Document:

efc12-681_ex103.htm

Exhibit 10.3

 

	 

 

 

 

 

 

 

MERCEDES-BENZ FINANCIAL SERVICES USA LLC,

as Seller,

 

and

 

DAIMLER RETAIL RECEIVABLES LLC,

as Purchaser

 

 

 

 

 

 

RECEIVABLES PURCHASE AGREEMENT

Dated as of September 1, 2012

 

 

 

 

 

 

 

	 

 

 

 

 

 

  

  

  

TABLE OF CONTENTS

 

Page

 

	
ARTICLE ONE

 

DEFINITIONS

	  	  
	
Section 1.01. Capitalized Terms; Rules of Usage

	
1

	  	  
	
ARTICLE TWO

 

CONVEYANCE OF RECEIVABLES

	  	  
	
Section 2.01. Sale and Conveyance of Receivables

	
2

	
Section 2.02. Receivables Purchase Price; Payments on the Receivables

	
3

	
Section 2.03. Transfer of Receivables

	
3

	
Section 2.04. Examination of Receivable Files

	
4

	  	  
	
ARTICLE THREE

 

REPRESENTATIONS AND WARRANTIES

	  	  
	
Section 3.01. Representations and Warranties of the Purchaser

	
5

	
Section 3.02. Representations and Warranties of the Seller

	
6

	
Section 3.03. Representations and Warranties as to the Receivables

	
7

	
Section 3.04. Representations and Warranties as to Security Interests

	
8

	  	  
	
ARTICLE FOUR

 

CONDITIONS

	  	  
	
Section 4.01. Conditions to Obligation of the Purchaser

	
10

	
Section 4.02. Conditions to Obligation of the Seller

	
10

	  	  
	
ARTICLE FIVE

 

COVENANTS OF THE SELLER

	  	  
	
Section 5.01. Protection of Right, Title and Interest in, to and Under the Receivables

	
11

	
Section 5.02. Security Interests

	
12

	
Section 5.03. Delivery of Payments

	
12

	
Section 5.04. No Impairment

	
12

	
Section 5.05. Costs and Expenses

	
13

	
Section 5.06. Sale

	
13

	
Section 5.07. Hold Harmless

	
13

 

 

 

 

  

i

  

 

Page

 

	  	  
	
ARTICLE SIX

 

MISCELLANEOUS PROVISIONS

	  	  
	
Section 6.01. Amendment

	
14

	
Section 6.02. Termination

	
14

	
Section 6.03. GOVERNING LAW

	
14

	
Section 6.04. Notices

	
14

	
Section 6.05. Severability

	
15

	
Section 6.06. Further Assurances

	
15

	
Section 6.07. Waivers

	
15

	
Section 6.08. Counterparts

	
15

	
Section 6.09. Successors and Assigns

	
15

	
Section 6.10. Table of Contents and Headings

	
16

	
Section 6.11. Representations, Warranties and Agreements to Survive

	
16

	
Section 6.12. No Petition

	
16

	  	  
	
SCHEDULES

	  	  
	
Schedule A – Schedule of Receivables

	
SA-1

	
Schedule B – Location of Receivable Files

	
SB-1

	  	  
	
EXHIBITS

	  	  
	
Exhibit A – Representations and Warranties as to the Receivables

	
A-1

	
Exhibit B – Form of First-Tier Assignment

	
B-1

 

 

 

 

  

ii  

  

This RECEIVABLES PURCHASE AGREEMENT, dated as of September 1, 2012 (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), is between MERCEDES-BENZ FINANCIAL SERVICES USA LLC, a Delaware limited liability company (“MBFS USA”), as seller (the “Seller”), and DAIMLER RETAIL RECEIVABLES LLC, a Delaware limited liability company (“Daimler Retail Receivables”), as purchaser (the “Purchaser”).

 

WHEREAS, in the regular course of its business, the Seller purchases and originates motor vehicle installment sales contracts and installment loans secured by new and pre-owned motor vehicles (the “Receivables”);

 

WHEREAS, the Seller intends to convey all of its right, title and interest in and to certain Receivables to the Purchaser, and the Purchaser shall convey all of its right, title and interest in and to the Receivables to Mercedes-Benz Auto Receivables Trust 2012-1 (the “Issuer”) pursuant to the sale and servicing agreement, dated as of September 1, 2012 (the “Sale and Servicing Agreement”), among the Issuer, Daimler Retail Receivables and MBFS USA; and

 

WHEREAS, the parties hereto wish to set forth the terms pursuant to which the Receivables are to be sold by the Seller to the Purchaser.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

 

 

ARTICLE ONE

DEFINITIONS

 

Section 1.01. Capitalized Terms; Rules of Usage.  Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in Appendix A to the Sale and Servicing Agreement, which Appendix is hereby incorporated into and made a part of this Agreement.  Appendix A also contains rules as to usage applicable to this Agreement.

 

 

 

 

  

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ARTICLE TWO

CONVEYANCE OF RECEIVABLES

 

Section 2.01. Sale and Conveyance of Receivables.  On the Closing Date, subject to the terms and conditions of this Agreement, the Seller agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Seller, the Receivables, and the other property relating thereto (as described below).

