Document:

Exhibit 10.2

 

AFFILIATED MANAGERS GROUP, INC.

 

Shares of Common Stock
 (par value $0.01 per share)

 

FORM OF DISTRIBUTION AGENCY AGREEMENT

 

August 6, 2013

 

[BANK NAME]

[ADDRESS]

 

Ladies and Gentlemen:

 

This Distribution Agency Agreement (this “Agreement”), dated as of August 6, 2013, is between Affiliated Managers Group, Inc., a Delaware corporation (the “Company”) and [    ] (the “Manager”). The Company and the Manager agree as follows:

 

Introductory.  The Company has entered into a forward stock purchase transaction with [    ] (the “Forward Purchaser”) as set forth in a separate letter agreement dated the date hereof, a copy of which is attached hereto as Exhibit A (the “Initial Confirmation”).  The Company may also enter into additional forward stock purchase transactions with the Forward Purchaser under the Initial Confirmation or on substantially similar terms (each, a “Subsequent Confirmation” and, together with the Initial Confirmation, the “Confirmations”).

 

The Company has also entered into distribution agency agreements (the “Additional Distribution Agency Agreements”) dated the date hereof, with each of [                                        ] (the “Additional Managers”) and a forward stock purchase transaction with an affiliate of each of [                                    ] and the Company may enter into additional forward stock purchase transactions with an affiliate of each of [                                  ].

 

Subject to the terms and conditions herein and therein, under the Confirmation and, if applicable, the Subsequent Confirmations, the Company will deliver to the Forward Purchaser, or an affiliate thereof (including the Manager), up to the number of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), as may be sold in accordance with the terms of this Agreement.  In connection therewith, the Company and the Forward Purchaser understand that the Forward Purchaser, through the Manager, as sales agent, will effect sales of shares of Common Stock having an aggregate offering price not in excess of $252,800,000 (the “Shares”) on the terms set forth in Section 2 of this Agreement.

 

Section 1.  Representations and Warranties of the Company.  The Company represents and warrants to the Manager that:

 

(a)  Compliance with Registration Requirements.  The Company has filed, in accordance with the provisions of the Securities Act of 1933, as amended (the “1933 Act”), and 

 

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the rules and regulations thereunder (the “1933 Act Regulations”), with the Securities and Exchange Commission (the “Commission”) an “automatic shelf registration statement,” as defined in Rule 405 of the 1933 Act Regulations (“Rule 405”), on Form S—3 (File No. 333-190402), including a prospectus, to be used in connection with the public offering and sale of the Shares, which incorporates by reference documents that the Company has filed or will file in accordance with the provisions of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the rules and regulations thereunder (the “1934 Act Regulations”), which registration statement became effective not earlier than three years on or prior to the date of this Agreement upon filing under Rule 462(e) of the 1933 Act Regulations.

 

Except where the context otherwise requires, the registration statement, as it may have heretofore been amended, including all documents filed as part thereof or incorporated by reference therein, and including any information contained in a Prospectus (as defined below) filed with the Commission pursuant to Rule 430B of the 1933 Act Regulations (“Rule 430B”) and also including any other registration statement filed with the Commission pursuant to Rule 462(b) or Rule 429 of the 1933 Act Regulations, is herein called the “Registration Statement;” the base prospectus filed as part of such Registration Statement, in the form in which it has most recently been filed with the Commission on or prior to the date of this Agreement, is herein called the “Base Prospectus;” the prospectus supplement dated August 6, 2013, specifically relating to the Shares prepared and filed with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations is herein called the “Prospectus Supplement;” and the Base Prospectus, as amended and supplemented from time to time by the Prospectus Supplement, is herein called the “Prospectus.”  The Registration Statement at the time it originally became effective is herein called the “Original Registration Statement.”  Any reference herein to the Registration Statement, the Base Prospectus, Prospectus Supplement or Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing after the execution hereof with the Commission of any post-effective amendment to the Registration Statement, any Prospectus Supplement and any document deemed to be incorporated by reference therein.

 

To the extent that the Registration Statement is not available for the sales of the Shares as contemplated by this Agreement or the Company is not a “well known seasoned issuer” as defined in Rule 405 or otherwise is unable to make the representations set forth in Section 1(b) at any time when such representations are required, the Company shall file a new registration statement with respect to any additional shares of Common Stock necessary to complete such sales of the Shares and shall cause such registration statement to become effective as promptly as practicable.  After the effectiveness of any such registration statement, all references to “Registration Statement” included in this Agreement shall be deemed to include such new registration statement, including all documents filed as part thereof or incorporated therein by reference, and all references to “Prospectus” included in this Agreement shall be deemed to include the final form of prospectus, including all documents incorporated therein by reference, included in any such registration statement, as amended or supplemented from time to time (including by any prospectus supplement thereto).  For purposes of this Agreement, all references to the Registration Statement or the Prospectus or to any amendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to its Electronic 

 

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Data Gathering Analysis and Retrieval System (“EDGAR”), and such copy shall be identical in content to any Prospectus delivered to the Manager for use in connection with the offering of the Shares.

 

(b)  Well-Known Seasoned Issuer.  (1) At the time of filing of the Original Registration Statement, (2) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the 1933 Act or otherwise (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the 1934 Act or form of prospectus), (3) at the time the Company or any person acting on its behalf (within the meaning, for this clause only, of Rule 163(c) of the 1933 Act Regulations) made any offer relating to the Shares in reliance on the exemption of Rule 163 of the 1933 Act Regulations, (4) at the earliest time after the filing of the Original Registration Statement that a bona fide offer (within the meaning of Rule 164(h)(2) of the 1933 Act Regulations) of the Shares was made, and (5) at the date hereof, the Company was and is a “well-known seasoned issuer” as defined in Rule 405.  The Registration Statement is an “automatic shelf registration statement,” as defined in Rule 405, and the Shares, since their registration on the Registration Statement, have been and remain eligible for registration by the Company on a Rule 405 “automatic shelf registration statement.”  The Company has not received from the Commission any notice pursuant to Rule 401(g)(2) of the 1933 Act Regulations objecting to the use of the automatic shelf registration statement form.

 

(c)  S-3 Eligibility.  The Company meets, and at the time of filing of the Original Registration Statement met, the requirements for use of Form S-3 under the 1933 Act.  The Registration Statement has been filed with the Commission and is effective under the 1933 Act.  The Company has not received, and has no notice of, any order of the Commission preventing or suspending the use or effectiveness of the Registration Statement, or threatening or instituting proceedings for that purpose.  Any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement have been so described or filed.  Copies of the Registration Statement and the Prospectus, any such amendments or supplements and all documents incorporated by reference therein that were filed with the Commission on or prior to the date of this Agreement (including one fully executed copy of each of the Registration Statement and of each amendment thereto for the Manager) have been delivered to the Manager and its counsel.  The Company has not distributed any offering material in connection with the offering or sale of the Shares other than the Registration Statement, the Prospectus or any other materials, if any, permitted by the 1933 Act and the 1933 Act Regulations and reviewed and consented to by the Manager.

 

(d)  Form Compliance; No Material Misstatement or Omission of a Material Fact.  Each of the Registration Statement, any post-effective amendment thereto, the Prospectus and any amendment or supplement thereto conforms, and when it became effective or was filed with the Commission conformed, in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations.  The Registration Statement and any post-effective amendment thereto, when it became effective or was filed with the Commission, did not contain 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 not misleading.  The Prospectus and any amendment or supplement thereto does not, and on the date of filing thereof with the Commission did not, 

 

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include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the foregoing shall not apply to statements in, or omissions from, any such document in reliance upon, and in conformity with, written information concerning the Manager that was furnished in writing to the Company by the Manager specifically for use in the preparation thereof.

 

(e)  Issuer Free Writing Prospectuses.  Any Issuer Free Writing Prospectus(es) (as defined below) and the Prospectus, as amended or supplemented, all considered together (collectively, the “General Disclosure Package”), do not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

As used in this subsection and elsewhere in this Agreement:

 

“Applicable Time” means the time of each sale of any Shares pursuant to this Agreement.

 

“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 of the 1933 Act Regulations (“Rule 433”), relating to the Shares, in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).

 

Each Issuer Free Writing Prospectus does not, and as of its issue date and all subsequent times did not, include any information that conflicts or conflicted with the information contained in the Registration Statement or the Prospectus, including any document incorporated by reference therein, and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified.

 

The representations and warranties in this Section 1(e) shall not apply to statements in or omissions from the Registration Statement, the Prospectus or any amendments or supplements thereto or any Issuer Free Writing Prospectus made in reliance upon and in conformity with the Manager Information.

