Exhibit 10.156

 

[***]                   DENOTES CONFIDENTIAL MATERIALS OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.

 

INTEL/MICRON CONFIDENTIAL

 

 

THE INTERESTS EVIDENCED BY THIS DOCUMENT ARE SUBJECT TO RESTRICTIONS ON
ASSIGNMENT AND TRANSFER SET FORTH HEREIN.  IN ADDITION, THE INTERESTS HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNTIL REGISTERED OR UNTIL THE BOARD OF
MANAGERS HAS RECEIVED AN OPINION OF LEGAL COUNSEL, OR OTHER ASSURANCES
SATISFACTORY TO THAT BOARD, THAT AN INTEREST MAY LEGALLY BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT REGISTRATION, ALL AS PROVIDED IN THIS DOCUMENT.

 

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

 

OF

 

IM FLASH TECHNOLOGIES, LLC

 

BY AND BETWEEN

 

MICRON TECHNOLOGY, INC. AND INTEL CORPORATION

 

January  6, 2006

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

ARTICLE 1. ORGANIZATIONAL MATTERS

1

 

 

1.1

The Joint Venture Company

1

1.2

Name

1

1.3

Term

1

1.4

Purpose of the Joint Venture Company; Business

1

1.5

Principal Place of Business; Other Places of Business; Registered Office and
Agent

2

1.6

Fictitious Business Name Statement; Other Certificates

2

1.7

Admission of Members

3

1.8

Supply Agreements

3

 

 

 

ARTICLE 2. CAPITALIZATION

3

 

 

2.1

Initial Capital Contributions of the Members

3

2.2

Initial Capital Contribution Reserve

3

2.3

Additional Capital Contributions

3

2.4

Shortfalls in Contributions

6

2.5

Miscellaneous Capital Provisions

8

2.6

Contributions After a Change in Consolidating Member

9

 

 

 

ARTICLE 3. MEMBER DEBT FINANCING

9

 

 

3.1

Mandatory Member Debt Financing

9

3.2

Optional [***] Financing

12

3.3

Optional Other Member Debt Financing

13

3.4

Change In Committed Capital

13

3.5

Change in Consolidating Member

14

3.6

Loans Through Subsidiary

14

 

 

 

ARTICLE 4. CAPITAL ACCOUNTS AND ALLOCATIONS

14

 

 

4.1

Capital Accounts

14

4.2

Allocations of Book Income and Loss

14

4.3

Tax Allocations

14

4.4

Restoration of Negative Balances

14

 

 

 

ARTICLE 5. DISTRIBUTIONS

14

 

 

5.1

Distributions

14

5.2

Withholding Tax Payments and Obligations

16

5.3

Distribution Limitations

17

 

 

 

ARTICLE 6. MANAGEMENT; BOARD OF MANAGERS

17

 

 

6.1

Management Power

17

6.2

Number of Managers; Appointment of Managers

17

6.3

Voting of Managers

19

 

ii

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6.4

Meetings of the Board of Managers; Quorum

21

6.5

Notice; Waiver

22

6.6

Action Without a Meeting; Meetings by Telecommunications

22

6.7

Alternate Managers

22

6.8

Compensation of Managers

22

 

 

 

ARTICLE 7. MEMBERS

23

 

 

7.1

Rights of Members; Meetings

23

7.2

Limitations on the Rights of Members

24

7.3

Limited Liability of the Members

24

7.4

Voting Rights of Members

25

7.5

Defaulting Member

27

7.6

Cooperation

27

 

 

 

ARTICLE 8. OFFICERS AND COMMITTEES

27

 

 

8.1

Intel Executive Officer

27

8.2

Micron Executive Officer

28

8.3

Lead Controller/Chief Financial Officer

28

8.4

Chief Executive Officer

29

8.5

General Provisions Regarding Officers

29

8.6

Manufacturing Committee

30

8.7

Waiver of Fiduciary Duties

30

 

 

 

ARTICLE 9. EMPLOYEE MATTERS

31

 

 

9.1

Joint Venture Company Employees; Seconded Employees

31

9.2

Performance and Removal of Seconded Employees

31

9.3

Forms

32

9.4

Compensation and Benefits

33

 

 

 

ARTICLE 10. RECORDS, ACCOUNTS AND REPORTS

34

 

 

10.1

Books and Records

34

10.2

Access to Information

34

10.3

Operations Reports

35

10.4

Financial Reports

35

10.5

Reportable Events

37

10.6

Tax Information

39

10.7

Tax Matters and Tax Matters Partner

39

10.8

Bank Accounts and Funds

40

10.9

Internal Controls

40

 

 

 

ARTICLE 11. BUSINESS PLAN

41

 

 

11.1

Initial Business Plan; Initial Budgets

41

11.2

Subsequent Business Plans

45

11.3

Expenditures

47

11.4

Fab Criteria

47

11.5

Quarterly Business Plan

47

 

iii

--------------------------------------------------------------------------------

 

11.6

Operating Plan

48

11.7

Use of Member Names

48

11.8

Insurance

48

 

 

 

ARTICLE 12. TRANSFER RESTRICTIONS; PURCHASE OPTIONS

48

 

 

12.1

Restrictions on Transfer

48

12.2

Permitted Transfers

49

12.3

Additional Members

50

12.4

Purchase of Additional Interest

50

12.5

Purchase of Remaining Interest

50

 

 

 

ARTICLE 13. DISSOLUTION AND LIQUIDATION

53

 

 

13.1

Dissolution

53

13.2

Determination of [***] Value

55

13.3

No Withdrawal

55

13.4

Micron [***] Reimbursement; [***] True-Up Payment

55

13.5

Micron Purchase Option on [***]

56

13.6

Intel Purchase Option

56

13.7

Additional Micron Option

56

13.8

Remaining Facilities Draft

57

13.9

Auction of Single Remaining Facility

58

13.10

Closing of Purchases

58

13.11

Auction of Remaining Assets

59

13.12

Winding Up

59

13.13

Liquidation

59

13.14

Supply Agreements

60

13.15

Employees

61

 

 

 

ARTICLE 14. EXCULPATION AND INDEMNIFICATION

61

 

 

14.1

Exculpation

61

14.2

Indemnification

61

 

 

 

ARTICLE 15. GOVERNMENTAL APPROVALS

62

 

 

15.1

Governmental Approvals

62

 

 

 

ARTICLE 16. FORMATION OF ADDITIONAL ENTITIES

64

 

 

16.1

Formation of U.S. Subsidiaries

64

16.2

Formation of Foreign Facilities Company

65

 

 

 

ARTICLE 17. DEADLOCK; OTHER DISPUTE RESOLUTION; EVENT OF DEFAULT

65

 

 

17.1

Deadlock

65

17.2

Resolution of Deadlock

66

17.3

Definition of

66

17.4

Definition of

66

 

iv

--------------------------------------------------------------------------------

 

17.5

Other Dispute Resolution

66

17.6

Mediation

67

17.7

Event of Default

67

17.8

Specific Performance

68

17.8

Tax Matters

68

 

 

 

ARTICLE 18. MISCELLANEOUS PROVISIONS

68

 

 

18.1

Notices

68

18.2

Waiver

69

18.3

Assignment

69

18.4

Third Party Rights

69

18.5

Choice of Law

69

18.6

Headings

69

18.7

Entire Agreement

69

18.8

Severability

69

18.9

Counterparts

70

18.10

Further Assurances

70

18.11

Consequential Damages

70

18.12

Jurisdiction; Venue

70

18.13

Confidential Information

70

18.14

Certain Interpretive Matters

71

 

APPENDICES

 

Appendix A

Definitions

 

Appendix B

Tax Matters

 

Appendix C

Initial Managers

 

Appendix D

Initial Capital Contributions

 

Appendix E

Manufacturing Committee Charter

 

 

 

 

SCHEDULES

 

Schedule 1

[***] Schedule

 

Schedule 2

Insurance

 

Schedule 3

Intel Matters

 

Schedule 4

Micron Matters

 

 

 

 

EXHIBITS

 

Exhibit A

Form of Mandatory Note

 

Exhibit B

Form of Optional [***] Note

 

Exhibit C

Form of Optional Other Note

 

 

v

--------------------------------------------------------------------------------

 

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

 

OF

 

IM FLASH TECHNOLOGIES, LLC

 

This LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this “Agreement”) of IM
Flash Technologies, LLC, a Delaware limited liability company (the “Joint
Venture Company”), is made and entered into as of this 6th day of January 2006
(the “Effective Date”), by and between Micron Technology, Inc., a Delaware
corporation (“Micron”), and Intel Corporation, a Delaware corporation (“Intel”)
(Micron and Intel are each referred to individually as a “Member,” and
collectively as the “Members”).  Capitalized terms used in this Agreement shall
have the respective meanings ascribed to such terms in Appendix A to this
Agreement.

 

RECITALS

 

A.            Prior to the Effective Date, Micron formed the Joint Venture
Company to engage in the activities set forth in Section 1.4 hereof, and,
immediately prior to the execution and delivery of this Agreement, Micron was
the sole member of the Joint Venture Company; and

 

B.            Prior to or contemporaneously with the execution of this
Agreement, the Joint Venture Company, Micron and Intel have each entered into
the Joint Venture Documents to which they are a party, as described in the
Master Agreement.

 

ARTICLE 1.
ORGANIZATIONAL MATTERS

 

1.1           The Joint Venture Company.  The Joint Venture Company is a limited
liability company organized under the Delaware Limited Liability Company Act
(Del. Code Ann. tit. 6 §§ 18-101 et seq.), as amended from time to time (the
“Act”), and governed by the terms and conditions set forth in this Agreement. 
The Joint Venture Company is a Delaware limited liability company as a result of
the filing of a certificate of formation (the “Certificate”) in the office of
the Delaware Secretary of State in accordance with the Act.

 

1.2           Name.  The name of the Joint Venture Company is “IM Flash
Technologies, LLC.”

 

1.3           Term.  The initial term of the business of the Joint Venture
Company shall continue until the earlier of the tenth anniversary of the
Effective Date and the termination of the Joint Venture Company prior to such
date in accordance with this Agreement (the “Initial Term”).  Such Initial Term
may be extended by mutual written agreement of the Members at least [***] prior
to the expiration of the Initial Term or any Renewal Term (any such extensions
to be on such terms and for such period as set forth in writing and agreed to by
the Members) (each such extended term, a “Renewal Term,” and together with the
Initial Term, the “Term”).

 

1.4           Purpose of the Joint Venture Company; Business.  The purpose of
the Joint Venture Company shall be (A) to engage in the business of
manufacturing for the Members

 

--------------------------------------------------------------------------------

 

NAND Flash Memory Products in various forms, including NAND Flash Memory Wafers,
and such other forms of memory products as may be determined by the Board of
Managers from time to time, and related memory product manufacturing development
activities, (B) to enter into any other lawful business, purpose or activity in
which a limited liability company may be engaged under Applicable Law (including
the Act), as the Members may determine from time to time, subject to and in
accordance with the terms and conditions of this Agreement, and (C) to enter
into any lawful transaction and engage in any lawful activities in furtherance
of the foregoing purposes and as may be necessary or incidental to, connected
with or arising out of the foregoing purposes in accordance with the terms and
conditions of this Agreement; provided, however, that a Member having an
Economic Interest above [***] percent ([***]%) may, in its sole discretion,
include the manufacture of other forms of memory products in the purpose of the
Joint Venture Company (other than (i) [***] if such Member is Intel and
(ii) Intel [***] if such Member is Micron), so long as the amount, delivery
schedule, pricing and terms of the other Member’s supply of Joint Venture
Products remain as they existed immediately prior to the time at which the
decision to include the manufacture of such other forms of memory products is
made.

 

1.5                                 Principal Place of Business; Other Places of
Business; Registered Office and Agent.

 

(A)          The principal place of business and mailing address of the Joint
Venture Company shall be IM Flash Technologies, LLC, 1550 East 3400 North, Lehi,
Utah 84043, or such other address within or outside of the State of Delaware as
the Board of Managers may from time to time designate.  The Board of Managers
may change the principal place of business of the Joint Venture Company to such
other place or places within or outside the State of Delaware as the Board of
Managers may from time to time determine, in its sole and absolute discretion
and, if necessary, the Board of Managers shall cause the Certificate to be
amended in accordance with the applicable requirements of the Act to effectuate
the change in the principal place of business.

 

(B)           Other places of business of the Joint Venture Company shall
initially be in Boise, Idaho and Manassas, Virginia.  The Joint Venture Company
may maintain offices and places of business at such other place or places within
or outside the State of Delaware as the Board of Managers may deem to be
advisable.

 

(C)           The registered office of the Joint Venture Company in the State of
Delaware shall be Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801, and the initial registered agent for service of process at such
registered office shall be The Corporation Trust Company.  The registered office
and the registered agent may be changed from time to time by the Board of
Managers, by causing the prescribed form, accompanied by the requisite filing
fee, to be filed with the Delaware Secretary of State in accordance with the
Act.

 

1.6           Fictitious Business Name Statement; Other Certificates.  The
Authorized Officers, or the Chief Executive Officer, as applicable, shall, from
time to time, cause the Joint Venture Company to be registered as a foreign
limited liability company and to file fictitious or trade name statements or
certificates in those jurisdictions and offices as the Board of Managers
considers necessary or appropriate.  The Joint Venture Company may engage in
business activities under any fictitious business names selected by the Board of
Managers.  The Authorized Officers, or the Chief Executive Officer, as
applicable, shall, from time to time, file

 

2

--------------------------------------------------------------------------------

 

or cause to be filed certificates of amendment, certificates of cancellation, or
other certificates as the Board of Managers reasonably considers necessary or
appropriate under the Act or under the laws of any jurisdiction in which the
Joint Venture Company is doing business to establish and continue the Joint
Venture Company as a limited liability company or to protect the limited
liability of the Members.

 

1.7           Admission of Members.  Intel and Micron hereby confirm and agree
to their status as Members of the Joint Venture Company upon the execution of
this Agreement.

 

1.8           Supply Agreements.  Contemporaneously with the execution of this
Agreement, Intel and Micron have entered into the Supply Agreements with the
Joint Venture Company pursuant to which, subject to the terms and conditions set
forth in the applicable Supply Agreement, each Member shall purchase from the
Joint Venture Company, and the Joint Venture Company shall supply to each
Member, a percentage of the Joint Venture Company’s output of Products equal to
such Member’s Sharing Interest.

 

ARTICLE 2.
CAPITALIZATION

 

2.1           Initial Capital Contributions of the Members.

 

(A)          Intel Initial Capital Contribution.  The Members acknowledge and
agree that, contemporaneously herewith, Intel shall be deemed to have delivered
to the Joint Venture Company all of the Intel Initial Contributed Assets, as
identified on Appendix D.  These transactions shall be treated by Intel and the
Joint Venture Company as the Initial Capital Contribution by Intel of the Intel
Initial Contributed Assets in the manner and with a value as set forth on
Appendix D.

 

(B)           Micron Initial Capital Contribution.  The Members acknowledge and
agree that, contemporaneously herewith, Micron shall be deemed to have delivered
to the Joint Venture Company all of the Micron Initial Contributed Assets, as
identified on Appendix D.  These transactions shall be treated by Micron and the
Joint Venture Company as the Initial Capital Contribution by Micron of the
Micron Initial Contributed Assets in the manner and with a value as set forth on
Appendix D.

 

2.2           Initial Capital Contribution Reserve.  The Joint Venture Company
shall use all funds contributed (either in cash or pursuant to a promissory
note, in accordance with Appendix D) as Initial Capital Contributions before
permitting any Additional Capital Contributions.  Moreover, the Intel Additional
Cash and the Micron Additional Cash shall be transferred to a reserve account
promptly after such funds are delivered to the Joint Venture Company.  Such
monies shall be invested in such investment or investments as the Board of
Managers may hereafter designate and shall not be expended by the Joint Venture
Company until such time as all other funds contributed as Initial Capital
Contributions of the Members have been expended.  Such amounts shall be deemed
to be necessary reserves for purposes of distributions under Section 5.1(A).

 

2.3           Additional Capital Contributions.

 

(A)          [***] Capital Contributions.  In addition to the Initial Capital
Contributions, each Member shall make Capital Contributions to the Joint Venture
Company

 

3

--------------------------------------------------------------------------------

 

equal to its [***] Capital Contributions; provided, however, that in no event
shall (1) Intel be obligated to make [***] Capital Contributions in the
aggregate in excess of the Intel Maximum Incremental Capital Amount, or
(2) Micron be obligated to make [***] Capital Contributions in the aggregate in
excess of the Micron Maximum Incremental Capital Amount.  Such [***] Capital
Contributions shall be made in quarterly installments on the twenty-fifth (25th)
day of each Fiscal Quarter of the Joint Venture Company (or if such day is not a
Business Day, then on the next Business Day after such day) in amounts equal to
the sum of (a) the amounts required for the remainder of the Fiscal Quarter in
which the [***] Capital Contributions are made and (b) the amounts required for
the first twenty-five (25) days of the upcoming Fiscal Quarter (or if such day
is not a Business Day, then through the next Business Day after such day), each
as set forth in the Approved Business Plan in effect at the time of such
contribution.

 

(B)           [***] Capital Contributions.  Except as mutually agreed in writing
by both Members, each Member may, but shall not be required to, make Capital
Contributions to the Joint Venture Company equal to its [***] Capital
Contribution.  Such [***] Capital Contributions shall be made in quarterly
installments on the twenty-fifth (25th) day of each Fiscal Quarter of the Joint
Venture Company (or if such day is not a Business Day, then on the next Business
Day after such day) in an amount equal to the sum of (a) the amounts of the
[***] Capital Contributions scheduled for the remainder of the Fiscal Quarter in
which the [***] Capital Contributions are made and (b) the amounts of the [***]
Capital Contributions scheduled for the first twenty-five (25) days of the
upcoming Fiscal Quarter (or if such day is not a Business Day, then through the
next Business Day after such day), each as set forth in the Approved Business
Plan in effect at the time of such contribution.

 

(C)           Other Capital Contributions.  Except as mutually agreed in writing
by both Members, each Member may, but shall not be required to, make Capital
Contributions (other than [***] Capital Contributions and [***] Capital
Contributions) to the Joint Venture Company equal to its [***] as set forth in
the Annual Budget included in the Approved Business Plan for the Fiscal Year in
which the contributions are to be made.  Any such Capital Contributions shall be
made in quarterly installments on the twenty-fifth (25th) day of each Fiscal
Quarter of the Joint Venture Company (or if such day is not a Business Day, then
on the next Business Day after such day) in an amount equal to the sum of
(a) the amounts of such Capital Contributions scheduled for the remainder of the
Fiscal Quarter in which such Capital Contributions are made and (b) the amounts
of such Capital Contributions scheduled for the first twenty-five (25) days of
the upcoming Fiscal Quarter (or if such day is not a Business Day, then through
the next Business Day after such day), each as set forth in the Approved
Business Plan in effect at the time of such contribution.  Such contributed
funds are hereinafter referred to as the “Other Capital Contributions” and,
together with the [***] Capital Contributions and the [***] Capital
Contributions, the “Additional Capital Contributions.”

 

(D)          No Other Contributions.  Except as set forth in Sections 2.1 and
2.3(A), in the Joint Venture Documents and such other contributions as the
Members may agree shall be required, no Member shall be required to make any
Capital Contributions to the Joint Venture Company, and, except as contemplated
by Section 2.3(B), 2.3(C) and 2.4, in the Joint Venture Documents and such other
contributions as the Members may agree may be made (and except for Make-Up
Contributions and any deemed contributions of amounts outstanding under Member
Notes), no additional Capital Contribution to the Joint Venture Company shall be
made by either Member without the consent of the other Member.

 

4

--------------------------------------------------------------------------------

 

(E)           Coordination.  The Members shall coordinate with each other
regarding, and provide each other with advance written notice of, the timing of
their delivery of each Additional Capital Contribution.

 

(F)           Partial Contributions.  In the event that any Member determines to
contribute less than its [***] of any Additional Capital Contribution, such
Member shall provide notice of such determination specifying the amount of such
Additional Capital Contribution it intends to make, if any.  Such notice shall
be provided to the Joint Venture Company and to the other Member as soon as
practicable after such determination is made, but in any event not less than ten
(10) Business Days prior to the date such Additional Capital Contribution is to
be made.  Any failure or delay in providing such notice shall not affect the
right of any Member to refrain from providing such Additional Capital
Contribution, nor shall it result in any liability for damages.  Subject to
Section 3.1, to the extent that a Member contributes less than its [***] of any
Additional Capital Contribution for a given Fiscal Quarter, the other Member
shall have the right to reduce its contribution proportionately.  In the event
that such other Member has already remitted any amount in respect of its
Additional Capital Contribution, the Joint Venture Company shall, upon such
other Member’s request and at its option, return such amount or deem all or a
portion of such contribution to be Member Debt Financing hereunder.  Any amount
so requested to be returned or refunded shall be remitted to the requesting
Member immediately by wire transfer of immediately available funds.  The amount
contributed for such Fiscal Quarter by the non-contributing Member (and the
other Member, if its contribution is proportionately reduced) shall be applied
in the following order:

 

(1)           First, to satisfy the obligation of such Member to contribute its
[***] of any [***] Capital Contribution for such Fiscal Quarter;

 

(2)           Second, the remainder, if any, to fulfill the Member’s [***] of
the amount, if any, of any Other Capital Contribution for such Fiscal Quarter
relating to an Operational Fab;

 

(3)           Third, the remainder, if any, to fulfill the Member’s [***] of the
amount, if any, of any Other Capital Contribution for such Fiscal Quarter
relating to matters not addressed in the immediately preceding clause (2); and

 

(4)           Fourth, the remainder, if any, to fulfill the Member’s [***] of
any amount of the [***] Capital Contribution for such Fiscal Quarter to be
applied to a [***] under the [***] Budget, and if there is [***] such [***],
each of such [***] in the order in which they appear on the [***] Schedule.

 

(G)           Priority of Contributions.  Each Member shall contribute its [***]
of the cumulative aggregate [***] Capital Contributions theretofore due (and
shall pay any interest accrued thereon at the rate provided in
Section 2.4(A)(3) as a result of such Member’s failure to make such
contributions at the times and in the amounts required pursuant to
Section 2.3(A)) other than any [***] Capital Contributions as to which the
obligation to contribute has been terminated pursuant to Section 2.4(A)(2),
before it may make any other Capital Contributions, including any [***] Capital
Contributions (including by way of Make-Up Contributions), or any Other Capital
Contribution or any Member Debt Financing; provided, however, that for purposes
of this Section 2.3(G), a Member’s [***] of an Additional Capital Contribution
shall be deemed to exclude any shortfall of an [***] Capital Contribution
(1) for which the Joint Venture

 

5

--------------------------------------------------------------------------------

 

Company, or the other Member acting on its behalf, has not demanded payment or
pursued any claim for payment and (2) any portion of which the Member is
restricted from contributing, or the Joint Venture Company is restricted from
paying, under Article 2 or Article 3.

 

(H)          Interim Loan.  Each remittance of funds in respect of a Member’s
[***] of an Additional Capital Contribution pursuant to this Section 2.3 shall,
upon receipt by the Joint Venture Company of such funds, be deemed to be a loan
(which shall bear no interest) to the Joint Venture Company of the entire amount
so delivered until the other Member remits funds in respect of its [***] of such
Additional Capital Contribution.  At such time:

 

(1)           if both Members have remitted amounts equal to their respective
[***] of the Additional Capital Contribution in full, all such amounts shall be
deemed Additional Capital Contributions (whereupon the respective amounts
remitted by the Members shall no longer be deemed loans and shall be added to
the Members’ respective Capital Contribution Balances);

 

(2)           if there is a Shortfall Amount, the amount actually remitted by
the Non-Funding Member shall be deemed an Additional Capital Contribution by
such Member (and such amount shall no longer be deemed a loan and shall be added
to the Non-Funding Member’s Capital Contribution Balance), and a portion of the
amount actually remitted by the Funding Member equal to the product of (a) the
Funding Member’s [***] of such Additional Capital Contribution (whether or not
contributed in full) multiplied by (b) a fraction, the numerator of which is the
amount actually remitted by the Non-Funding Member and the denominator of which
is the Non-Funding Member’s [***] of the Additional Capital Contribution shall
be deemed an Additional Capital Contribution (and such amount shall be added to
the Funding Member’s Capital Contribution Balance).  In such event, the
remainder of the amount remitted by the Funding Member shall continue to be a
loan to the Joint Venture Company until: (i) the return of all or a portion of
such remaining funds upon the receipt by the Joint Venture Company of
instructions from such Member to return all or a portion of such funds to the
Member pursuant to Sections 2.3(F), 2.4(A)(1), 2.4(C) or 3.1(A); (ii) the
Funding Member instructs the Joint Venture Company to deem all or a portion of
such remaining funds an Additional Capital Contribution (whereupon all or such
portion of such funds shall be added to the Member’s Capital Contribution
Balance); or (iii) the Funding Member instructs the Joint Venture Company to
deem all or a portion of such funds to be Member Debt Financing; provided that
if the Joint Venture Company has not received instructions pursuant to
subparagraphs (i), (ii) or (iii) above within fifteen (15) days of the date the
applicable Additional Capital Contribution was due, the Joint Venture Company
shall contact such Member to request such instruction.

 

2.4           Shortfalls in Contributions.

 

(A)          [***] Capital Contribution Shortfall.

 

(1)           If a Member fails to remit in full its [***] Capital Contribution,
at the time and in the amount required pursuant to Section 2.3(A), the other
Member, if it has remitted its [***] of such [***] Capital Contribution, may, at
its election, (a) require that the Joint Venture Company return the remitting
Member’s share of such [***] Capital Contribution to such remitting Member in
part or in full, (b) make a Capital Contribution to the Joint Venture

 

6

--------------------------------------------------------------------------------

 

Company of any or all of the shortfall or (c) provide Optional [***] Financing
in accordance with Section 3.2.

 

(2)           To the extent the other Member elects to contribute or loan the
shortfall under Section 2.4(A)(1)(b) or (c) above, such other Member may elect,
by written notice to the Joint Venture Company and the non-contributing Member,
to terminate the right and obligation of the non-contributing Member to
contribute any unpaid portion of such non-contributing Member’s [***] of the
[***] Capital Contribution that the non-contributing Member failed to pay.

 

(3)           The other Member, if it has remitted its [***] of the [***]
Capital Contribution, may direct the Joint Venture Company under Section 7.5 to
(or may, on behalf of the Joint Venture Company) demand payment and pursue a
claim against the non-contributing Member for payment.  The non-contributing
Member shall be obligated to pay interest (which interest shall not be treated
as a Capital Contribution) on such uncontributed amount at [***] (as in effect
on the date such contribution was scheduled to be made and adjusted every
[***]), compounded [***], from the date such [***] Capital Contribution is due
until the date it is paid.  The Member that did not make an [***] Capital
Contribution it was required to make under the terms of this Agreement shall pay
to the Joint Venture Company and the other Member all costs, including
attorneys’ fees, incurred by the Joint Venture Company and the other Member,
respectively, in pursuing such claim for payment (which payments shall not be
treated as Capital Contributions).  Such Member shall not be liable for any
additional damages.  If the Joint Venture Company recovers against the
non-contributing Member, the funds collected from the non-contributing Member
shall be applied first to the payment in full of costs theretofore incurred by
the Joint Venture Company or the other Member in the pursuit of the claim for
payment against the non-contributing Member (and such amount shall not be
treated as a Capital Contribution), then to all accrued but unpaid interest on
such payment (and such amount shall not be treated as a Capital Contribution)
and then to the payment of the delinquent portion of the [***] Capital
Contribution (and such amount shall be added to the Capital Contribution Balance
of the non-contributing Member).  In addition, upon such payment by the
non-contributing Member, (a) if a related Optional [***] Shortfall Note is then
outstanding, the provisions of Section 3.2(D) (subject to Section 3.2(E)) shall
apply and (b) if no related Optional [***] Shortfall Note is then outstanding,
but the other Member has remitted to the Joint Venture Company the amount that
the non-contributing Member was required to make, then the Joint Venture Company
shall immediately refund to the contributing Member an amount equal to the
non-contributing Member’s payment that was treated as a Capital Contribution,
and the Capital Contribution Balance of the contributing Member shall be reduced
by such amount.

 

(4)           If, after a failure by a Member to timely make a Capital
Contribution of its [***] of an [***] Capital Contribution that it was required
to make under the terms of this Agreement, such Member wishes to make any
payment with respect to such portion of the [***] Capital Contribution (and the
ability to make such contribution has not been terminated pursuant to
Section 2.4(A)(2)), the Joint Venture Company, with the consent of the other
Member (which consent shall not be necessary if an action to collect such amount
has been commenced by or at the direction of such other Member), shall accept
such payment and apply it first to the payment in full of costs theretofore
incurred by the Joint Venture Company or the other Member in the pursuit of a
claim for payment against the non-contributing Member (and such amount shall not
be treated as a Capital Contribution), then to all accrued but unpaid interest
on such payment (and such amount shall not be treated as a Capital Contribution)
and

 

7

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then to the payment of the delinquent portion of the [***] Capital Contribution
(and such amount shall be added to the Capital Contribution Balance of such
Member).  In addition, upon such payment by the non-contributing Member, (a) if
a related Optional [***] Shortfall Note is then outstanding, the provisions of
Section 3.2(D) (subject to Section 3.2(E)) shall apply and (b) if no related
Optional [***] Shortfall Note is then outstanding, but the other Member has
remitted to the Joint Venture Company the amount that the non-contributing
Member was required to make, then the Joint Venture Company shall immediately
refund to the contributing Member an amount equal to the non-contributing
Member’s payment that was treated as a Capital Contribution, and the Capital
Contribution Balance of the contributing Member shall be reduced by such amount.

 

(5)           Notwithstanding any provision hereof to the contrary, the failure
by a Member to contribute in [***] of any [***] Capital Contribution shall not
constitute a Liquidating Event.

 

(B)           [***] Capital Contribution Shortfall.  If a Member does not remit
in [***] of any [***] Capital Contribution at the time and in the full amount
permitted pursuant to Section 2.3(B), the provisions of Section 3.1 shall apply.

 

(C)           Other Capital Contribution Shortfall.  If a Member does not remit
[***] of any Other Capital Contribution, at the time and in the full amount
permitted pursuant to Section 2.3(C), the other Member, if it has remitted its
[***] of such Other Capital Contribution may, at its election, (1) require that
the Joint Venture Company [***] of such Other Capital Contribution to the
remitting Member in part or in full, (2) make a [***] to the Joint Venture
Company of any or all of the shortfall or (3) provide Optional Other Financing
in accordance with Section 3.3.

 

2.5           Miscellaneous Capital Provisions.

 

(A)          Capital Contributions shall be credited to the Capital Account of
the contributing Member to the extent provided in Article 4 of this Agreement.

 

(B)           No interest shall be paid to a Member on Capital Contributions.  A
Member shall not be entitled to withdraw any of its Capital Contributions except
as provided in Section 2.3(F), 2.4 or Section 3.1.

 

(C)           Except as otherwise provided in Article 13, a Member receiving a
return of all or any portion of its Capital Contribution shall have no right to
receive a particular type of property or a particular asset.

 

(D)          Any Capital Contributions to the Joint Venture Company to be made
in cash shall be made by the Members by wire transfer of immediately available
funds to the Joint Venture Company or its designated agent.

 

(E)           Except as otherwise provided in Section 2.4 or Article 3 or for
trade credit for services or goods provided by a Member to the Joint Venture
Company under any Joint Venture Document or any other agreement that has been
approved as required in this Agreement, no Member shall advance funds or make
loans to the Joint Venture Company without the approval of the Board of
Managers.  Any such approved advances or loans by a Member shall not be Capital
Contributions and shall not result in any increase in the amount of such
Member’s Capital Contribution Balance or entitle such Member to any increase in
its Percentage Interest,

 

8

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except as otherwise provided in Section 2.4 or Article 3.  The amount of such
advances or loans shall be a debt of the Joint Venture Company to such Member
and (unless such loan is subject to a written guaranty or other written
agreement governing the liability of another party with respect thereto) shall
be payable or collectible only out of the assets of the Joint Venture Company.

 

(F)           Except as provided in Section 5.2(C), the Joint Venture Company
shall not make loans to, or guaranty any indebtedness of, any Member or any
other Person other than a Wholly-Owned Subsidiary of the Joint Venture Company
or a Foreign Facilities Company; provided, however, that the provisions of this
Section 2.5(F) shall not prohibit the Joint Venture Company from providing
payment terms to the Members for Joint Venture Products manufactured by the
Joint Venture Company on behalf of the Members pursuant to any Joint Venture
Document or any other agreement that has been approved as provided in this
Agreement.

 

2.6           Contributions After a Change in Consolidating Member. 
Notwithstanding anything in this Article 2 to the contrary, following a Change
in Consolidating Member:

 

(A)          with respect to any Additional Capital Contribution, (1) the amount
of the [***] Member’s [***] that the [***] Member is required or permitted to
make pursuant to this Article 2 shall be reduced to the amount that would not
result in the occurrence of [***] Member or in the reduction of the [***]
Economic Interest below the lesser of [***]% and the [***] Member’s
then-existing Economic Interest, and (2) the [***] Member shall become entitled
to contribute the [***] Contribution Amount; provided, however, that if the
[***] Member fails to make such Additional Capital Contribution (or provide
Member Debt Financing, if applicable) in an amount equal to the full [***]
Contribution Amount then the limitations set forth in this Section 2.6(A) shall
not apply with respect to such Additional Capital Contribution; and

 

(B)           any payment by the Joint Venture Company to such [***] Member
shall not equal or exceed the amount that would result in the occurrence of
[***] Member or in the reduction of the [***] Member’s Economic Interest below
the lesser of [***]% and the [***] Member’s then-existing Economic Interest.

 

ARTICLE 3.
MEMBER DEBT FINANCING

 

3.1           Mandatory Member Debt Financing.

 

(A)          This Section 3.1 shall apply if (1) there occurs a Shortfall Amount
in respect of a [***] Capital Contribution pursuant to Section 2.4(B), (2) the
Non-Funding Member has contributed its [***] of all previously required [***]
Capital Contributions and (3) the other Member has become the “Funding Member”
as a result of (a) such other Member’s timely remittance of its [***] of such
[***] Capital Contribution (after giving effect to the return of any amount so
remitted which such Member requests or any increase in such amount contributed
by such Member, up to its [***] of such [***] Capital Contribution, after
receiving notice from the Joint Venture Company that the other Member has not
timely delivered its [***] of the [***] Capital Contribution), or (b) if neither
Member has timely remitted the amount of its [***] of such [***] Capital
Contribution, such other Member’s remittance of a greater percentage of its
[***] of such [***] Capital Contribution than the other Member (after giving
effect to the return of any amount so remitted which such Member requests or any
increase in such amount

 

9

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contributed by such Member, up to its [***] of such [***] Capital Contribution,
after receiving notice from the Joint Venture Company that neither Member has
timely delivered its [***] of the [***] Capital Contribution).  In such event,
the Funding Member shall (y) promptly provide Member Debt Financing to the Joint
Venture Company in an amount equal to the Loan Amount and (z) the Funding Member
Portion shall be deemed to have been provided as Member Debt Financing, rather
than as a Capital Contribution, to the Joint Venture Company.  However, if the
Shortfall Amount is less than $[***], then the Funding Member may elect not to
provide the Mandatory Member Debt Financing and, in such case, the Joint Venture
Company shall return to each Member the portion of the [***] Capital
Contribution actually remitted by such Member.  Furthermore, a Funding Member
shall not be required to provide Mandatory Member Debt Financing with respect to
a [***] Capital Contribution under a [***] that is part of a Disputed Approved
Business Plan proposed by the Non-Funding Member.  No Funding Member shall be
obligated to provide more than $[***] of Mandatory Member Debt Financing
outstanding at any time (not including any Mandatory Equalization Note) with
respect to Shortfall Amounts caused by a given Non-Funding Member; provided,
however, that in the event there is an Approved Business Plan that calls for
[***] Capital Contributions for [***] that are reasonably expected to meet the
conditions for Mandatory Member Debt Financing set forth in this Section 3.1(A),
and if and only if the Funding Member’s board of directors so approves, the
Funding Member shall make available an additional $[***] of Mandatory Member
Debt Financing (not including any Mandatory Equalization Note) for any related
Shortfall Amounts, resulting in an aggregate of $[***] of Mandatory Member Debt
Financing available to the Joint Venture Company at any time (not including any
Mandatory Equalization Note) under this Section 3.1(A); provided further,
however, that in no event shall a Member be obligated to provide more than an
aggregate of $[***] of Mandatory Member Debt Financing outstanding at any given
time (not including any Mandatory Equalization Note) with respect to any
particular [***].  If such additional $[***] of Mandatory Member Debt Financing
is not made available, then, unless the Members agree otherwise, no Early Start
shall occur.

 

(B)           In exchange for the Mandatory Member Debt Financing, the Joint
Venture Company shall issue to the Funding Member two convertible notes, one
having a principal balance equal to the Loan Amount (the “Mandatory Shortfall
Note”), and the other having a principal balance equal to the Funding Member
Portion (the “Mandatory Equalization Note” and, together with the related
Mandatory Shortfall Note, the “Mandatory Notes”), in the form attached hereto as
Exhibit A.

 

(C)           Each Mandatory Note issued in accordance with this Section 3.1
shall have [***] term, subject to Section 3.1(E).  For the first [***] of the
term of a Mandatory Shortfall Note, such Mandatory Shortfall Note shall bear
interest at [***] (as in effect on the issue date (the “Issuance Date”) thereof
and adjusted every [***], [***] ([***]) basis points per annum, compounded
[***].  Thereafter, until the end of the [***] term, such Mandatory Shortfall
Note shall bear interest at [***], adjusted every [***], compounded [***].  No
Mandatory Equalization Note shall [***].

 

(D)          (1)           At any time after the Issuance Date of a Mandatory
Shortfall Note in accordance with this Section 3.1 and prior to the expiration
of the [***] term of such Mandatory Shortfall Note, the Non-Funding Member may,
upon three (3) Business Days’ notice to the Joint Venture Company and the
Funding Member, make one or more Make-Up Contributions to the Joint Venture
Company in an aggregate amount up to the outstanding principal balance of the
Mandatory Shortfall Note.  Each Make-Up Contribution shall be

 

10

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accompanied by a payment equal to the accrued interest on the corresponding
Mandatory Shortfall Note, which interest payment shall not be deemed to be a
Capital Contribution.  If the Make-Up Contribution is less than the entire
amount of principal and accrued interest on a Mandatory Shortfall Note, the
Make-Up Contribution shall be deemed to be a payment applied first to all
accrued interest and then to principal on such Mandatory Shortfall Note (and the
amount so treated as a payment with respect to accrued interest shall not be
treated as a Capital Contribution).  If a Member is the Non-Funding Member with
respect to more than one Mandatory Shortfall Note outstanding at the time of
such contribution, the Non-Funding Member shall specify the Mandatory Shortfall
Note to which a Make-Up Contribution applies (or, if no such specification is
made, the Make-Up Contribution will be used to repay the Mandatory Shortfall
Note that is closest to its maturity date).  Upon receipt of such funds, the
Joint Venture Company shall immediately repay to the Funding Member the portion
of the outstanding principal balance of and accrued interest on the Mandatory
Shortfall Note in an amount equal to the Make-Up Contribution plus any accrued
interest on the amount of such Make-Up Contribution.  At such time, the
following shall occur:  (a) the amount of the Make-Up Contribution equal to the
principal balance of the Mandatory Shortfall Note so repaid shall be deemed to
be a Capital Contribution by the Non-Funding Member and such amount shall be
added to the Capital Contribution Balance of the Non-Funding Member; and (b) a
percentage of the outstanding principal balance of the related Mandatory
Equalization Note equal to the percentage of the principal balance of the
Mandatory Shortfall Note repaid shall convert into a Capital Contribution by the
Funding Member, whereupon such amount shall be added to the Capital Contribution
Balance of the Funding Member.

 

(2)           To the extent excess cash is available in accordance with
Section 5.1 at any time to make payments on any Mandatory Notes, if the Funding
Member elects, by written notice executed by its chief executive officer and
delivered to the Joint Venture Company prior to the making of the distributions
under Section 5.1, to receive such payments, the Joint Venture Company shall
make payments on the outstanding principal of and accrued interest on the
Mandatory Shortfall Notes (with any such payment being applied first to the
payment in full of accrued interest and then, to the extent of any remaining
amount of such payment, to the repayment of principal) and the outstanding
principal of the Mandatory Equalization Notes; provided, however, that any
payment by the Joint Venture Company on the unpaid principal of a Mandatory
Shortfall Note must be accompanied by a payment by the Joint Venture Company of
an equal percentage of the unpaid principal of the related Mandatory
Equalization Note.  Upon the Funding Member’s receipt of funds from the Joint
Venture Company to be applied to the repayment of principal on the Mandatory
Notes, the principal portions of the Mandatory Notes that were so repaid by the
Joint Venture Company shall no longer be outstanding.

