Exhibit 10.1


 


BUSINESS AGREEMENT


 


 


BY AND BETWEEN


 


 


INTEL CORPORATION


 


a Delaware Corporation


 


 


and


 


 


MICRON TECHNOLOGY, INC.


 


a Delaware Corporation


 


 


Dated as of 24 September, 2003


 


CERTAIN
INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.  CONFIDENTIAL TREATEMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


 


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BUSINESS AGREEMENT


 


NOTE:  Information in this document marked with an “[*]” has been
omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the
omitted portions.


 


This Agreement (the “Agreement” or the “Business
Agreement”) is entered into as of the 24th day of September, 2003, by and
between MICRON Technology, Inc., a Delaware corporation, having a place of
business at 8000 S. Federal Way, Boise, ID 83716-9632  (hereinafter
“MICRON”), and INTEL Corporation, a Delaware corporation, having its principal
place of business at 2200 Mission College Blvd., Santa Clara, CA 95052
(hereinafter “INTEL”).  MICRON and INTEL
are sometimes referred to as a “Party” and collectively referred to as the
“Parties”.


 


RECITALS


 


WHEREAS,
INTEL
desires to make a significant investment in certain MICRON securities subject
to the terms and conditions set forth in certain investment agreements; and


 


WHEREAS, MICRON desires to use
the proceeds from the INTEL investment for the purposes set forth in this
Agreement;


 


NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the
Parties agree as follows:


 


DEFINITIONS


 


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


 


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


 


“Call
on Capacity” means INTEL’s right (or that of a permitted
designee hereunder) to purchase a portion of MICRON’s Output of Products as set
forth in Section 6.1 of this Agreement.


 


“Capacity” means
MICRON’s capacity to manufacture, assemble and test discrete devices including
such capacity of its Subsidiaries and Affiliates
and [*] of such capacity of TECH Semiconductor Singapore Pte. Ltd.


 


“Capital
Expenditures” means the amount paid for the
acquisition of equipment and facilities computed from information presented in
MICRON’s financial statements periodically filed with the U.S. Securities and
Exchange Commission as the sum of 1) expenditures for property, plant and
equipment and 2) payments on equipment contracts.


 












[*]  Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatement has been requested with respect to the omitted
portions.


 


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“Change of Control” means a Change in Control as defined in the
Securities Rights Agreement.


 


“Closing” means the
date and time specified in the Securities Purchase Agreement.


 


“Commercialize” means
Products available for sale by MICRON.


 


“Common Stock” means
the common stock, par value $0.10 per share, of MICRON.


 


“Corporate Purchase
Agreement” or “CPA”
means that agreement titled “Purchase
Agreement – Goods”  of
even date herewith (or such other date as may be set forth therein) entered
into between MICRON Semiconductor Products, Inc. (“MSP”), a Subsidiary of
MICRON, and INTEL, as such agreement may be amended from time to time, pursuant
to which MSP will sell and INTEL will purchase Products.  The CPA is designated by INTEL as # 52889.


 


“DRAM” means
a Product with a principle function of memory storage that is a dynamic random
access memory.


 


“Derivative Products”
means Products that have undergone a change with respect to module type, bus
width, density, package types, speed/frequency and other changes of similar
scope.


 


“DDR2 Products” means
DRAM Products that substantially comply with the memory device standards
established for DDR2 products by JEDEC.


 


“Effective Date”
means the first date set forth above.


 


“Finished Goods Inventory Measurement Date”
means each date on which MICRON measures its finished goods inventory of DDR2
Product.


 


“Inventory Limitation”
means the suspension or limitation of MICRON’s volume production of DDR2 pursuant
to Section 2.3 hereof.


 


“JEDEC” means the
standards setting body known as Joint Electron Device Engineering Council or
any successor thereof.


 


“Major DRAM Supplier”
means an entity having an average world-wide DRAM market segment share of
greater than ten percent (10%), measured in DRAM revenue, as determined and
reported by International Data Corporation for the six (6) month period
immediately preceding the month in which MICRON initiates a development project
pursuant to Section 4.1 hereof.


 


“Output”
means MICRON’s total production
of discrete components, other than CMOS imagers and NOR flash devices, received
into finished goods (excluding off-spec devices received into finished goods
for MICRON’s SpecTek division) for a given month expressed in


 


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terms of “equivalent units” of
256Mbit devices, and
with respect to projections of Output as reasonably adjusted by MICRON to
account for disruptions in production reasonably likely to occur.  MICRON’s Output for a given month
shall include [*] of the monthly production of discrete components from TECH
Semiconductor Singapore Pte. Ltd.


 


“Percentage Call on Capacity”
means as of each March 1st and September 1st, the
percentage derived by dividing (A) by (B), where (A) equals the total number of
Rights owned by INTEL on such date and (B) equals the total number of shares of
Common Stock of MICRON as measured on a “fully diluted” and “as converted”
basis as of such date.


 


“Product”
means any product developed and/or manufactured by MICRON during the term of
this Agreement other than (a) CMOS imagers, (b) NOR flash, and (c) for the
avoidance of doubt, any other product purchased from third parties by Crucial
Technology for purposes of resale to retail customers.


 


“Product Family” means Products defined by memory type and density.  Examples of separate Product Families
include:  256Mb SDRAM, 64Mb PSDRAM and
128Mb DDR.


 


“Reasonable Efforts”
means, in regard to Sections 4.2., 4.3 and 4.4 of this Agreement, the allocation
of resources consistent with the level of resources allocated by MICRON for
similar high-priority projects of like complexity.


 


“Rights” means the securities issuable pursuant
to the Stock Rights Agreement having the rights, preferences, privileges and restrictions
defined therein.


 


“Sample” means,
as to any specific part type, a device having no known material deviations from
the datasheet specifications and which is available for sending to a third
party but which carries no representation or warranty of any kind, including
any representation or warranty, express or implied, of merchantability or
fitness for a particular purpose.  The
Parties acknowledge and agree that Samples have not been subjected to MICRON’s quality
assurance or qualification processes.


