UNITED STATES
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 August 1, 2000
reported)
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NN, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-23485 62-1096725
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
800 Tennessee Road, Erwin, Tennessee 37650
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including (423) 743-9151
area code
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None
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(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 31, 2000, NN, Inc., a Delaware corporation ("NN") completed a
joint venture transaction with FAG Kugelfischer Georg Schafer AG, a German
company ("FAG"), and AB SKF, a Swedish company ("SKF"), to form a new Danish
holding company, NN Euroball ApS ("Euroball"). The parties transferred, through
Euroball and its subsidiaries, their steel ball manufacturing factories in
Pinerolo, Italy (previously owned by SKF), Eltmann, Germany (previously owned by
FAG) and Kilkenny, Ireland (previously owned by NN) to the joint venture.
Euroball will employ approximately 700 employees and have yearly sales of
approximately 95 Million Euro. Euroball will manufacture and sell high precision
chrome steel balls used for ball bearings and other products, and expects that
the economy of scale achieved will enhance competitiveness in both cost and
quality.
According to the terms of the agreement, NN Inc. will own 54 percent of
the shares in the new company, and SKF and FAG will each own 23 percent.
Financing for the transaction was provided by HypoVereinsbank Luxembourg S.A. as
agent for Bayerische Hypo-und Vereinsbank AG of Munich, Germany. Acquisition
financing of approximately 31.5 Million Euro was drawn at closing, and the
credit facility provides for additional working capital and capital expenditure
financing.
The Joint Venture Formation Agreement and the press release issued by NNBR
in connection with the acquisition are filed as exhibits to this report and are
incorporated herein by reference. The description of the joint venture set forth
herein does not purport to be complete and is qualified by the provisions of the
Joint Venture Formation Agreement and the press release attached hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a,b) FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION.
Financial statements and pro forma financial information will be
filed by amendment within the required reporting period.
(c) EXHIBITS. The following exhibits are filed herewith:
10.20 Joint Venture Formation Agreement, dated as of April 6, 2000,
with Amendment No. 1 dated June 15, 2000 and Amendment No. 2
dated July 31, 2000 by and among NN Ball & Roller, Inc., AB SKF,
and FAG Kugelfischer George Schafer AG
99.1 Press Release dated August 1, 1999
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.
NN, Inc.
(Registrant)
DATE: August 8, 2000 /s/ Will C. Kelly
Will C. Kelly
Chief Accounting Officer
EXHIBIT INDEX
Exhibit Number Description
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10.20 Joint Venture Formation Agreement, dated as of April 6, 2000,
with Amendment No. 1 dated June 15, 2000 and Amendment No. 2
dated July 31, 2000 by and among NN Ball & Roller, Inc., AB SKF,
and FAG Kugelfischer George Schafer AG
99.1 Press Release dated August 1, 2000
JOINT VENTURE FORMATION AGREEMENT
THIS JOINT VENTURE AGREEMENT is entered into and effective as of this 6th
day of April, 2000, by and among NN BALL & ROLLER, INC., a Delaware corporation
("NNBR"), AB SKF, A SWEDISH COMPANY ("SKF"), and FAG KUGELFISCHER GEORG SCHAFER
AG, a German company ("FAG").
RECITALS
A. NNBR manufactures precision steel balls for use in, inter alia, ball
bearings and currently has a wholly-owned subsidiary, NN Ball & Roller Limited,
which operates a precision steel ball manufacturing facility in Kilkenny,
Ireland (the "NNBR Sub"). This is the only manufacturing facility of NNBR and
its Affiliates in Europe. NNBR desires to transfer the shares of NNBR Sub in
exchange for a 54% interest in a joint venture (the "Company") with SKF and FAG.
B. SKF, through its wholly-owned subsidiary SKF Industrie S.p.A. ("SKF
Italy"), is, inter alia, a manufacturer of precision steel balls for use in,
inter alia, ball bearings and currently operates a precision steel ball
manufacturing facility in Pinerolo, Italy (the "SKF Facility"). This is the only
manufacturing facility of SKF and its Affiliates for such products in Europe.
SKF desires to transfer all of the assets used in its ball manufacturing
business in Pinerolo (the "SKF Assets") and the Business to a newly established
subsidiary (the "SKF Sub") and then to sell the SKF Sub to a subsidiary of the
Company ("EB Italy") for 35.532 million Euros and SKF desires to contribute
28.556 million Euros to the Company (subject to adjustment under Section 5.5
below) in exchange for a 23% interest in the Company.
C. FAG, through its wholly-owned subsidiary FAG Komponenten AG ("FAG
Sub"), is, inter alia, a manufacturer of precision steel balls for use in, inter
alia, ball bearings and currently operates a precision steel ball manufacturing
facility in Eltmann, Germany (the "FAG Facility"). This is the only
manufacturing facility of FAG and its Affiliates for such products in Europe.
FAG desires to contribute 4.960 million Euros to a newly established subsidiary
(the "FAG EB") and then to transfer the shares of FAG EB to the Company in
exchange for a 23% interest in the Company and to sell all of the assets used in
its ball manufacturing business in Eltmann (the "FAG Assets") and the Business
to FAG EB for 15.956 million Euros (subject to adjustment under Section 5.5
below).
AGREEMENT
In consideration of the mutual promises made herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Establishment and Purpose of Company. NNBR, SKF, and FAG hereby agree to
purchase the Company to manufacture precision steel balls for sale worldwide.
Each of NNBR, SKF, and FAG hereby acknowledges and agrees that the purpose of
all activities and operations of the Company and all activities and decisions of
such party in connection with the establishment and
operation of the Company shall be, in no order of priority, (i) to secure the
maximum commercial advantage of the Company in the territories in which it
operates (ii) to maximize the return on capital invested in the Company, and
(iii) to manufacture and sell high quality precision steel balls at competitive
prices.
2. Definitions.
2.1 "Affiliate" of a party means any entity that controls, is
controlled by or is under common control with such party, except that the
Company and its subsidiaries shall not be deemed to be Affiliates of NNBR
and no JV Party shall be deemed to be an Affiliate of the Company.
2.2 "Applicable Law" shall mean, with respect to a party, any domestic
or foreign, federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction,
directive, judgment, decree or other requirement of any Governmental
Authority applicable to such party or its properties, business or assets.
2.3 "Assets" shall mean the NNBR Assets as defined in Schedule 6.1.4,
the SKF Assets as defined in Schedule 6.2.4, or the FAG Assets as defined
in Schedule 6.3.4, as applicable.
2.4 RESERVED
2.5 "Board of Directors" shall mean the board of directors of the
Company as from time to time constituted pursuant to the Company
Organizational Documents.
2.6 "Business" shall mean the business conducted in the NNBR Facility
(the "NNBR Business"), the SKF Facility (the "SKF Business") and the FAG
Facility (the "FAG Business"), as applicable.
2.7 "Closing" shall mean the completion of the transactions
contemplated by this Agreement, all in accordance with the provisions of
this Agreement. The Closing shall take place at the offices of KPMG in
Frankfurt, Germany and in locations agreed to by the JV Parties in Italy,
Ireland, and Denmark if necessary.
2.8 "Closing Date" shall mean the date on which the Closing occurs.
2.9 RESERVED
2.10 "Company" shall mean the joint venture company established
pursuant to the Company Organizational Documents, and shall, when the
context requires, include its subsidiaries.
2.11 "Company Organizational Documents" shall mean the organizational
documents of the Company translated into the English language and attached
hereto as Exhibit 2.11(a), as amended from time to time and of its
subsidiaries as attached in Exhibits 2.11(b), (c) and (d), as amended from
time to time.
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2.12 "Confidential Information" shall mean any trade secrets,
know-how, data, formulas, processes, tools and techniques, software
algorithms and routines, intellectual property or other information,
tangible or intangible, of a person or entity.
2.13 "Customer Contracts" shall mean the NNBR Customer Contracts, the
SKF Customer Contracts, or the FAG Customer Contracts, as applicable.
2.14 "Employees" shall mean the persons employed by the NNBR Business,
SKF Business and FAG Business, as applicable, at the Closing Date.
2.15 "Europe" shall mean those countries listed on Schedule 2.15,
hereto.
2.16 "Governmental Approvals" mean all approvals, consents,
authorizations and similar actions from all Governmental Authorities that
are necessary in order to consummate the transactions contemplated
hereunder or under any of the Associated Agreements.
2.17 "Governmental Authority" shall mean any foreign, domestic,
federal, territorial, state or local governmental authority,
quasi-governmental authority, court, government or self-regulatory
organization, commission, tribunal, organization or any regulatory,
administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.
2.18 "Independent Accounting Firm" shall mean a certified public
accountant at an audit firm selected by the Shareholders under the
Shareholder Agreement.
2.19 "Intercompany Relations" shall mean any agreements, undertakings,
obligations, services or shared relationships between on the one hand SKF
and its Affiliates, NNBR and its Affiliates or FAG and its Affiliates,
respectively, and on the other hand the SKF Business, the NNBR Business or
the FAG Business, respectively, except for matters addressed in the Service
Agreements, the FAG Lease, or the Shareholder Agreement.
2.20 "JV Parties" shall mean NNBR, SKF and FAG.
2.21 "Nondisclosure Agreement" shall mean the Confidentiality
Agreement among NNBR, SKF and FAG dated June 5, 1999.
2.22 "Other Contracts" shall mean the NNBR Other Contracts, the SKF
Other Contracts, and the FAG Other Contracts, as applicable.
2.23 "Percentage Interest" shall mean with respect to a party, the
percentage of the Company's issued and outstanding shares held by such
party. The initial Percentage Interests of the parties shall be as follows:
NNBR - 54%; SKF - 23%; and FAG - 23%.
2.24 "Permits" shall mean all permits, licenses, or other approvals of
Governmental Authorities required for the operation of the Company and the
Businesses.
2.25 "Real Property Leases" shall mean the NNBR Real Property Leases,
the SKF Real Property Leases, and the FAG Real Property Leases, as
applicable.
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2.26 "Service Agreements" shall mean the agreements entered into
between NNBR and its Affiliates and the Company and its Affiliates, between
SKF and its Affiliates and the Company and its Affiliates, and between FAG
and its Affiliates and the Company and its Affiliates, as necessary to
provide the Company and its Affiliates continued access to property or
services controlled or provided by the JV Parties and/or their Affiliates.
2.27 "Shareholder Agreement" shall mean the agreement among the JV
Parties attached as Exhibit 2.27 hereto.
2.28 "Sub" shall mean NNBR Sub, SKF Sub, and FAG Sub, respectively.
2.29 "Supply Agreements" shall mean the Supply Agreement between the
Company and SKF attached as Exhibit 2.29(a) hereto and the Supply Agreement
between the Company and FAG attached as Exhibit 2.29(b) hereto.
3. The Company.
The business and activities of the Company shall be conducted through NN
Euroball, ApS, a Danish company formed pursuant to the Company Organizational
Documents for the sole purpose of undertaking the Company. The share capital of
the Company shall initially be 125,000 DKK to be represented by 1,250 shares of
common stock.
4. Actions to be Taken Prior to Closing.
4.1 SKF Transfer of Assets to Subsidiary. (a) Subject to the terms and
conditions set forth in this Agreement, SKF hereby agrees that before or at
the Closing it will cause SKF Italy to execute reasonable and customary
documents in accordance with Applicable Law, negotiated and agreed upon by
the JV Parties prior to the Closing, to contribute the SKF Assets and
Business to the SKF Sub. The contribution of the SKF Assets shall result in
a new share issuance (in kind contribution). All costs in connection with
this contribution, inclusive of new equipment, software, licenses, permits,
Governmental Approvals, taxes, etc., shall be borne by SKF or SKF Italy and
SKF undertakes to make the tax election set forth in Section 4,2(Degree)
par. of law no. 358 of October 8, 1997.
(b) Subject to the terms and conditions set forth in this
Agreement, SKF hereby agrees that before the Closing it will cause SKF
Italy to enter into the SKF Share Purchase Agreement with EB Italy.
4.2 FAG Actions. (a) Subject to the terms and conditions set forth
in this Agreement, FAG hereby agrees that before the Closing it will form
FAG EB and contribute to it 4.960 million Euros in exchange for 100% of
its capital shares. All costs in connection with this transaction shall be
borne by FAG.
(b) Subject to the terms and conditions set forth in this
Agreement, FAG hereby agrees that before the Closing it will cause FAG
Sub to execute the FAG Asset Transfer Agreement, and all other
reasonable and customary transfer documents in
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accordance with Applicable Law, negotiated and agreed upon by the JV
Parties prior to the Closing, to transfer the FAG Assets and Business to
FAG EB at the Closing. All costs in connection with these transfers,
inclusive of new equipment, software, licenses, permits, Governmental
Approvals, taxes, etc., shall be borne by FAG.
4.3 NNBR Actions. Subject to the terms and conditions set forth in
this Agreement, NNBR hereby agrees that at or before the Closing it will
execute reasonable and customary transfer documents in accordance with
Applicable Law, negotiated and agreed upon by the JV Parties prior to the
Closing, to transfer the shares of NNBR Sub to the Company.
4.4 Intercompany Relations. Prior to or at the Closing each JV Party
shall cause its Intercompany Relations to be terminated.
4.5 Governmental Approvals. As soon as practical and prior to the
Closing, each JV Party shall apply for and use its best efforts to obtain,
all Governmental Approvals necessary for it to complete the transactions
contemplated by this Agreement and the JV Parties shall cooperate to apply
for and obtain all Governmental Approvals required for the Company to
complete the transactions contemplated by this Agreement, including the JV
Parties joint efforts and cooperation in obtaining anti-trust approval.
4.6 Financial Statements. Each JV Party shall, at such Party's sole
cost, prepare and deliver to the Company at Closing, financial statements
of such Party's Business for the fiscal year ended December 31, 1999,
audited in accordance with United States generally accepted accounting
principles, in such form and content as required by the United States
Securities and Exchange Commission for financial statement reporting by
NNBR.
4.7 Asset Transfers and Valuations. Each party agrees to take all
actions necessary to ensure that, at the Closing, all of its Assets (as
described in the applicable Schedule) and Business are transferred to the
ownership and control of the Company or one of its subsidiaries. All such
Assets shall be valued for purposes of this Agreement, including the
formation of and contribution to the Company, and Section 5.5 below, in
accordance with the principles and methodologies described on Schedule 4.7
attached hereto.
5. Actions to be Taken at Closing; Closing Balance Sheets.
5.1 Actions by NNBR. (a) At the Closing, NNBR shall transfer its 100%
ownership interest in NNBR Sub to the Company in exchange for a 54%
Interest in the Company.
(b) At the Closing, NNBR shall execute and deliver to NNBR Sub
the NNBR Services Agreement pursuant to which NNBR shall agree to
provide to NNBR Sub the services described on Exhibit 5.1(b) for the
payments described on Exhibit 5.1(b).
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5.2 Actions by SKF. (a) At the Closing, SKF shall cause SKF Italy to
sell to EB Italy its 100% ownership interest in SKF Sub in accordance with
the terms and conditions of the SKF Share Purchase Agreement.
(b) At the Closing, SKF shall contribute to the Company 28.556
million Euros, subject to adjustment under Section 5.5, below, in
exchange for a 23% Interest in the Company.
(c) At the Closing, SKF shall cause its Affiliates to execute and
deliver to SKF Sub the SKF Services Agreement pursuant to which SKF
and/or its Affiliates shall agree to provide to SKF Sub or EB Italy,
as the case may be, the services described on Exhibit 5.2(c) for the
payments described on Exhibit 5.2(c).
5.3 Actions by FAG. (a) At the Closing, FAG shall
contribute to the Company its 100% ownership interest in FAG EB in
exchange for a 23% Interest in the Company.
(b) At the Closing, FAG shall cause FAG Sub to sell to FAG EB the
FAG Assets and Business in accordance with the terms and conditions of
the FAG Asset Transfer Agreement.
(c) At the Closing, FAG shall, and shall cause its Affiliates to
execute and deliver to FAG EB the FAG Services Agreement pursuant to
which FAG and FAG Sub shall agree to provide to FAG EB the services
described on Exhibit 5.3 (c) for the payments described on Exhibit
5.3(c).
5.4 Company Borrowings. (a) At the Closing, the Company and/or its
subsidiaries will execute and deliver all agreements and other documents
deemed necessary and appropriate to borrow from a third party lender (the
"Lender") 44.553 million Euros (the "Debt") to be used to fund the purchase
of the FAG Assets and Business under the FAG Asset Transfer Agreement, the
purchase of the shares of SKF Sub under the SKF Share Purchase Agreement,
and for general corporate purposes.
