Document:

ex10_2.htm

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

TRANSITION AGREEMENT

 

This TRANSITION AGREEMENT (“Agreement”) is made and entered into as of July 13, 2010 by and among, on one side, Toshiba Corporation, a Japanese corporation (“Toshiba”), and, on the other side, SanDisk Corporation, a Delaware corporation (“SanDisk Corporation”), and SanDisk Flash B.V., a company organized under the laws of The Netherlands (“SanDisk Flash”, and collectively with SanDisk Corporation, “SanDisk,” and SanDisk together with Toshiba, the “Parties”).

 

WHEREAS, Toshiba and SanDisk are parties to that certain FF Master Agreement; and,

 

WHEREAS, both Parties deem it desirable to establish terms and conditions which shall govern upon the occurrence of a Change of Control of SanDisk.

 

NOW, THEREFORE, the Parties agree as follows:

 

	
1.  

	
Applicability

 

	
(a)  

	
Applicability.  Except as expressly provided herein, the provisions of this Agreement shall apply only if a Change of Control of SanDisk occurs during the term of the FF Master Agreement.

 

	
(b)  

	
Definitions.  Capitalized terms used but not defined in this Agreement shall have the respective meanings assigned to them in Exhibit 1 attached hereto.  Capitalized terms used but not defined in this Agreement or Exhibit 1 shall have the respective meanings assigned to them in the FF Master Agreement and/or Appendix A thereto.

 

	
2.  

	
Change of Control Generally

 

	
(a)  

	
CIC Notice; SanDisk Obligation to Provide.  If, at any time during the term of the FF Master Agreement, a Change of Control of SanDisk occurs, SanDisk shall, within **** Business Days after the date in which the Change of Control has been consummated (as evidenced by **** (“CIC Closing Date”), provide a CIC Notice to Toshiba.  From and after **** with respect to a Change of Control of SanDisk, upon the request of the **** Acquirer, SanDisk shall introduce the **** Acquirer to Toshiba and facilitate good faith discussions between such **** Acquirer and Toshiba in a manner consistent with Government Rules or other applicable legal requirements.  After the CIC Closing Date, upon the request of Toshiba, SanDisk shall introduce the Acquirer to Toshiba and facilitate discussions between the Acquirer and Toshiba.

 

	
(b)  

	
Toshiba Options.  Upon any Change of Control of SanDisk, Toshiba shall have the option, ****, to:

 

	
(i)  

	
continue the business of Flash Forward, and its participation therein, on the same basis as prior to such Change of Control, substituting the Acquiror (or related entity as designated by SanDisk) for SanDisk as a Member of Flash Forward and party to the FF Operative Documents in accordance with the provisions of Section 9.1 of the FF Operating Agreement;

 

	
(ii)  

	
give notice to SanDisk of its election to engage in Consultation, in which case SanDisk and Toshiba shall, and shall cause their respective Affiliates to, so engage in Consultation;

 

	
(iii)  

	
if the Acquiror is a Designated Company, exercise the **** Buy-Out Option in accordance with Section ‎3(b) and Section ‎4 below; or

 

	
(iv)  

	
if the Acquiror is **** Designated Company in respect of the **** Buy-Out Option, exercise the **** Buy-Out Option in accordance with Section ‎3(b) and Section ‎5 below.

 

  

1

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

 

	
3.  

	
Change of Control Involving a Designated Company

 

	
(a)  

	
Toshiba Designation Right.  Toshiba shall have the right, for purposes of this Agreement, to designate **** companies as Designated Companies as of the Effective Date.  Toshiba may replace **** Designated Companies effective as of the **** and successively on each **** thereafter, provided that, as of the date it communicates such replacement to SanDisk in writing (which shall be no later than **** days prior to each such ****), Toshiba has no Knowledge or Awareness of any Active Acquisition Interest of a third party to be designated as a Designated Party as it relates to SanDisk.  Each such notice shall specify (i) which Designated Company(ies) are being replaced, (ii) the newly chosen Designated Company(ies) and (iii) whether such replacements correspond in respect of the **** Buy-Out Option or ****Buy-Out Option.

 

	
(b)  

	
Toshiba Election – Designated Company.  Upon a Change of Control of SanDisk involving a Designated Company, in addition to the rights of Toshiba described in Section ‎2(b)(i) and Section ‎2(b)(ii), Toshiba may Exercise one (1) (but not both) of the following options by providing a return notice (“Election Notice”)  (the date on which the Election Notice is delivered to SanDisk is an “Exercise Date”) to SanDisk indicating its election and Exercise thereof during the period beginning on the date that is **** after the CIC Closing Date and ending on the date that is **** after the CIC Closing Date:

 

	
(i)  

	
**** Buy-Out Option.  Toshiba may elect to purchase and acquire all (but not less than all) of (x) the FF Interests owned by SanDisk, or (y) Flash Forward capacity and **** equipment allocated to SanDisk; in each case at the **** Buy-Out Purchase Price, in a series of one or more successive closings over a period of **** commencing on the Initial Closing Date (“****Buy-Out Option”), subject to a foundry and supply arrangement with SanDisk, in each case in accordance with Section ‎4 below.

 

	
(ii)  

	
**** Buy-Out Option.  Toshiba may elect to purchase and acquire all (but not less than all) of (x) the FF Interests owned by SanDisk, or (y) Flash Forward capacity and **** equipment allocated to SanDisk; in each case for the **** Buy-Out Purchase Price, within **** after the CIC Closing Date (“****Buy-Out Option”), subject to a **** foundry and supply arrangement with SanDisk, in each case in accordance with Section ‎5 below.

 

	
(iii)  

	
For the avoidance of doubt, upon Toshiba’s election to purchase either (x) the FF Interests owned by SanDisk, or (y) the Flash Forward capacity and equipment allocated to SanDisk, as described in Section 3(b)(i) or (ii) above, at the Initial Closing Date, all successive purchases shall be solely within such category of (x) or (y).

 

	
(c)  

	
Termination of Options.  In the event that Toshiba fails to provide an Election Notice to SanDisk within the time period stated in Section ‎3(b), each of the **** Buy-Out Option and the **** Buy-Out Option shall terminate.  Either of the **** Buy-Out Option or the **** Buy-Out Option, as applicable, shall terminate upon Toshiba providing an Election Notice indicating its Exercise of the other option.  For the avoidance of doubt, if Toshiba fails to provide an Election Notice to SanDisk within the time period stated in Section 3(b), then SanDisk, if it is the surviving entity after the Change of Control, shall continue as the counterparty under the FF Operative Documents; if SanDisk is not the surviving entity, then the Acquirer shall be substituted for SanDisk as provided in Section 2(b)(i).

