Environmental Indemnification Agreement

EXHIBIT 10.5


MUTUAL CONTRIBUTION
AND ENVIRONMENTAL INDEMNIFICATION AGREEMENT


This MUTUAL CONTRIBUTION AND ENVIRONMENTAL INDEMNIFICATION AGREEMENT, dated as of September 10, 2004, 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, and SanDisk International Limited, a company organized under the laws of the Cayman Islands ("SanDisk International", and collectively with SanDisk Corporation, "SanDisk," and SanDisk together with Toshiba, the "Parties").


RECITALS


WHEREAS, Toshiba and SanDisk are parties to that certain Flash Partners Master Agreement, dated as of the date hereof (the "Master Agreement");


WHEREAS, pursuant to the terms of the Master Agreement and other Operative Documents, Flash Partners Y.K., a Japanese yugen kaisha (the "Company"), will have Y3 NAND Flash Memory Products manufactured at the Y3 Facility; and


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


NOW, THEREFORE, the Parties agree as follows:


1. DEFINITIONS AND INTERPRETATION.


1.1 Master Agreement. Appendix A to the 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.


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


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


(b) "Hazardous Substances" means petroleum, petroleum hydrocarbons or
petroleum products, petroleum by-products, radioactive materials, asbestos
or asbestos-containing


CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


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materials, gasoline, diesel fuel, 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.


2. ENVIRONMENTAL INVESTIGATIONS.


2.1 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 the proposed site of the Y3 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 Baseline Environmental Report (as
defined below) shall be chargeable to and payable by the Company, which
fees and costs shall be chargeable to and payable by the Parties through
wafer price increases.


2.2 Scope of Review. Each Consultant has performed the activities customarily
associated with Phase I (tochirireki chosa) and Phase II (osen jokyo
kakunin chosa) studies. Such activities were performed at the Y3 Facility
and elsewhere at the Yokkaichi Facility as identified in the Toshiba
Consultant's reports and the SanDisk Consultant's reports; provided,
however, that the Parties acknowledge that due to construction activities
at the Y3 Facility the SanDisk Consultant was not permitted to obtain soil
or water samples from those areas identified on Exhibit A (such areas, the
"Untested Areas").


2.3 Information from Monitoring Activities. Toshiba shall share, or cause to
be shared, with SanDisk and, upon SanDisk's request, the SanDisk
Consultant, the results of any monitoring activities conducted by Toshiba
or its Affiliates with respect to the surface and subsurface conditions on
the site of the Y3 Facility on or after the Effective Date and until the
FP Termination Date; provided that if as of the FP 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 Y3 Facility shall be considered
Confidential Information of the Company and any such information
concerning the


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Yokkaichi Facility (including the Y3 Facility) shall be considered
Confidential Information of Toshiba.


3. BASELINE ENVIRONMENTAL REPORT.


Each Party shall direct the Consultant retained by it to (i) provide the
other Consultant and other Party with its initial environmental report on
the Y3 Facility 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 "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 Baseline Environmental Report.


4. ENVIRONMENTAL COMPLIANCE.


4.1 The Parties confirm their intent that the Y3 Facility 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 Y3 Facility and all operations of the Company will remain in
compliance with all Environmental Laws.


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