Expanded Capacity. (a) The Parties intend to meet demand for increased capacity by equally investing in, and jointly building (except for the expansion of the Yokkaichi Facility (not including the FVC-Japan Equipment), unless otherwise agreed upon by the Parties), and sharing, on equal or substantially equal terms, equal amounts of new capacity for NAND Flash Memory Products. Schedule 6.03 sets forth a list in order of priority of expanding the manufacturing capacity of NAND Flash Memory Products. Toshiba shall be allocated NAND Flash Memory Product capacity of [***] L/M and SanDisk shall be allocated NAND Flash Memory Product capacity of [***] L/M at the Yokkaichi Facility (not including the FVC-Japan Equipment). FVC-Japan Equipment shall be installed with a targeted maximum manufacturing capacity for NAND Flash Memory Products of [***] L/M, to be allocated to each Party on an equal basis. Toshiba shall have the right, in its sole discretion, to expand the manufacturing capacity for NAND Flash Memory Products of the Yokkaichi Facility, by up to a maximum of [***] L/M; provided, that, SanDisk shall have the right to have allocated up to [***] of any such expanded capacity so long as SanDisk commits to load such additional capacity for six (6) months, and provided, further, that Toshiba may, in its sole discretion, decrease the manufacturing capacity of the Yokkaichi Facility (not including FVC-Japan Equipment), subject to Section 7.02(b). Master Agreement [***] INDICATES THAT CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-2. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. (b) Once the FVC-Japan Equipment installed at the Yokkaichi Facility has achieved NAND Flash Memory Products manufacturing capacity of [***] L/M, and after such time as the Yokkaichi Facility (not including the FVC-Japan Equipment) has achieved NAND Flash Memory Products manufacturing capacity of [***] L/M, the Management Committee will determine whether to further expand capacity at the Yokkaichi Facility or to establish a New Facility with capacity to manufacture NAND Flash Memory Products at a targeted capacity to be determined by the Management Committee, not to exceed [***] L/M. SanDisk shall have the option to commit to an allocation of such converted capacity to manufacture NAND Flash Memory Products, up to a maximum of [***] L/M. (c) Until (i) the Yokkaichi Facility (not including the FVC-Japan Equipment) has achieved the expansion of its manufacturing capacity for NAND Flash Memory Products, if any, determined by Toshiba in accordance with Section 6.03(a), (ii) the FVC-Japan Equipment installed at the Yokkaichi Facility has achieved a NAND Flash Memory Product manufacturing capacity of [***] L/M, and (iii) the Parties have further expanded capacity at the Yokkaichi Facility or established a New Facility with a capacity to manufacture NAND Flash Memory Products in an amount determined by the Management Committee (not to exceed a targeted maximum capacity of [***] L/M), the Parties shall not make or cause to be made any other increases in the manufacturing capacity for NAND Flash Memory Products. After the capacity expansions described in clauses (i), (ii) and (iii) of the preceding sentence have been achieved, either Party shall have the one-time option to expand its capacity to manufacture NAND Flash Memory Products; provided, that, in no event shall such Party's capacity [***] of the total combined committed capacity to manufacture NAND Flash Memory Products, after giving effect to such additional expansion. (d) Notwithstanding anything in this Section 6.03 to the contrary, if SanDisk desires to purchase more than [***] L/M of NAND [***] in the calendar year of 2003 or anytime thereafter, and Toshiba cannot offer such additional capacity at a market competitive price, then (i) SanDisk may purchase such additional capacity [***], and (ii) if SanDisk purchases such additional capacity from another source, Toshiba may thereafter utilize more than [***] of the total NAND manufacturing capacity and Toshiba shall no longer be subject to the last sentence of Section 6.03(c); provided, however, SanDisk shall continue to be entitled to purchase (A) [***] L/M of NAND [***] from FVC-Japan under and pursuant to the SanDisk Purchase and Supply Agreement and (B) up to [***] L/M of NAND [***] from Yokkaichi under and pursuant to the SanDisk Foundry Agreement. (e) After the capacity expansions described in Section 6.03(a), (b) and (c), any additional capacity expansion shall be determined by the Management Committee and shall be made by mutual agreement of the Parties. Master Agreement [***] INDICATES THAT CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-2. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. (f) All NAND Flash Memory Products will be obtained by the Parties or for the Parties through their respective Affiliates from FVC-Japan, except that each Party may obtain, directly or indirectly, a combined total of up to [***] L/M of NAND Flash Memory Products produced at the Yokkaichi Facility (not including the FVC-Japan Equipment), which shall be obtained according to agreed upon allocations in accordance with this Section 6.03. Notwithstanding the foregoing, all orders for NAND Flash Memory Products not ordered through FVC-Japan shall be reported to FVC-Japan on a quarterly basis. (g) If the Parties mutually agree to secure external manufacturing sources other than the Yokkaichi Facility through joint investment or investment by either Party in accordance with this Section 6.03, FVC-Japan and Toshiba will jointly transfer the applicable manufacturing technology and know-how to such source. FVC-Japan 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. The Parties may purchase NAND Flash Memory Products manufactured at such external source only from FVC-Japan. 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 NAND Flash Memory Products purchased by FVC-Japan from such external manufacturing source. If both Parties request such new external capacity, then FVC-Japan will pay the transfer costs to Toshiba. 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 NAND Flash Memory Products, except through FVC-Japan.
