<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Filed by the registrant |X|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CORE TECHNOLOGIES (PENNSYLVANIA), INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CORE TECHNOLOGIES (PENNSYLVANIA), INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 14, 1998
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Core Technologies (Pennsylvania), Inc. (the "Company") will be held at the
offices of Maris Equipment Company, Inc. at 110 Summit Drive, Exton, PA 19341
on August 14, 1998 at 9:00 a.m., local time, for the following purposes:
1. To elect four directors; and
2. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has established the close of business on June
24, 1998 as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting or any adjournments thereof. In order
that the meeting can be held and a maximum number of shares can be voted,
whether or not you plan to be present at the meeting in person, please fill
in, date and sign, and promptly return the enclosed Proxy in the return
envelope provided for your use. No postage is required if mailed in the United
States.
By order of the Board of Directors,
GEORGE E. MITCHELL
President and Chief Executive Officer
110 Summit Drive
Exton, PA 19341
July 23, 1998
<PAGE>
CORE TECHNOLOGIES (PENNSYLVANIA), INC.
110 Summit Drive
Exton, PA 19341
PROXY STATEMENT
The enclosed Proxy is solicited on behalf of the Board of Directors of Core
Technologies (Pennsylvania), Inc. (the "Company") for use at the Annual
Meeting of Stockholders on August 14, 1998 (such meeting and any adjournment
or adjournments thereof are referred to as the "Annual Meeting") for the
purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders and in this Proxy Statement. This Proxy Statement and the
enclosed Proxy are being mailed to stockholders on or about July 24, 1998.
Voting Securities
Only the holders of shares of common stock, par value $.01 per share
(the "Common Stock"), and Series A Redeemable Convertible Preferred Stock, par
value $.01 per share (the "Series A Shares"), of the Company (cumulatively,
the "Shares") of record at the close of business on June 24, 1998 (the "Record
Date") are entitled to receive notice of, and to vote at, the Annual Meeting.
On that date, there were 8,887,326 shares of Common Stock and 15,000 Series A
Shares outstanding and entitled to be voted at the Annual Meeting. Each share
of Common Stock is entitled to vote for up to four persons as directors and to
cast one vote on each other matter to be considered. Each Series A Share is
entitled to cast one vote for each share of Common Stock into which such
Series A Shares can be converted. At June 24, 1998, each Series A Share was
convertible into 100 shares of Common Stock.
The four nominees for the Board of Directors receiving the highest
number of affirmative votes of the Shares present or represented and entitled
to be voted shall be elected as directors.
A majority of outstanding Shares will constitute a quorum for the
transaction of business at the Annual Meeting. Votes withheld from any
director, abstentions and broker non-votes will be counted for purposes of
determining the presence of a quorum for the transaction of business at the
Annual Meeting. Abstentions are counted in tabulations of the votes cast on
proposals presented to stockholders. Broker non-votes are not counted for
purposes of determining whether a proposal has been approved.
Revocability of Proxy
Execution of the enclosed Proxy will not affect a stockholder's right
to attend the Annual Meeting and vote in person. A stockholder, in exercising
his right to vote in person at the Annual Meeting, effectively revokes all
previously executed Proxies. In addition, the Proxy is revocable at any time
prior to the effective exercise thereof by filing notice of revocation with
the Secretary of the Company or by filing a duly executed Proxy bearing a
later date.
<PAGE>
Persons Making the Solicitation
The cost of solicitation of Proxies by the Company, including the
actual expenses incurred by brokerage houses, nominees and fiduciaries in
forwarding Proxy materials to beneficial owners, will be borne by the Company.
In addition to solicitation by mail, certain officers and other employees of
the Company may solicit Proxies in person, by mail, or by telephone.
