COOPER INDUSTRIES INC
S-3/A, 1995-11-24
SWITCHGEAR & SWITCHBOARD APPARATUS
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<PAGE>   1
 
   
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 24, 1995
    
   
                                                       REGISTRATION NO. 33-63457
    
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------
   
                                AMENDMENT NO. 1
    
 
   
                                       TO
    
 
                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

                            ------------------------
 
                            COOPER INDUSTRIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                            ------------------------
 
<TABLE>
<S>                                           <C>
                     OHIO                                       31-4156620
       (STATE OR OTHER JURISDICTION OF           (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
        INCORPORATION OR ORGANIZATION)
</TABLE>
 
                            ------------------------

                          SUITE 4000, FIRST CITY TOWER
                                  1001 FANNIN
                              HOUSTON, TEXAS 77002
                                 (713) 739-5400
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
 
                            DIANE KOSMACH SCHUMACHER
                             SENIOR VICE PRESIDENT,
                         GENERAL COUNSEL AND SECRETARY
                          SUITE 4000, FIRST CITY TOWER
                                  1001 FANNIN
                              HOUSTON, TEXAS 77002
                                 (713) 739-5400
 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)

                            ------------------------

                                   Copies to:
 
<TABLE>
<S>                                           <C>
              MARGARET L. WOLFF                              GREGORY M. SHAW
             GREGORY A. FERNICOLA                        CRAVATH, SWAINE & MOORE
     SKADDEN, ARPS, SLATE, MEAGHER & FLOM                    WORLDWIDE PLAZA
               919 THIRD AVENUE                             825 EIGHTH AVENUE
           NEW YORK, NEW YORK 10022                      NEW YORK, NEW YORK 10019
                (212) 735-3000                                (212) 474-1000
</TABLE>
 
                            ------------------------

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
 
    If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.  / /
 
    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.  / /
 
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  / /
 
    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  / /
 
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  / /

                            ------------------------
   
    

    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>   2
 
***************************************************************************
*                                                                         *
*  Information contained herein is subject to completion or amendment. A  *
*  registration statement relating to these securities has been filed     *
*  with the Securities and Exchange Commission. These securities may not  *
*  be sold nor may offers to buy be accepted prior to the time the        *
*  registration statement becomes effective. This prospectus shall not    *
*  constitute an offer to sell or the solicitation of an offer to buy     *
*  nor shall there be any sale of these securities in any State in which  *
*  such offer, solicitation or sale would be unlawful prior to            *
*  registration or qualification under the securities laws of any such    *
*  State.                                                                 *
*                                                                         *
***************************************************************************

 
                             SUBJECT TO COMPLETION
   
                               NOVEMBER 24, 1995
    
 
<TABLE>
<S>                                                                           <C>
PROSPECTUS                                                                    [COOPER LOGO]
15,000,000 DECSSM
(DEBT EXCHANGEABLE FOR COMMON STOCKSM)
COOPER INDUSTRIES, INC.
</TABLE>
 
    % EXCHANGEABLE NOTES DUE                       , 1998
(SUBJECT TO EXCHANGE INTO SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF
WYMAN-GORDON COMPANY)
   
The principal amount of each of the   % Exchangeable Notes Due           , 1998
(each a "DECS"), of Cooper Industries, Inc. ("Cooper") being offered hereby will
be $     (the last sale price of the common stock, par value $1.00 per share
(the "Wyman-Gordon Common Stock"), of Wyman-Gordon Company ("Wyman-Gordon") on
          , 1995, as reported on The Nasdaq Stock Market's National Market) (the
"Initial Price"). The DECS will mature on           1998. Interest on the DECS,
at the rate of   % of the principal amount per annum, is payable quarterly on
          ,           , and           , beginning           , 1996. The DECS are
not subject to any sinking fund or redemption prior to maturity.
    
 
   
At maturity (including as a result of acceleration or otherwise), the principal
amount of each DECS will be mandatorily exchanged by Cooper into a number of
shares of Wyman-Gordon Common Stock (or, in accordance with the terms of the
Indenture (as defined), at Cooper's option, cash with an equal value) at the
Exchange Rate (as defined herein). The Exchange Rate is equal to, subject to
certain adjustments, (a) if the Maturity Price per share of Wyman-Gordon Common
Stock is greater than or equal to $        per share of Wyman-Gordon Common
Stock,         share of Wyman-Gordon Common Stock per DECS, (b) if the Maturity
Price is less than $        but is greater than the Initial Price, a fractional
share of Wyman-Gordon Common Stock per DECS so that the value thereof at the
Maturity Price equals the Initial Price and (c) if the Maturity Price is less
than or equal to the Initial Price, one share of Wyman-Gordon Common Stock per
DECS. The "Maturity Price" means the average Closing Price (as defined herein)
per share of Wyman-Gordon Common Stock on the 20 Trading Days (as defined
herein) immediately prior to (but not including) the date of maturity.
Accordingly, holders of the DECS will not necessarily receive an amount equal to
the principal amount thereof. Cooper may only exercise its option to pay
outstanding DECS in cash from the proceeds of its sale of common stock of
Cooper. The DECS will be an unsecured obligation of Cooper ranking pari passu
with all of its other unsecured and unsubordinated indebtedness. As of September
30, 1995, Cooper had no indebtedness by its terms ranking senior to the DECS,
$151.8 million of indebtedness effectively ranking senior to the DECS because it
is secured or issued by consolidated subsidiaries, $1,233.4 million of
indebtedness ranking pari passu with the DECS, and $690.5 million of
indebtedness subordinated to the DECS. Wyman-Gordon will have no obligations
with respect to the DECS. See "Description of the DECS."
    
 
For a discussion of certain United States federal income tax consequences for
holders of DECS, see "Certain United States Federal Income Tax Considerations."
 
Attached hereto as Appendix A is a prospectus of Wyman-Gordon (the "Wyman-Gordon
Prospectus") covering the shares of Wyman-Gordon Common Stock which may be
received by a holder of DECS at maturity. The Wyman-Gordon Prospectus relates to
an aggregate of 16,500,000 shares of Wyman-Gordon Common Stock.
 
"DECS" and "Debt Exchangeable for Common Stock" are service marks of Salomon
Brothers Inc ("Salomon").
 
The Wyman-Gordon Common Stock is listed on The Nasdaq Stock Market's National
Market ("Nasdaq") under the symbol "WYMN."
PROSPECTIVE INVESTORS ARE ADVISED TO CONSIDER CAREFULLY THE INFORMATION
CONTAINED UNDER "RISK FACTORS" ON PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
                                        PRICE TO            UNDERWRITING            PROCEEDS TO
                                        PUBLIC(1)             DISCOUNT             COOPER(1)(2)
<S>                                     <C>                    <C>                    <C>
Per DECS..............................  $                      $                      $
Total (3).............................  $                      $                      $
- -----------------------------------------------------------------------------------------------
</TABLE>
 
(1) Plus accrued interest, if any, from           , 1995, to the date of
    delivery.
(2) Before deducting expenses payable by Cooper, estimated to be $        .
(3) Cooper has granted the Underwriters an option, exercisable within 30 days
    from the date hereof, to purchase up to an additional 1,500,000 DECS at the
    Price to Public, less Underwriting Discount, for the purpose of covering
    over-allotments, if any. If the Underwriters exercise such option in full,
    the total Price to Public, Underwriting Discount and Proceeds to Cooper will
    be $        , $        and $        , respectively. See "Plan of
    Distribution."
 
The DECS are offered subject to receipt and acceptance by the Underwriters, to
prior sales and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the DECS will be made at the office of Salomon Brothers Inc,
Seven World Trade Center, New York, New York, or through the facilities of The
Depository Trust Company, on or about           , 1995.

SALOMON BROTHERS INC
                          MERRILL LYNCH & CO.
                                               SCHRODER WERTHEIM & CO.

The date of this Prospectus is             , 1995.
<PAGE>   3
 
     IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DECS AND THE
WYMAN-GORDON COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON NASDAQ OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
     IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) AND THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE WYMAN-GORDON COMMON STOCK ON NASDAQ IN ACCORDANCE WITH RULE
10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE
ACT"). SEE "PLAN OF DISTRIBUTION."
 
                             AVAILABLE INFORMATION
 
     Cooper is subject to the informational requirements of the Exchange Act,
and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by Cooper can be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's Regional Offices at Seven World Trade Center, Suite 1300, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. In addition, material filed by Cooper can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
 
     Cooper has filed with the Commission a Registration Statement on Form S-3
(together with any amendments or supplements thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities to be issued under this Prospectus. This
Prospectus omits certain of the information contained in the Registration
Statement and the exhibits and schedules thereto in accordance with the rules
and regulations of the Commission. For further information regarding Cooper and
the DECS offered hereby, reference is made to the Registration Statement and the
exhibits and schedules filed therewith, which may be inspected without charge at
the office of the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and copies of which may be obtained from the Commission at prescribed
rates. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
 
                                        2
<PAGE>   4
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
   
     The following documents have been filed by Cooper with the Commission
pursuant to the Exchange Act and are incorporated herein by reference and made a
part of the Prospectus: (i) Annual Report on Form 10-K for the fiscal year ended
December 31, 1994; (ii) Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1994; (iii) Proxy Statement dated March 17, 1995 for the 1995
Annual Meeting of Shareholders; (iv) Current Report on Form 8-K dated April 28,
1995; (v) Quarterly Report on Form 10-Q for the quarter ended March 31, 1995
dated May 12, 1995; (vi) Current Report on Form 8-K dated July 14, 1995; (vii)
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 dated August
14, 1995; and Quarterly Report on Form 10-Q for the quarter ended September 30,
1995 dated November 13, 1995.
    
 
     All documents subsequently filed by Cooper pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
of the DECS hereunder shall be deemed to be incorporated herein by reference and
shall be a part hereof from the date of the filing of such documents. Any
statements contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or replaced,
to constitute a part of this Prospectus.
 
     Cooper will provide without charge to each person, including any beneficial
owner, to whom a Prospectus is delivered, upon written or oral request of such
person, a copy of the documents incorporated by reference herein, other than
exhibits to such documents not specifically incorporated by reference. Such
requests should be directed to the principal executive office of Cooper
Industries, Inc., Suite 4000, First City Tower, 1001 Fannin, Houston, Texas
77002, Attention: Corporate Secretary, telephone number (713) 739-5400.
 
                                        3
<PAGE>   5
 
                                  RISK FACTORS
 
     The National Association of Securities Dealers, Inc. may provide guidelines
to its members regarding compliance responsibilities and requirements when
handling transactions in the DECS.
 
     As described in more detail below, the trading price of the DECS may vary
considerably prior to maturity (including by acceleration or otherwise,
"Maturity") due to, among other things, fluctuations in the price of
Wyman-Gordon Common Stock and other events that are difficult to predict and
beyond Cooper's control.
 
COMPARISON TO OTHER DEBT SECURITIES
 
   
     The terms of the DECS differ from those of ordinary debt securities in that
the amount that a holder of the DECS will receive upon mandatory exchange of the
principal amount thereof at Maturity is not fixed, but is based on the price of
the Wyman-Gordon Common Stock as specified in the Exchange Rate (as defined
herein). There can be no assurance that such amount receivable by such holder
upon exchange at Maturity will be equal to or greater than the principal amount
of the DECS. For example, if the Maturity Price of the Wyman-Gordon Common Stock
is less than the Initial Price, such amount receivable upon exchange will be
less than the principal amount paid for the DECS, in which case an investment in
the DECS would result in a loss. Holders of DECS, therefore, bear the full risk
of a decline in the value of the Wyman-Gordon Common Stock prior to Maturity.
    
 
   
     In addition, the opportunity for equity appreciation afforded by an
investment in the DECS is less than the opportunity for equity appreciation
afforded by an investment in the Wyman-Gordon Common Stock because the amount
receivable by holders of DECS upon exchange at Maturity will only exceed the
principal amount of such DECS ($  ) if the Maturity Price exceeds $  , the
Threshold Appreciation Price (as defined herein), which represents an
appreciation of   percent of the Initial Price of $  . Moreover, holders of the
DECS will only be entitled to receive upon exchange at Maturity   percent of any
appreciation of the value of Wyman-Gordon Common Stock in excess of the
Threshold Appreciation Price. For example, if the Maturity Price is $     , the
DECS holders will receive $     at maturity. Because the price of the
Wyman-Gordon Common Stock is subject to market fluctuations, the value of the
Wyman-Gordon Common Stock (or, to the extent permitted by applicable law, at the
option of Cooper, the amount of cash) received by a holder of DECS upon exchange
at Maturity, determined as described herein, may be more or less than the
principal amount of the DECS.
    
 
RELATIONSHIP OF THE DECS AND WYMAN-GORDON COMMON STOCK
 
   
     The market price of the DECS at any time is affected primarily by changes
in the price of Wyman-Gordon Common Stock. It is impossible to predict whether
the price of Wyman-Gordon Common Stock will rise or fall. Trading prices of
Wyman-Gordon Common Stock will be influenced by Wyman-Gordon's operational
results and by complex and interrelated political, economic, financial and other
factors that can affect the capital markets generally, Nasdaq (on which the
Wyman-Gordon Common Stock is traded) and the market segment of which
Wyman-Gordon is a part. As of November 22, 1995, Cooper beneficially owned an
aggregate of 16,500,000 shares of Wyman-Gordon Common Stock, 15,000,000 shares
(16,500,000 shares if the Underwriters' over-allotment option is exercised in
full) of which Cooper may deliver to holders of the DECS at Maturity.
    
 
     Holders of the DECS will not be entitled to any rights with respect to
Wyman-Gordon Common Stock (including, without limitation, voting rights and
rights to receive any dividends or other distributions in respect thereof) until
such time, if any, as Cooper shall have mandatorily exchanged the DECS at
Maturity for shares of Wyman-Gordon Common Stock and the applicable record date,
if any, for the exercise of such rights occurs after such date.
 
     There can be no assurance that Wyman-Gordon will continue to be subject to
the reporting requirements of the Exchange Act and distribute reports, proxy
statements and other information required thereby to its stockholders. In the
event that Wyman-Gordon ceases to be subject to such
 
                                        4
<PAGE>   6
 
reporting requirements and the DECS continue to be outstanding, pricing
information for the DECS may be more difficult to obtain and the value and
liquidity of the DECS may be adversely affected.
 
DILUTION OF WYMAN-GORDON COMMON STOCK
 
   
     The amount that holders of the DECS are entitled to receive upon the
mandatory exchange at Maturity is subject to adjustment for certain events
arising from, among others, a merger or consolidation in which Wyman-Gordon is
not the surviving or resulting corporation, a sale or other transfer of all or
substantially all of the assets of Wyman-Gordon and the liquidation,
dissolution, winding up or bankruptcy of Wyman-Gordon as well as stock splits
and combinations, stock dividends and certain other actions of Wyman-Gordon that
modify its capital structure. See "Description of the DECS -- Dilution
Adjustments." The amount to be received by such holders upon exchange at
Maturity may not be adjusted for other events, such as offerings of Wyman-Gordon
Common Stock for cash or in connection with acquisitions, that may adversely
affect the price of Wyman-Gordon Common Stock and, because of the relationship
of such amount to be received upon exchange to the price of Wyman-Gordon Common
Stock, such other events may adversely affect the trading price of the DECS.
There can be no assurance that Wyman-Gordon will not make offerings of
Wyman-Gordon Common Stock or take such other action in the future or as to the
amount of such offerings, if any.
    
 
NO OBLIGATION ON PART OF WYMAN-GORDON WITH RESPECT TO THE DECS
 
     Wyman-Gordon has no obligations with respect to the DECS, including any
obligation to take the needs of Cooper (other than pursuant to the Investment
Agreement (described below)) or of holders of the DECS into consideration for
any reason. Wyman-Gordon will not receive any of the proceeds of the offering of
the DECS made hereby and is not responsible for, and has not participated in,
the determination or calculation of the amount receivable by holders of the DECS
at Maturity. Wyman-Gordon is not involved with the administration or trading of
the DECS and has no obligations with respect to the amount receivable by holders
of the DECS at Maturity.
 
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
 
     It is not possible to predict how the DECS will trade in the secondary
market or whether such market will be liquid or illiquid. There is currently no
secondary market for the DECS. The Underwriters (as described under "Plan of
Distribution") currently intend, but are not obligated, to make a market in the
DECS. There can be no assurance that a secondary market will develop or, if a
secondary market does develop, that it will provide the holders of the DECS with
liquidity of investment or that it will continue for the life of the DECS. The
DECS will not be listed on any national securities exchange. Accordingly,
pricing information for the DECS may be difficult to obtain, and the liquidity
of the DECS may be adversely affected.
 
TAX UNCERTAINTIES
 
     The Indenture (as defined herein) requires that any holder subject to U.S.
federal income tax include currently in income, for U.S. federal income tax
purposes, payments denominated as interest that are made with respect to the
DECS, in accordance with such holder's method of accounting, and the amount of
original issue discount ("OID"), if any, attributable to the DECS as it accrues.
The Indenture also requires holders to treat the DECS as a unit consisting of
(i) an exchange note, which is a debt obligation with a fixed principal amount
unconditionally payable at Maturity equal to the principal amount of the DECS,
and (ii) a forward purchase contract pursuant to which the holder agrees to use
the principal payment due on the exchange note to purchase at Maturity the
Wyman-Gordon Common Stock that the holder is entitled to receive at that time
(subject to Cooper's right to deliver cash in lieu of the Wyman-Gordon Common
Stock). It is contemplated that, upon a holder's sale or other disposition of
the DECS prior to Maturity, the amount realized will be allocated between these
two components of the DECS on the basis of their then relative fair market
values. Because of an absence of authority as to the proper characterization of
the DECS for tax purposes, these tax characterizations and results are
uncertain. This
 
                                        5
<PAGE>   7
 
uncertainty extends to characterization of any gain or loss recognized with
respect to the DECS at Maturity as capital gain or loss or ordinary income or
loss and, in the event Cooper delivers Wyman-Gordon Common Stock at Maturity, as
to whether any gain or loss can be deferred until a sale or disposition of such
stock. As a result of these uncertainties, Cooper has not received an opinion of
counsel with respect to the specific tax consequences of owning or disposing of
the DECS. See "Certain United States Federal Income Tax Considerations."
 
RISK FACTORS RELATING TO WYMAN-GORDON
 
     Investors in the DECS should carefully consider the information in the
Wyman-Gordon Prospectus attached hereto as Appendix A, including the information
contained under "Risk Factors."
 
                            COOPER INDUSTRIES, INC.
 
     Cooper, which was incorporated in Ohio in 1919, is a diversified, worldwide
manufacturing company doing business in three primary business segments:
Electrical Products, Automotive Products and Tools & Hardware. Cooper has over
125 manufacturing facilities and approximately 39,700 employees in the United
States and more than 23 foreign countries.
 
Electrical Products Segment
 
     The Electrical Products segment manufactures and markets electrical and
circuit protection products for use in residential, commercial and industrial
construction, maintenance and repair applications. In addition, the segment
produces and markets products for use by utilities and industries for primary
electrical power transmission and distribution. Some of the major products
include Buss(R) and Edison(R) fuses; Crouse-Hinds(R) electrical construction
materials; Crouse-Hinds(R), Fail-Safe(TM), Halo(R) and Metalux(R) lighting
fixtures; Kyle(R) distribution switchgear and McGraw-Edison(TM) and RTE(R) power
and distribution transformers and related products.
 
Automotive Products Segment
 
     The Automotive Products segment manufactures and distributes spark plugs,
brake components, wiper blades, lighting products, heating and air conditioning
parts, steering and suspension components and other products for use by the
automotive aftermarket and in automobile assemblies. Products include Abex(R),
Lee(R), Gibson(R) and Wagner(R) brake components; Anco(R) windshield wiper
products; automotive wire and cable; Champion(R) spark plugs and igniters;
Everco(R) and Murray(R) heating and air conditioning parts; Moog(R) steering and
suspension products; Precision(R) universal joint products; and Wagner(R) and
Zanxx(R) lighting products.
 
Tools & Hardware Segment
 
     The Tools & Hardware segment produces and markets tools and hardware items
for use in residential, commercial and industrial construction, maintenance and
repair applications, and for other general industrial and consumer uses. Some of
the well-known products include Campbell(R) chain; Crescent(R) wrenches;
Diamond(R) horseshoes and farrier tools; Lufkin(R) measuring tapes; Nicholson(R)
files and saws; Plumb(R) hammers; Weller(R) soldering equipment; Wiss(R)
scissors; Xcelite(R) screwdrivers; Buckeye(R), DGD(TM) and Dotco(R) power tools;
and Kirsch(R) drapery hardware and custom window coverings.
 
RECENT DEVELOPMENTS
 
     On June 30, 1995, Cooper distributed 85.5 percent (21,375,000 shares) of
the common stock of its wholly-owned subsidiary Cooper Cameron Corporation
("Cooper Cameron") in exchange for 9,500,000 shares of Cooper common stock
pursuant to an offer made to Cooper's shareholders to exchange 2.25 shares of
common stock of Cooper Cameron for each share of Cooper common stock tendered,
up to a maximum of 9,500,000 shares of Cooper common stock. Cooper retained 14.5
percent (3,625,000
 
                                        6
<PAGE>   8
 
shares) of the common stock of Cooper Cameron. Cooper Cameron was incorporated
in Delaware on November 10, 1994. As of January 1, 1995, Cooper transferred to
Cooper Cameron the businesses that comprised Cooper's former Petroleum &
Industrial Equipment segment at September 30, 1994. These businesses included
the Cooper Oil Tool, Cooper Energy Services, Cooper Turbocompressor and Wheeling
Machine Products operations of Cooper.
 
   
ANTICIPATED ACCOUNTING TREATMENT OF THE DECS BY COOPER
    
 
   
     The DECS will be reflected as long-term debt in Cooper's balance sheet and
will carry an interest rate which will not differ significantly from the
interest rate paid on the long-term debt retired with the proceeds of the DECS
offering. The DECS provide a hedge of the Wyman-Gordon investment, which will
allow Cooper to assure a gain equal to the difference between Cooper's cost of
the Wyman-Gordon Common Stock and the proceeds from the DECS offering even if
the market price of Wyman-Gordon Common Stock decreases. Subsequent to the
completion of the DECS offering, Cooper's investment in Wyman-Gordon Common
Stock will continue to be reflected as an available-for-sale security, marked to
market with the unrealized gain included in stockholders' equity. The hedge
imbedded in the DECS will, however, result in the unrealized gain included in
stockholders' equity being limited to the appreciation attributable to Cooper
under the terms of the DECS. If the market value of Wyman-Gordon Common Stock
declines, the decrease in the market value of the investment in Wyman-Gordon
Common Stock will be offset by the increase in the market value of the imbedded
hedge in the DECS. In the event Cooper delivers Wyman-Gordon Common Stock in
exchange for the DECS, Cooper will recognize the unrealized gain attributable to
the number of shares delivered to the holders of the DECS. In the event Cooper
settles the DECS in cash at maturity and Cooper continues to hold its investment
in Wyman-Gordon Common Stock, no gain or loss will be recognized by Cooper.
    
 
     For additional information with respect to Cooper, see the documents
specified under "Documents Incorporated by Reference."
 
                              WYMAN-GORDON COMPANY
 
     Wyman-Gordon, founded in 1883, is a leading producer of highly engineered,
technically advanced components primarily for the aerospace industry as well as
for other markets, including power generation. Wyman-Gordon uses forging,
casting and composites technologies to produce components to exacting customer
specifications for technically demanding applications such as jet turbine
engines, airframe structures, land-based gas turbines and extruded seamless
pipe. Components manufactured by Wyman-Gordon are utilized in most of the major
commercial and United States defense aerospace programs.
 
     Attached hereto as Appendix A is the Wyman-Gordon Prospectus covering the
shares of Wyman-Gordon Common Stock offered, among other things, in connection
with the DECS.
 
                  RELATIONSHIP BETWEEN COOPER AND WYMAN-GORDON
 
     Pursuant to the Stock Purchase Agreement, dated as of January 10, 1994 (the
"Stock Purchase Agreement"), between Cooper and Wyman-Gordon, Wyman-Gordon
acquired from Cooper on May 26, 1994 all of the outstanding shares of common
stock of Cameron Forged Products Company ("Cameron") in consideration for
16,500,000 shares of Wyman-Gordon Common Stock and $8.5 million, consisting of
$3.9 million in cash and a $4.6 million promissory note of Wyman-Gordon (the
"Note"). The Stock Purchase Agreement contains obligations of each of Cooper and
Wyman-Gordon which remain outstanding. These obligations include, among others,
payment by Wyman-Gordon of the Note, cross indemnification by Cooper and
Wyman-Gordon for certain tax obligations, liabilities arising out of the
business and operations of Cameron and inaccuracies in certain representations
and warranties made by each company, and indemnification of Wyman-Gordon by
Cooper for certain liabilities under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), with respect to employee benefit plans.
 
                                        7
<PAGE>   9
 
   
     In connection with the Stock Purchase Agreement, Cooper and Wyman-Gordon
entered into the Investment Agreement, dated as of January 10, 1994, as amended
by Amendment dated as of May 26, 1994 (the "Investment Agreement"), which
governs Cooper's ownership of the 16,500,000 shares of Wyman-Gordon Common Stock
that were issued to Cooper under the Stock Purchase Agreement. The Investment
Agreement, among other things, contains (i) restrictions on Cooper's ability to
sell or encumber its shares of Wyman-Gordon Common Stock, (ii) provisions
requiring generally that Cooper vote its shares of Wyman-Gordon Common Stock
either in the manner recommended by the Wyman-Gordon Board of Directors or, at
Cooper's election, in the same proportion as the vote of the other Wyman-Gordon
shareholders, (iii) customary standstill provisions, (iv) provisions requiring
Wyman-Gordon to use its best efforts to cause two persons designated by Cooper
to be elected to the Wyman-Gordon Board of Directors and (v) provisions granting
Cooper certain registration rights in respect of its shares of Wyman-Gordon
Common Stock. The voting, sale and standstill restrictions set forth in the
Investment Agreement terminate upon the earlier of (i) May 26, 2004 and (ii) the
first date on which Cooper beneficially owns less than 5 percent of the
outstanding Company Voting Securities (as defined in the Investment Agreement).
    
 
   
     Neither the Stock Purchase Agreement nor the Investment Agreement will be
affected by the DECS offering.
    
 
     See "Relationship Between Cooper and the Company" in the Wyman-Gordon
Prospectus attached hereto as Appendix A for a further description of the Stock
Purchase Agreement and the Investment Agreement.
 
                                        8
<PAGE>   10
 
          PRICE RANGE OF WYMAN-GORDON COMMON STOCK AND DIVIDEND POLICY
 
     Wyman-Gordon Common Stock is listed on Nasdaq under the symbol "WYMN." The
following table sets forth the high and low sales prices of the Wyman-Gordon
Common Stock for the calendar periods listed below as reported on Nasdaq.
 
   
<TABLE>
<CAPTION>
                                                                               HIGH         LOW
                                                                              -------     -------
<S>                                                                           <C> <C>     <C> <C>
1994
  First Quarter.............................................................  $ 7  1/8    $ 4  5/8
  Second Quarter............................................................    6  7/8      4  1/2
  Third Quarter.............................................................    7           5  3/4
  Fourth Quarter............................................................    6  1/2      4  3/4
1995
  First Quarter.............................................................    8           5  1/4
  Second Quarter............................................................   12  3/8      7  5/8
  Third Quarter.............................................................   14  1/8     10  5/8
  Fourth Quarter (through November 21, 1995)................................   15  1/8     12  1/4
</TABLE>
    
 
   
     As of November   , 1995, there were approximately           holders of
record of Wyman-Gordon Common Stock. The number of record holders may not be
representative of the number of beneficial holders since many shares are held by
depositories, brokers or other nominees.
    
 
   
     On November   , 1995, the last reported sale price of Wyman-Gordon Common
Stock on the Nasdaq was $          per share. Wyman-Gordon has paid no dividends
on the Wyman-Gordon Common Stock since the fourth quarter of 1991. See "Price
Range of Common Stock and Dividend Policy" in the Wyman-Gordon Prospectus
attached hereto as Appendix A.
    
 
     Cooper makes no representation as to the amount of dividends, if any, that
Wyman-Gordon will pay in the future. In any event, holders of the DECS will not
be entitled to receive any dividends that may be payable on Wyman-Gordon Common
Stock until such time, if any, as Cooper shall have mandatorily exchanged the
DECS at Maturity for shares of Wyman-Gordon Common Stock and a record date, if
any, for such dividend occurs after such date. See "Description of the DECS."
 
                                USE OF PROCEEDS
 
     The net proceeds to be received by Cooper from the sale of the DECS will be
used for general corporate purposes, including potential acquisitions,
refinancings of existing indebtedness, working capital and capital expenditures.
 
                                        9
<PAGE>   11
 
                            SELECTED FINANCIAL DATA
 
   
     The following table sets forth selected historical financial data for
Cooper for each of the years in the five-year period ended December 31, 1994,
and selected unaudited historical financial data for the nine-month periods
ended September 30, 1995 and 1994. The historical data for the five full years
shown below has been derived from the audited consolidated financial statements
of Cooper. The historical data for the nine-month periods ended September 30,
1995 and 1994 has been derived from Cooper's unaudited consolidated financial
statements and includes, in the opinion of Cooper's management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
data for such periods. Financial information for the interim periods presented
is not necessarily indicative of the financial information for the full year.
The historical data set forth below should be read in conjunction with the
consolidated financial statements and notes thereto of Cooper incorporated by
reference herein.
    
 
   
<TABLE>
<CAPTION>
                                                 NINE MONTHS ENDED
                                                   SEPTEMBER 30,                        YEAR ENDED DECEMBER 31,
                                              -----------------------   --------------------------------------------------------
                                              1995(1)(2)    1994(1)     1994(1)     1993(1)      1992(1)       1991       1990
                                              ----------   ----------   --------   ----------   ----------   --------   --------
                                                                        (IN MILLIONS WHERE APPLICABLE)
<S>                                           <C>          <C>          <C>        <C>          <C>          <C>        <C>
Income Statement Data:
  Revenues....................................  $3,597.7    $3,348.1    $4,588.0    $4,776.4     $4,468.4    $4,307.6   $4,570.8
                                                --------    --------    --------    --------     --------    --------   --------
  Income from continuing operations before
    cumulative effect of changes in accounting
    principles................................     207.4       207.3       292.8       299.0        239.6       231.2      265.3
  Income from discontinued operations
    net of taxes..............................        --         0.3         0.3        68.1        121.7       162.0       96.1
  Charge for discontinued operations..........    (186.6)     (313.0)     (313.0)         --           --          --         --
  Cumulative effect on prior years of changes
    in accounting principles..................        --          --          --          --       (590.0)         --         --
                                                --------    --------    --------    --------     --------    --------   --------
    Net income (loss).........................  $   20.8    $ (105.4)   $  (19.9)   $  367.1     $ (228.7)   $  393.2   $  361.4
                                                ========    ========    ========    ========     ========    ========   ========
Per Common Share Data:
  Primary --
    Income from continuing operations before
      cumulative effect of changes in
      accounting
      principles..............................  $   1.83    $   1.47    $   2.10    $   2.15     $   1.64    $   1.60   $   1.94
    Income (loss) from discontinued
      operations..............................     (1.65)      (2.74)      (2.74)       0.60         1.07        1.44       0.87
    Cumulative effect on prior years of
      changes in
      accounting principles...................        --          --          --          --        (5.19)         --         --
                                                --------    --------    --------    --------     --------    --------   --------
    Net income (loss).........................  $    .18    $  (1.27)   $  (0.64)   $   2.75     $  (2.48)   $   3.04   $   2.81
                                                ========    ========    ========    ========     ========    ========   ========
  Fully diluted --
    Income from continuing operations before
      cumulative effect of changes in
      accounting
      principles..............................  $   1.76    $   1.47    $   2.10    $   2.15     $   1.64    $   1.60   $   1.94
                                                ========    ========    ========    ========     ========    ========   ========
    Net income (loss).........................  $    .18    $  (1.27)   $  (0.64)   $   2.75     $  (2.48)   $   3.01   $   2.81
                                                ========    ========    ========    ========     ========    ========   ========
  Cash dividends..............................  $   0.99    $   0.99    $   1.32    $   1.32     $   1.24    $   1.16   $   1.08
  Book value..................................     15.40       16.71       17.50       19.76        18.63       22.93      21.23
Balance Sheet Data (at the end of period):
  Total assets................................  $5,776.1    $6,064.4    $6,400.7    $6,361.7     $6,551.4    $5,951.1   $6,019.1
  Long-term debt..............................   1,882.0     1,254.6     1,361.9       883.4      1,369.8     1,033.3    1,238.5
  Stockholders' Equity........................   1,660.4     2,694.1     2,741.1     3,009.6      2,862.6     3,319.0    3,042.0
Other Data (unaudited):
  Ratio of earnings to fixed charges(3).......       3.8x        6.4x        6.4x        6.0x         4.6x        3.8x       3.4x
</TABLE>
    
 
- ---------------
(1) Includes the results of Moog Automotive Group, Inc., which was acquired
    effective October 1, 1992 from IFINT S.A. This transaction was accounted for
    as a purchase.
 
(2) Includes the results of Abex Friction Products, which was acquired effective
    December 30, 1994 from Abex, Inc. This transaction was accounted for as a
    purchase.
 
   
(3) The ratio of earnings to fixed charges has been calculated by dividing fixed
    charges into the sum of earnings before income tax expense and fixed 
    charges. Fixed charges consist of interest costs and estimated interest 
    in rentals.
    
 
                                       10
<PAGE>   12
 
                            DESCRIPTION OF THE DECS
 
   
     The DECS are a series of debt securities ("Debt Securities"), to be issued
under an Indenture dated as of             , 1995 between Cooper and Texas
Commerce Bank National Association, as trustee (the "Trustee"), as supplemented
by a First Supplemental Indenture dated as of             , 1995 between Cooper
and the Trustee (the indenture dated as of             , 1995, as supplemented
from time to time, the "Indenture"). The following summary of certain provisions
of the Indenture does not purport to be complete and is qualified in its
entirety by reference to the Indenture, a copy of which is filed as an exhibit
to the Registration Statement of which this Prospectus is a part.
    
 
GENERAL
 
   
     The DECS will be unsecured and will rank on a parity with all other
unsecured and unsubordinated indebtedness of Cooper. As of September 30, 1995,
Cooper had no indebtedness senior to the DECS, $151.8 million of indebtedness
effectively ranking senior to the DECS because it is secured or issued by
consolidated subsidiaries, $1,233.4 million of indebtedness ranking pari passu
with the DECS, and $690.5 million of indebtedness subordinated to the DECS. The
aggregate number of DECS to be issued will be 15,000,000 plus such additional
number of DECS as may be issued pursuant to the over-allotment option granted by
Cooper to the Underwriters. The DECS will mature on             , 1998. The
Indenture does not limit the amount of Debt Securities which may be issued
thereunder. As a result, Cooper may issue additional Debt Securities or other
securities with terms similar to those of the DECS in the future.
    
 
     Each DECS, which will be issued with a principal amount of $          ,
will bear interest at the annual rate of    percent of the principal amount per
annum (or $          per annum) from             , 1995, or from the most recent
Interest Payment Date (as defined below) to which interest has been paid or
provided for until the principal amount thereof is exchanged at Maturity
pursuant to the terms of the DECS. Interest on the DECS will be payable
quarterly in arrears on             ,             ,             , and
            , commencing             , 1996 (each, an "Interest Payment Date"),
to the persons in whose names the DECS are registered at the close of business
on the last day of the calendar month immediately preceding such Interest
Payment Date; provided that interest payable at Maturity shall be payable to the
person to whom the principal is payable. Interest on the DECS will be computed
on the basis of a 360-day year of twelve 30-day months. If an Interest Payment
Date falls on a day that is not a Business Day (as defined below), the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment. The DECs will be traded pursuant to rules and regulations
of any self-regulatory organization (as defined in Section 3(a)(26) of the
Exchange Act) which are filed with the Commission pursuant to Section 19(b) of
the Exchange Act.
 
   
     At Maturity (including as a result of acceleration or otherwise), the
principal amount of each DECS will be mandatorily exchanged by Cooper into a
number of shares of Wyman-Gordon Common Stock at the Exchange Rate, and,
accordingly, holders of the DECS will not necessarily receive an amount equal to
the principal amount thereof. The "Exchange Rate" is equal to, subject to
adjustment as a result of certain dilution events (see "-- Dilution Adjustments"
below), (a) if the Maturity Price (as defined below) per share of Wyman-Gordon
Common Stock is greater than or equal to $          per share of Wyman-Gordon
Common Stock (the "Threshold Appreciation Price"),           shares of Wyman-
Gordon Common Stock per DECS, (b) if the Maturity Price is less than the
Threshold Appreciation Price but is greater than the Initial Price, a fractional
share of Wyman-Gordon Common Stock per DECS so that the value thereof
(determined at the Maturity Price) is equal to the Initial Price or (c) if the
Maturity Price is less than or equal to the Initial Price, one share of
Wyman-Gordon Common Stock per DECS. Accordingly, the value of the Wyman-Gordon
Common Stock to be received by holders of the DECS (or as discussed below, the
cash equivalent to be received in lieu of such shares) at Maturity will not
necessarily equal the principal amount of such DECS. For example, if the
Maturity Price of the Wyman-Gordon Common Stock is less than the Initial Price,
the amount receivable upon exchange will be less than the principal amount paid
for the DECS, in which case an investment in the DECS would result in a
    
 
                                       11
<PAGE>   13
 
   
loss. No fractional shares of Wyman-Gordon Common Stock will be issued at
Maturity as provided under "-- Fractional Shares" below. Cooper may at its
option (in accordance with the terms of the Indenture) deliver cash at Maturity,
in lieu of delivering shares of Wyman-Gordon Common Stock, in an amount equal to
the product obtained by multiplying the value of the number of shares of
Wyman-Gordon Common Stock that would have been delivered at Maturity by the
Maturity Price. On or prior to the seventh Business Day prior to             ,
1998, Cooper will notify The Depository Trust Company (the "Depositary") and the
Trustee and publish a notice in a daily newspaper of national circulation
stating whether the principal amount of each DECS will be exchanged for shares
of Wyman-Gordon Common Stock or cash. If Cooper elects to deliver shares of
Wyman-Gordon Common Stock, (i) the holders of the DECS will be responsible for
the payment of any and all brokerage costs upon the subsequent sale of such
shares and (ii) the delivery of such shares shall occur on the floor of, or
pursuant to applicable rules and regulations promulgated by, Nasdaq or, if the
Wyman-Gordon Common Stock is not listed for trading on Nasdaq on the date of any
such exchange, the exchange, board of trade or similar institution on which
public market quotations or prices of the Wyman-Gordon Common Stock are made at
the time of such exchange. Although it is Cooper's current intention to deliver
Wyman-Gordon Common Stock at Maturity, Cooper intends to consider all relevant
economic and market factors in determining whether to deliver cash or shares of
Wyman-Gordon Common Stock at Maturity. Such factors will include, among others,
Cooper's liquidity and prevailing tax rates at Maturity. Cooper does not believe
that any one of such factors is more important in its consideration.
    
 
     The "Maturity Price" is defined as the average Closing Price per share of
Wyman-Gordon Common Stock on the 20 Trading Days immediately prior to (but not
including) the Maturity Date. The "Closing Price" of any security on any date of
determination means the closing sale price (or, if no closing price is reported,
the last reported sale price) of such security on Nasdaq on such date or, if
such security is not listed for trading on Nasdaq on any such date, as reported
in the composite transactions for the principal United States securities
exchange on which such security is so listed, or if such security is not so
listed on a United States national or regional securities exchange, as reported
by the National Association of Securities Dealers, Inc. Automated Quotation
System, or, if such security is not so reported, the last quoted bid price for
such security in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of such security on such date as determined by a
nationally recognized independent investment banking firm retained for this
purpose by Cooper. A "Trading Day" is defined as a day on which the security the
Closing Price of which is being determined (A) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of such security. "Business Day" means any
day that is not a Saturday, a Sunday or a day on which the New York Stock
Exchange, Nasdaq, banking institutions or trust companies in the City of New
York are authorized or obligated by law or executive order to close.
 
   
     The Indenture contains a covenant by Cooper to the effect that should
Cooper exercise its option to pay all outstanding DECS in cash, such cash must
be provided by the proceeds from a sale by Cooper of its common stock. Such sale
of common stock by Cooper must have occurred not more than 540 days prior to the
notice by Cooper to holders of DECS of its election to deliver cash in lieu of
Wyman-Gordon Common Stock.
    
 
     For illustrative purposes only, the following chart shows the number of
shares of Wyman-Gordon Common Stock or, where permitted by applicable law, the
amount of cash that a holder of DECS would receive for each DECS at various
Maturity Prices. The table assumes that there will be no adjustments to the
Exchange Rate described under "-- Dilution Adjustments" below. There can be no
assurance that the Maturity Price will be within the range set forth below.
Given the Initial Price of $          per DECS and the Threshold Appreciation
Price of $          , a DECS holder would receive at Maturity the following
 
                                       12
<PAGE>   14
 
number of shares of Wyman-Gordon Common Stock or amount of cash (if Cooper
elects to pay the DECS in cash):
 
<TABLE>
<CAPTION>
                           NUMBER OF
MATURITY PRICE              SHARES
OF WYMAN-GORDON         OF WYMAN-GORDON
 COMMON STOCK            COMMON STOCK           AMOUNT OF CASH
- ---------------         ---------------         --------------
<S>                     <C>                     <C>
</TABLE>
 
   
     As the foregoing chart illustrates, if at Maturity, the Maturity Price is
greater than or equal to $            , Cooper is obligated to deliver .
shares of Wyman-Gordon Common Stock per DECS, resulting in Cooper receiving    %
of the appreciation in market value above $            and the DECS holder
receiving    % of the appreciation in market value above $            . If at
Maturity, the Maturity Price is greater than $            and less than
$            , Cooper is obligated to deliver only that fraction of a share of
Wyman-Gordon Common Stock equal to $            , resulting in Cooper retaining
all appreciation in the market value of the Wyman-Gordon Common Stock from
$            to $            . If at Maturity, the Maturity Price is less than
or equal to $            , Copper is obligated to deliver one share of
Wyman-Gordon Common Stock per DECS, regardless of the market price of such
share, resulting in the DECS holder realizing the entire loss on the decline in
market value of the Wyman-Gordon Common Stock.
    
 
     Although it is Cooper's current intention to deliver Wyman-Gordon Common
Stock at Maturity, Cooper may at its option deliver cash, in lieu of delivering
such shares of Wyman-Gordon Common Stock, except that under the Indenture Cooper
will not deliver cash, nor will there have been any offer by Cooper to deliver
cash, where such delivery would violate applicable law. In the event that Cooper
elects to deliver cash in lieu of shares at Maturity, it will be obligated to
deliver cash with respect to all, but not less than all, of the shares of
Wyman-Gordon Common Stock that would otherwise be deliverable, except that
Cooper may deliver shares of Wyman-Gordon Common Stock to any holders with
respect to whom it has determined the delivery of cash may violate applicable
law.
 
   
     Interest on the DECS will be payable, and delivery of Wyman-Gordon Common
Stock (or, at the option of Cooper, its cash equivalent) in exchange for the
DECS at Maturity will be made upon surrender of such DECS, at the office or
agency of Cooper maintained for such purposes; provided that payment of interest
may be made at the option of Cooper by check mailed or, in the case of a holder
of an aggregate of at least             DECS, by wire transfer to the persons in
whose names the DECS are registered at the close of business on             ,
            ,             and             . See "-- Book-Entry System."
Initially, such office will be the office of the Trustee, located at 55 Water
Street, North Building, Room 234, Windows 20 and 21, New York, New York.
    
 
     The DECS will be transferable on the books of Cooper at any time or from
time to time at the aforementioned office. No service charge will be made to the
holder for any such transfer except for any tax or governmental charge
incidental thereto.
 
     The Indenture does not contain any restriction on the ability of Cooper to
sell all or any portion of the Wyman-Gordon Common Stock held by it or its
subsidiaries, and no such shares of Wyman-Gordon Common Stock will be pledged or
otherwise held in escrow for use at Maturity of the DECS. Consequently, in the
event of a bankruptcy, insolvency or liquidation of Cooper or its subsidiaries,
the Wyman-Gordon Common Stock, if any, owned by Cooper or its subsidiaries will
be subject to the claims of the creditors of Cooper or its subsidiaries,
respectively. In addition, as described herein, Cooper will have the option,
exercisable in its sole discretion, to satisfy its obligations pursuant to the
mandatory exchange for the principal amount of each DECS at Maturity by
delivering to holders of the DECS either the specified number of shares of
Wyman-Gordon Common Stock or, subject to applicable law, cash in an amount equal
to the value of such number of shares at the Maturity Price. In the event that
Cooper does sell all or a portion of the Wyman-Gordon Common Stock held by it or
its subsidiaries, Cooper may
 
                                       13
<PAGE>   15
 
be more likely to deliver cash in lieu of Wyman-Gordon Common Stock. As a
result, there can be no assurance that Cooper will elect at Maturity to deliver
Wyman-Gordon Common Stock or, if it so elects, that it will use all or any
portion of its current holdings of Wyman-Gordon Common Stock to make such
delivery. Consequently, holders of the DECS will not be entitled to any rights
with respect to Wyman-Gordon Common Stock (including without limitation voting
rights and rights to receive any dividends or other distributions in respect
thereof) until such time, if any, as Cooper shall have mandatorily exchanged the
DECS at Maturity for shares of Wyman-Gordon Common Stock and the applicable
record date, if any, for the exercise of such rights occurs after such date. See
"Relationship Between Cooper and Wyman-Gordon" for a discussion of restrictions
on Cooper's ability to transfer its shares of Wyman-Gordon Common Stock.
 
DILUTION ADJUSTMENTS
 
     The Exchange Rate is subject to adjustment if Wyman-Gordon shall (i) pay a
stock dividend or make a distribution with respect to Wyman-Gordon Common Stock
in shares of such stock, (ii) subdivide or split its outstanding shares of
Wyman-Gordon Common Stock, (iii) combine its outstanding shares of Wyman-Gordon
Common Stock into a smaller number of shares, (iv) issue by reclassification of
its shares of Wyman-Gordon Common Stock any shares of common stock of
Wyman-Gordon, (v) issue rights or warrants to all holders of Wyman-Gordon Common
Stock entitling them to subscribe for or purchase shares of Wyman-Gordon Common
Stock at a price per share less than the market price of the Wyman-Gordon Common
Stock (other than rights to purchase Wyman-Gordon Common Stock pursuant to a
plan for the reinvestment of dividends or interest) or (vi) pay a dividend or
make a distribution to all holders of Wyman-Gordon Common Stock of evidences of
its indebtedness or other assets (excluding any dividends or distributions
referred to in clause (i) above or any cash dividends other than any
Extraordinary Cash Dividends as defined below) or issue to all holders of
Wyman-Gordon Common Stock rights or warrants to subscribe for or purchase any of
its securities (other than those referred to in clause (v) above). In the case
of the events referred to in clauses (i), (ii), (iii) and (iv) above, the
Exchange Rate in effect immediately prior to such event shall be adjusted so
that the holder of any DECS shall thereafter be entitled to receive, upon
mandatory exchange of the principal amount of such DECS at Maturity, the number
of shares of Wyman-Gordon Common Stock that such holder would have owned or been
entitled to receive immediately following any event described above had such
DECS been exchanged immediately prior to such event or any record date with
respect thereto. In the case of the event referred to in clause (v) above, the
Exchange Rate shall be adjusted by multiplying the Exchange Rate in effect
immediately prior to the date of issuance of the rights or warrants referred to
in clause (v) above, by a fraction, of which the numerator shall be the number
of shares of Wyman-Gordon Common Stock outstanding on the date of issuance of
such rights or warrants, immediately prior to such issuance, plus the number of
additional shares of Wyman-Gordon Common Stock offered for subscription or
purchase pursuant to such rights or warrants, and of which the denominator shall
be the number of shares of Wyman-Gordon Common Stock outstanding on the date of
issuance of such rights or warrants, immediately prior to such issuance, plus
the number of additional shares of Wyman-Gordon Common Stock that the aggregate
offering price of the total number of shares of Wyman-Gordon Common Stock so
offered for subscription or purchase pursuant to such rights or warrants would
purchase at the market price (determined as the average Closing Price per share
of Wyman-Gordon Common Stock on the 20 Trading Days immediately prior to the
date such rights or warrants are issued), which shall be determined by
multiplying such total number of shares by the exercise price of such rights or
warrants and dividing the product so obtained by such market price. To the
extent that shares of Wyman-Gordon Common Stock are not delivered after the
expiration of such rights or warrants, the Exchange Rate shall be readjusted to
the Exchange Rate which would then be in effect had such adjustments for the
issuance of such rights or warrants been made upon the basis of delivery of only
the number of shares of Wyman-Gordon Common Stock actually delivered. In the
case of the event referred to in clause (vi) above, the Exchange Rate shall be
adjusted by multiplying the Exchange Rate in effect on the record date by a
fraction of which the numerator shall be the market price per share of the
Wyman-Gordon Common Stock on the record date for the determination of
stockholders entitled to receive the dividend or distribution
 
                                       14
<PAGE>   16
 
referred to in clause (vi) above (such market price being determined as the
average Closing Price per share of Wyman-Gordon Common Stock on the 20 Trading
Days immediately prior to such record date), and of which the denominator shall
be such market price per share of Wyman-Gordon Common Stock less the fair market
value (as determined by the Board of Directors of Cooper, whose determination
shall be conclusive, and described in a resolution adopted with respect thereto)
as of such record date of the portion of the assets or evidences of indebtedness
so distributed or of such subscription rights or warrants applicable to one
share of Wyman-Gordon Common Stock. An "Extraordinary Cash Dividend" means, with
respect to any one-year period, all cash dividends on the Wyman-Gordon Common
Stock during such period to the extent such dividends exceed on a per share
basis 10 percent of the average price of the Wyman-Gordon Common Stock over such
period (less any such dividends for which a prior adjustment to the Exchange
Rate was previously made). All adjustments to the Exchange Rate will be
calculated to the nearest 1/10,000th of a share of Wyman-Gordon Common Stock (or
if there is not a nearest 1/10,000th of a share to the next lower 1/10,000th of
a share). No adjustment in the Exchange Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent
therein; provided, however, that any adjustments which by reason of the
foregoing are not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
 
   
     In the event of (A) any consolidation or merger of Wyman-Gordon, or any
surviving entity or subsequent surviving entity of Wyman-Gordon (a "Wyman-Gordon
Successor"), with or into another entity (other than a merger or consolidation
in which Wyman-Gordon is the continuing corporation and in which the
Wyman-Gordon Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of
Wyman-Gordon or another corporation), (B) any sale, transfer, lease or
conveyance to another corporation of the property of Wyman-Gordon or any
Wyman-Gordon Successor as an entirety or substantially as an entirety, (C) any
statutory exchange of securities of Wyman-Gordon or any Wyman-Gordon Successor
with another corporation (other than in connection with a merger or acquisition)
or (D) any liquidation, dissolution, winding up or bankruptcy of Wyman-Gordon or
any Wyman-Gordon Successor (any such event, a "Reorganization Event"), the
Exchange Rate used to determine the amount payable upon exchange at Maturity for
each DECS will be adjusted to provide that each holder of DECS will receive at
Maturity cash in an amount equal to (a) if the Transaction Value (as defined
below) is greater than or equal to the Threshold Appreciation Price,
            multiplied by the Transaction Value, (b) if the Transaction Value is
less than the Threshold Appreciation Price but greater than the Initial Price,
the Initial Price and (c) if the Transaction Value is less than or equal to the
Initial Price, the Transaction Value. "Transaction Value" means (i) for any cash
received in any such Reorganization Event, the amount of cash received per share
of Wyman-Gordon Common Stock, (ii) for any property other than cash or
securities received in any such Reorganization Event, an amount equal to the
market value at Maturity of such property received per share of Wyman-Gordon
Common Stock as determined by a nationally recognized independent investment
banking firm retained for this purpose by Cooper and (iii) for any securities
received in any such Reorganization Event, an amount equal to the average
Closing Price per share of such securities on the 20 Trading Days immediately
prior to Maturity multiplied by the number of such securities received for each
share of Wyman-Gordon Common Stock. Notwithstanding the foregoing, in lieu of
delivering cash as provided above, Cooper may at its option deliver an
equivalent value of securities or other property received in such Reorganization
Event, determined in accordance with clause (ii) or (iii) above, as applicable.
If Cooper elects to deliver securities or other property, holders of the DECS
will be responsible for the payment of any and all brokerage and other
transaction costs upon the sale of such securities or other property. The kind
and amount of securities into which the DECS shall be exchangeable after
consummation of such transaction shall be subject to adjustment as described in
the immediately preceding paragraph following the date of consummation of such
transaction.
    
 
     Cooper is required, within 10 Business Days following the occurrence of an
event that requires an adjustment to the Exchange Rate (or if Cooper is not
aware of such occurrence, as soon as practicable after becoming so aware), to
provide written notice to the Trustee of the occurrence of such event and a
statement in reasonable detail setting forth the method by which the adjustment
to the Exchange Rate was determined and setting forth the revised Exchange Rate.
 
                                       15
<PAGE>   17
 
FRACTIONAL SHARES
 
     No fractional shares of Wyman-Gordon Common Stock will be issued if Cooper
exchanges the DECS for shares of Wyman-Gordon Common Stock. If more than one
DECS shall be surrendered for exchange at one time by the same holder, the
number of full shares of Wyman-Gordon Common Stock which shall be delivered upon
exchange, in whole or in part, as the case may be, shall be computed on the
basis of the aggregate number of DECS so surrendered at Maturity. In lieu of any
fractional share otherwise issuable in respect of all DECS of any holder which
are exchanged at Maturity, such holder shall be entitled to receive an amount in
cash equal to the value of such fractional share at the Maturity Price.
 
REDEMPTION
 
     The DECS are not subject to redemption prior to Maturity.
 
BOOK-ENTRY SYSTEM
 
     It is expected that the DECS will be issued in the form of one or more
global securities (the "Global Securities") deposited with the Depositary and
registered in the name of a nominee of the Depositary.
 
     The Depositary has advised Cooper and the Underwriters as follows: The
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to Section 17A of the Exchange Act. The
Depositary was created to hold securities of persons who have accounts with the
Depositary ("participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of certificates. Such participants
include securities brokers and dealers, banks, trust companies and clearing
corporations. Indirect access to the Depositary's book-entry system also is
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly.
 
     Upon the issuance of a Global Security, the Depositary or its nominee will
credit the respective DECS represented by such Global Security to the accounts
of participants. The accounts to be credited shall be designated by the
Underwriters. Ownership of beneficial interests in the Global Securities will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests by participants in such Global Securities will
be shown on, and the transfer of those ownership interests will be effected only
through, records maintained by the Depositary or its nominee for such Global
Securities. Ownership of beneficial interests in such Global Securities by
persons that hold through participants will be shown on, and the transfer of
that ownership interest within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
 
     So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the DECS for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in such Global Securities will not be entitled to have the DECS
registered in their names, will not receive or be entitled to receive physical
delivery of the DECS in definitive form and will not be considered the owners or
holders thereof under the Indenture.
 
     Payment of principal of and any interest on the DECS registered in the name
of or held by the Depositary or its nominee will be made to the Depositary or
its nominee, as the case may be, as the registered owner or the holder of the
Global Security. None of Cooper, the Trustee, any paying agent or any securities
registrar for the DECS will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
 
                                       16
<PAGE>   18
 
     Cooper expects that the Depositary, upon receipt of any payment of
principal or interest in respect of a permanent Global Security, will credit
immediately participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security as shown on the records of the Depositary. Cooper also expects that
payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants.
 
     A Global Security may not be transferred except as a whole by the
Depositary to a nominee or a successor of the Depositary. If the Depositary is
at any time unwilling or unable to continue as depositary and a successor
depositary is not appointed by Cooper within ninety days, Cooper will issue DECS
in definitive registered form in exchange for the Global Security representing
such DECS. In addition, Cooper may at any time and in its sole discretion
determine not to have any DECS represented by one or more Global Securities and,
in such event, will issue DECS in definitive form in exchange for all of the
Global Securities representing the DECS. Further, if Cooper so specifies with
respect to the DECS, an owner of a beneficial interest in a Global Security
representing DECS may, on terms acceptable to Cooper and the Depositary for such
Global Security, receive DECS in definitive form. Moreover, if there shall have
occurred and be continuing an Event of Default, or an event which, with the
giving of notice or lapse of time, or both, would constitute an Event of Default
with respect to any DECS represented by one or more Global Securities, such
Global Securities shall be exchangeable for DECS in definitive form. In any such
instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery in definitive form of DECS represented by such
Global Security equal in number to that represented by such beneficial interest
and to have such DECS registered in its name.
 
COVENANTS
 
     The Indenture contains the covenants generally summarized below, which are
applicable so long as any of the Debt Securities are outstanding.
 
     Limitations on Secured Indebtedness.  Neither Cooper nor any Restricted
Subsidiary (as defined below) will create, assume, guarantee, or incur any
Secured Indebtedness (as defined below), unless immediately thereafter the
aggregate amount of all Secured Indebtedness (exclusive of certain types of
permitted Secured Indebtedness generally described below), together with the
discounted present value of all rentals (not otherwise excluded from the
limitations on Sale and Leaseback Transactions (as defined below) as described
under "Covenants -- Limitations on Sale and Leaseback Transactions") due in
respect of Sale and Leaseback Transactions would not exceed 10 percent of
Shareholders' Equity (as defined below). However, this limitation does not apply
to Secured Indebtedness in respect of: (a) any Lien (as defined below) on
property as to which the Debt Securities are equally and ratably secured with
(or, at the option of Cooper, prior to) such Secured Indebtedness, (b) Liens on
property (including shares or Indebtedness) which is not a Principal Property
(as defined below), (c) Liens on property (including shares or Indebtedness) of
any corporation existing at the time such corporation becomes a Restricted
Subsidiary, (d) Liens on property (including shares or Indebtedness) existing at
the time of acquisition of such property by Cooper or a Restricted Subsidiary,
(e) Liens to secure the payment of all or any part of the purchase price of
property (including shares or Indebtedness) created upon the acquisition of such
property by Cooper or a Restricted Subsidiary, and Liens to secure any Secured
Indebtedness incurred by Cooper or a Restricted Subsidiary prior to, at the time
of, or within one year after the later of the acquisition, the completion of
construction (including any improvements, alterations or repairs to existing
property) or the commencement of commercial operation of such property, which
Secured Indebtedness is incurred for the purpose of financing all or any part of
the purchase price thereof or construction or improvements, alterations or
repairs thereon, (f) Liens securing Secured Indebtedness of any Restricted
Subsidiary owing to Cooper or to another Restricted Subsidiary, (g) Liens on
property of a corporation existing at the time such corporation is merged or
consolidated with Cooper or a Restricted Subsidiary or at the time of a sale,
lease or other disposition of the properties
 
                                       17
<PAGE>   19
 
of a corporation as an entirety or substantially as an entirety to Cooper or a
Restricted Subsidiary, (h) Liens on property of Cooper or a Restricted
Subsidiary in favor of governmental authorities or any trustee or mortgagee
acting on behalf, or for the benefit, of any such governmental authorities to
secure partial, progress, advance or other payments pursuant to any contract or
statute or to secure any Indebtedness incurred for the purpose of financing all
or any part of the purchase price or the cost of construction of the property
subject to such Liens, and any other Liens incurred or assumed in connection
with the issuance of industrial revenue bonds or private activity bonds the
interest of which is exempt from federal income taxation pursuant to Section
103(b) of the Internal Revenue Code of 1986, as amended (the "Code"), (i) Liens
existing on the first date on which a Debt Security is authenticated by the
Trustee under the Indenture, and (j) any extension, renewal or replacement of
any Lien referred to in clauses (a) through (i) of this paragraph.
 
     Limitations on Sale and Leaseback Transactions.  Neither Cooper nor any
Restricted Subsidiary may enter into any Sale and Leaseback Transaction (as
defined below) covering any Principal Property of Cooper or any Restricted
Subsidiary unless (A) immediately thereafter the sum of (i) the discounted
present value of all rentals (determined in accordance with a method of
discounting which is consistent with generally accepted accounting principles)
due pursuant to the proposed Sale and Leaseback Transaction and all Sale and
Leaseback Transactions entered into after the first date on which a Debt
Security is authenticated by the Trustee under the Indenture (except any Sale
and Leaseback Transaction of a Restricted Subsidiary entered into prior to the
time such Restricted Subsidiary became a Restricted Subsidiary or entered into
by a corporation prior to the time such corporation merged or consolidated with
Cooper or a Restricted Subsidiary or prior to the time of a sale, lease or other
disposition of the properties of such corporation as an entirety or
substantially as an entirety to Cooper or a Restricted Subsidiary) and (ii) the
aggregate amount of all Secured Indebtedness (exclusive of Secured Indebtedness
permitted by clauses (a) through (j) of the second sentence under "Limitation on
Secured Indebtedness" above) does not exceed 10 percent of Shareholders' Equity
or (B) an amount equal to the greater of (i) the net proceeds of the sale of
property leased pursuant to the Sale and Leaseback Transaction or (ii) the fair
market value of the property so leased (in the case of clause (i) or (ii), after
repayment of, or otherwise taking into account, as the case may be, the amount
of any Secured Indebtedness secured by a Lien encumbering such property which
Secured Indebtedness existed immediately prior to such Sale and Leaseback
Transaction), is applied within one year to the retirement of Funded Debt (as
defined below). There is excluded from such limitation any Sale and Leaseback
Transaction (x) entered into in connection with the issuance of industrial
revenue or private activity bonds the interest of which is exempt from federal
income taxation pursuant to Section 103(b) of the Code and (y) if Cooper or a
Restricted Subsidiary applies an amount equal to the net proceeds (after
repayment of any Secured Indebtedness encumbering such Principal Property which
Secured Indebtedness existed immediately before such Sale and Leaseback
Transaction) of the sale or transfer of the Principal Property leased pursuant
to such Sale and Leaseback Transaction to investment in another Principal
Property within one year prior or subsequent to such sale or transfer.
 
     Limitation on Merger, Consolidation and Certain Sales of Assets.  Cooper
will not merge into or consolidate with or convey or transfer its properties
substantially as an entirety to, any person unless (a) the successor corporation
is a corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, (b) the successor corporation
assumes on the same terms and conditions the Debt Securities and (c) there is no
Event of Default under the Indenture.
 
     Certain Definitions. The following summarize the definition of the terms
set forth below.
 
     "Board of Directors" means the Board of Directors of Cooper or any
committee of such Board or any committee of officers of Cooper duly authorized
by the Board of Directors to take any action under the Indenture.
 
     "Funded Debt" means (a) any Indebtedness maturing by its terms more than
one year from the date of the issuance thereof, including any Indebtedness
renewable or extendible at the option of the obligor to a date later than one
year from the date of the original issuance thereof, excluding any portion
 
                                       18
<PAGE>   20
 
of Indebtedness which is included in current liabilities and (b) any
Indebtedness which may be payable from the proceeds of Funded Debt as defined in
clause (a) hereof pursuant to the terms of such Funded Debt.
 
     "Indebtedness" means with respect to any corporation all indebtedness for
money borrowed which is created, assumed, incurred or guaranteed in any manner
by such corporation or for which such corporation is otherwise responsible or
liable.
 
     "Lien" means any mortgage, pledge, security interest, lien, charge or other
encumbrance.
 
     "Principal Property" means (A) any manufacturing plant located in the
continental United States, or manufacturing equipment located in any such
manufacturing plant (together with the land on which such plant is erected and
fixtures comprising a part thereof), owned or leased on the first date on which
a Debt Security is authenticated by the Trustee under the Indenture, or
thereafter acquired or leased by Cooper or any Restricted Subsidiary, other than
(i) any property which the Board of Directors determines is not of material
importance to the total business conducted, or assets owned, by Cooper and its
Subsidiaries as an entirety or (ii) any portion of any such property which the
Board of Directors determines not to be of material importance to the use or
operation of such property and (B) any shares or Indebtedness issued by any
Restricted Subsidiary. Manufacturing plant does not include any plant in which
the aggregate interest of Cooper and its Restricted Subsidiaries does not exceed
50 percent. Manufacturing equipment means manufacturing equipment in such
manufacturing plants used directly in the production of Cooper's or any
Restricted Subsidiary's products and does not include office equipment, computer
equipment, rolling stock and other equipment not directly used in the production
of Cooper's or any Restricted Subsidiary's products.
 
     "Restricted Subsidiary" means any Subsidiary substantially all the property
of which is located in the continental United States, other than (i) a
Subsidiary primarily engaged in financing, including, without limitation,
lending on the security of, purchasing or discounting (with or without recourse)
receivables, leases, obligations or other claims arising from or in connection
with the purchase or sale of products or services; (ii) a Subsidiary primarily
engaged in leasing or insurance; or (iii) a Subsidiary primarily engaged in
financing Cooper's or any Restricted Subsidiaries' operations outside the
continental United States.
 
     "Sale and Leaseback Transaction" means any arrangement with any person
providing for the leasing by Cooper or any Restricted Subsidiary of any
Principal Property of Cooper or any Restricted Subsidiary whether such property
is now owned or hereafter acquired (except for leases for a term of not more
than three years, except for leases between Cooper and a Restricted Subsidiary
or between Restricted Subsidiaries and except for leases of property executed
prior to, at the time of, or within one year after the later of, the
acquisition, the completion of construction, including any improvement or
alterations on real property, or the commencement of commercial operation or
such property), which Principal Property has been or is to be sold or
transferred by Cooper or such Restricted Subsidiary to such person.
 
     "Secured Indebtedness" of any corporation means Indebtedness secured by any
Lien upon property (including shares or Indebtedness issued by any Restricted
Subsidiary) owned by Cooper or any Restricted Subsidiary.
 
     "Shareholders' Equity" means the total assets calculated from a
consolidated balance sheet of Cooper, prepared in accordance with generally
accepted accounting principles, less total liabilities shown on such balance
sheet.
 
     "Subsidiary" means any corporation a majority of the voting shares of which
are at the time owned or controlled, directly or indirectly, by Cooper or by one
or more Subsidiaries, or by Cooper and one or more Subsidiaries and which is
consolidated in Cooper's latest consolidated financial statements filed with the
Commission or provided generally to Cooper's shareholders.
 
                                       19
<PAGE>   21
 
EVENTS OF DEFAULT
 
     The following are Events of Default under the Indenture with respect to
Debt Securities of any series: (i) default for 30 days in payment of any
interest installment when due; (ii) default in payment of principal of, or
premium, if any, on any of the Debt Securities of such series when due at its
stated maturity, when called for redemption, by declaration or otherwise; (iii)
default in the performance of any covenant in the Indenture with respect to Debt
Securities of such series for 90 days after notice to Cooper by the Trustee or
by holders of 25 percent in principal amount of the outstanding Debt Securities
of such series; (iv) default in the making of any payment for a sinking,
purchase or analogous fund provided for in respect of such series and
continuance of such default for a period of 30 days; and (v) certain events of
bankruptcy, insolvency and reorganization. No Event of Default with respect to a
single series of Debt Securities constitutes an Event of Default with respect to
any other series of Debt Securities. If an Event of Default described above
occurs and is continuing with respect to any series, either the Trustee or the
holders of not less than 25 percent in aggregate principal amount of the Debt
Securities of such series then outstanding (voting separately as a series) may
declare the principal of all outstanding Debt Securities of such series and the
interest accrued thereon, if any, to be due and payable immediately.
 