 


“Securities Purchase Agreement”
means that agreement titled Securities
Purchase Agreement of even date herewith entered into between MICRON
and INTEL Capital Corporation, a subsidiary of INTEL (“INTEL CAPITAL”), as such
agreement may be amended from time to time.


 


“Securities Rights Agreement”
means that agreement titled Securities
Rights and Restrictions Agreement of even date herewith entered into
between MICRON and INTEL CAPITAL, as such agreement may be amended from time to
time.


 


“Stock Rights Agreement”
means that agreement titled Stock Rights
Agreement of even date herewith entered into between MICRON and
INTEL CAPITAL, as such agreement may be amended from time to time.


 












[*]  Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatement has been requested with respect to the omitted
portions.


 


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“Subsidiary” of a
person means any corporation or other entity of which the securities or other ownership
interest having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are owned directly or
indirectly by such person.


 


Unless otherwise
explicitly noted, any time period expressed in terms of year or quarter in this
Agreement means the calendar year or calendar quarter, respectively.


 


1.0                               300mm
WAFER CAPACITY


 


1.1                               MICRON
shall incur Capital Expenditures as provided in Schedule 1.1 hereto.


 


1.2                               MICRON
shall achieve Capacity on its 300mm DRAM wafer production lines as provided in
Schedule 1.2 hereto.


 


 


2.0                               DDR2
REQUIREMENTS


 


MICRON shall
provide Samples to INTEL and achieve volume production of DDR2 pursuant to
the  schedules referenced in Sections
2.1 and 2.2 below:


 


2.1                               DDR2
Product Samples:


 


See Schedule 2.1 hereto.


 


2.2                               DDR2
Volume Production:


 


See Schedule 2.2 hereto.


 


2.3                               Inventory Cut Off – Forward Looking. 
Notwithstanding the production
requirements specified in Section 2.2 above and subsequent to [*], following
consultation with and notice to INTEL, MICRON shall not be required to produce
DDR2 at a rate that may result in finished goods inventory of such devices
exceeding sixty (60) days projected sales thereof (measured from the Finished
Goods Inventory Measurement Date and based upon the average of MICRON’s DDR2
demand forecast for the ninety (90) day period commencing with the Finished
Goods Inventory Measurement Date and INTEL’s projections (worldwide demand
forecast adjusted for an assumed MICRON [*] market segment share for DDR2
products) for the same  ninety (90) day
period).  In the event an Inventory
Limitation is implemented, MICRON will review customer forecasts and INTEL’S
projections on a weekly basis until such time as MICRON determines that an
Inventory Limitation is no longer applicable.


 


In the
event an Inventory Limitation is implemented for one hundred eighty (180)
consecutive days or less, MICRON shall, within ninety (90) days from


 












[*]  Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatement has been requested with respect to the omitted
portions.


 


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the date
that the Inventory Limitation no longer applies (assuming no intervening
Inventory Limitation has occurred during such ninety (90) day period), return
to the minimum volume production set forth in Section 2.2 above applicable to
the quarter in which such ninetieth (90th) day falls.  If, however, an Inventory Limitation is
implemented for more than one hundred and eighty (180) consecutive days, MICRON
shall, within ninety (90) days from the date that the Inventory Limitation no
longer applies (assuming no intervening Inventory Limitation has occurred
during such ninety (90) day period), return to the minimum volume production
set forth in Section 2.2 above applicable to the quarter in which such
ninetieth (90th) day falls; provided, however, notwithstanding the
foregoing, MICRON shall not be liable for any damages under this Agreement for
failure to meet the production volumes of Section 2.2 above if, in order to
achieve the quarterly production of DDR2 Product for the quarter in which the
ninetieth (90th) day falls (with respect to an Inventory Limitation
in excess of one hundred and eighty (180) days), MICRON would have to increase
production volume of DDR2 Product (measured in 256 Mb equivalents) greater than
[*] based on the number of DDR2 256 Mb equivalents being produced by MICRON on
the last day of MICRON’s fiscal month immediately preceding the day on which
such Inventory Limitation is lifted.  
In such event, MICRON and INTEL shall adjust each of the relevant
remaining quarterly DDR2 volume production milestones to equal a production
ramp rate of no greater than [*].


 


3.0                               MANAGEMENT
MEETINGS AND ROADMAP ALIGNMENT


 


3.1                               Management
Review Meetings.  INTEL and MICRON
shall hold periodic executive level review meetings, as determined by the
Parties, but in no event less frequently than semi-annually, to discuss matters
strategic to each of the Parties, including but not limited to, the
implementation of this Agreement.


 


3.2                               Technology
Review Meetings.  INTEL and MICRON
shall hold a quarterly technology alignment and review meeting.


 


3.3                               Information Exchanged.  All information exchanged or discussed
pursuant to the meetings called for in Sections 3.1 and 3.2 hereof will be on a
confidential basis, subject to the provisions of an applicable corporate
non-disclosure agreement, and in accordance with applicable law.


 


3.4                               Milestone Communication. – MICRON
shall communicate no less often than each calendar quarter, to INTEL’s
identified manager, MICRON’s progress in achieving the milestones set forth in
Sections 1.0 and 2.0 of this Agreement. 
Additionally, commencing October 31, 2003 MICRON shall provide monthly
to INTEL, via email, in a mutually acceptable form, a report of progress toward
completion of the milestones set forth in Section 2.1, including any
significant problems incurred and any failures to meet such milestones.


 












[*]  Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatement has been requested with respect to the omitted
portions.


 


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4.0                               DRAM
PRODUCTS


 


4.1                               General. 
MICRON agrees to develop products to support any DRAM
architecture to which at least two Major DRAM Suppliers (determined at the time
of MICRON’s initiation of the development) first allocate development resources
commensurate with development projects of a similar scope which are ultimately
intended for Commercialization after the Effective Date.  Development projects related to such DRAM
architecture by MICRON will not count against INTEL’s right to direct certain
derivative projects under Section 4.2 below.