Appears in 1 contract
Sources: New Master Agreement (Sandisk Corp)
Expanded Capacity. (a) The Parties Toshiba and SanDisk intend to meet demand for increased capacity by equally investing in, and jointly building (except for the expansion of the Yokkaichi Facility (not including the FVC-Japan Equipment)facility, unless otherwise agreed upon by the PartiesToshiba and SanDisk ), and sharing, on equal or substantially equal terms, equal amounts of new capacity for NAND Flash Memory Products. Schedule 6.03 SCHEDULE 7.03(A) sets forth a list in order of priority of expanding the manufacturing capacity of NAND Flash Memory Products. Initially, Toshiba shall be allocated NAND Flash Memory Product capacity of [***] * L/M and SanDisk shall be allocated NAND Flash Memory Product manufacturing capacity of [***] * L/M at the Yokkaichi Facility (not including the FVC-Japan Equipment)facility. FVC-Japan Equipment Module II shall be installed constructed with a targeted maximum manufacturing capacity for NAND Flash Memory Products of [***] * L/M, to be allocated to each Party Toshiba and SanDisk on an equal basis. Toshiba shall have the right, in its sole discretion, to expand the manufacturing capacity for NAND Flash Memory Products of the Yokkaichi Facilityfacility, by up to a maximum of [***] * L/M; providedPROVIDED, thatTHAT, SanDisk shall have the right to have allocated up to [***] * of any such expanded capacity so long as SanDisk commits to load such additional capacity for six (6) months, and provided, further, that Toshiba may, in its sole discretion, decrease the manufacturing capacity of the Yokkaichi Facility (not including FVC-Japan Equipment)facility, subject to Section 7.02(b8.02(b). Master Agreement [***] INDICATES THAT CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-2. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
(b) Once the FVC-Japan Equipment installed at the Yokkaichi Facility Module II has achieved NAND Flash Memory Products manufacturing capacity of [***] * L/M, and after such time as the Yokkaichi Facility (not including the FVC-Japan Equipment) facility has achieved NAND Flash Memory Products manufacturing capacity of [***] * L/M, the Management Committee will determine whether to further expand convert all or a portion of DSC Module I to the production of NAND Flash Memory Products at a targeted maximum capacity at to be determined by the Yokkaichi Facility Management Committee, not to exceed * L/M, or whether to establish a New Facility another facility with capacity to manufacture NAND Flash Memory Products at a targeted capacity to be determined by the Management Committee, not to exceed [***] * L/M. SanDisk shall have the option to commit to an allocation of such converted capacity to manufacture NAND Flash Memory Products, up to a maximum of [***] * L/M.M. In considering the conversion of DSC Module I, the Management Committee will discuss the possible sale of a fifty percent interest in DSC Module I to SanDisk. Notwithstanding the foregoing, SanDisk's purchase of the DSC Module I interest is not a condition to the conversion of DSC Module I to manufacturing NAND Flash Memory Products; PROVIDED, THAT, if no DSC Module I interest is purchased by SanDisk, SanDisk acknowledges that SanDisk's purchase price for such NAND Flash Memory Products manufactured at DSC Module I may not be equal to that for Toshiba.
(c) Until (i) the Yokkaichi Facility (not including the FVC-Japan Equipment) facility has achieved the expansion of its manufacturing capacity for NAND Flash Memory Products, if any, determined by Toshiba in accordance with Section 6.03(a7.03(a), (ii) the FVC-Japan Equipment installed at the Yokkaichi Facility Module II has achieved a NAND Flash Memory Product manufacturing capacity of [***] * L/M, and (iii) either DSC Module I has converted all or * INDICATES THAT CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. a portion of its capacity to the Parties production of NAND Flash Memory Products and DSC Module I has achieved a capacity to manufacture NAND Flash Memory Products in an amount determined by the Management Committee (not to exceed a targeted maximum capacity of * L/M) or the parties have further expanded capacity at the Yokkaichi Facility or established a New Facility another facility with a capacity to manufacture NAND Flash Memory Products in an amount determined by the Management Committee (not to exceed a targeted maximum capacity of [***] * L/M), the Parties shall not make or cause to be made any other increases in the manufacturing capacity for NAND Flash Memory Products. After the capacity expansions described in the clauses (i), (ii) and (iii) of the preceding sentence have been achieved, either Party Parent shall have the one-time option to expand its capacity to manufacture NAND Flash Memory Products; providedPROVIDED, thatTHAT, in no event shall such PartyParent's capacity [***] exceed 60% of the total combined committed capacity to manufacture NAND Flash Memory Products, after giving effect to such additional expansion.
(d) Notwithstanding anything in this Section 6.03 to the contrary, if SanDisk desires to purchase more than [***] L/M of NAND [***] in the calendar year of 2003 or anytime thereafter, and Toshiba cannot offer such additional capacity at a market competitive price, then (i) SanDisk may purchase such additional capacity [***], and (ii) if SanDisk purchases such additional capacity from another source, Toshiba may thereafter utilize more than [***] of the total NAND manufacturing capacity and Toshiba shall no longer be subject to the last sentence of Section 6.03(c); provided, however, SanDisk shall continue to be entitled to purchase (A) [***] L/M of NAND [***] from FVC-Japan under and pursuant to the SanDisk Purchase and Supply Agreement and (B) up to [***] L/M of NAND [***] from Yokkaichi under and pursuant to the SanDisk Foundry Agreement.
(e) After the capacity expansions described in Section 6.03(a7.03(a), (b) and (c), any additional capacity expansion shall be determined by the Management Committee and shall be made jointly by mutual agreement of the Parties. Master Agreement [***] INDICATES THAT CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-2. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONSParents on an equal basis.
(fe) All NAND Flash Memory Products will be obtained by the Parties Parents or for the Parties Parents through their respective Affiliates from FVC-JapanNewco, except that each Party Parent may obtain, directly or indirectly, a combined total of up to [***] * L/M of NAND Flash Memory Products produced at the Yokkaichi Facility (not including the FVC-Japan Equipment)facility, which shall be obtained according to agreed upon allocations in accordance with this Section 6.03Section. Notwithstanding the foregoing, all orders for NAND Flash Memory Products not ordered through FVC-Japan Newco shall be reported to FVC-Japan Newco on a quarterly basis.
(gf) If the Parties Parents mutually agree to secure external manufacturing sources other than the DSC and Yokkaichi Facility through joint investment or investment by either Party Parent in accordance with this Section 6.03Section, FVC-Japan Newco and Toshiba will jointly transfer the applicable manufacturing technology and know-how to such source. FVC-Japan Newco will conduct all negotiations with the external manufacturing source; providedPROVIDED, however, that the terms and conditions of any agreement shall be subject to prior consultation with and the approval of Toshiba. The Parties Toshiba and SanDisk may purchase NAND Flash Memory Products manufactured at such an external source only from FVC-JapanNewco. In connection with any technology transfer to such an 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 the external manufacturing source is requested by only one of the PartiesMembers, such Party Member will pay the transfer costs and be entitled to purchase the full output of NAND Flash Memory Products purchased by FVC-Japan Newco from such the external manufacturing source. If both Parties Members request such the new external capacity, then FVC-Japan Newco will pay the transfer costs to Toshiba. Neither Party shall Toshiba nor the Members have the right to grant manufacturing licenses to such an external manufacturing source or to disclose or transfer to any such external manufacturing source, source manufacturing know-how related to the manufacture of NAND Flash Memory Products, except through FVC-JapanNewco.
Appears in 1 contract
Sources: Master Agreement (Sandisk Corp)