Exhibit
10.161


 


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


 


NAND Flash
Supply Agreement


Between
Micron and Apple


 


This NAND Flash Supply Agreement (the
“Agreement”) is entered into by and
between Apple, a California corporation doing business at 1 Infinite Loop,
Cupertino, California (“Apple”),
and Micron Technology, Inc., a Delaware corporation, doing business at
8000 S. Federal Way, P.O. Box 6, Boise, Idaho 83707 (“Micron”)
as of the Effective Date (as defined below). 
Apple and Micron are sometimes individually referred to as a “Party” and collectively as the “Parties”.


 


Purpose


 


Apple is entering into this Agreement to enable it to have a long term
supply of NAND flash products from Micron, and Micron is entering into this
Agreement to enable it to supply on a long term basis NAND flash products to
Apple.  This Agreement sets forth the
terms and conditions on which Micron will supply to Apple, and Apple will
purchase from Micron, NAND flash products.


 


Agreement


 


In consideration of the mutual promises and covenants set forth herein,
the Parties agree as follows:


 


1.             Venture


 


1.1           On
or before October 31, 2005, Micron intends to execute an agreement with
Intel Corporation, a Delaware corporation (“Intel”),
to form a Delaware limited liability company (the “Manufacturer”)
to manufacture NAND flash products. Intel and Micron will be the only members
of the Manufacturer.  Micron will be a
51% owner of the Manufacturer and 51% of the Manufacturer’s wafer starts will
be for NAND flash products sold to Micron.


 


1.2           The
chief executive officer of Micron will recommend to the Board of Directors of
Micron that the formation of the Manufacturer be approved by the Board of
Directors on or before October 31, 2005.


 


2.             Term


 


2.1           Sections
1, 2.2, 9, 11 through 18 and this Section 2.1 of this Agreement will take
effect when the Agreement is executed by Micron and Apple.


 


2.2           The
remaining provisions of this Agreement will not take effect unless and until
the closing of the transaction to form the Manufacturer occurs (the “Effective Date”).  If the closing of the transaction to form the
Manufacturer does not occur before [***], the Parties agree to amend Exhibit A
with respect to the Supply Commitment


 





















 


for each calendar quarter to reflect the
delay between the date of the beginning of the Supply Commitment specified in Exhibit A
and the actual closing date of such transaction on a day for day basis.  If the closing of the transaction to form the
Manufacturer does not occur by [***], Apple may elect not to enter into the
provisions of this Agreement that are not effective under Section 2.1 by
providing written notice to Micron by [***]. 
If the closing of the transaction to form the Manufacturer does not
occur by [***], Micron may elect not to enter into the provisions of this
Agreement that are not effective under Section 2.1 by providing written
notice to Apple by [***].  In the event
that the closing of the transaction to form the Manufacturer does not occur by
[***], then the provisions of the Agreement that are not effective under Section 2.1
shall not take effect and this Agreement shall terminate. If the remaining
provisions of this Agreement become effective as provided in this Section 2.2,
this Agreement will expire on December 31, 2010, unless terminated sooner
in accordance with Sections 2.3 or 2.4 below or by written agreement of the
Parties.


 


2.3           Apple
may terminate this Agreement if: (i) Micron materially breaches this
Agreement and fails to cure such breach within 30 days after receipt of written
notice from Apple; or (ii) Micron or the Manufacturer files or has filed
against it a petition in bankruptcy, has a receiver appointed to handle its
assets or affairs, or makes or attempts to make an assignment for the benefit
of creditors, or is dissolved (other than in connection with the acquisition of
all of the capital stock or substantially all of the assets of Micron).


 


2.4           Micron
may terminate this Agreement if: (i) Apple materially breaches this
Agreement and fails to cure such breach within 30 days after receipt of written
notice from Micron; or (ii) Apple files or has filed against it a petition
in bankruptcy, has a receiver appointed to handle its assets or affairs, or
makes or attempts to make an assignment for the benefit of creditors, or is
dissolved (other than in connection with the acquisition of all of the capital
stock or substantially all of the assets of Apple).


