by the stockholders of the Company of this Agreement and the transactions contemplated hereby. (b) As soon as reasonably practicable on the date of commencement of the Offer, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the "Schedule 14D-9") containing, subject only to the fiduciary duties of the Board under applicable law as advised by the Company's counsel, the recommendation of the Board described in Section 1.02(a) and shall disseminate the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other applicable federal securities laws. The Company, Parent and Purchaser agree to correct promptly any information provided by any of them for use in the Schedule 14D-9 which shall have become false or misleading, and the Company further agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. (c) The Company shall promptly furnish Purchaser with mailing labels containing the names and addresses of all record holders of Shares and with security position listings of Shares held in stock depositories, each as of a recent date, together with all other available listings and computer files containing names, addresses and security position listings of record holders and beneficial owners of Shares. The Company shall furnish Purchaser with such additional information, including, without limitation, updated listings and computer files of stockholders, mailing labels and security position listings, and such other assistance as Parent, Purchaser or their agents may reasonably request. Subject to the requirements of applicable law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer or the Merger, Parent and Purchaser shall hold in confidence the information contained in such labels, listings and files, shall use such information only in connection with the Offer and the Merger and, if this Agreement shall be terminated in accordance with Section 8.01, shall deliver to the Company all copies of such information then in their possession. ARTICLE II. THE MERGER SECTION 2.01 The Merger. Upon the terms and subject to the conditions set forth in Article VII, and in accordance with Nevada Law, at the Effective Time (as hereinafter defined), Purchaser shall be merged with and into the Company. As a result of the Merger, the separate corporate 3 10 existence of Purchaser shall cease and the Company shall continue as the surviving corporation of the Merger (the "Surviving Corporation"), and shall continue to be governed by the laws of the State of Nevada. Notwithstanding anything to the contrary contained herein, Parent may elect instead, at any time prior to the fifth business day immediately preceding the date on which the Proxy Statement (as defined in Section 3.12) is mailed initially to the Company's stockholders, to merge the Company into Purchaser or another direct or indirect wholly owned subsidiary of Parent. In such event, the parties agree to execute an appropriate amendment to this Agreement in order to reflect the foregoing and to provide, as the case may be, that Purchaser or such other wholly owned subsidiary of Parent shall be the Surviving Corporation. SECTION 2.02 Effective Time; Closing. As promptly as practicable after the satisfaction or, if permissible, waiver of the conditions set forth in Article VII, the parties hereto shall cause the Merger to be consummated by filing this Agreement or articles of merger (in either case, the "Articles of Merger") with the Secretary of State of the State of Nevada, in such form as is required by, and executed in accordance with the relevant provisions of, Nevada Law (the date and time of such filing being, collectively, the "Effective Time"). Prior to such filing, a closing shall be held at the offices of Robinson, Bradshaw & Hinson, P.A., 1900 Independence Center, Charlotte, North Carolina 28246, or such other place as the parties shall agree, for the purpose of confirming the satisfaction or waiver, as the case may be, of the conditions set forth in Article VII. SECTION 2.03 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of Nevada Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of the Company and Purchaser shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of the Company and Purchaser shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation. SECTION 2.04 Articles of Incorporation; Bylaws. (a) Unless otherwise determined by Parent prior to the Effective Time, and subject to the requirements of Section 6.07, at the Effective Time the Articles of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation and shall be amended and restated to conform to the Articles of Incorporation of Purchaser as in effect immediately prior to the Effective Time; provided, however, that, at the Effective Time, Article I of the Articles of Incorporation of the Surviving Corporation shall be amended to read as follows: "The name of the corporation is CORE Industries Inc" and the Articles of Incorporation of the Surviving Corporation shall be amended if required to comply with Section 6.07. (b) The Bylaws of Purchaser, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter amended as provided by law, the Articles of Incorporation of the Surviving Corporation and such Bylaws. SECTION 2.05 Directors and Officers. The directors of Purchaser immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall be the initial officers of the 4 11 Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified. SECTION 2.06 Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Purchaser, the Company or the holders of any of the Shares: (a) Each Share issued and outstanding immediately prior to the Effective Time (other than any Shares to be canceled pursuant to Section 2.06(b)) shall be canceled and shall be converted automatically into the right to receive an amount equal to the Per Share Amount in cash (the "Merger Consideration"), payable, without interest, to the holder of such Share, upon surrender, in the manner provided in Section 2.08, of the certificate that formerly evidenced such Share; (b) Each Share owned by Purchaser, Parent or any direct or indirect wholly owned subsidiary of Parent or of the Company immediately prior to the Effective Time shall be canceled and retired without any conversion thereof and no payment or distribution shall be made with respect thereto; and (c) Each share of common stock, par value U.S. $.01 per share, of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock, par value U.S. $1.00 per share, of the Surviving Corporation. SECTION 2.07 Employee and Director Stock Options; Deferred Director Fees. (a) Each outstanding option to purchase Shares granted under the Company's 1978 Stock Option Plan, 1988 Stock Option Plan, 1988 Director Discounted Stock Option Plan, 1991 Director Discounted Stock Option Plan and 1993 Performance Incentive Plan (the "Stock Option Plans"), shall, immediately prior to the Effective Time, become exercisable regardless of the vesting schedule contained in any stock option agreement or in any of the Stock Option Plans and shall be canceled at the Effective Time. In the event that any unexercised option is canceled by the Company, each holder of a canceled option shall be entitled to receive, at the Effective Time or as soon as practicable thereafter, from the Company, in consideration for the cancellation of such option, an amount (subject to any applicable withholding tax) in cash equal to the product of (i) the number of Shares previously subject to such option and (ii) the excess, if any, of the Merger Consideration over the exercise price per Share previously subject to such option. (b) At the Effective Time, the Company shall pay to each individual who served as a Director of the Company prior to the Effective Time any and all deferred director fees owed to such individual. SECTION 2.08 Surrender of Shares: Stock Transfer Books. (a) Prior to the Effective Time, Purchaser shall designate a bank or trust company to act as agent (the "Paying Agent") for the holders of Shares in connection with the Merger to receive the funds to which holders of Shares shall become entitled pursuant to Section 2.06(a), and shall deposit with such Paying Agent an amount sufficient to pay the aggregate Merger Consideration. Such funds shall be invested by the Paying Agent as directed 5 12 by the Surviving Corporation, provided that such investments shall be in obligations of or guaranteed by the United States of America or of any agency thereof and backed by the full faith and credit of the United States of America or in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively. (b) Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each person who was, at the Effective Time, a holder of record of Shares entitled to receive the Merger Consideration pursuant to Section 2.06(a) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the certificates evidencing such Shares (the "Certificates") shall pass, only upon proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting the surrender of the Certificates pursuant to such letter of transmittal. Upon surrender to the Paying Agent of a Certificate, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly evidenced by such Certificate, and such Certificate shall then be canceled. No interest shall accrue or be paid on the Merger Consideration payable upon the surrender of any Certificate for the benefit of the holder of such Certificate. If payment of the Merger Consideration is to be made to a person other than the person in whose name the surrendered Certificate is registered on the stock transfer books of the Company, it shall be a condition of payment that the Certificate so surrendered shall be endorsed properly or otherwise be in proper form for transfer and that the person requesting such payment shall have paid all transfer and other taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such taxes either have been paid or are not applicable. (c) At any time following the sixth month after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds which had been made available to the Paying Agent and not disbursed to holders of Shares (including, without limitation, all interest and other income received by the Paying Agent in respect of all funds made available to it) and, thereafter, such holders shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat and other similar laws) only as general creditors thereof with respect to any Merger Consideration that may be payable upon due surrender of the Certificates held by them. Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Share for any Merger Consideration delivered in respect of such Share to a public official pursuant to any abandoned property, escheat or other similar law. (d) At the close of business on the day of the Effective Time, the stock transfer books of the Company shall be closed and, thereafter, there shall be no further registration of transfers of Shares on the records of the Company. From and after the Effective Time, the holders of Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided herein or by applicable law. 6 13 ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to Parent and Purchaser that: SECTION 3.01 Organization and Qualification; Subsidiaries. Each of the Company and each subsidiary of the Company (a "Subsidiary") is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to be so organized, existing or in good standing or to have such power, authority and governmental approvals would not, individually or in the aggregate, have a Material Adverse Effect (as defined below). The Company and each Subsidiary is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing that would not, individually or in the aggregate, have a Material Adverse Effect. When used in connection with the Company or any Subsidiary, the term "Material Adverse Effect" means any change or effect that is or is reasonably likely to be materially adverse to the business, operations, condition (financial or otherwise), assets or liabilities (including, without limitation, contingent liabilities) of the Company and the Subsidiaries taken as a whole. A true and complete list of all the Subsidiaries, together with the jurisdiction of incorporation of each Subsidiary and the percentage of the outstanding capital stock of each Subsidiary owned by the Company and each other Subsidiary, is set forth in Section 3.01 of the Disclosure Schedule, which has been delivered prior to the date of this Agreement by the Company to Parent (the "Disclosure Schedule"). Except as disclosed in such Section 3.01, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership, limited liability company, joint venture or other business association or entity. The term "Material Subsidiaries" means the Subsidiaries identified as Material Subsidiaries in Section 3.01 of the Disclosure Schedule. The Subsidiaries that are not Material Subsidiaries are not, individually and in the aggregate, material to the business, operations or condition (financial or otherwise) of the Company and do not, individually and in the aggregate, have any material assets or liabilities (including contingent liabilities). SECTION 3.02 Articles of Incorporation and Bylaws. The Company has heretofore furnished to Parent a complete and correct copy of the Articles of Incorporation and the Bylaws or equivalent organizational documents, each as amended to date, of the Company and each Material Subsidiary. Such Articles of Incorporation, Bylaws and equivalent organization documents are in full force and effect. Neither the Company nor any Material Subsidiary is in violation of any provision of its Articles of Incorporation, Bylaws or equivalent organizational documents. SECTION 3.03 Capitalization. The authorized capital stock of the Company consists of 100,000 shares of preferred stock (none of which is issued and outstanding) and 20,000,000 Shares. As of June 19, 1997, (i) 10,722,931 Shares are issued and outstanding, all of which are validly issued, fully paid and nonassessable, (ii) no Shares are held by the Subsidiaries, and (iii) 696,049 Shares are 7 14 reserved for issuance pursuant to stock options granted pursuant to the Company's Stock Option Plans. Except as set forth in this Section 3.03 or Section 3.03 of the Disclosure Schedule, there are no options, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any Material Subsidiary or obligating the Company or any Material Subsidiary to issue or sell any shares of capital stock of, or other equity interests in, the Company or any Material Subsidiary. Section 3.03 of the Disclosure Schedule sets forth a list, as of the date hereof, of the names of each person holding options under the Stock Option Plans, and the number of shares purchasable under, the exercise price of such options and date such options were granted. All Shares subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as set forth in Section 3.03 of the Disclosure Schedule, there are no outstanding contractual obligations of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital stock of any Subsidiary or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary or any other person. Each outstanding share of capital stock of each Material Subsidiary is duly authorized, validly issued, fully paid and nonassessable, and each such share owned by the Company or another Subsidiary is free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on the Company's or such other Subsidiary's voting rights, charges and other encumbrances of any nature whatsoever. SECTION 3.04 Authority Relative to this Agreement. The Company has all necessary power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions, including, without limitation, the Merger, contemplated hereby (the "Transactions"). The execution and delivery of this Agreement by the Company and the consummation by the Company of the Transactions have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Transactions (other than, with respect to the Merger, the approval and adoption of this Agreement by the affirmative vote of the stockholders of the Company to the extent required by Nevada Law and the Company's Articles of Incorporation, and the filing and recordation of appropriate merger documents as required by Nevada Law). This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Purchaser, constitutes a legal, valid and binding obligation of the Company. SECTION 3.05 No Conflict; Required Filings and Consents. Except as set forth in Section 3.05 of the Disclosure Schedule, (a) the execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Articles of Incorporation or Bylaws or equivalent organizational documents of the Company or any Subsidiary, (ii) assuming that required filings under the HSR Act (as hereinafter defined) are made by the appropriate parties, conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance of any nature on any property or asset of the Company or any Material Subsidiary 8 15 pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any Material Subsidiary is a party or by which the Company or any Material Subsidiary or any property or asset of the Company or any Material Subsidiary is bound or affected, except, in cases of (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not, individually or in the aggregate, have a Material Adverse Effect. (b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with, or notification to, any governmental or regulatory authority, domestic or foreign, except (i) for applicable requirements, if any, of the Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and state takeover laws, the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR Act"), and filing and recordation of appropriate merger documents as required by Nevada Law, and (ii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay consummation of the Offer or the Merger, or otherwise prevent the Company from performing its obligations under this Agreement, and would not, individually or in the aggregate, have a Material Adverse