Document:

Exhibit 10.33

Exhibit 10.33

OCLARO, INC.

Executive Severance and Retention Agreement

9 THIS EXECUTIVE SEVERANCE AND RETENTION AGREEMENT by and between Oclaro, Inc., a Delaware
corporation (the “Company”), and [Insert Name] (the “Executive”) is made as of [Insert Date] (the
“Effective Date”).

WHEREAS, the Company and Executive wish to provide for agreed-upon severance arrangements in
the event that the Executive ceases to be an employee of the Company under certain circumstances
prior to any change in control of the Company,

WHEREAS, the Company also recognizes that, as is the case with many publicly-held
corporations, the possibility of a change in control of the Company exists and that such
possibility, and the uncertainty and questions which it may raise among key personnel, may result
in the departure or distraction of key personnel to the detriment of the Company and its
stockholders, and

WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Board”) has
determined that appropriate steps should be taken to reinforce and encourage the continued
employment and dedication of the Company’s key personnel without distraction from the possibility
of termination under certain circumstances or a change in control of the Company and related events
and circumstances.

NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its
employ, the Company agrees that the Executive shall receive the severance benefits set forth in
this Agreement under the terms and subject to the provisions, provided below.

1. Key Definitions.

As used herein, the following terms shall have the following respective meanings:

1.1 “Cause” means:

(a) the Executive’s willful and continued failure to substantially perform
Executive’s reasonable assigned duties as an employee of the Company (other than any
such failure resulting from incapacity due to physical or mental illness or any failure
after the Executive gives notice of termination for Good Reason), which failure is not
cured within 30 days after a written demand for substantial performance is received by
the Executive from the Board that specifically identifies the manner in which the Board
believes the Executive has not substantially performed the Executive’s duties; provided
that, for purposes of Section 3.1, for all Executives other than the Chief Executive
Officer (“CEO”), substantial performance shall be determined by the CEO and such written
demand for substantial performance shall be provided by the CEO; or

(b) the Executive’s willful engagement in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company.

 

 

 

For purposes of this Section 1.1, no act or failure to act by the Executive shall be
considered “willful” unless it is done, or omitted to be done, in bad faith and without reasonable
belief that the Executive’s action or omission was in the best interests of the Company.

1.2 “Change in Control” means an event or occurrence set forth in any one or more
of subsections (a) through (d) below (including an event or occurrence that constitutes a
Change in Control under one of such subsections but is specifically exempted from another such
subsection):

(a) the acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the
Company if, after such acquisition, such Person beneficially owns (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) 50% or more of either (x) the
then-outstanding shares of common stock of the Company (the “Outstanding Company Common
Stock”) or (y) the combined voting power of the then-outstanding securities of the
Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company (excluding an acquisition pursuant to the
exercise, conversion or exchange of any security exercisable for, convertible into or
exchangeable for common stock or voting securities of the Company, unless the Person
exercising, converting or exchanging such security acquired such security directly from
the Company or an underwriter or agent of the Company), (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company, or (iv) any
acquisition by any corporation pursuant to a transaction which complies with clauses (i)
and (ii) of subsection (c) of this Section 1.2; or

(b) such time as the Continuing Directors (as defined below) do not constitute a
majority of the Board (or, if applicable, the Board of Directors of a successor
corporation to the Company), where the term “Continuing Director” means at any date a
member of the Board (i) who was a member of the Board on the date of the execution of
this Agreement or (ii) who was nominated or elected subsequent to such date by at least
a majority of the directors who were Continuing Directors at the time of such nomination
or election or whose election to the Board was recommended or endorsed by at least a
majority of the directors who were Continuing Directors at the time of such nomination
or election; provided, however, that there shall be excluded from this clause (ii) any
individual whose initial assumption of office occurred as a result of an actual or
threatened election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents, by or on behalf of a
person other than the Board; or

 

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(c) the consummation of a merger, consolidation, reorganization, recapitalization
or statutory share exchange involving the Company or a sale or other disposition of all
or substantially all of the assets of the Company in one or a series of transactions (a
“Business Combination”), unless, immediately following such Business Combination, each
of the following two conditions is satisfied: (i) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business Combination
(which shall include, without limitation, a corporation which as a result of such
transaction owns the Company or substantially all of the Company’s assets either
directly or through one or more subsidiaries) (such resulting or acquiring corporation
is referred to herein as the “Acquiring Corporation”) in substantially the same
proportions as their ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively; and (ii) no Person (excluding any employee benefit plan (or related trust)
maintained or sponsored by the Company or by the Acquiring Corporation) beneficially
owns, directly or indirectly, 30% or more of the then outstanding shares of common stock
of the Acquiring Corporation, or of the combined voting power of the then-outstanding
securities of such corporation entitled to vote generally in the election of directors
(except to the extent that such ownership existed prior to the Business Combination); or

(d) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

1.3 “Change in Control Date” means the first date during the Term (as defined in
Section 2) on which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if (a) a Change in Control occurs, (b) the Executive’s employment with the
Company is terminated prior to the date on which the Change in Control occurs, and (c) it is
reasonably demonstrated by the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect a Change in
Control or (ii) otherwise arose in connection with or in anticipation of a Change in Control,
then for all purposes of this Agreement the “Change in Control Date” shall mean the date
immediately prior to the date of such termination of employment.

1.4 “Disability” means the Executive’s incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive’s legal representative.
Notwithstanding anything to the contrary herein, for purposes of this Agreement, each
reference to the Company’s termination of the Executive’s employment without Cause shall be
deemed to exclude the Company’s termination of the Executive’s employment by reason of his or
her Disability.

 

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1.5 “Good Reason” means the occurrence, without the Executive’s written consent,
of any of the events or circumstances set forth in clauses (a) through (d) below.

(a) a material diminution in the Executive’s authority, duties or responsibilities
as in effect immediately prior to the earliest to occur of (i) the Change in Control
Date, (ii) the date of the execution by the Company of the definitive written agreement
or instrument providing for the Change in Control or (iii) the date of the adoption by
the Board of a resolution providing for a Change in Control (with the earliest to occur
of such dates referred to herein as the “Measurement Date”);

(b) a material diminution in the Executive’s base compensation as in effect on the
Measurement Date or as the same may be increased from time to time thereafter;

(c) a change by the Company in the location at which the Executive performs
Executive’s principal duties for the Company to a new location that is both (i) outside
a radius of 35 miles from the Executive’s principal residence immediately prior to the
Measurement Date and (ii) more than 20 miles from the location at which the Executive
performed Executive’s principal duties for the Company immediately prior to the
Measurement Date; or

(d) any other action or inaction that constitutes a material breach by the Company
of this Agreement.

2. Term of Agreement. This Agreement, and all rights and obligations of the parties
hereunder, shall take effect upon the Effective Date and shall expire upon the first to occur of
(a) the expiration of the Term (as defined below) if a Change in Control has not occurred during
the Term, (b) the termination of the Executive’s employment with the Company prior to the
expiration of the Term, other than by reason of a termination by the Company without Cause or a
termination of the Executive’s employment by reason of a Disability prior to the occurrence of a
Change in Control, (c) the fulfillment by the Company of all of its obligations under Section 3 if
the Executive’s employment with the Company is terminated without Cause prior to a Change in
Control, (d) the date 12 months after the Change in Control Date, if the Executive is still
employed by the Company as of such later date, or (e) the fulfillment by the Company of all of its
obligations under Section 4 if the Executive’s employment with the Company terminates within 12
months following the Change in Control Date. “Term” shall mean the period commencing as of the
Effective Date and continuing in effect through December 31, 2015.

 

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3. Benefits Prior to a Change in Control.

3.1 Termination of Employment Without Cause or Upon Death. Subject to the terms
and conditions set forth in Section 5, in the event that the Executive’s employment is
terminated because of the death of the Executive or by the Company without Cause at any time
prior to a Change in Control (such date of termination or death, the “Section 3 Date of
Termination”), the Executive (or Executive’s heirs) shall be entitled to the following
aggregate benefits:

(a) The sum of (i) an amount equal to the average of the Executive’s bonuses earned
during the last 3 full fiscal years (or such lesser number of years in which the
Executive earned a bonus), (“Average Bonus”) divided by 2, with the resulting amount
multiplied by a fraction, the numerator of which is the number of days preceding the
Section 3 Date of Termination in the current bonus period and the denominator of which
is the total number of days in the current bonus period (the “Pro-Rata Bonus”), (ii) any
prior period bonus approved by the Board or the Compensation Committee of the Board but
not paid, (iii) the amount of any accrued base salary and/or vacation pay to the Section
3 Date of Termination, in each case to the extent not previously paid (the sum of the
amounts described in clauses (ii) and (iii) shall be herein referred to as “Accrued
Obligations”), payable in a lump sum in cash within 55 days following the Section 3 Date
of Termination; and

(b) An amount, capped at 1.5 times the Executive’s base salary then in effect,
equal to (i) Executive’s annual base salary then in effect multiplied by 0.67, plus (ii)
one (1) month of the Executive’s monthly base salary then in effect for each whole year
of the Executive’s employment by the Company, as measured from the Section 3 Date of
Termination (the “Section 3 Termination Payment Period”), which amount shall be paid as
a lump sum cash payment within 55 days following the Section 3 Date of Termination
(subject to Section 3.2 below). Existing option, restricted stock and other equity
awards will continue to be governed by the terms of their respective grants and plan
provisions.

For the avoidance of doubt, the bonus shall be determined by (a) including bonuses
earned for the prior three fiscal years, regardless of whether such bonus amounts were
paid during such fiscal year or in the following fiscal year and (b) excluding any bonus
amount paid during any of such three fiscal years that was earned for any fiscal year
prior to such three fiscal years. Notwithstanding Section 3.2(a) above, if the
Executive’s Section 3 Date of Termination occurs prior to the date upon which the
Executive has earned any bonus from the Company, the Executive’s “bonus earned” for
purposes of applying Section 3.2(a) shall be an amount equal to [$_____].

3.2 Release. The payment to the Executive (or Executive’s heirs) of the amounts
and benefits payable under Sections 3.1(a)(i) and 3.1(b) shall be contingent upon both (i) the
execution by the Executive (or Executive’s heirs) of a separation agreement and release in a
form reasonably acceptable to the Company and substantially as set forth in Exhibit A to this
Agreement (the “Executive Release”) and upon the Executive Release becoming effective and
irrevocable in accordance with its terms within 55 days following the Section 3 Date of
Termination and (ii) agreement by the Executive to standard confidentiality obligations, a
non-solicitation of Company customers for six-months following the Section 3 Date of
Termination and a non-solicitation of Company employees for twelve-months following the
Section 3 Date of Termination, provided that the Executive signs such agreement by the
55th day following his or her Section 3 Date of Termination. Executive will be
given a 21 day period to review and consider the release (such period may be extended to 45
days if required under applicable law) and the Executive may revoke the
release for a period of 7 days, during which time the release shall not become effective
or enforceable until the revocation period has expired.

 

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3.3 Sole Remedy. The payments under this Section 3 constitute the sole remedy of
the Executive as a result of the circumstances set forth in this Section 3.

4. Benefits after a Change in Control.

4.1 Termination of Employment.

(a) If the Change in Control Date occurs during the Term, any termination of the
Executive’s employment by the Company or by the Executive within 12 months following the
Change in Control Date or termination due to the Executive’s death within 12 months
following the Change in Control Date, shall be communicated by a written notice to the
other party hereto (the “Notice of Termination”), given in accordance with Section 8.
Any Notice of Termination shall: (i) indicate the specific termination provision (if
any) of this Agreement relied upon by the party giving such notice, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the provision so
indicated and (iii) specify the Date of Termination (as defined below). The effective
date of an employment termination (the “Date of Termination”) shall be (I) the close of
business on the date specified in the Notice of Termination (which date may not be more
than 45 days after the date of delivery of such Notice of Termination) or (II) the date
of the Executive’s death.

(b) The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company, respectively, hereunder
or preclude the Executive or the Company, respectively, from asserting any such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

(c) Any Notice of Termination for Cause given by the Company must be given within
90 days of the occurrence of the event(s) or circumstance(s) which constitute(s) Cause.
Prior to any Notice of Termination for Cause being given (and prior to any termination
for Cause being effective), the Executive shall be entitled to a hearing before the
Board at which the Executive may, at the Executive’s election, be represented by counsel
and at which Executive shall have a reasonable opportunity to be heard. Such hearing
shall be held on not less than 15 days prior written notice to the Executive stating the
Board’s intention to terminate the Executive for Cause and stating in detail the
particular event(s) or circumstance(s) which the Board believes constitutes Cause for
termination.

(d) Any Notice of Termination for Good Reason given by the Executive must be given
within 90 days of the occurrence of the event(s) or circumstance(s) that constitute(s)
Good Reason. Notwithstanding the foregoing, such occurrence shall not be deemed to
constitute Good Reason unless (i) within 30 days
of the Company’s receipt of the Notice of Termination, such event or circumstance
has not been fully corrected and the Executive has not been reasonably compensated for
any losses or damages resulting therefrom and (ii) the Executive’s Date of Termination
occurs within two years following the Company’s receipt of the Notice of Termination.

 

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4.2 Benefits to Executive.

4.2.1. Stock Acceleration.  For each equity award (including options
and other awards) granted to the Executive prior to the Effective Date, if the Change in
Control Date occurs during the Term, then, effective upon the Change in Control Date, (a)
each outstanding option to purchase shares of Common Stock of the Company held by the
Executive (or Executive’s heirs) shall become immediately exercisable in full, (b) each
outstanding restricted stock award (“RS”) or restricted stock unit (“RSU”) shall be deemed
to be fully vested and, for RSUs, the shares of Company Stock will be delivered upon vesting
and (c) notwithstanding any provision in any applicable option agreement to the contrary,
each such option shall continue to be exercisable by the Executive (to the extent such
option was exercisable on the Date of Termination) until the earlier of (i) a period of six
months following the Date of Termination and (ii) the original expiration date of such
option.

For each equity award (including options and other awards) granted to the Executive
after the Effective Date and prior to the Change in Control Date, if the Change in Control
Date occurs during the Term and the Date of Termination occurs within 12 months following
the Change in Control Date due to death, a termination without Cause or a termination for
Good Reason, then, effective upon the Date of Termination, (a) each outstanding option to
purchase shares of Common Stock of the Company held by the Executive (or Executive’s heirs)
shall become immediately exercisable in full, (b) each outstanding restricted stock award or
RSU shall be deemed to be fully vested and, for RSUs, the shares of Company Stock will be
delivered upon vesting and (c) notwithstanding any provision in any applicable option
agreement to the contrary, each such option shall continue to be exercisable by the
Executive (to the extent such option was exercisable on the Date of Termination) until the
earlier of (i) a period of twelve months following the Date of Termination and (ii) the
original expiration date of such option.

 

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4.2.2 Compensation. If the Change in Control Date occurs during the Term and
the Executive’s employment with the Company terminates within 12 months following the Change
in Control Date, the Executive shall be entitled to the following additional benefits:

(a) Termination Upon Death, Without Cause or for Good Reason. Subject to
the terms and conditions set forth in Sections 4.4 and 5, if the Executive’s employment
with the Company is terminated (i) because of the death of the Executive or (ii) by the
Company (other than for Cause or by reason of the Executive’s Disability) or by the
Executive for Good Reason in each case within 12 months following the Change in Control
Date, then the Executive shall be entitled to
a lump sum payment in cash, payable within 55 days following the Date of
Termination, of the aggregate of the following amounts:

(1) the Accrued Obligations;

(2) an amount equal to 1.5 times the Executive’s annual base salary then in effect;

(3) Average Bonus; and

(4) a taxable lump-sum cash payment equal to the Executive’s aggregate premiums to continue
his or her existing group health coverage (medical, dental, and vision) in effect as of the Date
of Termination pursuant to 29 U.S.C. §§ 1161-1169 (“COBRA”) for a period of 12 months (which
payment shall be made if the Executive elects COBRA continuation coverage within 55 days following
the Date of Termination.).1

(b) Termination upon Disability. Subject to the terms and conditions set
forth in Sections 4.4 and 5, if the Executive’s employment with the Company is
terminated by reason of the Executive’s Disability, then the Company shall pay the
Executive in a lump sum in cash within 55 days following the Date of Termination, the
Accrued Obligations and the Pro-Rata Bonus; provided, however, that the Pro Rata Bonus
shall be paid to the Executive no later than March 15th of the calendar year
immediately following the calendar year in which the Executive suffers such Disability
or the Executive shall thereafter no longer be eligible to receive such a bonus.

4.3 Taxes. Notwithstanding any provision of this Agreement to the contrary, if
any payment or benefit to be paid or provided hereunder would be an “Excess Parachute
Payment,” within the meaning of Section 280G of the Code, or any successor provision thereto,
but for the application of this sentence, then the payments and benefits to be paid or
provided hereunder shall be reduced to the minimum extent necessary (but in no event to less
than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an
Excess Parachute Payment; provided, however, that the foregoing reduction shall be made only
if and to the extent that such reduction would result in an increase in the aggregate
payments and benefits to be provided (i.e. a “best results provision”) determined on an
after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the
Internal Revenue Code, or any successor provision thereto, any tax imposed by any comparable
provision of state law, and any applicable federal, state and local income taxes). The
determination of whether any reduction in such payments or benefits to be provided hereunder
is required pursuant to the preceding sentence shall be made by the Company’s independent
accountants at the expense of the Company. The fact that Executive’s right to payments or
benefits may be reduced by reason of the
limitations contained in this Section shall not of itself limit or otherwise affect any other rights of Executive under this Agreement. In the event that any payment or benefit intended to be provided hereunder is required to be reduced pursuant to this Section then the payments shall be reduced or eliminated in the following order: (W) any cash payments, (X) any taxable benefits, (Y) any nontaxable benefits,
and (Z) any vesting of equity awards, in each case in reverse order beginning with payments or
benefits that are to be paid the farthest in time from the date that triggers the applicability of the excise tax.

 

	 	 	 
	1	 	If the Company is not reasonably able to provide such
amount (including by reason of a determination by the Company’s outside counsel
that it cannot pay such amount without violating Section 2716 of the Public
Health Service Act), the Company shall provide substantially equivalent health
coverage under other sources or will reimburse the Executive for premiums (in
excess of the Executive’s cost described above) incurred by the Executive to
obtain his or her own such coverage.

 

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4.4 Release. The payment to the Executive (or the Executive’s heirs) of the
amounts and benefits payable under Section 4.2.2 shall be contingent on both (i) the execution
by the Executive (or the Executive’s heirs) of the Executive Release and upon the Executive
Release becoming effective in accordance with its terms within 55 days following the Date of
Termination and (ii) agreement by the Executive to standard confidentiality, a
non-solicitation of Company customers for six-months following the Change in Control and a
non-solicitation of Company employees for twelve months following the Change in Control,
provided that the Executive signs such agreement by the 55th day following his or
her Date of Termination. Executive will be given a 21 day period to review and consider the
release (such period may be extended to 45 days if required under applicable law) and the
Executive may revoke the release for a period of 7 days, during which time the release shall
not become effective or enforceable until the revocation period has expired.

4.5 Sole Remedy. The payments under this Section 4 constitute the sole remedy
of the Executive in the circumstances set forth in this Section 4.

5. Payments Subject to Section 409A. Subject to the provisions in this Section 5, any
severance payments or benefits under this Agreement shall begin only upon the date of the
Executive’s “separation from service” (determined as set forth below) which occurs on or after the
Section 3 Date of Termination or the Date of Termination, as applicable. The following rules shall
apply with respect to distribution of the payments and benefits, if any, to be provided to the
Executive under this Agreement.

5.1 If, as of the date of the Executive’s “separation from service” from the Company,
the Executive is not a “specified employee” (within the meaning of Section 409A), then
severance payments and benefits shall be made on the dates and terms set forth in this
Agreement.

5.2 If, as of the date of the Executive’s “separation from service” from the Company,
the Executive is a “specified employee” (within the meaning of Section 409A), then:

5.2.1. Each severance payment and benefit due under this Agreement that, in accordance with
the dates and terms set forth herein, will in all circumstances, regardless of when the separation
from service occurs, be paid within the short-term deferral period (as defined in Section 409A)
shall be treated as a short-term deferral within the meaning of Treasury Regulation Section
1.409A-1(b)(4) to the maximum extent permissible under Section 409A; and

 

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5.2.2. Each severance payment and benefit due under this Agreement that is not described in
Section 5.2.1 above and that would, absent this subsection, be paid within the six-month period
following the Executive’s “separation from service” from the Company shall not be paid until the
date that is six months and one day after such separation from service (or, if earlier, the
Executive’s death), with any such payments and benefits that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that is six months and
one day following the Executive’s separation from service; provided, however, that
the preceding provisions of this sentence shall not apply to any severance payments and benefits if
and to the maximum extent that any such payment or benefit is deemed to be paid under a separation
pay plan that does not provide for a deferral of compensation by reason of the application of
Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation
from service).

5.3 The determination of whether and when the Executive’s separation from service from
the Company has occurred shall be made in a manner consistent with, and based on the
presumptions set forth in, Treasury Regulation Section 1.409A-1(h).

5.4 All reimbursements and in-kind benefits provided under this Agreement shall be made
or provided in accordance with the requirements of Section 409A to the extent that such
reimbursements or in-kind benefits are subject to Section 409A, including, where applicable,
the requirements that (i) any reimbursement is for expenses incurred during the Executive’s
lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of
expenses eligible for reimbursement during a calendar year may not affect the expenses
eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the calendar year following the year in
which the expense is incurred and (iv) the right to reimbursement is not subject to set off
or liquidation or exchange for any other benefit.

5.5 Notwithstanding anything herein to the contrary, the Company shall have no liability
to the Executive or to any other person if the payments and benefits provided in this
Agreement that are intended to be exempt from or compliant with Section 409A are not so
exempt or compliant.

6. Disputes.

6.1 Settlement of Disputes. All claims by the Executive for benefits under
Sections 3 and 4 of this Agreement shall be directed to and determined by the Board and shall
be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be
delivered to the Executive in writing and shall set forth the specific reasons for the denial
and the specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to the Executive for a review of the decision denying a claim.

