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strategic AGREEMENT

This Strategic Agreement ("Agreement")is entered into and is effective as of December 31, 2003 ("EffectiveDate"), by and between **M-Systems Flash Disk Pioneers Ltd.**, anIsraeli corporation having its principal place of business at 7 Atir Yeda St.,Kfar Saba, 44425, Israel ("M-Systems") and **SamsungElectronics****Co.****, Ltd.**, a Korean corporation having itsprincipal place of business at San #24 Nongseo-Ri Giheung-Eup, Yongin-City, Gyeonggi-Do,Korea ("Samsung").

 

**RECITALS**

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**WHEREAS,**M-Systems owns and has rights under various patents and utility models andapplications in connection with such patents in various countries of the world;and

 

**WHEREAS,**Samsung desiresto acquire licenses under such patents and utility models and applications in connectionwith such patents, on the terms and conditions set forth herein; and

 

**WHEREAS,** M-Systemsdesires to purchase certain memory products from Samsung and Samsung agrees andundertakes to sell such products to M-Systems, all as more fully set forth below.

**NOW, THEREFORE,** for goodand valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereby agree as follows:

 

# 1.*     *Definitions. All capitalized terms usedherein shall have the following meanings:

## 1.1.*     *"[*****] Price****("[*****]**")**"shall mean, with respect to a specific Suppliable Product within the sameProduct Category and Type, [******].   In the event that noSuppliable Product is invoiced in a certain month, the [****] for suchSuppliable Product shall be deemed the final forecasted [****].

## 1.2.*     *"**Business Day**" shall mean any day except(i) a Saturday or Sunday, or (ii) any other day on which commercialbanks in Korea are authorized by law to close. 

## 1.3.*     *"**DiskOnKey****("DOK")"**in singular or plural shall mean any current or future Samsung removablestorage product which functions solely to store and transfer data to and from aHost Device, each DOK consisting of a USB connector, where such connector meetsthe "Certified USB" standards set by USB Implementers Forum, Inc.,connectable to such Host Device  and a controller integrated circuit("IC") with embedded flash memory, or a combination ofseparate controller and flash memory IC's, wherein the USB connector isnon-detachable from either the controller IC or the combination.

## 1.4.*     *[****].

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## 1.5.*     *"**Flash Card Product**" in singular orplural shall mean a product that provides a controller IC with embedded flashmemory, or a combination of controller IC and flash memory IC's including,without limitation, DOK, Smart Media Cards, and xD Picture Cards.

## 1.6.*     *"**Host Device**" in singular or plural shallmean a system which includes a USB receiving port to receive one or more DOK toread/write or otherwise to process data stored therein.

## 1.7.*     *"**Licensed Patents**" shall mean allPatents owned or controlled by either M-Systems or its Subsidiaries, includingwithout limitation United States Patent [****], entitled to an effective filingdate on or prior to the last day of the Term of Agreement.  ExhibitA, without in any way limiting the Licensed Patents, sets forth United Statespatents (and applications for patents) assigned to M-Systems as of theEffective Date.

## 1.8.*     *"**Licensed Products**" shall mean allproducts manufactured and sold by or on behalf of Samsung and/or itsSubsidiaries, including, without limitation, DOK.

## 1.9.*     *"**Line Item**" shall mean NFM identifiedsolely by density.

## 1.10.* *"**Maximum Line-Item Allocation**" shall mean[****]% of the actual total sales, in the month prior to a Firm Order, of aLine Item in bits by Samsung or its Subsidiaries to their third-partycustomers, as set forth in the Sales Report.  For purposes of thisAgreement, Maximum Line-Item Allocation shall specifically exclude any NANDsold by Samsung to any Samsung Foreign Sales Office.

## 1.11.* *"**NAND Flash Memory** ("**NFM**")"shall mean all NAND flash memory IC's ("NAND") produced bySamsung and/or its Subsidiaries, including both standalone NAND and such otherNAND as contained within Flash Card Products and MCPs.  For purposesof this Agreement, however, NFM shall exclude (i) such samples of NAND thatSamsung or its Subsidiaries may provide to customers in quantities of less thanone thousand (1,000) pieces, (ii) any NAND produced at a manufacturing yield of[****]% or less, and (iii) any NAND requiring, in whole or in part, customphysical configurations or designs originating from or required by athird-party customer.

