<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) April 16, 1998
--------------
LINDBERG CORPORATION
- ---------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
- ---------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-8287 36-1391480
- ------------------------ -----------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
6133 North River Road, Suite 700, Rosemont, Illinois 60018
- ---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(847) 823-2021
- ---------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On April 16, 1998 the registrant purchased all of the outstanding
shares of capital stock of Houston Heat Treating Company from its ten
individual shareholders for $11,500,000 in cash. Houston Heat Treating
Company is a Texas corporation engaged in the heat treating business.
The registrant intends to use the assets of the acquired company in the
same manner as they were used before the acquisition, except as described
in the last sentence. The stock purchase price was negotiated between
the registrant and representatives of the sellers and was financed from
a revolving line of credit under an amended bank credit agreement with
the registrant's banks. Cash in the amount of $800,000 was transferred
from the acquired company upon closing of the transaction to the
registrant to pay down the borrowing under the revolving line of credit.
-2-
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
LINDBERG CORPORATION
Date April 23, 1998 By: /s/ Stephen S. Penley
-----------------------
Stephen S. Penley
Senior Vice President,
Chief Financial Officer
and Secretary
-3-
<PAGE> 4
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 Agreement for Purchase and Sale of Stock dated
as of April 16, 1998 among Lindberg
Corporation and the stockholders of Houston
Heat Treating Company
</TABLE>
-4-
<PAGE> 1
EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE OF STOCK
This agreement (the "Agreement") is entered into as of April
16, 1998, between Lindberg Corporation, a Delaware corporation (the
"Buyer"), and the stockholders of Houston Heat Treating Company, a Texas
corporation (the "Company"), set forth on the signature page(s) of this
Agreement (the "Sellers").
The Sellers wish to sell all of the issued and outstanding
shares of capital stock (the "Stock") of the Company to Buyer and Buyer
is willing to buy the Stock on the terms and conditions set forth in
this Agreement.
Buyer and the Sellers agree as set forth below.
1. Purchase and Sale; Purchase Price; Closing.
------------------------------------------
(a) On the Closing Date (as hereinafter defined) the Sellers
will sell, transfer and assign to Buyer and Buyer will purchase all of
the Stock.
(b) The Purchase Price for the Stock to be paid at Closing
will be the amount equal to (i) $11,500,000 (ii) less (A) any interest-
bearing debt of the Company ("Debt") on the Closing Date and (B) the
amount by which cash of the Company as of the Closing Date is less than
$800,000.
(c) On the Closing Date, the Sellers shall deliver to Buyer
certificates evidencing all of the Stock, endorsed in blank or
accompanied by executed stock powers, and Buyer shall deliver certified
or cashier's checks or wire transfers in payment of the Purchase Price
payable to the order of the Sellers, in the percentages shown on
schedule 1(c) attached hereto (reduced proportionately for the sum of
$500,000 being deposited contemporaneously by Buyer pursuant to the
Escrow Agreement referred to in Section 4(e) below). The closing shall
be held at the office of Fulbright & Jaworski L.L.P. at 9:00 a.m., local
time, on April 16, 1998 (the "Closing Date").
2. Representations and Warranties of Sellers. The following
-----------------------------------------
representations and warranties of the Sellers are qualified to the
extent set forth on the attached Disclosure Schedule (which schedule
shall refer specifically to the paragraphs of this section 2 which it so
qualifies). The Sellers jointly and severally represent and warrant as
follows to Buyer:
(a) The Company is a corporation duly organized and validly
existing under the laws of the State of Texas, with full corporate power
and authority to own its assets and to operate its business as the same
is now being operated. The Company has no subsidiaries. The Company's
authorized capital stock consists of 40,000 shares of common stock,
$1.00 par value, and 10,000 shares of common stock, $.75 par value, of
which 46,500 shares are issued and outstanding; the Sellers are the
record and beneficial owners of all of such shares; there are no
outstanding options, warrants or rights to purchase any shares of
capital stock of the Company;
<PAGE> 2
all shares constituting the Stock have been validly authorized and
issued and are fully paid and non-assessable; delivery of certificates
for the Stock will vest in Buyer good and valid title to the Stock, free
and clear of any liens, claims, encumbrances and security interests.