Stockholder Proposals for 1999 Annual Meeting
Stockholders intending to present proposals at the next Annual
Meeting of Stockholders to be held in 1999 must notify the Company of the
proposal no later than April 16, 1999.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of June 24, 1998, the Company's
Common Stock beneficially owned by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, and the
number of shares of Common Stock owned beneficially by each director, by each
named executive officer, and by all executive officers and directors as a
group. In addition to the information regarding the Company's Common Stock
listed below, as of June 24, 1998, there were 15,000 Series A Shares issued
and outstanding. All of such Series A Shares are owned of record by Safeguard
Scientifics (Delaware), Inc., a wholly owned subsidiary of Safeguard
Scientifics, Inc. ("Safeguard"), and consequently are beneficially owned by
Safeguard.
2
<PAGE>
<TABLE>
<CAPTION>
Number of Percent of
Shares Owned (1) Class
---------------- ----------
<S> <C> <C>
Safeguard Scientifics (Delaware), Inc. (2).......... 4,059,757 37.93%
103 Springer Building
3411 Silverside Road
Wilmington, DE 19803
Philip J. Donnelly.................................. 838,333 9.38%
9 Dummings Road
Newtown Square, PA 19073
George E. Mitchell (3).............................. 1,504,834 16.9%
110 Summit Drive
Exton, PA 19341
Frederick B. Franks, III (4)........................ 903,333 10.09%
110 Summit Drive
Exton, PA 19341
W. Wayne Dunlop (4)................................. 5,000 *
Anthony A. Nichols(4)............................... 30,938 *
Richard P. Richter (4).............................. 6,530 *
Officers and directors
as a group (5 persons) (5)........................ 2,450,205 27.32%
</TABLE>
- ------------
(*) Less than 1%
(1) Except as otherwise disclosed, the nature of beneficial ownership is the
sole power to vote and to dispose of the shares (except for shares held
jointly with spouse). 233,334 shares owned by Mr. Mitchell, and 233,333
shares held by Mr. Franks, are redeemable by the Company to satisfy
exercises of employee stock options. See "Certain Relationships and
Related Transactions."
(2) Safeguard Scientifics (Delaware), Inc. is the record owner of 2,244,757
shares of Common Stock and 15,000 Series A Shares, which are presently
convertible into 1,815,000 shares of Common Stock, which includes the
potential conversion of accrued dividends as of December 31, 1997. Such
shares are beneficially owned by Safeguard. All of the shares
beneficially owned by Safeguard have been pledged by Safeguard as
collateral in connection with its bank line of credit.
(3) Includes 300,000 shares of Common Stock held by Mr. Mitchell's spouse.
(4) Includes for Messrs. Franks, Dunlop, Nichols and Richter 65,000, 5,000,
6,250 and 6,250 shares, respectively, which may be acquired pursuant to
stock options which are currently exercisable.
(5) Includes 82,500 shares which may be acquired pursuant to stock options
which are currently exercisable.
Change of Control
There are no arrangements known to the Company, the operation of which
may at a subsequent date result in a change in control of the Company.
3
<PAGE>
1. ELECTION OF DIRECTORS
It is intended that the persons named as Proxies for this Annual
Meeting will vote in favor of the election of the following nominees as
directors of the Company, to hold office until the Annual Meeting of
Stockholders in 1999 and until their successors are elected and have
qualified. All of the nominees are presently serving as directors of the
Company. Each of the nominees has consented to serve if elected. However, if
any of the nominees should become unavailable prior to the election, the
holder of the Proxies may vote the Proxies for the election of such other
persons as the Board of Directors may recommend, unless the Board of Directors
reduces the number of directors to be elected.
The Board of Directors unanimously recommends that Stockholders vote
FOR the election of the slate of nominees set forth in this Proposal. Proxies
received by the Board will be so voted unless Stockholders specify otherwise
on their Proxy cards. The four nominees receiving the highest number of
affirmative votes of the Shares present or represented and entitled to be
voted shall be elected as directors.
