<PAGE>
FORM 10-Q
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 3, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Commission File Number: 1-10658
MICRON TECHNOLOGY, INC.
State or other jurisdiction of incorporation or organization: Delaware
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Internal Revenue Service -- Employer Identification No. 75-1618004
8000 S. Federal Way, Boise, Idaho 83716-9632
(208) 368-4000
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The number of outstanding shares of the registrant's Common Stock as of
January 5, 1999, was 247,656,782.
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
MICRON TECHNOLOGY, INC.
Consolidated Balance Sheets
(Dollars in millions, except for par value data)
December 3, September 3,
As of 1998 1998
- --------------------------------------------------------------------------------
(Unaudited)
ASSETS
Cash and equivalents $ 767.7 $ 558.8
Liquid investments 1,157.1 90.8
Receivables 481.6 489.5
Inventories 360.4 291.6
Prepaid expenses 15.7 8.5
Deferred income taxes 67.2 61.7
-------- --------
Total current assets 2,849.7 1,500.9
Product and process technology, net 219.6 84.9
Property, plant and equipment, net 3,602.3 3,035.3
Other assets 116.0 82.4
-------- --------
Total assets $6,787.6 $4,703.5
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $ 627.8 $ 460.7
Short-term debt 11.1 10.1
Deferred income 6.2 7.5
Equipment purchase contracts 113.2 168.8
Current portion of long-term debt 103.4 98.6
-------- --------
Total current liabilities 861.7 745.7
Long-term debt 1,597.6 758.8
Deferred income taxes 264.5 284.2
Non-current product and process technology 12.0 11.3
Other liabilities 57.7 50.1
-------- --------
Total liabilities 2,793.5 1,850.1
-------- --------
Minority interests 157.9 152.1
Commitments and contingencies
Common stock, $0.10 par value, authorized 1.0 billion
shares, issued and outstanding 247.3 million and
217.1 million shares, respectively 24.7 21.7
Additional capital 1,743.6 565.4
Retained earnings 2,068.1 2,114.3
Accumulated other comprehensive loss (0.2) (0.1)
-------- --------
Total shareholders' equity 3,836.2 2,701.3
-------- --------
Total liabilities and shareholders' equity $6,787.6 $4,703.5
======== ========
Certain fiscal 1998 amounts have been restated as a result of a
pooling-of-interests merger.
See accompanying notes to consolidated financial statements.
1
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MICRON TECHNOLOGY, INC.
Consolidated Statements of Operations
(Amounts in millions, except for per share data)
(Unaudited)
December 3, November 27,
For the quarter ended 1998 1997
- --------------------------------------------------------------------------------
Net sales $ 793.6 $ 957.3
------- -------
Costs and expenses:
Cost of goods sold 677.7 747.1
Selling, general and administrative 103.0 126.0
Research and development 67.7 67.2
Other operating expense 7.8 4.6
------- -------
Total costs and expenses 856.2 944.9
------- -------
Operating income (loss) (62.6) 12.4
Loss on sale of investments (0.1) --
Gain on issuance of subsidiary stock, net 1.1 0.1
Interest expense, net (7.9) (1.3)
------- -------
Income (loss) before income taxes and minority
interests (69.5) 11.2
Income tax benefit (provision) 27.6 (4.5)
Minority interests in net income (4.3) (0.2)
------- -------
Net income (loss) $ (46.2) $ 6.5
======= =======
Earnings (loss) per share:
Basic $ (0.19) $ 0.03
Diluted (0.19) 0.03
Number of shares used in per share calculations:
Basic 245.7 214.7
Diluted 245.7 217.8
Certain fiscal 1998 amounts have been restated as a result of a pooling-of-
interests merger.
See accompanying notes to consolidated financial statements.
2
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MICRON TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
(Dollars in millions)
(Unaudited)
December 3, November 27,
For the quarter ended 1998 1997
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (46.2) $ 6.5
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 189.5 136.3
Change in assets and liabilities, net of effects
of acquisition
Decrease in receivables 112.3 22.3
Increase in inventories (36.4) (27.2)
Increase in accounts payable and accrued
expenses, net of plant and equipment
purchases 65.8 59.1
Other (29.4) (14.9)
--------- ---------
Net cash provided by operating activities 255.6 182.1
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment (117.5) (187.9)
Purchase of available-for-sale and held-to-maturity
securities (1,273.5) (362.0)
Proceeds from sales and maturities of securities 211.5 151.5
Other (1.5) (12.4)
--------- ---------
Net cash used for investing activities (1,181.0) (410.8)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received in conjunction with acquisition 681.1 --
Proceeds from issuance of stock rights 500.0 --
Proceeds from issuance of debt 34.0 11.4
Repayments of debt (28.3) (49.7)
Proceeds from issuance of common stock 19.1 0.1
Payments on equipment purchase contracts (73.9) (12.9)
Other 2.3 2.7
--------- ---------
Net cash provided by (used for) financing activities 1,134.3 (48.4)
--------- ---------
Net increase (decrease) in cash and equivalents 208.9 (277.1)
Cash and equivalents at beginning of period 558.8 619.5
--------- ---------
$ 767.7 $ 342.4
Cash and equivalents at end of period ========= =========
SUPPLEMENTAL DISCLOSURES
Interest paid $ (6.9) $ (6.8)
Income taxes refunded (paid), net 183.2 (3.3)
Noncash investing and financing activities:
Equipment acquisitions on contracts payable and
capital leases 18.3 24.6
Cash received in conjunction with acquisition:
Fair value of assets acquired $ 949.3 $ --
Liabilities assumed (138.0) --
Debt issued (836.0) --
Stock issued (656.4) --
--------- ---------
$ 681.1 $ --
========= =========
Certain fiscal 1998 amounts have been restated as a result of a pooling-of-
interests merger.
See accompanying notes to consolidated financial statements
3
<PAGE>
Notes to Consolidated Financial Statements
(All tabular dollar amounts are stated in millions)
1. Unaudited interim financial statements
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting solely of normal
recurring adjustments) necessary to present fairly the consolidated financial
position of Micron Technology, Inc., and subsidiaries (the "Company" or "MTI"),
and their consolidated results of operations and cash flows. The Company has
restated its prior period financial statements, as a result of the merger with
Rendition, Inc. ("Rendition") which was accounted for as a pooling-of-interests.
These unaudited interim financial statements for the quarter ended December
3, 1998, should be read in conjunction with the consolidated financial
statements and accompanying notes included in the Company's Form 10-K for the
year ended September 3, 1998.
2. Supplemental balance sheet information December 3, September 3,
1998 1998
- --------------------------------------------------------------------------------
Receivables
- --------------------------------------------------------------------------------
Trade receivables $ 404.2 $ 294.4
Income taxes receivable 46.5 191.9
Allowance for returns and discounts (15.3) (11.9)
Allowance for doubtful accounts (6.1) (6.5)
Other receivables 52.3 21.6
--------- ---------
$ 481.6 $ 489.5
========= =========
Inventories
- --------------------------------------------------------------------------------
Finished goods $ 121.9 $ 93.3
Work in progress 189.1 139.6
Raw materials and supplies 49.4 58.7
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$ 360.4 $ 291.6
========= =========
Product and process technology
- --------------------------------------------------------------------------------
Product and process technology, at cost $ 304.5 $ 161.7
Less accumulated amortization (84.9) (76.8)
--------- ---------
$ 219.6 $ 84.9
========= =========
Property, plant and equipment
- --------------------------------------------------------------------------------
Land $ 42.4 $ 34.8
Buildings 1,111.2 915.5
Equipment 3,529.2 3,025.7
Construction in progress 722.1 704.6
--------- ---------
5,404.9 4,680.6
Less accumulated depreciation and amortization (1,802.6) (1,645.3)
--------- ---------
$ 3,602.3 $ 3,035.3
========= =========
As of December 3, 1998, property, plant and equipment included unamortized
costs of $706.7 million for the Company's semiconductor memory manufacturing
facility in Lehi, Utah, of which $646.0 million has not been
4
<PAGE>
Notes to Consolidated Financial Statements, continued
placed in service and is not being depreciated. Timing of the completion of the
remainder of the Lehi production facilities is dependent upon market conditions.
Market conditions which the Company expects to evaluate include, but are not
limited to, worldwide market supply and demand of semiconductor products and the
Company's operations, cash flows and alternative uses of capital. The Company
continues to evaluate the carrying value of the facility and as of December 3,
1998, it was determined to have no impairment.
Depreciation expense was $181.1 million and $129.5 million for the first
quarter of 1999 and 1998, respectively.
December 3, September 3,
1998 1998
- --------------------------------------------------------------------------------
Accounts payable and accrued expenses
- --------------------------------------------------------------------------------
Accounts payable $ 312.4 $ 235.6
Salaries, wages and benefits 116.0 85.6
Product and process technology payable 68.9 46.4
Taxes payable other than income 49.2 44.5
Interest payable 24.3 7.7
Other 57.0 40.9
---------- ----------
$ 627.8 $ 460.7
========== ==========
Debt
- --------------------------------------------------------------------------------
Convertible Notes payable, due October 2005, with
an effective yield-to-maturity of 8.4%, net of
unamortized discount of $70.8 million $ 669.2 $ --
Convertible Subordinated Notes payable, due July
2004, interest rate of 7% 500.0 500.0
Subordinated Notes payable, due October 2005, with
an effective yield-to-maturity of 10.6%, net of
unamortized discount of $41.4 million 168.6 --
Notes payable in periodic installments through July
2015, weighted average interest rate of 7.39% and
7.38%, respectively 325.5 315.2
Capitalized lease obligations payable in monthly
installments through August 2004, weighted average
interest rate of 7.59% and 7.61%, respectively 39.7 42.2
--------- ----------
1,701.0 857.4
Less current portion (103.4) (98.6)
--------- ----------
$ 1,597.6 $ 758.8
========= ==========
The convertible notes due October 2005 (the "Convertible Notes") with a
yield-to-maturity of 8.4% have a face value of $740 million, a stated interest
rate of 6.5% and are convertible into shares of the Company's common stock at
$60 per share. The notes are not subject to redemption prior to October 2000 and
are redeemable from that date through October 2002 only if the common stock
price is at least $78.00 for a specified trading period. The Convertible Notes
have not been registered with the Securities and Exchange Commission, however
the holder has
5
<PAGE>
Notes to Consolidated Financial Statements, continued
registration rights which begin April 1999. (See "Acquisition"). The
subordinated notes due October 2005 with a yield-to-maturity of 10.6% have a
face value of $210 million and a stated interest rate of 6.5%.
The 7% convertible subordinated notes due July 2004 are convertible into
shares of the Company's common stock at $67.44 per share. The notes are not
subject to redemption prior to July 1999 and are redeemable from that date
through July 2001 only if the common stock price is at least $87.67 for a
specified trading period. The notes were offered under a $1 billion shelf
registration statement pursuant to which the Company may issue from time to time
up to $500 million of additional debt or equity securities.
The Company has a $400 million revolving credit agreement which expires May
2000. The interest rate on borrowed funds is based on various pricing options
at the time of borrowing. The agreement contains certain restrictive covenants
pertaining to the Company's semiconductor operations, including a maximum debt
to equity covenant. As of December 3, 1998, MTI had no borrowings outstanding
under the agreement.
Micron Electronics, Inc., an approximately 63% owned subsidiary of the Company
("MEI"), has a $100 million unsecured credit facility expiring in June 2001 and
an additional unsecured revolving credit facility expiring in June 1999
providing for borrowings of up to 1.5 billion Japanese yen (US $12.6 million at
December 3, 1998). Under the credit facilities, MEI is subject to certain
financial and other covenants including certain financial ratios and limitations
on the amount of dividends paid by MEI. As of December 3, 1998, MEI was
eligible to borrow the full amount under its credit agreements and had aggregate
borrowings of approximately $9.3 million outstanding under its credit
agreements.
3. Income taxes
The effective tax rate approximated 40% for the first quarter of 1999 and
1998. The effective tax rate primarily reflects the statutory corporate income
tax rate and the net effect of state taxation. Taxes on earnings of domestic
subsidiaries not consolidated for tax purposes may cause the effective tax rate
to vary significantly from period to period.
4. Earnings (loss) per share
Basic earnings per share is calculated using the average number of common
shares outstanding. Diluted earnings per share is computed on the basis of the
average number of common shares outstanding plus the effect of outstanding stock
options using the "treasury stock method" and convertible debentures using the
"if-converted" method.
December 3, November 27,
For the quarter ended 1998 1997
- --------------------------------------------------------------------------------
Net income (loss) available for common
shareholders, Basic and Diluted $ (46.2) $ 6.5
========= =========
Weighted average common stock outstanding -- Basic 245.7 214.7
Net effect of dilutive stock options -- 3.1
--------- ---------
Weighted average common stock and common
stock equivalents -- Diluted 245.7 217.8
========= =========
Basic earnings (loss) per share $ (0.19) $ 0.03
========= =========
Diluted earnings (loss) per share $ (0.19) $ 0.03
========= =========
6
<PAGE>
Notes to Consolidated Financial Statements, continued
Earnings per share computations exclude stock options and potential shares
for convertible debentures to the extent that their effect would have been
antidilutive.
5. Comprehensive Income
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 130, "Reporting Comprehensive Income," as of the first quarter of 1999.
SFAS No. 130 establishes new rules for the reporting and display of
comprehensive income and its components, however it has no impact on the
Company's net income or shareholders' equity.
The components of comprehensive income are as follows:
December 3, November 27,
For the quarter ended 1998 1997
- --------------------------------------------------------------------------------
Net income (loss) $ (46.2) $ 6.5
Foreign currency translation adjustments (0.2) (0.1)
-------- --------
Total comprehensive income $ (46.4) $ 6.4
======== ========
6. Acquisition
On September 30, 1998, the Company completed its acquisition (the
"Acquisition") of substantially all of the memory operations of Texas
Instruments, Inc. ("TI") for a net purchase price of approximately $832.8
million. The Acquisition was consummated through the issuance of debt and
equity securities. In connection with the transaction, the Company issued 28.9
million shares of MTI common stock, $740 million principal amount of Convertible
Notes and $210 million principal amount of Subordinated Notes. In addition to
TI's net memory assets, the Company received $681.1 million in cash. The
Acquisition was accounted for as a business combination using the purchase
method of accounting. The purchase price was allocated to the assets acquired
and liabilities assumed based on their estimated fair values. The Company and
TI also entered into a ten-year, royalty-free, life-of-patents, patent cross
license that commenced on January 1, 1999. The Company will make royalty
payments to TI under a prior cross license agreement for operations through
December 31, 1998.
The following unaudited pro forma information presents the consolidated
results of operations of the Company as if the Acquisition had taken place at
the beginning of each period presented.
December 3, November 27,
For the quarter ended 1998 1997
- --------------------------------------------------------------------------------
Net sales $ 848.9 $1,211.2
Net loss (63.4) (18.5)
Basic loss per share (0.23) (0.08)
Diluted loss per share (0.23) (0.08)
These pro forma results of operations have been prepared for comparative
purposes only and do not purport to be indicative of the results of operations
which actually would have resulted had the Acquisition occurred on the dates
indicated, or which may result in the future.
7
<PAGE>
Notes to Consolidated Financial Statements, continued
7. Merger
On September 14, 1998, the Company completed its merger with Rendition. The
Company issued approximately 3.6 million shares of Common Stock in exchange for
all of the outstanding stock of Rendition. The merger qualified as a tax-free
exchange and was accounted for as a business combination using the "pooling-of-
interests" method. Accordingly, the Company's financial statements have been
restated to include the results of Rendition for all periods presented. The
following table presents a reconciliation of net sales and net income (loss) as
previously reported by the Company for the quarter ended November 27, 1997 to
those presented in the accompanying consolidated financial statements.
