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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 reported) May 16, 2003 (May 2, 2003)
--------------------------
NN, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-23486 62-1096725
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2000 Waters Edge Drive, Johnson City, Tennessee 37604
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (423) 743-9151
----------------------------
None
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On May 2, 2003, NN, Inc., a Delaware corporation ("NN") acquired
substantially all of the assets of SKF B.V.'s tapered roller and metal cage
manufacturing operation in Veenendaal, The Netherlands, through a new
subsidiary, NN Netherlands, B.V. The Veenendaal operation manufactures rollers
for tapered roller bearings as well as metal cages for both tapered and
spherical roller bearings. NN intends to continue the 360-employee operation at
its present location in Veenendaal with its newly-acquired assets. The SKF Group
is one of NN's largest customers, accounting for approximately 33% of NN's
consolidated net sales in 2002.
The acquisition was valued at 22.2 million Euros (US $25.0 million). The
purchase price was negotiated between the parties based on the historical and
anticipated future performance of the business. Contemporaneously, SKF purchased
700,000 shares of NN common stock under NN's current shelf registration
statement for an aggregate investment of US$6,188,000. The remainder of the
purchase price was financed by a syndicate of banks with AmSouth Bank acting as
Administrative Agent and SunTrust Bank acting as Documentation Agent and Euro
Loan Agent.
Item 7. Financial Statements and Exhibits.
(c) EXHIBITS. The following exhibit is filed herewith:
2.1 Asset Purchase Agreement, dated April 14, 2001, by and among
SKF Holding Maatschappij Holland B.V., SKF B.V., NN, Inc.,
and NN Netherlands B.V. (We have omitted certain information
from the Agreement and filed it separately with the
Securities and Exchange Commission pursuant to our request
for confidential treatment under Rule 24b-2. We have
identified the omitted confidential information by the
following statement, "Confidential portions of material have
been omitted and filed separately with the Securities and
Exchange Commission," as indicated throughout the document
with an asterisk in brackets ([*])). The Company undertakes
to supplementally furnish to the Commission upon request a
copy of the schedules to Exhibit 2.1 omitted pursuant to
Item 601(b)(2) of Regulation S-K of the Exchange Act.
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.
Date: May 16, 2003 NN, INC.
By: /s/ William C. Kelly, Jr.
--------------------------------------
William C. Kelly, Jr.
Treasurer, Secretary and Chief Administrative
Officer
EXHIBIT INDEX
Exhibit Number Description
2.1 Asset Purchase Agreement, dated April 14, 2001, by and among
SKF Holding Maatschappij Holland B.V., SKF B.V., NN, Inc.,
and NN Netherlands B.V. (We have omitted certain information
from the Agreement and filed it separately with the
Securities and Exchange Commission pursuant to our request
for confidential treatment under Rule 24b-2. We have
identified the omitted confidential information by the
following statement, "Confidential portions of material have
been omitted and filed separately with the Securities and
Exchange Commission," as indicated throughout the document
with an asterisk in brackets ([*])). The Company undertakes
to supplementally furnish to the Commission upon request a
copy of the schedules to Exhibit 2.1 omitted pursuant to
Item 601(b)(2) of Regulation S-K of the Exchange Act.
EXECUTION VERSION
CONFIDENTIAL PORTIONS OF MATERIAL HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMISSION. THE REDACTED MATERIAL HAS BEEN INDICATED
WITH ASTERISK IN BRACKETS([*]).
ASSET PURCHASE AGREEMENT
dated as of
April 14, 2003
among
SKF HOLDING MAATSCHAPPIJ HOLLAND B.V.
SKF B.V.
NN, Inc.
and
NN Netherlands B.V.
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.....................................................1
1.1 DEFINITIONS............................................1
ARTICLE II SALE OF ASSETS, ASSUMPTION OF LIABILITIES AND
RELATED TRANSACTIONS............................................5
2.1 PURCHASE AND SALE OF ASSETS............................5
2.2 ASSIGNED CONTRACTS.....................................7
2.3 ASSUMPTION OF CERTAIN LIABILITIES......................8
2.4 THIRD PARTY APPROVAL...................................8
2.5 PURCHASE PRICE.........................................8
ARTICLE III CLOSING.........................................................9
3.1 CLOSING DATE...........................................9
3.2 ITEMS TO BE DELIVERED AT THE CLOSING BY SELLER.........9
3.3 ITEMS TO BE DELIVERED AT THE CLOSING BY BUYER.........10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT............10
4.1 ORGANIZATION AND EXISTENCE............................10
4.2 POWER AND AUTHORITY...................................10
4.3 EXECUTION AND DELIVERY PERMITTED; CONSENTS............11
4.4 BINDING EFFECT........................................11
4.5 CONDITION OF PURCHASED ASSETS.........................11
4.6 ABSENCE OF OTHER ASSETS; SUFFICIENCY..................11
4.7 OWNERSHIP OF PURCHASED ASSETS.........................12
4.8 REAL PROPERTY AND REAL PROPERTY LEASES................12
4.9 LITIGATION OR CONDEMNATION; COMPLIANCE WITH LAWS......12
4.10 TAXES.................................................12
4.11 ASSIGNED CONTRACTS....................................13
4.12 EMPLOYMENT MATTERS....................................13
4.13 LICENSURE.............................................14
4.14 ENVIRONMENTAL MATTERS.................................14
4.15 HISTORICAL FINANCIAL INFORMATION......................16
4.16 ABSENCE OF UNDISCLOSED LIABILITIES....................16
4.17 INTELLECTUAL PROPERTY.................................16
4.18 ABSENCE OF CERTAIN CHANGES............................16
4.19 INSURANCE.............................................17
4.20 CUSTOMER AND SUPPLIER RELATIONSHIPS...................17
4.21 DISCLOSURE............................................17
4.22 INVENTORY.............................................17
4.23 PARENT FINANCIAL INFORMATION..........................17
i
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER........................17
5.1 ORGANIZATION AND RELATED MATTERS......................17
5.2 AUTHORIZATION.........................................18
5.3 NO CONFLICTS..........................................18
5.4 LEGAL PROCEEDINGS.....................................18
5.5 GOVERNMENTAL CONSENTS.................................18
ARTICLE VI COVENANTS......................................................19
6.1 ENVIRONMENTAL MATTERS.................................19
6.2 WWTP..................................................20
6.3 PERMITS AND APPROVALS; THIRD PARTY CONSENTS...........20
6.4 SALES AND TRANSFER TAXES..............................21
6.5 BONUSES...............................................21
6.6 NONSOLICITATION.......................................21
6.7 NONDISCLOSURE OF PROPRIETARY DATA.....................21
6.8 COOPERATIVE USE OF INTELLECTUAL PROPERTY..............22
6.9 TECHNOLOGY SUPPORT....................................22
6.10 TAX COOPERATION.......................................22
6.11 ACCOUNTS PAYABLE......................................22
6.12 B&S SPECIAL TOOLS B.V.................................22
6.13 COMPLIANCE WITH NON-ENVIRONMENTAL LAWS................23
6.14 RIGHT OF FIRST REFUSAL................................23
6.15 SERVICES AFTER CLOSING................................23
ARTICLE VII CONDITIONS OF PURCHASE.........................................24
7.1 GENERAL CONDITIONS....................................24
7.2 CONDITIONS TO OBLIGATIONS OF BUYER AND NN.............24
7.3 CONDITIONS TO OBLIGATIONS OF SELLER...................25
ARTICLE VIII SURVIVAL.......................................................25
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............25
ARTICLE IX INDEMNIFICATION................................................25
9.1 OBLIGATIONS OF SELLER.................................26
9.2 CALCULATION OF LOSSES.................................26
9.3 LIMITATION OF OBLIGATIONS OF SELLER...................26
9.4 OBLIGATIONS OF BUYER AND NN...........................26
9.5 CERTAIN TAX MATTERS...................................27
9.6 PROCEDURE.............................................28
9.7 NOTICE BY SELLER......................................28
9.8 LIMITATION ON INDEMNIFICATION.........................29
9.9 OFFSET................................................29
ii
ARTICLE X DISPUTE RESOLUTION; ARBITRATION................................29
10.1 DISPUTE RESOLUTION....................................29
10.2 ARBITRATION...........................................29
10.3 CONFIDENTIAL INFORMATION..............................29
10.4 BINDING EFFECT........................................30
ARTICLE XI GENERAL........................................................30
11.1 AMENDMENTS; WAIVERS...................................30
11.2 SCHEDULES; EXHIBITS; INTEGRATION......................30
11.3 BEST EFFORTS; FURTHER ASSURANCES......................30
11.4 GOVERNING LAW.........................................31
11.5 NO ASSIGNMENT.........................................31
11.6 HEADINGS..............................................31
11.7 COUNTERPARTS..........................................31
11.8 PUBLICITY AND REPORTS.................................31
11.9 CONFIDENTIALITY.......................................31
11.10 PARTIES IN INTEREST...................................32
11.11 NOTICES...............................................32
11.12 EXPENSES..............................................33
11.13 REMEDIES; WAIVER......................................33
11.14 KNOWLEDGE CONVENTION..................................34
11.15 REPRESENTATION BY COUNSEL; INTERPRETATION.............34
11.16 SPECIFIC PERFORMANCE..................................34
11.17 SEVERABILITY..........................................34
11.18 NO CONSEQUENTIAL DAMAGES..............................34
11.19 WAIVER OF RIGHT TO SEEK ANNULMENT.....................34
Exhibits
° Exhibit A - Supply Agreement.
° Exhibit B - Notarial Deed.
° Exhibit C - De Vallei Agreement
Schedules
° Schedule 2.1(a) - Purchased Assets.
° Schedule 2.1(a)(i) - Real Property.
° Schedule 2.1(b) - Excluded Assets.
° Schedule 2.3(a) - Assumbed Liabilities.
° Schedule 2.3(a) - Liabilities.
° Schedule 4.3(a) - Consents.
° Schedule 4.5(a) - Condition of Purchased Assets.
iii
° Schedule 4.5(b) - Condition of Purchased Assets (Real Property).
° Schedule 4.6 - Absence of Other Assets.
° Schedule 4.7(a) - Consents needed for Real Property transfers.
° Schedule 4.7(b) - Persons other than Seller with interest in Real Property.
° Schedule 4.8(a) - Real Property.
° Schedule 4.10 - Tax Audits.
° Schedule 4.11 - Material Assigned Contracts and Approvals.
° Schedule 4.12(b) - Trade Union Agreements.
° Schedule 4.12(f) - Facility Employees.
° Schedule 4.12(g) - Pension or Retirement Plans.
° Schedule 4.13 - Business Permits.
° Schedule 4.14(b) - Environmental Law Investigations.
° Schedule 4.14(c) - Environmental Permits.
° Schedule 4.14(d) - Underground Storage Tanks ("USTs") and Aboveground
Storage Tanks ("ASTs").
° Schedule 4.14(e) - Release or Indemnification of Environmental Claims.
° Schedule 4.14(f) - Environmental Judgments.
° Schedule 4.15 - Financial Statements.