 

(f)  Incorporation of Documents by Reference.  The documents incorporated by reference in the Registration Statement and the Prospectus comply, and at the time they were filed with the Commission complied, in all material respects with the requirements of the 1934 Act and the 1934 Act Regulations, and, when read together with the other information in the Prospectus, do not, and at the time the Original Registration Statement became effective and at the date of the Prospectus did not, contain 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 light of the circumstances under which they were made, not misleading.

 

(g)  Independent Accountants.  The accountants who certified the financial statements and supporting schedules incorporated by reference into the Registration Statement and the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations.

 

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(h)  Financial Statements.  The financial statements included in or incorporated by reference into the Registration Statement and the Prospectus, together with the related schedules and notes, present fairly in all material respects (i) the financial position of the Company and its consolidated subsidiaries at the dates indicated and (ii) the consolidated statements of income, changes in stockholders’ equity and cash flows of the Company and its consolidated subsidiaries for the periods specified; said financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved, except as stated therein.  The supporting schedules incorporated by reference into the Registration Statement and the Prospectus present fairly in accordance with GAAP the information required to be stated therein.  Any pro forma financial statements of the Company, and the related notes thereto, included in or incorporated by reference into the Registration Statement and the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission’s rules and guidelines with respect to pro forma financial statements and have been properly compiled on the basis described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein.  No other financial statements are required to be set forth in or incorporated by reference into the Registration Statement or the Prospectus under the 1933 Act or the 1933 Act Regulations.

 

(i)  No Material Adverse Change in Business.  Since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus, except as otherwise stated therein, (A) there has been no material adverse change or prospective material adverse change in the business, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries considered as one enterprise from that set forth in the Registration Statement, the General Disclosure Package and the Prospectus, whether or not arising in the ordinary course of business (a “Material Adverse Effect”), (B) there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise, and (C) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.

 

(j)  Good Standing of the Company.  The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the General Disclosure Package and the Prospectus and to enter into and perform its obligations under, or as contemplated by, this Agreement and the Confirmations.  The Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect.

 

(k)  Good Standing of Subsidiaries.  Each subsidiary of the Company has been duly organized or formed and is validly existing as a corporation, limited partnership, limited liability company, Massachusetts business trust or general partnership, as the case may be, under the laws of its jurisdiction of organization and is in good standing under the laws of its jurisdiction of organization, has power (corporate or otherwise) and authority to own, lease and 

 

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operate its properties and to conduct its business as described in the General Disclosure Package and the Prospectus and is duly qualified as a foreign corporation, limited partnership, limited liability company, Massachusetts business trust or general partnership, as the case may be, to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or to be in good standing would not result in a Material Adverse Effect.  Except as otherwise disclosed in the General Disclosure Package and the Prospectus, all of the issued shares of capital stock of each subsidiary of the Company which is a corporation, have been duly authorized and validly issued, and are fully paid and non-assessable, and to the extent owned by the Company or any of its subsidiaries (except for directors’ qualifying shares and as described or reflected generally in the General Disclosure Package and the Prospectus) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, in each case with such exceptions, individually or in the aggregate, as would not have a Material Adverse Effect.  The partnership interests, membership interests and shares of beneficial interest of each subsidiary of the Company which is a partnership, limited liability company or Massachusetts business trust have been validly issued in accordance with applicable law and the partnership agreement, limited liability agreement or declaration of trust, as applicable, of such subsidiary, and to the extent owned by the Company or any of its subsidiaries (except as described or reflected generally in the General Disclosure Package and the Prospectus) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except, in the case of each subsidiary of the Company, for liens, encumbrances, equities or claims which individually or in the aggregate would not be material to the Company’s ownership of such subsidiary or to the Company’s exercise of its rights with respect to such subsidiary; and none of the outstanding shares of capital stock, partnership interests, membership interests or shares of beneficial interests, as the case may be, of any subsidiary of the Company was issued in violation of the preemptive or similar rights of any securityholder of such subsidiary.

 

(l)  Capitalization.  The Company has the authorized, issued and outstanding capitalization described in the General Disclosure Package and the Prospectus (except for subsequent issuances, if any, pursuant to reservations, agreements or employee benefit plans or pursuant to the exercise of convertible securities or options, in each case accurately described or reflected in the General Disclosure Package and the Prospectus, as amended or supplemented).  The shares of issued and outstanding capital stock of the Company, including the Shares, have been duly authorized and validly issued and are fully paid and non-assessable; and none of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any securityholder of the Company.  There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries other than those accurately described or reflected in the General Disclosure Package and the Prospectus, as amended or supplemented, or pursuant to reservations, agreements or employee benefit plans or the exercise of convertible securities or options, in each case accurately described or reflected in the General Disclosure Package and the Prospectus, as amended or supplemented.

 

(m)  Authorization of Agreement.  This Agreement has been duly authorized, executed and delivered by the Company.

 

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(n)  Authorization of Confirmations.  The Initial Confirmation has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).  The Company has duly authorized each Subsequent Confirmation and, when executed and delivered by the Company, each Subsequent Confirmation will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).  The description of the Confirmation and the Subsequent Confirmations set forth in the General Disclosure Package and the Prospectus is correct in all material respects.

 

(o)  Authorization and Description of Shares.  The description of the Common Stock set forth in the General Disclosure Package and the Prospectus is correct in all material respects.  The Settlement Shares (as defined in the Confirmation(s)) have been duly authorized by the Company for issuance and sale to the Forward Purchaser pursuant to the Confirmation(s) and, if and when issued and delivered by the Company pursuant to the Confirmation(s) against payment of the consideration specified therein, will be validly issued, fully paid and non-assessable and will not be issued in violation of any preemptive or other similar rights of any securityholder of the Company.  No holder or beneficial owner of the Shares or the Settlement Shares will be subject to personal liability solely by reason of being such a holder or beneficial owner.  The issuance and sale by the Company of the Settlement Shares to the Forward Purchaser or its affiliate in settlement of the Confirmation(s) in accordance with the terms thereof and the delivery by the Forward Purchaser or its affiliate of the Settlement Shares, during the term of and at settlement of the Confirmation(s), to close out open borrowings of Common Stock created in the course of the hedging activities created by the Forward Purchaser or its affiliate relating to its exposure under the Confirmation(s) will not require registration under the 1933 Act.  The Company will not have an obligation to file a prospectus supplement pursuant to Rule 424(b) of the 1933 Act Regulations in connection with any Settlement Shares delivered to the Forward Purchaser or its affiliate by the Company upon such settlement, and no prospectus supplement will be required to be filed under Rule 424(b) of the 1933 Act Regulations in connection with any Settlement Shares delivered by the Forward Purchaser or its affiliate to close out open borrowings created in the course of the hedging activities created by the Forward Purchaser or its affiliate relating to its exposure under the Confirmation(s), assuming in each case that the Manager complied with Rule 173 of the 1933 Act Regulations in connection with the sales of Shares in an amount not less than the Number of Shares (as defined in the Confirmation(s)).

 

(p)  Listing on New York Stock Exchange.  The Shares are listed on the New York Stock Exchange (the “NYSE”) and the Company has taken no action designed to, or likely to have the effect of, terminating the listing of the Shares from the NYSE, nor has the Company 

 

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received any notification that the Commission or the NYSE is contemplating terminating such listing.

 

(q)  Absence of Defaults and Conflicts.  Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws or other constituting or organizational document or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any subsidiary of the Company is subject (collectively, “Agreements and Instruments”) except for such defaults that would not result in a Material Adverse Effect; and the execution, delivery and performance of this Agreement and the Confirmation(s) and the consummation of the transactions contemplated herein and therein and in the General Disclosure Package and the Prospectus and compliance by the Company with its obligations hereunder and thereunder, have been duly authorized by all necessary corporate action and do not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any subsidiary of the Company pursuant to, the Agreements and Instruments (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not result in a Material Adverse Effect), nor will such action result in any violation of the provisions of the charter or by-laws or other constituting or organizational instrument as in effect on the date hereof of the Company or any subsidiary of the Company or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any subsidiary of the Company or any of their assets, properties or operations, except for any such violation of any applicable law, statute, rule, regulation, judgment, order, writ or decree of law which would not result in a Material Adverse Effect.  As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any subsidiary of the Company.

 

(r)  Absence of Proceedings.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened, against or affecting the Company or any subsidiary of the Company, which, singly or in the aggregate, would reasonably be expected to result in a Material Adverse Effect, or which would reasonably be expected to materially and adversely affect the consummation of the transactions contemplated in this Agreement or the performance by the Company of its obligations hereunder.

