Exhibit 10.1
Guarantee Agreement
June 20, 2006
SanDisk Corporation
IBJ Leasing Co., Ltd.
Sumisho Lease Co., Ltd.
Toshiba Finance Corporation

 

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

 

Guarantee Agreement
     SanDisk Corporation (the “Guarantor”) and IBJ Leasing Co., Ltd., Sumisho
Lease Co., Ltd., and Toshiba Finance Corporation as SD Lessor (in such capacity,
collectively, the “SD Lessors”) hereby enter into this guarantee agreement (the
“Agreement”) with respect to the Master Lease Agreement dated June 20, 2006 and
the related individual agreements entered into thereunder (collectively, the
“Lease Agreement”), in each case entered into by and between the SD Lessors and
IBJ Leasing Co., Ltd. and Sumisho Lease Co., Ltd. as Toshiba Lessor thereunder
(in such capacity, collectively, the “Toshiba Lessors”) and Flash Partners Yugen
Kaisha (the “Lessee”).
     Unless as otherwise specified in this Agreement, the words defined in the
Lease Agreement shall have the same meaning in this Agreement.
Article 1. (Guarantee)
     The Guarantor shall guarantee the performance, from time to time, of the
obligations subject to the guarantee below (the “Guaranteed Obligation”) to the
SD Lessors, jointly and severally (rentai-hosho) with the Lessee (the
“Guarantee”).
(Guaranteed Obligation)
     Guaranteed Obligation shall mean payment obligations of lease rental
(lease-ryo), stipulated loss payment (kitei-songaikin), purchase option exercise
price (konyu-sentakuken-koshikagaku), terminal return adjustment amount
(henkanji-choseikin), break funding cost, late charges (chien-songaikin), and
any and all payment obligations of other amounts concerning SD Tranche I and SD
Tranche II in individual transactions pursuant to the Lease Agreement; provided
that the Guarantor and the SD Lessors may consult in the event of any doubt
concerning “other amounts” as mentioned above.
     In any event, the Guarantor shall not pay any obligation concerning Toshiba
Tranche 1 and Toshiba Tranche 2, and all amounts owing from Lessee to the
Toshiba Lessors in relation to Toshiba Tranche 1 or Toshiba Tranche 2 or
otherwise are expressly excluded from the Guaranteed Obligations.
Article 2. (Period of Request for the Performance of Guarantee Obligation)
     In the event the SD Lessors demand performance of the Guarantee to the
Guarantor, the SD Lessors must make a written demand to the Guarantor for
performance of the Guaranteed Obligation which the Lessee has failed to duly and
punctually perform. The SD Lessors may, upon each failure of due and punctual
performance of the Guaranteed Obligation, make demand pursuant to this Article;
any delay in making such demand will not exempt the Guarantor from the
obligations under this Guarantee.
Article 3. (Performance of Guaranteed Obligation)

3.1   The Guarantor shall, in the event the Lessee fails to perform all or any
part of its obligations under the Guaranteed Obligation within 10 business days
from each due date, perform the Guarantee in favor of the SD Lessors within 20
business days from the receipt of the written demand from the SD Lessors.

 

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

 

3.2   If there is any Guaranteed Obligation upon the occurrence of any
termination event (kaijo-jiyu) under the Lease Agreement, the Guarantor shall
perform the Guarantee within 20 business days from the receipt of the written
demand from the SD Lessors.   3.3   If any termination event under the Lease
Agreement occurs, the Guarantor may, pursuant to Article 26, Paragraph 8 or
Article 26, Paragraph 9 of the Lease Agreement, succeed the rights, obligations
and legal title of the Lessee under the Lease Agreement or the rights,
obligations and legal title of Other Guarantor (defined below) under the
guarantee agreement dated the same date hereof by and between Toshiba
Corporation (the “Other Guarantor”) and the Toshiba Lessors, whereupon such
termination event shall be deemed cured.   3.4   The Guarantor may not exercise
the right of subrogation, prior indemnity and post indemnity with respect to the
Guarantee against the Lessee until any and all receivables of the SD Lessors and
Toshiba Lessors against the Lessee in respect of this Agreement and the Lease
Agreement have been paid in full.

