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


 





















 


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





















 


	
  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





















 


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





















 


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





















 


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





















 


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





















 


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





















 


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).


 


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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


 


15





















 


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


 


17





















 


[***] 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);


 


19





















 


(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


 


20





















 


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


 


21





















 


(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 


 


25





















 


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


 


27





















 


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


 


28





















 


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


 


29





















 


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


 


30





















 


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


 


32





















 


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


 


34





















 


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;


 


35





















 


(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


 


36





















 


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 $[***];


 


37





















 


(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


 


38





















 


(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


 


39





















 


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


 


40





















 


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.


 


41





















 


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,


 


42





















 


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


 


43





















 


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


 


45





















 


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.


 


46





















 


(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.


 


47





















 


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


 


48





















 


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


 


49





















 


(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


 


50





















 


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


 


51





















 


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


 


55





















 


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


 


56





















 


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


 


57





















 


([***]%)) [***] (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


 


58





















 


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,


 


59





















 


(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


 


69





















 


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


 


70





















 


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





















 


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.


 





















 


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


 


A-1





















 


(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.


 


A-2





















 


“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.


 


A-3





















 


“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;


 


A-4





















 


(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 [***].


 


A-5





















 


“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.


 


A-6





















 


“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.


 


A-7





















 


“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.


 


A-8





















 


“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.


 


A-9





















 


“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.


 


A-10





















 


“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.


 


A-11





















 


“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.


 


A-12





















 


“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





















 


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.


 


A-14





















 


“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.


 


A-15





















 


“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.


 


A-16





















 


“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.


 


A-17





















 


“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.


 


A-18





















 


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.


 


B-1





















 


“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).


 


B-2





















 


“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.


 


B-3





















 


“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





















 


(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)


 


B-5





















 


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


 


B-6





















 


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


 


B-7





















 


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





















 


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


 


B-9





















 


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





















 


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





















 


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





















 


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





















 


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





















 


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





















 


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





















 


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





















 


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





















 


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


 


E-4





















 


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.


 


E-5





















 


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





















 


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.


 


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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.


 


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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





















 


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





















 


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





















 


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


 


B-1





















 


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


 


B-2





















 


(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





















 


	
  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


 


B-4





















 


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.


 


B-5





















 


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





















 


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





















 


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





















 


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





















 


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





















 


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
[                        ]


 


C-5