Document:

Exhibit 10.4

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of October 1, 2013, is entered into by and between Healthways, Inc., a Delaware corporation (the "Company"), and CareFirst Holdings, LLC, a Maryland limited liability company ("CF").

WHEREAS, upon the terms and subject to the conditions set forth in that certain Investment Agreement, dated as of the date hereof, by and between the Company and CF (the "Investment Agreement"), CF has purchased from the Company a convertible senior subordinated promissory note of the Company in the aggregate principal amount of $20,000,000 (the "Convertible Note") which, upon the terms and conditions set forth therein, is convertible into shares (the "Conversion Shares") of the Common Stock, par value $.001 per share, of the Company (the "Common Stock");

WHEREAS, the Investment Agreement, upon the terms and conditions set forth therein, provides CF an opportunity to earn warrants (the "Warrants") to purchase shares (the "Warrant Shares") of Common Stock based on achieving certain thresholds for the Company revenue derived from certain commercial agreements and from other commercial opportunities to which the Company is introduced by CF or certain of its affiliates; and

WHEREAS, to induce CF to enter into the Investment Agreement, the Company has agreed to grant certain registration rights on the terms and subject to the conditions set forth herein with respect to the Conversion Shares and the Warrant Shares;

NOW, THEREFORE, the parties hereto, in consideration of the foregoing, the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, hereby agree, intending to be legally bound hereby, as follows:

1.            Certain Definitions.

In addition to the other terms defined in this Agreement, the following terms shall have the following meanings:

"Business Day" means any day except Saturday, Sunday and any legal holiday or a day on which banking institutions in New York City, New York generally are authorized or required by law or other governmental actions to close.

"Commission" means the United States Securities and Exchange Commission, or such other federal agency at the time having the principal responsibility for administering the Securities Act.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor federal statute, as the same shall be in effect from time to time.  References to a particular section of the Securities Exchange Act of 1934, as amended, shall include reference to the comparable section, if any, of any such successor federal statute.

"FINRA" means the Financial Industry Regulatory Authority, Inc.

"Holders" means CF and each other Person to whom CF or any other Holder has transferred Registrable Common Shares in accordance with the terms of the Investment Agreement and who has become a party to this Agreement by executing and delivering to the Company a counterpart of this Agreement in accordance with Section 7(d), but only so long as such other Person holds Registrable Common Shares.

"Person" means an individual, a partnership (general or limited), corporation, limited liability company, joint venture, business trust, cooperative, association or other form of business organization, whether or not regarded as a legal entity under applicable law, a trust (inter vivos or testamentary), an estate, a quasi-governmental entity, a government or any agency, authority, political subdivision or other instrumentality thereof, or any other entity.

"Registrable Common Shares" means (1) any Conversion Shares issued by the Company upon conversion of the Convertible Note,  (2) any Warrant Shares issued by the Company upon exercise of the Warrants, and (3) any additional shares of Common Stock or other equity securities of the Company issued by the Company in respect of Conversion Shares or Warrant Shares described in subclause (1) or (2) after the issuance of such Conversion Shares or Warrant Shares, as applicable, in connection with a stock dividend, stock split, combination, exchange, reorganization, recapitalization or similar reclassification of the Company's securities; provided, that, as to any particular Registrable Common Shares, such securities shall cease to constitute Registrable Common Shares when: (x) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of thereunder; (y) such securities shall have been sold in satisfaction of all applicable conditions to the resale provisions of Rule 144 under the Securities Act (or any similar provision then in force); or (z) such securities shall have ceased to be issued and outstanding.

"Securities Act" means the Securities Act of 1933, as amended, or any successor federal statute, as the same shall be in effect from time to time.  References to a particular section of the Securities Act of 1933, as amended, shall include reference to the comparable section, if any, of any such successor federal statute.

"Underwritten Offering" means an underwritten offering in which securities are sold to an underwriter or underwriters, on a firm commitment basis, for reoffering to the public.

2.            Incidental or "Piggy-Back" Registration.

(a)            If, at any time that a Holder owns Registrable Common Shares, the Company proposes to file a registration statement under the Securities Act covering an Underwritten Offering of Common Stock or other equity securities of the Company (other than a registration statement on Form S-4 or S-8 or any successor thereto) for its own account or for the account of any holder or holders of Common Stock or other equity securities, then the Company shall promptly (and in any event no later than ten (10) Business Days prior to such proposed filing) give written notice of such proposed filing to each Holder, specifying the approximate date on which the Company proposes to file such registration statement and advising such Holder of its right to have any or all of the Registrable Common Shares of such Holder included among the securities to be covered thereby.  Upon the written request of any such Holder (a "Holder Request") received by the Company within five (5) Business Days after the delivery of such notice by the Company, the Company shall use commercially reasonable efforts to cause the registration statement for the Company's proposed Underwritten Offering to include those Registrable Common Shares that such Holder has requested to be registered (subject, however, to the limitations set forth in Section 2(b) and to reduction in accordance with Section 2(c) below) and to be filed and become effective under the Securities Act.

(b)            The Company shall not be required under this Section 2 to include any Registrable Common Shares of a Holder in an Underwritten Offering unless the Holder accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company and, if requested, enter into an underwriting agreement in customary form with such underwriters.  If any Holder does not agree to the terms of any such underwriting or otherwise fails to comply with the terms and conditions of this Agreement, such Holder's Registrable Common Shares shall be excluded from such Underwritten Offering.  If the managing underwriters of the Underwritten Offering shall advise the Company that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise each Holder that requested its Registrable Common Shares to be included, and the number of shares of Registrable Common Shares that may be included in the Underwritten Offering shall be allocated in accordance with Section 2(c) below.

(c)            If the managing underwriters of an Underwritten Offering give written notice to the Company that in their sole discretion the number of shares of Registrable Common Shares requested to be included in such Underwritten Offering exceeds the number which can be sold in such Underwritten Offering in an orderly manner within a price range acceptable to the Company in its discretion, the Company will include in such Underwritten Offering (i) first, the greatest number of shares of Common Stock requested to be included by the Company for its own account, (ii) second, the greatest number of shares of Registrable Common Shares requested to be included by the Holders (which shall be allocated pro rata among the Holders who have requested Registrable Common Shares to be so included based on the number, as of the date of delivery of the Holder Request, of Registrable Securities requested by the Holders to be included in the Underwritten Offering), and (iii) third, any other shares of Common Stock, including shares requested to be included by other holders of the Company's Common Stock pursuant to any applicable rights, in each case up to the greatest number of shares of Common Stock which, in the reasonable and good faith opinion of such managing underwriters, can be sold in an orderly manner in the price range of such Underwritten Offering.

(d)            The Company shall have the right to terminate or withdraw any registration pursuant to this Section 2 prior to the effectiveness of such registration or the completion of the Underwritten Offering contemplated thereby whether or not any Holder has elected to include securities in such registration and/or Underwritten Offering.

(e)            The Company shall bear all Registration Expenses (as defined below) in connection with any incidental registration pursuant to this Section 2, whether or not such incidental registration statement becomes effective.

3.            Restrictions on Public Sale.

Each Holder shall:

(a)            in the event the Company is issuing equity securities in an Underwritten Offering and if requested by the managing underwriter or underwriters for such Underwritten Offering, not effect any public sale or distribution of Registrable Common Shares or any securities convertible into or exchangeable or exercisable for such Registrable Common Shares (except for Registrable Common Shares included in such registration), including a sale pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, for a period commencing on the seventh (7th) Business Day prior to the date such Underwritten Offering commences (such Underwritten Offering being deemed to commence for this purpose on the later of the effective date for the registration statement for such Underwritten Offering or, if applicable, the date of the prospectus supplement for such Underwritten Offering) and ending 90 days after the closing of such Underwritten Offering, or such shorter period as may be permitted by the managing underwriters;

(b)            comply with Regulation M under the Exchange Act in connection with the offer and sale of Registrable Common Shares made by such Holder pursuant to any registration statement, and provide the Company with such information about such Holder's offer and sale of Registrable Common Shares pursuant to any registration statement as the Company shall reasonably request to enable the Company and its affiliates to comply with Regulation M under the Exchange Act in connection with any such offer and sale; and

(c)            furnish each broker through whom such Holder offers Registrable Common Shares such number of copies of the prospectus as such broker may require and otherwise comply with the prospectus delivery requirements under the Securities Act.

