EXHIBIT 10.5
FOIA Confidential Treatment Requested Execution Version FLASH
ALLIANCE MUTUAL CONTRIBUTION AND ENVIRONMENTAL
INDEMNIFICATION AGREEMENT This FLASH ALLIANCE MUTUAL
CONTRIBUTION AND ENVIRONMENTAL INDEMNIFICATION AGREEMENT, dated as
of July 7, 2006 (this " Agreement "), is entered into
by and among, on one side, Toshiba Corporation, a Japanese
corporation (" Toshiba "), and, on the other side, SanDisk
(Ireland) Limited , a company organized under the laws of
the Republic of Ireland (" SanDisk Ireland ", and together
with Toshiba, the " Parties "). RECITALS
WHEREAS, Toshiba, SanDisk Corporation
and SanDisk (Cayman) Limited, a company organized under the laws of
the Cayman Islands, are parties to that certain Mutual Contribution
and Environmental Indemnification Agreement, dated as of
September 10, 2004, setting forth the terms and conditions
relating to environmental issues that arise out of the manufacture
of Y3 NAND Flash Memory Products manufactured at the Y3 Facility;
WHEREAS, Toshiba, SanDisk Ireland and
SanDisk Corporation are parties to that certain Flash Alliance
Master Agreement, dated as of the date hereof (the " Flash
Alliance Master Agreement ");
WHEREAS, pursuant to the terms of the
Flash Alliance Master Agreement and other FA Operative Documents,
Flash Alliance, Ltd., a Japanese tokurei yugen kaisha (the "
Company "), will have Y4 NAND Flash Memory Products
manufactured at the Y4 Facility; and
WHEREAS, Toshiba and SanDisk Ireland
have agreed to mutually contribute to, and indemnify each other and
the Company for, environmental remediation costs or liability
resulting from the Y4 NAND Flash Memory Product manufacturing
operations as set forth below. NOW,
THEREFORE, the Parties agree as follows:
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1.
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Definitions and Interpretation.
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1.1
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Flash Alliance Master Agreement . Appendix A
to the Flash Alliance Master Agreement is hereby incorporated into
this Agreement. Capitalized terms used but not defined in this
Agreement shall have the meanings given to them in
Appendix A .
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1.2
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Definitions . The following terms used in this Agreement
shall have the following respective meanings:
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(a)
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" Environmental Laws " means all Applicable Laws in
Japan, including, but not limited to, the Soil Contamination
Control Law ( Dojyouosen Taisaku Ho, Law No. 53 of
2002), now or hereafter in effect relating to the protection of
human health, safety, and the environment from emissions,
discharges, releases or threatened releases of pollutants,
contaminants (chemical or industrial), toxic or Hazardous
Substances or wastes into the
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EXHIBIT 10.5
FOIA Confidential Treatment Requested Execution Version
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environment (including, ambient air, soil, surface water, ground
water, wetlands, land or subsurface strata), or otherwise relating
to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling or investigation or
remediation of pollutants, contaminants, chemicals or industrial,
toxic or Hazardous Substances or wastes.
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(b)
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" Hazardous Substances " means petroleum, petroleum
hydrocarbons or petroleum products, petroleum by-products,
radioactive materials, asbestos or asbestos-containing materials,
pesticides, radon, urea formaldehyde, lead or lead- containing
materials, polychlorinated biphenyls; and any other chemicals,
materials, substances or wastes in any amount or concentration
which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous materials,"
"hazardous wastes," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants,"
"pollutants," "regulated substances," "solid wastes," or
"contaminants" or words of similar import, under any Environmental
Law.
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2.
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Environmental Investigations.
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2.1
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Environmental Consultants . The Parties acknowledge that
each of SanDisk and Toshiba has engaged an environmental consulting
company to conduct an environmental investigation on its behalf as
to the surface and subsurface conditions existing on or immediately
adjacent to the proposed site of the Y4 Facility and other new land
to be acquired or leased by Toshiba for the purpose of the Y4
Facility’s operation including the parking lot (such new land
to be acquired or leased, the " Other Y4 Facility ") (each a
" Consultant " and the Consultant engaged by SanDisk, the "
SanDisk Consultant " and the Consultant engaged by Toshiba,
the " Toshiba Consultant "). SanDisk shall be solely
responsible for the fees and costs charged by the SanDisk
Consultant and shall indemnify and hold harmless Toshiba and the
Company from any claims for compensation or damages made by the
SanDisk Consultant. Toshiba shall be solely responsible for the
fees and costs charged by the Toshiba Consultant and shall
indemnify and hold harmless SanDisk and the Company from any claims
for compensation or damages made by the Toshiba Consultant;
provided, however , that fees and costs incurred by the
Toshiba Consultant after the Closing and other than in connection
with finalizing the Y4 Baseline Environmental Report (as defined
below) shall be chargeable to and payable by the Company, which
fees and costs shall be chargeable to and payable by the Parties
through wafer price increases.