 

(E)           To the extent any amount of a Mandatory Shortfall Note remains
outstanding upon its maturity for any reason, the Funding Member shall elect to
do one of the following:  (1) transfer to the Joint Venture Company as a Capital
Contribution all or a portion of the obligations owing to the Funding Member for
(a) the unpaid principal of and accrued interest on the Mandatory Shortfall Note
and (b) the unpaid principal of the Mandatory Equalization Note, whereupon an
amount equal to the sum of (a) and (b) shall be added to the Capital
Contribution Balance of the Funding Member; or (2) permit the Mandatory Notes to
become a continuing note that will remain outstanding, have a principal amount
equal to the sum of (a) the principal of and accrued interest on the former
Mandatory Shortfall Note and (b) the principal of the former Mandatory
Equalization Note and be convertible at any time thereafter at the option

 

11

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of the Funding Member (a “Continuing Mandatory Note”), which Continuing
Mandatory Note shall bear no interest and shall mature on the Liquidation Date. 
In the event that the Funding Member fails to make an election, the Funding
Member shall be deemed to have elected to permit the Mandatory Notes to become a
Continuing Mandatory Note.  Upon conversion of a Continuing Mandatory Note by
the Funding Member, the amount of principal of such Continuing Mandatory Note
shall be added to the Capital Contribution Balance of the Funding Member.  To
the extent excess cash is available in accordance with Section 5.1 at any time
to make payments on any Continuing Mandatory Note, if the Funding Member elects
to receive such payments, by written notice executed by its chief executive
officer and delivered to the Joint Venture Company prior to the making of the
distributions under Section 5.1, the Joint Venture Company shall make such
payments on the outstanding principal of the Continuing Mandatory Note.  Upon
the Funding Member’s receipt of funds from the Joint Venture Company, the
portion of the Continuing Mandatory Note that was paid by the Joint Venture
Company shall no longer be outstanding.

 

3.2           Optional [***] Financing.

 

(A)          In the event of a Shortfall Amount in respect of an [***] Capital
Contribution, the Funding Member may, in its sole discretion, elect to extend
Member Debt Financing to the Joint Venture Company (the “Optional [***]
Financing”) consisting of all or a portion of the Shortfall Amount and the
related Funding Member Portion of such [***] Capital Contribution (the aggregate
amount so loaned, the “Optional [***] Loan Amount”).

 

(B)           In exchange for the Optional [***] Financing, the Joint Venture
Company shall issue to the Funding Member two convertible notes, one having a
principal amount equal to the amount loaned by the Funding Member in respect of
the Shortfall Amount (the “Optional [***] Shortfall Note”) and the other having
a principal amount equal to the Funding Member Portion (the “Optional [***]
Equalization Note” and, together with the related Optional [***] Shortfall Note,
the “Optional [***] Notes”), in the form attached hereto as Exhibit B.

 

(C)           The Optional [***] Shortfall Notes issued in accordance with this
Section 3.2 will mature on the [***] and shall bear interest at [***] (as in
effect on the Issuance Date thereof and adjusted every [***]), compounded
[***].  The Optional [***] Equalization Notes issued in accordance with this
Section 3.2 shall bear [***] interest and will mature on the [***].  The
Optional [***] Notes shall be convertible at any time.  Upon conversion of the
Optional [***] Notes by the Funding Member, the sum of (a) the unpaid principal
of and accrued interest on the Optional [***] Shortfall Note and (b) the unpaid
principal of the Optional [***] Equalization Note shall be added to the Capital
Contribution Balance of the Funding Member.

 

(D)          If the Joint Venture Company or the Funding Member, on the Joint
Venture Company’s behalf, demands payment and determines to pursue a collection
action with respect to the Non-Funding Member’s failure to deliver the Shortfall
Amount relating to the [***] Capital Contribution and the Joint Venture Company
recovers from the Non-Funding Member, the funds collected from the Non-Funding
Member shall be applied first to the payment to the Joint Venture Company and
the Funding Member, in full of the costs theretofore incurred by the Joint
Venture Company or the Funding Member, respectively, in the pursuit of the claim
for payment against the Non-Funding Member (and such amount shall not be treated
as a Capital Contribution), then to all accrued but unpaid interest on such
payment (and such amount shall not be treated as a Capital Contribution) and
then to the payment of an Optional [***] Shortfall

 

12

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Note to the extent funds are available.  At such time, the following shall
occur: (1) a portion of the Make-Up Contribution recovered from the Non-Funding
Member equal to the principal balance of the Optional [***] Shortfall Note so
repaid shall be deemed to be a Capital Contribution by the Non-Funding Member,
and such amount shall be added to the Capital Contribution Balance of the
Non-Funding Member and (2) a percentage of the outstanding principal balance of
the related Optional [***] Equalization Note equal to the percentage of the
principal balance of the Optional [***] Shortfall Note repaid shall convert into
a Capital Contribution by the Funding Member, and such amount shall be added to
the Capital Contribution Balance of the Funding Member.

 

(E)           To the extent excess cash is available in accordance with
Section 5.1 at any time to make payments on any Optional [***] Notes, if the
Funding Member elects to receive such payments, by written notice executed by
its chief executive officer and delivered to the Joint Venture Company prior to
the making of the distribution under Section 5.1, the Joint Venture Company
shall make payments on the outstanding principal of and accrued interest on the
Optional [***] Shortfall Notes (with any such payment being applied first to the
payment in full of accrued interest and then, to the extent of any remaining
amount of such payment, to the repayment of principal) and the outstanding
principal of the Optional [***] Equalization Notes; provided, however, that any
payment by the Joint Venture Company on the unpaid principal on an Optional
[***] Shortfall Note must be accompanied by a payment by the Joint Venture
Company of an equal percentage of the unpaid principal of the related Optional
[***] Equalization Note.  Upon the Funding Member’s receipt of funds from the
Joint Venture Company, the portion of the Optional [***] Shortfall Note and
related Optional [***] Equalization Note that was paid by the Joint Venture
Company shall no longer be outstanding.

 

3.3           Optional Other Member Debt Financing.

 

(A)          In the event of a Shortfall Amount in respect of an Other Capital
Contribution, the Funding Member may, in its sole discretion, elect to extend
Member Debt Financing to the Joint Venture Company (the “Optional Other
Financing”), consisting of all or a portion of the Shortfall Amount and the
related Funding Member Portion of such Other Capital Contribution.

 

(B)           In exchange for the Optional Other Financing, the Joint Venture
Company shall issue to the Funding Member a convertible note (the “Optional
Other Shortfall Note”), in the form attached hereto as Exhibit C.  The Optional
Other Shortfall Note shall bear [***] interest, shall mature on the [***] and
shall be convertible at any time.

 

3.4           Change In Committed Capital.  Each time there is a change in a
Member’s Committed Capital, as a result of the making of a Capital Contribution
or a loan evidenced by a Member Note, a payment on a Member Note, or otherwise,
each Member’s respective Percentage Interest, Economic Interest and Sharing
Interest shall be immediately recalculated in accordance with the definitions of
such terms, taking into account any delay provided for in the definition of
Sharing Interest; provided, however, that in accordance with Section 2.3(H) an
adjustment to the Percentage Interests of the Members relating to any funds
remitted in respect of an Additional Capital Contribution to be made pursuant to
Article 2 shall be made when contemplated by Section 2.3(H).

 

13

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3.5           Change in Consolidating Member.  Following a Change in
Consolidating Member (as a result of which the Non-Funding Member becomes the
Former Consolidating Member), any (A) Make-Up Contribution made by the
Non-Funding Member to the Joint Venture Company or (B) payment on a Member Note
by the Joint Venture Company from excess funds available in accordance with
Section 5.1 shall not equal or exceed the amount that would result in the
occurrence of another Change in Consolidating Member or in the reduction of the
Consolidating Member’s Economic Interest below the lesser of [***]% and the
Consolidating Member’s then-existing Economic Interest.

 

3.6           Loans Through Subsidiary.  Notwithstanding any provision of this
Article 3, in lieu of providing any Member Debt Financing permitted or required
of a Member, such Member may elect to provide such Member Debt Financing through
a Wholly-Owned Subsidiary of such Member; provided, however, that the Member,
rather than such Wholly-Owned Subsidiary of the Member, shall own the Economic
Interest, Sharing Interest and Committed Capital related to such Member Debt
Financing and shall have all rights against the Joint Venture Company related to
such Member Debt Financing.

 

ARTICLE 4.
CAPITAL ACCOUNTS AND ALLOCATIONS

 

4.1           Capital Accounts.  Each Member shall have a capital account
maintained in accordance with the terms of Article 2 of Appendix B to this
Agreement (a “Capital Account”).

 

4.2           Allocations of Book Income and Loss.  Book income and Book loss
for any Fiscal Year shall be allocated to the Members in the manner provided in
Article 3 of Appendix B.

 

4.3           Tax Allocations.  All items of income, gain, loss, and deduction
shall be allocated among the Members for federal income tax purposes in the
manner provided in Article 4 of Appendix B.

 

4.4           Restoration of Negative Balances.  No Member with a deficit
balance in its Capital Account shall have any obligation to the Joint Venture
Company, to any other Member or to any third party to restore or repay said
deficit balance.  This Section 4.4 shall not affect any of the other rights or
obligations of the Members under this Agreement or any other agreement.

 

ARTICLE 5.
DISTRIBUTIONS

 

5.1           Distributions.

 

(A)          Unless otherwise unanimously agreed by the Members, the Joint
Venture Company shall not make any distributions until after the first
anniversary of the Effective Date.  Thereafter, subject to Articles 6, 7 and 13
and the provisions of the Act and after giving effect to all Capital
Contributions or Member Debt Financing to be made on the same date under
Article 2 and Article 3, respectively, the Joint Venture Company shall, subject
to Section 5.1(C), make distributions of cash to the Members as set forth in
this Section 5.1(A), on a [***] basis on the [***] day of each Fiscal [***] (or
if such day is not a Business Day, then on the first Business Day after such
day) to the extent that the Joint Venture Company’s cash as of the end of the
immediately preceding Fiscal [***] is in excess of the sum of (y) any amounts
that have been contributed as a Capital Contribution or loaned to the Joint
Venture Company as Member Debt

 

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Financing and that are being held for the purpose of making capital or operating
expenditures in the current Fiscal [***] or the first twenty-five (25) days of
the immediately succeeding Fiscal [***] (or if such day is not a Business Day,
then on the first Business Day after such day) and (z) all reserves that are
considered reasonably necessary by the Board of Managers to pay other
expenditures that are reasonably likely to be payable in the period described in
clause (y) above, and in any event including the reserve established under
Section 2.2 and amounts remaining in the Accumulated Distributions Accounts;
provided, however, that the Board of Managers shall cause the Joint Venture
Company to use any cash available for distribution as follows:

 

(1)           first, to pay in full all amounts outstanding under any
outstanding Mandatory Shortfall Notes and related Mandatory Equalization Notes
(provided any holder thereof has requested such payment by written notice
executed by its chief executive officer and delivered to the Joint Venture
Company prior to the distribution thereof under this Section 5.1) in order of
their respective maturity dates;

 

(2)           second, to pay any outstanding Continuing Mandatory Notes
(provided any holder thereof has requested such payment by written notice
executed by its chief executive officer and delivered to the Joint Venture
Company prior to the distribution thereof under this Section 5.1) in the order
that the respective maturity dates of the related Mandatory Shortfall Notes and
Mandatory Equalization Notes occurred;

 

(3)           third, to pay in full all amounts outstanding under any other
outstanding Member Notes (provided any holder thereof has requested such payment
by written notice executed by its chief executive officer and delivered to the
Joint Venture Company prior to the distribution thereof under this Section 5.1);

 

(4)           fourth, to make a distribution to a Member whose aggregate,
cumulative distributions (not including any payments made pursuant to
Sections 5.1(A)(1), (2) and (3)) immediately prior to such distribution are less
than the amount equal to the Member’s Sharing Interest (as such Sharing Interest
is determined immediately after any payments made under Sections 5.1(A)(1),
(2) and (3)) multiplied by the aggregate, cumulative distributions (not
including any payments made pursuant to Sections 5.1(A)(1), (2) and (3)) of the
Joint Venture Company immediately prior to such distribution, until such
Member’s aggregate, cumulative distributions (not including payments made
pursuant to Sections 5.1(A)(1), (2) and (3), but including such distribution
pursuant to this Section 5.1(A)(4)) are equal to its Distribution Entitlement;
and

 

(5)           finally, to make distributions pro rata to the Members in
accordance with their respective Sharing Interests (as such Sharing Interests
are determined immediately after any payments made under Sections 5.1(A)(1),
(2) and (3)).

 

(B)           Distributions of cash are only to be made to the extent cash is
available to the Joint Venture Company without requiring (1) the sale of Joint
Venture Company assets (other than in the ordinary course of business) or the
pledge of Joint Venture Company assets at a time or on terms that the Board of
Managers believes are not in the best interests of the Joint Venture Company or
(2) a reduction in reserves that the Board of Managers believes are reasonably
necessary for Joint Venture Company purposes for the then-current Fiscal [***]
and

 

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the first twenty-five (25) days of the immediately succeeding Fiscal [***] (or
if such day is not a Business Day, then through the first Business Day after
such day).

 

(C)           The Joint Venture Company shall maintain in its books of account
for each Member a special purpose account (the “Accumulated Distributions
Accounts”) for purposes of recording amounts that would be distributed to such
Member under Section 5.1(A) but for the application of this Section 5.1(C). 
Notwithstanding anything to the contrary in this Section 5.1, in lieu of
actually making the cash distributions contemplated by this Section 5.1, the
Joint Venture Company shall (except to the extent a Member requests direct
payment to the Member) increase each Member’s Accumulated Distributions Account
by the amount of such cash that was to have been distributed to such Member. 
Subsequently, when a Member is required to, or desires to, make a Capital
Contribution required or permitted by this Agreement, in lieu of making such
Capital Contribution such Member may instruct the Joint Venture Company to
reduce such Member’s Accumulated Distributions Account in an amount (not to
exceed the amount in such Member’s Accumulated Distributions Account) up to the
amount of such Capital Contribution, which shall be treated for all purposes
(including for purposes of the definition of Capital Contribution Balance) as if
such Member had made such Capital Contribution at the time designated in such
instruction.  A Member may, at any time, demand payment of, and the Joint
Venture Company shall immediately pay, the full amount of such Member’s
Accumulated Distributions Account, in which event the amount so paid shall
reduce the Member’s Accumulated Distributions Account.

 

5.2           Withholding Tax Payments and Obligations.  In the event that
withholding taxes are paid or required to be paid in respect of payments made to
or by the Joint Venture Company, or allocations to a Member, such withholding
shall be treated as follows:

 

(A)          Payments to the Joint Venture Company.  If the Joint Venture
Company receives proceeds in respect of which a tax has been withheld, the Joint
Venture Company shall be treated as having received cash in an amount equal to
the amount of such withheld tax, and, for all purposes of this Agreement, each
Member shall be treated as having received a distribution pursuant to
Section 5.1 equal to the portion of the withholding tax allocable to such
Member, as reasonably determined by the Board of Managers.  Such amounts shall
not be treated as Joint Venture Company expenses.

 

(B)           Payments by the Joint Venture Company.  The Joint Venture Company
is authorized to withhold, and the Tax Matters Partner shall take any actions
reasonably necessary to withhold, from any payment made to, or any distributive
share of, a Member any taxes required by law to be withheld, and in such event,
such taxes shall be treated as if an amount equal to such withheld taxes had
been distributed to such Member pursuant to Section 5.1 (or, as provided in
Section 5.2(C), loaned to such Member).

 

(C)           Certain Withheld Taxes Treated as Demand Loans.  Any taxes
withheld pursuant to Sections 5.2(A) or 5.2(B) hereof shall be treated as if
distributed to the relevant Member pursuant to Section 5.1 to the extent an
amount equal to such withheld taxes would then be distributable to such Member,
and, to the extent in excess of such distributable amounts, as a demand loan
payable by the Member to the Joint Venture Company with interest at a rate equal
to [***] (or, if less, the maximum rate allowed by law), compounded and adjusted
[***], commencing five (5) days after written demand therefor on behalf of the
Joint Venture Company is made by any other Member.

 

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5.3           Distribution Limitations.  Notwithstanding anything in this
Agreement to the contrary, the Joint Venture Company shall not make any
distribution of cash or other property to any Member if the distribution would
violate any agreement to which the Joint Venture Company or any of its
Subsidiaries is a party or by which it or any of them is bound.

 

ARTICLE 6.
MANAGEMENT; BOARD OF MANAGERS

 

6.1           Management Power.  Except as specifically provided in Article 7,
Article 8, and Sections 11.1, 11.2 and 11.3, all management powers over the
business, property and affairs of the Joint Venture Company are exclusively
vested in a board of Managers (the “Board of Managers”), and, except as provided
in Article 7, Article 8 and Sections 11.1, 11.2 and 11.3, no Member shall have
any right to participate in or exercise control or management power over the
business and affairs of the Joint Venture Company or otherwise to bind, act or
purport to act on behalf of the Joint Venture Company in any manner.  Subject to
the limitations set forth in this Agreement, the Board of Managers shall have
all the rights and powers that may be possessed by a manager under the Act,
including the power to incur indebtedness for trade payables and equipment
leases, the power to enter into agreements and commitments of all kinds, the
power to manage, acquire and dispose of Joint Venture Company assets, and all
ancillary powers necessary or convenient as to the foregoing.  No individual
Manager, in his or her capacity as such, may act on behalf of the Board of
Managers or bind the Joint Venture Company.

 

6.2           Number of Managers; Appointment of Managers.

 

(A)          The Board of Managers shall consist of six (6) individuals (each
such individual, a “Manager”).  Subject to Section 6.2(B), one half of the
Managers shall be appointed by Micron and one half of the Managers shall be
appointed by Intel.  The initial Managers appointed by Micron are listed on
Appendix C, and the initial Managers appointed by Intel are listed on Appendix
C.  Each Member having the right to appoint a Manager or Managers in accordance
with this Section shall also have the right, in its sole discretion, to remove
such Manager or Managers at any time by delivery of written notice to the other
Member(s) and the Joint Venture Company.  Any vacancy in the office of a Manager
for any reason other than pursuant to Section 6.2(B) (including as a result of
such Manager’s death, resignation, retirement or removal pursuant to this
Section) shall be filled by the Member that appointed the relevant Manager. 
Unless a Manager resigns, dies, retires or is removed in accordance with this
Section, each Manager shall hold office until a successor shall have been duly
appointed by the appointing Member.

 

(B)           Effect of Change in Percentage Interest on Managers.  While a
Member’s Percentage Interest is below [***] percent ([***] %) but at least [***]
percent ([***]%), the number of Managers such Member is entitled to appoint to
the Board of Managers shall be reduced to [***] ([***]), and the number of
Managers the other Member is entitled to appoint to the Board of Managers shall
be increased to [***] ([***]).  While a Member’s Percentage Interest is below
[***] percent ([***]%) but at least [***] percent ([***]%), the number of
Managers such Member is entitled to appoint to the Board of Managers shall be
reduced to [***] ([***]), and the number of Managers the other Member is
entitled to appoint to the Board of Managers shall be increased to [***]
([***]).  While a Member’s Percentage Interest is below [***] percent ([***]%),
the number of Managers such Member is entitled to appoint to the Board of
Managers shall be reduced to [***] ([***]), and the other Member shall be
entitled to appoint

 

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[***] Managers to the Board of Managers; provided, however, that the Member with
a Percentage Interest of less than [***] percent ([***]%) shall be entitled to
designate, from time to time, an individual who shall not be a member of, and
shall have no right to vote at any meeting of, the Board of Managers, but who
shall have the right to receive notice of, attend, and act as an observer for
such Member at, any meeting of the Board of Managers, and who shall receive all
materials delivered to the Board of Managers in connection with any such
meetings.  If either Member’s Percentage Interest should be below any of the
threshold levels set forth above and if such Member (the “Appointing Member”)
then has more designees serving on the Board of Managers than the number to
which it is entitled, such Appointing Member shall immediately identify by
written notice to the other Member the designee or designees on the Board of
Managers that will cease serving on the Board of Managers and each such designee
shall thereupon cease to be a Manager or member of the Board of Managers.  If
such Appointing Member fails to make such designation within five (5) Business
Days after written demand by the other Member, the other Member may designate by
written notice to the Appointing Member one or more (as appropriate) of the
Appointing Member’s designees on the Board of Managers that will cease serving
on the Board of Managers and each such designee shall thereupon cease to be a
Manager or member of the Board of Managers.  The other Member who is entitled to
appoint one or more additional Managers to serve on the Board of Managers may
immediately appoint such additional Managers by written notice to the other
Member designating such Managers.  Similarly, if a Member whose Percentage
Interest fell below any threshold level set forth in this
Section 6.2(B) subsequently increases its Percentage Interest above any such
level, the process shall be reversed.

 

(C)           Chairman of the Board of Managers.  Until the end of the Fiscal
Year ending in 2007, Micron shall have the right to designate one of its
designated Managers as chairman of the Board of Managers (the “Chairman”), and
thereafter, for each subsequent Fiscal Year of the Joint Venture Company, the
right to designate the Chairman (from among its designated Managers) shall
alternate between Intel and Micron; provided, however, that while the Percentage
Interest of a Member is below [***] percent ([***]%), the Chairman of the Board
will be appointed by the other Member.  The Chairman shall preside at all
meetings of the Board of Managers and shall have such other duties and
responsibilities as may be assigned to him or her by the Board of Managers.  The
Chairman may delegate to any Manager authority to chair any meeting, either on a
temporary or a permanent basis.  The Chairman must include any item submitted by
a Member or Manager for consideration at a meeting of the Board of Managers, may
not cut off debate on any matter being considered by the Board of Managers and
shall call for a vote on any matter at the request of any Manager, including any
matter described in Section 6.3(B).

 

(D)          Presence of Certain Officers at Meetings of Board of Managers. 
Each of the Authorized Officers, or the Chief Executive Officer, as applicable,
each of whom shall not be a member of the Board of Managers, may attend, but
shall have no right to vote at, all meetings of the Board of Managers; provided,
however, that the Board of Managers may exclude the Authorized Officers, or the
Chief Executive Officer, as applicable, from such meetings or such portions of
meetings at which the compensation or performance of, or any issue involving,
either of the Authorized Officers, or the Chief Executive Officer, as
applicable, is discussed as the Board of Managers, in its sole discretion, deems
appropriate.  If either Authorized Officer is excluded from any meeting or
portion of a meeting of the Board of Managers, the other Authorized Officer
shall also be excluded from such meeting or portion of such meeting.

 

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6.3           Voting of Managers.

 

(A)          Each Manager shall be entitled to one (1) vote, and Managers shall
not be entitled to cast their votes through proxies (except as provided in
Section 6.7).  Subject to Sections 6.3(B) and 6.3(C), all actions,
determinations or resolutions of the Board of Managers shall require the
affirmative vote or consent of a majority of the Board of Managers present at
any meeting at which a quorum is present (i.e., the affirmative vote of four
(4) Managers if the total number of Managers is six (6)), which majority must
include at least [***] appointed by each Member at all times that each Member
has at least [***] to the Board of Managers; provided, however, that any matter
that is a Micron Matter, as specified on Schedule 4, shall be deemed approved
upon the approval of a majority of the Managers appointed by Micron, and any
matter that is an Intel Matter, as specified on Schedule 3, shall be deemed
approved upon the approval of a majority of the Managers appointed by Intel. 
Except as specifically provided in Article 7, Article 8 and Sections 11.1, 11.2
and 11.3, the Board of Managers shall have the right, power and authority to
take all actions of the Joint Venture Company, including the following, and in
no event shall any of the following actions be taken without the approval of the
Board of Managers (which approval may be obtained through the adoption of an
Undisputed Approved Business Plan by the Board of Managers in accordance with
Sections 11.1 and 11.2, provided that the relevant Undisputed Approved Business
Plan sets forth such action in reasonable detail), by or with respect to the
Joint Venture Company or any Subsidiary of the Joint Venture Company:

 

(1)           entering into any agreement or making any modification or
amendment to, or terminating, any agreement between (a) the Joint Venture
Company or any Subsidiary of the Joint Venture Company and (b) any Member or an
Affiliate of a Member;

 

(2)           selecting attorneys, accountants, auditors and financial advisors
for the Joint Venture Company or any of its Subsidiaries;

 

(3)           adopting, or making any material modification, amendment or
termination of, material accounting and tax policies, procedures and principles
applicable to the Joint Venture Company or any of its Subsidiaries other than
those made in accordance with Section 10.9 (provided, however, that the right,
power and authority of the Board of Managers with respect to tax policies,
procedures and principles granted under this Section 6.3 shall be subject to the
provisions of Section 10.7 hereof);

 

(4)           adopting or making any material changes to any employee benefit
plan, including any incentive compensation plan;

 

(5)           setting any distribution to the Members not required under
Article 5;

 

(6)           subject to Section 6.3(B)(1)(b), commencing or settling
litigation, except routine employment litigation matters;

 

(7)           making any material purchase, sale or lease (as lessor or lessee)
of any real property (except for any such purchase or lease to effectuate an
Intel Matter that is approved by a majority of the Intel Managers then in office
or a Micron Matter that is approved by a majority of the Micron Managers then in
office);

 

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(8)           acquiring securities or any equity ownership interest in any
Person, other than a Wholly-Owned Subsidiary of the Joint Venture Company
established to hold a Fab or assets of the Joint Venture Company or any of its
Subsidiaries;

 

(9)           making any public announcement by the Joint Venture Company or any
Subsidiary of the Joint Venture Company of any material non-public information
not previously approved for public announcement by the Board of Managers;

 

(10)         entering into or amending any collective bargaining arrangements or
waiving any material provision or requirement thereof;

 

(11)         approving any Proposed Business Plan, or amending or modifying any
Approved Business Plan (or any modification thereof), subject to Sections
11.1(C), 11.2(D) and 11.2(E);

 

(12)         making any filing with, public comments to, or negotiation or
discussion with, any Governmental Entity (excluding regular operating filings
and other routine administrative matters and other than any such filing, public
comments, or negotiation or discussion relating to an Intel Matter that is
approved by a majority of the Intel Managers then in office or relating to a
Micron Matter that is approved by a majority of the Micron Managers then in
office); and

 

(13)         establishing, overseeing and modifying the investment policies of
the Joint Venture Company with respect to funds held by the Joint Venture
Company, including funds reserved pursuant to Section 2.2 pending the use of
such funds in accordance with any applicable Approved Business Plan.

 

(B)           (1)           Notwithstanding the foregoing, any action of the
Board of Managers with respect to any of the following matters relating to a
Member (the “Interested Member”) shall be deemed approved by the Board of
Managers if approved either by the affirmative vote at a meeting of the Board of
Managers of a majority of the Managers appointed by the other Member (the
“Independent Member”) with respect to such action or by written consent of a
majority of the Managers appointed by such Independent Member:

 

(a)           any determination to grant indemnification to the Interested
Member for any matter not contemplated by Section 14.2 hereof; or

 

(b)           the pursuit of any remedy by the Joint Venture Company or a
Subsidiary of the Joint Venture Company against the Interested Member or
Affiliate of the Interested Member in accordance with Section 7.5; or

 

(c)           any other matter (other than a matter provided for in
Section 6.3(B)(2)) in which the interests of the Joint Venture Company or a
Subsidiary of the Joint Venture Company and the Interested Member, or an
officer, director, controlling stockholder or Affiliate of the Interested
Member, are adverse.

 

(2)           The entry into, modification of, amendment to, or termination by
the Joint Venture Company of any agreement or other transaction between the
Joint Venture Company or any Subsidiary of the Joint Venture Company, on the one
hand, and the Interested

 

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Member or an officer, director, controlling stockholder or Affiliate of the
Interested Member, on the other hand, (an “Interested Member Transaction”) shall
be permitted only if:

 

(a)           The material facts as to the relationship or interest of the
Interested Member (and its officers, directors, controlling stockholders and
Affiliates) as to the Interested Member Transaction are disclosed or are known
to the Board of Managers and the Independent Member, and the Board of Managers
in good faith authorizes the Interested Member Transaction by the affirmative
votes of a majority of the Managers appointed by the Independent Member, even
though the Managers appointed by the Independent Member may be less than a
quorum; or

 

(b)           The material facts as to the relationship or interest of the
Interested Member (and its officers, directors, controlling stockholders and
Affiliates) as to the Interested Member Transaction are disclosed or are known
to the Independent Member, and the Interested Member Transaction is specifically
approved in writing by the Independent Member; or

 

(c)           The Interested Member Transaction is authorized, approved or
ratified by the Board of Managers and is fair as to the Joint Venture Company or
the applicable Subsidiary of the Joint Venture Company and the Independent
Member as of the time it is so authorized, approved or ratified by the Board of
Managers.

 

(3)           Managers appointed by the Interested Member may be counted in
determining the presence of a quorum at a meeting of the Board of Managers which
authorizes the Interested Member Transaction.

 

(C)           Notwithstanding anything in this Agreement to the contrary, if a
Member has only [***] to the Board of Managers as a result of its Percentage
Interest falling below the requisite threshold set forth in Section 6.2(B), the
following actions will require the approval of a majority of the members of the
Board of Managers, including the Manager appointed by such Member:

 

(1)           any material modification, amendment or termination of material
accounting and tax policies, procedures and principles applicable to the Joint
Venture Company or any of its Subsidiaries, other than those made in accordance
with Section 10.9 (provided, however, that the right, power and authority of the
Board of Managers with respect to tax policies, procedures and principles
granted under this Section 6.3 shall be subject to the provisions of
Section 10.7 hereof); and

 

(2)           except for any litigation matter subject to Section 6.3(B)(1)(b),
any settlement of a litigation matter or a group of related litigation matters,
other than routine litigation matters not involving current or former members of
management, where the amount of damages payable by the Joint Venture Company or
any of its Subsidiaries exceeds $[***] or that results in disparate treatment of
the Members.

 

6.4           Meetings of the Board of Managers; Quorum.  The Board of Managers
shall hold meetings at least once per Fiscal Quarter.  Subject to a Manager’s
right to appoint an alternate Manager in accordance with Section 6.7, the
presence of at least a majority of the Managers

 

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(four (4) while the number of Managers is six (6)), in person or by telephone
conference or by other means of communications acceptable to the Board of
Managers, shall be necessary and sufficient to constitute a quorum for the
purpose of taking action by the Board of Managers at any meeting of the Board of
Managers; provided, that such quorum shall consist of at least a majority of the
Managers appointed by each Member that appoints an odd number of Managers
greater than one, and at least half of the Managers appointed by each Member
that appoints an even number of Managers.  No action taken by the Board of
Managers at any meeting shall be valid unless the requisite quorum is present.

 

6.5           Notice; Waiver.  The regular quarterly meetings of the Board of
Managers described in Section 6.4 shall be held upon not less than ten
(10) days’ written notice.  Additional meetings of the Board of Managers shall
be held (A) at such other times as may be determined by the Board of Managers,
(B) at the request of at least two (2) Managers or either Authorized Officer, or
the Chief Executive Officer, as applicable, upon not less than five (5) Business
Days’ written notice or (C) in accordance with Section 17.1, following a failure
by the Board of Managers to adopt or reject a proposal for action presented to
it.  For purposes of this Section, notice may be provided via facsimile, email
or any other manner provided in Section 18.1, or telephonic notice to each
Manager (which notice shall be provided to the other Managers by the requesting
Managers).  The presence of any Manager at a meeting (including by means of
telephone conference or other means of communications acceptable to the Board of
Managers) shall constitute a waiver of notice of the meeting with respect to
such Manager, unless such Manager declares at the meeting that such Manager
objects to the notice as having been improperly given.  The Board of Managers
shall cause written minutes to be prepared of all actions taken by the Board of
Managers and shall cause a copy thereof to be delivered to each Manager within
fifteen (15) days of each meeting.

 

6.6           Action Without a Meeting; Meetings by Telecommunications.

 

(A)          On any matter that is to be voted on, consented to or approved by
the Board of Managers, the Board of Managers may take such action without a
meeting, without prior notice and without a vote if a consent or consents in
writing, setting forth the action so taken, shall be signed by the Managers
having not less than the minimum votes that would be necessary to authorize or
take such action, in accordance with the terms of this Agreement, at a meeting
at which all the Managers were present and voted.

 

(B)           Unless the Act otherwise provides, members of the Board of
Managers shall have the right to participate in all meetings of the Board of
Managers by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time and participation by such means shall constitute presence in
person at a meeting.

 

6.7           Alternate Managers.  Each Manager shall have the right to
designate an individual to attend and vote at meetings of the Board of Managers
as the proxy of such regularly appointed Manager.

 

6.8           Compensation of Managers.  The Managers, in their capacity as
such, shall not receive compensation from the Joint Venture Company.  Each
Member shall bear the cost and expenses incurred by its appointed Managers in
connection with the Joint Venture Company’s business while such Managers are
serving in such capacity.

 

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ARTICLE 7.
MEMBERS

 

7.1           Rights of Members; Meetings.

 

(A)          The Members shall be the members of the Joint Venture Company under
the Act, and shall be entitled to the following:  (1) receive financial reports
and tax reporting information referenced in Sections 10.4 and 10.6; (2) receive
(y) the then-current Approved Business Plans, as updated from time to time in
accordance with Section 11.1 or Section 11.2 and any Proposed Business Plan and
(z) the then-current Operating Plan; (3) receive such additional information of
the Joint Venture Company or any of its Subsidiaries as may reasonably be
requested by a Member; (4) copies of any third party audit findings from any
audit of the Joint Venture Company or any Subsidiary of the Joint Venture
Company, any subcontractor for the Joint Venture Company or any Subsidiary of
the Joint Venture Company or any Person that provides services to the Joint
Venture Company or any Subsidiary of the Joint Venture Company (including a
Member in such capacity but only to the extent contemplated by the applicable
service agreement with such Member); and (5) such additional rights as are
elsewhere provided in this Agreement or by mandatory requirements of Applicable
Law, including mandatory requirements of the Act.

 

(B)           At any time, and from time to time, the Board of Managers may, but
shall not be required to, call meetings of the Members.

 

(1)           Special meetings of the Members for any proper purpose or purposes
may be called at any time by either Member.  Each meeting of the Members shall
be conducted by the Authorized Officers, or the Chief Executive Officer, as
applicable, or any mutually agreeable designee of the Authorized Officers or
designee of the Chief Executive Officer, as applicable, and shall be held at the
principal offices of the Joint Venture Company or at such other place as may be
agreed upon from time to time by the Members.  The Authorized Officers or their
designee, or the Chief Executive Officer or his or her designee, as applicable,
shall include any item submitted by a Member for consideration at a meeting of
the Members, may not cut off debate on any matter being considered by the
Members and shall call for a vote on any matter at the request of any Member. 
Meetings may be held by telephone if both Members so consent.

 

(2)           Except as otherwise required by Applicable Law, written notice
(which may be provided via facsimile or electronic mail with receipt
confirmation) of each meeting of the Members of the Joint Venture Company shall
be given not less than five (5) nor more than thirty-five (35) days before the
date of such meeting.

 

(3)           The presence, either in person or by proxy, of Members whose
combined Percentage Interests equal one hundred percent (100%) is required to
constitute a quorum at any meeting of the Members.

 

(4)           Each Member may authorize any Person (provided such Person is an
officer of the Member) to act for it or on its behalf on all matters in which
the Member is entitled to participate.  Each proxy must be signed by a duly
authorized officer of the Member.  All other provisions governing, or otherwise
relating to, the holding of meetings of the Members shall be established from
time to time as mutually agreed by the Members.

 

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(5)           The Members shall be entitled to vote on any matter submitted to a
vote of the Members in proportion to their Percentage Interests.  Members may
vote either in person or by proxy at any meeting.  Each Member shall be entitled
to cast one (1) vote for each full percentage of the Percentage Interest held by
such Member.  Fractional votes shall be permitted.

 

(6)           Any action permitted or required by the Act, the Certificate, or
this Agreement to be taken at a meeting of Members may be taken without a
meeting if a consent in writing, setting forth the action to be taken, is signed
by the Member or Members whose vote or approval is required for the taking of
such action under this Agreement.  Such consent shall have the same force and
effect as if such action was approved by vote at a meeting at which all the
Members were present and voted and may be stated as such in any document or
instrument filed with the Secretary of State of Delaware, and the execution of
such consent shall constitute attendance or presence in person at a meeting of
Members.

 

7.2           Limitations on the Rights of Members.

 

(A)          Subject to any mandatory requirements of Applicable Law, including
mandatory requirements under the Act, except as provided in this Agreement, no
Member (in its capacity as a Member) has the right to take any part whatsoever
in the management and control of the business of the Joint Venture Company, sign
for or bind the Joint Venture Company or any of its Subsidiaries, compel a sale
or appraisal of the Joint Venture Company’s or any of its Subsidiaries’ assets,
or sell or assign its Interest in the Joint Venture Company or any of its
Subsidiaries.

 

(B)           No Member may, without the prior written consent of the other
Member: (1) confess any judgment against the Joint Venture Company or any of its
Subsidiaries; (2) act for, enter into any agreement on behalf of or otherwise
purport to bind the other Member, the Joint Venture Company or any of its
Subsidiaries; (3) do any acts in contravention of this Agreement or any of the
Affiliate Agreements; (4) except as contemplated by the Affiliate Agreements,
dispose of the goodwill or the business of the Joint Venture Company or any of
its Subsidiaries; (5) Transfer its Interest in the Joint Venture Company (except
as provided in Sections 12.2, 12.4 or 12.5); or (6) assign the property of the
Joint Venture Company or any of its Subsidiaries in trust for creditors or on
the assignee’s promise to pay any indebtedness of the Joint Venture Company or
any of its Subsidiaries.

 

7.3           Limited Liability of the Members.  Except to the extent expressly
set forth in Article 2 of this Agreement or otherwise in a written instrument
executed by the Member against whom any liability is asserted in favor of the
Person asserting such liability, the Members (solely in their capacity as
Members) have no obligation to contribute to the Joint Venture Company or any of
its Subsidiaries and shall not be liable for any debt, obligation or liability
of the Joint Venture Company or any of its Subsidiaries.  Any liability to
return distributions made by the Joint Venture Company is limited to mandatory
requirements of the Act or of any other Applicable Law.

 

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7.4           Voting Rights of Members.

 

(A)          Notwithstanding anything in this Agreement to the contrary, for so
long as a Member’s Percentage Interest is greater than [***] ([***]%) , the
following actions shall require the unanimous approval of the Members:

 

(1)           any amendment, restatement or revocation of the Certificate,
except (a) as provided in Section 1.5(A) to effectuate a change in the principal
place of business of the Joint Venture Company, (b) to change the name of the
Joint Venture Company, (c) as required by Applicable Law, or (d) to accomplish
any action that would be allowed under the terms and conditions of this
Agreement where the only prohibition on the performance of such action is the
terms of the Certificate;

 

(2)           any material change in the business purpose of the Joint Venture
Company or any of its Subsidiaries, other than a change in accordance with the
proviso to Section 1.4;

 

(3)           any Transfer of any Interest to any Person, except as expressly
permitted by Sections 12.2, 12.4 or 12.5;

 

(4)           any agreement with respect to all present or former Members to
extend the period for assessing any tax which is attributable to any Joint
Venture Company item or item of any of the Joint Venture Company’s Subsidiaries;

 

(5)           approving the inclusion within the business purpose of the Joint
Venture Company or any of its Subsidiaries the manufacture of memory products
other than NAND Flash Memory Products, subject to the proviso to Section 1.4;

 

(6)           any approval or setting of any distribution to any Member (other
than distributions of cash in accordance with Article 5); provided, however,
that a Member’s consent for the purposes of this Section 7.4(A)(6) shall not be
unreasonably withheld; and

 

(7)           the sale, license, assignment or other transfer of any
intellectual property owned or in the possession of the Joint Venture Company or
any Subsidiary of the Joint Venture Company (including any technology or
know-how, whether or not patented, any trademark, trade name or service mark,
any copyright or any software or other method or process) to any Person other
than a Facilities Company or Wholly-Owned Subsidiary, except as provided in the
Joint Venture Documents.