4.            Registration Procedures.

(a)            In connection with any registration contemplated by Section 2, the Company shall:

(i)            prepare and file with the Commission a registration statement, which registration statement shall (A) be available for the sale of the Registrable Common Shares in accordance with the intended method or methods of distribution by the Holders, and (B) comply as to form in all material respects with the requirements of the applicable form and include (or incorporate by reference) all financial statements required by the Commission to be filed therewith; provided, that, no later than five (5) days before filing such registration statement, the Company shall furnish to each Holder copies of such registration statement as proposed to be filed and thereafter such number of copies of such registration statement (including all exhibits thereto), and any documents incorporated by reference after the initial filing of any registration statement as the Holders may reasonably request on a case by case basis after each such filing in order to facilitate the disposition of the Registrable Common Shares owned by the Holders, and shall revise the registration statement as it specifically relates to the Holders based on information received a reasonable amount of time prior to filing from the Holders or counsel to the Holders;

(ii)            prepare and file with the Commission such amendments, post-effective amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for such period of time as is necessary to allow the distribution of the Registrable Common Shares contemplated therein and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during the period during which any such registration statement is required to be effective; provided, that, before filing any amendments or supplements to such registration statement or the prospectus, the Company shall upon request furnish to each Holder copies of such amendments and supplements (in each case including all exhibits thereto) and the prospectus (including each preliminary prospectus) as proposed to be filed and thereafter such number of copies of such amendments, supplements, prospectuses and any documents incorporated by reference after the initial filing of any registration statement as a Holder may reasonably request on a case by case basis after each such filing to the extent such documents are not otherwise publicly available in order to facilitate the disposition of the Registrable Common Shares owned by such Holder, and revise such documents as they specifically relate to the Holders based on information received a reasonable amount of time prior to filing from the Holders or counsel to the Holders;

(iii)            use commercially reasonable efforts to cause the Registrable Common Shares covered by such registration statement to be registered with, or approved by, such other public, governmental or regulatory authorities as may be necessary to facilitate the disposition of such Registrable Common Shares in accordance with the methods of disposition intended therein; provided, that Company shall not be required to (A) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (B) file any general consent to service of process in any such jurisdiction, or (C) subject itself to taxation in any such jurisdiction if it is not so subject;

(iv)            notify each Holder (A) when a prospectus or any prospectus supplement has been filed with the Commission, and, with respect to such registration statement or any post-effective amendment thereto, when the same has been declared effective by the Commission, (B) of any request by the Commission for amendments or supplements to such registration statement or related prospectus, or for additional information, (C) of the issuance by the Commission of any stop order or the initiation of any proceedings for such or a similar purpose (and the Company shall use commercially reasonable efforts to obtain the withdrawal of any such order at the earliest practicable moment), (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Registrable Common Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose (and the Company shall use its commercially reasonable efforts to obtain the withdrawal of any such suspension at the earliest practicable moment), (E) of the occurrence of any event that requires the making of any changes to such registration statement or related prospectus so that such documents will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (and the Company shall, subject to Section 6, promptly prepare and furnish to each Holder a reasonable number of copies of a supplemented or amended prospectus such that, as thereafter delivered to the purchasers of such Registrable Common Shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading), and (F) of the Company's determination that the filing of a post-effective amendment to such registration statement (other than an amendment that does nothing more substantive than add one or more holders to the "Selling Securityholders" table of such registration statement or to update any information set forth in such table) shall be necessary or appropriate.  Each Holder shall be deemed to have agreed by acquisition of Registrable Common Shares that, upon the receipt of any notice from the Company of the occurrence of any event of the kind described in clause (E) of this Section 4(a)(iv), such Holder shall forthwith discontinue such Holder's offer and disposition of Registrable Common Shares pursuant to the registration statement covering such Registrable Common Shares until such time (not to exceed 90 days from the date of initial notification) as the Company notifies such Holder otherwise.  In addition, if so directed by the Company, each Holder shall deliver to the Company, at the Company's expense, all copies (other than permanent file copies) of any defective prospectus as contemplated by clause (E) of this Section 4(a)(iv) covering such Registrable Common Shares which are then in its possession;

(v)            otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, as the same may hereafter be amended; and

(vi)            unless all Registrable Common Shares shall be registered in book-entry form, cooperate with each Holder to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Common Shares to be sold, and use commercially reasonable efforts to cause the registrar and transfer agent for the Company to issue, upon request of a Holder, certificates for such numbers of Registrable Common Shares registered in such names as such Holder may reasonably request at least two (2) Business Days prior to any sale of Registrable Common Shares.

(b)            In connection with any registration contemplated by Section 2, each Holder shall:

(i)            cooperate with the Company in connection with the preparation of the registration statement to be filed by the Company pursuant to this Agreement, and for so long as the Company is obligated to keep such  registration statement effective, shall (A) respond within five (5) Business days to any request by the Company to provide or verify information regarding such Holder or such Holder's Registrable Common Shares (including the proposed manner of sale) that may be required to be included in such registration statement pursuant to the rules and regulations of the Commission, and (B) provide in a timely manner information regarding the proposed distribution by such Holder of the Registrable Common Shares and such other information as may reasonably be requested by the Company from time to time; and

(ii)            if requested by the Company, before using any registration statement or any prospectus contained therein or any amendment or supplement thereto, deliver to the Company a certification that he or it has reviewed the information contained therein and representing and warranting to the Company that the information relating to such Holder and such Holder's plan of distribution is as set forth in the related prospectus, that the prospectus does not, as of the time of such sale, contain any untrue statement of a material fact relating to or provided by such Holder or such Holder's plan of distribution and that the prospectus does not, as of the time of such sale, omit to state any material fact relating to such Holder or such Holder's plan of distribution required to be stated in the prospectus or necessary to make the statements in such prospectus, in the light of the circumstances under which they were made, not misleading.

5.            Registration Expenses.

Whether or not any registration statement prepared and filed pursuant to Section 2 is declared effective by the Commission, the Company shall pay all of the following expenses ("Registration Expenses") arising in connection with the registration pursuant to this Agreement (except as specified in the following sentence): (a) all Commission and any FINRA registration and filing fees and expenses; (b) any and all expenses incident to the Company's performance of, or compliance with, this Agreement, including, without limitation, any allocation of salaries and expenses of Company personnel or other general overhead expenses of the Company, or other expenses for the preparation of historical and pro forma financial statements or other data prepared by the Company; (c) all listing, transfer and/or exchange agent and registrar fees; (d) fees and expenses in connection with the qualification of the Registrable Common Shares under securities or "blue sky" laws; (e) printing and delivery expenses; and (f) fees and expenses of counsel for the Company and its independent certified public accountants and other persons, including special experts, retained by the Company.  Notwithstanding the foregoing, the Company shall not be required to pay fees and expenses of counsel retained by any Holder, or any discounts, commissions or fees of selling brokers, dealers and underwriters or any stock transfer taxes relating to the distribution of the Registrable Common Shares.

6.            Indemnification; Contribution.

(a)            The Company shall indemnify and hold harmless, to the fullest extent permitted by law, each Holder and each Person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, against all losses, claims, damages, liabilities (or proceedings in respect thereof) and expenses (under the Securities Act, common law and otherwise), joint or several, which arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the registration statement contemplated hereby or in any prospectus, preliminary prospectus, any amendment or supplement thereto or any document incorporated by reference relating thereto or in any filing made in connection with the registration or qualification of the offering under "blue sky" or other securities laws of jurisdictions in which the Registrable Common Shares are offered, or any omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, if used prior to the effective date of such registration statement (unless such statement is corrected in the final prospectus, and the Company has previously furnished copies thereof to the Holder seeking such indemnification), or contained in the final prospectus (as amended or supplemented if the Company shall have filed with the Commission any amendment thereof or supplement thereto) if used within the period during which the Company is required to keep the registration statement to which such prospectus relates current, or the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and, in either case, the Company shall reimburse each Holder for any out-of-pocket legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or proceeding; provided, however, that such indemnification pursuant to the foregoing clauses (i) and (ii) shall not extend to any such losses, claims, damages, liabilities (or proceedings in respect thereof) or expenses that arise out of or are based upon any untrue statement or alleged untrue statement contained in, or by any omission or alleged omission from, information furnished in writing to the Company by such Holder in such capacity specifically and expressly for use in any such registration statement or prospectus.

(b)            Each Holder shall indemnify and hold harmless, to the fullest extent permitted by law, the Company, its officers, directors, employees, agents and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, against any losses, claims, damages, liabilities (or proceedings in respect thereof) and expenses which arise out of or are based upon any untrue statement, or alleged untrue statement of a material fact, or any omission or alleged omission of a material fact required to be stated, or necessary to make the statements in the registration statement or prospectus, or any amendment thereof or supplement thereto, not misleading; provided, however, that each Holder shall be liable hereunder if and only to the extent that any such loss, claim, damage, liability (or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement, or alleged untrue statement or omission or alleged omission, made in reliance upon and in conformity with information pertaining to such Holder furnished in writing to the Company by such Holder for use in any such registration statement or prospectus, or any amendment thereof or supplement thereto.

(c)            Any Person seeking indemnification under the provisions of this Section 6 shall, promptly after receipt by such Person of notice of the commencement of any action, suit, claim or proceeding, notify in writing each party against whom indemnification is to be sought of the commencement thereof; provided, however, that the failure so to notify an indemnifying party shall not relieve the indemnifying party from any liability which it or he may have under this Section 6 (except to the extent that it has been prejudiced in any material respect by such failure (through the forfeiture of substantive rights or defenses)) or from any liability which the indemnifying party may otherwise have. In case any such action, suit, claim or proceeding is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent it or he may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party.  

Notwithstanding the foregoing, the indemnified party shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying party in connection with the defense of such suit, action, claim or proceeding (which authorization shall not be unreasonably withheld, conditioned or delayed), (ii) the indemnifying party shall not have employed counsel (reasonably satisfactory to the indemnified party) to take charge of the defense of such action, suit, claim or proceeding within a reasonable time after notice of commencement of the action, suit, claim or proceeding, or (iii) such indemnified party shall have reasonably concluded, based on the advice of counsel, that there may be defenses available to it which are different from or additional to those available to the indemnifying party which, if the indemnifying party and the indemnified party were to be represented by the same counsel, would result in a conflict of interest for such counsel or materially prejudice the prosecution of the defenses available to such indemnified party.  If any of the events specified in clauses (i), (ii) or (iii) of the preceding sentence shall have occurred or shall otherwise be applicable, then the fees and expenses of one counsel selected by a majority in interest of the indemnified parties shall be borne by the indemnifying party.  If, in any case, the indemnified party employs separate counsel, the indemnifying party shall not have the right to direct the defense of such action, suit, claim or proceeding on behalf of the indemnified party.  Anything in this paragraph to the contrary notwithstanding, an indemnifying party shall not be liable for the settlement of any action, suit, claim or proceeding effected without its prior written consent (which consent in the case of an action, suit, claim or proceeding exclusively seeking monetary relief shall not be unreasonably withheld, conditioned or delayed). Such indemnification shall remain in full force and effect irrespective of any investigation made by or on behalf of an indemnified party.

