Document:

exhibit101.htm

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made as of this 8th day of May, 2013 by and between NN, Inc., a Delaware Corporation with its principal place of business in Johnson City, Tennessee (the “Company”), and Richard D. Holder (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Company desires to employ the Executive as President and Chief Executive Officer of the Company; and

 

WHEREAS, the Executive desires to be employed by the Company in such capacity; and

 

WHEREAS, the parties understand that certain payments hereunder may be deemed to be "deferred compensation" within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"); and

 

WHEREAS, the Company and the Executive mutually desire that their employment relationship be set forth under the terms of this written Employment Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and of the promises, covenants and mutual agreements set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree that the terms of their employment relationship are as follows:

 

	
1.  

	
Employment.  The Company agrees to employ the Executive, and the Executive agrees to be employed by the Company, on the terms and conditions set forth herein.

 

	
2.  

	
Term of Employment.  The employment of the Executive by the Company as provided herein shall commence on June 3, 2013, and end on June 3, 2014 unless further extended or sooner terminated as hereinafter provided.  On June 3, 2014 and on June 3 of each year thereafter, the term of the Executive’s employment hereunder shall be extended automatically one (1) additional year, unless at least six (6) months prior to the date of such automatic extension the Company shall have delivered to the Executive or the Executive shall have delivered to the Company written notice that the term of the Executive’s employment hereunder shall not be extended.  In the event that the Company provides at least six (6) months written notice that the term of Executive's employment hereunder shall not be extended at the end of the then current term, the Executive's separation at the expiration of the then current term shall be treated as a Separation From Service by Company not For Cause pursuant to Paragraph 7(b) of this Agreement.  Nothing in this Paragraph 2 will affect either party's ability to terminate the Executive's employment hereunder pursuant to Paragraph 7(b) or (c) of this Agreement during any notice period provided pursuant to this Paragraph 2 and, in such event, Executive will not be paid for the remainder of the notice period, and said separation shall be evaluated pursuant to the applicable provisions of Paragraph 7.

 

  

  

  

	
3.  

	
Position and Duties.  The Executive shall serve as the President and Chief Executive Officer of the Company with responsibilities and authority as may from time to time be assigned by the Board of Directors of the Company.  Executive agrees to perform faithfully and industriously the duties which the Company may assign to him. The Executive shall devote substantially all of his working time and efforts to the business affairs of the Company, to the exclusion of all other employment or business interest other than passive personal investments, charitable, religious or civic activities.  Executive may not engage, directly or indirectly, in any other business or businesses, whether or not similar to that of the Company, except with the consent of the Board of Directors of the Company.

 

	
4.  

	
Compensation and Benefits.  In consideration of the Executive’s performance of his duties hereunder, the Company shall provide the Executive with the following compensation and benefits during the term of his employment hereunder.

 

	
(a)  

	
Base Salary.  The Company shall pay to the Executive an aggregate base salary at a rate of Five Hundred Thousand Dollars ($500,000.00) per annum, payable in accordance with the Company’s normal payroll practices.  Such base salary may be increased from time to time by the Board of Directors in accordance with the normal business practices of the Company.

 

	
(b)  

	
Expenses.  The Company, as applicable, shall promptly reimburse the Executive for all reasonable out-of-pocket expenses incurred by the Executive in his performance of services hereunder, including all such expenses of travel and entertainment, provided that such expenses are incurred, accounted for and documented in accordance with the Company’s regular policies and in compliance with IRS Guidelines.  The Company reserves the right to establish limits on the types or amounts of business expenses that the Executive may incur.

 

	
(c)  

	
Employee Benefits.  The Executive shall be entitled to participate in all Company employee benefit plans for which he is eligible, subject to the rules and regulations applicable thereto, which were in effect on the date hereof (including, but not limited to, life, disability, and health insurance plans and programs and savings plans and programs) as such plans may continue or be altered by the Company Board of Directors from time to time at the Board’s discretion.

 

	
(d)  

	
Vacation and Other Absences.  The Executive shall receive reasonable and customary vacation in each calendar year during the term of this Agreement, in accordance with the Company's present policies.  The Executive shall also receive all paid absences for holidays or illnesses in accordance with the Company's applicable plans, policies or provisions.

  

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	 	(e)	Car Allowance.  The Executive shall receive a car allowance of fourteen thousand four hundred dollars ($14,400) per year, which shall be pro-rated for any partial year and shall be paid in monthly installments of $1,200 in accordance with the Company’s normal payroll practice.
	 	 	 
	 	(f)	Relocation Expense.  The Company shall promptly reimburse the Executive for the one-time cost associated with moving all of the Executive’s household and personal goods from his current residence to a new residence located nearby the Company’s corporate headquarters in Johnson City, Tennessee.
	 	 	 
	 	(g)	Technology.  The Company, at its expense, shall provide to the Executive, for use in executing the Executive’s duties under this Employment Agreement, a laptop computer, an iPad and a cell phone.

 

 

	
5.  

	
Non-Equity Incentive Plan Participation.  Executive will be eligible to participate in the Company’s Annual Non-Equity Incentive Plan (the “NEIP”) with a target incentive of 75% - 90% of Executive’s annual base salary and, for the fiscal year ending December 31, 2013, Executive shall receive non-equity incentive compensation equal to 65% of Executive’s annual base salary (the “2013 Incentive Compensation”), pro-rated for the period of time in 2013 that Executive is employed by the Company, less applicable taxes, deductions and withholdings.  To qualify for the NEIP and the 2013 Incentive Compensation, Executive must remain employed with the Company through the date that the non-equity incentive compensation is paid (as specified in the NEIP).  Any future payments under the NEIP will depend on the Company’s financial performance and the Compensation Committee’s assessment of Executive’s individual performance.  The terms of any NEIP payout is subject to, and governed by, the terms and requirements of the NEIP.  NEIP amounts are usually paid in late February or early March of the year after the end of the fiscal year for which such payments are earned.

 

	
5.A.

	
Equity Incentive Compensation.  Executive will be entitled to participate in the Company’s equity incentive compensation program as described below:

 

	
(a)  

	
Inducement Restricted Stock Units.  On the grant date, the Executive shall be granted an award of 25,000 restricted stock units corresponding to shares of the Company’s Common Stock (the “Inducement Restricted Stock Units”).  The Inducement Restricted Stock Units Shall vest in annual installments of 8,333 shares, 8,333 shares and 8,334 shares on June 3, 2014, June 3, 2015 and June 3, 2016, respectively, subject, in each case, to Executive’s continued employment with the Company through the applicable vesting date.  Except as specifically provided herein, the terms and conditions of the Inducement Restricted Stock Units shall be subject the NN, Inc. 2011 Stock Incentive Plan (the “2011 Plan”) and the award agreement evidencing the grant of the Inducement Restricted Stock Units.