6.2 Expenses. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal, accounting and other fees and expenses which the Executive may
reasonably incur as a result of any claim or contest by the Company, the Executive or others
regarding the validity or enforceability of, or liability under, Sections 3 and 4 of this
Agreement or any guarantee of performance thereof (including as a result of any contest
by the Executive regarding the amount of any payment or benefits pursuant to this
Agreement); provided that Executive prevails in the outcome of such claim or contest.

 

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6.3 Compensation During a Dispute. Subject to any limitations under Section
409A, if the Change in Control Date occurs during the Term and the Executive’s employment
with the Company terminates within 12 months following the Change in Control Date, and the
right of the Executive to receive benefits under Section 4 (or the amount or nature of the
benefits to which Executive is entitled to receive) are the subject of a dispute between the
Company and the Executive, the Company shall continue (a) to pay Executive, the Executive’s
base salary in effect as of the Measurement Date and (b) to provide benefits to the Executive
and the Executive’s family at least equal to those which would have been provided to them, if
the Executive’s employment had not been terminated, in accordance with the applicable Benefit
Plans in effect on the Measurement Date, until such dispute is resolved either by mutual
written agreement of the parties or by final adjudication. Following the resolution of such
dispute, the sum of the payments made to the Executive under clause (a) of this Section 6.3
shall be deducted from any cash payment which the Executive is entitled to receive pursuant
to Section 4, if any; and if such sum exceeds the amount of the cash payment which the
Executive is entitled to receive pursuant to Section 4, if any, the excess of such sum over
the amount of such payment shall be repaid (without interest) by the Executive to the Company
within 60 days of the resolution of such dispute.

7. Successors.

7.1 Successor to Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially
all of the business or assets of the Company expressly to assume and agree to perform this
Agreement to the same extent that the Company would be required to perform it if no such
succession had taken place, provided that: (i) nothing in this Agreement shall oblige any
successor to pay any further sums to the Executive in the event that the Company has
fulfilled its obligations to make payments to the Executive and/or the Agreement expires due
to any other term set forth in Section 2 above; and (ii) the successor shall not be entitled
to ignore the occurrence of a Change in Control in order to avoid any obligations under this
Agreement. Failure of the Company to obtain an assumption of this Agreement at or prior to
the effectiveness of any succession shall be a breach of this Agreement and shall constitute
Good Reason if the Executive elects to terminate employment. As used in this Agreement,
“Company” shall mean the Company as defined above and any successor to its business or assets
as aforesaid which assumes and agrees to perform this Agreement, by operation of law or
otherwise.

7.2 Successor to Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should die while
any amount would still be payable to the Executive or Executive’s family hereunder if the
Executive had continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive’s estate.

 

- 11 -

 

8. Notice. All notices, instructions and other communications given hereunder or in
connection herewith shall be in writing. Any such notice, instruction or communication shall be
sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii)
prepaid via a reputable nationwide overnight courier service, in each case addressed to the
Company, at 2584 Junction Avenue, San Jose, CA 95134, Attn: General Counsel, and to the Executive
at the Executive’s address indicated on the signature page of this Agreement (or to such other
address as either the Company or the Executive may have furnished to the other in writing in
accordance herewith). Any such notice, instruction or communication shall be deemed to have been
delivered five business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable nationwide
overnight courier service. Either party may give any notice, instruction or other communication
hereunder using any other means, but no such notice, instruction or other communication shall be
deemed to have been duly delivered unless and until it actually is received by the party for whom
it is intended.

9. Miscellaneous.

9.1 Employment by Subsidiary. For purposes of this Agreement, the Executive’s
employment with the Company shall not be deemed to have terminated solely as a result of the
Executive continuing to be employed by a wholly-owned subsidiary of the Company.

9.2 Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.

9.3 Injunctive Relief. The Company and the Executive agree that any breach of
this Agreement by the Company is likely to cause the Executive substantial and irrevocable
damage and therefore, in the event of any such breach, in addition to such other remedies
which may be available, the Executive shall have the right to specific performance and
injunctive relief.

9.4 Exclusive Severance Benefits. The making of the payments and the provision
of the benefits by the Company to the Executive under this Agreement shall constitute the
entire obligation of the Company to the Executive as a result of the termination of
Executive’s employment, and the Executive shall not be entitled to additional payments or
benefits as a result of such termination of employment under any other plan, program,
policy, practice, contract or agreement of the Company or its subsidiaries.

9.5 Mitigation. The Executive shall not be required to mitigate the amount of
any payment or benefits provided for in Sections 3.1 and 4.2.2 by seeking other employment
or otherwise. Further, the amount of any payment or benefits provided for in this Agreement
shall not be reduced by any compensation earned by the Executive as a result of employment
by another employer, by retirement benefits, by offset against any amount claimed to be owed
by the Executive to the Company or otherwise.

 

- 12 -

 

9.6 Not an Employment Contract. The Executive acknowledges that this Agreement
does not constitute a contract of employment or impose on the Company any obligation to
retain the Executive as an employee and that this Agreement does not prevent the Executive
from terminating employment at any time. If the Executive’s employment with the Company
terminates for any reason and subsequently a Change in Control shall occur, the Executive
shall not be entitled to any benefits hereunder except as otherwise provided pursuant to
Section 3 or 4.

9.7 Governing Law. The validity, interpretation, construction and performance
of this Agreement shall be governed by the internal laws of the State of Delaware, without
regard to conflicts of law principles.

9.8 Waivers. No waiver by the Executive at any time of any breach of, or
compliance with, any provision of this Agreement to be performed by the Company shall be
deemed a waiver of that or any other provision at any subsequent time.

9.9 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but both of which together shall constitute one and
the same instrument.

9.10 Tax Withholding. Any payments provided for hereunder shall be paid net of
any applicable tax withholding required under federal, state or local law.

9.11 Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative of any party
hereto in respect of the subject matter contained herein; and any prior agreement of the
parties hereto in respect of the subject matter contained herein is hereby terminated and
cancelled.

9.12 Amendments. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.

9.13 Executive’s Acknowledgements. The Executive acknowledges that Executive:
(a) has read this Agreement; (b) has been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of the Executive’s own choice or has
voluntarily declined to seek such counsel; and (c) understands the terms and consequences of
this Agreement; and (d) understands that by executing this Agreement, the Employee forever
waives and forfeits all rights under any prior agreements relating to the subject matter
herein.

 

- 13 -

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first set forth above.

	 
	Oclaro, Inc.

	 
	By:

	 

	Title:

	 	 	 	 	 
	 

	 	Executive	 	 
	 
	 	 	 	 
	 

	 	 

[Insert Name]
	 	 
	 
	 	 	 	 
	 

	 	Address:	 	 
	 

	 	[Insert Address]	 	 

 

- 14 -

 

Exhibit A

Form of Executive Release Agreement

This Release Agreement (the “Agreement”) is between Oclaro, Inc. (“Company”) and
 _____ 

(“Executive”).

Recital

  The Company and Executive have entered into an Executive Severance and Retention
Agreement dated _____, 20_____ 

(“ESRA”), providing for the execution of this release as a
condition to receipt of benefits under the ESRA.

1. Consideration.

a. The Recital set forth above is incorporated herein by reference as if fully set forth. All
capitalized terms used in this Agreement have the same meaning as those contained in the ERSA,
except where expressly defined otherwise.

b. Executive expressly acknowledges and agrees that as of the date this Agreement is signed
and except as otherwise provided in subparagraph 1(b) above, Executive has received all
compensation Executive has earned while employed by the Company, save and except for base salary
which has accrued since Executive’s last paycheck from the Company. Executive further acknowledges
and agrees that as of the date this Agreement is signed, Executive has submitted for reimbursement
all claims which he has for reimbursement of expenses Executive has incurred in connection with the
performance of Executive’s duties for the Company, and that Executive has no dispute with the
Company pertaining to any expense reports and reimbursements submitted to or received from the
Company.

 

 

 

2. Release. As of the date Executive signs this Agreement, Executive waives all
claims Executive might have against the Company (or any person or entity that could be made liable
through the Company, including such persons as officers, directors, partners, members, managers,
employees, representatives, agents, assigns, investors, stockholders, insurers, purchasers,
successors, assigns, and others) arising out of or relating in any manner to Executive’s prior or
current relationship, or change of relationship, with the Company, whether or not Executive’s
claims have matured and whether or not Executive is aware of such claims. As used throughout this
Agreement, “claims” means and includes all claims for breach of contract, fraud, discrimination on
any prohibited basis (including, but not limited to, race, color, ancestry, national origin,
religion, disability, age, sex, sexual orientation, gender identity, medical condition, marital
status, or veteran status), breach of the covenant of good faith and fair dealing, violation of any
statute, defamation, breach of any benefit plan provision, breach of any California Labor Code
provision, breach of any Business & Professions Code provision, breach of any securities laws or
regulations, breach of any Corporations Code provision, interference with contract, interference
with economic advantage, violation of ERISA, violation of any wage and hour laws (including any
applicable wage orders and regulations) and any other claim arising out of or relating in any
manner to the parties’ former or current relationship, or change of that
relationship. Executive specifically waives the provisions of Civil Code section 1542 which
provides:

A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of
executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.

The Company and Executive agree that this release does not apply to claims which cannot be waived
as a matter of law or public policy (including, by way of example, claims for unemployment
insurance benefits, or claims arising under the Workers Compensation Act). In addition to the
foregoing, Executive expressly represents and warrants that Executive has not and will not assign
any claim released in this Agreement to any other person or entity. Executive will indemnify and
defend the Company for all liabilities (including costs, attorneys fees, damages, settlements,
compromises, judgments, penalties, interest, and any other sums) it incurs arising in whole or part
from Executive’s untrue representation and warranty.

[Remainder of Page Intentionally Blank]

 

- 2 -

 

3. Miscellaneous. This Agreement is the complete agreement between the Company and
Executive concerning the subject matters discussed herein, and supersedes all previous discussions,
understandings, and agreements between them concerning said matters, except as otherwise expressly
stated in this Agreement. This Agreement is governed by California law (except to the extent its
conflict of laws principles would apply the law of a different jurisdiction), is entered into and
performed entirely in Santa Clara County, San Jose, California. If any provision of this is found
invalid by any court having jurisdiction, the remainder of this Agreement shall be fully valid and
enforceable. Executive and the Company understand this is a binding, legal agreement. This
Agreement is binding on the parties’ respective heirs, successors, assigns, and representatives.

	 	 	 	 	 	 	 
	 	 	“Executive”	 	 
	 
	 	 	 	 	 	 
	DATED:                                                            
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Signature	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Print Name	 	 
	 
	 	 	 	 	 	 
	 	 	“Company”	 	 
	 
	 	 	 	 	 	 
	 	 	Oclaro, Inc.	 	 
	 
	 	 	 	 	 	 
	DATED:                                                            

	 	By:	 	 	 	 
	 

	 	 	 	 

Signature
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

Print Name, Title
	 	 

 

- 3 -ex10_1.htm

Exhibit 10.1

FOIA Confidential Treatment Requested

Execution Version

 

 

 

 

 

 

 

FLASH FORWARD MASTER AGREEMENT

Dated as of July 13, 2010

by and among

TOSHIBA CORPORATION,

SANDISK CORPORATION

and

SANDISK FLASH B.V.

 

 

 

 

 

 

 

 

 

 

  

  

 

.

Exhibit 10.1

FOIA Confidential Treatment Requested

Execution Version

 

TABLE OF CONTENTS

 

 

 

	 	 	 	Page
	 1.	Definitions and Interpretation	 1
	 	 1.1	Certain Definitions	 1
	 	 1.2	Additional Definitions	 1
	 	 1.3	
Rules of Construction and Documentary Conventions

	 5
	 	 1.4	
Precedence

	 5
	 2.	
Closing and Post-Closing Transactions

	 6
	 	 2.1	
Closing Transactions

	 6
	 	 2.2	
Further Assurances

	 8
	 	 2.3	
Continuation of FP and FA Documents

	 8
	 3.	
Purpose and Products of Flash Forward and Rights to Y5 Production Space

	 9
	 	 3.1 	
Purpose

	 9
	 	 3.2	
Products

	 9
	 	 3.3	
Phases I and II; Rights to Y5 Facility Production Capacity Space

	 10
	 4.	
Representations and Warranties of the Parties

	 11
	 	 4.1	
Organization, Ownership Interest, etc.

	 11
	 	 4.2	
Authorization; No Conflict

	 11
	 	 4.3	
Enforceability

	 12
	 	 4.4	
Proceedings

	 13
	 	 4.5	
Litigation; Decrees

	 13
	 	 4.6	
Compliance with Other Instruments

	 13
	 	 4.7	
Patents and Proprietary Rights

	 13
	 	 4.8	
Compliance with Laws

	 14
	 	 4.9	
Patent Cross Licenses

	 14
	 5.	
Covenants

	 14
	 	 5.1	
Covenants of the Parties

	 14
	 	 5.2	
Public Announcements

	 14
	 	 5.3	
Expenses

	 15
	 	 5.4	
Undertaking as to Affiliate Obligations

	 15
	 	 5.5	
Continuity and Maintenance of Operations

	 15
	 	 5.6	
Certain Deliveries and Notices

	 15
	 6.	Agreements Regarding Flash Forward Operation	 16
	 	 6.1	
Tool Acquisition

	 16
	 	 6.2	
Technology Transfers

	 18
	 	 6.3	
Ramp-Up

	 19
	 	 6.4	
Ramp Up of JV R/W Space in Phase II

	 23
	 	 6.5	
Capacity

	 23
	 	 6.6	
Capacity Sharing Arrangement

	 25
	 	 6.7	
SanDisk Reservation Option

	 27
	 	 6.8	
Engineering Wafers and Development Expense

	 30
	 	 6.9	
Management Representatives

	 31
	 	 6.10	
FF Management Structure and Headcount

	 31
	 	 6.11	
Non-solicitation of Employees

	 34
	 	 6.12	
Financing

	 35
	 	 6.13	
Other Activities

	 36
	 	 6.14	
Protection of Intellectual Property

	 37

 

 

 

  

i

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

TABLE OF CONTENTS

(continued)

 

	 	 	 Page
	 7.	
Start-Up and Production Costs

	 37
	 	 7.1	
Start-Up Services for Y5

	 37
	 	 7.2	
Equal Participation and Purchase Price Per Unit Generally

	 37
	 	 7.3	
Adjustment Payment

	 37
	 	 7.4	
Cost Terms

	 37
	 	 7.5	
Negative Impacts

	 38
	 	 7.6	
Cost and Methodology

	 38
	 8.	Other Agreements	 39
	 	 8.1	
Flash Forward Management

	 39
	 	 8.2	
Y5 Facility

	 39
	 	 8.3	
FF Foundry Agreement

	 40
	 	 8.4	
FF Purchase and Supply Agreements

	 41
	 	 8.5	
Documentation of JV R/W Production

	 42
	 	 8.6	
Other Matters

	 42
	 9.	
Termination

	 44
	 	 9.1	
Termination

	 44
	 10.	
Miscellaneous

	 49
	 	 10.1	
Survival

	 49
	 	 10.2	
Entire Agreement

	 49
	 	 10.3	
Governing Law

	 49
	 	 10.4	
Assignment

	 49
	 	 10.5	
Joinder of SanDisk Flash

	 49

 

 

 

  

ii

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

This FLASH FORWARD MASTER AGREEMENT, dated as of July 13, 2010, is entered into 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, pursuant to that certain Flash Partners Master Agreement by and among Toshiba, SanDisk Corporation and SanDisk (Cayman) Limited, dated as of September 10, 2004 (the “FP Master Agreement”), and the agreements referenced therein, as amended by the JVRA (as hereinafter defined), the Parties have had a collaboration for development and manufacture of Y3 NAND Flash Memory Products (as defined in the FP Master Agreement);

 

WHEREAS, pursuant to that certain Flash Alliance Master Agreement by and among Toshiba, SanDisk Corporation and SanDisk (Ireland) Limited, dated as of July 7, 2006 (the “FA Master Agreement”), and the agreements referenced therein, as amended by the JVRA, the Parties have had a collaboration for development and manufacture of Y4 NAND Flash Memory Products (as defined in the FA Master Agreement);

 

WHEREAS, the Parties desire to extend their collaboration to encompass (i) additional joint development and manufacture of Y5 NAND Flash Memory Products (as hereinafter defined) by a new joint venture company, (ii) possible joint production of R/W (as hereinafter defined) to be produced at the wafer fabrication facility known as “Y5” by the new joint venture company and (iii) the other matters discussed herein; and

 

WHEREAS, in order to realize these goals, the Parties desire to consummate or cause to be consummated the transactions described in this Agreement, and any other transactions which the Parties may from time to time consider necessary or appropriate to carry out the intent of the Parties as expressed herein.

 

NOW, THEREFORE, the Parties agree as follows:

 

	
1.  

	
Definitions and Interpretation

 

	
1.1  

	
Certain Definitions.

 

	
(a)  

	
Capitalized terms used but not defined in this Agreement shall have the respective meanings assigned to them in Appendix A (Definitions, Rules of Construction and General Terms and Conditions).

 

	
(b)  

	
As used herein, the term “Agreement” means this Flash Forward Master Agreement together with any Exhibits, Schedules, Appendices and Attachments hereto.

 

	
1.2  

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

 

	
Term

	
Defined In

	
3D Collaboration Agreement

	
Section ‎2.1(c)(v)

	
3D Memory

	
Section ‎3.2(b)(i)

	
3D Memory Products

	
Section ‎3.2(b)(ii)

	
Acquiring Party

	
Section ‎9.1(d)

	
Adjustment Payment

	
Section ‎7.3

	
Agreement

	
Section ‎1.1(b)

	
Alternative Use

	
Section ‎6.3(a)(iii)

	
AMC

	
Section ‎6.8(a)(i)

	
Amendment No. 5 to Patent Cross License Agreement

	
Section ‎2.1(c)(iii)

	
Building Depreciation Prepayment

	
Section ‎8.2(a)(iii)(A)

	
Business Plan

	
Section ‎5.1(a)

	
Capital Interests Purchase Agreement

	
Section ‎2.1(b)(i)

	
Catch-Up Space

	
Section ‎6.7(a)(iii)

	
Closing

	
Section ‎2.1(a)

 

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	Term	Defined In
	
Common R&D Agreement

	
Section ‎2.1(c)(i)

	
Common R&D Development Expenses

	
Section ‎6.8(a)(i)

	
Costs

	
Section ‎6.3(a)(iii)

	
Cross License Agreement

	
Section ‎2.1(c)(iii)

	
Defaulting Party

	
Section ‎6.12(d)

	
Designated Individuals

	
Section ‎6.3(b)(ii)

	
EC Compensation

	
Section ‎6.6(b)(i)(D)

	
EC Party or Excess Capacity Party

	
Section ‎6.6(b)(i)

	
Embedded NAND Product

	
Section ‎6.6(c)

	
Employer

	
Section ‎6.10(b)(viii)

	
Engineers

	
Section ‎6.10(a)(ii)

	
Environmental Indemnification Agreement

	
Section ‎2.1(b)(vii)

	
Equipment

	
Section ‎6.3(a)(iii)

	
Equivalent Lot

	
Section ‎7.4(e)

	
Evaluation Wafers

	
Section ‎6.8(a)(iv)

	
FA Master Agreement

	
Recitals

	
FF Foundry Agreement

	
Section ‎2.1(b)(iv)

	
FF Headcount Plan

	
Section ‎6.10(a)(i)

	
FF Interests

	
Section ‎4.2(a)

	
FF Operating Agreement

	
Section ‎2.1(b)(ii)

	
FF Operative Documents

	
Section ‎2.1(b)

	
FF Patent Indemnification Agreement

	
Section ‎2.1(b)(vi)

	
FF Purchase and Supply Agreements

	
Section ‎2.1(b)(v)

	
FF Termination Date

	
Section ‎9.1(b)

	
Financing

	
Section ‎6.12(b)(iii)

	
Fixed Manufacturing Costs

	
Section ‎7.4(a)(i)

	
Flash Forward

	
Section ‎2.1(b)

	
FP Master Agreement

	
Recitals

	
Headcount Working Group

	
Section ‎6.10(a)(iii)

	
ICs

	
Section ‎3.2(a)(i)

	
Intellectual Property

	
Section ‎4.7

	
Investing Party

	
Section ‎6.3(a)(ii)

	
Investment Plan

	
Section ‎6.3(b)(i)

	
****

	
Section ‎2.1(c)(iv)

	
JMDY Development Expenses

	
Section ‎6.8(a)(iv)

	
Joint Operative Documents

	
Section ‎2.1(c)

	
Joint Tool Procurement Team

	
Section ‎6.1(a)

	
****

	
Section 6.1(a)

	
****

	
Section 3.3(a)(i)

	
JV Space

	
Section ‎3.3(a)

	
JV Y5 NAND Flash Memory Products

	
Section ‎3.2(a)(ii)

	
JV Y5 Wafer Sales Price

	
Section 8.4(c)(i)

	
JVRA

	
Section ‎2.1(c)(vi)

	
Leading Party

	
Section ‎6.7(a)

	
Lease Agreement

	
Section ‎2.1(b)(viii)

	
Management Representative

	
Section ‎6.9

	
Master Operative Documents

	
Section ‎2.2

	
NAND

	
Section ‎3.2(a)(i)

	
NAND Flash Memory Integrated Circuits

	
Section ‎6.13

	
NAND Flash Memory Products

	
Section ‎3.2(a)(i)

	
Non-Defaulting Party

	
Section ‎6.12(d)

	
Non-Engineer SanDisk Team Members

	
Section ‎6.10(b)(ii)

 

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

 

	Term	Defined In
	
Non-Investing Party

	
Section ‎6.3(a)(ii)

	
Non-JV Space

	
Section ‎3.3(b)

	
Non-NAND Products

	
Section ‎3.2(b)(iv)

	
Non-Originating Party

	
Section ‎6.6(e)

	
Originating Party

	
Section ‎6.6(e)

	
Parties

	
Heading

	
Phase I

	
Section 3.3

	
****

	
Section ‎6.7(a)(i)(B)

	
Phase I Investing Party

	
Section ‎6.3(a)(i)

	
Phase I Minimum RUP Commitment

	
Section ‎6.3(a)(i)

	
****

	
Section ‎6.3(a)(i)

	
Phase II

	
Section 3.3

	
****

	
Section ‎6.7(a)(ii)