(d)            If the indemnification from the indemnifying party provided for in paragraphs (a) or (b) of this Section 6 is unavailable to an indemnified party or is otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and indemnified parties on the other hand in connection with the actions, including statements or omissions, which resulted in such losses, claims, damages, liabilities or expenses.  The relative fault of such indemnifying party on the one hand and the indemnified party on the other hand shall be determined by reference to, among other things, whether any action in question, including any untrue (or alleged untrue) statement of a material fact or omission (or alleged omission) to state a material fact, has been made, or relates to information supplied, by such indemnifying party or such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, including statement or omission.  The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 6(d) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with any such investigation or proceeding.

The parties hereto acknowledge that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation or by any other method of allocation other than as described above.  Notwithstanding the provisions of this Section 6(d), a Holder shall not be required to contribute any aggregate amount in excess of the amount by which the total price at which the Registrable Common Shares of such Holder were sold to the public exceed the amount of any damages which such Holder otherwise would have been required to pay or become liable to pay by reason of such untrue or alleged statement or omission unless such loss, claim, damage, liability (or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement, or alleged untrue statement or omission or alleged omission, made in reliance upon and in conformity with information pertaining to such Holder furnished in writing to the Company by such Holder for use in any such registration statement or prospectus.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

(e)            If, however, the indemnification from the indemnifying party provided for in paragraphs (a) or (b) of this Section 6 is available, the indemnifying parties shall indemnify each indemnified party to the fullest extent provided in Sections 6(a) through 6(d) hereof without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration.

7.            Miscellaneous

(a)            Notices.  All notices, demands, requests, consents or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or:  (i) personal delivery to the party to be notified, (ii) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the next Business Day, in each case with electronic confirmation of receipt, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) Business Day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. If any time period for giving notice or taking action hereunder expires on a day that is not a Business Day, the time period shall automatically be extended to the Business Day immediately following such day. Such notices, demands, requests, consents and other communications shall be sent to the following Persons at the following addresses:

if to the Company:

Healthways, Inc.

701 Cool Springs Blvd.

Franklin, TN  37067

Attention: General Counsel

Fax: 615-778-0486

Email:  Mary.Flipse@healthways.com

if to a Holder:

CareFirst Holdings, LLC

1501 Clinton Street

Baltimore, Maryland 21224

Attention: Executive Vice President and General Counsel

Fax: 410-505-6654

Email:  Meryl.Burgin@CareFirst.com

(b)            Entire Agreement. This Agreement, the Investment Agreement and the other Transaction Documents (as defined in the Investment Agreement) constitute the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof, including the registration rights granted by the Company with respect to the Registrable Common Shares.  Except as provided in the Investment Agreement and the other Transaction Documents, there are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein, concerning the registration rights granted by the Company with respect to the Registrable Common Shares.

(c)            No Inconsistent Agreements. The Company is not currently a party to, and after the date hereof shall not enter into, any agreement which is inconsistent with the rights granted to the Holders of Registrable Common Shares by this Agreement; provided, however, that CF acknowledges and agrees that any grant with respect to Common Stock (or other securities of the Company that may be converted into, exercised for or otherwise settled in shares of Common Stock) by the Company of rights similar to, and ranking on no better than a pari passu basis with, the rights granted to the Holders of Registrable Common Shares by this Agreement shall not constitute a violation or breach of this Section 7(c).

 

(d)            Assignment; Successors and Assigns. The rights granted under this Agreement may be assigned (but only with all related obligations hereunder) by any Holder in connection with any transfer of such Registrable Common Shares in accordance with the terms of the Investment Agreement to any transferee who, immediately following such transfer, holds at least 5% of then-outstanding Registrable Common Shares; provided, that, as a condition to the effectiveness of such assignment, such transferee shall be required to execute a counterpart of this Agreement.  Upon such transferee's execution of such counterpart, such transferee shall be deemed to be a Holder for all purposes of this Agreement and shall be entitled to the benefits of, and shall be subject to the restrictions contained in, this Agreement, as amended from time to time, as a Holder hereunder to the same extent as if such transferee had originally been included in the definition of a Holder and had originally been a party hereto.

(e)            Binding Effect; Benefit.  This Agreement shall inure to the benefit of and be binding upon the parties hereto, any Holder and any successor, permitted assign, heir and legal representative thereof; provided, however, that, except as provided in Section 7(d), this Agreement and the provisions of this Agreement that are for the benefit of a Holder shall not be assignable by any Holder, and any such purported assignment shall be null and void.  No purchaser of Registrable Common Shares from any Holder shall be deemed to be a successor or assignee of such Holder merely by reason of such purchase.

(f)            Descriptive Headings; No Strict Construction. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. The parties to this Agreement have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. The parties agree that prior drafts of this Agreement shall be deemed not to provide any evidence as to the meaning of any provision hereof or the intention of the parties hereto with respect to this Agreement.

 

(g)            Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not render invalid or unenforceable any other provision of this Agreement.

(h)            Specific Enforcement.  The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific intent or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they may be entitled by law or equity.

(i)            Waiver.  The rights and remedies provided for herein are cumulative and not exclusive of any right or remedy that may be available to any party whether at law, in equity, or otherwise.  No delay, forbearance, or neglect by any party, whether in one or more instances, in the exercise or any right, power, privilege, or remedy hereunder or in the enforcement of any term or condition of this Agreement shall constitute or be construed as a waiver thereof.  No waiver of any provision hereof, or consent required hereunder, or any consent or departure from this Agreement, shall be valid or binding unless expressly and affirmatively made in writing and duly executed by the party to be charged with such waiver.  No waiver shall constitute or be construed as a continuing waiver or a waiver in respect of any subsequent breach, either of similar or different nature, unless expressly so stated in such writing.

 

(j)            Applicable Law.  This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

(k)            Waiver of Jury Trial.  Company and Holders hereby waive any right they may have to a trial by jury in respect of any action, proceeding or litigation directly or indirectly arising out of, under or in connection with this Agreement.

(l)            Counterparts.  This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement.  Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

[signatures page follows]

 

IN WITNESS WHEREOF, each of the parties hereto has duly executed and delivered this Registration Rights Agreement, or has caused this Registration Rights Agreement to be duly executed and delivered in their names and on their behalf, as of the date first written above.

COMPANY:

Healthways, Inc.

By:            /s/ Alfred Lumsdaine

Name:   Alfred Lumsdaine

		Title:	Executive Vice President, Chief Financial Officer

HOLDER:

CareFirst Holdings, LLC

By:              /s/ C.E. Burrell                                                                 

Name:      C.E. Burrell                                                                              

Title:          President & CEO

[Signature Page to Registration Rights Agreement]exh10-139.htm

 

EXHIBIT 10.139

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FRONT-END MANUFACTURING SUPPLY AGREEMENT

This Front-End Manufacturing Supply Agreement (the “Agreement”) is entered into as of July 31, 2013 by and between Micron Semiconductor Asia Pte. Ltd., a company with limited liability organized under the laws of Singapore, having an address of 990 Bendemeer Road, Singapore, 339942 (“Recipient”) and Elpida Memory, Inc., a corporation organized under the laws of Japan with its principal place of business at 2-1, Yaesu 2-chome, Chuo-ku, Tokyo, 104-0028, Japan (“Provider”).  Each of Recipient and Provider may be referred to individually as a “Party” and collectively as the “Parties”.

WHEREAS, Provider filed a petition for commencement of corporate reorganization proceedings with the Court under the Corporate Reorganization Act of Japan on February 27, 2012, and on March 23, 2012, the Court issued an order to commence the Reorganization Proceedings;

WHEREAS, on July 2, 2012, Micron Technology, Inc. (“MTI”), the parent company of Recipient, and the Trustees of Provider entered into the Sponsor Agreement (as hereinafter defined), which provides for, among other things, MTI’s acquisition of Provider and MTI’s support of Provider’s proposed plan of reorganization in connection with the Reorganization Proceedings;

WHEREAS, as contemplated by the Sponsor Agreement, the proposed plan of reorganization was initially submitted to the Court on August 21, 2012, the Court approved submission of the proposed plan to creditors on October 31, 2012, the creditors approved the plan on February 26, 2013 and on February 28, 2013, the Court issued an order approving the proposed plan (such plan, as so approved, and as may be amended from time to time, the “Reorganization Plan”);

WHEREAS, as of the date hereof, pursuant to the Sponsor Agreement and the Reorganization Plan, MTI has become owner of one-hundred per cent (100%) of the equity of Provider, and, as a result, Provider has become part of a multinational group of companies of which Recipient is also a member, and which group is a leading provider of semiconductor solutions;

WHEREAS, the Sponsor Agreement contemplates that promptly following the Closing Date, and subject to receipt of any required approvals from the Trustees and the Court, MTI will implement the transition of Provider’s business as promptly as practicable consistent with an orderly business transition and integration process to a cost plus model as described in Attachment 7-1 and Attachment 7-2 thereto (estimated to be completed within [*] after the Closing Date) with the goal of generating more stable operating cash flows to meet the requirements of Provider’s business, including for payment of the Installment Payment obligations under the Reorganization Plan;

  