<TABLE>
<CAPTION>
Has Been
Principal Occupation and Business A Director
Name Experience During Last Five Years Since Age
- ---- --------------------------------- ---------- ---
<S> <C> <C> <C>
George E. Mitchell President, Chairman and Chief Executive Officer of the 1984 60
Company
Anthony A. Nichols Chairman, Brandywine Realty Trust, a real estate 1988 58
investment trust. (1)(2)(4)
Richard P. Richter President Emeritus, Ursinus College(1)(3)(5) 1989 67
W. Wayne Dunlop Executive Vice President and Chief Operating Officer, 1995 51
Barclay White, Inc., a general construction
contracting and management firm (1)(6)
</TABLE>
- ------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Stock Option Committee.
(4) Prior to August 1996, Mr. Nichols was President of the Nichols Company,
an owner and manager of commercial office and industrial space.
(5) Prior to January 1, 1995, Mr. Richter was President of Ursinus College.
(6) Mr. Dunlop has been Chief Operating Officer of Barclay White since
September 1995 and Executive Vice President since September 1994. Prior
to September 1994 he was a Senior Vice President of Barclay White.
4
<PAGE>
Committees and Meetings of the Board of Directors
The Board of Directors held five (5) meetings and took action by
unanimous consent one (1) time in 1997. The Company's Board of Directors has
appointed standing Audit, Compensation and Stock Option Committees. The Audit
Committee, which met in February, 1997, is authorized to conduct such reviews
and examinations as it deems necessary or desirable with respect to the
practices and procedures of the independent accountants, the scope of the
audit, accounting controls, practices and policies, the recommendation to the
Board of the independent accountants to be selected, and the relationship
between the Company and the independent accountants, including the
availability of Company records, information and personnel. The Compensation
Committee, which currently consists of Mr. Nichols only, and took action in
February 1997 and March 1998, fixes compensation levels, including incentive
compensation for all officers and other principal employees. The Stock Option
Committee, which administers the Company's stock option plans, currently
consists of Dr. Richter only and took action in August and November, 1997. The
Board does not have a Nominating Committee. All of the directors attended at
least 75% of the Board meetings and meetings of committees of which they were
members.
Directors' Compensation
Directors are elected annually and hold office until their successors
are elected and have qualified or until their earlier resignation or removal.
Directors who are not employees of the Company are paid a quarterly fee of
$1,000 and $400 for each Board meeting attended, including committee meetings
attended on a date other than a Board meeting date.
The Company also maintains a stock option plan for Non-Employee
Directors (the "Directors' Plan") which provides for the grant of options to
directors not otherwise employed by the Company, its parent or any of its
subsidiaries ("Eligible Director"). Each Eligible Director receives, as of the
date such person first becomes an Eligible Director, an option to purchase
5,000 shares of the Company's Common Stock at an option exercise price equal
to the fair market value of the Common Stock on the date of grant. All options
granted under the Directors' Plan vest in four equal annual installments
beginning on the first anniversary of the date of option grant and have a term
of seven years. During 1996, Mr. Nichols and Mr. Richter were each granted
options for 10,000 shares of the Company's common stock exercisable at $.26
per share; Mr. Dunlop was granted options for 5,000 shares at $.25 per share
and 10,000 shares at $.26 per share. No options were granted to or exercised
by any Eligible Director during 1997.
5
<PAGE>
REPORT OF THE BOARD COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the
"Committee") determines compensation levels, including incentive compensation,
for the executives of the Company. Anthony A. Nichols is presently serving as
the sole member of the Compensation Committee.
Executive Compensation Policies
The Company was and is in a highly competitive industry. In order to
succeed, the Company believes that it must be able to attract and retain
qualified executives, promote among them the economic benefits of stock
ownership in the Company, and motivate and reward executives who, by their
industry, loyalty and exceptional service, make contributions of special
importance to the success of the business of the Company. The Company has
structured its executive compensation program to support the strategic goals
and objectives of the Company.