 

(B)           Notwithstanding anything in this Agreement to the contrary, and in
addition to the provisions of Section 7.4(A), for so long as a Member’s
Percentage Interest is at least [***] percent ([***]%), the following actions
shall require the unanimous approval of the Members:

 

(1)           the incurrence of any indebtedness for borrowed money, other than
(i) as provided in Article 2 or Article 3 and (ii)  any third-party equipment
financing;

 

(2)           any sale, lease, pledge (other than pledges of equipment under a
permitted third-party equipment financing), assignment, transfer (other than
transfers to a

 

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Wholly-Owned Subsidiary of the Joint Venture Company) or other disposition of
any asset of the Joint Venture Company or any of its Subsidiaries or group of
assets in each case other than in the ordinary course, unless approved in an
Undisputed Approved Business Plan or unless made in connection with a
dissolution of the Joint Venture Company as contemplated by Article 13;
provided, however, that unanimous approval will not be required if the aggregate
amount of such sales, leases, pledges (other than pledges of equipment under a
permitted third-party equipment financing), assignments, transfers (other than
transfers to a Wholly-Owned Subsidiary of the Joint Venture Company) and other
dispositions not in the ordinary course do not exceed the amount provided for in
an Undisputed Approved Business Plan by more than $[***] in any Fiscal Year;

 

(3)           any purchase, lease or other acquisition, in any single
transaction or in a series of related transactions, of personal property or
services or capital equipment inconsistent with an Approved Business Plan (after
taking into account any general overrun provisions contained in such Approved
Business Plan);

 

(4)           any capital expenditures or series of related capital
expenditures, that exceed the amount provided therefor in the most recently
Approved Business Plan (after taking into account any general spending overrun
provisions contained in such Approved Business Plan) or any commitment by the
Joint Venture Company or any Subsidiary of the Joint Venture Company to make
expenditures in any development project in an amount greater than the amount set
forth in the most recently Approved Business Plan (after taking into account any
general spending overrun provisions contained in such Approved Business Plan);

 

(5)           any merger, consolidation or other business combination to which
the Joint Venture Company or any Subsidiary of the Joint Venture Company is a
party, or any other transaction to which the Joint Venture Company or any
Subsidiary of the Joint Venture Company is a party (other than where the Joint
Venture Company is merged or combined with or consolidated into a Wholly-Owned
Subsidiary of the Joint Venture Company), resulting in a change of control of
the Joint Venture Company or any Subsidiary of the Joint Venture Company, other
than a change of control that may occur pursuant to Article 2 or Article 3;

 

(6)           (a) the voluntary commencement or the failure to contest in a
timely and appropriate manner any involuntary proceeding or the filing of any
petition seeking relief under bankruptcy, insolvency, receivership or similar
laws, (b) the application for or consent to the appointment of a receiver,
trustee, custodian, conservator or similar official for the Joint Venture
Company or any Subsidiary of the Joint Venture Company, or for a substantial
part of their property or assets, (c) the filing of an answer admitting the
material allegations of a petition filed against the Joint Venture Company or
any Subsidiary of the Joint Venture Company in any proceeding described above,
(d) the consent to any order for relief issued with respect to any proceeding
described in this subsection (6), (e) the making of a general assignment for the
benefit of creditors, or (f) the admission in writing of the Joint Venture
Company’s inability, or the failure of the Joint Venture Company or of any
Subsidiary of the Joint Venture Company generally, to pay its debts as they
become due or the taking of any action for the purpose of effecting any of the
foregoing;

 

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(7)           the acquisition of any business or entry into any joint venture or
partnership;

 

(8)           the creation of any direct or indirect Subsidiary of the Joint
Venture Company other than a Facilities Company or any Wholly-Owned Subsidiary;
and

 

(9)           negotiating external sources of additional wafer manufacturing
capacity for Joint Venture Products.

 

In addition, such Member shall have the right to review and comment on any
public announcement by the Joint Venture Company or any Subsidiary of the Joint
Venture Company.

 

(C)           Notwithstanding anything in this Agreement to the contrary, and in
addition to the provisions of Sections 7.4(A) and 7.4(B), for so long as a
Member’s Percentage Interest is at least [***] percent ([***]%), the following
actions shall require the unanimous approval of the Members:

 

(1)           the purchase, license or other acquisition of rights to third
party intellectual property other than routine software licenses in connection
with the Joint Venture Company’s or any of its Subsidiaries’ ongoing operations.

 

7.5           Defaulting Member.  Notwithstanding anything in this Agreement to
the contrary, in no event shall the pursuit of any remedy by the Joint Venture
Company or any of its Subsidiaries against a Defaulting Member pursuant to
Section 17.7 require the consent of such Defaulting Member.  The Non-Defaulting
Member shall have the right to control the Joint Venture Company’s pursuit of
any such claim against the Defaulting Member.

 

7.6           Cooperation.

 

(A)          Intel may take action on behalf of the Joint Venture Company as
contemplated by Schedule 3 and shall cooperate with and keep Micron regularly
informed with respect to any Intel Matter.

 

(B)           Micron may take action on behalf of the Joint Venture Company as
contemplated by Schedule 4 and shall cooperate with and keep Intel regularly
informed with respect to any Micron Matter.

 

ARTICLE 8.
OFFICERS AND COMMITTEES

 

8.1           Intel Executive Officer.

 

(A)          Until the [***] anniversary of the Effective Date (the “Management
Conversion Date”), the Joint Venture Company shall have an executive officer
appointed by Intel (the “Intel Executive Officer”) who, together with the Micron
Executive Officer, shall have responsibility for the day-to-day management and
control of the business and affairs of the Joint Venture Company and its
Subsidiaries and overseeing the implementation of the strategic direction of the
Joint Venture Company and its Subsidiaries.  The Intel Executive Officer shall
perform such duties and have such powers specifically delegated to the Intel
Executive Officer

 

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by the Board of Managers.  The Intel Executive Officer shall be an employee of
Intel seconded to the Joint Venture Company by Intel, subject to the consent of
Micron, which consent shall not be unreasonably withheld or delayed.  Intel
shall have the right to remove the Intel Executive Officer at any time, with or
without cause, provided that it provides at least ten (10) days written notice
of such removal to Micron and the Joint Venture Company.  Intel shall have the
right to fill any vacancy in the position of Intel Executive Officer for any
reason (including as a result of the Intel Executive Officer’s death,
resignation, retirement or removal pursuant to this Section), subject to the
consent of Micron, which consent shall not be unreasonably withheld or delayed. 
The Intel Executive Officer shall report directly to the Board of Managers.

 

(B)           The Board of Managers shall determine, from time to time, the
incentive compensation for which the Intel Executive Officer may be eligible
based upon the Joint Venture Company’s operational success.

 

8.2           Micron Executive Officer.

 

(A)          Until the Management Conversion Date, the Joint Venture Company
shall have an executive officer appointed by Micron (the “Micron Executive
Officer”) who, together with the Intel Executive Officer, shall have
responsibility for the general management and control of the day-to-day business
and affairs of the Joint Venture Company and its Subsidiaries and overseeing the
implementation of the strategic direction of the Joint Venture Company and its
Subsidiaries.  The Micron Executive Officer shall perform such duties and have
such powers specifically delegated to the Micron Executive Officer by the Board
of Managers.  The Micron Executive Officer shall be an employee of Micron
seconded to the Joint Venture Company by Micron, subject to the consent of
Intel, which consent shall not be unreasonably withheld or delayed.  Micron
shall have the right to remove the Micron Executive Officer at any time, with or
without cause, provided that it provides at least ten (10) days written notice
of removal to Intel and the Joint Venture Company.  Micron shall have the right
to fill any vacancy in the position of Micron Executive Officer for any reason
(including as a result of the Micron Executive Officer’s death, resignation,
retirement or removal pursuant to this Section), subject to the consent of
Intel, which consent shall not be unreasonably withheld or delayed.  The Micron
Executive Officer shall report directly to the Board of Managers.

 

(B)           The Board of Managers shall determine, from to time, the incentive
compensation for which the Micron Executive Officer may be eligible based upon
the Joint Venture Company’s operational success.

 

8.3           Lead Controller/Chief Financial Officer.

 

(A)          The Joint Venture Company shall have a financial manager (the “Lead
Controller”) who shall serve as the principal financial officer of the Joint
Venture Company and shall have responsibility for and authority over the
day-to-day financial matters of the Joint Venture Company and its Subsidiaries. 
The Lead Controller shall perform such duties and have such powers specifically
delegated to the Lead Controller by the Board of Managers.  The Lead Controller
shall be an employee of Micron seconded to the Joint Venture by Micron, or
another individual selected by Micron, subject to the consent of Intel, which
consent shall not be unreasonably withheld or delayed.  Micron shall have the
right to remove the Lead Controller at any time, with or without cause, provided
that it provides at least ten (10) days written notice of removal to Intel and
the Joint Venture Company.  Micron shall have the right to fill any vacancy

 

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in the position of Lead Controller for any reason (including as a result of the
Lead Controller’s death, resignation, retirement or removal pursuant to this
Section), subject to the consent of Intel, which consent shall not be
unreasonably withheld or delayed.  The Lead Controller shall report directly to
the Board of Managers.

 

(B)           The Board of Managers shall determine, from time to time, the
incentive compensation for which the Lead Controller may be eligible based upon
the Joint Venture Company’s operational success.

 

(C)           For so long as there is a Lead Controller who is seconded to the
Joint Venture Company by a Member, the other Member shall be entitled to second
to the Joint Venture Company a senior finance officer to assist the Lead
Controller in the execution of his or her duties set forth in this Section 8.3. 
The Board of Managers shall determine, from time to time, the incentive
compensation for which such officer may be eligible based upon the Joint Venture
Company’s operational success.

 

(D)          Upon the Management Conversion Date, the position of the Lead
Controller shall terminate and the Board of Managers shall appoint a Chief
Financial Officer (the “Chief Financial Officer”) who shall be an employee of
the Joint Venture Company and shall report directly to the Chief Executive
Officer.  The Chief Financial Officer shall have the responsibilities
specifically delegated to the Lead Controller by the Board of Managers, shall
perform all other duties and shall have all powers that are delegated to him or
her by the Board of Managers or the Chief Executive Officer, and shall be
selected by the Board of Managers.  For purposes of this Agreement, the Lead
Controller and the Chief Financial Officer are referred to interchangeably as
the “Financial Officer.”

 

8.4           Chief Executive Officer.  Upon the Management Conversion Date, the
Board of Managers shall appoint a Chief Executive Officer (the “Chief Executive
Officer”), who shall have responsibility for the day-to-day general management
and control of the business and affairs of the Joint Venture Company and its
Subsidiaries and overseeing the implementation of the strategic direction of the
Joint Venture Company and its Subsidiaries.  The Chief Executive Officer shall
perform or oversee those duties that were specifically delegated to the Intel
Executive Officer and Micron Executive Officer by the Board of Managers prior to
the Management Conversion Date and shall perform all other duties and have all
powers that are that are commonly incident to the office of chief executive
officer or that are specifically delegated to him or her by the Board of
Managers.  The Chief Executive Officer shall be an employee of the Joint Venture
Company, selected by the Board of Managers, subject to the consent of any Member
whose Percentage Interest is at least [***] percent ([***]%), which consent
shall not be unreasonably withheld or delayed.  The Board of Managers shall have
the right to remove any Chief Executive Officer at any time, with or without
cause, subject to the terms of any employment contract between the Joint Venture
Company and the Chief Executive Officer.

 

8.5           General Provisions Regarding Officers.

 

(A)          There shall be one or more site managers of the Joint Venture
Company who shall serve as officers of the Joint Venture Company and shall have
such authority and perform or oversee those duties that are delegated to such
officers by the Board of Managers or the Authorized Officers or Chief Executive
Officer, as applicable.  The Board of Managers may, from time to time, designate
other officers of the Joint Venture Company, delegate to such

 

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officers such authority and duties as the Board of Managers may deem advisable
and assign titles to any such officers.  Except as otherwise provided in this
Agreement, prior to the Management Conversion Date, officers may either be
employees of the Joint Venture Company or Seconded Employees.  Unless the Board
of Managers otherwise determines or unless otherwise provided by this Agreement,
if the title assigned to an officer of the Joint Venture Company is one commonly
used for officers for businesses of comparable size in the same industry, then,
subject to the terms of this Agreement, the assignment of such title shall
constitute the delegation to such officer of the authority and duties that are
customarily associated with such office for businesses of comparable size in the
same industry.  Except as otherwise provided in this Agreement, any number of
titles may be held by the same individual.

 

(B)           Subject to all rights, if any, under any contract of employment,
any officer to whom a delegation is made pursuant to Section 8.5(A) shall serve
in the capacity delegated unless and until such delegation is revoked by the
Board of Managers for any reason or no reason whatsoever, with or without cause,
or such officer resigns.

 

8.6           Manufacturing Committee.  The Members shall, by mutual agreement,
establish a manufacturing committee (the “Manufacturing Committee”) to, among
other things, consult with the Joint Venture Company and the Members regarding
the output of Joint Venture Products to the Members.  The membership, function,
objectives and procedures of the Manufacturing Committee are set forth in
Appendix E to this Agreement.

 

8.7           Waiver of Fiduciary Duties.

 

(A)          In connection with the determination of any and all matters
presented for action to the Members, the Board of Managers or the Manufacturing
Committee, as applicable, the Members acknowledge and agree that each Member
will be acting on its own behalf and each Representative serving on the Board of
Managers or the Manufacturing Committee will be acting on behalf of the Member
that appointed such Representative.

 

(B)           Each Member may act, and, to the fullest extent permitted by
Applicable Law, will be protected for acting, in its own interest (subject to
the express terms of any contract entered into by such Member) without regard to
the interest of the other Member or the Joint Venture Company or any of its
Subsidiaries, and, subject to Section 8.7(D), each Representative may act, and,
to the fullest extent permitted by Applicable Law, will be protected for acting
at the direction or control of, or in a manner that such Representative believes
is in the best interest of, the Member that appointed the Representative without
regard to the interest of the other Member or the Joint Venture Company or any
of its Subsidiaries.  Further, each Member may, to the fullest extent permitted
by Applicable Law (subject to the express terms of any contract entered into by
such Member), make decisions and exercise direction and control over the
decisions of the Representatives appointed by such Member without duty to or
regard for the interests of the other Member or the Joint Venture Company or any
of its Subsidiaries.

 

(C)           The Joint Venture Company, on its own behalf and on behalf of each
of its Subsidiaries, and each Member waives, to the fullest extent permitted by
Applicable Law, (1) any claim or cause of action against any Member or Manager
or member of the Manufacturing Committee appointed by a Member, based on the
determination of any and all matters presented for action to the Members, the
Board of Managers or the Manufacturing Committee, as applicable, (2) breach of
fiduciary duty, duty of care, duty of loyalty or any other

 

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duty or (3) breach of the Act; provided, however, the foregoing will not limit
any Member’s obligation under or liability for breach of the express terms of
this Agreement or any other agreement that they have entered into with the Joint
Venture Company or any of its Subsidiaries or the other Member; and provided
further, however, that no Member shall negotiate or enter into or request or
otherwise cause the Joint Venture Company to negotiate or enter into any
agreement or transaction that would result in such Member or any of its
Subsidiaries receiving any financial consideration or other tangible property
incentive, payment or other form of financial consideration or other tangible
property consideration from any Governmental Entity or Person based upon the
Joint Venture Company’s taking an action (including hiring any employees,
undertaking any construction or purchasing any equipment) or entering into such
agreement or transaction other than as a Member of the Joint Venture Company
pursuant to this Agreement, and any Member who receives any such consideration
or other tangible property incentive, payment or other form of financial
consideration or other tangible property consideration from any Governmental
Entity or Person in respect of the Joint Venture Company’s activities, shall
promptly convey such consideration or other tangible property incentive, payment
or other form of financial consideration or other tangible property
consideration from any Governmental Entity or Person to the Joint Venture
Company without any adjustment in the Capital Contribution Balance of such
Member.

 

(D)          The term “Representative” shall mean, with respect to a Member, the
Managers and members of the Manufacturing Committee appointed by such Member and
the employees, agents and other representatives of such Member including the
Seconded Employees of such Member, but not including, only for purposes of
Section 8.7(C)(2), the Chief Executive Officer, the Intel Executive Officer, the
Micron Executive Officer, the Lead Controller, the Chief Financial Officer or
any other officer or site manager of the Joint Venture Company (and each such
officer shall be bound by such fiduciary and other duties (including the duty of
care and the duty of loyalty) as would apply to an officer having comparable
authority and duties under the DGCL).

 

ARTICLE 9.
EMPLOYEE MATTERS

 

9.1           Joint Venture Company Employees; Seconded Employees.  The Joint
Venture Company shall employ its own personnel and shall be their exclusive
employer.  In addition, certain other persons who are employed by Micron or
Intel may be assigned by Micron or Intel, respectively, to work for the Joint
Venture Company for a given period of time (“Seconded Employees”) pursuant to
the terms and conditions of the Micron Personnel Secondment Agreement or the
Intel Personnel Secondment Agreement, respectively.  Seconded Employees may be
utilized to provide services to the Joint Venture Company until (1) the time
specified in Article 8 for certain Seconded Employees acting as officers of the
Joint Venture Company, (2) with respect to Seconded Employees employed by
Micron, until the time determined under the terms of the Micron Personnel
Secondment Agreement, or (3) with respect to Seconded Employees employed by
Intel, until the time determined under the terms of the Intel Personnel
Secondment Agreement.  Notwithstanding the foregoing, no Seconded Employee will
become employed by the Joint Venture Company or any of its Subsidiaries unless
agreed among the Joint Venture Company and the Members.

 

9.2           Performance and Removal of Seconded Employees.  The Intel
Executive Officer and Micron Executive Officer shall consult with one another
with respect to any Seconded

 

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Employee, regardless of Member origin, who is not adequately performing or
adequately adapting to the team environment of the Joint Venture Company, and
discuss appropriate action.  If a decision is made by the Intel Executive
Officer, in the case of an Intel Seconded Employee, or the Micron Executive
Officer, in the case of a Micron Seconded Employee, that such employee should be
reassigned to duties other than with the Joint Venture Company, the Intel
Executive Officer or the Micron Executive Officer, as the case may be, will make
reasonably prompt efforts to request the seconding Member to reassign such
employee to duties other than with the Joint Venture Company as such seconding
Member shall determine in its sole discretion.  In no event will the Intel
Executive Officer or Micron Executive Officer have (i) the authority to reassign
any Seconded Employee of the other Member (either within the Joint Venture
Company or to any other assignment), or (ii) the ability to terminate the
employee relationship between a Seconded Employee of the other Member and his or
her Member employer.  Intel and Micron shall each determine in its own sole
discretion with regard to its own Seconded Employees whether or not, and if so
under what conditions, the Intel Executive Officer (in the case of Intel) or the
Micron Executive Officer (in the case of Micron) may either reassign the duties
of (either within the Joint Venture Company or to any other assignment) or
terminate the employment relationship with its own Seconded Employees.

 

For avoidance of doubt, this Section 9.2 shall not apply to the Intel Executive
Officer, the Micron Executive Officer, or the Lead Controller whose performance
shall be subject to review by the Board of Managers. Furthermore, the Board of
Managers shall possess the authority to require that a Seconded Employee be
reassigned by the seconding Member to duties other than with the Joint Venture
Company.  Subject to the terms of the Intel Personnel Secondment Agreement and
the Micron Personnel Secondment Agreement, as the case may be, the Chief
Executive Officer shall possess the authority to require that a Seconded
Employee be reassigned by the seconding Member to duties other than with the
Joint Venture Company.

 

9.3           Forms.  (A)            The Joint Venture Company and each of its
Subsidiaries shall have policies applicable to, and ensure that all of its
officers, employees and third-party independent contractors, third-party
consultants, and other third-party service providers enter into appropriate
agreements with respect to, (1)  protection of confidential information of the
Joint Venture Company and its Subsidiaries, (2) compliance with Applicable Laws,
and (3) other matters related to the delivery of services to, or employment of
such Person by, the Joint Venture Company or its Subsidiaries.  The Joint
Venture Company and each of its Subsidiaries shall have policies applicable to,
and ensure that all of its officers and employees enter into appropriate
agreements with respect to intellectual property assignment, including invention
disclosures, pursuant to which ownership to any intellectual property created in
the course of employment with the Joint Venture Company or any of its
Subsidiaries shall be assigned to the Joint Venture Company.  The Joint Venture
Company and each of its Subsidiaries shall have policies applicable to, and
ensure that all of its third-party independent contractors, third-party
consultants, and other third-party service providers that create intellectual
property in the course of performing services for the Joint Venture Company or
any of its Subsidiaries, enter into appropriate agreements with the Joint
Venture Company with respect to the Joint Venture Company’s ownership of or the
Joint Venture Company and its Subsidiaries’ right to use such intellectual
property.  The forms referred to in this Section 9.3 are collectively referred
to as the “Service Provider Related Forms.”

 

(B)           Notwithstanding any preceding provisions in this Section 9.3 or
elsewhere, no Seconded Employee shall be required to sign any Service Provider
Related Forms, except with

 

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respect to acknowledgement of and agreement regarding policies of the Joint
Venture Company addressing conduct while performing services at the premises of
the Joint Venture Company, such as workplace safety, but excluding matters
relating to protection of confidential information of the Joint Venture Company
and its Subsidiaries and intellectual property assignment, which issues have
been addressed in other documents.  The Joint Venture Company shall be
responsible for providing those appropriate Service Provider Related Forms, if
any, prepared by the Joint Venture Company for Seconded Employees to the
appropriate Seconded Employees, following up to make sure they are signed and
for properly storing such forms; however Intel and Micron shall each require
that their Seconded Employees sign the applicable Service Provider Related Forms
when requested to do so by the Joint Venture Company.

 

9.4           Compensation and Benefits.

 

(A)          The Joint Venture Company and its Subsidiaries shall have
compensation and benefits programs for the employees of the Joint Venture
Company and its Subsidiaries (excluding, for this purpose, Seconded Employees)
at its locations consistent with local practices in each respective geographic
area, as determined by the Intel Executive Officer and Micron Executive Officer,
or the Chief Executive Officer, as applicable, and, to the extent required by
law or this Agreement, approved by the Board of Managers, which may initially be
modeled after Micron’s local compensation and benefits programs if deemed to be
appropriate and competitive by the Intel Executive Officer and the Micron
Executive Officer (or the Chief Executive Officer, when applicable) and, if
applicable, the Board of Managers.  Incentive compensation programs for Joint
Venture Company employees and the employees of any Subsidiary of the Joint
Venture Company will be tied to the Joint Venture Company’s operational success,
as determined by the Intel Executive Officer and the Micron Executive Officer
(or the Chief Executive Officer, when applicable) and approved by the Board of
Managers.

 

(B)           It is the intention of Micron to offer its employees who transfer
to the Joint Venture Company the option to transfer up to [***] hours of their
current accrued Time Off Plan (“TOP”) hours balance to the comparable plan of
the Joint Venture Company to be administered in accordance with the terms of
such plan.  If Micron allows such a transfer and if an employee so elects, the
Joint Venture Company shall credit the employee’s Joint Venture Company TOP (or
similar time bank) account with the transferred hours and Micron shall pay the
Joint Venture Company an amount equal to the person’s base hourly rate (or a
calculated base hourly rate in case of salaried employees) multiplied by the TOP
hours transferred.

 

(C)           It is the intention of Intel to offer its employees who transfer
to the Joint Venture Company the option to transfer up to [***] hours of their
current accrued vacation and personal absence hours balance to the comparable
plan of the Joint Venture Company to be administered in accordance with the
terms of such plan.  If Intel allows such a transfer and if an employee so
elects, the Joint Venture Company shall credit the employee’s Joint Venture
Company TOP (or similar time bank) account with the transferred hours and Intel
shall pay the Joint Venture Company an amount equal to the person’s base hourly
rate (or a calculated base hourly rate in case of salaried employees) multiplied
by the vacation and personal absence hours transferred.

 

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ARTICLE 10.
RECORDS, ACCOUNTS AND REPORTS

 

10.1         Books and Records.  The Authorized Officers, or the Chief Executive
Officer, as applicable, shall keep or cause to be kept adequate books and
records with respect to the Joint Venture Company’s and each of its
Subsidiaries’ business, including the following:

 

(A)          a current list of the full name and last known business address of
each Member and its appointed Managers and all officers and Representatives;

 

(B)           copies of records that would enable a Member to determine the
relative Committed Capital, Percentage Interests, Sharing Interests, Economic
Interests, Member Debt Financing, Capital Contribution Balances and Accumulated
Distributions Accounts of the Members and to determine whether any Balance Sheet
Metric Event or Operating Metric Event has occurred in any relevant period;

 

(C)           a copy of the Certificate together with any amendments;

 

(D)          copies of the Joint Venture Company’s and each of its Subsidiaries’
federal and state income tax returns and reports, if any, for the longer of
(1) five (5) years from the time of filing or (2) with respect to any such tax
return of the Joint Venture Company, until the expiration of the statute of
limitations on the assessment of income tax liabilities for the taxable year of
each Member in which the income required to be shown on such tax return of the
Joint Venture Company is required to be included (and each Member shall promptly
respond to requests from the officers of the Joint Venture Company in order to
determine whether such statute of limitations has expired);

 

(E)           a copy of this Agreement, together with any amendments;

 

(F)           copies of any financial statements of the Joint Venture Company
and its Subsidiaries for the greater of its seven (7) most recent years or all
open taxable years;

 

(G)           copies of all Proposed Business Plans, Approved Business Plans,
Member Business Plans and Operating Plans;

 

(H)          minutes of meetings of the Members, the Board of Managers, and any
other committee appointed by the Board of Managers from time to time and all
written consents in lieu of a meeting; and

 

(I)            any other records required to be maintained by the Act.

 

10.2         Access to Information.

 

(A)          To the extent not in violation of Applicable Law, each Member and
its agents (which may include employees of the Member or the Member’s
independent certified accountants) shall have the right, at any reasonable time,
to inspect, review, copy and audit (or cause to be audited) at the expense of
the inspecting Member any and all properties, assets, books of account,
corporate records, contracts, documentation and any other material of the Joint
Venture Company or any of its Subsidiaries, at the request of the inspecting
Member.  Upon such request, the Joint Venture Company and each of its relevant
Subsidiaries shall use reasonable

 

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efforts to make available to such inspecting Member the Joint Venture Company’s
accountants and key employees for interviews to verify information furnished or
to enable such Member to otherwise review the Joint Venture Company or any of
its Subsidiaries and their operations.  Such availability is conditioned upon
the terms and conditions of the Confidentiality Agreement.

 

(B)           The Members recognize that the Joint Venture Company may, from
time to time, be in possession of Competitively Sensitive Information belonging
to a Member, and in no event shall a Member be entitled to access any
Competitively Sensitive Information of the other Member in the possession of the
Joint Venture Company.  The Joint Venture Company shall maintain procedures
reasonably acceptable to both Members (including requiring that the Members use
reasonable efforts to label or otherwise identify Competitively Sensitive
Information as such) to ensure that the Joint Venture Company will not disclose
or provide Competitively Sensitive Information of one Member to the other Member
(other than to a Joint Venture Company employee or to a Seconded Employee of the
other Member to the extent required for such employee or Seconded Employee to
perform his or her duties for the Joint Venture Company) or any third party
unless such disclosure is specifically requested by the Member providing such
Competitively Sensitive Information.  The Joint Venture Company shall not be
liable for inadvertent disclosures of Competitively Sensitive Information that
was not labeled or identified as such.

 

(C)           Upon request, each Member agrees to use reasonable efforts to
provide the other Member and the Joint Venture Company with reasonable access to
those portions of its facilities and to those items of its equipment that are
being used to provide services to the Joint Venture Company, and to those
employees who are providing services to the Joint Venture Company, to verify
information regarding such operations or enable such Member and the Joint
Venture Company to otherwise review the services being provided to the Joint
Venture Company.

 

10.3         Operations Reports.  Subject to Section 10.2(B), the Joint Venture
Company and each of its Subsidiaries shall provide both Members with all
quarterly, monthly and weekly reporting packages containing such manufacturing
and production reports as may be required to be delivered under any agreement
with, or otherwise requested by, either Member.

 

10.4         Financial Reports.  The Joint Venture Company and each of its
Subsidiaries shall provide the Members the following:

 

(A)          Monthly Reports.

 

(1)           for each Fiscal Month, the Joint Venture Company, and if
requested, each of its Subsidiaries, shall provide each Member with the
following monthly reports prepared in accordance with Modified GAAP consistently
applied, in each case within the time period specified below:

 

(a)           Monthly Flash Report within eight (8) days after the end of each
Fiscal Month;

 

(b)           monthly cash flow report within fifteen (15) days after the end of
each Fiscal Month;

 

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(c)           month-end balance sheet within fifteen (15) days after the end of
each Fiscal Month;

 

(d)           monthly profit and loss statement within fifteen (15) days after
the end of each Fiscal Month;

 

(e)           monthly operational spending summary within fifteen (15) days
after the end of each Fiscal Month; and

 

(f)            such other reports as may be required to be delivered under any
agreement with, or otherwise reasonably requested by, either Member.

 

(2)           With respect to each of the monthly reports set forth in
Section 10.4(A)(1), each Member may provide a sample format for such monthly
report as is necessary and appropriate.

 

(B)           Quarterly Reports.  (1)  As soon as available, but not later than
twenty (20) days after the end of each Fiscal Quarter (other than Fiscal
Quarters ending on the last day of a Fiscal Year, provided that the information
required by this Section 10.4(B) will be included in the reports delivered
pursuant to Section 10.4(C) below for the Fiscal Year ending on such date), the
Joint Venture Company shall provide to each Member a consolidated balance sheet
of the Joint Venture Company as of the end of such period and consolidated
statements of income, cash flows and changes in Members’ equity, as applicable,
for such Fiscal Quarter and for the period commencing at the end of the previous
Fiscal Year and ending with the end of such period, setting forth in each case
in comparative form the corresponding figures for the corresponding period of
the preceding Fiscal Year, and including comparisons to the Approved Business
Plan, each prepared in accordance with Modified GAAP.  The Financial Officer
shall discuss with the Members such quarterly financial data and the business
outlook of the Joint Venture Company and its Subsidiaries and shall be available
to respond to questions from the Members regarding such data and outlook.

 

(3)           In addition, as soon as available, but not later than thirty (30)
days after the end of each Fiscal Quarter, the Joint Venture Company shall
provide to each Member a consolidated balance sheet of the Joint Venture Company
as of the end of each Fiscal Quarter and consolidated statements of income and
changes in Members’ equity, as applicable, for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and ending with the end
of such period, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding Fiscal Year (to the extent
such comparison is appropriate), each prepared in accordance with GAAP.  The
Joint Venture Company shall also provide a reconciliation that describes and
quantifies the differences between the consolidated financial statements
prepared in accordance with GAAP and the consolidated financial statements
prepared in accordance with Modified GAAP.  The non-Consolidating Member may
reasonably request that the Consolidating Member use its reasonable efforts to
engage the Consolidating Member’s external auditor to perform certain
agreed-upon procedures with respect to such reconciliation.  Upon such request,
the Consolidating Member shall not unreasonably deny or delay such request.  The
non-Consolidating Member shall promptly reimburse the Consolidating Member for
the incremental costs incurred by the

 

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Consolidating Member with respect to the performance of such agreed-upon
procedures by the Consolidating Member’s external auditor.

 

(C)           Annual Audit.  As soon as available, but not later than sixty (60)
days after the end of each Fiscal Year of the Joint Venture Company commencing
with the Fiscal Year ended August 31, 2006, audited consolidated financial
statements of the Joint Venture Company and its Subsidiaries, which shall
include statements of income, cash flows and changes in Members’ equity, as
applicable, for such Fiscal Year and a balance sheet as of the last day thereof,
each prepared in accordance with GAAP, consistently applied, and accompanied by
the report of a firm of independent certified public accountants selected from
time to time by the Board of Managers (the “Accountants”).

 

(D)          Right to Audit.  Either Member may conduct a separate audit of the
Joint Venture Company’s financial statements and internal controls over
financing reporting at its own expense, and the Members agree to use all
reasonable efforts to coordinate the timing of any separate audits that any
Member elects to conduct.

 

10.5         Reportable Events.

 

(A)          The Joint Venture Company shall provide notice to the Members of
any Member Reportable Event as soon as possible and in any event no later than
[***] ([***]) days following the occurrence of said event.  The following events
shall be “Member Reportable Events”:

 

(1)           any action by the Joint Venture Company or a Subsidiary of the
Joint Venture Company that will result in recording an impairment of assets of
the Joint Venture Company or any of its Subsidiaries, including without
limitation, intangibles, goodwill, fixed assets, accounts receivable and
inventory, that is expected to exceed $[***], individually or when aggregating
other similar assets impaired at the same time;

 

(2)           any decision to shutdown a business unit, close a facility,
dispose of long-lived assets or terminate employees (in a FAS 146 plan of
termination) whereby the Joint Venture Company or a Subsidiary of the Joint
Venture Company may incur an accounting charge that would exceed $[***];

 

(3)           entry by the Joint Venture Company or a Subsidiary of the Joint
Venture Company into any off-balance sheet arrangement (unconsolidated
transactions with a third party under which the entity retains or has a
contingent interest in transferred assets or is obligated under derivative
instruments classified in equity, or with a third party that constitutes a
“variable interest entity” under FIN 46);

 

(4)           the execution, amendment or termination of a contract that meets
one of the following thresholds:

 

(a)           patent, copyright or trademark license requiring payment of more
than $[***];

 

(b)           technology licenses requiring payment of more than $[***];

 

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(c)           contracts for supply of equipment or materials (i) from either a
sole source (single qualified source or true sole source), a supplier with only
one site, or a supplier located only in a “high risk” geographic area and
(ii) where interruption of supply may cause a key Joint Venture Product to
experience a launch delay or production interruption with revenue impact of more
than $[***] in a ninety (90)-day period; and

 

(d)           other contracts with a value in excess of $[***]; and

 

(5)           entry into any short-term debt (payable within one year),
long-term debt, capital lease, operating lease or guaranty in excess of $[***].

 

(B)           The Joint Venture Company shall provide notice to the Members of
any Joint Venture Reportable Event as soon as possible and in any event no later
than [***] ([***]) days after the Joint Venture Company becomes aware of such
Joint Venture Reportable Event.  The following events shall be “Joint Venture
Reportable Events”:

 

(1)           receipt by the Joint Venture Company or any of its Subsidiaries of
an offer to buy an Interest in the Joint Venture Company or any of its
Subsidiaries or a significant amount of its assets or to merge or consolidate
with the Joint Venture Company or any of its Subsidiaries, or any indication of
interest from any Person with respect to any such transaction;

 

(2)           the commencement, or threat delivered in writing, of any lawsuit
involving the Joint Venture Company or any of its Subsidiaries;

 

(3)           the receipt by the Joint Venture Company or any of its
Subsidiaries of a notice that the Joint Venture Company or any of its
Subsidiaries is in default under any loan agreement to which the Joint Venture
Company or any of its Subsidiaries is a party;

 

(4)           any breach by the Joint Venture Company or any of its Subsidiaries
or a Member or an Affiliate of a Member of any contract, agreement or
understanding between the Joint Venture Company or any of its Subsidiaries and a
Member or an Affiliate of a Member;

 

(5)           any recall of, or other significant alleged product defects with
respect to, any product manufactured by the Joint Venture Company or any of its
Subsidiaries, whether or not as a result of a request or order by any
Governmental Entity;

 

(6)           any material adverse change with respect to the current status of
any item of intellectual property rights owned by the Joint Venture Company or
any of its Subsidiaries (“Intellectual Property Rights”), including receipt of
any adverse notice from any Governmental Entity with respect to such item of
Intellectual Property Rights and notice of any action taken or threatened by any
third party that could affect the validity of any item of Intellectual Property
Rights;

 

(7)           the removal or resignation of the Accountants for the Joint
Venture Company, or any adoption, or material modification, of any significant
accounting policy or tax policy other than those required by GAAP; or

 

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(8)           any other event that has had, or could reasonably be expected to
have, a material adverse effect on the business, results of operations,
financial condition or assets of the Joint Venture Company or any of its
Subsidiaries.

 

10.6         Tax Information.

 

(A)          Estimated Tax Information.  The Financial Officer shall deliver the
following information to each Member, as provided below:

 

(1)           on or prior to the date that is ninety (90) days following the end
of each Joint Venture Company taxable year, an estimate of the United States
federal and material state taxable income of the Joint Venture Company for such
taxable year; and

 

(2)           on or prior to the date that is thirty (30) days following the end
of each Joint Venture Company taxable quarter, an estimate of the United States
federal and material state taxable income of the Joint Venture Company for the
taxable year of the Joint Venture Company as of the end of such taxable quarter.

 

(B)           Tax Returns.  The Financial Officer shall deliver to each Member,
on or prior to the date that is one hundred twenty (120) days following the end
of each Joint Venture Company taxable year, a draft of the United States federal
and material state income tax returns (and related attachments including
Schedule K-1) of the Joint Venture Company for such taxable year.  Each Member
shall have fifteen (15) days to review such tax returns and provide written
comments thereon to the Joint Venture Company, and to the extent the Joint
Venture Company does not intend to incorporate such comments into such tax
returns the Joint Venture Company and the Members shall attempt to resolve any
disagreements within fifteen (15) days after the delivery of such comments to
the Joint Venture Company.  If the Members and the Joint Venture Company are
unable to resolve any disputes regarding the content of such tax returns within
such fifteen (15)-day period, the issue or issues shall be referred for
resolution to a partner at a “Big 4” accounting firm (or other nationally
recognized accounting firm) reasonably acceptable to the Members and the Joint
Venture Company, who shall be requested to resolve open issues, on the basis of
the position most likely to be sustained if challenged in a court having initial
jurisdiction over the matter (which for federal income tax issues shall be
deemed to be the United States Tax Court), no later than one hundred eighty
(180) days following the end of such taxable year.  The decision of such
accounting firm shall be final and binding on the Members and the Joint Venture
Company, and the costs of such accounting firm shall be Joint Venture Company
costs.  The Joint Venture Company shall deliver final income tax returns
(including related schedules) to the Members within two hundred twenty (220)
days after the end of each taxable year of the Joint Venture Company, but not
prior to the resolution of disputes among the Members and the Joint Venture
Company with respect to such tax returns; provided that if such tax returns
become due (taking into account extensions of time to file, which the Joint
Venture Company shall seek as necessary to avoid the delinquent filing of its
tax returns) they shall be filed as determined by the Joint Venture Company and
shall be amended and re-filed as required by the outcome of the referral to the
accounting firm as provided herein.

 

10.7         Tax Matters and Tax Matters Partner.  The [***] at the end of a
given taxable year (or, if there is no [***] at such time, the Member that
served as the Tax Matters Partner for the prior year) shall serve as the “Tax
Matters Partner” under the Code and in any similar capacity under state, local
or foreign law for such year.  The Tax

 

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Matters Partner shall supply such information to the Internal Revenue Service as
may be necessary to cause the other Member to be a “notice partner” as defined
in Code Section 6231(a)(8).  The Tax Matters Partner shall keep each Member
informed of any administrative or judicial proceeding relative to any adjustment
or proposed adjustment at the Joint Venture Company level of Joint Venture
Company items, and shall provide the other Member with notice and an opportunity
to participate in significant meetings or other proceedings (both in person and
by telephone), preparation of correspondence and other significant events with
respect to taxes pertaining to the Joint Venture Company.  Without the prior
written approval of all Members, the Tax Matters Partner shall not (a) enter
into any settlement agreement with the Internal Revenue Service which purports
to bind or otherwise could adversely affect Persons other than the Tax Matters
Partner and any Members who agree in writing to be bound by such agreement, (b) 
file a petition as contemplated by Sections 6226(a) or 6228 of the Code,
(c) intervene in any action as contemplated by Section 6226(b) of the Code,
(d) file any request as contemplated by Section 6227(c) of the Code, (e) enter
into an agreement extending the period of limitation as contemplated by
Section 6229(b)(1)(B) of the Code, (f) take any actions comparable to those
described in clauses (a) through (e) under state, local or foreign tax law or
(g) take any other action in its capacity as Tax Matters Partner that could
significantly affect the tax liability of the other Member.

 

10.8         Bank Accounts and Funds.  Except as otherwise provided in
Section 2.2, Joint Venture Company funds, including cash Capital Contributions,
shall be deposited in an interest-bearing account or accounts in the name of the
Joint Venture Company and shall not be commingled with the funds of any Member,
Manager or any other Person.  All checks, orders or withdrawals shall be signed
by any one or more Persons as authorized by the Board of Managers and subject to
the approval rights set forth in Section 10.9(E).

 

10.9         Internal Controls.

 

(A)          The Joint Venture Company shall have in place a system of internal
controls over financial reporting in accordance with the policies of the
Consolidating Member as of the Effective Date, the design and operation of which
shall be monitored and approved by the Board of Managers and the Financial
Officer.  Changes to the Joint Venture Company’s system of internal controls
over financial reporting shall be made at the request of either Member (and if
requested by the Non-Consolidating Member, the Non-Consolidating Member shall
reimburse the Joint Venture Company for its reasonable costs incurred in
implementing the changes), subject to the other Member’s approval, which
approval shall not be unreasonably withheld, and, subject to the approval of the
Board of Managers and the approval of the Financial Officer, which shall not be
unreasonably withheld; provided, however, that in the event of a Change of
Consolidating Member, the internal controls over financial reporting and
accounting systems of the Joint Venture Company shall, at the Joint Venture
Company’s expense, be modified as necessary to satisfy the new Consolidating
Member’s requirements relating to internal controls over financial reporting,
and such Member shall be entitled to receive the information and perform the
testing that either it or such Member’s auditors deem necessary or advisable to
satisfy their responsibilities related thereto.

 

(B)           Each Member shall be entitled, at its own expense, to have one or
more internal auditors (not to exceed three (3) internal auditors at any single
Facility) located on site at the offices and facilities of the Joint Venture
Company with full access to all of the Joint Venture Company’s financial and
manufacturing records and reporting systems; provided, however, that

 

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such internal auditors shall be required to abide by the procedures maintained
by the Joint Venture Company pursuant to Section 10.2(B) for preventing the
inappropriate sharing of such information.

 

(C)           The Consolidating Member shall provide to the non-consolidating
Member such information as the non-consolidating Member may reasonably request
in connection with the assessment of whether a Change of Consolidating Member
has occurred or may occur.  The Consolidating Member, if it is the Non-Funding
Member with respect to any outstanding Member Notes, shall promptly notify the
non-consolidating Member if it has determined that it is reasonably likely to
not contribute to the Joint Venture Company any amounts to be used to repay any
such Member Notes in accordance with Article 3.

 

(D)          The Consolidating Member shall make available to the
non-Consolidating Member the findings of the external auditor of the
Consolidating Member with respect to the Consolidating Member’s annual audit and
of its internal control over financial reporting to the extent such findings are
applicable to the internal control over financial reporting of the Joint Venture
Company.  The non-Consolidating Member may reasonably request that the
Consolidating Member use its reasonable efforts to engage the Consolidating
Member’s external auditor to perform certain agreed-upon procedures with respect
to such internal control over financial reporting of the Joint Venture Company. 
Upon such request, the Consolidating Member shall not unreasonably deny or delay
such request.  The non-Consolidating Member shall promptly reimburse the
Consolidating Member for the incremental costs incurred by the Consolidating
Member with respect to the performance of such agreed-upon procedures by the
Consolidating Member’s external auditor.

