Exhibit 10.5
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "Agreement"), dated as of February
22, 1994, is made by those persons whose names and addresses appear on the
schedule attached hereto as Appendix A, each of whom is a stockholder or
prospective stockholder of NN Ball & Roller, Inc., a Delaware corporation (the
"Company"), and Richard D. Ennen, Monica C. Ennen, John C. Ennen, Melissa Ennen,
Deborah Ennen Bagierek and Elizabeth Ennen.
WITNESSETH
WHEREAS, the Company has an authorized capitalization of 20,000,000
shares of common stock, par value $.01 per share (the "Common Stock"), and
5,000,000 shares of preferred stock, par value $.01 per share (the "Preferred
Stock");
WHEREAS, as of the date hereof, 4,432,300 shares of Common Stock, and
no shares of Preferred Stock, are issued and outstanding;
WHEREAS, as of the date hereof, the members of the Ennen Family (as
such term is hereinafter defined) in the aggregate own, beneficially and of
record, 2,286,000 shares (approximately 52%) of the outstanding Common Stock;
WHEREAS, as of the date hereof, the Minority Stockholders (as such term
is hereinafter defined) in the aggregate own, beneficially and of record, the
remaining 2,146,300 shares (approximately 48%) of the outstanding Common Stock;
WHEREAS, the Company currently plans to effect a public offering of its
Common Stock and, in connection with the offering, expects to grant an option to
James J. Mitchell, the Company's President and Chief Operating Officer, to
purchase approximately 226,060 shares of Common Stock;
WHEREAS, the Minority Stockholders desire, and deem it to be in their
best interests, that the Company effect the public offering of its Common Stock;
and
WHEREAS, the Ennen Family is unwilling to permit the public offering or
the issuance of the option to Mr. Mitchell unless the Minority Stockholders
enter into the contractual arrangements set forth herein regarding the election
and composition of the Company's board of directors;
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and in order to induce the Ennen Family to permit a public
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offering of the Common Stock, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
PRELIMINARY MATTERS
1.01 Certain Definitions. As used herein, the following terms shall be
defined as follows:
(a) An "Affiliate" of any party shall mean any individual,
partnership, corporation, group, foundation or trust that directly or indirectly
Controls, or is Controlled by, or is under common Control with, such party, and
in the case of a party that is a natural person it also shall mean (i) any trust
or foundation established or created by such party; (ii) any individual related
by blood or marriage to such party; (iii) a guardian, conservator, or
attorney-in-fact acting for a disabled party; and (iv) in the case of a deceased
party, such party's spouse, descendant(s), estate, executor, administrator,
personal representative, or other fiduciary (i.e., trustee, guardian,
conservator or custodian).
(b) "Capital Stock" shall mean the Common Stock and the Preferred
Stock and any other class of capital stock hereafter authorized by the
Corporation's Certificate of Incorporation and any amendments thereto.
(c) The term "Control", whether used as a noun or verb, means the
possession, directly or indirectly, of the power to direct, or cause the
direction of, the management and policies of a person, whether through the
ownership of voting securities or otherwise.
(d) "Ennen Family" (i) shall mean Richard D. Ennen, Monica C.
Ennen, John C. Ennen, Melissa Ennen, Deborah Ennen Bagierek, Elizabeth Ennen and
any Affiliate of any such person, whether now or hereafter existing, and (ii)
shall be represented for purposes of this Agreement by the Ennen Family
Coordinator designed pursuant to paragraph (f) of this Section 1.01.
(e) "Ennen Family Capital Stock" shall mean the shares of Capital
Stock the Ennen Family shall directly or indirectly beneficially own from time
to time.
(f) "Ennen Family Coordinator" shall mean Richard D. Ennen,
provided that the Ennen Family Coordinator is subject to change as set forth in
Section 1.02 hereof.
(g) "Minority Stockholders" shall mean those persons whose names
and addresses appear on Appendix A
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(including James J. Mitchell) and shall include any transferee of a Minority
Stockholder that is bound by the terms and provisions of this Agreement pursuant
to Section 2.01 hereof.
1.02 Ennen Family Coordinator. The Ennen Family Coordinator shall at
all times be a natural person who is a member of the Ennen Family. Neither a
guardian, conservator, or attorney-in-fact acting for a disabled member of the
Ennen Family, nor an estate, executor, administrator, personal representative or
other fiduciary of a deceased member of the Ennen Family shall at any time serve
as the Ennen Family Coordinator. The Ennen Family Coordinator shall (a) serve as
the only person to receive any notice to be given under this Agreement to the
Ennen Family; and (b) be the only person to notify the Minority Stockholders of
the exercise of any rights and selections of the Ennen Family under this
Agreement. The Minority Stockholders may completely rely on any written
notification or statement by the Ennen Family Coordinator, and no recourse or
liability shall arise from such reliance. The Ennen Family Coordinator may be
changed by written notice to the Minority Stockholders from the Ennen Family
Coordinator then serving. In the case of the death or disability of an Ennen
Family Coordinator, the oldest surviving lineal descendant of Richard D. Ennen
and Monica C. Ennen shall automatically succeed as Ennen Family Coordinator.