(b) At the Closing, each of NNBR, FAG and SKF shall execute and
deliver to the Lender an unconditional guarantee of that portion of
the Debt equal to such Party's Percentage Interest. Each party's
guarantee shall expire (i) on its sixth (6th) anniversary or (ii)
earlier if the party ceases to be a shareholder in the Company. In the
event of (ii), above, the Company shall use all reasonable efforts to
obtain the release of the party's guarantee by the Lender as quickly
as possible.
5.5 Closing Balance Sheet.
(a) Balance Sheet Adjustment Mechanism.
(i) Each JV Party has prepared a balance sheet in
accordance with U.S. GAAP for its Business (the
"Opening Balance Sheet"). These are attached hereto as
Schedule 5.5.
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(ii) As promptly as possible following the Closing Date, the
Company shall prepare a balance sheet dated as of the
Closing Date in accordance with U.S. GAAP, and using
the valuation principles set forth in Schedule 4.7, for
each Business (the "Closing Balance Sheet"), without
any adjustments applicable solely as a result of the
Company.
(iii) The Net Book Value Adjustment for each Business shall
be the amount by which the net book value of that
Business, calculated as total assets less total
liabilities, as shown on the Closing Balance Sheet is
greater than, or less than, the Net Book Value shown on
the Opening Balance Sheet applicable to that Business.
(iv) Each Closing Balance Sheet shall be accompanied by a
statement setting forth the Net Book Value Adjustment,
together with the calculations showing the basis for
the determination of such sum, and shall be delivered
to each JV Party.
(v) In the event that any JV Party disputes a Closing
Balance Sheet or the calculation of a Net Book Value
Adjustment, the disputing party shall deliver the
Dispute Notice within thirty (30) calendar days after
delivery of the Closing Balance Sheet, setting forth in
such Dispute Notice the basis for such dispute and, if
possible, the amount in dispute. In the event of such a
dispute, the JV Parties shall first use their best
efforts to resolve such dispute between themselves. If
the JV Parties are unable to resolve the dispute within
thirty (30) calendar days after delivery of the Dispute
Notice, the dispute shall be submitted to the
accountants for the Company and the accountants for the
disputing party for resolution, who shall use their
best efforts to resolve the dispute within thirty (30)
days after submission. In the event that the
accountants for the Company and the accountants for the
disputing party do not resolve the dispute within such
thirty (30) day period, they shall appoint a third
independent accounting firm, or if no agreement can be
reached regarding the appointment of a third party
accounting firm, the President of the Chamber of
Commerce of Paris shall appoint an internationally
reputable accounting firm (the "Independent
Accountants") which shall, within thirty (30) days
after such appointment, resolve the dispute. The
determination by the accountants for the Company and
the accountants for the disputing party or by the
Independent Accountants, as the case may be, as to the
resolution of any dispute shall be binding and
conclusive upon all parties hereto. All determinations
pursuant to this Section
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5.5(a)(v) shall be in writing and shall be delivered to
the parties hereto.
(vi) The fees and expenses of the accountants for the
Company in connection with the resolution of disputes
pursuant to Section 5.5(a)(v) shall be borne by the
Company and the fees and expenses of accountants for
the disputing party in connection with the resolution
of disputes pursuant to Section 5.5(a)(v) shall be
borne by the disputing party. The fees and expenses of
the Independent Accountants in connection with the
resolution of disputes pursuant to Section 5.5(a)(v)
shall be shared equally by the Company and the
disputing party.
(c) Reconciliation of Adjustments. The Company shall
determine the net amount of adjustments, if any, as between the
Company and each JV Party, or its Affiliates. Each JV Party or
its Affiliates shall then either be required to pay or entitled
to receive the net amount calculated by the Company as being owed
or due to such JV Party or its Affiliates as a Net Book Value
Adjustment. In addition, because the aggregate investment in the
Company by FAG, SKF and NNBR has been agreed to represent 23%,
23% and 54%, respectively, of the total Company, in the event
that the Net Book Value Adjustment results in the Company paying
additional amounts to a JV Party or its Affiliates, such JV Party
shall contribute to the Company additional capital investment of
an equal amount.
6. Representations and Warranties.
6.1 Representations and Warranties of NNBR. As an inducement to
SKF and FAG to enter into this Agreement and to consummate the
transactions contemplated hereby, NNBR makes the representations and
warranties to SKF and FAG set forth on Schedule 6.1 (the "NNBR
Representations and Warranties"). The Company shall be a third party
beneficiary of these representations and warranties and be entitled to
enforce and recover for any breach of these representations and
warranties. At the Closing, NNBR shall reconfirm the NNBR
Representations and Warranties.
6.2 Representations and Warranties of SKF. As an inducement to
NNBR and FAG to enter into this Agreement and to consummate the
transactions contemplated hereby SKF makes the representations and
warranties to NNBR and FAG set forth on Schedule 6.2 (the "SKF
Representations and Warranties"). The Company shall be a third party
beneficiary of this Agreement and be entitled to enforce and recover
for any breach of these representations and warranties. At the
Closing, SKF and SKF Italy shall make the SKF Representations and
Warranties in the SKF Share Purchase Agreement.
6.3 Representations and Warranties of FAG. As an inducement to
NNBR and SKF to enter into this Agreement and to consummate the
transactions contemplated hereby FAG makes the representations and
warranties to NNBR and SKF set forth on Schedule 6.3 (the "FAG
Representations and Warranties"). The Company shall be a third party
beneficiary of this Agreement and be entitled to enforce and recover
for any breach of these representations and warranties. At the
Closing, FAG and FAG Sub shall make the FAG Representations and
Warranties in the FAG Asset Transfer Agreement.
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7. Joint Covenants of JV Parties.
Each of the JV Parties covenants and agrees as follows:
7.1 Performance.
(a) Each JV Party shall, through the Closing Date, continue
(and shall cause its Affiliates to continue) to faithfully and
diligently perform its continuing obligations, if any, under each
of their Real Property Leases, Customer Contracts and Other
Contracts in accordance with their terms such that all
obligations of the JV Party (and its Affiliates) thereunder to be
performed through and as of the Closing Date will be so
performed.
(b) The JV Parties shall each pay one-third of (i) the cost
of the services of KPMG in conducting its financial due diligence
of the Businesses and of preparing its related report, a copy of
which has been delivered to each JV Party and (ii) the cost of
the services of Dames & Moore in conducting environmental due
diligence of the Businesses and of preparing its related reports,
copies of which have been delivered to each JV Party.
7.2 Conduct of Business.
(a) From the execution of this Agreement until Closing, each
JV Party shall or shall cause its Affiliates to:
(i) Operate their Business and continue to maintain the
Assets only in the ordinary course, using reasonable
commercial efforts in keeping with historical practices to
preserve and maintain the services of the Employees and its
relationships with suppliers and customers;
(ii) Continue to insure the Assets under existing
policies of insurance at current levels;
(iii) Maintain all books and records in the ordinary
course, consistent with past practice;
(iv) Promptly inform the other JV Parties in writing of
any material development affecting the Assets, operations,
results of operations or prospects, or any material
development affecting their ability to consummate the
transactions contemplated by this Agreement.
(b) Further, from the execution of this Agreement until
Closing, no JV Party shall or shall cause its Affiliates to,
other than in the ordinary course of business consistent with
historical practice, without the express prior written approval
of the other JV Parties or unless specifically allowed or
required under this Agreement:
(i) Change in any material manner the ownership of the
Assets;
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(ii) Increase the rate of compensation to the Employees
beyond the usual and customary annual merit increases or
bonuses under established compensation plans;
(iii) Mortgage, pledge or subject to lien any of the
Assets;
(iv) Sell, transfer, or otherwise dispose of any of the
Assets except in the ordinary course of business;
(v) Violate any law applicable to the operation of the
Business or Assets in any material respect;
(vi) Engage in any practice, take any action or omit to
take any action or enter into any transaction that would
render any of the warranties and representations of the JV
Party contained herein untrue in any material respect;
(vii) Enter into or commit to enter into any contract,
agreement or commitment that would be required to be set
forth on Schedules 6.1.4(f), 6.2.4(f) and 6.3.4(f) hereto;
and
(viii) Other than any expiration due solely to the
passage of time, cancel or terminate or consent to or accept
any cancellation or termination of any Customer Contract,
any Real Property Lease or any Other Contract, amend or
otherwise modify any of the material terms or provisions or
give any consent, waiver or approval, waive any breach of
any of the material terms or provisions or take any other
action in connection with the foregoing that would
materially impair the Assets.
7.3 Access to Information. Each JV Party shall afford the other JV
Parties, their counsel, financial advisors, auditors, lenders, lenders'
counsel and other authorized representatives reasonable access from the
date hereof until the Closing during normal business hours, to the offices,
properties, books, and records of the JV Party and its Affiliates limited
exclusively to its Business (including the organizational documents of the
Subsidiary) and with respect to the Assets, subject to each JV Party's
obligations regarding the confidentiality of such information as set forth
in Section 9 hereof; provided, however, that such access shall be arranged
in advance by the JV Parties and will be scheduled in a manner and with a
frequency calculated to cause as little disruption of the business of the
JV Party and its Affiliates as practical.
7.4 Cooperation. Each JV Party will use all commercially reasonable
efforts to cause the conditions set forth in Section 8 to be satisfied, to
facilitate and cause the consummation of the transactions contemplated
hereby and to obtain from all persons all consent or approvals required on
the part of such party with respect to the consummation of those
transactions.
7.5 Further Assurances. Each JV Party hereby agrees that it will at
any time and from time to time following the Closing Date, upon request of
the other JV Parties, execute,
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acknowledge and deliver, or will cause to be executed, acknowledged and
delivered, all such further acknowledgements, assignments, transfers,
conveyances and similar instruments of assignment as may be reasonable and
necessary for the assigning, conveying and transferring (or confirmation
thereof) from the JV Party any and all of the Assets to be conveyed and
transferred to the Company as provided herein.
7.6 Environmental Matters.
(a) Undertaking.
(i) Each JV party undertakes, at its own cost, to take (1)
all the actions mentioned in Dames & Moore's Phase II reports, in
FAG's case as related to the ball manufacturing hall, (2) all
actions that are agreed with or imposed by relevant Governmental
Authorities and (3) any other actions that the relevant party may
deem necessary prior to the Compliance Date (as defined below).
The actions shall be taken prior to the Closing Date or as soon
as practicably possible thereafter. If the Company takes any
actions which cause the Facility to be subject to governmental
inquiry, other than required by Applicable Law related to
environmental matters, which may require any environmental
activity such as, but not limited to, investigation or
remediation or if the Company does not support and co-operate in
any and all reasonable ways with the relevant JV Party, then this
undertaking shall be null and void and of no further force and
effect after such date.
(ii) The undertaking above in Section 7.6(a)(i) shall be
deemed to have been fulfilled when Dames & Moore has confirmed in
writing that the Facility, according to their professional
opinion and to the best of their knowledge, in all material
respects is in compliance with all Applicable Law related to
environmental matters. The date of such letter from Dames & Moore
shall be the "Compliance Date".
(b) Warranty. Each party warrants that at the Closing Date, and
as regards actions set forth in Section 7.6(a) at the Compliance Date,
each party's Facility will comply in all material respects with any
and all Applicable Laws related to environmental matters in force at
the Closing Date.
(c) Limitation of warranty. The warranty in Section 7.6(b) above
is subject to the following conditions: (i) the Company and/or the
other JV Parties must give timely written notice of any claim; (ii)
any claim must be made within three years of the Closing Date; (iii)
if the Company sells the Business or property at the Facility, ceases
operation at the Facility or takes any action which causes the
Facility to be the subject of governmental inquiry, other than
required by Applicable Law related to environmental matters, which may
require any environmental activity such as, but not limited to,
investigation or remediation, the warranty shall be null and void and
of no further force and effect after such date. In case of a claim for
breach of the warranty, the Company and the JV Parties shall give the
relevant party sole control of the defense of the underlying matter on
which the claim is based,
11
including any action to take any measure necessary to cause the
Company to be in compliance with all Applicable Laws related to
environmental matters. The Company shall support and co-operate in any
and all reasonable ways with the relevant JV Party in this respect.
8. Conditions to Closing. The obligations of each JV Party to proceed to
the Closing in accordance with the terms hereof are subject to satisfaction of
each of the following conditions at or before Closing:
(a) All representations and warranties of the other JV Parties in
this Agreement shall be, to the extent qualified by materiality, true,
and to the extent not qualified by materiality, true in all material
respects, on and as of the Closing as if made as of the Closing, and
each JV Party shall have delivered to the other JV Parties a
certificate to such effect dated as of the Closing Date;
(b) Since December 31, 1999, there shall not have occurred any
event, condition or state of facts which could reasonably be expected
to have a material adverse effect on the Business or Assets of either
of the other JV Parties;
(c) Each JV Party shall have completed its due diligence review
and shall be reasonably satisfied as to the legal, financial, and
operating condition of the Assets and Business being transferred to
the Company by the other JV Parties.
(d) The other JV Parties shall have performed and complied or
shall have caused the performance and compliance (i) in all material
respects with all covenants and agreements that are unqualified as to
materiality and are required by this Agreement on their part to be
performed or complied with prior to or on the Closing Date, and (ii)
with all covenants and agreements that are qualified as to materiality
and are required by this Agreement on their part to be performed or
complied with prior to or on the Closing Date;
(e) The approval of the Supervisory Board of FAG shall have been
obtained;
(f) The form and substance of the documents delivered by the
other JV Parties pursuant to this Agreement shall be reasonably
acceptable to each JV Party and its counsel;
(g) There shall be no claims, actions or suits pending or
threatened regarding the Assets or the Business of the other JV
Parties that would restrict or prohibit or materially adversely affect
the other JV Parties from or in consummating the transactions
contemplated herein;
(h) Each JV Party shall have used its best efforts to obtain all
necessary consents and authorizations of third parties, including
labor unions, suppliers, customers, etc., and all Governmental
Approvals of the Company and each JV Party shall be reasonably
satisfied that the consents and approvals of the other JV Parties will
be obtained;
12
(i) Each JV Party shall have used its best efforts to obtain all
consents or approvals needed with respect to all of its material
Customer Contracts and Other Contracts and each JV Party shall be
reasonably satisfied that no material Customer Contract or Other
Contract of the other JV Parties shall be reasonably subject to
cancellation;
(j) All actions to be taken by the other JV Parties prior to the
Closing under Section 4, above, have been completed;
(k) All actions agreed to be taken by the other JV Parties at the
Closing under Section 5 above, have been taken;
(l) Each JV Party shall have a right not to proceed to Closing if
the undertaking under Section 7.6(a) is not practicable or
commercially viable.
(m) All agreements and transfer documents that are required to be
notarized under local law have been notarized.
(n) The Company or FAG EB shall have entered into a lease
agreement with FAG and any other known subsequent owners of the FAG
Facility on terms acceptable to NNBR and FAG.
9. Confidentiality.
9.1 Limited Use. Except as expressly authorized by any other party,
each party agrees not to disclose, use or permit the disclosure or use by
others of any Confidential Information unless and to the extent such
Confidential Information (i) is not marked or designated in writing as
confidential and is provided for a purpose that reasonably contemplates
disclosure to or use by others; provided, however, that information
disclosed orally that is later designated in writing as confidential shall
be treated as Confidential Information except to the extent it has already
been disclosed or used by the receiving party, (ii) becomes a matter of
public knowledge through no action or inaction of the party receiving the
Confidential Information, (iii) was in the receiving party's possession
before receipt from the party providing such Confidential Information, (iv)
is rightfully received by the receiving party from a third party without
any duty of confidentiality, (v) is disclosed to a third party by the party
providing the Confidential Information without a duty of confidentiality on
the third party, (vi) is disclosed with the prior written approval of the
party providing such Confidential Information, or (vii) is independently
developed by the receiving party without any use of either of the other
parties' Confidential Information. Information shall not be deemed to be
available to the general public for the purpose of the exclusion (ii) above
with respect to each party merely because it is embraced by more general
information in the prior possession of recipient or others.
9.2 Treatment. In furtherance, and not in limitation of the foregoing
Section 9.1, each party agrees to do the following with respect to any such
Confidential Information: (i) exercise the same degree of care to safeguard
the confidentiality of, and prevent the unauthorized use of, such
information as that party exercises to safeguard the confidentiality of its
own Confidential Information; (ii) restrict disclosure of such information
to those of its
13
employees and agents who have a need to know, and (iii) instruct and
require such employees and agents to maintain the confidentiality of such
information and not to use such Confidential Information except as
expressly permitted herein. Each party further agrees not to remove or
destroy any proprietary or confidential legends or markings placed upon any
documentation or other materials.