Base compensation levels and benefits for executives generally had
been set in previous years to be between the lower end and the midpoint of the
scale of compensation paid by comparable companies in the Company's principal
industry. Conversely, incentive programs were regarded to be above the
midpoint of the scale in the industry. In pursuing this philosophy, the
Company believed it could keep the fixed component of the compensation package
at reasonable levels while incenting its key executives and managers to
achieve better than average results. Therefore, the total cash compensation
plan is made up of a lower base and higher incentive opportunity which in
total would be competitive with comparable companies in the industry if the
Company's objectives are achieved. For the purpose of establishing these
levels, the Company had reviewed an evaluation by an independent compensation
consultant of various published industry salary surveys. In setting executive
compensation packages for 1995, 1996 and 1997 the Committee considered an
evaluation of executive compensation levels for comparably-sized companies in
the electrical contracting industry. In the future, the Compensation Committee
will re-examine executive compensation in light of Airo Clean's business
becoming the Company's primary business.
Annual cash bonuses in 1996 and 1997 were, and in 1998 will be based
on Company income and individual goals. At the beginning of each year, the
Committee approves a target range of income, and a range of potential bonus
amounts for the chief executive officer and each other executive officer,
stated as a percentage of base salary. Performance bonuses are awarded at
year-end based on the actual income compared to the target income, and the
achievement of individual objectives and individual contributions during the
year to the achievement by the Company of its financial and strategic
objectives, which the Board determines in its discretion.
Grants of Company stock options are intended to align the interests
of executives and key employees with the long-term interests of the Company's
stockholders, and to encourage executives and key employees to remain in the
Company's employ. Generally, grants are not made in every year, but are
awarded subjectively based on a number of factors, including the pre-tax
operating earnings of the Company, the individual's contributions to the
achievement of the Company's financial and strategic objectives, and the
amount and remaining term of options already held by an individual. The Stock
Option Committee of the Board administers the Company's stock option plan. In
1997, options for 50,000 shares were issued to Mr. Franks, and are intended to
replace 50,000 options held by Mr. Franks which expire in December 1998. See
"Stock Options," below.
6
<PAGE>
CEO Compensation
In 1994, the Committee set Mr. Mitchell's base salary at $140,000.
However, based on the Company's performance and its cash flow problems, in
April, 1994, Mr. Mitchell initiated a 16% reduction in his salary in order to
conserve Company resources. Mr. Mitchell has continued to draw base salary at
this reduced level through the end of 1997 and to the date of this report. A
payment of $25,000 was made to Mr. Mitchell in March 1996 to partially
compensate him for the salary foregone in 1994 and 1995. Since the Company
failed to achieve the established target range of return on assets during 1996
and 1997, no bonus was paid to Mr. Mitchell for those years.
Other Executive Compensation
Mr. Franks, the Company's Vice-President-Finance and Chief Financial
Officer, is currently the Company's only other executive officer. Mr. Franks
received a payment of $16,000 in March, 1996 to compensate him for salary
foregone in 1994 and 1995.
By the Compensation Committee:
Anthony A. Nichols
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation of Executive Officers
The following table sets forth information concerning compensation
paid to the Chief Executive Officer and to each other person who was an
executive officer of the Company at any time during 1997 and whose salary and
bonus exceeded $100,000 in 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------------------------------------------------
Awards
-------------
Securities
Other Annual Underlying All Other
Name and Principal Compensation Options/ Compensation
Position Year Salary($)(1) Bonus($) ($)(2) SARS (#) ($)(3)(4)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George E. Mitchell (5) 1997 $117,600 $ 0 $18,976 0 $34,316
President, Chairman and 1996 117,600 0 18,331 0 33,170
Chief Executive Officer 1995 142,600 0 17,733 0 32,106
- ------------------------------------------------------------------------------------------------------------------------
Michael H. Pelosi III 1997 $100,000 $ 0 0 0 $ 0
President, Airo Clean, Inc. 1996 100,000 $ 75,000 0 25,000 $37,500
through August, 1997 (6) 1995 99,801 5,465 0 50,000 37,500
- ------------------------------------------------------------------------------------------------------------------------
Frederick B. Franks, III (5) 1997 $100,000 $ 0 $11,939 50,000 $18,910
Vice President-Finance and 1996 100,000 0 $11,552 30,000 $18,222
Chief Financial Officer 1995 108,154 0 11,194 0 17,587
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes annual compensation which has been deferred by the named
executives pursuant to the Company's 401(k) Tax Deferred Retirement and
Incentive Plan ("401(k) Plan").
