EXHIBIT 10.47
FOIA Confidential Treatment Requested
[Signature Copy]
Basic Lease Contract
Flash memory manufacturing equipment
December 16, 2005
I  B  J     L  e  a  s  i  n  g    C  o  .  ,    L   t  d  .
S  u  m  i  s  h  o    L  e  a  s  e    C  o  .  ,    L  t  d  .
T  o  s  h  i  b  a    F  i  n  a  n  c  e    C  o  .  ,    L  t  d  .
SD Lessor
I  B  J    L  e  a  s  i  n  g    C  o  .  ,    L  t  d  .
S  u  m  i  s  h  o    L  e  a  s  e    C  o  .  ,    L  t  d  .
Toshiba Lessor

 

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Flash Partners Limited Company
Lessee
Table of Contents

                      Page
Article 1
  (Definitions)     1  
Article 2
  (Composition of transactions)     9  
Article 3
  (Lease)     10  
Article 4
  (Delivery)     10  
Article 5
  (Prior conditions regarding delivery)     11  
Article 6
  (Related documents)     12  
Article 7
  (Payment of lease payment etc.)     12  
Article 8
  (Defective security indemnity)     15  
Article 9
  (Burden for loss, damage and danger)     16  
Article 10
  (Representation of owner)     18  
Article 11
  (Peaceful use)     18  
Article 12
  (Installation and use)     18  
Article 13
  (Possession and re-leasing)     18  
Article 14
  (Maintenance management)     19  
Article 15
  (Change in original condition)     20  
Article 16
  (Ownership of parts)     20  
Article 17
  (Inspection)     20  
Article 18
  (Burden etc.)     21  
Article 19
  (Insurance)     21  
Article 20
  (Representation and warranty)     22  
Article 21
  (Commitment matters)     23  
Article 22
  (Compensation and burden of expense)     25  
Article 23
  (Number of individual transactions and change of deliverable period)     26  
Article 24
  (Purchase option right)     27  
Article 25
  (Return)     28  
Article 26
  (Termination of contract)     30  
Article 27
  (Default interest)     33  
Article 28
  (Transfer of rights and obligations)     33  
Article 29
  (Responsible assets)     34  
Article 30
  (Notice etc.)     36  
Article 31
  (Revision of contract)     36  

 

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                      Page
Article 32
  (Confidentiality)     36  
Article 33
  (Governing law)     36  
Article 34
  (Court of competent jurisdiction)     37  

     
Appendix 1
  Lease Conditions
Appendix 2
  Loan Certificate
Appendix 3
  Permitted Liens
Appendix 4
  Certificate of Return
Appendix 5
  Certificate of Transfer
Appendix 6
  Situation requirements at the time of return
Appendix 7
  Notification address

 

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Basic Lease Contract
This basic lease contract was concluded on December 16, 2005 between IBJ Leasing
Co., Ltd., Sumisho Lease Co., Ltd. and Toshiba Finance Co., Ltd. as SD Lessor
(hereinafter generically named as “SD Lessor”), IBJ Leasing Co., Ltd. and
Sumisho Lease Co., Ltd. as Toshiba Lessor (hereinafter generically named as
“Toshiba Lessor”, and it is combined with SD Lessor. They are generically named
as “Lessor”), and Flash Partners Limited Company (hereinafter referred to as
“Lessee”).
Article 1 (Definitions)

  1   Terms in the left column below that are used in this contact shall have
meanings listed in the right column below corresponding to the relevant terms
except where they apparently represent different contextual meanings.

     
SD Group Companies
  San Disk Corporation and companies San Disk Corporation directly or indirectly
owns 50% or more of their voting stocks
 
   
SD Lessor RA
  Sumisho Lease Co., Ltd. acting on behalf of SD Lessor with respect to common
portions of SD Lessor at the time of return, sale and other forms of disposition
of Subject property pursuant to the provision of Article 4 of Subject Statement
of Mutual Agreement among Involved Parties, or acting on behalf of the SD Lender
with respect to the Property or the common portions of the SD Lessor.
 
   
Reason for cancellation
  All or part of reasons stipulated in Article 26, Item 1
 
   
Loan certificate
  Loan certificate for subject properties for respective individual transaction
to be prepared in the form provided in Appendix 2 based on Article 4, Item 5
 
   
Prescribed damages
  Amounts to be calculated for each Tranche on a certain day based on
Appendix 1, Item 9
 
   
Taxes and public dues
  Present or future tax, levy, tax collected at the source, fees, handling fees,
burden charges as well as other monies (regardless of their names) and penalty
charges, foul charges, additional charges, delayed charges and delayed interest
thereon (regardless of their names)

 

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Banking Business Day
  Days on which banks operate in Japan
 
   
Purchase option exercise cost
  Amounts to be calculated on each Tranche on a payment day based on Appendix 1,
Item 6
 
   
Individual transaction
  Each individual transaction to be conducted based on this contract and each
loan certificate
 
   
Original purchase agreement
  Each purchase agreement concluded between the Lessee and the manufacturer of
properties on the purchase of Subject properties
 
   
Sub lessee
  Persons who are sub-leased based on the regulations of Article 13
 
   
Repayment base money
  Amounts to be calculated based on Appendix 1, Item 8 for the day of return
stipulated in Article 25, Item 1
 
   
Performance, etc.
  Performance, structure, design, design specification, practical value,
exchange value, usability, sales possibility, commercial value, durability,
operability, economical efficiency, compatibility with purpose, legality and any
other performance, function, characteristics, value and utility of Subject
properties
 
   
Reason for total loss
  (a) Loss or missing location, (b) damage or glitch reasonably recognized by
the Lessee as impossible to repair or re-use from an economic viewpoint, which
is confirmed by the appraisal company appointed by the Lessor or
(c) confiscation, expropriation or theft occurred to Subject property, its unit
component part or Subject property composing unit component part
 
   
Loss, etc.
  Losses, damages, costs, fees, handling fees, liabilities, responsibilities,
penal charges, penalty, delinquency charges, complaints and judicial actions

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Unit component part
  A set of each property (including the Subject parts fixed or furnished in the
relevant properties) to be independently listed in the loan certificate of
Subject property. Provided, however, that when a part of the unit component part
subject to the relevant Individual transaction is excluded from this contract,
the remaining unit component part shall compose the unit component part subject
to the relevant Individual transaction thereafter.
 
   
Toshiba Lessor RA
  Sumisho Lease Co., Ltd. acting on behalf of Toshiba Lessor with respect to
common portions of Toshiba Lessor at the time of return, sale and other forms of
disposition of Subject property pursuant to the provision of Article 4 of
Subject Statement of Mutual Agreement among Involved Parties, or acting on
behalf of the SD Lender with respect to the Property or the common portions of
the SD Lessor.
 
   
Toshiba group companies
  Toshiba Corporation and companies Toshiba Corporation directly or indirectly
owns 50% or more of their voting shares
 
   
Tranche
  Collective term for SD Tranche 1, SD Tranche 2, Toshiba Tranche 1 and Toshiba
Tranche 2 composed with respect to lease payment or other claimable assets under
this contract pursuant to Article 7, Item 1.
 
   
Delivery period
  Period from the day of this contract to the final deliverable day stipulated
in Appendix 1, Item 1
 
   
Delivery place
  Place where Subject property or each unit component part exists on the
relevant scheduled delivery day to be notified by the Lessee to the Lessor by a
Banking Business Day immediately prior to each scheduled delivery day
 
   
Deliver day
  Each day on which each unit component part composing Subject property is
delivered based on Article 4

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Scheduled delivery day
  Each day stipulated in Appendix 1, Item 1 as a scheduled delivery day for each
Individual transaction or other banking business days during the delivery period
to be agreed upon by the Lessee and the Lessor
 
   
Person to be compensated
  Lessor, Subject borrower, Subject lender and all or either of the successor
thereto, director, employee or agent
 
   
Burden etc.
  Ownership, right of possession, lease right, lease, mortgage, right of pledge,
lien, security interests, right of mortgage and conditional rights thereto,
subscription rights thereto, any other usufructuary right as well as security
right and rights based on attachment or provisional attachment
 
   
Property purchase cost
  Sales cost to be determined pursuant to Article 3, Item 1 of the Subject Sales
Contract with respect to Subject property or each unit component part
 
   
Property manufacturing agency
  A person described in the column of “manufacturer” of the itemized property
list to be attached in a loan certificate
 
   
Default reason
  Reason for cancellation or reasons constituting reasons for cancellation due
to notification, passing of time or other conditions
 
   
Break funding cost
  Damages or expenses to be borne with respect to raising of purchase cost for
Subject property when each Lessor fails to implement or terminates this contract
before expiration. The cost shall be calculated as damage cost, penal charge or
other monies (provided, however, that if Lessee has doubts about other monies,
Lessor, Lessee and Subject Lender shall have consultations thereon) imposed by
Subject lender on Subject borrower with respect to non-performance of loans or
prepayment, etc. based on the Subject Loan Agreement.
 
   
Reimbursement adjustment fee
  Amounts to be calculated about the day of return stipulated in Article 25,
Item 1 pursuant to Appendix 1, Item 7

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Subject lender
  Collectively means Subject SD lender and Subject Toshiba lender.
 
   
Subject SD lender
  Collectively means persons listed as Subject SD lender in Appendix 1, Item 11
 
   
Subject Toshiba lender
  Persons listed as Subject Toshiba lender in Appendix 1, Item 11
 
   
Subject Loan Agreement
  Collectively means Subject SD Loan Agreement and Subject Toshiba Loan
Agreement
 
   
Subject SD Loan Agreement
  Collectively means Limited Loan Agreement (SD Tranche) to be concluded between
Subject SD borrower and Subject SD lender as of the same date as this Contract
and Acknowledgement of debts and Repayment Agreement based on Limited Loan
Agreement.
 
   
Subject Toshiba Loan Agreement
  Collectively means Limited Loan Agreement (Toshiba Tranche) to be concluded
between Subject Toshiba borrower and Subject Toshiba lender as of the same date
as this Contract and Acknowledgment of debts and Repayment Agreement based on
Limited Loan Agreement.
 
   
Subject borrower
  Collectively means Subject SD borrower and Subject Toshiba borrower.
 
   
Subject SD borrower
  Persons listed as Subject SD borrower in Appendix 1, Item 12
 
   
Subject Toshiba borrower
  Persons listed as Subject Toshiba borrower in Appendix 1, Item 12
 
   
Subject Statement of Mutual Agreement among Involved Parties
  Agreement on senior or subordinated relations, etc. among Subject lender,
Lessor and Subject borrower as of the same date as this Contract

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Subject related contracts
  This Contract, Subject Sales Contract, Subject Loan Sales Contract, Subject
Statement of Mutual Agreement among Involved Parties, Subject Loan Agreement,
Subject Loan Transfer Security Contract, Subject property transfer security
reservation contract, Subject Contract of Clerical Work Commission, Subject
Guarantee Agreement, Subject Letter of Agreement and agreements and other
documents related thereto
 
   
Subject Loan Transfer Security Contract
  Collectively means Subject SD Loan Transfer Security Contract and Subject
Toshiba Loan Transfer Security Contract.
 
   
Subject SD Loan Transfer Security Contract
  Collectively means Basic Loan Transfer Security Contract (SD Tranche) on the
Right to claim performance of obligations of guarantee for (i) credits with
respect to SD Tranche 1 under this Contract and (ii) credits with respect to SD
Tranche 1 under this Contract under Subject SD Guarantee Agreement to be
concluded between Subject SD borrower and Subject SD lender as of the same date
as this Contract and each individual agreement based thereon.
 
   
Subject Toshiba Loan Transfer Security Contract
  Collectively means Basic Loan Transfer Security Contract (Toshiba Tranche) on
the Right to claim performance of obligations of guarantee for (i) credits with
respect to Toshiba Tranche 1 under this Contract and (ii) credits with respect
to Toshiba Tranche 1 under Subject Toshiba Guarantee Agreement to be concluded
between Subject Toshiba borrower and Subject Toshiba lender as of the same date
as this Contract and each individual agreement based thereon.
 
   
Subject Loan Sales Contract
  Collectively means Subject SD Loan Sales Contract and Subject Toshiba Loan
Sales Contract

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Subject SD Loan Sales Contract
  Collectively means Basic Lease Credit Sales Contract (SD Tranche) on the Right
to claim performance of obligations of guarantee for (i) credits with respect to
SD Tranche 1 under this Contract and (ii) credits with respect to SD Tranche 1
under Subject SD Guarantee Agreement to be concluded between SD Lessor and
Subject SD borrower as of the same date as this Contract and each individual
agreement based thereon.
 
   
Subject Toshiba Loan Sales Contract
  Collectively means Basic Lease Credit Sales Contract (Toshiba Tranche) on the
Right to claim performance of obligations of guarantee for (i) credits with
respect to Toshiba Tranche 1 under this Contract and (ii) credits with respect
to Toshiba Tranche 1 under Subject Toshiba Guarantee Agreement to be concluded
between Toshiba Lessor and Subject Toshiba borrower as of the same date as this
Contract and each individual agreement based thereon.
 
   
Subject Contract of Clerical Work Commission
  Collectively means the Subject SD Contract of Clerical Work Commission and the
Subject Toshiba Contract of Clerical Work Commission
 
   
Subject SD Contract of Clerical Work Commission
  Contract of Clerical Work Commission (SD Tranche) to be concluded between the
SD Lessor and the Subject Clerical Work Assignee as of the same date as this
contract
 
   
Subject Toshiba Contract of Clerical Work Commission
  Contract of Clerical Work Commission (Toshiba Tranche) to be concluded between
Toshiba Lessor and Subject Clerical Work Assignee as of the same date as this
contract
 
   
Subject Clerical Work Assignee
  Persons described in Appendix 1, Item 14

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Subject Letter of Agreement
  Letter of consent by Subject guarantor and Lessee in a specified form with
respect to transfer of receivables based on each Subject Loan Transfer Security
Contract and establishment of transfer security reservation completion right
based on Subject property transfer security reservation contract
 
   
Subject Sales Contract
  Collectively means Basic Sales Contract on Subject property to be concluded
between Lessee and Lessor as of the same date as this Contract and each
individual agreement based thereon.
 