 

	
(b)  

	
Inducement Stock Options.   On the grant date, the Executive shall be granted an option (the “Inducement Stock Option”) to purchase 100,000 shares of the Company’s Common Stock.  The Inducement Stock Option shall have a per share exercise price equal to the Fair Market Value (as such term is defined in, and determined in accordance with, the 2011 Plan).  The Inducement Stock Option shall have a ten-year term and a vesting schedule such that the Inducement Stock Option will become exercisable in annual installments of 33,333 shares, 33,333 shares and 33,334 shares on June 3, 2014, June 3, 2015 and June 3, 2016, respectively; provided that the Executive remains in the employ of the Company through each such vesting date.  Except as specifically provided herein, the terms and conditions of the Inducement Stock Option shall be subject to the terms of the 2011 Plan and the award agreement evidencing the grant of the Inducement Stock Option.

 

  

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(c)  

	
Future Incentive Compensation.  So long as Executive remains in the employ of the Company, Executive shall be entitled to receive additional annual equity incentive compensation in accordance with the Company’s customary practices under the 2011 Plan, which will include equity incentive compensation intended to compensate Executive for the forfeiture of stock options and restricted stock in Executive’s previous employer.

 

	
6.  

	
Termination.  Except for the provisions of Paragraphs 8, 9, 10, 11, and 12, which shall continue in full force and effect, this Agreement shall terminate upon the first to occur of the following:

 

	
(a)  

	
The death of Executive;

 

	
(b)  

	
The permanent Disability of Executive, as defined in Paragraph 7(a)(iv);

 

	
(c)  

	
Termination of Executive’s employment by Company "For Cause" as defined in Paragraph 7(a)(i);

 

	
(d)  

	
Separation From Service with the Company other than For Cause or Separation From Service with the Company by Executive with "Good Reason" as defined in Paragraph 7(a)(ii).  The Company reserves the right to terminate the Executive at any time, subject to the Company's obligation to pay the Executive compensation as otherwise provided for herein; or

 

	
(e)  

	
Separation From Service with the Company following a "Change in Control" as defined in Paragraph 7(a)(iii) and as provided in Paragraph 7(d)(i); or

 

	
(f)  

	
Termination of employment with the Company by Executive without Good Reason, provided that Executive shall give written notice of his voluntary termination in accordance with Paragraph 7(a)(v).  Upon receipt of notice of intended termination given by Executive, the Company reserves the right to terminate the Executive's employment, effective immediately.

 

	
7.  

	
Compensation and Benefits in the Event of Termination or Separation From Service.  In the event of the termination of the Executive’s employment or a Separation From Service, as applicable, during the term of this Agreement or any renewal thereof, compensation and benefits shall be paid as set forth below.

 

	
(a)  

	
Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated:

 

  

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(i)  

	
The term "For Cause" shall include, but shall not be limited to (A) the failure of the Executive to perform the Executive's duties under this Agreement (other than as a result of physical or mental illness or injury), which failure, if correctable, and provided it does not constitute willful misconduct or gross negligence described in Subsection B below, remains uncorrected for 10 days following written notice to Executive by the Board of Directors of the Company of such breach; (B) willful misconduct or gross negligence by the Executive, in either case that results in material damage to the business or reputation of the Company; (C) a material breach by Executive of this Agreement which, if correctable, remains uncorrected for 10 days following written notice to Executive by the Board of Directors of the Company of such breach; or (D) the Executive is convicted of a felony or any other crime involving moral turpitude (whether or not in connection with the performance by Executive of his duties under this Agreement).

 

	
(ii)  

	
The term "Good Reason" shall mean either:

 

	
  

	
(A)

	
assignment to the Executive of any duties inconsistent with Executive's position duties, responsibilities, title or office, or any other action by the Company that results in a material diminution in the Executive's position, authority, duties or responsibilities, excluding in each case any assignment or action that is remedied by the Company within 10 days after receipt of notice thereof from the Executive; or

 

	
  

	
(B)

	
any material failure by the Company to comply with this Agreement, other than a failure that is remedied by the Company within 10 days after receipt of notice thereof from the Executive.

 

	
(iii)  

	
The term “Change in Control” shall mean either:

 

	
(A)  

	
A person, corporation, entity or group (1) makes a tender or exchange offer for the issued and outstanding voting stock of the Company's parent, NN, Inc., ("NN") and beneficially owns fifty percent (50%) or more of the issued and outstanding voting stock of NN after such tender or exchange offer, or (2) acquires, directly or indirectly, the beneficial ownership of fifty percent (50%) or more of the issued and outstanding voting stock of NN in a single transaction or a series of transactions (other than any person, corporation, entity or group for which a Schedule 13G is on file with the Securities and Exchange Commission, so long as such person, corporation, entity or group has beneficial ownership of less than fifty percent (50%) of the issued and outstanding voting stock of NN); or

 

  

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(B)  

	
NN is a party to a merger, consolidation or similar transaction and following such transaction, fifty percent (50%) or more of the issued and outstanding voting stock of the resulting entity is not beneficially owned by those persons, corporations or entities that constituted the stockholders of NN immediately prior to the transaction; or

 

	
(C)  

	
NN sells fifty percent (50%) or more of its assets to any other person or persons (other than an affiliate or affiliates of NN); or

 

	
  

	
(D)

	
Individuals  who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least seventy-five percent (75%) of the Board of Directors of NN; provided, however, that any individual becoming a director subsequent to the date hereof, whose election or nomination was approved by a majority of the directors than comprising the Incumbent Board, shall be considered a member of the Incumbent Board, but not including any individual whose initial board membership is a result of an actual or threatened election contest (as that term is used in Rule 14a-11 promulgated under the Securities Act of 1934, as amended) or an actual or threatened solicitation of proxies or consents by or on behalf of a party other than the Board.

 

It is not intended that a Change in Control will serve as an event which entitles Executive to any payment hereunder.

 

	
(iv)  

	
The term “Disability” shall mean the Executive: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees or directors of the Company.  Medical determination of Disability may be made by either the Social Security Administration or by the provider of an accident or health plan covering employees or directors of the Company provided that the definition of "disability" applied under such disability insurance program complies with the requirements of the preceding sentence.  Upon the request of the plan administrator, the Executive must submit proof to the plan administrator of the Social Security Administration’s or the provider’s determination.

 

	
(v)  

	
The term “Notice of Termination” shall mean a written notice which shall include the specific termination provision under this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment.  Any purported termination of the Executive’s employment hereunder by action of either party shall be communicated by delivery of a Notice of Termination to the other party.  Any termination by Executive of his employment without Good Reason shall be made on not less than 14 days' notice.