MTI Rendition Combined
- -------------------------------------------------------------------------------
Net sales $ 954.6 $ 2.7 $ 957.3
Net income (loss) $ 9.5 $ (3.0) $ 6.5
8. Equity investment
On October 19, 1998, the Company issued to Intel Corporation ("Intel")
approximately 15.8 million stock rights exchangeable into non-voting Class A
Common Stock (upon MTI shareholder approval of such class of stock) or into
common stock of the Company for a purchase price of $500 million. The Rights at
the time of issuance represented approximately 6% of the Company's outstanding
common stock. The Rights (or Class A Common Stock) will automatically be
exchanged for (or converted into) the Company's common stock upon a transfer to
a holder other than Intel or a 90% owned subsidiary of Intel. The Company has
agreed to seek shareholder approval to amend its Certificate of Incorporation to
create the non-voting Class A Common Stock at the Company's next Annual Meeting
of Shareholders. In the event the Company's shareholders approve the amendment,
the Rights will be automatically exchanged for Class A Common Stock upon the
filing in Delaware of the amended Certificate of Incorporation. In the event
the Company's shareholders do not approve the amendment, the Rights will remain
exchangeable into the Company's common stock. In order to exchange the Rights
for the Company's common stock, Intel would be required to provide the Company
with written evidence of compliance with the Hart-Scott-Rodino Act ("HSR")
filing requirements or that no HSR filings are required. The MTI stock to be
issued to Intel has not been registered under the Securities Act of 1933, as
amended, and is therefore subject to certain restrictions on resale. The
Company and Intel entered into a securities rights and restrictions agreement
which provides Intel with certain registration rights and places certain
restrictions on Intel's voting rights and other activities with respect to the
shares of MTI Class A Common Stock or common stock. Intel's registration rights
begin in April 1999. Intel also has the right to designate a nominee acceptable
to the Company to the Company's Board of Directors. Proceeds from the issuance
of these stock rights are reflected in "Additional Capital" in the Company's
balance sheet dated as of December 3, 1998.
In consideration for Intel's investment, the Company has agreed to commit
to the development of direct Rambus DRAM ("RDRAM") and to certain production and
capital expenditure milestones and to make available to Intel a certain
percentage of its semiconductor memory output over a five-year period, subject
to certain limitations. The exchange ratio of the Rights and conversion ratio of
the Class A Common Stock is subject to adjustment under certain formulae at the
election of Intel in the event the Company fails to meet the production or
capital expenditure milestones. No adjustment will occur to the exchange ratio
or conversion ratio under such formulae (i) unless the price of the Company's
common stock for a twenty day period ending two days prior to such milestone
dates is lower than $31.625 (the market price of the Company's common stock at
the time of investment), or (ii) if the Company achieves the production and
capital expenditure milestones. In addition, if an adjustment occurs, in no
event will the Company be obligated to issue more than: (a) a number of
additional shares of Class A Common Stock or common stock having a value
exceeding $150 million, or (b) a number of additional shares exceeding the
number of Rights originally issued.
8
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Notes to Consolidated Financial Statements, continued
9. Joint ventures
In connection with the Acquisition, the Company acquired a 30% ownership in
the TECH Singapore Semiconductor Pte. Ltd. ("TECH") and a 25% ownership in the
KTI Semiconductor Limited ("KTI") joint ventures (collectively, the "JVs"), each
of which operates wafer fabrication facilities for the manufacture of DRAM
products. TECH, which operates in Singapore, is a joint venture between the
Company, the Singapore Economic Development Board, Canon Inc., and Hewlett-
Packard Company. KTI, which operates in Japan, is a joint venture between the
Company and Kobe Steel, Ltd.
The Company has rights and obligations to purchase 100% of the JVs'
production meeting the Company's specifications at pricing determined quarterly
which generally results in discounts from the Company's average worldwide
selling prices. Certain partners of the JVs have product purchase rights with
the Company. The Company charges a fee to the joint ventures for its estimated
costs to transfer product and manufacturing process technology to the joint
ventures. The Company accounts for its investments in these JVs under the equity
method.
Product purchases from the JVs aggregated $46.1 million in the first
quarter of 1999. The Company performed assembly/test services for the JVs
totaling $12.9 million for the first quarter of 1999. Receivables from and
payables to the JVs were $11.8 million and $27.6 million, respectively, as of
December 3, 1998.
10. Commitments and contingencies
As of December 3, 1998, the Company had commitments of approximately $423.9
million for equipment purchases and $18.5 million for the construction of
buildings.
The Company has from time to time received, and may in the future receive,
communications alleging that its products or its processes may infringe on
product or process technology rights held by others. The Company has accrued a
liability and charged operations for the estimated costs of settlement or
adjudication of asserted and unasserted claims for alleged infringement prior to
the balance sheet date. Determination that the Company's manufacture of
products has infringed on valid rights held by others could have a material
adverse effect on the Company's financial position, results of operations or
cash flows and could require changes in production processes and products.
The Company is currently a party to various other legal actions arising out
of the normal course of business, none of which are expected to have a material
effect on the Company's financial position or results of operations.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
- -------------
The following discussion contains trend information and other forward
looking statements (including statements regarding future operating results,
future capital expenditures and facility expansion, new product introductions,
technological developments, acquisitions and the effect thereof and industry
trends) that involve a number of risks and uncertainties. The Company's actual
results could differ materially from the Company's historical results of
operations and those discussed in the forward looking statements. Factors that
could cause actual results to differ materially include, but are not limited to,
those identified in "Certain Factors." This discussion should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
September 3, 1998. All period references are to the Company's fiscal periods
ended December 3, 1998, September 3, 1998, or November 27, 1997, unless
otherwise indicated. All per share amounts are presented on a diluted basis
unless otherwise stated. All 1998 financial data of the Company has been
restated to include the results of operations of Rendition, Inc., which was
merged with the Company on September 11, 1998.
OVERVIEW
- --------
Micron Technology, Inc. and its subsidiaries are hereinafter referred to
collectively as the "Company" or "MTI." The Company designs, develops,
manufactures and markets semiconductor memory products, primarily DRAM, and
through its approximately 63% owned subsidiary, Micron Electronics, Inc.
("MEI"), develops, markets, manufactures and supports PC systems.
The semiconductor industry in general, and the DRAM market in particular,
experienced severe price declines in recent years. Per megabit prices declined
approximately 60% in 1998 following a 75% decline in fiscal 1997 and a 45%
decline in fiscal 1996. These extreme market conditions have had an adverse
effect on the Company's results of operations. Although the Company experienced
an 18% increase in per megabit average selling prices for the first quarter of
1999 as compared to the fourth quarter of 1998, the Company is unable to predict
whether such improved pricing is indicative of future periods.
On September 30, 1998, the Company completed the acquisition (the
"Acquisition") of substantially all of the semiconductor memory operations of
Texas Instruments, Inc. ("TI"). The Company's results of operations for the
first quarter of 1999 reflect two months for the acquired operations. On
October 19, 1998, the Company also issued to Intel Corporation ("Intel")
approximately 15.8 million stock rights (the "Rights") exchangeable into non-
voting Class A Common Stock (upon MTI shareholder approval of such class of
stock) or into common stock of the Company for an aggregate amount of $500
million. (See "Significant Transactions")
RESULTS OF OPERATIONS
- ---------------------
Net loss for the first quarter of 1999 was $46 million, or $0.19 per share,
on net sales of $794 million. For the first quarter of 1998 net income was $7
million, or $0.03 per share, on net sales of $957 million. For the fourth
quarter of 1998, net loss was $93 million, or $0.43 per share, on net sales of
$692 million.
NET SALES
First Quarter
----------------------------------
1999 1998
----------------------------------
Net sales % Net sales %
--------- ------ --------- ------
Semiconductor memory products $ 409.5 51.6 $ 440.1 46.0
PC systems 352.1 44.4 445.1 46.5
Other 32.0 4.0 72.1 7.5
--------- ------ --------- ------
Total net sales $ 793.6 100.0 $ 957.3 100.0
========= ====== ========= ======
Net sales of "Semiconductor memory products" include sales of $10.3 million
and $12.4 million in the first quarters of 1999 and 1998, respectively, of sales
of MTI semiconductor memory products incorporated in MEI PC products. "Other "
net sales for the first quarter of 1999 include revenue of $18.6 million for
test and assembly services performed by the Company. "Other" net sales for the
first quarter of 1998 include revenue of approximately $61 million from MEI's
contract manufacturing subsidiary, which was sold in February 1998.
10
<PAGE>
Net sales of semiconductor memory products for the first quarter of 1999
decreased by 7% as compared to the first quarter of 1998, principally due to a
52% decline in average selling price per megabit of memory, partially offset by
an 89% increase in megabits shipped. This increase in megabits shipped was due
to production increases principally resulting from shifts in the Company's mix
of semiconductor memory products to higher average density products, ongoing
transitions to successive reduced die size ("shrink") versions of existing
memory products and additional output from the acquired operations. The
Company's principal memory product in the first quarter of 1999 was the 64 Meg
DRAM, which comprised approximately 65% of the net sales of semiconductor memory
products. Approximately 87% of the 64 Meg DRAM sales were synchronous DRAM
("SDRAM") products.
Net sales of semiconductor memory products increased by 10% in the first
quarter of 1999 as compared to the fourth quarter of 1998 principally due to an
approximate 18% increase in average selling price per megabit of memory sold,
partially offset by a 10% decline in megabits shipped. During the first quarter
of 1999 prices for the Company's 16 Meg DRAM product increased significantly as
that device reached the end of its product life cycle and customers sought
lifetime-buy arrangements. The average selling price for the 64 Meg SDRAM
increased 8% in the first quarter of 1999 as compared to the fourth quarter of
1998. The decrease in megabits shipped was primarily due to backend production
constraints associated with the Company's rapid transition to the .21u shrink
version of its 64 Meg DRAM product. The effects of these constraints were
partially offset by the additional sales of semiconductor memory products
arising from the Company's newly acquired operations. These constraints are
expected to be resolved in the second quarter of 1999.
Net sales of PC systems were lower in the first quarter of 1999 compared to
the first quarter of 1998 primarily as a result of an 18% decline in average
selling prices which was partially offset by a 2% increase in unit sales. In
addition during the first quarter of 1998, the Company disposed of excess PC
component inventories, which also contributed to the comparative decline. Net
sales of PC systems for the first quarter of 1999 were 20% higher than for the
fourth quarter of 1998 primarily as a result of a 21% increase in unit sales,
which was partially offset by a 5% decrease in average selling prices.
GROSS MARGIN
First Quarter
-------------------------------------
1999 % Change 1998
-------------------------------------
Gross margin $ 115.9 (44.9)% $ 210.2
as a % of net sales 14.6% 22.0%
The Company's gross margin percentage was lower for the first quarter of
1999 compared to the first quarter of 1998 principally due to lower gross margin
percentages on sales of the Company's semiconductor memory products which
resulted primarily from a severe decline in average sales prices per megabit.
The Company's gross margin percentage on sales of semiconductor memory
products for the first quarter of 1999 was 9%, compared to 32% for the first
quarter of 1998. The decrease in gross margin percentage on sales of
semiconductor memory products for the first quarter of 1999 compared to the
first quarter of 1998 was primarily the result of the 52% decline in average
selling prices, and to a lesser extent, the inclusion of two months of results
for the acquired operations which have higher per-unit manufacturing costs.
These factors were partially offset by decreases in per megabit manufacturing
costs during the same period. Comparative decreases in per megabit
manufacturing costs were achieved primarily through shifts in the Company's mix
of semiconductor memory products to higher average density products and
transitions to shrink versions of existing products.
The Company's gross margin percentage for the fourth quarter of 1998 was
6%. The gross margin percentage on sales of semiconductor memory products for
the fourth quarter of 1998 was negative 10%. The increase in gross margin
percentage for semiconductor memory products sold in the first quarter of 1999
as compared to the fourth quarter of 1998 was primarily the result of the 18%
increase in average selling prices per megabit of memory. The Company's cost per
megabit of semiconductor memory sold remained unchanged comparing the first
quarter of 1999 with the fourth quarter of 1998 as cost improvements achieved by
the Company's Boise operations were offset by higher costs per megabit incurred
at the acquired operations.
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In connection with the Acquisition, the Company acquired the right and
obligation to purchase 100% of the production output of two joint ventures, TECH
Semiconductor Singapore Pte. Ltd. ("TECH") and KTI Semiconductor Limited
("KTI"), which meets the Company's specifications. The Company purchases
assembled and tested components from the joint ventures at prices determined
quarterly, which generally results in discounts from the Company's worldwide
average sales prices. These discounts are higher than gross margins realized by
the Company in recent periods on similar products manufactured in the Company's
wholly-owned facilities, but are lower than gross margins historically realized
in periods of relatively constrained supply. At any future reporting period,
gross margins for semiconductor memory products resulting from the Company's
purchase of joint venture products may positively or negatively impact gross
margins depending on the then existing relationship of average selling prices to
the Company's cost per unit sold for product manufactured in its wholly-owned
facilities.
The Company's PC gross margins in the first quarter of 1999 were 15%,
compared to 13% in the first quarter of 1998 and 22% in the fourth quarter of
1998. PC gross margins in the first quarter of 1998 were adversely affected by
significant losses recognized from disposition of excess PC component
inventories. PC gross margins in the fourth quarter of 1998 were favorably
affected by revisions of estimates for certain product and process technology
costs. In addition, the Company experienced intense price pressure on its PC
products resulting in a lower gross margin provided by such products in the
first quarter of 1999 when compared to the fourth quarter of 1998. PC gross
margins in the first quarter of 1999 were also affected by a more aggressive
pricing strategy, particularly on notebook products. The Company expects to
continue experiencing significant pressure on its gross margins on sales of its
PC systems, particularly for desktop and notebook products, as a result of
intense competition in the PC industry and consumer expectations of more
powerful PC systems at lower prices.
SELLING, GENERAL AND ADMINISTRATIVE
First Quarter
-------------------------------------
1999 % Change 1998
-------------------------------------
Selling, general and administrative $ 103.0 (18.3)% $ 126.0
as a % of net sales 13.0% 13.2%
Selling, general and administrative expenses were lower in the first
quarter of 1999 as compared to the first quarter of 1998 primarily as a result
of enhanced operational efficiencies and cost reductions at MEI and the sale of
90% of MEI's interest in its contract manufacturing subsidiary in fiscal 1998.
Selling, general and administrative expenses for the first quarter of 1999
include approximately $7 million in expense associated with the acquired
semiconductor operations. Selling, general and administrative expenses for the
first quarter of 1998 reflect a $6 million contribution to a university in
support of engineering education.
Selling, general and administrative expenses for the first quarter of 1999
increased by 3% as compared to the fourth quarter of 1998, primarily due to
increased costs associated with the acquired semiconductor operations. This
increase in selling, general and administrative expenses over the immediately
preceding quarter was partially offset by a decrease in expense associated with
the Company's PC operations.
RESEARCH AND DEVELOPMENT
First Quarter
-------------------------------------
1999 % Change 1998
-------------------------------------
Research and development $ 67.7 (0.7)% $ 67.2
as a % of net sales 8.5% 7.0%
Research and development expenses relating to the Company's semiconductor
memory operations, which constitute substantially all of the Company's research
and development expenses, vary primarily with the number of wafers processed,
personnel costs, and the cost of advanced equipment dedicated to new product and
process development. Research and development efforts are focused on advanced
process technology, which is the primary determinant in transitioning to next
generation products. Application of advanced process technology currently is
concentrated on shrink versions of the Company's 64 Meg SDRAM and development of
the Company's 128 Meg SDRAM and direct Rambus DRAM ("RDRAM"), Double Data Rate
("DDR"), SyncLink DRAM ("SLDRAM"),
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Flash and SRAM memory products. Other research and development efforts are
currently devoted to the design and development of RIC, flat panel displays,
graphics accelerator products and PC systems.
Research and development expenses in the first quarter of 1999 include
additional costs of resources obtained in the Acquisition being utilized to
broaden the Company's range of DRAM product offerings. The expansion of product
offerings is considered necessary to support the customer base associated with
the Company's anticipated increased market share.
The Company completed its transition from .25u to .21u at its Boise site in
the fourth quarter of calendar 1998 and expects the transition from .21u to .18u
to occur at its Boise site in calendar 1999. The Company anticipates that
process technology will move to .15u line widths in the next few years as needed
for the development of future generation semiconductor products. Transitions to
smaller line widths at the acquired operations are expected to lag behind
transitions at the Boise site as process development will be conducted primarily
in Boise.