   
Subject property
  Each unit component part (including Subject parts) in each Individual
transaction to be notified by Lessee to Lessor pursuant to Article 4, Item 1 of
the Subject Sales Contract and to be confirmed by certificate of transfer,
receipt and loan certificate to be delivered on the delivery day for the
relevant Individual transaction. Provided, however, that if a part of unit
component part is excluded from this Contract due to occurrence of reasons for
all-loss and the exercise of the purchase selection right, the remaining unit
component part shall be Subject property thereafter.
 
   
Subject property transfer security reservation contract
  Collectively means the Basic Property Transfer Security Reservation Contract
for Subject property to be concluded between the Lessor and the Subject lender
as of the same date as this contract and individual contracts pursuant thereto
 
   
Subject parts
  Equipment and parts composing unit component part as well as equipment,
accessories, attachments and parts (including aggregates of single parts and
similar kinds) fixed or furnished as needed with Subject property
 
   
Subject Guarantee Agreement
  Collectively means Subject SD Guarantee Agreement and Subject Toshiba
Guarantee Agreement.
 
   
Subject SD Guarantee Agreement
  Guarantee Agreement to be concluded between SanDisk and SD Lessor as of the
same date as this contract

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Subject Toshiba Guarantee Agreement
  Guarantee Agreement to be concluded between Toshiba and Toshiba Lessor as of
the same date as this contract
 
   
Subject guarantor
  Collectively means SanDisk and Toshiba.
 
   
SanDisk
  Persons described as SanDisk in Appendix 1, Item 13.
 
   
Toshiba
  Persons described as Toshiba in Appendix 1, Item 13
 
   
Waived burdens, etc.
  Burdens, etc. excluded pursuant to Article 18, Item 1
 
   
Lease period
  A period starting on a delivery day stipulated in Appendix 1, Item 2.
Provided, however, that if this contract is cancelled before expiration, lease
period shall terminate on the relevant cancellation day.
 
   
Lease period expiration period
  The last day of Lease period
 
   
lease payment
  Lease payment to be determined for each unit component part of each Tranche
based on Appendix 1, Item 3
 
   
lease payment calculation period
  A period stipulated in Appendix 1, Item 5
 
   
lease payment day
  A day stipulated in Appendix 1, Item 4

  2   In the event of quoting other agreements and documents in this Contract,
if the relevant agreements and documents were revised, added or changed after
the Contract was initially concluded, they shall mean the relevant agreements
and documents after they were revised, added or changed.     3   In the event of
quoting provisions in this Contract, they shall mean, unless otherwise specially
designated, the provisions of this Contract.     4   In the event of referring
to parties to Subject related contracts in this Contract, they shall include
their successors and accredited transferees (assignees) as well.

Article 2 (Composition of transactions)

  1   Lessee and Lessor confirm that transactions listed in Appendix 1, Item 15
are planned on Subject property and they are inextricably linked with each
other.     2   Lessee confirms that Lessor has the ownership of Subject property
during the Lease period under this Contract.

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Article 3 (Lease)

  1   Lessor shall be delivered each unit component part composing Subject
property from Lessee on each delivery day based on the Subject Sales Contract
and shall lease the relevant unit component part to Lessee pursuant to the
provision of this Contract while Lessee shall be leased the relevant lease from
Lessor.     2   Lease of Subject property and each unit component part under
this Contract shall exist in each Individual transaction for each Lease period
and it shall reckon from the day of delivery of each loan certificate pursuant
to Article 4, Item 5. Except where explicitly provided, lease of Subject
property shall not be cancelled nor caused to be terminated before each Lease
period expiration period.     3   Lessee shall pay lease payment pursuant to
Article 7, Item 2 as a price of lease under this Contract.     4   Lessee shall
have the right to quietly use Subject property pursuant to Article 11 or other
provisions of this Contract.

Article 4 (Delivery)

  1   Lessee shall designate a scheduled day of delivery of each unit component
part composing Subject property to Lessor pursuant to Appendix 1, Item 1.     2
  Lessor shall deliver the relevant unit component part to Lessee on the same
day and at the same place for leasing under the preceding Article on condition
that terms and conditions stipulated in Article 5 be satisfied and each unit
component part be delivered from Lessee on the scheduled day of delivery and at
the delivery place pursuant to Subject Sales Contract, and the relevant part
shall be delivered to Lessee from Lessor.     3   In the case where change of
each scheduled delivery day becomes necessary, Lessee shall notify Lessor to
that effect as soon as possible (at the latest by 5 Banking Business Days
before). Lessee and Lessor shall agree on respective amount of lease payment,
purchase option exercise cost, reimbursement adjustment fee, repayment standard
amount and prescribed damages in each Individual transaction based on the actual
property purchase price of and delivery day for subject unit component part. In
such cases, the agreed amount of lease payment, purchase option exercise cost,
reimbursement adjustment fee, repayment standard amount and Prescribed damages
shall be filled in documents together with the actual property purchase price
and delivery day and be attached to each loan certificate in the form specified
in Appendix 2.     4   Lessee shall bear the cost and liabilities (including
Break funding cost. When Lessee bears the responsibility to pay Break funding
cost under this Contract, Lessee shall pay the amount calculated based on the
definition stipulated in Article 1 for both SD Tranche

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      1 and Toshiba Tranche 1. Provided, however, that if respective amounts of
and payment times for SD Tranche 1 and Toshiba Tranche 1 are different, they
shall be appropriately adjusted. Hereinafter the same in this Contract) caused
by change or delay in each scheduled delivery day or inability (excluding cases
attributable to Lessor).     5   Lessee shall prepare and deliver to Lessor a
loan certificate in the form specified in Appendix 2 at the same time as
delivery of each unit component part pursuant to this Article, Item 2.     6  
Delivery of each unit component part for lease of each Individual transaction
under this Contract shall be considered completed by delivery of each loan
certificate under the preceding Item and Lessee may use each unit component part
on the day of delivery of the relevant loan certificate.     7   Lessee shall
bear all the cost for delivery of Subject property under this Article.     8  
In the case where delivery of Subject property is not completed during the
delivery period under this Article, Item 2, Lessee and Lessor shall faithfully
consult possibilities of extension of delivery period with each other.

Article 5 (Prior conditions regarding delivery)

      Lessor’s obligation of delivery of each unit component part for each
individual transaction under Article 4 presupposes that the following conditions
be fully satisfied before the day of scheduled delivery. Provided, however, that
this shall not apply in the event that Lessor notifies Lessee before the
completion of delivery that Lessor does not demand that these conditions are
satisfied.

  (1)   That events have not occurred by the scheduled delivery day that would
cause Lessor or Lessee to expect legal, administrative guidance or tax changes
in laws, orders, notices and others that Lessor or Lessee reasonably judges to
be appropriate in consideration of the relevant objective to suspend or postpone
the execution of transaction planned under Subject related contracts, or that
the transaction is illegal. (However, if Lessor or Lessee determines that events
applicable under this Clause have occurred, Lessor or Lessee shall immediately
notify the other party and have consultation with the other party in advance.)  
  (2)   That the relevant unit component parts have been purchase by Lessee
before the relevant scheduled delivery day from property manufacturer under the
original purchase agreement, and Lessee has acquired the ownership thereof
without any burdens etc. (excluding waived burdens).     (3)   That the relevant
unit component part is insured under Article 19 by insurance that is effective
as of the day of the relevant scheduled delivery day.     (4)   That no events
of default have occurred.

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  (5)   That no events have occurred that make Lessor reasonably judge that
events that constitute total loss events or lead to total loss events regarding
the relevant unit component part.     (6)   That Subject related contracts to
which Lessor or Lessee should be the parties concerned are signed by all parties
concerned, issued and continued to be in force.     (7)   That representations
and warrants by Lessee in Article 20 are entirely correct as of the relevant
scheduled delivery day under the conditions that exist on the same day.     (8)
  That no significant change has been added to the FLASH PARTNERS MASTER
AGREEMENT concluded as of September 10, 2004 between the Guarantor and SanDisk
International Limited, and that this Agreement has not been terminated,
dissolved or ended.     (9)   That long-term loan rating of SanDisk by Standard
& Poor’s Rating Services or Moody’s Investors Service is BB- or Ba3 or above
respectively as of the relevant scheduled delivery day.

Article 6 (Related documents)

  1   Lessee and Lessor shall take procedures necessary for the conclusion of
this Contract and other Subject related contracts and the empowerment for the
implementation of obligations under this Contract by the date of this Contract
or each delivery day and, at the same time, submit to each other a certificate
of seal impression that was used in these contracts (issued within three months
prior to each day of signing), certified copy of company registration (issued
within three months prior to the day of signing each contract) and Articles of
Incorporation (valid as of the day of signing this Contract).     2   Lessee
shall submit the following documents to Lessor by each scheduled delivery day:

  (1)   Insurance certificate for the relevant unit component part designated in
Article 19     (2)   Original Subject Letter of Agreement on the relevant unit
component part as of the day determined by notary     (3)   Copies of other
documents reasonably requested by Lessor

Article 7 (Payment of lease payment etc.)

  1   Lessee and each Lessor agree that monetary claim of Lessor against Lessee
regarding payment of lease payment, prescribed damages, reimbursement adjustment
fee, purchase option exercise cost regarding each individual transaction under
this Contract constitute each of SD Tranche 1, SD Tranche 2, Toshiba Tranche 1
and Toshiba Tranche 2. Each Tranche regarding each individual transaction shall
constitute credits obtained by dividing the applicable monetary claim by the
rate provided in loan certificate regarding the relevant individual transaction.
Further, specific amount of each Tranche regarding lease

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      payment, prescribed damages, reimbursement adjustment fee, purchase option
exercise cost regarding each individual transaction shall follow the rules
provided by Appendix 1 Clause 3, Clause 6, Clause 7 and Clause 9 of this
Contract and loan certificate regarding the relevant individual transaction.    
    In addition, credits related to lease payment, prescribed damages,
reimbursement adjustment fee, purchase option exercise cost regarding SD Tranche
1 and SD Tranche 2 shall be attributed to only SD Lessor (each SD Lessor
maintains as divided credits according to the rate of shared equity of Subject
property), and the money regarding the relevant credit shall be paid only to SD
Lessor, and credits related to lease payment, prescribed damages, reimbursement
adjustment fee, purchase option exercise cost regarding Toshiba Tranche 1 and
Toshiba Tranche 2 shall be attributed to only Toshiba Lessor (each Toshiba
Lessor maintains as divided credits according to the rate of shared equity of
Subject property), and the money regarding the relevant credit shall be paid
only to Toshiba Lessor.     2   Lessee shall, for each individual transaction,
pay the lease payment for the lease payment calculation period that ends on each
payment day of lease payment to Lessor by 11 am of the payment day of the
relevant lease payment.     3   In the event that the day that Lessee is
supposed to make payment in the amount that Lessee has payment obligation for
each individual transaction under this Contract is not a banking business day,
for lease payment, prescribed damages, reimbursement adjustment fee, purchase
option execution price, Lessee shall make payment on the following banking
business day (if the following banking business day is in the next month, the
previous banking business day) and the payment amount shall be adjusted
accordingly, and for other amounts, the applicable payment shall be made on the
following banking business day and the payment amount shall not be adjusted.    
4   The amount that Lessee has payment obligation under this Contract shall be
paid in methods set forth in Appendix 1 Clause 10(2), except as otherwise agreed
between the parties concerned. However, lease payment, prescribed damages,
purchase option exercise cost and reimbursement adjustment fee regarding SD
Tranche 1 and SD Tranche 2 under this Contract shall be paid to Subject SD
borrower, and lease payment, prescribed damages, purchase option exercise cost
and reimbursement adjustment fee regarding Toshiba Tranche 1 and Toshiba Tranche
2 under this Contract shall be paid to Subject Toshiba borrower in accordance
with Appendix 1 Clause 10(1). Lessee confirms that regarding reception of the
relevant amount to the bank account of each Subject borrower, SD Lessor has
entrusted Subject SD borrower, and Toshiba Lessor has entrusted Subject Toshiba
borrower, and each Subject borrower has accepted this entrustments. In the event
that the applicable entrustment were cancelled by prior written notice by SD
Lessor or

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      Toshiba Lessor to Subject SD borrower or Subject Toshiba borrower, Lessor
shall notify Lessee that effect 1 banking business day before the first payment
day of lease payment that arrives after the cancellation. (In this case, of
lease payment, prescribed damages, purchase option exercise cost and
reimbursement adjustment fee under this Contract, the amount regarding SD
Tranche 1 shall be received in the bank account of each Subject SD lender
provided in Appendix 1 Clause 10(2), the amount regarding Toshiba Tranche 1
shall be received in the bank account of each Subject Toshiba lender provided in
Appendix 1 Clause 10(2), the amount regarding SD Tranche 2 shall be received in
the bank account of each SD Lessor provided in Appendix 1 Clause 10(2), and the
amount regarding Toshiba Tranche 2 shall be received in the bank account of each
Toshiba Lessor provided in Appendix 1 Clause 10(2))     5   The amount that
Lessee should pay Lessor under this Contract shall be in full amount without any
deduction, offsetting or defense regardless of any reasons (except for the case
that caused by matters ought to be attributed to Lessor’s responsibility)
including existence of defects regarding performance etc. of Subject property,
existence of burdens etc. against Subject property, existence of infringement
against use of Subject property or bankruptcy of parties concerned (that is,
bankruptcy, civil rehabilitation, corporate consolidation, corporate
reorganization and other legal arrangement procedures, or similar procedures
under laws of countries other than Japan have started and continue to be
implemented). In the event that Lessee is required by decree to withhold tax for
the applicable payment, Lessee shall make additional payment that is needed to
ensure the amount that the receiving party would have received if the relevant
withholding was not required.     6   If lease of each individual transaction
under this Contract is terminated on a day other than the payment day of lease
payment regardless of the reasons including occurrence of total loss event of
Subject property or unit component part, occurrence of cancellation events,
execution of purchase option or return option right by Lessee and others
(however, except for the case of cancellation caused by matters ought to be
attributed to Lessor’s responsibility), Lessee shall pay break funding cost to
Lessor on the relevant termination day.     7   In the event that the amount of
money that Lessee paid to Lessor or money received by Lessor by disposition of
Subject property under this Contract is less than the total amount of debts that
the time for performance has arrived as of the relevant payment day or receiving
day under this Contract, the relevant amount of money shall be appropriated to
each debt in the order below. However, debts of the same order shall be
distributed proportionally to the amount of credit that each Lessor holds.