Effect. SECTION 3.06 Compliance. Except as set forth in Section 3.06 of the Disclosure Schedule and with respect to matters addressed in Section 3.16, neither the Company nor any Subsidiary is in conflict with, or in default or violation of, (i) any law, rule, regulation, order, judgment or decree applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or subject or (ii) any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or any property or asset of the Company or any Subsidiary is bound or affected, except for any such conflicts, defaults or violations that would not, individually or in the aggregate, have a Material Adverse Effect. SECTION 3.07 SEC Filings; Financial Statements. (a) The Company has filed all forms, reports and documents required to be filed by it with the SEC since August 31, 1994, and has heretofore delivered to Parent, in the form filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years ended August 31, 1994, 1995 and 1996, respectively, (ii) its Quarterly Reports on Form 10-Q for the periods ended November 30, 1996 and February 28, 1997, (iii) all proxy statements relating to the Company's meetings of stockholders (whether annual or special) held since August 31, 1994 and (iv) all other forms, reports and other registration statements (other than Quarterly Reports on Form 10-Q not referred to in clause (ii) above) filed by the Company with the SEC since August 31, 1994 (the forms, reports and other documents referred to in clauses (i), (ii), (iii) and (iv) above being referred to herein, collectively, as the "SEC Reports"). The SEC Reports (i) were prepared in accordance with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act, as the case may be, and the rules and regulations promulgated thereunder and (ii) did not, at the time they were filed (or at the effective date thereof with respect to registration statements under the Securities Act), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in 9 16 the light of the circumstances under which they were made, not misleading. No Subsidiary is required to file any form, report or other document with the SEC. (b) Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the SEC Reports was prepared in accordance with United States generally accepted accounting principles applied on a consistent basis ("GAAP") throughout the periods indicated (except as may be indicated in the notes thereto) and each fairly presents the consolidated financial position, results of operations and changes in stockholders equity and cash flows of the Company and the consolidated Subsidiaries as at the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which were not and are not expected, individually or in the aggregate, to have a Material Adverse Effect). (c) Except as and to the extent set forth on the consolidated balance sheet of the Company and the consolidated Subsidiaries as at August 31, 1996 including the notes thereto (the "1996 Balance Sheet"), in Section 3.07 of the Disclosure Schedule, or in any SEC Report filed by the Company after August 31, 1996 neither the Company nor any Subsidiary has any liability or obligation of any nature (whether accrued, absolute, contingent or otherwise) that would be required to be reflected on a balance sheet, or in the notes thereto, prepared in accordance with GAAP, except for liabilities and obligations incurred in the ordinary course of business consistent with past practice since August 31, 1996, which would not, individually or in the aggregate, be material in amount. (d) The Company has heretofore furnished to Parent complete and correct copies of all amendments and modifications (if any) that have not been filed by the Company with the SEC to all agreements, documents and other instruments that previously had been filed by the Company with the SEC and are currently in effect. SECTION 3.08 Absence of Certain Changes or Events. (a) Since February 28, 1997, except as set forth in Section 3.08(a) of the Disclosure Schedule or as contemplated by this Agreement or disclosed in any SEC Report filed since February 28, 1997 and prior to the date of this Agreement, the Company and the Subsidiaries have conducted their businesses only in the ordinary course and in a manner consistent with past practice and there has not been (i) any change in the business, operations, properties, condition, assets or liabilities (including, without limitation, contingent liabilities) of the Company or any Subsidiary having, individually or in the aggregate, a Material Adverse Effect, (ii) any damage, destruction or loss (whether or not covered by insurance) with respect to any property or asset of the Company or any Subsidiary and having, individually or in the aggregate, a Material Adverse Effect, (iii) any entry by the Company or any Subsidiary into any commitment or transaction material to the Company and the Subsidiaries taken as a whole, (iv) any increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards or restricted stock awards), stock purchase or other employee benefit plan, or any other increase in the compensation payable or to become payable to any officers or key employees of the Company or any Subsidiary, except in the ordinary course of business consistent with past practice, or (v) any entering into, renewal, modification or extension of, any contract, arrangement or agreement with any other party having, individually or in the aggregate, a Material Adverse Effect. 10 17 (b) Since August 31, 1996, except as set forth in Section 3.08(b) of the Disclosure Schedule or as contemplated by this Agreement or disclosed in any SEC Report filed since August 31, 1996 and prior to the date of this Agreement, there has not been (i) any material change by the Company in its accounting methods, principles or practices, (ii) any material revaluation by the Company of any asset (including, without limitation, any writing down of the value of inventory or writing off of notes or accounts receivable), (iii) any failure by the Company to revalue any asset in accordance with GAAP, or (iv) any declaration, setting aside or payment of any dividend or distribution in respect of any capital stock of the Company (except for quarterly cash dividends of $.06 per Share) or any redemption, purchase or other acquisition of any of its securities. SECTION 3.09 Absence of Litigation. Except as set forth in Section 3.09 of the Disclosure Schedule or as disclosed in the SEC Reports filed prior to the date of this Agreement, there is no claim, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary, or any property or asset of the Company or any Subsidiary, before any court, arbitrator or administrative, governmental or regulatory authority or body, domestic or foreign, which (i) individually or in the aggregate, is reasonably likely to have a Material Adverse Effect or (ii) seeks to, or is reasonably likely to, delay or prevent the consummation of any Transaction. As of the date hereof, neither the Company nor any Subsidiary nor any property or asset of the Company or any Subsidiary is subject to any order, writ, judgment, injunction, decree, determination or award having, individually or in the aggregate, a Material Adverse Effect. SECTION 3.10 Employee Benefit Plans. (a) Section 3.10 of the Disclosure Schedule contains a true and complete list of all "Qualified Plans" (as defined below). Except as set forth in Section 3.10 of the Disclosure Schedule, no Qualified Plan is a "defined benefit plan" within the meaning of Section 3(35) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and no Qualified Plan is subject to Part IV of ERISA. Each Qualified Plan is in writing, and the Company has made available to Parent with respect to each Qualified Plan (i) a copy of the trust or other funding arrangement, (ii) each summary plan description and summary of material modifications, (iii) the most recently filed Internal Revenue Service ("IRS") Form 5500, (iv) the most recently received IRS determination letter and (v) the most recently prepared financial statement. For purposes of this Agreement, "Qualified Plan" means each "employee benefit plan" (within the meaning of Section 3(3) of ERISA) that is sponsored by the Company or any entity which is considered one employer with the Company (an "ERISA Affiliate") under Section 4001 of ERISA or Section 414 of the Internal Revenue Code of 1986, as amended (the "Code") and that is intended to be qualified under Section 401(a) of the Code, including without limitation any "multiemployer plan" within the meaning of Section 3(37) of ERISA ("Multiemployer Plans"). (b) Other than the Qualified Plans, there is no other "employee benefit plan" within the meaning of Section 3(3) of ERISA sponsored by the Company or any ERISA Affiliate that covers a majority of the total employees of the Company and its ERISA Affiliates. (c) All Qualified Plans are in substantial compliance with ERISA. Except as set forth in Section 3.10 of the Disclosure Schedule, each Qualified Plan has received a favorable determination letter from the IRS, and there are no circumstances likely to result in revocation of any such favorable 11 18 determination letter. There is no material pending or, to the knowledge of the Company, threatened litigation relating to the Qualified Plans. Neither the Company nor any of the Subsidiaries has engaged in a transaction with respect to any Qualified Plan that, assuming the taxable period of such transaction expired as of the date thereof, insofar as may be reasonably foreseen, is likely to subject the Company or any of the Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an amount that would be material. (d) No liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by the Company or any of the Subsidiaries with respect to any ongoing, frozen or terminated Qualified Plan that is a "single-employer plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them or any ERISA Affiliate. Except as with respect to any plan listed in Section 3.10 of the Disclosure Schedule, neither the Company nor any of the Subsidiaries presently contribute to a Multiemployer Plan, nor have they contributed to a Multiemployer Plan within the past five calendar years. Neither the Company nor any Subsidiary has received any written notice setting forth the amount of any material liability of the Company or any Subsidiary under any Multiemployer Plan if it were to engage in a complete withdrawal (as defined in Section 4203 of ERISA) or partial withdrawal (as defined in Section 4203 of ERISA) from such Multiemployer Plan. No notice of a "reportable event", within the meaning of Section 4043 of ERISA for which the 30 day reporting requirement has not been waived, has been required to be filed for any Qualified Plan or by any ERISA Affiliate within the 12-month period ending on the date hereof. (e) All contributions required to be made under the terms of any Qualified Plan have been timely made. No Qualified Plan has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither the Company nor any of the Subsidiaries has provided, or is required to provide, security to any Qualified Plan pursuant to Section 401(a)(29) of the Code. (f) Under each Qualified Plan which is a single-employer plan, as of the last day of the most recent plan year ended prior to the date hereof, the actuarially determined present value of all "benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions contained in the Qualified Plan's most recent actuarial valuation), did not exceed the then current value of the assets of such Qualified Plan, and there has been no material change in the financial condition of such Plan since the last day of the most recent plan year. (g) The Company and the Subsidiaries do not have any unfunded liabilities under pension, retirement or other employee benefit plans, programs or arrangements maintained outside the United States by the Company or any of the Subsidiaries for the employees thereof, the payment of which by the Company or such Subsidiary, individually or in the aggregate, would have a Material Adverse Effect. SECTION 3.11 Labor Matters. Except as set forth in Section 3.11 of the Disclosure Schedule, (i) there are no controversies pending or, to the knowledge of the Company, threatened between the Company or any Subsidiary and any of their respective employees, which controversies have or could have a Material Adverse Effect; (ii) neither the Company nor any Subsidiary is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by 12 19 the Company or any Subsidiary, nor, to the knowledge of the Company, are there any activities or proceedings of any labor union to organize any such employees; (iii) neither the Company nor any Subsidiary has breached or otherwise failed to comply with any provision of any such agreement or contract and there are no grievances outstanding against the Company or any Subsidiary under any such agreement or contract; (iv) there are no unfair labor practice complaints pending against the Company or any Subsidiary before the National Labor Relations Board or any current union representation questions involving employees of the Company or any Subsidiary; and (v) there is no strike, slowdown, work stoppage or lockout, or, to the knowledge of the Company, threat thereof, by or with respect to any employees of the Company or any Subsidiary. SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement. Neither the Schedule 14D-9, any information supplied by the Company for inclusion in the Offer Documents nor the information to be filed by the Company in connection with the Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the "Information Statement"), other than information provided by Parent or Purchaser for inclusion therein, shall, at the respective times the Schedule 14D-9, the Offer Documents, the Information Statement or any amendments or supplements thereto are filed with the SEC or are first published, sent or given to stockholders of the Company, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not misleading. The proxy statement to be sent to the stockholders of the Company in connection with the Special Stockholders' Meeting (as defined in Section 6.01 hereof) (such proxy statement, as amended or supplemented, being referred to herein as the "Proxy Statement") and the Information Statement shall not, at the date such document (or any amendment or supplement thereto) is first mailed to stockholders of the Company, with respect to the Information Statement at the time Shares are accepted for payment in the offer, and with respect to the Proxy Statement at the time of the Special Stockholders' Meeting and at the Effective Time, be false or misleading with respect to any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Special Stockholders' Meeting which shall have become false or misleading. The Schedule 14D-9, the Information Statement and the Proxy Statement shall comply in all material respects as to form with the requirements of the Exchange Act and the rules and regulations thereunder. SECTION 3.13 Tangible Property; Real Property and Leases. (a) The Company and the Subsidiaries have sufficient title to all their tangible properties and assets to conduct their respective businesses as currently conducted or as contemplated to be conducted, with only such exceptions as, individually or in the aggregate, would not have a Material Adverse Effect. (b) No parcel of real property owned or leased by the Company is subject to any governmental decree or order to be sold nor is being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor, nor, to the knowledge of the Company, has any such condemnation, expropriation or taking been proposed. 