9.3 Agreement Confidential. The foregoing confidentiality obligation
shall also apply to the contents of this Agreement.
9.4 Disclosure. The obligations under this Section 9 shall not prevent
the parties from disclosing the Confidential Information or terms of this
Agreement to any Governmental Authority as required by law or applicable
stock regulations (provided that the party intending to make such
disclosure in such circumstances has given the appropriate other party
prompt notice prior to making such disclosure so that other party may seek
a protective order or other appropriate remedy prior to such disclosure and
cooperates fully with that party in seeking such order or remedy).
9.5 Company Use. The obligations under this Section 9 shall not
prevent the Company from using all information relevant to the Business and
the Assets in the operation of the Business.
10. RESERVED
11. Indemnification.
11.1 Each JV Party (the "Indemnifying Party") agrees to defend,
indemnify, and hold harmless the Company and the other JV Parties, their
officers, directors, agents, representatives, successors, and assigns (the
"Indemnitees") from, against, and in respect of any and all loss,
liability, and expense, including counsel fees and costs of investigation
and defense (a "Loss"), resulting from:
(a) Any misrepresentation or breach or nonfulfillment of any
obligation by Indemnifying Party under this Agreement or any other
agreement or document required to be entered into pursuant to this
Agreement;
(b) The failure of any representation or warranty of Indemnifying
Party under this Agreement, or any other agreement or document
required to be entered into pursuant to this Agreement, to have been
true when made; or
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses (including legal expenses)
related to the sale of products of the Indemnifying Party's Business
prior to the Closing.
11.2 In calculating the amount of the Loss, the following shall be
deducted (i) the amount of any indemnification or other recovery (including
without limitation insurance proceeds) actually paid to the Company or the
JV Party in question from any third party with respect to such Loss; and
(ii) 100 percent of the tax benefit, if any, realized by the JV Party
and/or the Company, as a result thereof.
14
11.3 In the event of double recovery from a JV Party and from a third
party (including insurers), the JV Party or the Company as the case may be
shall promptly reimburse the JV Party in question the net amount of the
double recovery.
12. Claims.
12.1 Claim Period. All claims by a JV Party or by the Company against
a JV Party for indemnification herein shall be notified within six (6)
months after the JV Party or the Company, as the case may be, obtained
actual knowledge of the breach in question, indicating the claimed breach
in question.
12.2 Third-Party Claims. In the event any third party asserts any
claim with respect to any matter for which any Indemnitee shall have the
right to seek indemnification hereunder, the Indemnitee shall without undue
delay give notice to the Indemnifying Party and the Indemnifying Party
shall have the right at its election to control the defense of such
third-party claim at its own expense by giving prompt notice to the
Indemnitee. The Indemnifying Party has the right to require that the
Indemnitee, at the Indemnifying Party's cost, shall participate in the
defense led by the Indemnifying Party. The Indemnitee shall have the right
at its choice and cost also to participate in the defense. If the
Indemnifying Party elects to control the defense, it will so do acting in
good faith and taking into consideration the reasonable best interests of
the Indemnitee. The Indemnitee undertakes that it shall not settle any such
third party claim without the Indemnifying Party's consent, which such
party undertakes not to unreasonably withhold. In all events, the JV
Parties and the Company shall co-operate in defending against any asserted
third-party claims, and the defending party shall keep the other duly and
reasonably informed during the defense of such claims.
13. Limitation of Liability.
The indemnification to which a JV Party or the Company shall be
entitled to shall become effective only if the aggregate of Losses claimed
by such party exceeds 150,000 Euros and in such event the Indemnitee shall
be entitled to indemnification for the full amount of all Losses without
regard to such limit. With regard to any liability SKF may have with
respect to the SKF Warranty of the SKF Facility under Section 7.6(b) and
6.2.15(b), the Company and SKF shall be responsible for such liability,
shared on a Euro for Euro basis, up to a maximum liability to the Company
of 500,000 Euros.
14. Termination.
This Agreement may be terminated prior to the Closing as follows:
(a) At any time by unanimous consent of the JV Parties;
(b) If Closing has not occurred by September 30, 2000, due to the
non-fulfillment of the conditions described in Section 8, this
Agreement shall, upon the expiry of the said period, and provided that
the parties do not agree otherwise in writing, terminate and become
null and void without any party having any liability towards the
other.
15
15. Dispute Resolution; Arbitration.
15.1 Amicable Resolution. Prior to pursuing arbitration with respect
to any dispute hereunder, the chief executive officers or general managers
of SKF, FAG and NNBR (or a direct subordinate officer or general manager
appointed by them) shall meet to seek an amicable resolution to such
dispute. No party shall be entitled to make and bring a claim in
arbitration unless it has attempted for a period of forty-five (45) days
from written notice of a dispute to reach such amicable resolution.
15.2 Arbitration. After expiration of the forty-five (45) day period
referred to in the prior section, any and all disputes, controversies or
claims arising out of or relating to this Agreement, or the transactions
contemplated hereby, or the breach, termination or invalidity thereof,
shall be settled by mandatory, final and binding arbitration by three (3)
arbitrators in accordance with the UNCITRAL Arbitration Rules as at present
in effect. The appointing authority shall be the International Chamber of
Commerce. The place of arbitration shall be Copenhagen, Denmark or such
other location as may be agreed among the parties. The arbitration
proceedings shall be conducted in the English language. Among the remedies
available to them, the arbitrators shall be authorized to order the
specific performance of provisions of this Agreement and of the Associated
Agreements. The award rendered by the arbitrators may include costs of
arbitration, reasonable counsel's fees, and reasonable costs for expert and
other witnesses.
15.3 Confidentiality. All papers, documents or evidence, whether
written or oral, filed with or presented to the panel of arbitrators shall
be deemed by the parties and by the arbitrators to be Confidential
Information. No party or arbitrator shall disclose in whole or in part to
any other person any Confidential Information submitted in connection with
the arbitration proceedings, except to the extent reasonably necessary to
assist counsel in the arbitration or preparation for arbitration of the
dispute. Confidential Information may be disclosed (i) to attorneys, (ii)
to parties, and (iii) to outside experts requested by either party's
counsel to furnish technical or expert services or to give testimony at the
arbitration proceedings, subject, in the case of such experts, to execution
of a legally binding written statement that such expert is fully familiar
with the terms of this Section, agrees to comply with the confidentiality
terms of this Section, and will not use any Confidential Information
disclosed to such expert for personal or business advantage.
15.4 Arbitral Decision. The written decisions and conclusions of a
majority of the arbitration panel shall be final and binding on the JV
Parties and enforcement thereof may be rendered thereon by any court having
jurisdiction upon application of the Company or any JV Party.
16. Miscellaneous.
16.1 Announcements. The parties shall agree to consult with each other
before issuing any press releases or making any public statement with
respect to this Agreement or the transactions contemplated hereby and,
except as may be required by law or any applicable stock exchange
regulation, will not issue any such press release or make any such public
statement if the other party withholds its consent during such
consultation.
16
16.2 Governing Law. This Agreement is governed by and shall be
construed in accordance with, the laws of Denmark excluding any choice of
law rules that would refer the matter to the laws of another jurisdiction.
16.3 Force Majeure. Neither party shall be liable for failure to
perform, in whole or in material part, its obligations under this Agreement
or any Associated Agreement if such failure is caused by an event or
condition not existing as of the date of this Agreement and not reasonably
within the control of the affected party, including without limitation, by
fire, flood, typhoon, earthquake, explosion, strikes, labor troubles or
other industrial disturbances, unavoidable accidents, war (declared or
undeclared), acts of terrorism, sabotage, embargoes, blockage, acts of
Governmental Authorities, riots, insurrections, or any other cause beyond
the control of the parties; provided, that the affected party promptly
notifies the other party of the occurrence of the event of force majeure
and takes all reasonable steps necessary to resume performance of its
obligations so interfered with.
16.4 Assignment. Neither this Agreement nor any of the rights and
obligations created hereunder may be assigned, transferred, pledged, or
otherwise encumbered or disposed of, in whole or in part, whether voluntary
or by operation of law, or otherwise, by any party without the prior
written consent of the other parties. The parties may, however, transfer
this Agreement to another company within its group of companies. No such
assignment shall relieve the assigning party of any of its obligations
hereunder. This Agreement and the Associated Agreements shall inure to the
benefit of and be binding upon the parties, permitted successors and
assigns.
16.5 Survival. The obligations of each party to the others and to the
Company under Sections 5, 7, 9, 11, 12, 13, 15, and 16 shall continue to be
binding on the parties for a period of five (5) years with respect to
Sections 9, 15 and 16, and two (2) years with respect to Sections 5, 7, 11,
12 and 13, following the Closing or the termination or expiration of this
Agreement. The JV Parties acknowledge that at Closing they will enter into
the several agreements contemplated by this Agreement which will contain
representations, warranties and covenants that will survive the Closing
under this Agreement.
16.6 Notices. All notices and communications required, made or
permitted hereunder shall be in writing and shall be delivered by hand or
by messenger, or by recognized courier service (with written receipt
confirming delivery), or by postage prepaid, return receipt requested,
registered or certified airmail or telecopy, addressed:
If to NNBR: NN Ball & Roller
800 Tennessee Road
Erwin, TN 37650
USA
Attn: David Dyckman
Fax: (423) 743-8870
17
with a copy to: Blackwell Sanders Peper Martin LLP
2300 Main St., Suite 1000
Kansas City, MO 64108
USA
Attn: James M. Ash
Fax: (816) 983-9137
If to SKF: AB SKF
SKF Group Business Development
SE-415 50 Gothenberg
Sweden
Att: the Director
Fax No. 46-31-337-2077
with a copy to: SKF Group Headquarters
SE-415 50 Gothenberg
Sweden
Att: General Counsel
Fax No. 46-31-3371691
If to FAG: FAG Kugelfischer Georg Schaefer AG
Georg-Schaefer-Strasse 30
D-97421 Schweinfurt
Germany
Attn: Rechtsabteilug-FR
Fax: 49-97-21 91 31 21
With a copy to: FAG Kugelfischer Georg Schaefer AG
D-97421 Schweinfurt
Germany
Att: Technische Koordination - VT
Fax: 49-97-21-91-34-17
All notices must be in writing in English and each such notice or
other communication shall for all purposes hereunder be treated as
effective or as having been given as follows: (i) if delivered in person,
when delivered, (ii) if sent by airmail, at the earlier of its receipt or
at 5 p.m. local time of the recipient, on the seventh day after deposit in
a regularly maintained receptacle for the deposit of airmail, (iii) if sent
by a recognized courier service, on the date shown in the written
confirmation of delivery issued by such delivery service or (iv) on the
next business day after the date of the transmission in case of telecopy
with a telecopy receipt. Either party may change the addresses and/or
addressees to whom notice may be given by giving notice pursuant to this
section at least seven (7) days prior to the date the change becomes
effective.
16.7 Waiver. No delay or omission by a party in exercising any of its
rights hereunder shall operate as a waiver of that or any other right.
Unless otherwise expressly
18
stated, a waiver given by a party on any one occasion shall be effective
only in that instance and shall not be construed as a waiver of that right
on any other occasion.
16.8 Amendment. The parties may amend, modify, and supplement this
Agreement, but only pursuant to a writing signed by all parties.
16.9 Entire Agreement. This Agreement embodies the entire agreement
among the parties hereto with respect to the formation of the joint venture
and supersedes all prior agreements and understandings relating to such
subject matter.
16.10 Successors. This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors
and permitted assigns.
16.11 Headings. The headings used in this Agreement are for
convenience only, do not constitute a part of this Agreement, and shall not
be used as an aid to the interpretation of this Agreement.
16.12 Exhibits. All of the exhibits attached hereto are incorporated
herein and made a part of this Agreement by reference thereto.
16.13 Further Assurances. Each party will do all acts and things and
execute all documents and instruments which the other party reasonably
requests in order to carry out or give further effect to the provisions of
this Agreement.
16.14 Counterparts. This Agreement may be executed in three or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
16.15 Relationship of JV Parties and the Company. The relationship
between NNBR, SKF and FAG is that of independent contractors and co-owners
of the Company, and nothing in this Agreement shall be construed to
constitute one as an employee, partner, or agent of the other. Without
limiting the foregoing, neither NNBR, SKF nor FAG shall have the authority
to act for or to bind the other in any way.
Signature Page Follows
19
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have caused this agreement to be duly
signed as of the date first written above.
NNBR
By: /s/ David L. Dyckman
Name: David L. Dyckman
Title: Vice President and CFO
AB SKF
(publ)
By: /s/ Kaj Thoren
Name: Kaj Thoren
Title: Senior Vice President
By: /s/ Carina Bergfelt
Name: Carina Bergfelt
Title: General Counsel
FAG
By: /s/ Dr. Uwe Loos
Name: Dr. Uwe Loos
Title: President CEO
By: /s/ Dr, Gerhard Vogel
Name: Dr. Gerhard Vogel
Title: Member of the Executive Board CFO
20
EXHIBIT 2.27
SHAREHOLDER AGREEMENT
21
SCHEDULE 2.15
Iceland
Norway
Sweden
Finland
Russia (west of the Urals)
Estonia
Latvia
Lithuania
Belorussia
Ukraine
Moldavia
Romania
Bulgaria
Macedonia
Greece
Albania
Yugoslavia
Bosnia/Herzegovina
Croatia
Slovenia
Hungary
Slovak Republic
Czech Republic
Poland
Austria
Italy
Switzerland
Germany
Netherlands
Belgium
Luxembourg
France
Spain
Portugal
Ireland
United Kingdom
Denmark
Schedule 2.15 - 1
SCHEDULE 6.1
When used in this Schedule 6.1, the term "knowledge" or any variation
thereof with respect to NNBR shall mean the actual knowledge of the executive
officers or managers of NNBR after reasonable investigation of all relevant
matters.
6.1.1 Organization and Existence.
(a) Valid incorporation. NNBR Sub is validly incorporated and no
resolution has been passed or is proposed, nor has any petition been
presented, in respect of the winding-up of NNBR Sub.
(b) Constitution of Group Members. Schedule 6.1.1(b) comprises correct
and complete copies of the memorandum and articles of association of NNBR
Sub and of all resolutions and agreements required by section 143(2) of the
1963 Act.
(c) Returns to Registrar of Companies. All returns, particulars,
resolutions and other documents required to be delivered on behalf of NNBR
Sub to the Registrar of Companies have been properly made and delivered.
(d) Compliance with the Law. NNBR Sub has carried on its business in
all material respects in accordance with applicable laws, regulations and
by-laws in Ireland and all foreign countries, and there is no investigation
or enquiry by, or order, decree or judgement of, any court, governmental
agency or regulatory body outstanding against NNBR Sub which may have a
material adverse effect upon its assets or business.
6.1.2. Power and Authority. NNBR Sub has the corporate power and authority
to own its properties and assets, specifically including but not limited to the
NNBR Assets, and to carry on its business as now conducted.
6.1.3. Execution and Delivery Permitted; Consents. The execution, delivery
and performance of this Agreement will not violate or result in a breach of any
term of the organizational documents of NNBR or NNBR Sub, result in a breach of
or constitute a default under any term in any agreement or other instrument to
which NNBR or NNBR Sub is a party or by which any of the NNBR Assets are bound,
such default having not been previously waived by the other party to any such
agreement, or violate any law or any order, rule or regulation applicable to
NNBR or NNBR Sub, of any Governmental Authority having jurisdiction over NNBR
Sub or its properties; and will not result in the creation or imposition of any
lien, charge, or encumbrance of any nature whatsoever upon any of the NNBR
Assets. The Board of Directors of NNBR and NNBR Sub have taken all action
required by law and by their organizational documents to authorize the execution
and delivery of this Agreement, and the transfer of NNBR Sub in accordance with
this Agreement. Except as set forth on Schedule 6.1.3 and excluding any customer
of NNBR Sub, the execution, delivery and performance of this Agreement and the
other agreements executed in connection herewith, and the consummation of the
transactions contemplated hereby and thereby do not require any filing with,
notice to or consent, waiver or approval of any third party (other than
Schedule 6.1 - 1
those obtained prior to the date hereof), including but not limited to, any
governmental body or entity. NNBR Sub will use its best efforts to obtain
all required customer consents.