(2) Represents amounts reimbursed during the fiscal year for the payment of
taxes. Perquisites and other personal benefits did not exceed the lesser
of $50,000 or 10% of any executive officer's salary and bonus and
accordingly have been omitted from the table as permitted by the rules of
the Securities and Exchange Commission.
(3) The stated amounts for fiscal 1996 include the following amounts for each
named executive officer: Company contributions under the 401(k) Plan --
Mr. Mitchell, $0; Mr. Pelosi, $0; Mr. Franks, $0; term life and
disability premiums -- Mr. Mitchell, $26,589; Mr. Pelosi, $0; Mr. Franks,
$14,536; current dollar value of benefits to the named executives of the
remainder of split-dollar premiums paid by the Company -- Mr. Mitchell,
$6,581; Mr. Pelosi, $0; Mr. Franks, $3,686; residual salary payments
agreed to in connection with acquisition -- Mr. Mitchell, $0; Mr. Pelosi,
$37,500; Mr. Franks, $0.
(4) The stated amounts for fiscal 1997 include the following amounts for each
named executive officer: Term life and disability premiums -- Mr.
Mitchell, $27,735; Mr. Pelosi, $0; Mr. Franks, $15,224; current dollar
value of benefits to the named executives of the remainder of
split-dollar premiums paid by the Company -- Mr. Mitchell, $6,581; Mr.
Pelosi, $0; Mr. Franks, $3,686.
(5) The 1995 amount includes salary adjustment paid on March 15, 1996 to: Mr.
Mitchell, $25,000 and Mr. Franks, $16,000.
(6) Mr. Pelosi ceased to be an executive officer of the Company in August
1997. He continues to serve the Company as a sales representative. The
amounts in 1997 include both amounts Mr. Pelosi received as an executive
officer and amounts he received as a sales representative.
8
<PAGE>
Stock Options
The following table sets forth information with respect to the number
of unexercised options and the value of unexercised in-the-money options at
December 31, 1997.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Shares Number of Securities Underlying
Acquired Unexercised Value of Unexercised
on Value Options/SARs at Fiscal Year-End In-The Money Options/SARs
Exercise Realized (#)(1) at Fiscal Year-End ($)(1)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George E. Mitchell 0 $ 0 0 0 $ 0 $ 0
- --------------------------------------------------------------------------------------------------------------------------
Michael H. Pelosi III 0 $ 0 76,250 43,750 $ 0 $ 0
- --------------------------------------------------------------------------------------------------------------------------
Frederick B. Franks III 0 $ 0 61,250 68,750 $ 0 $ 0
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) On December 31, 1997, the fair market value of the common stock was $.15.
No options were in-the-money on that date.
During Fiscal Year 1997, Mr. Franks was granted options for 50,000
shares, of the Company's common stock under the Company's 1993 Stock Option
Plan. These options were issued at the market price on the date of grant,
expire seven years after the date of grant, and vest in twenty-five percent
increments annually beginning one year from the date of grant. No options were
granted to the Company's Chief Executive Officer in 1997. The following table
sets forth certain information regarding the options granted to Mr. Franks in
1997:
Options/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
% of Total
Number of Options/
Securities SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration
Name Granted Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- --------------------------------------------------------------------------------------------------------------------
Frederick B. Franks, III 50,000 21.6% $.20 08/01/04 $4,071 $9,487
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements.
Prior to his resignation as an executive officer in August 1997,
Michael H. Pelosi III had an employment agreement with the Company providing
for at a minimum base salary of $100,000, plus a bonus based on Airo Clean's
net income. Upon his resignation as President of Airo Clean, that contract was
released. Mr. Pelosi now serves as a sales representative and therefore was
not entitled to a bonus in 1997.
