*M-Systems/Toshiba XDOC Development & LicenseAgreement*

**                                                                                                                                        **

XDOC DEVELOPMENT AND LICENSEAGREEMENT

 

ThisXDOC Development and License Agreement ("**Agreement**") is entered into andis effective as of July 15, 2003 (the "**Effective Date**"), by and between **ToshibaCorporation**, a Japanese corporation having its principal place of businessat 1-1 Shibaura 1-chome, Minato-ku, Tokyo 105-8001, Japan ("**Toshiba**"),and **M-Systems Flash Disk Pioneers, Ltd.**, an Israeli corporation havingits principal place of business at 7 Atir Yeda St., Kfar Saba, 44425, Israel ("**M-Systems**").  Toshibaand M-Systems are also hereinafter referred to collectively as the "**Parties**"and each individually as a "**Party**".

 

**RECITALS**

** **

**WHEREAS,**Toshiba is a leading designer and manufacturer of flash memory products; and

 

**WHEREAS,**M-Systems is a leading developer of flash disk controller and file systemtechnologies; and

 

**WHEREAS,**the Parties have entered into (i) the [***] Development and License Agreement(the "[***]") dated June 5, 1998, defining the terms and conditions for a jointdevelopment and related license of the [***] (as defined in such agreement),(ii) the [***] Development and License Agreement (the "[***]") dated July 4,2000, defining the terms and conditions for a joint development and relatedlicense of the [***] (as defined in such agreement), (iii) the [***]Development and License Agreement  (the "[***]") dated as of October25, 2001, defining the terms and conditions for a joint development and relatedlicense of the [***] (as defined in such agreement), and (iv) the [***]Development and License Agreement ("[***]") dated June 25, 2002, defining theterms and conditions for a joint development and related license of the [***](as defined in such agreement) (the [***] Agreement, the [***]Agreement, the[***]Agreementandthe [***] Agreementshallbe collectively referred to as the "[***]"); and

 

**WHEREAS,**the Parties wish to replace the MDOC D&L Agreements with this Agreement;and 

 

**WHEREAS,**the Parties wish to set forth in this Agreement a framework for cooperationwith respect to future XDOC Products (as defined below); and

 

**WHEREAS,**as of the Effective Date the  Parties are also entering into a NewMPA and a Patent License Agreement (all as defined below). 

 

**NOW, THEREFORE,** inconsideration of the foregoing premises and the covenants and agreements setforth in this Agreement, the Parties agree as follows:

 

 

 

**_1_** 

**AGREEMENT**

 

**1.*                 *****DEFINITIONS**

         Thefollowing capitalized terms shall have the following meanings:  

 

1.1*                   *"**Additional Support Fees**" has the meaning set forthin Section 4.7.3 below. 

1.2*                   *"**Additional Jointly Developed XDOC Products**" hasthe meaning set forth in Section 2.2 below.

1.3*                   *[***].

1.4*                   *"**Business Day**" means any day except (a) aSaturday or Sunday, or (b) any other day on which commercial banks in Tokyo, Japan are authorized by law to close. 

1.5*                   *"**Combo Revenue**" means the sum of all XDOC Paymentsapplicable to Combo Units for which payments have been invoiced after theEffective Date by Toshiba and/or its Subsidiaries (other than with respect toinvoices issued to (i) M-Systems and/or its Subsidiaries, (ii) any [***], (iii)any Toshiba Subsidiary, [***]). For purposes of this definition, the "XDOCPayments" applicable to a covered Combo Unit shall be equal to the [***], inthe applicable Royalty Period, of the applicable XDOC Product contained in suchCombo Unit, provided that if Toshiba and/or its Subsidiaries have not sold anysuch applicable XDOC Product, then the agreed invoiced amount per such XDOCProduct shall be a price calculated in accordance with the pricing scheme setforth in Section 1.2 of Exhibit B-2 of the New MPA.

In the case of asale of any Combo Unit by Toshiba to its Subsidiary which is then incorporatedinto another product with substantial additional value prior to being sold to acustomer [***], the XDOC Payments for such Combo Unit will be equal to [***]:(i) the [***] price charged [***], in the applicable Royalty Period, of theapplicable XDOC Product contained in such Combo Unit, if any, or (ii) the [***]paid to [***] for the applicable XDOC Product contained in such Combo Unitduring the applicable Royalty Period by customers [***], provided however thatif [***] have not sold any such applicable XDOC Product  during theapplicable Royalty Period, then the agreed invoiced amount per such XDOCProduct under this Subsection (ii) shall be a price calculated in accordancewith the pricing scheme set forth in Section 1.2 of Exhibit B-2 of the New MPA.

**_2_** 

 

 

1.6*                   *"**Combo Unit**" means a multi chip package productwhich includes an XDOC Product (in any form, including die form) in addition toat least one component that is not an XDOC Product.

1.7*                   *"**Continuing Terms**" has the meaning set forth inSection 2.1 below.

1.8*                   *"**Developed Technology**" means (a) the results of anyjoint development work performed under the [***] and expressly set forth inExhibit A hereof under the heading "Jointly Developed Technology", as updatedfrom time to time by mutual written agreement of the Parties, and (b) anyresults of any joint development work expressly identified as "JointlyDeveloped Technology" pursuant to any additional written joint developmentagreement entered by the Parties pursuant to Section 2.2. 

1.9*                   *"**Deliverable**" has the meaning given to it in eachapplicable [***].

1.10*               *[***]. 

1.11*               *"**Fiscal Year**" means the period from January 1stto December 31st.

1.12*               *"**Governmental Authority**" means any governmentalbody, agency or official of any country or political subdivision of anycountry, including, but not limited to, federal, state, county and localgovernments and administrative agencies; any court, administrative hearingbody, arbitrator, commission or other similar dispute resolving panel or body;and any other entity exercising executive, legislative, judicial, regulatory oradministrative functions of a government.

 

 

 

 

 

 

**_3_** 

 

1.13*               *"**Improvements**" means (a) with respect to patentablesubject matter, any improvement to such subject matter that would infringe oneor more claims of the original patent, (b) with respect to copyrightablematerial, any derivative work of such copyrightable material, and (c) withrespect to trade secrets, any new design or implementation that incorporatessuch trade secret; provided, however, that in no event will the M‐SystemsTechnology be considered an Improvement to the Toshiba Technology and in noevent will the Toshiba Technology be considered an Improvement to the M-SystemsTechnology.

1.14*               *[***].

1.15*               *"**MDOC Products**" means, collectively, the [***](each as defined in the applicable [***]).

1.16*               *"**M-Systems Technology**" means M-Systems` XDOCProduct designs and technology.  M-Systems Technology includes,without limitation, [***] designs and technology (each as more fully describedin Exhibit A) and any additional M-Systems technology expressly identified as"M-Systems Technology" in any additional written joint development agreemententered by the Parties pursuant to Section 2.2.  

1.17*               *"**New MPA**" means the New Master Purchase Agreemententered into by and between Toshiba and M-Systems as of the Effective Date.