 

(s)  Accuracy of Descriptions.  All of the descriptions of contracts or other documents contained or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus are accurate and complete descriptions in all material respects of such contracts or other documents.

 

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(t)  Absence of Further Requirements.  No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations hereunder or under the Confirmation(s) or the consummation of the transactions contemplated by this Agreement, or for the due execution, delivery or performance of this Agreement and the Confirmation(s), except such as have been already obtained or as may be required under the 1933 Act or the 1933 Act Regulations or state securities laws.

 

(u)  Possession of Licenses and Permits.  The Company and its subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them; the Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except in any such case where the failure to so possess or to comply would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.

 

(v)  Title to Property.  The Company and its subsidiaries have good and marketable title to all real property owned by the Company and its subsidiaries and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (a) are described in the General Disclosure Package and the Prospectus or (b) would not, singly or in the aggregate, result in a Material Adverse Effect; and all of the leases and subleases material to the business of the Company and its subsidiaries, considered as one enterprise, and under which the Company or any of its subsidiaries holds properties described in the General Disclosure Package and the Prospectus, are in full force and effect, and neither the Company nor any subsidiary of the Company has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any subsidiary of the Company under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease.

 

(w)  No Investment Company.  Neither the Company nor any of its subsidiaries is, and upon the offering of the Shares as herein contemplated will be, an “investment company” or an entity “controlled” by an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended (the “1940 Act”).

 

(x)  Company Not an Investment Adviser.  The Company is not required to register as an “investment adviser” or as a “broker-dealer” within the Investment Advisers Act of 1940, as amended (the “Advisers Act”) or the 1934 Act, respectively, and the rules and regulations of the Commission promulgated thereunder.  The Company is not required to be registered, licensed or qualified as an investment adviser or broker-dealer under the laws 

 

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requiring any such registration, licensing or qualification in any jurisdiction in which it or its subsidiaries conduct business.  Each of the subsidiaries has been duly registered as an investment adviser under the Advisers Act, and has been duly registered as a broker-dealer under the 1934 Act, and each such registration is in full force and effect, in each case to the extent such registration is required and with such exceptions as would not reasonably be expected to have a Material Adverse Effect.  Each of the subsidiaries is duly registered, licensed or qualified as an investment adviser and broker-dealer under state and local laws where such registration, licensing or qualification is required by such laws and is in compliance with all such laws requiring any such registration, licensing or qualification, in each case with such exceptions, individually or in the aggregate, as would not reasonably be expected to have a Material Adverse Effect.

 

(y)  Investment Adviser Subsidiaries.  Each subsidiary of the Company which is required to be registered as an investment adviser or broker-dealer is and has been in compliance with all applicable laws and governmental rules and regulations, as may be applicable to its investment advisory or broker-dealer business, except to the extent that such non-compliance would not reasonably be expected to result in a Material Adverse Effect and none of such subsidiaries is prohibited by any provision of the Advisers Act or the 1940 Act from acting as an investment adviser.  Each subsidiary of the Company which is required to be registered as a broker-dealer is a member in good standing of the Financial Industry Regulatory Authority (“FINRA”).  No subsidiary of the Company which is required to be registered as an investment adviser or broker-dealer is in default with respect to any judgment, order, writ, injunction, decree, demand or assessment issued by any court or any foreign, federal, state, municipal or other governmental agency, board, commission, bureau, instrumentality or department, domestic or foreign, or by any self-regulatory authority relating to any aspect of its investment advisory or broker-dealer business, which would need to be disclosed pursuant to Rule 206(4)-4(b) under the Advisers Act, or which is reasonably likely to give rise to an affirmative answer to any of the questions in Item 11, Part 1 of the Form ADV of such registered investment adviser or which is reasonably likely to give rise to an affirmative answer to any of the questions in Item 7 of the Form BD of such broker-dealer.

 

(z)  Investment Company Mutual Funds.  Each mutual fund of which a subsidiary of the Company serves as the investment advisor (a “Mutual Fund”) has been since inception, is currently and will be immediately after consummation of the transactions contemplated herein, a duly registered investment company in compliance with the 1940 Act, and the rules and regulations promulgated thereunder and duly registered or licensed, except where any failure to be duly registered, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.  Since their initial offering, shares of each of the Mutual Funds have been duly qualified for sale under the securities laws of each jurisdiction in which they have been sold or offered for sale at such time or times during which such qualification was required, and, if not so qualified, the failure to so qualify would not reasonably be expected to have a Material Adverse Effect.  The offering and sale of shares of each of the Mutual Funds have been registered under the 1933 Act during such period or periods for which such registration is required; the related registration statement has become effective under the 1933 Act; no stop order suspending the effectiveness of any such registration statement has been issued and no proceedings for that purpose have been instituted or, to the best knowledge of the Company, are contemplated.  Except to the extent that such failure to comply, misstatement or omission, as the

 

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case may be, would not reasonably be likely to result in a Material Adverse Effect, the registration statement of each Mutual Fund, together with the amendments and supplements thereto, under the 1940 Act and the 1933 Act has, at all times when such registration statement was effective, complied in all material respects with the requirements of the 1940 Act and the 1933 Act then in effect and neither such registration statement nor any amendments or supplements thereto contained, at the time and in light of the circumstances in which they were made, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, at the time and in the light of the circumstances under which they were made, not misleading.  All shares of each of the Mutual Funds were sold pursuant to an effective registration statement, or pursuant to a valid exemption from registration, and have been duly authorized and are validly issued, fully paid and non-assessable.  Each of the Mutual Funds’ investments has been made in accordance with its investment policies and restrictions set forth in its registration statement in effect at the time the investments were made and have been held in accordance with its respective investment policies and restrictions, to the extent applicable and in effect at the time such investments were held, except to the extent any failure to comply with such policies and restrictions, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

(aa)  Investment Advisory Agreements.  The Company is not party to any investment advisory agreement or distribution agreement and is not serving or acting as an investment adviser to any person.  Each of the investment advisory agreements to which any of its subsidiaries is a party is a legal and valid obligation of such subsidiary and complies with the applicable requirements of the Advisers Act and the rules and regulations of the Commission thereunder, except where the failure to so comply would not individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Each of the investment advisory agreements and distribution agreements between a subsidiary of the Company and a Mutual Fund is a legal and valid obligation of such subsidiary and complies with the applicable requirements of the 1940 Act, and in the case of such distribution agreements, with the applicable requirements of the 1934 Act, except where the failure to so comply would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No investment advisory agreement or distribution agreement to which any of the subsidiaries is a party that was either in effect on January 1, 2010 or entered into by a subsidiary of the Company since January 1, 2010 has been terminated or expired, except where any such termination or expiration would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  None of such subsidiaries is in breach or violation of or in default under any such investment advisory agreement or distribution agreement, with such exceptions individually or in the aggregate as would not reasonably be expected to have a Material Adverse Effect.  No subsidiary of the Company is serving or acting as an investment adviser to any person except pursuant to an agreement to which such subsidiary is a party and which is in full force and effect, other than any agreement the non-existence of which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The consummation of the transaction contemplated herein will not constitute an “assignment” as such term is defined in the Advisers Act and the 1934 Act.

 

(bb)  No Fiduciary Duties.  The Company acknowledges and agrees that (i) the sale of the Shares pursuant to this Agreement is an arm’s-length commercial transaction among the Company, on the one hand, and the Forward Purchaser and the Manager, on the other hand,

 

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(ii) in connection with the offering contemplated hereby and the process leading to such transaction, the Manager is acting as agent for the Forward Purchaser in connection with sales of the Shares sold on behalf of the Forward Purchaser and neither the Manager nor the Forward Purchaser nor any of their affiliates is an agent or fiduciary of the Company, or its stockholders, creditors, employees or any other party, (iii) the Manager has not assumed and will not assume an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether the Manager has advised or is currently advising the Company on other matters) and the Manager has no obligation to the Company with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement, (iv) the Manager and its affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, and (v) the Manager has not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.

 

(cc)  Internal Control over Financial Reporting.  The Company maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the 1934 Act Regulations) that complies with the requirements of the 1934 Act and the 1934 Act Regulations and that has been designed by the Company’s principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting, the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and the interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement.  The Company’s internal control over financial reporting is effective and the Company is not aware of any material weaknesses in its internal control over financial reporting.  Since the date of the latest audited financial statements included or incorporated by reference in the General Disclosure Package and the Prospectus, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

(dd)  eXtensible Business Reporting Language. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto.