13 20 (c) All leases of real property leased for the use or benefit of the Company or any Subsidiary to which the Company or any Subsidiary is a party requiring rental payments in excess of U.S. $100,000 during the period of the lease and all amendments and modifications thereto are in full force and effect and have not been modified or amended, and there exists no default under any such lease by the Company or any Subsidiary, nor any event which with notice or lapse of time or both would constitute a default thereunder by the Company or any Subsidiary, except as, individually or in the aggregate, would not have a Material Adverse Effect. SECTION 3.14 Trademarks, Patents and Copyrights. Except as set forth in Section 3.14 of the Disclosure Schedule, the Company and the Subsidiaries own or possess adequate licenses or other valid rights to use all patents, patent rights, trademarks, trademark rights, trade names, trade dress, trade name rights, copyrights, servicemarks, trade secrets, applications for trademarks and for servicemarks, mask works, know-how and other proprietary rights and information used or held for use in connection with the business of the Company and the Subsidiaries as conducted since August 31, 1996, as currently conducted or as contemplated to be conducted, and the Company is unaware of any assertion or claim challenging the validity of any of the foregoing which, individually or in the aggregate, could have a Material Adverse Effect. The conduct of the business of the Company and the Subsidiaries as conducted since August 31, 1996, as currently conducted and as contemplated to be conducted did not, does not and will not conflict in any way with any patent, patent right, license, trademark, trademark right, trade dress, trade name, trade name right, service mark, mask work or copyright of any third party that, individually or in the aggregate, could have a Material Adverse Effect. There are no infringements of any property rights owned by or licensed by or to the Company or any Subsidiary which, individually or in the aggregate, could have a Material Adverse Effect. Neither the Company nor any Subsidiary has licensed or otherwise permitted the use by any third party of any proprietary information on terms or in a manner which, individually or in the aggregate, could have a Material Adverse Effect. SECTION 3.15 Taxes. (a) The Company and the Subsidiaries have filed all federal, state, local and foreign Tax returns and reports required to be filed by them and have paid and discharged all Taxes shown as due thereon and have paid all applicable ad valorem taxes as are due, other than (i) such payments as are being contested in good faith by appropriate proceedings and (ii) such filings, payments or other occurrences that, individually or in the aggregate, could not result in the Company or any Subsidiary incurring liabilities in excess of U.S. $100,000. The Company's federal consolidated income tax returns for all periods ending on or after August 31, 1990 have been audited by the IRS. Except as disclosed in Section 3.15 of the Disclosure Schedule, neither the IRS nor any other taxing authority or agency, domestic or foreign, is now formally proposing, or to the Company's knowledge informally proposing, any adjustment relating to such returns or is now asserting or, to the knowledge of the Company, threatening to assert against the Company or any Subsidiary any deficiency or claim for additional taxes or interest thereon or penalties in connection therewith. Neither the Company nor any Subsidiary has granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any federal, state, county, municipal or foreign income Tax which is currently in effect. The accruals and reserves for taxes reflected in the Company's consolidated balance sheet (the "1997 Balance Sheet") included in its Quarterly Report on Form 10-Q for the period ended February 28, 1997, as filed with the SEC, are adequate to cover all Taxes accruable through such date (including interest and penalties, if any, thereon and any payments of Taxes are being contested by the 14 21 Company or any Subsidiary) in accordance with GAAP. Neither the Company nor any Subsidiary has made an election under Section 341(f) of the Code. (b) "Tax" or "Taxes" means any and all taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including, without limitation: taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and custom duties, tariffs, and similar charges. SECTION 3.16 Environmental Matters. (a) For purposes of this Agreement, the following terms shall have the following meanings: (i) "Hazardous Substances" means (A) those substances defined as hazardous in or regulated as hazardous under the following federal statutes and their state counterparts, as each may be amended from time to time, and all regulations thereunder: the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (B) any asbestos or asbestos-containing material, petroleum and petroleum products, including crude oil and any fractions thereof, natural gas, natural gas liquids, synthetic gas, polychlorinated biphenyls or radon; (C) any pollutant or contaminant; or (D) any substance with respect to which a federal, state or local agency requires environmental investigation, monitoring, reporting or remediation; and (ii) "Environmental Law" means any federal, state or local law relating to (A) releases or threatened releases of Hazardous Substances or materials containing Hazardous Substances; (B) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances; or (C) otherwise relating to pollution of the environment or the protection of human health. (b) Except as described in Section 3.16 of the Disclosure Schedule or with respect to matters described in oral or written reports provided to Parent or Purchaser at any time prior to the time of execution of this Agreement by Parent or Purchaser by environmental consultants retained by Parent or Purchaser or in environmental due diligence reports prepared by Parent or Purchaser at any time prior to the time of execution of this Agreement: (i) the Company and each Subsidiary is in compliance with all applicable Environmental Laws, except for noncompliance that individually or in the aggregate would not have a Material Adverse Effect; (ii) the Company and each Subsidiary have obtained all permits, licenses and other material governmental authorizations required under applicable Environmental Laws, and are in compliance with the terms and conditions thereof, except for failures to obtain or noncompliance that individually or in the aggregate would not have a Material Adverse Effect; (iii) neither the Company nor any of its Subsidiaries has received written notice of, or, to the knowledge of the Company, is the subject of, any action, cause of action, claim, investigation, demand or notice by any person or entity alleging liability under or noncompliance with any Environmental Law that individually or in the aggregate would have a Material Adverse Effect; and (iv) there is no environmental condition on 15 22 any of the properties currently or formerly owned or leased by the Company or any Subsidiary that individually or in the aggregate would be reasonably likely to have a Material Adverse Effect. SECTION 3.17 Material Contracts. Section 3.17 of the Disclosure Schedule lists each contract or agreement to which the Company or any of the Material Subsidiaries is a party that involves payment of more than $100,000 and that does not expire within one year of this Agreement or cannot be terminated by the Company or the Material Subsidiary within one year of the date of this Agreement without any liability to the Company or the Material Subsidiary (other than any blanket purchase or sales order entered into in the ordinary course of business or any equipment leases) (a "Material Contract"). Each Material Contract is in full force and effect and is enforceable against the parties thereto (other than the Company and the Material Subsidiaries) in accordance with its terms and no condition or state of facts exists that, with notice or the passage of time, or both, would constitute a material default by the Company or any Material Subsidiary or to the knowledge of the Company, any third party under such Material Contracts. The Company or the applicable Material Subsidiary has duly complied in all material respects with the provision of each Material Contract to which it is a party. SECTION 3.18 Insurance; Workers' Compensation. Neither the Company nor any Material Subsidiary has received any notice of cancellation with respect to any of its insurance policies within the three years, where such cancellation, individually or in the aggregate, would have a Material Adverse Effect. SECTION 3.19 Certain Payments; Absence of Certain Business Practices. To the knowledge of the Company, no employee or agent of the Company or any Subsidiary, nor any other person acting on behalf of Company or any Subsidiary, has within the past five (5) years violated the Foreign Corrupt Practices Act or made or caused to be made any payments to government officials in violation of the laws of the United States or any other jurisdiction. As of the date hereof, neither the IRS nor any other federal, state, local or foreign government agency or entity has notified the Company or any Company Subsidiary of any pending or threatened investigation of any payment made by or on behalf of the Company or any Company Subsidiary of, or alleged to be of, the type described in the previous sentence. SECTION 3.20 Licenses and Permits. The Company and each Material Subsidiary have obtained all governmental licenses and permits (other than governmental licenses and permits required under applicable Environmental Laws or otherwise addressed in Section 3.16) necessary to conduct their respective businesses in accordance with past practices except to the extent that the failure to obtain and/or maintain such license or permit would not have a Material Adverse Effect. Such licenses and permits are valid and in full force and effect; no such licenses or permits will be terminated or materially impaired or become terminable as a result of the Transactions contemplated by this Agreement, except to the extent that the failure to obtain and/or maintain such license or permit would not have a Material Adverse Effect. SECTION 3.21 Letters of Credit, Surety Bonds, Guarantees. Section 3.21 of the Disclosure Schedule lists all letters of credit, performance or payment bonds, guaranty arrangements and surety 16 23 bonds of any nature involving amounts in excess of $100,000 relating to the Company or any Subsidiary. SECTION 3.22 Brokers. No broker, finder or investment banker (other than Goldman, Sachs) is entitled to any brokerage, finder's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company. The Company has heretofore furnished to Parent a complete and correct copy of all agreements between the Company and Goldman, Sachs pursuant to which such firm would be entitled to any payment relating to the Transactions. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER Parent and Purchaser hereby, jointly and severally, represent and warrant to the Company that: SECTION 4.01 Corporate Organization. Each of Parent and Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to be so organized, existing or in good standing or to have such power, authority and governmental approvals would not, individually or in the aggregate, have a material adverse effect on the business or operations of Parent and Purchaser and their respective subsidiaries, taken as a whole. SECTION 4.02 Authority Relative to This Agreement. Each of Parent and Purchaser has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution and delivery of this Agreement by Parent and Purchaser and the consummation by Parent and Purchaser of the Transactions have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of Parent or Purchaser are necessary to authorize this Agreement or to consummate the Transactions (other than with respect to the Merger, the filing and recordation of appropriate merger documents as required by Nevada Law). This Agreement has been duly and validly executed and delivered by Parent and Purchaser and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent and Purchaser enforceable against each of Parent and Purchaser in accordance with its terms. SECTION 4.03 No Conflict; Required Filings and Consents. (a) The execution and delivery of this Agreement by Parent and Purchaser do not, and the performance of this Agreement by Parent and Purchaser will not, (i) assuming that required filings under the HSR Act are made by appropriate parties, conflict with or violate the Articles of Incorporation or Bylaws (or equivalent documents) of either Parent or Purchaser, (ii) assuming that required filings under the HSR Act are made by appropriate parties conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Parent or Purchaser or by which any property or asset of either of them is bound or affected, or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of 17 24 time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Parent or Purchaser is a party or by which Parent or Purchaser or any property or asset of either of them is bound or affected, except, in cases of (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not, individually or in the aggregate, have a material adverse effect on the business or operations of Parent or Purchaser and their respective subsidiaries, taken as a whole. (b) The execution and delivery of this Agreement by Parent and Purchaser do not, and the performance of this Agreement by Parent and Purchaser will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, except (i) for applicable requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover laws, the HSR Act, and filing and recordation of appropriate merger documents as required by Nevada Law and (ii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay consummation of the Offer or the Merger, or otherwise prevent Parent or Purchaser from performing their respective obligations under this Agreement. SECTION 4.04 Financing. Parent has, or has commitments to obtain, sufficient funds to permit Purchaser to acquire all the outstanding Shares in the Offer and the Merger, evidence of which has been provided to the Company. SECTION 4.05 Offer Documents; Proxy Statement. The Offer Documents will not, at the time the Offer Documents are filed with the SEC or are first published, sent or given to stockholders of the Company, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not misleading. The information supplied by Parent for inclusion in the Information Statement or the Proxy Statement will not, on the date such document (or any amendment or supplement thereto) is first mailed to stockholders of the Company, with respect to the Information Statement, at the time Shares are accepted for payment in the Offer, and with respect to the Proxy Statement at the time of the Special Stockholders' Meeting and at the Effective Time, contain any statement which, at such time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact, or omits to state any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Special Stockholders' Meeting which shall have become false or misleading. Notwithstanding the foregoing, Parent and Purchaser make no representation or warranty with respect to any information supplied by the Company or any of its representatives which is contained in any of the foregoing documents or the Offer Documents. The Offer Documents shall comply in all material respects as to form with the requirements of the Exchange Act and the rules and regulations thereunder. 18 25 SECTION 4.06 Due Diligence. Parent and Purchaser agree to conduct or cause to be conducted no further environmental testing of facilities owned, leased or operated by the Company or any of its Subsidiaries prior to the Effective Time. SECTION 4.07 Brokers. Parent and Purchaser agree to indemnify the Company, and hold it harmless from, any brokerage, finder's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent or Purchaser. ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER SECTION 5.01 Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between the date of this Agreement and the election or appointment of Purchaser's designees to the Board pursuant to Section 6.03 upon the purchase by Purchaser of any Shares pursuant to the Offer (the "Purchaser's Election Date"), unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and the Subsidiaries and to preserve the current relationships of the Company and the Subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Purchaser's Election Date, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 696,049 Shares issuable pursuant to employee and director stock options outstanding on the date hereof) or (ii) any assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for cash such 19 26 declarations, set asides dividends declared at times and in amounts consistent with the Company's current dividend policy ($.06 per Share per quarter); (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (e) (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any material amount of assets other than in the ordinary course of business; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice; (iii) enter into any contract or agreement other than contracts or agreements entered into in the ordinary course of business, consistent with past practice and which require payments by the Company or the Subsidiaries in an aggregate amount of less than U.S. $250,000; (iv) terminate, cancel or request any material change in, or agree to any material change in, any Material Contract set forth in Section 3.17(a) of the Disclosure Schedule and with respect to all other Material Contracts, except in the ordinary course of business consistent with past practice; (v) authorize any single capital expenditure (excluding software development activity) which is in excess of U.S. $250,000 or capital expenditures which are, in the aggregate, in excess of U.S. $1,000,000 for the Company and the Subsidiaries taken as a whole; or (vi) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its officers or employees, except for increases in accordance with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment or severance agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee or circulate to any employee any details of any proposal to adopt or amend any such plan; (g) take any action, other than reasonable and usual actions in the ordinary course of business and consistent with past practice, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; 20 27 (i) pay, discharge or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1997 Balance Sheet or subsequently incurred in the ordinary course of business and consistent with past practice; or (j) settle or comprise any pending or threatened suit, action or claim that is material or which relates to any of the Transactions; or (k) announce an intention, enter into any formal or informal agreement, or otherwise make a commitment, to do any of the foregoing or any action that would result in any of the conditions to the Offer not being satisfied (other than as contemplated by this Agreement). ARTICLE VI. ADDITIONAL AGREEMENTS SECTION 6.01 Special Stockholders' Meeting. The Company, acting through the Board, shall, in accordance with applicable law and the Company's Articles of Incorporation and Bylaws, unless not required under applicable "short-form" merger provisions of Nevada Law, (i) duly call, give notice of, convene and hold a special meeting of its stockholders as soon as practicable following consummation of the Offer for the purpose of considering and taking action on this Agreement and the transactions contemplated hereby (the "Special Stockholders' Meeting") and (ii) subject to its fiduciary duties under applicable law as advised in writing by independent counsel, (A) include in the Proxy Statement the unanimous recommendation of the Board that the stockholders of the Company approve and adopt this Agreement and the Transactions, including, without limitation, the Merger and (B) use its best reasonable