EMCOR’s subsidiary Dynalectric Company (“Dynalectric”) had been a party to an arbitration proceeding arising out of Dynalectric’s participation in a joint venture with Computran Systems Corp. (“Computran”). The proceeding, which was instituted in 1988 in the Superior Court of New Jersey, Bergen County (“Superior Court”) by Computran, a participant in, and a subcontractor to, the joint venture, alleged that Dynalectric wrongfully terminated its subcontract, fraudulently diverted funds due to it, misappropriated its trade secrets and proprietary information, fraudulently induced it to enter into the joint venture and conspired with others to commit certain acts in violation of the New Jersey Racketeering Influence and Corrupt Organization Act. The Superior Court ordered that the matter in dispute between Dynalectric and Computran be resolved by binding arbitration in accordance with an original agreement between the parties. Following a decision by the arbitrator, the parties decided to settle all matters relating to the dispute and exchange general releases and, as a consequence, Dynalectric paid to Computran $1,000,000.

In February 1995, as part of an investigation by the New York County District Attorney’s office into the business affairs of Herbert Construction Company (“Herbert”), a general contractor that did business with EMCOR’s subsidiary, Forest Electric Corp. (“Forest”), a search warrant was executed at Forest’s executive offices. At that time, EMCOR was informed that Forest and certain of its officers are targets of the continuing investigation. Neither EMCOR nor Forest has been advised of the precise nature of any suspected violation of law by Forest or its officers. On April 7, 1997, Ted Kohl, a principal of Herbert, pled guilty to one count of money laundering, one count of offering a false instrument for filing and one count of filing a false New York State Resident Income Tax Return. DPL Interiors, Inc., a company allegedly owned by Mr. Kohl, also pled guilty to one count of failing to file New York City General Income Tax Returns. Mr. Kohl and DPL Interiors, Inc. have not yet been sentenced.

On July 31, 1998, a former employee of a subsidiary of EMCOR filed a class-action complaint on behalf of the participants in two employee benefit plans sponsored by EMCOR against EMCOR and other defendants for breach of fiduciary duty under the Employee Retirement Income Security Act. All of the claims relate to alleged acts or omissions which occurred during the period May 1, 1991 to December 1994.