 

(ee)  Disclosure Controls and Procedures.  The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) of the 1934 Act Regulations) that comply with the requirements of the 1934 Act and the 1934 Act Regulations; such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective.

 

(ff)  No Stop Order or Cease-and-Desist Proceeding.  The Registration Statement is not the subject of a pending proceeding or examination under Section 8(d) or 8(e) of the 1933 Act, and the Company is not the subject of a pending proceeding under Section 8A of the 1933 Act in connection with the offering of the Securities.

 

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(gg)  Actively-Traded Security.  The Common Stock is an “actively traded security” exempted from the requirements of Rule 101 of Regulation M under the 1934 Act by subsection (c)(1) of such rule.

 

(hh)  No Other At-The-Market Offerings.  Except for the Additional Distribution Agency Agreements and as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company has not entered into any other sales agency agreements or other similar arrangements with any agent or any other representative in respect of at the market offerings of the Shares in accordance with Rule 415(a)(4) of the 1933 Act Regulations.

 

(ii)  No Stabilization or Manipulation.  The Company has not taken, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.

 

(jj)  No Commissions.  There is no broker, finder or other party that is entitled to receive from the Company any brokerage or finder’s fee or other fee or commission as a result of any transactions contemplated by this Agreement.

 

(kk)  Deemed Representation.  Any certificate signed by any officer of the Company delivered to the Manager or to counsel for the Manager pursuant to or in connection with this Agreement shall be deemed a representation and warranty by the Company to the Manager as to the matters covered thereby.

 

Section 2.  Sale and Delivery of Shares.

 

(a)  Subject to the terms and conditions set forth herein, the Manager agrees to use its reasonable efforts to sell the Shares as sales agent for the Forward Purchaser in the manner contemplated by the General Disclosure Package.

 

(b)  The Shares are to be sold on a daily basis or otherwise as shall be agreed to by the Company, the Forward Purchaser and the Manager on any day that is a trading day for the NYSE (other than a day on which the NYSE is scheduled to close prior to its regular weekday closing time, each, a “Trading Day”) that the Company has satisfied its obligations under Section 4 of this Agreement and that the Company has instructed the Manager to make such sales.  On any Trading Day, the Company, in consultation with the Forward Purchaser and the Manager, may instruct the Manager by telephone (confirmed promptly by telecopy or email, which confirmation will be promptly acknowledged by the Manager) as to the maximum amount of Shares to be sold by the Manager on such day (in any event not in excess of the amount then available for sale under the Prospectus and the currently effective Registration Statement) and the minimum price per Share at which such Shares may be sold.  Subject to the terms and conditions hereof, the Manager shall use its commercially reasonable efforts to sell as sales agent for the Forward Purchaser all of the Shares so designated by the Company.  The Company and the Manager each acknowledge and agree that (A) there can be no assurance that the Manager will be successful in selling the Shares, (B) the Manager will incur no liability or obligation to the Company or any other person or entity if it does not sell Shares for any reason other than a

 

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failure by the Manager to use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell such Shares as required by this Agreement, and (C) the Manager shall be under no obligation to purchase Shares on a principal basis.

 

(c)  Notwithstanding the foregoing, the Company shall not authorize the sale of, and the Manager shall not be obligated to use its commercially reasonable efforts to sell, any Shares (i) at a price lower than the minimum price therefor authorized from time to time, or (ii) having an aggregate offering price in excess of the aggregate offering price of Shares authorized from time to time to be issued and sold under this Agreement, in each case, by the Company’s board of directors, or a duly authorized committee thereof, and notified to the Manager in writing.  In addition, the Company or the Manager may, upon notice to the other party hereto by telephone (confirmed promptly by telecopy or email, which confirmation will be promptly acknowledged), suspend the offering of the Shares for any reason and at any time; provided, however, that such suspension shall not affect or impair the parties’ respective obligations with respect to the Shares sold hereunder prior to the giving of such notice.  Under no circumstances shall the aggregate offering price of Shares sold pursuant to this Agreement and the Additional Distribution Agency Agreements exceed the aggregate offering price of Shares set forth in the “Introductory” paragraph of this Agreement or the aggregate offering price of Common Stock available for sale under the currently effective Registration Statement.  Notwithstanding any of the provisions of this Agreement, in the event that either (i) the Forward Purchaser is unable to borrow and deliver any Shares for sale under this Agreement or (ii) in the sole judgment of the Forward Purchaser, it is either impracticable to do so or the Forward Purchaser would incur a stock loan cost that is equal to or greater than 75 basis points per annum to do so, then the Manager shall only be required to sell on behalf of the Forward Purchaser the aggregate number of Shares that the Forward Purchaser is able to, and that it is practicable to, so borrow below such cost.

 

(d)  The Company agrees that any offer to sell, any solicitation of an offer to buy, or any sales of Shares pursuant to this Agreement or the Additional Distribution Agency Agreements shall be effected by or through only one of the Manager or any of the Additional Managers on any single day, but in no event by more than one, and the Company shall in no event request that the Manager and any of the Additional Managers sell Shares on the same day.

 

(e)  If either party reasonably believes that the exemptive provisions set forth in Rule 101(c)(1) of Regulation M under the 1934 Act are not satisfied with respect to the Company or the Shares, it shall promptly notify the other party and sales of Shares under this Agreement shall be suspended until that or other exemptive provisions have been satisfied in the judgment of each party.

 

(f)  The Manager shall not make any sales of Shares on behalf of the Forward Purchaser other than by means of ordinary brokers’ transactions in accordance with Rule 153 of the 1933 Act Regulations.

 

(g)  The gross sales price of any Shares sold pursuant to this Agreement shall be the market or other price agreed to by the Company and the Manager for Shares sold by the Manager under this Agreement at the time of such sale.  The compensation payable to the

 

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Manager for sales of Shares shall be deemed to equal the difference between such gross proceeds and the amount payable by the Forward Purchaser to the Company under the Confirmation(s), assuming full physical settlement of the Confirmation(s) based on the Initial Forward Price (as such term is defined in the Confirmation(s)).  The amount payable by the Forward Purchaser to the Company under the Confirmation(s), assuming full physical settlement of the Confirmation(s) based on the Initial Forward Price, subject to the price adjustment and other provisions of the Confirmation(s) shall constitute the net proceeds to the Company for such Shares (the “Net Proceeds”).

 

(h)  The Manager shall provide written confirmation (which may be by telecopy or email) to the Company following the close of trading on the NYSE each day on which Shares are sold under this Agreement setting forth the number of Shares sold on such day, the price or prices at which such Shares were sold on such day, the aggregate gross sales proceeds of the Shares, the Net Proceeds to the Company and the compensation payable by the Company to the Manager with respect to such sales.

 

(i)  Settlement for sales of Shares pursuant to this Section 2 will occur on the third business day that is also a Trading Day following the trade date on which such sales are made, unless another date shall be agreed to by the Company and the Manager (each such day, a “Settlement Date”).  On each Settlement Date, the Shares sold through the Manager for settlement on such date shall be delivered by the Forward Purchaser to the Manager.

 

(j)  Notwithstanding any other provision of this Agreement, the Company and the Manager agree that no sales of Shares shall take place, and the Company shall not request the sale of any Shares that would be sold, and the Manager shall not be obligated to sell, (A) during any period starting on the first day of each fiscal quarter of the Company and ending on the day on which the Company’s insider trading policy, as it exists on the date of the Agreement, does not prohibit the purchases or sales of the Company’s Common Stock by its officers or directors, or (B) during any other period in which the Prospectus or any amendment or supplement thereto includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(k)  At each Applicable Time and on each Settlement Date, each date the Registration Statement or the Prospectus shall be amended or supplemented (other than a prospectus supplement to the Prospectus included as part of the Registration Statement filed pursuant to Rule 424(b) of the 1933 Act Regulations relating solely to the offering of securities other than the Shares) (a “Registration Statement Amendment Date”) and each date the Company files an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q or an amendment to any such document (a “Company Periodic Report Date”), the Company shall be deemed to have affirmed each representation and warranty (except for the representation and warranty in Section 1(l) hereof, which the Company shall be deemed to have affirmed only at each Company Periodic Report Date) and its compliance with each covenant and other agreement contained in this Agreement (unless the Company shall have notified the Manager to the contrary in writing).  The Company shall cause a senior corporate officer of the Company from time to time designated by the Company (which senior corporate officer shall initially be one of the senior corporate officers specified in Exhibit C hereto) to respond via electronic mail

 

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to a communication from the Manager in the form set forth in Exhibit C hereto when, during the term of this Agreement, the Company shall have received such a communication.  Any obligation of the Manager to use its commercially reasonable efforts to sell the Shares on behalf of the Forward Purchaser shall be subject to, as determined in the reasonable discretion of the Manager, the continuing accuracy of the representations and warranties of the Company, the compliance by the Company with each covenant contained herein, the performance by the Company of its obligations hereunder and the continuing satisfaction of the additional conditions specified in Section 4 of this Agreement.