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WHEREAS, the transition of Provider to the cost-plus model entails a number of steps including, among other things, (i) the transfer of certain intellectual property by Provider to MTI pursuant to that certain Intellectual Property Assignment Agreement, dated as of the date hereof, (ii) execution and delivery by Provider and MTI of that certain Research and Development Engineering Services Agreement, as of the date hereof, (iii) execution and delivery by Provider and Recipient of that certain General Services Agreement, as of the date hereof, (iv) execution and delivery by Provider and Recipient of a back-end manufacturing services agreement, as of the date hereof, (v) execution and delivery by Provider and Akita Elpida Memory, Inc. (“Akita”) of a back-end manufacturing services agreement, as of the date hereof, in substitution for the existing agreement between such parties, which will be terminated, and a general services agreement, as of the date hereof, (vi) execution and delivery by Akita and MTI of a research and development engineering services agreement, as of the date hereof, (vii) except as otherwise agreed by the Parties, the termination or assignment to Recipient or one of its Affiliates, effective on or prior to the Supply Commencement Date (defined below), of all of Provider’s and its subsidiaries’ other commitments for the sale of products to third parties, (viii) the sale of inventory held by Provider’s subsidiaries, wherever located, and the sale of finished goods owned by Provider and located in Japan, in each case as of the Supply Commencement Date, to MTI or MTI’s Affiliates on or promptly following the Supply Commencement Date under separate agreements, (ix) the consolidation of Provider’s sales and marketing subsidiaries, including Provider’s U.S. subsidiary, with MTI’s global operations through merger, consolidation or transfer of all or substantially all their respective assets, as the case may be, (x) the transfer of all or substantially all of the assets and liabilities of Semiconductor Patent Corporation to Provider prior to the IP Transfer Date (as defined in the R&D Services Agreement) and (xi) execution and delivery by Provider and Recipient of this Agreement;

WHEREAS, Recipient desires to commit to purchase every month, and Provider desires to sell to Recipient every month, all Products manufactured by Provider, on the terms and conditions set forth herein commencing on the Supply Commencement Date; and

WHEREAS, Provider possesses the requisite experience, personnel and facilities to provide the Products to Recipient and is willing to provide such Products to Recipient on the terms set forth herein;

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the Parties, the Parties covenant and agree as follows:

1 – DEFINITIONS AND INTERPRETATION

1.1           DEFINITIONS

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

1.1.1           “Affiliate” means, with respect to any specified Person, any other Person that directly or indirectly, including through one or more intermediaries, controls or is controlled by, or is under common control, with such specified Person.

  

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1.1.2           “Agreement” means this Agreement, including any and all Annexes, Appendices or Exhibits hereto, and as amended from time to time.

1.1.3           “Arm’s Length Profit Percentage” means such appropriate mark-up as mutually agreed upon from time-to-time by the Parties in writing (electronic, facsimile or otherwise) in accordance with arm’s length principles and the most recent transfer pricing comparable analysis obtained by Recipient, and in a manner consistent and in accordance with the Sponsor Agreement.  Factors to be considered in determining the Arm’s Length Profit Percentage shall include overall market conditions, the profitability of comparable independent enterprises engaged in comparable transactions and the functions performed, risks assumed, and assets utilized by each Party, respectively.  The Parties agree that the initial Arm’s Length Profit Percentage as of the Supply Commencement Date will be set by Recipient based on and consistent with a recent transfer pricing comparable analysis obtained by Recipient and shall be at least [*]%.  Any subsequent adjustments to the Arm’s Length Profit Percentage will be made in accordance with Sections 2.2.3 and 2.2.4.

1.1.4           “Force Majeure Event” means any act of God, fire, flood, earthquake, tsunami, accident, riot, war, act of terrorism, act of government, embargo, or other significant difficulty which significant difficulty is beyond the reasonable control and without the fault or negligence of the applicable Party that, in the case of Provider, materially and adversely affects (a) Provider’s manufacturing operations or the products produced by Provider, in each case, taken as a whole, or (b) the supply of products by Provider to Recipient, taken as a whole, or, in the case of Recipient, causes Recipient to be unable to perform its obligations under this Agreement.  For purposes of this definition, the Parties agree that fluctuations in currency exchange rates or in DRAM prices, strike, lockout or other labor dispute, or general deterioration in the economy or in the economic conditions prevalent in the semiconductor memory industry shall not constitute a “difficulty which is beyond the reasonable control” of the applicable Party.

1.1.5           “General Services Agreement” means that certain General Services Agreement executed and delivered by Provider and Recipient as of the date hereof, as the same may be amended from time to time.

1.1.6           “Initial Products” means any wafers and components (finished or unfinished) owned by Provider as of the Supply Commencement Date that are located as of such date outside Japan.

1.1.7           “Intellectual Property Rights” means any or all of the following and all rights in, arising out of, or associated therewith: (i) any and all U.S. and foreign patents issued by the patent-granting authority in any country in the world, together with any and all reissues, divisionals, renewals, extensions, provisionals, continuations, continuations-in-part, reexaminations, post-grant reviews, foreign counterparts or equivalents of any of the foregoing, wherever and whenever existing; (ii) all inventions, developments, discoveries, improvements, trade secrets, proprietary information, know-how, technology, software, technical data, and all documentation embodying or evidencing any of the foregoing; (iii) copyrights (including the rights under Articles 27 and 28 of the Japanese Copyright Act), copyright registrations and applications therefor and all other rights corresponding thereto throughout the world; (iv) mask

  

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works, mask work registrations and applications therefor, and any equivalent or similar rights in semiconductor masks, layouts, architectures or topology; (v) industrial designs and any registrations and applications therefor throughout the world; (vi) all rights in databases and data collections throughout the world; and (vii) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.

1.1.8           “Licensed Products” shall mean all apparatuses, devices and products of whatever kind or nature.

1.1.9           “Manufacturing Costs” means, when used with respect to any Products, all of Provider’s costs of goods sold as determined based on Japanese statutory accounting principles and in accordance with Provider’s internal accounting policies and procedures, attributable to such Products.  Such costs shall (a) include the costs described in Section 2 of Exhibit A of Attachment 7-1 of the Sponsor Agreement, and (b) exclude Reimbursable Costs (as defined below).

1.1.10           “Manufacturing Supply” means the procurement, manufacturing, processing, sorting and conversion of materials into Products and the related packaging and delivery of such Products.

1.1.11           “Manufacturing Supply Fee” means the fee to be paid by Recipient to Provider in accordance with Section 2.2.

1.1.12           “Manufacturing Supply Fee Offsets” means, as of any applicable date, the sum of (a) revenue from the sale of Scrap materials in connection with the Manufacturing Supply and (b) gains or losses from the sale or disposal of fixed assets incurred by Provider in connection with the Manufacturing Supply, in each case, received or recognized after the date of this Agreement, to the extent not previously applied in reduction of the Manufacturing Supply Fee, and only to the extent such amounts are not included as R&D Service Fee Offsets (as such term is defined in the R&D Services Agreement) or as General Services Fee Offsets (as defined in the General Services Agreement).

1.1.13           “Person” means any natural person, corporation, joint stock company, limited liability company, association, partnership, firm, joint venture, organization, business, trust, estate or any other entity or organization of any kind or character.

1.1.14           “Products” means (i) any wafers manufactured by Provider and any components manufactured by Provider from wafers manufactured by Provider, in each case after the Supply Commencement Date that are completed in accordance with Orders (defined below)  as specified by Recipient and (ii) Initial Products.

1.1.15           “Product Supplies” means all materials and other components necessary for the manufacture of the Products.

  

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1.1.16           “R&D Services Agreement” means that certain Research and Development Engineering Services Agreement executed and delivered by Provider and MTI as of the date hereof, as the same may be amended from time to time.

1.1.17           “Reimbursable Costs” means (i) all subcontracting costs for back-end manufacturing services and (ii) all damages paid by Provider arising under or relating to its performance or breach of obligations hereunder.

1.1.18           “Scrap” means all scrap, broken wafers/parts and other remnants resulting from the provision of the Manufacturing Supply.

1.1.19           [Reserved].

1.1.20           “Specifications” means Recipient’s reasonable written specifications, standards and criteria relating to the Products or their manufacture, as communicated by Recipient to Provider in writing from time to time.

1.1.21           “Sponsor Agreement” means that Agreement on Support of Reorganization Companies by and between MTI and Nobuaki Kobayashi and Yukio Sakamoto as trustees of the Reorganization Company (as defined therein) and the Akita Reorganization Company (as defined therein), dated July 2, 2012, as amended through the date hereof, and as may be further amended from time to time in accordance with its terms.

1.1.22           “Supply Commencement Date” means the first date on which both: (i) the manufacturing, sales and other operational computing systems in use at Provider as of the date of this Agreement have been converted to MTI’s Enterprise Resources Planning System, as reasonably determined by MTI (such conversion estimated to be completed within [*] after the Closing Date); and (ii) all required approvals from the Trustees and the Court for the transition to the cost-plus model and related integration actions have been obtained (or receipt of such approvals has been waived by MTI).

1.1.23           “Third Party” means any Person other than Recipient, Provider, and their respective Affiliates.

1.1.24           “Title Transfer Point” means the point in international waters which is the first point where shipped Product is outside the territorial waters of Japan.

1.1.25           “Trademarks” means all trademarks, trade names, trade dress and service marks, and applications and registrations for any of the foregoing.

1.1.26           “Trustees” means the Initial Trustees, for so long as they are serving as trustees of Both Reorganization Companies, and any other person appointed by Both Companies’ Courts as a trustee of Both Reorganization Companies after the Execution Date, but excluding the Business Trustee.

  

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In addition, any capitalized term used herein but not defined shall have the meaning ascribed to such term in the Sponsor Agreement, unless the context otherwise requires.

1.2           INTERPRETATION

Unless the context requires otherwise, (i) all references to Sections, Articles, Exhibits, Appendices or Schedules are to Sections, Articles, Exhibits, Appendices or Schedules of or to this Agreement, (ii) each accounting term not otherwise defined in this Agreement has the meaning commonly applied to it in accordance with Japanese statutory accounting principles, (iii) words in the singular include the plural and vice versa, (iv) the terms “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation,” and (v) the terms “herein,” “hereof,” “hereunder” and words of similar import mean references to this Agreement as a whole and not to any individual section or portion hereof.  Unless otherwise denoted, all references to $ or dollar amounts are to the lawful currency of the United States of America, and all references to ¥ and yen are to the lawful currency of Japan.  All references to “day” or “days” mean calendar days.