(b) The Sellers have furnished to Buyer the following
financial statements:
. balance sheets at December 31, 1996 and 1997, in each case
with supplementary schedules thereto.
. income statements for the 12-month periods ended December 31,
1995, 1996 and 1997, in each case with supplementary schedules
thereto.
These financial statements present fairly the financial position of the
Company at the dates thereof and the results of its operations and
changes in financial position for the periods ended on such dates, in
conformity with generally accepted accounting principles consistently
applied. Since December 31, 1997, there has been no change that would
have a material adverse effect on the business, financial condition, or
results of operation of the Company ("Material Adverse Effect"), and the
Company has not declared or paid any dividend or made any other
distribution on or with respect to its capital stock.
(c) The Company has good title to its assets, subject to no
liens, encumbrances or security interests. All of such assets are in
good operating condition, ordinary wear and tear excepted.
(d) Since December 31, 1997, the Company has conducted its
business in a normal and ordinary manner, and there have been no
material changes, or, to any Seller's knowledge, threatened or
prospective event or condition which could reasonably be expected to
cause material changes in its business or business organization, its
personnel (other than normal turnover), or its relationship with
suppliers or customers, other than changes occurring in the ordinary
course of business.
(e) The Company possesses, without conflict with proprietary
rights of others, all proprietary rights, including, without limitation,
patents, trade secrets, technology, know-how, copyrights, trademarks,
trade names, and rights to any of the foregoing or has licenses (such
licenses as described in paragraph 2(e) of the Disclosure Schedule) in
such proprietary rights, which (i) are necessary to carry on its
business as now being conducted, and (ii) the failure to possess would
have a Material Adverse Effect. The Company owns all right, title and
interest in and to all of such proprietary rights or has licenses in
such proprietary rights; there have been no claims made against the
Company asserting the invalidity or unenforceability of any of such
rights, and to the best of the Sellers' knowledge there are no valid
grounds for the same, and none of the Sellers or the Company has
received a notice of conflict with the asserted rights of others. No
officer, director, stockholder, or employee of the Company owns or has
any interest in any patents, inventions, trademarks, or secret processes
or trade secrets used in the business of the Company.
-2-
<PAGE> 3
(f) The Company possesses all licenses and other required
governmental or official approvals, permits or authorizations the
failure to possess which would have a Material Adverse Effect. All such
licenses, approvals, permits and authorizations are in full force and
effect, the Company is in compliance with their requirements, and no
proceeding is pending or to any Seller's knowledge threatened to revoke
or amend any of them, nor is there any valid basis therefor. Except for
notification or filings required to reflect or report changes in
ownership or operational control or responsibility, the failure to
comply with such requirements would have a Material Adverse Effect, all
as described in paragraph 2(f) of the Disclosure Schedule, none of such
licenses, approvals, permits and authorizations are or will be impaired
or in any way affected by the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
(g) The assets and properties of the Company constitute, in
the aggregate, all of the property necessary for the conduct of the
Company's business in the manner in which and to the extent to which it
is currently being conducted. None of the Sellers or the Company knows
of any written or oral communication, fact, event or action which exists
or has occurred which would tend to indicate that any current customer
of the Company which accounted for over 5% of the total net sales of the
Company for the year ended December 31, 1997, or any current supplier to
the Company of items essential to the conduct of its business, will
terminate its business relationship with the Company. None of the
Sellers or any Affiliate (as hereinafter defined) of any of the Sellers,
other than the Company, nor, to the best knowledge of the Sellers, any
officer, director or employee of the Company, has any direct or indirect
interest in any customer, supplier or competitor of the Company or in
any person from whom or to whom the Company leases real or personal
property, or in any other person with whom the Company is doing
business. As used in this Agreement, the term "Affiliate" means, with
respect to a specified person, any other person which directly, or
indirectly through one or more intermediaries, controls or is controlled
by, or is under common control with, the person specified.