 


2.5           The
last sentence of Section 3.3, and Sections 3.6, 7.3, 9, and 11 through 18
of this Agreement shall survive termination or expiration of this
Agreement.   Section 3.4 will
survive with respect to the last calendar quarter of the term of the Agreement
until the calculation is made with respect to such quarter and Section 10
will survive for a period of two (2) years after the termination or
expiration date.


 


3.             Supply
Commitment by Micron


 


3.1           Micron
agrees to supply to Apple the number of gigabytes (“GBs”)
identified in Exhibit A as the supply commitment for each calendar quarter
(as may be adjusted under Sections 2 or 3 of Exhibit A), (the “Supply Commitment”).  Micron will accept and fulfill all P.O.s (as
defined in Section 5.4) for Micron Products (as defined in Exhibit D)
placed by Apple in accordance with Section 5.4, except to the extent the
total GBs ordered for delivery in a calendar quarter exceeds the Supply
Commitment for that calendar quarter.  At
least [***] ([***]) days prior to each calendar quarter,


 


2





















 


Micron will provide to Apple written notice
of (i) the total number of GBs that Micron will make available for sale to
Apple during such quarter and (ii) the number of GBs of each gigabit die
density available for use in such Micron Products during such quarter,
consistent with the Density Road Map (as defined in Section 8.1).


 


3.2           (a) 
If Micron reasonably believes it will be unable to meet the Supply Commitment
in any calendar quarter during the term of this Agreement, Micron will
immediately notify Apple in writing of such shortage and the GBs it will be
able to supply to Apple if Micron takes the actions set forth in Section 3.2(c) below.


 


(b)  Within [***] ([***]) business days
after receipt of such notification issued under Section 3.2(a), Apple may
[***].


 


(c)  If Apple [***], Micron will, to the
extent necessary to meet such P.O.s: (i) direct the Manufacturer to use
Micron’s allocation of wafer starts, work in process (if possible), and the
resulting output from such wafer starts to manufacture Micron Products; and (ii) make
available for sale to Apple finished Micron Products delivered to Micron or
held by the Manufacturer for Micron for such quarter, and any Micron Products
manufactured for Micron in
previous quarters for later delivery to Apple, up to [***].


 


3.3           If
in any calendar quarter Micron did not meet at least [***]% of the Supply
Commitment for such calendar quarter for any reason, and:


 


(a) Micron provided notice under Section 3.2(a) and
Apple [***] P.O.s for Micron Product, as required by Section 3.2(b), that
Micron was unable to fulfill in such quarter; or


 


(b) Micron provided notice under Section 3.2(a),
Apple [***] P.O.s for Micron Product, as required by Section 3.2(b), and
Apple provided written notice representing that it would have placed P.O.s up
to the Supply Commitment but did not due to the notification it received from
Micron under Section 3.2(a); or


 


(c) Micron did not provide notice under Section 3.2(a),


 


then Micron will promptly reimburse the
portion of the Pre-Payment equal to the sum of:


 


(i)    to
the extent Apple is able to purchase NAND flash products [***], the difference
between (x) [***] and (y) [***]; and


 


3





















 


(ii)   to
the extent Apple is able to purchase NAND flash products [***], the difference
between (x) [***], and (y) [***]; and


 


(iii)  to
the extent (x) Apple is unable to purchase NAND flash products [***], (y) Apple
provides Micron written notice representing that it actively contacted its
other suppliers and other third party suppliers of NAND flash products to
replace the Micron Products Apple placed P.O.s for, in accordance with Section 5.4,
for delivery during such quarter that Micron was unable to fulfill during such
quarter (or would have placed P.O.s for, pursuant to Section 5.4, for
delivery during such quarter as identified in the notice provided by Apple
under Section 3.3(b) above), but NAND flash products were not
available for sale from such suppliers, and (z) [***]; and


 


(iv)  the
product of (x) [***] GB and (y) [***] USD. 
For purposes of this Section 3.3(iv), “Shortfall”
shall mean the difference between the Supply Commitment for such quarter and
the number of GBs of Micron Products purchased by Apple during such quarter.


 


Notwithstanding anything herein to the
contrary, in the event Micron has paid to Apple [***], Micron shall have no
further liability under this Section 3.3.