2 – AGREEMENTS AND COVENANTS

2.1           MANUFACTURING SUPPLY

2.1.1           Product Supply; Orders.  Beginning on the Supply Commencement Date, (i) Recipient shall place one or more Orders (as defined below) every month for Products during the term of this Agreement, which Orders will specify whether and the extent to which Products will be wafers, components, probed, unprobed, assembled and/or tested and (ii) Provider shall provide to Recipient the Products manufactured pursuant to such Orders. All Products shall be ordered by such communication methods as Recipient may utilize from time to time, including written purchase orders, telephone orders, EDI and electronic mail (each such order, an “Order”).  An Order will be deemed accepted by Provider unless written notification to amend the terms of the order is provided within ten (10) business days from the date of receipt of such Order.   Recipient shall make efforts as much as possible to a reasonable extent to place Orders at least [*] days prior to shipment of the Products, and the Parties agree to work together in good faith to address any modifications of such Orders reasonably requested by Recipient.

2.1.2           Estimates.  To help Provider plan its operations and make the necessary manufacturing and purchase arrangements, Recipient agrees that on a periodic basis, as agreed upon from time-to-time by the Parties, it shall furnish to Provider estimates of Recipient’s future need for the Products.  Such estimates shall not be binding on either Party, but will be used for information purposes only.

2.1.3           Commitment to Purchase.  Each month, (i) Recipient or its Affiliates shall, to the extent within their control, cause Provider to complete the manufacture of Products and to ship such Products pursuant to Orders placed by Recipient, and (ii) Recipient shall purchase all Products manufactured and shipped pursuant to such Orders.  Promptly following the Supply Commencement Date, Recipient shall place an Order for all of the Initial Products.

  

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2.1.4           Exclusivity.  From and after the Supply Commencement Date, unless consented to in writing by Recipient or MTI, Provider shall manufacture products exclusively for Recipient and any of Recipient’s Affiliates designated by Recipient; provided, that, in the event this Agreement is terminated by Provider pursuant to Section 7.2.3.2 hereof, Provider may continue to manufacture products but may not sell such products to any Person other than MTI,  any of MTI’s Affiliates designated by MTI or any other Person consented to in writing by MTI, unless and until the Sponsor Agreement has been terminated in accordance with Article 24.1(3) or Article 24.6 thereof.  Nothing herein shall be interpreted as granting Provider an exclusive right to manufacture the Products for Recipient.  [*]. 

2.2           PRICE, INVOICING AND PAYMENTS

2.2.1           Price and Invoicing.  Upon each shipment of Products, Provider will invoice Recipient the Manufacturing Supply Fee for such Products.  The Manufacturing Supply Fee with respect to any Products shipped shall be equal to:  (i) Manufacturing Costs, plus (ii) an Arm’s Length Profit Percentage applied to the Manufacturing Costs, plus (iii) Reimbursable Costs, minus (iv) the Manufacturing Supply Fee Offsets, in each case where applicable, with each such amount calculated with respect to such Products.  The Parties acknowledge that, in practice, the Manufacturing Supply Fee amounts invoiced will be based on good faith estimates in a manner consistent with customary practices, and appropriate adjustments will be made in accordance with the second paragraph of Section 2.2.3.

2.2.2           Invoicing and Time of Payments.  Recipient shall pay Provider’s invoices issued on or prior to December 31, 2016, within [*] days of the invoice date. For invoices issued after December 31, 2016, Recipient shall use its commercially reasonable efforts to gradually transition payment terms to [*] days of the invoice date.  All invoices and payments shall be made in United States Dollars.  On any amounts not paid within [*] days of when due, Provider may charge interest at the higher of (i) [*] or (ii) [*], whichever is higher, unless a lower rate is required under applicable law, in which event Provider may charge such lower rate.

2.2.3            Arm’s Length Profit Adjustments.  The Parties agree to periodically review the appropriateness of the Arm’s Length Profit Percentage, taking into account all relevant facts and circumstances, including those factors set forth in Section 1.1.3 above.  If the Parties mutually agree to change the Arm’s Length Profit Percentage, they shall memorialize such changes in writing (electronic, facsimile or otherwise).  The Parties may mutually agree to make such adjustments prospectively or retrospectively as necessary so that the profit earned will be based on the arm’s length principle as defined in the most recent transfer pricing comparable analysis obtained by Recipient.

Promptly following the end of each month after the Supply Commencement Date, the Parties will review the amounts invoiced with respect to Products sold to Recipient during such month in relation to the actual Manufacturing Supply Fee with respect to the Products sold to Recipient during such month, and shall make appropriate adjustments, including, as applicable, debits or credits, to ensure that Provider receives the actual Manufacturing Supply Fee with respect to Products sold to Recipient during such month.  Any such adjustments shall be made promptly,

  

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and may be implemented by means of additional payments, debit, a refund or a credit against future payments, or other reasonable means, in a subsequent period or periods.

2.2.4            Adjustments by Tax Authorities.  Should relevant tax authorities determine that the Manufacturing Supply Fee does not represent an arm’s length compensation, both Parties will work with such tax authorities to adjust the compensation in accordance with arm’s length principles acceptable by each Party’s respective tax authorities.  The Parties agree to negotiate, in good faith, an equitable adjustment should such adjustments for prior years be required.

2.2.5            Scrap Materials.  Recipient has the option to obtain the Scrap, used pilot wafers, and secondary silicon from Provider at no additional charge as the costs of these items are already included in the price of the Products.  If Recipient exercises such option, Provider will ship the Scrap, used pilot wafers and/or secondary silicon to Recipient, and a commercial invoice will be prepared together with the shipment with an appropriate value for customs purposes only.  If Recipient does not exercise this option, Provider will dispose of the Scrap, used pilot wafers and/or secondary silicon in accordance with Recipient’s instruction.

2.3           TITLE; SHIPMENT; RISK OF LOSS

Provider shall retain title to all materials, work-in-process and finished Products, whether in die or wafer form, until such time as title for the Products passes to Recipient in accordance with this Section 2.3.  Products shall be suitably packed for shipment in Provider’s standard shipping cartons, marked for shipment to the destination specified in Recipient’s Order, and (unless otherwise stated on the front side of the commercial invoice with respect to a specific Product purchase) delivered to Recipient’s international carrier FCA Provider’s facility in Hiroshima, Japan.  Unless the Parties otherwise agree in writing, risk of damage or loss to the Products shall remain with Provider until Products are delivered to Recipient’s international carrier, at which point risk of loss shall pass to Recipient. Title to the Products shall pass from the Provider to the Recipient when the Products pass the Title Transfer Point.  Provider shall insure all Product Supplies, work-in-process and Products in its care, custody or control against loss or damage from perils covered by an “all risk” property insurance policy in the amount of the replacement cost of such Product Supplies, work-in-process and Products less the maximum yield loss allowance. The terms and conditions of the insurance shall not be altered, canceled or changed without Recipient’s prior written consent, which consent shall not be unreasonably withheld or delayed, or until ten (10) days after the termination or cancellation of this Agreement. Upon Recipient’s request therefor, Provider shall furnish Recipient a copy of the certificate of such insurance coverage.

2.4           CERTAIN COVENANTS

2.4.1           Access to Records; Record Retention.  Provider shall grant to Recipient or its representatives reasonable access to Provider’s books and records.  Provider shall, within ten (10) days of any request made by Recipient, furnish supporting data and documentation with respect to the components of the Manufacturing Supply Fee on any invoice.

  

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2.4.2            Procurement; Storage. Provider shall procure and store all Product Supplies in its own name and for its own account.

2.4.3           Direction of Manufacturing Operations.   Provider and Recipient acknowledge and agree that the roles of the Business Trustee and the Trustees with respect to the operation of Provider following the Closing Date are as set forth in Article 17 of the Sponsor Agreement. In light of the commitments of Recipient hereunder, the Parties agree that, to the greatest extent possible consistent with the foregoing, in making business decisions that affect, directly or indirectly, Manufacturing Supply, the Business Trustee and the Trustees, if applicable, will consult with, and cause Provider to act in a manner consistent with guidance provided by, Recipient and its Affiliates, which guidance is not inconsistent with the Sponsor Agreement, including with respect to:  (i) business plan development; (ii) product roadmap, including node transitions; (iii) capital expenditures, including timing and amount; (iv) loading; (v) material expenditures or commitments for Product Supplies; (vi) entry into material contracts affecting or relating to manufacturing of Products; (vii) subcontracting, directly or indirectly, any element of the manufacture of Products; (viii) employee-related actions such as hiring and separation; and (ix) the matters referred to in Attachment 17.8A to the Sponsor Agreement.

2.4.4           Change of Business; New Business.  Without first obtaining Recipient’s written consent, Provider shall not, and will not cause its respective subsidiaries to, (a) make or threaten to make any substantial change in the nature of its business, (b) carry on any business other than its business as currently performed, (c) discontinue any line of business, or (d) enter into agreements with third parties for business substantially similar to that which is contemplated by this Agreement.

2.4.5           Maintenance of Insurance.  Provider shall maintain insurance policies and fidelity bonds with reputable insurers in such amounts and covering such risks as are consistent with normal industry practice for companies engaged in businesses similar to those of Provider in the same geographic region or regions with similar risks, or as otherwise reasonably requested by Recipient, including, without limitation, casualty, business interruption, earthquake and other similar insurance policies.