 


4.2                               Derivatives of Micron DRAM Products.  Upon INTEL’s request, which request may be
made [*] (measured from the Effective Date of this Agreement and each [*]
thereafter), MICRON shall use Reasonable Efforts, at its own expense, to
develop and Commercialize a Derivative Product according to specifications
delivered by INTEL to MICRON from a DRAM Product that is currently being
manufactured, marketed and sold by MICRON. 
MICRON shall not be obligated to undertake more than [*] to develop a
Derivative Product at any given time.


 


4.3                               Custom-Designed DRAM Products for INTEL.  Upon INTEL’s request, which request may be
made [*], MICRON shall use Reasonable Efforts, at its own expense, to develop
and Commercialize a custom-designed DRAM Product specified by INTEL that will
support specified INTEL products. 
MICRON shall commit one team of design engineers to the custom design
project.  INTEL shall provide MICRON
with the INTEL product designs, specifications and other information necessary
for the development of the custom-designed DRAM Product.


 


4.4                               Next Generation DRAM Products.  MICRON and INTEL shall work together using
Reasonable Efforts to develop next-generation DRAM products that will
incorporate advanced DRAM technology. 
The parties will work in good faith to (a) identify and agree upon
specific projects for development, (b) allocate resources consistent with the
scope, timeline and expected deliverables of such projects, and (c)
periodically meet and review the status of such projects.


 


4.5                               Additional Provisions.  Each Party shall own all intellectual
property that is developed solely by such Party as a result of the projects
undertaken pursuant to Sections 4.1, 4.2, 4.3 and 4.4 above, respectively.  The ownership rights governing intellectual
property provided by one Party to the other in support of such projects or
intellectual property that results from joint collaboration shall be defined on
a project by project basis pursuant to a mutually agreed collaboration
agreement.  At the initiation of any
development project outlined in Sections 4.1, 4.2, 4.3 and 4.4 above, the
Parties shall review any identified third party royalty obligations or claims
of intellectual property


 












[*]  Certain information on this page has been omitted and filed
separately with the Commission.  Confidential
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infringement that may be applicable to products resulting from such
development.  If applicable third party
royalties or claims of intellectual property infringement are identified,
MICRON will be obligated to perform and complete the development but may
decline to manufacture any product that would subject MICRON to a claim for
such royalty payments or intellectual property infringement.


 


5.0                               PRODUCT
VALIDATION


 


5.1                               Product
Validation Priority.  INTEL
shall give MICRON DRAM Products priority in the scheduling of validation
services.


 


5.2                               Joint
Validation of Micron Products.  
MICRON and INTEL will each allocate [*] or more engineers reasonably
acceptable to the other Party to create a joint product validation team. This
joint product validation team will focus on validating MICRON memory on INTEL
platforms.


 


6.0                               CALL
ON CAPACITY


 


6.1                               Purchase of Product. 
Each month during the term of this Agreement, commencing ninety (90)
days after the Effective date, INTEL shall have a right to purchase a percent,
up to its Percentage Call on Capacity, of MICRON’s Output of Products for such
month.  Such purchases may be made in
discrete component or module form.  For avoidance of
doubt, the Parties acknowledge and agree that all Products sold by MICRON to
INTEL in any given month shall count against INTEL’s Call on Capacity for such
month, including without limitation Products sold pursuant to Section 5 of
Addendum D to the CPA.  Subject to the limitations set forth in
this Section 6 below, INTEL’s right to purchase MICRON’s Output can be 100%
applied to any single MICRON Product by Product Family.  Notwithstanding anything herein to the contrary,
the portion of the Percentage Call on Capacity not utilized by INTEL or its
designee in any calendar month may not be carried forward to any subsequent
month.


 


6.2                               Purchase
of Product Under the Call on Capacity.  Products sold by
MICRON to INTEL pursuant to INTEL’s Call on Capacity shall be sold pursuant to
the terms and conditions of the Corporate Purchase Agreement, including
Products developed and Commercialized pursuant to Sections 4.2 and 4.3;
provided that notwithstanding anything to the contrary in the Corporate
Purchase Agreement, INTEL may not, within two weeks of the scheduled delivery
date, cancel scheduled Product deliveries under any purchase orders to the
extent such purchase orders provide for deliveries in any month of [*] or more of
MICRON’s anticipated Output for such month.   For
avoidance of doubt, quantities of Products that constitute less than [*] of the
anticipated monthly Output shall remain subject to the standard cancellation
terms of the Corporate Purchase Agreement.  Products sold by


 












[*]  Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatement has been requested with respect to the omitted
portions.


 


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MICRON to INTEL’s designees
pursuant to Sections 6.4 and 6.5, respectively, shall be governed by the terms
thereof.


 


6.3                               Forecasts. 
For INTEL purchases of Products, the Parties shall utilize the
forecasting methodology set forth in the Corporate Purchase Agreement.  For purchases of Products by designee
pursuant to the Call on Capacity, the following forecasting methodology shall
be utilized: Each month during the term of this Agreement:  (i) MICRON will provide INTEL with a six (6)
month rolling forecast of its anticipated Output by Product Family; and (ii)
INTEL or its designee will provide MICRON with a six (6) month rolling forecast
of its Products purchases from MICRON out of
MICRON’s then current active Product list and any anticipated allocations of those purchase
rights to third parties as permitted by Section 6.4 below.  These forecasts are provided for planning
purposes only.