 

(E)           The internal controls over financial reporting referenced in this
Section 10.9 shall provide, among other things, that prior to the Management
Conversion Date, Joint Venture Company expenditures greater than $[***] shall
require approval of both Authorized Officers and shall thereafter require the
approval of the Chief Executive Officer; provided, however, that a decision to
approve or disapprove any such expenditure shall be made in a manner consistent
with the [***] Budget and [***] Budget or Annual Budget, as applicable, included
in the then-effective Approved Business Plan.

 

ARTICLE 11.
BUSINESS PLAN

 

11.1         Initial Business Plan; Initial Budgets.

 

(A)          Initial Approved Business Plan.  The Members have agreed upon an
initial Approved Business Plan (the “Initial Business Plan”) of the Joint
Venture Company and its Subsidiaries covering the operations of the Joint
Venture Company and its Subsidiaries from the Effective Date through [***] ,
which is the end of the Applicable Fiscal Quarter (the “Initial Period”).  The
Initial Business Plan shall be deemed to be an Undisputed Approved Business
Plan.

 

(B)           Initial Budgets.  The Initial Business Plan includes an [***]
budget (the “[***] Budget”) in accordance with which the Joint Venture Company’s
and each of its Subsidiaries’ operating and capital expenditures relating to
matters not covered by the [***] Budget shall be made during the Initial Period
and the Capital Contributions that will be needed from the Members during each
Fiscal Quarter of the Initial Period to fund the [***] Budget.

 

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Such operating and capital expenditures will be funded by the Members’ Initial
Capital Contributions and by [***] Capital Contributions, which [***] Capital
Contributions shall not, in the aggregate, exceed the Maximum Incremental
Capital Amount.  The Initial Business Plan also includes a budget (the “[***]
Budget”) in accordance with which the Joint Venture Company’s and each of its
Subsidiaries’ operating and capital expenditures for [***] shall be made during
the Initial Period and the Capital Contributions that will be needed from the
Members during each Fiscal Quarter of the Initial Period to fund [***] Budget.

 

(C)           Modification of Initial Business Plan.  Except as otherwise
provided in this Section 11.1(C), the Initial Business Plan shall not be
amended, updated, modified or superseded without the unanimous written consent
of the Members.

 

(1)           Annual Review of Initial Business Plan.  At least ninety (90) days
prior to the beginning of each of the [***] and [***] Fiscal [***] of the
Initial Period and the Applicable Fiscal Quarter, the Board of Managers shall
(in consultation with the Authorized Officers or the Chief Executive Officer, as
applicable, and with the Financial Officer) review the Initial Business Plan and
determine whether any amendment thereto is necessary.  Subject to
Section 6.3(A)(11), upon a determination by the Board of Managers that an
amendment to the Initial Business Plan is necessary or appropriate, the Board of
Managers may approve such amendment (and the Initial Business Plan as so amended
shall be an Undisputed Approved Business Plan) and the Authorized Officers, or
the Chief Executive Officer, as applicable, shall thereupon implement such
amendment to the Initial Business Plan as promptly as commercially practicable;
provided, however, that any failure of the Board of Managers to approve any
amendment to the Initial Business Plan shall result in the continuation of the
Initial Business Plan, subject to (a) any prior amendment approved by the Board
of Managers and (b) Section 11.1(C)(2).

 

(2)           Member Modification of Initial Business Plan.  In addition to any
amendment to the Initial Business Plan that may be approved by the Board of
Managers pursuant to Section 11.1(C)(1), during the Initial Period:

 

(a)           (i)            Each Member shall have the right from time to time
to request that the Board of Managers review the Initial Business Plan to
consider whether the [***] Budget should be amended to, among other things,
adjust the Capital Contribution schedule set forth in the [***] Budget.  No such
amendment shall cause the [***] Capital Contributions to be made by Micron in
accordance with the [***] Budget, as amended, to exceed the Micron Maximum
Incremental Capital Amount, nor shall such amendment cause the [***] Capital
Contributions to be made by Intel in accordance with the [***] Budget, as
amended, to exceed, in the aggregate, the Intel Maximum Incremental Capital
Amount.  Upon such request, the Board of Managers shall, at the next scheduled
meeting of the Board of Managers, or at a special meeting called for such
purpose, review the Initial Business Plan and determine whether such amendment
to the [***] Budget is necessary or appropriate.  If the Board of Managers
approves such amendment to the [***] Budget in accordance with
Section 6.3(A)(11), such amended [***] Budget shall become an approved amendment
to the Initial Business Plan (and the Initial Business Plan as so amended shall
be an Undisputed Approved Business Plan), and the Authorized Officers, or the
Chief Executive Officer, as applicable,

 

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shall implement the amended Initial Business Plan as promptly as commercially
practicable.  Subject to clause (ii) of this Section 11.1(C)(2)(a), any failure
of the Board of Managers to approve any amendment to the [***] Budget shall
result in the continuation of the Initial Business Plan without the proposed
amendment.

 

(ii)           If the Board of Managers fails to approve such amendment to the
[***] Budget requested by a Member, then such Member may submit a proposed
amendment to the Initial Business Plan to adjust the Capital Contribution
schedule for the [***] Budget (a “Member [***] Budget”) to the Board of Managers
(with a copy delivered to the other Member) for approval.  The other Member may,
within twenty (20) days thereof, submit an alternate Member [***] Budget to the
Board of Managers for approval.  In no event shall a Member [***] Budget call
for aggregate [***] Capital Contributions to be made by Micron in excess of the
Micron Maximum Incremental Capital Amount or by Intel in excess of the Intel
Maximum Incremental Capital Amount.  If, within twenty (20) days after such
twenty (20)-day period, the Board of Managers approves any Member [***] Budget,
such Member [***] Budget shall become an approved amendment to the Initial
Business Plan (and the Initial Business Plan as so amended shall be an
Undisputed Approved Business Plan), and the Authorized Officers, or the Chief
Executive Officer, as applicable, shall implement the amended Initial Business
Plan as promptly as commercially practicable.  If the Board of Managers fails to
approve a Member [***] Budget within such twenty (20)-day period, then the
matter shall be referred to the Members’ Authorized Representatives for
resolution.  If such referral results in an agreement on a Member [***] Budget,
such Member [***] Budget shall become an approved amendment to the Initial
Business Plan (and the Initial Business Plan as so amended shall be an
Undisputed Approved Business Plan), and the Authorized Officers, or the Chief
Executive Officer, as applicable, shall implement the amended Initial Business
Plan as promptly as commercially practicable.  If such referral does not result
in an agreement on a Member [***] Budget within ten (10) days of such referral,
then the [***] shall become an approved amendment to the Initial Business Plan
(and the Initial Business Plan as so amended shall be a Disputed Approved
Business Plan), and the Authorized Officers, or the Chief Executive Officer, as
applicable, shall implement the amended Initial Business Plan as promptly as
commercially practicable.

 

(b)           (i)            Each Member shall have the right from time to time
to request that the Board of Managers review the Initial Business Plan to
consider whether the [***] Budget should be amended to, among other things,
adjust the [***] Budget and the Capital Contribution schedule set forth
therein.  Upon such request, the Board of Managers shall, at the next scheduled
meeting of the Board of Managers, or at a special meeting called for such
purpose, review the Initial Business Plan and determine whether such amendment
to the [***] Budget is necessary or appropriate.  If the Board of Managers
approves such amendment to the [***] Budget in accordance with
Section 6.3(A)(11), such amended [***] Budget shall become an approved amendment
to the Initial Business Plan (and the Initial Business Plan as so amended shall
be an Undisputed Approved Business Plan), and the Authorized Officers, or the
Chief Executive Officer, as applicable, shall implement the amended Initial
Business Plan as promptly as commercially

 

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practicable.  Subject to clause (ii) of this Section 11.1(C)(2)(b), any failure
of the Board of Managers to approve any amendment to the [***] Budget shall
result in the continuation of the Initial Business Plan without the proposed
amendment.

 

(ii)           If the Board of Managers fails to approve such amendment to the
[***] Budget requested by a Member, then either Member may submit a proposed
amendment to the Initial Business Plan to adjust the [***] Budget and the
Capital Contribution schedule contained therein (a “Member [***] Budget”) to the
Board of Managers (with a copy delivered to the other Member) for approval.  If
a Member submits a Member [***] Budget, the other Member shall have twenty (20)
days to present an alternate Member [***] Budget to the Board of Managers for
approval.  If, within thirty (30) days after such twenty (20)-day period, the
Board of Managers approves any Member [***] Budget, such Member [***] Budget
shall become an approved amendment to the Initial Business Plan (and the Initial
Business Plan as so amended shall be an Undisputed Approved Business Plan), and
the Authorized Officers, or the Chief Executive Officer, as applicable, shall
implement the amended Initial Business Plan as promptly as commercially
practicable.  If the Board of Managers fails to approve a Member [***] Budget
within such thirty (30)-day period, then the matter shall be referred to the
Members’ Authorized Representatives for resolution.  If such referral results in
an agreement on a Member [***] Budget, such Member [***] Budget shall become an
approved amendment to the Initial Business Plan (and the Initial Business Plan
as so amended shall be an Undisputed Approved Business Plan), and the Authorized
Officers, or the Chief Executive Officer, as applicable, shall implement the
amended Initial Business Plan as promptly as commercially practicable.  If such
referral does not result in an agreement on a Member [***] Budget within ten
(10) days of such referral, then the [***] shall become an approved amendment to
the Initial Business Plan (and the Initial Business Plan as so amended shall be
a Disputed Approved Business Plan), and the Authorized Officers, or the Chief
Executive Officer, as applicable, shall implement the amended Initial Business
Plan as promptly as commercially practicable.

 

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11.2         Subsequent Business Plans.  This Section 11.2 shall apply with
respect to any Fiscal Year or Fiscal Quarter ending after the Initial Period
(except that to the extent a Proposed Business Plan covers the Applicable Fiscal
Quarter, the portion of the Proposed Business Plan covering the [***] Budget for
such Applicable Fiscal Quarter shall be governed by Section 11.1).

 

(A)          Proposed Business Plan.  For each Fiscal Year ending after the end
of the Initial Period, the Authorized Officers, or the Chief Executive Officer,
as applicable, and the Financial Officer shall prepare a proposed three-year
business plan (the “Proposed Business Plan”) at least ninety (90) days prior to
the beginning of the applicable Fiscal Year, which shall address, for the
Proposed Business Plan period, [***].

 

(B)           Annual Budgets.  Each Proposed Business Plan shall include a fixed
budget (the “Annual Budget”) in accordance with [***], subject to the Proposed
Business Plan becoming an Approved Business Plan in accordance with
Section 11.2(D).  The Annual Budget may include [***], each as necessary to
effectuate the applicable Proposed Business Plan.  Any Proposed Business Plan
approved in accordance with Section 11.2(D) (as may be amended pursuant to
Section 11.2(E)) [***].

 

(C)           Participation in the Development of the Proposed Business Plan. 
In preparing the Proposed Business Plan, the Authorized Officers, or the Chief
Executive Officer, as applicable, and the Financial Officer shall be advised by
the Manufacturing Committee.

 

(D)          Submission of Proposed Business Plan for Approval by Board of
Managers.  The Authorized Officers, or the Chief Executive Officer, as
applicable, and the Financial Officer shall submit the Proposed Business Plan to
the Board of Managers [***].  The Board of Managers shall review the Proposed
Business Plan, including the Annual Budget included in such Proposed Business
Plan.

 

(1)           If the Proposed Business Plan receives the approval of the Board
of Managers, such Proposed Business Plan shall be approved (the “Undisputed
Approved Business Plan”); provided, however, that the most recently adopted
Undisputed Approved Business Plan may be amended from time to time in accordance
with Section 11.2(E).

 

(2)           If the Board of Managers fails to approve the Proposed Business
Plan within thirty (30) days of the submission of such Proposed Business Plan to
the Board of Managers, then each Member may, within twenty (20) days after the
earlier of the end of such thirty (30)-day period or the date on which the Board
of Managers rejects the Proposed Business Plan, submit its own proposed business
plan (a “Member Business Plan”) to the Board of Managers for approval.  If,
within twenty (20) days after the submission of a Member Business Plan, the
Board of Managers approves any Member Business Plan or any other Proposed
Business Plan, such Member Business Plan or other Proposed Business Plan shall
become an Undisputed Approved Business Plan.  If the Board of Managers fails to
approve any Member Business Plan or other Proposed Business Plan within such
twenty (20)-day period, then the matter shall be referred to the Members’
Authorized Representatives for resolution.  If such referral results in an
agreement on a Member Business Plan or any other Proposed Business Plan, such
Member Business Plan or other Proposed Business Plan, as applicable, shall be an
Undisputed Approved Business Plan.  Subject to compliance with the limitations
set forth

 

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in paragraph (3) below, if such referral does not result in an agreement on a
Member Business Plan or any other Proposed Business Plan within ten (10) days of
such referral, then the [***], if any, shall be deemed to be the then-adopted
Approved Business Plan (such Approved Business Plan, a “Disputed Approved
Business Plan”); provided that, except as contemplated by paragraph (3) below,
such Annual Budget set forth in any Disputed Approved Business Plan shall not be
inconsistent with the [***] Schedule; and provided further that the most
recently adopted Disputed Approved Business Plan may be amended from time to
time in accordance with Section 11.2(E).

 

(3)           The [***] Schedule, which sets forth the [***] timing for the
[***], is attached hereto as Schedule 1.  The [***] Schedule shall not be
amended or modified without the unanimous written consent of the Members;
provided, however, that, if a Member’s Economic Interest is at least [***]
percent ([***]%), such Member may submit a Member Business Plan that includes an
Annual Budget providing for capital expenditures relating to the [***] and [***]
with [***] for a [***] that deviates from the [***] Schedule.

 

(E)           Modification of Approved Business Plan.

 

(1)           Each Member, the Authorized Officers, or the Chief Executive
Officer, as applicable, or the Financial Officer shall have the right from time
to time to request that the Board of Managers review the Joint Venture Company’s
and its Subsidiaries’ operating results and business prospects, the progress to
date of the Joint Venture Company’s and its Subsidiaries’ [***] capital
projects, any changes in the requirements for such projects, and the
then-current market conditions for the Joint Venture Products, to consider
whether the then-effective Approved Business Plan should be amended.

 

(2)           In the event that any material milestone set forth in, or any
other material provision of, the Approved Business Plan is not achieved or is
achieved earlier than contemplated under the Approved Business Plan, or the
occurrence of any event having a material effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Joint Venture Company or its Subsidiaries, each Member, the
Authorized Officers, or the Chief Executive Officer, as applicable, or the
Financial Officer shall have the right to require that the then-effective
Approved Business Plan be reviewed by the Board of Managers to consider whether
the then-effective Approved Business Plan should be amended.

 

(3)           Upon such request or requirement pursuant to
Sections 11.2(E)(1) or (2), the Board of Managers shall, at the next scheduled
meeting of the Board of Managers, or at a special meeting called for such
purpose, review the then-effective Approved Business Plan and determine whether
such amendment is necessary or appropriate.  If the Board of Managers approves
such amendment to the Approved Business Plan in accordance with
Section 6.3(A)(11), such amendment shall become an approved amendment to the
Approved Business Plan (and the Approved Business Plan as so amended shall be an
Undisputed Approved Business Plan), and the Authorized Officers, or the Chief
Executive Officer, as applicable, shall implement the amended Approved Business
Plan as promptly as commercially practicable; provided, however, that any
failure of the Board of Managers to approve any amendment to the Approved
Business Plan shall, subject to Section 11.2(E)(4), result in the continuation
of such Approved Business Plan without the proposed amendment.

 

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(4)           In the event a Member wishes to propose amendments to the Approved
Business Plan for any reason or the Board of Managers fails to approve an
amendment to an Approved Business Plan under Section 11.2(E)(3), either Member
may submit a proposed amendment to the Approved Business Plan (a “Member Plan
Amendment”) to the Board of Managers (with a copy delivered to the other Member)
for approval.  If a Member submits a Member Plan Amendment, the other Member
shall have twenty (20) days to present an alternative Member Plan Amendment. 
If, within thirty (30) days after such twenty (20)-day period, the Board of
Managers approves any Member Plan Amendment, such Member Plan Amendment shall
become an approved amendment to the Approved Business Plan (and the Approved
Business Plan as so amended shall be an Undisputed Approved Business Plan), and
the Authorized Officers, or the Chief Executive Officer, as applicable, shall
implement such amendment to the Approved Business Plan as promptly as
commercially practicable.  If the Board of Managers fails to approve a Member
Plan Amendment within such thirty (30)-day period, then the matter shall be
referred to the Members’ Authorized Representatives for resolution.  If such
referral results in an agreement on a Member Plan Amendment, such Member Plan
Amendment shall become an approved amendment to the Approved Business Plan (and
the Approved Business Plan as so amended shall be an Undisputed Approved
Business Plan), and the Authorized Officers, or the Chief Executive Officer, as
applicable, shall implement such amendment to the Approved Business Plan as
promptly as commercially practicable.  If such referral does not result in an
agreement on a Member Plan Amendment within ten (10) days of such referral, then
the [***] for the remainder of the then-current Fiscal Year (or the Member Plan
Amendment, if there is only one) shall be deemed to be an approved amendment to
the Approved Business Plan (and the Approved Business Plan as so amended shall
be a Disputed Approved Business Plan), and the Authorized Officers, or the Chief
Executive Officer, as applicable, shall implement such amendment to the Approved
Business Plan as promptly as commercially practicable.  Except as contemplated
by Section 11.2(D)(3), the Annual Budget (or portion thereof for the remainder
of the then-current Fiscal Year) shall not be inconsistent with the [***]
Schedule.

 

11.3         Expenditures.  All operating expenditures and all capital
expenditures of the Joint Venture Company and its Subsidiaries shall be made in
accordance with the [***] Budget, the [***] Budget or the Annual Budget, as
applicable, set forth in the applicable Approved Business Plan (each as may be
modified or updated in accordance with this Article 11) for the Fiscal Year in
which such expenditures are made.

 

11.4         Fab Criteria.  Notwithstanding anything to the contrary in this
Agreement, no Approved Business Plan may, without the unanimous consent of the
Members, [***].

 

11.5         Quarterly Business Plan.  At least fifteen (15) days prior to the
end of each Fiscal Quarter, a quarterly business plan addressing at least the
next six (6) full Fiscal Quarters on a rolling basis (which shall be consistent
in all material respects with the then-effective Approved Business Plan) shall
be prepared by the officers of the Joint Venture Company in a manner consistent
with the Joint Venture Company’s financial statements and Modified GAAP and
reviewed and approved by the Authorized Officers, or the Chief Executive
Officer, as applicable, and the Financial Officer.

 

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11.6         Operating Plan.

 

(A)          The Members shall cause the Manufacturing Committee to approve for
submission to the Board of Managers an operating plan (the “Operating Plan”),
which shall be prepared and updated by the Joint Venture Company, and reviewed
by the Manufacturing Committee on a monthly basis.  The Operating Plan shall
[***].

 

(1)           [***].

 

(2)           [***].

 

(3)           [***].

 

(4)           The Members shall cause the Manufacturing Committee, in reviewing
the Operating Plan, to strive to optimize the operating efficiency and output of
the Joint Venture Company and its Subsidiaries.  The Members shall cause the
Manufacturing Committee to review, on a monthly basis, a report prepared by the
Joint Venture Company, which includes information on the operations of the Joint
Venture Company, its Subsidiaries and its subcontractors in respect of the
topics addressed in the Operating Plan (the “Monthly Operating Report”), with a
quarterly review of the Monthly Operating Report (“Quarterly Operating Review”).

 

(B)           Participation in the Development of the Operating Plan.  In
preparing the Operating Plan, the Manufacturing Committee shall be advised by
the Members, the Authorized Officers, or the Chief Executive Officer, as
applicable, the Financial Officer and the Technology Committees.  The Operating
Plan, unless otherwise determined by the Board of Managers, shall incorporate
Micron’s Process of Record and Model of Record, as amended from time to time by
Micron.

 

11.7         Use of Member Names.  Except as may be expressly provided in the
Joint Venture Documents, nothing in this Agreement shall be construed as
conferring on the Joint Venture Company, any Subsidiary of the Joint Venture
Company or either Member the right to use in advertising, publicity, marketing
or other promotional activities any name, trade name, trademark, servicemark or
other designation, or any derivation thereof, of the Members (in the case of a
Member, the other Member).

 

11.8         Insurance.  The Joint Venture Company shall at all times be covered
by insurance of the types and in the amounts set forth on Schedule 2 hereto. 
Such insurance coverage may be provided through the coverage under one or more
insurance policies maintained by either Member.

 

ARTICLE 12.
TRANSFER RESTRICTIONS; PURCHASE OPTIONS

 

12.1         Restrictions on Transfer.  No Member may, directly or indirectly,
by operation of law or otherwise, sell, assign or transfer or otherwise encumber
(whether by pledge or otherwise), or create a class of tracking stock or other
derivative security in respect of (each of the foregoing, a “Transfer”) all or
any portion of its Interest in the Joint Venture Company or any of its
Subsidiaries or any Member Note, or any interest therein, and the Joint Venture
Company and its Subsidiaries shall not recognize any Transfer of a Member’s
Interest in the

 

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Joint Venture Company or any of its Subsidiaries or any Member Note, other than
a Transfer permitted in accordance with Sections 12.2, 12.4 and 12.5.  Neither
(A) a Transfer of securities issued by a Member nor (B) a Member Change of
Control shall constitute a Transfer prohibited by this Section 12.1; provided,
however, that in the event of a Member Change of Control, the provisions of
Section 13.1(A)(7)(ii) shall apply.

 

12.2         Permitted Transfers.  Notwithstanding the restrictions on Transfer
set forth in Section 12.1, a Member may Transfer all, but not less than all, of
its Interest in the Joint Venture Company and any Member Note (including the
right to receive any accrued interest thereon) to a Wholly-Owned Subsidiary of
such Member, provided that, (i) while such Wholly-Owned Subsidiary holds such
Interest or any Member Note it remains a Wholly-Owned Subsidiary of the original
Member, (ii) such transferring Member shall remain liable for its Subsidiary’s
failure to perform the obligations associated with such transferred Interest
(including the obligations set forth in this Agreement), and (iii) prior to the
effectiveness of any permitted Transfer, the transferring Member shall deliver
to the Board of Managers and all of the other Members of the Joint Venture
Company the following:

 

(A)          a certificate of the transferring Member that the Transfer will
not, and could not reasonably be expected to, cause an adverse effect on the
Joint Venture Company or any of its Subsidiaries or the non-transferring Member,
including any adverse effect on, or resulting loss of, any of the Intellectual
Property Rights of the Joint Venture Company or any of its Subsidiaries;

 

(B)           evidence reasonably satisfactory to the other Member that all of
the following conditions have been satisfied:

 

(1)           the transferring Member and its Affiliates are not in material
breach of any provision of this Agreement or any agreement with the Joint
Venture Company or any of its Subsidiaries (collectively, the “Affiliate
Agreements”);

 

(2)           the transferee of the Member’s Interest or any Member Note is
financially capable of carrying out the obligations and paying any liabilities
of the transferring Member pursuant to this Agreement and the Affiliate
Agreements;

 

(3)           notwithstanding the continuing liability of the transferring
Member described above, the transferee has agreed in writing to assume all of
the obligations of the transferring Member relating to the transferred Interest
or any Member Note, including the obligations set forth in this Agreement and
any Affiliate Agreement it properly assumes;

 

(4)           the transferee executes and becomes a party to the Confidentiality
Agreement;

 

(5)           the Transfer will not result in material adverse tax consequences
to the Joint Venture Company or to the other Member (unless the Member engaging
in such Transfer reimburses the other Member or the Joint Venture Company, as
the case may be, for such tax consequences, which reimbursement and payment
shall not affect the Capital Contributions of the Members); and

 

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(6)           the Transfer will not result in a Liquidating Event, or in an
event or condition that with the giving of notice or the passage of time or both
would constitute a breach or default, by either the transferring Member or the
transferee, under this Agreement or any of the Affiliate Agreements.

 

12.3         Additional Members.  No Person shall be admitted to the Joint
Venture Company as a Member other than Intel, Micron or any substitute Member
for Intel or Micron (as provided in Section 12.2).

 

12.4         Purchase of Additional Interest.  During the period commencing on
the two (2) year anniversary of the Effective Date and at any time that Intel is
a Member and its Economic Interest (without taking into account in the Committed
Capital of such Member or in the aggregate Committed Capital of all Members, the
outstanding amount under any Mandatory Note payable to Intel) is less than 51%
but at least 49%, Intel shall have the right to purchase from Micron, and upon
the exercise of such right Micron shall sell to Intel, an Interest representing
a percentage (the “Option Percent”) of the Members’ aggregate Interests
necessary to bring Intel’s Economic Interest to 51% (computed by shifting from
the Capital Contribution Balance (and Committed Capital) of Micron to the
Capital Contribution Balance (and Committed Capital) of Intel the minimum sum
necessary to raise the Economic Interest of Intel to 51%).  The purchase price
to be paid by Intel for such Interest shall be an amount in cash equal to the
[***] value to Micron of the right to purchase under the terms of the Supply
Agreement – Micron the output of the Joint Venture Product that will be shifted
from Micron to Intel as a result of the adjustment in the Sharing Interests of
the Members following the exercise of the purchase right (and the resulting
shift in the Members’ Capital Contribution Balances) provided for in this
Section, such [***] value to be determined by a nationally recognized investment
bank that is mutually agreeable to the Members (the “Purchase Value”); provided,
however, that the purchase price shall in no event be (i) lower than an amount
equal to the Option Percent [***] by the [***] of the [***] of the Joint Venture
Company and its Subsidiaries (the “Floor Amount”), or (ii) greater than the
product of [***], multiplied by the Floor Amount (the “Cap Amount”).  If the
Purchase Value is determined to be lower than the Floor Amount, or greater than
the Cap Amount, then the purchase price shall be an amount equal to the Floor
Amount or the Cap Amount, respectively.  Intel may exercise this purchase right
by delivering a written notice of its intent to exercise to the Joint Venture
Company and Micron.  The closing of the purchase and sale shall take place on a
date agreed to by the Joint Venture Company, Micron and Intel, but in no event
later than thirty (30) days following the date the notice is delivered.  Such
closing shall take place at the principal office of the Joint Venture Company,
or at such other location as the Joint Venture Company, Micron and Intel may
mutually determine.  At the closing, the Joint Venture Company shall record in
its books and records the contemplated shift in the Members’ Capital
Contribution Balances, and the appropriate changes to the Capital Accounts of
the Members, and Intel shall pay to Micron the purchase price for such Option
Percent by wire transfer of immediately available funds.

 

12.5         Purchase of Remaining Interest.

 

(A)          If the Economic Interest of a Member (the “Minority Member”) drops
to ten percent (10%) or less and remains at or below ten percent (10%) for more
than six (6) consecutive months, the other Member or a Subsidiary thereof (such
other Member or Affiliated Company thereof, the “Majority Member”) shall have
the option, exercisable at any time prior to the day that is six (6) months
prior to the end of the Initial Term, to purchase all of the

 

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remaining Interest of, and outstanding Member Notes payable to, the Minority
Member at a cash purchase price equal to the Option Price, subject to the terms
and conditions set forth in Section 12.5(C).  The Majority Member may exercise
this purchase option by delivering a written notice of its intent to exercise to
the Minority Member.  The closing of the purchase and sale of the Minority
Member’s remaining Interest and any outstanding Member Notes held by the
Minority Member (the “Minority Closing”) shall take place as of the last day of
the Fiscal Month in which the notice is delivered (unless such notice is
delivered within the last ten (10) days of the end of a Fiscal Month, in which
case the Minority Closing shall take place on the last day of the first full
Fiscal Month thereafter).  Such Minority Closing shall take place at the
principal office of the Joint Venture Company, or at such other location as the
Majority Member and the Minority Member may mutually determine.  At the Minority
Closing, (i) the Minority Member shall transfer its remaining Interest in the
Joint Venture Company and outstanding Member Notes held by the Minority Member
to the Majority Member, free and clear of any liens or encumbrances, (ii) the
Majority Member shall pay the Minority Member the Minority Closing Price by wire
transfer of immediately available funds and (iii) the Minority Member shall
deliver to the Majority Member such instrument of conveyance as the Majority
Member reasonably requests.

 

(B)           Upon the Minority Closing, the Majority Member shall pay to the
Minority Member a sum (the “Minority Closing Price”) equal to the [***] of
(i) the [***] of (a) the [***] of the [***] of the Joint Venture Company and its
Subsidiaries as of the last day of the Fiscal Month immediately prior to the
Minority Closing, [***] (b) the [***] of all liabilities of the Joint Venture
Company and its Subsidiaries as of the last day of the Fiscal Month immediately
prior to the Minority Closing (excluding, however, any liabilities with respect
to Member Notes), and (ii) the Economic Interest of the Minority Member at the
time the option provided for in Section 12.5(A) is exercised.  Within five
(5) Business Days after the month-end balance sheet (prepared in accordance with
Modified GAAP consistently applied) as of the date of the Minority Closing
becomes available, the Minority Closing Price shall be recalculated using the
[***] of the [***] of the Joint Venture Company and its Subsidiaries as of such
date and the [***] of the liabilities of the Joint Venture Company and its
Subsidiaries as of such date (excluding any liabilities with respect to Member
Notes) (such recalculated sum, the “Option Price”).  If the Option Price is
greater than the Minority Closing Price, the Majority Member shall deliver the
difference to the Minority Member by wire transfer of immediately available
funds within three (3) Business Days of such recalculation.  If the Option Price
is less than the Minority Closing Price, the Minority Member shall refund the
difference to the Majority Member by wire transfer of immediately available
funds within three (3) Business Days of such recalculation.

 

(C)           Upon an election of the Majority Member to purchase the Minority
Member’s remaining Interest and the outstanding Member Notes held by such
Minority Member pursuant to Section 12.5(A), if the Minority Member is Micron,
then the following shall apply:

 

(1)           Micron shall, at its option, exercisable by written notice to
Intel not more than five (5) days after the exercise of the option contemplated
by Section 12.5(A), purchase either (i) the [***] or (ii) all of the equity
interest in any Facilities Company that owns or leases only the [***].  The
purchase price shall be the [***] of the [***] or of such Facilities Company, as
applicable (excluding, for purposes of this determination, any [***]
attributable to the [***]).  The closing of the purchase and sale provided for
in this Section 12.5(C)(1) (the “Micron Minority Closing”) shall take place on
the same

 

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date, at the same time and at the same location as the Minority Closing.  At the
Micron Minority Closing, (x) the Joint Venture Company shall transfer the
purchased assets, rights and equity interest to Micron, free and clear of any
liens or encumbrances other than liens securing indebtedness exclusively
associated with the Fab located at the [***], (y) Micron shall pay the Joint
Venture Company the purchase price determined in accordance with this
Section 12.5(C)(1) by wire transfer of immediately available funds and (z) the
Joint Venture Company shall deliver to Micron such instrument(s) of conveyance
as Micron reasonably requests.

 

(2)           Micron shall pay to the Joint Venture Company an amount equal to
the [***].

 

(3)           The [***] shall terminate at the time of the Micron Minority
Closing with no payment obligation, other than as contemplated by
Section 12.5(C)(2), thereunder by Micron; provided, however, that in the event
that Micron fails to acquire the [***] under Section 12.5(C)(1), the [***] shall
continue for a reasonable period of time to allow the Joint Venture Company to
remove the [***] from the Premises, and Micron shall permit the Joint Venture
Company to have reasonable access to the Premises, for a reasonable period and
on a reasonable basis, in order to remove such [***] from the Premises.

 

(4)           The Boise Supply Agreement shall continue for the remainder of its
term, if any, but shall be modified such that a percentage of the products to be
sold thereunder equal to the Sharing Interest of Micron at the time of the
exercise of the option under Section 12.5(A) shall be retained by Micron and the
remaining portion shall be sold to the Joint Venture Company (which may then
assign its rights and obligations thereunder to Intel).

 

(5)           Micron may, at its option, cause to continue in effect any
existing supply agreements it has with the Joint Venture Company or any
Subsidiary of the Joint Venture Company for [***] from the Minority Closing with
the same amounts and at the same delivery schedule, pricing and terms as are in
effect on the date of the Minority Closing; provided, however, that the quantity
of Products Micron shall be entitled to purchase thereunder, measured in 300
millimeter equivalents, shall be the [***] between (i) the quantity (determined
based on the three (3)-month period immediately preceding the Minority Closing)
of Products Micron would have been permitted to purchase had the option provided
for in Section 12.5(A) not been exercised, and (ii) the [***] of (a) the
quantity of Products that the assets acquired by Micron in accordance with
Section 12.5(C)(1) have been producing in the ordinary course as determined
based on the three (3)-month period immediately preceding the Minority Closing
and (b) the quantity of Products that is retained by Micron under
Section 12.5(C)(4).  Such quantity will be [***] for the first year and then
will [***] of such fixed quantity per Fiscal Quarter to [***] over the next
[***] Fiscal Quarters.  The Members will work together in good faith so that
such supply arrangements minimize disruption to the business of the Joint
Venture Company and the Members and to maintain, subject to such decline in
amount, substantially the same supply of custom Products and substantially the
same composition of types of Products as Micron had obtained from the Joint
Venture Company immediately prior to the Minority Closing.

 

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ARTICLE 13.
DISSOLUTION AND LIQUIDATION

 

13.1         Dissolution.

 

(A)          Upon the occurrence of any of the following events (each, a
“Liquidating Event”), the Joint Venture Company shall dissolve and commence
winding up and liquidation activities in accordance with this Article 13,
whether or not the event would cause a dissolution under the Act:

 

(1)           the expiration of the Term in accordance with Section 1.3;

 

(2)           the unanimous agreement of the Members to dissolve the Joint
Venture Company;

 

(3)           the election by a Member with a Percentage Interest of at least
[***]% to dissolve and wind up the affairs of the Joint Venture Company (which
election shall not require the consent of the other Member), upon delivery of
written notice of such election to the Joint Venture Company and the other
Member;

 

(4)           the election of Intel to dissolve the Joint Venture Company in the
event of one or more breaches by Micron of either or both of (i) the [***]
Agreement, dated as of the Effective Date, between the Joint Venture Company and
Micron or (ii) with respect to any obligations of Micron to [***] or [***] that
are [***] at [***], the [***] and [***] Services Agreement, dated as of the
Effective Date, between the Joint Venture Company and Micron that remain uncured
after any applicable cure period set forth in such agreement, provided that all
such breaches described in clauses (i) and (ii) from the Effective Date to the
date of such election result in [***] damages to the Joint Venture Company of
[***] (that would be recoverable [***] under such agreements) (without taking
into account the effect of the dissolution, winding up and liquidation of the
Joint Venture Company under this Article 13);

 

(5)           the occurrence of any other event that, under the Act, makes it
unlawful, impossible or impractical to carry on the business of the Joint
Venture Company;

 

(6)           the election by either Member to dissolve and wind up the affairs
of the Joint Venture Company upon (i) the occurrence of a Bankruptcy of the
Joint Venture Company of the type described in clause (iv) of the definition of
the term “Bankruptcy,” provided that the Member making such election is not in
default of any payment obligation to the Joint Venture Company or (ii) the
Bankruptcy (as hereinafter defined), dissolution or liquidation of a Member, and
further provided that, in either event, such election shall be made only after
entry by the court presiding over the Bankruptcy of an order granting relief
from the automatic stay to make such election to the Member making such
election;

 

(7)           the election by either Member to dissolve and wind up the affairs
of the Joint Venture Company, if (i) the Joint Venture Company ceases operations
for more than [***] or (ii) the other Member undergoes a Member Change of
Control; or

 

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(8)           the election of a Member by written notice to the Joint Venture
Company and the other Member upon the occurrence of a Balance Sheet Metric Event
on or prior to the Transition Date; provided, however, that such notice shall be
given not more than thirty (30) days after the receipt by the notifying Member
from the Joint Venture Company of financial reports indicating that such Balance
Sheet Metric Event has occurred;

 

(9)           the first day on which each of the following conditions is
satisfied:

 

(a)           an Initial Operating Metric Event has occurred on or prior to the
Transition Date;

 

(b)           either Member provides a written notice (the “Election Notice”) to
the Joint Venture Company and the other Member of its election to dissolve the
Joint Venture Company unless there is a Subsequent Operating Metric Cure;
provided, however, that:

 

(i)            the Election Notice shall be given only after completion of [***]
Fiscal Quarters after the Initial Operating Metric Event and only if a
Subsequent Operating Metric Cure has not occurred by the end of such [***]
Fiscal Quarters;

 

(ii)           such Election Notice shall be given not more than [***] after the
later of (A) receipt by the notifying Member from the Joint Venture Company of
financial reports for the [***]Fiscal Quarter after the Initial Operating Metric
Event and (B) the receipt by such Member of notice from the Joint Venture
Company or the other Member that the Transition Date has occurred; and

 

(iii)          a Member who has not remitted in full its [***] of any [***]
Capital Contribution in accordance with Section 2.3(A) shall not be eligible to
submit an Election Notice unless the other Member failed to contribute in full
its [***] of that or any earlier [***] Capital Contribution under
Section 2.3(A);

 

(c)           not less than Fiscal Quarters after the Initial Operating Metric
Event have been completed;

 

(d)           there shall not have been a Subsequent Operating Metric Cure in
any period of [***] Fiscal Quarters completed prior to the end of the Fiscal
Quarter most recently completed prior to the date the Election Notice is given;
provided, however, that if the Election Notice is given in the [***] Fiscal
Quarter after the Initial Operating Metric Event, there shall not have been a
Subsequent Operating Metric Cure in any period of [***] Fiscal Quarters
completed prior to the end of, and including, such [***] Fiscal Quarter; and

 

(e)           [***] shall have expired from the date the Election Notice was
given; or

 

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(10)         the election of a Member by written notice to the Joint Venture
Company and the other Member upon the occurrence of a Critical Deadlock,
provided such notice is given not more than thirty (30) days after the later of
the end of the [***] period described in subsection (B) of the definition of
Critical Deadlock and the receipt by the electing Member from the Joint Venture
Company of financial reports indicating that no Subsequent Operating Metric Cure
has occurred in the period of [***] Fiscal Quarters described in
subsection (C) of the definition of Critical Deadlock.

 

(B)           For the purposes of this Section 13.1, the term “Bankruptcy” shall
mean (i) the entry of a decree or order for relief of the Person by a court of
competent jurisdiction in any involuntary case involving the Person under any
bankruptcy, insolvency or other similar law now or hereafter in effect; (ii) the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or other similar agent for the Person or for any substantial part
of the Person’s assets or property; (iii) the ordering of the winding up or
liquidation of the Person’s affairs; (iv) the filing with respect to the Person
of a petition in any such involuntary bankruptcy case, which petition remains
undismissed for a period of sixty (60) days or which is dismissed or suspended
pursuant to Section 305 of the U.S. Bankruptcy Code (or any corresponding
provision of any future U.S. bankruptcy law); (v) the commencement by the Person
of a voluntary case under any bankruptcy, insolvency or other similar law now or
hereafter in effect; (vi) the consent by the Person to the entry of an order for
relief in an involuntary case under any such law or to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar agent for the Person or for any substantial part
of the Person’s assets or property; (vii) the making by the Person of any
general assignment for the benefit of creditors; or (viii) the failure by the
Person generally to pay its debts as such debts become due.

 

13.2         Determination of [***] Value.  Upon the occurrence of a Liquidating
Event, the Members shall promptly proceed to determine the [***] Value of each
Facility or Facilities Company and the [***] (the date of receipt of the last
such determination, the “Buyout Determination Date”).  The Members and the Joint
Venture Company shall use reasonable efforts to cause the determination to be
made as promptly as practicable, but not later than [***] after the Liquidating
Event or, in the case of a Liquidating Event under Section 13.1(A)(1), not later
than such Liquidating Event.

 

13.3         No Withdrawal.  No Member shall have any right to withdraw from the
Joint Venture Company.  No event that would constitute a withdrawal of a Member
under the Act shall in any way be deemed to be a withdrawal under this Agreement
or cause a dissolution of the Joint Venture Company.

 

13.4         Micron [***] Reimbursement; [***] True-Up Payment.

 

(A)          If a Liquidating Event occurs before the [***] becomes an
Operational Fab, Micron shall not be obligated to reimburse the Joint Venture
Company for any unused portion of the pre-paid rent under the [***] transferred
to the Joint Venture Company by Micron as described in Section 2.1(B).  If a
Liquidating Event occurs after the [***] becomes an Operational Fab, Micron
shall reimburse the Joint Venture Company for any unused portion of the prepaid
rent under the [***] transferred to the Joint Venture Company determined as of
the day of closing of the Micron [***] Purchase Option, if exercised, or
following the sale of the last Facility to be sold if such option is not
exercised and based on the assumption that, for the [***], such prepaid rent was
being amortized on a straight line basis over a ten (10)-year

 

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period.  Such reimbursement shall be paid by Micron to the Joint Venture Company
no later than the Liquidation Date and, if not so paid, shall be deducted from
the amount to be distributed to Micron under this Article 13.