° Schedule 4.20 - Customer and Supplier Relationships.
° Schedule 4.23 - Parent Financial Information.
° Schedule 6.1(a)(iii) - Environmental Matters.
° Schedule 6.1(e) - Environmental Parcels.
° Schedule 6.13 - Compliance with non-environmental laws.
° Schedule 6.15 - Services after Closing.
° Schedule 7.2(c) - Consents not provided to Buyer under Schedule 4.11.
° Schedule 7.3(b) - Approvals and Permits not provided to Buyer under Section 4.3.
iv
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of April 14,
2003, among SKF B.V., a Dutch company ("SKF" or "Seller"), SKF Holding
Maatschappij Holland B.V., a Dutch company (the "Parent"), NN Netherlands B.V.
("Buyer") and NN, Inc., a Delaware corporation ("NN").
R E C I T A L S
WHEREAS, Seller owns or is entitled to use all of the assets of Seller's
business division that produces taper rollers, cages and other stamped metal
parts at its facility in Veenendaal, The Netherlands (the "Facility").
WHEREAS, Seller desires to sell, and Buyer desires to purchase
substantially all of the assets of the Business on the terms and conditions set
forth in this Agreement.
A G R E E M E N T
In consideration of the mutual promises contained herein and intending to
be legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly provided,
(a) the terms defined in this Article I have the meanings assigned to them
in this Article I and include the plural as well as the singular,
(b) all references in this Agreement to designated "Articles," "Sections"
and other subdivisions are to the designated Articles, Sections and other
subdivisions of the body of this Agreement,
(c) pronouns of either gender or neuter shall include, as appropriate, the
other pronoun forms, and
(d) the words "herein," "hereof' and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
As used in this Agreement and the Exhibits and Schedules delivered pursuant
to this Agreement, the following definitions shall apply.
"Accounts Receivable" has the meaning specified in Section 2.1(b)(viii).
1
"Action" means any action, complaint, investigation, condemnation action,
petition, suit or other proceeding, whether civil or criminal, in law or in
equity, or before any judicial authority, arbitrator or other Governmental
Authority.
"Affiliate" means a Person that directly or indirectly, through one or more
intermediaries, Controls, or is Controlled by, or is under common Control with,
a specified Person.
"Agreement" means this Agreement by and among Buyer and Seller as amended
or supplemented, together with all Exhibits and Schedules attached or
incorporated by reference.
"Approval" means any approval, authorization, consent, qualification or
registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or other communication required to be filed with
or delivered to, any Person.
"Assigned Contracts" has the meaning specified in Section 2.2(a).
"Assumed Liabilities" has the meaning specified in Section 2.3.
"Business" means the division of Seller, which is primarily engaged in the
business of producing taper rollers, cages and other stamped metal parts in
Veenendaal, The Netherlands and shall be deemed to include the Purchased Assets,
Assigned Contracts, and personnel/management each as used by the Seller and
required to generate all of the historic income, goodwill, and cash flow as
shown on the Financial Statements.
"Closing" means the consummation of the transaction contemplated by this
Agreement.
"Closing Date" means the date of the Closing.
"Control" means, with respect to any Person, the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Disclosure Schedule" means the Disclosure Schedule dated of even date
herewith and delivered by Seller to Buyer. The Sections of the Disclosure
Schedule shall be numbered to correspond to the applicable Section of this
Agreement.
"Environment" means soil, land surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwater, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions or causes of action, suits, obligations, liabilities, losses,
proceedings, executory decrees, judgments, penalties, fees, demands, demand
letters, orders, directives, claims (including any claims involving toxic torts
or liability in tort, strict, absolute or otherwise), liens, notices of
noncompliance or violation, or legal fees or costs of investigations, monitoring
or proceedings, relating in any way to any Environmental Laws or any
Environmental Permit issued under any such Environmental Laws, or arising from
the presence or Release into the Environment of any
2
Hazardous Materials (hereinafter "Claims") including, without limitation, and
regardless of the merit of such Claims, any and all Claims by any Governmental
Authority or by any Person for enforcement, cleanup, remediation, removal,
response, remedial or other actions or damages, contribution, indemnification,
cost recovery, compensation, or injunctive relief pursuant to any Environmental
Law or for any Property damage or personal injury (including death) or threat of
injury to health, safety, natural resources, or the Environment.
"Environmental Committee" has the meaning specified in Section 6.1(a).
"Environmental Law" means all applicable past and present statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
authorizations and similar items, of any Governmental Authority and all
principles of common law pertaining to the regulation and protection of human
health, safety, and damages to natural resources, including, without limitation,
releases and threatened releases or otherwise relating to the operation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of Hazardous Substances.
"Environmental Permits" means all registrations; applications; filing;
certifications; notices; final, non-appealable orders; licenses; permits;
approvals; consents; qualifications; authorizations and/or waivers of any
Governmental Authority issued under or with respect to any applicable
Environmental Law.
"Excluded Assets" has the meaning specified in Section 2.1(b).
"Facility" has the meaning specified in the recitals to this Agreement.
"Facility Employees" has the meaning specified in Section 4.12.
"Financial Statements" means the financial statements on Schedule 4.15.
"Governmental Authority" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"Hazardous Materials" means (a) any chemicals, materials, substances or
wastes which are now or hereafter defined or listed in, or otherwise classified
pursuant to, any applicable Environmental Laws as "hazardous substances,"
"hazardous materials," "toxic substances," "extremely hazardous substances,"
"toxic pollutants," or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitibility,
corrosivity, reactivity, radioactivity, carcinogenicity, or reproductive
toxicity under any applicable Environmental Law; (b) any petroleum, petroleum
products (including, without limitation, crude oil or any fraction thereof),
natural gas, natural gas liquids, liquefied natural gas or synthetic gas useable
for fuel (or mixtures of natural gas and such synthetic gas) or oil and gas
exploration or production waste, polychlorinated biphenyls ("PCBs"),
asbestos-containing materials ("ACMs"), mercury and lead-based paints; and (c)
any other chemical, material, substances, or waste, exposure to which is
prohibited, limited or regulated by any Governmental Authority.
3
"Indemnifiable Claim" means any Loss for or against which any party is
entitled to indemnification under this Agreement; "Indemnified Party" means the
party entitled to indemnity hereunder; and "Indemnifying Party" means the party
obligated to provide indemnification hereunder.
"Intellectual Property" means all know how, copyrights, part numbers,
computer programs and other computer firmware and software (existing in any
form), Trade Secrets, and proprietary processes and formulae, to the extent each
is used by the Business.
"Inventory" has the meaning specified in Section 2.1(a)(iv).
"Law" means any constitutional provision, statute or other law, rule,
regulation, or interpretation of any Governmental Authority and any Order.
"Loss" means any cost, damage, disbursement, expense, liability, loss,
deficiency, diminution in value, penalty or settlement of any kind or nature,
whether foreseeable or unforeseeable, including but not limited to, interest or
other reasonable carrying costs, penalties, reasonable legal, accounting and
other professional fees and expenses incurred in the investigation, collection,
prosecution and defense of claims and amounts paid in settlement, that may be
imposed on or otherwise incurred or suffered by the specified person and shall
be calculated as set forth in Section 9.2.
"Material Assigned Contract" means any Assigned Contract that has a term of
more than twelve (12) months, requires payment by the Seller to the third party
or by the third party to the Seller, of more than €50,000, or is material
to the operation of the Business.
"Order" means any decree, injunction, judgment, order, ruling, assessment
or writ.
"Parcels" has the meaning specified in Section 6.1(e).
"Pension Plan" has the meaning set forth in Section 6.5.
"Permit" means any license, permit, franchise, certificate of authority, or
order, or any waiver of the foregoing, required to be issued by any Governmental
Authority.
"Person" means an association, a corporation, an individual, a partnership,
a trust or any other entity or organization, including a Governmental Authority.
"Prepaid Expenses" has the meaning specified in Section 2.1(a)(v).
"Purchase Price" has the meaning set forth in Section 2.5.
"Purchased Assets" has the meaning set forth in Section 2.1(a).
"Real Property" means all Purchased Assets consisting of real property,
appurtenances thereto, rights in connection therewith, and any interest therein.
4
"Real Property Leases" means those leases to which Seller is a party
relating to the real property used by the Business included on Schedule 4.11.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of
Hazardous Materials into the Environment, other than releases in the quantities
allowed under valid and applicable Environmental Permits possessed by the
Business.
"Sales and Transfer Taxes" has the meaning specified in Section 6.4.
"SKF Intellectual Property" means all final product designs, drawings and
plans, final product tolerances, photographs, samples and models, exclusively
related to products manufactured by the Business for SKF Group Companies as of
the Closing Date.
"Tax" means any and all foreign, federal, state, county or local taxes,
including income, sales and use, excise, franchise, real and personal property,
transfer, gross receipt, capital stock, production, business and occupation,
disability, employment, payroll, value added tax, stamp duty, custom and import
duty, severance or withholding tax or any like assessment fee or charge imposed
by any Governmental Authority, any interest and penalties (civil or criminal)
related thereto or to the nonpayment thereof, and any Loss in connection with
the determination, settlement or litigation of any Tax liability.
"Tax Return" means any report, return or other information required to be
supplied to a Governmental Authority with respect to Taxes (including any
schedules, attachments or amendments thereto) including, where permitted or
required, combined or consolidated returns for any group of entities.
"Third Party Consultant" has the meaning specified in Section 6.1.1(b).
"Trade Secrets" means any formula, pattern, method, concept, device or
compilation of information used in connection with or relating to the Business
and which gives an opportunity to obtain an advantage over competitors who do
not know it or use it, including, but not limited to, formulae for chemical
compounds, a process of manufacturing, treating or preserving materials, a
pattern for a machine or any forms, plans, drawings, specifications, customer
lists, marketing and competition analysis and project management, inventory and
cost control systems and techniques with respect to each of the above to the
extent each is used by the Seller with respect to the Business, not including
the SKF Intellectual Property.
"WWTP" has the meaning specified in Section 6.1.2.
"WWTP Cost" has the meaning specified in Section 6.1.2.
ARTICLE II
SALE OF ASSETS, ASSUMPTION OF LIABILITIES
AND RELATED TRANSACTIONS
2.1 Purchase and Sale of Assets.
5
(a) Purchased Assets. Subject to the terms and conditions of this
Agreement, at 10:00 a.m. on the Closing Date, at the offices of Van Bentham &
Keulen, Utrecht, The Netherlands, Seller shall sell, convey, assign, transfer
and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller,
all assets, properties, rights, privileges of every kind and nature, real and
personal, tangible and intangible, absolute or contingent, wherever located,
legally owned by Seller , but only to the extent used in the Business (the
"Purchased Assets"), except the assets specifically identified in Section 2.1(b)
(the "Excluded Assets"). The Purchased Assets shall include, but shall not be
limited to, the items set forth on Schedule 2.1(a), attached hereto and
incorporated herein by reference, except as changed by assets acquired or
disposed of in the ordinary course of business of the Business after the date
hereof, and also shall include the following, but only to the extent each
relates solely to the Business:
(i) All real property legally owned by Seller and used by the
Business (the "Real Property") as set forth on Schedule 2.1(a)(i).