INCOME TAXES
The effective tax rate approximated 40% for the first quarter of 1999 and
1998. The effective tax rate primarily reflects the statutory corporate income
tax rate and the net effect of state taxation. Taxes on earnings of domestic
subsidiaries not consolidated for tax purposes may cause the effective tax rate
to vary significantly from period to period.
RECENTLY ISSUED ACCOUNTING STANDARDS
Recently issued accounting standards include Statement of Financial
Accounting Standards ("SFAS") No. 131 "Disclosures about Segments of an
Enterprise and Related Information," issued by the FASB in June 1997, Statement
of Position ("SOP") 98-1 "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," issued by the AICPA in March 1998 and
SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities,"
issued by the FASB in June 1998.
SFAS No. 131 will require the Company to provide additional disclosures for
its year end 1999. The Company is currently evaluating the impact of SOP 98-1,
required by year end 2000 and SFAS No. 133, which is required for the first
quarter of 2000.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of December 3, 1998, the Company had cash and liquid investments
totaling $1,925 million, representing an increase of $1,275 million during the
first quarter of 1999. In the first quarter of 1999 the Company received $681
million in conjunction with the Acquisition and $500 million from the sale of
stock rights. The Company's other principal source of liquidity during the first
quarter of 1999 was net cash flow from operations of $256 million. The principal
uses of funds during the first quarter of 1999 were $118 million for property,
plant and equipment expenditures and $102 million for repayments of equipment
contracts and long-term debt.
The Company believes that in order to transition the acquired operations to
the Company's product and process technology, develop new product and process
technologies, support future growth, achieve operating efficiencies and maintain
product quality, it must continue to invest in manufacturing technology,
facilities and capital equipment, research and development, and product and
process technology. The Company currently estimates it will spend approximately
$1 billion in 1999 for purchases of equipment and construction and improvement
of buildings. As of December 3, 1998, the Company had entered into contracts
extending into 2000 for approximately $424 million for equipment purchases and
approximately $18 million for the construction of facilities.
The Company has an aggregate of $513 million in revolving credit
agreements, including a $400 million agreement expiring in May 2000 which
contains certain restrictive covenants pertaining to the Company's semiconductor
memory operations, including a maximum total debt to equity ratio. As of
December 3, 1998, the Company was in compliance with all covenants under the
facilities and had borrowings totaling approximately $9
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million outstanding under the agreements. There can be no assurance that the
Company will continue to be able to meet the terms of the covenants and
conditions in the agreements, borrow under the agreements or negotiate
satisfactory successor agreements.
As of December 3, 1998, approximately $370 million of the Company's
consolidated cash and liquid investments were held by MEI. Cash generated by
MEI is not readily available or anticipated to be available to finance
operations or other expenditures of MTI's semiconductor memory operations.
SIGNIFICANT TRANSACTIONS
- ------------------------
ACQUISITION
On September 30, 1998, the Company completed its acquisition of
substantially all of TI's memory operations. The Acquisition was consummated
through the issuance of debt and equity securities. TI received 28.9 million
shares of MTI common stock, $740 million principal amount of Convertible Notes
and $210 million principal amount of Subordinated Notes. In addition to TI's net
memory assets, the Company received $681 million in cash. The Company and TI
also entered into a ten-year, royalty-free, life-of-patents, patent cross
license that commenced on January 1, 1999.
The MTI common stock and Convertible Notes issued in the transaction have
not been registered under the Securities Act of 1933, as amended, and are
therefore subject to certain restrictions on resale. The Company and TI entered
into a securities rights and restrictions agreement as part of the transaction
which provides TI with certain registration rights and places certain
restrictions on TI's voting rights and other activities with respect to shares
of MTI common stock. TI's registration rights begin in April 1999. The
Convertible Notes and the Subordinated Notes issued in the transaction bear
interest at the rate of 6.5% and have a term of seven years. The Convertible
Notes are convertible into 12.3 million shares of MTI common stock at a
conversion price of $60 per share. The Convertible Notes are not subject to
redemption prior to October 2000 and are redeemable from that date through
October 2002 only if the common stock price is at least $78.00 for a specified
trading period. The Subordinated Notes are subordinated to the Convertible
Notes, the Company's outstanding 7% Convertible Subordinated Notes due July,
2004, and substantially all of the Company's other indebtedness.
The assets acquired by the Company in the Acquisition include a wafer
fabrication operation in Avezzano, Italy, an assembly/test operation in
Singapore, and a wafer fabrication facility in Richardson, Texas. TI closed the
Richardson memory manufacturing operation in June 1998. Also included in the
Acquisition was TI's interest in two joint ventures and TI's rights and
obligations to purchase 100% of the joint venture production meeting the
Company's specifications. TECH in Singapore is owned by TI, Canon, Inc.,
Hewlett-Packard Singapore (Private) Limited, a subsidiary of Hewlett Packard
Company, and EDB Investments Pte. Ltd., which is controlled by the Economic
Development Board of the Singapore government; and KTI in Japan is owned by TI
and Kobe Steel, Ltd. MTI acquired a 30% interest in TECH and a 25% interest in
KTI. The Company filed Form 8-K/A on October 16, 1998, which incorporates
historical and pro forma financial information with respect to the Acquisition.
Pro forma financial information is also included in the notes to the financial
statements in this Form 10-Q.
Although the Company believes the Acquisition further leverages its
technology, the Company anticipates that the Acquisition will continue to have a
near term adverse impact upon the Company's results of operations and cash
flows. The Company has begun to transfer its product and process technology
into the acquired operations (primarily the wholly-owned fabrication facilities
in Avezzano, Italy and the joint-venture facilities, KTI and TECH) and expects
the transfer to be substantially complete in the next nine to twelve months.
Output of the Company's semiconductor memory products will increase directly as
a result of the manufacturing capacity obtained in the Acquisition and should
increase further as a result of the transfer of the Company's product and
process technology to the acquired operations. Until the Company is able to
complete the transfer of its product and process technology into the acquired
operations, the Company expects that the per unit costs associated with products
manufactured at the acquired operations will continue to significantly exceed
the per unit costs of products manufactured at the Company's Boise, Idaho
facility, resulting in a near-term adverse impact on the Company's gross margin
percentage. The ten-year, royalty-free, life-of-patents, patent cross license
entered into with TI will result in a reduction in the Company's royalty
expenses beginning January, 1999.
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EQUITY INVESTMENT
On October 19, 1998, the Company issued to Intel approximately 15.8 million
Rights exchangeable into non-voting Class A Common Stock (upon MTI shareholder
approval of such class of stock) or into common stock of the Company for a
purchase price of $500 million. The Rights at the time of issuance represented
approximately 6% of the Company's outstanding common stock. The Rights (or
Class A Common Stock) will automatically be exchanged for (or converted into)
the Company's common stock upon a transfer to a holder other than Intel or a 90%
owned subsidiary of Intel. The Company has agreed to seek shareholder approval
to amend its Certificate of Incorporation to create the non-voting Class A
Common Stock at the Company's next Annual Meeting of Shareholders. In the event
the Company's shareholders approve the amendment, the Rights will be
automatically exchanged for Class A Common Stock upon the filing in Delaware of
the amended Certificate of Incorporation. In the event the Company's
shareholders do not approve the amendment, the Rights will remain exchangeable
into the Company's common stock. In order to exchange the Rights for the
Company's common stock, Intel would be required to provide the Company with
written evidence of compliance with the Hart-Scott-Rodino Act ("HSR") filing
requirements or that no HSR filings are required. The MTI tock to be issued to
Intel has not been registered under the Securities Act of 1933, as amended, and
is therefore subject to certain restrictions on resale. The Company and Intel
entered into a securities rights and restrictions agreement which provides Intel
with certain registration rights and places certain restrictions on Intel's
voting rights and other activities with respect to the shares of MTI Class A
Common Stock or common stock. Intel's registration rights begin in April 1999.
Intel also has the right to designate a director nominee, acceptable to the
Company, to the Company's Board of Directors.
In consideration for Intel's investment, the Company has agreed to commit
to the development of RDRAM and to certain production and capital expenditure
milestones and to make available to Intel a certain percentage of its
semiconductor memory output over a five-year period, subject to certain
limitations. The exchange ratio of the Rights and conversion ratio of the Class
A Common Stock is subject to adjustment under certain formulae at the election
of Intel in the event MTI fails to meet the production or capital expenditure
milestones. No adjustment will occur to the exchange ratio or conversion ratio
under such formulae (i) unless the price of the Company's common stock for a
twenty day period ending two days prior to such milestone dates is lower than
$31.625 (the market price of the Company's common stock at the time of
investment), or (ii) if the Company achieves the production and capital
expenditure milestones. In addition, if an adjustment occurs, in no event will
the Company be obligated to issue more than: (a) a number of additional shares
of Class A Common Stock or common stock having a value exceeding $150 million,
or (b) a number of additional shares exceeding the number of Rights originally
issued.
YEAR 2000
- ---------
Like many other companies, the Year 2000 computer issue creates risks for
the Company. If internal systems do not correctly recognize and process date
information beyond the year 1999, the Company's operations could be adversely
impacted as a result of system failures and business process interruption.
The Company has been addressing the Year 2000 computer issue with a plan
that began in early 1996. To manage its Year 2000 program, the Company has
divided its efforts into the primary program areas of: (i) information
technology ("IT"), which includes computer and network hardware, operating
systems, purchased development tools, third-party and internally developed
software, files and databases, end-user extracts and electronic interfaces; (ii)
manufacturing and facilitation equipment; and (iii) external dependencies, which
include relationships with suppliers and customers.
The Company is following four general steps for each of these program
areas: "Ownership," wherein each department manager is responsible for assigning
ownership for the various Year 2000 issues to be tested; "Identification" of
systems and equipment and the collection of Year 2000 data in a centralized
place to track results of compliance testing and subsequent remediation;
"Compliance Testing," which includes the determination of the specific test
routine to be performed on the software or equipment and determination of year
2000 compliance for the item being tested; and "Remediation," which involves
implementation of corrective action, verification of successful implementation,
finalization of, and, if need be, execution of, contingency plans.
15
<PAGE>
As of December 3, 1998, the Ownership and Identification steps were
essentially complete for all three program areas: IT, manufacturing equipment
and external dependencies. The Compliance Testing and Remediation steps are
substantially complete for the IT area at the Boise site and the Company is
evaluating the status of the IT areas for the acquired operations.
Compliance Testing of manufacturing and facilitation equipment is over
fifty percent complete. Remediation efforts for equipment thus tested is in
excess of sixty percent complete. The Company is currently in the process of
assessing embedded technology associated with its PC systems manufacturing
equipment and expects the evaluation to be complete in the first calendar
quarter 1999. The Company is currently working with suppliers of products and
services to determine and monitor their level of compliance and Compliance
Testing. Year 2000 readiness of significant customers is also being assessed.
The Company's evaluation of Year 2000 compliance as it relates to the Company's
external dependencies is expected to be complete by the second calendar quarter
of 1999.
The cost of addressing the Company's Year 2000 issues is expected to be
immaterial. The Company is executing its Year 2000 readiness plan solely through
its employees. Year 2000 Compliance Testing and reprogramming is being done in
conjunction with other ongoing maintenance and reprogramming efforts.
With respect to Remediation, the Company has commenced work on various
types of contingency plans to address potential problem areas with internal
systems and with suppliers and other third parties. Internally, each software
and hardware system has been assigned to on-call personnel who are responsible
for bringing the system back on line in the event of a failure. Externally, the
Company's Year 2000 plan includes identification of alternate sources for
providers of goods and services. The Company expects its contingency plans to be
complete by the second calendar quarter of 1999.
CERTAIN FACTORS
- ---------------
In addition to the factors discussed elsewhere in this Form 10-Q and in the
Company's Form 10-K for the fiscal year ended September 3, 1998, the following
are important factors which could cause actual results or events to differ
materially from those contained in any forward looking statements made by or on
behalf of the Company.
The semiconductor memory industry is characterized by rapid technological
change, frequent product introductions and enhancements, difficult product
transitions, relatively short product life cycles, and volatile market
conditions. These characteristics historically have made the semiconductor
industry highly cyclical, particularly in the market for DRAMs, which are the
Company's primary products. The semiconductor industry has a history of
declining average sales prices as products mature. Long-term average decreases
in sales prices for semiconductor memory products approximate 30% on an
annualized basis; however, significant fluctuations from this rate have occurred
from time to time, including in recent periods.
The selling prices for the Company's semiconductor memory products
fluctuate significantly with real and perceived changes in the balance of supply
and demand for these commodity products. Growth in worldwide supply has outpaced
growth in worldwide demand in recent periods, resulting in a significant
decrease in average selling prices for the Company's semiconductor memory
products. The semiconductor industry in general, and the DRAM market in
particular, has experienced a particularly severe downturn. While per megabit
prices increased in the first quarter of 1999 as compared to the fourth quarter
of 1998, per megabit prices declined approximately 60% in 1998 following a 75%
decline in 1997 and a 45% decline in 1996. The increase in per megabit pricing
for the first quarter of 1999 may not be indicative of pricing in future
periods. In the event that average selling prices decline at a faster rate than
the rate at which the Company is able to decrease per unit manufacturing costs,
the Company could be materially adversely affected in its operations, cash flows
and financial condition. Future consolidation by competitors in the
semiconductor memory industry may place the Company at a disadvantage in
competing with competitors that have greater capital resources. Competitors are
also aggressively seeking improved yields, smaller die size and fewer mask
levels in their product designs. These improvements could result in a
significant increase in worldwide capacity leading to further downward pressure
on prices.
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Approximately 72% of the Company's sales of semiconductor memory products
during the first quarter of 1999 were directly into the PC or peripheral
markets. DRAMs are the most widely used semiconductor memory component in most
PC systems. Should the rate of growth of sales of PC systems or the rate of
growth in the amount of memory per PC system decrease, the growth rate for sales
of semiconductor memory could also decrease, placing further downward pressure
on selling prices for the Company's semiconductor memory products. The Company
is unable to predict changes in industry supply, major customer inventory
management strategies, or end user demand, which are significant factors
influencing pricing for the Company's semiconductor memory products.
On September 30, 1998, the Company acquired substantially all of TI's
memory operations. The integration and successful operation of the acquired
operations is dependent upon a number of factors, including, but not limited to,
the Company's ability to transfer its product and process technology in a timely
and cost-effective manner into the wholly-owned acquired fabrication facilities
in Avezzano, Italy and joint venture facilities in Singapore (TECH ) and Japan
(KTI). The Company expects the transfer of its product and process technology
into these fabrication facilities to be substantially complete by the end of
calendar 1999; however, there can be no assurance that the Company will be able
to meet this timeline. Until such time as the Company is able to complete the
transfer of its product and process technology into the acquired fabrication
facilities, it is expected that the per unit costs associated with the products
manufactured at the acquired fabrication facilities will continue to
significantly exceed the per unit costs of products manufactured at the
Company's Boise, Idaho, facility. As a result, it is expected that the
Acquisition will continue to have a near term adverse effect on the Company's
results of operations and cash flows.
As the semiconductor industry transitions to higher bandwidth products
including RDRAM, DDR and SLDRAM, the Company may encounter difficulties in
achieving the semiconductor manufacturing efficiencies that it has historically
achieved. The Company's productivity levels, die per wafer yields, and in
particular, backend equipment requirements may be affected by a transition to
higher bandwidth products. There can be no assurance that the Company will
successfully transition to these products or that it will be able to achieve its
historical rate of cost per megabit reductions.
As a result of the Acquisition, the Company has substantially increased its
share of the worldwide DRAM market and its production capacity, and as a result,
the Company's results of operations are further subject to fluctuations in
pricing for semiconductor memory products. In addition, if the Company is
successful in the transfer of its product and process technology into the
acquired facilities, the amount of worldwide semiconductor memory capacity could
increase, resulting in further downward pricing pressure on the Company's
semiconductor memory products.