     In certain cases, the holders of a majority in principal amount of the
outstanding Debt Securities of a series may on behalf of the holders of all Debt
Securities of such series waive any past default or Events of Default with
respect to the Debt Securities of such series or compliance with certain
provisions of the Indenture, except, among other things, a default not
theretofore cured in payment of the principal of, or premium, if any, or
interest, if any, on any of the Debt Securities of such series.
 
     The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to the Debt Securities of any series, give
to the holders of the Debt Securities of such series notice of all uncured and
unwaived defaults known to it; provided that, except in the case of default in
the payment of principal of, or premium, if any, or interest, if any, on, any of
the Debt Securities of such series, the Trustee will be protected in withholding
such notice if it in good faith determines that the withholding of such notice
is in the interest of the holders of the Debt Securities of such series. The
term "default" for the purpose of this provision means the happening of any of
the Events of Default specified above, except that any grace period or notice
requirement is eliminated. The Indenture contains provisions entitling the
Trustee, subject to the duty of the Trustee during an Event of Default to act
with the required standard of care, to be indemnified by the holders of Debt
Securities before proceeding to exercise any right or power under the Indenture
at the request of holders of the Debt Securities. The Indenture provides that
subject to the provisions of the Indenture the holders of a majority in
principal amount of the outstanding Debt Securities of any series may direct the
time, method and place of conducting proceedings for remedies available to the
Trustee exercising any trust or power conferred on the Trustee in respect of
such series. The Indenture includes a covenant that Cooper will file annually
with the Trustee a certificate of no default or specifying any default that
exists.
 
MODIFICATION OF THE INDENTURE
 
     The Indenture provides that Cooper and the Trustee may, without the consent
of any holders of Debt Securities, enter into supplemental indentures for the
purposes, among other things, of adding to Cooper's covenants, adding additional
Events of Default, establishing the form or terms of Debt Securities, curing
ambiguities or inconsistencies in the Indenture or making such other provisions
in regard to matters or questions arising under the Indenture if such action
shall not adversely affect the interests of the holders of any affected series
of Debt Securities.
 
     The Indenture also contains provisions permitting Cooper and the Trustee,
with the consent of the holders of a majority in principal amount of the
outstanding Debt Securities of each series to be affected, to execute
supplemental indentures adding any provisions to or changing or eliminating any
of the provisions of the Indenture or the Debt Securities of a series or
modifying any of the rights of the holders of the Debt Securities of such series
to be affected, provided that no supplemental indenture may, without the consent
of the holder of each Debt Security affected, among other things, change the
fixed
 
                                       20
<PAGE>   22
 
maturity (which term for these purposes does not include payments due pursuant
to any sinking, purchase or analogous fund) of any Debt Securities, or reduce
the principal amount thereof, or reduce the rate or extend the time of payment
of interest thereon, or reduce any premium payable upon the redemption thereof,
or reduce the aforesaid percentage of Debt Securities of any series the consent
of the holders of which is required for any such supplemental indenture.
 
THE TRUSTEE
 
     Texas Commerce Bank National Association will be the Trustee under the
Indenture. The Trustee performs certain services for, and transacts other
banking business with (including the extension of credit), Cooper from time to
time in the normal course of business.
 
            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
 
   
     The following is a summary of certain U.S. federal income tax consequences
that may be relevant to a citizen or resident of the United States, a
corporation, partnership or other entity created or organized under the laws of
the United States, or an estate or trust the income of which is subject to U.S.
federal income taxation regardless of its source (any of the foregoing, a "U.S.
Person") who is the beneficial owner of a DECS (a "U.S. Holder"). All references
to "holders" (including U.S. Holders) are to beneficial owners of the DECS. This
summary is based on current U.S. federal income tax law and is for general
information only. It is based upon the advice of Skadden, Arps, Slate, Meagher &
Flom, 919 Third Avenue, New York, New York 10022, tax counsel to Cooper. Cooper
has not, however, received an opinion of counsel with respect to the specific
tax consequences of owning or disposing of the DECS in light of the
uncertainties described below.
    
 
     This summary deals only with holders who are initial holders of the DECS
and who will hold the DECS as capital assets. It does not address tax
considerations applicable to investors that may be subject to special U.S.
federal income tax treatment, such as dealers in securities or persons holding
the DECS as a position in a "straddle" for U.S. federal income tax purposes or
as part of a "synthetic security" or other integrated investment, and does not
address the consequences under state, local or foreign law.
 
     No statutory, judicial or administrative authority directly addresses the
characterization of the DECS or instruments similar to the DECS for U.S. federal
income tax purposes. As a result, significant aspects of the U.S. federal income
tax consequences of an investment in the DECS are not certain. No ruling is
being requested from the Internal Revenue Service (the "IRS") with respect to
the DECS and no assurance can be given that the IRS will agree with the
characterization and tax treatment of the DECS described herein. ACCORDINGLY, A
PROSPECTIVE INVESTOR (INCLUDING A TAX-EXEMPT INVESTOR) IN THE DECS SHOULD
CONSULT ITS TAX ADVISOR IN DETERMINING THE TAX CONSEQUENCES OF AN INVESTMENT IN
THE DECS, INCLUDING THE APPLICATION OF STATE, LOCAL OR OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
 
     Pursuant to the terms of the Indenture, Cooper and all holders of the DECS
will be obligated to treat the DECS as a unit (the "Unit") consisting of (i) an
exchange note ("Exchange Note") which is a debt obligation with a fixed
principal amount unconditionally payable at Maturity equal to the principal
amount of the DECS, bearing interest at the stated interest rate on the DECS,
and (ii) a forward purchase contract (the "Purchase Contract") pursuant to which
the holder agrees to use the principal payment due on the Exchange Note to
purchase at Maturity the Wyman-Gordon Common Stock which the holder is entitled
to receive at that time (subject to Cooper's right to deliver cash in lieu of
the Wyman-Gordon Common Stock). The Indenture will require that a U.S. Holder
include currently in income payments denominated as interest that are made with
respect to the DECS, in accordance with such holder's method of accounting, and
the amount of OID, if any, attributable to the DECS.
 
     Pursuant to the agreement to treat the DECS as a Unit, a holder will be
required to allocate the purchase price of the DECS between the two components
of the Unit (the Exchange Note and the
 
                                       21
<PAGE>   23
 
Purchase Contract) on the basis of their relative fair market values. The
purchase price so allocated will generally constitute the tax basis for each
component. Pursuant to the terms of the Indenture, Cooper and the holders agree
to allocate the entire purchase price of the DECS to the Exchange Note unless
the stated interest on the DECS represents a yield that is lower than Cooper's
normal cost of issuing debt with a similar term to the DECS ("Cooper's Mid-Term
Borrowing Rate"). If the stated interest on the DECS represents a yield that is
lower than Cooper's Mid-Term Borrowing Rate of   percent, Cooper and the holders
agree to allocate to the Exchange Note an amount, less than the principal amount
of the Exchange Note, calculated by discounting the cash flows relating to the
Exchange Note at a rate equal to Cooper's Mid-Term Borrowing Rate, and to
allocate to the Purchase Contract the remainder of the purchase price of the
DECS.
 
     If the amount allocated to the Exchange Note (its deemed issue price) is
less than the stated principal amount of the DECS, the Exchange Note will be
treated as having OID. In that event, a U.S. Holder will be required to include
in income OID as it accrues, in accordance with a constant-yield method, in an
aggregate amount equal to the difference between the stated principal amount of
the DECS and the deemed issue price of the Exchange Note. However, if the amount
of OID relating to an Exchange Note is less than three-fourths of one percent of
the stated principal amount of the DECS, the amount of OID attributable to the
Exchange Note will constitute "de minimis OID," and a U.S. Holder generally will
include such de minimis OID in income at Maturity (and not over the term of the
DECS). A U.S. Holder's tax basis in the Exchange Note will increase over its
term by the amount of OID included in such holder's income with respect to the
DECS.
 
     Upon the sale or other disposition of a DECS, a U.S. Holder generally will
be required to allocate the amount realized between the two components of the
DECS on the basis of their then relative fair market values. A U.S. Holder will
recognize gain or loss with respect to each component equal to the difference
between the amount realized on the sale or other disposition for each such
component and the U.S. Holder's tax basis in such component. Such gain or loss
generally will be long-term capital gain or loss if the U.S. Holder has held the
DECS for more than a year at the time of disposition.
 
     At Maturity, pursuant to the agreement to treat the DECS as a Unit, on the
repayment of the Exchange Note a U.S. Holder will recognize capital gain or
loss, which will be long-term capital gain or loss unless Maturity occurs within
one year of issuance of the DECS (as a result of acceleration or otherwise)
equal to any difference between its tax basis and the principal amount of the
Exchange Note. If Cooper delivers Wyman-Gordon Common Stock at Maturity, a U.S.
Holder will recognize no additional gain or loss on the exchange, pursuant to
the Purchase Contract, of the principal payment due on the Exchange Note for the
Wyman-Gordon Common Stock. However, a U.S. Holder will recognize additional
capital gain or loss, which should be short-term capital gain or loss, equal to
the difference between the cash received in lieu of fractional shares and the
portion of the principal amount of the Exchange Note allocable to fractional
shares. A U.S. Holder will have a tax basis in such shares of Wyman-Gordon
Common Stock equal to the principal amount of the Exchange Note less the amount
of the portion of the principal amount of the Exchange Note allocable to any
fractional shares. The U.S. Holder will have a holding period for the
Wyman-Gordon Common Stock that begins on the day after the Maturity date, and
will realize short- or long-term capital gain or loss upon the subsequent sale
or disposition of such stock. Alternatively, at Maturity, if Cooper pays the
DECS in cash, a U.S. Holder will have additional gain or loss (which might be
ordinary income or loss rather than capital gain or loss) equal to the
difference between the principal amount of the Exchange Note and the amount of
cash received from Cooper.
 
     Due to the absence of authority as to the proper characterization of the
DECS, no assurance can be given that the IRS will accept or that a court will
uphold the characterization agreed to in the Indenture or the tax treatment
described above. Proposed Treasury regulations with respect to "contingent
payment" debt instruments (the "Proposed Regulations") would provide for a
different tax result under some circumstances for instruments having
characteristics similar to the DECS, but the Proposed Regulations would be
effective only for instruments issued 60 days or more after their publication as
final regulations. Under the Proposed Regulations, the amount of interest
included in a holder's taxable income for any year would generally be determined
by projecting the amounts of contingent payments (which might
 
                                       22
<PAGE>   24
 
   
include the value of the Wyman-Gordon Common Stock to be delivered at Maturity)
and the yield on the instrument. Taxable interest income would be measured with
reference to the projected yield, which might be less than or greater than the
stated interest rate under the instrument. In the event that the amount of an
actual contingent payment differed from the projected amount of that payment,
the difference would generally increase or reduce taxable interest income, or
create a loss. Because of their prospective effective date, the Proposed
Regulations, if finalized in their current form, would not apply to the DECS.
    
 
     Even in the absence of regulations applicable to the DECS, the DECS may be
characterized under current law in a manner that results in tax consequences
different from those reflected in the agreement pursuant to the Indenture and as
described above. Under alternative characterizations of the DECS, it is
possible, for example, that (i) a U.S. Holder may be taxed upon the receipt of
Wyman-Gordon Common Stock with a value in excess of the principal amount of the
Exchange Note, rather than upon the sale of such stock, (ii) any gain recognized
at Maturity (whether a U.S. Holder receives Wyman-Gordon Common Stock or cash)
may be treated as ordinary income rather than capital gain, (iii) all or part of
the interest income on the Exchange Note may be treated as nontaxable,
increasing the gain (or decreasing the loss) at Maturity or upon disposition of
the DECS (or disposition of the Wyman-Gordon Common Stock) or (iv) if the stated
interest rate exceeds Cooper's Mid-Term Borrowing Rate, the Exchange Notes could
be considered as issued at a premium which, if amortized, would reduce the
amount of interest income currently includible in income by a holder and
increase the taxable gain (or decrease the loss) realized at Maturity or upon
disposition of the DECS (or disposition of the Wyman-Gordon Common Stock).
 
     The Revenue Reconciliation Act of 1993 added Section 1258 to the Code,
which may require certain holders of the DECS who have entered into hedging
transactions or offsetting positions with respect to the DECS to recognize
ordinary income rather than capital gain upon the disposition of the DECS.
Holders should consult their tax advisors regarding the applicability of this
legislation to an investment in the DECS.
 
NON-UNITED STATES PERSONS
 
     In the case of a holder of the DECS that is not a U.S. Person, payments
made with respect to the DECS should not be subject to U.S. withholding tax;
provided that such holder complies with applicable certification requirements.
Any capital gain realized upon the sale or other disposition of the DECS by a
holder that is not a U.S. Person will generally not be subject to U.S. federal
income tax if (i) such gain is not effectively connected with a U.S. trade or
business of such holder and (ii) in the case of an individual, such individual
is not present in the United States for 183 days or more in the taxable year of
the sale or other disposition and the gain is not attributable to a fixed place
of business maintained by such individual in the United States.
 
BACKUP WITHHOLDING AND INFORMATION REPORTING
 
     A holder of the DECS may be subject to information reporting requirements
and to backup withholding at a rate of 31 percent of certain amounts paid to the
holder unless such holder provides proof of an applicable exemption or a correct
taxpayer identification number, and otherwise complies with applicable
requirements of the backup withholding rules.
 
                                       23
<PAGE>   25
 
                              PLAN OF DISTRIBUTION
 
     The Underwriters have severally agreed, subject to the terms and conditions
set forth in the Underwriting Agreement, to purchase from Cooper the aggregate
number of DECS set forth opposite their names below:
 
<TABLE>
<CAPTION>
                                                                           NUMBER OF
                   UNDERWRITERS                                              DECS
                   ------------                                           -----------
        <S>                                                               <C>
        Salomon Brothers Inc ..........................................
        Merrill Lynch, Pierce, Fenner & Smith
                    Incorporated.......................................
        Schroder Wertheim & Co. Incorporated...........................
 
                                                                           ----------
                  Total................................................    15,000,000
                                                                           ==========
</TABLE>
 
     In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
DECS if any are purchased.
 
     Cooper has been advised: that the Underwriters propose to offer the DECS to
the public initially at the offering price set forth on the cover of this
Prospectus and to certain dealers at such price less a selling concession of
$          per DECS; that the Underwriters may allow, and each such dealer may
reallow, to other dealers a concession not exceeding $          per DECS; and
that, after the initial public offering, such public offering price and such
concession and reallowance may be changed.
 
     Cooper and Wyman-Gordon have agreed not to offer for sale, sell or
otherwise dispose of, without the prior written consent of the Underwriters, any
shares of Wyman-Gordon Common Stock or any securities convertible into or
exchangeable for, or warrants to acquire, Wyman-Gordon Common Stock for a period
of 90 days after the date of this Prospectus; provided, however, that such
restriction shall not affect the ability of Cooper or Wyman-Gordon or their
respective subsidiaries to take any such actions in connection with the offering
of the DECS made hereby or any exchange at Maturity pursuant to the terms of the
DECS.
 
   
     In connection with the offering of the DECS, Cooper or an affiliate
thereof, referred to herein as the "Lender," and Salomon intend to enter into a
Securities Loan Agreement (the "Securities Loan Agreement") which provides that,
subject to certain restrictions and with the agreement of the Lender, Salomon
may from time to time borrow, return and reborrow shares of Wyman-Gordon Common
Stock from the Lender (the "Borrowed Securities"); provided, however, that the
number of Borrowed Securities at any time may not exceed 750,000 shares in the
twelve-month period beginning December   , 1995; 1,000,000 shares in the
twelve-month period beginning December   , 1996; and 1,250,000 in the
twelve-month period beginning December   , 1997, subject to adjustment to
provide anti-dilution protection. The Securities Loan Agreement contains
limitations on the amount of Borrowed Securities which Salomon can borrow on any
day and from time to time and requires Salomon to return Borrowed Securities
within a specified period of time from the date of borrowing and prior to any
record date. The Securities Loan Agreement is intended to facilitate
market-making activity in the DECS by Salomon. Salomon may from time to time
offer shares of Wyman-Gordon Common Stock borrowed from the Lender under the
Securities Loan Agreement directly to one or more purchasers at negotiated
prices, at market prices prevailing at the time of sale or at prices related to
such market prices, in connection with such market-making activities. The
availability of shares of Wyman-Gordon Common Stock under the Securities Loan
Agreement, if any, at any time is not assured and any such availability does not
assure market-making activity with respect to the DECS and any market-making
actually engaged in by Salomon may
    
 
                                       24
<PAGE>   26
 
   
cease at any time. The foregoing description of the Securities Loan Agreement
does not purport to be complete and is qualified in its entirety by reference to
the Agreement, a copy of which is filed as an exhibit to the Registration
Statement of which the Prospectus is a part.
    
 
     Cooper has granted to the Underwriters an option, exercisable for 30 days
from the date of this Prospectus (or, if such 30th day shall not be a Business
Day, on the next Business Day thereafter), to purchase up to an additional
1,500,000 DECS, at the per DECS price to the public less the aggregate
underwriting discount set forth on the cover of this Prospectus. The
Underwriters may exercise such right of purchase only for the purpose of
covering over-allotments, if any, incurred in connection with the sale of DECS
offered hereby. To the extent that the Underwriters exercise such option, each
of the Underwriters will become obligated, subject to certain conditions, to
purchase a number of such additional DECS proportionate to such Underwriter's
initial commitment.
 
   
     In connection with the offering of the DECS, the Underwriters and selling
group members (if any) and their respective affiliates may engage in passive
market-making transactions in the Wyman-Gordon Common Stock on Nasdaq in
accordance with Rule 10b-6A under the Exchange Act. The passive market-making
transactions will comply with applicable volume and price limits and will be
identified as such.
    
 
     Cooper and Wyman-Gordon have agreed in the Underwriting Agreement to
indemnify the Underwriters against certain liabilities, including liabilities
under the Securities Act, or contribute to payments the Underwriters may be
required to make in respect thereof.
 
     The Underwriters will reimburse Cooper for certain expenses related to the
offering.
 
     As of June 30, 1995, Schroder Wertheim & Co. Incorporated beneficially
owned 1,121,900 shares of Wyman-Gordon Common Stock (representing 3.2 percent of
the issued and outstanding shares of Wyman-Gordon Common Stock).
 
     Salomon has provided financial advisory services to Wyman-Gordon in the
past, for which it has received customary fees. Merrill Lynch & Co. has provided
financial advisory services to Cooper in the past, for which it has received
customary fees.
 
                                 ERISA MATTERS
 
     Cooper, Wyman-Gordon or any of their affiliates may be considered a "party
in interest" or a "disqualified person" with respect to some employee benefit
plans ("Plans") that are subject to ERISA, or Section 4975 of the Code. The
purchase of DECS by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section 4975 of
the Code (including individual retirement arrangements and other plans described
in Section 4975(e)(1) of the Code) and with respect to which Cooper,
Wyman-Gordon or any of their affiliates is a "party in interest" within the
meaning of ERISA or a "disqualified person" within the meaning of Section 4975
of the Code may constitute or result in a prohibited transaction under ERISA or
the Code, unless such DECS are acquired pursuant to and in accordance with an
applicable exemption, such as Prohibited Transaction Class Exemption ("PTCE")
84-14 (an exemption for certain transactions determined by an independent
qualified professional asset manager), PTCE 91-38 (an exemption for certain
transactions involving bank collective investment funds) or PTCE 90-1 (an
exemption for certain transactions involving insurance company pooled separate
accounts). Any pension or other employee or other employee benefit plan
proposing to acquire DECS should consult with its counsel.
 
                                       25
<PAGE>   27
 
                                 LEGAL MATTERS
 
     The validity of the DECS will be passed upon for Cooper by Skadden, Arps,
Slate, Meagher & Flom, New York, New York and for the Underwriters by Cravath,
Swaine & Moore, New York, New York. Certain attorneys of Skadden, Arps, Slate,
Meagher & Flom and members of their immediate families have investment
discretion with respect to an aggregate of 1,300 shares of common stock of
Cooper.
 
                                    EXPERTS
 
     The consolidated financial statements of Cooper for the year ended December
31, 1994, incorporated by reference in Cooper's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph with respect to changes in methods of accounting for
postretirement benefits other than pensions, income taxes and postemployment
benefits as discussed in Note 4 to the consolidated financial statements)
incorporated therein and herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
 
                                       26
<PAGE>   28
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR        
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
                                                                      APPENDIX A
                             Subject to Completion,
   
                               November 24, 1995
    
PROSPECTUS
 
15,000,000 SHARES
 
[LOGO]    WYMAN-GORDON COMPANY
 

COMMON STOCK
(PAR VALUE $1.00 PER SHARE)

 
This Prospectus relates to 15,000,000 shares of Common Stock, par value $1.00
per share (the "Common Stock"), of Wyman-Gordon Company (the "Company"), which
may be delivered by Cooper Industries, Inc. ("Cooper"), at its option, pursuant
to the terms of the   % Exchangeable Notes Due               , 1998 (the "Debt
Exchangeable for Common StockSM" or "DECSSM" ). This Prospectus is Appendix A to
a prospectus of Cooper (the "DECS Prospectus") covering the sale of 15,000,000
DECS (the "DECS Offering"). The Company will not receive any of the proceeds
from the offering contemplated hereby.
 
Cooper has granted the Underwriters of the DECS a 30-day option to purchase up
to an additional 1,500,000 DECS, which may be exchangeable at their maturity for
additional shares of Common Stock. Such option has been granted solely to cover
over-allotments, if any. To the extent that the over-allotment option is not
exercised by the Underwriters in full, Cooper may, subject to certain
limitations, sell up to 1,500,000 shares of Common Stock pursuant to this
Prospectus. See "Plan of Distribution."
 
PROSPECTIVE INVESTORS ARE ADVISED TO CONSIDER CAREFULLY THE INFORMATION
CONTAINED UNDER "RISK FACTORS" ON PAGE 7.
 
The Common Stock is traded on The Nasdaq Stock Market's National Market
("Nasdaq") under the symbol WYMN. On               , 1995, the last reported
sale price of Common Stock was $          per share. See "Price Range of Common
Stock and Dividend Policy."
 
The Company and Cooper have agreed not to sell, without the prior written
consent of the Underwriters, any shares of Common Stock or any securities
convertible into or exchangeable for Common Stock for a period of 90 days after
the date of this Prospectus. See "Plan of Distribution."

 
                            ------------------------

 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is               , 1995.
<PAGE>   29
 
     THE COMPANY HAS BEEN ADVISED THAT IN CONNECTION WITH THE OFFERING BY COOPER
OF THE DECS, THE UNDERWRITERS OF THE DECS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DECS OR THE COMMON STOCK OF
THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON NASDAQ OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
     IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) AND THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE COMMON STOCK ON NASDAQ IN ACCORDANCE WITH RULE 10B-6A UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). SEE "PLAN
OF DISTRIBUTION."
 
                             AVAILABLE INFORMATION
 
     The Company is subject to the informational requirements of the Exchange
Act, and in accordance with the Exchange Act files reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). The
Company has filed a registration statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with the SEC with respect to the Common Stock offered hereby. This Prospectus,
which constitutes part of the Registration Statement, does not contain all the
information set forth in the Registration Statement and reference is made to the
Registration Statement and the exhibits thereto for further information with
respect to the Company and the Common Stock. Such reports, proxy statements,
Registration Statement and exhibits and other information omitted from this
Prospectus can be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549 and at the SEC's Regional Offices located at Seven World Trade Center,
Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, IL 60661-2511. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the SEC, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. Such reports, proxy statements
and other information concerning the Company can also be inspected at The Nasdaq
Stock Market at 1735 K Street, N.W., Washington, D.C. 20006.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The Company's Annual Report on Form 10-K for the fiscal year ended June 3,
1995, the Quarterly Report on Form 10-Q for the fiscal quarter ended September
2, 1995, the proxy statement dated August 30, 1995, and the Company's Current
Report on Form 8-K filed on June 9, 1994, including the financial statements of
Cameron (as defined herein) contained therein, are incorporated by reference in
this Prospectus. All documents filed by the Company pursuant to Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made hereby shall be
deemed to be incorporated by reference into this Prospectus and to be made a
part hereof from the respective dates of filing of such documents. Any statement
in any document incorporated or deemed to be incorporated by reference herein,
shall be deemed to be modified or superseded for purposes of the Registration
Statement and this Prospectus to the extent that a statement contained herein or
in any subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement or this Prospectus.
 
     Copies of the above documents (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference in such documents) may
be obtained upon written or oral request without charge from the Company, 244
Worcester Street, Grafton, Massachusetts 01536, Attention: Clerk, telephone
(508) 839-4441.
 
                                        2
<PAGE>   30
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by reference to the more
detailed information and the consolidated financial statements appearing
elsewhere in this Prospectus as well as the information incorporated herein by
reference.
 
                                  THE COMPANY
 
     Wyman-Gordon Company (the "Company"), founded in 1883, is a leading
producer of highly engineered, technically advanced components, primarily for
the aerospace industry as well as for other markets including power generation.
The Company uses forging, casting and composites technologies to produce
components to exacting customer specifications for technically demanding
applications such as jet turbine engines, airframe structures, land-based gas
turbines, and extruded seamless pipe. Components manufactured by the Company are
utilized in most of the major commercial and United States defense aerospace
programs. The Company believes that it is the only firm to provide the aerospace
industry with a combination of forging, casting and composites capabilities for
the production of high quality components and that it produces the broadest
offering of aerospace forgings available on the market.
 
     The Company manufactures components from sophisticated titanium and
nickel-based superalloys for jet engines manufactured by General Electric
Company ("GE"), the Pratt & Whitney Division ("Pratt & Whitney") of United
Technologies Corporation ("United Technologies"), Rolls-Royce plc ("Rolls-
Royce") and CFM International S.A. The Company's airframe structural components,
such as landing gear, bulkheads and wing spars, are used on the entire fleet of
airplanes manufactured by The Boeing Company ("Boeing"), including the new 777,
as well as the McDonnell Douglas Corporation ("McDonnell Douglas") MD-11 and the
Airbus Industrie S.A. ("Airbus") A330 and A340, and on a number of military
aircraft and other defense-related applications including the McDonnell Douglas
C-17 transport and the new F-22 air superiority fighter being jointly developed
by Lockheed Martin Corporation ("Lockheed") and Boeing. Recently the Company has
expanded its product offerings by focusing on the land-based gas turbine market
through products sold primarily to GE and on the power generation markets
through pipe and valve bodies sold to a variety of customers.
 
     In recent years the Company has experienced losses as a result of declines
in customer demand caused by a combination of defense spending cutbacks, reduced
orders for new commercial aircraft and reductions in customer inventory levels.
In response, the Company's senior management implemented a series of strategic
initiatives designed to (i) lower the Company's cost structure, (ii) consolidate
its forgings operations, (iii) lower inventory requirements, and (iv) solidify
customer relations.
 
     In further response to the continuing overcapacity in the industry, the
Company acquired all of the stock of Cameron Forged Products Company ("Cameron")
from Cooper in May 1994 (the "Acquisition"). Prior to the Acquisition, Cameron
was the Company's principal competitor in the production of forgings for use in
critical aerospace applications. For the year ended December 31, 1993, Cameron
had revenues of $149.5 million, an operating loss of ($22.2) million and total
assets of $151.8 million. As part of the consideration for the Acquisition, the
Company issued 16.5 million shares of Common Stock to Cooper, which shares are
being registered in connection with the DECS Offering. Currently, these shares
represent approximately 47% of the outstanding Common Stock of the Company.
 
     As a result of the Acquisition, the Company has achieved cost savings,
which total more than $26.0 million on an annualized basis to date. In addition,
the Company has achieved the following production efficiencies.
 
     Focused Factories.  The Company has substantially completed the
consolidation of the manufacture of rotating parts for jet engines from Grafton,
Massachusetts into Cameron's Houston, Texas facility. At the same time, the
Grafton facility has been focused on the production of large airframe structures
and large turbine parts such as components for the GE90 engine and land-based
gas turbines. The result has been the elimination of duplicative facilities,
improved throughput, and efficiencies of scale.
 
                                        3
<PAGE>   31
 
     Rationalization of Forging Operations.  Subsequent to the Acquisition the
Company closed one of the two Cameron forging plants in Houston, Texas. In
addition, the Company has closed its ring-roll operations and is in the process
of closing its hammer forging operations at its Worcester, Massachusetts
facility. The result has been improved manufacturing efficiencies, higher
utilizations and better inventory management.
 
     Best Practices.  The Company is in the process of adopting the best
manufacturing practices of the Company and Cameron. The improved manufacturing
practices have resulted in cost reductions from lower material input weights on
certain forgings, improved machining practices and more efficient testing
procedures. Substantial raw material cost savings in certain of the Company's
forging processes have resulted from utilization of material produced in
Cameron's Brighton, Michigan powder metal facility and Cameron's Houston, Texas
vacuum arc remelting facility. From 1991 through 1995 average production cycle
times at Cameron's Houston facility were reduced from approximately 22 weeks to
seven weeks and the Company is seeking to achieve similar reductions at its
Grafton, Massachusetts facility.
    
<TABLE>
     As a result of these realized production efficiencies and cost savings the
Company's operating results improved in each quarter of fiscal year 1995 and
continued at improved levels in the first quarter of fiscal year 1996 as shown
by the following table.
 
<CAPTION>
                                                         THREE MONTHS ENDED
                             ---------------------------------------------------------------------------
                             SEPTEMBER 3,      DECEMBER 3,      MARCH 4,      JUNE 3,       SEPTEMBER 2,
                                 1994             1994            1995          1995            1995
                             ------------      -----------      --------      --------      ------------
                                                     (000'S, EXCEPT PERCENTAGE DATA)
<S>                             <C>              <C>             <C>          <C>             <C>
Revenues................        $95,725          $94,974         $96,238      $109,702        $114,077
Gross profit............          9,575            9,869          12,615        17,329          18,180
Gross margin............           10.0%            10.4%           13.1%         15.8%           15.9%
Operating income........        $     3          $   768         $ 3,620      $  9,327           8,083
Operating margin........            0.0%             0.8%            3.8%          8.5%            7.1%
Annualized revenues per
  employee..............        $   129          $   129         $   130      $    146        $    151
</TABLE>
    
   
     In addition to the benefits the Company has realized from the Acquisition
and expects to realize in the future, the Company has in place several programs
designed to strengthen its position in the aerospace market and to enter new
markets through its expertise in high performance materials.
    
 
     Focus on Large Aerospace Components.  The Company believes that its
extensive installed asset base, technological leadership in manufacturing
large-scale components and experience in producing and utilizing sophisticated
alloys will enable the Company to capitalize on the industry trend toward
widebody aircraft with larger and more sophisticated engines. These aircraft,
which include the new Boeing 777, require larger airframe structural parts and
their engines require high-purity alloys, both of which are particular strengths
of the Company.
 
     Strategic Alliances with Key Customers.  The Company has entered into joint
development programs with its two largest customers, GE and Pratt & Whitney, for
the production of (i) forged rotating parts for the new GE90 jet engine and (ii)
nickel-based superalloy ingots in Perth, Australia for use in forging and
casting applications (the "Australian Joint Venture"), respectively. Management
believes that alliances such as these strengthen existing relationships, and in
some cases allow the Company to become involved in the design phases for new
components and applications, thereby enhancing the Company's chances of
obtaining future orders.
 
     New Applications and Markets.  The Company believes that its expertise in
the manufacture of highly specialized metal components with enhanced fatigue and
temperature resistant properties gives it the ability to design new applications
for existing technologies in its current markets and to utilize existing
technologies in new markets. For example, the Company has been able to enter the
power generation market where the Company's knowledge of nickel-based
superalloys and manufacturing technology
 
                                        4
<PAGE>   32
 
utilized for aircraft engines can be applied to manufacture energy efficient,
high strength, temperature resistant gas turbines.
 
   
     Management believes that the combination of the Company's technological
capabilities, installed asset base and close customer relationships, together
with its improved cost structure, will allow the Company to operate profitably
in an environment of relatively low commercial aircraft deliveries and to
benefit from increases in delivery rates. At the same time the Company seeks to
expand into new product and geographic markets. No assurances can be given that
such strategic initiatives will be successful in producing long-term
profitability. See "Risk Factors -- History of Recent Losses."
    
 
                            THE OFFERING OF THE DECS
 
     This Prospectus relates to 15.0 million shares of Common Stock, and up to
1.5 million additional shares of Common Stock to cover over-allotments, which
may be delivered by Cooper, at its option, pursuant to the terms of the DECS,
which are being offered by Cooper pursuant to the Cooper Prospectus. To the
extent that the over-allotment option is not exercised by the Underwriters,
Cooper may, subject to certain limitations, sell up to 1.5 million shares of
Common Stock pursuant to this Prospectus. The Company is registering the shares
of Common Stock pursuant to the Investment Agreement, dated January 10, 1994
(the "Investment Agreement"), between the Company and Cooper, which Investment
Agreement provides Cooper with certain rights to have the shares of Common Stock
held by Cooper registered by the Company under the Securities Act. The Company
has also agreed to indemnify Cooper and the Underwriters of the DECS against
certain liabilities, including civil liabilities under the Securities Act.
 
     The Company and Cooper have agreed not to sell, without the prior written
consent of the Underwriters, any shares of Common Stock or any securities
convertible into or exchangeable for Common Stock for a period of 90 days after
the date of this Prospectus. See "Plan of Distribution."
 
                                        5
<PAGE>   33
   
<TABLE>
                 SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

    The following tables set forth summary consolidated financial and other data
for the Company for the respective periods indicated based on the Company's
audited and unaudited financial statements. The following tables should be read
in conjunction with the Consolidated Financial Statements, related notes and
other financial information included elsewhere in this Prospectus.

<CAPTION>
                                              THREE MONTHS ENDED                           YEAR ENDED
                                         ----------------------------      ------------------------------------------
                                         SEPTEMBER 2,    SEPTEMBER 3,        JUNE 3,        MAY 28,      DECEMBER 31,
                                             1995            1994              1995         1994 (1)       1993 (2)
                                         -------------   ------------      ------------   ------------   ------------
                                                          (000'S OMITTED, EXCEPT PER SHARE AMOUNTS)
<S>                                         <C>            <C>               <C>            <C>            <C>
STATEMENT OF OPERATIONS DATA (3):
Revenues...............................     $114,077       $ 95,725          $396,639       $224,694       $239,761
Gross profit...........................       18,180          9,575            49,388          6,878         20,673
Other charges (credits) and
  environmental charges (4)............          900             --              (710)        35,003          2,453
Income (loss) from operations..........        8,083              3            13,718        (63,657)        (8,428)
Net income (loss) (5)..................        5,101         (3,321)            1,039        (72,403)       (60,004)

PER SHARE DATA:
Income (loss) per share before taxes
  and cumulative effect of changes in
  accounting principles................     $   0.14       $  (0.10)         $   0.03       $  (4.02)      $  (0.95)
Net income (loss) per share (5)........         0.14          (0.10)             0.03          (4.02)         (3.34)
Dividends paid per share...............           --             --                --             --             --
Shares used to compute income (loss)
  per share............................       35,889         34,715            35,148         17,992         17,965

BALANCE SHEET DATA:
(at end of period)(3):
Working capital........................     $103,943       $ 91,109          $ 93,062       $ 91,688       $ 90,685
Total assets...........................      370,619        368,868           369,064        394,747        286,634
Long-term debt.........................       90,308         90,385            90,308         90,385         90,461
Stockholders' equity...................       85,768         69,920            80,855         72,483         88,349

OTHER DATA:
Order backlog (at end of period).......     $476,944       $400,110          $468,761       $389,407       $256,259
EBITDA (6).............................       11,816          3,649            30,188        (45,380)         9,388
<FN> 
- ---------------
(1) On May 24, 1994, the Company's Board of Directors voted to change the
    Company's fiscal year end from December 31 to the Saturday nearest to May
    31. The Statement of Operations Data for the year ended May 28, 1994 is
    unaudited.
    The following table sets forth Summary Consolidated Statement of Operations
    Data, which has been derived from the Company's audited financial
    statements, for the five months ended May 28, 1994 (000's omitted, except
    per share amounts):
 
            <S>                                                                                 <C>
            Revenues.......................................................................     $ 86,976
            Other charges (credits) and environmental charges..............................       32,550
            Income (loss) from operations..................................................      (55,805)
            Net income (loss)..............................................................      (61,370)
            Per share data:
              Net income (loss) per share..................................................     $  (3.32)
              Dividends paid per share.....................................................           --
 
(2) Including Cameron's financial results for fiscal year 1993, the Company's
    pro forma unaudited revenues, loss before the cumulative effect of changes
    in accounting principles and net loss would have been $389.3 million,
    ($39.3) million and ($82.3) million, respectively.
 
(3) On May 26, 1994, the Company acquired Cameron from Cooper. The Summary
    Consolidated Financial and Other Data include the accounts of Cameron from
    the date of the Acquisition. Cameron's operating results from May 26, 1994
    to May 28, 1994 are not material to the consolidated statement of operations
    for the year and five months ended May 28, 1994.
 
(4) In November 1993, the Company sold substantially all of the net assets and
    business operations of Wyman-Gordon Composites, Inc. and recorded a non-cash
    charge on the sale of $2.5 million.
    In May 1994, the Company recorded charges of $6.5 million related to the
    closing of a castings facility, $24.1 million related to restructuring and
    integration of Cameron and $2.0 million for environmental investigation and
    remediation costs.
    During the first quarter of fiscal year 1996, the Company provided $0.8
    million in order to recognize its 25.0% share of the net losses of the
    Australian Joint Venture and to reserve for amounts loaned to the Australian
    Joint Venture during the first quarter of fiscal year 1996. Additionally,
    the Company provided $0.1 million relating to expenditures for an investment
    in an additional joint venture.
 
(5) Includes a charge of $43.0 million or $2.39 per share in fiscal year 1993
    related to the Company's adoption of SFAS 106, "Employers' Accounting for
    Postretirement Benefits other than Pensions" ("SFAS 106") and SFAS 109,
    "Accounting for Income Taxes" ("SFAS 109"). SFAS 106 requires postretirement
    benefits obligations to be accounted for on an accrual basis rather than the
    "expense as incurred" basis formerly used. The Company elected to recognize
    the cumulative effect of these accounting changes in fiscal year 1993.

(6) EBITDA is defined as earnings before interest, taxes, depreciation,
    amortization and changes in accounting principles. EBITDA is presented
    because it may be used as one indicator of a company's ability to service
    debt. The Company believes that EBITDA, while providing useful information,
    should not be considered in isolation or as a substitute for net income as
    an indicator of operating performance or as an alternative to cash flow as a
    measure of liquidity, in each case determined in accordance with generally
    accepted accounting principles.
</TABLE>
    
                                        6
<PAGE>   34
 
                                  RISK FACTORS
 
     Prospective investors should carefully consider the specific risk factors
set forth below as well as the other information contained in this Prospectus
and the information incorporated herein by reference.
 
HISTORY OF RECENT LOSSES
 
     Although the Company reported net income of $1.0 million for fiscal year
1995, the Company reported a net loss for the five months ended May 28, 1994,
and for two of the three previous fiscal years. For the year ended December 31,
1993, the Company reported a net loss (before the cumulative effect of changes
in accounting principles) of ($17.0) million. Cameron reported a net loss of
($20.1) million for the same period, its last fiscal year prior to the
Acquisition. The Company has implemented structural changes designed to improve
its cost structure and increase efficiency and productivity at its Houston
facilities. The Company is now implementing similar changes at its Grafton
facility, which has been operating at a loss in recent years. If these
objectives cannot be successfully achieved, the Company may implement further
restructuring measures which could result in write-offs and reduced earnings or
losses. There can be no assurance that the Company's operations will be
profitable in the future. See the Consolidated Financial Statements.
 
VOLATILITY IN THE COMMERCIAL AEROSPACE INDUSTRY
 
     Approximately 52% of the Company's revenues during fiscal year 1995 was
derived from the commercial aerospace industry, an industry that is cyclical in
nature and subject to changes based on general economic conditions and airline
profitability. Although the United States economy entered a period of slow
growth in 1989 and 1990, the aerospace industry made record deliveries of
commercial aircraft, based on revenue, during those years, and aircraft
deliveries continued to grow through 1991 and decreased only slightly in 1992.
In 1990 through 1992, domestic airlines suffered significant operating losses.
As a result of these losses, the high levels of debt incurred to purchase new
aircraft and the excess capacity within the commercial airline sector, the
commercial aerospace industry has since experienced reduced new orders for
commercial aircraft and related spare parts as well as deferrals, and in some
cases cancellations, of deliveries of previously ordered aircraft. While the
Company's customers are now reporting increased orders for spare parts, aircraft
deliveries continue at historically low rates. Although it appears that the
health of the airline industry is improving, based on profitability, there can
be no assurance that any improvement in the commercial aerospace market will be
substantial or that improved conditions would be sustained. See "Business --
Markets" and "Business -- Customers."
 
REDUCTIONS IN DEFENSE SPENDING
 
     Approximately 24% of the Company's revenues during fiscal year 1995 was
derived from the defense aerospace industry, an industry that is dependent upon
government defense budgets and, in particular, the United States' defense
budget. In general, defense budgets in the United States have been declining in
recent years, resulting in reduced demand for new aircraft and spare parts.
While the effect of United States defense budget reductions may be offset in
part by foreign military sales, such sales are affected by United States
governmental regulation, regulation by the purchasing government and political
uncertainties in the United States and abroad. There can be no assurance that
United States defense budgets and the related demand for defense equipment will
not continue to decline or that sales of defense equipment to foreign
governments will continue at present levels.
 
DEPENDENCE ON MAJOR CUSTOMERS
 
     The Company is dependent upon a few large aerospace contractors for a
significant percentage of its revenue. Five customers accounted for
approximately 50% of the Company's revenues during the Company's fiscal year
1995, and two of the five, GE and United Technologies, accounted for 26% and 15%
of total revenues, respectively. In addition, many of the Company's sales to its
smaller customers are eventually incorporated into components sold to its major
customers. The loss of, or significant reduction
 
                                        7
<PAGE>   35
 
in, purchases by any of the Company's major customers would adversely affect the
Company. In addition, because of the relatively small number of customers for
some of the Company's principal products, those customers exercise significant
influence over the Company's prices and other terms of trade. See "Business --
Customers."
 
COMPETITION
 
     The Company is subject to intense competition for supplying its customers
with products. Many of the Company's products are sold under long-term contracts
which are bid upon by several suppliers. Because of reductions in demand for
aerospace products in recent years, there exists excess productive capacity in
the market for a number of the Company's principal products which results in
intense price competition for orders. There can be no assurance that the Company
can maintain its share of the market for any of its products. See "Business --
Competition."
 
RISK OF FLUCTUATIONS IN PRICE AND AVAILABILITY OF RAW MATERIALS
 
   
     The Company's results of operations are affected by significant
fluctuations in the prices of raw materials used by the Company. Many of the
Company's customer contracts have fixed prices for extended time periods and do
not provide complete price adjustments for changes in the prices of raw
materials such as metals. The Company attempts to reduce its risk with respect
to its customer contracts by procuring long-term contracts with suppliers of
metal alloys, but the Company's supply contracts typically do not completely
insulate the Company from fluctuations in the prices of raw materials. In
addition, during periods of increasing raw materials prices, metals suppliers,
who are subject to increased raw materials costs, may be unable to make timely
deliveries or may experience quality problems. During the past year the Company
has experienced a doubling of the delivery times for its principal raw
materials, nickel-based alloys and titanium alloys. Due to these and other
factors, significant increases in the prices or scarcity of supply of raw
materials used by the Company may well have an adverse impact on the Company's
results of operations. See "Business -- Raw Materials."
    
 
LIQUIDITY
 
     The Company anticipates making cash expenditures during fiscal year 1996 of
approximately $35 to $38 million of which approximately $25 million will be for
ongoing capital expenditures, and the balance will be for expenditures relating
to the consolidation of the Company's forging operations with Cameron, for costs
associated with prior restructuring activities, and for environmental management
and remediation projects. The Company expects that its cash expenditures will
continue at close to the same level for fiscal years 1997 and 1998. There can be
no assurances that the Company will be able to generate the cash flow from its
operations and from improved inventory management necessary to meet its
anticipated cash requirements. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
 
COMPLIANCE WITH ENVIRONMENTAL AND OTHER GOVERNMENT REGULATIONS
 
     The Company's operations are subject to extensive environmental, health and
safety laws and regulations promulgated by federal, state and local governments.
Many of these laws and regulations provide for substantial fines and criminal
sanctions for violations. The nature of the Company's business exposes the
Company to risks of liability due to the use and storage of materials that can
cause contamination or personal injury if released into the environment. In
addition, environmental laws may have a significant effect on the nature, scope
and cost of cleanup of contamination at operating facilities. It is difficult to
predict the future development of such laws and regulations or their impact on
future earnings and operations, but the Company anticipates that these standards
will continue to require increased capital expenditures. There can be no
assurance that material costs or liabilities will not be incurred.
 
                                        8
<PAGE>   36
 
     Based upon information presently available, the Company does not expect
that costs for future environmental compliance and remediation will have a
material adverse effect on its competitive or financial position or its ongoing
results of operations. However, it is not possible to predict accurately the
amount or timing of costs of any future environmental remediation requirements.
Such costs could be material to future quarterly or annual results of
operations. In addition, the "Superfund" statutes may impose joint and several
liability for the costs of remedial investigations and actions on the entities
that arranged for disposal of the wastes, the waste transporters that delivered
materials to the disposal sites and the past and present owners and operators of
such sites; responsible parties (or any one of them, including the Company) may
be required to bear all of such costs regardless of fault, legality of the
original disposal or ownership of the disposal site. In such event, the amount
owed by the Company for liabilities at Superfund sites could be significantly
greater. See "Business -- Environmental Regulations" and Footnote G to the
Consolidated Financial Statements.
 
PRODUCT LIABILITY EXPOSURE
 
     The Company produces many critical engine and structural parts for
commercial and military aircraft. As a result, the Company has an inherent risk
of exposure to product liability claims. The Company maintains product liability
insurance, but there can be no assurance that such coverage will continue to be
available on terms acceptable to the Company or that such coverage will be
adequate for liabilities incurred. See "Business -- Product Liability Exposure."
 
ANTI-TAKEOVER PROVISIONS; POSSIBLE ADVERSE EFFECTS OF ISSUANCE OF PREFERRED
STOCK
 
   
     The Company's Restated Articles of Organization (the "Articles"), By-Laws
and Rights Agreement (as defined herein), as well as Massachusetts law, contain
provisions that could discourage a proxy contest, make more difficult the
acquisition of a substantial block of the Common Stock, which could make the
payment of a premium to shareholders in connection with a change in control less
likely, and increase the difficulty of removing incumbent management and board
members. In addition, such provisions could limit the price that investors might
be willing to pay in the future for shares of the Common Stock. The Board of
Directors of the Company is authorized to issue, without stockholder approval,
Preferred Stock with voting, conversion and other rights and preferences that
could adversely affect the voting power or other rights of the holders of Common
Stock. The issuance of Preferred Stock or rights to purchase Preferred Stock
could be used to discourage an unsolicited acquisition proposal. Pursuant to the
Rights Agreement the Company has issued Rights (as defined herein) which provide
that under certain circumstances each holder of a Right will have the right to
receive a number of shares of common stock of an Acquiring Person (as defined
herein) having a market value of two times the Exercise Price (as defined
herein) of the Right. The rights will cause substantial dilution to a person or
group that attempts to acquire the Company on terms not approved by the
Company's Board of Directors. See "Description of the Company's Capital Stock --
Rights Agreement." The Board of Directors is divided into three "staggered"
classes, with each class serving for a term of three years. Dividing the Board
of Directors in this manner could increase the difficulty of removing incumbent
members and could discourage a proxy contest or the acquisition of a substantial
block of the Common Stock. The Articles also contain a "fair price provision"
that could impede certain business combinations involving the Company.
Massachusetts law contains certain anti-takeover provisions, including Chapter
110F of the Massachusetts General Laws (the "MGL"), a so-called "Business
Combination Statute" that restricts certain stockholders that own (together with
their affiliates) 5% or more of the outstanding voting stock of a Massachusetts
corporation from engaging in certain business combinations with such corporation
("Chapter 110F"), and Chapter 110D of the MGL, a so-called "Control Share
Statute" that limits any person or entity that has acquired 20% or more of a
corporation's stock from voting such shares unless the corporation's
stockholders, other than such acquiring person or entity, authorize such voting
rights by a vote of the holders of the majority of stock of the corporation
entitled to vote on such matters ("Chapter 110D"). Although the Company has
presently selected to "opt-out" of Chapter 110D, the Company remains subject to
Chapter 110F. Such provisions of Massachusetts law could have the effect of
discouraging a potential acquiror from making an offer for the Common Stock,
which would make the payment of a premium to stockholders in connection with a
change in control less likely, and could
    
 
                                        9
<PAGE>   37
increase the difficulty of removing incumbent management and board members. See
"Description of the Company's Capital Stock."
 
   
     In addition, the Investment Agreement with Cooper creates certain obstacles
to a takeover of the Company. See "Restrictions on Voting Control" below.
    
   
RESTRICTIONS ON VOTING CONTROL

     The Investment Agreement with Cooper, which relates to Cooper's ownership
of 16.5 million shares of Common Stock or 47% of the Common Stock outstanding,
includes provisions (i) requiring Cooper to vote its shares of Common Stock as
recommended by the Company's Board of Directors or at Cooper's option in the
same proportion to votes of the other shareholders, (ii) restricting Cooper's
ability to sell or encumber its shares of Common Stock, and (iii) preventing
Cooper from joining in any proxy contest, making any proposal with respect to
the acquisition of any securities or assets of the Company, initiating or
soliciting proxies for the approval of any shareholder proposals, and tendering
shares of Common Stock that Cooper owns in a tender offer unless the Company's
Board of Directors approves such tender or takes a neutral position on the
offer. See "Relationship Between the Company and Cooper -- Investment
Agreement." Such "standstill" agreements give the Company's Board of Directors
effective voting control over 47% of the Company's outstanding shares of Common
Stock which could make it substantially more difficult for owners of shares of
Common Stock to affect the outcome of shareholder votes.
    
 
IMPACT OF THE DECS ON THE MARKET FOR THE COMPANY'S COMMON STOCK
 
     It is not possible to predict accurately how or whether the DECS will trade
in the secondary market or whether such market will be liquid. Any market that
develops for the DECS is likely to influence and be influenced by, the market
for the Common Stock. For example, the price of the Common Stock could become
more volatile and could be depressed by investors' anticipation of the potential
distribution into the market of substantial additional amounts of Common Stock
at the maturity of the DECS, by possible sales of Common Stock by investors who
view the DECS as a more attractive means of equity participation in the Company
and by hedging or arbitrage trading activity that may develop involving the DECS
and the Common Stock.
    
<TABLE>
                PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
 
     The Common Stock of the Company is listed on Nasdaq under the symbol WYMN.
The following table sets forth the high and low sales price of the Common Stock
for the calendar periods listed below as reported on Nasdaq.
 

<CAPTION>
                                                                              HIGH        LOW
                                                                             ------      ------
<S>                                                                          <C>         <C>
1994
  First Quarter..........................................................    $ 7 1/8     $ 4 5/8
  Second Quarter.........................................................      6 7/8       4 1/2
  Third Quarter..........................................................          7       5 3/4
  Fourth Quarter.........................................................      6 1/2       4 3/4
1995
  First Quarter..........................................................      8           5 1/4
  Second Quarter.........................................................     12 3/8       7 5/8
  Third Quarter..........................................................     14 1/8      10 5/8
  Fourth Quarter (through November 21, 1995).............................     15 1/8      12 1/4
</TABLE>
    
   
     On November    , 1995, the last reported sale price of the Common Stock was
     per share.
    
 
     The Company discontinued dividends on the Common Stock beginning in the
fourth quarter of 1991. While it is the intention of the Board of Directors to
consider the resumption of dividends on the Common Stock from time to time, the
declaration of future dividends will be dependent upon the Company's earnings,
financial condition, and other relevant factors.
 
                                       10
<PAGE>   38
 
     The Company is limited in the amount of dividends it may pay under the
terms of the indenture dated March 16, 1993, pursuant to which it issued $90.0
million principal amount of 10 3/4% Senior Notes due 2003 (the "Senior Note
Indenture"). Such limitation is provided by the Senior Note Indenture's
limitation on restricted payments, including dividends. The Senior Note
Indenture provides that the Company will not, and will not permit any of its
subsidiaries to, pay dividends or make any other restricted payment if, after
giving effect thereto, the aggregate amount of all restricted payments made from
and after the date of the Senior Note Indenture would exceed the sum of (a) 50%
of consolidated net income of the Company accrued for the period (taken as one
accounting period) commencing with March 29, 1993, to and including the date of
such calculation (or, in the event consolidated net income is a deficit, then
minus 100% of such deficit); (b) the aggregate net proceeds, including the fair
market value of property other than cash, received by the Company from the
issuance or sale of its capital stock, including the issuance of its capital
stock upon conversion of securities other than its capital stock, and options,
warrants and rights to purchase its capital stock (other than redeemable stock)
from and after the date of the Senior Note Indenture; and (c) $5.0 million. As
of June 3, 1995, the Company was not eligible to pay dividends under the terms
of the Senior Note Indenture. The Senior Note Indenture also contains certain
other covenants including limitations on indebtedness, liens, and disposition of
assets.
 
     As of                , 1995, the Common Stock was held by           holders
of record. The number of record holders may not be representative of the number
of beneficial holders because many shares are held by depositories, brokers, or
other nominees.
 
                                       11
<PAGE>   39
<TABLE>
                                 CAPITALIZATION
 
     The following table sets forth as of September 2, 1995 and June 3, 1995,
the capitalization of the Company. The Company will receive no proceeds from the
sale of the DECS or from sales of Common Stock by Cooper pursuant to this
Prospectus, if any. This table should be read in conjunction with the
Consolidated Financial Statements of the Company and the related notes thereto
appearing elsewhere in this Prospectus. See "Selected Consolidated Financial
Information" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
 
<CAPTION>
                                                                     SEPTEMBER 2,     JUNE 3,
                                                                         1995           1995
                                                                     ------------    --------
                                                                           (000'S OMITTED)
<S>                                                                   <C>            <C>
Borrowings Due Within One Year....................................    $  4,812       $  3,915
                                                                      ========       ========
Long-Term Debt:                                                                       
  10 3/4% Senior Notes Due 2003...................................    $ 90,000       $ 90,000
  Other...........................................................         308            308
                                                                      --------       --------
  Total Long-Term Debt............................................      90,308         90,308
                                                                      --------       --------
Stockholders' Equity:                                                                 
  Preferred Stock, No Par Value:                                                      
     Authorized 5,000,000 Shares; None Issued.....................          --             --
  Common Stock, Par Value $1.00                                                       
     Authorized 70,000,000 Shares; Issued 37,052,720..............      37,053         37,053
  Capital in Excess of Par Value..................................      38,699         40,118
  Retained Earnings...............................................      44,801         39,700
  Equity Adjustments..............................................        (714)            63
                                                                      --------       --------
                                                                       119,839        116,934
  Less Treasury Stock at Cost.....................................     (34,071)       (36,079)
                                                                      --------       --------
     Total Stockholders' Equity...................................      85,768         80,855
                                                                      --------       --------
Total Capitalization..............................................    $176,076       $171,163
                                                                      ========       ========
</TABLE>
 
                                       12
<PAGE>   40
   
<TABLE>
                      SELECTED CONSOLIDATED FINANCIAL DATA
 
     The consolidated balance sheet data as of June 3, 1995, May 28, 1994 and
December 31, 1993, 1992, 1991 and 1990 and consolidated statement of operations
data for the year ended June 3, 1995, five months ended May 28, 1994 and years
ended December 31, 1993, 1992, 1991 and 1990 have been derived from the
Company's audited consolidated financial statements. The consolidated balance
sheet data as of September 2, 1995 and September 3, 1994 and the consolidated
statement of operations data for the three months ended September 2, 1995 and
September 3, 1994 and for the year ended May 28, 1994, have been derived from
the Company's unaudited consolidated financial statements. The financial data
set forth below should be read in conjunction with the Consolidated Financial
Statements of the Company and related notes thereto, "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and other
financial information included elsewhere in this Prospectus.
 
<CAPTION>
                         THREE MONTHS ENDED                                        YEAR ENDED
                      -------------------------  ------------------------------------------------------------------------------
                      SEPTEMBER 2, SEPTEMBER 3,   JUNE 3,    MAY 28,  DECEMBER 31,  DECEMBER 31,   DECEMBER 31,    DECEMBER 31,
                          1995         1994        1995      1994(1)    1993(2)        1992          1991(3)         1990(3)
                      ------------ ------------  --------   --------  ------------  ------------   ------------   -------------
                                                    (000'S OMITTED, EXCEPT PER SHARE AMOUNTS)
<S>                      <C>         <C>         <C>        <C>         <C>           <C>           <C>              <C>
STATEMENT OF                                                                                        
 OPERATIONS                                                                                         
 DATA(4):                                                                                           
Revenues...............  $114,077    $ 95,725    $396,639   $224,694    $239,761      $298,881      $ 355,390        $405,381
Gross profit...........    18,180       9,575      49,388      6,878      20,673        55,590         28,362          56,295
Other charges (credits) 
 and environmental                                                                                      
 charges(5)............       900          --        (710)    35,003       2,453            --        106,464              --
Income (loss)                                                                                       
 from operations.......     8,083           3      13,718    (63,657)     (8,428)       27,275       (115,160)         21,319
Net income (loss)(6)...     5,101      (3,321)      1,039    (72,403)    (60,004)       21,795        (99,681)          8,696
PER SHARE DATA:                                                                                     
Income (loss) per share                                                                                          
 before cumulative                                                                                  
 effect of changes                                                                                  
 in accounting                                                                                      
 principles............  $   0.14    $  (0.10)   $   0.03   $  (4.02)   $  (0.95)     $   1.21      $   (5.59)       $   0.49
Net income (loss) per                                                                                          
 share (6).............      0.14       (0.10)       0.03      (4.02)      (3.34)         1.21          (5.59)           0.49
Dividends paid per share       --          --          --         --          --            --           0.30            0.80
Shares used to compute                                                                                         
 income (loss)                                                                                      
 per share.............    35,889      34,715      35,148     17,992      17,965        18,078         17,831          17,831
BALANCE SHEET DATA 
 (at end of period)(4):                                                                                    
Working capital........  $103,943    $ 91,109    $ 93,062   $ 91,688    $ 90,685      $ 96,057      $ 110,859        $124,030
Total assets...........   370,619     368,868     369,064    394,747     286,634       295,156        339,154         421,886
Long-term debt.........    90,308      90,385      90,308     90,385      90,461        70,538         90,615          73,892
Stockholders' equity...    85,768      69,920      80,855     72,483      88,349       149,516        128,088         232,157
OTHER DATA:                                                                                         
Order backlog (at end of                                                                                         
 period)...............  $476,944    $400,110    $468,761   $389,407    $256,259      $309,679      $ 386,905        $392,857
EBITDA (7).............    11,816       3,649      30,188    (45,380)      9,388        45,191        (89,960)         50,599
</TABLE>
    
 
                                       13
<PAGE>   41
[FN]
- ---------------
 
(1) On May 24, 1994, the Company's Board of Directors voted to change the
     Company's fiscal year end from one which ended on December 31 to the
     Saturday nearest to May 31. The Statement of Operations Data for the year
     ended May 28, 1994 is unaudited.
 
     The following table sets forth Summary Consolidated Statement of Operations
     Data, which has been derived from the Company's audited financial
     statements, for the five months ended May 28, 1994 (000's omitted, except
     per share amounts):
<TABLE>
          <S>                                                               <C>
          Revenues.....................................................     $ 86,976
          Other charges (credits) and environmental charges............       32,550
          Income (loss) from operations................................      (55,805)
          Net income (loss)............................................      (61,370)
          Per share data:
            Net income (loss) per share................................     $  (3.32)
            Dividends paid per share...................................           --
</TABLE>
 
(2) Including Cameron's financial results for fiscal year 1993, the Company's
     pro forma unaudited revenues, loss before the cumulative effect of changes
     in accounting principles and net loss would have been $389.3 million,
     ($39.3) million and ($82.3) million, respectively.
 
(3) In fiscal year 1991, the Company divested its automotive crankshaft
     operations. Revenues pro forma for the exclusion of such operations are
     $306.6 million and $344.0 million for fiscal years 1991 and 1990,
     respectively, assuming the divestiture of the automotive crankshaft
     operations had taken place as of the beginning of each of the periods.
 
(4) On May 26, 1994, the Company acquired Cameron from Cooper. The Selected
     Consolidated Financial Data include the accounts of Cameron from the date
     of the Acquisition. Cameron's operating results from May 26, 1994 to May
     28, 1994 are not material to the consolidated statement of operations for
     the year and five months ended May 28, 1994.
 
(5) During fiscal year 1991 the Company incurred charges of approximately $88.0
     million and $11.5 million in connection with a restructuring program
     primarily at its forging operations and disposition of its automotive
     crankshaft forging division, respectively. Additionally, $7.0 million was
     provided with respect to environmental investigation and remediation costs
     at one of the Company's facilities.
 
     In November 1993, the Company sold substantially all of the net assets and
     business operations of Wyman-Gordon Composites, Inc. and recorded a
     non-cash charge on the sale of $2.5 million.
 
     In May 1994, the Company recorded charges of $6.5 million related to the
     closing of a castings facility, $24.1 million related to restructuring and
     integration of Cameron and $2.0 million for environmental investigation and
     remediation costs.
 
     During the first quarter of fiscal year 1996, the Company provided $0.8
     million in order to recognize its 25.0% share of the net losses of the
     Australian Joint Venture and to reserve for amounts loaned to the
     Australian Joint Venture during the first quarter of fiscal year 1996.
     Additionally, the Company provided $0.1 million relating to expenditures
     for an investment in an additional joint venture.
 
(6) Includes a charge of $43.0 million or $2.39 per share in fiscal year 1993
     relating to the Company's adoption of SFAS 106, "Employers' Accounting for
     Postretirement Benefits other than Pensions" ("SFAS 106") and SFAS 109,
     "Accounting for Income Taxes" ("SFAS 109"). SFAS 106 requires
     postretirement benefits obligations to be accounted for on an accrual basis
     rather than the "expense as incurred" basis formerly used. The Company
     elected to recognize the cumulative effect of these accounting charges in
     fiscal year 1993.
 
   
(7) EBITDA is defined as earnings before interest, taxes, depreciation,
     amortization and changes in accounting principles. The presentation of
     EBITDA is presented because it may be used as one indicator of a company's
     ability to service debt. The Company believes that EBITDA, while providing
     useful information, should not be considered in isolation or as a
     substitute for net income as an indicator of operating performance or as an
     alternative to cash flow as a measure of liquidity, in each case determined
     in accordance with generally accepted accounting principles.
    
 
                                       14

<PAGE>   42
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
GENERAL
 
     The following discussion and analysis presents management's assessment of
material developments affecting the Company's results of operations, liquidity
and capital resources during the first quarter of fiscal year 1996 and the first
quarter of fiscal year 1995, and during fiscal years 1995, 1994 and 1993. These
discussions should be read in conjunction with the Company's Consolidated
Financial Statements and the Notes thereto. Comparisons of fiscal 1995 results
with results prior to the Acquisition of Cameron may not be meaningful.
 
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
THREE MONTHS ENDED SEPTEMBER 2, 1995 ("FIRST QUARTER OF FISCAL YEAR 1996")
COMPARED TO THREE MONTHS ENDED SEPTEMBER 3, 1994 ("FIRST QUARTER OF FISCAL YEAR
1995")
 
     The Company's revenues increased 19.2% to $114.1 million in the first
quarter fiscal year 1996 from $95.7 million in the first quarter fiscal year
1995 due to higher sales volume at the Company's Forgings and Castings
Divisions. These sales volume increases during the first quarter of fiscal year
1996 as compared to the first quarter of fiscal year 1995 are reflected by
market as follows: a $9.3 million (12.8%) increase in aerospace, a $8.3 million
(57.2%) increase in power generation and a $0.8 million (9.1%) increase in
other. Revenues in the first quarters of fiscal years 1996 and 1995 were limited
by raw material shortages and production delays caused by capacity constraints
of the Company's suppliers. While the severity of the raw material shortages was
not as extensive in the first quarter of fiscal year 1996 as compared to the
first quarter of fiscal year 1995, the Company is seeking to improve upon its
ability to receive raw material such that there is no disruption to its
production schedule. The revenue increases mentioned above have occurred while
the Company's backlog has grown steadily to $477.0 million at September 2, 1995
from $400.1 million at September 3, 1994.
 
     The Company's gross margins were 15.9% in the first quarter of fiscal year
1996 as compared to 10.0% in the first quarter of fiscal year 1995. This
improvement resulted from higher production volumes and productivity gains
resulting from the Company's efforts toward focusing forging production of
rotating parts for jet engines in its Houston, Texas facility and forging
production of airframe structures and large turbine parts in its Grafton,
Massachusetts facility. Additionally, continuing realization of cost reductions
from synergies associated with the integration of Cameron contributed to this
higher ratio. Gross margins benefitted from LIFO credits of $1.1 million during
the first quarter of fiscal year 1995. There were no LIFO credits recorded
during the first quarter of fiscal year 1996.
 
     Selling, general and administrative expenses decreased 3.9% to $9.2 million
during the first quarter of fiscal year 1996 from $9.6 million during the first
quarter of fiscal year 1995. Selling, general and administrative expenses as
percentage of revenues improved to 8.1% in the first quarter of fiscal year 1996
from 10.0% in the first quarter of fiscal year 1995. The improvement as a
percent of revenues is the result of cost reductions associated with the
integration of Cameron with the Company's Forgings operations and higher
revenues.
 
     During the first quarter of fiscal year 1996, the Company provided $0.8
million in order to recognize its 25.0% share of the net losses of the
Australian Joint Venture and to reserve for amounts loaned to the Australian
Joint Venture during the first quarter of fiscal year 1996. Additionally, the
Company provided $0.1 million relating to expenditures for an investment in an
additional joint venture.
 
     Interest expense was $2.9 million in both the first quarter of fiscal year
1996 and the first quarter of fiscal year 1995.
 
     Miscellaneous, net was an expense of $0.1 million in the first quarter of
fiscal year 1996 as compared to an expense of $0.4 million in the first quarter
of fiscal year 1995. Miscellaneous, net in the first quarter of fiscal year 1996
includes a $0.2 million gain on the sale of marketable securities.
 
                                       15
<PAGE>   43
 
     The Company recorded no provision for income taxes in the first quarter of
fiscal years 1996 and 1995.
 
     Net income was $5.1 million, or $.14 per share, in the first quarter of
fiscal year 1996 and net loss was $(3.3) million, or $(.10) per share in the
first quarter of fiscal year 1995. The $8.4 million improvement results from the
items described above.
 
YEAR ENDED JUNE 3, 1995 ("FISCAL YEAR 1995") COMPARED TO
YEAR ENDED MAY 28, 1994 ("FISCAL YEAR 1994")
 
     The Company's results of operations for fiscal year 1995 include the
results of Cameron which the Company acquired from Cooper in May 1994. As a
result of the Acquisition, the Company has broadened its revenue base and
expanded into new markets. The Company is also realizing substantial operating
and processing efficiencies through the consolidation of systems and facilities
and the reduction of personnel performing duplicate functions.
 
     The Company's revenues increased 76.5% to $396.6 million in fiscal year
1995 from $224.7 million in fiscal year 1994. Approximately $151.0 million of
this increase was due to the Acquisition of Cameron, which provides a broader
revenue base in the Company's traditional markets of commercial and defense
aerospace and provides diversification into the power generation market. The
remainder of the revenue increase was due to higher sales volume at the
Company's forgings and castings divisions. The increase in revenues was limited
by raw material shortages and production delays caused by capacity constraints
of the Company's suppliers. Although this situation improved during the second
half of fiscal year 1995, it had a negative impact on overall revenues.
Additionally, fiscal year 1994 contained $4.7 million of revenues from
Wyman-Gordon Composites, Inc. which was sold by the Company during November
1993.
 