(h) The Company is not a party to or bound by any collective
bargaining agreement or any other agreement with a labor union, and
there has been no effort by any labor union to organize any employees of
the Company into one or more collective bargaining units; there is no
pending or threatened labor dispute, strike or work stoppage which
affects or which may affect the business of the Company or which may
interfere with its continued operation; there has been no strike,
walkout or work stoppage involving any of the employees of the Company
during the five-year period prior to the date hereof; and the Sellers
have no reason to believe that any executive or key employee or group of
employees has any plans to terminate his, her or their employment with
the Company. No past or present employee benefit plan established,
maintained or contributed to by the Company (or by any employer that is
a member of a control group, as defined by the Employee Retirement
Income Security Act of 1974 ("ERISA") that includes the Company), is a
multiemployer plan subject to Title IV of ERISA, or has an accumulated
funding deficiency within the meaning of ERISA, or has incurred any
liability to the Pension Benefit Guaranty Corporation established under
ERISA, or has engaged in a prohibited transaction within the meaning of
ERISA. All of the Company's employee benefit, fringe benefit, bonus and
other compensation plans and practices are listed in paragraph
-3-
<PAGE> 4
2(h) of
the Disclosure Schedule attached hereto. All such plans have been
maintained in material compliance with ERISA, the Internal Revenue Code
and all other applicable laws. The Company has no liability for any
employee compensation or benefits (including any post-retirement
benefits) that is not properly accounted for in the Company's financial
statements listed in section 2(b) above, in accordance with generally
accepted accounting principles consistently applied.
(i) The Company carries insurance which is believed by the
Sellers to be adequate in character and amount, with reputable insurers,
covering all of the Company's assets, properties and business, and it
has provided all required performance and other surety bonds. All
premiums and other payments which have become due under such policies of
insurance have been paid in full, all of such policies are now in full
force and effect and the Company has not received any notice from any
insurer, agent or broker of the cancellation of, or any increase in
premium with respect to, any of such policies or bonds. The Company has
no claim against any of its insurers under any of such policies pending
or anticipated and there has been no occurrence of any kind which would
give rise to any such claim.
(j) With respect to environmental matters, except as would
not have a Material Adverse Effect:
(i) The Company has not transported, stored,
treated or disposed of, or arranged for any third parties to
transport, store, treat or dispose of Contaminants in
contravention of any Environmental Laws. The Company has not
disposed, or arranged for any third parties to dispose, of
Contaminants upon property currently, or in the past, owned,
operated, leased or occupied by the Company.
(ii) To the knowledge of Sellers after reasonable
inquiry, the Company has not transported or disposed of, or
allowed or arranged for any third parties to transport or
dispose of, any Contaminants to or at a site which, pursuant
to CERCLA or any similar state law, has been placed on the
National Priorities List or its state equivalent, or a site
that the U.S. Environmental Protection Agency or relevant
state agency has proposed or is proposing by public notice to
place on the National Priorities List or its state equivalent.
The Company has not received notice, and the Sellers have no
knowledge of any material facts which could give rise to any
notice, that the Company is a potentially responsible party
for Remedial Action. The Company has not submitted and was
not required to submit any notice pursuant to Section 103(c)
of CERCLA with respect to property owned, operated or occupied
by the Company. The Company has not received any written
request for information concerning environmental conditions
presently existing on property owned, operated or occupied by
the Company. The Company has not undertaken, or been
requested to undertake, any Remedial Actions that have not
been completed to the satisfaction of the appropriate
governmental agency.
-4-
<PAGE> 5
(iii) All underground storage tanks owned and
operated by the Company are registered with the Texas Natural
resource Conservation Commission ("TNRCC"). Such underground
storage tanks are regulated by the TNRCC and the United States
Environmental Protection Agency and are subject to the
registration, construction, notification and other
requirements found in 30 Texas Administrative Code, Chapter
334. For purposes of this paragraph, the term "underground
storage tank" shall have the meaning given it in RCRA (42
U.S.C. S 6902 et seq.).
------
(iv) To the knowledge of Sellers after reasonable
inquiry, the Company is and has been in compliance with all
Environmental Laws.
(v) The Company has not released any Contaminant on
property currently, or in the past, owned, operated, leased or
occupied by the Company.
(vi) To the knowledge of the Sellers after
reasonable inquiry, neither the Company nor any third party
has caused Contaminants to be present in the soils or
groundwater on property currently, owned, operated, leased or
occupied by the Company at levels that pose a substantial risk
to human health or the environment at industrial facilities.