 


6.4                               Allocation
of Capacity.  INTEL may
allocate its Call on Capacity in any given month, in whole or in part, to one
or more third parties (not including competitors of MICRON) pursuant to the
terms of this Section 6.4 and subject to Sections 6.7 and 6.8.  Any such allocation shall be for a period of
not less than one (1) month, and only in full month increments.  INTEL shall provide MICRON with written
notice of any such allocation, and MICRON shall not be required to accept any
purchase order from a third party without receipt of such notice.  MICRON shall not be required to sell any
Products to a third party except upon the receipt of a purchase order from such
party.  Purchase orders from such third
parties shall set forth, at a minimum, Product quantity, desired delivery dates
and destination, and MICRON part number. 
The terms and conditions of a sale to any such third party shall be (i)
in the case of a third party with which MICRON has a contractual relationship
governing the purchase and sale of MICRON’s products, consistent with the terms
and conditions applicable to such relationship, including pricing terms, or
(ii) in the case of a third party with which MICRON does not have a contractual
relationship governing the purchase and sale of MICRON’s products, such terms
and conditions as shall be negotiated in good faith between MICRON and such
third party, with lead times of one month or then applicable lead times,
whichever is longer.  MICRON shall have
no more than sixty (60) days to successfully conclude such negotiations.  In the case of (ii) above, the material terms
and conditions shall be substantially similar to the material terms and
conditions between MICRON and its other similarly situated customers and shall
be consistent with MICRON’s customary sales practices, including, without
limitation, credit review.  In no event
shall the recipient of any allocation have any rights, including without limitation,
rights as a third party beneficiary, under this Agreement.  Subject to Section 6.1 above, if MICRON
notifies INTEL that it cannot agree upon terms and conditions in the case of
(ii) above, INTEL may reallocate, provided such reallocation occurs at least
ninety (90) days prior to the scheduled delivery date, the applicable Product
to another third party or purchase such Product itself by so


 


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notifying MICRON within five
(5) business days of MICRON’s notification to INTEL that it cannot agree to
such terms and conditions with the third party.  Failure by INTEL to so notify MICRON within such five (5) day
period shall cause the forfeiture of INTEL’s right to allocate or purchase such
Product.


 


6.5                               Allocation
of DDR2 Call on Capacity to Crucial Technology.  With respect to INTEL’s Call on Capacity regarding DDR2 for any
given month, INTEL may allocate, until the later of [*], or the last day of the first calendar quarter
in which MICRON achieves production of [*] units (or equivalents) of DDR2, up to [*] of its Call on Capacity for
such month to Crucial Technology pursuant to the terms of this Section
6.5.  Any such allocation shall be for a
period of not less than one (1) month, and only in full month increments.  Any such allocation for a given month shall
reduce correspondingly INTEL’s right to allocate its Call on Capacity to third
parties pursuant to Section 6.4 above for such month.  INTEL shall provide MICRON with written notice of any such
allocation.


 


6.6                               Resale of Product. INTEL may resell Product purchased
hereunder to third parties in its discretion. 
Notwithstanding the forgoing, INTEL shall provide MICRON with prior
written notice of its intent to resell such Products, and shall offer to sell
such Products, whether still in discrete form or assembled onto modules, to
MICRON on identical terms and conditions as such Products were originally
purchased by INTEL from MICRON, provided that if such Products were assembled
into module form by INTEL, the price for such Products shall be equal to
INTEL’s actual cost of components plus its actual cost incurred to assemble
such Products into module form.


 


6.7                               Product
Mix and Purchasing Limitations.  INTEL’s Call on Capacity each month will be subject to the
following limitations, unless otherwise agreed by MICRON:  (i) with respect to any Product (determined
by Product Family) that constitutes less than [*] of MICRON’s anticipated Output for such month,
and if INTEL and its designees’ demand exceeds [*] of MICRON’s anticipated Output (such excess
referred to herein as “Excess”) of such Product for such month, then INTEL or
its designee will issue a purchase order for a quantity of Products equal to
the difference between INTEL and its designees’ demand and the [*] of MICRON’s anticipated
Output.  If such purchase order is from
INTEL, the Excess shall be deemed a “custom Item” for purposes of determining
cancellation liability under the CPA; provided that the foregoing limitation in
this Section 6.7 shall not limit INTEL’s purchase right pursuant to Section 5
of Addendum D to the CPA.


 


6.8                               No
Guarantee to Purchase Production Output.  Both Parties
understand and acknowledge that market conditions and technology requirements
change at a rapid pace and that nothing in this Agreement (except with respect
to purchase orders arising out of Section 6.7) constitutes any representation,
guaranty, promise or a commitment that any particular number of devices will


 












[*]  Certain information on this page has been omitted and filed
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Confidential treatement has been requested with respect to the omitted
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be ordered by INTEL (or its permitted designees under
Sections 6.4 and 6.5, respectively). 
Except with respect to purchase orders arising out of Sections 6.7,
MICRON agrees not to assert any claims based upon detrimental reliance or
equitable estoppel arising out of INTEL’s failure to purchase any particular level
of Output.


 


7.0                               REMEDIES AND
LIMITATIONS


 


7.1                               Commercially
Reasonable Efforts.  Except with respect to MICRON’s obligations
set forth in Sections 1.1, 1.2, 2.1 (limited to the provision of [*] Samples only), 2.2 (limited
to [*] DDR2 volume production milestones and aggregate DDR2 volume production
through [*], only), and 4.2 through 4.4, the Parties respective obligations herein
shall be to use commercially reasonable efforts to fulfill each of their
respective covenants and obligations undertaken herein.


 


7.2                               Liquidated Damages Remedy.  INTEL’s sole remedy, and MICRON’s complete liability
to INTEL, for  any failure by MICRON to comply with its commitments or obligations with
respect Sections 1.1, 1.2, 2.1 (limited to the provision of [*] Samples, respectively, only),
and 2.2 (limited to [*] DDR2 volume production milestones, respectively, and aggregate DDR2
volume production through [*], only) hereof, shall be as set forth immediately
below:


 


7.2.1                                             300mm Ramp


 


7.2.1.1                                   Capital Expenditure.  In the
event (a) MICRON fails to satisfy Section 1.1 hereof (i.e., incurrence of
Capital Expenditures in the amounts referenced in Schedule 1.1 hereto during
the period set forth therein) (b) INTEL provides written notice of such failure
to MICRON, and (c) sixty (60) days elapse without MICRON curing such failure
(i.e., MICRON fails to incur Capital Expenditures in the amounts referenced in
Schedule 1.1 hereto during the period set forth therein plus such cure period),
then INTEL shall notify MICRON in writing that it is in default of Section 1.1
hereof and within thirty (30) days of MICRON’s receipt of such default
notification, MICRON shall pay INTEL an amount equal to the applicable Base
Amount set forth on column 2 of Schedule A hereto.