     The Company's gross margins were 12.5% in fiscal year 1995, as compared to
3.1% in fiscal year 1994. Higher production volumes, particularly in the
Company's castings division, productivity gains in factory operations and
realization of certain synergies associated with the integration of Cameron with
the Company's forgings operations contributed to this higher ratio. In addition,
the gross margins at the Company's composites divisions for fiscal year 1995
were well above fiscal year 1994 levels. These favorable trends were offset
somewhat by production delays resulting from raw material shortages experienced
most significantly in the first half of fiscal year 1995. Gross margins
benefited from LIFO credits of $6.2 million in fiscal 1995 as compared to $8.1
million in fiscal year 1994. Gross margin in fiscal year 1994 was negatively
impacted by significant charges totaling $8.7 million related mainly to a change
in accounting estimate for workers' compensation of $4.2 million and excess
inventories of $2.8 million.
 
     Selling, general and administrative expenses increased 2.4% to $36.4
million in fiscal year 1995 from $35.5 million in fiscal year 1994. Selling,
general and administrative expenses improved as a percentage of revenues to 9.2%
in fiscal year 1995 from 15.8% in fiscal year 1994. Fiscal year 1994 selling,
general and administrative expenses include $7.6 million of significant charges.
Absent the significant charges, fiscal year 1994 selling, general and
administrative expenses were 12.4% of revenues. The improvement as a percent of
revenues is the result of certain savings associated with the integration of
Cameron with the Company's forgings operations, and higher revenues.
 
     During fiscal year 1995, the Company recognized $1.4 million of other
charges for its 25.0% equity share of the losses of its Australian Joint Venture
for the production of nickel-based superalloy.
 
     In fiscal year 1994, the Company recognized other charges of $35.0 million,
which included $24.1 million for Cameron integration costs, $6.5 million for
castings division restructuring costs, $2.0 million for anticipated
environmental charges, and $2.4 million related to the disposition of production
facilities. The Company recognized a $2.1 million credit in fiscal year 1995
after determining that Cameron integration costs, including severance and other
personnel costs, were lower than originally estimated. The Company believes that
most of the integration activities have been completed or adequate reserves have
been provided. As of June 3, 1995, unused reserves for Cameron integration costs
amount to $8.6 million.
 
     Interest expense decreased 1.0% to $11.0 million in fiscal year 1995 from
$11.1 million in fiscal year 1994. Fiscal year 1995 interest expense includes
higher financing fees associated with the establishment
 
                                       16
<PAGE>   44
 
in May 1994 of a receivables backed credit facility. Fiscal year 1994 interest
expense includes the write-off of financing fees relating to the Company's prior
credit facility amounting to $1.2 million.
 
     Miscellaneous, net was an expense of $1.7 million in fiscal year 1995 and
income of $2.4 million in fiscal year 1994. Miscellaneous, net in fiscal year
1994 includes a $3.3 million gain on the sale of marketable securities.
 
     The Company recorded no provision for income taxes in fiscal years 1995 and
1994. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
 
     Net income was $1.0 million, or $.03 per share, in fiscal year 1995
compared to a net loss of ($72.4) million, or ($4.02) per share, in fiscal year
1994. The $73.4 million improvement results from the items described above.
 
YEAR ENDED DECEMBER 31, 1993 ("FISCAL YEAR 1993") COMPARED TO
YEAR ENDED DECEMBER 31, 1992 ("FISCAL YEAR 1992")
 
     The Company's revenues decreased 19.8% to $239.8 million in fiscal year
1993 from $298.9 million in fiscal year 1992. This decline in revenues was
primarily attributable to continued sluggishness in the commercial aerospace
industry during fiscal year 1993.
 
     The Company's gross margins were 8.6% in fiscal year 1993 as compared to
18.6% in fiscal year 1992. The decline in gross margins was a result of (1)
lower production volume, (2) lower LIFO credits recorded in fiscal year 1993 as
compared to fiscal year 1992 and (3) competitive pricing which continued to
place pressure on the Company's gross margins. LIFO credits, which include both
LIFO liquidation and deflation effects, of $7.9 million and $22.8 million were
recognized in fiscal year 1993 and fiscal year 1992, respectively.
 
     Selling, general and administrative expenses decreased 5.9% to $26.6
million in fiscal year 1993 from $28.3 million in fiscal year 1992. The decrease
in selling, general and administrative expenses is mainly due to lower payroll
costs from reductions in personnel. Selling, general and administrative expenses
increased as a percent of revenues to 11.1% in fiscal year 1993 from 9.4% in
fiscal year 1992 as a result of the revenue decline.
 
     In November 1993, the Company sold substantially all of the net assets and
business operations of its Wyman-Gordon Composites, Inc. operations. The Company
recorded a non-cash charge on the sale in fiscal year 1993 of $2.5 million.
 
     Interest expense increased 43.9% to $10.8 million in fiscal year 1993 from
$7.5 million in fiscal year 1992 primarily as a result of higher interest rates
on the 10 3/4% Senior Notes due 2003 as compared to that on the debt retired
with the proceeds of the 10 3/4% Senior Notes. The average debt balance was
$87.7 million and $84.8 million in fiscal year 1993 and fiscal year 1992,
respectively. Additionally, the Company wrote off financing fees relating to a
prior credit facility amounting to $1.7 million in fiscal year 1993.
 
     Miscellaneous income was $2.2 million in fiscal year 1993 as compared to
$2.0 million in fiscal year 1992. Miscellaneous income in fiscal year 1993
reflects primarily the gain of $3.3 million on the sale of marketable
securities. Miscellaneous income in fiscal year 1992 reflects primarily the gain
of $0.9 million on the sale of marketable securities and a gain of $0.6 million
from a settlement of an overfunded pension plan terminated in a prior year.
 
     Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" ("SFAS 106"), and No. 109, "Accounting for Income Taxes"
("SFAS 109"). The Company elected to recognize the cumulative effect of these
accounting changes, resulting in a noncash reduction in earnings in 1993 of
$43.0 million or $2.39 per share.
 
                                       17
<PAGE>   45
 
     Net loss was ($60.0) million, or ($3.34) per share, in fiscal year 1993 and
net income was $21.8 million, or $1.21 per share, in fiscal year 1992. The
change results from the items described above.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The increase in the Company's cash of $7.5 million to $21.4 million as of
September 2, 1995 from $13.9 million as of June 3, 1995 resulted primarily from
cash provided by operating activities of $6.6 million.
 
   
     The increase in the Company's working capital of $10.9 million to $103.9
million as of September 2, 1995 from $93.1 million as of June 3, 1995 resulted
primarily from net income of $5.1 million, an increase in income taxes and other
of $2.8 million, net reductions of fixed assets of $4.3 million and net proceeds
from the issuance of Common Stock of $0.6 million, offset by a net increase in
other assets of $0.6 million and a decrease in long-term restructuring,
integration, disposal and environmental of $0.8 million.
    
 
   
     Earnings before interest, taxes, depreciation, amortization and changes in
accounting principles ("EBITDA") was $30.2 million in fiscal year 1995. EBITDA
increased $8.2 million to $11.8 million in the first quarter of fiscal year 1996
from $3.6 million in the first quarter of fiscal year 1995. This improvement
reflects primarily the $8.4 million improvement in the Company's net income in
the first quarter of fiscal year 1996 as compared to the first quarter of fiscal
year 1995.
    
 
   
     During fiscal year 1994, the Company recognized costs to be incurred for
the integration of Cameron totalling $24.1 million of which $12.7 million were
estimated to require cash outlays. Additionally, the Company estimated $12.2
million in cash outlays from direct costs associated with the Acquisition and
integration. Therefore, combined reserves for Cameron integration costs totalled
$36.3 million of which $24.9 million were estimated to require cash. The
projects undertaken for the integration of Cameron into the Company include (i)
consolidating the manufacture of rotating parts for jet engines from the
Company's Grafton, Massachusetts facility into Cameron's Houston facility, while
the Grafton facility has been focused on the production of large airframe
structures and large turbine parts, (ii) closing of one of the two Cameron
forging plants in Houston, (iii) closing the Company's ring-roll and hammer
forging operations at its Worcester, Massachusetts facility and (iv) adopting
the best manufacturing practices of the Company and Cameron. As a result of such
projects, the Company has eliminated duplicative facilities, improved
manufacturing efficiencies, improved inventory management and realized cost
reductions. During May 1994, $11.4 million of non-cash asset write-offs were
charged to these reserves. During fiscal year 1995, the Company incurred $11.1
million in charges on the integration of Cameron which were charged to these
reserves, $6.7 million of which required the use of cash. Additionally, the
Company reduced its estimates of costs to be incurred for the integration of
Cameron and direct costs associated with the acquisition by a total of $7.3
million. Such reduction is reflected by an adjustment in the purchase price of
$5.2 million and a credit to income of $2.1 million on the fiscal year 1995
Statement of Operations. See Footnote F to the Consolidated Financial Statements
for a summary of cash outlays relating to restructuring charges.
    
 
     As of June 3, 1995, the Company estimates the remaining cash requirements
for the integration of Cameron and direct costs associated with the Acquisition
to be $8.6 million, and expects to spend approximately $6.5 million during its
fiscal year ending June 1, 1996 ("fiscal year 1996") and $2.1 million
thereafter. In the first quarter of fiscal year 1996, spending related to the
integration of Cameron and associated direct costs amounted to $1.5 million.
 
     The 1991 restructuring plan is substantially complete. See Footnote F to
the Consolidated Financial Statements. The Company incurred cash charges of $2.7
million related to the 1991 restructuring plan during fiscal year 1995 and
expects to expend an additional $3.8 million over the next several years,
approximately $1.9 million in fiscal year 1996 and $1.9 million thereafter. For
fiscal year 1996 and thereafter, these expenditures are anticipated to include
payments for consolidation and reconfiguration of existing facilities of $1.7
million in fiscal year 1996 and $0.6 million thereafter, and payments under a
deferred compensation agreement of approximately $1.5 million. In the first
quarter of fiscal year 1996, spending related to the 1991 restructure plan
amounted to $0.4 million.
 
                                       18
<PAGE>   46
 
     As of June 3, 1995, the Company expects to spend $1.8 million in fiscal
year 1996 and $15.1 million thereafter on non-capitalizable environmental
activities. In the first quarter of fiscal year 1996, no amounts were expended
for non-capitalizable environmental projects. The Company has completed all
environmental projects within established timetables and is continuing to do so
at the present time.
 
     The Company from time to time expends cash on capital expenditures for more
cost effective operations, environmental projects and joint development programs
with customers. Capital expenditures amounted to $18.7 million, $2.4 million,
$13.9 million and $11.2 million in fiscal year 1995 the five months ended May
28, 1994 and fiscal years 1993 and 1992, respectively. Capital expenditures in
the foreseeable future are expected to increase from fiscal year 1995 levels. In
the first quarter of fiscal year 1996, capital expenditures amounted to $1.8
million.
 
     As of June 3, 1995, the Company had invested $4.1 million in cash towards
its share of the capital requirements of the Australian Joint Venture for the
production of nickel-based superalloy. The Company is committed to invest an
additional $3.4 million in the Joint Venture. The Australian Joint Venture has
entered into a credit agreement with an Australian bank under which it has $17.3
million in borrowings outstanding. The Company has guaranteed 25.0% of the
Australian Joint Venture's obligations under the credit agreement. This
guarantee expires at such time as the Australian Joint Venture demonstrates its
ability to produce commercially acceptable products. The Australian Joint
Venture has not generated sufficient cash flow to service its debt, and if the
operations do not become profitable in the future, the Company may be required
to write off all or a portion of the remaining book value of its investment and
repay up to 25.0% of the Joint Venture's $17.3 million debt, which is guaranteed
by the Company. The book value of the Company's investment in the Australian
Joint Venture as of September 2, 1995 is approximately $2.3 million.
 
   
     On May 20, 1994, the Company entered into a revolving receivables-backed
credit facility (the "Receivables Financing Program") among the Company, certain
subsidiaries and Wyman-Gordon Receivables Company ("WGRC") and a Revolving
Credit Agreement dated as of May 20, 1994 among WGRC and the financial
institutions party thereto. WGRC is a separate corporate entity from the Company
and its other subsidiaries with its own separate creditors. WGRC purchases
accounts receivable from the Company and certain other selling subsidiaries
("Sellers") and using those receivables as collateral borrows from the lending
banks. WGRC's creditors have a claim on its assets prior to those assets
becoming available to any creditors of any of the Sellers. Borrowings are
subject to a formula which is dependent upon certain reserves relating to the
accounts receivable purchased by WGRC and bear interest at fluctuating rates
tied to Eurodollar rates on the lending banks' prime rates. The aggregate
maximum borrowing capacity under the Receivables Financing Program is $65.0
million, with a letter of credit sub-limit of $35.0 million. The term of the
Receivables Financing Program is five years, with an evergreen feature. As of
June 3, 1995, under this credit facility, the total availability based on
eligible receivables was $44.8 million, there were no borrowings and letters of
credit amounting to $10.0 million were outstanding. As of September 2, 1995,
under the credit facility, the total availability based on eligible receivables
was $42.0 million, there were no borrowings and letters of credit amounting to
$9.7 million were outstanding.
    
 
     Wyman-Gordon Limited, the Company's subsidiary located in Livingston,
Scotland, entered into a credit agreement effective November 28, 1994 (the "U.K.
Credit Agreement"). The maximum borrowing capacity under the U.K. Credit
Agreement is L3.0 million with a separate letter of credit or guarantee limit of
L1.0 million. The term of the U.K. Credit Agreement is one year with an
evergreen feature. There were L2.4 million or $3.8 million of borrowings
outstanding at June 3, 1995 and the Company had issued L0.4 million or $0.6
million of letters of credit or guarantees under the U.K. Credit Agreement.
There were L3.0 million or $4.7 million of borrowings outstanding as of
September 2, 1995 and the Company had issued L0.9 million or $1.5 million of
letters of credit or guarantees under the U.K. Credit Agreement.
 
     The primary sources of liquidity available to the Company in fiscal year
1996 to fund operations, anticipated expenditures in connection with the
integration of Cameron, planned capital expenditures and planned environmental
expenditures include available cash ($21.4 million as of September 2, 1995 and
 
                                       19
<PAGE>   47
 
$13.9 million as of June 3, 1995), borrowing availability under the Company's
Receivables Financing Program, cash generated by operations and reductions in
working capital requirements through planned inventory reductions and accounts
receivable management.
 
     Cash from operations and debt are expected to be the Company's primary
sources of liquidity beyond fiscal year 1996. The Company believes that it has
adequate resources to provide for its operations and the funding of
restructuring, integration, capital and environmental expenditures.
 
     The Company's current plans to improve operating results include completing
the integration of Cameron, further reductions of personnel and various other
cost reduction measures. Programs to expand the Company's revenue base include
participation in new aerospace programs and expansion of participation in the
land-based gas turbine and extruded pipe markets and other markets in which the
Company has not traditionally participated. The Company anticipates that, in
addition to the growth in commercial aviation, the aging current commercial
airline fleet will require future orders for its replacement.
 
IMPACT OF INFLATION
 
     The Company's earnings may be affected by changes in price levels and in
particular, changes in the price of basic metals. The Company's contracts
generally provide for fixed prices for finished products with limited protection
against cost increases. The Company would therefore be affected by changes in
prices of the raw materials during the term of any such contract. The Company
attempts to minimize this risk by entering into fixed price arrangements with
raw material suppliers.
 
ACCOUNTING, TAX AND OTHER MATTERS
 
     In March 1995, the Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of" ("SFAS 121") which must be adopted by the Company no
later than fiscal year 1997. SFAS 121 prescribes the accounting for the
impairment of long-lived assets that are to be held and used in the business and
similar assets to be disposed of. The Company has not determined the impact of
adopting SFAS 121 on its financial position or results of operations.
 
     Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" ("SFAS 112"). This standard provides that the Company follow an
accrual method of accounting, rather than the as-incurred basis formerly used
for benefits payable to employees when they leave the Company for reasons other
than retirement. The adoption, including the cumulative effect, has not had a
material affect on earnings or the financial position of the Company.
 
     As of June 3, 1995, the Company had net operating loss carryforwards
("NOLs") of approximately $67.0 million, which begin expiring in year 2006. The
Company is seeking to utilize a substantial portion of such NOLs to obtain a
refund in excess of $20.0 million of prior years' taxes. To the extent that the
Company is not successful in recovering a refund of prior years' taxes, the NOLs
will be available to offset future taxable income, if any. A reasonable
estimation of the potential recovery cannot be made at this time and,
accordingly, no adjustment has been made in the financial statements with
respect to the claim for such refund.
 
     The Company's ability to utilize its NOLs in the future may be affected by
Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), which
generally limits the use of a corporation's NOLs following a more than 50
percentage point change in the ownership of the corporation's equity within any
three-year period (an "ownership change"). An ownership change could result in
the imposition of limitations on the Company's ability to offset future taxable
income with the Company's NOL's.
 
     The Australian Joint Venture has reported continued operating losses and
has not generated sufficient cash flow to service its debt. In fiscal year 1995,
the Company provided $1.4 million to
 
                                       20
<PAGE>   48
 
recognize the Company's 25.0% share of the net losses of this Joint Venture. The
Company provided an additional $0.8 million in the first quarter of fiscal year
1996. The book value of the Company's investment in the Australian Joint Venture
as of September 2, 1995 is approximately $2.3 million. If the Joint Venture's
operations do not become profitable in the future, the Company may be required
to make further provisions or to write off all or a portion of the remaining
book value of its investment and repay up to 25.0% of the Joint Venture's $17.3
million debt, which is guaranteed by the Company.
 
   
     The Company for several years maintained a program of company-owned life
insurance ("COLI") for certain of its employees. As of September 2, 1995 the
Company is named as beneficiary on approximately 1,650 COLI policies with an
aggregate cash surrender value of approximately $9.0 million, issued by
Confederation Life Insurance Company (U.S.), which is currently in
rehabilitation. Confederation Life Insurance Company is continuing to pay
benefits under the policies but has ceased to redeem cash surrender values. No
assurances can be given regarding to what extent the Company will be able to
realize such cash surrender values in the future.
    
 
                                       21
<PAGE>   49
 
                                    BUSINESS
 
GENERAL
 
     Wyman-Gordon Company is a leading producer of highly engineered,
technically advanced components for both the commercial and defense aerospace
market and the commercial power generation market. The Company uses die forging,
extrusion and investment casting processes to produce metal components to
exacting customer specifications for technically demanding applications such as
jet turbine engines, airframes and land-based gas turbine engines. The Company
also extrudes seamless heavy-wall steel pipe for use primarily in commercial
power generation plants, and designs and produces prototype aircraft using
composite technologies. The Company produces components for most of the major
commercial and U.S. defense aerospace programs. Metallurgical skills, an unique
asset base and a broad offering of capabilities allow the Company to serve
competing customers effectively and to lead the development and use of new metal
technologies for its customers' uses.
 
     The Company is the leading producer of rotating components for use in
turbine aircraft engines. These parts are forged from purchased ingots converted
to billet in the Company's cogging presses and from superalloy metal powders
which are produced, consolidated and extruded into billet entirely at the
Company's facilities. Forging is conducted in Massachusetts, Texas and Scotland
on a number of hydraulic presses with capacities ranging from 8,000 to 55,000
tons. The Company forges these engine components primarily from alloys of
high-temperature nickel. Additionally, the Company uses modern, automated,
high-volume production equipment and both air-melt and vacuum-melt furnaces in
its investment casting operations to produce complex non-rotating jet engine
parts from high-temperature nickel-based alloys.
 
     Structural airframe components are produced from alloys of steel, aluminum
and titanium on the Company's forging presses and by its investment casting
process. The Company uses its metallurgical and manufacturing capabilities to
design new products to accommodate its customers' needs for larger, stronger
structural parts forged from new superalloy metals. The Company produces
smaller, near net-shape structural parts for aircraft through its investment
castings business.
 
     The Company produces a variety of mechanical and structural tubular forged
products, primarily in the form of extruded seamless pipe, for the domestic and
international power generation markets, which include nuclear and fossil fueled
power plants, cogeneration projects and retrofit and life extension
applications. These tubular forged products also have ordnance and other
military applications. Aluminum, steel, titanium and superalloy products are
manufactured at the Company's Houston, Texas forging facility where one of the
world's largest vertical extrusion presses extrudes pipe up to 48 inches in
diameter and 7 inches in wall thickness and bar stock from 6 to 32 inches in
diameter. Lengths of pipe and bar stock vary from 10 to 45 feet with a maximum
forged weight of 20 tons. Similar equipment and capabilities are in operation at
the Company's Livingston, Scotland forging facility. Additionally, the Houston
press extrudes powder billets for use in aircraft turbine engine forgings.
 
     The Company's composite operation, Scaled Composites, Inc., plans, designs,
fabricates and tests composite airframe structures for the aerospace market.
 
   
     The Company's acquisition of Cameron from Cooper in May 1994 united two of
the country's largest and most technically advanced forging companies and had a
pervasive impact on the Company. As a result of the Acquisition, the Company has
broadened its revenue base and expanded into new markets. The Company is also
realizing substantial operating and processing efficiencies through the
consolidation of systems and facilities and the reduction of personnel
performing duplicate functions. At the time of the Acquisition in May 1994
Cameron and the Company's Forgings operations employed a combined total of 2,030
people. As of October 31, 1995 this number had been reduced by 9.4% to 1,840.
The Company estimates that this reduction in personnel and the Company's ability
to increase production with fewer employees as evidenced by the increase in
revenues per employee has resulted in improved operating results. See
"Prospectus Summary" on page 4. Areas where the Company has combined
    
 
                                       22
<PAGE>   50
 
   
operations include sales and marketing, testing, research and development and
management information systems.
    
 
BUSINESS STRATEGY
 
     In recent years the Company experienced losses as a result of declines in
customer demand caused by a combination of defense spending cutbacks, reduced
orders for new commercial aircraft and reductions in customer inventory levels.
In response the Company's senior management implemented a series of strategic
initiatives designed to (i) lower the Company's cost structure, (ii) consolidate
its forging operations, (iii) lower inventory requirements, and (iv) solidify
customer relations.
 
     In further response to the continuing overcapacity in the industry, the
Company acquired all of the stock of Cameron from Cooper in May 1994. Prior to
the Acquisition, Cameron was the Company's principal competitor in the
production of forgings for use in critical aerospace applications. For the year
ended December 31, 1993, Cameron had revenues of $149.5 million, an operating
loss of ($22.2) million and total assets of $151.8 million. As part of the
consideration for the Acquisition, the Company issued 16.5 million shares of
Common Stock to Cooper, which shares are being registered in connection with the
DECS Offering. Currently, these shares represent approximately 47% of the
outstanding Common Stock of the Company.
 
     As a result of the Acquisition, the Company has achieved cost savings,
which total more than $26.0 million on an annualized basis to date. In addition,
the Company has achieved the following production efficiencies.
 
     Focused Factories.  The Company has substantially completed the
consolidation of the manufacture of rotating parts for jet engines from Grafton,
Massachusetts into Cameron's Houston, Texas facility. At the same time, the
Grafton facility has been focused on the production of large airframe structures
and large turbine parts such as components for the GE90 engine and land-based
gas turbines. The results have been the elimination of duplicative facilities,
improved throughput, and efficiencies of scale.
 
   
     Rationalization of Forging Operations.  Subsequent to the Acquisition the
Company closed one of the two Cameron forging plants in Houston, Texas. In
addition, the Company has closed its hammer forging operations and is in the
process of closing its ring-roll operations at its Worcester, Massachusetts
facility. The result has been improved manufacturing efficiencies, higher
utilizations and better inventory management.
    
 
     Best Practices.  The Company is in the process of adopting the best
manufacturing practices of the Company and Cameron. The improved manufacturing
practices have resulted in cost reductions from lower material input weights on
certain forgings, improved machining practices and more efficient testing
procedures. Substantial raw material cost savings in certain of the Company's
forgings processes have resulted from utilization of material produced in
Cameron's Brighton, Michigan powder metal facility and Cameron's Houston, Texas
vacuum arc remelting facility. From 1991 through 1995 average production cycle
times at Cameron's Houston facility were reduced from approximately 22 weeks to
seven weeks and the Company is seeking to achieve similar reductions at its
Grafton, Massachusetts facility.
 
     In addition to the benefits the Company has realized from the Acquisition
and expects to realize in the future, the Company has in place several programs
to strengthen its position in the aerospace market and to enter new markets
utilizing its expertise in high performance materials.
 
     Focus on Large Aerospace Components.  The Company believes that its
extensive installed asset base, technological leadership in manufacturing
large-scale components and experience in producing and utilizing sophisticated
alloys will enable the Company to capitalize on the industry trend toward
widebody aircraft with larger and more sophisticated engines. These aircraft,
which include the new Boeing 777, require larger airframe structural parts and
their engines require high-purity alloys, both of which are particular strengths
of the Company.
 
                                       23
<PAGE>   51
 
     Strategic Alliances with Key Customers.  The Company has entered into joint
development programs with its two largest customers, GE and Pratt & Whitney, for
the production of (i) forged rotating parts for the new GE90 jet engine and (ii)
nickel-based superalloy ingots through the Australian Joint Venture,
respectively. Management believes that alliances such as these strengthen
existing relationships, and in some cases allow the Company to become involved
in the design phases for new components and applications, thereby enhancing the
Company's chances of obtaining future orders.
 
     New Applications and Markets.  The Company believes that its expertise in
the manufacture of highly specialized metal components with enhanced fatigue and
temperature resistant properties gives it the ability to design new applications
for existing technologies in its current markets and to utilize existing
technologies in new markets. For example, the Company has been able to enter the
power generation market where the Company's knowledge of nickel-based
superalloys and manufacturing technology utilized for aircraft engines can be
applied to manufacture energy efficient, high strength, temperature resistant
gas turbines.
 
   
     Management believes that the combination of the Company's technological
capabilities, installed asset base and close customer relationships, together
with its improved cost structure, will allow the Company to operate profitably
in an environment of relatively low commercial aircraft deliveries and to
benefit from increases in delivery rates. However, the Company's results of
operations could be adversely affected by a variety of factors. See "Risk
Factors". At the same time the Company seeks to expand into new product and
geographic markets.
    
 
MARKETS AND PRODUCTS
 
     The principal markets served by the Company are aerospace and power
generation. Revenue by market for the respective periods were as follows:
 
<TABLE>
<CAPTION>
                         
                             
                         THREE MONTHS
                             ENDED                                                 YEAR ENDED
                      -------------------      ----------------------------------------------------------------------------------
                       SEPTEMBER 2, 1995                                                     DECEMBER 31,          DECEMBER 31,
                      -------------------        JUNE 3, 1995          MAY 28, 1994              1993                  1992
                                               ----------------      ----------------      ----------------      ----------------
                                   % OF                    % OF                  % OF                  % OF                  % OF
                       REVENUE     TOTAL       REVENUE    TOTAL      REVENUE    TOTAL      REVENUE    TOTAL      REVENUE    TOTAL
                      ---------   -------      --------   -----      --------   -----      --------   -----      --------   -----
                                                          (000'S OMITTED, EXCEPT PERCENTAGES)
<S>                   <C>          <C>         <C>         <C>       <C>         <C>       <C>         <C>       <C>         <C>
Aerospace...........  $ 82,211      72%        $300,143     76%      $188,518     84%      $205,077     85%      $263,961     88%
Power generation....    22,823      20           66,892     17         15,616      7         14,719      6         17,401      6
Other...............     9,043       8           29,604      7         20,560      9         19,965      9         17,519      6
                      --------      --         --------    ---       --------    ---       --------    ---       --------    ---
 Total..............  $114,077     100%        $396,639    100%      $224,694    100%      $239,761    100%      $298,881    100%
                      ========     ===         ========    ===       ========    ===       ========    ===      =========    ===
</TABLE>
 
AEROSPACE
 
     The Company manufactures products utilized in general aviation, defense and
business jet aircraft. The Company manufactures numerous forged and cast
components for jet engines produced by all of the major manufacturers, including
GE, Pratt & Whitney and Rolls-Royce. The Company's forged engine parts include
fan discs, compressor discs, turbine discs, seals, spacers, shafts, hubs and
cases. Cast engine parts include thrust reversers, valves and fuel system parts
such as combustion chamber swirl guides. Jet engines may produce in excess of
100,000 pounds of thrust and may subject parts produced by the Company to
temperatures reaching 1,350 degrees Fahrenheit. Components for such extreme
conditions require precision manufacturing and expertise with high-purity
titanium and nickel-based superalloys. Rotating parts such as fan, compressor
and turbine discs must be manufactured to precise quality specifications.
 
     The Company manufactures forged and cast structural parts for fixed-wing
aircraft and helicopters. These products include wing spars, engine mounts,
struts, landing gear beams, landing gear, wing hinges, wing and tail flaps,
housings, and bulkheads. These parts may be made of titanium, steel, aluminum
and other alloys, as well as composite materials. The Company also produces
dynamic rotor forgings for helicopters. Forging is particularly well-suited for
airframe parts because of its ability to impart
 
                                       24
<PAGE>   52
 
greater proportional strength to metal than other manufacturing processes.
Investment casting can produce complex shapes to precise, repeatable dimensions.
 
     The Company has been a major supplier of the beams that support the main
landing gear assemblies on the Boeing 747 for many years and has recently begun
shipping main landing gear beams for the new Boeing 777 widebody. The Company
forges landing gear and other airframe structural components for the Boeing 737,
747, 757, 767 and 777, the McDonnell Douglas MD-11 and the Airbus A330 and A340.
The Company produces structural forgings for the F-15, F-16 and F-18 fighter
aircraft and the Black Hawk helicopter produced by the Sikorsky Division of
United Technologies ("Sikorsky"). The Company also produces large, one-piece
bulkheads for Lockheed/Boeing for the F-22 next generation air superiority
fighter aircraft.
 
POWER GENERATION
 
     The Company is a major supplier of extruded seamless heavy wall pipe for
the critical piping systems in both fossil fuel and nuclear commercial power
plants worldwide, as well as offshore petroleum exploration applications. The
Company believes it is a leading supplier in the U.S. and the U.K. of large
diameter, seamless heavy wall pipe. The Company produces components for steam
turbine and gas turbine generators and forged valves for land-based power
generation applications. The Company also manufactures shafts, cases, and
compressor and turbine discs for marine gas turbines.
 
OTHER PRODUCTS
 
     The Company supplies products to builders of military missiles. Examples of
these products include breech block and breech rings for large cannon and forged
steel casings for bombs, rockets and expendable launch vehicles. The Company
participates in a variety of U.S. Government programs including the Standard,
Harm, Patriot and Aegis programs. For naval defense applications, the Company
supplies components for propulsion systems for nuclear submarine and aircraft
carriers as well as pump, valve, structural and non nuclear propulsion forgings.
 
     The Company also manufactures extruded missile, rocket and bomb cases and
supplies extruded products for nuclear submarines and aircraft carriers
including heavy wall piping for nuclear propulsion systems, torpedo tubes and
catapult launch tubes.
 
     The Company's investment castings operations produce products for
commercial applications such as: components for golf clubs, pistol frames,
bicycles, food processing equipment, diesel turbo-chargers, land-based military
equipment such as tanks, and various other applications.
 
     The Company also supplies extruded powders for other superalloy powder
manufacturers. The Company is actively seeking to identify alternative
applications for its capabilities, such as in the automotive and other
commercial markets.
 
                                       25
<PAGE>   53
 
CUSTOMERS

<TABLE>
 
     The Company has approximately 150 active customers that purchase forgings,
approximately 550 active customers that purchase investment castings and
approximately 20 active customers that purchase composite structures. The
Company's principal customers are similar across all of these production
processes. Five customers accounted for 52% of the Company's revenues for the
three months ended September 2, 1995, 50% of the Company's revenues for the year
ended June 3, 1995, 51% for the year ended May 28, 1994, and 56% and 53% for the
years ended December 31, 1993 and 1992, respectively. GE and United Technologies
(primarily Pratt & Whitney and Sikorsky) each accounted for more than 10% of
revenues for the year ended June 3, 1995, the year ended May 28, 1994, and the
years ended December 31, 1993 and 1992, respectively, as follows:
 
<CAPTION>
                     THREE MONTHS 
                         ENDED                                                 YEAR ENDED
                  ------------------    -------------------------------------------------------------------------------------
                  SEPTEMBER 2, 1995        JUNE 3, 1995           MAY 28, 1994       DECEMBER 31, 1993     DECEMBER 31, 1992
                  ------------------    -------------------    ------------------    ------------------    ------------------
                              % OF                   % OF                  % OF                  % OF                  % OF
                              TOTAL                  TOTAL                 TOTAL                 TOTAL                 TOTAL
                  REVENUE    REVENUE    REVENUE     REVENUE    REVENUE    REVENUE    REVENUE    REVENUE    REVENUE    REVENUE
                  -------    -------    --------    -------    -------    -------    -------    -------    -------    -------
                                                           (000'S OMITTED, EXCEPT PERCENTAGES)
<S>               <C>         <C>       <C>          <C>       <C>           <C>      <C>          <C>     <C>           <C>
GE..............  $32,106     28%       $101,261     26%       $48,286       22%      $55,585      23%     $62,740       21%
United
 Technologies...   12,953     11          58,873     15         39,100       17        37,060      16       48,920       17

</TABLE>
 
   
     Boeing, McDonnell Douglas and Rolls-Royce are also significant customers of
the Company. Because of the relatively small number of customers for some of the
Company's principal products, those customers exercise significant influence
over the Company's prices and other terms of trade.
    
    
     The Company has organized its operations into product groups which focus on
specific customers or groups of customers with similar needs. The Company has
become actively involved with its aerospace customers through joint development
relationships and cooperative research and development, engineering, quality
control, just-in-time inventory control and computerized design programs. This
involvement begins with the design of the tooling and processes to manufacture
the customer's components to its precise specifications.
    
 
MARKETING AND SALES
 
     The Company markets its products principally through its own sales
engineers and makes only limited use of manufacturers' representatives.
Substantially all sales are made directly to original equipment manufacturers.
 
     The Company's sales are not subject to significant seasonal fluctuations.
 
     A substantial portion of the Company's revenues are derived from long-term,
fixed price contracts with major engine and aircraft manufacturers. These
contracts are typically "requirements" contracts under which the purchaser
commits to purchase a given portion of its requirements of a particular
component from the Company. Actual purchase quantities are typically not
determined until shortly before the year in which products are to be delivered.
 
BACKLOG
 
     The Company's firm backlog includes the sales price of all undelivered
units covered by customers' orders for which the Company has production
authorization.
 
                                       26
<PAGE>   54

<TABLE>
      The Company's firm backlog in the various markets served by the Company has
been as follows:
 
<CAPTION>
                                    SEPTEMBER 2, 1995           JUNE 3, 1995              MAY 28, 1994
                                   -------------------       -------------------       -------------------
                                                 % OF                      % OF                      % OF
                                    BACKLOG      TOTAL        BACKLOG      TOTAL        BACKLOG      TOTAL
                                   ---------     -----       ---------     -----       ---------     -----
                                                     (000'S OMITTED, EXCEPT PERCENTAGES)
<S>                                 <C>           <C>         <C>           <C>         <C>           <C>
Aerospace.......................    $385,625      81%         $382,982      82%         $342,007      88%
Power generation................      59,234      13            57,248      12            33,700       9
Other...........................      28,549       6            28,531       6            13,700       3
                                    --------     ---          --------     ---          --------     ---
  Total.........................    $476,950     100%         $468,761     100%         $389,407     100%
                                    ========     ===          ========     ===          ========     ===
</TABLE>
 
     At June 3, 1995 approximately $365.0 million of total firm backlog was
scheduled to be shipped within one year and the remainder in subsequent years.
(Sales during any period include sales which were not part of backlog at the end
of the prior period.) Customer orders in firm backlog are subject to
rescheduling or termination for customer convenience and due to market
fluctuations in the commercial aerospace industry. However, in certain cases the
Company is entitled to an adjustment in contract amounts.
 
MANUFACTURING PROCESSES
 
     The Company employs three manufacturing processes: forging, investment
casting and composites production.
 
Forging
 
     Forging is the process by which desired shapes, metallurgical
characteristics, and mechanical properties are imparted to metal by heating and
shaping it through pressing or extrusion. The Company forges alloys of titanium,
aluminum and steel as well as high temperature nickel-based superalloys.
 
     The Company manufactures most of its forgings at its facilities in Grafton
and Worcester, Massachusetts; Houston, Texas and Livingston, Scotland. The
Company also operates a superalloy powder metal facility in Brighton, Michigan
and vacuum arc remelting facilities in Houston, Texas and Millbury,
Massachusetts which produce steel, nickel and titanium ingots, and a plasma arc
melting facility for the production of high quality titanium ingots and nickel
powder in Millbury, Massachusetts. The Company has six large closed die
hydraulic forging presses rated as follows: 18,000 tons, 35,000 tons and 50,000
tons in Grafton Massachusetts; 29,000 tons and 35,000 tons in Houston, Texas and
30,000 tons in Livingston, Scotland. The 35,000 ton vertical extrusion press in
Houston can be modified to a 55,000 ton hydraulic forging press. The Company
also operates an open die cogging press rated at 2,000 tons at its Grafton,
Massachusetts location and a hydraulic isothermal forging press rated at 8,000
tons at its Worcester, Massachusetts location.
 
     The Company employs all major forging processes, including the following:
 
     Open-Die Forging.  In this process, the metal is forged between dies that
never completely surround the metal, thus allowing the metal to be observed
during the process. Typically, open-die forging is used to create relatively
simple, preliminary shapes to be further processed by closed-die forging.
 
     Closed-Die Forging.  Closed-die forging involves pressing heated metal into
the required shapes and size determined by machined impressions in specially
prepared dies which exert three dimensional control on the metal. In hot-die
forging, a type of closed-die process, the dies are heated to a temperature
approaching the transformation temperature of the materials being forged so as
to allow the metal to flow more easily within the die cavity which produces
forgings with superior surface conditions, metallurgical structures, tighter
tolerances, enhanced repeatability of the part shapes and greater metallurgical
control. Both titanium and nickel-based superalloys are forged using this
process, in which the dies are heated to a temperature of approximately 1,300
degrees Fahrenheit.
 
                                       27
<PAGE>   55
 
     Conventional/Multi-Ram.  The closed-die, multiple-ram process featured on
the Company's 30,000 ton press enables the Company to produce extremely complex
forgings with multiple cavities in a single heating and pressing cycle. Dies may
be split either on a vertical or a horizontal plane and shaped punches may be
operated by side rams, piercing rams, or both. Multi-ram forging enables the
Company to produce a wide variety of shapes, sizes, and configurations utilizing
less input weight. The process also optimizes grain flow and uniformity of
deformation, reduces machining requirements, and minimizes overall costs.
 
     Isothermal Forging.  Isothermal forging is a closed-die process in which
the dies are heated to the same temperature as the metal being forged, typically
in excess of 1,900 degrees Fahrenheit. The forged material typically consists of
nickel-based superalloy powders. Because of the extreme temperatures necessary
for forming these alloys, the dies must be made of refractory metal (such as
molybdenum) so that the die retains its strength and shape during the forging
process. Because the dies may oxidize at these elevated temperatures, the
forging process is carried on in a vacuum or inert gas atmosphere. The Company's
isothermal press also allows it to produce near-net shape components (requiring
less machining by the customer) made from titanium alloys, which can be an
important competitive advantage in times of high titanium prices. The Company
carries on this process in its 8,000-ton isothermal press.
 
     Extrusion.  The Company's 35,000 ton vertical extrusion press is one of the
largest and most advanced presses in the world. Extrusions are produced for
applications in the oil and gas industry, including tension leg platforms, riser
systems and production manifolds. The extrusion process is facilitated by
manipulators capable of handling work pieces weighing up to 20 tons, rotary
hearth furnaces and a 14,000 ton blocking press. It is capable of producing
heavy wall seamless pipe with outside diameters up to 48 inches and wall
thicknesses from 1/2 inch up to 7 inches or more. Solid extrusions can be
manufactured from 6 to 32 inches in diameter. Typical lengths vary from 10 to 45
feet. Powder materials can also be compacted and extruded into forging billets
utilizing this press. The 30,000 ton press has similar extrusion capabilities in
addition to its multi-ram forging capabilities.
 
     Titanium and Superalloy Production.  The Company utilizes vacuum arc
remelting technology to produce titanium alloy suitable for structural and
turbine aerospace applications. Titanium produced in this manner is utilized in
both the Company's forging and castings operations.
 
     The Company's Brighton, Michigan powder metal facility has the capability
to atomize, process, and consolidate (by hot isostatic pressing) superalloy
metal powders for use in aerospace, medical implant, petrochemical, hostile
environment oil and gas drilling and production, and other high technology
applications. This facility has an annual production capacity of up to 500,000
pounds of superalloy powder. In addition, the Company has the capacity to
consolidate powdered metals by extrusion using its 30,000 ton and 35,000 ton
presses. Extruded billets are further processed and either sold to other forge
shops or forged into critical jet engine components on the Company's 8,000 ton
isothermal press.
 
     The Company's Plasma Arc Melting "PAM" facility in Millbury, Massachusetts
is capable of producing high quality titanium ingot and nickel-based superalloy
powder. The Company is currently pursuing certifications by certain customers
for use of this technology in high performance jet engines.
 
     The Company's vacuum arc remelt ("VAR") shop in Houston, Texas has five
computer-controlled VAR furnaces which process electrodes up to 42 inches in
diameter that weigh up to 40,000 pounds. The Houston VAR furnaces are used to
remelt purchased electrodes into high purity alloys for internal use in severe
applications. In addition, the VAR furnaces are used for toll melting. These
vacuum metallurgy techniques provide consistently high levels of purity, low gas
content, and precise control over the solidification process. This minimizes
segregation in complex alloys and results in improved mechanical properties, as
well as hot and cold workability.
 
     The Company has entered into the Australian Joint Venture with Pratt &
Whitney and certain Australian investors to produce nickel-based superalloy
ingots in Perth, Australia. These ingots will be utilized as raw materials for
the Company's forging and casting products.
 
                                       28
<PAGE>   56
 
     Support Operations.  The Company manufactures its own forging dies out of
high-strength steel and molybdenum. These dies can weigh in excess of 100 tons
and can be up to 25 feet in length. In manufacturing its dies, the Company
utilizes its customers' drawings and engineers the dies using CAD/CAM equipment
and sophisticated metal flow computer models that simulate metal flow during the
forging process. This activity improves die design and process control and
permits the Company to enhance the metallurgical characteristics of the forging.
 
     The Company also has at its three major forging locations machine shops
with computer aided profiling equipment, vertical turret lathes and other
equipment that it employs to rough machine products to a shape allowing
inspection of the products. The Company also operates rotary and car-bottom heat
treating furnaces that enhance the performance characteristics of the forgings.
These furnaces have sufficient capacity to handle all the Company's forged
products. The Company subjects its products to extensive quality inspection and
contract qualification procedures involving zyglo, chemical etching, ultrasonic,
red dye, and electrical conductivity testing facilities.
 
     Testing.  Because the Company's products are for high performance end uses,
rigorous testing is necessary and is performed internally by Company engineers.
Throughout the manufacturing process, numerous tests and inspections are
performed to insure the final quality of each product; statistical process
control ("SPC") techniques are also applied throughout the entire manufacturing
process.
 
Investment Casting
 
     The Company's investment castings operations use modern, automated, high
volume production equipment and both air-melt and vacuum-melt furnaces to
produce a wide variety of complex investment castings. Castings are made of a
range of metal alloys including aluminum, magnesium, steel, titanium and
nickel-based superalloys.
 
     The Company's castings operations are conducted in facilities located in
Connecticut, New Hampshire, Nevada and California. These plants house air and
vacuum-melt furnaces, wax injection machines and investment dipping tanks.
Because of the growth in demand for the Company's high quality titanium
castings, the Company is in the process of restarting its Franklin, New
Hampshire facility which it closed in 1993. The Company has ordered a new
state-of-the-art titanium melting furnace for installation in the Franklin
plant. Additionally, the Company has expanded its Groton, Connecticut facility
for the production of high quality titanium castings.
 
     Investment castings are produced in four major stages. First, molten wax is
injected into an aluminum mold, known as a "tool," in the shape of the ultimate
component to be produced. These tools are produced to the specifications of the
customer and are primarily purchased from outside die makers, although the
Company maintains internal tool-making capabilities. In the second stage, the
wax patterns are mechanically coated with a sand and silicate-bonded slurry in a
process known as investment. This forms a ceramic shell which is subsequently
air-dried under controlled environmental conditions. The wax inside this shell
is then melted and removed in a high temperature steam autoclave and the molten
wax is recycled. In the third, or foundry stage, metal is melted in an electric
furnace in either an air or vacuum environment and poured into the ceramic
shell. After cooling, the ceramic shells are removed by vibration. The metal
parts are then cleaned in a high temperature caustic bath, followed by water
rinsing. In the fourth, or finishing stage, the castings are finished to remove
excess metal. The final product then undergoes a lengthy series of testing
(radiography, fluorescent penetrant, magnetic particle and dimensional) to
ensure quality and consistency.
 
Composites
 
     The Company's composites operation, Scaled Composites, Inc., plans,
designs, fabricates and tests composite airframe structures for the aerospace
market. Customers include Lawrence Livermore Laboratories and Orbital Sciences
Corp.
 
                                       29
<PAGE>   57
 
FACILITIES
   
<TABLE>
 
     The following table sets forth certain information with respect to the
Company's major facilities at June 3, 1995, all of which are owned. The Company
believes that its facilities are well-maintained, are suitable to support the
Company's business and are adequate for the Company's present and anticipated
needs. On average during the Company's fiscal year 1995, the Company's forging,
investment castings and composites facilities were operating at approximately
60%, 70% and 90% of their total productive capacity, respectively.
 
<CAPTION>
                                                       APPROX.
                                                       SQUARE
                     LOCATION                          FOOTAGE            PRIMARY FUNCTION
                     --------                         ---------           ----------------
<S>                                                 <C>                   <C>

FOREIGNS:
Brighton, Michigan.................................     34,500            Superalloy Powder Production
Grafton, Massachusetts.............................     85,420            Administrative Offices
Grafton, Massachusetts.............................    843,200            Forging
Houston, Texas.....................................  1,283,800            Forging
Livingston, Scotland...............................    405,200            Forging
Livingston, Scotland...............................    112,000            Currently idle
Millbury, Massachusetts............................    104,125            Research and Development,
                                                                          Metals Production
Worcester, Massachusetts...........................     43,200            Currently idle
Worcester, Massachusetts...........................     22,300            Forging
Worcester, Massachusetts...........................    301,400            Closing 1995

CASTINGS:
Carson City, Nevada................................     46,000            Casting
Franklin, New Hampshire............................     43,200            Casting
Groton, Connecticut (2 plants).....................    162,550            Casting
San Leandro, California............................     45,000            Casting
Tilton, New Hampshire..............................     94,000            Casting
                                                         
COMPOSITES:
Mojave, California.................................     67,000            Composites
                                                         
</TABLE>
    
 
RAW MATERIALS
 
     Raw materials used by the Company in its forgings and castings include
alloys of titanium, nickel, steel, aluminum, magnesium and other
high-temperature alloys. The composites operation uses high strength fibers such
as fiberglass or graphite, as well as materials such as foam and epoxy, to
fabricate composite structures. The major portion of metal requirements for
forged and cast products are purchased from major metal suppliers producing
forging and casting quality material as needed to fill customer orders. The
Company has two or more sources of supply for all significant raw materials. The
Company satisfies some of its nickel and titanium requirements internally by
producing titanium alloy from titanium scrap and "sponge." The Company's powder
metal facility and PAM units produce nickel-based superalloy powder and high
quality titanium ingot. The Company has experienced delays in the delivery of
its raw materials.
 
     The titanium and nickel-based superalloys utilized by the Company have a
relatively high dollar value. Accordingly, the Company attempts to recover and
recycle scrap materials such as machine turnings, forging flash, scrapped
forgings, test pieces and casting sprues, risers and gates.
 
                                       30
<PAGE>   58
   
     In the event of customer cancellation, the Company may, under certain
circumstances, obtain reimbursement from the customer if the material cannot be
diverted to other uses. Costs of material already on hand, along with any
conversion costs incurred, are generally billed to the customer unless
transferable to another order. As demand for the Company's products grew during
fiscal year 1995, and prices of raw materials rose, the Company experienced
certain raw material shortages and production delays. Although this situation
improved during the second half of fiscal year 1995, it had a negative impact on
overall revenues. The Company's most significant raw materials consist of nickel
and titanium alloys. Its principal suppliers of nickel alloys include Special
Metals Corporation, Teledyne Allvac Corporation, and Carpenter Technologies
Corporation. Its principal suppliers of titanium alloys are Titanium Metals
Corporation of America, Oregon Metallurgical Corp., and Refractory Metals, Inc.
Each of these suppliers has experienced increases in the market prices of the
elements (e.g. nickel, titanium, cobalt), that they use in fabricating their
products. The Company often has fixed-price contracts with its suppliers.
Because the Company's suppliers generally have alternative markets for their
products where they may have greater ability to increase their prices,
production has in some cases been diverted to alternative markets. As a result
the Company's lead time for deliveries from its suppliers has expanded from 20
weeks to 40 weeks in the case of titanium alloys and from 22 weeks to 44 weeks
in the case of nickel-based alloys. The Company has sought price increases and
other financial considerations from its customers which would permit it to
increase the price it pays to suppliers; and is considering producing a greater
amount of its requirements in its own facilities, including the Australian Joint
Venture; and has sought alternative sources of supply such as from the Republics
formerly comprising the Soviet Union. In addition, the Company, its customers
and suppliers have undertaken active programs for supply chain management which
should reduce the overall lead times.
    
 
ENERGY USAGE
 
     The Company is a large consumer of energy. Energy is required primarily for
heating metals to be forged and melting metals to be cast, melting of ingots,
heat-treating materials after forging and casting, operating forging presses,
melting furnaces, die-sinking, mechanical manipulation and pollution control
equipment and space heating. The Company uses natural gas, oil and electricity
in varying amounts at its manufacturing facilities. Supplies of natural gas, oil
and electricity have been sufficient and there is no anticipated shortage for
the future.
 
<TABLE>
EMPLOYEES
 
     As of June 3, 1995, the Company had approximately 3,100 employees of whom
850 were executive, administrative, engineering, research, sales and clerical
and 2,250 were production and craft. Approximately 61% of the production and
craft employees, consisting of employees in the forging business, are
represented by unions. The Company has entered into collective bargaining
agreements with these union employees as follows:
 
<CAPTION>
                                          NUMBER OF
                                          EMPLOYEES
                                          COVERED BY
                                          BARGAINING        INITIATION           EXPIRATION
               LOCATION                   AGREEMENTS           DATE                 DATE
               --------                   ----------     ----------------     -----------------
<S>                                          <C>         <C>                  <C>
Grafton and Worcester, Massachusetts...        562         March 27, 1995        March 30, 1997
Houston, Texas.........................        505         August 7, 1995        August 9, 1998
                                                32         August 7, 1995        Sept. 27, 1998
Livingston, Scotland...................        200       December 1, 1993     November 30, 1995
                                                55       February 1, 1994      January 31, 1996
                                             -----
Total..................................      1,354
                                             =====
</TABLE>
 
     The Company believes it has good relations with its employees although it
experienced a one week strike in August 1995 in connection with the negotiation
of its current collective bargaining agreement
 
                                       31
<PAGE>   59
 
   
with the union representing most of its factory workforce in Houston, Texas. The
strike involved approximately 505 union personnel. Because of the short nature
of the strike and the fact that the Company was able to continue to operate the
plant with non-union personnel, the strike did not have a significant impact on
the Company's operations.
    
 
RESEARCH AND PATENTS
 
     The Company maintains research and development departments at both
Millbury, Massachusetts and Houston, Texas which are engaged in applied research
and development work primarily relating to the Company's forging operations. The
Company works closely with customers, universities and government technical
agencies in developing advanced forging and casting materials and processes. The
Company's composites operation conducts research and development related to
aerospace composite structures at the Mojave, California facility. The Company
spent approximately $2.2 million, $0.7 million, $2.8 million, and $3.0 million
on applied research and development work during fiscal year 1995, the five
months ended May 28, 1994, and fiscal years 1993 and 1992, respectively.
Although the Company owns patents covering certain of its processes, the Company
does not consider that these patents are of material importance to the Company's
business as a whole. Most of the Company's products are manufactured to customer
specifications and, consequently, the Company has few proprietary products.
 

COMPETITION
 
     Most of the Company's production capabilities are possessed in varying
degrees by other companies in the industry, including both domestic and foreign
manufacturers. Competition is intense among the companies currently involved in
the industry. Competitive advantages are afforded to those with high quality
products, low cost manufacturing, excellent customer service and delivery and
engineering and production expertise. The Company considers that it is in a
leading position in these areas.

 
ENVIRONMENTAL REGULATIONS
 
     The Company is subject to extensive, stringent and changing federal, state
and local environmental laws and regulations, including those regulating the
use, handling, storage, discharge and disposal of hazardous substances and the
remediation of alleged environmental contamination. Accordingly, the Company is
involved from time to time in administrative and judicial inquiries and
proceedings regarding environmental matters. Nevertheless, the Company believes
that compliance with these laws and regulations will not have a material adverse
effect on the Company's operations as a whole. The Company continues to design
and implement a system of programs and facilities for the management of its raw
materials, production processes and industrial waste to promote compliance with
environmental requirements. In the fourth quarter of 1991, the Company recorded
a pre-tax charge of $7.0 million with respect to environmental investigation and
remediation costs at the Grafton facility and a pre-tax charge of $5.0 million
against potential environmental remediation costs upon the eventual sale of the
Worcester facility. During the five-month fiscal period ended May 28, 1994 the
Company provided an additional $2.0 million for potential environmental
investigation and remediation costs and established a $3.5 million purchase
accounting reserve related to environmental issues at Cameron.
 
     Pursuant to an agreement entered into with the U.S. Air Force upon the
acquisition of the Grafton facility from the federal government in 1982, the
Company agreed to make expenditures totaling $20.8 million for environmental
management and remediation at the site during the period 1982 through 1999, of
which $6.1 million remained as of June 3, 1995. These expenditures will not
resolve the Company's obligations to federal and state regulatory authorities,
who are not parties to the agreement, however, and the Company expects to incur
an additional amount, currently estimated at $3.5 million, to comply with
current federal and state environmental requirements governing the investigation
and remediation of contamination at the site. In connection with these
requirements, the Company is
 
                                       32
<PAGE>   60
 
evaluating and planning for closure of 46 solid waste management units on the
site. In addition, the Company is subject to an administrative consent order
issued by the Environmental Protection Agency in 1991 that requires the Company
to close several wastewater and water treatment facilities and construct a
Runoff Management Facility to treat process water and stormwater, which was
completed in January 1995 at a cost of $5.5 million.
 
   
     The Company's Grafton facility is included in the U.S. Nuclear Regulatory
Commission's ("NRC") May 1992 Site Decommissioning Management Plan for low-level
radioactive waste. In a draft 1992 long-range dose assessment the NRC determined
that the site should be remediated. As a result the Company has challenged the
draft assessment, believing it to be flawed. The Company has provided $1.5
million for the estimated cost of remediation and disposal if the NRC requires
it to take these actions. However, the Company may be required to dispose of the
wastes at a more expensive disposal facility, which could increase the
remediation and disposal costs beyond the provision that the Company has
established. The Company believes that it may have meritorious claims for
contribution from the U.S. Air Force in respect of any liabilities it may have
for such remediation.
    
 
     The Company, together with numerous other parties, has been named a
potentially responsible party ("PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") for the cleanup of the
following four Superfund sites: Operating Industries, Monterey Park, California;
Cedartown Municipal Landfill, Cedartown, Georgia; PSC Resources, Palmer,
Massachusetts; and the Gemme site, Leicester, Massachusetts. The Company
believes that any liability it may incur with respect to these sites will not be
material.
 
     At the Gemme site, a proposed agreement would allocate 33% of the cleanup
costs to the Company. In September 1995, a consulting firm retained by the PRP
group made a preliminary remediation cost estimate of $1.4 million to $2.8
million. The Company's insurance company is defending the Company's interests,
and the Company believes that any recovery against the Company would be offset
by recovery of insurance proceeds.
 
     The Company expects to incur between $6 and $7 million in cleanup expenses
upon the planned sale of its Worcester, Massachusetts facility to remedy certain
contamination discovered on-site.
 
PRODUCT LIABILITY EXPOSURE
 
     The Company produces many critical engine and structural parts for
commercial and military aircraft. As a result, the Company faces an inherent
business risk of exposure to product liability claims. The Company maintains
insurance against product liability claims, but there can be no assurance that
such coverage will continue to be available on terms acceptable to the Company
or that such coverage will be adequate for liabilities actually incurred. The
Company has not experienced any material loss from product liability claims and
believes that its insurance coverage is adequate to protect it against any
claims to which it may be subject.
 
LEGAL PROCEEDINGS
 
     At June 3, 1995, the Company was involved in certain legal proceedings
arising in the normal course of its business. The Company believes the outcome
of these matters will not have a material adverse effect on the Company.
 
                                       33
<PAGE>   61
   
<TABLE>
                                   MANAGEMENT
 
     The executive officers and directors of the Company are as follows:
 
<CAPTION>
                NAME                    AGE                        POSITION
                ----                    ---                        --------
<S>                                     <C>   <C>
John M. Nelson.......................   64    Chairman of the Board
David P. Gruber......................   53    President, Chief Executive Officer and Director
Andrew C. Genor......................   53    Vice President, Chief Financial Officer and Treasurer
Sanjay N. Shah.......................   45    Vice President, Corporate Strategy Planning and
                                                Business Development
J. Douglas Whelan....................   56    President, Forging Division
Wallace F. Whitney, Jr. .............   52    Vice President, General Counsel and Clerk
Frank J. Zugel.......................   50    President, Investment Castings Division
E. Paul Casey........................   65    Director
Dewain K. Cross......................   58    Director
Warner S. Fletcher...................   50    Director
Robert G. Foster.....................   57    Director
Russell E. Fuller....................   69    Director
M Howard Jacobson....................   62    Director
Judith S. King.......................   61    Director
George S. Mumford, Jr. ..............   67    Director
H. John Riley, Jr. ..................   55    Director
Jon C. Strauss.......................   55    Director
Charles A. Zraket....................   71    Director
</TABLE>
    
 
     JOHN M. NELSON was elected Chairman of the Company in May 1994 having
previously served as the Company's Chairman of the Board and Chief Executive
Officer since May 1991. Prior to that time he served for many years in a series
of executive positions with Norton Company, a manufacturer of abrasives and
ceramics based in Worcester, Massachusetts, and was Norton's Chairman and Chief
Executive Officer from 1988 to 1990 and its President and Chief Operating
Officer from 1986 to 1988. Mr. Nelson is also Chairman of the Board of Directors
of the TJX Companies, Inc., a Director of Brown & Sharpe Manufacturing Company,
Cambridge Biotechnology, Inc., Commerce Holdings, Inc. and Stocker & Yale, Inc.
He is also Chairman of the Board of Trustees of Worcester Polytechnic Institute
and Vice President of the Worcester Art Museum.
 
     DAVID P. GRUBER was elected President and Chief Executive Officer of the
Company in May 1994 having previously served as President and Chief Operating
Officer since he joined the Company in October 1991. Prior to joining the
Company, Mr. Gruber served as Vice President, Advanced Ceramics, of Compagnie de
Saint Gobain (which acquired Norton Company in 1990), a position he held with
Norton Company since 1987. Mr. Gruber previously held various executive and
technical positions with Norton Company since 1978. He is a Trustee of the
Manufacturers' Alliance for Productivity and Innovation, and is a member of the
Mechanical Engineering Advisory Committee of Worcester Polytechnic Institute.
 
     ANDREW C. GENOR joined the Company as Vice President, Chief Financial
Officer and Treasurer in January 1995. Prior to joining the Company, Mr. Genor
was Chief Financial and Operating Officer of HNSX Supercomputers, Inc., a
company he co-founded in 1987 to provide support to supercomputer users and
vendors. Prior to that time, he spent 20 years at Honeywell, Inc., including
service as Vice President and Corporate Treasurer and Vice President, Finance,
Administration and Business Development for Honeywell Europe.
 
     SANJAY N. SHAH was elected Vice President, Corporate Strategy Planning and
Business Development in May 1994 having previously served as Vice President and
Assistant General Manager of the Company's Aerospace Forgings Division. He has
held a number of executive, research, engineering and manufacturing positions at
the Company since joining the Company in 1975.
 
                                       34
<PAGE>   62
 
   
     J. DOUGLAS WHELAN joined the Company in March 1994 and was elected
President, Forgings in May 1994. Prior to joining the Company he had served for
a short time as the President of Ladish Co., Inc., a forging company in Cudahy,
Wisconsin, and prior thereto had been Vice President, Operations of Cameron with
which company and its predecessors he had been employed since 1965 in various
executive capacities. Mr. Whelan is a Director of SIFCO Industries, Inc.
    
 
     WALLACE F. WHITNEY, JR. joined the Company in 1991. Prior to that time, he
had been Vice President, General Counsel and Secretary of Norton Company since
1988, where he had been employed in various legal capacities since 1973.
 
     FRANK J. ZUGEL joined the Company in June 1993 when he was elected Vice
President -- General Manager, Investment Castings. Prior to that time he had
served as President of Stainless Steel Products, Inc., a metal fabricator for
aerospace applications, since 1992 and before then as Vice President of Pacific
Scientific Company, a supplier of components to the aerospace industry, since
1988.
 
     E. PAUL CASEY, Chairman and General Partner, Metapoint Partners, Peabody,
Massachusetts (an investment partnership which he established in 1988) has been
a Director of the Company since 1993. He served as Vice Chairman of Textron,
Inc. from 1986 to 1987 and as Chief Executive Officer and President of Ex-Cell-O
Corporation during 1978 to 1986. Mr. Casey is a Director of Comerica, Inc. and
Hood Enterprises, Inc., a Trustee of Henry Ford Health Care System, and
President of the Hobe Sound, Florida Community Chest.
 
     DEWAIN K. CROSS, Retired Senior Vice President, Finance of Cooper, has been
a Director of the Company since 1994. He is a former member of the Financial
Council II of the Manufacturers' Alliance for Productivity and Innovation and is
a member of the American Institute of Certified Public Accountants.
 
     WARNER S. FLETCHER, Attorney and Director of the law firm of Fletcher,
Tilton & Whipple, P.C., Worcester, Massachusetts has been a Director of the
Company since 1987. Mr. Fletcher is an Advisory Director of Bank of Boston,
Worcester. He is also Chairman of The Stoddard Charitable Trust, a Trustee of
The Fletcher Foundation, the George I. Alden Trust, Worcester Polytechnic
Institute, Worcester Foundation for Experimental Biology, Bancroft School and
the Worcester Art Museum.
   
 
     ROBERT G. FOSTER, President, Chief Executive Officer and Chairman of the
Board of Commonwealth BioVentures, Inc., (a venture capital company engaged in
biotechnology) has been a Director of the Company since 1989. Mr. Foster was
President and Chairman of Ventrex Laboratories, Inc. from 1976 to 1987 when he
assumed his present position. He is also a Director of United Timber Corp., Carr
Separations, Phytera, Neptune Pharmaceuticals, ActiMed Laboratories, Inc.,
Brunswick Biomedical Corp. and Watson Technologies. He is also a member of the
Science & Technology Board for the State of Maine.
    
 
     RUSSELL E. FULLER, Chairman of REFCO, Inc., (a supplier of specialty
industrial products), has been a Director of the Company since 1988. Mr. Fuller
is Chairman and Treasurer of The George F. and Sybil H. Fuller Foundation and a
Trustee of The Medical Center of Central Massachusetts. He is also Trustee of
the Massachusetts Biotechnology Research Institute and the Worcester County
Horticultural Society.
 
     M HOWARD JACOBSON, Senior Advisor, Bankers Trust, New York, has been a
Director of the Company since 1993. Mr. Jacobson was for many years Chief
Executive Officer, President and Treasurer and a Director of Idle Wild Foods,
Inc. until that company was sold in 1986. From 1989 to 1991 he was a Senior
Advisor to Prudential Bache Capital Funding. Mr. Jacobson is a Director of
Allmerica Property & Casualty Cos., Inc., ImmuLogic Pharmaceutical Corporation,
Stoneyfield Farm, Inc. and Boston Chicken, Inc. He is Vice Chairman of the Board
of Trustees of the Medical Center of Central Massachusetts, Chairman of the
Overseers of WGBH/National Public Broadcasting, a Trustee of the Worcester
Foundation for Experimental Biology, a Trustee of the Worcester Polytechnic
Institute, and a member of the Harvard University Overseers' Committee on
University Resources.
 
     JUDITH S. KING, Trustee and Treasurer of The Stoddard Charitable Trust, has
been a Director of the Company since 1990.
 
                                       35
<PAGE>   63
 
     GEORGE S. MUMFORD, JR., Professor, Department of Physics and Astronomy,
Tufts University, has been a Director of the Company since 1968. Mr. Mumford
formerly served as Dean of the Graduate School of Arts and Sciences at Tufts
University. He is a former member of the Board of Directors of the Council of
Graduate Schools in the United States and Past President of the Northeast
Association of Graduate Schools. He is a Director of the Charles River Watershed
Association.
 
     H. JOHN RILEY, JR., President and Chief Executive Officer of Cooper, has
been a Director of the Company since 1994. Mr. Riley was elected Chief Executive
Officer of Cooper effective September 1, 1995, having previously served as
President and Chief Operating Officer since 1992 and as Executive Vice
President, Operations of Cooper since 1982. Prior to that time he held various
executive positions at Crouse-Hinds Company, which was acquired by Cooper in
1982. He is also Director and Chairman of Junior Achievement of Southeast Texas,
a Director of Central Houston, Inc., a Director of Houston Symphony, a member of
the Corporate Advisory Council of Syracuse University School of Management, and
a Trustee of the Manufacturers' Alliance for Productivity and Innovation.
 
     JON C. STRAUSS, Vice President and Chief Financial Officer of Howard Hughes
Medical Institute, Chevy Chase, Maryland (a medical research institute and the
largest private philanthropic organization in the United States) has been a
Director of the Company since 1989. Prior to assuming his current position in
1994, Dr. Strauss served as President of Worcester Polytechnic Institute,
Worcester, Massachusetts since 1985 and, before then, as Chief Administrative
Officer at the University of Southern California. He is a Director of
Computervision Corporation.
 
   
     CHARLES A. ZRAKET, Trustee and Former President and Chief Executive Officer
of MITRE Corporation, (a not-for-profit corporation engaged in systems
engineering and research primarily for the United States government), has been a
Director of the Company since 1990. Mr. Zraket is a Trustee of Northeastern
University, Beth Israel Hospital and the Hudson Institute.
    
 
                  RELATIONSHIP BETWEEN THE COMPANY AND COOPER
 
STOCK PURCHASE AGREEMENT
 
   
     Pursuant to a Stock Purchase Agreement dated as of January 10, 1994 (the
"Stock Purchase Agreement"), between the Company and Cooper, the Company
acquired from Cooper on May 26, 1994 (the "Closing Date"), all of the
outstanding shares of common stock of Cameron Forged Products Company
("Cameron") in consideration for 16.5 million shares of the Company's Common
Stock and $5.0 million (the "Cash Purchase Price"). The market price of the
Common Stock on the Closing Date was $6.25 per share.
    