 

  

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(vi)  

	
The term “Separation From Service” shall mean the termination of the Executive's employment with the Company for reasons other than death or Disability.  Whether a Separation from Service takes place is determined based on the facts and circumstances surrounding the termination of the Employee’s employment and whether the Company and the Executive intended for the Executive to provide significant services for the Company following such termination.  A change in the Executive's employment status will not be considered a Separation from Service if:

 

	
(A)  

	
the Executive continues to provide services as an employee of the Company at an annual rate that is twenty percent (20%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or, if employed less than three years, such lesser period) and the annual remuneration for such services is twenty percent (20%) or more of the average annual remuneration earned during the final three full calendar years of employment (or, if less, such lesser period), or

 

	
(B)  

	
the Executive continues to provide services to the Company in a capacity other than as an employee of the Company at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is fifty percent (50%) or more of the average annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period).

 

	
  

	
(vii)

	
The term “Specified Employee” shall mean a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Company if any stock of the Company is publicly traded on an established securities market or otherwise.

 

  

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(b)  

	
Separation From Service By Company Not For Cause Or By Executive With Good Reason Prior To A Change In Control.  In the event Executive incurs a termination of employment by action of the Company without Cause prior to a Change in Control, or by the Executive with Good Reason prior to a Change in Control, then upon a Separation From Service the Executive shall be entitled to receive:  (1) The annual salary due to him through the date of termination of his employment which occurs in connection with the Separation From Service.  In addition, if employed twelve (12) years or less, Executive shall be entitled to receive an amount equal to one year of his Annual Salary in effect on the date of termination of his employment which occurs in connection with the Separation From Service, payable (except as provided in Paragraph 7(e)) in accordance with the Company's regular payroll procedures over the 12-month period following the Executive's Separation From Service. For each full year of service Executive has completed over twelve (12) years of service, Executive shall additionally receive an amount equal to one month of such Annual Salary paid as indicated above, up to a maximum additional six (6) months if employed for eighteen (18) years or more.  (2) Any vested rights of Executive shall be paid to Executive in accordance with the Company's plans, programs or policies.  (3) The “target” (as set forth in the NEIP) bonus available to the Executive for the year in which the termination under this Paragraph 7(b) occurs, pro-rated for the portion of the year during which the Executive was employed by the Company.  (4) The Company shall promptly reimburse Executive for any and all reimbursable business expenses (to the extent not already reimbursed) upon Executive's properly accounting for the same.  (5) The Company shall pay to Executive an additional amount of $12,000 payable in installments in accordance with the Company's normal payroll practices to assist with the Executive's transition from employment.

 

	
(c)  

	
Termination By The Company For Cause Or By The Executive Without Good Reason.  In the event the Executive’s employment hereunder is terminated (A) by action of the Company for Cause; (B) by action of the Executive without Good Reason; or (C) by reason of the Executive’s death, Disability or retirement, the following compensation and benefits shall be paid and provided the Executive (or his beneficiary):

 

	
(1)  

	
The Executive’s annual salary provided under Paragraph 5(a) through the date of termination, at the annual rate in effect at the time the Notice of Termination is given (or death occurs), to the extent unpaid prior to such Date of Termination;

 

	
(2)  

	
Any vested rights of Executive shall be paid to Executive or in accordance with the Company's plans, programs or policies.  Without limiting the foregoing, in the event of the termination of Executive's employment due to death or disability, the rights and benefits of Executive (or his designated beneficiary or representatives, as applicable) under any Company life, health and long-term disability plans and policies shall be determined in accordance with the terms and provisions of such plans and policies; and

 

	
(3)  

	
The Company shall promptly reimburse Executive for any and all reimbursable business expenses (to the extent not already reimbursed) upon Executive's properly accounting for the same.

 

	
(d)  

	
Separation From Service Following a Change in Control

 

  

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(i)

	
Severance Benefits.  In the event that Executive incurs a termination of employment coincident with or followed by a Separation From Service, in either event within two (2) years following a "Change in Control" (as defined in Paragraph 7(a)(iii)) and such termination or Separation From Service is either (i) Without Cause (as defined below), or (ii) is a Constructive Termination (as defined below), Executive shall receive, in addition to all compensation due and payable to or accrued for the benefit of Executive:

 

	
  

	
(A)

	
a lump sum payment equal to an amount set forth on Schedule A to this Agreement ("Severance Payment").  The Severance payment shall be made by wire transfer or immediately available funds to an account designated by Executive within seven (7) business days following the date of the Separation From Service, except as provided in Paragraph 7(e) with respect to payments to Specified Employees;

 

	
  

	
(B)

	
a payment equal to the target bonus to which Executive would have been entitled but for Executive's termination of employment in connection with the Separation From Service, for the year of Executive's termination; pro-rated for the portion of the year during which he was employed by the Company (“Pro-rated Bonus”).  The Pro-rated Bonus shall be payable to Executive within seventy-five (75) days following Executive's Separation From Service, except as provided in Paragraph 7(e); and

 

	
  

	
(C)

	
an additional lump sum amount of $12,000 to assist with the Executive's transition from employment.

 

The Severance Payment, Pro-rated Bonus and Insurance Benefits are collectively referred to in this Agreement as the "Severance Benefit."

 

(ii)           Termination or Separation From Service Without Cause.  For purposes of this subparagraph 7(d), "Without Cause" shall mean termination of Executive by the Company for reasons other than: (i) the willful, persistent failure of Executive (after ten (10) days written notice and a reasonable opportunity to cure) to perform his material duties for reasons other than death or disability; (ii) the breach by Executive of any material provision of this Agreement; or (iii) Executive's conviction of a felony involving dishonesty, deceit or moral turpitude by a trial court of competent jurisdiction, whether or not appeal is taken.

 

(iii)           Constructive Termination.  For purposes of this subparagraph 7(d) "Constructive Termination" shall mean: (1) a material, adverse change of Executive's responsibilities, authority, status, position, offices, titles, duties or reporting requirements (including directorships); (2) an adverse change in Executive's annual compensation and benefits; (3) a requirement to relocate in excess of fifty (50) miles from the Executive's then current place of employment; or (4) the breach by the Company of any material provision of this Agreement, other than a breach that is remedied by the Company within 10 days after receipt of notice thereof from Executive.  For purposes of this definition, Executive's responsibilities, authority, status, position, offices, titles, duties and reporting requirements are to be determined as of the date of this Agreement.

 

  

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(iv)           Other Severance Benefits.  The Severance Benefit payable to Executive pursuant to this subparagraph 7(d) shall be reduced by any severance benefits to which Executive is entitled under the Company's severance policies for terminated employees generally or any termination payments otherwise payable under this Agreement.

 

(v)           Excise Tax.