1.18*               *"[***].

1.19*               *"[***].

[***]

 

1.20*               *[***].

1.21*               *"**Patent License Agreement**" means the Patent LicenseAgreement entered into by and between M-Systems and Toshiba as of the EffectiveDate.

 

**_4_** 

 

1.22*               *"**Proceeding**" means any action, litigation,arbitration, suit, proceeding or investigation or review of any nature, civil,criminal, regulatory or otherwise, before any Governmental Authority.

1.23*               *"**Royalty Period**" means each fiscal quarter asfollows: from January 1 to March 31, from April 1 to June 30, from July 1 toSeptember 30 and from October 1 to December 31.

1.24*               *"**Special Conditions**" with respect to a violation orbreach by Toshiba causing an XDOC Product Supply Termination for purposes ofSection 11.4 shall mean each of the following conditions:

(a)        [***];(b)          [***]

(c)        [***].

For the avoidance of doubt, this Section1.24 shall have no effect in determining whether any violation or breach byToshiba constitutes grounds for XDOC Product Supply Termination or othertermination of the New MPA.  Such determination shall be madeexclusively in accordance with Section 16.1.4 of the New MPA and any otherapplicable provisions thereof.

1.25*               *"**Subsidiary**" means a corporation or other entity ofwhich the applicable Party, directly or indirectly, (a) owns 50% or more of theoutstanding shares or other ownership interests, or (b) has the right toappoint the majority of the members of the Board of Directors or similar body.  [***]

1.26*               *[***].

1.27*               *"**Support Fees**" has the meaning set forth in Section4.7.1 below.

1.28*               *[***]. 

 

 

 

 

 

**_5_** 

 

1.29*               *"**Toshiba Technology**" means Toshiba`s XDOC Productdesigns and maskworks, but not any M‐Systems Technology incorporatedtherein, and Toshiba`s NAND flash technology, all as more fully described inExhibit A, and any additional Toshiba technology expressly identified as"Toshiba Technology" in any additional written joint development agreemententered by the Parties pursuant to Section 2.2.

1.30*               *"**TrueFFS**" means M-Systems` "True Flash File System"technology (including, without limitation, any software related thereto, insource code and object code forms) for providing read/write disk emulation forflash memory products. 

1.31*               *"**Unpaid Amount**" has the meaning set forth inSection 3.1 below. 

1.32*               *"**XDOC Product**" means any NAND-based memory devicein any form (whether single-chip and/or multi-chip, and whether developedjointly by the Parties or developed by a Party (solely or together with one ormore third parties) without the involvement of the other Party) that isdesigned or manufactured by or for Toshiba or its Subsidiaries and has acapability of booting a CPU without other memory devices and that includesinternal RAM for achieving the booting capability with the boot code executingin place in the RAM.  For the avoidance of doubt, XDOC Products shallinclude, without limitation, any of the MDOC Products.

1.33*               *"**XDOC Product Supply Termination**" means atermination of the New MPA by the non breaching Party pursuant to Section16.1.4 of the New MPA based upon a violation or breach relating to the supplyor purchase of XDOC Products.  For the avoidance of doubt, thisSection 1.33 shall have no effect in determining whether any violation orbreach by the breaching Party constitutes grounds for XDOC Product SupplyTermination or other termination of the New MPA.  Such determinationshall be made exclusively in accordance with Section 16.1.4 of the New MPA andany other applicable provisions thereof.

**_6_** 

 

1.34*               *"**XDOC Revenue**" means the sum of all paymentsinvoiced, after the Effective Date, by Toshiba and/or its Subsidiaries (otherthan with respect to invoices issued to (i) M-Systems and/or its Subsidiaries,(ii) any [***], (iii) any Toshiba Subsidiary, [***] for any XDOC Products. Inthe case of a sale of XDOC Products by Toshiba to a Subsidiary which is thenincorporated into another product with substantial additional value prior tobeing sold to a customer, the calculation of XDOC Revenue for such XDOCProducts will be based on a price per such XDOC Product equal to the greaterof: (i) the price invoiced by Toshiba to the Subsidiary, or (ii) the averageselling price paid to Toshiba for such XDOC Product during the applicableRoyalty Period by customers who are not Subsidiaries of Toshiba, providedhowever that if Toshiba and/or its Subsidiary have not sold any such applicableXDOC Product to any third parties during the applicable Royalty Period, thenthe agreed invoiced amount per such XDOC Product under this Subsection (ii)shall be a price calculated in accordance with the pricing scheme set forth inSection 1.2 of Exhibit B-2 of the New MPA.    

**2.*           *****DEVELOPMENT EFFORT**

2.1*                   *MDOC Product Development Responsibilities. 

Except as expressly set forth in this Agreement, the terms ofeach [***]are superceded in their entirety by the terms of this Agreement.  

Each of Toshiba and M-Systems will use commercially reasonableefforts to carry out its respective Development Responsibilities pursuant tothe following terms of each [***] (collectively, the "**Continuing Terms**"):****Section 2 (Development Effort), Section 3.1 (Development Payments byM-Systems), Schedule A (Specification) and Schedule C (Development Schedule).    

 

 

 

 

**_7_** 

 

2.2*                   *Additional Joint Development. 

The Parties will discuss the joint development of any additionalXDOC Products (the "**Additional Jointly Developed XDOC Products**") inaddition to the [***] and the [***] which have been developed or are currentlyunder development by the Parties as of the Effective Date. [***]. Any agreementbetween the Parties for the development of any Additional Jointly DevelopedXDOC Products shall be subject to further agreement by the Parties as to theParties` development responsibilities, reports, design review, resourcescommitment, amount of development payments to Toshiba and other appropriateterms.  

Notwithstanding the above, each Party shall have the option torequest, at least once every [***], that the other Party work together with therequesting Party to develop an Additional Jointly Developed XDOC Product. Allaspects of such new product development (including but not limited to productspecifications) shall be subject to good faith discussion and agreement betweenthe Parties, including with respect to the extent of each Party`s commitment todevelopment of the product. 

The Parties currently intend to [***], subject to applicablemarket circumstances and other relevant factors; provided that (a) this Section2.2.3 will not be deemed to create binding obligations of either Party, and (b)nothing herein shall obligate a Party to comply with or act upon any request bythe other Party to develop any Additional Jointly Developed XDOC Product unlessand until the Parties execute a written development agreement with respect tosuch Additional Jointly Developed XDOC Product as contemplated by Sections2.2.1 and 2.2.2.

[***].   

2.3*                   *Individual Development. The Parties acknowledge andagree that, except as expressly set forth herein, each Party is free to pursueits own independent development of XDOC Products.  

**_8_** 

 

2.4*                   *[***].

2.5*                   *Should a Party desire modifications in the design of theXDOC Products, such Party shall submit its request to the other Party inwriting, and the Parties shall have good faith discussions about such requesteddesign modification, provided that any such modification shall require theexpress written agreement of the Parties.  Should the Parties agreeto the requested design change (and subject to the terms of such agreement),such change will not affect the other XDOC Products already scheduled orrescheduled for delivery as of the date such request is agreed to by theParties. 