 
     The Cash Purchase Price consisted of (1) $400,000 in cash paid by the
Company to Cooper on the Closing Date and (2) a promissory note in the principal
amount of $4.6 million (the "Note") executed and delivered to Cooper by the
Company on the Closing Date. The principal amount of the Note is payable in
annual installments, beginning on June 30, 1997 and on each June 30 thereafter
until paid in full, in an amount equal to the lesser of (a) $2.3 million, (b) 25
percent of the Company's Free Cash Flow (as defined in the Note) for the
12-month period ending on the April 30 immediately preceding such June 30 and
(c) the unpaid principal balance of the Note. The Note will not bear interest
until May 1, 1998, from which date it will bear interest at a floating rate
equal to the 90-day commercial paper rate for high grade unsecured notes sold
through dealers by major corporations, as published by The Wall Street Journal
on that portion of the principal amount of the Note equal to the sum of all
amounts of unpaid principal that would have been payable but for mandatory debt
payments by the Company. The Company may from time to time prepay all or any
portion of the outstanding balance of the Note without penalty or premium.
Cooper may declare the Note to be immediately due and payable in the event that
(i) the Company does not pay any portion of the principal or interest on the
Note within 10 days after such payment becomes due or (ii) a Trigger Event (as
defined below in the discussion of the Investment Agreement) occurs.
 
     In the Stock Purchase Agreement the parties agreed to a cash adjustment in
the Cash Purchase Price based on certain changes in the balance sheet of Cameron
between September 26, 1993, and the
 
                                       36
<PAGE>   64
 
Closing Date. Since there was an increase in the Net Asset Value of Cameron (as
defined in the Stock Purchase Agreement) during that period, the Company paid
Cooper $3.6 million in full satisfaction of this adjustment on September 19,
1994.
 
     Pursuant to the Stock Purchase Agreement, (i) Cooper agreed to indemnify
the Company and its subsidiaries against all taxes of Cameron and its
subsidiaries for any taxable year or taxable period ending on or before the
Closing Date. The Stock Purchase Agreement further provides that any taxes for a
taxable period beginning before the Closing Date and ending after the Closing
Date with respect to Cameron or any of its subsidiaries will be apportioned
between the Company and Cooper based on the actual operations of Cameron or the
subsidiary, as the case may be, during the portion of such period ending on the
Closing Date and the portion of such period following the Closing Date.
 
     Pursuant to the Stock Purchase Agreement, Cooper agreed to retain and
indemnify the Company and its affiliates against (i) certain liabilities under
ERISA with respect to employee benefit plans or arrangements, other than
employee benefit plans or arrangements maintained for the benefit of employees
and former employees of the Business (as defined below), and (ii) pension
benefits under designated plans for periods prior to the Closing Date.
 
     Pursuant to the Stock Purchase Agreement, Cameron assumed Cooper's Cameron
Obligations (as defined below), effective on the Closing Date. For purposes of
the Stock Purchase Agreement, "Cooper's Cameron Obligations" means any
obligation, commitment, liability or responsibility of Cooper, its affiliates or
their predecessors (whether or not also an obligation, commitment, liability, or
responsibility of or claim against, in whole or in part, Cameron or its
subsidiaries C.F.P., Ltd. (the "U.K. Sub") or Cameron Pipeline Inc. (the
"Pipeline Sub")), arising, undertaken or created before the Closing Date in
connection with, on behalf of or for the benefit of any of certain entities, to
the extent that such entities conducted all or part of the Business (as defined
below) (the "Cameron Entities"), or arising from the conduct of the Business,
including without limitation (i) any consulting, employment or severance
agreements, guarantees, letters of credit, performance bonds, or indemnities, or
obligations or indemnities to officers or directors of any Cameron Entity, (ii)
any agreements with any transferors to Cooper, its affiliates, or their
predecessors, of any assets of any Cameron Entity or of the Business, (iii) any
labor or collective bargaining agreements relating to any Cameron Entity, (iv)
any governmental contracts relating to any Cameron Entity, (v) any sales or
purchase agreements relating to any Cameron Entity, (vi) any leases of real or
personal property relating to any Cameron Entity, and (vii) any other agreements
or commitments relating to any Cameron Entity under which Cooper, its affiliates
or predecessors will have any liability after the Closing Date, except that
Cooper's Cameron Obligations exclude the matters that Cooper is required to
indemnify as described herein. "Business" means research, development,
engineering, melting, refining, remelting, forging, extrusion, machining,
manufacturing, distribution, sales, marketing, service or repair operations
associated with the Products. "Products" means closed die forgings (including
rotating parts for aircraft engines or industrial turbines, aircraft landing
gear, structural airframe parts, ordnance and related parts, military and power
plant nuclear forgings, valves, heavy wall pipe and fittings, power generation
forgings and oil field equipment forgings), extrusions (including for aircraft
engines, pipe, oil field equipment, bar stock and ordnance), super alloy powder
products, thermal rail products for steel support member in push slab furnaces
and custom-shaped insulators, other forged products, skid rail reheat systems,
and high velocity burners.
 
     In the Stock Purchase Agreement, the Company and Cooper made customary
representations and warranties to each other. Each of the Company and Cooper
represented to the other that to its knowledge, its representations and
warranties were, subject in certain cases to materiality and supplemental
disclosure schedules, true and correct as of the Closing Date (except for those
representations and warranties that expressly relate only to some other time)
(the "Accuracy Representations"). The parties' representations and warranties
expired at the Closing except that the Accuracy Representations remain in full
force and effect until November 28, 1995. Any claim for indemnification with
respect to the Accuracy Representations not asserted by notice by that date may
not be pursued and will be irrevocably waived and released.
 
                                       37
<PAGE>   65
 
     Subject to certain terms and conditions set forth in the Stock Purchase
Agreement, (i) Cooper agreed to indemnify the Company, its affiliates, and their
directors, officers or employees (collectively, the "Company's Group") against
all Losses (as defined in the Stock Purchase Agreement) resulting from (a) any
inaccuracy in the Accuracy Representations given by Cooper or (b) any breach of
Cooper's covenants in the Stock Purchase Agreement and (ii) the Company agreed
to indemnify Cooper, its affiliates, and their directors, officers or employees
(collectively, the "Cooper Group") against all Losses resulting from (a) any
inaccuracy in the Accuracy Representations given by the Company, (b) any breach
of the Company's covenants in the Stock Purchase Agreement and (c) Cooper's
Cameron Obligations.
 
     In addition, the Company agreed in the Stock Purchase Agreement to
indemnify the Cooper Group against all Losses resulting from any liabilities or
obligations of or relating to, or claims against, any Cameron Entity or the
Business (other than the Losses that Cooper is required to indemnify) on, before
or after the Closing Date, including without limitation (i) all Losses resulting
from any Product Liability Claims (as defined in the Stock Purchase Agreement)
arising out of or resulting from Products sold or furnished by Cooper, any of
its affiliates or any Cameron Entity (including without limitation any product
liability assumed in connection with the acquisition of any business or product
line) on, before or after the Closing Date; (ii) all Losses resulting from (A)
any noncompliance of the operations, properties or business activities of any
Cameron Entity or the Business with any environmental law on, before or after
the Closing Date or (B) any liabilities or obligations of or relating to, or
claims against, any Cameron Entity or the Business based upon any environmental
law, or arising from the disposal of any regulated materials, on, before, or
after the Closing Date; and (iii) all Losses resulting from (A)any workers'
compensation claim filed against any Cameron Entity on, before or after the
Closing Date, and (B) any employment or severance agreements entered into by
Cooper or Cameron relating to employees of Cameron on, before or after the
Closing Date, other than severance payments under a specified employment
agreement.
 
     Cooper agreed in the Stock Purchase Agreement, other than losses that the
Company is required to indemnify, (i) to indemnify the Company's Group against
all Losses resulting from any liabilities or obligations of or relating to, or
claims against, Cooper or Cooper's subsidiaries to the extent that such
liabilities, obligations or claims (x) do not relate to the Business and (y)
arise from the activity of (a) any Cameron Entity (other than the Company or the
Pipeline Sub) before the Closing Date, or (b) Cooper or any of Cooper's
subsidiaries other than the Cameron Entities, (ii) except to the extent the
actions of the Company, Cameron or their affiliates may cause or increase any
such Losses after the Closing Date, to indemnify the Company's Group against all
Losses resulting from any regulated materials disposed of on, or discharged into
the environment at, a specified manufacturing facility of Cooper or at a
specified Superfund location on or before the Closing Date; and (iii) to
indemnify the Company's Group against all Losses resulting from severance
payments under a specified employment agreement.
 
     Notwithstanding any contrary provision of the Stock Purchase Agreement, no
claim by either party against the other for indemnification will be valid unless
the aggregate amount of Losses associated with such claim exceeds $100,000.
Further, any claims by the indemnified party will be determined net of any tax
benefit actually recognized and utilized to offset or reduce the tax liability
of the indemnified party or the other members of its group.
 
     Cooper agreed in the Stock Purchase Agreement that, until the later to
occur of (i) Cooper's ceasing to own at least 10 percent of the outstanding
shares of the Company's Common Stock and (ii) May 26, 1997, Cooper will not, and
Cooper will not permit any of its subsidiaries (regardless of whether such
person is a subsidiary of Cooper on the date hereof) to, engage in the
manufacturing or marketing of the Products currently manufactured or marketed by
Cameron or the U.K. Sub in competition with the Company or any subsidiary of the
Company (a "Competing Business"), except that (i) Cooper or any affiliate of
Cooper (other than Cameron and the Cameron Subsidiaries) may continue any
existing nonaerospace forging operations and may make any reasonable
maintenance, improvements and refinements thereto and (ii) Cooper or any
affiliate of Cooper may acquire any business that includes ancillary forging
operations in support of its main business. In addition, this
 
                                       38
<PAGE>   66
 
noncompetition provision will not prevent Cooper or its affiliates from
acquiring shares in or the business or assets of any company, business or entity
(the "Target") having a Competing Business (i) if no more than $10.0 million of
the Target's sales revenue (as recorded in the then-latest available audited
accounts) arises from the Competing Business or (ii) if the sales revenue of the
Competing Business is greater than $10.0 million of the Target's sales revenue,
if Cooper uses its reasonable commercial efforts to dispose of the Competing
Business within a two-year period from the date of acquisition of the Target. If
Cooper cannot dispose of the Competing Business on terms reasonably acceptable
to it during such two-year period, Cooper will be free to retain and operate the
Competing Business without any restriction of the Stock Purchase Agreement.
 
INVESTMENT AGREEMENT
 
     In connection with the Stock Purchase Agreement the Company and Cooper
entered into an Investment Agreement dated as of January 10, 1994, which governs
Cooper's ownership of the 16.5 million shares of the Company Common Stock that
were issued to Cooper under the Stock Purchase Agreement. The Investment
Agreement is unaffected by the DECS offering.
 
     In the Investment Agreement, Cooper agreed that, so long as the Investment
Agreement remains in effect, Cooper will not sell or otherwise dispose of or
encumber any Company Voting Securities (as hereinafter defined), except: (a) to
any wholly-owned subsidiary of Cooper which agrees to be bound by the Investment
Agreement; (b) pursuant to a bona fide underwritten offering or other
distribution of such Company Voting Securities registered under the Securities
Act; (c) pursuant to a bona fide underwritten offering or other distribution of
securities of Cooper convertible into or exercisable or exchangeable for Company
Voting Securities registered under the Securities Act; (d) pursuant to Rule 144
of the General Rules and Regulations under the Securities Act, or any successor
rule of similar effect ("Rule 144"); or (e) pursuant to a tender offer or
exchange offer if the board of directors of the Company has (i) recommended that
the shareholders of the Company accept such offer and such recommendation has
not been withdrawn or (ii) expressed no opinion and remains neutral toward such
offer; (f) pursuant to a merger or consolidation in which the Company is
acquired, or a sale of all or substantially all of the Company's assets to
another corporation or any other transaction approved by the board of directors
of the Company. For purposes of the Investment Agreement "Company Voting
Securities" means (i) shares of Common Stock, (ii) any other Company securities
entitled to vote generally for the election of directors of the Company, or
(iii) any securities of the Company convertible into or exchangeable for or
exercisable for the Company Common Stock or any Company securities entitled to
vote generally for the election of directors of the Company.
 
     In any registered offering or Rule 144 transaction, the seller of Company
Voting Securities or securities of Cooper convertible into or exercisable or
exchangeable for Company Voting Securities will be required under the Investment
Agreement to use its reasonable best efforts to effect the sale or transfer of
such securities in a manner which will effect the broadest possible
distribution. Such seller of Company Voting Securities will also be required to
use its reasonable best efforts to avoid making any sales or transfers of such
Company Voting Securities to any one person or group within the meaning of the
Exchange Act who or which after such transfer will own Company Voting Securities
representing more than 4 percent of the voting power for the election of
directors represented by all of the then-outstanding Company Voting Securities
(whether directly or indirectly).
 
     In the Investment Agreement, Cooper agreed to cause all Company Voting
Securities beneficially owned by it or any wholly-owned subsidiary to which it
has transferred any Company Voting Securities, and agrees to use reasonable
efforts to cause all Company Voting Securities known by the Cooper to be
beneficially owned by "affiliates" (as defined in Rule 12b-2 promulgated under
the Exchange Act) of Cooper over which Cooper has control, to be present at all
shareholder meetings of the Company at which the vote of common shareholders is
sought so that they may be counted for the purpose of determining the presence
of a quorum at such meetings.
 
                                       39
<PAGE>   67
 
     Cooper also agreed in the Investment Agreement to vote or cause to be voted
all Company Voting Securities beneficially owned by it or any wholly-owned
subsidiary to which it has transferred any Company Voting Securities, and agrees
to use reasonable efforts to cause to be voted all Company Voting Securities
known by Cooper to be beneficially owned by its affiliates over which it has
control, on all matters (including the election of directors) either in the
manner recommended to shareholders by the board of directors of the Company, or,
at Cooper's election, in the same proportion as the vote of the other
shareholders of the Company. Notwithstanding the foregoing, Cooper, such
wholly-owned subsidiaries of Cooper and such affiliates of Cooper over which it
has control will not be obligated so to vote if the matter being voted on by the
shareholders of the Company would, if approved, result in a breach of the
Investment Agreement.
 
     Pursuant to the Investment Agreement, so long as the Investment Agreement
remains in effect, Cooper and its controlled affiliates will not, directly or
indirectly, acting alone or in concert with others, unless specifically
requested or approved in advance by the board of directors of the Company:
 
     (1) in any manner acquire or agree, attempt, seek or propose to acquire (or
make any request for permission with respect thereto), by purchase, merger,
through the acquisition of control of another person, by joining a partnership,
limited partnership, syndicate or other "group" (within the meaning of Section
13(d)(3) of the Exchange Act), or otherwise, ownership (including, but not
limited to, beneficial ownership as defined in Rule 13d-3 under the Exchange
Act) of any of the assets or businesses of the Company or any securities issued
by the Company (the "Company Securities"), or any rights or options to acquire
such ownership (including from a third party), except (i) as expressly permitted
by the Investment Agreement or the Stock Purchase Agreement, or (ii) pursuant to
customary business transactions in the ordinary course of the Company's and
Cooper's business or (iii) in the case of Company Securities, in connection with
(A) a stock split or reverse stock split or other reclassification affecting
outstanding Company Securities, or (B) a stock dividend or other pro rata
distribution by the Company to holders of outstanding Company Securities;
 
     (2) make, or cause to be made any proposal for the acquisition of the
Company or any assets or business of the Company or Company Securities or for
any other extraordinary transaction involving the Company, including, without
limitation, any merger, or other business combination, restructuring,
recapitalization, liquidation or similar transaction, except (i) as expressly
permitted by the Investment Agreement or the Stock Purchase Agreement or (ii)
proposals pursuant to customary business transactions in the ordinary course of
the Company's and Cooper's business;
 
     (3) form, join or in any way participate in a "group" (within the meaning
of Section 13(d)(3) of the Exchange Act) with respect to any Company Securities;
 
     (4) make, or in any way cause or participate in, any "solicitation" of
"proxies" to vote (as such terms are defined in Regulation 14A under the
Exchange Act) with respect to the Company, or communicate with, seek to advise,
encourage or influence any person or entity, in any manner, with respect to the
voting of, any Company Securities, or become a "participant" in any "election
contest" (as such terms are defined or used in Rule 14a-11 under the Exchange
Act) with respect to the Company, or execute any written consent with respect to
the Company;
 
     (5) initiate, propose or otherwise solicit shareholders for the approval of
one or more shareholder proposals with respect to the Company or induce or
attempt to induce any other person to initiate any shareholder proposal, or
(except as expressly permitted by the Investment Agreement) seek election to or
seek to place a representative on the board of directors of the Company or seek
the removal of any member of the board of directors of the Company;
 
     (6) in any manner, agree, attempt, seek or propose (or make any request for
permission with respect thereto) to deposit any Company Securities, directly or
indirectly, in any voting trust or similar arrangement or to subject any Company
Voting Securities to any other voting or proxy agreement, arrangement or
understanding;
 
                                       40
<PAGE>   68
 
     (7) disclose any intention, plan or arrangement, or make any public
announcement (or request permission to make any such announcement), or induce
any third party to take any action, inconsistent with the foregoing;
 
     (8) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing; or
 
     (9) advise, assist or encourage or finance (or assist or arrange financing
to or for) any other person in connection with any of the foregoing.
 
     Pursuant to the Investment Agreement, the Company agreed that it will use
its best efforts to cause two persons designated by Cooper and reasonably
acceptable to the Company to be elected to the board of directors of the Company
and to serve as directors of the Company until their successors are duly elected
and qualified. Cooper has designated H. John Riley, Jr., its President and Chief
Executive Officer, and Dewain K. Cross, its retired Senior Vice President,
Finance, as its current representatives on the Company's board. In the event
that any such designee will cease to serve as a director for any reason, the
Company agreed in the Investment Agreement that it will use its best efforts to
cause such vacancy resulting thereby to be filled by a designee of Cooper
reasonably acceptable to the Company. The Investment Agreement provides that the
Company will vote all shares for which the Company's management or board of
directors holds proxies or is otherwise entitled to vote in favor of the
election of the designees of Cooper except as may otherwise be provided by
shareholders submitting such proxies.
 
     The Investment Agreement provides that the Company will not amend (i)
Article 6(e)(2) (the "Fair Price Provision") of its Articles (except pursuant to
the Fair Price Amendment as defined below) in any manner that adversely affects
Cooper or any other person to whom any of the Common Stock acquired by Cooper
under the Stock Purchase Agreement has been transferred in accordance with the
terms of the Investment Agreement or (ii) the provision of its By-Laws pursuant
to which it has opted out of Chapter 110D of the MGL. Under the Fair Price
Provision, a Business Combination (as defined in the Company's Articles) between
the Company or a subsidiary of the Company and an Interested Stockholder (as
defined in the Company's Articles) requires the approval of at least 85 percent
of the outstanding voting stock of the Company, unless either (i) the Business
Combination has been approved by at least two-thirds of the Company's Continuing
Directors (as defined in the Company's Articles) or (ii) certain minimum price
requirements are satisfied. The Fair Price Amendment exempts Cooper and its
affiliates and associates for so long as such group beneficially owns at least
10 percent or more of the outstanding shares of Company Common Stock
continuously from and after May 26, 1995, unless such group acquires beneficial
ownership of additional shares of Company Common Stock in breach of the
Investment Agreement. The Investment Agreement also provides that the Company
will not amend its Rights Agreement (described below under "Description of the
Company's Capital Stock") or adopt any other rights or similar agreement, except
that following prior consultation with Cooper, the Company may amend the Rights
Agreement in accordance with the terms thereof if such amendment does not
adversely affect Cooper or any other person to whom any of the Common Stock
acquired by Cooper under the Stock Purchase Agreement has been transferred in
accordance with the terms of the Investment Agreement.
 
     The Investment Agreement provides that, among others, the limitations on
Cooper and its affiliates described above with respect to restrictions on sales
of shares by Cooper, voting, ownership and certain other matters and the
limitations on the Company described above with respect to amendments to the
Company's Articles and By-Laws will terminate immediately and be of no further
force and effect on the date that a Trigger Event (as defined below) occurs. For
these purposes, "Trigger Event" means the occurrence of one or more of the
following events, without Cooper's prior written consent:
 
     (1) in connection with the issuance of Company Voting Securities (other
than (x) issuances pursuant to the Company's current employee benefit plans or
other customary employee benefit plans of the Company or (y) issuances in
connection with bona fide capital raising programs pursuant to which the
securities are sold for fair value, as approved by the board of directors of the
Company, and the proceeds of which are invested in the businesses in which the
Company or one or more of its subsidiaries are then engaged or (z) issuances for
fair value, as determined by the board of directors of the
 
                                       41
<PAGE>   69
 
Company, in connection with acquisitions by the Company or one of its
wholly-owned subsidiaries primarily involving one or more Similar Businesses (as
defined below)), the failure to provide Cooper with the right to purchase, at
the same price as Company Voting Securities are being issued, that number or
amount of Company Voting Securities which would enable Cooper to maintain its
proportionate interest in the Company following such issuance;
 
     (2) a Change in Control of the Company (as defined below);
 
     (3) a material acquisition or investment by the Company or one of its
subsidiaries, other than an acquisition or investment by the Company or one of
its wholly-owned subsidiaries primarily involving one or more Similar
Businesses;
 
     (4) a decline of at least 35% in the Consolidated Net Worth of the Company
(as defined in the Investment Agreement) from the Consolidated Net Worth of the
Company immediately following the consummation of the Acquisition after giving
effect to the Acquisition (including the issuance of 16.5 million shares of the
Company's Common Stock to Cooper), but not taking into account (A) any reduction
in the Company's Consolidated Net Worth attributable to or taken in connection
with or as a result of the Acquisition or the combination of the business
acquired from Cooper with the Company's business and recorded in the Company's
financial statements for any period ending on (and including) the end of the
first full fiscal year of the Company after the consummation of the Acquisition
or (B) any adjustments following the date of consummation of the Acquisition as
a result of any changes in generally accepted accounting principles (including
the implementation of SFAS 106) or any other regulatory changes or requirements
applicable to the Company or its financial statements or (C) any adjustment
resulting from any liability arising from or growing out of any matter or
circumstance existing as of the time of the consummation of the Acquisition and
relating to the business or assets acquired by the Company from Cooper but not
reflected on the balance sheet of such business and assets or (D) any change in
the translation component of shareholders' equity or (E) adjustments as a result
of sales of the Company's accounts receivables pursuant to a bona fide
receivables securitization program pursuant to which fair value is received for
receivables so sold (as determined by the Company's board of directors, taking
into account, among other things, any discount or credit enhancement features
required by any securities rating agency) or (F) any adjustment resulting from a
SFAS 109 valuation allowance recorded or reserved by the Company with respect to
deferred tax assets that were included in or excluded from the Company's final
Accounting Principles Bulletin No. 16, "Business Combinations," acquisition date
balance sheet;
 
     (5) any default or defaults by the Company or one of its subsidiaries under
any indebtedness of the Company or its subsidiaries for money borrowed with a
principal amount then outstanding, individually or in the aggregate, in excess
of $5.0 million, which default will constitute a failure to pay any portion of
the principal of each indebtedness at final maturity or will have resulted in
such indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable without such
indebtedness having been discharged, or such acceleration having been rescinded
or annulled within a period of 30 days after maturity or acceleration;
 
     (6) an Event of Bankruptcy (as defined in the Investment Agreement); or
 
     (7) the failure of the board of directors of the Company to nominate at
least two of Cooper's representatives for election to the Company's board of
directors.
 
     The Investment Agreement further provides that the Company may not issue
any securities having more than one vote per share (other than pursuant to the
Company's Rights Agreement) without the prior written consent of Cooper.
 
     For purposes of the Investment Agreement, (1) a "Change in Control of the
Company means (A) a merger or consolidation involving the Company or a sale of
all or substantially all of the assets of the Company, in each case except for a
transaction in which the Company's shareholders receive at least 50 percent of
the stock of the surviving, resulting or acquiring corporation, (B) the
acquisition by an individual, entity or group (excluding the Company or an
employee benefit plan of the Company or a corporation controlled by the
Company's shareholders) of shares of capital stock of the Company entitled to
cast a majority of the votes entitled to be cast on matters submitted to the
shareholders of the
 
                                       42
<PAGE>   70
 
Company, or (C) a change in a majority of the members of any class of the
Company's board of directors in connection with an "election contest" (as used
in Rule 14a-11 under the Exchange Act); and (2) "Similar Businesses" means (A)
businesses in which the Company or one or more of its subsidiaries are engaged,
(B) any businesses involving products related to or complementary to the
products of the Company or one or more of its subsidiaries or (C) any similar
businesses providing customers of the Company or one or more of its subsidiaries
with products or services similar to those provided by the Company or one or
more of its subsidiaries.
 
     Pursuant to the Investment Agreement, Cooper and certain of its transferees
have the right to require the Company to file under the Securities Act up to
three demand registrations of the shares of Company Common Stock acquired by
Cooper under the Stock Purchase Agreement (and any other of the Company's
securities issued in respect thereof) at the Company's expense (except that the
Company will not be responsible for underwriting discounts and commissions or
transfer taxes). Cooper also has the right to an unlimited number of additional
demand registrations under the Securities Act at Cooper's expense. Cooper also
has the right, under certain circumstances, to "piggyback" registrations in the
event that the Company registers securities for its own account or for the
account of third parties. Cooper's demand and piggyback registration rights are
subject to customary restrictions and limitations. In connection with any
registration statement filed pursuant to these registrations rights, Cooper and
the Company will indemnify each other against certain liabilities, including
certain liabilities under the Securities Act.
 
   
     The description of the Stock Purchase Agreement and the Investment
Agreement is a summary of the material terms thereof. Copies of the Stock
Purchase Agreement and the Investment Agreement have been filed as exhibits to
the Registration Statement of which this Prospectus is a part.
    
   
    
                   DESCRIPTION OF THE COMPANY'S CAPITAL STOCK
 
GENERAL
 
     The Company has the authority to issue 70,000,000 shares of Common Stock
and 5,000,000 shares of Preferred Stock, no par value (the "Preferred Stock").
The Company's Board of Directors has authority (without action by shareholders)
to issue the authorized and unissued shares of Preferred Stock in one or more
series and, within certain limitations, to determine the voting rights
(including the right to vote as a series on particular matters), preference as
to dividends and in liquidation, conversion, redemption and other rights of each
such series. The ability of the Board of Directors to issue Preferred Stock,
while providing flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company. There are no shares of
Preferred Stock issued or outstanding and the Company has no present plans to
issue any of the Preferred Stock.
 
COMMON STOCK
 
     Holders of Common Stock are entitled to one vote per share on all matters
to be voted on by shareholders, including the election of directors.
Shareholders are not entitled to cumulative voting rights, and, accordingly, the
holders of a majority of the shares voting for the election of directors can
elect the entire Board if they choose to do so and, in that event, the holders
of the remaining shares of Common Stock will not be able to elect any person to
the Board of Directors. Pursuant to the Company's By-Laws, the number of
directors of the Company may be not less than seven nor more than 13, as
determined from time to time by the directors. The number of directors is
currently 13. The By-Laws provide that the Board of Directors is divided into
three classes in respect of term of office, each class to contain as near as may
be one-third of the whole number of the Board. At each annual meeting of
shareholders, one class of directors is elected to serve until the annual
meeting of shareholders held three years next following and until their
successors are elected and qualify. In the event any vacancy occurs on the Board
of
 
                                       43
<PAGE>   71
 
Directors, the bylaws give the remaining directors the power to fill the vacancy
for the balance of the term of office, except that any vacancy occurring because
of an increase in the number of directors may be filled only until the next
annual meeting of shareholders, at which time the vacancy shall be filled by
vote of the shareholders.
 
     The holders of shares of Common Stock are entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors, in its discretion, from funds legally available therefor and subject
to the prior dividend rights of holders of any shares of Preferred Stock which
may be outstanding. Upon liquidation or dissolution of the Company, subject to
prior liquidation rights of the holders of Preferred Stock, the holders of
shares of Common Stock are entitled to receive on a pro rata basis the remaining
assets of the Company available for distribution. Holders of shares of Common
Stock have no preemptive or other subscription rights, and there are no
conversion rights or redemption or sinking fund provisions with respect to such
shares.
 
RIGHTS AGREEMENT
 
     On October 19, 1988, the Board of Directors of the Company declared a
dividend distribution of one right (a "Right") for each outstanding share of
Common Stock to shareholders of record at the close of business on November 30,
1988 (the "Rights Record Date") pursuant to a Rights Agreement dated as of
October 19, 1988 between the Company and The First National Bank of Boston (the
"Original Rights Agreement"). On January 10, 1994, in connection with the Stock
Purchase Agreement, the Original Rights Agreement was amended and restated. The
description and terms of the Rights are set forth in an Amended and Restated
Rights Agreement, dated as of January 10, 1994 (the "Rights Agreement"), between
the Company and State Street Bank & Trust Company, as Rights Agent ("Rights
Agent"). Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
no par value (the "Series A Shares"), of the Company at a price of $50 per one
one-hundredth of a Series A Share (the "Exercise Price"), subject to adjustment.
 
     Until the earlier to occur of (i) ten days following a public announcement
that a person or group of affiliated or associated persons has become an
Acquiring Person (as defined below) or (ii) ten business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in a person or
group becoming an Acquiring Person (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by the certificates
representing the shares of Common Stock, with either a copy of the Summary of
Rights that was sent to shareholders in connection with the original issuance of
the Rights (the "Summary of Rights") attached thereto or a notation
incorporating the Rights Agreement by reference. For purposes of the Rights
Agreement, an "Acquiring Person" generally means a person or group of affiliated
or associated persons who have acquired beneficial ownership of 20% or more of
the outstanding shares of Common Stock. For purposes of the Rights Agreement, a
person shall generally (subject to certain exceptions) be deemed the "beneficial
owner" of, and shall be deemed to "beneficially own," any Common Stock which
such person or any of such person's affiliates or associates, directly or
indirectly, has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options or otherwise.
However, Cooper and its affiliates and associates (together the "Cooper Group")
will not be deemed to be an Acquiring Person for so long as (A) the Cooper Group
beneficially owns at least 10% or more of the outstanding shares of Common Stock
continuously from and after the Closing Date and (B) the Cooper Group does not
acquire beneficial ownership of any shares in breach of the Investment Agreement
(other than an inadvertent breach which is remedied as promptly as practicable
by a transfer of the Shares so acquired to a person which is not a member of the
Cooper Group). In addition, for purposes of applying certain provisions of the
Rights Agreement, no person or entity owning more than 5% of the shares of
Common Stock as of October 19, 1988 will be deemed to be
 
                                       44
<PAGE>   72
 
the beneficial owner of, or to beneficially own, any shares of Common Stock in
excess of 5% of the shares of Common Stock owned by such person or entity as of
October 19, 1988.
 
     The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the shares of Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), share certificates issued after the
Rights Record Date upon transfer or new issuance of shares of Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for shares of Common Stock
outstanding as of the Rights Record Date, even without such notation or a copy
of the Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the shares of Common Stock represented by
such certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the shares of Common Stock as of the close of
business on the Distribution Date and such separate Right Certificates alone
will evidence the Rights.
 
     The Rights are not exercisable until the Distribution Date. The Rights will
expire on November 30, 1998 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
 
     The Exercise Price payable, and the number of Series A Shares or other
securities or property issuable, upon the exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Series A
Shares, (ii) upon the grant to holders of the Series A Shares of certain rights
or warrants to subscribe for or purchase Series A Shares at a price, or
securities convertible into Series A Shares with a conversion price, less than
the then-current market price of the Series A Shares or (iii) upon the
distribution to holders of the Series A Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Series A Shares) or subscription
rights or warrants (other than those referred to above).
 
     The number of outstanding Rights and the number of one one-hundredths of a
Series A Shares issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the shares of Common Stock or a
stock dividend on the shares of Common Stock payable in shares or subdivisions,
consolidations or combinations of the shares of Common Stock occurring, in any
case, prior to the Distribution Date.
 
     Series A Shares purchasable upon exercise of the Rights will not be
redeemable. Each Series A Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per share of Common Stock. In the
event of liquidation, the holders of the Series A Shares will be entitled to a
minimum preferential liquidation payment of $100 per share but will be entitled
to an aggregate payment of 100 times the payment made per share of Common Stock.
Each Series A Share will have 100 votes, voting together with the shares of
Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which Shares are exchanged, each Series A Share will be entitled
to receive 100 times the amount received per share of Common Stock. These rights
are protected by customary antidilution provisions.
 
     Because of the nature of the Series A Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Series A Share
purchasable upon exercise of each Right should approximate the value of one
share of Common Stock.
 
   
     In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
Exercise Price of the Right.
    
 
                                       45
<PAGE>   73
 
     At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one share of Common Stock,
or one one-hundredth of a Series A Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
 
     With certain exceptions, no adjustment in the Exercise Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Exercise Price. No fractional Series A Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Series A Share,
which may, at the election of the Company, be evidenced by depository receipts)
and in lieu thereof, an adjustment in cash will be made based on the market
price of the Series A Shares on the last trading day prior to the date of
exercise.
 
     At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
Shares, the Board of Directors of the company may redeem the Rights in whole,
but not in part, at a price of $.02 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time on such basis with
such conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
 
     The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an amendment
to lower certain thresholds described above to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstanding Shares then known
to the Company to be beneficially owned by any person or group of affiliated or
associated persons (other than the Cooper Group for so long as the Cooper Group
is deemed not to be an Acquiring Person) and (ii) 10% except that from and after
such time as any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights. Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including without
limitation, the right to vote or to receive dividends.
 
     The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors since the Rights may be redeemed by the Company at the
Redemption Price prior to the time that a person or group has become an
Acquiring Person.
 
     A copy of the Rights Agreement has been filed with the SEC as an exhibit to
a Registration Statement on Form 8-A/A dated January 21, 1994. A copy of the
Rights Agreement is available to any holder of Common Stock free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
 
MASSACHUSETTS LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS;
ANTI-TAKEOVER EFFECTS
 
     The Company is subject to Chapter 110F of the MGL, an anti-takeover law.
Under Chapter 110F, a Massachusetts corporation with more than 200 stockholders
may not engage in a "business combination" with an "interested stockholder" for
a period of three years after the date of the transaction in which the person
becomes an interested stockholder, unless (i) the interested stockholder obtains
the approval of the Board of Directors prior to becoming an interested
stockholder, (ii) the interested stockholder acquires 90% of the outstanding
voting stock of the corporation (excluding shares held by certain affiliates of
the corporation) at the time it becomes an interested stockholder or (iii) the
business
 
                                       46
<PAGE>   74
 
combination is approved by both the Board of Directors and the holders of
two-thirds of the outstanding voting stock of the corporation (excluding shares
held by the interested stockholder). An "interested stockholder" is a person
who, together with affiliates and associates, owns (or, in certain cases, at any
time within the prior three years did own) 5% or more of the outstanding voting
stock of the corporation. A "business combination" includes a merger, certain
stock or asset sales, and certain other specified transactions resulting in a
financial benefit to the interested stockholder.
 
     The By-Laws of the Company include a provision excluding the Company from
the applicability of Chapter 110D of the MGL, which regulates the acquisition of
so-called "control shares." A control share acquisition is the acquisition of
shares which, when added to shares already owned, would (but for the statute)
entitle the acquiring person to vote at least 20% of a corporation's stock.
Shares acquired in such a transaction would, under the statute, have no voting
rights unless a majority of noninterested stockholders voted to grant such
voting rights. In general, the person acquiring such shares, officers of the
Company and those directors of the Company who are also employees, are not
permitted to vote on whether such voting rights shall be granted. The Board of
Directors may amend the By-Laws at any time to subject the Company to this
statute prospectively.
 
     MGL Chapter 156B, Section 50A requires that a publicly held Massachusetts
corporation have a classified board of directors consisting of three classes as
nearly equal in size as possible, unless the corporation elects not to be
covered by Section 50A. The Company's By-Laws contain provisions which give
effect to Section 50A.
 
     The By-Laws also provide that the directors and officers of the Company
generally shall be indemnified by the Company to the fullest extent authorized
by Massachusetts law, as it now exists or may in the future be amended, against
all expenses and liabilities reasonably incurred in connection with service for
or on behalf of the Company. In addition, the Articles provide that the
directors of the Company will not be personally liable to the Company or its
stockholders for monetary damages for certain breaches of their fiduciary duty
as directors, unless they violated their duty of loyalty to the Company or its
stockholders, acted in bad faith, knowingly or intentionally violated the law,
authorized illegal dividends or redemptions, approved certain loans to insiders
or derived an improper benefit from their action as directors.
 
     The Company's By-Laws further provide that special meetings of stockholders
may be called only by the Chief Executive Officer, by the Board of Directors or
by the Clerk upon the written request of the holders of at least 10% of the
Company's outstanding Common Stock.
 
     In addition, under the fair price provision of the Articles, a Business
Combination (as defined in the Articles) between the Company or a subsidiary of
the Company and an Interested Stockholder (as defined in the Articles) requires
the approval of at least 85% of the outstanding voting stock of the Company,
unless either (i) the Business Combination has been approved by at least
two-thirds of the Company's Continuing Directors (as defined in the Articles) or
(ii) certain minimum price requirements are satisfied. See "Relationship Between
the Company and Cooper -- Investment Agreement."
 
REGISTRAR AND TRANSFER AGENT
 
     The registrar and transfer agent for the Common Stock is State Street Bank
& Trust Company, 2 Heritage Drive, North Quincy, Massachusetts, telephone number
(617) 985-3024.
 
                                       47
<PAGE>   75
 
                        COMMON STOCK OWNERSHIP OF COOPER
 
     Cooper beneficially owns 16.5 million shares of Common Stock, representing
approximately 47% of the outstanding shares of Common Stock. Immediately
following the sale of the DECS pursuant to the DECS Prospectus, the ownership
interest of Cooper will remain at approximately 47% of the outstanding shares of
Common Stock. Pursuant to the terms of the DECS, Cooper may, at its option,
consummate the mandatory exchange at maturity thereof by delivering to holders
thereof shares of Common Stock. Cooper's ownership interest after maturity of
the DECS could remain at 47% of the presently outstanding number of shares of
Common Stock if it elects to deliver cash or could be reduced to less than one
percent of the presently outstanding shares of Common Stock if (a) at maturity
of the DECS the Maturity Price is less than or equal to the Initial Price (each
as defined in the DECS Prospectus), (b) the Underwriters elect to exercise their
over-allotment option in full and (c) Cooper elects to deliver its shares of
Common Stock instead of cash and does not acquire any additional shares of
Common Stock. However, Cooper is under no obligation to, and there can be no
assurance that Cooper will, elect to exercise its option to deliver Common Stock
pursuant to the terms of the DECS or, if it so elects, that it will use all or
any portion of its current holdings of Common Stock to make such delivery.
 
<TABLE>
                              PLAN OF DISTRIBUTION
 
     The Underwriters have severally agreed, subject to the terms and conditions
set forth in the Underwriting Agreement, to purchase from Cooper the aggregate
number of DECS set forth opposite their names below:
 
<CAPTION>
                                                                          NUMBER OF
                                  UNDERWRITERS                              DECS
                                  ------------                            ---------
          <S>                                                             <C>
          Salomon Brothers Inc .......................................
          Merrill Lynch, Pierce, Fenner & Smith
                      Incorporated....................................
          Schroder Wertheim & Co. Incorporated........................
                                                                          ----------
               Total..................................................    15,000,000
                                                                          ==========
</TABLE>
 
     In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
DECS if any are purchased.
 
     The Company has been advised that the Underwriters propose to offer the
DECS to the public initially at the offering price set forth on the cover of the
Cooper Prospectus and to certain dealers at such price less a selling concession
of $          per DECS; that the Underwriters may allow, and each such dealer
may reallow, to other dealers a concession not exceeding $          per DECS;
and that, after the initial public offering, such public offering price and such
concession and reallowance may be changed.
 
     The Company and Cooper have agreed not to offer for sale, sell or otherwise
dispose of, without the prior written consent of the Underwriters, any shares of
the Company's Common Stock or any securities convertible into or exchangeable
for, or warrants to acquire the Company's Common Stock for a period of 90 days
after the date of this Prospectus; provided, however, that such restriction
shall not affect the ability of the Company or Cooper or their respective
subsidiaries to take any such actions in connection with the offering of the
DECS made hereby or any exchange at Maturity pursuant to the terms of the DECS.
 
   
     In connection with the DECS Offering, Cooper or an affiliate thereof,
referred to herein as the "Lender", and Salomon Brothers Inc ("Salomon") intend
to enter into a Securities Loan Agreement (the "Securities Loan Agreement")
which provides that, subject to certain restrictions and with the agreement of
the Lender, Salomon may from time to time borrow, return and reborrow shares of
Common Stock from the Lender (the "Borrowed Securities"); provided, however,
that the number of Borrowed Securities at any time may not exceed 750,000 shares
in the twelve-month period beginning December  , 1995; 1,000,000 shares in the
twelve-month period beginning December  , 1996; and
    
 
                                       48
<PAGE>   76
 
   
1,250,000 in the twelve-month period beginning December   , 1997, subject to
adjustment to provide antidilution protection. The Securities Loan Agreement
contains limitations on the amount of Borrowed Securities that Salomon can
borrow on any day and from time to time and requires Salomon to return Borrowed
Securities within a specified period of time from the date of borrowing and
prior to any record date. The Securities Loan Agreement is intended to
facilitate market-making activity in the DECs by Salomon. Salomon may from time
to time offer shares of Common Stock borrowed from the Lender under the
Securities Loan Agreement directly to one or more purchasers at negotiated
prices, at market prices prevailing at the time of sale or at prices related to
such market prices, in connection with such market making activities. The
availability of shares of Common Stock under the Securities Loan Agreement, if
any, at any time is not assured and any such availability does not assure
market-making activity with respect to the DECs and any market-making actually
engaged in by Salomon may cease at any time. The foregoing description of the
Securities Loan Agreement does not purport to be complete and is qualified in
its entirety by reference to the Agreement, a copy of which is filed as an
exhibit to the Registration Statement of which the Prospectus is a part.
    
 
     Cooper has granted to the Underwriters an option, exercisable for 30 days
from the date of this Prospectus (or, if such 30th day shall not be a Business
Day, on the next Business Day thereafter), to purchase up to an additional
1,500,000 DECS, at the per DECS price to the public less the aggregate
underwriting discount set forth on the cover of the Cooper Prospectus. The
Underwriters may exercise such right of purchase only for the purpose of
covering overallotments, if any, incurred in connection with the sale of DECS
being offered. To the extent that the Underwriters exercise such option, each of
the Underwriters will become obligated, subject to certain conditions, to
purchase a number of such additional DECS proportionate to such Underwriter's
initial commitment.
 
     The Company and Cooper have agreed in the Underwriting Agreement to
indemnify the Underwriters against certain liabilities, including liabilities
under the Securities Act, or contribute to payments the Underwriters may be
required to make in respect thereof.
 
     In connection with the offering of the DECS, the Underwriters and selling
group members (if any) and their respective affiliates may engage in passive
market making transactions in the Common Stock on Nasdaq in accordance with Rule
10b-6A under the Exchange Act. The passive market making transactions will
comply with applicable volume and price limits and will be identified as such.
 
   
     As of September 30, 1995, Schroder Wertheim & Co. Incorporated beneficially
owned           shares of Common Stock (representing   % of the issued and
outstanding shares of such Common Stock).
    
 
     Salomon has provided financial advisory services to the Company in the
past, for which it has received customary fees. Merrill Lynch & Co. has provided
financial advisory services to Cooper in the past, for which it has received
customary fees.
 
     To the extent that the over-allotment option is not exercised by the
Underwriters, Cooper may, subject to the Investment Agreement and Underwriting
Agreement, sell up to 1.5 million shares of Common Stock pursuant to this
Prospectus. Any such distribution hereunder of the Common Stock by Cooper may be
effected from time to time in one or more of the following transactions: (a)
through brokers, acting as agent in transactions (which may involve block
transactions), in special offerings, in the over-the-counter market, or
otherwise, at market prices obtainable at the time of sale, at prices related to
such prevailing market prices, at negotiated prices or at fixed prices, (b) to
underwriters who will acquire the shares of Common Stock for their own account
and resell them in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of
sale (any public offering price and any discount or concessions allowed or
reallowed or paid to dealers may be changed from time to time), (c) directly or
through brokers or agents in private sales at negotiated prices, (d) to lenders
pledged as collateral to secure loans, credit or other financing arrangements
and any subsequent foreclosure, if any, thereunder, or, (e) by any other legally
available means. Also, offers to purchase Common Stock may be solicited by
agents designated by Cooper from time to time. Underwriters or other agents
participating in an offering made pursuant to
 
                                       49
<PAGE>   77
 
this Prospectus (as amended or supplemented from time to time) may receive
underwriting discounts or commissions under the Securities Act and discounts or
concessions may be allowed or reallowed or paid to dealers, and brokers or
agents participating in such transactions may receive brokerage or agent's
commissions or fees.
 
     At the time a particular offering of any share of Common Stock is made by
Cooper hereunder, to the extent required by law, a Prospectus Supplement will be
distributed which will set forth the amount of Common Stock being offered and
the terms of the offering, including the purchase price or public offering
price, the name or names of any underwriters, dealers or agents, the purchase
price paid by any underwriter for any Common Stock purchased from Cooper, any
discounts, commissions and other items constituting compensation from Cooper and
any discounts, commission or concessions allowed or filed or paid to dealers.
 
                                 LEGAL MATTERS
 
     Certain legal matters have been passed upon for the Company by Wallace F.
Whitney, Jr., Vice President, General Counsel and Clerk of the Company. As of
October 12, 1995, Mr. Whitney was the beneficial owner of 3,000 shares of Common
Stock of the Company and held options to purchase 95,000 shares of Common Stock.
The Underwriters have been represented by Cravath, Swaine & Moore.
 
                                    EXPERTS
 
     The consolidated financial statements of the Company incorporated by
reference in its Annual Report (Form 10-K) for the year ended June 3, 1995 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
 
     The combined financial statements of Cameron Forged Products Division (a
division of Cooper Industries, Inc.) included in the Company's Current Report
(Form 8-K) dated May 26, 1994 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such combined financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
 
                                       50
<PAGE>   78
<TABLE>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                      <C>
Report of Independent Auditors.......................................................... F-1

Consolidated Statements of Operations for the years ended June 3, 1995, May 28, 1994
  (unaudited), December 31, 1993 and December 31, 1992 and the five months ended May 28,
  1994.................................................................................. F-2

Consolidated Balance Sheets at June 3, 1995 and May 28, 1994............................ F-3

Consolidated Statement of Cash Flows for the Years ended June 3, 1995, May 28, 1994
  (unaudited), December 31, 1993 and December 31, 1992 and the five months ended May 28,
  1994.................................................................................. F-4

Consolidated Statement of Stockholders' Equity for the year ended June 3, 1995, the five
  months ended May 28, 1994 and the two years ended December 31, 1993 and 1992.......... F-5

Notes to Consolidated Financial Statements.............................................. F-6
</TABLE>
 
                                       51
<PAGE>   79
 
                              WYMAN-GORDON COMPANY
 
                         REPORT OF INDEPENDENT AUDITORS
 
To the Stockholders of Wyman-Gordon Company:
 
     We have audited the accompanying consolidated balance sheets of
Wyman-Gordon Company and Subsidiaries as of June 3, 1995 and May 28, 1994, and
the related consolidated statements of operations, stockholders' equity and cash
flows for the year ended June 3, 1995, for the five months ended May 28, 1994,
and for each of the two years in the period ended December 31, 1993. These
consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Wyman-Gordon
Company and Subsidiaries at June 3, 1995 and May 28, 1994, and the consolidated
results of their operations and their cash flows for the year ended June 3,
1995, for the five months ended May 28, 1994, and for each of the two years in
the period ended December 31, 1993 in conformity with generally accepted
accounting principles.
 
     As discussed in Notes I and J to the consolidated financial statements, in
1993 the company changed its method of accounting for postretirement benefits
other than pensions and income taxes.
 
   
                                            Ernst & Young LLP
    
 
Boston, Massachusetts
June 26, 1995
 
                                       F-1
<PAGE>   80
<TABLE>
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<CAPTION>
                                            YEAR ENDED         FIVE MONTHS       YEAR ENDED
                                      ----------------------      ENDED         DECEMBER 31,
                                      JUNE 3,      MAY 28,       MAY 28,     -------------------
                                        1995        1994          1994         1993       1992
                                      -------     --------     -----------   --------   --------
                                                 (UNAUDITED)
                                                (000'S OMITTED, EXCEPT PER SHARE DATA)
<S>                                   <C>          <C>           <C>         <C>        <C>
Revenue.............................  $396,639     $224,694      $ 86,976    $239,761   $298,881
                                      --------     --------      --------    --------   --------
Cost of goods sold..................   347,251      217,816        91,907     219,088    243,291
Selling, general and administrative
  expenses..........................    36,380       35,532        18,324      26,648     28,315
Other charges (credits).............      (710)      33,003        30,550       2,453         --
Environmental charge................        --        2,000         2,000          --         --
                                      --------     --------      --------    --------   --------
                                       382,921      288,351       142,781     248,189    271,606
                                      --------     --------      --------    --------   --------
Income (loss) from operations.......    13,718      (63,657)      (55,805)     (8,428)    27,275
                                      --------     --------      --------    --------   --------
Other deductions (income):
  Interest expense..................    11,027       11,135         5,383      10,823      7,521
  Miscellaneous, net................     1,652       (2,389)          182      (2,247)    (2,041)
                                      --------     --------      --------    --------   --------
                                        12,679        8,746         5,565       8,576      5,480
                                      --------     --------      --------    --------   --------
Income (loss) before cumulative
  effect of changes in accounting
  principles........................     1,039      (72,403)      (61,370)    (17,004)    21,795
Cumulative effect of changes in
  accounting principles.............        --           --            --     (43,000)        --
                                      --------     --------      --------    --------   --------
Net income (loss)...................  $  1,039     $(72,403)     $(61,370)   $(60,004)  $ 21,795
                                      ========     ========      ========    ========   ========
INFORMATION PER SHARE
Income (loss) before cumulative
  effect of changes in accounting
  principles........................  $    .03     $  (4.02)     $  (3.32)   $   (.95)  $   1.21
Cumulative effect of changes in
  accounting principles.............        --           --            --       (2.39)        --
                                      --------     --------      --------    --------   --------
Net income (loss)...................  $    .03     $  (4.02)     $  (3.32)   $  (3.34)  $   1.21
                                      ========     ========      ========    ========   ========
Shares used to compute earnings per
  share.............................    35,148       17,992        18,490      17,965     18,078
                                      ========     ========      ========    ========   ========
</TABLE>
 
The accompanying Notes to the Consolidated Financial Statements are an integral
                      part of these financial statements.
 
                                       F-2
<PAGE>   81
<TABLE>
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
<CAPTION>
                                                                         JUNE 3,       MAY 28,
                                                                          1995          1994
                                                                        ---------     ---------
                                                                            (000'S OMITTED)
<S>                                                                      <C>           <C>
ASSETS
  Cash and cash equivalents.........................................     $ 13,856      $ 42,179
  Accounts receivable...............................................       79,219        77,019
  Inventories.......................................................       78,813        65,737
  Prepaid expenses..................................................       15,671        15,192
                                                                         --------      --------
     Total current assets...........................................      187,559       200,127
                                                                         --------      --------
  Property, plant and equipment, net................................      141,397       139,689
  Intangible assets.................................................       25,295        27,759
  Other assets......................................................       14,813        27,172
                                                                         --------      --------
     Total assets...................................................     $369,064      $394,747
                                                                         ========      ========
LIABILITIES
  Borrowings due within one year....................................     $  3,915      $     77
  Obligation to Cooper Industries...................................           --        20,561
  Accounts payable..................................................       34,729        27,650
  Accrued liabilities and other.....................................       55,853        60,151
                                                                         --------      --------
     Total current liabilities......................................       94,497       108,439
                                                                         --------      --------
  Restructuring, integration, disposal and environmental............       19,648        26,201
  Long-term debt....................................................       90,308        90,385
  Pension liability.................................................        9,589        14,462
  Deferred income taxes and other...................................       21,699        30,929
  Postretirement benefits...........................................       52,468        51,848
                                                                         --------      --------
STOCKHOLDERS' EQUITY
  Preferred stock, no par value:
     Authorized 5,000,000 shares; none issued.......................           --            --
  Common stock, par value $1.00 per share:
     Authorized 70,000,000 shares; issued 37,052,720 and 36,902,720
      shares at June 3, 1995 and May 28, 1994.......................       37,053        36,903
  Capital in excess of par value....................................       40,118        43,884
  Retained earnings.................................................       39,700        38,661
  Equity adjustments................................................           63        (5,408)
  Treasury stock, 2,044,178 shares at June 3, 1995 and 2,354,540
     shares at May 28, 1994.........................................      (36,079)      (41,557)
                                                                         --------      --------
     Total stockholders' equity.....................................       80,855        72,483
                                                                         --------      --------
     Total liabilities and stockholders' equity.....................     $369,064      $394,747
                                                                         ========      ========
</TABLE>
 
The accompanying Notes to the Consolidated Financial Statements are an integral
                      part of these financial statements.
 
                                       F-3
<PAGE>   82
<TABLE>
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
                                                              YEAR ENDED         FIVE MONTHS       YEAR ENDED
                                                        ----------------------      ENDED         DECEMBER 31,
                                                        JUNE 3,      MAY 28,       MAY 28,     -------------------
                                                          1995        1994          1994         1993       1992
                                                        --------   -----------   -----------   --------   --------
                                                                   (UNAUDITED)           
                                                                             (000'S OMITTED)
<S>                                                     <C>          <C>          <C>          <C>        <C>
OPERATING ACTIVITIES:
Net income (loss).....................................  $  1,039     $(72,403)    $(61,370)    $(60,004)  $ 21,795
Adjustments to reconcile net income (loss) to net cash
  provided (used) by operating activities:
  Depreciation and amortization.......................    18,122       15,888         6,782      15,569     15,875
  Loss from disposal of production facilities.........        --        2,453            --       2,453         --
  Environmental and other charges (credits)...........    (2,100)      32,550        32,550          --         --
  Losses of equity investment.........................     1,390           --            --          --         --
  Cumulative effect of changes in accounting
    principles........................................        --           --            --      43,000         --
Changes in assets and liabilities net of purchase
  price activity:
  Accounts receivable.................................    (2,200)       9,545         3,228      15,139     14,699
  Inventories.........................................   (13,076)      16,219         4,215       8,474     16,345
  Prepaid expenses and other assets...................    11,542        5,078         2,255      (7,114)       986
  Accrued restructuring, integration, disposal and
    environmental.....................................   (14,646)      (8,224)       (1,352)     (9,653)   (25,735)
  Income and other taxes..............................       628         (623)          585        (940)     2,789
  Accounts payable and accrued liabilities............     7,073        5,515         6,429         311    (15,951)
  Deferred income taxes...............................        --        1,009         1,009         (58)        --
                                                        --------     --------      --------    --------   --------
    Net cash provided (used) by operating
      activities......................................     7,772        7,007        (5,669)      7,177     30,803
                                                        --------     --------      --------    --------   --------
INVESTING ACTIVITIES:
  Investment in acquired subsidiaries.................    (3,591)      (3,450)       (3,450)         --     (3,700)
  Capital expenditures................................   (18,714)     (11,888)       (2,404)    (13,866)   (11,156)
  Deferred program costs..............................        --       16,408        16,063         (22)    (2,086)
  Proceeds from disposal of production
    facilities........................................        --        4,345            --       4,345        451
  Proceeds from sale of fixed assets..................     1,563           62            --         393      2,282
  Other, net..........................................      (415)       4,071         2,137       1,650        742
                                                        --------     --------      --------    --------   --------
    Net cash provided (used) by investing
      activities......................................   (21,157)       9,548        12,346      (7,500)   (13,467)
                                                        --------     --------      --------    --------   --------
FINANCING ACTIVITIES:
  Cash received from Cooper Industries for factored
    accounts receivable...............................        --       20,561        20,561          --         --
  Cash paid to Cooper Industries for factored accounts
    receivable........................................   (20,561)          --            --          --         --
  Payment of debt.....................................       (77)         (77)          (77)    (70,077)   (22,077)
  Issuance of debt....................................     3,838           --            --      84,680         --
  Net proceeds from issuance of common stock..........     1,862          572           201         537        220
                                                        --------     --------      --------    --------   --------
    Net cash provided (used) by financing
      activities......................................   (14,938)      21,056        20,685      15,140    (21,857)
                                                        --------     --------      --------    --------   --------
Increase (decrease) in cash...........................   (28,323)      37,611        27,362      14,817     (4,521)
Cash, beginning of period.............................    42,179        4,568        14,817          --      4,521
                                                        --------     --------      --------    --------   --------
Cash, end of period...................................  $ 13,856     $ 42,179      $ 42,179    $ 14,817   $     --
                                                        ========     ========      ========    ========   ========
</TABLE>
 
The accompanying Notes to the Consolidated Financial Statements are an integral
                      part of these financial statements.
 
                                       F-4
<PAGE>   83
<TABLE>
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
 
<CAPTION>
                                     COMMON STOCK      CAPITAL
                                   ----------------   IN EXCESS
                                   SHARES     PAR      OF PAR     RETAINED     EQUITY      TREASURY
                                   ISSUED    VALUE      VALUE     EARNINGS   ADJUSTMENTS    STOCK
                                   ------   -------   ---------   --------   -----------   --------
                                                           (000'S OMITTED)
<S>                                <C>      <C>        <C>         <C>         <C>         <C>
Balance, December 31, 1991.......  20,403   $20,403    $16,616    $138,240     $(1,788)    $(45,383)
  Net income.....................                                   21,795
  Stock plans....................                         (567)                                 735
  Pension equity adjustment......                                                 (535)
                                   ------   -------    -------    --------     -------     --------
Balance, December 31, 1992.......  20,403    20,403     16,049     160,035      (2,323)     (44,648)
  Net loss.......................                                  (60,004)
  Stock plans....................                         (984)                               1,250
  Savings/Investment Plan
     match.......................                         (769)                               1,040
  Pension equity adjustment......                                               (1,700)
                                   ------   -------    -------    --------     -------     --------
Balance, December 31, 1993.......  20,403    20,403     14,296     100,031      (4,023)     (42,358)
  Net loss.......................                                  (61,370)
  Stock plans....................                         (429)                                 546
  Savings/Investment Plan
     match.......................                         (171)                                 255
  Pension equity adjustment......                                               (1,385)
  Issuance of common stock.......  16,500    16,500     30,188
                                   ------   -------    -------    --------     -------     --------
Balance, May 28, 1994............  36,903    36,903     43,884      38,661      (5,408)     (41,557)
  Net income.....................                                    1,039
  Stock plans....................     150       150     (2,354)                               3,355
  Savings/Investment Plan
     match.......................                       (1,412)                               2,123
  Pension equity adjustment......                                                3,952
  Currency translation...........                                                1,519
                                   ------   -------    -------    --------     -------     --------
Balance, June 3, 1995............  37,053   $37,053    $40,118    $ 39,700     $    63     $(36,079)
                                   ======   =======    =======    ========     =======     ========
</TABLE>
 
The accompanying Notes to the Consolidated Financial Statements are an integral
                      part of these financial statements.
 
                                       F-5
<PAGE>   84
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
     The company is engaged principally in the design, engineering, production
and marketing of high-technology forged and investment cast metal and composite
components used for a wide variety of aerospace and power generation
applications.
 
     On May 24, 1994, the company's Board of Directors voted to change the
company's fiscal year end from one which ended on December 31 to one which ends
on the Saturday nearest to May 31.
 
     On May 26, 1994, the Company acquired Cameron Forged Products Company
("Cameron") from Cooper Industries. The accompanying consolidated financial
statements include the accounts of Cameron from the date of the acquisition.
Cameron's operating results from May 26, 1994 to May 28, 1994 are not material
to the consolidated statement of operations for the five month period ended May
28, 1994. The unaudited statement of operations and cash flows for the year
ended May 28, 1994 are presented for comparative purposes only.
 
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of the company and all subsidiaries. All intercompany accounts and
transactions have been eliminated.
 
REVENUE RECOGNITION: Sales and income are recognized at the time products are
shipped.
 
RECLASSIFICATIONS: Where appropriate, prior year amounts have been reclassified
to permit comparison.
 
CASH AND CASH EQUIVALENTS: Cash equivalents include short-term investments with
maturities of less than three months at the time of investment.
 
INVENTORIES: Inventories are valued at both the lower of first-in, first-out
(FIFO) cost or market, or for certain forgings and castings raw material and
work-in-process inventories, the last-in, first-out (LIFO) method. On certain
orders, usually involving lengthy raw material procurement and production
cycles, progress payments are reflected as a reduction of inventories. Product
repair costs are expensed as incurred.
 
LONG-TERM, FIXED PRICE CONTRACTS: A substantial portion of the company's
revenues is derived from long-term, fixed price contracts with major engine and
aircraft manufacturers. These contracts are typically "requirements" contracts
under which the purchaser commits to purchase a given portion of its
requirements of a particular component from the company. Actual purchase
quantities are typically not determined until shortly before the year in which
products are to be delivered. Losses on such contracts are provided when
available information indicates that the sales price is less than a fully
allocated cost projection. As part of the company's acquisition of Cameron on
May 26, 1994, loss reserves on backlog and long-term pricing agreements are
included on the balance sheet (see Footnote C).
 
DEPRECIABLE ASSETS: Property, plant and equipment, including significant
renewals and betterments, are capitalized at cost and are depreciated on the
straight-line method. Generally, depreciable lives range from 10 to 20 years for
land improvements, 10 to 40 years for buildings and 5 to 15 years for machinery
and equipment. Tooling production costs are primarily classified as machinery
and equipment and are capitalized at cost less associated revenue and
depreciated over 5 years.
 
BANK FEES: Bank fees and related costs of obtaining credit facilities are
recorded as other assets and amortized over the term of the facilities.
 
EARNINGS (LOSS) PER SHARE: Per-share data are computed based on the weighted
average number of common shares outstanding during each year. Common stock
equivalents related to outstanding stock options are included in per-share
computations unless their inclusion would be antidilutive.
 
                                       F-6
<PAGE>   85
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
CONCENTRATION OF CREDIT RISK: Financial instruments that potentially subject the
company to concentration of credit risk consist primarily of temporary cash
investments and trade receivables. The company restricts investment of temporary
cash investments to financial institutions with high credit standing.
 
     The company has approximately 550 active customers. However, the company's
accounts receivable are concentrated with a small number of Fortune 500
companies with whom the company has long-standing relationships. Accordingly,
management considers credit risk to be low. Five customers accounted for 50.0%
of the company's revenues during the year ended June 3, 1995, 50.6% for the five
months ended May 28, 1994, 55.6% for the year ended December 31, 1993 and 52.7%
for the year ended December 31, 1992. General Electric Company ("GE") and United
Technologies Corporation ("UT") each accounted for more than 10% of the
company's revenues as follows:
 
<TABLE>
<CAPTION>
                                                     FIVE MONTHS
                                YEAR ENDED            ENDED MAY                 YEAR ENDED DECEMBER 31,
                                 JUNE 3,                 28,               ----------------------------------
                                   1995        %        1994         %       1993       %       1992       %
                                ----------    ---    -----------    ---    --------    ---    --------    ---
                                                              ($000'S OMITTED)
<S>                             <C>            <C>    <C>            <C>   <C>          <C>   <C>          <C>
GE...........................   $ 101,261      26     $  17,226      20    $ 55,585     23    $ 62,740     21
UT...........................      58,873      15        13,930      16      37,060     16      48,920     17
</TABLE>
 
CURRENCY TRANSLATION: For foreign operations, the local currency is the
functional currency. Assets and liabilities are translated at year-end exchange
rates, and statement of operations items are translated at the average exchange
rates for the year. Translation adjustments are reported in equity adjustments
as a separate component of stockholders' equity which also includes exchange
gains and losses on certain intercompany balances of a long-term investment
nature.
 
RESEARCH AND DEVELOPMENT: Research and development expenses, including related
depreciation, amounted to $2,213,000, $733,000, $2,778,000 and $3,013,000 for
the year ended June 3, 1995, five months ended May 28, 1994 and for the years
ended December 31, 1993 and 1992, respectively.
 
   
INTANGIBLE ASSETS: Intangible assets consists primarily of costs of acquired
businesses in excess of net assets acquired and are amortized on a straightline
basis over periods up to 35 years. On a periodic basis, the company estimates
the future undiscounted cash flows of the businesses to which the costs of
acquired businesses in excess of net assets acquired relate in order to ensure
that the carrying value of such intangible asset has not been impaired.
    
 
                                       F-7
<PAGE>   86
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
B. ACQUISITION
 
     On May 26, 1994, the company acquired all of the outstanding stock of
Cameron from Cooper Industries Inc. for 16,500,000 shares of the company's
common stock valued at $46,687,000, direct costs of $3,050,000, a note payable
to Cooper Industries, Inc. of $3,186,000 net of discount of $1,414,000, $400,000
in cash at closing and a final cash settlement of $3,591,000. Cameron and its
subsidiaries operate forging facilities in Houston, Texas and Livingston,
Scotland, as well as a powder metal operation in Brighton, Michigan. The
integration of Cameron's operations with the company's is progressing
substantially as planned. The acquisition was accounted for as a purchase
transaction. The company's results of operations for fiscal 1995 include the
accounts of Cameron. The final allocation of the purchase price of this
transaction is reflected in the May 28, 1994 balance sheet as follows:
 
<TABLE>
<CAPTION>
                                                                            (000'S OMITTED)
<S>                                                                             <C>
Cost of acquisition:
  Issuance of 16,500 shares of common stock to Cooper, direct expenses of
     $3,050 and $3,591 final price adjustment................................    $53,328
  Note payable to Cooper net of discount of $1,414 (included in other
     long-term liabilities on the balance sheet).............................      3,186
  Cash paid to Cooper at closing.............................................        400
                                                                                 -------
                                                                                  56,914
Estimated costs to integrate Cameron into the company........................      6,993
                                                                                 -------
                                                                                 $63,907
                                                                                 =======
Allocation of cost of acquisition:
  Fair value of property, plant and equipment................................    $81,183
  Less excess of fair value of net assets acquired over purchase price.......    (30,712)
                                                                                 -------
                                                                                  50,471
  Other assets acquired and liabilities assumed..............................     13,436
                                                                                 -------
                                                                                 $63,907
                                                                                 =======
</TABLE>
 
     The allocation of the cost of the acquisition has been made on the basis of
the fair market value of the individual assets and liabilities acquired. Direct
costs of the acquisition of Cameron and liabilities assumed are $5,200,000 and
$900,000, respectively, lower than originally estimated at May 28, 1994.
 