	
Phase II Construction Plan Notice

	
Section ‎6.7(a)(i)(A)

	
Phase II Investing Party

	
Section ‎6.3(a)(ii)

	
Phase II Minimum RUP Commitment

	
Section ‎6.3(a)(ii)

	
Phase II Non-Investing Party

	
Section ‎6.3(a)(ii)

	
Process Technology

	
Section ‎6.2(a)

	
Product Development Agreement

	
Section ‎2.1(c)(ii)

	
Proposal

	
Section ‎6.3(c)(i)

	
Proprietary NAND Flash Memory Products

	
Section ‎6.6(d)

	
Purchased Capacity

	
Section ‎6.7(c)

	
Qualification Wafers

	
Section ‎6.8(a)(v)

	
R/W

	
Section ‎3.2(b)(iii)

	
Requesting Party

	
Section ‎9.1(d)(i)

	
Reservation Option

	
Section ‎6.7(a)

	
Reservation Payment

	
Section ‎6.7(b)

	
Restructuring Costs

	
Section 9.1(j)

	
RMPA

	
Section ‎2.1(c)(x)

	
SanDisk

	
Heading

	
SanDisk Corporation

	
Heading

	
SanDisk Engineers

	
Section ‎6.10(a)(ii)

	
SanDisk Financing

	
Section ‎6.12(b)(iii)

	
SanDisk Flash

	
Heading

	
SanDisk Flash-Flash Forward Services Agreement

	
Section ‎2.1(b)(xi)

	
SanDisk Foundry Agreement

	
Section ‎2.1(c)(vii)

	
SanDisk Purchase and Supply Agreement

	
Section ‎2.1(b)(v)

	
****

	
Section 3.3(b)(ii)

	
****

	
Section 3.3(b)(ii)

	
SanDisk Share

	
Section 9.1(j)(ii)(A)

	
SanDisk Team

	
Section ‎6.10(b)

	
Selling Party

	
Section ‎9.1(d)

	
Shortfall Quarter

	
Section ‎7.3

	
Start-Up Costs

	
Section ‎7.1

	
****

	
Section ‎7.3

	
Termination Capacity

	
Section ‎9.1(d)(i)

	
Third Party Sale

	
Section ‎6.3(a)(iii)

	
Threshold NAND Capacity Ratio

	
Section ‎7.4(b)

	
Toshiba

	
Heading

	
Toshiba Engineers

	
Section ‎6.10(a)(ii)

	
Toshiba Financing

	
Section ‎6.12(b)(iii)

 

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	Term	Defined In
	
****

	
Section 3.3(b)(i)

	
****

	
Section 3.3(b)(i)

	
Toshiba Purchase and Supply Agreement

	
Section ‎2.1(b)(v)

	
Toshiba’s Cost of Debt

	
Section ‎8.2(b)

	
Toshiba-Flash Forward Services Agreement

	
Section ‎2.1(b)(x)

	
Toshiba-SanDisk Flash Services Agreement

	
Section ‎2.1(b)(ix)

	
Trailing Party

	
Section ‎6.7(a)

	
Unilateral Expansion

	
Section 3.3(b)(iii)

	
Unilateral Expansion Space

	
Section 3.3(b)(iii)

	
Variable Manufacturing Costs

	
Section ‎7.4(a)(ii)

	
Y3 NAND Flash Memory Products

	
Section ‎3.2(a)(iii)

	
Y3 Ramp-Up Plan

	
Section ‎6.5(a)(i)(E)

	
Y4 NAND Flash Memory Products

	
Section ‎3.2(a)(iii)

	
Y4 Ramp-Up Plan

	
Section ‎6.5(a)(i)(E)

	
Y5 Capacity Ratio

	
Section ‎7.4(c)

	
Y5 Direct R&D Development Products

	
Section ‎6.8(a)(iii)

	
Y5 Facility or Y5

	
Section ‎3.1

	
Y5 NAND Capacity Ratio

	
Section ‎7.4(d)

	
Y5 NAND Flash Memory Products

	
Section ‎3.2(a)(ii)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
1.3  

	
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.

 

	
1.4  

	
Precedence.  The terms and provisions of this Agreement are binding on the Parties; provided, however, that to the extent that a description in this Agreement of another agreement (whether an FF Operative Document or otherwise) conflicts with or differs from the provisions of that agreement, then the provisions of that agreement shall control as to such conflict or difference unless this Agreement expressly amends such other agreement or provision, as the case may be.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

	
2.  

	
Closing and Post-Closing Transactions

 

	
2.1  

	
Closing Transactions.

 

	
(a)  

	
Closing.  The Parties shall effect the transactions set forth in this Section ‎2.1, all of which shall occur as soon as practicable after the date hereof and upon the consummation of the transactions contemplated by the Capital Interests Purchase Agreement (as defined below) and subject to the terms and conditions set forth therein unless otherwise stipulated (the effecting of such transactions, collectively, the “Closing”).

 

	
(b)  

	
Flash Forward Documents.  Unless otherwise indicated in this Section ‎2.1(b), as of the Closing Date, the Parties shall enter into or cause to be entered into or otherwise become effective the following agreements and documents (collectively with this Agreement, the “FF Operative Documents”) to apply to their joint development, manufacture and selling of Y5 NAND Flash Memory Products by and through Flash Forward, Ltd., a Japanese godo kaisha (“Flash Forward”) (the description of each document below is for reference only and shall not be used in interpreting any such document):

 

	
(i)  

	
a Capital Interests Purchase Agreement between Toshiba and SanDisk Flash, substantially in the form of Exhibit Al (the “Capital Interests Purchase Agreement”), and which concerns the sale by Toshiba and purchase by SanDisk Flash at the Closing of 49.9% of the FF Interests;

 

	
(ii)  

	
an Operating Agreement between Toshiba and SanDisk Flash, substantially in the form of Exhibit A2 (the “FF Operating Agreement”), and which concerns governance of Flash Forward;

 

	
(iii)  

	
Articles of Incorporation of Flash Forward in the form of Exhibit A to the FF Operating Agreement;

 

	
(iv)  

	
a Foundry Agreement between Flash Forward and Toshiba, reflecting terms and conditions mutually agreed between the Parties (the “FF Foundry Agreement”);

 

	
(v)  

	
a Purchase and Supply Agreement, by and between Flash Forward and SanDisk Flash (the “SanDisk Purchase and Supply Agreement”) and a Purchase and Supply Agreement, between Flash Forward and Toshiba (the “Toshiba Purchase and Supply Agreement” and together with the SanDisk Purchase and Supply Agreement, the “FF Purchase and Supply Agreements”), which shall reflect terms and conditions mutually agreed between the Parties and which concern the forecasting and purchase commitments by SanDisk Flash and Toshiba, respectively, of Y5 NAND Flash Memory Products;

 

	
(vi)  

	
a Patent Indemnification Agreement among SanDisk Corporation, **** and Toshiba, dated as of the date hereof, in the form of Exhibit A3 (the “FF Patent Indemnification Agreement”), and which concerns patent indemnification obligations of Toshiba in favor of SanDisk, and certain contribution obligations of SanDisk with respect to Y5 NAND Flash Memory Products and 3D Memory Products;

 

	
(vii)  

	
a Mutual Contribution and Environmental Indemnification Agreement between SanDisk Corporation and Toshiba, dated as of the date hereof, in the form of Exhibit A4 (the “Environmental Indemnification Agreement”), and which concerns indemnification obligations of the parties thereto in favor of one another with respect to Flash Forward and the Yokkaichi Facility (as defined in Appendix A);

 

	
(viii)  

	
a Lease Agreement between Flash Forward and Toshiba, as owner of the Yokkaichi Facility, substantially in the form of Exhibit A5 (the “Lease Agreement”), and which concerns the leasing of Flash Forward’s equipment to Toshiba as owner of the Yokkaichi Facility;

 

	
(ix)  

	
a Services Agreement between SanDisk Flash and Toshiba, substantially in the form of Exhibit A6 (“Toshiba-SanDisk Flash Services Agreement”), and which concerns Toshiba’s provision of certain services to SanDisk and SanDisk Flash’s payment to Toshiba for such services;

 

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(x)  

	
a Services Agreement between Flash Forward and Toshiba, as owner of the Yokkaichi Facility, substantially in the form of Exhibit A7 (the “Toshiba-Flash Forward Services Agreement”), and which concerns Toshiba’s provision of certain services to Flash Forward and Flash Forward’s payment to Toshiba for such services; and

 

	
(xi)  

	
a Services Agreement between Flash Forward and SanDisk Flash, substantially in the form of Exhibit A8 (“SanDisk Flash-Flash Forward Services Agreement”), and which concerns SanDisk Flash’s provision of certain services to Flash Forward and Flash Forward’s payment to SanDisk Flash for such services.

 

	
(c)  

	
Joint Operative Documents.  The Parties acknowledge and agree that the following agreements shall remain in force or be amended or executed as indicated below and shall apply generally to the Parties’ collaboration with respect to NAND Flash Memory Products, 3D Memory Products and related products (collectively, the “Joint Operative Documents”):

 

	
(i)  

	
the Fourth Amended and Restated Common R&D and Participation Agreement between the SanDisk Corporation and Toshiba (the “Common R&D Agreement”), which shall reflect terms and conditions mutually agreed between the Parties and which concerns collaboration between the Parties with respect to research and development activities;

 

	
(ii)  

	
the Third Amended and Restated Product Development Agreement between the SanDisk Corporation and Toshiba (the “Product Development Agreement”), which shall reflect terms and conditions mutually agreed between the Parties and which concerns collaboration between SanDisk Corporation and Toshiba with respect to product development activities;

 

	
(iii)  

	
an Amendment No. 5 to the Patent Cross License Agreement, dated as of the date hereof, between SanDisk Corporation and Toshiba (the “Amendment No. 5 to Patent Cross License Agreement”), a copy of which is Exhibit B, amending that certain Patent Cross License Agreement between SanDisk Corporation and Toshiba, dated as of July 30, 1997 (as previously amended, the “Cross License Agreement”), and which concerns certain patent licenses granted by SanDisk Corporation and Toshiba to one another;

 

	
(iv)  

	
the Amended and Restated Joint Memory Development Yokkaichi Agreement between SanDisk Corporation and Toshiba (the “JMDY Agreement”), which shall reflect terms and conditions mutually agreed between the Parties and which concerns the Parties joint development project to cooperate on the development of a pilot line at the Y4 Facility;

 

	
(v)  

	
the 3D Collaboration Agreement, dated as of June 13, 2008, between SanDisk Corporation and Toshiba (the “3D Collaboration Agreement”), which concerns the Parties further expansion of their collaboration through a project for the joint development of and technical collaboration on 3D Memory;

 

	
(vi)  

	
the Joint Venture Restructure Agreement, dated as of January 29, 2009, among SanDisk Corporation and certain of its affiliates, Toshiba Corporation, Flash Alliance and Flash Partners (the “JVRA”), in which the Parties restructured Flash Partners and Flash Alliance and amended the FP Operative Documents and FA Operative Documents;

 

	
(vii)  

	
the SanDisk Foundry Agreement, dated as of January 29, 2009, between SanDisk Corporation and Toshiba Corporation (the “SanDisk Foundry Agreement”), in which Toshiba agreed to build certain products for SanDisk;

 

	
(viii)  

	
****

 

	
(ix)  

	
the FVCJ Wind-Down Agreement, dated as of June 16, 2008, by and between Toshiba Corporation and SanDisk Corporation; and

 

	
(x)  

	
an Amended and Restated Raw Materials Purchase Agreement by and among SanDisk Corporation and certain of its Affiliates and Toshiba Corporation (the “RMPA”), in which the Parties shall agree how to allocate the costs for certain raw materials.

 

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
2.2  

	
Further Assurances.  Following the Closing, each Party shall, and shall cause its Affiliates and Flash Forward to, take all reasonable actions necessary or appropriate to effectuate the transactions contemplated by this Agreement, the FF Operative Documents and the Joint Operative Documents (collectively, the “Master Operative Documents”), and to obtain (and cooperate with the other Party in obtaining) any Governmental Action or third party consent required to be obtained or made by it in connection with any of the transactions contemplated by the Master Operative Documents; provided, that no Burdensome Condition shall be made to exist with respect to such Party or any of its Affiliates in connection therewith.

 

	
2.3  

	
Continuation of FP and FA Documents.  The Parties agree that unless otherwise expressly stated herein (a) neither the FA Operative Documents nor the FP Operative Documents shall affect the interpretation of this Agreement, the governance or operation of Flash Forward or the Y5 Facility and (b) the FF Operative Documents shall not affect the interpretation of the FA Master Agreement and the FP Master Agreement (in each case as amended by the JVRA), the governance or operation of Flash Alliance or the governance or operation of Flash Partners.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

8

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
3.  

	
Purpose and Products of Flash Forward and Rights to Y5 Production Space

 

	
3.1  

	
Purpose.  The Parties acknowledge and agree that the purpose of the Master Operative Documents and Flash Forward is the manufacture, including by subcontract to Toshiba pursuant to the FF Foundry Agreement, and sale to Toshiba and SanDisk Flash of NAND Flash Memory Products manufactured at the facility known by the Parties as “Y5” (the “Y5 Facility” or “Y5”), which is a part of the Yokkaichi Facility, as well as to set forth each of SanDisk’s and Toshiba’s rights to Y5 Facility production.

 

	
3.2  

	
Products.  The following types of products will be produced by Flash Forward at the Y5 Facility:

 

	
(a)  

	
NAND Flash Memory Products.

 

	
(i)  

	
“NAND Flash Memory Products” or “NAND,” as used herein, are NAND (both binary and MLC Flash Memory) Flash Memory Integrated Circuits (“ICs”), excluding any products with process design rules generally greater than ****.  Embedded ICs incorporating NAND Flash Memory Products shall be considered to constitute “NAND Flash Memory Products” if the main function and value of such IC is flash memory, but shall not be considered to constitute “NAND Flash Memory Products” if the main function and value of such IC is logic.  For the purpose of the foregoing, the “main function and value” of any product shall be considered to be flash memory if (x) the total NAND flash memory array area is greater than **** of the total die area or (y) the product is a cut-down or derivative of a standard NAND Flash Memory Product.

 

	
(ii)  

	
NAND Flash Memory Products manufactured at the Y5 Facility are referred to as “Y5 NAND Flash Memory Products.”  “JV Y5 NAND Flash Memory Products” are Y5 NAND Flash Memory Products which will be produced in the JV Space (under the FF Foundry Agreement between Flash Forward and Toshiba) for sale to Toshiba and SanDisk pursuant to the FF Purchase and Supply Agreements.

 

	
(iii)  

	
NAND Flash Memory Products manufactured at the Y3 Facility are referred to as “Y3 NAND Flash Memory Products;” and NAND Flash Memory Products manufactured at the Y4 Facility are referred to as “Y4 NAND Flash Memory Products”.

 

	
(b)  

	
Other Products.

 

	
(i)  

	
“3D Memory” has the meaning given in the 3D Collaboration Agreement.

 

	
(ii)  

	
“3D Memory Products” has the meaning given in the 3D Collaboration Agreement.

 

	
(iii)  

	
“R/W” has the meaning given in the 3D Collaboration Agreement.

 

	
(iv)  

	
“Non-NAND Products” means any technology or product other than NAND Flash Memory Products.

 

	
(v)  

	
****

 

	
(c)  

	
Each Party shall be permitted to market and sell all NAND Flash Memory Products and R/W, subject to the limitations set forth in ****, to any third party in any form, including chips, packaged devices, wafers, die and cards.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

9

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
3.3  

	

Phases I and II; Rights to Y5 Facility Production Capacity Space.  The Y5 Facility shall consist of a first phase (“Phase I”) with manufacturing capability for an estimated **** Equivalent Lots per month, and, upon notice by Toshiba to SanDisk **** a second phase (“Phase II”) currently planned to be substantially similar in size and Equivalent Lot capacity.  If Toshiba shall not have given notice of its approval of Phase II by **** , or such other date as is agreed by the Parties, then, unless otherwise agreed between the Parties **** disregarded and the costs associated with Phase II, such as, land acquisition costs, land preparation costs, foundation costs and infrastructure costs, in each case which would not have been incurred if not for Phase II, ****.  In each of Phase I and Phase II, the Parties shall have the rights to invest and secure production capacity and clean room space as follows, subject to ****, the other provisions of this Agreement and subsequent written agreement between the Parties:

 

	
(a)  

	

JV Space. Flash Forward shall have the right to invest in and secure the production capacity and/or clean room space in each phase **** as set forth below.

 

	
(i)  

	

Flash Forward shall have the right to invest in all production capacity of Phase I and Phase II that is not yet dedicated to **** for the production of **** with the amount of such investment subject to adjustments provided for in this Agreement or in a Business Plan or as otherwise agreed by the Parties in writing, to be manufactured by Flash Forward and purchased by either SanDisk or Toshiba pursuant to the applicable FF Purchase and Supply Agreement dated as of the date of this Agreement (the clean room space actually so utilized at any time, the ****.

 

	
(ii)  

	

Flash Forward shall have the right to invest in up to approximately **** of the clean room space in Phase II for the production of ****, such amount subject to adjustments provided for in this Agreement or in a Business Plan or otherwise agreed by the Parties in writing (the space actually so utilized at any time, the ****.

 

	
(b)  

	

**** Each of SanDisk and Toshiba shall have the right to invest in and secure the clean room space in each phase **** as follows:

 

	
(i)  

	

Toshiba ****. Toshiba shall have the right to invest in up to approximately **** of the clean room space in each of Phase I and Phase II for the production by Toshiba **** , subject to adjustments provided for in this Agreement or otherwise agreed by the Parties in writing.

 

	
(ii)  

	

SanDisk ****. SanDisk shall have the right to invest in up to approximately **** of the clean room space in each of Phase I and Phase II for the production by SanDisk ****  subject to adjustments provided for in this Agreement or otherwise agreed by the Parties in writing.

 

	
(iii)  

	

Unilateral Expansion Space.  Subject to adjustments provided for in this Agreement or otherwise agreed by the Parties in writing, if a Party exercises a right to proceed unilaterally in expanding capacity in the Y5 Facility **** shall be utilized in production by the Party exercising such Unilateral Expansion right.

 

	
(c)  

	

**** Priority. **** and there shall be no restriction on Flash Forward’s ability to expand **** or a Party’s ability to make ****  is already fitted out and producing wafers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

10

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
4.  

	
Representations and Warranties of the Parties

 

Except as may be disclosed in disclosure schedules attached to this Agreement, each Party represents and warrants to the other Party, as of the Closing, as follows:

 

	
4.1  

	
Organization, Ownership Interest, etc.

 

	
(a)  

	
It and each of its Affiliates that is a party to any Master Operative Document is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization or incorporation and has the power and authority to carry on its business as conducted on the date hereof, to own or hold under lease its properties and to enter into and perform its obligations under each Master Operative Document to which it is a party.

 

	
(b)  

	
It and each of its Affiliates that is a party to any Master Operative Document is duly qualified to own or lease its properties and generally to conduct its business as currently, or as proposed under the Master Operative Documents to be, conducted in each jurisdiction necessary for purposes of the transactions contemplated by the Master Operative Documents, except where failure to so qualify would not have a material adverse effect on either Party or Flash Forward.

 

	
4.2  

	
Authorization; No Conflict.

 

	
(a)  

	
It and each of its Affiliates has duly authorized by all necessary action (i) the execution, delivery and performance of each Master Operative Document to which it or any of its Affiliates is a party and (ii) the exercise of its rights as a holder of capital interests (mochibun) of Flash Forward (the “FF Interests”) to approve the execution, delivery and performance by Flash Forward of each Master Operative Document to which it is a party and for which the approval of the holders of FF Interests is required.

 

	
(b)  

	
Its and each of its Affiliates’ execution and delivery of each Master Operative Document to which it is a party, its and each of its Affiliates’ consummation of the transactions contemplated thereby and its and each of its Affiliates’ compliance therewith does not and will not (i) require any approval of its or any of such Affiliates’ stockholders or any approval or consent of any trustee or holder of any of its or any of such Affiliates’ Indebtedness or obligations, (ii) contravene any Governmental Rule applicable to or binding on it or any of such Affiliates or any of its or their properties if such contravention would have a material adverse effect on it or any of such Affiliates or on its or their ability to perform any of its or any of such Affiliates’ obligations under any Master Operative Document, (iii) contravene or result in any breach of, or constitute any default, with or without the passage of time, the giving of notice or both, under its charter or by-laws, or contravene or result in any breach of or constitute any default under, or result in the creation of any Lien (other than Permitted Liens) upon any of its or any of such Affiliates property or the property of Flash Forward under, any material indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, loan or credit agreement, non-compete agreement, license agreement, partnership or joint venture agreement or other material agreement or document to which it or any of such Affiliates is a party or by which it or any of such Affiliates or any of its or their properties is or is intended to be bound or by which Flash Forward or any of its properties is or is intended to be bound, (iv) require any negotiation with, or notice to, any labor union or violate, or require any procedure to be followed under, any collective bargaining or other agreement with employees or (v) require any Governmental Action (other than immaterial Governmental Actions such as routine qualifications to do business intended to be obtained as needed or Governmental Actions needed in connection with the construction and operation of the Y5 Facility), except, in each case described in clauses (i) through (v) above, such as have been duly obtained, made, taken or otherwise accomplished and which are in full force and effect.  All consents and approvals of any Governmental Authority (other than immaterial Governmental Actions such as routine qualifications to do business intended to be obtained as needed or Governmental Actions needed in connection with the operation of the Y5 Facility) or other third Person necessary or advisable for such Party or any of its Affiliates to consummate in all material respects the transactions contemplated by the Master Operative Documents have been obtained.  No Burdensome Condition exists with respect to such Party, any of its Affiliates or Flash Forward in connection with the transactions contemplated by the Master Operative Documents.

 

 

 

 

 

 

  

11

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
4.3  

	
Enforceability.

 

	
(a)  

	
It has duly executed and delivered this Agreement and, upon the execution and delivery of this Agreement by the other Party, this Agreement will constitute its legal, valid and binding obligation, enforceable against it in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights generally or the availability of equitable remedies (regardless of whether enforceability is considered in a proceeding at law or in equity).