 


7.2.1.2                                   Wafer Start Capacity.  (i) In the event (a) MICRON fails to satisfy
Section 1.2 hereof (i.e., Capacity with respect to the amounts set forth in
Schedule 1.2 hereto by the date set forth therein) and (b) INTEL provides
written notice of such default to MICRON, then within thirty (30) days of
MICRON’s receipt of such default


 












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notification, MICRON shall pay
INTEL an amount equal to the applicable Base Amount set forth in column 3 of
Schedule A hereto; and (ii) to the extent applicable, in the event (A) MICRON
fails to achieve the Capacity referenced in column 4 of Schedule A hereto by
the date set forth therein (i.e., Capacity with respect to the number of WSPW
set forth in column 4 of Schedule A by the date set forth therein) and (b)
INTEL provides written notice of such default to MICRON, then within three (3)
business days of the close of the 40th trading day following such
breach, including the date on which such breach occurred, MICRON shall pay
INTEL an amount equal to the applicable Additional Amount determined as set
forth on Schedule A hereto.


 


7.2.2                     DDR2 Production


 


7.2.2.1           [*]
Samples. In the event (a) MICRON fails to satisfy
Section 2.1 hereof with respect to providing [*] Samples to INTEL by [*], (b)
INTEL provides written notice of such failure, and (c) ninety (90) days elapse
without MICRON curing such failure (i.e., MICRON fails to provide such Samples
by the end of such cure period), then INTEL shall notify MICRON in writing that
it is in default of Section 2.1 hereof and within thirty (30) days of MICRON’s
receipt of such default notification, MICRON shall pay INTEL an amount equal to
the applicable Base Amount set forth in column 5 of Schedule A hereto.


 


7.2.2.2           [*]
Samples.  In
the event (a) MICRON fails to satisfy Section 2.1 hereof with respect to
providing [*] Samples to INTEL by [*], (b) INTEL provides written notice of
such failure, and (c) ninety (90) days elapse without MICRON curing such
failure (i.e., MICRON fails to provide such Samples by the end of such cure
period), then INTEL shall notify MICRON in writing that it is in default of
Section 2.1 hereof and within thirty (30) days of MICRON’s receipt of such
default notification, MICRON shall pay INTEL an amount equal to the applicable
Base Amount set forth in column 6 of Schedule A hereto.


 


7.2.2.3           [*] Volume.  In the event (a) MICRON fails to achieve the
volume production milestone for [*] by the date specified in Section 2.2 (but
subject to Sections 2.3 and 7.2.2.6), (b) INTEL provides written notice of such
failure, and (c) ninety (90) days elapse without MICRON curing such failure
(i.e., MICRON fails to achieve such level of volume production by


 












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12

















 


the end of such cure period),
then INTEL shall notify MICRON in writing that it is in default of Section 2.2
hereof and within thirty (30) days of MICRON’s receipt of such notification,
MICRON shall pay INTEL an amount equal to the applicable Base Amount set forth
in column 7 of Schedule A hereto.


 


7.2.2.4           [*] Volume.  In the event (a) MICRON fails to achieve the
volume production milestone for [*] by the date specified in Section 2.2 (but
subject to Sections 2.3 and 7.2.2.6), (b) INTEL provides written notice of such
failure, and (c) ninety (90) days elapse without MICRON curing such failure
(i.e., MICRON fails to achieve such level of volume production by the end of
such cure period), then INTEL shall notify MICRON in writing that it is in
default of Section 2.2 hereof and within thirty (30) days of MICRON’s receipt
of such notification, MICRON shall pay INTEL an amount equal to the applicable
Base Amount set forth in column 8 of 
Schedule A hereto.


 


7.2.2.5           Aggregated Volume.In the event (a) MICRON fails to achieve aggregated
volume production in the amount set forth in 
column 9 of Schedule A through the date set forth in such column (but
subject to Sections 2.3 and 7.2.2.6), (b) INTEL provides written notice of such
failure and (c) ninety (90) days elapse without MICRON curing such failure
(i.e., MICRON fails to achieve such aggregated level of volume production by
the end of such cure period), then INTEL shall notify MICRON in writing that it
is in default of Section 2.2 hereof and within three (3) business days of the
close of the 40th trading day following such breach (taking into
account the applicable cure period and including the date on which such breach
occurred), MICRON shall pay INTEL, to the extent applicable, an amount equal to
the applicable Additional Amount determined as set forth on Schedule A hereto.


 


7.2.2.6           Inventory Limitation.  For
avoidance of doubt, the Parties acknowledge and agree that if an Inventory
Limitation is implemented, the remedies provided in Sections 7.2.2.3 through
7.2.2.5 shall not be applicable if MICRON complies with the provisions of
Section 2.3 above with respect to the applicable period.


 


7.3                               Dollar Cap on
Liquidated Damages Remedies.  In no event shall MICRON’s aggregate liability to INTEL for
liquidated damages pursuant to


 












[*]  Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatement has been requested with respect to the omitted
portions.


 


13

















 


Section 7.2 hereof (i) exceed in
the aggregate (including Base Amounts and Additional Amounts) that amount set
forth in the first row of the table on Schedule A hereto, (ii) in the case of
Base Amounts, exceed in the aggregate the Maximum Aggregate Base Amount set
forth in  column 1 of the table on
Schedule A hereto, and (iii) in the case of Additional Amounts, exceed in the
aggregate the Maximum Aggregate Additional Amount set forth in  column 1 of the table on Schedule A hereto.