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2.2
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Scope of Review . Each Consultant will perform the
activities customarily associated with Phase I ( tochirireki
chosa ) and Phase II ( osen jokyo kakunin chosa )
studies. The Consultant(s) will perform Phase I and Phase II
studies on the site of the Y4 Facility. The Consultant(s) will
perform Phase I studies on the sites of the Other Y4 Facilities,
and depending on the results of Phase I testing, may perform Phase
II studies on any of such sites. Such activities will be performed
at the proposed site of the Y4 Facility (and immediately adjacent
thereto) and Other Y4 Facilities prior to the start of
construction
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(scheduled to begin July 1, 2006); provided ,
however , that the Parties acknowledge that the SanDisk
Consultant will not be permitted to obtain soil or water samples
from those areas identified on Exhibit A (such areas,
the " Untested Areas "). Subject to the requirements of the
owner of the Other Y4 Facilities, each Consultant will have all
access to the proposed site of the Y4 Facility and Other Y4
Facilities to the extent necessary to conduct the Phase I and Phase
II studies.
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2.3
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Information from Monitoring Activities . Toshiba shall
share, or cause to be shared, with SanDisk and, upon
SanDisk’s request, the SanDisk Consultant, the results of any
monitoring activities conducted by Toshiba or its Affiliates with
respect to the surface and subsurface conditions on the proposed
site of the Y4 Facility and Other Y4 Facilities on or after the
Effective Date and until the FA Termination Date; provided
that if as of the FA Termination Date any claims have been made
against SanDisk with respect to its indemnification obligations
hereunder, on SanDisk’s request, Toshiba shall continue to
provide SanDisk the results of any monitoring activities to the
extent such results may affect the evaluation or determination of
alleged liability of SanDisk hereunder. The Parties acknowledge and
agree that any such information concerning the Y4 Facility and
Other Y4 Facilities shall be considered Confidential Information of
the Company and any such information concerning the Yokkaichi
Facility (including the Y4 Facility and Other Y4 Facilities) shall
be considered Confidential Information of Toshiba.
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3.
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Baseline Environmental Report.
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Each Party shall direct the Consultant retained by it to
(i) provide the other Consultant and other Party with its
initial environmental report on the Y4 Facility and Other Y4
Facilities and (ii) discuss the reports in good faith with the
other Consultant with the intent of the Parties and their
Consultants agreeing upon a single, combined report (the " Y4
Baseline Environmental Report "). If Toshiba, SanDisk and the
Consultants are unable to agree upon a single report within sixty
(60) days after the Closing, then the draft reports of both
Consultants (or combined report indicating areas of disagreement)
shall collectively be considered to be the Y4 Baseline
Environmental Report.
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4.
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Environmental Compliance.
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4.1
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Compliance . The Parties confirm their intent that the Y4
Facility and Other Y4 Facilities and all operations of the Company
be maintained in compliance with all Environmental Laws, including
by having remedial measures taken as required by any Governmental
Authority or otherwise reasonably necessary to ensure that the Y4
Facility and Other Y4 Facilities and all operations of the Company
will remain in compliance with all Environmental Laws.
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4.2
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Notice . Each Party shall promptly notify the other of
any circumstances of which it becomes aware that require or could
reasonably be expected to require remediation or other actions to
ensure that the Company and its operations are and will be
maintained in compliance with all Environmental Laws and to
minimize the aggregate Covered
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Environmental Costs (as defined below) that may be incurred.
Upon any such notice being given and received, the Parties shall
promptly discuss in good faith and seek to agree upon the measures
to be taken in response to such circumstances. Pending their
agreement, nothing shall prevent or limit Toshiba, acting in good
faith on its own initiative or upon SanDisk’s reasonable
request, from investigating the circumstances of any releases of
Hazardous Substances or taking steps reasonably appropriate to
limit or prevent ongoing releases, to limit the effects of a
release, or to prevent or limit any exposure or damage resulting
from, arising out of or otherwise by virtue of a release, including
taking immediate or urgent steps as appropriate in light of the
circumstances then known, provided , that nothing in this
paragraph shall require either Party to take any step except as
required by applicable Environmental Law.
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5.
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Indemnification Obligations.
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5.1
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Mutual Responsibility and Indemnity for Environmental
Costs .
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(a)
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Subject to Section 5.1(b), each of SanDisk and Toshiba
shall:
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1.
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be responsible for bearing 50% of all costs, expenses or
liability (including claims by third parties or any Governmental
Authority) resulting from any contamination from the release or
discharge of Hazardous Substances resulting from, arising out of or
otherwise by virtue of the construction or operation of the Y4
Facility or Other Y4 Facilities from the Closing until the FA
Termination Date, including any and all costs to investigate,
remove or remediate any release of Hazardous Substances or
otherwise reasonably necessary to assure that the Company and the
Y4 Facility and Other Y4 Facilities are and will (until the FA
Termination Date) remain in compliance with then applicable
Environmental Laws (" Environmental Costs "); and
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2.
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indemnify, defend and hold harmless the other Party and the
Company (and their respective Indemnified Parties) for its 50%
share of all Environmental Costs.
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(b)
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Each of SanDisk’s and Toshiba’s responsibility for
50% of Environmental Costs under Section 5.1(a) shall be subject to
each of the following limitations (Environment
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