     The Unaudited Pro Forma Combined financial data of the company with Cameron
as though Cameron had been acquired as of the beginning of each period presented
are as follows:
 
<TABLE>
<CAPTION>
                                                                  FIVE MONTHS
                                                                     ENDED         YEAR ENDED
                                                                    MAY 28,       DECEMBER 31,
                                                                     1994             1993
                                                                  -----------     ------------
                                                                        (000'S OMITTED,
                                                                     EXCEPT PER-SHARE DATA)
<S>                                                                 <C>              <C>
Revenue.......................................................      $151,834         $389,295
                                                                    ========         ========
Income (loss) before cumulative effect of changes in
  accounting principles.......................................      $(71,525)        $(39,271)
                                                                    ========         ========
Net income (loss).............................................      $(71,525)        $(82,271)
                                                                    ========         ========
Income (loss) per share before cumulative effect of changes in
  accounting principles.......................................      $  (2.07)        $  (1.14)
                                                                    ========         ========
Net income (loss) per share...................................      $  (2.07)        $  (2.38)
                                                                    ========         ========
</TABLE>
 
                                       F-8
<PAGE>   87
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
C. BALANCE SHEET INFORMATION
 
     Components of selected captions in the consolidated balance sheets follow:
 
<TABLE>
<CAPTION>
                                                                         JUNE 3,       MAY 28,
                                                                          1995          1994
                                                                        ---------     ---------
                                                                            (000'S OMITTED)
<S>                                                                      <C>           <C>
PROPERTY, PLANT AND EQUIPMENT:
Land, buildings and improvements....................................     $100,399      $ 92,150
Machinery and equipment.............................................      278,691       272,429
Under construction..................................................        6,282         4,722
                                                                         --------      --------
                                                                          385,372       369,301
Less accumulated depreciation.......................................      243,975       229,612
                                                                         --------      --------
                                                                         $141,397      $139,689
                                                                         ========      ========
INTANGIBLE ASSETS:
Pension intangible..................................................     $  5,568      $  6,527
Costs in excess of net assets acquired..............................       28,786        29,586
Less: Accumulated amortization......................................       (9,059)       (8,354)
                                                                         --------      --------
                                                                         $ 25,295      $ 27,759
                                                                         ========      ========
OTHER ASSETS:
Cash surrender value of company-owned life insurance policies.......     $  7,974      $ 12,341
Other...............................................................        6,839        14,831
                                                                         --------      --------
                                                                         $ 14,813      $ 27,172
                                                                         ========      ========
ACCRUED LIABILITIES AND OTHER:
Accrued payroll and benefits........................................     $ 11,511      $  9,900
Restructuring, integration, disposal and environmental reserves.....       10,219        19,082
Payroll and other taxes.............................................        3,139         2,511
Loss on long-term contracts.........................................        7,407         8,334
Other...............................................................       23,577        20,324
                                                                         --------      --------
                                                                         $ 55,853      $ 60,151
                                                                         ========      ========
DEFERRED INCOME TAXES AND OTHER:
Deferred income taxes...............................................     $  2,623     $  2,623
Loss on long-term contracts.........................................        3,413        12,000
Other long-term liabilities.........................................       15,663        16,306
                                                                         --------      --------
                                                                         $ 21,699      $ 30,929
                                                                         ========      ========
</TABLE>
 
                                       F-9
<PAGE>   88
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
<TABLE>
D. INVENTORIES
 
     Inventories consisted of the following:
 
<CAPTION>
                                                                         JUNE 3,       MAY 28,
                                                                           1995          1994
                                                                         --------      --------
                                                                            (000'S OMITTED)
<S>                                                                      <C>           <C>
Raw material........................................................     $ 26,440      $ 13,706
Work-in-process.....................................................       54,310        54,570
Other...............................................................        3,228         2,286
                                                                           83,978        70,562
Less progress payments..............................................        5,165         4,825
                                                                         $ 78,813      $ 65,737
</TABLE>
 
     If all inventories valued at LIFO cost had been valued at FIFO cost or
market which approximates current replacement cost, inventories would have been
$21,584,000 and $27,758,000 higher than reported at June 3, 1995 and May 28,
1994, respectively.
 
     LIFO inventory quantities were reduced in each of the periods presented
below, resulting in the liquidation of LIFO inventories carried at the lower
costs prevailing in prior years compared with the cost of current purchases
which has a favorable effect on income from operations. Inflation and deflation
have negative and positive effects on income from operations, respectively. The
effects of lower quantities, inflation or deflation were as follows:
 
<TABLE>
<CAPTION>
                                                                              YEAR ENDED DECEMBER
                                              YEAR ENDED     FIVE MONTHS              31,
                                               JUNE 3,        ENDED MAY      ---------------------
                                                 1995         28, 1994         1993         1992
                                              ----------     -----------     --------     --------
                                                               (000'S OMITTED)
<S>                                           <C>            <C>             <C>          <C>
Lower quantities..........................     $ 7,567         $2,050          $5,469      $18,388
(Inflation) deflation.....................      (1,393)         1,085           4,450        2,448
                                               -------         ------          ------      -------
Net increase to income from operations....     $ 6,174         $3,135          $9,919      $20,836
                                               =======         ======          ======      =======
</TABLE>
 
E. SHORT-TERM AND LONG-TERM DEBT
 
     Short-term and long-term debt consisted of the following:
 
<TABLE>
<CAPTION>
                                                                         JUNE 3,       MAY 28,
                                                                           1995          1994
                                                                         --------      --------
                                                                            (000'S OMITTED)
<S>                                                                       <C>           <C>
Borrowings due within one year:
  Current portion of long-term debt.................................      $    77       $    77
  Borrowings under U.K. Credit Agreement............................        3,838            --
                                                                          -------       -------
     Total borrowings due within one year...........................      $ 3,915       $    77
                                                                          =======       =======
Long-term debt:
  Senior Notes......................................................      $90,000       $90,000
  Other.............................................................          308           385
                                                                          -------       -------
     Total long-term debt...........................................      $90,308       $90,385
                                                                          =======       =======
</TABLE>
 
                                      F-10
<PAGE>   89
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
     During 1993, the company issued $90,000,000 of 10 3/4% Senior Notes due
March 2003 (the "Senior Notes") under an indenture between the company and a
bank as trustee. The Senior Notes pay interest semi-annually. The Senior Notes
are general unsecured obligations of the company, are non-callable for a five
year period, and are senior to any future subordinated indebtedness of the
company. The indenture contains certain covenants including limitations on
indebtedness, restrictive payments including dividends, liens, and disposition
of assets.
 
     The estimated fair value of the Senior Notes was $86,400,000 and
$88,200,000 at June 3, 1995 and May 28, 1994 based on third party valuations.
 
     On May 20, 1994, the company initiated, through a new subsidiary,
Wyman-Gordon Receivables Corporation ("WGRC"), a revolving credit agreement with
a group of five banks ("Receivables Financing Program"). WGRC is a separate
corporate entity from Wyman-Gordon Company and its other subsidiaries, with its
own separate creditors. WGRC's business is the purchase of accounts receivable
from Wyman-Gordon Company and certain of its subsidiaries ("Sellers"), and
neither WGRC on the one hand nor the Sellers (or subsidiaries or affiliates of
the Sellers) on the other have agreed to pay or make their assets available to
pay creditors of others. WGRC's creditors have a claim on its assets prior to
those assets becoming available to any creditors of any of the Sellers. The
facility provides for a total commitment by the banks of up to $65,000,000,
including a letter of credit subfacility of up to $35,000,000.
 
     There were no borrowings outstanding at June 3, 1995 and May 28, 1994, but
the company had issued $10,009,000 and $5,139,000 of letters of credit under the
Receivables Financing Program, respectively. As of June 3, 1995 and May 28,
1994, total availability based on eligible receivables was $44,816,000 and
$15,418,000, respectively. Cameron's accounts receivable became eligible on
October 21, 1994.
 
     Wyman-Gordon Limited, the company's subsidiary located in Livingston,
Scotland, entered into a credit agreement ("U.K. Credit Agreement") with a bank
("the Bank") effective November 28, 1994. The maximum borrowing capacity under
the U.K. Credit Agreement is 3,000,000 pound sterling with a separate letter of
credit or guarantee limit of 1,000,000 pound sterling. Borrowings bear interest
at 1% over the Bank's base rate. In the event that borrowings by way of
overdraft are allowed to exceed the agreed limit, interest on the excess
borrowings will be charged at the rate of 2% over the Bank's base rate. The
company is obligated to pay a commitment fee of .75% on letters of credit issued
under the U.K. Credit Agreement. The U.K. Credit Agreement is secured by a
debenture from Wyman-Gordon Limited and is senior to any intercompany loans. The
term of the U.K. Credit Agreement is one year with an evergreen feature. There
were 2,415,000 pound sterling or $3,838,000 borrowings outstanding at June 3,
1995 and the company had issued pound sterling 380,000 or $604,000 of letters of
credit or guarantees under the U.K. Credit Agreement.
 
     For the year ended June 3, 1995, the weighted average interest rate on
short-term borrowings was 7.3%.
 
                                      F-11
<PAGE>   90
<TABLE>
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
     Annual maturities of long-term debt in the next five years amount to
$77,000 per year and $90,000,000 thereafter. The company's promissory note to
Cooper Industries, Inc. in the principal amount of $4,600,000, will be payable
in annual installments beginning on June 30, 1997 and each June 30 thereafter
until paid in full in amounts provided under the terms of the "Stock Purchase
Agreement" with Cooper Industries, Inc.
 
<CAPTION>
                                                             FIVE MONTHS          YEAR ENDED
                                              YEAR ENDED        ENDED            DECEMBER 31,
                                               JUNE 3,         MAY 28,       ---------------------
                                                 1995           1994           1993         1992
                                              ----------     -----------     --------     --------
                                                                (000'S OMITTED)
<S>                                            <C>             <C>           <C>            <C>
Interest on debt..........................     $ 9,929         $3,973        $ 8,741        $5,171
Capitalized interest......................        (397)          (152)          (544)         (218)
Amortization of financing fees and
  other...................................       1,495          1,562          2,626         2,568
                                               -------         ------        -------        ------
Interest expense..........................     $11,027         $5,383        $10,823        $7,521
                                               =======         ======        =======        ======
</TABLE>
 
     Total interest paid approximates "Interest on debt" stated in the table
above.
 
F. RESTRUCTURING OF OPERATIONS
 
  1991 RESTRUCTURING:
 
     During 1991, the company incurred charges of $87,966,000 and $11,498,000 in
connection with a restructuring program primarily at its forging operations and
disposition of its automotive crankshaft forging division, respectively.
 
     A significant portion of this charge related to the consolidation of
forging operations, including severance and other personnel costs. The company
has nearly completed its 1991 restructuring plan. Some consolidation activities
still remain to be completed requiring cash outlays of approximately $1,700,000
and $600,000 in fiscal 1996 and 1997, respectively. Deferred compensation of
approximately $1,500,000 will be payable over the next several years under the
terms of a severance agreement. The divestiture of the company's automotive
crankshaft forging division is virtually complete with minor costs remaining.
 
  1993 DISPOSITION:
 
     In 1993, the company sold substantially all of the net assets and business
operations of Wyman-Gordon Composites, Inc. and recorded a non-cash charge on
the sale in the fourth quarter of 1993 of $2,453,000.
 
  1994 RESTRUCTURING:
 
     The company recorded a charge of $6,450,000 in May 1994, $5,200,000 for
closing a castings facility, of which $1,100,000 required cash, and $1,250,000
to write-down castings fixed assets to their net realizable value. The non-cash
items amounting to $5,350,000 were charged against the reserve in May 1994. A
$600,000 cash charge was made against the reserve in fiscal 1995 and cash
charges of $500,000 are expected to be incurred in fiscal 1996.
 
  1994 CAMERON INTEGRATION COSTS:
 
     Based on the company's plans for the integration of Cameron, in May 1994,
the company recorded an integration restructuring charge totalling $24,100,000
which consisted of estimated cash costs of
 
                                      F-12
<PAGE>   91
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
$12,700,000 and estimated non-cash charges of $11,400,000 for asset
revaluations. Cash costs include relocating machinery, equipment, tooling and
dies of the company as well as relocation and severance costs related to
personnel of the company. Non-cash charges included the write-down of certain
assets of the company, including portions of metal production facilities and
certain forging, machining and testing equipment to net realizable value as a
result of consolidating certain systems and facilities, idling certain machinery
and equipment, and eliminating certain processes, departments and operations as
a result of the acquisition.
 
     In the fourth quarter of fiscal 1995, after a year of evaluating the
combined forgings operations and concluding that most of its integration
activities had been completed or were adequately provided for within the
remaining integration restructuring reserves, the company determined that
severance and other personnel costs were $1,900,000 lower and movement of
machinery, equipment and tooling and dies costs were $2,500,000 lower than
originally estimated. Additionally, the company had originally identified
certain machinery and equipment expected to become redundant as a result of the
integration of Cameron's operations with those of the company's. These
redundancies were $2,300,000 higher than the company's original estimates. As a
result, the company took into income from operations, an integration
restructuring credit in the amount of $2,100,000. At June 3, 1995, the company
estimates the remaining integration activities will require cash outlays of
approximately $4,100,000 in fiscal 1996 and $1,600,000 thereafter. Most of these
future expenditures represent costs associated with consolidation and
reconfiguration of production facilities and relocation or severance costs.
 
  CAMERON PURCHASE CASH COSTS:
 
     Included as part of the Cameron purchase price allocation the company
recorded $12,200,000 for direct cash costs related to the acquisition and
integration of Cameron for relocation of Cameron machinery and dies, severance
of Cameron personnel and other costs. At June 3, 1995, it was determined that
the cash costs of the acquisition were $5,200,000 lower than originally
estimated. The company made $4,100,000 of cash charges against these reserves in
fiscal 1995, and the remaining activities will require estimated cash outlays of
$2,900,000.
 
                                      F-13
<PAGE>   92
<TABLE>
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
     A summary of charges made or estimated to be made against restructuring,
integration and disposal reserves is as follows:
 
<CAPTION>
                                                                                              FIVE
                                                                      YEAR ENDED             MONTHS       YEAR ENDED
                                                                     DECEMBER 31,             ENDED    -----------------
                                                            ------------------------------   MAY 28,   JUNE 3,   JUNE 1,   THERE-
                                                   TOTAL      1991       1992       1993      1994      1995      1996     AFTER
                                                  -------   --------   --------   --------   -------   -------   -------   ------
                                                                               (000'S OMITTED)
<S>                                               <C>       <C>        <C>         <C>       <C>       <C>       <C>       <C>
1991 RESTRUCTURING:
 CASH:
 Consolidation and reconfiguration of
   facilities...................................  $32,600   $   700    $21,100     $4,800   $ 1,400    $ 2,300   $1,700   $  600
 Severance and deferred compensation............    6,400        --      2,200      2,000       300        400      200    1,300
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total cash charges...........................   39,000       700     23,300      6,800     1,700      2,700    1,900    1,900
                                                  -------   -------    -------     ------    ------    -------   ------   ------

 NON-CASH:
 Asset revaluation..............................   56,000    51,900      2,400     $1,700   $    --    $    --   $   --   $   --
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total 1991 Other Charges.....................  $95,000   $52,600    $25,700     $8,500   $ 1,700    $    --   $1,900   $1,900
                                                  =======   =======    =======     ======   =======    =======   ======   ======
1993 DISPOSITION:
 NON-CASH:
 Disposition of production facilities...........  $ 2,453   $    --    $    --     $2,453   $    --    $    --   $   --   $   --
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total 1993 Other Charges.....................  $ 2,453   $    --    $    --     $2,453   $    --    $    --   $   --   $   --
                                                  =======   =======    =======     ======   =======    =======   ======   =======
1994 RESTRUCTURING:
 CASH:
 Casting facility closure.......................  $ 1,100   $    --         --     $   --   $    --    $   600   $  500   $   --
                                                  -------   -------    -------     ------   -------    -------   ------   ------
 NON-CASH:
 Casting facility closure.......................    4,100        --         --         --     4,100         --       --       --
 Other..........................................    1,250        --         --         --     1,250         --       --       --
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total non-cash charges.......................    5,350        --         --         --     5,350         --       --       --
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total 1994 Restructuring.....................    6,450        --         --         --     5,350        600      500       --
 1994 CAMERON INTEGRATION COSTS:
 CASH:
 Movement of machinery, equipment and tooling
   and dies.....................................    4,300        --         --         --        --        800    2,100    1,400
 Severance and other personnel costs............    4,000        --         --         --        --      1,800    2,000      200
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total cash charges...........................    8,300        --         --         --        --      2,600    4,100    1,600
                                                  -------   -------    -------     ------   -------    -------   ------   ------
 NON-CASH:
 Asset revaluation..............................   13,700        --         --         --    11,400      2,300       --       --
 Credits to reserves............................    2,100        --         --         --        --      2,100       --       --
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total non-cash charges.......................   15,800        --         --         --    11,400      4,400       --       --
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total 1994 Cameron integration costs.........   24,100        --         --         --    11,400      7,000    4,100    1,600
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total 1994 Other Charges.....................  $30,550   $    --    $    --     $   --   $16,750    $ 7,600   $4,600   $1,600
                                                  =======   =======    =======     ======   =======    =======   ======   ======
CAMERON PURCHASE CASH COSTS:
 Cost of relocating Cameron's machinery and
   equipment and tooling and dies...............  $ 3,200   $    --    $    --     $   --   $    --    $ 1,700   $1,100   $  400
 Severance of Cameron personnel.................    3,800        --         --         --        --      2,400    1,300      100
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total Cameron Purchase Cash Costs............  $ 7,000   $    --    $    --     $   --   $    --    $ 4,100   $2,400   $  500
                                                  =======   =======    =======     ======   =======    =======   ======   ======
1995 OTHER CHARGES:
 NON-CASH:
 Credits to 1994 Cameron integration costs......  $(2,100)  $    --    $    --     $   --   $    --    $(2,100)  $   --   $   --
                                                  -------   -------    -------     ------   -------    -------   ------   ------
   Total 1995 Other Charges.....................  $(2,100)  $    --    $    --     $   --   $    --    $(2,100)  $   --   $   --
                                                  -------   -------    -------     ------   -------    -------   ------   ------
 Total Cash.....................................  $55,400   $   700    $23,300     $6,800   $ 1,700    $10,000   $8,900   $4,000
                                                  -------   -------    -------     ------   -------    -------   ------   ------
 Total Non-cash.................................  $77,503   $51,900    $ 2,400     $4,153   $16,750    $ 2,300   $   --   $   --
                                                  =======   =======    =======     ======   =======    =======   ======   ======
</TABLE>
 
                                      F-14
<PAGE>   93
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
G. ENVIRONMENTAL MATTERS
 
   
     The company is subject to extensive, stringent and changing federal, state
and local environmental laws and regulations, including those regulating the
use, handling, storage, discharge and disposal of hazardous substances and the
remediation of alleged environmental contamination. Nevertheless, the company
believes that compliance with these laws and regulations will not have a
material adverse effect on the company's operations as a whole. In 1991, the
company recorded a charge of $7,000,000 with respect to environmental
investigation and remediation costs at one of the company's facilities. During
the five months ended May 28, 1994, the company provided an additional
$2,000,000 to the current estimated cost of remediation and established a
$3,500,000 purchase accounting reserve related to environmental issues at
Cameron. Additionally, a charge of $5,000,000 against potential environmental
remediation costs upon the eventual sale of another facility was included in the
1991 restructuring charge. As of June 3, 1995, aggregate environmental reserves
amounted to $16,967,000 and have been provided for expected cleanup expenses
estimated between $6,000,000 and $7,000,000 upon the planned sale of a facility,
certain environmental issues at Cameron amounting to approximately $3,500,000
and the exposures noted in the following paragraphs, which include certain
capitalizable amounts for environmental management and remediation projects.
    
 
     Pursuant to an agreement entered into with the U.S. Air Force upon the
acquisition of a facility from the federal government in 1982, the company
agreed to make additional expenditures for environmental management and
remediation projects at that site during the period 1982 through 1999.
Approximately $6,100,000 of future expenditures remain as of June 3, 1995. The
company, together with numerous other parties, has also been alleged to be a
potentially responsible party at four federal or state Superfund sites. The
company does not believe that liabilities related to such sites will be material
in the aggregate.
 
     The company's Grafton, Massachusetts plant location is included in the U.S.
Nuclear Regulatory Commission's ("NRC") May 1992 Site Decommissioning Management
Plan for low-level radioactive waste as a "Priority C" (lowest priority) site.
The NRC conducted a long range dose assessment in 1992, and concluded that the
site should be remediated. However, the company believes the NRC's draft
assessment was flawed and has challenged that draft assessment. The company has
provided $1,500,000 for the estimated cost of the remediation. The company
believes that it may have meritorious claims for reimbursement from the U.S. Air
Force in respect of any liabilities it may have for such remediation.
 
     The company has been named in a suit which relates to the clean-up of a
privately owned site in Massachusetts formerly used as an impoundment lagoon
from which hazardous material is alleged to have spilled. A proposed agreement
would allocate 33% of the clean-up costs to the company. An insurance company is
defending the company's interests, and the company believes that any recovery
against the company would be covered by insurance. A consulting firm retained by
the PRP group has recently made a preliminary remediation cost estimate of
$300,000 to $9,900,000, depending on the level of toxicity found and the method
of remediation ultimately used.
 
H. BENEFIT PLANS
 
     The company and its subsidiaries have pension plans covering substantially
all employees. Benefits are generally based on years of service and a fixed
monthly rate or average earnings during the last years of employment. Pension
plan assets are invested in equity and fixed income securities, pooled funds
including real estate funds and annuities. Company contributions are determined
based upon the funding requirements of U.S. and other governmental laws and
regulations.
 
                                      F-15
<PAGE>   94
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
     A reconciliation between the amounts recorded on the consolidated balance
sheets and the summary tables of the funding status of the pension plans are as
follows:
 
<TABLE>
<CAPTION>
                                                                         JUNE 3,       MAY 28,
                                                                          1995          1994
                                                                        ---------     ---------
                                                                            (000'S OMITTED)
<S>                                                                      <C>          <C>
Pension liability per balance sheet.................................     $(9,589)     $(14,462)
Prepaid pension expense included in prepaid expenses in the balance      
  sheet.............................................................       1,639         2,769
UK pension liability................................................         789           750
                                                                         -------      --------
Net pension liability...............................................     $(7,161)     $(10,943)
                                                                         =======      ========
</TABLE>
 
 U.S. PENSION PLANS
 
     Pension expense for the U.S. pension plans included the following
components:
 
<TABLE>
<CAPTION>                                                                  
                                                                                  YEAR ENDED 
                                                              FIVE MONTHS         DECEMBER 31,
                                              YEAR ENDED         ENDED       ---------------------
                                             JUNE 3, 1995    MAY 28, 1994      1993         1992
                                              ----------     ------------    --------     --------
                                                               (000'S OMITTED)
<S>                                            <C>             <C>          <C>          <C>
Service cost..............................     $  2,938        $   917      $  1,720     $ 1,937
Interest cost on projected benefit                                                        
  obligation..............................       10,842          4,373        10,955      11,083
Actual return on assets...................       (8,205)        (2,248)      (18,107)     (6,849)
Net amortization and deferral of actuarial                                                
  gains (losses)..........................       (1,385)        (1,798)        8,208      (3,403)
                                               --------        -------      --------     -------
Net pension expense.......................     $  4,190        $ 1,244      $  2,776     $ 2,768
                                               ========        =======      ========     =======
Assumed long-term rate of return on plan                                                  
  assets..................................          9.0%           9.0%          9.0%        9.0%
                                               ========        =======      ========     =======
</TABLE>
 
                                      F-16
<PAGE>   95
<TABLE>
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
     A summary of the funding status of the U.S. pension plans and a
reconciliation to the amounts recorded in the consolidated balance sheets are as
follows:
 
<CAPTION>
                                                                   JUNE 3, 1995
                                                     -----------------------------------------
                                                       ASSETS      ACCUMULATED
                                                      EXCEEDING     BENEFITS
                                                     ACCUMULATED    EXCEEDING
                                                      BENEFITS       ASSETS         TOTAL
                                                     -----------   -----------    ---------
                                                                  (000'S OMITTED)
<S>                                                   <C>            <C>           <C>
Actuarial present value of benefit obligations:
  Vested.........................................     $ 82,042       $ 46,202       $128,244
  Nonvested......................................          349            324            673
                                                       -------        -------       --------
  Accumulated benefit obligation.................       82,391         46,526        128,917
  Impact of forecasted salary increases during                        
     future periods..............................        5,737            339          6,076
                                                       -------        -------       --------
  Projected benefit obligation for employee                           
     service to date.............................       88,128         46,865        134,993
Current fair market value of plan assets.........      101,933         30,967        132,900
                                                       -------        -------       --------
Excess (shortfall) of plan assets over (under)                        
  projected benefit obligation...................       13,805        (15,898)        (2,093)
Unrecognized net (gain) loss.....................      (10,261)         1,771         (8,490)
Unrecognized net (asset) obligation at                                
  transition.....................................         (455)         4,912          4,457
Unrecognized prior service cost..................        5,290          2,456          7,746
Adjustment required to recognize minimum                              
  liability......................................           --         (8,800)        (8,800)
Net periodic pension cost April 1, 1995 to June                       
  3, 1995........................................          (48)          (650)          (698)
Contributions April 1, 1995 to June 3, 1995......           --            717            717
                                                      --------       --------       --------
Net prepaid pension expense (pension                                  
  liability).....................................     $  8,331       $(15,492)      $ (7,161)
                                                      ========       ========       ========
Estimated annual increase in future salaries.....                                        3-5%
Weighted average discount rate...................                                        9.0%
                                                                                    --------
</TABLE>
 
                                      F-17
<PAGE>   96
<TABLE>
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
<CAPTION>
                                                                   MAY 28, 1994
                                                     -----------------------------------------
                                                       ASSETS      ACCUMULATED
                                                      EXCEEDING     BENEFITS
                                                     ACCUMULATED    EXCEEDING
                                                      BENEFITS       ASSETS          TOTAL
                                                     -----------   -----------     ---------
                                                                   (000'S OMITTED)
<S>                                                   <C>            <C>           <C>
Actuarial present value of benefit obligations:
  Vested.........................................     $ 91,533       $ 50,639      $142,172
  Nonvested......................................          341            398           739
                                                      --------       --------      --------
  Accumulated benefit obligation.................       91,874         51,037       142,911
  Impact of forecasted salary increases during                                      
     future periods..............................        6,798            235         7,033
                                                      --------       --------      --------
  Projected benefit obligation for employee                                         
     service to date.............................       98,672         51,272       149,944
Current fair market value of plan assets.........      103,349         31,390       134,739
                                                      --------       --------      --------
Excess (shortfall) of plan assets over (under)                                      
  projected benefit obligation...................        4,677        (19,882)      (15,205)
Unrecognized net (gain) loss.....................       (1,274)         5,121         3,847
Unrecognized net (asset) obligation at                                              
  transition.....................................         (522)         5,965         5,443
Unrecognized prior service cost..................        5,706          2,860         8,566
Adjustment required to recognize minimum                                            
  liability......................................           --        (13,712)      (13,712)
Net periodic pension cost April 1, 1994 to May                                      
  28, 1994.......................................           34           (507)         (473)
Contributions April 1, 1994 to May 28, 1994......           --            591           591
                                                      --------       --------      --------
Net prepaid pension expense (pension                                                
  liability).....................................     $  8,621       $(19,564)     $(10,943)
                                                      ========       ========      ========
Estimated annual increase in future salaries.....                                       3-5%
Weighted average discount rate...................                                       7.5%
                                                                                   --------
</TABLE>
 
     A measurement date of March 31 has been used for determining the disclosure
information. Expense recognition and contributions received during the period
April 1 through fiscal year-end are then recognized to bring the accrued or
prepaid expense to June 3, 1995 and May 28, 1994 balances.
 
<TABLE>
  U.K. PENSION PLAN
 
     Pension expense for the U.K. pension plan included the following:
 
<CAPTION>
                                                                         YEAR ENDED
                                                                        JUNE 3, 1995
                                                                       ---------------
                                                                       (000'S OMITTED)
          <S>                                                              <C>
          Service cost..............................................       $   692
          Interest cost.............................................         1,189
          Expected return on assets.................................        (1,084)
                                                                           -------
            Net pension expense.....................................       $   797
                                                                           =======
</TABLE>
 
                                      F-18
<PAGE>   97
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
<TABLE>
     The U.K. pension plan's assets and liabilities were rolled over from the
former Cameron plan during fiscal 1995. The funded status of the U.K. pension
plan is as follows:
 
<CAPTION>
                                                                        JUNE 3, 1995
                                                                       ---------------
                                                                       (000'S OMITTED)
          <S>                                                              <C>
          Fair value of plan assets.................................       $14,682
          Projected benefit obligation..............................        15,247
                                                                           -------
          Plan assets less than projected benefit obligation........          (565)
          Unrecognized net gain loss................................           498
                                                                           -------
          Accrued pension cost......................................       $   (67)
                                                                           =======
          Accumulated benefits......................................       $13,472
                                                                           =======
          Vested benefits...........................................       $13,472
                                                                           =======
          Assumed long-term rate of return on plan assets...........           9.0%
          Weighted average discount rate............................           9.0%
          Rate of salary increase...................................           6.0%
</TABLE>
 
     The company also maintains a 401K plan for most full-time salaried
employees. Employer contributions to the defined contribution plan are made at
the company's discretion and are reviewed periodically. Such contributions
amounted to $136,000 for the year ended June 3, 1995, $591,000 for the five
months ended May 28, 1994, and $134,000 and $375,000 for the years ended
December 31, 1993 and 1992, respectively. Additionally, for the year ended June
3, 1995, the five months ended May 28, 1994 and the years ended December 31,
1993 and 1992, the company contributed 120,261; 14,432; 58,927 and 0 shares of
common stock from Treasury to its defined contribution plan, respectively, and
recorded expense relating thereto of $711,000, $84,000, $271,000 and $0,
respectively.
 
I. OTHER POSTRETIREMENT BENEFITS
 
     In addition to providing pension benefits, the company and its subsidiaries
provide most retired employees with health care and life insurance benefits. The
majority of these health care and life insurance benefits are provided through
insurance companies, some of whose premiums are computed on a cost plus basis.
The annual cost of these benefits on the expense-as-incurred basis amounted to
$4,849,000 in 1992.
 
     Effective January 1, 1993, the company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." This standard
requires companies to accrue postretirement benefits during the years the
employees are working and earning benefits for retirement, as contrasted to the
expense-as-incurred basis that the company followed in 1992 and prior years. The
company elected to recognize the cumulative effect of the accounting change,
resulting in a non-cash reduction in earnings in 1993 of $43,000,000 or $2.39
per share.
 
     Most of the Forgings Division and Corporate retirees and full-time
employees are or become eligible for these postretirement health care and life
insurance benefits if they meet minimum age and service requirements. There are
certain retirees for which company cost and liability are affected by future
increases in health care cost. The liabilities have been developed assuming a
medical trend rate for growth in future health care claim levels from the
assumed 1994 level. The change to the accumulated postretirement benefit
obligation for each 1.0% change in these assumptions is $850,000. The change in
the annual SFAS 106 expense for each 1.0% change in these assumptions is
$78,000. The weighted average discount rate used in determining the amortization
of the accumulated postretirement benefit
 
                                      F-19
<PAGE>   98
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
obligation was 9.0% and 7.5% at June 3, 1995 and May 28, 1994, respectively, and
the average remaining service life was 20 years.
 
<TABLE>
     Net periodic benefit expense consists of the following components:
 
<CAPTION>
                                                                   FIVE MONTHS
                                                    YEAR ENDED        ENDED         YEAR ENDED
                                                     JUNE 3,         MAY 28,       DECEMBER 31,
                                                       1995           1994             1993
                                                    ----------     -----------     ------------
                                                                 (000'S OMITTED)
<S>                                                  <C>           <C>              <C>
Service cost....................................     $  350        $   85           $  170
Interest on the accumulated benefit
  obligation....................................      3,990         1,540            3,660
                                                     ------        -------          ------
  Total postretirement benefit expense..........     $4,340        $1,625           $3,830
                                                     ======        ======           ======
</TABLE>
<TABLE>
     The company has no plans for funding the liability and will continue to pay
for retiree medical costs as they occur. The components of the accumulated
postretirement benefit obligation are as follows:
 
<CAPTION>
                                                                          JUNE 3,      MAY 28,
                                                                            1995         1994
                                                                          --------     --------
                                                                             (000'S OMITTED)
<S>                                                                       <C>         <C>
Accumulated postretirement benefit obligation:
  Retirees............................................................    $41,323     $43,285
  Fully eligible active plan participants.............................      5,180       5,239
  Other active plan participants......................................      7,023       6,778
                                                                          -------     -------
                                                                           53,526      55,302
Plan assets at fair value.............................................         --          --
                                                                          -------     -------
Accumulated postretirement benefit obligation in excess of plan                        
  assets..............................................................     53,526      55,302
Unrecognized net gain (loss) from past experience different from that                  
  assumed and from changes in assumptions.............................        901      (3,454)
Prior service cost not yet recognized in net periodic postretirement                   
  benefit cost........................................................     (2,000)         --
                                                                          -------     -------
Accrued postretirement benefit cost...................................    $52,427     $51,848
                                                                          =======     =======
</TABLE>
 
J. FEDERAL, FOREIGN AND STATE INCOME TAXES
 
     As of January 1, 1993, the company adopted financial Accounting Standards
Board Statement No. 109, "Accounting for Income Taxes" ("SFAS 109"). As
permitted under SFAS 109, the company has elected not to restate the financial
statements of prior years. The impact of this change on the results of
operations for the year ended December 31, 1993 was immaterial.
 
     The company has not recognized an income tax benefit (provision) during the
year ended June 3, 1995, the five months ended May 28, 1994, or the years ended
December 31, 1993 and 1992, respectively.
 
     The company received income tax refunds of $0, $138,000, $282,000 and
$3,725,000 during the years ended June 3, 1995, the five months ended May 28,
1994, and the years ended December 31, 1993 and 1992, respectively.
 
                                      F-20
<PAGE>   99
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
<TABLE>
     The benefit (provision) for income taxes is at a rate other than the
federal statutory tax rate for the following reasons:
 
<CAPTION>
                                                                              YEAR ENDED DECEMBER
                                              YEAR ENDED     FIVE MONTHS              31,
                                               JUNE 3,        ENDED MAY      ---------------------
                                                 1995         28, 1994         1993        1992
                                              ----------     -----------     --------    --------
                                                                (000'S OMITTED)
<S>                                            <C>            <C>             <C>         <C>
U.S. federal statutory tax rate...........     $  (363)       $ 21,480        $ 5,781     $(7,410)
Recognition of previously unrecognized
  deferred tax assets.....................       1,749              --            --        7,410
Tax carryforwards without current tax
  benefits (foreign in 1995 and U.S.
  federal in 1994 and 1993)...............      (1,386)        (21,480)        (5,781)         --
                                               --------       --------        -------     -------
Income tax benefit (provision)............     $    --        $     --        $    --     $    --
                                               ========       ========        =======     =======
</TABLE>
 
     Tax net operating loss carryforwards of $67,000,000 begin expiring in the
year 2006. The company has experienced significant operating losses and there is
no assurance that the net operating loss carryforwards will be utilized,
therefore, a valuation allowance of $67,731,000 and $69,716,000 at June 3, 1995
and May 28, 1994 has been recognized, respectively.
 
<TABLE>
     The principal components of deferred tax assets and liabilities were as
follows:
 
<CAPTION>
                                                                    JUNE 3, 1995     MAY 28, 1994
                                                                    ------------     ------------
                                                                           (000'S OMITTED)
<S>                                                                   <C>             <C>
DEFERRED TAX ASSETS
  Provision for postretirement benefits.........................      $ 21,512        $ 21,228
  Net operating loss carryforwards..............................        23,585          19,230
  Restructuring provisions......................................        26,602          35,804
  Other.........................................................         6,496           5,768
                                                                      --------        --------
                                                                        78,195          82,030
  Valuation allowance...........................................       (67,731)        (69,716)
                                                                      --------        --------
                                                                        10,464          12,314
                                                                      --------        --------
DEFERRED TAX LIABILITIES                                                               
  Accelerated depreciation......................................         9,393          10,069
  Other.........................................................         3,694           4,868
                                                                      --------        --------
                                                                        13,087          14,937
                                                                      --------        --------
Net deferred tax liability......................................      $  2,623        $  2,623
                                                                      ========        ========
</TABLE>
 
     The net deferred tax liability is included in "Deferred income taxes and
other" on the accompanying consolidated balance sheets.
 
     The company is seeking refunds of prior year's federal taxes paid, which,
if fully realized, could have a material favorable impact on the company's
financial position. A reasonable estimation of the potential recovery cannot be
made at this time and, accordingly, no adjustment has been made in the financial
statements with respect to the claim.
 
                                      F-21
<PAGE>   100
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
K. STOCK OPTION PLANS
 
     The company's Long-Term Incentive Plan (the "Plan") is administered by the
Management Resources and Compensation Committee of the Board (the "Committee"),
which has plenary authority to interpret the Plan and to adopt rules relating
thereto. The Committee may also determine the number, frequency and timing of
awards, as well as the type of award and its exercise price, if any, prescribe
any performance criteria to be met and any restrictions on exercise and
determine any other terms or conditions, including schedules for vesting and
exercisability and the conditions under which vesting and exercisability may be
accelerated, such as in the event of a change in control of the company.
 
     The Committee may grant awards in the form of non-qualified stock options
or incentive stock options to those key employees of the company and its
subsidiaries, including executive officers, it selects to purchase in the
aggregate up to 1,750,000 shares of newly issued or treasury common stock. The
exercise price of non-qualified stock options may not be less than 50% of the
fair market value of such shares on the date of grant or, in the case of
incentive stock options, 100% of the fair market value on the date of grant.
Awards of stock appreciation rights ("SAR's") may also be granted, either in
tandem with grants of stock options (and exercisable as an alternative to the
exercise of stock options) or separately.
 
     In addition, the Committee may grant other awards that consist of or are
denominated in or payable in shares or that are valued by reference to shares,
including, for example, restricted shares, phantom shares, performance units,
performance bonus awards or other awards payable in cash, shares or a
combination thereof at the Committee's discretion. During fiscal 1995, awards of
150,000 shares of the company's common stock were made subject to restrictions
based upon continued employment for a period of five years and the performance
of the company. Compensation expense totalling $330,000 relating to the awards
was recorded during the year ended June 3, 1995.
 
     The 1975 Executive Long-Term Incentive Program (the "Program"), as amended,
provided for the granting of stock options, alternative common stock
appreciation rights and performance bonus award units to key employees of the
company and its subsidiaries. The 1975 program expired on December 31, 1992,
except as to outstanding grants.
 
                                      F-22
<PAGE>   101
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
<TABLE>
     Option activity under the 1975 Program and the 1991 Plan in the year ended
June 3, 1995, the five months ended May 28, 1994 and the years ended December
31, 1993 and 1992 was as follows:
 
<CAPTION>
                                                                       OPTION
                                                                     PRICE RANGE      SHARES
                                                                     -----------     ---------
<S>                                                                  <C>             <C>
Outstanding at December 31, 1991.................................    3.75-29.00      1,839,246
  Granted........................................................          5.00        321,502
  Terminated.....................................................          3.75       (185,001)
  Exercised......................................................          3.75        (16,666)
  Cancelled......................................................    3.75-29.00        (65,895)
                                                                                     ---------
Outstanding at December 31, 1992.................................    3.75-29.00      1,893,186
  Granted........................................................    5.00- 6.00        285,500
  Terminated.....................................................    3.75-29.00       (372,480)
  Exercised......................................................          3.75        (70,831)
                                                                                     ---------
Outstanding at December 31, 1993.................................                    1,735,375
  Granted........................................................    5.13- 5.63         88,008
  Terminated.....................................................    3.75-19.00        (28,185)
  Exercised......................................................    3.75- 5.00        (30,943)
                                                                                     ---------
Outstanding at May 28, 1994......................................                    1,764,255
  Granted........................................................    5.63-10.63        365,000
  Terminated.....................................................    3.75-21.50       (103,922)
  Exercised......................................................    3.75- 6.25       (190,098)
                                                                                     ---------
Outstanding at June 3, 1995......................................                    1,835,235
                                                                                     =========
</TABLE>
 
     Options for 1,203,000; 930,000; 867,000 and 677,000 shares, were
exercisable at June 3, 1995, May 28, 1994 and December 31, 1993 and 1992,
respectively. At June 3, 1995, 105,000 shares were available for future grants.
 
L. STOCK PURCHASE RIGHTS
 
     In August 1988, the company adopted a Rights Agreement (the "Rights
Agreement"), and in October 1988, the company declared a dividend distribution
of one common stock purchase Right on each outstanding share of common stock.
The Rights will become exercisable at a purchase price of $50 each on the
distribution date which occurs if a person or group acquires or makes an offer
to acquire 20% or more of the company's common stock.
 
     In the event that at any time following the distribution date, (i) a person
or group becomes the beneficial owner of 20% or more of the then outstanding
shares of common stock (except pursuant to an offer for all outstanding shares
of common stock which the continuing Directors determine to be fair to and
otherwise in the best interests of the company and its stockholders), (ii) the
company is not the surviving corporation in a merger and its common stock is not
changed or exchanged, (iii) an acquiring person engages in one or more
self-dealing transactions as set forth in the Rights Agreement, or (iv) during
such time as there is an acquiring person, an event occurs which results in such
person's ownership interest being increased by more than 1%, each holder of a
Right will thereafter have the right to receive, upon exercise of the Right and
payment of the purchase price, common stock or a
 
                                      F-23
<PAGE>   102
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
combination of common stock, cash, preferred stock or debt having a value equal
to two times the purchase price of the Right. Alternatively, in such event and
with the approval of the continuing Directors, each holder of a Right will have
the right, or may be permitted only, to receive shares of common stock having a
value equal to the purchase price upon surrender of the Right to the company and
without payment of the purchase price. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, all
Rights that are beneficially owned by the acquiring person will be null and
void. However, Rights are not exercisable following the occurrence of any of the
events set forth above until such time as the Rights are no longer redeemable by
the company.
 
     In the event that, at any time following the date on which a person or
group acquires 20% or more of the company's outstanding shares (i) the company
is acquired in a merger or other business combination transaction in which the
company is not the surviving corporation (other than certain exceptions
mentioned in the Rights agreement) or (ii) 50% or more of the company's assets
or earning power is sold or transferred, each holder of a Right which has not
been previously voided shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the purchase price of the Right. The Rights may generally be redeemed by
the company at a price of $.02 per Right and they expire in November 1998.
 
M. COMMITMENTS AND CONTINGENCIES
 
     At June 3, 1995, certain lawsuits arising in the normal course of business
were pending. The company denies all material allegations of these complaints.
In the opinion of management, the outcome of legal matters will not have a
material adverse effect on the company's financial position, results of
operations or liquidity.
 
     As of June 3, 1995, the company had invested $4,100,000 in cash towards its
share of the capital requirements of its Australian joint venture for the
production of nickel-based superalloy. The company is committed to an additional
investment of $3,400,000 to the joint venture. The joint venture has entered
into a credit agreement with an Australian bank. The company has guaranteed 25%
of the joint venture's obligations under the credit agreement totalling
$17,300,000. This guarantee expires at such time as the joint venture
demonstrates its ability to produce commercially acceptable products.
 
   
     The company enters into various foreign exchange contracts to manage its
foreign exchange risks. Through its foreign currency hedging activities, the
company seeks to minimize the risk that the eventual cash flows resulting from
purchase and sale transactions denominated in other than the functional currency
of the operating unit will be affected by changes in exchange rates. Foreign
currency transaction exposures generally are the responsibility of the company's
individual operating units to manage as an integral part of their business. The
company hedges its foreign currency transaction exposures based on judgment,
generally through the use of forward exchange contracts. Gains and losses on the
company's foreign currency transaction hedges are recognized as an adjustment to
the underlying hedged transactions. Deferred gains and losses on foreign
exchange contracts were not significant at June 3, 1995. The company had foreign
exchange contracts totalling $11,600,000 at June 3, 1995. Such contracts include
forward contracts of $9,100,000 for the sale of U.K. pounds and $2,500,000 for
the purchase of U.K. pounds. These contracts hedge certain normal operating
purchase and sales transactions. The exchange contracts generally mature within
six months and require the company to exchange U.K. pounds for non-U.K.
currencies or non-U.K. currencies for U.K. pounds. Translation and transaction
gains and losses included in fiscal 1995's Consolidated Statements of Operations
were not significant.
    
 
                                      F-24
<PAGE>   103
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
N. GEOGRAPHIC AND OTHER INFORMATION
 
     Prior to May 28, 1994 the company operated solely in the United States.
Transfers between U.S. and international operations, principally inventory
transfers, are charged to the receiving organization at prices sufficient to
recover manufacturing costs and provide a reasonable return.
 
<TABLE>
     Certain information on a geographic basis follows:
 
<CAPTION>
                                                                    YEAR ENDED     FIVE MONTHS
                                                                     JUNE 3,        ENDED MAY
                                                                       1995         28, 1994
                                                                    ----------     -----------
                                                                         (000'S OMITTED)
<S>                                                                  <C>             <C>
REVENUES FROM UNAFFILIATED CUSTOMERS:
United States (including direct export sales)...................     $365,666        $ 86,976
United Kingdom..................................................       30,973              --
                                                                     --------        --------
                                                                     $396,639        $ 86,976
                                                                     ========        ========
INTER AREA TRANSFERS:
United States...................................................     $    373        $     --
United Kingdom..................................................        2,528              --
                                                                     --------        --------
                                                                     $  2,901        $     --
                                                                     ========        ========
EXPORT SALES:
United States direct export sales...............................     $ 81,208        $ 13,254
                                                                     ========        ========
INCOME (LOSS) FROM OPERATIONS:
United States...................................................     $ 14,931        $(55,805)
United Kingdom..................................................       (1,213)             --
                                                                     --------        --------
                                                                     $ 13,718        $(55,805)
                                                                     ========        ========
IDENTIFIABLE ASSETS (EXCLUDING INTERCOMPANY):
United States...................................................     $289,649        $312,462
United Kingdom..................................................       47,547          39,457
General corporate...............................................       31,868          42,828
                                                                     --------        --------
                                                                     $369,064        $394,747
                                                                     ========        ========
</TABLE>
 
                                      F-25
<PAGE>   104
 
                     WYMAN-GORDON COMPANY AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
O. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
 
<TABLE>
     Selected quarterly financial data for fiscal 1995 and fiscal 1994 were as
follows:
 

<CAPTION>
QUARTER                                            FIRST        SECOND         THIRD        FOURTH
- -------                                          ---------     ---------     ---------     ---------
                                                       (000'S OMITTED, EXCEPT PER-SHARE DATA)
<S>                                                <C>           <C>           <C>          <C>
YEAR ENDED JUNE 3, 1995
Revenue......................................      $95,725       $94,974       $96,238      $109,702
Cost of goods sold...........................       86,150        85,105        83,623        92,373
Other charges (credits) and environmental
  charges....................................           --            --            --          (710)
Income (loss) from operations................            3           768         3,620         9,327
Net income (loss)............................       (3,321)       (2,021)          556         5,825
Net income (loss) per share..................         (.10)         (.06)          .02           .17
YEAR ENDED MAY 28, 1994
Revenue......................................      $58,452       $56,233       $50,896       $59,113
Cost of goods sold...........................       50,433        53,014        50,375        63,994
Other charges (credits) and environmental
  charges....................................           --         2,366            87        32,550
Income (loss) from operations................        1,886        (6,298)       (8,447)      (50,798)
Net income (loss)............................         (816)       (5,642)      (11,282)      (54,663)
Net income (loss) per share..................         (.05)         (.31)         (.63)        (3.02)
<FN> 
- ---------------
 
(a) Income (loss) from operations during the third quarter of the year ended May
    28, 1994 reflects charges of $2,400 resulting from a change in estimated
    cash surrender values provided by the company's insurance actuaries on
    company-owned life insurance policies.
 
(b) Income (loss) from operations during the fourth quarter of the year ended
    May 28, 1994 reflects significant charges amounting to $17,450,000.

</TABLE>
 
                                      F-26
<PAGE>   105
 
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE SUCH DATE.
 
                            ------------------------
 
                               TABLE OF CONTENTS
 
   
<TABLE>
<CAPTION>
                                         PAGE
                                       ------
<S>                                        <C>
Available Information................       2
Incorporation of Certain Documents by
  Reference..........................       2
Prospectus Summary...................       3
Risk Factors.........................       7
Price Range of Common Stock and
  Dividend Policy....................      10
Capitalization.......................      12
Selected Consolidated Financial
  Data...............................      13
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations......................      15
Business.............................      22
Management...........................      34
Relationship between the Company and
  Cooper.............................      36
Description of the Company's Capital
  Stock..............................      43
Common Stock Ownership of Cooper.....      48
Plan of Distribution.................      48
Legal Matters........................      50
Experts..............................      50
Index to Consolidated Financial
  Statements.........................      51
</TABLE>
    
 
15,000,000 SHARES
 
WYMAN-GORDON COMPANY
 
COMMON STOCK
(PAR VALUE $1.00 PER SHARE)
 
[LOGO]
 
PROSPECTUS
 
DATED           , 1995
<PAGE>   106
 
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY COOPER OR
THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF COOPER SINCE SUCH DATE.
 
                            ------------------------
 
                               TABLE OF CONTENTS
 
   
<TABLE>
<CAPTION>
                                           PAGE
                                           ----
<S>                                        <C>
Available Information..................     2
Incorporation of Certain Documents by
  Reference............................     3
Risk Factors...........................     4
Cooper Industries, Inc.................     6
Wyman-Gordon Company...................     7
Relationship between Cooper and
  Wyman-Gordon.........................     7
Price Range of Wyman-Gordon Common
  Stock and Dividend Policy............     9
Use of Proceeds........................     9
Selected Financial Data................    10
Description of the DECS................    11
Certain United States Federal Income
  Tax Considerations...................    21
Plan of Distribution...................    24
ERISA Matters..........................    25
Legal Matters..........................    26
Experts................................    26
Prospectus Relating to Common Stock of
  Wyman-Gordon Company............Appendix A
</TABLE>
    
 
15,000,000 DECSSM
(DEBT EXCHANGEABLE FOR
COMMON STOCKSM)

 
COOPER INDUSTRIES, INC.

 
        % EXCHANGEABLE NOTES
DUE                         , 1998

                         [COOPER LOGO]

SALOMON BROTHERS INC
 
MERRILL LYNCH & CO.
 
SCHRODER WERTHEIM & CO.

PROSPECTUS
 
DATED                     1995
<PAGE>   107
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table sets forth the costs and expenses other than
underwriting discounts and commissions, incurred in connection with the sale of
the DECS being registered (all amounts are estimated except the Commission
registration fee and the National Association of Securities Dealers, Inc. Fee).
 
   
<TABLE>
        <S>                                                                <C>
        Commission Registration Fee......................................  $ 71,121
        National Association of Securities Dealers, Inc. Fee.............  $  9,375
        Printing and Engraving...........................................  $105,000
        Legal Fees and Expenses..........................................  $  *
        Accounting Fees and Expenses.....................................  $ 17,500
        Trustee Fees.....................................................  $  6,500
        Rating Agency Fees...............................................  $210,000
        Blue Sky Fees and Expenses.......................................  $  2,000
        Miscellaneous....................................................  $  *
                                                                           --------
                  Total..................................................  $
                                                                           ========
</TABLE>
    
 
   
- ---------------
    
 
   
* To be provided by amendment.
    
 
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     Section 1701.13 of the Ohio General Corporation Law contains detailed
provisions for indemnification of directors and officers of Ohio corporations
against expenses, judgments, fines and settlements in connection with
litigation. Cooper's Articles of Incorporation and its Directors' and Officers'
Liability Insurance Policy provide for indemnification and insurance,
respectively, of the directors and officers of Cooper against certain
liabilities.
 
     In addition, on February 17, 1987 the Board of Directors of Cooper
authorized Cooper to enter into indemnification agreements with the directors
and certain officers that may be designated from time to time by the Board of
Directors. The Board's action was approved by the shareholders at their Annual
Meeting on April 28, 1987. The indemnification agreements contain provisions for
indemnification against expenses, judgments, fines and settlements in connection
with threatened or pending litigation, inquiries or investigations that arise
out of the director's or officer's acts or omissions in his or her capacity as a
director or officer of Cooper.
 
     Reference is made to the form of the Underwriting Agreement filed as
Exhibit 1.1 hereto, which contains provisions for indemnification of Cooper, its
directors, officers and any controlling persons by the Underwriters against
certain liabilities for information furnished by the Underwriters.
 
ITEM 16.  EXHIBITS.
 
   
<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER        EXHIBIT
       ------        -------
<S>                  <C>  <C>
          1.1         --  Form of Underwriting Agreement.*
          4.1         --  Form of Indenture, between Cooper Industries, Inc. and Texas Commerce
                          Bank National Association, as Trustee.**
          4.2         --  Form of First Supplemental Indenture between Cooper Industries, Inc.
                          and Texas Commerce Bank National Association, as Trustee.**
          4.3         --  Form of DECS (included as Exhibit A to Exhibit 4.2).**
</TABLE>
    
 
                                      II-1
<PAGE>   108
 
   
<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER        EXHIBIT
       ------        -------
<S>                  <C>  <C>
         5.1          --  Opinion of Skadden, Arps, Slate, Meagher & Flom.*
        12.1          --  Calculation of Ratios of Earnings to Fixed Charges (incorporated by
                          reference to Cooper's Form 10-Q for the quarter ended September 30,
                          1995).
        23.1          --  Consent of Ernst & Young LLP.
        23.2          --  Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit
                          5.1).*
        24.1          --  Powers of Attorney.**
        25.1          --  Statement of Eligibility and Qualification on Form T-1 of Texas
                          Commerce Bank National Association.**
        99.1          --  Stock Purchase Agreement, dated as of January 10, 1994, between Cooper
                          Industries, Inc. and Wyman-Gordon Company.
        99.2          --  Investment Agreement, dated as of January 10, 1994, between Cooper
                          Industries, Inc. and Wyman-Gordon Company (incorporated by reference
                          to Schedule 13D of Cooper Industries, Inc. with respect to its
                          ownership of Wyman-Gordon Company Common Stock, dated June 1, 1994).
        99.3          --  Amendment, dated May 26, 1994, to Investment Agreement dated as of
                          January 10, 1994, between Cooper Industries, Inc. and Wyman-Gordon
                          Company.
        99.4          --  Form of PSA Master Securities Loan Agreement.
</TABLE>
    
 
- ---------------
 
   
 * To be filed by amendment.
    
 
   
** Previously filed.
    
 
ITEM 17. UNDERTAKINGS.
 
     (a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
 
     (b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to any existing provision or arrangement or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
 
                                      II-2
<PAGE>   109
 
     (c) The Registrant hereby undertakes that:
 
          (1) For purposes of determining any liability under the Securities
     Act, the information omitted from the form of Prospectus filed as part of
     this Registration Statement in reliance upon Rule 430A and contained in the
     form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.
 
          (2) For the purpose of determining any liability under the Securities
     Act of 1933, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.
 
                                      II-3
<PAGE>   110
 
                                   SIGNATURES
 
   
     Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on November 22, 1995.
    
 
                                          COOPER INDUSTRIES, INC.
 
                                          By    /s/  H. JOHN RILEY, JR.
                                          --------------------------------------
                                                     H. John Riley, Jr.
                                          President and Chief Executive Officer
 
   
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
    
 
   
<TABLE>
<S>                                            <C>                         <C>
           /s/  ROBERT CIZIK                   Director and Chairman         November 22, 1995
- ---------------------------------------------  of the Board
                Robert Cizik                  
                                              
        /s/  H. JOHN RILEY, Jr.                Director, President and       November 22, 1995
- ---------------------------------------------  Chief Executive Officer
             H. John Riley, Jr.              
                               
       /s/  D. BRADLEY MCWILLIAMS              Senior Vice President,        November 22, 1995
- ---------------------------------------------  Finance (Chief Financial
            D. Bradley McWilliams              Officer)

          /s/  TERRY A. KLEBE                  Vice President and            November 22, 1995
- ---------------------------------------------  Controller (Chief
               Terry A. Klebe                  Accounting Officer)
                                               Director                      November 22, 1995

- ---------------------------------------------
               Warren L. Batts

                      *                        Director                      November 22, 1995
- ---------------------------------------------
              Clifford J. Grum

                      *                        Director                      November 22, 1995
- ---------------------------------------------
                Linda A. Hill

                                               Director                      November 22, 1995
- ---------------------------------------------
               Harold S. Hook

                                               Director                      November 22, 1995
- ---------------------------------------------
          Constantine S. Nicandros

                      *                        Director                      November 22, 1995
- ---------------------------------------------
               Frank A. Olson
</TABLE>
    
 
                                      II-4
<PAGE>   111
 
   
<TABLE>
<S>                                            <C>                         <C>
                      *                        Director                      November 22, 1995
- ---------------------------------------------
                 John D. Ong

                      *                        Director                      November 22, 1995
- ---------------------------------------------
             Sir Ralph H. Robins

                                               Director                      November 22, 1995
- ---------------------------------------------
               A. Thomas Young

Diane K. Schumacher by signing her name
hereto, does hereby execute the Registration
Statement on behalf of the directors and
officers of the Registrant indicated above
by asterisks, pursuant to powers of attorney
duly executed by such directors and officers
and filed as exhibits to the Registration
Statement.

*By     /s/  DIANE K. SCHUMACHER                                             November 22, 1995
- ---------------------------------------------
             Diane K. Schumacher
              Attorney-in-Fact
</TABLE>
    
 
                                      II-5
<PAGE>   112
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER         DESCRIPTION OF EXHIBITS
       -------        -----------------------
<S>                   <C>  <C>
         1.1          --  Form of Underwriting Agreement.*

         4.1          --  Form of Indenture, between Cooper Industries, Inc. and Texas Commerce
                          Bank National Association, as Trustee.**

         4.2          --  Form of First Supplemental Indenture between Cooper Industries, Inc.
                          and Texas Commerce Bank National Association, as Trustee.**

         4.3          --  Form of DECS (included as Exhibit A to Exhibit 4.2).**

         5.1          --  Opinion of Skadden, Arps, Slate, Meagher & Flom.*

        12.1          --  Calculation of Ratios of Earnings to Fixed Charges (incorporated by
                          reference to Cooper's Form 10-Q for the quarter ended September 30,
                          1995).

        23.1          --  Consent of Ernst & Young LLP.

        23.2          --  Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit
                          5.1).*

        24.1          --  Powers of Attorney.**

        25.1          --  Statement of Eligibility and Qualification on Form T-1 of Texas
                          Commerce Bank National Association.**

        99.1          --  Stock Purchase Agreement, dated as of January 10, 1994, between Cooper
                          Industries, Inc. and Wyman-Gordon Company.

        99.2          --  Investment Agreement, dated as of January 10, 1994, between Cooper
                          Industries, Inc. and Wyman-Gordon Company (incorporated by reference
                          to Schedule 13D of Cooper Industries, Inc. with respect to its
                          ownership of Wyman-Gordon Company Common Stock, dated June 1, 1994).

        99.3          --  Amendment, dated May 26, 1994, to Investment Agreement dated as of
                          January 10, 1994, between Cooper Industries, Inc. and Wyman-Gordon
                          Company.

        99.4          --  Form of PSA Master Securities Loan Agreement.
</TABLE>
 
- ---------------
 
 * To be filed by amendment.
 
** Previously filed.

<PAGE>   1
 
                                                                    EXHIBIT 23.1
 
                        CONSENT OF INDEPENDENT AUDITORS
 
   
     We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-3 No. 33-63457) and
related Prospectus of Cooper Industries, Inc. for the registration of three-year
notes of Cooper Industries, Inc. exchangeable into Wyman-Gordon Company common
stock, par value $1.00 per share, and to the incorporation by reference therein
of our report dated January 23, 1995, with respect to the consolidated financial
statements of Cooper Industries, Inc. for the year ended December 31, 1994,
included as Appendix A to the Cooper Industries, Inc. Proxy Statement for the
Annual Meeting of Shareholders held on April 25, 1995, filed with the Securities
and Exchange Commission.
    
 
                                          /s/ ERNST & YOUNG LLP
 
Houston, Texas
   
November 22, 1995
    

<PAGE>   1
                                                                   EXHIBIT 99.1
 
                                                                        ANNEX A
- --------------------------------------------------------------------------------
 
                            STOCK PURCHASE AGREEMENT
 
                                    BETWEEN
 
                            COOPER INDUSTRIES, INC.
 
                                      AND
 
                              WYMAN-GORDON COMPANY
 
                      ------------------------------------
 
                          DATED AS OF JANUARY 10, 1994
 
- --------------------------------------------------------------------------------
<PAGE>   2
<TABLE>
 
                            STOCK PURCHASE AGREEMENT
 
                               TABLE OF CONTENTS
                          (NOT PART OF THE AGREEMENT)
 
<CAPTION>
                                                                                         PAGE
                                                                                         ----
<S>    <C>                                                                               <C>
PARTIES................................................................................   A-1
PREAMBLES..............................................................................   A-1
                                          ARTICLE I
SALE OF COMPANY COMMON STOCK...........................................................   A-1
1.1    Purchase and Sale...............................................................   A-1
1.2    Consideration...................................................................   A-1
1.3    Closing Balance Sheet...........................................................   A-1
1.4    Seller's Review of Preliminary Closing Balance Sheet............................   A-3
1.5    Buyer Response to Seller's Letter...............................................   A-3
1.6    Meeting to Resolve Proposed Adjustments.........................................   A-4
1.7    Resolution by Accounting Arbitrator.............................................   A-4
1.8    Positive or Negative Purchase Price Adjustment..................................   A-4
1.9    Values..........................................................................   A-4
1.10   Place of Payment................................................................   A-5
                                         ARTICLE II
CLOSING................................................................................   A-5
2.1    Time and Place of Closing.......................................................   A-5
2.2    Deliveries by the Seller........................................................   A-5
2.3    Deliveries by the Buyer.........................................................   A-5
                                         ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER...........................................   A-6
3.1    Organization....................................................................   A-6
3.2    Capitalization..................................................................   A-6
3.3    Authority Relative to This Agreement............................................   A-6
3.4    Consents and Approvals; No Violations...........................................   A-7
3.5    Financial Statements............................................................   A-7
3.6    Absence of Certain Changes......................................................   A-8
3.7    No Undisclosed Liabilities......................................................   A-8
3.8    Information in Proxy Statement..................................................   A-8
3.9    Litigation......................................................................   A-8
3.10   Compliance With Applicable Law..................................................   A-8
3.11   Taxes...........................................................................   A-9
3.12   ERISA; Employee Benefits........................................................   A-9
3.13   Intellectual Property...........................................................  A-10
3.14   Material Contracts; No Defaults.................................................  A-11
3.15   Environmental Compliance........................................................  A-11
3.16   Title to Real Property..........................................................  A-12
3.17   Company Assets..................................................................  A-12
3.18   Labor Matters...................................................................  A-12
3.19   Purchase for Investment.........................................................  A-12
3.20   No Beneficial Ownership of the Buyer's Stock....................................  A-12
3.21   Change in Control...............................................................  A-13
</TABLE>
 
                                        i
<PAGE>   3
 
<TABLE>
<CAPTION>
                                                                                         PAGE
                                                                                         ----
<S>    <C>                                                                               <C>
3.22   Business of the Company.........................................................  A-13
3.23   Representations Accurate........................................................  A-13
                                         ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER............................................  A-13
4.1    Organization....................................................................  A-13
4.2    Capitalization..................................................................  A-13
4.3    Authority Relative to this Agreement............................................  A-14
4.4    Consents and Approvals; No Violations...........................................  A-14
4.5    Reports.........................................................................  A-15
4.6    Absence of Certain Changes......................................................  A-15
4.7    No Undisclosed Liabilities......................................................  A-15
4.8    Information in Proxy Statement..................................................  A-16
4.9    Litigation......................................................................  A-16
4.10   Compliance with Applicable Law..................................................  A-16
4.11   Taxes...........................................................................  A-16
4.12   ERISA; Employee Benefits........................................................  A-16
4.13   Intellectual Property...........................................................  A-17
4.14   No Defaults.....................................................................  A-18
4.15   Environmental Compliance........................................................  A-18
4.16   Representations Accurate........................................................  A-18
4.17   Purchase for Investment.........................................................  A-18
                                          ARTICLE V
COVENANTS..............................................................................  A-19
5.1    Business Covenants of the Seller................................................  A-19
5.2    Business Covenants of the Buyer.................................................  A-20
5.3    Current Information.............................................................  A-21
5.4    Access to Information...........................................................  A-21
5.5    Reasonable Best Efforts.........................................................  A-22
5.6    Consents: Filings...............................................................  A-22
5.7    Shareholder Meeting.............................................................  A-23
5.8    Amendment to Articles of Organization and By-Laws...............................  A-23
5.9    Rights Agreement................................................................  A-23
5.10   Brokers or Finders..............................................................  A-23
5.11   Fees and Expenses...............................................................  A-23
5.12   Employee Benefits...............................................................  A-24
5.13   Public Announcements............................................................  A-28
5.14   Use of the Company Name.........................................................  A-28
5.15   Company Books and Records.......................................................  A-28
5.16   Disclosure Supplements..........................................................  A-29
5.17   Ancillary Agreements............................................................  A-29
5.18   WARN Act........................................................................  A-29
5.19   Taxes...........................................................................  A-30
5.20   Existing Insurance Coverage.....................................................  A-33
5.21   Certain Obligations.............................................................  A-34
5.22   Survival; Indemnification.......................................................  A-34
5.23   Repurchase or Receivables.......................................................  A-37
</TABLE>
 
                                       ii
<PAGE>   4
 
<TABLE>
<CAPTION>
                                                                                         PAGE
                                                                                         ----
<S>    <C>                                                                               <C>
                                         ARTICLE VI
CONDITIONS.............................................................................  A-37
6.1    Conditions to Each Party's Obligation to Effect the Transactions Contemplated
       by this Agreement...............................................................  A-37
6.2    Conditions of Obligations of the Seller to Effect the Transactions Contemplated
       by this Agreement...............................................................  A-38
6.3    Conditions of Obligations of the Buyer to Effect the Transactions Contemplated
       by this Agreement...............................................................  A-38

                                         ARTICLE VII
TERMINATION AND ABANDONMENT............................................................  A-38
7.1    Termination.....................................................................  A-38
7.2    Procedure and Effect of Termination.............................................  A-39

                                        ARTICLE VIII
MISCELLANEOUS..........................................................................  A-39
8.1    Amendment and Modification......................................................  A-39
8.2    Waiver of Compliance; Consents..................................................  A-39
8.3    Investigations; Survival Upon Termination.......................................  A-39
8.4    Notices.........................................................................  A-40
8.5    Annexes, Schedules and Exhibits.................................................  A-40
8.6    Descriptive Headings............................................................  A-40
8.7    Counterparts....................................................................  A-41
8.8    Entire Agreement; Assignment....................................................  A-41
8.9    Governing Law...................................................................  A-41
8.10   Specific Performance............................................................  A-41
8.11   Alternative Dispute Resolution..................................................  A-41
8.12   Non-Competition.................................................................  A-42
8.13   Further Assurances..............................................................  A-42
8.14   No Third-Party Beneficiaries....................................................  A-42
8.15   Remedies; Waiver................................................................  A-42
8.16   Severability....................................................................  A-42
</TABLE>
<TABLE>
<S>            <C> <C>
Exhibit A      --  Company Financial Statements
Annex I        --  Investment Agreement
Annex II       --  Commercial Term Note
Annex III      --  Peg Balance Sheet
Annex IV       --  Certain Pre-Closing Transactions
Annex V        --  Fair Price Charter Amendment
Annex VI       --  Control Share Acquisitions Amendment
Annex VII      --  Rights Agreement
Annex VIII     --  Ancillary Agreement Term Sheets
                   Seller's Disclosure Schedule
                   Buyer's Disclosure Schedule

                           The Registrant will furnish supplementally
                           a copy of all omitted Schedules to
                           Exhibit 99.1 upon the request of the
                           Securities and Exchange Commission.
</TABLE>               

 
                                       iii
<PAGE>   5
 
                            STOCK PURCHASE AGREEMENT
 
     STOCK PURCHASE AGREEMENT, dated as of January 10, 1994 (the "Agreement"),
between Cooper Industries, Inc., an Ohio corporation (the "Seller"), and
Wyman-Gordon Company, a Massachusetts corporation (the "Buyer").
 