The Acquisition is expected to continue to have a significant effect on the
Company's future results of operations and cash flows, including, but not
limited to: a negative impact on gross margin in the near term due in part to
significantly higher per unit manufacturing costs at the acquired operations;
costs related to the assimilation of the acquired operations; increased research
and development expense associated with the Company's efforts to broaden its
range of DRAM product offerings; increased interest expense associated with the
Convertible Notes and Subordinated Notes issued in the transaction and increased
capital spending relating to the wholly-owned acquired operations in Avezzano,
Italy and Singapore.
The Company has limited experience in integrating or operating
geographically dispersed manufacturing facilities. It is expected that the
integration and operation of the acquired facilities will place strains on the
Company's management and information systems resources. Failure by the Company
to effectively manage the integration of the acquired facilities could have a
material adverse effect on the Company's results of operations.
In connection with the Acquisition, the Company and TI entered into a
transition services agreement requiring TI to provide certain services and
support to the Company for specified periods following the Acquisition. Among
other items, TI is to provide information technology, finance and accounting,
human resources, equipment maintenance, facilities and purchasing services under
the services agreement. The successful integration and operation of the
acquired facilities is partially dependent upon the continued successful
provision of services by TI under the services agreement. There can be no
assurance that the services and support called for under the services agreement
will be provided in a manner sufficient to meet anticipated requirements. The
failure to obtain sufficient
17
<PAGE>
services and support could impair the Company's ability to successfully
integrate the acquired facilities and could have a material adverse affect on
the Company's results of operations.
In accordance with the transition services agreement, the Company will rely
in part on TI computer networks and information technology services with respect
to certain of the acquired operations. During this period and beyond, the
Company will also be utilizing software obtained or licensed from TI to conduct
specific portions of the business. Dependency upon TI systems will span calendar
years 1999 and 2000, during which period Year 2000 issues may arise. If
unforeseen difficulties are encountered in ending the Company's reliance upon
TI's software, hardware or services or in segregating the companies' information
technology operations or with Year 2000 issues, the Company's results of
operations could be materially adversely affected.
International sales comprised approximately 27% of the Company's net sales
in the first quarter of 1999 and 20% in 1998. The Company expects international
sales to continue to increase in 1999 as a result of the Acquisition. In
addition, the Company has significantly expanded its international operations as
a result of the Acquisition. International sales and operations are subject to a
variety of risks, including those arising from currency fluctuations, export
duties, changes to import and export regulations, possible restrictions on the
transfer of funds, employee turnover, labor unrest, longer payment cycles,
greater difficulty in collecting accounts receivable, the burdens and costs of
compliance with a variety of foreign laws and, in certain parts of the world,
political instability. While to date these factors have not had a significant
adverse impact on the Company's results of operations, there can be no assurance
that there will not be such an impact in the future.
In connection with the Acquisition, the Company acquired the rights and
obligations to purchase 100% of the production output of the TECH joint venture
in Singapore and the KTI joint venture in Japan. The Company purchases
assembled and tested components meeting the Company's specifications at prices
determined quarterly, which generally results in discounts from the Company's
worldwide average sales prices. These discounts are currently higher than gross
margins realized by the Company in recent periods on similar products
manufactured in the Company's wholly-owned facilities, but are lower than gross
margins historically realized in periods of relatively constrained supply. At
any future reporting period, gross margins for semiconductor memory products
resulting from the Company's right to purchase joint venture products may
positively or negatively impact gross margins depending on the then existing
relationship of average selling prices to the Company's cost per unit sold for
product manufactured in its wholly-owned facilities.
The Company's operating results are significantly impacted by the operating
results of its consolidated subsidiaries, particularly MEI. MEI's past
operating results have been, and its future operating results may be, subject to
seasonality and other fluctuations, on a quarterly and an annual basis, as a
result of a wide variety of factors, including, but not limited to, industry
competition, the Company's ability to accurately forecast demand and selling
prices for its PC products, fluctuating market pricing for PCs and semiconductor
memory products, seasonal government purchasing cycles, inventory obsolescence,
the Company's ability to effectively manage inventory levels, changes in product
mix, manufacturing and production constraints, fluctuating component costs, the
effects of product reviews and industry awards, critical component availability,
seasonal cycles common in the PC industry, the timing of new product
introductions by the Company and its competitors and global market and economic
conditions. Changing circumstances, including but not limited to, changes in
the Company's core operations, uses of capital, strategic objectives and market
conditions, could result in the Company changing its ownership interest in its
subsidiaries.
The Company is engaged in ongoing efforts to enhance its production
processes to reduce per unit costs by reducing the die size of existing
products. The result of such efforts has generally led to significant increases
in megabit production. There can be no assurance that the Company will be able
to maintain or approximate increases in megabit production at a level
approaching that experienced in recent years or that the Company will not
experience decreases in manufacturing yield or production as it attempts to
implement future technologies. Further, from time to time, the Company
experiences volatility in its manufacturing yields, as it is not unusual to
encounter difficulties in ramping latest shrink versions of existing devices or
new generation devices to commercial volumes. The semiconductor memory industry
is characterized by frequent product introductions and enhancements. The
Company's ability to reduce per unit manufacturing costs of its semiconductor
memory products is largely dependent on its ability to design and develop new
generation products and shrink versions of existing products and its ability
18
<PAGE>
to ramp such products at acceptable rates to acceptable yields, of which there
can be no assurance. In addition, there can be no assurance that the Company
will be able to continue to reduce its per unit manufacturing costs at the rate
historically achieved by the Company.
Historically, the Company has reinvested substantially all cash flow from
semiconductor memory operations in capacity expansion and enhancement programs.
The Company's cash flow from operations depends primarily on average selling
prices and per unit manufacturing costs of the Company's semiconductor memory
products. If for any extended period of time average selling prices decline
faster than the rate at which the Company is able to decrease per unit
manufacturing costs, the Company may not be able to generate sufficient cash
flows from operations to sustain operations. Cash generated by MEI is not
readily available or anticipated to be available to finance the Company's
semiconductor operations. The Company has an aggregate of $513 million in
revolving credit agreements, including a $400 million agreement expiring in May
2000, which contains certain restrictive covenants pertaining to the Company's
semiconductor memory operations, including a maximum total debt to equity ratio.
There can be no assurance that the Company will continue to be able to meet the
terms of the covenants or be able to borrow the full amount of the credit
facilities. There can be no assurance that, if needed, external sources of
liquidity will be available to fund the Company's operations or its capacity and
product and process technology enhancement programs. Failure to obtain
financing could hinder the Company's ability to make continued investments in
such programs, which could materially adversely affect the Company's business,
results of operations and financial condition.
Completion of the Company's semiconductor manufacturing facility in Lehi,
Utah was suspended in February 1996, as a result of the decline in average
selling prices for semiconductor memory products. As of December 3, 1998, the
Company had invested approximately $707 million in the Lehi facility. Timing of
completion of the remainder of the Lehi production facilities is dependent upon
market conditions. Market conditions which the Company expects to evaluate
include, but are not limited to, worldwide market supply and demand of
semiconductor products and the Company's operations, cash flows and alternative
uses of capital. There can be no assurance that the Company will be able to fund
the completion of the Lehi manufacturing facility. The failure by the Company to
complete the facility would likely result in the Company being required to write
off all or a portion of the facility's cost, which could have a material adverse
effect on the Company's business and results of operations. In addition, in the
event that market conditions improve, there can be no assurance that the Company
can commence manufacturing at the Lehi facility in a timely, cost effective
manner that enables it to take advantage of the improved market conditions.
The semiconductor and PC industries have experienced a substantial amount
of litigation regarding patent and other intellectual property rights. In the
future, litigation may be necessary to enforce patents issued to the Company, to
protect trade secrets or know-how owned by the Company, or to defend the Company
against claimed infringement of the rights of others. The Company has from time
to time received, and may in the future receive, communications alleging that
its products or its processes may infringe product or process technology rights
held by others. The Company has entered into a number of patent and intellectual
property license agreements with third parties, some of which require one-time
or periodic royalty payments. It may be necessary or advantageous in the future
for the Company to obtain additional patent licenses or to renew existing
license agreements. The Company is unable to predict whether these license
agreements can be obtained or renewed on terms acceptable to the Company.
Adverse determinations that the Company's manufacturing processes or products
have infringed on the product or process rights held by others could subject the
Company to significant liabilities to third parties or require material changes
in production processes or products, any of which could have a material adverse
effect on the Company's business, results of operations and financial condition.
The Company is dependent upon a limited number of key management and
technical personnel. In addition, the Company's future success will depend in
part upon its ability to attract and retain highly qualified personnel,
particularly as the Company engages in worldwide operations and adds different
product types to its product line, which will require parallel design efforts
and significantly increase the need for highly skilled technical personnel. The
Company competes for such personnel with other companies, academic institutions,
government entities and other organizations. The Company has experienced, and
expects to continue to experience, increased recruitment of its existing
personnel by other employers. The Company's ability to retain key acquired
personnel will be a critical factor in the Company's ability to successfully
integrate the acquired operations. There can be no assurance that the
19
<PAGE>
Company will be successful in hiring or retaining qualified personnel. Any loss
of key personnel or the inability to hire or retain qualified personnel could
have a material adverse effect on the Company's business and results of
operations.
20
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
Substantially all of the Company's liquid investments and long-term debt
are at fixed interest rates, and therefore the fair value of these instruments
is affected by changes in market interest rates. However, substantially all of
the Company's liquid investments mature within one year. As a result, the
Company believes that the market risk arising from its holdings of financial
instruments is minimal. The Company's results of operations and financial
position for the first quarter of 1999 reflect a higher volume of foreign
currency transactions and account balances than in previous periods related to
the foreign operations obtained through the Acquisition. As of December 3, 1998
the Company held aggregate cash and receivables in foreign currency valued at
approximately US $13 million and aggregate foreign currency payables valued at
approximately US $61 (including long-term liabilities denominated in Italian
lira valued at approximately US $21 million). Foreign currency receivables and
payables are comprised primarily of Italian lira, Singapore dollars and Japanese
yen. The Company is currently evaluating its risk management policy regarding
foreign currency exposure.
21
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
- ---------------------------------------------------
TEXAS INSTRUMENTS INCORPORATED
On September 30, 1998, the Company completed its acquisition of
substantially all of TI's memory operations. The Acquisition was consummated
through the issuance of debt and equity securities. TI received 28.9 million
shares of Common Stock, $740 million principal amount of Convertible Notes and
$210 million principal amount of Subordinated Notes. In addition to TI's net
memory assets, the Company received $681 million in cash. The Company and TI
also entered into a ten-year, royalty-free, life-of-patents, patent cross
license that commenced on January 1, 1999.
The Common Stock and Convertible Notes issued in the transaction were
issued pursuant to a Section 4(2), exemption under the Securities Act of 1933,
as amended ("the Act"), and are therefore subject to certain restrictions on
resale. The Company and TI entered into a securities rights and restrictions
agreement as part of the transaction which provides TI with certain registration
rights and places certain restrictions on TI's voting rights and other
activities with respect to shares of Common Stock. TI's registration rights
begin in April 1999. The Convertible Notes and the Subordinated Notes issued in
the transaction bear interest at the rate of 6.5% and have a term of seven
years. The Convertible Notes are convertible into 12.3 million shares of Common
Stock at a conversion price of $60 per share. The Convertible Notes are not
subject to redemption prior to October 2000 and are redeemable from that date
through October 2002 only if the Common Stock price is at least $78.00 for a
specified trading period.
Conversion Terms
A holder of a Convertible Note has the right, at the holder's option, to
convert the Convertible Note into shares of Common Stock at any time on or prior
to the close of business on the maturity date, unless previously redeemed or
repurchased, at the Conversion Rate, subject to adjustment as described below.
The Conversion Rate is subject to adjustment in certain events, including,
without duplication: (a) dividends (and other distributions) payable in Common
Stock on shares of Common Stock, (b) the issuance to all holders of Common Stock
of rights, options or warrants entitling them to subscribe for or purchase
Common Stock at less than the then current market price of such Common Stock
(determined as provided in the Indenture for the Convertible Notes) as of the
record date for shareholders entitled to receive such rights, options or
warrants (provided that the Conversion Rate will be readjusted to the extent any
such rights, options or warrants are not exercised prior to the expiration
thereof), (c) subdivisions, combinations and reclassifications of Common Stock,
(d) distributions to all holders of Common Stock of evidences of indebtedness of
the Company, shares of capital stock, cash or assets (including securities (but
excluding those dividends, rights, options, warrants and distributions referred
to above) dividends, and distributions paid exclusively in cash), (e)
distributions consisting exclusively of cash (excluding any cash portion of
distributions referred to in (d) above) to all holders of Common Stock in an
aggregate amount that, combined together with (i) other such all-cash
distributions made within the preceding 12 months in respect of which no
adjustment has been made and (ii) any cash and the fair market value of other
considerations payable in respect of any tender offer by the Company or any of
its subsidiaries for Common Stock concluded within the preceding 12 months in
respect of which no adjustment has been made, exceeds 12.5% of the Company's
market capitalization (for this purpose being the product of the current market
price per share of the Common Stock on the record date for such distribution
times the number of shares of Common Stock outstanding) on such date, and (f)
the successful completion of a tender offer made by the Company or any of its
subsidiaries for Common Stock which involves an aggregate consideration that,
together with (i) any cash and other consideration payable in a tender offer by
the Company or any of its subsidiaries for Common Stock expiring within the 12
months preceding the expiration of such tender offer in respect of which no
adjustment has been made and (ii) the aggregate amount of any such all-cash
distributions referred to in (e) above to all holders of Common Stock within the
12 months preceding the expiration
22
<PAGE>
of such tender offer in respect of which no adjustments have been made, exceeds
12.5% of the Company's market capitalization on the expiration of such tender
offer.
In case of any consolidation or merger of the Company with or into another
person or any merger of another person into the Company (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale, transfer or lease of
all or substantially all of the assets of the Company, each Convertible Note
then outstanding will, without the consent of the holder of any Convertible
Note, become convertible only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale, transfer or
lease by a holder of the number of shares of Common Stock into which such
Convertible Note was convertible immediately prior thereto (assuming such holder
of Common Stock failed to exercise any rights of election and that such
Convertible Note was then convertible).
INTEL CORPORATION
On October 19, 1998, the Company issued to Intel Corporation ("Intel")
15,810,277 stock rights ("Rights") exchangeable into non-voting Class A Common
Stock (upon shareholder approval of such class of stock), or if shareholder
approval is not obtained, into Common Stock of the Company, for a purchase price
of $500 million. The Rights at the time of issuance represented approximately
6% of the Company's outstanding Common Stock. The Company agreed with Intel to
seek shareholder approval of an amendment to its Certificate of Incorporation to
provide for the authorization of Class A Common Stock. The Class A Common Stock
(or Rights, if shareholder approval is not obtained) will automatically be
converted into (or exchanged for) the Company's Common Stock upon a transfer by
Intel to a holder other than one of its 90% or more owned subsidiaries. In
consideration for Intel's investment, in addition to proceeds received, the
Company has agreed to certain goals for the development and production of direct
Rambus DRAM ("RDRAM") products and to certain related capital expenditures and
to make available to Intel a portion of its semiconductor memory output over a
five-year period, subject to certain limitations. The Company and Intel entered
into a securities rights and restrictions agreement which provides Intel with
certain registration rights and places certain restrictions on Intel's voting
rights and other activities with respect to the shares of Class A Common Stock
(or Common Stock). Intel's registration rights begin in April 1999. Intel also
has the right to designate a nominee to the Company's Board of Directors,
provided such nominee is acceptable to the Company. The Rights were issued
pursuant to a Section 4(2) exemption under the Act.
Conversion Terms of the Rights and Class A Common Stock
The Class A Common Stock, if approved by the Company's shareholders, will
be, and the Rights are convertible into shares of Common Stock at a conversion
ratio of one-to-one, subject to adjustment upon the occurrence of certain events
or circumstances as summarized. An amount equal to the fair market value of one
share of Common Stock, as determined in good faith by the Board of Directors,
will be paid in lieu of any fractional shares. In the event the Class A Common
Stock or the Rights are transferred to a person other than Intel or a 90% owned
subsidiary of Intel, each share of Class A Common Stock or each Right will
automatically convert into shares of Common Stock at the applicable conversion
ratio.