(vii) For purposes of this section
2(j): (i) "Environmental Law" means any law, statute,
regulation or order, or final and effective consent decree or
settlement agreement, as existing as of the Closing Date,
which imposes liability or standards of conduct on the Company
concerning discharges, emissions, Releases or threatened
Releases of any Contaminants into the environment, or
otherwise governs the treatment, storage, or disposal,
cleanup, or transport for disposal of any Contaminant,
including (but not limited to) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"),
as amended, the Resource Conservation and Recovery Act
("RCRA") of 1976, as amended, the Federal Water Pollution
Control Act, as amended, the Toxic Substances Control Act, the
Federal Clean Air Act, as amended, the Occupational Safety and
Health Act, and any other similar state or local statutes and
regulations promulgated pursuant thereto; (ii) "Contaminant"
means any substance defined as a "hazardous substance" under
CERCLA, any waste defined as a "solid waste" or "hazardous
waste" under RCRA, or any petroleum including crude oil or any
fraction thereof; (iii) "Release" means release, spill,
emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the
environment; (iv) "Remedial Action" means actions required by
any party to (A) clean up, remove, treat or in any other way
address Contaminants in the environment; (B) prevent the
Release or threat of Release or minimize the further Release
of Contaminants; or (C) perform pre-remedial studies and
investigations and post-remedial monitoring care, and (v)
"reasonable inquiry" includes interviews with persons at the
Company that would
-5-
<PAGE> 6
reasonably be expected to have knowledge of
matters arising under Environmental Laws, but does not require
soil or groundwater sampling or other environmental testing at
any property currently, or in the past, owned, operated,
leased or occupied by the Company.
(k) The only real estate owned by the Company is at 4111 &
4201 Robertson, Texas, and 1301 Hays Street, Houston, Texas, and legal
descriptions thereof are included in paragraph 2(k) of the Disclosure
Schedule. The Company has good and marketable title to such real
estate, free and clear of all liens, mortgages, pledges, encumbrances,
charges, assessments, restrictions, covenants and easements or title
defects of any nature whatsoever, except for liens set forth in
paragraph 2(k) of the Disclosure Schedule, liens for real estate taxes
not yet due and payable, and such imperfections of title and
encumbrances, if any, as are not substantial in character, amount or
extent and do not materially detract from the value, or interfere with
the present use, of such real estate or otherwise impair business
operations in any material respect. The buildings located on the real
estate are each in good operating condition, normal wear and tear
excepted, and are sufficient to satisfy the Company's current normal
production levels. The real estate (i) has direct access to public
roads or access to public roads by means of a perpetual access easement,
such access being sufficient to satisfy the current and reasonably
anticipated normal transportation requirements of the Company's business
as currently conducted thereon; and (ii) is served by all utilities,
including but not limited to water, electricity, natural gas, sewer and
telephone, in such quantity and quality as are sufficient to satisfy the
current normal production levels and business activities of the
Company's business as conducted at such parcel. The real estate owned
by the Company is in compliance with all zoning requirements. The
Sellers and the Company have received no notice of (i) any condemnation
proceedings with respect to any portion of the real estate, and, to the
best of their knowledge, no proceeding is contemplated by any
governmental authority, or (ii) any special assessment which may effect
the real estate, and to the best of their knowledge no such special
assessment is contemplated by any governmental authority.
(l) The Sellers have furnished to Buyer accurate and complete
copies of (i) each loan, credit agreement, guarantee, security agreement
or similar document or instrument to which the Company is a party or by
which it is bound; (ii) any other agreement, contract or commitment to
which the Company is a party or by which it is bound which involves a
commitment by the Company in excess of $20,000 and which cannot be
terminated without liability on 90 days or shorter notice; (iii) the
name and current annual salary of each employee of the Company and the
profit sharing, bonus and any other form or compensation (other than
salary) paid or payable by the Company to or for the benefit of each
such person for the year ended December 31, 1997, and any employment or
other agreement of the Company with any of its employees; (iv) the name
of each of the Company's officers and directors; and (v) the name of
each bank in which the Company has an account or safe-deposit box, the
name in which the account or box is held and the names of all persons
authorized to draw thereon or to have access thereto.
-6-
<PAGE> 7
(m) The Company is in compliance with all laws, regulations
and orders applicable to the Company, its assets, properties and
business, the failure to comply with which could have a Material Adverse
Effect, and the Company has not received notification of any asserted
past or present failure to comply with any laws.