STOCK PERFORMANCE GRAPHS
The following chart compares the cumulative total stockholder return
on the Company's Common Stock for the period December 31, 1992 through
December 31, 1997 with the cumulative total return on the NASDAQ Index and the
cumulative total return for a peer group index for the same period. Because
the Company has discontinued its security systems operations, the Company has
selected as a new peer group SIC Code 3564 - Industrial and Commercial Fans
and Blowers and Air Purification Equipment, which is the primary industry in
which the Company is continuing to operate.
275---------------------------------------------------------------------------
250------------------------------------------------------------------------+--
D 225---------------------------------------------------------------------------
O 200--------------------------------------------------------+------------------
L 175---------------------------------------------------------------------------
+ *
L 150---------------------------------------------------------------------------
# *
A 125------------------------------+--------------------------------------------
+ *
R 100#*+---------------*--------------------------------------------------------
*
S 75---------------------------------------------------------------------------
#
50---------------------------------------------------------------------------
# #
25------------------------------------------------------------------------#--
0---------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
# Core Technologies (Pennsylvania), Inc.
* SIC Code Index
+ NASDAQ Market Index
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
----------------------------------------------------------------
COMPANY/INDEX/MARKET 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Core Technologies Inc. 100 133.33 66.67 33.33 35.56 26.67
SIC Code Index 100 98.43 94.35 110.02 131.91 169.75
NASDAQ Market Index 100 119.95 125.94 163.35 202.99 248.3
</TABLE>
10
<PAGE>
As required by the rules of the Securities and Exchange Commission, the chart
below compares the cumulative stockholder return on the Company's common Stock
with the cumulative total return on the NASDAQ Index and the peer group used in
the chart presented in the Company's 1997 proxy statement. The peer group in
this chart consists of SIC Code 1731 - Electrical Contractors.
275---------------------------------------------------------------------------
250------------------------------------------------------------------------+--
D 225---------------------------------------------------------------------------
O 200------------------------------------------------------+--------------------
L 175---------------------------------------------------------------------------
+
L 150---------------------------------------------------------------------------
#
A 125----------------------------+----------------------------------------------
+
R 100#*+------------------------------------------------------------------------
S 75---------------------------------------------------------------------------
#
50---------------------------------------------------------------------------
# #
25-----------------------------------------------------------------------#*--
* * * *
0---------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
# Core Technologies (Pennsylvania), Inc.
* SIC Code Index
+ NASDAQ Market Index
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
-----------------------------------------------------------------------
COMPANY/INDEX/MARKET 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Core Technologies 100 133.33 66.67 33.33 35.56 26.67
Industry Group Index 100 29.79 10.72 16.92 20.27 24.29
NASDAQ Market Index 100 119.95 125.94 163.35 202.99 248.30
</TABLE>
The above charts each assume that $100 was invested on December 31,
1992 in the Company's Common Stock and in each of the comparison groups, and
assumes reinvestment of dividends.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company rents 21,580 square feet of office space used as its
headquarters in Exton, Pennsylvania. Prior to the third quarter of 1996, this
facility was owned by Safeguard; it has subsequently been transferred to
Brandywine Realty Trust, a Real Estate Investment Trust of which Anthony
Nichols, a director of the Company, is Chairman. The Company pays a monthly
rental of $12,588 plus its proportionate share of the monthly operating
expense. The Company believes the lease terms are no less favorable than could
be obtained from an unrelated third party.
Safeguard currently has in place letters of credit in the aggregate
amount of $4,500,000 to guaranty the Company's bank loans through September
30, 2000. Safeguard has guaranteed varying amounts of the Company's debt in
the past. Safeguard received no monetary compensation for the extension of the
guarantees. The Company has agreed to indemnify Safeguard against loss
resulting from the above described guarantees.