## 1.12.* *"**Patents**" shall mean patents (includingutility patents, design patents and utility models) of all countries of theworld, applications for patents, provisional applications for patents,and any continuations, continuations in part, divisionals and reissues, andforeign counterparts of such patents or applications.

## 1.13.* *"**Product Category and Type**" shall mean agrouping of NFM by like (i) density, (ii) package type, (iii) temperaturespecification, (iv) bus width, and (v) die version, as provided in the mostcurrent release of Samsung "Databook for NAND Flash Memory &Smartmedia."

## 1.14.* *"**Samsung Foreign Sales Office**" shall meanan overseas Subsidiary of Samsung whose primary function is to purchase NFMfrom Samsung and resell those NFM to a third party customer of Samsung.

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## 1.15.* * "**Sub-Line Item**" shall mean acertain Suppliable Product within a Product Category and Type.

## 1.16.* *"**Subsidiary**" shall mean a corporation orother entity of which the applicable party (a) owns, directly or indirectly,50% or more of the outstanding shares or other ownership interests, or (b) hasthe right to appoint the majority of the members of the Board of Directors ora similar controlling body.

## 1.17.* *"**Suppliable****Product**" insingular or plural shall mean any NFM in packaged standalone format, but shallspecifically exclude, without limitation, all Flash Card Products andMulti-Chip Packaging ("MCP") products.  From time totime, however, at Samsung's sole discretion, the Suppliable Products mayinclude NFM in die or wafer format.

## 1.18.* * "**Term of Agreement**" shall mean four(4) years from the Effective Date of this Agreement.

## 1.19.* *"**Term of License**" shall mean until thelast of the expiration dates of the Licensed Patents from the Effective Date ofthis Agreement.

# 2.*                 *Grant of License. 

## 2.1.*     *License. Subject to the terms andconditions of this Agreement, M-Systems (on behalf of itself and itsSubsidiaries) hereby grants to Samsung and its Subsidiaries, a nonexclusive,worldwide, fully paid-up license (subject to Sections 2.4 and 2.5), under allLicensed Patents for the Term of License (subject to Section 9.1.4), to make,have made, use, sell, offer to sell, import and otherwise dispose of anyLicensed Products.

## 2.2.*     *Immunity.

### 2.2.1.*              *The license by M-Systems as set forth in Section 2.1 hereinshall further constitute a grant of immunity during the Term of License of anyclaims or actions for infringement (whether direct, contributory, induced, orotherwise) under the Licensed Patents to Samsung and/or its Subsidiaries, distributors,resellers, customers, including [****], and users with respect to the use,sales or the manufacturing of any of the Licensed Products.  

### 2.2.2.*              *[****]

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## 2.3.*     *Release. Subject tothe terms and conditions of this Agreement, M-Systems, on behalf of itself and its Subsidiaries, hereby irrevocablyreleases Samsung and its Subsidiaries, distributors, resellers, customers andusers from any and all claims of infringement of any Licensed Patents, whichclaims have been made or which might be made at any time, in connection withany Licensed Product made, had made, used, sold, offered for sale, imported orotherwise disposed of by Samsung or its Subsidiaries prior to the EffectiveDate.

## 2.4.*     *Consideration for Release.  Inconsideration for the past release by M-Systems under Section 2.3, Samsungshall pay a nonrefundable fee of [****] U.S. dollars (US$[****]) to M-Systemswithin thirty (30) days of the Effective Date.

## 2.5.*     *Consideration for License and Immunity.  Inconsideration for the licenses and immunity granted to Samsung and itsSubsidiaries under this Agreement, Samsung shall pay M-Systems a nonrefundablefee of [****] dollars (US$[****]), in equal quarterly installments each in theamount of [****] U.S. dollars (US$[****]), within thirty (30) days of the endof a quarter.  

## 2.6.*     *Satisfaction of Payments.  Theamounts paid by Samsung under Sections 2.4 and 2.5 constitute the entirepayments owed to M-Systems for the release and license and immunity as grantedherein.  Otherwise, nothing in this Agreement shall derogate Samsungfrom its obligations to make payments to M-Systems under any other agreements.

## 2.7.*     *Effect of ceasing to be a Subsidiary. Theextension to a Samsung Subsidiary of any licenses under this Agreement shallapply only during the time period during which such entity meets all therequirements of the definition of "Subsidiary" under this Agreement,and the licenses granted to any such entity shall terminate immediately whensuch entity ceases to be a Subsidiary.  