6.1.4. The Assets.
(a) Attached hereto on Schedule 6.1.4(a) is a complete and accurate
list of all real property owned or leased by NNBR Sub or in which it has an
ownership, leasehold or other interest related to the operation of the NNBR
Sub (collectively, the "NNBR Real Property");
(b) Attached hereto on Schedule 6.1.4(b) is a complete and accurate
list of all agreements or documents, and NNBR has made available to SKF and
FAG a copy of such agreements or documents, under which NNBR Sub claims or
holds such leasehold or other interest or right to the use of the NNBR Real
Property (the "NNBR Real Property Leases");
(c) Attached hereto on Schedule 6.1.4(c) is a complete and accurate
list of all material leases of equipment, fixtures and/or personal property
used in the operation of the NNBR Business (the "NNBR Equipment Leases")
and NNBR has made available to SKF and FAG a copy of such NNBR Equipment
Leases;
(d) Attached hereto on Schedule 6.1.4(d) is a complete and accurate
list of all equipment, leasehold improvements, and other personal property
located at the NNBR Facility (the "NNBR Equipment");
(e) Attached hereto on Schedule 6.1.4(e) is a complete and accurate
list of all material (i) trademarks, tradenames, service marks, business
and product names, slogans, and any registration or application thereof;
(ii) copyrights; (iii) inventions, processes, designs, formulae, trade
secrets, know-how, confidential business and technical information; and
(iv) any other intellectual property rights similar to the foregoing used
or held for use in the NNBR Business (the "NNBR Intellectual Property");
(f) Attached hereto on Schedule 6.1.4(f) is a complete and accurate
list of (i) all material contracts, agreements, commitments or other
understandings or arrangements with respect to any customer to whom NNBR
Sub provides any services (the "NNBR Customer Contracts"), and (ii) all
other material contracts, agreements, commitments or other understandings
or arrangements to which NNBR is a party that relate to the NNBR Assets or
by which any of the NNBR Assets are bound or affected (the "NNBR Other
Contracts"). True and complete copies of the NNBR Customer Contracts and
NNBR Other Contracts have been made available to SKF and FAG;
(g) Attached hereto on Schedule 6.1.4(g) is a complete and accurate
list of all material licenses, permits, approvals and qualifications
related to the NNBR Assets, if any, from any Governmental Authority ("NNBR
Permits"); and
(h) NNBR has made available to SKF and FAG during their due diligence
review a complete and accurate list of all inventories of raw materials not
held on consignment, work in process and finished goods located at the NNBR
Facility (the "NNBR
Schedule 6.1 - 2
Inventory") and all inventories are not obsolete or discontinued items and
are of such quality as to meet the standard quality control standards of
the JV Parties.
6.1.5. Binding Effect. This Agreement and each other agreement required to
be executed and delivered by NNBR or NNBR Sub in connection herewith, when
executed and delivered, will be a legal, valid and binding obligation of NNBR or
NNBR Sub, enforceable against it in accordance with its terms, except as
enforceability may be limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally, and (ii) general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law).
6.1.6. Condition of Assets.
(a) The NNBR Equipment is in reasonable operating condition,
commensurate with its age, with reasonable wear and tear excepted, and the
NNBR Equipment complies in all material respects with all Applicable Laws.
(b) The buildings, fixtures, and other improvements, appurtenances and
hereditaments at the NNBR Facility are in good condition, commensurate with
their age, with reasonable wear and tear excepted, and in compliance in all
material respects with all Applicable Laws and leases and lease provisions.
(c) With respect to all software used by the NNBR Business, NNBR Sub
is in possession of all source and object codes related to each
configuration of software unless the failure to have such source and object
codes could not reasonably be expected to have a material adverse effect or
such software is standard retail software and was not customized for the
NNBR Business.
6.1.7. Absence of Other Assets. Except as specifically listed on Schedule
6.1.7, there is no material asset, property, or right of any nature owned, held
or used by NNBR Sub, or any direct or indirect subsidiary or affiliate which is
not being transferred to the Company or the Subsidiaries hereunder that has been
primarily used or held for use in connection with the operation of the NNBR
Business.
6.1.8 Ownership of Assets. NNBR Sub has good title to the NNBR Assets,
which title is, or will be at Closing, free and clear of all deeds of trust,
mortgages, liens, security interests, charges, and encumbrances of any nature
whatsoever. No person or entity other than NNBR Sub has any interest in the NNBR
Assets other than the lessors under the NNBR Real Property Leases and NNBR
Equipment Leases, the other parties to the NNBR Customer Contracts and the NNBR
Other Contracts.
6.1.9. Real Property. Each NNBR Real Property Lease is in full force and
effect; and each constitutes the legal, valid, binding and enforceable
obligation of NNBR Sub, and, to NNBR Sub's knowledge, the lessor thereof. NNBR
Sub is current in all material obligations under each NNBR Real Property Lease.
There are currently no events of default by NNBR Sub, and, to the best of NNBR
Sub's knowledge, no state of facts exists which with notice or the passage of
time, or both, would constitute an event of default by NNBR Sub or any other
party under any NNBR Real Property Lease. To NNBR Sub's knowledge, there are no
disputes in effect as to any NNBR Real
Schedule 6.1 - 3
Property Lease. Subject to the consents listed on Schedule 6.1.3, the
consummation of the transactions contemplated by this Agreement will not (and
will not give any person a right to) terminate or modify any rights of, or
accelerate or increase any obligation of NNBR Sub under any NNBR Real Property
Lease. Neither (a) the request for or granting of consent nor (b) the transfer
of any NNBR Real Property Lease will cause an increase in the amount of rent or
other sums payable under the terms of any NNBR Real Property Lease. NNBR Sub has
not assigned, transferred, conveyed, mortgaged or otherwise encumbered any
interest in any NNBR Real Property.
6.1.10. Litigation or Condemnation; Compliance with Laws. Except as set
forth on Schedule 6.1.10 to this Agreement, there are no suits, actions,
condemnation actions, investigations, complaints, or other proceedings of any
nature whatsoever in law or in equity, which are pending or, to NNBR's
knowledge, threatened against NNBR Sub, which materially adversely affect the
NNBR Business or any of the NNBR Assets, by or before any judicial authority,
arbitration tribunal or other Governmental Authority. NNBR Sub is not in default
with respect to any order, writ, injunction, garnishment, levy, or decree of any
judicial authority, arbitration tribunal or other Governmental Authority which
would materially adversely affect the NNBR Assets, the NNBR Business, and the
transfer of the NNBR Assets do not constitute a default thereunder. The
operations of the NNBR Business and the condition of the NNBR Assets do not
violate in any material respect any Applicable Law (including any applicable
zoning or similar use regulation or law). NNBR Sub has complied in all material
respects with all Applicable Laws and NNBR Sub has not received any written
notice alleging any material conflict, violation, breach or default with such
laws.
6.1.11. Taxes. All ad valorem taxes, value added taxes ("VAT") other
property taxes, all sales taxes, and all other taxes relating to the NNBR Sub
have been fully paid to the extent due, and all prior tax years and there are no
delinquent tax liens or assessments. NNBR Sub has also filed (or will file) all
tax returns and reports of whatever kind pertaining to the NNBR Business or NNBR
Assets and required to be filed by NNBR Sub with the appropriate Governmental
Authorities for all periods up to and including the Closing Date. NNBR Sub has
paid (or will pay) all taxes of whatever kind, including any interest,
penalties, governmental charges, duties, fees, and fines properly due to
Governmental Authorities which are due and payable (or which relate to any
period prior to the Closing Date) or for which assessments relating to any
period prior to the Closing Date have been received, the nonpayment of which
would result in a material lien on any of the NNBR Assets. Except as set forth
on Schedule 6.1.11 hereto, no audits are currently pending with respect to any
tax returns of NNBR Sub, and NNBR Sub has received no written notice of any
claims by any such governmental entity or taxing authority with respect to the
payment of taxes or filing of tax returns or reports.
6.1.12. Contracts. The NNBR Customer Contracts and the NNBR Other Contracts
have been entered into in the ordinary course of the NNBR Business and contain
commercially reasonable terms. There have been no events of material default by
NNBR Sub, or, to NNBR's knowledge, any third party, and no state of facts exists
which with notice or the passage of time, or both, would constitute an event of
material default by NNBR Sub or a third party under any Customer Contract or
Other Contract. Subject to the consents listed on Schedule 6.1.3, the
consummation of the transactions contemplated by this Agreement will not (and
will not give any person a right to) terminate or modify any rights of, or
accelerate or increase any obligation of NNBR Sub under any Customer Contract or
Other Contract.
Schedule 6.1 - 4
Each Customer Contract and Other Contract is in full force and effect; and each
constitutes the legal, valid, binding and enforceable obligation of NNBR Sub
and, to NNBR's knowledge, the other parties thereto. Except as set forth on
Schedule 6.1.4(f), there are no material oral contracts to which NNBR Sub is a
party that relate to the NNBR Assets and as to which the Company or NNBR Sub
would be obligated after the Closing.
6.1.13. Employment Matters.
(a) Except as set forth on Schedule 6.1.13(a), no persons who are
employed by NNBR Sub primarily for use at the NNBR Facility (the "Facility
Employees") are on strike, claiming unfair labor practices or other
collective bargaining disputes. NNBR Sub has received no written notice
that such employees are threatening to strike, claiming unfair labor
practices or other collective bargaining disputes. To NNBR's knowledge,
there have been no strikes, material grievances, claims of material unfair
labor practices or other collective bargaining disputes in connection with
the NNBR Business.
(b) No Facility Employee will be entitled to severance pay by virtue
of the transactions contemplated by this Agreement.
(c) The Company and NNBR Sub are not obligated to assume any
liability, obligation or other responsibility under any benefit plan of
NNBR.
(d) Schedule 6.1.13(d) sets forth a complete list of all Facility
Employees and a description of all monetary or other compensation paid to
such Facility Employees.
6.1.14. Licensure. NNBR Sub possesses all Permits necessary for the
operation of the NNBR Business which the failure to obtain would have a material
adverse effect on the operation of the NNBR Business. NNBR Sub has all such
Permits current and in full force and effect and are in material compliance with
all requirements and limitations set forth in such Permits.
6.1.15. Environmental Matters.
(a) Undertaking.
(i) NNBR Sub undertakes, at its own cost, to take (1) all the
actions mentioned in Dames & Moore's Phase II reports, (2) all actions
that are agreed with or imposed by relevant Governmental Authorities
and (3) any other actions that NNBR may deem necessary prior to the
Compliance Date (as defined below). The actions shall be taken prior
to the Closing Date or as soon as practicably possible thereafter. If
the Company takes any actions which cause the NNBR Facility to be
subject to governmental inquiry, other than required by Applicable Law
related to environmental matters, which may require any environmental
activity such as, but not limited to, investigation or remediation or
if the Company does not support and co-operate in any and all
reasonable ways with the NNBR Sub, then this undertaking shall be null
and void and of no further force and effect after such date.
(ii) The undertaking above in Section 6.1.15(a)(i) shall be
deemed to have been fulfilled when Dames & Moore has confirmed in
writing that the NNBR
Schedule 6.1 - 5
Facility, according to their professional opinion and to the best of
their knowledge, in all material respects is in compliance with all
Applicable Law related to environmental matters. The date of such
letter from Dames & Moore shall be the "Compliance Date".
(b) Warranty. NNBR warrants that at the Closing Date, and as regards
actions set forth in Section 6.1.15(a) at the Compliance Date, NNBR's
Facility will comply in all material respects with any and all Applicable
Law related to environmental matters in force at the Closing Date.
(c) Limitation of warranty. The warranty in Section 6.1.15(b) above is
subject to the following conditions: (i) the Company and/or the other JV
Parties must give timely written notice of any claim; (ii) any claim must
be made within three years of the Closing Date; (iii) if the Company sells
the NNBR Business or property at the NNBR Facility, ceases operation at the
NNBR Facility or takes any action which causes the NNBR Facility to be the
subject of governmental inquiry, other than required by Applicable Law
related to environmental matters, which may require any environmental
activity such as, but not limited to, investigation or remediation, the
warranty shall be null and void and of no further force and effect after
such date. In case of a claim for breach of the warranty, the Company and
the JV Parties shall give NNBR sole control of the defense of the
underlying matter on which the claim is based, including any action to take
any measure necessary to cause the Company to be in compliance with all
Applicable Law related to environmental matters. The Company shall support
and co-operate in any and all reasonable ways with NNBR in this respect.
6.1.16. Historical Financial Information. The historical financial
information for the NNBR Sub provided to SKF and FAG as set forth on Schedule
6.1.16 was prepared in accordance with NNBR's historical practices and the books
and records from which such financial information was prepared are true, correct
and complete in all material respects. The unaudited statements of operations
for the fiscal years ended December 31, 1999, December 31, 1998, and December
31, 1997 were prepared in accordance with generally accepted accounting
principles, except for the absence of explanatory notes, and fairly present in
all material respects the operating results for the periods presented. The
unaudited consolidated balance sheet of the NNBR Business as of December 31,
1999, which includes all NNBR Assets, was prepared in accordance with NNBR's
historical practices and the books and records of NNBR Sub from which such
financial information was prepared are true, correct and complete in all
material respects, and the NNBR Assets, as shown therein, are reflected in
accordance with generally accepted accounting principles, except for the absence
of explanatory notes. NNBR Sub does not have any material liability or
obligation of any nature, whether accrued absolute, fixed or contingent other
than those reflected in such balance sheet.
6.1.17. Year 2000 Issues. NNBR Sub has reviewed the areas within the NNBR
Business which could be adversely affected by, and has developed a program to
address on a timely basis, the risk that certain computer applications used in
the NNBR Business (or any of its material suppliers, customers or vendors) may
be unable to recognize and perform properly date-sensitive functions involving
dates prior to and after December 31, 1999 (the "Year 2000 Problem"). The Year
2000
Schedule 6.1 - 6
Problem did not and in NNBR's opinion will not have a material adverse effect
upon the NNBR Business or NNBR Assets.
6.1.18. Intellectual Property. All intellectual property owned or utilized
by NNBR Sub with respect to the NNBR Business or NNBR Assets are set forth on
Schedule 6.1.4(e), are valid and, where appropriate, have been duly registered
or filed with all appropriate governmental authorities (except as set forth on
Schedule 6.1.18) and constitute all of the intellectual property rights which
are necessary for the operation of the NNBR Business; there is no objection to
or pending challenge to the validity of such NNBR Intellectual Property and NNBR
Sub is not aware of any reasonable grounds for any challenge. NNBR Sub does not
hold any registrations with the Irish copyright office or any such office in a
foreign country; however all copyrightable materials created by NNBR Sub (such
as manuals, promotional materials and other product literature) and all trade
secrets of NNBR Sub are entitled to protection under Applicable Law. Each
patent, patent application, patent license, trademark, trademark application,
trademark license, service mark, service mark application, service mark license,
copyright, copyright application and copyright license owned or held by NNBR Sub
and all trade secrets used by NNBR Sub consists of original material or property
developed by NNBR Sub (in whole or in part) or was lawfully acquired by NNBR Sub
from the proper and lawful owner thereof (in whole or in part). NNBR Sub has the
right to use all other inventions, processes, designs, formulae, trade secrets,
know-how, confidential business and technical information not listed on Schedule
6.1.4(e) but used in the NNBR Business. Each of such items has been maintained
so as to preserve the value thereof from the date of creation or acquisition
thereof.
6.1.19. Absence of Certain Changes. Since December 31, 1998, NNBR Sub has
carried on the Business and conducted its operations and affairs only in the
ordinary and normal course consistent with past practice and there has not been
any material damage, destruction or loss (whether or not covered by insurance)
affecting the NNBR Assets or action taken by NNBR Sub which, if taken between
the date hereof and Closing, would be prohibited by Section 7.2 of the Joint
Venture Formation Agreement.
6.1.20. Insurance. The insurance coverage provided by the insurance
policies obtained by NNBR Sub with respect to the NNBR Assets is adequate. NNBR
Sub is not in default in any material respect with regard to any of the
provisions contained in any such insurance policy, where such default would have
a material adverse effect upon the NNBR Assets. Such insurance policies are in
full force and effect on the date hereof, and will be continued in full force
and effect to and including the Closing Date.
6.1.21. Customer Relationships. Except as set forth on Schedule 6.1.21
hereto, during the fiscal year ended December 31, 1999, there were no material
changes, termination, cancellation or limitation of, or any adverse modification
or change in, the business relationship of NNBR Sub with any customer or
supplier of the Business which individually or in the aggregate provided more
than 100,000 Euros of services or purchases for the period.