 

	
(b)  

	
It and each of its Affiliates have duly executed and delivered each other Master Operative Document to which it or any such Affiliate is a party and, upon the execution and delivery of each such other Master Operative Document by each other party thereto, each such other Master Operative Document will constitute its legal, valid and binding obligation, enforceable against it or its Affiliates in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights generally or the availability of equitable remedies (regardless of whether enforceability is considered in a proceeding at law or in equity).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

12

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
4.4  

	
Proceedings.  There are no actions, claims, investigations or proceedings pending, or to its knowledge threatened, by or before any Governmental Authority that, if adversely determined, would have a material adverse effect on it or any of its Affiliates that is a party to any Master Operative Document or, on the conduct of the business of Flash Forward following the Closing as contemplated in the Master Operative Documents or on it or any of its Affiliates’ ability to perform any material obligation under any Master Operative Document.

 

	
4.5  

	
Litigation; Decrees.  Except as set forth in Schedule 4.5, there are no lawsuits, arbitrations or other legal proceedings pending, or to its knowledge threatened, by or against or affecting it or any of its Affiliates or any of their respective properties that (a) are reasonably likely, based on information known to it as of the date hereof, to have a material adverse effect on the conduct of the business of Flash Forward following the Closing as contemplated by the Master Operative Documents or (b) relate to any of the transactions contemplated by the Master Operative Documents in a manner which is material to it, any of its Affiliates’ or Flash Forward’s ability to carry out the transactions contemplated hereby and in the FF Operative Documents or which could have a material adverse effect on the conduct of the business of Flash Forward following the Closing as contemplated in the Master Operative Documents.

 

	
4.6  

	
Compliance with Other Instruments.  Neither it nor any of its Affiliates that is a party to any Master Operative Document is in default in any material respect in the performance of any material obligation, agreement, instrument or undertaking to which it or any of its Affiliates is a party or by which it or any of its Affiliates or any of its or their properties is bound, and there is no such obligation, agreement, instrument or undertaking to which it or any of its Affiliates is a party or by which it or any of its Affiliates or any of its or their properties is bound, in each case which is reasonably likely to have a material adverse effect on the conduct of the business of Flash Forward following the Closing as contemplated by the Master Operative Documents.

 

	
4.7  

	
Patents and Proprietary Rights.  Except as set forth in Schedule 4.7, to its knowledge, it owns or possesses sufficient legal rights to all patents, utility models, trademarks, service marks, trade names, copyrights, applications for any of the foregoing, mask works, software, trade secrets, licenses, information and proprietary rights and processes (collectively, “Intellectual Property”) necessary (a) to carry out its or any of its Affiliates’ obligations under the Master Operative Documents and (b) for the conduct of the business of Flash Forward following the Closing as contemplated in the Master Operative Documents, without any conflict with or infringement of the rights of others, except as will not have a material adverse effect on either (a) or (b) above.  Except with respect to items referenced in Schedule 4.7, it has not received any communications alleging that its Intellectual Property violates, or by its or any of its Affiliates entering into the transactions contemplated by the Master Operative Documents, would violate the Intellectual Property of any other Person or entity, which violation could reasonably be expected to have a material adverse effect on either (a) or (b) above.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

13

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
4.8  

	
Compliance with Laws.  It and each of its Affiliates has complied and is complying in all material respects with all laws, statutes, permit requirements, licensing requirements, rules and regulations and judicial or administrative decisions, except where the failure to so comply would not have a material adverse effect on its or any of its Affiliates ability to perform its or their obligations hereunder or under any other Master Operative Document or on the conduct of the business of Flash Forward following the Closing as contemplated by the Master Operative Documents.

 

	
4.9  

	
Patent Cross Licenses.  Except as set forth on Schedule 4.9, with respect to (a) Toshiba, there are no patent cross licenses between it and any third party that would require Flash Forward to make any payment pursuant to Section 8 or Section 10 of Amendment No. 1 to the Cross License Agreement dated May 9, 2000, and (b) SanDisk, there are no patent cross licenses between it and any third party that would require Flash Forward to make any payment pursuant to Section 8 of the Cross License Agreement.

 

	
5.  

	
Covenants

 

	
5.1  

	
Covenants of the Parties.  Each Party agrees that, during the term of this Agreement:

 

	
(a)  

	
Performance of Obligations.  It and each of its Affiliates shall fully and faithfully carry out (i) all its obligations under each Master Operative Document to which it or any Affiliate is a party, and (ii) once agreed, each applicable Business Plan (as defined in the FF Operating Agreement) (“Business Plan”).

 

	
(b)  

	
Ownership Interest.  Except as otherwise expressly permitted by the FF Operating Agreement and this Agreement, it shall not Transfer or permit any of its Affiliates to Transfer all or any portion of its FF Interests (or all or any portion of its interest in any Affiliate through which it beneficially owns its FF Interests) to any Person without the consent of the other Party.

 

	
5.2  

	
Public Announcements.

 

	
(a)  

	
At or following the Closing, neither Party shall, nor shall it permit any of its Affiliates to, without the prior written consent of the other Party:

 

	
(i)  

	
issue any public release, announcement or other document, or otherwise publicly disclose any information or make any public statement, concerning the operations of Flash Forward that refers to the other Party or any of its Affiliates in connection therewith (other than a general reference to affiliation with Flash Forward) that (A) concerns the financial condition or results of operations of Flash Forward other than as required by any Governmental Rule, Japanese GAAP, Japanese GAAS, US GAAP or US GAAS, with respect to the financial disclosure obligations of either Party or (B) disparages either Party, or Flash Forward’s performance or reflects negatively on either Party’s commitment to either of Flash Forward; or

 

	
(ii)  

	
other than as may be required in connection with filings required to be made with Governmental Authorities with respect to the transactions contemplated by the FF Operative Documents pursuant to the Japanese Foreign Exchange and Foreign Trade Law and related regulations, (A) publicly file all or any part of any Master Operative Document or any description thereof or (B) issue or otherwise make publicly available any press release, announcement or other document that contains Confidential Information belonging to the other Party (or its Affiliates) or Flash Forward, except as may be required by any applicable Governmental Rule, in which case such Party shall (or shall cause the Person required to make such filing to) cooperate with the other Party, to the extent reasonable and practicable, in obtaining any confidential treatment for such filing requested by the other Party.

 

	
(b)  

	
Each Party shall use commercially reasonable efforts to grant or deny any approval required under this Section ‎5.2 within five (5) days of receipt of written request by the other Party; provided, however, a Party’s failure to respond within said time period shall not be deemed to constitute such Party’s approval or consent.

 

 

 

 

 

  

14

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
5.3  

	
Expenses.  Each Party shall bear its own expenses in connection with the negotiation, execution and delivery of the Master Operative Documents.

 

	
5.4  

	
Undertaking as to Affiliate Obligations.  Each Party shall cause all covenants, conditions and agreements to be performed, observed or satisfied by each of its Affiliates that is a party to any Master Operative Document to be fully and faithfully observed, performed and satisfied by such Affiliate, and shall not cause or permit to exist (a) an Event of Default with respect to such Affiliate or (b) except as otherwise permitted by the FF Operating Agreement, any event of dissolution of Flash Forward caused by such Affiliate.  Nothing in Section ‎5.1 or in this Section ‎5.4 shall be construed to create any right in any Person other than the Parties.  Without limiting the generality of the foregoing, SanDisk hereby guarantees the obligations of SanDisk Flash hereunder and under any Master Operative Document to which SanDisk Flash is a party.

 

	
5.5  

	
Continuity and Maintenance of Operations.  During the term of this Agreement, each Party agrees on behalf of itself and each of its Affiliates that is a party to any Master Operative Document to use all reasonable efforts consistent with past practice and policies to (a) preserve intact in all material respects its and their present business operations, (b) keep available the services of its and their key employees as a group, and (c) preserve its relationships with suppliers, licensors, licensees, and others having business relationships with it or them, each to the extent necessary to allow it and such Affiliates to perform its and their obligations under the Master Operative Documents and to allow Flash Forward to conduct its business as contemplated in its most recently approved Business Plan.

 

	
5.6  

	
Certain Deliveries and Notices.  Each Party shall promptly inform in writing the other Party of (a) any event or occurrences which could be reasonably expected to have a material adverse effect on its or any of its Affiliates’ ability to perform its or their obligations under any of the Master Operative Documents or the ability of Flash Forward to conduct its business as contemplated in its most recently approved Business Plan, or (b) any breach or failure to satisfy any condition or covenant contained herein or in any other Master Operative Document by such Party or any of its Affiliates.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

15

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.  

	
Agreements Regarding Flash Forward Operation

 

	
6.1  

	
Tool Acquisition.

 

	
(a)  

	
Flash Forward Tools.  All tools to be used in the JV Space of Y5 shall be purchased by Flash Forward (or a lessor for Flash Forward’s benefit as contemplated by Section ‎6.12(b)) and all such purchases shall be agreed upon by the Parties. Toshiba shall, from the Toshiba Semiconductor Company headquarters **** provide Flash Forward with tool purchase service and support and negotiate with vendors on Flash Forward’s behalf, and SanDisk shall have the right to participate in such negotiations or other tool purchase activities of Toshiba with respect to the JV Space ****.  For such purpose, a joint SanDisk/Toshiba tool procurement team (“Joint Tool Procurement Team”) will be formed and each member of the team will have total participation, visibility and responsibility in tool selection and procurement negotiations, including tool evaluation activities of the Joint Tool Procurement Team.  ****.  Immediately after the effective date of this Agreement, the Parties will establish a process that enables equal participation and equal decision making by the Parties in tool evaluation and purchase for the JV Space (depending on SanDisk’s ability to participate).

 

	
(b)  

	
Unilateral Expansion Tools.

 

	
(i)  

	
A Party undertaking a Unilateral Expansion (for the avoidance of doubt, excluding any Reservation Option exercise) shall have sole discretion and responsibility with respect to the purchase of all tools to be used for such Unilateral Expansion; provided, that tool purchases for jointly developed products will take into consideration the then-existing recommendations from the Joint Tool Procurement Team; provided further, that the Party undertaking such Unilateral Expansion shall provide the other Party with information concerning the types and quantities of tools purchased.  ****.

 

	
(ii)  

	
For the avoidance of doubt, in the case of a Reservation Option exercise, tool purchases shall be conducted in accordance with Section ‎6.1(a), provided, however, if the Reservation Option exercise results in a Unilateral Expansion, then SanDisk, as the Party undertaking the Unilateral Expansion shall pay for tools to be used for such Unilateral Expansion.

 

	
(c)  

	

****.  Toshiba shall have sole discretion and responsibility with respect to procurement of additional tools for production of Toshiba ****.  Toshiba shall have the right, in its sole discretion, to make decisions related to and to manage the investment and financing plan, schedule and loading plan relating to, and the operation of, Toshiba’s ****, including manufacturing and production efficiencies and losses in the production of Toshiba ****; provided (i) that any such decisions do not adversely affect the cost of, ramp of, or tool acquisition by Flash Forward and/or a Party effecting a Unilateral Expansion, and (ii) that Toshiba shall ensure that no adverse effect on the wafer cost **** results from any such decision or management by Toshiba.  If Toshiba desires to use any tool **** in the production of Toshiba ****  Toshiba shall request the consent of the applicable tool owner for the use of such tool, and such consent shall not be unreasonably withheld or delayed.  ****.

 

	
(d)  

	

****.  SanDisk shall have sole discretion and responsibility with respect to procurement of additional tools for production of SanDisk ****.  SanDisk shall have the right, in its sole discretion, to make decisions relating to and to manage the investment and financing plan, schedule and loading plan relating to the production of SanDisk ****, including manufacturing and production efficiencies and losses and use of tools in the JV Space for production of SanDisk ****; provided further (i) that any such decisions do not adversely affect the cost of, ramp of, or tool acquisition by Flash Forward and/or a Party effecting a Unilateral Expansion, and (ii) that SanDisk shall ensure that no adverse effect on the wafer cost of ****results from any such decision or management by SanDisk.  If SanDisk desires to use any tool **** in the production of ****, SanDisk shall request the consent of the applicable tool owner for the use of such tool, and such consent shall not be unreasonably withheld or delayed.  ****.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

16

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(e)  

	
Use of non-Flash Forward tools by Flash Forward.  If Flash Forward desires to use any tool of either SanDisk or Toshiba in the production of R/W, Flash Forward shall request the consent of the applicable tool owner for the use of such tool and such consent shall not be unreasonably withheld or delayed.  Flash Forward’s use of such tool shall be subject to appropriate cost allocation, usage limitations and steps to minimize any potential contamination risk and effect on capacity.

 

	
(f)  

	
Tool Layout.  Upon SanDisk’s reasonable request, Toshiba shall provide a tool layout plan for the Y5 Facility related to: (x) Flash Forward, (y) any SanDisk Unilateral Expansion capacity and (z) SanDisk R/W.  Toshiba shall provide SanDisk with appropriate information regarding Toshiba non-JV tools to reasonably demonstrate to the mutual satisfaction of the Parties that any space or capacity allocation is consistent with this Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

17

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.2  

	
Technology Transfers.

 

	
(a)  

	
Process Technology.

 

	
(i)  

	
The Parties will jointly make available to Flash Forward the process technology developed under the JMDY Agreement, the Product Development Agreement or the Common R&D Agreement and applicable to the manufacturing and testing of NAND Flash Memory Products and R/W (“Process Technology”) on a mutually agreed schedule.

 

	
(ii)  

	
Transfers of Process Technology and process integration for new processes developed pursuant to the JMDY Agreement and that appear on the JMDY Roadmap (as defined in the JMDY Agreement), including those processes developed at AMC or any other facility in accordance with the JMDY Agreement, will be jointly reviewed and discussed by the Parties and will be made in a mutually satisfactory manner.  All process integration for new process originating from AMC will be led by Toshiba employees, to the extent reasonably possible.  Toshiba and SanDisk will cause their respective employees to cooperate in achieving an efficient transition from development module to operating process and volume production.

 

	
(iii)  

	
The transfer of Process Technology to JV Space shall be deemed complete when the transferred Process Technology passes a reasonable qualification procedure to be mutually agreed upon by the Parties.

 

	
(iv)  

	
****

 

	
(v)  

	
****

 

	
(vi)  

	
Non-JV Space Process Technology.  The manner of Process Technology transfer from JMDY to a Party’s Non-JV Space and the conditions associated therewith shall be determined by such Party in its sole discretion; provided, that such Party shall exercise due care and shall comply with all Yokkaichi Facility or otherwise applicable safety and production regulations in effecting such transfer of Process Technology.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

18

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.3  

	
Ramp-Up.  The Parties shall expand Y5 Facility NAND Flash Memory Product manufacturing capacity through development of Phase I and Phase II of the Y5 Facility as follows:

 

	
(a)  

	
Minimum Commitments.

 

	
(i)  

	
****.  The initial **** L/M in aggregate increases in production capacity of the Y5 Facility shall be considered firmly committed by each Party (i.e., **** L/M each) as described below ****. Toshiba shall specify the timing and manner of implementation of **** and the details shall be reflected in one or more Business Plans that provide for implementing **** .  If SanDisk **** fails for any reason to make the investment necessary to implement its **** share of the **** then Toshiba (so long as it makes the investment necessary to implement its **** share of **** shall have the right **** either to maintain this Agreement in effect **** or **** in which case (A) **** and (B) **** shall apply.

 

	
(ii)  

	
****.  If Toshiba gives notice to SanDisk of **** to proceed with Phase II, the following terms and conditions shall apply with respect to the ramp-up in Phase II.  The initial **** in aggregate increases in production capacity of Phase II of the Y5 Facility shall be considered **** as described below **** shall specify the timing and manner of implementation of **** and the details shall be reflected in one or more Business Plans that provide for implementing ****.  If SanDisk **** fails for any reason to make the investment necessary to implement **** Toshiba (so long as it makes the investment necessary to implement **** share of **** shall have the right, **** to:  (A) maintain this Agreement in effect ****; (B) maintain this Agreement in effect with respect ****; or (C) in the event that SanDisk’s **** in Phase I is ****  or less at the time of such failure to ****, in which case (1) **** and (2) **** shall apply.

 

	
(iii)  

	

Costs of Non-Investment. If  ****, then it shall reimburse **** the costs due to cancellation of any purchase orders the Parties have agreed to place for **** to the extent such costs cannot be reducted or mitigated **** commercially reasonable efforts to mitigate the Costs to the fullest extent possible.  To the extent **** alternative use (“Alternative Use”) of Equipment, **** unable to negotiate a termination of an Equipment purchase order and must acquire such Equipment (and will not make Alternative Use of it), **** will promptly liquidate in one or more arm’s length transactions (“Third Party Sale”) such Equipment and the positive difference between the cost of such Equipment (including the out-of-pocket costs of conducting the Third Party Sale, such as costs related to de-installing Equipment, compensating a sales broker, delivering the Equipment to the purchaser thereof, etc.) and the proceeds of such Third Party Sale shall constitute Costs.  **** using commercially reasonable efforts to effect a Third Party Sale, the liquidation value of any given Equipment may be small compared to the purchase price for such Equipment given the specialized nature of the Equipment and limited secondary market for wafer manufacture equipment.  To the extent **** is in a commercially reasonable manner able to make Alternative Use or a Third Party Sale of any Equipment at any time after **** paid the Costs arising from or related to such Equipment, **** notify **** of such Alternative Use or Third Party Sale and shall reimburse**** for the full amount of the Costs paid by **** with respect to such Equipment.  If the net proceeds on the sale of any item of Equipment exceeds the cost thereof, such profit shall reduce amounts otherwise payable **** under this Section 6.3.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

19

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(b)  

	
Failure to Invest as Committed in Investment Plan or Business Plan.

 

	
(i)  

	
Investment Plan.  After the **** has been fulfilled by the Parties, once the Parties agree in the form of an Investment Plan (as defined below) approved by the Board of Executive Officers of Flash Forward to make investments to fulfill any given increment of capacity expansion for Flash Forward, if either Party, as the Non-Investing Party, then fails for any reason to make the investment necessary to implement its **** share of such committed increment of the capacity expansion, then the other Party, **** as applicable.  The term “Investment Plan” shall mean a proposed increment of capacity expansion as set forth in the Business Plan or subsequent mutual agreement between the Parties and presented to the Board of Executive Officers of Flash Forward in accordance with Section 6.3(c).

 

	
(ii)  

	
Business Plan.  Business Plans and proposals with respect to the adoption of new Business Plans shall describe JV Space capacity expansions to be effected by SanDisk and Toshiba through Flash Forward on a **** basis.  In the event that SanDisk does not approve an Investment Plan providing ****. Accordingly, the Parties shall cooperate in good faith to agree on and implement the Business Plan in a timely manner in accordance with Section 3.4 of the Operating Agreement.  In the event of a failure to either (A) agree on the capacity expansions in a Business Plan or (B) implement any specific capacity expansion set forth in the Business Plan, then the Board of Executive Officers of the Company shall meet and discuss the applicable capacity expansion.  If the Board of Executive Officers fails to agree on a solution, then any Member may bring the matter to the attention of the Vice President, Memory Division of Toshiba, and the Chief Operating Officer of SanDisk (the “Designated Individuals”), who will attempt to find a resolution.  If the matter has not been resolved within thirty (30) days of referral to the Designated Individuals, the matter will be referred to the Management Representatives for agreement on a final resolution.  Any agreement of the Management Representatives on a final resolution will be final and binding and shall be implemented by the Company.  In the event that no agreement on a final resolution is reached by the Management Representatives within thirty (30) days after submission of the matter to them, the matter shall be submitted to arbitration in accordance with ****.  The remedies set forth in this Section 6.3(b)(ii) shall constitute the exclusive remedies with respect to **** in the context of a Business Plan, and no Deadlock shall arise from such failure.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

20

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(c)  

	
General Rule; Proposed NAND Capacity Expansions.

 

	
(i)  

	
General Rule.  After the Parties have fulfilled their respective **** in Phase I or Phase II, as applicable, if either Party desires to (A) further expand the production capacity of the Y5 Facility, expand or accelerate any capacity increase provided for in a then-agreed Business Plan or otherwise increase the number ****  or (B) otherwise expand its aggregate manufacturing capacity ****, then in each of (A) and (B) above, such Party will **** to the other Party and will propose to the other Party a plan to make such desired expansion on a 50/50 basis with reasonable terms ****.

 

	
(ii)  

	
Expansions within Y5.  Expansions of JV NAND Space production may be proposed by either Party in the form of a Proposal and, if and to the extent agreed, shall in due course be reflected in a Business Plan or amendment thereto.  If no agreement with respect to joint implementation of the full amount of a proposed expansion of Y5 Facility production capacity beyond any capacity increase provided for in a then-agreed Business Plan is reached within **** following a Party’s written Proposal of such expansion, the proposing Party may ****:

 

	
(A)  

	

If **** is the proposing Party, it shall have the right to ****

 

	
(B)  

	

If **** is the proposing Party, it shall have the right to ****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

21

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(iii)  

	
Other Facility Expansions.  If no agreement with respect to a proposed expansion in a facility **** is reached during **** day period beginning on the day a Proposal is received by the non-proposing Party, then SanDisk and Toshiba shall cause the chief executive officer of SanDisk and the chief executive officer of Toshiba Semiconductor Company to meet face-to-face at Toshiba’s headquarters, no later than the **** day following receipt of the Proposal by the non-proposing Party, to develop and agree upon a solution ****.  If no resolution is reached within **** days after the face-to-face meeting, then (x) with respect to the Y5 Facility, the Parties will continue to pursue the ramp-up on the terms set forth in ****, (y) the proposing Party will ****:

 

	
(A)  

	

If SanDisk is the proposing Party, it shall have the right ****; and

 

	
(B)  

	

If Toshiba is the proposing Party, it shall have the right to ****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

22

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.4  

	
Ramp Up of JV R/W Space in Phase II.  If positive verification ****

 

	
(a)  

	
is made prior to ****

 

	
(b)  

	
is not made prior to ****

 

	
6.5  

	
Capacity.

 

	
(a)  

	
Priority.