  (1)   Cost that Lessee is required to pay Lessor under Subject related
contracts.

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  (2)   Default interest related to lease payment, prescribed damages,
reimbursement adjustment fee, purchase option exercise cost regarding SD Tranche
1 and Toshiba Tranche 1.     (3)   The amount equivalent to lease payment
interest (each amount in Appendix 1 Clause 3 (a) (2) and the same Clause (c)
(2), and Appendix 1 Clause 9 (3) and (9) specified in loan certificate for each
individual transaction regarding the relevant Tranche) of lease payment or
prescribed damages regarding SD Tranche 1 and Toshiba Tranche 1.     (4)   Of
lease payment or prescribed damages regarding SD Tranche 1 and Toshiba Tranche
1, the amount equivalent to original principal of lease payment (each amount of
Appendix 1 Clause 3 (a) (1) and the same clause (c) (1) and Appendix 1 Clause 9
(1), (2), (7) and (8) specified in loan certificate for each individual
transaction regarding the relevant Tranche), the amount equivalent to purchase
option exercise cost, or reimbursement adjustment fee.     (5)   Default
interest regarding lease payment, prescribed damages, reimbursement adjustment
fee, purchase option exercise cost regarding SD Tranche 2 and Toshiba Tranche 2.
    (6)   Of lease payment or prescribed damages regarding SD Tranche 2 and
Toshiba Tranche 2, the amount equivalent to lease payment interest (each amount
of Appendix 1 Clause 3 (b) (2) and the same clause (d) (2) and Appendix 1 Clause
9 (6) and (12) specified in loan certificate for each individual transaction
regarding the relevant Tranche).     (7)   Of lease payment or prescribed
damages regarding SD Tranche 2 and Toshiba Tranche 2, the amount equivalent to
original principal of lease payment (each amount of Appendix 1 Clause 3 (b)
(1) and the same clause (d) (1) and Appendix 1 Clause 9 (4), (5), (10) and
(11) specified in loan certificate for each individual transaction regarding the
relevant Tranche), purchase option exercise cost, or the amount equivalent to
reimbursement adjustment fee.     (8)   Amount of other credits.

Article 8 (Defective security indemnity)

  1   Lessor shall lease Subject property to Lessee on an as is basis, without
warranty of any kind regarding Subject property, whether express or implied, and
shall not be liable for defects in the property whether apparent or hidden.
Further, no guarantee shall be made regarding non-existence of burdens etc.
regarding Subject property or Subject parts, and shall not be liable for defects
whether the defects are known or not.     2   Lessee, on its own responsibility
and at its own expense, shall acquire appropriate quality

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      assurance with property manufacture or Subject parts supplier, and at the
same time make an arrangement of after the sale service and hereby transfer to
Lessor (except for those that the applicable transfer is prohibited) the rights
regarding Subject property such as right to claim security and guarantee
(including right to claim guarantee against defects). However, Lessee may
exercise the applicable right to claim security and guarantee in the name of
itself provided that no events of cancellations have occurred, and may directly
receive execution of security and guarantee during lease period from property
manufacturer or Subject parts supplier.     3   In the event that Lessee incurs
damages or loss due to lack of performance etc. in Subject property, Lessee may,
on its own responsibility and at its own expense, demand recuperation of such
damages or loss directly from property manufacturer or manufacturer of Subject
parts under the right set forth in provision of the previous clause, and Lessor
shall not be responsible for this. However, Lessee’s obligations under
Article 14 shall not be affected.

Article 9 (Burden for loss, damage and danger)

  1   In the events that events for total loss occurred to all or any unit
component part of Subject property (provided, however, that reasons attributable
to Lessor shall be excluded) Lessee shall immediately notify Lessor and pay
Lessor the amount of debt that is in time for performance of prescribed damages
and others regarding the applicable Subject property or unit component part as
of the day payment in the amount greater than the amount equivalent to the
following prescribed damages as insurance coverage of the insurance as
prescribed in Article 19 by earlier of (a) the day 90 days after the occurrence
of the relevant events for total loss (provided, however, that cases where the
relevant reasons for total loss were caused not by those attributable to Lessee,
and Lessor and Lessee separately agree shall be excluded.) or (b) the following
banking business day of the relevant day of payment.     2   When Lessee has
paid the amount prescribed in the previous clause, Lessor shall transfer to
Lessee the right to Subject property or unit component part subject to the total
loss event or the right to third party acquired by occurrence of the relevant
total loss event (excluding the right to claim indemnity of liability for
damages that Lessor should incur) on an as is basis as the time of the transfer
without securing performance and monetary capacity, trust and others of the
third party.     3   In the event that Lessor has received insurance coverage
for total loss or compensation payment from a third party due to occurrence of
total loss event regarding Subject property or unit component part (including
the monetary amount paid with the purpose to indemnify damages and drawback etc.
incurred by the total loss event regardless of its

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      title, and not including the amount of money to indemnify liability for
damages that Lessor should incur), and when Lessee has lapsed the payment due
date of prescribed under Clause 1 (whether or not if Lessee is aware that the
payment due date of Clause 1 has arrived as the result of payment of insurance
coverage for total loss), the relevant received amount shall be appropriated for
payment of the relevant prescribed damages, and if there is surplus after the
relevant appropriation, the surplus amount shall be immediately return to Lessee
upon subtracting unpaid amount that Lessee owes Lessor under Subject related
contracts (including delinquency charges), and if there is still deficient after
the relevant appropriation, Lessee shall not avoid payment of the relevant
deficient amount. Further, if Lessee has paid the relevant prescribed damages at
the time above, Lessor shall immediately return the remaining amount of the
relevant received amount to Lessee upon subtracting, if any, unpaid amount by
Lessee under Subject related contracts.     4   Lessee shall incur all dangers
and related expenses regarding loss (including total loss events) or damage
(however, in either case, except as in the case that caused by matters
attributed to Lessor’s responsibility).     5   In the event that total loss
events regarding any of unit component part has occurred and Lessee has made
payment prescribed damages regarding the relevant component part or the unpaid
amount regarding total loss events, the relevant unit component part shall be
removed from transactions under Subject related contracts, and Lessee shall be
exempt from obligations to pay lease payment regarding the relevant unit
component part in future.     6   Unit component part that Lessee reasonably
judges that does not qualify the required specification of Lessee upon
consulting to opinions of property manufacturer or property maintenance agent
after delivery day shall be considered as occurrence of total loss event by
matters not attributed to Lessee’s responsibility immediately after delivery on
the delivery day, and provisions of this Article shall be applied accordingly.  
  7   In the event that total loss event has occurred regarding Subject property
or any of unit component parts, or that Lessee judges that Subject property or
any of unit component part needs to be replaced in performing its business,
Lessee may request to Lessor replacement of the relevant Subject property or
unit component part conditional upon agreement of Subject borrower and Subject
lender (Lessor may not reject such agreement without any reasonable reasons, and
such reasonable reasons shall include the case where Lessor judges at its own
discretion that the value of Subject property after replacement of the relevant
Subject property or unit component part has decreased compared to the value
before the replacement (excluding slight decrease). The relevant replacement
shall be performed at the expense of Lessee if Lessor, Subject borrower and
Subject lender reach

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      agreement on the conditions upon taking replacement property, its price
and other matters into consideration.

Article 10 (Representation of Owner)

      Lessee shall, on its own responsibility and at its own expense, install
signs that include statement of Lessor’s ownership of Subject property in ways
that can be easily recognized by third parties in installation location of
Subject property and each of major unit component parts and unit component parts
that Lessor requests.

Article 11 (Peaceful Use)

      Lessee may, unless termination matter has occurred, use Subject property
peacefully, and Lessor shall not disturb the use by Lessee without valid
reasons.

Article 12 (Installation and Use)

  1   Lessee shall, on its own responsibility and at its own expense, install
Subject property to Toshiba Yokkaichi Factory in accordance with the
installation standards or methods provided by property manufacturer and
regulatory authority, and shall not change the installation location without
prior consent of Lessor. Installation location of Subject property or any of
unit component part outside of Japan is contingent upon, in addition to prior
consent of Lessor, compliance of provisions of each Articles of this Contract
regarding Subject property or the relevant unit component part outside of Japan,
not affecting the rights of Lessor, Subject borrower and Subject lender
regarding Subject property and rights provided in Subject related contracts, and
compliance of laws regarding export and reexport control of Japan and the United
States.     2   Lessee shall comply with demand, conditions and instructions by
property manufacturer, Subject parts supplier and insurance company, and
agreements with such parties on all laws applicable to Subject property and
installation, use, operation and handling thereof (including environmental laws)
and all important points, and at the same time, shall use Subject property only
for legal applications.     3   Lessee shall, on its own responsibility and at
its own expense, keep and maintain records regarding use and operation of
Subject property.

Article 13 (Possession and Re-leasing)

  1   Lessee shall not, without prior consent of Lessor, relocate possession of
Subject property to a third party, or re-lease Subject property. However, Lessee
may, on its own responsibility and at its own expense, without consent of
Lessor, relocate possession of Subject property for maintenance or repair to
property manufacturer or approved

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      maintenance or repair provider, and re-lease Subject property to a SD
group company or a Toshiba group company.     2   In the event that relocation
of possession or re-leasing is executed in accordance with the previous clause,
the relevant relocation of possession or re-leasing shall not affect Lessee’s
obligations under this Contract, and at the same time its articles, survival and
others shall be subject to the provisions of this Contract, and if taxes and
public dues occur to Lessee regarding the relevant relocation of possession or
re-leasing, the relevant taxes and public dues shall not affect the conditions
of lease under this Contract such as lease payment. Further, Lessee shall, on
its own responsibility and at its own expense, take all reasonable measures so
that Lessor and Subject lender maintains security as before (not limited to
those expressed in this Contract).

Article 14 (Maintenance Management)

  1   Lessee shall, on its own responsibility and at its own expense, place
Subject property in safe condition at all time.     2   Lessee shall, on its own
responsibility and at its own expense, perform maintenance and management of
Subject property in accordance with provisions of law, and perform maintenance
and repair in method approved or recommended by property manufacturer or Subject
parts supplier and method that is at lease equivalent to the methods Lessee
employs for other similar properties that Lessee uses, and at the same time,
retain Subject property in the save level condition as the initial condition on
the delivery day at all time (however, excluding normal wear and tear). In all
cases, Lessee shall not perform acts that might cause significant adverse effect
to guarantee of Subject property by property manufacturer.     3   Lessee shall,
on its own responsibility and at its own expense, keep and maintain records
regarding maintenance and repair of Subject property including maintenance log.
    4   Lessee may, for the purpose of maintenance and repair provided in Clause
2, on its own responsibility and at its own expense, replace Subject parts with
alternative part that has a similar level of performance etc. to the relevant
Subject parts and owned by Lessee without any burdens for itself (excluding the
waived burdens), and may install parts owned by Lessee without any burdens for
itself (excluding the waived burdens) to Subject Property, not as a replacement
of Subject parts. However, in either case, the replacement or installation shall
not cause any changes that are reasonably expected to decrease performance etc.
of Subject property, or have adverse effect on its performance etc.     5  
Lessee may, on its own responsibility and at its own expense, after delivery of
Subject property to Lessee in accordance with Article 4, may remove parts that
are installed to Subject property as an addition, not as a replacement to other
Subject parts, or Subject

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      parts with which removal of the relevant Subject parts does not cause
reduction in performance etc. of Subject property, without installing
alternative parts to Subject property.

Article 15 (Change in Original Condition)

      Lessee may, on its own responsibility and at its own expense, may perform
change, alteration or addition to Subject property that is considered necessary
or desirable for business reasons within the range of changes that would not
decrease its performance etc. nor have adverse effect on its performance etc.

Article 16 (Ownership of Parts)

  1   Except as in the case of Clause 2, Subject parts that Lessee installed to
Subject property under Article 14 Clause 4 shall become Subject parts that
constitutes Subject property at the same instance of installation to Subject
property, and at the same time automatically become a possession of Lessor, and
be leased from Lessor to Lessee under this Contract. For subject parts that are
removed from Subject property, ownership of the relevant removed Subject parts
shall be transferred to Lessee at the same instance that ownership of the
alternative parts are transferred to Lessor. However, Subject parts that are
changed and removed but not substituted by similar parts shall still be under
the ownership of Lessor regardless of its location and be subject to this
Contract.     2   Lessee may retain the ownership of parts that are installed to
Subject property as an addition, not as a replacement to other Subject parts,
under Article 14, after Subject property was delivered to Lessee under
Article 4, and that removal of the relevant parts from Subject property without
reducing performance etc. of Subject property is possible. Lessor may consider
the relevant parts as Subject parts in application of Article 26 Clause 3.