## 2.8.*     *No other sublicenses or assignment. Samsungshall not have the right to grant sublicenses of, or otherwise extend anylicenses, immunities, releases or other grants of rights under the rightsgranted to it pursuant to this Section 2.  Samsung may not assign thelicenses, immunities, releases or other grants of rights under this Section 2to any third party.

# 3.*                 *Forecasting and Purchase ofSuppliable Products.

## 3.1.*                *General. Under this Agreement Samsungshall commit to supply M-Systems with its various Suppliable Products on theterms and conditions below.

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## 3.2.*                *Price. M-Systems shall be entitled to purchase,and Samsung shall be committed to supply, the Suppliable Products, at [****], up to the Maximum Line-Item Allocation.  UnlessSamsung otherwise expressly agrees, any Suppliable Products beyond the MaximumLine-Item Allocation shall be provided to M-Systems at fair market price [****].  Inthe event, however, M-Systems' monthly purchase in total bits of the SuppliableProducts is less than [****]% of the Maximum Line Item Forecast as set forth inSection 3.3, Samsung shall, without obligation, put forth its best efforts toprovide the difference [****].

## 3.3.*                *Sales, [****], and Maximum Line Item Forecasts bySamsung.   No later than [****] days prior to the beginningof each calendar month, Samsung shall provide M-Systems with a rolling [****]month forecast of (i) the total monthly sales of the NFM by Samsung and/or itsSubsidiaries in [****] ("Sales Forecast"), (ii) the [****], byProduct Category and Type, for those Suppliable Products listed in M-Systems'last previous Purchase Forecast ("[****] Forecast"),and (iii) the total monthly sales of the NFM by Samsung and/or its Subsidiariesin [****] in each of those Line Items listed in M-Systems' last previous FirmOrder ("Maximum Line Item Forecast").

## 3.4.*                *Purchase Forecastsby M-Systems.  By no earlier than [****] days prior to thebeginning of each calendar month and no later than the beginning of thecalendar month, M-Systems will provide Samsung with a rolling purchase forecastof Suppliable Products in bits by Product Category and Type that it wishes topurchase in each of the ensuing [****] months ("Purchase Forecast").  

## 3.5.*                *Acceptance of Purchase Forecasts by Samsung.  Within[****] Business Days of receipt of the Purchase Forecast, Samsung may:

### 3.5.1.*              *adjust or reject in its sole discretion, bits ofany Sub-Line Items within the Purchase Forecast for the rolling months [****];

### 3.5.2.*              *adjust the forecasted bits of any Sub-Line Itemsfor [****] rolling month, but in no event provide in that [****] rolling monthless bits than those bits of Sub-Line Items forecasted in the last [****] rollingmonth;

### 3.5.3.*              *adjust the forecasted bits of any Sub-Line Items for the [****]rolling months only if such forecasted bits are different than the bits setforth in the previous respective forecasts, and only to be consistent with theforecasted bits in the previous respective forecasts, unless otherwise agreedby both Samsung and M-Systems.

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### Subject to Sections 3.5.2 and 3.5.3, Samsung shall becommitted to supply, and M-Systems shall be committed to purchase, thespecified bits of Sub-Line Items for the first [****] rolling months of thePurchase Forecast.  

## 3.6.*                *Firm Orders by M-Systems.  Concurrentlywith its Purchase Forecast, M-Systems shall issue a purchase order to Samsungor to its Subsidiary for delivery of Suppliable Products in the following month.  Suchpurchase order shall include a firm, binding, non-cancelable commitment topurchase the Suppliable Products by Product Category and Type in bits, whichbits shall be identical to those bits forecasted in the first rolling month ofthe Purchase Forecast ("Firm Order").  Within [****]Business Days of receipt of the Firm Order, Samsung shall send a deliveryschedule to M-Systems.

## 3.7.*                *Sales Report by Samsung.  Nolater than the [****] Business Day of each calendar month, Samsung shallprovide M-Systems with a report showing the actual sales from the previousmonth by Samsung and/or its Subsidiaries (but excluding any sales by Samsung toits Subsidiaries) of those Suppliable Products by Line Item in bits as listedon M-Systems' most current Purchase Forecast ("Sales Report").  