 

	
(i)  

	
****

 

	
(A)  

	

from ****, to fulfill the capacity allocated to SanDisk, as provided for under ****

 

	
(B)  

	

from ****, to fulfill the capacity allocated to SanDisk, as provided for under ****

 

	
(C)  

	

from ****, to fulfill the capacity allocated to SanDisk, as provided for under ****

 

	
(D)  

	

from **** in Y5 ****, and

 

	
(E)  

	
****

 

	
(ii)  

	
****

 

	
(A)  

	

from ****, to fulfill the capacity allocated to Toshiba, as provided for under ****,

 

	
(B)  

	

from ****, to fulfill the capacity allocated to Toshiba, as provided for under ****,

 

	
(C)  

	

from ****, to fulfill the capacity allocated to Toshiba, as provided for under ****,

 

	
(D)  

	
****, and

 

	
(E)  

	
****

 

	
(iii)  

	

In no event will **** source NAND Flash Memory Products **** from a source other than **** if the effect of such sourcing is the diversion of resources or other (intended or collateral) effects which reduce the economic or other efficiency of the Y3 or Y4 Facility; provided, that sourcing by Toshiba from the Toshiba Capacity (as defined in the JVRA and including, for the avoidance of doubt, any Toshiba Unilateral Expansion Space) shall not be deemed such a diversion of resources or other reduction in efficiency.

 

	
(b)  

	
**** Rule. In no event shall SanDisk’s and its Subsidiaries’ aggregate manufacturing capacity for NAND Flash Memory Products ****  of the aggregate manufacturing capacity for, and purchases of, (i) **** from the sources identified ****  and controlled by **** plus (ii) **** from the sources identified in ****  and controlled by  ****.  In no event shall purchases of NAND Flash Memory Products by either Party or their respective Subsidiaries **** be limited by this Section 6.5(b).  Manufacturing and purchased capacity under this Section 6.5(b) shall be determined ****.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

23

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(c)  

	
Transfer of Technology to External Manufacturing Source.  If the Parties mutually agree to secure external manufacturing sources other than the Yokkaichi Facility through joint investment, Flash Forward and Toshiba, as applicable, will jointly transfer the applicable manufacturing technology and know-how to such source.  Flash Forward, Flash Alliance and Flash Partners will conduct all negotiations with the external manufacturing source; provided, however, the terms and conditions of any agreement shall be subject to prior consultation with and the approval of Toshiba.  In connection with any technology transfer to such external source, Toshiba will be reimbursed its mutually agreed transfer costs for assisting in the transfer of manufacturing technology and know-how.  If the new capacity secured at such external manufacturing source is requested by only one of the Parties, such Party will pay the transfer costs and be entitled to purchase the full output of Flash Forward products purchased by Flash Alliance, Flash Partners or Flash Forward, as applicable, from such external manufacturing source.  If both Parties request such new external capacity, then Flash Alliance, Flash Partners or Flash Forward, as applicable, will pay the transfer costs to Toshiba.  Unless otherwise agreed by the Parties in writing, neither Party shall have the right to grant manufacturing licenses to such external manufacturing source or to disclose or transfer to any such external manufacturing source, manufacturing know-how related to the manufacture of Flash Forward products, except through Flash Alliance, Flash Partners or Flash Forward.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

24

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.6  

	
Capacity Sharing Arrangement.

 

	
(a)  

	
Equal right to Joint Venture capacity.  Each of the Parties will have the right and obligation, through Flash Forward, to utilize fifty percent (50%) of the JV Space products, on an Equivalent Lot basis.  The actual monthly NAND Flash Memory Product lot output from the Y5 Facility shall be allocated between Toshiba and SanDisk, as applicable, based on the Y5 NAND Capacity Ratio.

 

	
(b)  

	
Alternative use of allotted capacity.

 

	
(i)  

	
If a Party is unable to utilize its allotted manufacturing capacity for JV Y5 NAND Flash Memory Products (such Party, an “Excess Capacity” or “EC Party”), it may do any of the following:

 

	
(A)  

	
An EC Party may request the other Party to negotiate the terms of transfer of its capacity shortfall to the other Party, which may choose whether to accept such additional capacity and on what terms in its sole discretion.

 

	
(B)  

	
An EC Party may use its capacity for Embedded NAND Products, as defined in and subject to Section ‎6.6(c).

 

	
(C)  

	
An EC Party may use its capacity for Proprietary NAND Flash Memory Products and non-Proprietary NAND Flash Memory Products, in accordance with and subject to Sections ‎6.6(d) and ‎(e).

 

	
(D)  

	
An EC Party may produce less than one hundred percent (100%) of its total Equivalent Lot capacity, provided its allocation of costs in this case will be done in accordance with Section 7.4(a)(i) (“EC Compensation”).

 

	
(ii)  

	
If both Parties are EC Parties because demand for both Parties’ JV Y5 NAND Flash Memory Products are significantly below expectations, the Parties will discuss in good faith whether to permit products which are not JV Y5 NAND Flash Memory Products to be produced in the JV Space; provided that (A) the inability of the Parties to so agree shall not constitute a Deadlock (as defined in the FF Operating Agreement) and (B) the foregoing shall not limit either Party’s rights in the remainder of this Section ‎6.6.

 

	
(c)  

	
Either Party shall have the right to use a portion of its total allocated capacity with respect to the JV Space to run a memory product which is not a JV Y5 NAND Flash Memory Product (solely because the NAND flash memory array area is equal to or less than **** of the total die area (“Embedded NAND Product”)) so long as such Embedded NAND Product ****.  If a Party exercises its option to run Embedded NAND Products, it must ****.  No such products may be run if doing so ****.  The conditions stated in Sections ‎6.6(d) and ‎(e) do not apply to Embedded NAND Products.

 

 

 

 

 

 

 

 

 

 

 

 

 

  

25

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(d)  

	
Each Party may use a portion of its total allocated capacity from the JV Space to cause to be manufactured NAND Flash Memory Products which are proprietary to that Party (“Proprietary NAND Flash Memory Products”) and which need not be shared with the other Party.  Proprietary NAND Flash Memory Products may be produced in the JV Space so long as such products ****.  If a Party exercises such option, it must ****.  No such Proprietary NAND Flash Memory Products may be run if doing so ****.  Each Party shall give the other Party at least ninety (90) days’ advance written notice of its intention to use a portion of its allocated capacity to manufacture Proprietary NAND Flash Memory Products and the Parties shall refer the matter to the Board of Executive Officers (as defined in the FF Operating Agreement) for consultation and planning, with the intention to minimize the impact of such allocation.  Such notifying Party will limit the output volume of such Proprietary NAND Flash Memory Products to **** unless it receives the consent of the other Party to an increase in such output volume above such limit.

 

	
(e)  

	
Each Party (the “Originating Party”) shall inform the other (the “Non-Originating Party”) of the development plans by the Originating Party to develop NAND Flash Memory Products, and the Originating Party and the Non-Originating Party shall each refer such matter to the Coordinating Committee (as defined in the Product Development Agreement).  If the Coordinating Committee unanimously decides that such planned development shall be undertaken jointly, then the cost of such joint development shall be borne by each Party in accordance with the Product Development Agreement or JMDY Agreement, as applicable, and the NAND Flash Memory Products manufactured following such joint development shall be considered non-Proprietary NAND Flash Memory Products for purposes of Section ‎6.6(d); provided, however, the NAND Flash Memory Products set forth in Exhibit A to the Product Development Agreement shall be deemed to be non-Proprietary NAND Flash Memory Products without any action by the Coordinating Committee.  Subject to the foregoing, if the Coordinating Committee does not unanimously decide that such planned development shall be undertaken jointly, then the Originating Party may, at its sole discretion, either (i) transfer to the Non-Originating Party the technology, including the items in Exhibit C to the Product Development Agreement relating to such technology, used to manufacture such NAND Flash Memory Products on a royalty-free basis, whereupon such NAND Flash Memory Products shall be considered non-Proprietary NAND Flash Memory Products, or (ii) treat such NAND Flash Memory Products as Proprietary NAND Flash Memory Products for purposes of Section ‎6.6(d).  In the event the Originating Party elects to treat any NAND Flash Memory Products as Proprietary NAND Flash Memory Products in accordance with the preceding sentence, but thereafter the Coordinating Committee unanimously determines that such Proprietary NAND Flash Memory Products should be developed jointly, the Originating Party shall transfer to the other Party the technology used to manufacture such NAND Flash Memory Products on reasonable terms and conditions to be mutually agreed upon by the Parties, whereupon such Proprietary NAND Flash Memory Products shall be treated as non-Proprietary NAND Flash Memory Products.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

26

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.7  

	
SanDisk Reservation Option.

 

	
(a)  

	
Ramp Flexibility.  When **** initiates one or more ****, such that the total capacity of **** will be **** than **** in Y5 **** may execute one or more **** under the following conditions ****

 

	
(i)  

	

****  The **** Party will commit to utilize or release to **** all or a portion of its Phase I space as set forth below **** capacity as adjusted **** for any space that has been released by****:

 

	
(A)  

	

The **** Party will commit to utilize or release **** all or a portion of its Phase I space at the time of, and for the inclusion in, an annual or amended Business Plan, taking into account the results of ****, available resources, and the time required to effect the necessary ramp-up, among other relevant factors; provided, that neither Party shall have any right to **** of the Parties to agree with respect to ****; provided, further, that the **** shall commit to utilize or release all or a portion of the **** Phase I space **** no later than **** prior to the Phase II building target completion date as set forth in the Phase II Construction Plan Notice (as defined below); provided, that  no further **** shall apply in Phase I.  Toshiba may issue a notice of its intention to pursue Phase II construction (a “Phase II Construction Plan Notice”) **** such notice shall include the target building completion date for Phase II.  If and to the extent that, on the date when the **** delivers **** with respect to the **** required for it **** as adjusted for any **** that has been **** by the **** Party, the **** in Phase I **** such **** space of the **** Party shall be deemed ****.

 

	
(B)  

	

The **** Party will complete the ramp **** space no later than **** after the **** Party fully ****, unadjusted for any **** by the **** Party; provided, however, that the **** shall be **** by that **** between the Parties’ start and completion of ****.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

27

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(ii)  

	

Phase II Ramp.  The **** Party will commit to utilize or release to **** all or a portion of its **** prior to the date on which the **** Party **** which will result in ****, and no further **** shall apply in Phase II.  The **** Party will complete its **** no later than **** after the **** Party fully ****.

 

	
(iii)  

	

In the event that any of the events that trigger **** by the **** Party to commit or release ****, as applicable, pursuant to **** above is unreasonably ****, then the **** Party may **** commit to or release such ****, as applicable,****; provided, that no such right of the **** Party ****arise in the case where **** by reason of the **** Party’s **** space subject the  ****.

 

	
(iv)  

	
****.  Prior to implementing any ****, the **** Party must first propose such **** for implementation pursuant to ****.  Solely in the event that **** refuses to consent to such **** and/or the **** does not agree with the **** Party on the **** may the **** Party proceed *****.  Unless otherwise agreed by the Parties, only the **** Party shall have the right **** by placing **** space in the applicable phase that the **** Party has committed to utilize ****.  At the end of either the Phase I **** or the Phase II ****, as applicable, any **** space **** subject to the general rules ****.

 

	
(v)  

	
Operational Efficiencies.  Within the framework provided by the FF Operative Documents, the Parties shall cooperate to ensure that there is no significant adverse effect on **** as a result of the **** Party’s exercise of ****; provided, that the **** corresponding to the applicable **** shall not in and of itself constitute *****.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

28

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(b)  

	

Reservation ****.  During the term of each of the Phase I **** and Phase II ****, the **** Party shall make **** for such **** quarter or portion thereof.  The Parties shall cause **** the other provisions of this Agreement, other than the ****, the **** per unit of the same product and same design rule shall be the same for both Parties. The obligation for the Phase I ****shall be required only until the earlier to occur of **** production capacity is included in the **** and producing wafers, provided that the next **** will be prioritized into this space **** which the **** Party has released ****, provided that the **** will only terminate as to that **** that is released to ****.  The obligation for the Phase II **** shall be required only until the Phase II **** has expired. ****.

 

	
(c)  

	

Procedure for Catch-Up Expansions.  When a **** Party expands into its **** and the **** Party is not simultaneously *****, upon approval by the Board of Executive Officers of Flash Forward, Flash Forward will make **** on behalf of the **** Party equal to the proposed expansion by the **** Party and, upon the consent of the **** Party, the **** Party will **** and Flash Forward will **** amount of **** Party’s **** capacity ****, provided that (i) both Parties mutually agree on the Purchased Capacity **** and (ii) such Purchased Capacity is purchased by **** from the **** Party at the **** and any other costs for installation, hook up and facilitization.  **** amount and **** of the Purchased Capacity will transfer from **** Party **** over a period and at a ****.

 

	
(d)  

	
Consideration of Release.  Upon **** request  prior to the date that **** prior to the expected completion of Phase II clean-room space construction and facilitization, **** shall **** with respect to its release to **** of some or all of **** then-unutilized Phase I **** for **** expansion in Phase I, where (i) other than the Phase I ****, the **** could only next expand into Phase II **** has reasonable assurance that it can timely continue its ramp in Phase II, provided, that any such release shall be **** after considering the foregoing factors and that in no event shall **** in Phase II ***** of total Phase II ****.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

29

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.8  

	
Engineering Wafers and Development Expense.  Each Party will have full access to all operational and engineering data and reports related to engineering wafers manufactured in the JV Space.

 

	
(a)  

	
Engineering wafers and development expenses are defined in five (5) categories: Common R&D Development Expenses, Y5 Direct R&D Development Products, JMDY Development Expenses, Evaluation Wafers and Qualification Wafers (each as defined below); provided, however, that if there are any development expenses not falling in these categories and such expenses are not to be charged under the JMDY Agreement or the Product Development Agreement, such expenses shall be appropriately paid or borne between the Parties.

 

	
(i)  

	
“Common R&D Development Expenses” means those expenses approved in accordance with **** that are associated with activities mainly done **** for the purpose of development of fundamental semiconductor technology. For the avoidance of doubt, in no event shall **** allocated any costs attributed to **** unless the project that generated such **** was on the ****, such expenses are explicitly approved ****, or as otherwise mutually agreed by the Parties (in such case **** of a project that generated such costs).

 

	
(ii)  

	
**** are those products developed **** for the purpose of joint product development.  R&D costs for **** shall be allocated to the Parties in accordance with ****.  If similar products have also been manufactured **** (not including ****), the R&D costs for such products shall be shared among **** in accordance with applicable ****.

 

	
(iii)  

	
**** Expenses” are those development expenses incurred in accordance with **** for the purpose of product development.  R&D costs for **** Expenses shall be allocated to the Parties in accordance with ****.

 

	
(iv)  

	
“Evaluation Wafers” are those wafers manufactured ****.  for the purpose of ****.  Both Parties are entitled to receive Evaluation Wafers ****; however, the Party responsible for completion of **** has the right to receive **** necessary to perform the ****.  The cost of Evaluation Wafers is **** intended to be shared **** by the Parties and is therefore included **** Product manufacturing cost and is subsequently part of the ****.

 

	
(v)  

	
“Qualification Wafers” are those wafers manufactured in the JV Space for the purpose of ****.  The Parties will discuss and agree on the appropriate quantity of Qualification Wafers required for each JV Y5 NAND Flash Memory Product.  Each Party shall have the right to receive such quantity of Qualification Wafers ****.  For such Qualification Wafers, **** will charge the receiving Party pursuant to **** and the ****, as applicable, a price per wafer equal **** set forth in the ****.  The Parties intend that the **** for Qualification Wafers shall not **** the **** of production lots in the Y5 Facility.  It is understood that by the Parties that each Party’s Qualification Wafers shall come from **** capacity of lots in the JV Space.

 

	
(b)  

	

It is the intent of the Parties that Qualification Wafers manufactured in the JV Space will be allocated **** between the Parties.  **** will charge the receiving Party, pursuant to the **** and the FF ****, as applicable, a price per wafer equal to the **** set forth in the ****.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

30

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.9  

	
Management Representatives.  Each Party shall designate a person (each a “Management Representative”) and the two so designated shall have the authority to (a) advise Flash Forward with respect to policy and operating matters common to Toshiba and SanDisk as well as on such other matters as Flash Forward may refer to the Management Representatives from time to time, (b) hear and seek to resolve any disputes regarding operational matters or alleged breaches of any Master Operative Documents (including dispute resolution), and (c) take the actions specified to be taken by the Management Representatives in this Agreement or any Master Operative Document.

 

	
6.10  

	

FF Management Structure and Headcount.

 

	
(a)  

	

Flash Forward Headcount Plan and Working Group.

 

	
(i)  

	

The Parties will meet and mutually agree on an overall headcount plan for ****, which will incorporate **** (the “FF Headcount Plan”).

 

	
(ii)  

	

Each Party is committed to provide (itself or through its Affiliates) **** of the engineers (other than line engineers), including, but not limited to, device, integration, process and test, included in the FF Headcount Plan (“Engineers”).  In addition, Toshiba will use its reasonable best efforts to provide **** and the Parties will mutually agree on the number of ****. SanDisk will provide an execution status for the FF Headcount Plan and, in case of any shortage **** from the number agreed in the FF Headcount Plan, an improvement plan to fulfill such **** In no case will **** to SanDisk, Toshiba (including if it is unable to provide all Engineers not provided by SanDisk or to provide all necessary non-engineers), or Affiliates of SanDisk or Toshiba.

 

	
(iii)  

	

The Parties shall establish a working group with equal representation from each Party for the purpose of discussing integration of SanDisk-provided Engineers into the Toshiba Y5 Facility organization with respect to the JV Space, organization structure, updates on SanDisk’s and Toshiba’s respective hiring of Engineers, and related matters (the “Headcount Working Group”).  SanDisk and Toshiba should prepare updates to the FF Headcount Plan through the Headcount Working Group.  The Parties acknowledge their general intent to deploy **** engineering organization at all levels, subject to taking into account the capabilities of the individuals and the needs of the particular position.  The Headcount Working Group will meet as and for so long as its members consider necessary.  Deployment and positions of Engineers and any other SanDisk personnel at the Y5 Facility and issues and concerns related thereto shall be handled through the Y5 Operating Committee (as defined in the FF Operating Agreement), and the agenda for meetings of the Y5 Operating Committee shall include review and assessment of such issues if requested by either Party.

 

	
(iv)  

	
Recognizing that Japanese language skills will be necessary for Engineers working at the Y5 Facility, SanDisk shall seek to minimize the number of its Engineers seconded to Flash Forward who are not highly proficient in Japanese and for those who are not Japanese speakers SanDisk shall ensure they receive some language training in Japanese at SanDisk’s cost before being sent to work at the Y5 Facility.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

31

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(b)  

	
With respect to the SanDisk-seconded Engineers (including any seconded from SanDisk Affiliates) and any other SanDisk employees seconded to the Y5 Facility pursuant to the FF Headcount Plan or further agreement with Toshiba (collectively, the “SanDisk Team”), the Parties agree as follows:

 

	
(i)  

	
Members of the SanDisk Team who are Engineers shall be integrated by Toshiba at the Yokkaichi Facility and shall work together with Toshiba Engineers to seek to ensure the optimal operation of the Y5 Facility from a cost and technology perspective.  To the extent any SanDisk Team member who is an Engineer reasonably follows the properly issued directions of such person’s manager at the Y5 Facility and contributes to the success of the Y5 Facility’s operations that support Flash Forward to the degree that would be reasonably expected of a Toshiba Engineer in his or her position, **** member shall be charged to ****.  With respect to such costs, **** shall reimburse **** for salaries, bonuses and benefits (other than stock options or other similar equity incentive compensation but including expatriation benefits) in an amount ****.

 

	
(ii)  

	
Members of the SanDisk Team who are not Engineers (“Non-Engineer SanDisk Team Members”) shall work with their respective counterparts at the Yokkaichi Facility to facilitate SanDisk’s access to the operations of the Y5 Facility as follows.  Non-Engineer SanDisk Team Members who support the operations of Flash Forward or the manufacturing of NAND Flash Memory Products shall have full access to the Y5 Facility other than the Toshiba Non-JV Space, and information related to the operations of the Y5 Facility other than the Toshiba Non-JV Space, and reasonable access to other information relevant to Flash Forward or the operations of the Y5 Facility.  ****.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

32

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(iii)  

	

Each member of the SanDisk Team may, at all times and in such SanDisk Team member’s sole discretion, raise issues with the Y5 Operating Committee (as provided in the FF Operating Agreement) and may communicate with SanDisk as otherwise contemplated by the Master Operative Documents.  If the Y5 Operating Committee is unable to agree on the resolution of an issue raised by a member of the SanDisk Team, it shall be referred to the Board of Executive Officers.

 

	
(iv)  

	

Office space used in connection with the JV Space shall be made available for the **** on a non-discriminatory basis as compared to ****.  The members of the **** shall be provided with secure and confidential private data and voice linkages ****, consistent with the practice of the Parties in connection with Flash Partners and Flash Alliance).

 

	
(v)  

	
****

 

	
(vi)  

	

Either or both of **** shall be entitled to condition the **** onto its premises on such **** member’s execution of a nondisclosure and visitor requirements document in the forms to be mutually agreed by the Parties.

 

	
(vii)  

	

SanDisk shall ensure that SanDisk Y5 personnel (including Y5 Engineers) (A) comply with the written safety and security regulations, the other written policies and direct instructions of Toshiba related to site security and information security, as well as any otherwise applicable safety and production regulations (copies of the written Toshiba regulations and policies will be provided to SanDisk upon the request of SanDisk or upon the amendment of such regulations or policies) while such SanDisk Y5 personnel are in Toshiba’s facilities and (B) in their operation of the **** exercise due care and act with the degree of prudence that would be reasonably expected of a Toshiba Engineer in an analogous position.  Toshiba will provide safety and security training in Japanese to senior managers of SanDisk at Y5 to ensure that SanDisk Y5 personnel have the right to access ****.  The training of the senior managers shall be in Yokkaichi.  The senior managers of SanDisk Y5 personnel will be responsible for providing or delegating, to other SanDisk personnel, in English or Japanese, the safety and security training to other SanDisk Y5 personnel.

 

	
(viii)  

	
All members of the SanDisk Team will remain employees of SanDisk.  Each Party will indemnify the other Party and Flash Forward from any claim by any of such Party’s employees, consultants or agents (such Party being the “Employer”) (A) based on other than willful misconduct of such Employer, its employees, consultants or agents; or (B) that he or she has rights, or is owed obligations, as an employee of the Party that is not the Employer.