The conversion ratio is subject to adjustment in the event of any
subdivision (by stock split, stock dividend or otherwise) of the Common Stock or
any combination of the Rights or Class A Common Stock (by reverse stock split or
otherwise) or any combination of the Common Stock (by reverse stock split or
otherwise) or any subdivision of the Rights or Class A Common Stock (by stock
split, stock dividend or otherwise). In addition, the conversion ratio is
subject to special adjustments, in accordance with certain specified formulas,
in the event the Company fails to meet certain agreed upon capital expenditure
goals or RDRAM production goals and the average price of the Company's Common
Stock at the time of adjustment is lower than Intel's original price. These
goals are subject to adjustment under certain circumstances. The Company may
elect to pay cash in an amount equal to the value of the additional shares
issuable as a result of a special adjustment in lieu of such special adjustment.
The special conversion rate adjustments will be limited to the extent
required to ensure (1) that the value of additional shares of Common Stock and
other securities or property and any related payments (including any cash
payments in lieu of special adjustments), together with any shares of Common
Stock and other securities or property and any related payments as a result of
the special conversion rate adjustments with respect to the Rights, does not
exceed a maximum aggregate adjustment amount of $150 million (with the value of
such additional shares, securities
23
<PAGE>
and property measured as set forth in the Amendment); and (2) that the aggregate
number of shares of Common Stock issued or issuable upon conversion of Class A
Common Stock (or exercise of the Rights) does not exceed the lesser of (i) 19.9%
of the shares of Common Stock outstanding on the closing date of the issuance of
the Rights and (ii) 31,620,554 shares of Common Stock. No special conversion
rate adjustments will occur if (i) the Company achieves the production and
capital expenditure goals or (ii) the average price of the Company's Common
Stock is higher than $31.625 (the market price of the Company's Common Stock at
the time of the investment) for the twenty day period ending two days prior to
the goal achievement date.
The conversion rights are also subject to adjustment in the event of any
reorganization, reclassification or change of shares of the Common Stock (other
than a change in par value or from par value to no par value as a result of a
subdivision or combination), or any consolidation of the Company with one or
more corporations or a merger of the Company with another corporation (other
than a consolidation or merger in which the Company is the resulting or
surviving corporation and which does not result in any reclassification or
change of outstanding shares of Common Stock).
24
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) The following are filed as a part of this report:
Exhibit
Number Description of Exhibit
------ ----------------------
3.7 Bylaws, as amended
10.139 Purchase Agreement dated September 30, 1998 between the Company and
KTI Semiconductor Limited
10.140 Purchase Agreement dated September 30, 1998 between the Company and
TECH Semiconductor Singapore Pte. Ltd.
27 Financial Data Schedule
(b) The registrant filed the following reports on Form 8-K or Form 8-K/A during
the fiscal quarter ended December 3, 1998:
Form Date Item
---- ---- ----
8-K October 7, 1998 Item 5, Other Events
8-K October 14, 1998 Item 2, Acquisition or Disposition of Assets
Item 7, Financial Statements
8-K/A October 16, 1998 Item 7(a), Financial Statements of Business
Acquired MMP Business of Texas
Instruments Incorporated
Item 7(b), Pro Forma Financial Information
Unaudited Pro Forma Combined
Financial Statements, Micron/MMP
Combined Company
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Micron Technology, Inc.
------------------------------
(Registrant)
Dated: January 13, 1999 /s/ Wilbur G. Stover, Jr.
-------------------------
Wilbur G. Stover, Jr., Vice President of
Finance and Chief Financial Officer
(Principal Financial and Accounting
Officer)
26
<PAGE>
EXHIBIT 3.7
BYLAWS
OF
MICRON TECHNOLOGY, INC.
ARTICLE I
OFFICES
SECTION 1. The registered office shall be 100 West Tenth Street, in the
City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. All meetings of the stockholders shall be held at the principal
office of the corporation in the City of Boise, State of Idaho, or at such other
place either within or without the State of Delaware as shall be designated in
the notice of the meeting or in a duly executed waiver of notice thereof.
SECTION 2. Annual meetings of stockholders shall be held on such day and
such hour as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. At such meeting, the stockholders shall
elect a Board of Directors and transact such other business as may properly be
brought before the meeting.
SECTION 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
SECTION 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the Board of Directors, the Chairman of the
Board, the president, or by the holders of shares entitled to cast not less than
twenty percent (20%) of the votes at the meeting. Such request shall state the
purpose or purposes of the proposed meeting.
SECTION 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given to each stockholder entitled to vote at such meeting not less
than ten nor more than sixty days before the date of the meeting.
<PAGE>
SECTION 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
SECTION 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
SECTION 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the Certificate of Incorporation, a different vote is required in which case
such express provision shall govern and control the decision of the question.
SECTION 10. Unless otherwise provided in the Certificate of Incorporation,
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, regardless of class, but no proxy shall be voted
on or after three years from its date, unless the proxy provides for a longer
period. Vote may be viva voice or by ballot; provided, however, that elections
for directors must be by ballot upon demand by a shareholder at the meeting and
before the voting begins. At all elections of directors of the corporation each
stockholder having voting power shall be entitled to exercise the right of
cumulative voting as provided in the Certificate of Incorporation.
SECTION 11. Unless otherwise provided in the Certificate of Incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice and without a vote, of a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 1. The authorized number of directors of the corporation shall be
nine. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
SECTION 2. The directors shall be elected at each annual meeting of
shareholders, but if any such annual meeting is not held, or the directors are
not elected thereat, the directors may be elected at any special meeting of the
shareholders held for that purpose. All directors shall hold office until the
expiration of the term for which elected and until their respective successors
are elected, except in the case of death, resignation or removal of any
director. A director need not be a shareholder.
SECTION 3. Any director may resign effective upon giving written notice to
the Chairman of the Board, the President, the Secretary or the Board of
Directors of the corporation, unless the notice specifies a late time for the
effectiveness of such resignation. If the resignation is effective at a future
time, a successor may be elected to take office when the resignation becomes
effective.
<PAGE>
SECTION 4. The entire Board of Directors or any individual director may be
removed from office, prior to the expiration of their or his term of office only
in the manner and within the limitations provided by the General Corporation Law
of Delaware.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.
SECTION 5. A vacancy in the Board of Directors shall be deemed to exist in
case of the death, resignation or removal of any director, or if the authorized
number of directors be increased, or if the shareholders fail at any annual or
special meeting of shareholders at which any director or directors are elected
to elect the full authorized number of directors to be voted for at that
meeting.
Vacancies in the Board of Directors may be filled by a majority of
the directors then in office, whether or not less than a quorum, or by a sole
remaining director. Each director so elected shall hold office until the
expiration of the term for which he was elected and until his successor is
elected at an annual or a special meeting of the shareholders, or until his
death, resignation or removal.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. Any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
SECTION 6. The business of the corporation shall be managed by or under
the direction of its Board of Directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the Certificate of Incorporation or these Bylaws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 7. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
SECTION 8. The first meeting of each newly elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
SECTION 9. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board.
SECTION 10. Special meetings of the Board may be called by the president
on two days' notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the president or secretary in like
manner and on like notice on the written request of the Chairman of the Board or
two directors.
SECTION 11. At all meetings of the Board a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
<PAGE>
SECTION 12. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
SECTION 13. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
SECTION 14. The Board of Directors may, by resolution passed by a majority
of the authorized number of directors, appoint an executive committee consisting
of two or more of the directors of the corporation. The Board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. The executive
committee, to the extent provided in the resolution of the Board of Directors
and subject to any limitation by statute, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but it shall not have the power
or authority in reference to amending the Certificate of Incorporation, adopting
an agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all the corporation's property
and assets, recommending to the stockholders a dissolution of the corporation or
a revocation of a dissolution, or amending the Bylaws of the corporation; and,
unless the resolution or the Certificate of Incorporation expressly so provide,
it shall not have the power or authority to declare a dividend or to authorize
the issuance of stock.
SECTION 15. The Board of Directors may, by resolution adopted by a
majority of the authorized number of directors, designate such other committees,
each consisting of 2 or more directors, as it may from time to time deem
advisable to perform such general or special duties as may from time to time be
delegated to any such committee by the Board of Directors, subject to the
limitations imposed by statute or by the Certificate of Incorporation or by
these Bylaws. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent member at any meeting of
the committee.
COMPENSATION OF DIRECTORS
SECTION 17. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance of each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
ARTICLE IV
NOTICES
SECTION 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these Bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
<PAGE>
SECTION 2. Whenever any notice is required to be given under the
provisions of the Delaware statutes or of the Certificate of Incorporation or of
these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the Board of
Directors, and shall be a president, a vice-president, a secretary, and a
treasurer. The Board of Directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the Certificate of Incorporation
or these Bylaws otherwise provide.
SECTION 2. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
SECTION 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board.
SECTION 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
SECTION 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the corporation
shall be filled by the Board of Directors.
Any officer may resign at any time by giving written notice to the
corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
THE CHAIRMAN OF THE BOARD
SECTION 6. The Chairman of the Board, if there shall be such an officer,
shall, if present, preside at all meetings of the Board of Directors, and
exercise and perform such other powers and duties as may be from time to time
assigned to him by the Board of Directors or prescribed by these Bylaws.
THE PRESIDENT
SECTION 7. Subject to such supervisory powers, if any, as may be given
by the Board of Directors to the Chairman of the Board, if there be such an
officer, the President shall be the general manager of the corporation and
shall, subject to the control of the Board of Directors, have general
supervision, direction, and control of the business and officers of the
corporation. He shall preside at all meetings of the shareholders and in the
absence of the Chairman of the Board or if there be none, at all meetings of the
Board of Directors. He shall be ex officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or by these Bylaws.
SECTION 8. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
<PAGE>
THE VICE-PRESIDENTS
SECTION 9. In the absence of the president or in the event of his
inability or refusal to act, the vice president (or in the event there be more
than one vice president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
SECRETARY AND ASSISTANT SECRETARY
SECTION 10. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
president, under whose supervision he shall be placed. He shall have custody of
the corporate seal of the corporation and he, or an assistant secretary, shall
have authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by his signature or by the signature of such
assistant secretary. The Board of Directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his signature.
SECTION 11. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
SECTION 12. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
SECTION 13. He shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
SECTION 14. If required by the Board of Directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
SECTION 15. If the assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
<PAGE>
ARTICLE VI
CERTIFICATE OF STOCK
SECTION 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman or vice chairman of the Board of Directors, or the president or a vice
president and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
him in the corporation.
Certificates may be issued for partly paid shares and in such case
upon the face or back of the certificates issued to represent any such partly
paid shares, the total amount of the consideration to be paid therefor, and
the amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face of back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
SECTION 2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature have been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
SECTION 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issues by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit to that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
SECTION 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
SECTION 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any such other action. A
<PAGE>
determination of shareholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
SECTION 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
SECTION 7. The accounting books and records, and minutes of proceedings of
the shareholders and the Board of Directors and committees of the Board shall be
open to inspection upon written demand made upon the corporation by any
shareholder or the holder of a voting trust certificate, at any reasonable time
during usual business hours, for a purpose reasonably related to his interest as
a shareholder, or as the holder of such voting trust certificate. The record of
shareholders shall also be open to inspection by any shareholder or holder of a
voting trust certificate at any time during usual business hours upon written
demand on the corporation, for a purpose reasonably related to such holder's
interest as a shareholder or holder of a voting trust certificate. Such
inspection may be made in person or by an agent or attorney, and shall include
the right to copy and to make extracts.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
SECTION 1. Dividends upon the capital stock of the corporation, subject to
the provision of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out of
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
SECTION 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
FISCAL YEAR
SECTION 4. The fiscal year of the corporation shall be fixed by resolution
of the Board of Directors.
SEAL
SECTION 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
<PAGE>
INDEMNIFICATION
SECTION 6. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law of
Delaware.
ARTICLE VIII
AMENDMENTS
SECTION 1. These Bylaws may be altered, amended or repealed or new Bylaws
may be adopted by the stockholders or by the Board of Directors at any regular
meeting of the stockholders or of the Board of Directors or at any special
meeting of the stockholders or the Board of Directors if notice of such
alteration, amendment, repeal or adoption of new Bylaws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal Bylaws
is conferred upon the Board of Directors by the Certificate of Incorporation it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal Bylaws.
I, Nancy A. Stanger, the secretary of Micron Technology, Inc., a Delaware
corporation, hereby certify:
The foregoing bylaws, comprising 14 pages, were adopted as the bylaws of
Micron Technology on May 21, 1984.
DATED: May 25, 1984
Nancy A. Stanger
Nancy A. Stanger
SEAL
<PAGE>
CERTIFICATE OF FIRST AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
We, the undersigned, being the President and Secretary, respectively, of
MICRON TECHNOLOGY, INC., a corporation organized and existing under the laws of
the State of Delaware, do hereby certify that a meeting of the Board of
Directors of this Corporation was held on December 17, 1984 and an amendment to
the Bylaws of MICRON TECHNOLOGY, INC. was unanimously adopted.
The amendment adopted was pursuant to a Resolution reading as follows:
RESOLVED: The Board hereby approves that the second paragraph of Article
II Section 10 of the Bylaws of the Company be amended to read as follows:
"At all elections of directors of the corporation each stockholder having
voting power shall be entitled to exercise the right of cumulative voting as
provided in the Certificate of Incorporation. However, no stockholder shall be
entitled to cumulate votes for a candidate or candidates unless such candidate's
name or candidate's names have been placed in nomination prior to the voting and
a stockholder has given notice at the meeting prior to the voting of the
stockholder's intention to cumulate votes. If any stockholder has given such
notice, all stockholders may cumulate their votes for candidates in nomination."
IN WITNESS WHEREOF, we have hereunto set our hands and the seal of
the Corporation this 5th day of July, 1985.
MICRON TECHNOLOGY, INC.
BY: Joseph L. Parkinson
Joseph L. Parkinson, President
(SEAL)
BY: Cathy L. Smith
Cathy L. Smith, Secretary
STATE OF IDAHO )
) ss.
County of Ada )
On this 5th day of July, 1985, before me, the undersigned, personally appeared
JOSEPH L. PARKINSON and CATHY L. SMITH, known to me to be the President and
Secretary, respectively, of MICRON TECHNOLOGY, INC., the corporation that
executed the instrument or the persons who executed the instrument on behalf of
said corporation, and acknowledged to me that such corporation executed the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in
said County the day and year first above written.
Jill L. Henson
Notary Public for Idaho Residing at Boise
<PAGE>
CERTIFICATE OF SECOND AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on March 3, 1986:
RESOLVED: Article III Section 1 of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
ten. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate
seal of said corporation effective as of the 3rd day of March, 1986.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE THIRD AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on November 24, 1986:
RESOLVED: Article III Section 1 of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
nine. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 24th day of November, 1986.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF FOURTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on September 28, 1987:
RESOLVED: Article III Section 1 of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
eight. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 28th day of September, 1987.
Cathy L. Smith
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF FIFTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on March 28, 1988:
RESOLVED: Article III Section 1 of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
nine. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 28th day of March, 1988.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF SIXTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on October 3, 1988:
RESOLVED: Article III Section 1 of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
ten. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 17th day of October, 1988.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF SEVENTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on September 25, 1989:
RESOLVED: Article III Section 1 of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
nine. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 28th day September, 1989.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF EIGHTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on October 30, 1989:
RESOLVED: Article III Section 1 of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
eight. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 30th day of October, 1989.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF NINTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on August 27, 1990:
RESOLVED: Article III Section 1 of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
nine. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 27th day of August, 1990.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF TENTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on September 24, 1990:
RESOLVED: Article III, Section 1 of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
ten. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 24th day of September, 1990.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF ELEVENTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on July 27, 1992:
RESOLVED: Article III Section 1 of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
eight. The number of directors provided in this Section 1 may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 27th day of July, 1992.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF TWELFTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc. a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on May 23, 1994:
RESOLVED: Article III, Section I of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION I. The authorized number of directors of the Corporation shall be
ten.