## 3.8.*                *Bit Reconciliation.

### 3.8.1.*              *If any Firm Order is less than the Maximum Line-ItemAllocation, then Samsung shall make available [****] the difference inbits in each of the Line Items as specified in such Firm Order, provided thatM-Systems submits to Samsung, within [****] Business Days of receiving theSales Report, a purchase order on the difference ("Reconciliation PO").  Samsung'sobligation to reconcile under this Section 3.8 shall terminate in the eventM-Systems fails to submit the Reconciliation PO within [****] Business Days ofreceiving the Sales Report.  Samsung shall fulfill the ReconciliationPO within [****] months, after which the time limit for material breach underSection 9.1.4(b). shall begin to run.   

### 3.8.2.*              *The bit reconciliation under this Section shall not apply:(i) with respect to a Line Item that M-Systems did not include in a Firm Order;or (ii) with respect to a Firm Order in the event M-Systems' Purchase Forecastfor the third rolling month corresponding to such Firm Order is less than [****]%of Samsung's Maximum Line Item Forecast for the same third rolling month.

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## 3.9.*                *[****] Reconciliation. Within [****] days of thebeginning of each calendar month, Samsung shall reconcile and report toM-Systems any differences [****] (as defined in Section 6) for any shipments ofthe Suppliable Products from [****] months prior. Within [****] days of such areport Samsung shall issue a credit on such differences only in the event[****].    

## 3.10.*            *Logistic terms. Prices under this Agreementshall include drop shipment to any location designated by M-Systems.  Anyduties levied by a country into which the Suppliable Products enter shall bepaid by M-Systems.  All other details of the purchase order andshipment shall be decided between M-Systems and Samsung Semiconductor Europe(SSEG), subject to Samsung approval. 

## 3.11.*            *Quality Control.  Samsung willestablish and maintain quality control procedures that comply with applicableISO standards.

## 3.12.*                                       *Suppliable Product Inspection. All SuppliableProducts are subject to inspection by M-Systems and may be rejected andreturned to Samsung if the Suppliable Products do not comply with thewarranties under this Agreement, if the Suppliable Products are part of anepidemic failure, or if the Suppliable Products are not delivered in accordancewith the accepted****Firm Order.  If, within sixty (60) days ofdelivery, the Suppliable Products are rejected and returned for defects ornon-conformance, M-Systems will be relieved of any payment obligation or entitledto a credit for any amounts paid. 

## 3.13.*            *Discontinued Suppliable Products.  Samsungshall notify M-Systems of discontinuance of any Suppliable Products at leastsix (6) months in advance.  Such a notice notwithstanding, Samsungshall honor and fulfill any commitments under Section 3.5 for such SuppliableProducts. Beyond such commitments, the parties shall discuss availability ofsuch discontinued Suppliable Products at[****] within the Maximum Line-ItemAllocation.

## 3.14.*            *Samsung's warranties. Samsung warrants toM-Systems as follows:

### 3.14.1.*       *Liens, Materials and Workmanship. Eachof the Suppliable Products purchased and delivered hereunder: (i) will be freeand clear of all liens and encumbrances; (ii) will be free from all defects inmaterial and workmanship; and (iii) will conform to the agreed specificationsfor such Suppliable Products. This warranty shall run for one (1) yearcommencing from the date of delivery of the applicable Suppliable Product.

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### 3.14.2.*       *Warranty Repair/Replacement. If any SuppliableProduct is found to breach the warrantyspecified in Section 3.14.1 above, M-Systems may (within the warranty period)send a notice to Samsung informing it of the breach of warranty.  Uponreceipt of such notice, Samsung will issue a Return Material Authorization ("RMA")authorizing M-Systems to return the defective Suppliable Product to Samsung.  Uponreturn of the defective Suppliable Product, Samsung shall, at Samsung'sexpense, and Samsung's sole discretion, promptly repair or replace suchdefective Suppliable Product, and return the repaired or replaced units toM-Systems.  Except as expressly otherwise provided herein, thisSection shall constitute M-Systems' sole and exclusive remedy and Samsung'ssole and exclusive obligation with respect to any breach of the above warranty.

### 3.14.3.*       *Freight and Incidental Costs. Samsung willbe responsible for freight and incidental costs in connection with the repairor replacement of Suppliable Products as set forth above, including reasonablecosts for freight charges from M-Systems to Samsung, and freight charges fromSamsung to M-Systems.