Article 17 (Inspection)

      Lessor and parties designated by Lessor may, upon prior notice to Lessee
no less than 5 banking business days in advance, regarding Subject property or
Subject parts, enter office, factory or facility of Lessee or its installation
location, or on a premise of Lessee or its installation location, and inspect
conditions of Subject property such as conditions, installation, use, operation,
storage, maintenance and repair. However, when performing the applicable
inspection, normal operations of Lessee or its installation location shall not
be disturbed and at the same time, confidential, safety, and security
restrictions charged by Lessee or its installation location shall be abided by.

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Article 18 (Burden etc.)

  1   Lessee shall not establish, approve, or cause to create any burden etc. to
Subject property, Subject parts or rights in this Contract, or benefits.
Provided, however, it shall not apply to burden etc. occurred from (a) rights of
Lessor and Lessee provided in this Contract, (b) retention right of employees,
maintenance provider and repair provider that occur in the process of normal
operations of Lessee or similar security right, with which its payment has not
passed the payment due date and there is no danger that the relevant burden etc.
be executed on the relevant property, and (c) rights of Lessor, Subject lender
and its successor and its approved grantee provided in Subject related contracts
(including contracts of loan and security scheduled in these contracts.).     2
  In the event that burden etc. that is not excluded in the conditional clause
in the previous clause has occurred, Lessee, on its own responsibility and at
its own expense, shall eliminate this in an appropriate method.

Article 19 (Insurance)

  1   Lessee shall, on its own responsibility and at its own expense,
personally, conclude insurance contract to cover damage and loss of Subject
property through Subject guarantor or Toshiba group companies or SD group
companies at all time during the lease period with an insurance company that
Lessor recognizes as internationally trustworthy.     2   Regarding insurance of
the previous clause, the amount of insurance shall be no less than the amount
equivalent to 100% of prescribed damages as of the payment day of lease payment
right before the day of coverage.     3   Lessee shall, in the case of
occurrence of event insured against Subject property regardless of total loss or
partial loss event, promptly notify Lessor.     4   In the event that loss event
where restoration or repair of Subject property is possible (partial loss
event), insurance money paid for such event shall be received by Lessee. Upon
receiving payment of the applicable insurance money, Lessee shall appropriate
the entire amount of the insurance money for expense of restoration and repair
of Subject property unless the relevant loss has already been restored or
repaired. In addition, in the case of total loss event, provisions of Article 9
shall be abided by.     5   Before the property delivery day under Article 4 and
the start time of each insurance period of the period required to be insured
under this Article (at least once a year), Lessee shall obtain document that
proves the coverage that meets the above conditions from the insurance company
prescribed in Clause 1, and deliver such document to Lessor.     6   Condition
of insurance set forth in this Article shall, in all cases, not be less than
insurance that covers property that is similar to Subject property that Lessee
uses in all respects. In the event that the condition of insurance under this
Article become less than

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      the condition of the relevant other insurance, condition in this Article
regarding insurance shall be increased up to the condition of the relevant other
insurance, and Lessee shall promptly conform to the increased condition.

Article 20 (Representation and Warranty)

  1   Lessee shall represent and warrant the following items as of the day of
this Contract:

  (1)   That Lessee has concluded Subject related contracts in which Lessee is a
party concerned, has capacity and authority by law and internal provisions of
the company to exercise the right under the relevant Subject related contracts
and fulfill obligations, and resolution of internal general meeting and other
measures necessary by law and internal provisions of the company for preparation
of such Subject related contracts and execution of its own rights and
fulfillment of obligations.     (2)   That preparation and delivery and
execution by Lessee of Subject related contracts that Lessee is a party
concerned does not violate laws, company contract of Lessee and other documents
related to organizations, and provisions of contracts that Lessee is a party
concerned in all respects.     (3)   That Subject related contracts that Lessee
is a party concerned are legal, effective and binding contracts of Lessee that
office grant is possible in accordance with each articles.     (4)   That any of
preparation and delivery of Subject related contracts that Lessee is a party
concerned and performance or fulfillment by Lessee of transaction intended
therein do not need in any way approval and license by government and other
public offices or court or notification or registration, or other procedure to
government and other public offices or court, with the exception of ones already
completed.     (5)   That no pending judicial or administrative procedure in any
way that might cause adverse effect to execution of rights or fulfillment of
obligations by Lessee in Subject related contracts that Lessee is a party
concerned.     (6)   That Lessee has disclosed to Lessor, Subject borrower and
Subject lender business plans determined by the board meeting of Lessee
regarding the business year that this contract day belongs to, that is
considered to be reasonably necessary for implementation of this Contract.

  2   Lessor shall represent and warrant the following items as of the day of
this Contract:

  (1)   That Lessor has concluded Subject related contracts in which Lessor is a
party concerned, has capacity and authority by law and internal provisions of
the company to exercise the right under the relevant Subject related contracts
and

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      fulfill obligations, and resolution of internal general meeting and other
measures necessary by law and internal provisions of the company for preparation
of such Subject related contracts and execution of its own rights and
fulfillment of obligations.     (2)   That preparation and delivery and
execution by Lessor of Subject related contracts that Lessor is a party
concerned does not violate laws, company contract of Lessee and other documents
related to organizations, and provisions of contracts that Lessor is a party
concerned in all respects.     (3)   That Subject related contracts that Lessor
is a party concerned are legal, effective and binding contracts of Lessor that
office grant is possible in accordance with each articles.     (4)   That any of
preparation and delivery of Subject related contracts that Lessor is a party
concerned and performance or fulfillment by Lessor of transaction intended
therein do not need in any way approval and license by government and other
public offices or court or notification or registration, or other procedure to
government and other public offices or court, with the exception of ones already
completed.     (5)   That no pending judicial or administrative procedure in any
way that might cause adverse effect to execution of rights or fulfillment of
obligations by Lessor in Subject related contracts that Lessor is a party
concerned.

  3   Representation and warranty of each item in the previous two Clauses shall
be considered to be repeated by Lessee and Lessor on delivery day of each
individual transaction and payment day of each lease payment under the
conditions exist on those days.

Article 21 (Commitment Matters)

  1   Lessee shall make the following commitment to Lessor:

  (1)   Lessee shall manage during the lease period Subject property, each unit
component part and Subject parts in distinction from other properties.     (2)  
Lessee shall fulfill and comply with Lessee’s obligations in Subject related
contracts (including the original purchase contract for the purpose of this
Contract) in accordance with its provisions.     (3)   In the event that default
matters or matters that would cause significant adverse effect to Lessor’s
entire rights in Subject related contracts or fulfillment of Lessee’s
obligations, Lessee shall notify Lessor to that effect promptly after learning
of occurrence of such matters.     (4)   In the event that Lessee has acquired
consent, permission, approval, license or acceptance of government or other
public offices or court which Lessee is required

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      by government or other public offices or court in order to continue
essentially the same business as the present time or regarding Subject related
contracts, maintains its effect, and conditions or restrictions imposed
regarding these, Lessee shall abide by all.     (5)   Lessee shall provide
Lessor and Subject lender upon their request with information regarding
financial situation and business conditions of Lessor or Subject guarantor
Lessor that Lessor reasonably requests including financial statements that is
not particularly under confidentiality obligation, and information regarding
installation, condition, storage, use, maintenance and repair of Subject
property after the end of its business year (however, after the end of its half
year period or business year for Subject guarantor).     (6)   Lessee shall
perform all acts that Lessor reasonably requests as necessary for establishment,
transfer or formation of fluctuation of rights or fulfillment of perfection in
Subject related contracts that are recognized by Subject related contracts or
scheduled, to the extent that Lessee perform in accordance with provisions
thereof.     (7)   Lessee shall, for each business year, report promptly after
the end of each relevant business year to Lessor progress status of business
plan of the relevant business year determined at a board meeting of Lessee, to
the extent that is reasonably recognized necessary for implementation of this
Contract.     (8)   If there is a reasonable request from Lessor, Lessee shall
cooperate with Lessor and Subject lender to achieve objects of Subject related
contracts.     (9)   Accounting and financial handling of Lessee and Subject
guarantor regarding transaction under this Contract and Subject related
contracts shall be performed by Lessee and Subject guarantor at their own
discretion and responsibility.     (10)   Lessee shall ensure that the Guarantor
makes no significant changes to the FLASH PARTNERS MASTER AGREEMENT concluded
between Subject guarantor and SanDisk International Limited as of September 10,
2004 as the day of this Contract. Provided, however, that this shall not apply
in the event that the Lessor and the Lender agree otherwise.     (11)   Lessee
shall have SanDisk abide by the following provisions. Provided, however, that
this shall not apply in the event that the Lessor and the Lender agree otherwise
as to (1) and (3) below.

  (1)   SanDisk shall maintain long-term loan rating by Standard & Poor’s Rating
Services or Moody’s Investors Service to BB- or Ba3 or above respectively.    
(2)   SanDisk shall promise that no security interest shall be established in
any San Disk assets SanDisk without prior written approval by Lessor. Provided,

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      however, that this shall exclude cases involving normal securitization
transactions regarding loan or inventory or any of the specified security
interests listed in Appendix 3 below (Permitted Liens).     (3)   SanDisk shall
maintain the amount of equity (Total Stockholders’ Equity) in consolidated
balance sheet as of the last of accounting term and mid accounting term of each
year at no less than 1,164 million US dollars until the termination of this
Contract and completion of fulfillment of all of Lessee’s and SanDisk’s
obligations to Lessor in this Contract.

Article 22 (Compensation and Burden of Expense)

  1   Lessee shall, except as otherwise provided in this Article, incur burdens
and compensations for taxes and public dues to be imposed on all or any of
persons to be compensated in direct or indirect relation to any of Subject
property, unit component part or Subject parts, or ownership, possession, use,
application, operation, lease, re-lease, installation, storage, maintenance,
repair, improvement, modification, insurance, burdens etc., delivery, purchase,
transfer, return, performance etc., structure, design, specification, functions,
durability, operability, manufacture or Subject related contracts thereof, or
payment regarding those (except payment of property purchase price under Subject
Sales Contract and payment of principal and interest under Subject Loan
Agreement) and other transactions intended by those, and loss etc. to be
incurred by all or any of persons to be compensated, and if there is an
instruction from the relevant persons to be compensated, directly pay to the
authorities or third parties. However, Lessee is not obliged to fulfill
obligation of compensation or payment under this clause for either of taxes and
public dues imposed on the basis of net profit, or taxes and public dues
otherwise provided in this clause.     2   Of expenses regarding preparation and
conclusion of Subject related contracts, attorney’s fee shall be incurred by
each party.     3   Expenses regarding fulfillment of obligations and
transactions under Subject related contracts shall be determined as specified in
express provisions and as provided below:

  (1)   Lessee shall incur bank fee regarding payment etc. in Article 7.     (2)
  Lessee shall incur expenses including attorney’s fee regarding purchase option
right or return of Subject property by Lessee.     (3)   Expenses including
attorney’s fee that arises from occurrence of default by any of parties involved
shall be incurred by the relevant parties involved.

  4   Taxes and public dues regarding Subject related contracts shall be
determined as specified in express provisions and as provided below

  (1)   For consumption tax imposed on payment of purchase price of Subject
property and payment etc. of lease fee under Subject related contracts, except
as otherwise

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      agreed on between parties involved in this Contract, the parties involved
that make these payment shall pay the amount of consumption tax to the receiving
parties along with these payment. Provided, however, this shall not apply in the
case that any of parties involved in this Contract may be exempt from imposition
of consumption tax under the provisions of laws related to consumption tax.    
(2)   Fixed property tax imposed on Subject property shall be paid by those
subject to incur by law, however, if Lessor is subject to such payment, Lessee
shall pay Lessor the amount equivalent to the fixed property tax.

  5   Taxes and public dues that Lessee compensates or pays persons to be
compensated under this Article shall be based upon net amount after tax.     6  
If the interest of loan is increased or each Subject borrower is charged with
additional expense in accordance with each Subject Loan Agreement, Lessor may,
upon written notice, based on charges from each Subject borrower, increase lease
payment applicable to SD Tranche 1 or Toshiba Tranche 1 based on reasonably
calculation method or demand payment of the relevant additional expense to
Lessee. In such case, each amount of the applicable purchase option exercise
cost, reimbursement adjustment fee, repayment standard money and prescribed
damages shall be recalculated as well.     7   In the event that taxes and
public dues and other expenses to be incurred by Lessee under Subject related
contracts are charged to Lessor or paid advance by Lessor, Lessee shall
immediately pay Lessor upon request by Lessor the amount of the relevant payment
and interest calculated in accordance with provisions of Article 27 from the day
of payment. Provided, however, Lessor shall immediately notify Lessee in the
case that Lessor was charged such taxes and public dues and other expenses, or
paid such amount.

Article 23 (Number of individual transactions and change of deliverable period)

  1   Lessee and Lessor shall perform the first individual transaction in the
period starting [*] ending [*], and may execute up to [*] times in [*] months
after the first individual transaction. Provided, however, number of individual
transactions and deliverable period shall be set forth in Appendix 1 Clause 1.  
  2   Lessee and Lessor may, if prior written approval of Subject lender and
Subject borrower are obtained, change executable period of individual
transactions and number of individual transaction provided in the previous
clause, and in this case, Lessee and Lessor, if change is needed regarding
change of payment conditions including lease payment, prescribed damages,
purchase option exercise cost, reimbursement adjustment fee, shall discuss the
relevant changes.

