IM Flash Agreements

On February 27, 2012, we entered into agreements with Intel relating to our IMFS and IMFT joint ventures. The transactions contemplated by such agreements became effective on April 6, 2012. In connection therewith, we acquired Intel's 18% interest in IMFS and the assets of IMFT located at our Virginia wafer fabrication facility. As a result, Intel received distributions of approximately $600 million, the approximate book value of its interests. Additionally, Intel deposited $300 million with us to be applied to Intel's future purchases of NAND Flash under a NAND Flash supply agreement or, under certain circumstances, to be refunded.

The agreements also provided for the following:


•	expansion of the scope of the IMFT joint venture to include certain emerging memory technologies;


•	new agreements under which we will supply NAND Flash memory products and certain emerging memory products to Intel on a cost-plus basis, and a termination of IMFS's supply agreement with us and Intel;


•	extension of IMFT's joint venture agreement through 2024; and


•	certain buy-sell rights, commencing in 2015, pursuant to which Intel may elect to sell to us, or we may elect to purchase from Intel, Intel’s interest in IMFT (if Intel so elects, we would set the closing date of the transaction within two years following such election and could elect to receive financing from Intel for one to two years).

In connection with purchasing the IMFT assets located in Virginia, we terminated IMFT's lease to use approximately 50% of our Virginia fabrication facility. As a result, we expect to recognize a charge of $17 million in the third quarter of 2012.

We also entered into a senior unsecured promissory note with Intel. Under the terms of the note, we borrowed $65 million, payable with interest in eight approximately equal quarterly installments with interest at a rate of Libor minus 50 basis points (but will not be less than zero).

We and Intel will continue to share output of IMFT and certain research and development costs generally in proportion to our investments in IMFT.