(n) The Company has timely filed all tax returns required to
be filed by it. All such tax returns were correct and complete in all
material respects. All taxes owed by the Company (whether or not shown
on any tax return) have been paid in full or the Company has made
adequate provision therefor by the establishment of reserves. The
Company is not currently the beneficiary of any extension of time within
which to file any tax return. No tax deficiency has been proposed or
threatened against the Company by the Internal Revenue Service or any
state, local or foreign tax authority and there are no ongoing audits or
investigations of the Company's tax returns by any authority. There are
no tax liens upon any property or assets of the Company. No claim has
ever been made by an authority in a jurisdiction where the Company does
not file tax returns that it is or may be subject to taxation by that
jurisdiction. All taxes and other assessments which the Company was
required by law to withhold or to collect have been duly withheld and
collected, and have been paid over to the proper governmental entity or
are being held by the Company for such payment, and all such
withholdings and collection and all other payments due in connection
therewith as of December 31, 1997 are duly reflected on the balance
sheet as of that date. There are no outstanding tax sharing agreements,
closing agreements or agreements or waivers extending the statute of
limitations applicable to any federal, state, local or foreign income
tax returns of the Company for any period. The Company is not and has
never been a member of a group filing a consolidated federal income tax
return, or a unitary tax return in any state. The Company has not filed
a consent under Section 341(f) of the Internal Revenue Code of 1986 (the
"Code") concerning collapsible corporations. The Company has not made
any payment, is not obligated to make any payment and is not a party to
any agreement that under certain circumstances could obligate it to make
any payments that will not be deductible under Section 280G of the Code.
The Disclosure Schedule sets forth, as of the most recent practicable
date, the basis of the Company in its assets. For purposes hereof, the
term "tax" includes all federal, state, local or foreign income, gross
receipts, profits, license, franchise, excise, value added, sales, use,
property (including special assessments), payroll, social security,
unemployment and other taxes and governmental impositions, however
described, regardless of whether the incidence of such tax is imposed
directly on the Company or the Company is obligated to withhold or
collect such tax from others, including any interest, penalty, or
addition thereto, whether disputed or not, and the term "tax return"
includes all returns, reports, declarations, information returns and
other documents that the Company is obligated to file with any
governmental authority with respect to any tax, including any schedule
or attachment thereto, and including any amendment thereof.
(o) The execution and performance of this Agreement by the
Sellers will not result in a breach of or constitute a default under any
material agreement or instrument to which any of the Sellers or the
Company is a party or is bound, or any order, decree or judgment of any
court or governmental agency having jurisdiction over the Company or the
Sellers, or any applicable law.
-7-
<PAGE> 8
(p) There is no claim, action, suit, or proceeding pending,
or to the knowledge of the Sellers, threatened, which would materially
adversely affect the business or assets of the Company, or any valid
basis known by any Seller for such.
(q) No representation, statement or information made or
furnished by the Sellers to Buyer, including, without limitation, those
contained in or furnished to Buyer pursuant to this Agreement, contains
or shall contain any untrue statement of a material fact or omit a
material fact required to be stated or necessary to make the statements
made, in light of the circumstances under which they were made, not
misleading.
3. Representations and Warranties of Buyer. Buyer
-------------------------------------------------
represents and warrants as follows to the Sellers:
(a) Buyer is a corporation duly organized and validly
existing under the laws of the State of Delaware.
(b) This Agreement and the transactions by Buyer contemplated
herein have been duly and validly authorized by all necessary corporate
action on the part of Buyer.
(c) The execution and performance of this Agreement by Buyer
will not result in a breach of or constitute a default under the
certificate of incorporation or bylaws of Buyer, or any agreement or
instrument to which Buyer is a party or by which it is bound.
4. Conditions of Buyer's Obligations. The obligations of
-----------------------------------
Buyer hereunder are subject to satisfaction on or prior to the Closing
Date of the following conditions:
(a) Other than as may be specifically contemplated by this
Agreement, the representations and warranties set forth in section 2
hereof shall be true and correct on the Closing Date as though made on
and as of such date (except to the extent such representation specifies
an earlier date), and the Sellers shall have performed all agreements
contained herein required to be performed by them on or prior to such
date. Buyer shall have received a certificate to this effect signed by
the Sellers, which certificate shall also state the amount of Debt and
amount of cash of the Company at the Closing Date.