 

	
4.  

	
**** Buy-Out Option

 

	
(a)  

	
General.  In the event that Toshiba elects to Exercise the **** Buy-Out Option pursuant to Section ‎3(b)(i), each of Toshiba and SanDisk shall consummate Toshiba’s purchase of SanDisk’s FF Interests or Flash Forward capacity and equipment, as applicable, in accordance with this Section ‎4(a).

 

	
(i)  

	
Election Notice; Binding Agreement.  The Election Notice shall indicate that Toshiba is Exercising its option hereunder and set forth (x) the percentage, which shall be between **** and **** of SanDisk’s FF Interests or Flash Forward capacity and equipment that Toshiba desires to initially purchase and (y) its desired closing date, which shall be no earlier than **** and no later than **** from the Exercise Date.  The Election Notice shall be irrevocable and, upon delivery of the same to SanDisk, shall constitute a binding agreement by Toshiba to purchase, and by SanDisk to sell the percentage of such FF Interests or Flash Forward capacity and equipment specified in the initial Election Notice on the Initial Closing Date pursuant to this Section 4.

 

  

2

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

	
(ii)  

	
Initial Closing Date; Deliveries.  The purchase of SanDisk’s FF Interests or  Flash Forward capacity and equipment, as applicable, pursuant to any Election Notice shall be completed on the date which Toshiba requests in the Election Notice, or such other date as may be mutually agreed by the Parties in writing (“Initial Closing Date”), except that such closing may be extended as necessary to comply with any Governmental Rule.  On the Initial Closing Date, SanDisk shall deliver duly executed instruments of transfer and other documents necessary to effect the conveyance of its FF Interests or Flash Forward capacity and equipment, and Toshiba shall deliver payment **** by wire transfer of immediately available funds **** an amount equal to the applicable **** Buy-Out Purchase Price to an account specified by SanDisk.

 

Unless otherwise agreed by the Parties, in the event that Toshiba elects to purchase SanDisk’s Flash Forward capacity and equipment, Toshiba shall deliver the **** Buy-Out Purchase Price, by wire transfer of immediately available funds **** to SanDisk by wire transfer of immediately available funds to an account designated by SanDisk, provided that, such SanDisk equipment and capacity acquired by Toshiba hereunder shall be acquired pursuant to additional terms and procedures discussed and agreed in good faith by the Parties with due consideration for the terms and procedures set forth in ****.

 

	
(iii)  

	
**** Buy-Out Purchase Price.  The **** Buy-Out Purchase Price shall be determined as set forth in Schedule ‎4(a)(iii).

 

	
(iv)  

	
Successive Closings.  In the event that Toshiba elects to purchase less than **** of SanDisk’s FF Interests or Flash Forward capacity and equipment, as applicable, on the Initial Closing Date, Toshiba shall issue a subsequent Election Notice **** prior to each **** and elect to purchase **** of SanDisk’s remaining FF Interests or Flash Forward capacity and equipment in an amount which shall be between **** and **** of the such **** FF Interests or Flash Forward capacity and equipment, as applicable.  The closing of each such subsequent purchase shall take place on the applicable **** to which the Election Notice relates (“Successive Closing Date”).  In such case, the closing procedures in Section ‎4(a)(ii) and the **** Buy-Out Purchase Price in Schedule ‎4(a)(iii) in respect of such Successive Closing Date shall apply. Prior to any **** in the event that Toshiba elects to purchase SanDisk’s Flash Forward capacity and equipment, the Parties shall discuss and agree on mechanics for SanDisk to transfer ****, and ****.

 

	
(v)  

	
**** Buy-Out by ****.  If by the **** Toshiba has not purchased **** SanDisk’s FF Interests or Flash Forward capacity and equipment, as applicable, Toshiba shall purchase **** in accordance with the closing procedures in Section ‎4(a)(ii) at the applicable **** Buy-Out Purchase Price in Schedule ‎4(a)(iii).

 

	
(vi)  

	
SanDisk Non-JV Equipment.  Except as may otherwise be agreed between the Parties at the time: (x) any SanDisk equipment utilized in the production of  **** that is scheduled to be incorporated into **** but is not owned or leased by **** at the time of the Exercise shall be acquired by Toshiba ****; and (y) any **** in **** that is not owned or leased by Flash Forward at the time of the Exercise shall remain the property of and be removed by SanDisk in a reasonable time and manner after mutual discussion, unless Flash Forward is at the time ****, in which case the Parties shall discuss in good faith with respect to treating any SanDisk **** equipment as equipment under subsection (x) of this Section 4(a)(vi).  Capacity output from SanDisk **** equipment used in the production of **** Products and purchased by Toshiba in accordance with this Section 4(a)(vi) shall be treated as **** Supply under this Agreement.

 

	
(vii)  

	
Loans and Support Obligations.  Prior to the Initial Closing Date, the Parties agree to discuss in good faith the **** related to the purchased SanDisk’s FF Interests or Flash Forward capacity and equipment in a manner that ****.

 

	
(b)  

	
**** Product Supply.  Toshiba shall, and shall cause Flash Forward to, supply **** Products and, as applicable, ****, to SanDisk and the Acquirer (“****Product Supply”) from and after the Initial Closing Date for a period of **** (“**** Supply Period”); provided, that the **** Supply Period shall be no longer than ****.  Volumes and prices of the **** Product Supply shall be as described in this Section ‎4(b).

 

	
(i)  

	
**** Supply Volume.  SanDisk shall have the right to purchase, and Toshiba shall have the obligation to sell, the **** Product Supply in an amount equal to the **** (the “****Supply Volume”).

 

  

3

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

	
(ii)  

	
**** Product Supply.  The **** Product Supply shall be sourced from **** during the **** Supply Period, at all times in an amount equal to the aggregate **** Supply Volume.  SanDisk shall have an obligation to purchase ****.  SanDisk shall not have the obligation to purchase ****.  Toshiba may reduce the **** Product Supply ****, by the **** Supply Amount after the Initial Closing Date in connection with certain technology transitions carried out by Toshiba as described in Section ‎4(b)(vi) below.

 

	
(iii)  

	
Prices for **** Product Supply.  Prices for the **** Product Supply shall be as follows:

 

(A) **** Supply Prices.  ****

 

(B) **** Supply Prices.  ****

 

	
(iv)  

	
**** Lead Time.  As to **** Supply, SanDisk shall be required to provide Toshiba with a rolling written **** forecast of the estimated **** requirements, and binding written purchase orders **** in advance.

