Crucial 2012 Annual Report Download - page 30

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• certain buy-sell rights, commencing in 2015, pursuant to which Intel may elect to sell to us, or we may elect to
purchase from Intel, Intel’s interest in IMFT (if Intel so elects, we would set the closing date of the transaction within
two years following such election and could elect to receive financing from Intel for one to two years);
• financing of $65 million provided by Intel to us under a two-year senior unsecured promissory note, payable with
interest in approximately equal quarterly installments; and
• termination of IMFT's lease to use approximately 50% of our Virginia fabrication facility.
We and Intel continue to share output of IMFT and certain research and development costs generally in proportion to our
investments in IMFT, which was 51% Micron and 49% Intel as of August 30, 2012.
Elpida Memory, Inc.
Elpida Sponsor Agreement
On July 2, 2012, we entered into a sponsor agreement (the "Sponsor Agreement") with the trustees of Elpida Memory, Inc.
(“Elpida”) and Elpida's wholly-owned subsidiary, Akita Elpida Memory, Inc. (“Akita”) (Elpida and Akita, collectively, the
“Elpida Companies”). The Elpida Companies filed petitions for corporate reorganization proceedings with the Tokyo District
Court under the Corporate Reorganization Act of Japan on February 27, 2012.
Under the Sponsor Agreement, we committed to support plans of reorganization for the Elpida Companies that would
provide for payments to the secured and unsecured creditors of the Elpida Companies in an aggregate amount of 200 billion
yen (or approximately $2.5 billion), less certain expenses of the reorganization proceedings and certain other items. As a
condition of the Sponsor Agreement, we deposited 1.8 billion yen (or approximately $23 million) into an escrow account which
will be applied to the share acquisition payments at closing. Of the aggregate amount, we will fund 60 billion yen (or
approximately $750 million) through a cash payment to Elpida at the closing, in exchange for 100% ownership of Elpida's
equity. The remaining 140 billion yen (or approximately $1.75 billion) of payments will be made by the Elpida Companies
(using cash flows expected to be generated from our payment for foundry services provided by Elpida, as our subsidiary) in six
annual installments payable at the end of each calendar year beginning in 2014, with payments of 20 billion yen (or
approximately $250 million) in each of 2014 through 2017, and payments of 30 billion yen (or approximately $375 million) in
each of 2018 and 2019.
We have agreed to provide additional support to Elpida, which may include a payment guarantee under certain
circumstances, to facilitate its continued access to debtor-in-possession financing of up to 16 billion yen (or approximately
$200 million) from third-party finance sources through the closing of the Elpida share purchase, and to use reasonable efforts to
assist Elpida in obtaining up to 5 billion yen (or approximately $63 million) of continued debtor-in-possession financing from
third parties for up to two months following the closing. In addition, we have agreed to use reasonable efforts to assist the
Elpida Companies in financing up to 64 billion yen (or approximately $800 million) of capital expenditures through June 30,
2014, including up to 40 billion yen (or approximately $500 million) prior to June 30, 2013, either by providing a payment
guarantee under certain circumstances, or by providing such financing directly.
Under applicable Japanese law, following the closing of the transaction, because a portion of the payments to creditors will
be satisfied through the installment payments described above, the operation of the businesses of the Elpida Companies will
remain subject to the oversight of the court in charge of the reorganization proceedings and of the trustees (including a trustee
nominated by us upon the closing of the transaction).
The Sponsor Agreement contains certain termination rights, including our right to terminate the Sponsor Agreement if a
change, taken together with all other changes, occurs that is or would reasonably be expected to be materially adverse to (i) the
business, assets, etc. of Elpida and its subsidiaries, taken as a whole, or to the business, assets, etc. taken as a whole of Rexchip
Electronics Corporation ("Rexchip"), a Taiwanese corporation formed as a manufacturing joint venture by Elpida and
Powerchip Technology Corporation ("Powerchip"), a Taiwanese corporation; or (ii) our ability to operate Elpida's business
immediately following closing in substantially the same manner as conducted by Elpida as of July 2, 2012. Elpida currently
owns, directly and indirectly through a subsidiary, approximately 65% of Rexchip's outstanding common stock.
The trustees of the Elpida Companies submitted plans of reorganization to the court on August 21, 2012, which plans are
subject to court and creditor approval under applicable Japanese law. The Sponsor Agreement provides that the plans of
reorganization submitted by the trustees are to contain terms consistent with the provisions of the Sponsor Agreement.