(b) Since the date hereof, there shall have been no change
that would have a Material Adverse Effect, and Buyer shall have received
a certificate to this effect signed by the chief executive officer of
the Company.
(c) Between the date hereof and the Closing Date, without
Buyer's prior written consent: (i) the business of the Company shall
have been conducted in all material respects in the manner in which it
has heretofore been conducted, and (ii) the Company shall not have
incurred any material obligation or liability or entered into any
material transaction, in each case other than in the ordinary course of
the Company's business consistent with past practice.
-8-
<PAGE> 9
(d) Michael J. Moore and Melissa M. Pena shall have entered
into Employment Agreements with Buyer substantially in the form of
schedule 4(d) attached hereto.
(e) Buyer and the Sellers shall have entered into an Escrow
Agreement substantially in the form of schedule 4(e) attached hereto
(the "Escrow Agreement").
(f) Each Seller shall have delivered an executed spousal
consent to the execution and performance of this Agreement by such
Seller, or alternatively, a certificate to the effect that no spousal
consent is required, in each case in form satisfactory to Buyer.
(g) All other necessary consents or approvals of third
parties to the transactions contemplated hereby, the absence of which
would materially affect Buyer's rights hereunder, shall have been
obtained and shown by written evidence reasonably satisfactory to Buyer.
(h) The Sellers shall have delivered to Buyer the written
resignations of the directors of the Company and the written
resignations of such officers of the Company as may be requested by
Buyer, in each case including a release and waiver of any claim for
salary or other compensation for past services that he or she may have
against the Company.
(i) Buyer shall have received an opinion of Fulbright &
Jaworski L.L.P., counsel for the Company, to the effect that:
(i) The Company is a corporation validly existing
in good standing under the laws of the State of Texas, with
corporate power to own its assets and conduct its business.
(ii) The execution and delivery of this Agreement
will not result in a breach of or constitute a default under
any agreement or instrument known to such counsel to which the
Company or any Seller is a party or is bound, or any order,
decree or judgment known to such counsel of any court or
governmental agency having jurisdiction over the Company or
any Seller.
(iii) The number of authorized and issued shares
of capital stock of the Company is as represented in section
2(a) of this Agreement and said shares have been validly
authorized and are validly issued, fully paid and non-
assessable.
(iv) The delivery by the Sellers to Buyer of
certificates for the Stock being sold by them against payment
therefor as provided herein will pass to Buyer good and valid
title to the Stock, free and clear of any liens, encumbrances,
security interests, or claims. (In giving this opinion, such
counsel may state that they have assumed that Buyer is a bona
fide purchaser without notice.)
-9-
<PAGE> 10
(v) Such counsel is not aware, after inquiry of the
Company and the Sellers and in reliance upon a certificate of
an officer of the Company, of any claim, action, suit or
proceeding pending or threatened against the Company before
any court or governmental agency.
5. Conditions of Sellers' Obligations. The obligations of
-----------------------------------
the Sellers hereunder are subject to satisfaction on or prior to the
Closing Date of the following conditions:
(a) The representations and warranties set forth in section 3
hereof shall be true and correct on the Closing Date as though made on
and as of such date, and Buyer shall have performed all agreements
contained herein required to be performed by it on or prior to such
date. The Sellers shall have received a certificate to this effect
signed by an officer of Buyer.
(b) Michael J. Moore and Melissa M. Pena shall have entered
into Employment Agreements with Buyer substantially in the form of
schedule 4(d) attached hereto.
(c) Buyer and the Sellers shall have entered into the Escrow
Agreement.
(d) The Sellers shall have received an opinion of Bell, Boyd
& Lloyd, counsel for Buyer, to the effect that:
(i) Buyer is a corporation validly existing in good
standing under the laws of the State of Delaware, with
corporate power and authority to execute and deliver this
Agreement.
(ii) The execution and delivery of this Agreement
will not result in a breach of or constitute a default under
any agreement or instrument known to such counsel to which
Buyer is a party or is bound, or any order, decree or judgment
known to such counsel of any court or governmental agency
having jurisdiction over Buyer.