In June 1994, Safeguard purchased from the Company 15,000 shares of
its Series A Redeemable Convertible Preferred Stock ("Series A Shares") for an
aggregate purchase price of $1.5 million. The Series A Shares are convertible
into shares of Common Stock based on a conversion price of $1.00 per share of
Common Stock. The conversion price and number of shares into which the Series
A shares may be converted are subject to anti-dilutive adjustments. The Series
A Shares are entitled to a 6% per annum dividend payable out of legally
11
<PAGE>
available funds. Dividends which are not declared and paid will accumulate and
are convertible into Common Stock at $1.00 per share. No dividends have been
declared to date. Unpaid, undeclared cumulative dividends as of December 31,
1997 were $315,000. The Series A Shares are entitled to one vote for each
share of Common Stock into which such Series A Shares may be converted. The
Company may redeem the Series A Shares at any time and must redeem all
outstanding Series A Shares on June 1, 2001.
In March 1995, the Company sold all of the capital stock of
CenterCore Canada Limited to Safeguard for $10,000. CenterCore Canada had an
intercompany liability to the Company of approximately $369,300, which
liability survived the stock sale. In February 1996, Safeguard sold the assets
of Safeguard Canada for a cash payment of $100,000 U.S. plus contingent
deferred payments equal to three percent of the purchaser's annual
consolidated revenues from all or any part of the business or assets sold to
the purchaser in the years 1996 through 2000, up to a maximum aggregate of
$100,000. The debt between CenterCore Canada and the Company was satisfied by
CenterCore Canada's assignment to the Company of the cash proceeds and the
rights to the contingent deferred payments.
Effective September 29, 1995, Safeguard contributed to the capital of
the Company 2,000,000 shares of the company's Common Stock and sold to Mr.
Mitchell, Mr. Franks and Philip J. Donnelly, a former Vice President of the
Company, an aggregate of 2,500,000 shares of the Company's Common Stock, at a
price of $.10 per share, payable in the form of a five year, interest-bearing
promissory note. The promissory notes bear interest at a rate of 6.35% per
annum and are payable in full upon the maturity date, September 29, 2000. Each
individual is required, however, to prepay the outstanding balance to the
extent of 25% of the proceeds of any sale or other disposition of any of the
shares purchased from Safeguard. The parties estimated the fair market value
of the shares to be $.10 as of the date of issue, taking into account a
discount for lack of liquidity, after the Common Stock of the Company was
delisted from NASDAQ.
Mr. Mitchell, Mr. Franks and Mr. Donnelly have entered into an
agreement with the Company pursuant to which they have deposited an aggregate
of 700,000 of the shares acquired from Safeguard into escrow with the Company.
The Company may redeem these escrowed shares in order to satisfy exercises of
options under the Company's 1993 Stock Option Plan. The redemption price
payable by the Company will be equal to the exercise price payable by the
individual exercising the option. No shares had been redeemed through December
31, 1997.
In 1995, Safeguard advanced $887,000 to the Company to cover closing
costs of the sale of the furnishings business and payments to Maris' sureties.
The Company has issued to Safeguard a Subordinated Note to evidence this
obligation. The Subordinated Note accrues interest at 6% per annum. Interest
and principal are due on December 31, 2000 but the Subordinated Note is
subordinated to all the Company's obligations to its other lenders.
Additionally, if the Safeguard letter of credit can be cancelled prior to
December 31, 2000, Safeguard has agreed to forgive all obligations under the
Subordinated Note.
In connection with the Airo Clean acquisition, Airo Clean entered
into a lease for approximately 15,300 square feet of flex office, warehouse
and assembly space in Exton, PA from Michael Pelosi, Jr. and Lucille Pelosi,
who are the parents of Michael H. Pelosi, III. (formerly the President of Airo
Clean). The lease continues through December 2001. The rent is approximately
$110,000 per annum, and the Company is required to pay the operating expenses
12
<PAGE>
for the leased premises. The Company subleased the space in 1996 and part of
1997, but the subtenant filed for bankruptcy and vacated the premises. The
Company currently does not use this space and is seeking a new subtenant.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement incorporates by reference the Company's Annual
Report to Stockholders which is being delivered to Stockholders herewith in
respect to the annual stockholders meeting to which this Proxy Statement
relates.