 

	
(v)  

	
Capacity Expansions.  ****

 

	
(vi)  

	
Technology Transitions.

 

(A) General.  Subject to Section ‎4(b)(vi)(B) below, after the Exercise Date, ****

 

(B) ****

 

****

 

(C) ****

 

(1)  ****

 

(2)  ****

 

(D) ****

 

(E) ****

 

	
5.  

	
**** Buy-Out Option

 

	
(a)  

	
General.  In the event that the Acquirer is **** Designated Company in respect of the **** Buy-Out Option as set forth in the ****, and Toshiba elects to exercise its **** Buy-Out Option pursuant to Section ‎3(b)(ii), Toshiba and SanDisk shall consummate the purchase and sale of the FF Interests owned by SanDisk or Flash Forward capacity and equipment allocated to SanDisk in accordance with this Section ‎5.

 

	
(b)  

	
Election Notice; Binding Agreement.  The Election Notice shall state (i) that Toshiba exercises its option hereunder and agrees to purchase **** of SanDisk’s FF Interests or **** of the Flash Forward capacity and equipment allocated to SanDisk on a closing date no earlier than **** and no later than **** after the date on which the **** Buy-Out Purchase Price is finally determined in accordance with Schedule ‎5(d).  The Election Notice shall be irrevocable and, upon delivery of the same to SanDisk, shall constitute a binding agreement by Toshiba to purchase, and by SanDisk to sell **** of the FF Interests or Flash Forward capacity and equipment specified in the Election Notice on the Buy-Out Closing Date pursuant to this Section 5.

 

	
(c)  

	
**** Buy-Out Closing.  The provisions set forth in Section ‎4(a)(ii) shall apply to the closing mechanics in respect to purchase and sale of the FF Interests under this Section ‎5, except that (i) the Initial Closing Date shall be referred to as the “**** Buy-Out Closing Date”, and (ii) the purchase price to be paid by Toshiba shall be the **** Buy-Out Purchase Price payable to SanDisk on the Payment Due Date.

 

  

4

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

	
(d)  

	
**** Buy-Out Purchase Price.  The **** Buy-Out Purchase Price shall be determined as set forth in Schedule ‎5(d).

 

	
(e)  

	
**** Foundry Supply.  Commencing on the **** Buy-Out Closing Date and for a period of **** thereafter (“**** Foundry Period”), SanDisk shall have the right to receive continuing supply as described in ****.

 

	
6.  

	
Intellectual Property

 

	
(a)  

	
In the event of a Change of Control of SanDisk involving a Designated Company, each of SanDisk’s and Toshiba’s rights and obligations with respect to certain intellectual property rights shall be as set forth in Schedule ‎6.

 

	
7.  

	
Term and Termination

 

	
(a)  

	
Term.  This Agreement shall remain in effect until terminated by either Party as permitted herein.

 

	
(b)  

	
Termination.  This Agreement may be terminated at any time prior to ****:

 

	
(i)  

	
By the mutual written agreement of SanDisk and Toshiba;

 

	
(ii)  

	
In the event that either Party materially breaches any material provision of this Agreement and such breach is not cured within **** from the date of its receipt of written notice of such breach from the other Party, the non-breaching Party shall have the right to terminate this Agreement by giving **** prior written notice; and,

 

	
(iii)  

	
Automatically upon the expiration or termination of the FF Master Agreement due to reasons unrelated to this Agreement prior to the Exercise of any option by Toshiba under Sections ‎4 or ‎5.

 

	
(c)  

	
Survival.  Notwithstanding the termination of this Agreement, the obligations under Sections 1, 7, and 8(e), (f), (g) and (h) and Appendix A shall survive any such termination.

 

	
8.  

	
General Provisions

 

	
(a)  

	
****

 

	
(i)  

	
****

 

	
(ii)  

	
****.

 

	
(b)  

	
Effect on the FF Joint Venture and FF Operative Documents.

 

	
(i)  

	
Management Rights.  ****

 

****

 

	
(ii)  

	
Access; Operations.  From and after the Exercise Date, notwithstanding ****.

 

	
(iii)  

	
Effect on the FF Operative Documents.  FF Operative Documents in effect as of the Exercise Date will be modified to take into account the changed relationship of the Parties.

 

	
(iv)  

	
No Impairment.  Until the earlier of the final closing date under the **** Buy-Out Option or the **** Buy-Out Closing Date as applicable, Toshiba agrees not to take any action that would materially impair or diminish SanDisk’s rights hereunder, the value of the FF Joint Venture (including its business, operations, properties, assets or condition), SanDisk’s FF Interests or the Flash Forward capacity and equipment allocated to SanDisk, as applicable.

 

  

5

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

	
(c)  

	
No Further Changes.  Except as expressly stated herein, in no event shall this Agreement, or the rights and obligations of SanDisk or Toshiba as set forth herein, have any effect upon, or otherwise modify, amend, or be deemed to interpret the Parties’ respective rights and obligations pursuant to ****.

 

	
(d)  

	
Further Assurances.  The Parties agree to cooperate to execute and deliver such further documents, certificates and agreements and to take such other actions as may be reasonably requested to evidence, reflect or effectuate the provisions, transactions and intentions of this Agreement.

 

	
(e)  

	
Rules of Construction and Documentary Conventions.  The rules of construction and documentary conventions and general terms and conditions set forth in Appendix A shall apply to this Agreement.

 

	
(f)  

	
Arbitration.  Any disputes arising out of or relating to this Agreement shall be finally settled pursuant to the arbitration provisions of Appendix A, provided that provisions relating to the Board of Executive Officers shall not apply.

 

	
(g)  

	
Governing Law.  This Agreement shall be governed and construed as to all matters including validity, construction and performance by and under the substantive laws of California, without regard to its conflicts of law provisions.

 

	
(h)  

	
Joinder of SanDisk Flash.  Notwithstanding the provisions of Section 2.9 of Appendix A, any other provision of this Agreement, and any delay beyond the date of hereof of execution by SanDisk Flash of this Agreement, Toshiba and SanDisk acknowledge and agree that, by the execution and delivery hereof to Toshiba and SanDisk Corporation: (i) this Agreement shall be effective as between Toshiba and SanDisk Corporation as of the date hereof; and (ii) upon the execution and delivery to Toshiba and SanDisk Corporation of this Agreement by SanDisk Flash, SanDisk Flash shall be joined as a Party to this Agreement, this Agreement shall be effective by and among Toshiba, SanDisk Corporation and SanDisk Flash as of the date written by the signature of the authorized signatory of SanDisk Flash, and SanDisk Flash shall enjoy and be subject to all rights and obligations hereunder from and after such date.