(ii) All machinery, tooling, apparatus, furniture and fixtures,
materials, supplies, and other equipment of every type owned by Seller and
solely used in connection with the Business.
(iii) All inventory of goods, including all merchandise, raw
materials, work in progress, and all spare parts and supplies, finished
products and other tangible personal property held for sale or used
exclusively in connection with the Business as of the date hereof (the
"Inventory"), together with any additions thereto and subject to any
reductions therefrom received or incurred by Seller operating the Business
in the ordinary course.
(iv) Seller's prepaid expenses as of the date hereof relating
exclusively to the Business ("Prepaid Expenses"), together with any
additions thereto and subject to any reductions therefrom made or accrued
by Seller in operating the Business in the ordinary course.
(v) Sales data, customer lists, information relating to customers,
suppliers' names, mailing lists, and, if any, advertising matter and all
rights thereto relating to the Business.
(vi) All of the Intellectual Property legally owned by Seller and used
by the Business, except the SKF Intellectual Property referred to in
Sections 2.1 (b)(ii) and (iii).
(vii) Any transferable Permits associated with or used in the conduct
of the Business.
(viii) All of Seller's business and financial records relating solely
to the Business (including all Tax records relating solely to the
Business), including all ledgers sales invoices, accounts and payroll
records, and all original copies thereof (but excluding business records
relating solely to the Excluded Assets set forth herein); transferable
Permits; unemployment compensation, workers' compensation and other
credits, reserves or deposits with applicable Governmental Authorities
relating to Seller's employees.
6
(b) Excluded Assets. The Excluded Assets shall include all assets of
Seller not solely related to the Business and, with respect to those assets of
Seller that are solely used by Seller in the Business, only those assets set
forth on Schedule 2.1(b) and the following:
(i) The consideration delivered to Seller pursuant to this Agreement;
(ii) The Intellectual Property related exclusively to the [*];
(iii) The SKF Intellectual Property.
(iv) Seller's articles of incorporation, non-transferable franchises
and Permits, corporate seals, minute books, stock books and other corporate
records having to do with the corporate organization and capitalization of
Seller and all income tax records;
(v) Any shares of the capital stock of Seller;
(vi) All insurance policies and rights thereunder, except claims
related to the Purchased Assets pre-closing;
(vii) All cash and cash equivalents; and
(viii) All accounts receivable.
2.2 Assigned Contracts.
(a) Assignment and Assumption of Contractual Rights and Obligations.
Subject to satisfaction of the terms and conditions of this Agreement on the
Closing Date and subject to Section 2.2(b) below and effective as of the Closing
Date, Seller hereby sells, transfers, conveys, assigns and delivers and Buyer
hereby assumes all rights and obligations of Seller pursuant to the contracts
used in the operation of the Business, effective as of the Closing Date
("Assigned Contracts").
(b) Third Party Approval. The assignment and assumption of the
Assigned Contracts shall not take legal effect until such time as the party to
such Assigned Contract (other than Seller) shall consent or shall reasonably be
deemed to have consented to such assignment and assumption. Seller shall take
all commercially reasonable efforts to obtain the consent of all such parties on
behalf of both Seller and Buyer. Buyer shall take commercially reasonable
efforts to cooperate with Seller in obtaining such consents.
(c) Failure to Obtain Third Party Approval. In the event that a party to
an Assigned Contract (other than Seller) shall refuse or shall reasonably be
deemed to have refused consent or has not consented before the Closing Date to
the assignment and assumption of such Assigned Contract, Seller and Buyer shall
nonetheless remain bound by the provisions of Section 2.2(a) hereof, such that
all economic benefit and risk to such Assigned Contracts shall be deemed to have
passed from Seller to Buyer effective as of the Closing Date. As between Seller
and such third parties, Seller shall act on behalf of and for the sole risk and
account of Buyer as a party to such Assigned Contract and Seller shall make
available to Buyer the economic and practical benefits of any such Assigned
Contract for the sole cost and risk of Buyer.
7
(d) No Breach. Notwithstanding the terms and conditions of this Agreement,
Section 2.2 hereof shall not constitute an agreement to effect the assignment or
assumption of an Assigned Contract if such action would constitute a breach
thereof. In such case, the Parties will negotiate in mutual good faith an
alternative arrangement whereby Buyer shall be enabled to reap the economic
and/or practical benefit of such Assigned Contract and Seller held free and
harmless from any liability or claim arising therefrom.
2.3 Assumption of Certain Liabilities.
Except as otherwise specifically provided in this Section 2.3, Buyer shall
not assume any of the liabilities or obligations of Seller. On the Closing Date,
Buyer shall assume and agree to discharge only those liabilities of Seller
specifically identified on Schedule 2.3 attached hereto and incorporated herein
by this reference (the "Assumed Liabilities"), which shall also include the
following, each only to the extent it relates exclusively to the Business:
(a) the liabilities of Seller carried on the December 31, 2002 balance
sheet of Seller and listed on Schedule 2.3(a), as adjusted under Section 2.5, up
to a maximum amount of 4,391,000 Euro (the "Section 2.3(a) Liabilities");
(b) any liability arising after the Closing Date under the Assigned
Contracts;
(c) the WWTP "Removal Costs," as that term is defined, and only to the
extent specifically described to be borne by Buyer, in Section 6.1;
(d) the cost associated with Buyer's duplication of information from
Seller's information systems to Buyer's information systems; and
(e) those liabilities related to the Facility Employees resulting from the
employment contracts concluded with the Facility Employees which employment
contracts are transferred by operation of Dutch law to Buyer pursuant to Section
7:663 of the Dutch Civil Code.
2.4 Third Party Approval. The Assumed Liabilities will only have effect
against any creditor under the Assumed Liabilities if such creditor has given
its consent. Seller hereby authorizes Buyer to notify all such Parties on behalf
of both Seller and Buyer of the aforementioned assumption. Buyer will use
commercially reasonable efforts to obtain the approval of any creditor to the
extent that such approval has not been given prior to the Closing Date.
Regardless of whether Buyer has obtained any such approval or consent, the
assumption of the Liabilities by Buyer will be effective in accordance with the
terms and conditions of this Agreement. As a result thereof, towards third
parties, Buyer shall act as debtor for its own account.
2.5 Purchase Price.
(a) The Purchase Price for the Assets shall be 22,282,062 Euro, adjusted
for increases or decreases in the Inventory value at Closing from the Inventory
balance as of December 31, 2002 of 6,491,000 Euro.
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(b) At Closing, Buyer will pay 22,282,062 Euro to Seller by wire transfer.
As soon as practical after the Closing, Buyer shall prepare a closing date
inventory value and present it to Seller, using the same accounting principles
applied to determine the December 31, 2002 values. Seller shall have 20 days to
accept or reject such value (if Seller does not reject the value within such 20
day period, Seller shall be deemed to have accepted it). Upon Seller's
acceptance of the closing date inventory value, Buyer or Seller, as the case may
be, shall pay to the other by wire transfer, the amount of difference between
the closing date inventory value and 6,491,000 Euro. In the event Seller rejects
the closing date inventory value as determined by Buyer, the dispute will be
resolved pursuant to Article X.
(c) In addition, as soon as practical after Closing, Buyer shall prepare a
closing date valuation of the Section 2.3(a) Liabilities and present it to
Seller, using the same accounting principles applied to determine the December
31, 2002 values. Seller shall have 20 days to accept or reject such valuation
(if Seller does not reject the valuation within such 20 day period, Seller shall
be deemed to have accepted it). Upon Seller's acceptance of the closing date
valuation, if the valuation is more than 4,391,000 Euro, Seller will pay the
excess to Buyer so that Buyer will be able to effect the payment to third
parties of the total amount of the liabilities or otherwise make mutually
acceptable arrangements to satisfy the excess liabilities. In the event Seller
rejects the closing date valuation of the Section 2.3(a) Liabilities as
determined by Buyer, the dispute will be resolved pursuant to Article X.
ARTICLE III
CLOSING
3.1 Closing Date. Upon the terms and subject to the conditions set forth
in this Agreement, the Closing of the transaction shall take place at the
offices of Van Benthem & Keulen, Utrecht, The Netherlands, at such time as
agreed to by the parties, on April 29, 2003, or at such other location as Seller
and Buyer may agree in writing.
3.2 Items to be Delivered at the Closing By Seller. At the Closing, or, in
connection with item 3.2(g) as soon as possible after the Closing, Seller shall
deliver or cause to be delivered to Buyer:
(a) The Purchased Assets.
(b) The Supply Agreement executed by Seller, attached hereto as Exhibit A.
(c) The notarial deed executed by Seller and a Civil Law Notary, attached
hereto as Exhibit B.
(d) All consents listed on Schedule 4.11.
(e) Such other instruments of transfer necessary or appropriate to
transfer to and vest in Buyer all of Seller's right, title and interest in and
to the Purchased Assets.
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(f) The opinions, certificates, consents and other documents referred to
herein as then deliverable by Seller.
(g) The keys to all locks located on or in the Purchased Assets (and any
and all cards, devices or things necessary to access any Purchased Assets).
(h) Evidence in writing and satisfactory to Buyer that the conditions in
Section 7.2(a), (c), and (f) have been fulfilled.
(i) Executed agreement from V.B. Beleggingsmaatschappij en
Handelsonderneming "De Vallei" and Bouwmaatschappij Bennekom B.V. in
substantially the form attached hereto as Exhibit C (the "DeVallei Agreement").
3.3 Items to be Delivered at the Closing by Buyer. At the Closing, Buyer
shall deliver to Seller:
(a) The Closing Payment.
(b) The Supply Agreement executed by Buyer, attached hereto as Exhibit A.
(c) Such instruments as may reasonably be requested by any creditor,
lessor or any other person whose consent is required to consummate the
transactions contemplated by this Agreement to evidence the assumption by Buyer
of the Assumed Liabilities and all other consents required by Buyer to
consummate the transactions contemplated by this Agreement.
(d) The opinions, certificates, consents and other documents referred to
herein as then deliverable by Buyer.
(e) The certificates referenced in Section 7.3(a).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Except as otherwise indicated on the Seller's Disclosure Schedule dated as
of the date of Closing, Seller and Parent jointly and severally represent,
warrant and agree as follows:
4.1 Organization and Existence. Seller is duly organized and validly
existing under the laws of The Netherlands, and has not been adjudicated
bankrupt or subject to any other insolvency proceeding. Parent is duly organized
and validly existing under the laws of The Netherlands, and has not been
adjudicated bankrupt or subject to any other insolvency proceeding.
4.2 Power and Authority. Seller has the corporate power and authority to
own its properties and assets, specifically including but not limited to the
Purchased Assets, and to carry on its business as now conducted. Seller has the
requisite corporate power and authority to own, operate, convey, assign, and
transfer the Purchased Assets to Buyer, all as set forth in this Agreement.