efforts to obtain such approval and adoption. At the Special Stockholders' Meeting (or by consent if a stockholders meeting is not required), Parent and Purchaser shall cause all Shares then owned by them and their subsidiaries to be voted in favor of the approval and adoption of this Agreement and the Transactions, including, without limitation, the Merger. SECTION 6.02 Proxy Statement. As soon as practicable following consummation of the Offer, the Company shall file the Proxy Statement with the SEC under the Exchange Act, unless not required under applicable "short-form" merger provisions of Nevada Law, and shall use its best reasonable efforts to have the Proxy Statement cleared by the SEC. Parent, Purchaser and the Company shall cooperate with each other in the preparation of the Proxy Statement, and the Company shall notify Parent of the receipt of any comments of the SEC with respect to the Proxy Statement and of any requests by the SEC for any amendment or supplement thereto or for additional information and shall provide to Parent promptly copies of all correspondence between the Company or any representative of the Company and the SEC. The Company shall give Parent and its counsel the opportunity to review the Proxy Statement prior to its being filed with the SEC and shall give Parent and its counsel the opportunity to review all amendments and supplements to the Proxy Statement and all responses to requests for additional information and replies to comments prior to their being filed 21 28 with, or sent to, the SEC. Each of the Company, Parent and Purchaser agrees to use its best reasonable efforts, after consultation with the other parties hereto, to respond promptly to all such comments of and requests by the SEC and to cause the Proxy Statement and all required amendments and supplements thereto to be mailed to the holders of Shares entitled to vote at the Special Stockholders' Meeting at the earliest practicable time. SECTION 6.03 Company Board Representation; Section 14(f). (a) Promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to time thereafter, Purchaser shall be entitled to designate up to such number of directors, rounded up to the next whole number, on the Board as shall give Purchaser representation on the Board equal to the product of the total number of directors on the Board (giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Purchaser or any affiliate of Purchaser at such time bears to the total number of Shares then outstanding, and the Company shall, at such time, promptly take all actions necessary to cause Purchaser's designees to be elected as directors of the Company, including increasing the size of the Board or securing the resignations of incumbent directors or both. At such times, the Company shall use its best efforts to cause persons designated by Purchaser to constitute the same percentage as persons designated by Purchaser shall constitute of the Board of (i) each committee of the Board (some of whom may be required to be independent as required by applicable law or requirements of the New York Stock Exchange), (ii) each board of directors of each Subsidiary and (iii) each committee of each such board, in each case only to the extent permitted by applicable law. Notwithstanding the foregoing, until the time Purchaser acquires a majority of the then outstanding Shares on a fully diluted basis, the Company shall use its best efforts to ensure that all the members of the Board and each committee of the Board and such boards and committees of the Subsidiaries as of the date hereof who are not employees of the Company shall remain members of the Board and of such boards and committees. (b) The Company shall promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under this Section 6.03 and shall include the Information Statement containing such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 as an annex to the Schedule 14D-9 to fulfill such obligations. Parent or Purchaser shall supply to the Company and be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by such Section 14(f) and Rule 14f-1. (c) Following the election or appointment of designees of Purchaser pursuant to this Section 6.03, prior to the Effective Time, any amendment of this Agreement or the Articles of Incorporation or Bylaws of the Company, any termination of this Agreement by the Company, any extension by the Company of the time for the performance of any of the obligations or other acts of Parent or Purchaser or waiver of any of the Company's rights hereunder shall require the concurrence of a majority of the directors of the Company then in office who neither were designated by Purchaser nor are employees of the Company or if no such directors are then in office, no such amendment, termination, extension or waiver shall be effected which is materially adverse to the holders of Shares (other than Parent and its subsidiaries). 22 29 SECTION 6.04 Access to Information; Confidentiality. (a) From the date hereof to the consummation of the Offer, the Company shall, and shall cause the Subsidiaries and the officers, directors, employees, auditors and agents of the Company and the Subsidiaries to, afford the officers, employees and agents of Parent and Purchaser complete access at all reasonable times to the officers, employees, agents, properties, offices, plants and other facilities, books and records of the Company and each Subsidiary, and shall furnish Parent and Purchaser with all financial, operating and other data and information as Parent or Purchaser, through its officers, employees or agents, may reasonably request. (b) To the extent permitted by applicable law, in order to facilitate the continuing operation of the Company by Parent and Purchaser from and after the completion of the Offer without disruption and to assist in an achievement of an orderly transition in the ownership and management of the Company, from the date of this Agreement and until completion of the Offer, the Company, Parent and Purchaser shall cooperate reasonably with each other to effect an orderly transition including, without limitation, with respect to communications with the Company's customers and employees. (c) All information obtained by Parent or Purchaser pursuant to this Section 6.04 shall be kept confidential, by Purchaser, by Parent and by any other party which is to be afforded access pursuant to Section 6.04(a), in accordance with the confidentiality agreement, dated October 2, 1996 (the "Confidentiality Agreement"), between Parent and the Company. SECTION 6.05 No Solicitation of Transactions. Neither the Company nor any Subsidiary shall, directly or indirectly, through any officer, director, agent or otherwise, solicit, initiate or encourage the submission of any proposal or offer from any person relating to any acquisition or purchase of all or any material portion of the assets of, or any equity interest in, the Company or any Material Subsidiary or any business combination with the Company or any Material Subsidiary or participate in any negotiations regarding, or furnish to any other person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other person to do or seek any of the foregoing; provided, however, that nothing contained in this Section 6.05 shall prohibit the Board from furnishing information to, or entering into discussions or negotiations with, any person in connection with an unsolicited (from the date of this Agreement) proposal in writing by such person to acquire the Company pursuant to a merger, consolidation, share exchange, business combination or other similar transaction or to acquire all or substantially all of the assets of the Company or any of its Subsidiaries, if, and only to the extent that, (i) the Board, after consultation with independent legal counsel (which may include its regularly engaged independent legal counsel), determines in good faith that such action is required for the Board to comply with its fiduciary duties to stockholders imposed by Nevada Law and (ii) prior to furnishing such information to, or entering into discussions or negotiations with, such person the Company uses its reasonable best efforts to obtain from such person an executed confidentiality agreement on terms no less favorable to the Company than those contained in the Confidentiality Agreement (or obtained a confidentiality agreement prior to the date hereof). The Company immediately shall cease and cause to be terminated all existing discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. The Company shall notify Parent 23 30 promptly if any such proposal or offer, or any inquiry or contact with any person with respect thereto, is made. The Company agrees not to release any third party from, or waive any provision of, any confidentiality or, subject to the fiduciary duties of the Board, standstill agreement to which the Company is or may become a party. SECTION 6.06 Employee Benefits Matters; Employment Agreements. Annex B hereto sets forth certain agreements among the parties hereto with respect to the Plans and other employee benefits matters. SECTION 6.07 Directors' and Officers' Indemnification and Insurance. (a) The Articles of Incorporation and Bylaws of the Surviving Corporation shall contain provisions no less favorable with respect to indemnification than are set forth in Article VI of the Bylaws of the Company, which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights thereunder of individuals who at any time to and including the Effective Time were directors, officers, employees, fiduciaries or agents of the Company in respect of acts or omissions occurring at or prior to the Effective Time (including, without limitation, the matters contemplated by this Agreement), unless such modification shall be required by law. From and after the Purchaser's Election Date, the Company shall not amend, repeal or otherwise modify the indemnification and advancement of expenses provisions of Article VI of the Bylaws of the Company or the indemnification or advancement of expenses provisions in the Articles of Incorporation or Bylaws of any of the Subsidiaries in any manner that would adversely affect the rights thereunder of individuals who at any time to and including the Effective Time were directors, officers, employees, fiduciaries or agents of the Company or any of the Subsidiaries in respect of actions or omissions occurring at or prior to the Effective Time (including, without limitation, the matters contemplated by this Agreement), unless such modification is required by law. Any determinations made pursuant to Section VI of the Bylaws of the Company, or analogous provisions of the Articles of Incorporation or Bylaws of any of the Subsidiaries, with respect to the appropriateness of indemnification shall be made in good faith. (b) The Company shall, to the fullest extent permitted under applicable law, indemnify and hold harmless, and, after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify and hold harmless, each present and former director, officer, employee, fiduciary and agent of the Company and each Subsidiary (collectively, the "Indemnified Parties") against all costs and expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, criminal, administrative or investigative, arising out of or pertaining to any action or omission in their capacity as an officer, director, employee, fiduciary or agent, whether occurring before or after the Effective Time, for a period of six years after the date hereof (and shall pay any expenses in advance of the final disposition of any such action or proceeding to each Indemnified Party to the fullest extent permitted under Nevada Law, and, with respect to Indemnified Parties who are or were directors or officers of the Company, upon receipt from the Indemnified Party to whom expenses are advanced of any undertaking to repay such advances required under Nevada Law). In the event of any such claim, action, suit, proceeding or investigation, (i) the Company or the Surviving Corporation, as the case may be, shall pay the reasonable fees and expenses of counsel selected by the Indemnified 24 31 Parties, which counsel shall be reasonably satisfactory to the Company or the Surviving Corporation, promptly after statements therefor are received (subject to the provision of an undertaking as set forth in the prior sentence, if applicable) and (ii) the Company and the Surviving Corporation shall cooperate in the defense of any such matter; provided, however, that neither the Company nor the Surviving Corporation shall be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld); provided further that neither the Company nor the Surviving Corporation shall be obligated pursuant to this Section 6.07(b) to pay the fees and expenses of more than one counsel for all Indemnified Parties in any single action except to the extent that two or more of such Indemnified Parties shall have conflicting interests in the outcome of such action; and provided further that, in the event that any claim for indemnification is asserted or made within such six-year period, all rights to indemnification in respect of such claim shall continue until the disposition of such claim. (c) Each of the Company, from and after the date of this Agreement and to and including the Effective Time, and the Surviving Corporation, from the Effective Time until six years thereafter, shall use its best efforts to maintain in effect, if available, the current directors' and officers' liability insurance policies maintained by the Company (provided that the Surviving Corporation may substitute therefor policies of at least the same coverage containing terms and conditions which are not materially less favorable) with respect to matters occurring on or prior to the Effective Time; provided, however, that in no event shall the Surviving Corporation be required to expend pursuant to this Section 6.07(d) more than an amount per year equal to 250% of current annual premiums paid by the Company for such insurance (which annual premiums the Company represents to be approximately $110,000). (d) In the event the Company or the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of the Company or the Surviving Corporation, as the case may be, or at Parent's option, Parent, shall assume the obligations set forth in this Section 6.07. SECTION 6.08 Notification of Certain Matters. The Company shall give prompt notice to Parent, and Parent shall give prompt notice to the Company, of (i) the occurrence, or non-occurrence, of any event the occurrence, or non-occurrence, of which causes any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect and (ii) any failure of the Company, Parent or Purchaser, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 6.08 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice.. SECTION 6.09 Further Action; Reasonable Best Efforts. Upon the terms and subject to the conditions hereof, each of the parties hereto shall (i) make promptly its respective filings, and thereafter make any other required submissions, under the HSR Act with respect to the Transactions and (ii) use its reasonable best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate 25 32 and make effective the Transactions, including, without limitation, using its reasonable best efforts to obtain all licenses, permits (including, without limitation, environmental permits), consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and the Subsidiaries as are necessary for the consummation of the Transactions and to fulfill the conditions to the Offer and the Merger and (iii) except as contemplated by this Agreement, use its reasonable best efforts not to take any action, or enter into any transaction, which would cause any of its representations or warranties contained in this Agreement to be untrue or result in a breach of any covenant made by it in this Agreement. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party to this Agreement shall use their reasonable best efforts to take all such action. SECTION 6.10 Public Announcements. Parent and the Company shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or any Transaction and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by law or any listing agreement with a national securities exchange or foreign securities exchange to which Parent or the Company is a party. SECTION 6.11 Confidentiality Agreement. The Company hereby waives the provisions of the Confidentiality Agreement as and to the extent necessary to permit the consummation of each Transaction. Upon the acceptance for payment of Shares pursuant to the Offer, the Confidentiality Agreement shall be deemed to have terminated without further action by the parties thereto. ARTICLE VII. CONDITIONS TO THE MERGER SECTION 7.01 Conditions to the Merger. The respective obligations of each party to effect the Merger shall be subject to the satisfaction at or prior to the Effective Time of the following conditions: (a) Stockholder Approval. This Agreement and the Transactions, including, without limitation, the Merger, shall have been approved and adopted by the affirmative vote of the stockholders of the Company (unless the vote of the stockholders is not required by Nevada Law); (b) HSR Act. Any waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated; (c) No Order. No foreign, United States or state governmental authority or other agency or commission or foreign, United States or state court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is then in effect and has the effect of making the acquisition of Shares by Parent or Purchaser or 26 33 any affiliate of either of them or the consummation of the Merger illegal or otherwise restricting, preventing or prohibiting consummation of the Transactions; and (d) Offer. Purchaser or its permitted assignee shall have purchased all Shares validly tendered and not withdrawn pursuant to the Offer; provided, however, that neither Parent nor Purchaser shall be entitled to assert the failure of this condition if, in breach of this Agreement or the terms of the Offer, Purchaser fails to purchase any Shares validly tendered and not withdrawn pursuant to the Offer. ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER SECTION 8.01 Termination. This Agreement may be terminated and the Merger and the other Transactions may be abandoned at any time prior to the Effective Time, notwithstanding any requisite approval and adoption of this Agreement and the transactions contemplated hereby by the stockholders of the Company: (a) By mutual written consent duly authorized by the Boards of Directors of Parent, Purchaser and the Company prior to Purchaser's Election Date; or (b) By Parent, Purchaser or the Company if (i) the Effective Time shall not have occurred on or before December 31, 1997; provided, however, that the right to terminate this Agreement under this Section 8.01(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before such date or (ii) any court of competent jurisdiction in the United States or other governmental authority shall have issued an order, decree, ruling or taken any other action restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and nonappealable; or (c) By Parent, upon approval of its Board of Directors, if (i) due to an occurrence or circumstance that would result in a failure to satisfy any condition set forth in Annex A hereto, Purchaser shall have (A) failed to commence the Offer within 30 days following the date of this Agreement, (B) terminated the Offer without having accepted any Shares for payment thereunder or (C) failed to pay for Shares pursuant to the Offer within 90 days following the commencement of the Offer; unless such action or inaction under (A), (B) or (C) shall have been caused by or resulted from the failure of Parent or Purchaser to perform in any material respect any material covenant or agreement of either of them contained in this Agreement or the material breach by Parent or Purchaser of any material representation or warranty of either of them contained in this Agreement or (ii) prior to the purchase of Shares pursuant to the Offer, the Board or any committee thereof shall have withdrawn or modified in a manner adverse to Purchaser or Parent its approval or recommendation of the Offer, this Agreement, the Merger or any other Transaction or shall have recommended another merger, consolidation, business combination with, or acquisition of, the Company or its assets or 27 34 another tender offer or exchange offer for Shares, or shall have resolved to do any of the foregoing; or (d) By the Company, upon approval of the Board, if (i) due to an occurrence or circumstance that would result in a failure to satisfy any of the conditions set forth in Annex A hereto, Purchaser shall have (A) failed to commence the Offer within 30 days following the date of this Agreement, (B) terminated the Offer without having accepted any Shares for payment thereunder or (C) failed to pay for Shares pursuant to the Offer within 90 days following the commencement of the Offer, unless such action or inaction under (A), (B), and (C) shall have been caused by or resulted from the failure of the Company to perform in any material respect any material covenant or agreement of it contained in this Agreement or the material breach by the Company of any material representation or warranty of it contained in this Agreement or (ii) prior to the purchase of Shares pursuant to the Offer, the Board shall have withdrawn or modified in a manner adverse to Purchaser or Parent its approval or recommendation of the Offer, this Agreement, the Merger or any other Transaction in order to approve the execution by the Company of a definitive agreement providing for the acquisition of the Company or any of its assets by a sale, merger or other business combination or in order to approve a tender offer or exchange offer for Shares by a third party, in either case, as the Board determines in good faith that such action is required for the Board to comply with its fiduciary duties to stockholders, after consultation with its independent legal counsel and financial advisers, and is on terms more favorable to the Company's stockholders than the Offer and the Merger taken together; provided, however, that such termination under this clause (ii) shall not be effective until the Company has made payment to Parent of the Fee (as hereinafter defined) required to be paid pursuant to Section 8.03(a) and has deposited with a mutually acceptable escrow agent U.S. $3.0 million for reimbursement to Parent and Purchaser of Expenses (as hereinafter defined). SECTION 8.02 Effect of Termination. In the event of the termination of this Agreement pursuant to Section 8.01, this Agreement shall forthwith become void, and there shall be no liability on the part of any party hereto, except as set forth in Sections 8.03 and 9.01, and nothing herein shall relieve any party from liability for any breach hereof. SECTION 8.03 Fees and Expenses. (a) In the event that (i) any person (including, without limitation, the Company or any affiliate thereof), other than Parent or any affiliate of Parent, shall have become the beneficial owner of more than 25% of the then outstanding Shares and this Agreement shall have been terminated pursuant to Section 8.01 and within 12 months of such termination a Third Party Acquisition (as defined hereinafter) shall occur; or (ii) any person shall have commenced, publicly proposed or communicated to the Company a proposal that is publicly disclosed for a tender or exchange offer for 25% or more (or which, assuming the maximum amount of securities that could be purchased, would result in any person beneficially owning 25% or more of the then outstanding Shares or otherwise for the direct or indirect acquisition of the 28 35 Company or all or substantially all of its assets for per Share consideration having a value greater than the Per Share Amount and (x) the Offer shall have remained open for at least 20 business days, (y) the Minimum Condition shall not have been satisfied and (z) this Agreement shall have been terminated pursuant to Section 8.01; or (iii) this Agreement is terminated pursuant to Section 8.01(c)(ii) or 8.01(d)(ii); then, in any such event, the Company shall pay Parent promptly (but in no event later than one business day after the first of such events shall have occurred) a fee of U.S. $10.0 million (the "Fee"), which amount shall be payable in immediately available funds, plus all Expenses (as hereinafter defined). (b) Provided that neither Parent nor Purchaser is in material breach of its obligations under this Agreement, if (i) this Agreement is terminated pursuant to Section 8.01(c) due to the occurrence of the condition set forth in paragraph (g) of Annex A or (ii) this Agreement is terminated pursuant to Section 8.01(c) because of the occurrence of the condition set forth in paragraph (f) of Annex A, then, in either case (i) or (ii), the Company shall promptly reimburse Parent and Purchaser for all Expenses. (c) "Expenses" means all out-of-pocket expenses and fees up to U.S. $3.0 million in the aggregate (including, without limitation, fees and expenses payable to all banks, investment banking firms, other financial institutions and other persons and their respective agents and counsel for arranging, committing to provide or providing any financing for the Transactions or structuring the Transactions and all fees of counsel, accountants, experts and consultants to Parent and Purchaser, and all printing and advertising expenses) actually incurred or accrued by either of them or on their behalf in connection with the Transactions, including, without limitation, the financing thereof, and actually incurred or accrued by banks, investment banking firms, other financial institutions and other persons and assumed by Parent and Purchaser in connection with the negotiation, preparation, execution and performance of this Agreement, the structuring and financing of the Transactions and any financing commitments or agreements relating thereto. (d) Except as set forth in this Section 8.03, all costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses, whether or not any Transaction is consummated. (e) In the event that the Company shall fail to pay the Fee or any Expenses when due, the term "Expenses" shall be deemed to include the costs and expenses actually incurred or accrued by Parent and Purchaser (including, without limitation, fees and expenses of counsel) in connection with the collection under and enforcement of this Section 8.03, together with interest on such unpaid Fee and Expenses, commencing on the date that the Fee or such Expenses became due, at a per annum rate equal to the rate of interest publicly announced by Morgan Guaranty Trust Company of New York, from time to time, in the City of New York, as such bank's prime rate plus 1.00 percentage point. In addition, in connection with any other action or proceeding by any party hereto against any other party hereto alleging a breach of a representation, warranty, 29 36 covenant or agreement set forth herein, the prevailing party in such action or proceeding shall be entitled to recover costs and expenses actually incurred or accrued (including, with limitation, fees and expenses of counsel) in connection with the prosecution or defense (as the case may be) of such action or proceeding. (f) "Third Party Acquisition" means the occurrence of any of the following events: (i) the acquisition of the Company by merger, consolidation or other business combination transaction by any person other than Parent, Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by any Third Party of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole; (iii) the acquisition by a Third Party of 50% or more of the outstanding Shares whether by tender offer, exchange offer or otherwise; (iv) the adoption by the Company of a plan of liquidation or the declaration or payment of an extraordinary dividend; or (v) the repurchase by the Company or any of its Subsidiaries of 50% or more of the outstanding Shares. SECTION 8.04 Amendment. Subject to the limitations set forth in Section 6.03(c), this Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time; provided, however, that, after the approval and adoption of this Agreement and the transactions contemplated hereby by the stockholders of the Company, no amendment may be made which would reduce the amount or change the type of consideration into which each Share shall be converted upon consummation of the Merger. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. SECTION 8.05 Waiver. Subject to the limitations set forth in Section 6.03(c), at any time prior to the Effective Time, any party hereto may (i) extend the time for the performance of any obligation or other act of any other party hereto, (ii) waive any inaccuracy in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any agreement or condition contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. ARTICLE IX. GENERAL PROVISIONS SECTION 9.01 Non-Survival of Representations, Warranties and Agreements. The representations, warranties and agreements in this Agreement shall terminate at the Effective Time or upon the termination of this Agreement pursuant to Section 8.01, as the case may be, except that the agreements set forth in Articles II and IX and Section 6.07 shall survive the Effective Time indefinitely and those set forth in Sections 6.04(c), 8.03 and Article IX shall survive termination indefinitely. SECTION 9.02 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telecopy, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at 30 37 such other address for a party as shall be specified in a notice given in accordance with this Section 9.02): if to Parent or Purchaser: United Dominion Industries Limited 2300 One First Union Center 301 South College Street Charlotte, North Carolina 28202-6039 Attention: Mr. Richard L. Magee with a copy to: Robinson, Bradshaw & Hinson, P.A. 101 North Tryon Street Suite 1900 Charlotte, North Carolina 28246 Attention: Mr. Stephen M. Lynch if to the Company: CORE Industries Inc 500 North Woodward Avenue Bloomfield Hills, Michigan 48304 Attention: Mr. Lawrence J. Murphy with a copy to: Honigman Miller Schwartz and Cohn 2290 First National Building Detroit, Michigan 48226 Attention: Mr. Donald J. Kunz SECTION 9.03 Certain Definitions. For purposes of this Agreement, the term: (a) "affiliate" of a specified person means a person who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such specified person; (b) "beneficial owner" with respect to any Shares means a person who shall be deemed to be the beneficial owner of such Shares (i) that such person or any of its affiliates or associates (as such term is defined in Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly or indirectly, (ii) that such person or any of its affiliates or associates has, directly or indirectly, (A) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of consideration rights, 31 38 exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding or (iii) that are beneficially owned, directly or indirectly, by any other persons with whom such person or any of its affiliates or associates or person with whom such person or any of its affiliates or associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any Shares; (c) "business day" means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized to close in the City of New York; (d) "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 and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise; (e) "person" means an individual, corporation, partnership, limited partnership, syndicate, person (including, without limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government; and (f) "subsidiary" or "subsidiaries" of the Company, the Surviving Corporation, Parent or any other person means an affiliate controlled by such person, directly or indirectly, through one or more intermediaries. SECTION 9.04 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible. SECTION 9.05 Entire Agreement, Assignment. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes, except as set forth in Sections 6.04(c) and 6.11, all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise, except that Parent and Purchaser may assign all or any of their rights and obligations hereunder to any affiliate of Parent provided that no such assignment shall relieve the assigning party of its obligations hereunder if such assignee does not perform such obligations. SECTION 9.06 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by 32 39 reason of this Agreement, other than Section 6.07 (which is intended to be for the benefit of the persons covered thereby and may be enforced by such persons). SECTION 9.07 Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. SECTION 9.08 Governing Law. Except to the extent that Nevada Law is mandatorily applicable to the Offer, the Merger and the rights of the stockholders of the Company, this Agreement shall be governed by, and construed in accordance with, the laws of the State of North Carolina regardless of the laws that might otherwise govern under applicable principles of conflicts of laws. SECTION 9.09 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 9.10 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 33 40 IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. UNITED DOMINION INDUSTRIES LIMITED Attest: By: /s/ William R. Holland -------------------------------------------- /s/ Richard L. Magee Name: William R. Holland - --------------------------- Title: Chairman and Chief Executive Officer Name: Richard L. Magee Secretary By: /s/ Richard A. Bearse -------------------------------------------- Name: Richard A. Bearse Title: Senior Vice President UD NEVADA CORP. Attest: By: /s/ William R. Holland -------------------------------------------- /s/ Richard L. Magee Name: William R. Holland - --------------------------- Title: Chairman and Chief Executive Officer Name: Richard L. Magee Secretary By: /s/ Richard A. Bearse -------------------------------------------- Name: Richard A. Bearse Title: Senior Vice President CORE INDUSTRIES INC Attest: By: /s/ David R. Zimmer -------------------------------------------- /s/ Lawrence J. Murphy Name: David R. Zimmer - --------------------------- Title: President and Chief Executive Officer Name: Lawrence J. Murphy Secretary 34 41 ANNEX A CONDITIONS TO THE OFFER Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or pay for any Shares tendered pursuant to the Offer, and may terminate or amend the Offer and may postpone the acceptance for payment of and payment for Shares tendered, if (i) the Minimum Condition shall not have been satisfied, (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer or (iii) at any time on or after the date of this Agreement, and prior to the acceptance for payment of Shares, any of the following conditions shall exist: (a) there shall have been instituted or be pending any action or proceeding brought by any governmental, administrative or regulatory authority or agency, domestic or foreign, before any court or governmental, administrative or regulatory authority or agency, domestic or foreign, (i) challenging or seeking to make illegal, materially delay or otherwise directly or indirectly restrain or prohibit or make materially more costly the making of the Offer, the acceptance for payment of, or payment for, any Shares by Parent, Purchaser or any other affiliate of Parent pursuant to the Offer, or the consummation of any other Transaction, or seeking to obtain material damages in connection with any Transaction; (ii) seeking to prohibit or limit materially the ownership or operation by the Company, Parent or any of their subsidiaries of all or any material portion of the business or assets of the Company, Parent or any of their