 


3.4           If
in any calendar quarter Micron failed to meet the Supply Commitment for such
quarter, but (A) had GBs available which could have been supplied to Apple
[***] (unless otherwise permitted under additional purchase terms and
conditions specifically referencing this Agreement and signed by authorized
representatives of both parties) or (B) [***] (unless otherwise permitted
under additional purchase terms and


 


4





















 


conditions specifically referencing this
Agreement and signed by authorized representatives of both parties), and if (i) the
actual percentage of GBs that Micron [***] to Apple was less than [***]% if
such calendar quarter was in [***], [***]% if in [***], or [***]% if in [***],
of Micron’s total GB output from the Manufacturer for such quarter; (ii) the
then current Supply Commitment is greater than [***]% of the original Supply
Commitment set forth in Exhibit A, and (iii) Apple has placed P.O.s
in accordance with Section 5.4 for Micron Products [***] pursuant to Section 3.1
(not to exceed the Supply Commitment) and such P.O.s have not been cancelled
during the calendar quarter or re-scheduled for delivery after the calendar
quarter by Apple for any reason other than failure to meet the conditions in Section 4.2
(such an occurrence referred to as a “Willful Failure to Supply”),
then Micron will promptly:


 


(a) pay Apple [***] above; provided,
however, that if the Willful Failure to Supply occurs in a calendar quarter
immediately after a calendar quarter in which Apple did not meet the conditions
set forth in Section 3.4(iii) above, the [***] shall be as follows:


 


(i) in the event that [***].


 


(ii) in the event that it is determined
under Section 3.4(a)(i) [***] then nevertheless Micron [***] under
this Section 3.4 if the number of GB of Micron Products purchased by Apple
during the quarter in which the Willful Failure to Supply occurs is greater
than an amount equal to (“[***]”):  (1) the
product of: [***] and (B) the Supply Commitment for the quarter in which
the Willful Failure to Supply occurs; or (2) if there was a calculation


 


5





















 


under clause (1) immediately above in
the prior quarter, the product of [***], the Supply Commitment for the most
recent calendar quarter in which the Willful Failure to Supply occurs and
[***],  provided such product does not
exceed the Supply Commitment for that quarter; or (3) if there was a
calculation under clause (2) immediately above in the prior quarter, the
product of the [***], the Supply Commitment for the most recent calendar
quarter in which the Willful Failure to Supply occurs and [***], provided such
product does not exceed the Supply Commitment for that quarter.  [***].


 


(iii) in the event that it is determined
under Section 3.4(a)(i) or (ii) [***] then the volume of GB
subject to [***] shall be equal to the difference between (A) the lesser
of (X) [***] and (Y) the number of GB of Micron Products which Apple placed
P.O.s for Micron Products in accordance with Section 5.4 to be delivered
during such quarter and (B) the number of GB of Micron Products which Apple
purchased during such quarter (the “[***]”), Micron shall pay to Apple [***]
under this Section 3.4 an amount equal to, [***], the difference between (1) [***]
and (2) [***].  In each consecutive
quarter thereafter in which a Willful Failure to Supply occurs, the volume of
GBs subject to [***] shall be the product of [***], the Supply Commitment for
the most recent calendar quarter in which the Willful Failure to Supply occurs
and [***], but in no event shall the volume of GB subject to the [***] in any
given quarter exceed the Supply Commitment for that quarter.


 


(b) if the aggregate amount to be paid
by Micron in accordance with subsection (a) exceeds
a lifetime cap of [***] US Dollars ($[***] USD) (“[***]”), then, in addition to the amount of such cap, Micron
shall reimburse Apple all of remaining Pre-Payment as of the date the cap is
exceeded.


 


6





















 


(c) the Parties agree that the [***]
plus the reimbursement of the remaining Pre-Payment as of the date the [***] is
exceeded, shall be the sole and exclusive remedy available to Apple under this Section 3.4.  Nothing provided in this Section 3.4
will affect Micron’s obligations with respect to the Supply Commitment for any
calendar quarter.


 


3.5           Micron
is not obligated to sell any Micron Products in excess of the Supply Commitment
to Apple either on an annual or a quarterly basis under the terms and
conditions of this Agreement.  Further,
nothing in this Section 3 adjusts the Supply Commitment.