 


7.4                               IN NO EVENT SHALL
EITHER PARTY HAVE ANY LIABILITY TO THE OTHER PARTY OR ANY OTHER THIRD PARTY,
FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF FAILURE TO
PERFORM IN ACCORDANCE WITH THIS AGREEMENT, UNDER ANY CAUSE OF ACTION OR THEORY
OF LIABILITY, AND IRRESPECTIVE OF WHETHER THE DEFAULTING PARTY HAS ADVANCE
NOTICE OF THE POSSIBILITY OF SUCH FAILURE TO PERFORM.


 


7.5                               Legal Rights and
Remedies Unaffected.  Except with respect to liability for
MICRON’s failures to satisfy its obligations under Section 1.1, 1.2, 2.1
(limited to the provision of [*] Samples only) and 2.2 (limited to [*] DDR2 volume production
milestones and aggregate DDR2 volume production through [*], only), for which the Parties
have agreed to specific liquidated damages, the Parties retain all other legal
rights and remedies available to them at law or in equity.


 


7.6                               Form of Payment.  Any Base Amounts required to be paid by
MICRON to INTEL pursuant to Section 7.2 hereof shall be paid in immediately
available funds.  Any Additional Amounts
required to be paid by MICRON to INTEL pursuant to Section 7.2 hereof shall be
paid, at MICRON’s election, either in immediately available funds or Rights (or
Common Stock if both INTEL and MICRON agree in writing that such Common Stock
will not require any HSR filing), 
provided that as a condition to MICRON’s ability to elect to pay such
amount in Rights (or Common Stock if both INTEL and MICRON agree in writing
that such Common Stock will not require any HSR filing) MICRON shall have
agreed to provide registration rights with respect to such shares of Common
Stock issuable upon exercise of such Rights on the same terms and conditions as
provided with respect to the shares of Common Stock issuable upon exercise of
the Rights  purchased by INTEL Capital
Corporation pursuant to the Securities Purchase Agreement.  Any such Rights, based on the numbers of
such shares such Rights are then exercisable for (or Common Stock if both INTEL
and MICRON agree in writing that such Common Stock will not require any HSR
filing) shall be valued at the average of the daily NYSE closing prices of
MICRON Common Stock, as reported by Bloomberg, L.P., during the twenty (20)
trading day period ending on the third trading day prior the date such payment
is required to be made.


 












[*]  Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatement has been requested with respect to the omitted
portions.


 


14

















 


7.7                               Audit Rights.  During normal business hours and upon reasonable advance written notice,  INTEL shall have the right,
semi-annually, to inspect and audit the records of MICRON that are directly
related to MICRON’s performance of its obligations under Sections 1.1, 1.2, and
2.2, respectively, of this Agreement. 
Such audit shall be performed by a INTEL-designated independent and
reputable third party auditor at INTEL’s expense who shall employ such audit procedures
and review such documents as are reasonable, to confirm compliance with the
above obligations.  MICRON shall
cooperate fully with all such reasonable audit requests; provided however, that
in no event shall material containing any information that is protected under
court order or the written direction of regulatory authorities be subject to
such audit.  If, as a result of such
audit, MICRON is found to be materially out of compliance with this Agreement,
MICRON shall reimburse INTEL for all costs associated with the audit and the
number of audits may be reasonably increased. 
Before being permitted to perform the audit referred to herein, the
auditor will be required to execute a MICRON nondisclosure agreement in
reasonable form pursuant to which the auditor and its personnel and agents will
agree to keep the results of such audit confidential and to inform INTEL only
of MICRON’s non-compliance, if any, with Sections 1.1, 1.2 and 2.2 of this
Agreement.


 


8.0                               USE
OF PROCEEDS


 


8.1                               MICRON shall use the proceeds received under
the Securities Purchase Agreement for purposes of achieving the milestones set
forth in Sections 1.0 and 2.0 respectively.


 


9.0                               TERM
AND TERMINATION


 


9.1                               Term.    This Agreement shall be effective as of the Effective Date and shall
remain in effect until termination or expiration as provided for herein.


 


9.2                               Termination.    In addition to the termination rights set
forth in Section 10.4, either Party may terminate this Agreement if the other
Party (a) materially breaches this Agreement and fails to cure the same within
sixty (60) days (unless another time period is otherwise specified herein) from
receipt of notice by the non-breaching Party, (b) files or has filed against it
a petition in bankruptcy, (c) has a receiver appointed to handle its assets or
affairs, (d) makes or attempts to make an assignment for the benefit of
creditors, or (e) either Party undergoes a change in control.


 


9.3                               Expiration.  This Agreement shall expire five (5) years
from the Effective Date, unless otherwise earlier terminated pursuant to
Section 9.2 or upon mutual written agreement of the Parties.


 


15

















 


10.                               GENERAL
TERMS


 


10.1                        Controlling Law.  Any claim arising under or relating to this
Agreement shall be governed by the internal substantive laws of the State of
Delaware, U.S.A or federal courts located in Delaware, without regard to
principles of conflict of laws.


 


10.2                        Venue and Waiver to Jury Trial.    The Parties hereby waive the right to jury
trial with respect to any action that may arise under this Agreement. Each
Party hereby agrees to jurisdiction and venue in the courts of the State of
Delaware, U.S.A.


 


10.3                        Confidentiality and Publicity.


 


10.3.1              Confidentiality.  Except to the extent required by law or
judicial order or except as otherwise provided herein, neither Party shall
disclose this Agreement or any of its terms without the other’s prior written
approval, which approval will not be delayed or unreasonably withheld.  Either Party may disclose this Agreement to
the extent required by law or judicial order, provided that if such disclosure
is pursuant to judicial order or proceedings, the disclosing Party will notify
the other Party promptly before such disclosure and will cooperate with the
other Party to seek confidential treatment with respect to the disclosure if
requested by the other Party and provided further that if such disclosure is
required pursuant to the rules and regulations of any federal, state or local
organization, the Parties will cooperate to seek confidential treatment of this
Agreement to the maximum extent possible under law.  Notwithstanding the foregoing, in the absence of any prior
disclosure of this Agreement or the terms thereof pursuant to this Section
10.3.1, each Party may disclose this Agreement and its terms to its agents or
third party consultants who have a need to know arising out of the
establishment, implementation, administration, termination or enforcement of
this Agreement provided such agents are informed of the confidential nature of
this Agreement and the terms thereof and are bound, either by statutory rules
of professional responsibility to maintain client confidences with respect
thereto or, in the absence of such statutory duties, are bound by the terms of
a applicable nondisclosure agreement that treats as confidential information
this Agreement and the terms thereof.