 

(B)           If a Liquidating Event occurs pursuant to Section 13.1(A)(1),
Micron shall, on the Liquidation Date, make a one-time true-up payment to the
Joint Venture Company in an amount equal to the [***] as of the date of the
termination of the [***].  A real estate appraiser mutually selected by the
Members shall determine such [***] on a final and conclusive basis.  Such
appraiser shall be instructed to consider all factors that in his or her
professional opinion may affect the [***].

 

13.5         Micron Purchase Option on [***].  Within thirty (30) days after the
[***] Determination Date, Micron may elect to purchase all, but not less than
all, of either (i) the [***] or (ii) the equity interest in the U.S. Facilities
Company that owns or leases only the [***].  Micron’s election to purchase (the
“Micron [***] Purchase Option”) shall be exercised by delivering a written
notice (the “Micron [***] Exercise Notice”) of such election to the other Member
and the Joint Venture Company.  The purchase price for, as applicable, either
(x) the [***] or (y) the equity interest, purchased pursuant to the Micron [***]
Purchase Option shall be the [***] Value of such [***] or the equity interest in
the applicable U.S. Facilities Company, respectively (excluding, for purposes of
this determination, any value attributable to the [***]).

 

13.6         Intel Purchase Option.

 

(A)          If a Liquidating Event occurs before [***] is an Operational Fab,
then within thirty (30) days after the Buyout Determination Date, Intel may,
subject to Section 13.8(C), elect to purchase all, but not less than all, of
either (i) the [***] and its Associated Assets or (ii) the equity interest in
the U.S. Facilities Company that owns or leases only the [***] and its
Associated Assets, irrespective of whether the [***] is then not an Operational
Fab and irrespective of whether any additional [***].

 

(B)           If the Liquidating Event occurs after [***] is an Operational Fab
but before [***] is an Operational Fab (a “Later Liquidating Event”), then
within thirty (30) days after the Buyout Determination Date, Intel may, subject
to Section 13.8(C), elect to purchase under this Section 13.6(B) all, but not
less than all, of either (i) [***] and its Associated Assets or (ii) the equity
interest in the Facilities Company that owns or leases only [***] and its
Associated Assets.

 

(C)           Intel shall exercise the purchase option contained in Sections
13.6(A) or 13.6(B) (in either case, an “Intel Purchase Option”) by delivering a
written notice (the “Intel Exercise Notice”) of such election to the Joint
Venture Company and Micron.  The purchase price for, as applicable, either
(i) (a) the [***] and its Associated Assets or (b) [***] and its Associated
Assets or (ii) the equity interest in (a) the U.S. Facilities Company that owns
or leases only the [***] and its Associated Assets or (b) the Facilities Company
that owns or leases only [***] and its Associated Assets, purchased pursuant to
the Intel Purchase Option shall be the [***] Value of such assets or equity,
respectively.

 

13.7         Additional Micron Option.

 

(A)          If a Later Liquidating Event occurs, then within thirty (30) days
after the Buyout Determination Date, Micron may, subject to Section 13.8(C),
elect to purchase under this

 

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Section 13.7(A) all, but not less than all, of either (i) the [***] and its
Associated Assets or (ii) the equity interest in the U.S. Facilities Company
that owns or leases only the [***] and its Associated Assets.

 

(B)           Micron shall exercise the purchase option contained in
Section 13.7(A) (the “Micron Purchase Option”) by delivering a written notice
(the “Micron Exercise Notice”) of such election to the Joint Venture Company and
Intel.  The purchase price for, as applicable, either (i) the [***] and its
Associated Assets or (ii) the equity interest in the U.S. Facilities Company
that owns or leases only the [***] and its Associated Assets, purchased pursuant
to the Micron Purchase Option shall be the [***] Value of such assets or equity,
respectively.

 

13.8         Remaining Facilities Draft.

 

(A)          Within fifteen (15) days (the “Fab Draft Period”) after the
expiration of the last to expire of the options set forth in Sections 13.5, 13.6
and 13.7 (to the extent such options are applicable), any Facility or the equity
of any Facilities Company that owns or leases only a single Facility that is not
the subject of a Micron [***] Exercise Notice, an Intel Exercise Notice or a
Micron Exercise Notice (each such Facility, a “Remaining Facility”) shall be
offered to the Members for purchase at their respective [***] Values in a draft
(the “Draft”) to be conducted under the following procedure; provided, however,
that in the event there is only one Remaining Facility, such Remaining Facility
shall be offered to the Members under Section 13.9, and the provisions of this
Section 13.8 shall not apply to such Remaining Facility.

 

(B)           Within fifteen (15) days after the commencement of the Fab Draft
Period, the Members will appoint an independent third party to administer the
Draft (the “Draft Administrator”).  If the Members fail to mutually agree on the
Draft Administrator within fifteen (15) days, Deloitte & Touche shall be
appointed the Draft Administrator by written request of either Member.  Within
fifteen (15) days after the appointment of the Draft Administrator, each of the
Members may submit a written bid to the Draft Administrator for the right to
select the first Facility to be acquired in the Draft under this Section 13.8,
unless the right to select the first Facility has been designated pursuant to
Section 13.8(C) or either of the last two sentences of this paragraph (B).  Such
bid shall be a binding, irrevocable offer to pay in cash to the Joint Venture
Company a sum specified by the bidding Member in the bid for the right to select
the first Facility in the Draft.  The Draft Administrator shall hold such bids
in confidence until the earlier of receipt of bids from both Members and the end
of such fifteen (15)-day period, whereupon the Draft Administrator shall
announce to the Members which Member submitted the highest bid on a timely basis
in accordance with the provisions hereof (the “First Drafter”).  Such Member
shall pay to the Joint Venture Company the amount of its bid within ten
(10) days thereafter by wire transfer of immediately available funds.  If no
bids are timely submitted in accordance with the provisions hereof, the Draft
Administrator shall designate the First Drafter by lot.  Notwithstanding the
foregoing, in the event of a Liquidating Event described in
Section 13.1(A)(10) after the fifth anniversary of the Effective Date, the
Member who did not elect for the Critical Deadlock to be a Liquidating Event
shall be the First Drafter without any requirement to bid therefor. 
Notwithstanding the foregoing, if at the time of a Liquidating Event, a Member’s
Economic Interest is above [***] percent ([***]%), that Member will be the First
Drafter without any requirement to bid therefor and will also get [***], with
the other Member having the [***] and, notwithstanding anything to the contrary
in Section 13.8(D), [***] between the Members [***] (for the Member whose
Economic Interest is above [***] percent

 

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([***]%)) [***] (for the Member whose Economic Interest is below [***] percent
([***]%)) basis (except that, if there are only [***] Remaining Facilities after
a [***], the ratio in that [***] will be [***] to [***]).

 

(C)           Notwithstanding anything to the contrary in Sections 13.6 and 13.7
and this Section 13.8, in the event of a Liquidating Event described in
Section 13.1(A)(7)(ii), the Member electing under such Section to dissolve and
wind up the Joint Venture Company on the occurrence of the Member Change of
Control shall be the First Drafter without any requirement to bid therefor,
Sections 13.6 and 13.7 shall not be effective, and the [***] and its Associated
Assets and [***] (if it is an Operational Fab) and its Associated Assets shall
be deemed to be included in the Remaining Facilities for purposes of the draft
contemplated by this Section 13.8.

 

(D)          Within fifteen (15) days after the date (the “Draft Commencement
Date”) on which the Draft Administrator announces the identity of the First
Drafter, the First Drafter may (but shall not be obligated to) select for
purchase a [***] or the equity of a Facilities Company that owns or leases [***]
by written notice to the Joint Venture Company and the other Member (the “Second
Drafter”).  After such [***] ([***])-day period expires, but within [***]
([***]) days after the Draft Commencement Date, the Second Drafter may (but
shall not be obligated to) select for purchase a [***] or the equity of a
Facilities Company that owns or leases [***] (other than that selected
previously by the First Drafter) by written notice to the Joint Venture Company
and the other Member.  If there are [***] after the [***] selections by the
First Drafter and the Second Drafter, then after such [***] ([***])-day period
expires, but within [***] ([***]) days after the Draft Commencement Date, the
First Drafter may (but shall not be obligated to) select for purchase a [***] or
the equity of a Facilities Company that owns or leases [***] in the Draft. 
After such [***] ([***])-day period expires, but within [***] ([***]) days after
the Draft Commencement Date, the Second Drafter may (but shall not be obligated
to) select for purchase a [***] or the equity of a Facilities Company that owns
or leases [***] in the Draft.  After the foregoing [***], the Draft shall [***]
in the foregoing manner until (1) [***] in the Draft, (2) there [***], or
(3) neither Member wishes to [***].

 

13.9         Auction of Single Remaining Facility.  If (1) there is only a
single Remaining Facility (and therefore no Draft has occurred) or (2) after the
final round of picks in the Draft under Section 13.8(D) there remains without a
pick only a single Remaining Facility, each Member may submit an irrevocable,
binding written offer (a “Remaining Facility Purchase Offer”) to purchase the
Remaining Facility or the equity of the Facilities Company that owns or leases
only such Remaining Facility.  Such offer shall be submitted to the Draft
Administrator within thirty (30) days after the Draft Commencement Date (in the
case of an auction under clause (1) above) or thirty (30) days after the last
pick was permitted to be submitted in the Draft (in the case of an auction under
clause (2) above).  Immediately after the end of such thirty (30) day period,
the Draft Administrator shall announce the winning bid.

 

13.10       Closing of Purchases.  The closing of any purchase to be made under
a Purchase Option shall each take place as soon as reasonably practicable (but
in no event later than one-hundred twenty (120) calendar days) following the
last to occur of the expiration of any of the Micron [***] Purchase Option, the
Intel Purchase Option, the Micron Purchase Option or a Remaining Facility
Purchase Offer, the completion of the Draft and the expiration of the thirty
(30) day period contemplated by Section 13.9.  Such closing shall take place at
the principal office of the Joint Venture Company, or at such other time and
location as the Members may mutually determine.  At the closing of the Purchase
Options, the applicable assets, rights or equity interest, as applicable, shall
be conveyed, assigned or otherwise transferred to the Member

 

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purchasing such assets, rights or equity, free and clear of any liens and
encumbrances other than liens securing indebtedness exclusively associated with
the applicable Fab, and each Member shall pay the Joint Venture Company the
purchase price for the assets, rights or equity it is purchasing by wire
transfer of immediately available funds and the Joint Venture Company shall
deliver to each Member such instrument(s) of conveyance as the purchasing Member
reasonably requests.  For purposes hereof, the term “Purchase Options” shall
mean any purchase made under Section 13.8 and the Micron [***] Purchase Option,
the Intel Purchase Option, the Micron Purchase Option and any Remaining Facility
Purchase Offer.

 

13.11       Auction of Remaining Assets.  As soon as reasonably practicable
following the closing of the Purchase Options pursuant to Section 13.10 (or if
any Purchase Options are not exercised, the expiration of all Purchase Options),
but not later than [***] ([***]) days after the Buyout Determination Date, the
Board of Managers shall cause the Joint Venture Company and its Subsidiaries to
sell, in an auction process reasonably designed to maximize the price, all of
the assets, other than cash, remaining in the Joint Venture Company and its
Subsidiaries that were not sold to the Members in accordance with the Purchase
Options (the “Remaining Assets”).  Each of the Members shall be entitled to
participate as a bidder in the auction.  The Remaining Assets shall be sold to
the Person providing the best bid.

 

13.12       Winding Up.  Following the conclusion of any sale conducted in
accordance with Section 13.11, the Joint Venture Company shall continue solely
for the purposes of winding up its affairs in an orderly manner, liquidating its
assets, and satisfying the claims of its creditors and Members.  To the extent
not inconsistent with the foregoing, all covenants and obligations in this
Agreement shall continue in full force and effect until such time as the Joint
Venture Company’s property has been distributed pursuant to this Section 13.12
and Section 13.13 and the Joint Venture Company has been dissolved in accordance
with the Act.

 

13.13       Liquidation.  (A)  Upon the occurrence of a Liquidating Event and
following the completion of (i) the consummation of any sale under any of the
Purchase Options and (ii) the auction of assets contemplated by Section 13.11
(the date on which all such events have been completed, the “Liquidation Date”),
the Board of Managers shall act as the liquidating committee of the Joint
Venture Company.  The liquidating committee shall liquidate the Joint Venture
Company’s remaining assets and terminate its business in accordance with this
Section 13.13.  The liquidating committee shall promptly prepare or cause to be
prepared, at the expense of the Joint Venture Company, a statement setting forth
the assets and liabilities of the Joint Venture Company as of the date of
dissolution and shall furnish that statement to all Members.  The liquidating
committee shall proceed to liquidate any assets of the Joint Venture Company
that remain unsold after the auction contemplated by Section 13.11 and to
terminate the Joint Venture Company’s business as promptly as practicable but
shall be allowed a reasonable time for the orderly liquidation of Joint Venture
Company assets and the discharge of liabilities to creditors (including Members
who are creditors) in order to minimize losses normally incident to a
liquidation.  The liquidating committee shall have full power and authority to
operate Joint Venture Company properties in the ordinary course of business for
the account of the Joint Venture Company.

 

(B)           At least ten (10) days prior to the first distribution of assets
or other proceeds of the liquidation under Section 13.13(C) (which distribution
shall occur no earlier than the Liquidation Date), the liquidating committee
shall deliver written notice of such pending first liquidating distribution to
both Members.  Prior to the time of such first liquidating distribution,

 

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(i) any Member that is the Funding Member with respect to any Member Note
outstanding at such time may, by delivering written notice to the Joint Venture
Company, convert the outstanding principal balance of and accrued interest on
such Member Note into a Capital Contribution and (ii) any Member that is the
Non-Funding Member with respect to any Member Note outstanding at such time may,
by delivering written notice to the Joint Venture Company, cause the Joint
Venture Company to convert the outstanding principal balance of and accrued
interest on any such Member Note into a Capital Contribution.  Any conversion of
a Member Note made pursuant to this Section 13.13(B) shall be effective prior to
the commencement of the first liquidating distribution pursuant to
Section 13.13(C).

 

(C)           The assets and other proceeds of the liquidation, as and when
available, shall be applied and distributed in the following order and priority:

 

(1)           first, to the payment of all debts and liabilities of the Joint
Venture Company, excluding debts and liabilities to Members and former Members;

 

(2)           second, to the setting up of reserves that the liquidating
committee deems reasonably necessary for contingent, unmatured or unforeseen
liabilities or obligations of the Joint Venture Company;

 

(3)           third, to the payment of all debts and liabilities to Members and
any former Members; and

 

(4)           fourth, to the Members in accordance with Section 5.1.

 

(D)          In the event that, at the time of a liquidating distribution in
accordance with Section 13.13(C), there exists any outstanding obligation of a
Member to the Joint Venture Company (including, but not limited to, any amounts
owed by such Member to the Joint Venture Company under any Purchase Option that
remains unpaid), all amounts to be distributed to such Member under
Section 13.13(C) shall be subject to offset, and no distribution shall be made
to such Member until after all such obligations have been satisfied in full.

 

(E)           In the event that Micron does not exercise the Micron [***]
Purchase Option, or does not otherwise acquire the [***] pursuant to this
Article 13, then Micron shall permit the Joint Venture Company, or the purchaser
of any such [***] in an auction contemplated by Section 13.11, as applicable, to
have reasonable access to the Premises, for a reasonable period and on a
reasonable basis, in order to remove such [***] from the Premises.

 

13.14       Supply Agreements.  Notwithstanding the occurrence of a Liquidating
Event, the Boise Supply Agreement shall remain in effect for the remainder of
its term, if any, but shall be modified as described in Section 12.5(C)(4) based
on the Members’ respective Sharing Interests at the time of such Liquidating
Event, and the Products to be sold thereunder to, and purchased by, the Joint
Venture Company instead shall be sold to, and purchased by, Intel.  If a
Liquidating Event has occurred, then, from and after the consummation of a sale
under a Purchase Option, each Member shall enter into a supply agreement with
the other Member, on substantially the same terms (including amount, delivery
schedule, pricing terms and other terms) as the Supply Agreement that the Member
is entering into with the Joint Venture Company on the date of this Agreement,
under which each Member agrees to provide the other Member with its Sharing
Interest on the date of the Liquidating Event of the output of each type of
Product from each of the Facilities purchased by that Member in accordance with
the provisions of this Article 13.

 

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The quantity (determined based on the three (3)-month period immediately
preceding the effectiveness of the contemplated Supply Agreement) of Product,
measured in 300 millimeter diameter equivalents (excluding Product provided to
either Member under the Boise Supply Agreement) that a Member shall be obligated
to provide from each Facility under that Member’s supply agreement will be fixed
for the first year after the consummation of a sale under a Purchase Option and
then will decline by [***] ([***]) of such fixed quantity per Fiscal Quarter to
[***] ([***]) over the next [***] ([***]) Fiscal Quarters.  The Members will
work together in good faith so that such supply agreements minimize disruption
to the business of the Members and to maintain, subject to such decline in
amount, substantially the same supply of custom Products and substantially the
same composition of types of Products as the Members had obtained from the Joint
Venture Company immediately prior to the date of the Liquidating Event.

 

13.15       Employees.  Each Member shall be free to offer employment to or
continue the employment of any or all of the Joint Venture Company employees
whose primary place of business is at a Fab owned or leased by the Joint Venture
Company or by a Facilities Company if such Fab or the equity of such Facilities
Company is purchased by that Member in accordance with the provisions of this
Article 13.

 

ARTICLE 14.
EXCULPATION AND INDEMNIFICATION

 

14.1         Exculpation.  No Manager (or alternate Manager) shall be liable to
the Joint Venture Company, any Subsidiary of the Joint Venture Company or the
Members (in their capacities as members of the Joint Venture Company) for
monetary damages for breach of fiduciary duty as a Manager or otherwise liable,
responsible or accountable to the Joint Venture Company, any Subsidiary of the
Joint Venture Company or the Members (in their capacities as members of the
Joint Venture Company) for monetary damages or otherwise for any acts performed,
or for any failure to act, except that this provision shall not eliminate or
limit the liability of a Manager (or alternate Manager) (i) for acts or
omissions that involve willful or intentional misconduct or gross negligence or
(ii) for any transaction from which the Manager (or alternate Manager) received
any improper personal benefit.

 

14.2         Indemnification.

 

(A)          The Joint Venture Company shall, to the fullest extent permitted by
Applicable Law, indemnify, defend and hold harmless (1) each Manager and
alternate Manager and (2) the Chief Executive Officer, the Intel Executive
Officer, the Micron Executive Officer, the Financial Officer and any other
officer or site manager of the Joint Venture Company (each, an “Executive
Indemnified Party” and collectively with the Managers, the “Indemnified Party”),
against any losses, claims, damages or liabilities to which such Indemnified
Party may become subject in connection with any matter arising out of or
incidental to any act performed or omitted to be performed by any such
Indemnified Party in connection with this Agreement or the Joint Venture
Company’s or any of its Subsidiaries’ business or affairs; provided, however,
that in the case of an Executive Indemnified Party, such act or omission was
taken in good faith and was reasonably believed by the Executive Indemnified
Party, as applicable, to be within the scope of authority granted to such
Executive Indemnified Party; and provided further, however, that in the case of
any Indemnified Party such act or omission was not attributable in whole or in
part to the fraud, bad faith, willful misconduct or gross negligence of such
Indemnified Party.  If

 

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an Indemnified Party becomes involved in any capacity in any action, proceeding
or investigation in connection with any matter arising out of or in connection
with this Agreement or the Joint Venture Company’s or any of its Subsidiaries’
business or affairs, the Joint Venture Company shall reimburse such Indemnified
Party for its reasonable legal and other reasonable out-of-pocket expenses
(including the cost of any investigation and preparation) as they are incurred
in connection therewith, provided that such Indemnified Party shall promptly
repay to the Joint Venture Company the amount of any such reimbursed expenses
paid to it if it shall ultimately be determined that such Indemnified Party was
not entitled to be indemnified by the Joint Venture Company in connection with
such action, proceeding or investigation.  If for any reason (other than the
fraud, bad faith, willful misconduct or gross negligence of such Indemnified
Party) the foregoing indemnification is unavailable to such Indemnified Party,
or insufficient to hold it harmless, then the Joint Venture Company shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage, liability or expense in such proportion as is
appropriate to reflect the relative benefits received by the Joint Venture
Company on the one hand and such Indemnified Party on the other hand or, if such
allocation is not permitted by Applicable Law, to reflect not only the relative
benefits referred to above but also any other relevant equitable
considerations.  Any indemnity under this Section 14.2(A) shall be paid solely
out of and to the extent of the Joint Venture Company’s and its Subsidiaries’
assets and shall not be a personal obligation of any Member and in no event will
any Member be required or permitted, without the consent of the other Member, to
contribute additional capital under Article 2 to enable the Joint Venture
Company to satisfy any obligation under this Section 14.2.

 

(B)           The provisions of this Section 14.2 shall survive for a period of
two (2) years from the date of dissolution of the Joint Venture Company,
provided that (1) if at the end of such period there are any actions,
proceedings or investigations then pending, an Indemnified Party may so notify
the Joint Venture Company and the Members at such time (which notice shall
include a brief description of each such action, proceeding or investigation and
the liabilities asserted therein) and the provisions of this Section 14.2 shall
survive with respect to each such action, proceeding or investigation set forth
in such notice (or any related action, proceeding or investigation based upon
the same or similar claim) until such date that such action, proceeding or
investigation is finally resolved and (2) the obligations of the Joint Venture
Company under this Section 14.2 shall be satisfied solely out of Joint Venture
Company assets, including the assets of any Subsidiary of the Joint Venture
Company.

 

ARTICLE 15.
GOVERNMENTAL APPROVALS

 

15.1         Governmental Approvals.  In the event that either Member takes any
action contemplated by this Agreement that could reasonably be expected to
result in an event or transaction, including without limitation (i) the purchase
by either Member of an Interest pursuant to Sections 12.4 or 12.5, (ii) the
exercise by either Member of a Purchase Option or the purchase of a Facility or
Facilities Company pursuant to Sections 13.5, 13.6, 13.7, 13.8 or 13.9, (iii) a
Change of Consolidating Member, (iv) the making of a Capital Contribution,
(v) the conversion of a Member Note or (vi) the creation or acquisition of
interests in a Facilities Company, which event or transaction, as to each of the
foregoing, would require either Member to make a filing, notification or any
other required or requested submission under the HSR Act or any other applicable
Competition Law (any such event or transaction, a “Filing Event” and any such
filing, notification, or any such other required or requested submission, a
“Filing”), then:

 

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(A)          the Member taking such action, in addition to complying with any
other applicable notice provisions under this Agreement, shall promptly notify
the other Member of such Filing Event, which notification shall include an
indication that Filings under the HSR Act or any other applicable Competition
Law will be required;

 

(B)           notwithstanding any provision to the contrary in this Agreement, a
Filing Event may not occur or close until after any applicable waiting period
(including any extension thereof) under the HSR Act or any other Competition
Law, as applicable to such Filing Event, shall have expired or been terminated,
and all approvals under antitrust regulatory Filings in any jurisdiction that
shall be necessary for such Filing Event to occur or close shall have been
obtained, and any applicable deadline for the occurrence or closing of such
Filing Event contained in this Agreement shall be delayed, so long as both
Members are proceeding diligently in accordance with this Section 15.1 to seek
any such expiration, termination or approval, and so long as there are no other
outstanding conditions preventing the occurrence or closing of the Filing Event;

 

(C)           the Members shall, and shall cause any of their relevant
Affiliates to:

 

(1)           as promptly as practicable, make their respective Filings under
the HSR Act or any other applicable Competition Law,

 

(2)           promptly respond to any requests for additional information from
the Federal Trade Commission, the Department of Justice or any other
Governmental Entity,

 

(3)           subject to Applicable Laws, use commercially reasonable efforts to
cooperate with each other in the preparation of, and coordinate, such Filings
(including the exchange of drafts between each party’s outside counsel) so as to
reduce the length of any review periods

 

(4)           subject to Applicable Laws, cooperate and use their respective
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary under Applicable Laws in
connection with such Filing Event, including using commercially reasonable
efforts to provide information,  obtain necessary exemptions, rulings, consents,
clearances, authorizations, approvals and waivers, and effect necessary
registrations and filings;

 

(5)           subject to Applicable Laws, use their commercially reasonable
efforts to (a) take actions that are necessary to prevent the Federal Trade
Commission, the Antitrust Division of the Department of Justice, or any other
Governmental Entity, as the case may be, from filing an action with a court or
Governmental Entity that, if the Governmental Entity prevailed, would restrict,
enjoin, prohibit or otherwise prevent or materially delay the consummation of
the Filing Event, including an action by any such Governmental Entity seeking a
requirement to (i) sell, license or otherwise dispose of, or hold separate and
agree to sell or otherwise dispose of, assets, categories of assets or
businesses of either Member, the Joint Venture Company, or its respective
Subsidiaries; (ii) terminate existing relationships and contractual rights and
obligations of either Member, the Joint Venture Company or its respective
Subsidiaries; (iii) terminate any relevant

 

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venture or other arrangement; or (iv) effectuate any other change or
restructuring of either Member or the Joint Venture Company (as to each of the
foregoing, a “Divestiture Action”), and (b) contest and resist any action,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any order that restricts, enjoins,
prohibits or otherwise prevents or materially delays the occurrence or closing
of such Filing Event; and

 

(6)                                  subject to Applicable Laws, prior to the
making or submission of any analysis, appearance, presentation, memorandum,
brief, argument, opinion or proposal by or on behalf of either Member in
connection with proceedings under or relating to the HSR Act or any other
applicable Competition Law, consult and cooperate with one another, and consider
in good faith the views of one another, in connection with any such analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and
proposals, and will provide one another with copies of all material
communications from and filings with, any Governmental Entities in connection
with any Filing Event;

 

(D)                               notwithstanding anything to the contrary in
this Section 15.1, nothing in this Section 15.1 shall require either Member or
its respective Affiliates, or the Joint Venture Company, to take any Divestiture
Action; and

 

(E)                                 if the Filing Event is prevented from
occurring or closing as a result of any applicable Competition Laws, after
exhausting all efforts permitted under this Section 15.1 to obtain the necessary
approval of any applicable Governmental Entity, then the Members shall negotiate
in good faith to agree upon an alternative event or transaction that would be
permissible under applicable Competition Laws, and would approximate, as closely
as possible, the intent and contemplated effect of the original Filing Event.

 

ARTICLE 16.
FORMATION OF ADDITIONAL ENTITIES

 

16.1                           Formation of U.S. Subsidiaries.  The Members
agree that certain of the Facilities located in the United States may be held
through a Wholly-Owned Subsidiary of the Joint Venture Company (each, a “U.S.
Facilities Company”).  Unless the Members agree otherwise, each U.S. Facilities
Company shall be owned directly or indirectly by the Joint Venture Company. 
Each U.S. Facilities Company shall elect to be treated as a disregarded entity
or a partnership for U.S. federal income tax purposes, as appropriate.  The
Members agree that the charter and other organizational documents of each U.S.
Facilities Company and all contractual and other arrangements between the Joint
Venture Company and such U.S. Facilities Company, and between the Members and
the U.S. Facilities Company, shall have such terms and conditions as shall be
necessary to achieve the purposes of the Members in entering into this Agreement
and the Joint Venture Documents and to achieve as closely as practicable the
same beneficial results (including with respect to Joint Venture Products
produced by such U.S. Facilities Company and the pricing thereof; tax matters,
financial accounting matters, assets to be distributed, and rights provided, on
dissolution and liquidation; profits; losses; distributions; governance; control
and the like) for the Members as would be achieved if the Facility held by such
U.S. Facilities Company were held directly by the Joint Venture Company.

 

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16.2                           Formation of Foreign Facilities Company. 
Notwithstanding any provision hereof to the contrary, the Members anticipate
that each Facility with respect to which this Agreement applies (or would apply
but for the ownership of such Facility outside of the Joint Venture Company as
provided herein) and which is located outside the United States will be held in
a separate entity (each, a “Foreign Facilities Company”) as the Members shall
mutually determine in good faith (which entity may be owned directly or
indirectly by the Joint Venture Company or by the Members or their Affiliates
outside the Joint Venture Company, as provided herein).  If the Members fail to
agree as to the type of entity that will act as a Foreign Facilities Company
with respect to a Facility or whether such Foreign Facilities Company shall be
owned directly or indirectly by the Joint Venture Company or by the Members or
their Affiliates outside the Joint Venture Company, then such Foreign Facilities
Company shall be organized as an entity (1) that is formed under the laws of the
jurisdiction in which the Facility is located, (2) that, to the extent permitted
under the laws of such jurisdiction, shall be an “eligible entity” as defined in
United States Treasury Regulation 301.7701-3(a), (3) that elects to be treated
as a partnership for United States federal income tax purposes, (4) in which
each Member’s direct interest in such Foreign Facilities Company is owned by a
direct or indirect Wholly-Owned Subsidiary of such Member (the “Foreign
Facilities Company Member”) formed in the jurisdiction in which the Foreign
Facilities Company is formed (unless both Members consent to have such direct
interest owned by an entity formed in another jurisdiction), and (5) that will
sell Joint Venture Product to the Foreign Facilities Company Members using
pricing methodology and terms comparable to the pricing methodology and terms
applicable to sales of Joint Venture Product by the Joint Venture Company to the
Members.  If the immediately preceding sentence applies to a Foreign Facilities
Company, further transfers of Joint Venture Product between each Foreign
Facilities Company Member and its Affiliates shall be structured in a manner
that both Members reasonably and in good faith agree will maximize in a
commercially reasonable manner and without undue tax risk (including tax risks
unrelated to the Foreign Facilities Company) the benefits of owning the
applicable Facility in the jurisdiction in which the Foreign Facilities Company
is formed.  [***]; provided, however, that at the option of Intel, Intel may,
contribute additional funds to the capital of such Foreign Facilities Company so
that Intel shall own [***]% and Micron [***]% of the shares or other ownership
interests of such Foreign Facilities Company.

 

ARTICLE 17.
DEADLOCK; OTHER DISPUTE RESOLUTION; EVENT OF DEFAULT

 

17.1                           Deadlock.  “Deadlock” shall occur with respect to
any matter for which an affirmative vote by at least one Manager appointed by
each Member is required for approval, and such matter is not approved as a
result of a vote in which a majority of the Managers appointed by one Member (or
the sole Manager appointed by a Member, if there is only one) have voted against
the matter and a majority of the Managers appointed by the other Member (or the
sole Manager appointed by the other Member, if there is only one) have voted for
the matter other than an Intel Matter or a Micron Matter (a “Tie Vote”) on a
matter submitted to it at a meeting or in the form of a proposed written
consent, and during the [***] period following this Tie Vote, the Board of
Managers is unable or fails to break the Tie Vote (if the matter is presented in
the form of a proposed written consent, the [***] period shall commence on the
date that the Manager who was last to receive the proposal received it).  During
this [***] period, the Board of Managers shall seek in good faith to hold at
least [***] ([***]) additional meetings at which it shall make a good faith
effort to break the Deadlock.  To the extent practicable, the Board of Managers
shall seek to resolve the matter in a manner consistent with the Joint Venture

 

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Company’s then-current Approved Business Plan.  The additional meetings shall be
held at the time and place agreed to by the Managers, or if the Managers are
unable to agree, at a time and place determined by the Authorized Officers, or
the Chief Executive Officer, as applicable, on at least two (2) days’ written
notice.

 

17.2                           Resolution of Deadlock.  If a Deadlock occurs,
(i) if the matter is an Intel Matter, the matter shall be resolved in the manner
specified by the general manager of Intel’s memory products group, whose
decision shall be final and binding on the Joint Venture Company and its
Subsidiaries, (ii) if the matter is a Micron Matter, the matter shall be
resolved in the manner specified by the general manager of Micron’s memory
products group, whose decision shall be final and binding on the Joint Venture
Company and its Subsidiaries, and (iii) if the matter is neither an Intel Matter
nor a Micron Matter, the Joint Venture Company shall (a) first submit the matter
that was the subject of the Deadlock to the general manager of Intel’s memory
products group and to the general manager of Micron’s memory products group by
providing notice of the Deadlock to the Members, and the general manager of
Intel’s memory products group and the general manager of Micron’s memory
products group shall then make a good faith effort to resolve the dispute and
break the Deadlock within [***] of the Members’ receiving notice of the Deadlock
and (b) next, if the Deadlock is still not resolved, submit the matter to the
principal executive officer for each of the Members (each, an “Authorized
Representative”), who shall then make a good faith effort to resolve the
Deadlock within [***] of submission to the Authorized Representatives.  If the
matter remains unresolved, then the Members shall submit the Deadlock to
non-binding mediation.  Either Member may initiate the non-binding meditation by
providing to JAMS and the other Member a written request for mediation, setting
forth the subject of the Deadlock.  The Members will cooperate with JAMS and
with one another in selecting a retired judge from JAMS panel of neutrals, and
in scheduling the mediation proceedings.  The Members covenant that they will
participate in the mediation in good faith, and that they will share equally in
its costs.  The provisions of this Section 17.2 may be enforced by any court of
competent jurisdiction, and the Member seeking enforcement shall be entitled to
an award of all costs, fees and expenses, including attorneys’ fees, to be paid
by the Member against whom enforcement is ordered.

 

17.3                           Definition of “Intel Matters.”  For purposes of
this Agreement, any matter described on Schedule 3 is an “Intel Matter.”

 

17.4                           Definition of “Micron Matters.”  For purposes of
this Agreement, any matter described on Schedule 4 is a “Micron Matter.”

 

17.5                           Other Dispute Resolution.  In the event of any
other dispute over a purported breach of this Agreement (a “Dispute”), the
Members shall endeavor to settle, through their respective designees to the
Board of Managers, the Dispute.  All Disputes arising under this Agreement that
are not resolved by the Board of Managers shall be resolved as follows:  the
Joint Venture Company shall first submit the matter to the general manager of
the memory products group for each of the Members by providing notice of the
Dispute to the Members.  The general managers of the memory products groups
shall then make a good faith effort to resolve the Dispute.  If they are unable
to resolve the Dispute within [***] of receiving notice of the Dispute, the
matter shall then be submitted to the Authorized Representative for each of the
Members, who shall then make a good faith effort to resolve the Dispute.  If the
Dispute cannot be resolved within [***] of submission of the matter to the
Authorized Representatives, then a

 

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civil action with respect to the Dispute may be commenced, but only after the
matter has been submitted to JAMS for mediation as contemplated by Section 17.6.

 

17.6                           Mediation.  If there is a Dispute, either Member
may commence mediation by providing to JAMS and the other Member a written
request for mediation, setting forth the subject of the Dispute and the relief
requested. The Members will cooperate with JAMS and with one another in
selecting a mediator from JAMS panel of neutrals, and in scheduling the
mediation proceedings. The Members covenant that they will participate in the
mediation in good faith, and that they will share equally in its costs. All
offers, promises, conduct and statements, whether oral or written, made in the
course of the mediation by any of the Members, their agents, employees, experts
and attorneys, and by the mediator and any JAMS employees, are confidential,
privileged and inadmissible for any purpose, including impeachment, in any
litigation or other proceeding involving the Members, provided that evidence
that is otherwise admissible or discoverable shall not be rendered inadmissible
or non-discoverable as a result of its use in the mediation. Either Member may
seek equitable relief prior to the mediation to preserve the status quo pending
the completion of that process.  Except for such an action to obtain equitable
relief, neither Member may commence a civil action with respect to a Dispute
until after the completion of the initial mediation session, or [***] after the
date of filing the written request for mediation, whichever occurs first.
Mediation may continue after the commencement of a civil action, if the Members
so desire. The provisions of this Section may be enforced by any court of
competent jurisdiction, and the Member seeking enforcement shall be entitled to
an award of all costs, fees and expenses, including attorneys’ fees, to be paid
by the Member against whom enforcement is ordered.

 

17.7                           Event of Default.

 

(A)                              An “Event of Default” shall occur if a Member
(the “Defaulting Member”) fails to perform any material obligation under this
Agreement or any of the Joint Venture Documents to which it is a party.

 

(B)                                Upon the occurrence of an Event of Default,
the Joint Venture Company and the other Member (the “Non-Defaulting Member”)
shall each have the right to deliver to the Defaulting Member notice (a “Notice
of Default”).  The Notice of Default shall set forth the nature of the
obligations that the Defaulting Member has failed to perform.  If the Defaulting
Member fails to cure the Event of Default within the Cure Period, the
Non-Defaulting Member may take any of the actions set forth in Section 17.7(C). 
For purposes hereof, “Cure Period” means a period commencing on the date that
the Notice of Default is provided by the Non-Defaulting Member or the Joint
Venture Company and ending (i) thirty (30) days after Notice of Default is so
provided, or (ii) in the case of any obligation (other than an obligation to pay
money) which cannot reasonably be cured within such thirty (30) day period, such
longer period not to exceed one hundred twenty (120) days after the Notice of
Default as is necessary to effect a cure of the Event of Default, so long as the
Defaulting Member diligently attempts to effect a cure throughout such period.

 

(C)                                Upon the occurrence of an Event of Default
and the expiration of the Cure Period set forth in Section 17.7(B), the
Non-Defaulting Member may request the Joint Venture Company to pursue all legal
and equitable rights and remedies against the Defaulting Member available to it
(subject to any limitations in the agreement containing the obligation that was
not performed) or may pursue its own legal and equitable rights and remedies
against the Defaulting

 

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Member (subject to any limitations in the agreement containing the obligation
that was not performed); provided, however, that the Non-Defaulting Member may
seek dissolution of the Joint Venture Company under such circumstances only if
expressly permitted pursuant to Section 13.1(A)(4).  The Defaulting Member shall
pay all costs, including attorneys’ fees, incurred by the Joint Venture Company
and the other Member in pursuing such legal remedies.

 

17.8                           Specific Performance.  The Parties agree that
irreparable damage will result if this Agreement is not performed in accordance
with its terms, and the parties agree that any damages available at law for a
breach of this Agreement would not be an adequate remedy.  Therefore, the
provisions hereof and the obligations of the parties hereunder shall be
enforceable in a court of equity, or other tribunal with jurisdiction, by a
decree of specific performance, and appropriate preliminary or permanent
injunctive relief may be applied for and granted in connection therewith. 
Except as otherwise limited by this Agreement, such remedies and all other
remedies provided for in this Agreement shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies that a party may have
under this Agreement; provided, however, that in no event shall the dissolution
of the Joint Venture Company be permitted unless it is expressly permitted by
Section 13.1(A).

 

17.9                           Tax Matters.  Notwithstanding anything in this
Article 17 to the contrary, the resolution of disputes concerning tax matters
governed by Section 10.6(B) shall be governed by Section 10.6(B) of this
Agreement.

 

ARTICLE 18.
MISCELLANEOUS PROVISIONS

 

18.1                           Notices.  All notices to the Joint Venture
Company shall be sent addressed to the Authorized Officers, or the Chief
Executive Officer, as applicable, at the Joint Venture Company’s principal place
of business.  All notices to a Member shall be sent addressed to such Member at
the address as may be specified by the Member from time to time in a notice to
the Joint Venture Company, provided that the initial notice address for each
Member is as follows:

 

(A)                              if to Intel:

 

Intel Corporation
2200 Mission College Blvd.
Mailstop SC4-203
Santa Clara, CA 95054
Attention:  General Counsel
Facsimile:  (408) 653-8050

 

with a copy to:

 

Intel Corporation
2200 Mission College Blvd.
Mailstop RN6-46
Santa Clara, CA 95054
Attention:  [***]
Facsimile:  [***]

 

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(B)                                if to Micron:

 

Micron Technology, Inc.
8000 S. Federal Way
Mail Stop 1-507
Boise, ID 83716
Attn:  General Counsel
Facsimile:  (208) 368-4537

 

All notices to a Manager shall be sent addressed to such Manager at the address
as may be specified by the Manager from time to time in a notice to the Joint
Venture Company.  All notices are effective the next day, if sent by recognized
overnight courier or facsimile, or five (5) days after deposit in the United
States mail, postage prepaid, properly addressed and return receipt requested.

 

18.2                           Waiver.  The failure at any time of a Member to
require performance by any other Member of any responsibility or obligation
required by this Agreement shall in no way affect a Member’s right to require
such performance at any time thereafter, nor shall the waiver by a Member of a
breach of any provision of this Agreement by any other Member constitute a
waiver of any other breach of the same or any other provision nor constitute a
waiver of the responsibility or obligation itself.

 

18.3                           Assignment.  This Agreement shall be binding upon
and inure to the benefit of the successors and permitted assigns of each party
hereto.  Except as otherwise specifically provided in this Agreement, neither
this Agreement nor any right or obligation hereunder may be assigned or
delegated in whole or in part to any other Person.

 

18.4                           Third Party Rights.  Nothing in this Agreement,
whether express or implied, is intended or shall be construed to confer,
directly or indirectly, upon or give to any Person other than the Joint Venture
Company and the Members any legal or equitable right, remedy or claim under or
in respect of this Agreement or any covenant, condition or other provision
contained herein.

 

18.5                           Choice of Law.  This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of
Delaware, without giving effect to the principles of conflict of laws thereof.

 

18.6                           Headings.  The headings of the Articles and
Sections in this Agreement are provided for convenience of reference only and
shall not be deemed to constitute a part hereof.

 

18.7                           Entire Agreement.  This Agreement, together with
the Appendices, Exhibits and Schedules hereto and the agreements (including the
Confidentiality Agreement) and instruments expressly provided for herein,
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral and written, among the parties hereto with respect to the subject matter
hereof.