### 3.14.4.*       *No Waiver. Neither M-Systems' approval ofSamsung's material or design for a Suppliable Product or its acceptance of any SuppliableProducts not in compliance with Samsung's warranty obligations under set forthabove shall relieve Samsung of its obligations under this Section, unlessotherwise specifically agreed in writing by M‐Systems.

### 3.14.5.*       *Disclaimer of Warranties.  Theexpress warranties and representations set forth in this Agreement are in lieuof, and SAMSUNG DISCLAIMS, ANY AND ALL OTHER WARRANTIES, CONDITIONS, ORREPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR WRITTEN), WITH RESPECT TO THESUPPLIABLE PRODUCT, FORECASTS OR ANY PART THEREOF, INCLUDING ANY AND ALLIMPLIED WARRANTIES OR CONDITIONS OF TITLE, NONINFRINGEMENT, MERCHANTABILITY, ORFITNESS OR SUITABILITY FOR ANY PRUPOSE (WHETHER OR NOT SAMSUNG IS INFORMED OFTHE POSSIBILITY THEREOF IN ADVANCE).

### 3.14.6.*       *Limitation of Liability.  UNDER NOCIRCUMSTANCES WILL A PARTY BE LIABLE TO THE OTHER PARTY OR ANY OF ITSRESPECTIVE SUBSIDIARIES FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL,CONSEQUENTIAL, OR OTHER DAMAGES AS A RESULT OF BREACH OF ANY WARRANTY OR OTHERTERM OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS ORBUSINESS INTERRUPTION, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THEPOSSIBILITY OF SUCH DAMAGES.

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## 3.15.*            *Samsung Representations. 

### 3.15.1.*       *Samsung represents and warrants to M-Systems that,to the best of its knowledge, the Suppliable Products provided under thisAgreement do not infringe or violate any patent, copyright, trade secret, maskwork right or other intellectual property right of a third party.

### 3.15.2.*       *Samsung represents that it is licensed from varioussemiconductor companies under their patents including, without limitation, [****], regarding certain NAND flash memory products,including the Suppliable Products.

### 3.15.3.*       *M-Systems' Warranties & Representations.  M-Systemsrepresents and warrants that: (i) there are currently no actions, suitsor proceedings pending, or threatened against or affecting the Licensed Patents;and (ii) there are no contracts, licenses, commitments, or other legalobligations affecting the Licensed Patents in such a manner as to prevent orlimit conducting this Agreement, or the granting of rights to Samsung.  [****].

# 4.*                 *Mutual Development of a [****]equivalent component.  The parties agree that they will put forththeir best efforts to develop a [****] or equivalent component during the Termof Agreement.  The details relating to the development of suchcomponent shall be separately discussed by the parties.

# 5.*                 *Records and Audit. Each party shall keep andmaintain appropriate books and records for two (2) years that are reasonablynecessary for the determination of compliance only with Sections 3.3, 3.6 to3.9, and 10.1 of this Agreement, as applicable.  Such determinationshall be made no more than once annually by an independent auditor from one ofthe "Big Four" accounting firms at the expense of the party seekingsuch a determination.  With respect to any amounts determined to beoverpaid by M-Systems, Samsung shall promptly issue a credit on suchoverpayment.

# 6.*                 *Invoice; Payment Terms & Account.Samsung shall provide M-Systems with an invoice upon the shipment of theSuppliable Products at a price based on the relevant [****] Forecast for the monthof such shipment ("Invoiced Price"). Payments for SuppliableProducts purchased by M-Systems under this Agreement shall be made within [****]days of the end of the month in which the invoice was remitted by Samsung.  Allpayments under this Agreement from a party to the other party hereto shall bemade by telegraphic transfer to the following bank accounts: 

| Payment to Samsung:Any bank account(s) shown on  Samsung's or its Subsidiaries' invoices to M-Systems. | Payment to M-Systems:
M-Systems Flash Disk  Pioneers Ltd.
Bank Hapoalim
Hadar-Yosef  branch  (#610) 

Account No:    5187873                                                                Telephone:      +972-9-764-5000

27 Pinchas Rosen St.                                                                  Telephone:      +972-9-764-5000
Tel Aviv, IsraelTelephone:      +972-9-764-5000 |
|--------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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# 7.*                 *Tax. Any tax required by the Korean governmentwith respect to the payments by Samsung to M-Systems under this Agreement shallbe the responsibility of M-Systems, and Samsung shall: (i) submit any necessaryfilings to the Korean tax authorities, (ii) withhold from such payments and payany such tax amount on behalf of M-Systems to the Korean tax authorities, and(iii) promptly provide M-Systems with a certificate or receipt thereto.  