INDEPENDENT PUBLIC ACCOUNTANTS
Since 1986, the Company has retained KPMG Peat Marwick LLP as its
independent public accountants, and it intends to retain KPMG Peat Marwick LLP
for the current year ending December 31, 1998. Representatives of KPMG Peat
Marwick LLP are expected to be present at the Annual Meeting, will have an
opportunity at the Annual Meeting to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Disclosure of Delinquent Filers Pursuant to Item 405 of Regulation S-K:
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities ("10%
Stockholders") to file reports of ownership and changes in ownership of Common
Stock and other equity securities of the Company with the Securities and
Exchange Commission ("SEC"). Officers, directors and 10% Stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of the copies of such forms
received by it and written representations from certain reporting persons that
no other reports were required for those persons, the Company believes that
during the period from January 1, 1997 to December 31, 1997, all Section 16(a)
filing requirements applicable to its officers, directors and 10% Stockholders
were complied with.
OTHER MATTERS
The Company is not aware of any other business to be presented at the
Annual Meeting. If any other matters should properly come before the Annual
Meeting, however, the enclosed Proxy confers discretionary authority with
respect thereto.
The Company's Annual Report to Stockholders for the year ended
December 31, 1997, including financial statements and other information with
respect to the Company and its subsidiaries, is being mailed simultaneously to
the stockholders but is not to be regarded as proxy solicitation material.
Dated: July 23, 1998
13
<PAGE>
PROXY
CORE TECHNOLOGIES (PENNSYLVANIA), INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby constitute and appoint George E. Mitchell and Frederick
B. Franks, III, and each of them, my true and lawful agents and
proxies with full power of substitution in each, to vote all
shares held of record by me, as directed, and in their
discretion, on all other matters which may properly come before
the 1998 Annual Meeting of Stockholders of Core Technologies
(Pennsylvania), Inc. to be held on August 14, 1998, and at any
adjournments thereof. I direct said proxies to vote as specified
on the reverse side.
PLEASEMARK, SIGN AND DATE THE PROXY CARD ON THE REVERSE SIDE
AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE
===================================================================
MISSION STATEMENT
Core Technologies is dedicated to providing quality
products and services to customers needing a healthy air
environment through its subsidiary, Airo Clean, Inc. Our
growth will come through evolving products and
technologies enabling us to continually upgrade service
solutions in existing markets and aggressively explore new
ones.
Our specific expertise:
Advanced Air Filtration
o Indoor Air Quality Enhancements
o Clean Room Products and Services
o Portable Patient Isolation Chambers
===================================================================
<PAGE>
The Board of Directors ("Board") recommends that stockholders vote FOR
Proposal I. If not otherwise specified, this Proxy will be voted FOR the
election of all nominees.
I. ELECTION OF DIRECTORS:
<TABLE>
<S> <C> <C> <C>
FOR WITHHOLD To withhold authority to Nominees: George E. Mitchell,
all nominees AUTHORITY vote for any individual --------- Anthony A. Nichols,
listed (except to vote nominee while voting Richard P. Richter,
as marked to for all for the remainder, strike W. Wayne Dunlop
the contrary) Nominees a line through the
nominee's name in the
[ ] [ ] list to the right:
</TABLE>
DATED: , 1998
---------------------
---------------------------------
Signature
---------------------------------
Signature if held jointly
THIS PROXY MUST BE SIGNED
EXACTLY AS NAME APPEARS HEREIN.
When shares are held by joint
tenants, both should sign.
Attorneys, executors,
administrators, trustees, etc.
should give full title as such.
If a corporation, please sign in
full corporate name by duly
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
- --------------------------------------------
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES.
- --------------------------------------------
<PAGE>
FOLD AND DETACH HERE
CORE TECHNOLOGIES (PENNSYLVANIA), INC.
=============================================================================
YOUR PROXY VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON, PLEASE COMPLETE, DATE AND SIGN THE
ABOVE PROXY CARD AND RETURN IT WITHOUT DELAY IN
THE ENCLOSED ENVELOPE.
=============================================================================