 

Section 3.  Covenants of the Company.   The Company hereby covenants and agrees with the Manager that:

 

(a)  During the period beginning on the date hereof and ending on the date, as determined in the reasonable discretion of the Manager, that a prospectus is no longer required by law to be delivered in connection with the offering or sales of the Shares by the Manager or any dealer (whether physically or through compliance with Rule 153 or 172 of the 1933 Act Regulations, or in lieu thereof, a notice referred to in Rule 173(a) of the 1933 Act Regulations) (the “Prospectus Delivery Period”):

 

(i)  the Company will notify the Manager promptly in writing of the time when any subsequent amendment to the Registration Statement has become effective or any amendment to the Registration Statement or any subsequent supplement to the Prospectus has been filed;

 

(ii)  the Company will prepare and file with the Commission any material required to be filed with the Commission pursuant to Rule 433(d) of the 1933 Act Regulations and any amendments or supplements to the Registration Statement or the Prospectus that, in the reasonable judgment of the Company, may be necessary or advisable in connection with the offering of the Shares by the Manager;

 

(iii)  the Company will comply with Rule 430B; provided, however, that the Company will not file any amendment to the Registration Statement or supplement to the Prospectus unless a copy thereof has been submitted to the Manager a reasonable period of time before filing with the Commission or if the Manager reasonably objects to such filing in writing, in each case excluding an amendment by incorporated report filed pursuant to Section 13 or 15(d) of the 1934 Act.

 

(iv)  the Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act and will advise the Manager of any such filing;

 

(v)  the Company will furnish to the Manager at the time of filing thereof, a copy of any document that upon filing is deemed to be incorporated by reference in the Registration Statement or the Prospectus; and

 

(vi)  the Company will cause each amendment or supplement to the Prospectus to be filed with the Commission as required pursuant to the applicable paragraph of Rule

 

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424(b) of the 1933 Act Regulations or, in the case of any document to be incorporated therein by reference, to be filed with the Commission as required pursuant to the 1934 Act, within the prescribed time period.

 

(b)  The Company shall pay the required Commission filing fees relating to the Shares within the time required by Rule 456(b)(1)(i) of the 1933 Act Regulations without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the 1933 Act Regulations.

 

(c)  To the extent the Company requests that the Manager effect sales of Shares pursuant to this Agreement, the Company will advise the Manager (through notice provided to Cleary Gottlieb Steen & Hamilton LLP) of the receipt of any comments of or request by the Commission for any amendment or supplement to the Registration Statement or the Prospectus, including the documents incorporated by reference therein, or for additional or supplemental information with respect thereto or of notice of institution of proceedings for the entry of a stop order suspending the effectiveness of the Registration Statement by the Commission or of any examination pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement or of any order or notice preventing or suspending the use of the Registration Statement, any preliminary prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Common Stock from any securities exchange upon which it is listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any of such purposes, which comments, requests, notices, proceedings have been received, threatened or initiated since the last time the Company requested that the Manager effect sales of Shares pursuant to this Agreement.  The Company shall use its best efforts to prevent the issuance of any such stop order or notice of prevention or suspension of such use.  If the Commission shall enter any such stop order or issue any such notice at any time, the Company will use its best efforts to obtain the lifting or reversal of such order or notice at the earliest possible moment, or will file an amendment to the Registration Statement or a new registration statement in a form satisfactory to the Manager and use its best efforts to have such amendment or new registration statement become effective as soon as practicable.

 

(d)  The Company will make available to the Manager and from time to time furnish to the Manager, at the Company’s expense, copies of the Prospectus (or the Prospectus as amended or supplemented if the Company shall have made any amendments or supplements thereto after the effective date of the Registration Statement) in such quantities and at such locations as the Manager may reasonably request for the purposes contemplated by the 1933 Act.

 

(e)  The Company will promptly notify the Manager to suspend the offering of Shares upon the happening of any event known to the Company during the Prospectus Delivery Period or otherwise prior to the final Settlement Date which, in the reasonable judgment of the Company, would require the making of any change in the Registration Statement or in the Prospectus then being used, or in the information incorporated by reference therein, so that the Registration Statement and the Prospectus would not include an untrue statement of 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 were made, not misleading.  During such time period, the Company will prepare and furnish, at the Company’s expense, to the Manager promptly such amendments or supplements to such Registration Statement and

 

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Prospectus as may be necessary to reflect any such change and will furnish the Manager with a copy of such proposed amendment or supplement before filing any such amendment or supplement with the Commission.  If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement (or any other registration statement relating to the Shares) or the Prospectus or any preliminary prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Company will promptly notify the Manager and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

 

(f)  The Company will furnish such information as may be required and otherwise will cooperate in qualifying the Shares for offering and sale under the securities or blue sky laws of such jurisdictions as the Manager may designate and to maintain such qualifications in effect so long as required for the distribution of the Shares; provided that the Company shall not be required to qualify as a foreign corporation or to consent to the service of process under the laws of any such jurisdiction (except service of process with respect to the offering and sale of the Shares).  The Company will promptly advise the Manager of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose.

 

(g)  Prior to the final Settlement Date, the Company will furnish to the Manager (i) copies of any reports or other communications which the Company shall send directly to its stockholders or shall from time to time publish or publicly disseminate, (ii) copies of all annual, quarterly and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar form as may be designated by the Commission, (iii) copies of any financial statements or reports filed with any national securities exchange on which any class of securities of the Company is listed, and (iv) such other information as the Manager may reasonably request regarding the Company, in each case as soon as such reports, communications, documents or information becomes available.  Where in any part of this Agreement there is an obligation on the part of the Company to deliver a document to the Manager, such obligation shall be deemed satisfied if such document shall have been filed on the Commission’s EDGAR system.

 

(h)  The Company will make generally available to its stockholders as soon as practicable, and in the manner contemplated by Rule 158 of the 1933 Act Regulations but in any event not later than 15 months after the end of the Company’s current fiscal quarter, an earnings statement (which need not be audited) covering a 12 month period beginning after the date upon which a prospectus supplement is filed pursuant to Rule 424(b) of the 1933 Act Regulations that shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 of the 1933 Act Regulations.

 

(i)  Whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, the Company will pay all of its costs, expenses, fees and taxes incident to the performance of its obligations hereunder, including, but not limited to, such costs, expenses, fees and taxes in connection with (i) the preparation and filing of the Registration

 

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Statement, the Prospectus, each prospectus supplement filed by the Company in connection with the offering and sale of Shares by the Manager under this Agreement and any amendments or supplements thereto and the printing and furnishing of copies of each thereof to the Manager (including costs of mailing and shipment), (ii) the producing, word processing and/or printing of this Agreement, the Confirmation(s), any power of attorney and any closing documents (including compilations thereof) and the reproduction and/or printing and furnishing of copies of each thereof to the Manager (including costs of mailing and shipment), (iii) the qualification of the Shares for offering and sale under state laws and the determination of their eligibility for investment under state law as aforesaid (including the reasonable legal fees and filing fees and other disbursements of counsel for the Manager) and the preparation, printing and furnishing of copies of any blue sky surveys to the Manager, (iv) the listing of the Settlement Shares on the NYSE, (v) any filing for review of the public offering of the Shares by FINRA, (vi) the fees and disbursements of the Company’s counsel and accountants, (vii) the performance of the Company’s other obligations hereunder, (viii) the costs and expenses (including without limitation any damages or other amounts payable in connection with legal or contractual liability) associated with the reforming of any contracts for sale of the Shares made by the Manager caused by a breach of the representation contained in the first paragraph of Section 1(e), and (ix) the registration, issue, sale and delivery of the Settlement Shares.  The Manager will pay its own out-of-pocket costs and expenses incurred in connection with entering into this Agreement and the transactions contemplated by this Agreement, including, without limitation, travel, reproduction, printing and similar expenses as well as the fees and disbursements of its legal counsel.

 

(j)  The Company will use the Net Proceeds from the sale of the Shares in the manner set forth in the Prospectus.