 

 

 

 

 

 

 

 

 

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

 

 

 

 

 

 

 

 

 

 

 

 

  

6

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

 

 

           IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered as of the date and year first above written.

 

 

 

	 	TOSHIBA CORPORATION
	 	 By:	 /s/ Kiyoshi Kobayashi
	 	 Name:	 Kiyoshi Kobayashi
	 	 Title:	 President and CEO
	 	 	 Semiconductor Company
	 	 	 Corporate Senior Vice President
	 	 	 
	 	 SANDISK CORPORATION
	 	 By:	 /s/ Eli Harari
	 	 Name:	 Eli Harari
	 	 Title:	 Chairman and CEO
	 	 	 
	 	 SANDISK FLASH B.V.
	 	 By:	 /s/ Sanjay Mehrotra
	 	 Name:	 Sanjay Mehrotra
	 	 Title:	 Director
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Flash Forward Transition Agreement]

  

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

 

Exhibit 1

 

Definitions

 

“**** Buy-Out Closing Date” shall have the meaning set forth in Section ‎5(c).

 

“**** Buy-Out Option” shall have the meaning set forth in Section ‎3(b)(ii).

 

“**** Buy-Out Purchase Price” shall have the meaning set forth in Schedule ‎5(d).

 

“Acquirer” means ****.

 

“Active Acquisition Interest” ****

 

“Agreement” means that certain Transition Agreement, dated as of the date hereof, between SanDisk and Toshiba, to which this Exhibit 1 is attached.

 

“Appendix A” means the appendix entitled Definitions, Rules of Construction and General Terms and Conditions, attached to the FF Master Agreement.

 

“Available Termination” means (i) any termination right provided for in Section 9.1 of the FF Master Agreement where the event giving rise to the termination right occurred prior to the Exercise; (ii) a Section 9.1(h) (Bankruptcy Event) termination any time prior to the final applicable closing under either of the buy-out options in Section 2(b)(iii) or (iv); and (iii) the expiration of the FF Master Agreement upon the end of its fifteen (15) year life.

 

“Change of Control”, for purposes of this Agreement, means any transaction involving SanDisk that includes ****.

 

“CIC Closing Date” shall have the meaning set forth in Section ‎2(a).

 

“CIC Notice” means the written notice provided by SanDisk to Toshiba setting forth (i) that a Change of Control has occurred, (ii) the name of the Acquirer and (iii) the CIC Closing Date.

 

****

 

“Consultation” means good faith discussion between SanDisk and Toshiba to determine the most effective manner to continue, or the optimal disposition of, Flash Forward and/or its assets and operations, taking into account ****.

 

“Continued Development Investment” ****.

 

“Designated Company(ies)” means, initially, (i) **** and (ii) **** identified in the **** as each of the foregoing designations may be subsequently modified from time to time, in each case including such companies’ Subsidiaries and Affiliates.

 

“Development Agreements” ****

 

****

 

“Election Notice” shall have the meaning set forth in Section ‎3(b).

 

****

 

“Exercise” means Toshiba’s exercise of the **** Buy-Out Option or **** Buy-Out Option.

 

  

Ex. 1, p. 1

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

“Exercise Date” shall have the meaning set forth in Section ‎3(b).

 

“**** Product Supply” shall have the meaning set forth in Section 4(b).

 

“****Supply Period” shall have the meaning set forth in Section 4(b).

 

“**** Supply Volume” shall have the meaning set forth in Section 4(b)(i).

 

“**** Supply” means the percentage of the **** Supply Volume that is ****

 

“FF Master Agreement” means that certain Flash Forward Master Agreement, among Toshiba, SanDisk and SanDisk Flash, dated as of July 13, 2010.

 

“Initial Closing Date” shall have the meaning set forth in Section ‎4(a)(ii).

 

“****Supply” means the percentage of the **** Supply Volume that is ****

 

“Knowledge or Awareness” means that executives or officers responsible for **** possess specific knowledge of a matter from (i) **** (ii) **** (iii) **** or (iv) ****.

 

“****Foundry Period” shall have the meaning set forth in Section ‎5(e).

 

“**** Cost” means ****.

 

“Member” shall have the meaning set forth in the FF Operating Agreement.

 

“Non-Designated Company(ies)” means all third parties other than Designated Companies.

 

“Payment Due Date” means a date that is **** after the **** Buy-Out Closing Date.

 

 “****Supply Amount” ****

 

“**** Buy-Out Option” shall have the meaning set forth in Section ‎3(b)(i).

 

“**** Buy-Out Purchase Price” shall have the meaning set forth in Schedule ‎4(a)(iii).

 

“Successive Closing Date” shall have the meaning set forth in Section ‎4(a)(iv).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

******

  

Ex. 1, p. 2

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

Schedule ‎4(a)(iii)

 

**** Buy-Out Purchase Price

 

The “**** Buy-Out Purchase Price” shall mean, as of the Initial Closing Date or any Successive Closing Date, the amount equal to either of:

 

	
(a)  

	
****

 

or, if applicable,

 

	
(b)  

	
****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

******

  

Schs., p. 1

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

Schedule 5(d)

 

****  Buy-Out Purchase Price

 

The “**** Buy-Out Purchase Price” shall be an amount of United States Dollars and be determined in accordance with ****

 

****

****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

******

  

Schs., p. 2

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.2

FOIA Confidential Treatment Requested

Execution Version

 

Schedule ‎6

 

Intellectual Property

 

	
(a)  

	
General.  From and after the Exercise Date, the provisions of this Schedule 6 will apply.

 

	
(b)  

	
Definitions.

 

“Continued Development Support” means SanDisk’s participating in **** and supporting joint development with respect to a Segment after a Change of Control of SanDisk involving a Designated Company, in a manner ****.

 

“License” means a worldwide, perpetual, fully paid-up, royalty-free, right and license, sublicenseable only to the extent expressly set forth in this Schedule 6, to use, practice and exploit **** the Transferred Technology, and to have made products only to the extent expressly set forth in this Schedule 6.

 

“Non-Patent Rights” means, as to a Party, all copyrights, mask work rights, trade secret rights, and all other intellectual property, industrial property or proprietary rights (whether or not subject to statutory registration) other than patents, patent applications, trademarks and trademark applications, in each case (i) which are owned by such Party or any of its Affiliates, or (ii) under which such Party or any of its Affiliates has the right to grant a License of the scope set forth herein without incurring any royalty or other payments to any third party.