     WHEREAS, the Seller owns all of the issued and outstanding shares of common
stock, par value $.208 1/3 per share (the "Company Common Stock"), of Cameron
Forged Products Company, a Delaware corporation (the "Company"); and
 
     WHEREAS, the Seller desires to sell and the Buyer desires to purchase the
Company Common Stock; and
 
     WHEREAS, simultaneously with the execution and delivery of this Agreement
and as an inducement to enter into this Agreement, the Buyer and the Seller are
entering into the Investment Agreement dated as of the date hereof and in the
form attached hereto as Annex I (the "Investment Agreement"), providing for
certain arrangements with respect to their relationship following consummation
of the transactions contemplated by this Agreement.
 
     NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
 
                                   ARTICLE I
 
                          SALE OF COMPANY COMMON STOCK
 
     1.1  Purchase and Sale  Upon the terms and subject to the conditions of
this Agreement, at the Closing (as hereinafter defined) the Seller will sell,
assign, transfer and deliver to the Buyer, and the Buyer will accept and
purchase from the Seller, all of the Company Common Stock.
 
     1.2  Consideration.
 
     (a) Upon the terms and subject to the conditions of this Agreement, and in
consideration of the sale, assignment, transfer and delivery of the Company
Common Stock the Buyer will pay, issue, and deliver to the Seller the
Consideration. The Consideration consists of (i) the Cash Consideration, (ii)
the Balance Sheet Consideration Amount and (iii) the Equity Consideration.
 
     (b) The "Cash Consideration" $5,000,000 payable as follows: (i) The Buyer
will pay to the Seller the sum of $400,000 at Closing and (ii) the Buyer will
execute and deliver to Seller, at Closing, Buyer's promissory note, dated as of
the Closing, in the form attached hereto as Annex II in the principal amount of
$4,600,000 (the "Note").
 
     (c) The "Equity Consideration" is 16,500,000 shares, par value $1.00 per
share, of the Buyer's Common Stock. At Closing Buyer will issue and deliver to
Seller the Equity Consideration.
 
     (d) The Balance Sheet Consideration Amount will be determined and paid as
set forth herein. Within five days following the date on which the Final Closing
Date Net Asset Value is determined pursuant to the provisions of Section 1.8,
either Seller shall pay to Buyer the Negative Net Asset Amount or Buyer shall
pay to Seller the Positive Net Asset Amount, in either case, together with
interest thereon at the annual rate of 4% per annum from the Closing Date (as
hereinafter defined) until the date paid (the "Balance Sheet Consideration
Amount").
 
     1.3  Closing Balance Sheet.  Within 60 days following the Closing Date, the
Buyer shall prepare and deliver to the Seller a consolidated balance sheet of
the Company and the Company Subsidiaries as of the close of business on the
Closing Date (the "Preliminary Closing Balance Sheet"). The Preliminary Closing
Balance Sheet and the final balance sheet determined in accordance with Sections
1.4, 1.5, 1.6 and 1.7 of this Article I (the "Final Closing Balance Sheet")
shall be prepared in
 
                                       A-1
<PAGE>   6
 
accordance with principles, practices and procedures that are the same as those
which resulted in the asset and liability values reflected in the Balance Sheet
dated September 26, 1993, which is attached hereto as Annex III (the "Peg
Balance Sheet"). The Preliminary Closing Balance Sheet and the Final Closing
Balance Sheet are sometimes collectively referred to herein as the Preliminary
and Final Closing Balance Sheets. Notwithstanding the foregoing, the following
specific provisions shall take precedence over such principles, practices and
procedures in the preparation of the Preliminary and Final Closing Balance
Sheets:
 
     (a) The asset and liability amounts included in the Preliminary and Final
Closing Balance Sheets will be the same as those included in the Peg Balance
Sheet except as necessary to reflect those changes in the asset and liability
values that result from new transactions and actual changes in facts and
circumstances occurring during the period after (but not including) September
26, 1993 (the "Peg Date") through and including the Closing Date (the "Change
Period"). (To illustrate, if an item of machinery and equipment was included in
the Peg Balance Sheet at a net book value of $1 million, but had not been used
for the past several years, or would no longer function, or would require major
repairs to put it in working condition, this item would be valued at $1 million
in the Preliminary and Final Closing Balance Sheets because no changes in facts
or circumstances occurred during the Change Period which would warrant a
reduction in the book value of that asset as of the Closing Date that would not
have been equally appropriate as of the Peg Date. However, if a change in facts
or circumstances occurred during the Change Period which would have warranted a
change in the book value of such item of machinery and equipment that would not
have been equally appropriate as of the Peg Date, then the book value of such
item would be changed on the Preliminary and Final Closing Balance Sheets. As
further examples, any liability which was underaccrued or over-accrued as of the
Peg Date, absent a change in facts and circumstances during the Change Period,
will be recorded so that it is equally under-accrued or over-accrued as of the
Closing Date, and the aging of accounts receivable may constitute a change in
facts and circumstances warranting a change in the bad debt reserve.)
 
     (b) The quantities of inventory used to determine the inventory amount to
be included in the Preliminary and Final Closing Balance Sheets will be based on
the results of a physical inventory to be taken as of the opening of business on
the Closing Date in accordance with procedures to be mutually agreed to by the
parties. The physical inventory quantities will be priced utilizing the same
standard costs which were used in the determination of the inventory amount
reflected in the Peg Balance Sheet and in the case of items which were not on
hand as of the Peg Date in accordance with the normal procedures of the Company.
The Preliminary and Final Closing Balance Sheets will include a LIFO debit of
$8,226,129 which is the same amount as the LIFO debit included in the Peg
Balance Sheet. The Preliminary and Final Closing Balance Sheets will not include
any reserve or accrual with respect to inventory shrinkage but will include
reserves or accruals for any other inventory valuation matter that are equal in
amount to any such reserves or accruals that were included in the Peg Balance
Sheet, including without limitation, reserves and accruals for excess, obsolete
or slow moving inventory or for loss jobs.
 
     (c) No depreciation or amortization expense shall be recorded for the
Change Period. As a result, the accumulated depreciation and amortization
balances reflected in the Preliminary and Final Closing Balance Sheets shall be
the same as the amounts included in the Peg Balance Sheet adjusted only for
asset sales or other dispositions in the ordinary course of business and in
accordance with the terms of this Agreement.
 
     (d) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any payable or receivable for (i) federal income
tax or (ii) state and local income tax balances. The deferred tax balances on
the Preliminary and Final Closing Balance Sheets will be the same as the
deferred tax balances included in the Peg Balance Sheet adjusted only to reflect
changes in the book or tax basis of the underlying assets and liabilities which
occur during the Change Period.
 
                                       A-2
<PAGE>   7
 
     (e) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any cash either on-hand or in banks other than
cash equal to the "Receivables Purchase Price" paid by the Seller to the Company
pursuant to the Factoring Agreement (as hereinafter defined) and the Peg Balance
Sheet did not and the Preliminary and Final Closing Balance Sheets will not
include any payable or receivable between the Company and the Seller including
any of Seller's Affiliates.
 
     (f) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any assets or liabilities with respect to the
Company's Domestic Retirement and Savings Plans or Seller U.K. Pension Plans (as
such terms are hereinafter defined).
 
     (g) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any amounts as to land, land improvements or
buildings or environmental accruals with respect to the Katy Road Site (as
hereinafter defined).
 
     (h) For purposes of this Agreement, a change in translation rates between
the U.S. dollar and various foreign currencies, including the U.K. pound, during
the Change Period will be considered to be a change in facts and circumstances.
 
     (i) The deferred tax asset amount included in the Preliminary and Final
Closing Balance Sheets will be net of a deferred tax asset valuation allowance
of $2,776,000 which is the same as the deferred tax asset valuation allowance
included in the Peg Balance Sheet.
 
     (j) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any amounts (assets or liabilities) with respect
to the Gulf Metals Site (as hereinafter defined).
 
     (k) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any adjustments to asset or liability amounts,
including any adjustments for currency translation (increase or decrease) which
may occur in connection with a transfer as contemplated by this Agreement at
other than current book value of U.K. assets or other assets used in the
Business between (i) Seller and the Seller's Subsidiaries and (ii) the Company
and the Company's Subsidiaries.
 
     (l) The Tech Mod accrual to be included in the Preliminary and Final
Closing Balance Sheets will be the same as the Tech Mod accrual included in the
Peg Balance Sheet.
 
     (m) The Preliminary and Final Closing Balance Sheets will include a prepaid
asset equal to 1% of the trade and notes receivable of the Company sold to
Seller pursuant to the Factoring Agreement.
 
     (n) The Peg Balance Sheet did not and the Preliminary and the Final Closing
Balance Sheets will not include any reserve or accrual with respect to any loss
or potential liability which the Company may have in connection with Item 1 in
Section 3.7 of the Seller Disclosure Schedule.
 
     1.4  Seller's Review of Preliminary Closing Balance Sheet.  Seller shall
have 30 days following receipt of the Preliminary Closing Balance Sheet to
review (the "Seller's Review") such balance sheet. If Seller determines, in
Seller's reasonable judgment, that it has not been prepared in accordance with
the provisions of Section 1.3 then within the said 30-day period allowed for
Seller's Review, Seller shall prepare and deliver a letter to Buyer (the
"Seller's Letter") setting forth in reasonable detail the adjustments that
Seller determines are appropriate. During the said 30-day period, Buyer shall
grant Seller reasonable access during normal business hours to the books and
records of the Company and its working papers pertaining to the Preliminary
Closing Balance Sheet and shall authorize the Company's auditors to grant
Seller's auditors access to any working papers or other documents prepared by
such auditors with respect to the Preliminary Closing Balance Sheet. If Seller
does not prepare and furnish Seller's Letter to Buyer within the said 30-day
period, then the Preliminary Balance Sheet as prepared by Buyer will become the
Final Closing Balance Sheet.
 
     1.5  Buyer Response to Seller's Letter.  Buyer will have 15 days following
receipt of Seller's Letter, if any, to review such letter and prepare a written
response (the "Buyer's Letter") setting forth Buyer's position with respect to
each adjustment proposed by Seller in Seller's Letter. If Buyer does not prepare
and furnish Buyer's Letter to Seller within the 15 days allowed, then all of the
adjustments set
 
                                       A-3
<PAGE>   8
 
forth in Seller's Letter shall be deemed to have been accepted by Buyer, and the
Final Closing Balance Sheet shall be prepared by adjusting the Preliminary
Closing Balance Sheet for all of the adjustments set forth in Seller's Letter.
 
     1.6  Meeting to Resolve Proposed Adjustments.  As soon as practicable, but
not later than ten days following the receipt by Seller of Buyer's Letter, if
any, the parties shall meet and endeavor to mutually resolve any of Seller's
adjustments not agreed to in Buyer's Letter. If the parties reach agreement on
the remaining adjustments, if any, then the Final Closing Balance Sheet shall be
prepared by adjusting the Preliminary Closing Balance Sheet for the adjustments
agreed to in Buyer's Letter and those resolved by the parties.
 
     1.7  Resolution by Accounting Arbitrator.  If the parties do not meet
within the said ten-day period, or they fail to agree to meet at some later
date, or they meet but are unable to resolve all of the adjustments set forth in
Seller's Letter to the mutual satisfaction of both parties, then the parties,
jointly, or if one party is unwilling then the other party singly, shall engage
the New York office of the firm of Deloitte & Touche (the "Accounting
Arbitrator") to resolve any of Seller's adjustments which remain unresolved. The
Accounting Arbitrator shall be furnished with a copy of the Agreement, the Peg
Balance Sheet, the Preliminary Closing Balance Sheet, Seller's Letter, Buyer's
Letter and any other relevant correspondence between the parties. The Accounting
Arbitrator must, within 30 days from the date such documents are furnished,
complete his review and render a written report setting forth his conclusion
with respect to each of Seller's adjustments which were unresolved between the
parties. The Accounting Arbitrator shall be granted access to the books and
records of the Company as well as the working papers or other documents which
either party or its accountants may have which relate to the Preliminary Closing
Balance Sheet and any other documents or information which the Accounting
Arbitrator may deem appropriate. The Accounting Arbitrator's review shall be
limited to the purpose of determining whether, in respect of each disputed
adjustment, the Seller's proposed adjustment or the Buyer's position with
respect to the Seller's proposed adjustment is more nearly in accordance with
the terms of this Agreement. The parties shall have the right to submit written
materials to the Accounting Arbitrator and make oral presentations all in
accordance with procedures to be set forth in the engagement letter between the
parties and the Accounting Arbitrator. In arriving at his determination the
Accounting Arbitrator must select for each adjustment either the Seller's
proposed adjustment or Buyer's position with respect to the Seller's proposed
adjustment. The decision by the Accounting Arbitrator shall be in writing and
delivered to both Buyer and Seller. The Accounting Arbitrator's said decision
shall be conclusive and binding upon the parties and may be entered and enforced
in any court of competent jurisdiction. The parties agree to submit to the
jurisdiction of any such court for the enforcement of such award or decision.
Each party shall pay 50% of the fees and expenses of the Accounting Arbitrator.
If the Accounting Arbitrator is engaged, the Final Closing Balance Sheet will be
prepared by adjusting the Preliminary Closing Balance Sheet for any of Seller's
adjustments accepted by Buyer's Letter, those agreed to by the parties and those
determined by the Accounting Arbitrator.
 
     1.8  Positive or Negative Purchase Price Adjustment.  When the Final
Closing Balance Sheet is determined pursuant to the provisions of Sections 1.4,
1.5, 1.6 or 1.7, then the net asset/equity value set forth on such Final Closing
Balance Sheet will be the Final Net Asset Value and the Positive or Negative Net
Asset Amount shall be determined by comparing the Final Net Asset Value to the
net asset/equity amount set forth on the Peg Balance Sheet (the "Peg Value"). If
the Peg Value is more than the Final Net Asset Value, then the excess is the
Negative Net Asset Amount. If the Final Net Asset Value is more than the Peg
Value, then the excess is the Positive Net Asset Amount.
 
     1.9  Values.  On or about the date that the number of shares was fixed
between the parties the estimated value of the Equity Consideration was
$47,437,500. This amount added to the Cash Consideration of $5,000,000 is
$52,437,500. These values will be utilized by the Buyer for all relevant
financial accounting purposes.
 
                                       A-4
<PAGE>   9
 
     1.10  Place of Payment.  All payments to Seller under this Agreement shall
be made by wire transfer in immediately available funds to Chase Manhattan Bank,
New York, for credit to Cooper Industries, Inc., account number 910-1-144781.
All payments to Buyer under this Agreement shall be made by wire transfer in
immediately available funds to Shawmut Bank, Boston, for the credit to
Wyman-Gordon Company, account number 030-03-92612.
 
                                   ARTICLE II
 
                                    CLOSING
 
     2.1  Time and Place of Closing.  The closing of the transactions
contemplated by this Agreement (the "Closing") will take place at the offices of
the Seller, at 10:00 A.M. (Houston time) on the fifth business day following the
date on which all of the conditions to each party's obligations hereunder have
been satisfied or waived; or at such other place or time or both as the parties
may agree. The date on which the Closing actually occurs is hereinafter referred
to as the "Closing Date." The Closing and the consummation of the transactions
contemplated hereby shall be deemed effective as of the close of business on the
Closing Date.
 
     2.2  Deliveries by the Seller.  At the Closing the Seller will deliver the
following to the Buyer:
 
     (a) Stock certificates representing the Company Common Stock, issued to and
registered in the name or names of the Buyer or its designee or designees,
together with evidence of payment of any applicable stock transfer taxes.
 
     (b) The resignations of those members of the Boards of Directors of the
Company, the U.K. Sub or the Pipeline Sub (as such terms are hereinafter
defined) who will continue after the Closing to be employees of the Seller.
 
     (c) The stock books, stock ledgers, minute books and corporate seals of the
Company, the U.K. Sub and the Pipeline Sub; provided that any of the foregoing
items shall be deemed to have been delivered pursuant to this Section 2.2(c), if
delivered to or otherwise located at the offices of the Company, the U.K. Sub or
the Pipeline Sub.
 
     (d) The officers' certificate and other documents contemplated by Sections
6.1 and 6.3.
 
     (e) All other documents required to be delivered by the Seller on or prior
to the Closing Date pursuant to this Agreement.
 
     2.3  Deliveries by the Buyer.  At the Closing the Buyer will deliver the
following to the Seller:
 
     (a) Stock certificates representing the Equity Consideration issued to and
registered in the name or names of the Seller or its designee or designees,
together with evidence of payment of any stock transfer taxes.
 
     (b) $400,000 in cash.
 
     (c) The Note duly executed by the Buyer.
 
     (d) A letter from Wachtell, Lipton, Rosen & Katz addressed to the Seller
and dated the Closing Date stating that (without opining as to Massachusetts
law) neither the execution nor delivery of the Rights Agreement (as hereinafter
defined) will constitute a breach or violation of any of the provisions of the
Original Rights Agreement (as hereinafter defined).
 
     (e) The officers' certificate and other documents contemplated by Sections
6.1 and 6.2.
 
     (f) All other documents required to be delivered by the Buyer on or prior
to the Closing Date pursuant to this Agreement.
 
                                       A-5
<PAGE>   10
 
                                  ARTICLE III
 
                  REPRESENTATIONS AND WARRANTIES OF THE SELLER
 
     The Seller represents and warrants to the Buyer as follows:
 
     3.1  Organization.  Each of the Seller, the Company, CFPD, Ltd.,
incorporated under the laws of England and Scotland and a wholly owned
subsidiary of the Company (the "U.K. Sub"), and Cameron Pipeline, Inc., a Texas
corporation and a wholly owned subsidiary of the Company (the "Pipeline Sub"
and, together with the U.K. Sub, the "Company Subsidiaries"), is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Each of the Seller, the Company and the Company
Subsidiaries is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect. "Material Adverse Effect," as used in this Article III, means a material
adverse effect, on the business operations or financial condition of the Company
and the Company Subsidiaries, taken as a whole, or on the Business (as defined
below). The Seller has heretofore delivered to the Buyer accurate and complete
copies of the Certificate of Incorporation and By-laws (or similar
organizational documents), as currently in effect, of the Company and each
Company Subsidiary. The Company has no subsidiaries other than the Company
Subsidiaries and does not own, directly or indirectly, any capital stock or
other equity securities of any corporation or have any direct or indirect equity
ownership in any business other than the Company Subsidiaries. The Company
Subsidiaries have no subsidiaries and do not own, directly or indirectly, any
capital stock or other equity securities of any corporation or have any direct
or indirect equity ownership in any business.
 
     3.2  Capitalization.  (a) The authorized capital stock of the Company
consists of 5,000 shares of Company Common Stock, all of which are issued and
outstanding as of the date hereof. Except as listed in Section 3.2(a) of the
Seller's disclosure schedule (the "Seller Disclosure Schedule"), the authorized
capital stock of the U.K. Sub consists of 1,000,000 shares of common stock (the
"U.K. Stock"), one share of which is issued and outstanding as of the date
hereof. The authorized capital stock of the Pipeline Sub consists of 1,000
shares of common stock par value $1.00 per share (the "Pipeline Stock"), all of
which are issued and outstanding as of the date hereof. All of the shares of
Company Common Stock are owned by the Seller, and all of the shares of U.K.
Stock and Pipeline Stock are owned by the Company, and are in each case validly
issued, fully paid, nonassessable and free of preemptive rights. Except pursuant
to this Agreement, there are no subscriptions, options, warrants, convertible or
exchangeable securities, calls, rights or other agreements or commitments
obligating the Seller, the Company or the Company Subsidiaries to issue,
transfer or sell any securities of the Company or of the Company Subsidiaries.
 
     (b) The Seller has good and marketable title to the shares of Company
Common Stock, and the Company has good and marketable title to the shares of
U.K. Stock and Pipeline Stock, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and options of
whatever nature. Upon consummation of the transactions contemplated hereby, the
Buyer will acquire good and marketable title to the shares of Company Common
Stock, free and clear of all pledges, security interests, liens, charges,
encumbrances, equities, claims and options of whatever nature.
 
     (c) Section 3.2(c) of the Seller Disclosure Schedule sets forth the name,
jurisdiction of incorporation and capitalization of each Company Subsidiary and
the jurisdictions in which the Company and each Company Subsidiary are qualified
to do business.
 
     3.3  Authority Relative to This Agreement.  The Seller has full corporate
power and authority to execute and deliver this Agreement, the Investment
Agreement and the other instruments, agreements and documents contemplated by
this Agreement and the Investment Agreement (the "Other Agree-
 
                                       A-6
<PAGE>   11
 
ments") and to perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement, the Investment Agreement and the Other
Agreements and the consummation of the transactions contemplated hereby or
thereby have been duly and validly authorized by the Board of Directors of the
Seller and no other corporate proceedings on the part of the Seller are
necessary to authorize this Agreement, the Investment Agreement and the other
Agreements or to consummate the transactions so contemplated. This Agreement and
the Investment Agreement have been duly and validly executed and delivered by
the Seller and (assuming they are duly and validly executed by the Buyer)
constitute, and the Other Agreements will when executed (assuming due and valid
execution by any other parties thereto) constitute, valid and binding agreements
of the Seller, enforceable against the Seller in accordance with their
respective terms, except as such enforceability may be limited by respective
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
 
     3.4  Consents and Approvals; No Violations.  Except for applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and German pre-merger notification laws, no filing with, and no permit,
authorization, consent or approval of, any governmental body or authority,
including courts of competent jurisdiction, domestic or foreign ("Governmental
Entity"), is necessary for the consummation by the Seller of the transactions
contemplated by this Agreement and the Investment Agreement and the Other
Agreements. Except as set forth in Section 3.4 of the Seller Disclosure
Schedule, neither the execution and delivery of this Agreement, the Investment
Agreement and the Other Agreements by the Seller nor the consummation by the
Seller of the transactions contemplated hereby or thereby nor compliance by the
Seller with any of the provisions hereof or thereof will (i) conflict with or
breach any provision of the Certificate of Incorporation or By-laws (or similar
organizational documents) of the Seller, any Seller Subsidiary (as defined
below), the Company or any Company Subsidiary, (ii) violate or breach any
provision of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration or result in the creation of any lien) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which the Seller, the
Company or any Company Subsidiary is a party or by which the Seller, the Company
or any Company Subsidiary or any of their properties or assets may be bound, or
(iii) violate any order, judgment, writ, injunction, decree, statute, rule or
regulation applicable to the Seller, the Company or any Company Subsidiary or
any of their properties or assets, except in the case of clauses (ii) and (iii)
for violations, breaches or defaults which would not either have a Material
Adverse Effect or prevent or delay the consummation of the transactions
contemplated hereby. For purposes of this Agreement, the "Seller Subsidiaries"
means the subsidiaries of the Seller other than the Company and the Company
Subsidiaries.
 
     3.5  Financial Statements.  Attached hereto as Exhibit A are true and
complete copies of (i) the audited combined balance sheets of the Cameron Forged
Products Division of the Seller, which includes the Company, that portion of
Cooper (Great Britain) Ltd. to the extent that it previously conducted all or
part of the Business (as hereinafter defined) and the Pipeline Sub
(collectively, "Cameron"), as of December 31, 1992 and December 31, 1991 and the
unaudited combined balance sheet of Cameron as of September 30, 1993
(collectively the "Company Balance Sheets"), and (ii) the related audited
combined statements of operations and cash flows for each of the years ended
December 31, 1991 and 1992 and the related unaudited combined statements of
operations and cash flows for the year ended December 31, 1990, and the nine
months ended September 30, 1993 and September 30, 1992 (collectively with the
Company Balance Sheets, the "Company Financial Statements"), together with the
notes thereto and, in the case of the audited balance sheets and statements of
operations and cash flows, an opinion of E&Y relating thereto. The Company
Financial Statements and the Peg Balance Sheet have been prepared from, and are
in accordance with, the books and records of Cameron and the books and records
of Seller that pertain to Cameron. The Company Balance Sheets fairly present the
financial position of Cameron as of their respective dates, and the other
related statements included in the Company Financial Statements fairly present
the results of operations and
 
                                       A-7
<PAGE>   12
 
changes in financial position of Cameron for the periods then ended, subject in
the case of the unaudited Company Financial Statements to normal year-end audit
adjustments. The Company Financial Statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis, except as otherwise disclosed in the notes thereto.
 
     3.6  Absence of Certain Changes.  Except as disclosed in Section 3.6 of the
Seller Disclosure Schedule or in Annex IV hereto, or as disclosed in the Company
Financial Statements, since September 30, 1993, none of the Company, the Company
Subsidiaries and the Business has (i) taken any of the actions set forth in
Section 5.1(a) through Section 5.1(o) of this Agreement, (ii) suffered a
Material Adverse Effect, or any change in circumstances that is reasonably
likely to have a Material Adverse Effect (other than any change generally
affecting the industry in which the Business is engaged), or (iii) entered into
any transaction, or conducted its business or operations, other than in the
ordinary course of business and consistent with past practice.
 
     3.7  No Undisclosed Liabilities.  Any reference in this Agreement to
Seller's Knowledge shall be a reference solely to the actual knowledge of
Kenneth L. Hardcastle and his direct reports, and Michael J. Sebastian, D.
Bradley McWilliams, Alan J. Hill, Robert W. Teets, Stephen V. O'Neill, Donald R.
Sheley, Jr. and Bruce E. Himmelreich. Seller's Knowledge shall not include any
constructive knowledge, imputed knowledge or any knowledge attributed to Seller
solely because Seller or its agents or employees should have known the matter in
question. Except as and to the extent set forth in Section 3.7 of the Seller
Disclosure Schedule, to Seller's Knowledge, neither the Company nor any Company
Subsidiary has any liabilities (absolute, accrued, contingent or otherwise) of a
kind required to be reflected in a balance sheet prepared in accordance with
GAAP, or required to be disclosed in the notes thereto, except (a) liabilities
which were reflected in the December 31, 1992, or the September 30, 1993,
Company Balance Sheets or disclosed in the notes thereto, (b) liabilities which
were incurred since September 30, 1993 in the ordinary course of business,
consistent with past practice and which would be reflected in a balance sheet
prepared in accordance with GAAP, (c) liabilities which have not had a Material
Adverse Effect, and are not reasonably likely to have a Material Adverse Effect,
and (d) liabilities incurred in connection with this Agreement. Except as
disclosed in Section 3.7 of the Seller Disclosure Schedule or the Exhibits or
Annexes hereto, there are no material obligations or liabilities of the Company
or the Company Subsidiaries to the Seller or any of the Seller Subsidiaries that
will exist after the Closing Date.
 
     3.8  Information in Proxy Statement.  None of the information supplied in
writing by the Seller, the Seller Subsidiaries, the Company or the Company
Subsidiaries (including without limitation the Company Financial Statements and
any other financial statements of the Company and the Company Subsidiaries) for
inclusion or incorporation by reference in the proxy statement relating to the
meeting of the Buyer's shareholders to be held with respect to the transactions
contemplated by this Agreement (the "Proxy Statement") will, at the time the
Proxy Statement is mailed to the shareholders of the Buyer or at the time of the
meeting of shareholders of the Buyer, 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 therein, in light of the circumstances
under which they are made, not misleading.
 
     3.9  Litigation.  Except as disclosed in Section 3.9 of the Seller
Disclosure Schedule, (a) there are no existing orders, injunctions, judgments or
decrees of any Governmental Entity which apply to the Company or any Company
Subsidiary or any assets, properties or operations of the foregoing and (b)
there are no actions, suits or proceedings, at law or in equity, pending, or to
Seller's Knowledge, threatened, or to Seller's Knowledge, any investigations
pending or threatened involving the Company or the Company Subsidiaries by or
before any Governmental Entity which in the case of either Clause (a) or (b)
above are reasonably likely to have a Material Adverse Effect.
 
     3.10  Compliance With Applicable Law.  Except as set forth in Section 3.10
of the Seller Disclosure Schedule, and except with respect to environmental
matters, which are addressed in Section 3.15 hereof, (a) the Company and the
Company Subsidiaries are, and the Business has been conducted, in compliance
with all laws, ordinances, rules, regulations, decrees and orders of all
Governmental
 
                                       A-8
<PAGE>   13
 
Entities ("Laws"), except where the failure to be in compliance is not
reasonably likely to have a Material Adverse Effect and (b) the Seller, the
Company, and the Company Subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary to
conduct the Business as currently conducted (the "Company Permits"), and such
Company Permits are in full force and effect, except for such failure to hold or
be in full force and effect which would not be reasonably likely to have a
Material Adverse Effect. To Seller's Knowledge, no suspension, cancellation or
termination of any of the Company Permits is threatened or imminent that would
be reasonably likely to have a Material Adverse Effect.
 
     3.11  Taxes.  The Company has duly filed all returns of income Taxes (as
hereinafter defined) of the Company and the Company Subsidiaries and all
material returns of other Taxes of the Company and the Company Subsidiaries
required to be filed by them or such income or other returns have been included
in a return filed by an affiliated group or by a consolidated, unitary or
combined group of companies of which the Company is or has been a member, and
the Seller or the Company has duly paid, caused to be paid or made adequate
provision for the payment of all such Taxes required to be paid in respect of
the periods covered by such returns and has made adequate provision for payment
of all Taxes anticipated to be payable in respect of all calendar periods since
the periods covered by such returns. Except as disclosed in Section 3.11 of the
Seller Disclosure Schedule, no material deficiency or adjustment in respect of
any Taxes against the Company or any Company Subsidiary remains unpaid and no
material claim or assessment for any such deficiency or adjustment is pending
or, to Seller's Knowledge, threatened. There are no material claims for Taxes
(other than Taxes attributable to Seller or the Seller Subsidiaries) against the
Company or any Company Subsidiaries which might result in a lien, charge or
encumbrance on any of the assets of the Company or any Company Subsidiary.
 
     3.12  ERISA; Employee Benefits.  The Seller hereby represents and warrants
to Buyer that as of the date hereof and as of the Closing Date:
 
     (a) Section 3.12(a) of the Seller Disclosure Schedule identifies each
Seller Employee Plan with an annual cost in excess of $100,000. The Seller has
furnished or made available to Buyer true and complete copies of such Seller
Employee Plans (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof together with (i) the most recent
annual report prepared in connection with any such Seller Employee Plan (Form
5500 or 5500-C including, if applicable, Schedules A and B thereto), (ii) the
summary plan description currently in effect for each such Seller Employee Plan
and all modifications thereof, (iii) for each such Seller Employee Plan with
respect to which there is no summary plan description in effect, a written
description of such Seller Employee Plan including all materials distributed or
made available to employees with respect to such Seller Employee Plan and (iv)
the most recent financial statements and actuarial reports (if any) for each
such Seller Employee Plan and its related trust (if any), (collectively, the
"Seller Employee Plan Documents").
 
     (b) Neither the Company nor the Seller nor any subsidiary of either has
incurred, or reasonably expects to incur prior to the Closing Date, any
Controlled Group Liability that could become a material liability of Buyer or
any Buyer Subsidiary (including the Company) after the Closing Date. Except as
set forth on Section 3.12(b) of the Seller Disclosure Schedule, no Seller
Employee Plan with an annual cost in excess of $100,000 is a Title IV Plan. No
Seller Employee Plan is a Multiemployer Plan.
 
     (c) Except as set forth in Section 3.12(c) of the Seller Disclosure
Schedule, each Seller Employee Plan with an annual cost in excess of $100,000
has been maintained in compliance in all material respects with its terms and
with the requirements prescribed by any and all applicable statutes, orders,
rules and regulations including but not limited to ERISA and the Code. Neither
the Seller nor any Related Person has engaged in, nor to Seller's Knowledge has
any other Person engaged in, any "prohibited transaction" (as defined in ERISA
and the Code) with respect to any such Seller Employee Plan.
 
     (d) Section 3.12(d) of the Seller Disclosure Schedule identifies each
Seller Benefit Arrangement with an annual cost in excess of $100,000. The Seller
has furnished or made available to Buyer true and
 
                                       A-9
<PAGE>   14
 
complete copies or, if no written document exists, descriptions of each such
Seller Benefit Arrangement. Each such Seller Benefit Arrangement has been
maintained in compliance in all material respects with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations.
 
     (e) Section 3.12(e) of the Seller Disclosure Schedule identifies each
Seller International Plan with an annual cost in excess of $100,000. The Seller
has furnished or made available to Buyer true and complete copies or, if no
written document exists, descriptions of each such Seller International Plan.
Each such Seller International Plan has been maintained in all material respects
in compliance with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations (including any special
provisions relating to qualified plans where such Seller International Plan was
intended to so qualify) and has been maintained in good standing with applicable
regulatory authorities.
 
     (f) Except as set forth on Section 3.12(f) of the Seller Disclosure
Schedule, there are no actions, suits, arbitrations, inquiries, investigations
or other proceedings (other than routine claims for benefits), pending or, to
the Seller's Knowledge, threatened, with respect to any Seller Employee Plan,
Seller Benefit Arrangement or Seller International Plan which would be
reasonably likely to have a Material Adverse Effect.
 
     (g) Except as set forth on Section 3.12(g) of the Seller Disclosure
Schedule, and except for coverage mandated by Section 4980B of the Code, no
Employees or Former Employees and no beneficiaries or dependents of Employees or
Former Employees are or may become entitled under any Seller Employee Plan,
Seller Benefit Arrangement or Seller International Plan to post-employment
welfare benefits of any kind, including without limitation death or medical
benefits, having an annual cost, in the aggregate, in excess of $100,000.
 
     (h) Except as set forth on Section 3.12(h) of the Seller Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not result in any obligation to pay severance, separation pay or other
compensation in the aggregate in excess of $100,000 associated with the
termination of employment to any Employee or Former Employee, result in any
increase in the amount of compensation or benefits or accelerate the vesting or
timing of any payment of any compensation or benefits payable to or with respect
to any Employee or Former Employee, or cause any amounts paid or payable by the
Company, the Buyer or their subsidiaries to or with respect to any Employee or
Former Employee to fail to be deductible for U. S. federal income tax purposes
by reason of Section 280G of the Code.
 
     (i) Except (i) as set forth on Section 3.12(i) of the Seller Disclosure
Schedule, (ii) pursuant to the terms of each Seller Employee Plan, Seller
International Plan and Seller Benefit Arrangement, respectively, (iii) pursuant
to any collective bargaining agreement or (iv) pursuant to applicable law, there
are no arrangements, understandings or agreements, written or unwritten, formal
or informal, which would prevent the termination of each Seller Employee Plan,
Seller International Plan and Seller Benefit Arrangement, respectively, in each
case, without any liability to the Company in excess of $100,000, other than for
accrued benefits thereunder.
 
     3.13  Intellectual Property.  Section 3.13 of the Seller Disclosure
Schedule sets forth a list of all of the Company's or any of the Company
Subsidiaries' domestic and foreign patents and patent applications currently
being used in the Business. "Company Intellectual Property" means all of the
Company's or any of the Company Subsidiaries' domestic and foreign letters
patent, patents, patent applications, patent licenses, trademark licenses,
software licenses and knowhow licenses, trade names, trademarks, copyrights,
service marks, trademark registrations and applications, service mark
registrations and applications and copyright registrations and applications
currently being used in the Business. Except as set forth in Section 3.13 of the
Seller Disclosure Schedule and except for any claim, infringement, act or
omission that would not be reasonably likely to have a Material Adverse Effect
(a) no claim is pending or, to Seller's Knowledge, threatened which alleges that
any of the Company Intellectual Property is invalid or unenforceable or which is
otherwise adverse to the right, title and
 
                                      A-10
<PAGE>   15
 
interest of the Company and the Company Subsidiaries in and to the Company
Intellectual Property, (b) to Seller's Knowledge, no actions or operations of
any other person, association, corporation, individual, partnership, trust or
other entity or organization, including a Governmental Entity (a "Person")
infringe upon or conflict with the right, title or interest of the Company and
the Company Subsidiaries in and to the Company Intellectual Property, and (c) to
Seller's Knowledge, no Company Intellectual Property infringes on the rights
owned or held by any other Person. Except as set forth in Section 3.13 of the
Seller Disclosure Schedule, no existing contract, agreement or understanding
between the Seller, the Company or any Company Subsidiary and any other party
would impede or prevent the continued use by the Company and the Company
Subsidiaries of the entire right, title and interest of the Company and the
Company Subsidiaries in and to the Company Intellectual Property except such
contracts or understandings that would not be reasonably likely to have a
Material Adverse Effect.
 
     3.14  Material Contracts; No Defaults.  Except as set forth in Section 3.14
of the Seller Disclosure Schedule or in the notes to the Company Balance Sheets,
neither the Company nor any Company Subsidiary is a party to any written: (a)
material consulting agreement or collective bargaining agreement; (b) indenture,
mortgage, note or other agreement relating to the borrowing of money not in the
ordinary course of business by the Company or any Company Subsidiary or the
guaranty by the Company or any Company Subsidiary of an obligation of a third
party for the borrowing of money; (c) agreement which involves a certain (rather
than contingent) obligation of the Company or any Company Subsidiary of more
than $1,000,000 in any twelvemonth period; or (d) agreement containing covenants
limiting the ability of the Company or any Company Subsidiary to compete in any
line of business with any Person or in any area or territory (collectively, the
"Company Contracts"). Except as set forth in Section 3.14 of the Seller
Disclosure Schedule, (1) there is not, under any of the Company Contracts, any
existing default or event of default or event or condition which, with or
without due notice or lapse of time or both, would constitute a default or event
of default on the part of the Company or any Company Subsidiary, or, to the
Seller's Knowledge, the other parties thereto, except such defaults, events of
default and other events which would not be reasonably likely to have a Material
Adverse Effect, and (2) the Company Contracts are (i) valid and binding
obligations of the Company or the Company Subsidiaries and, to the Seller's
Knowledge, the other parties thereto, (ii) are in full force and effect and
(iii) are enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
by general equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law).
 
     3.15  Environmental Compliance.
 
     (a) Except as set forth on Section 3.15 of the Seller Disclosure Schedule,
all operations, properties and business activities of the Company, the Company
Subsidiaries and the Business are in compliance with all Environmental Laws and
neither the Company nor any of the Company Subsidiaries has or is subject to any
claim, notice of investigation or liability based upon any Environmental Law or
arising from the disposal of any Regulated Materials except where such failure
to be in compliance or such claim, notice of investigation or liability would
not be reasonably likely to have a Material Adverse Effect.
 
     (b) "Environmental Laws" means all Laws and Company Permits concerning,
relating to or controlling (i) the handling, transportation, sale, offering for
sale, storage, treatment, discharge, disposal, release, use, processing or
manufacture of any material or substance or (ii) the introduction of any
material, substance, radiation or other emission into the environment or
workplace, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Solid Waste Disposal
Act as amended by the Resource Conservation and Recovery Act, the Clean Air Act,
the Clean Water Act, the Toxic Substances Control Act, and the Occupational
Safety and Health Act.
 
                                      A-11
<PAGE>   16
 
     (c) "Regulated Material" means any material, substance, radiation or
emission which is regulated by or subject to any Environmental Law.
 
     3.16  Title to Real Property.  Section 3.16 of the Seller Disclosure
Schedule sets forth a list of all of the Owned Real Property reflected on the
September 30, 1993 Company Balance Sheet or acquired by the Company or any of
the Company Subsidiaries subsequent to the date thereof and conveyed hereby to
Buyer (the "Company Real Property"), together with all Company Leases (as
defined below). The Company or one of the Company Subsidiaries has good and
marketable title to the Company Real Property, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any kind or character, except for
current property taxes not yet payable or such encumbrances that would not be
reasonably likely to have a Material Adverse Effect. To Seller's Knowledge,
there is no appropriation, condemnation or like proceeding relating to the
Company Real Property. Each lease for any leased real property (a "Company
Lease") is a valid and binding lease under which the Company or one of the
Company Subsidiaries is entitled to occupy and use the parcel of real property
for its current use to which such Company Lease relates except for such failure
to be valid and binding as would not be reasonably likely to have a Material
Adverse Effect.
 
     3.17  Company Assets.  Except for those assets, properties, contract
rights, or licenses listed on Section 3.17 of the Seller Disclosure Schedule,
the Company and the Company Subsidiaries will own or have at Closing the right
to use all of the assets, properties, contract rights and licenses currently
used to operate the Business, or reflected on the September 30, 1993 Company
Balance Sheet (the "Company Assets"), except for cases in which the failure to
own or to have such right to use would not be reasonably likely to have a
Material Adverse Effect. To the Seller's Knowledge, the consummation of the
transactions contemplated by this Agreement will not, in and of itself,
adversely affect the ownership of or right to use the Company Assets, the
Company Intellectual Property and the Company Permits of the Company or the
Company Subsidiaries, except in cases where the failure to own or to have such
right to use would not be reasonably likely to have a Material Adverse Effect.
 
     3.18  Labor Matters.  Except as set forth on Section 3.18 of the Seller
Disclosure Schedule and except as would not constitute a Material Adverse
Effect:
 
     (a) there is no unfair labor practice complaint against the Company or any
of the Company Subsidiaries pending or, to the Seller's Knowledge, threatened
before the National Labor Relations Board or the Ministry of Labor, as the case
may be;
 
     (b) there is no labor strike, dispute, slowdown or stoppage pending or, to
the Seller's Knowledge, threatened against or affecting the Company, any of the
Company Subsidiaries or the Business; and
 
     (c) there is no grievance or arbitration proceeding arising out of or under
collective bargaining agreements pending or, to the Seller's Knowledge,
threatened against or affecting the Company, any of the Company Subsidiaries or
the Business.
 
     3.19  Purchase for Investment.  The Seller is acquiring the Equity
Consideration for its own account as principal, with no view to any distribution
of any of the Equity Consideration or any beneficial interest in the Equity
Consideration to any third party, and the Seller has no agreement, understanding
or arrangement to sell, pledge or otherwise dispose of the Equity Consideration
or any beneficial interest in the Equity Consideration to any other Person. The
Seller understands and agrees that the Equity Consideration has not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or applicable state securities laws, and therefore may not be sold or otherwise
transferred, unless the Equity Consideration is registered under the Securities
Act and any applicable state securities laws or unless an exemption from such
registration is available.
 
     3.20  No Beneficial Ownership of the Buyer's Stock.  The Seller and its
Affiliates do not hold, have the right to vote or direct the voting of, or
otherwise beneficially own any shares of Common Stock, par value $1.00 per
share, of the Buyer (the "Buyer Common Stock").
 
                                      A-12
<PAGE>   17
 
     3.21  Change in Control.  Except as set forth in Section 3.21 of the Seller
Disclosure Schedule or in cases which would not be reasonably likely to have a
Material Adverse Effect, neither the Company nor any Company Subsidiary is party
to any contract, agreement or understanding relating to employment which
contains a "change in control," "potential change in control" or similar
provision.
 
     3.22  Business of the Company.  To the Seller's Knowledge, the Company has
not engaged in any businesses other than the Business, and the Pipeline Sub has
not engaged in any businesses other than the transmission of natural gas.
 
     3.23  Representations Accurate.  To Seller's Knowledge, the representations
and warranties of the Seller set forth in this Agreement and qualified by
materiality or by Material Adverse Effects shall be true and correct (subject to
such qualification) as of the Closing Date (except for representations and
warranties that expressly speak only as of some other time), subject to the
disclosures in the Seller Disclosure Schedule as supplemented or amended through
the Closing Date and excluding those failures to be true and correct that do not
have a Material Adverse Effect. To Seller's Knowledge, the representations and
warranties of the Seller set forth in this Agreement and not qualified by
materiality or by Material Adverse Effects shall be true and correct in all
material respects as of the Closing Date (except for representations and
warranties that expressly speak only as of some other time), subject to the
disclosures in the Seller Disclosure Schedule as supplemented or amended through
the Closing Date and excluding those failures to be true and correct that do not
have a Material Adverse Effect.
 
                                   ARTICLE IV
 
                  REPRESENTATIONS AND WARRANTIES OF THE BUYER
 
     The Buyer represents and warrants to the Seller as follows:
 
     4.1  Organization.  Except as disclosed in Section 4.1 of the Buyer's
disclosure schedule attached hereto (the "Buyer Disclosure Schedule"), each of
the Buyer and its Subsidiaries (collectively, the "Buyer Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Buyer and the Buyer Subsidiaries is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" as used in this Article IV, means a material adverse
effect in the aggregate, on the business, operations or financial condition of
the Buyer and Buyer Subsidiaries taken as a whole. The Buyer has heretofore
delivered to the Seller accurate and complete copies of the Articles of
Organization and By-laws, as currently in effect, of the Buyer.
 
     4.2  Capitalization.
 
     (a) The authorized capital stock of the Buyer consists of (i) 35,000,000
shares of Buyer Common Stock, of which 17,984,249 shares are issued and
outstanding as of the date hereof, and (ii) 5,000,000 shares of preferred stock,
no par value, none of which are issued or outstanding as of the date hereof. All
of the issued and outstanding shares of Buyer Common Stock are (and the Equity
Consideration will upon issuance be) validly issued, fully paid, nonassessable
and free of preemptive rights. As of the date hereof, approximately 1,690,609
shares of Buyer Common Stock were issuable upon exercise of stock options
("Stock Options") granted under the Buyer's Long-Term Incentive Plan and
Executive Long-Term Incentive Program (collectively, the "Stock Plans") and an
indeterminate number of shares of Buyer Common Stock were reserved for issuance
in accordance with the Rights Agreement, dated as of October 19, 1988 by and
between the Buyer and State Street Bank & Trust Company, as Rights Agent (the
"Original Rights Agreement"). Except pursuant to this Agreement, the Stock
Plans, the Original Rights Agreement and the Buyer's Savings/Investment Plan or
as disclosed in Section 4.2 of the Buyer Disclosure Schedule, there are no
subscriptions, options, warrants, calls, rights or other agreements or
 
                                      A-13
<PAGE>   18
 
commitments obligating the Buyer to issue, transfer or sell any of its
securities, including any right of conversion or exchange under any outstanding
security.
 
     (b) Upon consummation of the transactions contemplated hereby, the Seller
will acquire good and marketable title to the Equity Consideration, free and
clear of all pledges, security interests, liens, charges, encumbrances,
equities, claims and options of whatever nature.
 
     (c) Except as disclosed in Section 4.2 of the Buyer Disclosure Schedule,
the only direct or indirect subsidiaries of the Buyer are those named in the
Buyer SEC Reports. Except as disclosed in Section 4.2 of the Buyer Disclosure
Schedule, or in the Buyer SEC Reports, the Buyer does not own, directly or
indirectly, any capital stock or other equity securities of any corporation or
have any direct or indirect equity ownership interest in any business. All of
the outstanding shares of capital stock of each of the Buyer Subsidiaries have
been validly issued and are fully paid, nonassessable and free of preemptive
rights and, except as set forth in Section 4.2 of the Buyer Disclosure Schedule
are owned by either the Buyer or another of the Buyer Subsidiaries free and
clear of all pledges, security interests, liens, charges, encumbrances,
equities, claims and options of whatever nature. Except as disclosed in Section
4.2 of the Buyer Disclosure Schedule there are no outstanding subscriptions,
options, warrants, calls, rights, convertible securities or other agreements or
commitments of any character relating to the issued or unissued capital stock or
other securities of any Buyer Subsidiary, or otherwise obligating the Buyer or
any Buyer Subsidiary to issue, transfer or sell any such securities. Except for
the Investment Agreement, there are not now, and at the Closing Date there will
not be, any voting trusts or other agreements or understandings to which the
Buyer or any Buyer Subsidiary is a party or is bound with respect of the voting
of the capital stock of the Buyer or any Buyer Subsidiary. Except as set forth
above or in Section 4.2 of the Buyer Disclosure Schedule, there are no persons
or entities (other than Buyer Subsidiaries) in which the Buyer or any Buyer
Subsidiary has any voting rights or equity interests.
 
     4.3  Authority Relative to this Agreement.  The Buyer has full corporate
power and authority to execute and deliver this Agreement, the Investment
Agreement and the Other Agreements and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement, the Investment
Agreement and the Other Agreements and the consummation of the transactions
contemplated hereby or thereby have been duly and validly authorized and
approved by the Board of Directors of the Buyer, including by a two-thirds vote
of the Continuing Directors at a meeting at which a Continuing Director Quorum
(as such terms are defined in the Buyer's Articles of Organization) was present
for purposes of approving the amendment to Article 6(c)2 of the Buyer's Articles
of Organization in the form attached hereto as Annex V (the "Fair Price Charter
Amendment")), and no other corporate proceedings on the part of the Buyer are
necessary to authorize this Agreement, the Investment Agreement and the Other
Agreements (other than the approval of the transactions contemplated hereby by
the requisite affirmative vote of the holders of Buyer Common Stock). This
Agreement and the Investment Agreement have been duly and validly executed and
delivered by the Buyer and (assuming they are duly and validly executed by the
Seller) constitute, and the Other Agreements will when executed constitute,
valid and binding agreements of the Buyer, enforceable against the Buyer in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
 
     4.4  Consents and Approvals; No Violations.  Except as disclosed in Section
4.4 of the Buyer Disclosure Schedule, and except for applicable requirements of
the Exchange Act and German pre-merger notification laws, no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity, is
necessary for the consummation by the Buyer of the transactions contemplated by
this Agreement and the Investment Agreement. Except as set forth in Section 4.4
of the Buyer Disclosure Schedule, neither the execution and delivery of this
Agreement, the Investment Agreement and the Other Agreements by the Buyer nor
the consummation by the Buyer of the transactions contemplated hereby or thereby
nor compliance by the Buyer with any of the provisions hereof or
 
                                      A-14
<PAGE>   19
 
thereof will (i) conflict with or breach any provision of the Articles of
Organization or By-Laws (or similar organizational documents) of the Buyer or
any Buyer Subsidiary, (ii) violate or breach any provision of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration or result in the creation
of any lien) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation to which the Buyer or any Buyer Subsidiary is a party or by which any
of them or any of their properties or assets may be bound, or (iii) violate any
order, judgment, writ, injunction, decree, statute, rule or regulation
applicable to the Buyer, any Buyer Subsidiary or any of their properties or
assets, except in the case of clauses (ii) and (iii) for violations, breaches or
defaults which would not either have a Material Adverse Effect or prevent or
delay the consummation of the transactions contemplated hereby.
 
     4.5  Reports.  Except as disclosed in Section 4.5 of the Buyer Disclosure
Schedule, the Buyer has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since January 1, 1990
(collectively, the "Buyer SEC Reports"), each of which has complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act. Except as
disclosed in Section 4.5 of the Buyer Disclosure Schedule, as of their
respective dates, none of the Buyer SEC Reports, including without limitation,
any financial statements or schedules (including the related notes) included
therein, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. Each of the balance sheets (including the
related notes) included in the Buyer SEC Reports fairly presents the
consolidated financial position of the Buyer and the Buyer Subsidiaries as of
the date thereof, and the other related statements (including the related notes)
included therein fairly present the consolidated results of operations and cash
flows of the Buyer and the Buyer Subsidiaries for the respective periods
indicated. Each of the financial statements (including the related notes)
included in the Buyer SEC Reports has been prepared from and is in accordance
with the books and records of the Buyer and has been prepared in accordance with
GAAP consistently applied during the period involved, except as otherwise noted
therein and except for year-end audit adjustments, consisting of normal and
recurring adjustments. The Buyer has delivered to the Seller accurate and
complete copies of all Buyer SEC Reports filed since January 1, 1990.
 
     4.6  Absence of Certain Changes.  Except as disclosed in Section 4.6 of the
Buyer Disclosure Schedule or as disclosed in the Buyer SEC Reports, since
December 31, 1992, neither the Buyer nor any of the Buyer Subsidiaries has (i)
taken any actions set forth in Section 5.2(a) through Section 5.2(l) of this
Agreement, (ii) suffered a Material Adverse Effect, or (iii) entered into any
transaction, or conducted its business or operations, other than in the ordinary
course of business and consistent with past practice.
 
     4.7  No Undisclosed Liabilities.  Any reference in this Agreement to
Buyer's Knowledge shall be a reference solely to the actual knowledge of John M.
Nelson, David P. Gruber, and their direct reports. Buyer's Knowledge shall not
include any constructive knowledge, imputed knowledge or any knowledge
attributed to Buyer solely because Buyer or its agents or employees should have
known the matter in question. Except as and to the extent set forth in Section
4.7 of the Buyer Disclosure Schedule, to Buyer's Knowledge, neither the Buyer
nor any Buyer Subsidiary has any liabilities (absolute, accrued, contingent or
otherwise) of a kind required to be reflected in a balance sheet prepared in
accordance with GAAP, or required to be disclosed in the notes thereto, except
(a) liabilities which were reflected in the audited consolidated balance sheet
of the Buyer and the Buyer Subsidiaries as of December 31, 1992 incorporated in
the Buyer's Annual Report on Form 10-K for the fiscal year ended December 31,
1992 (the "Buyer Balance Sheet") or disclosed in the notes thereto, (b)
liabilities which were incurred since December 31, 1992 in the ordinary course
of business, consistent with past practice and which would be reflected in a
balance sheet prepared in accordance with GAAP, (c) liabilities which do not
constitute a Material Adverse Effect and would not be reasonably likely to
constitute a Material Adverse Effect and (d) liabilities incurred in connection
with this Agreement.
 
                                      A-15
<PAGE>   20
 
     4.8  Information in Proxy Statement.  None of the information supplied in
writing by the Buyer for inclusion or incorporation by reference in the Proxy
Statement will, at the time the Proxy Statement is mailed to the shareholders of
the Buyer and at the time of the meeting of shareholders of the Buyer, 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
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply in all material respects with the
provisions of the Exchange Act, and the rules and regulations thereunder, except
that no representation is made by the Buyer with respect to statements made
therein based on information supplied by the Seller or the Company in writing
for inclusion or incorporation by reference therein.
 
     4.9  Litigation.  Except as disclosed in Section 4.9 of the Buyer
Disclosure Schedule or in the Buyer SEC Reports, (a) there are no existing
orders, injunctions, judgments or decrees of any Governmental Entity which apply
to Buyer or any Buyer Subsidiary or to the assets, properties or operations of
the foregoing and (b) there are no actions, suits, proceedings, at law or in
equity, pending, or to Buyer's Knowledge, threatened or to Buyer's Knowledge any
investigations pending or threatened involving the Buyer or the Buyer
Subsidiaries, or before any Governmental Entity which in the case of either
clause (a) or (b) are reasonably likely to have a Material Adverse Effect.
 
     4.10  Compliance with Applicable Law.  Except as set forth in Section 4.10
of the Buyer Disclosure Schedule, or in the Buyer SEC Reports, and except with
respect to environmental matters, which are addressed in Section 4.15 hereof,
(a) the Buyer and the Buyer Subsidiaries are, and the business, operations or
financial condition of the Buyer and the Buyer Subsidiaries has been conducted,
and is, in compliance with all Laws, except where the failure to be in
compliance would not be reasonably likely to have a Material Adverse Effect, and
(b) the Buyer and Buyer Subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary to
conduct their respective businesses as currently conducted (the "Buyer
Permits"), and such Buyer Permits are in full force and effect, except for such
failures to hold or be in full force and effect which would not be reasonably
likely to have a Material Adverse Effect .
 
     4.11  Taxes.  The Buyer and each Buyer Subsidiary has duly filed all
returns of income Taxes (as hereinafter defined) and all material returns of
other Taxes required to be filed by it, and the Buyer has duly paid, caused to
be paid or made adequate provision for the payment of all Taxes required to be
paid in respect of the periods covered by such returns and has made adequate
provision for payment of all Taxes anticipated to be payable in respect of all
calendar periods since the periods covered by such returns. Except as set forth
in Section 4.11 of the Buyer Disclosure Schedule, the United States federal and
state income tax returns of the Buyer have been audited by the Internal Revenue
Service or relevant state tax authorities or are closed by the applicable
statute of limitations for all taxable years through 1986. All deficiencies and
assessments asserted as a result of such audits have been paid, fully settled or
adequately provided for in the financial statements contained in the Buyer SEC
Reports, or are being contested in good faith by appropriate proceedings. Except
as set forth in Section 4.11 of the Buyer Disclosure Schedule, there are no
outstanding agreements or waivers extending the statutory period of limitation
relating to the payment of Taxes of the Buyer or its subsidiaries for taxable
periods for which the applicable statute of limitations has not expired.
 
     4.12  ERISA; Employee Benefits.  The Buyer hereby represents and warrants
to Seller that as of the date hereof and as of the Closing Date:
 
     (a) Section 4.12(a) of the Buyer's Disclosure Schedule identifies each
Buyer Employee Plan with an annual cost in excess of $100,000. The Buyer has
furnished or made available to Seller true and complete copies of such Buyer
Employee Plans (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof together with (i) the most recent
annual report prepared in connection with any such Buyer Employee Plan (Form
5500 or 5500-C including, if applicable, Schedules A and B thereto), (ii) the
summary plan description currently in effect for each such Buyer Employee Plan
and all modifications thereof, (iii) for each such Buyer Employee Plan with
respect to which there is no summary plan description in effect, a written
description of such Buyer
 
                                      A-16
<PAGE>   21
 
Employee Plan including all materials distributed or made available to employees
with respect to such Buyer Employee Plan and (iv) the most recent financial
statements and actuarial reports (if any) for each such Buyer Employee Plan and
its related trust (if any) (collectively, the Buyer Employee Plan Documents").
 
     (b) Except as set forth in Section 4.12(b) of the Buyer Disclosure
Schedule, no Buyer Employee Plan with an annual cost in excess of $100,000 is a
Title IV Plan or a Multiemployer Plan.
 
     (c) Each Buyer Employee Plan with an annual cost in excess of $100,000 that
is intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified and no event has occurred
since the date of such determination that would adversely affect such
qualification; each trust created under any such Buyer Employee Plan has been
determined by the Internal Revenue Service to be exempt from tax under Section
501(a) of the Code and no event has occurred since the date of such
determination that would adversely affect such exemption. The Buyer has
furnished to Seller the most recent determination letter of the Internal Revenue
Service relating to each such Buyer Employee Plan. Each such Buyer Employee Plan
has been maintained in compliance in all material respects with its terms and
with the requirements prescribed by any and all applicable statutes, orders,
rules and regulations, including but not limited to ERISA and the Code. Neither
the Buyer nor any Related Person engaged in, nor to Buyer's Knowledge has any
other Person has engaged in, any "prohibited transaction" (as defined in ERISA
and the Code) with respect to any such Buyer Employee Plan.
 
     (d) Section 4.12(d) of the Buyer's Disclosure Schedule identifies each
Buyer Benefit Arrangement with an annual cost in excess of $100,000. The Buyer
has furnished or made available to Seller true and complete copies or, if no
written document exists, descriptions of each such Buyer Benefit Arrangement.
Each such Buyer Benefit Arrangement has been maintained in compliance in all
material respects with its terms and with the requirements prescribed by any and
all applicable statutes, orders, rules and regulations.
 
     (e) Section 4.12(e) of the Buyer Disclosure Schedule identifies each Buyer
International Plan with an annual cost in excess of $100,000. The Buyer has
furnished or made available to Seller true and complete copies or, if no written
document exists, descriptions of each such Buyer International Plan. Each such
Buyer International Plan has been maintained in compliance in all material
respects with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations (including any special
provisions relating to qualified plans where such Buyer International Plan was
intended to so qualify) and has been maintained in good standing with applicable
regulatory authorities.
 
     (f) Except as set forth on Section 4.12(f) of the Buyer Disclosure
Schedule, there are no actions, suits, arbitrations, inquiries, investigations
or other proceedings (other than routine claims for benefits) pending or, to the
Buyer's Knowledge, threatened, with respect to any Buyer Employee Plan, Buyer
Benefit Arrangement or Buyer International Plan which would be reasonably likely
to have a Material Adverse Effect.
 
     (g) Except as set forth on Section 4.12(g) of the Buyer Disclosure
Schedule, and except for coverage mandated by Section 4980B of the Code, no
Employees or Former Employees and no beneficiaries or dependents of Employees or
Former Employees are or may become entitled under any Buyer Employee Plan, Buyer
Benefit Arrangement or Buyer International Plan to post-employment welfare
benefits of any kind, including without limitation death or medical benefits,
having an annual cost, in the aggregate, in excess of $100,000.
 
     4.13  Intellectual Property.  "Buyer Intellectual Property" means all of
the Buyer's or any of the Buyer Subsidiaries' domestic and foreign letters
patent, patents, patent applications, patent licenses, trademark licenses,
software licenses and know-how licenses, trade names, trademarks, copyrights,
service marks, trademark registrations and applications, service mark
registrations and applications and copyright registrations and applications
currently being used by the Buyer or any Buyer Subsidiary.
 
                                      A-17
<PAGE>   22
 
Except as set forth in Section 4.13 of the Buyer Disclosure Schedule or Buyer's
SEC Reports and except for any claim, infringement, act or omission that would
not be reasonably likely to have a Material Adverse Effect (a) no claim is
pending or, to the knowledge of the Buyer, threatened to the effect that any of
the Buyer Intellectual Property is invalid or unenforceable or which is
otherwise adverse to the right, title and interest of the Buyer and the Buyer
Subsidiaries in and to the Buyer Intellectual Property; (b) to the knowledge of
the Buyer, no actions or operations of any Person infringe upon or conflict with
the right, title or interest of the Buyer and the Buyer Subsidiaries in and to
the Buyer Intellectual Property; and (c) to the knowledge of the Buyer, no Buyer
Intellectual Property infringes on the rights owned or held by any other Person.
Except as set forth in Section 4.13 of the Buyer Disclosure Schedule, no
contract, agreement or understanding between the Buyer or any Buyer Subsidiary
and any other party exists which would impede or prevent the continued use by
the Buyer and the Buyer Subsidiaries of the entire right, title and interest of
the Buyer and the Buyer Subsidiaries in and to the Buyer Intellectual Property.
 
     4.14  No Defaults.  Except as set forth in Section 4.14 of the Buyer
Disclosure Schedule or in the Buyer SEC Reports, to Buyer's Knowledge, Buyer and
the Buyer Subsidiaries are not in default under, and no condition exists that
with notice or lapse of time or both would constitute a default under, (i) any
mortgage, loan agreement, indenture, evidence of indebtedness or other
instrument evidencing borrowed money, Buyer and Buyer Subsidiaries'
organizational documents, any other material agreement, contract, lease, license
to which Buyer or Buyer Subsidiaries are a party or by which they or their
properties are bound, or (ii) any judgment, order or injunction of any court,
arbitrator or Governmental Entity, except in the case of clause (i) and (ii)
above those that will not be reasonably likely to have a Material Adverse
Effect.
 
     4.15  Environmental Compliance.  Except as set forth in Section 4.15 of the
Buyer Disclosure Schedule, all operations, properties and business activities of
the Buyer and the Buyer Subsidiaries are in compliance with all Environmental
Laws, and neither the Buyer nor any of the Buyer Subsidiaries has or is subject
to any claim, notice of investigation or liability based upon any Environmental
Law or arising from the disposal of any Regulated Material except where such
failure to be in compliance or such claim, notice of investigation or liability
would not be reasonably likely to have a Material Adverse Effect.
 
     4.16  Representations Accurate.  To Buyer's Knowledge, the representations
and warranties of the Buyer set forth in this Agreement and qualified by
materiality or by Material Adverse Effects shall be true and correct (subject to
such qualification) as of the Closing Date (except for representations and
warranties that expressly speak only as of some other time), subject to the
disclosures in the Buyer Disclosure Schedule as supplemented or amended through
the Closing Date and excluding those failures to be true and correct that do not
have a Material Adverse Effect. To Buyer's Knowledge, the representations and
warranties of the Buyer set forth in this Agreement and not qualified by
materiality or by Material Adverse Effects shall be true and correct in all
material respects as of the Closing Date (except for representations and
warranties that expressly speak only as of some other time), subject to the
disclosures in the Buyer Disclosure Schedule as supplemented or amended through
the Closing Date and excluding those failures to be true and correct that do not
have a Material Adverse Effect.
 
     4.17  Purchase for Investment.  The Buyer is acquiring the Company Common
Stock for its own account as principal, with no view to any distribution of any
of the Company Common Stock or any beneficial interest in the Company Common
Stock to any third party, and the Buyer has no agreement, understanding or
arrangement to sell, pledge or otherwise dispose of the Company Common Stock or
any beneficial interest in the Company Common Stock to any other Person. The
Buyer understands and agrees that the Company Common Stock has not been
registered under the Securities Act, or applicable state securities laws, and
neither the Seller nor the Company has any obligation hereunder to so register
and, therefore, the Company Common Stock may not be sold or otherwise
transferred so as to cause the sale of the shares hereunder by the Seller to be
unlawful or violative of any law or regulation, unless the Company Common Stock
is registered under the Securities Act and any applicable state securities laws
or unless an exemption from such registration is available.
 
                                      A-18
<PAGE>   23
 
                                   ARTICLE V
 
                                   COVENANTS
 
     5.1  Business Covenants of the Seller.  Except as expressly contemplated by
this Agreement, the Ancillary Agreements (as hereinafter defined) and except for
the pre-Closing transactions described in Annex IV hereto between the Seller and
its Affiliates, on the one hand, and the Company and the Company Subsidiaries,
on the other hand, during the period from the date of this Agreement and
continuing until the Closing Date, the Seller will cause the Company and the
Company Subsidiaries to carry on their respective businesses in the ordinary
course, consistent with past practice, and to use their respective reasonable
best efforts to preserve intact their present business organizations, to keep
available the services of their present officers and key employees and to
preserve their relationships with customers, suppliers, licensors, licensees,
contractors, distributors and others having business dealings with them. Without
limiting the generality of the foregoing, and except as provided herein, the
Seller will not, without the prior consent of the Buyer, cause or permit the
Company and the Company Subsidiaries to:
 
     (a) (i) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that the Company Subsidiaries may declare and
pay a dividend to the Company, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of its subsidiaries, or propose to do
any of the foregoing;
 
     (b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities (including indebtedness having the right to
vote) or equity equivalents (including, without limitation, stock appreciation
rights), except pursuant to any Company Benefit Plan, or amend in any material
respect any of the terms of any such agreements, commitments, stock, securities
or equity equivalents outstanding on the date hereof;
 
     (c) amend or propose to amend its charter or by-laws;
 
     (d) acquire, sell, lease, encumber, transfer or dispose of any assets other
than in the ordinary course of business consistent with past practice;
 
     (e) make any capital expenditures which in the aggregate exceed $100,000;
 
     (f) create, incur or assume any long-term debt (including obligations in
respect of capital leases);
 
     (g) except in the ordinary course of business consistent with past
practice, create, incur, assume, maintain or permit to exist any short-term debt
(including obligations in respect of capital leases) or assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person, except that
such debt or obligations which are set forth on the Seller Disclosure Schedule
may be maintained and permitted to exist;
 
     (h) permit any of its current insurance policies to be cancelled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies providing
coverage equal to or greater than coverage remaining under those cancelled,
terminated or lapsed are in full force and effect;
 
     (i) change any of the accounting principles or practices used by it (except
as required by GAAP);
 
     (j) except as required by law, or pursuant to the terms of any collective
bargaining agreement, (i) enter into, adopt, amend or terminate any Company
Benefit Plan or any agreement, arrangement, plan or policy between itself and
one or more of its directors, executive officers, or other employees, or (ii)
increase in any manner the compensation or fringe benefits of any director,
officer or other
 
                                      A-19
<PAGE>   24
 
employee or pay any benefit not required by any plan or arrangement as in effect
as of the date hereof, except such increases as are granted in the ordinary
course of business consistent with past practice (which shall include normal
periodic performance reviews and related compensation and benefit increases but
not any general across-the-board increases);
 
     (k) amend or terminate any material agreements, commitments or contracts,
or enter into other material agreements, commitments or contracts, except in the
ordinary course of business consistent with past practice and not in excess of
current requirements;
 
     (l) lend any money in excess of $100,000 to any Person other than an
Affiliate or trade creditor;
 
     (m) merge or consolidate with or into any other Person; or
 
     (n) enter into any agreement with any Person for the purchase of inventory
for to the Company in excess of $500,000 if such purchase would cause the
Company's inventory to exceed substantially the amount of inventory required to
fill outstanding contracts with customers of the Company; or
 
     (o) agree to take any of the foregoing actions.
 