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4.3 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 Seller or Parent, result in a material
breach of or constitute a material default under any term in any agreement or
other instrument to which Seller or Parent is a party or by which any of the
Purchased Assets are bound, such default having not been waived by the other
party to any such agreement, or violate any law or any order, rule or regulation
applicable to Seller or Parent, of any Governmental Authority having
jurisdiction over Seller or Parent or their properties; and will not result in
the creation or imposition of any lien, charge, or encumbrance of any nature
whatsoever upon any of the Purchased Assets. The Board of Directors of Seller
and the Board of Directors of Parent 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 the Purchased Assets to Buyer in accordance
with this Agreement. Except as set forth on Schedule 4.3, 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 and those required in connection with the Assigned Contracts not listed
on Schedule 4.11), including but not limited to, any Governmental Authority or
entity. Seller will use its best efforts to obtain all required consents.
4.4 Binding Effect. This Agreement and each other agreement required to be
executed and delivered by Seller in connection herewith, when executed and
delivered, will be the legal, valid and binding obligation of Seller,
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).
4.5 Condition of Purchased Assets.
(a) Except as set forth on Schedule 4.5(a), the Purchased Assets are in a
sufficient state of maintenance and repair, with reasonable wear and tear
excepted, to conduct the Business in accordance with Seller's historical
practices, and the Purchased Assets comply in all material respects with all
applicable laws.
(b) Except as set forth on Schedule 4.5(b), the buildings, fixtures, and
other improvements, appurtenances and hereditaments at the Facility are, with
reasonable wear and tear excepted, in a sufficient condition such that the
Purchased Assets can be used to conduct the Business in accordance with Seller's
historical practices and are, subject to the matters shown on Schedule 6.1(a),
in compliance in all material respects with all applicable Laws and leases and
lease provisions.
4.6 Absence of Other Assets; Sufficiency. Except as specifically listed on
Schedule 4.6, there is no material asset, property, or right of any nature
owned, held or used by Seller or any direct or indirect subsidiary or Affiliate
which is not being transferred to the Buyer hereunder that has been used or held
for use in connection with the operation of the Business.
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The Purchased Assets and the Assigned Contracts are sufficient to conduct the
Business as currently conducted.
4.7 Ownership of Purchased Assets. Seller has good and marketable title to
all of the Purchased Assets, which title is, or will be at Closing, free and
clear of all deeds of trust, mortgages, liens, security interests, charges,
claims and encumbrances of any nature whatsoever. Seller has the full, absolute
and unrestricted right to assign, transfer and convey to Buyer the Purchased
Assets, subject only to those consents set forth on Schedule 4.7(a); no Person
other than Seller has any interest in the Purchased Assets other than those set
forth on Schedule 4.7(b).
4.8 Real Property and Real Property Leases.
(a) Schedule 4.8(a) attached hereto contains a true, correct and complete
list of the address and legal description of each parcel of Real Property.
Except as set forth on Schedule 4.8(a)(2), Seller has good and marketable title
to each parcel of Real Property, which title is free and clear of all deeds of
trust, mortgages, liens, security interest, charges, claims and encumbrances of
any nature whatsoever. Seller has the full, absolute and unrestricted right to
assign, transfer and convey to Buyer the Real Property under applicable Law. No
person or entity other than Seller has any interest in the Real Property. There
is no pending or threatened condemnation or eminent domain proceeding with
respect to the Real Property.
(b) Each Real Property Lease is in full force and effect; and each
constitutes the legal, valid, binding and enforceable obligation of Seller and,
to Seller's knowledge, the lessor thereof. Seller is current in all material
obligations under each Real Property Lease. There are currently no events of
default by Seller, and, to the best of Seller's knowledge, no state of facts
exists which with notice or the passage of time, or both, would constitute an
event of default by Seller or any other party under any Real Property Lease. To
the Seller's knowledge, there are no disputes in existence as to any Real
Property Lease. Neither (i) the request for or granting of consent nor (ii) the
transfer of any Real Property Lease will cause a contractual obligation to pay
an increased amount of rent or other sums payable under the terms, or any
reduction in the length or extension options of any Real Property Lease.
4.9 Litigation or Condemnation; Compliance with Laws. There are no Actions
which are pending or, to Seller's knowledge, threatened against Seller, which
could materially adversely affect the Business or any of the Purchased Assets.
Seller 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
Purchased Assets, the Business, and the transfer of the Purchased Assets does
not constitute a default thereunder. The operations of the Business and the
condition of the Purchased Assets does not violate in any material respect any
applicable Law (including any applicable zoning or similar use regulation or
law). Seller has complied in all material respects with all applicable Laws and
Seller has not received any written notice alleging any material conflict,
violation, breach or default with such laws.
4.10 Taxes. All Taxes relating to the Purchased Assets or the Business have
been fully paid for this year and all prior years to the extent due.
Furthermore, there are currently no pending issues regarding any Dutch corporate
income tax issue with respect to the Purchased
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Assets or the Business. Seller has also filed (or will file) all tax returns and
reports of whatever kind pertaining to the Business or the Purchased Assets that
are required to be filed by Seller with the appropriate Governmental Authorities
for all periods up to and including the Closing Date. Seller has paid (or will
pay) all taxes of whatever kind, including any interest, penalties, governmental
charges, duties, fees, and fines with respect to the Purchased Assets or the
Business properly 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 tax liability. Except as set forth on
Schedule 4.10 hereto, no tax audits are currently pending with respect to any
tax returns related to the Purchased Assets or the Business, and Seller has not
received written notice of any claims by any such Governmental Authority with
respect to the payment of taxes or filing of tax returns or reports with respect
to the Purchased Assets or the Business.
4.11 Assigned Contracts. Schedule 4.11 is a complete list of all Material
Assigned Contracts. The Assigned Contracts have been entered into in the
ordinary course of the Business and contain commercially reasonable terms.
Subject to the consents listed on Schedule 4.11, Seller has the right to assign,
transfer and convey to the Buyer the Material Assigned Contracts. There have
been no events of material default by Seller or to Seller's knowledge by any
third party, and no state of facts exists which, with notice or the passage of
time, or both, could constitute an event of material default by Seller or, to
Seller's knowledge, a third party under any Assigned Contract. Subject to the
consents listed on Schedule 4.11, 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 Seller under any Material Assigned Contract. Each Assigned Contract is in
full force and effect; and each constitutes the legal, valid, binding and
enforceable obligation of Seller and, to Seller's knowledge of the other parties
thereto. There are no material oral contracts to which Seller is a party that
relate to the Business or the Purchased Assets and as to which the Buyer would
be obligated after the Closing.
4.12 Employment Matters.
(a) No persons who are employed by Seller at the Facility (the "Facility
Employees") are on strike, claiming unfair labor practices or other labor
disputes. Seller has not received written notice that such employees are
threatening to strike, claiming unfair labor practices or other labor disputes.
Since ten years before the Closing Date there have been no strikes, material
grievances, claims of material unfair labor practices or other material labor
disputes in connection with the Business.
(b) Except as set forth on Schedule 4.12(b), no trade union agreements
exist between Seller and any union or works council.
(c) Seller has notified any trade union, works council or similar entity
of the transaction contemplated by this Agreement in compliance with applicable
Law.
(d) To the knowledge of Seller, no person whose employment contract is
transferred to the Buyer pursuant to the Agreement or provisions of any
applicable law has any grounds to
13
file a claim for severance payment upon the termination of such employment
agreement other than those provided by the Laws of The Netherlands.
(e) Buyer is not obligated to assume any liability, obligation or other
responsibility under any benefit plan of Seller.
(f) Schedule 4.12(f) sets forth a complete list of all Facility Employees
and a description of all monetary or other compensation payable to such Facility
Employees.
(g) Except as set forth on Schedule 4.12(g), Seller does not maintain any
type of pension or retirement plan. All pension or retirement plans listed on
Schedule 4.12(g), if any, have been fully accrued, are in compliance with all
relevant laws and regulations governing such plans. Seller participates in a
multi-employer plan, for which its payment obligations are correctly represented
on the Financial Statements on Schedule 4.15. All of Seller's obligations
arising from any pension plan are fulfilled as of the Closing Date.
(h) Seller is not in breach of any provisions contained in the labor
agreements with the Facility Employees and is in compliance with the applicable
national and local labor contracts and is not in breach of any provisions
regarding the payment of Social Security contributions or of any other labor law
provisions.
(i) Seller is in compliance and will comply with the provisions of Dutch
and local Law, including the Working Conditions Act.
(j) Seller maintains adequate reserves in its books of account for the
payment of any severance indemnity due to their employees.
(k) There are no worker's compensation claims either pending or threatened
for which Buyer will be liable.
(l) None of Seller's liabilities nor any Seller Affiliate's liabilities
associated with the employees of B&S Special Tools B.V. will be transferred to
Buyer.
4.13 Licensure. Except as set forth on Schedule 4.13, Seller possesses all
Permits necessary to operate the Business in accordance with Law, or which the
failure to obtain would have a material adverse effect on the operation of the
Business. Seller has all such Permits current and in full force and effect and
is in material compliance with all requirements and limitations set forth in
such Permits. All such Permits are now, and at Closing will be, in full force
and effect and, unless otherwise set forth on Schedule 4.13, will be fully
transferred to the Buyer at the Closing.
4.14 Environmental Matters. Notwithstanding anything to the contrary
contained in this Agreement or the Schedules and other attachments hereto, the
representations and warranties set forth in this Section 4.14 are the exclusive
representations and warranties of Seller concerning any and all environmental
matters.
(a) RESERVED.
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(b) Except as set forth in Schedule 4.14(b), Seller is not subject to any
pending or, to the knowledge of Seller, threatened investigation or inquiry by
any Governmental Authority or any Person relating to any violation or alleged
violation under any Environmental Law, or relating to a Release or threatened
Release of any Hazardous Materials, whether on Real Property owned or leased by
Seller and related to the operation of the Business, except for violations or
alleged violations of Environmental Laws which would not reasonably be expected
to have a material adverse effect on the Business, operations, or financial
condition of Seller or the Business.
(c) Schedule 4.14(c) contains a complete and correct list of all
Environmental Permits, all of which are in full force and effect and, to the
extent any of such Environmental Permits are not personal to Seller, but apply
to the Real Property or Real Property Leases, all such Environmental Permits
will remain in full force and effect following consummation of the transactions
contemplated hereby. Except as set forth in Schedule 4.14(c), Seller is not
required to file, obtain, or apply for additional Environmental Permits to
conduct the Business as it is presently being conducted. Schedule 4.14(c)
further contains a complete and correct list of all periodic or other reports
concerning Seller, the Facility, Real Property, or operations at the Facility
and Real Property submitted to any Governmental Authority by Seller within the
past one year, including but not limited to use, storage, and disposal of
Hazardous Materials, water discharges and air emissions reports, reports of
environmental investigations of the Facility and Real Property, and any
corrective action, cleanup, or monitoring plans.