 

	
  

	
(A)

	
Notwithstanding anything to the contrary set forth in this Agreement, in no event shall a Severance Benefit payable pursuant to this Paragraph 7(d) exceed an amount equal to the lesser of (i) 2.99 times the "base amount" (as defined in Section 280G(b)(3) of the Internal Revenue Code) of Executive's compensation, or (ii) such other amount which would constitute a "parachute payment" (as defined in Section 280G of the Code).  In the event that it shall be determined that any Severance Benefit to Executive (whether paid or payable or distributed or distributable) would be subject to the excise tax imposed by Section 4999 of the Code, or any successor provision thereto (the "Excise Tax"), then Executive shall be entitled to receive from the Company an additional payment (the "Gross-Up Payment”) in an amount such that the net amount of the Severance Benefit and the Gross-Up Payment retained by the Executive after calculation and deduction of all Excise Taxes (including any interest or penalties imposed with respect to such taxes) or the Gross-Up Payment provided for in this Section, and taking into account any lost or reduced tax deductions on account of the Gross-Up payment, shall be equal to the Severance Benefit.

 

	
  

	
(B)

	
Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment.  Such notification shall be given as soon as practicable after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes, interest and/or penalties with respect to such claim is due).  If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

 

  

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(1)

	
give the Company any information reasonably requested by the Company relating to such claim;

 

	
  

	
(2)

	
take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;

 

	
  

	
(3)

	
cooperate with the Company in good faith in order to effectively contest such claim; and

 

	
  

	
(4)

	
permit the Company to participate in any proceedings relating to such claims;

 

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify Executive for and hold Executive harmless from, on an after-tax basis, any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of all related costs and expenses.  Without limiting the foregoing provisions of this section, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify Executive for and hold Executive harmless from, on an after-tax basis, any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance (including as a result of any forgiveness by the Company of such advance); provided, further, that any extension of the statute of limitations relating to the payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

 

  

  

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(e)  

	
Payments to Specified Employees.   Notwithstanding the foregoing provisions which normally require payment of certain elements of compensation within a stated period after a Separation From Service, in no event shall any payment to a Specified Employee of compensation which is subject to Internal Revenue Code Section 409A be made prior to the date which is six (6) months and one (1) day after the date of such Separation From Service.  Any amount otherwise required to be paid within such payment suspension period shall be paid in a lump sum on the date the suspension period lapses or, if such date is not a regular business day of the Company, on the first regular business day of the Company which follows the expiration of the payment suspension period.

 

	
(f)  

	
Continuation of Benefits.  Following the termination of Executive’s employment hereunder, the Executive shall have the right to continue in the Company’s group health insurance plan or other Company benefit program as may be required by COBRA or any other federal or state law or regulation.

 

	
  

	
(g)

	
Limit on Company Liability.  Except as expressly set forth in this Paragraph 7, the Company shall have no obligation to Executive under this Agreement following a termination of Executive's employment with the Company.  Without limiting the generality of the provision of the foregoing sentence, the Company shall not, following a termination of Executive's employment with the Company, have any obligation to provide any further benefit to Executive or make any further contribution for Executive's benefit except as provided in this Paragraph 7.

 

	
8.  

	
Disclosure of Confidential Information.  The Company has developed confidential information, strategies and programs, which include customer lists, prospects, lists, expansion and acquisition plans, market research, sales systems, marketing programs, computer systems and programs, product development strategies, manufacturing strategies and techniques, budgets, pricing strategies, identity and requirements of national accounts, customer lists, methods of operating, service systems, training programs and methods, other trade secrets and information about the business in which the Company is engaged that is not known to the public and gives the Company an opportunity to obtain an advantage over competitors who do not know of such information (collectively, "Confidential Information").  In performing duties for the Company, Executive regularly will be exposed to and work with Confidential Information.  Executive acknowledges that such Confidential Information is critical to the Company's success and that the Company has invested substantial sums of money in developing the Confidential Information.  While Executive is employed by the Company and after such employment ends for any reason, Executive will never reproduce, publish, disclose, use, reveal, show or otherwise communicate to any person or entity any Confidential Information unless specifically directed by the Company to do so in writing.  Executive agrees that whenever Executive's employment with the Company ends for any reason, all documents containing or referring to Confidential Information as may be in Executive's possession or control will be delivered by Executive to the Company immediately, with no request being required.

 

  

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9.  

	
Non-Interference with Personnel Relations.  While Executive is employed by the Company and for twenty-four (24) months after such employment ends for any reason, Executive acting either directly or indirectly, or through any other person, firm, or corporation, will not hire contract with or employ any employee of the Company or induce or attempt to induce or influence any employee of the Company to terminate employment with the Company.  However, this provision shall not apply to Executive in the case of the solicitation of his or her immediate family members.

 

	
10.  

	
Non-Competition.  While Executive is employed by the Company and for twenty-four (24) months after such employment ends for any reason, Executive will not, directly or indirectly, or through any other person, firm or corporation (i) be employed by, consult for, have any ownership interest in or engage in any activity on behalf of any competing business, or (ii) call on, solicit or communicate with any of the Company's customers (whether actual or potential) for the purpose of selling precision steel balls and rollers and other related items to such customer other than for the benefit of the Company.  As used in this Agreement, the term "competing business" means a business that is a manufacturer and supplier of precision steel balls and rollers to anti-friction bearing manufacturers (excluding any ball and roller manufacturers who manufacture such products for use in their business or the business of their affiliates and do not supply such products to third parties) and the term "customer" means any customer (whether actual or potential) with whom Executive or any other employee of the Company had business contact on behalf of the Company during the eighteen (18) months immediately before Executive's employment with the Company ended.  Notwithstanding the foregoing, this paragraph shall not be construed to prohibit Executive from owning less than five percent (5%) of the outstanding securities of a corporation which is publicly traded on a securities exchange or over-the-counter.

 

	
11.  

	
Notification to Subsequent Employers.  Executive grants the Company the right to notify any future employer or prospective employer of Executive concerning the existence of and terms of this Agreement and grants the Company the right to provide a copy of this Agreement to any such subsequent employer or prospective employer.

 

	
12.  

	
Company Proprietary Rights.

 

	
  

	
(a)

	
Company to Retain Rights.  Executive agrees that all right, title and interest of every kind and nature whatsoever in and to copyrights, patents, ideas, business or strategic plans and concepts, studies, presentations, creations, inventions, writings, properties, discoveries and all other intellectual property conceived by Executive during the term of this Agreement and pertaining to or useful in or to (directly or indirectly) the activities of the Company (collectively, "Company Intellectual Property") shall become and remain the exclusive property of the Company, and Executive shall have no interest therein.