 

“Segment” means **** segments of Technology, or product segments, or any other products or Technology, ****.

 

“Technology” means all technology, research, development, ideas, inventions, knowledge, know how, technical information (whether or not patentable) and intellectual property of any kind, ****.

 

“Transferred” means ****.

 

“Transferred Technology” means Technology that is Transferred (i) **** or (ii) ****.

 

	
(c)  

	
****

 

(i) ****; and

 

(ii) ****

 

	
(d)  

	
License to Technology.

 

(i) Grant of License to Transferred Technology.  ****

 

(ii) ****

 

	
(e)  

	
Grant of License to Certain Other Technology.  ****

 

	
(f)  

	
Patent Cross License.  ****

 

	
(g)  

	
No Other Amendments.  Except as expressly provided in this Schedule 6, in no event shall this Schedule 6, or the rights and obligations of SanDisk or Toshiba as set forth herein, have any effect upon, or otherwise modify, amend, or be deemed to interpret the Parties’ respective rights and obligations pursuant to ****.

 

 

 

 

 

 

  

Schs., p. 3

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.ex10_3.htm

Exhibit 10.3

FOIA Confidential Treatment Requested

Execution Version

 

FLASH FORWARD MUTUAL CONTRIBUTION

AND ENVIRONMENTAL INDEMNIFICATION AGREEMENT

This FLASH FORWARD MUTUAL CONTRIBUTION AND ENVIRONMENTAL INDEMNIFICATION AGREEMENT, dated as of July 13, 2010 (this “Agreement”), is entered into by and among, on one side, Toshiba Corporation, a Japanese corporation (“Toshiba”), and, on the other side, SanDisk Flash B.V., a Netherlands company (“SanDisk Entity”, and together with Toshiba, the “Parties”).

 

RECITALS

 

WHEREAS, Toshiba, SanDisk Corporation and SanDisk (Cayman) Limited, a company organized under the laws of the Cayman Islands, are parties to that certain Mutual Contribution and Environmental Indemnification Agreement, dated as of September 10, 2004, setting forth the terms and conditions relating to environmental issues that arise out of the manufacture of Y3 NAND Flash Memory Products manufactured at the Y3 Facility;

 

WHEREAS, Toshiba, SanDisk Corporation and SanDisk (Ireland) Limited, a company organized under the laws of the Republic of Ireland, are parties to that certain Mutual Contribution and Environmental Indemnification Agreement, dated as of July 7, 2006, as amended by that certain JVRA, dated as of January 29, 2009, setting forth the terms and conditions relating to environmental issues that arise out of the manufacture of Y4 NAND Flash Memory Products manufactured at the Y4 Facility;

 

WHEREAS, Toshiba, SanDisk Entity and SanDisk Corporation are parties to that certain Flash Forward Master Agreement, dated as of the date hereof (the “FF Master Agreement”);

 

WHEREAS, pursuant to the terms of the FF Master Agreement and other FF Operative Documents, Flash Forward, Ltd., a Japanese godo kaisha (the “Company”), will have Y5 NAND Flash Memory Products and other products manufactured at the Y5 Facility; and

 

WHEREAS, Toshiba and SanDisk Entity have agreed to mutually contribute to, and indemnify each other and the Company for, environmental remediation costs or liability resulting from the Y5 Facility manufacturing operations as set forth below.

 

NOW, THEREFORE, the Parties agree as follows:

 

	
1.  

	
Definitions and Interpretation.

 

	
1.1  

	
FF Master Agreement.  Appendix A to the FF Master Agreement is hereby incorporated into this Agreement.  Capitalized terms used but not defined in this Agreement shall have the meanings given to them in Appendix A.  If any capitalized term used in this Agreement is not defined herein or in Appendix A, it shall have the meaning assigned to it in the FF Master Agreement.

 

	
1.2  

	
Definitions.  The following terms used in this Agreement shall have the following respective meanings:

 

	
(a)  

	
“Environmental Costs” means any and all costs, expenses or liability (including claims by third parties or any Governmental Authority) attributable to any contamination from the release or discharge of Hazardous Substances resulting from, arising out of or otherwise by virtue of the construction or operation of the Y5 Facility or Other Y5 Facilities from the Closing until the FF Termination Date, including any and all costs to investigate, remove or remediate any release of Hazardous Substances or otherwise reasonably necessary to assure that the Company and the Y5 Facility and Other Y5 Facilities are and will (until the FF Termination Date) remain in compliance with then applicable Environmental Laws.

 

  

1

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.3

FOIA Confidential Treatment Requested

Execution Version

 

 

	
(b)  

	
“Environmental Laws” means all Applicable Laws in Japan, including, but not limited to, the Soil Contamination Control Law (Dojyouosen Taisaku Ho, Law No. 53 of 2002), now or hereafter in effect relating to the protection of human health, safety, and the environment from emissions, discharges, releases or threatened releases of pollutants, contaminants (chemical or industrial), toxic or Hazardous Substances or wastes into the environment (including, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling or investigation or remediation of pollutants, contaminants, chemicals or industrial, toxic or Hazardous Substances or wastes.

 

	
(c)  

	
“Hazardous Substances” means petroleum, petroleum hydrocarbons or petroleum products, petroleum by-products, radioactive materials, asbestos or asbestos-containing materials, pesticides, radon, urea formaldehyde, lead or lead-containing materials, polychlorinated biphenyls; and any other chemicals, materials, substances or wastes in any amount or concentration which are now or hereafter become defined as or included in the definition of “hazardous substances,” “hazardous materials,” “hazardous wastes,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “pollutants,” “regulated substances,” “solid wastes,” or “contaminants” or words of similar import, under any Environmental Law.

 

	
(d)  

	
“Share” means each of SanDisk Entity’s and Toshiba’s respective liability for Environmental Costs, which shall be measured by and shared in proportion to (i) each Party’s Y5 Capacity Ratio (as may be adjusted pursuant to the FF Master Agreement) within the Y5 Facility and Other Y5 Facilities at the time of the applicable contamination or release, if determinable, or (ii) if the time of such contamination or release is not determinable, each of Toshiba’s and SanDisk’s cumulative Equivalent Lot output from the commencement of production at the Y5 Facility and Other Y5 Facilities until the date the applicable contamination or release is discovered.

 

	
2.  

	
Environmental Investigations.