**3.*                 *****PAYMENTS**

3.1*                   *Royalty Payments by Toshiba. 

In consideration for the licenses granted by M-Systems pursuantto Sections 4.4 and 4.5 below, Toshiba will make royalty payments to M-Systemsin U.S. dollars in connection with the sale of any XDOC Products and ComboUnits, such payment to be based on the XDOC Revenue and the Combo Revenue, atthe times and royalty rates set forth in Section 3.2 below. The initial royaltypayment shall cover all of Toshiba`s XDOC Revenue and Combo Revenue during theperiod beginning on the Effective Date and ending on the last day of theRoyalty Period in which the Effective Date falls. All royalty payments will bemade within [***] days following the close of each Royalty Period based onToshiba`s XDOC Revenue and Combo Revenue within such Royalty Period. Eachroyalty payment will be accompanied by a statement certified by Toshibadescribing the number of units of XDOC Products and Combo Units sold (allocatedper each type of XDOC Product and/or Combo Unit), the amount of XDOC Revenueand Combo Revenue, [***], the actual amounts received by Toshiba and/or itsSubsidiaries in connection with XDOC Revenue and/or Combo Revenue, acalculation of the amount of royalties due to M-Systems, and the amount ofroyalties being paid. 

**_9_** 

In the event that any XDOC Revenue and/or Combo Revenue invoicedby Toshiba and/or its Subsidiaries is not received by such companies within[***] days from the payment date set forth in such invoice (such unpaid amountto be referred to as the "**Unpaid Amount**"), then the XDOC Revenue and/orCombo Revenue for the next Royalty Period after such date shall be decreased bythe Unpaid Amount, provided that if the Unpaid Amount is received by Toshibaand/or its Subsidiaries at any time thereafter, such Unpaid Amount shall beadded to the XDOC Revenue and/or Combo Revenue for the Royalty Period duringwhich such Unpaid Amount is received. XDOC Revenue and Combo Revenue invoicedin currencies other than U.S. dollars will be converted based on the exchangerate at the close of the last business day of the applicable Royalty Period inthe foreign currency exchange market of Tokyo. Each royalty statement willinclude a listing of each exchange rate used in calculating the royalty paymentfor the Royalty Period covered by such statement. Notwithstanding the above,Toshiba undertakes that any sale of XDOC Products and/or Combo Units to aSubsidiary shall be evidenced by an applicable invoice of Toshiba. 

3.2*                   *Royalty Rates.

Toshiba`s royalty obligations referred toin Section 3.1 above shall be calculated as a percentage of the XDOC Revenueand Combo Revenue. Such percentage shall be equal to [***].  M-Systemsmay approach Toshiba if in its opinion applying the mechanism described insubsection (ii) would not be equitable under certain circumstances, and in suchcase the Parties shall have good faith discussions about such circumstances,provided that the mechanism described in subsection (ii) shall be appliedunless M-Systems and Toshiba expressly agree in writing otherwise. 

[***].    

[***].[***]. 

**_10_** 

 

Payment of the royalties set forth in this Section ‎3.2 shall be subject to the limitations setforth in Section 4.8 below. 

For the avoidance of doubt, the Parties acknowledge and acceptthat (a) Toshiba`s royalty payment obligations set forth in this Section 3.2supercede in their entirety any previous agreements between Toshiba andM-Systems with respect to the subject matter thereof, including, withoutlimitation, in respect of all paragraphs of Section 3.2 of each [***] and anyinconsistent payment terms set forth in the [***], (b) without limiting thegenerality of the foregoing, (i) the [***] royalty rate set forth in the thirdparagraph of Section 3.2 of each of the [***], and (ii) the entitlement ofToshiba set forth in Section 2.6 of Exhibit B-4 of the [***] D&L Agreementand the [***] Agreement to receive from M-Systems an amount equal to [***]% ofM-Systems` [***] (defined in such agreements) in excess of [***]%, shall ceaseto be in force and effect, and (c) Toshiba`s royalty payment obligations inconnection with products covered under the [***]and invoiced by Toshiba priorto the Effective Date hereof, shall remain in accordance with the paymentscheme and terms set forth in the applicable [***].

3.3*                   *Records and Audit.  

Both Parties shall keep and maintain appropriate books andrecords reasonably necessary for verification that they have complied with theterms of this Agreement (including payment obligations for the applicableroyalties hereunder, the M-Systems [***] (as defined in [***] of each [***])and the Support Fees hereunder).

For [***] years after the end of each Fiscal Year, each Partyshall be entitled, not more than once annually, to retain independent auditorsat such Party`s expense (subject to Section ‎3.3.4 below), to review the other Party`s books and records forthe purpose of determining whether the applicable amounts paid by the Parties(as applicable) meet the requirements of this Agreement.  

**_11_** 

Any amounts hereunder due by a Party to the other Party whichare determined, as a result of the audit, to be underpaid or overpaid willpromptly be corrected and paid to the applicable Party.  

In the event that an audit is requestedby one of the Parties (the "**Initiating Party**") and such audit showsunderpayment by the other Party (namely, the non Initiating Party) of more than[***] of the aggregate payments due for the period being reviewed, then theother Party shall bear the cost of such audit.

3.4*                   *Payment Account.  All payments under thisAgreement from a Party to the other Party hereto shall be made by telegraphictransfer to the following bank accounts: 

** **

Payment to Toshiba:                                         Paymentto M-Systems:

 

Toshiba Corporation                                         M-SystemsFlash Disk Pioneers Ltd.

Sumitomo-MitsuiBanking Corporation             Bank Hapoalim 

Head Office                                                      Hadar-Yosef  branch(#610) 

Account No:    5187873                                   AccountNo:    389300

1-1-2, Yurakucho, Chiyoda-ku                        27 Pinchas Rosen St.  

Tokyo,100 Japan                                            Tel Aviv, Israel

Telephone:    +81-3-3501-1111                      Telephone:     +972-9-764-5000

 

3.5*                   *Tax.  All amounts paid to M-Systems under thisAgreement which are subject to tax withholding shall be net of any such taxwithholding, which withholding will be paid by Toshiba to the Japanese taxauthorities on behalf of M-Systems. Toshiba shall make all filings necessarywith respect to such withholdings and, upon request from M-Systems, shallprovide M-Systems with evidence that such amounts have been withheld.