# 8.*                 *Confidentiality.

## 8.1.*                *"Confidential Information" means, subject to thelimitations 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 regardingthe disclosing 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.  Without limitation,the terms of this Agreement, and any attachments or amendments thereto, shallbe Confidential Information.

## 8.2.*                *Confidentiality Obligation.During the term of this Agreement and for five (5) years thereafter, each partyagrees (i) to protect all Confidential Information received by such partyand not to disclose such Confidential Information to any person or entity,utilizing the same degree of care the receiving party utilizes to protect itsown confidential information of a similar nature (and in no event less thanreasonable care), and (ii) not to utilize such Confidential Informationfor any purpose other than in connection with the transactions contemplated bythis Agreement. Notwithstanding anything to the contrary in the foregoing, eachparty may disclose Confidential Information to any employee, agent orrepresentative who has a "need to know" such information for thepurposes of this Agreement, provided that such person(s) shall be notified thatsuch disclosure is made in confidence and agrees to keep such informationconfidential.

## 8.3.*                *Exceptions.  NotwithstandingSection 8.1, 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) wasindependently developed by the receiving party without use of or reference tosuch information, as can be evidenced by written documents, or (iv) wasreceived by the receiving

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 party from another personwithout violation of any confidentiality obligations.

## 8.4.*                *Ownership. All Confidential Informationshall remain the sole property of the disclosing party. No receiving partyshall have any rights to the Confidential Information of the disclosing party.

## 8.5.*                *Disposal of Confidential Information.Within thirty (30) days of the termination of this Agreement, or at any timeupon the applicable disclosing party's request, the receiving party shallreturn to the disclosing party or destroy all Confidential Information(including copies and electronic records thereof).  

## 8.6.*                *Publicity.  Either party mayrelease, with the consent of the other, a public statement in connection tothis Agreement.  Such statement may include a quotation by arepresentative of either or both parties. Any disclosures in connection withthis Agreement that are required by the applicable securities laws orregulations may be submitted by either party without the consent of the other.  Eitherparty shall notify the other within ten (10) days of the first time suchdisclosure is made.

# 9.*                 *Termination.

##  9.1.*                *This Agreement may be terminated as follows:

### 9.1.1.*                                 *By consent in writing of both parties.

### 9.1.2.*  *At theelection of either party, if the other party commences a voluntary proceedingseeking liquidation, reorganization, or other relief with respect to itself orits debts under any bankruptcy, insolvency or other similar law now orhereafter in effect or seeking the appointment of a trustee, receiver,liquidator, custodian or other similar official of it or any substantialportion of its property or taking possession by any such official in anyinvoluntary proceeding commenced against it, or makes a general assignment forthe benefit of creditors, or fails generally to pay its debts as they becomedue, or takes any action to authorize any of the foregoing.

### 9.1.3.*  *At theelection of either party, if an involuntary proceeding is commenced against theother party seeking liquidation, reorganization or other relief with respect toit or its debts under any bankruptcy, insolvency or other similar law now orhereafter in effect or seeking the appointment of a trustee, receiver,liquidator, custodian or other similar official for such party or any substantialpart of its property, and such involuntary proceeding remains undismissed andunstayed for a period of one hundred twenty (120) days.

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### 9.1.4.*  *By M-Systems, if Samsung has (a) failed to make paymentsas set forth in Sections 2.4 and 2.5, and Samsung has failed to cure or correctsuch failure within thirty (30) days after receipt of notice thereof, (b)failed to meet its supply obligations under Section 3 for a period of [****] consecutivemonths or any [****], or (c) been enjoined either preliminarily or permanentlyby law either to manufacture or sell those Suppliable Products purchased byM-Systems.  Upon termination of the Agreement under this Section9.1.4, the licenses and immunities granted in Sections 2.1 and 2.2 shallterminate.