 

18.8                           Severability.  Should any provision of this
Agreement be deemed in contradiction with the laws of any jurisdiction in which
it is to be performed or unenforceable for any reason, such provision shall be
deemed null and void, but this Agreement shall remain in full force in all

 

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other respects.  Should any provision of this Agreement be or become ineffective
because of changes in Applicable Law or interpretations thereof, or should this
Agreement fail to include a provision that is required as a matter of law, the
validity of the other provisions of this Agreement shall not be affected
thereby.  If such circumstances arise, the parties hereto shall negotiate in
good faith appropriate modifications to this Agreement to reflect those changes
that are required by Applicable Law.

 

18.9                           Counterparts.  This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

18.10                     Further Assurances.  Each Member shall execute such
deeds, assignments, endorsements, evidences of transfer and other instruments
and documents and shall give such further assurances as shall be necessary to
perform such Member’s obligations hereunder.  The obligations of the Members set
forth in this Section 18.10 shall survive the termination of this Agreement.

 

18.11                     Consequential Damages.  No party shall be liable to
any other party under any legal theory for indirect, special, incidental,
consequential or punitive damages, or any damages for loss of profits, revenue
or business, even if such party has been advised of the possibility of such
damages.

 

18.12                     Jurisdiction; Venue.  Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement shall be brought in a state or federal court
located in Delaware and each of the parties to this Agreement hereby consents
and submits to the exclusive jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by Applicable Law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum.  Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court.

 

18.13                     Confidential Information.

 

(A)                              The Members shall abide by the terms of that
certain Mutual Confidentiality Agreement between Micron, Intel and the Joint
Venture Company of even date herewith, and as may be amended or replaced from
time to time (the “Confidentiality Agreement”), which agreement is incorporated
herein by reference with respect to the Joint Venture Company, its Subsidiaries
and the Facilities Companies and the activities of the Joint Venture Company,
its Subsidiaries and the Facilities Companies.  The Members agree that the
Confidentiality Agreement shall govern the confidentiality and non-disclosure
obligations between the Members respecting the information provided or disclosed
pursuant to this Agreement as such information relates to the Joint Venture
Company, its Subsidiaries and the Facilities Companies and their activities.

 

(B)                                If the Confidentiality Agreement is
terminated or expires and is not replaced, such Confidentiality Agreement shall
continue with respect to confidential information provided in connection with
this Agreement, notwithstanding such expiration or termination, for the duration
of the term of this Agreement or until a new Confidentiality Agreement is
entered

 

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into between the Members.  To the extent there is a conflict between this
Agreement and the Confidentiality Agreement, the terms of this Agreement shall
control.

 

(C)                                The terms and conditions of this Agreement
shall be considered “Confidential Information” under the Confidentiality
Agreement for which each of Micron and Intel is considered a “Receiving Party”
under such Confidentiality Agreement.

 

18.14                     Certain Interpretive Matters.

 

(A)                              Unless the context requires otherwise, (1) all
references to Sections, Articles, Exhibits, Appendices or Schedules are to
Sections, Articles, Exhibits, Appendices or Schedules of or to this Agreement,
(2) each of the Schedules will apply only to the corresponding Section or
subsection of this Agreement, (3) each accounting term not otherwise defined in
this Agreement has the meaning commonly applied to it in accordance with GAAP,
except as modified by the definition of “Modified GAAP, “ (4) words in the
singular include the plural and visa versa, (5) the term “including” means
“including without limitation,” and (6) the terms “herein,” “hereof,”
“hereunder” and words of similar import shall mean references to this Agreement
as a whole and not to any individual section or portion hereof.  All references
to “$” or dollar amounts will be to lawful currency of the United States of
America.  All references to “$” or dollar amounts, or “%” or percent or
percentages, shall be to precise amounts and not rounded up or down.  All
references to “day” or “days” will mean calendar days.

 

(B)                                No provision of this Agreement will be
interpreted in favor of, or against, any of the parties by reason of the extent
to which any such party or its counsel participated in the drafting thereof or
by reason of the extent to which any such provision is inconsistent with any
prior draft of this Agreement or such provision.

 

[SIGNATURE PAGE FOLLOWS]

 

71

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IN WITNESS WHEREOF, the undersigned being all of the Members of IM Flash
Technologies, LLC organized under the Act, have executed this Agreement as of
the date and year first above written.

 

 

INTEL CORPORATION

 

 

 

By:

/s/ ARVIND SODHANI

 

 

Print Name: Arvind Sodhani

 

Title:

Senior Vice President, Intel Corporation
President, Intel Capital

 

 

 

MICRON TECHNOLOGY, INC.

 

 

 

By:

/s/ STEVEN R. APPLETON

 

 

Print Name: Steven R. Appleton

 

Title: Chief Executive Officer and President

 

THIS IS THE SIGNATURE PAGE FOR THE
LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF
IM FLASH TECHNOLOGIES, LLC ENTERED INTO BY AND BETWEEN
INTEL CORPORATION AND MICRON TECHNOLOGY, INC.

 

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APPENDIX A

 

IM FLASH TECHNOLOGIES, LLC

 

DEFINITIONS

 

“[***] Fab” means a Fab that has [***] construction, Tool Install and equipment
and process qualification, including all related facilities necessary to
commence production of semiconductor devices and such production output has
reached a minimum level of [***]% of its intended high volume output level (as
measured in Wafer Starts per week).

 

“Accountants” shall have the meaning set forth in Section 10.4(C) of this
Agreement.

 

“Act” shall have the meaning set forth in Section 1.1 of this Agreement.

 

“Accumulated Distributions Account” shall have the meaning set forth in
Section 5.1(C) of this Agreement.

 

“Actual Performance Projection” shall mean, [***].

 

“Additional Capital Contributions” shall have the meaning set forth in
Section 2.3(C) of this Agreement.

 

“Adjusted Contribution Amount” means, after a Change in Consolidating Member, an
amount equal to the sum of (i) the Consolidating Member’s Pro Rata Share of a
given Additional Capital Contribution and (ii) the portion of the Former
Consolidating Member’s Pro Rata Share of such Additional Capital Contribution
that such Former Consolidating Member is not [***].

 

“Affiliate” means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.

 

“Affiliate Agreements” shall have the meaning set forth in Section 12.2(B)(1) of
this Agreement.

 

 “Agreement” shall have the meaning set forth in the preamble of this Agreement.

 

“Annual Budget” shall have the meaning set forth in Section 11.2(B) of this
Agreement.

 

“Applicable Law” means any laws, statutes, rules, regulations, ordinances,
orders, codes, arbitration awards, judgments, decrees or other legal
requirements of any Governmental Entity.

 

“Applicable Percentage” shall be [***]% with respect to any Fiscal Quarter
ending on or prior to the Transition Date and [***]% for the remainder of the
Term.

 

“Applicable Fiscal Quarter” means Micron’s first fiscal quarter in its [***]
fiscal year.

 

“Applicable Projection” with respect to any Fiscal Quarter means:

 

(A)                              if the Approved Business Plan for such Fiscal
Quarter is an Undisputed Approved Business Plan, the projection set forth in
such Undisputed Approved Business Plan; and

 

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(B)                                if the Approved Business Plan for such Fiscal
Quarter is a Disputed Approved Business Plan, the projection determined as
follows:

 

[***].

 

“Appointing Member” shall have the meaning set forth in Section 6.2(B) of this
Agreement.

 

“Appraiser” means two nationally recognized investment banking firms (one to be
selected by each Member) and a manufacturing equipment reseller (mutually agreed
upon by the two investment banking firms).

 

“Approved Business Plan” means either an Undisputed Approved Business Plan or a
Disputed Approved Business Plan, as in effect from time to time.

 

“Assembly Plan” means an assembly plan set forth in the Operating Plan, as more
particularly described in Section 11.6(A)(2) of this Agreement.

 

“Associated Assets” means, with respect to any Fab, the Joint Venture Equipment,
inventory and other tangible personal property owned by the Joint Venture
Company or any of its Subsidiaries and located at that Fab on the date of the
Liquidating Event or thereafter and all rights and obligations pursuant to
contracts, permits and governmental approvals associated with such Fab, Joint
Venture Equipment, inventory or other tangible personal property, including all
liabilities exclusively associated with such Fab, except for assets sold or
disposed of in any of the following transactions that occurs after the
Liquidating Event:  (a) the sale of inventory in the ordinary course; (b) the
sale or other disposition of obsolete or surplus equipment or other assets to
third parties in the ordinary course in arm’s-length transactions; and (c) the
sale of any other asset with the approval of the Board of Managers.  Any
transfer of Associated Assets under this Agreement shall include the assumption
by the transferee of the liabilities exclusively associated with such Fab.

 

“Authorized Officers” means both the Intel Executive Officer and the Micron
Executive Officer.

 

“Authorized Representative” shall have the meaning set forth in Section 17.2 of
this Agreement.

 

“Balance Sheet Metric Event”  means, with respect to any given Fiscal Quarter,
the occurrence of either of the following:

 

[***].

 

“Bankruptcy” shall have the meaning set forth in Section 13.1(B) of this
Agreement.

 

“Board of Managers” shall have the meaning set forth in Section 6.1 of this
Agreement.

 

“Boise Supply Agreement” means that certain agreement, of even date herewith,
between Micron and the Joint Venture Company to supply products to the Joint
Venture Company.

 

“Book” shall have the meaning set forth in Appendix B to this Agreement.

 

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“Business Day” means a day that is not a Saturday, Sunday or other day on which
commercial banking institutions in the State of New York are authorized or
required by Applicable Law to be closed.

 

“Buyout Determination Date” shall have the meaning set forth in Section 13.2 of
this Agreement.

 

“[***] Value” means either (a) or (b) below, determined as follows:  each Member
shall select its own Appraiser and the two Appraisers shall mutually select a
third Appraiser.  Each Appraiser shall conduct its own independent appraisal to
determine the [***] Value, and the average of the two (2) determinations that
are the closest in value shall be the [***] Value.

 

[***].

 

“Cap Amount” shall have the meaning set forth in Section 12.4 of this Agreement.

 

“Capital Account” shall have the meaning set forth in Section 4.1 of this
Agreement.

 

“Capital Contribution” means, for each Member, any amount contributed or deemed
to be contributed to the Joint Venture Company as a capital contribution,
including (without duplication of any capital contribution in clauses (i) –
(v)):

 

(i)                                     the Initial Capital Contribution made by
such Member;

 

(ii)                                  any Additional Capital Contributions
(including any contributions made under Section 2.4) made by such Member;

 

(iii)                               any portion of a Make-Up Contribution made
by such Member equal to the amount of the principal balance of the Member Note
repaid with the Make-Up Contribution;

 

(iv)                              any other capital contributions made by such
Member to the Joint Venture Company as the Members may agree or as provided in
the Joint Venture Documents; and

 

(v)                                 any capital contribution deemed made by such
Member upon conversion, contribution or transfer to the Joint Venture Company of
a Member Note.

 

“Capital Contribution Balance” means, for each Member, the sum of all Capital
Contributions made to the Joint Venture Company by such Member, minus the sum of
any capital contributions returned or refunded to such Member pursuant to
Article 2 or Article 3.  As of the Effective Date, each Member shall, for
purposes of determining its Capital Contribution Balance, receive full credit
for its Initial Capital Contribution.

 

“Certificate” shall have the meaning set forth in Section 1.1 of this Agreement.

 

“Chairman” shall have the meaning set forth in Section 6.2(C) of this Agreement.

 

“Change in Consolidating Member” means a change in the Member that is required
under GAAP to consolidate the financial results of the Joint Venture Company
with its financial results.

 

“Chief Executive Officer” shall have the meaning set forth in Section 8.4 of
this Agreement.

 

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“Chief Financial Officer” shall have the meaning set forth in Section 8.3(D) of
this Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committed Capital” means, for a Member, on a given date, the sum of (1) the
Capital Contribution Balance of such Member through such date and (2) the
principal and accrued interest (provided, that for purposes of this definition,
accrued interest shall be accrued only on the first day of each Fiscal Month)
owed to such Member under any Member Debt Financing outstanding on such date.

 

“Competition Laws” means the Sherman Antitrust Act of 1890, as amended, the
Clayton Act of 1914, as amended, the HSR Act, the Federal Trade Commission Act,
as amended, and all other domestic or foreign Applicable Laws issued by a
domestic or foreign Governmental Entity that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition through merger
or acquisition.

 

“Competitively Sensitive Information” means any information, in whatever form,
that has not been made publicly available relating to products and services that
a Member sells in competition with the other Member at the execution of this
Agreement or thereafter during the Term including, without limitation, NAND
Flash Memory Product, to the extent such information of the Member selling such
products and services includes price or any element of price, customer terms or
conditions of sale, Member-specific costs, volume of sales, output (but not
including the Joint Venture Company’s output), or bid terms of the foregoing
type and such similar information as is specifically identified electronically
or in writing to the Joint Venture Company by a Member as competitively
sensitive information.

 

“Completion,” with respect to a Fab, means the time at which the Fab has
successfully completed Process Qualification/Certification and is capable of
manufacturing completed semiconductor devices.

 

“Confidentiality Agreement” shall have the meaning set forth in Section 18.13 of
this Agreement.

 

“Conforming Wafer” means a NAND Flash Memory Wafer with greater than [***]
percent ([***]%) functional die, or that is otherwise accepted by a Member.

 

“Consolidating Member” means the Member that is required to consolidate the
financial results of the Joint Venture Company with its financial results under
GAAP.

 

“Continuing Mandatory Notes” shall have the meaning set forth in
Section 3.1(E) of this Agreement.

 

“Critical Deadlock” means a Deadlock between the Members about how to address
the circumstances giving rise to an Initial Operating Metric Event or a Balance
Sheet Metric Event, provided that:

 

(A)                              such Deadlock (1) is not with respect to a
Micron Matter or an Intel Matter, (2) is not with respect to a matter within the
scope of the provisions of any of subsections (1) - (13) of Section 6.3(A),
Section 6.3(B), Section 6.3(C) or Section 7.4, and (3) does not relate to a
proposal to require any Capital Contributions or Member Debt Financing;

 

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(B)                                the Deadlock about how to address the
circumstances giving rise to such Initial Operating Metric Event or Balance
Sheet Metric Event, as applicable, has not been resolved within [***] of the
occurrence of such Deadlock; and

 

(C)                                with respect to a Deadlock about how to
address the circumstances giving rise to an Initial Operating Metric Event,
there has not been a Subsequent Operating Metric Cure within the following [***]
Fiscal Quarters after such Initial Operating Metric Event.

 

“Cure Period” shall have the meaning set forth in Section 17.7(B) of this
Agreement.

 

“Deadlock” shall have the meaning set forth in Section 17.1 of this Agreement.

 

“Defaulting Member” shall have the meaning set forth in Section 17.7(A) of this
Agreement.

 

“DGCL” means the Delaware General Corporation Law (Del. Code Ann. tit. 8 §§101
et seq.).

 

“Dispute” shall have the meaning set forth in Section 17.5 of this Agreement.

 

“Disputed Approved Business Plan” shall have the meaning set forth in
Section 11.2(D)(2) of this Agreement.

 

“Dissolving Member Event” shall mean any event, circumstance or occurrence, the
proximate cause of which is an action taken by the Member who has sent a notice
pursuant to Section 13.1(A)(8) or (10) electing to dissolve the Joint Venture
Company which is sent after the occurrence of a Balance Sheet Metric Event.  A
Member shall not be deemed to have taken any action solely as a result of
(a) the voting of the Managers appointed by such Member to the Board of Managers
or the members of any committee appointed by such Member or (b) actions of any
Seconded Employee, employee or officer of the Joint Venture Company (other than
an action taken by any Seconded Employee at the specific direction of the Member
that employs him or her).

 

“Distribution Entitlement” means with respect to any proposed distribution under
Section 5.1(A)(4) to a Member, the amount, if any, equal to the Member’s Sharing
Interest (as such Sharing Interest is determined immediately after any payments
made under Sections 5.1(A)(1), (2) and (3)) multiplied by the aggregate,
cumulative distributions (not including any payments made pursuant to
Sections 5.1(A)(1), (2) and (3) but including the amount to be distributed to
such Member in such proposed distribution under Section 5.1(A)(4)).

 

“Draft” shall have the meaning set forth in Section 13.8(A) of this Agreement.

 

“Draft Administrator” shall have the meaning set forth in Section 13.8(B) of
this Agreement.

 

“Draft Commencement Date” shall have the meaning set forth in Section 13.8(D) of
this Agreement.

 

“DRAM” has the meaning set forth in that certain [***] Agreement, dated [***],
between Intel and Micron.

 

“Early Start” means the [***].

 

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“Economic Interest” means, for each Member, a percentage determined from time to
time by dividing the Committed Capital of such Member at the time of
determination by the aggregate Committed Capital of all Members at the time of
determination.

 

“Effective Date” shall have the meaning set forth in the preamble of this
Agreement.

 

“Event of Default” shall have the meaning set forth in Section 17.7(A) of this
Agreement.

 

“Executive Indemnified Party” shall have the meaning set forth in
Section 14.2(A) of this Agreement.

 

“[***] Budget” shall have the meaning set forth in Section 11.1(B) of this
Agreement.

 

“[***] Capital Contribution” shall mean an Additional Capital Contribution of
funds required by the Joint Venture Company as set forth in the [***] Budget of
the Initial Business Plan, as it may be modified in accordance with
Section 11.1(C)(2).

 

“Fab” means a manufacturing facility for manufacturing NAND Flash Memory Wafers
and shall include the related automated material handling system (AMHS), process
tools, and support tools/fixtures used for manufacturing NAND Flash Memory
Wafers in the cleanroom, sub fab and all related laboratories.  It also includes
all non-clean support equipment and gas and chemical delivery systems required
to support the production tools in the Fab.

 

“Fab Criteria” means a Fab capable of producing a minimum of [***] and a maximum
of [***] Wafer Starts per week.

 

“Fab Draft Period” shall have the meaning set forth in Section 13.8(A) of this
Agreement.

 

“Facility” means a Fab that is owned or leased by the Joint Venture Company or
any of its Subsidiaries or any Facilities Company and the Associated Assets of
such Fab.

 

“Facilities Company” means a U.S. Facilities Company or a Foreign Facilities
Company.

 

“Filing” shall have the meaning set forth in Section 15.1 of this Agreement.

 

“Filing Event” shall have the meaning set forth in Section 15.1 of this
Agreement.

 

“Financial Officer” shall have the meaning set forth in Section 8.3(D) of this
Agreement.

 

“First Drafter” shall have the meaning set forth in Section 13.8(B) of this
Agreement.

 

“Fiscal Month” means the fiscal month of the Joint Venture Company as determined
by the Board of Managers from time to time, and, initially, the period
commensurate with Micron’s fiscal month; provided that, if the Member with whom
the Joint Venture Company’s financial statements are consolidated changes prior
to the end of any Fiscal Month, the Fiscal Month shall, at such Member’s
discretion, change to be commensurate with the Fiscal Month of such Member at
such time as such Member may thereafter specify.

 

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“Fiscal Quarter” means the fiscal quarter of the Joint Venture Company as
determined by the Board of Managers from time to time, and, initially, the
period commensurate with Micron’s fiscal quarter; provided that, if the Member
with whom the Joint Venture Company’s financial statements are consolidated
changes prior to the end of any Fiscal Quarter, the Fiscal Year shall, at such
Member’s discretion, change to be commensurate with the Fiscal Quarter of such
Member at such time as such Member may thereafter specify.

 

“Fiscal Year” means the fiscal year of the Joint Venture Company as determined
by the Board of Managers from time to time, and corresponding to the fiscal year
of the Member having the greater Percentage Interest, initially, the period
commencing as of the Effective Date and ending August 31, 2006 and thereafter a
fifty-two (52) or fifty-three (53) week period ending on the Thursday closest to
August 31 of each year; provided that, if the Member with whom the Joint Venture
Company’s financial statements are consolidated changes prior to the end of any
Fiscal Year, the Fiscal Year shall, at such Member’s discretion, change to be
commensurate with the Fiscal Year of such Member at such time as such Member may
thereafter specify.

 

“Flash Memory Integrated Circuit” means a non-volatile memory integrated circuit
that contains memory cells that are electrically programmable and electrically
erasable whereby the memory cells consist of one or more transistors that have a
floating gate, charge-trapping regions or any other functionally equivalent
structure utilizing one or more different charge levels (including binary or
multi-level cell structures) with or without any on-chip control, I/O and other
support circuitry.

 

“Floor Amount” shall have the meaning set forth in Section 12.4 of this
Agreement.

 

“Foreign Facilities Company” shall have the meaning set forth in Section 16.2 of
this Agreement.

 

“Foreign Facilities Company Member” shall have the meaning set forth in
Section 16.2 of this Agreement.

 

“Former Consolidating Member” means the Member that was required to consolidate
the financial results of the Joint Venture Company with its financial results
under GAAP immediately prior to a Change in Consolidating Member.

 

“Funding Member” shall have the meaning set forth in Section 3.1(A) of this
Agreement.

 

“Funding Member Portion” means that portion of the amount of a Funding Member’s
Additional Capital Contribution that is deemed to be a loan (rather than a
Capital Contribution) as part of a Member Debt Financing, which amount is
determined by [***] the Funding Member’s [***] of such Additional Capital
Contribution (whether or not contributed in full) [***] is the amount actually
loaned to the Joint Venture Company by the Funding Member in respect of the
Shortfall Amount and the [***] is the Non-Funding Member’s [***] of the
Additional Capital Contribution.

 

“GAAP” means United States generally accepted accounting principles as in effect
from time to time.

 

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“Governmental Entity” means any governmental authority or entity, including any
agency, board, bureau, commission, court, department, subdivision or
instrumentality thereof, or any arbitrator or arbitration panel.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

 

“Indemnified Party” shall have the meaning set forth in Section 14.2(A) of this
Agreement.

 

“Independent Member” shall have the meaning set forth in Section 6.3(B)(1) of
this Agreement.

 

“Initial Business Plan” shall have the meaning set forth in Section 11.1(A) of
this Agreement.

 

“Initial Capital Contribution” means the total amount of money or other property
initially contributed or agreed to be contributed to the Joint Venture Company
by a Member pursuant to Section 2.1, as set forth on Appendix D.

 

“Initial Operating Metric Event” means the [***].

 

“Initial Period” shall have the meaning set forth in Section 11.1(A) of this
Agreement.

 

“Initial Term” shall have the meaning set forth in Section 1.3 of this
Agreement.

 

“Intel” shall have the meaning set forth in the preamble of this Agreement.

 

“Intel Additional Cash” shall have the meaning set forth on Appendix D.

 

“Intel Executive Officer” shall have the meaning set forth in Section 8.1(A) of
this Agreement.

 

“Intel Exercise Notice” shall have the meaning set forth in Section 13.6(C) of
this Agreement.

 

“Intel Initial Contributed Assets” means the total amount of money or other
property contributed or agreed to be contributed to the Joint Venture Company by
Intel as of the Effective Date, as described on Appendix D.

 

“Intel Matter” shall have the meaning set forth in Section 17.3 of this
Agreement.

 

“Intel Maximum Incremental Capital Amount” means $[***].  Such amount does not
include any funds contributed as part of Intel’s Initial Capital Contribution.

 

“Intel Personnel Secondment Agreement” means that certain Intel Personnel
Secondment Agreement, of even date herewith, by and between the Joint Venture
Company and Intel, as amended.

 

“Intel [***]” has the meaning set forth in that certain [***] Agreement, dated
[***], between Intel and Micron.

 

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“Intel Purchase Option” shall have the meaning set forth in Section 13.6(C) of
this Agreement.

 

“Intellectual Property Rights” shall have the meaning set forth in
Section 10.5(B)(6) of this Agreement.

 

“Interest” means the ownership interest of a Member in the Joint Venture
Company, including any and all benefits to which a Member may be entitled under
this Agreement and the obligations of a Member under this Agreement, including,
without limitation, the right to vote or to participate in the management of the
Joint Venture Company, and the right to information concerning the business and
affairs of the Joint Venture Company and its Subsidiaries.

 

“Interested Member” shall have the meaning set forth in Section 6.3(B)(1) of
this Agreement.

 

“Interested Member Transaction” shall have the meaning set forth in
Section 6.3(B)(2) of this Agreement.

 

“Issuance Date” shall have the meaning set forth in Section 3.1(C) of this
Agreement.

 

“JAMS” means Judicial Arbitration and Mediation Services.

 

“Joint Development Committee” shall have the meaning ascribed to such term in
the Joint Development Program Agreement, of even date herewith, between Micron
and Intel.

 

“Joint Venture Company” shall have the meaning set forth in preamble of this
Agreement.

 

“Joint Venture Documents” shall have the meaning ascribed to such term in the
Master Agreement.

 

“Joint Venture Equipment” means all of the personal property, equipment and
tangible assets owned by the Joint Venture Company or any of its Subsidiaries.

 

“Joint Venture Products” means all NAND Flash Memory Products and any other
memory products that the Joint Venture Company and its Subsidiaries or any
Facilities Company shall produce.

 

“Joint Venture Reportable Event” shall have the meaning set forth in
Section 10.5(B) of this Agreement.

 

“Later Liquidating Event” shall have the meaning set forth in Section 13.6(B) of
this Agreement.

 

“Lead Controller” shall have the meaning set forth in Section 8.3(A) of this
Agreement.

 

“Lehi Fab” means the Fab to be built out by the Joint Venture Company or one of
its Subsidiaries at Lehi, Utah.

 

“Lehi Lease” shall have the meaning ascribed to such term in the Master
Agreement.

 

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“Lehi Property” means the Lehi Contributed Property (as defined in the Lehi
Lease) and all personal property, equipment and other tangible assets that are
conveyed to the Joint Venture Company pursuant to the Lehi Bill of Conveyance.

 

“[***]” means the [***] in effect from time to time (as reported in the [***]).

 

“Liquidating Event” shall have the meaning set forth in Section 13.1(A) of this
Agreement.

 

“Liquidation Date” shall have the meaning set forth in Section 13.13(A) of this
Agreement.

 

“Loan Amount” means the [***] (1) the [***] of (a) the Non-Funding Member’s full
Pro Rata Share of an Additional Capital Contribution, [***] (b) a [***] is the
amount of the Additional Capital Contribution actually contributed by the
Funding Member and the [***] is the Funding Member’s [***] of such Additional
Capital Contribution and (2) the amount of such Additional Capital Contribution
actually contributed by the Non-Funding Member.

 

“Majority Member” shall have the meaning sent forth in Section 12.5(A) of this
Agreement.

 

“Make-Up Contribution” means a Capital Contribution made by a Non-Funding Member
in respect of a Shortfall Amount (but not including any interest thereon).

 

“Mandatory Equalization Note” shall have the meaning set forth in
Section 3.1(B) of this Agreement.

 

“Mandatory Member Debt Financing” means Member Debt Financing made in accordance
with Section 3.1 of this Agreement.

 

“Mandatory Notes” shall have the meaning set forth in Section 3.1(B) of this
Agreement.

 

“Mandatory Shortfall Note” shall have the meaning set forth in Section 3.1(B) of
this Agreement.

 

“Management Conversion Date” shall have the meaning set forth in
Section 8.1(A) of this Agreement.

 

“Manager” shall have the meaning set forth in Section 6.2(A) of this Agreement.

 

“Manufacturing Committee” shall have the meaning set forth in Section 8.6 of
this Agreement.

 

“Manufacturing Plan” means a manufacturing plan set forth in the Operating Plan,
as described more particularly in Section 11.6(A)(1) of this Agreement.

 

“Master Agreement” means that certain Master Agreement, by and between Intel and
Micron, dated as of November 18, 2005.

 

“Maximum Incremental Capital Amount” means $[***].  Such amount does not include
any funds contributed as Initial Capital Contributions.

 

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“Member” or “Members” shall have the meaning set forth in the preamble of this
Agreement.

 

“Member Business Plan” shall have the meaning set forth in Section 11.2(D)(2) of
this Agreement.

 

“Member Change of Control” means (i) any consolidation, merger,
recapitalization, liquidation or other extraordinary transaction involving a
Member pursuant to which such Member’s stockholders immediately prior to such
consolidation, merger, recapitalization, liquidation or other extraordinary
transaction own, immediately after such consolidation, merger, recapitalization,
liquidation or other extraordinary transaction securities representing less than
50% of the combined voting power of all voting securities of the surviving
entity; (ii) any transaction or series of related transactions as a result of
which securities representing 50% or more of the combined voting power of all
voting securities of such Member are sold, conveyed, transferred, assigned or
pledged, either directly or indirectly, to persons other than such Member’s
stockholders immediately prior to such transaction or series of transactions; or
(iii) the sale, conveyance, transfer or assignment, either directly or
indirectly, of all or substantially all of the assets of such Member, in one
transaction or a series of related transactions, to a person that does not
control, is not controlled by and is not under common control with such Member.

 

“Member Debt Financing” as of any date shall mean all loans to the Joint Venture
Company under Article 3 of this Agreement.

 

“Member [***] Budget” shall have the meaning set forth in
Section 11.1(C)(2)(a)(ii) of this Agreement.

 

“Member [***] Budget” shall have the meaning set forth in
Section 11.1(C)(2)(b)(ii) of this Agreement.

 

“Member Notes” means any promissory notes issued under Article 3 of this
Agreement, including a Mandatory Shortfall Note, Mandatory Equalization Note,
Continuing Mandatory Note, Optional [***] Shortfall Note, Optional [***]
Equalization Note or Optional Other Shortfall Note outstanding pursuant to the
terms of this Agreement.

 

“Member Plan Amendment” shall have the meaning set forth in
Section 11.2(E)(4) of this Agreement.

 

“Member Reportable Events” shall have the meaning set forth in
Section 10.5(A) of this Agreement.

 

“Micron” shall have the meaning set forth in the preamble of this Agreement.

 

“Micron Additional Cash” shall have the meaning set forth on Appendix D.

 

“Micron Executive Officer” shall have the meaning set forth in Section 8.2(A) of
this Agreement.

 

“Micron Exercise Notice” shall have the meaning set forth in Section 13.7(B) of
this Agreement.

 

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“Micron Initial Contributed Assets” means the total amount of money or other
property contributed or agreed to be contributed to the Joint Venture Company by
Micron as of the Effective Date, as described on Appendix D.

 

“Micron Matter” shall have the meaning set forth in Section 17.4 of this
Agreement.

 

“Micron Maximum Incremental Capital Amount” means $[***].  Such amount does not
include any funds contributed as part of Micron’s Initial Capital Contribution.

 

“Micron Minority Closing” shall have the meaning set forth in
Section 12.5(C)(1) of this Agreement.

 

“Micron [***] Exercise Notice” shall have the meaning set forth in Section 13.5
of this Agreement.

 

“Micron [***] Purchase Option” shall have the meaning set forth in Section 13.5
of this Agreement.

 

“Micron Personnel Secondment Agreement” means that certain Micron Personnel
Secondment Agreement, of even date herewith, by and between the Joint Venture
Company and Micron, as amended.

 

“Micron Purchase Option” shall have the meaning set forth in Section 13.7(B) of
this Agreement.

 

“Minority Closing” shall have the meaning set forth in Section 12.5(A) of this
Agreement.

 

“Minority Closing Price” shall have the meaning set forth in Section 12.5(B) of
this Agreement.

 

“Minority Member” shall have the meaning sent forth in Section 12.5(A) of this
Agreement.

 

“Model of Record” or “MOR” means a representation of the POR and TOR for use in
determining the number of tools required to produce a specific number of
semiconductor wafers.  The MOR includes assumptions used to model overall tool
throughput and productivity as well as assumptions on process yield.

 

“Modified GAAP” means United States generally accepted accounting principles as
in effect from time to time, except that the value of any asset contributed or
otherwise transferred to the Joint Venture Company from a Member shall be the
value as agreed upon by the Members at the time of the contribution or transfer,
as applicable, and, if such asset is to be depreciated or amortized under GAAP,
the useful life and method of depreciation or amortization for such assets shall
be determined by applying the accounting policies used by the Joint Venture
Company for like assets.  The value of the Boise Supply Agreement, the MTV Lease
and the Lehi Property shall be the value specified with respect to such items in
Appendix D.

 

“Monthly Flash Report” means operating performance metrics reasonably acceptable
to each Member for the most recent month.

 

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“Monthly Operating Report” shall have the meaning set forth in
Section 11.6(A)(4) of this Agreement.

 

“MTV Assets” means the Associated Assets at the Fab located at the [***].

 

“MTV Lease” shall have the meaning ascribed to such term in the Master
Agreement.

 

“NAND Flash Memory Die” means a discrete integrated circuit die, wherein such
die includes at least one NAND Flash Memory Integrated Circuit and such die is
designed, developed, marketed and used primarily as a non-volatile memory die.

 

“NAND Flash Memory Die Package” means a discrete integrated circuit package for
a NAND Flash Memory Die, including TSOP, COB, BOC, BGA and FBGA or other type
package, wherein such package contains only one or more NAND Flash Memory Die
but no other die.

 

“NAND Flash Memory Integrated Circuit” means a Flash Memory Integrated Circuit
wherein the memory cells included in the Flash Memory Integrated Circuit are
arranged in groups of serially connected memory cells (each such group of
serially connected memory cells called a “string”) in which the drain of each
memory cell of a string (other than the first memory cell in the string) is
connected in series to the source of another memory cell in such string, the
gate of each memory cell in such string is directly accessible, and the drain of
the uppermost bit of such string is coupled to the bitline of the memory array.

 

“NAND Flash Memory Product” means any NAND Flash Memory Wafer, NAND Flash Memory
Die or NAND Flash Memory Die Package.

 

“NAND Flash Memory Wafer” means a prime wafer that has been processed to the
point of containing multiple NAND Flash Memory Die and that has undergone Probe
Testing, but before singulation of said die into individual semiconductor die.

 

“Net Book Value” means, with respect to (i) any assets, the value thereof, net
of accumulated depreciation, amortization and other adjustments, as would be
included in a consolidated balance sheet of the entity owning such assets
prepared in accordance with Modified GAAP, (ii) any liabilities, the amount
thereof as would be included in a consolidated balance sheet of the entity
having the liabilities prepared in accordance with Modified GAAP and (iii) any
equity security of a Facilities Company or other entity, (a) the value of the
assets of such entity, net of accumulated depreciation, amortization or other
adjustments, as would be included in a consolidated balance sheet of the entity
prepared in accordance with Modified GAAP, minus the amount of the liabilities
of such entity, as would be included in a consolidated balance sheet of such
entity prepared in accordance with Modified GAAP, multiplied by (b) a percentage
equal to the percentage of the equity of such entity represented by such equity
security.

 

“[***]” means any Fab that is, or is to be, owned or leased by the Joint Venture
Company, any of its Subsidiaries or any Facilities Company other than the [***].

 

“[***] Budget” shall have the meaning set forth in Section 11.1(B).

 

“[***] Capital Contribution” shall mean (i) any Additional Capital Contribution
to be made by the Members, as contemplated by an Approved Business Plan, to make
[***] an

 

A-13

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Operational Fab or (ii) any Additional Capital Contribution to be made by the
Members, as contemplated by an Approved Business Plan, to make [***] an
Operational Fab, but only in the event that the [***] for [***] is reasonably
expected to begin before [***].

 

“[***]” means the first Fab that is, [***], owned or leased by the Joint Venture
Company, any of its Subsidiaries or any Facilities Company other than the [***].

 

“[***]” means the first Fab that is, [***], owned or leased by the Joint Venture
Company, any of its Subsidiaries or any Facilities Company other than [***].

 

“Non-Defaulting Member” shall have the meaning set forth in Section 17.7 of this
Agreement.

 

“Non-Funding Member” shall be the Member that is determined not to be the
Funding Member in accordance with Section 3.1(A) of this Agreement.

 

“Notice of Default” shall have the meaning set forth in Section 17.7(B) of this
Agreement.

 

“Operating Metric Event” means, with respect to any Fiscal Quarter, the
occurrence of either of the following:

 

[***].

 

“Operating Plan” shall have the meaning set forth in Section 11.6(A) of this
Agreement

 

“Operational Fab” means a Fab that has completed construction, Tool Install and
equipment and process qualification, including all related facilities necessary
to commence production of semiconductor devices and such production output has
reached a minimum level of [***]% of its intended high volume output level (as
measured in [***]).

 

“Option Percent” shall have the meaning set forth in Section 12.4 of this
Agreement.

 

“Option Price” shall have the meaning set forth in Section 12.5(B) of this
Agreement.

 

“Optional [***] Equalization Note” shall have the meaning set forth in
Section 3.2(B) of this Agreement.

 

“Optional [***] Financing” shall have the meaning set forth in Section 3.2(A) of
this Agreement.

 

“Optional [***] Notes” shall have the meaning set forth in Section 3.2(B) of
this Agreement.

 

“Optional [***] Shortfall Note” shall have the meaning set forth in
Section 3.2(B) of this Agreement.

 

“Optional Other Financing” shall have the meaning set forth in Section 3.3(A) of
this Agreement.

 

“Optional Other Shortfall Note” shall have the meaning set forth in
Section 3.3(B) of this Agreement.

 

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“Other Capital Contributions” shall have the meaning set forth in
Section 2.3(C) of this Agreement.

 

“Percentage Interest” means, at any time of determination, with respect to any
Member, a percentage determined by dividing such Member’s Capital Contribution
Balance at the time of determination by the aggregate Capital Contribution
Balances of all Members at the time of determination.

 

“Person” or “Persons” means any natural person and any corporation, firm,
partnership, trust, estate, limited liability company, or other entity resulting
from any form of association.

 

“Premises” shall have the meaning ascribed to such term in the [***].

 

“Probe Testing” means testing, using a wafer test program as set forth in the
applicable specifications, of a wafer that has completed all processing steps
deemed necessary to complete the creation of the desired NAND Flash Memory
Integrated Circuits in the die on such wafer, the purpose of which test is to
determine how many and which of the die meet the applicable criteria for such
die.

 

“Process of Record” or “POR” means documents and/or systems that specify a
series of operations that a semiconductor wafer must process through.  The POR
includes the process recipes and parameters at each operation for the specified
Tool of Record.

 

“Product” shall have the meaning set forth in the Supply Agreements.

 

“Product Design Committee” shall have the meaning set forth in the Product
Design Committee Agreement.

 

Product Design Committee Agreement” shall have the meaning set forth in the
Product Design Committee Agreement, of even date herewith, between Micron and
Intel.

 

“Product Design Roadmap” shall have the meaning set forth in the Product Design
Committee Agreement.

 

“Proposed Business Plan” shall have the meaning set forth in Section 11.2(A) of
this Agreement.

 

“Pro Rata Share” means the pro rata share of a Member determined in accordance
with the Members’ respective Percentage Interests at the time of the
determination.

 

“Purchase Options” shall have the meaning set forth in Section 13.10 of this
Agreement.

 

“Purchase Value” shall have the meaning set forth in Section 12.4 of this
Agreement.

 

“Quarterly Operating Review” shall have the meaning set forth in
Section 11.(6)(A)(4) of this Agreement.

 

“Remaining Assets” shall have the meaning set forth in Section 13.11 of this
Agreement.

 

“Remaining Facility” shall have the meaning set forth in Section 13.8(A) of this
Agreement.

 

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“Remaining Facility Purchase Offer” shall have the meaning set forth in
Section 13.9 of this Agreement.

 

“Renewal Term” shall have the meaning set forth in Section 1.3 of this
Agreement.

 

“Representative” shall have the meaning set forth in Section 8.7(D) of this
Agreement.

 

“Second Drafter” shall have the meaning set forth in Section 13.8(D) of this
Agreement.

 

“Seconded Employees” shall have the meaning set forth in Section 9.1 of this
Agreement.

 

“Service Provider Related Forms” shall have the meaning set forth in
Section 9.3(A) of this Agreement.

 

“Sharing Interest” means, with respect to any Member, the percentage determined
by dividing (1) such Member’s Committed Capital at the time of determination, by
(2) the aggregate Committed Capital of all Members at the time of determination;
provided, however, that, for purposes of this definition only, Committed Capital
shall be adjusted as follows:

 

(a)                                  [***]% of any [***] Capital Contribution
that has been made by such Member, but that was not timely made, shall be
deducted from that Member’s Committed Capital and added to the other Member’s
Committed Capital;

 

(b)                                 any [***] Capital Contribution made, and any
loans made or deemed made that are represented by Mandatory Notes, within the
twelve months prior to the time of determination shall be deducted from
Committed Capital; and

 

(c)                                  any Other Capital Contributions made, and
any loans made or deemed made that are represented by Optional Other Shortfall
Notes shall be deducted from Committed Capital, but the exclusion under this
subparagraph (c) shall apply only to such Capital Contributions and such loans
made within (i) the [***] prior to the time of determination if the Capital
Contribution or loan related to [***] Fab, other than the [***], that was not a
[***] Fab at the time the contribution was due or (ii) the [***] prior to the
time of determination if the Other Capital Contribution made, or loan made or
deemed made that is represented by an Optional Other Shortfall Notes relates to
any operating expenditure, capital expenditure or other expenditure not subject
to the [***] period in the immediately preceding clause (i) and provided,
further, however, that a Make-Up Contribution shall be deemed made on the date
on which the related Shortfall Amount first arose, so that the applicable [***]
and [***] periods shall apply from the date the Shortfall Amount occurred. 
Notwithstanding the foregoing, subparagraphs (b) and (c) of this definition
shall not apply with respect to any use of the term “Sharing Interests” in
connection with a distribution under Section 13.13(C)(4) of this Agreement.