 

 

 

 

 

 

**_12_** 

 

**4.*                 *****OWNERSHIP, LICENSES AND SUPPORT**

4.1*                   *Ownership and License to Improvements.  Toshibaowns the Toshiba Technology and all intellectual property rights therein,without derogating from M-Systems` ownership of the M-Systems Technology andM-Systems` license rights as set forth in Section 4.2 below. M-Systems owns theM-Systems Technology and all intellectual property rights therein, withoutderogating from Toshiba`s ownership of the Toshiba Technology and Toshiba`slicense rights as set forth in Sections 4.3 and 4.4 below.  TheDeveloped Technology shall be jointly owned by M-Systems and Toshiba, and eachParty has the right to use, reproduce and otherwise dispose of such DevelopedTechnology for any purpose, provided that the right of Toshiba or M-Systems togrant licenses to any third party and have any products manufactured by anythird party using such Developed Technology shall be subject to the conditionsset forth in Sections 4.2, 4.3 and 4.4 below. To the extent employees orcontractors of M-Systems develop any Improvements to the Toshiba Technology inthe course of development of the XDOC Products, M-Systems hereby grants toToshiba a non-exclusive, irrevocable, perpetual, worldwide, paid-up license tomake, have made, use, sell, offer for sale, import, copy and distribute suchImprovements, including the right to sublicense any or all of these rightsthrough multiple tiers. To the extent employees or contractors of Toshibadevelop any Improvements to the M-Systems Technology in the course ofdevelopment of the XDOC Products, Toshiba hereby grants to M-Systems anon-exclusive, irrevocable, perpetual, worldwide, paid-up license to make, havemade, use, sell, offer for sale, import, copy and distribute such Improvements,including the right to sublicense any or all of these rights through multipletiers.

 

 

 

 

 

 

 

 

 

 

**_13_** 

 

4.2*                   *Second Source License. In the event M-Systemsdesires to have a second source of XDOC Products and have the second source usethe Developed Technology for such purpose, M-Systems and Toshiba shall, upon awritten request from M-Systems, discuss in good faith the terms and conditionsof a license of the Developed Technology to a third party to the extentnecessary to enable such third party to serve as a second source, including theextent of Developed Technology to be disclosed by M-Systems to such thirdparty.  Any such license granted by M-Systems to any such third partyshall be in form and substance reasonably acceptable to Toshiba, as indicatedin writing by Toshiba, and shall not include any rights with respect to anyToshiba Technology.

4.3*                   *Rights and License Grant to Toshiba: Production forM-Systems. M-Systems hereby grants to Toshiba a non-exclusive (subject tothe provisions of Section 4.5 below), worldwide, royalty-free, paid-up licenseunder M‐Systems` intellectual property rights in the M-Systems Technologyto develop, use, make and have made XDOC Products and Combo Units and to selland offer for sale such XDOC Products and Combo Units solely to M-Systems andit Subsidiaries.  Toshiba shall have the right tosublicense the rights set forth in this Section 4.3 only to any of itsSubsidiaries.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**_14_** 

 

4.4*                   *Rights and License Grant to Toshiba: Production forThird Parties.  M-Systems hereby grants to Toshiba a furthernon-exclusive (subject to the provisions of Section 4.5 below), worldwide, royalty-bearinglicense under M-Systems` intellectual property rights in the M-SystemsTechnology to make, have made, use, sell, offer for sale, import, copy, anddistribute the XDOC Products and Combo Units to third parties either: (a) undera Toshiba trademark and/or tradename, and/or (b) for incorporation by Toshiba`scustomer into another product bearing such customer`s trademark and/ortradename which adds substantial additional value. Toshiba shall have the rightto sublicense the rights set forth in this Section 4.4 only (i) to any of itsSubsidiaries, or (ii) in connection with the distribution of XDOC Products andCombo Units as specified in the preceding sentence.  The foregoinglicenses under this Section 4.4 shall be subject to Toshiba`s complying withits payment obligations under Sections 3.2 and 4.7; no other fees or royaltieswill be payable in connection therewith.

4.5*                   *[***]. 

4.6*                   *M-Systems` Support.  M-Systems agrees toprovide Toshiba with the following support for XDOC Products:  

M-Systems will inform Toshiba of any upgrade or enhancement tothe TrueFFS immediately after such upgrade or enhancement has been madeavailable to its customers and without delay provide Toshiba with tools forsystem functionality test;

M-Systems will provide TrueFFS and necessary technical supportto any and all of Toshiba`s customers (including, without limitation, [***]and/or its Subsidiaries, [***], and any Subsidiary of Toshiba) as requested byToshiba and with no discrimination, subject to Section 4.7.3 below; and

 

 

 

 

 

 

 

**_15_** 

 

In the event that a customer of Toshiba returns a malfunctioningXDOC Product or Combo Unit to Toshiba within the earlier of (i) the warrantyperiod provided to such customer by Toshiba, or (ii) [***] after the date suchunit has been sold to such customer, and such unit is malfunctioning due to anerror relating to the design of the M-Systems Technology integrated in themalfunctioning unit, M-Systems shall, at its sole expense, use reasonableefforts to cure such error and to amend such design as may be necessary so thatsuch design shall comply with the specification thereof, and, in the event that[***]. 

4.7*                   *Support Fees.

Toshiba shall pay to M-Systems support fees ("**Support Fees**")calculated as a percentage of the XDOC Revenue, Combo Revenue and [***].  Suchpercentage shall be equal to [***].  M-Systems may approach Toshibaif in its opinion applying the mechanism described in subsection (ii) would notbe equitable under certain circumstances, and in such case the Parties shallhave good faith discussions about such circumstances, provided that themechanism described in subsection (ii) shall be applied unless M-Systems andToshiba expressly agree in writing otherwise.  

[***].

### [***].    

### * *

### [***].*  *

### * *

### [***].

 

### Any Support Fees due hereunder shall be paid by Toshiba to M-Systems inaccordance with the schedule set forth in Section 3.1 with respect to royaltypayments, and will be accompanied by any and all information (including withoutlimitation, information relating to the [***]Revenue) reasonablyrequired for M-Systems to verify the calculation of such Support Fees.

### * *

**_16_** 

 

Notwithstanding Section 4.7.2 above, for any support whichrequires a full day or more of support by an M-Systems` employee or consultant(as requested by Toshiba), Toshiba will pay M-Systems, in addition to the abovesupport fees, additional fees ("**Additional Support Fees**") equal toUS$[***]****per employee or consultant per each full day of supportprovided for the benefit of Toshiba. Toshiba shall also reimburse M-Systems forany reasonable out of pocket expenses incurred by M-Systems in connection withsupport hereunder. All Additional Support Fees and any related expenses asdescribed herein shall be paid by Toshiba within [***] days from Toshiba`sreceipt of an M-Systems` invoice therefor.  

For the avoidance of doubt, the Parties acknowledge and agreethat Toshiba`s support fee payment obligations set forth in this Section 4.7supercede in their entirety any previous agreements between Toshiba andM-Systems with respect to the subject matter thereof, including, withoutlimitation, in respect of all paragraphs of Section 4.6 of each of the [***]and any inconsistent payment terms set forth in the [***].   

4.8*                   *[***].    