6.1.22 Disclosure. No representation or warranty of NNBR or NNBR Sub in
this Agreement, or any statement or certificate furnished or to be furnished by
or on behalf of the NNBR or NNBR Sub or any document or certificate delivered to
SKF and FAG pursuant to this Agreement, or in connection with the transaction
contemplated hereby, contains any untrue
Schedule 6.1 - 7
statement of material fact or omits to state any material fact necessary to make
any statement contained therein in light of the circumstances under which it was
made, not misleading.
6.1.23 Valuation of the Assets. The value of the NNBR Assets is accurately
reflected on the current balance sheet as of November 30, 1999 and attached
hereto as Exhibit Schedule 5.5.
6.1.24 Accuracy of Information. The statutory books, books of account,
registers and other records of NNBR Sub are up-to-date and maintained in all
material respect in accordance with all applicable legal requirements on a
proper and consistent basis and contain materially complete and accurate records
of all matters required to be disclosed or dealt with in them. All such books,
registers and records and all other documents (including documents of title and
copies of all subsisting agreements to which NNBR Sub are party) which are the
property of NNBR Sub or ought to be in its possession or under its control are
in its possession or under its control, and no notice or allegation has been
received that any is incorrect or should be rectified.
6.1.25 Rights to Share Capital. Nobody has the right to call for the
allotment, issue, sale or transfer of any share or loan capital of the Company
under any option or other agreement (including conversion rights and rights of
preemption) and there are no claims, charges, liens, equities or encumbrances on
any of the Shares.
6.1.26 Related Party Contracts. NNBR Sub is not, and has not been at any
time since May 14, 1997, the date of its incorporation, party to or subject to
any material contract, transaction, arrangement, understanding, obligation or
liability, written or oral, with NNBR or any other associated company of NNBR
which will continue to exist after the Closing Date.
Schedule 6.1 - 8
SCHEDULE 6.2
When used in this Schedule 6.2, the term "knowledge" or any variation
thereof with respect to SKF shall mean the actual knowledge of the executive
officers and managers of SKF, SKF Italy and SKF Sub after reasonable
investigation of all relevant matters. The JV Parties acknowledge that SKF Sub
currently has no assets or operations.
6.2.1 Organization and Existence. SKF Italy and SKF Sub are duly organized
and validly existing, and have not been adjudicated bankrupt or subject to any
other insolvency proceeding.
6.2.2. Power and Authority. SKF Sub has the corporate power and authority
to own its properties and assets, specifically including but not limited to the
SKF Assets, and to carry on its business as now conducted. SKF Italy has the
requisite corporate power and authority to convey, assign, and transfer the SKF
Assets to SKF Sub and to transfer SKF Sub to the Company, all as set forth in
this Agreement.
6.2.3. Execution and Delivery Permitted; Consents. The execution, delivery
and performance of this Agreement will not violate or result in a breach of any
term of the organizational documents of SKF, SKF Italy or SKF Sub, result in a
breach of or constitute a default under any term in any agreement or other
instrument to which SKF, SKF Italy or SKF Sub is a party or by which any of the
SKF Assets are bound, such default having not been previously waived by the
other party to any such agreement, or violate any law or any order, rule or
regulation applicable to SKF, SKF Italy or SKF Sub, of any Governmental
Authority having jurisdiction over SKF Sub or its properties; and will not
result in the creation or imposition of any lien, charge, or encumbrance of any
nature whatsoever upon any of the SKF Assets. The Board of Directors of SKF, SKF
Italy and SKF Sub has taken all action required by law and by their
organizational documents to authorize the execution and delivery of this
Agreement, and the transfer of the SKF Assets to SKF Sub in accordance with this
Agreement. Except as set forth on Schedule 6.2.3 and excluding any customer of
SKF Italy or SKF Sub, the execution, delivery and performance of this Agreement
and the other agreements executed in connection herewith, and the consummation
of the transactions contemplated hereby and thereby do not require any filing
with, notice to or consent, waiver or approval of any third party (other than
those obtained prior to the date hereof), including but not limited to, any
governmental body or entity. SKF will use its best efforts to obtain all
required customer consents.
6.2.4. The Assets.
(a) Attached hereto on Schedule 6.2.4(a) is a complete and accurate
list of each parcel of real estate owned or leased by SKF Italy or in
which it has a ownership, leasehold or other interest related to the
operation of the SKF Business (collectively, the "SKF Real Property");
(b) Attached hereto on Schedule 6.2.4(b) is a complete and accurate
list of all agreements or documents, and SKF has made available to NNBR
and FAG a copy of such agreements or documents, under which SKF Italy
claims or holds such leasehold or other interest or right to the use of
the SKF Real Property (the "SKF Real Property Leases");
Schedule 6.2 - 1
(c) Attached hereto on Schedule 6.2.4(c) is a complete and accurate
list of all material leases of equipment, fixtures and/or personal
property used in the operation of the SKF Business (the "SKF Equipment
Leases") and SKF has made available to NNBR and FAG a copy of such SKF
Equipment Leases.
(d) Attached hereto on Schedule 6.2.4(d) is a complete and accurate
list of all equipment, leasehold improvements, and other personal property
located at the SKF Facility (the "SKF Equipment");
(e) Attached hereto on Schedule 6.2.4(e) is a complete and accurate
list of all material (i) trademarks, tradenames, service marks, business
and product names, slogans, and any registration or application thereof;
(ii) copyrights; (iii) inventions, processes, designs, formulae, trade
secrets, know-how, confidential business and technical information; and
(iv) any other intellectual property rights similar to the foregoing used
or held for use in the SKF Business (the "SKF Intellectual Property");
(f) Attached hereto on Schedule 6.2.4(f) is a complete and accurate
list of (i) all material contracts, agreements, commitments or other
understandings or arrangements with respect to any customer to whom the
SKF Facility provides any services (the "SKF Customer Contracts"), and
(ii) all other material contracts, agreements, commitments or other
understandings or arrangements to which SKF Italy or SKF Sub is a party
that relate to the SKF Assets or by which any of the SKF Assets are bound
or affected (the "SKF Other Contracts"). True and complete copies of the
SKF Customer Contracts and SKF Other Contracts have been made available to
NNBR and FAG.
(g) Attached hereto on Schedule 6.2.4(g) is a complete and accurate
list of all material licenses, permits, approvals and qualifications
related to the SKF Assets, if any, from any Governmental Authority ("SKF
Permits").
(h) SKF has made available to NNBR and FAG during their due
diligence review a complete and accurate list of all inventories of raw
materials not held on consignment, work in process and finished goods
located at the SKF Facility (the "SKF Inventory") and all inventories are
not obsolete or discontinued items and are of such quality as to meet the
standard quality control standards of the JV Parties.
6.2.5. Binding Effect. This Agreement and each other agreement required to
be executed and delivered by SKF, SKF Italy or SKF Sub in connection herewith,
when executed and delivered, will be the legal, valid and binding obligation of
each, as applicable, enforceable against it in accordance with its terms, except
as enforceability may be limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally, and (ii) general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law).
6.2.6. Condition of Assets.
(a) Except as set forth on Schedule 6.2.6, the SKF Equipment is in
reasonable operating condition, commensurate with its age, with reasonable
wear and tear excepted, and the SKF Equipment complies in all material
respects with all Applicable Laws.
Schedule 6.2 - 2
(b) Except as set forth on Schedule 6.2.6, the buildings, fixtures,
and other improvements, appurtenances and hereditaments at the SKF
Facility are in good condition, commensurate with their age, with
reasonable wear and tear excepted, and in compliance in all material
respects with all Applicable Laws and leases and lease provisions.
(c) With respect to all software used by the SKF Business, SKF is in
possession of all source and object codes related to each configuration of
software unless the failure to have such source and object codes not
reasonably be expected to have a material adverse effect or such software
is standard retail software and was not customized for the SKF Business.
6.2.7. Absence of Other Assets. Except as specifically listed on Schedule
6.2.7, there is no material asset, property, or right of any nature owned, held
or used by the SKF Business, or any direct or indirect subsidiary or affiliate
which is not being transferred to the Company or the Subsidiaries hereunder that
has been primarily used or held for use in connection with the operation of the
SKF Business.
6.2.8 Ownership of Assets. Except as set forth on Schedule 6.2.8, SKF
Italy has good title to the SKF Assets, which title is, or will be at Closing,
free and clear of all deeds of trust, mortgages, liens, security interests,
charges, and encumbrances of any nature whatsoever. SKF Italy has the full,
absolute and unrestricted right to assign, transfer and convey to SKF Sub the
SKF Assets, subject only to those consents set forth on Schedule 6.2.3; no
person or entity other than SKF Sub has any interest in the SKF Assets other
than the lessors under the SKF Real Property Leases and SKF Equipment Leases,
the other parties to the SKF Customer Contracts and the SKF Other Contracts. SKF
Italy has good title to 100% of the SKF Sub shares, which shares are, or will be
at Closing free and clear of all liens, security interests, changes and
encumbrances of any nature whatsoever. SKF Italy has full, absolute and
unrestricted right to transfer the shares of SKF Sub; no person or entity other
than SKF Italy has any interest in the SKF Sub shares.
6.2.9. Real Property. Each SKF Real Property Lease is in full force and
effect; and each constitutes the legal, valid, binding and enforceable
obligation of SKF Italy or SKF Sub, and, to SKF's knowledge, the lessor thereof.
SKF Italy is current in all material obligations under each SKF Real Property
Lease. There are currently no events of default by SKF Italy or SKF Sub, and, to
the best of SKF's knowledge, no state of facts exists which with notice or the
passage of time, or both, would constitute an event of default by SKF Italy or
SKF Sub or any other party under any SKF Real Property Lease. To SKF's
knowledge, there are no disputes in effect as to any SKF Real Property Lease.
Subject to the consents listed on Schedule 6.2.3, the consummation of the
transactions contemplated by this Agreement will not (and will not give any
person a right to) terminate or modify any rights of, or accelerate or increase
any obligation of SKF Italy or SKF Sub under any SKF Real Property Lease.
Neither (a) the request for or granting of consent nor (b) the transfer of any
SKF Real Property Lease will cause an increase in the amount of rent or other
sums payable under the terms of any SKF Real Property Lease. Except as listed on
Schedule 6.2.9, neither SKF Italy or SKF Sub have assigned, transferred,
conveyed, mortgaged or otherwise encumbered any interest in any SKF Real
Property.
6.2.10. Litigation or Condemnation; Compliance with Laws. Except as set
forth on Schedule 6.2.10 to this Agreement, there are no suits, actions,
condemnation actions, investigations,
Schedule 6.2 - 3
complaints, or other proceedings of any nature whatsoever in law or in equity,
which are pending or, to SKF's knowledge, threatened against SKF Italy or SKF
Sub, which materially adversely affect the SKF Business or any of the SKF
Assets, by or before any judicial authority, arbitration tribunal or other
Governmental Authority. Neither SKF Italy nor SKF Sub is in default with respect
to any order, writ, injunction, garnishment, levy, or decree of any judicial
authority, arbitration tribunal or other Governmental Authority which would
materially adversely affect the SKF Assets, the SKF Business, and the transfer
of the SKF Assets and the shares of SKF Sub do not constitute a default
thereunder. The operations of the SKF Business and the condition of the SKF
Assets do not violate in any material respect any Applicable Law (including any
applicable zoning or similar use regulation or law). SKF Italy and SKF Sub have
complied in all material respects with all Applicable Laws and neither SKF Italy
nor SKF Sub has received any written notice alleging any material conflict,
violation, breach or default with such laws.
6.2.11. Taxes. All ad valorem, value added taxes ("VAT"), other property
taxes, all sales taxes and all other taxes relating to the SKF Assets or SKF
Business have been fully paid to the extent due, and all prior tax years and
there are no delinquent tax liens or assessments. SKF has also filed (or will
file) all tax returns and reports of whatever kind pertaining to the SKF
Business or the SKF Assets and required to be filed by SKF Italy or SKF Sub with
the appropriate Governmental Authorities for all periods up to and including the
Closing Date. SKF Italy or SKF Sub has paid (or will pay) all taxes of whatever
kind, including any interest, penalties, governmental charges, duties, fees, and
fines properly due to Governmental Authorities which are due and payable (or
which relate to any period prior to the Closing Date) or for which assessments
relating to any period prior to the Closing Date have been received, the
nonpayment of which would result in a material lien on any of the SKF Assets or
the shares of SKF Sub. Except as set forth on Schedule 6.2.11 hereto, no audits
are currently pending with respect to any tax returns of SKF Italy or SKF Sub,
and neither SKF Italy nor SKF Sub has received written notice of any claims by
any such governmental entity or taxing authority with respect to the payment of
taxes or filing of tax returns or reports.
6.2.12. Contracts. The SKF Customer Contracts and the SKF Other Contracts
have been entered into in the ordinary course of the SKF Business and contain
commercially reasonable terms. Subject to the consents listed on Schedule 6.2.3,
SKF Italy has the right to assign, transfer and convey to SKF Sub the SKF
Customer Contracts and the SKF Other Contracts. There have been no events of
material default by SKF Italy or SKF Sub, or, to SKF's knowledge, any third
party, and no state of facts exists which with notice or the passage of time, or
both, would constitute an event of material default by SKF Italy or SKF Sub or a
third party under any SKF Customer Contract or SKF Other Contract. Subject to
the consents listed on Schedule 6.2.3, the consummation of the transactions
contemplated by this Agreement will not (and will not give any person a right
to) terminate or modify any rights of, or accelerate or increase any obligation
of SKF Italy or SKF Sub under any SKF Customer Contract or SKF Other Contract.
Each SKF Customer Contract and SKF Other Contract is in full force and effect;
and each constitutes the legal, valid, binding and enforceable obligation of SKF
Italy or SKF Sub and, to SKF's knowledge, the other parties thereto. Except as
set forth on Schedule 6.2.4(f), there are no material oral contracts to which
SKF Italy or SKF Sub is a party that relate to the SKF Assets and as to which
the Company or SKF Sub would be obligated after the Closing.
Schedule 6.2 - 4
6.2.13. Employment Matters.
(a) Except as set forth on Schedule 6.2.13(a), no persons who are
employed by SKF Italy or SKF Sub primarily for use at the SKF Facility
(the "SKF Facility Employees") are on strike, claiming unfair labor
practices or other collective bargaining disputes. Neither SKF Italy nor
SKF Sub has received written notice that such employees are threatening to
strike, claiming unfair labor practices or other collective bargaining
disputes. To SKF's knowledge, there have been no strikes, material
grievances, claims of material unfair labor practices or other collective
bargaining disputes in connection with the SKF Business.
(b) Except as set forth on Schedule 6.2.13(b), no trade union
agreements exist between SKF Italy or SKF Sub and any union or works
council.
(c) The SKF Facility employees will be entitled to severance pay on
request by virtue of the transactions contemplated by this Agreement. SKF
or SKF Italy will pay for any severance pay requested by SKF Facility
employees.
(d) Except as listed on Schedule 6.2.13(d), the Company and SKF Sub
are not obligated to assume any liability, obligation or other
responsibility under any benefit plan of SKFItaly.
(e) Schedule 6.2.13(e) sets forth a complete list of all SKF
Facility Employees and a description of all monetary or other compensation
paid to such SKF Facility Employees.
(f) Except as set forth on Schedule 6.2.13(f), SKF Sub does not
maintain any type of pension or retirement plan. All pension or retirement
plans listed on Schedule 6.2.13(e), if any, have been fully accrued, are
in compliance with all relevant laws and regulations governing such plans,
and are correctly represented on the financial statements on Schedule
6.2.16.
(g) SKF Italy and SKF Sub are not in breach of any provisions
contained in the labor agreements with the SKF Facility Employees and are
in compliance with the applicable national and local labor contracts and
are not in breach of any provisions regarding the payment of Social
Security contributions or of any other labor law provisions.
(h) SKF Italy and SKF Sub are in compliance and will comply with the
provisions of Italian Law No. 428 of December 29, 1990 which provides for
a 25-day notice period to request the advice of labor unions prior to the
transfer of a business.
(i) SKF Italy and SKF Sub maintained adequate reserve in their books
of account for the payment of any severance indemnity or pension
obligation due to their employees.
(j) There are no circumstances in existence which allow an employee
to assert a claim against SKF Italy, SKF Sub or the SKF Business for any
reason whatsoever.
Schedule 6.2 - 5
6.2.14. Licensure. SKF Italy and SKF Sub possess all SKF Permits necessary
for the operation of the SKF Business which the failure to obtain would have a
material adverse effect on the operation of the SKF Business. SKF Italy and SKF
Sub have all such SKF Permits current and in full force and effect and are in
material compliance with all requirements and limitations set forth in such SKF
Permits. All such SKF Permits are now, and at Closing will be, in full force and
effect and, unless otherwise set forth on Schedule 6.2.14, are fully
transferable to SKF Sub.