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

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Article 24 (Purchase Option Right)

  1   Lessee may, for each individual transaction, by notifying Lessor no less
than 30 days in advance of each lease payment day, purchase all of Subject
property or any of unit component parts (provided, however, exercise of purchase
option right for any of unit component part only shall be determined by
provisions of Clause 4.) by paying Lessor with purchase option exercise cost and
the amount of other debts in time for performance of Subject property or the
relevant unit component part as of the relevant lease payment day (provided,
however, for each individual transaction on the final lease payment day, whether
or not there is notification from Lessee, unless otherwise return under Article
25 is made, purchase option right shall be considered to have been exercised).
Notice of exercise of purchase option right under this clause shall not be
withdrawn.     2   If Lessee exercised purchase option right under the previous
clause and paid the amount as prescribed in the previous clause, Lessor’s
ownership and any other rights regarding Subject property or the relevant unit
component part shall be transferred to Lessee on an as is basis without security
for performance etc. and others at the time of completion of its payment.
Provided, however, Lessor shall warrant Lessee that no burdens etc. that arise
based on matters established by Lessor or attributable to Lessor exist at the
time of such transfer to Subject property or the relevant unit component part.  
  3   Lessor shall deliver transfer certificate of Appendix 4 to Lessee when
receiving the amount as prescribed in Clause 1.     4   Exercise of purchase
option right on not the entire Subject property but only some of unit component
parts may be allowed only if the total amount of property purchase cost of the
unit component parts that Lessee is to purchase on the relevant lease payment
day under this Article exceeds [*] Yen and Lessor’s consent is obtained (Lessor
may not reject such consent without any reasonable reasons, and such reasonable
reasons shall include the case that Lessor judges at its own discretion that the
relative value of Subject property against purchase option exercise cost of
Subject property after the purchase of the relevant unit component part has
decreased (excluding slight decrease) compared to that of Subject property
before the purchase. Further, the limit amount of purchase option exercise cost
that is appropriated to the original principal of each of SD Tranche 1 and
Toshiba Tranche 1 shall be the amount of money calculated by multiplying
property purchase cost of the relevant subject unit component part by rates each
time provided in the prescribed damages (A) and (C) of loan certificate.     5  
Lessee shall incur all expenses regarding exercise of purchase option right by
Lessee.

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

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Article 25 (Return)

  1   Lessee may, in accordance with the following provisions, for each
individual transaction, may return to Lessor all unit component parts that are
subject to the relevant individual transaction at the location designated by
Lessor on the corresponding day of delivery day each year of lease period
(hereinafter referred to as “return day”) by notifying Lessor and Subject lender
no less than [*] days in advance. Provided, however, in the event that any one
of reason for cancellation or default reason (including reason for cancellation
and default reason regarding clauses on return under this Article) has occurred
on return day, or purchase by purchase option right under Article 24 is
exercised on the same day as return day, Lessee may not implement return of
Subject property under this Article. Notification of exercise of return option
right may be withdrawn until [*] days before return day.

  (1)   When Lessee returns Subject property to Lessor under this Clause,
Subject property shall be in a good condition as in the time of delivery in
Article 4, that normal use is possible, and that Lessor reasonably judges to
satisfy all of the requirements for conditions at the time of return regarding
Subject property prescribed in Appendix 6, except for normal wear and tear and
changes etc. performed in accordance with provisions of Article 14 Clause 4 or
5, or Article 15.     (2)   Lessee shall deliver with return of Subject property
to Lessor, in addition to maintenance and repair log, all records or copy
thereof regarding installation, storage, use, operation, maintenance and repair
of Subject property, and if Lessor requests, certificate by property maintenance
and repair provider approved by property manufacturer, Subject parts supplier or
property manufacturer that certifies the matters provided in Item (1) of this
Clause.     (3)   Lessee shall approve that Lessor, Subject lender or party that
is to become a buyer of Subject property that Lessor has designated (and related
parties thereof) enters office and factory etc. of Lessee or its installation
location to inspect Subject property ahead of return of Subject property under
Article 17.     (4)   Lessee shall, on the return day, at the same time as
return of Subject property, pay Lessor the amount of reimbursement fee of
Subject property as of the return day and the amount of other debts under
Subject related contracts.     (5)   If Lessor incurs debt against Lessee under
Subject related contracts on the return day, Lessor shall, on the return day, at
the same time as return of Subject property, pay Lessee the amount of the
relevant debt.

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

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  (6)   Return of Subject property under this Article shall be applied to all of
the unit component parts subject to the relevant individual transaction only,
and shall not be applied to only some of the unit component part.     (7)  
Lessee shall, in the case of selecting return under this Clause, upon discussion
with Lessor, work to mediate a third party that purchases Subject property with
purchase conditions that Lessor objectively satisfies. Provided, however, this
shall not apply in the case that Subject property or any of unit component part
is to be discarded in accordance with Clause 4.

  2   Lessor shall, when receiving the return of Subject property, prepare
return certificate of Appendix 4 and delivery to Lessee.     3   Lessee shall,
if requested by Lessor, on its own responsibility and at its own expense, shall
hold in trust Subject property for Lessor for maximum of [*] after the return
day, and shall perform maintenance management, inspection and maintenance in
accordance with this Contract in order to maintain the same level of performance
etc. as on the delivery day in Subject property at all time, and if Subject
property is damaged, regardless of the cause, shall repair to the perfect
condition.     4   Notwithstanding provisions of Clause 1, Lessor may request
Lessee disposition of all or a portion of unit component parts that constitute
Subject property before return day. In this case, Lessee shall, upon delivery of
acknowledgement document to Lessor, on its own responsibility and at its own
expense, immediately perform disposition of the requested unit component parts
within Japan. Lessee shall, for such disposition, abide by the applicable laws
(including environmental laws). Provided, however, in the case that Lessor needs
to perform disposition under the name of itself, Lessee shall perform necessary
cooperation along with covering its expenses. In any event, Lessor may request
Lessee to provide with documents that confirm disposition or related documents,
or copies thereof.     5   Lessee shall incur maintenance expense, removal
expense, transport expense, storage expense, resale expanse and all other
expenses related to return of Subject property, and all expenses related to
disposition of Subject property.

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

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  6   If Lessor sells Subject property to a third party within [*] of return of
Subject property by Lessee to Lessor under this Article, and the net amount
after deducting taxes and public dues, sales fee, and any other expenses from
the received amount of the sales exceeds the repayment standard money of Subject
property as of the return day, Lessor shall pay Lessee the amount equivalent to
[*]% of the difference of such received amount of sales and the repayment
standard money. Lessee shall incur taxes and public dues charged on such
payment.     7   In the case of disposition of Subject property that is returned
under this Article, conditions and methods etc. of disposition shall be
determined upon discussion by SD Lessor RA and Toshiba Lessor RA.

Article 26 (Termination of Contract)

  1   Lessor may, in the event of any one of the following events, with only
written notice without formal demand, have Lessee lose benefit of term regarding
loans on this Contract or any or all of individual transactions, and terminate
this Contract or any or all of individual transactions.

  (1)   If Lessee defaults payment of lease payment and other debts under
Subject related contracts, and does not make the relevant payment within 2
banking business days of receipt of written notice to that effect from Lessor.  
  (2)   If Lessee neglect obtain and keep required insurance in accordance with
this Contract.     (3)   If Lessee neglects to eliminate burdens etc. in
accordance with this Contract.     (4)   If Lessee violates the provisions of
Subject related contracts outside of the previous Item, and does not heal the
relevant violations within 10 banking business days of receipt of written notice
to that effect from Lessor.     (5)   If Lessee or Subject guarantor are
subjected to compulsory execution, petition for auction or disposition for
failure to pay taxes and public dues, or petition for bankruptcy, civil
rehabilitation, corporate consolidation, corporate reorganization and other
similar procedures (including petition for similar procedure or disposition
under foreign law). Provided, however, except as in the case that the relevant
petition or disposition is cancelled or dissolved within 30 days.

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

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  (6)   If Lessee or Subject guarantor starts private disposition, passes a
resolution to abolish or dissolve all or the major part of the business
operation (provided, however, except as in the case of corporate reorganization
that is not accompanied by procedure of Item (5) by Lessee or Subject guarantor,
and Lessor, Subject borrower, Subject lender have agreed upon), or receives
disposition of business suspension of all or major part of business or operation
or other discontinuance of all or major part of business or operation from
public office(It shall be considered to fall under this Item (6) if operation of
Subject property by Lessee has been ceased for more than 2 months and without
scheduled resuming).     (7)   If Lessee or Subject guarantor transfer all or
major part of business. Provided, however, except as in the case of corporate
reorganization that is not accompanied by procedure of Item (5) by Lessee or
Subject guarantor, and Lessor, Subject borrower, Subject lender have agreed
upon.     (8)   If Lessee or Subject guarantor stops payment or receives
transaction stoppage disposition by bill clearing house.     (9)   If direct and
indirect rate of equity participation of each Subject guarantor to Lessee is
changed. However, except as in the case that Lessor, Subject borrower and
Subject lender agreed upon.     (10)   If FLASH PARTNERS MASTER AGREEMENT
concluded between Toshiba Corporation, SanDisk Corporation and SanDisk
International Limited as of September 10, 2004 is cancelled, dissolved, or
terminated.     (11)   If Lessee or Subject guarantor loses term of benefit
regarding monetary debts for greater than 20 million US dollars that they incur.
Provided, however, that this shall not apply in the event that it is determined
that the obligee has agreed or consented to the delinquency (including cases
where, under industry custom, silence is deemed to signify consent).     (12)  
If the amount of equity (Total Stockholders’ Equity) in consolidated balance
sheet as of the last of accounting term and mid accounting term of each year of
SanDisk becomes less than 1,164 million US dollars.     (13)   If long-term loan
rating of SanDisk by Standard & Poor’s Rating Services or Moody’s Investors
Service is decreased to below BB- or Ba3 respectively (13) If, in the event that
there exists adequate cause that is objectively recognized that voluntary and
smooth fulfillment of debts in this Contract becomes difficult due to
significant change in the condition regarding assets and trusts of Lessee or
Subject guarantor other than each of the previous Items, no discussion was
arranged within 30 days of receipt of notice to that effect from Lessor by
Lessee.

  2   If this Contract is terminated under the previous Clause, Lessee shall
return Subject

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      property to Lessor on the day specified by Lessor (hereinafter referred to
as “termination day”), and pay debts that have not been paid as of the
termination day such as unpaid lease payment that is supposed to be paid on
lease payment day before the termination day and delinquency charges regarding
those, and prescribed damages on the termination day provided in Appendix 1
Clause 9.     3   In the event that this Contract was terminated in accordance
with Clause 1, Lessor shall, following its selection, liquidate all or a portion
of debts of the previous Clause by method provided in each of the following
Items.

  (1)   Upon disposing Subject property by sale under sales conditions
determined at its own discretion, the amount equivalent to the amount after
expense is deducted from such received amount by sales is reduced from the
amount debt in the previous Clause.     (2)   Upon evaluating fair market price
of Subject property, the amount equivalent to the amount after expense is
deducted from such evaluated amount is reduced from the amount debt in the
previous Clause.

      In addition, of the debts of the previous Clause, Lessee shall be subject
to the debts regarding the amount remained after such liquidation. Lessor shall
immediately return to Lessee the remaining balance after the total amount of
debts of the previous Clause is satisfied by such liquidation.     4   When
Lessee shall return Subject property by Clause 2, condition of Subject property,
method of return and others shall be determined by provisions of Article 25,
unless otherwise provided in this Article.     5   Notwithstanding provisions of
each of the previous Clauses, Lessee may, until Lessor disposes Subject property
or unit component part by sales in accordance with Clause 3, purchase such
Subject property or unit component part that has not been sold by paying Lessor
prescribed damages of such Subject property or unit component part as of the
termination day, unpaid lease payment and other amount that Lessee is subject to
make payment to Lessor under Clause 2 (including delinquency charges) (provided,
however, this may be approved only in the case that Lessor’s consent is provided
unless in the case of purchase of the entire Subject property). If Lessee
purchases Subject property or unit component part by making such payment to
Lessor, Lessor shall transfer such Subject property or unit component part to
Lessee on an as is basis without securing its performance etc. and others. Such
transfer shall be under provisions of transfer certificate in the form provided
in Appendix 5.     6   Lessor may, regarding every term of Subject related
contracts, claim for injunction of violation acts or specific benefits and claim
for compensation regarding debts or liability that is incurred by Lessor, as
well as receives other remedies recognized by law.

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  7   In the event that any reason for termination set forth in Clause 1 (12) or
(13) occurs, that termination event shall be deemed not to have occurred if
SanDisk, the SD Lessor, and the SD Lender have agreed on the supplementary
collateral to be supplied by SanDisk, or if they have agreed on the lease amount
and stipulated damages pursuant to this agreement and on the revision to the
spread used to calculate the interest rate pursuant to the Loan Agreement.     8
  Lessee may, in the event that any reason for cancellation provided in each
Item of Clause 1 occurs, by obtaining prior written consent of Lessor, transfer
the status of Lessee under this Contract and Subject related contracts to both
or one of Subject guarantor, and in this case, it shall be considered that the
relevant reason for cancellation did not occur.     9   In the event that reason
for cancellation provided in Clause 1 (5) through (8) and (10) through
(14) occurs for either Guarantor, the other Guarantor may succeed the status of
Guarantor within 30 days of the date that occurrence of the relevant event
became known, and pledge warranty or security that Lessor, Lender and the other
Guarantor agree upon, in which case, that termination event shall be deemed not
to have occurred.