4.9*                   *Assistance.  Each Party will providereasonable assistance, including providing and executing any additionaldocumentation, necessary to enable the other Party to exercise the rightsgranted to it under this Agreement and to record and protect its rights in andto its intellectual property. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**_17_** 

 

4.10*               *Assistance in Failure Analysis; Quality Assurance.  TheParties agree that if an XDOC Product made by either Party (or a Subsidiary ofeither Party) pursuant to this Agreement is found to be defective in anymanner, the Parties shall both commercially reasonably cooperate in anyanalysis that may be required in connection with such failure.  Inaddition, the Parties will use commercially reasonable efforts to help eachother and cooperate with all quality assurance (QA) issues related to thedevelopment of XDOC Products under this Agreement.  The Parties willmaintain a QA team in compliance with the requirements of ISO 9000 oralternatively QS-9000, and will implement appropriate manufacturing and testingpractices to insure a very high level of workmanship. All product relatedactivities shall be based on common well known industry standards and will bedocumented according to each Party`s working processes.

4.11*               *No Implied Licenses.  Except for therights expressly granted under this Agreement, no other rights in intellectual property,including but not limited to rights in trade secrets, patents, mask workrights, copyrights, trademarks, Confidential Information or other intellectualproperty rights, are granted by this Agreement.  Without limiting thegenerality of the foregoing and for the avoidance of doubt, and notwithstandingthe designation of any technology or other intellectual property as M-SystemsTechnology or Toshiba Technology, each Party shall be deemed the owner of alltechnology (and intellectual property rights therein) independently developedby or for such Party.

4.12*               *Documentation and Updates.  Each Partywill provide to the other Party such user documentation and other documentationin its possession as is necessary to enable the other Party to provide customersupport for XDOC Products manufactured pursuant to this Agreement and updatesto such documentation as such updates become available.

 

 

 

**_18_** 

 

**5.*                 *****MARKETING ACTIVITIES**

5.1*                   *M-Systems will continue to promote XDOC Products for usewith leading operating systems, including but not limited to Windows Mobile,Windows XP, and VxWorks.

5.2*                   *M-Systems will continue its efforts to obtain continueddesign-in of sockets for XDOC Products in motherboards and other applications.

5.3*                   *Toshiba will have the right to participate as a strategic partner in M-Systems` marketingactivities for XDOC Products and Combo Units and will provide ongoing supportfor such activities as reasonably requested by M-Systems and reasonably agreedby Toshiba.  

5.4*                   *Toshiba will be entitled to include links to M-Systems`home page on Toshiba`s web site pages describing Toshiba`s flash memoryproducts after providing written notice to M-Systems. Toshiba will be entitledto refer to M-Systems in appropriate collateral and marketing materialsregarding flash memory products.

**6.*                 *****PUBLICITY**

Subject to applicable law and the applicable rules orregulations of any stock exchange on which the securities of either Party aretraded, no Party shall issue any press release, publicity statement,communication with stockholders, public notice or other public disclosurerelating directly to this Agreement or the transactions contemplated herebywithout prior notice to, consultation with, and the consent of the other Party.  TheParties shall issue a joint press release with respect to the transactionsunder this Agreement and certain other related agreements entered into betweenthe Parties as of the Effective Date, in form to be mutually agreed by theParties, shortly after the Effective Date of this Agreement. 

 

**7.*                 *****Warranties**

7.1*                   *Toshiba Warranties.  Toshiba warrantsthat (i) it has the right and authority to enter into this Agreement and toperform its obligations hereunder, and (ii) the Toshiba Technology, andToshiba`s use thereof pursuant to this Agreement, does not and will notinfringe any patent, copyright, trade secret, mask work right or otherintellectual property right of any third party.   

 

 

 

 

**_19_** 

 

7.2*                   *M-Systems Warranties.  M-Systems warrantsthat (i) it has the right and authority to enter into this Agreement and toperform its obligations hereunder and (ii) the M-Systems Technology, and theuse thereof by M-Systems and by Toshiba and/or its Subsidiaries pursuant tothis Agreement, does not and will not infringe any patent, copyright, tradesecret, mask work right or other intellectual property right of any thirdparty.

**8.*                 *****CONFIDENTIALITY**

8.1*                   *Confidential Information.  "**ConfidentialInformation**" means, subject to the limitations set forth in Section ‎8.3, (i) any information of a Party withrespect to which the other Party has a confidentiality obligation as of thedate hereof pursuant to the express terms of a written confidentiality ornondisclosure agreement between the Parties, (ii) any information regarding thedisclosing Party or its business, including information which relates toresearch, product plans, designs, patents, trademarks, trade secrets, know-how,products, pricing, services, customers, markets, forecasts, marketing orfinance, which is (1) in written or other tangible form and marked with alegend which identifies the information as confidential, or (2) in oral orvisual form, identified as being confidential at the time of disclosure andthereafter summarized in a writing which identifies the information asconfidential and is transmitted to the receiving Party within thirty (30) daysafter such oral or visual disclosure.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**_20_** 

 

8.2*                   *Confidentiality Obligation.  For a periodof eight (8) years after receipt by a Party of any Confidential Information ofthe other Party, such Party agrees (i) to protect all Confidential Informationreceived by such Party and not to disclose such Confidential Information to anyperson or entity ("**Person**"), utilizing the same degree of care thereceiving Party utilizes to protect its own confidential information of asimilar nature (and in no event less than reasonable care), and (ii) not toutilize such Confidential Information for any purpose other than in connectionwith the activities contemplated by this Agreement.  Notwithstandinganything to the contrary in the foregoing, each Party may disclose ConfidentialInformation to any employee, agent or representative who has a "need to know"such information for the purposes of this Agreement, provided that suchPerson(s) shall be notified that such disclosure is made and shall be kept inconfidence.

8.3*                   *Exceptions.  Notwithstanding theprovisions of Section ‎8.2,neither Party shall have any obligation to maintain the confidentiality of anyinformation, and Confidential Information shall not include any information,that (i) is or becomes generally available in the public domain other than as aresult of disclosure by the receiving Party (or any third party under a duty ofconfidentiality to the disclosing Party), (ii) was known by the receiving Partyprior to disclosure by the disclosing Party, as can be evidenced by writtendocuments existing at the time of initial disclosure, (iii) was independentlydeveloped by the receiving Party without use of or reference to suchinformation, as can be evidenced by written documents, or (iv) was received bythe receiving Party from another Person without violation of anyconfidentiality obligations.

8.4*                   *Ownership.  All Confidential Informationshall remain the sole property of the disclosing Party.  No receivingParty shall have any rights to the Confidential Information of the disclosingParty other than as expressly set forth in this Agreement.

 

**_21_** 

 

8.5*                   *Disposal of Confidential Information.  Withinthirty (30) days of the termination of this Agreement, or at any time upon theapplicable disclosing Party`s request, the receiving Party shall return to thedisclosing Party or destroy all Confidential Information (including copies andelectronic records thereof), except as otherwise set forth in Section 11.3.4below. 