 


3.6           The
Parties agree [***].


 


4.             Purchase
Commitment by Apple


 


4.1           Subject
to Section 4.2 and 5.4 below, Apple agrees to purchase from Micron in each
calendar quarter [***] (as defined below) for such calendar quarter [***];
provided that the total amount in GBs of the highest density of NAND flash die
contained in the Micron Products ordered pursuant to a P.O. for Micron
Products (when aggregated with the other P.O.s for such Micron Products for
delivery in such quarter) placed in accordance with Section 5.4 does not
exceed the product of (i) the percentage set forth in the Density Roadmap
for such die density during such quarter; and (ii) the Supply Commitment
for such quarter.  [***].  For the last two quarters of [***], and for
the years [***], NAND flash products [***].


 


4.2           Micron’s [***] and Apple’s obligation to
meet its Purchase Commitment for a particular quarter are expressly conditioned
upon:  (i) availability of Micron
Products that are qualified for use in Apple Products; provided that Apple does
not unreasonably withhold qualification; (ii) such Micron Products being
available for delivery in time to meet the delivery date requested in
accordance with the P.O. and forecast procedures; and (iii) conformance
of such Micron Products with mutually agreed upon specifications and quality
requirements.


 


7





















 


If an Micron Product fails to meet applicable
qualification requirements after being qualified by Apple, Apple will have no
obligation to purchase such Micron Product from Micron unless and until Apple
has re-qualified such Micron Product for use in Apple Products, provided that
Apple does not unreasonably withhold such re-qualification.  Apple will include Micron Products in Apple’s
component qualification process with NAND flash products provided by other
suppliers, provided that the Micron Products meet Apple’s minimum requirements
for inclusion in such process and that samples are provided on a timely
basis.  During the QTM’s (as defined in Section 8.3
below) the Parties will discuss the schedule and the timing needed to get
samples of Micron Products into Apple’s qualification process.


 


5.             Forecast
and Purchase Orders


 


5.1           Each
[***], Apple will provide Micron with a [***] rolling forecast of its demand
for Micron Products (the “[***]”).  The [***]
Forecast will be prepared in good faith and reflect Apple’s best estimate of
its demand for Micron Products.  Each
[***] Forecast will show volume and density requirements for the first [***] of
such Forecast by week and for the second through [***] by month.  [***] Forecasts will be delivered no later
than November 30, February 28, May 30, and August 30 of
each year for the [***] commencing on the first, second, third and fourth
calendar [***], respectively; provided, however, that the first [***] Forecast
will be delivered upon payment of the Initial Pre-Payment under Section 7.1
for the subsequent [***]. Micron will respond with a statement of supply
availability for the [***] covered by such [***] Forecast within [***] ([***])
business days of receipt of the [***] Forecast. 
The supply availability will be prepared in good faith and reflect
Micron’s best estimate of its ability to supply Micron Products during such
period.


 


5.2           On
or before [***], Apple will give Micron a forecast for Apple’s demand for
Micron Products, including volume and density, for the upcoming [***] (the “[***] Forecasts”). The [***] Forecasts
will include forecasts for current and future Micron Products.


 


5.3           The
rolling [***] Forecast and the [***] Forecast provided by Apple are for
planning purposes only and do not constitute an obligation to purchase.


 


5.4           Micron
will accept all purchase orders and, in the case of blanket purchase orders,
subsequent shipping orders (“P.O.s”),
submitted by Apple for Micron Products within the Supply Commitment, except
that (i) if the total GBs of Micron Product in any P.O. for a quarter
would exceed the Supply Commitment for such quarter, Micron shall not be
obligated to accept such P.O. for such excess Micron Product;  (ii) Micron shall not be obligated to
accept any P.O. to the extent such P.O. would cause the amount of
Micron Products to be delivered to Apple in the [***] or [***] month of a
calendar quarter, respectively, to exceed [***] percent ([***]%) of the Supply
Commitment for such quarter; and (iii) Micron shall not be obligated to
accept any P.O. in any calendar quarter to the extent that the total GBs
of the highest density of NAND flash die contained in the Micron Products
ordered pursuant to a P.O. for


 


8





















 


Micron Products (when aggregated with the other P.O.s for such Micron
Products for delivery during such quarter) placed in accordance with this Section 5.4
exceeds the product of (i) the percentage set forth in the Density Roadmap
for such die density during such quarter; and (ii) the Supply Commitment
for such quarter.  Micron will drop ship
Micron Products to any location designated by Apple in a P.O. provided
that Apple provides Micron with reasonable advance notice of a request to drop
ship to a location Micron has not previously shipped to under this
Agreement.  Apple will issue P.O.s for
Micron Products no less than [***] ([***]) days prior to shipment, unless the
Parties agree in writing to a different time period. [***].