1.03 Current Ownership of Common Stock. Each Minority Stockholder
represents and warrants, as of the date hereof, that he owns of record and
beneficially the number of shares of Common Stock set forth opposite his name on
Appendix A, free and clear of any liens, claims, options, charges, encumbrances
or rights of others.
ARTICLE II
RESTRICTIONS ON MINORITY STOCKHOLDER TRANSFER
2.01 Transfer Void. Each Minority Stockholder agrees that he will not
hereafter sell, give, transfer, or assign any Common Stock now owned or
hereafter acquired by him to any Affiliate without first obtaining the
Affiliate's written consent, in form and substance reasonably satisfactory to
the Ennen Family Coordinator, to be bound by the terms and provisions of this
Agreement. Upon any such transfer, said Affiliate shall be deemed for all
purposes to be a party hereto, and shall be subject to all the obligations
created hereby with respect to the Minority Stockholders. Any sale, gift,
transfer or assignment of any Common Stock in violation of the this Section 2.01
shall be void ab initio.
2.02 Certain Acknowledgements. The parties hereto acknowledge and
agree that, subject to the limitations set
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forth in Section 2.01 hereof, nothing in this Agreement shall be construed to
limit the rights of any Minority Stockholder or the Ennen Family to sell or
otherwise transfer shares of Common Stock. If any Minority Stockholder sells or
otherwise transfers shares of Common Stock to a non-Affiliate during the term of
this Agreement or disposes of shares of Common Stock in a "brokers' transaction"
or a transaction with a "market maker" within the meaning of Rule 144(f)
promulgated under the Securities Act or 1933, as amended, without regard to the
identity of the ultimate purchaser thereof, such shares shall no longer be
subject to the restrictions set forth in this Agreement.
ARTICLE III
ELECTION OF DIRECTOR
3.01 Nomination of Director. Each Minority Stockholder hereby agrees
that if Richard D. Ennen shall at any time no longer serve on the board of
directors of the Company, the Minority Stockholder shall vote all of the shares
of Common Stock which he may own from time to time to cause the election to the
Company's board of directors of one individual designated by the Ennen Family
Coordinator in writing. The Ennen Family Coordinator shall designate for such
purpose such person as has been nominated by the members of the Ennen Family
holding a majority of the voting power of the Ennen Family Capital Stock. The
director so designated by the Ennen Family Coordinator is hereinafter referred
to as the "Ennen Family Director."
3.02 Removal. In the event that the Ennen Family Coordinator gives
notice in writing to the Minority Stockholders that the members of the Ennen
Family desire to remove, whether for cause or without cause, the Ennen Family
Director, then each Minority Stockholder agrees to vote the shares of the Common
Stock which he then owns for the removal of such director. Each Minority
Stockholder further agrees that he shall not vote to remove Richard D. Ennen or
any other Ennen Family Director unless the Ennen Family Coordinator has given
notice in writing to the Minority Stockholder that the members of the Ennen
Family desire such removal. The Ennen Family Coordinator shall give notices
contemplated by this Section 3.02 upon, and only upon, the direction by Ennen
Family Members holding a majority of the voting power of the Ennen Family
Capital Stock.
3.03 Vacancies. In the event that the seat on the board of directors
to be occupied by the Ennen Family Director is vacant for any reason, each
Minority Stockholder agrees to vote all of the shares of Common Stock which he
then owns to cause the vacancy to be filled by an individual designated by
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the Ennen Family Coordinator in writing. The Ennen Family Coordinator shall
designated for such purpose such person as has been nominated by the members of
the Ennen Family holding a majority of the voting power of the Ennen Family
Capital Stock.
ARTICLE IV
MISCELLANEOUS
4.01 Term. This Agreement and the rights granted to the Ennen Family
hereunder shall terminate on the earlier to occur of (a) July 31, 1994, if the
Company shall not have consummated a public offering of its Common Stock prior
to such date, (b) the first date upon which the Ennen Family, in the aggregate,
shall own less than 10% of the outstanding shares of Common Stock, and (c) the
tenth anniversary of the date hereof.
4.02 Governing Law. This Agreement shall be subject to and governed by
the laws of the State of Delaware, irrespective of the conflicts of laws rules
thereof.