### 9.1.5.*  *By Samsung, if (a) M-Systems has failed to make paymentsfor Suppliable Products as set forth in Section 6 and M-Systems has failed tocure or correct such failure within thirty (30) days after receipt of noticethereof, (b) resold any Suppliable Products in contravention of Section 10.1,or (c) failed to purchase Suppliable Products in accordance with its bindingforecasts under Section 3.5 for [****] consecutive months or any [****].  Inany termination under this Section 9.1.5, Samsung shall maintain all its rightsunder the licenses and immunities granted and other provisions as set forth inSection 2 provided that it has paid the full fees set forth under Sections 2.4and 2.5.

### 9.1.6.*  *By Samsung, notwithstanding Section 9.1.5, within no laterthan forty-five (45) days after M-Systems' notifying Samsung in writing of[****].  In such event, Samsung may: (i) terminate the entireAgreement, in which event, without limitation, all supply obligations underSection 3, all licenses and immunities under Section 2, and any obligation to payremaining fees under Sections 2.4 and 2.5 shall terminate and be of no furtherforce and effect, or (ii) terminate the entire Agreement, including withoutlimitation the supply obligations under Section 3, but maintain the licensesgranted under Section 2.1 to all Licensed Patents except [****], provided thatthe fees set forth under Sections 2.4 and 2.5 are paid in full.

## 9.2.*                  *In the event of the termination of this Agreement pursuantto Section 9.1, this Agreement shall cease to have further force oreffect and neither party shall have any liability to the other party in respectto this Agreement, except as otherwise provided in Section 9.1, and providedthat termination of this Agreement for any reason shall not release eitherparty from any liability which has already accrued as of the effective date ofsuch termination, and shall not constitute a waiver or release of, or otherwisebe deemed to prejudice or adversely affect, any rights, remedies or claims,whether for damages or otherwise, which a party may have hereunder, at law,equity or otherwise or which may arise out of or in connection with suchtermination.

## 9.3.*                *The provisions of Sections 3.14, 5, 6, 8, 9 and 10shall survive the termination of this Agreement for any reason.  Inaddition, Section 365(n) of the United States Bankruptcy Code, as it relates torejection of licenses in bankruptcy, shall be applicable to the licensesgranted under Section 2.1 of this Agreement.

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#  10.*             *General Provisions.

## 10.1.*              *No Resale.  M-Systems shallnot resell any of the Suppliable Products made available pursuant to thisAgreement as a stand-alone product, or otherwise in any form other thanconnected to a controller without the prior written consent of Samsung.

## 10.2.*              *Implementation of Agreement.  Theparties shall use best efforts to oversee the implementation and theperformance of this Agreement.

## 10.3.*            *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 provisions thereof).  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.

## 10.4.*            *Dispute Resolution.

### 10.4.1.*    *The parties intend that all disputes between the partiesarising out of this Agreement shall be settled by the parties amicably throughgood faith discussions upon the written request of either party.  Inthe event that any such dispute cannot be resolved thereby within a period ofsixty (60) days after such notice has been given, such dispute shall be finallysettled by binding arbitration at the request of either party.

### 10.4.2.*    *Each arbitration hereunder shall be conducted in theEnglish language in New York, New York, U.S.A. in accordance with theCommercial Arbitration Rules of the American Arbitration Association then ineffect ("Rules"). However, in all events, these arbitrationprovisions shall govern over any conflicting rules that may now or hereafter becontained in the Rules. Each party may demand arbitration by filing a writtendemand with the other party within one hundred twenty (120) days after theexpiration of the sixty (60) day period described above.  Each partyshall select one (1) arbitrator and the two (2) arbitrators selected by the partiesshall jointly select a third arbitrator, which arbitrators shall conduct thearbitration of such dispute.  In the event the two (2) arbitratorsare unable to select a third arbitrator, such selection shall be made pursuantto the Rules.  Judgment upon an award rendered in an arbitrationhereunder may be entered in any court having jurisdiction or application may bemade to such court for judicial acceptance of any award and an order ofenforcement, as the case may be.  The arbitrators shall have theauthority to grant any equitable and legal remedies that would be available inany judicial proceeding intended to resolve a dispute. The arbitrators shallalso have the authority to allocate between the parties the costs of thearbitration in such equitable manner as the arbitrators may determine.  Theprevailing party in the arbitration shall be entitled to receive reimbursementof its reasonable expenses incurred in connection therewith.  Notwithstandingthe foregoing, either party shall be entitled to seek preliminary

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injunctive relief from any courtof competent jurisdiction, pending the final decision or award of thearbitrators. The award rendered in an arbitration hereunder shall be final andnon‐appealable.  