subsidiaries, or to compel the Company, Parent or any of their subsidiaries to dispose of or hold separate all or any material portion of the business or assets of the Company, Parent or any of their subsidiaries, as a result of the Transactions; (iii) seeking to impose or confirm limitations on the ability of Parent, Purchaser or any other affiliate of Parent to exercise effectively full rights of ownership of any Shares, including, without limitation, the right to vote any Shares acquired by Purchaser pursuant to the Offer, or otherwise on all matters properly presented to the Company's stockholders, including, without limitation, the approval and adoption of this Agreement and the transactions contemplated hereby; or (iv) seeking to require divestiture by Parent, Purchaser or any other affiliate of Parent of any Shares; (b) there shall have been issued any injunction, order or decree by any court or governmental, administrative or regulatory authority or agency, domestic or foreign, resulting from any action or proceeding brought by any person other than any governmental, administrative or regulatory authority or agency, domestic or foreign, that (i) restrains or prohibits the making of the Offer or the consummation of any other Transaction; (ii) prohibits or limits ownership or operation by the Company, Parent or Purchaser of all or any material portion of the business or assets of the Company, taken as a whole, Parent or any of their subsidiaries, or compels the Company, Parent or any of their subsidiaries to dispose of or hold separate all or any material portion of the business or assets of the Company, Parent or any of their subsidiaries, in each case as a result of the 35 42 Transactions; (iii) imposes limitations on the ability of Parent or Purchaser to exercise effectively full rights of ownership of any Shares, including, without limitation, the right to vote any Shares acquired by Purchaser pursuant to the Offer, or otherwise on all matters properly presented to the Company's stockholders, including, without limitation, the approval and adoption of this Agreement and the Transactions; (iv) requires divestiture by Parent or Purchaser of any Shares; (c) there shall have been any action taken, or any statute, rule, regulation, order or injunction enacted, entered, enforced, promulgated, amended, issued or deemed applicable to (i) Parent, the Company or any subsidiary or affiliate of Parent or the Company or (ii) any Transaction, by any legislative body, court, government or governmental, administrative or regulatory authority or agency, domestic or foreign, in the case of both (i) and (ii) other than the routine application of the waiting period provisions of the HSR Act to the Offer or the Merger, in each case that results in any of the consequences referred to in clauses (i) through (iv) of paragraph (b) above; (d) there shall have occurred any change, condition, event or development that has a Material Adverse Effect with respect to the Company; (e) (i) the Board or any committee thereof shall have withdrawn or modified in a manner adverse to Parent or Purchaser the approval or recommendation of the Offer, the Merger or the Agreement or approved or recommended any takeover proposal or any other acquisition of Shares other than the Offer and the Merger or (ii) the Board or any committee thereof shall have resolved to do any of the foregoing; (f) any representation or warranty of the Company in the Agreement shall not be true and correct with the effect that such failure of any such representation or warranty to be true and correct, when taken together with all other such failures of such representations and warranties to be true and correct, in the aggregate has, or is reasonably likely to have, a Material Adverse Effect; provided, however that, for the purpose of the foregoing condition, in determining whether any such representation or warranty is true or correct, any qualification as to materiality or Material Adverse Effect contained in any such representation and warranty shall be deemed not to apply; (g) the Company shall have failed to perform in any material respect any material obligation or to comply in any material respect with any material agreement or material covenant of the Company to be performed or complied with by it under the Agreement; (h) the Agreement shall have been terminated in accordance with its terms; or (i) Purchaser and the Company shall have agreed that Purchaser shall terminate the Offer or postpone the acceptance for payment of or payment for Shares thereunder; which, in the sole judgment of Purchaser, in any such case, and regardless of the circumstances (including any action or inaction by Parent or any of its affiliates) giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment or payment 36 43 The foregoing conditions are for the sole benefit of Purchaser and Parent and may be asserted by Purchaser or Parent regardless of the circumstances giving rise to any such condition or may be waived by Purchaser or Parent in whole or in part at any time and from time to time in their sole discretion. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances; and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. 37 44 ANNEX B For a period of one year from the Effective Time, Parent shall, or shall cause the Company or the Surviving Corporation to, maintain the Plans (other than the Stock Option Plans) which the Company maintains for the benefit of, or which are open to, a majority of the employees of the Company on the terms in effect on the date hereof, or such other plans, arrangements or programs as will provide employees with benefits that in the aggregate are substantially equivalent to, and no less favorable than, those provided under the Plans (other than the Stock Option Plans) as in effect on the date hereof. In addition, Parent shall, or shall cause the Surviving Corporation to, assume and agree to perform those Change of Control Agreements listed in Schedule 6.06 of the Disclosure Schedule in the same manner and to the same extent that the Company is required to perform such agreements. 38 EX-99.2 3 EXHIBIT 99.2 1 EXHIBIT 99.2 Core Industries Inc David R. Zimmer 500 North Woodward President and Chief Executive Officer P.O. Box 2000 Bloomfield Hills, Michigan 48303-2000 (810) 901-1580 Fax (810) 642-6816 [Core Industries Logo] June 20, 1997 United Dominion Industries Limited 2300 One First Union Center 301 South College Street Charlotte, North Carolina 28202-6039 Attention: William R. Holland, Chairman and Chief Executive Officer Gentlemen: This letter confirms certain understandings between United Dominion Industries Limited ("UDI") and Core Industries Inc ("Core") regarding the proposed merger of Core into an indirect wholly-owned subsidiary of UDI. 1. Attached to this letter, as Exhibit A, is an Agreement and Plan of Merger, with Disclosure Schedule and Annexes (the "Merger Agreement"), which has been negotiated by representatives of UDI and Core. 2. UDI has completed its due diligence investigation with respect to Core and its assets, properties, claims, liabilities and business, and UDI is satisfied with the results of such investigation. 3. Core has scheduled a meeting of its Board of Directors for not later than Tuesday, June 24, 1997, to consider approval of the Merger Agreement. Management of Core will recommend that its Board approve the Merger Agreement. UDI has scheduled a meeting of its Board of Directors for Wednesday, June 25, 1997, to consider approval of the Merger Agreement. Management of UDI will recommend that its Board approve the Merger Agreement. 4. In the event that: (i) the Board of Directors of Core does not approve the Merger Agreement on or before June 25, 1997, or (ii) an authorized officer of Core does not execute such Agreement on behalf of Core and deliver such Agreement to UDI on or before June 25, 1997, or (iii) Core rescinds its agreement to the Merger Agreement prior to the execution of the Merger Agreement by UDI, 2 [Core Industries Logo] then Core shall pay promptly to UDI, as liquidated damages, a fee of $10,000,000 (the "Fee"), plus all Expenses (as defined in Section 8.03(c) of the Merger Agreement) up to a maximum of $3,000,000; provided, however, that this Agreement shall terminate without liability accruing to either party if: (a) the Board of Directors of UDI shall not have approved the Merger Agreement by 11:59 p.m. Eastern Daylight Savings Time on June 25, 1997; or (b) an authorized officer of UDI shall not have executed such Agreement on behalf of UDI and delivered such Agreement to Core by 11:59 p.m. Eastern Daylight Savings Time on such date. In the event either of such conditions precedent is not satisfied, Core shall have no obligation whatsoever to pay the Fee or Expenses. 5. For purposes of this letter agreement, the term "delivery" of the Merger Agreement shall include transmission of an executed signature page by telefacsimile, which the parties agree shall evidence a party's intent to be bound by the Merger Agreement. Please sign below to indicate UDI's agreement to the foregoing. Very truly yours, CORE INDUSTRIES INC By: /s/ David R. Zimmer ------------------------------------------- Its: President and Chief Executive Officer ------------------------------------- Accepted and agreed to: UNITED DOMINION INDUSTRIES LIMITED By: /s/ Richard A. Bearse ------------------------------- Its: Senior Vice President By: /s/ Richard L. Magee ------------------------------- Its: Vice President -------------------------- Date: June 20, 1997 EX-99.3 4 EXHIBIT 99.3 1 EXHIBIT 99.3 October 2, 1996 STRICTLY CONFIDENTIAL United Dominion Industries 2300 One First Union Center Charlotte, NC 28202-6039 Attention: Gentlemen: In connection with your consideration of a possible negotiated transaction with Core Industries Inc and/or its subsidiaries, affiliates and divisions (collectively, the "Company"), you have requested information which is not readily available to the general public concerning the Company. As a condition to your being furnished such information, you agree to treat any information concerning the Company which is furnished to you by the Company or on behalf of the Company by its representatives, whether furnished before or after the date of this letter agreement (herein collectively referred to as the "Evaluation Material"), in accordance with the provisions of this letter agreement. For the purposes of this letter agreement, the term "Evaluation Material" includes all data, reports, interpretations, forecasts, audit reports and other records to the extent that they include information concerning the Company which is not readily available to the general public, and also includes all notes, analyses, studies, compilations, interpretations or other documents prepared by you or by your directors, officers, employees, representatives or advisors which contain, reflect or are based upon, in whole or in part, the information furnished pursuant to this letter agreement. The term "Evaluation Material" does not include information which (i) was or becomes generally available to the public other than as a result of a disclosure by you or your directors, officers, employees, agents or advisors, or (ii) was or becomes available to you on a non- confidential basis from a source other than the Company or its advisors provided that such source is not to your knowledge bound by a confidentiality agreement with the Company, or (iii) was within your possession prior to its being furnished to you by or on behalf of the Company, provided that the source of such information was not to your knowledge bound by a confidentiality agreement with the Company in respect thereof. (1) You hereby agree that the Evaluation Material will be used solely for the purpose of evaluating a possible negotiated transaction between the Company and you, and that such information will be kept confidential by you and your directors, officers, employees, representatives and advisors; provided, however, that (i) any such information may be disclosed to your directors, officers, employees and your representatives or your advisors for the purpose of evaluating a possible transaction between the Company and you (it being agreed that such directors, officers, employees, representatives and advisors shall be informed by you of the confidential nature of such information and you shall cause them to treat such information confidentially and shall maintain a list of those to whom such information has been disclosed which list you will present to us upon request) and (ii) any disclosure of such information may be made to which we consent in writing. In any event, you shall be responsible for any breach of this letter agreement by any of your directors, officers, employees, representatives or advisors and you agree, at your sole expense, to take all reasonable measures (including but not limited to count proceedings) to restrain such directors, officers, employees, representatives and advisors from prohibited or unauthorized disclosure or use of the Evaluation Material. (2) Without the prior written consent of the Company, except as required by law or applicable stock exchange regulation, you will not, and will direct such directors, officers, employees and representatives not to, disclose to any person either the fact that discussions or negotiations are taking place concerning a possible transaction between the Company and you or any or the terms, conditions or other facts with respect to any such possible transaction, including the status thereof. The term "person" as used in this letter agreement shall be broadly interpreted to include without limitation the media and any corporation, company, group, partnership, other entity or individual. (3) You hereby acknowledge that you are aware, and that you will advise your directors, officers, employees, agents, representatives and advisors who are informed as to the matters which are the subject of this 2 letter agreement, that the United States securities laws prohibit any person who has material, non-public information concerning the matters which are the subject of this letter agreement from purchasing or selling securities of a company which may be a party to a transaction of the type contemplated by this letter agreement or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. (4) In the event that you are requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any information supplied to you in the course of your dealings with the Company or its representatives, it is agreed that you will (i) provide the Company with prompt notice of such request(s) and the documents requested thereby so that the Company may seek an appropriate protective order and/or waive your compliance with the provisions of this letter agreement and (ii) consult with the Company on the advisability or taking legally available steps to resist or narrow such request. It is further agreed that, if in the absence of a protective order or the receipt of a waiver hereunder you are nonetheless, in the written opinion of your counsel, compelled to disclose information concerning the Company to any tribunal or else stand liable for contempt or risk other censure or penalty, you may disclose such information to such tribunal without liability hereunder; provided, however, that you shall give the Company written notice of the information to be so disclosed as far in advance of its disclosure as is practicable and shall use your best efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the information required to be disclosed as the Company designates. (5) You hereby acknowledge that the Evaluation Material is being furnished to you in consideration of your agreement that, for a period of three years from the date hereof neither you nor any of your affiliates (as such term is defined under the Securities Exchange Act of 1934, as amended (the "1934 Act")) will in any manner, directly or indirectly: (a) effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause or participate in or in any way assist any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any securities (or beneficial ownership thereof) or assets of the Company; (ii) any tender or exchange offer, merger or other business combination involving the Company; (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company; or (iv) any "solicitation" of "proxies" (as such terms are used in the proxy rules of the Securities and Exchange Commission) or consents to vote any voting securities of the Company; (b) form, join or in any way participate in a "group" (as defined under the 1934 Act); (c) otherwise act, alone or in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company, (d) take any action which might force the Company to make a public announcement regarding any of the types of matters set forth in (a) above; or (e) enter into any discussions or arrangements with any third party with respect to any of the foregoing. You also agree during such period not to request the Company (or its directors, officers, employees or agents), directly or indirectly, to amend or waive any provision of this paragraph (including this sentence). (6) You agree that you will have no discussion, correspondence, or other contract concerning the Company or its securities or any transaction with or concerning the Company or its securities except with the management of the Company and its designated representatives or except as otherwise contemplated by this letter agreement; provided, however, it is understood and agreed that you may retain one or more third party advisors to do industry-wide studies to gain information about the competitors and customers in the industry, including the Company. In consideration of the Evaluation Material being furnished to you, you hereby agree that, for a period of one year from the date hereof, none of your employees who gain access to the Evaluation Material and no employee