6.2.15. Environmental Matters.
(a) Undertaking.
(i) SKF Italy undertakes, at its own cost, to take (1) all the
actions mentioned in Dames & Moore's Phase II reports, (2) all
actions that are agreed with or imposed by relevant Governmental
Authorities and (3) any other actions that SKF may deem necessary
prior to the Compliance Date (as defined below). The actions shall
be taken prior to the Closing Date or as soon as practicably
possible thereafter. If the Company takes any actions which cause
the SKF Facility to be subject to governmental inquiry, other than
required by Applicable Law related to environmental matters, which
may require any environmental activity such as, but not limited to,
investigation or remediation or if the Company does not support and
co-operate in any and all reasonable ways with SKF Italy, then this
undertaking shall be null and void and of no further force and
effect after such date.
(ii) The undertaking above in Section 6.2.15(a)(i) shall be
deemed to have been fulfilled when Dames & Moore has confirmed in
writing that the SKF Facility, according to their professional
opinion and to the best of their knowledge, in all material respects
is in compliance with all Applicable Law related to environmental
matters. The date of such letter from Dames & Moore shall be the
"Compliance Date".
(b) Warranty. SKF warrants that at the Closing Date, and as regards
actions set forth in Section 6.2.15(a) at the Compliance Date, SKF's
Facility will comply in all material respects with any and all Applicable
Law related to environmental matters in force at the Closing Date.
(c) Limitation of warranty. The warranty in Section 6.2.15(b) above
is subject to the following conditions: (i) the Company and/or the other
JV Parties must give timely written notice of any claim; (ii) any claim
must be made within three years of the Closing Date; (iii) if the Company
sells the SKF Business or property at the SKF Facility, ceases operation
at the SKF Facility or takes any action which causes the SKF Facility to
be the subject of governmental inquiry, other than required by Applicable
Law related to environmental matters, which may require any environmental
activity such as, but not limited to, investigation or remediation, the
warranty shall be null and void and of no further force and effect after
such date. In case of a claim for breach of the warranty, the Company and
the JV Parties shall give SKF sole control of the defense of the
underlying matter on which the claim is based, including any action to
take any measure necessary to cause the Company to be in compliance with
all Applicable Law related to environmental matters.
Schedule 6.2 - 6
The Company shall support and co-operate in any and all reasonable ways
with SKF in this respect.
6.2.16. Historical Financial Information. The historical financial
information for SKF Italy provided to NNBR and FAG as set forth on Schedule
6.2.16 was prepared in accordance with SKF's historical practices and the books
and records from which such financial information was prepared are true, correct
and complete in all material respects. The unaudited statements of operations
for the fiscal years ended December 31, 1999, December 31, 1998, and December
31, 1997 were prepared in accordance with generally accepted accounting
principles, except for the absence of explanatory notes, and fairly present in
all material respects the operating results for the periods presented. The
unaudited consolidated balance sheet of the SKF Business as of December 31,
1999, which includes all SKF Assets, was prepared in accordance with SKF's
historical practices and the books and records of SKF Italy from which such
financial information was prepared are true, correct and complete in all
material respects, and the SKF Assets, as shown therein, are reflected in
accordance with generally accepted accounting principles, except for the absence
of explanatory notes. SKF Italy and SKF Sub do not have any material liability
or obligation of any nature, whether accrued absolute, fixed or contingent other
than those reflected in such balance sheet.
6.2.17. Year 2000 Issues. SKF and SKF Italy have reviewed the areas within
the SKF Business which could be adversely affected by, and have developed a
program to address on a timely basis, the risk that certain computer
applications used in the SKF Business (or any of its material suppliers,
customers or vendors) may be unable to recognize and perform properly
date-sensitive functions involving dates prior to and after December 31, 1999
(the "Year 2000 Problem"). The Year 2000 Problem did not and in SKF's opinion
will not have a material adverse effect upon the SKF Business or SKF Assets.
6.2.18. Intellectual Property. All intellectual property owned or utilized
by SKF or SKF Italy with respect to the SKF Business or SKF Assets is set forth
on Schedule 6.2.4(e), is valid and has been duly registered or filed with all
appropriate governmental authorities (except as set forth on Schedule 6.2.18)
and constitutes all of the intellectual property rights which are necessary for
the operation of the SKF Business; there is no objection to or pending challenge
to the validity of such SKF Intellectual Property and neither SKF nor SKF Italy
is aware of any reasonable grounds for any challenge. SKF Italy does not hold
any registrations with the Italian copyright office or any such office in a
foreign country; however all copyrightable materials created by SKF Italy (such
as manuals, promotional materials and other product literature) are entitled to
protection under Applicable Law and all trade secrets of SKF are entitled to
protection under Applicable Law. Each patent, patent application, patent
license, trademark, trademark application, trademark license, service mark,
service mark application, service mark license, copyright, copyright application
and copyright license owned or held by SKF Italy and all trade secrets used by
SKF Italy consists of original material or property developed by SKF Italy (in
whole or in part) or was lawfully acquired by SKF or SKF Italy from the proper
and lawful owner thereof (in whole or in part). SKF Sub has the right to use all
other inventions, processes, designs, formulae, trade secrets, know-how,
confidential business and technical information not listed on Schedule 6.2.4(e)
but used in the SKF Business. Each of such items has been maintained so as to
preserve the value thereof from the date of creation or acquisition thereof.
Schedule 6.2 - 7
6.2.19. Absence of Certain Changes. Since December 31, 1998, SKF Italy and
SKF Sub have carried on the SKF Business and conducted its operations and
affairs only in the ordinary and normal course consistent with past practice and
there has not been any material damage, destruction or loss (whether or not
covered by insurance) affecting the SKF Assets or action taken by SKF Sub which,
if taken between the date hereof and Closing, would be prohibited by Section 7.2
of the Joint Venture Formation Agreement.
6.2.20. Insurance. The insurance coverage provided by the insurance
policies obtained by SKF Italy and SKF Sub with respect to the SKF Assets is
adequate. SKF Italy and SKF Sub are not in default in any material respect with
regard to any of the provisions contained in any such insurance policy, where
such default would have a material adverse effect upon the SKF Assets. Such
insurance policies are in full force and effect on the date hereof, and will be
continued in full force and effect to and including the Closing Date.
6.2.21. Customer Relationships. Except as set forth on Schedule 6.2.21
hereto, during the fiscal year ended December 31, 1999, there were no material
changes, termination, cancellation or limitation of, or any adverse modification
or change in, the business relationship of SKF Italy or SKF Sub regarding the
SKF Business with any customer or supplier of the SKF Business which
individually or in the aggregate provided more than 100,000 Euros of services or
purchases for the period.
6.2.22 Disclosure. No representation or warranty of SKF or SKF Italy in
this Agreement, or any statement or certificate furnished or to be furnished by
or on behalf of SKF or SKF Italy or any document or certificate delivered to
NNBR and FAG pursuant to this Agreement, or in connection with the transaction
contemplated hereby, contains any untrue statement of material fact or omits to
state any material fact necessary to make any statement contained therein in
light of the circumstances under which it was made, not misleading.
6.2.23 Valuation of the Assets. The value of the SKF Assets is accurately
reflected on the current balance sheet as of October 31, 1999 and attached
hereto as Exhibit Schedule 5.5.
Schedule 6.2 - 8
SCHEDULE 6.3
When used in this Schedule 6.3, the term "knowledge" or any variation
thereof with respect to FAG shall mean the actual knowledge of the executive
officers and managers of FAG, FAG Sub and FAG EB after reasonable investigation
of all relevant matters. The JV Parties acknowledge that FAG EB currently has no
assets or operations.
6.3.1 Organization and Existence. FAG EB and FAG Sub are duly organized,
validly existing, and in good standing under the laws of Germany and are in good
standing with the proper Governmental Authorities in each jurisdiction in which
the failure to be in good standing could materially adversely affect FAG EB or
FAG Sub.
6.3.2. Power and Authority. FAG Sub has the corporate power and authority
to own its properties and assets, specifically including but not limited to the
FAG Assets, and to carry on its business as now conducted. FAG Sub has the
requisite corporate power and authority to convey, assign, and transfer the FAG
Assets as set forth in this Agreement.
6.3.3. Execution and Delivery Permitted; Consents. The execution, delivery
and performance of this Agreement will not violate or result in a breach of any
term of the organizational documents of FAG, FAG Sub or FAG EB, result in a
breach of or constitute a default under any term in any agreement or other
instrument to which FAG, FAG Sub or FAG EB is a party or by which any of the FAG
Assets are bound, such default having not been previously waived by the other
party to any such agreement, or violate any law or any order, rule or regulation
applicable to FAG, FAG Sub or FAG EB, of any Governmental Authority having
jurisdiction over FAG, FAG Sub or FAG EB or its properties; and will not result
in the creation or imposition of any lien, charge, or encumbrance of any nature
whatsoever upon any of the FAG Assets. Except for the approval of the
Supervisory Board of FAG Kugelfischer which will be granted as soon as possible,
the Board of Directors of FAG, FAG Sub or FAG EB has taken all action required
by law and by their organizational documents to authorize the execution and
delivery of this Agreement, and the transfer of the FAG Assets to FAG EB in
accordance with this Agreement. Except as set forth on Schedule 6.3.3 and
excluding any customer of FAG Sub or FAG EB, the execution, delivery and
performance of this Agreement and the other agreements executed in connection
herewith, and the consummation of the transactions contemplated hereby and
thereby do not require any filing with, notice to or consent, waiver or approval
of any third party (other than those obtained prior to the date hereof),
including but not limited to, any governmental body or entity. FAG will use its
best efforts to obtain all required customer consents.
6.3.4. The Assets.
(a) Attached hereto on Schedule 6.3.4(a) is a complete and accurate
list of each parcel of real estate owned or leased by FAG Sub or in which
it has a ownership, leasehold or other interest related to the operation
of the FAG Business (collectively, the "FAG Real Property");
(b) Attached hereto on Schedule 6.3.4(b) is a complete and accurate
list of all agreements or documents, and FAG has made available to NNBR
and SKF a copy of such
Schedule 6.3 - 1
agreements or documents, under which FAG Sub claims or holds such leasehold
or other interest or right to the use of the FAG Real Property (the "FAG
Real Property Leases");
(c) Attached hereto on Schedule 6.3.4(c) is a complete and accurate
list of all material leases of equipment, fixtures and/or personal
property used in the operation of the FAG Business (the "FAG Equipment
Leases") and FAG has made available to NNBR and SKF a copy of such FAG
Equipment Leases.
(d) Attached hereto on Schedule 6.3.4(d) is a complete and accurate
list of all equipment, leasehold improvements, and other personal property
located at the FAG Facility (the "FAG Equipment");
(e) Attached hereto on Schedule 6.3.4(e) is a complete and accurate
list of all material (i) trademarks, tradenames, service marks, business
and product names, slogans, and any registration or application thereof;
(ii) copyrights; (iii) inventions, processes, designs, formulae, trade
secrets, know-how, confidential business and technical information; and
(iv) any other intellectual property rights similar to the foregoing used
or held for use in the FAG Business (the "FAG Intellectual Property");
(f) Attached hereto on Schedule 6.3.4(f) is a complete and accurate
list of (i) all material contracts, agreements, commitments or other
understandings or arrangements with respect to any customer to whom FAG
Sub or FAG EB provides any services (the "FAG Customer Contracts"), and
(ii) all other material contracts, agreements, commitments or other
understandings or arrangements to which NNBR is a party that relate to the
FAG Assets or by which any of the FAG Assets are bound or affected (the
"FAG Other Contracts"). True and complete copies of the FAG Customer
Contracts and FAG Other Contracts have been made available to SKF and
NNBR.
(g) Attached hereto on Schedule 6.3.4(g) is a complete and accurate
list of all material licenses, permits, approvals and qualifications
related to the FAG Assets, if any, from any Governmental Authority ("FAG
Permits").
(h) FAG has made available to SKF and NNBR during their due
diligence review a complete and accurate list of all inventories of raw
materials not held on consignment, work in process and finished goods
located at the FAG Facility (the "FAG Inventory") and all inventories are
not obsolete or discontinued items and are of such quality as to meet the
standard quality control standards of the JV Parties.
6.3.5. Binding Effect. This Agreement and each other agreement required to
be executed and delivered by FAG, FAG Sub and FAG EB in connection herewith,
when executed and delivered, will be the legal, valid and binding obligation of
each, as applicable, enforceable against it in accordance with its terms, except
as enforceability may be limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally, and (ii) general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law).
Schedule 6.3 - 2
6.3.6. Condition of Assets.
(a) The FAG Equipment is in reasonable operating condition,
commensurate with its age, with reasonable wear and tear excepted, and the
FAG Equipment complies in all material respects with all Applicable Laws.
(b) The buildings, fixtures, and other improvements, appurtenances
and hereditaments at the FAG Facility are in good condition, commensurate
with their age, with reasonable wear and tear excepted, and in compliance
in all material respects with all Applicable Laws and leases and lease
provisions.
(c) With respect to all software used by the FAG Business, FAG is in
possession of all source and object codes related to each configuration of
software unless the failure to have such source and object codes could not
reasonably be expected to have a material adverse effect or such software
is standard retail software and was not customized for the FAG Business.
6.3.7. Absence of Other Assets. Except as specifically listed on Schedule
6.3.7, there is no asset, property, or right of any nature owned, held or used
by FAG Sub, or any direct or indirect subsidiary or affiliate which is not being
transferred to the Company or the Subsidiaries hereunder that has been primarily
used or held for use in connection with the operation of the FAG Business.
6.3.8 Ownership of Assets. Except as specifically listed on Schedule
6.3.8, FAG Sub has good title to the FAG Assets, which title is, or will be at
Closing, free and clear of all deeds of trust, mortgages, liens, security
interests, charges, and encumbrances of any nature whatsoever. FAG Sub has the
full, absolute and unrestricted right to assign, transfer and convey to FAG EB
the FAG Assets, subject only to those consents set forth on Schedule 6.3.3; no
person or entity other than FAG Sub has any interest in the FAG Assets other
than the lessors under the FAG Real Property Leases and FAG Equipment Leases,
the other parties to the FAG Customer Contracts and the FAG Other Contracts.
6.3.9. Real Property. Each FAG Real Property Lease is in full force and
effect; and each constitutes the legal, valid, binding and enforceable
obligation of FAG Sub, and, to FAG's knowledge, the lessor thereof. FAG Sub is
current in all material obligations under each FAG Real Property Lease. There
are currently no events of default by FAG Sub, and, to the best of FAG's
knowledge, no state of facts exists which with notice or the passage of time, or
both, would constitute an event of default by FAG Sub or FAG EB or any other
party under any FAG Real Property Lease. To FAG's knowledge, there are no
disputes in effect as to any FAG Real Property Lease. Subject to the consents
listed on Schedule 6.3.3, the consummation of the transactions contemplated by
this Agreement will not (and will not give any person a right to) terminate or
modify any rights of, or accelerate or increase any obligation of FAG Sub or FAG
EB under any FAG Real Property Lease. Neither (a) the request for or granting of
consent nor (b) the transfer of any FAG Real Property Lease will cause an
increase in the amount of rent or other sums payable under the terms of any FAG
Real Property Lease. FAG Sub has not assigned, transferred, conveyed, mortgaged
or otherwise encumbered any interest in any FAG Real Property.
Schedule 6.3 - 3
6.3.10. Litigation or Condemnation; Compliance with Laws. Except as set
forth on Schedule 6.3.10 to this Agreement, there are no suits, actions,
condemnation actions, investigations, complaints, or other proceedings of any
nature whatsoever in law or in equity, which are pending or, to FAG's knowledge,
threatened against FAG or FAG Sub, which materially adversely affect the FAG
Business or any of the FAG Assets, by or before any judicial authority,
arbitration tribunal or other Governmental Authority. FAG Sub is not in default
with respect to any order, writ, injunction, garnishment, levy, or decree of any
judicial authority, arbitration tribunal or other Governmental Authority which
would materially adversely affect the FAG Assets, the FAG Business, and the
transfer of the FAG Assets do not constitute a default thereunder. The
operations of the FAG Business and the condition of the FAG Assets do not
violate in any material respect any Applicable Law (including any applicable
zoning or similar use regulation or law). FAG Sub has complied in all material
respects with all Applicable Laws and FAG Sub has not received any written
notice alleging any material conflict, violation, breach or default with such
laws.