 

“Shortfall Amount” means any uncontributed dollar amount of any Member’s [***]
of an Additional Capital Contribution.

 

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“Subsequent Operating Metric Cure” means, with respect to any Initial Operating
Metric Event, the [***].

 

“Subsidiary” means as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.

 

“Supply Agreement - Intel” means that certain Supply Agreement of even date
herewith, by and between the Joint Venture Company and Intel, as amended.

 

“Supply Agreement - Micron” means that certain Supply Agreement of even date
herewith, by and between the Joint Venture Company and Micron, as amended.

 

“Supply Agreements” means the Supply Agreement – Intel and the Supply Agreement
– Micron.

 

“Tax Matters Partner” shall have the meaning set forth in Section 10.7 of this
Agreement.

 

“Technology Committees” means the Product Design Committee and the Joint
Development Committee.

 

“Term” shall have the meaning set forth in Section 1.3 of this Agreement.

 

“Testing Plan” means a testing plan set forth in the Operating Plan, as more
particularly described in Section 11.6(A)(3) of this Agreement.

 

“Tie Vote” shall have the meaning set forth in Section 17.1 of this Agreement.

 

“Tool Install” means the installation of the automated material handling system
(AMHS), process tools, and support tools/fixtures used for semiconductor
manufacturing (including sort) in the cleanroom and in all related laboratories
in the Fab.

 

“Tool of Record” or “TOR” means the specified tool required to modify, handle,
or otherwise fulfill its intended purpose in the manufacture of a semiconductor
process pursuant to the POR.  The TOR encompasses the tool purchase price,
configuration and associated documentation required to procure, conduct
acceptance testing and administer service contracts.

 

“TOP” shall have the meaning set forth in Section 9.4(B) of this Agreement.

 

“Transfer” shall have the meaning set forth in Section 12.1 of this Agreement.

 

“Transition Date” means the earlier of the [***] anniversary of the Effective
Date and the date on which the [***] becomes an Operational Fab producing not
less than [***] Wafer Starts per week.

 

“Treasury Regulation” shall have the meaning set forth in Section 1.1 of
Appendix B to this Agreement.

 

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“Unamortized MTV Lease Value” means for [***].

 

“Undisputed Approved Business Plan” shall have the meaning set forth in
Section 11.2(D)(1) of this Agreement.  The Initial Business Plan approved by the
Members shall be deemed to be an Undisputed Approved Business Plan.

 

“U.S. Facilities Company” shall have the meaning set forth in Section 16.1 of
this Agreement.

 

“Wafer” means a silicon wafer.

 

“Wafer Start” means the initial Wafer introduction to a process flow.  When the
context requires reference to a quantity of “Wafer Starts,” such term shall be
expressed in 300 millimeter diameter equivalents.

 

“Wholly-Owned Subsidiary” of a Person means a Subsidiary, all of the shares of
stock or other ownership interests of which are owned, directly or indirectly
through one or more intermediaries, by such Person, other than a nominal number
of shares or a nominal amount of other ownership interests issued in order to
comply with requirements that such shares or interests be held by one or more
other Persons, including requirements for directors’ qualifying shares or
interests, requirements to have or maintain two or more stockholders or equity
owners or other similar requirements.

 

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APPENDIX B

 

IM FLASH TECHNOLOGIES, LLC

 

TAX MATTERS

 

This Appendix B is attached to and is a part of the LIMITED LIABILITY COMPANY
OPERATING AGREEMENT (the “Agreement”) of IM FLASH TECHNOLOGIES, LLC, a Delaware
limited liability company (the “Joint Venture Company”), dated as of 6th day of
January, 2006.  The parties to the Agreement intend that the Joint Venture
Company be classified as a partnership for federal income tax purposes pursuant
to section 7701(a)(2) of the Code and the regulations thereunder. The provisions
of this Appendix are intended to effect an allocation of tax items of the Joint
Venture Company that are in accordance with the Members’ “interests in the
partnership” (i.e., the Joint Venture Company) within the meaning of Treas. Reg.
§ 1.704-1(b)(3) by utilizing the principles of allocation contained in Treas.
Reg. § 1.704-1(b)(2)(iv) and Treas. Reg. § 1.704-2 with respect to maintenance
of capital accounts and allocations, and shall be interpreted and applied
accordingly.  For purposes of applying the provisions of this Appendix, it shall
be assumed that the Joint Venture Company satisfies the requirements of Treas.
Reg. § 1.704-1(b)(2)(ii)(b)(2) and (3), notwithstanding that the Joint Venture
Company does not satisfy such requirements.

 

ARTICLE 1
DEFINITIONS

 

1.1                                 Definitions.  For purposes of this Appendix,
the capitalized terms listed below shall have the meanings indicated.
Capitalized terms not listed below and not otherwise defined in this Appendix
shall have the meanings specified in the Agreement.

 

“Account Reduction Item” means (i) any adjustment described in Treas. Reg.
§ 1.704-1(b)(2)(ii)(d)(4); (ii) any allocation described in Treas. Reg.
§ 1.704-1(b)(2)(ii)(d)(5), other than a Nonrecourse Deduction or a Member
Nonrecourse Deduction; or (iii) any distribution described in Treas. Reg.
§ 1.704-1(b)(2)(ii)(d)(6).

 

“Adjusted Capital Account Balance” means, as of any date, a Member’s Capital
Account balance as of such date (and if such date is other than the last day of
the taxable year of the Joint Venture Company, determined as if the taxable year
of the Joint Venture Company ended on such date), taking into account all
contributions made by such Member and distributions made to such Member during
such taxable year and any special allocations or other adjustments required by
Sections 3.2, 3.3, 3.4(A), (B), and (D), 3.5, 3.6 and 3.7, and 5.2(B) and 5.9 of
this Appendix, and increased by the sum of (i) such Member’s share of Joint
Venture Company Minimum Gain and (ii) such Member’s share of Member Nonrecourse
Debt Minimum Gain, both determined after taking into account any such special
allocations and other adjustments.

 

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“Adjusted Fair Market Value” of an item of Joint Venture Company property means
the greater of (i) the fair market value of such property as reasonably
determined by the Board of Managers (provided, that in the case of any sale of
Joint Venture Company property, such amount shall be presumed to be the sales
price realized by the Joint Venture Company on such sale) or (ii) the amount of
any nonrecourse indebtedness to which such property is subject within the
meaning of section 7701(g) of the Code.

 

“Book” means the method of accounting prescribed for compliance with the capital
account maintenance rules set forth in Treas. Reg. § 1.704-1(b)(2)(iv) as
reflected in Articles 1 and 2 of this Appendix, as distinguished from any
accounting method which the Joint Venture Company may adopt for other purposes
such as financial reporting.

 

“Book Value” means, with respect to any item of Joint Venture Company property,
the book value of such property within the meaning of Treas. Reg.
§ 1.704-1(b)(2)(iv)(g)(3); provided, however, that if the Joint Venture Company
adopts the remedial allocation method described in Treas. Reg. § 1.704-3(d) with
respect to any item of Joint Venture Company property, the Book Value of such
property shall be its book basis determined in accordance with Treas. Reg.
§ 1.704-3(d)(2).

 

“Deemed Liquidation” means a liquidation of the Joint Venture Company that is
deemed to occur pursuant to Treas. Reg. § 1.708-1(b)(1)(iv) in the event of a
termination of the Joint Venture Company pursuant to section 708(b)(1)(B) of the
Code.

 

“Excess Deficit Balance” means the amount, if any, by which the balance in a
Member’s Capital Account as of the end of the relevant taxable year is more
negative than the amount, if any, of such negative balance that such Member is
treated as obligated to restore to the Joint Venture Company pursuant to Treas.
Reg. § 1.704-1(b)(2)(ii)(c), Treas. Reg. § 1.704-1(b)(2)(ii)(h), Treas. Reg.
§ 1.704-2(g)(1), and Treas. Reg. § 1.704-2(i)(5). Solely for purposes of
computing a Member’s Excess Deficit Balance, such Member’s Capital Account shall
be reduced by the amount of any Account Reduction Items that are reasonably
expected as of the end of such taxable year.

 

“Excess Nonrecourse Liabilities” means excess nonrecourse liabilities within the
meaning of Treas. Reg. § 1.752-3(a)(3).

 

“Joint Venture Company Minimum Gain” means partnership minimum gain determined
pursuant to Treas. Reg. § 1.704-2(d) and Section 5.3 of this Appendix.

 

“Member Nonrecourse Debt” means any “partner nonrecourse debt” as such term is
defined in Treas. Reg. § 1.704-2(b)(4).

 

“Member Nonrecourse Debt Minimum Gain” means minimum gain attributable to Member
Nonrecourse Debt pursuant to Treas. Reg. § 1.704-2(i)(3).

 

“Member Nonrecourse Deduction” means any item of Book loss or deduction that is
a partner nonrecourse deduction within the meaning of Treas. Reg.
§ 1.704-2(i)(1) and (2).

 

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“Member Nonrecourse Distribution” means a distribution to a Member that is
allocable to a net increase in such Member’s share of Member Nonrecourse Debt
Minimum Gain pursuant to Treas. Reg. § 1.704-2(i)(6).

 

“Nonrecourse Deduction” means a nonrecourse deduction determined pursuant to
Treas. Reg. § 1.704-2(b)(1) and Treas. Reg. § 1.704-2(c).

 

“Nonrecourse Distribution” means a distribution to a Member that is allocable to
a net increase in Joint Venture Company Minimum Gain pursuant to Treas. Reg.
§ 1.704-2(h)(1).

 

“Regulatory Allocation” means any allocation made pursuant to Section 3.2, 3.3,
3.4 or 3.5 of this Appendix.

 

“Related Person” means, with respect to a Member, a Person that is related to
such Member pursuant to Treas. Reg. § 1.752-4(b).

 

“Revaluation Event” means (i) a liquidation of the Joint Venture Company (within
the meaning of Treas. Reg. § 1.704-1(b)(2)(ii)(g) but not including a Deemed
Liquidation); (ii) a contribution of more than a de minimis amount of money or
other property to the Joint Venture Company by a Member or a distribution of
more than a de minimis amount of money or other property to a retiring or
continuing Member where such contribution or distribution alters the Sharing
Interest of any Member; or (iii) the grant of an interest in the Joint Venture
Company as consideration for the provision of services to or for the benefit of
the Joint Venture Company.

 

“Section 705(a)(2)(B) Expenditures” means nondeductible expenditures of the
Joint Venture Company that are described in section 705(a)(2)(B) of the Code,
and organization and syndication expenditures and disallowed losses to the
extent that such expenditures or losses are treated as expenditures described in
section 705(a)(2)(B) of the Code pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(i).

 

“Section 751 Property” means unrealized receivables and substantially
appreciated inventory items within the meaning of Treas. Reg. § 1.751-1(a)(1).

 

“Target Balance” means, for any Member as of any date, the amount that would be
distributable to such Member on such date pursuant to Section 5.1 of the
Agreement if (i) all the assets of the Company were sold for cash equal to their
respective Book Values as of such date, (ii) all liabilities of the Company
(other than any liabilities under outstanding Member Notes) were paid in full
(except that in the case of a nonrecourse liability, such payment would be
limited to the Book Value of the asset or assets securing such liability), and
(iii) all remaining cash were distributed to the Members pursuant to Section 5.1
(assuming, for this purpose, that the holders of any Member Notes have converted
such Member Notes immediately prior to such distribution).

 

“Tax Basis” means, with respect to any item of Joint Venture Company property,
the adjusted basis of such property as determined in accordance with the Code.

 

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“Treasury Regulation” or “Treas. Reg.” means the temporary or final
regulation(s) promulgated pursuant to the Code by the U.S. Department of the
Treasury, as amended, and any successor regulation(s).

 

ARTICLE 2
CAPITAL ACCOUNTS

 

2.1                                 Maintenance.

 

(A)                              A single Capital Account shall be maintained
for each Member in accordance with this Article 2.

 

(B)                                Each Member’s Capital Account shall from time
to time be increased by:

 

(i)                                     the amount of money contributed by such
Member to the Joint Venture Company in accordance with the Agreement (including
the amount of any Joint Venture Company liabilities which the Member is deemed
to assume as provided in Treas. Reg. § 1.704-1(b)(2)(iv)(c), and including the
principal amount paid for any Member Notes, but excluding liabilities assumed in
connection with the distribution of Joint Venture Company property and excluding
increases in such Member’s share of Joint Venture Company liabilities pursuant
to section 752 of the Code);

 

(ii)                                  the fair market value of property, as
reasonably determined by the Board of Managers, contributed by such Member to
the Joint Venture Company (net of any liabilities secured by such property that
the Joint Venture Company is considered to assume or take subject to pursuant to
section 752 of the Code); provided, that for this purpose the fair market value
of (A) the Lehi Property contributed by Micron (net of liabilities) is equal to
the value set forth with respect thereto on Appendix D (it being understood that
the [***] shall not be treated as property for purposes of this clause (ii)),
and (B) the amount credited to the Capital Account of a Member with respect to
any Capital Contribution taking the form of a contribution of a promissory note
shall equal the principal payments made by such Member with respect to such
promissory note; and, provided, further, that nothing in this Appendix B shall
be deemed to increase or limit the amount treated as a Capital Contribution for
purposes other than this Appendix B;

 

(iii)                               the amount recognized as gross income by
Micron with respect to the [***] as described in Section 5.10 of this Appendix;
and

 

(iv)                              allocations to such Member of Joint Venture
Company Book income and gain (or the amount of any item or items of income or
gain included therein).

 

(C)                                Each Member’s Capital Account shall from time
to time be reduced by:

 

B-4

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(i)                                     the amount of money distributed to such
Member by the Joint Venture Company (including the amount of such Member’s
individual liabilities which the Joint Venture Company is deemed to assume as
provided in Treas. Reg. § 1.704-1(b)(2)(iv)(c)), including the amount of any
amount paid or accrued on any Member Note that is not treated as a guaranteed
payment pursuant to Section 5.2 of this Appendix B;

 

(ii)                                  the fair market value, as reasonably
determined by the Board of Managers, of property distributed to such Member by
the Joint Venture Company (net of any liabilities secured by such property that
such Member is considered to assume or take subject to pursuant to section 752
of the Code); and

 

(iii)                               allocations to such Member of Joint Venture
Company Book loss and deduction (or items thereof);

 

(D)                               The Joint Venture Company shall make such
other adjustments to the Capital Accounts of the Members as are necessary to
comply with the provisions of Treas. Reg. § 1.704-1(b)(2)(iv).

 

2.2                                 Revaluation of Joint Venture Company
Property.

 

(A)                              Upon the occurrence of a Revaluation Event, the
Board of Managers may revalue all Joint Venture Company property (whether
tangible or intangible) for Book purposes to reflect the Adjusted Fair Market
Value of Joint Venture Company property immediately prior to the Revaluation
Event. In the event that Joint Venture Company property is so revalued, the
Capital Accounts of the Members shall be adjusted in accordance with Treas. Reg.
§ 1.704-1(b)(2)(iv)(f) as provided in Section 3.1 of this Appendix.

 

(B)                                Upon the distribution of Joint Venture
Company property to a Member, the property to be distributed shall be revalued
for Book purposes to reflect the Adjusted Fair Market Value of such property
immediately prior to such distribution, and the Capital Accounts of all Members
shall be adjusted in accordance with Treas. Reg. § 1.704-1(b)(2)(iv)(e).

 

2.3                                 Transfers of Interests.  Upon the transfer
of a Member’s entire interest in the Joint Venture Company in accordance with
Section 12.2 of the Agreement, the Capital Account of such Member shall carry
over to the transferee.

 

ARTICLE 3
ALLOCATION OF BOOK INCOME AND LOSS

 

3.1                                 Book Income And Loss.

 

(A)                              The Book income or loss of the Joint Venture
Company for purposes of determining allocations to the Capital Accounts of the
Members shall be determined in the same manner as the determination of the Joint
Venture Company’s taxable income, except that (i) items that are required by
section 703(a)(1) of the Code to be separately stated shall be included; (ii)

 

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items of income that are exempt from inclusion in gross income for federal
income tax purposes shall be treated as Book income;
(iii) Section 705(a)(2)(B) Expenditures shall be treated as deductions;
(iv) items of gain, loss, depreciation, amortization, or depletion that would be
computed for federal income tax purposes by reference to the Tax Basis of an
item of Joint Venture Company property shall be determined by reference to the
Book Value of such item of property in accordance with Section 3.1(B) hereof;
and (v) the effects of upward and downward revaluations of Joint Venture Company
property pursuant to Section 2.2 of this Appendix shall be treated as Book gain
or loss respectively from the sale of such property.

 

(B)                                In the event that the Book Value of any item
of Joint Venture Company property differs from its Tax Basis, the amount of Book
depreciation, depletion, or amortization for a period with respect to such
property shall be computed so as to bear the same relationship to the Book Value
of such property as the depreciation, depletion, or amortization computed for
tax purposes with respect to such property for such period bears to the Tax
Basis of such property. If the Tax Basis of such property is zero, the Book
depreciation, depletion, or amortization with respect to such property shall be
computed by using a method consistent with the method that would be used for tax
purposes if the Tax Basis of such property were greater than zero and the
property were placed in service on the date it is acquired by the Joint Venture
Company.

 

(C)                                The Book income and loss of the Joint Venture
Company for any taxable year shall be allocated in such a manner as to cause the
Adjusted Capital Account Balances of the Members as nearly as possible to equal
their respective Target Balances as of the end of such taxable year.

 

3.2                                 Allocation of Nonrecourse Deductions. 
Notwithstanding any other provisions of the Agreement, Nonrecourse Deductions
shall be allocated among the Members in proportion to their respective Sharing
Interests as of the end of the taxable year in which such deductions arise.

 

3.3                                 Allocation of Member Nonrecourse
Deductions.  Notwithstanding any other provisions of the Agreement, any item of
Member Nonrecourse Deduction with respect to a Member Nonrecourse Debt shall be
allocated to the Member or Members who bear the economic risk loss for such
Member Nonrecourse Debt in accordance with Treas. Reg. § 1.704-2(i).

 

3.4                                 Chargebacks of Income And Gain. 
Notwithstanding any other provisions of the Agreement:

 

(A)                              Joint Venture Company Minimum Gain.  In the
event that there is a net decrease in Joint Venture Company Minimum Gain for a
taxable year of the Joint Venture Company, then before any other allocations are
made for such taxable year, each Member shall be allocated items of Book income
and gain for such year (and, if necessary, for subsequent years) to the extent
provided by Treas. Reg. § 1.704-2(f).

 

(B)                                Member Nonrecourse Debt Minimum Gain.  In the
event that there is a net decrease in Member Nonrecourse Debt Minimum Gain for a
taxable year of the Joint Venture Company, then after taking into account
allocations pursuant to paragraph (a) immediately preceding, but before any
other allocations are made for such taxable year, each Member with a

 

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share of Member Nonrecourse Debt Minimum Gain at the beginning of such year
shall be allocated items of Book income and gain for such year (and, if
necessary, for subsequent years) to the extent provided by Treas. Reg.
§ 1.704-2(i)(4).

 

(C)                                [Reserved.]

 

(D)                               Qualified Income Offset. In the event that any
Member unexpectedly receives any Account Reduction Item that results in an
Excess Deficit Balance at the end of any taxable year after taking into account
all other allocations and adjustments under this Agreement, then items of Book
income and gain for such year (and, if necessary, for subsequent years) will be
reallocated to each such Member in the amount and in the proportions needed to
eliminate such Excess Deficit Balance as quickly as possible.

 

3.5                                 Reallocation To Avoid Excess Deficit
Balances.  Notwithstanding any other provisions of the Agreement, no Book loss
or deduction shall be allocated to any Member to the extent that such allocation
would cause or increase an Excess Deficit Balance in the Capital Account of such
Member. Such Book loss or deduction shall be reallocated away from such Member
and to the other Members in accordance with the Agreement, but only to the
extent that such reallocation would not cause or increase Excess Deficit
Balances in the Capital Accounts of such other Members.

 

3.6                                 Corrective Allocation.  Subject to the
provisions of Sections 3.2, 3.3, 3.4, and 3.5 of this Appendix, but
notwithstanding any other provision of the Agreement, in the event that any
Regulatory Allocation is made pursuant to this Appendix for any taxable year,
then remaining Book items for such year (and, if necessary, Book items for
subsequent years) shall be allocated or reallocated in such amounts and
proportions as are appropriate to restore the Adjusted Capital Account Balances
of the Members to the position in which such Adjusted Capital Account Balances
would have been if such Regulatory Allocation had not been made.  Adjustments
pursuant to this Section 3.6 shall only be made if such Regulatory Allocations
are not reasonably expected to be reversed with offsetting allocations in
subsequent taxable years.  The Members intend that the allocations of Book
income and loss pursuant to this Appendix shall result in Adjusted Capital
Account Balances of the Members, as of the end of each taxable year of the Joint
Venture Company and after all allocations pursuant to this Appendix have been
made, equaling their Target Balances.  This Appendix shall be interpreted in a
manner consistent with such intent.

 

3.7                                 Other Allocations.

 

(A)                              If during any taxable year of the Joint Venture
Company there is a change in any Member’s interest in the Joint Venture Company,
allocations of Book income or loss for such taxable year shall take into account
the varying interests of the Members in the Joint Venture Company in a manner
consistent with the requirements of Section 706 of the Code and
Section 5.2(B) hereof.

 

(B)                                If and to the extent that any distribution of
Section 751 Property to a Member in exchange for the distributee Member’s
interest in property other than Section 751 Property is treated as a sale or
exchange of such Section 751 Property by the Joint Venture Company pursuant

 

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to Treas. Reg. § 1.751-1(b)(2), any Book gain or loss attributable to such
deemed sale or exchange shall be allocated only to Members other than the
distributee Member in a manner consistent with such Treasury Regulation.

 

(C)                                If and to the extent that any distribution of
property other than Section 751 Property to a Member in exchange for the
distributee Member’s interest in Section 751 Property is treated as a sale or
exchange of such other property by the Joint Venture Company pursuant to Treas.
Reg. § 1.751-1(b)(3), any Book gain or loss attributable to such deemed sale or
exchange shall be allocated only to Members other than the distributee Member in
a manner consistent with such Treasury Regulation.

 

ARTICLE 4
ALLOCATION OF TAX ITEMS

 

4.1                                 In General.  Except as otherwise provided in
this Article 4, all items of income, gain, loss, and deduction shall be
allocated among the Members for federal income tax purposes in the same manner
as the corresponding allocation for Book purposes.

 

4.2                                 Section 704(c) Allocations.

 

(A)                              In the event that the Book Value of an item of
Joint Venture Company property differs from its Tax Basis, allocations of
depreciation, depletion, amortization, gain, and loss with respect to such
property will be made for federal income tax purposes in a manner that takes
account of the variation between the Tax Basis and Book Value of such property
in accordance with section 704(c)(1)(A) of the Code and Treas. Reg.
§ 1.704-1(b)(4)(i). The Board of Managers may select as the method for making
such allocations, either the method described in Treas. Reg. § 1.704-3(c) or
(d); provided, however, that the method selected for any asset shall be one that
minimizes the effect of the “ceiling rule” on allocations to the Member that did
not contribute such asset.

 

(B)                                For purposes of complying with Section 263A
of the Code, depreciation, amortization and cost recovery deductions of the
Joint Venture Company that are included in the capitalized cost of the Joint
Venture Company’s inventory shall be determined based on the Book Values of the
Joint Venture Company’s assets, and any difference between such amounts and the
corresponding amounts as computed for U.S. federal income tax purposes shall be
allocated separately to the Members pursuant to Section 704(c) of the Code.

 

4.3                                 Tax Credits.  Tax credits shall be allocated
among the Members in accordance with Treas. Reg. § 1.704-1(b)(4)(ii).

 

ARTICLE 5
OTHER TAX MATTERS

 

5.1                                 Excess Nonrecourse Liabilities.  For the
purpose of determining the Members’ shares of the Joint Venture Company’s Excess
Nonrecourse Liabilities pursuant to Treas. Reg. §§ 1.752-3(a)(3) and
1.707-5(a)(2)(ii), and solely for such purpose, the Members’ interests in
profits are hereby specified to be their respective Sharing Interests.

 

B-8

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5.2                                 Treatment of Loan Transactions.

 

(A)                              The Members agree that amounts outstanding
under Member Notes (which for purposes of this Appendix B includes amounts
outstanding under loans made pursuant to Section 2.3(H) of the Agreement) shall
be treated for federal and applicable state income tax purposes as equity and
not as debt for U.S. federal income tax purposes.  To the extent a Non-Funding
Member makes a Make-Up Contribution together with accrued interest, such
interest (solely for purposes of this Appendix B) shall be treated as a capital
contribution, the payment of such interest to the Funding Member on the related
Member Note shall be treated as a guaranteed payment pursuant to
Section 707(c) of the Code, and the deduction of the Joint Venture Company in
respect of such guaranteed payment shall be specially allocated to the
Non-Funding Member.  To the extent accrued interest on a Member Note has not
been paid as of the end of a taxable year of the Joint Venture Company, the
Members shall consult with each other to determine the appropriate income tax
treatment of such accrued interest, and if they are unable to agree on such
treatment the dispute resolution provisions of Section 10.6(B) shall apply.

 

(B)                                Upon a change in the Members’ Sharing
Interests, the Members agree that the Capital Accounts of the Members shall be
adjusted so that to the greatest extent possible, but consistent with the goal
of minimizing the adverse tax consequences to the Member whose interest
increased (as reasonably determined by such Member)(other than adverse
consequences resulting solely from receiving allocations of income or loss in
accordance with its revised Sharing Interest), the Adjusted Capital Account
Balances of the Members will equal their Target Balances immediately following
the conversion.

 

5.3                                 Treatment of Certain Distributions.  (A) In
the event that (i) the Joint Venture Company makes a distribution that would
(but for this Subsection (A)) be treated as a Nonrecourse Distribution; and
(ii) such distribution does not cause or increase a deficit balance in the
Capital Account of the Member receiving such distribution as of the end of the
Joint Venture Company’s taxable year in which such distribution occurs; then the
Board of Managers may treat such distribution as not constituting a Nonrecourse
Distribution to the extent permitted by Treas. Reg. § 1.704-2(h)(3).

 

(B)                                In the event that (i) the Joint Venture
Company makes a distribution that would (but for this Subsection (B)) be treated
as a Member Nonrecourse Distribution; and (ii) such distribution does not cause
or increase a deficit balance in the Capital Account of the Member receiving
such distribution as of the end of the Joint Venture Company’s taxable year in
which such distribution occurs; then the Board of Managers may treat such
distribution as not constituting a Member Nonrecourse Distribution to the extent
permitted by Treas. Reg. § 1.704-2(i)(6).

 

5.4                                 Reduction of Basis.  In the event that a
Member’s interest in the Joint Venture Company may be treated in whole or in
part as depreciable property for purposes of reducing such Member’s basis in
such interest pursuant to section 1017(b)(3)(C) of the Code, the Board of
Managers may, upon the request of such Member, make a corresponding reduction in
the basis of its depreciable property with respect to such Member. Such request
shall be submitted to the Joint Venture Company in writing, and shall include
such information as may be reasonably required in order to effect such reduction
in basis.  The costs of the Joint Venture Company in

 

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making and implementing any such adjustments shall be borne by the Member making
such request.

 

5.5                                 Entity Classification.  Neither the Joint
Venture Company nor any Member shall file or cause to be filed any election, the
effect of which would be to cause the Joint Venture Company to be classified as
other than a partnership for federal income tax purposes, without the prior
written consent of all Members.

 

5.6                                 Unified Audit Election.  The Joint Venture
Company will elect, pursuant to section 6231(a)(1)(B)(ii) of the Code, to be
subject to the unified audit rules of sections 6221-6234 of the Code, and all
Members agree to sign such election.

 

5.7                                 Application of Section 707(b) of the Code. 
For purposes of determining the Members’ respective interests in capital or
profits of the Joint Venture Company under Section 707(b) of the Code, the
Members agree that, unless otherwise agreed in writing, such interests shall be
computed as of each date of determination as follows: (a) the Joint Venture
Company shall be deemed to have a hypothetical taxable year that began with the
beginning of its actual taxable year including such date of determination and
ended as of such date of determination, with a closing of the Joint Venture
Company’s books as of such date (provided that deductions such as depreciation,
amortization and the like that are computed on an annual basis shall be prorated
on a daily basis so as to take into account only the portion attributable to the
period up to that date), (b) the interests in profits of each Member as of such
date shall equal the percentage of Book income or loss (excluding amounts, if
any, required to be disregarded for purposes of applying Section 707(b) of the
Code) that would have been allocated to each Member for such hypothetical
taxable year, and (c) the capital interests of the Members as of such date shall
equal the percentage of the total Capital Accounts of each Member as of such
date, after adjustment to reflect the items described in Section 2.1(B), (C) and
(D) of this Appendix B treated as occurring during such hypothetical taxable
year.

 

5.8                                 Section 754 Election.  The Joint Venture
Company shall make or seek the revocation of, as applicable, an election under
Section 754 of the Code with respect to the Joint Venture Company upon request
of any Member whose Percentage Interest as of the end of any taxable year of the
Joint Venture Company exceeds its Percentage Interest as of the Effective Date.

 

5.9                                 Imputed Income.  If a Member is deemed for
applicable income tax purposes to have received income from the Joint Venture
Company as a result of one or more transactions that were not treated by the
Joint Venture Company as giving rise to income to such Member, the Joint Venture
Company shall make such adjustments to its allocations as are necessary so that,
as closely as possible, such Member is placed in the same tax position as if
such income was not deemed to have been recognized, provided that such
adjustments shall not result in consequences to the other Member that are
significantly more adverse to such other Member than if the position originally
taken by the Joint Venture Company were upheld.

 

B-10

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5.10                           Treatment of [***]

 

(A)                              The Members agree that the issuance of Joint
Venture Company interests to Micron in exchange for the [***].

 

(B)                                The Members further agree that if the
treatment described in subsection (A) above ultimately is determined not to be
the proper treatment for either of such items, the Members shall make such
adjustments to the determination and allocation of the Joint Venture Company’s
items of income, gain, loss or deduction as are necessary (to the extent
possible) to place the Members in the same tax position as if such treatment
were respected.

 

5.11                           Tax Accounting Methods.  To the extent permitted
by applicable law, the Joint Venture Company shall implement such tax elections
that to the greatest extent possible result in the Joint Venture Company’s cost
of goods sold for purposes of determining the Joint Venture Company’s Book
income or loss equaling the sum of (a) ”Cost” as such term is defined in the
Supply Agreements, plus (b) any additional amounts included in the “amount
realized” by the Joint Venture Company upon the sale of products to Intel and
Micron, respectively.

 

5.12                           No Indemnity for Tax Consequences.  Neither of
the Members nor the Joint Venture Company shall be responsible for the income
tax consequences to the other Members resulting from this Appendix or the
Agreement; provided, however, that the Members shall reasonably cooperate as
requested in order to effectuate the intent of this Appendix, although such
cooperation shall not require either Member to incur significant additional
costs that are not reimbursed by the requesting Member.

 

5.13                           Precedent Agreements.  Amounts paid to Micron
pursuant to the Precedent Agreement to Joint Venture, dated September 27, 2005,
and the Second Precedent Agreement to Joint Venture, dated November 18, 2005, in
each case by and between Micron and Intel, shall be treated as reimbursements to
Micron of preformation expenditures as provided in Treas. Reg. § 1.707-4(d).

 

5.14                           Conflicts with Agreement.  In the event of any
conflict between the terms of this Appendix B and any provision of the
Agreement, the terms of this Appendix B shall govern.

 

B-11

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APPENDIX C

 

IM FLASH TECHNOLOGIES, LLC

 

INITIAL MANAGERS

 

The initial Managers appointed by Intel will be:

 

Leslie S. Culbertson
Thomas R. Franz
Brian L. Harrison

 

The initial Managers appointed by Micron will be:

 

D. Mark Durcan
Brian J. Shields
W. G. Stover, Jr.

 

C-1

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APPENDIX D

 

IM FLASH TECHNOLOGIES, LLC

 

INITIAL CAPITAL CONTRIBUTIONS

 

Intel Initial Capital Contribution

 

The Initial Capital Contribution of Intel is $1,196,176,471, payable as follows:

 

Intel Initial Contributed Assets:

 

Cash (to be delivered [***])

 

$

[***]

 

 

 

Cash (to be delivered [***]) (the “Intel Additional Cash”)

 

$

[***]

 

 

 

Promissory Note substantially in the form attached hereto as Attachment D-1 in
the amount of $[***] (representing funds to be delivered [***] the Joint Venture
Company).

 

$

[***]

 

 

 

Cash in the amount of $[***] (to be delivered to the Joint Venture Company upon
certification from Micron (and Micron shall make reasonable efforts to provide
at least ten (10) Business Days’ notice of such pending certification), not
contested by the Joint Venture Company after reasonable review and within 10
Business Days of the Joint Venture Company’s receipt of Micron’s certification,
that construction is complete and the [***] Fab is ready for [***]).

 

$

[***]

 

 

 

Total Intel Initial Capital Contribution (deemed to be contributed to the Joint
Venture Company in full as of the Effective Date)

 

$

1,196,176,471

 

If a Liquidating Event occurs prior to the delivery in full of such Initial
Capital Contribution, all undelivered cash and amounts represented by Promissory
Notes shall be delivered promptly after the occurrence of such Liquidating
Event; provided, however, that if the construction and readiness for [***] at
the [***] Fab referred to in the provisions of this Appendix D of the Micron
Initial Capital Contribution is not complete at the time of such Liquidating
Event, only a portion of the $[***] described above shall be delivered, which
portion shall be proportionate to the percentage of completion of such
construction as determined by the Members in good faith.

 

D-1

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Micron Initial Capital Contribution

 

The Initial Capital Contribution of Micron is $[***], payable as follows:

 

Micron Initial Contributed Assets:

 

Cash (to be delivered [***]) (the “Micron Additional Cash”)

 

$

250,000,000

 

 

 

Lehi Property (pursuant to entry into the Lehi Lease (which is treated as a
transfer of property for federal income tax purposes as described in the Lehi
Lease) and delivery of the Lehi Bill of Conveyance and all rights of Micron
under express or implied warranties or indemnities from third parties with
respect to the Lehi Property

 

Value $[***]

 

 

 

Prepaid Rent on [***], as follows:

 

 

 

 

 

On the Effective Date

 

Value $[***]

 

 

 

Upon certification from Micron (and Micron shall make reasonable efforts to
provide at least ten (10) Business Days’ notice of such pending certification),
not contested by the Joint Venture Company after reasonable review and within 10
Business Days of the Joint Venture Company’s receipt of Micron’s certification,
that construction is complete and the [***] Fab is ready for [***]

 

Value $[***]

 

 

 

Boise Supply Agreement Prepay

 

Value $[***]

 

 

 

Total Micron Initial Capital Contribution (deemed to be contributed to the Joint
Venture Company in full as of the Effective Date)

 

Value $[***]

 

If a Liquidating Event occurs prior to the delivery in full of such Initial
Capital Contribution, (a) all undelivered cash and amounts shall be delivered
promptly after the occurrence of such Liquidating Event and (b) if the
construction and readiness for [***] at the [***] Fab referred to in the
provisions of this Appendix D of the Micron Initial Capital Contribution is not
complete at the time of such Liquidating Event, a portion of the $[***]
described above shall be deemed contributed, which portion shall be
proportionate to the percentage of completion of such construction as determined
by the Members in good faith.

 

D-2

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ATTACHMENT D-1

 

FORM OF INITIAL CONTRIBUTION NOTE

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES.  THIS NOTE HAS BEEN
ISSUED IN RELIANCE UPON THE REPRESENTATION OF THE HOLDER THAT IT HAS BEEN
ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER
DISTRIBUTION THEREOF.  THIS NOTE MAY NOT BE TRANSFERRED OR RESOLD.

 

INTEL CORPORATION

 

PROMISSORY NOTE

 

 

No.: [                        ]

Principal Amount: $[                        ]

Location: [                        ]

Date of Issuance: [                        ]

 

 

FOR VALUE RECEIVED, Intel Corporation, a Delaware corporation (“Intel”),
promises to pay to IM Flash Technologies, LLC, a Delaware limited liability
company (the “Joint Venture Company”), the principal sum of
[                                                                                  ]
Dollars ($[                              ]) in accordance with Section 2 of this
Promissory Note (this “Note”).

 

This Note is delivered as a Capital Contribution to the Joint Venture Company
pursuant to Section 2.1(A) of the Limited Liability Company Operating Agreement
dated January 6th, 2006, of the Joint Venture Company (the “Operating
Agreement”) and is issued under and subject to the terms, provisions and
conditions of the Operating Agreement.  Capitalized terms used in this Note and
not defined shall have the meanings set forth in the Operating Agreement.

 

1.                                       TERM.

 

(a)                                  This Note shall remain outstanding until
the payment of the entire principal balance of this Note (such unpaid principal
balance at any given time is referred to a the “Outstanding Balance”).

 

2.                                       PAYMENTS.

 

Payments of the Outstanding Balance shall become due and payable by Intel to the
Joint Venture Company (a) in whole or in part on the tenth Business Day
following written notice by the Lead Controller of the Joint Venture Company
sent to Intel that such amounts are necessary for the operation of the Joint
Venture Company in accordance with the then-effective Approved Business Plan;
and (b) in whole upon the liquidation of the Joint Venture Company in accordance
with Article 13 of the Operating Agreement.

 

D-1-1

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3.                                       MISCELLANEOUS.

 

3.1                                 This Note shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware without giving
effect to the principles of conflict of laws thereof.

 

3.2                                 The titles, captions and headings of this
Note are provided for convenience of reference only and shall not be deemed to
constitute a part of this Note.  Unless otherwise specifically stated, all
references herein to “sections” and “appendices” will mean “sections” and
“appendices” to this Note.

 

3.3                                 All notices to the Joint Venture Company
shall be sent addressed to the Authorized Officers, or the Chief Executive
Officer, as applicable, of the Joint Venture Company at the Joint Venture
Company’s principal place of business.  All notices to Intel shall be addressed
to Intel at the address as may be specified by Intel from time to time in a
notice to the Joint Venture Company.  Notwithstanding the foregoing, the initial
notice addresses for the Joint Venture Company and Intel are set forth below. 
All notices are effective the next day, if sent by recognized overnight courier
or facsimile, or five (5) days after deposit in the United States mail, postage
prepaid, properly addressed and return receipt requested.

 

To the Joint Venture Company:

To Intel:

IM Flash Technologies, LLC
1550 East 3400 North
Lehi, Utah 84043

2200 Mission College Blvd.
Mailstop SC4-203
Santa Clara, CA 95054

 

 

Fax Number: (801) 767-5370

Fax Number: (408) 653-8050

 

3.4                                 This Note may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

3.5                                 Should any provision of this Note be deemed
in contradiction with the laws of any jurisdiction in which it is to be
performed or unenforceable for any reason, such provision shall be deemed null
and void, but this Note shall remain in full force in all other respects and the
parties hereto shall negotiate in good faith appropriate modifications to this
Note that most nearly effects the parties’ intent in entering into this Note.

 

3.6                                 Intel hereby waives presentment, demand,
protest, notice of dishonor, diligence and all other notices, any release or
discharge arising from any extension of time, discharge of a prior party,
release of any or all of any security given from time to time for this Note, or
other cause of release or discharge other than actual payment in full hereof.

 

3.7                                 It is expressly agreed that if this Note is
referred to an attorney or if suit is brought to collect or interpret this Note
or any part hereof or to enforce or protect any rights conferred upon the Joint
Venture Company by this Note or any other document evidencing this Note, then
Intel promises and agrees to pay all costs, including attorneys’ fees, incurred
by the Joint Venture Company.

 

D-1-2

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3.8                                 In the event of any conflict between the
provisions of the Operating Agreement and this Note, the provisions of the
Operating Agreement shall control.

 

D-1-3

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IN WITNESS WHEREOF, Intel has executed this Note as of the date first above
written.

 

 

INTEL CORPORATION

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

ACKNOWLEDGED AND ACCEPTED:

 

IM FLASH TECHNOLOGIES, LLC

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

SIGNATURE PAGE TO

PROMISSORY NOTE

ISSUED BY INTEL CORPORATION

TO IM FLASH TECHNOLOGIES, LLC

 

D-1-4

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APPENDIX E

 

IM FLASH TECHNOLOGIES, LLC

 

MANUFACTURING COMMITTEE

 

Manufacturing Committee Charter

 

The Manufacturing Committee is formed by the Members to perform certain
functions in relation to the LLC Operating Agreement, the Supply Agreements
between the Members and the Joint Venture Company and the manufacturing, supply
and services agreements entered into by the Joint Venture Company.

 

A.                                   Purpose and Functions of the Manufacturing
Committee.

 

The primary purpose of the Manufacturing Committee is to review and approve
certain proposed plans and actions of the Joint Venture Company prior to
submission to the Members and/or the Board of Managers.  In addition, the
Manufacturing Committee shall assist and advise the Joint Venture Company and
the Members in establishing, monitoring and improving the Product roadmap and
loading, output and assembly and testing strategy of the Joint Venture Company. 
In fulfilling such purpose, the Manufacturing Committee shall approve the Joint
Venture Company’s proposed plans or actions as specified herein and may request
the Joint Venture Company to explore alternatives to such proposals for
resubmission to the Manufacturing Committee.  The Manufacturing Committee’s
functions shall include:

 

1.                                       Review the performance and projected
performance of the Joint Venture Company against the Operating Plan and
Performance Criteria (including projected cost, capacity, cycle-time, yield and
quality) on a quarterly basis.