 


6.             Pricing


 


6.1           Subject
to Section 2.1 of Exhibit B, the price at which Micron will offer and
sell Micron Products to Apple for incorporation into Apple Products under this
Agreement will be as set forth in Exhibit B.  [***].


 


7.             Pre-Payment


 


7.1           Apple
will pay Micron Two Hundred Fifty Million U.S. Dollars ($250,000,000 USD) (the “Initial Pre-Payment”): 
(i) on January 10, 2006 if the closing of the transaction to
form the Manufacturer occurs before January 1, 2006; or (ii) if the
closing of the transaction to form the Manufacturer occurs on or after January 1,
2006, within ten days after the closing of such transaction. If the Initial
Pre-Payment is not timely paid, Micron may terminate this Agreement effective
five (5) days after written notice to Apple.  The Initial Pre-Payment, together with any
additional amounts paid by Apple to Micron as additions to the Initial
Pre-Payment under Exhibit A shall be referred to herein as the “Pre-Payment”.  Micron
shall be entitled to any interest earned on the Pre-Payment once paid by Apple.


 


7.2           Beginning
on [***], the Pre-Payment will be applied by Micron on a dollar for dollar
basis for those purchases of Micron Products by Apple, during a calendar year
beginning with the first dollar of such purchases until such purchases equals
[***]% of the Pre-Payment (the “Annual Credit Amount”).
In the event Apple does not purchase Micron Products equal in value to the
Annual Credit Amount during


 


9





















 


such calendar year, any remaining portion
thereof will be added to the Annual Credit Amount for the next calendar year.


 


7.3           If
any portion of the Pre-Payment is remaining and has not otherwise been
reimbursed on the earlier of December 31, 2010 and the termination of this
Agreement, Micron will pay Apple the remaining portion of the Pre-Payment
within 30 days after such date.


 


8.             Micron
Products and Apple Products


 


8.1           This
Agreement, including the pricing of Micron Product as set forth in Section 6,
shall apply to Micron Products purchased by Apple for use in Apple
Products.  Micron Products and Apple
Products are defined in Exhibit D.


 


8.2           Any
products ordered or purchased by Apple from Micron that are not Micron Products
are not subject to the terms and conditions of this Agreement.


 


8.3           At
least once per calendar quarter Apple’s CTO group and Micron’s CTO group will
hold a technical meeting (“QTM”) to
discuss Apple’s future requirements, and Micron’s future supply outlook,
including, without limitation, any proposed changes to the Density Road Map.


 


9.             Non-Disclosure


 


9.1           The
Parties will maintain the confidentiality of the existence of this Agreement,
the terms and conditions thereof, and information exchanged in connection with
the Agreement in accordance with the terms of the confidential non-disclosure
agreement entered into between Apple and Micron dated March 9, 1999, as
amended.


 


9.2           Micron
and Apple agree that there shall be no public statements or releases regarding
the proposed transaction, except as in the judgment of counsel is required by
law to be made or as mutually agreed by the Parties.


 


9.3           If
it is determined that disclosure is required by law, the person making such
disclosure will notify the other Party in advance of any such disclosure, will coordinate
with the others with respect to the content of such disclosure and will
disclose only such information as is legally required to be disclosed in the
opinion of legal counsel for the disclosing Party.


 


9.4           Subject
to the foregoing, the Parties to this Agreement will cooperate with each other
to coordinate all such public statements and releases to be made with respect
to the purchase & supply transactions contemplated hereby.