 


MICRON agrees that it
will provide INTEL with the relevant portions of any drafts of any documents,
press releases or other filings in which the Agreement or its contents are to
be disclosed prior to the filing and that it will provide INTEL with an
opportunity prior to the filing thereof to consult with MICRON as to the
contents of such filing.   Micron shall
endeavor to provide adequate opportunity for Intel review and comments prior to
any such filing.  The minimum prior
notice to Intel for such review is two (2) business days.


 


16

















 


10.3.2              Public Announcements. 
Upon execution of this Agreement, the Parties will mutually agree on
language to be included in press release(s) announcing the existence of the
transactions contemplated by this Agreement, which press release(s) will be
issued promptly following the execution of this Agreement


 


10.3.3              Third Party Information. 
Neither Party will be required to disclose to the other any confidential
information of any third party without having first obtained such third party’s
prior written consent.


 


10.3.4              Other Disclosures.  Except as otherwise provided for in Sections 10.3.1,
10.3.2, and 10.3.3 hereof, respectively, all confidential information exchanged
by the parties will be disclosed pursuant to the INTEL Corporation/MICRON
Technology, Inc. Corporate Non-Disclosure Agreement #19096.


 


10.4                        Force Majeure.   The Parties
hereto shall not be liable for any failure to perform due to acts of God, war,
terrorism, riot, epidemics, embargoes, acts of civil or military authority,
injunction, fire, flood, accidents, earthquakes, strikes, labor disputes or
causes beyond that Party’s reasonable control. If the failure to perform by
either Party continues for a period of more than one hundred and eighty (180)
days the other Party may terminate this Agreement.


 


10.5                        No Partnership or Joint Venture.    Performance by the Parties under this
Agreement shall be as independent contractors. 
Nothing contained herein or done under the terms of this Agreement shall
constitute the parties entering upon a joint venture or partnership, or shall
constitute any Party as the agent of another Party for any purpose.


 


10.6                        Assignment of Agreement.    Either Party may assign or delegate its
rights or obligations under this Agreement to any or all of its wholly owned
subsidiaries, provided, however, no such assignment or delegation shall relieve
the transferring Party from its obligations hereunder without the consent of
the other Party.  Otherwise, no Party
may assign or delegate its rights and obligations under this Agreement without
the prior written consent of the other. 
For purposes of this provision, the term subsidiaries means a person in
which one of the Parties owns fifty-one percent of the voting stock in such
firm.


 


10.7                        Trademarks.  
No Party has any right to use any trademark, logo, trade name or other
identifying mark of the other Party without the written consent of the
other;  provided that if MICRON
purchases Products assembled into modules by INTEL pursuant to Section 6.6,
MICRON shall be permitted to resell such modules even if they contain a INTEL
trademark, logo, trade name or other identifying mark, subject to compliance
with INTEL’s trademark and logo usage guidelines.


 


17

















 


10.8                        Merger, Modification, Waiver.     Failure by either Party to insist in any
instance upon strict conformance to any term or condition herein, or failure by
any Party to act in the event of a breach or default by the other Party, shall
not be construed as a consent to or a waiver of that breach or default or any
subsequent breach or default of the same or of any other term or condition
contained herein.


 


10.9                        Notices.  
All Notices and requests required under this Agreement shall be in
writing and shall, if personally delivered, be deemed given on the immediately
following business day.  If such notice
or request is mailed postage prepaid, certified or registered mail, it shall be
deemed given on the seventh business day.


 


	
  If
  to MICRON:

  	
  If
  to INTEL:

  
	
  Micron
  Technology, Inc.

  	
  Intel
  Corporation

  
	
  8000 S.
  Federal Way,

  	
  2200 Mission
  College Blvd.

  
	
  P.O. Box 6

  	
  Santa Clara,
  CA 95052

  
	
  Boise, Idaho
  83716-9632

  	
  Attention:
  Director, Platform Memory Ops

  
	
  Legal
  Notice:  General Counsel

  	
  Legal
  Notice: General Counsel

  



 


10.10                 Severability.    
If any provision or provisions of this Agreement shall become or be held
to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions shall be in no way be affected or
impaired thereby; provided, however, that if such holding substantially alters
the terms and conditions of this Agreement, the Parties agree to negotiate a
provision to be substituted for the eliminated provision which shall, as close
as possible, have the economic effect of the eliminated provision.


 


10.11                 Survival of Provisions.  
The following provisions of this Agreement shall survive its
termination or expiration:  4.5, 7.3
through 7.5, 10.1 through 10.5, 10.7, and 10.10 through 10.12, together with
such other provisions of this Agreement as may be necessary, but only to the
extent necessary, to give meaning to such surviving provisions.


 


10.12                 Dispute Resolution.   All disputes
arising directly under the express terms of this Agreement shall be resolved as
follows.  Senior management of both
Parties shall meet to attempt to resolve such dispute.  If senior management cannot resolve the
dispute, either Party may make a written demand for formal dispute resolution
and specify therein the scope of the dispute. 
Within thirty (30) days after such written notification, the Parties
shall agree to meet for one day with an impartial mediator and consider dispute
resolution alternatives other than litigation. 
If an alternative method of dispute resolution is not agreed upon within
thirty (30) days after the one (1) day mediation, either Party may proceed as
it sees fit.  This procedure shall be a
prerequisite before taking any additional action regarding disputes arising
under this Agreement.