3 – INTELLECTUAL PROPERTY; TRADEMARKS; TRADE NAMES

3.1           ASSIGNMENT OF INTELLECTUAL PROPERTY

3.1.1           Work Product.  All new or original Intellectual Property Rights created hereunder, and all Intellectual Property Rights obtained or acquired hereunder (including obtained or acquired through services provided by Provider’s subsidiaries and/or permitted contractors) (collectively, “Work Product IP”) shall be deemed created, obtained and/or acquired exclusively for and on behalf of Recipient, and Recipient shall own all rights, title and interest thereto without further consideration by Recipient (other than reimbursement of any costs of compensation to inventor employees required under applicable laws or under any applicable internal inventor compensation program to the extent not otherwise covered as a Manufacturing Cost or recovered or recoverable under the R&D Services Agreement or General Services Agreement). Provider

  

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may engage its wholly-owned subsidiaries to assist in the provision of the Manufacturing Supply so long as such subsidiaries have assigned all Intellectual Property Rights arising from such engagement to Provider and are under an obligation of confidentiality at least as protective of Recipient’s Confidential Information as the confidentiality provisions in this Agreement.  All Intellectual Property Rights created, obtained or acquired by Provider after the date of this Agreement that are not created, obtained or acquired pursuant to the R&D Services Agreement shall be deemed Work Product IP hereunder.  Provider hereby assigns, transfers and conveys to Recipient all rights, title and interests in and to the foregoing Work Product IP. For the avoidance of doubt, the Parties acknowledge that any Intellectual Property Rights created, obtained or acquired by Provider after termination of this Agreement will not be deemed Work Product IP hereunder.

3.1.2           Further Actions.  During and after the term of this Agreement, upon the request of Recipient and without further consideration, Provider shall take such further actions including, without limitation, the execution and delivery of instruments of conveyance and the securing of all waivers of and agreements not to exercise any moral (or equivalent) rights as Recipient might deem appropriate to give full effect to this Section 3.  Provider shall not exhibit, deliver or disclose any of the work created hereunder to any Third Party or use such work, or any part thereof, for any other purpose, without Recipient’s advance written consent.

3.1.3           Third Party Infringement.

3.1.3.1                                If at any time during the term of this Agreement, Provider becomes aware of a Third Party challenging or infringing upon any of Recipient’s or any of its Affiliates’ Intellectual Property Rights, Provider shall immediately notify Recipient or an Affiliate of Recipient designated by Recipient (the “Designated Affiliate”) in writing of such action, and shall, as requested by and at the expense of Recipient or its Designated Affiliate, cooperate with Recipient or its Designated Affiliate in the defense of Recipient’s or any of its Affiliates’ Intellectual Property Rights.

3.1.3.2                                Should Provider receive notice that the Products or any manufacturing process used to manufacture the Products infringes or misappropriates any Third Party proprietary or intellectual property rights, including any offer of a license to Provider for any Third Party intellectual property, Provider shall immediately provide such notice to Recipient or its Designated Affiliate.  Upon receipt of such notice by Recipient or its Designated Affiliate, Recipient or its Designated Affiliate shall take responsibility for responding to such notice, and Recipient or its Designated Affiliate, subject to the following terms and conditions, will defend Provider, at its own expense, against any claim or suit brought against Provider by any Third Party alleging that the Products or any manufacturing process used to manufacture the Products, infringes or misappropriates any Third Party proprietary or intellectual property rights (“IP Claim”).

3.1.3.3                                Provider agrees that Recipient or its Designated Affiliate shall have the sole right to defend and/or settle all IP Claims, in litigation or otherwise, and Provider shall provide Recipient or its Designated Affiliate with all reasonably requested assistance and cooperation in the defense of any IP Claim.

  

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3.1.4           Retained License.

3.1.4.1                                Notwithstanding the assignment, transfer, and conveyance of the Work Product IP by Provider to Recipient set forth in Section 3.1.1, Provider shall retain, as of the date of this Agreement and up to the earlier of (a) the Supply Commencement Date and (b) the date this Agreement terminates in accordance with its terms, a fully-paid, worldwide, irrevocable, non-transferable, non-exclusive, royalty-free license, without the right to sublicense Third Parties under all Work Product IP, to make, use, sell, offer for sale, and import or export the Licensed Products made by or, subject to Section 3.1.4.3, for Provider, and to use any method or process in the manufacture of such Licensed Products.

3.1.4.2                                The retained license described in Section 3.1.4.1 above shall endure as to all Licensed Products made by or for Provider, or with respect to products with respect to which substantial preparations were made for their manufacture by or for Provider, prior to the earlier of (a) the Supply Commencement Date and (b) the date this Agreement terminates in accordance with its terms.

3.1.4.3                                The retained license described in Section 3.1.4.1 above shall not include the retention of any right for Provider to have products made by any Third Party other than Rexchip Electronics Corporation (“Rexchip”), and in the case of Rexchip, such have made right shall be limited to the manufacture by Rexchip of products, the complete design for which is provided by Provider to Rexchip, and which products are marked by Rexchip with Provider trademarks, trade names or other commercial indicia, and thereafter shipped directly to Provider, or to customers of Provider pursuant to purchase orders or other contracts entered into by and between Provider and such customers.

3.2           TRADEMARK USE AND SUBSTITUTION

Provider shall fully comply with all guidelines, if any, communicated by Recipient concerning the use of Recipient’s Trademarks including, without limitation, Trademarks assigned to Recipient by Provider (“Recipient Trademarks”).  Upon reasonable prior written notice to Provider, Recipient may substitute alternative marks for any or all Recipient Trademarks.

3.3           QUALITY CONTROL

Provider agrees to maintain the quality of the Products used in conjunction with Recipient Trademarks at a level that meets or exceeds industry standards and the Specifications provided by Recipient.  Provider shall supply Recipient with suitable samples of the Products and/or Provider’s use of Recipient Trademarks in connection with the Products at any time upon reasonable notice from Recipient.  Provider shall cooperate fully with Recipient to facilitate Recipient’s review from time to time of Provider’s use of Recipient Trademarks and of Provider’s compliance with the quality standards described herein.  Upon reasonable notice from

  

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Recipient, Provider shall remedy any deficiencies in its use of Recipient Trademarks and/or the quality of the Products used in conjunction with Recipient Trademarks.

3.4           NO OTHER MARKS

Other than Recipient Trademarks, Provider shall not affix any other trademark or other identifying information to the Products except as may be specified in writing by Recipient or as may be required by applicable law.

4 – WARRANTY

4.1           LIMITED WARRANTY

Provider warrants that the Products will comply with Recipient’s Specifications; will be free from defects in material, design, workmanship and title which affect form, fit or function; and will function properly under ordinary use for a period of one (1) year from the date of delivery.  EXCEPT AS EXPRESSLY SET FORTH HEREIN, PROVIDER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.  ALL WARRANTIES COVER ONLY DEFECTS ARISING UNDER NORMAL USE AND DO NOT INCLUDE MALFUNCTIONS OR FAILURES RESULTING FROM MISUSE, ABUSE, NEGLECT, ALTERATION, MODIFICATION, OR IMPROPER INSTALLATION, OR REPAIRS BY ANYONE OTHER THAN PROVIDER, RECIPIENT, THEIR RESPECTIVE AFFILIATES OR THEIR RESPECTIVE AUTHORIZED AGENTS.

5 – CONFIDENTIALITY

Information disclosed by Recipient and Provider hereunder shall be deemed to be “Confidential Information” under, and as such shall be subject to the terms and conditions of, the Micron Wholly-Owned Subsidiary Mutual Nondisclosure Agreement between MTI, on the one hand, and Provider, on the other hand, effective on even date herewith, as may be replaced or amended from time to time (the “Confidentiality Agreement”).  Work Product IP shall be deemed to be “Micron Confidential Information” under, and as such shall be subject to the terms and conditions of, the Confidentiality Agreement.  All Confidential Information disclosed by Recipient to Provider shall remain the exclusive property of Recipient.  Except as otherwise provided by the Confidentiality Agreement, Provider shall not use the Confidential Information for any purpose other than to perform its obligations under this Agreement or otherwise for the benefit of Recipient.  The obligations hereunder shall be in addition to and not reduce the obligations under the Confidentiality Agreement. If the Confidentiality Agreement expires without being replaced prior to the expiration of this Agreement, the Confidentiality Agreement shall remain in effect with respect to Confidential Information disclosed hereunder.

  

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6 – REPRESENTATIONS AND WARRANTIES

Each Party represents and warrants to the other Party that it has full capacity, legal and otherwise, to enter into and perform this Agreement, and this Agreement has been duly authorized and executed by a duly authorized representative of such Party.  Each Party represents and warrants to the other Party that it has all necessary licenses, permits and consents required to enter into and perform this Agreement.

7 – TERM; TERMINATION

7.1           TERM

 

7.1.1           Duration of Agreement.  This Agreement shall be effective from the date hereof until terminated in accordance with the terms hereof.

7.1.2           Recipient Election.  If elected by Recipient at any time prior to the Supply Commencement Date, with respect to the period commencing on the effective date of such election until the Supply Commencement Date,  the Parties agree they will make appropriate provisions as between the Parties, as reasonably determined by Recipient after consultation with Provider, to give effect to the economics of this Agreement as if the Supply Commencement Date had occurred on the effective date of such election and all manufacture, supply, shipment and purchases of products during such period had taken place in accordance with the terms of this Agreement after the occurrence of the Supply Commencement Date.  Recipient may make the foregoing election by giving written notice thereof to Provider, and such notice shall specify the effective date of the election.  The effective date of any such election shall be the first day of a calendar month following delivery of such written notice specified in such notice.

7.2            TERMINATION

This Agreement may be terminated by the Parties only as provided in Section 7.2.1 through 7.2.10 below.