 

(a)   Subject to satisfaction of the conditions set forth in Section 4.01, on the Closing Date, and simultaneously with the transactions to be consummated pursuant to the Indenture, the Sale and Servicing Agreement and the Trust Agreement, the Seller shall, pursuant to the First-Tier Assignment, sell, transfer, assign and otherwise convey to the Purchaser, and the Purchaser shall purchase from the Seller, without recourse (subject to the Seller’s obligations hereunder), all of the right, title and interest of the Seller in, to and under, whether now owned or existing or hereafter acquired or arising, the following:

 

(i) the Receivables and all amounts due and collected on or in respect of the Receivables after the Cutoff Date;

 

(ii) the security interests in the Financed Vehicles granted by the Obligors pursuant to the Receivables and any other interest of the Seller in such Financed Vehicles;

 

(iii) all proceeds from claims on any physical damage or theft insurance policies and extended warranties covering the Financed Vehicles and any proceeds of any credit life or credit disability insurance policies relating to the Receivables, the related Financed Vehicles or the related Obligors;

 

(iv) the Receivable Files that relate to the Receivables;

 

(v) any proceeds of Dealer Recourse that relate to the Receivables;

 

(vi) the right to realize upon any property (including the right to receive future Net Liquidation Proceeds and Recoveries) that shall have secured a Receivable and have been repossessed by or on behalf of the Seller; and

 

(vii) all present and future claims, demands, causes of action and choses in action in respect of any or all of the foregoing, and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion thereof, voluntary or involuntary, into cash or other liquid property, all accounts, accounts receivable, general intangibles, chattel paper, documents, money, investment property, deposit accounts, letters of credit, letter of credit rights, insurance proceeds, condemnation awards, notes, drafts, acceptances, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing.

 

  

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(b)   In connection with the foregoing conveyance, the Seller further agrees, at its own expense, to, on or prior to the Closing Date, (i) annotate and indicate in its books, records and computer files that the Receivables have been sold and transferred to the Purchaser pursuant to this Agreement, (ii) deliver to the Purchaser a computer file or printed or microfiche list of the Schedule of Receivables containing a true and complete list of the Receivables, identified by account number and by the Principal Balance as of the Cutoff Date, which file or list shall be marked as Schedule A and is hereby incorporated into and made a part of this Agreement and (iii) deliver or cause to be delivered the Receivable Files to or upon the order of the Purchaser.

 

(c)   The parties hereto intend that the conveyance of Receivables and related property hereunder be a sale and not a loan.  In the event that the conveyance hereunder is for any reason not considered a sale, including in the event of an insolvency Proceeding with respect to the Seller or any of the Seller’s properties, the Seller hereby grants to the Purchaser a first priority security interest in all of the Seller’s right, title and interest in, to and under the Receivables, and all other property conveyed hereunder and all proceeds of the foregoing.  The parties intend that this Agreement constitute a security agreement under Applicable Law.  Such grant is made to secure the payment of all amounts payable hereunder, including the Receivables Purchase Price.  If such conveyance is for any reason considered to be a loan and not a sale, the Seller consents to the Purchaser transferring such security interest in favor of the Indenture Trustee to the Issuer and to the Issuer transferring the obligation secured thereby to the Indenture Trustee.

 

Section 2.02. Receivables Purchase Price; Payments on the Receivables.

 

(a)   On the Closing Date, in exchange for the Receivables and other assets described in Section 2.01(a), the Purchaser shall pay the Seller the Receivables Purchase Price which is equal to (i) $1,543,447,743.05 in immediately available funds from the sale of the Notes to the Underwriters and (ii) a capital contribution from MBFS USA to the Depositor in the amount of $107,418,298.73 (representing the fair market value of the Certificates retained by the Depositor) less (iii) the organizational, startup and transactional expenses of the Issuer, equal to $790,000.00, and the Reserve Fund Deposit.  The Purchaser, as set forth in the Sale and Servicing Agreement, shall deposit, from funds it receives from the sale of the Notes, the Reserve Fund Deposit into the Reserve Fund, which amount shall be an asset of the Issuer.  Daimler Retail Receivables shall receive, and shall be the holder of, the Certificates.

 

(b)   The Purchaser shall be entitled to, and shall convey such right to the Issuer pursuant to the Sale and Servicing Agreement, all amounts due and collected on or in respect of the Receivables received after the Cutoff Date.

 

Section 2.03. Transfer of Receivables.  Pursuant to the Sale and Servicing Agreement, the Purchaser will assign all of its right, title and interest in, to and under the Receivables and other assets described in Section 2.01(a) and its interests under this Agreement to the Issuer.  The parties hereto acknowledge that the Issuer will pledge its rights in, to and under the Receivables and other assets described in Section 2.01(a) and its interests under this Agreement to the Indenture Trustee pursuant to the Indenture.  The Purchaser shall have the right to assign its 

 

 

 

  

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interest under this Agreement as may be required to effect the purposes of the Sale and Servicing Agreement, without the consent of the Seller, and the Issuer as assignee shall succeed to the rights hereunder of the Purchaser and shall have the right to assign its interest under this Agreement to the Indenture Trustee pursuant to the Indenture.

 

Section 2.04. Examination of Receivable Files.  The Seller will make the Receivable Files available to the Purchaser or its agent for examination at the Seller’s offices or such other location as otherwise shall be agreed upon by the Purchaser and the Seller.

 

 

 

 

  

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ARTICLE THREE

REPRESENTATIONS AND WARRANTIES

 

Section 3.01. Representations and Warranties of the Purchaser.  The Purchaser hereby represents and warrants to the Seller as of the date of this Agreement and the Closing Date that:

 

(a)   Organization and Good Standing.  The Purchaser has been duly organized and is validly existing as a limited liability company under the laws of the State of Delaware, and has the power to own its assets and to transact the business in which it is currently engaged.  The Purchaser is duly authorized to transact business and has obtained all necessary licenses and approvals, and is in good standing in each jurisdiction in which the failure to so qualify or obtain such licenses or approvals would, in the reasonable judgment of the Purchaser, materially and adversely affect the performance by the Purchaser of its obligations under, or the validity or enforceability of, the Purchaser Basic Documents, the Receivables or the Securities.