(d) Except as set forth in Schedule 4.14(d), no underground storage tanks
("USTs") or other underground storage receptacles, or related piping, used for
or containing Hazardous Materials are located on the Real Property and there
have been no uncorrected or unremediated material Releases of Hazardous
Materials in, on, under or from the Real Property. The USTs identified in
Schedule 4.14(d) have been properly closed according to all applicable
Environmental Laws. Schedule 4.14(d) further lists all aboveground storage tanks
("ASTs") which, except as disclosed on Schedule 4.14(d), are in compliance
with applicable Environmental Laws, except violations or conditions that have
been cured or remedied in all material respects, or would not be reasonably
expected to have a material adverse effect on the business, operations, or
financial condition of the Business.
(e) Seller has not: (i) released any Person from any Claim under any
Environmental Law or waived any rights concerning any violation or alleged
violation of Environmental Law; or (ii) contractually indemnified any Person for
any violation or alleged violation of Environmental Law related to the Facility
or Real Property, except as listed on Schedule 4.14(e).
(f) Except as set forth in Schedule 4.14(f), there are no consent decrees,
consent orders, settlement agreements, judgments, judicial or administrative
orders or agreements (other than Environmental Permits) with or liens by any
Governmental Authority or other Person relating to any Environmental Law which
regulate, obligate or bind Seller with respect to the Business and which are not
generally applicable to all Persons owning and/or operating Facilities and Real
Property similar to the Business.
(g) True and correct copies of all written environmental reports related
to the Facility or Real Property or Business have been made available to Buyer
for copying and/or inspection.
15
(h) To the knowledge of Seller, there is no Environmental Claim pending or
threatened against Seller or against any Person or entity whose liability for
any Environmental Claim Seller has or may have retained or assumed either
contractually or by law, or in connection with the ownership or operation of the
Business, Facility, or Real Property, and, to the knowledge of Seller, no valid
basis for any such Environmental Claim exists.
(i) Seller has no environmental liabilities arising from or associated
with the relationship between B&S Special Tools B.V. and Seller or any Affiliate
of Seller that will be transferred to Buyer.
4.15 Historical Financial Information. The historical financial information
for the Business provided to Buyer as set forth on Schedule 4.15 was prepared in
accordance with Seller's historical practices consistently applied 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, 2001, December 31, 2000, and December
31, 1999 and for the nine-month period ended September 30, 2002, were prepared
in accordance with Seller's historical practices consistently applied, and in
accordance with generally accepted accounting principles as applied in The
Netherlands and fairly present in all material respects the operating results
for the periods presented. The unaudited consolidated balance sheet of the
Business as of December 31, 2001, and for the nine-month period ended September
30, 2002, which includes all Purchased Assets, were prepared in accordance with
Seller's historical practices and the books and records of the Business from
which such financial information was prepared are true, correct and complete in
all material respects, and the Purchased Assets, as shown therein, are reflected
in accordance with Seller's historical practices consistently applied, and in
accordance with generally accepted accounting principles as applied in The
Netherlands and fairly present in all material respects the financial position
as of the date thereof. The Business 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.
4.16 Absence of Undisclosed Liabilities. None of the Seller's employees is
now, or will by the passage of time hereafter become, entitled to receive any
vacation time, vacation pay or severance pay attributable to services rendered
prior to the date of the December 31, 2002 balance sheet except as disclosed on
the face of such balance sheet.
4.17 Intellectual Property. All Intellectual Property included in the
Purchased Assets constitutes all of the intellectual property necessary for the
operation of the Business; there is no objection to or pending challenge to such
Intellectual Property and Seller is not aware of any reasonable grounds for any
challenge. Other than as noted in Section 6.8(b), to the knowledge of Seller,
and notwithstanding the provisions of Section 2.1. (b) no person is currently
infringing upon or interfering with any of the Intellectual Property. Each
copyright, copyright application and copyright license owned or held by Seller
and used by the Business and all trade secrets used by Seller with respect to
the Business consists of original material or property developed by Seller (in
whole or in part) or was lawfully acquired by Seller from the proper and lawful
owner thereof (in whole or in part). There are no patents used in the Business.
4.18 Absence of Certain Changes. Since September 30, 2002, Seller has
carried on the Business and conducted its operations and affairs only in the
ordinary and normal course
16
consistent with past practice and there has not been any material action,
damage, destruction or loss (whether or not covered by insurance) affecting the
Purchased Assets or the Business.
4.19 Insurance. The insurance coverage provided by the insurance policies
obtained by Seller with respect to the Purchased Assets is adequate. Seller 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 Purchased 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.
4.20 Customer and Supplier Relationships. Except as set forth on Schedule
4.20 hereto, during the fiscal year ended December 31, 2002, there were no
material changes, termination, cancellation or limitation of, or any adverse
modification or change in, the business relationship of Seller regarding the
Business with any customer or supplier of the Business which individually or in
the aggregate provided more than 50,000 Euros of services or purchases for the
period.
4.21 Disclosure. To the best of Seller's knowledge, no representation or
warranty of Seller in this Agreement, or any statement or certificate furnished
or to be furnished by or on behalf of Seller or any document or certificate
delivered to the Buyer 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.
4.22 Inventory. The Inventory is useable and represents the aggregate
amount thereof carried on the books of Seller, except to the extent of any
reserve against inventory shown on such Closing Balance Sheet.
4.23 Parent Financial Information. The financial statements of Parent
attached hereto as Schedule 4.23 are prepared in accordance with generally
accepted accounting principles as applied in The Netherlands and fairly present
in all material respects the operating results and financial position of the
Parent for the periods presented.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND NN
Except as otherwise indicated on the Buyer's Disclosure Schedule dated as
of the date of Closing, Buyer and NN, jointly and severally, represent, warrant
and agree as follows:
5.1 Organization and Related Matters.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the Netherlands. NN is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. Buyer and NN
have all necessary corporate power and authority to carry on its business as now
being conducted. Buyer and NN have the necessary
17
corporate power and authority to execute, deliver and perform this Agreement and
any related agreements to which it is a party.
5.2 Authorization.
The execution, delivery and performance of this Agreement and any related
agreements by Buyer has been duly and validly authorized by the Board of
Directors of Buyer and by all other necessary corporate action on the part of
Buyer. This Agreement constitutes the legal, valid and binding obligation of
Buyer and NN, enforceable against Buyer and NN in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally.
5.3 No Conflicts.
The execution, delivery and performance of this Agreement and any related
agreements by Buyer or NN will not violate the provisions of, or constitute a
breach or default whether upon lapse of time and/or the occurrence of any act or
event or otherwise under (a) the charter documents or bylaws of Buyer or NN, (b)
any Law to which Buyer or NN is subject or (c) any contract to which Buyer or NN
is a party that is material to the financial condition, results of operations or
conduct of the business of Buyer or NN, provided that the appropriate regulatory
approvals are received as contemplated by Section 7.1 and specified consents, if
any, are secured.
5.4 Legal Proceedings.
There is no Order or Action pending or threatened against Buyer or NN that
individually or when aggregated with one or more other Actions has or might
reasonably be expected to have a material adverse effect on Buyer's or NN's
ability to perform this Agreement.
5.5 Governmental Consents.
No consent, approval or authorization of, or designation, declaration or
filing with, any governmental authority on the part of Buyer or NN is required
in connection with the valid execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
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ARTICLE VI
COVENANTS
6.1 Environmental Matters.
(a) Seller and Buyer affirmatively covenant that they will each designate
an individual or individuals to collectively form an "Environmental Committee"
on the Closing Date or as soon as practicably possible thereafter, with the
costs for participation in the Environmental Committee to be borne by each of
the respective parties, and whose purpose is to prioritize, coordinate, and
oversee the investigation, implementation, and completion of (i) all actions
required for the renewal of the Environmental Permits; (ii) all corrective
actions explicitly required under the renewed Environmental Permits and to the
extent such corrective actions are necessary to remedy a non-compliance as per
Closing; and (iii) all actions agreed and listed in Schedule 6.1(a)(iii), each
of (i), (ii) and (iii) to the extent necessary to achieve the standards of
applicable Environmental Laws as of the Closing Date, with all costs for the
actions set forth in this Section 6.1 (a) to be borne by Seller and/or Buyer as
set forth in Section 6.1(f).
(b) In the event that the parties, as represented on the Environmental
Committee, do not agree on the appropriate level of effort or scope of work for
any actions set forth in Sections 6.1(a)(ii) and 6.1(a)(iii) the issue shall be
referred by the Environmental Committee to Environmental Resources Management
("ERM"), an independent, third-party environmental consultant ("Third Party
Consultant"), and whose decision as to the level of effort or scope of work
appropriate for any actions set forth in Sections 6.1(a)(ii) and 6.1(a)(iii)
referred to it, shall be conclusive and binding on the Environmental Committee
and the parties.
(c) Seller further covenants that, to the extent it has already initiated
one or more of the actions set forth in Section 6.1(a), it will diligently
continue, at its own cost, to complete such actions prior to the Closing Date.
On the Closing Date or as soon as practicably possible thereafter, Seller
covenants that it shall transfer the oversight and management of uncompleted
actions set forth in Section 6.1(a) it had initiated prior to the Closing Date
to the Environmental Committee.
(d) The actions set forth in Sections 6.1(a) (ii) and 6.1(a)(iii) shall be
deemed to have been fulfilled when mutually agreed by the parties. If the
parties do not agree on the fulfillment of a particular item, the matter will be
referred to the Third Party Consultant (as defined in 6.1(b)) and the action
shall be deemed to have been fulfilled when the Third Party Consultant has
confirmed in writing to the Environmental Committee that such actions have been
performed. The actions set forth in Section 6.1(a)(i) shall be deemed to have
been fulfilled upon the date that the renewed Environmental Permits have been
obtained.
(e) On the Closing Date or as soon as practicably possible thereafter,
Seller and Buyer, through their respective representatives on the Environmental
Committee, affirmatively covenant that the Environmental Committee shall
prioritize such actions at, relating to, or affecting the parcels of real
property identified on the map attached as Schedule 6.1(e) (collectively,
"Parcels"), for the purpose of completing any such actions as soon as possible
after
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the Closing Date. Seller and Buyer shall use their best efforts to limit such
period to twelve (12) months of the Closing Date.
(f) With respect to the matters listed in Schedule 6.1(a)(iii), being those
matters of non-compliance with current Law and Permits, Seller shall bear all of
the cost. With respect to those matters listed in Section 6.1(a)(i) and
6.1(a)(ii), being those matters related to obtaining a new or renewed
environmental permit for the Business, including any corrective actions
necessary to obtain such permit, Buyer will bear the first 50,000 Euro of
expense and the first 62,000 Euro of capitalized expenditures in 2003 (reduced
for amounts already spent by Seller from January 1, 2003 through the Closing
Date on environmental matters), and the first 50,000 Euro of expense and the
first 62,000 Euro of capitalized expenditures in each of 2004 and 2005. All
costs in excess of Buyer's obligation in 2003, 2004 and 2005, and all costs, if
any, incurred after 2005, will be borne by Seller.