7.2.1           Mutual Agreement.  The Parties may terminate this Agreement at any time by mutual agreement in writing.

7.2.2           Certain Breaches.  Recipient may terminate this Agreement if Provider (x) unreasonably fails to take any action or actions required to comply with any provision of this Agreement or (y) fails to take any action or actions consistent with the reasonable guidance and direction provided by Recipient or its Affiliates that directly or indirectly relates to manufacturing operations, products or supply, including with respect to the matters referred to in Section 2.4.3 above, which failure or failures, individually or in the aggregate, (I) materially and adversely affect, or is  or are reasonably likely to materially and adversely affect, (a) Provider’s manufacturing operations or the products produced by Provider, in each case, taken as a whole, or (b) the supply of products by Provider to Recipient, taken as a whole, or (II) results or is reasonably likely to result in Recipient not receiving material benefits to which it is entitled under any material provision hereunder, which failure or failures continue for 90

  

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days following written notice of such failure or failures from Recipient.  For avoidance of doubt, for purposes of this Section 7.2.2, (i) the unreasonableness of any failure to take any action or actions required to comply with any provision of this Agreement and the reasonableness of any guidance and direction provided by Recipient or its Affiliate will be subject to and determined in accordance with the applicable provisions of the Sponsor Agreement (including Article 17), including whether such action or inaction is a violation of applicable law or legal regulation,  (ii) this Section 7.2.2 shall not apply to any failure to take any action that occurs during a period when either (X) there is no Business Trustee designated by Sponsor unless Sponsor has petitioned the Court for the appointment of a reasonably qualified Business Trustee without success, or (Y) there is a Business Trustee designated by Sponsor unless the Sponsor has petitioned the Court to replace such Business Trustee with a reasonably qualified candidate without success, and (iii) an omission to act shall be deemed to be an action.

In the event Recipient has given Provider notice of failure or failures pursuant to the preceding paragraph, Recipient and Provider shall engage in discussions, which may include consultation with the Trustees, in a good faith effort to resolve the circumstances giving rise to such claimed failure or failures during the 90 day period following delivery of such notice.

	
7.2.3  

	
Change of Control; Insolvency.  

7.2.3.1                      If, other than as a result of the voluntary transfer by MTI of shares (including pursuant to a pledge of or other grant of a security interest in shares by MTI and attachment of shares by a Third Party), the issued and outstanding shares of Provider undergo a change in control, so that its status as a corporation owned or controlled, directly or indirectly, by MTI, ceases, or if MTI’s direct or indirect ownership or control of Provider is materially and adversely impacted by extraordinary governmental action or by operation of law (it being understood that the restrictions on MTI’s rights as a shareholder of Provider under the Corporate Reorganization Act and the Reorganization Plan do not constitute lack of control for purposes of this Section 7.2.3.1 and actions in accordance with the Sponsor Agreement or the Reorganization Plan shall not constitute extraordinary government action or operation of law that gives rise to a right for Recipient to terminate this Agreement pursuant to this Section 7.2.3.1), Recipient may, in its sole discretion, terminate this Agreement.

7.2.3.2                      If (a) the issued and outstanding shares of Recipient undergo a change in control, so that its status as a corporation owned or controlled, directly or indirectly, by MTI, ceases, or (b) if Recipient becomes insolvent under applicable law, then Provider may, in its sole discretion, terminate this Agreement unless, within 30 days following receipt of a written notice from Provider of its intention to exercise its termination right hereunder, (x) the rights and obligations of such Recipient under this Agreement have been assigned pursuant to Section 8.4 to another Person that is solvent that is either MTI or a Person owned or controlled, directly or indirectly, by MTI, and (y) all amounts owing to Provider under this Agreement that are past due, if any, are paid.

 

  

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7.2.4           Reorganization Plan.  Recipient may terminate this Agreement if the Reorganization Plan is amended, without MTI’s prior written consent, in a manner that is, or would reasonably be expected to be, materially adverse to the interests of Recipient or its Affiliates (including Provider), individually or in the aggregate.  Unless otherwise agreed in writing by the Recipient and Provider, this Agreement will terminate automatically if the order approving the Reorganization Plan is revoked or cancelled or if an order of abolition (haishi) of the Reorganization Proceedings is issued.

7.2.5           Termination of Sponsor Agreement.  Unless otherwise agreed in writing by the Recipient and Provider, this Agreement will terminate automatically upon the termination of the Sponsor Agreement pursuant to Article 24.1(3) or Article 24.6 of the Sponsor Agreement.

7.2.6           Completion of Installment Payments.  Recipient may terminate this Agreement (a) at any time following payment in full of all Installment Payments or (b) subject to Court approval of such termination, after such time as sufficient funds have been provided to the Trustee from Provider, Recipient, any of their respective Affiliates, or a combination thereof to enable the payment in full of all Installment Payments.

7.2.7           Payment Guarantee.  Subject to Court approval of such termination, Recipient may terminate this Agreement at any time after MTI has provided a payment guarantee of the remaining Installment Payments under the Both Companies’ Reorganization Plans (in form and substance reasonably acceptable to the Trustees and the Court).

7.2.8           Force Majeure.  Recipient may terminate this Agreement if, following the occurrence of a Force Majeure Event with respect to Provider and after Recipient has consulted with Trustees about the Force Majeure Event, the consultation of which shall be made in good faith and in a manner consistent with the purposes of the Sponsor Agreement, Provider fails to take action or actions consistent with the reasonable guidance and direction provided by Recipient or its Affiliates in good faith for the purpose of effecting a recovery from such Force Majeure Event, which failure or failures, individually or in the aggregate, materially and adversely affects, or are reasonably likely to materially and adversely affect, the ability to implement such recovery in a commercially reasonable manner, and which failure or failures, or material and adverse effect(s) continue for 90 days following written notice of such failure or failures from Recipient.

In the event Recipient has given Provider a notice of failure pursuant to the preceding paragraph, Recipient and Provider shall engage in discussions, which may include consultation with the Trustees, in a good faith effort to resolve the circumstances giving rise to such claimed failure or failures during the 90 day period following delivery of such notice.

Following a Force Majeure Event with respect to Provider that results in Provider being unable or failing to manufacture or ship Products, so long as Provider has used its reasonable best efforts to manufacture and ship Products hereunder, Recipient shall, unless otherwise agreed, continue to pay the Manufacturing Supply Fee (net of any proceeds received by Provider under casualty, business interruption or similar insurance policies) on a monthly basis as if purchases of Product had continued unaffected hereunder unless and until this Agreement is terminated in

  

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 accordance with its terms.

7.2.9           Cross-Termination.  Recipient may terminate this Agreement if either (a) the General Services Agreement is terminated in accordance with its terms or (b) the R&D Services Agreement is terminated in accordance with its terms (other than a termination by MTI pursuant to Section 17.2.2 thereof). If the General Services Agreement is terminated by Provider in accordance with its terms, Provider may terminate this Agreement.

7.2.10           Notice of Termination.  Any termination of this Agreement at the election of a Party pursuant to this Section 7.2 shall be effective upon delivery of written notice of such termination to the other Party.

7.3           LIABILITY AND ITS LIMITATIONS; SURVIVAL; NO FURTHER OBLIGATIONS

7.3.1           Liability and its Limitations.  IN THE EVENT OF TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY BECAUSE OF SUCH TERMINATION FOR COMPENSATION, REIMBURSEMENT OR DAMAGES INCLUDING ON ACCOUNT OF THE LOSS OF PROSPECTIVE PROFITS OR ANTICIPATED SALES OR ON ACCOUNT OF EXPENDITURES, INVESTMENTS, LEASES OR COMMITMENTS IN CONNECTION WITH THE BUSINESS OR GOODWILL OF PROVIDER OR RECIPIENT.  SUBJECT TO THE FOREGOING, ANY TERMINATION OF THIS AGREEMENT SHALL NOT AFFECT ANY RIGHTS OR LIABILITIES OF THE PARTIES WHICH HAVE ACCRUED UNDER THE TERMS OF THIS AGREEMENT PRIOR TO THE DATE OF SUCH TERMINATION, INCLUDING, BUT NOT LIMITED TO, LIABILITIES TO COMPENSATE DAMAGES ACCRUED PRIOR TO THE DATE OF SUCH TERMINATION ARISING UNDER OR RELATING TO PERFORMANCE OR BREACH  OF OBLIGATIONS UNDER THIS AGREEMENT.  For the avoidance of doubt, this Section 7.3.1 shall not prevent a Party from claiming for damages accrued arising under or relating to the other Party’s performance or breach of obligations under this Agreement, subject to the foregoing limitations; provided, further, that in no event shall any Party or its representatives (which, in the case of the Provider, shall include the Trustees under the Sponsor Agreement) receive a double recovery under this Agreement and any other agreement in connection with the same set of facts and circumstances.

7.3.2           Survival of Certain Terms.  The provisions of Sections 3.1, 4 through 6, 7.3, 8 and 9 shall survive the termination or expira­tion of this Agreement for any reason.  The provisions of Sections 2.1.4 and 2.4.4 shall survive the termination or expira­tion of this Agreement for any reason other than for a termination pursuant to Section 7.2.5; provided, that, in the event this Agreement is terminated pursuant to Section 7.2.3.2 or the last sentence of Section 7.2.4, Sections 2.1.4 and 2.4.4 will survive unless and until the Sponsor Agreement is terminated in accordance with Article 24.1(3) or Article 24.6 thereof, at which time said Sections 2.1.4 and 2.4.4 will terminate. All other rights and obliga­tions of the Parties shall cease upon termination or expiration of this Agreement except for Recipient’s obligation to pay for the Products delivered during the term of this Agreement, as well as any Products manufactured during the  

 

 

  

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term of this Agreement but delivered thereafter (unless otherwise agreed by Recipient and Provider in writing).