6. Additional Agreements of Sellers.
--------------------------------
(a) Between the date hereof and the Closing Date, Sellers
shall use their reasonable efforts to preserve intact the business
organization of the Company, to keep available to Buyer the services of
the Company's present employees, to preserve all assets of the Company
in the ordinary course of business consistent with past practice, and to
preserve the Company's business relationships with suppliers, customers,
and others with whom it has business dealings.
(b) Between the date hereof and the Closing Date, the Sellers
will cause the Company to afford to representatives of Buyer access,
after reasonable notice, at reasonable times during normal business
hours, to the Company's facilities, books and records to enable Buyer
and its representatives to inspect the assets and properties of the
Company, and furnish to Buyer and its representatives during such period
all such information and otherwise cooperate with Buyer's
representatives relating to the foregoing investigation as Buyer and its
representatives may reasonably request; provided, however, that Buyer
will hold in strict
-10-
<PAGE> 11
confidence all documents and information concerning
the Company's business so furnished by the Sellers and, if the sale of
the Shares pursuant hereto shall not be consummated, such confidence
shall be maintained and Buyer shall not use or disclose to any person
any such document or information (except to the extent that (1) Buyer
becomes legally compelled (by deposition, interrogatory, request for
documents, subpoena, civil investigative demand or similar process) or
(2) such information can be shown to be (i) in the public domain through
no breach of this paragraph, or (ii) later acquired by Buyer on a
nonconfidential basis from other independent sources).
7. Survival; Indemnification. The representations,
-------------------------
warranties and agreements of the Sellers shall survive the consummation
of the transactions herein contemplated for three years and shall
terminate on the third anniversary of the Closing Date, after such
anniversary only the representations, warranties and agreements of the
Sellers set forth in the last sentence of section 2(a) shall survive.
In the event that the sale of Stock contemplated hereby is consummated,
the Sellers will jointly and severally indemnify Buyer from and against
any damage, loss, liability, or expense (including reasonable attorneys'
fees, costs of investigation, any damages or amounts paid in settlement,
and out of pocket expenses (but not hourly charges) of employees of
Buyer) incurred by Buyer and caused by or attributable to any breach of
any of the representations and warranties made by the Sellers herein or
any failure of the Sellers to fulfill their obligations or perform their
covenants hereunder. In determining the amount of any damage, loss,
liability or expense incurred by Buyer hereunder, there shall be taken
into account: (i) any insurance coverage or third-party entitlements,
(ii) any reserves for such damage, loss, liability or expense reflected
on the most recent balance sheet of the Company delivered to Buyer prior
to the Closing Date, which shall not differ materially from the reserves
reflected on the balance sheet at December 31, 1997, and (iii) any net
tax benefits that may be realized or recognized from such damage and the
receipt of indemnification hereunder.
In the event that Buyer asserts a claim for indemnification
pursuant to this section, it shall give notice of the claim under the
Escrow Agreement, or, if the Escrow Agreement has terminated, it shall
notify the Sellers in writing, in reasonable detail, of the basis and
general nature of such claim and, to the extent it can be ascertained,
the amount thereof and the basis for determining the amount. The
parties shall attempt to resolve the claim and shall cooperate with one
another in the event the claim is based on a claim by a third party. No
claim may be asserted hereunder unless notification thereof is delivered
to the Sellers within three years of the Closing Date except that a
claim for breach of any warranty set forth in the last sentence of
section 2(a) may be asserted at any time. Claims may be asserted only
to the extent that the aggregate of all claims shall have exceeded
$25,000, and the maximum aggregate amount Sellers shall be required to
pay hereunder is limited to the $500,000 deposited into the escrow under
the Escrow Agreement.
With respect to any claim for which the Sellers are required
to indemnify and defend Buyer pursuant to the terms of this Agreement
and which requires Remedial Action, the Sellers may elect to implement
and complete such Remedial Action. The Sellers shall plan, design,
implement and perform any Remedial Action that they elect to control
without undue delay and in a manner consistent with the business
operations of the Company. The Sellers shall
-11-
<PAGE> 12
provide the Company with
copies of all reports filed with any governmental agency with respect to
such Remedial Action. If the Company has any claim for or right of
contribution, reimbursement or other similar action against any third
party with respect to any Remedial Action for which the Sellers have
indemnified and defended Buyer, the Company or Buyer shall assign such
right to the Sellers and shall assist the Sellers in pursuing such
right.