(g) For clarity, (1) the actions required of Seller under Section 6.1(a)(i)
shall be only those actions necessary to obtain the renewed Environmental
Permits based on the Environmental Laws in effect as of the Closing Date and the
condition and operation of the Facility as of the Closing Date and (2) once the
actions required under Section 6.1(a)(i), (ii) and (iii) have been deemed
fulfilled pursuant to Section 6.1(d), Seller shall have satisfied all of its
obligations to Buyer related to environmental matters under this Agreement.
6.2 WWTP
(a) Seller agrees that in order for the real estate containing the existing
WWTP to be marketable for use consistent with the zoning classification as of
the Closing Date, but without diminution in value due to environmental
contamination or remediation expense, removal of the WWTP and environmental
investigation, and possible remediation and post-remediation monitoring, must be
accomplished. The cost of removal of the existing WWTP, including any
environmental investigation, remediation, and post-remediation monitoring
required by any applicable Governmental Authority pursuant to Environmental Laws
(the "WWTP Cost") shall be borne by Buyer up to and including Eight Hundred
Thousand Euros ((euro)800,000); Buyer and Seller shall each assume fifty percent
(50 %) each of the WWTP Cost between and including Eight Hundred Thousand and
One Euros ((euro)800,001) and Two Million Two Hundred Thousand Euros
((euro)2,200,000) in the aggregate; and Seller shall solely assume one-hundred
percent (100%) of the WWTP Cost above Two Million Two Hundred Thousand and One
Euros ((euro)2,200,001). Any and all actions undertaken by any of the parties to
this Agreement which could have a material effect on the WWTP Cost, shall be
reasonably agreed jointly between the parties.
(b) The cost of replacing the removed WWTP with an alternative process will
be borne by Buyer.
6.3 Permits and Approvals; Third Party Consents. Seller and Buyer each
agree to cooperate and use their commercially reasonable efforts to obtain (and
will timely prepare all registrations, filings and applications, requests and
notices preliminary to obtaining all) Approvals and Permits that may be
necessary or that may be reasonably requested by Buyer to consummate the
transactions contemplated by this Agreement.
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6.4 Sales and Transfer Taxes. Buyer shall pay all value-added, sales, use
and other similar Taxes, if any, imposed on or in connection with the purchase,
sale or transfer of the Purchased Assets (the "Sales and Transfer Taxes");
except that with respect to Taxes related to the transfer and recording of the
Real Property or Real Property Leases, Buyer shall pay the first 270,000 Euro
and any additional amount due will be borne equally by Buyer and Seller.
6.5 Bonuses. Seller will pay all bonuses that are payable to the employees
of the Business and relate to all periods prior to the Closing Date, in
accordance with Seller's ordinary bonus payment practices.
6.6 Nonsolicitation.
(a) Restrictions on Soliciting Employees. In addition, to protect Buyer
against any efforts by Seller to cause its employees to terminate their
employment, Seller agrees that for a period of two years following the Closing
Date, Seller will not directly or indirectly (i) induce any employee of Buyer to
leave his employment or to accept any other employment or position, or (ii)
assist any other entity in hiring any such employee.
(b) Special Remedies and Enforcement. Seller recognizes and agrees that a
breach by Seller of any of the covenants set forth in this Section 6.6 could
cause irreparable harm to Buyer, that Buyer's remedies at law in the event of
such breach would be inadequate, and that, accordingly, in the event of such
breach a restraining order or injunction or both may be issued against Seller,
in addition to any other rights and remedies which are available to Buyer. If
this Section 6.6 is more restrictive than permitted by the Laws of any
jurisdiction in which Buyer seeks enforcement hereof, this Section 6.6 shall be
limited to the extent required to permit enforcement under such Laws. In
particular, the parties intend that the covenants contained in the preceding
portions of this Section 6.6 shall be construed as a series of separate
covenants, one for each county and city specified. Except for geographic
coverage, each such separate covenant shall be deemed identical in terms. If, in
any judicial proceeding, a court shall refuse to enforce any of the separate
covenants deemed included in this paragraph, then such unenforceable covenant
shall be deemed eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
6.7 Nondisclosure of Proprietary Data.
Neither Seller nor any of its representatives shall, at any time, make use
of, divulge or otherwise disclose, directly or indirectly, any trade secret or
other proprietary data (including, but not limited to, any customer list, record
or financial information concerning the Business or the business or policies of
Seller related to the Business that Seller may have learned.
Neither Buyer nor NN nor any of their representatives shall, at any time,
make public to third parties, divulge or otherwise disclose, directly or
indirectly, the SKF Intellectual Property as referred to in Section 2.1(b).
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6.8 Cooperative Use of Intellectual Property.
(a) The parties acknowledge that Buyer intends to use the Purchased Assets
to operate a business to design, produce and sell stamped metal parts and
tapered rollers ("Products") to the SKF Companies and to third parties. It is
agreed that the Buyer may use, but not own, the SKF Intellectual Property in
order to continue to produce Products for the SKF Companies. It is also agreed
that, while Buyer may not disclose the SKF Intellectual Property to a third
party as stated in Section 6.7, above, Buyer may produce and sell Products to a
third party that contain portions of the SKF Intellectual Property if the third
party's Product design and specifications contain items that are also contained
within the SKF Intellectual Property.
(b) Buyer acknowledges that other SKF Companies possess portions of the
Intellectual Property included in the Purchased Assets and that this Agreement
does not affect in any way the ability of those companies to continue to use,
including but not limited to the right to license and sell, such information for
any and all purposes.
6.9 Technology Support.
(a) [*]
(b) [*]
6.10 Tax Cooperation.
After the Closing, Seller shall provide reasonable assistance, and shall
cause its Affiliates to Buyer in the preparation of all Tax Returns and shall
provide, or cause to be provided at Buyer's sole cost and expense, to Buyer any
records and other information relating to the Business as reasonably requested
by such Buyer in connection therewith.. Each of Buyer and Seller will retain,
until the expiration of the applicable statutes of limitation (including any
extensions thereof) copies of all Tax Returns, supporting work schedules and
other records relating to Tax periods or portions thereof ending on or prior to
the Closing Date. After the Closing Date, Seller shall, and shall cause its
Affiliates to provide reasonable assistance to Buyer's reasonable requests in
connection with any Tax investigation, audit or other proceeding relating to the
Business.
6.11 Accounts Payable. Seller will continue to handle the trade payables
related to the Business in accordance with Seller's historical practices,
including remitting payments to vendors in a prompt manner.
6.12 B&S Special Tools B.V. Within the time that Seller can exercise its
pre-emptive right to purchase all of the shares of capital stock of B&S Special
Tools B.V., Seller shall give Buyer notice of such ability in a timely manner.
If requested by Buyer, Seller shall use its best efforts to exercise its
preemptive right on behalf of Buyer. After Seller has exercised its pre-emptive
right, Seller shall give Buyer the right to purchase all of the shares of
capital stock of B&S Special Tools B.V. at the same terms and conditions
applicable to Seller in connection with the purchase of all of the shares of
capital stock of B&S Special Tools B.V.
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6.13 Compliance with Non-Environmental Laws. Seller will be responsible for
all costs related to correcting any significant legal non-compliance in
existence as of the Closing Date related to the matters listed on Schedule 6.13.
6.14 Right of First Refusal.
(a) NN, Inc. hereby grants Seller a right of first refusal should NN
determine to sell to any third party 50% or more of the stock of Buyer (the
"Shares"). To effect this right, NN shall give Seller 30 days prior written
notice of its intent to sell, together with the name of the third party
attempting to acquire the Shares. Seller may, within 30 days after receipt of
such notice, notify NN that Seller objects to such sale, on a reasonable basis
that the sale would adversely affect Seller's access to the products produced by
NN at market prices. If Seller so objects, NN shall notify Seller of the
purchase price and terms of payment offered by the third party and Seller may,
within 30 days following its receipt of such notification, notify NN in writing
that it wishes to exercise its right of first refusal by agreeing to pay on
terms equivalent to those offered by the third party, at closing, an amount
equal to the purchase price offered by the third party. If Seller does not
exercise its right of first refusal within the 20 business days following its
receipt of NN's notification, Seller will be deemed to have forever waived its
right of first refusal.
(b) Seller shall not have a right of first refusal with respect to any
transfer to any affiliate or successor of Buyer, but in such event, the
transferee shall be bound by the terms of this right of first refusal.
(c) The closing shall take place within 30 days from the date Seller
notifies NN of its intent to exercise the right of first refusal granted
hereunder. At the closing, Seller shall make payment in full of the purchase
price, and NN shall execute and deliver such conveyances and documents as shall
be reasonably required to transfer to and vest in Seller all right, title, and
interest in and to the Shares. Each party will be responsible for its own
closing costs.
(d) The rights granted in this Section 6.14 shall terminate five (5) years
after the Closing Date.
6.15 Services After Closing.
(a) After the Closing, Seller shall provide the services to Buyer and Buyer
shall provide the services to Seller, as specifically described in Schedule
6.15. For services provided directly by one party to another, the cost will be
on a cost plus 5% basis. For services provided through or by a third party, the
cost will be a direct pass-through of the cost charged by the third party.
(b) Neither Buyer nor Seller shall have any liability towards the other for
any direct or indirect damages incurred by a party for the services described in
Schedule 6.15 provided to the other party.
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ARTICLE VII
CONDITIONS OF PURCHASE
7.1 General Conditions.
The obligations of the parties to effect the Closing shall be subject to
the following conditions unless waived in writing by all parties who would
otherwise be exempted from Closing:
(a) No Orders; Legal Proceedings. No Law or Order shall have been enacted,
entered, issued, promulgated or enforced by any Governmental Authority, nor
shall any Action have been instituted and remain pending or, to the knowledge of
Seller, have been threatened and remain so by any Governmental Authority at what
would otherwise be the Closing Date, that prohibits or restricts or would (if
successful) prohibit or restrict the transactions contemplated by this
Agreement. No Governmental Authority shall have notified any party to this
Agreement that consummation of the transactions contemplated by this Agreement
would constitute a violation of any Laws of any jurisdiction and/or that it
intends to commence proceedings to restrain or prohibit such transactions or
force divestiture or rescission, unless such Governmental Authority shall have
withdrawn such notice and abandoned any such proceedings prior to the scheduled
Closing.
(b) Approvals. To the extent required by applicable Law, all Permits and
Approvals required to be obtained from any Governmental Authority, and the
consents of the works council and the trade union shall have been received or
obtained on or prior to the Closing Date without the imposition of any burdens
or conditions materially adverse to the party or parties entitled to the benefit
thereof.
7.2 Conditions to Obligations of Buyer and NN. The obligations of Buyer and
NN to effect the Closing shall be subject to the following conditions except to
the extent waived in writing by Buyer:
(a) Representations and Warranties and Covenants of Seller. The
representations and warranties of Seller and Parent herein contained shall be
true in all material respects at the Closing Date with the same effect as though
made at such time. Seller shall have in all material respects performed all
obligations and complied with all covenants and conditions required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date, and Seller shall have delivered to Buyer certificates of Seller in form
and substance satisfactory to Buyer, dated the Closing Date and signed by Seller
and Parent to such effect.