8 – GENERAL PROVISIONS

8.1           ENTIRE AGREEMENT

This Agreement is being entered into pursuant to MTI’s commitments under Article 7.1 of the Sponsor Agreement, and does not purport to supersede any provision of the Sponsor Agreement.  Subject to the foregoing, this Agreement sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and supersedes and replaces all prior or contemporaneous agreements, written or oral, regarding such subject matter.  In the event of any conflict between the provisions of this Agreement and any prior agreement between the Parties governing the disposition of Intellectual Property Rights, this Agreement shall control to the extent necessary to resolve such conflict.  Except as provided in this Agreement, there are no conditions, representations, warranties, undertakings, promises, inducements or agreements whether direct or indirect, collateral, expressed or implied made by the Parties with respect to the subject matter hereof.  No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by authorized representatives of each Party.

8.2           OTHER CONTRACTUAL RELATIONSHIPS BETWEEN THE PARTIES

The Parties acknowledge they have or may have in the future other contractual relationships between them. It is both Parties’ intentions and in both Parties’ interest to keep separate the different contractual relationships between the Parties.  Accordingly, the matters regulated in this Agreement shall in no way be affected by any term or condition other than those set forth in this Agreement.  Notwithstanding the foregoing or any other provision herein to the contrary, in no event will any costs or expenses of Provider that are paid to Provider by Recipient hereunder be recovered or recoverable by Provider from Recipient or any of its Affiliates under any other agreement.

8.3           SEVERABILITY

The invalidity or unenforceability of any provision or any covenant of this Agreement in any jurisdiction shall not affect the validity or enforceability of such provision or covenant in any other jurisdiction or of any other provision or covenant hereof or herein contained, and any invalid provision or covenant shall be deemed to be severable.  The Parties shall negotiate in good faith to replace any provision declared invalid or unenforceable with a new valid and enforceable provision that preserves the original intention of the Parties.

8.4           ASSIGNABILITY; SUCCESSORS AND ASSIGNS

No Party shall assign its rights, interests and/or obligations under this Agreement without the other Party’s prior written consent; provided, however, Recipient may assign its rights, interests and/or obligations to MTI or an Affiliate of MTI, in which case, (i) such assignee shall become

  

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“Recipient” for all purposes hereunder from and after the effective date of such assignment, and (ii) the assignor shall not be released from its obligations under this Agreement unless and until such time as the assignor ceases to be an Affiliate of MTI.  Subject to such limitation, this Agreement shall inure to the benefit of and be binding upon each Party and their respective legal representatives, successors and permitted assignees.

8.5           INDEPENDENT PARTIES

The relationship of the Parties hereunder is that of independent contractors, and nothing herein shall confer on either Party the status of employee, agent, partner or joint venture of the other Party.  All financial obligations associated with Provider’s business are the sole responsibility of Provider.  All sales and other agreements between Provider and its customers are Provider’s exclusive responsibility and will have no effect on Provider’s obligations under this Agreement.  Nothing in this Agreement shall authorize one Party to represent, or act in an agency relationship with respect to, the other Party.  Provider has no authority, express or implied, by virtue of this Agreement to create any or incur any liability on Recipient’s behalf.

8.6           NON-WAIVER

The failure of a Party to exercise any right, power or option hereunder or to insist upon the other Party’s compliance with the terms and conditions hereof shall not constitute a waiver of such terms and conditions with respect to that or any subsequent breach nor a waiver by the non-breaching Party of its rights at any time thereafter to require strict compliance with all terms and conditions hereof, including the terms or conditions with respect to which such Party may have not insisted on full compliance.

8.7           TAXES

All taxes or other levies must be settled by the Party liable for payment in accordance with the provisions of this Agreement, or, if not provided for, in accordance with applicable laws.

8.8           FORCE MAJEURE

Neither Party shall be liable in damages, or except as expressly set forth in Section 7.2.8, shall be subject to termination of this Agreement by the other Party, for any delay or default in performing any obligation hereunder if that delay or default is due to any Force Majeure Event and without fault or negligence of that Party; provided that, in order to excuse its delay or default hereunder, a Party shall promptly notify the other of the occurrence or the cause, specifying the nature and particulars thereof and the expected duration thereof; and provided further that, after the termination of such occurrence or cause, the affected Party shall give prompt notice thereof to the other Party, specifying the date of such termination. All obligations of both Parties shall return to full force and effect upon the termination of such Force Majeure Event.

  

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8.9           NOTICES

All notices, consents and approvals (hereinafter referred to as “Notice”) permitted or required to be given hereunder shall be deemed to be sufficiently and duly given if written and delivered personally or sent by courier or transmitted by facsimile transmission or other form of recorded communication tested prior to transmission, addressed as follows:

If to Provider:

Elpida Memory, Inc.

2-1, Yaesu 2-chome

Chuo-ku

Tokyo 104-0028

Attn: [*]

Fax: [*]

and if to Recipient:

Micron Semiconductor Asia Pte. Ltd.

1 North Coast Drive

Singapore 757432

Attention: [*]

Facsimile: [*]

With a copy to:

Micron Semiconductor Asia Pte. Ltd.

1 North Coast Drive

Singapore 757432

Attention: [*]

Facsimile: [*]

Any Notice so given shall be deemed to have been received on the date of delivery if sent by courier, facsimile transmission or other form of recorded communication, as the case may be. Either Party may, from time to time, by Notice change its address for the purposes of this Agreement.

A copy of any Notice delivered by Recipient in accordance with Sections 7.1.2, 7.2.2, 7.2.8, 7.2.10 and 8.8 hereunder will be provided to the Trustee at Kobayashi & Associates Law Office, Kioicho Building 14F, 3-12, Kioicho, Chiyoda-ku, Tokyo 102-0094, Japan, facsimile:  [*].

8.10           APPLICABLE LAW AND VENUE

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International Sale of Goods is hereby expressly excluded from applying to any purchase of the Products hereunder. The Parties agree that any court located in Tokyo, Japan shall provide the exclusive judicial venue for any disputes concerning this Agreement or either Party’s performance hereunder.

8.11                      LANGUAGE

This Agreement is executed in the Japanese language, and shall be construed in accordance with the rules of grammar commonly associated with the construction of legal documents in the Japanese language (except as expressly provided herein).  Even if this Agreement is translated into a language other than the Japanese language, only the Japanese language version is the official version of this Agreement, the Japanese language version shall always prevail over any translation in any language other than the Japanese language, and the translation may not be used as the basis for any interpretation of this Agreement.

8.12           FURTHER ASSURANCES

The Parties agree to do or cause to be done all acts or things necessary to implement and carry into effect this Agreement to its full extent.

8.13           COUNTERPARTS; EFFECTIVENESS

This Agreement may be signed in any number of counterparts and the signatures delivered by telecopy or in a scanned electronic file, each of which shall be an original, with the same effect as if the signatures were upon the same instrument and delivered in person.

8.14           EXPORT CONTROL

The Parties acknowledge that the transactions contemplated by this Agreement may be subject to the export laws and regulations of the Parties’ home countries and hereby agree to comply with such laws and regulations.

8.15           AMENDMENT

Amendment to or modification of any provision whatsoever of this Agreement is valid only in case where it has been executed in a writing affixed with the name and seal of, or signature of, the representative of each of the Parties and has been approved by the Court, provided that no such Court approval shall be required for any such amendment or modification entered into in the ordinary course of business.  For avoidance of doubt, and without limitation, amendments and modifications that pertain to ordinary course of business activities under this Agreement will be considered “entered into in the ordinary course of business.”

  

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9 – FOREIGN CORRUPT PRACTICES ACT COMPLIANCE

Neither Party, its subcontractors nor any of their respective officers, directors, employees or agents shall make any payment or give anything of value, directly or indirectly, to any government official (including any director, employee or agent of any government department, agency or instrumentality, political party or candidate or government- or state-owned enterprise) or official of any international organization, to influence his, her or its decision, or to gain any other advantage for either Party in connection with this Agreement.  In addition, each Party represents and warrants that it does not act as a consultant, agent or representative for, and is otherwise not affiliated with, any government, government official, political party, or government- or state-owned enterprise, and shall advise the other Party promptly in writing prior to entering into any such relationship. Each Party shall provide, or shall cause to be provided, anti-corruption training to all of its officers, employees, agents and subcontractors involved with performance of this Agreement, and shall notify them of the requirements of this Section 9.

Each Party shall immediately notify the other Party if it has any reason to believe that a violation of this Section 9 has occurred or may likely occur.  The Parties shall cooperate fully in any investigation of any such potential violation.  If a violation has occurred, the violating Party shall immediately pay to the other Party an amount equal to the amount of the payment or the value of the gift that gives rise to such violation.  The violating Party shall also indemnify, defend and hold harmless the other Party for all costs, losses and expenses arising out of such violation. Either Party may, either directly or through its authorized representatives, audit any and all of the other Party’s records relating to the performance of this Agreement and interview any of the other Parties’ officers, employees and agents for the purpose of determining whether there has been compliance with this Section 9.  Either Party may also disclose this Agreement, and any facts relating to this Agreement, to any governmental body or agency in connection with any investigations or inquiries into compliance with this Section 9.

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set forth above.

	
MICRON SEMICONDUCTOR

	  	
ELPIDA MEMORY, INC.

	
ASIA PTE. LTD.

	  	  
	  	  	  
	  	  	  
	
/s/ Brian J. Shields                                                  

	  	
/s/ Yukio Sakamoto                                                      

	
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Brian J. Shields                                                  

	  	
Yukio Sakamoto                                                      

	
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Senior Managing Director and Chairman

	  	
Trustee                                                      

	
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/s/ Nobuaki Kobayashi                                                      

	  	  	
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Nobuaki Kobayashi                                                      

	  	  	
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Trustee                                                     

	  	  	
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