 

(b)   Power and Authority.  The Purchaser has the power and authority to execute and deliver and perform its obligations under the Purchaser Basic Documents, and the execution, delivery and performance of the Purchaser Basic Documents has been duly authorized by the Purchaser.  When executed and delivered, the Purchaser Basic Documents will constitute legal, valid and binding obligations of the Purchaser enforceable in accordance with their respective terms, except as enforceability may be subject to or limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws affecting the enforcement of creditors’ rights in general, and by general principles of equity, regardless of whether considered in a Proceeding in equity or at law.

 

(c)   No Violation.  The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the certificate of formation or limited liability company agreement of the Purchaser, or any material indenture, agreement or other instrument to which the Purchaser is a party or by which it is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such material indenture, agreement or other instrument (other than pursuant to the Basic Documents); nor violate any Applicable Law or, to the best of its knowledge, any order, rule or regulation applicable to it of any Governmental Authority having jurisdiction over it or its properties, which conflict, breach, default, Lien or violation would have a material adverse effect on the performance by the Purchaser of its obligations under, or the validity or enforceability of the Purchaser Basic Documents, the Receivables or the Securities.

 

(d)   No Proceedings.  To the knowledge of the Purchaser, there are no Proceedings or investigations pending or threatened against the Purchaser before any Governmental Authority having jurisdiction over the Purchaser or its properties (i) asserting the invalidity of any Basic Document, (ii) seeking to prevent the 

 

 

 

 

  

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consummation of any of the transactions contemplated by any Basic Document, (iii) seeking any determination or ruling that would materially and adversely affect the performance by the Purchaser of its obligations under, or the validity or enforceability of, any Purchaser Basic Document or (iv) seeking any determination or ruling that would adversely affect the federal tax attributes of the Issuer or the Securities.

 

(e)   Principal Executive Office.  The chief executive office of the Purchaser is at 36455 Corporate Drive, Farmington Hills, Michigan 48331.

 

Section 3.02. Representations and Warranties of the Seller.  The Seller hereby represents and warrants to the Purchaser as of the date of this Agreement and the Closing Date, that:

 

(a)   Organization and Good Standing.  The Seller has been duly organized and is validly existing as a limited liability company under the laws of the State of Delaware, and has the power to own its assets and to transact the business in which it is currently engaged.  The Seller is duly authorized to transact business and has obtained all necessary licenses and approvals, and is in good standing in each jurisdiction in which the character of the business transacted by it or any properties owned or leased by it requires such authorization.

 

(b)   Power and Authority.  The Seller has the power and authority to execute and deliver and perform its obligations under the Seller Basic Documents, and the execution, delivery and performance of the Seller Basic Documents has been duly authorized by the Seller.  When executed and delivered, the Seller Basic Documents will constitute legal, valid and binding obligations of the Seller enforceable in accordance with their respective terms, except as enforceability may be subject to or limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws relating to or affecting the enforcement of creditors’ rights in general, and by general principles of equity, regardless of whether considered in a Proceeding in equity or at law.

 

(c)   No Violation.  The execution, delivery and performance by the Seller of this Agreement and the sale of the Receivables, the consummation of the transactions contemplated hereby and by each other Seller Basic Document and the fulfillment of the terms hereof and thereof will not conflict with, result in a breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under the certificate of formation or limited liability company agreement of the Seller, nor conflict with or violate any of the terms or provisions of, or constitute (with or without notice or lapse of time or both) a default under, any material indenture, agreement or other instrument to which it is a party or by which it shall be bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such material indenture, agreement or other instrument (other than this Agreement); nor violate any Applicable Law or, to the best of its knowledge, any order, rule or regulation applicable to it of any Governmental Authority having jurisdiction over it or its properties, which breach, default, conflict, Lien or violation would have a material adverse effect on the Seller’s earnings, business affairs or business prospects, on 

 

 

 

 

 

  

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the ability of the Seller to perform its obligations under this Agreement or on the validity or enforceability of the Seller Basic Documents, the Receivables or the Securities.

 

(d)   No Proceedings.  To the knowledge of the Seller, there are no Proceedings or investigations pending or threatened against the Seller before any Governmental Authority having jurisdiction over the Seller or its properties (i) asserting the invalidity of any Basic Document, (ii) seeking to prevent the consummation of any of the transactions contemplated by any Basic Document, (iii) seeking any determination or ruling that would materially and adversely affect the performance by the Purchaser of its obligations under, or the validity or enforceability of, any Seller Basic Document or (iv) seeking any determination or ruling that would adversely affect the federal tax attributes of the Issuer or the Securities.

 

(e)   Principal Executive Office.  The chief executive office of the Seller is at 36455 Corporate Drive, Farmington Hills, Michigan 48331.

 

(f)   No Consents.  The Seller is not required to obtain the consent of any other party or any consent, license, approval, registration, authorization, or declaration of or with any Governmental Authority in connection with the execution, delivery, performance, validity, or enforceability of this Agreement or any other Seller Basic Document that has not already been obtained.

 

(g)   Solvency.  The sale of the Receivables to the Purchaser is not being made with any intent to hinder, delay or defraud any of its creditors.  The Seller is not insolvent, nor will the Seller be made insolvent by the transfer of the Receivables, nor does the Seller anticipate any pending insolvency.

 

Section 3.03. Representations and Warranties as to the Receivables.