4.03 Notices. Notices and other communications hereunder shall be
sufficient if contained in a writing delivered in person or sent by cable,
telegram or facsimile or by overnight courier addressed to the particular party
to whom the notice is to be sent as set forth herein. Notices to the Ennen
Family shall be given to the Ennen Family Coordinator at the address set forth
below and notices to the Minority Stockholders shall be sent to each Minority
Stockholder at his address set forth on Appendix A, provided that any party
hereto shall have the right to designate a different address to the other
parties in writing. All such notices and other communications shall be deemed
given (i) in the case of personal delivery, on the date of such delivery, or
(ii) in the case of transmission by cable, telegram or facsimile or by overnight
courier, on the first day following the date of dispatch.
If to the Ennen Family Coordinator:
Richard D. Ennen
9 Dinghy Lane
Hilton Head, South Carolina 29928
Facsimile: 803-842-3843
4.04 Severability. In the event any provision hereof is held void or
unenforceable by any court, then such provision shall be severable and shall not
affect the remaining provisions hereof.
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4.05 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.06 Entire Agreement; Benefit. This Agreement is the entire agreement
among the parties, and, when executed by the parties hereto, supersedes all
prior agreements and communications, either verbal or in writing, between the
parties hereto concerning the respective subject matters contained herein. The
provisions of this Agreement shall inure to the benefit of the members of the
Ennen Family which currently own or may hereafter acquire any shares of Capital
Stock.
4.07 Amendment. Any amendment to this Agreement must be in writing and
duly signed by (a) members of the Ennen Family holding a majority of the voting
power of the Ennen Family Capital Stock and (b) Minority Stockholders holding a
majority of the voting power of the Capital Stock then held by all of the
Minority Stockholders, except that no such amendment shall eliminate the rights
or increase the obligations of any party hereto without the consent of such
party.
4.08 Waiver. Any failure by a party hereto to comply with any obligation,
agreement or condition herein may be expressly waived in writing by each of the
other parties hereto, but such waiver or failure to insist upon strict
compliance with such obligation, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
4.09 Consent to Specific Performance. The parties hereto acknowledge and
agree that a breach of any of the covenants or agreements set forth herein would
result in irreparable injury to the other parties hereto and that the other
parties would not have an adequate remedy at law for such breach, and therefore,
each party hereto agrees that the other parties hereto will be entitled to
enforce their rights by injunction proceedings restraining such party from
breaches or threatened breaches hereof. Neither the institution of an injunction
proceeding nor the granting of any injunctive relief therein shall in any way
limit the right of the parties hereto to other relief available at law or in
equity.
4.10 Variations in Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the antecedent person or persons or entity or entities may
require.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
MINORITY STOCKHOLDERS
/s/ Robert P. Farnor
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ROBERT P. FARNOR
/s/ Michael D. Huff
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MICHAEL D. HUFF
/s/ Leonard Bowman
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LEONARD BOWMAN
/s/ Dennis B. Richards
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DENNIS B. RICHARDS
/s/ Charles Edmisten
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CHARLES EDMISTEN
/s/ Robert J. Vance
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ROBERT J. VANCE
/s/ James J. Mitchell
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JAMES J. MITCHELL
/s/ Frank T. Gentry III
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FRANK T. GENTRY III
/s/ Larry L. Landers
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LARRY L. LANDERS
/s/ Gerald Foster
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GERALD FOSTER
/s/ Ricky L. Hyder
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RICKY L. HYDER
/s/ Frank Rice, Jr.
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FRANK RICE, JR.
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ENNEN FAMILY
/s/ Richard D. Ennen
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RICHARD D. ENNEN
/s/ Monica C. Ennen
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MONICA C. ENNEN
/s/ John C. Ennen
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JOHN C. ENNEN
/s/ Melissa Ennen
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MELISSA ENNEN
/s/ Deborah Ennen Bagierek
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DEBORAH ENNEN BAGIEREK
/s/ Elizabeth Ennen
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ELIZABETH ENNEN
APPENDIX A
Unless otherwise indicated, the address of each person is NN Ball &
Roller, Inc., 800 Tennessee Road, Erwin, Tennessee 37650.
Name Number of
- ---- Shares Owned
------------
Robert P. Farnor .............................................. 685,800
415 Love Street
Erwin, TN 37650
Michael D. Huff ............................................... 381,000
Leonard Bowman ................................................ 304,800
Dennis B. Richards ............................................ 304,800
Charles Edmisten .............................................. 203,200
Robert J. Vance ............................................... 101,600
P.O. Box 498
Erwin, TN 37650
James J. Mitchell ............................................. 0*
Frank T. Gentry III ........................................... 50,800
Larry L. Landers .............................................. 50,800
Gerald Foster ................................................. 25,400
Ricky L. Hyder ................................................ 25,400
Frank Rice, Jr. ............................................... 12,700
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* Upon the consummation of an initial public offering of the Company's
Common Stock, the Company will grant options to Mr. Mitchell to purchase 226,060
shares of Common Stock. Options to purchase 90,424 of such shares will be
exercisable as of the date of grant.