Article 27 (Default Interest)

      If Lessee defaults payment of money to Lessor under this Contract, Lessee
shall pay delinquency charges at the rate of [*]% annual interest (on a prorated
daily basis with 1 year as 360 days) for that delinquent period.

Article 28 (Transfer of Rights and Obligations)

      Lessee and Lessor shall not, without obtaining prior written approval of
the other party, transfer to a third party right of use of Subject property and
rights and obligations under this Contract, or give as security. Provided,
however, except for the following cases:

  (1)   For each individual transaction, SD Lessor may transfer to Subject SD
borrower under Subject SD Loan Sales Contract lease payment, prescribed damages,
purchase option exercise cost, reimbursement adjustment fee, break funding cost
regarding SD Tranche 1 and delinquency charges regarding those, and any other
monetary credits.

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

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  (2)   For each individual transaction, Toshiba Lessor may transfer to Subject
Toshiba borrower under Subject Toshiba Loan Sales Contract lease payment,
prescribed damages, purchase option exercise cost, reimbursement adjustment fee,
break funding cost regarding Toshiba Tranche 1 and delinquency charges regarding
those, and any other monetary credits (3) For each individual transaction,
Subject SD borrower may, as security for Subject SD Loan Agreement, for Subject
SD lender, transfer assigned credits of Clause 1 under Subject SD Loan Transfer
Security Contract.     (4)   For each individual transaction, Subject Toshiba
borrower may, as security for Subject Toshiba Loan Agreement, for Subject
Toshiba lender, transfer assigned credits of Clause 1 under Subject Toshiba Loan
Transfer Security Contract.     (5)   For each individual transaction, Lessor
may, as security for Subject Loan Agreement, for Subject lender, transfer
Subject property under Subject property transfer security reservation contract.

      Lessee shall hereby approve transfer and establishment of security right
of such loans, cooperate with Lessor in preparation and delivery of documents
requested by Lessor. In addition, Lessee and SD Lessor shall approve exercise of
SD Lessor’s rights provided in this Contract to the extent necessary to exercise
assigned credits that Subject SD borrower acquired under Subject SD Loan Sales
Contract, and Lessee and Toshiba Lessor shall approve exercise of Toshiba
Lessor’s rights provided in this Contract to the extent necessary to exercise
assigned credits that Subject Toshiba borrower acquired under Subject Toshiba
Loan Sales Contract.

Article 29 (Responsible Assets)

  1   Except as in the case of provisions under Clause 3 of this Article,
fulfillment of monetary obligations that Lessee incurs against SD Lessor under
this Contract shall be have only the following money and other assets
(hereinafter referred to as “SD responsible assets”) as payment underlying
assets, and Lessee shall not be responsible for default by parties involved in
Subject related contracts other than itself or price trends or disposition
possibility of Subject property. SD Lessor shall not file petition for starting
seizure, temporary seizure or other compulsory execution procedures, or
protective order to Lessee’s assets other than such SD responsible assets, and
shall not file petition for starting of bankruptcy procedure to Lessee.

  (1)   The amount equivalent to lease payment, prescribed damages, purchase
option exercise cost, reimbursement adjustment fee and delinquency charges
regarding SD Tranche 1 and SD Tranche 2 under Subject Lease Contract and other
monetary amount to be incurred regarding SD Tranche 1 and SD Tranche 2 under
Subject

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      Lease Contract.     (2)   Monetary amount that SD Lessor receives
regarding rights applied to monetary amount provided in the previous Item under
Subject SD Guarantee Agreement.     (3)   SD Lessor’s shared equity of Subject
property.     (4)   The amount that SD Lessor receives as the result of exercise
or execution of rights acquired under Subject related contracts (whether or not
compulsory or voluntary procedure).

  2   Except as in the case of provisions under Clause 3 of this Article,
fulfillment of monetary obligations that Lessee incurs against Toshiba Lessor
under this Contract shall be have only the following money and other assets
(hereinafter referred to as “Toshiba responsible assets”) as payment underlying
assets, and Lessee shall not be responsible for default by parties involved in
Subject related contracts other than itself or price trends or disposition
possibility of Subject property. Toshiba Lessor shall not file petition for
starting seizure, temporary seizure or other compulsory execution procedures, or
protective order to Lessee’s assets other than such Toshiba responsible assets,
and shall not file petition for starting of bankruptcy procedure to Lessee.

  (1)   The amount equivalent to lease payment, prescribed damages, purchase
option exercise cost, reimbursement adjustment fee and delinquency charges
regarding Toshiba Tranche 1 and Toshiba Tranche 2 under Subject Lease Contract
and other monetary amount to be incurred regarding Toshiba Tranche 1 and Toshiba
Tranche 2 under Subject Lease Contract.     (2)   Monetary amount that Toshiba
Lessor receives regarding rights applied to monetary amount provided in the
previous Item under Subject Toshiba Guarantee Agreement.     (3)   Toshiba
Lessor’s shared equity of Subject property.     (4)   The amount that Toshiba
Lessor receives as the result of exercise or execution of rights acquired under
Subject related contracts (whether or not compulsory or voluntary procedure).

  3   Notwithstanding provisions of the previous two Clauses, Lessee shall not
be exempt from responsibility to Lessor under Subject Lease Contract or Subject
related contracts regarding loss, damages, expenses and costs attributable to
Lessee’s responsibility that Lessor incurred or absorbed, and shall incur
absolute obligation and responsibility, and in that case, provisions of the
previous two Clauses shall not be applied. Further, this Clause shall not extend
debts divided to each Tranche regarding Subject guarantor under Subject
Guarantee Agreement to other Tranche.     4   Provisions of Clause 1 and Clause
2 shall only restrict payment underlying assets for payment of monetary debts
provided in the same Clauses, and shall not effect occurrence of such debts or
limit such debts, nor restrict exercise of Lessor’s rights under Subject

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      related contracts or security right held of Lessor.

Article 30 (Notice etc.)

      All written notice necessary in this Contract shall be sent by postal
mail, personal delivery or facsimile transmission to the notified parties listed
on Appendix 7. In addition, external clerical work of Lessor such as notice and
other transmissions shall be performed by IBJ Leasing Co., Ltd. on behalf of
Lessor, expect as otherwise provided in this Contract.

Article 31 (Revision of Contract)

      This Contract shall not be revised unless with written consent of all
parties concerned.

Article 32 (Confidentiality)

  1   Each party to this Contract shall pledge to not leak contents of this
Contract or Subject related contracts and information or documents received
regarding negotiations for them or in accordance with provisions thereof for [*]
years from the day of this Contract, and shall securely keep confidential.
Provided, however, except as in the case of disclosure of information or
documents that are already publicly known, disclosure that accompanies marketing
of Subject property, disclosure that is necessary for maintenance or exercise of
rights, or fulfillment of obligations in Subject related contracts, and
disclosure under the request of tax authorities and other related authorities or
disclosure under prior consent of all parties to this Contract.     2   Period
of confidentiality provided in the previous Clause shall be automatically
renewed for [*] year if there is no notice of cancellation of confidentiality
from Lessee, and the same shall apply after that. Provided, however, Lessor may
request confirmation of Lessee regarding extension of period of confidentiality
at the [*] year or at the end of the extended period.     3   In the event that
party concerned to this Contract infringes the obligations of Clause 1, the
relevant party concerned shall compensate economic damages incurred by other
parties concerned.

Article 33 (Governing Law)

      This Contract shall be subject to laws of Japan and be interpreted in
accordance with law of Japan in all respects.

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

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Article 34 (Court of Competent Jurisdiction)

      Any disputes that may arise under this Contract or regarding this Contract
shall be referred to exclusive competency of Tokyo District Court.

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In order to verify this Contract described above, on the date first above
written, Lessor and Lessee shall prepare 4 original copies of this Contract and
each shall maintain 1 copy each.

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      (basic lease contract)
SD Lessor
  :   IBJ Leasing Co., Ltd.
as well as
       
Toshiba Lessor
       

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      (basic lease contract)
SD Lessor
  :   Sumisho Lease Co., Ltd.
as well as
       
Toshiba Lessor
       

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      (basic lease contract)
SD Lessor   
  :   Toshiba Finance Co., Ltd.

- 41 -

--------------------------------------------------------------------------------

 

         
 
      (basic lease contract)
Lessee  
  :   Flash Partners Limited Company

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Lease Contract Appendix 1
Lease Conditions

1   Specification of scheduled delivery day, the final deliverable day and
properties

A corresponding day from [*] to [*] that falls on a banking business day and
Lessee objectively specifies the relevant unit component part by a serial
number, etc. and notifies Lessor as a scheduled day by 20 days before the
relevant scheduled delivery day shall be a scheduled delivery day in each
individual transaction and the final scheduled delivery day during the relevant
period shall be the final deliverable day under this Contract. Lessee and Lessor
shall conduct the first individual transaction in a period from [*] to [*], and
they may execute up to [*] transactions in the following [*] months. Provided,
however, that Lessee and Lessor may change the period mentioned above and the
number of transactions to be implemented pursuant to Article 23.

2   Lease period       For each individual transaction four or five years from
the delivery day to be described in related loan certificates (including
delivery day but not including Lease period expiration period).

3   Calculation of lease payment       Calculation is done with the total amount
of the following SD Tranche 1, SD Tranche 2, Toshiba Tranche 1, Toshiba Tranche
2.

  (a)   (SD Tranche 1)
For each lease payment calculation period, total amounts of (1) amount of
Subject property purchase price in each individual transaction multiplied by the
ratio in the following (A) and (2) total amount of interest on the amount to be
calculated based on the following Clause 9 (1) as of the lease payment day for
the lease payment calculation period immediately prior to the relevant lease
payment calculation period (in the event that the immediately prior lease
payment calculation period does not exist, delivery day) multiplied by the
interest rate of Euro Yen TIBOR plus the following SD Tranche 1 spread from the
first day to the last day of the relevant lease payment calculation period
(calculated on a pro-rate basis with 360 days a year).
(SD Tranche 1 spread)

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

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In the event that long-term loan rating of SanDisk by Standard & Poor’s Rating
Services or Moody’s Investors Service (hereinafter collectively referred to as
the “designated rating agency” as of the day of this Contract is “BB-” or “Ba3”
or below respectively;
  [*]% p.a.
In the event that long-term loan rating of SanDisk by the designated rating
agency is “BB” or “Ba2” respectively;
  [*]% p.a.
In the event that long-term loan rating of SanDisk by the designated rating
agency is “BB+” or “Ba1” or above respectively.
  [*]% p.a.

      Changes in SD Tranche 1 spread based on the above formula shall be
applicable in the lease payment calculation period that comes after the formal
public announcement by the designated rating agency (Provided, however, that if
the relevant public announcement is made after 10 business days prior to the
start of lease payment calculation period, they shall apply as from the next
lease payment calculation period that comes after the next lease payment
calculation period.).     (b)   (SD Tranche 2)         For each lease payment
calculation period, total amounts of (1) amount to be obtained by multiplying
purchase price of Subject property in each individual transaction by the ratio
in the following (B) and (2) amount of interest as of the lease payment day on
the amount to be calculated based on the following Clause 9 (4) for a lease
payment calculation period immediately prior to the lease payment calculation
period (delivery day in the event that the immediately prior lease payment
calculation period does not exist) multiplied by the interest rate of Euro Yen
TIBOR for a period from the first day to the last day of the relevant lease
payment calculation period plus the following SD Tranche 2 spread (calculated on
a pro-rate basis with 360 days a year).
(SD Tranche 2 spread)

     
In the event that long-term loan rating of San Disk as of the day of the
Contract by the designated rating agency is “BB-” or “Ba3” or below
respectively;
  [*]% p.a.
In the event that long-term loan rating of SanDisk by the designated rating
agency is “BB” or “Ba2” respectively;
  [*]% p.a.
In the event that long-term loan rating of SanDisk by the designated rating
agency is “BB+” or “Ba1” or above respectively;
  [*]% p.a.

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

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      Changes in the SD Tranche 2 spread based on the above formula shall be
applicable as from the lease payment calculation period that comes after the
formal public announcement by the designated rating agency (Provided, however,
that if the relevant formal announcement is made after 10 business days prior to
the first day of lease payment calculation period, they shall apply as from the
next lease payment calculation period that comes after the next lease payment
calculation period.).     (c)   (Toshiba Tranche 1)         For each lease
payment calculation period, total amounts of (1) amount to be obtained by
multiplying purchase price of Subject property in each individual transaction by
the rate in the following (c) and (2) amount of interest on the amount to be
calculated based on the following Clause 9 (7) as of the lease payment day for a
lease payment calculation period immediately prior to the relevant lease payment
calculation period (delivery day in the event that the immediately prior lease
payment calculation period does not exist) multiplied by the interest rate of
Euro Yen TIBOR for a period from the first day to the last day of the relevant
lease payment calculation period plus [*]% p.a. (calculated on a pro-rate basis
with 360 days a year).     (d)   (Toshiba Tranche 2)         For each lease
payment calculation period, total amounts of (1) amount to be obtained by
multiplying the purchase price of Subject property in each individual
transaction by the ratio in the following (D) and (2) amount of interest on the
amount to be calculated based on the following Clause 9 (10) as of the lease
payment day for a lease payment calculation period immediately prior to the
relevant lease payment calculation period (delivery day in the event that the
immediately prior lease payment calculation period does not exist) multiplied by
the interest rate of Euro Yen TIBOR for a period from the first day to the last
day of the relevant lease payment calculation period plus [*]% p.a. (calculated
on a pro-rate basis with 360 days a year).