 

(a)   Eligibility of Receivables.  The Seller makes the representations and warranties set forth in Exhibit A with respect to the Receivables, on which the Purchaser relies in accepting the Receivables and in selling, transferring, assigning and otherwise conveying the Receivables to the Issuer under the Sale and Servicing Agreement and on which the Issuer relies in pledging the same to the Indenture Trustee pursuant to the Indenture.  Except as otherwise provided, such representations and warranties speak as of the date of execution and delivery of this Agreement and the Closing Date, but shall survive the sale, transfer, assignment and conveyance of the Receivables to the Purchaser, the subsequent sale, transfer and assignment of the Receivables by the Purchaser to the Issuer pursuant to the Sale and Servicing Agreement and the pledge of the Receivables by the Issuer to the Indenture Trustee pursuant to the Indenture.

 

(b)   Notice of Breach.  The Purchaser, the Seller, the Issuer or either Trustee, as the case may be, shall inform the other parties promptly, in writing, upon discovery of any breach of the Seller’s representations and warranties pursuant to Section 3.03(a) which materially and adversely affects the interests of the Noteholders in any Receivable.

 

(c)   Repurchase of Receivables.  In the event of a breach of any representation or warranty set forth pursuant to Section 3.03(a) (including by means of a subsequently discovered breach of any local law or ruling or regulation thereunder) which materially and adversely affects 

 

 

 

 

  

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the interests of the Purchaser, the Issuer or the Noteholders in any Receivable that shall not have been cured by the close of business on the last day of the Collection Period which includes the 30th day after the date on which the Seller becomes aware of, or receives written notice from the Servicer, the Purchaser, the Issuer or either Trustee of such breach, the Seller shall repurchase such Receivable from the Issuer as of the close of business on the last day of such Collection Period, by depositing an amount equal to the Purchase Amount into the Collection Account on the related Deposit Date.  This repurchase obligation shall apply to all representations and warranties contained in Section 3.03(a) whether or not the Seller or the Purchaser has knowledge of the breach at the time of the breach or at the time the representations and warranties were made.  In consideration of the repurchase of any such Receivable the Seller shall remit an amount equal to the Purchase Amount in respect of such Receivable to the Issuer in the manner set forth in the Sale and Servicing Agreement.  In the event that, as of the date of execution and delivery of this Agreement, any Liens shall have been filed, including Liens for work, labor or materials relating to a Financed Vehicle, that shall be prior to, or equal or coordinate with, the Lien granted by the related Receivable (whether or not the Seller has knowledge thereof), which Liens shall not have been satisfied or otherwise released in full as of the Closing Date, the Seller shall repurchase such Receivable on the terms and in the manner specified above.  Upon any such repurchase, the Purchaser shall, without further action, be deemed to transfer, assign, set-over and otherwise convey to the Seller, without recourse, representation or warranty, all the right, title and interest of the Purchaser in, to and under such repurchased Receivable, all other related assets described in Section 2.01(a) and all monies due or to become due with respect thereto and all proceeds thereof.  The Purchaser, the Issuer, the Owner Trustee and the Indenture Trustee, as applicable, shall execute such documents and instruments of transfer or assignment and take such other actions as shall reasonably be requested by the Seller to effect the conveyance of such Receivable pursuant to this Section.  The sole remedy of the Purchaser, the Issuer, the Trustees or the Noteholders with respect to a breach of the Seller’s representations and warranties pursuant to Section 3.03(a) or with respect to the existence of any such Liens shall be to require the Seller to repurchase the related Receivables pursuant to this Section.

 

Section 3.04. Representations and Warranties as to Security Interests.  The Seller represents and warrants to the Purchaser as of the Closing Date:

 

(a)   This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables in favor of the Purchaser, which security interest is prior to all other Liens, and is enforceable as such against creditors of and purchasers from the Seller.

 

(b)   The Seller has taken all steps necessary to perfect its security interest against the Obligor in the Financed Vehicles.

 

(c)   The Receivables constitute “tangible chattel paper” within the meaning of the applicable UCC.

 

(d)   The Seller owns and has good and marketable title to the Receivables free and clear of any Lien, claim or encumbrance of any Person.

 

 

 

 

  

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(e)   All original executed copies of each loan agreement or installment sales contract that constitute or evidence the Receivables have been delivered to the Servicer, as custodian for the Issuer.

 

(f)   The Seller has received a written acknowledgment from the Servicer, if MBFS USA is not the Servicer, that the Servicer is holding the loan agreements or installment sales contracts that constitute or evidence the Receivables solely on behalf and for the benefit of the Issuer.

 

(g)   Other than the security interest granted to the Purchaser pursuant to this Agreement, the Seller has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Receivables.  The Seller has not authorized the filing of and is not aware of any financing statements against the Seller that include a description of collateral covering the Receivables other than any financing statement relating to the security interest granted to the Purchaser hereunder or that has been terminated.  The Seller is not aware of any judgment or tax lien filings against the Seller.

 

(h)   None of the loan agreements or installment sales contracts that constitute or evidence the Receivables has any marks or notations indicating that it has been pledged, assigned, or otherwise conveyed to any Person other than the Purchaser.

 

Notwithstanding the foregoing, the representations and warranties set forth in this Section may not be waived.  The representations and warranties set forth in this Section will survive the termination of this Agreement until the Indenture has been discharged.

 

 

 

 

 

 

  

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ARTICLE FOUR

CONDITIONS

 

Section 4.01. Conditions to Obligation of the Purchaser.  The obligation of the Purchaser to purchase the Receivables from the Seller on the Closing Date is subject to the satisfaction of the following conditions:

 

(a)   Representations and Warranties True.  The representations and warranties of the Seller contained herein and in the other Seller Basic Documents shall be true and correct on the Closing Date with the same effect as if made on the Closing Date (except that certain representations and warranties are made as of the Cutoff Date), and the Seller shall have performed all obligations to be performed by it hereunder and under the other Seller Basic Documents on or before the Closing Date.