 

	
  

	
(b)

	
Further Assurances.  At the request of the Company, Executive shall, at the Company's expense but without additional consideration, execute such documents and perform such other acts as the Company may deem necessary or appropriate to vest in the Company or its designee such title as Executive may have to all Company Intellectual Property in which Executive may be able to claim any rights by virtue of his employment under this Agreement.

 

  

13

  

	
  

	
(c)

	
Return of Material.  Upon the termination of the Executive's employment under this Agreement, the Executive will promptly return to the Company all copies of information protected by Paragraph 12(a) hereof which are in his possession, custody or control, whether prepared by him or others, and the Executive agrees that he shall not retain any of same.

 

	
13.  

	
Representation and Warranty of Executive.  Executive represents and warrants to the Company that he is not now under any obligation, of a contractual nature or otherwise, to any person, partnership, company or corporation that is inconsistent or in conflict with this Agreement or which would prevent, limit or impair in any way the performance by him of his obligations hereunder.  This Agreement is subject to the conduct of reference and background checks on Executive to the Company’s satisfaction.

 

	
14.  

	
Withholding.  Any provision of this Agreement to the contrary notwithstanding, all payments made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine should be withheld pursuant to any applicable law or regulation.  In lieu of withholding such amounts, the Company may accept other provisions, provided that it has sufficient funds to pay all taxes required by law to be withheld in respect of any or all such payments.

 

	
15.  

	
Mitigation.  The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others.  In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this agreement and such amounts shall not be reduced whether or not Executive obtains other employment.

 

	
16.  

	
Notices.  All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be sufficiently given if and when mailed in the continental United States by registered or certified mail, or personally delivered to the party entitled thereto, at the address stated below or to such changed address as the addressee may have given by a similar notice:

 

	
To the Company:

	  	
NN, Inc.

	  	  	
Attn: William C. Kelly, Jr.

	  	  	
2000 Waters Edge Drive

	  	  	
Johnson City, TN  37604

	
To the Executive:

	  	
Richard D. Holder

	  	  	
2000 Waters Edge Drive

	  	  	
Johnson City, TN  37604

	  	  	  

 

 

  

14

  

 

	
17.  

	
Successors:  Binding Agreement.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in the form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement.  For purposes of this Agreement, “Company” shall include any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

 

This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive should die while any amount would still be payable to him hereunder if he had continued to live, all such amounts, except to the extent otherwise provided under this Agreement, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee, or if there be no such designee, to the Executive’s estate.

 

	
18.  

	
Modification, Waiver or Discharge.  No provision of this Agreement may be modified or discharged unless such modification or discharge is authorized by the Board of Directors of the Company and is agreed to in writing, signed by the Executive and by an officer of the Company duly authorized by the Board.  However, the Company may unilaterally revise the provisions of this Agreement governed by the provisions of Internal Revenue Code Section 409A in order to make the Agreement compliant therewith, and as necessary under any provision of the Internal Revenue Code or any other federal or state statute or regulation to prevent the imposition of any federal or state fine, tax, or penalty upon Company or Executive that would result from the performance of any provisions of this Agreement.  No waiver by either party hereto of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the time or at any time or at any prior or subsequent time.

 

	
19.  

	
Entire Agreement.  This Agreement constitutes the entire understanding of the parties hereto with respect to its subject matter and supersedes all prior agreements between the parties hereto with respect to its subject matter, including, but not limited to, all employment agreements, change of control agreements, non-competition agreements or any other agreement related to Executive's employment with the Company.

 

	
20.  

	
Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Tennessee to the extent federal law does not apply.

 

	
21.  

	
Resolution of Disputes.  Any dispute or claim arising out of or relating to this Agreement shall be settled by final and binding arbitration in Johnson City, Tennessee in accordance with the Commercial Arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.  The fees and expenses of the arbitration panel shall be equally borne by the Company and Executive.  Each party shall be liable for its own costs and expenses as a result of any dispute related to this Agreement.

 

  

15

  

	
22.  

	
Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which latter provisions shall remain in full force and effect.

 

	
23.  

	
Compliance with Internal Revenue Code and Section 409A.  This Agreement shall at all times be administered and the provisions of this Agreement shall be interpreted consistent with the requirements of the Internal Revenue Code, including but not limited to Section 409A of the Code, and any and all regulations thereunder, including such regulations as may be promulgated after the effective date of this Agreement.

 

	
24.  

	
No Adequate Remedy At Law; Costs to Prevailing Party.  The Company and the Executive recognize that each party may have no adequate remedy at law for breach by the other of any of the agreements contained herein, and particularly a breach of Paragraphs 8, 9, 10, or 12, and, in the event of any such breach, the Company and the Executive hereby agree and consent that the other shall be entitled to injunctive relief or other appropriate remedy to enforce performance of such agreements.

 

	
25.  

	
Non-Assignability.  This Agreement, and the rights and obligations of the parties hereunder, are personal and neither this Agreement, nor any right, benefit or obligation of either party hereto, shall be subject to voluntary or involuntary assignment, alienation  or transfer, whether by operation of law or otherwise, without the prior written consent of the other party; provided, however, that the Company may assign this Agreement in connection with a merger or consolidation involving the Company or a sale of substantially all of its assets to the surviving corporation or purchaser, as the case may be, so long as such assignee assumes the Company's obligations hereunder.

 

	
26.  

	
Headings.  The section headings contained in this Agreement are for convenience of reference only and will not be deemed to control or affect the meaning or construction of any provision of this Agreement.  Reference to Paragraphs are to Paragraphs in this Agreement.

 

	
27.  

	
Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but of which together will constitute one and the same instrument.

 

16

  

  

  

IN WITNESS WHEREOF, the Executive and the Company (by action of its duly authorized officers) have executed this Agreement as of the date first above written.

 

 

 

 

 

	 	NN, Inc.

 

 

	 	By:	/s/ William C. Kelly, Jr.	 

	 	William C. Kelly, Jr., Vice President &
	 	Chief Administrative Officer
	 	 

 

 

 

	 	EXECUTIVE:

 

 

	 	By:	/s/ Richard D. Holder	 

	 	Richard D. Holder
	 	 
	 	 

 

 

 

 

 

17

  

  

  

Schedule A

 

 

Executive's Severance Payment subsequent to a Change in Control as provided in Paragraph 7(d)(i) shall be a lump sum payment equal to:

 

1.           2.0 times Executive's base salary (as of the date of Executive's termination); plus

 

2.           1.0 times Executive's bonus available at the following bonus target percentage:  80%.