In consideration for the agreement of the Sellers to indemnify
and defend Buyer in the manner provided in this Agreement, Buyer and the
Company hereby release, acquit and forever discharge the Sellers from
any claim, demand or cause of action Buyer or the Company may have
against the Sellers under any Environmental Law.
8. Brokerage. Each party hereto represents that such party
---------
has incurred no liabilities for finders' or brokers' fees in connection
with the transactions provided for herein.
9. Expenses. Each of the parties to this Agreement shall
--------
pay the fees of such party's attorneys and such party's other expenses
in connection with this Agreement.
10. Nondisclosure. Without the consent of all parties
-------------
hereto, no party hereto will, prior to the Closing Date, disclose this
Agreement or any transaction contemplated hereby to the public or to any
third party except to such party's attorneys and accountants, and
officers, directors and employees of the Company and Buyer and except as
may be required by law.
11. Entire Agreement; Binding Effect; etc. This Agreement
----------------
(together with any agreements entered into pursuant to the terms of this
Agreement) constitutes the final and complete agreement of the parties,
supersedes all prior oral or written agreements, and shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors, and assigns. This
Agreement may be amended or modified only in a writing signed by the
parties. If any provision of this Agreement is invalidated, it shall
not operate to invalidate any other provision. This Agreement may be
signed in two or more counterparts, each of which shall constitute an
original hereof.
12. Notices. All notices given hereunder shall be in
-------
writing. Notices to Sellers shall be directed to them c/o Michael J.
Moore, P.O. Box 30030, Houston, Texas 77429-0030 (phone: 713-699-2649;
fax: 713-695-2939), with a copy to Joseph C. Sleeth, Jr., Fulbright &
Jaworski L.L.P., 1301 McKinney, Suite 5100, Houston, Texas 77010-3095
(phone: 713-651-5151; fax: 713-651-5246). Notices to Buyer shall be
directed to it at 6133 North River Road, Suite 700, Rosemont, Illinois
60018, attention Chief Executive Officer (phone: 847-823-2021; fax: 847-
823-0795). Any party may designate a new address by notice so given.
Notices shall be effective when delivered.
13. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal law of the State of Illinois
applicable to contracts made and to be performed in that state.
-12-
<PAGE> 13
The parties are executing this Agreement as of the date shown
in the first paragraph hereof.
LINDBERG CORPORATION
By /s/ Stephen S. Penley
----------------------
Senior Vice President
<TABLE>
<CAPTIONS>
SELLERS
Percentage
Number of Purchase
Name Signature of Shares Price
------ ----------- --------- -----------
<S> <C> <C> <C>
Michael J. Moore /s/ Michael J. Moore 21,000 45.161%
--------------------
Melissa M. Pena /s/ Melissa M. Pena 5,000 10.753
--------------------
Melissa Pena, Custodian /s/ Melissa M. Pena 2,250 4.839
for Michael Pena, under --------------------
Texas Uniform Transfer for Michael Pena
to Minors Act
Melissa Pena, Custodian /s/ Melissa M. Pena 2,250 4.839
for Rachael Pena, under --------------------
Texas Uniform Transfer for Rachael Pena
to Minors Act
Mary M. Bagby /s/ Mary M. Bagby 5,000 10.753
--------------------
Mary Bagby, Custodian /s/ Mary Bagby, 1,500 3.226
for John D. Bagby, under --------------------
Texas Uniform Transfer to Custodian for John
Minors Act Bagby
Mary Bagby, Custodian /s/ Mary Bagby, 1,500 3.226
for Thomas E. Bagby, under --------------------
Texas Uniform Transfer to Custodian for Thomas
Minors Act Bagby
Patricia M. Zapalac /s/ Patricia M. Zapalac 5,000 10.753
-----------------------
Patricia Zapalac, Custodian /s/ Patricia M. Zapalac 1,500 3.226
for David R. Zapalac, -----------------------
under Texas Uniform Custodian for David R.
Transfer to Minors Act Zapalac
Fredrich J. Zapalac /s/ Patricia Zapalac 1,500 3.226
-------------------- ------ -------
Attorney-in-Fact 46,500 100.000%
</TABLE>
-13-