 

(b)   Computer Files Marked.  The Seller shall, at its own expense, on or before the Closing Date, indicate in its computer files that the Receivables have been sold to the Purchaser pursuant to this Agreement and deliver to the Purchaser an Officer’s Certificate confirming that its computer files have been marked pursuant to this subsection, and shall deliver to the Purchaser the Schedule of Receivables, certified by an authorized officer of the Seller to be true, correct and complete.

 

(c)   Execution of Basic Documents.  The Basic Documents shall have been executed and delivered by the parties thereto.

 

(d)   First-Tier Assignment.  The Purchaser shall have received the First-Tier Assignment, dated as of the Closing Date.

 

(e)   Other Transactions.  The transactions contemplated by the Basic Documents shall be consummated on the Closing Date.

 

Section 4.02. Conditions to Obligation of the Seller.  The obligation of the Seller to sell the Receivables to the Purchaser on the Closing Date is subject to the satisfaction of the following conditions:

 

(a)   Representations and Warranties True.  The representations and warranties of the Purchaser contained herein and in the other Purchaser Basic Documents shall be true and correct on the Closing Date, with the same effect as if then made, and the Purchaser shall have performed all obligations to be performed by it hereunder and under the other Purchaser Basic Documents on or before the Closing Date.

 

(b)   Payment of Receivables Purchase Price.  In consideration of the sale of the Receivables from the Seller to the Purchaser as provided in Section 2.01, on the Closing Date the Purchaser shall have paid to the Seller an aggregate amount equal to the Receivables Purchase Price.

 

 

 

 

 

  

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ARTICLE FIVE

COVENANTS OF THE SELLER

 

Section 5.01. Protection of Right, Title and Interest in, to and Under the Receivables.

 

(a)   The Seller, at its expense, shall cause this Agreement and all financing statements and continuation statements and any other necessary documents covering the Purchaser’s right, title and interest in, to and under the Receivables and other property conveyed by the Seller to the Purchaser hereunder to be promptly authorized, recorded, registered and filed, and at all times to be kept recorded, registered and filed, all in such manner and in such places as may be required by Applicable Law fully to preserve and protect the right, title and interest of the Purchaser hereunder to the Receivables and such other property.  The Seller shall deliver to the Purchaser file-stamped copies of, or filing receipts for, any document recorded, registered or filed as provided above, as soon as available following such recording, registration or filing.  The Purchaser shall cooperate fully with the Seller in connection with the obligations set forth above and will execute any and all documents reasonably required to fulfill the intent of this subsection.

 

(b)   Within 30 days after the Seller makes any change in its name, identity or organizational structure which would make any financing statement or continuation statement filed in accordance with this Agreement seriously misleading within the meaning of the UCC as in effect in the applicable State, the Seller shall give the Purchaser notice of any such change and within 30 days after such change shall authorize, execute and file such financing statements or amendments as may be necessary to continue the perfection of the Purchaser’s security interest in the Receivables and the proceeds thereof.

 

(c)   The Seller shall give the Purchaser written notice within 60 days of any relocation of any office from which the Seller keeps records concerning the Receivables or of its principal executive office or its jurisdiction of organization and whether, as a result of such relocation, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement and within 60 days after such relocation shall authorize, execute and file such financing statements or amendments as may be necessary to continue the perfection of the interest of the Purchaser in the Receivables and the proceeds thereof.  The Seller shall at all times maintain its jurisdiction of organization, its principal place of business, its chief executive office and the location of the office where the Receivable Files and any accounts and records relating to the Receivables are kept within the United States.

 

(d)   The Seller shall maintain accounts and records as to each Receivable accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Receivable.

 

(e)   The Seller shall maintain its computer systems so that, from and after the time of the transfer of the Receivables to the Purchaser pursuant to this Agreement, the Seller’s master computer records (including any back-up archives) that refer to a Receivable shall indicate 

 

 

 

 

 

  

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clearly and unambiguously that such Receivable is owned by the Purchaser (or, upon transfer of the Receivables to the Issuer, by the Issuer).  Indication of the Purchaser’s ownership of a Receivable shall be deleted from or modified on the Seller’s computer systems when, and only when, such Receivable shall have been paid in full or has been repurchased by the Seller.

 

(f)   If at any time the Seller shall propose to sell, grant a security interest in or otherwise transfer any interest in any motor vehicle installment sales contract or installment loan to any prospective purchaser, lender or other transferee, the Seller shall give to such prospective purchaser, lender or other transferee computer tapes, compact disks, records or print-outs (including any restored from back-up archives) that, if they shall refer in any manner whatsoever to any Receivable, shall indicate clearly and unambiguously that such Receivable has been sold and is owned by the Purchaser (or, upon transfer of the Receivables to the Issuer, by the Issuer), unless such Receivable has been paid in full or repurchased by the Seller.

 

(g)   The Seller shall permit the Purchaser and its agents at any time during normal business hours to inspect, audit and make copies of and abstracts from the Seller’s records regarding any Receivable, upon reasonable prior notice.

 

(h)   If the Seller has repurchased one or more Receivables from the Purchaser or the Issuer pursuant to Section 3.03(c), the Seller shall, upon request, furnish to the Purchaser, within ten Business Days, a list of all Receivables (by Receivable number) then owned by the Purchaser or the Issuer, together with a reconciliation of such list to the Schedule of Receivables.