 

 

 

 

18exhibit_10-1.htm

Exhibit 10.1

CONFIDENTIAL

February 14, 2013

Alkermes Pharma Ireland Limited

Connaught House

1 Burlington Road

Dublin 4, Ireland

Attn:  Kathryn L. Biberstein, Secretary

Re:  Amendment No. 3 to the Amended and Restated License Agreement and the Supply Agreement

Dear Ms. Biberstein:

Acorda Therapeutics, Inc. (“Acorda”) and Alkermes Pharma Ireland Limited (“Alkermes”) have agreed to enter into this Amendment No. 3 to the Amended and Restated License Agreement and the Supply Agreement (“Amendment No. 3”) to establish the basis on which certain payments under the Agreements (as defined below) are made to Alkermes by Acorda pursuant to the Agreements.

 

Background:

 

Acorda and Elan Corporation, plc. (“Elan”) were parties to (i) an Amended and Restated License Agreement, dated September 26, 2003, as amended (the “License Agreement”), and (ii) a Supply Agreement, dated September 26, 2003, as amended (the “Supply Agreement” and, collectively, the “Agreements”).  Pursuant to assignments of the Agreements, Alkermes became the successor in interest to all of Elan’s rights and obligations under the Agreements.

 

Capitalized terms used in this Amendment No. 3 shall have the meaning set forth in the License Agreement or the Supply Agreement (as applicable) unless otherwise defined herein.

 

Agreement:

In consideration of the premises and the mutual promises and covenants set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

1. Article 5.6. of the License Agreement.  The title of Article 5.6 of the License Agreement shall be deleted in its entirety and replaced with a new title which shall read as follows: “5.6 Elan Royalty:”

 

2. Product Supplied for United States.

a. Article 5.6.1.1 of the License Agreement.  Article 5.6.1.1 of the License Agreement shall be deleted in its entirety and replaced with a new Article 5.6.1.1 which shall read as follows:

 

  

1

  

	
  

	
“5.6.1.1

	
(a)

	
In respect of the Elan Royalty, where Elan manufactures and supplies the Product for use (other than a use covered by other provisions of this Agreement or provisions otherwise agreed to in writing by authorized representatives of the Parties) or sale in the United States, upon delivery of such Product, Elan shall render an invoice to Acorda in respect of the quantities of Product delivered to Acorda for a sum calculated by reference to four per cent (4%) of the then-applicable Notional NSP for the United States and the quantity of such Product supplied. Acorda shall pay this invoice within thirty (30) days of the date of such invoice.

	
  

	
(b)

	
Within forty-five (45) days after the end of each calendar quarter during the term of this Agreement in which any such Product has been supplied pursuant to Article 5.6.1.1(a), Acorda shall, pursuant to Article 5.9.1, provide a Statement to Elan setting forth the actual NSP for Product sold in the United States in such calendar quarter that is relevant to such Product supplied.  The Statement shall also set forth a calculation of the total Elan Royalty payable to Elan for the Product supplied by Elan during such calendar quarter pursuant to Article 5.6.1.1(a) by reference to ten per cent (10%) of such actual NSP and the amount of such Product supplied by Elan.  Acorda will owe Elan the difference between (i) the amount calculated by reference to ten per cent (10%) of such actual NSP and the amount of such Product supplied by Elan, minus (ii) the amount paid or payable pursuant to Article 5.6.1.1(a) for such calendar quarter.  If such difference is positive, Acorda shall pay such amount to Elan within forty-five (45) days after the end of such calendar quarter; if such difference is negative, Elan shall credit such overpayment to Acorda against monies owed for Product subsequently supplied to Acorda pursuant to this Agreement.

	
  

	
(c)

	
For the avoidance of doubt the Parties agree that if for whatever reason the Product supplied by Elan to Acorda pursuant to Article 5.6.1.1(a) during the previous calendar quarter which meets the Specifications and the applicable law and regulatory requirements is not sold by Acorda, payment to Elan of the total Elan Royalty for such Product shall nonetheless be effected and the price of the Product shall be determined by reference to the NSP calculated pursuant to the provisions of Article 5.6.1.1(b).

 

For example:  If on January 1, 2012, Elan delivers 1000 units of Product for sale in the United States, upon delivery of such Product, Elan shall render an invoice to Acorda for four per cent (4%) of the then-applicable Notional NSP for the United States of $570.45 for a total amount of $22,818 (4% x $570.45 x 1000).  Acorda shall pay this invoice on or before January 31, 2012.  On or before May 15, 2012, Acorda shall provide a Statement to Elan setting forth the actual NSP of $610 for Product sold in the United States during the calendar quarter ending March 31, 2012.  During the calendar quarter ending March 31, 2012 only 600 units of Product were sold; the 

 

  

2

  

remaining 300 units of Product were sold during the calendar quarter ending June 30, 2012 and the final 100 units of Product were never sold.  Notwithstanding the foregoing, on or before May 15, 2012, Acorda shall pay to Elan $38,182 with respect to the 1000 units of Product delivered on January 1, 2012 (10% x $610 x 1000 = $61,000 - $22,818).”

b. Article 9.3.3(a) of the Supply Agreement.  Article 9.3.3 of the Supply Agreement shall be deleted in its entirety and replaced with new Articles 9.3.3(a), 9.3.3(b) and 9.3.3(c).  Article 9.3.3(a) shall read as follows:

	
  

	
“9.3.3

	
(a)

	
Upon supply to Acorda of Product for use (other than a use covered by other provisions of this Agreement or provisions otherwise agreed to in writing by authorized representatives of the Parties) or sale in the United States, Elan shall render an invoice in respect of the quantities of Product delivered to Acorda for a sum calculated by reference to eight per cent (8%) of the then-applicable Notional NSP for the United States.  Acorda shall pay such invoice within thirty (30) days of the date of such invoice (or, through March 2012, within sixty (60) days of the date of such invoice).  Within forty-five (45) days after the end of each calendar quarter during the term of this Agreement in which Elan has supplied Product pursuant to this Article 9.3.3(a), Acorda shall provide a Statement to Elan setting forth the actual NSP (as defined in the License Agreement) for Product sold in the United States in such calendar quarter that is relevant to such Product supplied, and Acorda will owe Elan the difference between (i) the amount calculated by reference to eight per cent (8%) of such actual NSP and the amount of such Product supplied by Elan in such calendar quarter, which shall be the “Supply Price,” minus (ii) the amount paid or payable pursuant to the previous sentence.  If such difference is positive, Acorda shall pay such amount concurrently with the delivery of such Statement; if such difference is negative, Elan shall credit such overpayment to Acorda against monies owed for Product subsequently supplied to Acorda pursuant to this Agreement.