6.3.11. Taxes. All ad valorem taxes, value added taxes ("VAT"), other
property taxes, all sales taxes and all other taxes relating to the FAG Business
have been fully paid to the extent due, and all prior tax years and there are no
delinquent tax liens or assessments. FAG has also filed (or will file) all tax
returns and reports of whatever kind pertaining to the FAG Business or FAG
Assets and required to be filed by FAG with the appropriate Governmental
Authorities for all periods up to and including the Closing Date. FAG has paid
(or will pay) all taxes of whatever kind, including any interest, penalties,
governmental charges, duties, fees, and fines properly due to Governmental
Authorities which are due and payable (or which relate to any period prior to
the Closing Date) or for which assessments relating to any period prior to the
Closing Date have been received, the nonpayment of which would result in a
material lien on any of the FAG Assets. Except as set forth on Schedule 6.3.11
hereto, no audits are currently pending with respect to any tax returns of FAG,
and FAG has received no written notice of any claims by any such governmental
entity or taxing authority with respect to the payment of taxes or filing of tax
returns or reports.
6.3.12. Contracts. The FAG Customer Contracts and the FAG Other Contracts
have been entered into in the ordinary course of the FAG Business and contain
commercially reasonable terms. Subject to the consents listed on Schedule 6.3.3,
FAG Sub has the right to assign, transfer and convey to FAG EB the FAG Customer
Contracts and the FAG Other Contracts. There have been no events of material
default by FAG Sub, or, to FAG's knowledge, any third party, and no state of
facts exists which with notice or the passage of time, or both, would constitute
an event of material default by FAG Sub or a third party under any FAG Customer
Contract or FAG Other Contract. Subject to the consents listed on Schedule
6.3.3, the consummation of the transactions contemplated by this Agreement will
not (and will not give any person a right to) terminate or modify any rights of,
or accelerate or increase any obligation of FAG EB under any FAG Customer
Contract or FAG Other Contract. Each FAG Customer Contract and FAG Other
Contract is in full force and effect; and each constitutes the legal, valid,
binding and enforceable obligation of FAG or FAG Sub and, to FAG's knowledge,
the other parties thereto. Except as set forth on Schedule 6.3.4(f), there are
no material oral contracts to which FAG or FAG Sub is a party that relate to the
FAG Assets and as to which the Company or FAG EB would be obligated after the
Closing.
Schedule 6.3 - 4
6.3.13. Employment Matters.
(a) Except as set forth on Schedule 6.3.13(a), no persons who are
employed by FAG Sub primarily for use at the FAG Facility (the "FAG
Facility Employees") are on strike, claiming unfair labor practices or
other collective bargaining disputes. FAG Sub has received no written
notice that such employees are threatening to strike, claiming unfair
labor practices or other collective bargaining disputes. To FAG's
knowledge, there have been no strikes, material grievances, claims of
material unfair labor practices or other collective bargaining disputes in
connection with the FAG Business.
(b) Except as set forth on Schedule 6.3.13(b), no trade union
agreements exist between FAG or FAG Sub and any union or works council.
(c) No FAG Facility Employee will be entitled to severance pay by
virtue of the transactions contemplated by this Agreement.
(d) Except as set forth on Schedule 6.3.13(d), the Company and FAG
EB are not obligated to assume any liability, obligation or other
responsibility under any benefit plan of FAG.
(e) Schedule 6.3.13(e) sets forth a complete list of all FAG
Facility Employees and a description of all monetary or other compensation
paid to such FAG Facility Employees.
(f) Except as set forth on Schedule 6.3.13(f), FAG Sub does not
maintain any type of pension or retirement plan. All pension or retirement
plans listed on Schedule 6.3.13(e), if any, have been fully accrued, are
in compliance with all relevant laws and regulations governing such plans,
and are correctly represented on the financial statements on Schedule
6.3.16.
6.3.14. Licensure. FAG Sub possesses all FAG Permits necessary for the
operation of the FAG Business which the failure to obtain would have a material
adverse effect on the operation of the FAG Business. FAG Sub has all such FAG
Permits current and in full force and effect and are in material compliance with
all requirements and limitations set forth in such FAG Permits. All such FAG
Permits are now, and at Closing will be, in full force and effect and, unless
otherwise set forth on Schedule 6.3.14, are fully transferable to FAG EB.
6.3.15. Environmental Matters.
(a) Undertaking.
(i) FAG Sub undertakes, at its own cost, to take (1) all the
actions mentioned in Dames & Moore's Phase II reports, in FAG's case
as related to the ball manufacturing hall, (2) all actions that are
agreed with or imposed by relevant Governmental Authorities and (3)
any other actions that FAG may deem necessary prior to the
Compliance Date (as defined below). The actions shall be taken prior
to the Closing Date or as soon as practicably possible thereafter.
If the Company takes any actions which cause the FAG Facility to be
subject to governmental inquiry,
Schedule 6.3 - 5
other than required by Applicable Law related to environmental
matters, which may require any environmental activity such as,
but not limited to, investigation or remediation or if the Company
does not support and co-operate in any and all reasonable ways with
the FAG Sub, then this undertaking shall be null and void and of no
further force and effect after such date.
(ii) The undertaking above in Section 6.3.15(a)(i) shall be
deemed to have been fulfilled when Dames & Moore has confirmed in
writing that the FAG Facility, according to their professional
opinion and to the best of their knowledge, in all material respects
is in compliance with all Applicable Law related to environmental
matters. The date of such letter from Dames & Moore shall be the
"Compliance Date".
(b) Warranty. FAG warrants that at the Closing Date, and as regards
actions set forth in Section 6.3.15(a) at the Compliance Date, FAG's
Facility will comply in all material respects with any and all Applicable
Law related to environmental matters in force at the Closing Date.
(c) Limitation of warranty. The warranty in Section 6.3.15(b) above
is subject to the following conditions: (i) the Company and/or the other
JV Parties must give timely written notice of any claim; (ii) any claim
must be made within three years of the Closing Date; (iii) if the Company
sells the FAG Business or property at the FAG Facility, ceases operation
at the FAG Facility or takes any action which causes the FAG Facility to
be the subject of governmental inquiry, other than required by Applicable
Law related to environmental matters, which may require any environmental
activity such as, but not limited to, investigation or remediation, the
warranty shall be null and void and of no further force and effect after
such date. In case of a claim for breach of the warranty, the Company and
the JV Parties shall give FAG sole control of the defense of the
underlying matter on which the claim is based, including any action to
take any measure necessary to cause the Company to be in compliance with
all Applicable Law related to environmental matters. The Company shall
support and co-operate in any and all reasonable ways with FAG in this
respect.
6.3.16. Historical Financial Information. The historical financial
information for the FAG Business provided to SKF and NNBR as set forth on
Schedule 6.3.16 was prepared in accordance with FAG's historical practices and
the books and records from which such financial information was prepared are
true, correct and complete in all material respects. The unaudited statements of
operations for the fiscal years ended December 31, 1999, December 31, 1998, and
December 31, 1997 were prepared in accordance with generally accepted accounting
principles, except for the absence of explanatory notes, and fairly present in
all material respects the operating results for the periods presented. The
unaudited consolidated balance sheet of the FAG Business as of December 31,
1999, which includes all FAG Assets, was prepared in accordance with FAG's
historical practices and the books and records of FAG and FAG Sub from which
such financial information was prepared are true, correct and complete in all
material respects, and the FAG Assets, as shown therein, are reflected in
accordance with generally accepted accounting principles, except for the absence
of explanatory notes. The FAG Business and FAG EB do not have any
Schedule 6.3 - 6
material liability or obligation of any nature, whether accrued absolute, fixed
or contingent other than those reflected in such balance sheet.
6.3.17. Year 2000 Issues. FAG has reviewed the areas within the FAG
Business which could be adversely affected by, and has developed or a program to
address on a timely basis, the risk that certain computer applications used in
the FAG Business (or any of its material suppliers, customers or vendors) may be
unable to recognize and perform properly date-sensitive functions involving
dates prior to and after December 31, 1999 (the "Year 2000 Problem"). The Year
2000 Problem did not and in FAG's opinion will not have a material adverse
effect upon the FAG Business or FAG Assets.
6.3.18. Intellectual Property. All intellectual property owned or utilized
by FAG or FAG Sub with respect to the FAG Business or FAG Assets are set forth
on Schedule 6.3.4(e), are valid and have been duly registered or filed with all
appropriate governmental authorities (except as set forth on Schedule 6.3.18)
and constitute all of the intellectual property rights which are necessary for
the operation of the FAG Business; there is no objection to or pending challenge
to the validity of such FAG Intellectual Property and FAG is not aware of any
reasonable grounds for any challenge. FAG EB does not hold any registrations
with the German copyright office or any such office in a foreign country;
however all copyrightable materials created by FAG (such as manuals, promotional
materials and other product literature) are entitled to protection under
Applicable Law and all trade secrets are entitled to protection under Applicable
Law. Each patent, patent application, patent license, trademark, trademark
application, trademark license, service mark, service mark application, service
mark license, copyright, copyright application and copyright license owned or
held by FAG and all trade secrets used in the FAG Business consists of original
material or property developed by FAG (in whole or in part) or was lawfully
acquired by FAG from the proper and lawful owner thereof (in whole or in part).
FAG EB has the right to use all other inventions, processes, designs, formulae,
trade secrets, know-how, confidential business and technical information not
listed on Schedule 6.3.4(e) but used in the FAG Business. Each of such items has
been maintained so as to preserve the value thereof from the date of creation or
acquisition thereof.
6.3.19. Absence of Certain Changes. Since December 31, 1998, FAG and FAG
Sub have carried on the Business and conducted its operations and affairs only
in the ordinary and normal course consistent with past practice and there has
not been any material damage, destruction or loss (whether or not covered by
insurance) affecting the FAG Assets or action taken by FAG or FAG Sub which, if
taken between the date hereof and Closing, would be prohibited by Section 7.2 of
the Joint Venture Formation Agreement.
6.3.20. Insurance. The insurance coverage provided by the insurance
policies obtained by FAG Sub and FAG EB with respect to the FAG Assets is
adequate. FAG and FAG Sub are not in default in any material respect with regard
to any of the provisions contained in any such insurance policy, where such
default would have a material adverse effect upon the FAG Assets. Such insurance
policies are in full force and effect on the date hereof, and will be continued
in full force and effect to and including the Closing Date.
6.3.21. Customer Relationships. Except as set forth on Schedule 6.3.21
hereto, during the fiscal year ended December 31, 1999, there were no material
changes, termination, cancellation or
Schedule 6.3 - 7
limitation of, or any adverse modification or change in, the business
relationship of FAG or FAG Sub regarding the Business with any customer or
supplier of the Business which individually or in the aggregate provided more
than Euro100,000 of services or purchases for the period.
6.3.22 Disclosure. No representation or warranty of FAG in this Agreement,
or any statement or certificate furnished or to be furnished by or on behalf or
FAG or any document or certificate delivered to SKF and NNBR pursuant to this
Agreement, or in connection with the transaction contemplated hereby, contains
any untrue statement of material fact or omits to state any material fact
necessary to make any statement contained therein in light of the circumstances
under which it was made, not misleading.
6.3.23 Valuation of the Assets. The value of the FAG Assets is accurately
reflected on the current balance sheet as of November 30, 1999 and attached
hereto as Exhibit Schedule 5.5.
Schedule 6.3 - 8
TABLE OF CONTENTS
PAGE NO.
1. Establishment (and Purpose of) Company...........................1
2. Definitions......................................................2
3. The Company......................................................4
4. Actions to be Taken Prior to Closing.............................4
4.1 SKF TRANSFER OF ASSETS TO SUBSIDIARY.......................4
4.2 FAG ACTIONS................................................4
4.3 NNBR ACTIONS...............................................5
4.4 INTERCOMPANY RELATIONS.....................................5
4.5 GOVERNMENTAL APPROVALS.....................................5
4.6 FINANCIAL STATEMENTS.......................................5
4.7 ASSET TRANSFER AND VALUATIONS..............................5
5. Actions to be Taken at Closing...................................5
5.1 ACTIONS BY NNBR............................................6
5.2 ACTIONS BY SKF.............................................6
5.3 ACTIONS BY FAG.............................................6
5.4 COMPANY BORROWINGS.........................................6
5.5 CLOSING BALANCE SHEET......................................7
6. Representations and Warranties...................................8
6.1 REPRESENTATIONS AND WARRANTIES OF NNBR.....................8
6.2 REPRESENTATIONS AND WARRANTIES OF SKF......................8
6.3 REPRESENTATIONS AND WARRANTIES OF FAG......................9
7. Joint Covenants of JV Parties....................................9
7.1 PERFORMANCE................................................9
7.2 CONDUCT OF BUSINESS........................................9
7.3 ACCESS TO INFORMATION.....................................10
7.4 COOPERATION...............................................11
7.5 FURTHER ASSURANCES........................................11
7.6 ENVIRONMENTAL MATTERS.......................................11
8. Conditions to Closing...........................................12
9. Confidentiality.................................................13
9.1 LIMITED USE...............................................13
9.2 TREATMENT.................................................14
9.3 AGREEMENT CONFIDENTIAL....................................14
9.4 DISCLOSURE................................................14
9.5 COMPANY USE...............................................14
10. RESERVED........................................................14
i
11. Indemnification.................................................14
12. Claims..........................................................15
12.1 CLAIM PERIOD..............................................15
12.2 THIRD-PARTY CLAIMS........................................15
13. Limitation of Liability.........................................16
14. Termination.....................................................16
15. Dispute Resolution; Arbitration.................................16
15.1 AMICABLE RESOLUTION.......................................16
15.2 ARBITRATION...............................................16
15.3 CONFIDENTIALITY...........................................16
15.4 ARBITRAL DECISION.........................................17
16. Miscellaneous...................................................17
16.1 ANNOUNCEMENTS.............................................17
16.2 GOVERNING LAW.............................................17
16.3 FORCE MAJEURE.............................................17
16.4 ASSIGNMENT................................................17
16.5 SURVIVAL..................................................18
16.6 NOTICES...................................................18
16.7 WAIVER....................................................19
16.8 AMENDMENT.................................................19
16.9 ENTIRE AGREEMENT..........................................19
16.10 SUCCESSORS................................................19
16.11 HEADINGS..................................................19
16.12 EXHIBITS..................................................19
16.13 FURTHER ASSURANCES........................................20
16.14 COUNTERPARTS..............................................20
16.15 RELATIONSHIP OF JV PARTIES AND THE COMPANY................20
Schedule 2.15..........................................................1
SCHEDULE 6.1...........................................................1
SCHEDULE 6.2...........................................................1
SCHEDULE 6.3...........................................................1
i
AMENDMENT NO. 1 TO THE
JOINT VENTURE FORMATION AGREEMENT
THIS AMENDMENT NO. 1 TO THE JOINT VENTURE FORMATION AGREEMENT (the
"Amendment") is entered into and effective as of this 15th day of June, 2000, by
and among NN BALL & ROLLER, INC., a Delaware corporation ("NNBR"), AB SKF, a
Swedish company ("SKF"), and FAG KUGELFISCHER GEORG SCHAFER AG, a German company
("FAG").
RECITALS
A. NNBR, SKF, and FAG are parties to that certain Joint Venture Formation
Agreement dated as of April 6, 2000 (the "Formation Agreement"), which provides
for the parties to enter into a joint venture (the "Company") to manufacture
precision steel balls for sale worldwide;
B. NNBR, pursuant to the terms of the Formation Agreement desires to
transfer the shares of NNBR Sub in exchange for a 54% interest in the Company;
C. SKF, pursuant to the terms of the Formation Agreement, has transfered
all of the assets used in its ball manufacturing business in Pinerolo, Italy
(the "SKF Assets") and the Business to a newly established subsidiary (the "SKF
Sub"). SKF desires to sell the SKF Sub to a subsidiary of the Company ("EB
Italy") for 35.532 million Euros and SKF desires to contribute 28.556 million
Euros to the Company (subject to adjustment under Section 5.5 of the Formation
Agreement) in exchange for a 23% interest in the Company;
D. FAG, pursuant to the terms of the Formation Agreement, desires to
contribute 4.960 million Euros to a newly established subsidiary (the "FAG EB")
and then to transfer the shares of FAG EB to the Company in exchange for a 23%
interest in the Company and to sell all of the assets used in its ball
manufacturing business in Eltmann (the "FAG Assets") and the Business to FAG EB
for 15.956 million Euros (subject to adjustment under Section 5.5 of the
Formation Agreement).