 

Section 5.02. Security Interests.  Except for the conveyances hereunder, the Seller covenants that it will not sell, pledge, assign or transfer to any other Person, or grant, create, incur, assume or suffer to exist any Lien on any Receivable, whether now existing or hereafter created, or any interest therein; the Seller will immediately notify the Purchaser of the existence of any Lien on any Receivable and, in the event that the interests of the Noteholders in such Receivable are materially and adversely affected, such Receivable shall be repurchased from the Purchaser by the Seller in the manner and with the effect specified in Section 3.03(c), and the Seller shall defend the right, title and interest of the Purchaser and its assigns in, to and under the Receivables, whether now existing or hereafter created, against all claims of third parties claiming through or under the Seller; provided, however, that nothing in this subsection shall prevent or be deemed to prohibit the Seller from suffering to exist upon a Receivable any Lien for municipal or other local taxes if such taxes shall not at the time be due and payable or if the Seller shall currently be contesting the validity of such taxes in good faith by appropriate Proceedings and shall have set aside on its books adequate reserves with respect thereto.

 

Section 5.03. Delivery of Payments.  The Seller covenants and agrees to deliver in kind upon receipt to the Servicer under the Sale and Servicing Agreement all payments received by or on behalf of the Seller in respect of the Receivables as soon as practicable after receipt thereof by the Seller.

 

Section 5.04. No Impairment.  The Seller covenants that it shall take no action, nor omit to take any action, which would impair the rights of the Purchaser, the Issuer or the Noteholders in any Receivable, nor shall it, except as otherwise provided in this Agreement or the Sale and Servicing Agreement, reschedule, revise or defer payments due on any Receivable.

 

 

 

 

  

12

  

Section 5.05. Costs and Expenses.  The Seller shall pay all reasonable costs and expenses incurred in connection with the perfection of the Purchaser’s right, title and interest in, to and under the Receivables.

 

Section 5.06. Sale.  The Seller agrees to treat the conveyances hereunder for all purposes (including financial accounting purposes) as an absolute transfer on all relevant books, records, financial statements and related documents.

 

Section 5.07. Hold Harmless.  The Seller shall protect, defend, indemnify and hold the Purchaser and the Issuer and their respective assigns and their attorneys, accountants, employees, officers and directors harmless from and against all losses, costs, liabilities, claims, damages and expenses of every kind and character, as incurred, resulting from or relating to or arising out of (i) the inaccuracy, nonfulfillment or breach of any representation, warranty, covenant or agreement made by the Seller in this Agreement, (ii) any legal action, including any counterclaim, that has either been settled by the litigants (which settlement, if the Seller is not a party thereto shall be with the consent of the Seller) or has proceeded to judgment by a court of competent jurisdiction, in either case to the extent it is based upon alleged facts that, if true, would constitute a breach of any representation, warranty, covenant or agreement made by the Seller in this Agreement, (iii) any actions or omissions of the Seller or any employee or agent of the Seller occurring prior to the Closing Date with respect to any Receivable or the related Financed Vehicle or (iv) any failure of a Receivable to be originated in compliance with all requirements of law.  These indemnity obligations shall be in addition to any obligation that the Seller may otherwise have.

 

 

 

 

  

13

  

ARTICLE SIX

MISCELLANEOUS PROVISIONS

 

Section 6.01. Amendment.

 

(a)   This Agreement may be amended from time to time by a written amendment duly executed and delivered by the parties hereto without the consent of any Securityholder to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein or to add any other provision with respect to matters or questions arising under this Agreement which shall not be inconsistent with the provisions of this Agreement or the Sale and Servicing Agreement; provided, however, that any such amendment shall not, as evidenced by (i) an Opinion of Counsel to the Seller delivered to the Indenture Trustee or (ii) a letter from each Rating Agency to the effect that the amendment would not result in a qualification, downgrading or withdrawal of its then-current rating of any Class of Notes, adversely affect in any material respect the interests of any Noteholder.

 

This Agreement may also be amended from time to time for any other purpose by a written amendment duly executed and delivered by the Seller and by the Purchaser with the consent of the Indenture Trustee and the Holders of Notes evidencing not less than 662⁄3% of the Note Balance of the Controlling Class of Notes (or if the Notes are no longer Outstanding, Holders of Certificates evidencing not less than 51% of the aggregate Certificate Percentage Interests); provided, however, that no such amendment may reduce the percentage of the aggregate principal amount of the Notes of the Controlling Class the consent of the Holders of which is required for any amendment to this Agreement without the consent of all Holders of Notes then outstanding.

 

Promptly after the execution of any such amendment, the Seller shall furnish written notification of the substance of such amendment to the Trustees and the Rating Agencies.

 

Section 6.02. Termination.  The respective obligations and responsibilities of the Seller and the Purchaser created hereby shall terminate, except for the indemnity obligations of the Seller as provided herein, upon the termination of the Issuer as provided in the Trust Agreement.

 

Section 6.03. GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Section 6.04. Notices.  Unless otherwise specified in this Agreement, all notices, requests, demands, consents, waivers or other communications to or from the parties to this Agreement will be in writing.  Notices, requests, demands, consents and other communications will be deemed to have been given and made, (i) upon delivery or, in the case of a letter mailed via registered first class mail, postage prepaid, three days after deposit in the mail and (ii) in the 

 

 

 

 

  

14

  

case of (a) a facsimile, when receipt is confirmed by telephone or by reply e-mail or reply facsimile from the recipient, (b) an e-mail, when receipt is confirmed by telephone or by reply e-mail from the recipient and (c) an electronic posting to a password-protected website, upon printed confirmation of the recipient’s access to such password-protected website, or when notification of such electronic posting is confirmed in accordance with clauses (ii)(b) through (ii)(c) above.  Unless otherwise specified in this Agreement, any such notice, request, demand, consent or other communication will be delivered or addressed, in the case of (i) the Seller, at Mercedes-Benz Financial Services USA LLC, 36455 Corporate Drive, Farmington Hills, Michigan 48331, Facsimile: (248) 991-6962, Attention: Steven C. Poling (steven.c.poling@daimler.com), (ii) the Purchaser, at Daimler Retail Receivables LLC, c/o Mercedes-Benz Financial Services USA LLC, 36455 Corporate Drive, Farmington Hills, Michigan 48331, Facsimile: (248) 991-6962, Attention: Michelle D. Spreitzer (michelle.d.spreitzer@daimler.com) and (iii) as to each of the foregoing, at such other address as shall be designated by written notice to the other party.