For example:  If on January 1, 2012, Elan delivers 1000 units of Product for sale in the United States, upon delivery of such Product, Elan shall render an invoice to Acorda for eight per cent (8%) of the then-applicable Notional NSP for the United States of $570.45 for a total amount of $45,636 (8% x $570.45 x 1000).  Acorda shall pay this invoice on or before January 31, 2012.  On or before May 15, 2012, Acorda shall provide a Statement to Elan setting forth the actual NSP of $610 for Product sold in the United States during the calendar quarter ending March 31, 2012.  Concurrently with the delivery of the 

Statement, Acorda shall pay to Elan $3,164 with respect to the 1000 units of Product delivered on January 1, 2012 (8% x $610 x 1000 = $48,800 - $45,636).”

c.           Article 5.6.1.3 of the License Agreement.  Article 5.6.1.3 of the License Agreement shall be deleted in its entirety and replaced with a new Article 5.6.1.3 which shall read as follows:

 

  

3

  

	
  

	
“5.6.1.3

	
In respect of the Elan Royalty, where Elan does not manufacture and supply the Product but the Product is supplied to Acorda by a third party(ies) for use (other than a use covered by other provisions of this Agreement or provisions otherwise agreed to in writing by authorized representatives of the Parties) or sale in the United States, within forty-five (45) days after the end of each calendar quarter during the term of this Agreement in which any such Product has been supplied (or, through March 2012, within sixty (60) days after the end of each such calendar quarter), pursuant to Article 5.9.1, Acorda shall provide a Statement to Elan setting forth the actual NSP for Product sold in the United States in such calendar quarter that is relevant to such Product supplied and the amount of such Product supplied by such third party(ies) in such calendar quarter.  The Statement shall also set forth a calculation of the total Elan Royalty payable to Elan for such Product supplied by such third party(ies) in such calendar quarter by reference to ten per cent (10%) of such actual NSP and the amount of such Product supplied.  Such total Elan Royalty shall be paid by Acorda to Elan within forty-five (45) days after the end of each calendar quarter during the term of this Agreement (or, through March 2012, within sixty (60) days after the end of each calendar quarter during the term of this Agreement).”

3. Product Supplied for Countries other than the United States.

a. Article 5.6.1.2.  Article 5.6.1.2 of the License Agreement shall be deleted in its entirety and replaced with a new Article 5.6.1.2 which shall read as follows:

	
  

	
“5.6.1.2

	
In respect of the Elan Royalty, where Elan manufactures and supplies the Product for sale in countries other than the United States, within forty-five (45) days after the end of each calendar quarter during the term of this Agreement in which any such Product has been sold, pursuant to Article 5.9.1, Acorda shall provide a Statement to Elan setting forth the actual NSP for Product sold in each such country in such calendar quarter that is relevant to the Product supplied by Elan, on a country-by-country basis.  The Statement shall also set forth a calculation of the total Elan Royalty payable to Elan for such Product supplied by Elan that has been actually sold during such calendar quarter by reference to ten per cent (10%) of such actual NSP and the amount of such Product sold, on a country by country basis.  Such total Elan Royalty shall be paid by or on behalf of Acorda to Elan within forty-five (45) days after the end of each calendar quarter during the term of this Agreement.

 

For example:  On January 1, 2012, Elan delivers 1000 units of Product for sale in Germany.  During the calendar quarter ending March 31, 2012 only 600 units of Product were sold; during the calendar quarter ending June 30, 2012, 300 units of Product were sold; the remaining 100 units of Product were never sold.  On or before 

  

4

  

May 15, 2012, Acorda shall provide a Statement to Elan setting forth the actual NSP of $610 for Product sold in Germany during the calendar quarter ending March 31, 2012.  On or before May 15, 2012, Acorda shall pay to Elan $36,600 with respect to the 600 units of Product sold during the calendar quarter ending March 31, 2012 (10% x $610 x 600).  On or before August 14, 2012, Acorda shall provide a Statement to Elan setting forth the actual NSP of $610 for Product sold in Germany during the calendar quarter ending June 30, 2012.  On or before August 14, 2012, Acorda shall pay to Elan $18,300 with respect to the 300 units of Product sold during the calendar quarter ending June 30, 2012 (10% x $610 x300).  Elan shall receive no Elan Royalty for the 100 units of Product that were never sold.”

b. Article 9.3.3(b) of the Supply Agreement.  Article 9.3.3 of the Supply Agreement shall be deleted in its entirety and replaced with new Articles 9.3.3(a), 9.3.3(b) and 9.3.3(c).  Article 9.3.3(b) shall read as follows:

	
  

	
“9.3.3

	
(b)

	
Upon supply to Acorda of Product for use (other than a use covered by other provisions of this Agreement or provisions otherwise agreed to in writing by authorized representatives of the Parties) or sale in countries other than the United States, Elan shall render an invoice in respect of the quantities of Product delivered to Acorda for a sum calculated by reference to eight per cent (8%) of the then-applicable Notional NSP for each of the countries other than the United States for which such Product was supplied.  Acorda shall pay such invoice within thirty (30) days of the date of such invoice (or, through July 2013, within sixty (60) days of the date of such invoice).  Within forty-five (45) days after the end of each calendar quarter during the term of this Agreement in which Elan has supplied Product pursuant to this Article 9.3.3(b), Acorda shall provide a Statement to Elan setting forth the actual NSP for Product sold in each of the countries other than the United States in such calendar quarter that is relevant to such Product supplied, on a country by country basis, and Acorda will owe Elan the difference between (i) the amount calculated by reference to eight per cent (8%) of such actual NSP and the amount of such Product supplied by Elan in such calendar quarter, on a country by country basis, which shall be the “Supply Price,” minus (ii) the amount paid or payable pursuant to the previous sentence.  If such difference is positive, Acorda shall pay such amount concurrently with the delivery of such Statement; if such difference is negative, Elan shall credit such overpayment to Acorda against monies owed for Product subsequently supplied to Acorda pursuant to this Agreement.