 

(k)  The Company will not sell, offer or agree to sell, contract to sell, pledge, register, grant any option to purchase or otherwise dispose of, directly or indirectly, any shares of capital stock or securities convertible into or exchangeable, exercisable or redeemable for capital stock or warrants or other rights to purchase capital stock, except (i) for the registration of the Shares and the sales of Shares through the Manager or the Additional Managers pursuant to this Agreement or the Additional Distribution Agreements, respectively, (ii) for shares of Common Stock issued pursuant to outstanding equity awards or the grant of equity awards under (x) existing employee benefit agreements or equity incentive plans or (y) employee benefit agreements or equity incentive plans described in the Prospectus or the Registration Statement, (iii) any shares of Common Stock issued upon conversion, repurchase or exchange of the Company’s outstanding convertible securities, (iv) other securities issued as consideration for investments in or acquisitions of entities involved in investment advisory or investment management activities or other financial services related business, or (v) any filing under the 1933 Act relating to any shares of Common Stock on Form S-8 or any issuances of Common Stock thereunder, without (a) giving the Manager at least three business days’ prior written notice specifying the nature of the proposed sale and the date of such proposed sale and (b) the Manager suspending activity under this program for such period of time as requested by the Company or as deemed appropriate by the Manager in light of the proposed sale.

 

(l)  At any time during the term of this Agreement, the Company will advise the Manager immediately after it shall have received notice or obtain knowledge thereof, of (x) any

 

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information or fact that, in the opinion of counsel to the Company, would alter or affect, in any material respect, any opinion, certificate, letter or other document provided to the Manager pursuant to Section 4 of this Agreement or any of the representations or warranties made pursuant to Section 1 of this Agreement or (y) any non-compliance or imminent non-compliance by the Company with any of its covenants or obligations hereunder in any material respect.

 

(m)  Except as provided in the last sentence hereof, upon commencement of the offering of the Shares under this Agreement, on every Monday during the term of this Agreement following a week during which no certificate was furnished pursuant to this Section 3(m) (except for any Monday during any period starting on the first day of each fiscal quarter of the Company and ending on the third business day following the next Company Earnings Report Date) and promptly after each Registration Statement Amendment Date, each Company Periodic Report Date, and each date on which a current report on Form 8-K shall be furnished by the Company under Item 2.02 of such form in respect of a public disclosure or material non-public information regarding the Company’s results of operations or financial condition for a completed quarterly or annual fiscal period (a “Company Earnings Report Date”) and on such other dates as the Manager shall reasonably request, the Company will furnish or cause to be furnished forthwith to the Manager a certificate dated the date of effectiveness of such amendment, the date of filing with the Commission of such supplement or other document or the date of such request, as the case may be, in a form satisfactory to the Manager to the effect that the statements contained in the certificate referred to in Section 4(e) of this Agreement which were last furnished to the Manager are true and correct at the time of such amendment, supplement or filing, as the case may be, as though made at and as of such time (except that such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such time) or, in lieu of such certificate, a certificate of the same tenor as the certificate referred to in said Section 4(e), but modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented, or to the document incorporated by reference into the Prospectus, to the time of delivery of such certificate.  As used in this paragraph, to the extent there shall be an Applicable Time on or following the dates referred to above, promptly shall be deemed to be such Applicable Time.  The delivery requirements in this Section shall be suspended after the maximum number of Shares authorized to be issued and sold under this Agreement have been sold under this Agreement and the Additional Distribution Agency Agreements, in the aggregate.  To the extent that the Company does not furnish or cause to be furnished the certificate on a date identified above, the Manager’s obligations to effect sales under this Agreement shall be suspended until such time that the Company furnishes or causes to be furnished such certificate (and any other deliverables that may be due pursuant to the last sentence of Sections 3(n) and 3(o), respectively, of this Agreement).

 

(n)  Except as provided in the last sentence hereof, upon commencement of the offering of the Shares under this Agreement and promptly after each Registration Statement Amendment Date, each Company Periodic Report Date and each Company Earnings Report Date and on such other dates as the Manager shall reasonably request, the Company will furnish or cause to be furnished forthwith to the Manager and to counsel to the Manager written opinions and negative assurance letters of Ropes & Gray LLP, dated the date of effectiveness of such amendment, the date of filing with the Commission of such supplement or other document or the date of such request, as the case may be, in a form and substance satisfactory to the Manager and its counsel, of the same tenor as the opinions and negative assurance letters referred to in

 

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Section 4(c) of this Agreement, but modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented, or to the document incorporated by reference into the Prospectus, to the time of delivery of such opinion, provided that the Company shall not be required to furnish or cause to be furnished the opinion referred to in Section 4(c) other than upon the commencement of the offering of the Shares and each date the Company files an Annual Report on Form 10-K.  As used in this paragraph, to the extent there shall be an Applicable Time on or following the dates referred to above, promptly shall be deemed to be such Applicable Time.  The delivery requirements in this Section shall be suspended after the maximum number of Shares authorized to be issued and sold under this Agreement have been sold under this Agreement and the Additional Distribution Agency Agreements, in the aggregate.  To the extent that the Company does not furnish or cause to be furnished the opinion and/or negative assurance letter on a date identified above, the Manager’s obligations to effect sales under this Agreement shall be suspended until such time that the Company furnishes or causes to be furnished such opinion and/or negative assurance letter (and any other deliverables that may be due pursuant to the last sentence of Sections 3(m) and 3(o), respectively, of this Agreement); provided that the Company shall be required to furnish an opinion only if the Company has filed an Annual Report on Form 10-K during this suspension period.

 

(o)   Except as provided in the last sentence hereof, upon commencement of the offering of the Shares under this Agreement and promptly after each Registration Statement Amendment Date, each Company Periodic Report Date and each Company Earnings Report Date and on such other dates as the Manager shall reasonably request, the Company will cause PricewaterhouseCoopers LLP to furnish to the Manager a letter, dated the date of effectiveness of such amendment, the date of filing of such supplement or other document with the Commission or the date of such request, as the case may be, in form satisfactory to the Manager, its counsel and PricewaterhouseCoopers LLP, of the same tenor as the letter referred to in Section 4(d) hereof, but modified as necessary to relate to the Registration Statement and the Prospectus, as amended and supplemented, or to the document incorporated by reference into the Prospectus, to the date of such letter.  As used in this paragraph, to the extent there shall be an Applicable Time on or following the dates referred to above, promptly shall be deemed to be such Applicable Time.  The delivery requirements in this Section shall be suspended after the maximum number of Shares authorized to be issued and sold under this Agreement have been sold under this Agreement and the Additional Distribution Agency Agreements, in the aggregate.  To the extent that the Company does not cause PricewaterhouseCoopers LLP to furnish the letter on a date identified above, the Manager’s obligations to effect sales under this Agreement shall be suspended until such time that the Company causes PricewaterhouseCoopers LLP to furnish such letter (and any other deliverables that may be due pursuant to the last sentence of Sections 3(m) and 3(n), respectively, of this Agreement).

 

(p)  The Company acknowledges that the Manager will be trading the Company’s Common Stock for the Manager’s own account and for the account of its clients at the same time as sales of Shares occur pursuant to this Agreement.

 

(q)  If any condition set forth in Section 4(a) or 4(g) hereof shall not have been satisfied on the applicable Settlement Date, the Manager, at the direction of the Company, will offer to any person who has agreed to purchase Shares pursuant to the offering contemplated by

 

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this Agreement as the result of an offer to purchase solicited by the Manager the right to refuse to purchase and pay for such Shares.

 

(r)  The Company will disclose in its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, as applicable, the number of Shares sold through the Manager under this Agreement and through the Additional Managers under the Additional Distribution Agency Agreements, the Net Proceeds from such sales and the compensation deemed paid by the Company with respect to sales of Shares pursuant to this Agreement and the Additional Distribution Agency Agreements during the relevant period.

 

(s)  The Company will use its best efforts to cause the Settlement Shares to be listed on the NYSE and to maintain such listing and to file with the NYSE all documents and notices required by the NYSE of companies that have securities that are listed on the NYSE, it being understood that the Manager shall not be obligated to effect any sales of Shares in an amount exceeding the number of Settlement Shares that have been approved for listing on the NYSE.