 


10.          Audit


 


Either Apple or Micron may appoint an independent auditor reasonably
acceptable to the other party to review the other party’s records no more than
once in any calendar year (unless


 


10





















 


the results of an audit disclose material irregularities, in which
case, the auditing party may conduct quarterly audits for the next three
quarters) to confirm that the other party has satisfied its obligations under
this Agreement with regard to price and quantity commitments. The audited party
will ensure that an employee who is knowledgeable with relevant records and
business practices is available to facilitate any audit and will cooperate with
the auditor’s reasonable requests. The requesting party will pay for any audit
unless the audit discloses that the other party materially breached such an
obligation under this Agreement, in which case the other party will pay for the
audit.  Micron represents
that, as of the consummation of the transaction between Micron and Intel
regarding the formation of the Manufacturer, Micron will
have the right to audit the Manufacturer to confirm that the Manufacturer has
provided the percentage of products produced by the Manufacturer to Micron as set forth in Section 1.1
and, as applicable, has complied with Micron’s direction to take the actions set
forth in Section 3.2(c).  Upon Apple’s
request, Micron will exercise such audit
rights and make available the results of such audit to Apple.


 


11.          Assignments


 


The Agreement shall be binding upon, and
inure to the benefit of, the successors, representatives, and administrators of
the parties.  Neither party may assign
this Agreement without the other party’s prior written consent except to an
acquiring party in connection with (i) the sale of a majority of the
capital stock or all or substantially all of the assets of such party or (ii) the
sale of all or substantially all of its assets related to this Agreement, in
the case of Apple or Micron, or of its interest in the Manufacturer, in the
case of Micron, by way of merger or acquisition provided such assignee assumes
such party’s rights and obligations under this Agreement; provided, however,
that:


 


(i)            [***];


 


(ii)           Apple
may terminate this Agreement [***] effective immediately upon written notice if
Micron assigns this Agreement to [***]; and


 


(iii)          Micron
may terminate this Agreement [***] effective immediately upon written notice if
Apple assigns this Agreement to [***].


 


In each case,
such party shall exercise its right to terminate under this Section 11
within [***] after such assignment. In the event consent is required above, any
purported assignment without the required written consent shall be void and of
no effect.


 


(iv)          Micron may not divest any portion of its
ownership interest in the Manufacturer, or its rights in the wafer starts of
the Manufacturer (51%, as of the Effective Date), to


 


11





















 


any third party other than Intel without
Apple’s prior written consent except in connection with a transaction described
above.


 


12.          Other
Terms and Conditions


 


This Agreement and the Micron Products purchased hereunder are subject
to any additional purchase terms and conditions agreed to in a written
agreement specifically referencing this Agreement and signed by authorized
representatives of both parties, which are incorporated herein by reference.


 


13.          Governing
Law


 


The
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced in accordance with the laws of the State of California
as applied to agreements entered into and to be performed entirely within
California between California residents, without regard to conflicts of law
principles.  The parties expressly agree
that the provisions of the United Nations Convention on Contracts for the
International Sale of Goods will not apply to the Agreement or to their
relationship.


 


14.          Dispute
Resolution, Jurisdiction and Venue


 


If
there is a dispute between the parties (whether or not the dispute arises out
of or relates to the Agreement), the parties agree that they will first attempt
to resolve the dispute through one senior management member of each party.
 If they are unable to do so within 60 days after the complaining party’s
written notice to the other party, the parties will then seek to resolve the
dispute through non-binding mediation conducted in Santa Clara County or San
Francisco County, California.  Each party must bear its own expenses in
connection with the mediation and must share equally the fees and expenses of
the mediator.  If the parties are unable to resolve the dispute within 60
days after commencing mediation, either party may commence litigation in the
state or federal courts in Santa Clara County, California.  The parties irrevocably submit to the
exclusive jurisdiction of those courts and agree that final judgment in any
action or proceeding brought in such courts will be conclusive and may be
enforced in any other jurisdiction by suit on the judgment (a certified copy of
which will be conclusive evidence of the judgment) or in any other manner provided
by law.  Process served personally or by
registered or certified mail, return receipt requested, will constitute
adequate service of process in any such action, suit or proceeding.  Each party irrevocably waives to the fullest
extent permitted by applicable law (i) any objection it may have to the
laying of venue in any court referred to above; (ii) any claim that any
such action or proceeding has been brought in an inconvenient forum; and (iii) any
immunity that it or its assets may have from any suit, execution, attachment
(whether provisional or final, in aid of execution, before judgment or
otherwise) or other legal process. Notwithstanding the foregoing, either party
may seek equitable relief in order to protect its confidential information or
intellectual property at any time, provided it does so in the state or federal
courts in Santa Clara County, California (and only those courts).  The parties hereby waive any bond
requirements for obtaining equitable relief. 
The confidentiality provisions of the Agreement will be enforceable
under the provisions of the California Uniform Trade Secrets Act, California
Civil Code Section 3426, as amended.