 

2.                                       Review and approve proposed adjustments
to the Probed Wafer Cost Forecast and the Projected Output Forecast, all as
specified and defined in the Boise Supply Agreement.

 

3.                                       Review of the Joint Venture Company’s
monthly updates and reports of performance to the Operating Plan (including the
Manufacturing Plan, Assembly Plan and Test Plan) and performance to the ramp
plan.

 

4.                                       Review and approve for submission to
the Board of Managers the Joint Venture Company’s quarterly update of the
Operating Plan and the Proposed Loading Plan.

 

5.                                       Review and approve for submission to
the Board of Managers the Joint Venture Company’s proposed Operating Plan
(annually) in support of the Joint Venture Company’s Annual Business Plan,
including but not limited to the Joint Venture Company’s proposed operating and
capital expenditure plan.

 

6.                                       Review and advisory endorsement of the
Joint Venture Company’s packaging, assembly and test strategy in support of the
Joint Venture Company’s Annual Business Plan,

 

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including but not limited to the Joint Venture Company’s proposed operating and
capital expenditure plan.

 

7.                                       Review and approve the Joint Venture
Company’s proposed service agreement and support requests of each Member.

 

8.                                       Review the Joint Venture Company’s
proposals for project related secondment.

 

9.                                       Serve as an advice forum (on a
non-binding basis) on best known methods and arrange for advice to the Joint
Venture Company from Micron and Intel regarding manufacturing, assembly and
testing process and operations, with the goal of improved production performance
and ramp issue resolution.  Such advice may include, but not necessarily be
limited to advice on manufacturing process integration, manufacturing
operations, fab automation, and strategy on assembly and testing operations or
subcontracting.

 

10.                                 Such other functions as the Joint Venture
Company and the Members may specify by written consent.

 

B.                                    Membership and Procedure.

 

1.               Membership on Manufacturing Committee.

 

a.                                       Number and Appointment of Manufacturing
Committee Members.  The Manufacturing Committee shall have eight (8) members or
such other number as the Parties may specify by written consent.  The members
shall be the Intel Executive Officer and the Micron Executive Officer (or their
replacement) with the remaining members being appointed one-half by Micron and
one-half by Intel.  Unless the Members otherwise specify, the members of the
Manufacturing Committee appointed by each Member shall include:

 

(i)                                     A planning manager having factory
tactical planning, loading and scheduling experience, including logistics;

 

(ii)                                  A manufacturing finance officer or
director or business officer; and

 

(iii)                               A director with manufacturing, strategic
factory capacity, materials, purchasing and demand planning experience.

 

The qualifications of any individual appointed by any Member to serve on the
Manufacturing Committee shall be determined in the discretion of that Member. 
The initial members appointed by Micron and Intel to the Manufacturing Committee
shall be named within thirty (30) days of the Effective Date.

 

b.                                      Removal and Vacancies.  Each Member
having the right to appoint a member of the Manufacturing Committee in
accordance with this Section shall also have the right, in its sole discretion,
to remove such member at any time by delivery of written notice to the other

 

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Member and the Joint Venture Company.  Any vacancy on the Manufacturing
Committee for any reason (including as a result of the death, resignation,
retirement or removal pursuant to this Section of any member of the
Manufacturing Committee) shall be filled by the Member that appointed such
member of the Manufacturing Committee.  Unless a member of the Manufacturing
Committee resigns, dies, retires or is removed in accordance with this Section,
he or she shall hold office until a successor shall have been duly appointed by
the appointing Member.

 

2.                                       Additional Attendees at Manufacturing
Committee Meetings.  The Chief Financial Officer and the Planning Manager of the
Joint Venture Company may attend all meetings of the Manufacturing Committee,
but shall not be deemed members of the Manufacturing Committee and shall have no
right to vote.  In addition, the Manufacturing Committee may establish
rules with respect to the attendance at the Manufacturing Committee meetings of
staff and other invitees.

 

3.                                       Chairman of the Manufacturing
Committee.  The Board of Managers of the Joint Venture shall annually appoint
the Intel or Micron Executive Officer (or their replacement) on a rotating basis
to serve as the chairman of the Manufacturing Committee (the “Chairman”).  The
Chairman shall preside at all meetings of the Manufacturing Committee and shall
have such other duties and responsibilities as may be assigned to him by the
Manufacturing Committee.  The Chairman may delegate to the other Executive
Officer, if any, authority to chair any meeting, either on a temporary or a
permanent basis.  The Chairman shall determine the agenda of each meeting of the
Manufacturing Committee, but the other Executive Officer, if any, and any member
of the Manufacturing Committee shall have the right to request that additional
items be included in the agenda for any meeting and such items shall be included
in the agenda and presented for discussion.    The Chairman shall not have the
power to end discussion on an agenda item, unless termination of the discussion
is agreed to by a majority of the Committee members present at the meeting.

 

4.                                       Voting.  The Joint Venture Company,
Micron and Intel shall each be entitled to one (1) vote for each respective
company.  If the members representing any one company (the Joint Venture
Company, Micron or Intel) cannot agree on how to cast their vote they must
abstain from the vote. All actions, determinations or resolutions of the
Manufacturing Committee at a meeting shall require the unanimous affirmative
vote or consent of the three (3) votes at such meeting at which a quorum is
present.

 

5.                                       Meetings of the Manufacturing
Committee; Quorum.  The Manufacturing Committee shall hold meetings at least
once per calendar month at such times and at such locations as the Manufacturing
Committee may establish.  The presence of the Intel and Micron Executive
Officers (or their replacement) and at least two (2) members of the
Manufacturing Committee appointed by each Member, in person or by telephone
conference or by other means of

 

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communications acceptable to the Manufacturing Committee, shall be necessary and
sufficient to constitute a quorum for the purpose of taking action at any
meeting of the Manufacturing Committee.  No action taken by the Manufacturing
Committee at any meeting shall be valid unless the requisite quorum is present.

 

6.                                       Failure to Reach Agreement.

 

a.               If the Manufacturing Committee fails to secure a unanimous vote
on any matter in Section A requiring approval of the Manufacturing Committee,
then “Deadlock” shall be deemed to occur with respect to such matter.  The
Manufacturing Committee shall then have a ten (10) day period during which it
shall hold at least one (1) additional meeting at which it shall make a good
faith effort to break the Deadlock.  The additional meetings shall be held at
the time and place agreed to by the members of the Manufacturing Committee, or
if the members are unable to agree, at a time and place determined by the
Chairman of the Manufacturing Committee, on at least two (2) days’ written
notice.

 

b.              If the Manufacturing Committee fails to break the Deadlock
during such ten (10) day period the matter shall then be referred to the Board
of Managers of the Joint Venture Company for resolution that shall be binding on
the Joint Venture Company and each of the Members.  Any Tie Vote at the Board of
Managers on such matter shall be resolved in the manner set forth in the
Operating Agreement.  Notwithstanding the foregoing, if the Board of Managers
fails to approve a specific [***] for a [***], then Intel and Micron may
designate the [***] for such [***] in accordance with their respective Sharing
Interests.

 

7.                                       Notice; Waiver.  The regular monthly
meetings of the Manufacturing Committee shall be held upon not less than five
(5) Business Days’ written notice.  Additional meetings of the Manufacturing
Committee shall be held (A) at such other times as may be determined by the
Manufacturing Committee, (B) at the request of at least two (2) members of the
Manufacturing Committee or the Intel or Micron Executive Officer (or their
replacement), upon not less than five (5) Business Days’ written notice or
(C) in accordance with Section 5, following a failure by the Manufacturing
Committee to adopt or reject a proposal for action presented to it.  For
purposes of this Section, notice may be provided via facsimile, e-mail or any
other manner provided in Section 18.1 of the Operating Agreement, or telephonic
notice to each member of the Manufacturing Committee (which notice shall be
provided to the other members of the Manufacturing Committee by the requesting
members of the Manufacturing Committee).  The presence of any member of the
Manufacturing Committee at a meeting (including by means of telephone conference
or other means of communications acceptable to the Manufacturing Committee)
shall constitute a waiver of notice of the meeting with respect to such Manager,
unless such member of the Manufacturing Committee declares at the meeting that
such member of the Manufacturing Committee objects to the notice as having been
improperly given.  The Manufacturing Committee shall cause written minutes to be
prepared of all actions taken by the Manufacturing Committee and shall cause

 

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a copy thereof to be delivered to each member of the Manufacturing Committee
within fifteen (15) days.

 

8.                                       Action without a Meeting.  On any
matter that is to be voted on, consented to or approved by the Manufacturing
Committee, the Manufacturing Committee may take such action without a meeting,
without prior notice and without a vote if a consent or consents in writing,
setting forth the action so taken, shall be signed by the members of the
Manufacturing Committee having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
the members of the Manufacturing Committee were present and voted.

 

9.                                       Meetings by Telecommunications.  Unless
the Manufacturing Committee determines otherwise, members of the Manufacturing
Committee shall have the right to participate in all meetings of the
Manufacturing Committee by means of a telephone conference or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.

 

10.                                 Compensation of Members of the Manufacturing
Committee.  The members of the Manufacturing Committee, in their capacity as
such, shall not receive compensation.  Each Member shall bear the cost and
expenses incurred by its appointed members of the Manufacturing Committee in
connection with the Joint Venture Company’s business while such members of the
Manufacturing Committee are serving in such capacity.

 

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EXHIBIT A

 

FORM OF
MANDATORY NOTE

 

NEITHER THIS NOTE NOR ANY INTEREST IN THE JOINT VENTURE COMPANY (AS DEFINED
BELOW) THAT MAY BE ACQUIRED UPON CONVERSION OF THIS NOTE HAS BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE
SECURITIES LAWS OF ANY STATES.  THIS NOTE HAS BEEN ISSUED IN RELIANCE UPON THE
REPRESENTATION OF THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION THEREOF.  THIS NOTE
AND ANY INTEREST IN THE JOINT VENTURE COMPANY ACQUIRED UPON CONVERSION OF THIS
NOTE ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD UNLESS PERMITTED UNDER SECTIONS 12.2 OR 12.5 OF THE
LIMITED LIABILITY COMPANY OPERATING AGREEMENT, DATED JANUARY 6, 2006, OF THE
JOINT VENTURE COMPANY AND THEN ONLY PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS. 
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS
OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

IM FLASH TECHNOLOGIES, LLC

 

REDEEMABLE NOTE

 

 

No.:                    

Principal Amount:  $[                        ]

Location:  [                        ]

Date of Issuance: [                        ]

Maturity Date:  [                        ]

 

FOR VALUE RECEIVED, IM Flash Technologies, LLC, a Delaware limited liability
company (the “Joint Venture Company”), promises to pay to
[                        ], a Delaware corporation (the “Funding Member”), or
such Wholly-Owned Subsidiary of the Funding Member as the Funding Member may
designate, the principal sum of [                        ] Dollars
($[                        ]) and to pay interest on the outstanding principal
of this Convertible Promissory Note (this “Note”), in accordance with Section 2
of this Note.

 

This Note is delivered in exchange for Member Debt Financing received from the
Funding Member pursuant to Section 3.1 of the Limited Liability Company
Operating Agreement dated January 6, 2006, of the Joint Venture Company (the
“Operating Agreement”) and is issued under and subject to the terms, provisions
and conditions of the Operating Agreement.  Reference is hereby made to the
Operating Agreement for a full statement of the respective rights, limitations
of rights and duties of the Joint Venture Company, the Funding Member and
[                        ], a Delaware corporation (the “Non-Funding Member”)
and the terms under which this Note is issued and delivered.  Capitalized terms
used in this Note and not

 

A-1

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defined shall have the meanings set forth in the Operating Agreement.  This Note
may be one of a series of Notes issued pursuant to Section 3.1 of the Operating
Agreement.  This Note is [a Mandatory Shortfall Note] [a Mandatory Equalization
Note].

 

1.                                       TERM.

 

(a)                                  Subject to paragraph (b) below, from and
after the date that is [***] after the date of this Note (the “Maturity Date”),
the Funding Member shall elect to either:

 

(i)                                     convert this Note in accordance with
Section 4 below; or

 

(ii)                                  permit this Note to remain outstanding (in
which case this Note shall become a Continuing Mandatory Note) with the Maturity
Date being the Liquidation Date (the Maturity Date as so extended, the “Extended
Maturity Date”).

 

In the event that the Funding Member fails to make an election under clause
(i) or clause (ii) above, the Funding Member shall be deemed to have elected to
permit this Note to remain outstanding in accordance with clause (ii) above, and
this Note and the related Mandatory [Equalization][Shortfall] Note, shall
automatically become a Continuing Mandatory Note.

 

(b)                                 Subject to Section 4 below, upon the date of
the first distribution under Section 13.13(C) of the Operating Agreement, the
Outstanding Balance, plus all accrued and unpaid interest thereon, shall become
due.

 

2.                                       INTEREST.  [Mandatory Equalization
Note:  [***].]

 

[Mandatory Shortfall Note:  As provided in the Operating Agreement, interest on
the unpaid principal balance of this Note (such unpaid principal balance at any
given time is referred to as the “Outstanding Balance”) will accrue as follows:

 

(a)                                  For the [***] after the issue date of this
Note, interest will accrue at the [***] (as reported in the [***]), as in effect
on the issue date of this Note and adjusted every [***], plus [***] ([***])
basis points, per annum, compounded [***], calculated on the basis of a 360 day
year and actual days elapsed.

 

(b)                                 For the period starting on the day after the
[***] anniversary of the issue date of this Note through the Maturity Date,
interest will accrue at the [***] (as reported in the [***]), as in effect on
the [***] anniversary of the issue date of this Note and adjusted every [***],
per annum, compounded [***], calculated on the basis of a 360 day year and
actual days elapsed.

 

(c)                                  [***] will accrue on the Outstanding
Balance from the Maturity Date until this Note is converted or redeemed in
full.]

 

All payments received shall be applied first against costs of collection and
enforcement (if any), then against accrued and unpaid interest, and then against
principal.

 

A-2

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3.                                       PREPAYMENT.  The Joint Venture Company
shall prepay, without premium or penalty, this Note if, as and to the extent
required by the Operating Agreement, but only upon written notice executed by
the chief executive officer of the holder of this Note.

 

4.                                       CONVERSION.

 

(a)                                  At any time, and from time to time, from
the Maturity Date through the Extended Maturity Date, the Funding Member may, at
its election, transfer to the Joint Venture Company as a Capital Contribution
all or a portion of the Outstanding Balance plus all accrued and unpaid interest
thereon and such amount shall be added to the Capital Contribution Balance of
the Funding Member (a “Conversion”).

 

(b)                                 If the Outstanding Balance plus all accrued
and unpaid interest thereon shall become due as set forth in Section 1(b) above,
(i) the Funding Member may elect to make a Conversion in full, but not in part,
of the Outstanding Balance plus all accrued and unpaid interest thereon or
(ii) if the Funding Member does not so elect, a Conversion of the Outstanding
Balance plus all accrued and unpaid interest thereon (in full, but not in part)
may be effected in accordance with Section 13.13(B) of the Operating Agreement.

 

(c)                                  Upon the occurrence of an Event of Default
under Section 5 below, the Funding Member may, in addition to the remedies set
forth in Section 6 below, elect to make a Conversion.

 

5.                                       DEFAULT.  The occurrence of any one or
more of the following events, acts or occurrences shall constitute an event of
default (each an “Event of Default”):

 

(a)                                  failure by the Joint Venture Company to pay
any principal of or interest on this Note as and when required by the Operating
Agreement or the terms hereof, unless the Funding Member makes an election under
Section 1(a) hereof; and

 

(b)                                 (i) the entry of a decree or order for
relief of the Joint Venture Company by a court of competent jurisdiction in any
involuntary case involving the Joint Venture Company under any bankruptcy,
insolvency or other similar law now or hereafter in effect; (ii) the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar agent for the Joint Venture Company or for any substantial part of the
Joint Venture Company’s assets or property; (iii) the ordering of the winding up
or liquidation of the Joint Venture Company’s affairs; (iv) the filing with
respect to the Joint Venture Company of a petition in any such involuntary
bankruptcy case, which petition remains undismissed for a period of sixty (60)
days or which is dismissed or suspended pursuant to Section 305 of the Federal
Bankruptcy Code (or any corresponding provision of any future United States
bankruptcy law); (v) the commencement by the Joint Venture Company of a
voluntary case under any bankruptcy, insolvency or other similar law now or
hereafter in effect; (vi) the consent by the Joint Venture Company to the entry
of an order for relief in an involuntary case under any such law or to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar agent for the Joint Venture
Company or for any substantial part of the Joint Venture Company’s assets or
property; or (vii) the making by the Joint Venture Company of any general
assignment for the benefit of creditors.

 

A-3

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6.                                       REMEDIES.  If an Event of Default
occurs, the Funding Member may, at its election, (a) elect to make a Conversion
in accordance with Section 4 above, (b) accelerate repayment of the Outstanding
Balance, in which case the Outstanding Balance plus all accrued and unpaid
interest thereon shall be due and payable immediately, and (c) pursue a claim
for payment of the amounts required to be paid under the Operating Agreement or
this Note.

 

7.                                       MISCELLANEOUS.

 

7.1                                 This Note shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware without giving
effect to the principles of conflict of laws thereof.

 

7.2                                 The titles, captions and headings of this
Note are provided for convenience of reference only and shall not be deemed to
constitute a part of this Note.  Unless otherwise specifically stated, all
references herein to “sections” and “appendices” will mean “sections” and
“appendices” to this Note.

 

7.3                                 All notices to the Joint Venture Company
shall be sent addressed to the Authorized Officers, or the Chief Executive
Officer, as applicable, of the Joint Venture Company at the Joint Venture
Company’s principal place of business.  All notices to the Funding Member or the
Non-Funding Member shall be sent addressed to such Member at the address as may
be specified by Members from time to time in a notice to the Joint Venture
Company.  Notwithstanding the foregoing, the initial notice addresses for the
Joint Venture Company and the Members are set forth below.  All notices are
effective the next day, if sent by recognized overnight courier or facsimile, or
five (5) days after deposit in the United States mail, postage prepaid, properly
addressed and return receipt requested.

 

To the Joint Venture Company:

 

To the Funding Member:

[                        ]

 

[                        ]

[                        ]

 

[                        ]

[                        ]

 

[                        ]

[                        ]

 

[                        ]

 

 

 

Fax Number: [                        ]

 

Fax Number: [                        ]

 

7.4                                 No delay or omission to exercise any right,
power or remedy accruing to the Funding Member, upon any breach or default of
the Joint Venture Company under this Note, shall impair any such right, power or
remedy of the Funding Member nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of any similar breach of
default thereafter occurring or any waiver of any other breach or default
theretofore or thereafter occurring.  The acceptance at any time by the Funding
Member of any past-due amount shall not be deemed to be a waiver of the right to
require prompt payment when due of any other amounts then or thereafter due and
payable.  Any waiver, permit, consent or approval of any kind or character on
the part of the Funding Member of any breach of default under this Note or any
waiver on the part of the Funding Member of any provisions or conditions of this
Note, must be in writing and shall be effective only to the extent specifically
set forth in such writing.  All other

 

A-4

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remedies provided for in this Note shall be exclusive and shall be in lieu of
any other remedies that the Funding Member may have in respect of this Note, at
law or in equity.

 

7.5                                 This Note may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

7.6                                 Should any provision of this Note be deemed
in contradiction with the laws of any jurisdiction in which it is to be
performed or unenforceable for any reason, such provision shall be deemed null
and void, but this Note shall remain in full force in all other respects and the
parties hereto shall negotiate in good faith appropriate modifications to this
Note that most nearly effects the parties’ intent in entering into this Note.

 

7.7                                 The Joint Venture Company hereby waives
presentment, demand, protest, notice of dishonor, diligence and all other
notices, any release or discharge arising from any extension of time, discharge
of a prior party, release of any or all of any security given from time to time
for this Note, or other cause of release or discharge other than actual payment
in full hereof.

 

7.8                                 The Funding Member shall not be deemed, by
any act or omission, to have waived any of its rights or remedies hereunder
unless such waiver is in writing and signed by the Funding Member and then only
to the extent specifically set forth in such writing.  A waiver with reference
to one event shall not be construed as continuing or as a bar to or waiver of
any right or remedy as to a subsequent event.

 

7.9                                 Time is of the essence hereof.

 

7.10                           It is expressly agreed that if this Note is
referred to an attorney or if suit is brought to collect or interpret this Note
or any part hereof or to enforce or protect any rights conferred upon the
Funding Member by this Note or any other document evidencing this Note, then the
Joint Venture Company promises and agrees to pay all costs, including attorneys’
fees, incurred by the Funding Member.

 

7.11                           If any provisions of this Note would require the
Joint Venture Company to pay interest hereon at a rate exceeding the highest
rate allowed by applicable law, the Joint Venture Company shall instead pay
interest under this Note at the highest rate permitted by applicable law.

 

7.12                           In the event of any conflict between the
provisions of the Operating Agreement and this Note, the provisions of the
Operating Agreement shall control.

 

A-5

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IN WITNESS WHEREOF, the Joint Venture Company has executed this Note as of the
date first above written.

 

 

IM FLASH TECHNOLOGIES, LLC

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

ACKNOWLEDGED AND ACCEPTED:

 

[                        ], the Funding Member

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

SIGNATURE PAGE TO

PROMISSORY NOTE

ISSUED BY IM FLASH TECHNOLOGIES

TO [                        ]

 

A-6

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EXHIBIT B

 

FORM OF OPTIONAL [***] NOTE

 

NEITHER THIS NOTE NOR ANY INTEREST IN THE JOINT VENTURE COMPANY (AS DEFINED
BELOW) THAT MAY BE ACQUIRED UPON CONVERSION OF THIS NOTE HAS BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE
SECURITIES LAWS OF ANY STATES.  THIS NOTE HAS BEEN ISSUED IN RELIANCE UPON THE
REPRESENTATION OF THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION THEREOF.  THIS NOTE
AND ANY INTEREST IN THE JOINT VENTURE COMPANY ACQUIRED UPON CONVERSION OF THIS
NOTE ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD UNLESS PERMITTED UNDER SECTIONS 12.2 OR 12.5 OF THE
LIMITED LIABILITY COMPANY OPERATING AGREEMENT, DATED JANUARY 6, 2006, OF THE
JOINT VENTURE COMPANY AND THEN ONLY PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS. 
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS
OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

IM FLASH TECHNOLOGIES, LLC

 

REDEEMABLE NOTE

 

 

No.:

Principal Amount: $[                        ]

Location: [                        ]

Date of Issuance: [                        ]

Maturity Date: [                        ]

 

FOR VALUE RECEIVED, IM Flash Technologies, LLC, a Delaware limited liability
company (the “Joint Venture Company”), promises to pay to
[                        ], a Delaware corporation (the “Funding Member”), or
such Wholly-Owned Subsidiary of the Funding Member as the Funding Member may
designate, the principal sum of [                        ] Dollars
($[                        ]) and to pay interest on the outstanding principal
of this Convertible Promissory Note (this “Note”), in accordance with Section 2
of this Note.

 

This Note is delivered in exchange for Member Debt Financing received from the
Funding Member pursuant to Section 3.2 of the Limited Liability Company
Operating Agreement dated January 6, 2006, of the Joint Venture Company (the
“Operating Agreement”) and is issued under and subject to the terms, provisions
and conditions of the Operating Agreement.  Reference is hereby made to the
Operating Agreement for a full statement of the respective rights, limitations
of rights and duties of the Joint Venture Company, the Funding Member and
[                        ], a Delaware corporation (the “Non-Funding Member”)
and the terms under which this Note is issued and delivered.  Capitalized terms
used in this Note and not defined shall have the meanings set forth in the
Operating Agreement.  This Note may be one of

 

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a series of Notes issued pursuant to Section 3.2 of the Operating Agreement. 
This Note is [an Optional [***] Shortfall Note] [an Optional [***] Equalization
Note].

 

1.                                       TERM.  (a) This note will mature on the
[***].

 

(b)                                 Subject to Section 4 below, upon the date of
the first distribution under Section 13.13(C) of the Operating Agreement, the
Outstanding Balance, plus all accrued and unpaid interest thereon, shall become
due.

 

2.                                       INTEREST.  [Optional [***] Equalization
Note:  [***].]

 

[Optional [***] Shortfall Note:  As provided in the Operating Agreement,
interest on the unpaid principal balance of this Note (such unpaid principal
balance at any given time is referred to as the “Outstanding Balance”) will
accrue at the [***] (as reported in the [***]), as in effect on the issue date
of this Note and adjusted every [***], per annum, compounded [***], calculated
on the basis of a 360 day year and actual days elapsed.

 

All payments received shall be applied first against costs of collection and
enforcement (if any), then against accrued and unpaid interest, and then against
principal.

 

3.                                       PREPAYMENT.  The Joint Venture Company
shall prepay, without premium or penalty, this Note if, as and to the extent
required by the Operating Agreement, but only upon written notice executed by
the chief executive officer of the holder of this Note.

 

4.                                       CONVERSION.

 

(a)                                  At any time, and from time to time, the
Funding Member may, at its election, transfer to the Joint Venture Company as a
Capital Contribution all or a portion of the Outstanding Balance plus all
accrued and unpaid interest thereon and such amount shall be added to the
Capital Contribution Balance of the Funding Member (a “Conversion”).

 

(b)                                 If the Outstanding Balance plus all accrued
and unpaid interest thereon shall become due as set forth in Section 1(b) above,
(i) the Funding Member may elect to make a Conversion in full, but not in part,
of the Outstanding Balance plus all accrued and unpaid interest thereon or
(ii) if the Funding Member does not so elect, a Conversion of the Outstanding
Balance plus all accrued and unpaid interest thereon (in full, but not in part)
may be effected in accordance with Section 13.13(B) of the Operating Agreement.

 

(c)                                  Upon the occurrence of an Event of Default
under Section 5 below, the Funding Member may, in addition to the remedies set
forth in Section 6 below, elect to make a Conversion.

 

5.                                       DEFAULT.  The occurrence of any one or
more of the following events, acts or occurrences shall constitute an event of
default (each an “Event of Default”):

 

(a)                                  failure by the Joint Venture Company to pay
any principal of or interest on this Note as and when required by the Operating
Agreement or the terms hereof; and

 

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(b)                                 (i) the entry of a decree or order for
relief of the Joint Venture Company by a court of competent jurisdiction in any
involuntary case involving the Joint Venture Company under any bankruptcy,
insolvency or other similar law now or hereafter in effect; (ii) the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar agent for the Joint Venture Company or for any substantial part of the
Joint Venture Company’s assets or property; (iii) the ordering of the winding up
or liquidation of the Joint Venture Company’s affairs; (iv) the filing with
respect to the Joint Venture Company of a petition in any such involuntary
bankruptcy case, which petition remains undismissed for a period of sixty (60)
days or which is dismissed or suspended pursuant to Section 305 of the Federal
Bankruptcy Code (or any corresponding provision of any future United States
bankruptcy law); (v) the commencement by the Joint Venture Company of a
voluntary case under any bankruptcy, insolvency or other similar law now or
hereafter in effect; (vi) the consent by the Joint Venture Company to the entry
of an order for relief in an involuntary case under any such law or to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar agent for the Joint Venture
Company or for any substantial part of the Joint Venture Company’s assets or
property; or (vii) the making by the Joint Venture Company of any general
assignment for the benefit of creditors.

 

6.                                       REMEDIES.  If an Event of Default
occurs, the Funding Member may, at its election, (a) elect to make a Conversion
in accordance with Section 4 above, (b) accelerate repayment of the Outstanding
Balance, in which case the Outstanding Balance plus all accrued and unpaid
interest thereon shall be due and payable immediately, and (c) pursue a claim
for payment of the amounts required to be paid under the Operating Agreement or
this Note.

 

7.                                       MISCELLANEOUS.

 

7.1                                 This Note shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware without giving
effect to the principles of conflict of laws thereof.

 

7.2                                 The titles, captions and headings of this
Note are provided for convenience of reference only and shall not be deemed to
constitute a part of this Note.  Unless otherwise specifically stated, all
references herein to “sections” and “appendices” will mean “sections” and
“appendices” to this Note.

 

7.3                                 All notices to the Joint Venture Company
shall be sent addressed to the Authorized Officers, or the Chief Executive
Officer, as applicable, of the Joint Venture Company at the Joint Venture
Company’s principal place of business.  All notices to the Funding Member or the
Non-Funding Member shall be sent addressed to such Member at the address as may
be specified by Members from time to time in a notice to the Joint Venture
Company.  Notwithstanding the foregoing, the initial notice addresses for the
Joint Venture Company and the Members are set forth below.  All notices are
effective the next day, if sent by recognized overnight courier or facsimile, or
five (5) days after deposit in the United States mail, postage prepaid, properly
addressed and return receipt requested.

 

B-3

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To the Joint Venture Company:

 

To the Funding Member:

[                        ]

 

[                        ]

[                        ]

 

[                        ]

[                        ]

 

[                        ]

[                        ]

 

[                        ]

 

 

 

Fax Number: [                        ]

 

Fax Number: [                        ]

 

7.4                                 No delay or omission to exercise any right,
power or remedy accruing to the Funding Member, upon any breach or default of
the Joint Venture Company under this Note, shall impair any such right, power or
remedy of the Funding Member nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of any similar breach of
default thereafter occurring or any waiver of any other breach or default
theretofore or thereafter occurring.  The acceptance at any time by the Funding
Member of any past-due amount shall not be deemed to be a waiver of the right to
require prompt payment when due of any other amounts then or thereafter due and
payable.  Any waiver, permit, consent or approval of any kind or character on
the part of the Funding Member of any breach of default under this Note or any
waiver on the part of the Funding Member of any provisions or conditions of this
Note, must be in writing and shall be effective only to the extent specifically
set forth in such writing.  All other remedies provided for in this Note shall
be exclusive and shall be in lieu of any other remedies that the Funding Member
may have in respect of this Note, at law or in equity.

 

7.5                                 This Note may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

7.6                                 Should any provision of this Note be deemed
in contradiction with the laws of any jurisdiction in which it is to be
performed or unenforceable for any reason, such provision shall be deemed null
and void, but this Note shall remain in full force in all other respects and the
parties hereto shall negotiate in good faith appropriate modifications to this
Note that most nearly effects the parties’ intent in entering into this Note.

 

7.7                                 The Joint Venture Company hereby waives
presentment, demand, protest, notice of dishonor, diligence and all other
notices, any release or discharge arising from any extension of time, discharge
of a prior party, release of any or all of any security given from time to time
for this Note, or other cause of release or discharge other than actual payment
in full hereof.

 

7.8                                 The Funding Member shall not be deemed, by
any act or omission, to have waived any of its rights or remedies hereunder
unless such waiver is in writing and signed by the Funding Member and then only
to the extent specifically set forth in such writing.  A waiver with reference
to one event shall not be construed as continuing or as a bar to or waiver of
any right or remedy as to a subsequent event.

 

7.9                                 Time is of the essence hereof.

 

7.10                           It is expressly agreed that if this Note is
referred to an attorney or if suit is brought to collect or interpret this Note
or any part hereof or to enforce or protect any rights conferred

 

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upon the Funding Member by this Note or any other document evidencing this Note,
then the Joint Venture Company promises and agrees to pay all costs, including
attorneys’ fees, incurred by the Funding Member.

 

7.11                           If any provisions of this Note would require the
Joint Venture Company to pay interest hereon at a rate exceeding the highest
rate allowed by applicable law, the Joint Venture Company shall instead pay
interest under this Note at the highest rate permitted by applicable law.

 

7.12                           In the event of any conflict between the
provisions of the Operating Agreement and this Note, the provisions of the
Operating Agreement shall control.

 

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IN WITNESS WHEREOF, the Joint Venture Company has executed this Note as of the
date first above written.

 

 

IM FLASH TECHNOLOGIES, LLC

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

ACKNOWLEDGED AND ACCEPTED:

 

[                        ], the Funding Member

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

SIGNATURE PAGE TO

PROMISSORY NOTE

ISSUED BY IM FLASH TECHNOLOGIES

TO [             ]

 

B-6

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EXHIBIT C

 

FORM OF OPTIONAL OTHER NOTE

 

NEITHER THIS NOTE NOR ANY INTEREST IN THE JOINT VENTURE COMPANY (AS DEFINED
BELOW) THAT MAY BE ACQUIRED UPON CONVERSION OF THIS NOTE HAS BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE
SECURITIES LAWS OF ANY STATES.  THIS NOTE HAS BEEN ISSUED IN RELIANCE UPON THE
REPRESENTATION OF THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION THEREOF.  THIS NOTE
AND ANY INTEREST IN THE JOINT VENTURE COMPANY ACQUIRED UPON CONVERSION OF THIS
NOTE ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD UNLESS PERMITTED UNDER SECTIONS 12.2 OR 12.5 OF THE
LIMITED LIABILITY COMPANY OPERATING AGREEMENT, DATED JANUARY 6, 2006, OF THE
JOINT VENTURE COMPANY AND THEN ONLY PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS. 
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS
OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

IM FLASH TECHNOLOGIES, LLC

 

REDEEMABLE NOTE

 

 

No.:

Principal Amount: $[                        ]

Location: [                        ]

Date of Issuance: [                        ]

Maturity Date: [                        ]

 

FOR VALUE RECEIVED, IM Flash Technologies, LLC, a Delaware limited liability
company (the “Joint Venture Company”), promises to pay to
[                        ], a Delaware corporation (the “Funding Member”), or
such Wholly-Owned Subsidiary of the Funding Member as the Funding Member may
designate, the principal sum of [                        ] Dollars
($[                        ])of this Convertible Promissory Note (this “Note”),
in accordance with Section 2 of this Note.

 

This Note is delivered in exchange for Member Debt Financing received from the
Funding Member pursuant to Section 3.3 of the Limited Liability Company
Operating Agreement dated January 6, 2006, of the Joint Venture Company (the
“Operating Agreement”) and is issued under and subject to the terms, provisions
and conditions of the Operating Agreement.  Reference is hereby made to the
Operating Agreement for a full statement of the respective rights, limitations
of rights and duties of the Joint Venture Company, the Funding Member and
[                        ], a Delaware corporation (the “Non-Funding Member”)
and the terms under which this Note is issued and delivered.  Capitalized terms
used in this Note and not defined shall have the meanings set forth in the
Operating Agreement.  This Note may be one of

 

C-1

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a series of Notes issued pursuant to Section 3.3 of the Operating Agreement. 
This Note is an Optional Other Shortfall Note.

 

1.                                       TERM.  This Note will mature on the
[***].

 

2.                                       INTEREST.  [***].

 

3.                                       PREPAYMENT.  The Joint Venture Company
shall prepay, without premium or penalty, this Note if, as and to the extent
required by the Operating Agreement, but only upon written notice executed by
the chief executive officer of the holder of this Note.

 

4.                                       CONVERSION.

 

(a)                                  At any time, and from time to time, the
Funding Member may, at its election, transfer to the Joint Venture Company as a
Capital Contribution all or a portion of the Outstanding Balance thereon and
such amount shall be added to the Capital Contribution Balance of the Funding
Member (a “Conversion”).

 

(b)                                 Upon the occurrence of an Event of Default
under Section 5 below, the Funding Member may, in addition to the remedies set
forth in Section 6 below, elect to make a Conversion.

 

5.                                       DEFAULT.  The occurrence of any one or
more of the following events, acts or occurrences shall constitute an event of
default (each an “Event of Default”):

 

(a)                                  failure by the Joint Venture Company to pay
any principal of on this Note as and when required by the Operating Agreement or
the terms hereof; and

 

(b)                                 (i) the entry of a decree or order for
relief of the Joint Venture Company by a court of competent jurisdiction in any
involuntary case involving the Joint Venture Company under any bankruptcy,
insolvency or other similar law now or hereafter in effect; (ii) the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar agent for the Joint Venture Company or for any substantial part of the
Joint Venture Company’s assets or property; (iii) the ordering of the winding up
or liquidation of the Joint Venture Company’s affairs; (iv) the filing with
respect to the Joint Venture Company of a petition in any such involuntary
bankruptcy case, which petition remains undismissed for a period of sixty (60)
days or which is dismissed or suspended pursuant to Section 305 of the Federal
Bankruptcy Code (or any corresponding provision of any future United States
bankruptcy law); (v) the commencement by the Joint Venture Company of a
voluntary case under any bankruptcy, insolvency or other similar law now or
hereafter in effect; (vi) the consent by the Joint Venture Company to the entry
of an order for relief in an involuntary case under any such law or to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar agent for the Joint Venture
Company or for any substantial part of the Joint Venture Company’s assets or
property; or (vii) the making by the Joint Venture Company of any general
assignment for the benefit of creditors.

 

C-2

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6.                                       REMEDIES.  If an Event of Default
occurs, the Funding Member may, at its election, (a) elect to make a Conversion
in accordance with Section 4 above, (b) accelerate repayment of the Outstanding
Balance, in which case the Outstanding Balance shall be due and payable
immediately, and (c) pursue a claim for payment of the amounts required to be
paid under the Operating Agreement or this Note.

 

7.                                       MISCELLANEOUS.

 

7.1                                 This Note shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware without giving
effect to the principles of conflict of laws thereof.

 

7.2                                 The titles, captions and headings of this
Note are provided for convenience of reference only and shall not be deemed to
constitute a part of this Note.  Unless otherwise specifically stated, all
references herein to “sections” and “appendices” will mean “sections” and
“appendices” to this Note.

 

7.3                                 All notices to the Joint Venture Company
shall be sent addressed to the Authorized Officers, or the Chief Executive
Officer, as applicable, of the Joint Venture Company at the Joint Venture
Company’s principal place of business.  All notices to the Funding Member or the
Non-Funding Member shall be sent addressed to such Member at the address as may
be specified by Members from time to time in a notice to the Joint Venture
Company.  Notwithstanding the foregoing, the initial notice addresses for the
Joint Venture Company and the Members are set forth below.  All notices are
effective the next day, if sent by recognized overnight courier or facsimile, or
five (5) days after deposit in the United States mail, postage prepaid, properly
addressed and return receipt requested.

 

To the Joint Venture Company:

 

To the Funding Member:

[                        ]

 

[                        ]

[                        ]

 

[                        ]

[                        ]

 

[                        ]

[                        ]

 

[                        ]

 

 

 

Fax Number: [                        ]

 

Fax Number: [                        ]

 

7.4                                 No delay or omission to exercise any right,
power or remedy accruing to the Funding Member, upon any breach or default of
the Joint Venture Company under this Note, shall impair any such right, power or
remedy of the Funding Member nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of any similar breach of
default thereafter occurring or any waiver of any other breach or default
theretofore or thereafter occurring.  The acceptance at any time by the Funding
Member of any past-due amount shall not be deemed to be a waiver of the right to
require prompt payment when due of any other amounts then or thereafter due and
payable.  Any waiver, permit, consent or approval of any kind or character on
the part of the Funding Member of any breach of default under this Note or any
waiver on the part of the Funding Member of any provisions or conditions of this
Note, must be in writing and shall be effective only to the extent specifically
set forth in such writing.  All other

 

C-3

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remedies provided for in this Note shall be exclusive and shall be in lieu of
any other remedies that the Funding Member may have in respect of this Note, at
law or in equity.

 

7.5                                 This Note may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

7.6                                 Should any provision of this Note be deemed
in contradiction with the laws of any jurisdiction in which it is to be
performed or unenforceable for any reason, such provision shall be deemed null
and void, but this Note shall remain in full force in all other respects and the
parties hereto shall negotiate in good faith appropriate modifications to this
Note that most nearly effects the parties’ intent in entering into this Note.

 

7.7                                 The Joint Venture Company hereby waives
presentment, demand, protest, notice of dishonor, diligence and all other
notices, any release or discharge arising from any extension of time, discharge
of a prior party, release of any or all of any security given from time to time
for this Note, or other cause of release or discharge other than actual payment
in full hereof.

 

7.8                                 The Funding Member shall not be deemed, by
any act or omission, to have waived any of its rights or remedies hereunder
unless such waiver is in writing and signed by the Funding Member and then only
to the extent specifically set forth in such writing.  A waiver with reference
to one event shall not be construed as continuing or as a bar to or waiver of
any right or remedy as to a subsequent event.

 

7.9                                 Time is of the essence hereof.

 

7.10                           It is expressly agreed that if this Note is
referred to an attorney or if suit is brought to collect or interpret this Note
or any part hereof or to enforce or protect any rights conferred upon the
Funding Member by this Note or any other document evidencing this Note, then the
Joint Venture Company promises and agrees to pay all costs, including attorneys’
fees, incurred by the Funding Member.

 

7.11                           If any provisions of this Note would require the
Joint Venture Company to pay interest hereon at a rate exceeding the highest
rate allowed by applicable law, the Joint Venture Company shall instead pay
interest under this Note at the highest rate permitted by applicable law.

 

7.12                           In the event of any conflict between the
provisions of the Operating Agreement and this Note, the provisions of the
Operating Agreement shall control.

 

C-4

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IN WITNESS WHEREOF, the Joint Venture Company has executed this Note as of the
date first above written.

 

 

IM FLASH TECHNOLOGIES, LLC

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

ACKNOWLEDGED AND ACCEPTED:

 

[                        ], the Funding Member

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

SIGNATURE PAGE TO

PROMISSORY NOTE

ISSUED BY IM FLASH TECHNOLOGIES

TO [                        ]

 

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