The number of directors provided in this Section I may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 23rd day of May, 1994.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF THIRTEENTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc. a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on September 1, 1994:
RESOLVED: Article III, Section I of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION I. The authorized number of directors of the Corporation shall be
eleven. The number of directors provided in this Section I may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 1st day of September, 1994.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF FOURTEENTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Cathy L. Smith, Corporate Secretary of Micron Technology, Inc. a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on October 27, 1994:
RESOLVED: Article III, Section I of the Bylaws of this corporation are
hereby amended to read as follows:
SECTION I. The authorized number of directors of the Corporation shall be
ten. The number of directors provided in this Section I may be changed by a
Bylaw duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote or by a resolution of the Board of Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 27th day of October, 1994.
Cathy L. Smith
Corporate Secretary
(SEAL)
<PAGE>
CERTIFICATE OF FIFTEENTH
AMENDMENT TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Jan R. Reimer, Assistant Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolution was adopted
by the Board of Directors on February 5, 1996:
RESOLVED, that pursuant to Article VIII, Section 1 of the Company s
Bylaws, the Board hereby amends Article V, Section 1 of the Bylaws to read in
its entirety as follows:
The officers of the corporation shall be chosen by the Board of Directors,
and shall be a president or chief executive officer, a secretary, and a
treasurer. The Board of Directors may also choose additional officers,
including a president, vice president(s), and one or more assistant secretaries
and assistant treasurers. Any number of offices may be held by the same person,
unless the Certificate of Incorporation or these Bylaws otherwise provide.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 7th day of February, 1996.
Jan R. Reimer
Assistant Secretary
(SEAL)
<PAGE>
CERTIFICATE OF SIXTEENTH
AMENDMENT TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Jan R. Reimer, Assistant Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolutions were
adopted by the Board of Directors on September 30, 1996:
RESOLVED, that Article II, Section 10 of the Bylaws of this Company be
amended to read as follows:
SECTION 10. At all elections of directors of the corporation each
stockholder having voting power shall be entitled to exercise the right of
cumulative voting as provided in the Certificate of Incorporation. However, no
stockholder shall be entitled to cumulate votes for a candidate or candidates
unless such candidate's name or candidates' names have been placed in nomination
prior to the voting and a stockholder has given written notice to Secretary of
the corporation of the stockholder's intention to cumulate votes at least 15
days prior to the date of the meeting. If any stockholder has given such notice,
all stockholders may cumulate their votes for candidates in nomination.
RESOLVED FURTHER, that Article II of the Bylaws of this Company be amended
to add Section 12, which will read in its entirety as follows:
SECTION 12. Advance Notice of Stockholder Nominees and Stockholder
Business
(a) To be properly brought before an annual meeting or special meeting,
nominations for the election of directors or other business must be (i)
specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the board of directors, (ii) otherwise properly
brought before the meeting by or at the direction of the board of
directors or (iii) otherwise properly brought before the meeting by a
stockholder.
(b) For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive office of the corporation not less than one hundred
twenty (120) calendar days in advance of the date specified in the
corporation's proxy statement released to stockholders in connection with
the previous year's annual meeting of stockholders; provided, however,
that in the event that no annual meeting was held in the previous year or
the date of the annual meeting has been changed by more than thirty (30)
days from the date contemplated at the time of the previous year's proxy
statement, notice by the stockholder to be timely must be so received a
reasonable time before the solicitation is made. A stockholder's notice
to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting: (i) a brief description of
the business desired to be brought before the annual meeting and the
reasons for conducting such business at the annual meeting, (ii) the
name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (iii) the class and number of
shares of the corporation which are beneficially owned by the
stockholder, (iv) any material interest of the stockholder in such
business and (v) any other information that is required to be provided
by the stockholder pursuant to Regulation 14A under the securities
Exchange Act of 1934, as amended (the "Exchange Act"), in his capacity
as a proponent to a stockholder proposal. Notwithstanding the foregoing,
in order to include information with respect to a stockholder proposal
in the proxy statement and form of proxy for a stockholders' meeting,
stockholders must provide notice as required by the regulations
promulgated under the Exchange Act. Notwithstanding anything in these
bylaws to the contrary, no business shall be conducted at any annual
meeting except in accordance with the procedures set forth in this
Section 12. The chairman of the annual meeting shall, if the facts
warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the
provisions of this Section 12, and, if he should so determine, he shall
so declare at the meeting that any such business not properly brought
before the meeting shall not be transacted.
<PAGE>
(c) Only persons who are nominated in accordance with the procedures set
forth in this paragraph (c) shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the
corporation may be made at a meeting of stockholders by or at the
direction of the Board of Directors or by any stockholder of the
corporation entitled to vote in the election of directors at the meeting
who complies with the notice procedures set forth in this paragraph (c).
Such nominations, other than those made by or at the direction of the
Board of Directors, shall be made pursuant to timely notice in writing
to the Secretary of the corporation in accordance with the provisions of
paragraph (b) of this Section 12. Such stockholder's notice shall set
forth (i) as to each person, if any, whom the stockholder proposes to
nominate for election or re-election as a director: (A) the name, age,
business address and residence address of such person, (B) the principal
occupation or employment of such person, (C) the class and number of
shares of the corporation which are beneficially owned by such person,
(D) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nominations are to be made
by the stockholder and (E) any other information relating to such person
that is required to be disclosed in solicitations of proxies for
elections of directors, or is otherwise required, in each case pursuant
to Regulation 14A under the Exchange Act (including without limitation
such person's written consent to being named in the proxy statement, if
any, as a nominee and to serving as a director if elected); and (ii) as
to such stockholder giving notice, the information required to be
provided pursuant to paragraph (b) of this Section 12. At the request of
the Board of Directors, any person nominated by a stockholder for
election as a director shall furnish to the Secretary of the corporation
that information required to be set forth in the stockholder's notice of
nomination which pertains to the nominee. No person shall be eligible
for election as a director of the corporation unless nominated in
accordance with the procedures set forth in this paragraph (c). The
chairman of the meeting shall, if the facts warrant, determine and
declare at the meeting that a nomination was not made in accordance with
the procedures prescribed by these bylaws; and if he should so
determine, he shall so declare at the meeting, and the defective
nomination shall be disregarded.
RESOLVED FURTHER, that Article III, Section 1 of the Bylaws of this
Company be amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall
be seven. The number of directors provided in this Section 1 may be changed
by a Bylaw duly adopted by the affirmative vote of a majority of the
outstanding shares entitled to vote or by a resolution of the Board of
Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affixed the corporate seal
of said corporation effective as of the 30th day of September, 1996.
/s/ Jan R. Reimer
Assistant Secretary
(SEAL)
<PAGE>
CERTIFICATE OF SEVENTEENTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Jan R. Reimer, Assistant Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolutions were adopted
by the Board of Directors on June 30, 1997:
RESOLVED, that Article III, Section 1 of the Bylaws of this Company be
amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation shall be
eight. The number of directors provided in this Section 1 may be changed
by a Bylaw duly adopted by the affirmative vote of a majority of the
outstanding shares entitled to vote or by a resolution of the Board of
Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affix the corporate seal of
said corporation effective as of the 30th day of June, 1997.
/s/ Jan R. Reimer
Assistant Secretary
(SEAL)
<PAGE>
CERTIFICATE OF EIGHTEENTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Jan R. Reimer, Assistant Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolutions were adopted
by the Board of Directors on April 14, 1998:
RESOLVED, that Article III, Section 1 of the Bylaws of this Company be
amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation
shall be nine. The number of directors provided in this Section 1 may be
changed by a Bylaw duly adopted by the affirmative vote of a majority of
the outstanding shares entitled to vote or by a resolution of the Board of
Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affix the corporate seal of
said corporation effective as of the 20th day of July, 1998.
/s/ Jan R. Reimer
Assistant Secretary
(SEAL)
<PAGE>
CERTIFICATE OF NINETEENTH AMENDMENT
TO THE BYLAWS OF
MICRON TECHNOLOGY, INC.
I, Jan R. Reimer, Assistant Secretary of Micron Technology, Inc., a
Delaware corporation, hereby certify that the following resolutions were adopted
by the Board of Directors on November 23, 1998:
RESOLVED, that Article III, Section 1 of the Bylaws of this Company be
amended to read as follows:
SECTION 1. The authorized number of directors of the Corporation
shall be eight. The number of directors provided in this Section 1 may be
changed by a Bylaw duly adopted by the affirmative vote of a majority of
the outstanding shares entitled to vote or by a resolution of the Board of
Directors.
IN WITNESS WHEREOF, I hereunto set my hand and affix the corporate seal of
said corporation effective as of the 23rd day of November, 1998.
/s/ Jan R. Reimer
Assistant Secretary
(SEAL)
<PAGE>
Exhibit 10.139
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is made this 30th day of
September, 1998, by and between Micron Technology, Inc., a Delaware, U.S.A.
corporation, with its principal place of business at 8000 South Federal Way,
Boise, Idaho 83716-9632, U.S.A. ("Micron"), and KTI Semiconductor Limited, a
Japanese corporation, with its headquarters located at 302-2, Hirano-cho,
Nishiwaki, Hyogo Prefecture, 677-0063, Japan ("KTI"). Micron and KTI are
hereinafter sometimes individually referred to as a "Party" and collectively as
the "Parties".
In consideration of the mutual promises and covenants contained herein, the
Parties, intending to be legally bound, agree as follows:
1. PURPOSE
1.1 This Agreement implements certain provisions of the Shareholders'
Agreement dated March 19, 1990, among KTI's shareholders and
ratified, joined in and accepted by KTI on May 22, 1990, and amended
September 28, 1990 by Amendment #1, amended November 5, 1992 by
Amendment #2, amended effective as of June 7, 1993 by Amendment #3,
amended July 14, 1993 by Amendment #4, amended December 15, 1993 by
Amendment #5, amended March 24, 1994 by Amendment #6, amended June 27,
1994 by Amendment #7, amended effective as of November 1, 1995 by
Amendment #8, amended effective as of November 1, 1996 by Amendment
#9, amended effective as of January 1, 1998 by Amendment #10, amended
March 26, 1998 by Amendment #11, amended June 23, 1998 by Amendment
#12, and amended [September 30, 1998] by Amendment #13 to
Shareholders' Agreement (as so amended, and as hereafter amended or
otherwise modified from time to time, the "Shareholders' Agreement")
for the purchase by Micron, and the sale by KTI to Micron, of those
Products (as defined in the Shareholders' Agreement) which are more
specifically set forth in Attachment 1 which is incorporated herein by
this reference (hereinafter "Products").
2. PURCHASE ORDERS
2.1 Purchase orders issued by Micron and/or its affiliates (hereinafter
individually or collectively ("Micron")) under this Agreement are for
administrative, payment and accounting purposes. The terms and
conditions of any purchase order so issued which purports to alter,
amend or extend provisions or terms of manufacture, sale and delivery
of Products as agreed to by Micron, KOBE and KTI in the Shareholders'
Agreement and Annexes thereto shall have no force or effect.
<PAGE>
3. PRODUCTS
3.1 KTI agrees to sell to Micron or its designated Affiliate (as that term
is defined in the Shareholders Agreement) and Micron or its designated
Affiliate agrees to purchase, KTI's entire output (i.e., one hundred
percent (100%), of the finished Products subject to the terms,
conditions and obligations set forth in the Shareholders' Agreement
and the Annexes thereto, including this Agreement. Such terms,
conditions and obligations include without limitation SECTIONS 8 (WORK
SPECIFICATIONS), 9 (QUALITY INSPECTION, TESTING AND CUSTOMER SERVICE),
and 10 (MANUFACTURING CHANGES) of the Technical Assistance Agreement
dated as of September 30, 1998 between Micron, Kobe Steel Ltd., a
Japanese corporation, with its headquarters located at 3-18,
Wakinohama 1-Chrome, Chuyou-Ku, Kobe, Japan, and KTI (as hereafter
amended or otherwise modified from time to time, the "Technical
Assistance Agreement"). Nothing in this Agreement shall be construed
to limit Micron's right or the right of Micron's affiliates to
purchase any semiconductor devices similar to the Products from any
source other than KTI
4. TERM
4.1 This Agreement shall be effective as of the Acquisition Closing Date
(as defined in Amendment #13 to the Shareholders' Agreement) and shall
continue in effect throughout the Term of the Shareholders' Agreement
(as defined therein), unless earlier terminated or modified by mutual
agreement in writing by Micron and KTI.
5. PRICING AND PAYMENT TERMS
5.1 KTI shall sell the Products to Micron in accordance with the pricing
formula provided in Annex A to the Shareholders' Agreement. KTI
shall invoice Micron for Products sold to Micron on a monthly basis in
accordance with Section 18.6 of the Shareholders' Agreement and such
Annex.
5.2 Place of shipment and payment terms are as specified in Sections 18.5,
18.6 and 18.7 of the Shareholders' Agreement.
6. DELIVERY
6.1 The delivery dates indicated by Micron on its purchase orders for the
Products are important elements of shipment and receiving of Products.
KTI agrees to take all reasonable efforts so that the Products shall
be delivered to Micron's designated delivery point on the dates set
forth in the applicable purchase order(s) accepted by KTI, unless the
Parties agree otherwise in writing. In the event that any Products are
not shipped in accordance with such delivery dates, KTI agrees to ship
via air freight (or as directed by Micron) and to pay for all extra
costs.
-2-
<PAGE>
6.2 Failure of KTI to meet agreed upon delivery shall be considered a
breach of contract. Furthermore, KTI agrees to pay to Micron any
penalty and damages imposed upon or incurred by Micron for failure of
KTI to deliver any of the Products on such delivery dates.
6.3 In addition to the packing and shipping instructions in Paragraph 11
below, the Products shall be packaged in accordance with commercially
accepted standards, or to applicable Micron specifications, to ensure
safe arrival at Micron's designated delivery point.
7. KTI'S WARRANTIES AND REPRESENTATIONS
7.1 KTI warrants and represents to Micron that the Products will conform
to the Specifications and shall be fit for their intended purpose and
use and shall be free from any defects in material and workmanship for
a period of two (2) years from the date of each shipment from KTI of
the Products, provided that said period may be renegotiated for a
longer period of time to conform to the industry standard current at
the time of renegotiation. KTI's failure to take corrective actions
for the next production lots after written notification of the
problem(s) is provided to KTI may be considered by Micron to be a
material breach of this Agreement.
7.2 In the event Micron determines that the Products are defective in
workmanship or otherwise in breach of the warranty set forth in
Paragraph 7.1, Micron shall notify KTI immediately in writing of the
defect, and KTI shall promptly, at Micron's option, either repair or
replace any defective Products at no cost to Micron, or credit to
Micron's account Micron's purchase price and all reasonable out of
pocket shipping costs incurred with respect to the return of the
defective Products; provided, however, in the event such defect is
directly attributable to a material error in the Technical Information
transmitted by Micron to KTI under the Technical Assistance Agreement,
then Micron agrees that during the two (2) year warranty period Micron
will indemnify KTI for all direct manufacturing and material costs
associated with the repair or replacement of the defective Products
manufactured for Micron. MICRON SHALL NOT BE LIABLE FOR ANY
CONSEQUENTIAL DAMAGES, COSTS OR LOSSES WITH RESPECT TO BUSINESS
INTERRUPTION. A Return Material Authorization ("RMA") form previously
issued by KTI must accompany any such returned Products.
7.3 Following receipt of each shipment, Micron shall perform an incoming
test on each shipment of the Products shipped hereunder. In the event
that such Products fail to conform to the Specifications as evidenced
by the Micron incoming inspection, Micron shall have the right to
return, after confirmation of failures, such Products to KTI for
rework or replacement at no cost to Micron. Micron has the right to
recommend corrective action to address any such variances from
Specifications. Such return shipment shall be made by Micron F.O.B.
the destination from which they were originally shipped by KTI.
-3-
<PAGE>
7.4 If the Products fail Micron's incoming inspection tests at the
shipping destination as designated on the Micron purchase order,
Micron may so advise KTI in writing and receive, at Micron's option,
prompt replacement of the Products or credit in that amount against
pending or future Micron orders for the Products.