     Notwithstanding the provisions of this Section 5.1, nothing in this
Agreement shall be construed or interpreted to prevent the Seller, the Company
and the Company Subsidiaries from making, accepting or settling intercompany
advances to, from or with one another, or engaging in any other transaction
incidental to their normal cash management procedures, including without
limitation, short-term investments in time deposits, certificates of deposit and
bankers acceptances made in the ordinary course of business.
 
     5.2  Business Covenants of the Buyer.  Except as expressly contemplated by
this Agreement, during the period from the date of this Agreement and continuing
until the Closing Date, the Buyer will, and will cause the Buyer Subsidiaries
to, carry on their respective businesses in the ordinary course, consistent with
past practice, and to use their respective reasonable best efforts to preserve
intact their present business organizations, to keep available the services of
their present officers and key employees and to preserve their relationships
with customers, suppliers, licensors, licensees, contractors, distributors and
others having business dealings with them. Without limiting the generality of
the foregoing, and except as provided herein, the Buyer will not, and will cause
the Buyer Subsidiaries not, without the prior consent of the Seller, to:
 
     (a) (i) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
(iii) amend the terms of, repurchase, redeem or otherwise acquire, or permit any
subsidiary to repurchase, redeem or otherwise acquire, any of its securities or
any securities of its subsidiaries, or propose to do any of the foregoing;
 
     (b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities (including indebtedness having the right to
vote) or equity equivalents (including, without limitation, stock appreciation
rights) except in accordance with Buyer's Stock Plans, or amend in any material
respect any of the terms of any such agreements, commitments, stock, securities
or equity equivalents outstanding on the date hereof;
 
     (c) amend or propose to amend its charter or by-laws in any manner adverse
to the interests of the Seller;
 
     (d) make any capital expenditures which in the aggregate exceed the amounts
contemplated by the Buyer's most recent annual operating budget, unless the
Buyer notifies and consults with the Seller prior to taking any such action;
 
     (e) create, incur or assume any long-term debt (including obligations in
respect of capital leases) in excess of $1,000,000;
 
                                      A-20
<PAGE>   25
 
     (f) except in connection with draws made pursuant to the Financing
Agreement dated March 8, 1993 by and between The CIT Group/Business Credit, Inc.
and the Buyer, among others, or otherwise in the ordinary course of business
consistent with past practice, create, incur, assume, maintain or permit to
exist any short-term debt (including obligations in respect of capital leases)
in excess of $1,000,000 or assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other Person (except that any such debt or obligations set forth in
Section 5.2(f) of the Buyer Disclosure Schedule may be maintained and permitted
to exist);
 
     (g) lend any money in excess of $100,000, unless the Buyer notifies and
consults with the Seller prior to taking any such action;
 
     (h) except as required by law, (i) enter into, adopt, amend or terminate
any agreement, arrangement, plan or policy between itself and one or more of its
directors or executive officers, or (ii) increase in any manner the compensation
or fringe benefits of any director or executive officer or pay any benefit to
any director or executive officer not required by any plan or arrangement as in
effect as of the date hereof;
 
     (i) enter into any material agreements, commitments or contracts relating
to the acquisition or divestiture of any businesses;
 
     (j) amend or terminate any material agreements, commitments or contracts,
or enter into, other material agreements, commitments or contracts, except in
the ordinary course of business consistent with past practice and not in excess
of current requirements, unless the Buyer notifies and consults with the Seller
prior to taking any such action;
 
     (k) merge or consolidate with or into any other Person; or
 
     (l) agree to take any of the foregoing actions.
 
     5.3  Current Information.  During the period from the date of this
Agreement to the Closing Date, the Buyer will notify the Seller and the Seller
will notify the Buyer of any material change (or any event which might
reasonably be expected to cause a material change) in the normal course of
business or operations of the Buyer and the Buyer Subsidiaries or of the Company
and the Company Subsidiaries, as the case may be, and of any complaints,
investigations or hearings by any Governmental Entity (or communications
indicating that the same may be contemplated), or the institution or threat or
settlement of significant litigation, in each case involving the Buyer or the
Buyer Subsidiaries or the Company or the Company Subsidiaries, as the case may
be, and to keep each other fully informed of such events.
 
     5.4  Access to Information.
 
     (a) Between the date of this Agreement and the Closing Date the Buyer will
and will cause the Buyer Subsidiaries to, (i) give the Seller and the Company
and their authorized representatives reasonable access to all books, records,
plants, offices, warehouses and other facilities and properties of the Buyer and
the Buyer Subsidiaries, (ii) permit the Seller and the Company and their
authorized representatives to make such inspections thereof, during regular
business hours, as they may reasonably request, and (iii) cause their officers
to furnish the Seller and the Company and their authorized representatives with
such financial and operating data and other information with respect to the
business, operations and properties of the Buyer and the Buyer Subsidiaries as
the Seller and the Company may from time to time reasonably request; provided,
however, that any such investigation shall be conducted in such a manner as not
to interfere unreasonably with the operation of the business of the Buyer and
the Buyer Subsidiaries.
 
     (b) Between the date of this Agreement and the Closing Date the Seller will
and will cause the Company and the Company Subsidiaries to, (i) give the Buyer
and the Buyer Subsidiaries and their authorized representatives reasonable
access to all books, records, plants, offices, warehouses and other facilities
and properties of the Company, the Company Subsidiaries and the Business, and to
 
                                      A-21
<PAGE>   26
 
reasonably permit the Buyer to make copies of such books and records, (ii)
permit the Buyer and the Buyer Subsidiaries and their authorized representatives
to make such inspections thereof, during regular business hours, as they may
reasonably request, and (iii) cause its officers to furnish the Buyer and the
Buyer Subsidiaries and their authorized representatives with the monthly
financial reporting package of the Company that is prepared for the Seller in
its ordinary practice and with such other financial and operating data and other
information with respect to the business, operations and properties of the
Company, the Company Subsidiaries and the Business as the Buyer and the Buyer
Subsidiaries may from time to time reasonably request; provided, however, that
any such investigation shall be conducted in such manner as not to interfere
unreasonably with the operation of the business of the Seller, the Company and
the Company Subsidiaries.
 
     (c) Notwithstanding (a) and (b) above, the Buyer, the Buyer Subsidiaries,
the Seller, the Seller Subsidiaries, the Company and the Company Subsidiaries
shall not be obligated to furnish information if, in the opinion of counsel,
such furnishing of information would be reasonably likely to violate the law.
 
     (d) Between the date of this Agreement and the Closing Date (or, if this
Agreement terminates pursuant to Section 7.1 or otherwise, for three years from
the date hereof), the Buyer will hold and will cause the Buyer Subsidiaries and
their respective officers, directors, employees, representatives, consultants
and advisors to hold and the Seller will hold and will cause the Seller
Subsidiaries, the Company and the Company Subsidiaries and their respective
officers, directors, employees, representatives, consultants and advisors to
hold in strict confidence in accordance with the terms of the Confidentiality
Agreement, dated January 29, 1992, between the Buyer and the Seller (the
"Confidentiality Agreement"), all documents and information furnished to each
other and their representatives, consultants or advisors in connection with the
transactions contemplated by this Agreement; provided, however, that the Buyer
shall not be required hereunder to hold in strict confidence such documents and
information that relate solely to the operation of the Company, the Company
Subsidiaries or the Business. The Confidentiality Agreement will terminate on
the Closing Date.
 
     5.5  Reasonable Best Efforts.  Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Without limiting the foregoing, the Buyer agrees to use its reasonable best
efforts to, as promptly as practicable, (a) prepare and file with the SEC the
Proxy Statement, respond to the comments (if any) of the staff of the SEC with
respect thereto, and mail to the shareholders of the Buyer the definitive Proxy
Statement, which Proxy Statement shall contain the recommendation of the Board
of Directors of the Buyer to the Buyer's shareholders regarding the transactions
contemplated by this Agreement, and (b) take such actions as may be required to
cause, prior to the Closing Date, the Equity Consideration to be received by the
Seller pursuant to this Agreement to be eligible for quotation on the NASDAQ
National Market System (subject to official notice of issuance). The Seller
shall use its reasonable best efforts (i) to provide to the Buyer all
information about the Seller, the Seller Subsidiaries, the Company or the
Company Subsidiaries (including without limitation the Company Financial
Statements and any other financial statements of the Company and the Company
Subsidiaries) required to be included or incorporated by reference in the Proxy
Statement and (ii) otherwise to cooperate with the Buyer in taking the actions
described in the preceding sentence.
 
     5.6  Consents; Filings.
 
     (a) Each of the parties hereto will use its reasonable best efforts to
obtain consents of all Persons necessary for the consummation of the
transactions contemplated by this Agreement.
 
     (b) Each of the parties hereto will use its reasonable best efforts to file
expeditiously the appropriate German pre-merger filings. The Buyer and the
Seller will make all such other filings, notifications and requests for consent,
approval or permission that may be required by statute, regulation or judicial
decree in connection with the transactions contemplated by this Agreement and
 
                                      A-22
<PAGE>   27
 
will cooperate in providing each other or their respective outside counsel any
information, including reasonable access to knowledgeable individuals, necessary
in connection therewith. The Buyer and the Seller shall, upon the request of any
Governmental Entity, supply such agency with any additional requested
information as expeditiously as is reasonably possible, and shall use their
reasonable best efforts to cause the satisfaction or termination of the
applicable waiting period under German pre-merger notification laws. The Buyer
and the Seller shall use their reasonable best efforts to resolve as promptly as
practicable any concern on the part of any Governmental Entity regarding the
legality of the transactions contemplated hereby, but shall not be required to
divest any assets, significantly change the conduct of the business currently
conducted by the Buyer, the Seller or the Company or otherwise materially
restrict the future business activities of the Buyer, the Seller or the Company.
 
     5.7  Shareholder Meeting.  The Buyer shall duly call, give notice of,
convene and hold a meeting of its shareholders as promptly as practicable for
the purpose of adopting and approving this Agreement and the transactions
contemplated hereby (including, without limitation, adopting and approving (i)
an amendment to the Buyer's Articles of Organization providing that the number
of authorized shares of Buyer Common Stock be increased to 70,000,000 (the
"Authorized Shares Amendment"), (ii) the issuance of the Equity Consideration,
and (iii) the Fair Price Charter Amendment and for such other purposes as may be
necessary or desirable to effectuate the transactions contemplated by this
Agreement. The Buyer shall use its reasonable best efforts to obtain the
agreement of its Affiliates to vote all shares of Buyer Common Stock
beneficially owned by each such Affiliate in favor of the matters presented to
the Buyer's shareholders in connection with the transactions contemplated by
this Agreement.
 
     5.8  Amendment to Articles of Organization and By-Laws.  As promptly as
practicable following adoption of the Authorized Shares Amendment and the Fair
Price Charter Amendment by the requisite affirmative vote of the Buyer's
shareholders but prior to Closing, the Buyer shall file with the Secretary of
the Commonwealth of Massachusetts articles of amendment, duly signed in
accordance with the Massachusetts Business Corporation Law setting forth the
Authorized Shares Amendment, the Fair Price Charter Amendment, and the due
adoption thereof. Prior to Closing, the Board of Directors shall adopt and
approve the amendment to the Buyer's By-laws in the form attached hereto as
Annex VI (the "Control Share Acquisitions Amendment").
 
     5.9  Rights Agreement..  As promptly as practicable following the approval
and adoption of the Amended and Restated Rights Agreement in the form attached
hereto as Annex VII (the "Rights Agreement") by the Buyer's Board of Directors
but prior to the Closing, the Buyer shall execute and deliver the Rights
Agreement.
 
     5.10  Brokers or Finders.  Each of the Buyer and the Seller represents, as
to itself, its subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or Person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and Shearson
Lehman Brothers, Inc. ("Shearson"), whose fees and expenses, if any, will be
paid by the Buyer in accordance with the Buyer's agreement with DLJ or Shearson,
and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and The
First Boston Corporation ("First Boston"), whose fees and expenses, if any, will
be paid by the Seller in accordance with the Seller's agreement with Merrill
Lynch or First Boston; and the Buyer and the Seller each agree to indemnify and
hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any Person on the basis of any act or statement alleged to have been made by or
on behalf of such party.
 
     5.11  Fees and Expenses.  Whether or not the transactions contemplated by
this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses; provided, however, that in no event shall
such expenses be paid by the Company or the Company Subsidiaries.
 
                                      A-23
<PAGE>   28
 
     5.12  Employee Benefits.
 
     (a) The following terms, as used in this Agreement, have the following
meanings:
 
     "Buyer Benefit Arrangement" means any employment, severance or similar
contract, arrangement or policy, or any plan or arrangement (whether or not
written) providing for severance benefits, insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights, fringe benefits, perquisites or other forms of compensation
or post-retirement insurance, compensation benefits that (i) is not a Buyer
Employee Plan, (ii) is entered into or maintained, as the case may be, by the
Buyer or any of its Affiliates, and (iii) covers any individual employed or
formerly employed, as the case may be, by the Buyer or a subsidiary or Affiliate
of the Buyer.
 
     "Buyer Employee Plan" means any "employee benefit plan", as defined in
Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by the Buyer or any of its
Affiliates, and (iii) covers any individual employed or formerly employed by the
Buyer or a subsidiary or Affiliate of the Buyer.
 
     "Buyer International Plan" means any employment, severance or similar
contract, arrangement or policy (exclusive of any such contract which is
terminable within thirty days without liability of the Buyer or any of its
Affiliates), or any plan or arrangement providing for severance, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or for deferred compensation, profit sharing,
bonuses, stock options, stock appreciation rights, fringe benefits, perquisites
or other forms of compensation or post-retirement insurance, compensation or
benefits that (i) is not a Buyer Employee Plan or a Buyer Benefit Arrangement,
(ii) is maintained or contributed to by the Buyer or any of its Affiliates, and
(iii) covers any individual employed or formerly employed or by the Buyer or a
subsidiary or Affiliate of the Buyer outside the United States.
 
     "COBRA" means Part 6 of Title I of ERISA and Section 4980B of the Code.
 
     "Company Domestic Retirement and Savings Plans" shall mean the Seller
Employee Plans which are included in the definition of "employee pension benefit
plan" as defined in Section 3(2) of ERISA.
 
     "Controlled Group Liability" means any and all liabilities under (i) Title
IV of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and 4971 of the Code,
(iv) the continuation coverage requirements of section 601 et seq. of ERISA and
section 4980B of the Code and (v) corresponding or similar provisions of foreign
laws or regulations.
 
     "Employee" means any individual who, on the Closing Date, is employed in
the Business in any active or inactive status and whose current employment in
the Business has not been terminated and, if applicable, any beneficiary
thereof.
 
     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, and the rules and regulations
promulgated thereunder.
 
     "Former Employee" means any individual employed in the Business by the
Seller or any of its Affiliates and whose employment has been terminated prior
to the Closing Date (and, if applicable, any beneficiary thereof), excluding any
individuals subsequently employed by the Seller or any of its Affiliates outside
of the Business.
 
     "Multiemployer Plan" means each Employee Plan that is a multiemployer plan,
as defined in Section 3(37) of ERISA.
 
     "Related Person" of any Person means any other Person which, together with
such Person, would or at any time has been treated as a single employer with
either the Buyer or the Seller (as appropriate), the Company or any Affiliate
under Section 414 of the Code.
 
                                      A-24
<PAGE>   29
 
     "Seller Benefit Arrangement" means any employment, severance or similar
contract, arrangement or policy, or any plan or arrangement (whether or not
written) providing for severance benefits, insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights, fringe benefits, perquisites or other forms of compensation
or post-retirement insurance, compensation benefits that (i) is not a Seller
Employee Plan, (ii) is entered into or maintained, as the case may be, by the
Seller or any of its Affiliates, and (iii) covers any individual employed or
formerly employed, as the case may be, in the Business in the United States.
 
     "Seller Employee Plan" means any "employee benefit plan", as defined in
Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by the Seller or any of its
Affiliates, and (iii) covers any individual employed or formerly employed in the
Business.
 
     "Seller International Plan" means any employment, severance or similar
contract, arrangement or policy (exclusive of any such contract which is
terminable within thirty days without liability of the Seller or any of its
Affiliates), or any plan or arrangement providing for severance, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or for deferred compensation, profit sharing,
bonuses, stock options, stock appreciation rights, fringe benefits, perquisites
or other forms of compensation or post-retirement insurance, compensation or
benefits that (i) is not a Seller Employee Plan or a Seller Benefit Arrangement,
(ii) is maintained or contributed to by the Seller or any of its Affiliates and
(iii) covers any individual employed or formerly employed outside the United
States in the Business.
 
     "Seller U.K. Pension Plan" shall mean the Cameron Iron Works Retirement
Benefits Scheme (1974).
 
     "Title IV Plan" means an Employee Plan, other than any Multiemployer Plan,
subject to Title IV of ERISA.
 
     (b) As of the Closing Date each Employee will continue as an employee of
the Company in the same status and at the same salary or wage and benefit levels
as provided to such Employee on the Closing Date by the Company; provided that,
nothing herein shall prevent the Buyer from altering such salary, wage and
benefit levels or terminating the employment of any Employee after the Closing
Date.
 
     (c) Prior to the Closing Date, the Buyer shall establish a plan or plans
which are substantially similar in all material respects to the Company Domestic
Retirement and Savings Plans. The Buyer reserves the right to amend or terminate
such plans at any time after the Closing Date. Such plan or plans shall provide
credit for the service earned in each of the Company Domestic Retirement and
Savings Plans for purposes of eligibility (including for early retirement
subsidies and disability benefits) and vesting. Such plan or plans shall also
provide credit for benefit accrual purposes from the Closing Date forward.
Benefit accruals shall cease under the Company Domestic Retirement and Savings
Plans as of the Closing Date for all Employees. Service on and after the Closing
Date with the Buyer or any Affiliate, subsidiary or successor of the Buyer shall
be credited under each Company Domestic Retirement and Savings Plan which is not
a Section 401(k) plan solely for the purposes of eligibility (including for
early retirement subsidies and disability benefits) and vesting. Employees shall
not be considered terminated or retired by the Seller under the Domestic
Retirement and Savings Plans until they are no longer being credited with
service for purposes of eligibility (including for early retirement subsidies
and disability benefits) and vesting. The Seller shall take all necessary steps
to remove the Company as sponsoring employer or a participating employer of the
Domestic Retirement and Savings Plans as of the Closing Date. The Seller shall
retain all assets and liabilities associated with each Domestic Retirement and
Savings Plan which is not a Section 401(k) plan. As soon as practicable after
the Closing Date, Seller shall cause the trustee of each of the Domestic
Retirement and Savings Plans which are Section 401 (k) plans (each, a "401 (k)
Plan") to segregate or otherwise
 
                                      A-25
<PAGE>   30
 
identify the assets of such 401 (k) plan and related trust agreements and make
any and all filings and submissions to the appropriate governmental agencies
arising in connection with the transfer of assets as described below. The manner
in which the account balances of Employees under each 401 (k) Plan are invested
shall not be affected by such segregation or identification of assets. As soon
as practicable after the Closing Date, Buyer shall establish or designate profit
sharing plans with a salary reduction 401 (k) feature for the benefit of
Employees (such Buyer plans, the "Successor Individual Account Plans"), shall
take all necessary action, if any, to qualify the Successor Individual Account
Plans under the applicable provisions of the Code and shall make any and all
filings and submissions to the appropriate governmental agencies required to be
made by it in connection with the transfer of assets described below. The
successor Individual Account Plans shall include loan and in-service withdrawal
provisions substantially similar to those of such 401 (k) Plans. As soon as
practicable after the Closing Date, but not earlier than (i) thirty (30) days
after the filing of all necessary governmental forms and (ii) the receipt of a
favorable determination letter with respect to the qualification of each of the
Successor Individual Account Plans or the receipt of an opinion of counsel
acceptable to the Buyer and the Seller regarding such qualified status, Seller
shall cause the transfer of the entire account balance (which account balances
will have been credited with any employer contribution for the current Plan year
to which the applicable Employee is entitled under the terms of such 401 (k)
Plan) to the appropriate trustee as designated by Buyer under the trust
agreement forming a part of the Successor Individual Account Plans. The assets
to be transferred shall be in the form of cash, common stock of the Seller or
preferred stock of the Seller, as determined by Seller. The transfer of assets
to the Successor Individual Account Plans described herein shall each satisfy
the requirements of the Code. In consideration for the transfer of assets
described herein, Buyer shall, effective as of the date of transfer described
herein, assume all of the obligations of Seller and any of its Affiliates in
respect of the transferred account balances for the Employees under the 401 (k)
Plans (exclusive of any portion of such account balances which are paid or
otherwise withdrawn prior to the date of transfer described herein). Neither
Buyer nor any of its Affiliates shall assume any other obligations or
liabilities arising under or attributable to the 401 (k) Plans. The Buyer, the
Company and their Affiliates shall indemnify and hold the Seller and its
Affiliates harmless against all obligations and liabilities arising out of or
relating to the maintenance of any plan it establishes pursuant to the
provisions of this Section 5.12(c). Notwithstanding any other provision
contained in this Agreement to the contrary, in the event the Buyer, the
Company, or their Affiliates modify or terminate any plan it establishes
pursuant to the provisions of this Section 5.12(c), the Buyer, the Company and
their Affiliates indemnify and shall hold the Seller and its Affiliates harmless
against any increase in the obligations or liabilities of the Seller and its
Affiliates that arise out of or relating to such modification or termination.
 
     (d) The Buyer shall procure (or shall procure that the U.K. Sub procures)
that:
 
          (i) on or before the Closing Date it establishes a retirement benefit
     scheme which is approved or is capable of exempt approval under Chapter I
     of Part XIV of the Income and Corporation Taxes Act 1988 ("the New Plan")
     for the benefit of the employees of the U.K. Sub and that such employees
     are offered membership of the New Plan with effect from the Closing Date;
 
          (ii) the benefits to be provided by the New Plan for the employees of
     the U.K. Sub shall be substantially similar in all material respects to
     those provided under the Seller U.K. Pension Plan (details of which have
     been disclosed) as of the Closing Date (for purposes of this paragraph
     5.12(d)(ii), "substantially similar" shall mean that any differences
     between the New Plan and the Seller U.K. Pension Plan shall not constitute
     a change to any Employee's contract of employment); and
 
          (iii) for the purpose of vesting benefits in the New Plan in respect
     of those employees of the U.K. Sub who have not at the Closing Date
     qualified for preserved benefits under the Seller U.K. Pension Plan, the
     New Plan will recognize the period of pensionable service such employees
     have accrued under the Seller U.K. Pension Plan to the intent that they
     shall qualify for preserved benefits on the date that they would have done
     had their pensionable service under the Seller U.K. Pension Plan not ceased
     as a consequence of this Agreement. In the case of those employees of
 
                                      A-26
<PAGE>   31
 
     the U.K. Sub who already qualify for preserved benefits under the Seller
     U.K. Pension Plan the New Plan shall contain provisions which immediately
     vest the accrual of their benefits after the Closing Date in the New Plan.
     Buyer reserves the right to modify or terminate the New Plan at any time or
     from time to time after Closing Date.
 
     (e) The Seller shall procure that in respect of those employees of the U.K.
Sub who have not at the Closing Date qualified for preserved benefits under the
Seller's UK pension Plan such persons will each be offered the opportunity of
electing for a deferred vested benefit in accordance with the provisions of
Rules 12(b) of the Consolidating Trust Deed and rules of the Seller's UK Pension
Plan dated 13 December 1993 (therein described "Discretionary award of Short
Service Benefit in relation to Non Qualifying Members") as an alternative to
receiving a refund of member contributions to which he or she may be entitled
under the terms of the Seller UK Pension Plan as at the Closing Date.
 
     (f) Except for liabilities or obligations arising under the Company
Domestic Retirement and Savings Plans (but not including liabilities or
obligations transferred to plans designated by Buyer in accordance with
paragraph 5.12(c)), the Seller U.K. Pension Plan, the 1993 ESPP and any Seller
Benefit Arrangement providing for the issuance of Seller Stock ("Seller Stock
Plans") as of the Closing Date the Company shall retain, or the Buyer shall
assume, all liabilities or other obligations associated with the Seller Employee
Plans, the Seller Benefit Arrangements and the Seller International Plan for or
attributable to any Employee or Former Employee.
 
     (g) Except for liabilities or obligations arising under the Company
Domestic Retirement and Savings Plans, the Seller U.K. Pension Plan, the 1993
ESPP and the Seller Stock Plans (i) the Buyer, the Company and their Affiliates
shall indemnify and hold the Seller and its Affiliates harmless against
liabilities or obligations arising under the Seller Employee Plans, Seller
Benefit Arrangements and Seller International Plans in respect of any Employee
or Former Employee (including any beneficiary or dependent thereof) and all
obligations and liabilities arising out of or relating to the employment of any
Employee or Former Employee by the Company before or after the Closing other
than obligations and liabilities expressly retained by the Seller pursuant to
this Section 5.12 and (ii) without limiting the generality of the foregoing, the
Company, the Buyer and their Affiliates shall assume, be solely responsible for,
and shall hold the Seller and its Affiliates harmless against, any claims for
workers compensation, medical benefits, life insurance, or other insured or
uninsured welfare benefits of any kind incurred by any Employee or Former
Employee or beneficiary thereof. The Company shall, as of the Closing Date,
assume and retain, and hold the Seller and its Affiliates harmless against, all
obligations and liabilities of the Company and its Affiliates to provide
post-retirement health benefits to any Employee or Former Employee. Seller
hereby indemnifies Buyer and its Affiliates against and agrees to hold each of
them harmless from any and all damage, loss, liability and expense (including,
without limitation, reasonable expenses of investigation and reasonable attorney
fees and expenses) incurred or suffered by Buyer or any of its Affiliates
(including the Company) as a result of, arising out of or relating to (I) the
imposition of any Controlled Group Liability with respect to any employee
benefit plan (as that term is defined in Section 3(3) of ERISA (whether or not
such plan is subject to ERISA)) or arrangement currently or previously
maintained or contributed to by Seller, the Company or any ERISA Affiliate of
Seller or the Company at any time or to which Seller or any Related Person had
or has an obligation to contribute at any time, other than any Seller Employee
Plan, Seller Benefit Arrangement or Seller International Plan to the extent
maintained for the benefit of Employees or Former Employees of the Company and
its Subsidiaries or (II) the Company Domestic Retirement and Savings Plans and
the Seller U.K. Pension Plan.
 
     (h) The Company shall be responsible for continuation coverage requirements
under Section 4980B of the Code for "qualifying events" (within the meaning of
4980B(f)(3) of the Code) with respect to any Employee or Former Employee.
 
     (i) After the Closing, the Buyer shall cause the Company and the Company
Subsidiaries to comply with their collective bargaining obligations.
 
                                      A-27
<PAGE>   32
 
     (j) Certain Employees as of July 1, 1993 (including certain Former
Employees who became so since July 1, 1993) are participating in the 1993
Offering to the Seller's employees ("ESPP Participants") under the Seller's
Employee Stock Purchase Plan (the "1993 ESPP"), a payroll deduction stock
purchase plan under which options were granted on July 1, 1993, to purchase
shares of Seller common stock on September 8, 1995, and the related payroll
administration is being conducted by the Company in accordance with the Seller's
1993 ESPP standard administration manual. On or before the Closing Date, the
Seller will cause the 1993 ESPP to be continued subsequent to the Closing Date
for all ESPP Participants who become employed by the Buyer on the Closing Date
and the Seller undertakes to cause shares to be issued, and to pay interest on
payroll deposits from and after the Closing Date, all in accordance with the
1993 ESPP, to the ESPP Participants who continue in the 1993 ESPP. The Buyer
agrees to continue, or cause to be continued, the payroll administration related
to such continued participation in the 1993 ESPP, promptly forwarding all cash
withholdings to the Seller with appropriate records. The Seller has the right to
refrain from issuing any of the shares under the 1993 ESPP to any
then-participating ESPP Participant until the Buyer has remitted to the Seller
the amount of any payroll deduction due on behalf of such participant. Except as
provided in this Section , the Buyer shall not have any obligation to continue
the 1993 ESPP after the Closing Date and shall have no obligation to offer any
other stock purchase plan to Employees. Except for any damage, loss, liability
or expense (including, without limitation, reasonable expenses of investigation
and reasonable attorney fees and expenses) which is the result of, arises from
or relates to the gross negligence or willful misconduct of Buyer or the
Company, or their affiliates and subsidiaries, with respect to their compliance
with the provisions of this Section 5.12(j), Seller hereby indemnifies Buyer and
its Affiliates against and agrees to hold each of them harmless from any and all
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorney fees and expenses) incurred or
suffered by Buyer or any of its Affiliates (including the Company) as a result
of, arising out of or relating to the 1993 ESPP and the Seller Stock Plans.
 
     5.13  Public Announcements.  Neither the Buyer nor the Seller will issue
any press release or otherwise make any public statement with respect to the
transactions contemplated hereby without the other party's prior consent, except
as required by law or stock exchange or NASDAQ rules or regulations.
 
     5.14  Use of the Company Name.
 
     (a) Except as provided in this Section 5.14, no interest in or right to use
the "Cameron" name is being conveyed pursuant to this Agreement, and following
the Closing Date the Buyer, the Company and the Company Subsidiaries shall not
use the "Cameron" name in any manner in connection with their businesses or
operations, provided, however, the Buyer, the Company and the Company
Subsidiaries shall have the right (i) to use the name "Cameron Forged Products"
in conjunction with the name "Wyman-Gordon Company" for three years following
the Closing Date, and (ii) to dispose of or consume existing inventory,
stationery, promotional or advertising literature, labels, office forms and
packaging materials (other than that which relates to oil field equipment
forgings) which may be labeled with the "Cameron" name for up to six months
following the Closing Date.
 
     (b) Immediately following the Closing, the Buyer shall cause the Company to
file with the office of the Secretary of State of the State of Delaware all
documents necessary to change the name of the Company to a name reasonably
satisfactory to the Seller. Pending the effectiveness of the Company's name
change, the Buyer shall file all necessary documentation with the appropriate
Governmental Entities to evidence its doing business as an entity using a name
other than "Cameron Forged Products Company". The Buyer shall take the
equivalent action with respect to such name in any other jurisdiction where it
has been or is used.
 
     5.15  Company Books and Records.  For a period of eight years after the
Closing Date, the Buyer shall, or shall cause the Company, the Company
Subsidiaries and their successors and assigns, to (i) retain and, as reasonably
requested, permit the Seller and its employees or agents to inspect and copy all
books and records of the Company or any Company Subsidiary which relate to the
period
 
                                      A-28
<PAGE>   33
 
prior to the Closing Date and (ii) cooperate in arranging discussions with (and
the calling as witnesses) officers, directors, employees and agents of the
Company, the Company Subsidiaries and their successors and assigns, on matters
which relate to the Company or the Company Subsidiaries with respect to the
period prior to the Closing Date.
 
     5.16  Disclosure Supplements.  Prior to the Closing Date, the Buyer will,
by giving written notice to the Seller, supplement or amend the Buyer Disclosure
Schedule with respect to any matters hereinafter arising which, if existing or
occurring at or prior to the date of this Agreement, would have been required to
be set forth or described in the Buyer Disclosure Schedule or which is necessary
to correct any information in the Buyer Disclosure Schedule or in any
representation and warranty of the Buyer which has been rendered inaccurate
thereby. Prior to the Closing Date, the Seller will, by giving written notice to
the Buyer, supplement or amend the Seller Disclosure Schedule with respect to
any matters hereafter arising which, if existing or occurring at or prior to the
date of this Agreement, would have been required to be set forth or described in
the Seller Disclosure Schedule or which is necessary to correct any information
in the Seller Disclosure Schedule or in any representation and warranty of the
Seller which has been rendered inaccurate thereby. For purposes of determining
the accuracy of the representations and warranties of the Seller contained in
Article III and the accuracy of the representations and warranties of the Buyer
contained in Article IV in order to determine the fulfillment of the conditions
set forth in Sections 6.2 and 6.3 , respectively, the Buyer Disclosure Schedule
and the Seller Disclosure Schedule shall be deemed to include only that
information contained therein on the date of this Agreement and shall be deemed
to exclude any information contained in any subsequent supplement or amendment
thereto.
 
     5.17  Ancillary Agreements.
 
     (a) As promptly as practicable after the date hereof, the Buyer and the
Seller will negotiate in good faith the terms of the following agreements
(collectively the "Ancillary Agreements"):
 
          (i) a lease agreement pursuant to which the Buyer or the U.K. Sub will
     lease space and certain oil tool equipment to the Seller or an Affiliate of
     the Seller at the Livingston, Scotland facility;
 
          (ii) a lease agreement pursuant to which the Seller or a Seller
     Subsidiary will lease space and certain equipment to the Company or an
     Affiliate of the Buyer at the Katy Road Site;
 
          (iii) a supply agreement pursuant to which the Buyer will cause the
     Company to supply forgings to the Seller or an Affiliate of the Seller;
 
          (iv) a license agreement pursuant to which the Seller will grant to
     the Company a non-exclusive license to make and sell certain products
     covered by the Seller's hot isostatic pressing patents;
 
          (v) a license agreement pursuant to which the Seller will grant to the
     Company a non-exclusive license to make and sell to RMI Titanium Company
     certain forgings to be used in a titanium riser covered by the Seller's
     patent therefor;
 
          (vi) a computer services agreement pursuant to which the Seller will
     permit the Company to continue to use the Seller's Cooper Oil Tool
     computer; and
 
          (vii) an agreement providing for the Seller to factor the Company's
     receivables (the "Factoring Agreement").
 
     (b) The Ancillary Agreements will include the terms set forth in the term
sheets appearing as Annex VIII hereto, and such other terms to which the parties
may agree in writing.
 
     5.18  WARN Act.  The Buyer agrees to indemnify, defend and hold harmless
the Seller, its present or former officers and directors, agents and Affiliates,
against any claims, damages, wages, fines, penalties and expenses, including
attorneys' fees, arising from the failure to comply with the Worker Adjustment
and Retraining Notification Act (the "WARN Act") arising from or relating to a
"plant
 
                                      A-29
<PAGE>   34
 
closing" or "mass layoff" (as those terms are defined in the WARN Act) by the
Company occurring on or after the Closing Date.
 
     5.19  Taxes.
 
     (a) With respect to Seller's sale of the Company Common Stock hereunder, if
Seller gives Buyer written notice within 30 days after the Closing Date
("Seller's Notice"), Seller and Buyer shall jointly make each available Section
338(h)(10) Election in accordance with applicable Tax Laws and as set forth
herein, provided that Seller does not own, and is not deemed to own, and as a
result of the transactions contemplated by this Agreement will not own and will
not be deemed to own, fifty percent (50%) or more of Buyer's issued and
outstanding common stock. If the Section 338(h)(10) Election is to be made,
Seller and Buyer will supply in advance to one another copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) to be sent or made by Buyer or Seller or their respective
representatives to or with the Internal Revenue Service relating to such
election. Buyer and Seller agree to report the transfers under this Agreement
consistent with such Section 338(h)(10) Election, and shall take no position or
action contrary thereto (unless required to do so by applicable Tax Laws or an
administrative settlement with Tax Authorities), including but not limited to
any dissolution, merger, consolidation, or liquidation of the Company into the
Buyer for a period of two years following the Closing Date without the prior
written consent of the Seller, which consent may be withheld in its sole
discretion. If the Section 338(h)(10) Election is to be made, Seller agrees to
cause the Company and the Company Subsidiaries to recognize the gain, and to pay
all tax on such gain, with respect to any intangible asset deemed sold pursuant
to such election to the extent necessary to enable Buyer, the Company and the
Company Subsidiaries to amortize such intangible asset pursuant to the
provisions of Section 197 of the Code.
 
     (b) Buyer and Seller shall be jointly responsible for the preparation and
filing of all Section 338 Forms in accordance with applicable Tax Laws and the
terms of this Agreement, and each party shall deliver to the other party such
Forms and related documents at least 30 days prior to the date such Section 338
Forms as are required to be filed under applicable Tax Laws.
 
     (c) The parties hereby agree that, for purposes of the allocation of the
Aggregate Deemed Sale Price ("ADSP") (as defined under applicable Treasury
Regulations), the fair market value of the machinery and equipment, dies, land
and buildings of the U.K. Sub is $24,415,000, and the fair market value of the
remaining assets of the U.K. Sub is at net book value.
 
     (d) Seller shall be liable for, shall pay and shall indemnify and hold
Buyer and the Company and the Company Subsidiaries harmless against all Taxes of
the Company and the Company Subsidiaries for any taxable year or taxable period
ending on or before the Closing Date, including, without limitation, any Taxes
resulting from the making of the Section 338(h)(10) Election and any liability
for Taxes pursuant to Treasury Regulation sec. 1.1502-6. All liabilities and
obligations between the Company and the Company Subsidiaries on the one hand,
and the Seller and any of Seller's Affiliates on the other hand, under any tax
allocation agreement or arrangement in effect on or prior to the Closing Date
(other than this Agreement or as set forth herein) shall cease to exist as of
the date hereof.
 
     (e) Buyer shall be liable for, shall pay and shall indemnify and hold
Seller harmless against, any and all Taxes of the Company and the Company
Subsidiaries for any taxable year or taxable period commencing after the Closing
Date.
 
     (f) Any Taxes for a taxable period beginning before the Closing Date and
ending after the Closing Date (the "Straddle Period") with respect to the
Company or any Company Subsidiary shall be apportioned between Seller and Buyer
based on the actual operations of the Company or the Company Subsidiary, as the
case may be, during the portion of such period ending on the Closing Date (the
"Pre-Closing Straddle Period") and the portion of such period beginning on the
date following the Closing Date, and for purposes of Sections 5.19(d) and
5.19(e), each portion of such period shall be deemed to be a taxable period.
With respect to any Taxes for the Straddle Period, at least thirty days prior to
the due date for the payment of such Taxes, Buyer shall present Seller with a
schedule detailing the
 
                                      A-30
<PAGE>   35
 
computation of the Pre-Closing Straddle Period Tax; and within ten days after
Buyer presents Seller with such schedule, Seller shall pay the Company the
amount of the Pre-Closing Straddle Period Tax as computed by Buyer. In the event
Seller disputes Buyer's computation of the Pre-Closing Straddle Period Tax,
Seller shall not be relieved of its obligation to pay, in the first instance,
any such disputed amount. Whether any such disputed amount was in fact due from
Seller shall be resolved in accordance with Section 5.19(m). If upon such
resolution it is determined that any of such disputed amount was not payable to
Buyer and such amount has been paid to Buyer, then Buyer shall refund to Seller
such amount, plus interest at the rate required to be paid under Section 6621 of
the Code.
 
     (g) Seller shall (x) prepare and file all Federal income Tax and unitary
state Tax returns for the Company and the Company Subsidiaries with respect to
all periods, or partial periods, ending on or prior to the Closing Date
(including all tax returns, reports and forms relating thereto which are due
after the Closing Date) and (y) prepare and file or cause the Company and the
Company Subsidiaries to prepare and file all other Tax returns, reports and
forms for the Company which are due prior to the Closing Date, and shall pay all
Taxes with respect to clause (x) and at the time of such filing shall pay or
shall cause the Company or the Company Subsidiaries to pay all Taxes with
respect to clause (y). To the extent requested by Seller, the Company and the
Company Subsidiaries shall participate in the filing of and shall file any
required Tax returns with respect to any period ending on or prior to the
Closing Date. Buyer shall prepare or cause to be prepared the schedules in
respect of the Company and the Company Subsidiaries containing the information
necessary for Seller to prepare any consolidated or combined returns.
 
     (h) Buyer or the Company and the Company Subsidiaries shall prepare and
file all state and local Tax returns, forms and reports, other than returns with
respect to unitary state Taxes, for the Company and the Company Subsidiaries
with respect to any tax period for which such return, form or report is due
after the Closing Date, and shall remit all Taxes with respect thereto and shall
be free to make, or cause to be made, any tax elections in respect of such Taxes
and to claim any deductions or credits, in connection therewith; provided that
all returns filed by Buyer or the Company and the Company Subsidiaries for any
period beginning prior to the Closing Date shall be prepared by Buyer, or the
Company and the Company Subsidiaries, in a manner consistent with the Company's
and the Company's Subsidiaries prior practices, except for changes necessary to
comply with changes in Law.
 
     (i) Seller shall have exclusive control over any dispute relating to any
Tax liability or return of Seller or any Affiliate of Seller (including the
Company and the Company Subsidiaries for periods prior to the Closing Date)
filed by Seller for or with respect to any period, or partial period, ending on
or prior to the Closing Date, provided that Seller shall keep Buyer currently
informed of the progress of any such dispute. In the event that the Section
338(h)(10) Election is not made, Buyer shall be entitled to participate in any
such dispute at its own expense to the extent the same relate to the Company or
any Company Subsidiary; and Seller, with the consent of Buyer, which will not be
unreasonably withheld, may settle any or all such disputes, accept any
determination as final, pay any Tax claim or take such other action to contest
or concede any Tax claimed. If Buyer shall withhold its consent to any action
desired to be taken by Seller in connection with any such dispute, (x) Buyer
shall be responsible for, and shall indemnify and hold Seller and its Affiliates
harmless from and against, any Taxes required to be paid by Seller in connection
therewith in excess of the amount which Seller would otherwise have paid if
Buyer's consent had not been so withheld, (y) Buyer shall thereafter control the
content of all submissions made by Seller to any administrative or judicial
authority to the extent they relate to the Company and (z) (i) if such dispute
involves issues other than those relating solely to the Company or the Company
Subsidiaries, Seller shall control all other aspects of such dispute, or (ii) if
such dispute involves only issues relating solely to the Company or the Company
Subsidiaries, Buyer shall thereafter control such dispute. Buyer shall cooperate
and shall cause its Affiliates to cooperate with Seller and its Affiliates in
connection with any and all such disputes and will execute all lawful, true and
correct powers-of-attorney, affidavits, and other papers necessary in connection
therewith, and will provide Seller reasonable access during normal business
hours to the employees and business,
 
                                      A-31
<PAGE>   36
 
financial and Tax records or other similar information of the Company and the
Company Subsidiaries to the extent relating to such dispute.
 
     (j) Buyer and the Company shall have exclusive control over any dispute
relating to any Tax liability or return of Buyer or the Company or any Company
Subsidiary filed for or with respect to any tax period for which a return is due
after the Closing Date (other than Federal income Taxes and unitary state Taxes
relating to periods or partial periods ending on or prior to the Closing Date).
Seller and its Affiliates shall cooperate with Buyer and its Affiliates in
connection with any and all such disputes and will execute all lawful, true and
correct powers-of-attorney, affidavits, and other papers necessary in connection
therewith, and will provide Buyer, the Company and the Company Subsidiaries
reasonable access during normal business hours to the employees and business,
financial and Tax records or other similar information of Seller and its
Affiliates to the extent relating to such dispute.
 
     (k) Buyer shall cause the Company and the Company Subsidiaries to elect,
where permitted by law, to carryforward any net operating loss, net capital
loss, charitable contribution or other item arising after the Closing Date that
could, in the absence of such an election (collectively, "Carrybacks"), be
carried back to a taxable period of the Company or the Company Subsidiaries
ending on or before the Closing Date in which the Company or the Company
Subsidiaries filed a consolidated, combined or unitary tax return with Seller or
any of Seller's Affiliates. Buyer, on its own behalf and on behalf of its tax
Affiliates, hereby waives any right to use or apply any net operating loss, net
capital loss, charitable contribution or other item of the Company for any tax
year ending on any date following the Closing Date to part or all of the period
prior to the Closing Date.
 
     (l) As soon as practicable, but in any event within 15 days after Seller's
or Buyer's request, as the case may be, Buyer shall deliver to Seller, or Seller
shall deliver to Buyer, as the case may be, such information and other data
relating to the Tax returns and Taxes of the Company and shall make available
such knowledgeable employees of Seller, Buyer, the Company or any of their
Affiliates, as the case may be, as Seller or Buyer, as the case may be, may
reasonably request, including providing the information and other data
customarily required by Seller or Buyer, as the case may be, to cause the
completion and filing of all Tax returns for which it has responsibility or
liability under this Agreement or to respond to audits by any Taxing Authority
with respect to any Tax returns or Taxes for which it has any responsibility or
liability under this Agreement or to otherwise enable Seller or Buyer, as the
case may be, to satisfy its accounting or tax requirements.
 
     (m) If Seller and Buyer disagree as to the amount of Taxes for which either
of them is liable to the other under this Section 5.19, Seller and Buyer shall
promptly consult each other in an effort to resolve such dispute. If any such
point of disagreement cannot be resolved within 15 days of the date of
consultation, Seller and Buyer shall within ten days after such 15-day period
jointly select a firm of nationally recognized independent public accountants
who has not represented either Buyer or Seller for three years prior to the date
of the dispute (the "Neutral Auditors") to act as an arbitrator to resolve all
points of disagreement concerning tax accounting matters with respect to this
Agreement. If the parties cannot agree on the selection of the Neutral Auditors
within such ten-day period, then such Neutral Auditors shall be selected by the
American Arbitration Association. All fees and expenses relating to the work
performed by the arbitrator in accordance with this Section 5.19(m) shall be
borne equally by Seller and Buyer.
 
     (n) Seller and Buyer shall (x) each give the other prompt written notice of
the receipt of any claim by any taxing authority that, if successful, may result
in an indemnity payment pursuant to this Section 5.19 and (y) each transmit to
the other a written description reasonably detailing the nature of the claim, a
copy of all papers served with respect to such claim and the basis of its claim
for indemnification under this Section 5.19.
 
     (o) Seller will not allow the Company or any Company Subsidiary to elect to
be excluded from any consolidated federal income tax return of the Seller and
its Affiliates with respect to which it is otherwise includible on account of
any taxable period, whether of 30 days or less or otherwise.
 
                                      A-32
<PAGE>   37
 
     (p) For purposes of this Agreement, the following terms shall have the
following meanings:
 
          (i) "Code" means the Internal Revenue Code of 1986, as amended.
 
          (ii) "Returns" means any and all returns, declarations, reports,
     statements and other documents required to be filed in respect of any Tax.
 
          (iii) "Section 338 Forms" means all returns, documents, statements,
     and other forms that are required to be submitted to any Federal, state,
     county, or other local Taxing Authority in connection with a Code Section
     338(h)(10) Election. Section 338 Forms shall include, without limitation,
     any "statement of section 338 election" and United States Internal Revenue
     Service Form 8023 (together with any schedules or attachments thereto) that
     are required pursuant to relevant Treasury Regulations and any
     substantially similar forms under a state or local statute corresponding to
     Federal laws.
 
          (iv) "Section 338(h)(10) Election" means an election described in
     Section 338(h)(10) of the Code with respect to Seller's sale of the Company
     Common Stock to Buyer pursuant to this Agreement. "Section 338(h)(10)
     Election" shall also include any substantially similar election under a
     state or local statute corresponding to Federal laws.
 
          (v) "Tax" means any of the Taxes.
 
          (vi) "Taxes" means all federal, state, local and foreign income,
     profits, franchise, unincorporated business, withholding, capital, general
     corporate, customs duties, environmental (including taxes under Section 59A
     of the Code), disability, registration, alternative, add-on, minimum,
     estimated, sales, goods and services, use, occupation, property, severance,
     production, excise, recording, ad valorem, gains, transfer, value-added,
     unemployment compensation, social security premium, privilege and any and
     all other taxes (including interest, additions to tax and penalties
     thereon, and interest on such additions to tax and penalties);
 
          (vii) "Tax Laws" means the Code, Federal, state, county, local, or
     foreign laws relating to Taxes and any regulations or official
     administrative pronouncements released thereunder.
 
          (viii) "Taxing Authority" means any Governmental Entity having
     jurisdiction over the assessment, determination, collection, or other
     imposition of Tax.
 
     5.20  Existing Insurance Coverage.  As of the Closing Date, the Seller or
its Affiliates will cancel insurance coverage applicable to the Company or the
Company Subsidiaries for occurrences (with respect to any "occurrence" policies)
or claims made (with respect to any "claims-made" policies) after the Closing
Date (other than insurance policies in the name of the Company Subsidiaries);
provided, however, that the remaining insurance coverage shall be available to
the Buyer, the Company and the Company Subsidiaries with respect to insured
occurrences or series of occurrences relating to the Company, the Company
Subsidiaries or the Business on or prior to the Closing Date, if and only to the
extent that the Buyer or the Company has assumed or paid the loss or liability
attributed to such occurrences. If after the Closing, the Seller actually
receives from an insurer cash proceeds (excluding any return of premium or
reimbursed attorneys or investigation or other fees) attributable to such
insurance coverage with respect to any insured occurrences or any series of
occurrences on or prior to the Closing Date or any claims that were asserted on
or prior to the Closing Date, then such cash proceeds shall be paid to the Buyer
net of any deductible, co-payment, retro fees, self-insured premiums, defense
costs or other charges paid or payable to the insurance carrier or obligations
to reimburse the insurance carrier for which the Seller (or any of its
Affiliates) is liable, to the extent that the Buyer or the Company has assumed
or paid the loss or liability attributed to such occurrence or series of
occurrences. The Buyer shall reimburse the Seller for any administrative costs,
retro fees, premiums, self-insured or deductible loss costs or other expenses
that the Seller is charged after the Closing by such insurance carrier relating
to insurance coverage applicable to the Company or the Company Subsidiaries
prior to Closing.
 
                                      A-33
<PAGE>   38
 
     5.21  Certain Obligations.  "Seller's Company Obligations" shall mean any
obligation, commitment, liability or responsibility of the Seller, its
Affiliates or their Predecessors (whether or not also an obligation, commitment,
liability, or responsibility of or claim against, in whole or in part, the
Company, the U.K. Sub or the Pipeline Sub), arising, undertaken or created
before the Closing Date in connection with, on behalf of or for the benefit of
any Cameron Entity, or arising from the conduct of the Business, including
without limitation (i) any consulting, employment or severance agreements,
guarantees, letters of credit, performance bonds, or indemnities, or obligations
or indemnities to officers or directors of any Cameron Entity, (ii) any
agreements with any transferors to the Seller, its Affiliates, or their
Predecessors, of any assets of any Cameron Entity or of the Business, (iii) any
labor or collective bargaining agreements relating to any Cameron Entity, (iv)
any contracts with any Governmental Entity relating to any Cameron Entity, (v)
any sales or purchase agreements relating to any Cameron Entity, (vi) any leases
of real or personal property relating to any Cameron Entity, and (vii) any other
agreements or commitments relating to any Cameron Entity under which the Seller,
its Affiliates or Predecessors will have any liability after the Closing Date;
provided, however, that the Seller's Company Obligations shall exclude the
matters that the Seller is required to indemnify pursuant to Section 5.22(b) or
Section 5.22(f). The Company expressly agrees that it shall assume the Seller's
Company Obligations, effective on the Closing Date, and shall thereafter
discharge the same in accordance with their terms.
 
     5.22  Survival; Indemnification.
 
     (a) Survival of Representations, Warranties and Covenants.  Except for the
representation and warranty of the Seller in Section 3.23 hereof and the Buyer
in Section 4.16 hereof which will survive the Closing and remain in full force
and effect thereafter until 18 months after the Closing, the representations and
warranties of the parties contained in this Agreement shall expire with, and be
terminated and extinguished by, the Closing of the transactions contemplated
hereby and shall not survive the Closing Date. Any claim for indemnification
with respect to the representation and warranty of the Seller in Section 3.23
hereof and the Buyer in Section 4.16 hereof that is not asserted by notice given
as herein provided within the 18-month period may not be pursued and hereby is
irrevocably waived and released after such time. Subject to the preceding
18-month limitation on the indemnity with respect to Sections 3.23 and 4.16, the
covenants of the parties in Article V hereof (including without limitation the
indemnities contained therein) will survive the Closing and remain in full force
and effect thereafter without limitation as to time, except in connection with
(i) any applicable statute of limitations or (ii) any such covenant that, by its
terms, is otherwise limited with respect to time.
 
     (b) Cross Indemnity.  Subject to the terms and conditions of this Section
5.22, the Seller hereby agrees to indemnify and hold the Buyer, its Affiliates,
and their directors, officers or employees (collectively, "Buyer's Group")
harmless from and against all demands, claims, causes of action, assessments,
losses, damages (including without limitation fines, penalties and punitive
damages), liabilities and costs and expenses, including without limitation
attorneys' fees and any expenses incident to the enforcement of this Section
5.22 (collectively, "Losses"), which the Buyer's Group may suffer, sustain or
become subject to by reason of or resulting from (i) any inaccuracy in the
representation or warranty of the Seller contained in Section 3.23 of this
Agreement, or (ii) any breach of any covenant by the Seller in Article V of this
Agreement. Subject to the terms and conditions of this Section 5.22, the Buyer
hereby agrees to indemnify and hold the Seller, its Affiliates, and their
directors, officers or employees (collectively, "Seller's Group") harmless from
and against all Losses which the Seller's Group may suffer, sustain or become
subject to by reason of or resulting from (i) any inaccuracy in the
representation or warranty of the Buyer contained in Section 4.16 of this
Agreement, (ii) any breach of any covenant by the Buyer in Article V of this
Agreement, or (iii) the Seller's Company Obligations. The party seeking
indemnification pursuant to this Section 5.22 is hereinafter referred to as an
"Indemnified Party" and the party from whom indemnification is sought is
hereinafter referred to as an "Indemnifying Party."
 
                                      A-34
<PAGE>   39
 
     (c) Limitation of Indemnification.  Notwithstanding any contrary provision,
no claim by either party against the other for indemnification arising under
this Article V shall be valid and assertible unless the aggregate amount of
Losses associated with such claim shall exceed $100,000. Further, any claims by
the Indemnified Party against the Indemnifying Party shall be determined net of
any tax benefit actually recognized and utilized to offset or reduce the tax
liability of the Indemnified Party or the other members of its group. All
payments pursuant to this Section 5.22 shall be treated as adjustments to the
purchase price of the Company Common Stock.
 
     (d) Sole Remedy.  Other than the rights, obligations, and remedies provided
for in Article I, Article V, Article VII and Article VIII hereof, the Buyer and
the Seller agree that the rights to indemnification provided in this Section
5.22 and elsewhere in this Article V will be the exclusive rights, obligations
and remedies with respect to all provisions of this Agreement. Each party, on
behalf of itself and its Affiliates, irrevocably waives any claim, cause of
action or theory of liability it might otherwise be entitled to assert in
respect of such provisions except for the right to seek indemnification on the
terms and subject to the conditions set forth in this Section 5.22 and elsewhere
in this Article V.
 
     (e) Additional Indemnification by the Buyer.  Subject to the terms and
conditions of this Section 5.22 and in addition to the indemnification provided
for in Section 5.22(b), the Buyer agrees, other than the Losses that the Seller
is required to indemnify pursuant to Section 5.22(b) or Section 5.22(f), the
employee benefit matters addressed in Section 5.12 and the tax matters addressed
in Section 5.19, to indemnify and hold the Seller's Group harmless from and
against all Losses which the Seller's Group may suffer, sustain or become
subject to by reason of or resulting from any liabilities or obligations of or
relating to, or claims against, any Cameron Entity or the Business on, before or
after the Closing Date, including without limitation (i) to indemnify and hold
the Seller's Group harmless from and against all Losses which the Seller's Group
may suffer, sustain or become subject to by reason of or resulting from any
Product Liability Claims arising out of or resulting from Products sold or
furnished by the Seller, any of its Affiliates or any Cameron Entity (including
without limitation any product liability assumed in connection with the
acquisition of any business or product line) on, before or after the Closing
Date; (ii) to indemnify and hold the Seller's Group harmless from and against
all Losses which the Seller's Group may suffer, sustain or become subject to by
reason of or resulting from (A) any noncompliance of the operations, properties
or business activities of any Cameron Entity or the Business with any
Environmental Law on, before or after the Closing Date or (B) any liabilities or
obligations of or relating to, or claims against, any Cameron Entity or the
Business based upon any Environmental Law, or arising from the disposal of any
Regulated Materials, on, before, or after the Closing Date; and (iii) to
indemnify and hold the Seller's Group harmless from and against all Losses which
the Seller's Group may suffer, sustain or become subject to by reason of or
resulting from (A) any workers' compensation claim filed against any Cameron
Entity on, before or after the Closing Date, and (B) any employment or severance
agreements entered into by the Seller or the Company relating to employees of
the Company on, before or after the Closing Date, other than severance payments
under the Employment Agreement listed on Section 5.22(e) of the Seller
Disclosure Schedule. It is the intention of the parties that the indemnity
provided herein shall survive the Closing and shall, with respect to
environmental claims under CERCLA, be an agreement expressly not barred by 42
U.S.C.sec.9607(e)(1).
 
     (f) Additional Indemnification by the Seller.  Subject to the terms and
provisions of this Section 5.22 and in addition to the indemnification provided
for in Section 5.22(b), the Seller agrees, other than the Losses that the Buyer
is required to indemnify pursuant to Section 5.22(b), the employee benefit
matters addressed in Section 5.12 and the tax matters addressed in Section 5.19,
(i) to indemnify and hold the Buyer's Group harmless from and against all Losses
which the Buyer's Group may suffer, sustain or become subject to by reason of or
resulting from any liabilities or obligations of or relating to, or claims
against, the Seller or the Seller Subsidiaries on, before or after the Closing
Date to the extent that such liabilities, obligations or claims (x) do not
relate to the Business and (y) arise from the activity of (a) any Cameron Entity
(other than the Company or the Pipeline Sub) before the Closing Date, or (b) the
Seller or any of the Seller's subsidiaries (other than the Cameron Entities),
(ii) except
 
                                      A-35
<PAGE>   40
 
to the extent the actions of the Buyer, the Company or their Affiliates may
cause or increase any such Losses after the Closing Date, to indemnify and hold
the Buyer's Group harmless from and against all Losses which the Buyer's Group
may suffer, sustain or become subject to by reason of or resulting from any
Regulated Materials disposed of on, or discharged into the environment at, the
Katy Road Site or the Gulf Metals Site on or before the Closing Date; and (iii)
to indemnify and hold the Buyer's Group harmless from and against all Losses
which the Buyer's Group may suffer, sustain or become subject to by reason of or
resulting from severance payments under the Employment Agreement listed on
Section 5.22(e) of the Seller Disclosure Schedule. It is the intention of the
parties that the indemnity provided herein shall survive the Closing and shall,
with respect to environmental claims under CERCLA, be an agreement expressly not
barred by 42 U.S.C.sec.9607(e)(1).
 
     (g) Conditions of Indemnification of Third Party Claims.  The obligations
and liabilities of the parties under this Article V with respect to claims of
Losses resulting from the assertion of liability by third parties ("Third-Party
Claim") shall be subject to the following terms and conditions:
 
          (i) The Indemnified Party shall give written notice to the
     Indemnifying Party of any such Claim promptly after the Indemnified Party
     receives notice thereof, which written notice shall state the nature and
     basis of such Claim and, if determinable, the amount thereof, provided that
     failure to so notify the Indemnifying Party shall in no case prejudice the
     rights of the Indemnified Party under this Agreement unless the
     Indemnifying Party shall actually be prejudiced by such failure and then
     only to the extent of such actual prejudice. Upon receipt of notice of any
     such Claim from the Indemnified Party, the Indemnifying Party will
     undertake the defense thereof by representatives of its own choosing.
 
          (ii) In the event that the Indemnifying Party, within a reasonable
     time after notice of any such Claim, fails to defend the same, the
     Indemnified Party shall (upon further notice to the Indemnifying Party)
     have the right to undertake the defense, compromise or settlement of such
     Claim on behalf of and for the account and risk of the Indemnifying Party,
     subject to the right of the Indemnifying Party to assume the defense of
     such Claim at any time prior to settlement, compromise or final
     determination thereof.
 
          (iii) Anything in this Section 5.22 to the contrary notwithstanding,
     the Indemnifying Party shall have the right, at its own cost and expense,
     to defend, compromise or settle such Claim; provided, however, that the
     Indemnifying Party shall not, without the Indemnified Party's written
     consent, settle or compromise any Claim or consent to entry of any judgment
     which does not include as an unconditional term thereof the giving by the
     claimant or plaintiff to the Indemnified Party a release from all liability
     in respect of such Claim. The Indemnified Party shall have the right at its
     own expense to participate in the defense of the Claim.
 
     (h) Certain Definitions.  As used in this Agreement:
 
          (i) "Product Liability Claim" means any claim or cause of action,
     regardless of form and whether absolute, accrued, contingent or otherwise,
     arising out of injury to persons or damage to property, relating to the
     design or manufacture of or the introduction into commerce by sale,
     exchange or assignment of the Products.
 
          (ii) "Business" means research, development, engineering, melting,
     refining, remelting, forging, extrusion, machining, manufacturing,
     distribution, sales, marketing, service or repair operations associated
     with the Products.
 
          (iii) "Products" means closed die forgings (including rotating parts
     for aircraft engines or industrial turbines, aircraft landing gear,
     structural airframe parts, ordnances and related parts, military and power
     plant nuclear forgings, valves, heavy wall pipe and fittings, power
     generation forgings and oilfield equipment forgings), extrusions (including
     for aircraft engines, pipe, oilfield equipment, bar stock and ordnances),
     super alloy powder products, thermal rail products for steel support member
     in push slab furnaces and custom-shaped insulators, other forged products,
     skid rail reheat systems, and high velocity burners.
 
                                      A-36
<PAGE>   41
 
          (iv) "Cameron Entities" means (x) the Company, (y) the Pipeline Sub
     and (z) that portion of each of the following companies to the extent that
     it presently conducts or previously conducted all or part of the Business:
     (i) the U.K. Sub, (ii) the forged products division of Cameron Iron Works,
     Inc., (iii) the forged products division of Cameron Iron Works USA, Inc.,
     (iv) Cameron Forge Company, (v) the forged products division of Cameron
     Iron Works Limited, (vi) Cooper Industries, Inc., (vii) Cooper (Great
     Britain) Ltd., (viii) Cameron Iron Works, Inc., (ix) Cameron Iron Works
     USA, Inc., and (x) Cameron Iron Works Limited, and (xi) any direct or
     indirect Predecessor or successor to any of the foregoing that conducted or
     conducts all or part of the Business.
 
          (v) "Predecessor" means an entity which has previously held an
     interest to which the entity to whom the reference is made has succeeded,
     including without limitation an entity which conveyed, transferred or
     assigned all or substantially all of its assets to the entity to whom the
     reference is made or an entity which was merged or amalgamated into or
     consolidated with the entity to whom the reference is made.
 
          (vi) "Katy Road Site" means the former Cameron Iron Works, Katy Road
     Facility located at 1000 Silber Road, Houston (Harris County), Texas.
 
          (vii) "Gulf Metals Site" means the Gulf Metals State Superfund Site in
     Houston (Harris County), Texas, located northeast of the intersection of
     Mykawa Road and Almeda-Genoa Road.
 
          (viii) "Affiliate" shall mean any person or entity that directly or
     indirectly controls or is controlled by or is under the common control of
     the party referred to.
 
     5.23  Repurchase of Receivables.  Pursuant to the Factoring Agreement, the
Company has agreed to assign to the Seller prior to Closing its trade and notes
receivables (the "Receivables"). The Buyer agrees to purchase from the Seller
all Receivables that are outstanding 90 days after the Closing Date. Within five
business days following the 90th day after the Closing Date, the Seller will
prepare a statement listing the balance of the outstanding Receivables on such
date, deducting the same reserve amount previously deducted in determining the
Receivables Purchase Price. Within five business days after receipt of such
statement, subject to the terms of the Factoring Agreement, the Company shall
pay to the Seller such amount at its bank account designated in this Agreement.
 
                                   ARTICLE VI
 
                                   CONDITIONS
 
     6.1 Conditions to Each Party's Obligation to Effect the Transactions
Contemplated by this Agreement. The respective obligations of each party to
effect the transactions contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Closing Date of the following conditions:
 
     (a) Each of the Seller and the Buyer shall have executed and delivered the
Investment Agreement.
 
     (b) The transactions contemplated by this Agreement shall have been
approved by the requisite affirmative vote of the holders of the Buyer Common
Stock and the requisite consent to the transactions contemplated by this
Agreement shall have been obtained from the holders of the 10 3/4% Senior Notes
due 2003 issued pursuant to the Indenture, dated as of March 16, 1993, by and
among the Company, certain subsidiaries of the Company and State Street Bank and
Trust Company, as Trustee, and by The CIT Group/Business Credit, Inc.
 
     (c) Articles of amendment, signed in accordance with the Massachusetts
Business Corporation Law and setting forth the Authorized Shares Amendment, the
Fair Price Charter Amendment, and the due adoption thereof, shall have been
filed with the Secretary of the Commonwealth of Massachusetts and shall be in
full force and effect.
 
                                      A-37
<PAGE>   42
 
     (d) The Buyer's Board of Directors shall have adopted and approved the
Control Share Acquisitions Amendment and it shall be in full force and effect.
 
     (e) The Rights Agreement shall have been executed and delivered by the
Buyer and the other party thereto and shall be in full force and effect.
 
     (f) No statute, rule, regulation, executive order, decree or injunction
shall have been enacted, entered, promulgated or enforced, and no action, suit
or proceeding shall be pending or threatened, by any Governmental Entity of
competent jurisdiction which prohibits or challenges the consummation of the
transactions contemplated by this Agreement, or conditions such consummation on
the matters referred to in the last sentence of Section 5.6(b) hereof, and is in
effect.
 
     (g) The Ancillary Agreements shall have been negotiated on terms mutually
satisfactory to the Buyer and the Seller and executed and delivered by each of
the parties thereto.
 
     6.2  Conditions of Obligations of the Seller to Effect the Transactions
Contemplated by this Agreement. The obligations of the Seller to effect the
transactions contemplated by this Agreement are further subject to the
satisfaction at or prior to the Closing Date of the condition that the
representations and warranties of the Buyer set forth in this Agreement and
qualified as to materiality or Material Adverse Effects shall be true and
correct and those not so qualified shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date, as if made
at and as of the Closing Date (except for representations and warranties that
expressly speak only as of some other time), the Buyer shall have delivered the
documents and other items to be delivered pursuant to Section 2.3, and the Buyer
shall have performed and complied, in all material respects, with all
obligations and covenants required to be performed or complied with by it under
this Agreement at or prior to the Closing Date.
 
     6.3  Conditions of Obligations of the Buyer to Effect the Transactions
Contemplated by this Agreement. The obligations of the Buyer to effect the
transactions contemplated by this Agreement are further subject to the
satisfaction at or prior to the Closing Date of the condition that the
representations and warranties of the Seller set forth in this Agreement and
qualified as to materiality or Material Adverse Effects shall be true and
correct and those not so qualified shall be true and correct in all material
respects as of the date of this Agreement (except to the extent that the
transactions set forth on Annex IV have not been consummated as of such date)
and as of the Closing Date, as if made at and as of the Closing Date (except for
representations and warranties that expressly speak only as of some other time),
the Seller shall have delivered the documents and other items to be delivered
pursuant to Section 2.2, and the Seller shall have performed and complied, in
all material respects, with all obligations and covenants required to be
performed or complied with by them under this Agreement at or prior to the
Closing Date.
 