(b) No Material Adverse Change. There shall not have been any material
adverse change in or affecting the Business or any of the Purchased Assets
subsequent to September 30, 2002.
(c) Consents. Except as set forth on Schedule 7.2 (c) Seller shall have
obtained and provided to Buyer evidence of the receipt of all required Approvals
listed on Schedule 4.11,
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Seller have executed all transfer notices and other documents necessary to
effectively transfer and assign the Purchased Assets and the Assumed
Liabilities, and Buyer shall have obtained all Approvals and Permits required by
Law or referred to in Section 5.2, each in form and substance satisfactory to
Buyer.
(d) Changes in Law. No Law or Order shall have been enacted, entered,
issued, promulgated or enforced by any Governmental Authority, nor shall any
Action have been instituted and remain pending or, to the knowledge of Seller,
have been threatened and remain so by any Governmental Authority at what would
otherwise be the Closing Date which would not permit the Business as presently
conducted to be continued by Buyer unimpaired following the Closing Date.
(e) Closing Deliveries. Buyer shall have received all of the items referred
to in Section 3.2 hereof.
7.3 Conditions to Obligations of Seller.
The obligations of Seller to effect the Closing shall be subject to the
following conditions, except to the extent waived in writing by Seller:
(a) Representations and Warranties and Covenants of Buyer. The
representations and warranties of Buyer herein contained shall be true in all
material respects at the Closing Date with the same effect as though made at
such time. Buyer shall have in all material respects performed all obligations
and complied with all covenants and conditions required by this Agreement to be
performed or complied with by it at or prior to the Closing Date, and Buyer
shall have delivered to Seller certificates of Buyer in form and substance
satisfactory to Seller, dated the Closing Date and signed by Buyer, to such
effect.
(b) Consents. Except as set forth on Schedule 7.3 (b) Seller shall have
obtained all Approvals and Permits required by Law or referred to in Section
4.3.
(c) Closing Deliveries. Seller shall have received all of the items
referred to in Section 3.3 hereof.
ARTICLE VIII
SURVIVAL
8.1 Survival of Representations and Warranties.
The representations and warranties contained in Articles IV and V of this
Agreement shall expire on December 31, 2004. Those matters covered in Sections
4.10 (Tax matters) shall expire five (5) years and six (6) months after the
Closing and those matters covered in Section 4.14 (Environmental matters) shall
expire at the Closing.
ARTICLE IX
INDEMNIFICATION
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9.1 Obligations of Seller.
(a) Seller and Parent agree to indemnify and hold harmless Buyer and
Buyer's directors, officers, employees, affiliates, agents and assigns from and
against any and all Losses, directly or indirectly, as a result of, or based
upon or arising from:
(i) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by Seller or Parent in
or pursuant to this Agreement;
(ii) any liability or obligation of Seller or any Affiliate of Seller not
expressly assumed by Buyer pursuant to Section 2.2(b) hereof;
(iii) any third party claim for damages or injuries arising from or related
to the operation of the Business or condition of the Real Property or Real
Property Leases on or prior to the Closing Date;
(iv) any third party claims in respect of products produced by the Business
on or prior to the Closing Date, including without limitation with respect to
any alleged defect in such products; or
(v) any violation of Law, on or prior to the Closing Date, by Seller or any
Affiliate of Seller, including, but not limited to, any Law dealing with health
or safety matters, but excluding any matter that is addressed in Section 6.1.
9.2 Calculation of Losses. The amount of any Loss for which indemnification
is provided under this Article IX shall be net of any amounts actually recovered
by the Indemnified Party under insurance policies with respect to such Loss and
shall be (i) increased to take account of any net Tax cost incurred by the
Indemnified Party arising from the receipt of indemnity payments hereunder
(grossed up for such increase) and (ii) reduced to take account of any net Tax
benefit realized by the Indemnified Party arising from the incurrence or payment
of any such Loss. In computing the amount of any such Tax cost or Tax benefit,
the Indemnified Party shall be deemed to recognize all other items of income,
gain, loss deduction or credit before recognizing any item arising from the
receipt of any indemnity payment hereunder or the incurrence or payment of any
indemnified Loss.
9.3 Limitation of Obligations of Seller. Seller's liability under this
Agreement (except with respect to liability under Article VI) shall be limited
to a maximum amount of 10,000,000 Euro.
9.4 Obligations of Buyer and NN.
Buyer and NN agree to indemnify and hold harmless, Seller from and against
any Losses of Seller, directly or indirectly, as a result of, or based upon or
arising from:
(a) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by Buyer in or
pursuant to this Agreement; or
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(b) the Assumed Liabilities.
9.5 Certain Tax Matters.
(a) Buyer Indemnity. Seller agrees to indemnify, defend and hold harmless
Buyer against (i) any Tax payable by or on behalf of Seller or any of its
Affiliates, (ii) any deficiencies in any Tax payable relating to the Purchased
Assets or the Business by or on behalf of Seller or any of its Affiliates with
respect to any period ending (or treated by this Agreement as ending) on or
prior to the Closing Date, (iii) Taxes relating to the Purchased Assets or the
Business of any member of a consolidated or combined tax group of which Seller
or any of its Affiliates is, or was at any time, a member, for which Buyer or
any Subsidiary is jointly or severally liable as a result of Seller's inclusion
in such group, (iv) any claim or demand for reimbursement or indemnification
resulting from any transfer by Seller prior to the Closing to any other person
of any Tax benefits or credits attributable to the Business, the Purchased
Assets or the Assumed Liabilities, and (v) with respect to any Taxes payable by
Buyer with respect to the operation of the Business and the ownership of the
Purchased Assets (other than Buyer's income or franchise taxes) due for periods
ending on or prior to the Closing Date (whether or not assessed prior to the
Closing Date), a pro-rata share of such Taxes, calculated as if the period ended
on the Closing Date.
(b) Audit Matters. Seller shall have the responsibility for, and the right
to control, at Seller's expense, the audit (and disposition thereof) of any Tax
Return relating to periods ending on or prior to the Closing Date and shall have
the right to participate in the disposition of the audit of any Tax Return
relating to the periods ending after the Closing Date if and to the extent that
such audit or disposition thereof could give rise to a claim for indemnification
hereunder. Buyer shall have the right either directly or through its designated
representatives, to review in advance and to comment upon all submissions made
in the course of audits or appeals thereof regarding the Purchased Assets or the
Business, to any Governmental Authority relating to periods ending (or treated
by this Agreement as ending) on or prior to the Closing Date if such disposition
will or might reasonably be expected to result in an increase of Taxes of Buyer
or any Affiliate of Buyer for any period beginning at or after the Closing Date.
(c) Seller Indemnity. Buyer agrees to indemnify, defend and hold harmless
Seller against (i) any Tax payable by or on behalf of Buyer or any of its
Affiliates, (ii) any deficiencies in any Tax payable relating to the Purchased
Assets or the Business by or on behalf of Buyer or any of its Affiliates with
respect to any period beginning (or treated by this Agreement as beginning)
after the Closing Date, (iii) Taxes relating to the Purchased Assets of the
Business of any member of a consolidated or combined tax group of which Buyer or
any of its Affiliates is, or was at any time, a member, for which Seller or any
Subsidiary is jointly or severally liable as a result of Buyer's inclusion in
such group, (iv) any claim or demand for reimbursement or indemnification
resulting from any transfer by Buyer after the Closing to any other person of
any Tax benefits or credits attributable to the Business, the Purchased Assets
or the Assumed Liabilities, and (v) with respect to any Taxes payable by Seller
with respect to the operation of the Business and the ownership of the Purchased
Assets (other than Seller's income or franchise taxes) due for periods beginning
after the Closing Date, a pro-rata share of such Taxes, calculated as if the
period began after the Closing Date.
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9.6 Procedure.
(a) Notice. Any party seeking indemnification (an "Indemnified Party") with
respect to any Loss shall give notice thereof to the party required to provide
indemnity hereunder (the "Indemnifying Party") (i) on or before six months after
the 5th anniversary of the Closing Date with respect to the representations and
warranties set forth in Section 4.10; and (ii) on or before December 31, 2004
with respect to all other Losses. Notwithstanding the foregoing, no Indemnified
Party shall have any obligation to give any notice of any asserted liability by
a third party unless such assertion is in writing.
(b) Defense. If any claim, demand or liability is asserted by any third
party against any Indemnified Party, the Indemnifying Party shall defend any
action or proceeding brought against the Indemnified Party in respect of matters
embraced by the indemnity, but the Indemnified Party's written consent shall be
required prior to any compromise or settlement of any Indemnifiable Claim;
provided, however, if the Indemnified Party rejects any settlement offer then
the Indemnifying Party's liability, if any, will be limited to the amount of the
settlement offer in the event of a loss that exceeds such settlement offer. If,
after a request to defend any action or proceeding, the Indemnifying Party
neglects or refuses to defend the Indemnified Party, a recovery against the
latter suffered by it in good faith, is conclusive in its favor against the
Indemnifying Party, provided however that, if the Indemnifying Party has not
received reasonable notice of the action or proceeding against the Indemnified
Party, or is not allowed to control its defense, judgment against the
Indemnified Party is only presumptive evidence against the Indemnifying Party.
The parties shall cooperate in the defense of all third party claims which may
give rise to Indemnifiable Claims hereunder. In connection with the defense of
any claim, each party shall make available to the party controlling such
defense, any books, records or other documents within its control that are
necessary or appropriate for such defense.
(c) Assistance and Support in Connection with Seller's Actions Related to
Section 6.1. To assist and support Seller in its actions related to the renewal
of the Environmental Permits and compliance matters relating to Environmental
Laws, Buyer shall (a) promptly notify Seller of all meetings with Governmental
Authorities, (b) invite Seller to attend all meetings with Governmental
Authorities relating to the renewal of the Environmental Permits and compliance
matters relating to Environmental Laws, and (c) send to Seller copies of all
correspondence with Governmental Authorities relating to the renewal of the
Environmental Permits and compliance matters relating to Environmental Laws.
(d) Insurance Matters. If the Indemnifying Party makes any payment
hereunder of a Loss, the Indemnifying Party shall be subrogated, to the extent
of such payment, to the rights of the Indemnified Party against any third party
insurer or other third party with respect to such Loss. Nothing in this Section
9.6 shall be deemed to obligate any person to maintain any insurance or to
pursue any claim against any insurer or third party.
9.7 Notice by Seller.
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Seller agrees to notify Buyer of any liabilities, claims or
misrepresentations, breaches or other matters covered by this Article IX upon
discovery or receipt of notice thereof by an executive officer of SKF.
9.8 Limitation on Indemnification.
The Indemnifying Party shall not be obligated to reimburse, indemnify and
hold harmless the Indemnified Party until the total of all such claims exceeds
One Hundred Fifty Thousand Euros ((euro)150,000.00), except that no such limit
shall apply to the obligations set forth in Sections 2.5 (Purchase Price), 6.1
(Environmental Matters), 6.2 (WWTP), 6.4 (Sales and Transfer Taxes), 6.5
(Bonuses) and 6.13 (Compliance with Non-Environmental Laws) and in such event
the Indemnitee shall be entitled to indemnification for the full amount of all
Losses without regard to such limit.