7.5 Except as provided in Section 20.5 of the Shareholders' Agreement, KTI
will hold Micron harmless from and indemnify Micron against all claims
made by third parties arising out of the operations of KTI or the
Products manufactured by KTI, including all acts or omissions by KTI's
personnel (whether or not such personnel are direct employees of KTI
or have been obtained from one of the parties to the Shareholders'
Agreement on a seconding or contractual basis).
7.6 The warranties in the Shareholders' Agreement and its Annexes,
including this agreement, are stated in lieu of all other warranties,
express, statutory, or implied, and neither assume nor authorize any
other person to assume for the parties any other liabilities in
connection with the manufacture or sale of said Products. The
warranties shall not apply to any of such Products which have been
repaired or altered, except as authorized by KTI, or which shall be
subjected to misuse, negligence, accident, or abuse.
7.7 The terms "Specifications," "Technical Information," and "Products" as
used herein shall have the same definitions as in the Technical
Assistance Agreement.
8. FORCE MAJEURE
8.1 Should any Party be prevented from performing its contractual
obligations under this Agreement due to the cause or causes of force
majeure such as acts of God, acts of war (declared or undeclared),
fire, storm, floods, typhoon or other severe weather conditions,
serious earthquake, strikes, boycotts, legal restraints, government or
like interference, accidental damage to equipment, as well as any
other cause outside the control of that Party, that Party shall not be
liable to the other for any delay or failure of performance caused by
any of the above events.
8.2 The Party prevented from performing by the causes identified in
Paragraph 8.1 shall notify the other Party of the occurrence of any of
the above events in writing by cable or telex within the shortest
possible time.
8.3 Should the delay caused by any of the above events continue for more
than ninety (90) days, the Parties shall settle the problem of further
performance of this Agreement through friendly negotiations as soon as
possible. In the event that the Parties cannot meet to negotiate or
cannot reach agreement, the Agreement may be terminated by prior
written notice of one Party to the other Party.
-4-
<PAGE>
9. RETURN MATERIAL AUTHORIZATION
9.1 Defective material shall be returned freight collect to KTI.
Replacement material shall be sent freight prepaid from KTI, which
shall absorb the burden of premium transportation when defect or
replacement material places critical time or delivery schedule
constraints on Micron.
9.2 KTI agrees to provide as soon as reasonably possible, but not
exceeding five (5) work days, RMAs as contemplated by Paragraph 7.2
herein.
10. OVERSHIPMENTS
10.1 KTI shall ship only the quantity(ies) specified in purchase orders
placed under this Agreement. However, any deviation caused by
conditions of loading, shipping, packing or allowances in
manufacturing processes may be accepted by Micron according to the
overshipment allowance indicated on the face of Micron purchase
orders. If no allowance is shown, no percentage overshipment is
allowed. Micron reserves the right to return any overshipment in
excess of the allowance at KTI's expense.
11. PACKING AND SHIPPING INSTRUCTIONS
11.1 KTI will properly pack and describe shipments in accordance with
Micron specifications and applicable carrier regulations. Shipment
will be made at the lowest possible freight charges. Micron may
assist KTI by providing freight classifications or classifying
material. KTI will insure or declare value on shipments except on
parcel post, unless Micron specifies otherwise. On shipments where
value is declared, KTI will ship prepaid insured for fifty U.S.
dollars (US $50.00) to facilitate tracing. If shipping by air
carrier, KTI will ship freight prepaid. KTI shall consolidate the air
and surface shipments on single bills of lading insofar as possible so
as to avoid premium freight costs unless instructed otherwise by
Micron.
11.2 In case any shipment does not correspond to normal practice in the
industry (e.g., require special handling shipment or air ride
suspension, or air shipment over five hundred (500) pounds, or over
one hundred twenty (120) inches long or wide or over fifty-six (56)
cubic feet, etc.), KTI agrees to notify Micron's appropriate traffic
department seventy-two (72) hours prior to shipment for special
shipping instructions.
11.3 Each box, crate or carton will show Micron's full street address and
purchase order number regardless of how shipped. On air carrier
shipments, a packing list shall accompany each container and shall
describe the contents of such container. On all other shipments, KTI
will provide a packing list to accompany each shipment, referencing
the appropriate purchase order number. The bill of lading also will
reference the purchase order number.
-5-
<PAGE>
11.4 KTI is responsible for packing shipments correctly based on the
carrier/mode utilized. Charges for packing and crating shall be
deemed part of the purchase price and no additional charges will be
made therefor unless specifically requested by Micron on the purchase
order. KTI agrees to ship via the carrier specified by Micron.
12. NOTICE OF LABOR DISPUTE
12.1 Whenever any actual or potential labor dispute delays or threatens to
delay the timely performance of any purchase order issued hereunder,
KTI shall immediately give notice thereof to Micron.
13. APPLICABLE LAW
13.1 This Agreement and any purchase order issued hereunder shall not be
governed by the United Nations Convention on the International Sale of
Goods; rather this Agreement and any purchase order issued hereunder
shall be governed by, construed and enforced in accordance with the
laws of the State of New York, U.S.A. The Parties hereby submit to the
exclusive jurisdiction of the Federal Courts of the United States of
America and specifically the U.S. District Court for the Southern
District of New York.
13.2 For the purpose of any proceeding before the Federal Courts, the
Parties hereby appoint the respective persons set out below as their
agents for service of process in New York:
Micron: CT Corporation System KTI: c/o Kobe Steel USA Inc.
1633 Broadway 535 Madison Avenue
New York, NY 10019 New York, NY 10022
USA USA
14. MISCELLANEOUS
14.1 All notices and formal communications required or permitted to be
given hereunder shall be served on each Party in writing, via
facsimile transmission, registered letter, telex or prepaid cable
and shall be valid and sufficient when served on a Party at the
following address:
If to KTI: if to Micron:
President
KTI Semiconductor Limited General Counsel
302-2 Micron Technology, Inc.
Hirano-cho, Nishiwaki 8000 South Federal Way
Hyogo Prefecture, 677-0063, Japan Boise, Idaho 83716-9632
-6-
<PAGE>
14.2 Except as required by law, for governmental approval or as may be
reasonably required for the operation of KTI, the parties shall not,
without the prior written consent of the other, disclose to any third
party, other than the Parties to the Shareholders' Agreement either
the existence or contents of this Agreement, or any information of a
proprietary nature which it obtains or which becomes available to it
as the result of this Agreement or of the operations of KTI.
14.3 KTI agrees to comply with all applicable export control laws and to
obtain all export licenses required for performance of its
obligations hereunder.
14.4 Micron may assign this Agreement or any obligation hereunder to any
Affiliate (as that term is defined in the Shareholders' Agreement)
of Micron upon written notice to KTI. In such event, Micron shall
be the controlling Party of such assignee and shall guarantee the
obligations of such assignee under this Agreement. KTI shall not
assign or transfer this Agreement or any portion hereof, or
subcontract any obligation hereunder, without the prior written
consent of Micron. Any such attempted assignment, transfer or
subcontract by KTI shall be void.
14.5 The headings of the Paragraphs of this Agreement are for reference
purposes only and shall not be deemed to affect in any way the
meaning or interpretation of the Paragraphs to which they refer.
14.6 The failure on the part of any Party to exercise or enforce any
rights conferred on it hereunder shall not be deemed to constitute a
waiver of any rights or operate to bar the exercise or enforcement of
any such right at any time or times thereafter.
14.7 This Agreement may be executed in one or more counterparts, each of
which shall be enforceable against the Parties executing such
counterparts, and all of which together shall constitute one
instrument.
14.8 This Agreement may not be modified, except with the written consent
of the Parties.
14.9 If any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result
of future legislative action, such holding or action shall be
strictly construed and, subject to applicable law, shall not affect
the validity or effect of any other provisions hereof.
[Remainder of Page Intentionally Left Blank]
-7-
<PAGE>
IN WITNESS WHEREOF, the Parties have signed and dated this Purchase
Agreement in the space provided below.
KTI SEMICONDUCTOR LIMITED MICRON TECHNOLOGY, INC.
By: _________________________ By: _________________________
Name: _________________________ Name: _________________________
Title:_________________________ Title:_________________________
Date: _________________________ Date: _________________________
-8-
<PAGE>
Exhibit 10.140
PURCHASE AGREEMENT
------------------
This Purchase Agreement (the "Agreement") is made, as of October 1, 1998,
by and among Micron Technology, Inc., a Delaware, U.S.A. corporation, with its
principal place of business at 8000 South Federal Way, Boise, Idaho 83716-9632,
U.S.A. ("MICRON"), and TECH Semiconductor Singapore Pte. Ltd., a Republic of
Singapore corporation, with its principal place of business at No. 1 Woodlands
Industrial Park D, Street 1, Singapore 738799 ("TECH") (hereinafter individually
a "Party" and collectively the "Parties").
In consideration of the mutual promises and covenants contained herein, the
parties, intending to be legally bound, agree as follows:
1. PURPOSE
-------
1.1 This Agreement implements certain provisions of the Shareholders' Agreement
dated April 11, 1991, amended effective as of May 31, 1991, by Waiver to
Shareholders' Agreement, amended effective as of April 11, 1991 and July
22, 1991, by Amendment Agreement No. 1, amended effective as of February
15, 1993 by Amendment Agreement No. 2, amended as of August 4, 1995 by
Amendment Agreement No. 3, and amended as of October 1, 1998 by Amendment
Agreement No. 4 by and among MICRON, TECH, the Singapore Economic
Development Board (the "EDB"), EDB Investments Pte. Ltd., a corporation
established under the laws of Singapore ("EDBI"), Canon Inc., a corporation
of Japan ("CANON"), Hewlett-Packard Company ("HP"), a Delaware, U.S.A.,
corporation, and Hewlett-Packard Singapore (Private) Limited, a corporation
established under the laws of the Republic of Singapore ("HPSG") (as
amended, the "SHAREHOLDERS' AGREEMENT"), for the purchase by MICRON, and
the sale by TECH to MICRON of PRODUCTS. Capitalized terms used herein, but
not otherwise defined herein, shall have the meanings ascribed to them in
the SHAREHOLDERS' AGREEMENT.
2. PURCHASE ORDERS
---------------
2.1 Purchase orders issued by MICRON under this Agreement are for
administrative, payment and accounting purposes. The terms and conditions
of any purchase order so issued which purports to alter, amend or extend
provisions or terms of manufacture, sale and delivery of PRODUCTS as agreed
to by MICRON, EDB, EDBI, HP, HPSG and CANON and TECH in the SHAREHOLDERS'
AGREEMENT and Annexes thereto shall have no force or effect.
3. PRODUCTS
--------
3.1 TECH agrees to sell to MICRON and/or MICRON's affiliates (individually or
collectively), and MICRON, or its designee, agrees to purchase, TECH's
entire output (i.e., one hundred percent (100%)) of the finished PRODUCTS
and subject to the terms, conditions and obligations set forth in the
SHAREHOLDERS' AGREEMENT and the Annexes thereto, including this
-1-
<PAGE>
Agreement. Nothing in this Agreement shall be construed to limit MICRON's
right or the right of MICRON's affiliates to purchase products from any
source other than TECH.
4. TERM
----
4.1 This Agreement shall be effective as of the ACQUISITION CLOSING DATE and
shall continue in effect throughout the TERM of the SHAREHOLDERS'
AGREEMENT.
5. PRICING AND PAYMENT TERMS
-------------------------
5.1 TECH shall sell PRODUCTS to MICRON in accordance with the pricing formula
provided in Annex A to the SHAREHOLDERS' AGREEMENT. TECH shall invoice
MICRON for PRODUCTS sold to MICRON on a monthly basis in accordance with
Article 17.6 of the SHAREHOLDERS' AGREEMENT and said Annex A.
5.2 Place of shipment and payment terms are as specified in Articles 17.5, 17.6
and 17.7 of the SHAREHOLDERS' AGREEMENT.
6. DELIVERY
--------
6.1 The delivery dates indicated by MICRON on its purchase orders for PRODUCTS
are important elements of shipment and receiving of PRODUCTS. TECH agrees
to accept any MICRON purchase order, provided that such purchase order:
(i) does not exceed TECH's then current capacity, (ii) reasonably reflects
MICRON's forecasts as described under Article 17.2 of the SHAREHOLDERS'
AGREEMENT, and (iii) does not require delivery within a lead time which is
commercially unreasonable. TECH agrees to take all reasonable efforts so
that the PRODUCTS shall be delivered to MICRON's designated delivery point
on the dates set forth in any purchase order(s), accepted by TECH. In the
event that any PRODUCTS are not shipped in accordance with such delivery
dates, TECH agrees to ship via air freight (or as directed by MICRON) and
to pay for all extra costs; provided, however, that such failure to timely
ship is not due to any direct act or omission of MICRON (including without
limitation any MICRON employee or agent).
6.2 Material failure to meet agreed upon delivery shall be considered a breach
of this Agreement; provided, however, MICRON shall not be entitled to
damage and/or specific performance for any such breach where said breach is
the direct result of any act of MICRON, its employees or agents. TECH
shall not be liable for any penalty or incidental or consequential damages
imposed upon or incurred by MICRON as a result of failure of TECH to
deliver PRODUCTS on such delivery dates.
6.3 In addition to the packing and shipping instructions in Paragraph 11 below,
the PRODUCTS shall be packaged in accordance with commercially accepted
standards, or to applicable MICRON specifications, to ensure safe arrival
at MICRON's designated delivery point.
-2-
<PAGE>
7. TECH'S WARRANTIES AND REPRESENTATIONS
-------------------------------------
7.1 TECH warrants and represents to MICRON that the PRODUCTS will conform to
the SPECIFICATIONS and shall be free from any defects in material and
workmanship for a period of fifteen (15) months from the date of shipment
from TECH of the PRODUCTS, provided that said period may be renegotiated
for a longer period of time to conform to the industry standard current at
the time of renegotiation.
7.2 In the event MICRON determines within the 15-month period specified in
Paragraph 7.01 above that the PRODUCTS are in breach of the warranty set
forth in Paragraph 7.01, MICRON shall notify TECH immediately in writing of
the defect, and TECH shall promptly, at MICRON's option, either repair or
replace any defective PRODUCTS at no cost to MICRON, or credit to MICRON's
account MICRON's purchase price and all reasonable costs incurred with
respect to the return of the defective PRODUCTS. A Return Material
Authorization ("RMA") form previously issued by TECH must accompany any
such returned PRODUCTS. MICRON has the right to recommend corrective
action to address variances from the SPECIFICATIONS. Such return shipment
shall be made by MICRON, F.O.B. the destination from which they were
originally shipped to TECH.
7.3 Except as provided in Articles 19.6 and 19.7 of the SHAREHOLDERS'
AGREEMENT, and subject to Paragraph 7.04 below, TECH will hold MICRON
harmless from and indemnify it against all claims made by third parties
arising out of the operations of TECH or the PRODUCTS manufactured by TECH,
including all acts or omissions by TECH's personnel (whether or not such
personnel are direct employees of TECH or have been obtained from one of
the parties to the SHAREHOLDERS' AGREEMENT on a seconding or contractual
basis); provided, however, that liability for such claims is not due to any
direct act or omission of MICRON (including without limitation any MICRON
employee or agent).
7.4 (a) THE WARRANTIES IN THE SHAREHOLDERS' AGREEMENT AND ITS ANNEXES,
INCLUDING THIS AGREEMENT, ARE EXCLUSIVE AND STATED IN LIEU OF ALL OTHER
WARRANTIES, WHETHER EXPRESS, STATUTORY, OR IMPLIED, AND NEITHER ASSUME NOR
AUTHORIZE ANY OTHER PERSON TO ASSUME FOR THE PARTIES ANY OTHER LIABILITIES
IN CONNECTION WITH THE MANUFACTURE OR SALE OF THE PRODUCTS. THE WARRANTIES
SHALL NOT APPLY TO ANY OF THE PRODUCTS WHICH HAVE BEEN REPAIRED OR ALTERED,
EXCEPT AS AUTHORIZED BY TECH, OR WHICH SHALL BE SUBJECTED TO MISUSE,
NEGLIGENCE, ACCIDENT OR ABUSE.
(b) The remedies provided in this Agreement are MICRON's sole and exclusive
remedies for breach of TECH's warranties herein. Except as explicitly
provided herein, TECH shall not be liable for any direct damages therefor.