 

Section 6.05. Severability.  If any one or more of the covenants, agreements, provisions or terms of this Agreement is held invalid, illegal or unenforceable, then such covenants, agreements, provisions or terms will be deemed severable from the remaining covenants, agreements, provisions and terms of this Agreement and will in no way affect the validity, legality or enforceability of the other covenants, agreements, provisions and terms of this Agreement or of the Receivables or the rights of the holders thereof.

 

Section 6.06. Further Assurances.  The Seller and the Purchaser agree to do and perform, from time to time, any and all acts and to execute any and all further instruments required or reasonably requested by the other party hereto or by the Issuer or the Indenture Trustee more fully to effect the purposes of this Agreement, including the execution of any financing statements, amendments, continuation statements or releases relating to the Receivables for filing under the provisions of the UCC or other law of any applicable jurisdiction.

 

Section 6.07. Waivers.  No failure or delay on the part of the Seller or the Purchaser in exercising any power, right or remedy under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any such power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy.

 

Section 6.08. Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be an original, and all of which will together constitute one and the same instrument.

 

Section 6.09. Successors and Assigns.  All covenants and agreements contained herein will be binding upon, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns, all as provided in this Agreement.  Any request, notice, direction, consent, waiver or other instrument or action by a party to this Agreement will bind the successors and assigns of such party.  Except as otherwise provided in this Agreement, no other Person will have any right or obligation under this Agreement.

 

 

 

 

  

15

  

Section 6.10. Table of Contents and Headings.  The Table of Contents and the various headings in this Agreement are included for convenience only and will not affect the meaning or interpretation of any provision of this Agreement.

 

Section 6.11. Representations, Warranties and Agreements to Survive.  The respective representations, warranties and agreements by the Seller and the Purchaser set forth in or made pursuant to this Agreement will remain in full force and effect and will survive the closing hereunder of the transactions contemplated hereby.

 

Section 6.12. No Petition.  Each of the Seller and the Purchaser covenants that it will not at any time institute against, or join any Person in instituting against, the Issuer or the Purchaser any bankruptcy, reorganization, arrangement, insolvency or liquidation Proceedings or other Proceedings under any Insolvency Law in connection with any obligations relating to the Notes or any Basic Document and agrees that it will not cooperate with or encourage others to file a bankruptcy petition against the Issuer or the Purchaser during the same period.

 

 

 

 

 

  

16

  

IN WITNESS WHEREOF, the parties hereto have caused this Receivables Purchase Agreement to be duly executed by their respective officers, thereunto duly authorized, as of the day and year first above written.

 

	 	MERCEDES-BENZ FINANCIAL SERVICES

    USA LLC,

    as Seller	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 
	 	 	 	 

 

	
 

	
By: 

	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 
	 	 	 	 

 

	 	DAIMLER RETAIL RECEIVABLES LLC,

    as Purchaser	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 
	 	 	 	 

 

	
 

	
By: 

	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 
	 	 	 	 

 

 

 

 

  

Receivables Purchase Agreement

  

SCHEDULE A

 

SCHEDULE OF RECEIVABLES

 

[Original on file at Purchaser’s office]

 

 

 

 

 

 

 

 

  

SA-1

  

SCHEDULE B

 

LOCATION OF RECEIVABLE FILES

 

Iron Mountain

1248 Avenue R

Grand Prairie, Texas  48089

DealerTrack Collateral Management Services

9750 Goethe Road

Sacramento, California  95827

 

 

 

 

 

 

 

 

  

SB-1

  

EXHIBIT A

 

REPRESENTATIONS AND WARRANTIES AS TO THE RECEIVABLES

 

See Exhibit A to Sale and Servicing Agreement

 

 

 

 

 

 

 

 

 

  

A-1

  

 

EXHIBIT B

 

FORM OF FIRST-TIER ASSIGNMENT

 

 For value received, in accordance with the receivables purchase agreement, dated as of September 1, 2012 (the “Receivables Purchase Agreement”), between MERCEDES-BENZ FINANCIAL SERVICES USA LLC (the “Seller”) and DAIMLER RETAIL RECEIVABLES LLC (the “Purchaser”), the Seller does hereby irrevocably sell, transfer, assign and otherwise convey unto the Purchaser, without recourse (subject to the obligations of the Seller herein and in the Receivables Purchase Agreement), all right, title and interest of the Seller in, to and under, whether now owned or existing or hereafter acquired or arising, the following:

 

(i)   the Receivables listed on Schedule A hereto (the “Receivables”) and all amounts due and received on or in respect of the Receivables after the Cutoff Date;

 

(ii)   the security interests in the Financed Vehicles granted by the Obligors pursuant to the Receivables and any other interest of the Seller in such Financed Vehicles;

 

(iii)   all proceeds from claims on any physical damage or theft insurance policies and extended warranties covering the Financed Vehicles and any proceeds of any credit life or credit disability insurance policies relating to the Receivables, the related Financed Vehicles or the related Obligors;

 

(iv)   the Receivable Files that relate to the Receivables;

 

(v)   any proceeds of Dealer Recourse that relate to the Receivables;

 

(vi)   the right to realize upon any property (including the right to receive future Net Liquidation Proceeds and Recoveries) that shall have secured a Receivable and have been repossessed by or on behalf of the Seller; and

 

(vii)   all present and future claims, demands, causes of action and choses in action in respect of any or all of the foregoing, and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion thereof, voluntary or involuntary, into cash or other liquid property, all accounts, accounts receivable, general intangibles, chattel paper, documents, money, investment property, deposit accounts, letters of credit, letter of credit rights, insurance proceeds, condemnation awards, notes, drafts, acceptances, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing.