  (A)   Provided in loan certificate regarding the relevant individual
transaction     (B)   Provided in loan certificate regarding the relevant
individual transaction     (C)   Provided in loan certificate regarding the
relevant individual transaction     (D)   Provided in loan certificate regarding
the relevant individual transaction

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 45 -

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    In this Clause, “Euro Yen TIBOR” shall be indicated by the rate of Yen
offered trade for a three-month term (per annum) (for the final payment due
date) as of 11:00 a.m. Japan time on the date of loan (in the event of the first
payment due date) or on a day two banking business days before the previous
interest calculation day (as defined in Article 1) based on the outline publicly
announced on the Telerate screen number 23070 by the Japanese Bankers
Association to be designated by the Japanese Bankers Association. Provided,
however, that in the event that the lease payment calculation period is less
than three months, the rate shall be separately defined in the loan certificate.
  4   Lease payment day       For each individual transaction a corresponding
day of delivery day three months after the respective delivery day and
corresponding days of delivery days three months after the respective delivery
days shall be the first lease payment day (in the event that a delivery day
falls on the last banking business day of a month, the last banking business day
of every three month shall be the lease payment day). However, in the event that
the relevant corresponding day is not a banking business day, it shall be
determined based on the provision of Article 7, Clause 3 of this Contract.   5  
Lease payment calculation period       In each individual transaction, a period
that starts on the delivery day until the day before the first lease payment day
and from the following day of the last day of the immediately prior lease
payment calculation period thereafter until the previous day of the next lease
payment day shall be the first lease payment calculation period. Provided,
however, that in the event that this Contract is cancelled before termination,
the lease payment calculation period is until the relevant cancellation day.   6
  Purchase option exercise price       Described in the related loan certificate
for each individual transaction.   7   Reimbursement adjustment fee      
Described in the related loan certificate for each individual transaction.   8  
Repayment standard amount       Described in the related loan certificate for
each individual transaction.

- 46 -

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9   Prescribed damages       Total amounts of the following (1), (4), (7) and
(10) for delivery day or lease payment day. Provided, however, that lease
payment as of the relevant lease payment day shall be paid separately. In the
event that a day on which Prescribed damages shall be paid is not delivery day
or lease payment day, total amounts of the following (2), (3), (5), (6), (8),
(9), (11) and (12).       (SD Tranche 1)

  (1)   Amount to be obtained by multiplying Subject property or the relevant
unit component part purchase price of delivery day or lease payment day by the
rate in the following (A)     (2)   Amount to be obtained by multiplying Subject
property or the relevant unit component part purchase price of the immediately
prior delivery day or lease payment day of a day on which their payment should
be made by the rate in the following (A)     (3)   Amount of interest on the
amount mentioned under above (2) for a period from the first day of the relevant
lease payment calculation period until the day when Prescribed damages should be
paid multiplied by the interest rate of Euro Yen TIBOR stipulated in the list
attached to Subject Loan Agreement, Clause 6 (3) plus SD Tranche 1 spread
mentioned below (calculated on a pro-rate basis with 360 days a year).        
(SD Tranche 1 spread)

     
In the event that long-term loan rating of SanDisk by the designated rating
agency as of the day of this Contract is “BB-” or “Ba3” or below respectively;
  [*]% p.a.
Long-term loan rating of SanDisk by the designated rating agency is “BB” or
“Ba2” respectively;
  [*]% p.a.
Long-term loan rating of SanDisk by the designated rating agency is “BB+” or
“Ba1” or more respectively.
  [*]% p.a.

      The above changes shall be applicable only when formal public announcement
by the designated rating agency is made 10 business days before the immediately
prior delivery day or lease payment day.

  (SD Tranche 2)     (4)   Amount to be obtained by multiplying Subject property
or the relevant unit component part purchase price of delivery day or lease
payment day by the rate in the following (B)     (5)   Amount to be obtained by
multiplying Subject property or the relevant unit component part purchase price
of delivery day or lease payment day immediately prior to the day on which the
relevant payment should be made by the rate in the following (B)

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 47 -

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  (6)   Amount of interest on the amount mentioned under (5) above for a period
from the first day of the relevant lease payment calculation period to the day
on which Prescribed damages should be made multiplied by the interest rate of
Euro Yen TIBOR stipulated in Clause 6 (3) of the list attached to the Subject
Loan Agreement plus the following SD Tranche 2 spread (calculated on a pro-rate
basis with 360 days a year).         (SD Tranche 2 spread)

     
Long-term loan rating of SanDisk as of the day of this Contract by the
designated rating agency is “BB-” or “Ba3” or below respectively;
  [*]% p.a.
Long-term loan rating of SanDisk is “BB” or “Ba2” respectively;
  [*]% p.a.
Long-term loan rating of SanDisk by the designated rating agency is “BB+” or
“Ba1” or more respectively;
  [*]% p.a.

      The above changes shall be applicable only when formal public announcement
by the designated rating agency is made 10 business days before the immediately
prior delivery day or lease payment day.

  (Toshiba Tranche 1)     (7)   Amount to be obtained by multiplying Subject
property or the relevant unit component part purchase price of delivery day or
lease payment day by the rate in the following     (8)   Amount to be obtained
by multiplying Subject property or the relevant unit component part purchase
price of delivery day or lease payment day immediately prior to the day on which
the relevant payment should be made by the rate in the following (C)     (9)  
Amount of interest on the amount mentioned under (8) above for a period from the
first day of the relevant lease payment calculation period to the day on which
Prescribed damages should be made multiplied by the interest rate of Euro Yen
TIBOR stipulated in Clause 6 (3) of the list attached to the Subject Loan
Agreement plus [*]% p.a. (calculated on a pro-rate basis with 360 days a year).
    (Toshiba Tranche 2)     (10)   Amount to be obtained by multiplying Subject
property or the relevant unit component part purchase price of delivery day or
lease payment day by the rate in the following (D)     (11)   Amount to be
obtained by multiplying Subject property or the relevant unit component part
purchase price of delivery day or lease payment day immediately prior to the day
on which their payment should be made by the rate in the following (D)

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 48 -

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  (12)   Amount of interest on the amount mentioned under above (11) for a
period from the first day of the relevant lease payment calculation period until
the day when Prescribed damages should be paid multiplied by the interest rate
of Euro Yen TIBOR stipulated in the list attached to Subject Loan Agreement,
Clause 6 (3) plus [*]% p.a. (calculated on a pro-rate basis with 360 days a
year).

  (A)   Provided in loan certificate regarding the relevant individual
transaction     (B)   Provided in loan certificate regarding the relevant
individual transaction     (C)   Provided in loan certificate regarding the
relevant individual transaction     (D)   Provided in loan certificate regarding
the relevant individual transaction

10   Payment method

         
(1)
  o   Lease payment, prescribed damages, purchase option exercise cost and
reimbursement adjustment fee related to SD Tranche 1 and SD Tranche 2 shall be
remitted to the following account of Subject SD borrower in cash or by account
transfer by delegation of payment receipt stipulated in Article 7, Clause 4
(Lessee shall incur the bank transfer fee.).
 
       
 
      [*]
 
       
 
      [*]
 
       
 
      [*]
 
       
 
      [*]
 
       
 
  o   Lease payment, prescribed damages, purchase option exercise cost and
reimbursement adjustment fee related to Toshiba Tranche 1 and Toshiba Tranche
shall be remitted to the following account of Subject Toshiba borrower in cash
or by account transfer by delegation of payment receipt stipulated in Article 7,
Clause 4 (Lessee shall incur the bank transfer fee.).
 
       
 
      [*]
 
       
 
      [*]
 
       
 
      [*]
 
       
 
      [*]

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 49 -

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  (2)   Other monies or in the event that proxy receipt for each Subject
borrower stipulated in Article 7, Clause 4 is cancelled, they shall be remitted
to the account of each Lessor or each subject lender in cash or by account
transfer (Lessee shall incur the bank transfer fee.).         [*]         [*]  
      [*]         [*]                   [*]         [*]         [*]         [*]
                  [*]         [*]         [*]         [*]                   [*]
        [*]         [*]         [*]                   [*]         [*]        
[*]         [*]         [*]         [*]         [*]

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 50 -

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11   Subject lender

(Subject SD lender)
IBJ Leasing Co., Ltd.
Sumisho Lease Co., Ltd.
Toshiba Finance Co., Ltd.
Agricultural and Forestry Central Bank
Bank of Yokohama, Ltd.
(Subject Toshiba lender)
Mizuho Corporate Bank Co., Ltd.

12   Subject borrower

(Subject SD borrower)
Lancelot Leasing Limited Company
(Subject Toshiba borrower)
Facile Princeps Limited Company

  13   Subject guarantor (SanDisk)

          SanDisk Corporation as a guarantor of debts related to SD Tranche 1
and SD Tranche 2 under this Contract (Toshiba )
          Toshiba Corporation a guarantor of debts related to Toshiba Tranche 1
and Toshiba Tranche 2 under this Contract

14   Subject Clerical Work Assignee

IBJ Leasing Co., Ltd.

15   Composition of transactions

  (1)   Lessor shall purchase each unit component part in each individual
transaction from Lessee on delivery day based on the Subject Sales Contract and
owns their ownership. SD Lessor and Toshiba Lessor share the ownership with a
ratio of 1 and 1.

      (2) Based on its own option and discretion, SD Lessor shall sell claimable
assets related to SD Tranche 1 under this Contract to Subject SD borrower on
each delivery day in order to raise an amount worth about [*]% of property
purchase price.
        (3) Based on its own option and discretion, Toshiba Lessor shall sell
claimable assets related to Toshiba Tranche 1 under this Contract to Subject
Toshiba borrower on each delivery day based on the Subject Toshiba Loan Sales
Contract in order to raise an amount worth about [*]% of property purchase
price.

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 51 -

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  (4)   Based on its own option and discretion, Subject SD borrower shall be
extended loans from Subject SD lender on each delivery day based on the Subject
SD Loan Agreement in order to raise claimable assets purchase price.     (5)  
Based on its own option and discretion, Subject Toshiba borrower shall be
extended loans from Subject Toshiba lender on each delivery day based on the
Subject Toshiba Loan Agreement in order to raise claimable assets purchase
price.     (6)   SD Lessor and Toshiba Lessor shall raise an amount equivalent
to about [*]% from their own funds.     (7)   Lessor shall lease the relevant
unit component part to Lessee on each delivery day based on this Contract. SD
Tranche 1 and Toshiba Tranche 1 as well as SD Tranche 2 and Toshiba Tranche 2
shall share claimable assets with a ratio of 1 and 1 respectively.

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 52 -

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(Loan certificate, Appendix 2)
Ratio of each Tranche based on the Subject Lease Contract, Article 7, Item 1

         
SD Tranche 1
    [*]  
SD Tranche 2
    [*]  
Toshiba Tranche 1
    [*]  
Toshiba Tranche 2
    [*]  

Subject Lease Contract, Appendix 1, Item 3 lease payment calculation

                 
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 2 -

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Subject Lease Contract Appendix 1, Item 6 Purchase option exercise price
Amounts to be obtained by multiplying the property purchase cost by the
following ratios. Provided, however, that the lease payment as of the relevant
lease payment day shall be paid separately.

     
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]

Subject Lease Contract Appendix 1, Item 7 reimbursement adjustment fee
Amount to be obtained by multiplying the property purchase cost for Subject
property or the relevant unit component part by the following ratios. Provided,
however, that the lease payment as of the relevant lease payment day shall be
paid separately.

     
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 3 -

--------------------------------------------------------------------------------

 

Subject Lease Contract Appendix 1, Item 8 Repayment standard money
Amounts to be obtained by multiplying the property purchase cost for Subject
property or the relevant unit component part by the following ratios.

     
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]
[*]
  [*]

Subject Lease Contract Appendix 1, Item 9 Prescribed damages

                 
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]
[*]
  [*]   [*]   [*]   [*]

 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 4 -

--------------------------------------------------------------------------------

 

[*]
 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

- 5 -

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Lease Contract Appendix 3
Permitted Liens

  (a)   Liens existing on the date hereof and Liens securing refinancing
indebtedness in respect of secured indebtedness;     (b)   Indebtedness
represented by F, F&E Financing Agreements and/or Capitalized Lease Obligations
by secured by the assets acquired pursuant to the respective capital lease (in
the case of Capitalized Lease Obligations) or with the proceeds of the
respective F, F&E Financing Agreements, so long as such Liens do not extend to
any other assets;     (c)   Working Capital Indebtedness up to 50% of SanDisk’s
and its Subsidiaries accounts receivable and inventory balances (and
refinancings thereof) may be secured by the assets of SanDisk and its
Subsidiaries;     (d)   any Lien arising by reason of (i) any judgment, decree
or order of any court, so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the review
of such judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;
(ii) security for payment of workmen’s compensation or other insurance;
(iii) good faith deposits in connection with tenders, leases and contracts
(other than contracts for the payment of money); and (iv) deposits to secure, or
guarantees of, public, governmental or statutory obligations, or in lieu of
surety or appeal bonds;     (e)   Liens for taxes, assessments of other
governmental charges not yet due or which are being contested in good faith and
by appropriate proceedings by SanDisk or any of its Subsidiaries if adequate
reserves with respect thereto are maintained on the books of SanDisk or any of
its Subsidiaries, as the case may be, in accordance with GAAP;     (f)  
purchase money security interests arising in the ordinary course of business
securing only the assets so acquired;     (g)   statutory Liens of carriers,
warehousemen, mechanics, landlords, laborers, materialmen, repairmen or other
like Liens arising by operation of law in the ordinary course of business and
consistent with industry practices and Liens on deposits made to obtain the
release of such Liens if (i) the underlying obligations are not overdue for a
period of more than 60 days or (ii) such Liens are being contested in good faith
and by appropriate proceedings by

- 6 -

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      SanDisk or any of its Subsidiaries and adequate reserves with respect
thereto are maintained on the books of SanDisk or any of its Subsidiaries, as
the case may be, in accordance with GAAP;     (h)   Easements, rights-of-way,
zoning and similar restrictions and other similar encumbrances or title defects,
which, if they are incurred by SanDisk or any of its Subsidiaries after it
acquires the property subject thereto, are incurred in the ordinary course of
business and consistent with industry practices which, individually or in the
aggregate, do not materially detract from the value of the property subject
thereto (as such property is used or proposed to be used by SanDisk or any of
its Subsidiaries) or interfere with the ordinary conduct of the business of
SanDisk or any of its Subsidiaries, provided, that any such Liens are not
incurred in connection with any borrowing of money or any commitment to loan any
money or to extend any credit;     (i)   Liens that secure Acquired Indebtedness
(and refinancings thereof), provided, in each case, that such Liens do not
secure any property or assets other than the property or asset so acquired;    
(j)   leases or subleases granted to other persons not materially interfering
with the conduct of the business of SanDisk or any of its Subsidiaries or
materially detracting from the value of the relative assets of SanDisk or such
Subsidiary;     (k)   Liens arising from precautionary Uniform Commercial Code
financing statement filings regarding operating leases entered into by SanDisk
or any of its Subsidiaries;     (l)   A notice of intention filed by a mechanic,
materialman, or laborer under applicable mechanic’s lien law, or a building
contract filed by a contractor or subcontractor thereunder; and     (m)   Other
Liens as SanDisk and the Lessors may agree upon from time to time.