E. The JV Parties desire to amend Section 5.5(c) of the Formation
Agreement to provide that in the event the Company pays a JV Party or its
Affiliates additional amounts as a Net Book Value Adjustment, such JV Party is
not required to contribute to the Company an additional capital investment;
F. The JV Parties desire to further amend the Formation Agreement to
provide that the Company may borrow an additional amount (the "Additional Debt")
from the Lender above the Debt provided in Section 5.4(a) of the Formation
Agreement to the extent, and only to the extent, an additional amount is
required to fund a payment to a JV Party as a Net Book Value Adjustment; and
G. The JV Parties desire to further amend the Formation Agreement to
provide that in the event the Company must incur Additional Debt to pay
additional amounts to a JV Party or its Affiliates as a Net Book Value
Adjustment, each of NNBR, FAG and SKF will proportionately increase its
unconditional guarantee so that each JV Party unconditionally guarantees that
portion of the Additional Debt equal to such Party's Percentage Interest.
AGREEMENT
In consideration of the mutual promises made herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Terms used herein and not otherwise defined are used as defined in the
Formation Agreement.
2. Section 5.4(a) of the Formation Agreement is hereby amended and
restated in its entirety as follows:
(a) At the Closing, the Company and/or its subsidiaries
will execute and deliver all agreements and other documents
deemed necessary and appropriate to borrow from a third party
lender (the "Lender") 44.553 million Euros (the "Debt") to be
used to fund the purchase of the FAG Assets and Business under
the FAG Asset Transfer Agreement, the purchase of the shares
of SKF Sub under the SKF Share Purchase Agreement, and for
general corporate purposes. The Company may borrow an
additional amount ("Additional Debt") from the Lender as
needed to fund the payment of a Net Book Value Adjustment to a
JV Party as provided Section 5.5. The proceeds from the Debt
and the Additional Debt may not be used for any purpose other
than the purchase of the FAG Assets and Business under the FAG
Asset Transfer Agreement, the purchase of the shares of SKF
Sub under the SKF Share Purchase Agreement, the payment of a
Net Book Value Adjustment to a JV Party as provided Section
5.5, or general operating expenses related to the FAG
Business, the SKF Business, or the NNBR Business.
3. Section 5.4(b) of the Formation Agreement is hereby amended and
restated in its entirety as follows:
(b) At the Closing, each of NNBR, FAG and SKF shall
execute and deliver to the Lender an unconditional guarantee
of that portion of the Debt and Additional Debt, if any, equal
to such Party's Percentage Interest. Each party's guarantee
shall expire (i) on its sixth (6th) anniversary or (ii)
earlier if the party ceases to be a shareholder in the
Company. In the event of (ii), above, the Company shall use
all reasonable efforts to obtain the release of the party's
guarantee by the Lender as quickly as possible.
2
4. Section 5.5(c) of the Formation Agreement is hereby amended and
restated in its entirety as follows:
(c) Reconciliation of Adjustments. The parties shall
determine the net amount of adjustments, if any, as between
the Company and each JV Party, or its Affiliates. Each JV
Party or its Affiliates shall then either be required to pay
or entitled to receive the net amount calculated by the
parties as being owed or due to such JV Party or its
Affiliates as a Net Book Value Adjustment.
5. From and after the execution of this Amendment by all of the parties
hereto, all references in the Formation Agreement to "this Agreement,"
"hereof," "herein" and similar terms shall mean or refer to the
Formation Agreement as amended by this Amendment, and all references
in other documents to the Formation Agreement shall mean such
Formation Agreement as amended by this Amendment.
6. The Formation Agreement is hereby ratified and confirmed and, as
herein amended, remains in full force and effect.
7. The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right,
power or remedy of any JV Party under the Formation Agreement, nor
constitute a waiver of any provision of the Formation Agreement.
8. This Amendment may be executed in three or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute but one and the same instrument.
Signature Page Follows
3
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have caused this agreement to be duly
signed as of the date first written above.
NNBR
By: /s/ David L. Dyckman
Name: David L. Dyckman
Title: Vice President and CFO
AB SKF
(publ)
By: /s/ Kaj Thoren
Name: Kaj Thoren
Title: Senior Vice President
By: /s/ Carina Bergfelt
Name: Carina Bergfelt
Title: General Counsel
FAG
By: /s/ Dr. Uwe Loos
Name: Dr. Uwe Loos
Title: President CEO
By: /s/ Dr, Gerhard Vogel
Name: Dr. Gerhard Vogel
Title: Member of the Executive Board CFO
AMENDMENT NO. 2 TO THE
JOINT VENTURE FORMATION AGREEMENT
THIS AMENDMENT NO. 2 TO THE JOINT VENTURE FORMATION AGREEMENT (the
"Amendment") is entered into and effective as of this 31st day of July, 2000, by
and among NN, INC., a Delaware corporation ("NNBR"), AB SKF, a Swedish company
("SKF"), and FAG KUGELFISCHER GEORG SCHAFER AG, a German company ("FAG").
RECITALS
A. NNBR, SKF, and FAG are parties to that certain Joint Venture Formation
Agreement dated as of April 6, 2000 (the "Formation Agreement"), which provides
for the parties to enter into a joint venture (the "Company") to manufacture
precision steel balls for sale worldwide and which has been subsequently amended
by Amendment No. 1 to the Joint Venture Formation Agreement dated June 15, 2000;
B. NNBR desires to contribute the shares of NNBR Sub to the Company at
Closing and contribute an additional amount as determined by the adjustment
under Section 5.5 of the Formation Agreement (at such time as the reconciliation
of the adjustment has been determined as provided in Section 5.5(c) of the
Formation Agreement) all in exchange for a 54% interest in the Company;
C. SKF has transfered all of the assets used in its ball manufacturing
business in Pinerolo, Italy (the "SKF Assets") and the Business to a newly
established subsidiary (the "SKF Sub"). SKF desires to sell the SKF Sub to a
subsidiary of the Company ("EB Italy") for 35.532 million Euros and SKF desires
to contribute in total approximately 28.556 million Euros to the Company
(subject to adjustment under Section 5.5 of the Formation Agreement) in an
installment of 25.8 million Euros at Closing and another installment of an
additional amount as determined by the adjustment under Section 5.5 of the
Formation Agreement all in exchange for a 23% interest in the Company;
D. FAG desires to contribute 4.960 million Euros to a newly established
subsidiary (the "FAG EB") and then to contribute the shares of FAG EB to the
Company all in exchange for a 23% interest in the Company and to sell all of the
assets used in its ball manufacturing business in Eltmann (the "FAG Assets") and
the Business to FAG EB for 15.956 million Euros (subject to adjustment under
Section 5.5 of the Formation Agreement);
E. The JV Parties desire to amend the Formation Agreement to clearly
set forth the intentions of NNBR and SKF to make their contributions to the
Company in the series of installments described above; and
F. The JV Parties further desire to amend the Formation Agreement to
clarify the understanding of the JV Parties regarding the environmental
undertaking for the SKF Facility.
AGREEMENT
In consideration of the mutual promises made herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Terms used herein and not otherwise defined are used as defined in the
Formation Agreement.
2. Section 5.1 (a) of the Formation Agreement is hereby amended and
restated in its entirety as follows:
(a) At the Closing, NNBR shall contribute its 100%
ownership interest in NNBR Sub to the Company in exchange for
52,671.54 Euro of share capital in the Company which shall
increase NNBR's total share capital in the Company to
61,724.10 Euro following Closing.
3. Section 5.2(b) of the Formation Agreement is hereby amended and
restated in its entirety as follows:
(b) At the Closing, SKF shall contribute to the Company
25.8 million Euro in exchange for 22,434.18 Euro of share
capital in the Company which shall increase SKF's total share
capital in the Company to 26,289.90 Euro following the
Closing.
4. Section 5.3(a) of the Formation Agreement is hereby amended and
restated in its entirety as follows:
(a) At the Closing, FAG shall contribute to the Company
its 100% ownership interest in FAG EB in exchange 24,894.28
Euro of share capital in the Company which shall increase
FAG's total share capital in the Company to 28,750 Euro
following the Closing.
5. Section 5.5 (d) is hereby added to the Formation Agreement and shall
read in its entirety as follows:
(d) Contribution to Company Following Reconciliation of
Adjustments. After the parties have determined the net amount
of adjustments, if any, as between the Company and each JV
Party, or its Affiliates and Each JV Party or its Affiliates
has paid or received the Net Book Value Adjustment as
determined under Section 5.5(c), the Company shall issue
5,775.90 Euro of additonal share capital to NNBR which shall
increase NNBR's total share capital following such Net Book
Value Adjustment to 67,500 Euro following the Closing and the
Company shall, similarly, issue 2,460.10 Euro of additonal
share capital to SKF which shall increase SKF's total share
capital following such Net Book Value Adjustment to 28,750
Euro following the Closing.
2
6. Section 7.6 (a) of the Formation Agreement is hereby amended and
restated in its entirety as follows:
(a) Undertaking.
(i) SKF undertakes to see to it that SKF Italy, at its
own cost, takes (1) all the actions mentioned in Section 5
in Dames & Moore's report "Phase II ESA - Integrative
Investigation at SKF Pinerolo" (13561-011-437) dated June,
2000 (the "Report") (2) all actions that are agreed with or
imposed by relevant Governmental Authorities and (3) any
other actions that SKF may deem necessary prior to the
Compliance Date (as defined below). The actions shall be
taken prior to the Closing Date or as soon as practicably
possible thereafter. If the Company takes any actions which
cause the Facility to be subject to governmental inquiry,
other than required by Applicable Law related to
environmental matters, which may require any environmental
activity such as, but not limited to, investigation or
remediation or if the Company does not support and
co-operate in any and all reasonable ways with SKF, then
this undertaking shall be null and void and of no further
force and effect after such date.
(ii) The undertaking above in Section 7.6 (a) (i) shall
be deemed to have been fulfilled when Dames & Moore have
confirmed in writing that (1) all actions mentioned in the
Report have been taken (2) the actions taken have been
communicated to the local authorities in compliance with
all legal requirements (3) the actions (the remediation
plan) have been authorized by local authorities according
to Italian legislation and (4) assuming no contamination
has occurred since the date of the Report, the
implementation of the remediation plan at the Pinerolo
facility in Dames & Moore's professional opinion and to the
best of their knowledge will bring the Pinerolo facility
into compliance with Italian environmental law.
7. Section 6.2.15 of the Formation Agreement (Schedule 6.2) is hereby
amended and restated in its entirety as follows:
(a) Undertaking.
(i) SKF Italy undertakes, at its own cost, to take (1)
all the actions mentioned in Section 5 in Dames & Moore's
report "Phase II ESA - Integrative Investigation at SKF
Pinerolo" (13561-011-437) dated June, 2000 (the "Report")
(2) all actions that are agreed with or imposed by relevant
Governmental Authorities and (3) any other actions that SKF
may deem necessary prior to the Compliance Date (as defined
below). The actions shall be taken prior to the Closing
Date or as soon as practicably possible thereafter. If the
Company takes any actions which cause the Facility to be
subject to
3
governmental inquiry, other than required by Applicable Law
related to environmental matters, which may require any
environmental activity such as, but not limited to,
investigation or remediation or if the Company does not
support and co-operate in any and all reasonable ways with
SKF, then this undertaking shall be null and void and of no
further force and effect after such date.
(ii) The undertaking above in Section 6.2.15 (a) (i)
shall be deemed to have been fulfilled when Dames & Moore
have confirmed in writing that (1) all actions mentioned in
the Report have been taken (2) the actions taken have been
communicated to the local authorities in compliance with all
legal requirements (3) the actions (the remediation plan)
have been authorized by local authorities according to
Italian legislation and (4) assuming no contamination has
occurred since the date of the Report, the implementation of
the remediation plan at the Pinerolo facility in Dames &
Moore's professional opinion and to the best of their
knowledge will bring the Pinerolo facility into compliance
with Italian environmental law.
8. From and after the execution of this Amendment by all of the parties
hereto, all references in the Formation Agreement to "this Agreement,"
"hereof," "herein" and similar terms shall mean or refer to the
Formation Agreement as amended by this Amendment and any previous
amendments, and all references in other documents to the Formation
Agreement shall mean such Formation Agreement as amended by this
Amendment and any previous amendments.
9. The Formation Agreement is hereby ratified and confirmed and, as
herein amended, remains in full force and effect.
10. The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right,
power or remedy of any JV Party under the Formation Agreement, nor
constitute a waiver of any provision of the Formation Agreement.
11. This Amendment may be executed in three or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute but one and the same instrument.
Signature Page Follows
4
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have caused this agreement to be duly
signed as of the date first written above.
NNBR
By: /s/ David L. Dyckman
Name: David L. Dyckman
Title: Vice President and CFO
AB SKF
(publ)
By: /s/ Kaj Thoren
Name: Kaj Thoren
Title: Senior Vice President
By: /s/ Carina Bergfelt
Name: Carina Bergfelt
Title: General Counsel
FAG
By: /s/ Dr. Uwe Loos
Name: Dr. Uwe Loos
Title: President CEO
By: /s/ Dr. Gerhard Vogel
Name: Dr. Gerhard Vogel
Title: Member of the Executive Board CFO
NEWS BULLETIN
RE: NN Inc.
FROM: 800 Tennessee Road
The Financial Relations Board Erwin, TN 37650
BSMG WORLDWIDE Nasdaq: NNBR
- ------------------------------------------------------------------------------
FOR FURTHER INFORMATION:
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
- --------------- ---------------------------------
Will Kelly Julie Tu and Maura Gedid
Treasurer & Manager of Investor Relations (General info)
(423) 743-9151 212-661-8030
FOR IMMEDIATE RELEASE
August 1, 2000
NN INC., SKF, & FAG KUGELFISCHER START
EUROBALL JOINT VENTURE FOR BALL MANUFACTURING
ERWIN, TENNESSEE/SCHWEINFURT/GOTEBORG - AUGUST 1, 2000 - NN Inc. (Nasdaq: NNBR),
Erwin/USA; SKF, Goteborg/Sweden; and FAG Kugelfischer Georg Schafer AG,
Schweinfurt/Germany; today announced that they have finalized their previously
announced agreement to form a jointly owned stand-alone company in Europe - NN
Euroball ApS.
The new company has acquired ball factories located in Pinerolo, Italy (SKF),
Eltmann, Germany (FAG) and Kilkenny, Ireland (NN Inc.) with approximately 700
employees and yearly sales of approximately 95 million euro. The company will
manufacture and sell high precision chrome steel balls used for ball bearings
and other products, and expects that the economy of scale achieved will enhance
competitiveness in both cost and quality.
According to the terms of the agreement, NN Inc. will own 54 percent of the
shares in the new company, and SKF and FAG will each own 23 percent. Financing
for the transaction was provided by HypoVereinsbank Luxembourg S.A. as agent for
Bayerische Hypo-und Vereinsbank AG of Munich, Germany. Acquisition financing of
approximately 31.5 Million Euro was drawn at closing, and the credit facility
provides for additional working capital and capital expenditure financing.
Roderick R. Baty, President & CEO, said, "We are delighted to conclude the
formation of Euroball. The new company provides NN with a unique opportunity to
expand our customer relationships and serve our worldwide bearing customers. We
look forward to working with our new employees at the Eltmann, Germany and
Pinerolo, Italy operations."
NN Inc.
Page 2
NN Inc. is a leading manufacturer and supplier of precision steel balls to
bearing manufacturers and had sales of US $85.3 million in 1999. SKF, Sweden, is
the world's largest bearing company with sales of SEK 36.7 billion in 1999. FAG
Kugelfischer, Germany is one of the largest European bearing manufacturers with
sales of DEM 3.7 billion in 1999.
FOR MORE INFORMATION ON NN INC., AT NO COST VIA FACSIMILE,
PLEASE CALL 1-800-PRO-INFO, AND ENTER CODE #094 , OR STOCK TICKER SYMBOL -
NNBR
With the exception of the historical information contained in the release, the
matters described herein contain forward-looking statements that are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward looking statements involve a number of risks and
uncertainties that may cause actual results to be materially different from such
forward looking statements. Such factors include, among others, general economic
conditions and economic conditions in the industrial sector, competitive
influences, risks that current customers will commence or increase captive
production, risks of capacity underutilization, quality issues, availability of
raw materials, currency and other risks associated with international trade, the
Company's dependence on certain major customers, and other risk factors and
cautionary statements listed from time to time in the Company's periodic reports
filed with the Securities and Exchange Commission, including, but not limited
to, the Company's Annual Report on Form 10-Q for the period ended March 31, 2000
and the Company's Annual Report on 10-K for the fiscal year ended December 31,
1999.
###