 

In the event that the foregoing sale, transfer, assignment and conveyance is deemed to be a pledge, the Seller hereby grants to the Purchaser a first priority security interest in all of the Seller’s right to and interest in the Receivables and other property described in clauses (i) through (vii) above to secure a loan deemed to have been made by the Purchaser to the Seller in 

 

 

 

 

 

  

B-1

  

an amount equal to the sum of the initial principal amount of the Notes plus accrued interest thereon.

 

THIS FIRST-TIER ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

This First-Tier Assignment is made pursuant to and upon the representations, warranties and agreements on the part of the undersigned contained in the Receivables Purchase Agreement and is to be governed by the Receivables Purchase Agreement.

 

Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in the Receivables Purchase Agreement.

 

IN WITNESS WHEREOF, the undersigned has caused this First-Tier Assignment to be duly executed as of the day and year first written above.

 

	 	MERCEDES-BENZ FINANCIAL SERVICES

    USA LLC	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 
	 	 	 	 

 

 

 

 

 

 

 

 

 

 

 B-2gentryagreement.htm

EXHIBIT 10.1

AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made as of this 13th day of September, 2012 by and between NN, Inc., a Delaware Corporation with its principal place of business in Johnson City, Tennessee (the “Company”), and Frank T. Gentry III (the “Executive”).

 

WITNESSETH:

 

WHEREAS, in recognition of the value of the Executive’s experience and expertise and desire to continue Executive's employment as Sr. Vice President and Managing Director - Metal Bearings Components of the Company, the Company and Executive previously entered into an Executive Employment Agreement (the "Prior Agreement"); and

 

WHEREAS, the parties wish to revise the Prior Agreement; 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 amended and restated 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 Prior Agreement is null and void and that the terms of their employment relationship are as follows:

 

	
1.  

	
Employment.  The Company agrees to continue to employ the Executive, and the Executive agrees to continue 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 September 13, 2012, and end on September 13, 2013 unless further extended or sooner terminated as hereinafter provided.  On September 13, 2013 and on September 13 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 6(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 6(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 6.

 

  

  

  

	
3.  

	
Position and Duties.  The Executive shall serve as the Sr. Vice President and Managing Director - Metal Bearings Components of the Company with responsibilities and authority as may from time to time be assigned by the Chief Executive Officer and/or 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 Chief Executive Officer and 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 Three Hundred Fifteen Thousand Dollars ($315,000.00) 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 continue 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.

 

  

2

  

	
5.  

	
Termination.  Except for the provisions of Paragraphs 7, 8, 9, 10, and 11, 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 6(a)(iv);

 

	
(c)  

	
Termination of Executive’s employment by Company "For Cause" as defined in Paragraph 6(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 6(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 6(a)(iii) and as provided in Paragraph 6(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 6(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.

 

	
6.  

	
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:

 

	
(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 President or 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).

 

  

3

  

	
(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
	 	 	 
	 	(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.

 

 

 

 

 

  

4

  

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.

 

	
(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:

 

  

5

  

	
(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.

 

	
(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 6(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 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.  (4) 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.

 

  

6

  

	
(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

 

	
  

	
(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 6(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 6(e) with respect to payments to Specified Employees;

 

  

7

  

	
  

	
(B)

	
a payment equal to the annual 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 6(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 6(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 6(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.

 

(iv)           Other Severance Benefits.  The Severance Benefit payable to Executive pursuant to this subparagraph 6(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 6(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) 

 

  

8

  

 

 

	 	 	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:

 

	
  

	
(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;

 

  

9

  

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.

 

	
(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.

 

  

10

  

	
  

	
(g)

	
Limit on Company Liability.  Except as expressly set forth in this Paragraph 6, 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 6.

 

	
7.  

	
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.

 

	
8.  

	
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.

 

	
9.  

	
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 

 

  

11

  

 

	 	(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.

 

	
10.  

	
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.

 

	
11.  

	
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.

 

	
  

	
(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 11(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.

 

	
12.  

	
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.

 

	
13.  

	
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.

 

  

12

  

	
14.  

	
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.

 

	
15.  

	
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:

	  	
Frank T. Gentry III

	  	  	
2000 Waters Edge Drive

	  	  	
Johnson City, TN  37604

	  	  	  

	
16.  

	
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.

 

  

13

  

	
17.  

	
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.

 

	
18.  

	
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; provided, however, nothing herein shall affect the terms of the Indemnification Agreement entered into between the Company and Executive dated July 21, 2011, which shall continue and remain in full force and effect.

 

	
19.  

	
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.

 

	
20.  

	
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.

 

	
21.  

	
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.

 

	
22.  

	
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.

 

  

14

  

	
23.  

	
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 7, 8, 9, or 11, 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.

 

	
24.  

	
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.

 

	
25.  

	
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.

 

	
26.  

	
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.

 

 

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:

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

	
Attest:

	  	  	  
	  	  	  	  
	  	  	  	
EXECUTIVE:

	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	
  Frank T. Gentry III

	  	  	  	  

  

15  

  

Schedule A

 

 

Executive's Severance Payment subsequent to a Change in Control as provided in Paragraph 6(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 median bonus available at the following bonus target percentage:  50%.

 

 

16

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