**9.*                 *****NOTICES**

9.1*                   *With respect to any XDOC Products made or had made by orfor a Party pursuant to this Agreement, such Party shall cause the top levelmetal mask work layer of the XDOC Product`s dies to bear a mask work notice andcopyright notice as follows: 

"(M) © ToshibaCorporation/M-Systems Flash 

Disk Pioneers, Ltd., 200X.  AllRights Reserved"

 

                        or such othernotice that has been approved in writing by the other Party, provided, however,that if a Party determines that displaying such mask work notice and copyrightnotice on the top level metal mask work layer of an XDOC Product isimpracticable due to size or space limitations, such Party may display the maskwork notice and copyright notice elsewhere on the XDOC Product or on thepackaging therefore in a manner that complies with the mask work notice andcopyright notice provisions of applicable law.

** **

9.2*                   *Toshiba will include on the outside packaging of thefollowing products (i) any XDOC Products sold by Toshiba to M-Systems, and (ii)Combo Units sold by Toshiba to M-Systems, the name "M-Systems" and the partnumber specified by M-Systems, and together with any other identification asreasonably required or approved by M-Systems.

 

 

 

 

 

 

 

 

 

 

 

**_22_** 

 

**10.*             *****TERM**

10.1*               *This Agreement will commence on the Effective Date andwill continue until the [***] anniversary of the Effective Date (namely,[***]), unless earlier terminated under the terms of Section 11 below.  Notwithstandingthe above, the terms and conditions of Sections 2 (except for Section 2.3),4.10, 4.12 and 5 of this Agreement, and any obligations thereunder, shallterminate on [***], unless earlier terminated under the terms of Section 11below.  Termination of such Sections shall not derogate from theeffectiveness of all other provisions of this Agreement, which shall continueto be in full force and effect until the termination of this Agreement asexplained above. 

10.2*               *Unless otherwise set forth herein, following terminationof this Agreement after the completion of its term in accordance with Section10.1 above, all licenses granted by M-Systems to Toshiba hereunder shall becomeroyalty free and shall continue to be in full force and effect subject to thelimitations (other than with respect to the term) set forth in this Agreement. 

**11.*             *****TERMINATION**

11.1*               *Termination of Development Effort.  EitherParty has the right to terminate all remaining Development Responsibilities ofboth Parties under an [***] immediately upon written notice at any time if theother Party causes more than [***] days delay in achieving any Milestone (asdefined in the applicable [***]) or delivering a Deliverable (as defined in theapplicable [***]) as provided in Section 2.1 of the applicable [***]; provided,however, that any such delay in achieving a Milestone or delivering aDeliverable shall not entitle a Party to terminate this Agreement pursuant toSection 11.2.

11.2*               *Termination of Agreement.  Either Partywill have the right to terminate this Agreement, immediately upon writtennotice at any time if:

 

**_23_** 

 

the other Party commences a voluntary Proceeding seekingliquidation, reorganization, or other relief with respect to itself or itsdebts under any bankruptcy, insolvency or other similar law now or hereafter ineffect or seeking the appointment of a trustee, receiver, liquidator, custodianor other similar official of it or any substantial portion of its property ortaking possession by any such official in any involuntary Proceeding commencedagainst it, or makes a general assignment for the benefit of creditors, orfails generally to pay its debts as they become due, or takes any action toauthorize any of the foregoing.

an involuntary Proceeding is commenced against the other Partyseeking liquidation, reorganization or other relief with respect to it or itsdebts under any bankruptcy, insolvency or other similar law now or hereafter ineffect or seeking the appointment of a trustee, receiver, liquidator, custodianor other similar official for such Party or any substantial part of itsproperty, and such involuntary Proceeding remains undismissed and unstayed fora period of [***] days.

there has been a material violation orbreach by the other Party of any material covenant or agreement containedherein, which violation or breach shall not have been cured or corrected by theviolating or breaching Party within [***] Business Days after receipt of noticethereof, describing such violation or breach in reasonable detail (or suchlonger period (not to [***] Business Days) as is reasonably necessary to remedysuch violation or breach, provided that the violating or breaching Party shallcommence such action to cure such violation or breach within such [***] andthereafter shall use commercially reasonable efforts to pursue such cure untilsuch violation or breach is cured).

11.3*               *Effect of Termination.

 

 

**_24_** 

 

Upon any termination of this Agreement by M-Systems pursuant toSection 11.2, (i) Toshiba shall promptly deliver to M-Systems all work inprocess on any agreed Deliverable, (ii) the license granted by Toshiba toM-Systems hereunder shall continue subject to the conditions and paymentobligations set forth herein, and (iii) only in case of termination underSection 11.2.3, the license granted by M-Systems to Toshiba hereunder shallcontinue subject to the conditions and payment obligations set forth herein;provided, however, that any and all payment obligations incurred by eitherParty under this Agreement prior to termination (except for any paymentobligations relating to licenses, which shall be paid in accordance with theirterms) shall remain due from and payable by such Party within no later than[***] days from the date of termination.   

Upon any termination of this Agreement by Toshiba pursuant toSection 11.2, (i) M-Systems shall promptly deliver to Toshiba all work inprocess on any agreed Deliverable, (ii) the licenses granted by M-Systems toToshiba hereunder shall continue subject to the conditions and paymentobligations set forth herein, and (iii) only in case of termination underSection 11.2.3, the license granted by Toshiba to M-Systems hereunder shallcontinue subject to the conditions and payment obligations set forth herein;provided, however, that any and all payment obligations incurred by eitherParty under this Agreement prior to termination shall remain due from andpayable by such Party within no later than [***] days from the date oftermination. 

 

 

 

 

 

 

 

 

 

 

 

 

 

**_25_** 

 

Upon any termination of (a) a development effort under an MDOCD&L Agreement by Toshiba pursuant to Section 11.1 above, or (b) thisAgreement by Toshiba pursuant to Section 11.2 above, which in either caseoccurs prior to acceptance of the final Deliverables pursuant to Section 2.1(and the provisions of the applicable [***] referred to in Section 2.1),M-Systems will pay Toshiba [***].  If payments already made byM-Systems in relation to such development effort as of the date of suchtermination exceed [***] (as defined in the applicable [***]) incurred byToshiba as of the date of such termination, then [***] under Section 3.1 of theapplicable [***] in relation to the applicable development effort.   

Upon any termination of this Agreement, for any reason, eachParty will return all Confidential Information of the other Party, except thateach Party shall have the right to retain in its possession any ConfidentialInformation which is related to any licenses granted to such Party thatexpressly survive termination of this Agreement, all subject to the confidentialityprovisions set forth in Section 8.  Each Party will be released fromall obligations and liabilities to the other occurring or arising after thedate of such termination other than as set forth above.  Notwithstandingany of the above, the provisions of Sections 1, 3.3, 3.4, 4.1, 6, 7, 8,11, 12, 13, 14 and 16 and any liability arising from any breach of thisAgreement prior to or relating to such termination will survive termination ofthis Agreement.

11.4*               *Effect of XDOC Product Supply Termination.Notwithstanding anything to the contrary contained herein, the Parties agreethat: 

Subject to Section 11.4.2 below, if XDOC Product SupplyTermination occurs due to a violation or breach by Toshiba, then (a) thelicenses granted to Toshiba hereunder shall, [***], and (b) the licensesgranted to M-Systems under this Agreement shall remain in full force and effect.