 


18

















 


10.13                 Entire Agreement; Counterparts.  This Agreement
and its Schedules
together constitute the entire agreement among the Parties with respect to the
subject matter hereof, merge all prior and contemporaneous agreements and
negotiations, and may only be modified in a writing signed by authorized
representatives of the Parties. 
This Agreement may be executed in counterparts, each of which shall be
an original, but both of which together shall constitute one instrument.


 


 


[The remainder of this
page is intentionally left blank; signature page follows]


 


19

















 


IN WITNESS
WHEREOF these presents have been executed by duly authorized representatives of
the Parties as of the date first above written.


 


 


	
  INTEL
  CORPORATION

  	
  MICRON
  TECHNOLOGY, INC.

  
	
   

  	
   

  
	
  /s/ Gidu Shroff

  	
   

  	
  /s/ W.G. Stover, Jr.

  	
   

  
	
  Signature

  	
  Signature

  
	
   

  	
   

  
	
  Gidu Shroff

  	
   

  	
  W.G. Stover, Jr.

  	
   

  
	
  Printed Name

  	
  Printed Name

  
	
   

  	
   

  
	
  Vice President and Director, Materials

  	
   

  	
  Vice President of Finance and Chief
  Financial Officer

  	
   

  
	
  Title

  	
  Title

  
	
   

  	
   

  
	
  9/23/03

  	
   

  	
  9/23/03

  	
   

  
	
  Date

  	
  Date

  



 


 


[Signature Page to Business Agreement]


 


20

















 


INTEL AND MICRON CONFIDENTIAL


 


SCHEDULE A


 


Liquidated Damages


 


Maximum
Total Liability for Failure to Perform Items Listed Below:  $135 million


 


	
  300mm

  	
   

  	
  DDR2

  	
   

  
	
  -1-

  Milestone

  Event

  	
   

  	
  -2-

  $[*] in

  Capital

  Expenditures

  between

  [*]

  	
   

  	
  -3-

  Capacity to

  Commence [*]

  	
   

  	
  -4-

  Capacity to

  Commence [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Delivery
  of Samples

  	
   

  	
  Production
  Volume

  
	
  -5-

  [*]

  	
   

  	
  -6-

  [*]

  	
   

  	
  -7-

  [*]

  	
   

  	
  -8-

  [*]

  	
   

  	
  -9-

  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Base Amount
  (Maximum Aggregate Base Amount:  $[*])

  	
   

  	
  A = [*]

  	
   

  	
  B = [*]

  	
   

  	
  [*]

  	
   

  	
  C = [*]

  	
   

  	
  D = [*]

  	
   

  	
  E = [*]

  	
   

  	
  F = [*]

  	
   

  	
  [*]

  	
   

  
	
  Maximum
  Additional Amount (Maximum Aggregate Additional Amount: $135 million less any
  Base Amounts paid above)*

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
  **

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  Investment
  Percentage

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  



 












*With respect to the failure to meet any milestone
(including a failure to comply with the related covenant or condition) the
applicable Additional Amount, if any, shall be equal to:


 


the lesser of


 


(A)          the applicable Maximum Additional Amount (as set forth
in the applicable column of the table above), and


 


(B)            the
amount by which the applicable Investment Percentage (as set forth in the
applicable column of the table above) times the product of (x) the amount
obtained by subtracting the Current Per Share Price from $13.29 (the purchase
price for the Rights), as appropriately adjusted to reflect the effect of any
stock splits, reclassifications, stock dividends, recapitalizations,
combinations, mergers or other similar events affecting the Common Stock
occurring after the Effective Date (which amount shall be deemed to be zero if
negative), and (y) the aggregate number of Retained Shares, exceeds the applicable
Base Amounts (as set forth in the applicable columns of the table above).


 


For purposes
of such calculations the term “Current Per Share Price” means the average of
the daily NYSE closing prices, as reported by Bloomberg L.P., of MICRON common
stock during the forty (40) trading day period beginning on the day on which
the respective breach occurred (taking into account applicable cure periods),
and the term “Retained Shares” means shares of Common Stock (including for such
purposes shares of Common Stock issuable upon exercise of the Rights) purchased
by INTEL Capital Corporation pursuant to the Securities Purchase Agreement and
beneficially owned by INTEL or its Affiliates as of the day on which the
respective breach occurred (taking into account applicable cure periods).


 


21

















 












** For clarification, in the
event that (a) Micron does not achieve the Capacity referenced in column 4
above by the required date and in calculating the Additional Amount, if any, under
column 4 reduction was made for an assumed Base Amount payment under column 2,
and (b) it is determined that Micron is not required to make a Base Amount
payment under column 2, Micron shall make a cash payment to Intel in an amount
(up to a maximum of $[*]) equal to the difference between (i) the applicable
Additional Amount as originally calculated as set forth on this Schedule but
without including such Base Amount in column 2 in such calculation as a one of
the “applicable Base Amounts” (See Paragraph (B) above) less (ii) the
applicable Additional Amount previously paid by Micron with respect to such
column 4.


 


22

















 


Schedule 1.1


 


MICRON shall incur between [*], Capital Expenditures of no less than
$[*].


 


 


Schedule 1.2


 


MICRON shall achieve the Capacity to produce [*] wafer starts per week
(“WSPW”) on its 300mm DRAM wafer production line(s) no later than [*].


 


 


Schedule 2.1


 


	
  Density

  	
   

  	
  Samples

  
	
  [*]

  	
   

  	
   

  



 


 


Schedule 2.2


 


	
  By End of Calendar Quarter

  	
   

  	
  Per Quarter
  Quantity* (millions)

  
	
  [*]

  	
   

  	
   

  



 












*Quantity is measured in millions of 256Mb
equivalents (regardless of final form). Production that exceeds the commitment
for one quarter shall be carried over and be credited to subsequent quarters
until exhausted.


 


[*]  Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatement has been requested with respect to the omitted
portions.


 


23