Related Definitions
“Acquired Indebtedness” means indebtedness of any Person (a) existing at the
time such Person becomes a Subsidiary of SanDisk, including by designation, or
is merged or consolidated into or with SanDisk or one of its Subsidiaries or
(b) assumed in connection with the Acquisition of assets from such Person.
“Capital Lease Obligations” means any amount capitalized under any lease which
is required under GAAP to be capitalized by SanDisk or one of its consolidated
Subsidiaries.
“F, F&E Financing Agreement” means an agreement which creates a Lien upon any
after-acquired tangible personal property and/or other items constituting
operating assets, which are financed, purchased or leased for the purpose of
engaging in or developing SanDisk’s and its Subsidiaries’

- 7 -

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respective businesses.
“GAAP” means generally accepted accounting principals as in effect from time to
time in the applicable jurisdiction.
“Lien” means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired by SanDisk.
“Person” means any individual, corporation, company, partnership, or
governmental agency.
“Subsidiary” of any Person means (i) a corporation a majority of whose Voting
Stock is at the time, directly or indirectly, owned by such Person, by such
Person and one or more Subsidiaries of such Person or by one or more
Subsidiaries of such Person, (ii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries of such Person, or such Person and
one or more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof has a majority ownership interest, or (iii) a partnership
in which such Person of a Subsidiary of such Person is, at the time, a general
partner and has a majority ownership interest.
“Voting Stock” means all classes of equity interests then outstanding and
normally entitled to vote in the election of directors (or similar body) of the
issuer of such Voting Securities.
“Working Capital Indebtedness” means indebtedness incurred under a credit
facility available to SanDisk or any of its Subsidiaries the proceeds of which
are used for working capital or similar purposes.
[Reference Translation]

  (a)   Security interests existing at the time this Agreement is entered into,
as well as security interests to guarantee refinancing debt related to the
secured debt.     (b)   Security interests established by an agreement to
establish security interest and obtain operating assets (an agreement to obtain
(including purchases and/or leases) operating assets after the execution of this
Agreement in order to implement or develop each enterprise of SanDisk or
affiliated companies ((i) any company owned directly or indirectly at that time
by SanDisk through ownership of a majority of the voting shares (shares which
have been issued by that time and which grant in the normal course of business
the right to select the directors and similar positions of the issuer) by
SanDisk alone, or by SanDisk and an affiliated company, or by a SanDisk
affiliated company alone, (ii) any entity (excluding a corporation) in which
SanDisk independently, or SanDisk and an affiliated company, or a SanDisk
affiliated company alone owns a majority interest directly or indirectly on the
determined date, or (iii) any partnership in which SanDisk or a SanDisk
affiliated company is a general partner and owns a majority

- 8 -

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      interest; similarly throughout this Article) executed to establish a
security interest in those operating assets for the purpose of securing payment
of the price of those assets), as well as security interests established in
assets obtained pursuant to a capital lease (a lease or other financing required
by SanDisk or an affiliated company under U.S. accounting standards (GAAP) for
capitalization; similarly below) to secure the payment of the price of those
assets.     (c)   Security interests established in the assets of SanDisk or its
affiliated companies to secure accounts receivable or inventory balances, as
well as up to 50 percent of working capital debt (debt borrowed under a credit
facility available for the use of SanDisk or its affiliated companies, and which
is used for working capital or some similar purpse) to refinance either of the
above.     (d)   (i) Security interests arising pursuant to court judgment,
decision, or order (provided, however, that this shall only apply if a bond
sufficient for purposes of appealing the judgment, decision, or order has been
paid, and all legal procedures properly instituted for obtaining a rehearing of
the judgment, decision, or order have not been conclusively resolved, or the
period for instituting such procedures has not ended); (ii) security interests
to guarantee payment of worker’s compensation insurance and other insurance;
(iii) good-faith deposit monies for deposits related to bids, leases, and
contracting (excluding contracts paid in cash); and (4) deposits to secure a
public duty, government obligation, or legal obligation, or appeal bond.     (e)
  Security interests to secure payable taxes, public charges, and other
governmental levies, and security interests to secure taxes, public charges, and
other governmental levies that SanDisk or its affiliated companies are disputing
in good faith and pursuant to appropriate procedures. Provided, however, that
this shall be limited to cases in which SanDisk or its affiliate d companies
have set aside sufficient reserves on its books for these charges as appropriate
pursuant to GAAP.     (f)   Purchase money security interests arising in the
normal course of business. Provided, however, that this shall be limited to the
subject matter of this interest.     (g)   Judicial liens for carriers,
warehousemen, workmen, landlords, laborers, material suppliers, and mechanics,
as well as other similar liens arising in the normal course of business by
operation of law that are not contrary to

- 9 -

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      standard industry custom, and any security interests for deposit monies to
release any of these liens. Provided, however, that this shall be limited to
situations (i) within 60 days since the payment of the underlying indebtedness
has come due, or (ii) the lien is being disputed in good faith and according to
the appropriate procedures by SanDisk or its affiliated companies and SanDisk or
its affiliated companies have set aside sufficient reserves on their books for
these charges as appropriate pursuant to GAAP.     (h)   Easements, limitations
on use, or other limitations or similar encumbrances or defect in rights that
have, in the normal course of business in a manner not contrary to industry
customs, encumbered property, but that do not, whether in whole or in part,
reduce the actual value of the property and do not interfere with the normal
operations of SanDisk or its affiliated companies. Provided, however, that these
security interests shall exclude encumbrances related to the borrowing of money,
the lending of money, or the granting of credit.     (i)   Security interests to
secure the debt of predecessors ((i) debt of an entity that has become a SanDisk
affiliated company, or with which SanDisk or its affiliated companies have
merged, where that debt existed at that time or (ii) debt acquired in relation
to the acquisition of assets from some entity) or the refinancing of that debt.
Provided, however, that these security interests shall be limited to those
established in the assets of the predecessors.     (j)   A lease or sublease of
SanDisk or its affiliated companies’ assets that pose no actual obstacle to the
operational activity of SanDisk or its affiliated companies. Provided, however,
that such lease or sublease does not reduce the actual value of the assets.    
(k)   Security interests arising from the filing of a provisional Uniform
Commercial Code financing statement related to an operating lease executed by
SanDisk or its affiliated companies.

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Lease Contract Appendix 6
Situational requirements at the time of return
     When Flash Partners Limited Company (hereinafter referred to as “Lessee”)
returns the Subject property to Lessor (hereinafter referred to as “Lessors”)
based on the provision of Clause 25 of the Lease, in addition to the provision
of Clause 25 of the Lease the following requirements shall be satisfied.
     When Lessee returns the Equipment pursuant to Clause 25 of the Lease,
Lessee shall satisfy the following conditions, in addition to the conditions
specified in Clause 25 of the Lease.
     (A) Lessee shall no later than [*] days prior to the expiration or other
termination of the lease (with regard to all but not less than all Equipment)
provide, at its expense:
          1. a detailed inventory of the Equipment (including the model and
serial number of each major component thereof), including, without limitation,
all internal circuit boards, module boards, and software features
          2. a complete and current set of al manuals, blue prints, process flow
diagrams, equipment configuration diagrams, operation, maintenance and repair
records and other data (in Japanese and English) reasonably requested by Lessors
concerning the configuration and operation of the Equipment, and
          3. a certification of the manufacturer or of a maintenance provider
acceptable to Lessors that the Equipment (a) has been tested and is operating in
accordance with manufacturer’s specifications together with a report detailing
the condition of the Equipment, the results of such test (s) and inspection
(s) and all repairs that were performed as a result of such test (s) and
inspection (s), and (b) that the Equipment qualifies for the manufacturer’s used
equipment maintenance program.
     (B) Upon the request of Lessors and at the expense of Lessee, Lessee shall,
not later than [*] days prior to the expiration or other termination of the
Lease make the Equipment available for on-site operational inspection by persons
designated by Lessors who shall be qualified to inspect the Equipment in its
operational environment.
     (C) At the expense of Lessee, all Equipment shall be cleaned and treated
with respect to rust, corrosion and appearance in accordance with manufacturer’s
recommendations and consistent with the best practices of dealers in used
equipment similar to the Equipment. At Lessors’ option and at the expense of
Lessee, Lessee shall (a) properly remove all Lessee installed markings which are
not necessary for the operation, maintenance or repair of the Equipment; or
(b) translate said markings to a language as specified by Lessors and reattach
those markings.
 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

 

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     (D) Lessee shall, at its expense, ensure all Equipment and Equipment
operations conform to all applicable local, state, and federal laws, health and
safety guidelines which may be in effect at the time of return, or as specified
by Lessors.
     (E) Lessee shall, at its expense, provide for the deinstallation, packing,
transporting, and certifying of the Equipment to include, but not limited to,
the following: (1) the manufacturer’s representative or such other person
acceptable to Lessors shall de-install all Equipment (including all wire, cable
and mounting hardware) in accordance with the specifications of Lessors;
(2) each item of Equipment will be returned with a certificate supplied by the
manufacturer’s representative qualifying the Equipment to be in good condition
and (where applicable) to be eligible for the manufacturer’s maintenance plan;
the certificate of eligibility shall be transferable to another operator of the
Equipment; this assignment shall extend to any software licensing or relicensing
or other requirements of the manufacturer to enable an alternate user/purchaser
of the Equipment to enjoy all rights and privileges as would the original
purchaser of the Equipment directly from the manufacturer; (3) the Equipment
shall be packed properly and in accordance to Lessors’ specifications; (4) upon
sale of the Equipment to a third party, provide transportation in a manner and
to locations specified by Lessors; (5) without limitation, as applicable, all
Equipment shall be professionally de-contaminated and certified for removal and
transport by appropriate authorities, in accordance with industry standards, and
consistent with the mode of transport specified by Lessors; all internal fluids
and/or gases shall be purged and properly disposed of, any applicable reservoirs
etc. shall be secured in accordance with manufacturers recommendations and in
accordance with all applicable laws, rules, and regulations.
     (F) At the expense of Lessee all Equipment shall conform to or be modified
to conform to established standards in Japan, the United States or Taiwan;
including, but not limited to wiring codes, software, keyboards, control
consoles, all fittings and lines for gas, water, exhaust; Equipment labeling
i.e. (operational, warning, safety labels) all current operational and service
manuals. At the expense of Lessee accommodation of power requirements different
from where originally shall be provided including but not limited to
step-up/step-down transformers shall be fitted by original manufacturer or by
certified party in compliance with manufacturers specifications.
     (G) All tariffs, duties, taxes, import/export fees, bonding fees, bonded
warehousing fees, licenses, permits, approvals, permissions, and/or freight
forwarder fees without limitation shall be the responsibility of the Lessee.
     (H) Lessee shall, at its expense, obtain and pay for a policy of transit
insurance for the redelivery period in an amount equal to the replacement value
of the Equipment and Lessors shall be named as the loss payee on all such
policies of insurance;
     (I) Lessee shall, at its expense, provide insurance and safe, secure
storage for the Equipment for a period specified by Lessors after expiration of
the Lease at locations acceptable to Lessors which shall not exceed three
(3) years from the return of the Equipment;

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     (J) With regard to any Equipment that has been modified or reconfigured by
the Lessee, at Lessors’ options, Lessee shall, at its expense: (a) return or
restore the Equipment to its original configuration, as specified by the
manufacturer, or (b) make available for a period of [*] days following
successful re-installation and test runs, as required, any engineering and
technical personnel necessary for the training of personnel with respect to the
operation, maintenance and repair of the Equipment (said engineering and
technical personnel will be made available by Lessee for an additional [*] day
period for consultation regarding the operation of the Equipment);
     (K) Lessee shall, at its expense, allow Lessors the right to attempt resale
of the Equipment from the Toshiba’s Yokkaichi facility with the Lessee’s full
cooperation and assistance, for a period of [*] days from the Lease expiration.
Lessee will allow Lessors to show prospective buyers the Equipment while it is
operational during the [*] days from the Lessee’s notification of its intent to
return the Equipment and the Lease expiration date. Lessee shall, at its
expense, provide safe, secure storage for Equipment if requested by Lessors for
a [*] period. If an equipment auction is necessary, Lessors should be permitted
to auction the Equipment on-site.
 

*Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

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