 

(t)  The Company will not (i) take, directly or indirectly, any action designed to stabilize or manipulate the price of any security of the Company, or which may cause or result in, or which might in the future reasonably be expected to cause or result in, the stabilization or manipulation of the price of any security of the Company, to facilitate the sale or resale of any of the Shares, (ii) bid for or purchase, or pay any person (other than as contemplated by the provisions of this Agreement) any compensation for, soliciting purchases of the Shares, or (iii) pay or agree to pay to any person any compensation for soliciting any order to purchase any security that is a “reference security” with respect to the Common Stock of the Company (within the meaning of Regulation M under the 1934 Act) other than as contemplated by the provisions of this Agreement, in each case, during any “restricted period” within the meaning of Regulation M under the 1934 Act.

 

(u)  The Company will comply with all of the provisions of any undertakings in the Registration Statement.

 

(v)  The Company will cooperate timely with any reasonable due diligence review conducted by the Manager or its counsel from time to time in connection with the transactions contemplated hereby, including, without limitation, providing information and making available documents and senior corporate officers, during regular business hours and at the Company’s principal offices, at such times as the Manager may reasonably request.  If the Manager shall so request of one of the senior corporate officers of the Company specified in Exhibit C by 3:00 p.m. Eastern Time on any business day, the Company shall either (i) make available one or more senior corporate officers of the Company for interview due diligence at 9:00 a.m. Eastern Time on the next following business day or (ii) direct the Manager to cease offers and sales of the Shares until such time as such senior corporate officer or officers of the Company shall be made available for such purposes.  Further, the Company shall make available a Senior Vice President and counsel of the Company for interview due diligence at 9:00 a.m. Eastern Time on the 15th calendar day of the third month of each fiscal quarter of the Company.

 

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(w)  The Company represents and agrees that, unless it obtains the prior consent of the Manager, it has not made and will not make any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, whether or not required to be filed with the Commission.  Any such free writing prospectus consented to by the Company and the Manager is hereinafter referred to as a “Permitted Free Writing Prospectus.”  The Company represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission where required, legending and record keeping.

 

(x)  The Company agrees that it will not claim that the Manager has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company, in connection with such transaction or the process leading thereto.

 

Section 4.  Conditions of Manager’s Obligations.  The obligations of the Manager hereunder are subject to (i) the accuracy of the representations and warranties on the part of the Company on the date hereof and as of each Registration Statement Amendment Date, Company Earnings Report Date, Company Periodic Report Date, Applicable Time and Settlement Date, (ii) the performance by the Company of its obligations hereunder and (iii) the following additional conditions precedent:

 

(a)  (i) No stop order with respect to the effectiveness of the Registration Statement shall have been issued under the 1933 Act or the 1933 Act Regulations or proceedings initiated under Section 8(d) or 8(e) of the 1933 Act and no order directed at any document incorporated by reference therein and no order preventing or suspending the use of the Prospectus has been issued by the Commission, and no suspension of the qualification of the Shares for offering or sale in any jurisdiction, or to the knowledge of the Company or the Manager of the initiation or threatening of any proceedings for any of such purposes, has occurred; (ii) the Registration Statement and all amendments thereto, or modifications thereof, if any, shall not contain 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 not misleading; (iii) the Prospectus and all amendments or supplements thereto, or modifications thereof, if any, and the General Disclosure Package shall not contain 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, (iv) the Company shall have filed the Prospectus, and any amendments and supplements thereto, with the Commission (including the information required by Rule 430B) in the manner and within the time period required by the 1933 Act and the 1933 Act Regulations, and any post-effective amendment thereto containing the information required by Rule 430B shall have become effective, and (v) all material required to be filed by the Company pursuant to Rule 433(d) shall have been filed with the Commission within the applicable time periods prescribed for such filings under Rule 433.

 

(b)  In the judgment of the Manager, there shall not have occurred any Material Adverse Effect.

 

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(c)  The Company shall cause to be furnished to the Manager, on every date specified in Section 3(n) hereof (except as provided in the last sentence of Section 3(n)), the opinion and negative assurance letter of Ropes & Gray LLP addressed to the Manager, dated as of such date, in form satisfactory to the Manager and its counsel, substantially in the form of Exhibit B-1 and Exhibit B-2 attached hereto.

 

(d)  The Company shall cause to be furnished to the Manager, on every date specified in Section 3(o) hereof (except as provided in the last sentence of Section 3(o)), from PricewaterhouseCoopers LLP letters dated the date of delivery thereof and addressed to the Manager in form and substance satisfactory to the Manager, its counsel and PricewaterhouseCoopers LLP, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements of the Company and its subsidiaries included or incorporated by reference in the Registration Statement.

 

(e)  The Company shall furnish to the Manager, on each date specified in Section 3(m) hereof (except as provided in the last sentence of Section 3(m)), a certificate of two of its executive officers to the effect that (i) the representations and warranties of the Company as set forth in this Agreement are true and correct as of the date of such certificate (the “Certificate Date”), (ii) the Company shall have performed such of its obligations under this Agreement as are to be performed at or before each such Certificate Date, and (iii) the conditions set forth in paragraphs (a) and (b) of this Section 4 have been met.

 

(f)  On the date hereof, the Manager shall have received the opinion of Cleary Gottlieb Steen & Hamilton LLP dated the date hereof and addressed to the Manager in form and substance satisfactory to the Manager.  On every date specified in Section 3(n) hereof, the Manager shall have received a negative assurance letter of Cleary Gottlieb Steen & Hamilton LLP, dated as of such date, in form and substance satisfactory to the Manager.

 

(g)  All filings with the Commission required by Rule 424 of the 1933 Act Regulations to have been filed by each Applicable Time or related Settlement Date, as the case may be, shall have been made within the applicable time period prescribed for such filing by Rule 424 (without reliance on Rule 424(b)(8)).

 

(h)  The Settlement Shares shall have been approved for listing on the NYSE, subject to official notice of issuance.  The Manager acknowledges that as of the date of this Agreement, 4,500,000 shares of Common Stock have been approved for listing on the NYSE.

 

(i)  The Company shall have furnished to the Manager such other documents and certificates as to the accuracy and completeness of any statement in the Registration Statement, the Prospectus and the General Disclosure Package as of each Settlement Date as the Manager may reasonably request.

 

(j)  The Company shall have paid the required Commission filing fees relating to the Shares within the time period required by Rule 456(b)(1)(i) of the 1933 Act Regulations without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the 1933 Act Regulations.

 

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(k)  FINRA shall not have raised any objection with respect to the fairness and reasonableness of the terms and arrangements under this Agreement.

 

(l)  No amendment or supplement to the Registration Statement or Prospectus, including documents deemed to be incorporated by reference therein, shall be filed to which the Manager objects in writing.

 

(m)  Since the later of the time of execution of this Agreement and the most recent Applicable Time, there shall not have occurred any downgrading, nor shall any notice or announcement have been given or made of (i) any intended or potential downgrading or (ii) any review or possible change that does not indicate an improvement, in the rating accorded any securities of or guaranteed by the Company by any “nationally recognized statistical rating organization,” as that term is defined in Rule 436(g)(2) of the 1933 Act Regulations.

 

Section 5.  Indemnification.

 

(a)  Indemnification of Manager and Forward Purchaser.  The Company agrees to indemnify and hold harmless the Manager and the Forward Purchaser, each of their directors, officers, employees and agents, and each person, if any, who controls the Manager or the Forward Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act:

 

(i)  against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto) or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Issuer Free Writing Prospectus, the General Disclosure Package or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(ii)  against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 5(d) below) any such settlement is effected with the written consent of the Company; and

 

(iii)  against any and all expense whatsoever, as incurred (including the reasonable fees and disbursements of counsel chosen by the Manager), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission,

 

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or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above;

 

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with the Manager Information.

 

(b)  Indemnification of Company, Directors and Officers.  The Manager and the Forward Purchaser severally and not jointly agree to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any Issuer Free Writing Prospectus, the General Disclosure Package or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by the Manager expressly for use therein.  The Company acknowledges that (i) the statements set forth in the fifth sentence of the first paragraph under the caption “Plan of Distribution” in the Prospectus Supplement concerning transactions that stabilize the Common Stock; (ii) the statements set forth in the first sentence of the second paragraph under the caption “Plan of Distribution” in the Prospectus Supplement concerning solicitations of offers to purchase the Shares; and (iii) the Manager’s name on the front cover page of the Prospectus Supplement, on the back cover page of the Prospectus and under the caption “Plan of Distribution” in the Prospectus Supplement constitute the only information furnished in writing by or on behalf of the Manager for inclusion in the Registration Statement (or any amendment thereto) or any Issuer Free Writing Prospectus, the General Disclosure Package or the Prospectus (or any amendment or supplement thereto) (the “Manager Information”).