 


12





















 


15.          Headings


 


The section headings
used in the Agreement are used for convenience only and are not to be
considered in construing or interpreting the Agreement.


 


16.          Severability


 


If a
court of competent jurisdiction finds any provision of the Agreement unlawful
or unenforceable, that provision will be enforced to the maximum extent
permissible so as to effect the intent of the parties, and the remainder of the
Agreement will continue in full force and effect.


 


17.          Counterparts


 


The
Agreement may be executed in one or more counterparts, each of which will be
deemed an original, but which collectively will constitute one and the same
instrument.


 


18.          Amendments


 


Except
as specifically provided herein, the Agreement may be modified only by a
written amendment referring to the Agreement and signed by authorized representatives
of each party.


 


IN WITNESS WHEREOF,
the Parties have caused their duly authorized representatives to execute this
Agreement as of the Effective Date.


 


	
  Apple

  	
   

  	
   

  	
  Micron

  
	
   

  	
   

  
	
  By:

  	
  /s/ TIM D. COOK

  	
   

  	
   

  	
  By:

  	
  /s/ STEVEN R. APPLETON

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Tim D. Cook

  	
  Name: Steven R. Appleton

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Executive Vice President,

  	
  Title: Chief Executive Officer and
  President

  
	
   

  	
  World-Wide Sales and Operations

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  October 13, 2005

  	
  Date: October 13, 2005

  
									



 


13





















 


EXHIBIT A


Purchase
Commitment, Supply Commitment and Contract Price


 


1.             Purchase
Commitment, Supply Commitment & Contract Price by Calendar Quarter


 


	
  Item

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  
	
   

  	
   

  	
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchase Commitment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Supply Commitment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Contract Price

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  2007

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchase Commitment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Supply Commitment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Contract Price

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  2008

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchase Commitment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Supply Commitment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Contract Price

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  2009

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchase Commitment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Supply Commitment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Contract Price

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  2010

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchase Commitment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Supply Commitment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Contract Price

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  



 


The Supply Commitment numbers above are in millions of GBs.  Contract Prices are for one GB equivalents.


 


2.             Transfers


 


2.1           If
the allocation of Manufacturer wafer starts between Micron and Intel changes
for any reason, Micron shall
promptly notify Apple as to the amount of the increase or decrease, and Micron’s
Supply Commitment, Apple’s Purchase Commitment, and the Pre-Payment shall
decrease or increase, as the case may be, in a proportionate manner for all
calendar quarters of this Agreement after such change as follows:


 


(a)   Micron’s
Supply Commitment shall be revised to equal the [***];


 


(b)   Apple’s
Purchase Commitment shall be revised to equal [***];


 


14





















 


2.2           If
Micron’s Supply Commitment is reduced, Micron will reimburse Apple the amount
of the Pre-Payment equal [***]; and


 


2.3           If
Micron’s Supply Commitment is increased, Apple shall pay to Micron, as
additional Pre-Payment, the amount [***].


 


3.             Supply
Commitment Reduction


 


Micron’s obligations with respect to the
Supply Commitment will be reduced as follows:


 


3.1           The
“Percentage Purchased” means the
percentage equal [***].


 


3.2           The
“Percentage Available” means the
lesser of:  [***].


 


3.3           The
“Purchase Commitment Adjustment”
means the percentage equal to [***].


 


3.4           The
initial “Adjustment Threshold” is
[***]%.


 


3.5           Subject
to Section 3.6 below, if the average Purchase Commitment Adjustment for
any [***] after [***] is less than the Adjustment Threshold, then Micron may, upon notice to Apple no later
than [***] after the end of the [***], reduce the Supply Commitment for all
remaining [***] during the term of this Agreement by the lesser of [***].