**_26_** 

 

Notwithstanding Section ‎11.4.1, if (a) XDOC Product Supply Termination occurs due toa violation or breach by Toshiba and (b) the Special Conditions have beendetermined to be satisfied pursuant to the final arbitration decision providingfor such XDOC Product Supply Termination, then (i) the licenses granted toToshiba hereunder shall terminate and be of no further force and effect, and(ii) the licenses granted to M-Systems under this Agreement shall remain infull force and effect.

If XDOC Product Supply Termination occursdue to a violation or breach by M-Systems, then (for the avoidance of doubt,whether or not the Special Conditions are satisfied and without any requirementfor a determination with respect to such satisfaction) the licenses granted byM-Systems to Toshiba hereunder shall continue and immediately become royaltyfree and Toshiba shall not be required to pay any royalties or Support Feesunder this Agreement commencing with the date of such XDOC Product SupplyTermination.

If XDOC Product Supply Termination occurs otherwise thandescribed in Sections ‎11.4.1, ‎11.4.1 or ‎11.4.3, then such termination shall have no effect on thisAgreement or the licenses granted hereunder. 

**12.*             *****RIGHT TO DEVELOP INDEPENDENTLY**

Nothingin this Agreement will impair either Party`s right to acquire, license,develop, manufacture or distribute for itself, or have others develop,manufacture or distribute for it, technology performing the same or similarfunctions as the technology contemplated by this Agreement, or to market anddistribute such similar technology in addition to, or in lieu of, the XDOCProducts developed and/or sold under this Agreement, provided that in doing sothe Party does not breach (i) the confidentiality obligations set forth inSection 8 of this Agreement or (ii) the terms of any license grant provisionsof this Agreement, or infringe the other Party`s intellectual property rights.

 

 

 

 

**_27_** 

 

 

**13.*             *****DISCLAIMER OF CONSEQUENTIAL DAMAGES**

EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, IN NO EVENTSHALL EITHER PARTY BE LIABLE WITH RESPECT TO THIS AGREEMENT FOR ANY SPECIAL,INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING,BUT NOT LIMITED TO, DAMAGES TO THE OTHER PARTY`S BUSINESS REPUTATION HOWEVERCAUSED, AND ON ANY THEORY OF LIABILITY WHETHER IN AN ACTION FOR CONTRACT,STRICT LIABILITY OR TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, WHETHER OR NOTTHE FIRST PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

**14.*             *****INTELLECTUAL PROPERTY INDEMNIFICATION**

Each of the Parties hereto (in this Section, the "**IndemnifyingParty**") agrees to defend, at its expense, any action brought against theother party (in this Section, the "**Indemnified Party**") based on a claimthat, if true, would give rise to a breach of the warranty set forth in clause(ii) of Section 7.1 (in the case of Toshiba as the Indemnifying Party) orclause (ii) of Section 7.2 (in case of M-Systems as the Indemnifying Party),provided that the Indemnified Party (i) promptly notifies the Indemnifying Partyin writing of any such action or proceeding that has been brought or which isthreatened, (ii) cooperates fully in the defense or settlement of any suchaction, and (iii) grants the Indemnifying Party sole control of the defense ofany such action and all related negotiations for settlement; provided, howeverthat (a) the Indemnifying Party shall not enter into any settlement of any suchaction involving any remedy other than the payment of monetary damages by theIndemnifying Party without obtaining the prior written consent of theIndemnified Party, and (b) the Indemnified Party shall have the right, but notthe obligation, to participate in the defense or settlement of any such actionat its own expense with counsel of its own choice. Subject to the limitationsabove, the Indemnifying Party shall indemnify the Indemnified Party againstcosts, expenses and damages finally awarded in an action described above.

 

**15.*             *****COMPLIANCE WITH LAWS**

Each Party will comply with all applicable laws andregulations governing their activities under this Agreement, including but notlimited to the export control laws and regulations of the United States and Japan.  Inaddition, the Parties agree that no technology furnished to the other will beused for any purpose to develop and/or manufacture nuclear, chemical, orbiological weapons and/or missiles (hereinafter "**Weapons of Mass Destruction**").  EachParty further agrees that it will not sell semiconductor products usingtechnology received from the other Party hereunder, to any Party if it knowsthat the end-user of such products will use them for the development and/ormanufacture of Weapons of Mass Destruction.    

 

 

 

**_28_** 

**16.*             *****GENERAL**

16.1*               *Governing Law.  This Agreement shall beconstrued and interpreted in accordance with and governed by the laws of theState of New York, U.S.A. (without regard to the choice of law provisionsthereof).  The Parties agree and consent that services of process maybe made upon the Parties in any Proceedings relating hereto by any meansallowed under applicable law.

16.2*               *Dispute Resolution.

The Parties intend that all disputes between the Parties arisingout of this Agreement shall be settled by the Parties amicably through goodfaith discussions upon the written request of either Party. In the event thatany such dispute cannot be resolved thereby within a period of sixty (60) daysafter such notice has been given, such dispute shall be finally settled bybinding arbitration at the request of either Party.

Each arbitration hereunder shall be conducted in the English languagein New York, New York, U.S.A. in accordance with the Commercial ArbitrationRules of the American Arbitration Association then in effect (the "**Rules**").  However,in all events, these arbitration provisions shall govern over any conflictingrules that may now or hereafter be contained in the Rules.  EachParty may demand arbitration by filing a written demand with the other Partywithin one hundred twenty (120) days after the expiration of the sixty (60) dayperiod described above.  Each Party shall select one (1) arbitratorand the two (2) arbitrators selected by the Parties shall jointly select athird arbitrator, which arbitrators shall conduct the arbitration of suchdispute.  In the event the two (2) arbitrators are unable to select athird arbitrator, such selection shall be made pursuant to the Rules.  Judgmentupon an award rendered in an arbitration hereunder may be entered in any courthaving jurisdiction or application may be made to such court for judicialacceptance of any award and an order of enforcement, as the case may be.  

**_29_** 

The arbitrators shall have the authority to grant any equitableand legal remedies that would be available in any judicial proceeding intendedto resolve a dispute.  The arbitrators shall also have the authorityto allocate between the Parties the costs of the arbitration in such equitablemanner as the arbitrators may determine.  The prevailing Party in thearbitration shall be entitled to receive reimbursement of its reasonableexpenses incurred in connection therewith.  Notwithstanding theforegoing, either Party shall be entitled to seek preliminary injunctive relieffrom any court of competent jurisdiction, pending the final decision or awardof the arbitrators.  The award rendered in an arbitration hereundershall be final and non‐appealable.  