 

(c)  Actions against Parties; Notification.  Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement.  In the case of parties indemnified pursuant to Section 5(a) above, counsel to the indemnified parties shall be selected by the Manager, and, in the case of parties indemnified pursuant to Section 5(b) above, counsel to the indemnified parties shall be selected by the Company.  An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party.  In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances.  No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental

 

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agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 5 or Section 6 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

(d)  Settlement without Consent if Failure to Reimburse.  If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 5(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.  Notwithstanding the immediately preceding sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, an indemnifying party shall not be liable for any settlement of the nature contemplated by Section 5(a)(ii) effected without its consent if such indemnifying party (i) reimburses such indemnified party in accordance with such request to the extent it considers such request to be reasonable and (ii) provides written notice to the indemnified party substantiating the unpaid balance as unreasonable, in each case prior to the date of such settlement.

 

(e)  Additional Liability.  The obligations of the Company under this Section 5 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to the directors and officers of the Manager and to each person, if any, who controls the Manager within the meaning of the 1933 Act and each broker-dealer affiliate of the Manager; and the obligations of the Manager under this Section 5 shall be in addition to any liability which the Manager may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the 1933 Act.

 

Section 6.  Contribution.  If the indemnification provided for in Section 5 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Manager and the Forward Purchaser on the other hand from the offering of the Shares pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the Manager and the Forward Purchaser on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

 

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The relative benefits received by the Company on the one hand and the Forward Purchaser and the Manager on the other hand in connection with the offering of the Shares pursuant to this Agreement shall be deemed to be in the same respective proportions as (i) the Net Proceeds from the offering of the Shares pursuant to this Agreement (before deducting expenses and, for the avoidance of doubt, without including proceeds from the offering of Shares pursuant to the Additional Distribution Agency Agreements) received by the Company (which shall be deemed to include the proceeds that would be received by the Company upon physical settlement of the Confirmation(s) assuming that the aggregate amount payable by the Forward Purchaser under the Confirmation(s) is equal to the aggregate amount of the Net Proceeds realized upon the sale of the Shares) and (ii) the aggregate proceeds received by the Forward Purchaser and the Manager from the sale of the Shares less the aggregate Net Proceeds.

 

The relative fault of the Company on the one hand and the Forward Purchaser and the Manager on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Forward Purchaser and the Manager and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

The Company and the Manager agree 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 which does not take account of the equitable considerations referred to above in this Section 6.  The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 6 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

 

Notwithstanding the provisions of this Section 6, the Manager shall not be required to contribute any amount in excess of the total compensation received by the Manager in connection with the sale of Shares on behalf of the Forward Purchaser.

 

No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

For purposes of this Section 6, the person, if any, who controls the Manager within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and the Manager’s Affiliates shall have the same rights to contribution as such Manager, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company.

 

Section 7.  Representations, Warranties and Agreements to Survive Delivery.  The respective indemnities, agreements, representations, warranties and other statements of the Company and the Manager, as set forth in this Agreement or made by or on behalf of them,

 

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respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of the Manager or any controlling person of the Manager, or the Company, or any officer or director or controlling person of the Company, and shall survive delivery of and payment for the Shares.

 

Section 8.  Termination.

 

(a)  The Company shall have the right, by giving written notice as hereinafter specified, to terminate this Agreement in its sole discretion at any time.  Any such termination shall be without liability of any party to any other party except that (i) if Shares have been sold through the Manager, then Section 3(q) shall remain in full force and effect notwithstanding such termination, (ii) with respect to any pending sale through the Manager, the obligations of the Company, including in respect of compensation of the Manager, shall remain in full force and effect notwithstanding such termination and (iii) the provisions of Section 1, Section 3(i), Section 5 and Section 6 of this Agreement shall remain in full force and effect notwithstanding such termination.

 

(b)  The Manager shall have the right, by giving written notice as hereinafter specified, to terminate this Agreement in its sole discretion at any time.  Any such termination shall be without liability of any party to any other party except that the provisions of Section 1, 3(i), Section 5 and Section 6 of this Agreement shall remain in full force and effect notwithstanding such termination.

 

(c)  This Agreement shall remain in full force and effect unless terminated pursuant to Section 8(a) or (b) above or otherwise by mutual agreement of the parties or upon settlement of the sale of all the Shares in the aggregate in one or more offerings; provided that any such termination by mutual agreement or pursuant to this clause (c) shall in all cases be deemed to provide that Section 1, Section 3(i), Section 5 and Section 6 of this Agreement shall remain in full force and effect.

 

(d)  Any termination of this Agreement shall be effective on the date specified in such notice of termination; provided that such termination shall not be effective until the close of business on the date of receipt of such notice by the Manager or the Company, as the case may be.  If such termination shall occur prior to the Settlement Date for any sale of Shares, such sale shall settle in accordance with the provisions of Section 2(i) hereof.

 

Section 9.  Notices.  Except as otherwise herein provided, all statements, requests, notices and agreements shall be in writing and delivered by hand, overnight courier, mail or facsimile and, if to the Manager, shall be sufficient in all respects if delivered or sent to [·], Attention: [                 ] (facsimile: [                 ]), with a copy to [                 ] (facsimile: [                 ]); if to the Company, it shall be sufficient in all respects if delivered or sent to the Company at the offices of the Company at 600 Hale Street, P.O. Box 1000, Prides Crossing, MA 01965, Attention:  Chief Financial Officer.  Each party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose.

 

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Section 10.  Parties.  The Agreement herein set forth has been and is made solely for the benefit of the Manager, the Forward Purchaser and the Company and to the extent provided in Section 5 hereof the controlling persons, directors and officers referred to in such section, and their respective successors, assigns, heirs, personal representatives and executors and administrators.  No other person, partnership, association or corporation (including a purchaser, as such purchaser, from any of the Manager) shall acquire or have any right under or by virtue of this Agreement.

 

Section 11.  Adjustments For Stock Splits.  The parties acknowledge and agree that all share related numbers contained in this Agreement shall be adjusted to take into account any stock split effected with respect to the Shares.

 

Section 12.  Counterparts.  This Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument.  This Agreement may be delivered by any party by facsimile or other electronic transmission.

 

Section 13.  Time of the Essence.  Time shall be of the essence of this Agreement.  As used herein, the term “business day” shall mean any day when the Commission’s office in Washington, D.C. is open for business.

 

Section 14.  Waiver of Jury Trial.  The Company and the Manager hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to jury trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

Section 15.  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS PRINCIPLES OF CONFLICTS OF LAW.

 

Section 16.  Headings.  The Section headings in this Agreement have been inserted as a matter of convenience of reference and are not a part of this Agreement.

 

Section 17.  Successors and Assigns.  This Agreement shall be binding upon the Manager and the Company and their successors and assigns and any successor or assign of any substantial portion of the Company’s and any of the Manager’s respective businesses and/or assets.

 

Section 18.  Severability.  The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof.  If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

 

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Section 19.  Entire Agreement.  This Agreement constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof.

 

[Remainder of this page intentionally left blank]

 

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If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Manager and the Company in accordance with its terms.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Affiliated   Managers Group, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    
	
 
    	
 
    	
Name: 
    	
John   Kingston, III
    
	
 
    	
 
    	
Title: 
    	
Vice Chairman,   General Counsel and Secretary
    

 

 

Accepted as of the date hereof:

 

 

	
By:
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    
	
 
    
	
By:
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

[Signature Page DAA -                             ]EXHIBIT 10.139

 

[Translation]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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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[*]Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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; [*].

 

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                                   [*]

 

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.

 

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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 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.

 

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

 

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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 “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

 

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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.

 

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

 

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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

 

This Agreement shall be governed by and construed in accordance with the laws of Japan, without giving effect to its conflicts of law principles.  The U.N. Convention on Contracts for the 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

 

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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.”

 

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)

 

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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.

 

[Signatures on following page]

 

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

 

 

	
MICRON   SEMICONDUCTOR ASIA PTE. LTD.
    	
ELPIDA   MEMORY, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Brian J. Shields
    	
 
    	
/s/ Yukio   Sakamoto
    
	
Signature
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    
	
Brian J. Shields
    	
 
    	
Yukio Sakamoto
    
	
Print   name
    	
 
    	
Print   name
    
	
 
    	
 
    	
 
    
	
Senior Managing Director and Chairman
    	
 
    	
Trustee
    
	
Print   title
    	
 
    	
Print   title
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Nobuaki   Kobayashi
    
	
 
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Nobuaki Kobayashi
    
	
 
    	
 
    	
Print   name
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Trustee
    
	
 
    	
 
    	
Print   title
    

 

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[*]

 

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