 

	
2.1  

	
Environmental Consultants.  As of the date hereof, the Parties acknowledge that neither Party has engaged an environmental consultant to investigate, or prepared or obtained an environmental report with respect to, the Y5 Facility or Other Y5 Facility (as defined below).  Subject to Section 2.2, each of SanDisk and Toshiba will engage an environmental consulting company to conduct an environmental investigation on its behalf as to the surface and subsurface conditions existing on or immediately adjacent to the proposed site of the Y5 Facility and other new land to be acquired or leased by Toshiba for the purpose of the Y5 Facility’s operation (such new land to be acquired or leased, the “Other Y5 Facility”) (each a “Consultant” and the Consultant engaged by SanDisk, the “SanDisk Consultant” and the Consultant engaged by Toshiba, the “Toshiba Consultant”). SanDisk shall be solely responsible for the fees and costs charged by the SanDisk Consultant and shall indemnify and hold harmless Toshiba and the Company from any claims for compensation or damages made by the SanDisk Consultant.  Toshiba shall be solely responsible for the fees and costs charged by the Toshiba Consultant and shall indemnify and hold harmless SanDisk and the Company from any claims for compensation or damages made by the Toshiba Consultant; provided, however, that fees and costs incurred by the Toshiba Consultant after the Closing and other than in connection with finalizing the Y5 Baseline Environmental Report (as defined below) shall be chargeable to and payable by the Company, which fees and costs shall be chargeable to and payable by the Parties through wafer price increases.

 

	
2.2  

	
Scope of Review.  To the extent reasonably practicable and subject to Toshiba’s consent, which shall not be unreasonably withheld, each Consultant will perform the activities customarily associated with Phase I (tochirireki chosa) and Phase II (osen jokyo kakunin chosa) studies.  The Consultant(s) will perform Phase I and, if performed, Phase II studies at the site of the Y5 Facility (and immediately adjacent thereto) prior to the start of Y5 Facility operation (scheduled to begin April 2011); provided, however, that the Parties acknowledge that the Consultants may not be able to perform such studies with respect to some portions or all of the Y5 Facility and Other Y5 Facilities (any such portion, an “Untested Area”), and that access by the Consultants to the proposed site of the Y5 Facility and Other Y5 Facilities will be only to the extent necessary to conduct the Phase I and Phase II studies and subject to Toshiba’s prior consent, which shall not be unreasonably withheld.

 

  

2

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.3

FOIA Confidential Treatment Requested

Execution Version

 

 

	
2.3  

	
Information from Monitoring Activities.  Toshiba shall share, or cause to be shared, with SanDisk and, upon SanDisk’s request, the SanDisk Consultant, the results of any monitoring activities conducted by Toshiba or its Affiliates with respect to the surface and subsurface conditions on the proposed site of the Y5 Facility and Other Y5 Facilities on or after the Effective Date and until the FF Termination Date; provided that if as of the FF Termination Date any claims have been made against SanDisk with respect to its indemnification obligations hereunder, on SanDisk’s request, Toshiba shall continue to provide SanDisk the results of any monitoring activities to the extent such results may affect the evaluation or determination of alleged liability of SanDisk hereunder.  The Parties acknowledge and agree that any such information concerning the Y5 Facility and Other Y5 Facilities shall be considered Confidential Information of the Company and any such information concerning the Yokkaichi Facility (including the Y5 Facility and Other Y5 Facilities) shall be considered Confidential Information of Toshiba.

 

	
3.  

	
Baseline Environmental Report.

 

Each Party shall direct the Consultant retained by it to (i) provide the other Consultant and other Party with its initial environmental report on the Y5 Facility and Other Y5 Facilities and (ii) discuss the reports in good faith with the other Consultant with the intent of the Parties and their Consultants agreeing upon a single, combined report (the “Y5 Baseline Environmental Report”).  If Toshiba, SanDisk and the Consultants are unable to agree upon a single report within sixty (60) days after the start of Y5 Facility operations, then the draft reports of both Consultants (or combined report indicating areas of disagreement) shall collectively be considered to be the Y5 Baseline Environmental Report.

 

	
4.  

	
Environmental Compliance.

 

	
4.1  

	
Compliance.  The Parties confirm their intent that the Y5 Facility and Other Y5 Facilities and all operations of the Company be maintained in compliance with all Environmental Laws, including by having remedial measures taken as required by any Governmental Authority or otherwise reasonably necessary to ensure that the Y5 Facility and Other Y5 Facilities and all operations of the Company will remain in compliance with all Environmental Laws.

 

	
4.2  

	
Notice.  Each Party shall promptly notify the other of any circumstances of which it becomes aware that require or could reasonably be expected to require remediation or other actions to ensure that the Company and its operations are and will be maintained in compliance with all Environmental Laws and to minimize the aggregate Covered Environmental Costs (as defined below) that may be incurred.  Upon any such notice being given and received, the Parties shall promptly discuss in good faith and seek to agree upon the measures to be taken in response to such circumstances.  Pending their agreement, nothing shall prevent or limit Toshiba, acting in good faith on its own initiative or upon SanDisk’s reasonable request, from investigating the circumstances of any releases of Hazardous Substances or taking steps reasonably appropriate to limit or prevent ongoing releases, to limit the effects of a release, or to prevent or limit any exposure or damage resulting from, arising out of or otherwise by virtue of a release, including taking immediate or urgent steps as appropriate in light of the circumstances then known, provided, that nothing in this paragraph shall require either Party to take any step except as required by applicable Environmental Law.

 

	
5.  

	
Indemnification Obligations.

 

	
5.1  

	
Mutual Responsibility and Indemnity for Environmental Costs.

 

	
(a)  

	
Subject to Section ‎5.1(b), each of SanDisk and Toshiba shall:

 

	
(1)  

	
be responsible for bearing its Share of Environmental Costs; and

 

	
(2)  

	
indemnify, defend and hold harmless the other Party and the Company (and their respective Indemnified Parties) for its Share of such Environmental Costs.

 

  

3

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.3

FOIA Confidential Treatment Requested

Execution Version

 

	
(b)  

	
Each of SanDisk’s and Toshiba’s responsibility for its Share of Environmental Costs under Section ‎5.1(a) shall be subject to each of the following limitations (Environmental Costs not excluded from the one or both Parties’ responsibility under this Section ‎5.1(b), “Covered Environmental Costs”):

 

	
(1)  

	
Except as provided in Section 5.2(a), neither Party shall be responsible for conditions identified in the Y5 Baseline Environmental Report, including responsibility for any Environmental Costs resulting from, arising out of or otherwise by virtue of remediation or removal of pre-existing conditions.  However, if remedial measures otherwise taken in accordance with this Agreement incidentally result in remediation or removal of conditions not resulting from operation of the Y5 Facility or Other Y5 Facilities, only the Environmental Costs paid for the remedial measures taken with respect to the Y5 Facility or Other Y5 Facilities, as applicable (including amounts paid for remedial measures taken with respect to the Y5 Facility or Other Y5 Facilities that return the Y5 Facility or Other Y5 Facilities to a condition better than that identified in the Y5 Baseline Environmental Report) shall constitute Covered Environmental Costs.