16.3*               *Notices and Other Communications.  Anyand all notices, requests, demands and other communications required orotherwise contemplated to be made under this Agreement shall be in writing andin the English language and shall be provided by one or more of the followingmeans and shall be deemed to have been duly given (i) if deliveredpersonally, when received, (ii) if transmitted by facsimile, on the first(1st) Business Day following receipt of a transmittal confirmation, or(iii) if by international courier service, on the fourth (4th) BusinessDay following the date of deposit with such courier service, or such earlierdelivery date as may be confirmed in writing to the sender by such courierservice.  All such notices, requests, demands and othercommunications shall be addressed as follows:

## If to Toshiba:Toshiba Corporation1-1 Shibaura 1- chome, Minato-ku,   Tokyo 105-8001  JapanAttention:          General Manager                        Legal Affairs and Contracts Division                        Semiconductor Company                      Telephone:        +81-3-3457-3452Facsimile:         +81-3-5444-9342

## If to M-Systems:General Counsel; and 

**_30_** 

##  

## VP Corporate Developmentand Legal AffairsM-Systems Flash Disk Pioneers Limited7 Atir Yeda St. Kfar Saba, 44425, IsraelTelephone:        +972-9-764-5000Facsimile:         +972-3-548-8666

## or to such other address or facsimile number as a Partymay have specified to the other Party in writing delivered in accordance withthis Section 16.3.

 

16.4*               *Severability.  If any provision of thisAgreement shall be held to be illegal, invalid or unenforceable, the Partiesagree that such provision will be enforced to the maximum extent permissible soas to effect the intent of the Parties, and the validity, legality andenforceability of the remaining provisions of this Agreement shall not in anyway be affected or impaired thereby.  If necessary to effect theintent of the Parties, the Parties will negotiate in good faith to amend thisAgreement to replace the unenforceable language with enforceable language whichas closely as possible reflects such intent.

16.5*               *Amendments.  This Agreement may beamended or modified only by a written instrument signed by each Party.

16.6*               *Waiver.  Any waiver by a Party of aninstance of the other Party`s noncompliance with any obligation orresponsibility herein contained shall be in writing and signed by the waivingParty and shall not be deemed a waiver of any other instance of the otherParty`s noncompliance hereunder.

16.7*               *No Third-Party Beneficiaries.  The termsand provisions of this Agreement are intended solely for the benefit of theParties and their respective successors and permitted assigns, and the partiesdo not intend to confer third-party beneficiary rights upon any other person.

16.8*               *Expenses.  Each Party shall bear all ofits out-of-pocket costs and expenses incurred in connection with thenegotiation and execution of this Agreement. 

 

 

**_31_** 

 

16.9*               *Construction.  This Agreement has beennegotiated by the Parties and their respective counsel and shall be fairlyinterpreted in accordance with its terms and without any strict construction infavor of or against any Party.

16.10*           *Interpretation and Construction of this Agreement.  Unlessthe context shall otherwise require, any pronoun shall include thecorresponding masculine, feminine and neuter forms, and words using thesingular or plural number shall also include the plural or singular number,respectively.  The words "include," "includes" and "including" shallbe deemed to be followed by the phrase "without limitation".  Allreferences herein to Articles, Sections, Annexes, Exhibits and Schedules shallbe deemed to be references to Articles and Sections of, and Annexes, Exhibitsand Schedules to, this Agreement unless the context shall otherwise require.  AllExhibits and Schedules attached hereto are hereby incorporated by referenceinto, and made a part of, this Agreement.  The headings of theArticles and Sections hereof are inserted for convenience of reference only andare not intended to be a part of, or to affect the meaning or interpretationof, this Agreement.  Unless the context shall otherwise require, anyreference to any agreement or other instrument or statute or regulation is tosuch agreement, instrument, statute or regulation as amended and supplementedfrom time to time (and, in the case of a statute or regulation, to anysuccessor provision).  Any reference in this Agreement to a "day" ora number of "days" (without the explicit qualification of "Business") shall beinterpreted as a reference to a calendar day or number of calendar days.  Ifany action or notice is to be taken or given on or by a particular calendarday, and such calendar day is not a Business Day, then such action or noticeshall be deferred until, or may be taken or given, on the next Business Day.

16.11*           *Language.  The Parties have negotiatedthis Agreement in the English language, which shall be the governing languageof this Agreement.

 

 

 

**_32_** 

 

16.12*           *Specific Performance.  The Parties agreethat each other Party shall be entitled to obtain an injunction or injunctionsin accordance with the dispute resolution procedures contained inSection 16.2 to prevent breaches of the provisions of this Agreement orany agreement contemplated hereunder, and to enforce specifically the terms andprovisions hereof.

16.13*           *Cumulative Remedies.  Except as otherwise expressly providedherein, any and all remedies herein expressly conferred upon a Party will bedeemed cumulative with, and not exclusive of, any other remedy conferred herebyor by Law or otherwise on such Party, and the exercise of any one remedy willnot preclude the exercise of any other remedy.

16.14*           *Relationship of the Parties.  Nothingcontained in this Agreement is intended to, or shall be deemed to, create apartnership among the Parties for any purpose, including tax purposes.  Neitherof the Parties will take a position contrary to the foregoing.

16.15*           *Entire Agreement.  The provisions of thisAgreement and the Exhibits and Schedules hereto set forth the entire agreementand understanding among the Parties as to the subject matter hereof and supersedeall prior agreements, oral or written, and all other prior communications amongthe Parties relating to the subject matter hereof.  

16.16*           *Counterparts.  This Agreement may beexecuted in two or more counterparts, each of which shall be binding as of thedate first written above, and all of which shall constitute one and the sameinstrument.  Each such counterpart shall be deemed an original, andit shall not be necessary in making proof of this Agreement to produce oraccount for more than one such counterpart.

16.17*           *No Value Added, Sales or Use Tax.  Novalue added, sales, or use taxes have been assessed or are anticipated to berequired as a result of the services performed under this Agreement.  Tothe extent any such taxes are ultimately assessed to Toshiba as a retailer,M-Systems shall have responsibility to discharge the claim with the assistanceof Toshiba.

16.18*           *Nature of Agreement.  This is a contractunder which each Party is a licensor to the other Party of rights with respectto "intellectual property" within the scope of Section 101 of the U.S.Bankruptcy Code, and, in the event of a case under the Bankruptcy Codeinvolving a Party, the other Party shall have the right to exercise any and allrights described in Section 365(n) of the Bankruptcy Code or in this Agreement,including the right to retain the rights (including its licenses andimmunities) contemplated hereby.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**_33_** 

 

**IN WITNESS WHEREOF**,the Parties have caused this XDOC Development and License Agreement to beexecuted by their duly authorized representatives.

 

**M-Systems                                                    ToshibaCORPORATION**

**FLASH DISKPIONEERS LTD.**

** **

BY:                  BY:            **

 

NAME:      Dov Moran      NAME:      MasashiMuromachi**

                                                                                             VicePresident, Memory Division

TITLE:       President & CEO                              TITLE:       SemiconductorCompany**

 

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

**_34_** 

**Exhibit A**

** **

**M-SYSTEMS` TECHNOLOGY; TOSHIBA`S TECHNOLOGY; DEVELOPEDTECHNOLOGY**

****

*** ***

** **

** **

[***]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**_35_**