 

	
(c)  

	
**** members (including employees **** or any of its Affiliates) who are not located at the **** who are not located at the ****, are requested by **** to provide engineering services, their time shall be charged to **** at mutually agreed rates using the same principle as provided in ****, plus travel expenses.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

33

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.11  

	
Non-solicitation of Employees.  So long as the business of Flash Forward continues, each Party (and each of its respective Affiliates) shall not, without the prior written consent of the other Party, directly recruit or solicit (a) any employee or director of Flash Forward or (b) any employee of the other Party involved in the Flash Forward business to leave his or her employment with Flash Forward or such other Party prior to the period ending twenty-four (24) months after the FF Termination Date; provided, however, that placement of employment advertisements or other general solicitation for employees not specifically targeted to the employees or directors of Flash Forward or such other Party shall not constitute direct recruitment.  In the event of the dissolution and liquidation of Flash Forward, either Party (or any Affiliate of either Party) may solicit any former employee of such dissolved and liquidated company, but neither Party (nor any of its Affiliates) shall be required to employ any such Person.  If all of the FF Interests held by one Party are purchased by the other Party or its designee, if requested by the acquiring Party, the Parties shall reach agreement on a reasonable transition plan (without profit to the seller) in connection with the services provided to Flash Forward, as applicable, by employees and contractors of the selling Party.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

34

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.12  

	
Financing.

 

	
(a)  

	

****.  Neither Party will be obligated to make any assurance or guarantee ****; however, **** will use its reasonable best efforts to assist ****, to the extent reasonably requested by ****, in securing financing on favorable terms.  If either Party is unable to obtain financing, the Parties will meet to discuss in good faith a resolution to such Party’s inability to obtain financing.  For the avoidance of doubt, ****, and all loans to Flash Forward by the Parties will be shared 50/50.

 

	
(b)  

	
The Parties currently intend, but are not obligated, to structure the financing for equipment purchases by Flash Forward necessary to effect the ramp-up as follows:

 

	
(i)  

	
Flash Forward will enter into equipment lease or loan agreements and pledge the financed equipment as collateral;

 

	
(ii)  

	
Flash Forward will secure external financing for approximately **** of the initial purchase price of its tools and each Party will provide equity capital contributions and loans (on a subordinated basis) for the remaining cash requirements of Flash Forward necessary to effect the ramp-up;

 

	
(iii)  

	
each Party will severally and not jointly and through separate arrangements guarantee as close as possible to fifty percent (50%) of Flash Forward’s obligations under such lease or loan agreements (any financing separately guaranteed or provided by Toshiba for Flash Forward or otherwise for investment in the Y5 Facility, “Toshiba Financing”, any such financing separately guaranteed or provided by SanDisk for Flash Forward or otherwise for investment in the Y5 Facility “SanDisk Financing” and the Toshiba Financing and SanDisk Financing, each a “Financing”); and

 

	
(iv)  

	
the Parties will attempt to obtain the foregoing financing from the same financial institution, but under separate agreements that expressly disclaim any joint and several liability of the Parties.

 

	
(c)  

	
With respect to any Toshiba Financing or SanDisk Financing, the following shall apply:

 

	
(i)  

	

The terms and conditions of any Toshiba Financing shall be subject to the prior written approval of SanDisk and the terms of any SanDisk Financing shall be subject to the prior written approval of Toshiba, in each case after review of final drafts of all documents evidencing such Financings.  The foregoing approval of either Party shall (A) not be unreasonably withheld, delayed or conditioned by such Party, and (B) not subject such approving Party to any liability or obligations with respect to such financing.

 

	
(ii)  

	
Unless otherwise expressly agreed by both Parties in writing in each case, all Toshiba Financing and all SanDisk Financing shall create only several obligations of the Parties and no joint and several obligations or liability.  Toshiba (with respect to Toshiba Financing) and SanDisk (with respect to SanDisk Financing) hereby indemnifies and holds harmless the other Party and its Indemnified Parties from any claims by any financial institution or other Person that the other Party has any liabilities or obligations with respect to, respectively, any Toshiba Financing or SanDisk Financing (unless joint liability has been agreed pursuant to the first sentence of this Section ‎6.12(c)(ii)).

 

	
(iii)  

	
Flash Forward will use commercially reasonable efforts to comply with the requirements of any financing sources.  Flash Forward will make available to each Party one-half of its assets (with as near as practicable cost, collateral value and type) to secure such Party’s Financing (whether external or loans from a Party or its Affiliates).

 

	
(d)  

	
If the lender under the Financing for either Party (as the “Defaulting Party”) takes significant actions to enforce its right in the collateral, then the other Party (as the “Non-Defaulting Party”) shall have the right, but not the obligation, to cure the default giving rise to the lender’s enforcement action.  If the Non-Defaulting Party exercises such cure right, then the Non-Defaulting Party’s rights in any subject collateral shall be superior to the Defaulting Party’s and the Non-Defaulting Party may exercise one of the following options:

 

	
(i)  

	
the Non-Defaulting Party (A) shall have a claim against the Defaulting Party for reimbursement of any payments made by the Non-Defaulting Party on the Defaulting Party’s behalf (which will be subordinate to the lender’s claims and bear interest at a rate 500 basis points in excess of the rate being charged by the lender to the Defaulting Party) and (B) shall have the right, until and unless the Defaulting Party pays in full the obligation to the Non-Defaulting Party under foregoing clause (A), to take over the increment of production of the Y5 Facility represented by the collateral with respect to which the lender took significant actions to enforce its rights; or

 

	
(ii)  

	
the Non-Defaulting Party shall have the right to terminate the Operating Agreement pursuant to Section 11.6 thereof (foreclosure default).

 

 

 

  

35

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.13  

	
Other Activities.  Except as expressed in this Section ‎6 and in the JMDY Agreement and the JVRA, neither Party nor any of their respective Affiliates shall: (a) fabricate NAND Flash Memory Integrated Circuits or R/W at any location other than the Yokkaichi Facility or any other fabrication facility agreed upon by the Parties in writing; (b) have any third party fabricate NAND Flash Memory Integrated Circuits or R/W; or (c) have any right to fabricate NAND Flash Memory Integrated Circuits or R/W beyond the capacity as limited pursuant to this Section ‎6.  For the avoidance of doubt, nothing contained in the foregoing shall restrict the Parties from engaging in any other activities, including, without limitation, (i) designing any NAND Flash Memory Product or R/W; (ii) selling any NAND Flash Memory Product or R/W to any customer; (iii) entering into any equipment purchase or material supply agreements; or (iv) entering into any patent licensing arrangement.  For purposes of this Section ‎6.13, “NAND Flash Memory Integrated Circuits” means ICs included in the definition of NAND Flash Memory Products pursuant to Section ‎3.2.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

36

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
6.14  

	
Protection of Intellectual Property.  Both Parties recognize that it is important for the success of the Y5 NAND Flash Memory Products business to promote the adoption of such Y5 NAND Flash Memory Products with a wide variety of customers and applications, whether for card use or non-card use, and with such recognition, each Party shall use reasonable efforts to protect and enhance the value of Y5 NAND Flash Memory Products.

 

	
7.  

	
Start-Up and Production Costs

 

	
7.1  

	
Start-Up Services for Y5.  The Parties acknowledge that either or both of the Parties and Flash Forward have incurred or will incur costs in connection with developing Flash Forward and the Y5 Facility and preparing the Y5 Facility for production, including personnel costs, materials costs and other operating expenses, for which each Party has the obligation ultimately to bear fifty percent (50%) of the responsibility (“Start-Up Costs”).  The Parties shall discuss in good faith and agree upon the Start-Up Costs borne by either Party and the means and timing of each Party, as applicable, being reimbursed or credited for having incurred more than fifty percent (50%) of the Start-Up Costs or of making payments due to having incurred less than fifty percent (50%) of the Start-Up Costs; provided, that the determination and allocation of Start-Up Costs and the means and timing of reimbursement shall be in a manner substantially similar to that utilized in connection with the start-up costs of the Y4 Facility.

 

	
7.2  

	
Equal Participation and Purchase Price Per Unit Generally.  The Parties intend to meet demand for increased capacity by equally investing in, and jointly building, and sharing, on equal or substantially equal terms, equal amounts of new capacity for Y5 NAND Flash Memory Products, except as otherwise provided herein.  So long as each Party’s Threshold NAND Capacity Ratio (as defined below) is greater than or equal to ****, each Party will pay **** of the same product and same design rule.

 

	
7.3  

	
Adjustment Payment.  If either Party’s Threshold NAND Capacity Ratio falls below ****.

 

	
7.4  

	
Cost Terms.

 

	
(a)  

	
Fixed and Variable Manufacturing Costs.  All costs of manufacturing shall be either Fixed Manufacturing Costs (as defined below) or Variable Manufacturing Costs (as defined below).

 

	
(i)  

	
****

 

	
(ii)  

	
****

 

	
(b)  

	
Threshold NAND Capacity Ratio.  The term “Threshold NAND Capacity Ratio” shall mean the applicable Party’s NAND lot per month capacity **** in the Y5 Facility, as  calculated on an Equivalent Lot (as defined below) basis divided by ****, provided, however, that ****.

 

	
(c)  

	
Y5 Capacity Ratio.  The term “Y5 Capacity Ratio” for either SanDisk or Toshiba shall mean ****.

 

	
(d)  

	
Y5 NAND Capacity Ratio.  The term “Y5 NAND Capacity Ratio” for either SanDisk or Toshiba shall mean ****.

 

	
(e)  

	
Equivalent Lot.  ****

 

 

 

 

 

 

 

 

 

 

 

  

37

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
7.5  

	
Negative Impacts. In the event of any negative impact on the cost or output efficiency of JV Y5 NAND Flash Memory Products or Flash Forward R/W due to Non-NAND Product production in one Party’s Non-JV Space, ****.

 

	
7.6  

	
Cost and Methodology.  In all events, Y5 manufacturing cost and wafer cost methodology will be in accordance with Toshiba’s past practice and accounting system.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

38

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
8.  

	
Other Agreements

 

To supplement their agreement as expressed in certain of the Master Operative Documents, the Parties agree as set forth in this Section ‎8.  To the extent of any conflict between this Section ‎8 and any other Master Operative Document referenced in this Section ‎8, the other Master Operative Document shall prevail.

 

	
8.1  

	
Flash Forward Management.

 

	
(a)  

	
As contemplated by the FF Operating Agreement, the Y5 Operating Committee’s purpose is to give both Parties the ability to influence the day to day operating decisions of Flash Forward and the Y5 Facility.  The Y5 Operating Committee is intended to be a collaborative body with real-time communications, respectful consultation and dispute resolution with the goal of making the Y5 Facility the most competitive (cost and technology) memory fabrication facility in the world.

 

	
(b)  

	
If the Y5 Operating Committee is unable to decide an issue (by agreement of its two members) such issue shall be referred to the Board of Executive Officers.  Special meetings of the Board of Executive Officers may be noticed for issues requiring urgent resolution.  The Parties contemplate that while a special meeting of the Board of Executive Officers is being noticed, their respective management teams will discuss any issue that the Y5 Operating Committee could not resolve.

 

	
(c)  

	
If the Board of Executive Officers is unable to decide an issue (by unanimous agreement), such issue shall be referred to the Management Representatives for resolution, which shall be vested with final decision making authority.  This Agreement separately provides for procedures if the Management Representatives is unable to reach agreement on such issue.

 

	
8.2  

	
Y5 Facility.

 

	
(a)  

	
Site Preparation, Building Construction and Facilitization.

 

	
(i)  

	
Toshiba will design, construct and facilitize the Y5 Facility.  SanDisk shall work with Toshiba to help minimize administrative approval delays.  Toshiba shall exercise all commercially reasonable efforts to ensure that Y5 Facility is (A) insurable, (B) designed and constructed to mutually acceptable high levels of risk standards, and (C) is completed ****; provided, that Toshiba shall have no liability to SanDisk, any Affiliate of SanDisk or Flash Forward if completion is not achieved by such time.  The depreciation for the Y5 Facility will be charged in accordance with Section 8.3(d).

 

	
(ii)  

	
With prior coordination with Toshiba and the construction contractors for the Y5 Facility, SanDisk will have reasonable access to the construction site for the Y5 Facility and to all information pertaining to the construction of the Y5 Facility, on condition that SanDisk will be solely responsible for all damage caused by such access.

 

	
(iii)  

	
Building Depreciation Prepayment and Shortened Depreciation Schedule for ****:

 

	
(A)  

	
Each of the Parties agrees to ****, in a manner to be mutually agreed.

 

	
(B)  

	
If ****, the Parties agree to ****.

 

	
(iv)  

	
Also for purposes of this Section ‎8.2, Toshiba’s cost of site/land preparation for the Y5 Facility ****.

 

	
(b)  

	
Land.  With respect to the land purchased by Toshiba related to the establishment of the Y5 Facility, SanDisk will pay to Toshiba on a quarterly basis during the term of this Agreement compensation for **** for the actual aggregate purchase price of such land ****.  For purposes of this Section 8.2, ****.  Annual depreciation of the Y5 Facility shall be calculated in accordance with Section 8.3(d).  To the extent appropriate, these charges will be invoiced under the FF Foundry Agreement, as provided at Section 8.3 below.  For any portion of the Y5 Capacity Ratio that is not subject to the FF Foundry Agreement, such charges shall be invoiced directly.

 

	
(c)  

	
Incentives.  Government incentives (financial or otherwise) attributable to the assets or operations of Flash Forward and the Y5 Facility will be shared by the Parties in accordance with the Y5 Capacity Ratio at the time such incentives are realized.  The Parties will discuss such incentives and the sharing thereof based on the type of incentives.

 

 

  

39

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
8.3  

	
FF Foundry Agreement.  Flash Forward and Toshiba shall enter into the FF Foundry Agreement at the Closing.  In the event SanDisk owns or leases manufacturing equipment located in the Y5 Facility as a result of ****, SanDisk and Toshiba will enter into a foundry agreement with terms substantially similar to the FF Foundry Agreement.  The FF Foundry Agreement provides for ordering procedures, prices, delivery, cost reporting and other specific terms and conditions for the manufacture by Toshiba and supply to Flash Forward of Y5 NAND Flash Memory Products, which shall be consistent with the following basic terms:

 

	
(a)  

	
Facilities, Equipment and Raw Materials.  The manufacturing facilities will be located at the Y5 Facility and die sort will be located **** or such other place as the Parties may agree upon.  Flash Forward and Toshiba will enter into an exclusive lease agreement with respect to the Y5 Facility and Flash Forward’s manufacturing equipment located in the Y5 Facility to be used in the manufacture of Y5 NAND Flash Memory Products by Toshiba.  Toshiba shall be responsible for obtaining the raw materials and services to be used in the manufacture of Y5 NAND Flash Memory Products.  Raw materials shall be procured in accordance with that certain RMPA.

 

	
(b)  

	
Production.  Toshiba will manufacture Y5 NAND Flash Memory Products at the Y5 Facility for Flash Forward ordered by Toshiba and SanDisk under the terms and conditions of the FF Purchase and Supply Agreements.  Flash Forward and Toshiba (from the Yokkaichi Facility) will use their best efforts to achieve the Business Plan manufacturing capacity.  Wafers produced in the JV Space will be sorted between the Parties such that aggregate yield losses will be shared on an equal basis.

 

	
(c)  

	
Operating Relationship.  The Parties shall provide personnel necessary for the manufacturing of the Y5 NAND Flash Memory Products as described in Section ‎6.10.

 

	
(d)  

	
Consideration to be Paid to Toshiba.  Toshiba will be compensated by Flash Forward as provided in the FF Foundry Agreement ****.

 

	
(e)  

	
No Duplication of Costs or Expenses.  It is the intent of the Parties that any payments made by SanDisk under or pursuant to any Master Operative Documents, FA Operative Documents, FP Operative Documents or Joint Operative Documents shall not be duplicative and SanDisk shall in no event be required to pay or contribute more than once for any service, product or development work provided under such agreements, if such service, product or development work is provided under more than one agreement.  In addition, if SanDisk makes a direct payment for any service, product or development work provided under any such agreement, the cost incurred by Toshiba (from the Yokkaichi Facility), Flash Alliance, Flash Partners or Flash Forward, as the case may be, in connection with the provision of such service, product or development work shall not be included in the applicable wafer price charged to SanDisk.

 

	
(f)  

	
Exclusivity.  The Yokkaichi Facility shall be Flash Forward’s exclusive manufacturing source for output of Y5 NAND Flash Memory Products.  Flash Forward may seek external manufacturing sources for output in excess of the Yokkaichi Facility’s capacity upon agreement by the Management Representatives.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

40

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
8.4  

	
FF Purchase and Supply Agreements.  Flash Forward and each of the Parties or their respective Affiliates will enter into substantially identical FF Purchase and Supply Agreements providing for specific terms and conditions for the purchase by the Parties of Y5 NAND Flash Memory Products from Flash Forward, which shall be consistent with the following basic terms:

 

	
(a)  

	
Manufacturing.  Flash Forward shall manufacture or cause to be manufactured Y5 NAND Flash Memory Products and, as applicable, Y5 R/W as contemplated by Section ‎8.3.

 

	
(b)  

	
Purchase Commitment.  Except as contemplated in Section ‎6.3, each Party shall (itself or through Affiliates) purchase one half (based on a measure of Equivalent Lots out per week) of the total L/M of JV Y5 NAND Flash Memory Products.  The foregoing purchase commitment of each Party shall not be subject to reduction except as provided in Section ‎6.6(b).

 

	
(c)  

	
Sales Price for JV Y5 NAND Flash Memory Products Purchased by the Parties.  The sales price charged by Flash Forward to the Parties for wafers manufactured at Y5 shall be the sum of:

 

	
(i)  

	
****

 

	
(ii)  

	
****

 

	
(d)  

	
Other Cost Items.  Other items related to the manufacture of Y5 NAND Flash Memory Products will be charged on a monthly basis from Flash Forward to the Parties and will include the following:

 

	
(i)  

	
****

 

	
(ii)  

	
****

 

	
(iii)  

	
****

 

	
(iv)  

	
****

 

	
(v)  

	
****; and

 

	
(vi)  

	
****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

41

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
8.5  

	
Documentation of JV R/W Production.  In the event that R/W comes to be produced in the Y5 Facility, the Parties shall negotiate in good faith with respect to adopting modified documentation concerning such production, including, in the event of production in the JV R/W Space, (a) a foundry agreement indicating ordering procedures, prices, delivery, cost reporting and other specific terms and conditions for the manufacture by Toshiba and supply to Flash Forward of R/W, and (b) agreements governing the Parties’ respective purchases of R/W from Flash Forward, taking into account the differences between the production process of R/W and that of NAND Flash Memory Products, among other factors.

 

	
8.6  

	
Other Matters.

 

	
(a)  

	
Forecasts/Production Planning.  Each Party will submit forecasts, **** as further provided in the FF Purchase and Supply Agreements.  The Parties shall use the system at the Yokkaichi Facility for such direct forecast submission, provided that the cost necessary for **** shall be borne by SanDisk.  Each Party shall be provided the same access to Y5 data relating to Flash Forward data and such Party’s non-JV data, including data used for output forecasts, as the Parties receive with respect to Y4 data relating to Flash Alliance.  Flash Forward production planning will hold a monthly production planning meeting with representatives of each Party, as further provided in the FF Purchase and Supply Agreements.  At such meetings, the Parties will agree on a production plan for the **** which plan will be final (and the related forecast will be deemed to be covered by a binding purchase order).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

42

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(b)  

	
Production Control.  Flash Forward will provide each Party **** on a non-discriminatory basis **** with respect to **** provided that the cost necessary for making such system available to SanDisk will be borne by SanDisk.  Each Party shall be provided the same access to Y5 data relating to Flash Forward data and such Party’s non-JV data, including data used for tool/process analysis, as the Parties receive with respect to Y4 data relating to Flash Alliance.  Each Party (through the Y5 Management Representatives) will have the right to discuss the production schedule, planned wafer starts and ****.

 

	
(c)  

	
Operating Reports.  SanDisk will have full access to any management or operation reports related to Flash Forward or Flash Forward’s business through the Y5 Operating Committee (as defined in the FF Operating Agreement).  Management and operating reports related to Flash Forward or Flash Forward’s business as mutually agreed from time to time will be simultaneously made available in Japanese and English to each Party.  Upon request, Toshiba employees will explain such reports to SanDisk’s employees and respond to questions from SanDisk’s employees, but Toshiba will not be responsible for SanDisk’s failure to understand such reports.

 

	
(d)  

	
Insurance.  Toshiba shall maintain or arrange property insurance covering assets owned or leased by Flash Forward, and business interruption insurance in respect of the business of Flash Forward, the scope and amounts of which shall be consistent with Toshiba’s practices at the Yokkaichi Facility and as required by any lender.  This coverage shall provide basically full replacement value of all Flash Forward owned and leased equipment, subject to valuation as part of Toshiba’s annual insurance policy renewal, and shall name Flash Forward as a beneficiary in respect of assets owned or leased by it and Flash Forward’s employee expenses covered by business interruption insurance.  On an annual basis, or when requested by either Party, the Y5 Operating Committee shall discuss and review the current insurance coverage and/or the need for any additional property or business interruption insurance in respect of Flash Forward’s assets or business.  Further, SanDisk reserves the right to seek to arrange additional property or business interruption insurance for its own account in respect of Flash Forward’s assets or business, and shall be responsible for the maintenance of insurance with respect to equipment used in the SanDisk R/W Space and any SanDisk Unilateral Expansion Space, and Toshiba shall cooperate in good faith to provide such information and access as is reasonably necessary for SanDisk to arrange such insurance.  If Toshiba makes a recovery from a third party (other than an insurer per the above) in respect of both assets of Flash Forward and other assets, then Toshiba shall allocate to Flash Forward a share of the net amount of such recovery in proportion to the losses suffered by Flash Forward and total losses suffered by Flash Forward and Toshiba.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

43

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
9.  

	
Termination

 

	
9.1  

	
Termination.

 

	
(a)  

	
Termination of any Master Operative Document by either Party shall be done only in good faith.