 

	
(2)  

	
Neither Party shall be responsible for Environmental Costs to the extent such Environmental Costs are incurred as a result of the willful misconduct of employees, agents or representatives of the other Party.

 

	
(3)  

	
Environmental Costs incurred for remediation shall only constitute Covered Environmental Costs to the extent reasonably necessary to ensure that the Company fulfills the Prudent Operator Standard.  The “Prudent Operator Standard” means taking all such remedial measures (i) as are required to be in compliance with all then effective Environmental Laws, (ii) that have been required by a Governmental Authority or (iii) that a prudent operator of a similar facility would then take or begin to take to ensure that its continuing operations and facilities will remain in compliance with then effective Environmental Laws and with Environmental Laws as they are then scheduled to go into effect or are anticipated to be changed in the next ****. 

 

	
(4)  

	
No Environmental Costs shall constitute Covered Environmental Costs with respect to either Party to the extent such Party’s liability limit under Section ‎5.5 has been exceeded.

 

	
(c)  

	
If the Parties are not able to agree on whether any given Environmental Costs constitute Covered Environmental Costs (including, following the completion of the sixty (60)-day process set forth in Section ‎8.5, as to whether remediation is necessary to fulfill the Prudent Operator Standard), such dispute shall be resolved by the mediation and arbitration provisions of Appendix A.

 

	
5.2  

	
Toshiba Indemnity.  Toshiba shall indemnify SanDisk and its Indemnified Parties from any environmental costs, expenses or liabilities of SanDisk resulting from, arising out of or otherwise by virtue of:

 

	
(a)  

	
environmental conditions existing at the Yokkaichi Facility (including the Y5 Facility or Other Y5 Facilities but excluding conditions from operations of the Y3 Facility and Y4 Facility) prior to the Closing;

 

	
(b)  

	
the actions or omissions of Toshiba, its Affiliates or its or their respective employees, directors, agents or representatives (other than in connection with the operation of the Y5 Facility or Other Y5 Facilities), for which Toshiba shall be solely responsible; provided however, that Toshiba shall have no indemnification obligation under this Section ‎5.2(b) to the extent that any Environmental Costs result from, arise out of or otherwise occur by virtue of actions or omissions of SanDisk, its Affiliates or its or their respective employees, directors, agents or representatives, for which SanDisk shall be solely responsible; or

 

	
(c)  

	
from the operations of the Y5 Facility or Other Y5 Facilities after the FF Termination Date (unless SanDisk is the Buyer for purposes of Section ‎5.3, in which case this Section ‎5.2(c) shall not apply).

 

	
5.3  

	
Buyer Indemnity.  If either of Toshiba or SanDisk (as “Buyer”) acquires the interests of the other (as “Seller”) in the Company, the Y5 Facility and Other Y5 Facilities (whether through acquiring its FF Interests, by an asset sale and liquidation or by other means), then, subject to Section ‎7, Buyer shall indemnify Seller and its Indemnified Parties from any environmental costs, expenses or liability of Seller resulting from, arising out of or otherwise by virtue of, operations of the Y5 Facility and Other Y5 Facilities after the FF Termination Date.  However, Buyer shall have no indemnification obligation under this Section ‎5.3 to the extent that any Seller environmental costs, expenses or liabilities result from, arise out of or otherwise by virtue of actions or omissions of Seller, its Affiliates or its or their respective employees, directors, agents or representatives.

 

  

4

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.3

FOIA Confidential Treatment Requested

Execution Version

 

	
5.4  

	
Control by Indemnifying Party.

 

	
(a)  

	
The indemnifying Party under Section ‎5.2 or ‎5.3 shall have the sole right to control the defense of any claim and the method and scope of remediation with respect to which the indemnified Party seeks indemnification, provided that the indemnifying Party shall not enter into any settlement that would materially affect the operations of the indemnified Party at the Yokkaichi Facility unless the indemnified Party has granted its prior written consent.

 

	
(b)  

	
The Parties shall cooperate in good faith to seek to agree upon the means of joint defense of any third party claim giving rise to Covered Environmental Costs (with any disagreement to be resolved by the mediation and arbitration provisions set forth in Appendix A).

 

	
5.5  

	
Liability Limit.  Neither Party’s aggregate liability for Covered Environmental Costs or indemnification obligations under Sections ‎5.1, ‎5.2 and ‎5.3 shall exceed the greater of (a) US$5 million or (b) the aggregate (i) purchase price of the products purchased by such Party from Flash Forward and (ii) transfer price of the products produced for such Party at the Y5 Facility (which for purposes of computing this aggregate shall be deemed to be no less than cost plus one percent (1%)), during the six years prior to the date of the applicable claim (or in the case of liability arising after the FF Termination Date, for the six year period immediately preceding the FF Terminate Date).

 

	
6.  

	
Satisfaction of Indemnification Obligations.

 

	
6.1  

	
Prompt Payment.  Each Party shall promptly pay its Share of any Covered Environmental Costs paid by the Company or by the other Party in excess of its obligation to bear the Covered Environmental Costs.  In the event that any Covered Environmental Costs are incurred by the Company or disproportionately by a Party in excess of its Share, the Company or such Party, as applicable, shall invoice the other Party or Parties directly for the balance of such Covered Environmental Costs to the extent of such Party’s Share in accordance with Section ‎5.1(a); provided, however, that upon the mutual agreement of the Parties, each Party’s respective Share of Covered Environmental Costs may otherwise be paid via adjustments to the purchase prices they pay to the Company for Y5 NAND Flash Memory Products, pursuant to the applicable Master Operative Documents.  The Parties shall discuss in good faith the means and the timing of payment of their respective Shares of Covered Environmental Costs, taking into account when the Covered Environmental Costs are paid by the Company or by the other Party and the amount of such Covered Environmental Costs.  To the extent the obligations of either Party will not be timely or fully retired by wafer price increases, the Parties shall directly pay their respective Shares of Covered Environmental Costs.