## 10.5.*                                       *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)Business Day following the date of deposit with such courier service, or suchearlier delivery date as may be confirmed in writing to the sender by suchcourier service.  All such notices, requests, demands and othercommunications shall be addressed as follows:

## If toM-Systems:General Counsel; and 

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

##  

## If to Samsung:

## Vice President and GeneralPatent Counsel

## Intellectual Property

## Device Solution NetworkBusiness

## Samsung Electronics Co.,Ltd.

## San #16 Banwol-Ri, Taean-Eup

## Hwasung-City, Gyeonggi-Do445-701, Korea

## Telephone:           82-31-208-7012

## Facsimile: 82-31-208-7398

## or to such other address orfacsimile number as a party may have specified to the other party in writingdelivered in accordance with this Section.

## 10.6.*            *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.

## 10.7.*            *Amendments.  This Agreementmay be amended or modified only by a written instrument signed by each party.

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## 10.8.*            *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.

## 10.9.*            *No Assignment. No party may assign thisAgreement or its rights hereunder to any person without the written consent ofthe other party, provided that either party may freely assign the Agreement(without the requirement for a consent of the other party) in connection with amerger, acquisition, reorganization, sale of all or substantially all of theassets of such party, or a similar transaction.  No assignment by anyparty of this Agreement or of any of such party's rights hereunder (as agreedto by the other party) shall release such assigning party from any of itsobligations hereunder. Any attempted assignment of this Agreement in violationof this Section shall be void and of no effect**.**

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

## 10.11.*        *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.

## 10.12.*        *Interpretation and Construction of this Agreement.Unless the context shall otherwise require, any pronoun shall include the correspondingmasculine, feminine and neuter forms, and words using the singular or pluralnumber shall also include the plural or singular number, respectively.  Thewords "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 the Articles andSections hereof are inserted for convenience of reference only and are notintended to be a part of, or to affect the meaning or interpretation of, thisAgreement.  Unless the context shall otherwise require, any referenceto any agreement or other instrument or statute or regulation is to suchagreement, instrument, statute or regulation as amended and supplemented fromtime to time (and, in the case of a statute or regulation, to any successorprovision).  

##  

##  

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## 10.13.*        *Specific Performance. The parties agreethat the other party shall be entitled to obtain an injunction or injunctionsin accordance with the dispute resolution procedures contained inSection 10.4 to prevent breaches of the provisions of this Agreement orany agreement contemplated hereunder, and to enforce specifically the terms andprovisions hereof.

## 10.14.*        *Cumulative Remedies. Except as otherwise expressly provided herein, anyand all remedies herein expressly conferred upon a party will be deemedcumulative with, and not exclusive of, any other remedy conferred hereby or bylaw or otherwise on such party, and the exercise of any one remedy will notpreclude the exercise of any other remedy.

## 10.15.*        *Entire Agreement. The provisions of thisAgreement and any Exhibits and Schedules hereto set forth the entire agreementand understanding among the parties as to the subject matter hereof andsupersede all prior agreements, oral or written, and all other priorcommunications among the parties relating to the subject matter hereof.  

## 10.16.*        *Counterparts.  This Agreementmay be executed in two or more counterparts, each of which shall be binding asof the date first written above, and all of which shall constitute one and thesame instrument.  Each such counterpart shall be deemed an original,and it shall not be necessary in making proof of this Agreement to produce oraccount for more than one such counterpart.

## 10.17.*        *Force Majeure.  Neither partyshall be liable by reason of any failure or delay in the performance of itsobligations (except for the payment of money) on account of strikes, riots,insurrection, fires, flood, storm, explosions, acts of God, war, governmentalaction, labor conditions, earthquakes, or any other cause which is beyond thereasonable control of such party.

## 10.18.*        *Independent Contractors.  Nothingcontained in this Agreement shall be construed as creating any agency,partnership, or other form of joint enterprise between the parties.

**IN WITNESS WHEREOF**, theparties have caused this Strategic Agreement be executed by their dulyauthorized representatives.

 

 
| __________________________________      | __________________________________       |
|-----------------------------------------|------------------------------------------|
| **M-Systems Flash Disk  Pioneers Ltd.** | **Samsung Electronics Co****.,****Ltd.** |
| By:____________________                 | By:____________________                  |
| Its:___________________                 | Its:___________________                  |
| ** **                              | ** **                               |

 

 

 

 

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