 

	
(b)  

	
This Agreement shall be terminated automatically upon the earlier of the Transfer of all of a Party’s FF Interests to the other Party (or its Affiliate) or upon completion of the dissolution and liquidation of Flash Forward pursuant to Section 11 (Dissolution) of the FF Operating Agreement (the date of such Transfer or dissolution and liquidation, the “FF Termination Date”).

 

	
(c)  

	
Upon termination of this Agreement resulting from an event of dissolution of Flash Forward due to the expiration of Flash Forward pursuant to Section 11.1(a) (Expiration) of the FF Operating Agreement:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

44

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(i)  

	
the Parties shall further amend the Cross License Agreement, as then in effect, to specify that each Party’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FF Termination Date are licensed on a royalty-free basis for the duration of such patents.  The scope of the licenses as amended pursuant to this Section ‎9.1(c)(i) shall not be greater than the scope of those granted under the Cross License Agreement, as in effect as of the FF Termination Date.

 

	
(ii)  

	
Toshiba shall grant to SanDisk, effective upon the FF Termination Date, a non-exclusive, non-transferable (except to Affiliates of SanDisk), non-sub-licensable, fully paid up, royalty-free license to make, have made, use, sell and have sold NAND Flash Memory Products anywhere in the world utilizing the NAND technology transferred to and/or utilized at the Yokkaichi Facility, and SanDisk shall have full access to all such know-how at the Yokkaichi Facility which has been transferred to the Yokkaichi Facility prior to the FF Termination Date.

 

	
(d)  

	
Upon a termination of this Agreement resulting from (i) an event of dissolution of Flash Forward or (ii) one Party’s acquisition of all of the other Party’s FF Interests (the acquirer thereof referred to hereinafter as the “Acquiring Party” and the seller thereof referred to hereinafter as the “Selling Party”) pursuant to Section 11.5 (Dissolution Upon Notice) of the FF Operating Agreement:

 

	
(i)  

	
Toshiba or the Acquiring Party, as the case may be, will, upon the request, prior to the FF Termination Date, of (A) SanDisk (such request to be made at the time of its notice pursuant to Section 11.5 of the FF Operating Agreement) in the case of the dissolution of Flash Forward or (B) the Selling Party (each, a “Requesting Party”) as the case may be, continue to manufacture NAND Flash Memory Products for the Requesting Party (not to exceed the Requesting Party’s capacity allocation available from Flash Forward under this Agreement as of the FF Termination Date (the “Termination Capacity”)) for a period of **** following the Termination Date in the following ramp-down manner:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

45

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(A)  

	
****

 

	
(B)  

	
****

 

	
(C)  

	
****

 

	
(ii)  

	
Toshiba and SanDisk and their respective Affiliates shall have a perpetual, fully paid-up, royalty-free right to use technology previously transferred to one another during the term of this Agreement.

 

	
(iii)  

	
The Parties shall further amend the Cross License Agreement to specify that each Party’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FF Termination Date are licensed on a royalty free basis for the duration of such patents.  The scope of the licenses as amended pursuant to this Section ‎9.1(d)(iii) shall not be greater than the scope of those granted under the Cross License Agreement, as in effect as of FF Termination Date.

 

	
(iv)  

	
Upon termination of this Agreement resulting from an event of dissolution of Flash Forward caused by Toshiba’s election to withdraw from Flash Forward pursuant to the FF Operating Agreement, Toshiba hereby grants to SanDisk, effective upon the FF Termination Date, a non-exclusive, non-transferable (except to Affiliates of SanDisk), non-sub-licensable, fully paid-up, royalty-free license to make, have made, use, sell and have sold NAND Flash Memory Products anywhere in the world utilizing the NAND technology transferred to and/or utilized at the Yokkaichi Facility, and SanDisk shall have full access to all such know-how at the Yokkaichi Facility which has been transferred to the Yokkaichi Facility prior to the FF Termination Date.

 

	
(e)  

	
Intentionally omitted.

 

	
(f)  

	
Upon termination of this Agreement resulting from an event of dissolution of Flash Forward or one Party’s acquisition of the other Party’s FF Interests following a Deadlock (as defined in the FF Operating Agreement) pursuant to Section 10.3 (Dispute Resolution; Deadlock) of the FF Operating Agreement:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

46

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(i)  

	
In the case of one Party’s acquisition of the other Party’s FF Interests pursuant to Section 10.3(e) of the FF Operating Agreement, the Acquiring Party shall continue to manufacture products for the other Party (not to exceed the other Party’s Termination Capacity) for a period of **** following the FF Termination Date in accordance with the following ramp down manner:

 

	
(A)  

	
****

 

	
(B)  

	
****

 

	
(C)  

	
****

 

	
(ii)  

	
The Parties and their respective Affiliates shall have a perpetual, fully paid-up, royalty-free right to use technology previously transferred to one another during the term of this Agreement.

 

	
(iii)  

	
The Parties shall further amend the Cross License Agreement to specify that, with respect only to Y5 NAND Flash Memory Products and any other Licensed Products defined in the Cross License Agreement and manufactured with 300mm wafers at any facility, each Party’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FF Termination Date are licensed: (x) at the royalty rates specified in Schedule ‎9.1(f) until March 31, 2018; and (y) thereafter, on a royalty-free basis.  Both Parties shall negotiate in good faith for up to **** upon request of either Party at any time during the **** after the FF Termination Date to agree on royalty rates for patents filed by each Party after the FF Termination Date.  The scope of the licenses as amended pursuant to this Section shall not be greater than the scope of those granted under the Cross License Agreement, as in effect as of the FF Termination Date.

 

	
(g)  

	
Upon termination of this Agreement resulting from an event of dissolution of Flash Forward or a Party’s acquisition of the other Party’s FF Interests described in Section 11.3 (Dissolution Upon Event of Default) of the FF Operating Agreement:

 

	
(i)  

	
The Parties shall further amend the Cross License Agreement to specify that, with respect only to Y5 NAND Flash Memory Products and any other Licensed Products defined in the Cross License Agreement and manufactured with 300mm wafers at any facility, each Party’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FF Termination Date are licensed at the royalty rates specified in Schedule ‎9.1(g) for **** after the FF Termination Date or until the end of ****, whichever comes first, and thereafter such licenses shall be ****.

 

	
(ii)  

	
In the event that Toshiba or an Affiliate of Toshiba is the Defaulting Party, Toshiba shall grant to SanDisk, effective upon such date of termination, a non-exclusive, non-transferable (except to Affiliates of SanDisk), non-sub-licensable, fully paid-up, royalty-free license to make, have made, use, sell and have sold NAND Flash Memory Products anywhere in the world utilizing the NAND technology transferred to and/or utilized at the Yokkaichi Facility, and SanDisk shall have full access to all such know-how at the Yokkaichi Facility which has been transferred to the Yokkaichi Facility prior to the FF Termination Date.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

47

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
(h)  

	
Upon termination of this Agreement resulting from an event of dissolution described in Section 11.1(f) (Bankruptcy Event) of the FF Operating Agreement:

 

	
(i)  

	
If such termination is caused by a Bankruptcy Event in respect of Toshiba, (x) the license granted to SanDisk under Toshiba Licensed Patents pursuant to the Cross License Agreement shall continue on a royalty-free basis, and (y) Toshiba shall grant to SanDisk, effective upon such date of termination, a non-exclusive, non-transferable (except to Affiliates of SanDisk), non-sub-licensable, fully paid-up, royalty-free license to make, have made, use, sell and have sold NAND Flash Memory Products anywhere in the world utilizing the NAND technology transferred to and/or utilized at the Yokkaichi Facility, and SanDisk shall have full access to all such know-how at the Yokkaichi Facility which has been transferred to the Yokkaichi Facility prior to the Termination Date.

 

	
(ii)  

	
If such termination is caused by a Bankruptcy Event in respect of SanDisk, the license granted to Toshiba under SanDisk Licensed Patents (as defined in the Cross License Agreement) pursuant to the Cross License Amendment shall continue on a royalty-free basis.

 

	
(i)  

	
Upon a termination of this Agreement resulting from a purchase and sale transaction described in Section 11.6 (Financing Default) of the FF Operating Agreement, there shall be no capacity ramp-down rights or obligations and:

 

	
(i)  

	
If such termination is caused by a financing default in respect of Toshiba, (x) the Parties shall further amend the Cross License Agreement to specify that, with respect only to Y5 NAND Flash Memory Products and any other Licensed Products defined in the Cross License Agreement and manufactured with 300mm wafers at any facility, Toshiba’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FF Termination Date are licensed to SanDisk on a royalty-free basis, and (y) Toshiba shall grant to SanDisk, effective upon such date of termination, a non-exclusive, non-transferable (except to Affiliates of SanDisk), non-sub-licensable, fully paid-up, royalty-free license to make, have made, use, sell and have sold NAND Flash Memory Products anywhere in the world utilizing the NAND technology transferred to and/or utilized at the Yokkaichi Facility, and SanDisk shall have full access to all such know-how at the Yokkaichi Facility which has been transferred to the Yokkaichi Facility prior to the Termination Date.

 

	
(ii)  

	
If such termination is caused by a financing default in respect of SanDisk, the Parties shall further amend the Cross License Agreement to specify that, with respect only to Y5 NAND Flash Memory Products and any other Licensed Products defined in the Cross License Agreement and manufactured with 300mm wafers at any facility, SanDisk’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FF Termination Date are licensed to Toshiba on a royalty-free basis.

 

	
(j)  

	
Restructuring Costs.

 

	
(i)  

	
In the event this Agreement is terminated, the Parties will exercise best efforts to plan such termination in advance with the goal of minimizing related costs.  With respect to Toshiba employees and SanDisk employees working at the Y5 Facility, (A) in the case of those that are Toshiba employees, Toshiba will use its best efforts to retrain or relocate such individuals to other Toshiba facilities, and (B) in the case of those that are SanDisk employees, SanDisk will use its best efforts to retrain or relocate such individuals to other SanDisk facilities, each to the maximum extent possible.

 

	
(ii)  

	
The Parties agree that in the event of such a SanDisk exit from Flash Forward, ****.

 

	
(A)  

	
****

 

	
(B)  

	
****

 

	
(iii)  

	
Upon any termination of this Agreement, the Parties shall meet and discuss in good faith an estimate of the Restructuring Costs anticipated to be incurred by Toshiba.  ****.

 

	
(k)  

	
Unless otherwise expressly provided herein, termination of this Agreement shall not affect any surviving rights or obligations of either Party set forth in the Joint Operative Documents.

 

 

  

48

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

	
10.  

	
Miscellaneous

 

	
10.1  

	
Survival.  Sections ‎1.3, ‎6.10(b)(viii), ‎6.11, ‎6.12(d), ‎9 and ‎10 and Appendix A shall survive the termination or expiration of this Agreement.

 

	
10.2  

	
Entire Agreement.  This Agreement, together with the 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.

 

	
10.3  

	
Governing Law.  This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of California applicable to agreements made and to be performed entirely within such state without regard to the conflict of laws principles of such state.  Each Master Operative Document shall be governed in accordance with its governing law provision and, in the absence of any such provision, by the first sentence of this Section ‎10.3.

 

	
10.4  

	
Assignment.  Except as separately agreed by the Parties in writing, neither Party 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 (which consent may be withheld in such other Party’s sole discretion), and any such purported transfer without such consent shall be void.

 

	
10.5  

	
****  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: (a) this Agreement shall be effective as between Toshiba and SanDisk Corporation as of the date hereof; and (b) 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.

 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

49

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the Parties as of the date 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
	 	 	 
	 	 
	 	 ****	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Flash Forward Master 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

APPENDICES

	
  

	
Appendix A

	
-

	
Definitions, Rules of Construction and General Terms and Conditions

	
  

	
EXHIBITS

	
  

	
(FF Operative Documents)

	
  

	
Exhibit A1

	
-

	
Capital Interests Purchase Agreement

	
  

	
Exhibit A2

	
-

	
FF Operating Agreement

	
  

	
Exhibit A3

	
-

	
FF Patent Indemnification Agreement

	
  

	
Exhibit A4

	
-

	
Environmental Indemnification Agreement

	
  

	
Exhibit A5

	
-

	
Lease Agreement

	
  

	
Exhibit A6

	
-

	
Toshiba-SanDisk Flash Services Agreement

	
  

	
Exhibit A7

	
-

	
Toshiba-Flash Forward Services Agreement

	
  

	
Exhibit A8

	
-

	
SanDisk Flash-Flash Forward Services Agreement

	
  

	
(Joint Operative Documents)

	
  

	
Exhibit B

	
-

	
Amendment No. 5 to Cross License Agreement

	
  

	
SCHEDULES

	
  

	
Schedule 4.5

	
-

	
Litigation; Decrees

	
  

	
Schedule 4.7

	
-

	
Patents and Proprietary Rights

	
  

	
Schedule 4.9

	
-

	
Cross License Payment Obligations

	
  

	
Schedule 6.2(a)

	
-

	
Technology Transfer Costs

	
  

	
Schedule 7.4(a)

	
-

	
Fixed Manufacturing Costs and Variable Manufacturing Costs

	
  

	
Schedule 9.1(f)

	
-

	
Royalty in case of Deadlock Termination

	
  

	
Schedule 9.1(g)

	
-

	
Royalty in case of Event of Default Termination

 

 

 

 

  

  

**** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

 

APPENDIX A

DEFINITIONS, RULES OF CONSTRUCTION AND

DOCUMENTARY CONVENTIONS

 

The following shall apply unless otherwise required by the main body of the agreement into which this Appendix A is being incorporated (as used herein, “this Agreement”):

 

 

Definitions

 

The following terms shall have the specified meanings:

 

“3D Collaboration Agreement”, means the 3D Collaboration Agreement, dated as of June 13, 2008, between SanDisk Corporation and Toshiba.

 

“Accountants” means such firm of internationally recognized independent certified public accountants for Flash Forward as is appointed pursuant to the FF Operating Agreement from time to time.  Initially, the Accountants shall be Shin Nihon & Company, an affiliate of Ernst & Young LLP.

 

“Affiliate” of any Person means any other Person which directly or indirectly controls, is controlled by or is under common control with, such Person; provided, however, that the term Affiliate, (a) when used in relation to Flash Forward or any Subsidiary of Flash Forward, shall not include SanDisk Corporation or Toshiba or any Affiliate of either of them, and (b) when used in relation to SanDisk Corporation or Toshiba or any Affiliate of either of them, shall not include Flash Forward or any Subsidiary of Flash Forward.

 

“Articles” means the Articles of Incorporation of Flash Forward.

 

“Asahi Area” means Toshiba’s facilities in Asahi, Japan.

 

“Bankruptcy Event” means, with respect to any Person, the occurrence or existence of any of the following events or conditions: such Person (1) is dissolved; (2) becomes insolvent or fails or is unable or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding up or liquidation and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 60 days of the institution or presentation thereof; (5) has a resolution passed by its governing body for its winding-up or liquidation; (6) seeks or becomes subject to the appointment of an administrator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets (regardless of how brief such appointment may be, or whether any obligations are promptly assumed by another entity or whether any other event described in this clause (6) has occurred and is continuing); (7) experiences any event which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) through (6) above; or (8) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

 

“Board of Executive Officers” has the meaning set forth in Section 5.1(a) of the FF Operating 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

“Burdensome Condition” means, with respect to any proposed transaction, any action taken, or credibly threatened, by any Governmental Authority or (except if such action or threat is frivolous) other Person to challenge the legality of such proposed transaction, including (i) the pendency of a governmental investigation (formal or informal) in contemplation of the possible actions described in clauses (ii)(A), (ii)(B) or (ii)(C) below, (ii) the institution of a suit or the written threat thereof (A) seeking to restrain, enjoin or prohibit the consummation of such transaction or material part thereof, to place any material condition or limitation upon such consummation or to invalidate, suspend or require modification of any material provision of any Operative Document, (B) challenging the acquisition by either Toshiba or SanDisk Flash of its Interests or (C) seeking to impose limitations on the ability of either Toshiba or SanDisk Flash effectively to exercise full rights as Members of Flash Forward, including the right to act on all matters properly presented to the parties pursuant to the FF Operating Agreement, or (iii) an order by a court of competent jurisdiction having any of the consequences described in (ii)(A), (ii)(B) or (ii)(C) above, or placing any conditions or limitations upon such consummation that are unreasonably burdensome in the reasonable judgment of the applicable Person.

 

“Business Day” means any day (other than a day which is a Saturday, Sunday or legal holiday in the State of California or Japan) on which commercial banks are open for business in the State of California or Tokyo, Japan.

 

“Business Plan” means the Initial Business Plan and each subsequent business plan, including budgets and projections for Flash Forward for each relevant period, approved in accordance with Section 3.4(c) of the FF Operating Agreement and complying with Section 3.4(b) of the FF Operating Agreement.

 

“Capital Contribution” means the capital contribution made by or allocated to a Party by virtue of its ownership of Interests as indicated on Schedule 6.1 to the FF Operating Agreement.

 

“Change of Control” with respect to a Person means a transaction or series of related transactions as a result of which (i) more than 50% of the beneficial ownership of the outstanding common stock or other ownership interests of such Person (representing the right to vote for the board of directors or similar organization of such Person) is acquired by another Person or affiliated group of Persons, whether by reason of stock acquisition, merger, consolidation, reorganization or otherwise or (ii) the sale or disposition of all or substantially all of a Person’s assets to another Person or affiliated group of Persons.

 

“Closing” means the closing of the transactions described in Sections 2.1 of the Master Agreement.

 

“Closing Date” means the date of the Closing.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.  Any reference to a particular provision of the Code or a treasury regulation promulgated pursuant to the Code means, where appropriate, the corresponding provision of any successor statute or regulation.

 

“Common R&D Agreement” means the Fourth Amended and Restated Common R&D and Participation Agreement, dated as of the Effective Date, between Toshiba and SanDisk Corporation.

 

“Companies Act” means the Companies Act (Kaisha-ho), Law No. 86 of July 26, 2005, as may be amended hereafter and in effect as at any time.

 

“Control” (including its correlative meanings “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

 

“Cross License Agreement” has the meaning given in the Master Agreement.

 

“Effective Date” means July 13, 2010.

 

“Environmental Indemnification Agreement” means the Flash Forward Mutual Contribution and Environmental Indemnification Agreement, dated as of July 13, 2010, between Toshiba and SanDisk Flash.

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

“Event of Default” means, with respect to a Party, the occurrence or existence of any of the following events or conditions which remains uncured for sixty (60) days following receipt by such Party of written notice thereof:

 

(a)           a Bankruptcy Event in respect of such Party or any Person of which such Party is a Subsidiary; or

 

(b)           the breach by such Party of its covenant in Section 9.1 of the FF Operating Agreement or the breach by such Party of its covenant in Section 5.1(b) of the Master Agreement, provided that a Change of Control of a Party shall not be deemed an Event of Default.

 

“FA Master Agreement” means the Master Agreement among Toshiba, SanDisk and SanDisk Ireland dated as of July 7, 2006.

 

“FA Operative Documents” means the Flash Alliance Master Agreement, dated as of July 7, 2006, the Share Purchase Agreement between Toshiba and SanDisk Ireland, dated as of July 7, 2006, the Operating Agreement between Toshiba and SanDisk Ireland, dated as of July 7, 2006, the Articles of Incorporation of Flash Alliance, the Foundry Agreement between Flash Alliance and Toshiba, dated as of July 7, 2006, the Purchase and Supply Agreement between Flash Alliance and ****, dated as of July 7, 2006, the Purchase and Supply Agreement between Flash Alliance and Toshiba, dated as of July 7, 2006, the Patent Indemnification Agreement among SanDisk Corporation, **** and Toshiba, dated as of July 7, 2006, the Mutual Contribution and Environmental Indemnification Agreement between SanDisk Ireland and Toshiba, dated as of July 7, 2006, the Lease Agreement between Flash Alliance and Toshiba, as owner of the Yokkaichi Facility, dated as of July 7, 2006, the Services Agreement between SanDisk Ireland and Toshiba, dated as of July 7, 2006, the Services Agreement between Flash Alliance and Toshiba, as owner of the Yokkaichi Facility, dated as July 7, 2006, and the Services Agreement between Flash Alliance and SanDisk Ireland, dated as of July 7, 2006, in each case as amended by the JVRA.

 

“FF Foundry Agreement” means the Foundry Agreement, dated as of the Effective Date, between Flash Forward and Yokkaichi.

 

“FF Operating Agreement” means the Operating Agreement, dated as of the Effective Date, between Toshiba and SanDisk Flash.

 

“FF Operative Documents” has the meaning set forth in the Master Agreement.

 

“Fiscal Quarter” means, unless changed by the Board of Executive Officers, a calendar quarter.

 

“Fiscal Year” means the one year period commencing on April 1 of each year.

 

“Flash Alliance” means Flash Alliance, Ltd., a Japanese special limited liability company (tokurei yugen kaisha).

 

“Flash Forward” has the meaning set forth in the Master Agreement.

 

“Flash Partners” means Flash Partners, Ltd., a Japanese special limited liability company (tokurei yugen kaisha).

 

“FP Master Agreement” means the Master Agreement among Toshiba, SanDisk and SanDisk International dated as of September 10, 2004.

 

“FP Operative Documents” means the Flash Partners Master Agreement, dated as of September 10, 2004, the Share Purchase Agreement between Toshiba and SanDisk Manufacturing, dated as of September 10, 2004, the Operating Agreement between Toshiba and SanDisk International, dated as of September 10, 2004, the Foundry Agreement between Flash Partners and Toshiba, dated as of September 10, 2004, the Purchase and Supply Agreement between Flash Partners and SanDisk International, dated as of September 10, 2004, the Purchase and Supply Agreement between Flash Partners and Toshiba, dated as of September 10, 2004, the Patent Indemnification Agreement between SanDisk Corporation and Toshiba, dated as of September 10, 2004, the Mutual Contribution and Environmental Indemnification Agreement between SanDisk Corporation and Toshiba, dated as of September 10, 2004, and the Lease Agreement between Flash Partners and Toshiba, as owner of the Yokkaichi Facility, dated as of September 10, 2004, in each case as amended by the JVRA.

 

“FVC Japan” means FlashVision Ltd., a Japanese special limited liability company (tokurei yugen kaisha).

 

“FVC Japan Equipment” means any equipment which is or will, from time to time, be owned or leased by FVC Japan.