9.9 Offset.
To the extent the parties simultaneously owe to each other payments
pursuant to this Agreement or the transactions contemplated hereby, the parties
will have the right to offset such payment obligations against one another.
ARTICLE X
DISPUTE RESOLUTION; ARBITRATION
10.1 Dispute Resolution. Prior to pursuing arbitration with respect to any
dispute hereunder, the chief executive officers or general managers of each
party (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 commence arbitration proceedings unless it has attempted for a
period of forty-five (45) days from written notice of a dispute to reach such
amicable resolution.
10.2 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
final and binding arbitration by three (3) arbitrators in accordance with the
Rules of The Netherlands Arbitration Institute as at present in effect. The
appointing authority shall be The Netherlands Arbitration Institute in
Rotterdam, The Netherlands . The place of arbitration shall be Amsterdam, The
Netherlands. 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.
The award rendered by the arbitrators may include costs of arbitration,
reasonable counsel's fees, and reasonable costs for expert and other witnesses.
10.3 Confidential Information. 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
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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 a party's attorneys, (ii) to
another party, (iii) to courts for purpose of interim measures of protection,
enforcement or similar proceedings, (iv) 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, or (v) as required by Law or any
applicable stock exchange regulations.
10.4 Binding Effect. The written decisions and conclusions of a majority of
the arbitration panel shall be final and binding on the parties and enforcement
thereof may be rendered thereon by any court having jurisdiction upon
application of any party.
ARTICLE XI
GENERAL
11.1 Amendments; Waivers.
This Agreement and any schedule or exhibit attached hereto may be amended
only by agreement in writing of all parties. No waiver of any provision nor
consent to any exception to the terms of this Agreement or any agreement
contemplated hereby shall be effective unless in writing and signed by the party
to be bound and then only to the specific purpose, extent and instance so
provided.
11.2 Schedules; Exhibits; Integration.
Each schedule and exhibit delivered pursuant to the terms of this Agreement
shall be in writing and shall constitute a part of this Agreement, although
schedules need not be attached to each copy of this Agreement. This Agreement,
together with such schedules and exhibits, constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements and understandings of the parties in connection therewith,
including, but not limited to, the letter of intent dated December 9, 2002,
between NN and Seller.
11.3 Best Efforts; Further Assurances.
(a) Commitment to Best Efforts. As used in this Agreement, the term "best
efforts" shall mean that each party will in good faith attempt to cause all
conditions to its obligations to be timely satisfied and to perform and fulfill
all obligations on its part to be performed and fulfilled under this Agreement,
to the end that the transactions contemplated by this Agreement shall be
effected in accordance with its terms. The parties shall cooperate with each
other in such actions and in securing requisite approvals and consents. Each
party shall execute and deliver both before and after the Closing such further
certificates, agreements and other
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documents and take such other actions as the other party may reasonably request
to consummate or implement the transactions contemplated hereby or to evidence
such events or matters.
(b) Limitation. As used in this Agreement, the term "best efforts" shall
not mean efforts which require the performing party to do any act that is
unreasonable under the circumstances, to make any capital contribution or to
expend any funds other than in payment of financially reasonable ordinary course
out-of-pocket expenses incurred in satisfying material obligations hereunder.
11.4 Governing Law.
This Agreement is governed by and shall be construed in accordance with the
laws of The Netherlands excluding any choice of law rules that would refer the
matter to the laws of another jurisdiction.
11.5 No Assignment.
This Agreement and all of the provisions hereof will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, except that neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by either party without prior
written consent of the other party; provided, however, that Buyer may assign its
rights hereunder to one or more affiliates of Buyer, but any such assignment
shall not release the assignor from liability hereunder.
11.6 Headings.
The descriptive headings of the articles, sections and subsections of this
Agreement are for convenience only and do not constitute a part of this
Agreement.
11.7 Counterparts.
This Agreement and any amendment hereto or any other agreement (or
document) delivered pursuant hereto may be executed in one or more counterparts
and by different parties in separate counterparts. All of such counterparts
shall constitute one and the same agreement (or other document) and shall become
effective (unless otherwise therein provided) when one or more counterparts have
been signed by each party and delivered to the other party. Signatures of the
parties transmitted by facsimile shall be deemed to be their original signatures
for all purposes.
11.8 Publicity and Reports.
Seller and Buyer shall coordinate all publicity relating to the
transactions contemplated by this Agreement, and no party shall issue any press
release, publicity statement or other public notice relating to this Agreement,
or the transactions contemplated by this Agreement, without obtaining the prior
consent of the other parties except to the extent that a particular action may
be required by applicable Law or applicable stock exchange regulations.
11.9 Confidentiality.
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Except to the extent any information is a Purchased Asset, all information
disclosed in writing and designated in writing as confidential by any party (or
its representatives) whether before or after the date hereof, in connection with
the transactions contemplated by, or the discussions and negotiations preceding,
this Agreement to any other party (or its representatives) shall be kept
confidential by such other party and its representatives and shall not be used
by any Persons other than as contemplated by this Agreement, except to the
extent that such information (i) was known by the recipient when received, (ii)
it is or hereafter becomes lawfully obtainable from other sources, (iii) is
necessary or appropriate to disclose to a Governmental Authority or to any stock
exchange authority having jurisdiction over the parties, (iv) as may otherwise
be required by Law or applicable stock exchange regulations (v) to the extent
such duty as to confidentiality is waived in writing by the other party. In the
event a party is required to disclose confidential information pursuant to items
(iii) or (iv) above, the party required to make such disclosure will give the
other party prompt notice prior to making such disclosure. If this Agreement is
terminated, each party shall use all reasonable efforts to return upon written
request from the other party all documents (and reproductions thereof) received
by it or its representatives from such other party (and, in the case of
reproductions, all such reproductions made by the receiving party) that include
information not within the exceptions contained in the first sentence of this
Section 11.9, unless the recipients provide assurances reasonably satisfactory
to the requesting party that such documents have been destroyed.
The obligations under this Section 11.9 will survive this Agreement and
shall be valid for a period of five (5) years from the Closing Date.
11.10 Parties in Interest.
This Agreement shall be binding upon and inure to the benefit of each
party, and nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies of any nature whatsoever under or
by reason of this Agreement, except for the Indemnified Parties specified in
Article IX. Nothing in this Agreement is intended to relieve or discharge the
obligation of any third person to any party to this Agreement.
11.11 Notices.
Any notice or other communication hereunder must be given in writing and
either (a) delivered in person, (b) transmitted by e-mail, telefax or other
telecommunications mechanism, provided that any notice so given is also mailed
as provided in clause (c), or (c) mailed by certified or registered mail,
postage prepaid, receipt requested as follows:
If to Buyer or NN, addressed to:
NN Netherlands, B.V.
2000 Water's Edge Drive
Building C, Suite 12
Johnson City, TN 37604
Attn: Chief Financial Officer
Telefax: (423) 743-2670
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With a copy to:
Blackwell Sanders Peper Martin LLP
2300 Main Street, Suite 1000
Kansas City, Missouri 64108
Attn: James M. Ash
Telefax: (816) 983-8080
If to Seller or Parent, addressed to:
SKF B.V.
Managing Director
Postbus 2350
NL - 3430 DT Nieuwegein
The Netherlands
Telefax: + 31 30 60 75 893
With a copy to:
AB SKF
General Counsel
SE -415 50 Goteborg
Sweden
Telefax: + 46 31 337 1691
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 11.11 and an appropriate answerback is received, (ii) if given by mail,
five days after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when actually delivered at such address.
11.12 Expenses.
Each party shall pay its own expenses incident to the negotiation,
preparation and performance of this Agreement and the transactions contemplated
hereby, including but not limited to the fees, expenses and disbursements of its
investment bankers, accountants and counsel and of securing third party consents
and approvals required to be obtained by it.
11.13 Remedies; Waiver.
Without limitation of Section 11.18, to the extent permitted by Law, all
rights and remedies existing under this Agreement and any related agreements or
documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available under applicable Law. No failure on the part of any party to
exercise or delay in exercising any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise preclude any further or other
exercise of such or any other right.
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11.14 Knowledge Convention.
When used in this Agreement or in any schedule, exhibit, certificate or
other documents delivered to any party pursuant to this Agreement, the term "to
the knowledge" or "to the best knowledge" or words of similar intent or effect
of any Person includes the actual knowledge of such Person and knowledge of any
facts that would have come to such Person through reasonable investigation.
11.15 Representation By Counsel; Interpretation.
Each party to this Agreement has been represented by counsel in connection
with this Agreement and the transactions contemplated by this Agreement.
Accordingly, any rule of Law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived. The provisions of
this Agreement shall be interpreted in a reasonable manner to effect the intent
of the parties.
11.16 Specific Performance.
The parties hereto acknowledge that, in view of the uniqueness of the
Business and the transactions contemplated by this Agreement, the other parties
would not have an adequate remedy at law for money damages in the event that
this Agreement has not been performed in accordance with its terms. Each party
therefore agrees that the other parties shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
11.17 Severability.
If any provision of this Agreement is determined to be invalid, illegal or
unenforceable by any Governmental Authority, the remaining provisions of this
Agreement to the extent permitted by Law shall remain in full force and effect
provided that the essential terms and conditions of this Agreement for all
parties remain valid, binding and enforceable and provided that the economic and
legal substance of the transactions contemplated is not affected in any manner
materially adverse to any party. In the event of any such determination, the
parties agree to negotiate in good faith to modify this Agreement to fulfill as
closely as possible the original intents and purposes hereof.
11.18 No Consequential Damages.
No party (or its Affiliates) shall, in any event, be liable to any other
party (or its Affiliates) for any consequential damages, including, but not
limited to, loss of revenue or income, cost of capital, or loss of business
reputation or opportunity relating to the breach or alleged breach of this
Agreement.
11.19 Waiver of Right to Seek Annulment.
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Except where the Agreement is terminated before Closing and as permitted by
Dutch Law, each party hereby waives its right to seek annulment or dissolution
of the Agreement pursuant to error or to claim termination of the Agreement at
Law.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officers as of the day and year first above
written.
SKF B.V.
By: /s/ Barend Wouter de Graaff
-------------------------------------------------------
Name: Barend Wouter de Graaff
Title: Sole Managing Director
SKF HOLDING MAATSCHAPPIJ HOLLAND B.V.
By: /s/ Carina Bergfelt /s/ Tore Bertilsson
-------------------------------------------------------
Name: Carina Bergfelt Tore Bertilsson
Title: Managing Director Managing Director
NN NETHERLANDS, B.V.
By: /s/ David L. Dyckman
----------------------------------------
Name: David L. Dyckman
Title: Director
NN, INC.
By: /s/ David L. Dyckman
----------------------------------------
Name: David L. Dyckman
Title: Vice President and CFO