 


15





















 


3.6           If
the average Percentage Available for any [***] is less than the Adjustment
Threshold and Apple has placed P.O.s, in accordance with Section 5.4 of
the Agreement, for the total number of GBs made available for sale by Micron
during each of the [***] pursuant to Section 3.1 of the Agreement (or if a
notice has been provided by Micron pursuant to Section 3.2(a) of the
Agreement, the number of GBs made available for sale pursuant to Section 3.2(a) of
the Agreement) that meet the conditions set forth in Section 4.2 of the
Agreement; and (ii) indicated pursuant to Section 3.3(b) of the
Agreement, that Apple would have ordered additional Micron Products in each of
such quarters if Micron had made more GBs available for sale,  then the Adjustment Threshold will be reduced
for all remaining calendar quarters during the term of this Agreement by
[***]%.


 


3.7           In
no event will the Supply Commitment for any calendar quarter be reduced below
[***]% of the original Supply Commitment set forth in Section 1 above for
such quarter.  In no event will the
Adjustment Threshold be reduced below [***]%.


 


3.8           In
the event that the Supply Commitment is reduced under this Section 3,
Micron will reimburse Apple [***].


 


3.9           To
facilitate the calculation of the foregoing, Micron will use reasonable efforts
to provide Apple with quarterly reports no later than [***] after the end of
each calendar quarter, setting forth (i) the basis for calculation of the
[***]; and (ii) [***].


 


3.10         [***].


 


4.             Purchase
Commitment in [***]


 


Micron only plans to make available for sale
Micron Products with [***] during the [***], and [***] during [***].  In the event Apple has a need to purchase any
GBs of NAND flash products [***], Apple agrees to [***].  During such period, Apple will provide Micron
written notice specifying the number of GBs of Micron Products it will require
at least [***] ([***]) days before the required delivery date.  In the event Micron provides written notice
within five (5) business days after Apple’s written notice of the amount
of GBs Micron will supply to Apple, Apple shall, within five (5) business
days after Micron’s response, place a P.O. in accordance with Section 5.4
of the Agreement for


 


16





















 


delivery of the Micron Products specified in
such notice, and Micron shall accept such P.O. in accordance with Section 5.4
of the Agreement.  If Micron does not
provide written notice that it is [***] under this Section 4 within five (5) business
days after Apple’s written notice, Apple shall be entitled to [***].


 


17





















 


EXHIBIT B



Pricing
Exhibit


 


The price of
Micron Products purchased under this Agreement (the “Purchase
Price”) will be the lesser of: (a) the contract price set
forth in Exhibit A for the applicable calendar quarter (the “Contract Price”); or (b) the
[***].


 


1.             [***]


 


[***].


 


[***].


 


2.             Accrued
[***]


 


2.1           If,
at any time Micron Products are purchased [***].


 


18





















 


2.2           [***].


 


3.             Invoice
Price


 


Micron will invoice Apple at
Purchase Price in effect at the beginning of the calendar quarter (the “Invoice Price”), but will reconcile
pricing as follows:


 


[***].


 


19





















 


EXHIBIT C


 


The percentages shown are
percentages of gigabytes (GB) of output by product density.


 


Density Road Map


 


[***].


 


20





















 


EXHIBIT D


Micron
Products and Apple Products


 


1.             “Micron Products” means NAND flash
products available in packaging and pinouts [***] based on the densities
available in accordance with the density roadmap in Exhibit C, which
roadmap may be modified from time to time by Micron, upon agreement by Apple,
which agreement by Apple shall not be unreasonably withheld or delayed (the “Density
Road Map”), and other NAND flash products mutually agreed upon
by the Parties. Micron will
promptly notify Apple of changes in the NAND flash die densities being produced
by the Manufacturer and propose updates to the Density Road Map to reflect such
changes provided Micron fulfills its obligations under Section 3.2(c).


 


2.             “Apple Products” means [***].


 


3.             Apple
shall [***].


 


21





















 


4.             If
Apple requests that Micron supply [***].


 


22