Article 4. (Relationship with Other Security Rights)

4.1   The guarantee under this Agreement shall be granted in addition to other
security interests or guarantees held by the SD Lessors in connection with the
Guaranteed Obligation, and the effectiveness of such other securities or
guarantees shall not be affected by the security interests pursuant to this
Agreement.   4.2   The Guarantor shall not claim exemption even if the SD
Lessors, in their reasonable discretion, alter or terminate other security
interests or guarantees securing the Guaranteed Obligations, provided, however,
that the SD Lessors shall give at least fifteen (15) days prior notice to the
Guarantor in case of such alteration or termination unless the same is
contemplated by the Related Agreements (honken-kanren-keiyaku).

Article 5. (Transfer of Rights and Obligations)
     The SD Lessors and the Guarantor shall not, without obtaining prior written
consent of the other party, transfer or pledge the rights and obligations under
this Agreement to any third party, provided, however, this Article shall not
prohibit any assignment by the Guarantor to persons who acquire all or
substantial part of the assets, business and shares of or in the Guarantor by
means of sale, merger, acquisition or other change in management control. In
addition, in each individual transaction, (i) pursuant to the SD Receivables
Sale and Purchase Agreement (Honken-SD-Saiken-Baibai-Keiyaku), the SD Lessors
may transfer the right to demand the performance of the Guaranteed Obligation
with respect to SD Tranche I hereunder to the SD Borrower (Honken-SD-Kariirenin)
and (ii) pursuant to the SD Receivables Security Assignment Agreement
(Honken-SD-Saiken-Joto-Tampo-Keiyaku), the SD Borrower may transfer the right to
demand performance of the Guaranteed Obligation with respect to SD Tranche I
hereunder to the SD Lenders (Honken-SD-Kashitsukenin). The Guarantor hereby
grants prior consent to such transfers and agrees to cooperate with the SD
Lessors in preparing and delivering the documents requested by the SD Lessors.

 

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

 

Article 6. (Limited Recourse)
     The limitation of liability by the limited recourse provision pursuant to
Article 29, Paragraph 1 of the Lease Agreement shall not prevent the exercise of
the rights of the SD Lessors against the Guarantor pursuant to this Agreement,
nor shall the provisions thereof affect the performance of the guarantee
obligations pursuant to this Agreement.
Article 7. (Modification of the Agreement)
     This Agreement may not be modified except with the written consent of the
Guarantor, the SD Lessors and the Toshiba Lessors.
Article 8. (Governing Law)
     This Agreement shall be governed by, and construed in accordance with, the
laws of Japan in every respect.
Article 9. (Jurisdiction)
     Any and all disputes arising out of or in connection with this Agreement
shall be subject to the exclusive jurisdiction of the Tokyo District Court.

 

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

 

     This Guarantee Agreement shall be prepared in four counterparts and the
Guarantor and the SD Lessors shall each retain one copy hereof.
June 20, 2006

         
 
      [Guarantee Agreement]

 
  Guarantor:   SanDisk Corporation
 
      /s/ Eli Harari 
 
      By: Eli Harari
 
      Title: Chief Executive Officer

 

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

 

         
 
      [Guarantee Agreement]

 
  SD Lessor:   IBJ Leasing Co., Ltd.
 
      /s/ IBJ Leasing Co., Ltd.
 
      By:
 
      Title:

 

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

 

         
 
      [Guarantee Agreement]

 
  SD Lessor:   Sumisho Lease Co., Ltd.
 
      /s/ Sumisho Lease Co., Ltd.
 
      By:
 
      Title:

 

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

 

         
 
      [Guarantee Agreement]

 
  SD Lessor:   Toshiba Finance Corporation
 
      /s/ Toshiba Finance Corporation
 
      By:
 
      Title: