-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QhpoIN4RGJHGh/8oM6S751lMaFpCEk9bU3Lbp1nMi+GIbifNEzMAuYGlo7l7Q4Zf TKp2F7MibkszlxxCNPTTWA== 0000891618-97-004147.txt : 19971017 0000891618-97-004147.hdr.sgml : 19971017 ACCESSION NUMBER: 0000891618-97-004147 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970627 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971016 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SANDISK CORP CENTRAL INDEX KEY: 0001000180 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572] IRS NUMBER: 770191793 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-26734 FILM NUMBER: 97696775 BUSINESS ADDRESS: STREET 1: 140 CASPIAN COURT CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4085620500 MAIL ADDRESS: STREET 1: 140 CASPIAN COURT CITY: SUNNYVALE STATE: CA ZIP: 94089 8-K 1 FORM 8-K FOR REPORTING DATE JUNE 27, 1997 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) JUNE 27, 1997 SANDISK CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) DELAWARE 0-26734 77-0191793 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 140 CASPIAN COURT, SUNNYVALE, CALIFORNIA 94089 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (408) 542-0500 -------------------- NONE - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) 2 Item 5 Other Events. SanDisk Corporation, a Delaware corporation ("SanDisk"), entered into a Foundry Venture Agreement dated June 27, 1997 (the "Agreement") with United Microelectronics Corporation, a corporation organized under the laws of the Republic of China ("UMC"). Pursuant to the Agreement (included as Exhibit 10.23), SanDisk and UMC, along with other existing and potential parties to the venture, have committed to form and invest in a corporation formed under the laws of the Republic of China for purposes of engaging in the joint venture which will, among other things, engage in the business of foundry services. Also, pursuant to the Agreement, UMC has confirmed certain points and further explained other points concerning the Agreement. These confirmations and explanations have been set forth in the documents included as Exhibits 10.24 and 10.25. Item 7 Exhibits. 10.23* Foundry Venture Agreement entered into as of June 27, 1997, by and between SanDisk Corporation and United Microelectronics Corporation. 10.24* Written Assurances Re: Foundry Venture Agreement given by United Microelectronics Corporation, dated September 13, 1995. 10.25* Side Letter dated May 28, 1997 between United Microelectronics Corporation and SanDisk Corporation. - ------------ *Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SanDisk Corporation (Company) Date: October 16, 1997 By: /s/ CINDY BURGDORF ------------------------- Name: Cindy Burgdorf Title: Chief Financial Officer 4 EXHIBIT INDEX Exhibit - ------- 10.23* Foundry Venture Agreement entered into as of June 27, 1997, by and between SanDisk Corporation and United Microelectronics Corporation. 10.24* Written Assurances Re: Foundry Venture Agreement given by United Microelectronics Corporation, dated September 13, 1995. 10.25* Side Letter dated May 28, 1997 between United Microelectronics Corporation and SanDisk Corporation. - ------------ *Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. EX-10.23 2 FOUNDRY VENTURE AGREEMENT 1 EXHIBIT 10.23 FOUNDRY VENTURE AGREEMENT This Foundry Venture Agreement ("Foundry Venture Agreement") is entered into as of June ___, 1997, by and between SanDisk Corporation, a corporation with its headquarters in California ("SanDisk") and United Microelectronics Corporation, a corporation organized under the laws of the Republic of China ("UMC"). SanDisk understands that UMC is in discussions with others who are interested in participating in USI. SanDisk agrees that UMC may commit to such others (collectively referred to in this Foundry Venture Agreement as "OtherVen") in such amounts as UMC deems appropriate, subject to the commitments made to SanDisk hereunder, and provided further that each OtherVen must commit in writing to comply with and be bound by this Foundry Venture Agreement as if specifically named as a Venturer herein. Notwithstanding such OtherVen, SanDisk will be fully bound by and is committed to the terms of this Foundry Venture Agreement. SanDisk, OtherVen and UMC (collectively "the Venturers") agree: 1. PURPOSE AND FORMATION OF VENTURE 1.1 Subject to the Technology Transfer and License Agreement and the Foundry Capacity Agreement referred to in paragraphs 3 and 5 below (collectively, the "Venture Agreements"), the Venturers each commit to form and invest in a corporation to be formed under the laws of the Republic of China ("R.O.C.") for purposes of engaging in the business of providing integrated circuit foundry services, making and selling integrated circuits in wafer, die and packaged form as generally described in the USI Business Plan referred to in paragraph 1.4 below. 1.2 UMC has arranged for the formalities of submission to the Administration of the Science Based Industrial Park for approval of and then for incorporation of the corporation contemplated under this Foundry Venture Agreement, using a name mutually agreeable to the Venturers (for purposes of this Foundry Venture Agreement, the corporation contemplated under this Foundry Venture Agreement shall be referred to as "USI."). All reasonable expenses, up to a maximum of USD [*] (exclusive of fees to be paid to the government), incurred by UMC pursuant to this paragraph 1.2 with respect to such incorporation shall be subject to reimbursement by USI if the USI shares contemplated under Paragraph 4 are not issued to UMC as described below. 1.3 Subject to the terms of the Venture Agreements, USI shall engage in the business of foundry services, and develop and improve processing and manufacturing techniques in order to improve its competitiveness in the foundry area. - ------------ *Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 1. 2 1.4 UMC has submitted to the Science Based Industrial Park a written business plan (the "USI Business Plan") for the operations and for the capital structure and expenditures of USI; this USI Business Plan is subject to approval by the Administration of the Science Based Industrial Park; and, subject to the conditions of confidentiality in Paragraph 9.7 below, will be made available to the Venturers. As part of the USI Business Plan, the Venturers contemplate USI will apply for "tax holiday" and/or other favorable tax treatment under R.O.C. law. 2. INITIAL OPERATIONS 2.1 The Venturers generally contemplate the Building and Construction Schedule for USI as shown in Attachment A and the Production and Business Schedule for USI as shown in Attachment B. 2.2 Under mutually agreeable written terms to be negotiated between UMC and USI, USI shall lease from UMC the land generally described in Attachment C, and commonly known as UMC's Module C, located at No. 3 Li-Hsin Road Science Based Industrial Park, Hsin Chu City, Taiwan, R.O.C. (a) The Venturers contemplate that except as agreed by them in writing, the terms of this lease will be at the market rate which would be negotiated between a lessor and lessee dealing with one another at arms length in the context of an independent lease and not based on some other business relationship. (b) Without limiting the foregoing, any and all services and supplies (including without limitation power, water, gas and/or materials) will not be part of such lease, and will be the subject of such terms as may be negotiated by USI. (c) The lease term for Module C will be for an initial period of five years, and USI will have the right to extend the lease for up to two additional five year periods under terms to be stated in the lease agreement. USI will occupy the land for this Module as its principal place of business, and will utilize this land for its production facility. 2.3 The Venturers shall each cooperate to build out this land as USI's production facility as quickly and efficiently as commercially reasonable, provided however that this Paragraph 2.3 shall not impose any obligation to provide additional funding beyond that expressly required under this Foundry Venture Agreement. 3. TECHNOLOGY TRANSFER AND MANAGERIAL SUPPORT Promptly after USI's formation, UMC and USI will enter into a mutually agreeable Technology Transfer and License Agreement pursuant to which UMC will transfer to USI for 2. 3 use in USI facilities the Licensed Process (as defined in the Technology Transfer and License Agreement) and related manufacturing know-how. The execution of the Technology Transfer and License Agreement is an essential aspect of the relationship contemplated under this Foundry Venture Agreement. 4. INVESTMENT COMMITMENTS & STOCK PURCHASE AND SHAREHOLDER AGREEMENTS & REPRESENTATION ON BOARD OF DIRECTORS 4.1 The Venturers will purchase shares in USI as follows: (a) The total capital of USI shall be USD $1 Billion: USD $600 million will be by investment in standard shares, and, as may be approved by the USI board of directors, USD $400 million (plus any other additional capital required) will be by way of participation in UMC credit facilities and/or bank loans, and/or will be by way of other debt and/or equity to the extent such other debt and equity is approved in writing by each of the Venturers. Notwithstanding anything to the contrary, (i) UMC shall not be required to provide participation on behalf of USI in UMC's credit facilities in any amount in excess of USD $400 million, and (ii) provided further that, to the extent demanded by the lender and subject to the requirements of the law, UMC shall guarantee such bank loans made directly to USI but only so long as and to the extent that the total USI capital financed by way of participation in credit facilities, bank loans, debt and/or such other equity (excluding the investment stated in the table of paragraph 4.1(b) below) is less than and/or equal to USD $410 million. (b) The Venturers will invest according to the following table:
- -------------------------------------------------------------------------------- $ investment represented by Standard standard share share % (USD millions) Technical share % - -------------------------------------------------------------------------------- SanDisk 10% $60M 0% - -------------------------------------------------------------------------------- OtherVen TBD% $TBD 0% - -------------------------------------------------------------------------------- UMC, UMC Affiliates* 40% $240M 15% USI employees, UMC employees** & R.O.C. financial institutions - -------------------------------------------------------------------------------- Total shareholding 85% $510M 15% - --------------------------------------------------------------------------------
*For purposes of this Foundry Venture Agreement, "UMC Affiliates" shall mean those entities: (i) nominated by UMC and approved by the Venturers in writing, (ii) which UMC directly and/or indirectly controls, and/or (iii) in which UMC directly or indirectly owns a majority interest. 3. 4 **UMC employees who intend to become (and who later become) regular employees of USI will be among the USI shareholders pursuant to this table. The UMC employees and the eligible USI employees shall be required to pay the value shown in this table for their standard shares. (c) The Venturers shall pay in cash for their standard shares as follows: (i) twenty-five percent (25%) to be paid in full on the later of September 15, 1995, or when the appropriate governmental approvals for the formation of USI have been obtained; (ii) fifty percent (50%) to be paid in full on or before the start of clean room construction; and (iii) the remainder, twenty-five percent (25%), to be paid in full on or before the start of fab production ramp-up. (d) Subject to the requirements of law and pursuant to the applicable statutory and regulatory rules, the standard shares of the Venturers, of the UMC Affiliates, of the UMC employees, and of the USI employees as shown in paragraph 4.1(b) above shall vest upon payment for the shares involved; UMC's technical shares shall vest upon completion of first silicon for any process licensed from UMC having feature sizes of 0.35u or less; the shares of UMC Affiliates (to the extent fully paid) shall be issued as UMC requests; and the shares of UMC and UMC Affiliates shall be transferrable amongst UMC and UMC Affiliates without the necessity of USI's, SanDisk's, and/or OtherVen's prior written consent. (e) The Venturers' shares shall be common stock, and, to the fullest extent allowable under the law, will be registered in any public offering by USI, provided that with respect to such shares, each Venturer (and all UMC Affiliates holding such shares) must follow and comply with all requirements of R.O.C. law and of the Taiwan Securities and Exchange Commission and of the Taiwan Securities Exchange, including, without limitation, with respect to stand-still, lock-up, and/or other requirements. (f) Until USI completes a successful offering of its shares on a recognized securities exchange, the shares of the Venturers (and of UMC Affiliates holding such shares) in USI will not be transferable in any manner whatsoever except with the written consent of the Venturers, provided however that any Venturer may transfer its entire right, title and interest in USI (including its proportionate right of first refusal for foundry capacity, the "Foundry Rights") and other rights under the Foundry Venture Agreement and/or Venture Agreements: (i) once but only to the extent and only as part of a transfer of all or substantially all of the assets, business and/or ownership of that Venturer to a transferee subject, with respect to the Foundry Rights, to the terms of paragraph 4.1(f)(iii) below; and/or 4. 5 (ii) once to or between itself and any of its subsidiaries in which, at the time of such transfer, the transferring Venturer owns at least 50%. Notwithstanding anything to the contrary: (iii) the Foundry Rights when and if transferred pursuant to Paragraph 4.1(f)(i) above shall only be exercisable with respect to the manufacture of products which the transferring Venturer at the time of such transfer was selling, was designing (as reflected in contemporaneous documents) or was contemplating designing and selling (as demonstrated in its then written business plan(s)), and all future revisions and more highly integrated versions of such products. (iv) if prior to the completion of a public offering of USI securities on a recognized securities exchange, any Venturer (or UMC Affiliate holding such shares) wishes and/or attempts to transfer its shares in USI (other than as allowed by Paragraph 4.1(f)(i) and/or 4.1(f)(ii)) pursuant to any Court or other order or law, or as a result of any nonconsensual action by any authority with jurisdiction, the shares involved will be subject to a right of first refusal as follows: (aa) the other Venturers (the "eligible other Venturers") will have the right to purchase the shares involved at their then fair market value as determined by a mutually agreeable independent appraiser; (bb) each such eligible other Venturer will have the right to purchase such shares on a pro rata basis as determined by the ratio of their respective shareholding percentages (which, absent any previously permitted transfers, would be as shown in the table in Paragraph 4.1(b) above); (cc) if any such eligible other Venturer elects not to exercise any portion or all of such right of first refusal within 30 days of the independent appraisal, such portion of such right of first refusal will be subject to exercise by the other eligible other Venturer, and the shares involved will be subject to a right of such other eligible other Venturer to purchase on the same terms as outlined above; and (dd) if the other eligible other Venturer does not commit to purchase such shares within 60 days of the independent appraisal, all rights under this Paragraph 4.1(f)(iv) will expire as to such unpurchased shares. (g) Subject to the requirements of and to the extent permissible under R.O.C. law, to the extent that USI wishes to offer any equity beyond the USD $600 million referred to in Paragraph 4.1(a) above, each Venturer shall have the right of first refusal to participate in such offering in proportion to its then current respective shareholding. 5. 6 4.2 The parties shall in good faith after execution of this Foundry Venture Agreement enter into negotiations regarding audit and information rights to be provided to the Venturers, in order to, among other things, make timely public disclosure of information about USI's profits, losses, and/or other financial information reasonably required, in the view of such Venturer's counsel and accountants, to be disclosed separately, in conjunction with, or consolidated into, such Venturer's public quarterly, annual and/or other reports. Such rights shall at a minimum be sufficient for such Venturers to timely comply with their public reporting obligations, but shall not require USI to pay for and/or incur the expenses of such matters. In the event the parties do not reach agreement on such rights by December 15, 1995, the extent of such rights will be decided conclusively by Price Waterhouse & Co. (Taipei office) and a nationally recognized independent accounting firm nominated by SanDisk and OtherVen. If the aforesaid accounting firms fail to decide such rights by January 30, 1996, the matter shall be resolved by binding arbitration on an expedited basis. 5. FOUNDRY CAPACITY & COMMITMENTS Each Venturer's obligations under Paragraphs 1 to 5 of this Foundry Venture Agreement shall be conditioned upon entry by the Venturer into a Foundry Capacity Agreement with USI (the "Foundry Capacity Agreement") and none of the obligations of the Venturer or of USI under those sections shall be binding until such time as it enters such a Foundry Capacity Agreement. The terms of the Articles of Incorporation and Bylaws of USI shall be consistent with the terms of this Foundry Venture Agreement, and the Venture Agreements. 6. TERMINATION OF RIGHTS & PRIVILEGES 6.1 Subject to Paragraph 6.2 below, any one or more of the Venturers and/or USI (collectively "the Parties") shall have the right to terminate the rights of any other Party under this Foundry Venture Agreement and/or the Venture Agreements by giving written notice of termination to that other Party at any time upon or after: (a) the filing by the other Party of a petition in bankruptcy or insolvency; (b) any adjudication that the other Party is bankrupt or insolvent; (c) the filing by the other Party of any petition or answer seeking reorganization, readjustment or arrangement of its business under any law relating to bankruptcy or insolvency; (d) the appointment of a receiver for all or substantially all of the property of the other Party; 6. 7 (e) the making by the other Party of any assignment for the benefit of creditors; or, (f) the institution of any proceeding for the liquidation or winding up of the other Party's business or for the termination of its corporate charter. Notwithstanding anything to the contrary, no termination under this Paragraph 6.1 as to such other Party shall affect the rights of any other Venturer under this Foundry Venture Agreement and/or the Venture Agreements. 6.2 (a) Termination pursuant to Paragraph 6.1 above shall be effective immediately upon delivery of the written notice, or in the case of airmail notice, four days after dispatch, pursuant to Paragraph 8 below. (b) Upon termination as to a Venturer under Paragraph 6.1 above, any shares held by that Venturer shall be subject to purchase by the remaining Venturers pursuant to Paragraph 4.1(f)(iv) above. (c) Except as permitted in paragraph 4.1(f), no Venturer may transfer its interest or right in USI in any manner to any competitor of UMC or to any entity in the business of fabricating integrated circuits except under terms (i) in which such Venturer first relinquishes and releases all rights to USI capacity under this and any and all other agreements, and (ii) in which such entity and/or competitor expressly consents in writing that they have no such interest or right to such capacity. 6.3 USI will undertake its reasonable best efforts to implement the Technology Road Map attached as Attachment B, and to achieve the goals described in the USI Business Plan. In addition, and subject to the terms of this Foundry Venture Agreement and the Venture Agreements, USI will cooperate with each Venturer in a commercially reasonable manner to qualify products of such Venturer under the processes involved. 7. DISPUTE RESOLUTION 7.1 The Venturers and USI shall cooperate and attempt in good faith to resolve any and all disputes arising out of and/or relating to this Foundry Venture Agreement and/or any of the Venture Agreements. Without limiting the foregoing, within thirty days of a written demand to meet to resolve such a dispute, senior management with the authority to negotiate and resolve the issues shall meet in the State of Hawaii or in some other mutually agreeable location to discuss the issues, from time to time during the forty-five day period following such demand (or longer if agreeable to the Venturers involved) as reasonably requested by any party involved, and such senior management will attempt to resolve the dispute. 7.2 Any such disputes relating to and/or arising out of this Foundry Venture Agreement and/or any of the Venture Agreements which cannot be so resolved will be 7. 8 decided exclusively by binding arbitration under procedures which ensure efficient and speedy resolution. Such an arbitration may be commenced by USI and/or any Venturer involved in the dispute (i) after the expiration of the forty-five day period following the written demand to meet to resolve the dispute pursuant to Paragraph 7.1 above, and/or (ii) at such earlier time as any Party involved repudiates and/or refuses to continue with its obligations to negotiate in good faith. 7.3 The arbitration hearing will be before a panel of three neutral, independent arbitrators. The arbitration hearing will be conducted in the State of Hawaii, and will be in the English language (with translations and interpretations as reasonable for the presentation of evidence and/or conduct of the arbitration). Notwithstanding anything to the contrary, any party may apply to any court of competent jurisdiction for interim injunctive relief as may be allowed under applicable law with respect to irreparable harm which cannot be avoided and/or compensated by such arbitration proceedings, without breach of this Paragraph 7 and without any abridgment of the powers of the arbitrators. 7.4 The arbitration will be conducted under the Rules of the Asia Pacific Arbitration Center. Notwithstanding anything to the contrary: (a) the arbitrators will have no power to order discovery; and (b) the arbitrators shall require pre-hearing exchange of documentary evidence to be relied upon by each of the respective parties in their respective cases in chief, and pre-hearing exchange of briefs, witness lists and summaries of expected testimony. 7.5 The arbitrators will make their decision in writing; and their decision will be binding upon the Venturers and USI and it may be entered by any court having jurisdiction. 8. NOTICES All notices required or permitted to be given under this Foundry Venture Agreement and/or any of the Venture Agreements shall be in writing and be deemed as given when delivered, or in the case of airmail, four days after dispatch, and shall be addressed as follows and dispatched by personal delivery, by airmail letter in any post office in the U.S. or in Taiwan, or by facsimile: If to SanDisk: SanDisk Corporation 140 Caspian Court Sunnyvale CA 94089 Attention: Eli Harari, President fax (408) 542-0503; fon (408) 542-0500 If to UMC: 8. 9 United Microelectronics Corporation No. 13 Innovation Road I Science Based Industrial Park Hsin Chu City, Taiwan, R.O.C. Attention: John Hsuan, President fax (035) 774-767; fon (035) 782-258 If to USI: USI No. 3 Li-Hsin Road Science Based Industrial Park Hsin Chu City, Taiwan, R.O.C. Attention: President fax (035) ; fon (035) Any Venturer and/or USI may at any time give written notice of a change of its address to the others. 9. MISCELLANEOUS 9.1 No Party shall be liable to the others with respect to the failure or delay in the performance of any obligation under this Foundry Venture Agreement and/or any of the Venture Agreements for the time of and to the extent that such failure is caused by or the result of war, fire, flood, earthquake, acts of god or any causes beyond the reasonable control of the Venturers and/or USI. 9.2 No Party shall be liable to the others (i) for any special, incidental, indirect or consequential damages; (ii) for increased costs of obtaining substitute goods or services to the extent such increased costs are in excess of those amounts which such Party would have been entitled to receive for the goods and services involved had it properly performed; (iii) for loss of use, opportunity, market potential, and/or profit, on any theory (whether contract, tort, from third party claims or otherwise). 9.3 Except as expressly stated above and in Paragraphs 9.5 and/or 9.13 below and/or in the Venture Agreements, no Party makes any warranties or representations (express, implied or statutory), and there are no other warranties, representations, or indemnities, and THE PARTIES EXPRESSLY DISCLAIM ALL SUCH OTHER WARRANTIES, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE. Without limiting the foregoing, except as expressly stated in this Foundry Venture Agreement and/or in any of the Venture Agreements (these "Agreements"), there are no other representations and/or warranties concerning the subject matter of such Agreements, and/or relating to USI of any 9. 10 sort or manner, and each Party expressly agrees that it is not relying upon any such other representations and/or warranties. Each Party has consulted with counsel concerning such Agreements and USI, and enters into these Agreements with full advice and understanding and accepting the risks involved. 9.4 Notwithstanding anything to the contrary (whether in the Venture Agreements or elsewhere), nothing contained in this Foundry Venture Agreement, in the Venture Agreements, and/or in the USI Business Plan shall be or be construed as: (a) a warranty or representation as to the validity, utility, suitability or economic viability of this opportunity or of any intellectual property or technology except as expressly stated in paragraph 9.5 below, in Paragraph 9 of the Technology Transfer and License Agreement, and/or in Paragraphs 5 and/or 7 of the Foundry Capacity Agreement; (b) a warranty or representation that any manufacture, sales, use or other disposition of products to be manufactured by USI will be free from infringement of patents, utility models and/or design patents other than those under which licenses have been granted hereunder and/or except as expressly stated in paragraph 9.5 below, and/or in Paragraph 7 of the Foundry Capacity Agreement; (c) a warranty or representation that USI will be successful, that USI will realize and/or fulfill any of its Business Plans, that USI will go public or return profit to the Parties, or that the Parties will recover their investments (for purposes of this Paragraph 9.4(c), any covenant or obligation in these Agreements shall not be eliminated and/or excluded by reason of it also being part of the USI Business Plan, nor shall this Paragraph 9.4(c) absolve USI from efforts required under these Agreements to implement the USI Business Plan); (d) conferring any right to the other Parties to use in advertising, publicity, or otherwise, any trademark, trade name or names of any Party, or any contraction, abbreviation or simulation thereof; and/or (e) conferring by implication, estoppel or otherwise, upon any Party any license or other right under any class or type of patent, utility model or design patent except the licenses and rights expressly granted under the Venture Agreements. 9.5 (a) Each Venturer represents and warrants to the other Venturers and to USI that all technology, processes, masks and other information tranferred by that Venturer pursuant to the terms of this Foundry Venture Agreement and/or the Venture Agreements, and/or its respective foundry relationship with USI shall be free from any claims of infringement or violation of valid and enforceable trade secret, trademark, copyright, and/or mask work rights of others; and that Venturer shall defend, indemnify and hold the other Venturers and USI harmless from and against any claims to the contrary, provided however that such indemnifying Venturer shall receive (i) prompt written notification of any claim for which it is providing indemnification under this Paragraph 9.5, (ii) the right to assume, in a 10. 11 prompt fashion, sole control of the defense or settlement of such claim (provided that the indemnifying Venturer cannot commit any other Venturer and/or USI to the payment of sums), and (iii) reasonable assistance from the indemnified party or parties, at the indemnifying Venturer's request and expense and provided further that if the indemnifying Venturer assumes sole control of the defense of such claim, the indemnified party may, at its expense, participate in such defense. (b) USI represents and warrants to the Venturers that all technology, processes, masks and other information transferred by it (in products or otherwise) or used by it in any process employed in the fabrication of products pursuant to the terms of this Foundry Venture Agreement and/or the Venture Agreements, and/or under its respective foundry relationships with the Venturers shall be free from any claims of infringement or violation of valid and enforceable trade secret, trademark, copyright, and/or mask work rights of others; and USI shall defend, indemnify and hold the Venturers harmless from and against any claims to the contrary, provided however that USI shall receive (i) prompt written notification of any claim for which it is providing indemnification under this Paragraph 9.5, (ii) the right to assume, in a prompt fashion, sole control of the defense or settlement of such claim (provided that USI cannot commit any Venturer to the payment of sums), and (iii) reasonable assistance from the indemnified party or parties, at USI's request and expense, and provided further that if USI assumes sole control of the defense of such claim, the indemnified party may, at its expense, participate in such defense. 9.6 The obligations of the Parties under Paragraphs 1 to 5 above shall be subject to and conditioned upon funding of USI by the Venturers and upon approval of the formation of USI and of its operation at Module C by all required governmental authorities, including without limitation, the Science Based Industrial Park Administration, but the obligations under the other Paragraphs of this Agreement shall not be so conditioned. UMC shall cooperate with USI in securing such approvals within the time contemplated under the schedule of Attachment A. The obligations and responsibilities of the Venturers and USI under Paragraphs 6 to 9 shall survive the expiration and/or termination of this Foundry Venture Agreement. 9.7 (a) For purposes of these Agreements, "Confidential Information" shall mean: (i) any information disclosed by one party to another pursuant to or in connection with these Agreements which is in written, graphic, machine readable or other tangible form and is marked confidential, proprietary, or in some other manner to indicate its confidential nature; and (ii) any information orally disclosed by one party to another pursuant to or in connection with these Agreements provided that such information is designated as confidential at the time of disclosure and reduced to a writing delivered to the 11. 12 receiving party within thirty days of the oral disclosure and detailing the confidential information involved. (b) Each party shall treat as confidential all Confidential Information provided by any other party, shall not use or disclose such Confidential Information except as contemplated in these Agreements and then only subject to written confidentiality agreements at least as protective as those stated in this Foundry Venture Agreement. Without limiting the above, each party shall use at least the same procedures and degree of care which it uses to prevent the disclosure of its confidential information of like importance and shall in no event use less than reasonable procedures and a reasonable degree of care. Notwithstanding the above, no party shall have obligations with respect to Confidential Information of any other party which: (i) Such party shows was generally known and available to the public at the time it was disclosed, or becomes generally known and available to the public through no fault of the receiver prior to the use and or disclosure of such information by the receiver; (ii) Such party shows was known to the receiver without obligation of confidentiality at the time of disclosure as shown by written evidence in existence at the time of disclosure; (iii) Is disclosed with the prior written consent of the discloser; (iv) Such party shows becomes known to the receiver without obligations of confidentiality; or (v) Is disclosed pursuant to the order or requirement of any court, agency, or other governmental body having jurisdiction; provided, however, that, prior to any such disclosure pursuant to paragraphs 9.7(b)(v) above, the Party seeking disclosure shall notify the others and take all reasonable actions in an effort to minimize the nature and extent of such disclosure. (c) Each party agrees that the terms of these Agreements and the USI Business Plan shall be treated as Confidential Information and not disclosed, provided however that any and all parties may disclose the terms and conditions of these Agreements and the USI Business Plan in confidence to its legal counsel, accountants, banks, and financing sources and their advisers, or pursuant to written confidentiality agreements having terms at least as restrictive as those this Paragraph 9.7 in connection with an actual or proposed merger or acquisition, and/or in connection with the enforcement of its rights under this Foundry Venture Agreement 12. 13 (d) Notwithstanding anything to the contrary, and subject to the exceptions of Paragraph 9.7(b): (i) any Confidential Information disclosed to UMC by a Venturer which is marked "UMC only" (or similarly) may be used and disclosed by UMC solely in connection with preparing and submitting the USI Business Plan and applications for governmental approvals relating to USI but may not otherwise be disclosed by UMC to USI or to any other Venturer; (ii) any Confidential Information disclosed to UMC and/or to USI which is marked as "USI Internal Only" may be disclosed by UMC to USI, but may not be disclosed by USI to any other Venturer; and (iii) any Confidential Information disclosed to a Venturer which is not marked "UMC Only" and/or "USI Internal Only" (or similarly) may be disclosed to USI and/or to any Venturer. (e) Without limiting the foregoing, in order to facilitate exchanges of Confidential Information amongst themselves, the Venturers contemplate they may negotiate and execute one or more mutually satisfactory non-disclosure agreements. (f) The obligations of this Paragraph 9.7 shall survive the expiration or termination of this Foundry Venture Agreement and the Venture Agreements for a period of three (3) years after the last of them to expire and/or terminate. In the event of any breach of this covenant, the Venturers and USI shall promptly discuss and cooperate in good faith with respect to measures to mitigate any harmful effect of such breach and with respect to possible compensation to the injured party. 9.8 This Foundry Venture Agreement and the Venture Agreements are written only in the English language, which language shall be controlling in all respects, and all versions in any other language shall be for accommodation only and shall not be binding upon the Venturers. All communications to be made or given pursuant to such Agreements shall be in the English language, except as may be required under applicable law. 9.9 This Foundry Venture Agreement and the Foundry Capacity Agreement and matters connected with performance under any one or more of them shall be interpreted and construed in all respects in accordance with the laws of the State of California, provided however that all matters connected with the purchase and formalities of stock and ownership interests in USI and the Technology Transfer and License Agreement shall be interpreted and construed in all respects in accordance with the laws of Taiwan, the Republic of China, all without regard to that body of law which pertains to conflicts and/or choice of law and excluding the UN Convention on Contracts for International Sales of Goods. 13. 14 9.10 If any provision of this Foundry Venture Agreement and/or the Venture Agreements is held wholly or partially unenforceable for any reason, such unenforceability shall not affect the enforceability of the remaining provisions of such Agreements, and all provisions of such Agreements shall be construed so as to preserve enforceability. 9.11 (a) The terms and conditions contained in the USI Business Plan, this Foundry Venture Agreement and/or the Venture Agreements and the documents attached thereto (the "Plan and Agreements") shall supersede all previous communications, understandings, representations and/or agreements, oral and/or written, between the Venturers with respect to the subject matter hereof; (b) There are no other such agreements, understandings and/or writings except as stated above; (c) No agreement or understanding varying, modifying or extending the terms and/or conditions of such Plan and Agreements, nor any custom, practice, course of dealing or conduct of the parties, shall be binding upon any Venturer unless in writing and signed by a duly authorized officer or representative of each Party to be bound; provided however that a Venturer and USI may agree to ordering procedures which are established by them pursuant to mutual agreement; and (d) Except as expressly allowed under this Foundry Venture Agreement, no party may transfer or assign its rights or delegate its duties under this Agreement, except with the written consent of all the Parties to the agreement involved. 9.12 No licenses, other than the licenses expressly granted under these Agreements, are granted under these Agreements, by implication, estoppel or otherwise. Nothing in these Agreements shall be construed as conferring any license, right to use or other right with respect to any trademark or trade name of any party. Each party may make reasonable reference by name to any other party provided that the written consent of that other has been obtained in advance. 9.13 (a) The failure of any party to enforce, or the delay by any party in enforcing any of its rights under these Agreements shall not be deemed a waiver or a containing waiver of such rights or a modification of these Agreements, and such party may, within the time provided by applicable law, commence appropriate proceedings to enforce any and/or all such rights. (b) The section headings in these Agreements are for convenience only and do not define or limit nor will they be used to construe the content of such sections. (c) Each party expressly represents and warrants that it is free to enter into these Agreements and that such party has not made and will not make any creations or commitments in conflict with the provisions of these Agreements, or which reasonably might 14. 15 interfere with the full and complete performance of such party's obligations under these Agreements. Each party further represents and warrants that these Agreements, and the performance of its respective obligations under these Agreements, and the consummation of the transactions contemplated under these Agreements have been duly authorized and approved by all necessary action, and all necessary consents or permits have been obtained, and neither the execution of these Agreements nor the performance of the party's respective obligations under these agreements will violate any term or provision of any valid contract or agreement to which such party is subject and/or by which such party is bound. No further actions or consents are necessary to make these Agreements valid binding contracts, enforceable against the respective parties in accordance with their terms. 9.14 Nothing in this Foundry Venture Agreement and/or in the Venture Agreements shall be deemed to create a general or limited partnership or an agency relationship between the Venturers and/or USI, and the Venturers and USI are independent companies. The Venturers intend to become shareholders of USI and thereafter purchase products manufactured from USI in an arm's length vendor-purchaser relationship, and, in the case of USI and UMC, in an arm's length vendor-purchaser, lessor-lessee, and licensor-licensee relationship. No party shall be entitled to act on behalf of and/or to bind any one or more of the others. 9.15 The Venturers will cause USI to execute promptly after its formation the Foundry Capacity Agreement, Technology Transfer and License Agreement, and this Foundry Venture Agreement, to confirm USI's agreement to abide by the terms in such agreements which are binding upon USI. IN WITNESS WHEREOF, the Venturers have caused this Foundry Venture Agreement to be signed below by their respective duly authorized officers. SANDISK CORPORATION /s/ ELI HARARI ------------------------------------- Eli Harari UNITED MICROELECTRONICS CORPORATION /s/ I.D. LIU ------------------------------------- I.D. Liu, President First Group 15. 16 The attached Written Assurances re: Foundry Venture Agreement and May 28, 1997 letter to Eli Harari are entered as part of this foundry agreement. 16. 17 ACCORDING TO SECTION 232.304 OF REGISTRATION S-T, THE FOLLOWING NARRATIVE DESCRIPTIONS REPRESENT A GOOD FAITH EFFORT TO FAIRLY AND ACCURATELY DESCRIBE THE GRAPHICAL IMAGE(S) ATTACHED TO THE PAPER FORMAT OF THIS AGREEMENT. I. Schedule of USI Plant Construction This graphical image represents the project schedule for building up the new fabrication facility and for producing wafers from this facility. The time-line represented in the graphical image begins at March 1996 and ends at December 1998. The milestones represented on this graphical image are the following: "Building Construction," "Office Partitions," "Facility Installation," Clean Room Installation," "FAB Equipment Installation," "Pilot," and "Production Ramp-up." The time-lines for each milestone are confidential information for which Confidential Treatment has been requested. Confidential portions omitted have been filed with the Commission. II. USI Production Ramp-up Schedules The first line graph represents the projected wafer output versus time for the new venture. The abscissa of the line graph represents time, beginning at April 1998 and ending March 1999 (the graph uses a monthly time line). The ordinate of the line graph represents wafer output of the new venture. Therefore, the line graph represents the projected wafer output of the new venture versus time. The values on the graph are confidential information for which Confidential Treatment has been requested. Confidential portions omitted have been filed with the Commission. The second line graph describes the same information as the first with the exception that it is based on a quarterly schedule (more specifically, the quarters of years 1998 and 1999) rather than a monthly schedule as in the first line graph. III. Fabrication Facility Layout This graphical image represents the plat of the research park in which the new fabrication facility is located. The plat is written in Chinese. In English, the plat shows the location of Modules C and D with respect to two major roads and with respect to each other. The location and situation of Modules C and D as well as the writing describing the map are confidential information for which Confidential Treatment has been requested. Confidential portions omitted have been filed with the Commission. EX-10.24 3 WRITTEN ASSURANCES RE: FOUNDRY VENTURE AGREEMENT 1 EXHIBIT 10.24 UNITED MICROELECTRONICS CORPORATION No. 13 Innovation Road I Science Based Industrial Park Hsin Chu City, Taiwan, R.O.C. telephone (035) 782-258; facsimile (035) 774-767 September 13, 1995 WRITTEN ASSURANCES RE: FOUNDRY VENTURE AGREEMENT At the suggestion of several venturers, UMC is pleased to confirm in writing the following points concerning the Foundry Venture Agreement and the Foundry Capacity Agreement. Where these commitments require the consent of FabVen, UMC will exercise its influence and commit best faith efforts to secure that consent. 1. ALL VENTURERS ARE OFFERED EQUAL TERMS. As stated in the Foundry Venture Agreement, the terms of investment and of wafer purchases to each Venturer under the Foundry Venture Agreement and under the Foundry Capacity Agreement are the same, except for the percentages of ownership and capacity rights of each Venturer [capacity rights for Venturers are equal to 1.25 times the percentage of ownership]; provided however that Venturers who commit to a minimum of [*] will have the right to appoint a representative to a seat on the board of directors for the initial three year term. 2. ACCESS TO BOARD MEETINGS & BOARD MEMBERS. Subject to the obligations of Confidentiality imposed under the Foundry Venture Agreement, the Foundry Capacity Agreement, and/or the Technology Transfer and License Agreement ("Venture Agreements"), and to the requirements of law, each Venturer will be given reasonable notice of meetings of the board of directors of FabVen, and the opportunity to have a representative attend such meetings and communicate at such meetings with the board members in connection with matters concerning FabVen. 3. MEMBERSHIP ON FABVEN BOARD--FIRST THREE YEARS AND BEYOND. The board of directors of FabVen will be comprised of seven members. Of these seven members, four will be appointed by UMC for an initial three year term, one will be appointed by the R.O.C. financial institutions which invest in FabVen for an initial three year term, and the other two board members will be appointed for an initial three year term by the Venturers other than UMC under procedures to be mutually agreed upon by such Venturers, provided that any Venturer who holds at least [*] of the shares of FabVen will be entitled to appoint one of such other two board members. After the initial three year term, the board will be elected by the shareholders pursuant to R.O.C. law in the manner provided in the bylaws. - ------------ *Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2 4. STRATEGIC ACTIONS SUBJECT TO SPECIAL BOARD APPROVALS. Subject to the other requirements of the law, and for so long as the Venturer involved remains in compliance with all payment obligations under the Foundry Venture Agreement and such Venturer retains at least [*] of the ownership percentage in FabVen as listed in Paragraph 4.1 of the Foundry Venture Agreement, all board actions directly deciding strategic technical issues [including without limitation, the type of process technology (such as that used in the manufacture of logic, SRAM, DRAM, EPROM, EEPROM, and/or FLASH) to be developed, implemented and/or offered by FabVen, the amendment of the Technical Transfer and License Agreement, and/or the transfer or licensing of technology developed by FabVen to others (except as contemplated under the Technology Transfer and License Agreement)] shall not be effective unless and until approved by at least one of the board members designated by the Venturers other than UMC, and (ii) all board actions authorizing liquidation of FabVen, merger of FabVen, sale of all or substantially all of FabVen or of FabVen's assets, and/or the offering of any equity (except pursuant to a public offering of FabVen shares on a recognized securities exchange) shall not be effective unless and until approved by both board members designated by the non-UMC Venturers under the terms of the Foundry Venture Agreement. 5. NO UNAUTHORIZED CHANGES TO TECHNOLOGY ROADMAP. For so long as the Venturer involved remains in compliance with all payment obligations under the Foundry Venture Agreement and such Venturer retains at least [*] of the ownership percentage as listed in Paragraph 4.1 of the Foundry Venture Agreement, FabVen shall not make any material changes to the Technology Road Map as shown in Attachment A which affect such Venturer's existing and/or planned production without the consent of that Venturer. 6. CONDITIONAL "PUT" RIGHT. To the extent that FabVen fails (i) to qualify silicon manufactured with [*] and [*] processes each having a minimum of 0.35u feature sizes under a test vehicle to be agreed upon by FabVen, UMC and a majority of the Venturers other than UMC (including without limitation, a test vehicle from a Venturer, provided that such qualification under a test vehicle from a Venturer is commercially reasonable and within industry standards) ("First Qualification") on or before the end of December 31, 1998, and/or (ii) to achieve the ability to manufacture a minimum of [*] wafer outs per month for such [*] process and [*] wafer outs per month for such [*] process on or before December 31, 1998 for reasons attributable to UMC, FabVen and/or the Licensed Processes, the Venturers (one or more of them) will have the option to sell their shares (and their corresponding rights to capacity in FabVen) to UMC for the total amount they paid for such shares by sending written demand to UMC as follows: (a) No such demand shall be effective unless it is made on or before April 1, 1999; and - ------------ *Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2. 3 (b) Within ninety days of such written demand from the Venturer involved, UMC will buy the shares (and capacity rights) involved, and/or arrange another buyer willing to purchase such shares (and capacity rights) under the terms and conditions as stated in this heading. 7. RELEASE OF SHARE TRANSFER RESTRICTION IF NO PUBLIC OFFERING. To the extent that FabVen does not offer its shares in a public offering on a recognized securities exchange on or before December 31, 2006, and notwithstanding anything to the contrary, each Venturer other than UMC will have the right to transfer its entire right and interests in FabVen as follows: (a) The Venturer wishing to transfer ("Transferring Venturer") shall send the other Venturers (including UMC) written notice of its intention to transfer, stating in such notice the general terms and payment contemplated by such Transferring Venturer; (b) Within thirty days (the "Transfer Notice Period") of such notice, any one or more such other Venturers may send a written offer to purchase such Transferring Venturer's interest under terms to be stated in the written offer [for purposes of this Paragraph, each other Venturer making such an offer shall be referred to as the "Offering Venturer"]; (c) If no other Venturer makes such an offer within the Transfer Notice Period, then, subject to subpart (g) below, the Transferring Venturer shall be allowed to transfer its entire interest and ownership in FabVen to other purchasers; (d) If any Offering Venturer makes such an offer within the Transfer Notice Period, the Transferring Venturer and the Offering Venturer will negotiate in good faith concerning each such offer for not less than thirty days (the "Transfer Negotiation Period"); (e) If by the end of the Transfer Negotiation Period and despite such negotiations, the Transferring Venturer has not reached agreement with the Offering Venturer(s) for sale of the Transferring Venturer's interest, then, subject to this Paragraph (and all of its subparts), the Transferring Venturer shall be allowed to transfer its entire interest and ownership in FabVen to other purchasers; (f) Notwithstanding anything to the contrary, no Transferring Venturer shall be allowed to accept from any third party any offer with price and terms, taken together, which are less favorable than last offered in writing by an Offering Venturer during the Transfer Notice and/or Transfer Negotiation Periods, unless such Transferring Venturer first offers the same price terms to such Offering Venturer in writing, and allows such Offering Venturer ten business days to accept or reject such price and terms; 3. 4 (g) Except as permitted in paragraph 4.1(f) of the Foundry Venture Agreement and/or in Paragraph 15 of this Written Assurance, no Venturer may transfer its interest or right in FabVen under this paragraph or otherwise in any manner to any competitor of UMC or to any entity in the business of fabricating integrated circuits except under terms (i) in which such Venturer first relinquishes and releases all rights to FabVen capacity and to designate membership on the FabVen board of directors under this and any and all other agreements, and (ii) in which such entity and/or competitor expressly consents in writing that they have no such interest or right to such capacity and/or designation. 8. TECHNOLOGY TRANSFER AND LICENSE CONDITION TO FIRST PAYMENT. Notwithstanding anything to the contrary, the execution of the Technology Transfer and License Agreement in the form presented to the Venturers as of September 15, 1995 shall be a condition precedent to any payment of investment amounts pursuant to the Foundry Venture Agreement. 9. CLARIFICATION OF FAB RAMP-UP CONDITION TO THIRD INSTALLMENT. Notwithstanding anything to the contrary, the milestone for the third investment payment milestone shall be on or before "fab production ramp-up" as that phrase is generally understood and interpreted in the industry. 10. USE OF INVESTMENT MONIES. Unless otherwise agreed by each Venturer, FabVen will use all funds invested by the Venturers pursuant to paragraph 4.1(b) of the Foundry Venture Agreement solely as outlined in and consistent with the FabVen Business Plan. 11. RIGHTS OF FIRST REFUSAL ON SUBSEQUENT OFFERINGS. FabVen will provide the Venturers with notice reasonable under the circumstances in order to enable them to exercise their rights of first refusal in connection with equity offerings pursuant to paragraph 4.1(g) of the Foundry Venture Agreement. 12. VESTING OF TECHNICAL SHARES. UMC's technical shares will not vest under paragraph 4.1(d) of the Foundry Venture Agreement until FabVen produces wafers with the 0.35u process (as that phrase is defined in general industry usage) with sufficient yield to be recognized as "production ready" within general industry usage. 13. AUDIT RIGHTS. The specific wording of the provisions contemplated under paragraph 4.2 of the Foundry Venture Agreement with respect audit rights and financial information will be as stated by Price Waterhouse, with their commitment to prepare the reports as promptly as possible under the circumstances. The exact language for the audit rights will be modeled on whatever Price Waterhouse and the other accountants agree upon in connection with the joint venture announced with UMC, Alliance and S3. Currently, it is contemplated that the financials will be prepared in a manner consistent with that imposed on U.S. public companies for minority interests. 4. 5 14. TERMS FOR RIGHTS OF FIRST REFUSAL UNDER PARAGRAPH 4.1(f)(iv). The rights of first refusal under Paragraph 4.1(f)(iv) of the Foundry Venture Agreement are intended to extend to and benefit all other eligible Venturers. To avoid any ambiguity, 4.1(f)(iv)(cc) and 4.1(f)(iv)(dd) are to be interpreted as follows: (cc) if any such eligible other Venturer elects not to exercise any portion or all of such right of first refusal within 30 days of the independent appraisal, such portion of such right of first refusal will be subject to exercise by the other eligible other Venturers in proportion to their then existing shareholdings in FabVen, and the shares involved will be subject to a right of such other eligible other Venturers to purchase on the same terms as outlined above; and (dd) if any such other eligible other Venturer does not commit to purchase such shares within 60 days of the independent appraisal, all rights under this Paragraph 4.1(f)(iv) will expire as to such unpurchased shares. 15. TRANSFERS OF SHARES AFTER PUBLIC OFFERING. Nothing in Paragraph 6.2(c)(i) of the Foundry Venture Agreement or elsewhere shall prohibit a Venturer from offering and/or selling its shares in FabVen on the public market to a competitor of UMC, provided however that such competitor must relinquish all rights to representation and access to Board information under the Foundry Venture Agreement and under this Written Assurance, and provided that the restrictions of Paragraph 6.2(c)(ii) of the Foundry Venture Agreement and of Paragraph 7 of this Written Assurance shall still apply, and provided further that the other restrictions concerning transfers of capacity and reductions in capacity on a proportional basis with reductions in ownership will also apply. 16. TRANSFERS OF CAPACITY AMONGST VENTURERS. Notwithstanding anything to the contrary, the Venturers in Module C may each transfer their respective capacities (whether or not previously forecast) as stated in Paragraph 2.1 of the Foundry Capacity Agreement to and between one another by written notice to FabVen and the other Venturers, provided that such written notice must state the capacity amounts so transferred and the months in which such transfer will apply and provided that FabVen's consent (which must not be unreasonably withheld) shall be required for a transfer of quantities previously committed under Paragraph 2.3(b) of the Foundry Capacity Agreement. To the extent that FabVen receives such written notices forty-five or more days prior to the beginning of each month in which such capacity is to be transferred, such capacity will be treated as if allocated to the Venturer to whom it has been transferred for all purposes for the period of the transfer involved, including, without limitation, for purposes of forecasts, commitments, and the right of FabVen to commit to others any capacity unexercised by the Venturers. 17. ONE YEAR WARRANTY. The warranty period as stated in Paragraph 5.1 of the Foundry Capacity Agreement, and the claim period as stated in Paragraph 5.3 of the Foundry Capacity Agreement shall each be one year. 5. 6 18. CLARIFICATION OF PARAGRAPH 5.4 OF THE FOUNDRY CAPACITY AGREEMENT. The limitations of paragraph 5.4 of the Foundry Capacity Agreement are intended to limit the remedies under the Warranty provisions, Section 5 of the Foundry Capacity Agreement. Thus, the Paragraph will be understood and interpreted as follows: THIS PARAGRAPH 5.4 STATES THE ONLY AND EXCLUSIVE REMEDY FOR ANY AND ALL CLAIMS MADE AGAINST FABVEN UNDER THIS SECTION 5 OF THIS FOUNDRY CAPACITY AGREEMENT. 19. CONFIRMATION OF "COVER" REMEDY. To the extent an intentional breach by FabVen of its obligations concerning wafer start and/or delivery under the Foundry Capacity Agreement results in a delay of more than 60 days in delivery of Wafers to a Venturer, then, notwithstanding anything to the contrary, at the election of the Venturer, FabVen will compensate such Venturer for reasonable damages of such Venturer in securing substitute or cover Wafers for those involved in the breach, subject to the limitation stated below. In addition, to the extent that FabVen breaches its warranties under Section 5 of the Foundry Capacity Agreement, and fails, for reasons attributable to a breach by FabVen or the Licensed Process to correct such breach after two successive attempts to do so, then, at the election of the Venturer, FabVen will compensate such Venturer for reasonable damages of such Venturer in securing substitute or cover Wafers for those involved in the breach, subject to the limitation stated below. Notwithstanding anything to the contrary, for purposes of this commitment in Paragraph 19 of this Written Assurance, the recoverable substitute and/or cover damages shall be (i) the reasonable and necessary costs to replace mask sets for the products involved, together with (ii) the difference between (aa) the price which the Venturer would have paid for the Wafers had FabVen fully performed (the "contract price"), and (bb) all direct and reasonable costs (up to a maximum of [*] of the contract price) incurred by the Venturer in securing substitutes and/or cover. 20. LEASE TERM AND LEASEHOLD IMPROVEMENTS. Notwithstanding anything to the contrary under any local real estate or other law, custom or practice, UMC will consider all investments, improvements and fixtures purchased by FabVen to be the property of FabVen, and UMC will not request higher rents under the lease of Module C as a result of any such investment, improvement and/or fixture. In addition, at the request of FabVen, UMC will negotiate in good faith with FabVen over additional extensions of the lease term beyond the fifteen year period contemplated under the Foundry Venture Agreement, and, to the extent that UMC retains the underlying right to do so, UMC will renew the lease to FabVen for the land of Module C for subsequent five year terms continuing until the term (or partial term) ending August 31, 2044. Without limiting the terms of the Foundry Venture Agreement, the lease rate for the land for Module C will be proportional to the amount paid by UMC to the Park Administration for the respective square footage involved, plus a reasonable amount to cover overhead directly related to the lease (not to exceed [*] of the rate for the respective share). - ------------ *Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 6. 7 21. CONTINUED ASSISTANCE BY UMC. Notwithstanding anything to the contrary, UMC will continue to provide technical assistance to FabVen with respect to the Licensed Processes to the extent and for the period reasonably necessary to permit each Venturer to qualify its products on each Licensed Process which is suitable for the production of such products. In addition, UMC will make good faith efforts to improve and develop UMC technology so as to enable UMC to provide that technology to be provided to FabVen by UMC as shown in the Technology RoadMap. 22. CHOICE OF LAW--NO "HIDDEN" MEANINGS. To the extent any aspect of Taiwan law purports to alter the express meaning of any term of the Technology Transfer and License Agreement, such term will not be governed by Taiwan law, but instead will be governed by California law so as to give effect to the express intention of the parties as stated in that agreement. 23. CONFIRMATION OF SCOPE OF LICENSE. All licenses granted and/or to be granted under the Technology Transfer and License Agreement are intended to include rights to import, to offer to sell, and to otherwise dispose of Wafers, Die and product made using the Wafers made, together with all other rights stated. 24. NO KNOWN INFRINGEMENTS--UMC. UMC represents and warrants to the Venturers and to FabVen that UMC has no actual knowledge that the Licensed Process (as defined in the Technology Transfer and License Agreement) infringes any Patent Claims (as defined below). 25. NO KNOWN INFRINGEMENTS--FABVEN. FabVen represents to each of the Venturers that, to its or UMC's actual knowledge as of August 29, 1995, the technology, processes, masks and other information transferred or licensed to FabVen under the Technology Transfer and License Agreement or otherwise used in the manufacture of products pursuant to the terms of this Foundry Venture Agreement and/or the Venture Agreements will not infringe any valid patent rights enforceable under R.O.C. and/or U.S. law ("Patent Claims"), provided however that "Patent Claims" shall not include claims arising out of and/or in connection with patents licensed to UMC by third parties as of August 29, 1995. FabVen shall indemnify and hold harmless each of the Venturers from and against any such Patent Claims (i) to the extent arising out of a breach of this representation, and/or (ii) to the extent and proportional to any claim that such Venturer is liable as a direct and/or indirect result (aa) of its execution of this Foundry Venture Agreement or any of the Venture Agreements, and/or (bb) of its investment in FabVen and/or any actions under such agreements on any agency, express or implied partnership or joint venture, respondent superior, piercing the corporate veil, conspiracy or other legal theory whereby liability is asserted against such Venturer for or on account of actions of FabVen. Under no circumstances shall FabVen have any obligation under this Paragraph with respect to any Venturer who conspires and/or cooperates, other than pursuant to process of law, with the person raising the Patent Claim for which indemnity is sought, with respect to such Patent 7. 8 Claim. Notwithstanding anything to the contrary, and except for breaches of the representation of FabVen in the first sentence of this Paragraph, FabVen will not indemnify or hold any Venturer harmless from or against any Patent Claim to the extent arising out of the manufacture for such Venturer and/or the purchase, use and/or sale of products by that Venturer, provided however that with respect to such Patent Claims the Venturer shall be entitled to the same replace or refund remedy as is set forth in Paragraph 5.4 of the Foundry Capacity Agreement with respect to defectively manufactured product, provided however that unless otherwise agreed, replacement product shall not satisfy FabVen's obligations under this Paragraph 25 unless that replacement is non-infringing. 26. CLARIFICATION OF PURPOSE. As is clear from the documents involved, FabVen shall be in the business of fabricating integrated circuits and developing related processes and know-how. In doing so, FabVen will sell Wafers to the Venturers and others as described in more detail in the Foundry Capacity Agreements. 27. CONFIRMATION OF COMMITMENTS BY FABVEN. FabVen will undertake its reasonable best efforts to implement the Technology Road Map attached to the Foundry Venture Agreement as Attachment A, to achieve the goals described in the FabCo Business Plan, and to achieve the [*] wafer out minimums with respect to each of the [*] and the [*] processes described in Paragraph 6 above. In addition, and subject to the terms of this Foundry Venture Agreement, the Foundry Capacity Agreement and the Technology Transfer and License Agreement, FabVen will cooperate with each Venturer in a commercially reasonable manner to qualify products of such Venturer under the processes involved. 28. LIMITED DISCOVERY IN CONNECTION WITH ARBITRATION. Notwithstanding anything to the contrary in the Foundry Venture Agreement, the arbitrators will have the power to require discovery in connection with any dispute within their jurisdiction pursuant to the Federal Rules of Civil Procedure to the extent they find such discovery necessary to achieve a fair and equitable result, and subject to reasonable orders from the arbitrators to minimize the burdens involved and to focus the discovery on those areas necessary. All reasonable costs of such discovery (including attorneys' fees) incurred by a party which prevails in the arbitration in connection with the issue involved in the discovery will be recoverable by that party against the party which requested the discovery. 29. CONFIRMATION OF OBLIGATIONS CONCERNING PROPRIETARY PROCESSES. Without limiting the obligations under the confidentiality provisions of the Foundry Venture Agreement, and at the written request of a Venturer, FabVen will treat as confidential all processes provided by a Venturer which are designated by that Venturer as "Confidential" under the Foundry Venture Agreement, and, without the written consent of the Venturer which provided the process, FabVen shall not use or otherwise disclose any such process for any purpose other than the fabrication of Wafers for such Venturer. - ------------ *Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 8. 9 30. RATIFICATION BY FABVEN. UMC shall exert best faith efforts to have FabVen ratify in writing the commitments and obligations under this Written Assurance which apply to FabVen. 31. APPROPRIATE PUBLIC OFFERING ROADMAP. Promptly upon incorporation of FabVen, the parties will use reasonable best efforts to pursue discussions with mutually acceptable investment bankers or other appropriate people to attempt to establish the appropriate roadmap to an initial public offering. 32. APPROPRIATE RESOLUTION MECHANISM FOR DISPUTES. Promptly upon incorporation of FabVen, the parties will use reasonable best efforts to discuss and evaluate dispute and conflict resolution mechanisms and procedures in an attempt to anticipate and hopefully resolve matters. 9. 10 We request that each Venturer countersign this Written Assurance below to signify their approval and assent to its terms, and to confirm that we each will hold this Written Assurance as an integral and material part of our Foundry Venture Agreements. Yours sincerely, /s/ JOHN HSUAN -------------------------- John Hsuan, President AGREED ON BEHALF OF - ------------------------------- /s/ ELI HARARI - ------------------------------- Name of Venturer As of September _____, 1995 SanDisk - ------------------------------- Authorized signature RATIFIED BY FABVEN /s/ I.D. LIU - ------------------------------- Authorized signature 10. 11 ACCORDING TO SECTION 232.304 OF REGISTRATION S-T, THE FOLLOWING NARRATIVE DESCRIPTIONS REPRESENT A GOOD FAITH EFFORT TO FAIRLY AND ACCURATELY DESCRIBE THE GRAPHICAL IMAGE(S) ATTACHED TO THE PAPER FORMAT OF THIS AGREEMENT. I. USI Technology Transfer Schedule This graphical image represents the project schedule for decreasing the production line widths of the new fabrication facility. The time-line represented in the graphical image begins at the first quarter of 1998 and ends at the third quarter of 1999. The milestones represented on this graphical image are confidential information for which Confidential Treatment has been requested. Confidential portions omitted have been filed with the Commission. EX-10.25 4 SIDE LETTER DATED MAY 28, 1997 1 EXHIBIT 10.25 May 28, 1997 Eli Harari SanDisk Corporation 140 Caspian Court Sunnyvale, CA 94089 Dear Eli: On behalf of UMC and USI, I am pleased to confirm our arrangements with respect to payment installments, and wafer capacity/pricing, in connection with the investment by SanDisk in USI. In particular, and conditioned upon SanDisk's signatures on the Foundry Venture and Foundry Capacity Agreements for a total investment of USD $45 Million in USI, we agree: 1. PAYMENTS SCHEDULE AND TERMS: SanDisk will be permitted to make its investment in two parts with two payment dates. Although our current target is for SanDisk to acquire approximately 10% of USI, the exact number of shares at each payment date will be calculated based upon then current exchange rates, with the statutory per share price of NTD $10. As discussed, the deadline for SanDisk's first payment of USD $22.5 Million will be set for the closing of USI's second installment: June 30, 1997. Upon receipt of this first payment, USI will issue to SanDisk the number of shares which that sum will purchase based upon the per share price of NTD $10. SanDisk will pay its second payment in U.S. Dollars on or before April 1, 1998. As I described, the per share price for that second payment date will be equal to NTD $10 plus interest from June 30, 1997 calculated at a rate of 8.5% per annum. Under this approach, the per share price will be set in an amount which is greater than NTD $10, and the number of shares will depend upon the exchange rate as of the date of payment. At least sixty days before this second due date, our finance group will send a calculation of the amount needed in NTD for SanDisk to bring its total investment up to 10% of the shares of USI. This should permit SanDisk to plan its payment in USD, and to hedge the dollars involved against adverse foreign exchange risks should you wish to do so. As discussed, although SanDisk will not be able to pay its entire amount on June 30, 1997, USI must receive all funds needed to close its scheduled second installment. Accordingly, 2 at the closing of USI's second installment, UMC will pay for and receive the shares represented by the shortfall in SanDisk's first payment. UMC will then sell those shares to SanDisk on April 1, 1998, upon receipt of SanDisk's second payment in the amount calculated as described above. As we mentioned, SanDisk will be responsible for any incidental and/or transfer taxes which may be levied. Unfortunately, we cannot accept SanDisk's proposal that we reduce the interest rate: UMC is a publicly held company, and our shareholders and supervisors will not permit a lower rate of return. In addition, other Venturers who have requested similar extensions of payment times have paid this same rate, and UMC committed we would afford our venturers equal treatment. As a result, we are satisfied these terms are fair to all, and hope that you will understand the constraints we face. 2. COMMITMENT TO PROPORTIONATE SHARE OF [*] PER MONTH WAFER OUT CAPACITY UMC, USI, and the other Venturers in USI do not presently anticipate there will be any need for the third installment payment (as described in the Foundry Venture Agreement) in order for USI to ramp its capacity to [*] wafer starts per month. Accordingly, and conditioned upon SanDisk acquiring and holding the shares involved in its investment as described above, we promise that SanDisk will not be required to make any additional investment in USI beyond the amounts committed under item 1 above: (i) in order to preserve its right of first refusal with respect to proportional capacity in that amount, or (ii) in order to retain a seat on the board of directors during the first term (i.e., during the first three years). 3. BRIDGE CAPACITY & PRICING UMC will [*]. As discussed, these amounts will be conditioned upon receipt of appropriate written forecasts and purchase orders from SanDisk for the amounts involved pursuant to our standard foundry forecast and order procedures. These procedures are outlined generally in the Foundry Capacity Agreement. As discussed, this commitment [*]. Thus, the capacity amounts offered under this arrangement will serve to discharge the then applicable rights of first refusal for capacity from USI under the Foundry Venture and Foundry Capacity Agreements. - ------------ *Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2. 3 [*] also agreed to the following pricing for the wafers included within this bridge capacity commitment for [*] (i.e., substantially the [*]), [*] SanDisk wafer with target D.D. [*]: - -------------------------------------------------------------------------------- [*] [*] [*] [*] - -------------------------------------------------------------------------------- Wafer Price [*] [*] [*] [*] (USD/wafer) - -------------------------------------------------------------------------------- We will of course negotiate in good faith for competitive pricing for any additional process steps and/or wafers. 4. CONDITIONAL PUT RIGHTS--IF SANDISK PROCESS IS NOT QUALIFIED In addition, [*] and USI will cooperate to bring up the processes needed to fabricate wafers on behalf of SanDisk in as prompt a manner as is commercially and technically practicable. We appreciate that SanDisk has some unique processing requirements, and that our ability to meet those requirements is essential to SanDisk. Accordingly, to the extent that: (i) USI fails to qualify silicon manufactured with [*] processes having a minimum of [*] feature sizes for at least one suitable SanDisk mask set (to be provided by SanDisk within a reasonable time after the applicable design rules are available) on or before the end of [*] and/or (ii) USI fails to qualify silicon manufactured with [*] processes having a minimum of [*] feature sizes for at least one commercially reasonable test vehicle on or before the end of [*], SanDisk will have the option to sell its USI shares (and its corresponding rights to capacity in USI) to UMC for the total amount it paid for such shares by sending written demand to UMC as follows: (a) No such demand shall be effective unless it is made on or before [*]; and (b) Within ninety days of such written demand, UMC will buy the shares (and capacity rights) involved, and/or arrange another buyer willing to purchase such shares (and capacity rights) under the terms and conditions as stated above. 5. UPDATED TECHNOLOGY ROADMAP As requested, we will update the Technology Roadmap to show the development of the SanDisk Flash processes in a manner generally following the slides which Frank Wen showed during our meetings. In particular, we will attach to our agreements the Updated Technology Roadmap showing the anticipated dates and path for [*] processes, our [*] processes, and our [*] processes. - ------------ *Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 3. 4 Once again, we at UMC believe that our foundry venture model represents the path of future success within the industry, and a unique opportunity to meld the design expertise of Silicon Valley fabless entrepreneurs with the semiconductor manufacturing skill of UMC and the supporting infrastructure of Taiwan. We therefore appreciate your interest in the USI opportunity, and I look forward to welcoming you to the board of directors. Yours sincerely, Robert H.C. Tsao 4. 5 ACCORDING TO SECTION 232.304 OF REGISTRATION S-T, THE FOLLOWING NARRATIVE DESCRIPTIONS REPRESENT A GOOD FAITH EFFORT TO FAIRLY AND ACCURATELY DESCRIBE THE GRAPHICAL IMAGE(S) ATTACHED TO THE PAPER FORMAT OF THIS AGREEMENT. I. Foundry Bridge Supply This graphical image represents the production scheduled forcasted by the Company. The abscissa of the line graph represents time. The ordinate of the line graph represents volume. The values on the graph are confidential information for which Confidential Treatment has been requested. Confidential portions omitted have been filed with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----