IN NO EVENT (INCLUDING CLAIMS UNDER RIGHTS OF INDEMNIFICATION) SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES.
-3-
<PAGE>
(c) The limitation of liability for direct damages described in the
previous paragraph shall not apply in the event that any PRODUCTS sold to
MICRON under this Agreement are determined by a court of competent
jurisdiction to be defective and to have directly caused property damage or
bodily injury or death, provided that MICRON provides TECH with a right to
participate with MICRON, at TECH's cost, in the defense of the associated
action.
7.5 The terms "SPECIFICATIONS," "TECHNICAL INFORMATION" and "PRODUCTS" as used
herein shall have the same definitions as in the SHAREHOLDERS' AGREEMENT,
and TECHNICAL ASSISTANCE AGREEMENT.
8. FORCE MAJEURE
-------------
8.1 Should any Party be prevented from performing its contractual obligations
under this Agreement due to the cause or causes of force majeure such as
acts of war (declared or undeclared), fire, storm, floods, typhoon or other
severe weather conditions, serious earthquake, legal restraints, government
or like interference, judicial action, accidental damage to equipment, as
well as any other cause outside the control of that Party, that Party shall
not be liable to the other Party for any delay or failure of performance
caused by any of the above events. "Force Majeure" shall include the
failure to obtain such license(s) and other approvals, including export
licenses, as are required by United States law or other applicable law for
the equipment, technical information, software, technology and PRODUCTS to
be provided pursuant to the terms of this Agreement.
8.2 The Party prevented from performing by the causes identified in Paragraph
8.01 shall notify the other Party of the occurrence of any of the above
events in writing by cable or telex within the shortest possible time.
8.3 Should the delay caused by any of the above events continue for more than
ninety (90) days, the Parties shall settle the problem of further
performance of this Agreement through friendly negotiations as soon as
possible with the objective of restructuring the relationship between them
such that the effects of such delay are minimized. If the Parties cannot
agree on a mutually acceptable solution within six (6) months of any
Party's request for such negotiations, any Party may terminate this
Agreement by prior written notice to the other Party.
9. RETURN MATERIAL AUTHORIZATION
-----------------------------
9.1 Defective material shall be returned freight collect to TECH. Replacement
material shall be sent freight prepaid from TECH, which shall absorb the
burden of premium transportation when defect or replacement material places
critical time or delivery schedule constraints on MICRON.
9.2 TECH agrees to provide as soon as reasonably possible, but not exceeding
five (5) work days, RMAs as contemplated by Paragraph 7.02.
-4-
<PAGE>
10. OVERSHIPMENTS
-------------
10.1 TECH shall ship only the quantity(ies) specified in purchase orders placed
under this Agreement. However, any deviation caused by conditions of
loading, shipping, packing or allowances in manufacturing processes may be
accepted by MICRON according to the overshipment allowance indicated on
the face of MICRON purchase orders. If no allowance is shown, no
percentage overshipment is allowed. MICRON reserves the right to return
any overshipment in excess of the allowance at TECH's expense.
11. PACKING AND SHIPPING INSTRUCTIONS
---------------------------------
11.1 TECH will properly pack and describe shipments in accordance with MICRON
specifications and applicable carrier regulations. Shipments will be made
at the lowest possible freight charges. MICRON may assist TECH by
providing freight classifications or classifying material. TECH will
insure or declare value on shipments except on parcel post, unless MICRON
specifies otherwise. On shipment where value is declared, TECH will ship
prepaid insured for a minimum of the equivalent of fifty U.S. dollars
(U.S. $50.00) to facilitate tracing. If shipping by air carrier, TECH will
ship freight prepaid. TECH shall consolidate the air and surface shipments
on single bills of lading insofar as possible so as to avoid premium
freight costs unless instructed otherwise by MICRON.
11.2 In case any shipment does not correspond to normal practice in the
industry (e.g., require special handling shipments or air ride suspension,
or air shipment over five hundred (500) pounds, or over one hundred twenty
(120) inches long or wide or over fifty-six (56) cubic feet, etc.), TECH
agrees to notify MICRON's appropriate traffic department seventy-two (72)
hours prior to shipment for special shipping instructions.
11.3 Each box, crate or carton will show MICRON's full street address and
purchase order number regardless of how shipped. On air carrier shipments,
a packing list shall accompany each container and shall describe the
contents of such container. On all other shipments, TECH will provide a
packing list to accompany each shipment, referencing the appropriate
purchase order number. The bill of lading also will reference the purchase
order number.
11.4 TECH is responsible for packing shipments correctly based on the
carrier/mode utilized. Charges for packing and crating shall be deemed
part of the purchase price and no additional charges will be made therefor
unless specifically requested by MICRON on the purchase order. TECH agrees
to ship via the carrier specified by MICRON.
12. NOTICE OF LABOR DISPUTE
-----------------------
12.1 Whenever any actual or potential labor dispute delays or threatens to
delay the timely performance of any purchase order issued hereunder, TECH
shall immediately give notice thereof to MICRON.
-5-
<PAGE>
13. APPLICABLE LAW
--------------
13.1 During the INVESTMENT PERIOD, this Agreement shall be governed by and
construed in accordance with the laws of the Republic of Singapore, except
that the validity, scope, interpretation or infringement of MICRON
intellectual property rights (including, without limitation, MICRON
patents, copyrights, maskwork rights and trade secrets) shall be governed
by the laws of Idaho, U.S.A., applicable to contracts made and fully
performed within Idaho. In this Section 13.00, the "INVESTMENT PERIOD"
shall mean such time as EDB and/or any EDB SUBSIDIARY owns at least ten
percent (10%) of the issued ordinary share capital of TECH.
13.2 Subject to Paragraph 13.01 alone, this Agreement shall be governed by and
construed in accordance with the laws of Idaho, U.S.A., applicable to
contracts made and fully performed within Idaho.
13.3 For purposes of any litigation relating to this Agreement, the Parties
consent to the exclusive jurisdiction of the courts of the Republic of
Singapore and Idaho.
14. TERMINATION
-----------
14.1 If TI (including its successors and assigns and any person subrogated to
the rights of TI) shall exercise any remedy under the Reimbursement
Agreement or the Guarantor Security Documents (as defined in the
Reimbursement Agreement), or if any of the Collateral Agent (as defined in
the Credit Agreement), the Agent (as defined in the Credit Agreement) or
any other financial institution party thereto (including any of their
successors or assigns or any person subrogated to the rights of any such
party) shall exercise any remedy under the Credit Agreement or the related
loan or collateral documents, in each case other than one or more
Permitted Remedies (as defined below) or upon proceedings being commenced
or pursued by or against TECH (other than by MICRON or any of its
affiliates) for its bankruptcy, winding-up, dissolution, administration or
re-organization (other than any such proceeding of a frivolous or
vexatious nature discharged within thirty (30) days) or upon the
appointment by any person (other than MICRON or any of its affiliates) of
a receiver, administrator, trustee, judicial manager or similar officer
over TECH or all or a substantial portion of TECH's business, revenues or
assets (any such proceedings or appointment, an "Insolvency Event"), then
in any such event at the option of MICRON (other than an Insolvency Event,
in which case automatically): (A) MICRON's obligations and TECH's rights
under the SHAREHOLDERS' AGREEMENT (but subject to the survival of the
Articles referred to in Article 21.4 thereof, excluding Article 21.1
(which Article 21.1 shall specifically not survive in such instances as
set forth in Article 21.5 thereof)) shall immediately and with no further
action on the part of any PARTY thereto terminate; (B) TECH shall
immediately and with no further action on the part of any PARTY thereto
terminate its manufacture of PRODUCTS and any other use of MICRON
TECHNICAL INFORMATION (as defined in the TECHNICAL ASSISTANCE AGREEMENT)
or MICRON A/T TECHNICAL INFORMATION; (C) without limiting the generality
of the
-6-
<PAGE>
foregoing, the provisions of Article 21.1 of the SHAREHOLDERS' AGREEMENT
shall not apply and no license shall be granted to TECH thereunder or
otherwise; (D) TECH shall immediately destroy or return to MICRON as
instructed by MICRON in the exercise of its sole discretion, destroy all
TECHNICAL DATA (as defined in the TECHNICAL ASSISTANCE AGREEMENT) then in
its possession and any mask sets furnished to TECH pursuant to Section
4.04 of the Technical Assistance Agreement or any other agreement or
understanding; and (E) neither TECH nor any other person shall thereafter
have any claim against or right to any MICRON PATENT (as defined in the
TECHNICAL ASSISTANCE AGREEMENT), MICRON COPYRIGHT (as defined in the
TECHNICAL ASSISTANCE AGREEMENT), MICRON MASKWORK RIGHT (as defined in the
TECHNICAL ASSISTANCE AGREEMENT) or any other tangible or intangible right
or asset of MICRON. Following the receipt of a Default Notice (as defined
in the letter agreement by TI in favor of MICRON dated October 1, 1998),
the shareholders of TECH shall enter into good faith discussions for a
period of thirty (30) days in an effort to determine an appropriate course
of action for TECH. During such period, unless an Insolvency Event shall
have occurred prior to the termination of such thirty (30) day period,
MICRON shall refrain from exercising its termination rights pursuant to
this section. "Permitted Remedies" shall mean the Bank Permitted Remedies
or the TI Permitted Remedies. The "Bank Permitted Remedies" shall be any
remedy against the Borrower that does not result in the cancellation or
unavailability of all or any part of the commitments under the Credit
Agreement (it being understood that the unavailability of commitments
under the Credit Agreement due to TECH's inability to meet conditions
precedent or make representations or warranties shall not in and of itself
constitute a "remedy" for purposes of this section). The "TI Permitted
Remedies" shall be (i) sending of any notice or the demanding of any
payment by TECH owed under the Reimbursement Agreement or pursuant to
Section 5.01(a)(III) of the Reimbursement Agreement, (ii) making of any
payment or prepayment by TI to the Agent, the Security Agent or any other
financial institution party to the Credit Agreement pursuant to the terms
of the Guarantee (as defined in the Reimbursement Agreement), (iii)
delivering a statutory demand under Singapore law, (iv) commencing and
participating in legal proceedings for the sole purpose of obtaining a
monetary judgment and obtaining such a judgment, (v) pursuing, or
suffering to exist, remedies under Section 5.01(c) of the Reimbursement
Agreement, or (vi) enforcing remedies against operating and deposit
accounts, so long as the sum of TECH's total unrestricted cash and cash
equivalents plus the aggregate of all Available Revolving Commitments (as
defined in the Credit Agreement) then available to TECH under the Credit
Agreement is not less than $50.0 million after giving effect to such
remedies.
15. MISCELLANEOUS
-------------
15.1 For purposes of any litigation in the Republic of Singapore, or appeals
arising out of such litigation, the Parties hereby appoint the respective
persons set forth below as their agents for service of process in
Singapore:
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<PAGE>
TECH: TECH Semiconductor Singapore Pte. Ltd.
No. 1 Woodlands Industrial Park D
Street 1
Singapore 738799
Attention: President
MICRON: Micron Semiconductor Asia Pte. Ltd.
990 Bendemeer Road
Singapore 339942
Attention: Site Manager
With copy to: Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
U.S.A.
Attention: General Counsel
For purposes of any litigation in the courts in Idaho, or appeals arising
out of such litigation, the Parties hereby appoint the respective persons
set forth below as their agents for service of process:
TECH: General Counsel
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
U.S.A.
MICRON: General Counsel
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
U.S.A.
With copy to: Site Manager
Micron Semiconductor Asia Pte. Ltd.
990 Bendemeer Road
Singapore 339942
15.2 Except as required by law, for governmental approval or as may be
reasonably required for the operation of TECH, no Party shall, without the
prior written consent of the other Party, disclose (i) to any third party
other than Texas Instruments, Inc., its affiliates, any financial
institution that is a party to the Credit Facility or lending to TECH
thereunder, the PARTIES to the SHAREHOLDERS' AGREEMENT, and their
affiliates either the terms or conditions of this
-8-
<PAGE>
Agreement, or (ii) to any third party any information of a proprietary
nature which it obtains or which becomes available to it as the result of
this Agreement or of the operations of TECH.
15.3 TECH agrees to comply with all applicable export control laws and to
obtain all export licenses required for performance of its obligations
hereunder.
15.4 MICRON may assign this Agreement or any obligation hereunder to any
subsidiary of MICRON upon written notice to TECH. In such event, MICRON
shall be the controlling party of such assignee and shall guarantee the
obligations of such assignee under this Agreement. TECH shall not assign
or transfer this Agreement or any portion hereof, or subcontract any
obligation hereunder, without the prior written consent of MICRON. Any
such attempted assignment, transfer or subcontract by TECH shall be void.
15.5 The headings of the paragraphs of this Agreement are for reference
purposes only and shall not be deemed to affect in any way the meaning or
interpretation of the Paragraphs to which they refer.
15.6 The failure on the part of any Party to exercise or enforce any rights
conferred on it hereunder shall not be deemed to constitute a waiver of
any rights or operate to bar the exercise or enforcement of any such right
at any time or times thereafter.
15.7 This Agreement may not be modified, except as permitted under Article
7.11(c) of the SHAREHOLDERS' AGREEMENT and with written consent of the
Parties.
15.8 This Agreement may be executed in one or more counterparts, each of which
shall be enforceable against the Parties executing such counterparts, and
all of which together shall constitute one instrument.
15.9 All notices , requests, demands, and other communications under this
Agreement shall be in writing and shall be delivered personally (including
by courier) or sent by registered or certified mail (postage prepaid) or
given by facsimile transmission (with confirmation in writing) to the
parties at the following addresses (or to such address as a party may have
specified by notice given to the other pursuant to this provision) and
shall be deemed given when so received:
If to MICRON: Site Manager
Micron Semiconductor Asia Pte. Ltd.
990 Bendemeer Road
Singapore 339942
With copy to: General Counsel
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
-9-
<PAGE>
If to TECH: President
TECH Semiconductor Singapore Pte. Ltd.
No. 1 Woodlands Industrial Park D
Street 1
Singapore 738799
Fax: (65) 365-2016
and, to the extent required by Singapore law, on each member of TECH's Board of
Directors at their address of record. All such notices, requests, demands, and
other communications shall be deemed received on the date of receipt by the
recipient thereof if received prior to 5 p.m. in the place of receipt and such
day is a business day in the place of receipt. Otherwise, any such notice,
request, demand or other communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
15.10 All correspondence relating to this Agreement shall be in English.
15.11 This Agreement is written and executed in English. No translation of
this Agreement into any other language shall have any force or effect in
the interpretation of the construction of this Agreement in determination
of the intent of the Parties hereto.
15.12 If any provision of this Agreement shall be held invalid or unenforceable
by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed
and, subject to applicable law, shall not affect the validity or effect
of any other provisions hereof.
[The remainder of this page is intentionally left blank. Signatures appear on
the following page.]
-10-
<PAGE>
IN WITNESS WHEREOF, the Parties have signed and dated this Purchase
Agreement in the space provided below.
TECH SEMICONDUCTOR SINGAPORE MICRON TECHNOLOGY, INC.
PTE. LTD.
By:_________________________________ By:__________________________________
Name:_______________________________ Name:________________________________
Title:______________________________ Title:_______________________________
Date:_______________________________ Date:________________________________
-11-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-02-1999
<PERIOD-END> DEC-03-1998
<CASH> 768
<SECURITIES> 1157
<RECEIVABLES> 503
<ALLOWANCES> (21)
<INVENTORY> 360
<CURRENT-ASSETS> 2850
<PP&E> 5405
<DEPRECIATION> (1803)
<TOTAL-ASSETS> 6788
<CURRENT-LIABILITIES> 862
<BONDS> 0
0
0
<COMMON> 25
<OTHER-SE> 3811
<TOTAL-LIABILITY-AND-EQUITY> 6788
<SALES> 794
<TOTAL-REVENUES> 794
<CGS> 678
<TOTAL-COSTS> 856
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8)
<INCOME-PRETAX> (74)
<INCOME-TAX> (28)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46)
<EPS-PRIMARY> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