resident in your Charlotte, NC corporate office, directly or indirectly will solicit to employ any of the current officers or employees of the Company, without obtaining the prior written consent of the Company. You further acknowledge and agree that the Company reserves the right, in its sole and absolute discretion, to reject any or all proposals and to terminate discussions and negotiations with, or directly or indirectly involving, you at any time. (7) At any time upon our request you shall promptly redeliver to the Company all written material containing or reflecting any information contained in the Evaluation Material (whether prepared by the Company or otherwise, and whether in your possession or the possession of your directors, officers, employees, or advisors, but except items prepared by you or your advisors) and will not retain any copies, extracts or other reproductions in whole or in part of such written material. All documents, memoranda, notes and other writings whatsoever 2 3 (including all copies, extracts or other reproductions), prepared by you or your advisors based on the information contained in the Evaluation Material shall be destroyed, promptly upon your determination to discontinue consideration of a transaction with the Company, or upon request by the Company. The redelivery of such material shall not relieve your obligation of confidentiality or other obligations hereunder. (8) Although we will endeavor to include in the Evaluation Material information known to us which we believe to be relevant for the purpose of your investigation, you understand that the Company makes no representation or warranty as to the accuracy or completeness of the Evaluation Material. You agree that neither the Company nor its representatives shall have any liability to you or any of your representatives resulting from the use of the Evaluation Material supplied by us or our representatives except pursuant to a representation or warranty contained in a binding agreement between the Company and you. (9) It is further understood and agreed that no failure or delay by the Company in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. (10) It is further understood and agreed that money damages may not be a sufficient remedy for any breach of this letter agreement by you or by any of your agents or representatives and that the Company shall be entitled to seek specific performance and injunctive or other equitable relief as a remedy for any such breach, and you further agree to waive any requirement for the securing or posting of any bond in connection with such remedy. Such remedy shall not be deemed to be the exclusive remedy for your breach of this letter agreement, but shall be in addition to all other remedies available at law or equity to the Company. In the event of litigation relating to this letter agreement, if a court of competent jurisdiction determines that you or any of your agents or representatives have breached this letter agreement and such determination is final, then you shall be liable to pay the Company the reasonable fees incurred by the Company in connection with such litigation, including any appeal therefrom. (11) This letter agreement and all disputes arising from or relating to this letter agreement shall be governed by and construed in accordance with the internal laws of the State of Michigan, without giving effect to the principles of conflict of laws thereof. You also hereby irrevocably and unconditionally consent to submit to the jurisdiction of the courts of the State of Michigan for any actions, suits or proceedings arising out of or relating to this agreement, and further agree that service of any process, summons, notice or document by U.S. registered mail to your address set forth above shall be effective service of process for any action, suit or proceeding brought against you in any such court. You hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this letter agreement or the transactions contemplated hereby in the courts of the State of Michigan or the United States of America located in the State of Michigan, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. This agreement and all obligations hereunder shall continue in effect in accordance with its terms for a period of five (5) years from the date hereof or until terminated in writing by the Company. 3 4 If you are in agreement with the foregoing, please so indicate by signing and returning one copy of this letter agreement, whereupon it will constitute our agreement with respect to the subject matter hereof. Very truly yours, CORE INDUSTRIES INC By: /s/ LAWRENCE J. MURPHY ------------------------------------ Its: Executive Vice President Confirmed and Agreed to: United Dominion Industries, Inc. By: /s/ J. MILTON CHILDRESS ---------------------------------- Its: Vice President 4 EX-99.4 5 EXHIBIT 99.4 1 EXHIBIT 99.4 [CORE INDUSTRIES INC LOGO] July 2, 1997 To Our Stockholders: I am pleased to inform you that on June 25, 1997, Core Industries Inc ("Core") entered into an Agreement and Plan of Merger ("Merger Agreement") with United Dominion Industries Limited ("UDI") and UD Nevada Corp. ("Acquisition"), a wholly owned subsidiary of UDI, pursuant to which Acquisition has commenced today a tender offer for all outstanding shares of Core Common Stock for $25.00 per share in cash. Following the completion of the tender offer, upon the terms and subject to conditions of the Merger Agreement, Acquisition will be merged into Core (the "Merger"), and each share of Core Common Stock, other than shares of Common Stock owned by Core, UDI, Acquisition or any direct or indirect wholly owned subsidiary of Core or of UDI immediately prior to the effective time of the Merger, will be cancelled and converted into the right to receive $25.00 in cash, the same price per share paid pursuant to the tender offer. Your Board of Directors has unanimously approved the tender offer and the Merger, has determined that the tender offer and the Merger are fair to, and in the best interests of, the stockholders of Core, and recommends that stockholders accept the tender offer and tender all their shares pursuant to the offer. In arriving at its decision, your Board of Directors gave careful consideration to a number of factors described in the enclosed Schedule 14D-9 that is being filed today with the Securities and Exchange Commission, including, among other things, the opinion of Goldman, Sachs & Co., Core's financial advisor, to the effect that, as of the date of such opinion, the tender offer and the Merger were fair to the stockholders of Core. The enclosed Schedule 14D-9 describes the Board's decision and contains other important information relating to that decision. We urge you to read it carefully. Accompanying this letter, in addition to the Schedule 14D-9, is the Offer to Purchase, together with related materials including a Letter of Transmittal for use in tendering shares. These documents set forth the terms and conditions of the tender offer and provide instructions as to how you can tender your shares. We urge you to read the enclosed materials carefully and consider all the factors set forth therein before making your decision with respect to the tender offer. Sincerely, /s/ DAVID R. ZIMMER David R. Zimmer President and Chief Executive Officer EX-99.5 6 EXHIBIT 99.5 1 EXHIBIT 99.5 CORE INDUSTRIES INC 500 North Woodward P. O. Box 2000 Bloomfield Hills, MI 48303-2000 Telephone: (248) 642-3400 FAX: (248) 642-6816 [CORE INDUSTRIES LOGO] NEWS RELEASE FOR IMMEDIATE RELEASE Contact: Mark J. MacGuidwin June 26, 1997 Telephone: (248) 901-1575 E-mail: macguid@core-ind.com CORE INDUSTRIES TO BE ACQUIRED BY UNITED DOMINION INDUSTRIES ------------------------------------------ Core Industries Inc (CRI: NYSE) announced today that it has entered into a definitive agreement pursuant to which all of the outstanding common stock of Core will be acquired by United Dominion Industries Ltd. (UDI: NYSE, TSE). Under the agreement, which has been unanimously approved by Core's board of directors, United Dominion will commence a tender offer for all outstanding common stock of Core for $25 per share in cash. The tender offer will be followed by a merger in which any shares not acquired by United Dominion in the tender offer will be acquired for the same amount of cash. The tender offer will commence no later than Wednesday, July 2 and will be conditioned on a majority of the outstanding shares of Core being tendered as well as other customary conditions. Goldman, Sachs & Co. has acted as financial advisor to Core in connection with the transaction. United Dominion Industries Ltd. is a diversified manufacturer of industrial and commercial products. Core Industries Inc manufactures specialty products in three segments: Fluid Controls and Construction Products; Test, Measurement and Control; and Farm Equipment. Core's Internet address is HTTP://WWW.CORE-IND.COM EX-99.6 7 EXHIBIT 99.6 1 Goldman, Sachs & Co. Y 85 Broad Street Y New York, New York 10004 EXHIBIT 99.6 Tel: 212-902-1000 [GOLDMAN SACHS LOGO] PERSONAL AND CONFIDENTIAL June 25, 1997 Board of Directors Core Industries Inc 500 North Woodward Avenue Bloomfield Hills, MI 48304 Gentlemen: You have requested our opinion as to the fairness to the holders of the outstanding shares of Common Stock, par value $1 per share (the "Shares"), of Core Industries Inc (the "Company") of the $25 per Share in cash proposed to be paid by United Dominion Industries Limited ("United Dominion") in the Tender Offer and the Merger (as defined below) pursuant to the Agreement and Plan of Merger dated as of June 25, 1997 among United Dominion, UD Nevada Corp., an indirect wholly-owned subsidiary of United Dominion ("Newco"), and the Company (the "Agreement"). The Agreement provides for a tender offer for all of the Shares (the "Tender Offer") pursuant to which Newco will pay $25 per Share in cash for each Share accepted. The Agreement further provides that following completion of the Tender Offer, Newco will be merged into the Company (the "Merger") and each outstanding Share (other than Shares already owned by United Dominion or Newco) will be converted into the right to receive $25 in cash. Goldman, Sachs & Co. ("Goldman Sachs"), as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. We are familiar with the Company having acted as its financial advisor in connection with, and having participated in certain of the negotiations leading to, the Agreement. We are also familiar with United Dominion having provided certain investment banking services from time to time to United Dominion, including having acted as lead-managing underwriter in the public offering of $102 million aggregate principal amount of United Dominion common stock in February 1996. Goldman Sachs may provide investment banking services to United Dominion and its subsidiaries in the future. In connection with this opinion, we have reviewed, among other things, the Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the Company for the five fiscal years ended August 31, 1996; certain interim reports to stockholders and Quarterly Reports on Form 10-Q; certain other communications from the Company to its stockholders; and certain internal financial analyses and forecasts for the Company prepared by its management. We also have held discussions with members of the senior management of the Company regarding its past and current business operations, financial condition and future prospects. In addition, we have reviewed the reported price and trading activity for the Shares, compared certain financial and stock market information for the Company with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations in the industrial manufacturing industry specifically and in other industries generally and performed such other studies and analyses as we considered appropriate. 2 We have relied upon the accuracy and completeness of all of the financial and other information reviewed by us and assumed such accuracy and completeness for purposes of this opinion. In addition, we have not made an independent evaluation or appraisal of the assets and liabilities of the Company and we have not been furnished with any such evaluation or appraisal. Our advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors of the Company in connection with its consideration of the transactions contemplated by the Agreement. Based upon and subject to the foregoing, and based upon such other matters as we consider relevant, it is our opinion that as of the date hereof the $25 per Share in cash to be received by the holders of Shares in the Tender Offer and the Merger is fair to such holders. Very truly yours, /s/ Goldman, Sachs & Co. -------------------------------------- (GOLDMAN, SACHS & CO.) EX-99.7 8 EXHIBIT 99.7 1 EXHIBIT 99.7 CHANGE OF CONTROL AGREEMENT THIS CHANGE OF CONTROL AGREEMENT (this "Agreement") by and between Core Industries Inc, a Nevada corporation (the "Company"), with offices at 500 N. Woodward Avenue, Bloomfield Hills, Michigan 48303-2000 and Mark J. MacGuidwin (the "Executive"), an individual residing at 385 Yarmouth, Bloomfield Hills, Michigan 48301, dated as of the 27th day of May, 1997. R E C I T A L S: WHEREAS, the Company recognizes that the current business environment makes it difficult to attract and retain highly qualified executives unless a certain degree of security can be offered to such individuals against organizational and personnel changes which frequently follow changes in control of a corporation; and WHEREAS, even rumors of acquisitions or mergers may cause executives to consider major career changes in an effort to assure financial security for themselves and for their families; and WHEREAS, the Company desires to assure fair treatment of its executives in the event of a Change in Control (as defined below) and to allow them to make critical career decisions without undue time pressure and financial uncertainty, thereby increasing their willingness to remain with the Company notwithstanding the outcome of a possible Change in Control transaction; and WHEREAS, the Company recognizes that its executives will be involved in evaluating or negotiating any offers, proposals or other transactions which could result in Changes in Control of the Company and believes that it is in the best interest of the Company and its stockholders for such executives to be in a position, free from personal financial and employment considerations, to be able to assess objectively and pursue aggressively the interests of the Company's stockholders in making these evaluations and carrying on such negotiations; and WHEREAS, the Compensation Committee of the Board of Directors (the "Committee") of the Company believes it is essential to provide the Executive with compensation arrangements upon a Change in Control which are competitive with those of other corporations, and in order to accomplish these objectives, the Committee has caused the Company to enter into this Agreement. NOW THEREFORE, the parties, for good and valuable consideration and intending to be legally bound, agree as follows: 1. Operation and Term of Agreement. This Agreement shall be effective immediately upon its execution. This Agreement may be terminated by the Company upon two year's advance written notice to the Executive; provided, however, that after a Change in Control of the Company during the term of this Agreement, this Agreement shall remain in effect until all of the obligations of the parties hereunder are satisfied and the Protection Period has expired. Prior to a Change in Control, this Agreement shall immediately terminate upon termination of the Executive's employment or upon the Executive's ceasing to be an elected officer of the Company, except in the case of such termination under circumstances set forth in Section 2(e) below. 2. Certain Definitions. For purposes of this Agreement, the following definitions shall have the following meanings: (a) "Cause" shall mean (i) actual dishonesty intended to result in substantial personal enrichment at the expense of the Company, (ii) conviction of a felony or (iii) repeated willful and deliberate failure or refusal to perform the duties normally associated with the Executive's position which is not remedied in a reasonable period of time after receipt of written notice from the Company. (b) "Change in Control" shall mean: (i) on or after the date of execution of this Agreement, any person (which, for all purposes hereof, shall include, without limitation, an individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate and a trustee, executor, administrator or other legal representative) (a "Person") or any group of two or 2 more Persons acting in concert becomes the beneficial owner, directly or indirectly, of securities of the Company representing, or acquires the right to control or direct, or to acquire through the conversion of securities or the exercise of warrants or other rights to acquire securities, 40% or more of the combined voting power of the Company's then outstanding securities; provided that for the purposes of the Plan, (A) "voting power" means the right to vote for the election of directors, and (B) any determination of percentage combined voting power shall be made on the basis that (x) all securities beneficially owned by the Person or group or over which control or direction is exercised by the Person or group which are convertible into securities carrying voting rights have been converted (whether or not then convertible) and all options, warrants or other rights which may be exercised to acquire securities beneficially owned by the Person or group or over which control or direction is exercised by the Person or group have been exercised (whether or not then exercisable), and (y) no such convertible securities have been converted by any other Person and no such options, warrants or other rights have been exercised by any other Person; or (ii) at any time subsequent to the date of execution of this Agreement there shall be elected or appointed to the Board of Directors of the Company (the "Board") any director or directors whose appointment or election by the Board or nomination for election by the Company's shareholders was not approved by a vote of at least a majority of the directors then still in office who were either directors on the date of execution of this Agreement or whose election or appointment or nomination for election was previously so approved; or (iii) a reorganization, merger, consolidation, combination, corporate restructuring or similar transaction (an "Event"), in each case, in respect of which the beneficial owners of the outstanding Company voting securities immediately prior to such Event do not, following such Event, beneficially own, directly or indirectly, more than 60% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Company and any resulting Parent in substantially the same proportions as their ownership, immediately prior to such Event, of the outstanding Company voting securities; or (iv) an Event involving the Company as a result of which 40% or more of the members of the board of directors of the Parent or the Company are not persons who were members of the Board immediately prior to the earlier of (x) the Event, (y) execution of an agreement the consummation of which would result in the Event, or (z) announcement by the Company of an intention to effect the Event; or (v) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Change in Control has occurred. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended. (d) "Disability," for purposes of this Agreement, shall apply to an Executive who has applied for and is determined to be eligible to receive disability benefits under the Company's long term disability plan. (e) The "Change in Control Date" shall be any date during the term of this Agreement on which a Change in Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment or status as an elected officer with the Company is terminated within six months prior to the date on which a Change in Control occurs, then unless such employment or status as an elected officer with the Company is terminated (i) for cause, or (ii) voluntarily by the Executive, for all purposes of this Agreement the "Change in Control Date" shall mean the date immediately prior to the date of such termination. (f) "Good Reason" means: (i) the assignment to the Executive within the Protection Period of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements, authority, duties or responsibilities), or any other action which results in a diminution in such 2 3 position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (ii) a reduction by the Company in the Executive's base salary in effect immediately before the beginning of the Protection Period or as increased from time to time thereafter, (iii) a failure by the Company to maintain plans providing benefits at least as beneficial as those provided by any benefit or compensation plan (including, without limitation, any incentive compensation plan, bonus plan or program, retirement, pension or savings plan, stock option plan, restricted stock plan, life insurance plan, health and dental plan or disability plan) in which the Executive is participating immediately before the beginning of the Protection Period, or if the Company has taken any action which would adversely affect the Executive's participation in or reduce the Executive's opportunity to benefit under any of such plans or deprive the Executive of any material fringe benefit enjoyed by him immediately before the beginning of the Protection Period; provided, however, that a reduction in benefits under the Company's tax-qualified retirement, pension or savings plans or its life insurance plan, health and dental plan, disability plans or other insurance plans which reduction applies equally to all participants in the plans and has a de minimis effect on the Executive shall not constitute "Good Reason" for termination by the Executive; (iv) the Company's requiring the Executive, without the Executive's written consent, to be based at any office or location in excess of 50 miles from his office location immediately before the beginning of the Protection Period, except for travel reasonably required in the performance of the Executive's responsibilities; (v) any purported termination by the Company of the Executive's employment for Cause otherwise than as expressly permitted by Section 10 of this Agreement; or (vi) any failure by the Company to obtain the assumption of the obligations contained in this Agreement by any successor as contemplated in Section 9(c) of this Agreement. (g) "Parent" means any entity which directly or indirectly through one or more other entities owns or controls more than 50% of the voting stock or common stock of the Company. (h) "Protection Period" means the period beginning on the Change in Control Date and ending on the last day of the second full calendar year following the Change in Control Date. (i) "Subsidiary" means a company 50% or more of the voting securities of which are owned, directly or indirectly, by the Company. 3. Benefits Upon Termination Within a Protection Period. If, during a Protection Period, the Executive's employment shall be terminated by the Company other than for Cause or Disability or other than as a result of the Executive's death or if the Executive shall terminate his employment for Good Reason, the Company shall provide the following benefits: (a) The Company shall pay to the Executive in a lump sum in cash within 30 days after the date of termination the Executive's full base salary accrued but unpaid through the date of termination at the rate in effect at the time of the termination plus an amount equal to the product of (i) the "Current Year Bonus" for the Executive, which for purposes of this Agreement shall be equal to the greater of (A) the amount of the Executive's bonus under the applicable bonus plan for the most recent fiscal year ending prior to the date of the Change in Control (recognizing any election to receive stock under the Company's Stock Bonus Plan and valuing such stock at the market price thereof on the date received by the Executive) or (B) the target bonus established for the Executive for the fiscal year in which the Change in Control occurs (taking into account any election to receive stock under the Company's Stock Bonus Plan, and valuing such stock at the closing price of the Company's common stock two trading days after the date of the public announcement of the Change in Control), multiplied by (ii) a fraction, the numerator of which is the number of days in such fiscal year through the date of termination and the denominator of which is 365; and 3 4 (b) The Company shall pay to the Executive in a lump sum in cash within 30 days after the date of termination a severance payment in an amount equal to 100% of the Executive's "Annual Compensation." For purposes of this Agreement, "Annual Compensation" shall be an amount equal to the aggregate of the Executive's annual cash compensation (other than bonus) from the Company and its Subsidiaries, whether paid currently or deferred in effect immediately prior to the date of termination or Change in Control (whichever is greater) plus the Current Year Bonus as of the year in which the Change in Control occurs; and (c) Within 30 days after the date of termination, upon surrender by the Executive of his outstanding options to purchase common shares of the Company ("Common Shares") granted to the Executive pursuant to the stock option plans of the Company, but not including any non-vested stock options granted on November 13, 1993 or January 11, 1994 (the "Outstanding Options"), the Company shall pay the Executive an amount in respect of each Outstanding Option equal to the difference between the exercise price of such Outstanding Options and the higher of (x) the fair market value of the Common Shares at the time of such termination, and (y) the highest price paid for Common Shares or, in the cases of securities convertible into Common Shares or carrying a right to acquire Common Shares, the highest effective price (based on the prices paid for such securities) at which such securities are convertible into Common Shares or at which Common Shares may be acquired, by any person or group whose acquisition of voting securities has resulted in a Change in Control of the Company. In the alternative, the Executive may exercise his Outstanding Options, all of which shall be immediately vested; and (d) The Company shall provide the Executive with reasonable outplacement services selected by the Executive, which shall be of a cost consistent with the policies for executives serving in positions similar to the Executive's position attached hereto as Exhibit A; and (e) During the one year period following the date of termination, the Company shall maintain in full force and effect for the continued benefit of the Executive the Company's life and disability insurance programs and the Company's medical, dental and vision plans in which the Executive was entitled to participate immediately prior to the date of the Change in Control, and during such one year period following the date of termination, the Company shall maintain in full force and effect for the continued benefit of the Executive the Company's automobile program in which the Executive was entitled to participate immediately prior to the date of the Change in Control. In the event the Executive's participation in any such program or plan is barred or otherwise prevented, the Company shall provide the Executive with after-tax cash or benefits substantially similar to and not less favorable than the benefits which the Executive would otherwise be entitled to receive under such program or plan; and (f) The Company shall promptly upon a Change in Control establish a rabbi trust arrangement for the benefit of the Executive and fund that rabbi trust with an amount equal to the present value of the benefit accrued under the Company's Benefit Equalization Plan for Certain Employees of Core Industries Inc. (the "SERP Plan"), determined as of the date of the Change in Control, using the mortality table published in Revenue Ruling 95-6, as it may be amended from time to time, and using an interest rate equal to the average yield on 30-year Treasury Constant Maturities as specified by the Commissioner of Internal Revenue for the third calendar month preceding the first day of the month in which the Change in Control occurs; and (g) All of the Executive's benefits accrued under the supplemental retirement plans, excess retirement plans and deferred compensation plans maintained by the Company or any of its Subsidiaries shall become immediately vested in full. 4. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plans, practices, policies or programs provided by the Company or any of its Subsidiaries and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any stock option or other agreements with the Company or any of its Subsidiaries. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, practice, policy or program of the Company or any of 4 5 its Subsidiaries at or subsequent to the date of termination shall be payable in accordance with such plan, practice, policy or program. 5. Full Settlement; Legal Expenses. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Company agrees to pay, upon written demand therefor by the Executive, all legal fees and expenses which the Executive may reasonably incur as a result of any dispute or contest by or with the Company or others regarding the validity or enforceability of, or liability under, any provision of this Agreement, if the Executive is the prevailing party in such action. In any such action brought by the Executive for damages or to enforce any provisions of this Agreement, he shall be entitled to seek both legal and equitable relief and remedies, including, without limitation, specific performance of the Company's obligations hereunder, in his sole discretion. 6. Parachute Payments. Notwithstanding anything in this Agreement to the contrary, in the event it shall be determined that any payment or distribution by the Company or any other person or entity to or for the benefit of the Executive is a "parachute payment" (within the meaning of Section 280G(b)(2) of the Code), whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, his employment with the Company or a change in ownership or effective control of the Company or a substantial portion of its assets (a "Payment"), and would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), the Payments shall be reduced (but not below zero) if and to the extent that such reduction would result in the Executive's retaining a larger amount, on an after-tax basis (taking into account all federal, state and local income taxes and the imposition of the Excise Tax), than if the Executive had received all of the Payments. If the application of the preceding sentence should require a reduction in the Payments or other "parachute payments," unless the Executive shall have designated otherwise, such reduction shall be implemented first, by reducing any non-cash benefits to the extent necessary and, second, by reducing any cash benefits to the extent necessary. In each case, the reductions shall be made starting with the payment or benefit to be made on the latest date as of which any Payment would be made and reducing Payments in reverse chronological order therefrom. All determinations concerning the application of this Section 6 shall be made by a nationally recognized firm of independent accountants, selected by the Executive and satisfactory to the Company, whose determination shall be conclusive and binding on all parties. The fees and expenses of such accountants shall be borne by the Company. 7. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all proprietary or confidential information, knowledge or data relating to the Company or any of its Subsidiaries, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its Subsidiaries and which shall not be or become public knowledge (other than by acts of the Executive or his representatives in violation of this Agreement). After the date of termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. 8. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives or Successor(s) in Interest. The Executive may designate a Successor (or Successors) in Interest to receive any and all amounts due the Executive in accordance with this Agreement should the Executive be deceased at any time of payment. Such designation of Successor(s) in Interest shall be made in writing and signed by the Executive, and delivered to the Company pursuant to Section 10(b) hereof. Any such designation may be made to any legal person, persons, trust or the Executive's estate as 5 6 he shall determine in his sole discretion. In the event any designation shall be incomplete, or in the event the Executive shall fail to designate a Successor in Interest, his estate shall be deemed to be his Successor in Interest to receive such portion of all of the payments due hereunder. The Executive may amend, change or revoke any such designation at any time and from time to time, in the same manner. This Section 8(a) shall not supersede any designation of beneficiary or successor in interest made by the Executive, or separately covered, under any other plan, practice, policy or program of the Company. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company and any Parent of the Company or any successor and without regard to the form of transaction utilized by the Parent to acquire the business or assets of the Company, to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or Parentage had taken place. As used in this Agreement, "Company" shall mean the Company as herein before defined and any successor to its business and/or assets as aforesaid (and any Parent of the Company or any successor) which is required by this clause to assume and agree to perform this Agreement or which otherwise assumes and agrees to perform this Agreement. 9. Notice of Termination. Any termination of the Executive's employment by the Company for Cause or by the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the date of termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. 10. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Michigan, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, to the addresses for each party as first written above or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications to the Company shall be addressed to the attention of the Company's President. Notice and communications shall be effective when actually received by the addressee. (c) Whenever reference is made herein to any specific plan or program of the Company, to the extent that the Executive is not a participant therein or has no benefit accrued thereunder, whether vested or contingent, as of the Change in Control Date, then such reference herein shall be null and void and of no effect, and the Executive shall acquire no additional benefit as a result of such reference. (d) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (e) The Executive's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. 6 7 (f) This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof, and it supersedes any prior agreements between the Executive and the Company. IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from the Committee, the Company has caused these presents to be executed as of the day and year first above written. EXECUTIVE CORE INDUSTRIES INC /s/ MARK J. MACGUIDWIN By: /s/ RICHARD P. KUGHN - ---------------------- -------------------- Mark J. MacGuidwin Richard P. Kughn Its Member of the Compensation Committee of the Board of Directors 7 -----END PRIVACY-ENHANCED MESSAGE-----