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

“Governmental Action” means any authorization, consent, approval, order, waiver, exception, variance, franchise, permission, permit or license of, or any registration, filing or declaration with, by or in respect of, any Governmental Authority.

 

“Governmental Authority” means any United States or Japanese federal, state, local or other political subdivision or foreign governmental Person, authority, agency, court, regulatory commission or other governmental body, including the Internal Revenue Service and the Secretary of State of any State.

 

“Governmental Rule” means any statute, law, treaty, rule, code, ordinance, regulation, license, permit, certificate or order of any Governmental Authority or any judgment, decree, injunction, writ, order or like action of any court or other judicial or arbitration tribunal.

 

“Indebtedness” of any Person means, without duplication:

 

(a)           all obligations (whether present or future, contingent or otherwise, as principal or surety or otherwise) of such Person in respect of borrowed money or in respect of deposits or advances of any kind;

 

(b)           all obligations of such Person evidenced by bonds, debentures, notes or similar instruments;

 

(c)           all obligations of such Person upon which interest charges are customarily paid, except for trade payables;

 

(d)           all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person;

 

(e)           all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than with respect to the purchase of personal property under standard commercial terms);

 

(f)           all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed;

 

(g)           all guarantees by such Person of Indebtedness of others;

 

(h)           all obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property (or a combination thereof), which obligations would be required to be classified and accounted for as capital leases on a balance sheet of such Person prepared in accordance with Japanese GAAP or US GAAP, as applicable;

 

(i)           all obligations of such Person (whether absolute or contingent) in respect of interest rate swap or protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangements; and

 

(j)           all obligations of such Person as an account party in respect of letters of credit and bankers’ acceptances.

 

The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner.

 

“Indemnified Parties” means the Party being indemnified’s officers, directors, employees, agents, contractors, subcontractors, and transferees permitted pursuant to the FF Operating Agreement and the Master Agreement.

 

“Interests” means the issued and outstanding interests (mochibun) in Flash Forward.

 

“Japanese GAAP” means generally accepted accounting principles in Japan as in effect from time to time, consistently applied.

 

“Japanese GAAS” means generally accepted auditing standards in Japan as in effect from time to time.

 

“JMDY Agreement” means the Amended and Restated Joint Memory Development Yokkaichi Agreement, dated as of the Effective Date, between Toshiba and SanDisk Corporation.

 

“JV Y5 NAND Flash Memory Products” has the meaning given in Section 3.2(a)(ii) of the Master Agreement.

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

“JVRA” means the Joint Venture Restructure Agreement, dated as of January 29, 2009, among SanDisk Corporation and certain of its affiliates, Toshiba Corporation, Flash Alliance and Flash Partners, dated as of January 29, 2009.

 

“License Agreement” means the Patent Cross License Agreement, dated July 30, 1997, by and between Toshiba and SanDisk, as amended.

 

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset and (c) in the case of securities, any purchase option, call or similar right with respect to such securities.

 

“L/M” means Equivalent Lots (as defined in the Master Agreement) per month.

 

“Management Representative” has the meaning given in the Master Agreement.

 

“Master Agreement” means the Flash Forward Master Agreement, dated as of July 13, 2010, by and among Toshiba, SanDisk and SanDisk Flash.

 

“Material” means, with respect to any Person, an event, change or effect which is or, insofar as reasonably can be foreseen, will be material to the condition (financial or otherwise), properties, assets, liabilities, capitalization, licenses, businesses, operations or prospects of such Person and, in the case of Flash Forward, the ability of Flash Forward to carry out its then-current Business Plan.

 

“Member” means the holder of any Interests.

 

“NAND Flash Memory Products” has the meaning given in Section 3.2 of the Master Agreement.

 

“Net Book Value” means, with respect to any Person, the total assets of such Person less the total liabilities of such Person, in each case as determined in accordance with Japanese GAAP or US GAAP, as applicable.

 

“Patent Indemnification Agreement” means the Patent Indemnification Agreement dated as of July 13, 2010, among Toshiba, SanDisk Corporation and SanDisk Flash.

 

“Percentage” means, with respect to any Member (as defined in the FF Operating Agreement), the percentage of such Member’s ownership interest in Flash Forward.  For the avoidance of doubt, as of the date hereof, Percentage means with respect to Toshiba or its Affiliate, 50.1%, and with respect to SanDisk Flash or its Affiliate, 49.9%; provided, however, if either Member transfers all of its Interests to any Affiliate in accordance with the FF Operating Agreement, its Percentage shall be 0% and such Affiliate transferee shall receive the entire Percentage of the transferring Member.

 

“Permitted Liens” means (a) the rights and interests of Flash Forward, either Party or any Affiliate of any such Person as provided in the FF Operative Documents, and (b) Liens for Taxes which are not due and payable or which may after contest be paid without penalty or which are being contested in good faith and by appropriate proceedings and so long as such proceedings shall not involve any substantial risk of the sale, forfeiture or loss of any part of any relevant asset or title thereto or any interest therein.

 

“Person” means any individual, firm, company, corporation, limited liability company, unincorporated association, partnership, trust, joint venture, Governmental Authority or other entity, and shall include any successor (by merger or otherwise) of such entity.

 

“Product Development Agreement” means the Amended and Restated Product Development Agreement, dated as of the Effective Date, between Toshiba and SanDisk Corporation.

 

“SanDisk Corporation” means SanDisk Corporation, a Delaware corporation.

 

“SanDisk Flash” means SanDisk Flash B.V., a company organized under the laws of The Netherlands.

 

“SanDisk Ireland” means SanDisk (Ireland) Limited, a company organized under the laws of the Republic of Ireland.

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

“SanDisk International” means SanDisk (Cayman) Limited, a company organized under the laws of the Cayman Islands.

 

“SanDisk Purchase and Supply Agreement” means the Purchase and Supply Agreement, dated as of the Effective Date, between SanDisk Flash and Flash Forward.

 

“Subsidiary” of any Person means any other Person:

 

(i)           more than 50% of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or

 

(ii)           which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50% of whose ownership interest representing the right to make decisions (equivalent to those generally reserved for the board of directors of a corporation) for such other Person is,

 

now or hereafter owned or controlled, directly or indirectly, by such Person, but such other Person shall be deemed to be a Subsidiary only so long as such ownership or control exists; provided, however, that the term Subsidiary as used in any FF Operative Document, when used in relation to a Party or any of its Affiliates, shall not include Flash Forward or any of its Subsidiaries.

 

“Tax” or “Taxes” means all United States or Japanese Federal, state, local or other political subdivision and foreign taxes, assessments and other governmental charges, including: (a) taxes based upon or measured by gross receipts, income, profits, sales, use or occupation and (b) value added, ad valorem, transfer, franchise, withholding, payroll, employment, excise or property taxes, together with (c) all interest, penalties and additions imposed with respect to such amounts and (d) any obligations under any agreements or arrangements with any other Person with respect to such amounts.

 

“Termination Date” means the date on which one Member, itself or together with its Affiliates, holds one hundred percent (100%) of the interests of Flash Forward or the date Flash Forward is dissolved in accordance with applicable law.

 

“Toshiba” means Toshiba Corporation, a Japanese corporation.

 

“Toshiba Capacity” has the meaning set forth in the JVRA.

 

“Toshiba Licensed Patent” has the meaning given in the Cross License Agreement.

 

“Toshiba- SanDisk Flash Services Agreement” means the Services Agreement, dated as of the Effective Date, between SanDisk Flash and Toshiba.

 

“Toshiba Purchase and Supply Agreement” means the Purchase and Supply Agreement, dated as of the Effective Date, between Toshiba and Flash Forward.

 

“Transfer” means any transfer, sale, assignment, conveyance, creation of any Lien (other than a Permitted Lien), or other disposal or delivery, including by dividend or distribution, whether made directly or indirectly, voluntarily or involuntarily, absolutely or conditionally, or by operation of law or otherwise.

 

“Unique Activities” means production activities of Flash Forward at the request of either Member to (i) implement changes in the manufacturing processes to be employed for Products to be manufactured for such Member (or its Affiliates) that are not agreed to by the other Member, (ii) commence manufacturing other Products for the requesting Member (or its Affiliates) that the other Member does not desire to have manufactured for it and which require a change in manufacturing processes or in the utilization of the Facility or production resources, or (iii) implement any other change in its operations in order to manufacture Products specifically for the requesting Member (or its Affiliates).

 

“US GAAP” means generally accepted accounting principles in the United States as in effect from time to time, consistently applied.

 

“US GAAS” means generally accepted auditing standards in the United States as in effect from time to time.

 

“Y3 Facility” means the facility at which Y3 NAND Flash Memory Products are manufactured for Flash Partners.

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

“Y3 NAND Flash Memory Products” has the meaning given in Section 3.2(a)(iii) of the Master Agreement.

 

“Y4 Facility” means the facility at which Y4 NAND Flash Memory Products are manufactured for Flash Alliance.

 

“Y4 NAND Flash Memory Products” has the meaning given in Section 3.2(a)(iii) of the Master Agreement.

 

“Y5 Facility” has the meaning given in the Master Agreement.

 

“Y5 NAND Flash Memory Products” has the meaning given in Section 3.2(a)(ii) of the Master Agreement.

 

“Yokkaichi Facility” means Toshiba’s facilities in Yokkaichi Japan, including the FVC Japan Equipment, the Y3 Facility, the Y4 Facility, the Y5 Facility and Toshiba’s Asahi facility.

 

 

Rules of Construction and Documentary Conventions

 

2.1 Amendment and Waiver.  No amendment to or waiver of this Agreement shall be effective unless it shall be in writing, identify with specificity the provisions of this Agreement that are thereby amended or waived and be signed by each party hereto.  Any failure of a party to comply with any obligation, covenant, agreement or condition contained in this Agreement may be waived by the party entitled to the benefits thereof only by a written instrument duly executed and delivered by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure of compliance.

 

2.2 Severability.  If any provision of this Agreement or the application of any such provision is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement (except as may be expressly provided in this Agreement) or invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law, the parties hereto waive any provision of law that renders any provision of this Agreement invalid, illegal or unenforceable in any respect.  The parties hereto shall, to the extent lawful and practicable, use their reasonable efforts to enter into arrangements to reinstate the intended benefits, net of the intended burdens, of any such provision held invalid, illegal or unenforceable.  If the intent of the Parties for entering into the FF Operative Documents, considered as a single transaction, cannot be preserved, the FF Operative Documents shall either be renegotiated or terminated by mutual agreement of the Parties.

 

2.3 Assignment.  Except as may otherwise be specifically provided in this Agreement, no party hereto shall 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 parties) without the prior written consent of each other party hereto (which consent may be withheld in each such other party’s sole discretion), and any such purported Transfer without such consent shall be void.

 

2.4 Remedies.

 

(a) Except as may otherwise be specifically provided in this Agreement, the rights and remedies of the parties under this Agreement are cumulative and are not exclusive of any rights or remedies which the parties hereto would otherwise have.

 

(b) Equitable relief, including the remedies of specific performance and injunction, shall be available with respect to any actual or attempted breach of this Agreement; provided, however, in the absence of exigent circumstances, the parties shall refrain from commencing any lawsuit or seeking judicial relief in connection with such actual or attempted breach that is contemplated to be addressed by the dispute resolution process set forth in the Master Agreement and in Section 2.5 of this Appendix A until the parties have attempted to resolve the subject dispute by following said dispute resolution process to its conclusion.

 

(c) If the due date for any amount required to be paid under this Agreement is not a Business Day, such amount shall be payable on the next succeeding Business Day; provided that if payment cannot be made due to the existence of a banking crisis or international payment embargo, such amount may be paid within the following 30 days.  If due to the occurrence of an act of God, any party is prevented from providing training, technical assistance or other similar support required to be provided to Flash Forward pursuant to this Agreement, such party shall have an additional 30 day period to make alternative arrangements to provide such support.

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

2.5 Arbitration. Any dispute concerning this Agreement shall be referred to the Management Representatives and handled by it in accordance with the Master Agreement.  If the Management Representatives cannot resolve such dispute in accordance with the terms of the Master Agreement, then such dispute will be settled by binding arbitration in San Francisco, California.  The dispute shall be heard by a panel of three arbitrators pursuant to the rules of the International Chamber of Commerce.  The awards of such arbitration shall be final and binding upon the parties thereto.  Each party will bear its own fees and expenses associated with the arbitration.  Filing fees and arbitrator fees charged by the ICC shall be borne equally by the Parties.

 

2.6 Damages Limited.  IN THE ABSENCE OF ACTUAL FRAUD, IN NO EVENT SHALL ANY PARTY BE LIABLE TO OR BE REQUIRED TO INDEMNIFY ANY OTHER PARTY OR ANY OF THEIR RESPECTIVE AFFILIATES FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGE OF ANY KIND, (INCLUDING WITHOUT LIMITATION LOSS OF PROFIT OR DATA), WHETHER OR NOT ADVISED OF THE POSSIBILITY OF SUCH LOSS.

 

2.7 Parties in Interest; Limitation on Rights of Others.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns.  Nothing in this Agreement, whether express or implied, shall give or be construed to give any Person (other than the parties hereto and their permitted successors and assigns) any legal or equitable right, remedy or claim under or in respect of this Agreement, unless such Person is expressly stated in such agreement or instrument to be entitled to any such right, remedy or claim.

 

2.8 Table of Contents; Headings.  The Table of Contents and Article and Section headings of this Agreement are for convenience of reference only and shall not affect the construction of or be taken into consideration in interpreting any such agreement or instrument.

 

2.9 Counterparts; Effectiveness.  This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which counterparts shall together constitute but one and the same contract.  This Agreement shall not become effective until one or more counterparts have been executed by each party hereto and delivered to the other parties hereto.

 

2.10 Entire Agreement.  This Agreement, together with each other FF Operative Documents and the Exhibits, Schedules, Appendices and Attachments hereto and thereto, when completed, constitute the agreement of the parties to the FF Operative Documents with respect to the subject matter thereof and supersede all prior written and oral agreements and understandings with respect to such subject matter.

 

2.11 Construction.  References in this Agreement to any gender include references to all genders, and references in this Agreement to the singular include references to the plural and vice versa.  Unless the context otherwise requires, the term “party” when used in this Agreement means a party to this Agreement.  References in this Agreement to a party or other Person include their respective permitted successors and assigns.  The words “include”, “includes” and “including”, when used in this Agreement, shall be deemed to be followed by the phrase “without limitation”.  Unless the context otherwise requires, references used in this Agreement to Articles, Sections, Exhibits, Schedules, Appendices and Attachments shall be deemed references to Articles and Sections of, and Exhibits, Schedules, Appendices and Attachments to, this Agreement.  Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.  Any reference to a FF Operative Document shall include such FF Operative Document as amended or supplemented from time to time in accordance with the provisions thereof.

 

2.12 Official Language.                                The official language of this Agreement is the English language only, which language shall be controlling in all respects, and all versions of this Agreement in any other language shall not be binding on the parties hereto or nor shall such other versions be admissible in any legal proceeding, including arbitration, brought under this Agreement.  All communications and notices to be made or given pursuant to this Agreement shall be in the English language.

 

2.13 Notices.  All notices and other communications to be given to any party under this Agreement shall be in writing and any notice shall be deemed received when delivered by hand, courier or overnight delivery service, or by facsimile (if confirmed within two Business Days by delivery of a copy by hand, courier or overnight delivery service), or five days after being mailed by certified or registered mail, return receipt requested, with appropriate postage prepaid and shall be directed to the address of such party specified below (or at such other address as such party shall designate by like notice):

 

  

8

**** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

(a) If to SanDisk or SanDisk Flash:

SanDisk Corporation

601 McCarthy Boulevard

Milpitas, CA 95035 USA

Telephone: (408) 542-0555

Facsimile: (408) 542-0600

Attention: President and CEO

 

With a copy to:

SanDisk Corporation

601 McCarthy Boulevard

Milpitas, CA 95035 USA

Telephone: (408) 548-0208

Facsimile: (408) 548-0385

Attention: Vice President and General Counsel

(b) If to Toshiba:

Toshiba Corporation

Semiconductor Company

1-1 Shibaura 1-Chome

Minato-Ku, Tokyo 105-8001 Japan

Telephone: 011 81 3 3457 3362

Facsimile: 011 81 3 5444 9339

Attention: Memory Division, Vice President

With a copy to:

Toshiba Corporation

Semiconductor Company

Legal Affairs Division

1-1 Shibaura 1-Chome

Minato-Ku, Tokyo 105-8001 Japan

Telephone: 011-81-3-3457-3452

Facsimile: 011-81-3-5444-9342

Attention: General Manager

(c) If to Flash Forward:

Flash Forward, Ltd.

800 Yamanoisshikicho,

Yokkaichi, Mie, Japan

Attention: President

With a copy to:

SanDisk Corporation

601 McCarthy Boulevard

Milpitas, CA 95035 USA

Telephone: (408) 542-0510

Facsimile: (408) 542-0640

Attention: Chief Operating Officer

 

  

9

**** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

And

Toshiba Corporation

Semiconductor Company

Legal Affairs Division

1-1 Shibaura 1-Chome

Minato-Ku, Tokyo 105-8001 Japan

Telephone: 011-81-3-3457-3452

Facsimile: 011-81-3-5444-9342

Attention: General Manager

 

2.14 Non Disclosure Obligations.  Each party hereto agrees as follows:

 

(a) In this Agreement, “Confidential Information” means information disclosed in written, recorded, graphical or other tangible from which is marked as “Confidential”, “Proprietary” or in some other manner to indicate its confidential nature, and/or orally or in other intangible form, identified as confidential at the time of disclosure and confirmed as confidential information in writing within thirty (30) days of its initial disclosure.

 

(b) For a period of **** from the date of receipt of the Confidential Information disclosed by one Party (the “Disclosing Party”) hereunder, the receiving Party (the “Receiving Party”) agrees to safeguard the Confidential Information and to keep it in confidence and to use reasonable efforts, consistent with those used in the protection of its own confidential information, to prevent its disclosure to third parties, except that the Receiving Party shall not be obligated hereunder in any respect to information which:

 

	
(i)  

	
is already known to the Receiving Party at the time of its receipt from the Disclosing Party as reasonably evidenced by its written records; or

 

	
(ii)  

	
is or becomes publicly available without breach of this Agreement by the Receiving Party; or

 

	
(iii)  

	
is made available to a third party by the Disclosing Party without restriction on disclosure; or

 

	
(iv)  

	
is rightfully received by the Receiving Party from a third party without restriction and without breach of this Agreement; or

 

	
(v)  

	
is independently developed by the Receiving Party as reasonably evidenced by its written records contemporaneous with such development; or

 

	
(vi)  

	
is disclosed with the prior written consent of the Disclosing Party, provided that each recipient from the Receiving Party shall execute a confidentiality agreement prohibiting further disclosure of the Confidential Information, under terms no less restrictive that those provided in this Agreement; or

 

	
(vii)  

	
is required to be disclosed by the order of a governmental agency or legislative body of a court of competent jurisdiction, provided that the Receiving Party shall give the Disclosing Party prompt notice of such request so that the Disclosing Party has an opportunity to defend, limit or protect such disclosure; or

 

	
(viii)  

	
is required to be disclosed by applicable securities of other laws or regulations, provided that SanDisk shall, prior to any such disclosure required by the U.S. Securities and Exchange Commission, provide Toshiba with notice which includes a copy of the proposed disclosure. Further, SanDisk shall consider Toshiba’s timely input with respect to the disclosure.

 

 

  

10

**** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

(c) Receiving Party shall use its reasonable best efforts to limit dissemination of the Disclosing Party’s Confidential Information to such of its employees who have a need to know such information for the purpose for which such information was disclosed to it.   Receiving Party understands that disclosure or dissemination of the Disclosing Party’s Confidential Information not expressly authorized hereunder would cause irreparable injury to the Receiving Party, for which monetary damages would not be an adequate remedy and the Disclosing Party shall be entitled to equitable relief in addition to any remedies the Disclosing Party may have hereunder or at law.

 

(d) Nothing contained in this Agreement shall be construed as granting or conferring any rights, licenses or relationships by the transmission of the Confidential Information.

 

(e) All Confidential Information disclosed hereunder shall remain the property of the Disclosing Party. Upon request by the Disclosing Party, the Receiving Party shall return all Confidential Information, including any and all copies thereof, or certify in writing that all such Confidential Information had been destroyed.

 

2.15 Definitions.  The definitions set forth in Article I of this Appendix A shall apply to this Article II.

 

 

 

 

 

 

 

 

 

 

  

11

 **** 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

Schedule 4.5

 

Litigation, Decrees

 

 

For Toshiba: ****

For SanDisk: ****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

Schedule 4.7

 

Patents and Proprietary Rights

 

 

For Toshiba: ****

For SanDisk: ****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

Schedule 4.9

 

Cross License Payment Obligations

 

 

For Toshiba: ****

For SanDisk: ****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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.

  

Exhibit 10.1

FOIA Confidential Treatment Requested

Execution Version

 

Schedule 6.2(a)

 

Technology Transfer Costs

 

****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Schs., p. 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

Schedule 7.4(a)

 

Fixed Manufacturing Costs and Variable Manufacturing Costs

 

(i) “Fixed Manufacturing Costs” shall include ****

 

 

(ii) “Variable Manufacturing Costs” shall include ****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Schs., p. 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

Schedules 9.1(f)  and 9.1(g) Generally

 

For the purpose of Schedules 9.1(f) and 9.1(g), the following terms shall have the following meanings, and all capitalized term used herein but not defined herein are defined in the ****

 

“Adapter” shall mean ****.

 

“Card with Controller” shall mean ****.

 

“Embedded NAND MLC” shall mean ****.

 

“Embedded NAND SLC” shall mean ****.

 

“NAND Controller” shall mean ****.

 

“NAND MLC” shall mean ****.

 

“NAND SLC” shall mean ****.

 

“NOR Controller” shall mean ****.

 

“NOR MLC” shall mean ****.

 

“NOR SLC” shall mean ****.

 

“Other IC” shall mean ****.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Schs., p. 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

Schedule 9.1(f)

 

Royalty in case of Deadlock Termination

 

****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Schs., p. 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 10.1

FOIA Confidential Treatment Requested

Execution Version

 

Schedule 9.1(g)

 

Royalty in case of Event of Default Termination

 

****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Schs., p. 8

 **** 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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