                                  ARTICLE VII
 
                          TERMINATION AND ABANDONMENT
 
     7.1 Termination.  This Agreement may be terminated at any time prior to the
Closing Date, whether before or after approval by the shareholders of the Buyer
of the transactions contemplated by this Agreement:
 
     (a) by mutual consent of the parties hereto;
 
     (b) by the Seller or the Buyer, if the transactions contemplated by this
Agreement shall not have been consummated before June 30, 1994 (unless the
failure to consummate the transactions contemplated by this Agreement by such
date shall be due to the breach of this Agreement by the party seeking to
terminate this Agreement);
 
     (c) by the Seller, if there has been a material violation or breach by the
Buyer of any agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any
 
                                      A-38
<PAGE>   43
 
condition to the obligations of the Seller impossible and such violation or
breach has not been waived by the Seller;
 
     (d) by the Buyer, if there has been a material violation or breach by the
Seller of any agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the obligations of the
Buyer impossible and such violation or breach has not been waived by the Buyer;
or
 
     (e) by either of the parties hereto if this Agreement and the transactions
contemplated hereby are not duly approved by the shareholders of the Buyer at a
meeting of shareholders (or any adjournment thereof) duly called and held for
such purpose.
 
     7.2  Procedure and Effect of Termination.  In the event of termination of
this Agreement and abandonment of the transactions contemplated hereby by either
or both of the parties pursuant to Section 7.1, written notice thereof shall
forthwith be given to the other party hereto and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned, without further
action by either of the parties hereto. If this Agreement is terminated as
provided herein:
 
     (a) upon request therefor, each party will redeliver all documents, work
papers and other material of the other party relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party furnishing the same or will destroy such documents;
 
     (b) all information received by the Seller and the Company with respect to
the business of the Buyer or by the Buyer with respect to the business of the
Company (other than information which is a matter of public knowledge or which
has heretofore been or is hereafter published in any publication for public
distribution or filed as public information with any Governmental Entity) shall
not at any time be used for the advantage of the Person receiving the
information or to the detriment of the Person furnishing such information; and
each of the Seller and the Buyer will use its reasonable best efforts to prevent
the disclosure thereof to third Persons except as may be required by law;
 
     (c) neither party hereto shall have any liability or further obligation to
the other party hereto pursuant to this Agreement except as stated in this
Section 7.2 and in Sections 5.4(d), 5.10 and 5.11; and
 
     (d) all filings, applications and other submissions made pursuant to
Sections 5.6, 5.7 and 5.8 shall, to the extent practicable, be withdrawn from
the agency or other Person to which made.
 
                                  ARTICLE VIII
 
                                 MISCELLANEOUS
 
     8.1  Amendment and Modification.  Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of each of
the parties.
 
     8.2  Waiver of Compliance; Consents.  Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
8.2
 
     8.3  Investigations; Survival Upon Termination.  Subject to Section
5.22(a), the respective representations and warranties of the parties contained
herein or in any certificates, schedules, exhibits or other documents delivered
prior to or at the Closing shall not be deemed waived or otherwise affected by
any investigation made by any party hereto. Each and every such representation
and warranty shall expire with, and be terminated and extinguished by, the
termination of this Agreement pursuant to
 
                                      A-39
<PAGE>   44
 
Section 8.1 or otherwise; and thereafter none of the parties hereto or any of
their respective officers or directors shall be under any liability whatsoever
with respect to any such representations or warranties. This Section 8.3 shall
have no effect upon any other obligation of the parties hereto, whether to be
performed before or after the Closing Date.
 
     8.4  Notices.  All notices and other communications hereunder shall be
validly given, made or served, if in writing and delivered personally, sent by
facsimile transmission (receipt of which is confirmed) or mailed by registered
or certified mail (return receipt requested), postage prepaid, to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof):
 
     (a) if to Seller or the Company, to:
 
         Cooper Industries, Inc.
         First City Tower, Suite 4000
         1001 Fannin Street
         Houston, Texas 77002
         Attention: General Counsel
         Facsimile No.: 713-739-5882
 
     (b) if to the Buyer, to:
 
         Wyman-Gordon Company
         244 Worcester Street
         Box 8001
         North Grafton, Massachusetts 01536-8001
         Attention: Wallace F. Whitney, Jr., Esq.
         Facsimile No.: (508) 839-7500
 
         with a copy to:
 
         Wachtell, Lipton, Rosen & Katz
         51 West 52nd Street
         New York, New York 10019
         Attention: Adam O. Emmerich, Esq.
         Facsimile No.: (212) 403-2000
 
     Notice given by facsimile shall be deemed delivered on the business day
after it is sent to the recipient. Notice given by mail as set out above shall
be deemed delivered five calendar days after the same is mailed.
 
     8.5  Annexes, Schedules and Exhibits.  All annexes, schedules and exhibits
attached hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. All references to "this
Agreement" shall be deemed to include all annexes, schedules and exhibits to
this Agreement. Information set forth in any section to the Seller Disclosure
Schedule or the Buyer Disclosure Schedule is deemed set forth in all other
sections of such Disclosure Schedule. Disclosure of any fact or item in any
annex, schedule or exhibit hereto referenced by a particular paragraph or
section in this Agreement shall, should the existence of the fact or item or its
contents be relevant to any other paragraph or section, be deemed to be
disclosed with respect to that other paragraph or section whether or not a
specific cross reference appears. Disclosure of any fact or item in any annex,
schedule or exhibit hereto shall not necessarily mean that such item or fact
individually is material to (i) the Seller or the Company individually or the
Seller and the Company taken as a whole or (ii) the Buyer or its subsidiaries
individually or the Buyer and its subsidiaries taken as a whole.
 
     8.6  Descriptive Headings.  The descriptive headings herein are inserted
for convenience only and are not intended to be part of or to affect the meaning
or interpretation of this Agreement.
 
                                      A-40
<PAGE>   45
 
     8.7  Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
be considered one and the same agreement.
 
     8.8  Entire Agreement; Assignment.  The Confidentiality Agreement, the
Investment Agreement, this Agreement, including the annexes, schedules and
exhibits hereto and thereto, and the other instruments, agreements, documents,
schedules and certificates referred to herein and therein, embody the entire
agreement and understanding of the parties hereto and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
either of the parties hereto without the prior written consent of the other
party.
 
     8.9  Governing Law.  This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to any
applicable principles of conflicts of law.
 
     8.10  Specific Performance.  The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
 
     8.11  Alternative Dispute Resolution.
 
     (a) The parties shall attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiations between executives
who have authority to settle the controversy. Any party may give the other party
written notice of any dispute not resolved in the normal course of business.
Within 20 days after delivery of said notice, executives of both parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to exchange relevant information and to attempt to
resolve the dispute. If the matter has not been resolved within 60 days of the
disputing party's notice, or if the parties fail to meet within 20 days, either
party may initiate mediation of the controversy or claims as provided in Section
8.11(c).
 
     (b) If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator shall be given at least three working days' notice of such
intention and may also be accompanied by an attorney. All negotiations pursuant
to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and state
rules of evidence.
 
     (c) If negotiation fails within the time limits provided in Section
8.11(a), either party may initiate a mediation proceeding by a request in
writing to the other party. Thereupon, both parties will be obligated to engage
in a mediation. The proceeding will be conducted in accordance with the
presently effective CPR Model Procedure for Mediation of Business Disputes, with
the following exceptions;
 
          (i) The mediator shall be an attorney experienced in mediating large
     commercial disputes, who shall be compensated at his normal hourly or per
     diem rates for all time spent by him in connection with the proceedings,
     and whose fees shall be borne equally by the parties. If the parties have
     not agreed within 30 days of the request for mediation on the selection of
     a mediator willing to serve, the Center for Public Resources, upon the
     request of either party, shall appoint a member of the CPR Panels of
     Neutrals who meets the above qualifications as the mediator.
 
          (ii) Efforts to reach a settlement will continue until the conclusion
     of the proceeding, which is deemed to occur when: (a) a written settlement
     is reached, (b) the mediator concludes and informs the parties in writing
     that further efforts would not be useful, or (c) after making a good faith
     effort to mediate, either party or both parties assert in writing that an
     impasse has been reached. Neither party may withdraw before the conclusion
     of the proceeding. Thereafter, if a settlement has not been reached, the
     parties shall be free to pursue such rights and remedies, at law or in a
     equity, as may be available to them.
 
                                      A-41
<PAGE>   46
 
     (d) The parties regard the obligations in this Section 8.11 as an essential
provision of this Agreement and one that is legally binding on them. In case of
a violation of such obligation by either party, the other may bring an action to
seek enforcement of such obligation in any court of law having jurisdiction
thereof. This Section 8.11 shall in no way affect the arbitration procedures set
forth in Article I or Article V of this Agreement.
 
     8.12  Non-Competition.
 
     (a) The Seller agrees that, until the later to occur of (i) the Seller's
ceasing to own at least 10% of the outstanding shares of Buyer Common Stock and
(ii) the expiration of a period of three years commencing on the Closing Date,
the Seller will not, and the Seller will not permit any of its subsidiaries
(regardless of whether such Person is a subsidiary of the Seller on the date
hereof) to, engage in the manufacturing or marketing of the Products currently
manufactured or marketed by the Company or the U.K. Sub in competition with the
Buyer or any subsidiary of the Buyer (a "Competing Business"); provided,
however, that (i) the Seller or any Affiliate of the Seller (other than the
Company and the Company Subsidiaries) may continue any existing non-aerospace
forging operations and may make any reasonable maintenance, improvements and
refinements thereto; and (ii) the Seller or any Affiliate of the Seller may
acquire any business which includes ancillary forging operations in support of
its main business; provided further that this covenant shall not prevent the
Seller or its Affiliates from acquiring shares in or the business or assets of
any company, business or entity (the "Target") having a Competing Business (i)
if no more than $10,000,000 of the Target's sales revenue (as recorded in the
then latest available audited accounts) arises from the Competing Business or
(ii) if the sales revenue of the Competing Business is greater than $10,000,000
of the Target's sales revenue, if the Seller uses its reasonable commercial
efforts to dispose of the Competing Business within a two-year period from the
date of acquisition of the Target. If the Seller cannot dispose of the Competing
Business on terms reasonably acceptable to it during such two-year period, then
the Seller shall be free to retain and operate the Competing Business without
any restriction of this Agreement. The Seller acknowledges and agrees that the
foregoing restrictions are reasonably designed to protect the Buyer's
substantial investment and are reasonable with respect to duration, geographical
area and scope.
 
     (b) In the event of breach by the Seller or any subsidiary of the Seller of
any of the provisions of Section 8.12(a), the Buyer may, in addition to any
other rights or remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violations of the provisions of Section 8.12(a).
 
     8.13  Further Assurances.  Each party shall execute and deliver both before
and after the Closing such instruments, agreements and other documents and take
such other actions as the other party may reasonably request to consummate or
implement the transactions contemplated hereby or to evidence such events or
matters.
 
     8.14  No Third-Party Beneficiaries.  Nothing in this Agreement, express or
implied, is intended to confer upon any other Person, other than the Buyer's
Group and the Seller's Group in connection with Section 5.22, any rights or
remedies of any nature whatsoever under or by reason of this Agreement. Nothing
in this Agreement is intended to relieve or discharge the obligation of any
third Person to (or to confer any right of subrogation or action over against)
any party to this Agreement.
 
     8.15  Remedies; Waiver.  All rights and remedies existing under this
Agreement and any related agreements or documents are cumulative to and not
exclusive of, any rights or remedies otherwise available under applicable law.
No failure on the part of any party to exercise or delay in exercising any right
hereunder shall be deemed a waiver thereof, nor shall any single or partial
exercise preclude any further or other exercise of such or any other right.
 
     8.16  Severability.  If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement to the extent permitted by Law shall remain in full
force and effect, provided that the economic and legal substance of the
transactions contemplated by this Agreement are not affected in any manner
materially adverse to any party. In the event of any such determination, the
parties agree to negotiate in good faith to modify this Agreement to fulfill as
closely as possible the original intents and purposes hereof.
 
                                      A-42
<PAGE>   47
 
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
 
                                          COOPER INDUSTRIES, INC.
 
                                                    H. JOHN RILEY, JR.
                                          By:__________________________________
                                                    H. John Riley, Jr.
 
                                          President and Chief
                                          Operating Officer
 
                                          WYMAN-GORDON COMPANY
 
                                                      JOHN M. NELSON
                                          By:__________________________________
                                                      John M. Nelson
 
                                          Chairman and Chief
                                          Executive Officer
 
                                      A-43

<PAGE>   1
                                                                EXHIBIT 99.3


   
   
                                    Wyman-Gordon Company
                                    244 Worcester Street
                                    Box 8001
                                    North Grafton, Massachusetts 01536-8001
                                    (508)/839-4441
   
   


                                  May 26, 1994


Cooper Industries
1001 Fannin
Suite 4000
Houston, Texas  77002

Ladies and Gentlemen:

         Cooper Industries, Inc. ("Cooper") and Wyman-Gordon Company (the
"Company") have entered into an Investment Agreement, dated as of January 10,
1994 (the "Agreement").  Cooper and the Company desire to amend the Agreement
in order to avoid the necessity of a mid-week accounting close as of May 26,
1994 and thereby to simplify the administration of the Agreement.  Accordingly,
in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:

         1.  Section 4.3(a)(iv) of the Agreement is hereby amended by deleting
the words "immediately following the consummation of the Sale Transaction after
giving effect to the Sale Transaction (including the issuance of the Shares to
Cooper") and substituting therefor the words "as of May 28, 1994 adjusted to
include the effect of the Sale Transaction as of the consummation date of the
Sale Transaction (including the issuance of the Shares to Cooper)."

         2.  Section 4.3(a)(iv) of the Agreement is hereby further amended by
adding the following clause at the end thereof "but taking into account any
unusual material events or transactions occurring on or after May 26, 1994 and
on or before May 28, 1994."

         3.  As so amended, the Agreement is hereby ratified and confirmed in
all respects.

         4.  This Amendment shall be governed and construed in accordance with
the laws of the State of New York without regard to any applicable principles
of conflicts of law.
<PAGE>   2
Cooper Industries
May 26, 1994
Page 2



         If the foregoing is acceptable to you, please sign the enclosed copy
of this letter and return it to us.

                                         WYMAN-GORDON COMPANY




                                         By: /s/ Luis E. Leon  
                                            -------------------
                                            Luis E. Leon
                                            Vice President, Chief
                                            Financial Officer & Treasurer  



Accepted and Agreed to:


COOPER INDUSTRIES, INC.


By:  /s/ David White, Jr. 
    Name:  David White, Jr.
    Title: Vice President, Corp.
    Planning & Development

<PAGE>   1
                                                                    EXHIBIT 99.4


         [SALOMON BROTHERS LOGO]
                  
         SALOMON BROTHERS INC
         Seven World Trade Center
         New York, NY  10048 (212) 783-7000

                        MASTER SECURITIES LOAN AGREEMENT



                                        Dated as of

Between:

SALOMON BROTHERS INC                       
and


         This Agreement sets forth the terms and conditions under which one
party ("Lender") may, from time to time, lend to the other party ("Borrower")
certain securities against a pledge of collateral.  Capitalized terms not
otherwise defined herein shall have the meanings provided in Section 26.

         The parties hereto agree as follows:

1.       Loans of Securities.
        
         1.1  Subject to the terms and conditions of this Agreement, Borrower
or Lender may, from time to time, orally seek to initiate a transaction in
which Lender will lend securities to Borrower.  Borrower and Lender shall agree
orally on the terms of each Loan, including the issuer of the securities, the
amount of securities to be lent, the basis of compensation, and the amount of
Collateral to be transferred by Borrower, which terms may be amended during the
Loan.

         1.2  Notwithstanding any other provision in this Agreement regarding
when a Loan commences, a Loan hereunder shall not occur until the Loaned
Securities and the Collateral therefor have been transferred in accordance with
Section 16.

         1.3  WITHOUT WAIVING ANY RIGHTS GIVEN TO LENDER HEREUNDER, IT IS
UNDERSTOOD AND AGREED THAT THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION
ACT OF 1970 MAY NOT PROTECT LENDER WITH RESPECT TO LOANED SECURITIES HEREUNDER
AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO LENDER MAY CONSTITUTE THE ONLY
SOURCE OF SATISFACTION OF BORROWER'S OBLIGATIONS IN THE EVENT BORROWER FAILS TO
RETURN THE LOANED SECURITIES.

2.       Transfer of Loaned Securities.

         2.1  Unless otherwise agreed, Lender shall transfer Loaned Securities
to Borrower hereunder on or before the Cutoff Time on the date agreed to by
Borrower and Lender for the commencement of the Loan.

         2.2  Unless otherwise agreed, Borrower shall provide Lender, in each
Loan in which Lender is a Customer, with a schedule and receipt listing the
Loaned Securities.  Such schedule and receipt may consist of (a) a schedule
provided to Borrower by Lender and executed and returned by Borrower when the
Loaned Securities are received, (b) in the case of securities transferred
through a Clearing Organization which provides transferors with a notice
evidencing such transfer, such notice, or (c) a confirmation or other document
provided to Lender by Borrower.




                                     -1-
<PAGE>   2


3.       Collateral.

         3.1  Unless otherwise agreed, Borrower shall, prior to or concurrently
with the transfer of the Loaned Securities to Borrower, but in no case later
than the close of business on the day of such transfer, transfer to Lender
Collateral with a market value at least equal to a percentage of the market
value of the Loaned Securities agreed to by Borrower and Lender (which shall be
not less than 100% of the market value of the Loaned Securities) (the "Margin
Percentage").

         3.2  The Collateral transferred by Borrower to Lender, as adjusted
pursuant to Section 8, shall be security for Borrower's obligations in respect
of such Loan and for any other obligations of Borrower to Lender.  Borrower
hereby pledges with, assigns to, and grants Lender a continuing first security
interest in, and a lien upon, the Collateral, which shall attach upon the
transfer of the Loaned Securities by Lender to Borrower and which shall cease
upon the transfer of the Loaned Securities by Borrower to Lender.  In addition
to the rights and remedies given to Lender hereunder, Lender shall have all the
rights and remedies of a secured party under the New York Uniform Commercial
Code.  It is understood that Lender may use or invest the Collateral, if such
consists of cash, at its own risk, but that (unless Lender is a Broker-Dealer)
Lender shall, during the term of any Loan hereunder, segregate Collateral from
all securities or other assets in its possession.  Lender may pledge, repledge,
hypothecate, rehypothecate, lend, relend, sell or otherwise transfer the
Collateral, or re-register Collateral evidenced by physical certificates in any
name other than Borrower's, only (a) if Lender is Broker-Dealer or (b) in the
event of a Default by Borrower.  Segregation of Collateral may be accomplished
by appropriate identification on the books and records of Lender if it is a
"financial intermediary" or a "clearing corporation" within the meaning of the
New York Uniform Commercial Code.

         3.3  Except as otherwise provided herein, upon transfer to Lender of
the Loaned Securities of the day a Loan is terminated pursuant to Section 5,
Lender shall be obligated to transfer the Collateral (as adjusted pursuant to
Section 8) to Borrower no later than the Cutoff Time on such day or, if such
day is not a day on which a transfer of such Collateral may be effected under
Section 16, the next day on which such a transfer may be effected.

         3.4  If Borrower transfers Collateral to Lender, as provided in
Section 3.1, and Lender does not transfer the Loaned Securities to Borrower,
Borrower shall have the absolute right to the return of the Collateral; and if
Lender transfers Loaned Securities to Borrower and Borrower does not transfer
Collateral to Lender as provided In Section 3.1, Lender shall have the absolute
right to the return of the Loaned Securities.

         3.5  Borrower may, upon reasonable notice to Lender (taking into
account all relevant factors, including industry practice, the type of
Collateral to be submitted and the applicable method of transfer), substitute
Collateral for Collateral securing any Loan or Loans, provided, however, that
such substituted Collateral shall (a) consist only of cash, securities or other
property that Borrower and Lender agreed would be acceptable Collateral prior
to the Loan or Loans and (b) have a market value such that the aggregate market
value of such substituted Collateral, together with all other Collateral for
Loans in which the party substituting such Collateral is acting as Borrower,
shall equal or exceed the agreed upon Margin Percentage of the market value of
the Loaned Securities.  Prior to the expiration of any letter of credit
supporting Borrower's obligations hereunder, Borrower shall, no later than the
Cutoff Time on the date such letter of credit expires, obtain an extension of
the expiration of such letter of credit or replace such letter of credit by
providing Lender with a substitute letter of credit in an amount at least equal
to the amount of the letter of credit for which it is substituted.





                                    - 2 -
<PAGE>   3




         3.6  Lender acknowledges that, in connection with Loans of Government
Securities and as otherwise permitted by applicable law, some securities
provided by Borrower as Collateral under this Agreement may not be guaranteed
by the United States.

4.       Fees for Loan.

         4.1  Unless otherwise agreed, (a) Borrower agrees to pay Lender a loan
fee (a "Loan Fee") computed daily on each Loan to the extent such Loan is
secured by Collateral other than cash, based on the aggregate par value (in the
case of Loans of Government Securities) or the aggregate market value (in the
case of all other Loans) of the Loaned Securities on the day for which such
Loan Fee is being computed, and (b) Lender agrees to pay Borrower a fee or
rebate (a "Cash Collateral Fee") on Collateral consisting of cash, computed
daily based on the amount of cash held by Lender as Collateral, in the case of
each of the Loan Fee and the Cash Collateral Fee at such rates as Borrower and
Lender may agree.  Except as Borrower and Lender may otherwise agree (in the
event that cash Collateral is transferred by clearing house funds or
otherwise), Loan Fees shall accrue from and including the date on which the
Loaned Securities are transferred to Borrower to, but excluding, the date on
which such Loaned Securities are returned to Lender, and Cash Collateral Fees
shall accrue from and including the date on which the cash Collateral is
transferred to Lender to, but excluding, the date on which such cash Collateral
is returned to Borrower.

         4.2   Unless otherwise agreed, any Loan Fee or Cash Collateral Fee
payable hereunder shall be payable:

         (a)     in the case of any Loan of securities other than Government
                 Securities, upon the earlier of (i) the fifteenth day of the
                 month following the calendar month in which such fee was
                 incurred or (ii) the termination of all Loans hereunder (or,
                 if a transfer of cash in accordance with Section 16 may not be
                 effected on such fifteenth day or the day of such termination,
                 as the case may be, the next day on which such a transfer may
                 be effected); and

         (b)     in the case of any Loan of Government Securities, upon the
termination of such Loan.

Notwithstanding the foregoing, all Loan Fees shall be payable by Borrower
immediately in the event of a Default hereunder by Borrower and all Cash
Collateral Fees shall be payable immediately by Lender in the event of a
Default by Lender.

5.       Termination of the Loan.  Unless otherwise agreed, (a) Borrower may
terminate a Loan on any Business Day by giving notice to Lender and
transferring the Loaned Securities to Lender before the Cutoff Time on such
Business Day, and (b) Lender may terminate a Loan on a termination date
established by notice given to Borrower prior to the close of business on a
Business Day.  The termination date established by a termination notice given
by Lender to Borrower shall be a date no earlier than the standard settlement
date for trades of the Loaned Securities entered into on the date of such
notice, which date shall, unless Borrower and Lender agree to the contrary, be
(i) in the case of Government Securities, the next Business Day following such
notice and (ii) in the case of all other securities, the fifth Business Day
following such notice.  Unless otherwise agreed, Borrower shall, on or before
the Cutoff Time on the termination date of a Loan, transfer the Loaned
Securities to Lender, provided, however, that upon such transfer by Borrower,
Lender shall transfer the Collateral (as adjusted pursuant to Section 8) to
Borrower in accordance with Section 3.3.





                                    - 3 -
<PAGE>   4




6.       Rights of Borrower in Respect of the Loan Securities.  Except as set
forth in Sections 7.1 and 7.2 and as otherwise agreed by Borrower and Lender,
until Loaned Securities are required to be redelivered to Lender upon
termination of a Loan hereunder, Borrower shall have all of the incidents of
ownership of the Loan Securities, including the right to transfer the Loaned
Securities to others.  Lender hereby waives the right to vote, or to provide
any consent or to take any similar action with respect to the Loaned Securities
in the event that the record date or deadline for such vote, consent or other
action falls during the term of the Loan.

7.       Dividends, Distributions, Etc.

         7.1  Lender shall be entitled to receive all distributions made on or
in respect of the Loaned Securities which are not otherwise received by Lender,
to the full extent it would be so entitled if the Loaned Securities had not
been lent to Borrower, including, but not limited to:  (a) cash and all other
property, (b) stock dividends, (c) securities received as a result of split ups
of the Loaned Securities and distributions in respect thereof, (d) interest
payments, and (e) all rights to purchase additional securities.

         7.2  Any cash distributions made on or in respect of the Loaned
Securities, which Lender is entitled to receive pursuant to Section 7.1, shall
be paid by the transfer of cash to Lender by Borrower, on the date any such
distribution is paid, in an amount equal to such cash distribution, so long as
Lender is not in Default at the time of such payment.  Non-cash distributions
received by Borrower shall be added to the Loaned Securities on the date of
distribution and shall be considered such for all purposes, except that if the
Loan has terminated, Borrower shall forthwith transfer the same to Lender.

         7.3  Borrower shall be entitled to receive all cash distributions made
on or in respect of non-cash Collateral which are not otherwise received by
Borrower, to the full extent it would be so entitled if the Collateral had not
been transferred to Lender.  Any distributions of cash made on or in respect of
such Collateral which Borrower is entitled to receive hereunder shall be paid
by the transfer of cash to Borrower by Lender, on the date any such
distribution is paid, in an amount equal to such cash distribution, so long as
Borrower is not in Default at the time of such payment.

         7.4     (a)  Unless otherwise agreed, if (i) Borrower is required to
make a payment (a "Borrower Payment") with respect to cash distributions on
Loaned Securities under Sections 7.1 and 7.2 ("Securities Distributions"), or
(ii) Lender is required to make a payment (a "Lender Payment") with respect to
cash distributions on Collateral under Section 7.3 ("Collateral
Distributions"), and (iii) Borrower or Lender, as the case may be ("Payor"),
shall be required by law to collect any withdrawing or other tax, duty, fee,
levy or charge required to be deducted or withheld from such Borrower Payment
or Lender Payment ("Tax"), then Payor shall (subject to subsections (b) and (c)
below), pay such additional amounts as may be necessary in order that the net
amount of the Borrower Payment or Lender Payment received by the Lender or
Borrower, as the case may be ("Payee"), after payment of such Tax equals the
net amount of the Securities Distribution or Collateral Distribution that would
have been received if such Securities Distribution or Collateral Distribution
had been paid directly to the Payee.

                 (b)  No additional amounts shall be payable to a Payee under
subsection (a) above to the extent that Tax would have been imposed on a
Securities Distribution or Collateral Distribution paid directly to the Payee.

                 (c)  No additional amounts shall be payable to a Payee under
subsection (a) above to the extent that such Payee is entitled to an exemption
from, or reduction in the rate of, Tax on a Borrower





                                    - 4 -
<PAGE>   5




Payment or Lender Payment subject to the provision of a certificate or other
documentation, but has failed timely to provide such certificate or other
documentation.

                 (d)  Each party hereto shall be deemed to represent that, as
of the commencement of any Loan hereunder, no Tax would be imposed on any cash
distribution paid to it with respect to (i) Loaned Securities subject to a Loan
in which it is acting as Lender or (ii) Collateral for any Loan in which it is
acting as Borrower, unless such party has given notice to the contrary to the
other party hereto (which notice shall specify the rate at which such Tax would
be imposed).  Each party agrees to notify the other of any change that occurs
during the term of a Loan in the rate of any Tax that would be imposed on any
such cash distributions payable to it.

         7.5  To the extent that, under the provisions of Sections 7.1 through
7.4 (a) a transfer of cash or other property by Borrower would give rise to a
Margin Excess (as defined in Section 8.3 below) or (b) a transfer of cash or
other property by Lender would give rise to a Margin Deficit (as defined in
Section 8.2 below), Borrower or Lender (as the case may be) shall not be
obligated to make such transfer of cash or other property in accordance with
such Sections, but shall in lieu of such transfer immediately credit the
amounts that would have been transferable under such Sections to the account of
Lender or Borrower (as the case may be).

8.       Mark to Market.

         8.1  Borrower shall daily mark to market any Loan hereunder and in the
event that at the close of trading on any Business Day the market value of the
Collateral for any Loan to Borrower shall be less than 100% of the market value
of all the outstanding Loaned Securities subject to such Loan, Borrower shall
transfer additional Collateral no later than the close of the next Business Day
so that the market value of such additional Collateral, when added to the
market value of the other Collateral for such Loan, shall equal 100% of the
market value of the Loaned Securities.

         8.2  In addition to any rights of Lender under Section 8.1, in the
event that at the close of trading on any Business Day the aggregate market
value of all Collateral for Loans by Lender shall be less than the Margin
Percentage of the market value of all the outstanding Loaned Securities subject
to such Loans (a "Margin Deficit"), Lender may, by notice to Borrower, demand
that Borrower transfer to Lender additional Collateral so that the market value
of such additional Collateral, when added to the market value of all other
Collateral for such Loans, shall equal or exceed the agreed upon Margin
Percentage of the market value of the Loaned Securities.  Unless otherwise
agreed, such transfer is to be made no later than the close of the next
Business Day following the day of Lender's notice to Borrower.

         8.3  In the event that at the close of trading on any Business Day the
market value of all Collateral for Loans to Borrower shall be greater than the
Margin Percentage of the market value of all the outstanding Loaned Securities
subject to such Loans (a "Margin Excess"), Borrower may, by notice to Lender,
demand that Lender transfer to Borrower such amount of the Collateral selected
by Borrower so that the market value of the Collateral for such Loans, after
deduction of such amounts, shall thereupon not exceed the Margin Percentage of
the market value of the Loaned Securities.  Unless otherwise agreed, such
transfer is to be made no later than the close of the next Business Day
following the day of Borrower's notice to Lender.

         8.4  Borrower and Lender may agree, with respect to one or more Loans
hereunder, to mark the values to market pursuant to Sections 8.2 and 8.3 by
separately valuing the Loaned Securities lent and the Collateral given in
respect thereof on a Loan-by-Loan basis.





                                    - 5 -
<PAGE>   6




         8.5  Borrower and Lender may agree, with respect to any or all Loans
hereunder, that the respective rights of Lender and Borrower under Sections 8.2
and 8.3 may be exercised only where a Margin Excess or Margin Deficit exceeds a
specified dollar amount or a specified percentage of the market value of the
Loaned Securities under such Loans (which amount or percentage shall be agreed
to by Borrower and Lender prior to entering into any such Loans).

9.       Representations.  Each party to this Agreement hereby makes the
following representations and warranties, which shall continue during the term
of any Loan hereunder:

         9.1  Each party hereto represents and warrants that (a) it has the
power to execute and deliver this Agreement, to enter into the Loans
contemplated hereby and to perform its obligations hereunder; (b) it has taken
all necessary action to authorize such execution, delivery and performance; and
(c) this Agreement constitutes a legal, valid and binding obligation
enforceable against it in accordance with its terms.

         9.2  Each party hereto represents and warrants that the execution,
delivery and performance by it of this Agreement and each Loan hereunder will
at all times comply with all applicable laws and regulations including those of
applicable regulatory and self-regulatory organizations.

         9.3  Each party hereto represents and warrants that it has not relied
on the other for any tax or accounting advice concerning this Agreement and
that it has made its own determination as to the tax and accounting treatment
of any Loan and any dividends, remuneration or other funds received hereunder.

         9.4  Borrower represents and warrants that it is acting for its own
account, Lender represents and warrants that it is acting for its own account
unless it expressly specifies otherwise in writing and complies with Section
10.3(b).

         9.5  Borrower represents and warrants that (a) it has, or will have at
the time of transfer of any Collateral, the right to grant a first security
interest therein subject to the terms and conditions hereof, and (b) it (or the
person to whom it relends the Loaned Securities) is borrowing or will borrow
the Loaned Securities (except for Loaned Securities that qualify as "exempted
securities" under Regulation T of the Board of Governors of the Federal Reserve
System) for the purpose of making delivery of such securities in the case of
short sales, failure to receive securities required to be delivered, or as
otherwise permitted pursuant to Regulation T as in effect from time to time.

         9.6  Lender represents and warrants that it has, or will have at the
time of transfer of any Loaned Securities, the right to transfer the Loaned
Securities subject to the terms and conditions hereof.

10.      Covenants.

         10.1  Each party hereto agrees and acknowledges that (a) each Loan
hereunder is a "securities contract," as such term is defined in Section 741(7)
of Title 11 of the United States Code (the "Bankruptcy Code"), (b) each and
every transfer of funds, securities and other property under this Agreement and
each Loan hereunder is a "settlement payment" or a "margin payment," as such
terms are used In Sections 362(b)(6) and 546(e) of the Bankruptcy Code, and (c)
the rights given to Borrower and Lender hereunder upon a Default by the other
constitute the right to cause the liquidation of a securities contract and the
right to set off mutual debts and claims in connection with a securities
contract, as such terms are used in Sections 555 and 362(b)(6) of the
Bankruptcy Code.  Each party hereto further agrees and acknowledges that if a
party hereto is an "insured repository institution," as such term is defined in
the





                                    - 6 -
<PAGE>   7




Federal Deposit Insurance Act, as amended ("FDIA"), then each Loan hereunder is
a "securities contract" and "qualified financial contract," as such terms are
defined in the FDIA and any rules, orders or policy statements thereunder.

         10.2  Borrower agrees to be liable as principal with respect to its
obligations hereunder.

         10.3  Lender agrees either (a) to be liable as principal with respect
to its obligations hereunder or (b) to execute and comply fully with the
provisions of Annex I (the terms and conditions of which Annex are incorporated
herein and made a part hereof).

         10.4  Promptly upon (and in any event within seven (7) Business Days
after) demand by Lender, Borrower shall furnish Lender with Borrower's most
recent publicly-available financial statements and any other financial
statements mutually agreed upon by Borrower and Lender.  Unless otherwise
agreed, if Borrower is subject to the requirements of Rule 17a-5(c) under the
Exchange Act, it may satisfy the requirements of this Section by furnishing
Lender with its most recent statement required to be furnished to customers
pursuant to such Rule.

         10.5  Except to the extent required by applicable law or regulation or
as otherwise agreed, Borrower and Lender agree that Loans hereunder shall in no
event be "exchange contracts" for purposes of the rules of any securities
exchange and that Loans hereunder shall not be governed by the buy-in or
similar rules of any such exchange, registered national securities or other
self-regulatory organization.

11.       Events of Default.  All Loans hereunder may, at the Option of the
non-defaulting party exercised by notice to the defaulting party (which option
shall be deemed to have been exercised, even if no notice is given, immediately
upon the occurrence of an event specified in subsection (e) below), be
terminated immediately upon the occurrence of any one or more of the following
events (individuality, a "Default"):

         (a)     if any Loaned Securities shall not be transferred to Lender
                 upon termination of the Loan as required by Section 5;

         (b)     if any Collateral shall not be transferred to Borrower upon
                 termination of the Loan as required by Sections 3.3 and 5;

         (c)     if either party shall fail to transfer Collateral as required
                 by Section 8;

         (d)     if either party (i) shall fail to transfer to the other party
                 amounts in respect of distributions required to be transferred
                 by Section 7, (ii) shall have received notice of such failure
                 from the non-defaulting party, and (iii) shall not have cured
                 such default by the Cutoff Time on the next day after such
                 notice on which a transfer of cash may be effected in
                 accordance with Section 16;

         (e)     if (i) either party shall commence as debtor any case or
                 proceeding under any bankruptcy, insolvency, reorganization,
                 liquidation, dissolution or similar law, or seek the
                 appointment of a receiver, conservator, trustee, custodian or
                 similar official for such party or any substantial part of its
                 property, (ii) any such case or proceeding shall be commenced
                 against either party, or another shall seek such an
                 appointment, or any application shall be filed against either
                 party for a protective decree under the provisions of the
                 Securities Investor Protection Act of 1970, which (A) is
                 consented to or not timely contested by such party, (B)
                 results in the entry of an order for relief, such an





                                    - 7 -
<PAGE>   8




                 appointment, the issuance of such a protective decree or the
                 entry of an order having a similar effect, or (C) is not
                 dismissed within 15 days, (iii) either party shall make a
                 general assignment for the benefit of creditors, or (iv)
                 either party shall admit in writing its inability to pay its
                 debts as they become due;

         (f)     if either party shall have been suspended or expelled from
                 membership or participation in any national securities
                 exchange or registered national securities association of
                 which it is a member or other self-regulatory organization to
                 whose rules it is subject or if it is suspended from dealing
                 in securities by any federal or state government agency
                 thereof;

         (g)     if either party shall have its license, charter, or other
                 authorization necessary to conduct a material portion of its
                 business withdrawn, suspended or revoked by any applicable
                 federal or state government or agency thereof;

         (h)     if any representation made by either party in respect of this
                 Agreement or any Loan or Loans hereunder shall be incorrect or
                 untrue in any material respect during the term of any Loan
                 hereunder;

         (i)     if either party notifies the other, orally or in writing, of
                 its inability to or its intention not to perform its
                 obligations hereunder or otherwise disaffirms, rejects or
                 repudiates, any of its obligations hereunder; or

         (j)     if either party (i) shall fail to perform any material
                 obligation under this Agreement not specifically set forth in
                 clauses (a) through (i) above, including but not limited to
                 the payment of fees as required by Section 4, and the payment
                 of transfer taxes as required by Section 14, (ii) shall have
                 received notice of such failure from the non-defaulting party
                 and (iii) shall not have cured such failure by the Cutoff Time
                 on the next day after such notice on which a transfer of cash
                 may be effected under Section 16.

12.      Lender's Remedies.  Upon the occurrence of a Default under Section 11
entitling Lender to terminate all Loans hereunder, Lender shall have the right
(without further notice to Borrower), in addition to any other remedies
provided herein or under applicable law, (a) to purchase a like amount of
Loaned Securities ("Replacement Securities") in the principal market for such
securities in a commercially reasonable manner, (b) to sell any Collateral in
the principal market for such Collateral in a commercially reasonable manner
and (c) to apply and set off the Collateral and any proceeds thereof (including
any amounts drawn under a letter of credit supporting any Loan) against the
payment of the purchase price for such Replacement Securities and any amounts
due to Lender under Sections 4, 7, 14 and 17.  In the event Lender shall
exercise such rights, Borrower's obligation to return a like amount of the
Loaned Securities shall terminate.  Lender may similarly apply the Collateral
and any proceeds thereof to any other obligation of Borrower under this
Agreement, including Borrower's obligations with respect to distributions paid
to Borrower (and not forwarded to Lender) in respect of Loaned Securities.  In
the event that (i) the purchase price of Replacement Securities (plus all other
amounts, if any, due to Lender hereunder) exceeds (ii) the amount of the
Collateral, Borrower shall be liable to Lender for the amount of such excess
together with interest thereon at a rate equal to (A) in the case of purchases
of Foreign Securities, LIBOR, (B) in the case of purchases of any other
securities (or other amounts, if any, due to Lender hereunder), the Federal
Funds Rate or (C) such other rate as may be specified in Schedule B, in each
case as such rate fluctuates from day to day, from the date of such purchase
until the date of payment of such excess.  As security for Borrower's
obligation to pay such excess, Lender shall have, and Borrower hereby grants, a
security





                                    - 8 -
<PAGE>   9





interest in any property of Borrower then held by or for Lender and a right of
setoff with respect to such property and any other amount payable by Lender to
Borrower.  The purchase price of Replacement Securities purchased under this
Section 12 shall include, and the proceeds of any sale of Collateral shall be
determined after deduction of, brokers fees and commissions and all other
reasonable costs, fees and expenses related to such purchase or sale (as the
case may be).  In the event Lender exercises its rights under this Section 12,
Lender may elect in its sole discretion, in lieu of purchasing all or a portion
of the Replacement Securities or selling all or a portion of the Collateral, to
be deemed to have made, respectively, such purchase of Replacement Securities
or sale of Collateral for an amount equal to the price therefor on the date of
such exercise obtained from a generally recognized source or the most recent
closing bid quotation from such a source.  Subject to Section 19, upon the
satisfaction of all obligations hereunder, any remaining Collateral shall be
returned to Borrower.

13.      Borrower's Remedies.  Upon the occurrence of a Default under Section
11 entitling Borrower to terminate all Loans hereunder, Borrower shall have the
right (without further notice to Lender), in addition to any other remedies
provided herein or under applicable law, (a) to purchase a like amount of
Collateral ("Replacement Collateral") in the principal market for such
Collateral in a commercially reasonable manner, (b) to sell a like amount of
the Loaned Securities in the principal market for such securities in a
commercially reasonable manner and (c) to apply and set off the Loaned
Securities and any proceeds thereof against (i) the payment of the purchase
price for such Replacement Collateral (ii) Lenders obligation to return any
cash or other Collateral and (iii) any amounts due to Borrower under Sections
4, 7 and 17.  In such event, Borrower may treat the Loaned Securities as its
own and Lender's obligation to return a like amount of the Collateral shall
terminate; provided, however, that Lender shall immediately return any letters
of credit supporting any Loan upon the exercise or deemed exercise by Borrower
of its termination rights under Section 11.  Borrower may similarly apply the
Loaned Securities and any proceeds thereof to any other obligation of Lender
under this Agreement, including Lender's obligations with respect to
distributions paid to Lender (and not forwarded to Borrower) in respect of
Collateral.  In the event that (i) the sales price received from such Loaned
Securities is less than (ii) the purchase price of Replacement Collateral (plus
the amount of any cash or other Collateral not replaced by Borrower and all
other amounts, if any, due to Borrower hereunder), Lender shall be liable to
Borrower for the amount of any such deficiency, together with interest on such
amounts at a rate equal to (A) in the case of Collateral consisting of Foreign
Securities, LIBOR, (B) in the case of Collateral consisting of any other
securities (or other amounts due, if any, to Borrower hereunder), the Federal
Funds Rate or (C) such other rate as may be specified in Schedule B, in each
case as such rate fluctuates from day to day, from the date of such sale until
the date of payment of such deficiency.  As security for Lender's obligation to
pay such deficiency Borrower shall have, and Lender hereby grants, a security
interest in any property of Lender then held by or for Borrower and a right of
setoff with respect to such property and any other amount payable by Borrower
to Lender.  The purchase price of any Replacement Collateral purchased under
this Section 13 shall include, and the proceeds of any sale of Loaned
Securities shall be determined after deduction of, broker's fees and
commissions and all other reasonable costs, fees and expenses related to such
purchase or sale (as the case may be).  In the event Borrower exercises its
rights under this Section 13, Borrower may elect in its sole discretion, in
lieu of purchasing all or a portion of the Replacement Collateral or selling
all or a portion of the Loaned Securities, to be deemed to have made,
respectively, such purchase of Replacement Collateral or sale of Loaned
Securities for an amount equal to the price therefor on the date of such
exercise obtained from a generally recognized source or the most recent closing
bid quotation from such a source.  Subject to Section 19, upon the satisfaction
of all Lender's obligations hereunder, any remaining Loaned Securities (or
remaining cash proceeds thereof) shall be returned to Lender.  Without limiting
the foregoing, the parties hereto agree that they intend the Loan hereunder to
be loans of securities.  If, however, any Loan is deemed to be a loan of money
by Borrower to Lender, then Borrower shall have,





                                    - 9 -
<PAGE>   10




and Lender shall be deemed to have granted, a security interest in the Loaned
Securities and the proceeds thereof.

14.      Transfer Taxes.  All transfer taxes with respect to the transfer of
the Loaned Securities by Lender to Borrower and by Borrower to Lender upon
termination of the Loan shall be paid by Borrower.

15.      Market Value.

         15.1  Unless otherwise agreed, if the principal market for the
securities to be valued is a national securities exchange in the United States,
their market value shall be determined by their last sale price on such
exchange on the preceding Business Day or, if there was no sale on that day, by
the last sale price on the next preceding Business Day on which there was a
sale on such exchange, all as quoted on the Consolidated Tape or, it not quoted
on the Consolidated Tape, then as quoted by such exchange.

         15.2  Except as provided in Section 15.3 or 15.4 or as otherwise
agreed, if the principal market for the securities to be valued is the
over-the-counter market, their market value shall be determined as follows.  If
the securities are quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), their market value shall be the closing
sale price on NASDAQ on the preceding Business Day or, if the securities are
issues for which last sale prices are not quoted on NASDAQ, the closing bid
price on such day.  If the securities to be valued are not quoted on NASDAQ,
their market value shall be the highest bid quotation as quoted in any of The
Wall Street Journal, the National Quotation Bureau pink sheets, the Salomon
Brothers quotation sheets, quotations sheets of registered market makers and,
if necessary, dealers' telephone quotations on the preceding Business Day.  In
each case, if the relevant quotation did not exist on such day, then the
relevant quotation on the next preceding Business Day in which there was such a
quotation shall be the market value.

         15.3  Unless otherwise agreed, if the securities to be valued are
Government Securities, their market value shall be the average of the bid and
ask prices as quoted on Prophesy at 3:30 P.M. New York time on the Business Day
preceding the date on which such determination is made.  If the securities are
not so quoted on such day, their market value shall be determined as of the
next preceding Business Day on which they were so quoted.  If the securities to
be valued are Government Securities that are not quoted on Prophesy, their
market value shall be determined as of the close of business on the preceding
Business Day in accordance with market practice for such securities.

         15.4  Unless otherwise agreed, if the securities to be valued are
Foreign Securities, their market value shall be determined as of the close of
business on the preceding Business Day in accordance with market practice in
the principal market for such securities.

         15.5  Unless otherwise agreed, the market value of a letter of credit
shall be the undrawn amount thereof.

         15.6  All determinations of market value under Sections 15.1, 15.2,
15.3 and 15.4 shall include, where applicable, accrued interest to the extent
not already included therein (other than any interest transferred to the other
party pursuant to Section 7), unless market practice with respect to the
valuation of such securities in connection with securities loans is to the
contrary.  All determinations of market value that are required to be made at
the close of trading on any Business Day pursuant to Section 8 or otherwise
hereunder shall be made as if being determined at the commencement of trading
on the next Business Day.  The determinations of market value provided for in
this Section 15 shall apply for all purposes under this Agreement, except for
purposes of Sections 12 and 13.





                                   - 10 -
<PAGE>   11




16.      Transfers.

         16.1  All transfers of securities hereunder shall be by (a) physical
delivery of certificates representing such securities together with duly
executed stock and bond transfer powers, as the case may be, with signatures
guaranteed by a bank or a member firm of the New York Stock Exchange, Inc., (b)
transfer on the books of a Clearing Organization, or (c) such other means as
Borrower and Lender may agree.  In every transfer of securities hereunder, the
transferor shall take all steps necessary (i) to effect a "transfer" under
Section 8-313 of the New York Uniform Commercial Code or, where applicable,
under any U.S. federal regulation governing transfers of securities and (ii) to
provide the transferee with comparable rights under any applicable foreign law
or regulation.

         16.2  All transfers of cash Collateral hereunder shall be by (a) wire
transfer in immediately available, freely transferable funds or (b) such other
means as Borrower and Lender may agree. All other transfers of cash hereunder
shall be made in accordance with the preceding sentence or by delivery of a
certified or official bank check representing next-day New York Clearing House
Funds.

         16.3  All transfers of a letter of credit from Borrower to Lender
shall be made by physical delivery to Lender of an irrevocable letter of credit
issued by a "bank" as defined in Section 3(a)(6)(A)-(C) of the Exchange Act.
Transfer of a letter of credit from Lender to Borrower shall be made by causing
such letter of credit to be returned or by causing the amount of such letter of
credit to be reduced to the amount required after such transfer.

         16.4  A transfer of securities, cash or letters of credit may be
effected under this Section 16 on any day except (a) a day on which the
transferee is closed for business at its address set forth in Schedule A hereto
or (b) a day on which a Clearing Organization or wire transfer system is
closed, if the facilities of such Clearing Organization or wire transfer system
are required to effect such transfer.

17.      Contractual Currency.

         17.1  Borrower and Lender agree that:  (a) any payment in respect of a
distribution under Section 7 shall be made in the currency in which the
underlying distribution of cash was made; (b) any return of cash shall be made
in the currency in which the underlying transfer of cash was made and (c) any
other payment of cash in connection with a Loan under this Agreement shall be
in the currency agreed upon by Borrower and Lender in connection with such Loan
(the currency established under clause (a), (b) or (c) hereinafter referred to
as the "Contractual Currency").  Notwithstanding the foregoing, the payee of
any such payment may, at its option, accept tender thereof in any other
currency; provided, however, that, to the extent permitted by applicable law,
the obligation of the payor to make such payment will be discharged only to the
extent of the amount of Contractual Currency that such payee may, consistent
with normal banking procedures, purchase with such other currency (after
deduction of any premium and costs of exchange) on the banking day next
succeeding its receipt of such currency.

         17.2  If for any reason the amount in the Contractual Currency
received under Section 17.1, including amounts received after conversion of any
recovery under any judgment or order expressed in a currency other than the
Contractual Currency, falls short of the amount in the Contractual Currency due
in respect of this Agreement, the party required to make the payment will
(unless a Default has occurred and such party is the non-defaulting party) as a
separate and independent obligation and to the extent permitted by applicable
law, immediately pay such additional amount in the Contractual Currency as may
be necessary to compensate for the shortfall.





                                   - 11 -
<PAGE>   12




         17.3  If for any reason the amount in the Contractual Currency
received under Section 17.1 exceeds the amount in the Contractual Currency due
in respect of this Agreement, then the party receiving the payment will (unless
a Default has occurred and such party is the non-defaulting party) refund
promptly the amount of such excess.

18.      ERISA.  Lender shall, if any of the securities transferred to the
Borrower hereunder for any Loan have been or shall be obtained, directly or
indirectly, from or using the assets of any Plan, so notify Borrower in writing
upon the execution of the Agreement or upon initiation of such Loan under
Section 1.1.  If Lender so notifies Borrower, then Borrower and Lender shall
conduct the Loan in accordance with the terms and conditions of Department of
Labor Prohibited Transaction Exemption 81-6 (46 Fed.  Reg. 7527, Jan. 23, 1981;
as amended, 52 Fed. Reg. 18754, May 19, 1987), or any successor thereto (unless
Borrower and Lender have agreed prior to entering into a Loan that such Loan
will be conducted in reliance on another exemption, or without relying on any
exemption, from the prohibited transaction provisions of Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, and Section 4975
of the Internal Revenue Code of 1988, as amended).  Without limiting the
foregoing and notwithstanding any other provision of this Agreement, if the
Loan will be conducted in accordance with Prohibited Transaction Exemption
81-6, then;

         (a)     Borrower represents and warrants to Lender that it is either
                 (i) a bank subject to federal or state supervision, (ii) a
                 broker-dealer registered under the Exchange Act or (iii)
                 exempt from registration under Section 15(a)(1) of the
                 Exchange Act as a dealer in Government Securities.

         (b)     Borrower represents and warrants that, during the term of any
                 Loan hereunder, neither Borrower nor any affiliate of Borrower
                 has any discretionary authority or control with respect to the
                 investment of the assets of the Plan involved in the Loan or
                 renders investment advice (within the meaning of 29 C.F.R.
                 Section 2510.3-21(c)) with respect to the assets of the Plan
                 involved in the Loan, Lender agrees that, prior to or at the
                 commencement of any Loan hereunder, it will communicate to
                 Borrower information regarding the Plan sufficient to identify
                 to Borrower any person or persons that have discretionary
                 authority or control with respect to the investment of the
                 assets of the Plan involved in the Loan or that render
                 investment advice (as defined in the preceding sentence) with
                 respect to the assets of the Plan involved in the Loan.  In
                 the event Lender falls to communicate and keep current during
                 term of any Loan such information, Lender rather than Borrower
                 shall be deemed to have made the representation and warranty
                 in the first sentence of this clause (b).

         (c)     Borrower and Lender agree that:

                          (i)     the term "Collateral" shall mean cash,
                                  securities issued or guaranteed by the United
                                  States government or its agencies or
                                  instrumentalities, or irrevocable bank
                                  letters of credit issued by a person other
                                  than Borrower or an affiliate thereof;

                          (ii)    prior to the making of any Loans hereunder,
                                  Borrower shall provide Lender with (A) the
                                  most recent available audited statement of
                                  Borrowers financial condition and (B) the
                                  most recent available unaudited statement of
                                  Borrower's financial condition (if more
                                  recent than the most recent audited
                                  statement), and each Loan made hereunder





                                   - 12 -
<PAGE>   13





                                  shall be deemed a representation by Borrower
                                  that there has been no material adverse
                                  change in Borrower's financial condition
                                  subsequent to the date of the latest
                                  financial statements or information furnished
                                  in accordance herewith;

                          (iii)   the Loan may be terminated by Lender at any
                                  time, whereupon Borrower shall deliver the
                                  Loaned Securities to Lender within the lesser
                                  of (A) the customary delivery period for such
                                  securities; (B) five Business Days and (C)
                                  the time negotiated for such delivery between
                                  Borrower and Lender; provided, however, that
                                  Borrower and Lender may agree to a longer
                                  period only if permitted by Prohibited
                                  Transaction Exemption 81-6; and

                          (iv)    the Collateral transferred shall be security
                                  only for obligations of Borrower to the Plan
                                  with respect to Loans, and shall not be
                                  security for any obligation of Borrower to
                                  any agent or affiliate of the Plan.

19.      Single Agreement.  Borrower and Lender acknowledge that, and have
entered into this Agreement in reliance on the fact that, all Loans hereunder
constitute a single business and contractual relationship and have been entered
into in consideration of each other.  Accordingly, Borrower and Lender hereby
agree that payments, deliveries and other transfers made by either of them in
respect of any Loan shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Loan
hereunder, and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.  In addition, Borrower
and Lender acknowledge that, and have entered into this Agreement in reliance
on the fact that, all Loans hereunder have been entered into in consideration
of each other.  Accordingly, Borrower and Lender hereby agree that (a) each
shall perform all of its obligations in respect of each Loan hereunder, and
that a default in the performance of any such obligation by Borrower or by
Lender (the "Defaulting Party") in any Loan hereunder shall constitute a
default by the Defaulting Party under all such Loans hereunder, and (b) the
non-defaulting party shall be entitled to set off claims and apply property
held by it in respect of any Loan hereunder against obligations owing to it in
respect of any other Loan with the Defaulting Party.

20.      APPLICABLE LAW.  THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.

21.      Waiver.  The failure of a party to this Agreement to insist upon
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement.  All
waivers in respect of a Default must be in writing.

22.      Remedies.  All remedies hereunder and all obligations with respect to
any Loan shall survive the termination of the relevant Loan, return of Loaned
Securities or Collateral and termination of this Agreement.

23.      Notices and Other Communications.  Unless another address is specified
in writing by the respective party to whom any notice or other communication is
to be given hereunder, all such notices or communications shall be in writing
or confirmed in writing and delivered at the respective addresses set forth in
Schedule A attached hereto.  All notices shall be effective upon actual
receipt, provided, however,





                                   - 13 -
<PAGE>   14




that if any notice shall be received by a party on a day on which such party is
not open for business at its office located at the address set forth in
Schedule A, such notice shall be deemed to have been received by such party at
the opening of business on the next day on which such party is open for
business at such address.

24.      SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

         24.1  EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE
COURT SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY SUCH COURT,
SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT TO ENFORCE ITS
OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY LOAN
HEREUNDER AND (B) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF ITS
PLACE OF RESIDENCE OR DOMICILE.

         24.2  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT
MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

26.      Miscellaneous.  This Agreement supersedes any other agreement between
the parties hereto concerning loans of securities between Borrower and Lender.
This Agreement shall not be assigned by either party without the prior written
consent of the other party and any attempted assignment without such consent
shall be null and void.  Subject to the foregoing, this Agreement shall be
binding upon and shall ensure to the benefit of Borrower and Lender and their
respective heirs, representatives, successors and assigns.  This Agreement may
be terminated by either party upon written notice to the other, subject only to
fulfillment of any obligations then outstanding.  This Agreement shall not be
modified, except by an instrument in writing signed by the party against whom
enforcement is sought.  The parties hereto acknowledge and agree that, in
connection with this Agreement and each Loan hereunder, time is of the essence.
Each provision and agreement herein shall be treated as separate and
independent from any other provision herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or agreement.

26.      Definitions.  For the purposes hereof:

         26.1  "Broker-Dealer" shall mean any person that is a broker
(including a municipal securities broker), dealer, municipal securities dealer,
government securities broker or government securities dealer as defined in the
Exchange Act, regardless of whether the activities of such person are conducted
in the United States or otherwise require such person to register with the
Securities and Exchange Commission or other regulatory body.

         26.2  "Business Day" shall mean, with respect to any Loan hereunder, a
day on which regular trading occurs in the principal market for the Loaned
Securities subject to such Loan, provided, however, that for purposes of
Section 15, such term shall mean a day on which regular trading occurs in the
principal market for the securities whose value is being determined.
Notwithstanding the foregoing, (i) for purposes of Section 8, "Business Day"
shall mean any day on which regular trading





                                   - 14 -
<PAGE>   15




occurs in the principal market for any Loaned Securities or for any securities
Collateral under any outstanding Loan hereunder and "next Business Day" shall
mean the next day on which a transfer of Collateral may be affected in
accordance with Section 16; and (ii) in no event shall a Saturday or Sunday be
considered a Business Day.

         26.3  "Clearing Organization" shall mean The Depository Trust Company,
or, if agreed to by Borrower and Lender, such other clearing agency at which
Borrower (or Borrower's agent) and Lender (or Lender's agent) maintain
accounts, or a book-entry system maintained by a Federal Reserve Bank.

         26.4  "Collateral" shall mean, whether now owned or hereafter acquired
and to the extent permitted by applicable law, (a) any property which Borrower
and Lender agree shall be acceptable collateral prior to the Loan and which is
transferred to Lender pursuant to Section 3 or 8 (including as collateral, for
definitional purposes, any letters of credit mutually acceptable to Lender and
Borrower), (b) any property substituted therefor pursuant to Section 3.5, (c)
all accounts in which such property is deposited and all securities and the
like in which any cash collateral is invested or reinvested, and (d) any
proceeds of any of the foregoing.  For purposes of return of Collateral by
Lender or purchase or sale of securities pursuant to Section 12 or 13, such
term shall include securities of the same issuer, class and quantity as the
Collateral initially transferred by Borrower to Lender.

         26.5  "Customer" shall mean any person that is a customer of Borrower
under Rule 15c3-3 under the Exchange Act or any comparable regulation of the
Secretary of the Treasury under Section 15C of the Exchange Act (to the extent
that Borrower is subject to such Rule or comparable regulation).

         26.6  "Cutoff Time" shall mean a time on a Business Day by which a
transfer of cash, securities or other property must be made by Borrower or
Lender to the other, as shall be agreed by Borrower and Lender in Schedule B or
otherwise orally or in writing or, in the absence of any such agreement, as
shall be determined in accordance with market practice.

         28.7  "Default" shall have the meaning assigned in Section 11.

         26.8  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

         26.9  "Federal Funds Rate" shall mean the rate of interest (expressed
as an annual rate), as published in Federal Reserve Statistical Release
H.15(519) or any publication substituted therefor, charged for federal funds
(dollars in immediately available funds borrowed by banks on an overnight
unsecured basis) on that day or, if that day is not a banking day in New York
City, on the next preceding banking day.

         26.10  "Foreign Securities" shall mean, unless otherwise agreed,
securities that are principally cleared and settled outside the United States.

         26.11  "Government Securities" shall mean government securities as
defined in Section 3(a)(42)(A)-(C) of the Exchange Act.

         26.12  "LIBOR" shall mean for any date, the offered rate for deposits
in U.S. dollars for a period of three months which appears on the Reuters
Screen LIBO page as of 11:00 A.M., London time, on such date (or, if at least
two such rates appear, the arithmetic mean of such rates).





                                   - 15 -
<PAGE>   16




         26.13  "Loan" shall mean a loan of securities hereunder.

         26.14  "Loaned Security" shall mean any security which is a security
as defined in the Exchange Act, transferred in a Loan hereunder until such
security (or an identical security) is transferred back to Lender hereunder,
except that, if any new or different security shall be exchanged for any Loaned
Security by recapitalization, merger, consolidation or other corporate action,
such new or different security shall, effective upon such exchange, be deemed
to become a Loaned Security in substitution for the former Loaned Security for
which such exchange is made.   For purposes of return of Loaned Securities by
Borrower or purchase or sale of securities pursuant to Section 12 or 13, such
term shall include securities of the same issuer, class and quantity as the
Loaned Securities, as adjusted pursuant to the preceding sentence.
         
        26.15  "Plan" shall mean (a) any "employee benefit plan" as defined in 
Section 3(3) of the Employee Retirement Income Security Act of 1974 which is 
subject to Part 4 of Subtitle B of Title I of such Act:  (b) any "plan" as 
defined in Section 4975(e)(1) of the Internal Revenue Code of 1986; or (c) any 
entity the assets of which are deemed to be assets of any such "employee 
benefit plan" or "plan" by reason of the Department of Labor's plan asset 
regulation, 29 C.F.R. Section 2510.3-101.


SALOMON BROTHERS INC

By:  _________________________

Title:  _______________________

Date:  _______________________




By:  _________________________

Title:  _______________________

Date:  _______________________





                                   - 16 -
<PAGE>   17

                                    ANNEX I


Lender Acting as Agent

                 This Annex sets forth the terms and conditions governing all
transactions in which a party lending securities ("Agent") in a Loan is acting
as agent for one or more third parties (each, a "Principal").  Unless otherwise
defined, capitalized terms used in this Annex shall have the meanings assigned
in the Securities Loan Agreement of which it forms a part (such agreement,
together with this Annex and any other schedules or exhibits, referred to as
the "Agreement") and, unless otherwise specified, all section references herein
are intended to refer to sections of such Securities Loan Agreement.

                 1.  Additional Representations and Warranties.  In addition to
the representations and warranties set forth in Section 9 of the Agreement,
Agent hereby makes the following representations and warranties, which shall
continue during the term of any Loan.  Principal has duly authorized Agent to
execute and deliver the Agreement on its behalf, has the power to so authorize
Agent and to enter into the Loans contemplated by the Agreement and to perform
the obligations of Lender under such Loans, and has taken all necessary action
to authorize such execution and delivery by Agent and such performance by it.

                 2.  Identification of Principals.  Agent agrees (a) to provide
Borrower prior to any Loan under the Agreement with a written list of
Principals for which it intends to act as Agent (which list may be amended In
writing from time to time with the consent of Borrower), and (b) to provide
Borrower, before the close of business on the next Business Day after orally
agreeing to enter Into a Loan, with notice of the specific Principal or
Principals for whom it is acting in connection with such Loan.  If (i) Agent
fails to identify such Principal or Principals prior to the close of business
on such next Business Day or (ii) Borrower shall determine in its sole
discretion that any Principal or Principals identified by Agent are not
acceptable to it, Borrower may reject and rescind any Loan with such Principal
or Principals, return to Agent any Loaned Securities previously transferred to
Borrower and refuse any further performance under such Loan, and Agent shall
immediately return to Borrower any Collateral previously transferred to Agent
in connection with such Loan; provided, however, that (A) Borrower shall
promptly (and in any event within one Business Day) notify Agent of its
determination to reject and rescind such Loan and (B) to the extent that any
performance was rendered by any party under any Loan rejected by Borrower, such
party shall remain entitled to any fees or other amounts that would have been
payable to it with respect to such performance if such Loan had not been
rejected.  Borrower acknowledges that Agent shall not have any obligation to
provide it with confidential information regarding the financial status of its
Principals; Agent agrees, however, that it will assist Borrower in obtaining
from Agent's Principals such information regarding the financial status of such
Principals as Borrower may reasonably request.

                 3.  Limitation of Agent's Liability.  The parties expressly
acknowledge that if the representations and warranties of Agent under the
Agreement, including this Annex, are true and correct in all material respects
during the term of any Loan and Agent otherwise complies with the provisions of
this Annex, then (a) Agent's obligations under the Agreement shall not include
a guarantee of performance by its Principal or Principals and (b) Borrower's
remedies shall not include a right of setoff against obligations, if any, of
Agent arising in other transactions in which Agent is acting as principal.

                 4.  Multiple Principals.

                 (a)  In the event that Agent proposes to act for more than one
Principal hereunder, Borrower and Agent shall elect whether (i) to treat Loans
under this Agreement as transactions entered into on behalf of separate
Principals or (ii) to aggregate such Loans as if they were transactions by a
single Principal.  Failure to make such an election in writing shall be deemed
an election to treat Loans under this Agreement as transactions on behalf of
separate Principals.





<PAGE>   18
                                                                              2



                 (b)  In the event that Borrower and Agent elect (or are deemed
to elect) to treat Loans under the Agreement as transactions on behalf of
separate Principals, the parties agree that (i) Agent will provide Borrower,
together with the notice described in Section 2(b) of this Annex, notice
specifying the portion of each Loan allocable to the account of each of the
Principals for which it is acting (to the extent that any such Loan is
allocable to the account of more than one Principal); (ii) the portion of any
individual Loan allocable to each Principal shall be deemed a separate Loan
under the Agreement; (iii) the mark to market obligations of Borrower and
Lender under Section 8 of the Agreement shall be determined on a Loan-by-Loan
basis (unless the parties agree to determine such obligations on a
Principal-by-Principal basis); and (iv) Borrower's and Lender's remedies under
the Agreement upon the occurrence of a Default shall be determined as if Agent
had entered into a separate Agreement with Borrower on behalf of each of its
Principals.

                 (c)  In the event that Borrower and Agent elect to treat Loans
under this Agreement as if they were transactions by a single Principal, the
parties agree that (i) Agent's notice under Section 2(b) of this Annex need
only identify the names of its Principals but not the portion of each Loan
allocable to each Principal's account; (ii) the mark to market obligations of
Borrower and Lender under Section 8 shall, subject to any greater requirement
imposed by applicable law, be determined on an aggregate basis for all Loans
entered into by Agent on behalf of any Principal; and (iii) Borrower's and
Lender's remedies upon the occurrence of a Default shall be determined as if
all Principals were a single Lender.

                 (d)  Notwithstanding any other provision of the Agreement
(including without limitation this Annex), the parties agree that any
transactions by Agent on behalf of a Plan shall be treated as transactions on
behalf of separate Principals in accordance with Section 4(b) of this Annex
(and all mark to market obligations of the parties shall be determined on a
Loan-by-Loan basis).

                 5.  Interpretation of Terms.  All references to "Lender" in
the Agreement shall, subject to the provisions of this Annex (including among
other provisions the limitations on Agent's liability in Section 3 of this
Annex), be construed to reflect that (i) each Principal shall have, in
connection with any Loan or Loans entered into by Agent on its behalf, the
rights, responsibilities, privileges and obligations of a "Lender" directly
entering into such Loan or Loans with Borrower under the Agreement, and (ii)
Agent's Principal or Principals have designated Agent as their sole agent for
performance of Lender's obligations to Borrower and for receipt of performance
by Borrower of its obligations to Lender in connection with any Loan or Loans
under the Agreement (including, among other things, as agent for each Principal
in connection with transfers of securities, cash or other property and as agent
for giving and receiving all notices under the Agreement).  Both Agent and its
Principal or Principals shall be deemed "parties" to the Agreement and all
references to a "party" or "either party" in the Agreement shall be deemed
revised accordingly (and any Default by Agent under paragraph (e) or any other
applicable provision of Section 11 shall be deemed a Default by Lender).





<PAGE>   19
                                                                              3



SALOMON BROTHERS INC

By:      ________________________________________

Title:   ________________________________________

Date:    ________________________________________



By:      ________________________________________

Title:   ________________________________________

Date:    ________________________________________







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