 

For example:  If on January 1, 2012, Elan delivers 1000 units of Product for sale in Germany, upon delivery of such Product, Elan shall render an invoice to Acorda for eight per cent (8%) of the then-applicable Notional NSP for countries other than the United States of $570.45 for a total amount of $45,636 (8% x $570.45 x 1000).  Acorda shall pay this invoice on or before March 1, 2012.  On or before May 15, 2012, Acorda shall provide a Statement to Elan setting forth the actual NSP of $610 for Product sold in

 

  

5

  

Germany during the calendar quarter ending March 31, 2012.  Concurrently with the delivery of the Statement, Acorda shall pay to Elan $3,164 with respect to the 1000 units of Product delivered on January 1, 2012 (8% x $610 x 1000 = $48,800 - $45,636).”

c.           Article 5.6.1.4 of the License Agreement.  A new Article 5.6.1.4 shall be added to the License Agreement which shall read as follows:

	
  

	
“5.6.1.4

	
In respect of the Elan Royalty, where Elan does not manufacture and supply the Product but the Product is supplied to Acorda or its Designee by a third party(ies) for sale in countries other than the United States, within forty-five (45) days after the end of each calendar quarter during the term of this Agreement in which any such Product has been sold (or, through July 2013, within sixty (60) days after the end of each such calendar quarter), pursuant to Article 5.9.1, Acorda shall provide a Statement to Elan setting forth the actual NSP for Product sold in each of the countries other than the United States in such calendar quarter that is relevant to the Product supplied by such third party(ies), on a country by country basis.  The Statement shall also set forth a calculation of the total Elan Royalty payable to Elan for such Product supplied by such third party(ies) that has been actually sold during such calendar quarter by reference to ten per cent (10%) of such actual NSP and the amount of such Product sold, on a country by country basis.  Such total Elan Royalty shall be paid by or on behalf of Acorda to Elan within forty-five (45) days after the end of each calendar quarter during the term of this Agreement (or, through July 2013, within sixty (60) days after the end of each calendar quarter during the term of this Agreement).”

4. Article 5.6.1.5 of the License Agreement.  A new Article 5.6.1.5 shall be added to the License Agreement which shall read as follows:

	
  

	
“5.6.1.5

	
The Parties agree that all examples in this Article 5.6.1 are for illustrative purposes only and are not intended to describe all the possible scenarios with respect to payments under Article 5.6.1 nor are they intended to modify the terms of this Agreement nor is the use of a particular dollar amount for NSP in multiple countries or multiple calendar quarters intended to imply that NSP would not vary between countries and/or between calendar quarters, and Article 5.6.1 shall not be deemed to supersede any provisions of this Agreement that provide for a lower Elan Royalty.”

 

5. Article 9.3.3(c) of the Supply Agreement.  Article 9.3.3 of the Supply Agreement shall be deleted in its entirety and replaced with new Articles 9.3.3(a), 9.3.3(b) and 9.3.3(c).  Article 9.3.3(c) shall read as follows:

 

	 	
“9.3.3

	
(c)

	
The Parties agree that all examples in this Article 9.3.3 are for illustrative purposes only and are not intended to describe all the possible 

 

  

6

  

	
  

	
 

	
 

	
scenarios with respect to payments under Article 9.3.3 nor are they intended to modify the terms of this Agreement nor is the use of a particular dollar amount for NSP in multiple countries or multiple calendar quarters intended to imply that NSP would not vary between countries and/or between calendar quarters, and Article 9.3.3 shall not be deemed to supersede any provisions of this Agreement that provide for a lower Supply Price.”

6. Determination of Notional NSP and NSP.  Notional NSP and NSP will be determined based on the sales of Product by Acorda or its Designee to a third party that is not an Affiliate of Acorda or affiliated with its Designee; sales between Acorda and its Designee will also be disregarded.

7. Previous Payments.  The provisions of Sections 1 through 6 and Section 8 of this Amendment No. 3 shall apply to Product manufactured and supplied prior to, on or after the date of this Amendment No. 3, and, notwithstanding Article 5.8 of the License Agreement, any amounts paid to Alkermes pursuant to the Agreements prior to the date of this Amendment No. 3 with respect to any Product manufactured and supplied shall be credited to the amounts due under the Agreements, as modified by this Amendment No. 3.

8. Article 9.6 of the Supply Agreement.  The first two paragraphs of Article 9.6 of the Supply Agreement shall be deleted in their entirety.

9. Notional NSP.  Effective December 31, 2012, the Notional NSP definition in the License Agreement is hereby deleted in its entirety and replaced with a new definition which shall read as follows:

“‘Notional NSP’ shall mean the estimated NSP of Product at the applicable time, which shall be provided by Acorda to Elan for both (i) the United States and (ii) all countries other than the United States, in each case, within ninety (90) days prior to commencement of each calendar year during the term of this Agreement.

Unless otherwise agreed in writing by the Parties, the applicable Notional NSPs shall be calculated by reference to (i) the average NSP in the United States and (ii) the weighted average NSP (by sales volume) in all countries other than the United States, in each case as evidenced by the last four (4) Statements delivered to Elan pursuant to Article 5.9.1.”

 

10. Notices.  The addresses for notices to Acorda and Alkermes pursuant to Article 12.12.1 of the License Agreement and Article 14.12.1 of the Supply Agreement shall be as follows:

If to Accorda:

Acorda Therapeutics, Inc.

420 Saw Mill River Road

 

  

7

  

Ardsley, New York 10502

United States of America

Attention: Chief Executive Officer

Fax: +1-914-606-9572

With a copy to

Attention: General Counsel

at the same address

Fax: +1-914-606-9737

If to Alkermes:

Alkermes Pharma Ireland Limited

Connaught House

1 Burlington Road

Dublin 4, Ireland

Fax: +353 1 772 8001

Attention: Secretary

With a copy to:

Attention:  Vice President, Alliance Management

at the same address

Fax: +353 1 772 8001

11. No Other Amendments.  Except as expressly set out in this Amendment No. 3, all terms and conditions of the Agreements remain unchanged and continue to be in full force and effect.

12. Counterparts and Facsimile Signatures.  This Amendment No. 3 may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.  Signatures provided by facsimile transmission or in AdobeTM Portable Document Format (PDF) sent by electronic mail shall be deemed to be original signatures.

13. Modification.  This Amendment No. 3 may not be modified unless such modification is made in writing, references this Amendment No. 3 and is signed by the Parties by their respective officers thereunto duly authorized.

 

14. Governing Law.  This Amendment No. 3 shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflicts of laws principles.

15. Severability.  If, under applicable law, any provision of this Amendment No. 3 is determined to be invalid or unenforceable, or otherwise directly or indirectly affects the validity of any other material provision(s) of this Amendment No. 3 (“Severed Clause”), the Parties

 

  

8

  

mutually agree that this Amendment No. 3 shall endure except for the Severed Clause.  The Parties shall consult and use commercially reasonable efforts to agree upon a valid and enforceable provision that shall be a reasonable substitute for such Severed Clause in light of the intent of this Amendment No. 3.

 

[Remainder of Page Intentionally Left Blank]

  

9

  

 

By its signature below, Acorda acknowledges its agreement with the provisions of this Amendment No. 3.  Please sign below to acknowledge Alkermes’ agreement with the provisions of this Amendment No. 3 and return a copy to my attention.

Sincerely,

Acorda Therapeutics, Inc.

By: /s/ Ron Cohen, M.D.

       Ron Cohen, M.D.

       President & CEO

Acknowledged and Agreed on behalf of Alkermes Pharma Ireland Limited:

 

 

By: /s/Peter Thornton

Name:  Peter Thornton

Title:  Director

  

10

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