 

	
6.2  

	
Action in the Name of the Company.  Either Party making a demand for indemnification or contribution pursuant to this Agreement shall be entitled, notwithstanding anything to the contrary in the FF Master Agreement or the FF Operating Agreement, to cause the Company to make such demand, if doing so is appropriate to fulfill the intent of this Section ‎6 (e.g., if the Company has borne the Covered Environmental Costs and the claiming Party has already reimbursed the Company for its Share of the same).

 

	
7.  

	
Post Termination Environmental Costs and Exit Environmental Report.

 

	
7.1  

	
Environmental Costs Paid Post Termination.  Except as otherwise set forth in this Section ‎7, the Parties’ obligations under Section ‎5.1 shall expire as of the FF Termination Date.

 

	
(a)  

	
In respect of Environmental Costs for remediation, to the extent the Exit Environmental Report (as defined below) identifies contamination at the Y5 Facility or Other Y5 Facilities and a good faith claim concerning shared responsibility for such remediation costs is made by one of the Parties before the FF Termination Date, any obligations of the Parties under Section ‎5.1(a) (subject to Section ‎5.1(b)) in respect of remediation of such contamination shall survive the FF Termination Date, but only for so long and to the extent the Prudent Operator Standard continues to require remediation in respect of such contamination.

 

	
(b)  

	
In respect of Covered Environmental Costs resulting from a bona fide third party claim, the Parties obligations under Section ‎5.1(a) (subject to Section ‎5.1(b)) shall survive ****.

 

  

5

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.3

FOIA Confidential Treatment Requested

Execution Version

 

	
7.2  

	
Exit Environmental Report.

 

	
(a)  

	
Promptly upon (i) the exercise by either Party of any right under the FF Operating Agreement and/or the FF Master Agreement to acquire the FF Interests of the other Party, to sell its FF Interests to the other Party or to cause the dissolution of the Company, or (ii) entering into any letter of intent or agreement for the sale of the Y5 Facility and Other Y5 Facilities or all or substantially all of the assets (leased or owned) of the Company, the Parties shall engage an environmental consultant from an internationally recognized environmental investigation firm that has experience in Japan and that is mutually acceptable to the Parties (the “Exit Consultant”) to conduct and complete Phase I and Phase II investigations of the Y5 Facility and Other Y5 Facilities as of a date as close as practicable to but in any event in advance of the FF Termination Date.  Toshiba shall facilitate the Exit Consultant’s access to the Yokkaichi Facility as reasonably necessary to conduct such investigations.

 

	
(b)  

	
The Exit Consultant shall be directed to prepare a draft report based on its Phase I and Phase II investigations and to deliver the draft report to SanDisk and Toshiba (and if either so directs, to any environmental consultant either Party has engaged for its own account).  SanDisk and Toshiba, directly and/or through their respective consultants, shall have sixty (60) days from receipt to comment on the draft report (any such comment shall be delivered both to the Exit Consultant and the other Party and any consultant it engages for its own account). The Exit Consultant shall then be directed to issue to the Parties its final report (the “Exit Environmental Report”), which shall be final and binding on the Parties.

 

	
(c)  

	
Environmental Costs arising from the Exit Environmental Report process shall be payable as provided in Article ‎5 and Section ‎6.1.

 

	
(d)  

	
Unless all payments due for Covered Environmental Costs in connection with the Exit Environmental Report process have been made before the FF Termination Date, the Buyer shall be entitled to withhold from the purchase price payable (or distributable) to Seller and place into third party escrow up to **** of such purchase price (but not to exceed the balance of Seller’s liability limit in Section ‎5.5), which shall serve as security for Seller’s responsibility for Covered Environmental Costs determined pursuant to this Section ‎7.

 

	
7.3  

	
****

 

	
8.  

	
Miscellaneous.

 

	
8.1  

	
Survival.  Sections ‎5, ‎6, ‎7 and ‎8 and Appendix A shall survive the termination or expiration of this Agreement.

 

	
8.2  

	
Entire Agreement.  This Agreement, together with any exhibits, schedules, appendices and attachments thereto, constitutes the agreement of the Parties to this Agreement with respect to the subject matter hereof and supersedes all prior written and oral agreements and understandings with respect to such subject matter.

 

	
8.3  

	
Effective Time of Agreement.  This Agreement shall be effective from the date first written above.

 

  

6

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.3

FOIA Confidential Treatment Requested

Execution Version

 

	
8.4  

	
Governing Law.  This Agreement shall be governed and construed as to all matters including validity, construction and performance by and under the substantive laws of Japan.

 

	
8.5  

	
Dispute Concerning Prudent Operator Standard or Attribution of Environmental Costs.  Notwithstanding anything to the contrary in Section 2.5 of Appendix A, if the Parties are not able to agree upon (i) what application of the Prudent Operator Standard requires with respect to any given proposed remediation hereunder or (ii) the attribution of Hazardous Substances for purposes of Section ‎7.3, at the request of either of them they shall engage a neutral and independent environmental consultant acceptable to both Parties (the “Independent Consultant”) to facilitate resolution of such dispute.  The Parties (and at the option of each of them their own environmental consultants) shall meet and discuss the matter with the Independent Consultant and seek in good faith to resolve the dispute.  If the Parties are not able to resolve the dispute within sixty (60) days after initiating discussions with the Independent Consultant, then at any time after such sixty (60) day period either Party may bring an arbitration claim pursuant to Section 2.5 of Appendix A to resolve the dispute.

 

	
8.6  

	
Assignment.  Neither party hereto may transfer this Agreement or any of its rights hereunder (except for any transfer to an Affiliate or in connection with a merger, consolidation or sale of all or substantially all the assets or the outstanding securities of such party, which transfer shall not require any consent of the other party) without the prior written consent of the other party hereto (which consent may be withheld in such other party’s sole discretion), and any such purported transfer without such consent shall be void.

 

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7

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.3

FOIA Confidential Treatment Requested

Execution Version

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered as of the date and year first above written.

 

 

 

 

	 	TOSHIBA CORPORATION
	 	 By:	 /s/ Kiyoshi Kobayashi
	 	 Name:	 Kiyoshi Kobayashi
	 	 Title:	 President and CEO
	 	 	 Semiconductor Company
	 	 	 Corporate Senior Vice President
	 	 	 
	 	 SANDISK FLASH B.V.
	 	 By:	 /s/ Sanjay Mehrotra
	 	 Name:	 Sanjay Mehrotra
	 	 Title:	 Director
	 	 	 
	 	 	 
	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Flash Forward Mutual Contribution and Environmental Indemnification Agreement

 

 

  

**** Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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